Court of Appeal (Vic)|2014-06-25|Before: Mr J, Whelan JA, Osborn J, Nettle JA

Love v Roads Corporation [2014] VSCA 129 (25 June 2014)

LAND VALUATION AND COMPENSATION - Compulsory acquisition - Land used for agricultural purposes - Proposal for interchange - Compensation for loss attributable to severance of land - Difference between market value of claimant's interest in land before and after the acquisition - Whether access to claimant's interest 'before' acquisition would be different from access 'after' the eventual construction of the interchange - Land Acquisition and Compensation Act 1986 (Vic) ss 41(1)(a), 41(3).

2 This appeal is the latest in a series of cases concerning the compulsory acquisition by the Roads Corporation of land owned by Mr Love in Epping. The Roads Corporation has compulsorily acquired land from Mr Love to widen Cooper Street, Epping,[1] and to construct the Craigieburn Bypass.[2] The acquisition in issue here was made in 2003 and was for the purpose of constructing an interchange on the Craigieburn Bypass at O'Herns Road, Epping.[3]

3 The Craigieburn Bypass is part of the Hume Freeway and (broadly) runs north/south in the relevant area. O'Herns Road is a two lane carriageway running (broadly) east/west. In 2003 Mr Love owned land along the southern side of O'Herns Road on both the western side of the Craigieburn Bypass and the eastern side. The Roads Corporation compulsorily acquired part of Mr Love's land on each side for the purpose of constructing an interchange. An interchange is a bridge with on and off ramps so that traffic can cross the bypass on O'Herns Road and can also enter and exit the bypass.

4 The Roads Corporation has not built the interchange yet but after the acquisition it built an overpass at O'Herns Road. An overpass is a bridge without ramps. The traffic can cross the bypass on O'Herns Road but it cannot enter or exit the bypass.

5 Under s 30 of the Land Acquisition and Compensation Act 1986 ('the Act') Mr Love is entitled to claim compensation for the land compulsorily acquired.

Under s 41 of the Act in assessing the amount of compensation regard must be had to the market value of his interest in the land on the date of acquisition (s 41(1)(a)), any 'loss attributable to severance' (s 41(1)(c)), and to a number of other stipulated factors. Under s 41(3) of the Act if less than the whole of a claimant's interest is being acquired the market value of the acquired interest is the difference between the market value of the claimant's interest before the acquisition and the market value of the claimant's interest after the acquisition.

6 The expression 'loss attributable to severance' is defined by s 40 of the Act as 'the amount of any reduction in the market value of any other interest of the claimant in the acquired land or any interest of the claimant in other land used in conjunction with the acquired land which is caused by its severance from the acquired land'.

7 The trial judge quoted and adopted[4] a passage from the judgment of Osborn J in Murdesk Investments Pty Ltd v Roads Corporation, where he said:

[Section 41(3)] requires the assessment of market value in the present case to be undertaken by way of a "before and after" analysis. A before and after analysis will embrace not only the loss of the value of the land acquired but also the effect of the acquisition upon the value of the balance. Loss attributable to severance as defined in the ... Act is thus embraced by the before and after analysis (at least insofar as the notion of severance applies to the balance of the acquired land).[5]

Before the trial judge, and on appeal, the issue was approached by the parties in this way. The trial judge and the parties referred to the issue compendiously by reference to the term 'severance'.

8 In that context a matter of particular significance and controversy was the effect of the acquisition and of the eventual construction of the interchange on access to Mr Love's remaining land from O'Herns Road on both the eastern and western sides of the Craigieburn Bypass. Both the overpass, which is now there, and the interchange, the construction of which is the purpose of the acquisition, affect, or will affect, access to Mr Love's land from O'Herns Road on both sides of the bypass.

9 Because the Roads Corporation and Mr Love could not agree on compensation the acquisition was referred to the Court as a disputed claim under s 80 of the Act. A trial was held in which a significant amount of expert evidence was led and on 17 May 2013 McMillan J published a judgment in which she determined the compensation payable under s 89(1) of the Act. She substantially found in favour of the Roads Corporation.

