Nevis Pty Ltd v Chief Executive, Department of Main Roads
[2001] QLC 16
•23 March 2001
|
BRISBANE
23 March 2001
Claim for Compensation consequent on the resumption of land by the Chief Executive, Department of Main Roads, for transport and incidental purposes under the provisions of the Acquisition of Land Act 1967, the Transport Infrastructure Act 1994, and the Transport Planning and Co-Ordination Act 1994. (A00-05)
Nevis Pty Ltd (the first claimant)
Australian Self Storage Pty Ltd (the second claimant)
Australian Self Storage Pty Ltd as trustee of the
Australian Self Storage Superannuation Fund (the third claimant)
and
The Body Corporate for 4032 Pacific Highway
Community Titles Scheme 22755 (the fourth claimant)
v.
Chief Executive, Department of Main Roads (the respondent)J U D G M E N T
This case involves claims for compensation by four claimants consequent upon the resumption of land under the Acquisition of Land Act 1967 for transport and incidental purposes in connection with the upgrading of the Pacific Motorway from 6 lanes to 8 lanes.
Introduction:
Australian Self Storage Pty Ltd (ASS) conducts a self storage business in a complex at 4032 Pacific Highway, Loganholme. The complex is situated on land which comprised Group Title Plan 104571. Nevis Pty Ltd (Nevis) was the registered owner of Lot 1 GTP104571, Australian Self Storage Pty Ltd as Trustee of the Australian Self Storage Superannuation Fund (ASS-SF) is the registered owner of Lot 2 on GTP104571 and as such an owner, as tenant in common with Nevis of the common property for 4032 Pacific Highway Community Titles Scheme 22755, which is the fourth claimant. All four claimants are interrelated as the directors and shareholders of the first, second and third claimants and the committee members of the fourth claimant are Mr John and Mrs Maria Kreicbergs. There was no formal lease agreement between ASS and the owners of the land. ASS seems to hold as tenant at will, but has security of tenure because of the joint control of Mr and Mrs Kreicbergs.
From the outset the parties agreed that although each of the four claimants is a separate legal entity, since each of them is controlled by Mr and Mrs Kreicbergs, the matter should be dealt with as if there was one claim for compensation. In other words, they agreed that this was an appropriate case for lifting the corporate veil. In the circumstances, I can see no reason for departing from that approach; such an approach was adopted by this Court in Wanless v. Brisbane City Council (1987) 11 QLCR 252 at 255-256. In that spirit of pragmatism, the case proceeded as if Mr and Mrs Kreicbergs were the claimants.
I will therefore make one determination of compensation without attempting to apportion individual amounts to each of the claimants.
Before the resumption, the self storage complex comprised a building which contained an office and caretaker's accommodation situated on the common property, and a number of self storage blocks (or modules) situated on Lot 1 and Lot 2.
By Notices of Intention to Resume dated 7 July 1998, the owners were advised that the Chief Executive, Department of Main Roads (the respondent), intended to take land for transport and incidental purposes. That land was subsequently taken by proclamation on 25 June 1999, 280 square metres from Lot 1 (now described as Lot 3 on SP119185) and 812 square metres from the common property (now described as Lot 5 on SP119185).
The Claim for Compensation and the Respondent's Position:
Having sought and obtained leave under s.24(3) of the Acquisition of Land Act 1967, the four claimants combined their separate claims for compensation into one comprehensive claim (Exhibit 56) for the amount of $1,228,496.60 (in its amended form). Set out below are the details of the amended claim, together with the details of the compensation that the respondent contends should be paid. These are the final positions taken up by the parties: Commissioner for Railways v. Buckler [1996] 1 Qd.R.18 at 23-24.
