Mio Art Pty Ltd v Brisbane City Council (No 2); Greener Investments Pty Ltd (In Liquidation) v Brisbane City Council (No 2)

[2012] QLAC 5

LAND APPEAL COURT OF QUEENSLAND

CITATION:

Mio Art Pty Ltd v Brisbane City Council (No 2); Greener Investments Pty Ltd (In Liquidation) v Brisbane City Council (No 2) [2012] QLAC 005

PARTIES:

MIO ART PTY LTD
ACN 121 010 875
(appellant)
v
BRISBANE CITY COUNCIL
(respondent)

GREENER INVESTMENTS PTY LTD (IN LIQUIDATION)
ACN 110 036 452
(appellant)
v
BRISBANE CITY COUNCIL
(respondent)

FILE NO’S:

LAC001-10 (Mio Art Pty Ltd)

LAC002-10 (Greener Investments Pty Ltd)(in liquidation)

DIVISION:

Land Appeal Court

PROCEEDING:

Appeal

ORIGINATING COURT:

Land Court

DELIVERED ON:

11 October 2012

DELIVERED AT:

Brisbane

HEARING DATE:

2 April 2012

COURT:

Peter Lyons J
Mr PA Smith
Mr WA Isdale

ORDERS:

1.       Appeal allowed.

2.       Compensation is assessed at Eighteen Million Dollars ($18,000,000).

CATCHWORDS:

REAL PROPERTY - COMPULSORY ACQUISITION OF LAND - PROCEEDINGS FOR COMPENSATION - QUEENSLAND - APPEAL TO LAND APPEAL COURT - where the Land Court determined the GFA of the subject land was 44,000 square metres - where that figure was based on the development for which the respondent contended as representing the development potential of the land, with two adjustments; one to allow for a greater height of buildings nearest the river; and the other to allow for appropriate provision of space between buildings - where the appellant contends that the adjustments should be substantially greater than determined in the Land Court - where the GFA is relevant to determining compensation - whether the Land Court erred in its determination of compensation

COUNSEL:

F M Douglas QC, with D Smith for Mio Art Pty Ltd
M D Hinson SC, with D P O’Brien for the respondent

SOLICITORS:

Delta Law Pty Ltd for Mio Art Pty Ltd
DLA Piper for the respondent

1. When these proceedings were previously before this Court, the appellant Mio Art Pty Ltd (Mio Art) established that an arithmetic error was made in relation to the development potential of land for the resumption of which it claimed compensation.[1]  However, at that hearing, the parties requested the opportunity to make submissions about the further conduct of the appeal, if the Court considered it should be allowed.  It has now become necessary to determine the consequences of the arithmetic error. 

   [1]Mio Art Pty Ltd v Brisbane City Council; Greener Investments Pty Ltd (In Liquidation) v Brisbane City Council [2010] QLAC 7 at [105]-[114].

1. The background and earlier history of Mio Art’s claim are recited in the earlier judgment of this Court.  It is, however, convenient to make brief reference to some of these matters. 

1. The claim arose out of the resumption of land with a total area of 8,825 square metres, being part of a parcel of land located at 85 Montague Road, South Brisbane.  The Land Court determined compensation in an amount of $16,600,000.  In doing so, it determined that the land had the potential to be developed with buildings with a gross floor area (GFA) of 44,000 square metres.  That figure was based on the development for which the Council contended as representing the development potential of the land, with two adjustments.  One was to allow for a greater height of buildings nearest the river; and the other was to allow for what was referred to as the unduly generous provision of space between buildings.

1. The determination of compensation, however, was not a direct consequence of the determination of the development potential of the land.  Rather, the Land Court adopted a rate per square metre of $2,900 for the land.  For the total parcel, this resulted in a rounded value of $25,600,000.  The Land Court’s judgment identified this as representing a rate of $582 per square metre GFA, on the basis that the land had a development potential of 44,000 square metres GFA.[2]

   [2]See Mio Art Pty Ltd & Ors v Brisbane City Council [2009] QLC 177 at [298].

1. From the value of $25,600,000 attributed to the total parcel prior to resumption was deducted the sum of $9,000,000, being the value attributed to the land retained after resumption, resulting in the amount for compensation previously identified.

1. Mio Art now contends that the adjustments should be substantially greater, arguing that correctly understood, the evidence demonstrates that the adjustment should be an increase in GFA of 10,990 square metres[3].  It relies on the same two components.  The increase in height, it contends, should have led to an increase of 8,600 square metres in the calculated GFA; and the reduction in space between buildings to an additional increase in GFA of 12,390 square metres.  The figure for which it contends makes allowance for the increase in GFA of 10,000 square metres over that contended for by the Council, adopted in the reasons of the Land Court.

   [3]It should be noted that Greener Investments Pty Ltd (In Liquidation) did not appear at the further hearing of this matter, and that it advised the Court in writing of its non-appearance and that it would abide by the ruling of the Court with respect to the arithmetic error.

1. Mio Art demonstrates that, as a matter of calculation, if the height of the buildings adjacent to the river in the development proposal for which the Council contended were increased, the GFA should increase by 8,600 square metres, rather than the 6,000 square metres allowed by the Land Court.  The consequence is that an increase of 2,600 square metres for this component is more correct than the 2,500 square metres referred to in the previous reasons of this Court. 

