LAKE MACQUARIE CITY COUNCIL v LUKA

Court of Appeal (NSW)|1999-09-07|Before: Handley JA, Sheller JA, Stein JA, Bignold J, Mervyn J

New South Wales Court of Appeal CITATION : LAKE MACQUARIE CITY COUNCIL v LUKA [1999] NSWCA 447 FILE NUMBER(S) : CA 40760/96 HEARING DATE(S) : 7 September 1999 8 September 1999 JUDGMENT DATE : 7 December 1999

LAKE MACQUARIE CITY COUNCIL PARTIES : v SHANNON LUKA JUDGMENT OF : Handley JA at 1; Sheller JA at 79; Stein JA at 80

COUNSEL : M S Jacobs QC/P C Tomasetti (Appellant) P J McEwen SC (Respondent) SOLICITORS : Peter Rees - LMCC Speers Point (Appellant) Mervyn J Cathers & Co Castle Hill (Respondent) CATCHWORDS : COMPULSORY ACQUISITION - compulsory acquisition of private roads by Council - compensation awarded by Land and Environment Court - whether Judge erred in law - whether land could be valued as if it had never been sub-divided - whether private rights of other parties should be taken into account - whether roads had become public roads; REAL PROPERTY - subdivison creating roads contiguous with lots - private rights-of-way created in favour of lots - Dabbs v Seaman (1925) 36 CLR 538 followed; REAL PROPERTY - dedication of highways - not possible by public user after 1 January 1920 without compliance with Local Government Act 1919 Roads Act 1993 Land Acquisition (Just Terms Compensation) Act 1991 Land and Environment Court Act 1979 ACTS CITED : Real Property Act 1900 Local Government Act 1906 Local Government Act 1919 Interpretation Act 1987 Conveyancing Act 1919 The Raja's Case [1939] AC 302 Little v Dardier (1891) 12 NSWLR (Eq) 319 Dabbs v Seaman (1925) 36 CLR 538 Permanent Trustee Co of NSW Ltd v Campbelltown Corporation (1960) 105 CLR 401, 422 Yates Property Corporation Pty Ltd (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156 at 175 Turner v Minister of Public Instruction (1956) 95 CLR 245 at 268-9 Melwood Units Ltd v Commissioner of Main Roads [1979] AC 426, 432 Vickery v Municipality of Strathfield (1911) 11 SR (NSW) 354 Council of the City of Gosford v Peter Cunningham, Valuer-General for the State of New South Wales, SC, 26/3/96, unrep McCloys Pty Ltd v Lake Macquarie City Council, LEC, 19/9/94, unrep AG v City Bank of Sydney (1920) 20 SR NSW 216, 221 Owen v O'Connor (1963) 63 SR (NSW) 1051, 1053, 1054, 1057-8 CASES CITED: In re a Caveat by the Council of the Municipality of Botany (1936) 36 SR (NSW) 615, 619 Commissioner for Railways v Dangar (1943) 15 LGR 101, 105 Newington v Windeyer (1985) 3 NSWLR 555, 558 In re Sutton Cold Field Grammar School (1881) 7 App 91, 94-5 In re The Free Grammar School at Hemsworth (1887) 12 App Cas 444 Rosenbaum v The Minister (1965) 114 CLR 424 McMahon v Sydney County Council (1940) 40 SR (NSW) 427 E Robinson & Co (Barbados) Ltd v NSR Ltd [1997] AC 400 Housing Commission v San Sebastian Pty Ltd (1978) 140 CLR 196 In re Spotswood (1926) 26 SR (NSW) 522 Ex parte Hyman (1937) 54 WN (NSW) 186, 187 Sutton v Shoppe (1963) 63 SR (NSW) 853, 854 Haig v Minister Administering the National Parks and Wildlife Act 1974 [No 3] (1996) 90 LGERA 408, 412 DECISION : Appeal allowed. Orders made

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40760/96 LEC 30121/94 HANDLEY JA SHELLER JA STEIN JA

COMPULSORY ACQUISITION - compulsory acquisition of private roads by Council - compensation awarded by Land and Environment Court - whether Judge erred in law - whether land could be valued as if it had never been sub-divided - whether private rights of other parties should be taken into account - whether roads had become public roads REAL PROPERTY - subdivision creating roads contiguous with lots - private rights-of-way created in favour of lots - Dabbs v Seaman (1925) 36 CLR 538 followed REAL PROPERTY - dedication of highways - not possible by public user after 1 January 1920 without compliance with Local Government Act 1919 The appellant resumed the roads and lanes left in a 1904 sub-division, the respondent being the registered proprietor. Other parties had or might have had interests in the land. A compensation notice under s 42(2) of the Land Acquisition (Just Terms Compensation) Act 1991 was given to the respondent offering compensation of $16,500. The Judge awarded $682,836 based on an in globo value which assumed that the land had not been sub-divided, and he relied on a sale of in globo land nearby as comparable. The Council appealed. HELD , allowing the appeal: (1) The Judge's approach was contrary to the principle "that what must be valued is the property taken in the condition in which it existed at the date of resumption". The land should have been valued as existing roads and lanes as and where they were at the relevant date. Yates Property Corporation Pty Ltd (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156 at 175; Turner v Minister for Public Instruction (1956) 95 CLR 245 at 268-9 applied. (2) The Judge had erred in law because he had not taken account of the matrix of private rights-of-way over the roads and lanes. (3) There was no sufficient evidence of public user of the roads and lanes before 1 January 1920 that could establish that they were public roads. (4) Since the payment of compensation to the respondent might extinguish the rights of other interest holders, appropriate steps must be taken under s 25(2) of the Land and Environment Court Act to ensure that all interested parties are given the opportunity to claim compensation. ORDERS (1) Appeal allowed;

