Prior v Kemp [2001] WASCA 363

HEARD : 14 MAY - 6 JUNE, 11-27 JUNE, 2 & 3 JULY 2001

Prior v Kemp [2001] WASCA 363 | Case summary | Zoe

[105]

"It is, of course, to be valued in cases of compensation with the view to ensuring that the actual value contained in the land is replaced in the hands of the owner by an equivalent amount of money. The value must therefore be the value to the owner which the land possessed to him in its condition at the date of resumption. That value was necessarily affected by all the advantages which the land possessed and these might be a matter of future or even contingent enjoyment. Future advantages or potentialities must not be excluded. At the same time the value of these things must be assessed according to the condition of the land as it stood at the time of resumption: 'it is the present value alone of such advantages that falls to be determined': Cedars Rapids Manufacturing & Power Co v Lacoste [1914] AC 569 at 576. You must not notionally bring what is only potential into actual being and value it as if it existed.

In the case of the land in question no steps had been taken for sub-division. It was necessary to survey it, to prepare plans for sub-division, to obtain the consent of the local authority, to make streets or roads and then to place it upon the market. As the land stood it was incapable of sale in sub-division and it was necessary to make improvements or alterations in its physical condition before the sub-divisional prices could be obtained. In those circumstances it could not be sold in sub-division at the time of resumption. It was not therefore possible to ascribe to the owner possession of the present value of its sub-divisional potentialities on the footing that all you should do is to estimate what he would gain if he sub-divided the land at a future date and reduced the result to its then present value. This means too that the conclusion is clearly right which the learned Judges of the Supreme Court expressed in the passage already quoted from their judgment, viz: '... the only sale that could be considered is a sale of the land as it was at the date of resumption, that is un-subdivided, but having the clear potentiality that it was fit for sub-division'."

[119]

26 At all relevant times from 1 July 1994 Vincent exercised delegated authority from the WAPC to approve development applications under the MRS for certain purposes. It also had its own powers to grant approvals under its planning schemes. The terms of the delegated authority from the WAPC for MRS purposes required Vincent, in the case of land on or abutting a category 3 road under the MRS, to refer a development application in respect of that land to the referral agency for comment and recommendation before determining the application. Referral was not required if Vincent refused the application. Relevantly, the referral agencies were MRWA or the Ministry for Planning ("MfP") which acted on behalf of WAPC. The views of MRWA and MfP were not binding on Vincent under the delegated authority but in practice were obviously matters to be taken into account by Vincent. Where any recommendations made by MRWA or MfP were acceptable to Vincent it was authorised to act accordingly as the deciding authority both for MRS purposes and under its own planning schemes. Where, however, a recommendation of MRWA or MfP was "not acceptable to" Vincent for MRS purposes, under the instrument of delegation from WAPC the application was to be forwarded by Vincent to the WAPC "for determination". It is to be noted that MfP provided expert advice to the WAPC and provided its administrative support. Officers of the Transport Planning Branch of MfP routinely dealt with development applications involving vehicle crossovers/driveways which were referred by local government authorities including Vincent and provided the comments and recommendations to the local government authority. Where an application came to be referred to the WAPC the same officers reported with recommendations to the WAPC when it came to consider and determine the application. It is to be noted that there are statutory avenues of appeal both for the purposes of the MRS and Vincent's planning schemes if a development application involving a crossover/driveway is refused. A formal application, independently of a development application, could also be made to Vincent for the approval of a crossway/driveway. This too was subject to appeal rights. It is unnecessary for present purposes to consider this in detail.

[140]

41 This constituted, in my finding, an unequivocal indication of the attitude of Vincent at that time and of the decision it would make, subject to MRWA and MfP also approving, were there to be a formal development application made. It is properly described in the evidence in my view as an approval in principle. Vincent informed the plaintiff that it would approve the construction of a crossover subject to three conditions. The first required the crossover to be no less than 12 metres from the intersection of the western boundary of Lot 116. There was an attempt in evidence and submissions for the plaintiff to say this was uncertain and unclear as it appeared to ignore the existence of the truncation. I find the letter to be entirely clear in its meaning in this respect, a view which is further confirmed by later events. It refers to 12 metres from the western boundary, not to the truncation. At that point of time there had not been any resumption; the truncation was merely the subject of a reservation. The stipulated 12 metres from the western boundary left 5.96 metres to the eastern boundary in which to construct a crossover. The precise location in that 5.96 metres and the width of the crossover would, in the ordinary course, be the subject of detailed proposals in a formal development application and would be the subject of precise decision and approval at that stage. It is to be noted that the relevant plan informally submitted at that time by the plaintiff as the basis for his enquiry was for a two storey office development with 18 car bays in a basement parking area. It is clear from the terms and the evident purpose of each of the three conditions, as it is from the general body of evidence, and it is my finding, that Vincent was then well aware of the planned corner location of Lot 116 and of traffic safety issues relating to a two way crossover access from Newcastle Street to Lot 116 in the position stipulated by Vincent. The other two conditions stipulated by Vincent, left turn only on exit and the extension of the existing median island to ensure this, are, on the evidence, essential to ensuring the safest possible use of a crossover in this position and the 12 metre stipulation assured that an adequate width crossover which allowed for two vehicles to pass each other would be located at a position as far from the Loftus Street corner as practicable, ie adjacent to the eastern boundary of Lot 116.

