Marshall v Department of Transport
[2004] QLC 9
•27 February 2004
LAND COURT OF QUEENSLAND
CITATION: Marshall v Department of Transport [2004] QLC 0009 PARTIES: Melville Robert Marshall
(Claimant)v. Director-General, Department of Transport
(respondent)FILE NO: A1992/0077 DIVISION: Land Court of Queensland PROCEEDING: Remittal - Determination of compensation payable consequent upon the resumption by the then Commissioner of Main Roads for Road purposes under the provisions of the Acquisition of Land Act 1967 and the Main Roads Act 1920 of an area of 5555 square metres being Lot 3 on Plan 219843, County of Canning, Parish of Mooloolah. DELIVERED ON: 27 February 2004 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mr RP Scott ORDER: * CATCHWORDS: Practice and Procedure - Remittal - By High Court to Land Appeal Court thence to Land Court to determine according to law - Longstanding Edwards principle (as applied to Queensland legislation) overruled in decision on remittal.
Resumption - Injurious affection - Principle of equivalence - Limitation to such - Different from damages award - Not compensation for general or particular financial harm suffered by claimant.
Resumption - Injurious affection - Principle of equivalence - Limitation - Assumption that claimant will act reasonably - Loss on expenditure unreasonably incurred not a consequence of resumption - Injurious affection compensation not merely cost to remedy disability complained of.
Resumption - Injurious affection - Damage (increased flooding) caused to balance land by scheme of resumption - Alleged increased flooding emanated from land not resumed from claimant - Claim allowable if value of balance and reduced.
Resumption - Injurious affection - Permissible matters to consider in assessment - Physical damage, increased cost of use, limitations on use, interference with amenity, reduced attraction to purchasers - All must affect value to be compensable - No global figure as with nuisance.
Valuation - Methods of valuation - Summation or piecemeal method - Valuers required to consider reduction in value of balance land due to injurious affection.
Valuation - Method of valuation - Piecemeal method - Spencer test still applicable - Not confined to where sales evidence available.
Valuation - General principles - Detailed expert evidence available to Court at hearing date - Use such as against assumed market evidence at date of resumption - Court not to speculate where it knows - Approach applies to enhancement and injurious affection.
Resumption - Determination of compensation - Disappointed hopes - Not allowed - Unless such, before nullification by resumption, had present monetary value to prudent investor.
Resumption - General principles - Compensation determination to resolve doubts in claimant's favour - Limits to such rule - Rule not concerned with valuation methodology or principle - But with determination of compensation.
Resumption - Reinstatement - Four categories where allowable by Courts - Claimant here not within categories - No argument by claimant for variation or addition to categories.
Evidence - No property in a witness - Evidence of expert tendered via another witness - Expert not called himself - Opposing side critical - But either side could have called expert to clarify evidence.
Evidence - Rule in Brown & Dunn - Rationale for rule - When necessary to put proposed contradictory approach to opposing witness in cross-examination.
APPEARANCES: Mr R Mack for the claimant
Mr GJ Gibson QC, with him Mr RS Jones for the respondentSOLICITORS: James Conomos for the claimant
Crown Solicitor, Crown Law for the respondent
On 30 September 1985 a Notice of Intention to Resume was issued under the provisions of the Acquisition of Land Act 1967 (the AOL Act) in respect of certain land owned by the claimant adjoining the Bruce Highway at Eudlo Creek south of Nambour. I refer to the claimant's land as the parent parcel, where such a description seems desirable. The parent parcel was in two lots and had a total area of 79.959 ha.
By proclamations published on 1 February 1986, 26 March 1988 and 14 May 1988 a total area of 5,555 m² was taken for "road purposes" from the parent parcel. The relevant date for the assessment of compensation is 1 February 1986.
The claimant sought compensation consequent on the resumption claiming, inter alia, that the value of the balance lands had diminished having been injuriously affected by the respondent's proposed exercise of its statutory powers in the execution of the purpose for which the land was taken. In practical terms the "road purposes" concerned the upgrade of the Bruce Highway to a dual carriageway.
The basis of the injurious affection claim was formally particularised as follows:
"As a direct consequence of the construction of the road on the land resumed by the respondent Authority, the claimant has suffered loss, damage and a diminution in the value of the balance lands in that as at the date of resumption such lands could reasonably have been foreseen to be rendered more susceptible to flooding. The claimant's claim for compensation is calculated by reference to the cost of flood mitigation works already carried out and remaining to be carried out on the balance lands sufficient to return the said lands to the same degree of susceptibility to/immunity from flooding as was the case at the date of resumption for rainfall events in the Eudlo Creek catchment."
The claim under that heading was in the amount of $651,325. The respondent's primary case was that injurious affection compensation should be nil.
Compensation is to be assessed in accordance with s.20(1) of the AOL Act which provides:
"(1) In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also to the damage (if any) caused by either or both of the following, namely -
(a)the severing of the land taken from other land of the claimant;
(b)the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land." (my emphasis)
On 21 April 1986 a claim for compensation was lodged under the AOL Act. The claim was referred to this Court on 7 December 1992.
By its judgment dated 20 February 1998 the Land Court determined compensation under all heads in the amount of $348,446. (Reported as Marshall v Director-General, Department of Transport (1998) 19 QLCR 9). The details of the claim are set out at pp.11-12 of the reported decision. The claim amounted to $1,253,904.24 or, alternatively, $1,143,926.24 under all heads.
The compensation assessed at first instance included no sum in respect of the claim for injurious affection compensation, the Court being of the view that in relation to the construction of s.20(1) of the AOL Act, it was bound by the application of the principle expressed in Edwards v Minister of Transport (1964) 2 QB 134 and numerous decisions of the Land Appeal Court which had also applied that principle. The relevant discussion appears at pp.15-20 of the reported Land Court decision.
The application of Edwards case to the Court's finding of fact that no part of the relevant roadworks was constructed on the resumed land resulted in the conclusion that "... the claim for compensation for injurious affection arising from the flooding of the claimant's land caused, according to him, by the construction of the new northbound carriageway is that the claim cannot be entertained at law" (at p.25).
In the circumstances the Land Court refrained from delivering a decision on the question of the extent to which the balance lands might otherwise have been injuriously affected.
The question of the correct interpretation of s.20(1) of the AOL Act was taken on appeal to the Land Appeal Court, the Court of Appeal and, ultimately, the High Court of Australia.
The High Court held that on the correct interpretation of s.20(1) compensation for the taking of land is to be assessed having regard not only to the value of the land taken, but also to the damage caused by the exercise of any statutory powers by the constructing authority that injuriously affects the balance land, whether that statutory power is exercised on the relevant resumed land or on other land and whether the damage is physical or not. (See the joint judgments of Gleeson CJ, Gummow, Kirby and Callinan JJ at paras.[20], [33] and [34]; per Gaudron J at paras.[38] and [39] and per McHugh J at paras.[44], [46] and [48]. (Marshall v Director-General, Department of Transport [2001] HCA 37 (21 June 2001) and [2000-01] 205 CLR 603).
Relevantly, the High Court ordered that the further consideration of the assessment of the amount of compensation for injurious affection payable to the claimant be remitted to the Land Appeal Court "to be dealt with in accordance with law" (at para.[35]).