Claimant Respondent
A. Loss of going concern value of the enterprise $ 497,051 $ 262,563.00
Loss of profit during future roadworks $ 41,582 $ 7,500.00
TOTAL $ 538,633
B. Construction costs of new office and
reconfiguration of new parking area and
access gates $ 556,573.09 ($297,604.00
(
C. Other miscellaneous costs incurred in (
demolition and reconstruction of the site $ 14,328.32 (
D. Compensation for the time of directors and
staff of ASS $ 72,993.35 $3,960.00
E. Legal, valuation and accounting fees incurred in
the preparation of the claim and application for
advance on compensation (agreed) $ 24,880.69 $24,880.69
G. Bank charges (agreed) $ 4,825.00 $ 4,825.00
H. Staff and other costs that will be incurred during
additional roadworks $ 12,261.25 -
Work required to reconfigure and transfer lots $ 4,002.29 $ 3,727.29
Water supply headworks (Lot 21) - $ 3,250.00
Additional waterpipes (Lot 21) - $ 1,500.00
TOTAL $1,228,496.60 $609,809.98
As an alternative to head of claim A, the claimants made the following claim:-
Loss of land $ 385,778
Loss of profit to 28 February 2002 $ 15,731
Loss of future net profit after 28 February 2002 $ 80,947
Loss of profit during future roadworks $ 41,582
TOTAL $ 524,038
The Development of the Self Storage Complex:
The site of the Loganholme self storage complex, with an area of just over 8000m², was purchased by the Kreicbergs as vacant land in 1988. At that time or soon thereafter, they purchased the adjoining parcel of land to the north, with an area of a little over 9400m² and a frontage to Cairns Street. In 1989 an office and caretaker's building, together with 8 self storage blocks (Blocks A to H) were constructed on the original site. It soon became evident that the business would need to expand and the Kreicbergs applied to the Logan City Council for re-zoning approval of 5105m² of the adjoining 9400m² parcel to the north from "Rural" to "Service Industry". The balance 4307m² of that land was to remain in the "Rural" zone. That application was refused and they appealed successfully to the then Local Government Court, which granted the rezoning early in 1991. Following negotiations with the Council about conditions, the Local Government Court made a consent order on conditions in October 1991.
The rezoned land was then surveyed from the balance of the land fronting Cairns Street and incorporated into the land upon which Blocks A to H were situated. The balance 4307 square metres of the land became Lot 21 RP808745. In 1995 storage Block J and part of Block K were constructed (there is no Block I), in addition to footings and slabs for what were to become Block L and Block M, as well as the roadworks, landscaping and services. The Kreicbergs had planned to complete one block each year, Block K in 1996, Block L in 1997 and Block M in 1998, at which time the site would have been developed to capacity.
At some stage, Nevis purchased the land adjoining to the east, Lot 12 RP88336, with an area of 1.373 hectares. At the date of resumption, Lot 12 was undeveloped vacant land.
According to Mr Kreicbergs the construction of Block L and Block M was delayed when earlier roadworks on the Pacific Highway in the vicinity of the self storage complex caused disruption to a number of businesses, including their self storage business. The slabs for Block L and Block M were used for external storage of cars, boats, caravans, containers and earth-moving machinery.
The Resumption:
In June 1996, the Kreicbergs were informed that some of their land may be resumed as part of a project to widen the Pacific Highway. By April 1998 it was clear that a 20 metre wide strip on which the office and caretaker's building and Block A were situated would be required. On 7 July 1998, the Main Roads Department issued the formal notice of intention to resume and the land was subsequently resumed on 25 June 1999. Because of the existing development on the remainder of the site, there was not room to rebuild the office/caretaker's building without demolishing at least one of the other blocks. The Kreicbergs decided to demolish part of Block B and rebuild the office/caretaker's building on that area, as it was the best position for the administration building, being located near the front entrance to the site.Mr Kreicbergs was informed that the Department was working on a deadline for the demolition and removal of the office and caretaker's building and Block A. He alleged that threats were made that the buildings would be bulldozed by January 2000, regardless of whether the new building was completed. He thought that the period of 18 months from the date of the notice of intention to resume was inadequate to complete the rebuilding of the office/caretaker's building and relocate the clients' storage from Block A and Block B. That was a very busy period for the Kreicbergs as they had to plan the required changes to the site, complete the building works, reconfigure compartments in other storage units and move customers' property, as well as continue the self-storage business on the site.
