Overview of the Pointe Gourde/San Sebastian Principle

Transcription

1 Overview of the Pointe Gourde/San Sebastian Principle December 2009 Domenic Cristiano Managing Principal Solicitor Administrative Law

2 Page 2 Table of Contents 1. Introduction Background to the Pointe Gourde/ San Sebastian Principle The Common Law foundation of the Principle... 3 Introduction... 3 The Pointe Gourde Decision... 4 Why was the Pointe Gourde decision so significant?... 5 The San Sebastian decision... 5 Why was the San Sebastian decision so significant?... 6 Result of the Pointe Gourde and San Sebastian decisions The Pointe Gourde/San Sebastian Principle is enshrined in the LAC Act Practical examples of operation of the Pointe Gourde / San Sebastian Principle... 7 Example 1: An example of ignoring the decrease in value of land as a result of the proposal... 7 Example 2: Where the land would not have been rezoned, not because of the proposed scheme of acquisition, but because of other strategic planning reasons... 8 Example 3: A Step in the process... 9 Example 4: Where the characteristics of the land meant that it would not have been able to achieve the highest and best use according to zoning, so the purpose of the acquisition could be disregarded even though it was a step in the process Situations where zoning boundary coincides with infrastructure reservation Background to the difficulty faced by governments applying an integrated approach to urban growth Example 5: Infrastructure reservation is used as a zoning boundary Section 43 (1A) of the LAC Act Underlying zoning How is VC 55 intended to assist in determining land compensation in the future? Conclusion... 14

3 1. Introduction The Pointe Gourde/San Sebastian Principle is a key component of land compensation law. At the heart of it, the principle is quite simple - namely that: Resumed land should be valued disregarding any increase or decrease in the value of the land arising from the carrying out, or the proposal to carry out, the purpose for which the land was resumed. 1 Applying this principle will mean that land will be valued on the basis of the hypothetical highest and best use that the land would have had had it not been needed for the public purpose for which it was acquired. This reliance on hypothetical scenarios to determine land compensation may be a reason why the Pointe Gourde/ San Sebastian Principle can appear so daunting. However, hypothetical scenarios are common place in land valuation (eg ascertaining site value for land tax purposes). As well as looking at how the Pointe Gourde/San Sebastian Principle operates, this paper also looks at recent attempts by the State of Victoria to reduce the likelihood of protracted litigation related to disputes between litigants regarding the application of the Pointe Gourde/ San Sebastian Principle. Special Note: I originally intended to describe this paper as being an overview of the Pointe Gourde Principle. However, as I prepared for this seminar paper, I began to query whether the Pointe Gourde case deserves to lend its name to this principle as it applies in Australia. The principle known as the Pointe Gourde Principle was around well before the Pointe Gourde decision. The judgment of the Privy Council in the Pointe Gourde case is a brief judgment and did not alter the common law position as it existed previously. Further, the Pointe Gourde decision is not an Australian case. While the Privy Council may have been the highest appeal court in the Australian legal system in the 1940s, the Australian legal system has now cut its colonial ties with the Privy Council and the adoption of this principle by the High Court in Housing Commission of NSW v San Sebastian Pty Ltd (1978) 140 CLR 196 justifies us in describing the principle as the San Sebastian Principle. The above view does not appear to be held by me alone. A number of Australian judges refer to this principle in their judgments as the San Sebastian Principle (eg Bignold J in Lasseter v Blacktown City Council [1994] NSWLEC 24) or refer to the San Sebastian case as the key decision when examining it (eg Kirby P in Haigh v Minister (1994) 85 LGERA 143 at 149). Page 3 2. Background to the Pointe Gourde/ San Sebastian Principle. 2.1 The Common Law foundation of the Principle Introduction The Pointe Gourde/San Sebastian Principle is relevant when determining what compensation is payable when land is compulsorily acquired. 1 Brown D, Land Acquisition, 5 th ed (2004) at139.

