Plaintiff v Defendant

Supreme Court of Victoria|2013-05-17|Before: McMILLAN J

LAND VALUATION AND COMPENSATION - Defendant's land compulsorily acquired - Defendant claimed compensation for loss of land and loss of value to the unacquired land - Claimed loss of market value and severance, disturbance loss and solatium - Whether the hypothetical purchaser of the land at the relevant date would expect that an overpass at O'Herns Road was to be constructed - The extent of any access difficulties to the unacquired land - Whether the Modified Burnley Method of Amenity Tree Evaluation is an appropriate valuation method in the circumstances of this case - Disturbance loss claims not based on pecuniary loss - Appropriate allowance for solatium - Land Acquisition and Compensation Act 1986 ss 41, 43, 44.

1. Mr Thomas James Love is the owner of land in Epping, in the State of Victoria, part of which has been subject to three compulsory acquisitions by the Roads Corporation. In respect of the three acquisitions, he is entitled to compensation.

2. The amounts of compensation payable for the first and second compulsory acquisitions were disputed and both were the subject of separate proceedings in the Supreme Court.[1]

3. This proceeding concerns the amount of compensation payable to Mr Love for the third compulsory acquisition. This land was acquired by the Roads Corporation on 27 November 2003 and the acquisition was referred to this Court as a 'disputed claim' under s 80 of the Land Acquisition and Compensation Act 1986 ('the Act').[2]

4. Mr Love claims that he is entitled to compensation of $3 667 190, whereas the Roads Corporation says he is entitled to $422 115.52.[3]

5. All heads of Mr Love's claim for compensation are contested by the Roads Corporation, apart from a claim for professional expenses of $6115.52.

6. In the last two decades, Epping has emerged as a major growth area for employment and residential development. The three compulsory acquisitions of Mr Love's land in Epping have been a by-product of this growth.

7. The Roads Corporation first acquired land owned by Mr Love on 15 November 2001. This land was located at 410 and 460 Cooper Street, Epping and comprised part of a property or dwelling known as 'Clonard'. The Roads Corporation acquired part of this land in order to facilitate the provision of an extra carriageway in Cooper Street, Epping, by widening the roadway reserve ('the first acquisition').[4] This acquisition was the subject of a proceeding before Osborn J in Roads Corporation v Love ('the Clonard property proceeding').[5] The Court of Appeal has since dismissed an appeal by Mr Love in respect of the trial division judgment in that proceeding.[6]

8. The Roads Corporation acquired further land at 410 Cooper Street, Epping on 11 February 2002 ('the second acquisition'). This land was acquired for the purpose of the Craigieburn Bypass ('the Bypass'). This acquisition was the subject of a proceeding before Vickery J in Roads Corporation v Love ('the Cooper Street proceeding').[7] An appeal by Mr Love is currently before the Court of Appeal.[8]

9. The third acquisition occurred on 27 November 2003 ('the relevant date' or 'the acquisition date'), whereupon the Roads Corporation acquired land comprising Lots 1, 2 and 3 of Plan of Subdivision PS504517C, known as 275 O'Herns Road, Epping ('the land').[9] The land comprised 1.99 hectares.[10] Lots 1 and 3 comprise 1.374 hectares, and are situated to the west of the Bypass ('the western land'). Lot 2 comprises 0.625 hectares, and is situated to the east of the Bypass ('the eastern land').[11] Broadly speaking, the purpose of the third acquisition was for the O'Herns Road, Epping interchange. The precise purpose is one of a number of issues to be determined and will be addressed in due course.[12]

Circumstances Framing the Issues in the Proceeding

10. The Roads Corporation submitted that the objective circumstances that frame the issues in this proceeding, which were not challenged by Mr Love, are as follows:

(a) by the date of acquisition in this proceeding, the Roads Corporation had already acquired the land for the Bypass;

(b) at the relevant date, the Bypass was being constructed; and

(c) after the relevant date, an overpass was constructed at O'Herns Road at a location slightly north of the O'Herns Road reserve because of an injunction.[13]

11. The term 'overpass' refers to a bridge spanning over the Bypass that does not connect or integrate with the Bypass, whereas an 'interchange' embodies an overpass and connecting ramps on and off the Bypass. At the time of the trial of this proceeding, an overpass, but not an interchange, existed at O'Herns Road. A contemporaneous aerial photograph illustrating the Bypass, running north-south, and O'Herns Road, running east-west, is located at Annexure A to this judgment.

12. On 12 February 2012, Mr Love sold the eastern land.

(a) the sum of $325 400 said to be the market value of the acquired land pursuant to s 41(1)(a) of the Act;

(b) $2 121 780 for the loss in value of the unacquired western land due to severance pursuant to s 41(1)(c) of the Act;

(c) $943 050 for the loss in value of the unacquired eastern land due to severance pursuant to s 41(1)(c) of the Act;

(d) the sum of $175 990 for disturbance loss, being the loss of amenity of trees pursuant to s 41(1)(d) of the Act;

(e) the sum of $68 430 for other disturbance loss claims pursuant to s 41(1)(d) of the Act; and

(f) the sum of $32 540 for solatium pursuant to s 41(1)(f) of the Act.[14]

14. The present proceeding invokes the exercise of a statutory jurisdiction conferred upon the Court pursuant to pt 10 of the Act.

15. Section 30 of the Act provides a right to compensation for acquired land, where any person immediately before the publication of a notice of acquisition had an interest in land that was divested or diminished by the acquisition of the interest to which that notice relates.

16. Section 89 of the Act requires the Court to determine the amount of compensation to be paid in respect of the claim. As stated by Osborn J in the Clonard property proceeding, 'the notion of compensation envisages that an owner is entitled to be compensated fairly and fully for his loss, but is not entitled to receive more than fair compensation'.[15] In determining the compensation payable, the Court must determine the compensation payable in the particular circumstances of the case having regard to the provisions of the Act.[16]

17. Section 41 of the Act outlines the general principles on which compensation is to be based as follows:

General Principles on which compensation is to be based

(1) Except as otherwise provided in this Part, in assessing the amount of compensation payable to a claimant in respect of an interest in land which is acquired under this Act, regard must be had to the following factors -

(a) the market value of the interest on the date of acquisition;

(b) any special value to the claimant on the date of acquisition;

(e) the enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed from the acquired land by reason of the implementation of the purpose for which the land was acquired;

(f) any legal, valuation and other professional expenses necessarily incurred by the claimant by reason of the acquisition of the interest.

(2) If the market value of an interest in land is assessed on the basis that the land had potential to be used for a purpose other than the purpose for which it was used on the date of acquisition, compensation must not be allowed for -

(a) any special value in respect of any pecuniary advantage that would necessarily have been forgone in realizing that potential; and

(b) any loss attributable to disturbance that would necessarily have been incurred in realizing that potential.

(3) If less than the whole of the land in which a claimant's interest subsists is acquired or less than the whole of that interest is acquired, the market value of the acquired interest is the difference between the market value of the interest before the acquisition and the market value of the interest after the acquisition.

18. The following definitions apply, pursuant to s 40 of the Act:

...

loss attributable to disturbance means any pecuniary loss suffered by a claimant as the natural, direct and reasonable consequence of -

(a) the service upon the claimant of a notice of intention to acquire, where the Authority has refused or failed to give consent to the carrying out of improvements to the land in respect of which that notice has been served or the effecting or obtaining of any sales, transactions, licences or approvals in respect of that land; and

(b) the fact that an interest of the claimant in that land has been divested or diminished, being a pecuniary loss for which provision is not otherwise made in this Part;

loss attributable to severance, in relation to the acquisition of a claimant's interest in land, means 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;

market value, in relation to any interest in land on a particular date, means the amount of money that would have been paid for that interest if it had been sold on that date by a willing but not anxious seller to a willing but not anxious purchaser;

special value, in relation to an interest in land, means the value of any pecuniary advantage, in addition to market value, to a claimant which is incidental to his ownership or occupation of that land.

