Tony Fidler as trustee for Howship Holdings Pty Limited v Port Stephens Shire Council [No 2]

[1999] NSWLEC 167

Land and Environment Court

of New South Wales

CITATION:

Tony Fidler as trustee for Howship Holdings Pty Limited v Port Stephens Shire Council [No 2] [1999] NSWLEC 167

PARTIES

APPLICANT
Tony Fidler as trustee for Howship Holdings Pty Limited

RESPONDENT
Port Stephens Shire Council

NUMBER:

30156 of 1997

CORAM:

Cowdroy J

KEY ISSUES:

Compensation :- Valuation - valuation re-assessment - absence of reasons contained in valuation report - Court unable to assess compensation - directions for further evidence.

LEGISLATION CITED:

Land Acquisition (Just Terms Compensation) Act 1991
Land and Environment Court Act 1979

DATES OF HEARING:

10/29/1999

DATE OF JUDGMENT DELIVERY:

11/12/1999

LEGAL REPRESENTATIVES:

APPLICANT
Mr W Davison SC

SOLICITORS
Clayton Utz

RESPONDENT
Mr J Kildea (Barrister)

SOLICITORS
Trevor Dunn

JUDGMENT:

IN THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES MATTER No. 30156 of 1997
CORAM: Cowdroy J
DECISION DATE: 12/11/99

Tony Fidler as trustee for Howship Holdings Pty Limited

Applicant

v

Port Stephens Council

Respondent

JUDGMENT

1. In these proceedings the Court initially delivered judgment on 21 August 1998 (“Judgment No 1) in respect of the applicant’s claim for compensation. Such judgment was the subject of an appeal and cross-appeal. By judgment delivered on 3 August 1999 the New South Wales Court of Appeal dismissed the cross-appeal of the applicant but upheld the appeal of the respondent and remitted the matter to this Court.

2. The contentious issue concerns the basis of the valuation of the acquired lands. The applicant presented its claim for compensation upon the basis that the acquired lands being Lot 71 DP861094 (“Lot 71”) and Lot 2 DP 854716 (“Lot 2”) were each hypothetically capable of subdivision into 26 lots and 5 lots respectively. The respondent challenged such basis and Judgment No 1 determined that such basis would not be adopted.

3. As an alternative basis for compensation the respondent conceded that the acquired lands may have been the subject of a minimal subdivision namely a four lot subdivision of Lot 71 and one lot from Lot 2 (“the minimal subdivision”). The respondent provided evidence of value of the acquired lands on this basis, such evidence being contained in a report of a valuer, Exhibit O, by Mr C R Sorrenson who valued them as in globo parcels. The applicant however did not lead any evidence of value of the acquired lands on the minimal subdivisional basis.

4. The Court of Appeal in rejecting the cross appeal of the applicant found that this Court was entitled to proceed upon the basis of a minimal residential subdivision and Stein JA said:-

In my opinion, his Honour was entitled to proceed on the basis that a minimal residential subdivsion may have been permissible. However, his assessment of this must have regard to Mr Sorrenson’s valuation, the only one before the court, unless it could be properly rejected or an available alternative preferred. The judge may then have been entitled to proceed on the basis of a hypothetical value of the minimal subdivision if there was evidence before him to carry out the exercise. It is clear that while his Honour had an estimate of the development costs, he had no relevant material on the profit and risk factors which would enable the completion of the valuation exercise.

5. The respondent submits that the Court, being now required to assess the value of the acquired lands upon the basis of a minimal subdivision is bound to accept the evidence of Mr Sorreson since it was the only evidence of valuation on the minimal subdivision basis. No part of Mr Sorrenson’s valuation was challenged, nor was it the subject of cross examination. Judgment No 1 was held to be in error because this Court had endeavoured to value the lots in the minimal subdivision as if the subdivision had been effected.

6. The applicant contends that Mr Sorrenson’s valuation is not conclusive. It submits that there was no reasoning exposed in Exhibit O to enable Mr Sorrenson to reach his valuation, nor were any appropriate comparable sales referred to. It was also submitted, contrary to the finding of the Court of Appeal that there was evidence of a profit and risk factor which could be applied indirectly from other evidence.

7. The competing arguments raise for consideration the function of the Court when assessing compensation under the provisions of the Land Acquisition (Just Terms Compensation) Act 1991. In Brewarrina v Commissioner of Highways (1973) 6 S.A.S.R. 540 Wells J at 544 observed that a presiding Judge does not become an independent expert. In Bronzel v State Planning Authority (1979) 21 S.A.S.R. 513 Wells J made the observation that it is not the function of the Judge to become a valuer. He observed at 523:-

Valuers have their training, their learning, their experience, their art and their skill, and must use it all according to the best of their ability and to the precepts that guide their profession. The Judge cannot take over their role.

In reaching his valuation which is Exhibit O, Mr Sorrenson took into account the fact that such lands could be hypothetically developed. Such approach accorded with the principle expressed in Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer Vizagapatam [1939] AC 302 at 313.

8. The difficulty confronting this Court as found during the hearing is that Exhibit O does not provide any reasoning to support the conclusion of Mr Sorrenson. The correct approach of valuation is stated by Handley JA in Yates Property Corporation Pty Ltd (In Liquidation) v Darling Harbour Authority (1991) 24 NSWLR 156 at 176 where His Honour said:-

The present case may be tested against the case of land in globo which is ripe for subdivision. Turner v Minister of Public Instruction decides that the owner is not entitled to be compensated on the basis of the present value of the nett proceeds of a hypothetical subdivision. The land must be valued on the hypothesis that it is sold in globo to a purchaser who acquires it to subdivide. The price which would be paid by such a purchaser, and the compensation to the owner must reflect the present value of the estimated nett proceeds of subdivision subject to deductions for the risks of realisation and the profit the subdivider wishers to make from the transaction.

9. The respondent accepts that the lands must be valued on the basis of the minimal subdivision. This approach requires an investigation of the estimated nett proceeds of subdivision, as described by Handley JA.

10. Exhibit O is deficient. It does not enable the Court to find that the present value of the estimated nett proceeds of the subdivision are represented by the valuation. The respondent must value the lands on this basis once it acknowledges that the minimal subdivision is possible.

11. In these circumstances the Court is bereft of any valuation evidence to reach a determination of the amount of compensation to which the applicant is entitled. Accordingly the Court will make directions for the provision of further evidence.

Orders

12. The Court orders:-

1. These proceedings be re-listed for further directions.