(2) Orders 1, 2, 4 and 5 of the Land and Environment Court of 2 December 1996 and orders 1, 2 and 5 of 23 December 1998 set aside;

(3) In lieu thereof order that the respondent's objection to the amount of compensation offered by the Council be dismissed;

(4) Remit the proceedings to the Land and Environment Court for further hearing and determination in conformity with the reasons of this Court;

(5) The applicant to pay the Council's costs of the proceedings in the Land and Environment Court up to and including 7 February 1995 and one half of its costs of the first hearing which concluded on 21 June 1996;

(6) The applicant to pay the Council's costs of the third and fourth hearings in the Land and Environment Court which led to the judgments of that Court of 24 July and 23 December 1998;

(7) The respondent to pay one half of the Council's costs in this Court, and to have a certificate under the Suitors Fund Act in respect of the costs in this Court;

(8) The costs of the further proceedings in the Land and Environment Court to be in the discretion of that Court.

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40760/96 LEC 30121/94 HANDLEY JA SHELLER JA STEIN JA

1 HANDLEY JA: On 12 November 1993 the Council, by notification in the Gazette, which took effect under the Roads Act 1993 and the Land Acquisition (Just Terms Compensation) Act 1991 (the Just Terms Act), acquired Lot 3 DP 582637 from the respondent (the owner), who was then the registered proprietor. The acquired land comprised the roads and lanes in DP 4339 located south of The Broadway and west of The Boulevard in the village of Killingworth near Newcastle. That deposited plan was registered by the Caledonian Coal Co Ltd in July 1904. Those roads and lanes later became Lot 3 in DP 582637, which was registered on 24 January 1977. The other roads and lanes in DP 4339 became Lot 2 in DP 582637, which was purchased by the Council in 1991. (AB 1738) The area of the roads in Lot 3 was found by Bignold J to be 9.5 hectares, and the area of the lanes 2.2 hectares. 2 On 9 December 1993 the Council gave the owner a compensation notice under s 42(2) of the Just Terms Act. This stated that the Valuer-General had determined the amount of the compensation at $16,500 and advised the owner of her right to lodge an objection with the Land and Environment Court (the Court) within 90 days. She duly objected by lodging a Class 3 Application with the Court claiming compensation of $5,703,950.50. 3 The Application was heard by Bignold J who, in a reserved judgment on 2 December 1996, upheld the objection and assessed compensation at $334,600 as follows: (i) Value of roads south of The Broadway $243,000 (ii) Value of unconstructed section of Park Street 41,000 (iii) Value of roads north of The Broadway 25,600 (iv) Value of lanes 25,000 $334,600

4 He also made an order reserving the question of additional compensation for the value of the improvements to the roads to allow the owner to apply for leave to make further submissions. The evidence had revealed the existence of third parties who may have had equitable interests as purchasers or option holders. Since they may have had independent claims for compensation against the Council, the Judge made order 4 which required the owner to obtain and deliver to the Council releases by all persons other than herself who claimed an interest in the land before she was entitled to payment of the compensation. 5 These orders provoked an application for review from the Council, which was dismissed on 23 June 1997, an application from the owner to call further evidence on the value of the improvements, which was granted on 24 July 1998, and a further reserved judgment on 23 December 1998 in which additional compensation of $348,236 was awarded for the road improvements. The Council has appealed to this Court. Under s 57(1) of the Land and Environment Court Act (the Court Act), the appeal is restricted to questions of law. 6 The physical condition of the land at the acquisition date was that some 1.4 kms of road had been bitumen-sealed, approximately 1 km of roads had a gravel surface, and the balance of some 3 kms had been cleared to provide rough tracks through the bush. The constructed roads were located in the northern section of the estate and the unconstructed roads in the southern section where the land rises. Water, sewerage and electricity mains were located within the constructed roads. The lanes were generally unconstructed and had the appearance and land form of the adjoining residential lots. 7 The owner's claim form disclosed that the following persons might have an interest in the land: (1) Ms Erin Radnedge - unregistered mortgage (2) HSBP Pty Ltd - part of lane in section M (3) Steve McKenzie - part of lane in section M (4) Peter Birch - option to purchase 19 October 1993 8 The owner did not own the land beneficially but held it on trust for her father, Mr Edward Pryor, who claimed to hold it in trust for his wife, his two daughters, Ms Radnedge and the owner, and his son. Mr Pryor, in the course of his re-examination, verified a list of persons who had unregistered interests in the land, other than under the trusts, as follows: HSBP 1. Lane between M5 and M9 sold to HSBP in two sections for $5,000

Arcourt 2. Lane between 05-09 Arcourt Investments Pty Ltd Nominal amount

E Pryor 3. Park Street between Georgie St and Throckmorton St half to three quarter acres of road sold to E Pryor - contract of sale in evidence at time of acquisition of Lot 3 Road and lanes $80,000

Milliways 4. Milliways Pty Limited lane rear of N8 Stevenson St Current valuation $1,500

Prentice 5. Mr Prentice - cannot recall this name - but a lane was sold back in early 1980 between P3 and P15 for $200. He also owns Lots P3 and P15

McPherson 6. Lane between J5 and J9 sold one-third road on lane to present land occupier of J5

