AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2008] NSWCA 325 | Case summary

AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2008] NSWCA 325 | Case summary | Zoe

Circumstances 5 The acquired land is part of the Macquarie Shopping Centre (the Macquarie Centre) which is owned by AMP. The Macquarie Centre is within the Local Government Area of the Ryde City Council and is zoned 3(a) Business General under the Ryde Planning Scheme Ordinance 1979. It is classified by the Property Council of Australia as a regional shopping centre. It has a net lettable area of 95,129 square metres and contains 4,100 car-parking spaces. Car-parking is not controlled on the site. The shopping centre contains seven "major" chain-stores, seven "mini-major" chain-stores and 215 specialty shops. It has an annual turnover of $500 million, with approximately 12.2 million persons visiting the centre per annum. 6 It has operated on this site for about 25 years. The most recent additions and alterations were approved in 1998. 7 Following public exhibition of an Environmental Impact Study, on 26 February 2002 the Minister gave approval, subject to conditions, to the Parramatta Rail Link (PRL), a new suburban rail line to link Parramatta and Chatswood via Epping. 8 On 30 April 2002, Ryde City Council resolved that the Macquarie Park Corridor Structure Plan and a Transport Management and Accessibility Plan be endorsed for the purposes of exhibition. 9 On 8 January 2003, construction of the PRL commenced. 10 On 23 March 2003, a deed was entered into between the State Rail Authority of New South Wales (of which Transport is relevantly the successor) and AMP. The deed contained the following recitals: A. The Land Owner, that is, AMP Life Limited and AMP Henderson Global Investors Limited, owns the Land as tenants in common in equal shares. The Premises, including the Station Premises, form part of the Land. B. The Authority has indicated to the Land Owner the Authority's desire to take a leasehold interest in the Premises and freehold title to the Station Premises in connection with the construction and operation of the Parramatta Rail Link. The Authority and the Land Owner have been negotiating the terms on which the Authority will acquire those interests. As at the date of this Deed, the parties have not agreed those terms, in particular the amount of compensation that will be payable by the Authority to the Land Owner for the acquisition of those interests in the Land. C. The parties acknowledge that the acquisition of the interests in the Land by the Authority, as referred to in Recital B, among other things will require the Land Owner to construct the Ramp and that the costs of constructing the Ramp must be taken into consideration in determining the compensation payable by the Authority to the Land Owner for the acquisition of the interests in the Land. D. The parties agree that, given the Authority's intention to acquire the interests in the Land, construction of the Ramp is desirable and will commence as soon as practicable. Accordingly, notwithstanding that the aggregate compensation payable for the acquisition by the Authority from the Land Owner of the interests in the Land, as referred to in Recital B, has not been agreed between the parties, the Land Owner has agreed to construct the Ramp provided the Authority, as an interim measure, contributes $4,000,000 to the costs of constructing the Ramp. This Deed sets out the arrangements agreed between the parties in relation to construction of the Ramp and the interim compensation payment. 11 Clause 3 of the Deed provided: Negotiation of Compensation

Decision of primary judge 20 In its Amended Points of Claim, AMP claimed a total of $21,465,352. This was made up of the following elements: (a) Market value (s 55(a) of the Just Terms Act ): $2,345,000 (b) Disturbance (s 55(d)): $5,745,352 (c) Decrease in value of other land due to injurious affection (s 55(f)): $13,375,000 21 In its defence, Transport alleged among other things that there would be substantial betterment as a result of the public purpose, so that no compensation should be payable. 22 The primary judge first considered the question of market value under s 55(a). She noted arguments of the parties, including an argument by AMP that the definition of market value in s 56(1) was concerned with the sale of physical (freehold) land, not the sale of any particular interest in land. She noted the evidence of town planners Mr Harrison (for AMP) and Mr Rowen (for Transport), and valuers Mr Davis (for AMP) and Mr Wood (for Transport). In general terms, she preferred the evidence of AMP's witnesses, and reached approximate figures of $1,053,461 for Lot 12 and $61,901 for Lot 3 (to be finalised by detailed calculation, if necessary). 23 Next, the primary judge considered the question of increase or decrease in the value of other land (s 55(f)). The primary judge identified the three areas of dispute as follows: [63] The areas of dispute for the purposes of applying s 55(f) are: (i) what is the public purpose of the acquisition? (ii) betterment - will there be increased patronage to the Macquarie Centre as a result of the PRL and, if so, what is the increase in value of other land of AMP? (iii) decrease in value - is there a need for controlled parking when the PRL is built and if so what is the cost of an appropriate system? 24 On the first question, the primary judge noted the submissions of the parties, and she concluded that the public purpose was the PRL, and did not extend to planning changes mooted for the Macquarie Park area. 25 On the second question, the primary judge noted evidence of the same experts, and also that of Mr Smith (Consultant Retail Expert/Adviser to Investors) for AMP and Mr Hack (Land Economist and Planner) for Transport; of Mr Hynes, AMP Divisional Manager; and of Mr Masson (Traffic Expert) for AMP and Mr Hallam (Traffic Consultant/Engineer) for Transport. 26 The primary judge was satisfied from the evidence of Mr Hack that there would be additional patronage of the Macquarie Centre by reason of the PRL, and that this would be considered by a prudent hypothetical purchaser as likely to add value to the Macquarie Centre; and she accepted evidence of Mr Wood that the hypothetical purchaser would be prepared to pay more for the Macquarie Centre. The primary judge adopted a betterment figure of $15 million. 27 On the third question, the primary judge found that a prudent hypothetical purchaser was likely to consider there would be a need for some form of controlled parking when the PRL opened; but not that this would impact on patronage of the Macquarie Centre. The primary judge accepted that the potential cost of installing such system was $3 million. The primary judge made no allowance for operating costs, as income might be derived from the operation of controlled parking. 28 As regards the affect of this on value, the primary judge noted that the agreed value of the Macquarie Centre was $750 million; and she considered that the $3 million cost was likely to be considered negligible by a prudent hypothetical purchaser. Accordingly, she did not consider the claim under s 55(f) for a decrease in value should succeed. 29 The primary judge then noted that the betterment of $15 million clearly exceeded the sum of the market value and the agreed disturbance figure of $5,745,352; and she held that Nil compensation was payable. 30 In a separate judgment, the primary judge gave reasons for holding the appropriate costs order was that each party pay its own costs.

