Tolson v Roads and Maritime Services

Court of Appeal (NSW)|2013-10-22|Before: Beazley P, Basten JA, Preston CJ

CLR 495 Roads & Traffic Authority of NSW v McDonald [2010] NSWCA 236; 175 LGERA 276 State Super SAS Trustee Corporation v Cornes [2013] NSWCA 257 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; 233 CLR 259 Texts Cited: Law Reform Commission, Lands Acquisition and Compensation - Report No 14 (AGPS, Canberra, 1980) Category: Principal judgment Parties: Robert Neville Tolson and Norah Ruth Tolson (First Appellant) Elf Farm Supplies Pty Ltd (Second Appellant) Roads and Maritime Services (Respondent) Representation: Counsel: T Robertson SC; A Pickles (Appellants) R Lancaster SC; N Eastman; J McKelvey (Respondent) Solicitors: Shaddicks Lawyers (Appellants) Henry Davis York Solicitors (Respondent) File Number(s): CA 2012/255126 Decision under appeal Citation: Tolson v Roads and Traffic Authority of New South Wales [2012] NSWLEC 170 Date of Decision: 2012-07-24 00:00:00 Before: Sheahan J File Number(s): 30678/2010

[This headnote is not to be read as part of the judgment] Section 54 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ("the Land Acquisition Act") provides an entitlement to an amount of compensation that will, having regard to all relevant matters, justly compensate a person whose land has been acquired. Those matters are listed exhaustively in s 55 and relevantly include: "the market value of the land at the time of acquisition", "any special value of the land to the person on the date of its acquisition", "any loss attributable to disturbance" and "any increase or decrease in the value" of the remaining land. The appellants owned land which had been leased to a company manufacturing compost. A raised roadway, the Hawkesbury Valley Way, was proposed to run diagonally across part of the land, separating its north-eastern corner from the remainder. Construction of the roadway began in 2006 and was completed in 2007. Contemporaneous with the roadway's construction, the appellants were able to obtain consent to increase the industrial use of their land beyond the boundaries of the industrial zoning maintained by the local council. The part of the appellants' land affected by the roadway was compulsorily acquired by the respondent in 2009. Proceedings were commenced by the appellants to obtain compensation. A dispute arose over whether the land's value had actually increased because of the roadway, as the land could now be used for greater industrial purposes. The trial judge accepted the evidence of the respondent's valuer that there had been such an improvement. Aside from an amount reflecting the cost of disturbance, the trial judge awarded no compensation. The issues for determination on appeal were: (i) whether the trial judge erred in determining the amount of compensation, either by offsetting the improved value of the remaining land against the market value of the acquired land or (on cross-appeal) by failing to offset the cost of disturbance against the improved value of the land; (ii) whether the trial judge committed an error of law in accepting the findings of the respondent's valuer; (iii) whether the trial judge erred in considering the effect of the leases in determining compensation; (iv) whether the trial judge erred in rejecting a claim by the appellants for special value. The Court held (per Beazley P, Basten JA, and Preston CJ of LEC), dismissing the appeal and cross-appeal: In relation to (i): (Basten JA, Beazley P agreeing; Preston CJ of LEC)

Judgment 1BEAZLEY P: I have had the advantage of reading in draft the reasons of Basten JA and Preston CJ of LEC. I agree that the appeal should be dismissed for the reasons given by Basten JA. I also agree with Basten JA that the cross-appeal should be dismissed, for reasons which I am able to state briefly. 2The Land Acquisition (Just Terms Compensation) Act 1991, Pt 3, Div 4 makes provision for the determination of the amount of compensation payable for the compulsory acquisition of land. Its provisions are set out in the judgment of Basten JA at [26]. The particular question in issue on the cross-appeal is whether losses attributable to disturbance should be offset against the increase in value of other land, owned by the person whose land has been compulsorily acquired, resulting from the carrying out of the public purpose. The terms of ss 54 and 55, their interrelationship and the interrelationship between the various paragraphs of s 55 are critical to this issue. 3In Leichhardt Municipal Council v Roads & Traffic Authority of NSW [2006] NSWCA 353; 149 LGERA 439 Spigelman CJ stated, at [37], that the Land Acquisition (Just Terms Compensation) Act, s 55 constituted "an exhaustive list to which regard must be had when determining the amount of compensation under s 54". However, the Chief Justice went on to explain that the matters specified in s 55 do not constitute a "mathematical formula". Importantly, for the determination of the question I am presently considering, his Honour added: "The dominant test is contained in s54, that is, the task is to determine the amount that will 'justly compensate the person for the acquisition of the land'. This carries into effect the object of the Act set out in s3(1)(b) 'to ensure compensation on just terms for the owner of land that is acquired ...'." 4His Honour accepted, at [38], that the meaning of the term "compensation" in the Land Acquisition (Just Terms Compensation) Act is, prima facie, "compensation ... for loss": Nelungaloo Pty Ltd v Commonwealth [1947] HCA 58; 75 CLR 495 at 571. 5The question for the judicial valuer in any particular case is, therefore, to determine the amount that will justly compensate a land owner for the compulsory acquisition of their land by having regard to the matters specified in s 55 and only those matters. The answer to that question will depend upon the interrelationship of the various factors in s 55 and the determination of the just compensation to be paid having regard to those matters. 6In Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales [2006] NSWCA 314, Spigelman CJ (Handley and Tobias JJA agreeing), at [45] reiterated what he had said in Leichhardt v Roads & Traffic Authority that the determination required under s 54, by reference only to the matters specified in s 55, did not constitute a mathematical formula. His Honour, at [55], then turned to the consideration of the interrelationship between the various paragraphs of s 55 (the relevant passages are set out in the judgment of Basten JA at [43]). As the Chief Justice explained in Mir, s 55 does not prevent two or more of the matters being taken into account in a combined way. It was for that reason that the Court concluded in Mir that a before and after valuation was not inconsistent with the statutory measure of compensation to be determined under ss 54 and 55. 7Although the observations of Spigelman CJ in Leichhardt v Roads & Traffic Authority and Mir were made in the context of issues different from those which arise here, I consider his Honour's comments to be of general application. They involve the proper construction of ss 54 and 55. How the sections operate in a particular compensation case will depend upon the facts and circumstances of that case. 8The question in this case is whether disturbance costs should be offset against the increase in value of the retained land in the same way as s 55(f) may be offset against the market value of the acquired land where there has been an increase in the value of other land referred to in that paragraph. 9Basten JA has observed, at [83], that disturbance costs are separate and distinct from the value of the acquired or the retained land and that "[i]t is consistent with the legislative purpose ... that they be allowed or disallowed in accordance with the specific statutory entitlements, without regard to the value of any land involved". I agree with that conclusion, which follows, in my opinion, from the interaction of ss 54 and 55, having regard to their proper construction. Section 54 requires that the outcome of the compensation process as prescribed is the payment of "just compensation". 10Section 55(d) recognises the likelihood that a person whose land is subject to compulsory acquisition will need, or at least should be entitled, to obtain appropriate advice or to incur other actual costs as a result of the acquisition. As Basten JA has explained, the matters included in s 55(d) as specified or defined in s 59, are of a different nature from the valuation outcome to which s 55(a), and s 55(c) and (f) if applicable, are directed. 11In the present case, the disturbance costs that have been allowed are relevantly modest. Nonetheless, they involved actual outgoings which the Court determined were reasonably incurred. In other cases the sums may not be as modest. There is unlikely to be just compensation where a person has reasonably incurred expenses as permitted by statute where those monies are irrecoverable other than by being reflected in an unrealized increase in the value of the retained land. Whilst an increase in the value of land may have a longer term benefit to the person on sale, the impact of such expenses upon a person whose land has been compulsorily acquired is upon the person's liquid assets at the time of acquisition. That could be a serious financial burden in a particular case, even where the expenses are modest. These considerations underscore what Basten JA has said, namely, that expenses identified in s 55(d) are of a different nature from changes in the value of the land itself. 12In approaching the matter this way, I am not to be taken as saying that s 54 provides a "just compensation override" as an additional factor or consideration providing the final figure for the compensation payable is adjusted after regard has been had to the matters in s 55. Rather, it is the nature or character of the matters specified in s 55 which determines how they are to be treated so that the requirement of just compensation in s 54 is satisfied. Should my agreement in El Boustani v The Minister [2014] NSWCA 33 with the obiter comment of Preston CJ of LEC at [71] involve an acceptance that s 54 operates independently and after the factors in s 55 have been considered, I do not adhere to that agreement. In my opinion, the proper construction and interrelationship of ss 54 and 55 are as I have described them in these reasons. 13Accordingly, I agree with Basten JA that the appeal and cross-appeal should be dismissed. I agree with his Honour's orders as to costs. 14BASTEN JA: The first appellants (Robert and Norah Tolson) own land at Mulgrave, south of Windsor, which is used by the second appellant (Elf Farm Supplies Pty Ltd) to run a business of preparing compost (or substrate) for mushroom farms. In 2009 the respondent road authority acquired a strip of the appellants' land used for the construction of a raised roadway across the floodplain of South (or Wianamatta) Creek, the public purpose being known as the Windsor Flood Evacuation Route ("WFER"). 15The appellants claimed compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ("the Land Acquisition Act"). The respondent offered payment of approximately $30,000 on account of "disturbance" caused by putting into effect the purpose of the acquisition, namely the construction of the roadway. Dissatisfied with the offer, the appellants commenced proceedings in the Land and Environment Court, seeking compensation in the order of $3.2 million. They were unsuccessful in obtaining any amount in excess of the amounts for disturbance, which were assessed at some $36,000. 16The appellants challenge the judgment in the Land and Environment Court on the basis of error on a question of law, such an appeal being provided by s 57 of the Land and Environment Court Act 1979 (NSW). 17Despite its initial offer, the respondent cross-appealed on the basis that no amount should have been allowed, even for disturbance.