Radnedge 7. Erin Radnedge is EA Pryor's daughter and holds a mortgage on Lot 3 Roads and lanes

Dalglish 8. Joan Dalglish - Pryor's wife owns lane between L16 and L4

9 The valuers called by the Council, Messrs Henley and Helman, who were employed in the Valuer-General's Newcastle office, valued Lot 3 at $15,000 and $60,000 respectively. The owner's valuers, Messrs Turnbull and Prince, valued the land at $1,850,000 and $1,310,000 respectively. Bignold J accepted the principles favoured by the owner's valuers that the highest and best use of the land was as roads, the Council was the obvious purchaser, and The Raja's Case [1939] AC 302 should be applied. He also accepted their view that the roads should be valued on the basis of the in globo value of the land south of the Broadway. 10 The owner's valuers adopted as comparable a sale of in globo land at Edgeworth, a nearby village, involving some 38.49 hectares which was sold for $2 million on 11 August 1992. They used the price per hectare deduced from this sale, with adjustments, to obtain a price per hectare for in globo land in Killingworth and thus an in globo value for the roads. Bignold J made a number of additional adjustments to reflect the differences between the two areas and arrived at his judicial valuation. This valuation approach, which had been strongly urged on his Honour by the owner, was fundamentally flawed. 11 Deposited Plan 4339 of Killingworth was prepared on 13 September 1901 and is reproduced in part on Certificate of Title Vol 1829 Folio 106 dated 16 July 1907. This plan shows the land divided into 218 residential lots. One hundred and four of these were zoned residential at the date of resumption and were owned by private individuals. In the unserviced areas in the south of the sub-division a further 87 lots were zoned rural 1(a) of which 64 were owned by private individuals and 23 by the Council. A further 27 lots were zoned open space 6(c) of which 7 were in private ownership and 20 were owned by the Council. A large reserve zoned 5(a) comprising 5.71 hectares was owned by the Council, and another large site comprising .87 of a hectare and zoned 1(a) was owned by the Department of Education. 12 The grid road system south of The Broadway comprised 6 parallel roads running north-south and 3 parallel roads running east-west. All but 2 of these roads were 20 metres wide and the others were 30 metres wide. The road system was duplicated by a grid lane system, each lane being 7.6 metres wide. Killingworth is a small residential village on the western outskirts of the Newcastle metropolitan area, some 25 kms from Newcastle CBD, and 7 kms from Edgeworth. 13 Deposited Plan 4339 shows the residential lots and the public recreation reserve abutting on the roads and lanes. The original plan does not contain the lot now owned by the Department of Education, which was acquired by resumption and shown in the plan on the 1907 Certificate of Title. The evidence does not include the Certificates of Title issued to the original purchasers. 14 At the date of resumption there were 84 existing dwellings on lots south of The Broadway and 6 to the north and west of The Boulevard which fronted roads and lanes in Lot 3, and a further 3 lots of this type had dwellings under construction (AB 1730, 1732, 1778). There were another 12 dwellings on lots which fronted the south side of The Broadway, which had been reserved as a road in the original Crown grant, but most of these also fronted on to side streets or lanes in Lot 3. The land in the sub-division north of The Broadway and east of The Boulevard had been substantially built on by the date of the resumption. 15 Little v Dardier (1891) 12 NSWLR (Eq) 319 established that a transfer of land under the Real Property Act described by words or a plan as bounded by a street which was owned by the transferor created an easement or private right-of-way over that street in favour of the transferee. This was confirmed in Dabbs v Seaman (1925) 36 CLR 538, where the transfer showed the land bounded by a lane, and is settled law. See Permanent Trustee Co of NSW Ltd v Campbelltown Corporation (1960) 105 CLR 401, 422 per Windeyer J (the Campbelltown case). 16 The private rights-of-way must extend to other private roads or lanes in the sub-division owned by the transferor which gave access to public roads. Windeyer J suggested, in the passage referred to, that the right-of-way may extend to all roads and lanes in the sub-division, and this seems to be correct. The description of the lots transferred by the Caledonian Coal Co Ltd in the memorials of transfer endorsed on the original Certificate of Title Volume 1548 Folio 88 issued in 1904, and on the subsequent Certificate of Title Volume 1829 Folio 106 issued in 1907, by reference to lot numbers in DP 4339, included not only the common boundaries of the lots with the adjoining roads and lanes but the place of those roads and lanes in the grid shown in the plan. The transfers therefore created private rights-of-way in favour of each transferee over all the roads and lanes in the deposited plan. 17 The Judge valued the roads as if they comprised 9.5 hectares of land in globo but did not value the 2.2 hectares of lanes on that basis. This involved a notional reversal of the 1904 sub-division to create an in globo area ripe for a notional sub-division in accordance with the 1904 plan. Such a sub-division, like the actual sub-division in 1904, would involve the loss of 11.7 hectares of land to create the necessary roads and lanes. 18 Such an approach is contrary to the well established principle "that what must be valued is the property taken in the condition in which it existed at the date of resumption". See Yates Property Corporation Pty Ltd (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156 at 175, where relevant passages from The Raja's Case [1939] AC 302, 313 and Turner v Minister of Public Instruction (1956) 95 CLR 245 at 268-9 are set out. 19 Thus in Turner v Minister of Public Instruction (ibid) the land taken was ripe for sub-division and had to be valued on that basis, and not on the basis that it had already been sub-divided. In the present case the principle must be applied to deny a claim for compensation based on the value the land would have had if it had not been sub-divided. It had been sub-divided nearly 90 years before the resumption, and had already attained its highest and best use. The land taken must therefore be valued as existing roads and lanes as and where they were at the date of resumption. 20 The sale at Edgeworth in 1992 was not comparable and the Judge misdirected himself in holding that it was. That transaction was wholly irrelevant to the assessment of compensation for the taking of roads and lanes in an existing sub-division. These were errors of law. See Melwood Units Ltd v Commissioner of Main Roads [1979] AC 426, 432. 21 The awards of compensation are also contrary to principle and vitiated by legal error because they ignored the existence of the matrix of private rights-of-way over the roads and lanes. The Council, as the proprietor of the recreation reserve and 43 residential sized lots south of The Broadway, was entitled to the benefit of these private rights-of-way as were the other proprietors. These roads and lanes, viewed as private property, could not be closed without the consent of all the proprietors in the sub-division, and it is inconceivable that such consents could ever have been obtained. 22 The land must therefore be valued as roads and lanes burdened with these private rights-of-way and incapable of being used or developed for any other purpose. The idea that a willing but not anxious purchaser who was well informed would pay $682,836 for these roads and lanes lacks all reality. The appeal must therefore be allowed, and the compensation awards set aside. 23 Mr Jacobs QC for the Council submitted that no compensation was payable to the owner because the roads and lanes were already public roads. If this is so the Council resumed land that it already owned but any difficulties this might create were not explored. Such a claim could be made although the owner was the registered proprietor of Lot 3 with a clean certificate of title because public rights of highway are an exception to the general principle of indefeasibility. See Vickery v Municipality of Strathfield (1911) 11 SR (NSW) 354. On current authority (Council of the City of Gosford v Peter Cunningham, Valuer-General for the State of New South Wales, Supreme Court, 26 March 1996, unrep), the Council could not contest the Valuer-General's determination of the compensation to be offered to the owner (see Just Terms Act, ss 41, 42(1), (8), 43(d), 47)), but was not bound by that determination once the matter reached the Court. (McCloys Pty Ltd v Lake Macquarie City Council, Bignold J, 19 September 1994, unrep.) It is not necessary to express any view on these questions. 24 The roads and lanes in Lot 3 were opened before the commencement of the Local Government Act 1906 (the 1906 Act) by the registration of DP 4339 pursuant to s 113 of the Real Property Act 1900. The plan manifested the owner's intention to dedicate the roads and lanes as public roads. See AG v City Bank of Sydney (1920) 20 SR NSW 216, 221 and Owen v O'Connor (1963) 63 SR (NSW) 1051, 1053, 1057-8. 25 The owner's intention to dedicate, manifested by this offer, was not sufficient, by itself, to bring about the dedication of the land as public roads. Acceptance of the offer by the public was also required which could be inferred from public user of the roads. See Owen v O'Connor at 1054. This decision of Sugerman J established that public user prior to 1 January 1920, when the Local Government Act 1919 (the 1919 Act) came into force, can be considered for this purpose. Mr Jacobs however argued that public user after 1 January 1920 could also be considered. 26 It has been assumed for a long time that the 1919 Act prevented a private road left in a sub-division before the commencement of the 1906 Act becoming a public road after 1 January 1920. Sections 238(1), (2), 323(1), 327(1) and 337(1) provided as follows: Section 238(1): "A new public road shall not be opened except in accordance with the provisions of this Act". 27 This section applied to every new public road however it was opened. See sub s (2). 28 Section 323(1): "A public road shall not be opened … except in accordance with the provisions of this Act". 29 Section 327(1): "… a public road shall not be opened … until: (a) an application in respect thereof accompanied by plans and specifications thereof has been approved under this Act; and

