Whitelaw & Ors v The Land Commission of NSW & Ors [1990] NSWLEC 27 (5 March 1990)

LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

Matter No. 30145 of 1988 Coram: Bignold J.

Supreme Court Matter No. 2059 of 1985 Decision Date:

5th March, 1990

WHITELAW AND ORS.

V.

THE LAND COMMISSION OF NEW SOUTH WALES AND ORS.

WHITELAW AND ORS.

V.

THE DEPARTMENT OF TECHNICAL AND FURTHER EDUCATION

JUDGMENT

Bignold J.:

A. INTRODUCTION:

These reasons for judgment relate to two sets of proceedings heard concurrently by the Court.

Firstly there is the claim for compensation in consequence of the resumption of land being Lot 1021 Deposited Plan 623133 and situate at Metford in the City of Maitland: Matter No. 30145 of 1988 instituted in this Court. Secondly there is the assessment of damages for admitted acts of trespass and nuisance: Matter No. 2059 of 1985 instituted in the Supreme Court of New South Wales and transferred to this Court in the circumstances herein-after explained.

B. THE LAND RESUMPTION

The resumption was effected pursuant to the provisions of the Technical and Further Education Act 1974 and the Public Works Act 1912 by Notification published in Government Gazette No. 117 of 16th August 1985. By that notification the land was resumed for the stated purpose of "a Technical College at Maitland" and was vested in the Minister for Education (who, rather than the Department, is the proper Respondent in the proceedings).

The resumed land comprises an area of 17.02 hectares and has a frontage of some 403 metres (though lacking direct access because of physical constraints and Motorway restrictions) to the New England Highway. It immediately adjoins the site of the East Maitland Technical College situate at Metford some 6 kilometres east of the City of Maitland. That College was under construction at the date of resumption and has since been completed and occupied.

C. BACKGROUND TO THE RESUMPTION

The background circumstances to the aforesaid resumption should at once be noted because they are relevant not only to the land compensation claim but also to the claim for damages for admitted trespasses and nuisances caused to the said land prior to its resumption, the latter claim being the subject of proceedings in the Supreme Court (No. 2059 of 1985) brought by the same persons (who are Applicants in the present proceedings) against the Land Commission of New South Wales, the Minister for Education and the Department of Technical and Further Education.

In those Supreme Court proceedings relief was claimed by way of mandatory and prohibitory injunctions in respect of drainage structures built upon the Applicants' land and the consequent discharge of water thereon via those structures and by way of "damages for trespass and nuisance to the Plaintiffs' land".

Just 3 months after those Supreme Court proceedings had been commenced on 7th May 1985 the aforesaid resumption was effected. Thereafter on the 17th December 1986 the Supreme Court made the following orders by consent:

"1. Verdict for the Plaintiffs.

2. The matter be referred to the Master for assessment of damages."

I interpose here that once the Plaintiffs ceased to own the aforesaid land by virtue of its resumption their entitlement to relief by way of the injunctions sought likewise terminated cf. Wentworth v. Woollahra Municipal Council [1982] HCA 41; (1982) 149 C.L.R. 672. It follows that the verdict entered in favour of the Plaintiffs only relevantly applies to their claim for damages either at common law or pursuant to s.68 of the Supreme Court Act 1970 in respect of the aforesaid trespasses and nuisances.

When the matter came before the Master in Equity in March 1988 the proceedings were adjourned to enable the parties to consider whether it would be more convenient that the assessment of damages be undertaken by this Court in conjunction with its determination of the Applicants' anticipated claim for compensation in consequence of the aforesaid resumption. The anticipated claim by the Applicants was filed in this Court on 23rd March 1988 and thereafter on the application of all parties to the Supreme Court proceedings this Court on 13th May 1988 ordered that the assessment of damages for the admitted trespasses and nuisances be undertaken by this Court in conjunction with the hearing of the Applicants' claim for compensation in consequence of the resumption.

D. THE RELATIONSHIP BETWEEN THE TWO PROCEEDINGS

Although the two sets of proceedings are based upon entirely separate causes of action the manner in which the litigation has been conducted has involved a very close, if not inter-dependent, relationship between the two proceedings in respect of some vital issues of fact and law.

Thus as a matter of evidence, the diminution in the value of the Applicants' land as a result of the trespass and nuisance committed by the Land Commission and of the trespass and nuisance committed by the Department of Technical and Further Education was estimated by the Valuers called by the parties by reference to the values they had respectively assigned to the land as at the date of resumption, the latter values not reflecting any affectation caused by the existence of the various drains constituting the trespasses and nuisances.

This in turn leads to the more fundamental issue in dispute between the parties as to whether in assessing the appropriate measure of damages for the admitted trespasses and nuisances it is proper to have regard to the fact of the subsequent resumption of the Applicants' land and the compensation payable in consequence thereof. In this respect the Respondents have submitted, inter alia, that no damages are payable in respect of the admitted tortious liabilities "since the Applicants are to be compensated (in respect of the resumption) fully for the whole value of their land (as if the tort had not been committed)..."