10 Mr Love now appeals to this Court under s 89(2) of the Act. That section provides that such an appeal 'lies only on a question of law'.

11 Mr Love appeared for himself at the trial and he appeared for himself again on the appeal. The matters upon which Mr Love relies on his appeal all concern the expert evidence given before McMillan J in relation to access in the 'before' and 'after' situations, and the findings which she made in relation to that evidence.

12 The short answer to Mr Love's appeal is that none of his grounds of appeal or submissions raise any question of law or reveal any error of law.

13 During the course of the hearing of the appeal Mr Love was given considerable latitude in articulating his complaints. He was not required to identify or confine himself to questions of law.

14 It is necessary to address an important assumption now made by both parties and to then briefly review the judge's reasons and the relevant evidence at trial before turning to the grounds of appeal and the submissions made.

15 As already explained, under the Act compensation in this case was to be assessed by comparing the value of Mr Love's entire interest before the acquisition (both the land to be acquired and his remaining land) with the value of his remaining land after the acquisition. In this case that process was often referred to by reference to the 'before' and 'after' value. Value is to be assessed in the usual way: by reference to what a willing purchaser would pay and a not unwilling vendor would accept assuming both have access to all currently available information that affects the property.[6]

16 Because of the operation of the Pointe Gourde principle,[7] embodied in s 43(1)(a) of the Act, in assessing compensation any increase or decrease in the market value of the land which arises from the carrying out, or the proposal to carry out, the purpose for which the acquisition is being made must be disregarded. This means that courts have often had to assess value on the 'before' basis after determining what the position would have been if the proposal for which the acquisition is made had never existed. The issue has arisen most commonly in the context of zoning and the approach has been to determine what the zoning would have been if the proposal had never existed and to then value the land as if that were the zoning at the relevant time.[8] As this Court recently observed in another of Mr Love's appeals,[9] a different approach has been taken by Basten JA in the New South Wales Court of Appeal.[10] Basten JA held that the issue of what the planning position would have been should be approached 'in most cases' as loss of a chance rather than as an assumed fact. This Court observed that that approach appeared more consistent with general principles.

17 The Pointe Gourde issue did not arise in this case but a relevantly similar issue did arise. As at the date of acquisition the overpass had not been built. At one point in the proceeding it was a matter of controversy as to whether a hypothetical purchaser for the purposes of the 'before' valuation would have assumed that an overpass on O'Herns Road would be built. There were other alternatives.

18 The issue was potentially significant because if it were accepted that a potential purchaser in the 'before' valuation would assume the existence of the overpass then on the issue of what effect upon value the construction of the interchange would have (the 'after' valuation) the comparison would be between restricted access with the overpass and restricted access with the interchange.

19 If the 'before' valuation were undertaken on the basis that the presence of the overpass would not be assumed, then the comparison would be between unrestricted access to a road which was truncated at the bypass (because there was no overpass), and restricted access to a road which enabled crossing of and exit from and entry to the bypass (because of the interchange).

20 The trial judge dealt with this issue at some length,[11] reaching the conclusion that the 'hypothetical purchaser would have anticipated an overpass irrespective of the interchange'.[12]

21 Subject to one qualification, upon which Mr Love placed considerable reliance in this appeal, Mr Love's expert valuer accepted that the hypothetical purchaser in the 'before' situation would have assumed the existence of the overpass. Before us, Mr Love made it clear that he also accepted that position, although he did so with that same qualification, which is important to grounds 1 and 2 of appeal and which I address below.

22 Accordingly, what I might term the 'overpass' assumption was not a matter of controversy in this appeal. Nor were we required to address the issue as to whether such matters should be treated as if they were established facts or whether they should be approached on the basis suggested by Basten JA, at least in most cases. That issue remains to be determined in a matter where it is properly raised and argued.

