Sydney Metro v Expandamesh Pty Ltd

Court of Appeal (NSW)|2023-05-26|Before: Leeming JA

Background matters

Expandamesh is the registered proprietor of land located at 175-177 Botany Road, Waterloo. The site currently comprises a one and two storey building containing warehouses and associated office space. There is a single level basement carpark. Expandamesh has obtained a Preliminary Planning Proposal dated 8 May 2019 regarding the possible future development of part of the site, which would involve constructing a 33 level building. Expandamesh said the construction of such a building on top of the railway tunnels should enlarge the amount of compensation that it was entitled to under the Just Terms Act due to the expected increase in geotechnical costs in developing the land.
On 11 October 2017, by an official notice published in the NSW Government Gazette, Sydney Metro compulsorily acquired Expandamesh's interest in an underground substratum of the land. The stated purpose was to construct two tunnels to serve the Sydney Metro City and Southwest Project, in preparation for the construction of the new Waterloo railway station.
On 23 January 2018, the NSW Valuer General determined that Expandamesh was due nil compensation for this acquisition pursuant to the Just Terms Act and the Valuation of Land Act 1916 (NSW). Expandamesh was served with a notice dated 15 March 2018 advising of this determination.
Between approximately 20 March and 2 May 2019 two tunnels, each approximately seven metres high, were excavated and constructed by Sydney Metro. One was within the acquired substratum.
With the intention of monitoring any soil subsidence on the surface of the land, nine soil settlement monitoring pins were installed along Botany Road. Some were adjacent to the site, others were many metres to the north or south of the site (the primary judge included a plan showing the location of the nine monitoring pins). The pins had the capacity to measure displacement of the surface over time. There was no dispute as to the readings that were taken from the pins, which fluctuated by up to 4mm before and after the tunnelling, and with an average settlement or subsidence of about 1.5mm. There was a dispute between the experts as to whether it was better to rely upon the results of all nine monitoring pins (none of which was on the subject land, and only one of which was directly above a tunnel) or to rely only upon the single monitoring pin which was directly above a tunnel, and was the fourth or fifth closest to the subject land. That single pin showed a subsidence of some 3mm after the tunnelling had occurred. There was evidence, which seems not to have been contradicted, that the margin of error in measurements such as these was plus or minus 2-3mm.
The primary judge did not resolve the dispute between the geotechnical experts, but instead made the following four findings upon which Sydney Metro relied in its notice of appeal, namely, that "(a) the construction of Tunnels caused subsidence or settlement of the Surface, (b) the settlement or subsidence of the Surface was 1.5mm or modestly greater in magnitude, (c) the construction of the Tunnels did not cause any damage to the buildings erected on the Residue Land, and (d) the subsidence or settlement of the Surface was imperceptible to occupants of the Residue Land". Sydney Metro also relied upon "the fact agreed by the geotechnical experts retained by the parties in the proceedings below that any movement of the Surface would have had no adverse impact on the existing or possible future usage of the Residue Land". Together, those four findings and the agreed fact were the "Relevant Facts", and we shall return to them below,
The primary judge published detailed reasons for judgment (see Expandamesh Pty Ltd v Sydney Metro (No 3) [2022] NSWLEC 137 (PJ or primary judgment)). His Honour found at PJ[92] that the subsidence, on the balance of probabilities, of at least 1.5mm caused by the tunnels' construction under the site's north-western portion was: …sufficient to trigger the ability of the Company to make a claim for compensation pursuant to the provisions of the Just Terms Act. This triggering of the ability to claim compensation does not, however, automatically result in success for such a claim; the various bases upon which such a claim is advanced are considered in the remainder of this decision.
The primary judge ultimately concluded that Expandamesh was entitled to compensation in the amount of $20,000 (plus an agreed amount of $40,829.25 for Expandamesh's legal costs incurred prior to the commencement of the proceedings below).
Before outlining these reasons, it is desirable to identify the relevant legislative scheme.

The relevant legislative scheme

As noted above, the two relevant acts are the Just Terms Act and the Transport Administration Act.

Just Terms Act

This Act is intended to provide compensation for those whose land is affected by acquisition by the State. Section 54 provides: Entitlement to just compensation (1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land. …
Section 55 exhaustively sets out six criteria for determining the amount of compensation: Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division) - (a) the market value of the land on the date of its acquisition, (b) any special value of the land to the person on the date of its acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) the disadvantage resulting from relocation, (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.
Expandamesh claimed that the State's compulsory acquisition of the substratum had diminished the market value of its land at the date of acquisition. Section 56(1) provides: Market value (1) In this Act - market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid) - (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and (b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and (c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law. …
The operation of the Just Terms Act is affected, however, by some provisions of the Transport Administration Act mentioned below.

