CLIFFORD and SHIRE OF BUSSELTON [2007] WASAT 89 (23 April 2007)

State Administrative Tribunal (WA)|2007-04-23

The applicant's position in relation to market value

32 The applicant contends that the value of the private ROW at the date of taking was $825 000.

33 In so contending, the applicant relies on the expert valuation evidence of Mr Dix who, in turn, relies on the expert planning advice of Mr KA Adam, town planner and architect, to the effect that the private ROW could be closed and redeveloped, using the Naturaliste Terrace frontage, for the construction of a "landmark" building as proposed in the Townscape Plan_._

34 In Mr Dix's valuation, at pages 12-13 under the heading "Development Options", Mr Dix concludes as follows:

"It is our view that the comments of Mr Adam are critical to our assessment of the value of the land as it is likely that the development rationale he has adopted and the underlying intention of Council that this site (as well as Lot 13) has a special potential unavailable to the balance of the land in the CBD [of Dunsborough].

In our opinion the landmark development would attract premium rentals and although more expensive to develop would have a greater floor area than would otherwise be the case."

35 Put directly, the applicant's claim concerning value is made on the basis that:

there is no significant impediment to the redevelopment of the private ROW, especially that part of it that fronts Naturaliste Terrace, for commercial uses, such as shops, offices and restaurants; and
having regard to the projected redevelopment for the nearby "Caltex site", which is referred to "Sale 2" in Mr Dix's valuation, and the rental value achievable, the redevelopment of the private ROW will be at the same rate as that of the Caltex site.

36 The applicant's approach to valuation therefore depends on the resolution of the same three matters identified by the Shire as requiring resolution, namely:

the likelihood of closure of the private ROW at the date of taking so as to allow for the possibility of its development;
the development potential of the private ROW; and
the evidence as to the value of the private ROW.

37 Each of these matters will now be considered in turn.

38 Mr Dix's valuation evidence proceeded from the assumption, which he took from the planning advice of Mr Adam, that there was no real impediment to the redevelopment of the private ROW. In effect, Mr Dix treated the private ROW as if it were an unencumbered estate in fee simple which was or could readily be zoned for the commercial purposes of shops, offices and restaurants.

39 However, for there to be any possibility of the private ROW being put to such higher and better uses, the easements over it in favour of Lots 1, 8 and 7, and possibly 14, would need to be modified in such a way as to permit the contemplated development.

40 In this regard it is useful at this point to deal with the question whether the undoubted easements in favour of Lots 1, 8 and 7 also benefit Lot 14.

41 The Shire contends that the Certificate of Title for Lot 14 clearly includes the benefit of an easement over the private ROW, which is conclusive evidence of that easement under s 64 of the Transfer of Land Act 1893.

42 Lot 14 is the subject of Certificate of Title Vol 1539 Folio 893. The land referred to in that Certificate of Title is described as:

"estate in fee simple in portion of Sussex Location 536 and being Lot 14 on Diagram 53982, delineated and coloured green in the Third Schedule hereto."

43 The map in the third schedule shows appurtenant to it the commencement of a "R.O.W." and the further marking "DIA 29927". Next to the scale map the following notation appears:

"ROW created on DIA 29927 appurtenant only to the land formerly contained in Diagram 29927"

44 Section 64 of the Transfer of Land Act 1893 relevantly provides that whenever any certificate of title, either already registered or issued, shall contain any statement to the effect that the person named in the certificate is entitled to any easement therein specified, such statement shall be received in all courts of law and equity as conclusive evidence that he or she is so entitled. For the present purposes there is little doubt that the reference to "all courts of law and equity" would include the State Administrative Tribunal in determining a land valuation question under the Land Administration Act 1997. No party suggested otherwise.

45 The question that is raised by the notation on the title is whether the Certificate of Title actually contains a statement that the registered proprietor of Lot 14 is entitled to the ROW created on Diagram 29927.

that the evidence discloses firstly that at the date of creation of Diagram 29927, Lot 14 was not even in existence. Lot 14 was an amalgam of part of former Lot 3, part of the former right of way shown on Diagram 29927 and other land. Consequently, the applicant argues, a lot which did not exist at the date of the relevant diagram, and further which comprises part of a former right of way, cannot have rights over the private ROW here in question;
secondly, that the owner of Lot 3 gave up the right to use that part of the right of way shown on Diagram 53982, effectively blocking Lot 3's access to the private ROW and thus relinquishing rights to it; and
thirdly, that s 167A of the Transfer of Land Act 1893 which governs these matters, makes clear that a prerequisite to enjoying the easement is that land must be appurtenant to the right of way. The applicant says it cannot be said that the residual part of Lot 3 is any longer appurtenant to the right of way.

47 It is difficult to unravel the precise land tenure history relating to Lot 14 from the documents in evidence. However, reference to Diagram 29927 (which appears as Document 17 in Vol 1 of the agreed bundle of documents, Exhibit 1 in the proceedings) on the face of it seems to bear out what the applicant contends. If, prior to the creation of Lot 14 out of portion of Lot 3 and some of the right of way then appurtenant to Lot 3, the right of way (or rights of way) depicted on Diagram 29927 by reference to Diagram 53982 and Diagram 53983 was closed (as Diagram 29927 suggests by reference to Application B766552), then it appears difficult to see how it can be said with any degree of certainty that Lot 14, as depicted on Diagram 53982 (which is the subject of Certificate of Title Vol 1539 Folio 893) can be said to be "land formerly contained in Diagram 29927" to which the "ROW created on DIA 29927" was appurtenant. The notation in the third schedule of the Certificate of Title for Lot 14 seems only to extend the benefit of the right of way on Diagram 29927 to that land formerly contained in Diagram 29927 which was appurtenant to the right of way.

48 All in all, I am not satisfied from the title and tenure history that Lot 14 at material times had the benefit of the private ROW.

49 However, a conclusion on the material before me to this effect does not bind those with interests in Lot 14 and they would be at liberty to vindicate any claimed rights to such an easement in the Supreme Court of Western Australia.

50 Notwithstanding my views, the simple fact remains that for there to be any possibility of the private ROW being put to a higher and better use of the type Mr Dix has assumed in his valuation evidence, the undoubted easements in favour of Lots 1, 8 and 7 would need to be modified in such a way as to permit development of the sort contemplated by Mr Dix on the planning advice of Mr Adam. Additionally, the hypothetical purchaser would need to consider the possibility of the interest holders in Lot 14 litigating in respect of a claimed easement.

51 In considering the likelihood of the proprietors of Lots 1, 8 and 7 consenting to the modifications of their undoubted easements, it is important to understand the functioning of the private ROW. The private ROW at material times was used by Lots 1 (the subject of three commercial tenancies), 8 and 7 for rear servicing by large vehicles, including for rubbish collection and deliveries.

52 Lot 14 - the bakery premises - also at material times appears to have used at least portions of the private ROW for deliveries.

53 Much evidence was given about the extent to which large service vehicles were able to turn around within either another laneway from Dunn Bay Road through to the private ROW, or in the private ROW itself. It appears that many of these large service vehicles were able to find their way from Dunn Bay Road through to the private ROW at the rear of the commercial tenancies and then continue on through Lot 13 (which is adjacent to the private ROW adjacent to Lot 1) and then egress onto Naturaliste Terrace.

54 At material times it also seems, on the evidence, that customers of the fishing shop, then located within the tenancy on Lot 1, utilised the opportunity to park on the private ROW parallel to the wall of the building on Lot 1. This was particularly convenient for vehicles towing boats on trailers. While it is said that the easements over the private ROW did not provide for vehicles to park in it, the fact of the matter is that vehicles with boats on trailers did in fact do this without any apparent objection, so far as the evidence shows, from the proprietors or tenants of Lots 1, 8 or 7. Presumably this was so because vehicles and trailers parked in this way did not interfere with ingress and egress along the private ROW.