The Applicants' competing submission is that they are entitled to damages for the admitted tortious liabilities based upon the successive diminutions in the values of their land as a result of the respective acts of trespass and nuisance in addition to and unaffected by the compensation payable on resumption reflecting the value of the land unaffected by the existence of the drains constituting the acts of trespass and nuisance by virtue of the operation of s.124 of the Public Works Act 1912.

It can, at once, be noted that common to these competing submissions is the assumption that the compensation payable on resumption is, by virtue of s.124 of the Public Works Act, required to ignore the effects on value of the resumed land of the existence thereon of the all trespassing drainage works. The parties and the valuers have proceeded on this assumption. However for reasons that I shall hereinafter state that assumption is not legally sound and the Court's function of determining compensation payable on resumption in accordance with law cannot be abrogated by the manner in which the parties have presented their respective cases. Fortunately, as will appear, the evidence adduced at the hearing enables the Court to determine the issues raised by the proceedings without the need to reopen the case. This fortunate circumstance is the result of the concurrent hearing of the Applicant's separate claims and of the evidence adduced covering both claims in all their possible outcomes.

E. ASSESSMENT OF DAMAGES

(i) The admitted acts of trespass and nuisance

It is admitted that the particular acts of trespass and nuisance committed by the Land Commission comprise the following works:

(a) removal of top soil and excavation of a section of the land;

(b) construction of two concrete reinforced drainage pipes each having a 1 m diameter encroaching some 200 mm onto the land;

(c) construction of a concrete culvert containing the two concrete pipes;

(d) excavation of an open earth drain approximately 10m wide and 50m in length extending eastwards from the aforesaid culvert and pipes.

These works were undertaken between March and August 1982 and are located on the higher sections of the land near its northern boundary.

These drainage works have resulted in the discharge onto the Applicants' land of all surface waters collected by the road system for the adjacent residential estate being developed by the Land Commission involving ultimately some 450 residential lots.

Likewise it is admitted that the particular acts of trespass and nuisance done to the Applicants' land by the Department of Technical and Further Education comprise the following works:

(a) construction and laying of a 500mm diameter reinforced pipe for a distance of 10m onto the land;

(b) construction and excavation of an open earth drain 1m in width and 20m long extending easterly from the aforesaid pipe;

(c) construction and laying of a 800mm diameter reinforced concrete pipe for a distance of some 50m on the land;

(d) excavation of an open earth drain 2m wide and 15m long extending in an easterly direction from the aforesaid pipe and

(e) depositing broken pieces of concrete pipe on the land.

These drainage works were carried out between 1983 and 1984 and were designed to drain all stormwater from the adjoining site which was being developed as the Maitland Technical and Further Education College between 1984 and 1988. The works are entirely separate from the Land Commission's drainage works.

(ii) The Land Commission's trespass and nuisance

The Respondent, Land Commission, adduced evidence concerning discussions held in late 1981 and early 1982 with the then owner of the land, Dr. M. Rai. This evidence establishes that the aforesaid drainage works carried out by the Land Commission on the subject land were undertaken with the express consent of Dr. Rai. Counsel for the Applicants objected to this evidence on the ground of relevance, submitting that the Land Commission was estopped by virtue of its admission of liability, from asserting that its actions were not trespassory because they had the consent of the then landowner.

In my opinion the evidence establishing the consent of the predecessor in title (which I admitted subject to the Applicants' objection) is admissible, being relevant to the question of the precise nature and extent of the acts of trespass and nuisance committed by the Land Commission and for which liability is admitted. If, however, the Land Commission in tendering this evidence was attempting to present a case, on the assessment of damages for the admitted trespass and nuisance, that there was in law no trespass or nuisance then I would have held it to be estopped on account of its admission of liability. However the evidence adduced only deals with the construction of the drainage works by the Land Commission during the period of ownership by the Applicants' predecessor in title and does not deal with the separate and continuing acts of trespass and nuisance caused by (i) the discharge through the drainage works of stormwaters and (ii) the continuing presence on the land of the works after the Applicants became owners of the subject land on 27th August 1982, without the owners' consent.

Accordingly, and in any event, the consent of the Applicants' predecessor in title does not justify any continuing trespass and nuisance following the Applicants becoming owners in August 1982 (immediately after the drainage works were completed) and the Applicants are not to be held to be bound either contractually or proprietarily, by the consent of their predecessor in title: see Konskier v. B. Goodman Limited [1928] 1 K.B. 421; Armstrong v. Sheppard and Short Ltd. [1959] 2 All E.R. 651; and Bilambil - Terranora Pty Ltd. v. Tweed Shire Council (1980) 52 L.G.R.A. 1.

