Haber v Department of Main Roads
[2004] QLAC 86
•13 October 2004
LAND APPEAL COURT OF QUEENSLAND
CITATION: Haber v Department of Main Roads [2004] QLAC 0086 PARTIES: John Kevin Peter Haber
(appellant)v. Chief Executive, Department of Main Roads
(respondent)FILE NO: LAC2004/0023 DIVISION: Land Appeal Court of Queensland PROCEEDING: An appeal from a decision of the Land Court in the matter of determination of compensation consequent upon the resumption of land for future road requirement purposes under the Acquisition of Land Act 1967 and the Transport Planning and Coordination Act 1994 ORIGINATING COURT: Land Court of Queensland DELIVERED ON: 13 October 2004 DELIVERED AT: Townsville HEARD AT: Townsville JUDGE:
MEMBERS:Justice Cullinane
Mr RE Wenck
Mrs CAC MacDonaldORDER: The appeal is disallowed. CATCHWORDS: REAL PROPERTY - RESUMPTION AND ACQUISITION OF LAND - COMPENSATION - PARTICULAR PROPERTIES AND UNDERTAKINGS - LAND AFFECTED BY ROAD RESUMPTION - Valuation of land - Basis of assessment - Market value and special value to owner - Whether Land Court erred in method of valuation - Whether planning approval affected by Fisheries Act 1976- Whether undeveloped land could be economically developed in accordance with approval
Acquisition of Land Act 1967 (Qld) s.20
Fisheries Act 1976 (Qld) s.71
Local Government Act 1936 (Qld)Arkaba Holdings Ltd v Commissioner of Highways [1970] SASR 94 at 100, cited
Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209 at 225, considered
Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Limited (1947) 74 CLR 358 at 373-374, cited
Federal Commissioner of Taxation v St Helens Farm (1980-1981) 146 CLR 336 at 381, cited
Geita Sebea v Territory of Papua (1941) 67 CLR 544 at 555, cited
Pastoral Finance Association Ltd [1914] AC 1083, cited
Re Wilson and State Electricity Commission of Victoria [1921] VLR 459, cited
Spencer v The Commonwealth of Australia (1907) 5 CLR 418, considered
Warren v Coombes (1979) 142 CLR 531 at 551, citedAPPEARANCES: Mr JJ Haydon for the appellant
Mr RS Jones for the respondentSOLICITORS: Bill Cooper & Associates for the appellant
Crown Solicitor, Crown Law, for the respondent
Background
This is an appeal from a judgment of the learned President of the Land Court ("the Land Court") in the matter of a claim for compensation by Mr JKP Haber ("the appellant") consequent upon a resumption of land for future road requirement purposes, by the Chief Executive, Department of Main Roads ("the respondent"). The proclamation taking the land was published in the Government Gazette on 19 February 1999. That is the date at which compensation falls to be assessed.
The resumed land contains an area of 7,010 m², being part of Lot 2 on CPM 9125 and part of Lots 1 to 4 on RP 714637, Parish of Bassett, County of Carlisle.
It is low-lying tidal land, heavily vegetated with mangroves, being the rear or southern section of the aggregated parent parcel which, prior to resumption, contained an area of 3.495 ha, fronting Malcomson Street, Mackay. The resumed land comprised the undeveloped section of a caravan park known as the Central Tourist Park.
As is relevant to this matter, an approval for development of the aggregated parent parcel as a caravan park comprising 250 sites was obtained by the appellant from the Pioneer Shire Council in 1975 (prior to that Shire's amalgamation with the Mackay City Council). The approved development covered the total aggregated area of the site.
A condition of the approval was that the land be filled to a height of 22.5 metres State Datum. Progressive filling of the parent parcel had been carried out by the appellant, as the developer, using fill material obtained externally then placed and compacted using his own equipment.
By 1980, 200 sites had been developed together with mains service infrastructure and amenities sufficient to cater for the fully approved development of 250 sites.
The rear section of the land which was designed to accommodate the remaining 50 sites on the approved plan and being the land which is subject of the resumption, remained undeveloped. The adjacent fill line approximated the boundary of the area resumed.
The land was taken as part of the proposed Mackay City East-West Connector Road, a short link road to provide a more direct connection between the Bruce Highway and Mackay Harbour and to relieve traffic congestion on Malcomson Street and Evans Road. Vehicular access to or from the proposed road was unavailable to the balance land.