[122] One reason why a prudent hypothetical purchaser would take a conservative approach is that the PRL had obviously not been built at the date of acquisition. While it had been given development consent by the relevant Minister in 2002 and construction had started on part of it, suggesting completion was likely, there must be uncertainty with such a large project as to when it would be completed. In August 2003 for example, the NSW government announced that the project was only funded to Epping, at that stage, not to Parramatta. This is obviously not a matter of which a prudent hypothetical purchaser could be aware and is clearly a matter which occurred after the date of acquisition and not a matter which can be taken into account. It does however demonstrate why the caution expressed by Mr Smith and Mr Davis is likely to be part of the advice given to a prudent hypothetical purchaser in relation to the timing of larger government infrastructure projects. While I have not accepted that such cautious advice would lead to there being no allowance for value a conservative approach to the increase in value is warranted, as I have identified in the previous paragraph. 36 Mr Craig QC for AMP submitted that, while there was scope for a judge as a judicial valuer to exercise judgment, there had to be a basis for this in the evidence and in accordance with valuation principles. Here, while there was a basis in Mr Hack's evidence for finding that patronage would increase by five per cent, and perhaps for a finding that this would translate to a five per cent increase in turnover, there was no proper basis for finding that this in turn would result in a five per cent increase in value. 37 Mr Craig submitted that this was a case in which there was no relevant probative evidence, and that this was equivalent to no evidence: Bruce v Cole (1998) 45 NSWLR 163 at 188B. Thus, the primary judge's finding involved an error of law. He submitted that, although the Land and Environment Court was not bound by rules of evidence (LEC Act s38(2)), still there had to be material capable of rationally supporting a conclusion: South Western Sydney Area Health Service v Edmonds [2007] NSWCA 16 at [127]-[129]. 38 Mr Craig submitted that, although Mr Hack said that five per cent increase in patronage translated to five per cent increase in value, Mr Hack had no valuation expertise and did not support this assertion by reference to any recognised valuation methodology. Transport's valuer Mr Wood said nothing in his report which assigned an increase in value by reason of increased patronage. Although in oral evidence (2 Black 525) Mr Wood said "Increased patronage … means increased sales, increased turnover, increased rent and increased value of that centre, in the order of five to ten per cent" (and confirmed this at 2 Black 579), this was not in accordance with his written reports and Mr Wood did not base this assertion on any reasoning or any valuation principles. 39 Mr Craig submitted that the primary judge's reasons showed she was not acting on probative evidence or valuation principles, in that she apparently applied five per cent to $500 million, that is, to turnover, in order to arrive at a figure of $25 million, which she then reduced to $15 million. The reasons displayed error of valuation principle, and therefore an error of law: Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111 at [8]. 40 I accept Mr Craig's submission that there must be material capable of rationally supporting a conclusion (Edmonds), that the absence of probative evidence is equivalent to no evidence (Bruce), and that an error of valuation principle is or may be an error of law (Maurici). 41 However, s 55(f) requires the court to have regard to any increase or decrease in the value of land by reason of the carrying out of or the proposal to carry out the public purpose; and if there is some material capable of rationally supporting a decision as to such an increase or decrease in value, the court has to do its best to determine that increase or decrease: cf Hornsby Shire Council v Roads and Traffic Authority of New South Wales (1998) 100 LGERA 105 at 108-9, per Stein JA (Priestley JA and Sheppard AJA agreeing). 42 In this case, there plainly was some such material. There was Mr Hack's evidence as to increased patronage, and Mr Wood's evidence that this meant increased value in the order of five to ten per cent. Mr Wood did not back this up with any discussion of valuation principle or other reasoning, and this impacts on the weight and cogency of his evidence: Makita (Australia) Pty Limited v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705; ASIC v Rich [2005] NSWCA 152; (2005) 218 ALR 764 at [106]-[110]. However, Mr Wood was an expert valuer, and in my opinion his opinion was admissible; and although the weight of the evidence may be considered slight because of the lack of reasons, it was nevertheless material capable of rationally supporting a conclusion. 43 In my opinion also, it was open to the primary judge to reduce the figures suggested by Mr Wood because of uncertainty and because of many variables affecting the performance of a shopping centre. It appears she may have made an error in applying 5 per cent to the turnover of $500 million instead of the value of $750 million: but this was an error of fact, and in any event it was favourable to AMP. 44 Accordingly, in my opinion no error of law has been shown. 45 I note that there was also an argument by Mr Hale SC for Transport that the primary judge's decision can be upheld on the basis that she did not reason directly from valuation evidence to value, but rather herself considered the question posed by s 56(1), that is, what a hypothetical purchaser would be willing to pay (and by implication, what a hypothetical seller would be willing to accept); and she treated the evidence before her as indicative of the expert advice that such persons would receive. Mr Hale submitted that this was in accordance with the approach adopted by Stephen J in Morison v Commonwealth of Australia (1971) 34 LGRA 273. 46 In my opinion, this is an alternative way in which the material before the primary judge can be seen as rationally supporting her conclusion.

