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[2012] WASC 6
Supreme Court of WA
2012-01-12
Edelman J
Original judgment source is linked above.
1 The plaintiffs are Lenz Nominees Pty Ltd and Ms Glasson. They own ruralzoned land in Birchmont, in the southwest of Western Australia (the Subject Land). The Subject Land is approximately 123 ha. It is a short distance from a white sandy beach where people camp, fish, crab and prawn.
2 On 26 July 2006, approximately 14.5 ha of the Subject Land was resumed by the Commissioner of Main Roads under the Land Administration Act 1997 (WA) (the Taking). The resumed land (the Taken Land) was taken for public works. The public works were the construction of a new PerthBunbury highway called the Forrest Highway.
3 This case concerns the assessment of compensation arising from the Taking. The issues for resolution are as follows.
(1) Assessment of compensation for the value of the land which was taken, which includes an assessment of the highest and best use of the land without regard to the public works: s 241(2) Land Administration Act.
(2) Assessment of compensation for the damage suffered by the claimant due to the severing of the land taken from the adjoining land (severance): s 241(7)(a) Land Administration Act.
(3) Assessment of compensation for the damage suffered by the plaintiffs due to a reduction of the value of the adjoining land (injurious affection): s 241(7)(b) Land Administration Act.
(4) Assessment of compensation for the loss or damage sustained by the plaintiffs by reason of any other facts which are just to take into account in the circumstances of the case (consequential losses): s 241(6)(e) Land Administration Act.
4 As to (1), operose evidence and submissions were presented on this issue. Consequentially, it consumes numerous pages of this decision. But on one view, the practical difference between the conclusions of two of the opposed valuers on this point was only around 10%.
5 One of the expert valuers called by the Commissioner of Main Roads, Mr Benson, assessed the value of the Taken Land on the basis of a farming use with subdivision potential. Mr Benson's assessment of compensation for the Taken Land combined with compensation for loss of subdivision potential by severance was $281,000. In contrast, the valuer called by the plaintiffs, Mr Miller, whose evidence I prefer and whose valuation I accept, assessed the value of the Taken Land on the basis of a single lot with a farming and lifestyle use. On Mr Miller's approach, there was no value lost from a loss of subdivision potential. Mr Miller's assessment of compensation for the value of the Taken Land was $312,500.
6 As to (2), the only aspect of the claim for compensation for severance which was established on the evidence was for the loss of 501 pine trees on the severed land, and the cost of replanting those trees. One question was the proper head of compensation for this loss or damage. I consider that it is severance damage because it arises 'due to' the severing of the Taken Land.
7 A further question for resolution was how that compensation for severance should be measured. The possibilities were commercial planting cost/value; a notional cost for a third party to plant and grow the pine trees; the original cost of obtaining 501 pine tree seedlings; the value which a reasonable person would place on the 501 pine trees; or the cost of replanting the 501 seedlings.
8 The proper measure of the loss or damage due to the severing should be the cost of replanting the 501 pine trees. Compensation should be assessed for that loss at $27,400.
9 As to (3), a preliminary issue concerned the manner in which all experts assessed the reduction in value of the adjoining land (injurious affection). The experts all treated the adjoining land separately from the main residence which was a fixture on that land. This approach is based on a false legal premise, since s 241(7)(b) of the Land Administration Act is concerned only with the value of the adjoining 'land'. The main residence is a fixture, and part of that land. However, I have concluded that, in this case, the methodology was capable of producing a result which was not unreasonable.
10 As to that assessment of injurious affection, Mr Miller's evidence of the injurious affection to the plaintiffs' land adjoining the Taken Land was compelling. At a very high level of generality, it is perhaps unsurprising that the area of the Subject Land which remained after the Taking suffered significant injurious effect. The Subject Land enjoyed, in part, a lifestyle use. That lifestyle use is now severely blighted. The Forrest Highway carries about 30,000 vehicles a day. A flyover is likely to be built nearby which is up to 11 m in height.
11 It is possible that 'in effect cows don't mind' the Forrest Highway, as was assumed by one valuer called by the defendant (ts 192). But the evidence showed that the lifestyle effect on humans is substantial. In her witness statement, Ms Glasson described her land before the Forrest Highway construction as involving only sounds from the cows mooing and the birds chirping. She said that the effect of the Forrest Highway on her home is that the trucks sound like aeroplanes and she hears them approaching from kilometres away: Glasson witness statement (Glasson) pars 13 14.
12 Expert valuation evidence given by Mr Miller, which I accept, showed that there is generally a substantial negative effect on the value of a property which adjoins a highway. Compensation for injurious affection should be assessed at $325,219.
13 As to (4), none of the alleged losses claimed by the plaintiffs is recoverable. One reason why most of these losses are not recoverable is that the 'consequential loss' provision in s 241(6)(e) of the Land Administration Act does not allow recovery of all types of loss; this subsection only permits recovery of losses arising from interference with the activities carried on by the plaintiffs on the Subject Land.
14 Further, a number of the claimed losses were not incurred, or were not proved, or would involve double recovery. The submission that s 241(6)(e) permits recovery of losses which were not actually incurred should be rejected.
15 The total compensation to be awarded to the plaintiffs, excluding solatium and interest is $665,119.
16 Apart from evidence from one of the plaintiffs, Ms Glasson, all the other evidence in this case was from experts.
17 Three experts were valuers: Mr Miller, called by the plaintiffs; and Messrs Benson and Pember, called by the defendant.
18 Two other experts were also called by the defendant: a forester, Mr McArthur, and an engineer, Mr Zoetelief.
19 Multiple reports were provided by several of the experts. The expert reports and statements are abbreviated in this judgment as follows:
20 By far the most detailed description of the Subject Land was given in Miller 1, and I have drawn from that report most heavily in making my findings concerning the broad description of the Subject Land below.
21 Mr Miller was an impressive witness. For reasons which I explain in detail below, I have generally preferred his evidence over that of Mr Benson or Mr Pember.
3. The Subject Land, the Taking, the public works, and the claim 3.1 A general description of the Subject Land prior to the Taking
22 The following summary is derived from the documentary material and from relatively uncontroversial evidence given by the valuers, particularly Mr Miller's detailed description of the Subject Land.
23 Prior to the Taking, the Subject Land was an estate in fee simple at lot 1475 Herron Point Road, Birchmont, in the Shire of Murray. It was Murray Location 1475 on deposited plan 206344, held under certificate of title vol 1488 folio 790.
24 The Subject Land was an irregular 'L' shaped parcel of land with an area of 123.0522 ha: Miller 1, page 18.
25 In 2002 the plaintiffs became the registered proprietors of the Subject Land.
26 The Subject Land was, and is, held by the plaintiffs as tenants in common with Lenz Nominees having a threefifths share and Ms Glasson having a twofifths share: exhibit 3.
27 As a broad approximation of distance, the Subject Land is located 20 km southwest of Pinjarra, 40 km southeast of Mandurah, and 100 km south of Perth.
28 The closest towns to the Subject Land are Mandurah (population 36,000) and Pinjarra (population 6,500).
29 Immediately to the north of the Subject Land is Mostert's Dairy property: Miller 1, pages 18 19.
30 Immediately to the south of the Subject Land is gazetted road frontage to Herron Point Road: Miller 1, pages 11, 18 19; Benson 1, page 5.
31 Herron Point Road runs westerly from the Subject Land to Herron Point. The water's edge at Herron Point is just over 3 km from the Subject Land; part of the distance is a sealed road and part is a gravel path.
32 Herron Point is one of the most scenic places on the estuary. It contains a sandy beach with white sand. There is a boat ramp there. Unlike other areas on the estuary, Herron Point has no algal blooms or ferns. People can camp there; they can fish; they can prawn; and they can crab: (ts 28, 42, 245 246); Miller 1, page 11.
33 Immediately to the east of the Subject Land is a gazetted adjoining dirt road: Miller 1, page 11.
34 Immediately to the west of the Subject Land is another farming property: Miller 1, page 18. Further to the west of the Subject Land is Old Bunbury Road: Miller 1, page 17.
35 The Subject Land is generally flat. It is part of a 400 sq km area known as the 'Harvey Drainage System'. Most of this area is cleared, fenced and pastured land: Glasson, par 6; Miller 1, page 17.
36 Approximately 95% of the Subject Land consists of cleared, fenced and pastured paddocks: Miller 1, page 11.
37 Part of the Subject Land suffers from seasonal inundation. One paddock, which Ms Glasson described as the 'swamp paddock' is prone to flooding (ts 27).
38 The Subject Land falls within the suburb of Birchmont (ts 114). A nearby suburb is Coolup Flats (ts 114, 155).
39 The Subject Land has power and telephone connected to it. Water and sewerage are not connected. Like other properties in the locality, water must be obtained on the property itself (which has a bore) and septic tanks are used for effluent disposal: Benson 1, page 5; Miller 1, page 21; Glasson, par 5.
40 The Subject Land has various improvements on it. These are as follows: the original homestead (in poor repair); the main residence; various sheds; gully spoon drains; two windmills; one bore; two water tanks; three steel sheds; eleven cattle troughs; and several fenced off areas of planted trees and revegetation: Miller 1, page 11; Glasson, par 5.
41 The sheds are in good repair and the main residence is in fair condition for its age: Miller 1, page 23.
42 The main residence was built in 1972. It has four bedrooms, bathroom and ensuite, living area, formal lounge and formal dining areas: Miller 1, page 22.
43 The zoning of the Subject Land is 'Rural'. That zoning existed at the date of registration of the Taking on 26 July 2006. The minimum lot size of rural zoned land in the area is 40 ha: Miller 1, page 25.
44 In the autumn of 2003, Ms Glasson planted 1,100 pinus radiata trees (part of the family of pine tree); 901 of those trees survived the planting (ts 25).
45 The planting occurred after consultation between the plaintiffs and the defendant concerning the location of the new Forrest Highway: Glasson, pars 42 44.
46 Unfortunately the boundaries for the subsequent resumption decision of the Commissioner of Main Roads did not conform with the advice given to the plaintiffs concerning the Taken Land. The boundaries of the subsequent resumption decision meant that 501 of the pine trees were on the Taken Land. The pine trees can be seen on the aerial view of the Subject Land in Appendix 3.
3.2 The taking of part of the Subject Land on 26 July 2006
47 On 13 December 2005, the Commissioner of Main Roads issued a 'notice of intention to take interests for a public work'. The notice was issued under s 170 of the Land Administration Act. The public work was the construction of the new PerthBunbury 'Forrest Highway'. Part of the plaintiffs' land was included in the notice.
48 On 25 July 2006, the Commissioner of Main Roads issued a Taking Order in relation to land which included 14.5516 ha of the 123.0522 ha Subject Land: exhibit 32 (the Taken Land).
49 The Taking Order was registered on 26 July 2006 (ts 7).
50 The portion of the Subject Land which was not resumed is now identified as lot 48 on deposited plan 51502, estate in fee simple held under certificate of title vol 2631 folio 858 (the Remaining Land).
51 The portion of the Subject Land which was resumed is now identified as lot 372 on deposited plan 51502, estate in fee simple held under certificate of title vol 2631 folio 859 (the Taken Land).
52 The Taken Land is a roughly rectangular strip of land on the eastern boundary of the Subject Land. It was grazing land which was mostly cleared, fenced and pastured: Benson 1, page 7; Miller 1, page 20.
53 The Taken Land included 501 of the 901 pine trees which Ms Glasson had planted. An aerial view of the trees can be seen in Appendix 3 to these reasons.
54 On 25 January 2007, the Commissioner of Main Roads made an offer of compensation to the plaintiffs under s 217 of the Land Administration Act. The offer was $227,000 with interest at 6% from 15 January 2007 until settlement: exhibit 39.
55 On 12 February 2007 the offer from the Commissioner of Main Roads was rejected by the plaintiffs: exhibit 21.
56 The rejection of the offer by the Commissioner of Main Roads triggered the power of the plaintiffs to bring an action for the assessment of compensation under s 220(b) of the Land Administration Act.
57 On 16 March 2007, the plaintiffs and the Commissioner of Main Roads entered a Deed of Partial Discharge of Claim. The plaintiffs accepted advance payment of the amount of the offer of $227,000 and interest in partial satisfaction for their claim for compensation: exhibit 42.
58 The construction of the Forrest Highway from Perth to Bunbury commenced in November 2007.
59 It is proposed that the Forrest Highway will include a stage 2 'flyover' which will reach up to 11 m in height and will be built in proximity to the Subject Land. However, the construction of the flyover has not yet commenced and no commencement date has yet been set. It has not even been determined how the flyover will be constructed: Zoetelief, par 32.
60 The Commissioner for Main Roads conceded that the public works to be taken into account for the assessment of compensation should include the 'fly over': defendant's submissions, par 6.
61 The Subject Land was acquired by the Commissioner of Main Roads under pt 9 of the Land Administration Act. Section 202 of the Land Administration Act creates a right to compensation from the acquiring authority for every person having an interest in land which is acquired under pt 9.
62 It is common ground that the date for assessment of compensation is the date that the Taking Order was registered, 26 July 2006 (ts 7): Land Administration Act s 241(2)(c).
63 In assessing the amount of compensation for the Taking, regard is to be had only to the matters in s 241 of the Land Administration Act. By reference to that section, the plaintiffs claim compensation under six different heads:
(1) Compensation for the value of the Taken Land ($312,500): amended statement of claim, par 11(a);
(2) Compensation for farming severance costs ($74,500): amended statement of claim, par 11(b);
(3) Compensation for injurious affection ($325,219): amended statement of claim, par 11(c);
(4) Compensation for consequential losses ($285,326): amended statement of claim, par 11(d);
(5) Solatium at 10%: amended statement of claim, par 11(e); and
(6) Interest from the date of receipt of claim to date of settlement at 6% per annum: amended statement of claim, par 11(f).
It was common ground that the plaintiffs were entitled to (5), a solatium at 10%: defendant's closing submissions, par 226.
64 The remainder of these reasons sets out the law, the evidence, and my reasoning in relation to each of the claims (1) (4) above. If the quantum of interest is not agreed, I will hear submissions separately concerning the quantification of the claim to 6% interest.
4. The valuation of the Taken Land 4.1 The legal principles
65 The principles in relation to valuation of taken land have recently, and comprehensively, been set out by Beech J in McKay v Commissioner of Main Roads [No 7] [2011] WASC 223. In the brief summary which follows, I am indebted to his Honour's lucid description of the law and his navigation through the many authorities, especially at [144] [171] of his judgment.
66 I have set out below 13 basic legal propositions, with a small selection of the authorities in support. These are the propositions which are generally relevant to the determination of the valuation of the Taken Land in this case. In other particular areas which fall for consideration in this judgment I have considered the legal issues in more detail.
(1) Assessment of compensation must be conducted with regard only to the matters contained in s 241 of the Land Administration Act: s 241(1); Konowalow & Felber v Minister for Works [1961] WAR 40, 41 (Virtue J).
(2) No regard is to be had to the value of any improvements made without the consent of the Minister after the registration of the notice of intention on 13 December 2005: s 241(4) Land Administration Act.
(3) The purpose of the assessment of compensation for resumed land is to ensure that the person to be compensated is given a full money equivalent of his or her loss: Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Ltd [1947] HCA 10; (1947) 74 CLR 358, 373 374 (Dixon J).
(4) Compensation for the value of the resumed land should be assessed in a theoretical, albeit artificial, fashion by assuming that the land had been sold on the date of its acquisition by the resuming authority: Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 167 ALR 575, 647 649 [265], [271] (Callinan J).
(5) This theoretical approach to assess compensation for the resumption of the land requires the court to identify the price which would be paid under a hypothetical bargain between a person 'desiring to buy the land... to a vendor willing to sell it for a fair price but not desirous to sell': Spencer v The Commonwealth [1907] HCA 82; (1907) 5 CLR 418, 432 (Griffith CJ); Mount Lawley Pty Ltd v Western Australian Planning Commission [No 3] [2008] WASCA 158 [25] (the Court).
(6) In assessing the price payable in this hypothetical sale, it must be assumed that the hypothetical purchaser would be purchasing the land for the most advantageous use for which it is adapted: Spencer v The Commonwealth (441) (Isaacs J). This 'most advantageous use' is commonly referred to as the 'highest and best use' of the land: ISPT Pty Ltd v Melbourne City Council [2008] VSCA 180; (2008) 20 VR 447, 458-459 [40] (the Court); Commonwealth Custodial Services Ltd v ValuerGeneral (NSW) [2006] NSWLEC 400; (2006) 148 LGERA 38, 45 [15] (Biscoe J).
(7) The highest and best use of the land may be a single use or it may be a package of alternative uses: ISPT Pty Ltd v Melbourne City Council 462 [57]. However, in the instance of a package of alternative uses, care must be taken to ensure that those alternative uses are not inconsistent: Love v Roads Corporation [2011] VSCA 434 [63] [66].
(8) In assessing the highest and best use, the existing use will be a relevant, although not necessarily determinative, factor: ISPT Pty Ltd v Melbourne City Council 458 459 [40]; Commonwealth Custodial Services Ltd v ValuerGeneral (NSW) 45 [15] (Biscoe J).
(9) The hypothetical purchaser must be assumed to have regard to all relevant available information, and to be cognisant of all circumstances which might affect the value of the land: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259, 276 277 [51] (the Court); Boland v Yates Property Corporation Pty Ltd [271] [274] (Callinan J).
