Secretary to the Department of Economic Development, Jobs, Transport & Resources v Avid Property Group Nominees Pty Ltd (Formerly CRG Nominees Pty Ltd)
[2017] VSCA 136
•14 June 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0091
| SECRETARY TO THE DEPARTMENT OF ECONOMIC DEVELOPMENT, JOBS, TRANSPORT & RESOURCES | Applicant |
| v | |
| AVID PROPERTY GROUP NOMINEES PTY LTD (FORMERLY CRG NOMINEES PTY LTD) | Respondent |
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| JUDGES: | OSBORN and McLEISH JJA and CAMERON AJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 15 March 2017 |
| DATE OF JUDGMENT: | 14 June 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 136 |
| JUDGMENT APPEALED FROM: | [2015] VSC 301 (Emerton J) |
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VALUATION AND COMPULSORY ACQUISITION — Appeal — Application for leave to appeal from decision of trial judge on appeal on questions of law from Victorian Civil and Administrative Tribunal — Compensation for compulsory acquisition of land — Partial acquisition — Claim for loss of market value — Whether claim was in substance a claim for injurious affection — Whether ‘before and after’ assessment of market value made in accordance with s 41(3) of Land Acquisition and Compensation Act 1986 — Chief Executive, Department of Transport and Main Roads v Cidneo Pty Ltd (2015) 207 LGERA 448 distinguished — Whether events subsequent to date of acquisition relevant to assessment of market value under s 41(3) — Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547 considered; Brisbane City Council v Mio Art Pty Ltd [2012] 2 Qd R 1 approved — Whether cap on solatium in s 44 assessed under s 41(3) or s 41(1)(a) of the Land Acquisition and Compensation Act 1986 — Application for leave to appeal allowed— Appeal dismissed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr S R Morris QC with Mr P E O’Farrell | Herbert Smith Freehills |
| For the Respondent | Mr J Delany QC with Mr P F Chiappi | Maddocks |
OSBORN JA:
McLEISH JA:
CAMERON AJA:
The dispute underlying this application for leave to appeal arises out of the Regional Rail Link No 2 Project (‘the RRL project’) which seeks to provide dedicated rail tracks for passenger trains travelling south-west from Southern Cross Station into regional Victoria.
On 3 April 2012, the Secretary to the Department of Economic Development, Jobs, Transport and Resources (‘the Authority’) compulsorily acquired two irregularly shaped triangular slivers of land from the respondent, Avid Property Group Nominees Pty Ltd (‘APG’), in order to facilitate works at Wyndham Vale. The acquired land was taken to facilitate the excavation of the local section of the new rail track, creation of a new bridge where the rail track passes under Ballan Road and the upgrading of the intersection of Hobbs and Ballan Roads adjacent to the bridge.
The acquired land formed part of a holding of approximately 85 hectares located east of Hobbs Road comprising two lots from which a further house lot was excised (‘the APG land’). The juxtaposition of the two lots with the land to the west reserved for rail purposes is shown on the plan below. The plan is oriented to the north and we shall refer to the lot marked 40 as ‘the northern lot’ and to the lot marked 16 as ‘the southern lot’. The rail reserve runs roughly north-south and splays out to the north as it does so.
Because the acquired land formed part of a larger holding in which APG held an interest, its market value was assessed in accordance with s 41(3) of the Land Acquisition and Compensation Act 1986 (‘the LAC Act’) which provides:
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.
The RRL project involved not only the construction of new rail tracks, station facilities and roadworks, but also the acquisition of land which could accommodate future stabling yards for electric trains.
The APG land is close to the new Wyndham Vale railway station and located in an area that is being extensively developed for residential purposes. The RRL project thus has the capacity, on the one hand, to benefit the land by the provision of convenient rail transport facilities for future residents, but on the other hand, to adversely affect its amenity by reason of its proximity to new railway and stabling yard operations.
Part of the land acquired for the future stabling yards lies opposite the APG land to the west. It is the wedge-shaped area which is shown as splaying to the north on the plan above.
Dispute arose as to how the effects of the implementation of the RRL project should be taken into account in assessing compensation to APG for the acquisition of the APG land.
That dispute was referred to the Victorian Civil and Administrative Tribunal (‘the Tribunal’). The evidence before the Tribunal showed that the stabling yards will only be developed for use when the electrified metropolitan train service is extended to Wyndham Vale from Werribee. The date when this would occur had not been determined.
Both APG and the Authority called expert land valuation evidence which sought to address the impact of the RRL project (including both the railway line works and the future stabling yards) upon the ‘after’ value of the APG land. Each party also called expert evidence from acoustic engineers in relation to possible noise impacts from the stabling yards on the APG land.
Both the valuer called by the Authority (Mr Willison) and the valuer called by APG (Mr Brown) agreed that in the ‘after’ scenario part of the APG land would be adversely impacted due to the railway line and/or the future stabling yards. But they disagreed as to the nature and extent of that impact.
Mr Willison allowed a 15 per cent diminution in value across 16 hectares of the APG land due to the influence of the railway line, but disregarded the influence of the stabling yards on the value of the property entirely as he considered the proposed date of construction to be too remote to affect market value. The 16 hectares was constituted by a 200 metre strip of land set back from Hobbs Road extending over both the lots comprised in the APG land.
Mr Brown allowed an 18 per cent diminution in value across two 22.48 hectare segments of the subject land due to the impact of the railway line and the stabling yards. The two segments were respectively located on the western portion of each of the lots comprised in the APG land.
In assessing the ‘before’ situation, the Tribunal separately assessed the value of what it described as ‘encumbered land’ towards the north-west of the APG land (which cannot be developed because it forms part of an environmental buffer area) and ‘developable land’ comprising the balance of the APG land. The Tribunal assessed the market value of the encumbered land at $15,000 per hectare and the market value of the developable land at $450,000 per hectare.
In assessing the ‘after’ scenario, the Tribunal not only took account of the acquired land but identified an area of 22.48 hectares of ‘affected land’ in respect of which it applied a discounted rate per hectare of $369,000. This reflected a reduction of 18 per cent in the value of the affected land. In the Tribunal’s view, the reduction was necessary to reflect the adverse impact of the proposed stabling yards upon the market value of the APG land.
The 22.48 hectares constituted only the portion of the northern lot identified by Mr Brown as affected by the stabling yards proposal. The Tribunal was not satisfied that the market value of the southern lot would be affected. It concluded that the probable impact of the stabling yards upon that lot would not be any more detrimental than the impact of the noise and proximity to a major arterial road and intersection.[1]
[1]CRG Nominees Pty Ltd v Department of Economic Development, Jobs, Transport and Resources [2015] VCAT 564 [61] (‘Tribunal’s Reasons’).
The difference between the ‘before’ and ‘after’ values arrived at by the Tribunal was $1,945,000 and the Tribunal awarded this sum to APG as compensation for loss of market value.
Approximately $121,950 of that amount reflected the value of the slivers of acquired land; the remaining amount of approximately $1,820,880 was attributable to the 18 per cent discount applied to the value of affected land as a result of the perceived impact of the stabling facility.
The Tribunal also held that the relevant market value governing the cap on an award of solatium under s 44(1) of the LAC Act was market value derived under s 41(3).
The Tribunal awarded $40,000 by way of solatium to APG.
Appeal under the Victorian Civil and Administrative Tribunal Act 1998
The Authority sought leave to appeal the Tribunal’s decision to the Trial Division of the Supreme Court pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998. Such an appeal is by leave only and restricted to an appeal on questions of law. In accordance with the relevant Rules of the Supreme Court,[2] the Authority filed a proposed notice of appeal which identified the following questions of law.
[2]Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 r 4.11.
