John Campbell Bennett v Fitzroy Shire Council (No. 2)
[2003] QPEC 3
•30 January 2003
PLANNING AND ENVIRONMENT COURT
OF QUEENSLAND
CITATION:
John Campbell Bennett v Fitzroy Shire Council (No. 2) [2003] QPEC 003
JOHN CAMPBELL BENNETT
Appellantv
FITZROY SHIRE COUNCIL
RespondentFILE NO/S:
Consolidated Appeal No. 315 of 1998
DIVISION:
Planning and Environment Court
PROCEEDING:
Appeal
ORIGINATING COURT:
Brisbane
DELIVERED ON:
30 January 2003
DELIVERED AT:
Southport
HEARING DATES:
21, 22, 24 and 25 January 2002 (Brisbane & Rockhampton)
JUDGE:
Alan Wilson SC, DCJ
ORDER:
Appeal dismissed
CATCHWORDS:
LOCAL GOVERNMENT – TOWN PLANNING – GENERAL MATTERS - COMPENSATION – new Town Planning Scheme altering designation of appellant’s land – claim by appellant for compensation for injurious affection – determination of “highest and best use” – factors to be taken into account
Local Government (Planning and Environment Act) 1990 s 3.5(8)(a)
Cases considered:
Albany & Ors v Commonwealth of Australia 12 ALR 210
Albany v Commonwealth of Australia (1976) 12 ALR 201
Albert House Limited v Brisbane City Council (No. 2) (1968) 21 LGRA 94Australasian Jam Co Pty Ltd v FCT (1953) 88 CLR 23
Bennett v. Fitzroy Shire Council [1998] QPELR 1
Bingham v Cumberland County Council (1954) 20 LGR (NSW) 1
Boland v Yates Property Corp Pty Ltd (1999) 74 ALJR 209
BSC Footwear Ltd v Ridgway (Inspector of Taxes) (1972) AC 544Canberra Freeholds Limited v The Queanbeyan Municipal Council (1973) 27 LGERA 134
Chapman v Logan City Council (1996) QPELR 330
CMB No. 1 Pty Ltd v Cairns City Council (1999) 1 Qd R 1
Commonwealth v Arklay (1952) 87 CLR 159Housing Commission of NSW v Falconer (1981) 1 NSWLR 547
Jones v Gosford Shire Council (1975) 33 LGRA 368
Lubrano v Brisbane City Council (1995) QPLR 81
Marshall v DOT 2001 75 ALJR 1218
Minister for Army v Parbury Henty & Co (1945) 70 CLR 459
Sam Industries Pty Ltd v Mulgrave Shire Council (1995) QPLR 161
Shanvale Pty Ltd v Livingstone Shire Council (1995) QPLR 199
Spencer v The Commonwealth (1907) 5 CLR 418
Thorpe v Brisbane City Council (1996) Qd R 37
TM Burke v Noosa Shire Council [1997] 97 LGERA 69
COUNSEL:
Mr D Gore QC for the appellant
Mr S Ure for the respondentSOLICITORS:
Connor O’Meara for the appellant
King & Co for the respondent
This is a consolidated appeal against the deemed refusal of 44 claims for compensation for injurious affection alleged, by the appellant Mr Bennett, to have been caused to property he owns west of Rockhampton by the coming into effect of the respondent Council’s new Town Planning Scheme for the Fitzroy Shire on 13 December 1996. The appeals concern the major part of a property the appellant owned called “Helensvale”, comprised of 50 parcels held by him on separate titles, and containing about 1,643 hectares.
The particular part of the new planning scheme which, the appellant contends, reduced the value of his land was a Development Control Plan No. 2 – Alton Downs (“DCP 2”), which touches 49 of the 50 parcels[1]. Of those 49, five were the subject of a decision in this court of Nase DCJ in 1999 (involving the same parties)[2].
[1] One large parcel (Lot 589) is contiguous with the other 49, but outside the area of DCP 2
[2] P&E Appeals (Brisbane) Nos. 1310, 1311, 1312, 1314 & 1316 of 1998; Reasons for Judgment of Nase DCJ, filed in Brisbane Planning and Environment Court on 7 July 1999.
The appellant’s case is that before DCP 2 came into effect the most valuable use for the land, and the one which would achieve the highest return for him, was by the sale of the individual lots for rural home sites; but after it was promulgated the highest value was by sale, in various aggregations, for grazing purposes - with the result the value of the 44 lots was significantly reduced. The respondent Council contended the highest and best use both before and after DCP 2 came into effect was as a single grazing property, so the appellant has not suffered any loss. The Council also argued, in the alternative, that only part of the land could ever have been used for rural home sites, and DCP 2 did not prevent sales for that purpose, so any diminution in value was, in truth, comparatively small (about $48,000).
The difference in approach is significant, with the appellant’s claim initially being measured, by his expert valuer, at about $900,000 which was increased, as a result of the appellant’s case being advanced on an alternative basis during the course of the hearing, to about $1.4 million.
