Skypoint Investments Pty Ltd v Gavranich & Anor [2006] WADC 153

Skypoint Investments Pty Ltd v Gavranich & Anor [2006] WADC 153 - WADC 2006 case summary — Zoe

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12 Attached to these Reasons is a copy of exhibit 6. It shows the general layout of the two roads the subject of this dispute. It shows, as a guide, the road and associated work done by the plaintiff (solid coloured lines).

13 It was not in dispute by Skypoint at trial that Gavranich did road work on land previously owned by it. It was common ground that the land had become vested in the Crown with a right of use in the public. It was also admitted at trial that the defendants incurred costs as a result of the work done on the plaintiff's land.

14 Ian Bruce McKellar ("McKellar") is a civil engineering assistant. He is the managing partner and director of a business styled Civil Technology. This is an engineering consultancy dealing primarily with land subdivision. He was the project manager for Skypoint's subdivisional works. He made on-site visits and generally co-ordinated the road works.

15 He accepted that Gavranich had constructed asphalted and kerbed roads past his own boundary onto the road reserve of the land previously owned by Skypoint and in doing connected with the roads built by Skypoint's contractors. Gavranich had undertaken, among other things_,_ earth works and all aspects of road construction to achieve this.

16 It was also accepted that there were 18.27 metres of Ashbrook Avenue and 4.87 metres of Chalk Elbow on land previously owned by Skypoint that required completion in order for it to connect to Gavranich's road.

17 McKellar gave evidence that the Shire required Skypoint to make a temporary turnaround circle at the end of the road pavement on Ashbrook Avenue so that if any traffic proceeded down to the dead end it was possible to execute a turn and retrace a path.

18 This was in the context of there being no building or activity on Gavranich's land at that stage. Such a turnaround would also allow access by the public who were, as Stewart Baldock, director of the plaintiff put it, "hopefully going to buy (your) blocks of land".

19 McKellar gave evidence that the road reserve of Ashbrook Avenue ran to the boundary but the actual asphalted area stopped 18.27 metres short. He said that the turning circle comprised gravel and road base:

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37 Section 28A provides a statutory mechanism and also a method of calculation whereby an earlier subdivider can recover the costs of providing a road from a later subdivider who gains a benefit from its provision (Cinnani v Western Australia Planning Commission (2003) WATPAT 82).

38 Each subdivider of land served by the street system should contribute appropriately. One of the aims of the legislation is to share the burden of creating roads between subdividers of adjoining land who both get benefit from the road.

39 The deposited plans are part of an integrated road planning network. Each party gave evidence of how the construction of its road benefited the other party. Gavranich had constructed more of the total of Chalk Elbow than Skypoint. McKellar accepted it was four times more. Ashbrook Avenue connected to a major thoroughfare on Gavranich's land. It was put this was beneficial to the plaintiff.

40 Skypoint said that without the need to construct the roads on his land that land would have been dedicated to additional housing lots culminating in more profit.

41 The portion of Ashbrook Avenue on the plaintiff's land provides access to a primary school. The portion of Ashbrook Avenue on the defendants' land provided close proximity to and access to public open space.

42 I find there are general benefits to each party from the work done by the other party in the construction of these two roads on the respective pieces of land.

43 The second reading speech talks about provision of financial assistance to the earlier subdivider if the road is opposite a road junction. The word road junction is not contained within the Act.

44 In general parlance the word "junction" means the point at which things join or are joined. It seems to me that the word "junction" covers a range of meanings including an intersection and a road configuration commonly called a "T-junction". The reference to a road junction, is, in my view ambiguous.

45 A second reading speech may well be of some assistance in the interpretation of legislation if wording in the legislation is ambiguous. Whilst s 28A is not easy to understand, in my view, it is not ambiguous insofar as it refers to a road of the later subdivision joining an existing road.

46 I see no reason why s 28A(1)(a)(ii), given the plain wording of the section, should not apply to cases such as this where the subdivisional road extends to and joins the existing road despite the fact it is not opposite an intersection as argued by Gavranich. In s 28(1)(a)(ii) the issue of a "common boundary" does not arise.

47 The aim of the legislation is to provide some reimbursement to an original subdivider who has established a road which is to serve a subdivision with which it interfaces.

48 The WAPC had approved the plans and the works done on the original subdivider's land including the road construction in question.