The office/caretaker's building and the whole of Block A were demolished at the expense of the respondent as those buildings were situated on the resumed land. However, it was the responsibility of the claimants to replace the office/caretaker's building. That building consisted of a ground floor office, equipment room, garage and public toilets, with the one-bedroom caretaker's unit on the first floor. The area behind the office, comprising the caretaker's garden and courtyard, was affected by the resumption, as were carports, security fencing, electronic security gates, signage and landscaping.
It was contended by the claimants that it was not possible to exactly replicate the building, although they endeavoured to ensure that it resembled it as closely as circumstances allowed. Construction of Block L and Block M was brought forward and they were completed prior to the demolition of Block A and the eight storage modules of Block B, to provide space to relocate customers' property out of Block A and Block B. Construction of those blocks was completed about the end of June 1999. Demolition of Block A and the required part of Block B commenced in August 1999, so that construction of the new office/caretaker's building could be commenced in the footprint of the demolished part of Block B. It was decided that it was necessary to demolish 8 of the 12 storage modules of Block B to accommodate the new building.
The Kreicbergs signed a building contract with Booker Constructions Pty Ltd (Booker) on 26 August 1999 for the demolition of part of Block B and the construction of the new building. The new building was completed and occupied by early February 2000. Demolition of the original office/caretaker's building then proceeded.
The resumed land has since remained bare ground between the service road and the landscaping in front of the building. The Department has recently spread grass seed on the area and has advised the Kreicbergs that it will be some time before the new service road is constructed. The extent of the disruption to the self storage business that will occur during the construction of the new service road was an issue in this case.Mr Kreicbergs was concerned that the business will suffer in the future during the construction of the new service road, based on his previous experience with roadworks between mid-1995 and mid-1997. He was uncertain what losses had been incurred during the period of office reconstruction, as they had no way of knowing how many potential customers were deterred by the construction activity on and near the site. While Main Roads Department had estimated that construction of the new service road would take 25 weeks, Mr Kreicbergs thought that it could well take longer.
The self storage facility has a range of storage unit sizes and by reconfiguring them, the claimants can vary the number and sizes of the units according to demand. At the time of resumption, Block A and one bay of Block B were configured into smaller units because they were located near the office, facilitating closer supervision of the more frequently accessed smaller units. After resumption, other blocks had to be reconfigured to keep most of the smaller units near the new office.
As there were always comings and goings by clients, the business understandably never achieved 100% occupancy. Mr Kreicbergs said they worked on 90% economic occupancy as being full. He thought that the number of compartments occupied in percentage terms is misleading, as the base figure alters: their records showed the economic occupancy at 87.12%.
The Relevant Legislation:
The assessment of compensation is governed by the provisions of s.20 of the Acquisition of Land Act 1967 which states:
"(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.
(2) Compensation shall be assessed according to the value of the estate or interest of the claimant in the land taken on the date when it was taken.
(3) In assessing the compensation to be paid, there shall be taken into consideration, by way of set-off or abatement, any enhancement of the value of the interest of the claimant in any land adjoining the land taken or severed therefrom by the carrying out of the works or purpose for which the land is taken.
(4) But in no case shall subsection (3) operate so as to require any payment to be made by the claimant in consideration of such enhancement of value. "
In this case each of the four claimants was entitled to make a claim for compensation in respect of the value of its interest in the land taken. Instead, they have taken a practical approach and combined their individual claims into a single claim, as explained earlier. The claimants have based their claim for compensation partly on the "before and after" valuation approach, by assessing the value of the business as a going concern before resumption and the value of the business as a going concern after resumption, the difference being the loss in value to the whole enterprise as a result of the resumption. This method avoids the need for separate assessments, as it combines the loss in value of the land and the loss in value of the business, since both the "before and after" valuations are of the enterprise as a going concern.
The "before and after" method also has an advantage in terms of s.20 of the Acquisition of Land Act. It assesses not only the value of the land taken, but any injurious affection or severance damage, offset by any enhancement to the value of the claimants' other lands: Brisbane City Council v. Lansbury (1977) 4 QLCR 502.