Failure to apply s 54 51 There is an initial question whether leave should be given to rely on this ground at all. 52 Mr Hale submitted that the amendment should not be allowed, because the point was not raised below and because the case may have been conducted differently if it had been. However, he did not contend that Transport was prejudiced by the amendment, as compared with the position it would have been in if this ground had been included in the original Notice of Appeal. 53 My usual practice, and, as I understand it, the usual practice of this Court, is to approach the question of amendment of a notice of appeal by considering how the position of the respondent is different from that which the respondent would have been if the original notice of appeal had included the amendment; and then to consider arguments based on Coulton v Holcombe (1986) 162 CLR 1 as part of the argument on the appeal. 54 It is true that Coulton v Holcombe itself was a case in which an amendment was sought and refused; and I accept that, if there are good reasons for holding that a new ground could not succeed because of the way the case was conducted below, and if refusal of an amendment would save time and costs, then it is appropriate to refuse an amendment. 55 In this case, the appeal proceeded on the basis that an amendment may be permitted, and full argument was heard on the new ground, including Coulton v Holcombe arguments. In those circumstances, in my opinion it is appropriate to allow the amendment, and to deal with Coulton v Holcombe arguments as part of the argument as to whether the new ground can succeed. 56 In her judgment, having made findings in respect of s 55(a) and s 55(f), the primary judge concluded: [164] As argued by TIDC, cases such as Brell v Penrith City Council (1965) 11 LGRA 156 confirm that where betterment exceeds other heads of compensation then nil compensation is payable. This was also considered in Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority of New South Wales (2004) NSWLEC 612 where compensation was reduced downwards due to the beneficial effect on the area in which the resumed land was located as a result of the M7 motorway being built.

