Erola Pty Ltd v Council of the Shire of Redland
[1998] QLC 64
•2 June 1998
|
LAND COURT
BRISBANE
2 June 1998
Re: Claim for compensation - Acquisition of Land Act 1967
(A97-46)
Erola Pty Ltd
v.
Council of the Shire of Redland
JUDGMENT
Introduction
Russell Island is situated in Moreton Bay, between the mainland and the southern end of North Stradbroke Island. Wahine Drive runs near the eastern edge of part of the island. Parcels of land lie between Wahine Drive and Canaipa Passage. One parcel is the subject land in these proceedings, Lot 14 on RP130452 in the County of Stanley, Parish of Russell.
In September 1985 Erola Pty Ltd (the “claimant”) purchased the subject land for $25,500.00. Mr James Nixon Thomson is the managing director of the claimant. His wife, Patricia Evelyn Thomson, is the only other director. The claimant is the trustee of the Thomson family trust, and Mr and Mrs Thomson are the beneficiaries. Mr Thomson wanted to live on the subject land with his wife in his retirement. He planned to build a house there, but his hopes were dashed. On 8 September 1995 the Council of the Shire of Redland (the “constructing authority”), acting under the Acquisition of Land Act 1967, took the subject land for Boat Ramp purposes. The land now vests in the constructing authority for an estate in fee simple.
The claimant is entitled to be compensated for the taking of the subject land. In January 1997 it made a claim for compensation to the constructing authority, but the parties could not agree on the amount to be paid. The claim was referred to the Land Court pursuant to section 24 of the Acquisition of Land Act. The total amount claimed was $78,000.00, plus interest. The items for which compensation was claimed and the amounts sought were:
Land $55,000.00
Injurious effect $10,000.00
Severance $ 5,000.00
Disturbance (being legal,
engineering and valuation fees) $ 8,000.00.
At the hearing, the claimant, with the leave of the Court, amended the amount claimed to $63,499.50, comprising:
Land $55,000.00
Disturbance $ 8,499.50
plus interest.
At the end of the hearing, the claim was further amended, with the leave of the Court, to a claim for $51,750.00 plus interest. The amount was calculated as follows:
Land $47,130.00
being the value of land $55,000.00
less: cost of retaining wall $4,800.00
cost of stripping surface $ 750.00
cost of fill $2,320.00
$7,870.00
Disturbance costs agreed at $ 4,620.00
The constructing authority submitted, however, that the amount of compensation payable was $6,620.00, together with interest, comprising:
Land $2,000.00
Disturbance $4,620.00.
The issues
The first issue in this case is the highest and best use of the subject land at the date of resumption. The claimant submits that the highest and best use was for residential purposes with the construction of a dwelling house. The constructing authority disagrees, contending that the land could not be used in that way. To resolve that dispute, it is necessary to consider the physical features of the land and the constraints on its development which applied at the date of resumption.
Once the highest and best use of the land has been determined it will be possible to resolve the second issue, namely the value of the land taken.
The subject land
The subject land is a fan shaped parcel with an area of 26.6 perches (approximately 673 square metres), a 4 metre frontage to Wahine Drive and an absolute frontage to Canaipa Passage. The highest level of the land is almost 1.9 metres Australian Height Datum (“AHD”) at the boundary with Wahine Drive. The land slopes away to about 1.7 metres AHD at most of the water frontage, with some of the eastern corner being at a lower level and subject to tidal inundation.
Wahine Drive has a dirt surface past the subject land, but 180 metres to the south it intersects with the bitumen surface of Barcelona Terrace. An uninterrupted view across Canaipa Passage to North Stradbroke Island is available from the land.
Mr Thomas Kinivan, a valuer called by the claimant, described the subject as “Sound land, except for a little erosion on the eastern most point; partly cleared and partly timbered with cypress, oak, wattle and eucalypts; enjoys good water and island views and has deep water immediately in front of the land” (Exhibit 12).
Highest and best use
The subject land is zoned Residential A and is located in an area allocated for Residential A purposes in the Development Control Plan for Russell Island. The Strategic Plan for the Shire includes the locality in a Preferred Dominant Land Use designation of Urban (Exhibit 6).
At the date of resumption the Residential A zone was described in the Town Planning Scheme for the Shire of Redland (the “Town Planning Scheme”) as “intended to cater primarily for dwelling houses on allotments generally with an area of up to two thousand (2000) square metres and with all services normally provided in urban areas, including sewerage.” (Exhibit 14 page 874)
It was expected that town water would become available to the subject land. There was inconsistent evidence about whether electricity and telephone services were available (see Exhibits 12 and 16).
When the claimant purchased the subject land, the building of dwelling houses on Residential A zoned land was an as-of-right use. In February 1997 the situation changed in relation to Residential A zoned land on the Bay Islands, including Russell Island. The construction of a dwelling house on Russell Island became a purpose for which land may be used “subject to the applicant receiving notification of the approval pursuant to the administrative requirements of the town planning scheme” (Exhibit 14 page 879A).
There are, it seems, no records of any consents, permits or approvals granted relative to the subject land pursuant to section 33 of the Local Government Act 1936 or pursuant to the Local Government (Planning and Environment) Act 1990 (Exhibit 6). The constructing authority submitted that a house could have been built on the subject land when the claimant purchased it but could not have been built once the Town Planning Scheme came into effect.
The Town Planning Scheme was gazetted on 20 February 1988, nearly two and a half years after the claimant purchased the subject land. At the date of resumption, clauses 16 and 17 in Division 5 stated:
“16. Filling and Drainage
(1)Notwithstanding any other provisions of the scheme or the by-laws, no person shall, without the written approval of the Council, change or cause to be changed, the natural surface levels of any allotment or group of allotments except -
(a)as a condition of approval to subdivide land or open a new road in accordance with the Subdivision of Land By-laws;
(b) as a condition of a building permit;
(c)pursuant to a consent issued under this scheme for the development or use of the subject land;
(d)for purposes of landscaping the immediate surrounds of an existing or approved building or other structure;
(e)for purposes of storing surface water in connection with the use of land for bona fide rural pursuits.
Provided that an approval pursuant to this subclause to fill an allotment or group of allotments which are subject to flooding of a frequency of more than one (1) in fifty (50) years shall not be granted except where such filling is of a minor nature.