49 Having arrived at the conclusion that this part of the section can apply to these roads it is necessary to move on to then consider s 28A(1)(b) and (c).

50 When marrying s 28A(1)(a)(ii) with subsection (b) the use of the word in subsection (b) "also" is curious. It makes sense when s 28A(1)(a)(i) applies. Subsection (b) appears to be an exact reproduction of the subsection prior to the 1986 amendment without any attempt to modify or tie it in given the insertion of subsection (a)(ii). I am of the view that the use of the word "also", insofar as subsection (b) relates to subsection (a)(ii), is redundant. The word "also" seems to relate back to a requirement for a common boundary. However, s 28A(1)(a)(ii) which applies to this case does not require it.

51 Section 28A(1)(b) refers, in a somewhat cumbersome fashion, to the original subdivider "who previously subdivided land that (also) has a common boundary with that existing road contributed to or bore solely the cost of providing the existing road".

52 In this context it is useful to consider what the term "existing road" encompasses.

53 Exhibit 6 also shows what Skypoint has described as the "contribution" area. It is a total area of 1044 square metres and comprises both the road reserve and road pavement constructed by Skypoint's contractors for the two roads in question. No part of the road reserve or pavement area of Lucca Entrance was included. McKellar gave evidence that it related to roads common to both areas:

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54 Skypoint sought a contribution for works done solely by it to the two roads on the land it previously owned. Gavranich had not contributed to the cost of building that part of the road for which contribution was sought. Apart from Gavranich's potential to retrieve some of the limestone sub-grade there was no suggestion of contribution by Skypoint to the works done by Gavranich in order to complete the road on the adjoining land. Skypoint alleges it did not seek payment for work it did not do.

55 There was some suggestion that Gavranich had needed to provide some kerbing to the asphalted road of Chalk Elbow as constructed by Skypoint. However, an aerial photograph of the subdivision as at October 2002 was accepted by Gavranich as showing the kerbing had been completed by Skypoint. Porter gave evidence he saw a fully constructed and kerbed road, albeit not to the boundary. The only work done to the existing road was the cutting of the kerb and pavement to allow an appropriate structural connection between the two sections. This would have been necessary no matter where the road stopped. If the road or kerbing had required some repair or repairs it is likely such a need arose at a time after the WAPC had approved the plans and after October 2002.

56 Although Trlin v Fabio (supra) dealt with a claim under s 28A(1)(a)(i), Commissioner Miller as he then was held that the later subdivider was liable to contribute to the cost of not only the part of the road with which the later subdivider's lot shared a common boundary, but also "some 10 metres extending from the boundary of (the later subdivider's land with the existing road) to meet the Shire obligation to take new roads into existing roads." Commissioner Miller apportioned the later subdivider's liability to contribute to that cost according to the relative proportions of each subdivider's frontages onto the existing road.

57 There is no definition of what an appropriate area of contribution is. Some assistance is to be gained by looking at the deposited plan of Skypoint and also the deposited plan of Gavranich. In considering the first it shows that if there was no provision for any likely further subdivision as done by Gavranich then Ashbrook Avenue would not have continued on but stopped at Lucca Entrance. The plaintiff's claim in this case does not include all of the construction carried out by it on Ashbrook Avenue but confines it, logically, to the part of Ashbrook Avenue which services both subdivisions.

58 It also appears there would have been no need for any construction at all of Chalk Elbow on the land formerly owned by Skypoint. Ashbrook Avenue would simply have swept into Lucca Entrance. I accept it is likely that the land set aside for the roads to join the subdivision of Gavranich would have been utilised for further housing lots. I find the existing road area to be 574 m2 for Ashbrook Avenue and 470 m2 for Chalk Elbow.

59 I accept the evidence of McKellar that the road reserves were dedicated to the boundary and that the roads were done, to a stage of practical completion. The Shire made a final inspection and the WAPC endorsed the plans. The services went to the boundary. What appears to be unfortunate is that no bond was ever extracted from Skypoint in relation to the unfinished portion of the roads in terms of, inter alia, asphalt and kerbing. The completion of the roads was at the defendants' sole cost. However, this was not an issue before the Court, the defendant declining, despite opportunity, to pursue any possible counterclaim.

