WAINWRIGHT v THE MINISTER ADMINISTERING THE NATIONAL PARKS AND WILDLIFE ACT 1974 SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY, CLARKE and HANDLEY JJA 21,22 May 1990, 25 September 1990 [1990] NSWCA 180 COMPULSORY ACQUISITION — WHETHER trial judge erred in taking into account changes in zoning restrictions and planning policy — WHETHER assessment of compensation based on best comparable sale and highest and best use — EARLIER sale of resumed land — WHETHER valid basis for purpose of assessment of compensation — WHETHER further evidence admissible on appeal from Land and Environment Court — WHETHER error of law in assessment of compensation. Held: (1) There had been no error of law on the part of the trial judge, and no failure to properly assess the impact of State planning legislation. (2) No error of law in finding that the prior sale of the resumed land ten years previously was not a comparable sale. (3) New evidence would not be allowed. Real Property Act (1900) s61(2) Public Works Act (1912) s124 Land and Environment Court Act (1979) s57(1) Spencer v The Commonwealth (1907) 5 CLR 441 Corrie v MacDermott (1914) AC 1056 Royal Sydney Golf Club v FCT (1957) 97 CLR 379 Chapman v The Minister (1966) 84 WN (Pt 1) (NSW) 417 McIntosh v Williams (1976) 2 NSWLR 237 Housing Commission v San Sebastian Pty Limited (1978) 140 CLR 196 Melwood Units Pty Limited v Commissioner for Main Roads (1979) AC 426 Priestley, Clarke and Handley JJA This is an appeal by Mr Harry Wainwright, the former owner of 589.87 ha of coastal land situated north of the Hastings River near Port Macquarie, from the judgment of Perrignon J of the Land and Environment Court. His Honour had assessed the compensation payable under s124 of the Public Works Act for the compulsory acquisition of the appellant's land which had been affected by notification in the Gazette on 30 September 1983. The appellant's land was acquired for the purpose of establishing a public recreation ground at Limeburners Creek to be vested in the Minister Administering the National Parks and Wildlife Act 1974. His Honour in an extremely full and detailed judgment assessed the compensation payable in the sum of $623,000. The appellant seeks a new trial of the action or that this Court might fix the amount of compensation payable. The appellant's case at the first stage of the trial which lasted over thirty days was that the compensation properly payable was $1,998,000 which included an amount of $33,000 representing special value. This case was based on the valuation report and expert evidence of Mr JR Robertson, a qualified valuer. However after his Honour had reserved his decision the appellant sought and was 2 UNREPORTED JUDGMENTS granted leave to re-open his case and to make further submissions. These were made in writing and together with the respondent's further written submissions in reply are included in the appeal books. The new case made by the appellant in these written submissions was based upon earlier contracts for the sale of his land, known as Broken Bit Station, which comprised the resumed land and other land as well. The contracts dated 30 March 1973 were with Cambridge Credit Corporation Limited and the purchase price payable to the appellant was $1,467,000. A second contract which was inter-dependent with the first was entered into by the purchaser with the appellant and a Mr Mohr for the sale of some adjoining land for the price of $58,000. The appellant agreed to accept a mortgage back from the purchaser to secure $1m of the purchase money payable by equal annual instalments over eight years at an interest rate of 9 per centum reducible to 8 per centum on prompt payment. In addition the purchaser entered into a profit sharing arrangement with the appellant under which it appointed him its consultant to act in relation to the proposed development of the land as a tourist centre at a remuneration equal to 10 per centum of the purchaser's net profits from the development. The new case for the appellant was that the assessment of the compensation for the resumed land should be based on this sale as the best possible comparable sale and that the purchase price per hectare deducible from these contracts should be increased to reflect increases in land values generally in the area since 1973. On this basis the appellant contended that the proper compensation was $5,190,000. The action for compensation in the Land and Environment Court was a Class 3 proceeding and accordingly by s57(1) of the Land and Environment Court Act the appeal to this Court from his Honour's decision assessing the compensation payable was an appeal limited to questions of law. At the start of the hearing Dr Woods QC, who appeared for the appellant applied for leave to adduce further affidavit evidence. The Court received and read the affidavits sought to be relied upon without at that stage admitting them in evidence. The further evidence consisted of affidavits by the appellant sworn 14 and 21 June, an affidavit by his solicitor Mr Annis-Brown sworn 14 June and an affidavit by Mr JN Reen, a qualified valuer, sworn 15 June. It