[165] I have held that there is betterment to the Macquarie Centre in the amount of $15 million under s 55(f). I have also held that the introduction of controlled parking would not give rise to a reduction in value of the Macquarie Centre, also under s 55(f). I have held that market value is approximately $1,115,000 under s 55(a). I would ask that the parties provide an exact figure shortly. As betterment clearly exceeds the market value and disturbance agreed of $5,745,352 there is no compensation payable to AMP under the provisions of the Just Terms Act for this compulsory acquisition claim. I will reserve costs. 57 Mr Craig submitted that this approach gave no work to s 54(1). He submitted that the case of Brell v Penrith City Council (1965) 11 LGRA 156 was distinguishable, because the applicable legislative provision there was that "the court … shall … give effect to, by way of set-off or abatement, any enhancement in the value" of the other land. He submitted that the decision of the Court of Appeal in Mir Bros Unit Constructions Pty Ltd v Road and Traffic Authority of New South Wales [2006] NSWCA 314, given after the decision of the primary judge, although it dismissed an appeal from the decision referred to by the primary judge, supported a more flexible approach. Such an approach was also supported by Leichhardt Municipal Council v Roads and Traffic Authority of New South Wales [2006] NSWCA 353, 149 LGERA 439 at [37]-[41]. Mr Craig also referred to Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 82 ALJR 489 at [29], [35]. 58 Mr Craig submitted, in circumstances where AMP was compelled to spend over $5.7 million in constructing ramps, it could not be considered as justly compensating AMP that it receive nothing, because of an extremely uncertain benefit which it might receive sometime in the future. Also, because of s 3(1)(a) and s 10(1)(a) of the Just Terms Act, the market value of the acquired land must be seen as the bare minimum that AMP should receive. Mr Craig submitted that there was an error by the primary judge in failing to address these considerations. 59 Mr Craig also submitted that there was no reasonable possibility that the case would have been conducted differently below, had this point been taken. It was open on the pleadings, and questions of uncertainty and futurity of the betterment were fully explored in the evidence. 60 Mr Hale submitted that AMP was bound by its conduct of the hearing, and that Coulton v Holcombe applied. Had this matter been in issue, Transport may not have consented to assessment of disturbance at the $5.7 million figure, and may have raised the question of whether the expenditure produced ramps which increased the value of the property, as compared with the previous ramps. Further, had AMP sought to have the increased value under s 55(f) disregarded or discounted because of uncertainty and/or futurity, that issue could have been squarely addressed, and it was not. 61 Mr Hale submitted that it could not be said there was an error of law, where the question had not been raised below. In any event, there was no error of law. Although Mir did not endorse a purely mathematical approach to the various elements of s 55, it accepted the so-called "before and after" approach, which would have the same effect in the present case. 62 In my opinion, s 3(a) of the Just Terms Act is important here. One object of the Just Terms Act is to guarantee that compensation be not less than the market value of the acquired land (unaffected by the proposal), that is, the element of compensation provided by s 55(a). Section 10(1)(a) authorises the giving of a notice, stating that the Just Terms Act does guarantee this. Although this notice is not given in connection with actual negotiations for compensation or proceedings in which compensation is assessed, and although it cannot give rise to a civil cause of action (s 10(3)), it is plainly intended that the notice be truthful and not misleading. In my opinion, these provisions disclose a clear legislative intention that compensation be no less than that provided by s 55(a), even if there is "betterment" under s 55(f) that exceeds the other elements in s 55. 63 I see this as consistent with and supported by s 54(1). Where land is compulsorily acquired, it seems to me just that the acquiring authority pay at least the market value of that land (unaffected by the proposal), even if the person from whom the land is acquired owns adjoining land which is increased in value by the proposal, and even if this increase is greater than the market value of the acquired land. Other persons owning land in the area may benefit equally or more from the proposal; so it seems to me unjust that the acquiring authority should get the acquired land for nothing, and that the person whose land is acquired should get nothing for it, just because of a benefit that may be shared by others. Thus a lower limit of the market value (unaffected by the proposal) seems just; and this is what s 3(a) and s 10 indicate is to be guaranteed. 64 In my opinion, this is not inconsistent with Brell. Whereas s 55 merely requires the Court to have regard only to six matters, including "betterment" under s 55(f), the provision applicable in Brell explicitly required that betterment be given effect to by way of set-off for abatement. 65 There is tension between the view I am suggesting and the "before and after" method of ascertaining compensation, which is sometimes adopted when what is resumed is part of a larger parcel of land owned by the person entitled to compensation. This method takes the value of the whole parcel immediately prior to acquisition (unaffected by the proposal) and subtracts the value, immediately after the acquisition, of what the person is left with (affected by the proposal); and this gives a figure which takes account of the elements of s 55(a), s 55(c) and s 55(f). If it so happens that the "after" value is more than the "before" value, because of "betterment", then the compensation so calculated will be Nil. 66 The "before and after" method was adopted in Mir, and approved by the Court of Appeal in that case. However, Mir did not suggest that the "before and after" method is to be adopted in all cases; and there is no authority to that effect. 67 Mir itself was a case where the approach I am considering could have been adopted, with possibly a more favourable result to the claimant. In Mir, the resumed land had an area of 1.844 hectares, and originally formed part of a larger parcel with a total area of 4.07 hectares. The valuer for the claimant and the valuer for the acquiring authority both agreed that the "before and after" method was appropriate; but the valuer for the acquiring authority expressed the opinion that the value per unit area of the 2.253 hectares with which the claimant was left was, by reason of its smaller area, five per cent more than that of the original 4.097 hectares, and the trial judge accepted that evidence. In the result, compensation for the land acquired turned out to be at a rate per unit area even lower than that of the original parcel, although on evidence accepted by the primary judge it would have been about five per cent more if it had been valued separately. 68 In his judgment in Mir ([2006] NSWCA 314 at [58]-[60]) Spigelman CJ (with whom Handley JA agreed and Tobias JA generally agreed) said this: [58] By its nature the method encompasses a number of the matters expressly listed in s 55 including market value, loss attributable to severance and the increase or decrease due to the carrying out or proposal to carry out the public purpose. The before and after method is particularly useful in circumstances where the acquired land is difficult to value directly by reason, for example, that it is a non-marketable parcel. It may be preferable, where acquired land can be directly valued, as appears to have been the case in the present proceedings, to do so rather than to adopt the before and after method. Nevertheless, that was not the approach adopted in the present proceedings by either party. It is not appropriate for this Court to reject a methodology that may or may not have been chosen deliberately because of some synergy amongst the different heads of compensation in s 55.