4 The context in which the Pointe Gourde/San Sebastian Principle arises is that an acquiring authority needs to pay market value for the land that it has acquired. Typically, the courts have held that value in this context is determined: By forming an opinion as to what a willing purchaser will pay and a not unwilling vendor will receive for the property. 1 However, the reality will often be that the involvement of government in undertaking a public project will have a significant impact on land values in the vicinity of the area. How should this impact on land values be factored into the market value of land for the purposes of land compensation? The answer to this question, according to the Pointe Gourde/San Sebastian principle, is that this impact is to be totally ignored for the purposes of determining market value. The Pointe Gourde/San Sebastian principle has been part of the Australian common law (or judge-made law) since the 19 th century. For example, the Supreme Court of NSW held in Black v Commissioners for Railways (1890) 11 LR (NSW) 160 that: The Land is to be assessed at the value it would have had if the railway for which it is resumed had never been contemplated. Any and every other circumstance may be taken into consideration in estimating the worth of the land, except the effect upon it of the railway for which it is taken. Page 4 The Pointe Gourde Decision Given that it lends its name to the principle we are presently considering, it is logical we look at the decision of the Privy Council in Pointe Gourde Quarrying and Transport Company Ltd v Sub-Intendent of Crown Lands [1947] AC 565 The Facts of the Pointe Gourde case were as follows: The English Government compulsorily acquired certain land owned by the appellants at Pointe Gourde in Trinidad which were required by the USA in connection with the establishment of a naval base in Trinidad. Part of the land had a large deposit of limestone on it, which, before the acquisition, the Appellants had quarried and sold. The Appellants were paid $101,000 for the land. Of this amount, $86,000 was paid as compensation for the value of the quarry as a going concern. The remaining $15,000 had regard to the special adaptability of the land. In other words, it was the increase in value of the land that would have occurred as a result of the nearby presence of the US naval base which would have created a larger market for limestone. In a short judgment, the Privy Council decided that the $15,000 payment should not have been made. In arriving at this decision, the Privy Council stated that: It is well settled that compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition. 1 1 See Walker Corporation v Sydney Harbour Foreshore Authority (2008) 233 CLR 259, 276; quoting Spencer v Commonwealth (1907) 5 CLR 418.

5 Page 5 Why was the Pointe Gourde decision so significant? Until , Supreme Court litigants had the right to appeal to either the High Court of Australia or the Privy Council. This meant that the decision of the Privy Council decision of Pointe Gourde Quarrying and Transport Company Ltd v Sub-Intendent of Crown Lands [1947] AC 565 would have been a binding precedent in Victoria and explains why Australian law refers to the Pointe Gourde Principle. The San Sebastian decision The High Court considered the Pointe Gourde Decision in Housing Commission of NSW v San Sebastian Pty. 3 The Facts of the San Sebastian case were as follows: San Sebastian Pty Ltd (R) purchased P1 during December 1969 and August 1970 (the Acquired Land). R intended to build a private hospital on the Acquired Land. On 2 December 1974, the Sydney CC adopted the City of Sydney Strategic Plan which stated: The three levels of Government have accepted the 1971 recommendation of the City of Sydney Strategic Plan 1971 Woolloomooloo should be re-established as much as possible in predominantly residential uses. In June 1975, an agreement was reached between the three levels of government as to the future direction of development in Woolloomooloo. On 18 July 1975, Housing Commission of NSW (A) acquired P1 (as well as much other land in private land ownership in the Woolloomooloo Basin). At the date of acquisition, the Planning Scheme would have allowed some substantial redevelopment of the resumed land, although general planning considerations may have been against a hospital of the size proposed by R. Had the Council considered the application having regard to the draft interim development order, it would have been likely to refuse the application as not being for residential development. R gave evidence that by reason of the planning restrictions and the events set out above, the market value of land in the Woolloomooloo basin for redevelopment purposes at the date of acquisition had been very considerably depressed. The High Court took the view that the provisions of the agreement and the draft interim development order and the various planning steps taken were steps in the acquisition process and therefore they were relevant in determining the extent to which they effected an alteration in the value of the acquired land. In the leading judgment of that decision, Jacobs J stated that: 1 [1947] AC 565, See s 11 of the Australia Act 1986 (Cth). 3 (1978) 140 CLR 196.