(2)(a) Where the consent of the Council is not required under the scheme for the use of land or the erection or use of a building or other structure for any purpose, the owner, before such use is commenced or plans of the proposed building or other structure are submitted for approval of the Council, shall ascertain the Council’s requirements, if any, as to drainage or filling or drainage and filling the subject land to render it fit for such use of land or the erection or use of a building or other structure.
(b)The owner shall comply with all such requirements which shall be deemed to be a condition of approval of the building plan if the erection of a building or other structure as aforesaid is proposed.
17. Minimum Development Levels
(1)Notwithstanding any other provisions of the Scheme or the by-laws, no person shall, without the written approval of the Council, erect a building within the flood plains of any watercourse on any land which is subject to flooding at a frequency of more than one (1) in 100 years.
(2)Notwithstanding any other provisions of the Scheme or the by-laws, no person, shall, without the written approval of the Council, erect a building with a floor level of less than 300 mm above flood level at a frequency of one (1) in one hundred (100) years where such building is located on an allotment within or adjacent to a flood plain.
(3)Notwithstanding any other provisions of the Scheme or the by-laws, no person shall, without the written approval of the Council, erect a building with a floor level of less than 2.7 metres and the ground below such building shall be filled to a level of not less than 2.4 metres on Australian Height Datum.
Where the construction of such building requires also the disposal on site of septic and sullage wastes, the Council shall determine whether such site is capable of containing such wastes and may determine the minimum level and type of filling for the disposal of septic and sullage wastes if it approves of such method of disposal.”
Although not zoned as Drainage Problem land, the land was subject to flooding of a frequency of more than one in fifty years. Consequently, the effect of those provisions on the development of the subject land at the date of resumption was that fill would have been necessary before building would have been approved. The effect of clause 17 was to put the minimum ground level for building at 2.4 metres AHD. Where filling was necessary to bring the ground to that level, approval to fill the allotment would not have been granted “except where such filling is of a minor nature”.
The critical issue in deciding the highest and best use of the subject land is whether the necessary fill on that land would have constituted filling “of a minor nature”.
Before dealing with the evidence on that point, it is appropriate to deal with a separate but related issue. The claimant submitted that, in discussions preceding the hearing, the constructing authority had argued that the subject land could not be used for residential dwelling purposes for two reasons other than that the filling was not of a minor nature.
First, the constructing authority’s Supervisor of Property Services had stated at a meeting on 18 October 1996 that “the only thing preventing the site being worth $55,000.00 was the soil test that had been carried out on the site, and the problems with the septic and effluent, which meant that the site could never be built upon” (Exhibit 9). The evidence demonstrated, however, that the soil percolation tests on which the constructing authority relied were done on land other than the subject land. Soil permeability on the subject land was good and there were no problems with percolation.
Second, at a meeting in January 1997, the representative of the constructing authority contended that there was insufficient room on the subject land to fit a dwelling house and associated septic and sullage trenches. The constructing authority’s assessment of the potential of the land was later demonstrated to be wrong.
By the time of the hearing there was no issue about the potential for a house to be constructed on the subject land, so long as the land was filled to the relevant level. Mr Brian Appleton, a civil engineer who was at the time of the hearing the constructing authority’s Acting Director Environment Planning & Development and Acting Manager Building Services, expressly stated that the subject land could support a 2 bedroom dwelling and the requisite septic and sullage trenches. In making that assessment he had used the plan prepared for the claimant by Envirotech Treatment Systems. He concluded:“In accordance with the provisions of the Australian Standard 1547 and the Redland Shire town planning scheme, the site would have to be filled to a level of RL 2.4m AHD in the area of the trenches and the house pad. As a consequence, this requires the perimeter of much of the lot to be constrained by retaining wall.” (Exhibit 18)
There was thus no issue that it would have been possible to build a dwelling house on the subject land, and that it would have been necessary to import filling to the site for that purpose. The matter in dispute was whether, as at the date of resumption, the owner of the subject land could have expected to have been granted approval to fill the land to a level of 2.4 metres AHD in order to build such a house.
The constructing authority’s submissions: The constructing authority submitted that approval to fill the subject land to the requisite level would not have been granted. Having referred to the need to test any proposal to fill the subject land against the provisions of the Town Planning Scheme, Mr Appleton stated:“Filling of this allotment is extensive as shown in the attached working plan, where retaining walls ring the site, and the land is to be filled from the front road alignment to the Moreton Bay frontage.” (Exhibit 18)
As an officer of the Council responsible for making recommendations on filling applications, Mr Appleton stated that he would have recommended to Council that the filling application not be approved.
In his oral evidence Mr Appleton stated that there were no written guidelines or formally endorsed policy statements about what is or is not filling “of a minor nature”. He listed, however, the following factors which he understood were considered when assessing each application for approval to place filling on land:
(a) the area of the land;(b)the area of the land proposed to be filled as a proportion of the total area of the land;
(c) the location of the proposed fill;
(d) the depth of the proposed fill;
(e) whether the fill would require any engineering stabilising techniques;
(f)whether the proposed filling is required to facilitate a logical use of the land which would otherwise still be able to proceed or the fill necessary to bring the land into such use at all.
The evidence in relation to those factors was as follows:
(a) - (d) The subject land has an area of approximately 673 square metres (or 26 perches), a common size of block on Russell Island. All of the land (other than the eastern corner which is subject to tidal inundation and is to be ignored for present purposes) would have to be filled, most of it to 2.4 metres AHD. As the contours of the land range from the highest point of almost 1.9 metres AHD at the boundary with Wahine Drive to just below 1.7 metres AHD at the water frontage, the land would have to be filled at a depth ranging between approximately 500 mm and 700 mm. The fill would have a volume of 232 cubic metres (see Exhibits 15, 17, 18).
(e) The fill would require engineering stabilisation techniques. It was agreed that a retaining wall some 52 metres long would have to be constructed. It could be either a boulder wall or a blockwork wall with concrete footing. There was evidence that a boulder wall would be appropriate at least along the waterfrontage. The cost of the boulder wall at the relevant date was estimated to have been $4,800.00.
