Roads Corporation v Onans & Cottage Bluff Pty Ltd
[2001] VSC 127
•3 May 2001
SUPREME COURT OF VICTORIA
COMMON LAW DIVISION VALUATION, COMPENSATION & PLANNING LIST Not Restricted
No. 6691 of 1999
| ROADS CORPORATION | Acquiring Authority |
| V | |
| NEVILLE GRAHAM ONANS | Firstnamed Claimant |
| And | |
| COTTAGE BLUFF PTY LTD (ACN 007 168 970) | Secondnamed Claimant |
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JUDGE: | Balmford, J. | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 30 and 31 January, 1, 2, 5-9 and 19 February, 2001 | |
DATE OF JUDGMENT: | 3 May, 2001 | |
CASE MAY BE CITED AS: | Roads Corporation v Onans | |
MEDIA NEUTRAL CITATION: | [2001] VSC 127 | |
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COMPULSORY ACQUISITION OF LAND – acquisition by an empowered authority – compensation for acquisition – where a dwelling exists on, and a business is conducted on, the relevant land – special value of the land to the claimant – whether the company which conducted a business on the relevant land had any interest in the land acquired – where what is ultimately acquired by the acquiring authority is a smaller area of land than that referred to in the Notice of Acquisition.
Land Acquisition and Compensation Act 1986 – ss 3, 4, 19, 30, 35, 40, 41, 51, 80(b), 81(1)(b), 89(1), 109(1).
Transport Act 1983 – s 42.
David Richardson v Roads and Traffic Authority of NSW [1996] NSWLEC 117
Kozaris v Roads Corporation [1991] 1 VR 237
Marshall v Green (1875) 1 CPD 35
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APPEARANCES: | Counsel | Solicitors |
For the Acquiring Authority | Mr CJ Townshend | Garland Hawthorn Brahe |
| For the Claimants | Mr J Atkins | Alan J Munt |
HER HONOUR:
Glossary, with paragraph numbers of definitions
The acquired land the land ultimately acquired by Roads Corporation, west of the revised boundary [10] The acquisition date 25 June 1998 [1] The Act Land Acquisition and Compensation Act 1986 [3] The advance compensation $251,080 paid to Mr Onans pursuant to section 51 of the Act on 15 October 1998 [7] The Agreement an agreement made on 15 October 1998 between Roads Corporation and Mr Onans [7] The business the business of growing, buying and selling palm trees conducted on the subject land under the name of “Palm World” [2] The claimants Mr Onans and Cottage Bluff [1 & 2] Cottage Bluff the secondnamed Claimant [2] The original acquired land the land comprised in the Notice of Acquisition of 28 June 1998 [3] The initial boundary the boundary between the original acquired land and the balance of the subject land [5] The Knights Mr and Mrs Knight, registered proprietors of Crown Allotment 26 Parish of Mangalore [1] Landscape palms palms planted as an attraction to passers-by [52] The Notice of Claim the amended Notice of Claim filed by the Claimants on 24 January 2001 [15] Mr Onans the firstnamed Claimant [1] Mrs Onans the present wife of Mr Onans [1] The Particulars the Notice of Sum Offered and Particulars of Offer filed by Roads Corporation [15] Plantation palms palms planted in the course of the business as a long-term investment [66] The retained land the land ultimately retained by Mr Onans, to the east of the revised boundary, and including the strip of land [12] The revised boundary the boundary as revised to the west of the initial boundary so as not to pass through the house [10] Roads Corporation the Acquiring Authority [3] The strip of land the land between the initial boundary and the revised boundary [11] The subject land Crown Allotment 26A1 Parish of Mangalore [1] Introduction
Before 25 June 1998 (“the acquisition date”) the firstnamed claimant (“Mr Onans”) was the registered proprietor of a property being Crown Allotment 26A1 Parish of Mangalore (“the subject land”) situated at the south-east corner of the Goulburn Valley Highway and Gerrards Road at Mangalore and having an area of some 12,200 square metres. Mr Onans had previously owned, jointly with his then wife, a much larger area of land comprising Crown Allotments 26A and 26A1, which are contiguous. In 1993, pursuant to an order of the Family Court, that larger area was transferred to Mr Onans as sole registered proprietor. Later in 1993, Crown Allotment 26A was transferred to Mr and Mrs Knight (“the Knights”), by whom it is still occupied. After that transfer, Crown Allotment 26A1 constituted the whole of the land in Certificate of Title Volume 8924 Folio 384. Mr Onans remarried before the acquisition date and he and Mrs Onans live in the dwelling on the subject land. Before the acquisition date the Goulburn Valley Highway, running almost due north and south, formed the western boundary of the subject land. The Court was assisted by a visit to the subject land, on the basis that the purpose of that visit was merely to enable an understanding of the evidence which was to be presented at the hearing and that what was observed was not evidence.
The secondnamed claimant (“Cottage Bluff”) is a company of which Mr and Mrs Onans are the directors and shareholders. It is not in issue that Cottage Bluff is controlled by Mr Onans. Before the acquisition date a business of growing, buying and selling palm trees (“the business”) was conducted on the subject land under the name of Palm World. The ownership of that business and the period of its operation are considered at paragraphs 29-35 below.
On the acquisition date the Acquiring Authority (“Roads Corporation”) published a Notice of Acquisition in accordance with section 19 of the Land Acquisition and Compensation Act 1986 (“the Act”). The effect of that Notice of Acquisition was that on that date Roads Corporation acquired 7,934 square metres of the subject land (“the original acquired land”), which was required for the construction of the Goulburn Valley Freeway, which is to replace the Goulburn Valley Highway in the relevant area.
Section 4 of the Act provides that an Authority which is empowered under a special Act to acquire an interest in land by compulsory process must acquire that interest in accordance with Part 2 of the Act, in which section 19 appears. By virtue of section 42 of the Transport Act 1983, Roads Corporation is so empowered, and that Act is the relevant special Act.
The original acquired land constituted approximately the western two-thirds of the subject land. The plans prepared by Roads Corporation showed the boundary between the original acquired land and the balance of the subject land (“the initial boundary”) running approximately north-south and passing through the dwelling erected on the subject land which was occupied by Mr and Mrs Onans. The acquisition would have rendered the dwelling uninhabitable, and Mr Onans informed Roads Corporation that he did not wish to remain on the balance of the subject land.