Issues 18The issues raised by the case fall into four broad categories, namely: (1)whether compensation is payable in circumstances where the public purpose for which the land was acquired has resulted in an increase in value of the retained land which exceeds the value of the acquired land (grounds 1-7); (2)whether the valuation evidence accepted by the trial judge was inconsistent with the town planning evidence accepted by the judge, on which the valuation was purportedly based (grounds 8-10); (3)whether the land should have been valued as an unencumbered fee simple or subject to the unregistered 18 year lease held by the second appellant (grounds 11-13); (4)whether the trial judge erred in rejecting a claim by the first appellants for 'special value'. 19Issues within (2) and (3) raised questions as to the capacity of particular grounds to qualify as errors of law. Other grounds challenged the adequacy of the reasons given by the trial judge in relation to particular issues. These points will be addressed as they arise.

Description of land 20Before turning to discuss the issues raised, it is desirable to say a little more about the land. The land owned by the first appellants was roughly rectangular, with the longer sides of the rectangle running from Wianamatta Creek in the west to Mulgrave Road in the east. About half the land, being the western part adjoining the creek was not used or capable of use for industrial purposes. The Hawkesbury Valley Way, being the public purpose for which part of the land was acquired, ran diagonally from the north, crossing the northern boundary about three quarters of the way from the creek to Mulgrave Road. It left the land at Mulgrave Road on the south-eastern corner. The effect of the road construction was to separate the north-eastern corner of the appellants' land from the remainder. 21Pursuant to a development consent provided in 2006, the appellants were able to raise the level of the land to the west of the Hawkesbury Valley Way (which had by then been constructed) to a level which allowed it to be used for industrial purposes. A key question for the town planners was whether the landfill permitted in 2006 was to any extent affected by the public purpose. That depended in part upon whether, absent the public purpose, filling would have been permitted beyond the boundaries of the industrial zoning proposed in 2005 under the Hawkesbury Local Environmental Plan. (The zoning was more limited than the area approved in the 2006 consent.) 22The answer to this question, although relating to facts which had occurred in the past, was rendered speculative by the chronology. Thus the original preferred option for the Hawkesbury Valley Way had been proposed in 2001 and approved by the Minister for Planning in May 2003. Work had commenced on the construction of the road in March 2006, with construction completed in September 2007. The part of the road crossing the appellants' land was constructed with their approval, although the land did not become the subject of a compulsory acquisition until 11 December 2009. (Steps had been taken by the respondent at its own expense to limit the disruption to the second appellant's business operations during construction.) When the appellants lodged a development application to fill part of their land to accommodate new storage and manoeuvring areas, in July 2006, the construction work was already underway. Consent was given on 22 November 2006. Mr Montgomery (the appellants' planning expert) considered that consent would have been given absent the road proposal, though the extent of the consent will be addressed below. Mr Rowan (the respondent's planning expert) thought the likely area to be approved would have been smaller and would have followed the proposed zoning boundary. Mr Montgomery's view did not affect only the area approved to be filled and developed in 2006; it also had consequences for the likely infilling and development of the area to the east of the development consent, which included part of the roadway itself and extended into the north-eastern corner of the appellants' land. 23Each party obtained a report from an expert valuer, Ms Cooper for the appellants and Mr Lunney for the respondent. The valuers were agreed as to the appropriate values per square metre to be applied to the areas which were usable industrial land ($100/m2) and to areas where were not capable of industrial use ($5.5/m2). The issues addressed in a joint valuers' report and a supplementary joint valuers' report were the areas of possible future fill and development as industrial land, particularly with respect to the valuation of the so-called 'parent parcel', namely the land prior to the acquisition, which was to be valued disregarding the public purpose, and was contested and the value to be put on the areas so identified.