(b) the roads have been constructed and drained to the satisfaction of the Council in accordance with the approved application, plans, and specifications, and with any conditions attached to any such approval; and …". 30 Section 337(1): "Nothing in this Division shall preclude the opening of any road in accordance with any approval which was before the commencement of this Act given under the Local Government Act 1906". 31 These provisions were considered in In re a Caveat by the Council of the Municipality of Botany (1936) 36 SR (NSW) 615 and Nicholas J concluded at 619: "From these sections it appears to me to follow that … the Local Government Act 1919-1935 forbids the opening and dedication of a road until the requirements of s 327 have been fulfilled".

32 That decision has frequently been referred to and has not hitherto been questioned. See Commissioner for Railways v Dangar (1943) 15 LGR 101, 105 per Herron J; the Campbelltown case (1960) 105 CLR 401, 423 per Windeyer J, Owen v O'Connor (1963) 63 SR (NSW) 1051, 1057 per Sugerman J, and Newington v Windeyer (1985) 3 NSWLR 555 where at 558 McHugh JA said: "Since 1906 a public road can be opened in New South Wales only when it is approved by the local council: Local Government Act 1906 ss 99-101; Local Government Act 1919 s 323". 33 A public road was defined by s 4 of the 1919 Act as follows: "Public road means road which the public are entitled to use, and includes any road dedicated as a public road by any person or … dedicated as a public road under the authority of any Act …". 34 There was a difference of opinion in the Campbelltown case (above) as to the effect of this definition. At 411 Kitto J said: "Clearly enough, a complete and unrestricted dedication is not required … The expression 'entitled to use' is not one of so fixed a legal import that in the context its reference is necessarily to a public right-of-way existing by reason of dedication. It is apt enough for the case where public use of the land as a way is permitted by the person having the legal right to possession; for in such a case a member of the public as such, may pass and repass without being guilty of trespass". 35 However at 420 Windeyer J said: "What exactly this means is not clear. It seems suggested that it means that any road that any member of public may use without being a trespasser is, for the purposes of the Act, a public road. That would include roads not dedicated for public use but which the public are permitted to use by a temporary licence or by a revocable but subsisting licence from the land owner. But as such they would come under the care of the Council (s 249), would vest in the Council in fee simple (s 232) and could not be closed to the public except by the Council and in accordance with the Act. None of this would be consistent with the revocable licence. In my view, therefore, when the Act speaks of a public road as a road the public are entitled to use, it means land over which a public right-of-way exists - that is to say a highway in the common law sense". 36 The view of Windeyer J on this question should be accepted. The definition ("means … and includes … ") is exhaustive, and should not be construed as including private roads which are used by the public by the implied or tacit permission of the owner, such as footpaths and driveways on private property. The natural meaning of the expression "entitled to use" connotes use by right and not by permission. See In re Sutton Cold Field Grammar School (1881) 7 App 91, 94-5; and In re The Free Grammar School at Hemsworth (1887) 12 App Cas 444. 37 In my judgment the decisions and dicta on the effect of the 1919 Act on roads left in sub-divisions before the commencement of the 1906 Act are correct, and even if they were debatable they should not, after this length of time, be disturbed. 38 The status of these roads and lanes as public roads therefore depends on whether there was sufficient public user prior to 1 January 1920 to establish acceptance of the offer to dedicate. There were 335 residential sized lots and the lot for the recreation reserve in the original sub-division. Eight of the residential sized lots were resumed by the Education Department before July 1907. The Court was informed without objection that the evidence disclosed that 69 residential-sized lots within the entire sub-division had been transferred to purchasers before the commencement of the 1919 Act. Forty six were south of The Broadway or west of The Boulevard and almost all of these fronted onto roads or lanes within what became Lot 3. 39 There was very little evidence of development before 1920. Mr Helman in his report stated: "3.2 Little development appears to have occurred south of The Broadway in the early years although the VG records show a Mr Andrews owning a house in 1905 and an Anglican church erected in 1908. Access appears to have been by rough tracks in the approximate position of the roads shown on the Deposited Plan. 3.3 A small school operated in this area, also with access along the approximate position of some of the roads". 40 This evidence was admitted without objection. Para 3.2, except the last sentence, purports to be based on records held by the Valuer-General and it is a reasonable inference that the statement in par 3.3 that a school operated in the area was also based on such records. On the other hand the statement that access appears to have been by rough tracks in the approximate position of the roads seems to be at best an inference and perhaps mere speculation. The Judge said of this evidence: "I do not understand paragraphs 3.2 and 3.3 to be more than reasonable conjecture or speculation on Mr Helman's part. I do not accept these paragraphs as establishing facts". 41 If objection had been taken to this evidence, the Council could have obtained and tendered the original records of the Valuer-General's Department and the basis for the statement in para 3.3 about the school could have been clarified. Mr Helman was not required for cross-examination and these paragraphs stood unchallenged and uncontradicted. In these circumstances Bignold J was not entitled to disregard so much of those paragraphs as purported to be statements of fact. To do so would be unfair to the party tendering the evidence because if objection had been taken and upheld that party may have been able to prove the matters strictly. The Valuer-General's records would be admissible at common law as public documents, and by statute as business records. However the Judge was entitled to disregard evidence which on its face was speculative in nature and not such as could ordinarily be established by the Valuer-General's records. 