Fast Signs Pty Ltd v Gladstone City Council
[2005] QPEC 37
•19 May 2005
PLANNING & ENVIRONMENT COURT
OF QUEENSLAND
CITATION:
Fast Signs Pty Ltd v Gladstone City Council [2005] QPEC 037
PARTIES:
FAST SIGNS PTY LTD
Appellant
GLADSTONE CITY COUNCIL
Respondent
FILE NO/S:
P & E Appeal No. 246 of 1994
DIVISION:
PROCEEDING:
Appeal
ORIGINATING COURT:
DELIVERED ON:
19 May 2005
DELIVERED AT:
Brisbane
HEARING DATE:
27 – 28 April; written submissions 6 May 2005
JUDGE:
Skoien SJDC
ORDER:
Appeal allowed; compensation of $156,310 ordered
CATCHWORDS:
Injurious affection; land under interim development by-law; whether appeal can lapse because of inaction; whether rule 389 of UCPR applies; whether land in a “planning scheme”; whether prohibited uses can be the “highest and best use”.
COUNSEL:
Mr T Trotter for Appellant
Mr R Litster for Respondent
SOLICITORS:
Conroy & Associates for Appellant
Deacons for Respondent
This is an appeal by Fast Signs against the refusal of the Council to pay compensation for injurious affection to land.
Delay
The appeal is very old indeed. It was filed on 15 August 1994. Since then it has proceeded in fits and starts. In January 1995 Quirk DCJ made a consent order. A preliminary point was decided by O’Sullivan DCJ in December 1996. Nothing involving the Court then occurred until a directions order was made on 24 November 2004. Then on 14 March 2005 the appeal was ordered to be heard between 26 and 28 April 2004 and that has occurred.
The Rules of this Court do not provide for the lapse of an appeal because of inaction. However rule 3(2) provides that where these Rules do not provide for a matter in relation to a proceeding and rules applying to the District Court do, then those rules apply. Those rules are, of course, the Uniform Civil Procedure Rules (“UCPR”).
Rule 389 of UCPR provides, in mandatory terms that:-
(a) where no step has been taken in a proceeding for one year a party must give one months notice to other parties before taking a step; and
(b) where no step has been taken for two years a new step cannot be taken without the order of the court.
Fast Signs has not complied with either of those requirements and indeed the application for the Court’s leave to proceed was made only at the outset of the hearing of the appeal and orally.
In Jimbelung Pty Ltd v Beaudesert Shire Council [2005] QPEC 025 His Honour Judge Wilson SC decided that r.389 applies to such circumstance for reasons which I find persuasive. However I was not given the benefit of considered submissions on the point. For present purposes, and in the circumstances of this appeal, both parties were content that I proceed on the assumption that r.389 does apply.
A useful guide to the relevant principles to be applied can be found in Tyler v Custom Credit Corporation Limited BC200002582; [2000]QCA 178. In this appeal, however, without the need to consider all of those matters, I think the discretion should be exercised in favour of Fast Signs for two reasons. First, the affidavit of Mr Tran filed by leave on 27 April 2005 demonstrates that the parties have been negotiating throughout, raising matters of dispute, attending to them and in December 2002 going to mediation. So at no time would the respondent have considered that the appeal was dead. Second, the respondent does not seek to take any point under r.389. In these circumstances I order that the proceedings continue as from 24 November 2004.
The Land
The land is at Shaw Street, Gladstone, about 4.5 km south west of the city centre and very close to the airport. It is an irregular rectangle of 6209m², is about 210m in length (frontages to the Dawson Highway and Shaw Street) and about 30m deep. It is very well exposed to the Dawson Highway but access is from Shaw Street only. It is in a small pocket of industrial development which seems to be giving way to residential development All normal services are available in the area.
At the relevant time there was a 300m² steel framed galvanised iron clad building on the land. It was damaged by fire in August 1989. There are now storage units on the land.