6 Page 6 There are, however, many situations where the relation between the zoning and the proposed public works is not as clear cut Assume an area of land on the outskirts of existing settlement, and assume a planning authority concerned to designate land use in a planning scheme. The land is designated open space. Thereafter it is resumed for the purpose of a public reserve. The fact that the land was zoned as open space may have depreciated its value. Does the resuming authority pay compensation at the depreciated value of open space or at some other value? The question cannot be correctly answered without knowing whether there was any connexion between the zoning as open space and the subsequent resumption. If the zoning was done with the intent or in anticipation that the land should be resumed for a purpose such as a public reserve or if the zoning was proposed or dictated by the resuming authority then [it is required] that the zoning be ignored. It is only a step in the process of subsequent resumption, But in other circumstances the resumption may be unconnected with the act of zoning. [ ] In the circumstances of the present case it appears to me to be correct that there is no need to distinguish between a proposed use of the land for public housing and the proposed zoning of the rest, or most of the rest, of the land for residential development. Before the resumption the value of all of the land proposed to be zoned residential would have been affected by the proposal to establish the public work until it was known what particular land was intended to be resumed. The Land Valuation Court found that the proposed zoning in the draft [IDO] was a step in the resumption process and that its form was dictated by the proposed public work and that was sufficient to bring all the land within the effect of the proposed establishment of the public work. Why was the San Sebastian decision so significant? With the removal in 1986 of the Privy Council as an appeal court in Australia, the High Court of Australia is by itself the highest court in Australia. This means that its decisions are now the most authoritative for the purposes of the Australian common law. In this regard, the decision in Housing Commission of NSW v San Sebastian Pty Ltd stands alongside the Pointe Gourde decision in terms of importance because it was the decision in which the Pointe Gourde decision was adopted by the High Court of Australia. As well as this, the scenario that existed in San Sebastian was the opposite of that in Pointe Gourde (ie the scheme of acquisition in San Sebastian had a negative effect on market value). Finally, San Sebastian also confirmed that the Pointe Gourde/San Sebastian principle extends beyond the action of acquisition and includes steps in the acquisition process undertaken by the Acquiring Authority. Result of the Pointe Gourde and San Sebastian decisions The following statement can summarise the result of the decisions in Pointe Gourde and San Sebastian: 1 According to the principle, which is one devised by the judges, in valuing land for resumption purposes, any increases in the land s value which is entirely due to the scheme underlying the acquisition is to be disregarded. The converse of the principle is also accepted. Any diminution in the value of the land which is entirely due to the resumption scheme, or to any blight caused by a step in 1 Kirby P in Haigh v Minister (1994) 85 LGERA 143,

