Cotton & Co Pty Ltd v Minister for Lands

[1990] TASSC 80

Serial No B3/1990
List "B"

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Cotton & Co Pty Ltd v Minister for Lands [1990] TASSC 80; B3/1990

PARTIES:  COTTON & CO PTY LTD
  v
  MINISTER FOR LANDS

FILE NO/S:  941/1983
DELIVERED ON:  23 January 1990
JUDGMENT OF:  Nettlefold J

Judgment Number:  B3/1990
Number of paragraphs:  20

Serial No B3/1990
List "B"
File No 941/1983

COTTON & CO PTY LTD v THE MINISTER FOR LANDS

REASONS FOR JUDGMENT  NETTLEFOLD J

23 January 1990

1. I refer to the reasons for judgment published in this case on 7 April 1989, B10/1989.

1. At a resumed hearing the plaintiff was granted leave to reopen its case. It called only one witness, Mr J S Moon a town planner. It did not recall its only valuer, Mr Jones. The defendant was also granted leave to reopen. The defendant recalled the valuer Mr Ward.

1. Mr Moon's brief from the plaintiff was to prepare a report demonstrating the possibility of a subdivision consistent with "The Statement of Policy Guidelines for Subdivision of Land in Rural Areas" (exhibit D1). Mr Moon's evidence indicates that the land was capable of being subdivided into 15 lots each of approximately 10 hectares all of which have water frontage, subject to any requirement regarding foreshore reserves, and most of which would have access to a beach. The report prepared by Mr Moon postulates one particular hypothetical subdivision but he points out that this is not to be taken as the only possible subdivision. Mr Moon says that such a subdivision might not be developed as a whole. It might be staged or even only partly developed.

1. Mr Moon's evidence is that, if the theoretical subdivision had been submitted for approval, the minimum space which would have been required for public recreation was five percent, ie 7.75 hectares. The Crown may have required foreshore reservations but whatever was taken would be included in the five per cent.

1. Mr Moon pointed out that the Guidelines, D1, set down five standard zones or types of rural subdivision to provide overall guidance for subdivision control. The types were "rural", "intensive rural", "rural forest" ("woodland"), "rural landscape" and "rural residential". The guidelines set down a minimum area for each of these types as follows:

Rural    20 hectares

Intensive Rural 10 hectares

Rural Forest (Woodland)          No Subdivision

Rural Landscape          10 hectares

Rural Residential         2 hectares

1. Mr Moon's opinion is that subdivision of the subject land should fall within the rural landscape category and therefore the minimum lot size should be 10 hectares. It will be noted that he does not contemplate the closer development involved in the rural residential type in which category the minimum allotment size is 2 hectares. Mr Moon felt that, within the "rural landscape" context, various alternatives for subdivision can be considered. He produced a diagram illustrating that theoretically the 154.9444 hectares could be subdivided into 15 lots which might meet the criteria of rural landscape lots. Mr Moon said that, if asked to professionally consider a realistic subdivision of this land with proper consideration of both private and public interests, he would, of course have produced a more subtle result with proper recognition of all the qualities of the land and cognisance of the requirements for providing public recreation areas as set down in the Local Government Act 1962. Mr Moon produced a diagram illustrating one such solution. The principal characteristics of this hypothetical subdivision are:

(a)acceptance of the principle in the subdivision as prepared by the Crown that the three main beaches should be made available for public use but with an increase in area in each case particularly towards the south to provide better opportunity to park cars where there is a view northwards along the beaches.

(b)inclusion of the northern half of Kelvedon Beach in public use, with some additional land for parking and access from the road at the northern end of the beach.

(c)retention of the dwelling on a small lot behind Kelvedon Beach.

(d)creation of littoral reservations under s473A of the Local Government Act 1962, not less than 30 metres wide to all the remaining private lots not yet so treated, but with the proviso that use and care of this land remain with the individual owners, subject to a walkway being available within this zone for use by the public for pedestrian use.

(e)subdivision of the residual rural land into eleven rural landscape lots each of ten hectares or more. This subdivision would fortuitously provide each lot so created with a particular topographical feature such as a small beach or inlet or a permanent headland. Consideration might be given to placing covenants on the use of the land and the form of development in an attempt to ensure retention of the present high visual quality of the landscape.

1. Mr Moon felt that it was clear from his study that the subject land could have been subdivided in such a way that ten high quality and readily saleable 10 hectare lots, plus a cottage on a small lot, could have been created and adequate land provided for public recreation. He felt that it would not have been difficult to apply moderate restrictions to ensure that the visual character of the land was not reduced in quality.

1. Asked in cross–examination to assess the chances of his hypothetical subdivision winning the approval of the Town and Country Planning Commissioner he said, "I'll have to read Mr Lyneham's mind of ten years ago to answer that question. He (Mr Lyneham) seemed to indicate he would be prepared to look at a subdivision where there was some balance of public and private land, but whether he would accept that particular one I can't really answer". But later he said that he thought the chance was better than even. There was an even better chance of some subdivision being accepted by the Commissioner. He felt that there was nothing inherently wrong in allowing the land to be used for something other than agricultural use. Environmentally it need not suffer at all by being owned by people who wish to build a house on ten hectares.