The Land Appeal Court subsequently made orders concerning the further conduct of the matter, those orders relevantly included:
"(3)The appeal to the extent that it is based on ground 4A of the amended Notice of Appeal against the decision of Mr Scott made on 20 February 1998 be allowed by consent of the parties;
(4) The issue of the determination of compensation for damage due to injurious affection be remitted to Mr Scott to be heard and decided with such further evidence as Mr Scott allows;"
The ground of appeal referred to in the orders of the Land Appeal Court was:
"4.THAT the decision of the Land Court whereby it determined against the claimant the claim in issue 4(c) for damages due to the increased susceptibility to flooding of the claimant's balance lands caused by the taking and use of the resumed land by the respondent injuriously affecting the said balance lands.
(a)was wrong in and contrary to law in that the Land Court erred in concluding (as it did) that the damage complained of by the claimant was not caused by the exercise by the respondent constructing authority of any of its statutory powers for the purposes for which the resumed land was compulsorily acquired; and"
It is therefore the relevant orders of the Land Appeal Court and the content of this ground of appeal that enliven and circumscribe the jurisdiction of this Court on this remittal. The parties and the Court are otherwise bound by the findings in the original Land Court judgment of 20 February 1998.
The Injurious Affection Issue
The reported decision of the Land Court at p.12 provides the following description of the purpose of the resumption:
"The resumption of Mr Marshall's land was associated with a project the respondent had planned for the duplication of a large part of the Bruce Highway. Prior to the duplication project being undertaken, the highway where it passed the subject land comprised two lanes only and, following duplication, that carriageway became the southbound lanes. The new northbound lanes were constructed to the west and it was this new construction which gave rise to the resumption."
The original highway had been constructed in 1962.
Further relevant details of the construction are provided in a report entitled "Bruce Highway Crossing - Eudlo Creek Hydraulic Analysis - Final Report) prepared by WBM Oceanics Australia and released in July 1999 (the WBM 1999 Report):
"The upgrading involved the removal of the two banks of culverts in the anabranch and the addition of one span on the southern end and two spans on the northern end of the existing bridge to provide a similar total waterway area after the removal of the culverts. This bridge was duplicated on the new northbound carriageway. The new bridges were designed to provide a 1 in 50 year ARI flood immunity. The existing road was also raised by up to 0.3 m in some sections, although the bridge deck and abutments remained relatively unchanged in height. The northbound carriageway is higher than the southbound route primarily due to a greater crossfall."
Thomas Kinivan, registered valuer, who was called by the claimant at both the original and the remittal hearings said in his original report:
"... because the new road has been constructed on a raised embankment with two relatively small concrete pipes replacing the large culverts, rain water runoff now backs up and floods the balance land ...."
It is that claimed flooding of the balance land, which is said to be the result of the exercise of statutory power of the respondent in carrying out the project described briefly above, that diminishes the value of the balance or retained land in Mr Kinivan's opinion.
The High Court, having decided that the compensation payable to a dispossessed owner of land pursuant to s.20(1) of the AOL Act is not restricted to compensation for the impact of work done on the actual land taken, the questions for determination in the remittal hearing are whether the respondent's exercise of its statutory powers, described broadly above in paras.[18] and [20] (whether or not those powers were exercised on land resumed from the claimant) injuriously affected the balance land retained by the claimant and, if so, the extent (if any) to which the value of that land has been affected. Those questions may be resolved into the following core issues or questions with which this remittal is concerned:
(a)First, whether the respondent's exercise of its statutory powers in relation to the construction of the new northbound carriageway, and associated works caused the claimant's balance land to be more susceptible to flooding than it would have been had the respondent not exercised its statutory powers;
(b)Second, if so, whether the exercise of those statutory powers has caused the value of the claimant's balance land to be reduced; and
(c)Third, if so, by what amount has the value of the claimant's balance land been so reduced?
At this stage I can summarise the evidence and the submissions of the parties with respect to the core issues by saying that the claimant's position is that:
·The respondent's exercise of its statutory powers did cause the claimant's balance land to be more susceptible to flooding than it would otherwise have been.
·The value of the claimant's balance land has been reduced because of its increased susceptibility to flooding.
·The value of the claimant's land has been reduced by an amount equal to the cost of "... earth, road and bridge works required to maintain access for quarrying and tourist operations", that amount being in the sum of $686,274.
I note in passing that the value reduction referred to in para.[24] is different from that mentioned in para.[5]. However, that is not a matter of jurisdictional concern as my duty is to determine compensation notwithstanding the position adopted by the claimant (Melwood Units Pty Ltd v Commissioner of Main Roads [1978] 52 ALJR 593; (1978) 5 QLCR 145)
The respondent's position on the core issues is:
·The respondent's exercise of its statutory powers has had some incremental impact on peak flood levels on the claimant's balance land.
·The extent of the increase in peak flood levels on the claimant's balance land in consequence of the exercise of the respondent's statutory powers is such as to be of little practical consequence and, accordingly, has no material affect on the value of that land.
·Alternatively, if it is concluded that the value of the claimant's balance land has been diminished by an amount equal to the cost of works required to be undertaken on that land to achieve the same degree of flood immunity as it possessed as at the date of resumption, that amount is to be quantified in the sum of $59,829. If the pre-resumption level of flood immunity of the claimant's land were to be assessed at Q20 (as opposed to the Q5 on which the assessment referred to in the preceding sentence is based), that amount increases to $210,767. However, for reasons discussed in detail below the respondent asserts that there are cogent reasons for significantly reducing, if not eliminating entirely these assessments of compensation.
Witnesses
The following witnesses were called by the claimant:
·Melville Robert Marshall - the claimant
·Maxwell Francis Winders - a civil engineer whose specialities include hydrology and hydraulics.
·Ian Pemberton King, Director of Resource Modelling Associates and Emeritus Professor of Civil Engineering, University of California, Davis. Whilst Professor King's doctorate is in structural engineering, he subsequently specialised in water resources work, particularly in computer modelling.
·Steven Golding, Director-General, Department of Main Roads (MRD).
·Thomas Kinivan, registered valuer.
·David Neil Baker, licensed surveyor.
The following witnesses were called by the respondent.
·Christopher Andrew Russell - a civil engineer specialising in hydrology and hydraulics.
·William James Syme - a civil engineer specialising in hydrology and hydraulics.
·Charles George Reed, a civil engineer.
·Stuart Henry Bettington - a civil engineer specialising in hydraulics and associated topics.
·Colin James Apelt, Emeritus Professor and honorary research consultant in computerised hydraulics and fluid mechanics at the University of Queensland.
·David Charles Patterson - a civil engineer with expertise in computational hydraulics.
·Maurice Francis McAnany - a civil engineer with experience in subdivisional design and heavy equipment works.
·Ross Noel Ullman, consultant to the Department of Main Roads as a liaison officer. He holds a civil engineering degree.
·Michael Joseph Slater, registered valuer.
Both parties called Robert Garth Nielsen, civil engineer. My approach to the issue of the determination of compensation is such that not all of these witnesses are referred to below.
The Land and Eudlo Creek
I take the following quotation from the report of the Land Court decision at p.13:
"The parent parcel of land is within the flood plain of Eudlo Creek and has been the subject of extensive extraction of sand and associated materials since its purchase by Mr Marshall in 1974. The result is that there are now two large main lakes formed on the land which is zoned 'Extractive Industry' under the prevailing Town Plan. The first lake which one encounters just inside the entrance to the land was largely formed at the time of resumption. I will call this the 'main lake'. A second lake has since been formed towards the back of the property and, given its use on occasions for water-skiing purposes, it was referred to as the 'ski lake' during the hearing. Mr Marshall and his wife live on the land in a house constructed since the acquisition though utilised a caravan on the land prior to that."
