Rosenbaum v The Minister

I have had serious misgivings as to whether or not there was evidence before the Supreme Court of the value, for the purposes of compensation, of the appellant's estate in the land. Due to the course deliberately adopted by the appellant in not offering any evidence of the value of that interest, notwithstanding a specific opportunity to do so, the only material upon which the Court could properly act was the amount of a valuation of which notice was served upon the appellant by the Constructing Authority in purported compliance with s. 103 of the Public Works Act. That section requires the Constructing Authority to cause a valuation to be made in accordance with the provisions of the Act of the estate or interest of the claimant in the land acquired. The amount of the valuation said to be thus made, as compared with the Valuer-General's valuation of an estate in fee simple in possession of the land which was in evidence, certainly raises in my mind a serious question as to whether the notified valuation was made in accordance with the provisions of the Public Works Act. The tenancies to which the appellant's estate in the land was subject, though within the statutory provisions operating at the time of the acquisition limiting the right of recovery of possession by lessors, were yet weekly tenancies. Any limitations which existed upon the appellant's right to terminate the tenancy or to recover possession of the land did not enlarge the interest of the tenant in the land, however much they may affect the return of the appellant from the land, or the value of the lessor's estate therein so long as such limitations continued to exist or no order of a magistrate was made.

But in the case of property affected by statutory provisions of that kind considerations such as were referred to in The Moreton Club v. The Commonwealth [1] and in The Commonwealth of Australia v. Arklay [1] have their distinct influence upon the valuation to be made of the estate or interest taken for the purpose of assessing compensation.

1. (1948) 77 C.L.R. 253. 2. (1952) 87 C.L.R. 159.

It must remain doubtful in my mind whether any such considerations were in mind when the notified valuation was made or whether they were adequately reflected in that valuation. However, I think that the appellant chose to allow the Supreme Court to decide the question of compensation for the taking of her estate in the land upon the valuation which I think constituted in the circumstances some evidence of the value of the appellant's estate in the land. The appellant is thus bound by the course of events.

This is an appeal against an order of the Supreme Court of New South Wales (Full Court) made upon a case stated under s. 17 of the Land and Valuation Court Act, 1921-1957 N.S.W.. The section authorizes the Land and Valuation Court to state a case for the opinion of the Supreme Court on any question of law arising in a proceeding before the Court. In the present case three questions were submitted in relation to an action for compensation for a resumption of land in which the appellant was the plaintiff and the respondent was the defendant. The first question was whether in the circumstances stated the Judge who constituted the Land and Valuation Court "was in error in law in determining the compensation payable at the sum of £2,500". The other questions were contingent upon an affirmative answer being given to the first. As the Supreme Court answered the first question in the negative, the others required no answer.

The first question, as stated, is not a question of law which arose in the proceeding. A specific question of law which did so arise should have been isolated and presented to the Supreme Court in precise terms. However, upon a perusal of the material in the case stated it becomes clear enough that a specific question of law did arise in the proceeding, and as the Supreme Court has passed upon it we should, in this instance, treat the case as properly raising it.

The resumption was effected under Div. 1 of Pt V of the Public Works Act, 1912 N.S.W. in pursuance of an application by the governing body of an institution which had been declared an institution for the purposes of the Land Acquisition (Charitable Institutions) Act, 1946 N.S.W.. That is to say that it was effected by notification published in the Gazette , in consequence of which the land became vested by force of s. 4 (6) of the Land Acquisition (Charitable Institutions) Act in the Crown, freed and discharged from all trusts, obligations, estates, interests, contracts, charges, rates, rights of way or other easement whatsoever. The land so vested was the full fee simple (see s. 4 (9) of the lastmentioned Act). Upon publication of the notification in the Gazette , sub-ss. (2) and (3) of s. 45 of the Public Works Act took effect in respect of the estate and interest of every person entitled to the land, so that every such estate or interest must be taken to have been converted into a claim for compensation in pursuance of the subsequent provisions of that Act and every such person upon asserting his claim as provided and making out his title became entitled to compensation on account of the resumption, in the manner thereafter provided.

