Land and Environment Court of New South Wales CITATION : Simpson & Anor v Bagnall & Ors [2007] NSWLEC 823 FIRST APPLICANT James David Kingsley Simpson SECOND APPLICANT Lynne Elizabeth Simpson FIRST RESPONDENT Stephen David Bagnall SECOND RESPONDENT Loris Lorraine Stevenson PARTIES : THIRD RESPONDENT Scott Clinton Oakley FOURTH RESPONDENT Neville James Stack FIFTH RESPONDENT Shirley Gwendoline Stack SIXTH RESPONDENT Bowraville Local Aboriginal Land Council FILE NUMBER(S) : 30941 of 2004 CORAM: Jagot J KEY ISSUES: Compensation :- compulsory acquisition of land for road - public purpose - market value - enhancement - injurious affection - disturbance - determination of compensation LEGISLATION CITED: Land Acquisition (Just Terms Compensation) Act 1991 Roads Act 1993 Boland v Yates Property Corporation Pty Ltd and Another (1999) 167 ALR 575 ; Brewarrana Pty Ltd v Commissioner of Highways [No 2] (1973) 6 SASR 541; Bronzel v State Planning Authority (1979) 44 LGRA 34; Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited and Others (1947) 74 CLR 358; De Ieso v Commissioner of Highways (1981) 27 SASR 248; Downie v Sorell Council (2005) 141 LGERA 304; CASES CITED: EJ Cooper & Son Pty Limited v Baulkham Hills Shire Council (2003) 131 LGERA 226; Hornsby Shire Council v Roads and Traffic Authority of New South Wales (1998) 100 LGERA 105; Minister Administering the Environmental Planning and Assessment Act 1979 v Bautovich (2005) 142 LGERA 331; Roads and Traffic Authority (NSW) v Muir Properties Pty Ltd (2005) 143 LGERA 192; The Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373; Spencer v The Commonwealth of Australia (1907) 5 CLR 418; William Henry Kater v Electricity Transmission Authority of New South Wales [1996] NSWLEC 15 DATES OF HEARING: 20 September 2007 & 15 November 2007 DATE OF JUDGMENT: 19 December 2007 APPLICANTS Mr G Laughton SC SOLICITORS E C Abernethy & Co LEGAL REPRESENTATIVES: FIRST & SECOND RESPONDENTS Mr Stefan Balafoutis SOLICITORS Graham Barrett & Associates JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Jagot J 19 December 2007 30941 of 2004 JAMES DAVID KINGSLEY SIMPSON First Applicant LYNNE ELIZABETH SIMPSON Second Applicant STEPHEN DAVID BAGNALL First Respondent LORIS LORRAINE STEVENSON Second Respondent JUDGMENT Jagot J: A. Introduction 1 This is an application for the determination of compensation in anticipation of the compulsory acquisition of land from the respondents by the Minister for Lands for the purpose of a public road in accordance with Div 2 of Pt 12 of the Roads Act 1993. Div 2 of Pt 12 provides a scheme for the acquisition of land for the purpose of a public road on private application. Under that scheme compensation is to be determined by agreement or (failing agreement) by the Court before the Minister exercises the power to acquire the land. 2 Compensation is to be determined in accordance with certain provisions of the Land Acquisition (Just Terms Compensation) Act 1991, including Div 4 of Pt 3 of that Act. Those provisions must be read recognising that the acquisition has not yet occurred and the public purpose necessarily concerns the provision of a road. 3 The Minister, the applicant, and any claimant are entitled to be heard at the hearing. A claimant is a person who has claimed an interest in the land to be acquired and is entitled to compensation in accordance with the provisions of Div 2 of Pt 12 of the Roads Act 1993. The applicants are the persons who have applied to the Minister for the acquisition of land by the Minister for the purposes of a public road. The respondents are claimants entitled to compensation under that Act. 4 The respondents, other than the first and second respondents, have agreed with the applicants on the compensation payable to them. The Minister elected not to be heard in the proceedings. Accordingly, the only issue for resolution is the determination of compensation payable to the first and second respondents (together, the respondents). 5 The respondents are the owners of lots 23 and 40 in deposited plan 755547. They claimed compensation of $48,000 ($37,500 for the market value of the land acquired and $10,500 for disturbance representing the cost of new fencing). The applicants submitted that compensation determined in accordance with the statutory requirements should be determined in the sum of $3,523. 6 The issues requiring resolution in the proceedings are as follows: (1) What is the public purpose for which the land is to be acquired? (2) What method or methods should be used to value the acquired land? (3) What is the amount that, having regard to all relevant matters, will justly compensate the respondents for the acquisition of their land? B. Background 7 The matter has a long and largely unhappy history. It is unnecessary to record that history because the function of the Court in these proceedings is limited to determining compensation in accordance with the statutory scheme. 8 Lot 23 is 72.84 hectares. Lot 40 is 40.47 hectares. The respondents' home is located on lot 23. The land is zoned for rural purposes under the Nambucca Local Environmental Plan 1995. The land is located about 10km to the north of Taylors Arm. The nearest major township is Macksville about 40km to the east of the land. The applicants own lots 62 and 63 in the same deposited plan. The applicants' land and respondents' land is to the west of Taylors Arm Creek. There is a bridge crossing the creek. The creek flows intermittently. On some occasions the creek is impassable even with the bridge. On other occasions it is passable in an appropriate vehicle without the bridge. 9 Lots 23 and 40 are subject to an existing Crown road. Survey plans show that the existing Crown road (at least on plan) connects Taylors Arm Road (in the south) with lot 63 in the north. An existing track also traverses lots 23 and 40. The existing track deviates substantially from the Crown road north of the respondents' home on lot 23. The Crown road to the north of the house on lot 23 (if able to be formed) would cross very steep terrain. Access via that route would be impractical. The existing Crown road and track to the south of the house on lot 23 also do not coincide at all points. In the south and on the eastern side of the creek the Crown road and track cross each other at two points only. The Crown road joins the creek some distance south of the track and bridge. Immediately west of the creek the situation is similar. The Crown road commences to the south of the bridge. The bridge connects to the track but not the Crown road. The Crown road and track cross each other at one point only to the immediate west of the creek. Slightly further to the north the Crown road and the track largely coincide (albeit with greater and lesser variances at certain points). Insofar as lot 40 is concerned the Crown road and track largely overlap, with the track located slightly outside the road over the majority of its length. Insofar as lot 23 is concerned, the position up to the house is similar. C. Discussion Public purpose for which land is to be acquired 10 The public purpose for which the land is to be acquired is fundamental to the operation of the relevant provisions of the Land Acquisition (Just Terms Compensation) Act. The market value of the acquired land is to be assessed disregarding 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 (s 56(1)(a)). Just compensation must also be determined, however, having regard to 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 (s 55(f)). 