Transport Administration Act

By an amendment made to the Transport Administration Act in 2000, s 98 provides that Sch 6A (which deals with powers of rail authorities relating to rail infrastructure facilities and land) and Sch 6B (which contains special provisions for underground rail facilities) have effect. (It may be interpolated here that, as was pointed out at the hearing, the reference in the marginal note at the beginning of Sch 6B to "(Section 97)" is in evident error and the reference should be to s 98.)
Clause 2 of Sch 6B, which is headed "Special provisions for underground rail facilities", precludes the payment of any compensation under the Just Terms Act arising from the acquisition of sub-surface land for the purpose of underground rail infrastructure facilities, unless one of three conditions in cl 2(1) is satisfied. This special provision replaces the operation of (for the purposes of the Transport Administration Act) a similar but narrower provision in s 62(2) of the Just Terms Act (see cl 2(2) of Sch 6B). Section 62(2) of the Just Terms Act is limited in application to the compensation for compulsory acquisition of sub-surface land for the purpose of constructing a tunnel. The terms of s 62 are set out at [71] below. In contrast, Sch 6B deals with compensation where land is compulsorily acquired for the purposes of underground rail facilities, which is a broader concept. We will return below to summarise some relevant legislative history to these provisions.
For the purposes of Sch 6B "underground rail facilities" are defined in cl 1(1) of that schedule to mean: (a) rail infrastructure facilities that are located under the surface of land, and (b) structures and facilities for or associated with the provision of railway services (such as railway stations, platforms, access ways and vents),being structures and facilities that are located under the surface of land.
Clause 2(1) of Sch 6B of the Transport Administration Act provides: No compensation for acquisition of land for underground rail facilities (1) If land under the surface is compulsorily acquired under the Land Acquisition (Just Terms Compensation) Act 1991 for the purpose of underground rail facilities, compensation is not payable under that Act unless - (a) the surface of the overlying soil is disturbed, or (b) the support of that surface is destroyed or injuriously affected by the construction of those facilities, or (c) any mines or underground working in or adjacent to the land are thereby rendered unworkable or are injuriously affected.
Thus, if one of the criteria in cl 2(1) is met, compensation may be payable as assessed under the Just Terms Act. We will return below to deal with some relevant extrinsic materials bearing upon the proper construction of cl 2(1).

Primary judgment summarised

Expandamesh claimed an entitlement to $20,000 compensation arising from the decrease in market value of its land, pursuant to s 55(a) of the Just Terms Act. It also claimed an entitlement to $405,000 under s 55(f) due to an alleged decrease in the value of its land arising from additional delays and the uncertainty cost associated with potential future redevelopment.
Expandamesh claimed that the conditions in both cll 2(1)(a) and (b) of Sch 6B of the Transport Administration Act had been satisfied; the surface of the overlying soil on their land was relevantly "disturbed" (meeting the requirements of cl 2(1)(a)) and moreover the "support of the [surface of the land] was injuriously affected" (meeting the requirements of cl 2(1)(b)).
The primary judge was not satisfied that cl 2(1)(b) applied (finding that nothing in the geotechnical evidence suggested the site had been destroyed or injuriously affected (at PJ[102])), but his Honour upheld Expandamesh's reliance on cl 2(1)(a) (at PJ[92]).

Key factual findings

Both parties adduced expert evidence regarding the extent of soil subsidence caused by the tunnels' construction, which relied on data from soil monitoring pins (as noted above). The data spanned the period July 2018 to December 2019, which included the construction period.
Expandamesh's expert witness (Mr Kotze) opined that there was a "trend line" that could be observed when the data from the entire measurement period was compiled. This "trend line" (which was reproduced as Annexure B to the primary judgment) was suggested by Mr Kotze to represent "a possible settlement [i.e., a change in the overlying soil level] of one and a half millimetres or between 1 and 2 millimetres" (at PJ[56]). Mr Braybrooke, Sydney Metro's expert, disagreed with this "trend line". He opined that data drawn from only one of the monitoring pins would better represent the possible displacement of soil on account of the tunnels' construction, which revealed a more certain displacement figure of 1.5mm (and no more) (at PJ[57]).
The primary judge was disinclined to resolve the disagreement between the experts. Instead, his Honour found at PJ[63] that, on the balance of probabilities (emphasis added): …at a minimum of 1.5 millimetres (and accepting the possibility that there might be some minor increment on that number), the subsidence would be imperceptible but, nonetheless, has taken place
The focus then turned to whether this modest degree of subsidence, "as a matter of law on a proper construction of the relevant statutory provision, opens the gate" to permit Expandamesh access to the heads of compensation in s 55 of the Just Terms Act (at PJ[64]).

The central issue of statutory construction

Consistently with High Court authorities (including Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [70]-[71]), the primary judge approached the issue of construction on the basis that the meaning of a statutory provision "is to be ascertained by examining the context in which the language of those provisions is used and seeking to give effect to the purpose and language of the provisions" (PJ[73]).
Sydney Metro submitted that the Macquarie Dictionary definition of "disturbed" could be relied upon to reveal an ordinary meaning of the term in cl 2(1)(a) that did not encompass a 1.5mm disturbance (PJ[80]). The relevant part of that definition is as follows: 2. to interfere with; interrupt; hinder. 3. to throw into commotion or disorder; agitate; disorder; disarrange; unsettle.
Expandamesh opposed that approach, claiming that it required additional words to be read into the provision, such as "imperceptible" or "not trivial". The primary judge dispensed with any detailed consideration of dictionary definitions, consistently with authorities such as House of Peace Pty Ltd v Bankstown City Council (2000) 48 NSWLR 498; [2000] NSWCA 44 at [25]ff (see PJ[81]-[82]).
The primary judge rejected Sydney Metro's construction of cl 2(1)(a) for the following three essential reasons which are set out at PJ[90]-[92]: 1. the contrast between the language of cl 2(1)(a) and that in cl 2(1)(b), "where words explanatory of, and qualifying the extent of, impact are used" (i.e., referring to the fact that cl 2(1)(b) refers to the surface being "destroyed or injuriously affected" by the construction of the rail facilities); 2. there was no basis for concluding that the legislature intended that cl 2(1)(a) had any qualifying additional words read into it, and the language was "plain and clear" (presumably reflecting that both the parties submitted that there were no relevant extrinsic materials to the contrary); and 3. the evidence indicated that, on the balance of probabilities, there had been a disturbance of the surface of the site of at least 1.5mm and that was sufficient to trigger Expandamesh's ability to claim compensation.
The primary judge then proceeded to assess and determine the amount of compensation to which Expandamesh was entitled. This part of his Honour's reasons is not directly relevant to the central issue of statutory construction but it is appropriate to summarise those reasons because they bear upon grounds 2 and 3 of the appeal.