42 As Windeyer J said in the Campbelltown case (ibid at 423) "… no great amount of public use was necessary to make the dedication complete", and Menzies J said at 415: "It seems more realistic to treat such roads … as part of the general roadway system and as open to all so that unless access is prevented by fencing or otherwise, roads shown upon a plan of sub-division are properly to be regarded as open to the public, with the consequence that if there is use of such a road as a means of passage by any members of the public, whether owners of land in the sub-division or not, then it is a public road". 43 There was no other evidence of development before 1920. It is not clear from Mr Helman's evidence whether the school existed before that date. The Anglican church may have been erected on lots fronting The Broadway and if so the public could have obtained access without using the roads and lanes in Lot 3. Mr Andrews' house was erected on Lot 13 Block P and his legal access would have been over roads and lanes in Lot 3. However there is no evidence that Mr Andrews, his family and visitors used those roads and lanes, and they may have used other land in the sub-division which had not been included in roads or lanes shown in the plan. In any event he had a private right-of-way over the roads and lanes and use by one owner and his invitees could not establish, as a matter of law, that a completed dedication had occurred before 1920. 44 Evidence of public user during 1920 or soon afterwards would have been presumptive evidence of earlier public user and hence of a dedication before 1920 (see Owen v O'Connor ibid at 1059), but there was no evidence of such user. There was also no evidence of public user of the other roads and lanes in Lot 3. For these reasons, which were substantially those of Bignold J as well, the Council failed to establish as a matter of law that the whole or any particular part of the roads and lanes in Lot 3 had become public roads prior to 1920. 45 Bignold J held that the Council was estopped by its conduct over many years in levying and collecting rates in respect of Lot 3 from claiming that these roads and lanes were public roads. Although Council may have done its best to raise an estoppel against itself, the public also have legal rights over public roads. There could be no estoppel against the public, and therefore no estoppel against the Council. 46 There is no other basis on which the Council was entitled to acquire Lot 3 by resumption without payment of some compensation. Before parting with this aspect of the case, I must express surprise that the Council proceeded by resumption. Section 224(3) of the 1919 Act enabled councils to acquire a road left in a sub-division of private land before the commencement of the 1906 Act if "there exists any doubt as to whether or not it is a public road". The Council could serve on the owner a notice of intention to take over the road and this took effect unless the owner appealed to the District Court. If the notice took effect, or was affirmed on appeal, compensation was not payable. 47 In the Campbelltown case Fullagar J said at 407 that this power enabled a council "if it feels any doubt about the matter, to take steps to make the position certain … if it is quite clear that the land is not a public road, the council is, I think, intended to be left to its power of compulsory acquisition on payment of compensation". 48 The present case was manifestly one where there was a doubt as to whether these roads and lanes were public roads, if only because of the lapse of time since 1920. However the Council adopted the course which Fullagar J said should only be adopted if it was quite clear that the roads and lanes were not public roads. It then argued in the compensation proceedings and on appeal that compensation was not payable because the roads and lanes were already public roads. 49 The established position under the 1919 Act has been continued by the Roads Act 1993 which came into force on 1 July that year. The heading of Division 2, which under s 35(1) of the Interpretation Act is part of the Act, is "Resolution of doubts concerning status of certain roads". Sections 16 and 17 enable a council to acquire a road left in a sub-division before 1920 by notice to the owner and notification in the Gazette. If the acquisition is challenged the Court has a broad discretion to allow or disallow the acquisition. If the acquisition is upheld compensation is not payable. 50 There remain the problems associated with the existence of other interests in the land. Reference has already been made to the holders of equitable interests under contracts and options, to the trusts on which the land was held, and the equitable mortgage in favour of the owner's sister. Bignold J was alive to the difficulties, and his order 4 was intended to deal with them. This order was attacked in the Council's amended notice of appeal, and in its written and oral submissions. There was no cross-appeal. 51 There were also the registered proprietors of the lots fronting the roads and lanes in Lot 3 (other than the Council) who had registered private rights-of-way over those roads and lanes in accordance with Dabbs v Seaman (1925) 36 CLR 538. These rights-of-way were extinguished by the resumption, and converted into claims for compensation, but the proprietors were not given notice of the intended resumption under ss 11-13 and 15 of the Just Terms Act, and had not made claims for compensation under s 39. What is even more important the Council had not given them written notice of the compulsory acquisition under s 42(1) and (2) which provide: "(1) An Authority of the State which has compulsorily acquired land under this Act must, within 30 days after the publication of the acquisition notice, give the former owners of the land a written notice of the compulsory acquisition, their entitlement to compensation, and the amount of compensation offered (as determined by the Valuer-General). (2) The compensation notice must be given to all former owners of the land who, immediately before the acquisition: (a) had a registered interest in the land; or (b) were in lawful occupation of the land …; or (c) had, to the actual knowledge of the Authority of the State, an interest in the land which entitles them to compensation".

