State of Queensland v Springfield Land Corporation (No. 2) Pty Ltd
[2009] QSC 143
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- Appeal Determined (QCA) - Appeal Determined (HCA)
- State of Queensland v Springfield Land Corporation (No. 2) Pty Ltd[2009] QSC 143
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State of Queensland v Springfield Land Corporation (No. 2) Pty Ltd[2009] QSC 143
State of Queensland v Springfield Land Corporation (No. 2) Pty Ltd[2009] QSC 143
SUPREME COURT OF QUEENSLAND
CITATION: | State of Queensland v Springfield Land Corporation (No. 2) P/L & Anor [2009] QSC 143 |
PARTIES: | STATE OF QUEENSLAND (ACTING THROUGH THE CHIEF EXECUTIVE OF DEPARTMENT OF MAIN ROADS) (Applicant) v SPRINGFIELD LAND CORPORATION (NO. 2) PTY LTD (First Respondent) SPRINGFIELD LAND CORPORATION PTY LTD (Second Respondent) |
FILE NO/S: | BS 10982 of 2008 |
DIVISION: | Trial Division |
PROCEEDING: | Hearing |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 10 June 2009 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 13 March 2009 |
JUDGE: | McMurdo J |
ORDER: | 1.Leave to appeal granted and the appeal allowed. 2.The award is be varied by substituting “nil” as the assessed compensation. |
CATCHWORDS: | REAL PROPERTY – RESUMPTION OR ACQUISITION OF LAND – COMPENSATION – ASSESSMENT AND RELATED MATTERS – FACTORS IN ESTIMATING COMPENSATION – ALTERATION IN VALUE BY PURPOSE OF RESUMPTION – DEDUCTION FOR INCREASED VALUE OF ADJOINING LAND – where parties agreed that compensation would be determined by an arbitrator as if the land had been compulsory acquired under the Acquisition of Land Act 1967 (Qld) – where s 20(3) of the Act provides that the assessment of compensation shall take into consideration “any enhancement of the value of the interest of the claimant in any land adjoining the land taken or severed therefrom by the carrying out of the works or purpose for which the land is taken” – whether the Pointe Gourde principle is applicable – whether the “works or purpose for which the land is taken” should be characterised broadly as the public benefit or end to be achieved or narrowly as the specific means to that end – whether a mischaracterisation involves an error of law or an error of fact – whether the “land adjoining the land taken” refers to the specific lot adjoining the land taken or to the block of land adjoining the land taken Acquisition of Land Act 1967 (Qld), s 5, s 20 Commercial Arbitration Act 1990 (Qld), s 38(2), s 38(4) Land Acquisition (Just Terms Compensation) Act 1991 (NSW), s 55 Public Works Act 1888 (NSW), s 24 Brisbane City Counil v Zoeller (1973) 40 QCLLR 24, distinguished Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280, applied Cowper Essex v The Acton Local Board (1889) 14 App Cas. 153, applied Crisp and Gunn Cooperative Ltd v Hobart Corporation (1963) 110 CLR 538, cited Harris v Lee (1900) 21 NSWR 173, (1900-01) 17 WN (NSW) 39, applied Holt v The Gaslight and Coke Company (1872) L.R 7 Q.B. 728, cited Hope v Bathurst City Council (1980) 144 CLR 1, applied Hornsby Shire Council v Malcolm (1986) 60 LGRA 429, distinguished Marshall v Director-General, Department of Transport (2001) 205 CLR 603, applied Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426, not followed Minister of Works v Antonia [1966] SASR 54, cited NSW Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 509, applied Point Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565, distinguished Promenade Investments Pty Ltd v State Bank of New South Wales (1992) 26 NSWLR 203, cited Roads and Traffic Authority (NSW) v Muir Properties Pty Ltd [2005] NSWCA 460; (2005) 143 LGERA 192, distinguished Road and Traffic Authority of New South Wales v Perry (2001) 52 NSWLR 222, applied Wilson v The Minister (1908) 8 S.R. (N.S.W.) 427, cited Walker Corporation v Sydney Harbour Foreshore Authority (2008) 233 CLR 259, applied Waters v Welsh Development Agency [2004] UKHL 19; [2004] 1 WLR 1304, applied |
COUNSEL: | D R Gore QC, with J M Horton, for the applicant M D Hinson SC for the respondents |
SOLICITORS: | Clayton Utz for the applicant Schweikert Lawyers for the respondent |
- In October 2005, the applicant issued notices of intention to resume land owned by the first respondent at Springfield near Ipswich. The expressed purpose of the resumption was the use of the land
“for future transport purposes including the facilitation of transport infrastructure (namely road and busway, rail or light rail) for the South-West Transport Corridor”.
The total area of this land was a little less than seven hectares.
- The first respondent objected to that proposal. But subsequently it agreed to transfer the land on certain terms, under a written contract between the applicant and the respondents dated 21 April 2006. The applicant agreed to pay compensation for the transfer which was to be:
“… negotiated or determined by arbitration … as an amount that would have been payable by Main Roads to [the first respondent] if the Transfer Land had been compulsorily acquired under the Acquisition of Land Act on the Transfer Date.”
The “Transfer Land” was the land the subject of the notices of intention to resume, and the “Transfer Date”, it would appear, became 26 September 2006.
