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Uren v Bald Hills Wind Farm Pty Ltd - ORDER in favor of residents

Judge Richards|March 25, 2022
AustraliaLegal

This landmark decision by the Victorian Supreme Court found the Bald Hills wind facility was producing excess noise that harmed neighbors. The full decision can be downloaded from the links on this page. A portion of the decision is provided below.


DAMAGES

353 Both plaintiffs sought damages to compensate them for a decline in value of their properties due to the nuisance, and for distress, inconvenience and annoyance. They also sought aggravated and exemplary damages.

Issues 15, 16 and 17 – Damages referable to Uren properties

354 Mr Uren did not adduce expert valuation evidence in support of his claim that the noise nuisance caused by the wind farm caused either of the Uren properties to decline in value. Instead, he attempted to prove that loss inferentially, by reference to valuation evidence about other nearby properties — namely Mr Zakula’s property, and properties owned by the Fairbrothers, the McDougall family company, and the Kilsby family.  Bald Hills  objected to this evidence on the ground of relevance.

355 On 14 September 2021, I upheld  Bald Hills ’ objection, and gave reasons for that ruling on transcript. In summary, I held that it was not open to me to cobble together a valuation of the Uren properties, absent noise from the wind farm, based on valuations of other nearby properties. Valuation of land is properly a matter for expert evidence, and it is not permissible for the Court to piece together a valuation of its own.[129] Accordingly, evidence of the value of other properties was not logically probative of whether the sale prices for the Uren properties were depressed by wind turbine noise. Even if I had been persuaded that the evidence was relevant, I would have excluded it under s 135(c) of the Evidence Act 2008 (Vic). That was because I considered that it would have involved an undue waste of time to permit Mr Uren to try to prove this aspect of his claim in such a roundabout way, in view of his unexplained failure to prove it directly, in the conventional way.

356 In the absence of evidence to support this aspect of Mr Uren’s claim, I am unable to make any finding that noise from the wind farm caused the Uren properties to decline in value, or to what extent. Mr Uren is not entitled to damages for a decline in value of the properties.

357  Bald Hills  also disputed that Mr Uren was entitled to any remedy in respect of nuisance after 18 March 2016, the date on which the southern property was sold. As mentioned, with the agreement of the new owner, Mr Uren continued to live in the house on the southern property until December 2018, when he moved into the Tarwin Lower township.  Bald Hills  submitted that Mr Uren had not established that he had any interest in the property after March 2016, and that the evidence about the basis on which he continued living there after that date was equivocal.

358 In his evidence in chief, Mr Uren said that the southern property was sold to Ross Svenson on 4 January 2016, and the sale settled on 18 March 2016. The house needed a bit of work, and Mr Svenson was ‘happy to have someone kicking around’, so he let Mr Uren stay there after the sale. Mr Uren paid rent, in an amount agreed with Mr Svenson. Although he stayed in the house, Mr Uren spent a lot of time away from it over the next couple of years — he stopped at his friend Bart Harrold’s place and also went up to visit friends in East Gippsland. He moved out of the house for good in December 2018.

359 During cross-examination, Mr Uren agreed that he stopped farming the southern property after it was sold to Mr Svenson, and that he spent some time away from the property after that time. Mr Uren insisted that he had a written agreement with Mr Svenson about staying in the house after March 2016. He said that he had not discovered it, because he had misplaced it since moving. He said that he had tried to find the agreement, but had not been able to, and could not produce it.

360  Bald Hills  argued that this evidence did not establish, on the balance of probabilities, that Mr Uren had exclusive possession of the house on the southern property pursuant to a lease after March 2016. It pointed out that a remedy for nuisance is only available to a person who has an interest in the relevant land, and that no remedy is available to a person who occupies land as a mere licensee.[130] The test to be applied to distinguish between a lease and a licence is whether there is a grant of exclusive possession during the term.[131]  Bald Hills  submitted that I should find that Mr Uren occupied the house between March 2016 and December 2018 as a mere licensee.

361 The plaintiffs did not dispute the legal basis for  Bald Hills ’ submission, but argued that it was more probable that Mr Uren continued to live in the house pursuant to a lease rather than a licence. They submitted that the more common way for someone to occupy and live in a house is under a lease, while a licence is a less usual and more legalistic arrangement.

362 Although the evidence in relation to this issue is sparse, I am satisfied that Mr Uren leased the house on the southern property from its new owner, Mr Svenson, between March 2016 and December 2018. The two men had a written agreement, under which Mr Uren paid rent to Mr Svenson and was able to continue living in the house. Mr Uren spent a good deal of time elsewhere, but the house remained his principal place of residence until he moved out in December 2018. There was no suggestion that any other person — including Mr Svenson — used or lived in the house before that time. It is more probable than not that the agreement between Mr Uren and Mr Svenson was a ‘tenancy agreement’ for the purposes of the Residential Tenancies Act 1997 (Vic), and that Mr Uren had the rights and duties of a tenant under that Act, including the right to quiet enjoyment of the premises.[132]

363 Mr Uren had a freehold interest in the southern property until March 2016, and from then until December 2018 he had a leasehold interest in the house on the southern property. He is therefore entitled to damages for nuisance until December 2018.

Issues 18 and 19 – Damages referable to Zakula property

364 In the alternative to an injunction restraining  Bald Hills  from continuing the nuisance, Mr Zakula sought damages either for a claimed diminution in value of his land attributable to the nuisance, or for the cost of abating the nuisance. Since I have decided that an injunction should be ordered, it is not strictly necessary to assess this aspect of Mr Zakula’s damages claim. However, I can indicate that, if I had considered damages to be an adequate alternative to an injunction, I would have assessed this head of damage at $200,000.

