Luka v Lake Macquarie City Council

The resolution of this fundamental difference between the parties as to the true nature and scope of the further hearing and determination by this Court required in respect of the remitted proceedings looms as a far more important (and far more difficult) matter for adjudication than the required adjudication upon the Council's Motion for dismissal, which latter matter would conventionally be resolved, in view of the Applicant's expressed desire and willingness to prosecute her claim for statutory compensation (without calling further evidence), by refusing the relief claimed in the Council's Motion, in the exercise of the Court's discretion.

Accordingly, I proceed at once to answer this fundamental question concerning the true scope of the further hearing and determination required by the remitter. The answer, of course, is to be found in the proper construction of the Court of Appeal's Orders as they have been varied by the Orders made by the High Court of Australia. B. THE ORDERS OF THE COURT OF APPEAL AND OF THE HIGH COURT OF AUSTRALIA

The Orders made by the Court of Appeal in its judgment delivered on 7 December 1999 were as follows: (1) Appeal allowed; (2) Orders 1, 2, 4 and 5 of the Land and Environment Court of 2 December 1996 and orders 1, 2 and 5 of 23 December 1998 set aside; (3) In lieu thereof order that the respondent's objection to the amount of compensation offered by the Council be dismissed; (4) Remit the proceedings to the Land and Environment Court for further hearing and determination in conformity with the reasons of this Court; (5) The applicant to pay the Council's costs of the proceedings in the Land and Environment Court up to and including 7 February 1995 and one half of its costs of the first hearing which concluded on 21 June 1996; (6) The applicant to pay the Council's costs of the third and fourth hearings in the Land and Environment Court which led to the judgments of that Court of 24 July and 23 December 1998; (7) The respondent to pay one half of the Council's costs in this Court, and to have a certificate under the Suitors Fund Act in respect of the costs in this Court; (8) The costs of the further proceedings in the Land and Environment Court to be in the discretion of that Court.

The Orders made by the High Court of Australia on 4 August 2000 were as follows:

1. Special leave is granted to the applicant to appeal to this Court from the whole of the judgment and orders of the New South Wales Supreme Court, Court of Appeal given and made on the 7th day of December 1999.
2. The appeal against the whole of the judgment and orders of the New South Wales Supreme Court, Court of Appeal given and made on the 7th day of December 1999 is allowed to the extent that order 3 of the orders made by the Court of Appeal is deleted.
3. The Applicant is to pay the costs of the respondent of the application. C. THE COMPETING ARGUMENTS

The Council submits that the scope of Order 4 remitting the proceedings is found in the following passages of the Court of Appeal's judgment which was given by Handley JA (and agreed in by the other judges):

72. The proceedings must be returned to the Land and Environment Court to dispose of the owner's claim for compensation (Just Terms Act s 66(2)) and for the exercise of its jurisdiction under s 25 of the Court Act. Any claims hereafter referred to the Court by the holders of equitable interests, or by proprietors of lots in the sub-division, could be joined with these proceedings pursuant to orders made under s 25(2). Once such claims have been determined the Court can assess the impact of any awards in favour of those claimants on the amount offered to the owner in the Council's compensation notice, and determine whether the compensation payable to the owner should be reduced below the $16,500 offered. The order remitting the proceedings is not intended to reopen the owner's claim for additional compensation.

73. The Court will also have to deal with any payments of compensation made following the orders of Bignold J, which will have to be refunded by the owner, and interest on the amounts to be refunded. See Haig v Minister Administering the National Parks and Wildlife Act 1974 [No 3] (1996) 90 LGERA 408, 412. It may also have to deal with the question of interest under s 66(4) of the Just Terms Act.

74. The Council's attack on the figure of $16,500 assessed by the Valuer-General, which it had offered the owner in its compensation notice, was confined before Bignold J and this Court to the argument that these roads and lanes were public roads. Since that argument and the owner's objection have both failed, the compensation offered to the owner should stand unless the compensation offered or awarded to other claimants requires the amount payable to the owner to be reduced below $16,500. I express no view on that question.