(10) However, the hypothetical sale and the determination of the value of the plaintiff's interest in the land taken, and the compensation payable to the plaintiff must be conducted by 'discounting any increase or decrease in value attributable to the proposed public work': Land Administration Act s 241(2).
(11) In conducting the valuation exercise it has been iterated and reiterated that a court must not usurp the skill and experience of a valuer. In other words, the court must not allow itself to become a 'third valuer': Bronzel v State Planning Authority (1979) 21 SASR 513, 523 (Wells J); Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541, 544 545; Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2002] WASC 174; (2002) 125 LGERA 180 [76] (Pullin J).
(12) However, the prohibition against a court becoming a 'third valuer' does not, and cannot, prevent the court from making its own adjustments to the valuations, particularly where a valuer's adjustments to comparative sales are not wholly accepted. Judicial adjustment to the valuation may sometimes be unavoidable because a court cannot adopt adjustments which it has rejected; the court would otherwise be left with no basis to assess the value of the subject land: McKay v Commissioner of Main Roads [2484] (Beech J).
(13) If any doubts exist in assessing the compensation payable, then those doubts should be resolved by a liberal estimate in favour of the dispossessed owner: Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Ltd (373 374) (Dixon J); Boland v Yates Property Corporation Pty Ltd [100] (Gaudron J), [111] (Gummow J), [356] (Callinan J).
4.2 The highest and best use of the Subject Land in its unaffected state
67 A central issue in dispute in this trial was the highest and best use of the Subject Land in an unaffected state prior to the Taking. The valuations of Messrs Benson and Pember proceeded upon one assumption as to the highest and best use. The valuation of Mr Miller proceeded upon another.
68 The basis upon which Mr Miller proceeded should be preferred. This section of my reasons explains why Mr Miller's description of the highest and best use of the Subject Land as 'lifestyle and farming' should be preferred.
69 There was considerable evidence given by the valuers concerning whether the Subject Land had 'lifestyle' characteristics. However, there is no formal valuation definition of 'lifestyle'; the term is not contained in any relevant legislation, scheme, strategy or guideline document (ts 230).
70 Although 'lifestyle' is not a formal term, it assumed real significance in the assessment of the highest and best use of the Subject Land. Mr Benson and Mr Pember both denied that the Subject Land as a single lot had any lifestyle characteristics.
71 In these reasons, when I use the term 'lifestyle', I have used it in the sense in which Mr Miller uses it, namely a buyer who has, as one consideration, elements of lifestyle choice in selecting a property.
72 The elements of lifestyle choice are separate from the considerations of deriving an income from farming. Hence, as Mr Miller explained, elements of lifestyle choice include matters such as the desire of a purchaser to be near the beach (ts 67); for water views (ts 68); for a property without loud noise (ts 96). I refer below at [119] [123] to specific lifestyle characteristics peculiar to the Subject Land.
73 The purchaser of a 'lifestyle' or a 'lifestyle and farming' property will be influenced by the size of the property. As Mr Miller acknowledged, the possible activities on smaller farms are more restricted than those on larger farms. However, Mr Miller considered that the sales of these smaller farms were still relevant for comparison because they were all sales of properties where a lifestyle element was involved and the purchasers were not simply buying the property to establish a living as a farmer (ts 117).
74 The only nonexpert witness was Ms Glasson. Much of Ms Glasson's evidence was uncontested. She was an impressive witness. She was frank in her answers to questions in crossexamination. She did not gloss any of her answers. She was forthright in answering questions, and answered honestly whether or not her answers assisted her case. I have no hesitation in accepting her evidence, save for hearsay and inadmissible matters.
75 A commendable and conscious decision was taken by counsel, in the interests of the efficiency of the trial, not to object to a number of minor inadmissible matters such as hearsay in the evidence of Ms Glasson and the valuers. I have placed no weight on these matters.
76 The Subject Land was bought by Ms Glasson and Lenz Nominees in 2002. Ms Glasson used the Subject Land as a grazing farm and, since 2006, as a sheep stud farm: Glasson, par 5; (ts 26).
77 Ms Glasson described the Subject Land (in its unaffected state) as
the most beautiful place to live just minutes down the road to a lovely beach on the Harvey Estuary ... a productive farm in a high rainfall area only half an hour from the City of Mandurah with access to goods, schools, and shopping ... all the peacefulness of living in the country (Glasson, par 58).
78 Although Ms Glasson gave evidence that the profit potential of the farm had been reduced, no evidence was given about the profitability of her farm. Nor was any claim brought under s 241(6)(b) for disruption of a business.
79 For the purposes of the farming enterprise, Ms Glasson would transport livestock on and off the property (ts 27).
80 Mr Miller's opinion was that a sale based on the highest and best use of the Subject Land in its unaffected state would be to 'an individual lifestyle/investor type buyer': Miller 1, pages 12, 27.
81 In his report, Miller 1, Mr Miller suggested that the hypothetical buyer 'would probably take advantage of the potential for subdivision into three lifestyle farmlets over the medium to long term' (page 12). This was later modified at page 27.
82 In oral evidence, Mr Miller clarified these two statements in his report. He explained that he did not consider that an 'imminent' subdivision was the highest and best use at the valuation date. He said that he considered that the subdivision potential of the Subject Land was not part of its highest and best use. He therefore placed very little weight on the medium to long term potential for subdivision (ts 62).
83 Mr Miller also conducted a hypothetical subdivision exercise in which he concluded that the value of the Subject Land, if subdivided into three lots, was substantially less than the value of the Subject Land if sold as a single lot to a hypothetical purchaser to use as a lifestyle and farming property: (ts 41, 61); Miller 1, attachment 9.
84 Mr Miller explained that his reference to a 'lifestyle' buyer in his highest and best use was to a person who is an individual lifestyle investor but who is also going to operate, at least in the medium to long term, the property as a fully operational grazing and stud farm proposition: (ts 60); Miller 1, page 27.
85 The hypothetical farming and lifestyle buyer considered by Mr Miller would also be someone who might want to make a little profit from the land but would not be a serious farmer making serious money (ts 81).
86 In other words, on Mr Miller's analysis the hypothetical purchaser of the Subject Land at the date of Taking, who intended to use the Subject Land for its highest and best use, would be a person wishing to use the property as a 'lifestyle farming property': Miller 1, pages 29 30.
87 Mr Benson and Mr Pember agreed with Mr Miller that the highest and best use of the Subject Land was for farming. But neither Mr Benson nor Mr Pember considered that the Subject Land contained any lifestyle characteristics (ts 195 197, 246, 259 260).
88 A further difference from Mr Miller was that Mr Benson and Mr Pember considered that the highest and best use of the Subject Land, without regard to the public works, would involve subdividing it into '3 lifestyle lots': Joint Expert Memorandum, par 4; Benson 1, page 7; '2 or 3 "lifestyle lots"'; Pember 1, page 35.
89 My conclusions in relation to the subdivision potential and the lifestyle use of the Subject Land are expressed in the next section. However, in this section I explain why aspects of Mr Benson and Mr Pember's evidence concerning why the Subject Land would not be used, in its highest and best use, for lifestyle uses in addition to farming uses were unclear, or contradictory.
90 An example was in crossexamination of Mr Pember. In crossexamination, Mr Pember initially denied that the market for a lifestyle farming operation was any different from the market for a farming operation (ts 230). Only after a substantial number of further questions did he eventually acknowledge that a 'lifestyle farming operation' would be a different market from a 'farming operation' (ts 231).
91 Mr Benson gave evidence that the Subject Land was not a lifestyle property and said that, for that reason, he did not attach any premium to its location in Birchmont (ts 130). But in crossexamination he said that there was no point in the distinction he had made about whether a property was a lifestyle property (ts 153).
92 In crossexamination Mr Benson also sought to draw a distinction between 'lifestyle' and 'aesthetics' (ts 154 155). But in his report he described aesthetics in a remarkably similar way to the way in which he had been crossexamined about 'lifestyle' ie 'an aesthetical value in protecting the "country" lifestyle and quietness of the house': Benson 1, page 21.
93 For eight reasons, I prefer the conclusion of Mr Miller that a hypothetical sale of the Subject Land for its highest and best use would involve (1) lifestyle considerations, and (2) would not involve subdivision. The highest and best use is a hypothetical purchaser who is an individual lifestyle investor, and who is also going to operate the Subject Land as a fully operational grazing and stud farm proposition.
94 First, as Mr Miller explained, his opinion that subdivision of the Subject Land into three lots would not be the highest and best use was supported by the sales evidence. Half, or more, of the sales of rural lots in the region were properties of more than 80 ha. Since the minimum lot size for rural land was 40 ha then all of these properties could be subdivided. But although there was some evidence of some isolated subdivision proposals, Mr Miller's uncontradicted evidence was that there has not been a single subdivision of any site that had then been onsold (ts 41). It would be remarkable if no such buyer were using his or her land at its highest and best use.
95 An extreme example of this was Mr Pember's comparative sale number five: Pember 1, page 30. This was a sale of a 256 ha property, more than twice as large as the Subject Land. Although the property was on six separate titles it sold as a single sale in December 2005. Mr Pember could not point to a single property in Coolup Flats or the surrounding areas which had been subdivided.
96 Secondly, there is a powerful reason why buyers in the market had not been subdividing even large properties. There is no significant difference in rates paid per hectare in the locality for properties between 40 ha and 100 ha. As I explain below at [138] [147], the valuers generally agreed on this at the valuers' conference. It is supported by the sales evidence.
97 Further, Mr Miller also explained that the substantial costs of subdivision meant that it would not be profitable to subdivide a lot such as the Subject Land (ts 64).
98 Mr Miller's conclusion about the high costs of subdivision is also consistent with Mr Benson and Mr Pember's feasibility studies. Although their feasibility studies were conducted on their different assumption that the Subject Land had only a farming use, the studies showed that the cost of subdivision was extremely high. Their feasibility studies suggested that the value of the Subject Land when subdivided would be $17,000 (Benson) or $18,000 (Pember) per hectare. But the studies apparently suggested that the value with subdivision potential was only $14,500: Pember 1, page 25; exhibit F1 (Benson); see also ts 312. This considerable difference in value between potential and actual subdivision demonstrates a large cost of subdivision, particularly because there was little risk that subdivision would not be achieved (ts 178).
99 Thirdly, Mr Miller's conclusion that the highest and best use of the Subject Land would not involve subdivision was supported by his hypothetical subdivision comparison exercise: Miller 1, pages 158 160. Mr Miller was not crossexamined on this exercise.
100 Fourthly, as the Commissioner of Main Roads properly conceded, the use to which the plaintiffs put the land is a relevant indicator of the highest and best use, although not determinative: defendant's closing submissions, par 12; see also plaintiffs' closing submissions, par 9 and the authorities above at [66](8).
101 As discussed above at [76] [77], the plaintiffs had not subdivided the Subject Land. They had used the Subject Land in part for lifestyle reasons including its tranquil setting, and proximity to amenities.
102 Fifthly, both Mr Benson and Mr Pember accepted that the plaintiffs' use of the land was its highest and best use (ts 200, 261). As Mr Benson and Mr Pember were aware, Ms Glasson had planted hundreds of pine trees at the boundary of her property: she actually planted 1,100 but 901 survived (ts 22). The purpose for which that was done, as the valuers were aware, was to block the effect of the impending Forrest Highway, including the noise and sight. These are lifestyle issues.
103 Sixthly, Mr Benson's and Mr Pember's conclusions that the highest and best use of the Subject Land was for general farming without a lifestyle element were, to a degree, inconsistent with the lifestyle circumstances surrounding sales of smaller properties.
104 Although those smaller properties were sold to a different class of buyer from a potential buyer of the Subject Land, I accept Mr Miller's evidence that the smaller sales were indicative of the Birchmont locality being well sought after as a lifestyle location in comparison with localities such as West Pinjarra or Coolup: Miller 1, pages 37 38.
105 Mr Miller persuasively provided a number of reasons for this lifestyle desirability of Birchmont; a pattern which applies beyond the sales of smaller properties to sales of larger properties with a lifestyle component as well:
106 Seventhly, contrary to his conclusion that the Subject Land did not have 'lifestyle' as part of its highest and best use, in Mr Benson's assessment of injurious affection, he took into account the effect on lifestyle. In his report, Mr Benson said that the pine trees had value in protecting
the 'country' lifestyle and quietness of the house. This 'damage' has been allowed for in the injurious affection section of this report allowing for loss in the potential added value of the house (Benson 1, page 21).
107 In section 6.2 of these reasons, I explain why it is an error to treat the 'house' as if it could be the subject of some different use, or some different method of valuation from the Subject Land. The house is a fixture. It is the Subject Land. If the house has a lifestyle use then the Subject Land must have a lifestyle use as well.
108 Eighthly, even apart from the matters above, I have concerns with the valuation evidence of Mr Benson and Mr Pember which would have caused me real hesitancy before acceding to Mr Benson and Mr Pember's conclusions about the highest and best use of the Subject Land. My concerns with their valuations are set out above at [87] [92] and at various points below in these reasons.
109 For these eight reasons, I consider that Mr Miller's approach to the highest and best use of the Subject Land should be adopted. The highest and best use is that of an individual lifestyle investor who is also going to operate the property, at least in the medium to long term, as a fully operational grazing and stud farm proposition.
110 In any event, even if I had preferred the view of Mr Benson and Mr Pember that the Subject Land had no 'lifestyle' element in its highest and best use, then a question may have arisen whether that lifestyle element should be taken into account as an objective, ascertainable 'special value' to the plaintiffs which had been lost. This might have been relevant in relation to compensation for the Taken Land, although possibly not for injurious affection: see Pastoral Finance Association Ltd v The Minister [1914] UKPC 77; [1914] AC 1083, 1088 1089; Boland v Yates Property Corporation Pty Ltd [16] (Gleeson CJ), [354] (Callinan J); compare Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273, 329 330 [282] (the Court) (Mount Lawley [2004] WASCA); Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [70] [75] (Pullin J).
111 However, although there was an evidentiary basis for a claim for compensation for special value, no claim for special value was raised by the plaintiffs. My acceptance of Mr Miller's approach to highest and best use is a further reason why it is unnecessary to consider this issue.
4.2 Comparative sales and comparisons with the Subject Land
112 The valuation methodology adopted by all valuers was to assess the value of the Subject Land, and hence the Taken Land, by reference to comparative sales. This valuation methodology is the 'traditional, and usually unexceptionable' method: see Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111, 120 [16] (the Court).
113 As I have explained, the highest and best use of the Subject Land was as a lifestyle and farming property. Relevant factors to consider in comparison with other sales evidence are location, size, proximity, potential use, and soil characteristics (ts 62).
114 In applying the comparable sales technique, sales will not always fall neatly into a category of comparable or noncomparable. The process involves selecting potentially useful transactions and carefully analysing them to determine if they are comparable: Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122; (2003) 27 WAR 403, 408 [21] (Pullin J).
115 In performing the exercise of assessing comparative sales, none of the valuers adopted an approach which explained for every sale the particular rate that each comparative sale would have suggested as a price for the Subject Land. I do not consider this to be a flaw in any of the valuers' analyses. Provided that sufficient reasoning and information exists to show how a meaningful comparison can be drawn, the very nature of a comparative sales approach usually requires a number of comparative sales sufficient in volume to justify a deduction or inference as to the value of the Subject Land: Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295 [51] (McLure J).
116 All valuers took the relevant date for the comparative sales to be the date of contract, rather than the date of settlement (ts 70, 159, 250). This is the correct date for comparison, being the date when the price was chosen, and commitment made, by a willing buyer and seller.
117 The comparable sales considered by the valuers differed significantly. Some differed significantly in size from the Subject Land. Some differed significantly from the location of the Subject Land. And some differed significantly from the relevant date of the Take, 26 July 2006.
118 The line between sales which are comparable and those which are incomparable is a matter of degree. If too much adjustment is necessary to make a sale comparable then it might be unsafe to use. Although a court will adjudicate on this issue, the question of where this line is to be drawn is a matter for an expert valuer to determine: Duffy v The Minister for Planning [2003] WASCA 294 [25] (McLure J).
119 In terms of lifestyle, Mr Miller's evidence was that the lifestyle considerations of the Subject Land included proximity to amenities including a 'popular' beach and estuary with 'recreational/camping facilities': (ts 67); Miller 1, pages 11, 17.
120 The lifestyle considerations particular to the Subject Land in its unaffected state, also included the lack of noise, apart from the birds chirping and cows mooing: Glasson, par 13; Miller (ts 96). The popular beach and recreation and camping to which Mr Miller referred was a reference to one of the most scenic places on the estuary, with its sandy beach and white sand; its camping; and its fishing, crabbing and prawning: (ts 28, 42); Miller 1, pages 11, 17.
121 I have also referred above to the evidence of Ms Glasson and the valuers concerning the proximity of the Subject Land to the City of Mandurah (population 36,000) and its amenities. The evidence was that the City of Mandurah is approximately 40 km or 30 minutes drive away.
122 Mr Pember acknowledged that factors such as the proximity of the Subject Land to the sandy beach, camping, crabbing, prawning and fishing were 'positive attributes'. He said that they do not add value in terms of farming (ts 245 246). But, for the reasons explained above, the highest and best use of the Subject Land is for lifestyle as well as farming.
123 Mr Benson gave evidence that the Subject Land was flat and was not directly fronting the estuary (ts 130). I accept that if the Subject Land were hilly then it might have even more lifestyle appeal. But, for the reasons in the paragraphs immediately above, I do not accept Mr Benson's evidence that because of these factors the Subject Land 'does not have any aesthetic attributes that a lifestyler would be looking for' (ts 130).
