Applicant v Respondent

Supreme Court of Victoria|2008-02-14|Before: OSBORN J

Answers to preliminary questions - Compulsory acquisition of land reserved pursuant to a planning scheme for public purposes - Claimant aware of reservation at date of purchase - ascertainment of Claimant's interest in the land at the date of acquisition having regard to such reservation - valuation of Claimant's land having regard to such reservation - application of the Pointe Gourde principle - common law principles - Interpretation of the Land Acquisition and Compensation Act 1986 ss. 3, 30, 40, (1) and (3), (1)(a), (b) and (d), , - of the - ss. 98, 99 and 106 of the 1986 - of the - .

1 This case raises questions of interpretation of the Land Acquisition and Compensation Act 1986 ("the LAC Act"). It concerns the application of the Point Gourde principle to land reserved by a planning scheme for public purposes. The land in issue was owned by the applicant ("Halwood") and has been compulsorily acquired by the respondent ("the Authority").

2 Halwood now seeks compensation with respect to loss of market value in its interest in the land and professional expenses.

3 The Point Gourde principle was described by Kirby P in Haig v The Minister Administering the National Parks and Wildlife Act 1974 [1] as follows:

It is so named after Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands[2]. According to the principle, which is one devised by the judges, in valuing land for resumption purposes, any increase in the land's value which is entirely due to the scheme underlying the acquisition is to be disregarded. The converse of the principle is also accepted. Any diminution in the value of land which is entirely due to the resumption scheme, or to any blight caused by a step in the resumption process, is to be disregarded in determining the value of the land: see Housing Commission of New South Wales v San Sebastian Pty Ltd[3]; ... Thus, where it is found that there is a direct causal connection between a restriction on land use imposed by planning and land use legislation and the proposed establishment of the public works for which the land might be resumed, the extent of such restriction on the value of the land must be ignored. Behind this principle lies a search for a fair valuation and an insistence upon just procedures. If it were not upheld in the determination of the value of resumed land, it would be possible for a resuming authority to use its power or influence, in respect of such matters as zoning, to diminish the value of the land to be resumed, to its own advantage and to the disadvantage of the owner at valuation.

4 In Emerald Quarry Industries Pty Ltd v Commissioner of Highways (SA)[4] Mason J, (with whom Gibbs J agreed on this point and with whom Jacobs, Murphy and Aickin JJ agreed generally):[5]

The principle ... is one of long standing. It denies to the dispossessed owner the benefit of an enhancement in value and the disadvantage of a diminution in value which would flow from the execution of the undertaking. It was a rule of the common law which did not depend upon statute: Fraser v City of Fraserville[6]. As Lord MacDermott said in the Pointe Gourde Case[7]:

"It is well settled that compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition."

5 In the San Sebastian case, Jacobs J (with whom Gibbs ACJ and Stephen, Murphy and Aickin JJ agreed) observed specifically with respect to planning scheme restrictions:[8]

Restrictions on land use, so that, explicitly or practically, use is restricted to a use for a public purpose for which the land might be resumed, are commonly imposed as a result of consultation with or direction by the public authority concerned with the carrying out of the particular public purpose. In such a case where there is a direct relationship between the restriction on land use and the proposed establishment of the public works the effect on value of the zoning or restriction ought to be ignored.

One purpose of this principle is to ensure that a resuming authority does not employ planning restrictions to destroy the development potential of the land and then assess compensation for its resumption on the basis that the destroyed potential had never existed: ... The principle applies in cases where there is a direct relationship between the planning restriction and the scheme of which resumption is a feature and extends to cases where there is merely an indirect relationship, provided that the planning restriction can properly be regarded as a step in the process of resumption ... [citations omitted]

(a) is the planning scheme reservation of the land to be taken into account in ascertaining the nature of the interest divested upon a compulsory acquisition, for the purposes of assessing compensation; and

(b) if not, is the planning scheme reservation of the land to be taken into account when valuing the land for compensation purposes upon a compulsory acquisition?