History
The land was once in the Light Industry zone of the Calliope Shire. On 22 February 1975 the land was removed from the Calliope Shire to the Town of Gladstone and became subject to an Interim Development By-law (“IDB”) of Gladstone, being Chapter 33 of the By-laws of the Council of the Town of Gladstone. On 19 May 1984 the Council granted consent to allow the land to be used for unspecified light industry and for the erection of buildings.
The IDB continued to have force and effect from 15 April 1991, the date of commencement of the Local Government (Planning and Environment) Act 1991 (“P & E Act”) by virtue of s.8.10(5) of the Act. And the consent of 19 May 1984 continued to have effect by virtue of s.8.10(8) of the P & E Act. An attempt on 21 May 1991 by the Council to revoke the consent was declared invalid by this Court in February 1996 (see Fast Signs Pty Ltd v Gladstone City Council (1996) QPELR 306).
On 15 June 1991 the current Planning Scheme for the City of Gladstone was gazetted which contained a Table of Development and a Strategic Plan. Under the Strategic Plan the land was designated as Open Space and in the Planning Scheme it was included in the Rural/Non Urban zone. Under that scheme the only permitted use in the zone is for a dwelling house and effectively all commercial uses are prohibited.
The Claim
This appeal was commenced but not finished before 30 March 1998 (the commencement date of the relevant sections of the Integrated Planning Act 1997 (“IPA”) so it is to be determined under the provisions of the P & E Act. See IPA, s.6.1.39.
The claim for compensation is based upon s.3.5(1) of the P & E Act which is:-
“3.5(1) Where a person-
(a) has an interest in premises within a planning scheme area and the interest is injuriously affected-
(i) by the coming into force of any provision contained in a planning scheme; or
(ii) by any prohibition or restriction imposed by the planning scheme; or
(b) …
the person is, subject to compliance with this section, entitled to obtain from the local government compensation in respect of the injurious affection or expenditure and may claim that compensation in accordance with this section.”
The claim for compensation alleges that the land was injuriously affected by:-
(a) The coming into force of a provision contained in a planning scheme for the City of Gladstone, and
(b) A prohibition or restriction imposed by or under that planning scheme.
The Issues
There are three issues raised in the appeal:-
(a) does the claim for compensation come within the right to compensation conferred by s.3.5(1) of the P & E Act;
(b) if “yes” to (a), what is the amount of compensation under s.3.5(8);
(c) what, if any, interest should be allowed in the compensation.
The Right to Claim
This is obviously a critical point. It is the submission of Mr Litster for the Council that any right to compensation conferred by s.3.5(1) is only in respect of an interest in premises “within a planning scheme area” and he challenges the proposition that this land was, immediately before the coming into effect of the Gladstone Planning Scheme, within a planning scheme area.
Section 1.4 of the P & E Act defines:
(a) “planning scheme area” to mean “the area included within a planning scheme”; and
(b) “planning scheme” to mean “a scheme for town planning which conforms with s.2.1 and is approved by the Governor in Council.”
Section 2.1 of the P & E Act is:-
“Composition of planning scheme
2.1 A planning scheme is to consist of-
(a) planning scheme provisions for the regulation, implementation and administration of the planning scheme;
(b) zoning maps and any regulatory maps;
(c) a strategic plan;
(d) a development control plan (if any);
(e) any amendment approved by the Governor in Council in respect of the planning scheme.”
Section 8.10(5) of the P & E Act is:-
“(5) Each by-law regulating development pending the introduction of a town planning scheme and in force immediately prior to the commencement of this Act, is to continue to have force and effect as if it were an interim development control regulation that had force and effect under section 2.22.”
Section 2.22 of the P & E Act is:-
“Interim development control
2.22(1) Where a local government adopts a resolution to prepare a planning scheme under section 2.10 and no planning scheme is in force in respect of the area the subject of the resolution the local government may apply to the chief executive for part of the regulation in respect of interim development control to apply to its proposed planning scheme area.
(2) The Governor in Council may, by order in council, approve-
(a) the whole of the part of the regulation mentioned in subsection (1) if the Governor in Council considers that the whole of the part is necessary and appropriate; or
(b) that part of the part of the regulation mentioned in subsection (1) if the Governor in Council considers that that part is necessary and appropriate.