The Claim for Compensation
The claim for compensation as amended with the leave of the Land Court was finally in the amount of $1,591,000 calculated as follows:
(a)Value of the 200 site caravan park
before resumption $2,500,000
Value of the 200 site caravan park
after resumption $1,800,000
Loss in Value $700,000
(b)Value of resumed land with ability to develop a
further 50 sites $500,000
(c)Loss in value of facilities constructed for a
250 site park $185,000
(f)Special value to owner and solatium $195,000
Disturbance Items as agreed including interest $11,000
Total$1,591,000
Respondent's Final Valuation
Value before resumption $2,500,000
Value after resumption $2,400,000
Compensation $100,000
Disturbance items as agreed $11,000
Total$111,000
Land Court's Determination of Compensation
Compensation, before interest, was determined by the Land Court as follows:
Value of land taken $20,000
Loss in value of claimant's other land $242,000
Disturbance (including interest) $11,000
Total$273,000
The Appeal Issues
In the submissions by counsel for the appellant, Mr Haydon, the grounds of appeal were grouped as representing eight issues.
Issue 1
The first issue related to the effect, if any, on the initial planning approval consequent upon the enactment of the Fisheries Act 1976, which came into effect on 1 January 1978. For development of the resumed land to be achieved, substantial filling was necessary. As a consequence the mangrove vegetation would be destroyed. Pursuant to the Fisheries Act, a permit was required to destroy mangroves.
For reasons which relate to the highest and best use of the resumed land, the Land Court had found it unnecessary to decide whether or not the planning approval remained valid at the date of resumption.
Grounds 1, 2, 3 and 4 of the appeal are relevant to this issue. It is seen as appropriate that this issue and the relevant grounds be considered in light of our findings in relation to the remaining issues. Accordingly we will return later to these grounds.
Issue 2 - Special value to the owner
Grounds 5 and 14 as set out below are relevant to this issue:
Ground 5
"From the context of the Reasons for Judgment, the word 'uneconomic' in paragraph [157] relates to commercial viability and fails to take into account, as it should have done, the special value of the resumed land to the Appellant because of the less than commercial cost to him to develop the resumed land."
Ground 14
"Item (f) in the claim ought to be reassessed principally based on the arguments advanced before the Land Court on behalf of the Claimant (Appellant). Alternatively, the ability to fill the land at less than the market rate is an attribute of the land or a use to be made of land or an advantage to be derived from the land which is peculiar to the Claimant and would not exist in the case of the abstract hypothetical purchaser. The Appellant enjoyed additional economic advantages directly attributable to his ownership and occupation of the land which would not be reflected in the market value, but compensation for special value is available."
In the Reasons for Judgment ("RJ") para [157] the Land Court found that even if the development of the additional 50 sites could have been effected on the resumed land, such development would have been uneconomic.
In reaching that finding, consideration had been given to the valuation evidence of Mr Westlake, the appellant's valuer, the valuation evidence of Mr Gould, the respondent's valuer and the evidence of Mr Norling for the respondent, an "urban economist".
The Land Court had concluded in RJ paras [134], [135], [136] and [137] that no reliance could be placed on Mr Westlake's valuation of the resumed land. The opinions of Mr Gould and Mr Norling, in particular, as to the commercial viability of expanding the existing development were preferred.
Part of the appellant's argument that the resumed land had special value for him, was the uncontested evidence that he had the ability to fill the low-lying resumed land at a cost significantly less than commercial rates, by using the strategy employed in filling the existing development.
It was submitted before us that the Land Court misinterpreted the thrust of Mr Westlake's evidence which had been directed to assessment of the special value of the land to the appellant, through the appellant's ability to fill the land at a cost less than commercial rates.
We do not accept that the Land Court misinterpreted that evidence. Instead, the Land Court found that Mr Westlake's valuation of the land based on its hypothetical development for 50 sites was based on flawed methodology. Mr Gould had pointed out that in Mr Westlake's "on completion" valuation of the hypothetical development of the 50 additional sites, he had adopted a level of site value which assumed provision of accommodation structures, but had not included in the development costs, the cost of providing those structures. Neither had Mr Westlake adopted established valuation principles in such an exercise, failing to allow for the developer's profit and risk of realisation of the adopted site values then failing to allow holding costs (interest).
