Hornsby Shire Council v Roads and Traffic Authority of New South Wales Matter No Ca 40338/96 [1998] NSWSC 363 (19 August 1998)

Last Updated: 29 September 1998

HORNSBY SHIRE COUNCIL v ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES

CA 40338/96

19 August 1998

Priestley JA, Stein JA, Sheppard AJA

The Supreme Court of New South Wales Court of Appeal

NATURE OF JURISDICTION: LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES - BANNON J

FILE NO/S: CA 40338/96; LEC 30016/95

DELIVERED: 19 AUGUST 1998

HEARING DATE: 21 JULY 1998

PARTIES: HORNSBY SHIRE COUNCIL v ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES

JUDGMENT OF: PRIESTLEY JA, STEIN JA, SHEPPARD AJA

COUNSEL:

Appellant: M H Tobias QC/S Duggan

Respondent: G K Downes QC/J B Maston

SOLICITORS:

Appellant: Abbott Tout

Respondent: Crown Solicitor

CATCHWORDS:

RESUMPTION OF LAND - determination of compensation - land classified `community land' - effect of classification on determination of land value - effect of chance of possible reclassification of land

EXTEMPORE/ RESERVED: RESERVED

ALLOWED/DISMISSED: DISMISSED

NO OF PAGES: 12

HORNSBY SHIRE COUNCIL v ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES

On 14 October 1994, the respondent resumed five parcels of land belonging to the appellant council for the construction of the M2 Motorway. The resumed parcels are open space lands and classified as community land under the Local Government Act 1993 . The classification can constitute a restriction on the value of the land.

The trial judge assessed the amount of compensation to be paid, pursuant to Land Acquisition (Just Terms) Compensation Act 1991 and according to the principles in Corrie v MacDermott [1914] AC 1056 by firstly determining the market value of the land and then determining the restriction on the value that the classification placed on the land. He then deducted the second figure from the first.

In making his assessment, the trial judge accepted the evidence of the respondent's valuer regarding the market value of the land. He determined that the market value should be reduced by two thirds to account for the restriction. He fixed the amount of compensation to be paid by the respondent to the appellant at $585,000, excluding disturbance.

The appellant argued on appeal that the trial judge erred in:

(1) determining compensation in the amount of $585,000, excluding disturbance;

(2) the application of the principles in Corrie v MacDermott to the valuation of

the land;

(3) the determination of what was market value for land held for a public purpose.

Held:

The classification of the parcels of land as `community land' under the LG Act constitutes a restriction which is relevant to the determination of compensation upon resumption. It is also necessary to take into consideration the chance of the restriction being discharged.

There was no error by his Honour in the valuation of the restriction of the classification of community land and the determination of the chance of the restriction being discharged.

Corrie v MacDermott [1914] AC 1056 applied

Royal Sydney Golf Club v FCT (1957) CLR 379 applied

and

Liverpool CC v Commonwealth [1993] FCA 539; (1993) 81 LGERA 405 referred to.

ORDERS

Appeal dismissed with costs

HORNSBY SHIRE COUNCIL v ROADS AND TRAFFIC

AUTHORITY OF NEW SOUTH WALES

PRIESTLEY JA: The appellant accepted the correctness, and the applicability to the present case, of Corrie v MacDermott [1914] AC 1056. I agree with the reasons given by Stein JA for concluding that the appellant's argument, which took what was called the rule in Corrie v MacDermott as one of its premises, should not be accepted.

I also agree with the last paragraph in Stein JA's reasons.

In my opinion the appeal should be dismissed with costs.

HORNSBY SHIRE COUNCIL v ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES

JUDGMENT

STEIN JA:

INTRODUCTION:

This is an appeal from a decision of Bannon J in the Land and Environment Court wherein his Honour fixed compensation to be paid by the respondent (Roads and Traffic Authority) to the appellant (Hornsby Shire Council) in relation to the compulsory acquisition of 5 parcels of land under the Land Acquisition (Just Terms) Compensation Act, 1991. The subject land was acquired for the construction of the M2 Motorway by notice published in the Government Gazette on 14 October 1994.

The parcels of land have a combined total area of 4.89 ha. His Honour determined compensation in the amount of $585,500 excluding disturbance. When disturbance was added, the final figure awarded for compensation was approximately $716,000.

It is the submission made on behalf of the appellant council that in determining compensation at $585,500, excluding disturbance, his Honour erred in law. The appeal is confined by s 57 of the Land and Environment Court Act, 1979 to a question of law.

