Federal Court of Australia|1993-04-14|Before: Wilcox J

Re John Goold and Harold Norman Rootsey v Commonwealth of Australia and Federal Airports Corporation [1993] FCA 157; (1993) 114 ALR 135 (1993) 79 Lgera 407 (1993) 42 FCR 51 (14 April 1993)

And: COMMONWEALTH OF AUSTRALIA and FEDERAL AIRPORTS CORPORATION

Lands Acquisition - Resumption of two small parcels of land in vicinity of Kingsford Smith airport - Lands used for residential purposes at resumption date but capable of development by small buildings servicing airport-related uses - Land zoned Special Uses under County of Cumberland Planning Scheme Ordinance - Whether this zoning should be disregarded - Proper basis of valuation - Admissibility of evidence of offers to purchase the two parcels - Whether there is a relevant distinction between an offer to acquire subject land and an offer to acquire similar land - Genuineness of these offers - Analysis of sales evidence to determine market value - Calculation of disturbance allowances - Whether assessment of legal costs and stamp duty paid in connection with the acquisition of a replacement property fails to provide just terms - Principles applicable to the assessment of disturbance compensation under the general law.

County of Cumberland Planning Scheme Ordinance cll. 5, 26 and 42.

Solicitors for the Applicant: Abbott Tout Russell Kennedy

Solicitors for the Respondent: Australian Government

1. Compensation be assessed in the sum of Three Hundred and

Seventy Two Thousand Five Hundred and Seventy Five Dollars

($372,575).

2. Costs be reserved.

1. Compensation be assessed in the sum of Three Hundred and

Seventy Two Thousand Four Hundred and Three Dollars

($372,403).

2. Costs be reserved.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

WILCOX J These two cases (heard together by consent) are the first compensation claims under the Land Acquisition Act 1989 to come to judgment. Two earlier cases, each relating to land resumed for the new Badgery's Creek airport, were settled during the course of the hearing. The present cases do not relate to Badgery's Creek. They arise out of the resumption by the Federal Airports Corporation of two small parcels of land near Kingsford Smith airport, Mascot. Initially the only respondent was the Commonwealth of Australia. At the hearing the proceedings were amended, by consent, so as to add the Federal Airports Corporation as an additional respondent. I think it is the only necessary respondent, but nothing turns on this.

2. The major dispute between the parties concerns a valuation issue: the market value of the two parcels at the date of resumption, 6 June 1990. This dispute turns upon the selection of "comparable" sales and the application to the two parcels of the information they provide. But some incidental matters depend upon the terms of the new legislation.

3. Both parcels of land are in a suburb known as Lauriston Park. Few people will recognise that name. But those who have driven to the airport domestic terminal area may recall approaching it through a roundabout at the intersection of O'Riordan Street, a road leading directly to the city through the suburb of Botany, and Joyce Drive, the road that skirts part of the airport and gives access to Southern Cross Drive. Lauriston Park is the area between the roundabout and the terminal buildings.

4. The evidence includes a detailed history of Lauriston Park. It is not necessary to set this out. It is sufficient to say that it demonstrates that Lauriston Park was once a thriving residential community. But it has gradually been engulfed by the expansion of the airport. By the late 1980s the residential area was totally surrounded by airport uses, with aeroplane parking aprons on three sides. Only three houses remained, two of them on the subject parcels.

5. The first claim is brought by John Goold. It relates to Lot 28 in Deposited Plan 4066, a property otherwise known as 43 Tenth Street, Lauriston Park. Mr Goold was born in 1911. He was taken to Lauriston Park as a small boy. In 1931, he purchased 43 Tenth Street (then known as Melrose Street) and erected a house which he occupied with his family for many years. Mr Goold continued to occupy the house at the date of resumption. It was a part one, and part two, storey residence constructed of brick and fibrous cement.

6. Tenth Street lies immediately beyond the roundabout, as one approaches the terminal area from the city. It intersects with Shiers Avenue, a street that gives vehicular egress from the domestic terminals, and Keith Smith Avenue, which gives access to the terminals and provides frontage to the Ansett Airlines terminal. At one time, Tenth Street extended further south, to Vickers Avenue. After the date of resumption this section of the street was closed. It is now used for an aircraft apron.

7. Mr Goold's property lay on the western side of Tenth Street, some 50 metres south of its intersection with Keith Smith Avenue. At the date of resumption the land was surrounded on three sides by bituminised car parking areas used by airport employees. Because of the absence of surrounding buildings and the height of the house, it was easily observable from the Tenth Street - Keith Smith Avenue intersection. The exposure of the site to people approaching the airport from the city is a point upon which Mr Goold's valuation expert, Mr Terrence Dundas of Egan National Valuers, places considerable weight. However, as Mr Dundas accepts, the development potential of the parcel was significantly constrained by its smallness. The land had a frontage to Tenth Street of only 9.144 metres (30 feet) by a depth of only 32 metres (105 feet), giving an area of 292.61 square metres (3150 square feet).

8. The second claimant is Harold Norman Rootsey. Mr Rootsey is also a long time resident of Lauriston Park. He was born in 1910 and moved to the suburb in 1919. In 1939 he purchased the subject land, Lot 54 in Deposited Plan 4066, 26 Ninth Street, Lauriston Park. Ninth Street was then known as Roslin Street. Mr Rootsey erected a single storey asbestos cement cottage with a corrugated asbestos cement roof. He resided there for many years with his wife and four children. He, also, still lived in the house at the time of resumption.

9. Ninth Street lies parallel to Tenth Street, being the street immediately west of it. By the date of resumption it contained only two houses. Road works had been carried out to link the northern end of Ninth Street to the driveway leading to the international air terminal. At resumption date, all road traffic from the international terminal to the domestic terminal area passed Mr Rootsey's land, which was on the eastern side of Ninth Street between Spiers Street and Keith Smith Avenue. The parcel was surrounded by landscaped land owned by the Federal Airports Corporation. Since resumption, Mr Rootsey's house has been demolished. The land is now part of a new road.

10. Mr Rootsey's land not only shared the primary advantage of Mr Goold's land, its excellent exposure to airport traffic. It also shared its principal limitation. Mr Rootsey's land was also only 9.144 metres by 32 metres.

11. Under the County of Cumberland Planning Scheme Ordinance, made in 1951, both parcels of land were included in a Special Uses Area Zone. The reason for this zoning was, obviously, the proximity of the land to the airport, the whole of which was included in that zone. However, the ordinance did not restrict the use of the land to airport uses. The effect of the zoning table contained in cl.26 of the ordinance was that the subject parcels (like all other Special Uses Area land) could be used for any purpose with the consent of the responsible authority, but not otherwise. By virtue of cl.5 of the ordinance, the responsible authority was the local council - in this case, Botany Municipal Council. However, cl.42(c) provided that, in considering an application to erect a building or use land within a Special Uses Area Zone, the responsible authority must "have regard to the purpose for which the land is zoned and the preservation of existing amenities". It would have been the duty of the council, in considering any application to develop either parcel, to take into account the effect of the proposed development upon the existing use of the airport and its likely future development.

