Goleby v The Council of the Shire of Redland

[1991] QLC 1

[1991] QLC 1

 

  LAND COURT,

BRISBANE.

1st February. 1991

Re:      Claims for Compensation
  Resumption for Water Supply Purposes
  (A89-92/93)

Stanley William Goleby, Valda Lorrain Goleby & Beatrice Joan Goleby
  v.
  The Council of the Shire of Redland

J U D G M E N T

By Proclamations published in the Government Gazette on 14th November, 1987, the Council of the Shire of Redland resumed for supply of water purposes -

Lot 1 on Plan 212848 containing an area of 5.143 hectares and 

Easement A in Lot 2 on Plan 212848 containing an area of 8235 square metres,

both in the county of Stanley, parish of Redland and both being part of the land containing in Certificate of Title volume 1413 folio 121.
  The claimants are the owners of the land in fee simple.  On 22 January 1988 they executed a claim for compensation for the land taken in Lot 1 in the sum of $350,000.  This area will be used by the respondent for reservoir purposes.  A claim for compensation as a result of the taking of the easement which will provide access to the reservoir site was filed in Court on 27th February, 1990, in the sum of $10,000.
  An advance in the sum of $90,000 was made on 11th April, 1988.
  The claims were dealt with together and the resumptions treated as the one resumption. 
  The amount of compensation finally claimed in the proceedings is that assessed by Mr M. Slater, registered valuer.  His assessment was made on a "before and after" method of valuation in hypothetical subdivision resulting in sums of -
  Before resumption                 -         $407,000
  After resumption                   -         $185,000
  Compensation  -         $222,000,
which he apportioned as $214,500 for the resumed land and $7,500 for the resumed easement. In addition to that sum the claimants seek a sum of $4179.06 for legal and valuation fees incurred in the preparation and lodgement of the claim and a further sum of $4,924.75 for valuation fees, geologists fees, and planners fees incurred as a result of an investigation into the use of the land for quarrying purposes.  The respondent agrees to pay the former sum but not the latter.  The amount finally claimed as compensation thus becomes $232,103.81.
  The assessment made by Mr Slater was based on the premise that the highest and best use of the land was for subdivision into three large residential sites on a design drawn by Mr P. Vassallo, consulting surveyor.  The costs of the development were taken from estimates provided by Mr P.G. Breene, consulting engineer.  Town planning evidence was given on behalf of the claimants by Mr K. Todd, town planning consultant.
  The respondent relied upon an assessment of compensation made by Mr R.J. Scougall, registered valuer in the employ of the Department of Lands, Division of Valuations.  Mr D.V. Yardley, civil engineer and town planner, who holds a position with the respondent described as "subdivisions engineer", and Mr G.S. White, town planner in the employ of the respondent, were also called. 
  The hearing of the matter began on 28th August last year and was adjourned to 7th November when evidence was given over two days and the hearing completed on 12th December.  This all came about for reasons which need to be stated, but should be prefaced by some matters which are not in dispute.
  The subject land prior to the resumption contained an area of 64.75 hectares in the shape of a square with a frontage to an unmade road along the northern boundary except for part in the northeastern corner where Heinemann Road which comes from the north ran that boundary for a distance of about 100 metres and the eastern boundary for a distance of about 220 metres before turning easterly at right angles and leaving the boundary.  Heinemann Road was bitumen sealed to within 1.2 km of the land and thereafter comprised a gravel formed road with earth formed channels.  The block comprised an undulating timbered forest block with a ridge entering the southern central part at which contour levels are of the order of 75 metres from which it falls steeply to moderately to the east and west - to about level 35 metres in the southeastern corner and level 40 metres in the southwestern corner.  There are two secondary plateaus at about level 55 metres in the northwestern area and in the northeastern area.  The land was vacant and unimproved except for limited boundary fencing which was in fair to poor order.  Electricity and telephone services were available.  The land was zoned "Rural" under which the minimum area of any proposed allotment in any proposed subdivision is 20 hectares.  At the relevant time a new town plan had been on display for three months from December 1986.  Under that Plan which became law in February 1988 the subject land is zoned Rural - Non Urban.  Apart from this change in designation, the new plan continues the recognition of the zoning of the land prior to the resumption.  Aerial photographs tendered in evidence depict the area as a rural environment with significant rural type developments being fairly concentrated to the northeast and to a lesser extent to the northwest.  Generally the land is undeveloped land to the south-west and south-east.  The resumption for the reservoir took the highest land in the southern central area.  The easement runs in a southwesterly direction to the reservoir site from the point where Heinemann Road first meets the northern boundary.
