Emanuel (No 14) Pty Ltd v Council of the Shire of Caboolture

[1994] QLC 20

[1994] QLC 20

 

   LAND COURT

BRISBANE

31ST MAY, 1994

Re: Claim for Compensation for Discontinuance of Resumption - Acquisition of Land Act 1967

Emanuel (No 14) Pty Ltd
  v.
  Council of the Shire of Caboolture

J U D G M E N T

On 4th August, 1992, the Council of the Shire of Caboolture (the respondent) issued a Notice of Intention to Resume to Emanuel (No 14) Pty Ltd (the claimant) giving notice that as constructing authority it intended to take land described in a schedule attached thereto for sewage treatment, sewerage, the treatment and disposal of associated effluent and sludge and for associated activities.  The schedule attached thereto was headed "Description of Easements to be taken:" and gave the title references and real property descriptions of four parcels of land totalling 937.66 hectares. 
           The original Notice of Intention to Resume was defective  as the Council intended to acquire a full interest in that land, whereas the Notice stated an intention to acquire an easement interest only.  A Notice of Discontinuance of resumption was issued on 18th September, 1992, in respect of the original Notice of Intention to Resume under cover of a letter dated 21st September, 1992.  This letter also enclosed a fresh Notice of Intention to Resume the same areas of land, but this time correctly for a full interest in the land. 
           At the date of hearing of this matter the land had not been resumed, although application has been made to the relevant Minister for gazettal of the resumption.  The Council maintains its intention to effect the resumption and the Minister is currently considering the matter.
           The claimant lodged a claim for compensation for costs and expenses incurred in respect of the discontinuance of resumption.  These comprised legal costs paid to Sly & Weigall Cannan & Peterson, Solicitors, for $720, and fees paid to Schomburgk & Long Pty Ltd, Town Planning and Environment Consultants, amounting to $18,327.43, a total of $19,047.43.
           At the hearing of this claim, the respondent admits the amount of $720 as payable in respect of legal fees but contests the payment of the other fees as not compensable. 
           The background to this matter was supplied by Mr R McL Barrett, a consultant town planner, holding the position of urban development manager with the firm Schomburgk & Partners Pty Ltd, (previously Schomburgk & Long Pty Ltd).  Mr Barrett said that the Emanuel Group of companies, which holds large areas of land in South-East Queensland, became aware that the Caboolture Shire Council proposed to acquire approximately 1,000 hectares of its land for effluent farm purposes.  The Group engaged his firm to assist them to oppose the acquisition.  In doing so, their initial approach was to endeavour to convince the Council that the acquisition was unwarranted and undesirable and that its objectives could be achieved by other means.
           To that end Mr Barrett and others met with members and representatives of the Council on 3rd February, 1992.  The purpose of this initial meeting was to try to ascertain the Council's intention and to indicate that the Group not only opposed the acquisition, but felt there were alternative ways of achieving the Council's aims.  Despite their willingness to listen, the Council representatives indicated that it was the Council's intention to acquire the land for its purpose.

The Emanuel Group controlled a number of large holdings, but there were very few in South-East Queensland with areas in excess of 500 hectares where larger scale master plan development could occur.  The land was also strategically significant because of its location, not only in relation to the Group's other lands, but in relation to the Bruce Highway, Caboolture itself and the existing regional sewerage treatment plant.
           Following further communications with the Council, Mr Barrett commenced preparing a case to put to Council that the land should be developed in a comprehensive manner which would also resolve the Council's problems to upgrade the effluent quality, without the necessity to utilise the whole of the land for effluent disposal.  Mr Barrett said that he regarded this as part of the process of objection to the taking of the land. 
           The Council had indicated that it did not think that the land was suitable for any form of urban development, largely because it was significantly affected by flooding and, to some degree, was outside the terms of the Council's current strategic plan.  Mr Barrett said that the purpose of the exercise he had undertaken was to demonstrate that the flooding was not such an issue as to prevent proper development.  Much of the flooded land was suitable for open space and recreational purposes. 
           Mr Barrett said that his aim was first, to demonstrate that the Council's objectives to upgrade the effluent quality could be met by a more suitable process than resuming the whole of the land and then using the effluent for irrigation; second, to prove that the urban development would substantially meet the cost of upgrading with no cost to the community; and third, to show that the land was not suitable for effluent disposal.
           Subsequently, further meetings were held with the Shire Chairman and other representatives and a generalised concept plan for the site, together with a brief report outlining the potential for urban development (the potentials report), was presented on 15th June, 1992.  This material was considered by the Council Development Committee on 7th July, 1992, and its recommendation to proceed with the resumption was accepted by the Council on 28th July, 1992.  The Notice of Intention to Resume then issued on 4th August, 1992. 
           Following the issue of the Notice of Intention to Resume, Mr Barrett said that he continued to prepare supplementary studies and reports for a formal objection submission.  In due course the objection was finalised with Sly & Weigall Cannan & Peterson, Solicitors, before it was lodged, containing as an appendix a copy of the potentials report previously tendered to the Council.
           Mr Barrett went on to say that as the period for objection was one month, he did not think that his firm could have prepared all the material that went into that objection in that time.  He believed that all the work done by his firm from the time the claimant was notified of the Council's interest in acquiring the land, was preparation for the objection.
           Under cross-examination, Mr Barrett confirmed that coincidental with the preparation of the objection, the Caboolture Shire Council was in the process of reviewing its strategic plan.  The proposed strategic plan was on public display from September to December 1992.  Through Mr Barrett, the Emanuel Group lodged a submission objecting to the proposed strategic plan in respect of all its land holdings in the shire, seeking to persuade the Council that comprehensive development was more appropriate than the piecemeal approach proposed. 