- The parties were unable to agree on the amount of compensation and so there was an arbitration. On 9 October 2008 the arbitrator made an award under which the applicant was to pay to the respondents compensation assessed at $1,468,806.
- This is an application for leave to appeal against that award pursuant to s 38 of the Commercial Arbitration Act 1990 (Qld). By s 38(2), an appeal lies to this Court only on a question of law arising out of an award. By s 38(4), such an appeal requires the leave of the court absent the consent of all parties.
- On the applicant’s case, there are at least two errors of law which are manifest on the face of the award. Each of them involves the arbitrator’s determination of the question, raised before the arbitrator by the present applicant, of the enhancement in the value of the first respondent’s interest in other land by the carrying out of the works or purpose for which the Transfer Land was taken, according to s 20(3) of the Acquisition of Land Act 1967 (Qld) (“the Act”). The respondents contend that there was no error, or that any error was not one of law. The respondents do not argue that leave to appeal should be refused if the applicant establishes that there were these errors of law. For example, it was not suggested that the suggested errors, if they were made, were not manifest on the face of the award. A manifest error of law on the face of an award need not be so obvious that it is evident without the benefit of adversarial argument.[1] On the hearing of this application the parties agreed to make full submissions as if on an appeal.
Background to the acquisition
- It is necessary to summarise the relevant circumstances of this acquisition which were set out in the award. The respondents have been developing the area now known as Springfield since about 1992. On any view it was, and is, a very large residential development project, containing 2,851 hectares and expected to house at least 60,000 people. It was developed from a greenfield site. Almost from the outset the respondents proposed that the development would include the construction of a major road running from the Centenary Highway (where it then ended at the Ipswich Motorway) through the Springfield land, and in particular through or close to the proposed Springfield Town Centre, and continuing west beyond the Springfield land.
- In 1994 a draft Springfield Development Control Plan was prepared which identified such a “Regional Transport Corridor”. In 1998, the respondents and the Ipswich City Council entered into what was called the Springfield Infrastructure Agreement, whereby certain land within the development site was to be dedicated for road purposes, and in particular for this transport corridor. In 1999, the Council approved a subdivision application by the respondents, on terms which included the transfer to the Council, free of compensation, of certain land to be held in trust in favour of Springfield for future road purposes. That included the area described as Trust Lot 7, which was identified as the land upon which there would be constructed that part of the transport corridor from what is called the Western Interchange to the western boundary of the Springfield land.
- By the end of 1998 the Centenary Highway had been extended to the Springfield land and by June 2000 it had been further extended to the Springfield Town Centre. This road construction was described by the arbitrator as “very much a joint venture type arrangement” between the Queensland government, the respondents, a contractor and a financier, under which the respondents paid for the construction. The arbitrator also found, at least from 1994, that it had been intended that this road would continue beyond the Springfield Town Centre and in turn from the western boundary of the Springfield land to the area of Ripley and ultimately to the Cunningham Highway. In January 2004, the government announced that the section of the transport corridor from Springfield to Ripley would be built and later that year, it announced the preferred route for this corridor. In early 2005, it announced that it was committed also to the extension of the corridor from Ripley to the Cunningham Highway.
- In the course of planning of this extension of the corridor from the Springfield Town Centre, it was found that some of the land within Trust Lot 7 would not be required, but that some land owned by the first defendant adjacent to Trust Lot 7 was required instead. The land not required became known as “the returned land”. By this time, the Department had become the owner of Trust Lot 7 in place of the Council and it transferred this land back to the first respondent. The newly required land was the so called Transfer Land. It was in that context that the applicant gave the notices of intention to resume in October 2005.
The enhancement case
- The issues for the arbitrator concerned the valuation of the Transfer Land, whether there was any enhancement for the purposes of s 20(3) and whether the value of the returned land was to be set-off against the compensation. There is no challenge to the arbitrator’s finding that the value of the Transfer Land was, in aggregate, the sum of $1,468,806 (which became the assessed compensation). Nor is there any challenge to the arbitrator’s conclusion that the value of the returned land should not be brought into account.[2] The challenge concerns the enhancement issue.
- At all relevant times s 20 of the Act provided as follows:
“20Assessment of compensation
(1)In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also to the damage (if any) caused by either or both of the following, namely –
(a)the severing of the land taken from other land of the claimant;
(b)the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land.
(2)Compensation shall be assessed according to the value of the estate or interest of the claimant in the land taken on the date when it was taken.
(3)In assessing the compensation to be paid, there shall be taken into consideration, by way of set-off or abatement, any enhancement of the value of the interest of the claimant in any land adjoining the land taken or severed therefrom by the carrying out of the works or purpose for which the land is taken.
(4)But in no case shall subsection (3) operate so as to require any payment to be made by the claimant in consideration of such enhancement of value.”
Within s 20(3) the expression “purpose for which the land is taken” corresponds with s 5 which provides in part as follows:
“5Purposes for which land may be taken
(1)Land may be taken under and subject to this Act –
(a)where the constructing authority is the Crown, for any purpose set out in the schedule …
(2)The power to take, under and subject to this Act, land for a purpose (the primary purposes) includes power to take from time to time as required land either for the primary purpose or for any purpose incidental to the carrying out of the primary purpose.”