55 To a large extent, the case of the applicant concerning determination of the value of the private ROW depends on the assertion that there was no reason why the easement holders would not have consented, at material times, to the closure of the private ROW. I accept the submissions made on behalf of the Shire that this assertion is in effect speculative. In order to understand why that is the case, it is first necessary briefly to explain the planning advice from Mr Adam upon which Mr Dix relied and which Mr Adam developed in his own evidence to the Tribunal.

56 Mr Adam contemplated that the private ROW would effectively be closed from the frontage with Naturaliste Terrace to a point adjacent to the rear of the existing shop structures on Lots 1, 8 and 7. This would effectively reduce the private ROW to a back lane behind the shops and would permit the applicant to redevelop the new lot - the narrow strip of land immediately adjacent to Lot 1. The effect of such a closure would, as Mr Adam recognised, make it very difficult for access for vehicles entering the "back lane" from Dunn Bay Road, through the other access area, if there were no capacity to egress from the "back lane" through Lot 13 and out onto Naturaliste Terrace. However, Mr Adam believed that the persons with interests in Lot 13 would readily see the good sense of providing such ingress and egress so that traffic using the back lane behind Lots 1, 8 and 7 and the newly created lot would be able to pass through Lot 13.

57 For my part, it is entirely speculative whether the persons with interests in Lots 1, 8 and 7 would ever have acceded to the closure of the private ROW and the creation of the new freehold lot fronting Naturaliste Terrace, without there being a guaranteed right of ingress and egress both ways along the back lane, in the same way as they were then entitled to enjoy their easements travelling both ways along the existing private ROW off Naturaliste Terrace. To give up the comprehensive rights under the easements as they existed at all material times in favour of giving, in effect, a freehold title to the applicant and constraining their own future access entitlements, would, at the very least, be extremely uncertain, and not something that one would expect a fully informed person with proprietary interests in Lots 1, 8 or 7 to do in pursuit of their own interests.

58 While Mr Adam also suggested that some additional land might be taken from the "rear lane" and added to the titles of Lots 1, 8 and 7 as some form of recompense, it is difficult to comprehend how that consideration would necessarily result in those persons supporting the closure proposal of the applicant, in all the circumstances.

59 Mr Dix in his evidence readily accepted, as indeed did Mr Adam, that the closure and redevelopment proposal put forward by Mr Adam would require negotiation between the applicant and the easement holders and that some financial consideration would also need to pass from the applicant to those easement holders for it to have any prospect of success. Mr Dix did not however suggest any quantum for that consideration and had not taken the payment of any such consideration into account in making his assessment of the value of the private ROW at the date of taking. Indeed, Mr Dix, in his oral evidence, said that if someone came to him and sought his advice in respect of the private ROW on the market for $825 000 he would recommend they talk to the easement holders first.

60 I accept the submission made on behalf of the Shire that the benefits asserted by the applicant as likely to accrue to the easement holders are particularly limited. The applicant's proposition that a proposal to close the leg of the private ROW that runs off Naturaliste Terrace would result in a rationalisation of access and continued adequate rear servicing of Lots 1, 8 and 7 is speculation, and not something that a hypothetical prudent purchaser would seriously countenance as a basis for the easement holders giving up their existing rights. The benefits alleged are far outweighed by the reasons why the easement holders would not consent to the closure of the private ROW. I accept the Shire's submissions that these reasons include the following:

the fishing shop on Lot 1 had excellent exposure which would be removed if the leg of the private ROW off Naturaliste Terrace were to be closed and developed;
the three parallel parking bays on the private ROW to the north of Lot 1 were critical to the fishing shop as they enabled customers towing boats to park there in circumstances where there was a lack of vehicle and trailer parking in Dunsborough; and
that rear access for servicing was critical. Closure of the private ROW as proposed would result in Lots 1, 8 and 7 not being able to be serviced from the rear. It would also affect Lot 14 and, as I have noted, the persons with interests in Lot 14 may well sue to clarify the extent of their access rights in the private ROW. There would be no opportunity for service vehicles to turn around and reversing back down the lanes to Dunn Bay Road was not an option. Access to and from Naturaliste Terrace through the private car park on Lot 13 to the north would not have been physically possible and, in any event, would have been totally unacceptable to the owners of Lot 13 who, on the evidence, jealously guarded their proprietary rights. There is every reason to think they would have objected strenuously to the use of their car park as a thoroughfare for service vehicles from the "back lane" created by the implementation of Mr Adam's proposal. Servicing of Lots 1, 8 and 7 (and 14) from Naturaliste Terrace was not a realistic option for a number of reasons including the scale of the deliveries and rubbish collections, the need for the bakery on Lot 14 to have its gas tank at the rear of the property filled, the impact on vehicular traffic and pedestrians, including issues of safety, and the general negative impact on the amenity of Naturaliste Terrace.

61 It is also reasonable to suggest, as the Shire contends, that the fact that the easement holders did not object to a reasonably contemporaneous proposal of the Shire to dedicate the private ROW as a road tends to support the view that they were content at all material times with the then use of the private ROW.

62 Accordingly, a hypothetical purchaser interested in purchasing the private ROW as at the date of taking would have been presented with the following:

no direct evidence from the easement holders that they would consent to the closure of the private ROW. To the extent that there was any evidence, it was that they had not objected to the dedication of the private ROW as a public road;
the reasons put forward by the applicant as to why the easement holders would consent to the closure of the private ROW which are minimal, particularly when weighed against the reasons why they would want to maintain their easement rights in respect of a private ROW that had been functioning as such for more than 40 years; and
even if the easement holders were amenable to the closure they would be surrendering very real and practical rights in respect of which they would expect payment, and it is speculation as to what the hypothetical purchaser would have to pay to secure the consent of the easement holders to the closure.

63 The applicant further contends, in effect, that the easement holders could not exercise any right of veto in this regard because the applicant or a registered proprietor of the private ROW could apply to the Supreme Court under s 129C of the Transfer of Land Act 1893 for the discharge or modification of the easements, on the basis either that there was a changing landscape in the neighbourhood or, more importantly, that those entitled to the benefit were not having their interests substantially diminished. In that regard the applicant contends that Mr Adam's proposal would not interfere with the rights of the easement holders to access both Naturaliste Terrace and Dunn Bay Road, nor their parking rights, nor their delivery rights, nor their garbage collection rights. In fact, it is contended, the proposal provides additional benefits to them over and above those currently enjoyed.

64 To this contention, the Shire submits that the likelihood that the easements could be removed or modified in this way seems very remote if the easement holders were to object, given an assumed desire to continue use of the whole of the private ROW.

65 I accept the submission of the Shire in this regard. The likelihood that a hypothetical purchaser could gain any real comfort from the possibility of successfully applying under s 129C of the Transfer of Land Act 1893 is seriously to be doubted. The most that could be said by way of advice to the hypothetical purchaser is that, speculatively, such an application could be made, but there is absolutely no guarantee of success. Indeed, the court might well take the view that any encroachment on the existing right of access would be an end to the likelihood of such a proposal being adopted. Again, the complete uncertainty - if not improbability - of the persons with interests in Lot 13 agreeing to their car park being used for the purposes of ingress and egress to the private ROW would figure large in any such determination. At best, the hypothetical purchaser would have to be advised that there was a highly speculative possibility that the court might agree to modify the existing easements but that in all likelihood, the application would fail unless supported by all the easement holders, and there was clear evidence that Lot 13 owners also supported the proposal.

