SPECIAL VALUE TO THE OWNER

HEADS OF COMPENSATION

Special Value to the Owner can be considered as the sum of the following parts:

That is:

special value to the owner = mv + s + ia + c – b

Each head will be considered in turn.

MARKET VALUE

Market value is the value of the subject land according to the willing buyer willing seller theory as defined in Spencer v Commonwealth (1907) 5 CLR 275. The value must be determined according to the highest and best use (Maori Trustees v Min of Works (NZ) [1958] 3 All ER 336; Dangerfield v Town of St Peters (1971) 129 CLR 586).

SUBSEQUENT SALES AND EVENTS

Subsequent sales and events provide evidence of the effect that the public work has on any remaining lands. Therefore, such sales can be used as evidence of whether or not the owner has suffered a loss greater than market value (Daandine Pastoral Co v Comm of Land Tax, (1943) The Valuer, October, 1943). For example, subsequent sales were admitted as evidence of the damage caused to a business in Bennet v Comm for Railways (1952) The Valuer, Vol 12, 169. Subsequent sales are also evidence of market value if there has been no major event between the date of resumption and the date sale that would affect its comparability.





VALUE TO THE ACQUIRING AUTHORITY

In some resumption cases, the land has Its highest value only for the use to which the acquiring authority wishes to put the land. For example, the local authority resumes the only high hill suitable for water supply purpose for that purpose (The Rajah case (1939) The Valuer Vol 6, 331). In that case the Privy Council held that market value is the amount that would have been agreed upon between the owner and the acquiring authority in amicable negotiations under the willing buyer willing seller theory. In this case, since the owner knows of the special value to the authority, he would only agree to a price set at that value.

A similar decision was made in Geita Sebea v The Territory of Papua (1941) 67 CLR 147, The Valuer, Vol 7, 25 where land was acquired by the Territory for a new airport. The acquired land was the most suitable for airport purposes because an airport had already been constructed on the site. Held by the Privy Council that the value paid to Geita Sebea should include the existing airport facilities despite the fact that the Territory was the only possible user.

"RANSOME VALUE"

The affected owner cannot hold out for a "ransoms value" even if he/she is the last person required to sell the land so as to complete the public works.







DIAGRAM - PIPELINE EXAMPLE




THE "POINTE GOURDE" PRINCIPLE

The points gourds principle is that the market value so determined cannot include any increase or decrease in value caused by the scheme underlying the acquisition (Points Gourde Quarrying v Sub Intendant ofCrown lands (1947) AC 565, 572).

The principle is usually expressed in the relevant legislation for example, s63(a) Public Works Act (WA). The Australian approach has been to attempt to apportion that part of any increase in value arising from the public work and disregard that increase, rather than to only disregard any increase in value where the whole increase is directly attributable to the public work (Crompton v Comm of Highways (1973) 5 SASR 301; Housing Commission v San Sebastian (1978) 20 ALR 385; Emerald Quarry v Comm of Highways (1979) 24 ALR 37).

A typical statutory statement of the principle is in the Land Acquisition Act (NSW) 1991 as follows:

S56 (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; and
(b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land was acquired, of improvements for the public purpose for which the land is to be acquired; and
(c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law.

(2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition.

The effect of the proposed public work was well considered in Woollams v The Minister (1957) 2 LGRA 338. This case concerned the compulsory taking of farm land for the building of Warragamba dam, part of Sydney's water supply. Hardie J held that the market value paid to W was normal market value free of any depressing effect caused by the market's knowledge that a dam would soon be built in the valley. A proxy for that amount was found by reference to sales of comparable but non affected lands in valleys nearby.


MARKET VALUE AND LAND USE CONTROLS

Problems occur when the acquired land is reserved for a public purpose under state law. Market value will be determined according to the restrictions contained in the reservation or according to the land use before the acquisition or reservation.

A valuation based on the restrictions of the reserve/resumption is unfair if the land has been resumed for THAT purpose. Where the reservation or resumption is part of the SAME overall scheme, the Pointe Gourde or Woollams principle applies. This ensures that the effect of the reservation or resumption on the market value of the land is ignored. However, where the reservation of the land and subsequent resumption are unrelated, the valuation must be according to the reservation (re Housing Comm of NSW v San Sebastian P L (1978)140 CLR 196).

Under current law there is no simple process for resolving this question and each case is determined on its merits. However, in other countries, two systems have developed to overcome the problem:

Under this system the planning authorities are required to nominate the underlying zoning of land subject to a planning scheme at the time of publishing the scheme. In New Zealand, planning schemes are advertised and public comment is invited with regard to the underlying zones.

Under this system certificates of alternative development allows for either the claimant or the acquiring authority to apply to the relevant planning authority for a certificate setting out the purposes for which the land may have been used, had the land not been reserved.

See SEVERANCE DAMAGE

See INJURIOUS AFFECTION

See CONSEQUENTIAL LOSSES



BETTERMENT OR ENHANCEMENT

Betterment is an offset against the compensation heads covered above for any increase in value to the residue lands as a result of the proposed public works. Betterment can be thought of, as the reverse of injurious affection. For example:

s55(f) any increase or decrease in the value of any other land of the person at the date acquisition which adjoins or is severed from acquired land by reason of the carrying out or the proposal to carry out, the public purpose for which the land is acquired   Land Acquisition Act (NSW) 1991.

Betterment can be greater than the compensation otherwise payable. For example, in Brell & Anor v Penrith City Council(1965)11 LGRA 156 it was held that the increase in value of the remaining retail land caused by the construction of a public car park at its rear, was much higher than any other losses and therefore, without trying to quantify the increase, no compensation was payable. In the same case it was held that betterment was the amount emanating from the total carpark, not only from the part taken. However, in CBC v Penrith City Council (1970) 19 LGRA 156 it was held that compensation was payable because the land before resumption had a high value for redevelopment purposes so that the loss to the owner was greater than the betterment.

SCHOOL SITE

In Moore v The Minister (1962) 18 The Valuer 245, it was held that no compensation was payable to the affected owner of land suitable for residential subdivision because the building of the school would add more value to the residue lots not yet sold, than any loss or damage suffered by the plaintiff.

DRAINAGE EASEMENT

In Glen & Anor v Sutherland Shire Council (1965)18 The Valuer 574, it was held that no compensation was payable for the resumption of a drainage easement over the subject land because the increase in value to the residue brought about by better drainage was more than any loss in value. Before resumption, the plaintiffs could not build on the land whereas, after resumption they could.
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