The then schedule to the Act provided that the “purposes for which the land may be taken under and subject to this Act” relevantly included “roads”.
- As appears to be common ground, the onus was upon the present applicant to establish that there was some relevant enhancement and its amount. Ultimately the applicant’s case was that the value of the respondents’ land would be enhanced by the carrying out of the works which were the extension of the transport corridor west from the Springfield Town Centre. The Transfer Land was being taken for the carrying out of that work or for that purpose, although it would constitute only a very small part of the land required. The respondents’ case was that the purpose for which the Transfer Land was being taken was merely to effect a realignment of the designated transport corridor, which of itself would cause no enhancement in the value of their land. That argument was upheld by the arbitrator. The applicant argues that he thereby erred in law.
- The arbitrator reasoned as follows:
“It is in my view beyond question that the NIRs [notices of intention to resume] were given solely for the purpose of DMR advising an intention to realign part of the existing Corridor ‘in the vicinity of Trust Lot 7’. The realignment resulted only in an intention by DMR to acquire small parcels of land to make adjustments to the boundary of what had already been designated and which in fact had been dedicated by agreement in the 1998 Springfield Infrastructure Agreement. In short, the NIRs evidenced only DMR’s intention to acquire smaller parcels to achieve the desired realignment and as a further consequence to return to Springfield any land which had in 1998 been given to Ipswich City Council on trust and later transferred to DMR, but which was no longer required. These arrangements were confirmed by the Acquisition Agreement 2006.
It is plain that Trust Lot 7 had been set aside in 1998 so as to provide the corridor of land to contain the relevant transport infrastructure which had been the subject of discussion at least since the Springfield Development Control Plan in 1994.
One can easily test the correctness of the claimant’s submission that the purpose of the resumption was the late decision to realign the boundaries of the corridor in minor respects by noting that, had the NIRs not been given, the road infrastructure would have been built within Trust Lot 7. No land would have been taken and no claim for compensation could have arisen. Further, had no claim for compensation arisen, then there would have been no occasion to consider any issue of enhancement. Clearly therefore it was the very narrow purpose of the resumption to realign in minor respects an existing proposed road corridor. That was why the land was taken; that is why only now the need to assess compensation arises; only as a result of that does the occasion now also arise to assess any and, if so, what enhancement accrued for the purposes of Section 20(3)…
Therefore the relevant question becomes: was there any enhancement in the value of the interest of the claimants in any land adjoining the land taken or severed therefrom by the carrying out of the works or purpose for which the land was taken [Section 20(3)]?
The land which was taken was the transfer land. The purpose for which that land was taken was to accommodate ‘a slightly different corridor’. This necessarily required an alteration in the program of works to be carried out so as to give effect to the relevant purpose for which the land was taken. And so the final question emerges: was there any enhancement on that account to the value of the claimants’ land adjoining the land taken or severed therefrom? The claimant submits that there is no evidence of any enhanced value to the claimants’ adjoining or any balance land by the carrying out of the works or purpose for which the land was taken, that is, by reason of the design decision to require ‘a slightly different corridor to that allowed for in the trust land’ and the carrying out of the relevant works.
I am satisfied that the proper application of Section 20(3) to the facts of the case does not support any claim by DMR for enhancement in the value of other Springfield lands.
In my view, the valuation approach by Mr Slater, that is, that enhancement to other Springfield land arises as a result of the scheme to develop the South-West Transport Corridor and appropriate road infrastructure, cannot be supported by any proper application by Section 20(3). Nor is it an acceptable application of principle in this case to allege that because in October 2005/January 2006 there had arisen a perceived need to slightly alter what was considered in earlier years to be the required boundaries of the proposed corridor realignment, it follows that the issue of enhancement has to be addressed on the basis of enhanced values by reason of the planning and construction of the whole of the South-West Transport Corridor scheme from at least 1999. I do not accept that to be a proper application of principle in a case of compulsory acquisition, nor is it supported by the proper application of Section 20(3).”[3]
Pointe Gourde
- As the applicant’s argument was developed, it appeared to rely heavily upon the proposition that the so-called Pointe Gourde principle must be applied in the application of s 20(3). In Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands,[4] the Privy Council held that the compensation for the compulsory acquisition of land should not “include an increase in value which is entirely due to the scheme underlying the acquisition” and that the relevant “scheme” might include what was to occur on land which was not the subject of the acquisition. The arbitrator here held that the Pointe Gourde principle was irrelevant, because the issue under s 20(3) was the enhancement (if any) of the value of the interest in land retained by the respondents, rather than in the assessment of the market value of the land which was taken. The applicant argues that this involved an error of law, because, it is submitted, matters of injurious affection and enhancement must also be considered by reference to this principle.
- That argument places particular reliance upon what was said in the New South Wales Court of Appeal in Roads and Traffic Authority (NSW) v Muir Properties Pty Ltd.[5] The court there was considering the Land Acquisition (Just Terms Compensation) Act 1991 (NSW), in which s 55 provides that in determining the amount of compensation to which a person is entitled, regard must be had not only to the market value of the land on the date of its acquisition, but to certain other matters including:
“(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.”