66 In my view, the likelihood of closure of the private ROW in the face of the Lots 1, 8 and 7 easement holders - and the possibility that the persons with interests in Lot 14 might also sue to vindicate easements over the private ROW - is entirely speculative and would significantly affect the value that a hypothetical purchaser would pay in the market for the private ROW. In short, the hypothetical purchaser would not pay the price that would be fetched for that land if it were truly unencumbered freehold land zoned under the relevant town planning scheme for commercial uses such as shop, offices and restaurants.

67 The next issue that arises is whether, even if the easement holders were prepared to consent to the closure and redevelopment proposal put forward by Mr Adam, the local planning and development authority - the Shire of Busselton - would have been likely to take the relevant measures and grant the necessary approvals to permit such a form of development.

68 In this regard, the applicant called Mr Adam, a very experienced planner and architect, to explain why his proposed form of development of the private ROW would have received the support of the Council of the Shire.

69 In his evidence, Mr Adam explored the planning and development history of the Dunsborough CBD area and emphasised the following aspects:

that the proposed road link connection between Naturaliste Terrace and Dunn Bay Road had originally been contained in the 1996 Guide Plan prepared for the Shire by private consultants, BSD. The Guide Plan was considered to provide a vision for the overall future development of Dunsborough and set out development design features and details of desired land use mixes in the town centre area;
all this was strengthened by the staff recommendation approved by the Dunsborough Townscape Advisory Committee that it be recommended to the Council of the Shire that the Guide Plan be adopted as a policy pursuant to the Shire of Busselton Town Planning Scheme No 5, as a long term guide to Council consideration of development proposals in the town centre;
plans in the Guide Plan demonstrated the proposal to construct a link road which would pass through Lot 13 from Naturaliste Terrace and into Dunn Bay Road. This did not contemplate the incorporation of Lot 336 into any plan to link those two roads with the exception of perhaps some incidental involvement by way of a corner of the site;
the Dunsborough Townscape Plan (Preliminary Final) published in March 2002 shows the link through from Naturaliste Terrace to Dunn Bay Road passing through Lot 104. It is equally clear that at that point the businesses of the area sprang into action protesting about the acquisition of Lot 104. The final Plan shows that it was amended to drop out Lot 104. The right of way now passes from Dunn Bay Road through the upper leg of the public ROW and then turns to link up with Lot 13. The report at page 51 describes how two options available for the link road were either:

(a) purchase of Lot 104 Dunn Bay Road as the connection into Dunn Bay Road; or

(b) the alteration of Hannay Lane, which would connect into Dunn Bay Road between the town centre roundabout and Seymour Boulevard.

It says that the connection point for the second option into Naturaliste Terrace, that is via Lot 13, is the same as the original proposition. Page 51 goes on to say that whilst there would be benefits in constructing a link road through Lot 104, the cost was constraining and therefore Hannay Lane was the preferred option; that is, through Lot 13;

the private ROW is not reserved under the relevant Town Planning Scheme as a road and nowhere is there any planning document or policy indicating the Shire's intent with regard to the acquisition and dedication of the privately owned Lot 336 and the public rights of way to create a strategic link road through from Dunn Bay Road to Naturaliste Terrace;
the advantages which could be offered to Lots 1, 8 and 7 to come to the table and agree to the alteration of their rights. He outlined that fencing the access to Lot 13 or threatening to do so might have a similar encouraging effect on the owners of Lot 13 and there would be reasons for the Council to participate positively in the proposal;
his proposal would constitute a viable development project which complied substantially with the relevant town planning scheme;
that the Council would be very likely to support cash in lieu payments instead of requiring car parking bays, having regard to the Council's history in taking that course on earlier occasions; and
the strong public support for the link road which appears at page 34 of the Townscape Plan; where it appears that 72% of persons responding either agreed or strongly agreed with the link road via Lot 13 and via Lot 104, whilst only 23% disagreed or strongly disagreed. Mr Adam considered that squarely reflected the "public expectation" with regard to access between Dunn Bay Road and Naturaliste Terrace.

70 Accordingly, Mr Adam expressed the view that a standalone development could have been built in the north west leg of the private ROW fronting onto Naturaliste Terrace. He considered that with some car park "tweaking", the development would comply with the Shire's town planning scheme and that no serious objection would be forthcoming from the Shire.

71 Mr Adam considered that, in all likelihood, what would have occurred is that the proponent of the proposal would have engaged in negotiations with adjoining owners to obtain a way forward. In all likelihood, the access way through Lot 13 would have been maintained but the threat of closure, which would seriously disadvantage the commercial development on Lot 13, would have brought the Lot 13 interests "to the party". The Shire would welcome resolution of a number of long running problems to do with the access way, as revealed in the 2002 Plan.

72 It went without saying, in Mr Adam's view, that the fact that the private ROW was not zoned at material times would, in the circumstances, be no impediment to the land being appropriately zoned to permit its redevelopment for the contemplated commercial purposes.

73 The Shire called Ms AM Satre, who at various times since January 2004 has served as a planning officer with the Shire. By comparison with Mr Adam, she is inexperienced in planning and development matters, having only recently completed her planning qualifications. Her understanding of the practices of the Council of the Shire at the date of taking and earlier were necessarily informed by her own enquiry and appreciation of historic events and documentation, as she had not been with the Shire at those material times.

74 In the end, while the opinions expressed by the planners are helpful, most of the planning documents tended to speak for themselves.

75 The Shire contends that the form of development proposed by Mr Adam would obviously remove access to Naturaliste Terrace via the private ROW. The rear servicing of Lots 1, 8 and 7 (and 14) was necessary and could only be achieved via that access way. Access to and from Naturaliste Terrace through the private car park on Lot 13 would not have been physically possible and in any event totally unacceptable. Lot 13 was owned and developed and the use of its car park as a thoroughfare for service vehicles would have involved traffic and safety issues. Additionally, the owners of Lot 13 jealously guarded their proprietary rights.

76 The Shire points out that in August 1996 the Council of the Shire decided that access between Naturaliste Terrace and Dunn Bay Road would be via the then private and public rights of way. If the private ROW had not been compulsorily acquired, it would have remained unzoned and undeveloped as a private ROW.

77 As to the Guide Plan relied upon by Mr Adam as indicating that access off Naturaliste Terrace through Lot 13 was something that the Council would have supported, the Shire says it is important to bear in mind that, as of March 2003, the Guide Plan was not an adopted planning policy of the Shire listed under Schedule 10 of DTPS 20, nor does it depict any development on the private ROW.

78 The Shire says that a proper and complete understanding of the Guide Plan and surrounding circumstances leads to the following conclusions in respect of the access off Naturaliste Terrace shown on the Guide Plan:

the access represented simply represents the existing situation as at the time of its adoption in September 1996;
in August 1996 prior to the adoption of the Guide Plan, the Council had already made a decision to use the existing rights of way between Naturaliste Terrace and Dunn Bay Road for access between those two roads;
the Guide Plan is "indicative" and does not mean to set out precise forms of development and requirements; and
when all this is understood, the Guide Plan indicates an access between Naturaliste Terrace and Dunn Bay Road. The Council had already decided upon the route prior to the adoption of the Guide Plan, but in any event in a manner consistent with the Guide Plan.

79 The Shire thus says that the applicant's assertion that the Guide Plan only provides for access off Naturaliste Terrace through the existing car park on Lot 13 cannot be sustained. The Guide Plan indicates an access from Naturaliste Terrace to Dunn Bay Road but not its exact location. Furthermore, the access chosen by the Council using the existing rights of way between Naturaliste Terrace and Dunn Bay Road is consistent with, not contrary to, the Guide Plan, even though the Guide Plan was adopted after the access was selected.