[162]

49 In my finding, the September and October 1997 correspondence revealed that Vincent, MRWA and MfP, the three relevant authorities, would each approve a two-way crossover located no less than 12 metres from the western boundary of Lot 116, ie within the remaining 5.96 metres of the Newcastle Street frontage of Lot 116 to serve a two storey office development on Lot 116 which development provided for up to 18 car bays in a basement parking area. In my finding, this remained the position as at 1 May 1998 notwithstanding the resumption and for a considerable period thereafter. I am also satisfied on the evidence that in September and October 1997 all three of the authorities were well aware that Lot 116 would be the corner lot by virtue of the duplication of Loftus Street, that the intersection would be controlled by traffic signals, and that the new road layout on the corner would require a truncation of the southwest corner of Lot 116, although in September and October 1997 the precise dimensions of that truncation were still subject to final detailed design. The finalisation of the detailed design did not in my finding introduce any reason for any of these authorities to revoke the decision in principle to approve a crossover/driveway for Lot 116. The three authorities were also well aware of the two metre reservation on the Newcastle Street frontage that might be required for future road widening. It is also my finding that each of these three authorities was also aware of the standard policy requirements for crossover/driveway access near traffic signals and that they would be compromised, with or without the resumption, by a crossover located within 5.96 metres of the eastern boundary of the Newcastle Street frontage of Lot 116, but that each of them was prepared to approve a crossover/driveway notwithstanding this. Despite the vigorous contrary submissions of the plaintiff, in my finding, that is not surprising or unusual. The policy requirements, like the requirements of various national standards which will be mentioned later, were statements of what was desirable in the interests of road safety and of uniformity, but they were not binding legal requirements and, in particular, in established areas such as the present case, where the requirements could not be met, it was usual practice in my finding to adopt a solution which was the most satisfactory that could be achieved. In my finding, the September and October 1997 correspondence of the three authorities discloses that that this was the course then being followed by each of the three authorities and this had not changed as at 1 May 1998.

[164]

51 It is also my finding that, had the plaintiff made a formal development application for an office development on Lot 116, or had a purchaser or an intending purchaser made such an application, on or before 1 May 1998, or later in 1998, a crossover/driveway in that 5.96 metres at the eastern end of the Newcastle Street frontage of Lot 116 would have been formally approved by each of the three authorities, notwithstanding that such a crossover may not have complied with existing policies and national standards in some respect or other. In my finding, the precise width and position of the crossover/driveway, within that 5.96 metres, would have been determined as part of the development application and in light of the design details of the proposed office development and the views expressed by MRWA and MfP in the correspondence quoted. I accept from the evidence that a two way crossover/driveway would have been required, ie one wide enough for two vehicles to pass. I also find that a crossover/driveway within the 5.96 metres would have been approved notwithstanding any turnout requirement which will be mentioned later. I further find that such formal approvals would have been conditioned to require exiting traffic from Lot 116 to turn left into Newcastle Street. In this respect the development of the design of the MRWA works before 1 May 1998 for the intersection, including the provision of a median strip in Newcastle Street, would as a matter of probability have obviated a formal condition being imposed requiring the provision of a median strip at the expense of the owner of Lot 116 in respect of an application made at about that time, or indeed at any time thereafter. The construction of such a crossover/driveway would no doubt have required the repositioning of the SECWA pole mentioned in the correspondence, at the owner's expense. That would have been so until late 1999 by which time the progress of the Loftus Street duplication works would have obviated this as the public work involved conversion to underground power lines and the removal of that pole. The evidence does not enable me to make a finding as to the cost of repositioning the pole.