8 These issues arise within a framework of agreed facts and questions which have been fixed for preliminary hearing pursuant to the provisions of the Supreme Court Rules. More particularly, they have been formulated as follows:

On 3 February 2006 ("the acquisition date') part of the land comprised in Certificate of Title Volume 10226 Folio 028 ("the before title land") was subject to a public acquisition overlay in the Casey Planning Scheme reserving the land for road purposes ("the reservation").
By notice of acquisition published in the Government Gazette ("the acquisition") on the acquisition date, Roads Corporation acquired the interest of Halwood and all other interests in that part of the before title land being the land described as part of Lot C on Plan of Subdivision 336808A, Parish of Berwick comprising 18.3 hectares and being land described in Certificate of Title Volume 10226 Folio 028 shown as Parcel 1 on Survey Plan 20685 ("the acquired land").
Halwood Corporation Ltd (in liquidation) ("Halwood") purchased land including the before title land on 29 June 1988 ("the purchase date").
When Halwood purchased land including the before title land on the purchase date:

(a) it knew that the acquired land was subject to the reservation;

(i) was the owner of the acquired land at the date the acquired land was first reserved; and

(ii) made no claim for compensation for financial loss pursuant to sections 98 and/or 99 or for loss on sale pursuant to section 106 of the Planning and Environment Act 1987 whether to Roads Corporation or otherwise by reason of the land sold being subject to the reservation.

In 1995, Halwood sought compensation for financial loss from Roads Corporation pursuant to Part 5 of the Planning and Environment Act 1987[10] such loss alleged to have been suffered by Halwood by reason of:

(a) part of the before title land being subject to the reservation;

(b) a permit for the subdivision of the before title land having been refused on the ground that the before title land was affected by the reservation and that the proposed subdivision would prejudice future road works for which the land is or may be required;

(a) by the Supreme Court of Victoria in Halwood Corporation v Roads Corporation (1995) 89 LGERA 280;[11]

(b) an appeal, by the Court of Appeal in Halwood Corporation v Roads Corporation [1998] 2 VR 439;[12]

(c) with the Court of Appeal upholding the decision of the trial Judge that Halwood was not entitled to compensation under either section 98(1)(a) or 98(2) of the Planning and Environment Act 1987.

The purpose for which the acquired land was reserved at the acquisition date is the same purpose for which the land was reserved:

(a) at the date of purchase of land including the before title land by Halwood;

(b) at all times relevant to the compensation claim.

At the purchase date, Halwood paid a reduced price for the before title land by reason of the fact of the reservation.

At the purchase date, Halwood did not pay a reduced price for the before title land by reason of the fact of the reservation.

In ascertaining the interest in land which Halwood had in:

(i) which interest in land was divested or diminished by the acquisition;

(ii) for which compensation is payable under Part 3 of the Land Acquisition and Compensation Act 1986 ("the Act");

(1) is the Court to proceed on the basis that the reservation of the land had already notionally deprived the land of its planning potential and is that to be taken into account and, if so, how?

(2) is the reservation to be taken into account on the basis of assumed fact alternative A and, if so, how?

(3) is the reservation to be taken into account on the basis of assumed fact alternative B and, if so, how?

(4) is the compensation claim and the determination of it to be taken into account and, if so, how?

In assessing compensation payable to Halwood pursuant to the Act for the partial acquisition of the before title land by Roads Corporation by notice published in the Government Gazette on 3 February 2006, including compensation for loss of market value:

(a) on the basis of the agreed facts and on the basis of assumed fact alternative A:

(ii) if yes to (i), how is the reservation to be taken into account in assessing compensation;

(iii) must the reservation be disregarded or must the reservation be taken into account and, if so, how, having regard to, inter alia:

(iv) must the reservation, as well as the restrictions upon the use or development of the acquired land which were on the acquisition date imposed by or were a consequence of the reservation, be disregarded or must the reservation be taken into account and, if so, how, having regard to, inter alia:

(b) alternatively to (a), on the basis of the agreed facts and on the basis of assumed fact alternative B:

(ii) if yes to (i), how is the reservation to be taken into account in assessing compensation;

(iii) must the reservation be disregarded or must the reservation be taken into account and, if so, how, having regard to, inter alia:

9 It may be observed that the questions are not without complexity and rest upon alternative assumptions as to fact. In the event, however, the Authority submitted that no material difference to its case flowed from the alternative assumptions (at least with respect to the first question) and I have reached conclusions which do not differ as between them.[13]

10 The "main purposes" of the LAC Act[14] are:

(a) to establish a new procedure for the acquisition of land for public purposes; and

(b) to provide for the determination of the compensation payable in respect of land so acquired.

Authority to acquire or purchase in accordance with Part

An Authority which is empowered under a special Act[15] to acquire an interest in land by compulsory process must not acquire that interest by compulsory process or by agreement except in accordance with this Part.

12 Section 5 requires the reservation or certification of land before its acquisition. Section 5(1) provides (subject to limited exceptions which follow):

(1) The Authority must not commence to acquire any interest in land under the provisions of the special Act unless the land has been first reserved by or under a planning instrument for a public purpose.[16]

13 The Act then provides for preliminary procedures prior to the compulsory acquisition of land, including the service of a notice of intention to acquire land.