  The claimants, in pursuing the claim before the Court, had subdivisional plans of the land drawn up by Mr Vassallo.  The plan of the land before the resumption (Exhibit 6) provided for three irregular shaped lots of 20 hectares or more, two of which occupy the northern two-thirds of the block and the third being an irregularly shaped rear hatchet lot crossing the block from east to west and with an access way 10 metres wide by 130 metres long coming in from Heinemann Road at the point where it turns easterly from the eastern boundary of the parent parcel.  The homesites on these proposed lots were identified as the optimum building sites containing near level land with good views to the north-east including parts of Moreton Bay and the Bay islands and with excellent views to the north-west. 
  The plan of the land after the resumption and drawn with the same object in view eliminates the rear lot and provides for four lots including a small triangular lot of 8170 square metres in the north-eastern corner which would result from a road dedication eliminating the "dog leg" in Heinemann Road.  In the three principal lots, homesites are identified at levels of about 55 metres which relatively speaking possess significantly less availability of views than those available from the sites identified on the plan of the land before the resumption.
  At some stage these plans were provided to Mr Scougall.  He acted on them with the result that the issue between the valuers when the hearing commenced was one between an assessment of $222,000 (Mr Slater) and $150,000 (Mr Scougall).  The latter valuation comprised the difference between a value before the resumption of $350,000 and a value after the resumption of $200,000.  Had the matter been confined to an issue between these respective valuations, resolution of the exercise would have been relatively simple - principally, the differences in the "before" exercise were reflected in the gross selling prices of $580,000 to $540,000 and in development costs of $45,250 to $72,600.  At that time it was made known to the claimants that the plan of subdivision of the land before the resumption was one which the Council may not approve.  As things progressed it became a plan which Mr Yardley and Mr White were adamant would not be approved in that it did not provide for a subdivision of regular rectangular shaped lots with frontages to the road along the northern boundary.  In the course of the adjustments which were made to Mr Scougall's assessment of compensation (made during the period of the first adjournment) changes were also made in the workings by way of increasing the development costs.  The amount of the valuation finally put in evidence by the constructing authority through Mr Scougall was in the sum of $100,000, being the difference between an estimate of the value of the land as one lot before the resumption of $300,000 and a value of the land as one lot after the resumption of $200,000.  This was the higher of two assessments - the other being done by hypothetical subdivision.  In that exercise, using a plan of subdivision of the land into rectangular shaped lots fronting the unmade road on the northern boundary, he derived a net land value before the resumption of $225,000 and after the resumption of $145,000.  The introduction of the issue of the likelihood of success of an application to subdivide the land in accordance with the plan drawn by Mr Vassallo brought with it evidence from Mr Todd and further evidence from Mr Breene with the result that Mr Slater adhered to his original assessment.  The nature of this evidence and the issues involved will be discussed shortly.  What may be disposed of briefly is the value of the land after the resumption.  In all the hypothetical exercises performed and notwithstanding the appropriateness of a particular plan of subdivision or what may be accepted as reasonable and relevant costs and contributions, the value of the land has fluctuated between $145,000 and $200,000 in the evidence of Mr Scougall and $185,000 in the valuation of Mr Slater.  In his final valuation as one lot, Mr Scougall valued the land after the resumption at $200,000.  When the question was put to Mr Slater, he said that he would value it at $210,000 to $220,000.  The only reasonable conclusion which can be drawn from this evidence is that the highest and best use of the land after the resumption is for sale as one lot and that its value as such is of the order of $200,000.
  The primary exercise is the one which drew the contest and tended, in so far as the claimants were concerned, to concentrate on matters which were directed towards convincing this Court that if it were in the shoes of the Local Government Court the plan would be acceptable and that certain conditions would be held to be unreasonable and irrelevant.  The position however covers a broader spectrum.  What has to be ascertained is the price the land may be expected to fetch in the marketplace at the date of resumption if sold between those persons envisaged in the test laid down by the High Court in the Spencer case (8 C.L.R. 418 per Isaacs J at p. 440) which is worth repeating:

"..... The facts existing on 1st January 1905 are the only relevant facts, and the all important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted.  The plaintiff is to be compensated;  therefore he is to receive the money equivalent to the loss he has sustained by deprivation of his land, and that loss, apart from special damage not here claimed, cannot exceed what such a prudent purchaser would be prepared to give him.  To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration.  We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.  "

