Adelaide Fruit & Produce Exchange Co Ltd v Adelaide Corporation [1961] HCA 20; (1961) 106 CLR 85 (19 April 1961)

HIGH COURT OF AUSTRALIA

THE ADELAIDE FRUIT AND PRODUCE EXCHANGE CO. LTD. v. ADELAIDE CORPORATION [1961] HCA 20; (1961) 106 CLR 85

Resumption

High Court of Australia
Dixon C.J.(1), Fullagar(1), Kitto(1), Menzies(1) and Windeyer(1) JJ.

CATCHWORDS

Resumption - Compensation - Resumption of portion of land - Severance - Betterment - Time for assessment - Allowance for replacement of buildings - Replacement cost of buildings included in value of land - Whether betterment allowance limited to set-off against injurious affection - Method of assessing betterment - Costs of proceedings where no notice of claim delivered - Local Government Act, 1934-1957 (S.A.) (No. 2156 of 1934 - No. 1 of 1957), s. 871a - Compulsory Acquisition of Land Act, 1925 (S.A.) (No. 1724 of 1925), ss. 8, 12, 33, 46.

HEARING

Melbourne, 1960, October 6, 7;
Sydney, 1961, April 19. 19:4:1961
APPEAL from the Supreme Court of South Australia.

DECISION

1961, April 19.
THE COURT delivered the following written judgment:-
The Corporation of the City of Adelaide, pursuant to notice to treat dated Exchange Co. Ltd. a piece of land in the City of Adelaide 2 roods 8.5 perches in area and having a frontage of about 106 feet to the northern side of Grenfell Street and a depth varying from approximately 111 feet on the west to approximately 315 feet on the east. There was left immediately adjacent to the land taken an area of 3 roods 1 perch which belongs to the Company. The land that was taken was acquired for the purpose of running a new street from Grenfell Street north to Rundle Street as part of a larger project of running a new street from Wakefield Street to North Terrace. The land retained by the Company will front the east side of this new street which is yet to be made. Ross J. in May 1960 44,000 pounds; to this he added a sum of 7,100 pounds for injurious affection determined the value of the land taken as at 20th April 1949 at and disturbance assessed as at the date of hearing and from the total he deducted 14,000 pounds for the enhancement of the value of the Company's retained land which will front the new street, and so he arrived at an award of compensation of 37,100 pounds. From this judgment both parties have appealed but without contesting the figure of 44,000 pounds as the value of the land as at 20th April 1949, which it was common ground was the relevant date. The Company complains only of the deduction made for enhancement; the Corporation complains of the allowance of any sum for injurious affection and disturbance and contends that the deduction for enhancement should have been 18,000 pounds instead of 14,000 pounds. (at p89)

2. The acquisition was authorized by s.871a of the Local Government Act, 1934 (S.A.) as amended, and the assessment of compensation therefor fell to be made under the Compulsory Acquisition of Land Act, 1925 (S.A.). This latter Act gives a right to compensation where land is taken by a promoter (here the Corporation) under the provisions of a special Act (here the Local Government Act) or is injuriously affected by the execution of works under a special Act (s.8). The rules for determining the amount of compensation are set out in s.12 and are in the main similar to but not the same as those appearing in the English Statute, 9 & 10 Geo. V, c.57 (The Acquisition of Land (Assessment of Compensation) Act, 1919). So far as the rules are directly material to what is in issue, they are as follows: "(1) In any case where land is taken, regard shall be had to - (a) the value of the land taken; and (b) the damage (if any) by reason of the severing of the land taken from other land of the person entitled to compensation; and (c) the damage (if any) to other land adjoining the land taken or severed therefrom of the person entitled to compensation by reason of the execution of the works, or of the carrying on or use of the works by the promoters on the land taken. (2) The value of the land shall, subject as hereinafter provided, be taken to be its value - (a) in any case where land is taken, at the beginning of the period of twelve months prior to the giving by the promoters of the notice to treat; or (b) in any case where land is not taken, at the beginning of the period of twelve months prior to the commencement of the execution of the works, together in either case with the actual value of any improvements bona fide made during the said period of twelve months: Provided that the court or arbitrator shall be entitled to consider all returns and assessments of capital value for taxation made or acquiesced in by the claimant. (8) Allowances shall be made in favour of the promoters for any enhancement in value of other land adjoining the land taken or injuriously affected, or severed therefrom, of the person entitled to compensation by reason of the execution, carrying on, or use of the works by the promoters, but in no case shall this rule operate so as to require any payment to be made by the claimant to the promoters in consideration of such enhancement in value. (9) The provisions of rule (2) shall not affect the assessment of compensation for disturbance or any other matter not directly based on the value of the land." It is to be observed that there is no rule in the English Statute corresponding with r.(8). It is to be observed, too, that it is only with respect to the value of the land that it is expressly provided regard shall be had to its value as at the beginning of a period of twelve months from the giving of the notice to treat and in the absence of r.(9) this might raise some question about the time as at which damage by reason of severance, &c. is to be assessed and the time as at which enhancement is to be determined. Rule (9), however, confines the provisions of r.(2) to determining the value of the land taken and r.(2) has no application in the determination of the other items that must be taken into account in assessing the compensation payable. Although r.(9) does not expressly refer to the land taken, when it is read in conjunction with rr. (1), (2) and (8) there is not very much room for doubt that that is what it means. The determination of damages for severance or for the effect of the execution of works upon adjoining lands and the determination of enhancement are not, therefore, subject to the rule that the beginning of the period of twelve months prior to the giving of the notice to treat is the relevant date. Such matters must be determined as at the time when compensation is assessed and whatever information is then available may be taken into account in making these determinations. In this case the value of the land taken was assessed in May 1960 as at April 1949, and damages for severance and the deduction for enhancement were assessed as at May 1960. In this Ross J. was correct. (at p90)