19. Section 43(1)(a) of the Act outlines matters affecting compensation as follows:

(1) In assessing compensation, the following matters must be disregarded -

(a) any increase or decrease in the market value of the interest in land which is acquired arising from the carrying out, or the proposal to carry out, the purpose for which the interest was acquired;

20. In addition, the underlying framework for the valuation of land compulsorily acquired is provided by s 5A of the Valuation of Land Act 1960 in the following terms:

(1) Unless otherwise expressly provided where pursuant to the provisions of any Act a court board tribunal valuer or other person is required to determine the value of any land, every matter or thing which such court board tribunal valuer or person considers relevant to such determination shall be taken into account.

(2) In considering the weight to be given to the evidence of sales of other lands when determining such value, regard shall be given to the time at which such sales took place, the terms of such sales, the degree of comparability of the lands in question and any other relevant circumstances.

(3) Without limiting the generality of the foregoing provisions of this section when determining such value there shall, where it is relevant, be taken into account -

(a) the use to which such land is being put at the relevant time, the highest and best use to which the land might reasonably be expected to be put at the relevant time and to any potential use;

(b) the effect of any Act, regulation, local law, planning scheme or other such instrument which affects or may affect the use or development of such land;

(d) the situation of the land in respect to natural resources and to transport and other facilities and amenities;

(e) the extent condition and suitability of any improvements on the land; and

(f) the actual and potential capacity of the land to yield a monetary return.

21. Finally, in respect of solatium, s 44 of the Act provides:

(1) The amount of compensation may be increased by such amount, not exceeding 10% of the market value of the land, by way of solatium as is reasonable to compensate the claimant for intangible and non-pecuniary disadvantages resulting from the acquisition.

(2) In assessing the amount payable under subsection (1), there must be taken into account all relevant circumstances applicable to the claimant including, without limiting the generality of the foregoing -

(a) the interest of the claimant in the acquired land; and

(b) the length of time during which the claimant had occupied the land; and

(d) the period of time after the acquisition of the land during which the claimant has been, or will be, allowed to remain in possession of the land; and

(e) the period of time during which, but for the acquisition of the land, the claimant would have been likely to continue to occupy the land; and

(g) where the claimant at the date of acquisition is occupying the land as the claimant's principal place of residence, the number, age and circumstances of other people (if any) living with the claimant.

What Compensation Should Be Paid to Mr Love for the Market Value of the Acquired Land and Severance?

22. The Court must determine the amount of compensation payable to Mr Love in respect of the land acquired and the loss of value to the land not acquired.

23. Under this head of his claim, Mr Love contends that he should be paid $3 390 230 calculated as follows:

(a) $325 400 for the market value of the acquired land, being $188 000 for the eastern land and $137 400 for the western land;

(b) $2 121 780 for the loss in value of the unacquired western land due to severance; and

24. The Roads Corporation submitted that it is 'content for the Court to award compensation in accordance with Mr [Leslie James] Brown's assessment in the sum of $400 000 (comprising the market value of the land actually taken and severance to remaining land)'.[18] Mr Brown's calculation is as follows:

(a) in respect of the eastern land, compensation of $250 000 should be awarded, comprising $93 750 for the value of the acquired land and $156 250 for severance; and

(b) in respect of the western land, compensation of $150 000 should be awarded, comprising $82 440 for the value of the land acquired and $67 560 for severance.

25. The Roads Corporation submitted, and I accept, that the 'key issue in this case is not as to the value of the land actually taken but as to the appropriate allowance for severance'.[19]

Principles Applicable to Market Value and Severance

26. The two components of compensation for loss of market value are compensation for the value of the land actually taken and compensation for diminution in the value of the remaining land due to severance. The principles underpinning the statutory framework for the assessment of compensation in relation to market value and severance have been succinctly set out in Murdesk Investments Pty Ltd v Roads Corporation, where Osborn J said the following:

Section 40 of the [Act] defines the 'market value' in relation to any interest in land on a particular date as meaning 'the amount of money that would have been paid for that interest if it had been sold on that date by a willing but not anxious seller to a willing but not anxious purchaser'.

This provision reflects the test formulated by the High Court in Spencer's case and articulated by Isaacs J:

To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.

The test postulates a reasonably prudent purchaser. In Pastoral Finance Association Ltd v Minister the Privy Council stated:

Probably the most practical form in which the matter can be put is that [the claimants] were entitled to that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it.

...

[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).

...

[Section 43(1)(a)] reflects the Pointe Gourde principle. As Kirby P stated in Haig v The Minister Administering the National Parks and Wildlife Act 1974:

It is so named after Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565. According to the principle, which is one devised by the judges, in valuing land for resumption purposes, any increase in the land's value which is entirely due to the scheme underlying the acquisition is to be disregarded. The converse of the principle is also accepted. Any diminution in the value of land which is entirely due to the resumption scheme, or to any blight caused by a step in the resumption process, is to be disregarded in determining the value of the land: see Housing Commission of New South Wales v San Sebastian Pty Ltd [1978] HCA 28; (1978) 140 CLR 196 at 214; ... Behind this principle lies a search for a fair valuation and an insistence upon just procedures. If it were not upheld in the determination of the value of resumed land, it would be possible for a resuming authority to use its power or influence, in respect of such matters as zoning, to diminish the value of the land to be resumed, to its own advantage and to the disadvantage of the owner at valuation.

...

The effects of the implementation of a public purpose may be direct or indirect. The market value of land may be affected by the impact of the implementation of the public purpose not only upon the acquired land itself but also upon the surrounding area.[20]

27. As stated by Vickery J in the Cooper Street proceeding:

In assessing the 'before' value of the land ..., the Court is required to give effect to s 43(1)(a), insofar as it may be relevant. This may be contrasted with the 'after' assessment, where any increase or decrease in the market value of the land arising from the carrying out or proposal to carry out the purpose for which the interest was acquired must be brought into account.[21]

28. The effect of s 43(1)(a) is that, '[p]rovided a court is satisfied that the diminution or enhancement in value "arose out of" or "arose in connection with" the carrying out or the proposal to carry out the public purpose in question, the change in the value brought about is to be disregarded in assessing the "before" value of the land'.[22] The 'words "arising from" are broad words. The ultimate question for [the] Court is how as a matter of fact they are to be applied to the evidence'.[23]

29. Finally, while the wording of this section refers to 'any increase or decrease in the market value of the interest in the acquired land', the whole of the land is affected by s 43(1)(a).[24] This is so by virtue of s 41(3), which provides that, in determining the market value of the interest acquired by way of a 'before' and 'after' analysis, the assessment of the 'before' value of the land requires that the market value of the whole interest (rather than simply the acquired interest) be determined.[25]

30. In respect of the allowance for severance a number of issues arise.

31. In relation to the 'before' value of the land, the Court must determine whether the hypothetical purchaser of the land at the relevant date would expect that an overpass at O'Herns Road was to be constructed or, alternatively, whether a hypothetical purchaser would expect that O'Herns Road would be truncated at the Bypass. The answer to this question depends on whether an overpass at Vearings Road might be expected to be implemented as an alternative to an overpass at O'Herns Road. It also depends on whether the O'Herns Road overpass is treated as arising from the carrying out of the purpose for which the claimant's land was acquired. If so, the prospect of an overpass must be disregarded in assessing market value pursuant to s 43(1)(a) of the Act.

32. 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.

33. Resolution of each of the above issues has a bearing on the amount of compensation to be awarded for market value and severance in accordance with the Act. Accordingly, I first outline the evidence and findings in respect of each of the abovementioned issues, before turning to the valuation evidence relied on by each of the parties to the proceeding.

Mr Milner's Evidence concerning the Overpass at O'Herns Road

34. Mr Milner holds an honours diploma in town and country planning. He has more than 30 years' experience as a town planner and more than eight years' experience as a planner in local government.[26] In this proceeding, Mr Milner provided two reports to Roads Corporation, dated December 2011 and 29 July 2012, and gave evidence at trial. He was the only expert witness to give evidence in relation to whether the hypothetical purchaser of the land at the relevant date would expect that an overpass at O'Herns Road would be constructed.