In the application of this principle to the evidence, it is clear that whilst the Court may find on the probabilities of approval or refusal of an application to subdivide the land based on the plan of subdivision proposed, it must also consider the effects the secondary issues, such as time delays, risk of success and costs would have on the mind of the hypothetical prudent purchaser in arriving at a price he would be prepared to pay for the land on the given date (see A.K. and S.S. Gallagher v. Brisbane City Council (1975) 2 Q.L.C.R. 368 (L.A.C.) and J.A. and I.M. Scholfield v. The Crown (1968) 35 C.L.L.R. 233 (L.A.C.)). The significance of such issues should they go against the claimants can be demonstrated as follows - in the valuation of Mr Slater he has a development and selling period of 6 months, he has a risk and profit factor of 20 percent, interest is calculated on development costs and land holding over half the development and selling period; an extension of the consent, development and selling period to 18 months(say 12 months to obtain approval) and by increasing the risk and profit factor to 25 percent without making any other adjustment to his exercise would yield a land value in the vicinity of $345,000.  I come then to the evidence.  The object of the plan drawn by Mr Vassallo was to achieve the optimum homesites available from the land.  All three sites are within the land resumed.  The site on the hatchet shaped rear lot is near the southern boundary.  The others are both to the rear of the proposed lots and appear on Exhibit 6 to be about 75 metres apart.  Access from Heinemann Road to the rear lot is via an access way 10 metres wide for 130 metres.  On this exhibit the lot occupying the north-eastern corner of the land would have a frontage of 211 metres to Heinemann Road on the eastern boundary (ignoring any road dedication) and a frontage of 348 metres on the northern boundary.  The lot occupying the north-western area would have a frontage to the road along the northern boundary of 443 metres.  The land is zoned "Rural".  The minimum lot size is 20 hectares.  The topography of the land has been stated.  In the opinion of Mr Todd the layout contained in Mr Vassallo's plan provides the best three homesites and that what follows is "a question of the boundaries that are necessary to comply with the by-laws to make use of these three best house sites".   On his examination of the relevant by-laws and in having regard to the "exception" provisions of such by-laws he could find no difficulty with the plan and submitted in essence that it makes for the highest and best use of the land having regard to the topography of the block and to the remoteness of redevelopment reaching the area.  Mr Yardley who gave evidence on both town planning and development requirements of the Council agreed that if the land was to be cut up with that object in view, the plan achieved the best use of the land for the purpose.  The question was not put to Mr White but I am of the opinion such conclusion is inescapable on the evidence.  The evidence of Mr White and that of Mr Yardley is to the effect that a subdivision of land within the Rural zone should adhere to the characteristics which are normally associated with that zone (regular shaped lots) and that the discretionary powers of the Council should only be used when constraints do not allow the land to be subdivided in this manner.  In a nut shell the submission is this.  Here is a plot of land.  It is in the shape of a square.  It is zoned "Rural" under which the minimum lot size is 20 hectares and the minimum frontage to a road is 200 metres.  It has a road along the whole of the northern boundary.  There are no major physical problems in utilising that road for access purposes.  The land can be cut into three blocks of regular shape of the required size with frontages to that road without invoking the discretionary powers of the Council.  Therefore, this should be the manner in which the land is subdivided if it is to be subdivided.  Complementing these submissions are the conclusions which I have formed from their evidence that regular shaped lots are a matter of course in town planning, that the objective should be rational subdivision patterns unless major physical problems prevent the objective being achieved, that in the subdivision of Rural zoned land the question whether the subdivision provides for the identification and isolation of the best homesites is not dominant, and that the planners should look beyond the life of the plan and so avoid, in the first instance, matters which could become constraints on redevelopment of the land when the need arises, such as a 10 metre wide access way to a 20 hectare parcel.  In the opinion of Mr Todd this reglar form of subdivision would look good on a plan but would look terrible on the ground.  He however was looking at the position from the point of view of obtaining an optimum subdivision of the land for homesite purposes and whilst I agree that the plan which he endorses and the use assumed would not likely "have a detrimental effect on the rural character of the area" (a phrase used frequently in the plan) and otherwise was capable of approval under the discretionary powers of the Council, I cannot lose sight of the evidence of Mr Yardley and Mr White in considering whether a subdivision in this form is contrary to "good town planning practice" which according to the plan constitutes a sufficient reason for refusing approval of an application.  There is no evidence that Council has exercised its discretionary powers and approved subdivisions of irregular shape within this zone during the life of the former or present plan where major physical constraints do not exist.  I note also that under the general discretionary powers vested in the Council in paragraph 15 of Chapter 25, the power to vary any of the provisions of by-laws 12 and 13 may be exercised "where it considers such variation to be necessary because of the location, size, shape or topography of the subject land, and where it considers that the proposed allotments would be satisfactory for the use or uses permissible within the zone in which the subject land is included".  It seems to me that the inclusion of the word "necessary" is significant and that the latter part of the paragraph has also some significance in that the issue here deals with a subdivision of rural zoned land and not residential zoned land.  Further when consideration is given (which must be given by the Local Authority) to the size, shape and utility of each proposed separate parcel that consideration is once more relevant to the rural zoning.  These provisions apart from the general support they give to the opinions of the respondent's witnesses support the opinion of Mr White that a subdivision of rural land crossing a ridge (the proposed rear lot) is not desirable.  The evidence given on behalf of the respondent thus appears to well founded (belated though it may be), has a degree of consistency and on the facts and circumstances of this case, leads me to the conclusion that an application to subdivide the land based on Exhibit 6 would probably not be approved and that a land owner/developer would have serious doubts as to whether he would be successful were he to take the matter further.  The prudent purchaser with knowledge of the kind of evidence put before the Court would naturally guard against the possibility of losses and cut his business risks as far as reasonably possible (see De Ieso v. Commissioner for Highways (1981) 22 S.A.S.R. p. 248 at p. 254) and cover such matters in the manner I have indicated in ascertaining the worth of the land for subdivisional purposes. 
  In the exercises performed by Mr Scougall in hypothetical subdivision with regular shaped lots, he obtained a net land value before the resumption of $225,000.  Mr Slater did not attempt to perform a similar exercise.  With the inclusion of the small triangular shaped lot in the workings, Mr Scougall postulated a gross selling price for the land in subdivision at $510,000.  After allowing for commission, legals on sale, advertising and by applying a risk and profit factor of 20 percent, the sum was reduced to $406,000 before allowances were made for development costs and the items which ensue in an exercise of this kind.  It is evident that there is no point in pursuing the matter of costs and contributions which may or may not be required.  The better test of value and the one which on the evidence will yield a higher sum is that of a sale of the land as one lot.  In the opinion of Mr Slater the block if sold as one lot before the resumption would have a value around the region of $430,000.  Mr Scougall advanced the sum of $300,000.  The sales most relevant in testing these opinions are of two lots nearby which were purchased by Whitehall between February and October, 1987.  The sales were of Lots 10 and 11 on RP 107990, having a combined area of 55.99 hectares.  Lot 11 which is the superior of the two lots was purchased for $150,000 and subsequently Lot 10 for $135,000.  The combined purchase price is $285,000.  However, there is evidence that the vendor in the case of Lot 11 (Remington) was under some anxiety to sell at the time and that the value of the block was nearer the price of $210,000 at which it had previously been listed for sale than to the sum for which it actually sold.  Indeed, in comparing the sale with the subject land in subdivision, Mr Scougall compared Lot 11 as possessing a value of the order of $200,000.  It is agreed that the sale land is in close proximity to the subject land.  The entry to the property is opposite a quarry.  As one lot the sale land is of comparable size to the subject property and if compared at the date of resumption, the blocks possess comparable access.  The sale land has no electricity whereas electricity is to the boundary of the subject land.  It is agreed however that the sale land has superior views.  The aggregate of the purchase was advanced as a measure of testing the maximum which the subject land may have been expected to fetch at the relevant date as one lot.  This evidence does not support the sum contended for by Mr Slater.  Rather, in my opinion, the subject land would be slightly inferior overall to the sale land as one lot and the sum which I conclude is reasonable is $325,000.  Compensation should then be ascertained by deducting from that sum the sum of $200,000 which I adopt as the value of the land as one lot after the resumption.