Trial judge's reasons and the evidence at trial

23 In her reasons the trial judge outlined the broad parameters of the dispute, and some of the applicable statutory provisions and legal principles before identifying the significant issues.[13] The first significant issue identified was whether or not the existence of the overpass ought to be assumed in the 'before' valuation or not;[14] an issue which, subject to one matter, is no longer controversial. The judge then identified further issues. These are the issues which are now the principal subject of Mr Love's complaints in the appeal. She said:

Distinct issues are also raised in respect of access to the eastern and western land:

(a) in relation to the eastern land, the Court must determine the existence and extent of any difficulties or otherwise for access to O'Herns Road; and

(b) in relation to the western land, the Court must determine the availability or otherwise of access from the western land to O'Herns Road in the interim situation, prior to the interchange being constructed, and also the ultimate situation, once the interchange has been constructed.[15]

24 Both the Roads Corporation and Mr Love called expert valuation evidence. Mr Love relied upon the evidence of Mr Robin Harvey Hocking, a qualified valuer, real estate agent and auctioneer. The Roads Corporation relied upon the evidence of two expert valuers, Mr Leslie James Brown and Mr Brian Dudakov. Mr Love gave evidence about valuation issues himself. In addition to the expert valuation evidence, the Roads Corporation called expert evidence from a town planner, Mr Robert Milner, and from a traffic engineer and traffic planner, Ms Kathryn Lee Partenio. The Roads Corporation also led evidence from Mr Kenneth Douglas Adams, a retired licenced surveyor who had prepared survey plans of the relevant roads and land when employed by the Roads Corporation.

25 A large part of Mr Milner's evidence concerned the issue of whether an overpass should be assumed in the 'before' situation, the issue which is (with one qualification) no longer the subject of controversy.

26 On the 'distinct issues' identified by the trial judge in the passage I have quoted, the three non-valuer experts gave evidence relevant to the comparison between the access as it is with the overpass (the 'before' situation) and as it will be when the interchange is constructed (the 'after' situation). Both the overpass and the interchange are elevated. Accordingly, each of them necessarily reduce the frontage on O'Herns Road potentially available for access to and from the remaining land.

27 After dealing with the now uncontroversial issue of whether the overpass should be assumed in the 'before' situation,[16] the trial judge turned to the expert evidence regarding access.[17] The trial judge summarised the evidence of Mr Milner,[18] Mr Adams[19] and Ms Partenio.[20] The judge observed that Mr Love did not rely on any similar expert evidence.[21]

28 The Roads Corporation case was, in substance, that access on the eastern land would not be relevantly adversely affected by the interchange, as compared with the overpass, as industrial development of that land (its highest and best use on the Roads Corporation case) was likely to be by a single access point to the overall property. The Roads Corporation case in relation to the western land was that, with the overpass, the existing access was adequate for rural purposes but that upgraded access would be necessary and could be achieved if the land was to be developed for industrial purposes, and that that would remain the situation after construction of the interchange.

29 Mr Adams, the retired surveyor, gave evidence supporting the Roads Corporation case in relation to the western land. His evidence was that in 2005 what he called a 'plan of declaration' had been prepared which had shown O'Herns Road as a municipal road. He swore that, as a municipal road, access would 'usually' be reinstated in all circumstances save for when there was a safety hazard. His evidence was that a qualified traffic engineer would make the assessment as to whether there was a safety hazard.

30 Ms Partenio then gave evidence as a qualified traffic engineer in relation to access to the western land. Her evidence was that the access in the 'before' situation (overpass) was adequate for rural use but not for industrial use but that access for industrial use could be developed. As to the 'after' situation (interchange), her evidence in her written reports was that the ramps would improve the potential for industrial use access.[22]

31 Ms Partenio's evidence, and the trial judge's treatment of it, was the principal complaint raised by Mr Love in his submissions on the appeal. In that respect, Mr Love relied upon what he maintains are significant shortcomings revealed by, and significant concessions made in, Ms Partenio in cross-examination. Given the importance of that evidence to the issues Mr Love canvassed, it is desirable to quote the relevant part of the judge's summary of it. She said:

In cross-examination, Mrs Partenio accepted that she had not been provided with any drawings showing a layout of the overpass as built, or the proposed interchange based on the overpass built. Nor had she been provided with a drawing or concept of what future commercial access to O'Herns Road from Mr Love's land might look like, and she noted that any prospective hypothetical purchaser would need to do his or her own due diligence. Mrs Partenio stated that she had, however, made a site visit and had observed the overpass as built. Mrs Partenio confirmed that there would be some commercial risk in the 'after' scenario in respect of commercial access being developed from the western land to O'Herns Road.