Subject to this Act, the Authority may acquire an interest in land for the purposes of the special Act[17] by causing a notice declaring that interest to be acquired to be published in the Government Gazette.

An interest in land acquired under section 19 may be an interest which did not previously exist as such.

16 It follows that the interest acquired by way of the publication of notice pursuant to s.19 is not to be automatically equated with any interest divested or diminished by the acquisition.

Subject to this Act, every person who, immediately before the publication of a notice of acquisition, had an interest in land that is divested or diminished by the acquisition of the interest to which that notice relates has a claim for compensation.

18 It is with the ascertainment of the interest "divested or diminished by the acquisition" that this proceeding is first concerned.

19 Section 31 provides for an initial offer of compensation to be made to persons affected by the acquisition "on the assumption that the claimant held the interest in respect of which the offer is made". The Act then provides a claim procedure.

20 Section 35 provides in part that a notice of claim must:

(1) (d) state the interest which the claimant had in the acquired land immediately before the date of acquisition and, in the case of an interest which did not come into existence until on or after the date of acquisition, the details of that interest; and

(e) give details of the claimant's entitlement to that interest; ...

21 Halwood claims an estate in fee simple in possession at the relevant date.

22 Section 38 regulates compensation with respect to interests created by minerals and pastoral licences, and with respect to compensation which might otherwise be payable in respect of the making or provision of drains or sewers.

23 Section 39 provides for the apportionment of rent when only part of land leased is compulsorily acquired.

24 Part 4 of the Act provides for the measure of compensation. It defines a series of key concepts, "loss attributable to disturbance", "loss attributable to severance", "market value", and "special value", to which I shall return.

General principles on which compensation is to be based

(1) Except as otherwise provided in this Part, in assessing the amount of compensation payable to a claimant in respect of an interest in land which is acquired under this Act, regard must be had to the following factors -

(a) the market value of the interest on the date of acquisition;

(b) any special value to the claimant on the date of acquisition;

(e) the enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed from the acquired land by reason of the implementation of the purpose for which the land was acquired;

(f) any legal, valuation and other professional expenses necessarily incurred by the claimant by reason of the acquisition of the interest.

(3) If less than the whole of the land in which a claimant's interest subsists is acquired or less than the whole of that interest is acquired, the market value of the acquired interest is the difference between the market value of the interest before the acquisition and the market value of the interest after the acquisition.

27 It can be seen that, by reason of this provision, in cases such as the present where a strip of land is acquired, the net effect of the acquisition upon the market value of the whole holding in which the acquired interest subsists is to be taken into account.

28 Subsections 41(5) and (7) provide for any compensation previously paid in respect of the land pursuant to Part 5 of the P&E Act to be taken into account by way of a formula in reduction of the compensation which would otherwise be payable in respect of a compulsorily acquired interest in land, or in respect of land in which an acquired interest subsists.

(1) In assessing compensation, the following matters must be disregarded -

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

(b) any special suitability or adaptability of the land in which the acquired interest subsists for a purpose for which it could only be used in pursuance of a power conferred by or under law, or for which it could only be used by the government or a public or local authority; ...

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

30 It can be seen that each of the matters referred to potentially extends to circumstances which might fall within the Point Gourde principle.

31 The sense in which the effect on market value of a proposal to carry out a public purpose embodied in a planning scheme reservation is to be disregarded, is not absolute in evidentiary terms. As Jacobs J explained in the San Sebastian case:[18]

A difficulty which arises in the application of this principle is that valuation is in the ordinary case based on market value and, if the proposed public purpose and the possibility or likelihood of resumption therefore has become known prior to the date of resumption, the market value at the time of resumption will probably reflect by way of increase or decrease the possibility or likelihood of resumption for that public purpose. Therefore that value cannot be accepted. Yet it is inevitably in most cases the starting point of the process of valuation. With the actual market value at the time of resumption as the starting point it is then necessary to determine whether that value has been depressed or elevated by the market's foreknowledge of the possible or likely public purpose and consequent resumption. It is therefore inevitable in such circumstances that the public purpose has to be taken into account in the process of valuation but it can be taken into account only for that purpose.

(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

33 The assessment of market value thus governs the potential ambit of a claim for solatium.

34 At the core of the Authority's case, is the finding made upon the hearing of Halwood's claim for financial loss pursuant to s.98 of the P&E Act, that the reserved land was by force of the reservation stripped of its development potential for residential subdivision. As a result, when Halwood had purchased the land in its reserved condition, it had no rights to claim compensation under s.98 for financial loss suffered as the natural, direct and reasonable consequence of the reservation.[19]

35 It was submitted that the interest of which Halwood was in turn divested upon compulsory acquisition, was likewise an interest which was limited in the sense that the planning scheme reservation had previously deprived it of potential for residential subdivision.