A.In assessing the market value of the land under s 41(3) of the Land Acquisition and Compensation Act 1986 (Vic) (‘the Act’) is the tribunal obliged to consider relevant facts that were known at the date of the decision, but not known at the date of acquisition?
B.In assessing the market value of the land under s 41(3) of the Act, is the tribunal obliged to consider the probability[3] of relevant facts existing?
C.In assessing the market value of the land under s 41(3) of the Act, does a tribunal err if it deals with the impact of the implementation of the purpose of the acquisition as if it were a loss attributable to severance?
D. Did the Tribunal misapply the Act in relation to solatium?[4]
[3]Emphasis in original.
[4]Proposed Notice of Appeal dated 2 June 2015.
The application for leave to appeal was heard by Emerton J together with the appeal.
On the hearing of the matter, the Authority contended first that the Tribunal misdirected itself with respect to the impact of the prospect of the future stabling yards upon the value of the APG land.
·In this regard, the Authority contended the Tribunal did not consider a concept plan for the stabling yards prepared in August 2010 (known as ‘the AECOM plan’) which had been prepared by consultants to the rail agency VicTrack. The AECOM plan showed a proposal for stabling facilities on the northern portion of the stabling yard land removed in distance from the APG land and surrounded by a protective bund which would reduce noise impact on the APG land. Ground 1 of appeal was:
In assessing the market value of the land under s 41(3) of the Act, the tribunal erred in law by failing to consider relevant facts that were known at the date of the decision, but not known at the date of acquisition. Such facts included the likely location of future stabling yards.
·The Authority further contended that the Tribunal failed to consider the probability of future impacts upon the APG land occurring and instead opted for a worst case scenario in relation to the construction of the stabling facilities on the stabling yards land. Grounds 2 and 3 of appeal were:
In assessing the market value of the land under s 41(3) of the Act, the tribunal erred in law by failing to consider the probability[5] of facts relevant to the assessment of the said market value.
In assessing the market value of the land under s 41(3) of the Act, the tribunal erred in law by inferring a worst-case outcome, rather than a probable outcome, for the location of the stabling yards.
·Next, it was contended that the Tribunal erred in its conceptual approach to s 41(3) by approaching the matter as if the disputed loss was caused by severance. Ground 4 of appeal was:
In assessing the market value of the land under s 41(3) of the Act, the tribunal erred in law by approaching the matter as if loss was caused by severance (s 41(1)(c)), rather than by reason of the implementation of the purpose for which the land was acquired (s 41(1)(e)).
[5]Emphasis in original.
Secondly, the Authority contended that the Tribunal erred by treating the market value of the acquired land assessed in accordance with s 41(3) as the relevant cap upon solatium payable under s 44(1) of the LAC Act. Section 44(1) provides:
The amount of compensation may be increased by such amount, not exceeding 10% of the market value of the land, by way of solatium as is reasonable to compensate the claimant for intangible and non-pecuniary disadvantages resulting from the acquisition.
Ground 5 of appeal was:
In assessing solatium, the tribunal erred in law in holding that the cap on a solatium award was 10% of the amount assessed under s 41(3) of the Act, rather than 10% of the amount assessed under s 41(1)(a) of the Act.
On the last day of the hearing of the appeal the Authority sought to raise a further proposed contention concerning the identification of the land used in the before and after analysis carried out by the valuers. It was contended that the s 41(3) analysis should properly be applied only to the southern-most of the two lots comprised in the APG land being the lot which contained the two slivers which were actually acquired.
This issue had not been raised before the Tribunal and was not identified in the questions of law set out in the proposed notice of appeal.
In her decision, Emerton J first referred to the statutory framework governing the valuation in issue.
Her Honour then carefully summarised the Tribunal’s Reasons including its findings of fact.
As her Honour recorded, the Authority argued proposed grounds 1 to 4 together.[6] The central premise of the argument relating to these grounds was that the main part of APG’s claim was in substance a claim for ‘injurious affection’ under s 41(1)(e) of the LAC Act.[7] Her Honour summarised the Authority’s submissions as follows:
[6]Secretary to the Department of Economic Development, Jobs, Transport and Resources v CRG Nominees Pty Ltd [2016] VSC 301 [59] (‘Appeal Reasons’).
[7]Ibid.
In substance, the Authority submits that the case before the Tribunal was conducted and decided by the Tribunal as if the relevant factors for assessment were ‘market value’ and ‘severance’, when in fact compensation for the impact of the stabling yards on the retained land fell to be considered under s 41(1)(e), namely, in terms of the depreciation in the value of the claimant’s interest in other land adjoining or severed from the acquired land by reason of the implementation of the purpose for which the land was acquired. Senior Counsel for the Authority described this form of loss as ‘injurious affection’.
The Authority submits that the method made obligatory by s 41(3) is not only designed to ascertain the market value of the acquired land, it is also designed to address loss attributable to severance and any enhancement or depreciation in the value of adjoining land by reason of the implementation of the project. Thus, despite the fact that the Tribunal made an award for market value under s 41(1)(a) and s 41(3) of the LAC Act, the amount awarded was made up of two elements: the market value of the acquired land in the amount of approximately $121,000 and the remainder for what is best described as injurious affection or depreciation in the value of the remaining land by reason of the implementation of the purpose for which the land was acquired, under s 41(1)(e). This means, in substance, that compensation of approximately $1,820,880 was awarded for the depreciation in the value of the retained land.
The Authority’s central point is, therefore, that while the use of the ‘before and after’ method prescribed by s 41(3) may capture both a loss attributable to a severance and the depreciation in the value of the retained land by reason of the implementation of the purpose for which the land was acquired, a different temporal perspective from the perspective used in the assessment of loss of market value is required in respect of the loss for which the Tribunal sought to compensate the claimant in this case.
According to the Authority, as the depreciation in the value of the retained land is a loss that occurs by reason of the implementation of the purpose for which the land was acquired, relevant matters will often take place after the date of acquisition. The Tribunal ought therefore to have taken into account all matters relevant to this issue known at a later date, that is, at the date of the Tribunal’s decision. Instead, the Tribunal saw its task as putting itself in the shoes of the hypothetical purchaser at the date of acquisition, without any knowledge of facts that occurred after that date.
The Authority submits that in limiting its inquiry in this way, the Tribunal made errors of law. In particular, it failed to consider the information contained in the AECOM plan in relation to the likely location and impact of the stabling yards, and it failed to consider the probability of events occurring in the future, including the probability of the worst case scenario for the location of the stabling yards actually ever eventuating. In awarding an amount of compensation for the depreciation in the value of the retained land, the Tribunal did not consider relevant or place any significance upon the AECOM plan, which showed that the stabling facilities were very likely to be in the northern part of the area available, rather than in the southern part, with a consequent lessening of impact on the subject land.
This, so the Authority contends, involved error.
As a further matter, the Authority says that if it is wrong about this and the Tribunal was confined to facts that existed at the date of acquisition, then all facts of this kind are relevant, and not just those facts which were publicly known.
In the alternative, the Authority submits that the Tribunal was required to consider relevant evidence at the time of its decision that related to a foresight, that is, to a matter that would have been in contemplation of the hypothetical purchaser at the date of acquisition. Evidence of future events is admissible to confirm foresight (as opposed to hindsight). Such evidence may confirm contingencies that the purchaser of land would have foreseen at the date of acquisition.[8] This was referred to in argument as the ‘Falconer principle’ after the case in which that proposition was articulated.[9]
[8]Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547.
[9]Appeal Reasons [60]–[67] (citation in original).