12. Although the situation has since changed, the County of Cumberland Planning Scheme Ordinance continued to govern both parcels of land at the date of resumption. Under those circumstances, a question arises whether the constraints of the County scheme, such as they were, should be taken into account in determining the development potential of the land at that date.

13. The effect on market values of zonings and reservations designed to preserve the availability of land likely to be required for public purposes has long been recognised as a difficulty in the assessment of resumption compensation: see, for examples, the decisions of the High Court of Australia in Minister v. Stocks and Parkes Investments Pty Ltd [1973] HCA 29; (1973) 129 CLR 385 and Housing Commission of New South Wales v. San Sebastian Proprietary Limited [1978] HCA 28; (1978) 140 CLR 196. It is obviously unfair that a dispossessed owner should receive less compensation because the value of the resumed land has been reduced by a zoning designed to ensure its availability for the public purpose for which it was later acquired. The Australian Law Reform Commission discussed this problem at paras. 248-249 of the report that gave rise to the 1989 Lands Acquisition Act, "Lands Acquisition and Compensation" (ALRC 14). The Commission recommended a statutory provision requiring persons assessing compensation for the acquisition of land to disregard any limitation on its use "imposed by or as a consequence of" its zoning or reservation for any public use. Parliament accepted the idea behind this recommendation; but it enacted legislation in a different form. Section 59 of the Lands Acquisition Act provides:

"(1) This section applies where:

(a) an interest in land is acquired from a person by

compulsory process;

(b) immediately before the acquisition, a planning

instrument was in force having the effect of

limiting or restricting the permissible use of

the land to use for a purpose of a public

nature;

(c) the planning instrument was made to meet the

needs of an acquiring authority; and

(d) the planning instrument was not in force in

relation to the land at the time the person

acquired the interest.

(2) In determining the amount of compensation to which the

person is entitled in respect of the acquisition of

the interest:

(a) the limitation or restriction on the use of the

land imposed by the planning instrument shall be

disregarded;

(b) it shall be assumed that the land was subject

only to such limitations and restrictions as

would have been likely if there had been no

proposal to limit or restrict the use of the

land to use for the purpose permitted by the

planning instrument; and

(c) the amount of any compensation paid or payable

to the person in consequence of the planning

instrument shall be deducted from the

compensation to which the person would otherwise

be entitled".

14. It will be noted that para.(b) of subs.(1) departs significantly from the Law Reform Commission proposal. It is not enough that there be a limitation on the use of land arising out of a zoning or reservation for a public use; the planning instrument must have the effect of making a public use the only permissible use. Moreover, by para.(c) the planning instrument must have been made to meet the needs of "an acquiring authority". The term "acquiring authority" is defined by s.6 of the Act to mean the Commonwealth of Australia or a "Commonwealth authority". The latter term is itself defined by the section to mean an authority incorporated by or under a law of the Commonwealth or of a Territory (other than a law of the Northern Territory or Norfolk Island and certain Australian Capital Territory enactments) that is not declared by regulations to be an exempt authority.

15. There is a question whether, on its proper interpretation, subs.(1)(c) refers only to a planning instrument made to meet the needs of the particular acquiring authority that ultimately acquired the land. The significance of the point is illustrated by the facts of the present case. The authority that acquired the subject parcels was the Federal Airports Corporation, an entity which did not exist when the County of Cumberland Planning Scheme Ordinance was enacted in 1951. If it has to be shown that the zoning under the County scheme was made to meet the needs of the Federal Airports Corporation, subs.(1)(c) could not be satisfied in this case. If, on the other hand, it is enough that the zoning was made to meet the needs of some acquiring authority, as defined, whoever that authority might be, the paragraph is satisfied. In 1951 airports were controlled directly by the Commonwealth of Australia. At that time the Commonwealth was the entity that acquired additional airport land, when necessary. It may reasonably be assumed that the decision to impose the Special Uses Area zoning on the subject land was made to meet the needs of the Commonwealth.

16. For reasons both of language and likely policy, it seems to me that it would be wrong to interpret the words "the needs of an acquiring authority" in such a way as to refer only to the needs of the particular acquiring authority that ultimately acquired the land. So far as language is concerned, it is significant that the drafter of the paragraph used the indefinite article "an" rather than the definite article "the". The word "an" suggests an intention that it be enough that the intention was to meet the needs of any "acquiring authority"; that is, any entity falling within the defined meaning of that term. Such an interpretation is attractive in policy terms. Commonwealth authorities come and go. There would be little logic in making the operation of a section designed to safeguard owners' rights dependent upon bureaucratic structures.

17. As it seems to me, paras.(a), (c) and (d) of s.59(1) are satisfied in the present cases. But para.(b) is not satisfied. Having regard to the fact that consent could lawfully be given to the use of the subject parcels for any purpose, under the County of Cumberland Planning Scheme Ordinance, it cannot be said that the ordinance had the effect of limiting or restricting the use of the land to "use for a purpose of a public nature". Accordingly, in valuing the land at resumption date, it is necessary to take into account the Special Uses zoning. I do not need to consider, under s.59(2)(b), the restrictions likely to have been imposed in the absence of that zoning.

18. The valuers advising the Federal Airports Corporation initially assessed both parcels upon the basis of their existing (residential) uses. Mr J Rosenstrauss, a valuer in private practice with Darroch and Co Limited, thought that each parcel of land, considered merely as a house site, was worth $150,000. He assessed the improved value of Mr Goold's property, considered only as residential land, at $180,000. He thought the improvements added only $10,000 to the value of Mr Rootsey's property, taking its total value to $160,000. However, after taking into account the premium likely to be paid by an adjoining owner, he finally valued this land, on a residential basis, at $175,584. Mr Alan Langford, a valuer employed by the Australian Valuation Office ("AVO"), who did not give evidence, valued Mr Goold's property on a residential basis at $170,000. Mr John Bishop, an AVO valuer who did give evidence, valued Mr Rootsey's property, on the same basis, at the same figure.

19. The applicants' valuer, Mr Dundas, did not contest these figures. His attitude was that residential values are irrelevant, because the highest economic use of both parcels at resumption date was for commercial development. He said that each parcel could have provided a site for a two-storey commercial building, with off-street parking, suitable for occupation by an airport-oriented business. He instanced a car rental business, a helicopter or light plane operator or a tour company. His argument was that it would be advantageous for such a business to be located within the airport perimeter, close to the domestic terminals and on a site with a high exposure to travellers to the terminals. Restrictions have been imposed, under civil aviation regulations, on the size of buildings that may be erected on these two parcels. But it is common ground that these restrictions would not prevent buildings of the type envisaged by Mr Dundas.

20. At the trial, the valuers called by the respondents accepted that the use contemplated by Mr Dundas was the highest economic use of the land and that market value should be assessed on that basis, rather than by reference to residential value. The difference between the valuers related to the determination of that value. It stemmed from the fact that no truly comparable land has been sold in recent times, except for the purchase by the Federal Airports Corporation in 1990 of the third remaining house, at 18 Ninth Street. No doubt because of the circumstances surrounding that purchase, none of the valuers relied upon it. They had to resort to extrapolating conclusions from sales of dissimilar parcels. In so doing, they found themselves at odds, both as to their choices of sales and the conclusions they drew from them.