36 There are, I think, a series of answers to the Authority's proposition:

(a) the notion of interest as postulated by the Authority is not so defined under the LAC Act;

(b) any ambiguity in the statute is to be construed in favour of Halwood;

(c) the Act explicitly provides for the effect of planning scheme reservations to be taken into account at the stage of valuation of the relevant interest;

(d) that approach accords with the general law of valuation in this State; and

(e) that approach accords with the common law relating to valuation of land upon compulsory acquisition.

37 The definition of "interest in relation to land" found in s.3 of the LAC Act is utilised for two principal purposes within that Act. First, the Act speaks in part of the interest acquired by the relevant authority, and second, the Act governs the rights of persons in interests which are divested or diminished by the acquisition.

38 Thus, the Act provides a framework within which an authority may acquire exclusive title to a parcel of land, or a lesser interest, such as an easement over land. Conversely, persons affected by an acquisition may themselves have exclusive title to the land acquired, or a lesser interest in such land such as a leasehold or other interest.

39 The present case is first concerned with the identification of the interest divested as a consequence of the acquisition of the Halwood land.

40 "Interest in relation to land" is defined by s.3 of the LAC Act to mean:

(a) a legal or equitable estate or interest in the land; or

(b) an easement, right, charge, power or privilege in, under, over, affecting or in connexion with land;[20]

41 Land is itself defined for the purposes of Victorian legislation by s.38 of the Interpretation of Legislation Act 1984, unless the contrary intention appears -

"land" includes buildings and other structures permanently affixed to land, land covered with water, and any estate, interest, easement, servitude, privilege or right in or over land.

42 By reason of the s.3 definition, an authority may acquire an interest in the sense referred to in paragraph (a) or (b), or both. It may acquire absolute ownership comprehending all the estates and interests which could fall within (a) or (b).[21]

43 The Authority submits that the notion of interest in relation to land adopted by the LAC Act is to be understood in the broad sense referred to by the High Court in Western Australian Planning Commission v Temwood Holdings Pty Ltd,[22] when considering the effect on repeal of legislation of saving provisions contained in the Interpretation Act 1984 (WA). That Act (as does comparable legislation in other States) operated to preserve "an accrued, acquired or established right, interest, title, power or privilege". Gummow and Hayne JJ stated:[23]

Those terms are to be understood by reference to the provision of the repealed statute which is in question; they are not used in s 37 solely in any technical sense derived exclusively from property law or analytical jurisprudence.

44 Although there may be some superficial similarity between the terminology considered by the High Court and that contained in the definition of "interest" in the LAC Act, it is apparent that the latter is concerned with interests in land whereas the former is potentially concerned with a far greater variety of rights depending on the nature of the repealed statute in question. As was stated in Chang v Laidley Shire Council:[24]

Terms like "right", "interest", "title", "power" or "privilege" when used in the context of a general interpretation provision like s.20 are to be understood by reference to the statute that has been amended or repealed.

45 Moreover, in the present case there is no dispute that at the date of the acquisition of the land Halwood held a legal estate in such land, namely an absolute estate in fee simple.

46 It follows that the Authority's submission must turn not simply on the breadth of the definition as a whole but upon the interrelationship of its two subparagraphs.

47 Initially, Mr Delany submitted on behalf of the Authority that the relevant interest in land could be comprised within (a) or (b) of the definition, or both. If this approach be taken then it is apparent Halwood's interest would, on the face of it, fall within (a).

48 Ultimately, however, Mr Delany submitted that any interest must be defined by the cumulative application of both (a) and (b). Thus, an estate falling squarely within the terms of (a) should not necessarily be regarded as a relevant interest in land, but should be redefined by reference to the parcel of rights and obligations associated with that estate in a practical sense.

49 In my view the plain terms of the definition do not sit entirely happily with this submission. Subparagraph (b) amplifies (a), but if an estate or interest falls within (a) then it is an "interest" in relation to land within the meaning of the definition. It may of course be qualified by another property interest falling within either (a) or (b), but (b) does not introduce concepts of obligation which do not themselves constitute or create correlative interests.