Compensation - s 55(a)

In surpassing the above threshold, Expandamesh argued that it was entitled to $20,000 in compensation as the acquisition had effected a "blot on title". Sydney Metro maintained the company was "not entitled to any compensation for the acquisition of the substratum as it would, in a hypothetical purchase transaction, have no value because there would be no market for that substratum". Each party used the "before and after" method to determine the diminution of the entire site's value. Sydney Metro's valuer adopted a modified version of this method - in keeping all other variables equal, he questioned whether the acquisition of the substratum had changed the site's value and answered this in the negative. Expandamesh's valuer then adopted the "piecemeal" method, relying on the presumption that the rights to the substratum might have been sold as an easement or something similar. This led him to assess the market rate as $20,000.
Although his Honour rejected the "blot on title" submission, the primary judge nonetheless accepted that, if the company had alienated the substratum prior to the acquisition, it would have involved consideration. His Honour stated at PJ[188]: …It seems to me that the hypothetical owner of the site, if approached by a hypothetical purchaser of a substratum in the fashion which has here been compulsorily acquired, would not, for the purposes of the hypothetical transaction envisioned by s 56(1) of the Just Terms Act, simply say, in an altruistic fashion, to the hypothetical purchaser: "Please take it, I don't want to be paid for it".
Absent any valuation evidence displacing Expandamesh's assessment of the $20,000 value of the acquired substratum, the primary judge accepted the piecemeal valuation of this particular sum as the appropriate market value.

Compensation - s 55(f)

This head of compensation requires regard to be had to any increase or decrease in the value of severed land (here the property above the substratum) at the date of acquisition by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. Relying on valuation evidence provided by Mr Dyson, Expandamesh contended that it was owed $405,000 in compensation under s 55(f). This was for additional geotechnical monitoring costs which would arise if there was a redevelopment proposal, taking into account the potential for more beneficial planning controls applying in the future.
The primary judge considered that any compensation due under s 55(f) fell to be determined by "whether the cost of the additional geotechnical monitoring for any future redevelopment was to be offset against the increased value (if any) of the residue land as a consequence of carrying out the public purpose of constructing the Sydney Metro" (at PJ[170]).
After reviewing the parties' expert evidence and relevant case law (e.g., AMP Capital Investors Limited v Transport Infrastructure Development Corporation (2008) 163 LGERA 245; [2008] NSWCA 325; RTA v Perry & Anor (2001) 52 NSWLR 222; [2001] NSWCA 251), the primary judge found that there was a sufficient interrelation between beneficial future alterations to planning controls for the site and the Sydney Metro project, such that the project was to be regarded as triggering those beneficial impacts for the purposes of s 55(f) (at PJ[214]). His Honour determined there was a value uplift in the land of at least $800,000 caused by the carrying out of the public purpose, and Expandamesh was thus not due any compensation under this additional head (at PJ[230]). It was only entitled to receive $20,000 by operation of s 55(a).

The appeal

Sydney Metro raises three grounds of appeal which may be summarised as follows: 1. The primary judge erred in the construction of the terms of cl 2(1)(a) of Sch 6B of the Transport Administration Act (at PJ[72]ff); 2. In the alternative, the primary judge incorrectly determined that Expandamesh was entitled to compensation with evidence "that was not capable of rationally supporting the determination" (at PJ[190]); and 3. Further in the alternative, the primary judge "failed to have proper regards to the matters specified in s 55 of the Just Terms Act", consequently awarding compensation where none was due.
Under s 57 of the Land and Environment Court Act 1979 (NSW), Sydney Metro is entitled to appeal against an order or decision of the Land and Environment Court (LEC) on a question of law. It is now settled that the effect of s 57(1) is to require the subject of the appeal to be an order or decision of the LEC on a question of law, as opposed to the appeal itself being on a question of law (see Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66 at [139] per Basten JA and B & L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481; [2008] NSWCA 187 at [70] per Allsop P, with Giles and Basten JJA agreeing).
For the following reasons, ground 1 should be upheld and grounds 2 and 3 rejected.

Consideration and determination

It is convenient to address each of the three grounds of appeal in turn.

