Heilbronn v Department of Main Roads
[2006] QLC 58
•27 September 2006
LAND COURT OF QUEENSLAND
CITATION: Heilbronn v Department of Main Roads [2006] QLC 58 PARTIES: Raymond David Heilbronn
(claimant)v. Chief Executive, Department of Main Roads
(respondent)FILE NO.: A2005/1947 DIVISION: Land Court of Queensland PROCEEDING: Claim for compensation payable consequent upon the resumption of land pursuant to the Acquisition of Land Act 1967. DELIVERED ON: 27 September 2006 DELIVERED AT: Brisbane HEARD AT: Maroochydore MEMBER Mr RS Jones ORDERS: 1. Compensation is determined in the amount of $88,000 (Eighty Eight Thousand Dollars).
2. The respondent is to pay to the claimant interest at the rate of 5.5% per annum on the amount of $88,000 from 27 September 2002 to the date of payment of that amount.
3. The parties will have the opportunity to consider these reasons and to make submissions in respect of interest on disturbance and/or costs.
CATCHWORDS: Valuation – method of valuation – before and after method – likelihood of approval for industrial use – acceptable sales – sales analysis – whether discount for possible material change of use.
Valuation – advertising sign on resumed land – present income from sign licence – highest and best use industrial – licensed sign incompatible with such use – claim rejected.
Resumption – determination of compensation – severance – injurious affection – caused by works of scheme not carried out on resumed land – Marshall principle.
Resumption – determination of compensation – damage to business on balance land – costs of cattle crossing highway – claim separate to injurious affection to balance land itself – compensable – but discount for probable future change unrelated to scheme.APPEARANCES: Mr S Ure of counsel instructed by Butler McDermott and Egan, Solicitors for the claimant.
Mr D Quayle of counsel instructed by Crown Law for the respondent.
These proceedings concern a claim for compensation by Raymond D Heilbronn (the claimant) as the registered proprietor of land affected by a resumption of part of that land for road purposes by the Chief Executive, Department of Main Roads (the respondent).
Details of Resumption and General Description of Land
By a Notice of Intention to Resume dated 13 June 2002 the claimant was notified that a part of his land was to be resumed. On 27 September 2002, by proclamation published in the Queensland Government Gazette an area of about 7884 m² of land was resumed. Following a more detailed survey the area of land finally taken was 7737 m². Prior to the resumption the subject land was described as Lot 173 on Crown Plan MCH 4558, County of March, Parish of Gympie. The original area of the land was 14.043 hectares. Following the resumption the land is now described as Lot 173 on Survey Plan 153723 and contains an area of about 13.27 hectares. The land is located on the northern outskirts of Gympie.
The resumed land is comprised of an irregularly shaped narrow parcel running the full length of the eastern boundary of the parent parcel which fronted the Bruce Highway. At this location the Bruce Highway is also known and identified as Chatsworth Road. The eastern boundary of the parent parcel was about 260 m in length.
The bulk of the land could be described as being low-lying grazing country intersected by a central gully and having a more elevated area located in the northeastern corner of the land generally adjacent to what was originally the intersection of Rodney Road and the Bruce Highway. The bulk of this elevated land was lost to the claimant as a result of the resumption. The whole of the parent parcel was subject to periodic flooding, a not uncommon occurrence in the Gympie district.
The subject land is but one of a number of parcels of land owned by the claimant in the area. For the past 30 years he has used the land in conjunction with his other land for grazing purposes. As at the date of resumption it would appear that the claimant maintained a herd of about 60 to 70 head of cattle over his entire landholdings in the area.
The claimant says that as a part of his normal grazing activities he would, when necessary, move stock in the early hours of the morning via the surrounding road network from one set of paddocks on the eastern side of the Bruce Highway to paddocks on the western side of that road and vice versa. As a consequence of the closure of the intersection of Rodney Road and the Bruce Highway the claimant says that he has been unable to continue that operation since about 2002. More will be said about this matter below.
The Positions of the Parties
On 15 December 2005 the claimant, pursuant to s.19 of the Acquisition of Land Act 1967, filed in this Court his claim for compensation. The amount claimed was $216,507 plus "GST" and interest. On the first day of these proceedings the claim was amended to $219,445.20 plus "GST" and interest. This amendment was made without objection on the part of the respondent. The amount finally claimed was made up as follows:
(a) Land $139,266.00 plus GST (b) Other losses
(i) Severance, stock transport, construction of holding yards for stock
$10,000.00 plus GST
(ii) Loss of signage $46,285.00 plus GST (iii) Construction of holding yard $9,228.00 (iv) Interest pursuant to the Acquisition of Land Act and as designated by the Land Court. (v) Legal fees, valuation and town planning fees to 14/12/05 $14,666.20 Total $219,445.20
The claimant relied primarily on the advice of Mr Henderson to support his claim for the value of the land taken. Mr Henderson is an experienced registered real estate valuer. The evidence concerning the items under the heading of "severance" came primarily from the claimant himself.
Relying on the professional advice of Mr Mount, also an experienced registered real estate valuer, the respondent's primary case was that the claimant was only entitled to the value of the land taken plus interest thereon and a reasonable allowance for disturbance items. Mr Mount's assessment of the value of the land was $6,190.00. Mr Mount did not attempt to take into account any allowances for GST and/or disturbance.