(f) There was no doubt that, as at the date of resumption, a house could not have been built legally on the subject land in its unfilled state. The proposed filling was necessary before a house could be built.
The claimant’s submissions: The claimant submitted that the volume and the depth of fill required before building would be approved on the subject land was fill “of a minor nature”. It relied on the evidence of two engineers to support that contention.
Mr Neil McKenzie, a civil and structural engineer with extensive experience in domestic construction work, considered that fill on the subject land to a depth of 600 or 700 mm would be fill of a minor nature. He compared that with other projects in which he had been involved - one with a mound about two and a half metres high at a child care centre, and another, a house with a mound approximately 2 metres high. His basis of assessment was the depth rather than volume of the fill. Mr McKenzie also said that a boulder wall 52 metres long and 600 mm high would adequately retain the fill (Exhibit 13).
Mr Chris Palmer, a civil engineer who specialises in waste water treatment, said that the addition of fill to the site to an average depth of 565 mm “can quite correctly be categorised as ‘filling of a minor nature’”. In his opinion, the quantity and depth of material to be placed is small in engineering construction terms. He cited, by way of illustration, the formation of a level building site on the side of a hill where the volume of cut and fill would far exceed what would be required for the subject land. He also stated that retaining walls of 600 mm high are regarded in engineering parlance as minor structures (Exhibit 19).
In response to that evidence the constructing authority submitted that the issue in this case cannot be resolved simply by looking in absolute terms at the quantity of the fill and comparing it to, say, a significant reclamation or a significant cut and fill operation.
The claimant also argued that the constructing authority would not have refused to approve development on the land because:
(a) the land had not been rezoned for other than Residential A purposes; and
(b) the constructing authority had rated the land as residential land.
The claimant submitted that, even if Mr Appleton had rejected an application to fill and build on the subject land, the claimant could have exercised its rights of appeal under s 30BA of the Building Act 1975 and s 7.1 of the Local Government (Planning and Environment) Act 1990. Section 30BA (which was omitted in 1998) provided, at the date of resumption, that if an application was made for approval to carry out building work and a planning scheme applied to the relevant land, then the local government must consider the purpose of the application. It must decide whether, because of the planning scheme, the building work could be lawfully carried out only if the land were to be rezoned or if the local government’s approval, consent or permission was obtained (or both). If the local government decided that the building work could be carried out only in one of those circumstances, and if the applicant was dissatisfied with that decision, the applicant could appeal to the Planning and Environment Court. The Court could allow the appeal in part or in whole or dismiss the appeal.
Section 7.1 of the Local Government (Planning and Environment) Act 1990 provided that an applicant who was dissatisfied with a decision of a local government or conditions applied pursuant to the planning scheme with respect to the use of any premises or the erection of a building permitted by the planning scheme, could appeal to the Planning and Environment Court.
The constructing authority submitted that the application to fill the subject land at the date of resumption would have been refused and such refusal would have been maintained if any appeal had been lodged.
The claimant contended that its prospects of success on appeal would have been good because other blocks on Wahine Drive had been filled to some extent and good quality homes were constructed on them. Evidence was given in relation to six waterfront blocks on Wahine Drive and three waterfront blocks on Macleay Island. Some of the evidence was impressionistic, based on Mr Thomson’s observations or photographs of the land. Below is a summary of evidence about each block - moving southwards from the subject land, then to the Macleay Island blocks.
Lot 17 is three lots south of the subject land. It has similar contours to those of the subject land at the date of resumption. According to Mr Appleton, an application to fill the land has been refused by the constructing authority.
Lot 18 is four lots to the south of the subject land. It is slightly higher than the subject land, most of it being above 2 metres AHD (Exhibit 23). During the month in which the subject land was resumed, a house was built on filled land at a level higher than the surface of the neighbouring Lot 17 to the north. According to Mr Appleton there is no approval to fill Lot 18 but there was evidence that approximately 350m² of filling was used on that Lot. Apparently “not much fill was required at the Wahine Drive end of the block” but there was a large amount of fill required at the waterfront end” (Exhibit 40). The house was built on about the middle of the block. It is not clear how much fill was necessary for the construction of the house (which is elevated above the surface level) but it was much less that the volume provided to the site (see Exhibit 26).
Lot 982 has fill over what Mr Thomson estimated was 40 per cent. of its area.
Lot 976 is a house site with fill on the lower part of the block which Mr Thomson estimated to be about one metre deep. The land is a sloping block which a contour plan shows may be as high as 9.7 metres AHD at the frontage to Wahine Drive and is above 2.4 metres AHD to within 3 and 4 metres of the waterfrontage boundary. The land slopes to about 2 metres AHD at that boundary (Exhibit 34). The house site and most, if not all, of the fill is above the 2.4 metre line.
Lot 972 has, at the waterfront boundary, fill which Mr Thomson estimated to be about 1 metre deep. The fill had been placed there within a year before the hearing of this case. A plan shows that the residence and sullage and septic trench positions were all above the 2.4 metre contour (Exhibit 35).
Lot 969 has fill from the house site down to the waterfront and Mr Thomson also estimated the depth of fill to be about 1 metre. The land slopes from a height of about 5.25 metres at the Wahine Drive frontage to about 1.5 metres at the waterfront boundary. All of the sullage and effluent trenches and most of the house pad are above the 2.4 metre contour line. All of the slab is above 2.0 metres (Exhibit 36).
Lot 271 in Coondooroopa Drive, Macleay Island has fill to a depth of about 600 mm for about 40 metres from the house towards the water’s edge. It was Drainage Problem land. Most of the block, including the house site, is above 2.4 metres (Exhibit 39).
Lot 9 Charles Terrace, Macleay Island was described by Mr Thomson as a low site which is susceptible to partial inundation at high tide. The contour plan shows that most of the block is gently sloping between 2.5 and 1.5 metres. Mr Appleton did not know, but expected, that there may be some filling around the dwelling house. He was not aware of any approval for filling to take place there (Exhibit 39).
25 Beelong Street, Macleay Island is a wedge shaped block with a cross slope between 3.88 and 2.96 metres at the street frontage to swampy land below 1.5 metres at the Moreton Bay frontage (Exhibit 43). Mr Appleton said that the septic and sullage trenches and most of the dwelling were above the 2.4 metre line, with some filling associated with the building below that line. He estimated the filling to be on an area of about 90 m² at a depth between zero and 600 mm (Exhibit 43). There was a “nominal amount of filling associated with the building approval”. It was “minor filling”.