The relevant parcels of land were zoned Special Uses B (Transport Corridor) and part (of 2 parcels) Open Space A (Public Recreation-Local) under the Hornsby Local Environmental Plan, 1994. At the date of acquisition, the lands were used by the council for open space purposes. They were bushland areas. Bannon J found that, but for the road proposal, the lands would have been zoned open space. He also found that the terrain would have made development difficult, or rendered the land unsuitable for any alternative use.

BANNON J'S DECISION

His Honour approached the compensation task as follows. He accepted the evidence of Mr Wood, the respondent's valuer, that the market value of the land (including disturbance) totalled $1,896,000. However, because of the fact that the land was classified as `community land' under the Local Government Act, 1993 (the LG Act) its market value should be reduced by two-thirds. This led to a value of $585,500 excluding disturbance. [The amount of disturbance was later agreed by the parties].

In discounting the market value of the land, Bannon J purported to apply the principles in Corrie v MacDermott [1914] AC 1056. The appellant maintains that his Honour misunderstood or misapplied the principles. Further, in the absence of evidence as to the impact of the restriction of its categorisation as `community land', on market value, it is submitted that his Honour simply guessed. Lacking expert evidence on the value of the restriction, it is maintained that his Honour was acting `entirely arbitrarily'.

WHAT IS COMMUNITY LAND?

The Local Government Act, 1993, Chapter 6, Part 2, deals with `public land' vested in a council. The Act provides that all such public land must be classified as either `community' or `operational'. If land is classified as `community land', it cannot be reclassified except by the process of making a local environmental plan under the Environmental Planning and Assessment Act, 1979 (the Planning Act). Moreover, s 29 of the LG Act provides that a council must arrange a public hearing under s 68 of the Planning Act in respect of any such proposal. Prior to the LG Act, 1993, there was no concept of `community land'. No similar provision is to be found in the 1919 LG Act.

A number of restrictions on the use and dealing with community land are to be found in Division 2 of Part 2, Chapter 6. First, such land can only be used and managed in accordance with a plan of management. The LG Act lays down detailed requirements for the content of management plans and for community participation in their making. The most severe restriction on the use to which community may be put is to be found in s 45. This provides that a council cannot `sell, exchange or otherwise dispose of community land'. Further, a lease or licence of such land by a council is severely restricted by ss 46 and 47.

CONSIDERATION

The appellant accepts that the classification of the parcels as `community land' under the LG Act constitutes a restriction which is relevant to the determination of compensation upon resumption. Corrie v MacDermott (at 1062) is authority for the proposition that it is necessary to determine to what extent the restrictions affect the value of the land. The chance of those restrictions being discharged must also be considered (1064). Finally, a restriction which prevents sale by the dispossessed owner will not reduce its value to nil (1064). It is not contended that Bannon J breached the last mentioned principle but it is submitted that he erred in applying former.[1]

In examining the issue of the restriction, Bannon J noted that community land could only be used in accordance with a plan of management of the land and that the land was largely dedicated to public use. Accordingly, he concluded `... the value of the land in the market place must be regarded as small'. Having held that, but for the resumption, the land would have remained restricted open space, his Honour said he was unable to award the full amounts set out by Mr Wood `or anything like them'. He noted that there was no `yardstick [was] afforded by the evidence as to the value to the council of the subject parcels as open space subject to restrictions' (my emphasis added).

After having correctly and in accordance with Corrie v MacDermott, rejected a nominal value, Bannon J said:

Doing the best I can, I regard the market value of the subject land, having regard to the

restrictions applicable, as being one third of Mr Wood's open space valuations.

[AB 974W - 975C]

It seems apparent that his Honour was `valuing' the restriction at two-thirds of the market value. That is, he concluded that the depressive effect of the restriction reduced the market value to one-third. In doing so, his Honour properly applied Kitto J in Royal Sydney Golf Club v FCT [1957] HCA 31; (1957) 97 CLR 379 AT 391. [2]

What his Honour was purporting to do was to strike a valuation which accepted that there was a chance of the land becoming reclassified from community land to operational land. As Else-Mitchell J held in Parramatta CC v Valuer-General (1964) 10 LGRA 160, the burden of showing the probability of a zoning restriction being lifted or relaxed lies on the person so contending.