No advance on compensation has been paid for or on behalf of the respondent and disturbance was eventually agreed in the sum of $11,000.00.
Highest and Best Use
The subject land is located within the boundaries of the Cooloola Shire Council and pursuant to that authorities town planning scheme was, as at the date of resumption, zoned "Rural" and designated as "Rural" under its Strategic Plan. Grazing was a permitted use under that zoning and land designation.
Mr Henderson arrived at his value of the land by carrying out what he described as a before and after valuation. His value of the land in the before resumption scenario was $332,715.
That very precise figure was calculated in the following way:
1.5 ha of industrial land at $180,000/ha = $270,000
12.543 ha of balance land at $5,000/ha = $62,715Mr Henderson's after valuation of $193,449 was calculated as follows:
7263 m² of industrial land at $180,000/ha = $130,734
12.543 ha of balance land at $5,000/ha = $62,715Mr Henderson approached his valuation on the basis that any application to the council for a material change of use of part of the land to permit industrial development and use was, in effect, a certainty. In this regard Mr Henderson relied to a significant extent on the advice of Mr Ryter an experienced and professionally qualified town planner.
At page 8 of his report (Exhibit 10) Mr Mount says that he relied on town planning advice to the effect that there was a "reasonable prospect" of the council supporting a material change of use application. Mr Mount on town planning matters relied primarily on the advice of Mr Oliaro, also an experienced and professionally qualified town planner. Acting on this advice Mr Mount concluded that the resumed land was worth $8,000/ha. At page 8 of his report Mr Mount also expressed the view that the costs of meeting the conditions which might be attached to any change of use permission could make industrial use of the land an uneconomic proposition. For the reasons set out below I do not accept the evidence of Mr Mount about that.
In my opinion there was very little between the town planners about the industrial use potential of the land. In paragraph 8 of their conclave statement (Exhibit 7) Messrs Ryter and Oliaro agreed that:
"Despite the zoning, conflict with the Strategic Plan and the flooding issue, it is agreed that the Cooloola Shire Council would have supported the use of the subject land for industrial purposes. The land had potential for subdivision into industrial allotments with a minimum area of 1000 m²."
However, in the same document, under the heading of "Points of Disagreement", at paragraphs 3 and 4 it was stated that:
"3.Angelo Oliaro says that the Cooloola Shire Council would adopt a pro development attitude with this application with the likelihood for approval being about 80%.
4.Russell Ryter says that, from a town planning perspective, an application to develop the subject land for industrial purposes should, and would have been approved at the relevant date."
At the end of the day any tension between the former and latter paragraphs, if indeed there was any, had disappeared. The evidence of both town planners was to the effect that any prudent purchaser of the land would be as confident as he or she could be about obtaining approval for industrial use absent having the actual approval in hand. The evidence of the town planners on this topic is also important in respect of the weight to be given to the sale of land referred to as the "Pinewood Avenue" sale. This was Mr Henderson's Sale 1 and Mr Mount's Sale 4.
It was Mr Henderson's evidence that, in the before resumption case, the most likely use to which 1.5 ha of highway frontage land would be put would involve some form of display and retail use. Such a use would be likely to involve the display and sale of commercial vehicles and/or commercial plant and equipment. None of the experts called really took issue with the type of use Mr Henderson envisaged. In Mr Henderson's opinion the after use would have remained the same but would be limited to an area of 7263 m². This area was arrived at by deducting the resumed area of 7737 m² from 1.5 ha. In both the before and after scenarios Mr Henderson's notional industrial block occupied the whole of the road frontage but the depth in the after case was reduced from 60m to about 42m.
Having regard to the totality of the evidence on this topic I find that the highest and best use of the land in the before resumption case would have involved some form of industrial/commercial type of use over an area of about 1.5 ha which exploited its highway access and, in particular, its highway exposure. In the after case I find that the subject land has the same potential. However, I do not accept that in the after case the area of the site would be limited to 7263 m². In both the before and after case the highest and best use of the balance left after the subdivision of the highway frontage land was for grazing.
The Sales Evidence
As I understand it, in reaching his conclusions about the value of the land before and after the resumption Mr Henderson originally had regard to six sales in the general vicinity of the subject. Sometime after preparing his primary report (Exhibit 5) a further sale was uncovered which he considered offered further support for his valuation. The details of this sale are set out in his further report (Exhibit 5B) which also provides more details about the original six sales relied on.
Mr Mount had regard to five sales in carrying out his valuation and at page 14 of his primary report (Exhibit 10) states that the value of the subject land lies "somewhere in the range indicated by Sales 1 and 2…" The only sale common to both valuers is Mr Henderson's Sale 1 and Mr Mount's Sale 4. This is the sale already referred to as the "Pinewood Avenue" sale.
In assessing the value of that part of the land with industrial use potential it is my opinion that the only sales relied on by Mr Henderson which are of any real assistance are his Sales 1 and 6.
I reject Mr Henderson's Sale 2. Mr Henderson, in his report, suggests that this sale is indicative of the price being paid in late 2003 for vacant industrial land without highway frontage and having only limited exposure. When analysed the sale suggests a rate of $65/m² or $650,000 per hectare. Even allowing for a more buoyant market in December 2003 it is difficult to see how this sale could be considered in any meaningful way to be comparable to the subject which, according to Mr Henderson, has a worth of $18/m² or $180,000 per hectare. Mr Mount also considered this sale to be unreliable because it involved the purchase of a landscaping business including goodwill, plant and equipment. Mr Henderson was not able to refute this evidence. It is for all these reasons that I reject this sale as reliable evidence of value.