124 Mr McArthur observed that the soils in that part of Western Australia where the Subject Land is located are naturally shallow (ts 266). The soil on the Subject Land was also shallow, sandy top soil: Miller 1, page 19.
125 The soils on the Subject Land are predominantly good in comparison with other farming properties in the region: Benson 1, page 6; Miller (ts 70, 74); Pember (ts 216).
126 There are also four places on the Subject Land which are seasonally inundated with water, comprising about 15% of the Subject Land: Miller 1, page 18; (ts 58 59). However, this is not a feature which would detract significantly from the farming potential of the Subject Land in a hot climate like Pinjarra: the feed will last longer in the heat, and the Subject Land does not sheet flood (ts 69).
127 Overall, it was common ground that the Subject Land was suitable for grazing: closing submissions of the Commissioner of Main Roads, par 10. However, although Ms Glasson's sole employment was in relation to the grazing and stud operation on the Subject Land (ts 27), no evidence was given concerning the viability of that business.
128 Many of the comparative sales considered by the valuers were hobby farm lifestyletype properties. I accept that all of this sales evidence involved 'potentially useful transactions' in the sense I have described above at [114].
129 However, the approach of Mr Benson and Mr Pember to their chosen comparative sales does not accord with the highest and best use of the Subject Land. They were comparing the comparative sales with the Subject Land on the basis that the highest and best use of the Subject Land was farming only. But I have concluded that Mr Miller's approach should be adopted and that the highest and best use of the Subject Land at the date of Taking was as a lifestyle and farming property.
130 Mr Benson's and Mr Pember's assessment of the adjusted value of the Subject Land deriving from their chosen comparative sales has therefore proceeded upon a flawed assumption concerning the highest and best use of the Subject Land.
131 Further, a number of other concerns arise with each of Mr Benson and Mr Pember's reports. Those difficulties are sufficiently significant that, even independently of the question of highest and best use, I would have had real doubts concerning the weight to put on their assessments of value deriving from their comparative sales exercises.
132 As to Mr Pember, it was unclear which comparative sales Mr Pember had relied upon to reach his conclusion that the value of the Subject Land was $14,500 per hectare.
133 In Mr Pember's report he reached his conclusion on value by 'consideration of the evidence arising in sales 5, 6, 8, 9, 16 and 17': Pember 1, page 35.
134 In the Joint Expert Memorandum, Mr Pember said that the sales he had considered were (as correctly relabelled) sales 5, 6, 8, 9, 12, 13, 14: Joint Expert Memorandum, par 1.
135 In crossexamination, Mr Pember said that he placed most weight on the sales to which he had referred in the conferral document, not the sales to which he had referred in his report. He said that the value in his report, of $14,500, was derived from the sales referred to in the conferral document not the ones set out in the analysis section of his report (ts 234 235).
136 Two of the sales upon which significant reliance was placed in Mr Pember's analysis (Pember 1, pages 35 36) were sales 5 and 17. One of those, sale 17, did not appear in the Joint Expert Memorandum from which Mr Pember said the report figure had been derived.
137 In light of this evidence it is not clear which sales Mr Pember had relied upon in reaching his conclusions in his report or if, for example, sales such as sale 17 should be disregarded, or discounted from his report, or how this could be done. The process is further complicated by the omission in Mr Pember's report of the instructions from the Commissioner of Main Roads upon which Mr Pember was to proceed (ts 245).
138 Mr Benson expressed an important view at the valuers' conference, and endorsed that view in the Joint Expert Memorandum at par 2. The view was:
Benson - All sales selected are relevant as valuer does not consider there is much difference in value per hectare between lots of 40 hectares - 100 hectares. It is not until a lot is 20 hectares or under that noticeable differences start to emerge.
Mr Miller agreed with this assessment of Mr Benson that there was not much difference in value per hectare between lots of 40 ha 100 ha: Joint Expert Memorandum, par 2.
139 At another point in the Joint Expert Memorandum, all of the experts agreed that the magnitude of a property led to no discount, or only a modest discount for lots between 40 ha and 100 ha: Joint Expert Memorandum, par 8. In other words, the per hectare rate for lots from 40 ha 100 ha was not materially changed.
140 Consistent with this view, one of the five preferred comparable sales to the 123 ha Subject Land, which was chosen by Mr Benson in the Joint Expert Memorandum, was a 41.5 ha property: Joint Expert Memorandum, par 1.
141 In crossexamination, Mr Miller also explained one basis for this conclusion in the Joint Expert Memorandum that the per hectare rate for lots from 40 ha 100 ha was not materially different. Mr Miller explained, and I accept, that although properties between 47 ha and 120 ha were not viable farming propositions, more profit could be made with larger properties and other activities such as running sheep and cattle were more economically viable (ts 81).
142 Mr Miller also explained that the sales evidence, as a whole, supported this conclusion. One extreme example to which he made reference to show that size does not have a significant effect on the rate per hectare was a property which was twice the size of the Subject Land (a 250 ha property) which sold for a rate of $14,638 per hectare. This was a single sale of six lots, which was not as well located as the Subject Land. Further, the sale occurred eight months prior to the date of Taking when the market was generally much quieter: Miller 1, page 118. As I explain below, the market at that time was growing at a continuous rate of 3.5% per month.
143 This conclusion is highly significant because there were few sales involving properties of more than 100 ha which were also directly relevant for comparison purposes with the Subject Land (123 ha).
144 Also consistent with the view expressed in the Joint Expert Memorandum that there was not much difference in rate per hectare between lots of 40 ha 100 ha, Mr Benson relied in his report upon 24 sales of varying sizes: Benson 1, pages 8 18. Although the six properties upon which Mr Benson relied most heavily were over 90 ha, half (12) of the 24 sales were of properties between 40 ha and 100 ha. A further six were fewer than 40 ha. After referring to all these sales, Mr Benson said in his report that '[a]ll recent sales in the immediate district have been analysed in an effort to ascertain a fair market value for the subject': Benson 1, page 18.
145 In oral evidence, Mr Benson appeared to retreat from this position. Counsel for the Commissioner for Main Roads said in closing written submissions that Mr Benson, like Mr Pember, considered that 'the 40 50 ha lots do not provide a direct comparison with the subject land being a 123 ha lot with subdivision potential': par 56. Mr Benson never said this expressly. However, in oral evidence he did attempt to distinguish the values disclosed by 40 ha lots:
Basically they show there were cheap ones at 14, 15 thousand a hectare up to about 23,000. Then we have got to make allowances for soiltype location, access, aesthetics. When we get into the smaller blocks they sell on a block-value component, and if you have got 40 hectares with 20 hectares of bush that can sell for more than 40 hectares which is all clear so it's a block value feel the block, for the land (ts 146).
146 On the other hand, Mr Benson acknowledged in crossexamination that properties above 40 ha were comparable with the Subject Land and that the size was not a 'disqualifying factor' (ts 170), although he suggested that noticeable differences would emerge between 20 ha and 40 ha (ts 196). This was a point which he had not mentioned in the Joint Expert Memorandum.
147 Overall, Mr Benson never fully retreated from his view that properties of over 40 ha were comparable with the Subject Land without much difference in value per hectare, but his position in relation to the size of the property in his various statements was not particularly clear.
148 A further difficulty with the reports of Mr Benson and Mr Pember is a lack of transparency in relation to a number of significant matters.
149 In relation to sales which occurred after the date of Taking, all valuers accepted that it was necessary to discount the sale price to take account of the increase in the market. Nowhere in Mr Benson's or Mr Pember's reports did they clearly justify the discount factor which they had used.
150 In oral evidence Mr Benson said that he had taken into account a growth rate of 2% per calendar month (ts 133). Mr Benson admitted that in his report he did not explain how such a market adjustment was made to the comparative sales he considered (ts 159).
151 The only point in Mr Benson's report where movements in the market prior to the date of Taking are considered is at pages 28 29 of appendix 1 to Benson 1. On those pages he considers the movement from June 2005 to August 2006. He concluded that the sales in this period show an increase of 20% 25% (page 29). This corresponds with the 2% per month which he said in oral evidence had been taken into account in his comparisons. But it only does so by assuming that the growth rate is not continuous or cumulative.
152 In contrast, Mr Miller explained the need to calculate growth on a continuous basis (ts 56, 122), and the manner in which the calculation should be made. Absent a market shock the growth pressures are constant and growth occurs at a constant, or continuous, rate.
153 I accept Mr Miller's explanation. As for the calculation of continuous growth, it does not require even the most basic knowledge of differential calculus. As Mr Miller explained, a calculator with the button for growth function will suffice.
154 There are some further oddities about how the 2% figure is calculated by Mr Benson. Mr Benson said that he determined an average cleared value of mid2005 sales and compared that with a mid2006 average. In crossexamination he conceded that his mid2005 sales 'average' was based on one property sale only and that it was wrong to describe this as an average (ts 160).
155 The lack of transparency in relation to the rate Mr Benson used to adjust for market movements is also compounded by Mr Benson's failure to provide a consistent contract date for a number of his preferred sales. The contract date, as Mr Benson and the other valuers explained, is the relevant date from which the adjustments should be made (ts 159). Yet, in Mr Benson's statements in the Joint Expert Memorandum and in his report, he sometimes provided dates of 'negotiation' and dates of settlement. For instance:
(a) Mr Benson described his sale number 1 in the Joint Expert Memorandum as 'negotiated April 2005 - settled 2 November 2005'. In his report he described the same sale as 'negotiated June 2005 - settled 27/10/2005' (page 28). In his oral evidence he said that the sale date was June 2005 (ts 159). Mr Miller who relied consistently upon contract documents set out the offer and acceptance date as 27 April 2005: Miller 1, page 123.
(b) Another example is Mr Benson's preferred sale number 4. In the Joint Expert Memorandum, Mr Benson described the sale as '[n]egotiated November 2005 - settled February 2006'. In his report, Mr Benson described sale number 4 as '[n]egotiated January 2006 - settled February 2006': Benson 1, page 9. Mr Miller's report which focused upon the date of the offer document, and which I accept, said that the offer was dated November 2005: Miller 1, page 122.
156 Mr Pember's discount rate was also subject to some of the transparency problems similar to those of Mr Benson's. Like Mr Benson, a flat rate of interest was also applied by Mr Pember. In Mr Pember's report he said that he had applied a 'flat 2% per calendar monthly rate': Pember 1, page 25.
157 Mr Pember determined movements in the market based on values per hectare in late 2003 until early 2004; in late 2004; in mid2005; in mid2006; and in mid2007. In 'support of those observations' he referred to only two sales in 2006 and three sales in 2007: Pember 1, pages 21 22.
158 In contrast with Mr Benson and Mr Pember, Mr Miller's determination of a growth rate on a continuous basis of 3.5% per calendar month was more transparent. He explained that he derived this rate from the resale of the same 22 ha property in April 2004 and January 2007: Miller 1, page 93; (ts 54 56).
159 Mr Miller's approach is open to criticism for the limited evidence upon which it was based, but it was clear how his figure had been derived. Overall, I consider that there are good arguments in favour of adopting a lower 2% adjustment, although on a continuous growth basis. However, I accept that 3.5% was not unreasonable.
160 In comparison with Mr Benson and Mr Pember's 2% flat rate, Mr Miller's chosen rate of 3.5% continuous growth had the effect of a substantially greater reduction in the value of comparable sales after the date of Taking. This caused a substantially reduced value of the Subject Land. Six of Mr Miller's seven preferred comparative sales were after the date of Taking. The remaining one was only several months before it.
161 Another example of a lack of transparency at points in Mr Benson and Mr Pember's reports relates to a comparative sale relied upon by both Mr Benson and Mr Pember. The sale was number 4 of Mr Benson's sales, and number 6 of Mr Pember's. It was located on Old Bunbury Road. This was one of their preferred sales at both the expert conference and in their reports.
162 Nowhere in either of the reports of Mr Benson or Mr Pember did they mention that during the winter months two thirds of this property was underwater. Only in crossexamination was this 'damtype land feature' acknowledged by Mr Benson (ts 174).
163 Mr Miller said that the comparable sales considered by the three valuers were 'hobby farm lifestyle-type properties'. He said that the owners of these properties 'cannot draw a full income off anything between 20 hectares to three or four hundred hectares' (ts 43). I accept that all of the comparable sales considered by the valuers are 'potentially useful' (in the sense described above at [114]) on this basis for a valuation based upon a highest and best use as lifestyle and farming.
164 In the Joint Expert Memorandum on 1 July 2009, Mr Miller identified five sales which were the most comparable with the Subject Land. He labelled these sales with numbers 168, 65, 6, 87, and 133.
165 In his report, Mr Miller identified one further sale upon which reliance was placed, sale number 33: Miller 1, page 90. And in oral evidence he relied upon a further sale referred to in his report, namely sale number 35: (ts 44, 62); Miller 1, page 93.
166 The table below sets out the five sales relied upon by Mr Miller in the Joint Expert Memorandum, together with the additional two sales in italics. It also sets out the sales chosen by Mr Benson and Mr Pember in the Joint Expert Memorandum with Mr Benson's additional sale in italics. Minor additions or corrections arising from oral evidence concerning details in the Joint Expert Memorandum have been included.
Lots 65, 66 [Fishermans Road], Coolup (C.T. 2135/710 and C.T. 1656/858
Lot 2 (986) Old Bunbury Road, West Coolup (C.T. 1952/107)
Murray Loc 1478, 1478 Plan 206344, Herron Point Road
Coolup AA Lots 107, 108, 109, 110, 111 and Lot 10 Old Bunbury Road
Bangadang (Kim Buller) to Blanfield Investments Pty Ltd
Coolup AA Lot 74 Plan 235004 and Lot 1 Diagram 77022, Browns Lane Road
Lots 65, 66 [Fishermans Road], Coolup (C.T.2135/710 and C.T. 1656/858
Lots 107, 108, 109, 110, 111 Paulls Road/ Sutters Lane, Lot 10 South West Highway, Coolup
167 Three of the original five sales chosen by Mr Miller as the most directly comparable with the Subject Land were the same as those chosen by Mr Benson or Mr Pember, either at the valuers' conference or in their reports. However, as I have noted above, one very significant difference was that, unlike Mr Miller, Mr Benson and Mr Pember did not have regard to the lifestyle use of the Subject Land in comparison with these properties.
168 The first of these three overlapping preferred sales is Mr Miller's sale number 65, located on Fishermans Road. It is 140.2 ha.
169 It is marked on the map which is Appendix 2 to these reasons as 'Lots 65 and 66'. It is to the east and slightly to the south of the Subject Land; it does not enjoy the same degree of proximity to the recreation and sandy beach of the estuary. The property is also bisected by Fisherman's Road. It is shaded yellow with green stripes in Appendix 2.
170 This sale was also relied upon by Mr Benson in his report as one of the eight properties he considered to be the 'most comparable'. It was not relied upon by him in the Joint Expert Memorandum but I have added it to his list above because of his subsequent reliance on it in his report. This was Mr Benson's sale number 20: Benson 1, page 16.
171 The Fishermans Road property was described by Mr Benson as a '[v]ery comparable proposition to subject': Benson 1, page 16. The sale occurred five months after the valuation date. He said that the price disclosed a rate of $16,200 per cleared hectare.
172 In comparing this sale, Mr Benson acknowledged that he had not considered any lifestyle aspect (ts 168). He then said that a bisecting road, which deprives an owner of access, 'can be good' (ts 168). I do not accept that the road bisecting the property was beneficial. I prefer the approach of Mr Miller described below.
173 In Benson 3, Mr Benson said that the Fisherman's Road location was superior because, in 2002, the price obtained for the Fisherman's Road property ($4,719 per hectare) was higher than the price for the Subject Land in 2002 ($4,250 per hectare). However, it must also be recalled that Mr Benson's consideration was in the context of his opinion that the Subject Land enjoyed no lifestyle use; his reference to location may not have been in relation to any 'lifestyle' characteristics of the Fisherman's Road property.
174 Mr Miller gave a convincing explanation for why the Subject Land, which I accept was better located for lifestyle use, disclosed a slightly lower rate in 2002. He explained that in 2002 the Subject Land was already affected by the proposed Forrest Highway. It enjoyed better lifestyle characteristics but they were already blighted by the proposed public works although, as I explain below at [222], that effect is one which increases over time (ts 75).
175 In contrast with Mr Benson, Mr Miller's approach involved a much more closely tailored approach of adjustments to reflect the value of the Subject Land. Mr Miller considered, and I accept, that having the Fishermans Road property bisected by a road was a disadvantage and also that the property was more poorly located for lifestyle purposes compared with the Subject Land.
176 Mr Miller also took into account that the date of contract for the Fishermans Road property was three months later than the date of Taking, requiring the value to be reduced for the rising market: Miller 1, page 32; (ts 116). In oral evidence he explained that he had reduced that rate by applying the substantial 3.5% monthly compounding discount rate which I have discussed above at [158] [160] (ts 116).
177 Mr Miller also referred to the poorer soil on the Fishermans Road property. This conclusion was disputed by Mr Benson. There was no expert evidence on the soil of the property, but I do not consider that this conclusion about soil makes any substantive difference.
178 Mr Miller concluded that a direct comparison would reveal a land component for the Subject Land of between $20,000 per hectare and $25,000 per hectare (ts 72). Although this involves both a significant downward adjustment of the Fishermans Road sale value due to the high, compounding, monthly rate Mr Miller used, and a significant upward adjustment for the poorer location and bisecting road of the Fisherman's Road property, I accept that Mr Miller's conclusion is within the range of appropriate adjustments. However, in light of all the considerations above, I consider that the appropriate adjustment would be closer to the bottom of that range. A comparative value of the Subject Land of $21,500 per hectare is appropriate, as Mr Miller eventually concluded.