The reference in par 72 of Handley JA's judgment to the Court "exercising its jurisdiction under section 25 of the Court Act" is a reference to his Honour's discussion commencing at par 50 of what he described as "the problems associated with the existence of other interests in the land". That discussion was prompted by the Council's appeal against Order 4 of my judgment of 2 December 1996 which had directed payment by the Council of the amount of compensation "upon appropriate discharge and releases being given to the satisfaction of the Respondent (the Council) in respect of all persons other than the Applicant claiming an interest on the compulsorily acquired land…"

The Court of Appeal's judgment had disclosed a class of other interest in the compulsorily acquired land which had not been revealed at the trial, namely the interest of the individual proprietors of all of the residential lots which fronted onto the roads and lanes (which comprised the totality of the compulsorily acquired lands). Handley JA, at par 51 described such interests as "registered private rights-of-way over those roads and lanes in accordance with Dabbs v Seaman (1925) 36 CLR 538".

His Honour held at par 51 that "(T)hese rights-of-way were extinguished by the resumption, and converted into claims for compensation, but the proprietors were not given notice of the intended resumption under s 11 to s 13 and 15 of the Just Terms Act, and had not made claims under s 39". At par 70 of his judgment, Handley JA said (in the context of having said (par 69) that the provisions associated under the LEC Act, s 25(2) should be invoked):

The Council for its part should give compensation notices under s 42(1) and (5) to the proprietors of lots in DP 4339…..

The Council submits that the combined effect of par 72 and par 74 of Handley JA's judgment is to confine this Court's function in respect of the remitted proceeding (i) to the exercise of jurisdiction under the LEC Act, s 25 in respect of any interests in the compulsorily acquired land (other than the interest of the Applicant); and (ii) to dispose of the Applicant's claim for compensation upon the basis that the amount of $16,500 assessed by the Valuer-General satisfies that claim unless that amount is to be reduced by the amount of any compensation that is offered and awarded to other potential claimants who may be joined in the proceedings pursuant to s 25 of the LEC Act.

The Applicant's competing argument is that the Court's primary function in respect of the remitted proceeding is to determine, as required by the Just Terms Act, s 66(2), the Applicant's statutory objection to the amount of compensation offered and that that determination is not confined to the question whether the amount of $16,500 should be reduced by the amount of compensation that may be awarded to other claimants who may be joined to the proceedings by appropriate orders made pursuant to the LEC Act, s 25(2). In this respect, it is submitted the reference in pars 72 and par 74 of Handley JA's judgment to $16,500 is merely a reference to the amount of compensation assessed by the Valuer General in the statutory Compensation Notice given to the Applicant. That amount is merely a convenient finite reference point - it has not been held to be the amount of compensation or the maximum amount of compensation that is payable in respect of the Applicant's statutory claim to compensation. D. THE MEANING AND EFFECT OF THE COURT OF APPEAL'S ORDERS AS VARIED BY THE ORDERS OF THE HIGH COURT

I propose first to consider the orders made by the Court of Appeal unaffected by the variation made to them by virtue of the Orders made by the High Court of Australia, although as will appear, I consider the latter action to be decisive as to this Court's function in respect of the remitted proceedings.

However before considering the Orders, it may be helpful to recall a number of matters that constitute the legal matrix within which those orders must operate and which accordingly assists in the task of construing the orders to deduce their true meaning and effect.

The proceedings in this Court fall within class 3 of the Court's jurisdiction (vide the Land and Environment Court Act 1979, s 19(e) (LEC Act). In respect of this jurisdiction, the LEC Act, s 24 relevantly provides: (1) If: (a) a claim is made for compensation because of the compulsory acquisition of land in accordance with the Land Acquisition (Just Terms Compensation) Act 1991, Division 2 of Part 12 of the Roads Act 1993 or any other Act, and' (b) no agreement is reached between the claimant and the authority required to pay the compensation,

the claim is (subject to any such Act) to be heard and disposed of by the Court and not otherwise. (2) The Court shall, for the purpose of determining any such claim, give effect to any relevant provisions o-f any Acts that prescribe a basis for, or matters to be considered in, the assessment of compensation.

In amplification of the Court's jurisdiction, the following provision of the Just Terms Act should be noted:

66. (1) A person who has claimed compensation under this Part may, within 90 days after receiving a compensation notice, lodge with the Land and Environment Court an objection to the amount of compensation offered by the authority of the State.

