Inglis v State of Queensland (No. 2); State of Queensland v Inglis

Case [2015] QLAC 3

LAND APPEAL COURT OF QUEENSLAND

CITATION:

Inglis & Ors v State of Queensland (No. 2); State of Queensland v Inglis & Ors [2015] QLAC 3*

PARTIES:

ROBERT MALLALIEU INGLIS, MARION ANN INGLIS AND PAUL MALLALIEU INGLIS

(appellants)

v
STATE OF QUEENSLAND

(respondent) (LAC 001-14)

and

STATE OF QUEENSLAND

(appellant)

v
ROBERT MALLALIEU INGLIS, MARION ANN INGLIS AND PAUL MALLALIEU INGLIS

(respondents) (LAC 002-14)

FILE NOS:

LAC 001-14 and LAC 002-14

DIVISION:

Land Appeal Court of Queensland

PROCEEDING:

Appeal from the Land Court of Queensland

ORIGINATING COURT:

Land Court at Brisbane

DELIVERED ON:

15 October 2015

DELIVERED AT:

Brisbane

HEARING DATE:

27 November 2014

THE COURT:

Peter Lyons J
CAC MacDonald, President of the Land Court
PA Smith, Member of the Land Court

ORDERS:

Appeal LAC 001-14 is dismissed.

Appeal LAC 002-14 is dismissed.

CATCHWORDS:

REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – APPEAL TO LAND APPEAL COURT – where the Land Court assessed compensation at $2,250,000 – where the appellants contend that the Land Court Member failed to recognise that the land had additional value by reason of an adjoining owner’s potential interest – whether a valuation can take into account the resumed land’s potentiality to a single purchaser – whether offers to purchase the land by an adjoining owner are necessary to demonstrate that owner’s potential interest

REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – APPEAL TO LAND APPEAL COURT – EVIDENCE AS TO COSTS OF DEVELOPMENT – where the Land Court assessed compensation at $2,250,000 – where the appellants contend that the Land Court Member failed to recognise that the land had additional value by reason of an adjoining owner’s potential interest – where an employee of an adjoining owner gave evidence as to the costs associated with realising the land’s potentiality – where the employee identified his statements as to those costs as assumptions – where the employee did not have sufficient expertise to be regarded as an expert –– whether the Land Court Member erred in accepting the evidence of the adjoining owner’s employee as to the costs associated with the land’s potentiality

REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – APPEAL TO LAND APPEAL COURT – where the appellants’ land was resumed on 14 December 2007 – where the respondent’s valuer based his valuation on six sales within the resumed land’s immediate locality between August 2005 and December 2006 – where the respondent’s valuer indexed the sales by reference to a market report prepared for the Chief Executive under the Valuation of Land Act 1944 (Qld) – where the reliability of the market report indices relied upon could not be assessed – where the Land Court Member did not accept the valuer’s method of adjusting the sales and rejected the valuation – whether the Land Court Member was wrong to conclude that the respondent’s valuer erred in the method he adopted and whether the Land Court Member was wrong to reject the valuation – whether the Land Court Member’s…

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AGLC
Inglis v State of Queensland (No. 2); State of Queensland v Inglis [2015] QLAC 3
Case
[2015] QLAC 3
Decision Date

CaseChat Overview and Summary

The parties in this case are Inglis and the State of Queensland. The dispute revolves around the compulsory acquisition of land and the determination of compensation. The case was appealed to the Land Appeal Court. The Inglis parties argued that the Land Court Member did not recognize the additional value of the land due to the adjoining owner's potential interest. They also argued that the Land Court Member erred in accepting the evidence of an adjoining owner's employee regarding the costs associated with realizing the land's potentiality. The State contended that the evidence of its valuer should have been accepted, that a greater allowance should have been made for the risk associated with the potential subdivision of part of the land, and that the amount awarded for disturbance items was excessive. The court had to decide whether the Land Court Member was wrong in rejecting the valuation and whether the Land Court Member erred in not exercising the discretion to limit the interest awarded on the basis of the appellants' delay in claiming compensation.