3. Prior to the acquisition the Company owned in all about 6 1/2 acres of land in the locality, all of which was used for a market, The Adelaide Fruit and Produce Exchange. The area was divided into two sections by Union Street running north and south between Grenfell Street and Rundle Street, and to the west of Union Street there was an area of approximately 1 1/2 acres and to the east of Union Street approximately 5 acres. The market was established and maintained under a private Act of 1903, which authorized a market upon specified land to the east of Union Street and upon such additional nearby land not exceeding in all 4 acres as the undertaker should see fit. The land to the west of Union Street with which this litigation is alone concerned was purchased after 1903. It may be thought that in this way the market, 6 1/2 acres in area, extended beyond the limits prescribed by the Act, but nothing turns on that here. The Company did not itself conduct the market: what it did was to let stalls and shops to market traders, from whom it received rents totalling in all some 1,730 pounds a year net. Part of the land acquired by the Corporation was used for stalls and part for the accommodation of vehicles belonging to those using the market. These vehicles entered from Grenfell Street. (at p91)

4. The sum of 44,000 pounds, which as has already been said was allowed as the value of the land taken, took improvements into account, including a substantial wall upon the western boundary and a lavatory block. Mr. Matters, whose evidence of value Ross J. accepted, said that the value he attributed to improvements was such that "I think they could have been replaced for a figure not in excess of the figure I have placed upon them". If the use of the Company's remaining land as a market was to be continued (and there was evidence that this was intended) the conclusion was open that it would be necessary to build a substantial wall upon the new western boundary and lavatories for the use of those resorting to that part of the market. Alterations to the water and electricity installations would also have to be made. Estimates of price for these works were given, and after reviewing that evidence his Honour found that the wall and the alterations to the water and electricity installations would together cost 5,200 pounds and that new lavatories would cost 1,900 pounds. These amounts Ross J. allowed as damages for injurious affection and disturbance, but it is r.(1)(b) (supra) - viz., that relating to damages for severance - that warrants regard being had to the cost of effecting these works. As his Honour came to the conclusion that the land retained would continue for some time to be used as a market and that the proposed works were necessary for this use, it seems clear that this was a case for damages for severance and the allowances his Honour made should stand. If, as it seems, the improvements upon the land retained were valued at a figure that would cover replacement cost, it may be that in the result the Company in receiving both replacement cost and the cost of replacing improvements upon the land retained will obtain an advantage, but if it be so this is the accidental consequence of the acceptance of the way in which the buildings were valued and the possibility affords no reason for denying the Company the damages for severance that the evidence and his Honour's findings thereon warrant. The Corporation's objection to the allowance of anything by way of damages for severance therefore fails. (at p92)

