(c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law."
96 The matter in issue before the trial Judge was the market value of the Council's interests in Lots 15, 16 and 17. It was not in dispute that the Council's interests were such that it should be treated as the owner of the Lots and that any relevant restrictions imposed upon the use or dealing with the Lots should be taken into account. In Corrie v MacDermott [1914] AC 1056, Lord Dunedin, delivering the judgment of their Lordships, said, at p 1062:-
"The value which has to be assessed is the value to the old owner who parts with his property, not the value to the new owner who takes it over. If, therefore, the old owner holds the property subject to restrictions, it is a necessary point of inquiry how far these restrictions affect the value."
97 In Nelungaloo Pty Ltd v The Commonwealth (1948) 75 CLR 495, Dixon J said, at pp 571-572:-
"Compensation prima facie means recompense for loss, and when an owner is to receive compensation for being deprived of real or personal property his pecuniary loss must be ascertained by determining the value to him of the property taken from him. As the object is to find the money equivalent for the loss or, in other words, the pecuniary value to the owner contained in the asset, it cannot be less than the money value into which he might have converted his property had the law not deprived him of it. You do not give him any enhanced value that may attach to his property because it has been compulsorily acquired by the governmental authority for its purposes ( Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam (1939) AC 302, at p 318). Equally you exclude any diminution of value arising from the same cause. The hypothesis upon which the inquiry into value must proceed is that the owner had not been deprived by the exercise of compulsory powers of his ownership and of his consequent rights of disposition existing under the general law at the time of acquisition."
98 In Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610, it was held that, in arriving at the unimproved value of land under the Land Tax Assessment Act, 1910, the land should not be valued without regard to the provisions and effect of the County of Cumberland Planning Scheme Ordinance, which was a general law applying to the land and limiting its use.
99 A more limited restriction was given effect in Sydney Sailors' Home v Sydney Cove Redevelopment Authority (1977) 36 LGRA 106. In that case, it was held that it was necessary to have regard to the restrictions which were imposed upon the sale of the land and the circumstances in which it could be sold. Hope JA, with whom Moffitt P and Glass JA agreed, held that it was necessary to take account of the fact that the property had been the subject of a dedication of Crown lands for a purpose which may be briefly described as the carrying on of the Sydney sailors' home. The company holding the land had executed a declaration of trust under the Crown Lands Consolidation Act, 1913, which included a provision that the land would not be sold, exchanged, leased, mortgaged or charged or otherwise dealt with, without the approval of the Governor for the State of New South Wales with the advice of the Executive Council of the State. Hope JA held that the restriction on sale, without approval, was a relevant matter and that the assessor could not assume that consent would be given without a restriction on the disposition of the proceeds of sale.
100 It was, therefore, necessary for the trial Judge to take into account, insofar as they were relevant, any restrictions placed upon the use of the lands, any restrictions imposed upon the sale of the lands and any restrictions imposed upon the disposition of the proceeds of sale.
101 Each of the Lots was subject to a trust to which the provisions of Division 5 of Part 5 of the Crown Lands Act applied. The Council was the manager of the trust. Section 102 provided that the trust may not sell, lease or mortgage land, unless the trust has decided that it is desirable to do so, has given public notice of its intention and the Minister has consented in writing. Section 102(6) provides that, in giving consent, the Minister may impose such terms and conditions as the Minister thinks desirable. Section 106 provided, inter alia, that proceeds from a sale, lease, etc, made by a trust shall be applied in accordance with directions, if any, given by the Minister and that, in the absence of a direction, the proceeds shall be applied for the general purposes of the trust.
102 Under these provisions of the Crown Lands Act there was adequate power to sell the lands provided that the Council considered it appropriate to do so and the Minister consented. As a market value presupposes a ready and willing vendor and a ready and willing purchaser, it is difficult to see why it should not be assumed that a sale to the RTA may have been regarded as appropriate and one to which the Minister would have consented. The trial Judge accepted that alienation "for such public purposes as the making or improvement of public roads" was a possibility. There was no evidence before the trial Judge that the circumstances were such that it should be inferred that the Minister's consent would not have been given.