For present purposes it may be accepted that there is no difference in effect between that provision and s 20(3). Tobias JA (with whom McColl JA and Hunt AJA agreed) said that the Pointe Gourde principle was relevant in the operation of s 55(f) where what is described as a “before” and “after” valuation exercise is undertaken. His Honour said:
“It is often the case that when only part of a disposed owner’s land is compulsorily acquired, a ‘before’ and ‘after’ valuation exercise of the whole of that owner’s land is conducted. In other words, the market value of the land before acquisition is determined (including the acquired land) as is its value after acquisition (excluding the acquired land). In this way the difference between the two values determines not only the market value of the acquired land but also catches any injurious affection to the retained land by reason of the acquisition for the public purpose. This approach will also, in an appropriate case, capture any loss to the severance of the dispossessed owner’s land by that acquisition.
In proceeding according to that approach, there has never been any doubt that the Pointe Gourde principle is applied in the ‘before’ valuation exercise. In other words, the ‘before’ value is determined on the basis of disregarding any decrease in the value of the land arising out of the purpose of the compulsory acquisition and any steps in the scheme leading to that acquisition. It is only in the ‘after’ value that any decrease by reason of the proposed implementation of the public purpose for which the resumed land was compulsorily acquired is taken into account.”[6]
The applicant cites decisions of the Land Court of Queensland for effectively the same proposition, as well as Brown Land Acquisition, (2004, 5th edition) [3.20] and Jacobs The Law of Resumption and Compensation in Australia, (1998) [27.8].
- I accept that where the so-called “before” and “after” method might be employed in a particular case, the “before” value would have to be reached by excluding the effect of that “for which the resuming authority is responsible”.[7] But that was not the approach to the assessment of compensation which the arbitrator took, or was asked to take. He was asked to assess the market value of the Transfer Land and to then assess the amount of any enhancement of the value of retained land. There was no error in the arbitrator’s holding that the Pointe Gourde principle should not apply to the s 20(3) question. Rather, what was required was the application of the terms of the subsection itself.[8]
- The apparent explanation for this focus upon Pointe Gourde is to provide a basis for the applicant’s submission that in the present context it was necessary to identify a “scheme”, and that it is the effect of such a scheme upon the value of the respondents’ land which must be assessed. By substituting the term “scheme” for “the works or purpose for which the land is taken” in the application of s 20(3), the applicant argues that it was the effect of the construction of the transport corridor, rather than some small realignment of it, which had to be considered. The mere realignment of some part of it could not be considered as the Department’s scheme. As it was some scheme which had to be considered, then the arbitrator misapplied s 20(3). Further, it is argued, because the Pointe Gourde principle was, according to the observations of the Privy Council in Melwood Units Pty Ltd v Commissioner of Main Roads,[9] part of the “common law deriving as a matter of principle from the nature of compensation for resumption or compulsory acquisition”, the arbitrator’s error was one of law.
- Had the arbitrator acceded to this particular argument, he would have erred, for reasons which appear from the joint judgment in Walker Corporation v Sydney Harbour Foreshore Authority, where it was observed that:
“What was meant in Pointe Gourde and other cases by references to ‘the scheme’ does not readily appear. [… But] in the context of statutory compulsory acquisition of land, a ‘scheme’ may be taken to be a broad expression derived from the promotion in the nineteenth century of bills for a special statute to permit the construction of canals, railways, dams and other complex infrastructure. The ‘scheme’ referred to the obtaining by the promoters of compulsory powers without which their proposal could not be implemented. With that background in mind, the description in Pointe Gourde of the resumption of land to assist the construction of an air force base under Lend Lease as part of a ‘scheme’, may readily be understood.”[10]
Their Honours noted that the term “scheme” was not found in the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) and that:
“It is the terms of that legislation that are determinative and it is not to be assumed that they reproduce or attempt to reproduce an understanding of ‘principles’ derived by way of gloss upon the spare terms of ss 49 and 63 of the 1845 Act.”[11]
The same must apply to s 20(3) of the Queensland statute.
What were the relevant works?
- In considering s 20(3), the arbitrator was required to identify the works or purpose for which the land was taken. He identified the purpose as “the very narrow purpose…to realign in minor respects an existing proposed road corridor”. In one sense at least, that was undoubtedly true. But the question is whether that could be regarded as the purpose which is relevant in the operation of s 20(3). As already noted, the purpose within s 20(3) would appear to correspond with the purpose for which there is a power of compulsory acquisition. That indicates that the purpose was to be understood as the public benefit or end to be achieved, rather than some means to that end, and that the arbitrator’s identification of the purpose was incorrect.
- Further, there was the need to identify the relevant “works”. To the extent that the arbitrator did consider that matter, his conclusion was that the use of this slightly different corridor “necessarily required an alteration in the program of works to be carried out so as to give effect to [that alteration in the corridor]”. The arbitrator adopted the claimants’ submission that there was:
“no evidence of any enhanced value to the claimants’ adjoining or any balance land by the carrying out of the works or purpose for which the land was taken, that is, by reason of the design decision to require ‘a slightly different corridor to that allowed for in the trust land’ and the carrying out of the relevant works.”[12]
Thus he did not identify precisely what was involved in “the relevant works”, other than those which would be undertaken only because of the realignment, effectively limiting them to what would be carried out upon the Transfer Land.