The Land Court accepted that once correct valuation principles were followed, the development of the additional 50 sites would prove uneconomic. In other words, the highest and best use of the land was not for the development as had been approved, even if that development was to have been effected at a cost related to the appellant's filling strategy.
Furthermore, the Land Court found that the appellant's ability to fill the land at less than commercial rates was personal to him and not an attribute of the land. The following conclusion had been reached - "Provided that it was not unlawful to do so, the resumed land could have been developed by an incoming purchaser who would have adopted the most cost effective technique to fill the land" (RJ para [179]).
It was submitted by Mr Haydon that in accepting the written evidence of Mr Norling, the Land Court gave no or insufficient weight to his oral evidence-in-chief and evidence in cross-examination, when he had deferred in some matters to the appellant's experience in the industry and as the developer/operator of the existing caravan park. Mr Norling had accepted that "clients do not always take the professional advice given to them and it was legitimate for Mr Haber to use his professional flair". It was then submitted that apart from the savings available to him in development costs, as a developer/operator experienced in the industry, the appellant's entrepreneurial flair was a relevant factor in assessment of the special value of the land for him.
Mr Haydon accepted that special value must relate to some attribute of the land, as explained by Bray CJ in Arkaba Holdings Ltd v Commissioner of Highways [1970] SASR 94 at 100 and cited with approval by Gleeson CJ in Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209 at 225 para [80]:
"It is, of course, well established that it is the value to the owner which must be paid, even if that value exceeds the market value ... The additional element is commonly called 'special value to the owner' … But this special value must in my view arise from some attribute of the land, some use made or to be made of it or advantage derived or to be derived from it, which is peculiar to the claimant and would not exist in the case of the abstract hypothetical purchaser. Would a prudent man in the position of the claimant have been willing to give more for this land than the market value rather than fail to obtain it or regain it if he had been momentarily deprived of it?"
Mr Haydon submitted that the ability of a person to derive an advantage from an attribute of land was not limited to the owner, for the land to have special value to that owner, but was applicable where the ability extended to a limited class of potential owners. In the subject matter it was submitted that the relevant attribute of the land was its low-lying physical nature requiring filling and the advantage available to an owner was the owner's ability to fill the land at a cost significantly less than commercial contract rates. In support of the submissions, the following comments of Callinan J in Boland v Yates at 269, para [292], in his Honour's discussion on the concept of special value, were cited:
"It arises in circumstances in which there is a conjunction of some special factor relating to the land and a capacity on the part of the owner exclusively or perhaps almost exclusively to exploit it … The special quality must be a quality that has an economic significance to the owner. A possible case would be one in which, for example, a blacksmith operates a forge in the vicinity of a racetrack on land zoned for residential purposes as a protected non-conforming use, the right to which might be lost on a transfer of ownership or an interruption of the protected use (see, eg s.79c of the Environmental Planning and Assessment Act 1979 (NSW)). Such a property will have a special value for its blacksmith owner, and perhaps another blacksmith who might be able to comply with the relevant requirements to enable him to continue the use but to no one else."
In our view the ability of an owner to fill inferior quality land at a cost less than commercial contract rates does not give that inferior quality land a special value, over and above market value, to its owner, or any other person prepared to adopt the same filling strategy.
It is seen as illogical to suggest that a prudent owner of such land, if momentarily deprived of it, would pass on to the hypothetical vendor, the savings available from a particular filling strategy by paying an amount equivalent to those savings, rather than fail to obtain or retain the land. Inherent in the appellant's submissions is that a prudent purchaser would have no option other than to pay the vendor's asking price and would do so rather than fail to obtain the land. We do not accept that the purchaser in such circumstances would be regarded as prudent.
Mr Haydon then attempted to draw an analogy between the appellant's ownership of plant and equipment and access to fill material and the example hypothesised by Callinan J in Boland v Yates when, in rejecting the "head start principle" as a principle in the law of valuation his Honour said at para [298]:
"It may be that in some cases a particular developer may possess some very unusual advantage that might enable him or her to undertake some development more quickly than an hypothetical purchaser acquiring the site. An example of such a situation might be one in which the developer is both developer and builder, and has particular plant and equipment on site which might otherwise be idle and which he or she would be able to utilise immediately in constructing the development at marginal cost. The developer's equipment, the developer's occupation of buildings, its location on the land, and the suitability of the land for its utilisation all combine in such a case to give the land a special value to that developer."