21. I will go to the sales evidence in a moment. First, I should deal with an unusual aspect of the cases: evidence of an offer to purchase each property for the sum of $500,000.

22. Mr Alan Robertson, counsel for the respondents, objected to the admission of evidence concerning the offers. He contended that evidence of an offer to purchase or sell a parcel of land (as distinct from evidence of a concluded contract) was never admissible in connection with the assessment of its value. In support of this proposition he referred to the decision of the full High Court of Australia (Isaacs, Powers and Rich JJ) in McDonald v. Deputy Federal Commissioner of Land Tax [1915] HCA 54; (1915) 20 CLR 231. The question in that case was the value, for taxation purposes, of a pastoral property. The appellant, the owner of the land, objected that the rate per acre adopted by the respondent was excessive. At the hearing of his objection, in the New South Wales Supreme Court, counsel for the appellant tendered a letter written by the appellant's agent to a prospective purchaser some time before the valuation date. The letter conveyed an offer to sell the property at a stated price. The offer was not accepted. Regarding himself as bound by authority to do so, the trial judge (Ferguson J) rejected the tender. The High Court thought that the letter was inadmissible and upheld its rejection. At 237 Isaacs J, speaking for the Court, said:

"Apart from the distance of time - three years - it is plain

that the mere fact of a statement by an owner to a stranger

that he would be willing to sell at a given figure, and that

the offer was not accepted, for some reason undisclosed, is

no evidence of what the Statute requires, namely, the price

which a willing buyer would give, supposing the seller

announced reasonable conditions. At most, it is evidence of

the owner's bona fide belief at that time as to the value of

his land. Nor is the refusal of the person to whom the

offer was made to accept it, even if specifically on the

ground of excessive amount, any more than an expression of

his opinion on the point."

23. His Honour went on, at 238, to refer to the decision of the Full Supreme Court of New South Wales in Harris v. Sydney Municipal Council [1910] NSWStRp 106; (1910) 10 SR (NSW) 860. He described that case as deciding "that evidence of an offer to purchase land in the vicinity of the plaintiff's land is not admissible as evidence of the value of the plaintiff's land itself". He noted the view of Ferguson J that "(t)he fact that 1,000 pounds has been offered for a piece of land and refused, is no less relevant to the question whether its value is less than 1,000 pounds than if the offer had been accepted ...". But he responded by an argument based on the facts of Harris; that is, by discussing the case of an offer for other lands, not an offer concerning the land required to be valued.

"We have to search for principles. On what principle is the

act or opinion of a third person, manifested on some former

occasion, respecting the value of other land, not on oath,

not in presence of the parties, the opinion not capable of

being tested by cross-examination, admissible at all to

affect adversely one of the parties to the litigation?

"The answer is found in the principle that the rules of

evidence followed by the Courts have been adopted for the

better furtherance of justice, and are moulded so as to

attain that object in the best possible manner."

24. Isaacs J noted that sometimes facts unconnected with those directly in issue are valuable aids in indicating the truth as to central facts. He saw, as an example of this, the practice of admitting "evidence of actual sales of similar land" in determining the value of other land. At 239-240 he went on:

"It is true that from a logical standpoint, a bona fide

offer of 1,000 is just as good evidence the moment before

acceptance as the moment after. Why, then, should one be

received, and the other rejected? The answer is found in

the same principle, namely, the better service to justice on

the whole.

"When the matter has reached the point of a concluded

contract, there has been a definite concrete fact

established, which not only evidences value, but to some

extent helps to create or modify it. Where an owner has

actually parted with his land for a fixed sum and a buyer

has parted with his money for the land, a clear event has

arisen, which, based on the ordinary instincts and impulses

of human nature, indicates a consensus of opinion between

two adverse parties in the community respecting the value of

similar lands. Some advantage to justice is therefore

manifestly possible from considering it, and the law

presumes that up to that point the disadvantages of having

to undertake the collateral inquiries as to comparison do

not outweigh the possible advantages.

"But if the negotiations do not end in a concluded bargain,

the field is at once open to a multitude of other

considerations before the same point of opinion is reached.

Excursions into the realm of collateral circumstances would

be endless. They would so add to the cost, delay and

uncertainty of litigation as on the whole to render a great

disservice to the cause of justice. The Court might have to

inquire whether the owner or the other party really

terminated the negotiations, and, if so, for what reason.

Had either of the parties discovered the true worth of the

property or been misinformed by some means as to its real

value? Did the owner mistrust the ability of the purchaser,

or did the latter find an adverse claimant to the property,

or did his circumstances change, or was there a personal

quarrel? Or did he learn of a still better bargain? Or,

again, was the offer a sham on either side, or both sides?

Such inquiries would render litigation intolerable, and

defeat the purpose for which they were permitted.

"Consequently, though the logical relevance may be the same

when once the fact of a real firm offer is reached, whether

it be accepted or not, yet to reach that point in the latter

case is practically in such a different position in relation

to the true function and aim of Courts of Justice, as to be

placed legally in a different position also. The exception

in favour of the indirect evidence ends where it fails to

serve with advantage, and the line of demarcation is drawn

at actual contract."

25. As I understand his Honour's reasoning, whatever the logical attraction of considering an offer for a comparable property, the necessity to consider not only its comparability (as with a concluded sale), but also the circumstances surrounding the offer, makes that course inexpedient. It is not difficult to see the force of that view. But, curiously in the light of the facts before the Court, Isaacs J confined his discussion to the case of an offer relating to land other than that falling for valuation. He did not discuss the admissibility of an offer relating to the land to be valued; although, of course, his view that an offer to sell that land was inadmissible appears from the decision itself.

26. Notwithstanding the limited discussion in McDonald, in two subsequent cases, High Court Justices sitting at first instance have treated Isaacs J's reasoning as governing the admissibility of evidence of an offer regarding the property to be valued: see James Patrick and Co Pty Ltd v. Minister for the Navy (1944) Argus Law Reports 254 at 257-258 (Williams J) and Gregory v. Commissioner of Taxation [1971] HCA 2; (1971) 123 CLR 547 at 562 (Gibbs J). Neither judge adverted to the distinction between the case of an offer for other land, where the court has to consider both comparability and genuineness, and an offer for the subject land, involving only the issue of genuineness. Neither judge enunciated any reasons for his ruling that the evidence was inadmissible. In each case the judge simply treated McDonald as determinative.

27. There are cases indicating that a court may receive evidence of an offer in respect of the land to be valued. As Williams J pointed out in Nelungaloo Proprietary Limited v. The Commonwealth [1947] HCA 58; (1948) 75 CLR 495 at 507, the English courts treat an offer concerning the land under valuation as some evidence of its value: see the cases cited by Williams J and the statement in Cripps, "Compulsory Acquisition of Land", at para. 4-193 that "a bona fide offer for the land may be admissible" (in fixing the market value of resumed land).

