Jacobi v Council of the Shire of Pine Rivers
[1999] QLC 117
•12 November 1999
LAND COURT
BRISBANE
12 November 1999
Re: Determination of compensation – resumption for water supply purposes Acquisition of Land Act 1967 Local Government: Pine Rivers (A99-04)
On 25 January 1999 a claim was lodged with the Land Court on behalf of the
EC, HE, IC, SA, KM and KC Jacobi
v.
Council of the Shire of Pine Rivers
JUDGMENT
| (1) | Background: |
This is a claim for compensation for land resumed under the provisions of the Acquisition of Land Act 1967 (the “Act”). By proclamation in the Queensland Gazette of 19 April 1996, the Council of the Shire of Pine Rivers (the respondent) resumed land of area 589 m² being all of Lot 4 on RP 84688, Parish of Warner. At the date of the proclamation on 19 April 1996 the registered proprietors of the subject land were noted to be Ewen Charles Jacobi, Hazel Elsie Jacobi, Ian Charles Jacobi, Sheryl Anne Jacobi, Kym Margaret Jacobi and Kerry Christine Jacobi, as joint tenants (the claimants). The date of 19 April 1996 then becomes the date at which compensation is to be assessed.
| (2) | The claim: |
By notice of intention to resume of 1 February 1996, the respondent issued a notice to the claimant seeking written objection to the proposed resumption, and signalling a willingness to negotiate an appropriate settlement, or failing agreement, to treat as to the compensation to be paid and all consequential matters. The land was resumed for water supply purposes, and in particular for the construction of a water supply pump station and associated building works.
| claimants seeking resolution of their claim as follows: 1999, with an exchange of all witness statements to occur not later than 14 days prior to the final date for hearing. By Court Notice of 9 June 1999, a hearing date was established, and the hearing commenced on 23 August 1999. | Loss of land = | $115,000 |
Loss of improvements (dwelling) = $5,000 Severance = Nil Injurious affection = $15,000 Disturbance (legal, valuation and town planning fees) = $6,000 Total = $141,000. During the hearing the claim was amended as follows: Loss of land = $115,000 Loss of improvements (dwellings) = $4,000 Severance = Nil Injurious affection withdrawn Disturbance = $8,500 Total = $127,500
At the commencement of the hearing the respondent agreed to the amended claims for loss of dwelling ($4,000) and disturbance ($8,500). It was also agreed that an advance against compensation pursuant to section 23 of the Act in the sum of $60,000 was paid by the respondent to the claimants on 5 June 1996. With the agreement of both parties a joint inspection of the land and sales evidence was undertaken on 23 August 1999.
Mr WP Cusack, Solicitor, represented the claimants. Mr C Hughes of counsel, instructed by the respondent’s legal officer, represented the respondent.
| (3) | The nature of the land - |
The subject land was zoned as Residential A under the Pine Rivers Shire Council Planning Scheme of 14 May 1988. The property was level, well drained and free from flooding at the date of resumption. The subject land is located adjacent to the Strathpine Railway Station and parking area, and it is agreed by both parties that the land has excellent exposure in all directions, particularly to traffic travelling northbound in South Pine Road.
The land is at the intersection of South Pine Road and a side road (formerly part of South Pine Road), which is used by heavy vehicles in that part of the northern end of the Brendale commercial and industrial area. The subject land is the only Residential A land in its immediate locality, and is at a bend in South Pine Road, where South Pine Road crosses the railway line, before joining Gympie Road. Town water, electricity and telephone services were available, but the subject land had no direct sewerage connection at the relevant date, although a private septic system existed for the old dwelling.
The land was occupied by an old highset timber and hardiplank dwelling, which is now agreed to have provided an added value to the land of $4,000. The site had been formerly used as a bus depot and office, but had been vacant since 1990 until the date of resumption. The dwelling had been used during that period from 1990 to 1996 for the storage of equipment.
There was general agreement that the site was well known in the local community because of its excellent exposure. However its small size (589 m²) appears to provide some limitation upon its potential use for industrial or commercial purposes. The Council offices, Civic Centre and library are nearby on the eastern side of the railway line. South Pine Road to the south of the subject land is bitumen sealed with concrete kerbing and channelling. The road to the west of the subject land was bitumen sealed only. South Pine Road is the major sub-arterial road to the Brendale industrial and commercial area, and to residential areas south of Strathpine. The subject land is on the edge of the central business district (CBD) of Strathpine. Because of its exposure and locality, the claimant argues that the subject land is unique in that area.
Access to the subject land is good, and was noted to not suffer from some of the current access problems inherent in the CBD, mainly as a consequence of a median strip in Gympie Road in that area in the CBD. At the date of resumption there was also a large concrete slab on the subject land (12 metres x 3.6 metres x 0.3 metres deep), which had formerly been used for the servicing of buses.
Photographs of the locality reveal that adjoining Council land to the south had been landscaped with a pathway and concrete kerbing and channelling prior to the resumption, as an important entry to the CBD.
| (4) | History of the site – |
The use of the land had been the subject of an unsuccessful attempt at rezoning the subject land from residential to heavy industrial purposes in 1975. That application was finally rejected by the Local Government Court of Queensland, where in Cain and Another v Pine Rivers Shire Council (1975) 33 LGRA 150, Mylne J found that the site should not be rezoned to heavy industry. The claimants subsequently acquired the land in October 1981 and operated it as part of their bus service operations until 1990.
The evidence supplied to the Court reveals that the use of the subject land, for purposes other than for its zoning as residential, became an issue between the claimants and the Council in April 1983. However as a result of a minor change of operations in respect of the cleaning of the buses at the site, the matter appeared to have no longer remained at public issue. On cessation of the bus service in 1990, the claimants decided to seek to capitalise upon any potential capital gain in the land by placing it upon the market for sale. As a pre-1983 purchase it presented an opportunity to not be required to pay capital gains tax, and the claimants were prepared to wait for a suitable offer.
However it is generally agreed by the parties that initial expectations by the claimants at $180,000 were well beyond the then market assessments, and the land remained unsold until the date of resumption in April 1996. Mr Jacobi agrees that during that period he deliberately placed a high price on the property to discourage the large number of cursory inquiries which had become an annoyance.