7 Page 7 the resumption process, is to be disregarded in determining the value of the land: see Housing Commission of NSW v San Sebastian Pty Ltd Behind this principle lies a search for fair valuation and an insistence upon just procedures. If it were not upheld in the determination of the value of resumed land, it would be possible for a resuming authority to use its powers and influence, in respect of such matters as zoning, to diminish the value of the land to be resumed, to its own advantage and to the disadvantage of the owner at valuation. 2.2 The Pointe Gourde/San Sebastian Principle is enshrined in the LAC Act Section 43(1)(a) of the LAC Act enshrines the Pointe Gourde/San Sebastian Principle. This provision states that: Any increase or decrease in the market value of the interest in the land which is acquired arising from the carrying out, or the proposal to carry out, the purpose for which the interest was acquired must be disregarded in assessing compensation. Sub-sections 43(1)(b) and (d) of the LAC Act are also related to the Pointe Gourde/ San Sebastian Principle. However, we will not consider these provisions in the current paper. The High Court says that you need to focus on the words of legislation relating to land acquisition, rather than the common law operation of the Pointe Gourde/San Sebastian Principle. 1 However, in my opinion, s 43(1)(a) of the LAC Act enshrines the common law set out above, and so we can best understand how this statutory provision operates by looking at what courts have said about this principle. 2.3 Practical examples of operation of the Pointe Gourde / San Sebastian Principle A useful way to describe the operation of the Pointe Gourde/ San Sebastian Principle is to look at some examples. Example 1: An example of ignoring the decrease in value of land as a result of the proposal In 1964, Melwood (M) buys 37 acres of land (P1) near Brisbane. The purchase price was $7,700/acre. The State Government decides it wants to build a freeway and intends it to go through P1. The freeway project reached the detailed planning stage by late On 11 September 1965, the State Government acquires a portion of P1 for the purposes of the freeway. The public acquisition cut P1 into two portions, a north portion and a south portion. On 11 April 1965, M had sought planning permission to use the land as a shopping centre. In June 1965, M was given permission but only for the northern portion of the land. In June 1966, M sold the north portion to David Jones Pty Ltd at $40,000/acre. David Jones would have purchased the southern portion as well had it been part of the same area permitted to be used as a shopping centre. 1 Walker Corporation v Sydney Harbour Foreshore Authority (2008) 233 CLR 259, 270.

8 Page 8 But for the freeway project, a permit would have been granted for a shopping centre for the entire 37 acres. M argued that the southern land should be valued as a shopping centre, not as rural. In this case, the southern land should be valued on the basis that it could have been used as a shopping centre, and but for the freeway acquisition, it would have formed part of the land sold to David Jones Pty Ltd for a shopping centre. [See Melwood Units Pty Ltd v Commissioner of Main Roads (1978) 19 ALR 453, 458: Under the Pointe Gourde principle the landowner cannot claim compensation to the extent to which the value of his land is enhanced by the very scheme of which the resumption forms an integral part: that principle, in their Lordship s opinion, operates also in reverse. A resuming authority cannot by its project of resumption destroy the potential of the whole 37 acres for development as a drive-in shopping centre, and then resume and sever on the basis that the destroyed potential had never existed. Moreover, in their Lordships opinion, the principle remains applicable in a case such as the present, notwithstanding that planning permission had not been given for the whole 37 acres and would not have been given, when the lack of such permission was manifestly due to the expressway project, and it is established that, without the expressway project, such planning permission would have been given for the whole 37 acres. To hold otherwise in this case would enable the acquiring authority to inflict by its project the same injustice at one remove. Example 2: Where the land would not have been rezoned, not because of the proposed scheme of acquisition, but because of other strategic planning reasons Murphy (M) owns certain land (P1) which is zoned rural. P1 is located very close to a beach, but the beach is the site of a world renowned turtle rookery. In 1981, M applies to have P1 rezoned as residential. The State Government objects to the rezoning because it says that this zoning is inappropriate given the location of the turtle rookery. The Council decides not to rezone. In 1983, the State Government compulsorily acquires the land for the purposes of the protecting the turtles. M argues that the land should have been valued on the basis that it was zoned residential given that it would have been zoned as such were it not for the objection of the State Government to a proposed rezoning application. In this case, the land would be treated as rural given that the presence of the turtle rookery is so significant that it would have been unlikely that the land would have been rezoned as residential.