As Emerton J further identified, the actual error upon which the Authority focussed as giving rise to an excessive and unfair award of compensation to APG was the Tribunal’s alleged failure to take into account the AECOM plan and what it showed about how the stabling yards land might be used and the likely actual location of the stabling facilities.[10]
[10]Ibid [69].
There were two fundamental premises underlying this complaint.
First, the Authority’s contention that the claim made in respect of the impact of the stabling yards on the land retained after acquisition was in substance a claim for injurious affection under s 41(1)(e) of the LAC Act requiring consideration to be given to factors that were not known at the date of acquisition but which were known at the date of assessment of compensation.
Secondly, the factual proposition that the Tribunal was bound to have regard to and give the AECOM plan substantial weight in determining the s 41(3) valuation.
Emerton J rejected the Authority’s case at both levels.
Her Honour further refused leave to raise the proposed new ground of appeal, first, because the parties had proceeded before the Tribunal on the factual basis that ‘the whole of the land’ for the purpose of s 41(3) of the LAC Act comprised both the northern and southern lots in which APG had an interest on the date of acquisition. Secondly, the point was not identified in the proposed notice of appeal and as such, should not be entertained by the Court.
Her Honour also rejected the Authority’s contention that market value assessed in accordance with s 41(3) was not to be regarded as the relevant cap on solatium.
Leave to appeal was granted on grounds 1 to 5 but the appeal was dismissed.
Proposed Grounds of Appeal
The Authority now seeks leave to appeal the decision of Emerton J on the following grounds:
1 The judge erred in holding that:
athe tribunal, in conducting a ‘before’ and ‘after’ assessment, did not err in law by failing to consider relevant facts that were known at the date of the tribunal decision, but not known at the date of acquisition; and
bthe tribunal had conducted a ‘before’ and ‘after’ assessment that was in accordance with s 41(3) of the Act.
2 The judge erred in holding that:
athe tribunal, in assessing solatium, did not err in law in holding that the cap on a solatium award was 10% of the amount assessed under s 41(3) of the Act, rather than 10% of the amount assessed under s 41(1)(a) of the Act, as the tribunal was bound by the decision of Vickery J in Roads Corporation v Love [2010] VSC 537; and
beven if the correct position is that that the cap on a solatium award is 10% of the amount assessed under s 41(3) of the Act, the judge erred in dismissing the appeal in relation to solatium as the ‘before’ and ‘after’ assessment made by the tribunal was not in accordance with s 41(3) of the Act.[11]
[11]Application for Leave to Appeal dated 30 June 2016.
The statutory provisions governing proposed ground 1
Section 30 of the LAC Act provides:
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.
Section 41(1) further states:
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.
Market value is defined by s 40:
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;
Loss attributable to severance is also defined by s 40:
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;
It can be seen that s 41(1)(a) is expressly directed to the market value of the interest acquired ‘on the date of acquisition’. The definition of market value in turn relates to the assessment of such value ‘on a particular date’.
The definition of market value reflects the test elaborated by Isaacs J in Spencer v The Commonwealth:
To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.[12]
[12]Spencer v The Commonwealth (1907) 5 CLR 418, 441 (‘Spencer’s case’).
Spencer’s case arose under the first Federal legislation in the field of compensation for the compulsory acquisition of land, which spoke simply of ‘the value of the land taken’. The effect of the exegesis in Spencer’s case was summed up by McHugh J in Kenny & Good Pty Ltd v MGICA (1992) Ltd[13] in a passage approved in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority:[14]
Value is determined by forming an opinion as to what a willing purchaser will pay and a not unwilling vendor will receive for the property.[15] In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value. Those matters will include the predicted impact of future events as well as the experience of the past and the rates of return on other investments. As Isaacs J pointed out in Spencer v The Commonwealth:[16] ‘We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property. (Emphasis added.)’
The market for the property is, therefore, assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property.[17]
[13](1999) 199 CLR 413.
[14](2008) 233 CLR 259.
[15]Spencer v The Commonwealth (1907) 5 CLR 418.
[16]Ibid 441.
[17]Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413, 436 [49]–[50] (citations in original), quoted in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259, 276–7 [51].
In determining market value in Victoria a court must proceed in accordance with s 5A of the Valuation of Land Act 1960:
(1)Unless otherwise expressly provided where pursuant to the provisions of any Act a court board tribunal valuer or other person is required to determine the value of any land, every matter or thing which such court board tribunal valuer or person considers relevant to such determination shall be taken into account.
(2)In considering the weight to be given to the evidence of sales of other lands when determining such value, regard shall be given to the time at which such sales took place, the terms of such sales, the degree of comparability of the lands in question and any other relevant circumstances.
(3)Without limiting the generality of the foregoing provisions of this section when determining such value there shall, where it is relevant, be taken into account—
(a)the use to which such land is being put at the relevant time, the highest and best use to which the land might reasonably be expected to be put at the relevant time and to any potential use;
(b)the effect of any Act, regulation, local law, planning scheme or other such instrument which affects or may affect the use or development of such land;
(c)the shape size topography soil quality situation and aspect of the land;
(d)the situation of the land in respect to natural resources and to transport and other facilities and amenities;
(e)the extent condition and suitability of any improvements on the land; and
(f)the actual and potential capacity of the land to yield a monetary return.
Because market value is assessed at the date of acquisition, evidence of factors affecting market value that would not have been known to the hypothetical buyer or seller but become known after that date will be irrelevant. In terms of McHugh J’s elaboration of the relevant concept, such factors will not be part of ‘all currently available information that affects the property’.
In Brisbane City Council v Mio Art Pty Ltd,[18] the Queensland Court of Appeal was required to consider whether a draft structure plan known as ‘Kurilpa 2’, which was published after the date of acquisition, ought to have been taken into account when determining the market value of the acquired land. The proposal contained in the draft structure plan changed the height limits governing development on the acquired land under an existing structure plan.
[18][2012] 2 Qd R 1 (‘Mio’).
The claim was governed by s 20 of the Acquisition of Land Act 1967 (Qld) (‘ALA’):
(1)In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also —
(a) to the damage, if any, caused by any of the following —
(i)the severing of the land taken from other land of the claimant;
(ii)the exercise of any statutory powers by the constructing authority otherwise injuriously affecting the claimant’s other land mentioned in sub-paragraph (i); and
(b) the claimant’s costs attributable to disturbance.
(2)Compensation shall be assessed according to the value of the estate or interest of the claimant in the land taken on the date when it was taken.
At first instance, the Land Court constituted by its President determined the value of the land in part by reference to the perceived maximum average height of buildings which would have been approved on the site at the date of acquisition.[19] The Court held that the prudent purchaser must be assumed to know the relevant facts about the land as at the date of acquisition. The Court applied the principle articulated by Hope J in Housing Commission of New South Wales v Falconer[20] that evidence of events occurring after the date of acquisition is not generally relevant to the assessment of compensation unless it is evidence which confirms a foresight held by the prudent purchaser as at that date.
[19]Mio [2012] 2 Qd R 1, 5 [10].
[20][1981] 1 NSWLR 547, 558.
The Land Court found that it was likely that the prudent purchaser would have been informed in August 2007 that the relevant draft structure plan was under review. However, there was no evidence as to the content of any review at that time and, in particular, as to whether a proposal to raise the relevant height limit to 12 storeys was in circulation. The Court concluded that the evidence did not demonstrate that the draft structure plan was relevant to the assessment of market value.
On appeal to the Land Appeal Court, it was held that the evidence of the content of the draft plan was admissible as confirming what was foreseeable at the date of acquisition.[21]
[21]Mio [2012] 2 Qd R 1, 6 [15].