60 The definition of what road area is to be contributed to by a second subdivider may of course differ depending on such considerations as, for example, road configuration, any contribution from a third party and the nature and extent of respective benefits. Again, these matters may vary depending on whether the claim is pursuant to s 28A(1)(a)(i) or (ii). I am of the view that Skypoint does fall within s 28A(1)(b) of the Act in that at the very least it contributed to the cost of providing the existing roads of Chalk Elbow and Ashbrook Avenue.

61 Given the largely undisputed facts set out previously I find that the original subdivider, Skypoint, whose land had a common boundary with the existing roads bore solely the cost of providing part of the existing road and, at the very least, contributed to the provision of all the existing road. The existing road being all of Ashbrook Avenue and Chalk Elbow from the junction of Lucca Entrance to the boundary of Gavranich's land.

62 It is then necessary to consider whether Gavranich "did not contribute to that cost". Subsection (b) asks whether there has been a contribution to or a bearing solely of the cost of providing the existing road by the original subdivider. Subsection (c) does not use the words "the later subdivider did not contribute to the cost of providing the existing road". It specifically asks whether the later subdivider did not contribute to "that cost". Given that expression, it appears "that cost" relates back to either the part of the existing road contributed to by the original subdivider or to the whole road if the original subdivider bore that cost solely.

63 In this case on a plain reading of the Act it appears to me that the later subdivider, Gavranich, did not contribute to the cost of construction of that part of the existing road which was carried out by Skypoint, albeit he did do some work himself on the existing road.

64 The defendant advanced arguments as to why the legislation should not be construed in favour of the plaintiff. Oscar Gustav Drescher ("Drescher"), a town planner of some 41 years experience including with the City of Wanneroo, gave evidence about the undesirability of such an interpretation. He said there could be no claim for a circulatory road. It was only where the second subdivider gets the benefit of his lots being created on a road constructed by the first subdivider that the legislation applies.

65 He said that as there was no road frontage to lots to be created by Gavranich, there was no "benefit" to be gained by Gavranich and thus any contribution by him was for no reason and did not accord with the industry practice as reflected by the legislation. He saw benefit as being a direct or immediate financial benefit.

66 I formed the view that the definition of benefit by Drescher was extremely narrow. It failed to contemplate the wider benefits of a free flow of movement between subdivisions such that other benefits, for example access to primary schools, public open space or other amenities was available.

67 I was not convinced that his "opening of the floodgates" argument was valid given the wording of the legislation. Whether a subdivider is an "original" subdivider has been the subject of litigation (Lakewood Estates Pty Ltd v John De Boer supra). The tenor of his evidence suggested he had not paid regard to s 28A(1)(a)(ii) but simply s 28A(1)(a)(i).

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71 Keith Wilson ("Wilson") was called to give evidence for Skypoint. He was a certified practising valuer who had valuation experience in all property classes since 1973. Francis Fetherstonhaugh Fforde ("Fforde") gave evidence for Gavranich. He was a licensed valuer with 20 years experience.

72 Each used the date 29 August 2002 as the relevant valuation date. This was the date that WAPC gave its approval to Skypoint's deposited plan and is the date of subdivision under the Act.

73 Each valuer accepted that the total land area was 3.342 hectares. Each valuer assessed the total value of the land and then obtained the value of the portion set aside for roads (1,044 m2). Fforde also provided a value for an area of 440 m2. The relevance of this particular area was never made clear during the course of evidence. I gained little assistance from his report in this respect.

74 There were two somewhat unusual features to the valuation of this particular subdivision. One of the subdivided lots, Lot 220 Lucca Entrance, was to be transferred back to the original vendor free of charge. It comprised 1635 m2. Further, a contract had been negotiated between Skypoint and the Education Department on 16 October 2000. Skypoint was to sell a large portion of land as a school site. It comprised 56.42 percent of the total area. The actual transfer took place in December 2002.

75 Wilson provided two valuations. The first assessment allocated a current market value for the school site as at 29 August 2002. The second assessment allocated the actual amount agreed to be paid by the Education Department in October 2000. Each of his assessments allocated a market value to Lot 220 Lucca Entrance despite the fact it was returned to the vendor without charge.