52 Since the proprietors had registered interests in the roads and lanes, they should have received compensation notices from the Council which could have been sent to their addresses shown in the Council's rate records. The Council did not have "actual knowledge" of all of the equitable interests referred to in Mr Pryor's evidence, but may have had such knowledge where those interests were protected by a caveat. The owner's claim, dated 19 October 1993, stated that she was aware of other persons that may have an interest in the land and provided the particulars referred to in para 7 of these reasons. 53 The owner's claim stated "caveat to be lodged" against the first and fourth interests, and "caveat lodged" against the other two. There was no evidence that caveats had ever been lodged by the holders of any of these interests. If caveats had been lodged the Council could have sent compensation notices to the caveators at their addresses for service shown in the caveats. 54 During his re-examination, Mr Pryor gave evidence about other equitable interests and their owners, the details of which are set out in para 8 of these reasons. The Council did not give compensation notices to the persons identified by Mr Pryor, or to Mr Pryor. The question is whether order 4 deals appropriately with these difficulties. 55 Under s 37 of the Just Terms Act each owner with an interest in the land has a personal right to compensation under the Act. This codified the former law established in Rosenbaum v The Minister (1965) 114 CLR 424. Section 39 requires owners to lodge their claims with the acquiring Authority. None of the other owners have done this, but, despite the order of the sections, the initial obligation is on the Council as the acquiring Authority to serve compensation notices on those owners under s 42. 56 Section 42(4) required the Council to give the compensation notices within 30 days after the publication of the acquisition notice, or within such further time, not exceeding 60 days, as the Minister may allow. These periods have long since expired, but the time limits are only directory because s 42(5) provides that the resuming Authority is not excused from the requirement to give a compensation notice "because the period during which the notice is required to be given has expired or because the former owner has not lodged a claim for compensation". 57 Section 46(1) enables a person who has not been given the compensation notice under s 42 to lodge a claim for compensation with the resuming authority. Under s 46(2), if the Authority considers that the claimant is entitled to compensation, it must give that person a compensation notice. 58 Section 53 provides: "(1) If an Authority of the State pays compensation under this Act to a former owner of land without regard to the existence of an interest in the land owned by another person (being an interest that was not known to the Authority when that compensation was paid): (a) that other person's entitlement to be paid compensation by the Authority in respect of the acquisition of that land is extinguished; and (b) his or her rights and entitlements against the former owner in respect of the interest are not affected by the divesting … of the interest by this Act. (2) For the purposes of this section an interest is known to an Authority of the State only if it is a registered interest or an interest within the actual knowledge of the Authority". 59 Reference should also be made to s 65 which provides that compensation for the acquisition of land subject to a mortgage should, in general, be determined as if the land was not subject to that mortgage. 60 Neither the Court nor the Council is concerned in these proceedings with the rights of the beneficiaries under the trusts on which the owner held the land, or with the rights of the mortgagee. Their equities are enforceable against the owner and their value cannot exceed the compensation payable to her. Order 4 is not needed in these cases. The position of the purchasers and option holders is different as their claims are for the loss of their own interests in the land, and are not merely claims to share in the compensation payable to the owner. See McMahon v Sydney County Council (1940) 40 SR (NSW) 427; E Robinson & Co (Barbados) Ltd v NSR Ltd [1997] AC 400. 61 One of the difficulties facing the Council and the Court in dealing with the claims of the purchasers and option holders is that Mr Pryor did not know their addresses, and claimed that most of his records relating to this land, including his copies of the contracts and options which contained such addresses, had been removed by the police when executing a search warrant. Attempts to retrieve these papers by subpoena during the trial were unsuccessful. 62 If the position with regard to possible caveats had been explored, addresses for service on some of these people may have been obtained, but the evidence disclosed no other simple solution. The Council is on notice of the rights of these purchasers and option holders, but arguably does not have "actual knowledge" of their interests. Some or all of these claimants may not have had any interest at the date of resumption, and this, and the extent of their interests, cannot be determined without the contract documents. The options and contracts of sale may not have been with the owner, or may have been subject to conditions which had not been fulfilled. The options may already have expired without being exercised. The contracts may have been validly terminated for breach or in accordance with their terms, or for some reason may not have been enforceable. 63 None of these problems arise in relation to the proprietors of the lots. It might be thought that the compulsory acquisition of these private roads and lanes for the purposes of the Roads Act was not capable of generating any worthwhile claims for compensation. A matrix of private rights-of-way existed over those roads and lanes, and the release by a single proprietor of his rights would be of no value to the owner. The rights of the proprietors over these roads as public roads would, for all practical purposes, be the same as their private rights extinguished by the resumption. It seems however that the offsetting advantage of having these private roads converted into public roads available for use by the proprietors is not relevant in assessing their compensation. 64 The definition of market value in s 56(a) requires any increase or decrease in the value of the land caused by the proposal to carry out, or the actual carrying out, of the public purpose to be ignored. This codified the former law established in Housing Commission v San Sebastian Pty Ltd (1978) 140 CLR 196. Although s 55(f) allows account to be taken of any increase or decrease in the value of any other land retained by the former owner, this has no application where a private road is resumed to create a public road because the value of the residential lot will not be affected, and the proprietor will not "retain" any interest in the public roads. Nevertheless this Court cannot simply ignore the rights of these proprietors. 65 The solution to all these problems must be found in s 25 of the Court Act which provides: "(1) In hearing and disposing of any claim referred to in s 24, the Court shall have jurisdiction to determine the nature of the estate or interest of the claimant in the subject land and the amount of compensation (if any) to which the claimant is entitled. (2) In the exercise of its jurisdiction under subsection (1), the Court may order that any other person who claims to have had or who may have had an interest in the subject land at the date of acquisition … be joined as a party to the proceedings and may then proceed to determine the nature of the estate or interest of that person and the amount of compensation (if any) to which the person is entitled". 