80 As to the Townscape Plan, the Shire says it is important to note and keep in mind that the resolution of the Council at its meeting on 16 October 2002 was to "agree in principle" to the Dunsborough Townscape Plan (Preliminary Final) dated March 2002, subject to a number of deletions and modifications to the individual issues listed. The Shire says that it is also important to note and keep in mind that the Townscape Plan is not a planning policy under DTPS 20.

81 The Shire says a proper and complete understanding of the Townscape Plan and surrounding circumstances leads to the conclusion that, insofar as the Townscape Plan identifies access off Naturaliste Terrace and through the existing car park on Lot 13, it is, like the Guide Plan - indicative and not intended to provide an exact location for that access.

82 The Shire submits that there are good reasons for so concluding, including the following:

by the time the Townscape Plan was agreed to in principle, the Council had much earlier in August 1996 decided that its preferred access between Naturaliste Terrace and Dunn Bay Road would be via the existing rights of way. The access off Naturaliste Terrace depicted on the Townscape Plan needs to be understood in light of the Council's decision already made in respect of access;
the Dunsborough Townscape Advisory Committee and the Council in consideration of the preliminary final Townscape Plan of March 2002 had already made it known that access off Naturaliste Terrace through the existing car park on Lot 13 would be far too costly, involving the acquisition of land and the demolition of a building and be disruptive to businesses on Lot 13;
the access road shown on the Townscape Plan between Naturaliste Terrace and Dunn Bay Road was not one of the key recommendations of the proposals in the report. However, other road proposals were included in the key recommendations; and
the proposal for access off Naturaliste Terrace was not one of the numbered recommendations on the Townscape Plan, but other road proposals were.

83 In these circumstances, the Shire contends that the taking of the private ROW by the Shire was consistent with the Townscape Plan.

84 The Shire further contends that, even if it were the case that the access off Naturaliste Terrace as depicted on the Townscape Plan was intended to be precise as to location with no flexibility, then:

the circumstances discussed above would lead one clearly to the view that implementation of that access was most unlikely. Amongst other things, the owners of Lot 13 were opposed to it; and
the location could clearly only be as part of a complete redevelopment of the land in the vicinity of the northern corner of the intersection of Naturaliste Terrace and Dunn Bay Road in a manner similar to that depicted on the Townscape Plan and the Townscape Plan could not on its own provide a basis for public access through the car park of Lot 13 in the absence of such a redevelopment proposal.

85 Thus the Shire further contends that a proper and complete understanding of the Townscape Plan and surrounding circumstances leads to the following conclusions in respect of the extent to which the Townscape Plan deals with the development of the private ROW:

the location of the "landmark building" symbol in the vicinity of the private ROW is conceptual and indicative and not intended to be precise as to location;
the Townscape Plan depicts at a concept level a complete redevelopment of the area in question; and
the Townscape Plan provides no credible basis whatsoever for the standalone development of a "landmark building" on the private ROW.

86 In support of these contentions, the Shire says:

the development of private land is not within the scope of the Townscape Plan;
neither the development of the private ROW nor the redevelopment of the area in question is a key recommendation of the Townscape Plan;
neither the development of the private ROW nor any redevelopment of the area in question is any of the numbered recommendations of the Townscape Plan;
there is no discussion whatsoever in the report accompanying the Townscape Plan in respect of the development of the private ROW nor in respect of the redevelopment of the area in question;
the only reference to landmark buildings in the report accompanying the Townscape Plan is approximately three and a half lines of text;
the implementation plan for the Townscape Plan does not deal with the development of the private ROW;
examples of the imprecision of the location of "landmark building" symbols include that on the existing diagonal building on Lot 13 as well as the unexplained change in the location of the "landmark building" symbol in question from the preliminary final Townscape Plan of March 2002 to its location in the finalised Townscape Plan;
to the extent that the Townscape Plan apparently depicts a complete redevelopment of the area in question, it is very much only at a concept level; and
the evidence of Ms Satre was that the Shire does not use the Townscape Plan as a land use planning tool.

87 In general terms I consider there is much force in the Shire's analysis of the planning history. Undoubtedly there was an historic local government desire to provide an access way from Naturaliste Terrace through to Dunn Bay Road in the vicinity of Lot 13. It was not initially intended to provide access through the area of the private ROW. Opposition to the acquisition of land and opposition from the persons with interests in Lot 13 put paid to the broader idea. The initial proposals would have been too difficult and too costly to implement. In my view, the 2002 Townscape Plan, while showing some reasonably detailed CBD redevelopment ideas, was not intended to be a detailed land use and design plan, but was mostly indicative or conceptual.

88 Certainly I do not accept that, to the extent it can be suggested that the 2002 Plan positively encapsulated a development proposal that would see an access road running through Lot 13, it was anything more than encouragement for the idea that there should be, one way or the other, an access way in that locality. Absent some more detailed redevelopment proposal of land in the vicinity of the private ROW, I do not think it can be said with any degree of confidence that, faced with a proposal for the closure of the private ROW in the manner suggested by Mr Adam, the Council would have "jumped at" the proposal because it seemed to involve the implementation of an aspect of the 2002 Townscape Plan.

89 Similarly, while there is some evidence to suggest that the "landmark" building site had been the subject of some reasonably careful consideration in the preparation and adoption of the Plan, in broad terms it too appears to be conceptual in nature. I do not accept at all that the indication of a "landmark" building on or near to the private ROW where it fronts Naturaliste Terrace, was a considered land use decision on the part of the Council that indicated that it wanted a "landmark" building on that precise site. What one draws from the Townscape Plan is that, at various appropriate locations - not too close to each other - the Council would like to encourage the construction of "landmark" buildings. But to suggest that a two or three storey commercial structure on a lot with a narrow (8 metre) frontage where the private ROW met Naturaliste Terrace would have been a particular "landmark" building site that the Council had in mind when adopting the Townscape Plan is, I consider, highly unlikely.

90 What one can say from the Townscape Plan and the planning documents that preceded it, is that the Council had not given up on the idea of a link road from Naturaliste Terrace to Dunn Bay Road. There is, however, force in what the Shire says to the effect that at about that time and indeed prior to it, the Council had settled upon the acquisition of land to create the road incorporating the private ROW.

91 Certainly, in my view, there is much to be said for the view that the 2002 Townscape Plan was not a land use control tool, in the sense that the planning officers of the Council would have looked at it as a rule to decide what form of development should be approved in the face of a development proposal such as that envisaged by Mr Adam. Nor would the Council simply have looked at the Townscape Plan with a view to its direct implementation. All that means that I do not accept that the Council would have approved the proposed development suggested by Mr Adam, thereby closing off the front part of the private ROW with a view to forcing access through Lot 13. In the light of the Council's knowledge of the non-supportive approach of the owners of Lot 13, it would be surprising if any other position were to be adopted.

92 When one takes into account the speculative notion that the easement holders would "come to the party" and support Mr Adam's development idea, and adds to it the conceptual nature of planning proposals concerning an access way between Naturaliste Terrace and Dunn Bay Road, I consider the notion that in valuing the private ROW taken, one should treat the submission that the subject land with all its potentialities was ripe for development for commercial uses as proposed by Mr Adam, with considerable scepticism.

93 As noted above, the parties each called an expert valuer at the hearing to give evidence on the value of the private ROW. Initially, the Shire proposed to call two valuers but, in the end, only one was called - Mr Hughes. However, the report of the other, Mr PWD Lewis, was received on account of the formal documentation attached to it.