In re-examination, Mrs Partenio was questioned in respect of the commercial risk of rationalisation of access points to the western land in the 'after' situation. She confirmed that there was no difference as to the possibility of rationalisation of access from the western land to O'Herns Road if there were no interchange.[23]

32 The judge set out the submissions made regarding these access issues.[24] Her Honour particularly referred to submissions made by Mr Love to the effect that Ms Partenio's evidence was unreliable because she had not had engineering drawings of the proposed interchange or any proposed access. Mr Love's submission was that the western land should be treated as being 'effectively land locked for urban development' in the 'after' situation.[25]

33 Her Honour's finding on these issues was as follows:

I accept the expert evidence of Mr Adams, Mrs Partenio and Mr Milner as outlined above. Together, their evidence establishes those matters referred to [in the paragraph of her Honour's judgment summarising the Roads Corporation submission]. Mr Love's criticisms of the evidence of Mr Adams and Mrs Partenio are without force. Mrs Partenio could not be expected to have sighted 'as built' drawings of the interchange. She has made a site visit of the overpass as constructed and there is no proper basis upon which to disregard her evidence that there remains access to the land after the acquisition. Mrs Partenio was clear in her evidence that access would remain the same once the interchange was constructed. Similarly, Mr Adams's evidence as to reinstatement of access is not in dispute.[26]

34 Her Honour then turned to the evidence of the expert valuers. After analysing that evidence, her Honour accepted the evidence of one of the Roads Corporation's valuers, Mr Brown.[27] Mr Brown's valuation was more generous to Mr Love than that of the other Roads Corporation valuer, Mr Dudakov, but came to a conclusion significantly below the valuation contended for by Mr Hocking, Mr Love's expert valuer. Mr Brown's valuation was $400,000. Mr Hocking's valuation (after a joint consultation between the three valuers) was $989,000. Mr Love himself gave valuation evidence, which her Honour did not accept, asserting a value of $3,390,230.

35 The trial judge gave detailed reasons as to why she preferred the evidence of Mr Brown to that of Mr Hocking.[28] On the appeal the only attack made on the trial judge's acceptance of the evidence of Mr Brown was that his evidence was premised on the acceptance of the evidence of Ms Partenio, which, on the relevant access issues, it was. Accordingly, it is unnecessary to detail the reasons why the trial judge determined to prefer Mr Brown's valuation to that of Mr Hocking. It is important to note that Mr Brown did make allowances in Mr Love's favour in relation to the access issues; in particular, as to the more limited frontage to O'Herns Road on the eastern side and as to what was described as the 'relative complexity' of access on the western side in the 'after' (interchange) situation when compared with the 'before' (overpass) situation.[29] The trial judge specifically referred to these allowances when explaining why she preferred the evidence of Mr Brown to that of Mr Hocking.[30]

36 The trial judge dealt with claims for disturbance loss[31] and for solatium[32] before concluding that Mr Love ought to be awarded the sum of $422,115.52. That sum was made up of Mr Brown's valuation ($400,000), professional expenses which were agreed ($6,115.52), and an allowance for solatium ($16,000).