The question of law that arose in the present case at the trial concerned the ascertainment of the compensation appropriate to the estate or interest to which the appellant had claimed that she was entitled immediately before the resumption. Her notice of claim which had been served on the Crown Solicitor in compliance with s. 102 of the Public Works Act had described her as owner of the freehold, but had added that each of the two parcels into which the land was divided was let to a named person at a stated amount per week and that both parcels were subject to the Landlord and Tenant Act - meaning, as both parties agree, that each parcel was subject to the provisions of the Landlord and Tenant (Amendment) Act, 1948-1961 N.S.W. which curtail the rights of a landlord as regards terminating the tenancy and recovering possession of the demised premises. Plainly enough, this was a claim to be entitled to compensation for having been dispossessed of an estate in fee simple in reversion upon the tenancies. The Constructing Authority so interpreted it. Pursuant to s. 103 he gave the appellant a notice of valuation in the form in the Seventh Schedule to the Act, stating that "the land hereunder described, being that in respect of the taking whereof your claim for compensation has been lodged, has been valued at the sum of £2,500". Then followed a description of the two parcels that had been resumed; but the statement was added that "This valuation represents the claimant's interest in the premises after taking into consideration the tenancies mentioned in the notice". The appellant's declaration in the action contained an allegation that she was at all material times seised of an estate in fee simple in the resumed land; but this was an immaterial allegation because in an action for compensation there is no issue as to title: Robert Reid & Co. v. Minister for Public Works [1] . The verdict determines the amount of the compensation appropriate to the estate or interest which the plaintiff has claimed and, by disclosing a prima facie title, has got the Constructing Authority to value; but no judgment for payment of that sum can be entered: see the Compensation for Resumption Rules, r. 4 and the form of judgment in the schedule. This is because the plaintiff's right to payment remains conditional upon his making out a title to that estate or interest to the satisfaction of the Constructing Authority: s. 126; if he neglects or fails to do so, the compensation may be deposited with the Master in Equity to the credit of the parties interested in the land and becomes subject to the control and disposition of the Court: s. 61. The material allegations in the declaration were that the appellant had served notice on the Constructing Authority of the nature of her estate or interest, that he had caused a valuation of "the said claim" to be made and had informed her of the amount of the valuation, and that the parties had not agreed as to the amount of the compensation. The declaration ended with a claim that the amount of the compensation payable be determined at the sum of £7,500. The plea properly ignored the allegation that the appellant had been seised of an estate in fee simple. It alleged that the amount claimed by the appellant exceeded the amount to which she was entitled as compensation in respect of the premises - meaning, of course, the amount to which she was entitled on the assumption that she could establish the title that had been valued, which she had claimed.

At the trial, the appellant's notice of claim and the Constructing Authority's notice of valuation were put in evidence, as was a certificate of valuation of the Valuer-General under s. 76 of the Valuation of Land Act, 1916-1961 N.S.W. showing the improved value of the resumed land as having been at the date of resumption £5,000 "for fee simple in possession". The learned trial Judge held, in effect, that the estate or interest to be valued in the action was not the fee simple in possession but the fee simple subject to the weekly tenancies, and that therefore the Valuer-General's certificate was irrelevant. He gave the appellant an adjournment to adduce other evidence, but none was forthcoming. Thus the only material before him as to value, assuming that his ruling was correct, was the respondent's valuation of the appellant's reversion at £2,500; and he determined the compensation at that figure since the appellant did not allege that the land had any special value for her or that her compensation should include any element other than market value.

It will be seen that the question of law involved was whether the value of the fee simple in reversion claimed by the appellant was at least the value of the fee simple in possession, or on the contrary was necessarily less than that value by reason of the subsistence of the weekly tenancies. It is impossible to sustain the general proposition which the appellant's counsel pressed upon us, that there cannot be a difference between the value of a fee simple which is subject to a lease and the value of a fee simple which is not. No doubt the two may be of equal value, especially where the lease is at a rack-rent; but whether they are of equal value in a given case depends upon whether the existence of the lease, with all its incidents including statutory incidents would affect the price which would be agreed upon for the reversion between a vendor and purchaser both willing but not anxious to reach agreement.