These lakes are bounded by levees or bunds with those along Eudlo Creek and parallel to the highway being of particular significance. Access roads are provided along the top of the bunds. Extraction works have continued following the resumption, such that the lakes have been further enlarged or deepened. Since 1992 further rudimentary levee banks have been constructed, however there was little change in the levees between the date of resumption and 1992. Certain areas of the land were filled for such uses as pads to accommodate plant and equipment and for other uses associated with the extraction activities on the land and with habitation.
The resumed land comprises a strip located along the eastern boundary of the parent parcel where it borders the Bruce Highway along a 362-metre frontage.
The original decision at p.13 went on:
"Eudlo Creek, where it touches the parent parcel, is located in a well-defined channel, however, there was what Mr Marshall described as an anabranch which departed the main channel at a point to the west of where the main creek travelled under a bridge under the pre-existing two-lane Bruce Highway. The anabranch traversed in a north-easterly direction along the eastern boundary of the parent parcel, then drained under the previous highway through two large banks of box culverts."
The WBM 1999 Report provides the following description:
"Eudlo Creek flows out of the Sunshine Coast Hinterland and into the Maroochy River which subsequently enters the Pacific Ocean at Maroochydore. The Bruce Highway crosses Eudlo Creek just north of Forest Glen and just south of the Maroochydore Road interchange. At this point the floodplain is relatively narrow compared with the more substantial floodplains upstream and downstream."
No doubt the narrowness of the floodplain at this point made it a more attractive place for the location of the highway than the wider floodplains and swamps which would have been both more costly and more difficult to traverse.
In company with the parties' legal representatives, I inspected the balance land, the highway duplication, Eudlo Creek and areas downstream of the Bruce Highway. These inspections assisted me in my appreciation of the evidence and suitably supplemented the inspection carried out during the original hearing.
Flooding - the Experts' Reports - An Overview
Although both parties were of the view that the respondent's exercise of its statutory powers caused the claimant's balance land to be more susceptible to flooding than it otherwise would have been, there was no agreement as to the extent to which the land had become so affected. Mr Winders was called by the claimant at the original hearing where he provided two expert reports on the subject of flooding on the claimant's balance land, said by him to be caused by the highway duplication. Evidence on this topic at the original hearing was provided by Mr Russell who concluded that a small increase in flooding only would have been generated by the highway works. The respondent also, on that occasion, called Donald Gerard Carroll who relied on Mr Russell's data but applied a different methodology to draw conclusions broadly similar to those drawn by Mr Russell.
Each of the witnesses mentioned in para.[36] is a civil engineer specialising in both the science of the process causing rainfall to become stream flow (hydrology) and the science of the conveyance of fluids, in this case water, along or through waterways such as creeks, rivers, floodplains, pipes, bridges, etc (hydraulics).
Their expert work was concerned with identifying the afflux on the claimant's balance land caused by the highway works. "Afflux" can be defined as a change in peak flood level at a particular location attributable to a cause such as the duplicated highway. Afflux can be either an increase or a reduction in peak flood level, though I think I can fairly say that the main concern in the present case was to do with increases. Whilst the influence on afflux by the highway works is the particular subject of inquiry concerning injurious affection, the levee banks or bunds on the claimant's land are also of relevance as the respondent's evidence was that these structures, as well as the works done in creating lakes upstream of the highway, contributed to the overall increase in afflux on the claimant's balance land. Whilst that view was strongly debated at the original hearing, it was not prominent at the remittal.
There was considerable debate at the original hearing on the matter of the relevant hydrology as well as the issue of hydraulics. There was, during the remittal hearing, agreement between the parties on hydrology, the debate being confined to hydraulics issues.
The parties did not provide submissions which attempted to fully blend the evidence from both hearings into a comprehensive whole, reference to the original evidence being provided for completeness, to impugn the expertise or evidence of a particular witness or, in rare instances, for specific support.
The study of hydraulics in an area of geographic interest is undertaken by the use of hydraulic modelling. This modelling typically comprises the use of hydrodynamic computer software or scaled physical models. Computer modelling is based on mathematics being applied to information fed into the model by the hydraulics expert. The basic proposition is that if one is able to represent a known flood event or a number of such events in the computer model, then one is able to calculate an afflux under certain assumed circumstances.
At the original hearing the hydrologic and hydraulic engineering experts from each side made use of one dimensional or quasi-two dimensional hydraulic computer modelling techniques which were available at that time. Of the range of choices available, Mr Winders used software called MIKE 11, whilst Mr Russell employed RUBICON.
Subsequent to the original hearing, the respondent commissioned WBM Oceanics Australia (WBM) to undertake an extensive investigation aimed to determine:
1.The impact of the various works undertaken in the Eudlo Creek catchment since 1972 at the Bruce Highway crossing of Eudlo Creek particularly:
· the impact of the highway duplication; and
· the impact of the extractive industries.
2.the drainage structures necessary to minimise flood impacts from the proposed new Maroochydore Road at Eudlo Creek; and
3.the flood immunity of the Bruce Highway at Eudlo Creek.
The outcome of that work appears in the WBM 1999 Report. The lead co-author of that report was Mr Syme who gave evidence at the remittal hearing.
During the period since the original hearing, developments have taken place in computer hydraulic modelling such that fully two dimensional modelling software was available to Mr Syme for his investigation. The software that he utilised was TUFLOW. He employed this, as well as quasi-two dimensional modelling and a physical model.
Whereas quasi-two dimensional modelling is based on a simplified network of one dimensional channels, fully two dimensional modelling uses a digital terrain model (DTM) to represent topography. In an hydraulic investigation the topography is referred to as bathymetry - a term with a suitable aquatic connotation. The bathymetry is one only of the inputs into the modelling process.
At the time of the commencement of the WBM investigation, floods in June 1983 and February 1992 were used for calibrating and verifying the hydraulic models. These floods were two of the largest contemporary events and have data sets in terms of rainfall, flood heights and, in the case of the 1983 event, a set of flood levels and stream flow measurements taken at the Bruce Highway by the then Queensland Water Resources Commission (QWRC).
In February 1999 during the later stages of the WBM investigation, another flood occurred. The 1999 flood was significant in that both parties were able to call witnesses who had observed the flood in the area of interest. The claimant, Mr Marshall, took a video recording showing certain aspects of the flood which are of relevance to these proceedings. Mr Marshall was recalled during the remittal to provide evidence including evidence concerning the video.
The 1992 flood flowed over the highway which had by then been duplicated, whilst the 1983 flood did not broach the then single carriageway highway. The extent to which the 1999 flood may have impacted on the northbound highway bridge was a matter of some debate, though it was not asserted by either party that this event caused a flow over the highway.
The WBM investigation was carried out in two stages. Stage 1 of the study calibrated and verified all models to the 1983 and 1992 flood events. The calibrated models were then used to predict the flood behaviour of five different topographic scenarios using the floods of 1983 and 1992 and a flood larger than these recorded events. Based on the results of the different models, the TUFLOW two dimensional model was fine tuned during Stage 2. The occurrence of the February 1999 flood was said by Mr Syme to have provided valuable information leading to an improved calibration upstream of the highway.