That the trial judge erred in law in interpreting the evidence of Mr Robert Milner. This error concerned interpreting Roads Corporation's alleged intention regarding an Overpass at O'Herns Road Epping as having the effect that a prospective purchaser of the Appellant's land prior to the land acquisition, the subject of the award of compensation, would consider such information as having the force of a scheme to construct an O'Herns Road Overpass and that consequently no compensation for severance would be available when the construction took place. In fact, at law, in such circumstances such a purchaser would be entitled to be compensated.
The trial judge erred in law in accepting the evidence of Mr Robert Milner concerning the situation prior to the acquisition of the appellant's land when in part that evidence was based on an analysis of documents which only arose from the planning process which led to that Acquisition.
That the trial judge erred in law in not declaring the traffic evidence of Ms Kathryn Partenio inadmissible on the basis that that evidence was speculative as it was given without the benefit of drawings of a proposed interchange, no computations were provided to the Court to support the evidence and where the Court was aware that the witness had erred in other parts of her evidence.
That the trial judge erred in law in relying on the evidence of Mr Leslie Brown as to the value of the Appellant's property as it relied on the evidence of Mr Robert Milner and Ms Kathryn Partenio.

38 As indicated, s 89(2) of the Act provides that an appeal 'lies only on a question of law'.

39 A ground of appeal which attacks a factual finding can only succeed if it is demonstrated that it was not open to the trial judge, on the evidence before him or her, to make the finding in question.[33] Where it is contended that some different finding of fact to that made by the trial judge should have been made, that ground can only succeed if it is shown that the judge was bound on the evidence to make that different finding.[34]

Grounds 1 and 2 - evidence of Mr Milner - overpass in the 'before' situation

40 These grounds might be read as an attack upon her Honour's conclusion that the existence of the overpass should be assumed in the 'before' situation.[35] But, with one qualification, Mr Love made it clear in his oral submissions that that was not the complaint to which these grounds were directed. He accepted that his own valuer, Mr Hocking, had assumed the existence of the overpass in the 'before' situation and he told the Court that he felt he had to adopt the same position.

41 There was one qualification to Mr Love's acceptance of the overpass in the 'before' situation. That was that Mr Love submitted that the trial judge had fallen into error by failing to adopt evidence given by Mr Hocking to the effect that, whilst the existence of the overpass should be assumed, it should also be assumed that the owner would have been compensated by the Roads Corporation for the restrictions on access which the overpass created.

42 The evidence Mr Love relies upon in this respect was given during the course of Mr Hocking's cross-examination.[36] It is part of a passage in the course of which Mr Hocking conceded or clarified that the presence of the overpass should be assumed in the 'before' situation. The passage culminates in Mr Hocking's agreement with a proposition put to him that he had not made any adjustment in his valuation to reflect that.

43 As I read the entire relevant passage, it fortifies the conclusion her Honour reached, and which is now uncontroversial, namely that the existence of the overpass should be assumed in the 'before' valuation.

44 The part of Mr Hocking's evidence which Mr Love quotes in his written submission, and which he says was ignored by the trial judge, is Mr Hocking's response to a proposition put to him that, given the overpass concession, there was very little difference between access 'before' and 'after' on the eastern side. Mr Hocking's response was:

Well, no, I can't agree with that either Your Honour, because the road had not been acquired. There was access out there. If VicRoads came along and acquired that assess and cut me off I believe they were obliged to provide me with alternative access. I think that's been the case many times.

45 As the respondent's written submission points out, the trial judge referred to Mr Hocking's evidence about access[37] but preferred the evidence of Mr Milner, Mr Adams and Ms Partenio.[38]

46 Mr Love's complaint in relation to this issue is a complaint about the trial judge's analysis and acceptance or rejection of the expert evidence. These are questions of fact not law.[39] The finding she made was open on the evidence.

47 Mr Love also relies upon evidence given by Mr Hocking that the eastern land would eventually be rezoned for 'comprehensive development', which is mixed commercial and industrial, and upon Mr Hocking's cross-examination on the issue of access across the frontage on the eastern land in that context.

48 The passages relied upon are passages in which counsel for the Roads Corporation challenged Mr Hocking on his conclusions as to access restrictions on the eastern land. These were all matters of fact to be assessed by the trial judge.