These more modern authorities, in my opinion, are to be preferred, in case there be conflict in the authorities, to the earlier decision in Billiet v. Commercial Bank of Australasia [1906] S.A.S.R. 193 relied upon by the Respondent, the Land Commission: see Fleming, "The Law of Torts" 7th ed. p.40. (For completeness I also note that the Respondent did not submit that the consent of the Applicants' predecessor in title created any easement, equitable or legal).

The evidence satisfies me and I so find, that substantial physical damage to the Applicants' land was caused, not by the mere presence on their land of the drainage structures, but by the discharge onto the land through these structures of stormwaters collected by the road system in the adjacent residential estate being developed by the Land Commission. That physical damage includes a degree of land erosion and scouring and of course substantial inundation in times of heavy rainfall. The concentrated flow of stormwaters upon and across the subject land achieved by channelling stormwaters collected by the road system in the adjacent residential development far exceeds in terms of volume, velocity and effects that which occurred naturally (by virtue of the land being low lying and receiving run-off from higher lands to the west) prior to the residential development of those adjacent lands and the construction of the drainage structures on the resumed land.

I also accept the expert evidence led by the Applicants that the particular location of these drainage structures on the Applicants' land and the direction in which stormwaters were channelled across the land severely prejudiced whatever rezoning potential that land possessed beyond its then non-urban zoning.

In making these findings I totally reject the evidence of Mr. Morton, Valuer called by the Respondents that the existence and physical effects of the drainage structures, did not adversely affect the value of the Applicants' land. However Mr. Morton's opinion was doubtless but a logical consequence of his opinion that the land possessed no rezoning or development potential and no potential as the site of a rural house. In his opinion the highest and best use of the subject land was as grazing land lacking access.

(iii) Assessment of damages for the Land Commission's

admitted acts of trespass and nuisance.

Having found that the Land Commission's acts of trespass and nuisance caused physical damage to the Applicants' land the only evidence before the Court relevant to the question of the assessment of damages was that called by the Applicants, namely the opinion by Mr. Rooney, Consulting Civil Engineer that the estimated cost of rectifying the encroachments by the Land Commission's drainage structures (by extending them some 180m to drain into Four Mile Creek which traverses the site) was $103,250 and the opinion of Mr. Parsons, Valuer, that the value of the Applicants' land was diminished by the encroaching drainage structures from its then value in 1982 of $165,000 to $50,000.

Mr. Rooney's evidence was not challenged by the Respondents and I accept it. It was tendered by the Applicants to establish that the estimated cost of rectification of the trespassing drainage structures of both the Land Commission and the Department of Technical and Further Education (the combined cost of rectification was estimated at $229,500) exceeded the value of the Applicants' land. Based upon this evidence it was submitted that the appropriate measure of damages was not the cost of reinstatement but the diminution in the value of the land: McGregor on Damages 14ed. pp. 761-766.

At this point I must interpose the Applicants' submission reflects a fundamental error in legal analysis which unfortunately is a recurrent error (in different manifestations) in these proceedings, namely the failure to appreciate that the tortious acts of the Land Commission and of the Department of Technical and Further Education are entirely separate matters, being separate torts committed by separate tort-feasors on separate occasions and having separate consequences - both actual and legal.

A more important manifestation of this same legal error is the assumption by the parties that s.124 of the Public Works Act requires the effect on value of the resumed land of the existence of all the trespassing drainage structures to be ignored. For reasons that I shall soon state it is entirely erroneous to regard the drainage structures of the Land Commission to be the "scheme" or "public purpose" for which the Applicants' land was resumed, even if the drainage structures of the Department of Technical and Further Education can be so regarded.

However since the Applicants do not submit that Mr. Rooney's estimated costs of rectification works is the measure of damages for the tortious acts committed by the Land Commission I pass on to consider the valuation evidence of Mr. Parsons. Here the Respondents principally challenge the estimated value of of land at $165,000 immediately prior to the commission of the tort (ie immediately after the Applicants became owners of the land in August 1982), rather than challenge the estimate of the diminution in value caused by the tortious acts of the Land Commission. Since Mr. Parsons' estimate of $165,000 is based upon his valuation of $140,000 for the resumed land as at the date of resumption unaffected by the effects of all trespassing drainage structures adjusted upwards to reflect the market trend of fairly consistent annual reductions of 5 percent in values of similar lands between 1982 and 1985, it becomes necessary to examine the validity of Mr. Parsons' valuation of the Applicants' land as at the date of resumption. This valuation is challenged by the Respondents.

In addition to Mr. Parsons' valuation of $140,000 there were two other valuations in evidence before the Court of the value of the resumed land as at the date of resumption namely:

(i) Mr. Morton's valuation of $21,000; and

(ii) the Valuer-General's valuation of $75,000.