94 The valuers, Mr Dix and Mr Hughes, gave evidence in accordance with the Tribunal's concurrent expert witness practices. Prior to the hearing, they met (with Mr Lewis) and prepared a joint statement. At the hearing they gave their evidence concurrently, that is to say they sat in the witness box together and initially responded to questions put to them by the President before answering questions from counsel for the parties.

95 This is a case where the methodology adopted by the two valuers is quite at odds. Mr Hughes, called by the Shire, was of the opinion that the prime methodology is evidence provided by sales of comparable properties. However Mr Dix was of the opinion that the use of comparable sales is inappropriate in this case because the sales quoted by Mr Hughes did not exhibit the development potential of the subject land.

96 As a result, Mr Dix was of the view that the development proposal for the nearby Caltex site (Sale 2 on the list of sales in his valuation) provided a method of comparison of gross leaseable area (GLA) possible on that site, with a similar analysis of the private ROW. In utilising the evidence of the sale of the Caltex site, Mr Dix considered it was possible to determine a "purchase price" per unit of GLA which could then be applied to a proposed development on the subject land. Mr Hughes considered the methodology adopted by Mr Dix not to be accepted, sound valuation practice.

97 As a starting point, the valuers agreed that the private ROW needed to be valued in the condition in which it existed as at 13 March 2003, the taking date. They also agreed that the highest and best use of the land is the starting point and "is a reflection of the planning and legal outcomes".

98 So far as physical impediments to development of the private ROW were concerned, Mr Hughes was of the view that the sewer under the ground on the land is part of the bundle of rights forming the right of way and that these rights are both "positive and negative and have been taken into consideration". Mr Dix also took into consideration the impact of the sewer but accepted the advice of Mr Adam, the planner and architect, that it would only have a minor impact on the development potential of the land.

99 So far as the sewer is concerned, I generally accept, on the basis of the evidence by Mr GE Crowd of the Water Corporation, Mr Adam and Mr Dix that the cost of either encasing the sewer in its present general location, or in relocating it, was likely to be relatively modest and not so great as to have been a serious impediment to a physical redevelopment on that land.

100 The applicant attacked the comparable sales approach adopted by Mr Hughes on the basis that there are no comparable sales and therefore it is important to adopt an alternative methodology.

101 The Shire attacked the alternative approach adopted by Mr Dix because it effectively proceeds on the basis that matters that are serious constraints, such as the absence of zoning and the existence of easements, are not taken into account in valuing the private ROW.

102 The Shire submits that Sale 2 relied upon by Mr Dix as providing a basis for valuing the private ROW - the Caltex site - so lacks comparability that the transference of a rate per square metre directly across Naturaliste Terrace to the private ROW is flawed and provides no basis for the valuation of the private ROW. The Shire submits that the differences between the private ROW and Sale 2 are so many that the approach adopted by Mr Dix cannot be relied on.

103 In the result, I do not think it is appropriate in this case to abandon the comparable sales approach in favour of some alternative form of assessment along the lines of that adopted by Mr Dix. Mr Dix's valuation was conducted on the basis of the planning advice he received from Mr Adam: that there was no significant impediment to a commercial redevelopment of the site. In effect, Mr Dix treated the private ROW as if it were unencumbered freehold land zoned for commercial uses such as shops, offices and restaurants. However, as discussed in various contexts above, that was far from the case. Indeed, at all material times:

the subject land was a private ROW;
it was not zoned and there was an expectation, in my view, that the Shire would wish to maintain the access usage (whether as a private ROW or as a public access way);
the rights of way involved were formally protected by at least three easements held by persons with proprietary interests in Lots 1, 8 and 7; and possibly by those with interests in Lot 14;
any proposed redevelopment of the front portion of the private ROW fronting Naturaliste Terrace would require the effective consent of the various easement holders. The more easement holders, the rather more difficult it would be to achieve that consent. Even with three it would be difficult;
as to the suggestion that the Shire would, having regard to the planning history in the relevant documents, in all probability support the closure of the private ROW in the manner proposed by Mr Adam, as I have found above, I consider the 1996 Plan and the 2002 Townscape Plan to be largely conceptual documents to which the Council might well have had regard, but which would be far from determinative of any such development proposal;
more likely, the Council would have regard to the long use of the access way not only lawfully by easement holders but generally by the public as a thoroughfare; and
moreover, the suggestion by Mr Adam that, if the front part of the private ROW were closed, this would effectively cause the continuation of the back ROW through Lot 13 would be a quite unlikely scenario in the face of demonstrated opposition by the Lot 13 proprietors to the giving of any formal access way through that lot in other cases considered by the Council of the Shire;

104 It is, in those circumstances, unrealistic to adopt the valuation approach adopted by Mr Dix. To take the Caltex site, look at its purchase price, calculate a rate per square metre GLA, and then apply that rate across the road on the subject land, and also to treat the subject land as a premium site with "landmark building" potential, is in all the circumstances impermissible.

105 While Mr Dix eschewed the proposition that he was valuing a hypothetical development, in many respects to undertake a valuation of the private ROW on this basis is to engage in a hypothetical exercise.

106 Mr Dix explained that the reason he had adopted this approach was because he saw no real alternative; because he understood from the planning advice of Mr Adam that such a commercial development would be quite likely.

107 In my view, the private ROW should be valued as a private ROW and whatever guidance can be obtained from comparable sales of private ROWs must be turned to. I accept the evidence of Mr Hughes that, while there are a number of features to distinguish it from the private ROW here in question, the private ROW known as Ned Higgins Lane in the South West town of Margaret River, further to the south of Dunsborough, provides a relevant comparable sale upon which reliance can be placed. However, Mr Hughes also looked at a number of sales of private ROWs in the Perth CBD, Perth metropolitan area, and some country town settings in the South West.

108 The evidence of Mr Hughes makes it clear - not something that Mr Dix necessarily disputed - that private ROWs generally change hands for what can only be considered nominal amounts, unless there is something in the circumstances to suggest a greater value. An example of a right of way considered to have greater value because of the particular development circumstances in which it was located was the Bennett Street, Perth, right of way. Mr Hughes identified how the acquisition of that right of way provided significant development benefits for the owner of adjacent land that caused that owner to pay much more than a nominal sum for the right of way. No such benefit was indicated in the case of the private ROW valuation question here.

109 The applicant contends, by reference to Crompton v Commissioner of Highways (1973) 32 LGRA 8 at 23 - 24 and Wong v Minister of Water Resources (1985) 55 LGRA 431, that there are well understood reasons why one sale may not be considered comparable with another. So far as the sale of the Ned Higgins Lane right of way in Margaret River is concerned, the applicant says this was a sale to a government statutory body in a South West town quite some distance from the private ROW in question, with quite different physical attributes.

110 Mr Hughes was pressed in his evidence concerning the comparability of the Ned Higgins sale. Overall, he considered it relevant for these reasons:

it was a right of way in a town in the South West region;
the right of way was not zoned under the local authority's planning scheme;
there were at least two lots which had easement rights over the right of way;
while the sale was to a local authority, the negotiations leading to its sale were protracted and the parties advising the Higgins family included valuers and lawyers; and
available statistical information shows that the median house prices for the local government areas of Augusta-Margaret River and Busselton, in which the two rights of way in question respectively are located, appreciated by 13.2% and 29.2% respectively for the 2003 calendar year. It follows that market trends were not declining during 2003 between the date of valuation and October later that year.

111 The applicant suggested that a number of the comparable sales relied on by or referred to by Mr Hughes were not clearly comparable or could not be relied on. It was said that some, if not all, were not arm's length sales, and that most were sales to or from statutory bodies (not only Ned Higgins Lane, but Howard Street, Grand Lane, Campsie Street and Moore Place). Further, it was said that some had been acquired from a public authority in a pre-resumption situation (William Street). The only one not in such a situation was Bennett Street, and Mr Dix's view was that this was a distressed sale.

