Mir Bros Unit Constructions Pty Limited v Roads & Traffic Authority of New South Wales [2005] NSWLEC 467, McClellan CJ, 30 August 2005
Facts
On 10 October 2003, land owned by Mir Bros Unit Constructions Pty Limited (“Mir Bros”) was compulsorily acquired by the Roads and Traffic Authority (RTA). The land was acquired in order to construct the M7 motorway which forms a significant traffic link in the Sydney metropolitan area. The land in question is in a developing industrial area, and a previous dispute between the parties (Mir Bros Unit Constructions Pty Limited v Roads & Traffic Authority of New South Wales [2004] NSWLEC 612) (the 2004 proceedings) primarily focused on appropriately calculating the amount of compensation to be received by Mir Bros. In the 2004 proceedings, the Court determined that the “before and after” method should be used, and the valuers retained by both Mir Bros and the RTA agreed accordingly. Under this method the “before” amount is the market value of the original parcel of land; and the “after” value is the market value of the residue parcel of land.
At the time of the August 2005 proceedings, Mir Bros had conducted a failed negotiation with a developer regarding the development of the residue land. Mir Bros had also decided to acquire an additional parcel of land that would ‘replace’ the land that was compulsorily acquired by the RTA.
Issues and Judgment
1. What action should Mir Bros take if an arithmetical error is discovered in the Court’s calculation of compensation?
His Honour McClellan CJ found that the Court can grant leave to reopen the matter if there is an arithmetical error in the compensation calculations. As both Mir Bros and RTA had agreed prior to the August 2005 proceedings that an arithmetical error had occurred, the Court corrected the initial compensation amount to account for the mistake.
2. Mir Bros argued that it was necessary to develop two separate sites, in order to achieve the same amount of “Gross Floor Area” (“GFA”) that they would have had if they had kept the original site. Accordingly, should Mir Bros be entitled to additional compensation?
Under section 59(f) of the Land Acquisition (Just Terms Compensation) Act 1991, an applicant may recover financial costs that relate to the “actual use of the land, as a direct and natural consequence of the acquisition”. Referring to this section, Mir Bros wanted additional compensation for the costs associated with developing two smaller sites, because this would be more expensive than the cost of a larger development on their original site. However, the Court found that the “before and after” method which was used in the 2004 proceedings to calculate compensation, inherently adjusted for the advantages and disadvantages of developing the separate parcels of land. Additionally, the amounts that Mir Bros were claiming were speculative, and not based on any definite development plans.
3. Mir Bros argued that the odd angle at which the RTA had divided the property made development of the residue land less efficient than if the land was divided into a neat rectangle. The question was asked whether this entitled them to additional compensation.
The Court found that the unusual angle of the new boundary was not a significant impediment to the development of the land. Of particular importance, was the fact that Mir Bros was not currently developing these parcels of land – essentially, his Honour McClellan CJ noted he was forced to make a decision in response to a hypothetical project.
4. Mir Bros raised two alternative claims under section 55 of the Land Acquisition (Just Terms Compensation) Act 1991 – firstly, that an additional amount was attributable to the costs of severance; and secondly that there was a “special value” attributable to the costs of developing the two parcels of land.
The Court held that the “before and after” method used in the 2004 proceedings to calculate compensation takes into account the damage caused by severing the property and the cost of enhancing it, once and for all.
Orders
The RTA is to compensate Mir Bros for the amount decided in the 2004 proceedings. Additional amounts that were subsequently agreed to between the parties will also be paid to Mir Bros. These amounts included an amount for the arithmetical error, stamp duty on purchase of an alternative property and the legal costs associated with this purchase.
Legislation cited
Land Acquisition (Just Terms Compensation) Act 1991