(2A) The approval may be limited to a specified part of the area mentioned in subsection (1).
(3) The interim development control provisions approved in respect of that proposed planning scheme area are to have force and effect from the date of publication or notification in the gazette and are to continue in force until such time as a planning scheme for that area is approved by the Governor in Council.
(4) Upon the coming into force of those interim development control provisions the local government is to be responsible for the administration of those provisions.”
Section 1.4 of the P & E Act defines interim development control provisions to mean:-
“(a) those regulations approved pursuant to section 2.22; and
(b)those local laws continued in force and effect pursuant to section 8.10(5);
for the purpose of regulating development in a proposed planning scheme area in a particular local government area pending the introduction of a planning scheme.”
The meaning of the provisions I have set out in paras [20] – [22] are not fully immediately apparent. The wording of s.8.10(5) which provides that an existing planning by-law (here an IDB) continues to have force and effect as if it were an interim development control regulation (“IDCR”) under s.2.22 may suggest that the two are equated. And the definition of “interim development control provisions” (para [22]) also seems to equate the two concepts, although in context the conjunctive “and” could equally sensibly be the disjunctive “or”. Yet s.2.22 is obviously designed to cover a different situation from that where a planning IDB exists. Looking at it all together, I consider that the difficulty is overcome by reading s.8.10(5) as meaning that the existing IDB has the same force and effect as an IDCR, as to which see s.2.22(3).
I do not, therefore, get any assistance from ss.8.10(5), 2.22 and the definition of interim development control provisions in 1.4. What remains?
Section 33(10) of the Local Government Act 1936 (LGA) gave the right to compensation for injurious affection to land to a person who had an estate or interest in land “included within a town planning scheme approved pursuant to this section”. Subsection (1) defined “town planning scheme or scheme” as “A scheme for town planning” and subsection (21) stated that the power of the Local Authority to make by-laws shall include power to make all such by-laws as are necessary or convenient to implement the scheme and to provide for, regulate and control the administration and execution of the scheme.”
There can be no doubt, therefore, that the IDB in question was a Town Planning Scheme under the LGA and that land included within its area could be the subject of a claim for injurious affection. At the date of commencement of the operative provision of the P & E Act (15 April 1991) the IDB was the only planning instrument for the land because the 1991 Scheme was not gazetted until 15 June 1991. It would be extraordinary if the drafter of the Act which repealed s.33 of the LGA (which was s.8.8(1) of the P & E Act) intended to remove the right to claim for injurious affection without saying so, clearly and explicitly.
Mr Litster referred to the decision of the majority judgment of the High Court in Project Blue Sky Inc v Australia Broadcasting Authority (1998) 194 CLR 355 at 382:
“… a Court construing a statutory provisions must strive to give meaning to every word of the provision (the Commonwealth v Baume (1905) 2 CLR 405 at 414, per Griffith CJ; at 419, per O’Connor J; Chu Kheng Lim v Minister for Immigration, Local Government & Ethnic Affairs (1992) 176 CLR 1 at 12-13, per Mason CJ). In Commonwealth v Baume (1905) 2 CLR 405 AT 414 Griffith CJ cited R v Berchet (1688) I Show KB 106 [89 ER 480] to support the proposition that it was “a known rule in the interpretation of Statutes that such a sense is to be made upon the whole as that no clause, sentence, or work shall prove superfluous, void or insignificant, if by any other construction they may all be made useful and pertinent.”
and that poses the question whether the phrase “within a planning scheme area” or more exactly the words “planning scheme” (see para [18]) apply to the IDB. It is essential therefore to examine the IDB to decide whether it is a “planning scheme” within the meaning of the P & E Act.
By-law 3 of the IDB relevantly provides:-
“3(1) ……… a person shall not –
(a)Use any land (whether having a building or other structure there on or not);
(b)Use or erect any building or structure or part thereof; or
(c)Alter the use of any land, building or other structure or part of a building or other structure,
within the Town Planning Scheme Area, without first obtaining the consent of the Council to do so.”