The appellants now argue that there had been an offer to purchase the land for $80,000, and an offer made in 1994 for $100,000, plus further offers of $110,000 and $125,000, both subject to rezoning, all of which were refused by the claimants. During his discussions with the Council and Queensland Railways, Mr Jacobi had some preliminary advice that Queensland Railways may have some further interest in part of the land for railway purposes, but that was never pursued in 1986. Hearsay in 1994 about the possibility of a major shopping centre over the railway station also appears to have no firm basis.
On 29 January 1996 preliminary inquiries were commenced by the Council to purchase the subject land at $60,000. The claimants rejected that figure advising that the minimal figure that would be acceptable would be $120,000. On 1 February 1996 a notice of intention to resume the land was issued, leading to a formal objection on 1 March 1996. Following unsuccessful negotiations on the objections, the land was formally resumed by gazettal on 19 April 1996.
While the objection negotiations were in progress the claimants sought advice from a local real estate agent (Mr A Norman), who advised that he had a potential purchaser who was prepared to offer $120,000, subject to the Council not proceeding with the resumption. However the date of that offer (2 May 1996) already post-dated the actual date of resumption, and the offer was never pursued.
It would appear that fundamental to the claimants dispute with the respondent is a fervent belief that the Council has contributed to the claimants failure to sell the property, by, in their opinion, a progressive resistance to any inquiries by potential purchasers about the future use of the land. The claimants argue that a history of several inquirers would appear to have concluded from the Council’s response about the possible rezoning of the land, that it was not practical, and interest in pursuing the land then waned. The respondent rejects that conclusion, arguing that it was the unreasonable expectations of the claimants, in respect of the asking price, which resulted in the lack of any sale.
In respect of the ongoing interest of the Council in the subject land, it is noted that the Council approached Queensland Rail to ascertain its possible interest in the land in October 1990, and January 1991. Council suggested that the land’s possible use as a car park as part of a major rail freight dispatch facility may be appropriate. At that time Queensland Rail had no requirement for the land, but asked to be kept informed of any proposals to rezone or develop the subject land. At the time of those letters to Queensland Rail, the subject land was listed for sale.
The requirement for the future track widening by Queensland Rail became formally known, some time after the Council’s general meeting on 18 March 1996. Presumably the Council wrote to the Lands Department seeking an Executive Council minute for the resumption, and the Lands Department would have sought its normal calls for interest by other Government authorities. Queensland Rail faxed its requirements direct to Council on 20 November 1996, which advised on 27 November 1996 of Council’s intention to seek the closure of the road, and to amend its design accordingly. However it also noted that the consulting engineers for the Council on the pump station (John Wilson) contacted Queensland Rail by telephone on 23 February 1996, seeking Queensland Rail’s possible interest in that area.
Evidence was given by Mr Brian Kennedy, a local real estate agent who had made personal limited inquiries with the Council in respect of the zoning to which the subject land could be rezoned. Mr Kennedy’s inquiries revealed that the small size of the subject land indicated that the land could be rezoned to local business or special facilities. On the basis of Mr Kennedy’s limited inquiries, it would appear that there had been no consistent approach by Council to suggest that the land could not be rezoned, and in fact Council’s action to rezone the subject land to “special facilities (water supply)” on 16 December 1996, would appear to support that conclusion.
It is also noted that there appears to be no specific requirement for Council to have done so, as the use of the land for a public purpose as a pump site, was a permitted consent purpose within residential zoning. However the action to rezone the land in December 1996 would appear to resolve a long outstanding planning anomaly in that area, as the subject land was the only Residential A parcel left outstanding; and is included in the area designated as “industrial” in the strategic plan of the Council (Exhibit 27).
In noting the speed with which the resumption appeared to proceed between January and April 1996, the reason for that urgency would appear to have been generated by a major public health problem in respect of the water supply for the Shire. Blue green algae blooms in the North Pine Dam had resulted in a reduction in water supply, and the only way to remedy the urgent problem was to construct a new pumping station to boost the alternative water supply from a Brisbane City Council trunk main passing through the area. After an engineering study the subject land was chosen, and urgent construction of the pump station undertaken. The selection of the subject land is discussed later.
| (5) | Planning matters - |
While there would appear to have previously been some misunderstanding about the potential highest and best use of the subject land, it is now agreed that its highest and best use at the relevant date would have been for a commercial/service industry type, specifically “special facilities office” zoning. Both Mr Mark Baker, an experienced Town Planning consultant for the claimants, and Mr Andre Raymond Opanowycz, the Council’s Manager Land Development Services, and an experienced town planner and engineer, agree on that conclusion.
Mr Baker notes the former decision in respect of Cain and Another v Shire of Pine Rivers Council (supra), but believes that can be distinguished in as much as the rezoning sought at that time was for use for heavy industry, which was completely inappropriate in view of the small size of the subject land. Mr Baker also notes that the former application had been made under an earlier planning scheme, where conditions did not run with the land as now occurs, and at which time there had been no formal strategic plan to guide the proposal. At that time, there had also been no “Special Facilities” zoning and therefore no control mechanism for Council to control the type of development proposed. Mr Baker saw no precedent in that very specific nature of that decision by Mylne J.
In respect of the potential use of any building for office purposes upon the subject land, Mr Baker sees no problem with noise from the adjoining railway line, which he believes would be accommodated in the construction of the building. He also sees the wall adjoining the railway line as an excellent advertising facility. Both Mr Baker and Mr Opanowycz agree that onsite parking would be a requirement of any new office building, based upon the Council’s standards of one car park per 30 m² of floor space. In the unlikely event that some relaxation of offsite parking might be possible, it was noted that in those circumstances a contribution of $5,500 per car space would have been required towards public car parking in the area.
Mr Opanowycz argues that, while he believes rezoning to “Special Facilities Office” was likely, he feels that any rezoning to commercial would have limited likelihood of success, due to the more flexible conditions of such a rezoning.