28. In at least three Australian cases, evidence of an offer to purchase the subject land has been admitted: see Blefari v. The Minister (1962) 8 LGRA 1 at 5, Hustlers Pty Limited v. Valuer General (1967) 14 LGRA 269 at 277 (both decisions of Else-Mitchell J) and Phillipou v. Housing Commission of Victoria (1969) 18 LGRA 254 (Barber J). In none of these cases was the offer treated as direct evidence of value. In Blefari Else-Mitchell J pronounced himself "conscious that evidence of such a character may not be properly admissible in determining the market value of land". But he thought that, under some circumstances, an offer may have probative value; although it had very little in the case then under consideration. In Hustlers Else-Mitchell J used evidence of earlier offers as a basis for finding that later sales were not forced sales. In Phillipou an adjoining owner, a Church, had twice offered to acquire the subject land - first at a price of $25,000, later at $25,800. Barber J held that the Land Valuation Board of Review had rightly refused to treat those offers as evidence of the value of the land, but that it had correctly taken them into account; the offer demonstrated the existence of a person, the Church, who might pay more than ordinary market price. His Honour summarised the position, at 259, in this way:

"The board rightly took into account the potentiality of the land, the

likelihood of the Church authorities buying it, and being willing to pay

something more than the market value because of its position, but just

how much additional value should be allowed for this factor was a

question of fact for the board. The contention that the value must

necessarily be $25,800 because of the offers made to the Church was

rightly rejected."

29. As Barber J demonstrated, his conclusion flows inexorably from the reasoning adopted in two fundamental valuation cases: Inland Revenue Commissioners v. Clay (1914) 3 KB 466 and Raja Vyricherla v. Vizagapatam Revenue District Officer (1939) AC 302 (a decision of the Judicial Committee of the Privy Council). In the light of Barber J's analysis, it would be anomalous and unjust for the courts to adopt a blanket rule excluding offer evidence. Such a rule might exclude cogent evidence of the interest of a particular purchaser in the land being valued, a person who was willing to pay more than ordinary market price.

30. Of course, before placing reliance upon a mere offer, a court must consider carefully the question of its genuineness. The offer might be a sham, designed to prop up an inflated compensation claim or to reduce rates and taxes; in either case without any cost to the offerer. It might be an attempt to manipulate the market for some other ulterior purpose, perhaps a purpose extraneous to the litigation. If the offer was genuine when made, it might not have led to a concluded contract, even if resumption had not intervened. The offer might have been withdrawn. The purchaser might have failed to complete the transaction. Because of matters such as these, even a genuine offer cannot be regarded as direct evidence of value. But it seems to me that, once the court is satisfied about genuineness, an offer by an arms-length party to purchase the land under valuation is something that the judicial valuer ought to take into account in considering the possibility of a sale at a price different from that indicated by conventional evidence, such as an analysis of comparable sales, or of a hypothetical development, or a calculation of the capitalised value of the rental return. How much weight should be given to such an offer is a question to be determined by reference to the facts of the particular case. In some cases, the appropriate weight may be minimal; in others considerable.

31. I do not think that the views just expressed, or any of the statements made in Blefari, Hustlers and Phillipou, fail to pay proper deference to the decision in McDonald. The issue in that case was whether the trial judge rightly rejected evidence of an earlier offer by the owner to sell his land for a given sum. As that offer was made by the owner, and not accepted, it was incapable of providing evidence of the interest of a particular purchaser. The evidence of the offer could show no more than that the owner had been willing, at a particular time, to negotiate the sale of his land at a particular price. As Isaacs J observed, that willingness might indicate the owner's belief as to the then value of his land; but proof of that belief could say nothing about actual value at a later time.

32. It is true that, in McDonald, Isaacs J went beyond the matter requiring the Court's determination. Although they were obiter dicta, his comments about offers over other land must be accorded respect. But, in considering them, it must be remembered that his Honour was discussing the use of offer evidence as direct evidence of value, not the use of offer evidence as an indication of the existence of a person willing to pay a higher than market price. Bearing these matters in mind, it seems to me that, despite the absoluteness of some of Isaacs J's language, he should not be understood to have intended to exclude all offer evidence in all cases.

33. There is no dispute about the terms of the offers conveyed to the present applicants. Each applicant set out the circumstances in an affidavit. On 6 February 1990, pursuant to s.22 of the Lands Acquisition Act, the delegate of the Minister made a pre-acquisition declaration in relation to each parcel of land. Shortly thereafter, notice of the relevant declaration was served on each owner. On 13 February 1990, copies of the two declarations (and of a declaration relating to 18 Ninth Street) were advertised in a local newspaper, "Weekly Southern Courier". On 26 April 1990, a firm of solicitors, David Landa, Stewart and Co, wrote to each applicant:

"We act for a client who wishes to purchase your property.

On behalf of our client we hereby submit an offer of $500,000.00 (HALF A

MILLION DOLLARS) subject to a Contract on terms satisfactory to our

client and the Contract being approved by this firm.

On exchange of Contracts our client instructs that he is prepared to

immediately release the 10% deposit to you.

Further our client advises that you can rent the property and remain in

occupation for eighteen months at a nominal rent of $15.00 per week.

We would appreciate it if you were to telephone the writer, Barry Milch,

on 211 4889 to discuss this matter further."

34. Mr Goold wrote on his letter the words "Sorry folks the offer came too late". Apparently he returned it, so endorsed, to the writer. Mr Rootsey discussed his letter with his daughter, Carol Connell. On 1 May 1990, Ms Connell telephoned Mr Milch. She told him: "A pre-acquisition order has been issued with respect to the land and an acquisition declaration has been received". She faxed to Mr Milch a copy of the pre-acquisition declaration. Mr Milch responded with a letter to Mr Rootsey dated 3 May 1990. It read:

"Further to our letter of 26th April, 1990 we should be

pleased if you were to attend this office, with or without

your legal representative, at 3.00pm on Tuesday, 8th May

1990 to discuss further our client's offer.

For the inconvenience caused to you and to defray out-of-pocket

expenses on attendance at our office, our client will

make a token payment to you in the sum of $350.00 with no

strings attached.

Please telephone the writer, Barry Milch, to confirm the

above appointment. Would you please bring with you any

papers you may have received in relation to acquisition of

your property."

35. On the following day, 4 May, Ms Connell again telephoned Mr Milch. She told him that "we" have applied for a six month extension of the acquisition to enable a fair valuation to be made, but there had not yet been a government response. She mentioned an exchange of correspondence during the previous March. She sent copies of these letters to Mr Milch. Subsequently, Ms Connell had another telephone conversation with Mr Milch. He told her he would have to obtain instructions. Apparently that was the end of the matter. Neither Mr Rootsey nor Ms Connell attended Mr Milch's office to discuss the offer. There was no further approach to either of them.

36. Although Mr Milch did not reveal the name of his client to either offeree, it appears that the client was a man named Paul Makucha. Mr John Webster, counsel for the applicants, sought leave to call Mr Makucha to give oral evidence in these cases. Mr Webster stated that Mr Makucha had declined to make an affidavit and that notice had been given to the respondents' solicitors of the substance of the evidence he was expected to give. Mr Robertson objected to Mr Makucha being called. He said that notice had been given only two weeks before the commencement of the hearing, months after affidavits were supposed to be filed; and that, in August 1992, the applicants' solicitors had advised his instructing solicitors that "whilst Mr Dundas has had consideration" to the offer made to each applicant by David Landa, Stewart and Co "it does not form the basis of valuation". He submitted that his clients might be disadvantaged by the late notice, especially if it was necessary to have access to documents in the course of cross-examining Mr Makucha.