In these circumstances, and since there is no issue between the parties that land values of similar lands to the resumed land were consistently falling before the resumption date since 1982 it is, in my opinion, open to me in the task of assessing the diminution in value of the Applicants' land caused by the tortious acts of the Land Commission in 1982, to utilise the evidence of the 3 valuations of the resumed land. This approach, in my opinion, is proper (even though I regard all 3 valuations to be legally flawed because of an erroneous application of s.124 of the Public Works Act and therefore entirely unacceptable for the purpose of determining the value of the Applicants' land in consequence of the resumption) simply because the trespassing drainage works did not exist immediately before the tortious acts of the Land Commission were committed in 1982 and therefore can have no bearing on the value of the Applicants' land at that time.

Mr. Parsons' valuation of $140,000 adopted the comparable sales method. He examined and analysed many sales in the Parish area, ultimately founding his valuation on 3 principal sales (his Sales numbered 15,17 and 18) of lands similarly zoned to, and situate quite close to, the resumed land. Each of the comparable sales was analysed to show a per hectare rate of value. In the case of his 3 principal sales the analysed per hectare rates were $5,000 (Sale 15) $7,000 (Sale 18) and $7,500 (Sale 17). His analysis of Sale 17 was adjusted by 25 percent to reflect what he regarded as a premium paid by the purchaser, who was an adjoining owner. In his application of these analysed per hectare rates to the resumed land Mr. Parsons made an upwards adjustment to $8,250 per hectare to reflect what he regarded as the residential rezoning potential for some 2.5 hectares of the resumed land which potential he regarded each of the Sale lands to lack.

Mr. Morton's valuation also adopted the comparable sales method. He examined and analysed a number of sales but ultimately founded himself on one principal sale (his Sale 3) which the Valuer-General in his valuation also regarded as the most comparable. This was a sale of some 16.64 hectares in June 1984 for $50,000. Analysed on a per hectare rate the sale shows some $3,000.

In his application of this sale to the resumed land he adjusted downwards to $1,250 per hectare. This adjustment was in his opinion justified because he regarded the "most important feature affecting the value of the resumed land... is that it is virtually landlocked".

The Valuer-General's written valuation was tendered in evidence by the Applicants. (The Valuer-General was not called to give testimony). The Valuer-General's valuation involved 2 separate components. Firstly it recognised a potential residential rezoning for a 1.1 hectare section of the land above the 1 in 100 year flood level and adjacent to the Land Commission's residential estate (Precinct 8) assigning thereto a value of $42,320 (reflecting an en globo lot value of $5,000 x 11 residential lots deferred for 2 years). To this component it added $35,000 reflecting the value of the residue of the land as a rural home-site noting that a house "possibly could be located in the south east corner on 1 hectare of high land - but close to highway - access along gravel track...".

His valuation report notes that his valuation of $75,000 is "some 50 percent above sale 11" (the same sale that Mr. Morton principally relied upon) and "appears reasonable to allow for some rezoning potential to north part".

His valuation report concludes with the following comment on the his valuation of $75,000:

"On paper this amount looks low in relation to the sales surroundings, particularly sales 5 & 8. But the value of the site must be written down due to its poor access, its low and boggy and flood liable nature over most of the site, which precludes nearly all types of development and use. The subject land is located in a buffer zone - it forms a natural logical barrier between residential and industrial development but in itself is difficult land to utilize."

(The reference to Sales 5 & 8 are to sales not relied upon by Mr. Parsons or Mr. Morton. Sale 8 was the sale in December 1983 from the Land Commission to the Department of Technical and Further Education of what was to be become the site of the East Maitland Technical College. This land which comprises 7.48 hectares was already zoned residential and showed an analysed rate of $54,700 per hectare. Mr. Parsons relied on the sale to the extent that it indicated the value of residentially zoned en globo land at Metford, which of course the resumed land was not, being zoned non-urban. However it was cited as having some relevance to the potential for residential rezoning of a portion of the resumed land adjacent to the Land Commission's residential estate. I should note that evidence was led by the Respondents which indicates that properly analysed Sale 8 shows a per hectare rate of $20,320 for en globo lands residentially zoned).

Both Valuers Parsons and Morton were subjected to rigorous cross-examination and Counsel for both parties in their final written addresses (which I have found very helpful) have meticulously analysed their testimony and criticised it. In their addresses Counsel have helpfully isolated a number of key issues central to the competing valuations, the resolution of which is likely to prove decisive in the Court's evaluation of the valuation evidence. These key issues are:

(i) whether the resumed land had access;

(ii) whether the resumed land had the capacity for development as the site for a rural home;

(iii) whether the resumed land had any higher rezoning potential; and

(iv) whether any rezoning potential would add value to the resumed land.

It hardly needs to be said that these questions need to be addressed and answered from the perspective of the parties to the hypothetical sale in the classic Spencer formulation of the prudent and willing but not anxious vendor and purchaser. Having carefully weighed the evidence I can state my findings on each of these issues reflecting the considerations that would be brought to bear on the issues by the parties to the hypothetical sale.