50 Support for the Authority's approach was said to be found in the line of authority commencing with Ministry of Transport v Petit.[25] In that case the English Court of Appeal had to consider the effect of provisions of the Agricultural Holdings Act 1948, allowing a protected agricultural tenancy to be terminated where the land was required for a use other than agriculture for which planning permission had been granted. In circumstances where the Ministry for Transport acquired land for a motorway, Lord Russell expressed the view that the Point Gourde principle related not to the ascertainment of what was the interest to be valued but the value of the interest when ascertained.

51 In Rugby Joint Water Board v Shaw-Fox,[26] a water board obtained a compulsory purchase order to buy agricultural land adjoining a reservoir. Once again, the land was subject to protected tenancies pursuant to the Agricultural Holdings Act 1948 and the majority of the House of Lords held that because the land subject to notices to treat was required for a use other than agriculture the tenancies were no longer protected.

52 Despite the strong dissenting judgment of Lord Simon of Glaisdale, the view of the majority was clear that the Point Gourde principle did not prevent reference to the effect of the scheme of acquisition to ascertain the interest of a claimant at the date of acquisition. What was prevented by the Point Gourde principle was the use of the scheme in arriving at the value of the interest, once that interest had been ascertained.

53 This view was applied by Gobbo J in Road Construction Authority v Tiligadis.[27]

54 In that case, his Honour was confronted with the acquisition of land comprising a service station in Bell Street, Preston. The tenant of the service station was protected by the provisions of the Petroleum Retail Marketing Franchise Act 1980, from termination of his petrol supply agreement save in certain stipulated cases, one of which was the acquisition of the premises by a public authority. His Honour held that the principle stated in the Rugby Joint Water Board case meant that the ascertainment of the extent of the claimant's interest was to be made recognising the effect of steps in the acquisition process that, in effect, converted his lease from one that could not be terminated, to one without such a right of renewal.

55 In Abbey Homesteads (Developments) Ltd v Northampton County Council[28] the English Court of Appeal considered the compulsory acquisition by a local authority of land for educational purposes. In order to obtain planning permission for a residential development, prior to the acquisition the owner had entered into a statutory covenant to reserve the acquired land for school purposes. The covenant ran with the land. Glidewell LJ stated at 385:

In my judgment the ratio of the decision in the Shaw-Fox case applies to the present case. The interest to be valued is the freehold of the site subject to the restriction imposed by the covenant in paragraph 5 of schedule 1 of the s.52 agreement. Neither the Point Gourde principle nor s.9 of the 1961 Act could apply so as to remove that restriction or require it to be disregarded.

56 In my view each of these cases is clearly distinguishable from the present. The first three were concerned with the terms of statutory protection for leases. The last was concerned with the effect of a statutory restrictive covenant voluntarily entered into by the owner and encumbering the claimant's title.

57 Each case was concerned with the ascertainment of the nature of a property interest in the land. In three of them the definition of a tenant's interest impacted upon the correlative interest of the landlord. In the fourth, the obligation pursuant to the restrictive covenant was the consequence of a correlative benefit to the owner in respect of the development rights relating to the balance of its land.

58 The implementation of the planning scheme reservation in the current case did not change the nature of Halwood's property interest in its land, although for practical purposes it may have constrained its potential use and development.

59 As Mr Wright submitted for Halwood, when the land in the present case was reserved for a public purpose, the planning scheme created obligations of the public law as to its ongoing use and development. It did not, however, create any property interest which qualified Halwood's title to the land.

60 In my view the plain meaning of interest in relation to land as defined by the LAC Act is not one controlled by planning scheme reservations.

61 For completeness, I should add that if the Authority's submission were accepted, then as I understand it, at the date of compulsory acquisition of land from an owner whose ownership predated the imposition of the relevant reservation upon the land (and has no accrued right to compensation under the P&E Act) the owner would have a compensable interest as the owner of land subject to a reservation, and a further potentially compensable interest as the holder of an inchoate right[29] to compensation pursuant to the P&E Act for loss resulting from the prior imposition of the reservation. If compensation were payable with respect to the loss of the inchoate interest pursuant to the LAC Act, the valuation of the inchoate right may present its own difficulties. Further, in some cases the claimant's right to solatium will be very materially reduced as a consequence of the reduction in the notional market value of the land. These complications do not encourage the view that the Authority's submission should be embraced. Moreover, they do not demonstrate a particularly coherent or logical scheme.

Ambiguities in the statute are to be construed in favour of the Applicant

62 In Ketterington Pty Ltd v Noosa Shire Council[30] the High Court endorsed the following statement by Gaudron J:[31]

The right to compensation for injurious affection following upon the resumption of land is an important right of that kind and statutory provisions conferring such a right should be construed with all the generality that their words permit. Certainly such provisions should not be construed on the basis that the right to compensation is subject to limitations or qualifications which are not found in the terms of the statute.[32]

63 If I am wrong as to the plain meaning of the definition, then insofar as it can be said to be ambiguous, that ambiguity should not be held to result in an implied restriction on the right to compensation for the compulsory acquisition of the land.