In a two volume report entitled "Review of Bruce Highway Hydraulic Analysis - Eudlo Creek" dated 15 March 2002 (the WBM Review Report) Mr Syme provided a summary of and commentary on selected components of the WBM 1999 report. In his Review Report he said that duplication of the Bruce Highway increased the hydraulic control effects of the highway, particularly in large flood events. He said that for flooding up to about 11.0 metres Australian Height Datum (AHD) on the upstream side, the increased effect was primarily due to a slightly reduced total flow area of the drainage structures and more than double the flow length of the structures, given that there were two carriageways instead of one which a flow had to traverse. The lower frictional resistance of the culverts compared with a bridge would, in Mr Syme's view, also have contributed to increasing the hydraulic control effect. For flooding above 11.0 metres AHD, the higher elevation of the new northbound highway, which was lifted about 0.3 metres above that of the southbound carriageway, prevents flood flows overtopping the road that would otherwise have overtopped the road prior to duplication. The higher northbound embankment contributes significantly to the upstream increase in flood levels in major floods, for example the 1992 flood, and larger events in his view.
In his documented material Mr Syme divided the property into three zones; zone 1 coinciding with the main lake, zone 2 with the ski lake and zone 3 being that area including the southern side of Eudlo Creek and up to adjoining properties. In his Review Report Mr Syme said that since 1992 the raising of levees and the construction of new levees, together with the further filling on the floodplain on the claimant's balance land, has increased the hydraulic control in the vicinity of zone 2. Consequently, the effect of the Bruce Highway now extends to zone 1 and into zone 2 only, with little or no influence on zone 3.
The WBM 1999 Report and its conclusions, as well as the WBM Review Report, were addressed in a further report by Mr Winders dated 18 February 2002 described as "Comments" on the WBM Report. This further report went beyond commentary as Mr Winders employed his own two dimensional model, RMA2 in studying the area of interest and he relied on the conclusions that he had drawn in the use of that model and his own analysis of the WBM 1999 Report in his criticism of the WBM findings.
In his report of 18 February 2002 Mr Winders drew conclusions that were said to generally support the conclusion he had drawn in his 1996 reports which were that "Afflux at the highway, caused by duplication and removal of the culverts, causes creek water levels to rise upstream and overtop the Marshall levees well upstream of the highway, increasing flows into the main lagoon and raising levels there. The Marshall levees are not the primary cause of the increased levels in the main lagoon."
Mr Russell was called again by the respondent for the purpose of providing what it said to be independent verification of the WMB two-dimensional modelling and a separate assessment of flood impacts, as well as a review of Mr Winders' February 2002 report.
Mr Russell produced a report dated 18 March 2002 in accordance with his instructions. In his modelling Mr Russell used MIKE 21 two dimensional software and, based on the input data supplied by WBM, concluded that the TUFLOW modelling for the 1983, 1992 and 1999 events were verified, though his results were not exactly the same.
Fill had been placed in the area of the anabranch downstream of the highway. Mr Russell concluded that these works, which are not connected with the purpose of the resumption, would have had minimal effect on afflux upstream of the highway, but would have had significant effect both on afflux and in its distribution downstream of the highway.
Whilst the respondent maintained the position at both the original hearing and in the remittal that the increase in flood susceptibility of the balance land was incremental only, the afflux in the area of the main lake on Mr Russell's evidence was 0.16 metres in the original hearing compared with an increase in afflux of 0.29 metres calculated by him in the remittal. Mr Winders, on the other hand, all but maintained the same levels at both hearings.
Mr Winders' analysis of the effect of the highway duplication by use of the RMA2 program was the subject of a further report by him of 8 April 2002, that is subsequent to Mr Russell's completion of his report. There had been consultation between the hydraulics experts on both sides prior to the date of Mr Winders' April 2002 report, such that some apparent issues were able to be put aside and the central issue focused on. That central issue is that of calibration of the various models, a topic which received particular attention in this April 2002 report, which was critical of the calibration of the TUFLOW model by WBM.
In his April 2002 report Mr Winders concluded afflux of greater heights at various locations on the claimant's land than did the respondent's experts. Mr Winders went on in this report to calculate the volume of fill that he thought would be needed, consistent with the claimant's case, to restore the flood immunity of the balance land. Those calculations produced fill figures a little different from those relied on by Mr Kinivan in his valuation.
Professor King provided an undated report entitled "A Review of the RMA2 Hydrodynamic Modelling of Eudlo Creek and the surrounding area carried out by Max Winders & Associates" in which he drew conclusions favourable to the method of use of RMA2 and its calibration. Professor King was critical of calibration of the TUFLOW and MIKE 21 models of the respondent experts.
I deal with the physical model developed by WBM after my consideration of the mathematical models. It may be useful to the understanding of the later discussion in these reasons if I provide a level of information about modelling, the classification of rainfall events and some terms used in these reasons.
A Model Model
A hydrodynamic model is designed to operate within physical boundaries adopted by the modeller. Those boundaries and the conditions there are identified on the basis that such variations as there may be at those locations can be applied to the model and will not affect the validity of the model's operation. The bathymetry of the area within the boundaries will be identified on the basis of ground survey, aerial and other photography, photogrammetry and personal observation.
Within the boundaries and the adopted bathymetry the important parameters comprise the methods used to represent the hydraulic structures and the issue of roughness factors which influence flow. That is, water will flow more easily over a smooth pebbled surface, for example, than it would through a timbered area. The prime tool employed in representing roughness is the adoption of a Manning's "n" figure or value. The modeller decides on a Manning's "n" value for a particular bed dependent on the bed characteristics with the adoption of one value or another being dependent on expert judgment, but within what experts might consider to be an acceptable range. A bed with high frictional characteristics will attract a higher Manning's "n" value than one with low frictional characteristics.
Within the area of study the modeller is generally required to construct a computerised layout which appears as a mesh. Each segment of that mesh represents a small part of the area. Where the bathymetry is most variable, such as in areas of steeper gradient, the mesh will be more detailed than in areas of low gradient.
What I have described thus far constitutes my attempt at simplification of what might generally be found in two-dimensional hydrodynamic models. Particular software will allow for variations and enhancements, whilst it is possible for a particular study, as the WBM 1999 study did, to "nest" one type of model inside another to focus the overall model in a manner selected by the modeller.
Now the model as finally generated from the input data, has the purpose of representing the behaviour of both real and assumed events. The accuracy of the model in this role, which is often predictive, is dependent on whether it reflects reality and that is ascertained by calibrating it against historical flood events, particularly those whose relevant dimensions are known.
Professor King described the calibration process thus:
"The overall process of calibration results in a model that can be confirmed as responding in the same way as the prototype system. The typical process is to calibrate the model by adjusting the model coefficients using a single data set and then as validation to apply the model using the same coefficients to a second data set and test whether the model still gives an acceptable set of simulation results."
One of the difficulties in calibration in the present case is that for each of the available flood events, that is 1983, 1992 and 1999, there were differences in floodplain characteristics in the form of the claimant's extractive works, as well as other extractive works upstream and in Mr Marshall's levees and in the duplication of the highway. In addition, there was the matter of the placement of fill in the anabranch downstream of the highway. Apart from that, there was debate between the parties as to the peak of the 1992 and 1999 floods in certain locations.