As part of a potential rezoning proposal to “Special Facilities Office”, the application would need to indicate the type of proposed development. Mr Baker provides an example of a two-storey development for professional offices which demonstrates a floor area of 180 m², plus six car parking spaces. Mr Opanowycz proposes a single-storey of 150 m², and five car parking spaces. Those design criteria were on the basis of leaving free any future land required for railway extension purposes.
Mr Opanowycz queries the practicability of the 180 m² layout by Mr Baker, noting that if allowance is made for toilets and stairwells, the effect of office floor area would only be 155 m². Allowing for the extra structural building costs for the two- storey building, Mr Opanowycz argues that it would not be cost effective to develop the site with two storeys. Mr Opanowycz notes that reliable building costs suggest that final fitout costs for a single-storey building vary from $650 per m² to $720 per m², and for two storeys from $735 per m² to $805 per m². He also queries the aesthetic appeal of the two-storey building on such a small site, particularly if additional height has to be arranged to achieve gravity sewerage connection to the sewer mains. Mr Opanowycz estimates likely building costs for a suitable office building on the site would be $97,500 (single storey) and $126,520 (two storeys). He notes that generally two storeys have not been built in that locality outside the CBD area. Mr Denman also feels that two storeys was not applicable in respect of that site.
In respect of any application to rezone the land, Mr Baker notes that there is already provision in the planning scheme for Council to require kerbing and channelling and a footpath, to developments on industrial zone frontages. In view of the already existing concrete kerbing and channelling, and the concrete footpath on the adjoining land in 1996, Council would have required an extension of those facilities, even without rezoning. However it would definitely have been a condition of any rezoning approval for “Special Facilities Office”. While the actual expenditure on those matters might not occur until the building is developed, the required conditions would be part of the rezoning approval process. Mr Baker also concurs in that approach.
In respect of why the Council had not corrected the obvious zoning inconsistency for the subject land at any of the revisions of the Town Plan, Mr Baker notes that such matters occur either because Council is unsure as to the future best zoning of the land, or because such a change could have eliminated any opportunity for the Council to obtain headworks charges at a subsequent rezoning by the owner. In either event Mr Baker was not uncomfortable that any proposed rezoning for consideration should then include those charges. In respect of the vacant land to the west of the subject land, and across the unnamed road, Mr Baker notes that land has been rezoned in recent years as commercial for a motel and conference centre site.
In the matter of the extent of concrete kerbing and channelling, footpath and bitumen road surface widening, there were differences between the estimates of length and width adopted by Mr Opanowycz and Mr Denman. After further consultation, and merely for comparison purposes, Mr Denman provided a revised estimate of costs based upon guidelines suggested by Mr Opanowycz. The additional length of kerbing and channelling by Mr Opanowycz were to ensure that surface water did not pond between the railway car park and the subject land, and to connect the existing kerbing and channelling to the south. On an inspection of those facilities, I would agree that Mr Opanowycz’s estimates were not unreasonable, and were likely to have been a reasonable condition of any Council approval, issued under section 6.3 of the then Local Government (Planning and Environment) Act 1990, effective at 19 April 1996. For the purposes of this matter I will adopt his estimated dimensions for those facilities.
During preparation for the calling of contracts for the construction of the pump station, Queensland Rail belatedly signalled a future requirement for the resumption of a strip of land 4 metres wide adjoining the railway lane for future track widening purposes. As a consequence of that direction from Queensland Rail, the Council sought and obtained Executive Council approval for the closure of an area of 105 m² of public road, (4 metres wide) for inclusion in the pump site. The pump site facility was then realigned to ensure that the possible railway extension remained free of encumbrances, and construction was completed accordingly. The Council paid the Department of Natural Resources an amount of $13,500, plus associated costs of rezoning and conveyancing ($352.50). The amended area of the pump station site (now Lot 41 on SP 105297) is now 695 m². The costs of the survey undertaken by the Council’s surveyor, were not supplied.
Evidence was also given of correspondence between the Council and the claimants on 18 February 1997 indicating that Council at that time had advised that its valuer believed that the limited size and irregular shape of the subject land would be a serious impediment to the land’s use for either commercial or industrial uses. While that letter provides no direct correlation between the opinions of the consulting valuer and the decision of Cain and Another v Pine Rivers Shire Council (supra), it was clearly the claimants’ opinion that the decision of Mylne J was being misinterpreted by Council officers. The tenor of the claimants’ letter to Council of 17 February 1997 strongly supports Mr Cusack’s understanding of a telephone conference he had with the Council’s legal officer; in which he believed those views had been expressed which supported such a scenario.
I note Mr Opanowycz’s initial estimate of the likely requirement by Council for a rezoning of the subject land to "Special Facilities Office” which identifies the following condition:
Sewerage headworks = $1,780 Water headworks = $1,411 Kerbing and channelling (45 metres) = $2,025 Road widening = $1,452 Footpath = $2,700 Sewerage = $18,810 Contingencies (25% on $24,987) = $6,247 Total = $34,425
Mr Opanowycz provides a further estimate of costs allowing for an alternative sewerage connection across the road to the west, which is discussed later. Mr Denman initially argues likely costs for rezoning at $13,000, plus time lost to achieve the rezoning, although Mr Denman also supplies an alternative estimate ($34,425), used for comparison purposes only, adopting Mr Opanowycz’s figures (Exhibit 19).
| (6) | Construction of sewerage - |
Mr Opanowycz argues that the most practical method of arranging a sewerage connection to the subject land would be to provide 90 metres of new sewer line to an existing sewerage manhole in Mott Street, near the Koala car park sale (Sale 4). That is the basis of his estimate of cost for sewerage at $18,810 plus 25% contingencies ($23,512). Mr Denman’s estimate of cost was based upon obtaining a suitable gravity feed line of some 30 metres from a manhole immediately west of the subject land across the roadway. During the evidence it was agreed that the Council has, as part of the development of the water pump station now erected on the subject land, provided a rising main sewerage connection to that existing manhole.
Problems to be overcome in such a gravity sewer line involved, whether a clear right of way could be obtained, the relative levels of overburden cover across the roadway, and any consequential filling of the subject land which might become necessary. While Mr Opanowycz continues to argue that the preferred method would be to connect to the Mott Street line, he concedes that it would also be possible to connect across the roadway to the west.