179 The second overlapping preferred sale is Mr Miller's sale number 87, the property at Mills Road. This is Mr Pember's sale number 12. It is 53.6 ha.
180 On the map in Appendix 2 to these reasons, this property is a triangular shape to the north east of the Subject Land, shaded yellow with green stripes. It is marked 'Lot 124'.
181 The two valuers came to similar conclusions about the value per hectare disclosed from that sale: Mr Miller's was $15,064 per hectare, and Mr Pember's was $14,553 per hectare. Mr Benson considered that Mills Road disclosed a rate of $17,300 per cleared hectare but he did not choose it as one of his preferred sales: Benson 1, page 17.
182 Mr Miller explained that the soil type of the Mills Road property was similar to the Subject Land, and that the sale date was three months after the date of Taking, which required his substantial discount factor.
183 Mr Miller was influenced in his adjustments by the fact that 'this site is considered not as well located as subject property as a lifestyle property': Miller 1, page 33. For that reason he concluded that the direct comparison indicated a value for the Subject Land of between $17,000 per hectare and $22,000 per hectare.
184 I accept this conclusion. I also consider that it is reasonable for an upward adjustment toward the top of this range to reflect the lifestyle differences in the two properties.
185 In contrast, in Mr Pember's report he discussed the features of the Mills Road property without reference to any lifestyle features (which was understandable since he had considered that the highest and best use of the Subject Land was farming only).
186 Mr Pember did not make any direct comparison with the Subject Land: Pember 1, page 32. In the 'Valuation Analysis and Consideration of a claim' section in his report (page 35) Mr Pember did not refer to the Mills Road property despite having described it as one of his 'sales upon which most weight is placed' in the Joint Expert Memorandum.
187 The third overlapping preferred sale was Mr Miller's sale number 133, the property in Gibbings Road. This was also Mr Pember's sale number 9. The Gibbings Road property is 96.65 ha.
188 On the map which is Appendix 2 to these reasons this property is yellow with green stripes. It is located considerably to the east, and slightly to the south of the Subject Land. It is marked 'Lot 2'.
189 The two valuers came to similar conclusions about the value per hectare disclosed from that sale: Mr Miller $11,898 per hectare, and Mr Pember $11,942 per hectare.
190 The sale of Gibbings Road was very similar to the date of Taking so no adjustment was necessary for timing. However, Mr Miller made some substantial upward adjustments for two reasons. First, he explained that the Gibbings Road property was substantially affected by an SEC (Western Power) easement and a gas pipeline running through it: Miller 1, page 34. The easement was 100 m wide on each side (ts 78). For this reason, Mr Miller adjusted the per hectare rate to $14,872.
191 Mr Miller then made a further adjustment to the per hectare rate to reach a value of $18,000 $23,000 per hectare. He said that he did this because Gibbings Road was 'completely and absolutely rundown' and the farm 'was not a workable farm' (ts 77). The adjustment was large but it was reasonably based.
192 In comparison with Mr Miller's assessment of Gibbings Road, there is very little in Mr Pember's report which can explain how he derived the rate per hectare for the Gibbings Road property, or how he adjusted that rate to achieve a comparator rate for the Subject Land.
193 In examinationinchief Mr Pember said that the Gibbings Road property was 'a little more isolated', and that the soil was sandy and not as good as the Subject Land (ts 216). In oral evidence, Mr Pember said that he did not consider that the transmission line crossing the property had any effect on value (ts 216). He did not mention the gas pipeline. This is consistent with his view that the valuation was concerned only with a farming use.
194 I accept Mr Miller's evidence that based on his experience, the substantial gas pipeline and the SEC easement on the property would have a significant effect on its lifestyle use (cf Benson (ts 137)).
195 Mr Miller relied upon four other sales within his selection of the seven most comparable sales. All of those were sales of substantially smaller properties than the Subject Land, although two of them (Daudson Road and Mayfield Road) were more than 40 ha and the other two were more than 20 ha (Attein Road and Old Bunbury Road).
196 I have explained above that I accept the evidence of Mr Miller, who agreed with the position of Mr Benson at the valuers' conference, that there is not much difference in value per hectare between lots of 40 ha 100 ha, and that it is not until a lot is 20 ha or fewer that noticeable differences start to emerge: Joint Expert Memorandum, par 2.
197 Of the four remaining of Mr Miller's most comparable sales, I have focused below on Mr Miller's evidence in relation to two of them. Mr Miller said that the other two, sales number 6 (Old Bunbury Road) and number 35 (Attein Road), were comparable because they were both part of the same general market for lifestyle properties. However, he acknowledged that the buyers of these lots were a different type of buyer from those interested in the Subject Land (ts 91). This greatly decreases the utility of these two sales for the purposes of comparison.
198 The first of the two remaining sales was Mr Miller's sale number 168. This was at Daudson Road which was to the north and slightly west of the Subject Land. On the map which is Appendix 2 to these reasons it is marked 'Lot 350' and shaded green and yellow.
199 The Daudson Road property is 47 ha. It is the only comparative sale which is located directly on the estuary, which is important for the lifestyle use comparison. And the Daudson Road property is only 7 km north of the Subject Land. I accept Mr Miller's evidence that this sale was important for the purposes of lifestyle comparison (ts 67) and I consider that Daudson Road was one of the most directly comparable sales.
200 Mr Benson gave evidence that this property was 'lifestyle only' (ts 200). Daudson Road was not one of Mr Benson's preferred sales although he acknowledged in crossexamination that at 47 ha it was comparable (ts 170): (compare Benson 3, page 4 where he erroneously describes it as 39 ha and says it is 'hardly comparable').
201 The Daudson Road sale disclosed a value of $22,640 per hectare which Mr Miller adjusted up to $25,216 per hectare because 8 ha of the land was zoned parks and recreation under the Peel Region Scheme at the date of sale.
202 Mr Benson considered that the zoning of parks and recreation should be ignored. His initial reason was that the block was 'block value' only without viable earnings: Benson 3, page 4. In crossexamination his asserted reasons why the zoning should be ignored in a valuation exercise were that resumption had not yet occurred and would require payment of compensation (ts 171 173).
203 I prefer the approach of Mr Miller. Mr Miller was not crossexamined on his adjustment due to the zoning and I accept that it was legitimate for him to adjust the value of Daudson Road on the basis that a hypothetical purchaser would pay less for a property which was subject to possible resumption in part even though compensation might be paid in some unknown amount for the resumption.
204 As Mr Miller explained, some aspects of the Daudson Road property are inferior to the Subject Land. First, the location on the estuary is desirable for lifestyle reasons but not as desirable as the Subject Land. Secondly, the dwelling on Daudson Road is in very poor condition. On the other hand, the sale date of Daudson Road was four months after the Subject Land, in a period when the market was rising: Miller 1, page 35.
205 I consider Mr Miller's conclusions about the value of the Subject Land revealed by the Daudson Road property to be reasonable. The sale of the Daudson Road property suggests that a value of the Subject Land of $21,500 per hectare is a conservative estimate.
206 The second additional property relied upon by Mr Miller was a 42.45 ha lot in Mayfield Road, which Mr Miller labelled sale number 33.
207 This property is located southeast of the Subject Land. On Appendix 2 to these reasons it is shaded pink (a 2007 sale) with a red dot and marked 'Lot 54'.
208 The price per hectare for the sale of Mayfield Road was $26,619. Mr Miller explained that the sale date of Mayfield Road was six months later than the date of Taking, which required the sale price to be discounted.
209 As Mr Miller explained, Mayfield Road is not as well located as the Subject Land. Mr Miller was not crossexamined on this point. Mr Benson denied that Mayfield Road was less well located (ts 167) but it is clear from the map, at Appendix 2 to these reasons, that Mayfield Road enjoys none of the lifestyle benefits of the location of the Subject Land so close to the estuary.
210 Each of these additional sales, together with the overlapping sales, provides significant support for the conclusion reached by Mr Miller that the value of the Subject Land was $21,500 per hectare.
211 I have preferred the evidence of Mr Miller over the evidence of Mr Benson and Mr Pember, and I have accepted the conclusion of Mr Miller that the value of the Subject Land was $21,500 per hectare. However, two additional sales chosen by Mr Benson and Mr Pember should also be mentioned in addition to those I have considered above.
212 Both of those sales were sales of property which was a significant size and located close to the estuary and to the Subject Land. However, I accept Mr Miller's evidence that these properties were not sufficiently comparable with the Subject Land.
213 The first is Mr Benson's preferred comparative sale number 4. At 117 ha, it is a similar size to the Subject Land. It is located on Old Bunbury Road next to a nature reserve and close to the estuary, south of the Subject Land.
214 This Old Bunbury Road property can be seen on the map which is Annexure 2 to these reasons shaded in yellow and marked with 'L2942' and the triangle and ring mark of Mr Pember.
215 Both Mr Benson and Mr Pember considered that the sale of the Old Bunbury Road property disclosed a value per hectare of around $11,900.
216 Mr Miller did not consider this property comparable with the Subject Land because the marketplace had increased significantly between the date of the sale contract for Old Bunbury Road (October 2005) and the date of Taking (July 2006): Miller 1, page 122.
217 I agree that the Old Bunbury Road property is not comparable for five cumulative reasons. It is not merely that the adjustment would need to be very large, perhaps more than doubling the value disclosed, but the number of significant adjustments which would need to be made.
218 First, Mr Benson acknowledged that for a property which was 12 months old he made an adjustment of 25% (2% per month) to account for the increase in the market (ts 133). This would require an adjustment of at least 18% for Old Bunbury Road. An even greater adjustment of 36.3% (ie (1+0.035)9) would need to be made if Mr Miller's 3.5% monthly continuous growth rate were used. As I have explained, this was the rate which Mr Miller had used to reduce his postTaking sales prices.
219 Secondly, Mr Benson also acknowledged that further upward adjustment had to be made because the Old Bunbury Road property has more uncleared land than the Subject Land (ts 134).
220 Thirdly, as Mr Benson accepted in cross-examination, twothirds of the property at Old Bunbury Road was underwater during winter (ts 174).
221 Fourthly, another reason why the sale price for the Old Bunbury Road property requires a further significant adjustment is its close proximity in time to the proposed Forrest Highway.
222 In Wilson v Liverpool Corporation [1971] 1 All ER 628, 634, Lord Denning said that the impact of a scheme (including proposed public works)
has a progressive effect on values. At first it has little effect because it is so vague and uncertain. As it becomes more precise and better known, so its impact increases until it has an important effect.
This was cited with approval in Mount Lawley Pty Ltd v Western Australian Planning Commission [2007] WASCA 226; (2007) 34 WAR 499, 509 [27] (the Court) (Mount Lawley [2007] WASCA).
223 The contract for sale of Old Bunbury Road was only two months before the Commissioner of Main Roads issued a notice of intention to take interests for the construction of the Forrest Highway. Mr Miller explained in his report that the Old Bunbury Road property is impacted by the public works because of difficulty which will be created to access the property: Miller 1, page 122 (cf Pember (ts 122)).
224 Fifthly, other minor adjustments would also be required in order to compare the Old Bunbury Road property sale with the Subject Land. Mr Miller explained that it is not as well located as the Subject Land, and I accept that this is the case for lifestyle purposes. Mr Pember also said that the property is not as well located as the Subject Land, being further from the markets (ts 217).
225 A second potentially useful property sale was relied upon by Mr Benson in his report and at the valuers' conference, and by Mr Pember in his report only.
226 This sale was of a 117 ha property on Herron Point Road. That property is very close to the Subject Land, located to the west of it. On the map which is Annexure 2 to these reasons it is coloured yellow and marked as 'Lot 1478'.
227 The principal reason why this sale is not comparable is given by Mr Pember and Mr Miller. It is a '[d]ated sale': Pember 1, page 34; Miller 1, page 123. The contract date was 27 April 2005, fifteen months before the date of Taking. It was also at a time when the proposed public works could have a substantial effect on any lifestyle component of the property. Mr Pember appears to use a date of October 2005, and Mr Benson uses a date of June 2005 for the purposes of their adjustments, but the point about the dated nature of the sale remains the same: Benson 1, page 8; Pember 1, pages 33 34.
228 In valuing the property with a highest and best use as a farming property, Mr Benson and Mr Pember reached nearidentical valuations, respectively, of $210,998 ($14,500 per hectare) and $211,000 ($14,500 per hectare): Benson 1, page 24; Pember 1, pages 4, 45.
229 In contrast, Mr Miller valued the Subject Land as a farming and lifestyle property and concluded that the valuation of the Taken Land was $312,500 ($21,500 per hectare): Miller 1, pages 44 45, 51.
230 For the reasons I have expressed, I prefer the valuation of Mr Miller to those of Mr Benson or Mr Pember and I accept that Mr Miller's adjustments to the comparative sales were appropriately made. The properties which I consider to be the most comparable, particularly Daudson Road, provide strong support for a valuation of the Subject Land of $21,500 per hectare.
231 Although, for the reasons I have expressed above, I consider that Mr Miller's reasoning was principled and justifiable, there were several instances where, as Mr Miller accepted, his adjustments were partly subjective (ts 58, 74, 78). These involved his assessment of the growth rate which he generally used to discount comparative sales (which was at the very upper end of reasonable rates); and his assessment of the comparative values of location and lifestyle.
232 It is not necessarily objectionable for a valuer to make subjective adjustments, even substantial ones. This is particularly the case where, as I accept was sometimes the case here, the subjective adjustments to values deduced from comparable sales involved 'nothing more than the best guess that can be made': Leichhardt Municipal Council v Seatainer Terminals Pty Ltd (1981) 48 LGRA 409, 434 (Hope JA); Yates Property Corporation Pty Ltd (in liq) v Darling Harbour Authority (1991) 24 NSWLR 156, 182 - 183 (Handley JA); Duffy v The Minister for Planning [29] [31] (McLure J).
233 I also accept that doubts which exist in assessing compensation should be resolved by a liberal estimate in favour of the plaintiffs: above [66](13).
234 Compensation for the value of the Taken Land is assessed at $312,500.
5. Severance 5.1 The legal approach to severance
235 The basis for a claim for compensation for 'severance' damage is s 241(7)(a) of the Land Administration Act. That section relevantly provides:
If the fee simple in land is taken from a person who is also the holder in fee simple of adjoining land, regard is to be had to the amount of any damage suffered by the claimant -
(a) due to the severing of the land taken from that adjoining land; or
(b) due to a reduction of the value of that adjoining land.
Subsection (a) is a separate provision for assessment of compensation from subsection (b). Subsection (a) is described in these reasons as 'severance'. Subsection (b) is described in these reasons, also following general nomenclature, as 'injurious affection'.
236 In one significant respect, the assessment of compensation arising from damage due to severance of the land differs from the assessment of compensation for the value of the Taken Land.
237 Compensation for the value of the Taken Land is a money equivalent of loss suffered by the plaintiffs assessed at the time of Taking. It is a 'loss' only in the sense of an immediate loss. In comparison, severance is more closely related to a claim for damages for subsequent consequential losses. The words 'damage suffered ... due to' introduce issues of causation which can permit recovery of subsequent losses. The same is true of injurious affection which is considered in the next section of these reasons.
238 In Brisbane City Council v Mio Art Pty Ltd [2011] QCA 234; (2011) 183 LGERA 352, the Queensland Court of Appeal considered the operation of s 20 of the Acquisition of Land Act 1967 (Qld). That section is in very similar terms to s 241(7)(a). It provides:
(1) In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also -
(a) to the damage, if any, caused by any of the following -
(i) the severing of the land taken from other land of the claimant.
The use of the words 'due to' in s 241(7)(a) of the Land Administration Act raises the same considerations as 'caused by' in the Queensland legislation. 'Due to' is the language of causation.
239 The Queensland Court of Appeal in Brisbane City Council v Mio Art Pty Ltd explained, in slightly different language, that under the similar Queensland legislation severance and injurious affection is not limited to an immediate loss. Fryberg J, delivering the leading judgment, said this:
Two points follow from the text of s 20. The first is that value of the land taken is quite separate from damage caused by severance or injurious affection and disturbance costs. They are not elements of land value under the Act. The second is that, unlike compensation for the value of the land taken, compensation for severance, injurious affection and disturbance is not explicitly required to be assessed by reference to the date of acquisition. They are indirectly connected to that date by the requirement for causation ('damage ... caused by', 'costs attributable to'), but the section gives no indication of the appropriate test of remoteness of damage. Whether that test is one of foreseeability by the hypothetical purchaser, as suggested in the Council's submission, need not be determined in this appeal. It is sufficient to observe that compensation for severance, injurious affection and disturbance is awarded in respect of matters which often will arise or be quantified after the taking (361) [30].
240 Once it is accepted that subsequent events of damage caused by the severing of the land are relevant to the assessment of compensation for severance then unless those events are too remote or not within the scope of the statutory provision they cannot be disregarded.
241 Subsequent evidence concerning the extent of that damage is therefore generally admissible. This is why the statement of Harman LJ in Curwen v James [1963] 1 WLR 748, 753 is sometimes emphasised in compensation cases. In that case, Harman LJ said, pithily, that the court should 'never speculate where it knows': see the references to this statement in CMB No 1 Pty Ltd v Cairns City Council [1999] 1 Qd R 1, 13 (McPherson JA), 20 (Williams J, as he was then); Brisbane City Council v Mio Art Pty Ltd (359) [22] (Fryberg J).