35. In his first report, Mr Milner was asked by Roads Corporation to answer the following:

In your opinion, was the O'Herns Road overpass part of the 'proposal' the purpose for which the Claimant's land was acquired?
You are instructed to assume (for the purposes of your answer to the preceding question) that the 'O'Herns Road overpass' comprises an elevated crossing over the Bypass at O'Herns Road with no ramp connections to the Bypass.[27]

36. Mr Milner's answer to the above was as follows:

The Claimant's land was acquired for the purpose of an urban, closed diamond interchange with the Craigieburn Bypass, not the O'Herns Road overpass.

The O'Herns Road overpass is wholly contained within the original road reservation of O'Herns Road. The intended connection to the Bypass would be located on that land.

The Explanatory Report of Amendment C44 to the Whittlesea Planning Scheme, for which VicRoads was the planning authority and the proponent, makes the following statement in relation to the O'Herns Road overpass:

Initially, the existing 2-lane 2-way development standard would be suitable for O'Herns Road, within its current reservation (with the exception of the proposed interchange works that would extend into the properties on either side of O'Herns Road), supported initially by an overpass bridge across Craigieburn Bypass, with no ramp connections to the bypass.

Furthermore, the Explanatory Report reiterates the Epping North Strategic Plan, 2002, stating that a 49 metre wide reservation would be required for the duplication of O'Herns Road and that additional width would be obtained along the north side of the existing road reserve.[28]

37. As stated above, the term 'overpass' refers to a bridge spanning over the Bypass that does not connect or integrate with the Bypass, whereas an 'interchange' embodies an overpass and connecting ramps on and off the Bypass.

38. In one respect, Mr Milner amended the evidence in his first report: O'Herns Road is not wholly contained within the original road reservation, but rather a short section of the road, as it passes over the Bypass, deviates on an abutting alignment to the north of the reservation.[29] The reference to the 'north side' of the existing road reserve being used for the duplication of O'Herns Road is significant, as Mr Love's land is located to the south of O'Herns Road. It follows that, if Mr Milner's evidence is accepted, any additional width required for O'Herns Road would not form the basis for the acquisition of Mr Love's land.

39. As to the Explanatory Report of Amendment C44 to the Whittlesea Planning Scheme and the Epping North Strategic Plan referred to above, these documents form part of the planning history of Epping. The 2002 Epping North Strategic Plan and Local Structure Plan (Plan 7) was prepared to consolidate previous policy statements and provide a framework to guide development in Epping North.[30] In late 2002, Amendment C44 to the Whittlesea Planning Scheme (Plan 4) was exhibited.[31] Amendment C44 applies a Public Acquisition Overlay to land in the City of Whittlesea on either side of O'Herns Road to facilitate provision of an urban, closed diamond interchange, as proposed by VicRoads.[32]

40. In his second report dated 29 July 2012, Mr Milner noted that he had been asked by the Roads Corporation whether:

in the context of the various documents referenced and attached to [the Roads Corporation] letter [dated 27 July 2012], if I am still of the opinion that the claimant's land was acquired for the purposes of an urban closed diamond interchange with the Craigieburn By-pass and not the O'Herns Road overpass. In particular your inquiry appears to be premised upon two separate considerations.

Does the fact the O'Herns Road overpass has been built outside the O'Herns Road reservation suggest that the overpass was integral to the interchange and the acquisition of land arising from Amendment C44 to the Whittlesea Planning Scheme?
Do the references to the Vearings Road overpass no longer being required because of the interchange at O'Herns Road as detailed in the explanatory report, panel report and submissions on behalf of the Corporation to Amendment C44, suggest that in the alternative neither an overpass or interchange would have existed at O'Herns Road and therefore there would have been severance of the claimant's land?

41. The documents attached to the Roads Corporation's letter dated 27 July 2012 are as follows:

(a) the Whittlesea Planning Scheme Amendment C44 O'Herns Road Interchange Panel Report dated March 2003;[33]

(b) the Submissions made to the Amendment to the C44 Panel on behalf of the Roads Corporation dated 17, 18 and 28 February 2003; and

(c) an aerial photograph of land after the construction of the bypass, with red lines depicting the alignment of O'Herns Road prior to the bypass and blue lines depicting the area of the acquisition for the O'Herns Road interchange.[34]

42. Mr Milner provided the following answer in relation to whether the overpass was integral to the interchange and the acquisition of land arising from Amendment C44:

as referenced in the Explanatory Report to Amendment C44, the intention of the proponent was to provide a two land / two way road in the form of an overpass bridge within the current reservation of O'Herns Road. The adjoining land was identified for proposed later interchange work. On that basis the amendment was not to enable a road reservation for an overpass. The extent of the proposed Public Acquisition Overlay provided for land required for the later ramp connections.

It might be put that at a later date a widened four lane overpass / road was seen as required on O'Herns Road and therefore adjoining land was required to provide the widened overpass, regardless of any later interchange. In those circumstances additional adjoining land would have been publicly acquired but the strategic transportation planning for the area provided for that to be located on the north side of O'Herns Road and not on the claimant's land, to the south.[35]

43. In his oral evidence, Mr Milner was also asked his opinion as to whether or not an overpass would have been anticipated in the 'before' circumstance even if he had to disregard the prospect of an interchange at O'Herns Road or interchanges at both O'Herns Road and Vearings Road. His evidence was that he considered that there would have been an overpass at O'Herns Road regardless.[36]

44. The second consideration identified by Mr Milner in his report dated 27 July 2012, relates to whether, if a decision were made to locate an overpass at Vearings Road, neither an overpass nor interchange would exist at O'Herns Road, meaning that O'Herns Road would be truncated. Vearings Road runs north-south, perpendicular to O'Herns Road. This issue arose as 'documentation associated with Amendment C44 appears to indicate that since provision had been made for an overpass of the ... Bypass at Vearings Road, in the form of a Public Acquisition overlay gazetted to an [earlier] ... Amendment C23 [to the Whittlesea Planning Scheme], there has also been a decision not to have an overpass at O'Herns Road'.[37] Mr Milner's response to this consideration is as follows:

documentation associated with Amendment C44 appears to indicate that since provision had been made for an overpass of the ... Bypass at Vearings Road ... there had also been a decision not to have an overpass at O'Herns Road.

In the circumstances an informed hypothetical purchaser of the claimant's land in the 'before' situation might have assumed that the east and west sides of the claimant's land were severed by the Bypass and that would have influenced and diminished the value placed upon the land due to the indirect and significantly extended access to the western portion of the claimant's land ....

[However] the Explanatory Report to C44 was the first time that reference had been made to the Vearings Road overpass being provided instead of an overpass at either Harvest Home Road or O'Herns Road. The references to the same point in both the Panel Report and the submissions made on behalf of the Roads Corporation to the Panel essentially replicate the words and language in the Explanatory Report.

From my analysis the City of Whittlesea has always sought an overpass / interchange at O'Herns Road regardless of Vearings Road. Any uncertainty about the preferred position of Council and Vic Roads was clarified with the adoption of the April 2002 Whittlesea Strategic Transport Infrastructure Report.