[41] Significantly for present purposes s 3(1)(a) states that one of the objects of the Act is to "guarantee" that "compensation will not be less than … market value". The Court should be slow to interpret the definition of market value in s 56(1) as permitting regard to be had to a matter which necessarily means that the owner will not receive market value. With respect to a restraint on alienation applicable only to the particular owner whose land is being acquired, that is what the application of the principle in Corrie v MacDermott to a prohibition on alienation must mean. The Court should not adopt such an interpretation in the absence of express words or necessary intendment. 72 Those views in my opinion support an approach that recognises s 55(a) as providing a minimum figure. On that approach, which I adopt, there was an error of law by the primary judge in deciding that wherever betterment exceeds other heads of compensation, nil compensation is payable, and in awarding nil compensation in this case; and no different conduct of the case below could have altered this. It is true that this point was not taken, and that may affect costs; but the result arrived at by the primary judge is one that cannot be justified on what I consider to be the correct construction of the Just Terms Act; and in my opinion that is an error of law justifying appellate intervention. 73 It remains to consider whether there should also be appellate intervention on the basis that there is a wider discretion; so that (for example) it would be open, as Mr Craig submits, to hold that the compensation to AMP should be at least $5.7 million, because AMP has been compelled to pay out that amount; and because that amount should not be reduced by reason of a highly uncertain benefit that may come about some time in the future. 74 My tentative view is that there is not such a wide discretion. It is plainly appropriate to have regard to the possibility of overlapping of the various paragraphs of s 55, and to adjust the regard had to the various paragraphs to ensure there is no double counting. Further, insofar as an increase or decrease in value within par (f) is uncertain and/or some way in the future, it is appropriate to arrive at a lesser value to take account of the uncertainty and/or futurity. Indeed, in the present case, it would have been open to the primary judge to say there is such uncertainty about an alleged increase in value that it should not be given any value at all. However, once a value is arrived at, which fully takes into account uncertainty and futurity, I do not see any basis on which it should be further discounted or disregarded. Subject to what I have said concerning s 55(a) as a minimum figure and possible overlapping of the various elements, I do not see any principled way in which regard can be had to a decrease in value under par (f) otherwise than by treating it as justifying a pro tanto reduction of compensation. 75 In any event, even if there were such a wide discretion, reliance on the point should not be permitted on appeal, having regard to Coulton v Holcombe. There is a reasonable possibility that, had the point been raised below, the case would have been conducted differently and there would have been further evidence relevant to how such a discretion should be exercised.