is clear that the additional affidavit evidence was intended to support the new arguments that the appellant had developed before the trial judge after he had been given leave to re-open his case at the trial. His Honour had originally reserved his decision on 19 June, 1986 at the conclusion of the submissions then made for the parties. Shortly afterwards he had had a view of the resumed land with counsel for the parties. Some time afterwards the appellant discharged the solicitors who had acted for him at the trial and the proceedings were re-listed before his Honour for mention on 19 August 1986. The appellant appeared in person at the mention and informed the judge that he wished to produce further evidence and present additional submissions which would differ from those previously made on his behalf. The trial judge indicated that the appellant could make additional submissions in writing, and that he could apply for leave to adduce further evidence. The appellant made it clear that he wished to rely upon the Cambridge Credit contracts as evidence of the market value of the resumed land in 1973 and to link it up with the value at the date of WRUINWRIGHT v THE MINISTER ADMINISTERING THE NATIONAL PARKS ANB WILDLIFE ACT 1974 (Priestley, Clarke and Handley JJA) resumption by means of general evidence as to increases, during the interval, in the value of land in the area which had not been affected by any planning "blight". At the end of the mention the case was adjourned to a date to be fixed. Subsequently the appellant's new solicitors filed supplementary submissions dated 13 October 1986 and the respondent filed submissions in answer on 30 October which were the subject of further submissions in reply on behalf of the appellant which were filed on 30 January 1987. The battle of submissions ended with a further answer by counsel for the respondent on 19 February 1987. On 9 March the respondent sought and was granted leave to re-open his case to tender an affidavit of Susan Cottingham, an Officer of the Valuer General's Department which was sworn on 21 November 1986 and a letter from the appellant's then solicitors to the Valuer General's Office at Taree dated 6 August 1976. In reply the appellant filed two affidavits by himself sworn 3 March 1987 which were received without objection. His counsel then sought leave to re-open the appellant's case to tender further evidence in the form of two certified copies of entries on the Valuation Roll in respect of adjoining land owned by the appellant as at 6 October 1971 and 7 March 1984. It transpired that the second certified copy was already in evidence. Counsel for the respondent opposed leave being granted to the appellant to re-open his case to tender the earlier certified copy. However upon the appellant's counsel offering no opposition to the admission of an affidavit in reply of Mr May sworn | April 1987, he being the expert valuer called by the respondent at the trial, and informing the Court that he did not wish to cross-examine Mr May on that affidavit his Honour granted the appellant leave to re-open to tender the earlier certified copy. This occurred on 9 April 1987 whereupon his Honour reserved his decision. This was approximately ten months after his Honour had first reserved his decision on 19 June the previous year. The trial therefore was re-opened on 19 August 1986 and continued in the form of various mentions until 9 April 1987. The appellant took advantage of the re-opening of the trial to make lengthy further submissions in writing, but only sought leave to adduce limited further evidence in the form of the certified copy of the entry on the Valuation Roll for adjoining land owned by him as at 6 October 1971 together with his two affidavits sworn 3 March 1987. The respondent took advantage of the re-opening of the trial to tender the letter from the appellant's former solicitors of 6 August 1976 to the Taree office of the Valuer General, and an affidavit by its Valuer. The appellant's supplementary written submissions of 13 October 1986 stated that "the applicant wished and felt it necessary for reasons of economy and expedition to re-open the case to a minimum extent". It is clear that the appellant maintained this attitude over the months that followed until the last mention before the trial judge on 9 April 1987. In these circumstances it is clear that the appellant's application for leave to adduce further evidence on appeal to this Court should be refused. The evidence was not "fresh" evidence which would have been admissible at common law before this Court if the present appeal had been by way of re-hearing. However this appeal is not a re-hearing and is limited to questions of law. Further evidence cannot be received on the hearing of an appeal which is limited to questions of law when no attempt has been made to tender that evidence before the trial Court. 