That part of the claimants' claim depends upon the Method A of assessment of compensation by their valuer, Mr Olive, which was made on the "before and after" approach. Mr Olive also made an alternative assessment of compensation for the value of land and improvements only (Method B), but although he said it was a check on his primary method, it was clear that the claimants sought to rely on this alternative method only in the event that Mr Olive's approach in Method A was rejected.
For reasons which I will explain, I think that the "before and after" assessment of compensation, valuing the enterprise as a going concern both before and after the resumption, is the appropriate method to be adopted in this case. Separate assessments of the statutory heads of claim for loss of land, severance and injurious affection and any enhancement to the balance lands held by the claimants are not necessary.Any other compensation claimed by the claimants which does not fall under the statutory heads of claim, must be by way of "disturbance", or is not recoverable at all. In this case such claims were made in respect of those matters encompassed by heads of claim C to I.
Somewhat unusually in these circumstances, head of claim B was dealt with by both the claimants and the respondent as a separate assessment, either as part of "the value of the land taken", or as disturbance. An argument could have been raised that, considered strictly as a business enterprise, the "before and after" assessment of compensation would have adequately addressed the value of the office/caretaker's building at the date of resumption and the value of the new building after resumption. However, the parties took the view that the loss of the building should be treated as a separate assessment under the reinstatement principle. Therefore, the "before and after" assessment in Mr Olive's Method A, which was based on capitalisation of net profits, excluded the office/caretaker's building, while his Method B, his capitalisation of rentals approach, included the building, at least partly.
A somewhat similar situation was encountered in Kozaris v. Roads Corporation (1990) 75 LGRA 346. There a dwelling-house on a farm property was resumed and required demolition. The claimant sought the cost of a replacement home on the property. Although the relevant legislation provided for recovery of "direct pecuniary loss", the reinstatement of the building was dealt with in a manner similar to the treatment of "disturbance" in Queensland.
In respect of the adequacy of the before and after valuation approach in such circumstances, Gobbo J said at p.353:"It was submitted on behalf of the acquiring authority that where portion of a farm or like property was taken, the application of a before and after valuation approach - as was the course it took here - would always provide a proper assessment of compensation. No doubt, in many cases this would be true. It might indeed be a satisfactory approach in most cases if the before and after value was one which reflected the value to the owner. But it would not suffice if the value was limited to market value and if it was clear that market value did not meet the particular circumstances. In any event, as I have already indicated, the proper approach is one that takes into account the particular provisions of s.11B(1)(c)[direct pecuniary loss]. "
Similar remarks could well apply to this case.
Each of the claimants' heads of claim will be discussed later. Before doing so, I will consider the reasoning behind the claimants' claim for compensation, the reasoning and methodology put forward by the respondent and the principal issues between the parties.
The Approach of the Claimants:
The basis for the claimants' case is that before resumption they conducted a self storage enterprise on the land comprising a number of storage blocks, Blocks A to K (there is no Block I) and a building used as an office and caretaker's accommodation. Their intention was to develop two further storage blocks, Block L and Block M, on the northern part of the land at which time the site would have been fully developed, with a total storage capacity of 5445 square metres (according to their valuer, Mr Slater), with no further potential for development. Although they owned adjoining vacant land, Lot 12 and Lot 21, they had no intention of expanding the self storage enterprise onto either of those lots, which they held for future development pending the realisation of the industrial potential of land fronting Cairns Street.
The resumption resulted in the loss of the building housing the office and caretaker's accommodation and the whole of storage Block A. They reasoned that it was necessary to relocate the office/caretaker's accommodation to an appropriate location which meant demolishing 8 modules of the 12 module Block B. This would result in the loss in the future of the storage capacity of the whole of Block A and 8 modules of Block B, amounting to about 415.7 square metres (481m² gross area). They reasoned that they would be entitled to compensation for the loss of value of the self storage enterprise in addition to the costs of relocation of the office/caretaker's building and appropriate costs associated therewith. The claimants' case was based on the evidence of their expert witnesses, including that of their valuer, Mr Olive, who assessed the compensation payable in respect of the loss of the enterprise as a going concern, but excluding the value of the office/caretaker's building. For the cost of relocation of that building, the claimants relied upon the amount which they paid to their builders, Booker, and the evidence of architect Mr Middleton, and their quantity surveyor, Mr Hunter.