112 Mr Hughes dealt with all of these observations in some detail. As to Howard Street, Mr Hughes confirmed that he did not rely heavily on the sale. In any event, it was a rate of $0.54 per square metre versus $4.62 per square metre that he had allowed for the private ROW in question. He noted that nevertheless it was a sale of a right of way in a sample or spectrum of evidence and that he had obtained information about the sale from a valuer at the Perth City Council who negotiated the transaction. He said the initial expectations for the sale were very high and they plummeted.

113 As to Grand Lane, Mr Hughes explained that this land was in an area of the Perth CBD undergoing significant redevelopment at the time. That and other factors were reflected in the sale price. The sale price was for $148 per square metre versus the $4.62 applied in the case of the private ROW in question.

114 Mr Hughes referred again to the Bennett Street right of way which sold at the rate of $158 per square metre. He explained the full development potential of the right of way had been assessed. He did not accept it was a distressed sale. It was a private sale to the owner of the adjacent land with development potential. He said that the development potential was then fully exploited. Mr Hughes made reference to a comment by Mr Dix concerning a sale to the City of Perth of $100 000 after capitalising benefits inherent in Bennett Street was simply wrong. The land had not been sold. The owner had instead fully exploited the benefits.

115 As to the William Street sale, he rejected the inference that the transaction was not a market one. He said it had been fully tested in the market at $176 per metre for a central Perth CBD property. He said there were many valuers involved on both sides of the negotiations and it was a negotiated outcome and clearly a market one.

116 As to Laroche Lane in North Perth, comments made by Mr Dix were rejected by Mr Hughes. Mr Hughes said the sale was not made by the developer of the land after taking advantage of the access provided to develop the adjoining land. There was no process of stripping out value before it was sold to the Town of Vincent for one dollar. The facts were that the small lot subdivision opened up by purchase of the remnant right of way enabled the Town of Vincent to develop its former depot site, which is now Toorak Rise. The Council purchased part of the right of way, widened it slightly and created Toorak Rise and achieved a small lot subdivision. Mr Hughes said that if anything, the sellers of the right of way could have endeavoured to receive a higher price because the land was critical to the new subdivision, but they did not. On the contrary, when the Council approached the sellers and a number of other holders of rights of way, the Council eventually purchased all for a token consideration.

117 As to Moore Place in Bridgetown, Mr Hughes considered it would appear that the acquisition was an exercise in formalising a development condition relating to a subdivision from 1953. He considered the circumstances were not unlike that of the private ROW in question here. An adjoining Lot 13 had been sold as vacant land in October 2003 for $37 000, which appeared to have triggered the formal transfer of Lot 123 - the ROW - to the Shire.

118 Mr Hughes explained, and I accept, that he did not rely on any of these sales heavily, although he considered each of them had a circumstance that was similar and relevant in relation to the valuation to be conducted here. In the end, as noted, Mr Hughes relied on Ned Higgins Lane as the most comparable sale. Ned Higgins Lane sold for $3.08 per square metre. In the case of the private ROW in question, Mr Hughes assessed a value of $4.62 per square metre.

119 I generally accept Mr Hughes' evidence putting those sales, apart from Ned Higgins Lane, into context.

120 It follows, in my view, that the methodology adopted by Mr Dix in valuing the private ROW is inappropriate in the circumstances of this case. In short, Mr Dix proceeded to conduct a valuation on the basis that the subject land was unencumbered freehold land which could be developed without any serious impediment for the commercial uses of shops, offices and restaurants. Having regard to all the evidence, as set out above, the assumption made by Mr Dix is incorrectly made, and the private ROW should be valued, as Mr Hughes has suggested, as a private ROW with limited development potential and by reference to the most appropriate comparable sales. Sales of private ROWs, as the valuation evidence of Mr Hughes discloses, are mostly for relatively nominal sums, unless there is some particular benefit to a purchaser, such as the example of the Bennett Street, Perth, transaction, which was not indicated here.

121 Mr Hughes considered the appropriate value of the subject property to be $3250, rounded down to $3000, as of 13 March 2003, the date of taking. In the circumstances I see no reason to adopt any assessment of value other than that suggested by Mr Hughes. However, I do not think, in the case of such a relatively small sum as $3250, that there is any justification to round it down to a lesser sum.

122 I should also add that, as to the reliance by Mr Dix on the Caltex site sale - referred to as Sale 2 in his valuation report - I have considerable difficulty in accepting that this may be used as a sale upon which a rate per GLA can be extracted and then applied without more to the subject private ROW. I accept the questioning analysis made by Mr Hughes of this methodology. Mr Hughes noted that there are aspects of Sale 2 that are not remotely comparable to the private ROW:

it is over 90 square metres;
its visibility and prominence are second to none;
it is a very desirable shape for a retail development and it has negligible constraints;
to compare the two sites and come out with and apply a rate per square metre of GLA requires one to assume that everything else is equal when the profiles of the two sites are "just chalk and cheese. They are completely different";
one has development certainty - the Caltex site; the other doesn't - the private ROW; and
one has car parking benefits that were inherent in the sale price.

123 I also accept the more fundamental comment made by Mr Hughes on the methodology adopted by Mr Dix in this regard, which Mr Hughes expressed in the following way (Transcript of 8 February 2007 at 23):

"Now to come out with a GLA, a dollar rate per square metre of GLA, to directly transfer across the road, you need to conduct a detailed analysis and hypothetical development of both sites, compare all the costs, compare the rents, assess the gross income, assess the net income, capitalise that, deduct the development costs, building costs and all development costs, allow risk factors and come up with a rate per square metre of land. Now applying the same rate per square metre of GLA assumes that all of those things are equal. So in my view, the methodology is a half methodology ... Well, there are no substantiating facts, figures, costings, rents, capitalisation rates, risk rates anywhere to be seen in the report and I don't know how you can then draw a comparison between the two properties, if you haven't analysed them fully. For that matter, why don't you apply the $118 dollars a square metre of Sale 1? Why is there no focus on Sale 3? I don't know. That's not my methodology."

124 The applicant says that interest should be awarded on the compensation payable in accordance with s 241(11)(b) of the Act from 4 March 1997.

125 Section 241(11) of the Act relevantly provides that:

"If the interest in land taken does not produce any rents or profits, interest is to be paid at the rate payable in respect of judgment debts as determined under section 142 of the Supreme Court Act 1935 ruling as at the date of entry for construction or carrying out of the work or the date of registration of the taking order, whichever is earlier, and the interest is payable from -

(a) the date of the service of the claim on the acquiring authority; or

(b) the date of entry for construction or carrying out of the work,

(c) when the offer was served on the claimant, if the compensation awarded by the State Administrative Tribunal or the court of competent jurisdiction is not more than the amount offered by the acquiring authority; or

126 It is accepted by the parties that the interest taken in the land did not produce any rents or profits and therefore it should be paid at the rate identified in this provision as of the date of any entry for construction or carrying out of the work, or the date of registration of the taking order, whichever is the earlier, and payable from the relevant date. In this case the question is whether there was any prior entry for construction or carrying out of the work. If so, that will dictate the dates for calculation of interest.

127 The applicant says that entry for construction or carrying out of the work occurred on 4 March 1997.

128 The applicant draws attention to the evidence given by Mr SL Millen, a Council officer, that underground trenching work to provide underground power was carried out on the subject land in 1997 and that at least one street light was connected to that. He gave further evidence that work was carried out in 1999 which involved sealing and curbing the first leg of the subject land, marking spaces and repairing the other leg.