On further appeal to the Court of Appeal, Fryberg J, with whom Margaret McMurdo P and Fraser JA agreed, reviewed the decisions in Thorpe v Brisbane City Council;[22] Minister for the Army v Parbury Henty & Co Pty Ltd;[23] CMB No 1 Pty Ltd v Cairns City Council;[24] and Housing Commission of New South Wales v Falconer.[25]
[22][1966] Qd R 37.
[23](1945) 70 CLR 459.
[24][1999] 1 Qd R 1.
[25][1981] 1 NSWLR 547.
Fryberg J concluded that there was no error in excluding the draft structure plan from consideration when assessing the market value of the land taken in the circumstances found by the Land Court.
On the other hand, however, compensation for severance, injurious affection and disturbance was not explicitly required by s 20 of the ALA, to be assessed by reference to the date of acquisition. Losses arising from these matters would often arise subsequently and require to be quantified by reference to events after the acquisition of the land.
Fryberg J expressed his conclusions with respect to the relevance of subsequent events to the assessment of market value as follows:
Mio submitted that Kurilpa 2 could be taken into account in assessing market value under s 20 ‘not to prove a hindsight, but to confirm a foresight’ of the likely approval of a 12 storey development. The meaning of that catchy dictum is unclear. So is its logic. For direct proof of market value, it were an aphorism best forgotten. The lack of clarity is hardly surprising. The Spencer test postulates hypothetical parties in full possession of knowledge generally available on the date of acquisition. That knowledge includes knowledge of future possibilities, but only as possibilities, and with the weight which prudent persons would ascribe to them. It is difficult to imagine how the fact that a possibility subsequently became a reality could be directly relevant to that knowledge.
I see no inconsistency between this approach and that which enables subsequent sales to be taken into account in assessing market price. Those sales are not taken into account as matters which would be present in the minds of the hypothetical parties. They are simply evidence of an event from which an inference can be drawn about the position at an earlier (but not very much earlier) time. The implicit assumption is that nothing material has changed in the meantime or that if it has, allowance can be made for the change. Consequently they are probative of the earlier position. There will probably be other cases in which inferences about the position on the date of acquisition might logically be drawn from subsequent events. For example, suppose in circumstances similar to those in this case an acquiring authority denied that a change in building heights was under consideration at the date of acquisition. Publication of a document which would have taken six months to prepare on that topic only three months after the date of acquisition might tend to prove the falsity of the denial; it might support an inference that the topic was under consideration. But it would still be necessary to prove what would have been known by the hypothetical vendor and purchaser.
No such inference was relevant in the present case. The President held that a prudent purchaser would have been aware that Kurilpa 1 was under review, but not aware of the content of the review. The subsequent publication of Kurilpa 2 could not affect that finding.[26]
[26]Mio [2012] 2 Qd R 1, 26–7 [78]–[80] (citations omitted).
We respectfully agree with his Honour’s observations with respect to direct proof of market value by reference to evidence of events subsequent to the relevant date of assessment.
In Victoria in cases of a partial acquisition of land, the market value of the interest acquired is ascertained in accordance with s 41(3) of the LAC Act by way of a before and after assessment of the market value of the claimant’s interest in the whole of the land.[27] In other words, the Act contemplates an assessment of the difference in market value of the whole pie in which the claimant has an interest in the before and after situation and not a direct assessment of the value of the piece bitten out of it.
[27]Set out at [4] of these reasons.
This approach enables an owner to claim the market value which the acquired land possessed as part of a larger land holding prior to the acquisition. If such an approach were not adopted, then the assessment of the market value of strips or slivers of land commonly acquired for the purposes of roadways, transmission lines, gas pipelines, trunk sewers, water pipelines and other services, would often be problematic.
The strip or sliver of land acquired may have a shape and dimensions which mean that its potential highest and best use when considered in isolation is very limited. It may not be sufficient to accommodate any development whatsoever because of planning scheme restrictions or physical limitations. It may be limited in its use because the acquisition severs it from convenient access or necessary services such as water supply.
The direct assessment of value by reference to comparable sales as contemplated by s 5A(2) of the Valuation of Land Act 1960 may also be impossible simply because there is no sales evidence available relating to similar strips or slivers of land.
In addition to capturing the pre-existing market value of the acquired land from the owner’s point of view, the assessment of market value by the method required by s 41(3) captures the effect of the acquisition upon the value of the balance of the land in which the owner has an interest.
Section 41(3) thus rolls up the effects which the acquisition has upon the market value of the interest which the owner held in land as a whole prior to its partial acquisition.
In so doing it captures losses which might be separately conceptualised and treated distinctly under a different statutory scheme.
In this way, the before and after method of valuation may conveniently roll up the assessment of compensation in respect of factors which are the subject of separate provision under a particular statutory scheme.[28]
[28]Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales [2006] NSWCA 314 [10]–[11] (Spigelman CJ).
The legal premise of ground 1(a) of appeal
There are a series of fundamental difficulties with the proposition that, in cases of the partial acquisition of land, s 41(3) contemplates and requires the separate assessment of the effect of the acquisition upon the value of the balance of the land and the land actually acquired.
First, the broad concept of ‘injurious affection’ is given content only by the relevant statutory provisions. The phrase as such is not used in the LAC Act. In Lenz Nominees Pty Ltd v Commissioner of Main Roads,[29] Edelman J said of a parallel situation under Western Australian legislation:
The term ‘injurious affection’ is not used in the Land Administration Act. The origin of this term is the Land Clauses Consolidation Act 1845 (UK) which used the term in relation to physical injury or disturbance of enjoyment caused by the construction of works on resumed land.[30]
The label ‘injurious affection’ has also been described as ‘a neat, expressive way of describing the adverse effect of the activities of a resuming authority upon a dispossessed owner’s land’.[31]
Although it is convenient to use this label, it should be used only as a shorthand description for the reference to ‘the reduction in value of that adjoining land’. The governing principle is the words of the statute.[32]
[29](2012) 186 LGERA 58, 100–1 [302]–[304] (citations in original).
[30]Kettering Pty Ltd v Noosa Shire Council (2004) 78 ALJR 1022; 134 LGERA 99 [24] (McHugh, Gummow, Hayne, Callinan & Heydon JJ) citing Bingham v Cumberland County Council (1954) 20 LGR (NSW) 1, 8 (Sugerman J).
[31]Marshall v Director-General, Department of Transport (2001) 205 CLR 603; 114 LGERA 389 [22] (Gleeson CJ, Gummow, Kirby & Callinan JJ).
[32]Boland v Yates Property Corporation Pty Ltd [174] (Hayne J); Leichhardt Council v Roads & Traffic Authority (NSW) (2006) 149 LGERA 439 [35] (Spigelman CJ).
In Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority, the High Court addressed the use of general concepts derived from the interpretation of different statutes which have themselves been amended and supplemented from time to time:[33]
The caution required in construing modern Australian legislation by reference to ‘principles’ derived in this way is indicated by McHugh J in Marshall v Director-General, Department of Transport.[34] That case concerned the expression ‘injuriously affecting’ as it appeared in s 20 of the Acquisition of Land Act 1967 (Qld); ss 49 and 63 of the 1845 Act had used the same phrase as had the subsequent legislation in various jurisdictions. Differing interpretations had been given to the expression in question. McHugh J noted the similarity in the terms of the legislation and went on:[35]
But that does not mean that the courts of Queensland, when construing the legislation of that State, should slavishly follow judicial decisions of the courts of another jurisdiction in respect of similar or even identical legislation. The duty of courts, when construing legislation, is to give effect to the purpose of the legislation. The primary guide to understanding that purpose is the natural and ordinary meaning of the words of the legislation. Judicial decisions on similar or identical legislation in other jurisdictions are guides to, but cannot control, the meaning of legislation in the court’s jurisdiction. Judicial decisions are not substitutes for the text of legislation although, by reason of the doctrine of precedent and the hierarchical nature of our court system, particular courts may be bound to apply the decision of a particular court as to the meaning of legislation.