37. There was substance in the matters raised by Mr Robertson. Although, of course, I accepted that the applicants' solicitors could not compel Mr Makucha to make an affidavit, they had not explained their belated notice of intention to call him to give oral evidence. At the same time, I thought that the applicants ought not be prejudiced by an omission that was almost certainly not their own fault. It seemed to me that any difficulty that might be visited upon the respondents by the late notice could be alleviated by adjourning the completion of Mr Makucha's cross-examination, if necessary, until any needed documents were produced in court. Accordingly, I allowed Mr Makucha to be called. As events turned out, there was no problem about missing documents. Mr Robertson proceeded with his cross-examination in the usual way. He did not seek an adjournment at any stage.

38. Mr Makucha said in evidence that he instructed Mr Milch to send the letters of 26 April 1990 to Mr Goold and Mr Rootsey. He was aware of the terms of the letters before they were sent. He said that the figure of $500,000, "or a little more", was the price he was prepared to pay for each of the subject parcels. He said that the proposed contracts were not to be conditional. Mr Makucha was asked the circumstances of the offers. He replied that he had been interested in acquiring the three remaining freehold properties in the airport area since 1987 or 1988, that he had made several visits to each house and spoken with their owners but "we never seem to have got anywhere". He said that "one of the parties" asked him why he didn't "put an offer in writing". So he contacted Mr Milch and asked him to make written offers on his behalf. Mr Makucha said that he intended to buy the properties "in my own private name".

39. It appears that Mr Makucha, either directly or through companies controlled by him, already owned land in the area. In evidence he claimed "two miles of frontage to Sydney airport where we have outdoor advertising". He mentioned having car parking and offices. It is common ground between the parties that Mr Makucha, through one or more companies, assembled a hotel site on the corner of O'Riordan Street and Robey Street, just north of the roundabout mentioned earlier. A Sheraton hotel and commercial offices have recently been erected on this site. Mr Makucha said that he thought the three small parcels within the airport (including, of course, the two subject parcels) constituted "excellent investments".

40. Mr Makucha did not claim to have made an offer to purchase any of the small parcels before 26 April 1990. He did say that he had asked all three parties whether they wished to lease a portion of the properties and he claimed to have mentioned "$20,000 or $30,000 a year or something like that". There was no evidence from any of the three owners, or anyone acting on their behalf, concerning an offer to lease; or, indeed, of any offer or contact whatsoever by Mr Makucha, other than through David Landa, Stewart and Co.

41. There are a number of curious features about Mr Makucha's evidence. As I have said, he claimed that the offers were made because of a suggestion by one of the owners. Yet he specifically instructed Mr Milch not to mention his name. He said that, if Mr Rootsey had attended the meeting proposed by the letter of 3 May, he would not himself have been present; to have done so "would have defeated the purpose of having solicitors deal on my behalf without my name being totally displayed". He insisted that the properties would be purchased by himself personally. When it was pointed out that, if this was done, a vendor would learn the identity of the purchaser before committing himself to sell, because he would have to sign the contract before then, Mr Makucha said "one can use a nominee company". Mr Makucha said that he intended that the proposed contracts have no special conditions. He claimed that contracts had actually been drafted by his solicitors; but no draft contracts were tendered as evidence.

42. Mr Makucha works from an office close to the airport. He agreed that, over some years, he has taken a keen interest in land dealings in the area. He read the "Weekly Southern Courier" from time to time. Yet he said he did not see the prominent advertisements of the pre-acquisition declarations in the 13 February edition of that newspaper. Apparently nobody drew them to his attention. Mr Makucha said he had been informed -

"that these people were afraid to enter into a sale with me

because they had been told by the FAC that they would be

denied access into their own homes and that they would be

resumed and immediately thrown out and I said to them,

please accept my offer and we will fight the good battle".

Yet, according to Mr Makucha, when the letters were written he was not aware that the Federal Airports Corporation was proposing to acquire the two subject properties.

43. Even more curiously, Mr Makucha said that he gave specific instructions to David Landa, Stewart and Co to offer Mr Goold and Mr Rootsey $350 each to attend the meeting in their office. He gave those instructions between the dispatch of the two letters of 26 April and that to Mr Rootsey of 3 May. He said he was in contact with his solicitors between 26 April and 3 May and "discussed what response, if any, had been received to the first letter". He understood each owner had responded negatively to the earlier letter. In the light of these responses, he decided to spend $700 in order to get Mr Goold and Mr Rootsey into Mr Milch's office. He gave instructions for the letter to Mr Rootsey of 3 May "within 24-36 hours" before it was sent. He said that Mr Milch was an efficient solicitor who kept in close touch with him at that time and would "undoubtedly" have told him about the pre-acquisition notices if he knew of them. Yet Mr Makucha claimed that, on 3 May, he was still unaware of the fact that pre-acquisition declarations had been made. It will be recalled that on 1 May Ms Connell faxed to Mr Milch a copy of the declaration that had been served on Mr Rootsey.

44. The problems surrounding Mr Makucha's evidence are so extensive that I cannot confidently rely on it. However, I do accept that Mr Makucha was interested in the two properties. The Federal Airports Corporation itself recognised his likely interest. As early as 29 February 1988, Mr B G Armstrong, the Manager, Technical Services, of Federal Airports Corporation, wrote a memorandum addressed to some of his colleagues in which he referred to the possible acquisition of the "three privately owned and occupied properties within the general airport boundary". He identified the properties. They included the subject parcels. Mr Armstrong noted that attempts to purchase the properties had been unsuccessful. He commented:

"The potential exists therefore for anyone to acquire these properties

if they become aware of them.

In view of the efforts by Mr Makucha to acquire airport property this is

clearly and (sic) undesirable situation.

Any further non-Commonwealth ownership of the properties could

compromise the proposed development of the north east sector ... ."

45. I summarise my opinion about the offer evidence in four propositions:

(i) Even if I was satisfied that the offers contained

in the letters were genuine and would not have

been subject to any unusual conditions, it would

be contrary to legal principle to use them as

direct evidence that each parcel was worth

$500,000; but, if I was so satisfied, I could use

the letters as evidence of Mr Makucha's interest

in purchasing the parcels at prices that might

exceed their market value;

(ii) Being unable to accept Mr Makucha's evidence, and

in the absence of other evidence supporting its

critical aspects, I am not satisfied that the

offers were genuinely made or intended to be

translated into contracts free of unusual

conditions; so I do not draw from them a

conclusion that Mr Makucha was willing to pay more

than market value;

(iii) I am, however, satisfied (by a combination of Mr

Armstrong's memorandum, the fact of the offers and

Mr Makucha's undisputed evidence of his earlier

extensive acquisitions of land in the airport

vicinity) that Mr Makucha was a potential buyer of

the subject parcels; as, of course, was the

Federal Airports Corporation itself. There was a

competitive market for the two parcels; so it

might have been expected at resumption date that

they would realise prices fairly reflecting their

inherent characteristics.