In that citation I have remedied an obvious and misleading error in the setting out of the by-law as printed in the Government Gazette. Paragraph (2) of the by-law permits, without Council consent, certain specified uses, irrelevant here. By-law 6 requires applications for consent to contain information of the type regularly seen to be required in Town Planning Schemes of greater complexity than this IDB. By-law 7 permits the Council to grant or refuse consent or grant consent subject to reasonable and relevant conditions, and requires the Council to have regard to “proposals formulated from time to time for inclusion in a town planning scheme for the town-planning scheme area.” By-law 10 creates the offence of contravening any provision of the IDB, or failing to comply with a condition of a consent. By-law 11 permits its Council to prepare Policy Plans “for the purpose of orderly development of land … in the Town-planning scheme area,” and such Policy Plans are deemed to express the policy of the Council in relation to the desirable development of land, but are not to be deemed to be a re-zoning. It appears that no Policy Plan was ever prepared.
By-law 8 of the IDB is:-
“8.(1) The Council shall keep a register of all consents granted under this Chapter specifying –
(a)The name and address of the person to whom the consent was granted;
(b) The date and grant of the consent;
(c) The land affected by the consent;(d)The use or erection or other work permitted by the consent; and
(e) Any conditions imposed in all consent.
(2) The register shall be open to inspection.”
Thus, although rudimentary by later standards, the IDB is by any measure a town planning scheme of the type with which we have become familiar. Critically, it provides generally a restriction on the use of land without town planning consent.
The question for decision really boils down to the question whether the IDB “conforms with s.2.1”. It is does, being a by-law which was approved by the Governor in Council, it is a planning scheme for the purpose of the P & E Act. See para [18].
In my opinion the verb “to conform” does not mean to comply exactly. The Shorter Oxford English Dictionary defines the verb “conform” as “1. To form according to some model; to make like. 2. To bring into harmony or conformity; to adapt; 4. To follow in form or nature.” The excellent Encarta electronic dictionary gives “to be or make similar: to be the same as or very similar to something” and gives the example “The Assyrian account of the great flood conforms closely with the biblical account.” If we can talk of conforming closely, we can also talk of conforming loosely. So the term can describe varying degrees of similarity.
Given that to conform with s.2.1 of the P & E Act does not necessarily mean to comply exactly, to what extent does the IDB conform? Section 2.1 says:-
“Composition of Planning scheme
2.1A planning scheme is to consist of –
(a)planning scheme provisions for the regulation, implementation and administration of the planning scheme;
(b) zoning maps and any regulatory map;
(c) a strategic plan
(d) a development control plan (if any)(e)any amendment approved by the Governor in Council in respect of the planning scheme.”
The matters in (d) and (e) are not material as, to my knowledge are no such documents and anyway they are not actually required by s.2.1. The matters in (a) are met by the IDB (see para [29]). I do not know if there are any zoning maps but obviously the Council will have records of each consent with sufficient detail to identify each parcel of land and to describe its zoning (if any), so the information contained in a zoning map is available. See para [30]. There is no strategic plan but in my experience there never was in those early planning orders in council. Looked at fairly, it would be impossible to say that it did not constitute a statutory scheme “to provide for town planning …. in local government areas” as the long title of the P & E Act puts it.
I conclude therefore, that the IDB was a planning scheme and that the land was within a planning scheme area so that a claim for injurious affection of the land lies under s.3.5.
Was There a Loss in Value
Mr Litster submitted that on the commencement of the P & E Act on 19 April 1991 the consent under the IDB was, because of s.8.10(8) of the Act, to be treated as continuing to have force and effect as if it were a consent under the P & E Act, and because of paragraph (c) of s.8.10(8) that consent would not lapse for a further four years. That is correct. But he then submits that the right to use the land under the consent continued notwithstanding the introduction on 15 June 1991 of the 1991 scheme.