Market value of acquired land 76 The primary judge noted the following submissions by AMP: [18] AMP argued that market value is defined by s 56(1) which is concerned with the sale of physical (freehold) land, not the sale of any particular interest in land. The Spencer test ( Spencer v The Commonwealth [1907] 5 CLR 418) requires the determination of the price that would be paid by a prudent hypothetical purchaser to a prudent hypothetical vendor in a willing but not anxious sale of that land. Lots 12 and 3 have been created as separate lots as a result of the acquisition. The capital/freehold value must be determined first. The second step is the determination of the amount of compensation to which AMP is entitled under s 55(a). At this step the leasehold interest acquired by the resuming authority is considered. 77 She considered planning evidence as to the highest and best use of the acquired land, including evidence from Mr Davis that it would be to include them as part of the shopping centre. Mr Davis' evidence was that the appropriate valuation procedure was to ask what a small site adjacent to a larger shopping centre would bring on the market, when acquired to amalgamate with that centre or to capitalise on the trade-draw of that centre. On that basis, Mr Davis worked out a rate per square metre, calculated an appropriate rate of return to rent the land, and calculated the market value of a six-year lease using a capitalisation rate of 7.5 per cent. 78 The primary judge also considered other evidence as to the highest and best use, and as to market value, including evidence from Mr Wood adopting a car-park rental approach: that is, Mr Wood treated the highest and best use as use for car-parking, and in the case of Lot 12 calculated the market value of a six-year lease of fourteen car spaces. 79 The primary judge referred to rival arguments in par [42]: [42] The basis of TIDC's argument is that when s 55(a) refers to the market value of the land on the date of the acquisition, in this case a leasehold interest in land, that interest is key to determining the market value of land under s 56(1). AMP argued the opposite, that is, that market value in s 56(1) must first be considered and then compensation under s 55(a) for the interest in that land assessed, based on market value. The acquisition created two separate lots of land and Lot 12 in particular could be sold separately. 80 She referred to Prince Alfred Reserve Trust v State Rail Authority of New South Wales (1997) 96 LGERA 75, and other cases; and she continued: [46] I consider the capital value of the freehold land of Lot 12 calculated on the basis of its highest and best use must be determined as that lot has been created separately as a result of the acquisition. The capital value of Lot 3 should be calculated as a percentage of that value. The rental value is then determined. This approach is supported by the application of s 56(1) of the Just Terms Act and as applied in cases such as Prince Alfred Park . 81 The primary judge then proceeded to apply Mr Davis' method as "the correct approach" (Judgment [51]), with some variation. At [54], she said "the rental value must be determined next by adopting the appropriate rate of rental return on the freehold capital value". 82 Mr Hale submitted that the primary judge erred in law in adopting AMP's submission that s 56(1) required consideration of the market value of freehold, rather than of the limited interest being acquired. He submitted that this was confirmed by evidence of Mr Davis, which the primary judge accepted, that he had to first of all have regard to the capital value of the land (2 Black 459). 83 Mr Hale referred to the definition of "Land" in s 4 of the Just Terms Act as including "any interest in land"; and submitted that the definition of "market value of land" in s 56(1) was the definition of the market value of any interest in land; and that where what was acquired was an interest in land, so that s 55(a) applied to that interest, s 56(1) defined how the market value of that interest was to be understood. 84 I accept Mr Hale's submission that s 56(1) defines the meaning of market value for interests in land as well as for the freehold in land; and that accordingly it gives content to s 55(a) in its application to an interest in land that has been acquired and in respect of which compensation is to be assessed. 85 In my opinion, this view is not affected by s 56(2), in which a distinction is drawn between the values of interests in land and the value of the freehold of the land; and in which, in the last line, "the market value of the land" has to be understood in the latter sense. 86 However, this does not necessarily mean that the primary judge made an error of law or, if she did, that it was material. 87 It can happen, as in this case, that what is acquired is an interest in land such that there is no reasonable possibility that there would be available for comparison sales of interests that are truly comparable; so that, as a matter of valuation technique, an acceptable method is to look for some different interest in respect of which there are comparable sales, and to extrapolate from those sales. 88 In this case, if a judgment is correctly made that the highest and best use of the land is as part of a regional shopping centre site, it would be reasonable to conclude that the most realistic comparisons would be of acquisitions for amalgamation with such sites; and it is unlikely in the extreme that there would be acquisitions of that kind which would be acquisitions of a leasehold interest for six years. If one limits the comparable sales to sales of leasehold interests, one would not be dealing with comparable sales in respect of which the highest and best use of the land is given effect to. 89 That this was the approach of the primary judge is suggested by her reliance on the Prince Alfred Park decision: [44] In determining compensation in Prince Alfred Park Pearlman J considered the amount which a hypothetical willing but not anxious lessor would require and a hypothetical lessee would pay. Her Honour assessed compensation at a premium rental determined at six per cent of the land value capitalised for the term of the lease at ten per cent. Her Honour held the lease terms were relevant but not determinative of the market value of the resumed land. She considered that a hypothetical lessor at the time of acquisition of the resumed land would have proceeded on the basis that the land was to be reinstated, after considering the EIS and the development consent for the proposal. In relation to highest and best use her Honour adopted the approach of the valuer who had regard to the highest and best use of the resumed land, not the approach of the potential loss of revenue to the applicant for the lease term. That approach while expressed differently in some respects supports the approach argued for by AMP and is the approach of the valuer Mr Davis relied on by AMP. The approach she rejected is similar to that argued for by TIDC, that is, that the market value is the loss of revenue of leasing 14 car parking spaces for six years. 90 It is true that AMP did argue for an incorrect construction of s 56(1), that the primary judge did not reject that construction, and that what she said in par [46] and perhaps par [54] could be read as suggesting she adopted it. However, in my opinion, a fair reading of her judgment indicates that she accepted the approach of Mr Davis as a matter of preferable valuation technique, rather than because of any incorrect construction of s 56(1). 91 For those reasons, in my opinion no error of law is shown in this respect.