Accordingly a prospective hypothetical purchaser could not reasonably have come to a view that there would not have been at least an overpass at O'Herns Road in the before situation.[38]

45. In reaching the above conclusion, Mr Milner provided an analysis of the planning documents and history as follows:

(a) from the outset of proposals for the Bypass, the City of Whittlesea has strongly favoured an arterial road overpass and interchange at O'Herns Road. It adopted this approach on the basis that, in conjunction with Cooper Street, O'Herns Road would effectively and efficiently service the new and emerging residential and industrial precincts at Epping North and Cooper Street.[39] In contrast, after a certain time, the role of Vearings Road as a potentially significant local urban access role was reduced;

(b) putting aside the C44 planning documents and submissions, Mr Milner could find no reference in planning documents to a closure of, or lack of need for an O'Herns Road overpass because of a crossing of the Bypass at Vearings Road;[40]

(c) in 1999 and 2000, Freeway Advisory Committees called upon VicRoads to clarify its position and review the merits of an interchange on or in the vicinity of O'Herns Road;

(d) while between 2000 and 2003 strategic, structure and infrastructure plans showed indicative and possible realignment of O'Herns Road, this realignment was always subject to VicRoads' review and the existing alignment of O'Herns Road was the default position; and

(e) by the time of the April 2002 Whittlesea Strategic Transport Infrastructure Report, there was no discussion about the role of Vearings Road but every expectation that access would be provided across the freeway at O'Herns Road.[41]

46. In his oral evidence, Mr Milner reiterated the importance of an overpass at O'Herns Road, when having regard to the three broad themes in the planning history of Epping, being planning for employment, residential growth and the primary arterial road network serving the northern part of Melbourne.[42] He gave evidence that:

(a) O'Herns Road is important because it separated residential areas to the north from the industrial area to the south; [43]

(b) an overpass at Vearings Road was not an alternative to O'Herns Road in terms of crossing the Bypass because Vearings Road ran north-south, whereas O'Herns Road and Harvest Home Road ran parallel to each other and, therefore, Vearings Road was never functionally a substitute for an east-west Road;[44] and

(c) if access at O'Herns Road were not reinstated, Mr Milner said:

For these properties the distance and therefore time travel to local shops and areas and other areas such as those located in Epping Plaza Shopping Centre on the Eastern side of the Bypass would be increased. That is a core issue. Even if, at the end of the day, you weren't to find any evidence that at some point the existing road reservation on O'Herns Road had been there at the very beginning, pre 1999. It was there at the end as a road reservation, and ... the residence or the businesses that existed on the west side of the highway would have been grossly affected by a requirement that they can no longer move to the east but had to go to north over the freeway on a road that wasn't existing all the way to Craigieburn Road to have to come back again down Epping Road to get to the services that are required. Therefore I have formed a view that there is no evidence pre the Panel Explanatory Report to C44 that ever intended that Vearings Road was a substitute for even the absolute minimum of an overpass at O'Herns Road.[45]

Submissions in Relation to the Existence of an Overpass at O'Herns Road

47. The Roads Corporation submits the hypothetical purchaser would be aware and would proceed on the basis that O'Herns Road, which was otherwise severed by the Bypass, would be rebuilt as an overpass. It reiterated the evidence of Mr Milner that:

in his opinion Vearings Road was not an alternative in terms of crossing the Bypass to O'Herns Road because Vearings Road ran north south whereas O'Herns Road and Harvest Home Road ran parallel to each other. Accordingly, Vearings Road was never functionally a substitute for an east west Road.[46]

48. As I understand it, in dealing with the effect of s 43(1)(a) and the 'purpose' for which Mr Love's land was acquired, the Roads Corporation did not urge the Court to adopt Mr Milner's definition of the purpose of the acquisition contained in his first report. That is, that the land was acquired for the purpose of an urban, closed diamond interchange with the Bypass. Rather, the Roads Corporation submitted that:

The comprehensive evidence provided by Mr Milner upon which the Court should proceed leads only to one conclusion, no matter what view is taken as to the ambit of the 'proposal' which must be disregarded. Namely, that a hypothetical purchaser at the relevant date would have expected there to be a bridge constructed over the Bypass in the 'before' circumstance. That is an expectation that the hypothetical purchaser would have disregarding the proposal, no matter how the 'proposal' is defined or viewed for the purposes of the application of section 43(1)(a). In light of Mr Milner's evidence and his conclusion there is no need for the Court to define what constitutes the 'proposal' the impact of which must be disregarded. That is so because whatever view is taken there would have been [an overpass].

It follows that in considering the 'before' circumstance, the Court should proceed on the basis that there would have been [an overpass] ... at O'Herns Road. The valuation evidence should be approached on that basis.[47]

49. In making this submission, the Roads Corporation relied on Mr Milner's oral evidence that an overpass would be constructed, regardless of whether an interchange or interchanges were to be built at O'Herns Road and Vearings Road.

50. Counsel for the Roads Corporation also referred to the judgment of Osborn J in McCann v Roads Corporation.[48] In this case, his Honour was faced with the task of identifying the 'proposal' for which the land was acquired, which, in that instance, was the Geelong Bypass. Osborn J then determined what events and matters should be disregarded in consequence of that proposal, being matters or events that impinged upon market value. In that case, the issue was in determining what zoning would have applied to the claimant's land in the absence of the proposal for the Geelong Bypass, which can be traced to strategic planning in 1959.[49] His Honour noted that the words 'arising from' contained in s 43(1)(a) are broad in terms of what must be disregarded, and that, 'it will be a question of fact as to whether particular planning scheme provisions are to be regarded as resulting from the proposal for the bypass or not'.[50] Osborn J found that in the 'before' situation, in the absence of the Geelong Bypass proposal, the claimant's land was ripe for residential rezoning.[51] However, as to certain 'structure planning' prior to the relevant date, Osborn J found that such planning 'would have occurred whether or not the [Geelong] Bypass proposal had proceeded'.[52] Counsel for the applicant submitted that:

there are some parallels here [to McCann v Roads Corporation] ... here what's happened is that, in fact, the [overpass] was built as part of the works, whether associated with the bypass or associated with the ... interchange ... And so the question here is ... in looking at the before circumstances, if there was no proposal would that bridge have been built anyway?

... we say that Your Honour doesn't have to identify with any precision what was the proposal [for which the land was acquired]. Because irrespective of whether the proposal was just to take two little pieces of land for the ramps or whether it was a proposal for the whole interchange, or whether it was a proposal for an interchange at O'Herns Road ... it doesn't matter because for the reasons that Mr Milner gave ... there would have been ... an overpass [in any case].[53]

51. In his opening written submissions, Mr Love's position was that an informed hypothetical purchaser in the 'before' scenario would have known about the recommendations and plans set out in the Amendment C12 Report.[54] The hypothetical purchaser would have done further investigations and concluded that 'the O'Herns Road Overpass/Interchange, if it were to be moved from Vearings Road, would have been placed to the north of O'Herns Road'.[55] In turn, 'the purchaser would have considered that he had access from the Love land to the west of the Hume Freeway without having lost direct access to O'Herns Road through severance'.[56] In his closing submissions, Mr Love stated that:

The evidence of Mr Milner was that as a matter of fact there was not an overpass at O'Herns Road at the date of acquisition. However, he was of the view that in the before scenario a hypothetical purchaser would have anticipated one constructed as it currently is before the Love land would be ready for urban development. ... He advised the court that while this was his view, the last publicly available document which could be used to form a view on this issue, the Whittlesea Transport Infrastructure Study, dated April 2002 included a plan at figure 36 within it which showed a proposed O'Herns Road Interchange to the north of O'Herns Road.[57]

Whether the Hypothetical Purchaser Would Expect an Overpass at O'Herns Road

52. Mr Love's submissions do not, in my view, undermine Mr Milner's evidence or findings. As is outlined above, Mr Milner expressly stated that O'Herns Road is not wholly contained within the original road reservation. He considered the relevant planning history, including the Whittlesea Transport Infrastructure Study, and gave a cogent explanation as to the views of a hypothetical purchaser in the 'before' scenario.

53. I accept Mr Milner's evidence that an overpass at Vearings Road was not a viable alternative to an overpass at O'Herns Road. In my view, in the 'before' scenario, the hypothetical purchaser would not have expected an overpass at Vearings Road to be implemented as an alternative to an overpass at O'Herns Road.[58]

54. As to s 43(1)(a) of the Act, in my view the correct approach is for the Court to identify the purpose for which the land was acquired, before turning to consider any increase or decrease in the market value of the interest in land which is acquired arising from the carrying out, or the proposal to carry out, the purpose for which the interest was acquired. The Court should not avoid identification of the purpose for which the land is acquired. To do so would mean that the Court has no basis upon which to make a finding as to whether an event or matter 'arises' from the purpose. Identification of the purpose is a question of fact to be determined by this Court. In the present case, I accept the evidence of Mr Milner that the 'purpose' for which the land was acquired was for ramp connections required for interchange works.