66 The equitable claims of purchasers and option holders under contracts which were enforceable at the resumption date could diminish the compensation payable to the owner. If the contracts could be terminated for breach because the owner did not have a good title, the purchasers or optionees would have equitable liens for monies paid under the contracts which could also diminish the owner's compensation. Any worthwhile claims by the proprietors for the loss of their private easements could also diminish the compensation payable to the owner. 67 Under s 53 of the Just Terms Act payment of compensation to the owner would extinguish the rights of the purchasers and option holders if those rights were not within the actual knowledge of the Council. This Court should therefore take active steps to ensure, if possible, that those persons are notified of the proceedings, and given an opportunity to appear and be heard. 68 An useful analogy is the practice followed by the Supreme Court in Equity in applications under s 89 of the Conveyancing Act for the modification or extinguishment of restrictive covenants and easements, or for a declaration as to their enforceability. The applicant either sought directions from the Court as to the extent and manner of service on interested parties, or served such persons with appropriate notices informing them of the nature of the proceedings, giving them the opportunity to appear and contest the relief sought. See In re Spotswood (1926) 26 SR (NSW) 522; Ex parte Hyman (1937) 54 WN (NSW) 186, 187; and Sutton v Shoppe (1963) 63 SR (NSW) 853, 854. Where the potential objectors could be identified by title searches and served by post, there was little point in directing public advertisements which would probably not come to the notice of the interested persons. 69 The procedures available under s 25(2) should be invoked in the present case. If the owner wishes to receive compensation, she should relist her Class 3 application and place any further evidence, including evidence of any caveats, before the Court to enable it to direct service of appropriate notices on the persons who might have had equitable interests under contracts, options or liens. If the owner is unable to provide any addresses at which such persons might be served, there would seem to be little point in directing advertisements in newspapers circulating in the area. 70 The Council for its part should give compensation notices under s 42(1) and (5) to the proprietors of lots in DP 4339, including those north of The Broadway and east of The Boulevard. It is possible that none of the proprietors will lodge claims for compensation, but if any claims are lodged they will have to be dealt with in the ordinary way. 71 The owner may be unable to provide addresses for service on the persons who may have had equitable interests under contracts, options or liens at the date of the resumption. In that case the Court may be able to exercise its jurisdiction under ss 22 and 23 of the Court Act to grant a declaration that there were no equitable interests in the land under contracts, options or liens at the date of the resumption within the actual knowledge of the Council at the date of the declaration. This would enable the Council to pay the compensation to the owner, and gain the protection of s 53 of the Just Terms Act. If for any reason such a declaration cannot be made, the Council may have to pay the compensation into its trust account pursuant to s 51 of the Just Terms Act. 72 The proceedings must be returned to the Land and Environment Court to dispose of the owner's claim for compensation (Just Terms Act s 66(2)) and for the exercise of its jurisdiction under s 25 of the Court Act. Any claims hereafter referred to the Court by the holders of equitable interests, or by proprietors of lots in the sub-division, could be joined with these proceedings pursuant to orders made under s 25(2). Once such claims have been determined the Court can assess the impact of any awards in favour of those claimants on the amount offered to the owner in the Council's compensation notice, and determine whether the compensation payable to the owner should be reduced below the $16,500 offered. The order remitting the proceedings is not intended to reopen the owner's claim for additional compensation. 73 The Court will also have to deal with any payments of compensation made following the orders of Bignold J, which will have to be refunded by the owner, and interest on the amounts to be refunded. See Haig v Minister Administering the National Parks and Wildlife Act 1974 [No 3] (1996) 90 LGERA 408, 412. It may also have to deal with the question of interest under s 66(4) of the Just Terms Act. 74 The Council's attack on the figure of $16,500 assessed by the Valuer-General, which it had offered the owner in its compensation notice, was confined before Bignold J and this Court to the argument that these roads and lanes were public roads. Since that argument and the owner's objection have both failed, the compensation offered to the owner should stand unless the compensation offered or awarded to other claimants requires the amount payable to the owner to be reduced below $16,500. I express no view on that question. 75 The question of costs is one of some difficulty in view of the four hearings in the Land and Environment Court and the successes and failures in the arguments of the parties in this Court. The owner's case on value has failed and the Council's case has substantially succeeded. However the first hearing before Bignold J was needlessly complicated and prolonged by a large number of questions raised by the Council which were either peripheral to the real dispute, or were questions on which it ultimately failed. Both sides, but particularly the Council, conducted the first hearing over 9 days between 8 February 1995 and 21 June 1996, without reference to the principle in Dabbs v Seaman (1925) 36 CLR 538, which was of fundamental importance in determining the existence and extent of the proprietary rights in these roads and lanes before the resumption, and the Council's duty under the Just Terms Act. The Dabbs v Seaman point was not even raised in the Council's first notice of appeal. If this point had been taken at an early stage, the first hearing would have been considerably shortened, and the later hearings in the Land and Environment Court, and the appeal to this Court, may have been avoided. In all the circumstances the owner should pay the Council's costs up to and including 7 February 1995 and one half of its costs of the first hearing. 76 The Council's challenge to the Court's jurisdiction, which led to the second hearing, failed and the order that it pay the owners costs of that hearing should stand. The owner's application to re-open the evidence and submissions on the value of the road improvements sought a great indulgence in view of the extended hearing during the first trial and the owner should have brought forward the whole of the evidence to be relied upon during that hearing. The owner should have been ordered to pay the costs of that application in any event and I would make that order. The final hearing was directed to the value of the improvements on which the owner has now completely failed and I would order the owner to pay the Council's costs of that hearing. 77 The proceedings in this Court were prolonged by the Council's argument that these roads and lanes were public roads. This issue on which the Council failed occupied a considerable amount of court time, and caused the case to go into a second day. The issue involved compensation of only $16,500 and the costs incurred on this issue in the trial court. The Council also raised a number of procedural or peripheral questions which were dealt with at length in its written submissions. This Court focussed on the substantial issues and did not hear argument on these other questions. These issues should not have been raised or pursued in the light of the substantial issues at the heart of the appeal on which the Council has succeeded. In these circumstances the owner should be ordered to pay only one half of the Council's costs in this Court. 78 The following orders should be made: (1) Appeal allowed;