9 Page 9 See Queensland v Murphy (1990) 95 ALR 493: One purpose of this principle is to ensure that a resuming authority does not employ planning restrictions to destroy the development potential of the land and then assess compensation for its resumption on the basis that the destroyed potential never existed. Of course a characteristic or attribute of the land which affects its value must be taken into account in the assessment of compensation even if the planning restriction which is a step in the process of resumption is dependent upon or directed to that characteristic or attribute. The Land Appeal Court considered that the existence of the turtle rookery adjacent to the land was an attribute of the land which affected its value to the extent that the existence of the rookery itself militated against rezoning. 1 Example 3: A Step in the process Certain land (P1) which is zoned industrial is owned by Walker (W). P1 is located in a prime location close to the CBD. In 1989 W applies for the land to be re-zoned from Industrial to Residential. The local council wants the land to be converted into public open space and does not support the planning scheme amendment. In 1991, Council proposes to zone P1 for public open space. In 1991, the State Government supported the planning scheme amendment, but did not intervene in the process. By 1999, there was a new State Government and this new government decides that it should acquire the land and does so in Had it not been for the resistance of the Council, P1 would have been rezoned to permit residential development, but that had not come to pass. W argues that the land should be valued on the basis that it was zoned residential because it would have been zoned residential at the time of the acquisition had it not been for the proposal to develop the land as public open space. The Government argues that the land should be valued on the basis that it was zoned industrial because that was its zoning and the compulsory acquisition process was not responsible for the fact that the land was not zoned residential. In this case, the land would be valued on the basis of its industrial zoning because the maintenance of the land as industrial was not a step in the process of acquisition. The proposal which led to the acquisition of P1 was not that of the Council or some aggregation over time of the policies of the Council. See Walker Corporation v Sydney Harbour Foreshore Authority (2008) 233 CLR (1990) 95 ALR

10 Page 10 Example 4: Where the characteristics of the land meant that it would not have been able to achieve the highest and best use according to zoning, so the purpose of the acquisition could be disregarded even though it was a step in the process Coastal (C) owned certain land (P1) along the coast of Victoria. The land was zoned residential. If C wanted to subdivide the land, it would have needed to set aside an area as a retarding basin to ensure there was adequate drainage. The State of Victoria acquired part of the land for the purposes of a retarding basin. As a result of this, C did not have to provide a retarding basin for the remainder of its land. C would argue that the acquired land should be valued as if it were residential land. The State of Victoria would argue that C would have needed to have set aside land for a retarding basin and now did not need to do so, so you treat the land as non-residential land. In this case, the land would be valued on the basis that it was non-residential land because this would have needed to have been provided by C in any event. See Coastal Estate Pty Ltd v State of Victoria (1993) VR 566, 576 (Gobbo J): In the present case, the absence of adequate drainage, in particular a retarding basin not necessarily the very basin ultimately adopted was a characteristic of the subject land that was capable of affecting its value. It was not to the point that the presence of drainage problems brought about a drainage proposal that was a step in the acquisition process. The likelihood that the planning authority would refuse planning consent if no proper drainage retarding basin was provided is analogous to the council treating a rezoning as unlikely because of its effect on the turtle rookery. 3. Situations where zoning boundary coincides with infrastructure reservation 3.1 Background to the difficulty faced by governments applying an integrated approach to urban growth The Victorian Government often describes Melbourne as being one of the most liveable cities in the world. Whether or not this label is accurate (or whether it actually means anything), the reason why this label is possible is that large-scale infrastructure projects have been planned well ahead of the time that they have actually been needed. However Melbourne s population has been booming in recent years, prompting the Government to release a strategy document for dealing with a population of 5 million. A natural consequence of population growth is greater competition for land (typically forcing up prices) and greater demand for public infrastructure, which threatens Melbourne s liveability. In order to protect Melbourne s liveable reputation, Governments need to be acting now to meet Melbourne s future infrastructure needs. In addition to this, it is arguable that from the 1990s right up until about 2008, implementing long term projects was out of fashion, as governments focussed more on balancing budgets than planning for the future. There is certainly a perception that during that period, capital investment in Victoria s public