(1) Allowing for betterment: the legal principles 24The appellants owned an area of some 24.4 hectares comprised by two contiguous lots. Of that, approximately 2.4 hectares (or 10% of the total area) was acquired for the road. The roadway cut across the appellants' land diagonally, leaving the bulk of the land to the south-west unaffected, but cutting off direct access to the north-eastern corner of the land. Despite the detriment caused by the loss of part of the land and the lack of ready access to another part, the Court accepted the evidence of the respondent's valuer that the overall value of the appellants' retained land after the acquisition exceeded the value of the whole (or 'parent parcel'), assessed without regard to the public purpose. That was because the carrying out of the public purpose had resulted in a change in the use to which parts of the land could be put (by allowing a larger area to be filled and the level thus raised above the surrounding flood plain). 25Leaving to one side the challenge to the valuation itself, the appellants submitted that they were, despite the "betterment", entitled to compensation for the loss of an area of their land. The correctness of that submission turned on the proper construction of the Land Acquisition Act. 26The primary object of the Land Acquisition Act is to "guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition": s 3(1)(a). Part 3 of the Act deals with compensation for acquisition of land. Section 37 (in Pt 3, Div 1) provides that "[a]n owner of an interest in land which is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with this Part by the authority of the State which acquired the land." Part 3, Divs 2 and 3 deal with procedural matters. Part 3, Div 4 (ss 54-65) is headed "Determination of amount of compensation". Section 54(1) provides that "[t]he 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." The other provisions of immediate operation are as follows: 55 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) solatium, (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. 56 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. (2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition. 57 Special value In this Act: special value of land means the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person's use of the land. 27The appellants do not challenge the finding for disturbance, but the respondent does and, accordingly, it is convenient to set out the meaning given to disturbance by s 59: 59 Loss attributable to disturbance In this Act: loss attributable to disturbance of land means any of the following: (a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land, (b) valuation fees reasonably incurred by those persons in connection with the compulsory acquisition of the land, (c) financial costs reasonably incurred in connection with the relocation of those persons ..., (d) stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation ..., (e) financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation..., (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition. 28The approach adopted by the appellants involved a number of steps. The first is to identify the phrase "the land" in s 55(a) as being the land acquired. That follows, it was submitted, by reference to the context which includes "the date of its acquisition" in par (a) and the reference to the value of "any other land" in par (f). That step should be accepted. 29Next, reliance was placed upon the primary object of the Act which is to guarantee that the amount of compensation will be not less than the market value of that land. The market value must be calculated without reference to the proposal for acquisition, which might increase or decrease the value. However, it was submitted, the compensation cannot be less than the market value of the acquired land, so assessed. 30The next step was to consider the effect of s 55(f), which recognises that the carrying out of a public purpose may either increase or decrease the value of other land. Where the effect is to decrease the value, an amount is recoverable for the detriment. If the effect is to increase the value of the other land, clearly there can be no element of compensation under par (f) itself. Nevertheless, the appellants submitted, any increase in value of adjoining land (sometimes referred to as "betterment") is not to be offset against the market value of the acquired land under par (a), so as to diminish the compensation payable below the true value of the acquired land. How it was to be taken into account was less clear. 31The cross-appeal raised a question as to the inter-relationship between pars (f) and (d). No doubt the respondent was conscious of the logic that if betterment under (f) could diminish the compensation payable under (a), it should also diminish the compensation which would otherwise be payable under any other head in s 55. 32By way of response, the appellants noted that the "loss attributable to disturbance", as defined in s 59, involved a number of heads of cost and expense which the owner of acquired land might reasonably incur in connection with the compulsory acquisition. It was not logical, they submitted, to set off those expenses against a notional (in the sense of unrealised) increase in the value of any other land adjoining or severed from that acquired. 33The respective submissions give rise to further questions as to the inter-relationship of the various paragraphs in s 55. Thus, par (b) refers to "any special value of the land", a term defined in s 57 to mean "the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person's use of the land." On one view, if increase in the value of adjoining land is to be offset against the market value of the land, it would be logical that it should also be offset against any special value of the land. Paragraph (c) is concerned with "loss attributable to severance", which is defined in s 58 to mean "the amount of any reduction in the market value of any other land of the person entitled to compensation which is caused by that other land being severed from other land of that person." The remaining paragraph, (e), relates to "solatium", defined in s 60 to mean compensation for "non-financial disadvantage resulting from the necessity of the person to relocate his or her principal place of residence". (There is a cap on the amount recoverable.) Solatium, on one view, would fall into the same category as disturbance, in that it involves a form of loss quite separate from any consideration as to market value or as to the change in value of other land. 34The appellants approached the construction of the Land Acquisition Act by reference to a "presumption" that the legislature did not intend to permit the executive to acquire property without compensation. So much may be conceded: however, the next step in the argument was that, if taking into account the enhanced value of retained land had the effect that compensation would not cover the full value of the acquired land, that result would contravene the presumption and therefore would need an express provision, or at least a necessary implication, to that effect. That submission had particular rhetorical effect in the present circumstances where the enhanced value of the retained land exceeded the market value of the acquired land, when the latter was calculated without reference to the public purpose. 35There is no need in this context to rely upon general law presumptions: the objects, as carried into effect by the specific provisions of the Land Acquisition Act, demonstrate a clear intention to ensure compensation on just terms for the owners of acquired land. What amount "will justly compensate the person for the acquisition of the land" is to be calculated in accordance with Pt 3, Div 4: see s 54(1). That it may not amount to compensation on just terms under s 51(xxxi) of the Constitution is expressly recognised in s 54(2) with respect to native title rights and interests. 36In some circumstances, knowledge of preceding case law is useful in understanding the concepts used in this area of the law, such as "injurious affection", "betterment" and "the Pointe Gourde principle". However, the Land Acquisition Act contains language which is largely defined within the Act, so that its construction is a matter to be addressed primarily by reference to its own terminology: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; 233 CLR 259 at [35]. 37Section 55 is in emphatic terms: it identifies certain matters as the only matters to which "regard must be had" in determining compensation. Nevertheless, it also recognises that other provisions in the Division must be applied because compensation must be "assessed in accordance with this Division" (being the words in parenthesis in the chapeau). This last phrase has two primary effects: one is to pick up s 54(1), which itself has two elements. First, it requires that the amount of compensation be assessed "having regard to all relevant matters under this Part"; secondly, the amount must be such as will "justly compensate" the person for the acquisition of the land. 38The second effect of s 55 is to apply the various matters identified in pars (a)-(f) of that provision, the definitions to be found in ss 56-60, and the more general limitations imposed by ss 62-65. 39The appellants' submissions gave par (f) no work to do with respect to the items set out in (a), (b), (d) and (e). That left par (f) with work to do only in relation to "loss attributable to severance", under par (c). However, there are two difficulties with that conclusion. The first is that par (c) is concerned with "loss" attributable to severance, so that any increase in the value of any other land could not be relevant to the assessment required by par (c). Secondly, the two provisions relate to different consequences. "Severance" refers to "other land being severed from other land": that is, it is concerned with two areas of retained land. As explained by Tobias JA in Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales [2006] NSWCA 314 at [107], "[t]he usual example of severance in this sense is where land is compulsorily acquired for a road through the middle of a larger parcel in the one ownership". By contrast, par (f) is concerned with the value of any other land which is "severed from the acquired land". 