5.2 The plaintiffs' claim for compensation for severance
242 The plaintiffs properly accepted that if Mr Miller's highest and best use of the Subject Land (as a single lifestyle and farming lot) were accepted then the plaintiffs would have no basis upon which to claim compensation for the lost subdivision potential assessed by Mr Benson and Mr Pember due to the severance of the Taken Land from the Subject Land.
243 My conclusion that the highest and best use of the Subject Land was as a single lifestyle and farming lot means that no compensation is available to the plaintiffs for the lost subdivision potential assessed on the alternative basis by Mr Benson and Mr Pember.
244 The plaintiffs' pleaded claim for compensation for severance was put only on the basis of 'farming severance costs' of $74,500. These matters were effectively particularised in Mr Miller's report at page 46. They were as follows:
Farming Severance Costs:
(new Lot 48):
a) New limestone access track and build up ramp to Stage 2 road level costs, allow nominal $1,500
b) one new culvert/crossover off Herron Point Road ramp area (includes drainage culvert and new gate)
a) New limestone access track and build up ramp to Stage 2 road level costs.
Say 100 metres long x 8 m wide (includes build up costs for slope) @ $25/m3 up to 3.3 metre high at highway ramp.
b) one new culvert/crossover off Herron Point Road FlyOver ramp area. (includes drainage culvert and new gate)
Gully drain cost along part of eastern boundary adjoining the Take
It is convenient to consider the two types of claim separately: claims (i) and (ii) arising from access issues; and claim (iii) arising from the gully drain.
245 The Subject Land currently has direct access to the Forrest Highway from Herron Point Road. There are two access points to the Subject Land from Herron Point Road. One leads to the residence and the other leads to the sheds. Those access points still exist and Ms Glasson continues to use them (ts 27 28).
246 Exhibit 48 at trial was a November 2007 draft property management plan for the Subject Land which was prepared for the Commissioner of Main Roads by Mr Zoetelief. Its purpose was to define the methods to mitigate the impact on the farming operations on the Subject Land during the construction of the Forrest Highway: exhibit 48, par 1. The plaintiffs did not agree to the draft management plan (ts 242).
247 The draft management plan did not mention any of the access issues which might arise from the construction of the flyover. This is unsurprising. In November 2007 although the construction of the Forrest Highway had begun, the commencement date for the construction of the flyover was not determined. Four years later, construction of the flyover has still not commenced and no commencement date has yet been set. It has not even been determined how the flyover will be constructed: Zoetelief, par 32.
248 The location of the flyover as proposed can be seen in Appendix 1 to these reasons.
249 As Mr Zoetelief, the expert engineer called by the Commissioner of Main Roads, explained in oral evidence, in order to construct the flyover safely there will be a need to divert traffic away from the flyover (ts 237 238). The current designs for the flyover will require the existing access to the shed gates on the Subject Land to be relocated: Zoetelief, pars 29 30.
250 This proposed construction of the flyover would impair the only entrance and exit point that Ms Glasson has to the sheds and to the stockyard on the Remaining Land: Glasson, par 41.
251 The claims relating to access issues were quantified, as above, by Mr Miller at $16,500 for anticipated impairment of access to the main residence and $48,000 for impairment of access to the sheds: Miller 1, page 46.
252 Mr Pember also gave evidence of the cost of providing access of around $30,000 'should Main Roads WA not attend to' these issues: Pember 2, page 2.
253 Mr Benson assumed that accommodation works would be accounted for by the Commissioner of Main Roads during the construction period: Benson 2, page 2.
254 Mr Miller said that if 'someone like the owners or the owners' solicitors' obtained evidence 'in writing' that Main Roads would maintain access for the Subject Land to Herron Point Road then '[t]his issue ... would be removed from my valuation' (ts 107).
255 There is strong evidence that Main Roads will maintain this access.
256 First, when the highway was constructed, the draft property management plan provided for Main Roads to construct access roads along the road alignment to provide access to the Subject Land: exhibit 48, par 4.
257 Secondly, Mr Zoetelief's unchallenged oral evidence on this point, which I accept, was that Main Roads 'will still need to maintain access to properties along Herron Point Road so that they can access either back to the freeway or back to Old Bunbury Road the same way they do now'. Mr Zoetelief said that this would be at the cost of Main Roads (ts 238).
258 Thirdly, in his witness statement, speaking of the existing access to the shed gates, Mr Zoetelief said that 'the cost of relocating this access will be met by the government when the interchange is constructed': Zoetelief, par 30.
259 The plaintiffs' only submission on this point was that this was not sufficient evidence. They submitted that the exercise in assessment of compensation was a once and for all assessment. It was argued that without a deed of agreement from the Commissioner of Main Roads, guaranteeing the plaintiffs that they would not have their access impaired, Mr Zoetelief's evidence 'counts for nothing' (ts 281).
260 I do not accept this submission. The 'once and for all' general rule of damages is at least three centuries old. It was apparently first enunciated by the Court of King's Bench, with the Lord Chief Justice presiding, in Fitter v Veal (1701) 12 Mod Rep 542; (1701) 88 ER 1506. But in three centuries it has never been part of that rule that reliable evidence concerning damage to a plaintiff which might or might not occur should be ignored or discounted.
261 The evidence of Mr Zoetelief is the only evidence concerning the way in which access to the Subject Land will be maintained, once the manner of construction of the flyover is determined. His evidence is reliable, and for the reasons explained above at [241] it cannot be ignored.
262 On the basis of this uncontradicted, sworn evidence of the Project Manager for the Commissioner of Main Roads, I am satisfied that the plaintiffs will not incur the damage from access issues that Mr Miller suggests could be incurred due to the severing of the Taken Land.
263 The second type of alleged damage suffered by the claimant by severance of the Taken Land was said to be a 'gully drain cost along part of eastern boundary adjoining the Take': Miller 1, page 46. There is insufficient evidence to permit an award of compensation for this alleged damage.
264 Mr Benson said that 'all gully drains [for] the new highway are already in place': Benson 2, page 2.
265 Ms Glasson's witness statement makes no reference to any gully drain.
266 Mr Miller's report provided no detail in support of his assertion that the severance of the Subject Land meant that this 'gully drain cost' had been or would be incurred. In his oral evidence he was uncertain about why compensation should be allowed. He said that 'the last time I inspected the property was a week ago and I can't remember seeing the gully drain, so it may have been sorted by the main roads themselves. I'm unsure.' (ts 108).
267 There is no basis for an award of compensation for severance in relation to the 'gully drain cost'.
268 Throughout trial it was common ground that the 501 pine trees on the Taken Land were to be treated as if they were no longer present. In closing oral submissions, counsel for the Commissioner of Main Roads accepted that treating the pine trees as lost was the consequence of the loss of control of the pine trees by the plaintiffs (ts 302, 304 305).
269 This was an appropriate concession. Although Mr Zoetelief said in his witness statement (par 23) that there would be no need to remove the trees unless they interfered with the construction or safe operation of the flyover, it is likely that this interference will occur. Mr Zoetelief's draft property management plan (exhibit 48) suggested that pine tree seedlings would be planted inside the Subject Land 'to replace pine trees that will eventually be cleared within the road reserve' (emphasis added): exhibit 48, par 5.
270 It was, therefore, common ground at trial that some compensation needed to be paid for the 501 lost pine trees. At trial, the plaintiffs put their claim for the cost of planting the 501 pine trees on the basis of recovery of compensation for consequential loss under s 241(6)(e). In my reasons below at [444] [449], I explain why compensation is not recoverable for the pine trees under that subsection.
271 In closing oral submissions the plaintiffs put their claim for the 501 lost pine trees in the alternative under s 241(7)(a) or s 241(7)(b) as an assessment of compensation for severance or for injurious affection (ts 291 292). The Commissioner of Main Roads submitted that the assessment should be by reference to s 241(7)(a) as severance damage: (ts 303 304); closing written submissions of the Commissioner of Main Roads, par 192.
272 There is support from the valuers for the treatment of the loss of the pine trees as an issue of value to be considered as either injurious affection or severance. In the Joint Expert Memorandum, Mr Miller had said (par 21): '[t]rees and their removal will have an impact on [i]njurious [a]ffection as in this case.' Mr Benson said in his report, at page 21, that the pine trees 'have an aesthetical value in protecting the "country" lifestyle and quietness of the house'. He continued, explaining that he had allowed for this in his assessment of injurious affection. And Mr Pember treated the lost trees as falling within severance: Pember 1, pages 42 43.
273 In some cases there may be a fine distinction between 'severance' damage (s 241(7)(a)) and injurious affection (s 241(7)(b)). Some decisions treat the two interchangeably: Cerini v The Minister for Transport [2001] WASC 309 [187] [201] (Parker J). Other cases treat severance damage as a species of injurious affection: Sisters of Charity of Rockingham v The King [1922] 2 AC 315, 327 328 (Privy Council), referred to in Mount Lawley [2004] WASCA (335) [327] (the Court).
274 However, the two concepts are distinct in the legislation, and can also be distinct in effect. Injurious affection in s 241(7)(b) focuses upon the reduction in the value of adjoining land. Severance in s 241(7)(a) is not so confined. In an appropriate case, severance might include, for example, reliance losses suffered which are independent of the value of the adjoining land.
275 The injurious affection assessment of compensation is set out in the next section below. As I explain, that assessment of the reduction in value of the Remaining Land must be determined by comparing the following two matters:
(1) the value of the Remaining Land, at its highest and best use, before the resumption of the Taken Land without taking into account the public works; and
(2) the value of the Remaining Land, at its highest and best use, after the resumption of the Taken Land and taking into account the public works.
276 In assessing the value of (1), it was common ground amongst the valuers that the pines added little value to the Subject Land in an unaffected state. Mr Miller did not take them into account in his assessment of (1) for injurious affection.
277 In assessing (2), the 501 lost pines were also ignored by Mr Miller: Miller 1, page 15. Plainly, pines which are to be treated as if they no longer exist cannot mitigate the effect of the public works.
278 However, if the 501 lost pines are simply ignored then the plaintiffs will suffer a loss which is uncompensated. As I explained above, this is common ground. The plaintiffs had incurred costs and spent considerable time planting those pine trees in the autumn of 2003 to enhance the value of the Subject Land when the Forrest Highway and flyover were built. They had relied upon their consultations with representatives of the Commissioner of Main Roads. But the Taken Land still included 501 of the pine trees. The plaintiffs reasonably decided to replant due to the severing of the 501 pine trees. This was a cost which would not have been incurred but for the severance.
279 The plaintiffs' loss properly falls for assessment under s 241(7)(a). It arose due to the severing of the Taken Land, which also severed the 501 pine trees from the Remaining Land. The question, then, is how compensation for the pine trees should be assessed as 'damage due to the severing of the land taken'. Five possibilities were raised, in different ways, during the trial:
(1) The pines are valued at a commercial planting cost based on the expert evidence of Mr McArthur at $1,772. However, Mr McArthur's approach was based upon an assumption that a lost tree has value independently of the land upon which it is affixed. Mr McArthur valued the pine trees as if they were planted as a commercial operation (ts 268). Mr McArthur's valuation also included a noncommercial valuation of lost eucalypts and shrubs on the Taken Land, for total compensation of $25,642: McArthur, page 18; (ts 270).
(2) The pines are valued at a notional cost of $137,500, which was never incurred and which will not be incurred, as the cost of a third party spending four years to grow 500 pine trees in 75 litre bags: exhibit 53; (ts 31). This method of growing the pines was described by Mr McArthur as 'very expensive ... not commonly done ... highly unusual' (ts 272).
(3) The pines are valued at the cost actually incurred by Ms Glasson in originally purchasing and planting them, without a cost for her labour, as to which there was no evidence of opportunity cost. The planting cost was therefore a minimal cost for seedlings of approximately $500 (ts 35).
(4) The pines are valued at the value which a reasonable person would attribute to them in the circumstances and for the purpose for which they were planted. The only evidence upon which such a value might be placed is Mr Miller's assessment of the value of 400 pine trees at $41,359. This was comprised of $36,259 in relation to the land (5% of the land value) and $5,100 in relation to the main residence (2% of the value of the residence).
(5) The pine trees are valued at the cost Ms Glasson incurred in replanting them with her own labour, namely $24,024 (earthworks), $3,000 (materials) and $400 (seedlings) for a total of $27,400: Glasson, par 54; (ts 32, 35).
As a matter of both principle and authority, the answer is (5).
280 As a matter of principle, as explained above at [235] [241], severance is concerned with compensating for losses consequential upon the taking. The only costs which Ms Glasson incurred which were consequential upon the Taking were her costs of replanting the pine trees.
281 As a matter of principle it can also be seen that options (1) (4) are inappropriate.
282 First, to award compensation to Ms Glasson on the basis of (1) or (4) is inappropriate in these circumstances. These measures of compensation seek to attribute value to the trees independently of the land upon which they are affixed. But, in law, trees are a fixture. They are part of the land. Their value enhances the value of the land.
283 Secondly, as to option (2), Ms Glasson replanted the pine trees herself. There is no evidence that there will be any further cost of labour in growing the trees. Nor is there any evidence of any financial opportunity cost to Ms Glasson for the time she spent in planting the pine trees. To award compensation to Ms Glasson as contemplated by (2) would be to put her in a 'better position financially than would [otherwise] have been the case': Butler v Egg & Egg Pulp Marketing Board [1966] HCA 38; (1966) 114 CLR 185, 190 (Taylor & Owen JJ).
284 Thirdly, as to option (3), this small cost was not a loss due to the Taking. The cost of purchasing the pine tree seedlings was incurred prior to the Taking. It was incurred deliberately in order to ameliorate the effect of the Taking. The loss which occurred as a result of the Taking was due to the need to repurchase and replant seedlings when the Taking severed these existing pine trees.
285 The only appropriate award of compensation is (5). This reflects the loss incurred by the plaintiffs from the severance of the Taken Land; a loss which the plaintiffs have actually incurred by replanting the pine trees after severance. It does not include any notional labour cost for Ms Glasson's time: as I have mentioned there was no evidence of any opportunity cost of her labour, ie any income foregone from the time she spent replanting and maintaining the trees.
286 As to this cost, Ms Glasson said, and I accept, that $24,024 was incurred for earthworks. That amount was supported by an invoice from Spiers Earthmoving dated 3 April 2009: exhibit 56.
287 The Commissioner for Main Roads said in written closing submissions at pars 193 194 that there was no proof of payment and no explanation of why the cost was greater than Mr Miller's estimated cost of $3,950 for bulldozer hire for replanting 400 trees: Miller 1, page 49.
288 These submissions do not undermine Ms Glasson's evidence. No questions were asked in crossexamination of Ms Glasson that might have suggested that she had not paid $24,024 for earthworks or that the amount was excessive (see especially ts 32). And when Ms Glasson was asked whether the quote for the earthworks related to both the dam and the mounds, she explained the nature of the work which had been done to prepare the mound for the replanting of the trees: '[t]hey dug out - in that swamp paddock there, where that was already lowlying, that's where we got - the earth was taken from there to build the mound' (ts 33). Ms Glasson's evidence was forthright and believable and consistent with the quotation from Spiers Earthmoving.
289 As for the materials, Mr Miller referred in his report to a cost of $6,736, based on an invoice, for fencing to prevent cattle entry to the area where the 501 trees are being grown: Miller 1, page 50. But Ms Glasson frankly acknowledged in crossexamination that this cost had not been incurred because she decided to build the fence herself and did so after buying the materials which 'cost three thousand and something' (ts 32). I accept that the cost of $3,000 was incurred.
290 As to the seedlings, there was no dispute that the $400 cost was incurred for the seedlings to replace the 501 trees. The plaintiffs paid $347.60 for 1,000 seedlings: exhibit 19. In addition to that cost were associated costs of planting and spraying which Ms Glasson had estimated at 0.53 cents per seedling: exhibit 37.
291 The award of compensation by reference to option (5), or replacement cost, is also supported as a matter of authority.
292 A similar issue was considered in Roads Corporation v Love [2010] VSC 32; (2010) 173 LGERA 1. In that case, a claim was made for the loss of trees on taken land. The trees removed had assisted with the agricultural capacity of the land by providing windbreaks for stock, and had contributed to the residential amenity of the land.
293 The claim was pleaded for 'disturbance, severance and/or special value' (10) [12]. Osborn J considered whether the Modified Burnley valuation method, which valued the replacement value of equivalent trees should be applied. He considered that they should not:
(a) Whilst I accept this method may be appropriate for the valuation of specimen trees in parks, gardens and other like settings, that is not their present context. In such contexts the trees themselves are a primary component of the value of the land to the owner. In the present context they are at best ancillary (125) [622].
However, Osborn J allowed, as special value, the estimated replacement cost of the plantations of $35,655 (including the cost of new stock fencing).
294 An appeal from the decision of Osborn J was dismissed, but the issue of the trees was not considered on appeal: Love v Roads Corporation.
295 Another case where cost of replanting was the appropriate measure of compensation for severance was Benton v Road Construction Authority (No 2) [1992] VicRp 81; [1992] 2 VR 495. In that case, one issue concerned a claim for compensation under the Lands Compensation Act 1958 (Vic) for the loss of 125 almond trees which were on land acquired by the Roads Corporation.