11 infrastructure was insufficient and that there is now a need to catch up on this investment (or State building ). Since 2008, assisted in large part by the public spending triggered by the governmental response to the global financial crisis, the planning of big ticket infrastructure projects is now back in fashion. Unfortunately for governments, the boom in land prices over the past 20 years now makes the potential land compensation exposure for government a significant factor in the ability of government to deliver such projects. While an integrated approach between town planning considerations and infrastructure provision is to be commended, it also has important potential consequences for land compensation exposure. Example 5 demonstrates how the Pointe Gourde/San Sebastian Principle can have an important impact on land compensation liability in such a case. Example 5: Infrastructure reservation is used as a zoning boundary Page 11 P1 P1 - Zoned Rural - Zoned Rural - Zoned Residential - PAO Diagram 1: Pre-amendment Diagram 2: post-amendment L owns certain land (P1). In 2009, P1 is zoned rural. Diagram 1 shows the lay-out of P1. In 2009, Government decides to reserve certain land for a freeway and also decides to rezone land so that there is residential zoning up to the zoning boundary. The reservation dissects P1. Diagram 2 shows the situation after the reservation/re-zoning occurs. In 2030, the State acquires the land that is subject to the reservation. Q: What will the State have to pay the landowner for the market value of the acquired land? A: In order to determine market value, the State will need to determine what the highest and best use of the land would have been had the reservation not been in place. This will be very difficult. L might argue that all of the land would have been zoned residential because part of the land would have been zoned residential, and logic would then say that all of the land should be zoned the same, and it was only because of the reservation that this was not the case. See Diagram 3. The State might argue that all of the land would otherwise have been rural, but it was only with the reservation that part of the land was zoned residential. See Diagram 4.

12 Page 12 P1 P1 - Zoned Residential - Zoned Rural Diagram 3: Hypothetical zoning according to L Diagram 4: Hypothetical Zoning according to State The Pointe Gourde/San Sebastian Principle will require planning evidence as to what would have been the case had the reservation not occurred. Given the hypothetical nature of this evidence, it is quite likely that different planners will have different views of the world. This would make it more likely that the dispute will need to be adjudicated by a Court of Tribunal. 3.2 Section 43 (1A) of the LAC Act. In 2006, the State of Victoria tried to address this issue by inserting s 43(1A) to the LAC Act. This provision reads as follows: Despite anything to the contrary in this Part, in assessing compensation, if (a) the land in which the acquired interest subsists is reserved for a public purpose in a planning instrument; and (b) the reservation forms the boundary of a zone in that planning instrument; and (c) the decision to impose the zoning boundary was not related to the purpose for which the interest in land was acquired regard may be had to the actual zoning of the land in which the acquired interest subsists and, where relevant, to the actual zoning boundary. It is unclear to me how this provision changes the common law in relation to the Pointe Gourde / San Sebastian Principle. Further, it appears that acquiring authorities generally have not sought to rely on this provision for the purposes of clarifying what land compensation liability they have. There might be an argument that s 43(1A) of the LAC Act has not served its purpose and should be repealed from the LAC Act. 3.3 Underlying zoning Planning Scheme Amendment VC 55 was approved by the Minister for Planning in November This planning scheme amendment sought to amend the urban growth boundary, and at the same time introduce a public acquisition overlay for the Outer-Metropolitan Ring Road (OMR) and the Regional Rail Link (RRL) Project.