- The Transfer Land consisted of two areas. The first, which was on the northern side of the corridor, amounted to less than three-quarters of a hectare but had a length, it seems, of at least 500 metres along what had been the northern boundary of the corridor. The other was further west and on the southern side of the corridor. It had an area of about 5.5 hectares but again it was more than 500 metres in length (along the southern boundary). On any view, the works which the arbitrator could have had in mind would have amounted to, at most, the construction of a small part of the road to be constructed within the designated corridor west of the Town Centre. The extent of those works is reflected by the arbitrator’s description of the realignment of the corridor as one which was minor or slight.
- Quite apart from its “scheme” argument based upon Pointe Gourde, the applicant argues that this reasoning involved an error, and an error of law. It says that the relevant works are the construction of the road west from the town centre to the Cunningham Highway. In the pleadings in the arbitration, the applicant put his case somewhat differently, saying that the relevant works constituted the road and other works from the Ipswich Motorway to the town centre and then beyond. In his award,[13] the arbitrator noted that difference between the pleaded case and the ultimate argument, which is advanced again here.
- The present question is similar to that which sometimes arises in the definition of the relevant “scheme” in cases which apply the Pointe Gourde principle, which is where the land which is taken is to be used with other land in the same project. It was discussed by Lord Nicholls of Birkenhead in Waters v Welsh Development Agency:
“43.Notoriously the practical difficulty with the Pointe Gourde principle lies in identifying the area of the “scheme” in question. This difficulty does not arise when the enhanced value arises from the authority’s proposed user of the subject land. Then, by definition, what is in issue is the proposed use of the subject land. But when regard is had to the authority’s use or proposed use of other land the application of the principle is not self-defining. A major development project of a general character, covering a wide geographical area, may proceed in several phases, each phase taking years to implement, and the detailed content and geographical extent of each phase being subject to change and finalised only as the phase nears the time when the work will be carried out. Is that one scheme or several?
…
- A similar judgmental exercise is required with regard to the works said to comprise one scheme for the purposes of the Pointe Gourde principle. When deciding, for instance, whether a phased development constitutes a single scheme or more than one scheme the tribunal will consider all the circumstances and decide how much weight, or importance, to attach to the various relevant features.”[14]
- Essentially the same question was discussed by the New South Wales Court of Appeal in Road and Traffic Authority of New South Wales v Perry,[15] involving the operation of s 56(1) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) which provides that in the assessment of the “market value” of land which is acquired, there is to be disregarded “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”. The land in question was nine hectares on both sides of the Pacific Highway just south of Coffs Harbour. The land had been used for grazing purposes but it included the site of a disused quarry, which was a potential source of fill suitable for use in the construction of a particular embankment for a section of the highway. The question was the appropriate level of generality at which the “purpose” should be identified. Hodgson JA said that:
“In this case, at the most general level, the purpose could be identified as the upgrading of the Pacific Highway between Sydney and the Queensland border; and there are other possible identifications, including the Raleigh Deviation generally, or particular versions of the Raleigh Deviation, or the extension of the Raleigh Deviation to Perry’s Hill.
I do not think there are any clear rules determining how the relevant purpose or the appropriate level of generality is to be determined. Factors to be taken into account would, in my opinion, include the degree of continuity and consistency of various elements of what is proposed and done, and fairness to both the claimant and the acquiring authority.”[16]
Handley JA said:
“The identification of the scheme which underlay this acquisition requires the evaluation of complex events which occurred over 4 ½ years and questions of degree are involved. It would be relevant to consider whether a separate contract was let, and construction work started at the southern end of the Raleigh Deviation before the planning for the Perry’s Hill extension had either commenced or been completed and before the decision was made to acquire the lands taken. It would also be relevant to consider whether or not the planning and construction work for the Raleigh Deviation and the Perry’s Hill extension were interrelated and not severable in time, location, contractual arrangements or otherwise…
Bignold J found that the land taken was acquired for the principal purposes of building the highway deviation through the claimant’s land and obtaining a supply of fill. However this finding did not determine whether the scheme which underlay the acquisition was a single scheme for the enlarged Raleigh Deviation or a separate Perry’s Hill scheme. The particular purposes, in the sense of the uses to which particular land will be put, do not exclude the wider public purpose to be served by the acquisition. If so it is this wider public purpose, scheme or project which underlay the acquisition, which governs the operation of s 56(1)(a).
The resumption of land in the middle of a substantial extension to an existing railway or highway will be for the public purpose of that scheme or project as a whole, and not just for whatever part of it is to be constructed on that land. Section 56(1)(a) would fail to achieve its evident purpose if the court could award compensation for an increase in value due to the construction of the new railway or highway up to the boundaries of the land resumed and only had to ignore the proposal as it directly related to that land.”[17]
The court was unable to determine what did constitute the relevant scheme, or more precisely the public purpose for which the land was acquired. But it was persuaded to remit the case to the Land and Environment Court to identify that purpose because the primary judge’s finding (described by Handley JA in that passage) involved an error of law. The proposition of Handley JA that the resumption of land in the middle of a substantial extension to an existing highway will be for the public purpose of that project as a whole, and not just for whatever part is to be constructed on that land, cannot be doubted. And its relevance to the operation of s 20(3) is not affected by the use of the term “public purpose” in s 56(a) of the New South Wales statute, where that is defined (by s 4) to mean “any purpose for which land may by law be acquired by compulsory process under this Act”. This is equivalent to the meaning of “purpose” in s 20(3), which takes its meaning from s 5 of the Act.