11 Mr Banwell and Mr Magann, valuers, gave evidence. Mr Banwell assessed compensation having regard to both the land to be acquired and opened as a public road, and land within the existing Crown road that will no longer be required as part of the Crown road. He offset the value of one against the other (addressing both lot 23 and lot 40). Mr Magann did not adopt this offsetting approach. He also did not consider lot 40 because his instructions were limited to lot 23. 12 The respondents submitted that Mr Banwell's approach involved an assumption that the respondents would be partly compensated in the form of land (by the closure of that part of the Crown road outside the new alignment). The respondents observed that they had not agreed to accept compensation in the form of land noting that s 64 of the Land Acquisition (Just Terms Compensation) Act required their agreement. Further, that the Minister had not decided to close the redundant parts of the existing Crown road. 13 The different approaches of Mr Banwell and Mr Magann in fact raise an anterior issue, namely, identification of the public purpose for which the land is to be acquired. Determining this factual issue is important to the proper application of s 55(f) and s 56(1)(a) of the Land Acquisition (Just Terms Compensation) Act. 14 The respondents relied on a letter from the Department of Lands to the applicants' solicitor dated 21 March 2007 as identifying the public purpose. This letter said that the Minister's delegate had approved the acquisition of lands identified as being necessary to provide practical and legal access to lot 63. The respondents also noted that the closure of a Crown road involved a separate statutory process (see Div 1 of Pt 4 of the Roads Act 1993), as did any subsequent transfer of the land within the closed road to the respondents (see Div 1 of Pt 10 of the Roads Act). It is also correct that the Minister has not made any decision to close the redundant parts of the existing Crown road (and could not do so unless and until various statutory procedures have been satisfied). 15 Nevertheless, on 5 November 2003 when the Department informed the applicants that the Minister would continue with the road opening application the letter referred to each claimant (including the respondents) and the areas of their land affected by both a road opening and road closing. The letter also noted that in order to facilitate the applicant agreeing compensation with the claimants the Department was "prepared to grant sections of Crown public road proposed to [be] closed as compensation for the land required for road". The letter observed that for the respondents (in contrast to other claimants) "additional compensation may need to be negotiated as the area of land required for road is greater than the area of road proposed to be closed". The Department indicated its willingness to obtain a valuation to assist the applicants in agreeing compensation. 16 The Department retained the State Valuation Office to prepare the valuation. On 31 May 2004 the Department forwarded a copy of the valuation report to the applicants and claimants. This valuation, prepared under instructions from the Minister's Department, recorded those instructions as follows: To determine the current market value of various parcels of land proposed to be closed and opened along the Apple Tree Glen track. The lots are parcels of land that will be transferred to the adjoining four owners. 17 The valuation report assessed the relevant values on this basis. It identified the land to be acquired on each property and opened as a Crown road, and the land to be closed and transferred to the adjoining owner. 18 The lengthy history of the matter has generated substantial correspondence, including letters from the applicants' solicitor to the respondents. In a letter of 25 November 2003, the solicitor described the respondents' position as one of not being "prepared to consent…until the question of compensation for the road opening, closing and widening has been determined". In a letter to other claimants of 23 November 2003 the solicitor described the applicants as having "made a road opening application to the Department of Lands seeking, effectively, to have the track opened as the public road and parts of the Reserve Road closed". 19 There was a hearing about the proposal to open a road by the Local Land Board in October 2005, March 2006 and December 2006. The Local Land Board identified the questions for inquiry, including whether the circumstances warranted the opening of the road shown by the red colour on diagram "P" having regard to the merits of objections. That diagram shows the existing Crown road and the proposed alignment. The areas of the existing Crown road from which the new alignment deviates are shown crosshatched. The inference that should be drawn is clear. The proposal involved the opening and closing of a road. 20 All of the survey plans in evidence prepared as part of the long history of this matter show areas of road to be opened and areas to be closed. One of the respondents, Mr Bagnall, swore an affidavit in which he referred to his understanding that, as part of the proposed acquisition, the existing Crown road to the north of his house (on lot 23) would be closed. 21 I am satisfied that the proposal to carry out the public purpose for which the land is to be acquired is not merely the opening of a new Crown road. The public purpose is to be ascertained having regard to the facts described above. There is an existing Crown road connecting Taylors Arm Road to lot 63. However, the track that people use for access deviates from the alignment of the Crown road. The existing Crown road beyond the house on lot 23 is practically impassable. The public purpose is to provide (by opening, closing and transferring Crown roads as required) practical and legal access from Taylors Arm Road to lot 63. In other words, there is a single and indivisible public purpose incorporating various elements to achieve the object of providing practical and legal access from Taylors Arm Road to lot 63. That purpose includes the closing of the redundant sections of the existing Crown road, the transfer of those sections to adjoining owners, and the acquisition of land to accommodate the new Crown road. The appropriate description of the purpose is thus the realignment of the existing Crown road in a manner that involves all these elements. 22 Accordingly, when determining just compensation, it is the proposal to carry out this public purpose which is to be disregarded insofar as it might increase or decrease the value of the acquired land under s 56(1)(a) of the Land Acquisition (Just Terms Compensation) Act (that is, the market value). However, insofar as this proposal might increase or decrease the value of any other land of the respondents which adjoins or is severed from the acquired land, under s 55(f) of that Act this must be taken into consideration. Valuation methodology 23 Mr Banwell and Mr Magann each prepared a principal valuation report and two joint reports in addition to giving evidence at the hearing. 