103 In Sydney Sailors' Home, the position was different. It was there held that the unqualified sale of the land was not an object in accordance with which the land was to be used and the consent of the Governor-in-Council could not have been given to what would have been a breach of trust. That is not the present case.
104 The position, therefore, is that the Lots were lands which the RTA wished to acquire and did acquire and they were lands which the Council had power to sell with consent. In this circumstance, the assessment to be made was an assessment of the fair market value of that which was taken. The first and most important factor to be considered was the land itself, its position and qualities. The subject lands were accessible, level land adjacent to the Parramatta River. They were in an area of Sydney in which the land available for public recreation was limited. The trial Judge referred to a report which "highlighted the deficiency of the Council in open space".
105 The community would have regarded the lands as valuable public open spaces. Increasingly, public open space is regarded as a necessary and valuable community asset. Increasingly, councils are building up their reserves, not destroying them. In the area in which the subject lands were situated, there was not such an abundance of open space land that the subject lands would have been regarded as having only minimal value.
106 It was, therefore, significant that the comparable properties upon which the trial Judge relied were properties which had been purchased by municipal councils for public recreation or public open space. Those sales demonstrated the value which communities in Sydney were prepared to pay to obtain such land. Although none of the land in the comparable sales was subject to any specific restriction, public open space was its highest and best use and, in each case, the land was purchased for that purpose. In no case was the land purchased for profit making, for development or for resale. It was purchased with the intention that it would be held and used as public open space or for public recreation.
107 In this context, the restrictions imposed upon the subject Lots had little significance. The comparable sales were of lands which had been acquired for a comparable use. The comparable sales reflected the value which the community placed upon such land.
108 The task is always to assess the value of that which has been acquired. The subject lands were held by a municipal council and were devoted to public recreation. The comparable sales, which reflected acquisitions made by councils of land to be devoted to such a purpose, were good evidence of the value to the Council of the lands from which it has been dispossessed.
109 In my opinion, the trial Judge erred in law in applying the two-thirds discount which was applied by Bannon J, at first instance, in Hornsby Shire Council v Roads and Traffic Authority of NSW [1996] NSWLEC 152. There is no practice or principle of law which makes a two-thirds discount appropriate in itself to a case involving restrictions of the type with which we are concerned. Every case turns upon its own facts.
110 In Hornsby, the judgment of Bannon J shows that the comparable sales were "sales of other open space lands, not being sales for medium density or residential housing … the lands examined were not subject to the same restrictions as the subject parcels at the time of purchase, although they were generally in areas zoned for open space or public recreation". The crux of Bannon J's findings was expressed in these words:-
"Having arrived at the lugubrious conclusion that but for the resumption, the land would remain restricted open space, I am unable to award to the Council the full amounts set out by Mr Wood [the RTA valuer] in his Exhibit 9, or anything like them.
By comparison to West Princes Street Gardens below the Castle in Edinburgh this is wild gully country. No yardstick was afforded by the evidence as to the value to the Council of the subject parcels as open space subject to restrictions. Mr Wood's valuation was of open space without restrictions."
111 It will be seen that Bannon J did not regard the comparable sales as truly comparable. Moreover, he regarded the land which had been compulsorily acquired as "wild gully country". As there is a great deal of such country in and adjacent to the Hornsby Shire, Bannon J was well justified in concluding that the land acquired did not have a great value. It was on this basis that his Honour placed a discount of two-thirds on the figure arrived at from available comparable sales.
112 The facts in Hornsby are not the facts of the present case. The subject lands were public open spaces adjacent to the Parramatta River. They were in an area where public open space was limited. The community would have regarded the lands as valuable community assets.
113 In my opinion, the trial Judge erred in law in his approach. The trial Judge adopted the two-thirds discount applied in Hornsby without considering its relevance to the facts of the case before him.
114 Unless the parties agree on the amount of compensation that should be awarded, I would remit the matter for rehearing in respect of the lands excluding the 2349 square metres part of Dobroyd Parade. I would direct that the parties bring in short minutes within 21 days.
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