(iv) In fixing the prices that they were respectively

willing to pay, and accept, potential purchasers,

and the vendors themselves, would be likely to be

influenced by their analyses of sales of parcels

most like the subject parcels. But, as the

prospective price would be relatively low, the

negotiating parties would also consider how much

the relevant parcel was worth, looking at it as a

block of land suitable for development and

regardless of rates per square metre.

46. Mr Dundas was the only expert valuer called on behalf of the applicants. I was impressed with his general competence and I am satisfied that he made a careful investigation of sales in the immediate vicinity. But he thought there were no sales of land in the area that cast light on the value of the subject parcels. He decided to look further afield. In doing so, Mr Dundas disregarded the Special Uses Area zoning of the subject land. He did this because he thought that s.59 of the Lands Acquisition Act applied. Mr Dundas asked himself what would have been the zoning if the land had not been required for airport uses. He took his answer from the 4(D2) zoning of nearby lands under the Local Environmental Plan. That zoning permitted "airport related" uses such as airport parking, hire car offices, airport related commercial offices and the like. As I have indicated, this approach was technically incorrect; s.59 did not apply. But it makes no difference to Mr Dundas' approach. It is agreed by the parties that, under the Special Uses Area zoning, the highest economic use of the land was for purposes such as those he assumed. Mr Dundas analysed six sales, all of them involving land remote from the airport. I summarise them as follows:

(i) 440-442 Elizabeth Street, Surry Hills. Sold after

auction in May 1990 for $400,000. Area - 279.9

square metres ($1,429 per square metre). Zoned

Residential 2C, but this zoning permits commercial

development up to two storeys.

(ii) 276-278 Abercrombie Street, Chippendale. Sold

(contract and transfer) 4 July 1989 for $396,500.

Area - 279.9 square metres ($1,417 per square

metre). Zoned Residential 2(h1), which zoning

permits small shops, galleries, professional

consulting rooms, business agencies and light

industries. A seven metre height limit applied at

the date of sale.

(iii) 76-78 Crown Street, Woolloomooloo. Sold by a

contract that was dated 20 April 1989 and

completed on 25 May 1989 for $560,000. Area 358

square metres ($1,564 per square metre). Zoned

Residential 2(g1) at date of contract - this

zoning permits the erection of a two storey

building for use as offices and residence.

(iv) 205 Bourke Street, Darlinghurst. Sold by contract

dated 26 June 1990 (completion 3 August 1990) for

$155,000. Area 139 square metres ($1,115 per

square metre). Zoned Residential 2F, which

permits car parking.

(v) 7 Myrtle Street, Crows Nest. Sold by a contract

dated 7 June 1989 that was completed on 24 July

1989 for $650,000. Area 213.4 square metres

($3,046 per square metre). Zoning not disclosed

but the property was purchased with development

approval for an office building.

(vi) 64 Penshurst Street, Willoughby. Sold by contract

dated 24 November 1989 and completed 31 January

1990 for $706,000. Area 468 square metres ($1,508

per square metre). Zoned light industrial.

47. I am not prepared to put any reliance upon sales (iv), (v) and (vi). Each of these sales involved land markedly different to the subject parcels. Sale (iv) was a sale to an adjoining commercial owner wishing to use the land for car parking, in an area where parking is notoriously difficult. The land was incapable of separate development. The unit price of the parcel probably reflects its smallness and the purchaser's need for off-street car parking. Sale (v) related to land within the major commercial centre of Crows Nest, in close proximity to two other major commercial centres at North Sydney and St Leonards and served by excellent public transport. The land was able to be developed by the erection of an elegant three storey structure, no doubt suitable for occupation by a wide variety of professional and commercial people. The land is greatly superior to the subject parcels. Sale (vi) related to a site 60% larger than the subject land and containing about three times its frontage. It is located on a major thoroughfare, is close to Mowbray Road and several good neighbourhood shops. The land provides an ideal site for a use such as its present use, a car and truck rental depot. It has distinct advantages over the subject parcels.

48. Sales (i), (ii) and (iii) also concerned land distinctly different to the subject parcels. Sale (i) involved vacant land on the fringe of the Sydney Central Business District. The land is located in a well-trafficked street, thus yielding high exposure for commercial users. It is close to many residential units and several major commercial activities (the tower office blocks on the former Toohey's brewery site near Central Railway and News Limited's offices). The land is within easy walking distance of Central Railway, with its excellent rail and bus facilities. This part of Elizabeth Street is less desirable than much of the remainder of it, although many businesses (including the Sydney Building Information Centre and several restaurants) are located there. The dimensions of the site are close to those of the subject parcels. The sale took place just before resumption date. Despite the obvious differences, this sale provides some assistance; but only by setting an upper limit to the value of the subject parcels. Number 440-442 Elizabeth Street is superior to the subject parcels.

49. I take a similar view about sale (ii). This sale related to a vacant site in a neighbourhood shopping centre. The centre serves a densely occupied residential area, with many small terrace houses and residential flats within walking distance. It is fairly close to Redfern railway station, Parramatta Road and Sydney University. Although Abercrombie Street carries considerable traffic at this point, the amount of traffic is probably less than in Elizabeth Street or past the subject parcels. This Chippendale sale has the advantage, for comparative purposes, of relating to a site having an area, and, apparently, frontage and depth, close to that of the subject parcels. But it has the disadvantage of being effected eleven months before the resumption date.

50. It is even more difficult to make use of sale (iii). The contract date was 14 months before resumption date. The land is 22% larger than the subject parcels. Judging by Mr Dundas' photograph, its frontage exceeds that of the subject parcels by more than 22%. The land is on an extremely busy road, with very high exposure to view. It is close to William Street and located towards the centre of the densely occupied residential part of Woolloomooloo. It lies within walking distance of the city's Macquarie Street precinct. The land is significantly superior to the subject parcels.

51. As will be obvious from my comments, I do not think that the sales analysed by Mr Dundas provide comprehensive guidance as to the value of the subject parcels. The only properties capable of meaningful comparison (really only sales (i) and (ii)) are superior to the subject parcels. But Mr Dundas' sales do two things: they demonstrate the existence of a market for small commercial sites and they show that a realistic value of the subject parcels would be below $1,400 per square metre. The sales do not indicate the likely bottom figure.

52. As mentioned, the respondents called two valuers. The first of them, Mr Rosenstrauss, identified five sales of industrial sites. Four of them were in Mascot, close to the airport. The other was at Alexandria, several kilometres away. This last sale (November 1990 for $460,000) related to a parcel of land containing 818 square metres - nearly three times the area of the subject parcels. The land was zoned 4(A) General Industrial and contained a single storey factory that was later refurbished. The sale provides no assistance as to the value of a small airport-orientated office site.