- The construction of such part of a highway which was on an individual resumed parcel of land would not be an end in itself. It would be a means to an end which would be the construction of a useable road. As Hodgson JA discussed, just how that road was to be defined in a particular case could involve a fine question. But on no reasonable view could the relevant works or purpose be confined to what was to happen to the particular land of a claimant. Such an approach could distort the assessment of the value of the land to be resumed, as RTA v Perry explains. Similarly it could distort the assessment of compensation for injurious affection, as is shown by Marshall v Department of Transport,[18] which held that in the operation of s 20(1)(b) of the Act, the relevant exercise by the constructing authority of its statutory powers is not to be confined to what occurs on the land acquired from the claimant. Although Marshall concerned injurious affection, and not enhancement under s 20(3), it strongly indicates that the purpose of s 20(3) would not be served by limiting its operation to the effect of such of the works as are carried out upon the acquired land. In this case the respondents do not submit that s 20(3) should be so construed. Rather they submit that this is simply a factual question, and that in the circumstances of this case, it was open to the arbitrator to find that the relevant works or purpose were so confined.
- In my respectful view, the arbitrator erred in identifying the relevant works or purpose. In particular, the arbitrator did not consider, or properly consider, what constituted the relevant works for which the land was taken. But for the proposal to construct the road west from the town centre, the transfer land, consisting of these few hectares, would not have been required. The works for which they were required could not be realistically defined in terms of part of the width of a relatively small section of a proposed road. As to the relevant purpose, it was not to realign something depicted upon a map, but to provide some of the land which was required for the construction of a single road, which the applicant was prepared to accept was the road yet to be constructed from the town centre westwards.
- The respondents argue that any such error was one of fact, not of law. But as Lord Nicholls explained in the above passage from Waters v Welsh Development Agency, this is not a process of fact finding as ordinarily understood; rather, it involves the exercise of a judgment. In the present case, the relevant facts were found, and the arbitrator’s error was in the application of s 20(3) to them. The question involved the scope or effect of s 20(3). In Hope v Bathurst City Council,[19] Mason J held that “whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law”. His Honour said:
“One example is the judgment of Fullagar J. in Hayes v. Federal Commissioner of Taxation (1956) 96 C.L.R. 47, at p. 51, where his Honour quoted the comment of Lord Parker of Waddington in Farmer v. Cotton’s Trustees [1915] A.C. 922, at p. 932, which was adopted by Latham C.J. in Commissioner of Taxation v. Miller (1946) 73 C.L.R. 93, at p. 97, that where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only. Fullagar J. then said (1956) 96 C.L.R. at p. 51:
‘…this seems to me to be the only reasonable view. The distinction between the two classes of question is, I think, greatly simplified, if we bear in mind the distinction, so clearly drawn by Wigmore, between the factum probandum (the ultimate fact in issue) and facta probantia (the facts adduced to prove or disprove that ultimate fact). The ‘facts’ referred to by Lord Parker … are the facta probantia. Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally – so far as I can see, always – be a question of law.’”
Mason J added that special considerations apply when a statute uses words according to their ordinary meaning and the question is whether the facts as found fall within those words. Adopting what was said by Kitto J in NSW Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation,[20] his Honour said that where it is reasonably open to hold that the facts as found do fall within the enactment, the question of whether they do so or not is one of fact. But the question of whether the facts as found do reasonably admit different conclusions as to the operation of the Act is one of law. In applying these principles in Collector of Customs v Pozzolanic Enterprises Pty Ltd,[21] the Full Federal Court (Neaves, French and Cooper JJ) held that the Administrative Appeals Tribunal had erred in law in deciding that the respondents had purchased diesel fuel for use in “operations connected with … primary production”. The Court held:
“Although the words of the statute are construed according to their ordinary English meaning, that does not mean that their application to a set of facts is simply described as the matching of that set of facts with a factual description. There is necessarily a selection process involved. The range of relationships to which the words apply for the purpose of the Act depends upon a judgment about that purpose. The selection process involved is analogous to that used in determining what causal relationships between conduct and loss attract liability for the purpose of s 82 of the Trade Practices Act (1974) (Cth): see Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410 at 418-419; Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 712-713. In the end this is not a process of fact finding. The facts are found. What is left is a value judgment about the range of the Act and that is a question of law.”[22]
- In my conclusion the error here was one of law. It was not open to the arbitrator to conclude that on the facts as found, the relevant works or purpose was as he described them. That involved a misinterpretation of s 20(3), and in particular what was meant by the “works” or “purpose” when applied to the facts of this case.
What was the “adjoining” land?
- There is then a further question involving the interpretation of s 20(3), which is what was the extent of the “land adjoining the land taken”. The Transfer Land was made up of parts of four lots. The respondents argued, and the arbitrator accepted, that the balance of these four lots constituted the adjoining land. The applicant argues that the adjoining land included other land owned by the first respondent which in turn adjoined those lots. The extent of that land is much greater and consequently so too the likely betterment for the purposes of s 20(3). It was that betterment which was the subject of the applicant’s valuation evidence in the arbitration.