Little can be said about Lots 17, 18 and 982 other than that approval to fill has not been given in relation to the first two lots. The blocks about which there was sufficient evidence to form an informed conclusion were Lots 976, 972, and 969 on Wahine Drive, and the three Lots on Macleay Island. A significant difference between those blocks and the subject land is that each of the other blocks had a significant area which was above 2.4 metres AHD. As noted, most if not all of the house pad area on each site was above that height. Any fill below that line which was related to building on the land was fill of a minor nature. The land had potential for residential purposes which could be achieved either with no fill or minor fill. By contrast, the subject land had to be filled before that potential could be achieved. Without the fill, it could not be used for that purpose. In other words, fill on the subject land would establish the use of the land rather than merely facilitate the better use of the land for dwelling house.
The plan showing the contours of the subject land and neighbouring blocks (Exhibit 15) demonstrates that neither that part of Wahine Drive fronting the subject land nor the neighbouring parcels had a contour at or above 2.4 metres AHD. If the block were to be filled to 2.4 metres AHD, its surface would have been approximately 500 mm or more above that of the neighbouring street and land parcel levels. If the subject land had been filled and neighbouring blocks had not, retaining walls along common boundaries may have been necessary.
Some evidence was led concerning a building application made in 1989-90 in relation to the adjacent Lot 13. Apparently the application was approved, but it was not clear how much filling would have been required for the proposed development or what other conditions applied. It is possible that any approval was given before the 2.4 metres AHD requirements commenced to operate on 15 November 1990. For those reasons, no inference can be drawn which favours the claimant’s case.
There was also evidence (Exhibit 41) that, in 1994, the constructing authority had considered carrying out “minor filling” east of Lots 67, 68 and 69 to enable a 70 car trailer car park to be constructed. No mention was made of the volume, depth or extent of the fill which would have been required, but Mr Appleton disagreed with the suggestion that more filling would be required for that purpose than for building a house on Lot 14. He said that there is no pre-requirement or expectation that a trailer park is going to be protected from a storm surge of a 100 year nature.
Mention was made of a parcel of land at 46 Coorong Street, Macleay Island, which has contours below 2.4 metres AHD. Fill had been placed on the site without council approval and the council issued instructions that the work cease. Although that occurred, it seems that approval may have been given to building on the site.
That evidence supports a conclusion that the claimant would not have succeeded on appeal against a decision by the constructing authority not to grant approval to build a dwelling house on the subject land. An application to fill land was refused in relation to Lot 17, a block that has similar contours to those existing on the subject land at the date of resumption and, apparently, approval was not granted for fill on Lot 18. The other lots where approval for filling was granted were significantly higher than the subject land at the date of resumption, most if not all having contours above the critical 2.4 metres AHD level, particularly where a house and associated septic and sullage trenches were located.
The claimant also placed some reliance on the decision of the Land Court in Crelga Holdings Pty Ltd v Commissioner of Railways (1991) 13 QLCR 311. In that case there was a dispute about the amount of filling which may have been permitted on land before and after resumption. The Court held that, while a negotiation and appeal process may have been necessary, it was a reasonable expectation that sufficient filling should have been permitted on the parent parcel to accommodate a residential development. The decision in that case is distinguishable from the present case because, in the Crelga Holdings case, there was no dispute that in both the before and after resumption situations the highest and best use of the land was for rezoning to allow residential development. Some filling would probably be required in each instance. The dispute concerned the extent of filling and the density of development that might have been permitted, rather than whether any filling would have been permitted or residential development allowed. The Court concluded that, although the Shire would have endeavoured to restrict building development to the flood free land or its immediate environs, the engineering evidence indicated that, in the special circumstances of location outside the river flow path where the requisite filling was seen to have negligible effect on the flood storage requirements, where other filling development had been approved and in an area where filling was permitted, a strong challenge to a filling restriction was capable of being mounted. The facts in the Crelga Holdings case are significantly different from the facts in the present case and the decision of the Land Court is of no assistance to the claimant.
The issue determined: To determine whether the highest and best use of the land was for residential purposes it is necessary to decide whether the filling which would have been necessary on the subject land would have constituted filling “of a minor nature”. To resolve the issue it is necessary to determine the meaning of that expression then critically examine the facts in relation to the necessary filling of the subject land.
There are no authoritative decisions on the meaning of “minor nature” in this context. The ordinary English meaning of “minor” is “comparatively small or unimportant” (see Shorter Oxford English Dictionary, 3rd edn, p 1329) and “lesser, as in size, extent, or importance, or being the lesser of two” (see Macquarie Dictionary, 2nd edn, p 1133). In this context, “minor” carries a sense of proportionality (see Attorney-General v Woollahra Municipal Council (1980) 41 LGRA 376 at 390-1). In other words, there is no objective or arbitrary measure of what is or is not filling of a minor nature. The issue of comparative smallness or proportionality is not to be determined by reference to projects of a much larger scale which required fill. The proviso to clause 16(1) of the Town Planning Scheme refers to approval to fill “an allotment or group of allotments”. The relevant context in which to assess proportionality in this case is the subject land (which is a commonly sized allotment), not a housing estate or a larger development than that which might have been possible on the subject land. The question is whether the fill required to fill “an allotment” (that is, the subject land) is “of a minor nature”.
The expression “minor nature” is perhaps curious in this context. On one reading, it is the character, kind or sort of filling, rather than its volume, to which the clause refers. If that were so, it might be arguable that volume was of little, if any, relevance. But what type of filling is minor and what is not for these purposes? The case was argued on the basis that the expression “minor nature” in this context referred to the quantity rather than the type of filling, and it is on that basis that the issue will be determined.
Although the Town Planning Scheme provides no criteria for determining whether or not fill on a particular allotment is fill of a minor nature, the criteria listed by Mr Appleton, provide comprehensive and reasonable guidelines for assessing proposals for an allotment.
The evidence summarised earlier shows that the subject land could not be used for building purposes unless the surface was filled to 2.4 metres AHD. None of the land was at that height. Consequently it would have been necessary to put fill on all of the block, and to construct a retaining wall. The fill would have been at least 500 mm deep and would have been about 700 mm deep in places.