53. Much the same comment must be made about three of the Mascot sales. Number 81-83 Baxter Street sold for $425,000 on 24 June 1990, only 18 days after resumption date. It contained 1,016 square metres and had a frontage of 30.1 metres. The land contained a single storey brick and fibrous cement factory. It was zoned 4(A2) Industrial General Restricted, within which zoning airport related uses were permissible. But Baxter Street provides little exposure; it carries only local traffic. The greater size, restricted exposure and greater distance from the airport of this land combine to suggest that the rate per square metre ($418) achieved on the sale would be well below the worth of the subject parcels.

54. Number 22 Ricketty Street, Mascot is situated on a well trafficked road, though one that is less busy than those serving the subject parcels. It was sold on 3 August 1990 for $340,000. It contains 860 square metres, realising $395 per square metre. This land was also zoned 4(A2) Industrial. It contained an old factory building and was likely to continue to be used for industrial purposes. Mr Rosenstrauss noted that vehicular access was difficult.

55. The next sale mentioned by Mr Rosenstrauss, 350 King Street, Mascot was of a large parcel containing 1.649 hectares. The price was $11,286,000, the land being purchased on behalf of Qantas Airways for airport industrial purposes. The sale provides no assistance whatever.

56. Finally, Mr Rosenstrauss drew attention to the sale in December 1990 of a fragment of 4(D2) Industrial land, containing 112.2 square metres, for $56,100. This land lay between a new elevated roading and the Sheraton hotel development. It was sold by the Roads and Traffic Authority to the hotel owner for use as a site for an underground car park vent and landscaping. The land was incapable of separate development. Although Mr Webster suggested that its price ($500 square metres) demonstrates that the subject parcels are worth several times this rate, I decline to put any weight on this sale. The land was a remnant which sold for a relatively small sum. The sale obviously suited both parties, but it may be that the purchaser was under more pressure to buy than the vendor to sell.

57. In the result, I obtain little assistance from Mr Rosenstrauss' sales. All that they demonstrate is that the value of the subject parcels is likely to be significantly more than the rates per square metre paid for the larger, less exposed, industrially orientated sites in Baxter Road and Ricketty Street (both about $400 per square metre).

58. I turn to Mr Bishop's sales analysis. Mr Bishop also relied on five sales of industrial land. One of these was the 1.6 ha sale to Qantas. Of the remaining four, three have frontage to Ewan Street, a narrow road serving several industrial properties. The three Ewan Street properties are all significantly larger than the subject parcels. One property, on the corner of Ewan Street and O'Riordan Street, contained 1,480 square metres. It sold for $815,000 in November 1990, yielding $550 per square metre. At that time the land was subject to a five year lease current until 1 May 1993. Although this land shares with the subject parcels good exposure to high volume traffic, the difference in size makes comparison difficult. The land is probably best used for its current use, industrial premises.

59. Number 22 Ewan Street was sold in November 1989 for $570,000. It contains 613.5 metres. At the time of sale, it contained a factory building which Mr Bishop estimated to be worth $100,000. If one deducts this amount from the sale price, the result equals $766 per square metre. The property is a good industrial site but with difficult access and extremely limited exposure. It is markedly inferior to the subject parcels for the type of use envisaged by Mr Dundas; and, of course, contains over twice the area. It was sold seven months before resumption day on a rising market. These factors make direct compensation impossible. But the sale does suggest that the subject parcels are likely to have been worth considerably more than $766 per square metre at resumption day.

60. The final Ewan Street property is number 3 Ewan Street. This property sold on 2 April 1992 for $265,000. It contains 493.2 square metres. Mr Bishop estimated the improvements to be worth $15,000, giving a land value of $250,000 ($507 per square metre). The improvements consisted of an old weatherboard and galvanised iron cottage converted to office use. The property suffers from the same limited access and lack of exposure as 22 Ewan Street. It is 68% larger than the subject parcels. More importantly, it was sold nearly two years after resumption date. There is no evidence of the trend of the market between June 1990 and April 1992; but it is notorious that this period coincided with a severe recession which affected the whole property market, and perhaps especially the market for commercial and industrial properties. For that reason alone, no weight should be placed on this sale.

61. The remaining property mentioned by Mr Bishop is the one on which he placed most weight. The property is 20 Sarah Street, Mascot. Sarah Street lies parallel to Ewan Street and intersects with O'Riordan Street. The properties fronting Sarah Street predominantly contain old factory buildings. The land sold for $232,500. Mr Bishop thought the improvements were worth about $7,500, so he derived a land value of $225,000 or $833 per square metre. The purchaser was Haniroast Pty Ltd, a company associated with Mr Makucha. It is understandable that Mr Bishop thought this sale useful. The dimensions of the property are close to those of the subject parcels. The frontage (9.14 metres) is identical. Number 20 Sarah Street has slightly less depth (29.57 metres) and area (270.26 square metres). The land was zoned Industrial Special (Restricted) Airport Related. The type of development envisaged by Mr Dundas is permissible in that zone. Moreover, the sale date (28 March 1990) was only ten weeks before the resumption date.

62. I agree that this sale provides guidance; but, only by indicating the bottom of the range of rates per square metre that ought to be considered in relation to the subject land. Number 20 Sarah Street is inferior to the subject parcels in three important respects. Access is more difficult. It is impermissible for vehicles to make a right hand turn into Sarah Street. So any vehicle approaching the site from the city must either use narrow Ewan Street or proceed further along O'Riordan Street to, and then around, the roundabout and then return northwards along O'Riordan Street and make a left hand turn into Sarah Street. In relation to the first option (Ewan Street) there could be a difficulty, especially for the driver of a truck or other large vehicle. The evidence is that it would be difficult for two cars to pass in Ewan Street if vehicles were parked on one side of the roadway. The second option presents no particular difficulty, though it slightly extends the journey. But strangers may not realise that this is the desirable course.

63. Number 20 Sarah Street backs on to a landscaped area above the new road previously mentioned. But for a tree-planting program undertaken by the Roads and Traffic Authority, it would have reasonable commercial exposure to persons using that road. But it does not now. I do not know what stage the tree planting program had reached at the date of sale, but it must then have been predictable that trees would eventually screen the land from the roadway.

64. Finally, 20 Sarah Street is much further from the domestic terminals than the subject parcels. For that reason alone, it is less suitable for an airport-oriented commercial use.

65. Relying primarily upon his first two sales (Surry Hills and Chippendale) Mr Dundas assessed the value of the subject parcels at $1,450 per metre. This equals $424,282, a figure which Mr Dundas rounded off at $430,000.

66. Mr Rosenstrauss did not value the land on the basis of its use for a two-storey commercial development. He placed considerable, almost exclusive, weight on the sale of the 112.2 square metre remnant to the hotel developer. As indicated, this shows $500 per square metre, only $146,000 for the subject parcels. This figure is obviously too low.

67. Although he took into account his other sales, Mr Bishop relied primarily on the Sarah Street sale. He recognised that this property was inferior to the subject parcels, so he increased its disclosed rate per square metre by 10%, to $920. Applying that rate, he valued each of the subject parcels at $270,000.