On 7 September 1998 Roads Corporation (under the name “VicRoads”) wrote to Coltmans Price Brent, then the solicitors for Mr Onans, offering to pay to “your client” the sum of $251,080 for compensation in respect of the acquisition “for the freehold property, plant and equipment and palm stock.” The client in question is not named in the letter, but it is clear from the context that it refers to the owner of the subject land, and thus to Mr Onans. There is no suggestion in the letter that any other person had an interest in any of the items in respect of which compensation was offered. However, the penultimate sentence of the letter reads, “A condition of this offer is that Cottage Bluff Pty Ltd and the registered proprietor is [sic] required to execute a release and indemnity agreement for any further or future claims in respect of this acquisition”. That is the only reference to Cottage Bluff in the letter. No release and indemnity agreement was ever executed. The letter included an offer by Roads Corporation to purchase the balance of the subject land for $2389.
An agreement executed on 15 October 1998 between Mr Onans and Roads Corporation (“the Agreement”) recites the offer of $251,080 by way of compensation and the request of Mr Onans pursuant to section 51 of the Act that that amount (“the advance compensation”) be advanced. Cottage Bluff is not a party to that agreement. The advance compensation was paid to Mr Onans, and in clause 1 of the Agreement he acknowledged receipt of that amount on the date of the Agreement. In clause 5 the parties agreed that if Mr Onans pursued his claim for compensation, payment of the advance compensation was to be treated as an interim payment only, without prejudice to further compensation being awarded or agreed upon. The parties further agreed in clause 6 that if the compensation were to be ultimately determined by a Court or Tribunal, or ultimately agreed, at a sum less than the advance compensation, the difference between the advance compensation and any such further compensation would be paid to Roads Corporation by Mr Onans.
At the settlement of the advance compensation the following amounts were paid by Roads Corporation:
To ANZ Banking Group Limited 85,008.23
To Victoria Legal Aid 2,461.00
To Coltmans Price Brent, Solicitors 163,610.77
Total $251,080.00
The affidavit of Mr Bull of Roads Corporation, in which details of the settlement are set out, describes Coltmans Price Brent as “the solicitors for the Claimant”, although “the Claimant” is nowhere defined in that affidavit. Nevertheless, it is apparent from the contents of the affidavit that that expression is intended to refer to Mr Onans. It does not appear to be in issue that the first two amounts were paid to discharge respectively a mortgage and a caveat affecting the title.
By a letter of 3 December 1998 Mr Onans wrote to Roads Corporation stating that he was dissatisfied with its offer and had decided to keep the remaining land for residential purposes. He said that he was prepared to settle his claim, including the claim by Cottage Bluff Pty Ltd for the destruction of its business, on the basis of the advance compensation and a number of other conditions. Although this letter did not comply with section 35 of the Act, dealing with the form of a Notice of Claim, Roads Corporation elected to treat it as a Notice of Claim by Mr Onans and Cottage Bluff.
Fresh plans were prepared showing a boundary between the land now to be acquired by Roads Corporation and the balance of the subject land (“the revised boundary”) which ran a little to the west of the initial boundary and thus did not pass through the dwelling on the subject land. Mr Onans notified Roads Corporation, through his solicitors, that he accepted the revised boundary. The area of land now proposed to be acquired by Roads Corporation was some 7569 square metres. There was no question of Roads Corporation offering to purchase the balance of the subject land, and Mr and Mrs Onans could remain in their home.
Plan of Subdivision 425601D, dividing the subject land along the initial boundary was registered at the Land Titles Office on 20 December 1999. Plan of Subdivision 425602B, dividing the subject land along the revised boundary, was registered on 20 April 2000. The land to be retained by Mr Onans was shown as Lot 1 on Plan of Subdivision 425602B. Lot 1 included that part of the subject land lying east of the revised boundary and west of the initial boundary (“the strip of land”), as well as that part of the subject land lying east of the initial boundary.
As the original acquired land, which included the strip of land, had vested in Roads Corporation by virtue of section 19 of the Act, it was necessary for Roads Corporation to transfer the strip of land to Mr Onans, and this was done by a transfer dated 6 June 2000, no doubt pursuant to the power conferred on an acquiring authority by section 109(1) of the Act to deal with or dispose of any interest in land acquired by it pursuant to the Act. Mr Onans is now the registered proprietor of the whole of the land in Certificate of Title Volume 10512 Folio 153, being Lot 1 on Plan of Subdivision 425602B (“the retained land”), and Roads Corporation presumably remains the registered proprietor of the balance of the subject land (“the acquired land”), although there is no evidence before the Court to that effect. Given the date of the transfer by which the strip of land was disposed of, section 109(2) has no relevance to this matter.
The present proceeding
By a letter dated 10 May 1999 Roads Corporation (under the name “VicRoads”) made a fresh offer of compensation addressed to Mr Onans personally. That letter did not refer to Cottage Bluff. It appears that at the stage when this offer was made, Roads Corporation was under the impression that it was the intention of Mr Onans to move from the retained land, but nothing turns on this. The total amount of compensation offered was $110,280. In that letter Roads Corporation stated that if the offer was accepted, Mr Onans must repay (subject to adjustment in respect of legal and like expenses) $140,800, being the difference between the amount offered and the advance compensation.
The letter continued:
In accordance with the requirements of Section 81(1)(b) of the Act, you are requested to advise within one month as to whether you wish to have the dispute in respect of compensation payable determined by the Victorian Civil and Administrative Tribunal or the Supreme Court. If you fail to advise VicRoads of which option you prefer within the one month period stipulated, VicRoads will itself refer the matter for determination to the Court or Tribunal as it sees fit.
No answer was received by Roads Corporation to that letter.
On 31 August 1999 the matter was referred to the Court by Roads Corporation as a disputed claim pursuant to sections 80(b) and 81(1)(b) of the Act. A formal Notice of Claim filed by both claimants on 17 December 1999 was replaced on 24 January 2001, shortly before this matter came on for hearing, by an Amended Notice of Claim (“the Notice of Claim”) in which they claim total compensation of $432,653.98 in respect of the acquisition. A Notice of Sum Offered and Particulars of Offer (“the Particulars”) was filed by Roads Corporation on 13 April 2000, offering a total compensation of $125,211. In the Particulars the solicitors for Roads Corporation give notice that their client will seek repayment of the difference between the advance compensation of $251,080 and the amount of compensation determined by the Court.
Thus in summary, on the one hand Mr Onans and Cottage Bluff seek more compensation in addition to the advance compensation already received by Mr Onans, and on the other hand Roads Corporation seeks repayment of part of that advance compensation.