Having regard to the area of the subject land, the area of the land proposed to be filled as a proportion of the total area of the subject land, the location of the proposed fill, the depth of the proposed fill, the requirement for engineering stabilizing techniques, and the fact that the proposed fill would have been required to facilitate a use of the land which would not otherwise be able to proceed, I am satisfied that the necessary filling would not have been “of a minor nature”.
The evidence leads clearly, if not inevitably, to the conclusions that, at the date of resumption:(a)if fill had been allowed and an appropriate retaining wall had been constructed, a dwelling house could have been built on the subject land;
(b)the subject land was within the one in fifty year flood area and the filling which would have been required to ensure that the surface of the subject land was at 2.4 metres AHD would not have been filling “of a minor nature”; and
(c)consequently, approval would not have been granted to the filling of the land nor to the construction of a dwelling house on the land.
At the date of resumption, the highest and best use of the subject land was not for residential purposes. Its highest and best use, however, cannot be determined with any precision on the available evidence. Mr Kinivan suggested that people could have picnicked and camped on the land and may have been able to launch a boat into the water next to it. He also suggested that it may have been possible to put a private boating facility there or, in concert with adjoining land owners, develop a commercial boating enterprise. The resumption of the land for boat ramp purposes confirmed the special waterfront features of the subject land, but no evidence was led as to how the land might be used or what value it would have because of its suitability for boating related purposes. As commercial boating enterprises were not permitted on Residential A zoned land, the land would have to be rezoned for such use. Those options were not explored. All that emerged with clarity was that the land could not be used for residential dwelling purposes.
However unfair it may seem to the claimant, it is irrelevant to the determination of this appeal that the constructing authority has filled the resumed land (although not to a level of 2.4 metres AHD over all the block) for use as community facility, namely a boat ramp. As the constructing authority submitted, there is a difference in planning terms between filling a single parcel of land for the purposes of providing needed community infrastructure and the filling of a parcel of land for private residential purposes.
Value of the resumed land
The claimant’s principal submission was that, if a dwelling house could be built on the subject land, the land was worth $55,000.00, less the cost of bringing the land to a state suitable for that purpose. Those costs were estimated to be $7,870.00. Alternatively, if a house could not be built there, the land was worth $25,000.00.
The constructing authority’s principal submission was that, because approval would not have been granted for the construction of a dwelling house, the subject land should be valued at $2,000.00. Alternatively, if building had been permitted, the land would be valued at $55,000.00 less the costs necessary to bring the subject land to a state upon which a house could be built. Those costs were estimated to be $15,834.00 (Exhibits 16 and 17).
Because I have decided that, at the date of resumption, approval would not have been granted for building a dwelling house on the subject land, it is not necessary to determine the cost of bringing the land to a state suitable for that purpose. As the constructing authority’s principal submission related to land on which a house could not be constructed, it is appropriate to consider first the construction authority’s submissions on the value of the land.
The constructing authority’s submission: The constructing authority relied on the evidence of Mr Brian Hall, a valuer experienced in public and private practice. He assessed the value of the subject land at the date of resumption to be $2,000.00 on the basis that the land was an irregularly shaped, vacant block of low lying land which was only slightly above high water level and to which no services or amenities were then connected (though electricity and water services would be available in the future). He had been advised by the constructing authority that the land is “unsuitable for building purposes due to the fact that sewerage and waste water effluent cannot be absorbed on the site”. That advice was based on the soil percolation tests which, as noted earlier in these reasons, were on land other than the subject land. In his opinion, the land “has no use other than to remain as vacant land unless at some time in the future the area was sewered by the Council” (Exhibit 16). It is apparent from his written valuation report that Mr Hall proceeded on the correct assumption that building was not allowed on the land, but that the factual foundation for that assumption was incorrect.
Mr Hall considered various sales including sales of Drainage Problem land and said that the effect on value of not allowing building on land was the same as the effect of drainage problems. Sale prices ranged from a few hundred dollars to “some quite high prices”. In his opinion, the high prices were paid by uninformed buyers, that is, persons who were either unaware that they could not build on the land or who had acquired the land as part of a wider range of dealings. He also noted that some land was given to the constructing authority (Exhibit 24). Because there was, in Mr Hall’s opinion, “a huge ... disparity in values between waterfront land that you can’t use at all and waterfront land that you can use”, he selected sales of land in reasonably elevated areas that were zoned Residential A and on which a building could be constructed. Those sales were parcels that “could be bought for the $2,000.00 figure that fell within the range that Council were paying to buy back land that was in this non-buildable drainage problem areas”. He explained that the constructing authority was “the only real buyer for land that couldn’t be built on” and that it was not paying more than $2,000.00 for those types of blocks. Mr Hall acknowledged that his approach was not orthodox. He had tried to find some methodology to arrive at a compensation figure that would allow the dispossessed owner to have a block on which he could build.
The evidence about the five sales on which Mr Hall relied to support his valuation of the subject land was as follows:
Lot 21 on RP131859, Bilbungra Street, has an area of 825 m². The land is almost triangular and slopes from a level of above 5.75 metres AHD at the road frontage to below 2 metres AHD at the lowest corner. It was sold on 20 February 1995 for $2,000.00.
Lots 337 and 338 on RP123820, Manor Hill Road, have an area of 1,092 m² and range in height from about 7.5 metres AHD to about 6 metres AHD. The two blocks were sold on 20 December 1994 for a total of $2,000.00, an average of $1,000.00 for each block.
Lot 532 on RP122556, Rampart Drive, has an area of 582 m² and rises from about 11 metres AHD at the street frontage to 13.5 metres AHD. It was sold on 9 January 1995 for $1,800.00.
Lot 59 on RP129103, Rumbin Street, has an area of 556 m² and rises from about 9 metres AHD at the front to 11 metres AHD. It was sold on 18 December 1994 for $1,575.00 and again in 1995 for $5,500.00.
Each of those four blocks is well inland, on an unmade road and lacks a water view, let alone a water frontage. The vegetation on some of the blocks suggests that they have poor drainage. It is possible, however, to build on each of them.