Their alternative method of assessment of compensation depended upon Mr Olive's Method B for the loss in value of land and improvements, plus the separate assessment of the loss of value of the business by their accountant, Mr Cooper.
The Approach of the Respondent:
The respondent approached the assessment of compensation quite differently, reasoning that the adjoining land held by Nevis had a highest and best use for self storage purposes and that therefore the claimants had a duty to mitigate their losses by reinstating the lost storage space on part of Lot 21. Under this approach, there would be no long-term loss in value of the business, simply the cost of reinstating the storage space on Lot 21 which, in addition to the cost of construction of the replacement storage blocks, would involve the costs of rezoning, resurveying and reconfiguring the lots.
The respondent accepted that the claimants were entitled to the reasonable costs of relocating the building housing the office and caretaker's accommodation on the area occupied by part of Block B. However, the respondent contended that the building constructed as replacement for the original office/caretaker's building was both larger than, and of superior quality to, the original building; therefore, the constructing authority should not be responsible for meeting the additional cost over and above the cost of establishing a building of similar size and quality to the original building. The respondent challenged as excessive the amount paid by the claimants to Booker and also many of the costs claimed as being associated with the reconstruction of the building, relying on the evidence of architect, Mr van Reit and quantity surveyor, Mr Tanner.
The respondent relied upon the evidence of valuer, Mr Slater, for the value of that part of Lot 21 required to re-establish the storage space; the evidence of engineer, Mr Breene, in relation to the area and cost of development of the land required to establish the lost area; and the evidence of town planner, Mr Brown, to establish that there were no town planning difficulties in re-establishing the storage space on part of Lot 21. A separate assessment for the loss of value of the business was made by the respondent's accountant, Mr Sheridan.
The Issues:
Because of the different approaches taken by the parties, a number of major issues were raised. First, what was the appropriate approach? Should compensation be assessed on the basis that the claimants were required to mitigate their loss by replacing the lost storage space on other land owned by one of them, despite the fact that they had not done so?
The claimants denied there was any such duty beyond acting reasonably, which they contended that they had done. The respondent insisted that reinstatement of the storage space was the correct method. The respondent did not produce an alternative assessment of the going concern value of the enterprise on a "before and after" basis, or a separate assessment of the loss in value of land and improvements, continuing throughout the hearing to rely on the reinstatement principle explained above.
The second major issue relates to the cost of reinstatement of the office/caretaker's building. The claimants relied on their contract with Booker, plus additional costs; that is, what it actually cost them to build the new building. The respondent argued that the new building is both larger than and of superior quality to, the one it replaced.
Another major issue related to the loss of future profits which is likely to result during the construction of the new service road at some time in the future. The service road is to be constructed as part of the 8 lane upgrading of the Pacific Motorway. The best estimate of the project manager for the project, Mr Lutton, was that construction of the service road was likely to commence about the end of the year 2003 and be completed by mid-2004. He estimated that the likely duration of the works would be 25 weeks. The claimants and the respondent relied upon their accountants for assessment of loss of future profits.
Before considering in detail the various approaches of the parties, it is necessary to consider whether the approach adopted by the respondent has any sound basis in law. The respondent conceded that it was reasonable in the circumstances for the claimants to relocate the office/caretaker's building, subject to the dispute about size and quality of the new building. However, the respondent asserted that the claimants had a duty to mitigate future losses by reinstating the lost storage space from Block A and part of Block B onto part of Lot 21.
The separate ownership of the various parcels of land held by the claimants was not an issue. Although Nevis owns Lot 21, for the purposes of this case it was agreed that the corporate veil should be lifted to reveal that ownership and control of all four claimants rests with Mr and Mrs Kreicbergs.Lot 21 was created following the Kreicbergs' successful appeal to the Local Government Court allowing them to extend the existing self storage facility to include the area now occupied by Blocks J, K, L and M. The balance 4307m² of the land became Lot 21 and zoned is "Rural". At the date of resumption, the highest and best use of Lot 21 was for self storage facilities. However, to achieve that highest and best use, the approval of the Logan City Council was required for re-zoning and also for a development permit for a material change of use. The respondent contended that such approvals could be achieved with relatively little delay or cost.