Re (i): Access

Physical access from the New England Highway to the resumed land was available by virtue of qualified approval granted by the Department of Main Roads. That approval is contained in a letter dated 18th June 1982 from the Department to the Applicants' Solicitors. One of the qualifications was that the land be used for "rural purposes". The access was not particularly attractive, commodious or direct. (In terms of comparison with the comparable sales all of which had direct road access, the access would be regarded as inferior). However Mr. Morton's opinion that the land was "virtually land locked" cannot be sustained.

The prospects of obtaining superior and more direct access via the road system serving the adjacent residential estate would be apparent to the hypothetical parties. Such access would be available for any development of the subject land if its potential for rezoning were realised including any rural residential development.

It would have been apparent that such access would require the consent of the Land Commission, the owner of the adjacent residential estate, through Precinct 8. However the matter would not be entirely in the hands of the Land Commission since the Maitland City Council, as the responsible planning authority, would be in a position to influence the decision, and its influence would in turn be influenced by the views of the Department of Main Roads which had written to the Council on the question of access to the resumed land as far back as 1975.

Whereas I find Mr. Blackley's views on the prospects of securing road access through Precinct 8 and of securing a residential rezoning of that section of the resumed land adjacent to that Precinct and located above the 1 in 100 year flood level to be somewhat over-confident I find that the hypothetical parties to the notional sale would conclude that, though some risk was involved, (including the risks of having to contribute to the costs of the roading) there were reasonable prospects of obtaining proper access to the resumed land off Ferraby Drive through the Land Commission's Precinct 8. An allowance for risk obviously would be reflected in the price struck by the hypothetical parties.

In the light of these conclusions I would reject Mr. Morton's opinion and generally accept Mr. Parsons' opinion (which was also the opinion expressed in the Valuer-General's valuation) subject to a greater allowance for risk than I believe Mr. Parsons' valuation recognises.

Re (ii): "Rural home-site"

It follows from my finding in respect of access to the resumed land that the land at the date of resumption would be perceived by the hypothetical parties to have the capacity of being the site for a rural home.

Mr. Morton's opinion on this question was based entirely on his opinion that the land was virtually landlocked. Again Mr. Morton's opinion cannot be sustained. Again I regard the contrary opinions of Mr. Parsons and the Valuer-General to be correct and to reflect the perception of the hypothetical parties.

Re (iii): "Higher rezoning potential"

The zoning of the resumed land had been "non-urban" since 1972 when Interim Development Order No. 6 - City of Maitland came into force. At that time the land formed part of a larger land holding which had for many years been used as a dairy farm. The land was severed by the re-routing of the New England Highway and portions of the land were sold in the 1970s.

The subject land contains low lying sections and is traversed by Four Mile Creek. Thirty percent of the site lies within the 1 in 20 flood plain, 40 percent lies within the 1 in 50 flood plain and 70 percent lies within the 1 in 100 flood plain.

Lands immediately surrounding the resumed land north of the Highway had since 1972 been progressively rezoned for urban purposes. Thus in 1981 Maitland Local Environmental Plan No. 18 came into force and rezoned to "Residential 2(d)" a large parcel of land immediately adjoining the northern and western boundaries of the resumed land. This rezoning was to accomodate the planned "Metford Development Area". In 1983 Maitland Local Environmental Plan No. 55 came into force rezoning for urban purposes (residential and light industrial) a large parcel of land on the eastern boundary of the resumed land.

At the date of resumption much of the Metford Development Area had already been developed although Precinct 8 (on the northern boundary of the resumed land) had not been developed. A development application had been proposed for the residential subdivision of Precinct 8 which was approved by the Maitland City Council in 1986 ie post the resumption date.

All utility services were available to the resumed land.

I accept the evidence of Mr. Blackley, Consultant Surveyor and Town Planner, that at the date of resumption those sections above the 1 in 100 flood plain of the resumed land had the potential for rezoning for higher purposes, and in particular that the northern section of the land (comprising some 2.5 hectares) adjoining the Land Commission's Precinct 8 had the potential for residential rezoning.

I find that at the date of resumption the resumed land possessed a strong potential for a higher rezoning in respect of those sections of it which lay above the 1 in 100 flood plain. In so finding I do not accept the contrary case presented by the Respondents. That case, as I understood it, principally relied upon the fact that the resumed land, unlike its neighbouring lands, had not in fact been rezoned for higher purposes. It also relied upon the fact that the Land Commission had not chosen to seek to acquire it and upon the fact that when the boundary was fixed between the resumed land and the lot to the west (which at one time formed part of the one parcel of land) the 7 m contour line had been adopted as demarcating flood liable land from non-flood liable land. I do not regard these historical facts as decisive of the question as to how the parties to the hypothetical sale would view the question of the potential, if any, possessed by the resumed land, particularly once it is realised that since 1981/2 the Land Commission had planned and excuted its drainage scheme for its residential estate by utilising the resumed land as in effect the receiving land for the stormwater run-off from the Land Commission's residential estate. This fact must have profoundly affected the history of the resumed land since 1981. If the fact is ignored, the rezoning potential of the resumed land becomes the more obvious.

