Laerkesen v Gold Coast City Council
[1997] QLC 46
•11 April 1997
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BRISBANE
11 APRIL 1997
Re: A94-78
Determination of Compensation -
Resumption by the Council of the Shire of Albert
for Rubbish Depot Purposes -
Acquisition of Land Act 1967
BETWEEN
Povl F. Laerkesen
Claimant
and
Gold Coast City Council
Respondent Constructing Authority
J U D G M E N T
By proclamation published in the Government Gazette on 29 July 1994 the Council of the Shire of Albert as it then was, took land described as Lots 1 and 2 on Plan WD4797, containing a total area of 3.6436 ha, in the Parish of Nerang and contained in Certificates of Title Volume 5961 Folios 77 and 78.
On 22 July 1994 the Council had taken a number of other parcels in the locality also for rubbish depot purposes. One of those parcels was owned by E.B. Arkinstall and R.D. Spies and adjoined the subject land to the south-west.
The claimant in this matter and E.B. Arkinstall and R.D. Spies, through their respective solicitors, had instructed Mr J.E. Gallagher QC, assisted by Mr T.N. Trotter, Barrister, and engaged Mr K.P. Walsh, Valuer; Mr C.L. Buckley, Town Planner and Mr D.W. Knobel, Engineer, to provide expert advice relative to their professional disciplines. At the request of the claimants, the two matters were called on for hearing at the one time. Part of the respective cases was that the potential highest and best use of both properties was capable of being achieved through joint rezoning and development. Much of the overall evidence was common to both properties and as a matter of practicality that common evidence and the transcript of proceedings forms part of the record in each matter. As many of the facts, issues and findings are common to both matters and contained in the Arkinstall judgment which is also delivered today, that judgment should be read as part of this separate determination.
The principal issue in both matters is whether the potential of the land at the date of resumption was for rezoning to permit multi-unit residential development (the claimants’ case) or light industrial development (the respondent’s case).
Mr S.M. Ure, Barrister, appeared for the respondent and expert evidence was provided through Mr T.J. Lacey, Valuer; Mr D.W. Perkins, Town Planner; Mr J.M. Webb, Town Planner and Mr D.R. Davis, Engineer, in both matters.
Leave was sought and granted without objection, for the claim for compensation as served on the respondent to be amended as follows:
“The value of the land taken based upon its highest and best
possible use:
amalgamated as a single parcel and rezoned as Residential - $1,592,000
Disturbance costs being professional fees incurred for the purpose
of the preparation of this claim:
Town Planner’s fees $1,200
Valuer’s fees $10,314
Solicitor’s fees $1,200
Engineer’s fees $1,228 $13,942
Total $1,605.942 ”
The final valuation placed in evidence by the respondent was in the amount of $650,000 before disturbance items.
The subject land is located on the northern side of Southport/Nerang Road and on the western side of Old Coach Road, about 1 km north-east of the business centre of Nerang. Accommodated on the land is a dwelling but there is no dispute that the structure added no value to the land because of the redevelopment potential.
The land is described as an irregularly shaped aggregated parcel of two surveyed lots, rising moderately to steeply up from the western alignment of Southport/Nerang Road to a generally levelled area around the dwelling. The south-eastern corner is low-lying and is approximately 4 metres below the Southport/Nerang Road level, rising gradually up in a north-westerly direction to the levelled area. The south-eastern corner is affected by major downstream drainage from the north. Apart from the homesite area the land carried a fairly dense cover of forest vegetation.
The amended claim was based on a valuation conducted by Mr Walsh. He had accepted that the highest and best use of the land was for rezoning, in combination with the Arkinstall land, then joint marketing/development, as multi-unit residential land. The evidence was that the owners had an historical arrangement and informal agreement to join in any development/marketing proposal. Mr Walsh’s valuation of the combined parcels was based on a development potential for 161 residential units, which he assessed as having, if rezoned, a total value of $3,542,000 ($22,000 per potential unit), but as zoned, $2,980,000, with estimated rezoning costs of $115,000. The “as rezoned” valuation was deferred for one year, being Mr Walsh’s estimate of the period required to effect rezoning, at a discount factor of 15%. His valuation of the subject land, which provided 86 of the 161 potential units was a pro-rata apportionment of the as zoned assessment, ie $1,592,000. That assessment was intended to represent the market value of the land with little risk of residential rezoning. Mr Walsh accepted that if a Planning and Environment Court appeal had been necessary to achieve that residential rezoning then the estimated cost of the appeal was $60,000 and a longer period would be required for the rezoning to become effective through that litigation process.