The claim against Cottage Bluff
It is convenient to deal first with the position of Cottage Bluff. Paragraph 2 of the statutory declaration by Mr Onans in the Notice of Claim, relating to the offer and payment of the advance compensation, reads “That Cottage Bluff and I are the persons to who [sic] the above offer and payment was [sic] made”. It will be apparent that that paragraph is incorrect. No part of the advance compensation was offered or paid to Cottage Bluff. The offer of compensation was made to Mr Onans alone (see paragraph 6 above) and the receipt of the advance compensation was acknowledged by Mr Onans alone (see paragraphs 7 and 8 above). That being so, Roads Corporation is not in a position to seek repayment from Cottage Bluff of any part of the advance compensation, and its claim for repayment must be brought solely against Mr Onans. Indeed, while there is some inconsistency in the Particulars as to whether that document is addressed to one or both claimants, on balance I do not read it as claiming any repayment from Cottage Bluff.
Given the nature of this proceeding, should the Court find the amount of compensation for the acquisition to be less than the advance compensation of $251,080 paid under section 51(1) of the Act, any claim of Roads Corporation must depend primarily on section 51(7). Those provisions read, so far as relevant:
51.Advances of compensation
(1)Upon the service on a claimant of an offer under Part 3 or 5, the claimant may, by notice in writing, require the Authority to advance an amount equal to the amount of compensation offered in respect of the claimant's interest or the loss or expenses sustained or incurred by the claimant . . .
(7)If the amount of money paid under this section exceeds the amount of compensation determined under this Act for -
(a)the acquisition of the interests of; or
(b)the loss or expenses sustained or incurred by; or
(c)the solatium payable to -
the person to whom the money was paid, that person is liable to pay to the Authority as a debt due to the Authority an amount equal to the difference between the amount paid to that person under this section and the amount of compensation which is so determined.
However, in those circumstances Roads Corporation might also claim under clause 6 of the Agreement, summarised in paragraph 7 above.
The cashbook of the business “Palm World” showed that an amount of $150,641.76, which Mr Onans had indicated was the amount remaining after his solicitors had retained their costs from the amount of $163,610.77 paid to them at settlement (see paragraph 8 above) was paid to the account of the business on 20 October 1998. Mr Townshend, for Roads Corporation, submitted that, assuming that the business was owned by Cottage Bluff, that entry was evidence that the amount of $163,610.77 had been paid to Cottage Bluff. However, leaving on one side for the moment the question of the ownership of the business, whatever Mr Onans may have chosen to do with the money he received does not alter the statutory or contractual position, that Roads Corporation can claim repayment of the advance compensation only from the person to whom it was paid by Roads Corporation, namely Mr Onans.
The claim by Cottage Bluff
Turning to the claim by Cottage Bluff for compensation from Roads Corporation, it should be noted at the outset that, while the claim set out in the Notice of Claim is made by the two claimants jointly under fourteen separate heads, there is no specification of which items or what amounts are claimed by which claimant.
Any claim for compensation under the Act depends on section 30, which reads:
30. Right to compensation on acquisition
Subject to this Act, every person who, immediately before the publication of a notice of acquisition, had an interest in land that is divested or diminished by the acquisition of the interest to which that notice relates has a claim for compensation.
The question then arises as to whether, immediately before the acquisition date, Cottage Bluff had an interest in any land that was divested or diminished by the acquisition of the original acquired land. In section 3 of the Act, “interest” in relation to land, is defined as meaning:
(a)a legal or equitable estate or interest in the land; or
(b)an easement, right, charge, power or privilege in, under, over, affecting or in connexion with land;
The Notice of Claim reads, under the heading “Nature of Interest in Land”:
Onans is the registered proprietor of the subject land. Cottage Bluff conducted a business relating to the growing and sale of palm trees on the subject land.
“The subject land” is defined in the Notice of Claim in the following terms:
LAND IN RESPECT OF WHICH CLAIM IS MADE: The land is located at the corner of Gerrards Road and Goulburn Valley Highway, Mangalore being part of the land more particularly described in Certificate of Title Volume 8924 Folio 384 (“the subject land”) the subject land shown on the Survey Plan prepared by Roads Corporation annexed hereto.
There is no annexed survey plan. Accordingly, the land in respect of which the claim is made, and in respect of which the interest of Cottage Bluff is said to exist, is defined as part of the land in the Certificate of Title, and with no further precision. In any case, as at 24 January 2001, the date of the Notice of Claim, that Certificate of Title would have been affected by the transactions described in paragraphs 11 and 12 above, and it is not possible to say what land, if any, was described therein at that date. Further, in paragraph 3 of the statutory declaration contained in the Notice of Claim, Mr Onans declares that “At the time the right to compensation arose, . . . Cottage Bluff conducted the business from part of the subject land.” The “part” in question is not defined.
Assuming for the moment, without deciding, that the business was conducted by Cottage Bluff, the conduct of a business on a given piece of land cannot of itself give the person conducting the business an interest in that land. It is common to find a company conducting a business from premises on land owned by the person who controls the company. The company does not thereby acquire an interest in the land. The extensive definition of “ ’interest’ in relation to land” contained in the Act does not extend to that relationship.
The only documentary evidence tending to show that Cottage Bluff had an interest in any part of the subject land at any time prior to the acquisition date appears in the financial statements of Cottage Bluff which are before the Court as attachments to income tax returns. Those statements show the following amounts paid under the heading “Rent of Property and Equipment – N. Onans”:
1994-95: $3529
1995-96: $6676
1996-97 $5472
The evidence of Mr Onans (see paragraph 30 below) is that Cottage Bluff took over the business in about December 1994. It should be noted that for the year 1994-95, the profit and loss statement of Cottage Bluff includes the statement “trading 17/12/94 to 30/6/95”. Thus any payment of rent in that financial year would have been in respect of that period only.
Assuming that the word “property” in the relevant heading in the financial statements is intended to mean “land”, there is no document before the Court defining the land for which rent is being paid, or showing any allocation of the rent as between land and equipment. Further, no financial statements are available for any years later than 1996-97. The evidence of Mr Onans was that taxation returns for later years were still being prepared. In the absence of other evidence, I make no comment on the apparent failure of Mr Onans and Cottage Bluff to comply with their obligations under the taxation legislation. However, this litigation was commenced in August 1999. If it was thought relevant to exhibit financial statements from earlier years to Mr Onans’s affidavit, it is surprising that no effort was made in the intervening period to prepare and produce the corresponding information even for the succeeding financial year, which includes the acquisition date. As a result of the failure to do so, there is no documentary evidence at all before the Court which would tend to show that as at the acquisition date Cottage Bluff had an interest in any part of the subject land.
I note that Mr Wilkinson, a chartered accountant whose evidence is described at paragraph 39 below, said that the amounts described as rent did not constitute a commercial rental for the land and the equipment in question. That evidence tacitly assumes that rental was being paid for the whole of the subject land and the whole of the equipment used in the business. However, I do not intend to criticise Mr Wilkinson’s evidence when I say that if Cottage Bluff were the tenant of the whole of the subject land, presumably Mr and Mrs Onans should have been paying rent to it as sub-tenants of the house in which they were living. There is no evidence that they were doing so. Further uncertainty as to the area of land claimed to be occupied for the purpose of the business appears from paragraph 22 above.