The court found that the Land Court Member was not wrong in rejecting the valuation as the reliability of the market report indices could not be assessed. The court also found that the Land Court Member was not wrong in not exercising the discretion to limit the interest awarded as the appellants did not unreasonably delay in bringing their claim for compensation. The court concluded that the Land Court Member's findings as to the valuation of the respondent's valuer were findings of fact, not law.

The court dismissed both appeals. The court found that the Land Court Member identified the correct principles to be applied in determining the award for disturbance and that there was no error in his assessment of the evidence. The court also found that the amounts charged for the preparation of the claim were not excessive and that it was appropriate to have reports prepared and settled before the claim was lodged. The court concluded that the Inglis parties' claim was fundamentally the same as the case advanced in the Land Court.

Orders

Orders of the court

Appeal LAC 001-14 is dismissed.

Appeal LAC 002-14 is dismissed.

Background

Background to the litigation

Both the Inglis parties and the State have appealed. The Inglis parties contend primarily that the Land Court Member failed to recognise that the land had additional value by reason of the interest (or potential interest) of an adjoining owner. The State contends that the evidence of its valuer should have been accepted; that a greater allowance should have been made for risk associated with the potential subdivision of part of the land; and that the amount awarded for disturbance items is excessive. It also appeals against the award of interest.Background The resumed land comprised two parcels, Lot 238 on registered plan CA 31519, with an area of 258.898 hectares; and Lot 242 on registered plan CA 31612, with an area of 101.171 hectares. Lot 242 was located generally to the south-west of Lot 238, and was offset from it. An unmade road separated the lots for a short distance towards the northern end of the eastern boundary of Lot 242 and the southern end of the western boundary of Lot 238[1]. The resumed land is located approximately 16 kilometres north west of Gatton. Both parcels have frontage to Millers Road.[1] Record (R) 1031, 1039, 1092. A short distance south of the resumed land, and in one location contiguous with Lot 242, is land owned by Golden Egg Producers Pty Ltd. This company was described as a member of the Darwalla Group of companies, and was itself referred to as Darwalla in the Land Court, a practice which will be followed in these reasons. For many years, Darwalla has conducted an operation associated with the production of chicken meat on this land. In addition to the land so used, Darwalla owned a parcel immediately to the west, Lot 4 on RP 206331[2] (Lot 4), with an area of 182.4 hectares[3], but undeveloped at the resumption date.[2] See R 1678; for a cadastral plan see R 1361.[3] R 1914. The Darwalla Group conducts what was described as a fully integrated chicken farming organisation. Thus it has a breeding hen operation, producing fertilised eggs; a chicken growing operation; and a processing operation, producing chicken meat for commercial sale. It also operates a feed mill to produce feed for its chicken flocks. It trades under the name “Golden Cockerel”. It operates about two dozen farms in various locations around south east Queensland and northern New South Wales.[4][4] R 1908-1909. The Group’s head office and a feed mill and processing plant are located at Mt Cotton. It employs approximately 500 people. It produces some 35.5 million kilograms of chicken meat per annum[5].[5] R 1037, 1039. The Darwalla land at Gatton has an area of some 258.08 hectares, with 40 sheds on it[6]. It has operated this farm for many years, and purchased Lot 4 in 1989 for “land banking”[7].[6] R 1039.[7] R 93, 95. Generally to the west of Lot 238 and the north of Lot 242 is other land, also taken for prison purposes, and referred to as the Weaver land.Evidence relevant to the Inglis appeal Mr Knight gave valuation evidence on behalf of the Inglis parties. He considered the highest and best use to be “as a ‘greenfield site’ broiler farm”[8]. Its value on that basis was the amount that Darwalla would pay, above market value, for its other likely use, being a “mixed lifestyle/rural home site with some associated grazing and/or cultivation’[9].[8] R 1042.[9] R 1042.