Re (iv): Does the rezoning potential add value?

Mr. Morton's evidence on this question was not entirely clear or satisfactory, but as I understood it, it ultimately came down to this proposition:

At the date of resumption zoned residential en globo lands in the Maitland area, were in the market, of no greater value than non-urban zoned lands.

This proposition was not supported by sales evidence. Indeed it is at odds with the sales evidence which indicates that sales of residentially zoned en globo lands yielded substantially higher values than sales of non-urban zoned lands.

Accordingly I reject Mr. Morton's opinion and find that the potential for a higher rezoning of sections of the resumed land added value to it at the date of resumption over and above the value it would otherwise have without possessing that potential.

Having regard to my findings on these key issues in the competing valuations it follows that I must reject Mr. Morton's valuation. Conversely Mr. Parsons' valuation and the Valuer-General's valuation which are both based upon assumptions that accord with my findings on these key issues are obviously to be preferred. However there is a substantial difference in these valuations - $140,000 compared with $75,000. Counsel for the Applicants sought to reconcile these two valuations by pointing out that if the Valuer-General had recognised the resumed land as containing an area of 2.5 hectares possessing residential rezoning potential (instead of the area of 1.1 hectares that his valuation recognised), the component of his valuation recognising residential potential would in consequence be increased from $42,320 to $96,181 and result in an increased overall valuation of $131,181. This is a plausible attempt at reconciliation because it is apparent from his valuation report that the Valuer-General discounted a further section of higher land from residential rezoning potential because it was, inter alia, cut off from the northern section by the Land Commission drain. In other words the Valuer-General's valuation appears at this point to be recognising the existence of the Land Commission drains. However even if the valuations can be so reconciled it needs to be appreciated that the two valuations though similar in their results ($140,000 and $132,000), are obtained by quite different (though consistent) lines of reasoning. Significantly in this respect if the Valuer-General's valuation is to be adjusted in the manner suggested by Counsel for the Applicants $96,000 of the adjusted valuation of $132,000 would be the residential rezoning component whereas in Mr. Parsons' valuation the amount assigned to the resumed land's residential rezoning potential would not exceed $55,000. This disparity is explained by the fact that the Valuer-General's valuation of the resumed land as a rural home-site without any rezoning potential is some $35,000 based upon the same principal comparable sale as was relied upon by Mr. Morton. That sale showed an analysed per hectare rate of $3,000. Mr. Parsons regarded this sale as being below market and he relies upon a re-sale of part of that sale, the re-sale showing an analysed per hectare rate of $5,000. His opinion that the original sale (showing $3,000 per hectare) was below market gains support from the Valuer-General's comments on the sale "...appears to be slightly low - was asking $76,000 then sudden drop to $50,000 indicates vendor slightly anxious - could have been worth $60,000". It also gains support from the re-sale of part of the sale land (contracted only 1 month before the resumption date) showing an analysed per hectare rate of $5,000.

The Respondents' attempt to exclude reliance on the re-sale because the contract contemplated approval for a rural dwelling-house, in my opinion fails, and the re-sale is properly to be regarded as an important contemporary sale of non-urban land (though lacking rezoning potential) in the vicinity of the resumed land. Whether it was appropriate to analyse the sale and re-sale on a per hectare basis as opposed to a rural home-site basis was not in question between Mr. Morton and Mr. Parsons, each accepting the former analysis, although the Valuer-General's approach appears to adopt the latter basis.

Mr. Parsons' reliance on the two sales situate on the southern side of the Highway at Metford presents some obvious difficulty because they were sales to an adjoining owner and in respect of one of these sales Mr. Parsons himself considered a premium representing 25 percent of the price was paid. Although his investigation of the sales does not resolve all difficulties posed by the sales, they are sales that can in my opinion, particularly in the absence of much other available sales evidence, be used with caution. They do, at the very least, support the reliability of the aforesaid re-sale showing an analysed per hectare rate of $5,000 upon which Mr. Parsons relied.

Generally speaking I accept as reliable and sound in principle Mr. Parsons' analyses and application of the comparable sales evidence. However I would adopt $5,000 per hectare as the more reliable evidence to be derived from the comparable sales in their application to the resumed land, and further I would reduce the upwards adjustment that he has made to the sales evidence to reflect the value of the rezoning potential of sections of the resumed land. The reduced allowance or component for rezoning potential is in my opinion necessary to recognise, to a greater degree than Mr. Parsons has recognised, the risks involved in securing a rezoning and in securing access across the Land Commission's Precinct 8.

I would accordingly reduce Mr. Parsons per hectare rate as applied to the resumed land from $8,250 to $7,000, resulting in a valuation of $120,000 instead of his valuation of $140,000.