Lot 32 on RP130452, Wahine Drive, has an area of 617 m². It is a low lying block, most of which is between 1.5 and 2 metres AHD. The land is on the western side of Wahine Drive, lacks a water frontage and is next to a Drainage Problem block (Lot 33). It was sold to the constructing authority on 27 May 1996 for $2,000.00 by someone who, in Mr Hall’s opinion, was keen to dispose of the land and could not attract a buyer who would pay more. Although the sale was after the date of resumption, the constructing authority submitted that it is the most comparable sale for present purposes. The land is close to, and has similar elevations to, the subject land. Although the land is zoned Residential A, Mr Hall doubted whether permission to build in the land would be granted.
Mr Hall also noted that the Valuer-General had assessed the unimproved value of the subject land as at 30 June 1994 to be $1,700.00.
The claimant submitted that Mr Hall had not compared like with like. Four of the sale blocks on which he relied were well away from the subject land, near the middle or western side of the island. Access to them was poor and some had poor drainage. None had a water frontage or noteworthy views. In Mr Kinivan’s opinion, those blocks were not comparable with the subject land. I agree.
Although Lot 32 is the block most comparable to the subject land, the claimant submitted that sales like that to a local government should be given little weight (see Merivale Motel Investments Pty Ltd v Brisbane Exposition and South Bank Redevelopment Authority [1988] 2 Qd R 562 at 564 per Matthews J (with whom Ryan J agreed) and cases cited there, particularly Wollams v The Minister (1957) 2 LGRA 338 at 347). The claimant also submitted that the fact that blocks have been handed back to the constructing authority (as listed in Exhibit 24) should be given no weight at all. Subject to a qualification expressed later in these reasons, I am in general agreement with that submission.
The claimant’s submission: The claimant relied on the evidence of Mr Kinivan, also an experienced valuer. He assessed the value of the resumed land at $55,000.00 on the basis that doubts about drainage and elevation should be resolved in favour of the claimant. In his written valuation report (Exhibit 12) Mr Kinivan had regard to two sales.
Lot 18 on RP124698, Wahine Drive, has an area of 754 m². Much of the land is above 2 metres AHD but none of it is above 2.5 metres AHD (Exhibit 23). It was sold on 21 July 1995 for $58,000.00. The land is about 60 metres south of the subject land. It has a water frontage and access by way of Wahine Drive. Mr Kinivan believed that the land was cleared and had some filling placed on it before the sale. As noted earlier, a house has been built on the land even though, according to Mr Appleton, there was no approval for filling on the land. I infer that the sale price reflected the purchaser’s belief that a dwelling house could be constructed on the land.
Lot 979 on RP122553, 55 Wahine Drive, has an area of 746 m² and most of the land is above 2.4 metres AHD (Exhibit 20). It was sold on 14 March 1996 for $57,000.00. The land is about 250 metres south of the subject land. It also has a water frontage and access by way of Wahine Drive. The lengthy jetties from adjoining blocks suggest that deep water is not immediately available to this property.
Mr Kinivan made no allowance in his calculations for the cost of fill or a retaining wall, nor had he allowed anything for the risk that approval to build on the subject land would not be granted. Given my findings that filling would have been necessary on all of the subject land and that approval would not have been granted for building on it at the date of resumption, those sales are of no assistance in valuing the land and its value cannot have been $55,000.00.
In the alternative, Mr Kinivan suggested that a value of $25,000.00 could be supported by reference to a combination of the following factors:
(a) comparable sales;(b)the possibility that sewerage would have been provided to the subject land at some future date; and
(c) to a lesser extent, the purchase price paid for the subject land by the claimant.
Comparable sales: Mr Kinivan said that the figure is supported by sales of comparable blocks on Wahine Drive, namely, Lots 137 and 138, 132, 30, 67-69, and 70.
Lots 137 and 138 Wahine Drive are reasonably elevated, non-waterfront blocks located to the north-west of the subject land. Lot 138 is a battleaxe block with an area of 822 m². Most of the land is behind Lot 137, which has an area of 605 m². Views are available from the blocks. Their levels are higher than those on the subject land. Lot 137 is between 2 and 2.5 metres AHD and most of Lot 138 is between 2.5 and 4.5 metres AHD (Exhibit 21). The land is zoned Residential A and those levels suggest that building would be permitted, at least on Lot 138. For that reason, Mr Hall considered them to be superior to the subject land. Lots 137 and 138 were sold together in December 1993 for a total of $19,600.00.
Lot 132, further north of the subject land and further inland from the coastline, has an area of 539 m². It is zoned Residential A and was sold in February 1994 for $10,000.00. It is a higher block than the subject land, rising from just below 2.5 metres AHD at the road frontage to about 7 metres AHD at the rear (Exhibit 22). Despite its elevation, Mr Kinivan did not consider the land to be superior to the subject which, he stressed, had a deep water frontage.
In Mr Kinivan’s opinion, Lots 132, 137 and 138 were not directly comparable with the subject land because the sale blocks lacked a water frontage. Because Lots 137 and 138 and 132 could be built on, Mr Hall considered that they are useable blocks and considered that the sale prices reflected their values.
Lot 30 on Wahine Drive is to the south of the subject land and is on the opposite, inland side of the road, across from Lot 18 referred to earlier. It was sold in February 1995 for $12,000.00. Although Mr Kinivan described it as reasonably high, near level land, most of the land is at or just above 2 metres AHD (Exhibit 23). It was semi-cleared but had eucalyptus and tea tree growing on it which, Mr Kinivan suggested, was evidence of a drainage problem. The land is zoned Residential A. Mr Kinivan noted that the land did not have a water frontage and said that, everything else being equal, the waterfront land should be more valuable. Although Mr Hall was unable to say whether building might be permitted on the block, the contours as shown on the plan in Exhibit 23 suggest that it could not be built on without fill on most if not all of the block. It is not possible to determine whether such fill would be fill of a minor nature. There was no evidence about whether the purchaser thought that construction on the land would be permitted or the purpose for which the land was bought.