The Land
The respondent’s local government area contains about 5,800 square kilometres, west of Rockhampton. In 1996 it accommodated approximately 9,800 residents, of whom around half lived in its central township and administrative centre, Gracemere. The appellant’s property is in the Alton Downs district, which is one of the oldest closely subdivided areas in rural Queensland, having been originally surveyed in 1862-1864[3]. The district is about 10 kilometres due west of Rockhampton City, and about 15-20 kilometres away by road. It is a similar distance from Gracemere. Helensvale lay within an established cattle grazing district, in reasonable proximity to the large sale yards at Gracemere, and meatworks in Rockhampton.
[3] Exhibit 10, p6, para 2.3 (report Mr Bill Gannon)
The land is situated on the northern spurs of a ridge which runs generally east-west, and reaches up to about 75 metres above sea level. It slopes down to a lagoon system on the eastern portion which is surrounded by lower, flatter land. The area largely drains north to Lion Creek, which runs west to east in the vicinity of the northern boundary. The eastern portion of the ridge drains down to the east into a permanent lagoon, Lower Gracemere Lagoon[4]. The entire parcel contains, over about one half of its area, flooded bluegum and coolibah flats with lagoons and waterways grassed with para grass, couch and paspalum; over 300 hectares of creek flats, and easy slopes and gullies; about 360 hectares comprised of stony ridges and moderate slopes with grey to brown soils and some varieties of grass; and, about 120 hectares of moderate to high stony ridges and slopes, with gravel and limestone outcrops. An inspection during the course of the hearing clearly showed, even to the layman, that the property contains what one of the respondent’s valuers, Mr Sheehan, described as an excellent mix of flooded wet country comprising part of the Fitzroy River floodplain, alluvial creek flats and elevated dry, hard country to allow for stock safety in extended flood periods[5]. It can, however, be affected by flooding from three directions – through heavy rainfall on hard ridges in the western head waters of Lion Creek; from Scrubby Creek/Neerkol Creek to the south; and from the Fitzroy River[6].
[4] Report of appellant’s town planner, Mr Panateros (Exhibit 1) p1, para 1.2
[5] Exhibit 8, p3 (Report Sheehan)
[6] ibid
By 1996, Mr. Bennett had owned Helensvale for 20 years. He used it as a cattle property. After 1996 it was sold, and is now used by the Acton family interests for the same purpose and was, at the time of the inspection on 23 January 2002, obviously the subject of fairly intensive development for purposes associated with beef cattle.
Helensvale is roughly dissected on the north-south access by a road variously called the Malchi-Nine Mile (Fairy Bower) Road, which runs from the Capricorn Highway near Gracemere to the Rockhampton-Ridgelands Road near Alton Downs. Both parties, and their witnesses, commonly referred to the area to the east of this road as the “eastern aggregation”, and to the part lying to the west of it as the “western aggregation”, which are convenient terms to distinguish between the generally lower and wetter areas to the east, including the Lower Gracemere Lagoon, and the higher land to the west.[7] The eastern aggregation is defined by the Malchi-Nine Mile and Fairy Bower Roads on its north, west and south and, on its eastern side, by an unreconstructed road reserve running generally northeast-southwest. The western aggregation is approximately rectangular in shape with a formed rural gravel road, Lion Mountain Road, making up most of its northern boundary, the Malchi-Nine Mile Road on its eastern side, and unreconstructed road reserves on its southern and western borders. It is divided at about the centre point by Pipeline Road, a rural gravel road, running generally north-south. This western area largely drains north to Lion Creek, which runs from west to east in the vicinity of its northern boundary.
[7] And are also consistent with the distinction made, and approach used, by Nase DCJ in the 1999 case.
The 44 parcels the subject of this appeal and the address, real property description, and area of each, are set out in appendix 2A to the report of the appellants’ town planner, Mr. Panateros (Exhibit 1). His appendix 5 also shows the six parcels which are part of the entire Helensvale aggregation, but are not the subject of these proceedings: lot 589, a large parcel below the southeast corner of the western aggregation has not been affected by DCP 2; and five parcels (four in the western aggregation, and one in the east) which have already been the subject of compensation claims determined by Nase DCJ.
The Issues
The appellant’s case was advanced through the evidence of a valuer, Mr Wake; Mr Panateros, a town planner; and, the appellant himself. The respondent Council called two valuers – Mr Brett, and Mr Sheehan; a town planner, Mr Gannon; and, the Council engineer, Mr McDougall.
In the “before” case Mr Wake initially valued both the eastern and western aggregations for home sites using a method which assumed all lots were sold individually, or in smaller groups to different purchasers, but on the same date. From a gross valuation figure he deducted selling costs, and a discount which, he said, would be necessary to achieve such a sale, at one time. He contended this methodology was one which had been approved by the High Court in Albany & Ors v Commonwealth of Australia[8]. Under it, he valued Helensvale before DCP 2 at $2,038,000.00[9].