[176]

61 Even had the 17 March 1999 letter of Vincent been available on or before 1 May 1998 I am satisfied that a hypothetical purchaser of the Spencer type would have accepted from it that satisfactory two way vehicular access would be approved by Vincent at the eastern end of the Newcastle frontage of Lot 116. Obviously, a hypothetical purchaser would be conscious that, as before, this was not a formal decision legally binding on Vincent and would be aware that the precise conditions attached to any formal development approval would, in part, depend on the precise detailed design of the proposed development. Nevertheless, in my finding, a hypothetical purchaser on or before 1 May 1998, who had such an indication of Vincent's position, would be satisfied that formal approval would be obtained and that the conditions attaching to that approval would not differ from those which the letter indicated were likely to be imposed in ways which would significantly adversely affect a two storey commercial office development with undercroft parking. In my finding, had this advice of Vincent of 17 March 1999 been available to a hypothetical purchaser on or before 1 May 1998, the purchaser would not have anticipated that the indicated likely detailed conditions would be productive of any difficulty or change of mind by MRWA or MfP. Indeed, from the evidence I am satisfied that had these more detailed conditions been put forward in October 1997, or at any time between then and 17 March 1999, their general sense could have been acceptable to and approved in principle by both MRWA and MfP. The precise width of the crossover may have led to an exchange of views between MRWA, MfP and Vincent, not so as to lead to a refusal to approve a crossover but because it was clearly a question of finding an appropriate compromise between two competing considerations, and different appreciations of the most appropriate point of compromise might well have been offered. It is entirely hypothetical what might have happened, but what can be gleaned of the approach of the three authorities on or before 1 May 1998, and indeed into 1999, even when viewed in light of the competing views of the traffic engineering experts who have given evidence before me, leaves me quite satisfied that the probabilities clearly were that all three authorities would have quickly settled on an agreed width for a crossover/driveway adjacent to the eastern boundary of Lot 116. That agreed width would have been a figure between 5.0 metres and 7.5 metres and would have satisfied the needs of a hypothetical purchaser contemplating a commercial two storey office development with basement parking on Lot 116. I am satisfied that had this March 1999 letter of Vincent or its effect been available on or before 1 May 1998 and a cautious hypothetical purchaser had put that view to MRWA and MfP, each would have responded to the hypothetical purchaser in accordance with the views just outlined. The effect of this, in my finding, would have been to satisfy the hypothetical purchaser that a suitable crossover/driveway for a development of the type identified would be approved on formal application.

[194]

74 By 23 May 2000 it is clear, in my finding, that by the lobbying of the plaintiff and Mr McMahon against access, and the circulation of the BSD report, there had been encouraged and developed an awareness of safety concerns regarding access to Lot 116, which awareness did not exist and would not have been influential two years earlier on 1 May 1998 and thereabouts. In particular, the BSD report had presented the issues of access from Newcastle Street in quite a different light, in my finding, from that in which it had been considered by the officers of Vincent before the existence of the report which became available for the first time in about September 1999. Further, had the plaintiff not personally involved the Mayor, the probabilities, in my finding, clearly favour the conclusion that the Council would have acted in accordance with recommendations placed before it by its officers. In reaching that view I am well conscious of the concerns of the Mayor which were aroused by his visit to the site and what was put to him by the plaintiff and Mr McMahon, and it can be accepted that the resolution he then had prepared and urged on the Council reflected his appreciation of the position as he had seen it in May 2000. There is no reason to think, however, that those views would have been formed or that the Mayor would have had a similar appreciation of the position, had he not responded to the personal intervention of the plaintiff and visited the site and had the opinions expressed in the BSD report so strongly urged upon him. It was the opinion of the Mayor in evidence that, had the issue then arisen, a similar decision would have been reached in May 1998 as that reached on 23 May 2000 but, in my finding, that would only have been so had, on and before 1 May 1998, the plaintiff been as active in lobbying against access and had provided and advocated the views expressed in the BSD report, and had actively involved the Mayor, as he had done before the 23 May 2000 meeting of Council.