The evident meaning of the Valuer-General's certificate in the present case is that the sum of £5,000 makes no allowance, by way either of addition or of subtraction, for the existence of any tenancy. Consequently, in order to make the certificate relevant to the assessment of the appellant's compensation evidence was needed to the effect that the weekly tenancies, with their incidents under the Landlord and Tenant (Amendment) Act, were not disadvantageous, that is to say that an ordinary, prudent purchaser would not give less for the reversion than he would give for the land with vacant possession. No evidence to that effect was adduced, and accordingly, as it seems to me, the trial Judge was right in refusing to act upon the certificate.

The validity of this conclusion is challenged by a submission to the effect that in respect of every resumption of a fee simple the market value of the fee simple must be determined once for all, in an action for compensation brought by one claimant; and (if I follow the argument correctly) that for this reason the whole of the amount determined as the value of the fee simple in the present case should have been included in the appellant's compensation, subject to a liability on the part of the appellant to pay over a proper proportion thereof to any other person who should prove that he was entitled to an estate or interest in the land.

The submission goes, I think, beyond anything to be found in the judgment which was delivered by Griffith C.J., with the concurrence of Barton J., in Harris v. Minister for Public Works (N.S.W.) [1] but it purports to be founded upon the main thesis of that judgment. It is a thesis which Isaacs J. considered to be incompatible with the terms of the statute. If the difference of opinion between their Honours had been only as to the construction to be placed upon provisions of doubtful meaning, we could hardly be justified in re-opening the discussion at this distance of time. But it was in essence a difference as to the validity of an assumption which underlay the whole of the learned Chief Justice's reasoning; and its importance is so great for every question depending upon an understanding of the plan and structure of the compensation provisions that reconsideration of it seems to me to be fully justified.

The fundamental assumption in the judgment of Griffith C.J. is "that the resuming authority is only concerned with the value of the physical object taken" [1] , "the substantial rights of the owners of the land (being) to share in the money substituted for it" [1] ; so that, at least in the case of settled land, "the total value of the land is a single sum payable by the resuming authority" [2] . His Honour drew from this view of the Act the conclusion that a dispossessed life tenant or remainderman must accept in respect of the market value element in his compensation, a proportionate share of a single sum payable by the resuming authority and fixed once for all as binding, if not upon them both. The State courts have endeavoured to cope with the difficulties involved in requiring that a total market value be ascertained in one claimant's action in a manner binding upon other claimants who are not and cannot be made parties to that action: see, for example, McMahon v. Sydney County Council [3] ; but the criticism to which the whole theory is open is not merely that there are difficulties in applying it, but that it regards compensation in respect of a given resumption as a total liability of the Constructing Authority whereas the Act regards it as a separate right given to each dispossessed individual in replacement of the estate or interest of which he himself has been deprived. Each estate or interest which was separately held at the time of the resumption is converted into a separate claim; each person's claim is to be separately notified, separately valued by the Constructing Authority, quantified (in the absence of agreement) in a separate action at the suit of the person claiming, thereafter separately substantiated by the making out of a title by that person, and separately satisfied by means of a payment to him or to the Master in Equity.

1. (1914) 19 C.L.R., at p. 188. 2. (1914) 19 C.L.R., at p. 186. 3. (1914) 19 C.L.R., at p. 187. 4. (1940) 40 S.R. (N.S.W.) 427; 57 W.N. 142.

As a practical consideration tending to support the view of the learned Chief Justice it was urged in the present case that if the respective values of a life estate and the remainder thereon, or the respective values of a term of years and the reversion thereon, are to be assessed separately in separate proceedings it is possible that the total of the two values may exceed the value of the fee simple. The unexpressed assumption, of course, is that the value of land or of an interest in land is a fixed fact. In truth it is not. Unless and until it is fixed by a determination binding upon a person it can never be the subject of dogmatic statement as against that person, but must always remain a matter of opinion, as this Court pointed out in Federal Commissioner of Taxation v. Westgarth [1] . The utmost that can be said in respect of a given resumption, then, is that the sum of the values that may be assigned in the separate proceedings to the respective limited interests is greater than the amount which some selected person, such as the Judge who presided in one of the proceedings, has considered to be the value of the fee simple. Such a statement, however, would be as irrelevant as its counterpart, namely that the sum is less than the amount which some other person, such as the Judge in the other proceeding, has considered to be the value of the fee simple. In these considerations there is, I think, nothing of assistance upon the question we have to decide. It is, after all, a question of the meaning of the Act. In my opinion the reasoning of Isaacs J. on the relevant aspect of Harris v. Minister for Public Works (N.S.W.) [1] should be accepted in preference to that of Griffith C.J., and that case should not be treated in this appeal as an authority in the appellant's favour.