[8] 12 ALR 201
[9] This value included the house on Lot 53, but excluded the five lots the subject of the decision of Nase DCJ
in 1999 – Exhibit 7
During the hearing Mr Wake advanced a valuation using a different approach[10], in which it was assumed the appellant disposed of the property by intermittent sales of lots over a marketing period, and received an income stream during that period, in equal monthly payments. The adoption of a marketing period of 36 months gave a “before” valuation of $2,342,966.00. If 18 months is adopted the figure achieved under this methodology is, Mr Wake said, $2,524,023.00.
[10] Exhibit 24
Mr Sheehan, for the respondent, valued the property on the basis it had a highest and best use, both before and after the new scheme came into effect, as a grazing property and was, therefore, unchanged, and there was no injurious affection. Initially, he valued Helensvale at $1,680,000.00[11] but in the course of the hearing reduced this to $1,670,000.00.
[11] Exhibits 8, & 8A
Mr Brett, called by the respondent Council, excluded the eastern aggregation on the basis it was unsuitable for home sites and its highest and best use was always as a grazing property (and deferred to Mr Sheehan’s valuation of it on that basis), and valued the western aggregation for home sites using a methodology which assumed sale of that entire aggregation, at one time, to a developer, who purchased with the intention of reselling individual lots at a profit[12]. The valuation reached under this method was $670,000.00. Mr Brett adopted a similar methodology in the “after” case – involving, of course, an assumption that notwithstanding DCP 2 the respondent Council would nevertheless consent to homes being built on the allotments in that aggregation – and, after some adjustments, reached a figure of $615,000.00. Hence, the difference was only $55,000.00, before any allowance of compensation previously determined by Nase DCJ in respect of four of the lots in the western aggregation.
[12] Exhibit 9: this valuation included the four lots which had been the subject of the 1999 decision
Mr Wake’s “after” valuation assumed the contrary, and was based on a sale for rural purposes with the highest value being obtained by a method which sold a limited number of separate properties – five in all, three of which were aggregations of a group of lots. The “after” value reached using this method was $1,485,650.00. In the course of the hearing, the appellant signified he accepted Mr Sheehan’s higher figure, of $1,670,000. In any event, the significant difference between Mr Wake’s two ‘before’ valuation figures for the land as rural home sites, and this much lower ‘after’ figure, assessed on the basis the land could only be sold for grazing, comprised the appellant’s large compensation claim.
The primary issues then are firstly, in the “before” case, what was the highest and best use (ie, the most valuable) of the western, and eastern aggregations? If it is assumed the highest and best use of either or both was for rural home sites what, then, was the correct valuation for that purpose, and what is the choice which should be made between Mr Wake’s initial, or alternate approach, and Mr Brett’s methodology? In the “after” case, a primary issue is whether the consent of the Council for development of a large number of rural home sites could reasonably be expected, notwithstanding the terms of the new planning scheme. If it is assumed consent would have been forthcoming then it is necessary, again, to choose between the different methods used, and different valuations reached, by Mr Wake, and Mr Brett.
The previous claims in respect of ‘Helensvale’
Before the respondents new town planning scheme and, in particular, DCP 2 came into effect Mr. Bennett applied to the respondent for permission to further subdivide 39 parcels, largely in the western aggregation, and create 68 low density residential allotments. At the time the land was subject to the respondent’s DCP 1, gazetted in May 1987, and zoned Rural A. DCP 2 had, however, been drafted and its terms, and imminent introduction, were known. The respondent’s deemed refusal of this combined application to rezone, and subdivide, was the subject of an appeal determined by Quirk DCJ in 1997.[13] The appeal was refused on the grounds, inter alia, that a need for the proposed development had not been established and, although DCP 2 did not then govern the application, significant weight should be given to its expressed desire to keep conventional rural, and rural residential uses separated; and, because other areas in the shire were more suitable, in a physical sense, for development of the kind the appellant proposed and, also significantly, better served by roads to an appropriate standard with more direct access to major traffic carrying routes. Quirk DCJ held that the road system giving access to the land the subject of the appeal was in relatively poor condition and in some cases tortuous in configuration and, although there was evidence it could be improved, that need “reinforced the good planning sense of identifying other areas as preferred for such development”[14].
[13]Bennett v. Fitzroy Shire Council [1998] QPELR 1
[14] ibid, headnote.
In the case heard by Nase DCJ in 1999, the approach of the parties was quite different from that adopted before me: in particular, as His Honour noted at pp. 2-3 of the judgment[15]:
... it was common ground that, provided any issues concerning access are satisfactorily resolved, the highest and best use of the land in the western aggregation is as rural residential allotments. Similarly, with the exception of one allotment over which the parties are in dispute it is common ground that the highest and best use of the land comprising the eastern section is as a grazing property.
[15] Exhibit 2, pp 5-6.
Ultimately, Nase DCJ accepted that the one parcel in the eastern aggregation included in the application before him had a highest and best use, both before and after DCP 2 came into effect, as a grazing property and did not, therefore, suffer any diminution.