Ground 1

This ground of appeal is in the following terms: The learned primary judge erred by applying an improper construction of clause 2(1)(a) of Schedule 6B to the Transport Act to the facts, namely that the Relevant Facts resulted in the Surface being "disturbed" by the construction of the Tunnels within the meaning of clause 2(1)(a) (reasons for decision [90]-[92]). The learned primary judge ought to have concluded: (a) that the Relevant Facts did not result in the Surface being "disturbed" by the construction of the Tunnels within the meaning of clause 2(1)(a) on its proper construction; and (b) no amount of compensation was therefore payable to the Respondent under the Just Terms Act because the learned primary judge concluded that the criterion in cl 2(1)(b) of Schedule 6B to the Transport Act had not been satisfied (reasons for decision [102]-[104]).
The "Relevant Facts" are reproduced above. They are not controversial. Thus this ground not only identifies an error of law, namely a wrong construction of cl 2(1)(a), but also maintains that on the correct construction of that clause and on the "Relevant Facts" there is no utility in remitting the matter because there could only be one outcome, notwithstanding that the primary judge did not resolve the dispute between the experts. Expandamesh did not cavil with the latter aspect of this ground, for the good reason that on the evidence adduced at this trial, the Relevant Facts were sufficient to dispose of the case. Even Expandamesh's expert accepted that the subsidence was imperceptible, and although he was of the view that it was more than 1.5mm, it was not greatly more (hence the finding by the primary judge that it might be "modestly" more).
Unsurprisingly there was no disagreement regarding the principles which guide the task of contemporary statutory construction. The parties' disagreement focused on the application of those principles to the circumstances here.
As the High Court has repeatedly held, the task of the proper construction of a legislative provision should be conducted "by reference to considerations of text, context and purpose having regard to the mischief which it was directed" (see Australian Securities and Investments Commission v King (2020) 270 CLR 1; [2020] HCA 4 at [23] per Kiefel CJ, Gageler and Keane JJ, and, to similar effect, see at [71] per Nettle and Gordon JJ). It is equally uncontroversial that context must be understood in a broad sense and considered in the first instance and not at some later stage when ambiguity arises (see CIC Insurance Ltd v Bankstown Football Club (1997) 187 CLR 384 at 408; [1997] HCA 2 per Brennan CJ, Dawson, Toohey and Gummow JJ). Finally, s 33 of the Interpretation Act 1987 (NSW) stipulates that a construction which promotes the purpose or object underlying the provision is to be preferred to one that would not.