296 Section 11B(1) of the Lands Compensation Act 1958 (Vic) provided for recovery of compensation for land which had been acquired and land which had been 'injuriously affected'. Section 11B(1)(a) was concerned with market value of the acquired land. Section 11B(1)(b) was concerned with special value of improvements or facilities on the land. And the subsection with which the litigation in Benton v Road Construction Authority (No 2) was concerned, s 11B(1)(c), provided for compensation for 'direct pecuniary loss caused by the acquisition of the land in respect of which compensation is not otherwise payable under this section'.
297 This subsection was worded differently, and was contextually different, from the terms of the Land Administration Act. But it has been treated as concerned with severance: D Brown, Land Acquisition (6th ed, 2009), 169.
298 In a section of his Honour's judgment, which is not in the reported version, the trial judge, Gobbo J, allowed the claim for the lost almond trees and awarded $14,484 under this severance head of compensation for 'direct pecuniary loss'.
299 Although the circumstances and subsection in Benton v Road Construction Authority (No 2) were different from this case because the almond trees were an income producing asset and it had been proved by expert evidence that substantial loss of income would occur, the case is another situation of an award of severance compensation for lost trees where the focus is upon the actual financial loss incurred which is caused by the severance: Benton v Road Construction Authority (No 2) (Unreported, VSC, 1 March 1990) 1 3.
6. Injurious affection 6.1 The legal approach to injurious affection
301 A claim for compensation for 'injurious affection' derives from s 241(7)(b) of the Land Administration Act. That section provides as follows:
If the fee simple in land is taken from a person who is also the holder in fee simple of adjoining land, regard is to be had to the amount of any damage suffered by the claimant -
...
(b) due to a reduction of the value of that adjoining land.
302 The term 'injurious affection' is not used in the Land Administration Act. The origin of this term is the Land Clauses Consolidation Act 1845 (UK) which used the term in relation to physical injury or disturbance of enjoyment caused by the construction of works on resumed land: Kettering Pty Ltd v Noosa Shire Council [2004] HCA 33; (2004) 207 ALR 1, 8 [24] (McHugh, Gummow, Hayne, Callinan & Heydon JJ) citing Bingham v Cumberland County Council (1954) 20 LGR (NSW) 1, 8 (Sugerman J).
303 The label 'injurious affection' has also been described as 'a neat, expressive way of describing the adverse effect of the activities of a resuming authority upon a dispossessed owner's land': Marshall v DirectorGeneral, Department of Transport [2001] HCA 37; (2001) 205 CLR 603, 622 [32] (Gleeson CJ, Gummow, Kirby & Callinan JJ).
304 Although it is convenient to use this label, it should be used only as a shorthand description for the reference to 'the reduction in value of that adjoining land'. The governing principle is the words of the statute: Boland v Yates Property Corporation Pty Ltd [174] (Hayne J); Leichhardt Council v Roads & Traffic Authority of New South Wales [2006] NSWCA 353; (2006) 149 LGERA 439 [35] (Spigelman CJ).
305 Some of the general legal principles for the assessment of a claim for compensation for injurious affection are the same as those for valuation of the Taken Land, which I have set out above at [66](1) [66](13).
306 In particular, those general principles include the relevant date being the date of Taking (but also further subsequent damage as discussed above at [235] [241]); disregard of the value of improvements made after 13 December 2005; the principles for assessment of highest and best use; and the qualities of a hypothetical vendor and purchaser.
307 A plurality of the High Court has said in relation to a similar provision in Queensland that '[o]nce the constructing authority acquires land for a statutory purpose ... it must ... compensate the dispossessed owner for the injurious effect upon the residual land resulting from the undertaking and the implementation of that purpose, actual and prospective': Marshall v Director General Department of Transport (616) [20] (Gleeson CJ, Gummow, Kirby & Callinan JJ).
308 It was common ground that the assessment of compensation for injurious affection under s 241(7)(b) requires an assessment of reduction in value of the Remaining Land by comparing, on the one hand, the value of the Remaining Land at its highest and best use at the date of Taking without regard to the public work with, on the other hand, the value of the Remaining Land at its highest and best use at the date of Taking having regard to the public work: Commissioner of Main Roads, written opening submissions, par 46.
6.2 The valuers' methodology concerning injurious affection
309 At the start of the trial I raised a concern with counsel (ts 15 16). The filed reports from all of the valuers had proceeded on an assumption which might cause concern. The assumption was that injurious affection to the remaining land could be assessed by valuing the injurious effect on the building and, separately, the injurious effect on the land.
310 I explained to counsel that this approach is not consistent with the words of s 241(7)(b). That subsection clearly contemplates the valuation of the remaining land only.
311 The main residence on the Subject Land is a fixture. At common law a fixture is part of the land. This is a basic tenet of land law. In Re Lehrer and The Real Property Act 1900 - 1956 [1961] SR (NSW) 365, 369 370, Jacobs J (as his Honour then was) said as follows:
The word 'land' comprehends in law any ground or soil or earth whatsoever: even though it originally meant only arable land. Coke further says that land 'legally includeth also all castles houses and other buildings for castles, houses, &c., consist upon two things, viz., land or ground, as the foundation or structure thereupon; so as passing the land or ground, the structure or building thereupon passeth therewith' ... If there is found the word 'land' and no statutory definition governs the context, the word 'land' includes all buildings on the land and the maxim [that whoever owns the soil it is theirs up to the sky and down to the centre of the earth] applies ... My conclusion is that the word 'land' at common law prima facie includes buildings on the soil, but is not appropriate to describe the building alone or any part thereof, even if it be the subject of an interest in realty separate from the soil itself.
See also Epic Energy (Pilbara Pipeline) Pty Ltd v Commissioner of State Revenue [2011] WASCA 228 [205] (Murphy JA).
312 Despite this, all valuers conducted their valuation of the Remaining Land by determining an amount of injurious affection separately for (1) the main residence, and (2) the land.
313 The valuers all agreed that there was significant injurious affection to the value of the main residence. The assessed amounts were Miller ($71,400), Benson ($40,000), Pember ($35,000): Joint Expert Memorandum, par 13; Pember 1, page 43; Benson 1, page 23; Miller 1, page 48.
314 There was significant difference between the valuers concerning whether the 'land' was also injuriously affected, apparently independently of the main residence.
315 Mr Benson and Mr Pember valued the injurious affection to the land as $26,000 (Benson: for a tree buffer) and $35,000 (Pember): Benson 1, page 23; Pember 1, page 36. Mr Miller valued the injurious affection at $325,219: Miller 1, page 48.
316 This significant difference is unsurprising in circumstances in which Mr Benson and Mr Pember did not consider that the Subject Land had any lifestyle use in an unaffected state, but Mr Miller considered that it did. It is plain that the lifestyle component of the use of the Subject Land was severely blighted.
317 The preliminary issue is whether this method of valuation, by separating the valuation of the land from the 'main residence', is permissible. In some cases it may not be acceptable. Nothing in these reasons should be taken to endorse this approach as a generally accepted method of assessment of compensation for injurious affection.
318 However, in this case, I am satisfied that the methodology is capable of yielding an appropriate assessment of injurious affection within bounds that are not unreasonable. This is for three reasons.
319 First, neither counsel suggested that this method of valuation was inappropriate. Even after I raised this concern with counsel, no submission was made by the Commissioner of Main Roads that the injurious affection valuations should be disregarded. This is, perhaps, unsurprising since all valuers had adopted this methodology and no counsel, party, or valuer had raised any concerns at any stage.
320 Secondly, in a passage in Bronzel v State Planning Authority (516), quoted by Callinan J in Boland v Yates Property Corporation Pty Ltd [283], Wells J said:
I am not disposed to reject any method of valuation adopted by either valuer on the ground that it is not worth considering; it seems to me that if Spencer's case ... is to keep its practical worth in this jurisdiction, this Court should be slow to reject any method that, in expert hands, is capable of yielding a result within bounds that are not unreasonable. The limitations of every method must, of course, always be kept clearly in mind.
321 Although I have concern about the validity of a valuation which proceeds to value the 'land' separately from the 'main residence' affixed to it, on consideration of all of the evidence on this point I consider that this methodology is capable of yielding a result within bounds that are not unreasonable.
322 In particular, having considered Mr Miller's reasoning and comparative sales which I explain below, I consider that Mr Miller's conclusion is reasonable that the Remaining Land (including the main residence) suffered overall injurious affection of $325,219 (or 13.94% of the value of the Remaining Land) and that Mr Miller's approach was effectively to consider the different components of that injurious affection as they would appear to a hypothetical purchaser.
323 Thirdly, at some points Mr Miller's approach came close to an assessment of the injurious effect on the Remaining Land as a whole by treating the injurious effect to the main residence as an adjustment. For instance, at Miller 1, page 149, Mr Miller conducts an assessment of injurious affection on the 'land' (without the main residence), based upon the effect of other highways and concludes that the overall effect is 12.43% less a discount adjustment for the existing pine trees. The separate treatment of the main residence might be seen as an adjustment, upwards, for an additional injurious effect on the Remaining Land because of the effect on the main residence.
324 Although the valuers treated the main residence separately from the 'land', in this judgment any reference to the Remaining Land included fixtures, such as the main residence.
6.3 The highest and best use of the Subject Land after the Taking
325 As I have explained above, an assessment of injurious affection requires a comparison between the value of the Remaining Land at the date of Taking in its unaffected state and the value of the Remaining Land at the date of Taking in its affected state.
326 At the commencement of the hearing I explained to counsel a concern I had with the assumption made in submissions that the assessment of injurious affection required the court to adopt the same highest and best use of the Subject Land in its affected state as in its unaffected state (ts 14). This assumption is incorrect. In determining the 'reduction of the value of [the] adjoining land' the adjoining land must be valued at its highest and best use in its affected state. If the same highest and best use is automatically applied as in its unaffected state then there is a danger that the reduction in value of the land will be overstated.
327 I have explained above at [101] [108] why the highest and best use of the Subject Land before the Taking was, as Mr Miller had concluded, a farming and lifestyle use.
328 When asked about the highest and best use after the Taking, Mr Miller explained that he considered that the highest and best use would remain the same, but with the lifestyle component severely blighted (ts 126 127).
329 I accept this conclusion for several reasons. First, as both Mr Benson and Mr Miller explained, the planting of pine trees would have a beneficial effect on the Subject Land. As Mr Benson explained at page 21 of his report, the pine trees 'have an aesthetical value in protecting the "country" lifestyle and quietness of the house'. This means that there must still be a component of the 'country lifestyle' in the Subject Land, albeit blighted.
330 Secondly, as Mr Miller explained, there still remains the 'drawcard of that sandy beach and that [the Subject Land is] near the estuary' (ts 127).
331 Thirdly, for the same reasons explained above at [94] [101] in relation to subdivision of the Subject Land at 123 ha, although the lifestyle use of the Remaining Land is severely blighted, the subdivision of the Remaining Land at 109 ha would also not be its highest and best use.
332 Ms Glasson gave evidence about the effect of the Forrest Highway on her lifestyle. She described her perception of the noise from the Forrest Highway, of safety issues she had encountered since the Forrest Highway had been established, and of accidents on her doorstep.
333 Perhaps the most significant of these factors was the noise. Ms Glasson described how before the Forrest Highway opened the Land was 'completely peaceful and tranquil. The only sounds came from the cows mooing and the birds chirping'. But the effect of the passage of 30,000 vehicles a day adjacent to her home was that the 'trucks sound like aeroplanes at night and [she] can hear them approaching from kilometres away. They often wake [her] at three, four and five am': Glasson, pars 13 14.
334 Ms Glasson also gave evidence concerning security issues that have arisen since the construction of the Forrest Highway and safety concerns, including visitors on her doorstep and accidents near her house: Glasson, pars 26 33. Accidents and unwanted visitors apparently had not been deterred by the presence of two emergency phones on the corner of Herron Point Road and the Forrest Highway (ts 239).
335 Ms Glasson did not seek to make any claim for compensation based on 'special value' to her of the Land: see above [63]. Her evidence was not expert evidence. Nor was the DVD which she tendered in an effort to illustrate the dramatic change in noise caused by the Forrest Highway.
336 Ms Glasson's evidence therefore has limited relevance in relation to injurious affection. The main reason its value is limited is because Ms Glasson's evidence on what is perhaps the most significant issue, the noise, is not expert acoustic evidence. But her evidence does provide some support for Mr Miller's assessment of the injurious affection of the Subject Land.
337 As I have explained, in valuing the Taken Land without the public works, the highest and best use of the Taken Land includes a lifestyle element. An assessment of injurious affection requires consideration of the impairment to the lifestyle elements by the Forrest Highway, ie the impairment of the peace and tranquillity of the Land and its proximity to lifestyle amenities. Ms Glasson's evidence provides some confirmation of the expert evidence of Mr Miller that land which has a lifestyle element will lose value if a highway is built very close to it.
338 The valuations of Mr Benson and Mr Pember concerning injurious affection must be assessed carefully in determining the extent of injurious affection. This is because, contrary to the conclusion I have reached above, neither valuer considered that the highest and best use of the Subject Land in its unaffected state included any lifestyle elements.
339 It was therefore curious that Mr Benson and Mr Pember both considered that the highway and flyover would cause substantial injurious affection to the main residence and 'the "country" lifestyle and quietness of the house': Benson 1, page 21; see also Pember 1, page 43.
340 A further curiosity is that although Mr Benson did not acknowledge any lifestyle elements in the highest and best use of the Subject Land, he made an assessment of the need to compensate for the 'privacy [that] has been invaded' and the need for a 'noise buffer': Benson 1, page 22.
341 The reason for the curiosity of the approach of Mr Benson and Mr Pember is that the use of the Subject Land cannot be a different use from the main residence. If the main residence enjoyed, in part, a lifestyle use then so would the Subject Land.
342 The approach by Mr Benson and Mr Pember may have proceeded from the premise that the land comprised in the Subject Land is independent of the main residence, so that the main residence might have enjoyed a lifestyle use but the land surrounding it would not. Such a premise is contrary to my conclusion about the use of the Subject Land. It is also legally flawed because it is not possible for the residence on the Subject Land to have a use which is different from the use of the Subject Land. To reiterate, the residence is a fixture. It is part of the Subject Land.
343 In one section of Benson 1, Mr Benson relied on a report which he had produced in 2008 (the 2008 Report) where he concluded that 'there was no discount to highway properties with the result being that often a premium was paid for the highway frontage properties': Benson 1, page 23.
344 In crossexamination, Mr Benson, relying upon the 2008 Report, initially denied that there would be any effect on the value of adjoining land of 'a highway carrying up to 30,000 vehicles a day with the prospect of a flyover, some 11 metres high': (ts 178); Benson 2, page 6. This conclusion is surprising, particularly if applied to properties, such as the Subject Land, which include a lifestyle use.
345 However, Mr Benson conceded in crossexamination that the 2008 Report does not say anything for the purpose of injurious affection of the Subject Land (ts 180). This is correct. It has little relevance to the process of assessing the injurious affection of the Subject Land for the following reasons:
(1) As Mr Benson said, none of the properties considered in the 2008 Report, for the purpose of comparability, involved a highway of the significance of the Forrest Highway, with its volume of traffic and the proposed flyover. Nothing in the 2008 Report equated 'in any real sense' with the effect of the Forrest Highway (ts 179 180).
(2) More importantly, Mr Benson's report was prepared in 2008 without attempting to make any comparison with the Subject Land (ts 180). In some instances, this had a very significant effect. For instance, one of only three onhighway properties considered by Mr Benson in his assessment of the effect in value of proximity to the Old Coast Road was sale number 9. Nowhere in the 2008 Report is there a reference to the presence of 160 m of thick, very dense Tuart Forest to stop that traffic noise from Old Coast Road: Miller (ts 96), Benson (ts 185 186).
(3) The properties in the 2008 Report were not all inspected by Mr Benson at the time of preparation of his report (ts 184).
346 Further, even if the exercise were relevant to an assessment of injurious affection of the Subject Land, there are real difficulties with the 2008 Report which were raised by Mr Miller. These difficulties, if unanswered, might have precluded any significant weight being attached to it. I mention these matters below merely for completeness because Mr Benson was not crossexamined on them and I do not place any reliance upon them.
(1) The 2008 Report compared land values which were not adjusted for sale dates, which varied from 2003 to 2006: Miller 2, page 16.
(2) The 2008 Report did not adjust for sales to adjoining owners: Miller 2, page 16.
(3) The 2008 Report did not adjust for noise mitigating effects of roadside tree plantings: Miller 2, page 16. This included, in one instance, where two rows of thick mature native trees ran along Sues Road for 95% of the entire eastern frontage of the lot: Miller 2, page 4.
(4) The 2008 Report did not adjust for nonarable lands: Miller 2, page 16.
347 Mr Pember's most detailed comments concerning injurious affection were in his responsive report to Mr Miller: Pember 3. Curiously, although there were a number of matters in Mr Miller's report with which Mr Pember disagreed, at one point in Pember 3, Mr Pember said, in bold typeface, at page 8:
I would conclude from the evidence that a diminution of in value of between 10.3% and 14% diminution is appropriate for sites of 108ha to 123ha.
348 This was curious because, as I explain below, Mr Miller's conclusion was that an overall depreciation rate should be applied to the Subject Land of 10.88% (strictly, including the main residence the rate was 13.94%). Mr Miller's conclusion falls between the values Mr Pember appeared to accept. However, Mr Pember was not crossexamined on this paragraph and I have not needed to place any weight upon it.
349 In contrast with the other valuers (who did not accept a lifestyle use of the Subject Land), Mr Miller focused upon the injurious affection on the lifestyle use of both the buildings and the 'land', although as I have explained he used the same methodology as the other valuers of assessing the reduction in value of the 'main residence' separately from the remaining 'land'.