40Thus on the appellants' approach, par (f), in so far as it refers to an increase in the value of any other land, will have no direct application to any of the separate elements in s 55. Even disregarding that difficulty, the appellants' attempt to limit its operation is without support in any part of the statutory language. For these reasons, it must be rejected. 41By way of extrapolation, the appellant submitted that where a 'before and after' valuation gave rise (as in this case) to an overall increase in the value of the affected owner's land, there should be a provision precluding the acquiring authority from claiming the increase. The absence of such a provision was said to weigh against the validity of the off-setting exercise. Although there have been such provisions in other legislation, the absence of such a provision is immaterial: there is simply no statutory basis for a claim for the value of the excess improvement in any event. 42Further, the appellants submitted that the enhanced value of the retained land was an unrealised benefit and one which might not be capable of realisation whilst the appellants continued to operate their business on the land. On the other hand, the loss of part of their land was a fact which had happened. Again, these may be factors which affect the equity of the outcome; they are not factors which the Court, as judicial valuer, can consider under s 55. 43The submission was also untenable as a matter of authority. In Mir Bros there was a challenge to the appropriateness of a valuation of land on the "before and after" basis. That is, the valuers first assessed the market value of the whole of the claimant's land, disregarding the proposal for acquisition, and then the value of the retained land. The values accepted by the trial judge involved a higher value per square metre for the (smaller) retained parcel than for the original (larger) parcel of land. The claimant said that approach in effect discounted the market value under par (a) by making allowance for an increase in the value of the retained land, pursuant to par (f). As noted by Spigelman CJ, an approach which incorporated factors which were inconsistent with the terms of s 55 could involve legal error: at [44] and [47]. However, the Court rejected the proposition that there was any inconsistency. The Chief Justice concluded: "55 I would not approach the interpretation of s 55 on the assumption that each of the component parts and specifically s 55(c), was intended to operate to the exclusion of each other. Section 55 is a list of relevant matters to which regard must be had. ... 56 In any event, a number of the paragraphs of s 55 overlap with each other. ... The terminology of s 55 does not suggest a parliamentary intention that one of its paragraphs should operate to the entire exclusion of another. More relevantly, there is nothing to suggest that s 55(c) with its reference to 'loss' was intended to operate as an exclusive provision on the subject of 'severance'. Notably, the same word, albeit differently defined appears in s 55(f). 57 Section 55, in my opinion, does not prevent two or more of the matters therein contained being taken into account in a combined way. I can see nothing which indicates an inconsistency between any of the provisions in s 55, and the before and after method in the present case. 58 By its nature the method encompasses a number of the matters expressly listed in s 55 including market value, loss attributable to severance and the increase or decrease due to the carrying out or proposal to carry out the public purpose." 44The effect upheld in Mir Bros was not as dramatic as in the present case, but the rejection of the challenge to the valuation has equal application in the present case. There is no basis in the statute to allow some reduction in the market value of the acquired land, but not a reduction to nil. 45In their attempt to quarantine a calculation of market value of the acquired land under par (a) from any increase in the value of the retained land under par (f), the appellants also sought to rely upon two other authorities in this Court. In the first, Leichhardt Council v Roads & Traffic Authority of NSW [2006] NSWCA 353; 149 LGERA 439, Spigelman CJ, on behalf of a five member bench, stated at [41]: "Significantly for present purposes s 3(1)(a) states that one of the objects of the Act is to 'guarantee' that 'compensation will not be less than ... market value'. The Court should be slow to interpret the definition of market value in s 56(1) as permitting regard to be had to a matter which necessarily means that the owner will not receive market value." 46The issue in Leichhardt Council was whether land owned by the Council, and acquired by the roads authority, was to be valued subject to the constraints on use and alienation imposed by statute on the Council, or according to its market value to a purchaser. The Court held that the compensation was to be assessed by reference to the market value of the land, ignoring the restrictions on alienation and use to which the current owner, the Leichhardt Council, was subject. In other words, the statutory language, particularly in s 56(a), was not to be read down by reference to some implied limitation where to do so would be inconsistent with the general purpose and objects of the Act. The present case is concerned with a different question, namely the inter-relationship of the various matters set out in s 55. Nor is there anything inconsistent in the reasoning in Leichhardt Council with the conclusion reached above. 47The second authority upon which the appellants relied was a passage in the judgment of Hodgson JA in AMP Capital Investors Ltd v Transport Infrastructure Development Corporation [2008] NSWCA 325; 163 LGERA 245: "62 In my opinion, s 3(a) of the Just Terms Act is important here. One object of the Just Terms Act is to guarantee that compensation be not less than the market value of the acquired land (unaffected by the proposal), that is, the element of compensation provided by s 55(a). Section 10(1)(a) authorises the giving of a notice, stating that the Just Terms Act does guarantee this. Although this notice is not given in connection with actual negotiations for compensation or proceedings in which compensation is assessed, and although it cannot give rise to a civil cause of action (s 10(3)), it is plainly intended that the notice be truthful and not misleading. In my opinion, these provisions disclose a clear legislative intention that compensation be no less than that provided by s 55(a), even if there is 'betterment' under s 55(f) that exceeds the other elements in s 55. 63 I see this as consistent with and supported by s 54(1). Where land is compulsorily acquired, it seems to me just that the acquiring authority pay at least the market value of that land (unaffected by the proposal), even if the person from whom the land is acquired owns adjoining land which is increased in value by the proposal, and even if this increase is greater than the market value of the acquired land. Other persons owning land in the area may benefit equally or more from the proposal; so it seems to me unjust that the acquiring authority should get the acquired land for nothing, and that the person whose land is acquired should get nothing for it, just because of a benefit that may be shared by others. Thus a lower limit of the market value (unaffected by the proposal) seems just; and this is what s 3(a) and s 10 indicate is to be guaranteed." 48There are a number of problems in seeking to rely on this reasoning. First, as the following paragraphs recognised, that view did not necessarily accord with the approach adopted in Mir Bros and in Leichhardt Council: to the extent that it was inconsistent with the reasoning in those cases, and particularly the approach in Mir Bros, it should not be followed. Secondly, the majority (Bell JA and Gyles AJA) did not adopt that approach. Its application depended upon a grant of leave to rely upon a fresh ground, namely that the trial judge had failed to apply s 54: the majority did not accept that such leave should be given. 49Thirdly and in principle, the approach of Hodgson JA did not accord with the statute. One reason why that is so is demonstrated by the passage at [63] set out above. As Hodgson JA noted, other persons owning land in the area, from whom land is not acquired, may benefit equally with the claimant for compensation, from whom land was acquired. Hodgson JA stated that "it seems to be unjust that the acquiring authority should get the acquired land for nothing, and that the person whose land is acquired should get nothing for it, just because of a benefit that may be shared by others." That is a factor which might well be thought significant in terms of an equitable outcome: however, it is not a consideration identified in s 55 and is therefore (because s 55 purports to be exclusive of considerations which can be taken into account) a prohibited consideration. A similar argument was put forward by the appellants in the present case and must also be rejected as impermissible. 50It follows that, if the value of the 'parent parcel' of land, disregarding the public purpose of the proposed acquisition (the 'before' value) and the value of the retained land taking into account the increase in value resulting from the carrying out of the public purpose (the 'after' value) were assessed without legal error, this aspect of the appeal must be dismissed. There is no need to address separately the further grounds which arose under this issue.