76 Fforde pinpointed the time of sale of the Education Department land as December 2002. He was not aware the price had been agreed years before. Despite this the sale price of that land was approximately, on average, $30,000 per hectare more than what he considered appropriate for all of the land at the end of August 2002. He saw the increase as being consistent with the passing of a four month period and also that the land acquired by the Education Department was more elevated than the remaining land in the subdivision.

77 Fforde said that he took sales to a government department with a degree of caution. When asked the reason for this he explained:

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78 He ignored the actual sale and worked on a comparative sales approach.

79 Wilson conducted his valuation on the basis the land was subdivided. All roads, services and infrastructure were installed and connected to the lots.

80 The plaintiff relied upon the evidence of McKellar that on 28 May 2002 its contractor brought the execution of the road pavement, drainage and ducting to the stage of practical completion. It is clear from Porter's evidence that there were services such as water, gas and Telstra installed. McKellar also gave evidence, albeit in a different context, that the sewer and water ducts included junctions to allow access to individual lots.

81 Fforde, on the other hand, valued the land on the basis that it was capable of being subdivided but not yet subdivided. Whilst it was capable of being subdivided it still had to be provided with services for example, roads or access to services.

82 The evidence suggests that the subdivision had taken place and roads had been laid to a stage of practical completion. Apart, in late May 2002, for some footpath construction for which bond money had been provided, the infrastructure and services had been installed. This was not a raw piece of land with no servicing.

83 Wilson gave evidence that all the residential lots within the subdivision had been pre-sold or else sold within a few months of 29 August 2002. The land to the Education Department had been sold in October 2000 with a price negotiated at that stage. His method was to use the actual realisation cost for the land. His view was the prices paid for Lot 51 were comparable to residential lots nearby and on that basis the actual sale prices were adopted. He calculated the selling price of each individual lot.

84 Fforde adopted a comparative sales approach. He looked at nearby land that was subject to subdivision and adopted an englobo valuation approach.

85 Wilson allowed for the selling price of individual lots at the date of valuation when all servicing and subdivision had been completed. He obtained a gross realisation expected and made allowances for such things as GST, selling fees, a selling incentive of $2,000, a modest profit and risk factor of 10 per cent as the land was already subdivided and most lots sold. He also took into account low rates and taxes to be charged ($250).

86 Fforde's approach of a standard englobo valuation method did not meet much criticism from Wilson. He saw the problem as being that Fforde disregarded the return of Lot 220 Lucca Entrance and that he failed to adopt a realistic approach with the Education Department sale.

87 In cross-examination Wilson conceded that the most appropriate way to deal with the Education Department was to take into account the actual amount negotiated in October 2000 and apply that to the proportion of the land now owned by the Education Department. Despite the fact that Fforde ignored the actual price and valued it as if it had not actually been sold the value he attributed to it was lower than the amount actually realised.

88 I have formed the view that the appropriate way to deal with the Education Department land is to use the price actually negotiated and paid for it. It adopts a real value for land which forms an integral part of the subdivision. There is no cogent evidence to suggest that the amount negotiated by the Education Department in 2000 was over and above what should have been paid in August 2002 given its more desirable elevated position within the lot.

89 However it is my view that having adopted this realistic approach it was appropriate that the true position in regard to Lot 220 Lucca Entrance also be taken into account. This block had been dealt with in such a way that it returned nothing to Skypoint representing no value for the land. Wilson gave evidence that if this lot was disregarded it would lower his valuation by some $120,000.

90 In looking at the respective valuations, some of the difference may be attributable to the fact that Wilson's figures were inclusive of GST and Fforde did not include GST. Wilson gave evidence that a sale of lots is inclusive of GST. Wilson gave a risk factor of 10 per cent given the progress made in terms of subdivision. Fforde pitched that factor at 20 per cent given the land was simply capable of being subdivided but not subdivided and without services. I have referred to the evidence in this regard previously.

91 Despite what I consider to be an inappropriate way of dealing with Lot 220 Lucca Entrance, I preferred the evidence given by Wilson to that of Fforde. His valuation was in accordance with the Act and took into account the fact that most of the land was or did sell at or around the time of the date of valuation. This gave an exact comparison of the capital value at the time. He took into account the reality of the sale to the Education Department.

92 During the course of evidence he was willing to make concessions and gave reasons for the approach he adopted.

93 Therefore the value to be adopted for the land is that of Wilson less the amount of $120,000 which he attributes to Lot 220 Lucca Entrance.