[205]

80 There is no doubt on the evidence as to the qualifications and experience of both Mr Bordbar and Mr Klyne. Generally, their evidence did not distinguish between the position at 1 May 1998 and today, although each had regard to the intersection as now constructed. In respect of a great deal they were in general agreement. Both saw a crossover/driveway at the eastern end of the Newcastle Street frontage of Lot 116 as the possibility to be most seriously considered, although in particular Mr Klyne would, like Mr White of MfP, have preferred a crossover in that general location but one shared with the adjoining Lot 117. Each gave attention to a crossover/driveway at that eastern end of the frontage of Lot 116. Both saw the proximity to the Loftus Street intersection to be a concern. Both accepted the wisdom of there being only a left turn entry and a left turn exit from such a crossover for Lot 116 as this minimised the traffic risks for a crossover in this location. Both saw the value of a median strip in Newcastle Street in the vicinity of this crossover to enforce this left turn in, left turn out configuration, so that in effect, for Lot 116, Newcastle Street could be regarded as a one way street with traffic flowing only from west to east. Both Mr Klyne and Mr Bordbar saw the retaining wall at the truncation as interfering with vision of and for cyclists and pedestrians as well as vehicles. The lowering or removal of the retaining wall with some excavation and battering of the retained soil on Lot 116 in the vicinity of the truncation and across the Newcastle Street frontage would in the view of each of them have improved this issue. Subject to that, both accepted that there was no problem of visibility of and for vehicles approaching Lot 116 in Newcastle Street from west of the intersection with Loftus Street, or travelling north in Loftus Street to turn right into Newcastle Street at the intersection (there is a right turn arrow to facilitate this at the traffic signals).

[216]

91 It is also contended for the plaintiff that turnouts should be provided where a crossover meets the roadway to facilitate vehicles entering and leaving. Turnouts are depicted on the 1999 Concrete Crossover Standard Drawing of Vincent. There is no evidence of such a standard drawing as at 1 May 1998. It is further contended that turnouts are required to be confined within the prolongation of the boundary of Lot 116, a requirement that would necessitate the crossover/driveway being moved away from the actual boundary so as to accommodate the eastern side turnout within the prolongation of the boundary. If that were so, it would necessarily reduce the width of crossover/driveway that could be accommodated clear of the 6 metre prohibited area identified in figure 3.1 of AS.2890.1-1993. The problem with this contention is that any requirement for turnouts on a crossover in Newcastle Street is a self-imposed requirement of Vincent. The only evidence of a requirement in May 1998 for turnouts to be within the prolongation of the boundary of the land being served by the crossover is an MRWA internal policy which has no application to Newcastle Street. It is not established, in my view of the evidence, that there was then an external requirement, or even a self-imposed policy of Vincent, to that effect. Even if there were, it is a requirement that Vincent could waive or vary. This was clearly contemplated in my finding by the informal approvals of Vincent in September 1997 and 17 March 1999 and none of the evidence as to the Vincent's further consideration of the issue in May 2000 indicates that turnouts were seen as relevant or material. It is to be noted that turnouts are located at the roadway edge on the road reserve, not on private property, so there is no legal reason why turnouts could not be provided for a crossover/driveway located immediately adjacent to the boundary of the land to be served by the crossover. Further where two crossovers/driveways abut each other there is no practical need for a turnout on the mutual boundary. In my finding any standard turnout policy or requirement, if there were one, would not preclude a crossover/driveway immediately adjacent to the eastern boundary of Lot 116.

[217]

92 As to the second issue, sight distances for south bound traffic in Loftus Street turning left into Newcastle Street to travel east, is the subject of the strongest difference of professional opinion between Mr Bordbar and Mr Klyne. On Mr Bordbar's reading of AS.2890.1-1993 and the Austroads Standard there must be a minimum sight distance of 55 metres of and for traffic approaching from the west along Newcastle Street, the "frontage road" for the purposes of applying figure 3.2 of AS.2890.1-1993, to the centre line of a crossover/driveway at the eastern end of the Newcastle Street frontage of Lot 116. As the Loftus Street intersection commences well within 55 metres from a crossover in that position it is Mr Bordbar's view that no crossover in the contemplated position can comply with this standard. Mr Klyne, on the other hand, reads and applies AS.2890.1-1993, together with the source Austroads Standard, as applying to distance travelled by a vehicle approaching a carpark exit (crossover) and the stopping distance of such a vehicle. Hence, he measures the minimum sight distance along the actual track of a vehicle turning left from Loftus into Newcastle Street, rather than in a straight line along Newcastle Street. Further, because of footnotes 4, 5 and 6 to figure 3.2, Mr Klyne applies the more detailed provisions of par 5.2.2 - 5.2.4 of the source Austroads Standard, rather than the abbreviated extracted table in figure 3.2, to determine the required minimum sight distance. On this basis Mr Klyne's calculation uses the 85th percentile speed of vehicles turning left around the rather tight left hand corner from Loftus to Newcastle Streets, rather than the posted speed limit of 60 kmh. It is on this basis that Mr Klyne concludes, in effect, that, subject to the frontage design and setback of an office development on Lot 116, the sight distance of and to a vehicle turning left from Loftus Street to the contemplated crossover/driveway would meet the requirements of AS2890.1-1993 and the Austroads Standard.