- The arbitrator decided this point as follows:
“The enhancement in value of other lands of the claimant by the carrying out of the works or purpose is limited by Section 20(3) to “lands adjoining the land taken or severed therefrom”.
In the case of severed land, its application is clear: enhancement operates only in respect of the remainder of the parcel from which the resumed area is severed. So too in the case of the resumption of a defined parcel. Section 20(3) similarly limits enhancement to other land which adjoins that land taken. This construction of Section 20(3) is consistent with the dicta of the Land Court in Bisbane City Council v. Zoeller (1973) 40 QCLLR 24 where it is said with reference to Section 20(3):-
“No doubt the underlying reason for this provision is that the construction of expensive public works, eg. railroads, highways, dams, etc. may, depending on particular circumstances, greatly increase the value of the lands in the localities which they serve. Whilst it has not been deemed equitable to place a betterment tax on all land so affected, the legislature has decreed that if the balance of a person’s resumed land which adjoins the land taken from him is increased in value as a result of the works, then such increase will be set against the compensation otherwise payable…”
In the case of adjoining, as distinct from severed land, the term “adjoining” is generally considered by the legal dictionaries to have a meaning distinct from other terms such as “adjacent”. A Dictionary of Modern English Usage (Garner) 1987 defines “adjoining” as “directly abutting, contiguous”. See also In re Wildman (1901) 27 VLR 43.
There is no justification in Section 20(3) of the Acquisition of Land Act for Mr Slater’s assertion (Exhibit 10, page 19) that “in complying with the provisions of Section 20(3)” the term “adjoining land refers to land in a general sense.” I reject his valuation approach which, in the circumstances of this case, would extend “enhancement” to lands which are beyond the scope of the express terms of Section 20(3).”[23]
- With respect, there is nothing in the passage cited from Brisbane City Council v Zoeller which supported the arbitrator’s conclusion. Nor was the question to be resolved according to whether “adjoining”, in this provision, refers to some physical contiguity or instead close physical proximity, as Kirby P described the alternatives in Hornsby Shire Council v Malcolm.[24] Referring to what he said was the useful discussion of the authorities in the judgment of Hogarth J in Minister of Works v Antonia,[25] Kirby P said that which of those meanings was correct depended upon the statutory context. But the applicant here accepts that in this statutory context, “adjoining” does mean physically contiguous. The question is whether it is relevant that the first respondent’s land had been subdivided into several lots, and that not every lot was contiguous with the land which was taken.
- The arbitrator held that there was “no justification” for reading s 20(3) in the way suggested by the applicant. In my respectful view, that cannot be accepted. The starting point is that s 20(3) makes no reference to a lot or lots but to “land”. Elsewhere the Act distinguishes between land and a lot or lots. For example, in s 7(3)(b), which prescribes the content of a notice of intention to resume, it is provided that “if the land is described as a separate lot or parcel in a plan of survey registered in the land registry …”, then the notice shall describe the land as such. The word “land” is defined to mean “land, or any estate or interest in land, that is held in fee simple, but does not include a freeholding lease under the Land Act 1994”.
- The respondents argue as follows. Only freehold land may be taken under the Act, and the register maintained under the Land Title Act 1994 (Qld) identifies land by reference to lots so that land is taken by reference to its lot or plan description. That may be so but it does not follow that “land” and “lot” are synonymous within the Act and in particular within s 20(3). So rather than the express terms of the section supporting the respondents’ argument, they accord with the applicant’s argument.
- Secondly, the respondents’ argument would seem to serve no purpose of the Act, whereas there is no apparent inconsistency between that purpose and the applicant’s argument. The purpose of s 20(3) should be unaffected by whether the adjoining land consists of several parcels, each capable of separate disposition, or of but one parcel. To accept the applicant’s argument is not to provide for what was described in BCC v Zoeller as a “betterment tax” on all of a claimant’s land. Rather the effect of any “betterment” is limited to land which has a certain connection with that which is taken. There is no evident reason why that connection should be according to how the land has been surveyed.
- Thirdly, the applicant’s argument is supported by authority. In Harris v Lee,[26] land was resumed under s 24 of the Public Works Act 1888 (NSW), which required that the assessor of compensation
“take into consideration and give effect to by way of set-off or abatement any enhancement in the value of any land belonging to such owner adjoining the land taken.”