[33](2008) 233 CLR 259, 270 [31] (citations in original).
[34](2001) 205 CLR 603, 632–3 [62].
[35](2001) 205 CLR 603, 632–3 [62].
Secondly, s 41(3) provides that there will be a ‘rolled up’ assessment of market value.[36] It does not provide for an assessment of the impact of the acquisition upon the value of different parts of a claimant’s land on different bases.
[36]Appeal Reasons [91].
Thirdly, the ‘rolled up’ assessment determines what the LAC Act defines as the market value of the acquired land. As Emerton J found:
Contrary to the Authority’s submissions, the Tribunal did not make a finding as to ‘market value of the interest that was acquired’ and (separately) a finding of loss attributable to severance (or injurious affection). It assessed the market value of the acquired interest on the date of acquisition using the ‘before and after’ method mandated by s 41(3) of the LAC Act. That assessment included in a rolled up way any loss suffered as at the date of acquisition due to impacts on the retained land.[37]
[37]Ibid [93].
Fourthly, s 41(1)(e) governs both enhancement and injurious affection specifically ‘at the date of acquisition’. In this regard, it is critically different from the provisions of s 20 of the ALA.
The Authority placed significant reliance upon the decision of the Queensland Court of Appeal in Chief Executive, Department of Transport and Main Roads v Cidneo Pty Ltd.[38] In that case the question arose whether a development contribution agreement entered into after a compulsory acquisition could be taken into account in assessing compensation for the consequences of the acquisition.
[38](2015) 207 LGERA 448.
Fraser JA, with whom Carmody CJ agreed, emphasised that the development contribution was relied upon not in respect of a claim for loss of market value of the acquired land but for injurious affection with respect to the value of the balance of land retained by the owner after the acquisition.
The language of s 20(1) of ALA makes it clear that injurious affection is a form of damage that adversely affects the retained land (the ‘other land’ in the terms of s 20(1)). The Land Appeal Court has described severance damage ‘as a specialised form of injurious affection to the retained land’ and as the ‘depreciation in the value of the retained land resulting from its division into two or more parts, or its reduction in area and consequent loss of value for some current or higher [potential use]’.[39] It is therefore not difficult to accept Cidneo’s submission that the requirement for a transport infrastructure contribution should be considered when assessing the market value of the retained land under the Spencer test as one of the ‘ordinary business considerations’[40] affecting the price a prudent purchaser would be prepared to pay for that land. However, the value of the retained land is not a head of compensation in s 20 and, as I have already mentioned, Cidneo’s claim for compensation did not include any contention that the contribution requirement affected the value of the resumed land, which is a head of compensation in that provision.[41]
[39]Gold Coast City Council v Suntown (1979) 6 QLCR 196, 207. It is not necessary to consider whether that statement comprehends all permissible claims for severance damage.
[40]Spencer v The Commonwealth (1906) 5 CLR 418, 441 (Isaacs J).
[41]Chief Executive, Department of Transport and Main Roads v Cidneo Pty Ltd (2015) 207 LGERA 448, 458–9 [37] (citations in original) (‘Cidneo’).
It can be seen immediately that the ALA adopts a fundamentally different approach to s 41(3) of the LAC Act.
Further, s 20(2) of the ALA did not require assessment of injurious affection as at the date of acquisition. Hence, in the different statutory context of the ALA there was no restriction upon reference to post-resumption events in assessing compensation under the head of injurious affection:
Because Cidneo did not claim that the contribution bore upon the value of ‘the land taken’ s 20(2) would not apply, so that there would be no restriction upon reference to post-resumption events in assessing compensation. It follows that if the contribution requirement was compensable, on Cidneo’s claim the amount of compensation could be assessed taking into account the contribution which was actually required for the development of the retained land ($1,087,110.76) rather than an estimate of the likely contribution which would have been taken into account by parties to a hypothetical sale of the retained land on the resumption date.[42]
[42]Ibid 459 [38].
Conversely, s 41(1)(e) of the LAC Act expressly provides for the assessment of compensation of the kind in issue in Cidneo as at the date of acquisition.
Under the Victorian statute, it is the concepts of loss attributable to severance and loss attributable to disturbance as they are defined in s 40 of the LAC Act which potentially capture losses arising from factors arising subsequent to the acquisition.
It must also be recognised that the Queensland legislation did not prescribe the use of a before and after method of valuation relating to the whole of land held by a claimant prior to a partial acquisition. The choice of valuation method was governed by the need to assess the claim fairly in accordance with s 20.[43] Conversely, the before and after method was required to be used under the LAC Act for the assessment of market value in the present case.
[43]Cidneo (2015) 207 LGERA 448, 460–1 [42] (Fraser JA), 465 [60] (Dalton J).
In Cidneo, the before and after method fell to be applied to a claim for compensation in respect of injurious affection or severance damage only.
It should be noted that the argument was not that the requirement for the contribution bore upon the market value of the resumed land. Indeed, the argument appears to have assumed that the contribution requirement in this case amounted to injurious affection or severance damage to the retained land. No case was cited in which expert witnesses’ endorsement of any particular method of assessing compensation was held to preclude consideration of subsequent events in assessing compensation for a loss that was claimed to be compensable only as injurious affection or severance damage. The choice of the appropriate assessment method in any particular case must be driven by the requirement to make a fair assessment of the allowable heads of compensation in accordance with s 20 of the ALA. It was not contentious in this application that the before and after method is apt to include in the assessment both the value of the resumed land and other losses, including injurious affection and severance damage, but those various heads of compensation remain conceptually distinct. It is conventional for injurious affection and severance damage to be assessed with reference to events occurring after resumption. As soon as the relevant event occurred in this case (the agreement upon the required transport infrastructure contribution) DTMR contended that it should be used in the assessment of compensation. The evidence did not suggest that there was any substantial practical difficulty in taking the actual amount of the required contribution into account in the assessment of compensation, as s 20 allowed. Upon Mr Brett’s evidence, doing so in this case would affect the amount of compensation significantly and a failure to do so would result in an unmerited windfall to Cidneo. In those circumstances, a compensation method that did not take into account the actual amount would not fairly assess the compensation and should not have been used.[44]
[44]Ibid 460–1 [42] (Fraser JA) (emphasis in original). See also 471 [85] (Dalton J).
In summary, reference could be made to events subsequent to the acquisition because the Queensland legislation did not require claims for injurious affection to be assessed at a particular date. The scheme was thus fundamentally different from s 41(1)(e) of the LAC Act. In turn, the decision in Cidneo does not assist the Authority.
The legal premise of proposed ground 1(a) thus fails.
The factual premise of proposed ground 1(a) of appeal
Proposed ground 1(a) also turns on the proposition that the Tribunal erred in failing to consider relevant facts concerning the probable development and use of the future stabling yards constituted by matters that were known at the date of the Tribunal decision but not known at the date of acquisition. This is the factual assumption underlying the s 41(1)(e) argument. Moreover, even if the s 41(1)(e) argument is rejected the Authority contends that the Tribunal failed to have regard to evidence which was relevant to the assessment of market value pursuant to the principle attributed to Falconer’s case.[45]
[45]Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547.
As Emerton J held, there are fundamental problems with the factual premise of this submission.
First, the Tribunal did consider the evidence in the course of its decision and determined to give it little weight in circumstances where it was open to do so.