However we think it is drawing a long bow to compare an example such as that hypothesised by his Honour with the circumstances of the appellant's ownership of earthmoving equipment in the subject matter where there was no suggestion that its immediate use to fill the land would have been a desirable strategy or would provide any particular advantage.
As Gleeson CJ observed also in Boland v Yates at 225, para [80] before referring to the explanation of Bray CJ in Arkaba Holdings, cited earlier:
"It was established in Pastoral Finance Association Ltd [1914] AC 1083, which has been followed in many subsequent cases, that in some cases land may have a special value to the owner which exceeds the market value. If, in a given case, it is contended that such special value exists, that also raises an issue for factual judgment."
As Callinan J observed in Boland v Yates, again at 269, para [292]:
"There will in practice be few cases in which a property does have a special value for a particular owner. Obviously neither sentiment nor a long attachment to it will suffice."
It is understandable that with his long association with the caravan park development of the parent parcel and his unproved perceptions as to the development potential of the resumed land, the appellant would have preferred to retain that land rather than lose it. However the evidence, in our opinion, supports the effect of the findings of the Land Court that the resumed land did not possess highest and best use for caravan park development either in the appellant's or any other person's hands at the date of resumption. The ability of the appellant to fill the land at less than a commercial cost or his experience in the industry and entrepreneurial flair were not attributes of the land which gave it a value to the appellant more than its market value, or indeed gave it any value for the development as had been approved.
We do not accept the submission for the appellant that, in the circumstances of this case, the test should not be one of commercial viability, regardless of the cost of the development. While the opportunity may have existed for the appellant to fill the land, its added value, once developed as proposed, was shown by Mr Gould to be less than the cost of development even at the filling cost available to the appellant.
For the reasons given, Ground 5 fails as does Ground 14, subject to the further discussion regarding special value, in association with solatium, in response to Ground 15 of the appeal.
Issue 3 - Spencer v The Commonwealth (1907) 5 CLR 418
Ground 6:
"The learned President gave too much emphasis to the role of the prudent purchaser and too little emphasis to the role of the prudent vendor, especially in the context of Spencer v The Commonwealth of Australia (1907) 5 CLR 418."
It was Mr Haydon's submission that the Land Court concentrated too heavily on the considerations of the hypothetical purchaser in the Spencer test of market value and "It is not just what the purchaser may do or think".
It is accepted that at RJ para [157] the Land Court concentrated on "the price a fully informed prudent purchaser would pay for the land". However it is also clear that the hypothetical purchaser's position was being considered in light of the claim that, in the appellant's view, the highest and best use of the land was for extension of the existing caravan park, as approved, and that the land had special value to him for the various reasons earlier discussed. At RJ para [159] was the following observation:
"As Mr Haydon pointed out, the test in Spencer envisages an informed prudent vendor as well as an informed prudent purchaser, and the price at which the land would be sold is not unaffected by the price which such a vendor would be prepared to take for it. Even if such a vendor was convinced that development of the land for caravan sites was uneconomic, it is difficult to envisage that such a vendor would accept that the resumed land had no value at all."
Then, with no cogent assistance being obtained from the evidence of either valuer, as to the value of the land, with highest and best use for other than development as caravan sites, a nominal value of $20,000 was adopted at RJ para [160].
We note that the Land Court had expressed the view that the conventional approach to the assessment of compensation would have involved the value of the whole of the land before resumption at its highest and best use (RJ para [112]). We will return to that aspect of valuation methodology later.
The difficulty facing the appellant is that the Land Court did not accept the contention that the highest and best use of the land was for development as approved or that the land had special value to the owner, regardless of the owner's perceptions of its highest and best use. It is clear to us that, if it was correct for a piecemeal assessment of the resumed land to be conducted, the role of the prudent vendor in the Spencer test was properly considered by the Land Court.
Ground 6 of the appeal fails accordingly.
Issue 4 - A more liberal estimate of compensation
Grounds 7, 8, 9, 10, 11 and 12 of the appeal are relevant to this issue and are set out as follows:
Ground 7:
"The learned President failed to resolve doubts in favour of a more liberal estimate of compensation."