55. The question then is whether the overpass at O'Herns Road arises from the purpose for which the land was acquired. Mr Milner's evidence is that the overpass would have existed whether or not an interchange was constructed. In my view, this evidence supports the conclusion that the overpass did not arise from the purpose for which the land was acquired. The hypothetical purchaser would have anticipated an overpass irrespective of the interchange. In coming to this conclusion, I adopt what was said by Gobbo J in Coastal Estates Pty Ltd v Bass Shire Council: the Pointe Gourde principle underpinning s 43(1)(a) of the Act 'is not designed to protect the owner from a disadvantage he would have suffered in any event or to deprive him of a benefit he would have enjoyed in any event'.[59]

56. For the above reasons, in considering the 'before' circumstance, I find that the hypothetical purchaser would have expected there to be an overpass constructed at O'Herns Road. The valuation evidence should be approached on that basis.

57. On behalf of the Roads Corporation, Mr Milner, Mr Kenneth Douglas Adams and Mrs Kathryn Lee Partenio provided expert evidence as to access to Mr Love's land. Mr Love did not rely on any expert evidence in respect of access to his property.

58. In his first report, Mr Milner was asked by Roads Corporation to answer the following question:

Assuming that the highest and best use of the eastern portion of the Claimant's land (in the after situation) is future industrial use, is a service road (and road frontage) as claimed by Mr Love necessary for the subdivision of that land for industrial use?[60]

59. Mr Milner's evidence is that approximately half of the O'Herns Road frontage of the western portion of the subject site is encumbered and constrained by the overpass, preventing direct access onto O'Herns Road. The other half has the potential for direct access. While a service road would be optimal, in Mr Milner's opinion, it was not necessary. The preferred site development strategy and access solution would be to have a central access in to the overall property, located approximately centrally across the frontage. In overall land development terms, a service road option to the O'Herns Road frontage detracts from the net area of the land available for development and therefore is unlikely to be the preferred commercial outcome.[61]

60. Mr Adams is a licensed surveyor and, prior to his retirement, was employed by the Roads Corporation for 41 years.[62] During the course of his employment, Mr Adams undertook numerous surveys in relation to compulsory acquisitions, and he was personally involved in surveying Mr Love's land.[63] Mr Adams's affidavit evidence concerning the western land is as follows:

(a) after construction of a freeway or road, as the case may be, the Roads Corporation prepares a plan of declaration;

(b) that plan depicts the classification of the road, whether as a municipal road or freeway or some other kind of road;

(c) the classification has bearing on whether access will be permitted to the road reserve. If classified as a freeway, access tends to be restricted, while if classified as a municipal road, other than for safety reasons access is permitted or reinstated (as the case may be);

(d) he prepared the plan of declaration dated 6 December 2005 in respect of the Bypass and O'Herns Road acquisitions; and

(e) the plan shows that O'Herns Road is a municipal road and that there is no restriction on access imposed on Mr Love's land insofar as it fronts O'Herns Road. In relation to a municipal road, such as O'Herns Road, access is usually reinstated in all circumstances save for where there may be a safety hazard which is assessed by a qualified traffic engineer. He understands that in Mrs Partenio's opinion, no issue of safety arises in reinstating access on the western side of the Bypass;

(f) in relation to the eastern land, in the 'before' situation the frontage to Mr Love's land is approximately 800 metres. In the 'after' situation, the frontage is approximately 370 metres;

(g) in relation to the western land, in the 'before' situation the frontage to Mr Love's land is approximately 275 metres. In the 'after' situation, the frontage is approximately 145 metres.[64]

61. At trial, Mr Adams was cross-examined by Mr Love as to the evidence contained in his affidavit. Mr Adams confirmed that in his evidence as to the frontage of the western land to O'Herns Road in the 'after' situation, he is referring to the declared O'Herns Road, which is not necessarily where the road is physically.[65]

62. Mrs Partenio is a traffic engineer and traffic planner and holds a Bachelor of Engineering and a Graduate Diploma of Transport and Traffic Engineering.[66] Mrs Partenio provided two reports to the Roads Corporation:[67] the second report, dated December 2011, made minor clarifications to the first report.[68] Mrs Partenio's evidence, as contained in her second report, is as follows:

(a) before the acquisition, the western land enjoyed a frontage to O'Herns Road, with vehicle access being located 150 metres from the western boundary of Mr Love's land. After the acquisition, the site access onto the O'Herns Road carriageway has been relocated approximately 130 metres to the west. It is still located along the frontage to the western land that remains in Mr Love's ownership. The street access is approximately 24 metres east of the western boundary of Mr Love's land;[69]

(b) before the acquisition, the form of access to the western land via O'Herns Road would be reasonable for the purposes of rural use, but not for industrial use, as the O'Herns, Harvest Home and Vearings Roads were unsealed gravel roads. After the acquisition, the reinstated access does not cater for a large truck turning or high levels of traffic owing to a tight turning circle, meaning that it is not suitable for industrial use. The access would ultimately need to be upgraded for industrial uses but the same would have been necessary in relation to Mr Love's former access point. However, the reinstated access is tolerable for present rural use, as evidenced by its continuing use since the acquisition;[70] and

(c) the ramps to be constructed at some point in the future, in order to provide for an interchange at O'Herns Road, do not change her assessment.[71]

63. In providing her second report, Mrs Partenio was asked to proceed on the basis of certain assumptions. In the 'after' situation, in the initial stage, Mrs Partenio assumed that there would be an overpass at O'Herns Road; ramp connections would not be built until sufficient land development occurred in the surrounding area; and the ramps would be located close to the Bypass alignment to minimize the total footprint of the interchange.[72]

64. 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.[73] 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.[74] Mrs Partenio stated that she had, however, made a site visit and had observed the overpass as built.[75] 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.

65. 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.[76]

66. The Roads Corporation submitted that the expert evidence of Mr Adams, Mrs Partenio and Mr Milner 'is uncontradicted, should be accepted and should be acted upon' by the Court.[77] The evidence, in their submissions, establishes the following:

(a) the evidence of Mr Milner establishes that the hypothetical purchaser would know in relation to the eastern land that planning policy preferred site development with single access to the overall property, thereby limiting access points to O'Herns Road, a planning strategy that would not be impinged upon by the acquisition of part of the frontage along O'Herns Road for the purposes of the interchange;

(b) so far as access to the western land is concerned, the evidence of Mr Adams and Mrs Partenio establishes that access remains available to Lot 1 after the acquisition, that interim access is workable for rural (and similar) uses and that there is no impediment to constructing access, for industrial sub-divisional purposes, from the subject property, Lot 1, to O'Herns Road. Mrs Partenio establishes that those access arrangements would not be affected when, in the ultimate circumstance, the interchange is constructed; and

(c) based on the evidence of Mr Adams and Mrs Partenio, access would be available to the western land for sub-divisional development whether or not an overpass exists at O'Herns Road. In the 'overpass scenario', access to the western land is the same 'before' and 'after' the acquisition.[78]

67. In relation to Mrs Partenio, Mr Love submits that her evidence:

was in the case of the after scenario (with an interchange constructed) not based upon any supporting engineering drawings of the proposed interchange or any proposed access drawings ... It is submitted therefore that the evidence of [Mrs] Partenio in the after scenario cannot be relied upon because it was in effect a house with no foundations. In the absence of any drawings or other information ... the Court should find that in the after scenario the Love land to the west of the [Bypass] ... should be regarded as having no prospect of gaining a commercial access to O'Herns Road. The land should be treated as effectively land locked for urban development purposes in the after scenario. As [Mrs] Partenio's opinion regarding the same land in the before scenario was supported by engineering drawings and an inspection of what had been constructed it should be relied upon. The land should be treated as not being land locked for urban development purposes in the before scenario.[79]