I also reject Mr Henderson's Sale 3. The town planning evidence was that the council was likely to give sympathetic consideration to an application to have the material change of use of this land changed from rural to industrial. However, I accept the evidence of Mr Ryter that any such change would, unlike any similar application concerning the subject land, be likely to attract quite onerous and expensive conditions, particularly in respect of access to and from the highway. Further, I accept the evidence of Mr Mount that this transaction involved the sale of land from one brother to another. The evidence of Mr Mount suggests that, at best, this sale might provide some evidence of the value of the land used for grazing.
I also reject Mr Henderson's Sales 4 and 5. In my opinion they provide no reliable evidence of value for that part of the subject land having industrial potential. Sale 4 was substantially improved at the date of sale. According to Mr Henderson this sale analyses down to a site value rate of $54/m². This is three times the rate applied to the subject land with industrial potential. Such a difference, in my opinion, strongly suggests that this sale is not really comparable to the subject at all. The difference could, in part, be explained by the fact that the sale involved a significantly larger area of flood free land. However, the difference could just as readily be explained by the evidence of Mr Mount, which I accept, to the effect that the sale was purchased by the existing tenant who already owned and operated a business from the site. Further, the purchaser of Sale 4 was the owner of the Sale 5 site from which he also operated his business. Sales 4 and 5 are separated only by what is effectively an urban street or road. A transaction involving such facts is likely to involve a consideration of matters other than just the market value of the land and improvements involved. In my opinion this transaction involves too many variables to allow it to be in any way considered reliable evidence of the value of the frontage land of the subject.
Turning then to Mr Henderson's Sale 5, it involved a relatively lightly improved parcel of land when compared to Sale 4. According to Mr Henderson an analysis of this sale reveals a site value of $36/m², double the rate applied to the subject. Again, such a difference in value suggests to me that this sale may not involve truly comparable land. It is also quite likely that the value of this site is affected by the fact that it comprises of three separate titles ranging from 750 m² to 3927 m².
Turning finally to Mr Henderson's Sale 7, according to him this sale analyses down to a rate of $68/m², nearly four times the rates applied to the subject. The sale involved a much smaller parcel of flood free improved land which was probably sold with a major commercial tenant in place. In all the circumstances, I do not see how this sale could be considered in any way comparable to the subject. I also disagree with Mr Henderson's opinion that this sale provided some reliable indication of the different rates per square metre being paid for highway frontage land when compared to that paid for land with no such frontage.
As a consequence of my findings concerning the highest and best use of the highway frontage land it is also my opinion that most of the sales evidence relied on by Mr Mount in his valuation exercise is of no real assistance in establishing an appropriate rate per square metre or hectare for that land.
As identified by Mr Mount, his Sale 1 has no industrial potential and is well removed from any highway influence. It cannot be sensibly compared to that part of the subject land having industrial potential.
Turning to Mr Mount's Sale 3 it involves a parcel of land which in part is presently being developed for residential purposes. As I understand it, a significant part of the balance land fronting Bonnick Road is being retained for future industrial development. Apart from the end land use there are other differences of significance between this site and that part of the subject with industrial potential. These include the fact that the sale land, while flood free, is well removed from any highway influences. Having regard to the totality of the evidence concerning this sale I am of the opinion that it provides no reliable evidence of value.
At page 9 of his primary report Mr Mount describes his Sale 2 in the following way: "Overall regarded as having very similar characteristics to the subject and best directly comparable sales evidence." This sale has caused me some difficulty. On a per hectare basis it shows an analysed rate of $9,539. It is located adjacent to an existing industrial development south of Gympie and, according to Mr Mount, was purchased by an owner of other nearby industrial land. The land had the same zoning as the subject and the sale date is reasonably close to the date of resumption. These factors would tend to suggest that it could be good evidence of the value of land with industrial potential. Notwithstanding these elements of the sale I do not find it reliable evidence in the circumstances of this case. It has no highway access and, more importantly, materially inferior highway exposure when compared to the subject in the before resumption case. Having regard to all of the evidence on this matter, I am left with little doubt that highway exposure and access would be seen as a significant positive by any purchaser of land intending to use it for purposes of the kind referred to in paragraphs 16 and 17 above. Further, in my opinion, this sale is significantly inferior to the subject in respect of its physical access. In addition, there is one further matter which, in conjunction with the others, leads me to reject this sale. It is the analysed sale price. The rate of $9,539/ha bears no meaningful relativity with the dollar rates produced by an analysis of any of the other sales with potential for higher order uses. These range from $32,178/ha for mixed residential and industrial[1] to $110,887/ha[2] or $120,000/ha[3] for industrial land.
[1] Mr Mount's Sale 3.
[2] Mr Mount's Sale 5.
[3] Mr Henderson's Sale 1`.
Having regard to the matters referred to above I have reached the conclusion that the best evidence of the before and after value of the resumed land is that provided by Mr Henderson's Sale 1 (Mr Mount's Sale 4) supported by Mr Henderson's Sale 6 and Mr Mount's Sale 5.