Ground 8:
"It is appropriate in the circumstances for the Land Appeal Court to review the town planning, traffic engineering, noise and visual amenity evidence to determine a more liberal estimate of compensation. For example, notwithstanding the report of Mr Kamst (noise), the second road boundary for the Caravan Park which occurs after the resumption does significantly change the noise and visual amenity of the Caravan Park. The Tourist Park is impacted by noise from each road. However, in the before situation, the noise impacts came from one road only and did not impact on all of the Caravan Park. The proposed new fence will impact on the visual amenity. All of these matters are relevant to assessing compensation. The historical trends in the Caravan Park industry are also relevant."
Ground 9:
"The learned President amended the valuation evidence of both valuers to arrive at a decision with respect to the after valuation. In the circumstances, it is appropriate for the Land Appeal Court to review that approach."
Ground 10:
"As the capitalisation rate to be used is subjective because there are no directly comparative sales available, the Land Appeal Court should review the capitalisation rates."
Ground 11:
"The risk profile of the business after resumption was considered by the learned President at the low end of the scale. The Land Appeal Court should review the facts and circumstances relevant to assessing the risk profile.
Ground 12:
"The learned President applied a nominal value to the resumed land and in all the circumstances the Land Appeal Court should review that assessment."
The appellant's submissions proceeded on the basis that this Court is in the same position as was the Land Court to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the Land Court, citing Warren v Coombes (1979) 142 CLR 531 at 551. In the joint judgment of Gibbs ACJ, Jacobs and Murphy JJ, their Honours went on to say at 551:
"In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it."
The appellant's submission on the issue of a more liberal estimate of compensation revisited the questions of the continuing planning approval, the development history of the caravan park, the importance of the long association of the appellant and his family with the park, the appellant's experience in the industry, his perceptions as to the importance of the resumed land to the park and its environment and the special value which the resumed land and overall caravan park had to the appellant from his perspective. The evidence of increasing demand subsequent to the resumption was seen as confirmation of the appellant's opinions as to the potential for development of the resumed land at the date of resumption and the reasoning behind the provision of infrastructure within the initial development to cater for the proposed expansion onto the resumed land.
It was submitted that the appellant's valuer's approach in identifying the perceived special value to the owner of the resumed land separately from the developed section was not unconventional and was not a variant of the summation approach as described by the Land Court, as the existing development had been valued on a before and after resumption basis.
It is observed that the Land Court had, in the end result, adopted a similar piecemeal approach to the assessment of compensation as had the appellant's valuer.
The Land Court had not accepted the capitalisation rates adopted by the valuers in the valuation of the existing development. It was submitted that this Court should review the capitalisation rates adopted by the Land Court, because the risk in maintaining the same net income as before the resumption was perceived to be greater than that assessed by the Land Court.
The facts are that the valuation of the established caravan park before the resumption, excluding the undeveloped area, was not in dispute, although the valuers had adopted differing net maintainable income and capitalisation rates. The Land Court gave clear reasons for adopting Mr Gould's more liberal estimate of net income and his assessment of acceptable yield, or capitalisation rate, based on the sales evidence.
In the after resumption exercise, the Land Court again gave clear reasons for assessing greater risk in maintaining net income than had been adopted by Mr Gould, but less than the risk assessed by Mr Westlake. The elements of risk associated with the maintenance of the same income from the caravan park after the resumption, as was achievable before the resumption, were well exposed in the evidence before the Land Court including the effects of noise, visual amenity and historical trends in the caravan park industry.
It was submitted that the risk profile of the business after resumption was assessed by the Land Court "at the low end of the scale". However, "the high end of the scale" was Mr Westlake's opinion, and the reasons for rejection of his opinion were clearly expressed. On our assessment of the evidence, the Land Court's assessment as to the differentiation in risk was open to it.
It was further submitted that the Land Court failed to resolve doubts in favour of a more liberal estimate of compensation and should have done so had it followed that which was said by Dixon J in Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Limited (1947) 74 CLR 358 at 373-374 and cited with approval by Callinan J in Boland v Yates at 279, para [356]:
"[T]here is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. While this difference cannot change the test of value, it is not without effect upon a court's attitude in the application of the test. In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate."
With regard to the role of an appellate court in valuation matters Mr Jones, counsel for the respondent, cited the observations of Mason J, as he then was, in Federal Commissioner of Taxation v St. Helens Farm (1980-1981) 146 CLR 336 at 381 (subsequent to the Warren v Coombes judgment):
"This Court has consistently applied the rule that on a question of valuation an appellate tribunal is not justified in substituting its own opinion for that of the court below unless it is satisfied that the court below acted on a wrong principle of law or that its valuation was entirely erroneous … As with the assessment of damages, especially in personal injury cases, the valuation of property by a court has many of the characteristics of a discretionary judgment. Valuation is a matter of estimation, not of precise mathematical calculation. It certainly involves the making of a value judgment in the metaphorical as well as the literal sense."