To support their estimate of the cost of sewerage construction, the claimants sought evidence from Mr Alan Frank Benzie, an experienced licensed plumber with considerable experience in the provision of sewerage services. Mr Benzie explained that in the absence of a thorough drainage investigation by a plumbing hydraulic consultant, he did the best he could in ascertaining any possible problems with other services in the area. Mr Benzie based his conclusions on evidence he later obtained from the Council records.
Mr Benzie argues that adopting the invert levels on the existing manhole to the west of the subject land, he concludes that a gravity sewer line of gradient 1 in 60 could be achieved across the roadway. Mr Benzie concedes that in addition to his estimated costs to install the 30 metres of pipeline at $3,060, there would need to be added any additional costs associated with cutting and repairing the bitumen road surface ($595); and a further $750 for concrete base material for back filling.
Where the new pipe came to less than the minimum required distance below the road surface; an additional $2,000 to provide a cast iron type pipe instead of the normal PVC pipe; plus any required Council fees; plus the provision of a new manhole within the subject land if required by Council ($,1000); plus breaking into the existing manhole ($900); plus traffic control costs during the excavation ($400) would be required. Based upon those concessions Mr Benzie’s estimate of cost would be $8,705 plus any Council fees.
By comparison Mr Opanowycz’s alternative estimate for a similar pipe across
the road was:
Supply and lay sewer pipe = $5,400 Lean mix backfill = $1,000 New manhole = $1,000 Break into existing manhole = $900 Traffic control =
$400 $7,875
Fill on site (350 cubic metres) = Total = $16,575 plus on costs and contingencies (25%) = $4,143 Total costs = $20,718
The difference in approach between the parties for this alternative method involves the need for fill upon the subject land; and whether it is appropriate to allow 25% for contingencies. Mr Jacobi argues that even if fill is required on the site, the estimate of $7,875 is excessive. Mr Jacobi supplies an alternative quotation as follows:
Supply of suitable fill 350 cubic metres x 1.4 tonnes
per cubic metre x $5.60 per tonne = $2,744 Spreading and compaction of fill = $1,200 Total for compaction of fill = $3,944
Mr Opanowycz queries those costs claiming the weight per cubic metre is nearer 1.8 to 2.0 tonnes per cubic metre for compacted fill, depending upon the moisture content of the fill. He also notes that his estimate was for 350 cubic metres of compacted fill, not loose material in the truck. If I allowed for a compacted rate at 1.8 tonnes per cubic metre, I arrive at a figure of $3,528 ($10.08 per cubic metre), for the 350 cubic metres of compacted fill, to which must then be allowed the cost of achieving the compaction. This compares with the rate of $12.50 per cubic metre adopted by Mr Opanowycz.
However Mr Opanowycz notes that costs of progressive soil testing ($750) should also be allowed on top of the claimants’ cost of $1,200; plus the additional cost for a compactor, as the fill was in excess of 400 mm in depth. Mr Opanowycz suggests an overall cost of compaction and testing would be $3,500 ($10 per cubic metre) for compaction under any future building upon the subject land. Based on those figures an amount of $7028 for the compacted fill would appear reasonable.
The need for fill upon the site emanates from the requirement by Council for a depth of 1.1 metres at the new sewer manhole at the end of the new main within the subject land. This is to ensure adequate gravity drainage for service pipes within the site, and to facilitate effective maintenance of the sewer line. Based upon his calculation of 1 in 80 gravity main (to allow for effective discharge of solids), Mr Opanowycz provides a graded self-draining building pad in his estimate of 350 cubic metres of fill. He sees such an approach as the most cost effective method of raising the building pad, and also the more aesthetically pleasing for any future office building construction. On the evidence supplied I accept his advice that a new line of some 35 metres would be required to enter the subject land (prior to the later resumption of 4 metres width for road purposes). On those figures a revised estimate of $15,728 would appear reasonable.
That then leaves the matter of what contingencies, if any, should be allowed to those estimated costs. I note that the 25% allowed by Mr Opanowycz represents 10% for “on-costs”, and 15% for “contingencies”. The on-cost reflect the design and supervision of plans by an engineer, and the subsequent supervision of the works. The contingencies are an allowance to cover any unforeseen items or problems that might arise in the construction. In view of the lack of any indepth hydraulic investigation, or any detailed drawings of the pipes and electrical conduits to be avoided, I believe those additional costs are justified.
Adopting those valuations I will accept:
Supply and install main = $5,400 Backfill (lean mix) = $1,000 New manhole = $1,000 Break into existing manhole = $900 Traffic control = $400 $7,028 Compacted and tested fill = Total = $15,728 Plus 25% (on-cost and contingencies) = $3,932 Total costs = $19,660
As a final check against the practicability of such an approach, it is noted that the Council was unlikely to consider a rising main service line to any future office building, in view of the potential servicing difficulties. Whilst such a service has been built into the pump station, its operation is restricted to minimal usage by service staff, and Council has greater access to service resources. In any case the prospect of any sewerage pumping station and rising main becomes theoretical, in view of the likely cost of the order of some $30,000 for the domestic pumping station anyhow. It was also noted that for any construction within a public road, there is a requirement for those works to be certified by a registered engineer.
| (7) | Comparison of sales - |
In seeking comparisons with sales in the locality, Mr Elwyn Denman, an experienced consulting registered valuer for the claimants, and Mr John Richard Wood, an experienced consulting registered valuer for the respondent, analysed a total of 27 sales. Many of those sales it was agreed provided only a broad outline of the background to the market in the locality, and added little to the comparisons with the subject land. Most of those sales were of areas much larger than the subject land, zoned for either general industry or commercial purposes, and all at rates per square metre much less than the subject land. I get little assistance from any of those sales, and I will focus my attention on the three key sales agreed to be the most comparable by both Mr Denman and Mr Wood.