  Accordingly, compensation for the resumption of both the land and the easement will be determined in the sum of One hundred and twenty-five thousand dollars ($125,000).  Legal and valuation fees incurred for the purpose of formulating this claim are agreed in the sum of $4,179.06.  The additional sum claimed under this heading resulted from an investigation of the site as a quarry site.  It is conceded that the claim before the Court is based on the highest and best use of the land and, ipso facto, is a more valuable use than the use investigated but abandoned.  Whether it was reasonable to undertake the other alternative investigation is open to argument (in the commercial world most probably it is done frequently) but once the highest and best use has been settled it would seem to me that any consideration outlaid in exploring any alternative but lesser use is merged in the value of the land for the higher and better use and accordingly is not compensable (you are aware that doesn't exist in the dictionaries?) as a separate head of compensation under general principles or under principles which govern the determination of compensation for professional fees outlaid for the purpose of the formulation and lodgment of a claim for compensation.
  In the circumstances compensation under all heads is determined in the sum of $129,179.06.  Interest is ordered to be paid on this sum at the rate of 13 percentum per annum from and including the date of resumption up to and including 11th April, 1988 (when an advance of $90,000 was made) and thereafter on the sum of $39,179.06 up to and including the day immediately preceding the date that sum is paid.

Member of the Land Court