24 In his principal report, Mr Banwell used the piecemeal method of valuation. The piecemeal method assesses market value of the land taken, and amounts for severance, injurious affection and/or enhancement separately (Rost and Collins, Land Valuation and Compensation in Australia, 3rd ed., 1984 at 496). Mr Banwell considered the "before and after" method inappropriate in this case because the comparison was between land without practical legal access in the before situation and with practical legal access in the after situation. Further, the acquisition involved relatively small areas of large properties. Mr Banwell also took into account the land within the existing Crown road to be closed on the basis that it would be transferred to the adjoining owner. He identified the respondents' land as lots 23 and 40 of 72.84 and 40.47 hectares respectively, and the land to be opened and closed as Crown road by reference to an unregistered plan of subdivision. This shows total areas of road to be opened and closed across the respondents' land of 1.856 hectares (opened) and 1.00 hectares (closed). These areas, by reference to lots 23 and 40, were as follows: Lot 23 Area to be opened 1.815 hectares Area to be closed 0.961 hectares Net loss 0.854 hectares Lot 40 Area to be opened 402.9sqm Area to be closed 392.07sqm Net loss 10.83sqm 25 With respect to lot 23, Mr Banwell observed that where the new road followed the existing track the gains and losses were roughly equal. Where the new road departed from the track (north of the house on lot 23) the new road traversed the elevated frost and flood free ridge to the north (with the majority of the track being formed but in rough condition). By comparison the existing (unformed) Crown road traverses a lightly timbered gully that rises steeply to the northern boundary. This land was inferior to the land affected by the new road. Mr Banwell relied on comparable sales to deduce values of the land to be opened and closed on lot 23 of $3000 and $2000 per hectare respectively. Mr Banwell acknowledged that the opening of the road would result in the possibility of traffic passing the house on lot 23 but noted the existing Crown road traversed lot 23 (albeit over very difficult terrain) and the existing track (albeit rough) near the house. He also considered that lot 23 did not presently enjoy practical legal access given the deviations between the Crown road and the track to the south of lot 23 (particularly in the vicinity of the creek across the land owned by the sixth respondent). Mr Banwell concluded that any compensation for loss of privacy and other impacts associated with the new road would be offset by the realignment providing legal access to lot 23. He calculated total compensation for lot 23 on this basis in the sum of $3,523 (1.815 hectares x $3000 per hectare less 0.961 hectares x $2000 per hectare). 26 With respect to lot 40, Mr Banwell used the figure of $2000 per hectare for land affected by both the proposed opening and closing. He considered that this land would also benefit from the provision of practical legal access from Taylors Arm Road. As there would be no adverse impact on this land and betterment by reason of practical legal access he assessed the compensation payable for lot 40 as nil. 27 In his principal report, Mr Magann only considered lot 23. He noted that because the existing Crown road deviated from the rough track from the house onwards the respondents were the only people who drove near the house at present. He described the use of lot 23 as a small hobby farm and rural retreat. The cleared areas on lot 23 followed the ridgeline. Mr Magann used the "before and after" method and rejected the "piecemeal" method. He considered that the "before and after" method captured the injurious affection to lot 23 from the road now being located and trafficable within 30m of the house and across the frost free arable land on the ridge (in contrast to the impassable existing Crown road across the gully). He characterised the impacts on lot 23 as loss of privacy, noise and dust, making the land materially less attractive as a rural retreat and hobby farm. Mr Magann considered that the new road would need to be fenced due to stock and safety issues creating "farm management difficulties". 28 Based on comparable sales Mr Magann assessed (in the before situation) a land value of $300,000 (or $4,118 per hectare). He valued the improvements in the sum of $75,000. Hence, the total before value was $375,000. In the after situation, Mr Magann allowed a deduction of 10% of the total before value, having regard to the matters described above (that is, $37,500 or an after value of $337,500). Mr Magann also made an allowance for the cost of fencing as a disturbance item in the amount of $4,000. Accordingly, he assessed total compensation in the sum of $41,500. 29 The observations of Wells J in Bronzel v State Planning Authority (1979) 44 LGRA 34 at 38 are apt in the present case. Wells J observed that: …this Court should be slow to reject any method that, in expert hands, is capable of yielding a result within bounds that are not unreasonable. The limitations of every method must, of course, always be kept clearly in mind. I am of the opinion that the approach likely to result in the most direct and reliable resolution of the outstanding differences between the valuations is to consider the particular features of each valuation that are capable of yielding to adverse criticism. 30 Pearlman J, in William Henry Kater v Electricity Transmission Authority of New South Wales [1996] NSWLEC 15, made similar observations when dealing with a dispute about valuation methodology. 31 I propose to adopt the same course in this case and consider the method used by both of the valuers, keeping in mind the limitations on each and the "particular features of each valuation that are capable of yielding to adverse criticism". Further evidence 32 One of the applicants, Mr Simpson, gave evidence. The applicants use their land for rearing cattle (about 80 head) and growing macadamia trees (about 2,500 trees). If and when the realigned Crown road is opened, he would use the road for access (including transporting macadamia nuts and cattle as and when required). 33 One of the respondents, Mr Bagnall, gave evidence. He has erected a fence to the south of his home to remove the risk of his cattle (about 45 head) being hit by cars at night. The cattle usually sleep on the ridge area. The opening of the new part of the Crown road to the north of his house would be through the primary arable frost free area on his property. He had planned to use that area to grow mangoes but would no longer be able to do so once the new part of the road was opened. He would also need to fence the new part of the road to prevent cattle straying onto the road. He obtained two quotes for this purpose ($10,500 and $11,800 respectively). He also believed that the opening of the new part of the road so close to his house would cause dust, noise, loss of privacy, and loss of isolation and serenity. He obtained a quote for sealing the road near the house but that element was not pressed as part of the respondents' claim for compensation. There is a fire track to the west providing alternative access from Taylors Arm Road to his property through forestry roads. There were no signs preventing use of this road but he generally used the Crown road to the south. In seven years, no one had prevented him from using the Crown road. 34 Mr Banwell and Mr Magann relied on various comparable sales. They both considered the respondents' property to be a rural retreat/hobby farm, with insufficient arable areas for any viable agricultural operation (growing mangoes or otherwise). 