(a) Text

Without denying the need to consider context at an early point in the analysis, it is well in this case to focus on the text.
The first point to note is that cl 2(1) prescribes the circumstances in which compensation is payable where land under the surface is compulsorily acquired for the purpose of underground rail facilities. It provides that no compensation is payable under the Just Terms Act unless one of the three stipulated criteria is met. Sub-para (a) deals specifically with a situation where the surface of the overlying soil is "disturbed". For sub-para (b) to apply, it needs to be demonstrated that the support of the surface of the overlying soil is "destroyed" or "injuriously affected" by the construction of underground rail facilities. Plainly, sub-para (b) only applies where the substratum of the overlying soil has been detrimentally affected by the construction of the facilities such that the substratum is either destroyed or injuriously affected. Similar but not identical concepts also arise under sub-para (c), which has the effect of providing a gateway to compensation where any mines or underground working in or adjacent to subject land are rendered unworkable or are injuriously affected.
As noted above, the primary judge correctly eschewed any reliance on dictionary definitions of the word "disturbed" (which is not defined in the Transport Administration Act). That word should be given its ordinary or common meaning unless there is some indication that the legislature intended differently.
The primary judge's construction of the word "disturbed" was partly based on the significance he attached to the contrast in the language between cl 2(1)(a) and cl 2(1)(b) (see PJ[90]). In particular, his Honour attached significance to the fact that, unlike the wording in cl 2(1)(a), the following sub-paragraph contained words which were explanatory of and qualifying the extent of the impact used. With respect, the difficulty with this approach is that it glosses over the threshold question of whether the word "disturbed" in sub-cl 2(1)(a), as commonly understood, contains an implicit limitation which has the effect that an impact or effect which is objectively trivial and of no practical significance does not amount to disturbance.
One way of seeing this is by having regard to the standard condition in a mining lease imposed by cl 5 of Sch 8A of the Mining Regulation 2016 (NSW): The holder of a mining lease must rehabilitate land and water in the mining area that is disturbed by activities under the mining lease as soon as reasonably practicable after the disturbance occurs.
Evidently that condition has no application unless the land or water has been disturbed in a way which has practical significance or is not trivial, such that there is something which can be done by way of rehabilitation.
Another way of seeing this is by regard to the canon of construction, sometimes called the de minimis principle, that the law does not concern itself with trifling matters, discussed by Hill J in Farnell Electronic Electric Components Pty Ltd v Collector of Customs (1996) 72 FCR 125; [1996] FCA 1135. Thus many editions of F Bennion, Statutory Interpretation, have stated that "unless the contrary intention appears, an enactment by implication imports the principle of the maxim de minimis non curat lex (the law does not concern itself with trifling matters)". It is most unlikely that this principle has no application to the clause. And if a subsidence of 1.5mm amounts to the surface of the overlying soil being disturbed, then what of a subsidence of 1.5 micrometres or 1.5 nanometres? There must be some limit to what is necessary to amount to the surface of the overlying soil being disturbed, and such subsidence as is imperceptible to the occupiers and causes no damage would prima facie seem to answer the description of de minimis.
Some limited assistance may also be obtained from the approach and decision in Li v Chief of Army (2013) 250 CLR 328; [2013] HCA 49. The issue there, in a very different statutory and factual context, was whether a member of the Australian Defence Force (Major Li) had committed an offence under s 33 of the Defence Force Discipline Act 1982 (Cth). It was an offence if such a person creates "a disturbance or takes part in creating or continuing a disturbance". The conduct which gave rise to the conviction involved Major Li refusing to leave an office of a Commonwealth public servant when asked to do so; speaking with a raised voice; following the public servant and continuing the conversation when the public left his office; forcefully pushing against the office door and placing his head and shoulder in the doorway when the public servant had returned to the office and was trying to close the door; re-entering the office and again refusing to leave when asked to do so; standing approximately three inches from the public servant's face and speaking with a raised voice and in an agitated and aggressive manner.
After tracing the legislative history of the provision, the Court concluded at [16] that there was nothing to suggest that "disturbance" required a narrow or technical meaning. Further, this history suggested that the mischief which the provision addressed could appropriately be identified broadly as the maintenance of order and discipline, rather than narrowly as elimination of violence.
At [18], the Court said that a "disturbance is a non-trivial interruption of order". The Court added there that violence or a threat of violence was not necessary to the existence of a disturbance and that quarrelling may, in a particular factual context, be enough.
We do not mean to suggest that Li is determinative of the issue of statutory construction in this appeal. There are several reasons why that is so. First, the relevant term in Li was "disturbance", rather than "disturbed", and it may be that the state of affairs connoted by the noun may carry with it a notion of substantiality, particularly when it is an element of an offence, which is not necessarily conveyed by the participle. Secondly, it is well settled that, while decisions construing like words in other legislation may be of some assistance, it remains necessary to construe the enacted text. As was stated in McNamara v Consumer Trader and Tenancy Tribunal (2005) 221 CLR 646; [2005] HCA 55 at [40] (per McHugh, Gummow and Heydon JJ): …It would be an error to treat what was said in construing one statute as necessarily controlling the construction of another; the judicial task in statutory construction differs from that in distilling the common law from past decisions.
To similar effect, see Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 at [31] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ.
Thirdly, the factual circumstances in Li were plainly very different to those here.
Fourthly, and importantly, the provision in Li involved the creation of a criminal offence, which necessarily affected the task of statutory construction.
With these limitations in mind, however, Li provides some (albeit limited) assistance to the task of construction here because the Court found that, in the context of the particular statute there, the notion of a "disturbance" was to be given its normal meaning. That meaning required a non-trivial interruption of order. We consider that the same applies here with the consequence that "disturbed" does not extend to an impact or effect which is objectively trivial and of no practical significance.
As noted above, another reason given by the primary judge in support of his construction of cl 2(1)(a) was that he considered Sydney Metro's preferred construction to involve the reading in of qualifying additional words to that provision, being words such as "imperceptible" or "not trivial" (see PJ[88] and [91]). Again, with respect, this approach fails to engage with the fact that the ordinary meaning of "disturbed" does not extend to an impact or effect which is objectively trivial and of no practical significance. Thus it is unnecessary to read such qualifying words into the provision.
Whether or not a particular effect is non-trivial for the purposes of cl 2(1)(a) will depend upon the particular factual context. As was pointed out during the hearing, a subsidence of 1.5mm might appropriately be described as trivial if a tunnel is constructed under land which has sheep grazing on it. This could be contrasted with the situation where subsidence of that degree is caused by tunnelling under land on which is located a semiconductor factory or a chemical laboratory with sensitive equipment which is very susceptible to any form of disturbance or destabilisation. To put it another way, how land is currently being used or might be used in the future may be relevant to an assessment of the triviality or otherwise of disturbance to the surface of overlying soil. The circumstances relating to Expandamesh's land are far removed from the example concerning the chemical laboratory.

(b) Context and Purpose

Turning now to considerations of context and purpose, it is relevant to address both the legislative history leading up to the 2000 amendments and the insertion of Sch 6B, as well as some relevant extrinsic materials which aid statutory construction. It may be noted that neither of these matters were drawn to the attention of the primary judge. Indeed, during the course of the appeal, senior counsel for Expandamesh said that his client's research into relevant extrinsic material had produced "nothing".