[236]

109 As at 1 May 1998 Lot 116 was in an area of very mixed development. Much of the land on the north side of Newcastle Street to the east of Loftus Street, and further to the north of that area, was utilised for long established residences, few of them of any particular distinction, with other uses occasionally interspersed. For example, the adjoining lot was used as a small day hospital or out-patient clinic by the Health Department, although the design and scale of the buildings is in keeping with the residential area. There is a block of flats some doors to the east. On the south side of Newcastle Street in that vicinity, to the east of Loftus Street and immediately further to the south, the use pattern is much more varied with a number of workshops and other industrial properties as well as some show rooms and assorted commercial developments including offices. A few of these are relatively recent developments but most are of long standing. There are also some old homes. Quite a distance to the east Newcastle Street intersects with Charles Street which provides access to the freeway to the south, and even further east in Newcastle Street there are the intersections of William and Beaufort Streets which, in turn, provide access to and from the central city area of Perth which is some distance to the south of Newcastle Street. Lot 116 may therefore be said to have relatively direct road access to the city, but it cannot be said to be obviously close to the city. On the west side of Loftus Street north of Newcastle Street the immediate area is generally residential, but along Newcastle Street itself and also to the south of Newcastle Street the use is more predominantly that of a mixed commercial usage, including offices, shops and workshops in each case both modern and old. A little further to the west of Loftus Street, Newcastle Street runs into the Carr Place and the Oxford Street commercial and shopping precinct quite close to the intersections of Carr Place and Vincent Streets with Oxford Street, which I will refer to as the Oxford/Vincent precinct. This is a very active, well patronised, precinct which offers a wide variety of services and facilities. By comparison with the vicinity of the intersection of Loftus and Newcastle Street, the Oxford/Vincent precinct is much more developed and is a centre of greater commercial activity and prosperity even though it is further from the central city area. A number of the sales relied in the evidence are in the Oxford/Vincent precinct.

[238]

111 South of the Thomas Street railway bridge and the east of Thomas Street there are two further areas from which a number of sales were used by the valuers who gave evidence. Running toward the east and generally at right angles to Thomas Street are further significant thoroughfares which connect directly into the central city. These are Wellington, Murray and Hay Streets, and well to the south, Kings Park Road. Like Newcastle Street in the vicinity of Loftus Street, these areas south of the railway lines and to the east of Thomas Street are all in the suburb and postal area of West Perth. A great deal was made of this in the plaintiff's case, in particular by Mr McMahon, as a significant feature which he suggested added much to the desirability of Lot 116 over land in the Oxford/Vincent precinct or in the Southport/Harrogate area, and thereby enhanced its value in the opinion of Mr McMahon and Mr Logan above the land in those areas, particularly for an office development. Having regard to the whole of the evidence I am unable to accept this. It is my finding that there is little direct comparison for relevant purposes between Lot 116 and its surroundings, and that part of West Perth which is between Murray Street and Kings Park Road which is an extensive, highly regarded, very well developed and maintained area, well served with wide attractively maintained and treed streets, containing a range of successful commercial developments including modern offices and well maintained large older residences used for a variety of commercial purposes such as offices, consulting rooms and restaurants, but also with a considerable continuing use as a higher class residential locality. It is an area very well served by direct road and public transport systems to the central city which is relatively close to the east, and offers a wide range of facilities. To the north of Murray Street and in particular between Wellington Street and the Fremantle railway I accept from the evidence that the general appearance of the locality and the prevailing nature of the development is less attractive than that to the south of Murray Street, even though it is also part of West Perth. It is in the process of gaining in popularity and in particular in the last year or two it is increasingly attracting some modern development or the adaptation of older residences to other uses such as offices. Even so, in my finding on the evidence, while the well established commercially attractive area of West Perth to the south of Murray Street may be seen to be spreading, so that there is now a growing demand to the north of Murray Street into the area between Murray Street and the Fremantle suburban railway, there remains in my finding a marked distinction between each of those areas. There is a further marked distinction between the area north of Murray Street and south of the railway and the area in the vicinity of Lot 116 which is further to the north and separated from the rest of West Perth by two railway lines and a freeway.