35 Both valuers considered 30 Apple Tree Glen a comparable sale. 30 Apple Tree Glen (lot 64 of 41.34 hectares) sold in April 2006 for $360,000. It is also dependent on the existing Crown road for access to Taylors Arm Road. This sale included improvements. Mr Banwell considered it a superior sale to the respondents' property, with better grazing land and improvements. Mr Banwell also spoke to the agent for this sale who told him that the purchasers expected that the road would be realigned to provide lawful access. Mr Magann did not consider the sale superior. He described lot 23 as larger, more elevated, and has superior views to the sale. He allowed $120,000 for improvements, giving a land value of $240,000 (or $5,805 per hectare). Mr Magann had not been able to speak to the purchasers or their agent. 36 Both valuers considered Burrapine Lodge (known as 10 Sheet-O-Bark Road) a comparable sale. This sale consists of 118.90 hectares, with 22 hectares of prime alluvial river flats, 56 hectares of moderately sloping pasture improved grazing, and 40 hectares of steep timbered country. It sold in March 2006 for $580,000. The sale included substantial improvements. Mr Banwell described this sale as vastly superior land to lots 23 and 40. Mr Banwell and Mr Magann allowed $250,000 for the improvements, giving a land value of $330,000 (or $2,775 per hectare). Mr Magann also considered this sale superior to the respondents' property but having a different character (being a farming operation rather than a rural retreat). 37 Lot 49 deposited plan 755547 (70 hectares) sold in April 2005 for $80,000. Mr Banwell described this land as inferior and as having difficult access across the river. Mr Magann did not rely on this sale. 38 3901 Taylors Arm Road (94.89 hectares) sold in August 2005 for $595,000. Mr Magann allowed $250,000 for improvements, giving a land value of $395,000 or $4,162 per hectare (although in fact the correct calculation would be $345,000 and $3635.79 per hectare). He described the sale as superior land to the respondents' property with a better house, more useable land areas, and better access. Mr Banwell did not rely on this sale. 39 3850 Taylors Arm Road (53.59 hectares) sold in January 2005 for $450,000. Mr Magann allowed $200,000 for improvements, giving a land value of $250,000 (or $4,665 per hectare). He considered this sale slightly superior to the respondents' property. Mr Banwell did not rely on this sale. 40 Lowes Creek, Taylors Arm Road (136.7 hectares) sold in June 2005 for $255,000. Mr Magann described this sale as a rough rural retreat with no improvements. He considered the sale slightly inferior to the respondents' land (excluding the improvements) showing a value of $1,865 per hectare. Mr Banwell did not rely on this sale. 41 90 Apple Tree Glen (22.28 hectares) sold in September 2007 for $142,500. The sale included rudimentary improvements for which Mr Magann allowed $2,500. This gives a land value of $140,000 (or $6,283 per hectare). Mr Magan considered the sale inferior to the respondents' property. Mr Banwell did not rely on this sale. 42 Mr Banwell observed that Mr Magann's value of $4,118 per hectare for the respondents' property was an overall value including improvements (such as a building entitlement). The land affected by the road opening and closing was small in area and had no such entitlements. Accordingly, Mr Banwell said he had calculated overall site values and then deducted the value of a notional building entitlement of two hectares (the value of which he estimated as $75,000). He then divided the area of the balance of the land by the adjusted sale price to reach his rates of $3000 per hectare for the land to be opened as road and $2000 per hectare for the land to be closed (at least on lot 23, as the latter was inferior land). Mr Magann considered this unreliable because the figure of $75,000 was hypothetical, whereas he had assessed the actual improvements in each case to derive a land value (as, indeed, Mr Banwell appears to have done for the sale of Burrapine Lodge). 43 Mr Banwell explained that, in his view, lots 23 and 40 obtained a substantial benefit from the realignment of the Crown road to the south, particularly over the land of the sixth respondents (where the deviation is marked). The realignment gave both lots lawful access they did not presently enjoy. The sixth respondent, for example, could deny access across its land at any time. The fact that the respondents had not been denied access was not determinative. Neighbours change and so do their views. His opinions had regard to the risk created by the illegal access. He accepted that the sale of 30 Apple Tree Glen showed no decrease in value on account of the access issues. He also accepted that the sequence of events included the Minister having changed position on the issue of the road opening, culminating in the referral to the Local Land Board for inquiry. Further, that the Minister's decision to proceed with the acquisitions for the road opening occurred in March 2007 so that a well-informed purchaser of 30 Apple Tree Glen in April 2006 would not have assumed the access would be regularised. Nevertheless, he had spoken to the agent and was told the purchasers of 30 Apple Tree Glen believed the road would be opened when they purchased. Mr Banwell agreed that the sale of 90 Apple Tree Glen in September 2007 showed no decrease in value even though the Minister may change the decision made in March 2007 to realign the road. 44 Mr Banwell considered that the betterment materially exceeded the adverse impacts identified by Mr Bagnall and Mr Magann. Hence, although Mr Banwell was prepared to acknowledge those impacts and that they might yield a 10% reduction in value (consistent with Mr Magann's opinion), when considered with the substantial benefit from the provision of legal access, Mr Banwell assessed compensation as indicated above. He said his figure of $3,523 should be understood as nominal compensation to reflect the fact that materially more land on lot 23 was being opened as road than closed. Mr Banwell identified additional sales (at Southgate and Pillar Valley) to assist in isolating the difference between properties with and without legal access. He did not suggest these sales were comparable to lots 23 and 40. Rather, they were comparable with each other, with one lot having legal access and the other not. Mr Banwell acknowledged that it was difficult to put a monetary figure on the difference between properties having and not having legal access but considered these sales supported a substantial difference of up to 30% or 40%. 