(2) Orders 1, 2, 4 and 5 of the Land and Environment Court of 2 December 1996 and orders 1, 2 and 5 of 23 December 1998 set aside;

(3) In lieu thereof order that the respondent's objection to the amount of compensation offered by the Council be dismissed;

(4) Remit the proceedings to the Land and Environment Court for further hearing and determination in conformity with the reasons of this Court;

(6) The applicant to pay the Council's costs of the third and fourth hearings in the Land and Environment Court which led to the judgments of that Court of 24 July and 23 December 1998;

(7) The respondent to pay one half of the Council's costs in this Court, and to have a certificate under the Suitors Fund Act in respect of the costs in this Court;

(8) The costs of the further proceedings in the Land and Environment Court to be in the discretion of that Court. 79 SHELLER JA: I agree with Handley JA. 80 STEIN JA: I have had the benefit of reading the draft judgment of Handley JA. I agree with it and with the orders which he proposes. 81 I wish to make some additional remarks about the proceedings. It beggars belief that the proceedings in the Land and Environment Court took up 24 hearing days over a dispute concerning a very modest amount of compensation. Some of the blame for this situation rests squarely with the parties because of the forensic decisions they made at various points of time about how to conduct the litigation. 82 One of the parties is a local government authority funded in part by ratepayers. In addition to the no doubt enormous costs of the litigation, is to be added the costs to the State of almost 5 weeks of sitting time of a Superior Court. The impact on other litigants waiting in the queue is not be ignored. I would like to think that such situations will be avoided in the future. However, this will require a common sense approach by parties to litigation because, to an extent, the court is powerless to intervene. ******

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