Evidence

Evidence Before The Court

Generally to the west of Lot 238 and the north of Lot 242 is other land, also taken for prison purposes, and referred to as the Weaver land.Evidence relevant to the Inglis appeal Mr Knight gave valuation evidence on behalf of the Inglis parties. He considered the highest and best use to be “as a ‘greenfield site’ broiler farm”[8]. Its value on that basis was the amount that Darwalla would pay, above market value, for its other likely use, being a “mixed lifestyle/rural home site with some associated grazing and/or cultivation’[9].[8] R 1042.[9] R 1042. There are 12 reasons which Mr Knight identified for these views. They were set out in his report as follows[10]:- [10] See R 1042.“(i) ‘Darwalla’ was, at the date of resumption, an adjoining owner of the subject property and as such fell within the category of buyers who potentially would have been seeking to purchase the subject property;(ii) ‘Darwalla’ was, at the date of resumption, a large, established, long term operator within the poultry industry;(iii) ‘Darwalla’ has been in expansion mode since at least 2004 (refer comments Section 7);(iv) in or about 2004, Mr David Bray, then employed by ‘Darwalla’ as its Technical Services Manager had, on behalf of the company, approached the dispossessed owners to see if they would sell their land to the company in order to expand the existing operation which adjoined the subject property to the south. Whilst the dispossessed owners immediately rejected the expression of interest, and no sale later occurred, the approach by Mr Bray clearly confirms that, historically, ‘Darwalla’ had been interested in purchasing the subject property in order to expand its Gatton operation;(v) ‘Darwalla’, because of the scale of their existing operation, had, as at 14 December 2007, existing end markets already in place;(vi) ‘Darwalla’ could have readily developed the subject lots to fit in with their existing operations on the adjoining land to the south of the property;(vii) to allow for the expansion, town water was readily accessible to Lot 238 and Lot 242 as it was already available to ‘Darwalla’s’ land adjoining the subject property to the south having been connected in ‘early 2007’;(viii) a purchase by ‘Darwalla’ would have resulted in lower overall costs of production as there would have been only a minimal requirement to increase their number of employees;(ix) the subject property is located within approximately 1 hour’s travel of ‘Darwalla’s processing plant situated at Mt Cotton;(x) as at the date of resumption there was ‘onsite’ staff accommodation on ‘Darwalla’s land which adjoins Lot 242. Accordingly, there would have been no immediate imperative for the company to establish further ‘onsite accommodation’. In addition, the subject property is in close proximity to the town of Gatton which allows daily commuting for employees;(xi) there was, at the date of resumption, no major dams in close proximity to the proposed locations of the broiler sheds on Lots 238 and 242 (Annexure 9) which is an advantage in reducing the risks of wild birds/ducks using those water storages and, in turn, mitigates the risk of disease outbreaks.(xii) The large size and the adjoining location of the subject Lots 238 and 242 were special characteristics to these lands that allowed ‘Darwalla’ to readily adapt the subject property to a use as a broiler farm. The large size of the subject lots allowed separation distances for odour and bio security to be readily achievable.”