45 Mr Magann was not aware of any issue with the legality of access to lot 23 when he wrote his principal report. When he became aware of that issue, he concluded that any betterment to lot 23 caused by the realignment of the Crown road to the south was so marginal that it was not reflected in any difference in value. He considered this would be the same for lot 40, noting that his instructions had been limited to lot 23. Mr Magann thought the illegal access to the south was a low risk for the respondents and capable of resolution without great cost in any event. He did not think the sales evidence supported any different conclusion noting, in particular, that the sale of 30 Apple Tree Glen occurred when the Local Land Board was still considering the issue of the road. This suggested the purchasers could not have been confident about the issue being resolved but the sale shows no decrease in value on that account. Mr Magann did not accept that Mr Banwell's analysis of the sales in Southgate and Pillar Valley was sufficiently reliable to show any difference in value between properties with legal access and those without. The features of the properties analysed were different from each other and the respondents' property. In particular, the properties without access were extremely isolated whereas the respondents' property was not (irrespective of any access issues). In Mr Magann's view the adverse effects of the road opening on lot 23 outweighed any possible benefits, having regard to the loss of the "end of the road" position presently enjoyed and the associated reduction of value for a rural retreat property. 46 Mr Magann acknowledged that fencing was a management decision for the respondents. Mr Banwell agreed with Mr Magann's estimate of $4000 if fencing costs were to be allowed but accepted that costs could vary depending on suppliers in the locality. Further submissions 47 The applicants' submissions emphasised the following: (1) Mr Magann was unaware of the issues with access when he prepared his principal report. When he became aware of those issues he made no adjustment to the conclusions he originally reached. This was untenable. The provision of practical and legal access would be a substantial benefit to both lots 23 and 40. The survey material disclosed that lots 23 and 40 could be denied access to Taylors Arm Road at any time, particularly given the significant deviation between the existing Crown road and the track at the river crossing. (2) The evidence showed that properties in the locality and along the road changed hands relatively frequently. It would only take one person along the existing road south of lots 23 and 40 to make that land landlocked. The respondents did not use the alternative access. It was not a true alternative because they had no rights to use the forestry roads. (3) The statutory provisions require compensation to be assessed as one figure on a once and for all basis. Hence, the betterment to lots 23 and 40 had to be taken into account. The betterment more than offset any detriment. (4) Mr Magann's before and after assessment did not compare like with like. He had not acknowledged (or been aware of) the illegal access in the before situation compared to the legal access in the after situation. He had also not taken into account the fact that people were entitled to travel along the existing Crown road as far as they practically could in any event (that is, at least up to the house on lot 23). (5) The evidence of adverse impacts was slim and unreliable. The level of impact would depend on the degree of use about which there was little evidence but for the applicants themselves. (6) Insofar as the mango trees were concerned, the respondents were not using their land for that purpose and the valuers did not consider the use viable. Section 61 of the Land Acquisition (Just Terms Compensation) Act would also be relevant. Under s 61 a claimant may not be compensated for any financial advantage that would necessarily have been forgone or any financial loss that would necessarily have been incurred in realising the potential of the land if the market value of the land is assessed on the basis that the land had potential to be used for a purpose other than that for which it is currently used. (7) Insofar as the fencing cost was concerned, the respondents (if concerned) could keep the cattle within the existing fenced area (as they would have to do to use the ridge for growing mangoes). The sixth respondent ran cattle and the road through that property was not fenced. The quotes the respondents obtained also far exceeded what Mr Magann (and Mr Banwell) considered reasonable. 48 The respondents submitted as follows: (1) Consistent with principle, any genuine doubt must be resolved in the respondents' favour (which the applicants accepted). (2) The onus of proving enhancement or betterment lies on the applicants. (3) Speculation about enhancement or betterment was unnecessary. The sale of 30 Apple Tree Glen in particular showed no decrease in value due to concerns about illegal access (despite the uncertainty arising from the changes in position by the Minister over the years and the incomplete inquiry by the Local Land Board at the time of the sale). Moreover, the respondents had never been denied access to the south in seven years. A purchaser would take that fact into account and conclude the risk was low (as Mr Bagnall had in fact done) and the situation could be readily rectified if necessary. Hence, the market evidence supported Mr Magann's approach. (4) Mr Banwell did not dispute Mr Magann's assessment of a 10% reduction for injurious affection. He said that the provision of legal access offset this but the evidence did not support his analysis. The property was a rural retreat with an "end of road" location that would be lost. The impacts identified by Mr Bagnall and Mr Magann were real. The applicants would obtain a substantial advantage by the road being opened but the respondents would be subject to a substantial disadvantage. (5) The respondents' land was used for grazing cattle. Mr Bagnall had fenced that part of his land traversed by the existing track. The decision to fence the new area was reasonable and recoverable either by reduced market value or as disturbance. He had obtained independent quotes for the cost and the lower quote ($10,500) should be accepted. 