Not only is there no documentary evidence as to the nature of the interest in the acquired land which is claimed by Cottage Bluff, there is no oral evidence either. There is no evidence at all of the term of any agreement under which the rent was paid, whether any such agreement was terminable at will or on what notice, the extent of the land affected by any such agreement, or the manner in which the rent was payable. Without that information it is not possible to value the supposed interest of Cottage Bluff in the land (and see section 41(6) of the Act). I note that none of the valuers attempted to do so. All of them prepared their valuations on the basis that immediately before the acquisition date Mr Onans was the owner of the subject land, and none of them made reference to any interest of Cottage Bluff or any other person affecting that land. I can only conclude that they received no instructions as to the existence of any such interest.
In summary, on the evidence before me, I cannot find that immediately before the acquisition date Cottage Bluff had, in terms of section 30 of the Act, any interest in any part of the subject land that was divested or diminished by the acquisition by Roads Corporation of the original acquired land. Accordingly Cottage Bluff is not entitled to make any claim for compensation under the Act in respect of that acquisition.
The ownership of the business
The next question is whether immediately before the acquisition date the business was owned by Cottage Bluff or by Mr Onans. It is not in issue that Mr Onans was the owner of the business prior to December 1994, as appears from his taxation returns for earlier years. In his sworn affidavit, Mr Onans consistently refers to himself as operating the business. In paragraph 6 he says “I gradually developed that business . . . I outlayed [sic] considerable expense” . . . In paragraph 7 he speaks of “increasing my wholesale business and retail business from the site under the name of Cottage Bluff Pty. Ltd. trading as Palmworld” [sic]. That passage is the only reference to Cottage Bluff in an affidavit more than ten pages long, explaining the basis of the claim for compensation in respect of both the subject land and the business. It is also the only evidence before the Court as to the ownership of the business name “Palm World” or “Palmworld”. In paragraphs 8 and 9 of the affidavit, Mr Onans describes the business at length, always referring to himself as the operator of the business.
Mr Onans’s oral evidence is of some assistance. In examination in chief he was asked, “Why did Cottage Bluff take over from you the palm business, did it take over all the business activities on the site?” In reply to that leading question, he said, “Well, it took over all the business activities on the site, trees that were mine until the company took over they remained mine until I suppose the trees were dug, then they would become the property of Cottage Bluff once they were sold as retail sales.” No document was produced evidencing any sale of the business from Mr Onans to Cottage Bluff. Mr Cronin, the accountant who prepared the financial statements of Cottage Bluff which were before the Court, was not called to give evidence. In response to another leading question, Mr Onans agreed that Cottage Bluff took over the business in about December 1994 and said, “I suppose for tax reasons the company [Cottage Bluff] was formed.” He gave evidence as to a number of payments relating to the business which were entered in a cashbook labelled “Palm World”. In cross-examination it was put to Mr Onans that when he spoke of himself closing the business (see paragraph 35 below), he was referring to himself as a director of Cottage Bluff. He replied in the affirmative, although it was not clear to me that he had understood the question.
The financial statements referred to above, as well as taxation returns for the same years which were before the Court, have been prepared on the basis that the business was conducted by Cottage Bluff. Although there is no financial statement or taxation return in existence for the year including the acquisition date, the evidence of Mr Onans was that as at that date the situation was unchanged.
On balance, I find that as at the acquisition date the business was conducted by Cottage Bluff, and I note that Mr Wilkinson, in his examination of the business, reached the same conclusion. That being so, Mr Onans is unable to claim for losses of the business. It should be noted that no claim is made for loss of goodwill. I must conclude that Mr Onans permitted Cottage Bluff to use an unspecified part of the subject land for the purposes of the business, without, as I have found, conferring on Cottage Bluff any interest in terms of the Act. The uncertainties to which I have referred are such that that permission cannot be dignified with so much as the title of a licence.
The position with regard to equipment used in the business is equally vague. The only fixed asset shown in the accounts as belonging to Cottage Bluff is a computer, which is not the subject of any claim in this proceeding. As has been said (see paragraph 24 above), the financial statements of Cottage Bluff which are before the Court show amounts of rent paid to Mr Onans for “property and equipment”. There are, however, no accounts, and no corresponding evidence, for the year which included the acquisition date. The equipment for which rent was said to be paid is not specified. There was no evidence that any plant or equipment was transferred by Mr Onans to Cottage Bluff.
On the evidence before me, I cannot find that at the acquisition date Cottage Bluff had any proprietary interest in any equipment used in the business apart from the computer, and must conclude that the equipment was the property of Mr Onans and that he allowed it to be used by Cottage Bluff for the purposes of the business.
Mr Onans deposed to a number of reasons why he (read Cottage Bluff) had ceased to carry on the business as at the date of acquisition. He did not have room to hold large advanced palm trees; the return on small palm trees was not worth his while; he had lost the use of the dam on the acquired land, and the bore which he used was not on his property; he had lost his display area and people did not come after the acquisition because they thought he had closed down and left; there was no room to continue the seedling nursery for palms. He deposed that he is presently involved in transporting Cocos Island palm trees from properties in the area, which he locates and on sells to buyers. There was evidence from the cashbook of the business of activity in that regard, from which I assume, without other evidence on the matter, that that activity is being carried on by Cottage Bluff. Having considered the matter, I accept that the situation is that the business described in paragraph 2 above with which this claim is concerned did come to an end on the acquisition date, and the activity referred to, while it involves palms, constitutes a new and different business.
The claim of Mr Onans
A problem arises from the events described in paragraphs 9-12 above. By virtue of section 30 of the Act, Mr Onans has a claim for compensation as being a person who, immediately before the publication of a notice of acquisition, had an interest in land that was divested or diminished by the acquisition of the interest to which that notice related. That interest was “the interest of N.G. Onans as owner” in the subject land, which was divested or diminished by the acquisition of the original acquired land. An offer of compensation was made by Roads Corporation and the advance compensation paid. The strip of land, which was part of the original acquired land, was then transferred back to Mr Onans. Thus what has ultimately been acquired by Roads Corporation is a lesser area of land than that to which the notice of acquisition related. The Act does not provide for this situation.