The claimant owned land which was divided into 20 separate lots, which were situated in a line with each fronting the same road and backing onto a bay. The resumed land was taken from lots 1 and 2. Lot 3 adjoined lot 2, lot 4 adjoined lot 3 and so on. In that case compensation was assessed by a jury, which was instructed to consider only the enhancement in value of lots 1 and 2. The unanimous view on appeal was that the enhancement in value of all of the lots should have been assessed. Darley CJ said:
“As I said before, the whole question therefore turns on the meaning of the word ‘adjoining’ in s 24. We must give to the word “adjoining” its ordinary English interpretation. The whole of this block of land adjoins the land taken, whether it is 100 acres, 1,000 acres or 10,000 acres. It touches the land taken, and you cannot draw an arbitrary line from lot 2 down to the water and say only that land adjoins the land taken. If there were no roads nor a river nor anything of that kind intersecting the block of land, then the whole block adjoined the land resumed. I therefore think that his Honour came to an erroneous conclusion in directing the jury that only the land in lots 1 and 2 adjoined the land taken.”[27]
- In this context it is also relevant to consider the authorities on what constitutes the “severing” of land. Section 20(1) requires an assessment of compensation to have regard to the damage (if any) caused by the severing of the lands taken from other land of the claimant and the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land. Section 20(3) requires a consideration of the enhancement of the value of the interest of the claimant not only “in any land adjoining the land taken”, but in any land “severed therefrom”. Severance might occur by the taking of part of a lot. But there might also be a severance in this respect although it is one of several distinct lots which is taken, and even where those lots are not contiguous. That was the unanimous conclusion of the High Court (McTiernan, Taylor and Windeyer JJ) in Crisp and Gunn Co-operative Ltd v Hobart Corporation,[28] following Holt v The Gaslight and Coke Company,[29] Cowper Essex v The Acton Local Board[30] and Wilson v The Minister.[31] In the present case the applicant has not put its case upon an alternative argument of severance. But the meaning of severance in this context is relevant because it makes the suggested purpose of the arbitrator’s construction of “adjoining”, by implying some limitation according to whether that land is held as one or more lots, more difficult to discern.
Timing
- A further matter was debated in the present proceedings which was described as the “timing” of the enhancement. The applicant criticised the arbitrator because, it was suggested, he had held that any enhancement
“had long since accrued as the result of the progressive implementation of earlier proposals relating to proposed road infrastructure, including the [South-West Transport Corridor]”.
But in that passage, the arbitrator was simply reciting a submission made for the present respondents. That was in the course of their argument that the arbitrator should adopt the incremental approach which he did, by looking only at the impact of what would be done within the relatively small amount of land which was the Transfer Land. If the relevant works and purpose under s 20(3) are identified as the construction of the road west from the town centre, as the applicant here ultimately put its case to the arbitrator, then no issue of “timing” arises.
Conclusion
- It follows that the applicant has established that the arbitrator erred in law. It is undisputed that if that conclusion is reached, the errors of law are manifest on the face of the award. The outcome on these questions of law substantially affected the rights of the parties in that the result of the arbitration should have been an award of no compensation. The valuation evidence tendered by the applicant in the arbitration is not before me, but it is extensively discussed in the award. The effect of that evidence was that the enhancement was of such an extent as to easily exceed the value of the Transfer Land. The arbitrator held that nothing should be allowed for enhancement under s 20(3) because of his conclusions on the questions of law the subject of this case, rather than because of anything going to the merits of the valuation of the enhancement undertaken by the applicant’s witness. It seems that much of the cross-examination of the valuer extended to testing those questions of law, and this no doubt contributed to the arbitrator’s criticism of what the valuer said in that respect. But there was no apparent rejection of what the valuer said as a matter of valuation opinion. Nor was there any submission here that if the errors of law were manifest, nevertheless leave to appeal should be refused or that the outcome of an appeal should be a remitter to the arbitrator. For example, it is not suggested that there was other evidence before the arbitrator from which it might be concluded that the enhancement was not as great as that suggested by the applicant’s witness.
- It follows that leave to appeal should be granted and the appeal should be allowed. The award should be varied by substituting “nil” as the assessed compensation. I shall hear the parties as to costs.
Footnotes
[1] Promenade Investments Pty Ltd v State Bank of New South Wales (1992) 26 NSWLR 203, 225-6 (Sheller JA).
[2] The arbitrator held that once the returned land was not required for the transport corridor, it was held on a resulting trust for the first respondent which was thereby entitled to a transfer.
[3] At p 50-52 of the award.
[4] [1947] AC 565, 572-3.
[5] [2005] NSWCA 460; (2005) 143 LGERA 192.
[6] [2005] NSWCA 460, [103]-[104]; (2005) 143 LGERA 192, 212-3.
[7] Walker Corporation v Sydney Harbour Foreshore Authority (2008) 233 CLR 259, 278.
[8] Walker Corporation v Sydney Harbour Foreshore Authority (2008) 233 CLR 259, 270; Marshall v Director-General, Department of Transport (2001) 205 CLR 603, 632-3.
[9] [1979] AC 426, 435.
[10] (2008) 233 CLR 259, 275.
[11] (2008) 233 CLR 259, 275.
[12] At p 52 of the award.
[13] At p 48.
[14] [2004] UKHL 19; [2004] 1 WLR 1304, 1315, 1319.
[15] (2001) 52 NSWLR 222.
[16] (2001) 52 NSWLR 222, 241.
[17] (2001) 52 NSWLR 222, 235-6 [emphasis added].
[18] (2001) 205 CLR 603.
[19] (1980) 144 CLR 1, 7.
[20] (1956) 94 CLR 509, 511-2.
[21] (1993) 43 FCR 280.
[22] (1993) 43 FCR 280, 288-289.
[23] At p 53-4.
[24] (1986) 60 LGRA 429, 433.
[25] [1966] SASR 54, 61.
[26] (1900) 21 NSWR 173.
[27] (1900) 21 NSWR 173, 176; (1900-01) 17 WN (NSW) 39, 41.
[28] (1963) 110 CLR 538, 548.
[29] (1872) L.R 7 Q.B. 728.
[30] (1889) 14 App Cas. 153.
[31] (1908) 8 S.R. (N.S.W.) 427.