The explicit provisions of the LAC Act with respect to the effect of planning scheme reservations as part of the valuation process

64 The LAC Act expressly provides for the effect of planning scheme reservations to be considered upon the valuation of the land.

65 I have set out s.43(1)(a) and (d) above but it is convenient to repeat them:

(1) In assessing compensation, the following matters must be disregarded -

66 It can be seen that (1)(a) is concerned with the consequences upon market value arising from the carrying out, or the proposal to carry out the purpose for which the interest in land was acquired. Because s.5(1) of the LAC Act prima facie requires reservation of the land pursuant to a planning scheme for a public purpose as a pre-condition to compulsory acquisition, such reservation is properly regarded as a necessary part of the "proposal to carry out" the purpose for which the land was acquired. In the first instance, s.43(10)(a) thus requires compensation in respect of market value to be assessed disregarding the reservation.

67 Subsection (d) further specifically provides that where the land in which the acquired interest subsists[33] is reserved for a public purpose in a planning instrument, any restrictions upon the use or development of that land which are imposed by, or are a consequence of the reservation are to be disregarded.

68 The provision necessarily contemplates that the effect of a reservation upon the acquired land will be considered at the valuation stage of the compensation process.

69 If restrictions upon the use or development of the land imposed by the reservation were intended to be taken into account in ascertaining the nature of the claimant's interest in the land in which the acquired interests subsists, this provision would be otiose.

70 Further, the provisions of s.43(1)(a) and (d) are preceded by s.41(1)(e) which provides for compensation for injurious affection in the following terms:

71 Section 43(1)(a) and (d) thus form part of a more general scheme under the LAC Act governing when a planning scheme reservation preliminary to acquisition is and is not to be taken into account in the valuation process.

72 In my view, both the provisions of s.43(1)(a) and (d) governing the effect of a planning scheme reservation implemented in consequence of the proposal to carry out the purpose for which the relevant interest was acquired, compel the view that such a reservation is a matter which the Act intends to be taken into account at the time of assessment of compensation and not at the time of ascertainment of the claimant's interest. Conversely, they strongly discourage the view that the definition of "interest in relation to land" is intended by its breadth or by implication, to be extended by reference to the notional impact of a planning scheme reservation imposed for the purpose for which the interest was acquired.

73 Section 5A of the Valuation of Land Act 1960 contains general provisions relating to the determination of the value of land by courts

(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;

(f) the actual and potential capacity of the land to yield a monetary return (my emphasis).

74 It follows that it is part of the general law of this State that the effect of a planning scheme upon the use or development of land is ordinarily of relevance to the assessment of its value not the ascertainment of the interest comprehended by the definition of "land" pursuant to s.38 of the Interpretation of Legislation Act 1984. Section 5A commences with the words "unless otherwise expressly provided ..." In my view, the provisions of the LAC Act are express provisions otherwise as to the manner in which the planning scheme reservation is to be taken in to account in particular circumstances.

75 Section 5A supports the view that in determining the value of land the effect of a planning scheme is a matter to be taken into account as part of the valuation process and not in characterising the relevant interest in land.

76 It follows that the construction which I prefer in respect of the LAC Act is consistent with the conceptual approach generally adopted to the valuation of land in this State.

77 This case falls squarely within the statements of the Point Gourde principle concerning planning restrictions, which I have quoted at the outset of this judgment. It is a case in which there is no dispute that there is a direct relationship between the reservation restricting use of Halwood's land and the proposed public works for which the land was ultimately acquired.[34]

78 Two further authorities bear on the proper approach to the interpretation of a statute in the light of these principles.

79 In Melwood Units Pty Ltd v Commissioner for Main Roads[35] the Judicial Committee of the Privy Council considered the principles to be applied with respect to the compulsory acquisition of land for the purpose of an expressway between Brisbane and Combabah.

80 At the date of compulsory acquisition the project had reached the stage where it was reasonable to assume that a strip of the appellant's land would be acquired for the expressway.

81 The Land Appeal Court assessed compensation on the basis that the value of the land was to be arrived at by adjusting the price paid by the appellant for it in the light of the proposal.

82 The Full Court of the Supreme Court of Queensland took the view that the question of the status and effect of the expressway proposal raised issues of fact upon the valuation but no question of law.