68. In reply, the Roads Corporation submits that Mr Love's criticism of this aspect of Mrs Partenio's opinion is misplaced. As the ramps have not yet been constructed it should be of no surprise that there are no 'as built' drawings. The absence of such drawing does not alter the cogency and persuasiveness of Mrs Partenio's opinion that, if and when they are built, they will not interfere with Mr Love's access.[80]

69. In relation to Mr Adams, Mr Love submitted that:

The oral evidence of Mr Adams ... was that while his written evidence stated various frontages to O'Herns Road ... the correct interpretation of his evidence was that the frontages quoted were for the O'Herns Road reservation and not necessarily the road itself ... This is an important issue because O'Herns Road rises substantially above natural ground level to pass over the [Bypass]. In the before scenario ... there is still room between the Love land frontage and the currently existing O'Herns Road overpass embankments for motor vehicle access to that frontage. In the after scenario that access is lost beside the proposed interchange and the property boundary has been modified.[81]

70. In reply, the Roads Corporation submits that there is no evidence:

that access is lost and the property boundary has been modified ... Mr Adams addresses the circumstances of what's actually there, and gives evidence that in relation to a municipal road ... access is usually reinstated in all circumstances save where there may be a safety hazard which is assessed by a qualified traffic engineer. And that qualified traffic engineer in the present case is Mrs Partenio and her evidence ... is that access would ultimately need to be upgraded for industrial uses but that would have been necessary in relation to the before circumstances anyway ...[82]

71. I accept the expert evidence of Mr Adams, Mrs Partenio and Mr Milner as outlined above. Together, their evidence establishes those matters referred to above in paragraph [66] of this judgment. 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.

The Valuation Evidence regarding Loss of Market Value and Severance

72. In this proceeding, the Roads Corporation retained two expert valuers, Mr Leslie James Brown and Mr Brian Dudakov. Mr Love retained and, in part, relied upon the expert evidence of Mr Robin Harvey Hocking. On 6 July 2012, all three expert valuers signed a joint report ('the joint report').[83] In addition, each valuer produced individual reports and/or affidavits and gave evidence at trial.

73. The Roads Corporation submitted that compensation for loss of market value and severance was either $400 000, based on Mr Brown's valuation, or $185 000, based on Mr Dudakov's valuation.[84] As stated above, the Roads Corporation submitted that it is 'content for the Court to award compensation in accordance with Mr Brown's assessment in the sum of $400 000 (comprising the market value of the land actually taken and severance to [the] remaining land)'.[85] This assessment was provided in Mr Brown's reports dated 30 September 2003 and 23 July 2012, and proceeded on the basis that before the acquisition, the hypothetical purchaser would anticipate that an overpass at O'Herns Road would be built. The Roads Corporation submitted that, if the Court accepts that an overpass would be anticipated by the hypothetical purchaser, the views expressed in the joint expert report become irrelevant because they were based on the assumption there was no overpass along O'Herns Road over the Bypass and that O'Herns Road was truncated.[86] If the 'before' circumstance is that O'Herns Road was truncated, then the Roads Corporation submitted that the correct amount for compensation under this head of claim is $632 000, as agreed by Mr Brown and Mr Dudakov in the joint report.[87] Given the findings above, namely that a hypothetical purchaser would expect that an overpass would be constructed at O'Herns Road in the 'before' scenario, I consider it unnecessary to detail the evidence of Mr Brown and Mr Dudakov in the joint report. I consider it unnecessary to outline the evidence of Mr Dudakov in his individual reports, as neither party sought to rely on that evidence.

74. As to Mr Love's valuation evidence, Mr Hocking maintains that he proceeded on the basis that before the acquisition the hypothetical purchaser would anticipate an overpass in both his individual reports and in the joint report.[88] In the joint report, Mr Hocking states that in his opinion the amount of compensation payable is $989 000.[89] Mr Love relies in part on the valuation evidence provided by Mr Hocking, but submits that he should be awarded $3 390 230 in total for market value and severance. Mr Love also relies on the evidence of Mr Alan Henry Rae in relation to the cost of constructing a service road along O'Herns Road, although his final particulars of claim do not include this amount.[90] Mr Love's own evidence in respect of the figures calculated by him will be addressed in due course.

75. Mr Brown is a certified practising valuer and a fellow of the Australian Property Institute.[91] He has practised as a valuer for some 30 years.[92]

76. As stated above, the Roads Corporation relies on Mr Brown's reports dated 30 September 2003 and 23 July 2012, in the event that the Court finds that a hypothetical purchaser would expect that an overpass would be constructed at O'Herns Road. In view of the findings made above, I shall deal only with these reports. In preparing the latter report, Mr Brown was provided with, and relied upon, the expert evidence of Mrs Partenio, Mr Adams and Mr Milner. In assessing compensation in his reports, Mr Brown also based his opinion on the following:

(a) prior to acquisition, the land was zoned 'rural'. Local development planning indicates that the eastern land is proposed to be developed for 'industrial / business uses', whereas the western land is to be withheld from short to medium term rezoning;[93]

(b) surrounding development is predominately rural with industrial uses and industrial subdivision being developed in parts. In addition, north of the claimant's land, land is being developed for residential purposes;[94]

(c) in his assessment of severance, he expressly factored in an allowance for the lost benefit of trees taken in the acquisition, with such benefit arising whilst Mr Love's land was farmed pending longer term development;[95] and

(d) taking into account sales evidence and the potential for rezoning,[96] he assessed the value of the eastern land at a rate of $150 000 per hectare and the value of the western land at a rate of $77 000 per hectare. In respect of the eastern land, he allowed for severance to the eastern land due to loss of shape and in recognition of the more limited 'after' frontage to O'Herns Road.[97] The lesser rate for the western land is based on an allowance for the less regular shape of the land and the relative complexity of access compared to access before the acquisition.[98]

77. According to Mr Brown and taking into consideration the above factors, compensation of $400 000 should be awarded.

78. In his oral evidence, Mr Brown was referred to the evidence of Mr Rae, and noted that in his view, if there was a requirement for a road to be constructed, this would properly be taken into account in assessing 'after' value.[99] It does not appear that Mr Brown has included a service road in his assessment, although he has factored into his assessment access difficulties after the acquisition.

(a) accepted that, at the date of acquisition, he put a premium on the land that had a frontage to Cooper Street. He noted however, that Northpoint, which had frontage to Cooper Street, was at its embryonic stages and was a satellite development at that point in time;[100]

(b) confirmed that he had proceeded to assess 'after' value on the basis that access to O'Herns Road would be available;[101] and

(c) that he estimated that, in respect of the eastern land, he did not anticipate that the land would be developed for at least 10 plus years. In the interim, he expected the land to be used for primary production in order to retain primary production status for land tax. He guessed that land tax for the acquired land at the date of acquisition would be $350 000. He agreed that trees were important for this interim use and facilitated savings in terms of holding costs. Mr Brown noted that he had considered the impact of the loss of trees in respect of interim use in his valuation.[102]

80. The Roads Corporation submitted that it is on Mr Brown's evidence that the Court should proceed to determine and award compensation.[103] Mr Love's cross-examination served only to confirm the reasonableness of Mr Brown's approach. [104] In particular, he expressly factored into his assessment of severance the lost benefit of trees taken in the acquisition; the less regular shape and relative complexity of access in respect of the western land; and the loss of shape and more limited O'Herns Road frontage in relation to the eastern land.[105]

81. Mr Love submits that the Court should not rely upon the evidence of Mr Brown, for the following reasons:

The evidence of Mr Brown was predicated on the written evidence of [Mrs] Parteneo [sic] and Mr Adams being correct. He advised the Court that if it was found not to be correct he would have to review his analysis for a least [sic] the Love land to the west of the [Bypass] ... Mr Brown advised the Court that his valuation was predicated on development of the Love eastern land not taking place for at least ten years from the date of acquisition ... He also stated that while his valuation for the Love eastern land was based on the development of it proceeding from its southern boundary which was adjoining the Northpoint estate, the urban development of that estate at the date of acquisition was 'embryonic' ... Mr Brown also told the Court that if primary production use of the land could be continued then the land tax savings for [the] owner of the land would be of the order of $350,000 per annum in the after scenario ... There were also potential savings in Council rates. It is submitted that because Mr Brown's valuation evidence was predicated on Mr Adams' written evidence being correct on its face, as well as that of [Mrs] Parteneo [sic], then all of his evidence would have to be rewritten and cannot be relied upon. Further, his evidence as to savings of land tax which would follow from the continued primary production use of the land in the period prior to its development ... supports the proposition that the loss of the amenity trees for shelter is an important matter which underpins the valuation evidence prepared by Mr Stone. ...[106]

82. In reply, the Roads Corporation submitted that it is not open to the Court to proceed other than by adopting the expert evidence of Mrs Partenio and Mr Adams.

