The Minister v Stocks & Parkes Investments Pty Ltd

This is an appeal by special leave from a decision of the Court of Appeal of the Supreme Court of New South Wales upon a case stated by Else-Mitchell J. in proceedings for compensation by the respondent against the appellant for the resumption of about six acres of land in the Shire of Sutherland compulsorily acquired under the Public Works Act, 1912 N S W for the purposes of a school. His Honour awarded $1.00 as nominal compensation and the Court of Appeal held, inter alia, that compensation in excess of that sum ought to have been assessed.

What happened can be stated shortly. The respondent had in 1962, by purchase through a trustee, acquired 231 acres of land in the Shire of Sutherland for £203,500. The land had previously been in a Green Belt Zone under the provisions of the County of Cumberland planning scheme but these provisions in relation to the land had been suspended in 1961. The zoning of what may conveniently be called "the released land" was left undetermined but in a letter from the Under Secretary of the Department of Local Government dated 8th February 1961 to the Shire Secretary of the Sutherland Shire, it was said with regard to it:

A further undetermined area is located at West Jannali. While in these areas both the Cumberland County Council and the Shire Council have endorsed the open space reservation, the Minister considers that in view of the yet unresolved problems associated with the localities and having regard particularly to the absence of detailed planning or any information on the question of financing the acquisition of the lands at this stage, the proposal to leave the areas undetermined is the correct one to adopt for the time being. In administering control over these undetermined areas the Shire Council should have regard to the fact that such lands are not intended for urban use but ultimately it is anticipated that after closer examination of the situation and resolving of any anomalies, they will be incorporated as open space lands.

The Minister proposes, in respect of all undetermined areas, to direct the Council under cl. 10 (f) of Ordinance No. 105 to consult with the Cumberland County Council in determining all interim development applications and in pursuance of s. 342V (3) of the Local Government Act, 1919, to direct the Council to refer to him for decision such of the aforesaid applications where there is a difference of views between the Shire Council and the County Council following consultation.

However, Plan no. 245:475 in the Department of Local Government, which was the plan by reference to which the released land was described at the time of the suspension of the planning scheme, showed by a line, subject to survey that an area of about 61 acres, within the larger area marked "undetermined zone", had been marked "residential 2 (b)". It must, however, be taken that it was not until after the acquisition of the subject land that any part of the released land was, in fact, zoned. Upon its release and until it was re-zoned, any use of the released land was subject to the consent of the shire council.

It was in these circumstances that the respondent set about getting approval for a scheme under which the major part of the released land would be zoned "residential", but provision would be made for open spaces and special areas. In November 1962, the respondent submitted to the shire council a proposed plan for the development of the whole area showing it subdivided into blocks with "public garden and recreational space". Upon this plan there was an area of about six acres described as "school site". This plan came to the notice of the Education Department which then began an investigation which eventually resulted in the resumption of the subject land pursuant, it seems, to the following request from the respondent dated 30th September 1966:

re: JANNALI WEST: Acquisition of School Site within Development Area 8 between Soldiers Road and Woronora River. Property Lot No. 395 - D. P. 230682. In part C/T Vol. 10237 Fol. 107 and Vol. 9887 Fol. 250.

We refer to our letter dated 22nd September, 1966, and advise that we would raise no objection whatsoever to your Department resuming the property

We would appreciate if resumption proceedings could be instigated at your earliest convenience, and completed prior to 31st October 1966.

The notice of resumption of an area of six acres nine and a half perches or thereabouts said to be in the possession of Stocks and Parkes Investments Pty Ltd was published in the Government Gazette of 28th October 1966. The land acquired in this manner was not identical with the land marked "school site" in the respondent's plan of subdivision of November 1962, but it was in the same neighbourhood and was wholly within the area marked "residential 2 (b)" in the Local Government Plan no. 245:475.