The issue his Honour had to consider touching the four parcels in the western aggregation was one which also arose before me: namely, whether DCP 2 might have the effect, on the appellant, of a loss of the right to construct a dwelling on each allotment, in favour of a mere right to seek council consent for that construction. Council took the position, as it did before me in its alternative argument, that there was no actual impediment to the development of parcels in the western aggregation as rural residential allotments under DCP 2. Ultimately, Nase DCJ was persuaded that some uncertainty had arisen under the new planning scheme, giving rise to the possibility the Council might withhold town planning consent for the construction of a dwelling, so a “prudent and reasonable developer” would necessarily make allowance for that possibility, to which some loss of value should be attached. He preferred the approach of Mr. Sheehan (who gave evidence for the respondent before me), but also held that the valuer had underestimated the diminution which he assessed, in respect of each of the four parcels, at $1,750.
Relevant Legislation
LGPEA
At the time DCP 2 came into effect the legislation governing rights to compensation occurred under the Local Government (Planning and Environment) Act 1990 (“LGPEA”). Section 3.5(1) provided:
Where a person –
(a)has an interest in premises within a planning scheme area and the interest is injuriously affected –
(i)by the coming into force of any provision contained in a planning scheme; or
(ii)by any prohibition or restriction imposed by the planning scheme; or
(b)has incurred expenditure pursuant to a town planning certificate given to that person by a local government pursuant to section 3.3 which expenditure is rendered abortive (in whole or in part) by reason of any error, omission or inaccuracy in the certificate;
the person is, subject to compliance with this section, entitled to obtain from the local government compensation in respect of the injurious affection or expenditure and may claim that compensation in accordance with this section.
The manner of assessing compensation is prescribed by s. 3.5(8)(a):
(8)Subject to subsections (2A) and (9), the following provisions are to have effect in assessing compensation in respect of a claim made under subsection (1)(a) –
(a)the amount of compensation is (subject to paragraphs (B), (c) and (d)) to be an amount equal to the difference between the market value of the interest immediately after the time of the coming into operation of the provision of the planning scheme by virtue of the operation whereof the claim for compensation arose and what would have been the market value of that interest if the provision had not come into operation;
The phrase “injuriously affected” is not defined in the legislation but the two sub-sections, read together, indicate it must mean “reduced in value”[16]. In an appeal of the present kind, then, the first question is whether the change in the planning scheme has reduced the value of the appellant’s land. If that question is answered in the affirmative then, as the parties to this appeal accepted, the court must then determine the value of the “highest and best use” of the land both before, and after, the change. A diminution between the former, and the latter figure will constitute injurious affection if it can be attributed to the alteration in the planning scheme[17]. In deciding what was, and after the change in the planning scheme is, the highest and best use of the land the court is not limited, in either instance, to the actual use; and, subject to proof, may assess market value by reference to potential use, even if that use was subject to planning approval[18].
[16]TM Burke v Noosa Shire Council [1997] 97 LGERA 69, at 70
[18] Brown “Land Acquisition” 4th Edition (1996) para 3.19; Boland v Yates Property Corp Pty Ltd
(1999) 74 ALJR 209, at 265-266
The Planning Scheme
Under the respondent’s 1982 Planning Scheme the appellant’s land was zoned Rural A and construction of a dwelling house was an “as of right” use. The 1996 Planning Scheme provided, in s 2.4.3 that the Alton Downs semi rural area was subject to a separate preferred dominant land use under DCP No. 2, Alton Downs. Sections 10.2.1 and 10.3.3 of that DCP provide:
10.2.1 Planning Goal 1
The preservation and enhancement of the semi-rural character and amenity of the development control area.
Planning Objectives10.2.1.1To limit the further fragmentation of property ownership by adoption of one or more of the following measures:
...
(b)restrictions on subdivision and development rights
...
10.3.3 Intent of Precincts
10.3.3.1 Precinct 1Precinct 1 will establish a semi-rural character accommodating people who wish to live on large allotments of approximately 10 hectares.
Limited development and/or subdivision is envisaged. For the purposes of orderly development priority settlement areas have been identified.
...
10.3.3.2Precinct 2
Precinct 2 will retain a rural character with an emphasis on retention of: large land parcels; vegetation along ridgelines and watercourses, low population densities and basic services
Subdivision and/or development for purposes not associated with rural development will not be encouraged.
Section 10.3.4, Schedule 5, specifies that a detached house now requires Council consent. The tenor of the scheme and its use, in particular, of phrases like “subdivision and/or development for purposes not associated with rural development will not be encouraged” suggests that the use of the appellant’s parcels for dwelling houses is now discouraged, and consents are unlikely. That conclusion is only strengthened when the objectives for Precinct 2 are contrasted with those for Precinct 1 where, plainly, those who wish to establish a home of the ilk of those formerly permitted under the old Rural A zoning are still encouraged.
The Subsequent Approvals
It transpired, however, that since the introduction of DCP 2 the Council had approved a number of applications for dwelling houses and, indeed, had done so in the majority of cases; and it became necessary to determine what weight and relevance attached to the fact of those approvals, if any.