49 The parties agreed that compensation had to be determined at the date of judgment, as the acquisition has not yet taken place. This is consistent with the provisions of the Roads Act. Under s 198 of that Act, any agreement or determination with respect to compensation lapses if the acquisition does not occur within that period. The parties also agreed that a view was unnecessary. Just compensation 50 It will be apparent from the summary of the competing submissions that there was little dispute about the principles that should be applied in determining compensation. Nevertheless, the following propositions must be kept in mind: (1) As the parties agreed, any genuine doubt as to value ought to be "resolved in favour of a more liberal estimate" ( Boland v Yates Property Corporation Pty Ltd and Another (1999) 167 ALR 575 at [356], citing Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited and Others (1947) 74 CLR 358 at 373 – 374). (2) Section 54 of the Land Acquisition (Just Terms Compensation) Act entitles a disposed owner to compensation in "such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land". Section 55 prescribes that regard must be had to each of the matters therein listed, including not only the market value of the acquired land and disturbance but also any decrease or increase in the value of any other land of the owner 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. (3) The potential benefits of the carrying out of the public purpose to other people (such as the applicants in this case) are immaterial. Compensation to a dispossessed owner under the Land Acquisition (Just Terms Compensation) Act is not measured by the enhanced value of land vested in any other person. Accordingly, the fact that the applicants will obtain a substantial benefit from the realignment of the Crown road cannot inform the assessment of the respondents' entitlement to compensation. (4) Various circumstances potentially affect the value of land. The view of the hypothetical buyer and seller about those circumstances and their effect on the value of the land is relevant, not the circumstances per se ( EJ Cooper & Son Pty Limited v Baulkham Hills Shire Coun cil (2003) 131 LGERA 226 at [9], referred to as "the correct approach" in Minister Administering the Environmental Planning and Assessment Act 1979 v Bautovich (2005) 142 LGERA 331 at [20] per Handley JA, Tobias JA and Brownie AJA agreeing. See also De Ieso v Commissioner of Highways (1981) 27 SASR 248 at 252). (5) The Court is not bound to accept the opinion of one valuer over another but must do the best it can on the evidence ( Hornsby Shire Council v Roads and Traffic Authority of New South Wales (1998) 100 LGERA 105 at 108, Roads and Traffic Authority (NSW) v Muir Properties Pty Ltd (2005) 143 LGERA 192 at [89], Brewarrana Pty Ltd v Commissioner of Highways [No 2] (1973) 6 SASR 541 at 544-545 and 578, and Downie v Sorell Council (2005) 141 LGERA 304 at [31]). 51 Despite some suggestions to the contrary, I am satisfied that both Mr Banwell and Mr Magann are experienced valuers who gave careful evidence reflecting their opinions. Nevertheless, there are "particular features of each valuation that are capable of yielding to adverse criticism" (Bronzel at 38). 52 Mr Banwell disclosed his complete method of valuation for the first time when giving evidence. He said this method included making a notional allowance of $75,000 for a building entitlement on a parcel of two hectares. Mr Banwell said he deducted $75,000 from each sale price and two hectares from each sale area before comparing the sale to lots 23 and 40. However, for the sale of Burrapine Lodge Mr Banwell appeared to have adopted a more conventional approach of deducting the estimated value of improvements ($250,000) to assess land value. As Mr Magann said the improvements on the sale properties varied in character and value considerably. Mr Magann adopted an orthodox approach to improvements. He estimated their value as part of the sale price and then deducted the value of the improvements for each sale before comparing the sale to lot 23 (the only land Mr Magann was instructed to consider). 53 Mr Magann, however, only considered lot 23 (despite the fact that the respondents own lot 40 and the proposed road opening and closing affects both lots). Lots 23 and 40 adjoin each other and are held and occupied as a single entity by the respondents. Mr Banwell (who considered both lots) treated each lot separately. When assessing compensation in accordance with Div 4 of Pt 3 of the Land Acquisition (Just Terms Compensation) Act (particularly given the terms of s 55(f)) both lots, in my view, have to be considered. 54 Mr Banwell implicitly recognised that the public purpose involved the realignment of the road so that some areas would be acquired and opened for the road and other areas of existing road would be redundant and thus closed and transferred to the adjoining owner. Under the Land Acquisition (Just Terms Compensation) Act the effect of this public purpose on value is to be disregarded when assessing the market value of the acquired land (s 56(1)(a)). However, it must be taken into account insofar as it increases or decreases the value of any adjoining land of the dispossessed owner (s 55(f)). The residue of lots 23 and 40 are adjoining land for the purpose of this latter provision. Mr Magann, however, only considered part of the public purpose (namely, the acquisition of land to open the new parts of the road) and thus adopted an incomplete approach to the application of s 55(f). 55 When he prepared his original report Mr Magann was unaware of any issue with respect to access from Taylors Arm Road to the respondents' property. Yet inspection of the survey plans discloses that the track used by the respondents for access deviates from the existing Crown road at a number of points, with substantial deviations near the creek and across the land of the sixth respondent. Accordingly, Mr Magann assumed that the lawfulness of the access to lot 23 would be the same before and after acquisition when he concluded that the acquisition of land to open the new parts of the road (which is only one part of the relevant public purpose) decreased the value of the residue of lot 23. That assumption was incorrect. Other than informal access through the forestry road to the west (which the respondents do not routinely use and in respect of which they have no apparent enforceable right of access) the existing access to the south of the respondents' property is across privately owned land. It is access at the pleasure of the owners of that privately owned land. After the public purpose has been implemented (that is, the realignment of the Crown road along the whole of its length from Taylors Arm Road to lot 63) the whole of the respondents' property (lots 23 and 40) will enjoy lawful access in perpetuity that cannot be denied by any other landowner. This is a fundamental difference before and after the carrying out of the public purpose that was recognised by Mr Banwell from the outset, but not Mr Magann. 56 After he became aware of the access issue Mr Magann concluded that the provision of legal access would result in enhancement or betterment of such insignificance that no adjustment to value could or should be made. He relied on the sales of 30 and 90 Appletree Glen to support this conclusion. The valuers agreed that neither sale showed any decrease in value by reason of access issues. However, Mr Banwell had spoken to the agent who sold 30 Apple Tree Glen and been told that the purchasers believed the issue of access would be resolved by realignment of the road. Mr Magann had tried to speak to the purchasers but been unsuccessful. 