Decision

Reasons for decision

Mr Benfer was described as a director of Darwalla[32]. Mr Benfer did not give evidence. In Mr Knight’s report, Mr Benfer is recorded as saying that, if the resumed land “had been put on the open market in 2007, (Darwalla) certainly would have expressed an interest” in it[33]. On a number of occasions, Counsel for the Inglis parties in the Land Court made it very clear that he did not rely on the statement attributed to Mr Benfer[34].[32] R 1037.[33] R 1040; and see R 89.[34] See R 127, 135, 136, 139, 140, 290, 291, and 292; see also R 2790, 2937.Reasons for judgment relevant to the Inglis appeal The reasons of the Land Court recorded matters relied upon by Mr Knight for his approach of valuing the resumed land as the site for a chicken farm, with which Mr Bray disagreed. They were that the purchase of the land by Darwalla, and an expansion of its operation onto it, would have only required a minimal increase in the number of employees[35]; and that the existing staff accommodation would permit a saving in the cost of utilising the resumed land for chicken farming by Darwalla. The reasons also recorded that Mr Bray did not accept the cost referred to in Mr Knight’s report for providing town water to the subject land, of $21,729.[35] Reasons of Judgment of the Land Court (RJ) at [21]. The reasons contrasted the evidence of Mr Bray about Darwalla’s potential interest in the resumed land in December 2007, with the statement attributed to Mr Benfer[36]. The learned Member stated that, were it necessary to choose between the two witnesses, he would have accepted the statement of Mr Benfer, as a director of the company[37]; but went on to record that the Inglis parties did not place any reliance on that statement[38]. He did, however, accept the evidence of Mr Bray “so far as it relates to his knowledge and experience within the company as distinct from the intentions of the company”[39].[36] RJ at [23].[37] RJ at [23].[38] RJ at [25].[39] RJ at [25]. The learned Member noted the conflict between Mr Bray’s evidence, that expansion onto the resumed land “would not have resulted in lower overall costs”; and Mr Knight’s view that there would have been a minimal increase in the number of employees. He also noted the conflict between their evidence in relation to saving on staff accommodation, and the cost of supplying water to the resumed land. The learned Member preferred Mr Bray’s evidence on these matters “(i)n view of his position in the company”. He stated, “financial feasibility is less established than Mr Knight believed it to be when he formed his opinion based, in part, on the aspects which have now been shown to be different from his appreciation of them”, and considered them to be of sufficient significance to invalidate Mr Knight’s opinion, as they went to the financial feasibility of the proposed land use[40]. The learned Member was not prepared to adopt Mr Knight’s view as to the highest and best use of the land; and proceeded to value it on Mr Knight’s alternative basis, related to its use for mixed lifestyle/rural home sites with some associated grazing and /or agriculture (rural site use).[40] RJ at [27].Submissions in Inglis appeal

Ratio Decidendi

Legal Principle Established

The oral submissions for the Inglis parties referred to the complexity of the trial and appeal as indicative of the difficulties associated with the preparation of the claim. The learned Member accepted Mr Purcell’s views about his ability to prepare the claim without the assistance of Counsel and his explanations for the incurring of costs, about which he was challenged. The amounts charged were not, in the context of the case, excessive. It was a case where it was appropriate to have reports prepared and settled before the claim was lodged. Sufficient evidence was placed before the Land Court to enable the learned Member to form a view as to whether the steps taken relating to the preparation of the reports were appropriate and reasonable. The resulting claim was fundamentally the same as the case advanced in the Land Court.Consideration of the award for disturbance It is clear that the learned Member identified the correct principles to be applied in determining this aspect of the case. It is also clear that he gave consideration to the evidence put before him that costs could not properly have been saved by not undertaking the second site inspection; the cost associated with the settling of the letters of instruction to the experts was not excessive; and that the costs claimed were necessarily and properly incurred, and were conservative. The evidence having been placed before him (indeed, it was elicited through cross-examination) the learned Member was entitled to take it into account in reaching his conclusion. Given the way the case was conducted on behalf of the State, he was entitled to follow this course. It is apparent from the learned Member’s reasons that he considered whether the fees claimed were of a nature, and within the scope, of that which a reasonable person in the position of the claimant would have done or caused to be done, by reference to the evidence put before him relevant to that question. The submissions for the State seemed to amount to an assertion that he was required to consider this question, without regard to such evidence; and that it was wrong for him to act on the evidence put forward in the Land Court. In assessing that evidence, there was no error in his noting the absence of evidence indicating how savings could have been made, if a different approach were adopted. Such evidence might have provided some assistance on the question whether it was reasonable for the claimant to have caused to be done the work which resulted in the amounts claimed. Likewise, had evidence been put forward to demonstrate that the amount which the State contended as being a reasonable amount for the preparation of the claim, that may have assisted the learned Member in his determination. There was no error in his observation that the State had not produced any such evidence. The claim plainly had its complexities. So much is apparent from the nature of the case advanced in the Land Court. It is also apparent from the evidence of Mr Purcell that, after the claim had been filed, the State raised issues which resulted in the Inglis parties expending very large sums of money on issues which ultimately turned out to be of no significance[169]. In such a case, it was open to the learned Member to find that it was reasonable to incur costs for the preparation of reports, particularly in light of the size of the claim, and the real prospect that it would be litigated.[169] See R 918.