5. To turn now to the question of the enhancement of the value of the Company's remaining land to the west of Union Street resulting from the prospect of a new street frontage, it is clear that it is only by virtue of a special provision that the betterment of land from which land taken is severed can be taken into account for determining the compensation to be paid for the land taken or for the injurious affection of other land. Such special provisions have from time to time been made and sometimes they merely allow the betterment of retained land to be set off against any injurious affection of that land. In Harding v. Board of Land and Works that in determining the compensation payable an allowance is to be made for enhancement of value of land adjoining the land taken which arises from the execution of the works for which the land is taken, whether or not the remaining land of the person entitled to compensation is injuriously affected, and we agree with Ross J. that there is no ground upon which to imply here any limitation of the sort adopted in Harding's Case (1)(1886) 11 App. Cas. 208. . There is, however, still a difficulty in applying r.(8) because, as was the case here, the works proposed may not have been carried out when compensation is to be assessed and it is therefore difficult to apply the words of r.(8) literally. As we read the sub-section, however, the allowance to be made in such a case as this is the judge's estimate of the enhancement, as at the time of the hearing, of retained adjoining land resulting from the prospect of the making of the street. This is how Ross J. understood and applied the provision and we think he was right in making an allowance for any enhancement in value of the Company's adjoining land by reason of the prospect of the new street frontage. It is true that in a case such as the present this construction of r.(8) does require an allowance estimated at a later date (i.e. May 1960) to be deducted from a value ascertained as at an earlier date (i.e. April 1949), and this may be thought to permit an injustice, but here, if there be an injustice, it is not more than the unanticipated result of the unusual circumstances that compensation was assessed ten years after the notice to treat had been given. As had already been said, we regard r. (9) as forbidding the calculation of enhancement as at the same date as at which the value of the land taken has to be assessed. Ross J. therefore correctly appreciated the law to be applied in relation to enhancement. The Company contended, however, that as the land retained is still being used as a market and this could continue indefinitely, no enhancement should be allowed on the basis that by reason of the new street frontage the land could be used in the future for other purposes. Under the Act, however, the judge is not concerned merely with the use to which the land retained is in fact put; that may, as here, be an uneconomic use. What in every case is of decisive importance is whether the prospect of the execution of works has, as at the date of the hearing, increased the value of the land retained and in this case his Honour has found with what seems to be every justification, that it did, that is, that a purchaser would pay more for the land in the new circumstances than he would have paid before. As his Honour points out, this is not a case where the land must always be used for a market; the Company and any purchaser from the Company could use it for other purposes and its value with the prospect of a frontage to a new street cannot be estimated as though it were nothing but a site for a market. The appellant's contention that no allowance should have been made under r. (8) therefore fails. (at p93)

6. The Corporation, while supporting the principles applied by Ross J. in determining the allowance to be made under r. (8), contended that his Honour in this case misapplied those principles because the evidence was that the prospect of the new street made the land retained worth 18,000 pounds more than it would have been worth had the new street not then been in prospect. This was the substance of the evidence of Mr. Matters, which his Honour in the main accepted but said: "To my mind the only criticism which can justly be directed against his final figure is that he seems to have allowed little or no weight to any damage by severance owing to the reduction of the Grenfell Street property" (viz. to 30 feet) "and that he may have taken a somewhat too optimistic view of the probability of the early development of this area for business purposes". Because of these reservations his Honour assessed enhancement at 14,000 pounds instead of at Mr. Matters' figure of 18,000 pounds. It seems to us that his Honour was not bound to accept Mr. Matters' figure without reduction and that in the circumstances it was open to him to assess enhancement at the figure he did. (at p93)

7. There is one other matter to be mentioned. Ross J. without giving reasons ordered the Corporation to pay one half of the Company's costs of the proceedings before him. By its cross-appeal the Corporation seeks the discharge of that order and an order that the Company should pay the Corporation's costs. Section 33 of the Compulsory Acquisition of Land Act, which is the section under which the proceedings were taken, authorizes the Court to make such order as to costs as it thinks fit "regard being had to the provisions of Division 6 of this Part". Division 6 relates to costs and s. 46 provides inter alia that where it has not been possible for a promoter to make an offer of compensation because the claimant has omitted to give a notice of claim with sufficient particulars, an offer of compensation should be assumed to have been made at the time when such particulars should have been given and it should also be assumed that the amount awarded did not exceed the amount assumed to have been offered, with the consequence that the Court, unless for special reasons it thinks proper not to do so, must order the claimant to bear its own costs and to pay the costs of the promoter. Here there was no notice of claim given by the Company, and the Corporation's contention is that if s. 46 had applied directly it would in the absence of special reasons have been entitled to costs and that his Honour should have applied it in the exercise of the discretion conferred upon him by s. 33. It is clear, however, that in exercising the discretion as to costs conferred by s.33 all that is necessary is that regard should be had to s. 46 and there is no doubt that in exercising his discretion in this case his Honour did pay such regard. There is therefore no basis for interfering with the discretionary order that he made. (at p94)

8. Accordingly we consider that both the Company's appeal and the Corporation's cross-appeal should be dismissed. Both parties having failed, there should be no order for costs. (at p94)

ORDER

Appeal and cross-appeal dismissed.