4 UNREPORTED JUDGMENTS The Land and Environment Court may be subject to the supervisory jurisdiction of this Court exercisable by means of orders of the kind which formerly could have been obtained by means of the prerogative writs. Additional evidence, in some circumstances, may be admissible in proceedings of that kind, but the present appeal is not such a proceeding, and there are no grounds for thinking that the appellant had any case whatever for relief of the kind formerly granted by prerogative writs. The decision of this Court in MacIntosh v Williams (1976) 2 NSWLR 237 especially at 248 and 258 establishes that, in a trial without a jury, a party is entitled to apply to re-open his case to adduce "fresh" evidence after the trial judge has reserved judgment and at any time up to judgment. This principle is clearly of very great importance in the Land and Environment Court where in so many matters there is no appeal to this Court on questions of fact, and if fresh evidence is to be received at all, application to adduce it must be made prior to judgment. The learned trial judge appreciated that his discretion to permit the parties to re-open their cases had to be exercised with care and sensitivity since his decision on the facts would be final. He was prepared to consider allowing the appellant to re-open his case to adduce further evidence and he did so. In the result all the further evidence that the appellant wished to adduce was admitted. The evidence which the appellant sought to adduce on the hearing of this appeal was not evidence which he had tendered before the trial judge and which had been rejected. It was substantially for these reasons that the Court, during the hearing of the appeal, declined to receive the further evidence tendered by the appellant. Following the rejection of the further evidence senior counsel for the appellant endeavoured to demonstrate that the trial judge's assessment was vitiated by errors of law. Dr Woods' first submission was that even on the material before the Court the trial judge should have accepted the sale to Cambridge Credit in March 1973, which included the whole of the resumed land, as the most comparable of all the sales that were in evidence and as providing the best evidence of its real value at the date of resumption. Since the purchase price under the main contract was $1,467,000 it seems clear that if the trial judge had treated this as a comparable sale he would probably have awarded compensation substantially in excess of the $623,000 actually awarded. The trial judge rejected this approach, he said: "The Cambridge Credit sales were in my opinion too remote in point of time for them (to) provide any reliable evidence of value at the resumption date... I do not accept the argument that the Cambridge Credit sales truly reflect the full unaffected potential of the subject land at the date of resumption". There is no doubt that an earlier sale of the resumed land may constitute a comparable sale which should be taken into consideration in valuing the land at the date of resumption. If authority is needed for such an obvious proposition it can be found in Chapman v The Minister (1966) 84 WN (Pt 1) (NSW) 417. Dr Woods submitted that the trial judge erred in law in disregarding the Cambridge Credit sales as evidence of value at the date of resumption and he referred to and relied upon the statement by the Privy Council in Melwood Units Pty Limited v Commissioner of Main Roads (1979) AC 426 at 432: WRUINWRIGHT v THE MINISTER ADMINISTERING THE NATIONAL PARKS ANB WILDLIFE ACT 1974 (Priestley, Clarke and Handley JJA) "... if the Land Appeal Court rejected as wholly irrelevant to assessment of compensation a transaction which prima facie afforded some evidence of value and rejected it for reasons which were not rational, that in their Lordships' opinion would be an error of law." The problem for the appellant however is that the trial judge did give a reason for rejecting the Cambridge Credit contracts as being a reliable guide to the value of the resumed land. He said that they were "too remote in time" from the resumption date. In fact the time lapse was some ten and a half years. In our opinion it is impossible for this Court to conclude that this was not a "rational reason". The evidence establishes that the Cambridge Credit contracts were completed and title transferred to the purchaser with a registered mortgage back to the appellant. Following the collapse of that company the appellant foreclosed under his mortgage. A letter written by the appellant's solicitors to the Valuer General on 6 August 1976 showed that the foreclosure proceedings were then pending. An application for foreclosure pursuant to a registered mortgage is made to the Registrar General. Real Property Act s61. S61(2) provides that the mortgagee must have submitted the property to public auction through a licensed auctioneer, after notice to the mortgagor, without receiving a bid sufficient to satisfy the mortgage. S62(2) requires the Registrar General to advertise the land for sale in the Government Gazette and a Sydney newspaper at an amount sufficient to cover the mortgage debt and expenses. If no sale results the Registrar General is authorised to proceed to foreclosure. The mortgage back in favour of the appellant secured a principal debt of $1,000,000. During 1974 the purchaser made a payment of $125,000 in reduction of the principal and quarterly payments of interest were also made for some time. When in 1976 the property was submitted for auction on behalf of the appellant the mortgage debt was $875,000 plus costs and interest. No one was prepared at that time to bid at auction $875,000 plus whatever was then owing for interest and costs. On 6 August 1976 the appellant's solicitors wrote to the Valuer General and stated that at that time there were no proposed or prospective purchasers for the property. Furthermore the valuation report of Mr Robertson, the appellant's valuer, which was tendered at the trial, stated that on 19 May 1976 the Valuer General valued the land for the purposes of the foreclosure proceedings at $175,000. This Court can hardly ignore the fact that for over thirty days the appellant's case had been conducted before the trial judge on the basis that the Cambridge Credit contracts had only limited relevance. The solicitor for the appellant in opening his case to the trial judge stated that he would be seeking to tender the Cambridge Credit contracts "not so much on the basis that they demonstrate the value of the land as at the date of resumption but on two other bases, that is that one really has to go back to early 1973 to find the time when this property was not affected by proposals to resume or establish it as some kind of nature reserve and the fact that those negotiations were successful and resulted in a contract... demonstrate the potential that was perceived at that time for this area as a very desirable area for resort potential and for very substantial resort potential". Furthermore the plaintiffs valuation witness Mr Robertson did not rely upon the Cambridge Credit contracts as a comparable sale. In view of the Valuer General's valuation of the land as at 19 May 1976 at $175,000 this was hardly surprising. The Court is mindful that the appellant has asked it to assess the evidence in the light of arguments different from those put forward by his former 6 UNREPORTED JUDGMENTS legal representatives. Assuming, but not deciding that such a course is open on appeal which is limited to questions of law, we are unable to discern any error of law in the approach of the trial judge. In these circumstances the first ground argued in support of the appeal fails. Dr Woods then submitted that the assessment by the trial judge was vitiated because the comparable sales relied upon by him occurred after the value of coastal land had been effected by the planning "blight" which began in this area in August 1973 when the Coastal Lands Protection Scheme was first publically exhibited. Dr Woods, and Mr McEwen counsel for the respondent traced for the benefit of the Court the history of the extension and development of planning controls over this and other coastal land in the area after August 1973 up to the date of resumption. On the basis of this history Dr Woods submitted that the trial judge's conclusion that: "... at the date of resumption the highest and best use of the subject lands would have been for hobby farms or rural homesites and that the most advantageous way of realising that use was by the sale of the land without sub-division in existing portions...". was based on an error of principle because that highest and best use reflected the "blight" that planning decisions of the State Government had imposed on the land which had drastically reduced its value and in particular had destroyed the development potential it possessed. In reply to questions from the Court Dr Woods acknowledged that the State Government's proposals which were made public in August 1973 and thereafter did not for some years directly affect the appellant's land at all. The effect, if any, of those proposals was indirect at best. In our opinion there is no justification in principle or authority for disregarding the effect on land values of changes in planning legislation or planning policy which do not form part of the resumption process. The assessment of compensation is intended to arrive at "the money equivalent to the loss (the owner) has sustained by deprivation of his land, and that loss, apart from special damage... cannot exceed what... a prudent purchaser would be prepared to give him". Spencer v The Commonwealth (1907) 5 CLR 418 at 441. Moreover in assessing what the prudent purchaser would pay and the willing but not anxious vendor would accept the Court must assume that both parties are "perfectly acquainted with the land and cognizant of all the circumstances which might affect its value, either advantageously or prejudicially." (Above at 441). In the real world knowledge of "all the circumstances which might affect its value" cannot in these days leave out of account the effect of the State's planning legislation on the existing and future uses of the land and the perceptions of the market as to how the responsible authorities are likely to exercise any powers or discretions they may possess under such legislation to grant or withhold development consent, or to alter the