Section 89 (1) of the Act provides that the duty of the Court on a referral of a disputed claim “is to determine the amount of compensation in accordance with this Act to be paid in respect of the claim”. It is clear from the Notice of Referral that the “disputed claim” thereby referred to the Court is the claim for compensation in respect of the acquisition of the original acquired land. Mr Townshend submitted that, given that the advance compensation was premised on the first acquisition, that is, the acquisition of the original acquired land, it was a matter of evidence that since the payment of the advance compensation, the strip of land had been retransferred by Roads Corporation to Mr Onans. That was a fact to be taken into account by the Court in determining the amount of compensation. Further, the Court was required to consider the amount of compensation to be paid, if any, in respect of losses attributable to disturbance and severance and the like. Again, whether there were such losses was a matter of evidence. Finally, the significant effect of the transfer back of the strip of land was not so much a matter of the value of the land as a matter of Mr Onans being able to retain the house in which he lived; and again, the effect of that change was a matter of evidence. Accordingly, he submitted, the Court had jurisdiction to deal with the disputed claim in the form before it, and the changed circumstances arising from the retransfer of the strip of land were relevant in the context of assessing compensation, rather than in determining whether there was a proper claim before the Court. I did not understand Mr Atkins, for the claimants, to challenge that submission, and I propose to deal with the disputed claim on that basis.
Sections 40 and 41 of the Act lay down the principles upon which compensation is to be based, and read, so far as relevant:
40.Definitions
In this Part -
"loss attributable to disturbance" means any pecuniary loss suffered by a claimant as the natural, direct and reasonable consequence of -
(a)the service upon the claimant of a notice of intention to acquire, where the Authority has refused or failed to give consent to the carrying out of improvements to the land in respect of which that notice has been served or the effecting or obtaining of any sales, transactions, licences or approvals in respect of that land; and
(b)the fact that an interest of the claimant in that land has been divested or diminished, being a pecuniary loss for which provision is not otherwise made in this Part;
"loss attributable to severance", in relation to the acquisition of a claimant's interest in land, means the amount of any reduction in the market value of any other interest of the claimant in the acquired land or any interest of the claimant in other land used in conjunction with the acquired land which is caused by its severance from the acquired land;
"market value", in relation to any interest in land on a particular date, means the amount of money that would have been paid for that interest if it had been sold on that date by a willing but not anxious seller to a willing but not anxious purchaser;
"special value", in relation to an interest in land, means the value of any pecuniary advantage, in addition to market value, to a claimant which is incidental to his ownership or occupation of that land.
41.General principles on which compensation is to be based
(1)Except as otherwise provided in this Part, in assessing the amount of compensation payable to a claimant in respect of an interest in land which is acquired under this Act, regard must be had to the following factors -
(a)the market value of the interest on the date of acquisition;
(b)any special value to the claimant on the date of acquisition;
(c)any loss attributable to severance;
(d)any loss attributable to disturbance;
(e)the enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed from the acquired land by reason of the implementation of the purpose for which the land was acquired;
(f)any legal, valuation and other professional expenses necessarily incurred by the claimant by reason of the acquisition of the interest.
.. .
(3)If less than the whole of the land in which a claimant's interest subsists is acquired or less than the whole of that interest 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.
.. .
(6)If the claimant's interest in the acquired land was liable to expire or to be determined, the assessment of compensation payable under this Part in respect of that interest must take account of any reasonable prospect of renewal or continuation of the interest.
There were six valuations before the Court. Mr St Clair, a professional valuer, who was called by Mr Onans, valued the freehold property, taking into account the conduct of the business from that property. Mr Lewis, also a professional valuer, who was called by Roads Corporation, valued only the freehold property and made no reference to the business. Mr Wilkinson, a chartered accountant largely involved in forensic accounting, was called by Roads Corporation, and complemented the valuation of Mr Lewis by valuing the business, on the understanding that the acquisition by Roads Corporation would result in the loss of the business.
Mr Pullar is a horticultural consultant, not a valuer, and was called by Mr Onans to value the palms. Mr Davis conducts a large business of growing, supplying and transplanting large trees including palms and was called by Roads Corporation to provide expert evidence as to the current market value of the palms. Finally, Mr Sheehy was called by Roads Corporation to value the plant, stock and equipment on the land.
The valuations must be read in the light of my findings that at the acquisition date Cottage Bluff owned the business but it cannot claim compensation under the Act; and that at that date the land and improvements, and the equipment used in the business, were the property of Mr Onans.
Mr Wilkinson deposed that as at the acquisition date the business was not a financially viable operation. He pointed out that no provision was made for payment of wages to Mr Onans or to any other person. It would not be unreasonable to allow approximately $30,000 per annum for wages for such a business, and that meant that the business would have made a loss in the year ending 30 June 1997, the last year for which accounts were available. The business had no commercial value beyond the sale value of the palms.
I accept that evidence, save as to the ownership of the palms, which is discussed further at paragraph 66 below.
The Notice of Claim
It is convenient to deal one by one with the fourteen items in the Notice of Claim, in the order in which they appear.
Item 1 Land
Market value of land acquired $33,000
In situ value of swimming pool $30,000
Diminution in value of dwelling $11,520 $74,520
The amount claimed under this head derives from the valuation of Mr St Clair, the diminution in value of the dwelling being valued as a loss attributable to severance and the pool on the acquired land as an addition to the market value of that land. The corresponding figure in Mr Lewis’s valuation was $62,000, including only $10,000 for the in situ value of the pool. Mr St Clair relied on ten comparable sales and Mr Lewis on twelve. The difficulty of valuing this property is highlighted by the circumstances that no sale was relied on by both valuers, and none of the twenty-two sales was a sale of a palm nursery or any other nursery.
Mr St Clair said in evidence that he added a “commercial premium” in the order of $5000 to the before value of the land, arising from its situation. The effect of the acquisition he said, was that in the after value it was “essentially just a residential site”, with no commercial value. Mr Lewis made no allowance for any commercial value of the property. There was evidence that the land was zoned Rural in the relevant planning scheme, but no evidence as to what, if any, commercial uses would be permitted in that zone.
Only one of the comparable sales included a pool, and Mr St Clair said that he had allocated a value of $15,000 to that pool. He said in his report that he understood that the pool on the acquired land had a dual purpose of display for the business and health benefits for Mr Onans, and in cross-examination he said that he had taken both purposes into account in valuing the pool. However, he was unable to say in what proportion he had done so, and he did not show the pool among the improvements relevant to the market value of the business (see paragraph 39 above).
Mr Onans deposed that he needed the pool for treatment for certain injuries from which he suffered. Unchallenged medical evidence as to those injuries and as to the desirability of “a regular exercise program, particularly in a swimming pool” was before the Court. However, he conceded that he had not replaced the pool in the period of more than two years since he received the advance compensation. Mr Townshend submitted that that concession mitigated against there being any special value to Mr Onans in the presence of the pool on the land. However, I am prepared to accept that, while Mr Onans saw other items of expenditure as more important than the pool, it still had a special value to him in the context of his injuries.