13 Page 13 In the course of preparing this planning scheme amendment, the Government tried to consider how it might be able to remove some of the uncertainty in determining land compensation liability due to the Pointe Gourde / San Sebastian Principle. As explained above, this uncertainty is because of the potential for disputes between landowners and Government as to how the market value of the acquired land is to be assessed. In order to address the Pointe Gourde/ San Sebastian Principle, the Government took the view that if it could disclose at the outset what the zoning of land would have been had the OMR not been proposed, this may be useful in the years ahead in dealing with disputes about what the zoning of the acquired land would have been had the reservation not been proposed. There were a number of ways in which this could have been done, but after carefully considering this matter, the State Government adopted the following approach: Step 1: Introduce a new clause in the Victorian Planning Provisions stating: Statement of Underlying Provisions Purpose To state the provisions of the planning scheme which would have applied to land reserved for a public purpose under the planning scheme if it had not been reserved for this purpose, pursuant to section 6(2)(i) of the Planning and Environment Act Application In relation to any land identified in the schedule to this clause, the provisions of the planning scheme which would have applied to that land if it had not been reserved for a public purpose are the provisions which are contained in the relevant incorporated document, also identified in the schedule to this clause. Step 2: Introduce an incorporated document as part of the relevant planning scheme. In Part 1 of this document, the following statement of underlying provisions is provided: 1.1 Pursuant to section 6(2)(i) of the Planning and Environment Act 1987, the provisions of the planning scheme in effect at the date Amendment VC55 came into operation would have applied to land reserved for the purpose of the Outer Metropolitan ring and E6 Transport Corridor, in the event that this land had not been reserved for that purpose on the maps contained in this Part, in which case the zones and overlay shown on the maps contained in this Part would have applied. 1.2 Pursuant to s 6(1)(i) of the Planning and Environment Act 1987, the urban growth boundary as alternative urban growth boundary on the maps contained in this Part constitute a further statement of the provisions of the planning scheme which would have applied in the event that land had not been reserved for the purposes of the Outer Metropolitan Ring and the E6 Transport Corridor. Amongst the maps attached to this incorporated document were two maps showing the Alternative Urban Growth Boundary, followed by numerous maps showing the underlying zoning. Part 2 of the Incorporated Document then provides the Strategic Context for the underlying zoning.

14 3.4 How is VC 55 intended to assist in determining land compensation in the future? Recent experience in land compensation claims has been that a significant amount of time and expense is spent by litigants in determining what the highest and best use of the land would have been had the scheme of acquisition not been proposed. One example of this can be seen from the VCAT decision of Moore v Roads Corporation 1 where over a dozen witnesses were called by the parties and the Applicant was awarded legal, valuation and expenses in excess of $240,000 in circumstances where the Acquiring Authority substantially succeeded in the proceeding. Government officials were concerned that given the significant re-zoning that was being undertaken by VC55, much time and expense would be spent in future compensation claims arguing over whether, assuming the OMR had never been proposed, the land along the reservation would have been located within the urban growth boundary (and therefore more valuable) or would have been located outside of the urban growth boundary (and therefore less valuable). Page 14 VC55 attempts to reduce the scope for this dispute because it sets out in a considered and balanced way the Government s view of what the zoning of the land would have been had the OMR not been proposed. It is noted that the LAC Act does not expressly provide that underlying maps should have taken into account when assessing compensation. Nevertheless, it is hoped that the statement will be accepted by the court and will be influential in their assessment of market value. If this would occur, the Government would anticipate that far less legal costs would be incurred because the parties to the litigation would be given greater guidance as to how a valuation should proceed. An argument might be made that s 43(1A) of the LAC Act should be replaced with a new provision which gives this new strategy a statutory basis, perhaps even making it compulsory for a judge to take the underlying provisions into account when determining market value. Assuming that such an amendment will not be forthcoming in the foreseeable future, we will wait with great interest to see how the Courts deal with VC55 in future compensation claims. Conclusion I am always surprised by the loathing that others have of the land compensation and land valuation work that I do. I have been accused a number of times of practising in dark arts. While such a description can be flattering on some levels, it can also be seen as a basic human response to something that they do not properly understand. In some ways, it is similar to the response that people can have when exposed for the first time to people from a different culture. This seminar paper attempts to give a simple (I hope) explanation of the Pointe Gourde/San Sebastian Principle. Hopefully this can help break down people s apprehension of the Pointe Gourde/San Sebastian Principle. 1 [2008] VCAT 838.

15 Page 15 For more information For further information or legal advice on any issues raised in this paper contact: Domenic Cristiano on Managing Principal Solicitor * Please note that this paper is intended as a stimulus for discussion and consideration of issues frequently encountered. It is not intended as a comprehensive guide, and should not be relied upon as legal advice when carrying out compulsory acquisitions * The VGSO is the primary source of legal services to the Victorian State Government and its statutory authorities, providing strategic advice and practical legal solutions.