83 The Judicial Committee held that a failure to properly apply the Point Gourde principle did disclose a question of law.

84 Lord Russell of Killowen, delivering the judgment of the Court, stated in part that the Point Gourde principle operates both with respect to the consequential enhancement and adverse effect of a scheme for public works upon resumed land. A resuming authority cannot by its project of resumption destroy the potential for the highest and best use of the land and then resume land severing it from part of the previous holding, on the basis that the destroyed potential never existed. The principle remains applicable where planning permission is refused for development for the highest and best use of the whole of the land, because of the apprehended use of part of the land for a public purpose.

85 Turning specifically to the question of the relevance of the circumstances in which the owner purchased the land, his Lordship stated:

Further, as to the premise of the Land Appeal Court above mentioned, if it is meant thereby that because the developer bought the land with knowledge he should not, on some principle, be allowed compensation except on the basis of what he knew, this would be doubly wrong: a person buying land buys with it the right to compensation for resumption and severance. ...

86 His Lordship went on to address the proper approach to the interpretation of the Queensland statute:

... the Land Appeal Court [pp.66-67 of the record] in discussing Woollams v The Minister[36] pointed out that that decision was based upon a section of the relevant New South Wales statute which, so to speak, embraced both the Point Gourde principle and its reverse operation, and distinguished the relevant operative section [section 26A (5)] of the Main Roads Acts 1920 to 1952 as only forbidding consideration of increase in value attributable to the relevant project. This suggests that the Land Appeal Court thought that effect could be given to a decrease in value so attributable, which as their Lordships have indicated would be wrong in principle and in law. In their Lordships' opinion it is a part of the common law deriving as a matter of principle from the nature of compensation for resumption or compulsory acquisition, that neither relevantly attributable appreciation nor depreciation in value is to be regarded in the assessment of land compensation. The relevant New South Wales section merely reflects the law, as it did in England section 9 of the Land Compensation Act 1961, and the absence of the reverse of the medal in the relevant section of the Queensland Main Roads Acts is not to be taken as altering the law. Immediately after that passage in the judgment of the Land Appeal Court, they say:

"Apart from that, however, there is no evidence before us that, prior to the resumption, foreknowledge of the proposed expressway had a depressing effect upon land values in the neighbourhood of the resumed land."

Their Lordships venture to think that this overlooks the true question, which is whether such foreknowledge had a depressing effect upon the development potential of the resumed and south land.

(a) that the Point Gourde principle is to be regarded as a principle of the common law;

(b) that such principle applies to compensation for both the resumption and severance of land;

(c) that such principle applies to both increase and decrease in the value of the affected land as a result of the implementation of the scheme which gives rise to the acquisition;

(d) that such principle is one properly given effect to in the construction of compensation legislation and should be regarded as continuing to have application, where it is not expressly abrogated, but only partially implemented by express statutory provision;

(e) that such principle is to be applied to the process of valuation of land which is acquired for the purpose of a roadway and at the date of such acquisition the proposed implementation of such purpose is known and affects the value of the land; and

(f) the knowledge of the claimant who buys land prior to the compulsory acquisition may bear on proof of the fact that the proposal did affect the value of the land at the date of compulsory acquisition, but is otherwise irrelevant.

88 These principles support the view that the LAC Act should be interpreted as relating the question of the impact of the planning scheme reservation to the assessment of value and not to the ascertainment of interest.

89 The Authority seeks to distinguish the Melwood decision on the basis that the previous decisions with respect to Halwood's rights under the P&E Act should be regarded as qualifying the concepts in issue. In the previous Halwood decisions it was held that the owner of Halwood's land at the time of planning scheme reservation, was to be regarded as having held an inchoate right to compensation pursuant to s.98 of the P&E Act, which did not pass to Halwood upon the transfer of the land to it.[37] Likewise, it is submitted Halwood should not be regarded as having acquired any right to compensation pursuant to the LAC Act, save subject to the impact on value of the relevant reservation.

90 It may be (although I do not decide) that the LAC Act provides in part for inchoate rights in an analogous sense to that identified in the previous Halwood decisions. More particularly an inchoate right to compensation may be said to arise upon the service of a notice of intention to acquire land as part of the procedure preliminary to acquisition. Such right would not crystallise until either the land is acquired (as a form of loss attributable to disturbance as defined pursuant to s.41(1)) or the acquisition is abandoned and compensation is payable for consequential loss pursuant to s.46.

91 The previous decisions in Halwood cannot, however, be regarded as bearing on the question of the ambit of the interest for which compensation is payable upon the final act of compulsory acquisition.