The three most useful sales are:
• Sale 4 (Mr Woods) and Sale 14 (Mr Denman) – Mott Street, Brendale – Lot 1 on RP 194047
This common sale has an area of 1,092 m², is zoned as special facilities (car, truck and boat supplies), and operates as Koala Car Sales. The sale was a developed, filled site at the date of sale, with a retaining wall about 1.2 metres high to the north of the building, and hard stand standing display area. Improvements including a sales office, car port and concrete parking area, together with landscaping, a chain link fence and some floodlights. There is disagreement about the added value of those improvements, which Mr Denman sees at $112,000, and Mr Wood at $110,000 to $120,000. The sale site has a proven record of successful operation as a car yard since 1986, and was rezoned for that purpose in 1983.
The sale sold in February 1996 for $360,000, which after allowing for improvements was analysed by Mr Denman at $248,000 ($227.11 per m²), and by Mr Wood at $240,000 to $250,000 ($225 per m²). Mr Denman saw the sale as comparable, while Mr Wood saw the sale as not really comparable, on the basis of a car sales outlet, due to the small size of the subject land, and its unsuitability for that purpose. However it is agreed by both parties that Sale 4 and the subject land have very good exposure, although there is some difference of opinion in respect of which site is the more prominent. Mr Denman believes the subject land has better exposure while Mr Wood believes Sale 4 is better. There is some local flooding across Mott Street in heavy rains. In respect of the level of improvements upon the sale, Mr Kennedy, a licensed real estate agent, argues that the sales office building was essential only an office and a small reception area, probably worth only about $20,000, including the original carport. There have been some minor alterations to the carport since the sale, and the erection of a second carport. Mr Kennedy also saw Sale 4 as slightly superior to the subject land on a site basis, although Mr Kennedy was unaware of any fill material placed upon that parcel prior to its sale in 1996. Mr Kennedy also saw the size of the subject land as too small for car sales purposes.
Mr Wood basis his estimate of the added value of the good all weather improvements of Sale 4 upon his experience of another similar car sales yard in Brisbane at $100 per m² to $110 per m². In his final assessment of the analysed value of the land Mr Wood adopts $114,300 for the improvements. Mr Wood sees Sale 4 as a sale for a highest specific purpose as a car sales yard, for which the subject land is not suitable. However he agrees that pedestrian access would be easier to the subject land than to Sale 4.
•
Sale 9 (Mr Wood) and Sale 16 (Mr Denman) – (401 Gympie Road, Strathpine – Lot 15 on RP 110258)
This common sale has an area of 2,023 m², is zoned central business, and is in the CBD of Strathpine. At the date of sale the property contained a two-storey building of 1,058 m², which has subsequently been refurbished for use as professional offices, restaurant and a hair salon. The site is sealed with 30 car parking spaces at the rear, landscaped, and is referred to as the Trilby Misso building.
The sale sold in May 1996 for $447,500 ($221 per m²). Mr Denman believes the nature of the existing building adds little to the property, and he has analysed the unimproved value of the land at $221 per m². Mr Wood sees Sale 9 as an improved sale, in a commercial area, and of a larger parcel. He sees the permitted uses of Sale 9 as a higher order than the subject land, and he believes comparisons with that sale do not support Mr Denman’s estimate of $225 per m² for the subject land.
Mr Denman concedes that exposure of the subject land could be construed as inferior to Sale 9, as he agrees that estimates of passing traffic in Gympie Road (48,500 vehicles per day) is about three times that of passing traffic in South Pine Road (16,400 per day). Mr Denman acknowledges that the sales demonstrate that the land in the CBD is supported by the sales evidence to be superior to the subject land. However the claimants argue that there are difficulties with access to the CBD properties, due to the median strip in Gympie Road, which are not evident at the subject land. Mr Denman argues that the reason that Sale 9 has a lesser value per square metre, than what he might have expected, was because of its extra depth, and therefore extra less commercially attractive areas at the rear of that sale, in spite of that area being used for car parking purposes.
Mr Denman also believes that some selected areas just outside the CBD, can have a higher rate per square metre than the CBD, due to the specific demand for those sites, such as the Koala Car park site. In view of his opinion of the excellent exposure of the subject land, due to its unique location, Mr Denman believes that the subject land should be seen as one of those specific sites where demand would overcome the normal CBD advantages, although he argues that exposure is not as important with commercial offices than for retail use.
•
Sale 15 (Mr Denman) – (Gympie Road, Strathpine – Lot 5 on RP 221589)
This improved property, formerly occupied by the Family Services Department, now occupied by the Council, was substantially refurbished after the sale. It is near to the Westfield Shopping Centre, and towards the edge of the CBD. The sale has the advantage of the higher vehicle traffic along Gympie Road, but also suffers from some of the difficulties of access both for pedestrians and cars. The sale is an area of 3,773 m², is zoned as commercial. Only the front part of the sale has been developed for offices, and car parking, with the rear land remaining vacant. Mr Wood rejects the sale because of its nature as an improved property.
The sale sold in April 1995 for $925,000, which Mr Denman analysed as a redevelopment site of $245 per m². Mr Denman notes that sale to be larger and less prominently located than the subject land.
| (8) | The method of valuation - | |
|
In seeking comparisons for the value of the site for its highest and best use as land suitably rezoned for “Special Facilities Office”, Mr Denman compares the subject land with Sale 4 ($227 per m²), Sale 9 ($221 per m²), and Sale 15 ($245 per m²). Mr Denman believes the subject land is at least $200 per m² for sites of area 2,023 m² to 3,773 m², and concludes a rezoned site value of $225 per m². He allows that figure acknowledging the superior location, and exposure of the subject land, and its corner location. Mr Denman believes as unzoned land, the subject land would be worth just less than $200 per m².
Mr Wood bases his conclusion of the rezoned site value upon comparisons mainly with Sale 9 ($221 per m²), but also draws comparison with Sale 4 ($227 per m²) which he believes is superior to the subject land due to its proven record as a car sales outlet. Mr Wood concludes a site value for the subject land a $200 per m².
On the evidence I believe that the excellent location and exposure of the subject land is at least comparable to Sale 4, and while its smaller size would mitigate against any use of the subject land as a car sales outlet, there is no evidence that it would not be suitable for professional offices.