(2) Challenge to valuation evidence 51For the reasons given above, the "before and after" approach to valuation was not legally erroneous. The challenges set out in grounds 1-7 therefore failed. The second group of grounds (grounds 8-10) challenged the acceptance by the trial judge of the valuation evidence called from Mr Lunney by the respondent. 52Ground 8 asserted a failure to provide reasons for preferring the evidence of Mr Lunney over that of Ms Cooper and can be deferred. A second challenge (ground 9) alleged that the trial judge had misconceived the facts; having accepted the town planning evidence of Mr Montgomery as to the extent of the land which would have been approved for filling and industrial development (absent the public purpose), he erred in adopting the valuation by Mr Lunney, which was not based on Mr Montgomery's evidence. A third challenge (ground 10), in the alternative to ground 9, alleged a failure to identify the point of difference between the two expert valuers as to the areas potentially available for filling and development. It is convenient to address the latter grounds (9 and 10) before considering the alleged lack of reasons for preferring one over the other. 53These challenges were directed to the fact-finding exercise undertaken by the trial judge. In order to demonstrate that they involved an erroneous decision on a question of law, the appellants were confronted with the authority of this Court that a finding of fact which could be characterised as "perverse" or "illogical" does not raise a point of law: Azzopardi v Tasman UEB Industries Pty Ltd (1985) 4 NSWLR 139 at 156-157 (Glass JA, Samuels JA agreeing). However, as the Court has subsequently noted, an erroneous finding of fact may demonstrate a basic misunderstanding of the case brought by the claimant, so as to demonstrate that the tribunal has failed to address and determine the issues before it and has thus failed to exercise its jurisdiction: State Super SAS Trustee Corporation v Cornes [2013] NSWCA 257 at [11]-[12]. It is therefore necessary to consider whether an error of this kind has been established in the present case. 54One of the two critical factors in the different assessments of the expert valuers was the area which was capable of being filled and developed (disregarding the road proposal), as opposed to the area which was in fact approved for filling and development. The appellants' claim that there was inconsistency between the findings of the trial judge in this respect was disputed by the respondent, for the reasons outlined below; the respondent's contentions should be accepted. The second factor, the value to be accorded the areas identified as "possible future fill", will be addressed later. 55In order to establish a ground which could be characterised as an error of law, the appellants needed to demonstrate that both Mr Lunney and the trial judge (relying upon him) had misunderstood Mr Montgomery's evidence in a substantial respect. The respondent submitted that there had been no misunderstanding, based on the further joint report of the town planners (dated 9 May 2011), the oral evidence of Mr Montgomery and Mr Lunney's explanation of his calculation of areas in the supplementary joint valuers' report. 56The appellants submitted that the value for industrial land ($100/m2) should have been applied to the whole area which had in fact been filled pursuant to the 2006 development consent. The area of that land was in the order of 100,000/m2. Ms Cooper, who treated the whole of that area as industrial land, adopted the figure of 108,736/m2, which appears to have picked up some additional land between the area of existing landfill and the actual roadway as constructed. 57Mr Lunney, by contrast, commenced with an area of 83,260/m2 being the area accepted by the planners in their first joint report as the likely zone boundary for industrial land, absent the public purpose. The appellants submitted that Mr Lunney had thus adopted the views of the town planner rejected by the judge (Mr Rowan) in his final valuation. However, that was not so: in addition to those areas he treated as industrial land some 10,300/m2 which he considered reflected Mr Montgomery's opinion as to the town planning issues. On his calculation, there were three further areas: one to the north (13,854/m2), and two to the east, including land on both sides of the roadway and much of the road itself (11,773/m2 and 4,605/m2) which he assessed as "possible future fill areas". Mr Lunney thus valued 30,232/m2 as "possible future fill areas", whereas Ms Cooper treated only about half of that area (15,042/m2) as potential future fill, the balance being within the area she treated as certain industrial land. 58In a supplementary joint valuers' report, Mr Lunney had referred to the additional areas treated as industrial land, outside the assumed zoning boundary, as "assumed existing ... fill area to a regular RL10 contour". That reflected the agreement in the further joint town planner's report which stated (at par 4 on p 1): "We agree that ... at the date of acquisition and absent the public purpose, the embankment that existed would have been at RL16. Mr Rowan says that the toe of the batter would have been west of the WFR alignment. Mr Rowan says that it would have followed the zone boundary (Figure 1 in the joint report). Mr Montgomery says that the toe of the batter would have followed a regularised alignment similar to the 10 metre contour." 59Further statements in the report might have been read as qualifying the passage set out above with respect to Mr Montgomery's opinion. The examination by counsel for the respondent (Mr Maston) led Mr Montgomery to reject the proposition that the zone boundary in the draft LEP was to be treated as a limiting factor on where filling and development might occur: Tcpt, 20/06/11, p 42(5). The following exchange then took place (Tcpt, p 42-43): "MASTON: In the last sentence, and this is a paragraph of agreement between the two of you, 'Absent the public purpose, the western boundary,' that is of the red hatched area, 'would have been defined by the edge of the fill in our respective scenarios. See above. As would have existed post 2006 consent.' The reference to 'post 2006 consent' simply means at and after 2006, because we're not considering the 2006 consent itself here. You've put your positions in paragraph 4 and this is simply saying, isn't it, this last paragraph, 'Absent the public purpose, the western boundary would have been as we stated it in paragraph 4.' It's as simple as that, isn't it? WITNESS MONTGOMERY: The western boundary, yes. MASTON: Really the reference to the 2006 consent is neither here nor there. The position remains as in paragraph 4. Correct? WITNESS MONTGOMERY: Yes, that's right. MASTON: Is that your understanding, Mr Rowan? WITNESS ROWAN: That's correct, yes. MASTON: All right, thank you. So paragraph 4 then sets out the difference between you and it's one contour difference between the two of you. Is that right, effectively? WITNESS ROWAN: Effectively. I've adopted RL11 and Mr Montgomery says RL10. WITNESS MONTGOMERY: Yes." 60There was other evidence with respect to the size of the various areas, but the town planner's sketch map as to the relevant boundaries had been done in broad parameters (described colloquially at trial as if done "with a thumbnail dipped in tar"). More precise calculations were based on survey information, prepared by a Mr Cole, undertaken by Mr Lunney and Ms Cooper. The valuers gave extensive oral evidence in respect of their calculations: Tcpt, 22/06/11, particularly at pp 133-144. 61On the basis of this material, it was not correct to say that Mr Lunney's further calculations were based on Mr Rowan's opinion, rather than Mr Montgomery's. Whether Mr Lunney's calculations as to area were correct or not is beside the point: they were undertaken on the basis of his understanding of Mr Montgomery's view, and particularly by reference to a "regularised RL10 contour". They were so described in the supplementary joint valuers' report. 62The second significant aspect of the calculations undertaken by Mr Lunney concerned the value to be put on land which was potentially capable of being filled and developed. Ms Cooper, in her original valuation, had made no allowance for the possibility that such land would not be approved for industrial purposes. In the supplementary report, she accepted that a discount must be allowed, adopting a figure of 25%. Mr Lunney, based on evidence of comparable sales, was of the view that the potentiality of such land did not improve its market value above that for non-industrial land (agreed to be $5.50/m2). However, he accepted in the supplementary report that a buyer would be prepared to pay, but "no more than a modest premium above prevailing rural values, if any at all." In his valuation calculations, he adopted the value of $20/m2 which he described as "at the upper limit of the acceptable range." 63To the extent that this assessment of the market was inconsistent with Mr Montgomery's views as to the likely attitude of the council to a further development application, it is to be recalled that the trial judge's finding did not adopt Mr Montgomery's opinion as to the degree of likelihood of consent being given. His finding, at [112] that "it cannot be said with any certainty either that the 2006 consent would not have been granted, or that it would have been limited to the proposed zone boundary", was consistent with his further acceptance of Mr Lunney's opinion as to how the market would value the potentiality of the land. If there were any error in the approach adopted by the trial judge, as the judicial valuer, there was none which can be characterised as an erroneous decision on a question of law. Grounds 9 and 10 should be rejected. 64Ground 8 complained of the failure by the trial judge to provide reasons for preferring the valuation evidence of Mr Lunney over that of Ms Cooper, at [240]. 65It is true that in reaching a final conclusion that the value of the land was enhanced by the public purpose, he expressed no specific reason for preferring the evidence of one valuer over the other. However, with respect to the calculation of areas, the trial judge had referred to the calculations undertaken by each, at [133]-[134], and as to the differential in value, including counsel's criticisms of Ms Cooper's calculation, at [137]-[140]. 66The giving of reasons for preferring one expert over another can often involve the acceptance of the reasons given for one opinion over those given (or missing) from the other. In the present case, the joint valuers' report set out in some detail the approach adopted by Mr Lunney. However, as counsel for the respondent noted in the criticism identified by the trial judge at [140], there was little by way of persuasive reasoning to support Ms Cooper's position. Although he did not say so, the trial judge impliedly accepted the reasoning provided by Mr Lunney to support his position. That would have been a rational conclusion to reach. The appellants can have been in no doubt as to the reasons for the conclusion, the unarticulated step being readily implied. In those circumstances, it cannot be said there has been any constructive failure by the trial judge to exercise his function as a judicial valuer, or his judicial function of giving reasons for his decision. Ground 8 should be rejected.