In this case, Mr Lacey’s valuation of $650,000 was unchallenged if the potential of the land was found to be limited to industrial rezoning. Although he did not agree that any potential existed for residential rezoning, Mr Lacey offered the opinion that as rezoned multi-unit residential land his valuation would have been $1,482,000, after allowing for “abnormal costs” of $408,000. Had there been no risk in obtaining residential rezoning, he would have valued the land as zoned “Future Urban” at $1,400,000 after allowance for the normal delays involved in the rezoning process. In effect he allowed holding costs for a period of six months at an interest rate of 12%.
For the reasons given in the Arkinstall judgment, I have found that there were planning grounds which afforded prospect of success for a residential rezoning refusal in the first instance to be reversed on appeal to the Planning and Environment Court. The opportunity for a rezoning application to cover the combined Arkinstall/Laerkesen lands, was seen as one of the factors which assisted that prospect. It was then found that Mr Walsh’s valuation methodology in assessing the development potential of the combined properties was consistent with the historical informal agreement between the owners and an approach which would meet market expectations.
On the evidence, including that of Mr Lacey, the “as zoned” valuation of the combined lands was adopted as $3,045,000 (or $20,000 per potential residential unit). That amount was deferred for 1½ years to reflect the estimate of time required to successfully litigate the matter in the Planning and Environment Court. A discount factor of 30% per annum was adopted to reflect both the holding costs and the perceived risks in successfully reversing an initial rezoning refusal. On a rounded result equating $12,750 per potential unit site, the apportioned value of the subject land became $1,096,500.
That amount is adopted as the valuation of the land, zoned “Future Urban” at the date of resumption.
Disturbance
Subsequent to the hearing the Court was advised that agreement had been reached between the parties in the total mount of $10,504 in place of the amount which had been claimed for professional fees. The agreed amount is awarded accordingly.
Determination
Compensation is determined as follows:
Loss of land - $1,096,500
Disturbance as agreed $10,504
Total $1,107,004
Interest
The evidence is that Mr Laerkesen remained in occupation of the dwelling (which the parties had agreed added no value to the land) subsequent to the resumption. After some months, Mr Laerkesen was asked by the respondent to pay rental of $200 per week. There was no suggestion that such rental was unreasonable for the accommodation provided. Mr Laerkesen however declined to pay rent. His evidence was (transcript p.191):
“Well, I found it difficult to pay rent for something which I believed was mine. I mean it wasn’t at the time and I got my hackles up I’m afraid, maybe I made a mistake in not paying rent, I don’t know, but I found that one hard to swallow I must confess.”
Mr Ure submitted that as Mr Laerkesen had remained in occupation of the land it was appropriate that what resulted in rent-free occupation should be accepted as a consideration in lieu of the payment of interest.
Mr Gallagher submitted that neither the claimant nor the respondent should “have it both ways”. The claimant was not entitled to remain in occupation rent free, but in a case such as the subject where the compensation payable was not incidental to single-unit residential use, the respondent should not be rewarded by its retention of the unpaid moneys based on compensation for higher and better use.
As the Land Appeal Court said in G & M Core Pty Ltd v. The Commissioner for Railways (1976) 3 QLCR 342 at 349:
“...we believe that any interest ordered to be paid upon the amount of compensation determined by the Court is solely for the purpose of ensuring that the dispossessed owner receives an amount when the compensation is paid equal to that he would have accumulated at that date, if such had been paid to him on the day the land was taken and he had invested it with the caution to be expected of the well-known hypothetical prudent person.”
It would be, in my view, a different matter if rent-free occupation reasonably compensated a claimant for the loss of investment opportunity on the unpaid money. That is clearly not the case here. It seems reasonable that the claimant be paid interest, but deducted from that payment should be an allowance for the undisputed rental value of the land for residential use together with interest on that unpaid rental.
There is no evidence as to the dates of payment by the claimant of the professional fees which have been awarded.
An advance payment of $600,000 was made to the claimant on 30 August 1994. It is ordered that the respondent pay the claimant interest calculated at the rate of 8.75% per annum on the amount of $1,096,500 from the date of resumption up to and including 30 August 1994 then from that date on the amount of $496,500 up to and including the date on which final compensation is paid. From the calculation of interest is to be deducted the amount of $210 per week being my calculation of the unpaid rent together with interest, for each week or part thereof from the date of resumption up to and including the date of payment of final compensation or, if earlier, the date on which occupation ceases or rental payment commences.
RE WENCK
MEMBER OF THE LAND COURT
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