Mr Henderson's Sale 6 and Mr Mount's Sale 5 are located to the south of Gympie on opposite sides of the Bruce Highway about the same distance from the centre of Gympie. Both involve land with significantly superior flood immunity. In fact the Sale 6 site is not affected by flooding. Both sales were zoned for industrial purposes and located in established industrial areas. Mr Henderson analysed his Sale 6 to a rate of about $11/m² or $110,000/ha. There was no real challenge to Mr Henderson's analysis of this sale. Mr Mount analysed his Sale 5 to a rate of $110,887/ha. Again there was no serious challenge to this analysis.
These sales involve land with significantly different areas. One is only 5085 m² in area while the other is 2.48 hectares. One may have expected that, all other things being equal, the significantly larger block might have attracted overall a lower rate per square metre or hectare. However, in this case there was no probative evidence to support that theory. In Mr Henderson's supplementary report there is reference to the fact that Mr Mount's Sale 6 was later subdivided into three lots but there was no evidence from him that a premium was paid for the land in recognition of that potential. In my opinion, the evidence surrounding these sales suggests a rate in the order of $110,000/ha for largely what is flood free industrial land located on the fringes of Gympie but having no highway frontage and/or exposure.
Turning then to the Pinewood Avenue sale, Mr Henderson was clearly of the opinion that it was the best evidence of value for the frontage land. It is also my opinion that, when pressed by Mr Ure, Mr Mount really conceded that this sale was probably the best evidence of the value of the land with industrial potential provided that it was properly analysed and applied to the subject.
Mr Henderson analysed this sale to show a rate of near enough to $12/m² or $120,000/ha. At page 10 of his primary report Mr Mount analysed this sale to a rate of close enough to $11/m² or $110,000/ha. Although there is not much difference between Mr Henderson and Mr Mount about the appropriate rate per square metre this sale reveals, overall I prefer the evidence of Mr Henderson. I do not consider that Mr Mount had sufficient regard to the land required to be dedicated for road purposes when analysing this sale.
The Pinewood Avenue sale is close in area to the notional industrial lot proposed for the subject. Overall the evidence concerning this sale leads me to the following conclusions. First, in the before case the subject land had slightly superior highway exposure, particularly by virtue of its more extensive frontage. Second, I find that it had superior access compared to that of the Pinewood Avenue site as at its date of sale. I also find that between the date of the Pinewood Avenue sale, October 1999 and the date of resumption, September 2002 there had been an increase in the value of highway frontage industrial land but the increase was small.
Taking into account the evidence concerning the characteristics of the frontage land of the subject and the facts and circumstances surrounding the three sales I have found to be relevant, it is my opinion that the subject frontage land is superior to the three sales but not vastly superior. That is particularly the case in respect of the Pinewood Avenue sale. In this context, I reject the evidence of Mr Henderson to the effect that the subject frontage land would have attracted a premium of about 50% as at the date of resumption.
Before leaving this topic I should deal with Mr Mount's "top down" analysis of this sale set out on page 12 of his primary report. This exercise led him to conclude that the economic viability of industrial development of the land was highly questionable.
I reject this exercise. In my opinion it is fatally flawed for a number of reasons. First, there is in my opinion no basis for the 20% 'MCU risk". The evidence about this shows that it was quite likely that at the time the Pinewood Avenue sale occurred it had substantially the same prospects of a successful material change of use application as the subject. Second, Mr Mount provided no basis whatsoever to justify his profit and risk allowance of 30%. Third, his application of a development cost of about $127,000 was unjustifiable. This figure was arrived at by Mr Mount from a review of the costs associated with a multi lot industrial subdivision. As was pointed out by Mr Ure this development involved a three-staged subdivision of 39 individual lots incorporating, among other things, about $100,000 worth of water reticulation and sewerage and 940 metres of new road. In my opinion no sensible comparison can be made between the costs associated with that project and what might be incurred in developing the land in the way envisaged by Mr Henderson and adopted by me.
In my opinion the evidence leads to the conclusion that as at the date of resumption it is more likely than not that the cost of developing a 1.5 ha industrial lot on the subject land would have been reasonably comparable in equivalent dollar terms to those associated with the development and use of the Pinewood Avenue sale.
Before Value of the Land
Having regard to the matters canvassed above I am of the opinion that that part of the subject land fronting the Bruce Highway, containing an area of 1.5 ha with industrial potential had a before resumption value of $150,000/ha. This rate reflects the demand for industrial land with highway access and exposure at the date of resumption and the fact that there would be very little risk associated with the development and marketing of the site.
Notwithstanding the evidence of Mr Oliaro to the effect that the council would probably have approved an industrial use designation over the whole of the subject land there seemed to be no real dispute that the highest and best use of the rear land was for grazing. There was no real challenge to the rate of $5000/ha applied by Mr Henderson to the rear grazing land. In my opinion that rate is also supported by Mr Mount's Sale 1. This sale revealed an analysed rate per hectare of $4,124 for grazing land seriously affected by flooding and encumbered by an electricity transmission line easement.