On our review of the evidence we are not persuaded that the appellant has shown that the Land Court acted on a wrong principle of law or its valuation was in any way erroneous.
The "nominal" value applied to the resumed land as a separate heading was open to the Land Court when its highest and best use was, at best, open space ancillary to the existing development and uneconomical to develop for an extension of that existing development in the foreseeable future. It would have been open to the Court to have valued the overall parent property including the resumed land as a complete entity before resumption when the resumed land, as Mr Gould suggested, might have been found to have possessed no identifiable added value. That approach was rejected by the Land Court and while the resumed land was valued separately at a nominal figure, it is our view that the Land Court's approach resolved doubts in favour of a more liberal estimate of overall compensation.
Similarly we accept that the capitalisation rate adopted by the Land Court for the established development after resumption also resolved doubts in favour of a more liberal estimate of compensation than might have been otherwise found on the evidence.
For the above reasons we would not disturb the valuation of the Land Court and each of Grounds 7, 8, 9, 10, 11 and 12 fail.
Issue 5 - Loss of value of the facilities and infrastructure
This issue is raised in Ground 13 as follows:
"As to Item (c) of the claim, it should have been separately assessed for compensation as part of the injurious affection damage caused by the resumption action of the constructing authority taking away land so that the 250 site Caravan Park could not be finished and/or part of the special value of the land to the appellant and/or part of disturbance. The amenities and infrastructure are worth less in the after valuation. The full value of the facilities and infrastructure to earn income (cash flow) would not be achieved until 250 sites are built. The potential to complete the 250 Caravan Park sites and ensure the full utilisation of the facilities and infrastructure has been lost. In the before situation, the prudent vendor and the prudent purchaser would know that the existing facilities and infrastructure were sufficient for the 250 site Caravan Park so those existing facilities and infrastructure had value in the before situation because when the Caravan Park was completed to 250 sites no further facilities or infrastructure would need to be provided. The vendor would not sell before resumption without a value being added. The value is lost after resumption because the balance of 50 sites are not able to be built."
Item (c) of the claim, as amended during the Land Court hearing, was in the amount of $185,000 for "loss in value of facilities constructed for a 250 site park".
There was no dispute between the parties that the facilities and infrastructure contained within the existing development were designed and constructed to service not only the 200 sites but the 50 additional sites which had been approved. In other words, the later construction of those additional approved sites would not have involved the provision of, for example, additional administrative, ablution and recreation facilities and mains service infrastructure.
Clearly, had the highest and best permitted use of the overall property, before resumption, been for a 250 site development, the existing facilities and infrastructure capable of servicing the 250 sites would have been expected to possess value greater than had they been limited to servicing only the existing 200 sites. Any added value would have formed part of the market value of the existing development and would have been reflected in the total "before resumption" valuation just as would have been the added value of the land available to accommodate the additional 50 approved sites.
However if as was found by the Land Court, and reasonably so in our opinion, the additional 50 site development was economically unviable, despite the existence of these necessary facilities and infrastructure, then the excess facilities and infrastructure were not made redundant or "thrown away" as a direct consequence of the resumption, as submitted by the appellant. They would already have been redundant as a consequence of market forces associated with the highest and best use of the total site. However, if the excess facilities and infrastructure possessed any added value, that would have related to any contribution that the facilities, in particular, made to the income from the existing development through, for example, any residual benefits to the comfort of the occupants of the caravan park. Those excess facilities would have been available to the park clients for about 20 years prior to the date of resumption. The existing income formed part of the basis of the before resumption valuations made by the valuers for both parties. The dispute between the valuers in that exercise related not to the added value of the existing facilities and infrastructure, but to the added value of the undeveloped land.
It was submitted that it was not surprising that the valuers did not mention the capacity of the facilities, a matter observed and seen as significant by the Land Court, because the "capitalisation method does not seek to look at individual facilities on the subject and sale sites" and "No one sale was comparable". Again, reference was made to the requirement to consider the position of a prudent vendor as well as that of the prudent purchaser and the need in this case to consider "the continuing validity of the planning approval".