Secondly, the Tribunal’s ultimate findings concerning the effect of the stabling yards proposal upon the market value of the APG land did not turn upon findings as to the probable form and use of the stabling yard facilities, but upon Mr Brown’s valuation evidence that the general perception of the proposed future use of the stabling yards as having an industrial character would affect the value of the APG land at the date of acquisition.
Insofar as the first matter is concerned, the Authority submitted both to the Tribunal and to Emerton J that the AECOM plan fell to be considered in the following context:
The Authority submits that there were a number of contingencies that the hypothetical purchaser of the subject land would have foreseen at the date of acquisition. It was known that land opposite had been acquired for stabling yards. What would have been in contemplation was how the stabling facilities would be configured on the stabling yards land. There were certain facts that existed at the date of acquisition that made it likely that the stabling facilities would be located in the northern part of the stabling yards land. The first of these was topography. The topography of the land was such that it would be difficult to access the stabling yards from the south, because the railway line is in cut at that point. The topography levels off to the north, and it is logical that the flatter land to the north would be used for the stabling facilities. A second factor in existence at the date of acquisition was the illogicality of stabling trains on the southern part of the stabling yards land, because of the extra distance that they would need to travel to get there. The third matter was that for safety reasons, the turnout from the rail track to the stabling facilities had to be on a straight line, rather than on a curve, and that would also need to be to the north of the stabling yards land.[46]
[46]Appeal Reasons [96].
In turn, it was submitted the AECOM plan showed that these factors would be accommodated in the design of the stabling yards. Even though the AECOM plan was not publically available at the date of the acquisition, it was submitted that it represented a sensible and practical indication of the likely development and activity within the stabling yard.
The Tribunal was not bound by the rules of evidence.[47] It considered the relevance and probative weight of the AECOM plan in the context of submissions made on behalf of the Authority by reference to Falconer’s case.[48] The AECOM plan was submitted to be relevant to the foresight that the hypothetical purchaser would have had at the date of acquisition.
[47]Victorian Civil and Administrative Tribunal 1998 Act s 98(1).
[48]Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547.
The Tribunal concluded:
At pages 9-15 of his Closing Submissions, Mr O’Farrell relied on certain case law/legal principles in arguing that the Tribunal should give weight to the August 2010 AECOM plans, which show the actual stabling yard activity occurring simply in the northern area of the whole wedge-shaped land. Dr Burgemeister’s acoustic evidence had regard to these considerations. This is despite the fact that Mr O’Farrell conceded these AECOM plans were not publicly available as at the Date of Acquisition. Even allowing for these legal principles/cases, we see no reasonable basis for the Tribunal to give any significant weight to the AECOM plans, when they were not publicly known at the relevant date. We also observe that:
•Dr Burgemeister is an acoustic expert but not one in the operation of train stabling yards.
•During his cross-examination by Mr Chiappi, Mr Willison conceded per se the difficulty of giving any particular weight to the AECOM plan when it was not publicly available as at the relevant date.[49]
[49]Tribunal’s Reasons [58] (emphasis in original).
The last dot point is a reference to the following exchange in the course of the opinion evidence given by the valuer called by the Authority.
COUNSEL: The tribunal should proceed in this matter shouldn’t it Mr Willison [on the basis] that this AECOM plan was not available to the hypothetical purchaser at the relevant date?---That’s correct.
And there is no reason to think that the hypothetical purchaser would have understood that the configuration of the stabling yards would be in this layout as distinct from any other layout at the relevant date?---My evaluation considerations, that’s correct.
In our view, it is simply not arguable that the Tribunal failed to consider the AECOM plan and this is sufficient to dispose of proposed ground of appeal 1(a) in the terms in which it is formulated.
Further, we agree with the following statement of Emerton J that it was open to the Tribunal to give the AECOM plan little if any weight.
The Tribunal concluded that there was no ‘reliable’ or ‘credible’ evidence excluding the possibility of the southern section of the stabling yards land being actively used for train movement and storage. This was a question of fact and it was open to the Tribunal to so find. The AECOM plan was a draft plan of unknown and unproven status. It was not a document about which any witness gave evidence. There was no evidence at all as to the authorship, origins or purpose of the plan, or that it was ever adopted by anyone or even proposed to be adopted by anyone, whether prior to or after the relevant date. There was no evidence as to what design, planning or other assumptions guided or informed the preparation of the AECOM plan or even as to when or how the Authority or the legal representatives of the Secretary came to have the AECOM plan.
Given the dearth of information and the uncertainty surrounding the genesis and status of the AECOM plan, it was unsurprising that the Tribunal gave it little, if any, weight.[50]
[50]Appeal Reasons [104]–[105].
To this may be added the fact that the basis on which the AECOM plan was put to the Tribunal as relevant was the principle attributed to Falconer’s case.[51] For the reasons succinctly stated by Fryberg J in Mio,[52] we do not see how a document of this kind published after acquisition could constitute a factor relevant to market value at the date of acquisition. In other words, the document was not relevant to the purpose for which it was put in evidence.
[51]Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547.
[52][2012] 2 Qd R 1, 26–7 [78]–[80].
Moreover, the basis on which the Tribunal ultimately assessed the likely impact of the RRL project upon the value of the APG land was not (as the Authority contended it should be) a detailed analysis of the probabilities as to the ultimate form and use of the stabling yards. The Tribunal accepted the proper approach was that articulated by APG’s valuer, Mr Brown, and that the critical factor would be the market perception of the general nature of the potential use of the stabling yards land as industrial in character.
The Tribunal’s summary of overall findings in relation to loss of market value was as follows:
The Authority’s case at its highest is that:
•there is a development time frame for the stabling yards of no less than 20 years;
•it is reasonable to assume that only the northern section of the stabling yards will be actively used for train storage and movement; and
•noise mitigation measures can be implemented to meet relevant acoustic standards
such that the hypothetical purchaser at the relevant date would conclude (despite the probable aggressive sales-tactics of sales agents from competing nearby residential estates) that the possibility of the future development of the adjacent train stabling yards would not have any adverse market impact on the value of the subject land in the ‘after’ scenario for residential development.
The Tribunal does not consider this scenario likely or reasonable. Rather, the Tribunal agrees with Mr Brown’s basic premise, as follows. This premise is that in the ‘before’ scenario, the subject property has a residential neighbour on the western side of Hobbs Road, whereas in the ‘after’ scenario, the neighbour is an industrial neighbour. Whilst there may well be mitigation measures that are and will be provided, it’s still an industrial neighbour.
Beyond:
• speculation across the bar table; or
•‘guesstimates’ by the Authority’s experts about the timing of the stabling yards being developed and ‘the typical day-to-day operation of train stabling yards’, that in each case extend beyond their core area of expert expertise (and hence carry minimal weight for obvious reasons)
the Authority provided no credible evidence excluding the possibility of the southern section of the stabling yards area being actively used for train movement and storage.
In our view it is reasonable to conclude that, as at the relevant date, a hypothetical purchaser (for the purposes of the LACA assessment) would consider the designation of the wedge-shaped land adjacent to Hobbs Road as a future train stabling yard to constitute a significant compromised aspect of any future use of the subject land as a residential estate. This conclusion is reinforced by the following two points:
•Mr Burgemeister’s oral evidence included his concession in cross-examination that it was not unreasonable for the hypothetical purchaser at the relevant date to consider the possibility of the entire wedge-shaped area designated as stabling yards (inclusive of the southern portion) being used for that purpose.
•Mr Willison’s oral evidence under cross-examination included the express concession that should the development of the stabling yards be in the short-medium term, as opposed to an assumed timeframe of 20-30 years, his assessment would need to be re-visited.[53]
[53]Tribunal’s Reasons [66]–[69] (emphasis in original).