57 The respondents' submissions about these sales providing objective evidence that illegal access did not decrease the value of sales in this area (hence, by implication, the provision of legal access would not enhance their value) were not persuasive. It is true that the Minister had referred the issue of access to the Local Land Board in or about 2005. The hearing before that Board had not been completed at the time of the sale of 30 Apple Tree Glen (in April 2006). However, as the reasons of the Board disclose, the Minister's terms of reference focused on the "merits of the objections". Apart from the respondents (in their capacity as the owners of lots 23 and 40) there were no objections. Further, the Minister's Department had not accepted the respondents' objections as early as 1997. In these circumstances I do not see any necessary inconsistency between the purchasers of 30 Apple Tree Glen having been both well informed and confident that the road realignment would be implemented. Moreover, Mr Banwell's unchallenged evidence (based on discussions with the agent) was that the purchasers believed the road realignment would take place. There is no reason to doubt the accuracy of that information. 58 90 Apple Tree Glen sold in September 2007, after the Minister had decided to proceed with the acquisitions to implement the public purpose. Although the Minister is not bound to proceed, the history of the matter indicates that the purchasers of 90 Apple Tree Glen (who were local people and also well informed about the access issues) would have been very likely to assume that the road realignment would take place. 59 For these reasons, I do not accept the sale of 30 and 90 Apple Tree Glen support Mr Magann's conclusion that the provision of legal access to lots 23 and 40 would be enhancement or betterment of such insignificance as not to result in any increase in value. I find that conclusion untenable given the nature of the risk to the owners of lots 23 and 40 inherent in the present position with respect to access to the south. It is an obvious risk that the market would recognise. 60 Mr Magann had no difficulty in assessing injurious affection in the order of 10% for noise, dust and loss of privacy impacts based on his expertise and experience without being able to point to any specific sale that would support that estimate. Yet he did not accept the validity of any equivalent attempt to estimate the enhancement of value consequent upon changing the access to the respondents' property from an illegal arrangement dependent on the continued goodwill of other landowners to legal access available in perpetuity. His reasons for not doing so were unconvincing. First, and as Mr Banwell recognised, the fact that the respondents have not been denied access for seven yeas does not alter the essential difference between a property with legal access and one without. The risks associated with the illegal access in a context where ownership of other properties may change over time are obvious. In this case, ownership of many of the affected properties has changed. Secondly, the idea that illegal access can readily be rectified without too much cost and time is unrealistic. It fails to appreciate the risks inherent in proprietary relationships. Thirdly, the lack of comparable sales to isolate the effects of illegal access on value is neither surprising nor any bar to the valuer providing useful opinions on the issue. As the Privy Council observed in The Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373 at 391: It is quite true that in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others. Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had his own set of conjectures, of more or less weight according to his experience and personal sagacity. In such an inquiry as the present, relating to subjects abounding with uncertainties and on which there is little experience, there is more than ordinary room for such guesswork; and it would be very unfair to require an exact exposition of reasons for the conclusions arrived at. 61 Mr Banwell applied his experience and personal sagacity to conclude that the realignment of the road and consequential provisions of legal access to lots 23 and 40 would involve significant enhancement of the value of each lot, more than sufficient to offset any injurious affection to lot 23 (although he allowed $3,523 in compensation for the difference in areas used for road on that lot by way of nominal compensation). He did so in circumstances where he was aware of the issue from the outset. In the joint report he attempted to identify sales disclosing the difference between properties with and without legal access. Although some of the criticisms of that attempt were sound, they did not undermine his primary opinion that the realignment of the road would provide legal access to the south (which lots 23 and 40 did not presently enjoy). The criticisms also did not undermine his reasoning process supporting the conclusion that the provision of legal access would be a very significant benefit to lots 23 and 30 reflected in increased value of the respondents' retained land. 62 Having regard to Mr Banwell's evidence, I am satisfied that the carrying out of the road realignment will provide a significant benefit to the respondents' retained land on lots 23 and 40 that will increase the value of both lots. Under s 55(f) of the Land Acquisition (Just Terms Compensation) Act that increase in value must be taken into account. I am also satisfied that the opening of the road closer to the house on lot 23 and the fact that the new road will be trafficable (in contrast to the existing road that is further away from the house and is not trafficable to the north) will decrease the value of lot 23 for the reasons given by Mr Magann (which Mr Banwell did not dispute). That decrease in value must also be taken into account under s 55(f). Consistent with Mr Banwell's evidence, I am satisfied that (as a minimum and resolving all doubts in the respondents' favour) the increase in value will fully offset the decrease. 63 I recognise that the respondents' perception is that the opening of the road will have significant adverse impacts on their enjoyment of lot 23 and significant advantages for the applicants. Three observations need to be made in this regard. First, and as noted, the statutory provisions concerning the determination of compensation do not focus on any advantage to a person in the position of the applicants. Secondly, the respondents' land has always been subject to a Crown road extending both south and north of the house on lot 23. Although the road was not trafficable to the north of the house, any person had the right to pass and repass as often as they wanted and as far as they wished or could along the existing road. Thirdly, compensation must be assessed in accordance with all of the applicable statutory provisions (including s 55(f)). The requirement to consider increases or decreases in value carries the idea of a sale as posited in Spencer's case (Spencer v The Commonwealth of Australia (1907) 5 CLR 418). In this context it would be both incorrect and incomplete for the respondents to perceive that the realignment of the road will involve adverse impacts on lot 23 by reason of dust, noise and loss of privacy without providing any benefits (other than to the applicants). The realignment of the road will significantly enhance the value of all of the respondents' retained land (lots 23 and 40). That part of the purpose providing for closure and transfer of redundant parts of the existing road to adjoining owners will also enhance the value of the respondents' retained land (albeit recognising, as Mr Banwell said, that the land to be acquired is more valuable than the land no longer required for road purposes). 