It was as a step in the obtaining of the approval of its plans that the respondent, on 29th March 1965, reached agreement with the Council of the Sutherland Shire for the approval of the development of the whole of the released land in accordance with a plan identified as T. P. 172 which showed a school site of the size and in the situation of the subject land. This is referred to in the case stated as follows:

10. On 29th March 1965 a deed was executed by the plaintiff (therein called "the developer") and the Sutherland Shire Council which recited that the Council as responsible authority in respect of the released land under s. 342Y of the Local Government Act was prepared to grant approval to the development of that land in accordance with the plan T. P. 172 upon and subject to the conditions set out in the deed one of which was in the following terms: The developer shall make provision for a school site in accordance with the requirements of the Department of Education. This plan after execution of the deed was adopted by the Sutherland Shire Council and transmitted to the State Planning Authority (which in the meantime had succeeded the Cumberland County Council) for its approval and that Authority approved the plan on 10th August 1965.

12. At the date of resumption the released land was still subject to interim development control under Div 7 of Pt XIIA of the Local Government Act but a draft local planning scheme had been prepared by the Sutherland Shire Council and submitted to the State Planning Authority in February 1966 pursuant to the provisions of s. 342F (1) of the Local Government Act, 1919, as amended, under which the subject land was shown zoned as "Special Uses (School)".

The second half of par. 19 of the case stated reads as follows: I also found that the provision of the subject land as a school site was a vital factor in the approval by the Sutherland Shire Council of the subdivision of the entirety of the released land of 231 acres and the resumption of the subject land as a school site thus resulted in the enhancement in the value of the adjoining lands which were or are in the course of subdivision and sale by the plaintiff as residential allotments and which would not otherwise have been available for residential development. I found that the enhancement in the value of these adjoining lands should be set off against any value which the subject land might be proved to have had if there had been no proposal to establish a school on the subject land or if consent to the development and subdivision of the whole of the released land had not been given by the Sutherland Shire Council.

It was in the foregoing circumstances that Else-Mitchell J. stated a case which included the following questions:

(1) Whether I was obliged to determine the compensation for the resumption of the subject land upon the assumption that it could have been subdivided into residential allotments for sale to home builders.

(2) Whether I was obliged to determine the compensation for the resumption of the subject land upon the assumption that approval had been given by the Sutherland Shire Council to the development and subdivision of the released land and the opening of roads to serve such subdivision but disregarding all or any (and if so which) of the following facts -

(a) The designation on any of the plans for the development or subdivision of the released land of a "primary school site" or "school site";

(b) The provisions of the deed dated 29th March 1965 between the plaintiff and the Sutherland Shire Council;

(c) The provisions of the Sutherland Shire Council's draft planning scheme under which the subject land was proposed to be zoned as Special Uses (School).

(3) Whether, having found that the value of the subject land on the basis of a residential subdivision was inapplicable, I was obliged in the absence of any other acceptable evidence of value to determine the compensation for the resumption of the subject land at a sum in excess of $1.00.

The Court of Appeal did not answer the first question but answered question (2) as follows: (2) (a) Yes. (2) (b) Yes. (2) (c) Yes.

These answers were given on the footing of the meaning which the Court of Appeal attributed to the second question. Question (3) was answered:

"Yes" on the assumption that the figure of $1 was intended to reflect the set off under s. 124 of the Public Works Act for enhancement in the value of the interest of the plaintiff in adjoining land in the manner set forth in the second half of par. 19 of the stated case. [1] 1. [1971] 1 N.S.W.L.R. 932; (1971) 25 L.G.R.A. 243.

The appellant has appealed against the answers to questions (2) and (3) and the respondent has cross-appealed in relation to question (1).

The cross-appeal can be disposed of shortly. At the date of the resumption, the land could not be used for the purpose of residence without the consent of the Council and there was no prospect of the Council giving such consent. Accordingly, if question (1) were to be answered it would have to be answered "No".

The actual terms of the second and third questions, as the Court of Appeal observed, do give rise to difficulties that are not perhaps inherent in the real problem which faced the learned judge of first instance.