The net result of these differences was that Mr Winders formed the opinion that peak levels downstream of the duplicated highway bridge were lower than thought to be the case by either Mr Syme or Mr Russell. Mr Winders' conclusion from his modelling was that the head loss caused by the bridge was greater than that concluded by the respondent's experts with the result being that upstream water levels in Mr Winders' prediction would be higher in a high flow event, therefore inundation on the balance land of the claimant would be greater. Head loss, I would describe as being the reduced capacity of the drainage works under the highway (bridges and culverts) to convey upstream flow. Its frictional and barrier characteristics are high. In low flows there would be no head loss, however there would be head loss in certain high volume flood events.
The brief summary provided thus far with respect to the flooding issue belies the volume of evidence given on this topic in the remittal. This evidence occupied most of the time of the hearing. It transpired that 16 witnesses were called during the remittal hearing; 125 more exhibits were tendered and the remittal occupied 31 days and generated a further 1,931 pages of transcript. The single issue of injurious affection exhausted more resources than the original trial in toto. Evidence from the original trial was also relied upon to some extent, there being 82 exhibits on that occasion, 22 days of hearing and 1,184 pages of transcript.
References to the transcript of proceedings in these reasons will be to the transcript of the remittal unless otherwise indicated. Exhibits identified by number and the letter "R" are exhibits received in the remittal hearing, whilst those identified by number only and perhaps some other letter, were tendered during the original hearing.
Some Terms
Sales evidence was, as one would expect in a case such as this, not available to allow the parties' valuers to prepare a "before and after" valuation by the direct comparison of sales method. The valuers were also constrained by the 1998 decision of the Land Court which determined, apart from injurious affection, a reduction in value of the parent parcel resulting from the resumption. The task left to them, therefore, was to consider the question of the reduction in value of the balance land of the claimant brought about by any injurious affection. Each valuer therefore provided an opinion confined to that aspect. Such an approach is often referred to as a piecemeal or summation method.
In these circumstances there will be little need to refer to the parent parcel, nor to before and after resumption scenarios. The key question here is the effect on the claimant's balance land of the works carried out by the respondent in the form of the highway duplication. I will therefore use the term "before works" to refer to the claimant's balance land before the highway duplication and "after works" to refer to that land with the highway works completed.
Average Return Intervals
A rainfall event might be classified as a Q10, Q20 or Q100, for example, based on the anticipated frequency of that event occurring. A Q10, for example, will have an Average Return Interval (ARI) of 10 years. A Q5 will be predicted as occurring more frequently than a Q20 and it will involve a lesser level of rainfall. The corollary also applies. Each rainfall event is not the same, however, as the time over which the volume of rain falls will usually differ. This is referred to as the temporal pattern. The same volume of rainfall over a shorter period will generate more intense runoff than one over a longer period. Thus the records show that a Q100, based on 1977 data, will generate more flooding than a Q100 event, based on 1987 data.
The classification of a particular rainfall event is very much a matter of expert opinion informed by rainfall records collected in a publication "Australian Rainfall and Runoff" (AR & R). Thus an engineer's classification or designation of a particular event may differ from that of another engineer's and a classification of an event by one engineer may change as more data is collected.
Just as the classification of an event represents the frequency at which such an event is expected, the classification also indicates the chance or risk of it occurring in a particular year. That is, a Q100 has a one in 100 or 1% chance of occurring each year. The fact that it has occurred say, last year, does not therefore mean that it will not occur for another 99 years, nor that there is not the same chance that it will occur this year.
The terms Q5, Q20 and so on were used in three different ways in the evidence of the engineering experts. The usual use of such terms was to indicate the ARI.
The term was similarly used to indicate the flood immunity of a piece of land. The land may, for example, not be flooded following a Q20 rainfall event, but flooded by less frequent events. Its immunity might, therefore, be expressed as a Q20. Some properties, such as the claimant's land, would have parts that enjoy a higher flood immunity than others, thus it may not be possible to use a single flood immunity designator.
It follows that a property may have an agreed immunity at a certain point in time, but that as time passes and it becomes filled or otherwise protected from inundation, its immunity will improve. That is, the designator changes because of physical changes associated with the land.
In some of the evidence, particularly the written reports of the hydraulics experts, a particular event such as the 1983 storm was referred to as a Q83. A non-expert might be forgiven for thinking that this indicated that the event had an ARI of 83 years or a 1.205% chance of occurring in a particular year. Not so. It is simply a convenient shorthand for the experts.
A particular rainfall event may be designated as, say, a Q100 at a point in time based on the AR & R data available at that time, but as further data is obtained, expert opinion may move to classifying the same event as, say, a Q50. It follows that a parcel of land within an attributed flood immunity of Q100 based on outdated data would, by reference to the latest data, have an immunity of Q50. The land's actual immunity has not changed by, for example, some topographical change, but its immunity has simply been reclassified or redesignated.
In any discussion involving the ARI designators of a property it is important, as the above discussion indicates, to ensure that one is using what I would call the same template. That is, one needs to refer to the same AR & R publication and same topography for any comparison to be valid.
It is common ground between the parties, as I have said, that the relevant works of the respondent have caused the claimant's balance land to become more susceptible to flooding than was the case before works. The remaining core issues to be addressed relate to whether that circumstance has reduced the value of the balance land and, if so, by what amount. Whilst such questions are usually addressed by valuers, as did occur in this case, there were also submissions from the claimant as to other methods said to be appropriate. It will be convenient to dispose of two such suggested methods at this stage before I come to the different opinions as to afflux expressed by the hydraulics experts.
Assumed Marketplace Method
It was submitted by Mr Mack, counsel for the claimant, that there is a number of methods of conducting the assessment of injurious affection compensation, one of which is to carry out the exercise from the perspective of the hypothetical prudent purchaser.
The method said to take the perspective of the prudent purchaser was based, as one would expect, on the formulation contained in Spencer v. The Commonwealth (1907) 5 CLR 418 (Spencer) per Isaac J at p.441 who proposed a hypothetical purchaser and, I would stress, vendor:
"... perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property."
The submission for the claimant, as I understand its essentials, is that in determining the question of compensation in this case I ought to rely on such evidence as replicates, as far as it can, what might reasonably be expected to occur in the marketplace when a prudent person contemplating the purchase of the balance land after works is attempting to settle on a price.
The submission is that such a purchaser would not rely on the mass of detailed evidence from the hydraulics experts who gave evidence as to the effect of the highway duplication on the flooding status of the balance land. The parties acknowledge that the opinions assembled for the purpose of trial would not ordinarily be available to a purchaser in the marketplace. The claimant builds on that to say that, therefore, the after works value of the balance land and, specifically in this case the allowance for injurious affection - should be struck without reference to those opinions.
The argument, as I comprehend it, has two limbs to it. The first is to do with the quarantining of the technical engineering evidence to do with flooding causation from the evidence to do with the quantification of damage. The second is to do with the adoption of a suggested factual scenario which it is said reflects the actual marketplace - and the consequent rejection of the detailed engineering evidence.
The claimant divides the process of determining injurious affection compensation into two phases. First, there is a requirement that the "damage" complained of is shown as having been caused by the "exercise of ... statutory powers", that is the highway duplication. Second, there is a need to ascertain the quantum of damage, usually by the adoption of recognised valuation techniques.