Grounds 3 and 4 - acceptance of the evidence of Ms Partenio and effect of that acceptance on the evidence of Mr Brown

49 The complaints Mr Love makes on appeal in relation to the trial judge's acceptance of the evidence of Ms Partenio replicate submissions which he made to the trial judge, which she set out and considered in her judgment, but which she determined not to accept for reasons which she gave and which I have already quoted. The two matters particularly relied upon were a passage in Ms Partenio's cross-examination where she conceded that the issue of access to the western land in the 'after' situation would be a matter in relation to which a prospective purchaser would have to conduct 'due diligence', and her concession that she had not seen any drawing of a proposed interchange.

50 I will not repeat what the trial judge said about these issues. It suffices to say that the conclusions she reached were open to her. No submission was put which

could result in a conclusion that she was necessarily required to reach some different finding.

51 In the course of the hearing, in an endeavour to explore whether there might be a question of law raised in Mr Love's grounds or the submissions made in support of them, the Court explored a number of other issues, including whether Ms Partenio may have overlooked the fact that the interchange would be a dual carriageway whereas the overpass was a single carriageway, whether she had expressly given evidence that the nature of the risk to access for industrial use on the western land would be the same in both the before and after situation, and what drawings she did have. In the course of submissions made by counsel for the Roads Corporation the Court was referred to evidence which revealed Ms Partenio was well aware the interchange would be a dual carriageway, to Ms Partenio's oral evidence as to the nature of the risk 'before' and 'after' in relation to industrial access to the western land, and to the drawings which Ms Partenio did have. No relevant question of law emerged.

52 Mr Love's Notice of Appeal and his submissions in support do not raise any question of law. The appeal should be dismissed.

[1] See Roads Corporation v Love (No 2) (2010) 31 VR 451 and Love v Roads Corporation [2011] VSCA 434.

[2] See Roads Corporation v Love [2010] VSC 537 and Love v Roads Corporation [2014] VSCA 30.

[3] The judgment at first instance is at Roads Corporation v Love [2013] VSC 176 ('Judgment').

[5] [2006] VSC 363, [26] ('Murdesk').

[6] Spencer v The Commonwealth [1907] HCA 82; (1907) 5 CLR 418, 441; Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413, 436 [49]; Walker Corporation v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259, 276-7 [51].

[7] Deriving its name from the decision in Pointe Gourde Quarrying and Transport Co, Limited v Sub-Intendent of Crown Lands [1947] AC 565.

[8] Murdesk [2006] VSC 363; Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438.

[9] Love v Roads Corporation [2014] VSCA 30, [54], [76].

[10] Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251; (2005) 63 NSWLR 407, 433 [83].

[22] Exhibit 'KLP12' to Affidavit of Kathryn Lee Partenio sworn 19 December 2011 ('Partenio affidavit').

[23] Judgment [64]-[65] (citations omitted).

[33] S v Crimes Compensation Tribunal (1998) 1 VR 83, 89-90; Victorian WorkCover Authority v Michaels (2009) 26 VR 88, 91 [8]; Love v Roads Corporation [2014] VSCA 30, [14].

[34] McVey v GJ and LJ Smith Pty Ltd [2012] VSCA 312, [13], [24], [34]; Love v Roads Corporation [2014] VSCA 30, [14].

[35] The respondent's written submissions interpreted these grounds that way.

[36] Transcript of Proceedings, Roads Corporation v Love (Supreme Court of Victoria, S CI 2005 010146, McMillan J, 31 July 2012) 435. Mr Love's written submission cites T 453 but he quotes the passage he relies upon and it is at T 435.

[39] S v Crimes Compensation Tribunal (1998) 1 VR 83, 89-90.

Acquisition and Compensation Act 1986

Love v Roads Corporation [2014] VSCA 129

At a glance

Court

Decision date

Before

Source

Judgment (83 paragraphs)

Love v Roads Corporation [2014] VSCA 129 (25 June 2014)

Parties

Legislation Cited (1)

Cases Cited (7)