(3) Effect of leases (grounds 11, 12 and 13) 67At the date of acquisition, being 11 December 2009, the whole of the land was subject to a lease to N R Tolson Holdings Pty Ltd ("Holdings"), a company owned and controlled by the first appellants. It was not a party to the proceedings. That company had, however, sublet the whole of the land to the second appellant. Grounds 11 and 12 asserted that the trial judge had erred "in failing to disregard the leases" in assessing compensation under s 55. The reason why it was said the leases should have been disregarded was that, both being for terms exceeding three years and being unregistered, upon an actual sale of the land, the buyer would have acquired a fee simple unburdened by the leases. Further, the interest acquired by the respondent was a fee simple in the acquired land. 68Ground 13 raised an alternative challenge, namely that the trial judge erred "in failing to determine the market value of the fee simple, and then to assess the value of each former owner's interest including the interest of the second appellant." 69There are unsatisfactory factors making a resolution of these grounds undesirable, if not necessary to the outcome of the appeal. It is not necessary if, as a practical matter, no compensation was payable. One factor of concern was that they demonstrated a potential conflict of interest between the first and second appellants, who were jointly represented in the proceedings, both at trial and in this Court. Counsel accepted that the company could obtain registration of its lease at any time, but argued that because the first appellants controlled both companies, they would not allow that to happen, contrary to their interests. It had not happened by the date of acquisition. Whether there were creditors with security over the undertaking of the operator of the business (the second appellant) was not addressed in this Court. What factors induced the first appellants to lease the land, but not register the leases is not known. The appellants did not hold all the shares in the holding company. 70Both Holdings and the second appellant had registrable interests which were not registered. They were entitled to insist on registration to perfect their legal titles, but in the meantime held equitable interests which were defeasible, as the appellant noted, on one month's notice, pursuant to ss 41 and 53 of the Real Property Act 1900 (NSW) and s 127 of the Conveyancing Act 1919 (NSW). Subject to the second appellant's claim for compensation for disturbance, neither it nor Holdings made any claim for the market value of their equitable interests in the land. (There is no doubt that those interests were effectively acquired by the compulsory acquisition: Land Acquisition Act, s 20(1).) 71So far as market value was concerned, it was common ground that the use in fact being made of the land was the highest and best use (meaning, in the context, the most profitable use). The fee simple could have been sold with vacant possession or subject to the leases. The land could have been sold without the businesses, or with them. A common way to value industrial land being used to its highest potential is to calculate value against the actual or projected return from the commercial use of the land with the relevant improvements. If that were the basis of the valuation, it would not necessarily matter that the Court treated the leases as relevant and effective. However, the appellants argued that one consequence of treating the leases as enforceable was that the additional fill required to develop the business to its full potential would be deferred for the period of the leases, being some 18 years. At the date of acquisition, it was common ground that fill could be obtained at no cost. The trial judge concluded that "if" the leases were valid and the options exercised, and the development was "therefore" deferred for 18 years, "it could not be assumed that there would be no costs incurred to fill the land": at [213]. That was not, in terms, a finding that there would be costs or any particular costs, but the appellants claimed that the valuation evidence accepted by the trial judge assumed a level of cost, thus undervaluing the land. 72Because each valuer used a discounted value based on rental flows to value the land subject to the leases, Mr Lunney's conclusion remained the same on either approach, namely that there was no loss suffered through the acquisition. (Each valuer put a higher value on the land with vacant possession than without.) 73Accordingly, whichever approach was adopted, so long as Mr Lunney's valuation evidence was accepted, no different result eventuated. In the circumstances it is unnecessary to consider the further grounds relating to the leases. To do so would require not merely an assessment of the legal arguments, one of which the respondent says was not put below, but also the practical consequences of separating the value of the business (as reflected in the rental payable under the leases) from the value of the land. Clearly the assessment of the value of the land at $100/m2 reflected the cost of developing the land and the likely return on the development. How these matters were assessed by the valuers was not discussed in this Court. 74It is, however, convenient to note the challenge to the statement with regard to the cost of fill. The trial judge noted that both valuers agreed that the cost of fill at the date of acquisition would have been nil. He further noted that Mr Lunney considered that an intending purchaser "would not assume that this situation will remain indefinitely" and that "landfill costs in the future may be significant": at [212]. The trial judge then concluded that the effect of the leases might be to defer expansion for 18 years concluding, on that basis, that "it could not be assumed that there would be no costs incurred to fill the land": at [213]. 75While it is true that Mr Lunney took into account the "possible cost of filling the land in the future", he did not assume that such activity would be deferred for 18 years, because of the leases. Rather, he relied upon the affidavit of Mr Tolson to conclude that the mushroom substrate farm (with the proposed expansion on the area already filled) would cater for forecast demand "until about 2018 and that there is the potential to further expand the [business] on the Residue Land": supplementary joint valuers' report, 21 June 2011 at p 8(iv). Thus, the factor taken into account by Mr Lunney was not to do with the leases (that passage occurring in the part of the report which assumed vacant possession (p 6(iv)), but depended on market forecasts for the business. Accordingly, the significance of the calculations based on the leases as noted by the appellants in their submissions, involved a mistake by the trial judge. Had the relevance of the leases otherwise been material, this mistake would not have warranted intervention on the ground relied on by the appellants. 76Nevertheless, in considering the challenges to the valuation evidence set out above it has been assumed that the trial judge was wrong not to disregard the leases; the discussion focussed on the assessment as to the value of land with vacant possession.