Lots 67 to 70 are water edge parcels to the north of the subject land. They were purchased by Mr Abrahamson who Mr Kinivan interviewed and described as a “prudent man” and “someone who did know what he was on about”. Mr Kinivan inferred that the purchaser knew that the land was zoned Drainage Problem and that expert advice would have been necessary to convince the constructing authority that it should allow building there. In Mr Kinivan’s opinion, Lots 67 to 70 are inferior to the subject land because they are further north along a dirt road, are poorly drained, and have inferior water frontage features. Unlike the deep water frontage to the subject land, there are shallow mangrove flats adjacent to these Lots. Despite those features, they sold for a total of $29,500.00 (Lots 67 to 69 as one parcel for $19,500.00 in January 1994 and Lot 70 for $10,000.00 in 1993), an average price of $7,500.00 per block. Apparently the purchaser informed Mr Kinivan that he had got a bargain because he had purchased Lot 70 from a developer who was keen to dispose of the last of the blocks which he owned. Although there was no direct evidence about the purpose for which the land was acquired, it is possible to infer from the evidence noted earlier in these reasons that the land had potential for commercial (possibly caravan park) purposes.
According to Mr Kinivan, although a Drainage Problem zoning is “normally a killer on values”, people will pay substantial sums for such blocks if the land has an absolute water frontage because waterfront blocks are scarce. A purchaser would be willing to hold the land in the hope that the planning restrictions will be lifted or varied. In that context, Mr Kinivan considered that the subject land, with its Residential A zoning and immediate deep water frontage “is still a valuable block”.
Mr Hall expressed surprise that these parcels of Drainage Problem land which could not be built upon were sold for that price. He agreed that some people purchase land with a view to future events (such as a change to a planning scheme or the provision of sewerage) and that some people may pay a premium for waterfront land on that basis. Mr Hall described it as an “expensive proposition” to hold such land in the expectation that there would be a change in the future to allow building on the land. He regarded the sales as being “very much of the upper limit of prices” paid for land with those characteristics, and suggested that the purchaser may not have been informed. When comparing the sale blocks with the subject, Mr Hall noted that the sale blocks were slightly lower than the subject and do not have as good a water frontage. More importantly, none of the blocks could be built upon and so could only be used, if at all, for such purposes as picnicking.
The claimant also provided some evidence concerning the sale of other waterfront blocks to the near north of Lots 67 to 70, namely Lots 71, 74, 75 and 76.
Lot 71 has an area of 617 m². It was sold in November 1992 for $20,000.00.
Lot 74 has an area of 759 m². It was sold in April 1992 for $25,000.00.
Lots 75 and 76 have a combined area of 1,515 m². They were sold together in 1992 for a total price of $50,000.00.
Mr Kinivan knew nothing about the sales but considered the blocks to be “vastly inferior” to Lots 67 to 70 because tidal land encroaches into the eastern boundaries of Lots to the north of Lot 72 and because road access gets worse the further north it extends. Lots 71 and 74 to 76 are Drainage Problem land and Mr Hall described them as physically inferior to the subject land.
The limited evidence about the sales gives rise to doubts about whether they were arm’s length transactions which reflect the market value of the land. The vendor and purchaser of Lots 74, 75 and 76 all had the same address. I note also that the unimproved value of Lots 75 and 76 had been assessed as at 31 March 1990 to be $1,000.00. They were the earliest sales referred to in this case and there was no evidence about the market some three years before the date of resumption. Nor was there evidence that would explain the apparently dramatic increase in the value of the land in the two years from March 1990. It is unnecessary and, having regard to those factors, it is unwise to rely on those sales in this case.
Accordingly, the remaining sales evidence in support of the claimant’s case relates to Lots 30, 67 to 70, 132, 137 and 138 on Wahine Drive.
Possibility of sewerage: Mr Kinivan suggested that sewerage may become available to the subject land some years into the future. He calculated the present value of the subject land by applying the Commonwealth bond rate of 8 per cent. and discounting from $55,000.00 to present value, so that:
(a)if sewerage comes in five years (using a discount of 0.680583) the present value would be $37,432.065;
(b)if sewerage comes in ten years (using a discount of 0.463193) the present value would be $25,475.615; and
(c)if sewerage comes in fifteen years (using a discount of 0.315242) the present value would be $17,338.31.
That approach is flawed in two significant respects. First, it assumes that sewerage will be available to the subject land at some time in the foreseeable future. There was no evidence to support that assumption. Mr Kinivan had no knowledge of any plan by the constructing authority to provide sewerage on Russell Island. He was speculating on the basis that “the way Russell Island has gone it wouldn’t have been too much to expect you could get sewerage within 10 years”. The claimant relied on two documents - a copy of the undated “Southern Moreton Bay Islands Draft Background Report”, and “Southern Moreton Bay Islands Planning Study - Report on Island Summit and Analysis of Responses to Newsletter No 4, dated November 1997 (Exhibit 42). It was not clear when the former document was prepared or, in particular, whether its contents would have been available to a prudent purchaser in September 1995. The latter document referred to community consultations more than two years after the date of acquisition. Neither document would or could have prompted a prudent purchaser in September 1995 to believe that sewerage would be provided to the subject land within a decade. The most that can be drawn from them is that the constructing authority had indicated its support for the provision of reticulated sewerage on Macleay, Lamb, Karragarra and Russell Islands and was funding the preparation of a sewerage strategy for all of the Bay Islands. It had advice that where (as on Russell Island) a reticulated water supply exists, the future provision of reticulated sewerage would be required. The constructing authority’s officers had estimated that septic effluent disposal could begin to pose problems by the year 2000 as a result of the cumulative effect of increased settlement in certain areas and small allotment sizes. At the date when the former document was prepared, a definite timeframe for the provision of reticulated sewerage to the islands had not been identified.
Second, the approach assumes that the only factor preventing a house being built on the subject land as at the date of resumption was the absence of sewerage and that, had sewerage been available, the land would have been worth $55,000.00. The evidence demonstrates, however, that the absence of sewerage was not determinative. The site could have supported a 2 bedroom dwelling house and the requisite septic and sullage trenches, so long as there was an appropriate level of suitable fill. It was the amount of necessary fill that was the critical factor, not the presence or absence of sewerage. Consequently, the calculations back from a value of $55,000.00 to allow for the future provision of sewerage to the subject land are of no assistance in this case.