Relevant factors in weighing up the two approaches to the valuation of the land are; that Cottage Bluff owns the business but has no entitlement to compensation; the absence of any claim for goodwill; my finding in paragraph 43 above that the business was not financially viable; and the rural zoning. In the result, it is my view that the separation of the valuation of the business from the valuation of the land provides the more satisfactory basis for the assessment of this claim. Accordingly, I prefer the valuation of Mr Lewis. However, given the special value of the pool to Mr Onans, I prefer the figure of $30,000 to the figure of $10,000 for its in situ value. Mr Lewis agreed that a nominal value of $3,000 could be attributed, on the basis of the property being purely residential, to the before value of the rotunda and watering system which were used in the business. If that amount and the additional $20,000 for the in situ value of the pool, are added to the $62,000 which was Mr Lewis’s assessment of the compensation, the resulting amount of $85,000 appears appropriate compensation under this head.
I do not find that the use of the land and equipment by Cottage Bluff creates any “special value” to Mr Onans which is incidental to his ownership of the land, in terms of the definition in section 40 of the Act. He has made the decision to separate the business from his personal affairs, no doubt for what appeared to him good reasons: see paragraph 31 above. Having presumably obtained benefits from so arranging his affairs, he cannot claim benefits which he might have received had he not done so.
Item 2 Solatium:
10% of the value of the land acquired $3,000
The amount of this item, authorised by section 44 of the Act, is not in issue.
Item 3 Palms on acquired land $25,980
less value of 4 medium cocos palms remaining $480 $25,500
At one time Mr Onans conducted a business on the subject land as agent for a swimming pool manufacturer. (He does not refer to Cottage Bluff in the context of that business.) In 1990 the pool already referred to was constructed on the subject land between the house and the highway, and at the same time the pool surround and other areas at the front of the property (now part of the acquired land) were landscaped with a total of 80 mature palms, to serve as an attraction to passers by who might come in and purchase a pool or palms. Those palms are referred to as the landscape palms. Four of them are still on the retained land.
There is only one small matter in dispute between the parties as to the value of the addition to the market value of the acquired land provided by the 80 landscape palms. Mr St Clair, Mr Wilkinson and Mr Pullar all valued them on the basis of current price lists from nurseries specialising in palms, and were in agreement on the value so obtained as being $25,980. Mr St Clair then properly deducted $480, being the value of the four landscape palms on the retained land, giving a total of $25,500 for 76 landscape palms. Mr Wilkinson expressed the opinion, which I accept, that an allowance must be made for the cost of removing the plants from the ground, which Mr Onans had estimated as being on average $40 per plant. The deduction of $40 x 76 from $25,500 gives a figure of $22,460. Given the very considerable degree of agreement between the parties on this item, no attempt was made by either counsel to examine the evidence of Mr Davis or Mr Sheehy insofar as it might be relevant to the valuation of the landscape palms, and accordingly, I have not considered that evidence in this context.
Item 4 Driveway and gates (at cost)
Earthmoving and machinery $7,500
This claim was abandoned.
Item 5 Allowance for loss of:
Igloo $8,000
Rotunda (shade house) $2,500
Shed $5,000
Timber shade house (palm holding frame) $1,000 $16,500
The shed was in existence at the time of the sale of the adjoining land to the Knights, and the evidence is that it straddles the boundary and by far the greater part of it is situated on the Knights’ land. By arrangement with the Knights, it was used by Mr Onans to store machinery used in the business. The hypothetical purchaser envisaged in the definition of “market value” in section 40 of the Act would not imagine that it was to be included in the property to be purchased. No claim can be made by Mr Onans for compensation for the loss of a structure erected almost entirely on his neighbours’ land. The rotunda has been taken into account in paragraph 49 above. Mr Lewis, whose valuation I prefer (see paragraph 49 above), expressed the view that the shade house and igloo would not add value to the property. Accordingly, no allowance is made here for any of these items.
Item 6
Watering system made redundant as a
result of loss of business due to acquisition $10,000
Security fencing on acquired land at road
frontage to prevent theft of palms $5,000
Loss of dam on acquired land $5,000Loss of plantation palms mainly on
remaining land due to business redundancy $165,000 $185,000
The watering system has been dealt with (see paragraph 49 above). The dam on the acquired land must be considered as equipment owned by Mr Onans and used in the business conducted by Cottage Bluff. If that equipment was made redundant as a result of the closing of the business, then it cannot be said to have any value to Mr Onans; and Cottage Bluff has no entitlement to compensation under the Act.
The security fencing here claimed for ran along the front of the property only, and the fences on the remaining three sides were of post and wire. That being so, and on the basis that a hypothetical purchaser would not pay any extra amount because of the presence of that fencing, Mr Lewis said that he had allowed no additional value for the security fencing. Mr St Clair valued it at $5,000 in the context of the commercial value of the property. Having considered the matter in the light of the basis of each valuation, I prefer the approach of Mr Lewis.
The valuation of the plantation palms, the largest single claim, is dealt with in paragraphs 65 and following below.
Item 7
Value of plant and equipment purchased by
Roads Corporation resulting from closure of
business $35,135
In cross-examination Mr Onans conceded that save for three animal drinking troughs and a rotary slasher, everything claimed under this item was either taken into account under other headings or had been retained by him and not purchased by Roads Corporation. Mr Sheehy valued the water troughs at $360 and the slasher at $475, both on a going concern basis. There is no evidence that either of these items was used in the business, and I am satisfied that it is appropriate to allow both these amounts.
Item 8
Difference between in situ value of pool
and spa and cost of replacement
with new facility on remaining land $17,462
Mr St Clair indicated that he had quotations for a replacement pool, spa, electrical works, landscaping, safety fence and paving totalling $52,297. I have found a special value of the pool to Mr Onans, and the $30,000 valuation must, in the light of those quotations, be found to be a depreciated value. On that basis, I consider that it is reasonable to allow Mr Onans the amount claimed for a replacement pool. The decision of Gobbo J in Kozaris v Roads Corporation [1991] 1 VR 237 is authority for the proposition that a replacement cost (if otherwise appropriate) may be allowed in respect of a direct pecuniary loss in circumstances where that cost has not yet been incurred.
Item 9
Cost of construction of replacement shed
including preparation of foundations,
site, laying of concrete floor, earth works,
purchase of shed, erection of shed,
supply electricity to shed and any
associated labour costs
(to compensate for loss of cover) $22,731
less allowed for shed $5,000 $17,731
There is evidence that Cottage Bluff stored machinery used for the business in a shed which was constructed largely on the Knights’ land and which was removed by the acquisition (see paragraph 55 above). Mr Onans had no interest in the greater part of the land occupied by that shed, and thus had no claim in that context for loss attributable to severance; and Cottage Bluff has no entitlement to compensation under the Act. Accordingly, I find no compensation payable under this head.