[269]

140 Mr Logan explains this difference on the basis that he was better "instructed" in February 2001 than he was in 1996, and he had more reliable and extensive market information. His better instructions seem to have been a full briefing by the plaintiff's solicitors on traffic engineering, zoning and planning issues. He also had a general discussion with Mr McMahon before undertaking his valuation in 2001. While traffic, engineering, zoning and planning issues may have had a relevance to other aspects of Mr Logan's valuation - as he also dealt extensively with other issues such as injurious affection - it does not appear from his evidence that these issues were of any particular relevance to his appreciation of comparable sales. What is apparent, in my finding, is that Mr Logan came to a markedly enhanced appreciation of the location of Lot 116 and of the value of its exposure particularly to Loftus Street traffic. The issue of location caused him, like Mr McMahon, to see much significance in the West Perth address and to place new weight on that, which in turn led to reliance on sales in West Perth to the south of the Fremantle suburban railway and also the Southport/Harrogate area. Mr Logan also suggested that in 1996 he had placed what he now regarded as too much reliance on sales identified to him by valuers in the Valuer General's office, or other valuers retained by government agencies, sales which he now considered not truly reflective of the location and exposure of Lot 116 and he had not then had adequate regard to other sales such as those now relied on. This evidence does not satisfactorily explain, in my view, the fact that some 18 months before the relevant date Mr Logan was satisfied at the comparability of the sales he then used, with what he then saw to be appropriate adjustments for factors including location and exposure, but approaching three years after the relevant date he had formed quite a different appreciation of the sales which are comparable and this has produced a somewhat dramatically different market value for Lot 116 as at 1 May 1998. In this change, it is probable in my finding that the influence, conscious or unconscious, of Mr McMahon has played a part. The other change, of course, is that in February 2001 Mr Logan had access to and has relied on sales information from 1999 and 2000 and also, inevitably, now has the benefit of much hindsight, in my finding, too much hindsight, into trends, developments and market movements from May 1998 to February 2001. In my findings these factors have had a perhaps unconscious but nevertheless inappropriate and improper influence on Mr Logan's present opinion, an influence which unduly favours the plaintiff.

[297]

168 It is convenient to note at this point my finding that the designs of Mr Adam for an office development, both in the Before and After taking situations were intended by Mr Adam, for very sound reasons, to involve the excavation of Lot 116. There was some difference of understanding about this in the evidence, and the plaintiff and Mr McMahon sought to advance the view that no excavation was intended in the Before Taking situation. I accept from the evidence of Mr Adam, particularly at the commencement of his cross-examination and par 39 of his report, that his proposals were based on excavation so that the floor of the basement would be near to the Newcastle Street level, ie 1.0 - 1.5 metres of excavation with that level being probably maintained to the rear of the block. The effect of this, as his report indicates, is that the ground floor level of the office floors would be set at approximately the floor level of the present duplex dwelling. I also find from par 39 that the opinion of Mr Adam that a set back of only 3 metres from the side boundaries would be required may depend on such excavation, because this lowered the overall height of the development in relation to neighbouring properties. This Mr Adam saw also to be the intention of the design prepared for the defendant by another architect Mr Oakley. That was confirmed by the evidence of Mr Oakley, who also stressed that without excavation there would be an unduly steep vehicular ramp to the basement carpark and a need for extra stairs for pedestrian access. I would add that although there was no detailed explanation of the 1983 and 1996 plans submitted for approval by the plaintiff to the relevant local authorities, and despite the plaintiff's evidence, what is shown in those plans with respect to pedestrian access and vehicle access suggests that excavation to near the Newcastle Street level was contemplated. I also accept from the evidence, including that of Mr Adam, Mr Oakley and Mr Van Der Meer, that the construction of an office development of the type in contemplation without excavation would not be the most desirable or cost efficient design. Notwithstanding Mr McMahon's expressed opinion, it has not been shown that an extra 1.0 - 1.5 metres of floor level height for each of the two office floors would make any difference to the rental which the offices would command, whereas a lowered carparking area would add to the convenience of both vehicular and pedestrian access.