129 The applicant submits that the trenching work shows clearly the first road work carried out on the subject land by the Shire and therefore its first entry for the purposes of calculating interest on the claim. By reference to Shire documents the applicant identifies 4 March 1997 as the relevant date.

130 The applicant says the stated purpose of the taking is the creation of an under width road and the trenching works constitute a part of that work given the status quo, which is that it was already an access way. The applicant says Mr Millen said the work was done on the basis that the Shire considered that the road was theirs already and it was taking steps to acquire it.

131 The Shire says that the evidence of Mr Millen was that some time in 1999/2000 he was involved in fixing a pothole on the leg of the private ROW that runs into Naturaliste Terrace, as well as sealing approximately the first 30 metres of the private ROW, installing curbing and marking parking spaces. The Shire says the purpose of undertaking these works was because of concerns regarding public safety and liability and as the private ROW was going to be compulsorily taken.

132 The Shire accepts that prior to the undertaking of these works the Shire had undertaken works on the private ROW and charged the costs to those persons who had interests in it.

133 The Shire also accepts the works referred to carried out in 1999 were not paid for, however, by the registered proprietor or easement holders.

134 The Shire contends that the works carried out in 1999 do not constitute an "entry for construction or carrying out of" the creation of the under width public road for the purposes of s 241(11). What was done was simply the repair and upgrade of an existing facility to the benefit of those who used it and not adverse in any sense to those who had interests in the private ROW. The sealed access way already existed and the entry was not for the purpose of creating a work that did not already exist. Furthermore, the reasons for undertaking the works included issues of public liability and public safety.

135 The Shire says that any suggestion that work associated with the installation of underground power cables in 1997 constitutes an entry is erroneous. The work for which the private ROW was compulsorily acquired was that of an under width public road, not the installation of underground power cables. Furthermore, creation of the under width public road and the installation of underground power cables were unrelated, and the taking of the private ROW proceeded from the decision of the Council in August 1996 to create the road and the installation of the underground power was pursuant to the Guide Plan.

136 I generally accept the submissions made on behalf of the Shire. I do not consider that the trenching works of 1997 constitute "entry" for the purposes of s 241(11) of the Act. Nor do I consider that the work undertaken in 1999/2000 constitutes a relevant "entry". While there may have been some understanding on the part of junior officers of the Council that the private ROW was already under their control, it seems to me that properly understood the works then undertaken were not in pursuit of the work to which the taking related and were merely incidental to the general management of roads by the Shire in the vicinity of Dunsborough. The fact that prior to 1999/2000 works were undertaken and charged to persons who had interests in the private ROW supports this conclusion.

137 The 1997 work to do with the installation of underground power cables cannot be considered an "entry" for the purposes of s 241(11).

138 The repair and upgrading of the existing facilities in 1999/2000 was merely the repair and upgrading of an existing facility in respect of which one can understand that the Shire wanted to safeguard or facilitate public safety. It was not an unambiguous act of eminent domain.

139 As a result, I do not consider that in either 1997 or 1999/2000 there was any relevant entry for the purposes of s 241(11) of the Act.

140 In these circumstances, the applicant is only entitled to interest pursuant to s 241(11) of the Act as of the date of registration of the taking order and interest is payable from the date of the service of the claim on the acquiring authority to the date specified in s 241(11)(c), namely, when the offer was served on the claimant, if the compensation awarded by the State Administrative Tribunal is not more than the amount offered by the acquiring authority.

141 For the reasons given above, the Tribunal finds:

1. the value of the land taken, for the purposes of s 241 of the Land Administration Act 1997, is $3250 and compensation is payable in that sum;
an additional amount appropriate to compensate the applicant for the taking without agreement should also be added, pursuant to s 241(8). As there are no exceptional circumstances to justify a higher amount, for the purposes of s 241(9), the Tribunal would allow an additional amount of 10% of the value assessed;
the Tribunal will hear from the parties as to whether or not any interest is payable pursuant to s 241(11) of the Act, in light of the ruling made above concerning the prior entry issue; and
the compensation payable in these respects will be payable less any advance payments of compensation already made.

142 The Tribunal will invite the parties to bring forward an agreed minute of final orders to give effect to this decision.

I certify that this and the preceding [142] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

CITATION : CLIFFORD and SHIRE OF BUSSELTON [2007] WASAT 89 (S)

HEARD : 12 JUNE 2007 AND DECIDED ON THE DOCUMENTS

Compensation Taking of private right of way Settlement offers by respondent Costs of proceedings

1 On 23 April 2007, the Tribunal assessed the compensation payable for the taking of a private right of way in the centre of Dunsborough in the sum of $3,250.

2 Between 12 August 2004 and 24 January 2007, each party offered to settle the proceedings. The Shire of Busselton in particular made a number of offers of settlement.

3 The Tribunal considered the statutory context of its discretion to award costs. The Tribunal then analysed each offer in light of the costs incurred by the applicant at the relevant date.

4 The Tribunal found that the Shire's offer of 17 July 2006 was more favourable than the Tribunal's order and ordered that the applicant pay the Shire's costs from 17 July 2006.

5 In Clifford and Shire of Busselton [2007] WASAT 89, the Tribunal assessed the compensation payable for the taking of a private right of way (ROW) in the centre of Dunsborough, for the purpose of creating an underwidth public road, in the sum of $3,250.

6 The Tribunal also found that there were no relevant entries onto the subject land prior to the taking, for the purposes of s 241(11), Land Administration Act 1997 (WA) (LA Act).

7 Following the giving of that decision, the Shire of Busselton applied for an order that the applicant pay the Shire's costs of the proceedings.

8 The issue currently for determination is whether the applicant is, in the circumstances of this case, obliged to meet the costs of the Shire and, if so, in what sum.

9 As noted, on the principal issue for determination in the main proceedings, the Tribunal determined that compensation for the taking of the private ROW should be assessed in the sum of $3,250.

10 The Shire filed a chronology of events pertaining to endeavours by the parties to settle the compensation proceedings without a final hearing, which endeavours it says bear on the question of costs.

11 The initial claim for compensation dated 10 January 2004, was for land value of $692,250, solatium of $69,225, as well as fees and interest.

12 By offer of the Shire dated 12 August 2004, the Shire offered to pay $1000 by way of compensation.

13 By further offer of the Shire dated 8 March 2005, the Shire offered to pay compensation of $2,500.

14 These offers were further increased by offer of the Shire dated 3 October 2005 of $2,750 plus interest. This was a formal offer made under the LA Act.

15 By offer dated 25 November 2005 the applicant then indicated she was prepared to settle the proceedings in the sum of $75,000 plus solatium, interest and costs.

16 The Shire by offer dated 17 July 2006 offered $40,000 inclusive of legal costs.

17 By offer dated 27 July 2006 the Shire increased that offer to $60,000 inclusive of costs.

18 By offer dated 8 January 2007, the Shire further increased its offer to $110,000 which was said to be "inclusive of all heads of compensation, interest, legal costs and disbursements, other fees and expenses or any other loss, damage or expense however arising in relation to the matters the subject of this application".

19 The Shire increased its offer by offer dated 19 January 2007 to $130,000 expressed in the same terms as the offer of 8 January 2007.

20 The applicant by offer dated 24 January 2007 indicated to the Shire she was prepared to settle the proceedings for approximately $231,000. This sum is estimated by reference to the express offer of the applicant to accept the sum of $150,000 plus costs as previously outlined in a letter by the applicant's solicitors to the Shire's solicitors dated 17 January 2007. This offer was made in full and final settlement of the claim.