1985 purchase price: Mr Kinivan said that the price paid by the claimant was a fair price in 1985. He acknowledged, however, that supervening events (particularly the Town Planning Scheme requirement about filling below the one in 100 year flood level) “could change those things”. It is for that reason that the sale price in 1985 is not relevant to the determination of the value of the land as at the date of resumption.
Mr Kinivan’s suggestion that the special adaptability of using the land as a marina or jetty or for other purposes gives it a value above $2,000.00 provides no guidance as to the market value of the land at the date of resumption even if it had that potential.
Having rejected the second and third components of Mr Kinivan’s approach, one is left with the sales evidence summarized earlier.
Conclusions on value: Before recording my conclusion on the value of the land taken, it is appropriate to make some observations about the methodologies employed by the valuers. In my opinion, Mr Hall’s methodology was flawed in three significant respects. First, despite correctly assuming that a dwelling house could not be built on the subject land at the date of resumption, he attempted to assess the value of the land by reference to sales of land on which dwellings could be constructed. Second, on that basis, all but one of the sales on which he relied (Lot 32) were not strictly comparable. Third, Mr Hall assumed that the only real purchaser of land which could not be built upon was the constructing authority. Although the constructing authority was in the market, it was not the only purchaser of such land. Given the peculiar circumstances in which land dealings are transacted on Russell Island, such sales should not be disregarded. But, as judicial authorities suggest, they should be used with caution.
Mr Kinivan agreed that a provision in a Town Planning Scheme which prevented building on a parcel of land was “a significant factor” but he stressed that land which cannot be built on is not worthless. People could picnic and camp on the subject land and may be able to put a boat into the water next to it. The resumption of the land for boat ramp purposes confirmed the special waterfront features which it has. A purchaser may be willing to pay for a parcel in the hope that in time the planning restrictions will be lifted and the land could be developed.
I consider that, in making his alternative assessment of value, Mr Kinivan gave too little weight to what was effectively a prohibition on building on the land, and gave too much weight to the value of the deep water frontage. I have no doubt that the particular waterfront characteristics of the subject land make it more valuable than nearby blocks, all other things being equal. But I am not convinced that, in assessing the value of the land at the date of resumption, one must assume that its water frontage features make it superior to nearby, more elevated blocks which have similar views and on which a dwelling house may be constructed. Nor should much be added for any future potential which the land had because of the possibility that the restrictions on building might be lifted or that sewerage would be provided to the site at some indeterminable future date.
There is, as the claimant submitted, authority for the proposition that, in determining the amount of compensation payable to a dispossessed owner, any doubts are to be resolved in favour of a more liberal estimate (see Commissioner of Succession Duties (SA) v Executor Trustee & Agency Co of South Australia Ltd (1947) 74 CLR 358 at 374; Castle Hill Brick Tile & Pottery Works Pty Ltd v Baulkham Hills Shire Council (1961) 7 LGRA 139 at 154). It has also been stated that the assessment of compensation is to be approached “in a generous rather than a niggardly spirit” (Latimer v North Coast National Agricultural and Industrial Society (1938) 14 LGR (NSW) 30 at 32 per Roper J; see also Hawkins v Director-General, Department of Transport (1993) 14 QLCR 437 at 450-1).
Having regard to the features of all the sale blocks referred to in evidence, those which are most comparable to the subject land in terms of location, size, contours, and lack of building potential are Lots 30, 32, 67 to 70, 71 and 74 to 76. Some doubt has been cast on the sale prices of Lots 71 and 74 to 76 and, for reasons given earlier, it is best not to rely on them for this purpose. The price paid by the constructing authority for Lot 32 is a check on the other sale prices.
The sale prices for the remaining comparable blocks indicate a range of amounts paid in the years around the date of resumption for comparably sized blocks of low lying land with restrictions on their use because of the operation of the Town Planning Scheme. In the absence of evidence about many of the sales it is not clear what each purchaser intended to do with the land and whether those aspirations could be realised. With those qualifications in mind, I am satisfied that the value of the subject land at the date of resumption was $7,500.00. A comparison with prices paid for Lots 132, 137 and 138, which are near the subject land but lack water frontages, support that figure.
Disturbance
As noted earlier, the parties agreed that disturbance costs totalled $4,620.00. Those costs comprised:
Legal costs $1,150.00
Survey costs $ 230.00
Envirotech - soil sampling and technical advice $2,240.00
Valuation costs $1,000.00.
The claimant submitted, quite properly, that interest should be allowed from the date(s) on which the outlays were incurred: see Varitimos v Queensland Electricity Commission (1991) 13 QLCR 1 (Land Court), Council of the City of Townsville v MVO Investments Pty Ltd (1992) 14 QLCR 191 (Land Appeal Court).
The evidence shows that the legal costs were paid on 24 March 1997 and the survey costs were paid in early December 1995. The accounts for the other costs have not been paid.
Conclusions and order
For the reasons set out above I have concluded that, at the date of resumption:(a)if fill had been allowed and an appropriate retaining wall had been constructed, a dwelling house could have been built on the subject land; and
(b)the subject land was within the one in fifty year flood area and the fill which would have been required to ensure that the surface of the subject land was at 2.4 metres AHD would not have been filling “of a minor nature”; and
(c)consequently approval would not have been granted to the filling of the land nor to the construction of a dwelling house on the land; and
(d) the value of the land at the date of resumption was $7,500.00.
The parties have agreed that the claimant is entitled to receive from the constructing authority the sum of $4,620.00 as compensation for disturbance costs incurred by the claimant in preparing and making the claim for compensation.
The amount of compensation payable by the constructing authority to the claimant is determined in relation to the value of the land taken and disturbance in the sum of twelve thousand one hundred and twenty dollars ($12,120.00).
Interest will be payable at the following rates and for the following periods in relation to components of the amount of compensation awarded:
(a)interest at the rate of 9.25 per cent. per annum on the sum of $7,500.00 from 9 September 1995 until the date upon which the final payment of compensation is made;
(b)interest at the rate of 7.0 per cent. per annum on the sum of $1,150.00 from 24 March 1997 until the date upon which the final payment of compensation is made; and
(c)interest at the rate of 9.25 per cent. per annum on the sum of $230.00 from 1 December 1995 until the date upon which the final payment is made.
GJ NEATE
MEMBER
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