350 Mr Miller also assessed the reduction in value of the part of the Remaining Land which was 'most affected', although he expressed his final conclusion in relation to the remaining 'land' (separate from the 'main residence') as a single figure: Miller 1, pages 47 48.
351 The first part of Mr Miller's approach involved an assessment of the reduction in value of a part of the Remaining Land which was the most affected. This was 33.73 ha of the remaining 109 ha. Mr Miller concluded that this most affected part of the Remaining Land had been adversely affected in value by 35%.
352 The 35% figure included allowance for a 5% benefit from the 400 pine trees on the Remaining Land. For this 33.73 ha only, the 35% reduction was a reduction of $7,525 per hectare (ie $8,600 per hectare without the benefit of the 400 trees).
353 Mr Miller's conclusion in relation to the Remaining Land, independent of the main residence, was then expressed as a single figure for the whole of the Remaining Land. That final conclusion was a reduction of $2,339 per hectare from the $21,500 per hectare value of the Remaining Land. In other words, his assessment was that the 'land' which remained (without considering the effect on the main residence) suffered an injurious effect from the Forrest Highway of 10.88% or $253,819: Miller 1, page 48.
354 Mr Miller explained that he had also concluded that this single figure of 10.88% was appropriate by an independent assessment of the effect of the Forrest Highway on the whole of the land which remained (excluding the main residence) rather than just the most affected parts (ts 51).
355 Mr Miller separately assessed a reduction in value of the main residence on the Subject Land as 28% (again, including the benefit of the 400 pine trees which reduced the injurious effect from 30%) or $71,400: Miller 1, page 48.
356 By combining the two amounts (the whole of the remaining land without the main residence, and the remaining land including the main residence), Mr Miller reached a conclusion that the total amount of injurious affection of $325,219. By my calculations this is 13.94% of the unaffected value of the Remaining Land (at $21,500 per hectare).
357 Mr Miller explained in oral evidence that he had taken into account the effect of both the Forrest Highway and the proposed flyover. He considered that the injurious effect of each was about the same (ts 53).
358 In an attachment to his report, Mr Miller included sales evidence which he had relied upon in his assessment of injurious affection. He relied upon five groups of sales evidence: Miller 1, pages 126 150. I consider each below.
359 Mr Miller's group 1 sales evidence for injurious affection concerned sales on Sues Road, east of Margaret River. The relative location of these sales can be seen in Appendix 4 to this judgment.
360 The sales which were 'on' Sues Road (ie affected by it) were sales IA 4, and IA 4A. The sales which were 'off' Sues Road were sales IA 5, IA 6, IA 6A, and IA 7.
361 Sues Road was a road which had been built by BHP. It carried 277 vehicles a day in comparison with the 30,000 vehicles on the Forrest Highway. But the road was built to the same specifications as the Forrest Highway and BHP may one day open a mine which would involve a large number of trucks passing on Sues Road (ts 49).
362 Mr Miller concluded that there was a 14% loss of value for properties on Sues Road, but he considered that this was predominantly an expression of perceived future damage resulting from substantial increase in traffic if a future mine or forestry project were opened: Miller 1, page 133.
363 Even though the diminution in value of the properties on Sues Road was only in relation to anticipated possible future damage, Mr Miller's 14% reduction in value for these properties is slightly greater than the 13.94% overall reduction in value of the Remaining Land. Mr Miller also observed that (Miller 1, page 133):
(a) Sues Road will never be as busy as the Forrest Highway;
(b) Sues Road is not a real controlled access highway;
(c) Unlike the Subject Land, there is no planned 11 m flyover in front of any of the group 1 sales;
(d) The Sues Road sales have some roadside trees which act as a mitigating factor.
Mr Miller concluded that these factors ought to lead to a 40% reduction in value over the Remaining Land in comparison: Miller 1, page 133.
364 However, I consider that these significant differences in the Sues Road sales mean that the Sues Road sales are only barely comparable. Mr Miller properly acknowledged in oral examination that the weight he attached to the Sues Road sales evidence was 'fairly low' (ts 49).
365 Mr Miller was only crossexamined on one matter arising from these group 1 sales. This matter was his decision to exclude Mr Benson's injurious affection sale number 3 from his assessment. Sale number 3 was rural zoned. It disclosed the highest rate of the group 1 sales which was almost $8,000 per hectare. Mr Miller said that he had disregarded this sale because it was a corner site with probable future commercial potential such as for a service station (ts 93 94).
366 I do not consider that the exclusion of sale number 3 was unreasonable. It is also noteworthy that when Mr Miller evaluated the 2008 Report of Mr Benson, he considered two other properties on Sues Road, Mr Benson's sale number 1 and sale number 1A of his injurious affection sales. Although the 2008 Report did not consider sale number 1A, it was comparable to sale number 1. Both were adjoining lots. Both were 2006 sales. However, sale number 1 (on highway) disclosed a 16% lower rate per hectare than sale number 1A (off highway).
367 Mr Miller's group 2 sales involved sales 'on highway' and 'off highway' in relation to Old Coast Road. The relative location of these sales can be seen in Appendix 5 to these reasons.
368 At the date of the relevant sales, the traffic on Old Coast Road (6,723 8,133 vehicles) was less than a quarter of that on the Forrest Highway: Miller 1, page 135. There was no flyover on Old Coast Road. And Old Coast Road is not a real controlled access highway: Miller 1, page 137.
369 Mr Miller considered only two sales in this area to be comparable for the measurement of the injurious effect of Old Coast Road on properties which include a lifestyle use. These were sale number IA 8 (off highway) and sale number IA 9 (on highway).
370 There was only a small difference in value disclosed between these two sales. Sale number IA 8 disclosed a rate of $23,669 per hectare. Sale number IA 9 disclosed a rate of $22,772 per hectare: Miller 1, pages 135 137.
371 Mr Miller accepted that the very small difference in value was potentially inconsistent with his views that a highway would have a significant detrimental effect on adjacent lifestyle properties. However, there was a good explanation for the negligible difference in value of these two sales. As Mr Miller observed, there was 160 m of very dense Tuart forest between the highway and the remaining land in sale number IA 9 (ts 95 96).
372 In Mr Miller's overall assessment, without the 160 m of dense Tuart forest, the equivalent loss of value for the Subject Land would be around 20% across the entirety of the Remaining Land: Miller 1, page 137. This assessment is highly subjective, and its weight must be considered in that light. But it is not an unreasonable conclusion.
373 Mr Miller's group 3 sales were also concerned with the injurious effect of Old Coast Road, although at a different point in time (2007) and at a different location on Old Coast Road: Miller 1, page 138. The relative location of these sales can be seen in Appendix 5 to these reasons.
374 Only two sales were considered comparable in group 3. These were sale number IA 11 (off highway) and sale number IA 12 (on highway). The sales were similar in a number of respects. They were roughly comparable in size (59.3 ha and 79.6 ha respectively); both were mostly cleared; neither had any residence or building improvements; both had a water licence as part of the sale; and the sales were in March and June 2007 respectively.
375 Sale number IA 11 (off highway) disclosed a value of $21,093 per hectare. Sale number IA 12 (on highway) disclosed a value of $13,395 per hectare.
376 The difference represents a value loss from the Old Coast Road of approximately 36% which, after making adjustments for the differences between Old Coast Road and the Forrest Highway, would suggest a 45% valuation loss for the Remaining Land.
377 Mr Miller was only crossexamined on one matter in relation to these group 3 sales and his related conclusions. This was his failure to make any deduction for buildings which had been constructed on the property which was the subject of sale number IA 11. Mr Miller explained that he had not made this adjustment because the buildings had not been built at the date of sale (ts 97). The date of sale was March 2007: see the 2008 Report of Mr Benson, page 10.
378 Mr Benson did not agree that the house on IA 11 was erected after 2009, two years later than the sale. However, he initially suggested that he did not inspect IA 11 until 2009. He then revised that date to April 2008 (ts 181).
379 I do not consider that Mr Miller erred in failing to adjust the value of IA 11 for a building on the property which was, more likely than not, built after the date of sale. Mr Miller had inspected the property and for the reasons I have explained, he was a reliable witness.
380 Mr Miller gave evidence in crossexamination and reexamination that he had obtained printouts from the Shire of Harvey of the building licences for IA 11 and IA 12 and that he had spoken with Ms Sue Hanson, the building officer from the Shire of Harvey who confirmed that the building licence was issued on 21 October 2009 (ts 97, 119).
381 No objection was taken by the Commissioner of Main Roads to this evidence (as part of a conscious, and effective, decision to increase the efficiency of the trial). But I do not consider that any weight can be placed upon this evidence which is obviously not evidence from the Shire of Harvey.
382 Group 4 consisted of sales evidence of three sales in relation to the Peel Deviation or Forrest Highway. The relative location of these sales can be seen in Appendix 6 to these reasons.
383 The three properties were numbered IA 13, IA 14 and IA 16. The size of the properties were 39.9 ha, 44.9 ha and 45.8 ha respectively. I have already explained above that there is no significant difference in value per hectare of properties between 40 ha and 109 ha (the size of the Remaining Land).
384 The dates of offer and acceptance were August 2005, October 2005 and October 2005. They were therefore sales prior to the construction of the Forrest Highway. They also fall almost a year before the Taking date. Mr Miller correctly explained that the impact of public works such as the Forrest Highway increases as the works become more precise and better known (ts 99): see also Wilson v Liverpool Corporation (634) (Lord Denning) cited in Mount Lawley [2007] WASCA, 509 510 [27] (the Court).
385 All three properties were located on Greenlands Road, Pinjarra. However, IA 13 and IA 14 were adjacent sales 'on' highway but sale number IA 16 was partially 'off' highway although still moderately affected by traffic noise: Miller 1, page 143; (ts 98).
386 Mr Miller acknowledged that there was almost no difference in the sale prices of the adjacent sales of IA 13 and IA 14 even though IA 13 was closer to the Forrest Highway. Sale number IA 13 and sale number IA 14 disclosed a per hectare value of approximately $16,750: (ts 98 99); Miller 1, page 143.
387 Mr Miller accepted that sale number IA 16 only disclosed a marginal difference in value but he considered that sale number IA 16 should be adjusted to take into account its proximity of 200 m from the freeway ramp and the fact that it was partially affected by the Forrest highway. I consider that this was an appropriate adjustment to make. The adjusted value disclosed a per hectare value of $19,201. The overall loss of value compared with IA 13 and IA 14 was 12.76%: Miller 1, page 143.
388 Group 5 also consisted of sales evidence of three sales in relation to the Peel Deviation or Forrest Highway. The relative location of these sales can be seen in Appendix 7 to these reasons. These were the only three sales in the Ravenswood and West Pinjarra localities of approximately 8 ha after the construction of the Forrest Highway (ts 101).
389 One of the sales, IA 25 was 'on' highway. The other two, IA 26 and IA 27 were 'off' highway. All were sales in 2009 or 2010. All were smaller lots between 8 ha and 10 ha.
390 However, the comparability of these three sales, and their usefulness for an injurious affection assessment, was limited as Mr Miller acknowledged. First, the two 'off' highway properties were some distance away from IA 25, in different localities, as can be seen in Appendix 7 (ts 100 101).
391 Secondly, an offer had been made on IA 25 of $450,000 but it did not settle (ts 100). This limits its usefulness as a comparator even though it was the only relevant agreement for sale after the construction of the Forrest Highway (ts 100).
392 Thirdly, a significant adjustment had to be made to the per hectare rate disclosed by IA 27 because it was located next to a rubbish tip: Miller 1, page 146.
393 Overall, Mr Miller concluded that the differences in value from Group 5, as adjusted, disclosed a loss in value of the Remaining Land of 12.43% (which, I interpolate, was subject to the adjustment he made in relation to the main residence).
394 After analysis of the sales evidence, Mr Miller's overall conclusion was that injurious affection would have a significant effect on the Remaining Land. He explained, and I accept, that the lifestyle use of the Remaining Land was significant because land of that size is not large enough to operate as a selfsufficient farming venture.
395 Mr Miller described the reasons why 'on highway' properties such as the Remaining Land are adversely affected in value. These reasons include heavy traffic noise, traffic fumes, lack of security, traffic vibration and strong night lighting (although Mr Miller acknowledged that at the moment there was no lighting on the Forrest Highway (ts 86)): Miller 1, page 14.
396 Mr Miller also explained that the Forrest Highway will render the Remaining Land 'aesthetically...relatively unappealing to lifestyle buyers': Miller 1, page 43.
397 Ms Glasson also gave evidence of the adverse effect of factors such as heavy traffic noise and lack of security. Of these effects the most significant was perhaps the noise. Although it is not possible to quantify the noise effect, nor was any expert acoustic evidence given, I accept that the 30,000 daily vehicles on the Forrest Highway has caused significant noise. In any event, whatever the precise reasons for the deleterious effect of a highway on adjoining lifestyle properties, I accept Mr Miller's expert evidence that this effect is real, and that it is substantial.
398 The sales evidence relied upon by Mr Miller disclosed the effect on properties which adjoin a freeway. As I have explained, Mr Miller considered all of the injurious affection analysis from groups 1 5 set out above and concluded that the Remaining Land was affected by 10.88%.
399 Mr Miller adjusted the 10.88% figure upwards by an amount to include the injurious effect on the main residence of $71,400. Mr Benson acknowledged that the difference between him and Mr Miller concerning the injurious affection to the main residence was 'only marginal': Benson 3, page 6.
400 I have explained above that, according to my calculations, Mr Miller's total combined injurious effect on the Remaining Land (including the main residence) was 13.94%. In light of all the evidence which I have discussed, this conclusion is reasonable, perhaps even conservative, in light of the dramatic effect of the Forrest Highway upon the lifestyle use of the Remaining Land. The conclusion should be accepted.
401 Two other matters should also be addressed, for completeness.
402 First, Ms Glasson was crossexamined about her failure to install double glazing of the windows, and airconditioning of the main residence to help insulate it from the effect of the Forrest Highway. Her answer, which I accept, was that she could not afford to make these changes herself. When the Commissioner for Main Roads offered to do it she had concerns that she might not be able to open her windows. She asked the Commissioner for Main Roads to put the offer in writing so that she could consider it. The written offer was never received (ts 36).
403 Secondly, some submissions were made, and crossexamination conducted, concerning a comment, expressed in bold, in Mr Miller's report. The comment appeared almost as an afterthought in which Mr Miller drew 'attention to information [he had] received' that Main Roads had opted for a 'chip seal' bitumen surface on the Forrest Highway rather than 'the more expensive two coat bitumen (or asphalt)'. Mr Miller said that this would increase the noise level for adjoining properties: Miller 1, page 43.
404 The comment by Mr Miller was generally accurate even if the language was not precise. In January 2011, a two coat seal coat was applied to the Forrest Highway: Zoetelief, par 33; (ts 238 241). The two coat seal 'reduces noise slightly' (ts 238). However, the two coat seal is at the top of the range for noise whilst open graded asphalt is at the bottom of the range (ts 240). That range for tyre noise varies from the noise from a two coat seal (+3.5 dB) to the noise from open-graded asphalt (-2.5 dB): exhibit H1, page 30.
405 I have also considered two sales upon which Mr Benson placed reliance and which Mr Miller considered in his critique of Mr Benson's report on injurious affection. These were sales of adjoining properties. Both were 36 ha. The timing of the sales was similar: March and September 2008 when the market was not rising. Mr Miller's sale 22 was affected by the proposed Forrest Highway but sale number 21 was not. Yet both sales disclosed the same rate per hectare: Miller 2, pages 41 43.
406 Mr Miller gave evidence in crossexamination concerning matters he had been told by the buyer of sale number 22 from which Mr Miller concluded that the buyer was uninformed about the flyover (ts 102). This hearsay evidence has no weight. However, I am satisfied in light of all the other evidence of the effect of 'onhighway' properties that to the extent that these two properties were purchased for lifestyle purposes then the lack of difference in value is an anomaly.
407 At the highest level of generality, the Subject Land enjoyed a substantial lifestyle use prior to the construction of the Forrest Highway. As Mr Miller said, that lifestyle use is now 'so small above the production value' of the Subject Land. The lifestyle use is 'severely blighted' (ts 126).
408 For the reasons I have expressed above, I accept the conclusion of Mr Miller, that compensation for injurious affection should be $325,219.
7. Consequential losses 7.1 The legal principles
409 Like the label 'injurious affection', the label 'consequential loss' does not appear in s 241 of the Land Administration Act. It was used by the parties as a loose description of compensation awarded by reference to s 241(6). That subsection provides as follows:
(6) Regard is to be had to the loss or damage, if any, sustained by the claimant by reason of -
(a) removal expenses;
(b) disruption and reinstatement of a business;
(c) the halting of building works in progress at the date when the interest is taken and the consequential termination of building contracts;
(d) architect's fees or quantity surveyor's fees actually incurred by the claimant in respect of proposed buildings or improvements which cannot be commenced or continued in consequence of the taking of the interest; or
(e) any other facts which the acquiring authority, the court, or the State Administrative Tribunal considers it just to take into account in the circumstances of the case.
The focus in this case was on s 241(6)(e).
410 The operation of this provision was considered by this court in Konowalow & Felber v Minister for Works. In that case, part of the plaintiff's land was resumed for a new road under the Public Works Act 19021956 (WA). The plaintiff brought an action for compensation and a case was stated for the court on a question of law.