365 Mr Zakula relied on the expert opinion of a valuer, Gerald McMahon of CBRE, dated 13 August 2021, to the effect that the continuing noise nuisance reduced the value of Mr Zakula’s property from $850,000 to $650,000. Mr McMahon had been asked to assume the existence of a nuisance in the form of ‘intermittent production of an unreasonable amount of noise and infrasound by the wind turbines’ operated by  Bald Hills  on the adjoining land.

366 Based on comparable sales, Mr McMahon considered that Mr Zakula’s land was worth $25,000 per hectare, excluding structures. He valued the house and other buildings at $284,300. A key piece of sales evidence was the price of $12,357 per hectare (excluding structures) obtained for a nearby property at 1080 Buffalo-Waratah Road, Tarwin Lower. Mr McMahon observed:

The distinctive feature of this property is that is has three wind turbines positioned through the middle of the property from which a registered proprietor earns annual income. Whilst, it does provide additional income, the positioning of the turbines precludes a dwelling as there is no unencumbered space inside the recommended 1 kilometre exclusion zone. This limits the appeal of the property to rural/lifestyle purchasers who predominantly buy to reside on the property. Therefore, the purchaser pool in this case, is limited to either adjoining owners or local farmers seeking to increase their overall landholding; or, investors seeking an investment yield from the wind turbines in addition to leasing the property.
The price per hectare for that property was 17.75% less than the sale price of a nearby property at 1255 Walkerville Road, where there were no wind turbines (and hence no rental income from turbines) but where a dwelling could be built outside the one kilometre exclusion zone.

367 Mr McMahon took into account that the existence of a noise nuisance had been recognised by the Council, and was a matter of public record. He considered that would have a negative impact on the market value of Mr Zakula’s property. He was of the view that a ‘severance factor’ was the most appropriate approach to assessing the impact of the noise nuisance, and further noted that ‘rural lifestyle properties with existing structures such as the subject have only one market that being the occupation of a dwelling in rural setting’.[133] Based on after sales evidence reflecting severance rates of 5.5% to 50%, Mr McMahon applied a severance factor of 25% to the land and the dwelling. This resulted in a valuation of $20,000 per hectare, excluding structures, and a total valuation of $650,000 for land and structures.

368 Most unfortunately, Mr McMahon died unexpectedly, shortly before he was due to give evidence at the trial of this proceeding. His reports were tendered by consent, although his opinion could not be tested in cross-examination.

369  Bald Hills  relied on the expert opinion of a valuer, Damian Kininmonth of Preston Rowe Paterson. In his report dated 2 September 2021, Mr Kininmonth opined that the sales analysis and methodology used by Mr McMahon were unacceptable and inappropriate. I did not understand Mr Kininmonth to dispute Mr McMahon’s valuation of Mr Zakula’s property at $850,000, excluding the effect of the noise nuisance from the wind farm. Rather, he took issue with Mr McMahon’s opinion about the severance factor to be applied. Mr Kininmonth’s main difficulty with Mr McMahon’s methodology was that it measured the impact of not being able to develop (or use) the property as a residential dwelling, rather than the impact of noise or infrasound. He also considered that Mr McMahon had not demonstrated a proper basis for applying a severance factor of 25%. Mr Kininmonth expressed no opinion about the value of Mr Zakula’s property.

370 In his evidence at trial, Mr Kininmonth agreed that, if I were to find that noise from the wind farm amounted to a nuisance at Mr Zakula’s property, it would affect the value of his property. He accepted that the property would be worth more as a rural lifestyle property, with a habitable dwelling, than as farm land. When pressed, Mr Kininmonth considered that a 17.5% reduction would represent a total loss of use of the property as a lifestyle property.

371 I accept Mr McMahon’s opinion as to the impact of the noise nuisance on the value of Mr Zakula’s property. There was no question that he was appropriately qualified to express the opinion. He had extensive experience in valuing rural properties. His opinion was based on comparable local sales, and his rationale was well articulated. The conclusions he drew from the sales information for 1080 Buffalo-Waratah Road were particularly persuasive.

372 I am fortified in this conclusion by Mr Kininmonth’s acceptance that a noise nuisance of the kind I have found to exist would diminish the value of Mr Zakula’s property. The lower severance factor of 17.5% put forward by Mr Kininmonth during cross‑examination did not appear to me to be the result of considered analysis. In particular, it did not take account of the rental income for the wind turbines on 1080 Buffalo-Waratah Road, which enhanced the value of that property. There are no wind turbines on Mr Zakula’s property and no rental income stream of interest to a prospective purchaser.

373 Had I awarded damages instead of an injunction, I consider that it would have been more appropriate to compensate Mr Zakula for the decline in value of his property, rather than assessing damages by reference to the cost of further soundproofing measures at his house. It would have been a matter for Mr Zakula how he used that money. If he chose to remain living at the property, he could — if he wished — have spent some of the damages award on further soundproofing his house. Mr Mitchell estimated the cost of his recommended soundproofing measures, including an off‑grid energy supply, to be in the range $123,500 to $157,000 plus GST. Alternatively, Mr Zakula could have sold the property and moved away from the wind farm, in which case he would have been compensated for the impact of the noise nuisance on the sale price.

Attachments

Uren V Bald Hills Au Cases Vic Vsc 2022 145

March 25, 2022


Source:https://www.austlii.edu.au/cg…

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