(4) Rejection of special value (ground 14) 77The precise scope of this intended challenge was unclear. The business which was the subject of the value of the land was operated by the company and not the individual appellants. It was claimed in the ground of appeal that the trial judge erred in assessing the value to the individual appellants as the value of the rental flow and the reversion when the lease expired in 18 years. According to the trial judge, the company lodged a separate claim for compensation for disturbance, which was accepted by the respondent: at [10]. There was no suggestion that the company had made any claim for "special value". The ground of appeal alleged error in failing to assess an amount on account of special value in favour of the first appellants. 78In considering the claim for special value, the trial judge rejected the proposition that the first appellants were uniquely placed to continue to exploit the land, preferring the view that the hypothetical purchaser would continue to operate the farm as the company did. It followed that there was no special value to be attached to the land. The basis upon which the market value of the fee simple held by the first appellants was assessed did not contradict or present any degree of inconsistency with this conclusion. Mr Lunney stated that the factors which might have supported a claim for special value had been taken into account in assessing the market value of the industrial land. That evidence was not challenged (and could not have been challenged) in this Court. The ground is without substance and must be rejected.

Cross-appeal 79The respondent, consistently with its submissions before the trial, but inconsistently with the approach it had adopted by way of its pre-trial offer, contended that the increase in value resulting from the public purpose should have been offset against the claim for disturbance as well as the claim for other elements of compensation. The amount involved was $14,733.62. The amount comprised legal fees ($9,233.62) and a valuation fee ($5,500). The amounts were allowed on the basis that "a dispossessed owner must be entitled to obtain relevant advice": at [249]. 80Although the trial judge stated that the respondent did not present argument in support of its contention, in fact it was the logic of its position with respect to the operation of s 55(f) which should have been understood to support that conclusion with respect to a claim for disturbance under s 55(d). 81The appellants submitted that acceptance of that contention would reduce the exercise required under s 55 to an arithmetical formula by which losses and increases in value are to be added up to achieve a final figure. To adopt such an approach would be inconsistent, it was submitted, with the statement by Spigelman CJ in Mir Bros that s 55 "does not constitute a mathematical formula": at [45]. 82This matter has been addressed above: the question which the Chief Justice was addressing in Mir Bros was an alleged inconsistency between the "before and after" approach to valuation and the requirements of s 55. The suggestion that there might be an arithmetical exercise required by s 55 depended on there being only one correct approach to assessing market value of the land acquired and a requirement that each element of the paragraphs be treated separately. Both of those propositions were denied in Mir Bros. 83Nevertheless, in this aspect of the case, the appellants' point as to statutory construction should be accepted: the conclusion sought by the appellants, that an increase in the value of retained land should not be offset against loss attributable to disturbance, follows from two propositions. First, s 55 requires that "regard must be had" to the identified matters, without specifying how they should be understood to interrelate. Secondly, regard may not be had to other matters (the list being exhaustive). In relation to the present issue, the interrelationship between the different paragraphs can be considered without reference to extraneous factors. Losses attributable to disturbance and solatium fall into a different category from changes in the value of land. Thus, solatium is concerned with "non-financial disadvantage", arising from the necessity of relocating one's home: s 60. Disturbance covers legal costs, valuation fees, financial costs of relocation and other financial costs relating to the actual use of the land: s 59. Such costs are entirely separate from the value of the acquired land or the retained land. It is consistent with the legislative purpose of providing compensation for such amounts that they be allowed or disallowed in accordance with the specific statutory entitlements, without regard to the value of any land involved. 84In written submissions, the appellants stated that to set off an increase in value in retained land against disturbance costs would be contrary to "a long line of authority in the Land and Environment Court and this Court." The only authority referred to was the judgment of this Court in Roads and Traffic Authority of NSW v McDonald [2010] NSWCA 236; 79 NSWLR 155 at [88] (Tobias JA). It is true that the passage relied on distinguishes between the element referred to in pars (a), (c) and (f) from loss attributable to disturbance under (d), on the basis that the former, but not the latter, will be covered by a "before and after" valuation. It was not authority for the proposition that disturbance was not to be set off against an increase in the value of any other land assessed under par (f). On the other hand, the respondent did not suggest there was any authority in this Court with respect to s 55 of the Land Acquisition Act, which required that its submission be upheld. 85In these circumstances, for the reasons given above, the cross-appeal should be dismissed.

"Just compensation override" 86Having concluded that the exercise required by s 55 of the Land Acquisition Act did not give rise to any entitlement to compensation, the primary judge asked whether, nevertheless, applying the "just compensation override" in s 54 of the Act, some amount should be awarded: at [243]. He declined to exercise that power. The appellants did not seek to rely on such a discretionary power, referring to it in written submissions as the exercise of "a supposed judicial discretion under s 54(1)": at par 58. It follows that nothing turned in the present case on whether such a discretionary power exists. Nevertheless, as the term appears to be gaining some credence in State jurisdiction, it is desirable to note its uncertain provenance. 87The immediate source of the term in this country appears to be the Law Reform Commission, Lands Acquisition and Compensation - Report No 14 (AGPS, Canberra, 1980). Apart from any other reason, such a provision was necessary in Commonwealth legislation because the Parliament lacked power to enact laws for the acquisition of property otherwise than "on just terms": Constitution, s 51(xxxi). Following the recommendations of the Commission, the Lands Acquisition Act 1989 (Cth) relevantly provides: 55 Amount of compensation - general principles (1) The amount of compensation to which a person is entitled under this Part in respect of the acquisition of an interest in land is such amount as, having regard to all relevant matters, will justly compensate the person for the acquisition. (2) In assessing the amount of compensation to which the person is entitled, regard shall be had to all relevant matters, including: ... 88The difference between this language and that of ss 54(1) and 55 of the State Land Acquisition Act are readily apparent, although it may rightly be said they have a common parent. First, s 54(1) of the State Act refers to all relevant matters "under this Part", a phrase omitted from the Commonwealth Act, s 55(1). Secondly, the chapeau to s 55 of the State Act requires regard be had "to the following matters only (as assessed in accordance with this Division)", whereas the Commonwealth Act provides that regard shall be had "to all relevant matters, including ...": s 55(2). 89The effect of the differences in language is unequivocal: the Commonwealth Act did not purport to provide an exclusive list of "relevant matters", whereas the State Act did. The entitlement to just compensation under the Commonwealth Act was thus not constrained by the relevant matters identified in s 55(2). By contrast, the entitlement under the State Act was to such amount as, having regard to all relevant matters under this Part, will justly compensate the person. The proper construction of s 54(1) is to provide that the assessment under s 55 will be directed to determining an amount which will "justly compensate": it does not permit matters other than those specified in s 55 (as further defined in later sections) to be taken into account. It does not in terms provide a discretionary power to ignore or expand in any sense the list of "relevant matters". Accordingly, to describe s 54 as encompassing a "just compensation override" is to introduce an imprecise and inaccurate concept which finds no reflection in the statutory language. Rather, s 54(1) confirms the purpose which permeates the Act and which is first set out in the objects in s 3(1). 90By way of contrast, s 54(2), dealing with native title, does provide a just compensation override. That reflects the need to be consistent with the Native Title Act 1993 (Cth), which in turn conforms to the constitutional limits on federal legislative power. The different language of subss (1) and (2) in s 54 confirms the ordinary meaning of subs (1), which is not a just compensation override. 91Any full consideration of this issue will require reference to earlier authority in this Court. Some support for the view that s 54(1) provides a just compensation override appears to have been derived from the reasoning of Spigelman CJ in Leichhardt Council. The Chief Justice, speaking on behalf of a unanimous five judge bench, concluded that the assessment of market value for the purposes of s 55(a) was not constrained by a statutory restriction on the power of the owner to dispose of the land. After referring to the Law Reform Commission Report recommending the replacement of the "value to the owner" approach by a statutory list, subject to a "just compensation override", the Chief Justice noted at [28]: "This recommendation is clearly reflected in s 54 and s 55. Indeed, the New South Wales Parliament, unconstrained by a Constitutional requirement of just terms, could and did go further by making the list an exhaustive one." 92The Chief Justice continued, at [37]: "The context in which, relevantly, s 56(1) falls to be interpreted, is as one of the matters identified in s 55, which constitutes an exhaustive list to which regard must be had when determining the amount of compensation under s 54. These matters do not, however, constitute a mathematical formula. They are matters which the valuer must take into account. The dominant test is contained in s 54, that is, the task is to determine the amount that will 'justly compensate the person for the acquisition of the land'. This carries into effect the object of the Act set out in s 3(1)(b) 'to ensure compensation on just terms for the owner of land that is acquired ...'." 93This language is consistent with the proposition that the purpose identified in s 54(1) may properly inform the construction of s 55 and subsequent provisions: the comment that the State legislation went further than the Commonwealth Act by making the list of relevant factors exhaustive is inconsistent with the proposition that s 54(1) created an independent right to "just compensation". 94In McDonald, at [60], Tobias JA (with the agreement of Giles and Macfarlan JJA) noted, apparently by reference to the reasons of the trial judge, that "double-dipping of disturbance costs is implicitly excluded by the just compensation override in s 54 and by the requirement of s 55 that one amount of compensation be determined having 'regard' only to the heads of compensation prescribed in that provision." 95No further reference was given to the "just compensation override" as a concept, and to use it as a constraint on the amount of compensation is a far cry from the concept underlying the Law Reform Commission report and the Commonwealth legislation. The concept appears to have served no further purpose in the reasoning in McDonald. 96More recently, in El Boustani v Minister Administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33; 199 LGERA 198, Preston CJ (LEC) considered the operation of s 61 of the Land Acquisition Act, dealing with the assessment of market value on the basis that land had potential to be used for a purpose other than that for which it is currently used. In discussing the statutory context in which the provision was found, the Chief Judge stated that "[t]he amount of compensation to which a person is entitled is not only to be determined having regard to the relevant matters but also to be such amount as will 'justly compensate' the person for the acquisition of the land": at [71]. This, he continued, "has been referred to as the 'just compensation override'." There was then reference to the historical explanation given by Spigelman CJ in Leichhardt Council, extracting [28] in that decision. At [145], the Chief Judge concluded: "However, an analysis of the meaning and application of what has been referred to as the 'just terms override' in s 54 ..., should await a case where the amount of compensation has been determined having regard only to the matters in, and as assessed in accordance with, Div 4 of Pt 3." 97There is, it appears, no authority in this Court which is inconsistent with the reading of the legislation set out above. The relevant provision is not, it may be noted, s 54 but only s 54(1), the comparison with subs (2) being instructive. However, as correctly noted in El Boustani, the issue must await determination in a matter in which it squarely arises.