In turn, we agree with Emerton J that it follows that whatever status be accorded to the AECOM plan, it could not sensibly be said to vitiate the reasoning which supported the Tribunal’s decision.[54] The AECOM plan simply did not rebut the basis of Mr Brown’s opinion.
[54]Appeal Reasons [111].
Proposed ground 1(a) of appeal raises novel arguments. We would grant leave to appeal with respect to it but we would dismiss the appeal. Both the legal and factual premises upon which it was propounded are fundamentally flawed.
Ground 1(b) of appeal
The Authority submits in the alternative that the Tribunal did not apply s 41(3) of the LAC Act properly because only part of the land treated as being held by APG at the date of the acquisition should have been treated as the ‘whole of the land in which a claimant’s interest subsists’ for the purposes of s 41(3). As Emerton J recorded, the acquired land formed part of a larger parcel comprised in lots 2 and 3 of plan of subdivision 125673 (referred to by the Tribunal as the ‘subject land’). Lots 2 and 3 are contiguous, running generally in an easterly direction from Hobbs Road in the case of lot 2 and from the intersection of Hobbs and Ballan Roads in the case of lot 3.[55]
[55]Ibid [7].
The two lots belonged originally to the Grima family. Lot 3 was sold to APG by contract dated 7 September 2007. Lot 2 was subject to a ‘put and call’ agreement also dated 7 September 2007. The sales of lots 2 and 3 to APG were settled on 7 September 2012. A small parcel of land was carved out from lots 2 and 3 fronting Hobbs Road, to enable members of the Grima family to continue living in the family home.
Late in the hearing before Emerton J, the Authority submitted that only lot 3 should have been treated as the ‘whole of the land in which a claimant’s interest subsists’ for the purposes of s 41(3).
Her Honour held first that the point raised was a new ground of appeal. In this she was correct. None of the grounds contained in the draft notice of appeal before the Court took the point. Moreover, the questions of law stated in the notice did not embrace the point. The questions of law relevantly defined the scope of the proposed appeal.[56]
[56]Fraser v Sperling [2017] VSCA 53 [55] (Maxwell P, Santamaria and McLeish JJA).
For completeness, we note that the written submissions filed in support of the application for leave also failed to take the point.
Emerton J further found that what was ‘the whole of the land’ was a question of fact upon which the parties agreed before the Tribunal.
Once again, her Honour was correct. Both parties presented their cases to the Tribunal on the basis that the northern and southern lots together comprised ‘the whole of the land’ in which APG held an interest on the date of acquisition. In turn, the Tribunal proceeded on this agreed factual basis.
As the Tribunal’s Reasons indicate, the Authority’s final submission usefully identified the issues which were in dispute before it.[57] No issue was raised as to the extent of the land which was to be the subject of the s 41(3) valuation. The valuation dispute proceeded on the basis that the relevant land comprised both lots.
[57]Respondent’s closing submissions cited in Tribunal’s Reasons [38].
In turn, the Tribunal dealt with the issues identified, namely:
·the legitimacy of Mr Brown’s approach of focussing on the valuation impacts on what the Tribunal called ‘the front half’ of the subject land;[58]
·what was the appropriate englobo rate for the purposes of market assessment?[59]
·how much of the subject land would incur ‘severance’ impacts due to the railway line/future stabling yards and how should that impact be quantified?[60]
·conclusions as to loss of market value;[61]
·the appropriate award of solatium;[62]
·the claim for pre-referral s 41(1)(f) professional expenses.[63]
[58]Tribunal’s Reasons [41]–[44].
[59]Ibid [45]–[47].
[60]Ibid [48]–[65].
[61]Ibid [66]–[70].
[62]Ibid [71]–[94].
[63]Ibid [95]–[105].
The Tribunal was enjoined by the Victorian Civil and Administrative Tribunal Act 1998 pursuant to s 98(1)(d) that it:
must conduct each proceeding with as little formality and technicality, and determine each proceeding with as much speed, as the requirements of this Act and the enabling enactment and the proper consideration on the matters before it permit.
There was no error of law in determining only the issues raised by the parties before it. In Boland v Yates Property Corporation Pty Ltd, Callinan J stated the relevant principle as follows:[64]
It is not for a court to invent, or find, issues which the parties have not invited it to decide or which it is unnecessary for a court to decide. What Barwick CJ said in Ratten v The Queen[65] in the context of a criminal trial is no less true of a civil trial:
Each [of the protagonists] is free to decide the ground on which it or he will contest the issue, the evidence which it or he will call, and what questions whether in-chief or in cross-examination shall be asked.
[64](1999) 74 ALJR 209, 280 [359] (citation in original).
[65](1974) 131 CLR 510, 517. See also Whitehorn v The Queen (1983) 152 CLR 657, 682 (Dawson J).
Accordingly, it was open to her Honour to refuse leave to raise the new ground of appeal on the leave application.
(1) The Tribunal made no error of law in proceeding upon the factual basis accepted, and implicitly agreed to, by the parties before it.
(2) The appeal judge was entitled to have regard to the fact that the new ground was not only not raised before the Tribunal but not raised in the proposed notice of appeal and material filed in support of the application. The overarching purpose of the Civil Procedure Act 2010 is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.[66] The manner in which the point was raised was neither just, efficient, timely nor cost-efficient. The Authority representing the State of Victoria took a point in a long-running dispute arising out of a compulsory acquisition at a very late stage. The Court, in exercising its discretion, was required to give effect to the overarching purpose[67] and in furthering that overarching purpose, also to have regard to the objects set out in s 9 of the Civil Procedure Act. The Court was empowered to make any order it considered appropriate for the purposes of ensuring the proceeding was managed and controlled in accordance with the overarching purpose.[68]
[66]Civil Procedure Act 2010 s 7.
[67]Ibid s 8.
[68]Ibid s 47.
We would add that the following further matters might also be thought to support the appeal judge’s exercise of discretion:
(1) The ground went to a point which was not argued before the Tribunal and upon which APG might have addressed further evidence if it had been in issue. In Whisprun Pty Ltd v Dixon, Gleeson CJ, McHugh and Gummow JJ said:
It would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial.[69] Nothing is more likely to give rise to a sense of injustice in a litigant than to have a verdict taken away on a point that was not taken at the trial and could or might possibly have been met by rebutting evidence or cross-examination. Even when no question of further evidence is admissible, it may not be in the interests of justice to allow a new point to be raised on appeal, particularly if it will require a further trial of the action.[70] Not only is the successful party put to expense that may not be recoverable on a party and party taxation but a new trial inevitably inflicts on the parties worry, inconvenience and an interference with their personal and business affairs.[71]
[69]University of Wollongong v Metwally [No 2] (1985) 59 ALJR 481, 483; Coulton v Holcombe (1986) 162 CLR 1, 8–9; Liftronic Pty Ltd v Unver (2001) 75 ALJR 867, 875 [44]; Water Board v Moustakas (1988) 180 CLR 491, 496–7; cf R v Birks (1990) 19 NSWLR 677, 683–5.
[70]Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631, 645–6.
[71](2003) 77 ALJR 1598, 1608 [51] (citations in original).
The evidence in the present case did not address the question of when the option relating to the northern lot was exercised.
(2) There is a strong public interest in maintaining the finality of decisions with respect to contested claims. Conversely, there is a strong public interest weighing against the taking of points only upon appeal. In Coulton v Holcombe, Gibbs CJ, Wilson, Brennan and Dawson JJ said:
It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish.[72]
These considerations have particular force in the case of a Tribunal, which it is apparent the legislature intended to act speedily and in an informal manner.
[72](1986) 162 CLR 1, 7.