[301]

172 In the letter sent by Mr McMahon to Mr Richmond in January 1999 to support the plaintiff's case for a value of $550 per square metre, Mr McMahon included a broad hypothetical development calculation. This was eight months after the taking of the land. In dealing with income in this calculation Mr McMahon noted that rentals for similar new strata offices in West Perth and West Leederville then reflected rentals of $135 - $165 per square metre and on this basis he calculated rental income at a $160 per square metre - not $175 per square metre as allowed for in his February 2001 report. Further, he allowed for car bay rental at only $20 per month, rather than the $60 estimated in his February 2001 report. In cross-examination he described the figure of $20 per month as being merely a "guess". At that time he used a capitalisation rate of 8 per cent, rather than the 7.75 per cent rate which he adopted in his February 2001 report. He also adopted a profit and risk factor of 22.5 per cent in his earlier hypothetical development calculation rather than the 17.5 per cent which he used in his February 2001 report. In the hypothetical development calculation which he urged on Mr Richmond in January 1999, after allowances for construction and other costs Mr McMahon obtained a resultant land value of $290,000 for Lot 116 which is equivalent to only $440 per square metre. However, by then allowing for the offices to be strata titled and to be sold on this basis Mr McMahon was able to suggest to Mr Richmond in January 1999, although in my finding not convincingly, that the calculations supported a land value of between $510 per square metre and $570 per square metre, figures which he suggested were also supported by comparable sales evidence of between $500 and $550 per square metre. It will be apparent that this is very different from the $714 per square metre which is the product of the hypothetical development calculation undertaken by Mr McMahon in his February 2001 report, even though the earlier calculation and the latter both purport to relate to 1 May 1998. He offered no satisfactory explanation, in my finding, for the difference between his two opinions.

[310]

181 With regards to the net lettable office area I should note that there was some difference in the evidence which affected the designs of Mr Adam and Mr Oakley and in turn the calculations based on them made by Mr McMahon and Mr Richmond. Mr Oakley had been retained in early 1999 to advise on the development potential of Lot 116. He proceeded on the basis that a frontage setback the same as that of the existing adjoining buildings in Newcastle Street, ie 4.5 metres, would be approved by Vincent, whereas I accept that the City of Perth Town Planning Scheme which Vincent was applying required 9.0 metres. Further, Mr Oakley assumed that the draft Vincent Town Planning Scheme would be in force before any application for development application was considered by Vincent. In fact the Vincent Scheme came into force in November 1998. Under the Vincent Scheme the area devoted to service and public areas in the building are included in the gross area of the building for the purposes of plot ratio calculations. In fact, however, under the City of Perth Planning Scheme the service and public areas were excluded from plot ratio calculations. I prefer the view taken by Mr Adam that the appropriate scheme to be applied as at 1 May 1998 was the City of Perth Scheme. In my view, a hypothetical purchaser would also have taken that same view as at 1 May 1998 and would not have been prepared to base calculations on the prospect that the Vincent Scheme could be expected to come into force at some time in the near future. Under the City of Perth Scheme, as the land area of Lot 116 was 658 square metres in the Before Taking situation, it was possible to secure approval for 658 square metres of lettable office space, the service and public areas being excluded from the plot ratio calculation. I accept from the evidence that an efficiently designed building could therefore have been of 720 - 730 square metres of gross area with a net lettable office area of 658 square metres. This represents an allowance of approximately 12 per cent for the service and public areas which I accept from the evidence is an appropriate allowance. A gross area of 720 - 730 square metres of office building would have required the provision of a minimum of 15 car bays, the required rate being 1 car bay for each 50 square metres of gross area. While such a building with a net lettable office area of 658 square metres was possible to achieve on Lot 116, it would have been necessary to go to a part third level of office space to do so. As indicated earlier I accept from the evidence that that would have been uneconomic. For these reasons any design would be confined to two levels of office space so that the full plot ratio capacity of Lot 116 could not be achieved in practical terms. Hence both Mr Adams and Mr Oakley in their respective development designs contemplate a net lettable office area less than 600 square metres from two floors of office space.

[400]

248 In re-examination an attempt was made to have Mr Van Der Meer detail his inspection in December 2000 to describe what he then saw, and to compare it with what he could make of the September 1998 photographs, and to give his opinion of the cause of the cracks he saw in December 2000. Because of the pre-trial directions and the implications for the trial in a number of respects if this opinion evidence were to be allowed, this was not permitted. He was allowed, however, to attempt a comparison between what he saw in December 2000 and what he could make of the September 1998 photographs. In the course of this, for the first time in re-examination, Mr Van Der Meer described extensive structural cracking to the western wall above and below the windows which he had seen in December 2000. He went on to add, despite the rulings, that in his opinion this indicated significant settlement. This re-examination had been permitted on the basis that there should be further cross-examination. In the course of this Mr Van Der Meer indicated that even though he had taken photographs in December 2000 of the condition of the house, none was taken of the western wall. Thus he had made no photographic record of what he described to be extensive structural cracking and significant settlement of the western wall. This was surprising indeed, given the significance he now sought to attach to these observations. Mr Van Der Meer was shown, however, Mr McMahon's three photographs taken in 2000 (mentioned above) which were in Mr McMahon's report. Two of these were of the western wall. They were compared by Mr Van Der Meer with the September 1998 photographs. Mr Van Der Meer could not identify any new cracks or mortar erosion in the 2000 photographs, nor could he identify any apparent change in the cracks shown in the two sets of photographs. When it was put to him that there was nothing in the brickwork to indicate that subsidence had occurred between the two sets of photographs, his reply was there was "... not much to indicate subsidence". When that answer was challenged with the question "There's nothing, is there?", his only response was "I haven't measured the cracks". He then agreed there did not appear to be any change in the cracks.