(2) If any such objection is duly lodged, the Land and Environment Court is to hear and dispose of the person's claim for compensation.

The LEC Act, s 24(2) attracts the operation of the provisions of the Just Terms Act Division 4, of Part 3 which include s 54(1) and s 55 which relevantly provide as follows: 54. (1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land. 55. In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division): (a) the market value of the land on the date of its acquisition; (b) any special value of the land to the person on the date of its acquisition; (c) any loss attributable to severance; (d) any loss attributable ti disturbance; (e) solatium; (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

The Council's appeal to the Court of Appeal against my judgments determining the amount of compensation payable to the Applicant as the "market value" of the compulsorily acquired land was governed by the LEC Act, s 57 subsections (1) and (2) of which relevantly provide as follows:

57 Class 1, 2 and 3 proceedings - appeals (1) A party to proceedings in Class 1, 2 or 3 of the court's jurisdiction may appeal to the Supreme Court against an order or decision (including an interlocutory order or decision) of the Court on a question of law. (2) On the hearing of an appeal under subsection (1), the Supreme Court shall: (a) remit the matter to the Court for determination by the Court in accordance with the decision of the Supreme Court, or (b) make such other order in relation to the appeal as seems fit.

Against this statutory background, it is apparent that in making Orders 1 and 2 the Court of Appeal was correcting errors of law that it found to infect my two aforesaid judgments and that in making Order 4 the Court of Appeal was exercising the power expressly conferred by the LEC Act, s 57(2)(a). In this regard, there is no material distinction between the words of the statute and the direction contained in Order 4 that the remitted proceedings be further heard and determined "in conformity with the reasons of this Court".

Order 4 obviously requires some exploration into the stated reasons for the judgment of the Court of Appeal. The principal passages from those reasons have already been recited when stating the parties' competing arguments. However, in seeking to understand and to obey Order 4, I have carefully examined the whole of the reasons of Handley JA and not simply pars 72 to 74 which obviously form the principal focus for the Council's argument.

According to my examination of the reasons for judgment, those reasons may be analysed as follows: (i.) paragraphs 1 to 9 deal with background matters; (ii.) paragraphs 10 to 22 expose legal errors in the judicial valuations contained in my judgments; (iii.) paragraphs 23 to 49 deal with the Council's unsuccessful contention that no compensation was payable because the compulsorily acquired land already had the status of public roads; (iv.) paragraphs 50 to 71 deal with the perceived problems of the existence of other interests in the land (besides the Applicant's interest); (v.) paragraphs 72 to 74 deal with the remitter; (vi.) paragraphs 75 to 77 deal with the question of costs in the proceedings; (vii.) paragraph 78 contains the Court's orders.

The two legal errors in the judicial valuation that was contained in my judgment of 2 December 1996 identified in the passages (comprising paragraphs 10 to 22) of Handley JA's reasons for judgment were (i) the valuation was contrary to the principles "that what must be valued is the property taken in the condition in which it existed at the date of resumption' (pars 18 and 19) and that the "Edgeworth sale" was not a comparable sale and was "wholly irrelevant to the assessment of compensation for the taking of roads and lanes in an existing subdivision" (par 20); and (ii) the valuation (and the additional compensation that was awarded by my judgment of 23 December 1998 in respect of the value of existing roadwork improvements) was vitiated by legal error because it ignored the existence of the matrix of private rights-of-way over the roads and lanes (par 21).

These identified legal errors led to the following consequence as stated in par 22 of Handley JA's judgment:

The land must therefore be valued as roads and lanes burdened with these private rights-of-way and incapable of being used or developed for any other purpose. The idea that a willing but not anxious purchaser who was well informed would pay $682,836 for these roads and lanes lacks all reality. The appeal must therefore be allowed, and the compensation awards set aside

These reasons clearly inform Orders 1 and 2 of the Court of Appeal's Orders but in my opinion they also inform Order 4 (subject, however to the effect of Order 3). In other words, whereas the legally erroneous assessments of compensation obviously needed to be set aside, it is equally clear that the effect of these orders meant that there now remained outstanding the performance of the statutory duty imposed upon this Court by the Just Terms Act, s 66(2) to determine the Applicant's statutory objection and her statutory claim for compensation.

