Land and Environment Court New South Wales Medium Neutral Citation: McGeary v Richmond Valley Council [2012] NSWLEC 204 Hearing dates: 3 September 2012 Decision date: 06 September 2012 Jurisdiction: Class 3 Before: Biscoe J Decision: Compensation determined in the sum of $57,657. Costs are reserved. Catchwords: COMPULSORY ACQUISITION - disputed claim for decrease in value of retained land - disputed claim for disturbance loss being cost of a quantity surveyor's report regarding replacement cost of water tank on acquired land where the applicants abandoned a claim for that replacement cost. Legislation Cited: Land Acquisition (Just Terms Compensation) Act 1991 ss 55, 56 Category: Principal judgment Parties: William Owen McGeary (First Applicant) Marie Frances McGeary (Second Applicant) Richmond Valley Council (Respondent) Representation: COUNSEL: Mr M Hadley (Applicants) Ms A Pearman (Respondent) SOLICITORS: McInnes Legal (Applicant) Hannigans (Respondent) File Number(s): 31168/11 Judgment 1This is a relatively small claim for compensation for the compulsory acquisition of land under the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act). 2The claim has three components. First, the market value of the acquired land: s 55(a). Secondly, disturbance losses: s 55(d). Thirdly, decrease in the value of the retained land: s 55(f). Prior to the hearing the parties agreed that the market value of the acquired land at the acquisition date was $25,000 and the respondent agreed $8,657 of the applicants' claimed disturbance losses. In the result, only two items remain in dispute and their resolution lies within a narrow factual compass: (a)a claim in the sum of $24,000 for decrease in the value of the retained land; and (b)a disturbance loss item in the sum of $4,950. The Just Terms Act 3The Just Terms Act provides: 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division): (a) the market value of the land on the date of its acquisition, ... (d) any loss attributable to disturbance, ... (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. 56 Market value (1) In this Act: market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid): (a) 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 4The acquired land is Lot 21 DP 1159679, previously part of Lot 2 DP 1096808, at Fischer Street, Broadwater, NSW in the Richmond Valley Council area. 5The acquired land has an area of about 600 square metres and is located at the northern end of the parent land. The parent land had a far larger area of about 24 hectares, upon which operates a large hard rock quarry. The quarry is towards the opposite side of the parent land from the acquired land. The parent land lies between Fischer Street to the north and Broadwater Quarry Road to the south. Access to the quarry is from Broadwater Quarry Road. 6The acquired land is on a ridge, half way up the northern side of a hill. The top of the hill is about 48 metres above the surrounding plain. The retained land includes the summit and some land on all other sides. 7There is another quarry to the north of the parent land but the evidence does not indicate that it is visible from the latter. 8The subject land is near the village of Broadwater, which is located on the Richmond River on the far north coast of NSW. Broadwater has a sugar mill close to the river, from which, when operating, there is sometimes a treacly aroma in the vicinity. The mill is about 600 metres west-southwest of the acquired land. Many of Broadwater's houses are closer to the mill. There are tourist facilities in Broadwater. Background facts 9The background facts occurred in an unusual sequence: (a)In 1997 the respondent, Richmond Valley Council decided to acquire the area which became the acquired land for construction of a concrete water tank (a reservoir). At the time the applicants, William Owen McGeary and Marie Frances McGeary, did not own the parent land. (b)In 1999 the Council constructed and commissioned the large cylindrical concrete water tank and associated pipes. The then owner allowed the Council to fence off and secure exclusive occupancy of the area which later became the acquired land. (c)On 27 April 2005 the applicants purchased the parent land. The Council maintained exclusive occupancy of the future acquired land. (d)On 27 July 2011 the Council compulsorily acquired the acquired land. Decrease in value of retained land: s 55(f) 10A s 55(f) claim for decrease in the value of retained land is still often called "injurious affection", following pre-Just Terms Act jargon. However, that expression does not appear in the Just Terms Act. 11The applicants' s 55(f) claim is based on the propositions that the best and likely location of a potential house on the retained land would be near the water tank where the bulk and height of the water tank would detrimentally affect the otherwise attractive views available in that location. It is reasonable, in my view, to envisage a modest house on the retained land which would be of particular advantage to a manager or caretaker of the quarry on the retained land. 12The location of such a potential house is critical to determination of the s 55(f) issue. The parties' valuers were Mr Andrew Hoolihan for the applicants and Mr Owen Allsopp for the Council. They agreed, and I accept, that development consent for a house on the retained land could be obtained. However, they differed as to the likely location of a house on the retained land. Therein lies the nub of the s 55(f) issue. Mr Hoolihan considered that the house would be near, and best located just above and facing, the water tank because of the good, expansive views from that elevated location, which is away from the quarry, and ease of access. In that location, the views from the house would be substantially impaired by the water tank. Mr Hoolihan assessed the consequential diminution in value at 5 per cent of the value of the retained land. 13The valuers agreed, and I accept, that the value of the retained land, before determination of the s 55(f) claim, immediately following the acquisition was $478,400: 5 per cent of that sum is $23,920. I accept that if Mr Hoolihan is correct in his assessment of the likely location of the house, then that sum reasonably represents the decrease in value of the retained land under s 55(f). 14However, Mr Allsopp disagreed that that would be the likely location of the house. Although he agreed that that location had the best views, he considered that a house would be located out of sight of the water tank on the southern side of the retained land between the quarry and Broadwater Quarry Road, where there is an access road. Alternatively, if the house were not for a manager or caretaker of the quarry, Mr Allsopp considered that the house would be located in a cleared meadow in the northwestern corner of the retained land some distance (perhaps 150 metres) down Fischer Street from the acquired land, where the water tank would be barely visible in the distance. In either of those locations, he considered, and I accept, that there would be no diminution in value of the retained land under s 55(f). 