I reject that submission. In support of the submission he referred to a point of agreement between the two planning experts who were retained, Mr Challenor for Fast Signs and Mr Humphreys for the Council. But that point of agreement was premised on the condition that the permission of the Council remained current, which is the very fact in issue. Anyway, it is a question of law.
I have referred to the fact (para [29]) that the Council did not adopt any Policy Plans which affected the land. Between 1975 and 1991 the Council had the opportunity of adopting any such policy plans or policies which would have provided guidance for decisions involving particular types of development within the area. They would have provided a basis for any Council decision directing that particular forms of development should or should not take place in particular locations.
Thus the IDB, without any policies in operation, provided very rudimentary planning control and gave the Council little ground to refuse applications for particular kinds of development in any particular location in the way that a strategic plan or a development control plan or even a policy would have. It is not that the Council could not refuse an application by applying sound town planning principles but there was simply no structure provided to support a refusal of any particular application. So (the relevance of which will appear) under the IDB the owner of the land had very good prospects of developing on it a small shopping centre containing such businesses as a small supermarket, a bottle shop, a fast food shop, a newsagency, a pharmacy, a doctor’s or dentist’s surgery.
The 1991 Town Planning Scheme
This was a relatively sophisticated document, even by today’s standards. The scheme contained a strategic plan incorporating a strategic plan map; a town planning scheme which contained an Intent of Zones and a Table of Development; particular requirements with respect to various forms of developments and general and specific performance standards.
Under this 1991 Scheme the land was included in the Rural/Non Urban Zone and was designated as Open Space on the Strategic Plan as well as being subject to the provisions relating to City Image.
The Table of Development
In the Rural/Non Urban Zone the only relevant permitted activity as of right is that of a dwelling house. That was effectively the same before and after the 1991 scheme was introduced. But light industry is contained in the prohibited use column of the Table of Development which clearly put an end to the IDB consent for the land. And (the relevance of which will appear) each one of the standard components of a small neighbourhood shopping centre use is also contained in the prohibited use column. So if development to contain those uses was sought, a rezoning would be required. That creates a higher hurdle than getting a consent because there is an implicit proposition that each of the those prohibited uses is regarded as being incompatible with the Rural/Non Urban Zone.
An example of the approach taken by this Court to this question at the relevant time is contained in Vanglow Pty Ltd v. Council of the Shire of Albert (1991) QPLR 68. Row DCJ said (at 71):
“The reasonable expectations of persons residing in the residential area would not encompass the development of the subject land for a use which is prohibited both in the Residential A and Residential B zones.”
In Drivetype Pty Ltd v. Council of the Shire of Caboolture (1995) QPLR 141 at 143 it was said:
“The planning documents support those actual perceptions. As this site is within a rural residential area, the residents’ perception can validly be measured against the provisions of the town planning scheme for such an area. In December 1991 the Council duly made the use of land for a service station a prohibited use in both rural residential A and B zones. That was a statement by the responsible planning authority that a service station (which is by far the most important component of this proposal) is considered incompatible with the rural residential zones.”
and, in Prime Group Properties Limited v. Caloundra City Council andDarracott (1995) QPLR 147 at 150:
“Whether their perception is reasonably held depends very largely on the planning scheme in force at the relevant time. A resident in a locality ought to expect that a particular piece of land will be developed to one of the “as of right uses” set down by the planning scheme. … Then they ought to expect that the land may be developed in one of the ways which the Council might permit (subject to objections). The scheme defines that as “any purposes other than those permitted by column (iii) (i.e. as of right) or prohibited by column (v). That column (v) prohibits both service station and shop as well as a large number of other commercial uses. So it has been reasonable for the surrounding residents to hold the perception of the general area, including the site, as excluding commercial uses generally and this proposed use specifically.”