Here, as his Honour's judgment makes clear, it was probable that any move by the council to seek to reclassify the land from community land would likely incur the wrath of the residents. Moreover, as a planning judge, his Honour would be well aware of the complexities of the process of making local environmental plans under the Planning Act, and the need to convince the Minister and his or her department of the planning wisdom of the proposal. In addition to the public participation inherent in the Planning Act process, s 29 of the LG Act mandates a public hearing. When one combines these factors with the nature of the terrain, the conclusion must be that the chances of reclassifying the land under the LG Act would be slim.

As I have said, Bannon J's task was to seek to value the chance of the land being released from the category of community land and have the restriction removed. Assuming that fixing the extent to which the restriction affects value involves a question of law (and this is far from self-evident) it seems to me that Bannon J may have been generous to the Council.

In criticising his Honour's approach as guesswork, senior counsel for the appellant was forced to suggest that, in the absence of the parties calling expert evidence on the value of the restriction, Bannon J should have adjourned the proceedings indefinitely. In fact, his Honour had more than once drawn the attention of the parties to the dearth of expert evidence on the issue. The incongruity of the submission is demonstrated by the order sought - a remit to the Land and Environment Court. One might rhetorically ask, what would occur on a remit if the parties still produced no evidence of the value of the restriction?

Given the functions the judge was exercising under the Land Acquisition (Just Terms) Compensation Act and his powers under ss 38 and 39 of the Land and Environment Court Act, his Honour was entitled, if not bound, to do `the best that he could' on the basis of the whole of the evidence. This included Mr Wood's open space valuation, town planning evidence, as well as an inspection of the site and locality. His Honour was acting as the judicial valuer (Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418) and this involves making inferences and applying experience and judgment in order to determine what are really hypothetical questions. Questions which may (permissibly) involve subjective judgments. As the Privy Council stated in Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373 at 391 there must be room for `inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning'.

The approach of Bannon J to valuing the chance of the restriction being lifted may be likened to that of Wilcox J in Liverpool CC v Commonwealth [1993] FCA 539; (1993) 81 LGERA 405 at 421 where he said:

In a case where the task of assessing compensation comes down to the evaluation of a chance, it will rarely be possible to demonstrate that any particular figure is correct. I certainly cannot do so in this case. I can only consider all the relevant factors and make a judgment about them; a "best guess" perhaps.

I can discern no error of law in his Honour's valuation of the restriction of the classification of community land and his determination of the chance of the restriction being discharged.

The appellant also argues that Bannon J erred in double-counting. The submission runs that the judge had already diminished the value of the resumed lands on the basis that, on its original acquisition by the council the parcels had been dedicated as public reserves under s 340C of the LG Act, 1919. To further diminish the value because of its categorisation as community land, amounted to double discounting.

I do not see that there was any double discounting by the judge. He was clearly aware that s 340C of the LG Act 1993 , 1919 had been repealed by the LG Act (see AB 968). Quite obviously Bannon J treated the classification of the land as `community land' under the LG Act, 1993 as an overwhelming restriction affecting market value. He was correct to so do. The valuation of Mr Wood, accepted by his Honour, did not consider the restriction on community land under the new LG Act which came into force on 1 July 1993. Once the new Act came into force, it was necessary to make an adjustment for the restriction and the chance that the subject lands would be released from their classification as `community land'. This is what his Honour set out to do and no double counting is evident.

I would dismiss the appeal with costs. However, before doing so I should mention that although the amended notice of appeal does not include any ground concerning the adequacy or sufficiency of reasons, Mr Tobias has submitted that Bannon J did not sufficiently disclose his reasoning process for his conclusion on the valuation of the restriction. When one reads the judgment as a whole, and fairly, it cannot be said that his Honour failed in his judicial duty to give reasons. That he could have given more reasons is beside the point.

HORNSBY SHIRE COUNCIL v ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES

JUDGMENT

SHEPPARD AJA: In this matter I have had the advantage of reading the judgment to be delivered by Stein JA. I am in agreement with his Honour's reasons and conclusions, and with the order which he proposes.

[1]

Corrie v MacDermott has been applied in Australia; see, for example, Royal Sydney Golf Club v FCT [1957] HCA 31; (1957) 97 CLR 379 at 385 (Kitto J); The Crown v Murphy [1990] HCA 42; (1990) 71 LGRA 1 at 5 [HC] and Sydney Sailor's Home v Sydney Cove Redevelopment Authority (1977) 26 LGRA 106 at 118, 120 (Hope JA).

[2] See also Wattle Park Pty Ltd v Commissioner of Highways (1973) SASR 69 at 93-94 and

City of Brighton v Roads Construction Authority [1986] VicRp 27; [1986] VR 255 at 263.