[415]

263 The duplex residences had so deteriorated as a rental proposition, however, that for some years before 1994 the class of tenant attracted to it were those in impoverished circumstances in need of low cost housing, who were referred by the public housing authority and had the benefit of some governmental assistance. For some years until mid 1995 each of the duplex dwellings was tenanted by such a person, in each case a man living alone. Each paid a weekly rental of some $75 even though prevailing rents for such properties in good order were double that figure. These tenants were clearly less than satisfactory and on separate occasions in May and June 1995 the tenants of each of the duplex dwellings left without notice, owing several weeks rent. The plaintiff's net rental income for 1995 had been only $1,655. When these tenants left in those circumstances the plaintiff did not seek to re-let either of the duplex residences and the duplex dwelling has remained unlet since then. An indication of its condition is provided by the formal health notice which Vincent issued in respect of the property in February 1997, although in some respects by then the condition of the property had further deteriorated due to disuse and some vandalism. The Vincent notice prohibited the use of the property for human habitation until substantial works were undertaken. In essence, the notice requires a complete refurbishment of the premises including the kitchens, bathrooms, laundries and toilets. I accept the evidence of Mr Van Der Meer that the cost of compliance with this notice would be just on $50,000. If that expense was incurred it appears that gross rentals in the order of $200 per week might be obtained today. This figure would have been about $150 per week for each duplex in 1995 - 1996. It is clear, and it is my finding, that it would be quite uneconomic to expend some $50,000 for rental returns of that nature. Several years of letting would be necessary to recover the bare capital expenditure from net returns and in the meantime the owner, whether the plaintiff or a purchaser, would not have the far better returns anticipated from an office development and would be incurring ongoing ownership and maintenance costs.

[449]

294 Some submissions for the plaintiff also seem to carry the implication that the authority should be required by s 217(1) to refer a claim to a valuer who was expert in compensation claims, and further to ensure that the report of the valuer deals with all compensation issues and reports on the amount of compensation which is payable. Such a view appears to me to misunderstand the role of a valuer in the resolution of questions of compensation. There are a number of issues which, in some cases, may be determinative of, or relevant to, the assessment of claims for compensation, and as to which a valuer may form an opinion and give expert advice. Typically in many cases, however, the present being an obvious example, issues relevant to the assessment of the amount of compensation extend well beyond the expertise of any valuer and may require for their appropriate assessment the advice of experts of other disciplines including legal advice and which, if not the subject of agreement between the parties, may require a trial in which the various factual and legal issues are determined. A valuer, even one claiming some special experience in compensation claims, could not be expected to resolve many of the issues that arise in cases of this nature. It is not to be expected, therefore, that the legislature comprehended and intended that a report of a valuer for the purposes of s 217(1) would be a report which necessarily recommended a particular amount of compensation. Experience in cases of this nature also suggests that the assessment of claims, at least in those cases that involve factual or legal issues of complexity, may well take much longer than 90 days. It is not surprising, therefore, that in s 217(3) it is provided that an offer of compensation is to be made "as soon as possible" after a report is received. There is also a question whether the 90 days in s 217(1) relates to the time within which the authority must cause a compensation claim to be examined, or whether it also stipulates that the report must be made within 90 days. In this respect the language is somewhat ambiguous and the subject matter suggests, for the reasons indicated, that the legislative intention may well be that the 90 days relates to the time within which the authority is required to cause the claim to be examined.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (477 paragraphs)

Prior v Kemp [2001] WASCA 363 (16 November 2001)

Statutory provisions and compensation principles

Injurious affection and disturbance to duplex building and southern retaining wall; Residual Value of Improvements

Stamp duty, conveyancing and Land Titles Office fees on a replacement property

Professional fees and expenses incurred prior to issue of proceedings

Rates, land tax, insurance and maintenance from 1 May 1998

Parties

Legislation Cited (9)

Cases Cited (19)