1. Mr Ward prepared a further proof in response to the report and proof of Mr Moon.

1. The first step in that further proof is a before acquisition – after acquisition exercise in which the highest and best use of the acquired area is assumed for the purpose of the exercise to be on part of the severance lots available for sale for residential use, those lots not being capable of further subdivision. On that basis total compensation payable would be $27,624 made up as follows:

Value before acquisition as 5
potential lots  $222,000

Value after acquisition as 5
potential lots  $200,000

$  22,000
Add for use of waterhole  $    1,000

Add for cost of supplying water
to Webber Point  $    4,624

$  27,624

1. The next step in Mr Ward's proof is to do the same exercise but with the variation of eliminating the profit and risk factor. The reason for eliminating the profit and risk factor is that Mr Jones had argued that, because the severance parcels were capable of sale without planning approval it was inappropriate to apply a profit and risk factor. Conceding that point, but for the purpose of the exercise only, Mr Ward produced a figure for compensation of $33,342. However, he pointed out that he did not resile from the position that a twenty per cent allowance for risk was appropriate.

1. Having been supplied with a copy of the report by Mr Moon, Mr Ward felt he should address himself to the task of applying values to that to see what the end result would be. On the basis of a minimum lot size of 10 hectares the maximum number of lots which the 155.5 hectares would yield is 15. He applied an average lot price of $34,000 to each of these lots. He arrived at that figure of $34,000 by going through each parcel and attributing a value to each parcel in line with what he and Mr Jones had agreed upon a the previous hearing. The price for some lots was above that figure and the price for others less but the average was $34,000. Using an allowance for risk of realisation of twenty five per cent and taking account of the usual expenses he reached a figure of $2,200 per hectare. He then applied the provisions of s473A of the Local Government Act 1962 and calculated 7.75 hectares as the amount of land to be surrendered for reserves. As the Crown acquisition comprised part of the intended public and littoral reserves, Mr Ward thought it was logical to credit the area acquired with the benefit of a five per cent dedication. That is to say when the balance land is subdivided the five per cent dedication required at that time will be calculated on the net area after acquisition, namely, 138.3 hectares. Therefore he calculated compensation for the Crown acquisition on this basis as follows:

16.74 hectares – (5 per cent of 16.74 hectares) x $2,200 per hectare = 15.9 hectares x $2,200 = $34,980. Mr Ward contends that because on this basis compensation is being assessed on a full subdivision of the land it is not appropriate to further compensate for the loss of a waterhole and the loss of stock water to Webber Point.

1. Thus $2,200 per hectare for 155 hectares became the en globo value of the land in its undeveloped state prior to any subdivisional approval.

1. In response to an allegation that the use of an en globo rate was unfair, Mr Ward disagreed saying "the areas of Crown acquisition at the time were part of larger parcels, they weren't subdivided lots as such ... we acquired small parcels off a larger area and they were in their en globo state. These parcels were not capable of sale on the open market at that time ... They were only capable of being sold as part of larger parcels – part of five larger parcels ... there is no guarantee that these areas would have been approved for subdivision".

1. On the evidence in this case the prime consideration is the highest and best use of the acquired land at the relevant date. At that date the acquired land could not be used as residential land unless it was used in conjunction with a large adjoining area. Mr Moon rejects the notion that a "rural residential" use should have been allowed. He contemplated a better than even chance of persuading the Town and Country Planning Commissioner to allow a "rural landscape" subdivision thus permitting residential use but only of a low density nature associated with controls to protect the environment. In his hypothetical subdivision exercise Mr Moon has conceded that large parcels of the relevant land should have gone into public control reducing the amount available for sale to something of the order of 110 hectares. Rereading Mr Lyneham's own evidence suggests that, perhaps, Mr Moon's assessment of the chances of getting approval for a "rural landscape" subdivision at the relevant date was a little optimistic. But, with a "rural landscape" subdivision the minimum lot size requirement militates against any high per hectare price, the evidence being that buyers are prepared to pay at a certain rate for land to put the house on but will not pay for more remote land at that high rate, the average rate overall thus being reduced.

1. I accept Mr Howarth's submission to the effect that compensation is not to be assessed on the basis that the acquired lots were separately saleable lots at the relevant date. The hard fact remains that they were not separately saleable lots at that date. The beach which was the principal part of each acquired area was obviously going to be taken by the Crown for public use. With any proposal for the subdivision of a larger area, of which the beach formed a part, the beach was going to be part of the five per cent compulsory dedication.

1. One does not have the benefit of Mr Jones' evidence on the subject of the weight to be given to Mr Moon's evidence when making a valuation of the land.

1. On the evidence one cannot say that there was a residential component in the value sufficient to justify Mr Jones' valuation. In all the circumstances his valuation should be rejected.

1. It now appears that Mr Ward's final approach is along the right lines. However, I do not accept his evidence to the effect that it is not appropriate to add compensation for the loss of the waterhole and loss of stock water to Webber Point when doing the exercise of assessing compensation based on Mr Moon's theoretical and hypothetical subdivision plan. I accept the submission of Mr Cranswick QC on that point. All the exercise does in essence is to arrive at a per hectare price for 15.9 hectares. The Crown did not take 155 hectares but 16.74 hectares. The waterhole at the southern end of Kelvedon Beach was lost as a result of the acquisition. Webber Point paddock was severed from the balance property by the acquisition (see D3, p6).

1. It will be noted that Mr Ward adopted several different approaches when assessing the compensation, each method throwing up a different estimate. In all the circumstances it is appropriate to adopt a figure at the more liberal end of his range. Compensation is assessed at the round figure of $40,000.