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96 Evidence to support these costs being $20,519 was given by McKellar. He had been intimately involved with the actual project at the time. Wormall had done the actual construction but McKellar had overseen the works. He was able to justify the amounts and explain both the quantity used and the rates applied. He was not shaken in any material way during the course of cross-examination.

97 The witnesses called by the defendant to challenge both the quantities used by Skypoint's contractor in the construction of the road and the rates applied by that contractor for such construction were at a disadvantage in that they had not been involved at the time of actual construction. Georgiou Group commenced construction for Gavranich in mid 2003 almost a year after the WAPC approved Skypoint's subdivision. There was clearly some confusion in relation to the witnesses called by Gavranich as to what road area was actually in contention.

98 Porter gave evidence that he accepted the costs charged by Wormall to Skypoint were fair and reasonable. He did not suggest in any way that the actual work had not been done. His only real query was as to how far the limestone sub-base had gone to the end of the road because by the time his involvement commenced, sand had covered a certain amount of what the plaintiff says was a limestone foundation.

99 Thomas Lambros Siamos ("Lambros") was a project engineer/site manager for Georgiou Group. He had no quibble with the rates that Wormall had charged for work done but did challenge the components used. Whilst he had visited the site prior to, during and after construction his involvement was solely with the construction on Gavranich's property.

100 Considerable emphasis was placed upon a video that had been taken by Gavranich and showed both the proportion of Ashbrook Avenue and Chalk Elbow the subject of this claim. The video was used to "blow the plaintiff's claim out of the water". I found the video unhelpful. Despite a request for a schedule identifying relevant parts this was not forthcoming. As it transpired when Gavranich gave evidence it was clear the video was a compilation tape. The video had been used by Gavranich to show the progress of his subdivision. He had operated the video every weekend for a three month period. He was unable to identify the date upon which he commenced his compilation video. It was only in cross-examination that it became apparent it was some time in 2003 after his own subdivisional work had commenced. This was some nine months after the subdivision approval of Skypoint's project. I was not satisfied that any identification of componentry by way of this video was satisfactory at all.

101 McKellar gave evidence that the costs raised by Wormall for the construction of the roads had been paid.

102 On the balance of probabilities I am satisfied that the cost involved in the formation, preparation, priming and sealing of the roads including the provision of kerbing were completed by Skypoint.

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104 There was no real challenge to the appropriateness of the claim as it related to road drainage. However, there was challenge to whether sewer ducts and water ducts came within the provisions of the Act. The heading to that section is to the effect that a subdivider may recover a portion of road costs from a subsequent subdivider. That includes the provision of "service ducts in connection with the road". McKellar gave evidence that these services were, in the main, for the benefit of the defendant and formed part of what was necessary in an integrated development. He explained that the item claimed for road drainage was separate from both water and sewerage claims. Excavation was involved with each of the claims and each involved the supply of a particular type of pipe. He gave evidence that there was no inclusion of any piping where a junction comes off the main duct into a specific lot. It was simply to do with a provision of service ducts within the road reserve.

105 Porter said that water ducts and sewer ducts had nothing to do with road construction. However, he said that they were done or installed at the same time as road construction to achieve a co-ordinated orderly development. It also saved the risk of having to disturb or dig up completed or existing work at a later stage. He accepted that it was Skypoint's responsibility to provide service infrastructure within its land.

106 Siamos also gave evidence that the provision of water and sewer ducts had nothing to do with road costs in a construction context. He said as part of land development a subdivider has to provide water and sewer although it had nothing to do with road works.

107 He accepted that sewer ducts and water ducts were service ducts.

108 I accept that the installation of these particular services comes within s 28A(3)(b)(iii) of the Act. Although the section of the Act refers to the recovery of a portion of road costs, the provision is in the context of a town planning scheme. Whilst the terminology used by the plaintiff was not altogether satisfactory, the explanation of it given by McKellar and the concessions made by the defendant's witnesses satisfy me on the balance of probabilities that it is a claim that it comes within the Act and in all the circumstances is an appropriate one.

At a glance

Court

Decision date

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Source

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Judgment (73 paragraphs)

Skypoint Investments Pty Ltd v Gavranich & Anor [2006] WADC 153 (28 September 2006)

Parties

Legislation Cited (4)

Cases Cited (1)