We do not accept the reasoning in the appellant's submission with regard to the "capitalisation method" not seeking to consider matters which directly affect the market value of income-producing properties as demonstrated by sales evidence. The capitalisation rate reflects the direct relationship between the market value of an income-producing property and the income, either actual or potential. A piecemeal or summation approach to market value might be the preferred methodology in circumstances where the existing development is not considered to represent the optimum use of the land. However in this case the appellant failed to show that, despite the planning approval, the highest and best use of the land was for a 250 site development rather than the existing 200 site development.
We are not persuaded that the Land Court erred in rejecting this item of claim in the circumstances specific to this matter, and Ground 13 of the appeal fails accordingly.
Item 6 - Solatium
Ground 15 of the appeal relates to this issue and is set out as follows:
"The claim for solatium should, at least, be considered an item of disturbance. In the same way as disturbance is paid for professional fees associated with the preparation of a claim. The categories of disturbance are not closed. Solatium is not too remote in the circumstances of this resumption. It is a natural and reasonable consequence of the resumption."
Item (f) in the claim as amended was in the amount of $195,000 for "Special value to owner and solatium". Although it is clear that the claim for the value of the resumed land had included an element of alleged special value to the owner, related to the appellant's ability to fill the land at a cost less than commercial contract rates, this item of claim linked another aspect of alleged special value with the solatium concept. The explanation of this heading of claim was provided in the amended claim and repeated by the Land Court at RJ para [171] as follows:
"The caravan park has special value to the applicant. The caravan park is not for sale and the applicant intends to keep it for his children and grandchildren. The land has been in the applicant's family for over 30 years and was being developed progressively, as a caravan park for retention for future generations. Much of the works in building up the park were personally carried out by the applicant and his family, which involved much sacrifice to the applicant and his family. The resumption has halted that plan and has caused much stress and injury to the applicant and the applicant claims $195,000 as special value of the resumed land to him. This part of the claim includes solatium."
It was the appellant's submission that, in the context of the subject claim, solatium is capable of being part of special value and/or disturbance. The argument continued that while a strict reading of s.19 and s.20 of the Acquisition of Land Act 1967 would exclude payment of any amount relating to legal, valuation and other professional costs associated with the preparation of a claim, "these amounts are regularly allowed as items of disturbance" and "[S]olatium is capable of fitting into the same concept of disturbance".
At RJ para [183] the Land Court made reference to the discussion on solatium in the publication "Land Acquisition" 4th Edition at [3.35]. The author, Douglas Brown, described the issue as being "whether in addition to a sum for the value of the land resumed and for other heads of compensation governing loss or damage, the dispossessed owner is entitled to an additional sum in respect of the hardship, inconvenience, trauma or other unspecified loss caused by the resumption. The question is whether the claimant is entitled to an additional sum in respect of his or her injured feelings or the insult due to the unilateral action of the acquiring authority in arbitrarily expropriating his or her land. … The award of a solatium is a recognition that the amount of compensation may not have covered every foreseeable loss which the dispossessed owner suffers at being evicted from his or her land. It is a kind of sweetener, reflecting some kind of apology."
Brown gave examples of various approaches to solatium as may be reflected in relevant statutes, summarising:
"the award of a solatium is dependent upon the particular provisions applying to the resumption."
At RJ para [192] the Land Court observed that:
"Acquisition statutes in some other jurisdictions in Australia now make specific provision for an award of solatium, as of right, or discretionary. However, no provision has been made in the Queensland Statute."
After considering the rejection of a claim for solatium by the Supreme Court of Victoria in Re Wilson and State Electricity Commission of Victoria [1921] VLR 459 and by the High Court in Geita Sebea v Territory of Papua (1941) 67 CLR 544 at 555 by Starke J and at 559 by Williams J, the Land Court saw it as "abundantly clear that unless there is specific provision for the payment of an additional sum by way of solatium, then it cannot be allowed."
We agree with the submission by Mr Jones for the respondent that, properly analysed, solatium cannot be said to be a component of the value of the land in the hands of the owner and form the basis of a claim under the heading of disturbance or special value.
Section 20 of the Acquisition of Land Act 1967 which deals with assessment of compensation, relevantly provides:
"(1) In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also to the damage (if any) caused by either or both of the following, namely—
(a) the severing of the land taken from other land of the claimant;
(b)the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land.