For all the above reasons I determine that in the before resumption case the subject land would have had a market value of $288,000 made up as follows:
1.5 ha at $150,000/ha = $225,000
12.543 ha at $5,000/ha = $ 62,715
$287,715
rounded to: $288,000
After Value of the Land
At page 4 of his primary report Mr Henderson states that in the after case the size of the industrial site is reduced to 7263 m². This area is simply the product of deducting from the area of 1.5 ha the area of the resumed land. There was no evidence to the effect that in the after case the council would have been reluctant to approve a 1.5 ha industrial block. In fact the evidence of the town planners quite clearly suggested that a 1.5 ha industrial block had as much chance of being approved in the after case as in the before. Nor was there any convincing evidence to the effect that in the after case a 1.5 ha block would not have been a marketable product. The lack of any evidence in respect of the last mentioned matter is not entirely surprising given the evidence concerning the extent of industrial and commercial development on flood-affected land in the Gympie district.
Overall, I am left with the strong impression that Mr Henderson's after area of 7263 m² is just the product of a simple mathematical exercise rather than of any critical analysis of the issues involved. It is my opinion that there is no convincing reason why, in the after case, the area of any industrial block to be subdivided from the parent parcel should be less than 1.5 ha. That is not to say that the 1.5 ha block available in the after case would be as the valuable as the one that would have been available in the before case.
In his valuation exercise Mr Henderson decided to apply the same rate of $18/m² to the industrial land in the before and after case. I do not understand how he reached that decision. His own evidence about this which I have largely accepted, is that the industrial land in the after case no longer has direct access to the Bruce Highway and, being generally lower overall and further set back, has inferior exposure. Exposure and highway access of course were two of the more important and valuable characteristics the land had in the before case according to Mr Henderson.
Despite Mr Henderson's views about the value of the industrial land in the after case it is my opinion that, when all of the evidence relevant to this issue is taken into account, the after value must be less than in the before resumption case. In the after case, the dynamics involved in any comparison between the subject industrial land and the relevant sales has changed to the detriment of the land in question. In this context, I particularly have in mind the changes in access, topography and highway exposure.
I have reached the conclusion that the industrial land in the after case is slightly inferior to the Pinewood Avenue sale but worth no less on a rate per square metre basis than Mr Mount's Sale 5 and Mr Henderson's Sale 6. In my opinion even in the after case the exposure of the subject land is still superior to those sales thus retaining at least some potential for industrial uses involving some display and sales components. This was clearly the approach adopted by Mr Henderson. However, the subject land is now even more inferior to those sales in topography and flood immunity. While this issue to an extent involves a question of degree only the evidence of Mr Henderson was to the effect that, generally speaking, the lower and more flood prone the land the greater the cost of development. Unfortunately his evidence about this did not provide any details about by how much development costs might be affected by topography.
Doing the best that I can with the evidence before me I will adopt an overall rate of $11/m² or $110,000/ha for the industrial land in the after case. In this context Mr Quayle, during his cross examination of Mr Henderson, suggested that an appropriate discount in the after case could be from $18/m² to about $16/m². On balance, I consider the discount needs to be greater than that suggested by Mr Quayle. There is no evidence to suggest that the value of the grazing land should be adjusted.
In the after resumption case I find that the value of the land is $224,000 made up as follows:
1.5 ha at $110,000/ha = $165,000
11.77 ha at $5,000/ha = $ 58,850
$223,850
rounded to: $224,000Accordingly, in respect of the claim for the value of the land taken, I determine compensation in the amount of $64,000.
The Advertising Signs
The claim for compensation under this heading is for loss of signage income in the amount of $46,285. This claim effectively assumes a continuation in perpetuity of advertising signage arrangements similar to those which existed at the date of resumption.
On 23 May 2002 the claimant entered into a licence agreement with Australian Posters Pty Ltd as a licensee. Relevantly this agreement gave Australian Posters the right to erect two advertising signposts on the land. The term of the licence was for five years and the relevant consideration was a licence fee of $2,333 per annum. The agreement contained other terms and conditions concerning termination and options to renew which, in my opinion, tended to favour the licensee. As I understand the evidence, Australian Posters or its successor terminated the agreement in February 2003 when the respondent began to carry out the road works associated with the resumption. The style and type of the large signs which existed on the land would be familiar to anyone who has travelled on any major highway in Queensland.
I accept the evidence of Mr Heilbronn that, prior to resumption, the land had been used for advertising signage purposes for some forty years. I also accept that absent the resumption, it was more likely than not that some form of advertising on the highway frontage land would have continued at least into the foreseeable future and that, in the after case, there would be no real interest in erecting advertising signs on the land.
It is obviously the case for the claimant that such arrangements would have continued after the development of the 1.5 ha industrial block. In his statement, (Exhibit 4) the claimant says as much. With the greatest respect to Mr Heilbronn I do not consider that he has the expertise to justify such an opinion. The evidence of Mr Henderson on this topic was, overall, also unconvincing. It would seem that in reality Mr Henderson saw the prospect of advertising continuing in such circumstances more in terms of it being only a possibility.
There is no doubt in my mind that any prudent user of the highway frontage land would endeavour to maximise its exposure. In my opinion this would involve erecting some form of advertising signage. While there is not a lot of evidence on this topic I am inclined to the view that the prudent end user of this land would want to ensure that he or she had full control of any advertising on the land. Such an approach would be consistent with a maximisation of income, self-promotion and a minimisation of competitive or distractive advertising. In this context, there is also the risk that any prudent potential licensee of the site would no longer see the site as one suitable for its uses. Clause 3(c) of the existing licence agreement makes it clear that unrestricted and unhindered maximum exposure was a matter of prime concern to the licensee. Mr Ure submitted that the 1.5 ha site may be leased and not sold by the claimant. In all the circumstances I consider such an event to be unlikely and, more importantly, inconsistent with the valuation approach adopted by Mr Henderson. In any event, it is my opinion that the matters concerning income, self promotion and control would be of equal importance to any prudent lessee as it would be to any prudent purchaser or owner.