Item 10
Landscaping house site and preparation
of boundary fence, including labour for
digging holes for plants and trees
46 hours @ $45.00 $2,070
65 hours @ $50.00 $2,250 $5,320Item 11
Driveway to the south end of house,
levelling with gravel supplied by Vic Roads
including labour for new path at front of house $675Item 12
Water system around the block $1984.70
These items, totalling $7,979.70, all derive from the effect of the acquisition being, as Mr Atkins submitted, to turn the front of the house into the back of the house. They are expenses either incurred or estimated in, to an extent, turning the back of the house into the front of the house in response. (See Kozaris, cited in paragraph 60 above.) Mr Townshend submitted that these items should not be compensable, as they constitute improvements to the retained land. However, I consider it reasonable that $5,000 of these expenses, which were not taken into account by Mr Lewis in assessing the market value of the property, be compensated as “loss attributable to severance”, in terms of the definition in section 40.
Item 13
Costs of installing pump to back dam for
domestic water supply $1,300
On the same basis, the necessity to replace the domestic water supply formerly drawn from the dam on the acquired land should be compensated and I consider it reasonable to allow the whole of this claim.
Item 14
Legal, valuation and other fees and expenses
incurred as a result of the acquisition $41,026.28
This item, allowed pursuant to section 41(1)(f) of the Act, is a matter of evidence, and I did not understand Mr Townshend to challenge the amount of the claim. That item is accordingly allowed in full in respect of legal, valuation and other fees and expenses up to the service of the Notice of Referral.
Valuation of the plantation palms
The palms on the site prior to the acquisition date can be divided into landscape palms and plantation palms. The landscape palms are considered in paragraphs 52 and 53 above. I now turn to consider the plantation palms for which an amount of $165,000 is claimed under item 6 above.
There were, it appears, 624 palms planted on the subject land in the context of the business, as a long-term investment. (The statement of Mr St Clair that there were nearly 900 plantation palms appears to be an error; his valuation, like the others, specified 624 palms.) They consisted of 103 Cocos Palms, 221 Cotton Palms and 300 Canary Island Date Palms. It appears from Mr Onans’s affidavit that all of these palms were planted before December 1994. Thus, on the ambiguous evidence of Mr Onans set out in paragraph 30 above, as at the acquisition date they were the property of Mr Onans while in the ground, and either when they were dug or when they were “sold as retail sales” became the property of Cottage Bluff.
Talbot J of the Land and Environment Court of New South Wales in David Richardson v Roads and Traffic Authority of NSW [1996] NSWLEC 117 page 5 considered the authorities relevant to the question of whether palms on land compulsorily acquired were fixtures. His Honour adopted the following passage from Marshall v Green (1875) 1 CPD 35, a decision relating to a contract for the sale of trees, where the following comments of Sir Edward Vaughan Williams were cited with approval at 39:
The principle of these decisions appears to be this, that wherever at the time of the contract it is contemplated that the purchaser should derive a benefit from the further growth of the thing sold from further vegetation and from the nutriment to be afforded by the land, the contract is to be considered as for an interest in land; but where the process of vegetation is over, or the parties agree that the thing sold shall be immediately withdrawn from the land, the land is to be considered as a mere warehouse of the thing sold, and the contract is for goods.
His Honour referred to cases where the principle cited in Marshall v Green had been adopted by the High Court, including McCauley v Federal Commissioner of Taxation (1944) 69 CLR 235 and Australian Softwood Forests Pty Ltd & Ors v Attorney General (NSW) Ex Rel. Corporate Affairs Commission (1981) 148 CLR 121.
In that case Talbot J held, on the basis of Marshall v Green, that the claimant intended to derive benefit from the future growth of the palms in question. They had been planted in the ground for that purpose, there was no present intention to sever them, and they were accordingly fixtures.
Thus the authority for the change in the legal nature of the palms after digging is clear. However, the financial basis of the arrangement as between Mr Onans and Cottage Bluff is not clear to me. In the absence of any other evidence, and in particular of any formal agreement for the sale of the business from Mr Onans to Cottage Bluff, and given the ambiguity of the brief evidence of Mr Onans on the point, I can do no more than accept that, as seemed to be accepted by counsel, the palms belonged to Mr Onans as long as they were in the ground, but after digging belonged to Cottage Bluff.
In this context, I note that amounts are shown as “purchases” in the financial statements of Cottage Bluff for the three financial years preceding that in which the date of acquisition occurs. However, whether they were purchases from Mr Onans of palms as they were dug, or purchases from outside suppliers, which would clearly belong to Cottage Bluff, or purchases of items other than palms, is not apparent. There is no evidence of any relevant financial transaction between Mr Onans and Cottage Bluff. I propose to deal with this matter as best I can on the evidence before me, that is, on the basis that all of the plantation palms were, immediately before the acquisition date, the property of Mr Onans, and not stock of the business owned by Cottage Bluff.
The situation is complicated by the evidence of Mr Onans, and of photographs included in valuations, showing that there were some palms on the subject land at the acquisition date which had already been dug up and bagged. There is no indication of the number of bagged palms, save that one photograph shows a total of seven. It is not in issue that on reaching maturity palms are dug and held in bags for twelve months before sale to stabilise the root system. None of the valuations refers to bagged palms separately and I must assume that the bagged palms are not included in the 624 palms which were valued as plantation palms, and that having been dug, they are the property of Cottage Bluff.
Mr Lewis did not value the plantation palms. Mr Sheehy valued them on the basis of both current wholesale value and auction realisation value The remaining valuations were those of Mr St Clair and Mr Pullar for Mr Onans and Mr Wilkinson and Mr Davis for Roads Corporation (as to all of whom see paragraphs 39 and 40 above). The valuations of Mr St Clair, Mr Pullar and Mr Wilkinson all proceeded on the basis of calculation of a claim for loss of future profits.
Mr St Clair described as follows the manner in which he valued the plantation palms:
The added value of the [624] palms in the ground on the property, has been estimated based upon the retail value at maturity, allowing for the time taken to grow the plants to their mature state, remove the plants from the ground, bag the roots and stabilise the plant over a 12 month period. We have used a present value calculation to establish the value of those plants at the relevant date by applying a discount rate of 9% pa to the estimated retail price. The estimated price is based upon information supplied by specialist nurseries.
We have deducted an allowance of $50/plant pa for the period required for the plant to mature, discounted to a present day value at a rate of 9% pa to arrive at the added value of the plantation stock.