Attached to the submission was a copy of the second objection to the resumption, lodged in relation to the correct Notice of Intention to Resume, which is identical to the first objection document, except for the deletion of the reference to easements.  Attached to it as an appendix was a copy of the potentials report.             Mr Barrett admitted that there was no real cost in altering the first objection submission. 
           Mr Barrett said that the issue of the resumption brought forward the need to prepare proposals to put before the Council to demonstrate what  had been previously discussed in a general sense.  He admitted that all the research that had gone into the preparation of the first objection had been used in the second objection and also for the submission in respect of the strategic plan.  It therefore served multiple purposes, for lobbying the Council, for the first objection, for the second objection and for the strategic plan submission.
The legislative framework for this claim is contained in Part III of the Acquisition of Land Act 1967, headed "Discontinuance of Taking of Land". Section 16(1) provides that at any time before the publication of the proclamation taking the land, a constructing authority may serve upon a person who has been served with a Notice of Intention to Resume a further notice stating that the constructing authority is discontinuing the resumption of the land and service of such notice shall discontinue the resumption. It then goes on to provide that:

"... no person shall have any claim for compensation or other right or remedy whatsoever against the constructing authority for any loss or damage alleged to have been occasioned (directly or indirectly) by the service of the Notice of Intention to Resume or the discontinuance of the resumption except a claim for compensation for costs and expenses incurred by the person who was served with the notice and any actual damage done to the land concerned by the constructing authority."

The claimant's case is that it is entitled to the amount of costs and expenses incurred in relation to the objection to the taking of the land.  It argues that the wording of the section does not limit compensation to those costs and expenses which were incurred subsequent to the service of the Notice of Intention to Resume.  The respondent had made clear its intention to acquire the land by private treaty or to resume it.  Therefore, the cost of the work which was commenced prior to the Notice of Intention to Resume, was part of the objection process.  Although the liability arises by the service of the notice, the quantum of the liability is not limited to the costs and expenses incurred in the period subsequent to the service of the notice. 
           On the other hand, the respondent argues that there is no claim for compensation except where "a claim for compensation for costs and expenses is incurred by the person who was served with the notice".  Therefore, it argues, costs or expenses incurred prior to the service of the Notice of Intention to Resume are not compensable. 
           Second, the respondent argues that costs incurred in this case have not been thrown away as, with minor modifications, the objection and attachments form the basis for the objection to the second Notice of Intention to Resume.  They have also been used as part of the submissions to the Council prior to the service of the Notice of Intention to Resume and for the objections to the Council's proposed strategic plan. 
Third, the respondent argues, in any case, that the costs incurred in preparation of the objection to the taking of the land are not compensable. The second paragraph of Section 16(1) gives the recipient of a Notice of Intention to Resume the right to claim compensation for reasonable disturbance items if the resumption is discontinued. Costs and expenses referable to the objection to the taking of the land are simply not compensable. They are costs incurred in an attempt to stop the resumption and are not the costs and expenses that are referred to in the second paragraph of Section 16(1).
           There is little direct authority on this matter.  The judgment of the then President of the Land Court in Weld v. Gold Coast City Council (1979) 6 QLCR 8, recognised that valuation fees incurred after the service of a Notice of Intention to resume but prior to a Notice of Discontinuance of resumption were subject of a proper claim under Section 16.
           The judgment of the then President in Stanfield v. Brisbane City Council delivered on 26th July, 1989 (unreported) takes the matter a little further.  In that case a Notice of Intention to Resume for bus depot purposes issued on 18th April, 1986 and the respondent issued a Notice of Discontinuance of resumption on 18th March, 1987.  Then on 8th April, 1987, the respondent issued a second Notice of Intention to Resume the same land, this time for motor omnibus purposes and on 23rd March, 1988, a proclamation taking the land was gazetted.
A claim for $7,785 under Section 16(1) of the Acquisition of Land Act, was made up principally of valuation fees, but including town planner's fees, solicitor's fees and counsel's fees. In considering this claim at page 35 of his judgment, the President said:

"I am against the respondent's submission that `costs and expenses' as appearing in Section 16(1) are limited to legal fees. `Costs and expenses' is not a technical term. The ordinary meaning of the words is much wider than `legal fees'. There is no explicit direction in the Section that legal fees only are to be recouped. It seems to me that the intention of the legislation is that an owner who has been served a Notice of Discontinuance is entitled in addition to any actual damage done to the land concerned by the constructing authority to receive all out of pocket expenses incurred by him providing they were the natural and reasonable consequences (directly or indirectly) of the service of the Notice of Intention to Resume or of the discontinuance of the resumption."

Then at page 36 he said:

"A claim under this section it seems to me is wider than a claim under the disturbance rules set by the Merivale case in that the subject instance fees for attending conferences in attempted settlements of claim would be out of pocket expenses and tenable items."

In the event the President allowed the claim in full for the professional fees.  On appeal, the Land Appeal Court confirmed this award without any adverse comment on the President's reasoning.
           In Merivale Motel Investments Pty Ltd v. Brisbane Exposition and South Bank Redevelopment Authority (1984-85) 10 QLCR 175, the Land Court, in considering the date for the commencement of the disturbance item of legal costs, referred to the provisions of Section 16(1) of the Acquisition of Land Act. At page 207 the learned Member, Mr Barry, said:

"I am of opinion that a prudent person upon receiving a Notice of Intention to Resume his land might properly seek advice as to the appropriate amount he is likely to receive when the resumption occurs. If, per chance, the resumption is discontinued he has protection for such costs in terms of Section 16(1) of the Act. I do not see why such costs should not also be paid to that person where the resumption becomes a reality. I therefore find that, providing the costs fall within the rules stated by Romer LJ (supra) such costs from the date of receipt of the Notice of Intention to Resume should form part of the overall award."

The rule to which Mr Barry referred is that which Romer LJ expressed in Harvey v. Crawley Development Corporation [1957] 1 All ER 504, where at page 507 he determined that compensation for disturbance is payable provided that it is not too remote and that it is a natural and reasonable consequence of the dispossession of the owner. In the Merivale case at page 207, Mr Barry disallowed a claim for the costs of protracted negotiations which took place prior to the issue of the Notice of Intention to Resume and which were directed to influencing the Government to proceed in a certain way, rather than resume the land. He went on to say at page 207:

"If the Government had decided not to proceed with its plans to hold Expo 88 and had not proceeded with the resumption there would be no avenue open to the claimant to recover the costs incurred in this period.  They are costs which were incurred in commercial decisions on how the directors of the claimant company should deal with the situation as they saw it."

Included in the bill of costs in that case, were charges relating to the preparation of a formal objection to the taking of the land.  At page 208 Mr Barry said: 

"I find that the costs incurred in the objection conference were not costs incurred for the purpose of formulating and lodging the claim.  They are costs of endeavouring to stop the resumption.  They are too remote and not a natural and reasonable consequence of the dispossession of the owner."

In addition to such costs, there were also costs claimed in respect of various conferences and other activities which took place after the lodgment of the claim for compensation in endeavours to reach a settlement of that claim.  Mr Barry was unable to find that these costs fall within the rule and did not include them in his calculation of compensation.  It is with respect to the costs of such conferences endeavouring to settle the claim for compensation, that Mr Smith was referring to in the Stanfield case. 
           In the ensuing appeal, the Land Appeal Court in the Merivale case, (1984-85) 10 QLCR 268, confirmed Mr Barry's finding. The Land Appeal Court said at page 288:

"Fees outlaid in steps taken to prevent the resumption prior to the issue of the Notice of Intention to Resume have nothing to do with the resumption and are not compensable.  We cannot see that any of the claimant company's conduct prior to the issue of the Notice of Intention to Resume in this case gives rise to compensation.  We again find ourselves in agreement with the reasoning of the learned Member below."

In my opinion such reasoning extends to a claim under Section 16(1) of the Acquisition of Land Act 1967 and, in the present case, that all the activities of the claimant prior to the issue of the Notice of Intention to Resume are not compensable. However, it remains to consider the costs incurred after the issue of the Notice of Intention to Resume relating to the objection to the resumption.