The Strategic Plan, Open Space and City Image Objectives
In considering a rezoning application the local authority, and on appeal the Court is required by s.4.4 of the P & E Act to assess the following matters to the extent they are relevant to the application…
3(c) whether the inclusion of the land in the zone in which the land is proposed to be included would be in accordance ,or conflict with the implementation of the strategic plan (if any) or the Intent of a Development Control Plan (emphasis added)
The section was later amended in 1994 to include subsection (5A) which allows the Court to overlook conflict with the Strategic Plan if there are sufficient planning grounds to do so. But at the relevant time that saving provision did not exist. So it is important to assess the weight that would have been given to the Strategic Plan without its provisions.
There can be no doubt that conflict with a Strategic Plan in 1991 was a strong ground for refusing an application. In Vanglow Pty Ltd. v. Council of the Shire of Albert (1991) QPLR 68 at 71 Row DCJ said:
“Whether the proposed rezoning is in conflict or in conformity with the strategic plan is one of the matters referred to in s.33(6A)(e) of the Local Government Act…the proposal, I am satisfied, is particularly in conflict with the provisions of clause 4(1)(a))(i) of the Strategic Plan.”
In Thomas Holdings Pty Ltd v. Gold Coast City Council and Others (1991) QPLR 32 Row DCJ said (at 36):
“A strategic plan is an important document in considering the future or forward planning of a local authority and should, particularly on rezoning applications, be given significant weight. The fact that a proposal substantially conflicts in many instances with various objectives as set out in the strategic plan, is particularly important.”
and in Bowden v. Brisbane City Council (1991) QPLR 271, Row DCJ said (at 284):
“The significance of strategic planning, particularly on rezoning applications, has been recognized by the Court on many occasions. Since the forward planning documents of a local authority are indicative of the Intent of a planning authority as to the future preferred form of development that it sees for its local authority area, considerable weight ought to be given to the provision of forward planning documents of a local authority.”
The Strategic Plan designates the site as Open Space the designation for which seems intended not only to seek to preserve the entirety of some parcels of land in an undeveloped form but also to ensure that new developments make provision for linkages between the open space network. See implementation provision 1.3.5.5.1 which provides:
“In new developments, land will be obtained for open space purposes to create elements of a coordinated network or links between major elements. Linkages between major open spaces and the areas which they serve should be traffic free.”
The rationale for the objective in para 1.3.5.5.1 provides:-
“3. It is important the Council consistently pursue the aims of the open space network as depicted on the strategic plan.”
Of equal or greater importance are the City Image objectives. One of these objectives seeks to ensure, “a strong open space and parkland character along the main transport corridors leading into the City” (s.1.3.8.4). As part of the implementation objectives the Council is to subject all development applications along arterial roads to the following considerations:
(1) Limitation of ribbon development and discouragement of non essential commercial development (emphasis added).
(2) In the case of new roads or realignments, the retention of a 20 metre wide landscape buffer on each side of the carriage way.
(3) Landscape enhancements schemes along the existing roadways.
(4) Maximizing the amount of park and public or private open space located along these corridors.
(5) ......
(6) Control over the number, location and quality of advertising hoardings which are visible from the roads.
Thus, the Strategic Plan through the Open Space and City Image objectives introduced strong emphasis which either precluded development on the land entirely or severely restricted any form of development. I am satisfied that these strategic plan designations grossly restricted the ability of Fast Signs to obtain the rezoning which would have been necessary in order to carry out the intended development. Nothing like them existed before the 1991 Scheme came into operation.
The intent of the Rural/Non Urban zone
“is to identify any land for which urban development, as otherwise provided for in the other zones, is not suitable or is premature. Therefore, the zone is seen as a holding zone pending the development of the land or a zone which allows for low intensity forms of non urban land use.” (emphasis added)
This intent gives no encouragement to the prospects of successfully rezoning the land to a commercial use which is neither low intensity or non urban in nature. While the intent of the zone which a re-zoning seeks to leave is of limited relevance, it is still a factor to be considered. See Williams McEwan Pty Ltd v BCC (1981) 2 APA 165 at 172.
Without enumerating them, the evidence of Mr Challenor listed various requirements of the 1991 Scheme which would make the development of a shopping centre on the land physically very difficult, perhaps impossible. I accept that conclusion.