83. Mr Hocking is a qualified valuer, a licensed real estate agent, auctioneer and experienced quarry valuer.[107] Mr Hocking prepared reports dated 27 September 2007 and 3 August 2011, and provided a letter of advice dated 30 July 2012. Mr Hocking gave oral evidence that his 'before' assumptions included a bridge at O'Herns Road.[108] He asserted that all of his reports proceeded on that basis. Mr Hocking's letter of advice did not provide figures for market value and severance, but rather responded to questions posed by Mr Love. His report dated 3 August 2011 adopted the same values as those expressed in his earlier report.

84. In his report dated 3 August 2011, Mr Hocking based his opinion on the following:

(a) Lot 3 has direct access from Cooper Street in the south and Lots 1 and 2 had direct access to O'Herns Road. The acquisition of land seriously affects the access to O'Herns Road for Lot 2, by removing in excess half of the frontage to O'Herns Road. When the interchange is constructed it is expected that access from Lots 1 and 2 to the ramps on the east and west of the interchange will be prohibited;

(b) Mr Hocking notes that, if he is correct with the interpretation of the future works for the on and off ramps, Lot 1 will have no physical access to a road way and will have to rely on access to Cooper Street through Lot 3, while Lot 2 will have access to O'Herns Road restricted to only 368 metres to the north east corner of the allotment. This may require construction of a service road, but this road, if required, is not included in the valuation assessment. Mr Hocking considers Lot 1 to be now landlocked;

(c) at the acquisition date, the highest and best use of Lots 1, 2 and 3 is for land banking with development at some time in the future. Lot 2, forming the eastern land, is expected to be developed prior to the western land. The highest and best use of the land is for future industrial development, and it seems reasonable to assume developers would attribute considerable weight to retaining several points of access to a major thoroughfare;

(d) Mr Hocking's view is that there is little sales evidence as at the acquisition date. Mr Hocking relies on a sale of land at 445-75 Cooper Street (opposite Mr Love's land) in 2005 to support his opinion that in 2003 the real estate market was getting stronger; and

(e) Mr Hocking did not provide any valuation in respect of Mr Love's claim relating to the loss of trees.[109]

85. Based on the above, Mr Hocking's evidence is that compensation of $1 246 550 should be awarded, calculated as follows:

(a) in the 'before' scenario, the value of the land is $13 680 550 comprising:

(i) Lot 1, valued at $1 535 500 or $50 000 per hectare;

(ii) Lot 2, valued at $13 680 550 or $160 000 per hectare; and

(iii) Lot 3, valued at $2 085 850, or $65 000 per hectare.

(b) in the 'after' scenario, the value of the land is $12 434 000 comprising:

(i) Lot 1 and 3, together valued at $3 071 000 or $50 000 per hectare; and

(ii) Lot 2, valued at $9 363 000 or $150 000 per hectare.[110]

86. Mr Hocking varied his assessment in the joint report. In this report he stated that compensation of $989 000 should be awarded as follows:

(a) in the 'before' scenario, the value of the land is $15 548 750, comprising:

(b) in the 'after' scenario, the value of the land is $14 559 800, comprising:

87. In arriving at the above figures in the joint report, Mr Hocking noted that, in respect of the western land, the acquisition reduced the flexibility of being able separately to sell each parcel of land.[112] In respect of the eastern land, Mr Hocking considered that the acquisition results in the loss of almost all effective access to O'Herns Road.[113] In his oral evidence, Mr Hocking notes that, in the joint report, 'I have given in to the other two valuers and agreed that Lot 3 [forming part of the western land] on the Cooper Street highway did not have any adverse effect or any severance effect because of Lot 1. So that affected my calculations of compensation fairly seriously because that's quite an important block of land down there '.[114]

88. Finally, in a letter to Mr Hocking dated 26 July 2012, Mr Love put the following scenario to Mr Hocking:

In the Scenario where it would have been anticipated by a hypothetical purchaser that prior to this acquisition, there would have been an overpass on O'Herns Road where the current overpass is located, what would have been the before and after values of the Love property? Your report is to separately identify the before and after values of the Love land actually acquired and the remnant land to the east and west ... and to provide a total before and after value.[115]

89. In response, Mr Hocking confirmed his view is that the 'before' value is $15 548 750, as stated in the joint report.[116] As the 'after' value, Mr Hocking notes that, in the joint report, his opinion was that the value of the land should be reduced by no less than 5 per cent.[117] However, Mr Hocking states that 'I offer my concern that the residual land in the "after" could have had a severance affect [sic] more in the range of 10 [per cent]'.[118] He notes that the 'after' values are difficult to assess at the relevant date, as:

At that dated there was limited knowledge as to:

The future timing for development.
The proposed road works on O'Herns Road and the impact of the interchange.
No firm plans were available at the relevant date as to how the interchange would be constructed.
The restrictions on access to O'Herns Road caused by the acquisition and the future interchange, and the impact on land values.
The height of the overpass, plus the restrictions the on and off ramps would have access.
The lack of a timetable for the construction of an interchange.
The lack of a timetable for any western extension of O'Herns Road to the Hume Highway.[119]

90. In his oral evidence, Mr Hocking stated that '[i]f I had my time over again and redid my valuations, I would [assess the severance affect] at ... 10 per cent. I still believe that the effect on the land as at 2003 was serious'.[120]

91. Mr Love submitted that, because the evidence of Mrs Partenio and Mr Adams cannot be relied upon, Mr Hocking's change of view in the joint report should be disregarded.[121] The Court should instead adopt the 'after' value in Mr Hocking's report dated 3 August 2011. [122] Mr Love further submitted that:

[Mr Hocking] told the Court by way of a summary of his evidence that in his opinion the effect of severance on the remnant Love land to the east of the Hume Freeway after the acquisitions was to diminish its value by ten per cent. ... Mr Hocking also stated that given that the Love land along O'Herns Road in the before situation could be developed for retail or other commercial use as opposed to industrial use, its value should be treated as $300 000 per hectare ... It was Mr Hocking's view that the market which would be serviced by the ... eastern land lay to the east in the form of rapidly growing residential areas to the north and east of Epping. While the value of the road costed by Mr Rae has been removed as an extra item of claim ... the amount of approximately $1 million arrived at by Mr Rae supports the $900 000 value decrease of the Love eastern land as suggested by Mr Hocking, that is 10 per cent of $9 million is $900 000 ... [123]

92. The Roads Corporation provided detailed submissions as to why the Court should not adopt the evidence put forth by Mr Hocking,[124] as follows:

(a) Mr Love's characterisation of Mr Hocking's oral evidence, that the value of the land along O'Herns Road in the 'before' situation should be treated as $300 000, is inaccurate. Mr Hocking's evidence was that, if he were looking at the value of the land today, 'I would probably say it would be worth twice as much as my value of $150 000. It would be worth at least $300 000 per hectare'.[125] The estimate of the present value of the land is not relevant;[126]