In his closing address, Mr Ure also submitted that the length of the highway frontage, some 260 metres, was such so as to be able to accommodate both in house and external advertising. While initially having some attraction, I have not found the proposition convincing. It does not, in my opinion, sufficiently deal with the matters referred to in paragraph 55 above.
On balance, I tend to lean towards the views of Mr Henderson. It is my opinion that the prospects of any material external advertising arrangements continuing in conjunction with industrial use of the frontage land could only be described as being a remote possibility. Accordingly, this claim fails.
Mr Quayle also made submissions to the effect that, in the event of any compensation being awarded for the loss of advertising signage it should be limited to the unexpired term of the then existing licence agreement. As a consequence of my findings of fact concerning this claim it is not necessary for me to determine that issue now.
The Cattle Severance Claims
The claims for compensation under this heading consist of two components. First, a claim for stock transportation in the amount of $10,000 and second, a claim for the cost of the materials required for the construction of steel cattle yards on the balance grazing land in the after case. This claim is for $9,228.
The bases for the claims arise out of the claimant's grazing enterprise which he conducts on the subject land in conjunction with other grazing land owned by him. The other land lies to the south and south west of the subject land and to the north east on the eastern side of the Bruce Highway.
The claimant says that in the before case he would move his cattle between these parcels of land for various reasons including pasture management, weaning and to mitigate against the affects of flooding. Cattle movements from east to west would involve the claimant and one other person, in the very early morning, walking the cattle in a generally westerly direction down Wadell Road until that road met the highway. The cattle would then be walked across the highway to Rodney Road and then a very short distance westerly along Rodney Road before being turned into a gate on the northern boundary of the subject land close to the highway. As circumstances demanded and the cattle were required to be moved east the process was reversed. The evidence was not entirely clear as to exactly how and where the cattle moved back and forward across the highway.
The cattle were usually moved in mobs of about six to seven. On occasions a mob of between fifteen to twenty might be moved but this would be a relatively rare event. According to the claimant the cattle were, generally speaking, quiet for grazing stock but not as quiet as dairy cattle. The cattle were moved in total about twenty five times a year on average. I should point out here that the claimant is extremely experienced with cattle and that his grazing enterprises are a business and not a hobby.
The claimant says that in the after case it is no longer practical to walk the cattle between those paddocks and that they can now only be moved across the highway by truck and at a financial cost. That is so according to the claimant as a consequence of the closure of the Rodney Road exit point onto the highway and the construction of the service road and associated drainage works along the eastern frontage of the balance land. Essentially the claimant says that in the after case the cattle are required to cross a drain which tends to agitate them and that there is now too much space between the eastern boundary of the remaining land and the highway to keep the cattle under control.
Leaving aside the question of quantum for the moment, Mr Quayle submits that no compensation is able to be awarded or should be awarded for these claims for several reasons.
First, Mr Quayle submitted to the effect that in respect of these claims no compensable right vests in the claimant as is said to be required by virtue of the operation of s.12(5) of the Acquisition of Land Act 1967. This must be so, as I understand the submission, because as the loss or damage arises out of the closure of Rodney Road no estate or interest in land is affected or sufficiently affected to trigger the operation of s.12(5) and for that matter s.20 of that Act. In his written submissions Mr Quayle put his argument in the following terms:
"5.That it was the closure of the Rodney Road intersection that caused the severance the applicant contends has occurred was confirmed by him under cross-examination.
6. This is clear evidence that if there has been severance of this kind it was caused by the closure of Rodney Road not the taking of land. As such the terms of section 12(5) of the Acquisition of Land Act have not been engaged as no right vests in Mr Heilbronn by reason of the closing of Rodney Road. At that this claim fails."
As the evidence emerged at the hearing of this matter it became reasonably clear to me that the claims concerning cattle movements were not limited solely to the closure of Rodney Road. However, even if that were the case I do not consider that it would necessarily assist the respondent. In the Notice of Intention to Resume the purpose underlying the resumption was said to be "…for the purpose of transport, in particular road purposes…" This purpose was repeated in the notice published in the Queensland Government Gazette published 27 September 2002. Exhibit 13 is a copy of a Department of Main Roads planning report dated March 2001. Counsel for the parties accepted that this document identified what might be called the "scheme" underlying the resumption. The scheme as identified in Exhibit 13 envisaged the closure of Rodney Road and the possible construction of a road to connect Rodney Road with Pinewood Avenue.
The resumption of 7737 m² of land from the claimant meant, pursuant to s.12(5) of the Acquisition of Land Act, that his estate and interest in that land was lost and converted into a right to claim compensation under that Act. Relevantly, s.20 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.