The comparison with Sale 9 at ($221 per m²) which, while a larger site, is located in the CBD, and does include a certain level of improvements, would suggest that the subject land rate should be something less than $220 per m². If I consider that Sale 4 at $225 per m² is seen to reflect a rate for an established and successful car sales yard, and that site also has excellent exposure, I believe that a reasonable rate for the subject land would be $210 per m², and I will adopt that rate. Allowing any balance of doubt in the claimants’ benefit, I will allow $210 per m² for the site value as a rezoned redeveloped site, or 589 m² by $210 per m² equals $123,690.
(ii) The cost of rezoning the land -
For the reasons previously discussed, I determine the likely costs of rezoning
works as:
Sewerage headworks = $1,780 Water headworks = $1,411 Kerbing and channelling = $2,025 Road widening = $1,452 Footpath = $2,700 Supply of sewerage = $15,728 Total = $25,096 Plus 25% (on-costs and contingencies) = $6,274 Cost of works = $31,370 Plus costs of Council rezoning application = $2,500 Total cost of rezoning = $33,870 Estimated value of the subject land by direct comparisons = $123,690 Less costs = $33,870 Value of land lost = $89,820 Say = $90,000
In seeking any comfort for the rate per square metre for the land resumed from the road at a cost of $13,852, plus costs of survey, I note that rate per square metre represents only $130.67 per m² for the land prior to rezoning. While I have no indication of the costs of survey, I note from plan of survey SP 105297, that the surveyor had reason to conduct an extensive survey down South Pine Road, Mott Street and Station Street. On that evidence I believe it would not be unreasonable to conclude an estimated value for the survey at $1,500 to $2,000, giving an overall cost of $149.50 per m² for the additional 106 m² of closed road. However those conclusions add little to the estimate of the value which is best considered, in my opinion, on a direct comparison of sales basis.
As a further check on his conclusions, Mr Wood has adopted a hypothetical development assessment (Exhibit 30), which concludes a land value of $62,000. By comparison Mr Denman also undertakes a check hypothetical development (Exhibit 19), and concludes a land value of $120,890. As noted previously there are areas of dispute between the parties with such a check method in respect of the likely building area and building costs. I also note that Mr Denman makes no allowance for any profit risk, legal costs and commissions, or loss of interest on both the development costs and the acquisition costs during the process of rezoning. Mr Denman sees the development of the office building as for owner/builder purposes and not for leasing or sale to other users.
While the history of inquirers about the subject land would support that potential buyers saw the site for use for their own purposes, I believe that any hypothetical development assessment should be undertaken on a commercial basis. Any developer would be likely to consider the costs involved in any unforeseen delays or other circumstances. Any prudent developer would also assess the potential to be able to recoup his costs in the event of some change in circumstances that may require him to dispose of the developed site. In the end I find that Mr Denman should have allowed for some further expenses in his determination. In view of the uncertainties in such a check method, I believe the appropriate method of assessment should be on the direct comparison of sales approach.
Evidence was also given by Mr Wood of a previous report, apparently prepared by a valuer, (Mr Sandhoff), for the Council, in which Mr Sandhoff had estimated the value of the land at $90,000. However that was only obtained by Mr Wood from a letter from Council files, and there was no indepth opportunity to fully understand Mr Sandhoff’s basis of his valuation. However it appears to involve a hypothetical refurbishment of the old dwelling on the subject land. Mr Sandhoff had allowed for profit and risk (20%), Council fees and contributions ($34,425), holding charges and loss of interest in his final examination. However without any further opportunity to explore that assessment I get little assistance from the earlier valuation by Mr Sandhoff, who apparently has since retired.
Decision:
(i) Special value to the Council -
I turn first to the claimants’ concern that Council had seen a “Special Value” in the subject land, and had accordingly, either by intent or omission, contribution to the claimants’ failure to sell the site over the period 1990 to 1996. The claimants’ concerns would appear to have been reinforced by actions by Council, when considering the report of the Planning and Environment Committee of 16 December 1996 (page 96/7837), to have identified in the rezoning application of the site, that all services were available. At that date the Council officers were well aware that in fact sewerage was not then connected to the site, in spite of the balance of that locality having been connected to the sewerage system in the overall process of sewering the area.
While such an issue may have been a matter of fact at that date, Mr Wood argues that it is not inconsistent for Council to have noted such a statement in respect of services for a special facility zoning, as any development on that site would have had to be carried out in accordance with the approved plan of development, including the new connection to the sewerage, which was available either in Mott Street, or to the west of the subject land. Accordingly Mr Wood makes no further allowance in his valuation as a consequence of that rezoning statement.
Mr Cusack however argues that the subject land had a special value to the Council, as it saved the Council by not having to resume an alternative site across the road to the west, from the land zoned for “Special Facilities – Motel, Conference and Convention Centre” purposes (Lot 42 on RP 806627). The evidence was that consulting engineers John Wilson and Partners Pty Ltd had investigated the cost of installing a pump station. Their report had indicated that for engineering reasons the subject land was the preferred site for resumption purposes. It is the claimants’ case that that decision had been based not upon the cost differential to construct the pump station, but upon the advice from Mr Opanowycz that it would be cheaper for Council to resume the subject land, than to reserve part of the motel site across the road (Lot 42 on RP 806627).
In coming to the conclusion that direct engineering costs would have significantly biased any engineering decision towards Lot 42, Mr Opanowycz concedes that the connection to the sewer line would have been much cheaper than on the subject land, as the manhole would have been virtually alongside the pump station in that location. From the engineering drawings of the pump station facility (Exhibit 20A), there would have been a greatly reduced need for the suction and discharge pipes across the road to the water main on the western side of the road. The stormwater connection to the new manhole on the existing 375 mm stormwater line was also on the west side of the road, and the need for a domestic sewerage pumping station to discharge by rising main across the roadway, would not have been required. From the levels of the sewer manhole there would also obviously have been no need for an additional 350 cubic metres of fill at $7,028, plus contingencies and costs on Lot 42. Collectively there would not appear to be any physical reason for locating the pump station on the subject land compared to locating it on Lot 42.