(2) Compensation shall be assessed according to the value of the estate or interest of the claimant in the land taken on the date when it was taken."
This Court has consistently accepted that professional fees expended in the compilation of a claim for compensation should in fairness be recompensed as items of disturbance provided they are the reasonable and not too remote consequence of the resumption, following the test laid down in Harvey v Crawley Development Corporation (1957) 1 All ER 504. It is true that there is no express provision in the Queensland Acquisition of Land Act for the payment of disturbance. However as Callinan J said in Boland v Yates at 269 para [292], when discussing disturbance and special value to the owner, "I group these two topics together because although they are separate they are related concepts. The special value of land is its value to the owner over and above its market value." Items of disturbance are also related to the value of the land to the owner over and above its market value. Value to the owner has statutory recognition in s.20(2) of the Acquisition of Land Act.
The elements which may warrant, where statutory provision is made, payment of solatium are not elements relating to the value of the land to the owner. There is no provision for the payment of solatium in the Queensland legislation and we agree with the finding of the Land Court that no such payment can be made.
Ground 15 of the appeal fails accordingly.
We now return to the first issue.
Issue 1 - Continuing planning approval
The relevant grounds of appeal are as follows:
Ground 1:
"With respect, paragraph [151] of the Reasons for Judgment proceed on wrong assumptions and/or propositions. The filling for the 250 site approval had commenced before the commencement of the Fisheries Act 1976 (1 January 1978) and has not yet been finished. The full Planning and Development Certificate from the Mackay City Council dated 14 June 2002 recognises the continuing effect of the 1975 approval and the undertaking of works on the land in stages. The right to fill arose under the Local Government Act 1936. The filling has begun and was not yet completed before the introduction of the permit system under the Fisheries Act 1976. The final stage of 50 lots was yet to be completed as at the date of the resumption. There is no time limit in the 1975 approval to complete the development."
Ground 2:
"The learned President was, with respect, wrong in saying it was not necessary to decide whether or not the 1975 town planning approval to develop a 250 site Caravan Park remained valid, notwithstanding the 1976 and subsequent Fisheries legislation."
Ground 3:
"It is necessary in the circumstances of this claim to decide if the development approval is still valid. The legal position with respect to the 1975 approval is clear and it remains valid. That removes uncertainties and doubts mentioned by the learned President in the Reasons for Judgment."
Ground 4:
"It is not a question of the planning approval overriding the later Fisheries legislation as is suggested in paragraph [157] of the Reasons for Judgment."
A persuasive submission was made by Mr Haydon before us to the effect that, despite the effect of the restrictive Fisheries legislation, the approval to develop the remaining 50 sites remained valid.
However, the relevant point is that even if the approval remained valid, it added no value to the land if the cost of effecting the approval exceeded the value which the extended development would have added to the existing development. The appellant failed to prove that there was economic advantage to be gained by exercising the approval.
The Land Court, while not deciding the continuing approval issue, after summarising the appellant's argument and relevant matters in RJ paras [150] through to [154], expressed the view that "any prudent purchaser would already have reservations about his ability to carry out further development" and at RJ para [157]:
"In my view a properly informed prudent purchaser would have grave doubts as to whether such development could be undertaken. There must be uncertainty as to whether the planning certificate signed by an officer of the Council is sufficient to override legislation which regulates the development of the land. Because of these doubts, a prudent purchaser would pay little for the rear land. In any event, I have found that even if such development was allowed, it would be uneconomic." (emphasis added)
Mr Haydon submitted that the Land Court should have, and this Court should decide the issue of the validity of the approval. His reasoning was that the doubts which the Land Court considered would exercise the mind of a prudent purchaser should be ignored because both the hypothetical prudent vendor and purchaser are to be assumed to know the correct legal answer.
When regard is had to the authorities to which we were referred, there is good reason to think that Mr Haydon's submission as to the validity of the approval is correct. However it is unnecessary to express a final opinion about this in view of the Land Court's finding, (which for reasons already given, we think was justified) that the approval, if valid, added no value to the resumed land.
Summary of Findings
Each of the grounds of appeal fails.
Order
The appeal is disallowed.
CULLINANE J
JUSTICE OF THE SUPREME COURT
RE WENCK
MEMBER OF THE LAND COURT
CAC MacDONALD
MEMBER OF THE LAND COURT
0
6
3