1. The second adjustment for which Mio Art contends, relating to the space between buildings, is a result of the adoption of the GFA for which Mio Art contended in the Land Court.  The calculation involves a comparison between the GFA for which Mio Art contended, and that for which the Council contended, at level 6 of the development.  The difference in GFA was 1,239 square metres.  Multiplying this by ten, to allow for the ten levels of the building, results in the figure of 12,390 square metres, the second adjustment for which Mio Art contends.

1. The difficulty with this submission is that the Land Court did not adopt the development design for which Mio Art contended.  In particular, it did not accept the GFA at level 6 for which Mio Art contended.  Accordingly, there is no finding of the Land Court to support Mio Art’s approach. 

1. On the other hand, the Council argued that, by making some assumptions to how the space might be reduced, and carrying out some calculations, the appropriate adjustment for the reduced space between buildings was 3,300 square metres; and accordingly, the adjustment now to be made to the GFA by reference to both elements is 1,900 square metres.

1. Again, the difficulty with the submission is that it is not supported by findings in the Land Court.  The Land Court made a global allowance including an allowance of 4,000 square metres GFA for a reduction in the spaces between the buildings.  That is an approach which was open to it, and it has not been shown that it erred in doing so.  There is accordingly no reason to interfere with this aspect of the approach taken in the Land Court, save in one respect.

1. The approach taken in the Land Court was to increase the GFA by 4,000 square metres, or 10% of what the GFA would otherwise have been, to allow for the reduced space between the buildings.  The earlier reasons of this Court recognised that if there were to be an increase in GFA beyond that allowed by the Land Court, on the basis that the buildings adjacent to the river should have a height of ten storeys, there should also be a further small increase in GFA because of the reduced space between buildings.  As a matter of calculation, that figure would be 260 square metres. 

1. Making allowance for these adjustments, with some slight rounding, it seems appropriate therefore to assume an increase in GFA of 2,850 square metres, rather than 2,750 square metres referred to in this Court’s previous reasons.  This is slightly less than 6.5 percent of the GFA allowed by the Land Court.

1. For the respondent, emphasis was placed on the fact that compensation was determined by the identification of a rate per square metre to be applied to the land, and not by the determination of a rate per square metre of potential GFA.  It was also submitted that the GFA assessed by the Land Court was referred to as an approximate figure.  Reliance was also placed on a passage from the Land Court’s reasons for judgment which stated that “a plot ratio of 5 could be regarded as reasonably achievable”.[4]

   [4]At [181].

1. The value of the land prior to resumption depended upon its potential for development.  A critical matter relating to that potential is the extent of development which a potential purchaser would consider could be carried out on the land.  An error in the determination of that potential may well be of some importance in the assessment of the value of the land prior to the resumption, and accordingly in the determination of compensation.

1. It is clear that the Land Court paid close attention to the development potential of the land.  It is highly likely to have been influential in the determination of the rate per square metre of land area adopted for assessing the value of the land prior to the resumption.  Indeed, the Land Court went to the trouble of translating the adopted value to a rate per square metre of GFA. 

1. In those circumstances, an error in excess of 6 per cent in the assessment of the development potential of the land could not fairly be described as immaterial.  While it is acknowledged that the GFA adopted by the Land Court was described as “approximate”, had the error not been made, a larger number for the “approximate” GFA for potential development of the land was likely to have been adopted, with likely consequences to the assessed value. Accordingly, and bearing in mind that any remaining doubt should be resolved in favour of a more liberal estimate of compensation[5], some adjustment should be made to the value, and the determination of compensation.

   [5]See Mio Art Pty Ltd v Brisbane City Council; Greener Investments Pty Ltd (In Liquidation) v Brisbane City Council [2010] QLAC 0007 at paragraphs [122]-[124]

1. A development on the site with a GFA of 46,850 square metres would have a plot ratio of 5.3.  That is, inevitably, a little higher than the plot ratio adopted by the Land Court of 4.98.  However, the table of plot ratios reproduced in the Land Court’s judgment showed considerable variability; and a plot ratio of 5.3 does not appear to be out of harmony with the plot ratios identified in it.  The reference by the Land Court to plot ratios appears to have been used as a check for the development potential there identified; but that check does not warrant the rejection of the approach taken by the Land Court, the correct application of which results in an achievable GFA of 46,750 square metres.

1. The “approximate” nature of the GFA adopted by the Land Court may mean that a precise calculation would have yielded a higher or lower figure for GFA.  That does not seem to justify a failure to give effect to an adjustment to the GFA, and to the assessed value of the land prior to resumption, to reflect the correction of the arithmetic error.

1. The precise application of the increase in GFA to the rate per square metre adopted for the value of the land would result in attributing to it a value of approximately $27,250,000, prior to resumption.  Since the increase is incremental, and approximations are involved, it seems appropriate to adopt a value of $27,000,000 as the pre-resumption value of the land.  This would result in a total award for compensation of $18,000,000, or an increase of $1,400,000 above the amount awarded. 

1. Accordingly, the appeal should be allowed and compensation assessed at $18,000,000.      

ORDERS

1.          Appeal allowed.

2.          Compensation is assessed at Eighteen Million Dollars ($18,000,000).

PETER LYONS J

PA SMITH
MEMBER OF THE LAND COURT  

WA ISDALE
MEMBER OF THE LAND COURT