Clearly the extenuating circumstances which are likely to have impacted John Wilson’s decision to recommend the subject land as the preferred site, would have been related to either or both planning impacts or the total costs of the project. While the claimants may argue that the difference in cost of resuming either parcel of land has had an influence upon John Wilson’s decision, it would be wrong to conclude that it was inappropriate for John Wilson to have come to that advice to his client, the Council.
Without direct knowledge of John Wilson’s brief by the Council, it would be reasonable to conclude that John Wilson would have been charged with providing the most cost effective solution to installing the pump station. As such it would be appropriate for him to inquire what might be the likely cost of obtaining either site. It is to be remembered that at that preliminary stage there would not have been a fully detailed estimate of the pump station facility and its cost. However any superficial analysis could have concluded that development costs on Lot 42 would be considerably less than those on the subject land.
If I consider the planning impacts of a pump station on Lot 42 to the west, I note that Mr Opanowycz believes that the pump station would have devalued the motel site (Lot 42) to a greater extent, than the total resumption of the subject land. However I note that the road frontage of Lot 42 extends south to about opposite Mott Street, which we are advised is some 90 metres. If the pump station had been located within the north eastern corner of Lot 42 (a width of say 25 metres), then there would have remained a frontage of about 65 metres to the balance of Lot 42, which has an area of 1.612 hectares. If I conclude that a similar pump station could have been built on Lot 42, then the visual impact would have been comparable, and the only other impact upon Lot 42 would have been the loss of a comparable area of about 589 m² (or 4% of Lot 42).
The obvious conclusion of such supposition is that it was concluded, for whatever reasons, that it would be cheaper to resume the subject land, than to resume part of Lot 42, plus any other additional costs that might have resulted by locating the pump station across the road from the very pipes that it is intended to service. While that is a perfectly reasonable matter for the Council to conclude, it does suggest that the Council saw some “special value” in the subject land for that purpose.
While it is correct for Mr Opanowycz to note that the additional costs for the connections across the road would have been only marginal in the overall cost of possibly $1,500,000 for the pump station, the Council must have had some broad assessment of the alternative resumption costs for Lot 42 and the subject land. John Wilson was already advised of Queensland Rail’s possible interest in further resuming part of the land for railway purposes, on 23 February 1996, prior to the formal objection conference between Council and the claimant. Hence a likely further complication to the resumption of the subject land had been signalled, and presumably weighed in the cost effective balance for the Council.
However in deciding on the quantum of any special value to the Council, it is important to remember that the Council would have always been aware that, if it resumed the land, it was likely to have to pay full market value for it. To conclude that Council would have had to pay a premium beyond the market value, presupposes that Council had no other alternative site for the pump station. The evidence was that there were at least two other alternative sites, including Lot 42.
(ii) Council’s attitude to the land -
In seeking to ascertain what quantum of special value, if any, that the subject land may have had for the Council, Mr Cusack draws support from the decision of Cain v Pine Rivers Shire Council (supra), where Mylne J identified the need to landscape and improve the visual aspect of the site as part of the entrance to Strathpine. Mr Cusack also argues that the history of the Council’s apparent attitude to rezoning inquiries about the subject land, had, in his opinion, affected the market value of the land. In that matter he draws support from the decision of Housing Commission of New South Wales v San Sebastian Pty Ltd (1978) 140 CLR 196.
In that decision the High Court considered the matter where the Sydney City Council had deferred an application for a hospital site, which could have been used under the then strategic plan for the city. The reason for the deferral was to allow for negotiations between the Commonwealth and the New South Wales State Government to proceed to an agreement, which in effect, limited the use of the land to residential development. The land was then resumed for residential purposes. The High Court held, per Jacobs J, that:
(1) In assessing the compensation the purpose of the resumption can only be considered to determine whether the actual resumption, or the public knowledge of the resumption had effected the actual market at the date of resumption (p. 206).
(2) Any direct relationship between any restrictions on the land use, and the public works for which the land is resumed, must be ignored (p. 206).
(3) Although the interim zoning of the planning scheme could not be ignored in assessing the value of the land, its particular use for a public purpose must be ignored (p. 212).
Mr Cusack argues that the San Sebastian principle highlights that the intentions of the Council in respect of the subject land, should be taken into account, but only insofar as they affect the market value of the land. However, in my opinion, San Sebastian can be distinguished on that issue in as much as there had been no formal agreement or draft plan by Council to resume the land prior to its decision in February 1996. Any conclusion that there was a broad understanding that Council intended to resume the subject land prior to February 1996, appears to reside only in the minds of the claimants, or upon unsubstantiated opinions expressed. Indeed there had been no formal application to rezone the land during 1990 to 1996, and Mr Brian Kennedy’s inquiries suggested that it could be possible to rezone the land to special facilities or local business.
Mr Cusack also sought support in the findings of The Crown v Murphy and Another (1990) 71 LGRA 1 (and also 95 ALJ 493), where the High Court noted at page 4:
“One purpose of this principle is to ensure that a resuming authority does not employ planning restrictions to destroy the development potential of the land and then assess compensation for its resumption on the basis that the destroyed potential had never existed: Melville Units Ltd v Commissioner of Main Roads [1979] AC 426, at 434. The principle applies in cases where there is a direct relationship between the planning restriction and the scheme of which resumption is a feature and extends to cases where there is merely an indirect relationship, provided that the planning restriction can properly be regarded as a step in the process of resumption: Housing Commission of New South Wales v San Sebastian Pty Ltd”, (at 206 to 207).
In that matter a rezoning of land for future subdivisional purposes was refused by the Woongarra Shire Council at Mon Repos Beach near Bundaberg, and the land was later resumed for the purposes of an environmental park. Following resumption an appeal to the Land Court found compensation on the basis of a “notional rezoning” of the land from Rural to Residential A zone. That decision was later overturned by the Land Appeal Court which determined a lesser quantum of compensation based upon the existing rural zoning. On appeal to the Full Court of Queensland, that decision was then found to be in error, and that the Land Appeal Court should have considered the prospect of rezoning, and the Full Court referred the matter back to the Land Appeal Court. Subsequently the Crown appealed to the High Court against that decision of the Full Court. The High Court upheld the decision of the Land Appeal Court finding that it had not erred.