411 The most substantial part of the plaintiff's claim in Konowalow & Felber v Minister for Works concerned an allegation that vibrations from heavy vehicles on the new road would cause damage to buildings on the plaintiff's land. The plaintiff had discontinued building work on their land for this reason. The question of law stated for the court was whether the plaintiff could be compensated for (a) any injurious affection to the remaining land; and (b) any alleged damage to the building or proposed building by the vibrations.
412 One ground upon which the plaintiff in Konowalow & Felber v Minister for Works submitted that each head of damage could be claimed was by reference to a consequential loss provision, s 63(aa) of the Public Works Act which is in very similar terms to s 241(6) of the Land Administration Act.
413 Justice Virtue considered s 63(aa)(v) of the Public Works Act which is in very similar terms to s 241(6)(e) of the Land Administration Act. Section 63(aa)(v) provides that the court can have regard to 'any other facts which the respondent or the Court considers it just to take into account having regard to the circumstances of each case'.
414 His Honour held that only the second head of damage (damage to the building or proposed building by the vibrations) could be claimed under s 63(aa)(v).
415 The reason why the first head of damage (injurious affection to the remaining land) in Konowalow & Felber v Minister for Works was irrecoverable was that s 63(aa)(v) must be construed with s 63(aa)(i)(iv), ejusdem generis (of the same kind). In other words, the reference to 'any other facts' should be construed to mean 'any other facts of the same kind as described in s 63(aa)(i)(iv)'.
416 The frequent reference to the Latin words ejusdem generis in the construction of legislation is little more than an insistence that statutory words be construed in their context. Virtue J was following a line of authority when he said that 'I cannot conceive why the Legislature should have taken the trouble to specify in this subsection so many particular heads of damage except to show the type of damage to which they were referring' (42): see Re Stockport Ragged, Industrial and Reformatory Schools [1898] 2 Ch 687, 696 (Lindley MR); Attorney General v Brown [1920] 1 KB 773, 798 (Sankey J).
417 The genus in s 63(aa)(i)(iv), which Virtue J identified, is 'compensation for loss or damage resulting from interference with the activities being carried on by the plaintiff on the land' (42).
418 When the Land Administration Act was proclaimed, and came into force on 30 March 1998, it was enacted against this pre-existing state of law. The preexisting state of the law informs the interpretation of a statute: CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey & Gummow JJ); Singh v The Commonwealth [2004] HCA 43; (2004) 222 CLR 322, 336 [19] (Gleeson CJ).
419 The Konowalow & Felber v Minister for Works approach has been applied to s 241(6)(e), confining its operation to compensation for loss or damage resulting from interference with the activities being carried on by a plaintiff on the land: Caltex Petroleum Pty Ltd v Commissioner for Main Roads [2004] WASC 239 [28] [34] (McKechnie J); Cerini v Minister for Transport [282] (Parker J).
420 In other words, each of s 241(6)(a) (d) is concerned with compensation for damage arising from interference with activities carried on by a plaintiff on the land. The interferences might give rise to expenses for (a) removal; (b) disruption or reinstatement of a business; (c) halting building works in progress, and terminating building contracts; or (d) architect's fees or quantity surveyor's fees for proposed works which cannot now be undertaken.
421 Section 241(6)(e) is therefore concerned with 'other facts' arising from interference with the activities carried on by the plaintiffs on the Subject Land.
422 It was also suggested in closing that s 241(6)(e) might permit recovery for losses which were not actually incurred. An analogy was drawn with the principle of damages that an assessment of compensation might be made for tortious damage to a motor vehicle, even though the owner has no intention to repair the vehicle (ts 287). In Ruxley Electronics & Construction Ltd v Forsyth [1994] 1 WLR 650, 657 (Ruxley [1994]), Staughton LJ made this point succinctly: '[i]f someone steals my watch I am not obliged to buy another before I can sue him in damages for conversion; nor need I intend to do so'. In the appeal in the House of Lords, Lord Lloyd explained why this was the case: 'the plaintiff is entitled to recover the value of the watch, because that is the true measure of his loss': Ruxley Electronics & Construction Ltd v Forsyth [1996] AC 344, 372 373 (Ruxley [1996]). On a balance sheet assessment, the assets of the owner of the watch are of less value.
423 Section 241(6)(e) does not permit the recovery of losses which have not been suffered for several reasons. First, s 241(6)(e) is concerned with loss or damage 'sustained' by the claimant. The focus of these introductory words of the section is upon loss or damage actually incurred. The words of s 241(6)(d) do not detract from this. Those words refer to architect's fees or quantity surveyor's fees 'actually incurred by the claimant in respect of proposed buildings or improvements'. The reference to 'actually incurred' narrows those fees which are recoverable. This is perhaps in contrast with s 241(6)(c) which may include future lost profits from the termination of building contracts. Or it could be to emphasise that only those fees incurred prior to the Taking are recoverable.
424 Secondly, construed in its context, s 241(6)(e) is concerned with pecuniary losses. It is not concerned with nonpecuniary losses. As I explain below at [454] [456], compensation for nonpecuniary loss, as solatium, is the subject of s 241(8) and s 241(9). Section 241(6)(e) therefore requires the plaintiffs to demonstrate quantifiable financial detriment.
425 Thirdly, the irrecoverability of compensation is consistent with the general law position concerning damages for a damaged watch or motor vehicle which the owner does not intend to repair. In the example of a damaged watch or motor car which the owner has no intention to repair, there is a quantifiable financial detriment. As Lord Lloyd explained in Ruxley [1996], the watch is less valuable. Although there is some controversy on this issue in the law of torts, the damages in such a case ought to be measured by the difference in value, rather than the cost of a repair which will not occur. But the short point is that like the general law of torts, s 241(6)(e) requires that real loss has been suffered or will be suffered before an award of compensation can be made.
7.2 The alleged consequential losses claimed by the plaintiffs
426 The plaintiffs, relying upon Mr Miller's report, claimed for the following alleged consequential losses: Miller 1, pages 49 50:
(a) Anticipated disturbance to farming due to the construction of the flyover: $10,000.
(b) Costs associated with planting and maintaining 400 pine trees which survive in the Remaining Land: $59,166.
(c) Costs associated with planting and maintaining 501 pine trees within the Taken Land: $181,160.
(d) Costs associated with replanting native trees along Herron Point Road that are within the Taken Land: $35,000.
427 The alleged losses, by disturbance to farming, from the construction of the flyover are consistent with the genus of s 241(6) and therefore fall within s 241(6)(e). A disturbance to farming is an interference with activities on the Subject Land akin to disruption of a business.
428 However, there was insufficient evidence to support this claimed head of damage. Mr Miller described the loss or damage as
disturbance to sheep and cattle herd and method that [the] farm operates (ie onsite sheep/cattle movement and stocking) due to the construction of the highway and flyover causing access/egress problems along Herron Point Road, over a three year period, say nominal $10,000 (Miller 1, page 49).
429 This amount is not recoverable as consequential loss under s 241(6)(e) for three independent reasons.
430 First, the evidence of Mr Miller on this point was not sufficiently clear. He did not explain the nature of the access problems to which he referred, or the nature of the difficulties which the plaintiffs would encounter. Nor did he explain whether the award was for subjective, nonpecuniary loss which might be suffered by the plaintiffs, or whether it was for some objectively measurable type of loss.
431 In examinationinchief Mr Miller said that he had allowed this item because in his 'intuitive judgment' the construction of the highway and flyover would make it difficult to move sheep in and out of the property and would create access problems (ts 45). I have addressed the lack of loss from access problems above at [245] [262].
432 In crossexamination, Mr Miller said that the amount provided was not in relation to movement of cattle on and off Herron Point Road but was 'just a nominal amount' for the 'disturbance to the way [Ms] Glasson operates her lifestyle property' (ts 109).
433 Secondly, to the extent that this claim concerned any impairment of lifestyle or farming use of the Remaining Land by the effect of the public works then the loss would be included in the assessment of injurious affection upon the Remaining Land. To the extent to which it related to non-pecuniary loss due to acquisition without agreement, it would be included in the award of solatium.
434 Thirdly, I do not accept Mr Miller's conclusion that $10,000 is recoverable because it is merely a 'nominal' amount. '[N]ominal' need not mean 'small': Owners of the Steamship Mediana v Owners, Master & Crew of the Lightship Comet (The Mediana) [1900] AC 113, 116 (Lord Halsbury LC); Greer v Alstons Engineering Sales and Services Ltd (Trinidad and Tobago) [2003] UKPC 46 [7] (Sir Andrew Leggatt). But an award of a nontoken amount such as $10,000 cannot be made without justification for the quantification.
435 No compensation should be allowed for this alleged head of damage.
436 The 400 pine trees to which reference is made in this section can be seen in the aerial photograph reproduced in Appendix 3 to these reasons.
437 This alleged head of compensation for loss and damage was for losses relating to the 400 pine trees which remain on the Remaining Land. This alleged loss cannot be recovered for two separate reasons.
438 First, the alleged consequential loss from the 400 pine trees which still remain on the Remaining Land is not loss or damage 'arising from interference with the activities carried on by the plaintiffs on the Subject Land' as required by the genus of s 241(6)(e) of the Land Administration Act.
439 Secondly, no loss or damage has been suffered in relation to the 400 pine trees which still remain on the Remaining Land. There is no suggestion that these 400 pine trees will be, or will need to be, removed by the plaintiffs.
440 In his report, Mr Miller valued the beneficial effect of the 400 remaining pine trees on the Remaining Land and the main residence as $36,259 and $5,100 respectively. In assessing injurious affection, Mr Miller added back these amounts. In other words, he correctly calculated the injurious affection on the assumption that the 400 pine trees remained on the Remaining Land and had ameliorated the effect of the public works.
441 But Mr Miller's assessment of $59,166 as compensation for the costs of planting and maintaining 400 pine trees within the Remaining Land does not relate to any loss or damage suffered. To allow recovery of the cost of planting the 400 remaining pine trees would allow the plaintiffs the recovery of alleged costs without bringing into account the benefit obtained by the plaintiffs, namely the amelioration of the effect of the Forrest Highway.
442 In other words, the plaintiffs incurred cost in planting the 400 pine trees but the plaintiffs will obtain exactly the benefit from these trees which they intended. The cost was incurred in order to offset the losses and effects of the public works. The Remaining Land is more valuable because the 400 pine trees shield the noise from the Forrest Highway. If the plaintiffs sell the Remaining Land, they will realise this benefit. As Mr Miller concluded in his injurious affection exercise, the costs incurred by the plaintiffs had the effect of increasing the value of the Remaining Land by $36,259 and the main residence by $5,100.
443 To allow the plaintiffs compensation for the costs incurred in planting the 400 pine trees would enable the plaintiffs to obtain the very benefit they had intended, namely the enhanced value of the Remaining Land from that planting, as well as to recover their costs of the planting.
444 I have explained above at [268] [299] why I consider that this compensation should be assessed as a component of an assessment of 'severance'. The few authorities which have considered compensation for loss of trees in the context of land acquisition have also treated this compensation as part of the valuation of the taken land, or as a loss caused by severance.
445 Plainly, any loss or damage from the 501 pine trees cannot be recovered under the head of severance as well as the head of consequential losses under s 241(6)(e) of the Land Administration Act. To allow this would be to allow double recovery.
446 In any event, the lost 501 pine trees are not recoverable as consequential losses for two independent reasons.
447 First, the loss of the 501 pine trees by severance from the Subject Land is not an 'interference with the activities carried on by the plaintiffs on the Subject Land'. It does not fall within s 241(6)(e).
448 Secondly, even if the cost related to the 501 lost pine trees were an 'interference with the activities carried on by the plaintiffs on the Subject Land', and even if the cost were properly treated as s 241(6)(e) rather than severance, the consequential loss would not be $181,160. As I have explained above at [285] [290] the cost, and loss, which was incurred due to the replanting was $27,400.
449 The additional amounts represent losses which were not actually incurred. For instance, as I have explained above, the notional cost of $137,500 is a cost for a third party to spend four years growing 500 pine trees in 75 litre bags: exhibit 53; (ts 31). Not only was this cost never incurred but this method of growing the pines was described by Mr McArthur as 'very expensive ... not commonly done ... highly unusual' (ts 272).
450 The final area of consequential losses claimed by the plaintiffs was the costs associated with replanting native trees within the Taken Land. There are three reasons why these costs are not recoverable.
451 First, the loss of the native trees by severance from the Subject Land is not an 'interference with the activities carried on by the plaintiffs on the Subject Land'. It does not fall within s 241(6)(e).
452 Secondly, and unlike the loss of the 501 pine trees, there is no evidence that the plaintiffs will replant the native trees. The native trees were not intended to perform the function of the pine trees, which were planted to shield the Subject Land from the public works.
453 Thirdly, there is, in any event, insufficient evidence from which the cost of replanting the native trees could be assessed. Mr Miller simply says that he adopted $35,000 as the cost because this was 'agreed' in the conferral of experts in 2007 2008: Miller 1, page 50. There was no evidence of such an agreement and Mr Miller said in crossexamination that it was Mr Diggs, a different valuer engaged by the plaintiffs, who had been at the relevant conference and not him (ts 114).
454 The term 'solatium' does not appear in s 241 of the Land Administration Act. Its etymology is the Latin solacium, 'comfort'. The concern is to provide a monetary redress for a nonpecuniary loss arising from the taking of land without agreement. The statutory source for an award of solatium is s 241(8) and s 241(9). Those subsections provide as follows:
(8) If the interest in land is taken without agreement, an amount considered by the court or the State Administrative Tribunal or, for the purposes of making an offer, by the acquiring authority, appropriate to compensate for the taking without agreement may be added to the award or offer.
(9) The additional amount under subsection (8) must not be more than 10% of the amount otherwise awarded or offered, unless the court or the State Administrative Tribunal, or, for the purposes of making an offer, the acquiring authority, is satisfied that exceptional circumstances justify a higher amount.
455 It was common ground between the parties that 10% solatium should be awarded: plaintiffs' closing submissions, par 108; Commissioner for Main Roads' closing submissions, par 226.
456 The plaintiffs also sought interest in their prayer for relief at 6% from the date of receipt of claim until the date of settlement, relying upon s 241(11) of the Land Administration Act. I did not receive any submissions on this issue and it is appropriate to defer any award of interest until after the delivery of these reasons.
457 Broadly, there were four issues raised in this case.
458 The first issue was compensation for the Taken Land: s 241(2) Land Administration Act. Considerable time was spent in crossexamination on this issue, and concerning the highest and best use of the Subject Land. On this issue, although the valuers adopted different highest and best uses of the land, they were not actually far apart in quantum. The combination of the value of the Taken Land and the loss of subdivision potential (severance) recognised by Mr Benson and Mr Pember led to valuations of $281,000 (Mr Benson) and $231,000 (Mr Pember). Mr Miller, who did not recognise a loss of subdivision potential but who included lifestyle elements, assessed the value of the Taken Land at $312,500.
459 On this issue, the highest and best use adopted by Mr Miller should be used and Mr Miller's methodology should be accepted. The conclusion he reached was solidly based on the evidence. It was fair and reasonable and should also be accepted without any need for further adjustment. Compensation for the value of the Taken Land is $312,500.
460 The second issue was compensation for severance: s 241(7)(a) Land Administration Act. The only aspect of the claim for compensation for severance which was established, and which is recoverable, is for the loss of the 501 pine trees, and the cost of replanting them. Compensation should be assessed for that loss at $27,400.
461 The third issue was compensation for 'injurious affection': s 241(7)(b) Land Administration Act. On this issue the valuers diverged greatly. This divergence was perhaps unsurprising in circumstances in which Mr Miller valued the land as including a lifestyle use, which was severely blighted by the public works; but the other valuers considered that the Subject Land had no lifestyle use.
462 Again, I preferred the approach of Mr Miller, and for reasons set out in detail above, Mr Miller's assessment of the value of injurious affection as $325,219 was a fair and reasonable assessment. It should be accepted. Although one view might be that his assessment was conservative, I do not consider that it requires further upward adjustment. And none was sought by the plaintiffs. Compensation should be made for injurious affection in the amount of $325,219.
463 The fourth issue was compensation for consequential losses: s 241(6)(e) Land Administration Act. None of these alleged losses is recoverable. Either the losses were not incurred, or they were not proved, or they would involve double recovery, or they did not fall within the terms of s 241(6)(e) of the Land Administration Act. In some cases several of these reasons all independently meant that various claims for consequential losses failed.
464 The total compensation payable under each of these four heads is $312,500 (Taken Land), $27,400 (severance), and $325,219 (injurious affection).
465 The total compensation to be awarded to the plaintiffs is $665,119 plus solatium and interest.
466 I will hear from counsel in relation to consequential matters including solatium, interest and deductions for the payment made in partial discharge of the claim.
Appendix 3: Aerial view of the Subject Land showing the 901 pine trees
(1947) 74 CLR 358
(1999) 167 ALR 575
(1907) 5 CLR 418
(2008) 20 VR 447
(2006) 148 LGERA 38
(2008) 233 CLR 259
(1979) 21 SASR 513
(1973) 6 SASR 541
(2002) 125 LGERA 180
(2004) 29 WAR 273
(2003) 212 CLR 111
(2003) 27 WAR 403
(2007) 34 WAR 499
(1991) 24 NSWLR 156
(2011) 183 LGERA 352
(1966) 114 CLR 185
(2010) 173 LGERA 1
(2004) 207 ALR 1
(2001) 205 CLR 603
(2006) 149 LGERA 439
(1997) 187 CLR 384
(2004) 222 CLR 322