1. (1950) 81 C.L.R. 396. 2. (1914) 19 C.L.R. 180.

Some reliance was placed for the appellant upon the special provision made by s. 78 for compensation to a person who, though in possession of land, has no greater interest than as tenant for a year or from year to year and is required to give up possession of any of the land before the expiration of his term or interest therein. It was said that this provision creates an exception out of the general scheme in regard to compensation, and produces the result that where it applies the owner of the freehold is entitled to have the full value of the freehold included in his compensation, regardless of the tenancy. The logic of the argument need not be discussed; it is enough to point out that according to its own terms s. 78 is not a provision for compensation for deprivation of an interest by resumption: it is applicable only to the case where a tenancy remains on foot after the resumption. The section is descended from s. 121 of the Lands Clauses Consolidation Act, 1845 U.K. and applies where land is taken subject to short tenancies. As appears from the judgments of members of the Court of Appeal in Syers v. Metropolitan Board of Works [2] , the provision means that if, after the acquisition, there is a tenancy still subsisting and a person is in possession thereunder, the tenancy not being for more than a year or from year to year, the acquiring authority, instead of waiting until the tenancy expires or determining it by an appropriate notice to quit, may require the tenant to give up possession of the whole or part of the land, thereby putting an end to the tenancy in whole or in part, and then must pay compensation for having done so. The section has no bearing upon the question in the present case.

For these reasons I am of opinion that the learned trial Judge correctly decided the question of law that arose before him, and the appeal should be dismissed.

I have had the opportunity of considering the reasons prepared on this appeal by my brother Kitto. I agree that the appeal should be dismissed and I do not wish to add to what he has said.

The appellant, who was the owner of certain house property subject to tenancies, contends that she was entitled, upon her own application and without the participation of the tenants, to have compensation for the compulsory acquisition of a fee simple in possession of the land assessed without regard to the tenancies. The acquisition was effected under the Public Works Act N.S.W. and the question has to be determined by reference to the provisions of that Act.

I agree that her contention must fail and I do so notwithstanding the presence in the Act of some provisions which appear to assume that there will be but one assessment of compensation for what has been acquired whether or not the whole of the interest acquired was in one ownership, e.g. s. 105.

Even upon the judgment of Griffith C.J. in Harris v. Minister for Public Works, N.S.W. [1] , the appellant's contention must fail for at p. 187 the learned Chief Justice said: - "It is said in Halsbury's Laws of England, vol. VI, at p. 67, that each party on whom a notice to treat has been served is entitled to have the compensation as regards his own particular interest assessed separately. The cases cited in support of this position are Fotherby v. Metropolitan Railway Co. [1] , in which the claim was in respect of an entire and undivided interest, and Abrahams v. London Corporation [2] , which was a case of a lease with several underleases. The distinction between the estate of a tenant for life and the estate of a lessee, so far as regards assessment, is so plain as not to require elaborate exposition. The value of the lessee's interest in his term does not depend upon any apportionment of a lump sum, while, on the other hand, in the case of a life estate the total value of the land, which is a single sum payable by the resuming authority, must, if the argument is correct, be apportioned between the tenant for life and remainderman" [1] . I agree, however, with Kitto J., whose judgment I have had the advantage of reading, that we should not now regard ourselves as bound by that case to decide that when the total interest in land which is taken is divided, the compensation payable in respect of the land taken is to be assessed once for all and the individual owners of estates or interests in the land are not entitled to separate assessments of the value of their individual estates or interests. It may be that in some cases in order to comply with special provisions of the Act there must be but one assessment of the value of what has been acquired, but in general the provisions of the Act as a whole satisfy me that every person who has an estate or interest in what has been acquired is entitled to have his claim for compensation determined upon an application of his own made separately from those of the other owners.

1. (1914) 19 C.L.R. 180. 2. (1866) L.R. 2 C.P. 188. 3. (1868) L.R. 6 Eq. 625. 4. (1914) 19 C.L.R., at p. 187.