Not surprisingly, the basic principle in this jurisdiction is that circumstances arising after the change in the planning legislation are usually ignored[19]; but, they may be taken into account if they throw light upon the circumstances existing at the relevant time, or provide some evidence of what was foreseeable then – or “confirm a foresight”[20]. These tests were not, in my view, extended by the decision in CMB No. 1 Pty Ltd v Cairns City Council (1999) 1 Qd R 1.
[19]Spencer v The Commonwealth (1907) 5 CLR 418, at 440
[20]Minister for Army v Parbury Henty & Co (1945) 70 CLR 459 at 514; Housing Commission of NSW
v Falconer (1981) 1 NSWLR 547, per Glass JA at 563, and Hope JA at 558
The central provisions of DCP 2 show on their face a clear implication that applications for consent to build dwelling houses on land subject to it are unlikely to be granted. At first blush, then, the respondent’s subsequent granting of approvals is surprising, and seemingly inconsistent with the language of DCP 2 itself. The evidence showed applications for consent to erect dwelling houses on land (including the applicant’s) affected by the changes wrought by DCP 2 have been approved in all but two instances[21], and in the case of those two the refusal arose as a consequence of significant problems with access, and flooding.
[21] Exhibit 19
Mr Gannon, the respondent’s town planning expert, gave evidence that these approvals occurred as a consequence of a policy decision, on the respondent’s part, that DCP 2 should be construed in a way which meant there was no impediment to erection of a dwelling house on the subject land, so long as clear means of access existed, and the land was not badly flood affected.
In the course of Mr Gannon’s evidence, three reasons emerged for those approvals: first, Council “did not agree with the view that a dwelling house on the Helensvale lots would lead to a change in the rural character of the Alton Downs Precinct 2 areas”[22]; secondly, “Council placed weight on the expectation of named owners to have a house on a created block”[23]; and, “Council considers that the dwelling house will not encourage development for purposes not associated with rural development”[24]. The first reason is not consistent with the language of the DCP. The second is irrelevant; and, the third involves a clear misreading of the DCP, which raises the question whether a development application for a dwelling house itself constitutes “development for purposes not associated with rural development”, not whether the dwelling house would encourage further development of that kind.
[22] Exhibit 10, p12
[23] Exhibit 2, p150
[24] Exhibit 2, p121
The application of the tests postulated in CMB No. 1 (and Thorpe v Brisbane City Council (1996) Qd R 37) here points strongly, I find, to the conclusion that as at the relevant date it was not reasonably foreseeable that the Council would grant consent for dwellings on any of the lots either on the appellant’s property as a whole, or the western aggregation only. In reaching this conclusion I take comfort from the views of Nase DCJ (before whom the respondent took a similar position) that, at the least, some “uncertainty” existed as to whether or not consent would be granted.
Applications for Compensation for Injurious Affection: Some General Matters
It is well established that, in the case of compensation, doubts are generally resolved in favour of a more liberal estimation[25]. Further, when a statute governs rights to compensation and the manner of calculation, it should be construed to its “full effect”. As Gaudron J said in Marshall v DOT[26]:
Although the rule that legislative provisions are to be construed according to their natural and ordinary meaning is a rule of general application, it is particularly important that it be given its full effect when, to do otherwise, would limit or impair individual rights, particularly property rights. The right to compensation for injurious affection following upon the resumption of land is an important right of that kind and statutory provisions conferring such a right should be construed with all the generality that their words permit. Certainly, such provisions should not be construed on the basis that the right to compensation is subject to limitations or qualifications which are not found in the terms of the statute.
[25]Boland v Yates Property Corp Pty Ltd (1999) 74 ALJR 209, at 279-80; Brown “Land Acquisition”
4th ed. para 3.20
[26]2001 75 ALJR 1218, at 1229
Cases in this jurisdiction often involve compulsory acquisition, through which the former owner of the land is dispossessed – in contrast with injurious affection, in which the owner retains ownership but the land may have become less valuable. The authorities show that some care must be taken if it is sought, in a case of the latter kind, to reason from the law of the former[27]. In particular, Mr Wake’s initial method of valuation, which was based upon an approach accepted in a case determined by the High Court (Jacobs J)[28] involving the sale of multiple lots on one day, allowing a discount in order to attract buyers for all lots at one time is, as Mr Gore QC for the appellant conceded, understandable for a compulsory acquisition case but is not necessarily dictated by the circumstances for one involving injurious affection. Otherwise, the cases show there is no hard and fast rule as to the proper approach to be taken.