It was submitted by the claimant that once causation has been demonstrated as it has been, the evidence in respect of that phase has run its course and ought to be put aside. That evidence ought not to be relied on in the second phase of determining quantum, that is in the valuation phase. The evidence of causation, it was submitted, is not relevant to the question of the highest and best use of the land, nor to the before works and after works valuation exercise.
I accept that the two phases are quite different from each other in principle in that one is to do with cause and the other to do with effect in the form of damage which calls for quantification. However, that difference in principle does not mean that evidence which is found to be relevant to one phase cannot also be relevant to the other. Evidence comprises matters of fact and opinion that have a separate existence from matters of law and principle and may be called in aid in the application of principle in favour of the adjustment of the parties' rights. I know of no law, practice or principle which confines evidence to being available in the application of one principle, but not in the application of another in respect of which the evidence is relevant.
This brings me to the second limb that I have described above. That argument is based on what was said in Spencer which I have quoted above and places some reliance on an opinion taken from Hall and Hedge v Chief Executive, Department of Transport (1997) 18 QLCR 284. The discussion starts at p.299 where the Court expressed concern about the level of detail in the evidence presented on that occasion concerning the attributes of the subject land and its subdivision prospects. At p.306 the decision records:
"It would be appropriate therefore to adduce evidence from experts of those matters to which a hypothetical prudent purchaser would direct his mind, but limited to those matters which would ordinarily be available to him at or near the relevant date."
Whilst that may be thought to support the proposition put forward by the claimant, it is important to notice that discussion on the topic follows then at pp.307-308 of the reported decision. There was evidence in that case from one of the valuer witnesses who said, in effect, that a purchaser of in globo land in the marketplace assumes a risk factor which reflects, amongst other things, a limited "degree of knowledge" about the land. A buffer is included in the purchase price to cater for that. Given the detailed evidence concerning the land given at the trial, it was the valuer's opinion that the risk factor would be perceived to be lower there than in an actual open market transaction.
The reduction of risk leads, of course, to a higher value figure. The reported decision records this opinion at p.308:
"This last proposition reveals the type of difficulty to which a promiscuous reliance on information can lead. It is unquestionably the case that greater information will lead to greater certainty and therefore less risk, however, there is in my view a conflict with the Spencer formulation where the type and detail of information relied upon turns more on the choices the parties take in the presentation of their cases than in an attempt to replicate Spencer in the prevailing market conditions. To be able to reduce risk and therefore increase value by a choice of evidence to be adduced, shows an error of principle. The level of risk that the Court should take into account is the level which would be in the mind of the hypothetical prudent purchaser at the relevant date based on the level and reliability of information which would ordinarily be available to him. A reduction in risk by the elimination of uncertainty about certain facts is rather like assuming the hypothetical contract of purchase is subject to conditions concerning those facts, or that the hypothetical prudent purchaser has unusual prescience."
Hall and Hedge was a case concerned with a valuation both before and after resumption of land suited to residential subdivision. It was in that context that the quoted opinion has relevance. Indeed, at 309 the Court attempted to provide limits to the views expressed:
"I should finish my discussion on this point by making it clear that my comments are concerned with the proposition of establishing market value and not in the determination of such issues as, for example, injurious affection or enhancement."
What appears to have been intended by these words is that whilst a so-called before and after valuation may take into account as an aspect of market value any injurious affection or enhancement, detailed evidence may be needed to determine injurious affection or enhancement as separate elements in a compensation case. The detailed evidence that may be required may need to go beyond the level that would ordinarily be available to a hypothetical prudent purchaser.
What the claimant proposes in the present case is that the quantum of injurious affection compensation should be determined having regard to the evidence that, it is submitted, reflects what would conceivably happen in the marketplace at the date of resumption, on 1 February 1986 and not by reference to the detailed evidence from the various hydraulic engineers.
Mr Winders gave evidence relevant to the claimant's proposition (Exhibit 135R). He said that the usual form of advice that an intending purchaser would require when considering the purchase of land for extractive industry or tourism purposes would be similar to Exhibit 33; though I hasten to add that it was the constrained level of sophistication of that report rather than its contents to which Mr Winders was referring. Exhibit 33 was a Flood Investigation Report prepared by Trevor David Monson, a civil engineer. Mr Monson's investigation did not involve the modelling of a Q100 flood or other floods as Messrs Winders, Syme and Russell had done. He simply made estimates on the data available to him concerning the 1983 flood. His report occupied only 2½ typed pages - a small fraction of the size of the other hydraulics reports put into evidence.
The report was prepared and relied on for the purpose of obtaining a town planning permit from Maroochydore Shire Council for the Sunshine Lagoon tourist venture proposed on the parent parcel by Mr Marshall.
In Mr Winders' view, the form of report that an intending purchaser would rely on would be preliminary in nature as most people wanted to minimise their exposure to cost prior to committing to a purchase or to a particular type of development. The engineer, according to this scenario, would collect flood data from public agencies and would obtain some survey information concerning the subject land. If no useful survey information was available, some spot levels would be taken.
Mr Winders said that he would have prepared such a report on a before works basis and would have upgraded report by way of a second report to take into account the highway duplication. To give another indication of the limited level of sophistication of the reports he proposed, he said that charges would have been of the order of $5,000 only for each of them. He said that a purchaser would "tighten up on your estimate of afflux after you've got your budget". I understand this refinement would, therefore, take place after purchase.
Whilst Mr Winders did not in evidence provide reports of this type, he said that he would advise an intending purchaser to use the highest known flood as the point of reference. In 1986 the highest recorded flood was the 1983 event. He also said that he would advise that the land should be filled by as much at least as the highway was elevated, that is 0.3 of a metre, to achieve the same level of exposure to an event such as the 1983 event. In his opinion a purchaser would adopt a conservative approach and would add an allowance for risk. This means, as I understand it, that he would add something more than 0.3 m of fill.
I have difficulty reconciling the advice to fill to greater than 0.3 m and the advice that one has regard to the highest known flood event. In the case of the 1983 event, there is data upon which an intending purchaser would rely, whereas the adoption of 0.3 m is quite independent of the 1983 flood.
Apart from that, I would say that it would be clearly erroneous for a purchaser and for me in this case to have regard to the increased level of the new carriageway but to disregard the different bridge and culvert configuration which was designed to offset the increased afflux which would otherwise result from the highway duplication. In addition, the approach suggested by the claimant, through Mr Winders, disregards the position of the intending vendor who would not, in Mr Slater's opinion, willingly accommodate a purchaser who adopted the Winders' approach.
That raises, to my mind, a particular defect of principle in the assumed marketplace method as described by the claimant. The claimant proceeds on the assumption that the purchaser would fill the balance land and focuses on the method of costing/valuing the outcome of that assumption. Mr Slater's approach, which I discuss later in these reasons, squarely approaches the matter by first addressing the question of the attitude a hypothetical prudent purchaser would adopt with respect to the desirability of filling. In that sense he also adopts an assumed marketplace method, but one that I think is consistent with principle.