The rate of $7,000 per hectare may be compared with the analysed rate of $14,825 per hectare for the sale in 1982 to the Land Commission of Precincts 4, 5, 8 and 9 in the Metford Release Area being en globo residentially zoned lands, as disclosed in the Valuer-General's valuation report. This sale is of the adjacent residential estate subsequently developed by the Land Commission.

Counsel for the Respondents placed considerable reliance upon the sale of the subject land to the Applicants in mid 1982 for the sum of only $9,000 or $10,000. Significantly no Valuer (including Mr. Morton) relied on this sale. The reason is apparent- the sale was the result of the Applicants exercising an option granted in 1978 to purchase back from the purchaser (Dr. Rai) portion of that sale property. In these circumstances I do not think the purchase back by the Applicants provides reliable evidence of the value of the land in 1982.

Accordingly I find that as at the date of resumption the value of the resumed land ignoring the existence of all the trespassing drainage structures was $120,000 and that by applying the same factor of 5 percent per annum fall in values to arrive at the value of the property in August 1982 the result is $140,000 instead of $165,000 opined by Mr. Parsons. Accordingly Mr. Parsons' estimate of $50,000 representing the diminished value of the Applicants' land caused by the Land Commission's trespassing drains would require corresponding adjustment to reflect the reduced unaffected valuation of $140,000 instead of $165,000. The result is a diminished value of $42,000 ie 50,000/1 x 140,000/165,000.

Accordingly the diminution in value of the Applicants' land in 1982 is $120,000 less $42,000 = $78,000. I assess the damages in the sum of $78,000.

(iv) The trespass and nuisance committed by the

Department of Technical and Further Education

The evidence satisfies me (indeed it was not in dispute) that physical damage to the Applicants' land was caused by these drainage structures. This principally involves flooding of sections of the land in times of heavy rain in sections removed from flooding caused by the Land Commission drains.

I should mention that the evidence indicates that the Public Works Department in undertaking the construction works for the Maitland College involving the trepassing drains erroneously believed the Applicants' land to be Crown land.

(v) Assessment of damages for the admitted acts of trespass and nuisance

committed by the Department of Technical and Further Education

As I have earlier noted Mr. Rooney's evidence, which was not challenged, estimates that rectification works would cost $124,250, well in excess of the than value of the land.

Mr. Morton estimated that the value of the land would be diminished by 25 per cent on account of the Department's trespassing drainage works.

Mr. Parsons' estimate was that in October 1984 the value of the Applicants' land had diminished to $25,000 on account of the existence of the drainage works carried out by the Land Commission and by the Department. In other words the diminished value of $50,000 for the land as at August 1982 reflecting the existence of the Land Commission drains was further diminished to $25,000 by virtue of the existence of the Department's drains.

If $42,000 is substituted for Mr. Parsons $50,000 the corresponding adjustment to his estimate of further diminished value would result in a value as at May 1984 of $21,000.

This amount represents the additional damage caused to the Applicants' land by the Department's trespass.

Subject to any question of set off in respect of the amount payable as compensation in consequence of the resumption of the Applicants' land, I would assess damages in the sum of $21,000 in respect of the trespass and nuisance committed by the Department.

It is the question of compensation payable in consequence of the resumption that I must now consider before finally assessing damages for the admitted torts.

F. COMPENSATION PAYABLE IN CONSEQUENCE OF THE RESUMPTION

As I have earlier stated all 3 valuations of the resumed land in consequence of the resumption that were introduced into evidence are, in my opinion, legally flawed inasmuch as they are based upon the premise that s.124 of the Public Works Act requires the Land Commission drains to be ignored.

This is a false premise because the Land Commission drains are altogether extraneous to the declared public purpose for which the land was resumed. There is no suggestion in the evidence that they provide the underlying purpose for the resumption.

The question whether the Department's drains are required by s.124 to be ignored is more difficult. On one view of the matter (which I would think correct) it is possible that the drains are to be regarded as forming part of the resumed land and hence are not to be ignored or disregarded: cf. Collins v. Council of the Shire of Livingstone [1972] HCA 35; (1972) 127 C.L.R. 477.

On the other hand it is possible that the "scheme" or "public purpose" for which the land was resumed was the use of the resumed land to receive stormwater run-off from the site of the adjoining College. Such a "scheme" or "purpose" is consistent with the declared purpose of the resumption: "a Technical College of Maitland". Other than the declared purpose appearing in the Notification of resumption and the fact that the Applicants had earlier requested the Department to acquire their land once it was realised that the drainage works had been constructed thereon there was no evidence from which the Court could establish the "scheme" or "public purpose" underlying the resumption. However the evidence that I have mentioned is at least consistent with the approach that the parties and their valuer witnesses have taken and I therefore am content to adopt that approach in respect of the drains of the Department, though not in respect of the drains of the Land Commission.