The key issue in that matter was whether the resuming authority (National Parks and Wildlife Service) had influenced the Council in its decision to refuse the application to rezone the land, and what impact that may have had on any potential increase in zoning to Residential A, and the consequential value to the land. If that had been the case then the principle of Pointe Gourde would dictate that any influence of the proposal to resume the land must be ignored in assessing the value of the land.
The High Court found that the Land Appeal Court had considered the prospect of the rezoning on its merits, free of any pressure from the National Parks and Wildlife Service, and concluded that the prospect of rezoning was such as to not influence the value of the land. On that basis it was found by the Land Appeal Court that their determination of compensation did not breach the principle of Pointe Gourde and the value of the land should be seen in the context of its current zoning as rural land. The major impediment to any rezoning of that land was the physical existence of the turtle rookery. The Land Appeal Court in its decision in Murphy and Cove House v The Crown (1986-87) 11 QLCR 34 when seeking comparison with Pointe Gourde said at page 41:
“The position in this case is even one step further removed for there was no original activity by any Authority setting up the rookery. It was a natural phenomenon that always constituted an impediment to rezoning, even if all schemes were disregarded. The question is the relationship between the factor affecting value and the scheme.”
The principle of Pointe Gourde was established in Pointe Gourde Quarrying and Transport Co Ltd v Crown Lands (Trinidad) (1947) AC 565 at page 572 where Lord MacDermott said:
“It is well settled that compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition.”
In the current matter there is a direct analogy with The Crown v Murphy in as much as the physical location, and the restrictions of the subject land, would have been known to a prudent potential purchaser prior to the date of resumption. In the absence of any direct evidence of the Council refusing an application to rezone the land, it would not be appropriate to link the principle established in Pointe Gourde with the purpose of the resumption for the pump site. Indeed the decision to resume the subject land would appear to rely more on the Council’s understanding of what might have been the market value of the land at that time, and the urgent need to solve the problem of clean water supply for the Shire.
In the matter of whether the actions of the Council, prior to the decision to resume the subject land, could be construed to have impacted the value of the land, or to have destroyed its development potential by the use of any planning restrictions, I am also directed to the findings of the Privy Council in Melwood Units v Commissioner of Main Roads [1979] AC 426. In that matter the Privy Council noted that in considering any impact from the principle of Pointe Gourde, the common law dictates that “neither relevantly attributable appreciation nor depreciation in value is to be regarded in the assessment of land compensation” (page 435).
In considering then the matter of the impact of a proposed resumption for an arterial road purpose, the Privy Council directed that the true question to be asked in that matter related to whether the proposed resumption had a depressing effect upon the development potential of that land, and also a balance area to the south of the resumed land; and any such effect should have been ignored in determining the compensation. However Melwood Units can also be distinguished in the current matter as there is no direct connection between the action to resume the subject land for a pump station, and any previous actions by the Council in respect of preliminary inquiries for possible land use by potential purchasers.
Mr Cusack also refers me to the findings of Rugby Joint Water Board v Foottit and Another [1972] 1 All ER 1057, where their Lordships followed the principles established in Pointe Gourde. However the Court found that the interests of the claimant to be considered at the date of acquisition, could not be construed to have changed in value from a protected tenancy to an unprotected tenancy as a consequence of the scheme. I again distinguish the current matter from Rugby Joint Water Board for the reasons previously discussed.
(iii) The method of valuation -
It is agreed that the highest and best use of the subject land at the date of resumption would have been for use as special facilities office, subject to rezoning of the land by Council. However, where there was any doubt about the likely success of any rezoning application, it must also be remembered that the correct method of valuation in such circumstances was clarified in Parramatta City Council v The Valuer General (1965) 10 LGRA 160. In that matter Else-Mitchell J followed the findings of Royal Sydney Golf Club v Federal Commissioner of Taxation (1957) 97 CLR 379, at 391. Else-Mitchell J concluded that it was not correct to initially value the land on the basis that there was no restriction on the zoning, and then to deduct something extra to allow for the risk that rezoning might be obtained. Rather he found at page 173:
“I think the proper course is to inquire first what was the value of the land on the footing that there was no possibility of its ever being turned to other than recreational purposes and then how much extra should be allowed for such chance as there was of securing permission for [some other] use at some future time.”
In the method finally adopted by both Mr Denman and Mr Wood, both valuers have followed that principle, and have allowed that any risk that rezoning might not have been achieved should be allowed in the claimants’ benefit, in accordance with the principle of resolving such doubts in the claimants’ favour, as established in
Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency
Co of South Australia Ltd & Ors
(1946-47) 74 CLR 358, at 373. approach for lands suitably rezoned for special facilities office, and deducting the likely cost of achieving that new rezoning, would have resulted in a value for the land, at the date of resumption, at $90,000. In respect of whether the subject land had any additional value to the Council, I believe that the presence of two alternatives sites for the pump station, resulted in Council only considering the subject land on its market value, rather than concluding some “special value” to the Council. On that basis I make no further allowance for a special value beyond what the land might have achieved in the market place. In summary I direct that compensation due be summarised as follows:
Summary:
| • | Value of land lost = $90,000 |
| • | Value of dwelling lost = $4,000 |
| • | Disturbance (including legal and valuation fees) = $8,500 |
| • | Total compensation due = $102,500 |
| • | Less advance paid on 5 June 1996 = $60,000 |
| • | Balance due = $42,500 |
Interest - the claimant on the amount of $94,000 ($102,500 less the cost of legal and valuation fees $8,500) for the period commencing on and including 19 April 1996 and ending on 5 June 1996 (the date at which the advance was paid); and then on $34,000 ($94,000 less the advance of $60,000) from 5 June 1996 to the day immediately preceding the date upon which final payment of compensation is made.
In addition to interest on compensation awarded, also to pay interest at 6.5% for professional, legal and valuation fees commencing upon the dates the respective award items were paid by the claimants (if they were paid) and ending upon the day immediately preceding the date from which final payment of compensation for disturbance is made.
N G DIVETT
MEMBER
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