[27]Bingham v Cumberland County Council (1954) 20 LGR (NSW) 1, at 26; CMB No. 1 Pty Ltd v Cairns
City Council (1991) 1 Qd R 1, at 8-9
[28]Albany & Ors v Commonwealth of Australia 12 ALR 210, at 218-220
The “Before” Case
Mr Wake’s initial method for valuation involved an approach – sale, by the appellant, of all of the lots on one day individually, or in smaller groups, less selling costs and a discount necessary to achieve that sale – which was not realistic, or feasible in the prevailing marketplace. Exhibits 14 and 15 showed, and I am satisfied, that there was only a very limited “take-up” of land in the Parishes around Helensvale at the relevant date. Mr Gannon’s Table 4[29] showed, for example, that there had been only 15 building approvals in the Alton Downs parishes in 1995, and 13 in 1996. As he said, demand has been very low. The availability of many other comparable parcels in the Rockhampton area generally, suitable for those desirous of building a home on a small ‘rural’ parcel, was confirmed during a day long inspection.
[29]Exhibit 10, p14
Relevantly, it was also apparent that a number of allotments at Helensvale have impediments to development as house properties which would make them less than readily attractive to purchasers intending, as the appellant’s case surmises, to apply for consent to build dwellings on them. Eight allotments along Lion Creek Road are flood-affected. Six, or seven have no legal access. Eleven have no practical access. Some would necessarily involve road closures and would be of an unusual shape – eg, 20 metres, by 400 metres (and some are up to 1200 metres long). Some could also be encumbered with access easements to land-locked blocks; or, have uncertain access[30]. (The blocks in these categories comprise in excess of 55 per cent of Mr Wake’s gross realisation.)
[30]LGPEA s 5.12
In light of the number of other properties of a similar kind available around Rockhampton, and the low level of interest apparent from the evidence mentioned earlier I was satisfied that, as Mr Brett said, any attempt to sell 44 allotments on one day would simply flood the market.
Mr Wake’s second method[31], involving a calculation of the present day (discounted) value of various income streams calculated on the assumption sales were effected within a range of marketing periods between 18, and 36 months, was advanced on the basis that the appellant’s land constituted, as at 13 December 1996, a form of “stock” which could be valued in the same way as trading stock is valued at the end of a trading year. Reliance was placed upon cases concerning the actual stock of businesses[32]. It was said this method accords with a natural reading of LGPEA, s 3.5(8)(a) and the phrase “market value” in that section can readily and reasonably be ascribed to the appellant’s “stock” of subdivided lots on the relevant date.
[31]Described in Exhibit 24
[32]BSC Footwear Ltd v Ridgway (Inspector of Taxes) (1972) AC 544; Australasian Jam Co Pty Ltd v FCT
(1953) 88 CLR 23
The term “market value” is not defined in the LGPEA. The classic test for determining it was that set out in Spencer v The Commonwealth[33]:
In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, ie, whether there was in fact on that day a willing buyer, but by inquiring ‘what would a man, desiring to buy the land have to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell’
...
The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to then current opinion of land value, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.
[33] Supra per Griffiths CJ, at 441
This approach was re-affirmed in Commonwealth v Arklay (1952) 87 CLR 159 at 169-170:
Shortly stated what is required is ‘an estimate of the price which would have been agreed upon in a voluntary bargain between a vendor and purchaser each willing to trade but neither of whom were so anxious to do so that he would overlook any ordinary business considerations”
...
It is simply an analysis of what in all the relevant circumstances would be the price that a willing purchaser would have to pay a vendor willing but not anxious to sell in order to obtain the land. Where land has no special suitability for some business or activity carried on by the owner and has no added potential value if put to some better use, the value on a free market is usually its market value.
The process by which this is achieved has been explained in a number of jurisdictions in cases involving very similar legislation. In Bingham v Cumberland County Council (1954) 20 LGR (NSW) 1, Sugerman J said the effect of the provision was that:
Two valuations of the ‘market value’ of the estate or interest in question must be made, and the prima facie measure of compensation is to be obtained by subtracting the amount of the first valuation from the amount of the second valuation. Both valuations are made as at the same time, which, confining the matter to what is here relevant, is the first point of time at which the provision in question became operative where the restriction in question was imposed. The first valuation has regard to the actual circumstances, namely that the prescribed scheme was in operation and therefore the provisional restriction out of which the claim for compensation arose was in operation or was effective. This valuation must, therefore, have due regard to the effect of these matters upon ‘market value’. The second valuation is to be based on a state of affairs partly actual and partly hypothetical. The hypothesis required is that the provision or the restriction out of which the claim for compensation arose had not come into operation and had not been imposed.
Similar conclusions were reached by Waddell J in Jones v Gosford Shire Council (1975) 33 LGRA 368, at 372. In Albert House Limited v Brisbane City Council (No. 2) (1968) 21 LGRA 94 it is said, at 96:
Section 16 of the Act sets out that compensation shall be a sum equal to the difference between the market value immediately after the time of coming into operation of the provision of the plan by virtue of the operation whereof the claim for compensation arose, and what would have been the market value if such provision had not come into operation. This calls for two values, both immediately after the coming into operation of the provision, but the second of the values is to be ascertained as if the land were unaffected by the relevant provisions of the Town Plan.