21 At the hearing the applicant claimed a total of $907,500, being $825,000 compensation plus solatium of $92,500, plus interest since 4 March 1997, an amount calculated in total to be greater than $1,450,000.

22 In the event, the Tribunal assessed compensation in the sum of $3,250 which with interest from 10 January 2004 was calculated to be a sum less than $4,500 in total.

23 In short, the Shire contends that because the applicant failed to obtain an award of compensation greater than the offers it had made at material times in the course of proceedings the applicant should meet the Shire's costs of the proceedings.

24 Counsel for the Shire acknowledged that the starting point in relation to an application for costs by a party in the Tribunal is s 87(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act). Section 87(1) in effect provides a "no costs rule" in that unless otherwise specified in the SAT Act, the enabling Act in this case the LA Act or an order of the Tribunal under s 87, parties bear their own costs in a proceeding of the Tribunal.

25 However, counsel for the Shire also drew attention to s 87(2) which permits the Tribunal to make an order for the payment by a party of all or any of the costs of another party.

26 Counsel also drew attention to s 87(5) which provides:

"[t]he rules may deal with the effect of certain offers to settle, and responses, if any, to the offer, on the making of an order for the payment by a party of the costs of another party."

27 Rule 40 and r 41 of the State Administrative Tribunal Rules 2004 (WA) (SAT Rules) govern settlement offers and acceptance of settlement offers. Rule 42 provides that if a settlement offer made in accordance with the Rules is not accepted within the time the offer is open and in the opinion of the Tribunal the orders made by the Tribunal in the proceeding are not more favourable to the other party than the offer, then the Tribunal is to, in determining the costs that may be awarded, take into account that the party did not accept an offer more favourable than the Tribunal's order. Rule 42(3) provides that in determining whether its orders are or are not more favourable to a party than an offer, the Tribunal

must take into account any costs it would have ordered on the date the offer was made; and

must disregard any costs it ordered in respect of any period after the date the offer was received."

28 The Shire contends that the offer made at relevant times was greater than the compensation ordered by the Tribunal. Counsel for the Shire submitted two alternative possibilities by way of a costs order:

That the Shire have all of its costs from 17 July 2006 when the Shire made the offer of $40,000 inclusive of costs.

That the Shire have all of its costs in respect of the conduct of the four-day hearing of the matter and its experts.

29 Counsel for the applicant produced a bundle of documents showing the applicant's professional costs incurred in prosecuting the claim for compensation up to 29 January 2007, that is, four days prior to the final hearing, which indicated that she had potentially incurred professional fees of $131,046.

30 Counsel for the applicant said none of the offers made met the costs incurred at relevant dates.

31 Counsel for the applicant submitted that the last offer of $130,000 inclusive of costs and expenses of 19 January 2007, was not an effective offer because r 41 was not complied with in that there were only 12 days' notice for acceptance prior to the hearing, not the 14 days specified in r 41(1) and r 41(2).

32 As to the Shire's offer dated 8 January 2007 of $110,000, counsel for the applicant submitted that that offer did not meet all of the costs that had been incurred by the applicant at that point, including professional fees, and it was not reasonable that the applicant should have accepted it.

33 In rejecting the $110,000 offer the solicitors for the applicant by letter dated 17 January 2007 made the following observation:

"Nevertheless costs have escalated alarmingly as a consequence of the complication of the issues. Our client's legal costs now stand somewhere in the region $40,000.00. The costs of Mr Adam currently stand at $21,000.00 and although we have not as yet asked our client's valuer Mr Dix what his costs may be, we imagine they will be similarly substantial. We therefore consider that the costs now stand at approximately $81,000.00 on a conservative basis which appears to completely negate the offer which you have made.

We have therefore had to inform our client that taking into account the deductions mentioned in your letter, this offer would only result in her costs to date being paid and no compensation at all accruing to her.

Our client has instructed us to reject this offer for the reasons set out above ..."

34 As to the 14day requirement for an offer mentioned in r 41(2), counsel for the Shire pointed out that under r 41(1) an offer must be open for acceptance until hearing or until the expiry of the specified period after the offer is made, whichever is the shorter period. It is suggested that means an offer can be left open until the hearing even if that is a shorter period than 14 days.

35 Counsel for the Shire submitted that in any event it is open to the Tribunal in the exercise of its discretion under s 87(2) to take into account the making of an offer whether or not it is made in compliance with r 40 and r 41 of the SAT Rules.

36 Counsel for the Shire also responded to the calculation as to the offer made in the applicant's solicitors' letter dated 17 January 2007, suggesting that the analysis provided there is wrong. Counsel submits that if $81,000 had already been incurred in costs then, given that the offer was for $110,000 at that time, $29,000 remained to meet solatium, any interest and the valuer's fees of $19,000, as well as the compensation award made by the Tribunal, because there would be in the region of $10,000 remaining once those professional and other costs were subtracted.

37 Subsequent to the making of submissions on costs, with the leave of the Tribunal, the solicitors for the applicant provided further material to the Tribunal that sought to identify the extent of legal costs and other professional costs incurred by the applicant at different periods during the course of getting up the application for compensation for hearing at the Tribunal.

38 The solicitors for the Shire also lodged further written submissions concerning those materials.

39 It is commonplace now to describe the State Administrative Tribunal as, on the face of it, a costsneutral tribunal. This has been explained in a number of decisions of the Tribunal: see Chew and Director General of the Department of Education and Training [2006] WASAT 248; Summerville and Department of Education and Training [2006] WASAT 368(S). This observation derives from two main sources. First, the Task Force report that informed the setting up of the Tribunal. And secondly, and more importantly, the express terms of the SAT Act in respect of costs.

"Unless otherwise specified in this Act, the enabling Act, or an order of the Tribunal under this section, parties bear their own costs in a proceeding of the Tribunal."

This enshrines the philosophy that the Tribunal is costneutral. Ordinarily parties will bear their own costs and not obtain orders against other parties to meet their costs of proceedings.

"Unless otherwise specified in the enabling Act, the Tribunal may make an order for the payment by a party of all or any of the costs of another party or of a person required to produce a document or other material on the application of the party under section 35."

This means that the Tribunal has a discretion to order a party to pay the costs of another party in an appropriate case.

42 The circumstances in which the Tribunal will exercise its discretion to order that one party pay the costs of another party are being worked out over time. For example, in vocational regulation proceedings, the Tribunal has made it plain that a vocational body that succeeds on an application ordinarily will be entitled to an order for costs, effectively on the basis that costs follow the event, as it is stated in many courts.

43 However, the Tribunal has also made it clear that just because a vocational body is not successful does not necessarily mean it will be ordered to pay the costs of the affected party. This is because there is a public interest in the vocational body bringing proceedings: See Motor Vehicle Industry Board and Dawson [2006] WASAT 8.

44 Section 87(3) specially empowers the Tribunal to make an order for the payment of an amount to compensate a person in certain circumstances. This is over and above the costs of the proceedings to which s 87(1) and s 87(2) refer.

45 Section 87(4) sets out some factors to be considered by the Tribunal where a party applies for costs in relation to a proceeding in the Tribunal's review jurisdiction. If the order is sought against a party which is the decision-maker, a relevant question is whether the decision-maker genuinely attempted to make a decision on its merits. If the party against whom costs is sought is the applicant, a relevant question is whether that party genuinely attempted to enable and assist the decision-maker to make a decision on its merits.

At a glance

Court

Decision date

Catchwords

Source

Catchwords

Judgment (261 paragraphs)

Legislation Cited (5)

Cases Cited (3)

CLIFFORD and SHIRE OF BUSSELTON [2007] WASAT 89 (23 April 2007)