zoning of the land. See Royal Sydney Golf Club v FCT (1957) 97 CLR 379 at 384-385. The effect of other restrictions on use or alienation has always been taken into account for valuation purposes. see Corrie v MacDermott (1914) AC 1056 at 1062. The decision in Housing Commission v San Sebastian Pty Limited (1978) 140 CLR 196 stands as authority for the proposition that the effect of zoning restrictions under planning legislation is normally to be taken into account in the assessment of compensation. However the imposition of zoning restrictions for the first time, or an alteration in existing restrictions should be ignored in assessing compensation either: WRUINWRIGHT v THE MINISTER ADMINISTERING THE NATIONAL PARKS AND WILDLIFE ACT 1974 (Priestley, Clarke and Handley JJA) "... Where there is a direct relationship between the restriction on land use and the proposed establishment of the public works" (above at 206). or - "Tf the zoning was done with the intent or in anticipation that the land would be resumed for a purpose such as public reserve or if the zoning was proposed or dictated by the resuming authority..." In our opinion therefore the trial judge was bound to take into account changes in the zoning restrictions and planning policy affecting coastal lands generally in the area and in particular such changes which affected the lands the subject of the comparable sales adopted by him as the basis of his assessment. There is no such general principle as Dr Woods contended for that general planning "blight" resulting from planning restrictions or government policy can be ignored in valuing land for resumption purposes. On the contrary the true rule, both on principle and authority, is that the effect of such restrictions is to be taken into account unless they were imposed as part of the resumption process. The earliest indication to the appellant or the public that the National Parks and Wildlife Service was considering resuming the appellant's land to create or extend a national park occurred in December 1977. It was common ground at the trial that the process of resumption of the appellant's land began at that date. The trial judge correctly directed himself in accordance with the decision in Housing Commission v San Sebastian Pty Limited (above). He held that the change in the zoning of the subject land from Non Urban 1(a) to Open Space Protected Zone (Proposed Future National Park Extension Area) 8(b) which took place on 2 December 1979 should be ignored in the assessment of compensation. He also held that any other steps in the resumption process must be ignored so far as they would have been likely to depreciate the value of the subject land. Thus any depreciatory effect caused by the opposition of the National Parks and Wildlife Service and any other government authority, such as the Department of Environment and Planning, to any development on the subject land or to the up-grading or reconstruction of the Point Plomer road into a major access road also had to be ignored, so far as such opposition was based upon a desire to preserve the subject land in its existing condition pending its acquisition for addition to the National Park. In our opinion the appellant has failed to establish that his Honour erred in law in the manner in which he applied the principles established by Housing Commission v San Sebastian Pty Limited (above). There is no suggestion that any of the comparable sales relied upon by his Honour were affected by the creation or extension of the National Park which came to include the resumed land. Dr Woods also submitted that the trial Judge had ignored the development potential of the land for tourist purposes. However in our opinion his Honour considered and evaluated that potential but in the end, because of other factors, he concluded that the highest and best use of the land was for sub-division for rural homesites. His Honour committed no error of law in reaching this conclusion and it appears to us that it was correct. Dr Woods' final submission was that the trial judge erred in rejecting the appellant's claim for special value. This arose from the appellant's expenditure of $33,000 during 1976 and 1977 on architects' plans and associated advice for the purposes of a proposed tourist development. His Honour referred to the legal principles which govern the allowance of additional compensation for special value. There was no challenge to his Honour's statement of those principles. He concluded that since the highest and best use of the land was for sub-division for 8 UNREPORTED JUDGMENTS rural homesites, the plans in question would have been no use to any such purchaser, and he rejected this claim. In our opinion the appellant has failed to establish that his Honour erred in law in doing so and indeed in our opinion his Honour's conclusion was correct. The appeal must be dismissed with costs. Appeal dismissed with costs. Counsel for the Appellant: DR G WOODS QC and AA HYAM Counsel for the Respondent: PJ McCEWEN Solicitors for the Appellant: LINCOLN SMITH and CO Solicitors for the Respondent: CROWN SOLICITOR - MR CANTRILL