The exercise carried out by Mr Wake for his second, alternative valuation is not in accord with the process described in these cases. It does not calculate a valuation which reveals the price a willing purchaser would pay a vendor willing but not anxious to sell at the relevant date but, rather, the present value of the cash flow the appellant would derive by entering into the process of selling the parcels of land over an extended period of time; and includes an element of the profit he would make in the course of that enterprise. A comparison of the present values expressed in Exhibit 24, and what is described as the “rounded value” as an aggravation before 13 December 1996 in Mr Wake’s first valuation (Exhibit 7, p 15) illustrates the point. Moreover, the method is one which does not recognise the obvious distinction between land, and chattels. It also ignores the fact the Court has power to award interest on compensation with the obvious intent of ensuring any delay in assessment is not prejudicial to the landowner[34]. It is not, for these reasons, an appropriate or acceptable approach to valuation in this case.
[34]Lubrano v Brisbane City Council (1995) QPLR 81, at 86; Sam Industries Pty Ltd v Mulgrave Shire
Council (1995) QPLR 161, at 166; and, Chapman v Logan City Council (1996) QPELR 330, at 335
Mr Brett’s different method also raises, however, a preliminary question: whether or not the lots in the eastern aggregation are, in truth, unsuitable and unsaleable as rural house sites[35]. Construction of a home site in that aggregation would, I accept, involve building a 2.8 metre pad on the land to elevate the house site above the Q100 flood level – but, Mr Brett said, development in this way would nevertheless leave access problems and difficulties with such matters as the operation of septic systems. In his view, the value of the lots in the eastern aggregation as home sites was no greater than the value of that whole aggregation for grazing purposes[36]. While this stance was not entirely consistent with his approach in respect of a number of parcels in the western aggregation, along Lion Mountain Road, which were flood prone but which he nevertheless appeared to accept were capable of development for house sites[37] I was persuaded, notwithstanding Mr Wake’s contrary view, that the difficulties facing a person wishing to place a home on a block on the eastern aggregation were sufficiently high to make development of that kind improbable. During a long inspection I saw some homes in other places built up on these high pads, but the ready availability of ‘rural blocks’ without this drawback, the manifest ‘wetness’ of the eastern aggregation, and its obvious qualities for use for cattle point strongly to the correctness of Mr Brett’s conclusion.
[35]Exhibit 9, pp 12, 18
[36]T p172, ll 1-18
[37]Exhibit 9, p10
Mr Sheehan, of course, valued both aggregations on the basis the highest and best use for each was as a grazing property. (Although his ultimate valuation on this basis at $1,680,000.00 exceeded Mr Wake’s valuation, on the same basis, of $1,485,000.00, the difference was largely explained by the fact Mr Wake had not taken into account the five lots the subject of the proceedings before Nase DCJ and, when he did so, reached a figure of over $1.6m. In the event, there was no major dispute about the values on this basis[38]).
[38]T 8, ll 40-53
Notwithstanding the inconsistency in Mr Brett’s approach to flooding on the eastern and western sections I was also persuaded, for a number of reasons, that his primary valuation figures for the individual lots in the western aggregation were more realistic than those of Mr Wake. The evidence of Mr Gannon, and in Exhibits 14 and 15, showed a very limited market for rural home site properties of this kind. Population in the areas of Rockhampton, and Gracemere is static. Some parcels in the western aggregation are likely to be affected by flooding from Lions Creek. Purchasers of the lots there would have been obliged to connect power, involving substantial cost. Those lots with easement access would have been obliged to pay for their annual maintenance, and initial construction costs. The lots constituted by private corridors, particularly the longer ones would have been inherently unattractive to purchasers by reason of their odd shape, and might potentially have had a number of vehicles driving across them on a daily basis, so any house would have to be placed at one end and involve a driveway of, in some instances, up to 1200 metres. In Mr Wake’s initial valuation a value of $392,000.00 was ascribed to the eight, flood-affected allotments along Lion Creek Road. The large number of lots having no legal, or practical access attract, in his estimation, a total valuation of almost $1.1m.
The individual lot values of Mr Brett, and Mr Wake are set out in Exhibit 27 and suggest, as the respondent submitted and I accept, that Mr Wake has attached values on an “as is where is” basis which, in light of the significant constraints many of the lots carry, over-values them. That submission was strengthened by the impressions gained on inspection of both ‘Helensvale’, and other comparable parcels, and is supported by the clear evidence of low demand. I am satisfied that Mr Wake’s valuations for each lot in the western aggregation are, for these reasons, unrealistically high and Mr Brett’s reflect a basis, and show figures, (explained by reference to comparable, local sales set out in his valuation) which are more soundly rooted in the existing marketplace, at the material time, and should be preferred.
I am also satisfied that Mr Brett’s overall method of valuation is satisfactory, and to be preferred to either of Mr Wake’s. It is consistent with that adopted in cases involving a number of lots: in Canberra Freeholds Limited v The Queanbeyan Municipal Council (1973) 27 LGERA 134, Else Mitchell J said, at 137:
The approach made by the defendant’s valuers was in conformity with the accepted authority of judges of this Court over many years that a profit and risk factor should not be excluded simply because the resumed land had been previously subdivided: Closer Settlement Limited v. The Minister (2); Beset v Housing Commission of New South Wales (3) Nelson v Housing Commission of New South Wales (4). These decisions are supported by the judgment of the High Court of Australia in Turner v The Minister for Public Instruction (supra) and are not contrary to anything said by the Privy Council in Maori Trustee v Ministry for Works (5).