(i) Some legislative history

As might be expected, there is a lengthy history of legislation in NSW dealing with the subject of compensation arising from the public acquisition of private land, including where the substratum of land is acquired for public purposes, including tunnelling. In the case of compensation in respect of tunnelling and the effects on surface soil, a precondition requiring that the surface soil be "disturbed" dates back to at least 1880. Section 18 of the Lands for Public Purposes Acquisition Act 1880 (NSW) provided (emphasis added): In estimating or assessing the compensation to be paid under this Act regard shall be had by the valuators and by the jury (on any issue) not only to the value of the land taken by the Minister and to the provisions of the tenth section of this Act where the same shall be applicable but also to the damage (if any) to be sustained by the claimant by reason of the severing of the lands taken from other lands or other injuries suffered by him by reason of the exercise of the powers expressed or incorporated in this Act and they shall assess the same according to what they shall find to have been the value of such lands estate or interest at the time of the resumption thereof or the extent of the damage or injury sustained. Provided that in the case of land under the surface taken for the purpose of constructing a subterranean tunnel for water supply or sewerage or railway transit no compensation shall he allowed or awarded unless the surface of the overlying soil be disturbed or the support to such surface be destroyed or injuriously affected by the construction of such tunnel or unless any mines or underground workings in or adjacent to such land be thereby rendered unworkable or be so affected as aforesaid.
The marginal note to s 117 of the Public Works Act 1900 (NSW) described it as a "General provision as to compensation for land howsoever taken or acquired". The final paragraph of the provision contained the following proviso relating specifically to underground land resumed for tunnelling purposes: … Provided also that in the case of land under the surface taken or acquired by notification in the Gazette for the purpose of constructing a subterranean tunnel for water supply or sewerage or railway transit, no compensation shall be allowed or awarded unless - (a) the surface of the overlying soil is disturbed; or (b) the support to such surface is destroyed or injuriously affected by the construction of such tunnel; or (c) any mines or underground workings in or adjacent to such land are thereby rendered unworkable or are so affected as aforesaid.
The wording of this provision was retained as s 124 in the Public Works Act 1912 (NSW).
Reference might also be made at this point to s 10 of the Property for Public Purposes Acquisition Act 1901 (Cth) (1901 Commonwealth Act), which contained similar provisions on compensation for the effects on land where the substratum was compulsorily acquired: (1) For the purpose of constructing any underground work, land under the surface may be acquired under this Act without acquiring the surface. (2) In such case no compensation shall be allowed or awarded unless - (a) the surface of the overlying soil is disturbed; or (b) the support to such surface is destroyed or injuriously affected by the construction of the work; or (c) any mine, underground working [etc]…in or adjacent to such land is thereby injuriously affected.
"Compensation" was defined in s 2 of the 1901 Commonwealth Act as including (emphasis added): …compensation for or in respect of any land acquired under this Act, or for any estate or interest therein, and also for damages caused by such acquisition, or for any work or other matter done under the authority of this Act;…
As noted above, s 62 of the Just Terms Act also forms part of the relevant legislative history (see at [18]) above. It provides: Special provision relating to acquisition of easement of rights, tunnels etc (1) If the land compulsorily acquired under this Act consists only of an easement, or right to use land, under the surface for the construction and maintenance of works (such as a tunnel, pipe or conduit for the conveyance of water, sewage or electrical cables), compensation is not payable except for actual damage done in the construction of the work or caused by the work. (2) If land under the surface is compulsorily acquired under this Act for the purpose of constructing a tunnel, compensation is not payable (subject to subsection (1)) unless - (a) the surface of the overlying soil is disturbed, or (b) the support of that surface is destroyed or injuriously affected by the construction of the tunnel, or (c) any mines or underground working in or adjacent to the land are thereby rendered unworkable or are injuriously affected. (3) If the land compulsorily acquired under this Act consists of or includes an easement or right to use the surface of any land for the construction and maintenance of works (such as canals, drainage, stormwater channels, electrical cables, openings or ventilators), the easement or right is (unless the acquisition notice otherwise provides) taken to include a power, from time to time, to enter the land for the purpose of inspection and for carrying out of any additions, renewals or repairs. Compensation under this Part is payable accordingly.
The meaning and operation of s 62 of the Just Terms Act was considered by this Court in Hornsby Shire Council v Gosper (1993) 82 LGERA 1. It should be noted that s 62 was directed to the case where land was compulsorily acquired and the land consisted only of an easement or right to use land under the surface for the construction and maintenance of works, including a tunnel. Compensation was not payable except for actual damage done in the construction of the work or caused by it. Notably, s 62(2) specifically addressed the compulsory acquisition of the substratum for the purpose of constructing a tunnel. The wording of sub-paras (a)-(c) of s 62(2) is identical to sub-paras (a)-(c) of cl 2(1) of Sch 6B of the Transport Administration Act.
The Court highlighted the distinction between a situation where there was a right to disturb the landowner's use of land on the surface and a situation where there is no such right. In the latter case, compensation was limited to actual damage and, where there was tunnelling, compensation was payable only to the extent that the surface of the land was disturbed or the support of the surface was destroyed or injuriously affected. Sheller JA (with whom Mahoney and Powell JJA agreed) made the following observations at 14 (emphasis added): The mischief to which the section is directed is plain. If an easement or right to use land for the construction and maintenance of works is compulsorily acquired, compensation is payable if the surface of the land may be used for the construction and maintenance of works, and not payable if only the land under the surface may be used for the construction and maintenance of works, unless actual damage is done in the construction of the work or caused by the work. If a tunnel is to be driven beneath land and only the tunnel used for the construction and maintenance of works so that the normal use and enjoyment of the landowner of his land is unaffected there is no compensation for that easement or right. However if such use and enjoyment is to be or is affected by construction and maintenance of the works understandably the landowner is or may be entitled to compensation. In my opinion the language of the section achieves this purpose. The section draws a distinction between a right to disturb the landowner's use of the land on the surface and the case where there is no such right in which case compensation is limited to actual damage and, in the case of a tunnel, this only to the extent that the surface of the overlying soil is disturbed or the support of the surface is destroyed or injuriously affected by the construction of the tunnel (subs (2)). I put aside damage to mines or underground working. No doubt better language could have been chosen and the examples given do not elucidate the distinction. But as I say the intention is plain enough and the occasion for compensation plainly enough described.
More recently, Sackville AJA said with the agreement of McColl and Basten JJA in Bligh Consulting Pty Ltd v Ausgrid [2017] NSWCA 95 at [127]: The evident purpose of s 62(1) of the Just Terms Act, derived from its language, is to preclude a landowner from claiming compensation for the compulsory acquisition of an easement that allows land under the surface to be used in a manner likely to cause minimal disruption to the occupiers. Mr Walker did not point to anything in the Just Terms Act, other than the illustrations themselves, suggesting that they should be read as exhaustive of the scope of s 62(1). It is difficult to see a rationale in the text or structure of the Just Terms Act for reading s 62(1) as precluding compensation for works facilitating the carriage of water, electricity, sewage or the like, but not precluding compensation for other works equally essential to the carrying out of the public purpose.
It is worth repeating that cl 2 of Sch 6B of the Transport Administration Act replaced the operation of s 62(2) of the Just Terms Act, as regards sub-surface land acquired for the purpose of underground rail facilities. Although the wording of the three criteria was retained, the proscription on compensation was broadened so as to cover underground rail facilities, and not merely tunnels.