(3) …"
Recently the High Court in Marshall v Director General, Department of Transport[4] considered the operation of s.20(1)(b). In a joint judgment Gleeson CJ, Gummow, Kirby and Callinan JJ in paragraph 20 said:
"In our opinion, however, the language of s.20(1)(b) of the Act could hardly be plainer. In assessing compensation, regard is to be had not only to the value of the land taken but also to the damage caused by the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other [the remaining, severed] land. The section does not say "the exercise of any statutory powers by the constructing authority on and only on the land taken…". The section clearly distinguishes between the land taken and the severed land. It does not seek to distinguish between the various activities carried out by a constructing authority in the exercise of its statutory powers: for example, the conduct of a survey, the construction of a road, the building of a bridge, the installation of drainage or footpaths beside the road, and the subsequent use of everything that has been done or brought into existence as, and for the purpose of, a road. In truth, all of these can relevantly and properly be characterised as part and parcel of the construction , and subsequently the use of the road. Once the constructing authority acquires land for a statutory purpose and carries out the statutory purpose, it must, pursuant to s.20(1)(b) of the Act, compensate the dispossessed owner for the injurious effect upon the residual land resulting from the undertaking and the implementation of that purpose, actual and prospective."
In a separate judgment McHugh J at paragraph 44 reached a similar conclusion and went on to say about s.20(1)(b):
"All that the claimant is required to prove is that the exercise of a statutory power by the constructing authority injuriously affected the "other land" of the claimant."
[4] (2001) 205 CLR 603.
The closure of Rodney Road and the construction of drainage works and the service road connection to Pinewood Avenue, which in turn required the movement of the front fenceline further west, were the consequence of the respondent exercising its statutory powers and the cause of the disruption to the movement of the claimant's cattle to and from the balance land. In this case the relevant claims seemed to be identified as falling under the heading of "severance" and not "injurious affection". In my opinion nothing turns on this. In Marshall at paragraph [32] the term "injurious affection" was described as a "…neat, expressive way of describing the adverse effect of the activities of a resuming authority upon a dispossessed owner's land…". The consequences of the respondent's exercise of its statutory powers in this case falls within that description.
For the reasons set out above, it is my opinion that the claims associated with the claimant's cattle operations could legitimately fall within the scope and operation of s.20(1)(b) of the Acquisition of Land Act 1967.
In a case where retained or balance land has been injuriously affected and/or severed, the carrying out of a before and after valuation exercise would usually be expected to yield a lower land value in the after case. However, the consequences of compensable injurious affection need not, in my opinion, always be restricted to only a reduction in the value of the balance or retained land. In Barns v Director General, Department of Transport[5] Wall QC DCJ and Mr Trickett page 77 said:
"There are in our view, two requirements which must be satisfied before a claim for injurious affection under section 20(1)(b) can be allowed. They are:
(1)the constructing authority must, by the exercise of its statutory powers injuriously affect the retained land; and
(2)that injurious affection must cause damage in the Harvey v Crawley Development Corporation sense.
If we are correct in expressing the requirements of section 20(1)(b), the damage so caused is not confined or limited to damage to the retained land per se, but includes other damage which is not too remote and is the natural and reasonable consequence of the injurious affection, that is, the activity causing or amounting to injurious affection. So approached damage to a business conducted on the retained land could be encompassed. It could include, to use the words of Bray C.J. in Brewarrana Pty Ltd v Commissioner for Highways (No 2), supra, at page 247 (dealing with disturbance), "the disruption of or interference with some business or process of living or other activity carried on on the (retained) land."
Fryberg J in separate reasons at page 31 also expressed the view that the wording of subsection 1 of section 20 did not in terms limit the "damage" referred to therein to an actual diminution in the value of the retained or balance land.
[5] (1996) 16 QLCR 22 (LAC)
On balance I am of the opinion that the claims concerning the cattle operations of the claimant do in principle fall within the operation and scope of s.20(1)(b).
The second argument raised by Mr Quayle is that there is no sensible reason why the same or similar cattle movements could not be carried out in the after case. This argument has a certain superficial attraction as there does not appear to be a significant difference in the access situation in the after case as far as cattle movements are concerned. However, the only probative evidence about this was that given by the claimant. Mr Heilbronn is a very experienced cattleman and he said the previous arrangements simply would not work in the after case and that he had been transporting his cattle by truck since at or about the closure of Rodney Road. The evidence of the claimant about this was not refuted. Accordingly this argument also fails.
The third argument is that the practice of walking the cattle to and from Rodney Road could not have continued once that part of the subject land fronting the highway went to an industrial use. However, the evidence of the claimant was that the cattle movements would occur early in the morning before the likely opening hour of any businesses. And, that in any event the cattle had, until the closure of the Rodney Road access to the highway, walked past the industrial developments fronting Wadell Road without any problems. At the end of the day the only evidence about this was given by the claimant and it was not seriously challenged. Accordingly, this argument also fails.
On behalf of the respondent there was also a submission concerning the overall creditability of the evidence given by the claimant. While I accept that in some respects his evidence was unclear and, in some areas even inconsistent I did not consider the claimant to be, overall, an unreliable witness. With one exception that I will specifically refer to below I believe that the uncertainties and inconsistencies were more the product of nervousness and discomfort with the legal processes confronting him. In this respect I am also of the opinion that at least some of the documents which tended to contradict aspects of his oral evidence were the product of his solicitor wanting some form of documentary evidence to support the claims rather than the product of any untoward motive or conduct on the part of the claimant. In saying this I am not suggesting in any way that the solicitors acting for the claimant acted in anything other than a professional and appropriate manner.
Turning then to the question of quantum Mr Quayle again advanced a number of arguments which, if accepted by me, would significantly limit the amount of compensation to be awarded.