Orders 98Although the appeal was brought by Mr and Mrs Tolson as the first appellants and Elf Farm Supplies as the second appellant, no argument was put for any variation of the orders made below in favour of the second appellant. In these circumstances the Court should make the following orders: (1) Dismiss the appeal. (2) Order the first appellants to pay the respondent's costs of the appeal. (3) Dismiss the cross-appeal. (4) Order the respondent to pay the appellants' costs of the cross-appeal. 99PRESTON CJ OF LEC: I have had the advantage of reading the draft judgment of Basten JA. I agree that the appellants' appeal should be dismissed with costs for the reasons his Honour gives. I also agree that the respondent's cross appeal should be dismissed with costs. However, I wish to explain my reasons for concluding that any increase in the value of other land which adjoins or is severed from the acquired land can be offset against the market value of the acquired land but that any increase in the value of the other land cannot be offset against any loss attributable to disturbance. 100The lodestar for determining the compensation to which a person whose land has been acquired is entitled is s 54(1) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ('the Land Acquisition Act'). This provision states that: 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 (emphasis added). 101The reference to the amount of compensation to which a person "is entitled under this Part" is a reference to the person's entitlement to compensation under s 37 of the Land Acquisition Act (in Div 1 of Pt 3) that arises on acquisition of the land. 102The "amount of compensation" to which a person is entitled under s 54 is one amount only, notwithstanding that in determining that one amount regard must be had to the relevant matters under Pt 3. A person is not entitled to be awarded separate amounts of compensation for each of the matters under s 55 of the Land Acquisition Act. 103The amount of compensation to which a person is entitled under s 54 is to be determined "having regard to all relevant matters under this Part". The matters under Pt 3 which may be relevant are the matters listed in s 55 (as assessed in accordance with Div 4 of Pt 3). Section 55 provides: 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 the acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) solatium, 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. 104The matters identified in s 55 constitute "an exhaustive list to which regard must be had when determining the amount of compensation under s 54": Leichhardt Council v Roads and Traffic Authority (NSW) [2006] NSWCA 353; (2006) 149 LGERA 439 at [37]; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 at [13]. The matters from this exhaustive list that will be relevant to a particular acquisition of land will depend on the particular interest in the land acquired and the particular owner of that interest. 105The requirement in s 55 that, in determining the amount of compensation to which a person is entitled, "regard must be had to the following matters only" has both a positive and a negative effect: the positive effect is that the valuer, in determining the amount of compensation to which the person is entitled, is bound to have regard to each of the matters in s 55 of relevance to the person's interest in the land that is compulsorily acquired and the person whose interest has been acquired, and the negative effect is that the valuer is bound to ignore any matters other than those in s 55 (as assessed in accordance with Div 4 of Pt 3). 106The matters listed in s 55 are required to be assessed in accordance with Div 4 of Pt 3. Thus, "market value" in s 55(a) is to be assessed in accordance with s 56; "special value" in s 55(b) is to be assessed in accordance with s 57; "loss attributable to severance" in s 55(c) is to be assessed in accordance with s 58; "loss attributable to disturbance" in s 55(d) is to be assessed in accordance with s 59; and "solatium" in s 55(e) is to be assessed in accordance with s 60. There is no manner prescribed for assessing the matter in s 55(f). 107However, after the matters have been assessed in accordance with the relevant provisions of Div 4 of Pt 3, neither s 54 nor s 55 of the Land Acquisition Act specifies how "regard must be had" to the relevant matters in determining the amount of compensation to which the person is entitled under s 54. 108The concept of "having regard" to the relevant matters entails taking into account or considering the relevant matters in determining the amount of compensation to which the person is entitled: see the Macquarie Dictionary's definition 4 of "regard". Evidently, s 55 provides a list of the relevant matters to be considered, but not "a mathematical formula" to be applied in considering those matters: Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority of NSW [2006] NSWCA 314 at [45]. 109One method of having regard to the relevant matters would be for each relevant matter in s 55 to be individually assessed in accordance with Div 4 of Pt 3, so as to be quantified in monetary terms, then the quantified monetary amounts of all relevant matters taken into account in determining the one amount of compensation to which the person is entitled under s 54. 110However, s 55 does not prevent two or more matters in s 55 being taken into account in a combined way: Mir Bros at [57]. For example, the matter of the market value of the land in para (a) can be taken into account with the matter of any loss attributable to severance in para (c) and the matter of the increased value of other land which adjoins or is severed from the acquired land in para (f), by use of the before and after method of valuation so as to aggregate the monetary amounts of these matters: Mir Bros at [57]-[59] and Roads and Traffic Authority (NSW) v McDonald [2010] NSWCA 236; (2010) 175 LGERA 276 at [88]. 111In having regard to the relevant matters in s 55, care needs to be taken to identify, in the particular case, if there is any overlap in the quantified amounts of different matters, so as to avoid any double counting. As Spigelman CJ noted in Mir Bros, each of the matters in s 55 does not necessarily operate to the exclusion of each other (at [55]) and a number of the paragraphs in s 55 overlap with each other (at [56]). If there is overlap, an appropriate adjustment needs to be made to remove the amount of the overlap and hence avoid double counting. 112The manner in which regard may be had to the relevant matters in determining the amount of compensation will also depend on the nature of the matters. Some of the matters concern the value of land - the market value of the acquired land (para (a)), the special value of the acquired land (para (b)), the reduction in the market value of other land severed from the acquired land (para (c)) and the increase or decrease in the value of other land which adjoins or is severed from the acquired land (para (f)). Each of these matters is of a like nature and, after assessment in accordance with Div 4 of Pt 5, can be aggregated either individually or in a combined way such as by utilisation of the before and after method of valuation. 113However, other matters in s 55 are of a different nature. Solatium (para (e)) is the starkest example. Unlike the other matters in s 55, which are all financial, solatium involves compensation for the non-financial disadvantage suffered by the person whose land has been acquired of having to relocate his or her principal place of residence. The valuer's task is to assess the monetary sum that will compensate the person for the distress, discomfort and inconvenience suffered in having to relocate the person's principal place of residence (up to the statutory maximum under s 60(2) of the Land Acquisition Act). 114Loss attributable to disturbance is a financial loss but it too is of a different nature to the market value or special value of the acquired land, loss attributable to severance, or the decrease or increase in the value of other land of the person. Loss attributable to disturbance includes legal costs and valuation fees in connection with the compulsory acquisition of the acquired land, financial costs in connection with relocation from the acquired land, stamp duty costs in connection with the purchase of land for relocation, financial costs in connection with the discharge of a mortgage over the acquired land and execution of a new mortgage resulting from the relocation, and any other financial costs as a direct and natural consequence of the acquisition (s 59). These financial costs and losses are of a different nature to the market value or special value of the acquired land, loss attributable to severance, or the decrease or increase in the value of other land of the person. 115As a consequence of these differences in the nature of the matters, "having regard" to the matters of solatium and loss attributable to disturbance in determining the amount of compensation to which a person is entitled under s 54, does not mandate that the quantified amounts of these matters be added to or subtracted from (as the case may be) the quantified amounts of the other matters in s 55 that are concerned with the value of land, and in particular the quantified amount of any increase in value of other land of the person under (para (f)). 116To not offset the quantified amounts of solatium or loss attributable to disturbance against the quantified amount of any increase in the value of other land, does not mean that regard has not been had to the relevant matter of the increase in the value of the other land. The statutory requirement to have regard to a relevant matter dictates a process of consideration, not the result of the consideration. 117On the facts of this case, for example, the inclusion in the amount of compensation to which the appellants were entitled of an amount for loss attributable to disturbance (in the sum of $14,733.62), notwithstanding that the increase in the value of other land of the appellants exceeded that amount, did not mean that the amount of compensation was determined without having regard to the increase in the value of the other land of the appellants. Regard was had to that increase in value of the other land in determining the amount of compensation to which the appellants were entitled by means of using the before and after method of valuation to assess, in a combined way, the market value of the acquired land, the loss attributable to severance and the increase in the value of the residue land. The large increase in the value of the residue land offset the sum of the market value of the acquired land and the loss attributable to severance resulting in nil net compensation for these matters concerning the value of land. 118The manner in which regard is to be had to the relevant matters in s 55 is also influenced by the requirement in s 54 of the Land Acquisition Act that the amount of compensation be such as will "justly compensate" the person for the acquisition. To have regard to the relevant matters in s 55 concerning the value of land (paras (a), (b), (c) and (f)), which are all of a like nature, by aggregating their quantified monetary amounts (either individually or in a combined way) in determining the amount of compensation to which the person is entitled, would be to "justly compensate" the person. The gain of the increased value of the other land is able to be set off against the market value or special value of the acquired land and any loss attributable to severance to derive the net change in value of all land of the person so as to determine the amount of compensation to which the person is entitled. Such a manner of having regard to these matters concerning the value of land does result in an amount of compensation that would justly compensate the person. 119The appellant's argument that the matter in para (a) of the market value of the land falls into a special category that is immune from being offset by the amount of any increase in the value of other land in para (f) finds no support in the language of s 54 or s 55 of the Land Acquisition Act. Sections 54 and 55 require that regard is to be had to all of the relevant matters in s 55. The matter in s 55(a) is not specified as being immune from having set off against it any increase in the value of other land of the person under para (f). 120The objects of s 3 of the Land Acquisition Act also do not support the appellants' argument. The statement in s 3(1)(a) upon which the appellants rely, that one of the objects of the Act is "to guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition", does not have that legal effect. It is one of five objects and indicates one of the intended purposes of the legislation. Such an expression of intention is not definitive. Courts can have regard to the objects clause of legislation to resolve uncertainty or ambiguity in the language of substantive provisions of the legislation, however it cannot control clear statutory language, or command a particular outcome or exercise of discretionary power: Minister for Urban Affairs and Planning v Rosemount Estates Pty Ltd (1996) 91 LGERA 31 at 78. 121There is no uncertainty or ambiguity in the language of s 54 or s 55 of the Land Acquisition Act that would permit an interpretation that the amount of compensation to be determined is guaranteed to be not less than the market value of the land. The language of s 55 that regard must be had to, among other matters, the matter in para (f) of any increase in the value of other land 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, is clear. The statement in s 3(1)(a) of the objects clause guaranteeing that the market value will be unaffected by the proposal for acquisition cannot be used to control the clear language in s 55, including by precluding regard being had to the matter in s 55(f) of any increase in the value of other land by reason of the proposal for acquisition in determining the amount of compensation to which the person is entitled. 122Furthermore, the statement of intention in s 3(1)(a) is in fact referring to, and is reflected, in the definition of market value in s 56(1) of the Land Acquisition Act, not the interrelationship of the matters in s 55. The definition of market value in s 56(1) achieves the statement of intention in s 3(1)(a) that the market value of the land will be unaffected by the proposal for which the land was acquired. That the object in s 3(1)(a) refers to the definition of market value in s 56(1) was recognised in Leichhardt Municipal Council v Roads and Traffic Authority of NSW. Spigelman CJ, with whom the other members of the Court of Appeal agreed, stated at [41]: Significantly for present purposes s 3(1)(a) states that one of the objects of the Act is to 'guarantee' that 'compensation will not be less than ... market value'. The Court should be slow to interpret the definition of market value in s 56(1) as permitting regard to be had to a matter which necessarily means that the owner will not receive market value. 123Regard was had to the object in s 3(1)(a) to assist in the interpretation of the definition of market value in s 56(1) and hence the assessment of the market value of the land under s 55(a). The Chief Justice's statement, and the case itself, was not concerned with whether regard could be had to the object in s 3(1)(a) in construing the interrelationship of s 55(a) with the other matters in s 55 of the Land Acquisition Act. 124Similarly, in Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 at [50], the High Court noted that para (a) of the definition of market value may be read with the statement in s 3(1)(a) of the objects clause. 125The dicta of Hodgson JA in AMP Capital Investors Ltd v Transport Infrastructure Development Corporation [2008] NSWCA 325; (2008) 163 LGERA 245 at [62], [63], upon which the appellants rely, is not authority that the matter in s 55(a) of the market value of the land is immune from being offset by the matter in s 55(f) of any increase in the value of other land of the person, for the three reasons given in this case by Basten JA at [48] - [49]. 126It is also to be noted that another object of the Land Acquisition Act, in s 3(1)(b), is "to ensure compensation on just terms for the owners of land that is acquired by an authority of the State". That object refers to, and is reflected in, s 54 of the Land Acquisition Act. Section 54, as noted previously, provides that the amount of compensation to which a person is entitled 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 supplements s 54 by exhaustively listing the relevant matters to which regard must be had. One of those relevant matters is the matter in para (f) of the increase in the value of any other land of the person. Hence, achievement of the object in s 3(1)(b) of ensuring compensation on just terms entails having regard to the mandatory relevant matter in s 55(f) of any increase in the value of any other land of the person in determining the amount of compensation to which the person is entitled. The object in s 3(1)(b), therefore, speaks against the appellants' argument, relying on the object in s 3(1)(a), that regard should not be had to the increase in value of other land in determining the amount of compensation to which the appellants are entitled by deducting the amount of the increase from the amount of the market value of the land. 127Conversely, however, to have regard to the relevant matters in s 55 that do not concern the value of land, namely loss attributable to disturbance (para (d)) and solatium (para (e)), by aggregating their quantified monetary amounts with the quantified monetary amounts of the relevant matters in s 55 that do concern the value of land (paras (a), (b), (c) and (f)), in determining the amount of compensation to which the person is entitled, would not be to "justly compensate" the person. It would not be just for the person who suffers loss attributable to disturbance or solatium not to be compensated for that loss or disadvantage. The non-financial disadvantage of having to relocate the person's principal place of residence from the acquired land and the financial costs of purchasing and relocating to other land are not, in justice, offset by any increase in the value of any residue land or adjoining land. The loss and the gain are different in nature and cannot be compared and offset one against the other. 128For these reasons, I agree with the orders proposed by Basten JA that the appellant's appeal should be dismissed and the first appellant's should pay the respondent's costs of the appeal. I also agree that the respondent's cross-appeal should be dismissed and the respondent should pay the appellant's costs of the cross-appeal.

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: 23 May 2014

Commission, the Lands Acquisition Act 1989(Cth)

(2006) 149 LGERA 439

(2010) 175 LGERA 276

(2008) 163 LGERA 245

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Cases Cited (15)