(ii) Extrinsic materials

There can be no doubt that the purpose of Sch 6B is to limit the circumstances in which compensation is payable in respect of the acquisition of land for the purpose of underground rail infrastructure facilities. That is clear from the terms of the legislation themselves. The relevant question, of course, is the extent to which that purpose has been implemented, which primarily turns on the proper construction of the legislation itself (note the pertinent observations of the High Court in Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd (2005) 222 CLR 194; [2005] HCA 9 at [21]).
In construing the language of cl 2, it is relevant to bear in mind statements made in the second reading speech to the Bill which introduced Schs 6A and 6B. In the Legislative Council, the then Minister for Mineral Resources said the following at 5785: …The bill…inserts into the Transport Administration Act a new schedule that provides an appropriate level of protection to underground railway infrastructure generally. This protection applies to existing facilities as well as to future works such as the Paramatta rail link... … …Clause 2 of the new schedule confirms beyond doubt that these provisions are not limited to merely construction but apply to the purpose for which the acquisition was undertaken. There is currently no adequate statutory protection in the Transport Administration Act 1988 for underground railway facilities… … This legislation will provide a level of protection consistent with the State's investment in this infrastructure…
The Explanatory Note to the Bill confirms the legislative intention was to extend and not narrow the proscriptions on compensation applying to all underground rail facilities. Page 1 of the Explanatory Note stated that the purposes were: … (b) to extend to all underground rail facilities the principle under the Land Acquisition (Just Terms Compensation) Act 1991 that no compensation is payable under that Act for the acquisition of land to be used for a tunnel, and to make it clear that no compensation is payable for the use of those facilities, and (c) to protect underground rail facilities (including but not limited to the proposed Paramatta Rail Link tunnels and facilities) by enacting provisions for an entitlement to compensation for damage, a right of support, an implied protective covenant and removal of interference.
On p 2 of the Explanatory Note, it was stated in respect of proposed cl 2 of the new Sch 6B that it: …provides that no compensation is payable under the Land Acquisition (Just Terms Compensation) Act 1991 for the compulsory acquisition of land for the purpose of underground rail facilities in certain circumstances. This extends an existing provision of that Act that is currently limited to tunnels. The proposed clause also makes it clear that when no compensation is payable for the construction of underground rail facilities, no compensation is payable for the use of those facilities either. The proposed clause extends to existing underground rail facilities, not just new facilities.
These materials strongly indicate that the intention was to provide protection to State entities involved in the construction and operation of underground rail facilities. The intention was not to broaden the circumstances in which compensation was payable.
Finally, the legislative history and the extrinsic materials referred to above sit very uncomfortably with Expandamesh's submission that the relevant provisions should be read narrowly so as to minimise encroachment upon private property rights. The difficulty with that submission is that the stated purpose of the amendments made in 2000 was to broaden the protection against compensation having to be paid by State entities involved in constructing and operating rail infrastructure facilities. This is also reflected in the text.

Ground 2

Sydney Metro submitted that Expandamesh's expert evidence of the market value of the substratum was not credible, and the primary judge erred in assessing compensation for the market value of the land in the amount of $20,000 based upon an acceptance of Expandamesh's valuer when that valuation went to the reduction in the value of the residue land. Strictly speaking it is unnecessary to determine this ground of appeal because the parties were agreed that ground 1 was dispositive. Had it been necessary, we would have dismissed this ground for the following reasons.
First, both parties admitted that Expandamesh's expert used the "before and after" method of valuation, ascertaining the overall diminution of the site's value.
Secondly, in cross-examination during the hearing below, the expert clarified that the sum was calculated to account for the substratum specifically.
Thirdly, it is clear from Expandamesh's expert's report, especially at [113], that the figure is a market valuation of the substratum itself.