15Mr Allsopp advanced three reasons why a manager's or caretaker's house would be located where he proposed and not where Mr Hoolihan proposed. First, Mr Allsopp considered that the gradient of Fischer Street leading to Mr Hoolihan's location is too steep for two-wheel drive vehicles. Secondly, he considered that such a house would most likely be located on the southern side of the quarry in order to provide security for the quarry at night and on weekends when the quarry does not operate to deter entry by, for example, vandals and youths on motorbikes. Thirdly, he suggested that the blight of a telecommunications tower within sight of Mr Hoolihan's proposed location meant that a house would not be constructed there. 16I consider that these three points are sufficiently answered. First, as to the gradient, Mr Hoolihan said, and I accept, that houses have been built in recent years elsewhere in the locality in a street that is of similar steepness to Fischer Street. Mr Hoolihan also said, and I am prepared to accept, that two-wheel drive vehicles can get up Fischer Street, which is bitumen sealed, and referred to council staff in utilities travelling up it to maintain the water tank. 17Secondly, as to security, I do not accept that a quarry manager or the like living in a house on the retained land would be expected to double as a kind of security guard at night and on weekends such that his house would be located close to the quarry. It seems to me that the far better visual amenity of the elevated area close to the water tank would contribute so much to lifestyle as to make it the likely location of a house. 18Thirdly, in my assessment, the blight of the tower, partly obscured by trees, would not be sufficient to deter construction of a house near the acquired land given that it has such good views. 19The Council also submits that there was no s 55(f) decrease in the value of the retained land because it was generally affected by a number of blights including the telecommunications tower, power poles and lines, a sugar cane overland conveyor belt for the mill running on the southern side of the quarry on the retained land, and (sometimes) aroma from the sugar mill (when operating). I do not accept the submission. In my judgment, those blights would be insufficient to deter the building of a house for a quarry supervisor or the like on the retained land near the water tank, which would adversely affect views from the house. 20The Council further submits, based on a view expressed by Mr Allsopp, that no s 55(f) compensation should be awarded because when the applicants purchased the parent land the water tank was already on it and any decrease in value caused by the water tank would have been reflected in the purchase price. I consider that the evidence is insufficient to establish that this was so (even assuming that this is an allowable approach under the Just Terms Act, which the applicants dispute). For example, as the applicants submit, Mr Allsopp has no capacity to deal with the idea that the applicants may have believed they were acquiring the water tank as a fixture (see [22] - [24] below). It is unnecessary to go further but a second concern is that the Council's approach lets it avoid paying s 55(f) compensation to anyone notwithstanding the fact that the tank diminished the value of the retained land. Nothing was paid to the former owner because the land had not been resumed even though the tank had been constructed. Deeming the applicants to have secured a reduction in the purchase price is also to deem the vendor to have suffered damage to that extent without redress. 21For these reasons, I propose to allow the s 55(f) claim on the basis that the likely location of a house on the retained land would be close to the acquired land where the water tank is located. Consequently, on the figures referred to above at [13], I determine that the diminution in value of the retained land under s 55(f) is $23,920, which I round to $24,000. The disputed disturbance loss item: s 55(d) 22The applicants claim quantity surveyor's fees in the sum of $4,950, which the Council disputes. The fees are for a report containing a replacement cost estimate in relation to the water tank. Originally, the replacement cost of the water tank was included in the applicants' claim for the market value of the acquired land. However, after the proceedings commenced, they abandoned that component of the claim when the Council produced a deed of March 1997 concerning construction of the water tank, which the applicants had signed on behalf of one of the corporate signatories. The parties agree that the deed evidences that the water tank was owned by the Council. It appears that when the applicants purchased the parent land in 2005, they thought that the purchase included the water tank but that when reminded of the deed they accepted they were mistaken. Their valuer had originally assumed that they owned the water tank and therefore he determined that the quantity surveyor's report should be obtained. When the Council produced the deed, the applicants' legal advisers concluded that the claim for the value of the water tank could not be pressed. 23Nevertheless, the applicants claim the cost of this report as disturbance loss on the basis, they say, that it was obtained as part of investigating the proper amount to seek by way of compensation without litigation. 24I do not accept this claim. From the outset the applicants should have been aware of the deed which they had signed. They accept that the deed shows that they did not own the water tank and therefore a claim for the value of the water tank was not allowable under the Just Terms Act. Consequently, there was no need or basis to obtain a quantity surveyor's report relating to its replacement cost. Conclusion 25For these reasons, I determine that the compensation to which the applicants are entitled is $57,657 comprising: s 55(a) market value of the acquired land (agreed) $25,000 s 55(d) disturbance losses (agreed) $8,657 s 55(f) decrease in value of the retained land $24,000 26The orders of the Court are as follows: (1)Determination that the amount of compensation to which the applicants are entitled is $57,657. (2)Costs are reserved. The proceedings will be listed for a costs argument on 14 September 2012 before Biscoe J. (3)The exhibits may be returned. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 September 2012