In pursuit of its submission under this heading, the claimant also suggested the reliance be placed on the evidence of Charles George Reed, who was involved in the preparation of a report entitled "Bruce Highway Planning Study - Caloundra to Maroochydore Road" November 2001, prepared by SMEC Australia Pty Ltd for the respondent (the SMEC Report). That study, which Mr Reed said focused on traffic issues, included a section relating to flooding. Mr Reed described that section as a "limited desktop study" with a total budget of $10,000 designed to determine if and where flood problems occurred along the section of road under consideration. The intention was to identify areas for future detailed investigation. Mr Reed compared the $10,000 figure with the cost of the whole SMEC Report at $500,000, explaining that it was a very small sum to study three crossings: that at Eudlo Creek, Sippy Creek and at the Mooloolah River at the Caloundra Interchange.
The flooding section of the SMEC Report placed particular reliance on a reported 1992 flood observation by a local resident and on flow records. The report suggested changes to the bridge structure by adding a span and raising it by "a minimum of about 0.5 metres in height" (Exhibit 103R). Mr Reed made it clear in evidence that these suggestions would require detailed investigation.
Mr Reed described the above study as a "quick and nasty assessment", a description which in the claimant's submission put it into the same category as Mr Winders' description of the advice that he would expect to provide to an intending purchaser of the claimant's balance land. I doubt that the SMEC report would even amount to the level of sophistication proposed by Mr Winders. Mr Reed's work was not concerned with the claimant's land, but with the highway and was very preliminary in nature.
The claimant also referred to Mr Kinivan's report at the original hearing in which Mr Kinivan's oral evidence recorded that he was attempting to adopt the viewpoint of an intending purchaser. That is an unexceptional remark coming from a valuer and one which I do not connect with the adoption of the approach proposed for the claimant under this heading. I do not understand Mr Kinivan to be saying that he would eschew detailed flooding evidence of the type given by Mr Winders, Mr Russell and Mr Syme in favour of such an approach. Indeed, he directly relied on Mr Winders' opinion as to afflux.
In passing I would say that, of the evidence placed before me, perhaps the best evidence available in 1986 that one might rely on in an approach of the type proposed by the claimant is the report of Mr Monson. That report shows that the main lake was inundated in the 1983 flood which left above flood level the house site and a substantial part of the site identified by Mr Monson for the main building and the car park. It also reveals that Mr Monson was unconcerned with the flooding of the claimant's parent parcel in a Q100 event except as it related to the main building in the Sunshine Lagoon proposal. The site of the main building was the only part of the claimant's land which Mr Monson proposed ought to be elevated by filling. The volume of filling would have been a fraction only of that suggested to me by the claimant as being appropriate.
I do not understand him to have been saying that his calculation was done assuming the whole of the claimant's land to have had a Q5 immunity. Not only would such an assumption have been contrary to Mr McAnany's evidence as contained in his prepared report, but it would have involved a calculation of no assistance to the matters in issue.
Nor do I understand Mr McAnany to have departed from the levels to which he had accorded a Q5 immunity in his report and to have adopted the actual levels which were below a Q5 immunity. Not only would that have been inconsistent with the approach employed in his report, but it would have involved a very detailed new set of calculations - an exercise at odds with what he called a "very very" quick one.
Now the claimant presented a set of calculations based on the same source material as Mr McAnany had relied on, but employing Q5 levels in each of the various areas identified by Mr McAnany, including those areas he had identified as Q20. The flood differentials and, therefore, the fill required would be greater than if Q20 levels in area 1 and area 7 identified by Mr McAnany were adopted. In other words, the fill volume calculated by the claimant in its final submission at 51,828.24 m³ is greater than it would be were it based on the flood immunities adopted by Mr McAnany for his areas. His total volume was 123,400 m³, that is more than double that now calculated by the claimant.
Now none of this fill calculation criticism of Mr McAnany's $1,000,000 calculated figure was put to him in cross-examination. Three things flow from this. One, the submission from the respondent that it would be contrary to Browne v Dunn for me to accept these submissions. I do not think that in substance a submission producing a mathematical result different from that supplied in the evidence of a particular witness needs to be put to that witness. It would be an unduly onerous application of the principle if it was so applied as no amount of re-examination can be expected to somehow make good an arithmetic error. Patent errors and contradictions in an expert witness's evidence do not become inviolate from criticism in submission simply because they were not raised in cross-examination.
The second difficulty that arises is that on my analysis the fill figure calculations presented by the claimant in submissions does not appear to produce the result that Mr McAnany would have been expected to have, had the apparent errors in his calculations been put to him. It was not open to the claimant to cross-examine precisely on any suggested error as Mr McAnany provided his results orally and without supplying detailed figures. However, it is tolerably clear to me that had Mr McAnany's attention been drawn to the different results produced by the claimant, he would or ought to have readily conceded that his calculated fill figure cost of $1,000,000 was substantially too high.
The third difficulty for the claimant is, however, how a different mathematical result ought to be dealt with. Mr Slater expressed the view that a prudent owner would not, on a cost benefit basis, spend $1 million to achieve a Q20 flood immunity before works. He was not asked about a lesser figure which could be calculated using the claimant's fill figure of 51,828.24 m³ or similar. Indeed, the claimant adduced no evidence as to what it might cost to elevate the land to a Q20 flood immunity. Mt Slater expressed the view, however, that a prudent purchaser would not spend $210,767 to maintain a Q20 immunity overall after works. It follows that if I accept that opinion, and I do - as it is based on the correct application of the principles of equivalence and that cost does not equal value on the evidence - there is no need for me to consider further the question of whether a prudent purchaser would fill to a Q20 level before works.
I have not been convinced by the claimant that a prudent owner of the balance land before works would have expended funds to purchase and apply commercially obtained fill such that the land would generally achieve a Q20 flood immunity.
Late Submission - Reinstatement
In written submissions following the discovery of the typographical error discussed at para.[371] and following, the claimant submitted that a duty of the claimant to act reasonably with respect to filling the balance land may be so confined as to exclude the consideration of highest and best use and market value. That submission comprises, in effect, another option in the assessment of injurious affection compensation.
This submission relies on Commissioner of Highways v George Eblen Pty Ltd (1975) 10 SASR 384 with particular reference being made to pp.402.5 to 406. I have studied those pages, as well as the decision as a whole. The pages referred to are concerned with a particular aspect of the assessment of compensation which was, after some debate, agreed by the parties in that case as being one properly based on the principle of reinstatement, not that of market value. That is not the position in the present case, nor was it one squarely pursued by the claimant before me.
The respondent's submission in response to this belated argument from the claimant was that it did not properly flow from the residual matter for debate which arose solely out of a typographical error. I accept that submission, but will say a little more about the submission from the claimant.
The issue of reinstatement was considered by the Land Appeal Court in Chapman v Brisbane City Council (unreported 3 June 1999), the joint judgment of two members of that Court being concerned with a claim for reinstatement in the case of a business undertaking. The joint judgment considered the question of reinstatement generally and made reference to George Eblen Pty Ltd in the context of the discussion.
The joint judgment records the opinion:
" The employment of the reinstatement principle is appropriate, therefore, only where other approaches to assessment of value have been shown to be inappropriate or as not producing a fair result. Reinstatement is not a method of first resort.
The following quotation is taken from Cripps Compulsory Acquisition of Land 11th Edition paragraph [4-203]:
'Before the Acquisition of Land Act, 1919, reinstatement value, instead of market value, was sometimes given so as to give proper effect to the principle of compensation on the basis of value to the owner. Generally it was only given in respect of property which was of such a nature (for example a school, church hospital, house of exceptional character, business premises in which the premises could only be carried on under special conditions or by means of a special licence) that there was no market or general demand for such property; and a market value deducted from the income derived would not constitute a fair basis in assessing the value to the owner.'