The decision by Emerton J to refuse leave to raise a new ground of appeal was ultimately a discretionary one. No seriously arguable error has been demonstrated in the exercise of her Honour’s discretion. Indeed, the proposed grounds of appeal to this Court do not squarely confront this difficulty.[73]
[73]See [38] above.
For completeness, however, we would add the following. During the course of his submissions to this Court, senior counsel for the Authority acknowledged that if the s 41(3) analysis were undertaken with respect to the southern lot only, it would still be open to undertake a before and after analysis with respect to the northern lot in order to give effect to s 41(1)(e). This concession was properly made.
The Authority’s case was that the quantum of loss should be assessed pursuant to s 41(1)(e) having regard to the facts known at the date of the assessment and not those known at the date of acquisition.
In turn, it was the Authority’s case that the Tribunal had failed to adopt the appropriate approach because it had not had regard to the AECOM plan.
It will be recalled that the affected land area retained by APG, for which the Tribunal allowed compensation for loss of market value, was entirely contained within the northern lot.
It follows that the Tribunal did in fact assess the ‘injurious affection’ flowing from the acquisition in respect of the market value of the northern lot.[74]
[74]See [15]–[16] above.
It is only if the Tribunal failed to have regard to evidence which it should have had regard to under s 41(1)(e) that the argument concerning the extent of the whole of the land in which the claimant’s interest subsisted under s 41(3) has any practical consequence.
For reasons we have explained in addressing proposed ground 1(a) of appeal, relating to the assessment of market value, the Authority faces a series of fundamental difficulties in demonstrating that the Tribunal failed to have regard to matters which it should have in considering the northern lot:
(a) section 41(1)(e) requires the assessment of both the enhancement and the depreciation in value of the interest of the claimant in adjoining land at the date of acquisition, being the same date as that required for the assessment of loss of market value of the acquired land;
(b) the Tribunal did in fact consider the AECOM plan;
(c) it was open to the Tribunal to give the AECOM plan little weight;
(d) the AECOM plan did not rebut Mr Brown’s evidence that the critical factor governing the adverse effect upon the value of the land retained by APG was the probable market perception of the industrial character of the potential future use of the stabling yards.
Accordingly, because the Tribunal in fact assessed the impact of injurious affection upon the northern lot alone, the argument that it should not have treated both the northern and southern lots as ‘the whole of the land in which the claimant’s interest subsists’ for the purposes of s 41(3) is of no practical consequence. There is no real prospect that it could lead to the conclusion that the Tribunal’s decision should be set aside. If the alleged error in the application of s 41(3), which has belatedly been complained of, was in fact an error, it did not vitiate the Tribunal’s reasoning.
Proposed ground 1(b) of appeal again raises novel arguments. We would grant leave to appeal with respect to it but dismiss the appeal.
Solatium
Section 44 provides for compensation by way of solatium. It relevantly provides:
44 Solatium
(1)The amount of compensation may be increased by such amount, not exceeding 10% of the market value of the land, by way of solatium as is reasonable to compensate the claimant for intangible and non‑pecuniary disadvantages resulting from the acquisition.
(2)In assessing the amount payable under subsection (1), there must be taken into account all relevant circumstances applicable to the claimant including, without limiting the generality of the foregoing—
(a) the interest of the claimant in the acquired land; and
(b)the length of time during which the claimant had occupied the land; and
(c)the inconvenience likely to be suffered by the claimant by reason of removal from the land; and
(d)the period of time after the acquisition of the land during which the claimant has been, or will be, allowed to remain in possession of the land; and
(e)the period of time during which, but for the acquisition of the land, the claimant would have been likely to continue to occupy the land; and
(f) the age of the claimant; and
(g)where the claimant at the date of acquisition is occupying the land as the claimant’s principal place of residence, the number, age and circumstances of other people (if any) living with the claimant.
A question arose in the Tribunal as to how the 10 per cent ‘cap’ in s 44(1) operates. The Authority contended that the ‘market value of the land’ meant the ‘market value’ as defined in s 40 of the land being acquired — here, just the two slivers of land. The Authority submitted that this approach had been taken by Vickery J in Roads Corporation v Love.[75]
[75](2010) 179 LGERA 113, 263 [738].
APG submitted before the Tribunal that ‘market value’ under s 44(1) was to be determined by applying the definition of that expression in s 41(3). APG pointed to cases where it was contended that this approach had been taken.[76] It was said that the matter had not been fully argued before Vickery J. At the same time, APG did not suggest that the matter had been fully argued in any of the earlier cases either.
[76]Kozaris v Roads Corporation [1991] 1 VR 237; Coastal Estates Pty Ltd v Bass Shire Council [1993] 2 VR 566; Moore v Roads Corporation [2008] VCAT 838; R K Morgan Holdings Pty Ltd v Melbourne and Metropolitan Board of Works (1992) 77 LGRA 102, 114–15 (Gobbo J); Roads Corporation v Love (2010) 173 LGERA 1.
The Tribunal found that there were two different lines of Supreme Court authority. It concluded that the approach urged by APG applied s 41(3) in a consistent manner in cases of partial acquisition, and was to be preferred.
The trial judge upheld this approach. She found that Vickery J had not been asked by either party to consider the approach now advanced by APG. He had only rejected an argument that in the case of a partial acquisition, the cap in s 44(1) was calculated by reference to the whole of the ‘before’ land value. She adopted the following analysis of the Tribunal in Secretary, Department of Economic Development, Jobs, Transport and Resources v Driver:
It is artificial and antith[et]ical to the scheme of the legislation to attempt to apportion that difference between the market value of the land actually acquired and diminution in the value of the balance of the land due to severance. What has to be valued is the whole of the land before the acquisition and the whole of the land remaining after acquisition. The difference is the market value for the purpose of the Act, including s 44.[77]
[77][2015] VCAT 813 [96] (H McM Wright QC, Senior Member), quoted in Appeal Reasons [136].
The Authority submitted that the judge was wrong to adopt this approach. It argued that ‘market value’ is a defined term in s 40, whereas s 41(3) is only a deeming mechanism for determining compensation in the case of partial acquisitions. Application of that provision will usually take account of severance, enhancement and ‘injurious affection’.
The Authority’s submission should be rejected. It is plain from the terms of s 41(3) that ‘market value’ in the case of a partial acquisition is to be determined by applying the ‘before and after’ calculation. As we have explained, this enables an owner to recover the pre-existing market value of the acquired land as a component of a larger whole. There is no occasion to calculate ‘market value’ in such a case by reference to the definition in s 40. To construe s 44(1) as demanding such an exercise would introduce a lack of cohesion and symmetry into the legislation. As the Tribunal in Driver explained, in cases of partial acquisition, the definition of market value in s 41(3) applies for the purpose of the LAC Act generally, not just s 41.
Moreover, there is no reason why the legislature would have contemplated that an award of solatium in respect of a partial acquisition should ignore the effects of that acquisition on the enjoyment of the balance of the land. The concerns reflected in s 41(3) about the potential effect of a partial acquisition on the value of the remaining land are apt to arise also in the context of solatium. To the extent that that effect has already been compensated in the process of determining ‘market value’ under s 41, that can be taken into account when the actual amount of solatium, if any, is decided. The present issue of course goes only to the level of the maximum that might be awarded.
In the circumstances, it is unnecessary to decide whether the Tribunal was bound to follow the decision of Vickery J. However, we note for completeness that this point was not raised before Vickery J and we see no error in the way the Tribunal approached the previous authorities.
For these reasons, although we would grant leave in respect of ground 2(a), the ground is not made out.
The success of ground 2(b) was contingent on the appellant succeeding on either aspect of ground 1, which it has not done. Ground 2(b) fails for that reason.
Conclusion
We would grant leave to appeal on each of the proposed grounds but we would dismiss the appeal.
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