Ground 3

Finally, Sydney Metro submitted further in the alternative that the primary judge erred in failing to have "proper regard" to the matters specified in s 55 of the Just Terms Act. This was particularised as a failure to offset any increase in value under s 55(f) against the amount of the market value determined under s 55(a).
For the following reasons, for completeness, this ground should also be rejected. First, assuming that this ground relates to a decision on a question of law (which is far from clear), Sydney Metro did not make any submission to the primary judge that an offset was required. There is no reason why Sydney Metro should be able to raise the matter for the first time on appeal. Another difficulty arises from the fact that ground 3 is worded as a failure by the primary judge to have "proper regard" to the matters specified in s 55 of the Just Terms Act. Although Sydney Metro submitted on the appeal that this ground was supported by this Court's decision in Tolson v Roads and Maritime Services (2014) 201 LGERA 367; [2014] NSWCA 161, it did not cite this decision in the proceeding below. Nor did it make any submission to the effect that any amount of compensation or the market value of the acquired land was required to be set off against the amount of the increase in the value of the residue land. These matters should not be raised for the first time on the appeal.

Conclusion

For these reasons, the appeal should be allowed. The parties were agreed that there should be no order as to the costs of the appeal (Sydney Metro having agreed already to bear Expandamesh's costs of the appeal in order to have a contradictor), but the issue of the costs of the proceedings below will need to be remitted to the LEC.
Sydney Metro sought an order setting aside orders (1), (2), (3) and (4) made below on 24 November 2022. Order (2) dismissed Expandamesh's claim for compensation pursuant to s 55(f) of the Just Terms Act. On its face, it is not clear that order (2) should be set aside, it being in Sydney Metro's favour. It appears, however, that it may be that this issue is effectively overcome by the order Sydney Metro seeks to replace it with, which picks up the different heads of compensation under ss 55(a) and (f) (see order 2 in the next paragraph). As noted above, in the circumstances of this case, there is only one order that could be made upon the correct construction of the legislation, which should therefore be made by this Court.
The following orders should be made: 1. The appeal be allowed, with no order as to costs with the intention that each party bear its own costs. 2. Orders (1), (2), (3) and (4) dated 24 November 2022 in the Land and Environment Court be set aside and in lieu thereof, the following order be made: Expandamesh is entitled to no compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) by operation of cl 2 of Sch 6B of the Transport Administration Act 1988 (NSW) in respect of the acquisition of the substratum of its land the subject of the official notice published in the NSW Government Gazette dated 11 October 2017. 1. The issue of costs of the primary proceedings be remitted to the Land and Environment Court.
SIMPSON AJA: I have had the advantage of reading in draft the judgment of Leeming JA and Griffiths AJA. I agree with the orders proposed, and, subject to the following, with their Honours' reasons.
I am able to reach the same conclusions as their Honours without reference to the decision of the High Court in Li v Chief of Army (2013) 250 CLR 328; [2013] HCA 49, which, to my mind, casts no light on the construction of the word "disturbed" as it appears in cl 2(1) of Sch 6B of the Transport Administration Act 1988 (NSW).
The judgment in Li was concerned with the construction of a statute creating criminal liability in military personnel. The offence with which Mr Li was charged was one of a number of offences created by s 33 of the Defence Force Discipline Act 1982 (Cth). The offences were: (a) assaulting another person; (b) creating a disturbance or taking part in creating or continuing a disturbance; (c) engaging in conduct, within the view or hearing of another person, that is obscene; and (d) using insulting or provocative words to another person.
It can immediately be seen that the provision is directed to conduct that has an impact on another person (or persons). The offence created by sub-para (b) is constituted by conduct that results in "a non-trivial disruption of order" ([28]), "order" (in the context of a statute dealing with defence forces) being "order" amongst the individuals concerned.
That is a far cry from the concept of a disturbance for the purposes of cl 2(1)(a), which is directed to a disturbance of "the surface of the overlying soil". The contexts are so different that I cannot accept that the construction of "disturbance" for the purpose of the Defence Force Discipline Act has any bearing on the construction of "disturbed" for the purpose of cl 2(1)(a) of Sch 6B of the Transport Administration Act.
In other respects I agree with the joint judgment and add only this. I have difficulty with the notion that "disturbance" may be "imperceptible". The very concept of a "disturbance" ordinarily, and, indeed, inherently, connotes something that is perceived; certainly something that is "perceptible". "Imperceptible disturbance" is an unfamiliar, and somewhat jarring, collocation of words.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 August 2023

Lands for Public Purposes Acquisition Act 1880(NSW)

Public Works Act 1900(NSW)

Public Works Act 1912(NSW)

(McGrath) v Consumer Trader and Tenancy Tribunal (2005) 221 CLR 646; [2005] HCA 55 Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd (2005) 222 CLR 194; [2005] HCA 9 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Roads & Traffic Authority (NSW) v Peak [2007] NSWCA 66 Roads and Traffic Authority of New South Wales v Perry (2001) 52 NSWLR 222; [2001] NSWCA 251 Tolson v Roads and Maritime Services (2014) 201 LGERA 367; [2014] NSWCA 161 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 Texts Cited: F Bennion, Statutory Interpretation Category: Principal judgment Parties: Sydney Metro (Appellant) Expandamesh Pty Ltd (Respondent) Representation: Counsel: RC Beasley SC/L Waterson (Appellant) TS Hale SC/DW Robertson (Respondent)

Solicitors: Crown Solicitor's Office (Appellant) ClarkeKann Lawyers (Respondent) File Number(s): 2022/379614 Publication restriction: Nil Decision under appeal Court or tribunal: Land and Environment Court Jurisdiction: Class 3 Citation: [2022] NSWLEC 137 Date of Decision: 24 November 2022 Before: Moore J File Number(s): 2020/179897

(2014) 201 LGERA 367

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