Injurious Affection – The Nature of the Claim
The concept of injurious affection has been described as:
“the cutting down of the bundle of legal rights which attach to one’s ownership of the fee simple in an injurious way, if those rights are cut down or limited by, for example, prohibiting or restricting the right to use that land in a particular way, even though the existing use is, or may, be permitted to continue”. See Lamb v Maryborough City Council 1 APA 365 at 368.
Another authority relates injurious affection to:-
“the coming into operation of any provision contained in a scheme…being a provision…which infringes or curtails his (the owner’s) legal rights in respect of that property.” See Bingham v Cumberland Country Council (1954) 20 LGR (NSW) 2 at 9.
In TM Burke v Noosa Shire Council 1997 LGRA 69 at 70 the Court said:
“The phrase “injuriously affected” is not defined but it was submitted by the appellant and not contested by the respondent that this meant “reduced in value”. That view is supported by the way in which compensation is required to be assessed; sub section (8)(a).
And more recently in Kettering Pty Ltd v Noosa Shire Council 2004 HCA 33, para [31] the High Court of Australia said:
“Injurious affection by the taking and use of part of a land holdings, and injurious affection occasioned by a planning scheme have in common the impairment or displacement of a private interest by a public one. This feature has led, in cases of the former, to judicial pronouncements favouring dispossessed land owners, of which the following, by Gaudron J [21], is a recent example.
The right to compensation for injurious affection following upon the resumption of land is an important right of that kind and statutory provisions conferring such a right should be construed with all the generality their words permit. Certainly, such provisions should not be construed on the basis that the right to compensation is subject to limitations or qualifications which are not found in the terms of the statute.”
Principles of Assessment
Section 3.5(8) of the P & E Act is:-
“(8) Subject to subsections 2(b) and (9), the following provisions are to have effect in assessing compensation in respect of a claim made under this section; -
(a) the amount of compensation is (subject to paragraphs (b), (c) and (d)) to be an amount equal to the difference between the market value of the interest immediately after the time of the coming into operation of the provision of the planning scheme by virtue of the operation whereof the claim for compensation arose and what would have been the market value of that interest if the provision had not come into operation.”
Both parties accept that in valuing the land, whether before or after the injurious affection occurred, the use of the land to be applied is the highest and best use of the land. So I look for the land’s highest and best use on the eve of the promulgation of the 1991 Scheme and that which it had on the day of its promulgation.
Both of the planning experts agree that the highest and best use of the land on the eve was for a small shopping centre. Where they differed was on the point whether the 1991 Scheme affected the situation. I have concluded, paras [49] – [55] that the 1991 Scheme put serious obstacles in the path of anyone wanting to develop the land for a small shopping complex and in para [40] that no recognisable obstacle existed under the IDB. That accords with the evidence of Mr Challenor, which I accept.
Whilst it cannot be denied that a later, lesser rezoning occurred (to a Special Facilities zone in July 1994) the Courts have warned against using too much hindsight in the exercise. In Spencer vCommonwealth 1907 5 CLR 418 Isaacs J said at 440:
“All circumstances subsequently arising are to be ignored. Whether the land becomes more valuable or less valuable afterwards is immaterial. Its value is fixed by statute on that day. Prosperity unexpected, or depression which no man would ever have anticipated, if happening after the date named, must alike be disregarded.”
It is to be remembered, as Row DCJ said in Bowden & Ors v BCC (1990) QPLR 271 at 276:
“The Court cannot, in its consideration of an application, go behind the statutory zoning of the subject land or any reasons whereby the land was zoned in a particular manner. The Court is bound to accept the zoning.”
Mr Humphrey’s analysis seems to be influenced by the belief that Fast Signs’ then planning consultant may have been negotiating with the Council at a relevant time for an approval for a small shopping centre on the land and that gave rise to the likelihood of an application for that under the 1991 Scheme being given special treatment. There is no documentation in the form of any minute or resolution to support this proposition. In any event, the analysis would defy the ordinary rule that in a case like this the zoning must be taken on face value and the Court cannot go behind the zoning.