Identification of public purpose 92 The primary judge said this at par [71]: [71] Section 55(f) refers to "… by reason of the carrying out of … the public purpose for which the land was acquired ". The land was acquired by the State Rail Authority (now TIDC) under the Transport Administration Act. I consider that given those specific words in the section there is a short answer to TIDC's submission that the public purpose for which the land was acquired includes the planning changes mooted for Macquarie Park in the EIS for the PRL. TIDC, the acquiring authority, is not responsible for, and indeed has no power to effect, rezoning of land. The proposed planning changes referred to in the EIS relied on by TIDC simply cannot therefore be within the public purpose contemplated by TIDC in undertaking this compulsory acquisition. I agree with and adopt all of AMP's written submissions at para 6 on that issue. 93 Mr Hale submitted that the evidence showed there would be substantially increased capacity for development in the area surrounding the Macquarie Centre as a result of the PRL, which would increase the value of the Macquarie Centre; and that the primary judge erred in law in excluding this from her consideration under s 55(f). 94 Mr Hale referred to Woollams v The Minister (1957) 2 LGRA 338. That case dealt with the acquisition of land which was to be flooded as the result of the establishment of the Warragamba Storage Dam. The material provision was s 124 of the Public Works Act 1912, under which the value of the acquired land was to be determined "without reference to any alteration in such value arising from the establishment of … public words upon or for which such land was resumed". Hardie J held that the value of the acquired land was to be determined on the assumption that the amenities and other economic and social conditions in the subject area did not deteriorate following upon and by reason of the decision of the Board to proceed with the Warragamba Dam Project, the acquisition by the Board of a number of properties in the area before the relevant date, and other events and circumstances associated with or consequential upon such acquisition; and on the assumption that those amenities and conditions would have improved during the period under consideration as they did in other areas. 95 Mr Hale submitted that, just as a blight on an area by reason of the relevant public purpose was disregarded in Woollams, so also intensification of use would be disregarded for the purposes of s 56(1) of the Just Terms Act and taken into account for the purposes of s 55(f). 96 In my opinion, in determining what increase or decrease in value occurs "by reason of" or is "caused by" the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, it is first necessary to identify the public purpose and its relevant scope or generality. This may be a matter of some difficulty, as illustrated by Roads and Traffic Authority of New South Wales v Perry [2001] NSWCA 251; (2001) 52 NSWLR 222. 97 That case concerned the acquisition of land on which a road was to be constructed, and the result was greatly affected by the determination of whether the relevant public purpose was the construction of that particular stretch of road or a larger stretch of road of which this was to be part, or even the overall scheme of upgrading the Pacific Highway from Sydney to the Queensland border. I expressed the following view at [100]: [100] I do not think there are any clear rules determining how the relevant purpose or the appropriate level of generality is to be determined. Factors to be taken into account would, in my opinion, include the degree of continuity and consistency of various elements of what is proposed and done, and fairness to both the claimant and the acquiring authority. In the present case, I think it unlikely that the relevant public purpose could be as wide as the upgrading of the Pacific Highway between Sydney and the Queensland boarder; while on the other hand, assuming there have been a number of versions of the Perry's Hill extension, I think it unlikely that the public purpose could be as narrow as just the last of those versions. The public purpose could be as wide as the Raleigh Deviation generally, encompassing all the variations of that project including all versions of the Perry's Hill extension, or it could be somewhat narrower. 98 Once the public purpose is thus identified, it may then be necessary to identify what is comprehended by "the proposal" to carry it out and/or "the carrying out of" the purpose. Then it may be necessary to identify the scope of what occurs "by reason of" or is "caused by" these things. In these steps also, I do not think there are clear rules, but there may need to be judgments of degree which take into account considerations of reasonableness and fairness. 99 The mere circumstance that the public purpose is a contributing factor to changes which in turn affect value is not necessarily sufficient, particularly if the changes depend also on discretionary decisions made by other authorities. 100 The primary judge made the judgment that planning changes, to which the PRL was a contributing factor but which also involved discretionary decisions by other authorities, should be disregarded for the purposes of s 55(f). In my opinion, there was no error of law in that decision.

ORDERS 106 It follows that the cross-appeal should be dismissed with costs. 107 The appeal in my opinion should be allowed. The precise amount of the market value was left by the primary judge for calculation, but there is no reason why this cannot now be done. I see no reason why this Court cannot give effect to its decision, without any need to refer the matter back to the Land and Environment Court, since there are no additional facts to be found or discretions to be exercised. 108 Since the matter on which the appeal succeeded was introduced by a late amendment, and the appellant's success was only partial, my tentative view is that each party should bear its own costs of the appeal. I would direct AMP to bring in agreed short minutes within 21 days; and if there is not agreement, to submit its proposed short minutes with any submissions concerning costs or other matters within that time. In that event, Transport is to respond with its proposed short minutes and submissions within a further 14 days. 109 Bell JA and Gyles AJA are of the view that the appeal should be dismissed with costs. Bell JA is of the view that the cross-appeal (including the cross-appeal as to costs) should be dismissed with costs. Accordingly, the following orders are by majority to be made. (1) Appeal dismissed with costs. (2) Cross-appeal dismissed with costs. 110 BELL JA: I have had the benefit of reading the judgments in draft of Hodgson JA and Gyles AJA. I also agree with Hodgson JA's reasons with respect to the disposition of grounds 1, 3 and 4, being the only grounds in the notice of appeal that were pressed on the hearing. I agree with Gyles AJA that in the result this should lead to the dismissal of the appeal with costs. I agree with Gyles AJA's reasons both for holding that the amendment should not be allowed and for not permitting the claim to be recast on appeal to take up the statutory construction point. I note with reference to the nature of the appeal under s 57 of the Land and Environment Court Act 1979 (NSW) the recent discussion in B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187 per Allsop P (Giles JA agreeing) at [57]-[70].