In some cases it has eventuated that some of the plantation stock being some time from maturity, having regard to the cost of production, is in some instances greater than the present day value of the mature plant, resulting in a nil valuation for that stock.
On that basis, he found the total value of the plantation palms to be $77,022.
Mr Pullar is not a professional valuer. He estimated the annual cost of production at $6.45 per plant with additional direct cost in their final year of $40. He valued the palms on the basis of retail value at maturity, given that price increases were unlikely. Current prices were discounted at 9% per annum and production costs also discounted at 9% per annum. He found the total value of the plantation palms to be $165,879. The difference between his figure and that of Mr St Clair was attributable to the significant difference in their allowance for production costs.
Mr Wilkinson considered that a discount rate of 9% seemed appropriate to determine the present value of future production costs. However, such a rate failed to recognise the risk involved in any agricultural pursuit. An average discount rate should be 10% to 50%, depending on the years to maturity. Given the maturity of the existing stock, an average rate of at least 20% was appropriate. Further, in his view Mr Pullar adopted a highly optimistic sale price at maturity, and made no allowance for labour, capital and equipment costs for maintenance of the palms during their life on the land.
Mr Wilkinson’s estimate of the present value of the plantation palms, used “the values selected by Mr St Clair”, and provided for a discount rate of 20% for the value of the plants and 9% for the production costs. This calculation produced the result that the only palms with a net present value greater than nil were the three Cocos Palms which would reach maturity in one year from the acquisition date and which had a total net present value of $987.39.
Mr Davis said that the current prices on which Mr Sheehy and Mr St Clair based their calculations were fairly accurate as to the current market value of palms in Victoria. He said that in general one can obtain unlimited numbers of 3-8 metre trunk height Cocos Palms for the cost of harvesting them; that is digging out and collecting them. The price otherwise would be $50 each for 3-4 metre trunk height, and $135-150 each wholesale for 7-8 metre trunk height. However, he said that he did not grow Cocos palms because there was no money in them. Containerised Cocos Palms of 2-2.5 metre trunk height are available from Queensland and New South Wales at $12-$15 each. Date Palms he would currently purchase at the rate of $800 per metre. Cotton Palms vary from $150 per metre for a 3-4 metre trunk to $250 per metre for a 7-8 metre trunk.
Mr Davis also commented:
I am unsure as to how one can assess the future value of palms for a period of 6-11 years. For example, 20 years ago in Queensland and in northern New South Wales, Cocos Palms with 6 metre high trunks were selling for $400-$500 each. Today the same palms have no value except for the cost of harvesting them. There are other types of palms that have also fallen dramatically in value due mainly to the prices paid for palms during the boom of resort developments in the 1980s.
Mr Sheehy said in his affidavit that the wholesale values given reflected advice which he obtained from two businesses specialising in the sale of palm trees. He also noted that his valuation was carried out on the basis that the trees would have been taken out of the ground and prepared for collection by the hypothetical purchaser, and that in relation to the larger trees, there would be significant work involved in that process. In his report he said that he had endeavoured to establish an independent current wholesale replacement value of plants of a similar size, on the basis that the size of a given species usually equates to the current value. He noted that this approach did not factor any costs of labour associated with replanting. He pointed out that “it is axiomatic that as plants grow or perish, values will fluctuate”.
Mr Sheehy classified the plantation palms on a different basis from the other valuers, including the landscape palms and plantation palms in the one list. However, it is possible, with reasonable certainty, to identify 603 palms described by him as among the 624 palms described in the other valuations. He assessed the current wholesale value of those 603 plantation palms, on the basis set out in the preceding paragraph, at $36,800 and the auction realisation value at $4,200. Mr Sheehy was cross-examined extensively and Mr Townshend, who had called him, did not seek to adopt his valuation.
There is a question as to whether any person was entitled, immediately before the acquisition date, to claim compensation under the Act in respect of the plantation palms. At the date of acquisition the palms were in the ground, and as I have found, were fixtures and belonged to Mr Onans. Any realisation of value, however, depended on their being acquired, in the manner discussed in paragraphs 66-70 above, by Cottage Bluff, which is not entitled to claim compensation. It would, of course, be possible to assume, for these purposes, although there is no evidence to that effect, that any sale of a palm by Cottage Bluff presupposes a sale by Mr Onans to Cottage Bluff, and accordingly that Mr Onans could be assumed to be able to realise the future value of the palms in due course. However, there are a number of imponderables in such an assumption.
A more satisfactory approach, in my view, is based on the decision of Talbot J in David Richardson. His Honour found that the palms there in question had a special value for the claimant whose land was acquired. In that case the special value was increased by the claimant’s being, as well as the operator of a palm nursery, a collector of palms in his personal capacity. That is not the case with Mr Onans. However, I find that the palms have a special value for Mr Onans, in terms of the definition in section 40 of the Act, given that he had previously conducted the business later operated by Cottage Bluff, and thus has knowledge and experience of palms. I now turn to determine the amount of that special value.
The only one of the valuers with knowledge of the business of buying, growing and selling palms is Mr Davis. His evidence as to the difficulty of predicting palm values in the future is consistent with the expressed view of Mr Wilkinson on the subject of the appropriate discount rate. That being so, I would, if concerned to assess the value of the plantation palms on the basis of loss of future profits, prefer the assessment of Mr Wilkinson, that is $987.39.
However, it seems to me to be more in accord with the evidence to assess the special value of the palms to Mr Onans on a basis other than loss of future profits, given that Mr Onans is not operating the business. The only detailed evidence before me which is calculated on any other basis is that of Mr Sheehy. While that evidence was not entirely satisfactory as the subject of cross-examination, largely because Mr Sheehy appeared to have lost his notes, it does give a basis for an assessment of the value of the plantation palms outside the commercial context. As I have said in paragraph 77 above, Mr Davis found the prices on which Mr Sheehy based his values to be fairly accurate as to the current market value of palms in Victoria.
Taking Mr Sheehy’s wholesale value of $36,800 for 603 palms as at the date of acquisition, there can be derived an average price of a little over $60 per palm. If an average of $60 per palm is extrapolated to the 624 palms, and an allowance is made of $40 per palm, in accordance with the evidence in paragraph 53 above, for the cost of taking them out of the ground and preparing them for collection, then the 624 plantation palms are valued at $20 each, giving a total value of $12,480.
Conclusion
For the reasons given, I find that the rights of the respective claimants to compensation in respect of the acquisition are:
Mr Onans $188,563.28
Cottage Bluff Nil
As Mr Onans has already received the sum of $251,080 by way of advance compensation, I consider it appropriate that the matter be adjourned to enable counsel to make submissions as to the orders to be made as a result of these findings and as to costs.
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