92 The common law principle is that if a person buys land, part of which is subject to a proposed scheme for acquisition and used for a public purpose, that person buys the land with the right to compensation for resumption and severance if acquisition in fact occurs. This principle is underpinned by the proposition that an authority should not be permitted to destroy the value of land he proposes to acquire by steps preparatory to the acquisition. I do not accept that the Authority has demonstrated the relevant principle has been displaced in the present case.

93 In the Emerald Quarry case[38] the High Court was required to interpret the provisions of a South Australian statute, applicable to a quarry conducted on leasehold land and acquired by a highway authority for the purposes of constructing a freeway.

The compensation payable under this Act in respect of the acquisition of land shall be determined according to the following principles:-

(a) the compensation payable to a claimant shall be such as adequately to compensate him for any loss that he has suffered by reason of the acquisition of the land;

(b) in assessing the amount referred to in paragraph (a) of this section consideration may be given to-

(ii) the loss occasioned by reason of severance, disturbance or injurious affection;

(h) no allowance shall be made for any enhancement or diminution in the value of the land in consequence of--

(b) the acquisition under this Act of any other land;

95 It was argued by the claimant that the provision relating to enhancement or diminution in the value of the land contained in s.25(h) was intended to apply only to "the actual value of the subject land" as referred to in paragraph (b).

96 At first instance, Wells J concluded that the expression "the value of the land" in paragraph (h) meant more than "the actual value of the subject land" in (b).

97 Likewise, the High Court accepted that the law of compensation does not limit a dispossessed owner to the recovery of the value to the purchaser of the land which has been taken, the owner is entitled to recover the value of the land to him, for the precise use to which he was putting it at the date of acquisition.[39]

98 The basic claim made by the quarry operator was for the special value of the land. Mason J stated[40] that if such a claim was to be regarded as one for disturbance pursuant to paragraph (b)(ii) of the section, s.25(h) must apply "because it remains an element to be taken into account in assessing the value of the land".

On the appellant's argument the statutory provision, s 25 (h), is narrower in its operation than the common law rule and the earlier statutory provision contained in s 12 of the 1925 Act. If so, the statute has achieved this result in a singularly oblique and devious fashion. For the appellant's case is, that the present statute altered the policy, not by relevantly restating the principle in s 25 (h) but impliedly as a consequence of the distinction which is drawn in par (b). No rational explanation for the suggested alteration was offered in argument, nor does one readily present itself. If enhancement in value attributable to the execution of the undertaking is not to be taken into account in assessing the actual value of the land, it is inconceivable that it is to be taken into account in determining the special value which the land has to the owner. The concept of special value to the owner is very much of a subsidiary consideration, an additional element in the valuation which reflects the desire of the owner to conduct his business where it is, in preference to re-locating his business elsewhere.

100 Like the decision in Melwood the approach taken by the Court in the Emerald Quarry case strongly encourages the view that the LAC Act is to be interpreted in the light of the relevant common law principles. In my view, the Authority's submission seeks to alter the well understood application of these principles, by an artificial refinement of the concept of compensable interest in land in respect of characteristics which the common law would regard as going to the question of valuation. To adopt the wording of Mason J if the statute has achieved the result contended for it has done so "in a singularly oblique and devious fashion".

101 Halwood also submitted that the Authority's construction of the LAC Act with respect to the ascertainment of the relevant interest in land, would have anomalous consequences. It was submitted that this construction would enable the Authority to avoid paying fair compensation for land, by depressing its value by way of a planning scheme reservation.

102 In particular, it was said this would occur where an owner of land did not claim compensation pursuant to the P&E Act at the time of its reservation and a subsequent owner's claim for compensation upon compulsory acquisition was limited to the carcass value of the land.

103 It was submitted on behalf of the Authority that in circumstances such as the present where the claimant purchased land subject to the reservation prior to its compulsory acquisition, the question was in effect, who should have a windfall?

104 The Authority's submission implicitly concedes that its construction of the statute may give it a windfall in cases such as the present. Conversely, if the effect of the reservation were to increase the value of a claimant's land in the before situation, and such increase is not to be disregarded pursuant to the Point Gourde principle, then an owner may recover a windfall. Whether an owner in fact receives a windfall in circumstances where it buys after a reservation is imposed on the land, will, however, always depend on the price paid by it for the land.

105 I am inclined to accept Halwood's submission that the Authority's construction does have the capacity to result in anomalous outcomes but I prefer to rest my decision on this first issue on the matters I have already referred to.

At a glance

Court

Decision date

Before

Source

Judgment (295 paragraphs)

Parties

Legislation Cited (10)

Cases Cited (11)