64 Consideration must also be given to the competing land values deduced by each valuer. Having regard to the matters set out above, it is apparent that Mr Magann's value of $4,118 per hectare materially exceeds the value achieved by the sale of Burrapine Lodge (where both valuers allowed for improvements in the amount of $250,000 and agreed the sale was superior). Mr Magann's description of the sale as involving a property of a different character does not alter the fact that it is superior in terms of arable land, quality of land, agricultural potential, and range of available uses (including short stay farm holidays). Moreover, Mr Magann analysed the sales on the assumption that lot 23 enjoyed an "end of road" location. In a practical sense that is correct. But Mr Magann did not sufficiently take into account the existence of the Crown road traversing the whole of lot 23 and the fact that any person could pass and repass along that road as far as they could and as often as they wished. Further, Mr Magann's land value was based mainly on his sales two and three. Both of these sales are on Taylors Arm Road and thus have none of the access issues associated with the respondents' property. Both also have substantial improvements of a far greater value than the improvements on the respondents' property. The improvements allowed by Mr Magann on these sales involved allowances of 42% and 44% of the total value respectively. The sales of 30 and 90 Apple Tree Glen, for the reasons given above, were on the basis that the access arrangements would be regularised. 65 Having regard to all of the comparable sales and the factors above, Mr Magann's land value of $4,118 per hectare was excessive. Despite my concern about the method first disclosed by Mr Banwell during the hearing, his land values of $3000 per hectare for the land to be opened and $2000 for the land to be closed on lot 23 (and $2000 per hectare for all affected land on lot 40) better accords with the sales evidence. In particular, those figures better reflect: - (i) comparison with the sale of Burrapine Lodge where the valuers agreed the value of improvements and the overall superiority of that property (which is obvious from their respective descriptions), (ii) the circumstances of the sales of 30 and 90 Apple Tree Glen, and (iii) comparison with the sales on Taylors Arm Road relied on by Mr Magann. Hence, Mr Banwell's values should be applied. 66 The respondents' claim for the costs of fencing was properly brought under s 55(d) (any loss attributable to disturbance) and s 59(f) (any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition). The claim could not be sustained under s 55(f) because the cost of new fencing is unlikely to have a direct relationship with the value of the respondents' retained land. In terms of s 59(f), the respondents keep cattle on their property (including the acquired land). That is an actual use of land. The acquisition will have the direct and natural consequence of enabling vehicles to pass and repass north along the ridge in circumstances where that cannot presently occur. I accept that the fencing of the new part of the road is essentially a management decision for the respondents, and some other land traversed by road in the area (such as the land of the sixth respondent) is used to maintain cattle and is not fenced. Those facts do not necessarily take the claim outside the scope of s 59(f). Nevertheless, any claim must be for financial costs that might reasonably be incurred. The quotes obtained by Mr Bagnall far exceed the amount that both Mr Magann and Mr Banwell considered reasonable, having regard to their experience of the costs of rural fencing. They agreed that $4000 represented a reasonable sum. I am not satisfied that the quotes provided by Mr Bagnall represent a reasonable cost that might be incurred within the meaning of s 59(f). Resolving all doubts in the respondents' favour, I consider an allowance on this account should not exceed the $4000 estimated by Mr Magann and Mr Banwell. 67 The issue about the capacity to use the ridge to grow mangoes is readily resolved on the evidence. The respondents do not use that area to grow mangoes presently. The greater potential of that land (compared to the land no longer required for road purposes) should be taken into account in assessing compensation (as Mr Banwell in fact has done). However, there is no additional head of compensation available for the respondents' perceived loss of opportunity. The different use of this area cannot simply be assumed. If it were assumed then s 61 would operate with the consequence that no allowance could be made for the cost of fencing (because fencing for cattle is inconsistent with an assumed use for growing mangoes). In any event, neither valuer considered that use a viable commercial proposition. 68 Just compensation in accordance with the Land Acquisition (Just Terms Compensation) Act must be determined having regard to these conclusions. Against these conclusions application of the before and after or piecemeal method is reduced to a matter of mere presentation. Either way an allowance must be made for the value of the land opened and closed. I accept Mr Banwell's values for this purpose. The competing increase and decrease in the value of the retained land by reason of the impacts identified by Mr Magann and the benefits identified by Mr Banwell must be taken into account. I accept Mr Banwell's evidence that the latter offsets the former but that compensation for the materially greater land area to be opened on lot 23 compared to that to be closed should still be allowed, having regard to the requirement to resolve all genuine doubts in favour of the more liberal estimate. A reasonable cost for fencing should be allowed as an item of disturbance in the amount of $4,000. Accordingly, just compensation assessed in accordance with the applicable statutory requirements is $7,523 ($3,523 as assessed by Mr Banwell and $4000 for fencing as loss attributable to disturbance). 69 I therefore determine as follows: Determine the first and second respondents' entitlement to compensation in accordance with Division 2 of Part 12 of the Roads Act 1993 with respect to the prospective acquisition under that Act of part of lots 23 and 40 in deposited plan 755547 in the amount of $7,523. 70 If the parties are not able to file with my Associate a draft consent order with respect to costs within 14 days, then any party seeking such an order must seek to have the matter listed for mention before the Duty Judge in the week of 14 January 2008 for the purpose of directions for evidence (if necessary) and allocation of a hearing date on costs. **************************** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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