There is also the evidence of Mr Sheehan who indicated that in 1994 he approached the Council, in particular the Senior Planning Officer as well as the Director of Planning, to make enquiries as to what uses may be able to be established on the land. He came away with the distinct impression that the Council was unlikely to favour anything other than two detached dwellings.
Quantum of Compensation
Mr Sheehan, a valuer, was called by Fast Signs and, I thought, displayed a careful approach to his task, his expertise being greatly assisted by his local knowledge, Mr Walsh, the valuer called by the Council was thoughtful and frank and while he advanced a preferred option which was different from that preferred by Mr Sheehan ultimately, I thought, did not differ very much from Mr Sheehan.
If, because of the 1991 scheme, residential development would have been the only practical approval, then Mr Sheehan’s net figure of $101,500 was actually below Mr Walsh’s net figure of $106,500. But if the market considered development for a small shopping centre was still a practical approach then the exercise is to adopt the pre-scheme value and make various adjustments.
The biggest adjustment would be to reflect the uncertainty of a developer in buying the land with a view to re-zoning to allow for the building of a small shopping centre. That is calculated by assessing the notional number of years which would elapse before the purchase would take place to reflect the uncertainty. In my view the uncertainty would be greater than Mr Walsh, who was guided by the opinion of Mr Humphreys, accepted. In this exercise Mr Sheehan would have allowed for a greater number of years because he was guided by the more cautious opinion of Mr Challenor, which I think is the better view. Then a capitalisation over that period is made at 14% compound interest. Then such things as cost of the re-zoning the payment of rates etc have to be taken into account.
When all that is done, preferring the assumptions made by Mr Sheehan, there was little difference in the results on this method of valuation between the two valuers. Indeed the final figures are very close to that arrived at by the preferred approach taken by Mr Sheehan to value the after-1991 scheme land for two residences.
I much prefer that approach, so I accept Mr Sheehan’s evidence that the injurious affection to the land, brought about by the 1991 Scheme, reduced the highest and best use of the land from that of a small shopping centre to that of two residences. The figure he placed on the reduction in value of the land, based on that, was $101,500 which I accept.
Interest
As I said at the beginning of these reasons, this appeal had dragged on interminably. While a successful applicant is generally entitled to interest on the compensation from the date the injurious affection occurred, if the period is extremely long and the delay is the sole fault of the applicant the total interest can be so great as to be an unjust burden on the Council, or more accurately the ratepayers. Mr Challenor’s report, ex. 1, sets out a chronology of relevant events, which I will not repeat here. Many of them reflect negotiations which are unsurprising but some events stand out as material.
In December 1989 Fast Signs made approaches to the Council with a view to developing, on the land, a small office/shopping centre. The draft 1991 scheme then went on exhibition and I suspect its contents were responsible for the failure of Fast Signs to apply formally for the office/shopping complex consent. Then in May 1991, the Council purported to revoke the earlier IDB consent for light industry. There ensued an application by Fast Sign for a re-zoning to permit storage facilities on the land (approved in July 1994), at which time the Council also refused Fast Sign’s application for compensation for injurious affection (made in June 1994). In August 1994 this appeal for compensation was commenced. Also in 1994 Fast Signs appealed to this Court against the purported revocation of its light industry permit and won that appeal in February 1996.
I am not prepared to be critical of Fast Signs for failing to commence this compensation appeal earlier than it did. Then, I consider that it was reasonable to have the revocation appeal determined before prosecuting this appeal. But it seems to me that with anything like a reasonable effort, this appeal could have been heard and determined by, say June 1997, that is, six years after the injurious affection occurred. So I am prepared to allow interest for the period of six years.
The rate of interest for the period 1991 – 1997, as allowed by the Land Court and Land Appeal Court, averaged (rounded) 9%. Interest on $101,500 at 9% for six years is $54,810.
Conclusion
I assess compensation in the total sum of $156,310 and order the respondent to pay that sum forthwith to the appellant.
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