Desbois v Chief Executive, Department of Transport and Main Roads (No 3)

[2022] QLC 11

LAND COURT OF QUEENSLAND

CITATION:

Desbois v Chief Executive, Department of Transport and Main Roads (No 3) [2022] QLC 11

PARTIES:

Clive John Desbois
(applicant)

v

Chief Executive, Department of Transport and Main Roads
(respondent)

FILE NO:

AQL696-19

PROCEEDING:

Remittal of application to determine compensation under the Acquisition of Land Act 1967

DELIVERED ON:

26 August 2022

DELIVERED AT:

Brisbane

HEARD ON:

Submissions closed on 18 July 2022

HEARD AT:

On the papers

PRESIDENT:

FY Kingham

ORDER:

The Court determines compensation on the following basis:1.          

Loss in land value of $934,385.(a)     

Interest at 2%/annum from the date of resumption (12 August 2016) until compensation is paid.(b)     

Disturbance of $84,000.(c)     

I will hear from the parties as to the costs of the original and remitted hearing.2.          

CATCHWORDS:

REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – ASSESSMENT – APPEAL – REMITTAL – where the Court determined compensation payable to Mr Desbois under the Acquisition of Land Act 1967 for land resumed by the Department of Transport and Main Roads for road improvements – where the applicant appealed that determination – where the Land Appeal Court remitted the matter to the Land Court for decision in accordance with its reasons

Acquisition of Land Act 1967

Brisbane City Council v Bortoli [2012] QLAC 8
Desbois v Chief Executive, Department of Transport and Main Roads [2021] QLC 43
Desbois v Chief Executive, Department of Transport and Main Roads; Chief Executive, Department of Transport and Main Roads v Desbois [2022] QLAC 1
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259

APPEARANCES:

Not applicable

1. On 16 December 2021 I determined Mr Desbois’ entitlement to compensation for land resumed by the Department of Transport and Main Roads in the sum of $948,961.00, including interest to the date of judgment.[1]

   [1]Desbois v Chief Executive, Department of Transport and Main Roads [2021] QLC 43 (‘the original decision’).

1. Both parties appealed to the Land Appeal Court. On 23 May 2022 the Land Appeal Court dismissed the appeal by DTMR on all grounds and upheld, in part, Mr Desbois’ appeal. The Land Appeal Court remitted the matter to the Land Court for determination in accordance with its reasons.[2] 

   [2]Desbois v Chief Executive, Department of Transport and Main Roads; Chief Executive, Department of Transport and Main Roads v Desbois [2022] QLAC 1 (‘the appeal decision’).

1. The Land Appeal Court found I had failed to separately determine what rate/ha should be derived from the agreed comparable sale, before determining what discount should be applied to account for the risk of a development approval condition being imposed that would have required an acceleration lane longer than 315 m.

1. No other findings were disturbed.

The applied rate

1. In my original determination, I used the rate of $400,000/ha, derived from the agreed comparable sale. In this remittal hearing, Mr Desbois says I should apply a rate of at least $650,000 while DTMR says there is no evidence to support an upwards adjustment from $400,000.

1. I reject DTMR’s submission.

1. On the evidence led at the first hearing, I found the rate of $400,000 was too low without adjustment, because it was heavily discounted for the sale’s un-costed flood mitigation risks and did not reflect the superior locational attributes of the subject site.[3]

   [3]The original decision, [152].

1. That finding was not disturbed on appeal.

1. The question in this hearing is, as the Land Appeal Court observed, how much higher than $400,000/ha the applied rate should be.[4]

   [4]The appeal decision, [162].

1. Mr Desbois’ submission that $650,000 is the minimum rate, is formulated in two steps. The first step is to account for the flood risk by adjusting the rate to $600,000. The second is to add a further $50,000 to account for superior locational attributes.

1. The figure of $600,000 is proposed ‘as a matter of logic’ because of the evidence that there was a risk that up to one-third of the site would be lost to flooding unless un-costed flood mitigation works were undertaken.

1. DTMR submitted the Land Appeal Court had rejected that figure,[5] but that is not a fair reading of the appeal judgment. 

   [5]The appeal decision, [162].

1. The Land Appeal Court rejected Mr Desbois’ ground of appeal that the rate of $400,000 was too low and should have been $600,000. It found the error was in my failure to decide what the rate should be. It made no finding about whether the rate should or should not have been $600,000. The matter was remitted so a finding could be made about the appropriate rate to apply.

1. However, I reject Mr Desbois’ submission that the rate of $600,000 arises as a matter of logic. As DTMR says, this assigns no value at all to the land that may be affected by flooding.