(b) Mr Hocking gave oral evidence that his 'before' assumptions included a bridge at O'Herns Road. He asserted that all of his reports proceeded on that basis. If they did then he clearly misunderstood the implications of a bridge over the Bypass, those implications for access being apparent from the aerial photograph.[127] Yet upon reading Mr Hocking's two reports and the joint report to which he is a signatory it seems plain that he approached the 'before' value exercise on all three occasions on the assumption that O'Herns Road was severed. By way of example, this appears from the fact that he discusses the loss of eastern land frontage to O'Herns Rd, 1001.5m in the 'before' and 368.22m in the 'after'.[128] If there were an overpass in the 'before' the frontage would not be 1001.5m, the land would have frontage to an embankment across approximately 50 per cent of the northern boundary.[129] The joint report was clearly written on the premise that O'Herns Road was truncated;

(c) in his oral evidence, Mr Hocking did not display any particular familiarity with valuing land with a highest and best use for future industrial or CDZ2 development. Nor was his evidence convincing when viewed from the perspective of his methodology. His initial valuation report did not identify any comparable sales.[130] After he was provided with the valuation reports of Mr Dudakov and Mr Brown he did not discuss the sales evidence identified by them,[131] and his opinion as to value and as to compensation remained unchanged.[132] He displayed a failure to grasp the concept of a comparable sale, seeking to defend agreed 'before' land values of $150 000 per hectare for the eastern land in 2003 by reference to a sale of the same land eight years later.[133] Such an approach to comparability fails to give any meaningful weight to the passage of time, the date of comparable sales being a matter to which s 5A of the Valuation of Land Act 1960 expressly refers;

(d) in cross-examination Mr Hocking refused to accept and, beyond that, to countenance an independent expert opinion based upon the opinions of Mrs Partenio, Mr Milner and Mr Adams as to the availability of access in the 'after' to both the western and the eastern land. He displayed an intransigence that was not of assistance to the Court when called upon to perform an expert witness role. Such intransigence reflected an over-pessimistic and unrealistic view of 'after' access conditions leading to excessive allowances for severance. In the west, he refused to accept and nor did he express an opinion as to value on the assumed basis that access from O'Herns Road was not prohibited and Lot 1 was not 'landlocked'.[134] His opinion as to western land severance was on the premise that the only legal access was via Lot 3, with the consequence that Lots 1 and 3 could only be sold together.[135] That opinion is contrary to the expert evidence of Mr Adams and Mrs Partenio and cannot be acted upon. It is the entire basis for his allowance of $481 350 for western land severance in his first and second report.[136] It also explains why Mr Hocking's western severance allowance in the joint report is much higher than the corresponding allowance by Messrs Brown and Dudakov in that report;[137] and

(e) on the eastern side of the Bypass, Mr Hocking disclosed a lack of appreciation of planning routinely part of industrial sub-divisional development. He assumed that a purchaser in the 'before' circumstance would be entitled to multiple road access points from Lot 2 to O'Herns Road. The expert planning evidence of Mr Milner is to the contrary. Mr Hocking also saw O'Herns Road as a major opportunity for retail and similar development in the 'before' circumstance. He may well be correct in the ultimate 'after' scenario once the interchange is fully constructed but not so in the 'before' where O'Herns Rd is a secondary local road and where industrial traffic seeking access to the freeway or to the ring road must first travel a continuous and heavily trafficked route through Epping and then back via Cooper Street.[138]

93. As stated above, Mr Love contends that he should be paid $3 390 230 calculated as follows:

(a) $325 400 for the market value of the acquired land, being $188 000 for the eastern land and $137 400 for the western land;

(b) $2 121 780 for the loss in value of the unacquired western land due to severance; and

(c) $943 050 for the loss in value of the unacquired eastern land due to severance.[139]

94. The amount of $325 400 claimed by Mr Love for the market value of the acquired land, both before and after the acquisition, was calculated by valuing the eastern land at $300 000 per hectare and the western land at $100 000 per hectare.

95. In respect of severance, Mr Love maintained that he derived an 'after' value for the western land of $2 121 780 by using the valuation determined by Vickery J in the Cooper Street proceeding and adding an inflation figure of 30 per cent into the calculation. In determining an inflation rate of 30 per cent, Mr Love stated that he relied on the evidence of Mr Hocking to the effect that this figure represented the inflation rate between the second acquisition and the third acquisition. Applying this method, Mr Love valued the western land at $5 261 490 and then calculated that the land comprising 62.7942 hectares valued at $50 000 per hectare should be deducted from that amount thereby reaching the claimed amount of $2 121 780. As to the figure of $943 050, Mr Love maintained that this figure was calculated as 10 per cent of the agreed 'before' valuation of $9 429 750 for the land east of the Bypass. He submitted that the basis of calculating this figure was Mr Hocking's evidence, that, due to severance, the value of the land would be reduced by 10 per cent.

96. Finally, as to the evidence of Mr Rae, Mr Love stated in his closing that:

the road claim ... is not being persisted with. The claim for the eastern land severance is based purely on Mr Hocking's evidence. So Mr Rae's evidence is being treated if you like as providing a quantum of money, which I would argue would support Mr Hocking's contention regarding the effect of severance.[140]

Findings as to Compensation for Market Value and Severance

97. In my view, the expert evidence of Mr Brown, as contained in his reports dated 30 September 2003 and 23 July 2012, should be preferred over the evidence of Mr Hocking.

98. Mr Brown's valuation takes into account the expectation of the hypothetical purchaser that an overpass would be constructed.[141] He provided an allowance for severance, including the relative complexity of access in the 'after' scenario and the impact of the loss of trees in the interim situation. He provided and based his assessment on comparable sales in accordance with s 5A(2) of the Valuation of Land Act 1960. Mr Love's main criticism of Mr Brown's evidence is that he based his assessment on the expert evidence of Mr Milner, Mr Adams and Mrs Partenio. Given that the Court accepts the findings of those experts, this criticism has no force.

99. Mr Hocking's report dated 27 September 2007 did not identify comparable sales. His second report dated 3 August 2011 referred to one sale taking place in 2005, some two years after the acquisition. While it is a question of fact for the Court in each case as to what is the appropriate method of valuation, the comparable sales method is ordinarily preferred.[142] In any case, Mr Hocking altered his view in respect of access to Lot 3 in the joint report and adopted instead the 'before' value of Messers Dudakov and Brown. The difficulty with this value is that it is based on the hypothetical purchaser's viewing O'Herns Road as truncated in the 'before' scenario. Given the findings above, the basis of the 'before' value in the joint report does not stand, but nor do Mr Hocking's earlier assessments, given that he revised his views in the joint report as to access in the 'before' scenario. As for Mr Hocking's revised 'after' value in the joint report, it was based on his more pessimistic views in respect of access, as compared to Messrs Dudakov and Brown. In his oral evidence, Mr Hocking asserted that an even greater allowance for severance was warranted than the allowance provided by him in the joint report. In my view, Mr Hocking does not have a sound basis for his assessment of access difficulties in the 'after' scenario. It is at odds with the expert evidence of Mr Milner, Mr Adams and Mrs Partenio.

100. Finally, in my view, there is no evidence to enable the Court to make such an award of compensation for market value and severance as sought by Mr Love. As to the acquired land, there was no evidence that, at the relevant date, the eastern land was valued at $300 000 per hectare. Mr Love is not assisted by Mr Hocking's evidence that, today, the eastern land is worth $300 000 per hectare. Mr Love's reference to a value of $100 000 per hectare for the western land is also misconceived. This figure was relied upon in the joint report, but is premised on there being no overpass in the 'before' scenario. As the appropriate allowance for severance, there is no basis for the Court simply to apply an inflation rate to the value of the western land in order to calculate the severance effect. Finally, in calculating the severance effect on the eastern land, Mr Love relies on the 'before' value of the land as assessed in the joint report, which is again premised on there being no overpass in the 'before' scenario. He also relies on Mr Hocking's suggestion that, if he had his time again, he would value the severance effect at 10 per cent. As stated above, I do not accept Mr Hocking's assessment as to the degree of difficulty of access in the 'after' scenario.

At a glance

Court

Decision date

Before

Source

Judgment (381 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (8)