Accordingly, the setting aside of my assessments of compensation created the need for a further or fresh determination of the Applicant's claim to compensation upon the basis prescribed by par 22 of the Court of Appeal's judgment namely -

The land must be valued as roads and lanes burdened with these private rights-of-way and incapable of being used or developed for any other purpose.

In respect of this proper basis for valuing the land, it is to be noted that at the trial (including the three subsequent substantial hearings which culminated in my judgment of 23 December 1998 awarding additional compensation in respect of the value of existing roadworks improvements in the subject land) there was no evidence of any valuation undertaken on that basis. This includes the Valuer General's valuation of $16,500 as contained in the statutory Compensation Notice given to the Applicant.

In these circumstances, it is difficult to appreciate, how and why, this Court's outstanding duty under the Just Terms Act on the remitted proceeding to determine the Applicant's statutory objection and her statutory claim for compensation would be confined to determining by how much the amount of $16,500 should be reduced on account of the award(s) of compensation which may be made to other potential claimants having an interest in the compulsorily acquired lands whose claims would be joined to the proceedings by virtue of the Court exercising the jurisdiction conferred upon it by the LEC Act, s 25.

For the Court's statutory duty under the Just Terms Act to be so confined would require, in my judgment, either (i) a finding by the Court of Appeal in its judgment that the valuation of $16,500 made by the Valuer General and contained in the statutory Compensation Notice is the "market value" of the compulsorily acquired land or (ii) a finding that the legal consequence of the rejection of the Applicant's statutory objection to the amount of compensation offered where that objection was based upon a legally erroneous valuation, was that the amount of compensation that had been offered ipso facto became (conclusively) the amount of compensation to which the claimant was entitled.

In respect of each of these two possible foundations for confining this Court's statutory duty under the Just Terms Act, (i) there is no finding in the Court of Appeal's judgment that the market value of the compulsorily acquired land is $16,500 and (ii) there is no legal principle that translates in the context of proceedings under the Just Terms Act, s 66 the amount of compensation offered in the statutory Compensation Notice into the amount of compensation to which the claimant is entitled, if the valuation proffered in support of the claimant's case is rejected.

It is hardly surprising that the Court of Appeal made no such finding because its statutory function on the appeal was confined to the correction of legal error in the trial judgment and it is long established that this Court's statutory function of determining claims to compensation under the Just Terms Act, by assessing compensation that is payable in accordance with the principles contained in that Act, involves it in a fact finding task, as is the case with most valuations of property (or other assets): cf Valuer-General v Dobrel Pty Ltd (1993) 79 LGERA 334.

Whereas in other valuation contexts, there may exist statutory provisions deeming a statutory valuation made by the valuer general "to be correct until proved otherwise upon objection or appeal' (being the relevant provision contained in the Valuation of Land Act 1944 (Queensland) that was considered by the High Court of Australia in Brisbane City Council v The Valuer General (Queensland) (1978) 140 CLR 41) no such provision is made in the Just Terms Act except for the provision contained in s 45 which deems an "offer of compensation to be accepted" if the recipient of the compensation notice does not lodge with this Court (within the prescribed time limits) an objection to the amount of compensation offered. (That exception has no application to the present case.)

Once an objection has been lodged with this Court pursuant to the Just Terms Act, s 66, it is the statutory duty of this Court to determine that objection by determining the amount of compensation to which the claimant is entitled: vide s 66(2), s 54(1) and s 55. Such a task is not concerned with the question whether the Valuer-General's assessment was right or wrong. Rather, this Court is bound to determine, in accordance with the Just Terms Act, the amount of compensation that is payable to the claimant: vide s 54(1) and s 55.

However, all that I have just said on the meaning of Order 4 is subject to the effect of Order 3 in the Court of Appeal's judgment which ordered "in lieu of" the specified orders contained in my judgments of 2 December 1996 and 23 December 1998 upholding the Applicant's objection and awarding substantial amounts of compensation, that the claimant's "objection to the amount of compensation offered by the Council be dismissed".