It was argued that the practice of walking the cattle across the highway had to be a short lived one. It was not argued that the practice was illegal but that given the traffic volumes on this section of the Bruce Highway it was one that would soon have to stop or be stopped. Mr O'Brien, the Principal Engineer for the respondent's North Coast-Hinterland District, gave evidence that as at 2002 the highway in the vicinity of the subject land carried an average daily number of vehicles of 11,100. No evidence was given about any increases in traffic volumes by Mr O'Brien but in the respondents planning report[6] a growth rate of 5% was adopted and by at or about 2016 traffic volumes of in excess of 25,000 vehicles per day were predicted.
[6] Exhibit 13, page 8.
Also of relevance is the fact that prior to March 2001 the claimant expressed his concerns about how the proposed resumption and associated works might affect his practice of walking the cattle across the highway. Rather than expressing the view that the activity was unlawful or otherwise one that had to be stopped the respondent considered the matter rather sympathetically. In its planning report at page 6, the author said in relation to this issue:
"… Will consider access for transferring cattle across highway as part of detailed design, loss of income a compensation issue…".
Mr O'Brien said nothing which contradicted the views expressed by the authors of Exhibit 13.
Apparently, as at March 2001 the respondent did not see the cattle crossing issue as one that had to be stopped immediately or even in the short term. Notwithstanding this I consider that there is some merit in the argument advanced by Mr Quayle about this aspect of the claims. On balance I consider appropriate to allow some discount to take account of the risk associated with the continuation of the practice for ten years following the date of resumption, 27 September 2002. These risks might include not only the risk of the practice simply becoming too dangerous as traffic volumes increased but also the risk that some authorised body, including the respondent to these proceedings, may have decided at some time to make the practice an unlawful one or carry out works within the road reserve to prevent its continuation. I also found the claimant's evidence concerning the financial arrangements with his son for the transporting of cattle to be largely unconvincing. This evidence was often unclear and uncertain and, in some respects, contradictory. Overall however I do accept that since at or about the closure of Rodney Road, the claimant's cattle has had to be transported by truck when it was necessary to move them across the highway.
Doing the best that I can with the evidence before me I intend to discount the amount claimed for the transporting of the cattle by 25%. This results in a figure of $7,500.
The evidence concerning the claim for cattle yards is to the effect that the yards are necessary for the efficient management of the cattle on the balance land prior to them being loaded onto a truck and taken across the highway. The yards have not been built yet as the claimant has been utilising makeshift yards to date. The claimant conceded that the yards would also have a benefit for the overall management of his grazing operations. However, his evidence was also to the effect that the majority of their use would be for the transporting of cattle to paddocks on the eastern side of the highway. Mr Ure conceded that some small discounting for the additional benefit the yards have to the overall management of the claimant's grazing operations might be appropriate. Mr Ure also submitted that the fact that makeshift yards have been utilised should not work against the claimant and that in the circumstances of this case it would be unreasonable to require him to continue that use. I agree.
The conclusions reached by me in paragraph 79 also impact on the cattle yards claim in my opinion. That is, for reasons not associated with the resumption or scheme underlying it, sometime within ten years from the date of resumption it was likely that the trucking of cattle across the highway would have become necessary. This in turn would require the erection of the cattle yards. In that sense their construction was inevitable but the timing has been brought forward.
In the circumstances I intend to discount the claim concerning the cattle yards by 40%. This results in a figure of say $5,500. The increase in the discount rate from 25% to 40% is to take account of the additional cattle management benefits the yards will give when erected.
Determination of Compensation
Bringing my findings concerning the various claims together I assess compensation in the amount of $88,000 made up as follows:
Land $64,000
Loss of signs Nil
Cattle transport $7,500
Cattle yards $5,500
Disturbance $11,000
$88,000
Interest and GST
In paragraph 2 of his written submissions Mr Quayle states that interest on the award is not opposed. The "award" seems to be a reference to the amount of compensation as determined by me. By reference to paragraph 1 of its submissions it seems, by implication, that the respondent was content to let interest run on the total compensation figure inclusive of any allowance under the heading of disturbance. It is now well established that interest on compensation for professional fees incurred runs from the date of their payment. The onus is on the claimant to provide evidence of the date of payment. As best as I can recall there was no evidence about the date of payment of the professional fees claimed.
Notwithstanding the above, I will allow interest on the total amount of compensation as determined by me. If that approach is inconsistent with the agreement reached by the parties concerning the disturbance claims I will hear from them about it at a time to be arranged.
There is one final matter that I need to address. The original claim and the claim presently before the court includes claims for goods and service tax liabilities. No evidence was led concerning GST and no submissions about it were made. In the circumstances I do not intend to make any allowance or award concerning GST.
As no advance on compensation was paid by the respondent the appropriate order is that the respondent is to pay interest at the rate of 5.5% per annum on the amount of $88,000 from the date of resumption, 27 September 2002 to the date of payment of that amount.
Orders
1.Compensation is determined in the amount of $88,000 (Eighty Eight Thousand Dollars).
2.The respondent is to pay to the claimant interest at the rate of 5.5% per annum on the amount of $88,000 from 27 September 2002 to the date of payment of that amount.
3.The parties will have the opportunity to consider these reasons and to make submissions in respect of interest on disturbance and/or costs.
RS JONES
MEMBER OF THE LAND COURT
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