I have carefully considered the judgment that Walsh J. gave in the Supreme Court; and, notwithstanding the elaborate argument for the appellant that we heard, I am satisfied that his Honour's conclusion, concurred in by the other members of the Court, was correct. I fully agree in what has been said by my brother Kitto whose judgment I had the advantage of reading.

But although I consider that the learned trial judge correctly decided, on the evidence before him, the question of law that arose for his decision, I yet think that in the special circumstances of this case justice can only be properly served by remitting the matter with an intimation that it would be proper to allow the case to be re-opened to permit evidence to be given on behalf of the appellant of the value of her interest in the premises. For that reason, and to that end only, I would set aside the assessment of the trial judge. I shall briefly state my reasons.

Walsh J. said that he had "an uneasy feeling that £2,500 may be less than the amount which the appellant should have received". This feeling I share. I echo the statement that the Chief Justice made during the course of the hearing before us: that he "could not discover or understand how it could be said that a person who has granted a weekly tenancy reduces by fifty per cent the value of his freehold". Counsel for the respondent could suggest no reasonable explanation of the process by which the valuation of £2,500 was arrived at, or how it could be reconciled with a value for the freehold in possession of £5,000. It was said that it was because the weekly tenancies were protected by the Landlord and Tenant (Amendment) Act, 1948-1961, the provisions of which control and curtail the right of a landlord to give a notice to quit and require him to obtain authority from a Fair Rents Board to increase the rent. But how these statutory modifications of the contractual and common law incidents of a periodic tenancy could have the drastic consequences they were said to have was not explained to us. There was some suggestion in the argument for the respondent that the difference, £2,500, between the values put upon the freehold in possession and the freehold in reversion reflected the value of the tenancies to the tenants. But could this be so? The tenants could not, it seems, have assigned any interest beyond the weekly terms, for the statutory restrictions upon the landlord's common law rights would not survive assignment, sub-letting or parting with possession by a tenant of the premises. How then could one say what a willing but not eager purchaser would pay to acquire the tenants' terms? And on a compulsory acquisition by the Crown these tenancies could have no greater value than mere weekly tenancies unaffected by the statutory modifications, as these do not bind the Crown. In any event, the value of the reversion cannot necessarily be determined by simply subtracting the value of the term, however that be arrived at, from the value of the freehold. The two interests are separate and to be separately valued. I need say no more than that I have the greatest misgivings about the valuation of the appellant's interest at £2,500. I think that, if the matter were investigated upon adequate evidence, it might be found to be considerably more than that amount. Counsel for the appellant had, however, deliberately elected not to tender evidence to support a greater value, although he was given an opportunity to do so and an adjournment was allowed for that purpose. His attitude thus left the learned trial judge with no other course open than to assess the compensation at the sum of £2,500. I would ordinarily consider, without any hesitation, that the appellant was bound by the course thus taken on her behalf. But the circumstances were unusual. Counsel had insistently argued that his Honour was obliged by law to make one assessment of compensation only, that of the value of an unencumbered freehold in possession. Support for this view could, it was argued, be found in some remarks by Griffith C.J. in his judgment in Harris's Case [1] . His Honour refused, and rightly refused, to accept the proposition put for the appellant. It was after he had given his ruling against it that he invited the appellant's counsel to call evidence. But counsel, being firmly of the view that the law was on his side, preferred to test by appeal his Honour's interpretation of the law. His Honour having given judgment was asked to state a case for the decision of the Supreme Court. The ground on which counsel had so insistently and uncompromisingly taken his stand was found in the Supreme Court to be unsound. But it seems to me that, not until after that question of law was finally resolved, as now it has been, should the appellant be treated as precluded from having the amount of compensation to which she is entitled assessed on a proper basis. The question arises between the Crown and a subject whose land has been expropriated. The subject urged that compensation be determined in a way that was mistaken. But to that mistake remarks in Harris's Case [1] contributed: and only now have those remarks been discounted by this Court.

1. (1914) 19 C.L.R. 180, at p. 190. 2. (1914) 19 C.L.R. 180, at p. 190.

I would remit the matter to the Supreme Court with a view to the case being re-opened.