This source was cited with approval in the Queensland case of A.W.U. v. Townsville City Council (1982) 8 QLCR 195 at p.197.
It is to be noted that in Cripps there is no suggestion that one has regard to the fairness of assessment in a general sense, but only in the sense that traditional methods of valuation do not give proper effect to the principle of compensation on the basis of value to the owner. It is thus not a matter of simply having regard to all of the evidence, and based upon that, determining that a reinstatement method of valuation ought to be employed, for the essential question which must be asked in a case of this nature, is what is the value to the owner of the land acquired compulsorily."
Later in the joint judgment the following summary appears:
" In summary, at this stage then, we can say that there are four categories of application of reinstatement. These are:
1.Application in the classical sense as it applies to churches, schools and the like where reinstatement of the whole of the structure may be the subject of the award.
2.Reinstatement of business premises of a type where there is no general demand in the marketplace for the type of property under consideration.
3.Reinstatement applying where the reconstruction of part of an essential component within a single undertaking is appropriate.
4.In the case of the resumption of a lease, or of possession, for a limited period, of fee simple land."
In my view the claimant has not brought himself within any of these categories, nor cogently argued for a variation of or addition to these categories in such a way as to admit the facts of the present case.
A Broad Submission
The claimant submitted that the highway duplication works had injuriously affected the balance land to such an extent that it has:
(a)limited the activities that can be carried out on the balance land;
(b)limited the use of the balance land;
(c)interfered with the amenity or character of the balance land;
(d)and is likely to deter purchasers from buying the balance land; and
(e)made it more expensive for the claimant to use the balance land.
That submission appears to place reliance on the quotation from the judgment of McHugh J which appears in para.[128] which I have dealt with already concluding that his Honour did not enunciate a new test of compensation. I will, nevertheless, say something about this separate submission.
Notwithstanding the breadth of this submission, I was not in address alerted to evidence in support of each contention. The evidence supports the contention, in my view, that an increased propensity to flooding, such as it is, would interfere with the use of the land for quarrying purposes in the manner that I have discussed above. It would also have some impact on the potential tourist usage.
I am not aware of any evidence which would lead to a conclusion that the use of the land for either of these uses would be limited. I was not addressed on how the term "limited" ought to be used, however I use it in the sense of constraining or reducing the use or activities to such an extent that the after works uses would be of a different character from those before works.
Whilst there was no evidence which was referred to in address to the effect that purchasers would be deterred from purchasing the balance land, my award of compensation is intended to address any reduction in the land's attractiveness for sale.
Similarly, the compensation determined by me ought to be understood as addressing such allowances as would arise in the mind of a prudent owner of the land as being required to address the increase afflux, after works.
Assessment of Compensation
The respondent's exercise of statutory powers in relation to the purpose of this resumption have caused the claimant's balance land to be more susceptible to flooding than it would otherwise have been.
The extent of that susceptibility to flooding is of the order contained in those opinions of Messrs Winders, Syme and Russell which were accepted by the Court and which are largely represented in the table at para.[141].
The increased susceptibility to flooding reduces the value of the claimant's balance land from what it would have been had the respondent's works not been carried out.
The measure of that value loss is not based on the need to fill the balance land such that its before works flood immunity is restored overall.
Neither is it based on the assumption that, absent the resumption, a prudent owner of the balance land would have been expected to fill the land such that it would achieve a Q20 flood immunity or better.
The claimant's argument that compensation for injurious affection, based on the principle of equivalence would yield to an assessment in the amount of his claim, suffers both in terms of there being a failure to demonstrate the flood immunity of the claimant's land before works and a failure to apply the principle of equivalence as it ought to be applied.
The measure of loss is based on a prudent owner filling selected sites on the land, such sites being (1) in association with the existing extractive operation - machinery and plant storage and repair; sand stockpiling and (2) in association with such potential for tourism use as exists - planned building sites.
In addition, there was loss (1) associated with the extractive operation - inconvenience and risk of loss of the type discussed in these reasons above and (2) associated with the potential for tourism use - inconvenience and the risk of loss of the type discussed in these reasons above including the need to design, plan and construct any such tourist development to take into account the prospect of greater inundation of the order found in these reasons.
I now present my calculations and conclusions with respect to the quantum of compensation. I will proceed on the assumption that the sand stockpile and machinery storage areas would be located on sites within Mr Symes' Zone Z1. That leans in favour of the claimant, providing him with choice as to the location of such sites.
I will adopt Mr Slater's selection of area 3 which appears on Mr Baker's plan 920229/SP in Exhibit 9 as representing a site for machinery storage and repair. It is a generous site of 35,000 m².
I proceed on the basis of my conclusion that the before works flood immunity of area 3 as something greater than Q5. If it had been Q5, it would have needed 1,400 m³ of fill to restore its flood immunity based on Mr McAnany's figures. That was based on Mr Syme's evidence that the flood differential would be 4 centimetres. I will, however, adopt a Q10 for the purpose of assessing compensation. It represents a level of immunity which pays proper regard, I think, to Mr Winders' opinion and to the prospect of error inherent in hydraulic modelling, including in the modelling presented in this case. Mr Syme provided an afflux of 7 centimetres for a Q10, a figure I will not change as that would magnify my allowance for error and difference of opinion.
On the basis of that afflux, 2,450 m³ of fill would be needed to restore the before works flood immunity of area 3. Based on Mr McAnany's proportions, 98 m³ would be road base costing $16.50 per m³ and 2,352 m³ would be bulk fill costing $8.15 per m³. The total cost would be $20,786.
I will assume that a sand stockpile will need 10,797 m² as that is the size of area 1 which contained a sand stockpile at about the time of the original hearing. On the same basis of calculation as I carried out with respect to the machinery pad, I would arrive at a cost figure for the elevation of a stockpile site of $6,412. I observe that a single sand stockpile might not service the extraction operation for its predicted life. I will proceed on the basis that two strategically located stockpile pads would be desirable. Accordingly, the cost figure would total $12,824.
Thus, for the extractive industry use, the loss after works on the above basis would be $33,610. I will add a 10% profit and risk allowance to that figure in accordance with Mr Kinivan's approach, which the respondent did not challenge. The resultant figure is $36,971. To that I will add an allowance for inconvenience, risk and the quality of usage of the access road and its maintenance. That allowance will take this element of compensation up to $45,000.
My approach to the potential tourist usage is one of difficulty as I do not have a particular plan to work to. I will, however, allow a total of 5,000 m² as requiring lifting for the purpose of buildings to re-establish the before works flood immunity and will employ the same standards that I employed for the extractive operations. The cost of filling that total area on that basis including a 10% profit and risk allowance would be $3,266. In addition to that, there would be design costs, some marginally greater building costs and an inconvenience and risk allowance. I will settle on a figure here greater than in the case of the extractive use figure as the tourism use will be ongoing whilst the extraction activity has a foreseeable, finite life. In the result I will allow a rounded figure of $20,000 for the injurious affection on the potential tourist use area.
The addition of the figures calculated and adopted above comes to $65,000. I determine injurious affection compensation in that sum.
I invite the parties to make submissions on interest and costs before I make the final orders in this matter.
RP SCOTT
MEMBER OF THE LAND COURT
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