The intention of the Legislature in this regard can be found from an examination of the language used in the statute as a whole. The Acquisition of Land Act is divided into five parts: Part I - Preliminary; Part II -Taking of Land; Part III - Discontinuance of Taking of Land; Part IV - Compensation; and Part V - General.
           Part II sets out the procedure for the taking of land.  Section 7 deals with the notice of intention to take land and provides that the authority shall serve a Notice of Intention to Resume.  That notice must, among other things, state that the person to whom the notice is directed may object in writing to the taking of the land.  Section 8 provides a process for dealing with objections and allows the constructing authority, after consideration of the objection, to discontinue the resumption or amend the Notice of Intention to Resume.  However, neither in Section 8 nor in any other section within Part II of the Act is there any provision for compensation for costs or expenses incurred in the objection process.
           It is not until Part III of the Act, dealing with discontinuance of taking of land, that there is any provision for compensation.  Section 16 provides for a constructing authority to discontinue the resumption before the proclamation of the taking of the land, but states that there shall be no compensation or other right or remedy whatsoever except as specified therein.  It further provides that the constructing authority and the claimant may agree upon the amount of compensation to be paid, or the matter may be determined by the Land Court.  There is no provision for the recovery of costs or expenses in respect of an objection against the resumption.
           Section 17 deals with the revocation of the proclamation of resumption before compensation is determined whereupon the land revests in the person entitled.  Subsection (4) of that section provides for a claim for compensation for loss or damage and costs or expenses incurred in consequence of the taking of the land and prior to its revesting. 
           In both sections 16 and 17 the word "compensation" is used in respect of the costs or expenses incurred in consequence of the discontinuance or revocation of the resumption.  They are immediately followed by Part IV of the Act, headed "Compensation", commencing with section 18, which provides for the entitlement to claim compensation and followed by section 19 dealing with the requirements of making such a claim.

           Section 20 deals with the assessment of compensation.  In essence, it provides for the assessment of compensation not only for the loss of land, but also for the damage caused by severance and injurious affection to other lands of the claimant, offset or abated by any enhancement of the value of any other land of the claimant adjoining the land taken.
           Compensation for costs and expenses provided for in section 16 is not directly attributable to the heads of compensation in section 20.  However, it has been well established that a landowner is entitled to claim for any losses which are the natural and reasonable consequence of the dispossession of the owner.  It is my view that the costs or expenses provided for in sections 16 are disturbance items to which the test propounded in Harvey v. Crawley Development Corporation applies.
           If the Legislature had intended that costs of an objection to a resumption be recoverable, it could easily have expressly so provided.  In the absence of such an express provision, the general test for disturbance must be applied.  Sections 7 and 8 give a landowner a right to object and a right to be heard before the constructing authority actually takes the land.  As a result of an objection, the authority may discontinue the resumption.  On the other hand, the discontinuance may be quite unrelated to the objection, as in the present case.  In any event, the costs of the objection are too remote and not the natural and reasonable consequence of the resumption.   
           On the other hand, I am of the view that the costs and expenses of seeking legal and other professional advice in relation to the Notice of Intention to Resume the land are recoverable in the present case.  Mr Smith in Stanfield has extended this to the recovery of costs of conferences and negotiations in an endeavour to settle the amount of compensation payable. Such costs and expenses are part of the compensation for the taking of the land, even though that process was discontinued. This differs from the process of objecting to the taking of the land. A landowner may well have incurred costs and expenses between the notice of intention to resume and the discontinuance, not only in seeking professional advice, but for other reasons. A sale may have been aborted, crops not planted, improvements not made, land values may have fallen, and so on. Some or all of these circumstances may give rise to a successful claim under section 16(1).
           In this case the parties have agreed to the amount of $720 claimed in respect of legal fees paid to Solicitors, Sly & Weigall Cannan & Peterson.  The statement of fees is for work done in connection with both the defective notice and the objection to the resumption.  While I have some doubts as to whether the costs in relation to the objection are compensable, the claimant is entitled to legal expenses incurred in respect of the Notice of Intention to Resume.  It is not possible for me on the state of the evidence to separate which amounts are attributable to each of these matters and I propose to award $720 as agreed by the parties.
           Therefore, I determine the compensation payable by the respondent to the claimant for costs and expenses incurred as a result of the discontinuance of the resumption at $720.
           I order the respondent to pay to the claimant interest at the rate of 7.25 per cent per annum on the sum of $720 from the date that such payment was made, up to and including the day immediately preceding the day on which payment of compensation is made.

J J TRICKETT
  MEMBER OF THE LAND COURT