Although, at the time of the acquisition of the subject land, there had been no formal change in its zoning and it was still subject to interim development control, the council and the planning authority had approved the plan no. T. P. 172 which showed land in the situation of the subject land as a school site. For some time prior to the resumption of the land for the purposes of a school, the Education Department had conducted investigations and decided that it required the land as a school site. These facts could be ascertained by interested persons and would no doubt affect the price which the respondent might get for the land from a prospective purchaser. But in so far as any such alteration in value arose from the proposed establishment of the school on the land, it had, in accordance with s. 124 of the Public Works Act, 1912 N S W, to be disregarded. What that section required here was the assessment of the compensation to be paid for the taking of the land without regard to any alteration in its value because it was already known that the land was the site for a school. In so far as the designation of the school site on the plans of the respondent or in the provisions of the deed dated 29th March 1965, or in the draft planning scheme merely had the effect of spreading the knowledge that the land was to be a school site, s. 124 requires that any increase in value due to these matters should be disregarded. Furthermore, a reference in such plans, deed or planning scheme to the land as a school site, did not require that the land should be used for school purposes. Whether the land should be the site for a school depended upon the Education Department, regardless of what was shown in these plans and documents. Moreover, before us the appellant abandoned the contention that the provisions of the deed obliged the respondent to transfer the subject land free of cost to the appropriate person or authority for use as a school site. The affirmative answers of the Court of Appeal to question (2) were intended to mean (1) that the deed did not contain a promise by the respondent to make a school site available free of charge; (2) that the compensation must be assessed without reference to any public foreknowledge of the proposal to establish a primary school, even if the foreknowledge came from a draft planning scheme; and (3) that the fact that the respondent had suggested the proposal did not mean that it should be regarded. We consider that the answers of the Court of Appeal, understood in this way, were correct.

This, in conjunction with what has been said about the first question, means, of course, that it would have been wrong to value the land resumed as land then available for use for residential purposes. The value had to be determined as at the date of the notice on the footing that it was six acres in extent, in an unzoned area, subject to interim development control, which was ripe for subdivision but of which portion would not be used for residential purposes but for open spaces or special uses. It does not follow, however, that the six acres of land in a residential area would not be of substantial value even if it could not be predicated that it was itself residential land. Every developer would know that it would be necessary to make provision in a residential subdivision for roads and for open spaces and for special purpose use as well as for building allotments. It could fairly be asked as some measure of its value, how much more would a developer pay for the whole area of 231 acres than for the whole of that area less the six acres comprising the subject land? Furthermore, evidence of the value of the land as a school site or as open space would be relevant although not, of course, decisive to the assessment of its value.

It is at this point that it is convenient to turn to the third question. What has already been said indicates that it was wrong to fix the value of the subject land as nominal unless either (1) the respondent had failed to prove that it had any value at all, or (2) there was to be set off against the proved value of the land any enhancement in the value of the adjoining land owned by the respondent at the date of the acquisitions by reason of the proposed construction of a school upon the subject land as provided by s. 124.

So far as the first of the foregoing qualifications is concerned, counsel for the appellant expressly disclaimed it as the ground for upholding the award for $1.00. This was on the footing that if there were merely a deficiency of evidence, the Minister did not want to preclude consideration of evidence which might be adduced if the hearing were to be re-opened. As to the second qualification, it is clear that, although the learned judge at first instance seems to have had in mind enhancement as described in s. 124 as something to be taken into account, the actual assessment of $1.00 was certainly not arrived at by deducting the calculated amount of such enhancement from the value of the land as ascertained upon the evidence.

We therefore agree substantially with the answer of the Court of Appeal to the third question.

However, because we consider that the answers given to the second question, without more, could lead to an unwarranted restriction of the matters to which the court assessing compensation could properly take into account, we think we ought to allow the appeal and remit the matter to the Court of Appeal with a direction that question (2) should be answered in conformity with the following principles:

1. That the subject land was not to be valued as if it were residential land;

2. That in the valuing of the land, it was necessary to take into account that it was part of an area ripe for subdivision in a manner providing for open spaces and special purpose uses, and its value could be determined upon evidence relating to any way in which the six acres of land could contribute to the value of the land in the subdivision as a whole;

3. That in assessing compensation for the subject land, it would be appropriate to set off any enhancement of the value of the interest of the respondent in any land adjoining the subject land which existed at the date of the resumption by reason of the proposed use of the subject land for the construction of a school.

These conclusions are, we think, within the ambit of the questions, notwithstanding that if they were to be construed literally something more specific might be indicated. We are, however, conscious of the great difficulty of framing questions to elicit the assistance which a judge who states a case seeks in the event of some further hearing becoming necessary. It is such assistance that the Court of Appeal sought to provide and which this Court, in turn, seeks to provide for the learned judge who stated the case.

For these reasons we would allow the appeal to the extent indicated and dismiss the cross-appeal. We consider that in the circumstances there should be no order as to costs.