Mr. Parsons did not value the resumed land on this basis. He valued it on the assumption that s.124 required all trespassing drainage structures to be ignored. His value was $140,000. Clearly that valuation is not relevant to the task at hand. He also valued the resumed land in the sum of $20,000 on the assumption that regard was to be had to all trespassing drains. This valuation has some relevance to the task in hand but of greater relevance is his valuation of the Applicants' land in August 1982 in the sum of $50,000 reflecting the diminished value of the land caused by the trespass and nuisance committed by the Land Commission. Since I have already reduced this valuation to $42,000 for the reasons earlier stated, I shall adopt it subject to applying the same 5 percent per annum fall in values to arrive at the value of some $35,000 as at the date of resumption.

Since I have generally adopted Mr. Parsons' valuation opinions relevant to the assessment of damages for the admitted tortious liabilities, I would now adopt those opinions relevant to the question of determining compensation payable in consequence of the resumption and accordingly I determine that compensation in the sum of $35,000.

G. CONCLUSIONS

For the foregoing reasons I determine the compensation payable in consequence to the resumption in the sum of $35,000.

The only outstanding question is whether this determination of compensation has any legal consequences for the assessment of damages for the admitted tortious liabilities of the Land Commission and of the Department of Technical and Further Education.

In my opinion the compensation payable on resumption does not affect the assessment of damages for the admitted liability of the Land Commission.

Accordingly I assess damages payable by the Land Commission in the sum of 78,000.

In respect of the assessment of damages for the admitted tortious liability of the Department of Technical and Further Education the position is that the compensation determined to be payable in consequence of the resumption has, in accordance with s.124 of the Public Works Act, ignored the effect on value of the Department's drains etc. On what basis can the Applicants be entitled to recover damages for a diminution in value of the land on account of the existence of those drains? In asking this question it must be remembered that the Applicants took no steps to rectify the trespasses and nuisances to their land other than commencing the Supreme Court proceedings after requesting the Department to acquire their land.

According to the Applicants' own case the value of their land in August 1982 as a result of the trespass committed by the Land Commission was $42,000 (I have substituted my adjusted figure for Mr. Parsons' $50,000 figure). Again according to the Applicants' own case values were falling at the annual rate of 5 percent. Hence when the Department committed its acts of trespass (1984) the value of their land as affected by the Land Commission drains (which had not been rectified) would have fallen to some $38,000. That value would have been further reduced at the date of resumption by the same 5 percent factor (fall in values) to a figure of some $36,000.

As at the date of resumption the value of the land having been determined by ignoring the existence of the Department's drains in the sum of $35,000 it follows that the only loss in value suffered by the Applicants is $1,000 ie $36,000 less $35,000. The payment of $1,000 damages would therefore put the Applicants in the same position as at the date of resumption that they would have been in had the tort not been committed. In my opinion this is the proper measure of damages in the present case, where it is appropriate to look to subsequent events beyond the date of commission of the tort to assess the damage actually sustained in order that the Applicants be fairly compensated for such damage.

Accordingly I assess the damages payable by the Department of Technical and Further Education in the sum of $1,000.

For the sake of completeness I would add that if, contrary to my view, compensation payable in consequence of resumption was to be determined by ignoring all the trespassing drainage structures I would have determined compensation in the sum of $120,000 for the reasons that I have earlier stated.

If the compensation was to be determined having regard to the existence of all the trespassing drainage works (cf. Collins v. Livingstone Shire Council) I would have determined compensation in the sum of $20,000 by again adopting Mr. Parsons' valuation.

Again for the sake of completeness if I had determined compensation on resumption in the sum of $120,000 I would have assessed damages payable in respect of the admitted tortious liabilities as nominal damages only because the Applicants had not demonstrated any relevant loss or damage.

Finally for the sake of completeness if I had determined compensation on resumption in the sum of $20,000 I would have assessed damages payable by the Land Commission in the sum of $78,000 and damages payable by the Department of Technical and Further Education in the sum of $18,000.

For the foregoing reasons, I make the following orders:

1. In proceedings No. 30145 of 1988 I determine the compensation payable in consequence of the resumption of Lot 1 Deposited Plan 623133 in the sum of $35,000.

2. In proceedings No. 2059 of 1985 transferred from the Supreme Court of New South Wales I assess damages for the admitted tortious liabilities as follows:

(i) $78,000 payable by the Land Commission of New South Wales; and

(ii) $1,000 payable by the Department of Technical and Further Education.

3. Exhibits be returned.

4. Question of costs be reserved.

5. Liberty to apply.

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I HEREBY CERTIFY THAT THIS AND THE PRECEDING 25 PAGES

ARE A TRUE AND ACCURATE COPY OF THE REASONS FOR JUDGMENT

HEREIN OF HIS HONOUR MR. JUSTICE BIGNOLD.

ASSOCIATE