Clearly, that Order is capable of an interpretation that would result in the Valuer-General's statutory valuation of $16,500, providing the maximum amount of compensation that might be awarded in respect of the Applicant's statutory claim to compensation under the Just Terms Act. That this is so, is clearly revealed by the content of the Transcript of proceedings in the High Court of Australia on 4 August 2000 when that Court was entertaining the Applicant's application for special leave to appeal against the Court of Appeal's judgment.

In the following extracts from pages 5 and 6, it is to be noted that the Chief Justice and Gaudron J constituted the High Court and that Mr McEwen SC was appearing for the Applicant and Mr Jacobs QC was appearing for the Council:

GAUDRON J: That is what I am wondering. I am just wondering whether, having lost on those two grounds, you are precluded from having the proper value determined, other than on the basis of what the Valuer General asserted.

MR JACOBS: We are bound by the Valuer General's valuation - - -

GAUDRON J: I know you are. The question is, is Mr McEwen bound by the Valuer General's valuation in circumstances where the court has said the approach which the court took was flawed but there may be another approach open.

MR JACOBS: The procedures I note is that an objection is filed, there are points of claim filed, there are points of defence which are lodged in response thereto, and those are the matters that then go forward.

GAUDRON J: To say an approach is flawed is one thing; to conclude that there is no basis for valuing the land other than that asserted by the Valuer General is another thing.

MR JACOBS: What they did was they dismissed the objection.

GAUDRON J: I know, and that is what I am concerned about. They could only dismiss the objection, I should have thought, if the Land and Environment Court was bound to dismiss the objection at the end of the evidence.

GAUDRON J: You accept that they could only have done that?

GAUDRON J: Then the question is, why was the Land and Environment Court bound to dismiss?

MR JACOBS: Because there were two points which had been agitated at different stages before his Honour Mr Justice Bignold.

GAUDRON J: But there is no finding, is there, that the land is only worth $16,500?

MR JACOBS: No, there is no such finding. But then one is bound - one should be bound by the way - - -

GAUDRON J: One may be bound by it, but what seems to me is that you could put your case at the highest level, pitch it at the highest level, and absent, so be it, that maybe at the end of the day you do not make that out, but it seems to me at the end of the day someone had to find that the land was only worth $16,500. It does not seem to me that that has been done.

MR JACOBS: With respect, that is not how it works in the Land and Environment Court…….

GLEESON CJ: And that was the basis on which they made the order that they made.

GLEESON CJ: So the question is, were they right to proceed upon the basis - did anybody argue to the contrary - that having resolved against Mr McEwen's client the issues that they resolved, the result was that the only other issues open for determination in the Land and Environment Court were issues that might reduce the value below $16,500. Was that common ground before the Court of Appeal?

GLEESON CJ: Where do we find the part of their reasoning with which they deal with that matter?

MR JACOBS: They do not, excepting to the extent that they say the objection is to be dismissed - - -

MR JACOBS: Because of the two points that were held against my learned friend.

GAUDRON J: I can understand them saying that the appeal should be allowed and the order of the Land and Environment Court set aside and the matter remitted to them. I cannot understand them saying - let us assume there had been no Dabbs v Seaman point, appeal allowed, order of the Land and Environment Court set aside, order in lieu that they be paid or order that the application be dismissed, without there being a finding somewhere along the line that $16,500 was the true value.

I do not think it necessary for me to further consider the question under present discussion because whatever difficulty the existence of Order 3 may have posed to my understanding of Order 4 in the Court of Appeal's judgment, that difficulty has been entirely removed by the decision of the High Court on the special leave application to "allow the appeal to the extent that Order 3 of the orders made by the Court of Appeal is deleted".

Reference to the transcript of the proceedings in the High Court clearly indicates that the Orders made by the High Court were "no mere formality" of merely a matter of "drafting" nicety, but were based on matters of substance. The transcript also indicates that the costs order made by the High Court against the Appellant was made as conceded, because the point upon which the appeal was allowed had not been raised prior to its emergence at the hearing before the High Court.

In my judgment, the elimination of the complication caused by the existence of Order 3 means that this Court's statutory duty in respect of the remitted proceedings must include the outstanding determination of the Applicant's objection under the Just Terms Act and this determination must involve the determination of the compensation that is payable in accordance with s 54(1) and s 55 of the Just Terms Act on the valuation basis enunciated in par 22 of the judgment of the Court of Appeal, namely - The land must be valued as roads and lanes burdened with private rights-of-way and incapable of being used or developed for any other purpose.