The town planners for the parties, Mr Perkins for the claimants and Mr Brown for the respondent, agreed that any application to re-zone part of Lot 21 and to extend the self storage facility onto that land would have succeeded, as there was no town planning reason why it should have been refused. However, they disagreed as to the time and cost of gaining such approval and the likelihood of any appeal to the Planning and Environment Court, which would have increased both the time and the cost. To some extent they disagreed on the impact of such development on the amenity of the existing residences in Cairns Street and the type of conditions that might have been imposed by the Council to minimise such impact. They also disagreed about the effect of such approval on the future orderly development of the balance area of Lot 21; Mr Perkins was of the view that it reduced the future development options, while Mr Brown thought it could be satisfactorily developed, depending on the demand and requirements at that time, which really amounts to agreeing that it might reduce future options.
Mr Kreicbergs thought that as much as 2,000 square metres may be required to accommodate the two buildings to replace the storage space lost from Blocks A and B, much more than estimated by Mr Breene, the respondent's engineer. Mr Breene initially calculated that 1025 square metres would be required to construct a building to replace the lost storage space. However, when challenged, Mr Breene had some difficulty in designing a new building which would accommodate the lost space and allow for the required number of bays, corner truncations and turning clearances for trucks. The required area from Lot 21 could well exceed 1105 square metres.Mr Perkins expressed the view that any use of Lot 21 would reduce its ultimate utility for a wide range of industrial uses. As Lot 21 narrows towards the Cairns Street frontage, the more of the wider part that is taken up as the site reduced in size, the range of future options is decreased.
The real areas of disagreement between the town planners were in relation to the timetable for gaining approval and, more particularly, the cost. Mr Perkins thought the process of rezoning and development approval could have taken between 6 and 9 months and cost about $71,000, with up to $50,000 more if there was an appeal. Mr Brown was of the opinion that it would have taken 111 days if there was no appeal and at far less expense; he thought an appeal would have been unlikely.
The respondent's approach raises the question that if reinstating the lost storage space on Lot 21 was such a logical approach, why did the claimants not take it? Mr Kreicbergs gave evidence that in considering what action should be taken after the claimants heard about the pending resumption, they did not even consider extending the self storage facility onto part of Lot 21. He said it was only in the last fortnight or so before the hearing, that the representatives of the Main Roads Department had suggested that the claimants could have used part of Lot 21 to rebuild the lost storage space, thereby mitigating their loss. Neither Lot 21 nor Lot 12 had the appropriate zoning. In addition, the Kreicbergs believed that Cairns Street, to which each lot had frontage, would become the main thoroughfare to an industrial area in the future and they intended to hold the two lots for other business developments. If a large part of Lot 21 was rezoned and used for storage, the small balance area would absorb all the roadwork costs, leaving development potentially uneconomic, in Mr Kreicbergs view, because of the development costs. He said that he would prefer not to use Lot 21 for self storage purposes. They already had other self storage facilities and would rather wait, because circumstances change in the self storage industry. If they were to expand, Mr Kreicbergs thought it would be wiser to go to a different site rather than extending onto Lot 21.
The Reinstatement Approach:
The respondent agreed that it was reasonable for the claimants to have reinstated the office/caretaker's building which was located on the land which was resumed, but as explained above, contended that it would have been reasonable and prudent for the claimants to have reinstated the lost storage space from Block A and part of Block B onto Lot 21. On this approach, the cost of reinstatement would be the proper measure of compensation.
Counsel for the claimants submitted that in the present circumstances, the notional reinstatement approach is wrong in principle and involves confusion of two separate notions, (i) reinstatement (properly so called) and (ii) relocation.
The former is often referred to as the West Midland Baptist principle, named after the leading authority Birmingham Corporation v. West Midland Baptist (Trust) Association [1970] AC 874. That principle is to the effect that in determining the value of resumed land for which there is no general demand, such as hospitals, schools, churches and theatres, the cost of reinstatement may be adopted as the measure of value. In other words, it is an alternative method of valuing the land when the market value approach would be inappropriate because of the absence of comparable sales. That is, where land has no "market value" in the traditional sense.