As I see the position, it is a question of fact for determination by the tribunal assessing compensation in light of the circumstances of each resumption, whether one should assume the immediate sale of the entirety of the land resumed to one purchaser or the sale of individual subdivided lots to several purchasers; and according to whichever assumptions made it will usually be necessary to consider also how far the market price would be affected and to what extent any delay in the sale of all the sub-divided parcels might ensure.
…
In a case involving compensation for 26 allotments resumed for the Wivenhoe Dam[39] the President of the Land Court said, at p. 85:
The dispute springs directly from the most probable way in which the lots at resumption date would be marketed. The considerations involved are whether the subject lots would commercially best be disposed of to a highly motivated land developer/dealer with all modern techniques (branch offices, video films, professional salesmen) available for a quick and certain sale of all lots ‘in somewhere around’ three months, whether the subdivisions would be best sold as an ‘in one line’ parcel to a person who would hold them against future disposal or whether sales of one or more lots to several purchasers would be the way to go. The questions of bulk allowance and risk/profit factor were also argued In a sense these considerations involve the highest and best use of the lots at resumption date.
[39] (1989) 12 QLCR 82
And, at page 87:
When considering the question of marketing the resumed lots, it is fundamental to consider the nature of the produce to be marketed. It is agreed that the produce comprises 26 lots of open and exposed country somewhat isolatedly situated 13 kilometres from Esk in a township which prior to the scheme was almost defunct and lacked any substantial infrastructure. The individual lots contained for the most part 910 square metres each. The most likely purchaser of parcels in this general locality would be persons seeking weekend retreats.
...
The evidence in my view is against an owner himself marketing the lots in a reasonable period of time. There is no evidence of any private person successfully engaging in such activity.
...
The most certain method of disposal offering quickest sales and the best value according to Mr Baker’s calculations is disposal in bulk to a highly motivated organisation. On the balance of probabilities I accept this as the most cogent evidence before me as to the most likely method of disposal. Accordingly I propose to adopt this method and Mr Baker’s calculations.
Mr Brett used this method. Although the Wivenhoe Dam case was one involving compulsory acquisition, the circumstances are similar to those arising here, and it seems perfectly apposite. Mr Brett assumed commission at 5 per cent (and “incentive” commission) for agents to give priority to the sale; an outlay of $500 per lot for advertising; and $1,000 per lot for “presentation” involving constructions of such things as gates, front fences, and some access work. He assumed a “profit and risk” factor at 50 per cent based on actual multiple lot sales mentioned in his report. He has discussed this method with developers experienced in this type of property[40]. Attachment 6 of his report is persuasive that his allocated lot prices are consistent with sales.
[40]Exhibit 9, p15; T p180, ll 10-50
Mr Brett’s valuation for the western aggregation, which I have accepted for the reasons set out above, was $670,000.00. He deferred to Mr Sheehan’s valuation for the eastern aggregation (for grazing purposes) of $810,000.00; and, again for the reasons set out, I accept that valuation in preference to Mr Wake’s contention that the eastern portion had a higher value for rural home sites. The total is, of course, less than Mr Sheehan’s ‘before’ valuation of the entire property, for grazing purposes, of $1,670,000 which becomes, then, the highest and best use, and the highest valuation in that case.
The “After” Case
For the reasons set out earlier at paras [26] - [31] I was not persuaded by the respondent’s submission that, notwithstanding the introduction of the new scheme and DCP 2, the appellant or any other owner of one of the subject lots could reasonably anticipate Council’s consent for permission to develop a rural home site. Even if that conclusion is ignored, however, the other findings I have made still apply: namely, that the eastern aggregation was at all material times unsuited for rural home sites and its highest and best use, and value, remained one associated with grazing and rural activity; and, that Mr Brett’s valuation figures for the lots in the western aggregation are to be preferred to those of Mr Wake. In the event, Mr Brett’s value in the ‘after’ case – even assuming consent for the building of dwellings – was a little, albeit only slightly, less than his ‘before’ estimate; and, pertinently, less than a valuation based on use for rural activity. It follows that the highest and best use after the change in the planning scheme was for grazing purposes and Mr Sheehan’s valuation (which approximates that of Mr Wake) is the highest and, of course, unchanged.
Conclusion
There has been no diminution in the value of the appellant’s land which has not, then, been injuriously affected and no compensation should be awarded.
- - - - -
Council (1995) QPLR 199, at 201; TM Burke Estates Pty Ltd v Noosa Shire Council (1997) 2 Qd R 448
at 449; and see Fogg “Land Development Law in Queensland” (1987) pp 711-712, 718-719
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