1. The second adjustment of $50,000 is not explained by reference to any evidence but I take this to be Mr Desbois’ best guess at a value to be assigned for the locational attributes of the subject site which I found to be superior to the sale.

1. Having decided $400,000 is too low, I must make a judgment that reflects the influence of those factors.[6] The evidence of both valuers provides little assistance. Mr Williams made no adjustment for either factor and I rejected Mr Eales’ unorthodox approach to adjusting the sale rate.

   [6]Brisbane City Council v Bortoli [2012] QLAC 8, [54].

1. The influence of those factors can be reflected by applying a % increase to the rate. I consider a 20% increase reasonably accounts for the flood risk on the sale site and the superior locational attributes of the subject site.

1. This results in an applied rate of $480,000/ha.

The discount rate

1. In my original determination, I applied a discount of 15%, in part because I found the rate of $400,000/ha was too low.[7] The Land Appeal Court found this was an error because I did not separately determine what was the appropriate discount rate to account for the risk of the disputed development condition.[8]

   [7]The original decision, [153].

   [8]The appeal decision, [156].

1. The question in this hearing is what discount should be applied for that risk.

1. The consequence of the disputed development condition is the substantial costs of widening the rail bridge if the acceleration lane was to exceed 315 m.[9]

   [9]The original decision, [88].

1. Mr Williams, the valuer called by DTMR, effectively assessed the risk at 100%, saying the cost of widening the bridge was so disproportionate that a developer would conclude the land’s highest and best use was rural. That is, the risk would destroy its value for use as a service station.[10]

   [10]The original decision, [147].

1. As Mr Desbois submitted, that is contrary to my finding, affirmed on appeal, that there were reasonable prospects of a traffic safety condition requiring an acceleration lane of no more than 315 m.[11]

   [11]The original decision, [123]; the appeal decision, [131].

1. Mr Eales, the valuer engaged by Mr Desbois, applied a discount rate of 30%. After hearing the traffic engineers’ evidence, he said he would reduce the risk considerably. That was in response to evidence given by the engineers about an alternative design option that had not been explored. Mr Eales interpreted this as reducing the risk to almost nil.

1. However, he maintained the discount rate of 30% in the valuers’ supplementary joint expert report, which was prepared after he had heard that evidence, because the market would not have access to that forensic exploration of the issue.[12]

   [12]T 4-6, line 29 to T 4-7, line 15; T 4-18, line 33 to T 4-19, line 6.

1. In assessing value for the purpose of determining compensation, the hypothetical buyer and seller are assumed to be cognisant of all circumstances which affect the land’s value, including the advice of experts on relevant factors.[13]

   [13]Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259, 276-277.

1. Accordingly, in making my determination, I must have regard to the expert evidence.

1. While neither party adverted to the alternative design option in the remitted hearing, there is other evidence the Court should consider in deciding what discount rate to apply. Mr Johnson, the traffic engineer engaged by DTMR, agreed that, if the Court were to find the traffic volumes past the site were low, then an acceleration lane of 315 m would be sufficient.[14]

   [14]T 2-36, lines 38-45.

1. I did make that finding[15] and that was not disturbed on appeal.[16]

   [15]The original decision, [117].

   [16]The appeal decision, [128].

1. That does not render the risk negligible. I took that evidence into account in finding that a hypothetical developer would be advised it had ‘reasonable prospects’ of a traffic safety condition that required an acceleration lane no longer than 315 m.[17]

   [17]The original decision, [123].

1. Given that finding, I consider a 30% discount to be too high.

1. A discount of 15% adequately accounts for that risk.

Assessment of compensation

1. The dispute between the parties related only to a 2.25 ha area of land that Mr Desbois said should be valued with a highest and best use for service station. Applying my findings above, the before value of that area is $918,000 ($480,000 (the applied rate) x 85% (the 15% discount) x 2.25 ha (the area in question)).

1. The parties agreed on the before value of balance of the land, for rural use, at $1,289,385. That means the before value of the entire area is $2,207,385 ($918,000 + $1,289,385).

1. The after value was agreed at $1,273,000.

1. The difference is a loss in land value of $934,385.

1. Interest will be awarded at 2% / annum from the date of resumption (12 August 2016) until compensation is paid.

1. Disturbance items were agreed at $84,000.

1. I will hear from the parties as to costs of the original and remitted hearing.

Orders

The Court determines compensation on the following basis:1.          

Loss in land value of $934,385.(a)        

Interest at 2%/annum from the date of resumption (12 August 2016) until compensation is paid.(b)       

Disturbance of $84,000.(c)        

I will hear from the parties as to the costs of the original and remitted hearing.2.