Concerning the other aspect of the remitted proceeding dealt with in the reasons for judgment of the Court of Appeal, namely "the problems associated with the existence of other interests in the land" it would appear from the contents of Mr Peter Rees' affidavit sworn 6 December 2000 that there will be no occasion for the Court to exercise its jurisdiction under the LEC Act, s 25(2) because there have been no further claims to compensation made in respect of the compulsorily acquired land under the Just Terms Act, following the giving of notice to persons having an interest in the land at the time the compulsory acquisition was effected in November 1993. In respect of the statutory notice required by the Court of Appeal's judgment to be given to each of the owners of the lots fronting onto the roads and lanes (comprising the entirety of the compulsorily acquired land) it is to be noted that in the relevant statutory Compensation Notices, the Valuer General assessed at nil value, both "the market value" and the compensation payable, in respect of the private rights-of way that were extinguished by the compulsory acquisition.

For all of the foregoing reasons, I must reject the Council's argument that the Court's statutory function in the remitted proceeding of determining the Applicant's objection is confined to determining by how much the sum of $16,500 (being the Valuer-General's assessment of compensation as contained in the statutory Compensation Notice given to the Applicant) is to be reduced on account of any amount of compensation that may be awarded to other potential claimants in respect of their interests in the compulsorily acquired land. E. CONCLUSIONS AND ORDERS

In view of my conclusions as to the true effect of the Orders made by the Court of Appeal, as varied by the Orders made by the High Court of Australia, I now come to consider the Council's Motion for dismissal or stay of the proceedings and the Applicant's competing application for leave to obtain hearing dates for the completion of the remitted proceeding upon the basis of the evidence that has already been received in the proceedings, together with the evidence contained in the two affidavits of Mr Peter Rees (the Council's Solicitor) that I have earlier referred to.

Having regard to the Applicant's desire and apparent willingness to proceed with her case, the Council's Motion must be dismissed, because of the very serious consequences of terminating the proceedings at a time when there has been no determination of the Applicant's objection under the Just Terms Act, and the Applicant has expressed her desire and willingness to prosecute her objection. Her Solicitor has confessed to misunderstanding what was expected of the Applicant in respect of what was required by Handley JA at par 69 of his judgment in respect of the investigation of potential claimants having equitable interests in the land.

Although it is appropriate to give the Applicant leave to obtain a hearing date for the completion of these proceedings, I think that no date should be fixed until the lapse of the period for any appeal that may be taken by the Council pursuant to the LEC Act, s 57(1) against my decision concerning the true effect of the Orders of the Court of Appeal as varied by the Orders made by the High Court and the true nature and scope of the further hearing and determination required by this Court on the remitted proceedings.

I take this action precautionarily, not because I entertain doubts about my construction of the Orders of the Court of Appeal as varied by the Orders of High Court of Australia, but so as to avoid the incurring of further unnecessary costs in this litigation saga, lest, for whatever reason, I be held to be wrong in my understanding of my statutory duty to determine the Applicant's objection conformably to the requirements of the Just Terms Act, and conformably to the conditions of the remitter. If there be relevant error, it is obviously preferable that it be exposed immediately, rather than after a further hearing and judgment in the proceedings.

If the Council files an application for leave to appeal against my interlocutory decision, the question of this Court allocating a hearing date for the remitted proceedings will require to be reviewed. In this respect, I grant liberty to the parties to apply on three days' notice.

Accordingly, I make the following orders:

1. The Council's Notice of Motion filed on 26 September 2001 is dismissed.
2. Leave given to the Applicant to seek a hearing date for the hearing of the remitted proceedings at the expiry of 28 days if, within that period the Council has not filed an application for leave to appeal to the Court of Appeal against my decision defining the nature and scope of the hearing and determination that is required by this Court in respect of the remitted proceedings.
3. If the Council files an appeal as referred to in Order 2, the question of whether this Court should allocate a hearing date for the remitted proceedings, pending the hearing and determination of that appeal should be reviewed by this Court, in respect of which question the parties have liberty to apply on three days' notice.
4. The question of costs is reserved.

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