113 GYLES AJA: Hodgson JA has outlined how the issues arise. I agree with his Honour's conclusions as to those of the original grounds of appeal that are pressed, namely grounds 1, 3 and 4. In my respectful opinion that should lead to dismissal of the appeal with costs. I would not permit the amendment of the grounds of appeal to include proposed ground 7. 114 That ground is based upon the proposition that there is a wide discretion to adjust the application of the factors set out in s 55 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (the Act) to arrive at the just compensation provided for by s 54(1). In the present case that would mean that the discretion would be exercised on the basis that the factor in s 55(f) would effectively be ignored or substantially discounted. It is accepted on the part of the appellant, AMP Capital Investors Limited (AMP), that the case in the Land and Environment Court was not put in that way. That being so, it cannot be said that the Land and Environment Court judgment is subject to appeal on a question of law as required by s 57 of the Land and Environment Court Act 1979 (NSW). This is not a general appeal, and, in particular, is not appeal by way of re-hearing. 115 If that problem is overlooked, the next problem is the Coulton v Holcombe line of authority ((1986) 162 CLR 1). It is obvious that if the point had been relied upon in the Land and Environment Court the case would have been differently conducted on both sides. It would have been a very different case. Indeed it would have been a novel case. We have not been referred to any other case in the Land and Environment Court that has considered the issue since the Act came into force. Dicta in this Court in Leichhardt Municipal Council v Roads & Traffic Authority of NSW [2006] NSWCA 353, (2006) 149 LGERA 439 and Mir Bros Unit Constructions Pty Limited v Roads & Traffic Authority of NSW [2006] NSWCA 314 were relied upon by counsel for AMP, but the present argument did not fall for decision in either case. 116 Allowing such a point to be raised on appeal seriously disturbs the principal of finality of litigation. The case in the Land and Environment Court was commenced in 2003 and after, no doubt, extensive preparation, came on for hearing on 13 November 2006 and ran for 13 days between then and 30 March 2007 with written submissions before and after the final day. A judgment of 165 paragraphs was delivered on 2 July 2007. Thereafter 2 subsequent judgments dealing with other aspects of the case were given. 117 In my view it is neither necessary nor appropriate to enter upon discussion of the merits of the argument. The result of doing so would be that an important issue of compensation law would be dealt with without the benefit of consideration by the specialist court charged with the responsibility of deciding such cases and with the case having been presented and conducted at trial without the point in mind. There are, of course, occasions where it is convenient to hear the substance of the argument as to the merits of a new point proposed on appeal. But, in my view, this was not one of them, as the point is precluded regardless of merit. 118 There is a separate issue in relation to the opinion of Hodgson JA that there was appealable error by the Land and Environment Court in awarding nil compensation in that the amount of compensation should have been not less than the market value of the "land" acquired (unaffected by the proposal) at the date of acquisition assessed in accordance with s 56. That argument was not put to or considered by the Land and Environment Court, is not reflected in any ground of appeal or proposed ground of appeal, and was not put in AMP's submissions prior to the hearing of the appeal. It arose in the course of argument on the appeal. It appears to be novel. We were not referred to any case in which it has been considered or any commentary that refers to it, notwithstanding that the Act has been in force for some 17 years. 119 It would be unusual to permit a money claim by a well resourced party to be recast on appeal after a substantial trial simply because an argument as to statutory construction emerges on the hearing of an appeal even if the appeal were a re-hearing. The problem is even more acute in the case of an appeal from a specialist Court limited to questions of law. 120 There is a particular difficulty here, as the award of nil compensation would have to be set aside and the amount attributed to market value awarded if Hodgson JA is correct as to the point of statutory construction. In my opinion that follows from the fact that Hodgson JA has demonstrated in considering the first cross claim that the respondent was correct in contending that, in fixing market value, the Land and Environment Court proceeded upon an erroneous construction of the legislation as to a fundamental question - the nature of that which is to be valued. That was obviously an error on a question of law. Such an error would require the finding based upon it to be set aside unless it is clear that the result would not change in the event of reconsideration. It is not sufficient that some basis may exist for upholding the decision. (cf. Balenzuela v De Gail (1959) 101 CLR 226; Stead v State Government Insurance Commission (1986) 161 CLR 141; Toll Pty Ltd v Craig Morrissey [2008] NSWCA 197 per Beazley JA at [10]). In my opinion the difference between valuing freehold on the one hand and a short-term leasehold on the other is so radical as to require re-hearing if the issue remains live. The issue would be live if the point of statutory construction were permitted to be raised and if it were to succeed. The fact that a re-hearing on this point would or may be necessary is a further reason to decline to enter upon the issue. 121 Thus I would simply dismiss the appeal with costs.

AMP Capital Investors Limited v Transport Infrastructure Development Corporation

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Judgment (94 paragraphs)

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Legislation Cited (2)

Cases Cited (32)

Cited By (29)