68. It is clear to me that the correct rate per square metre lies between Mr Dundas' $1,450 and Mr Bishop's $920. I think that Mr Dundas errs in regarding the subject parcels as more desirable than the Surry Hills land and only slightly inferior to that at Chippendale. Their isolation from other commercial development makes the subject sites inferior to Surry Hills and Chippendale, and to a significant degree. On the other hand, I think that the subject parcels enjoy an advantage over 20 Sarah Street which is not sufficiently reflected by a 10% adjustment. I have considered whether a 20% adjustment would be appropriate. This would yield $1,000 per square metre or $292,600 total value. But I am unhappy with that figure. I think it inadequately reflects the very considerable advantage that the subject parcels enjoyed, in relation to exposure to airport traffic and utility for selected airport-related uses. I cannot resist the thought that, if Mr Makucha was prepared to pay $232,500 for 20 Sarah Street, he would almost certainly be prepared to pay 50% more than that figure (say $350,000) for either of these two parcels. And, considering the parcels as sites for small airport-related development, I think that others would also be interested at that price.

69. A figure of $350,000 is almost exactly $1,200 per square metre. That figure relates well to the comparative advantages of these parcels over those examined by Mr Bishop, and their disadvantages vis-a-vis those mentioned by Mr Dundas. Given the absence of sales of truly comparable properties, it is impossible to demonstrate that any particular figure is certainly correct. But, having taken into account all the valuation evidence and the features of the various properties that have been mentioned, I think that an assessment of market value in the sum of $350,000 would be fair.

70. In addition to compensation for the market value of his land, each applicant is entitled to recover householder's solatium and compensation for disturbance. Entitlement to solatium depends upon the conjunction of specified circumstances: that the compulsorily acquired land was the site of a dwelling occupied at resumption date by the owner of the land as his or her principal place of residence; and that, because of the acquisition, the person has lost the right to occupy the dwelling: see s.61 of the Lands Acquisition Act. These conditions are fulfilled in these cases. It makes no difference that the dispossessed owners are being compensated on the basis of commercial values. Each is entitled to a solatium payment. Counsel agree that the indexed figure of $10,000 stipulated by s.61 was $10,680 at resumption date. This amount should be allowed in each case.

71. Counsel also agree that in each case the following costs should be allowed pursuant to s.55(2)(c) and (e):

Pre-acquisition legal advice $500

Legal disbursements on purchase of

replacement property $500

Survey on replacement property $300

Building/pest report on replacement

property $350

Removal costs $2,000

Mail re-direction $24

Telephone reconnection $48

Valuation fees on initial claim $2,278

72. These items total $6,000. I allow them in each case.

73. Counsel agree that, in addition to these expenses, each applicant is entitled to recover solicitor's profit costs and stamp duty on the purchase of a replacement property. The amount of those expenses depends upon the price paid for the replacement property. On behalf of the applicants, Mr Webster contends that I should take a purchase price corresponding with my assessment of the market value of the resumed parcels. Mr Robertson says this is wrong in principle - the value of the hypothetical replacement property should be related to the value of the resumed land, considered as a dwelling.

74. In the present cases little turns on this issue. But the matter is one of general importance. So I will indicate why I think Mr Robertson's submission is correct. Section 61 not only provides a solatium payment to people within its purview. It also provides, by subs.(2)(b), that such a person shall receive "the amount necessary to reimburse the person for the costs of acquiring a reasonably equivalent interest in land that entitles the person to occupation of a reasonably equivalent dwelling". The yardstick is not land of reasonably equivalent value, but a "reasonably equivalent dwelling". In cases where market value is assessed by reference to residential value, the two measures will coincide. But where, as here, market value is determined by reference to a higher economic use, they will not.

75. Mr Webster contended that, if this was the proper interpretation of s.61(2)(b), I should hold that, in this respect, the Act failed to provide for acquisition on just terms. He said that, in that situation, I can and should increase the assessed compensation to a figure that would provide just terms.

76. I do not doubt my power to take that course: see s.93 of the Act and the discussion of its predecessor by Jacobs J in Albany v. Commonwealth of Australia (1976) 12 ALR 201 at 233. But there is nothing unjust about s.61(2)(b). On the contrary, it takes an approach more generous to resumees than that which applies under the general law.

77. In Horn v. Sunderland Corporation (1941) 2KB 26 the English Court of Appeal held that under the United Kingdom Acquisition of Land (Assessment of Compensation) Act 1919 (which codifies the assessment principles previously adopted under the general law) disturbance ought not be allowed in a case where the market value is being assessed on the basis of a higher economic use than the actual use at resumption date. The rationale of this holding was that it would not have been possible for the owner to exploit the higher economic use without incurring disturbance costs: see per Greene M R at 35 and Scott LJ at 42. At the latter reference, Scott LJ put the matter pithily by saying:

"Ex hypothesi, the building value is only realizable if and when the

land is offered in the market as building land, which necessarily

postulates that the selling owner will have given up his farm and

cleared the land of all its farm buildings, stock and implements, or, at

least, is ready and willing to do so at his own expense. Conversely, in

so far as he chooses to leave that task to be performed by the

purchaser, he must submit to the deduction of the cost of it from his

price."

78. Horn v. Sunderland Corporation has been applied by the High Court of Australia: see Commonwealth v. Milledge [1953] HCA 6; (1953) 90 CLR 157 and Crisp and Gunn Co-operative Ltd v. Hobart Corporation [1963] HCA 55; (1963) 110 CLR 538. It leads to the conclusion that, in the absence of the special provisions of s.61 of the Lands Acquisition Act, the present applicants would not be entitled to any disturbance compensation. They would have needed to incur disturbance costs in order to take advantage of the commercial potential of the land, a potential which is reflected in market value. There is no justification for the contention that, in limiting the allowance for the costs of a new dwelling to the value of the old dwelling, the statute fails to provide just terms.

79. Counsel have provided me with a schedule setting out scale purchaser's legal costs and stamp duty, at various considerations. Applying s.61(2)(b), I take those figures which correspond to the residential value assessed in each case by Mr Rosenstrauss; that is, $180,000 in the case of Mr Goold and $175,584 in the case of Mr Rootsey. The schedule reveals that the legal costs and stamp duty arising out of the purchase of a house for $180,000 is $5,895; that for $175,584 is $5,723. I will add these figures to the sums already mentioned.

80. In summary, I assess compensation in Mr Goold's case at $372,575, made up as follows:

Market value of land $350,000

Solatium 10,680

Agreed disturbance and professional

items 6,000

Legal and stamp duty on replacement

property 5,895

Total compensation $372,575

81. In Mr Rootsey's case, the first three items are the same. But the difference in the last sum yields a total of only $372,403. I assess compensation at that figure.

Acquisition Act 1989

Land Acquisition Act 1989

United Kingdom Acquisition of Land (Assessment of Compensation) Act 1919

Re John Goold and Harold Norman Rootsey v Commonwealth of Australia and Federal Airports Corporation [1993] FCA 157;

At a glance

Court

Decision date

Before

Source

Judgment (109 paragraphs)

Re John Goold and Harold Norman Rootsey v Commonwealth of Australia and Federal Airports Corporation [1993] FCA 157; (1993) 114 ALR 135 (1993) 79 Lgera 407 (1993) 42 FCR 51 (14 April 1993)

Parties

Legislation Cited (3)

Cases Cited (11)