The term "reinstatement" can be used in different senses; the Land Appeal Court identified four categories in Chapman v. Brisbane City Council (A97-87) 3 June 1999 (not reported). When used in the sense of "relocation", it usually applies to the category of cases where a dispossessed owner reestablishes on alternative land, recovering not only the value of the resumed land, but the cost of relocating, which latter cost comes under the heading of disturbance. A sub-category of "relocation" arises when a structure on the resumed land is reinstated (or relocated) onto the balance of the land held by the dispossessed owner: Commissioner of Highways v. George Eblen Pty Ltd (1975) 34 LGRA 207. This concept of relocation will be discussed when considering the value of the office/caretaker's building in the present case.
Counsel for the claimants referred to Mr Kreicbergs' evidence that the matter of reinstatement of the lost storage space on Lot 21 was raised by the respondent only weeks before the hearing, never having previously been suggested. Such a course of action had not been considered prudent by the Kreicbergs; they had acted quickly to take what they considered to be appropriate action when they realised that their land was to be resumed.
In my view, reinstatement of the lost storage space on Lot 21 is not a method of assessment which is appropriate in this case. This is not a case which satisfies the criteria for application of the West Midland Baptist principle, as the evidence shows there is clearly a market for self storage facilities.
It is unusual for a constructing authority to raise reinstatement as the approach that the claimants should have taken. It is even more unusual for that method to be put forward to the exclusion of any other method of assessment of compensation in order to reduce the amount of compensation payable. In matters where reinstatement is raised, it is usually the dispossessed owner who bases a claim for compensation on that approach. Even when such a claim is made, there is authority for the proposition that faced with compulsory acquisition, a claimant ought not be compelled to commence reinstatement action, but could await the court's decision as to whether reinstatement was a justifiable course of action.
In Commissioner of Highways v. George Eblen Pty Ltd, Wells J said at 225:"If it reasonably appears … that there is real doubt as to whether his claim will be allowed in its specialised or in its conventional form, he ought not to be compelled to make a choice, in which he errs at his peril, and to be expected to begin rebuilding in order to escape subsequent stricture that he failed to act with due diligence."
In the present case, just such an accusation has been raised by the respondent, in the sense that the claimants failed to mitigate their loss by not reinstating the lost storage space on Lot 21.
I turn now to consider whether the claimants had a duty to mitigate their loss of storage capacity by extending the complex onto Lot 21.
Duty to Mitigate or to Act Reasonably?
There is some uncertainty as to the extent to which the notion of mitigation is relevant in this context. On the one hand, there is a line of authority which indicates:"The owner is not to be expected to mitigate his loss by 1 cent, but, as a qualification of this, he must be reasonable." Howard v. Commissioner for Railways (1967) 34 CLLR 140 at 174; Sabina Three Gorges Corporation Ltd v. Department of Transport (1997) 18 QLCR 244 at 272.
On the other hand, there are cases where it is said that the claimant is under a duty to mitigate any loss caused by the compulsory acquisition: Pejama Pty Ltd v. Commissioner of Main Roads (1989) 12 QLCR 278 at 289-290; Christies Stone Quarries Pty Ltd v. The City of Tea Tree Gully (1979) 43 LGRA 336.
Regardless of whether the claimant in the case of compulsory acquisition has a duty to mitigate his or her loss, it is well established that he or she must act reasonably. This was illustrated in the decision of the Privy Council in the case Director of Buildings and Lands v. Shun Fung Ironworks Ltd [1995] 2 AC 111 where Lord Nicholls of Birkenhead said at 126:
"Fairness requires that claims for compensation should satisfy a further third condition in all cases. The law expects those who claim recompense to behave reasonably. If a reasonable person in the position of the claimant would have taken steps to eliminate or reduce the loss, and the claimant failed to do so, he cannot fairly expect to be compensated for the loss of the unreasonable part of it. Likewise if a reasonable person in the position of the claimant would not have incurred, or would not incur, the expenditure being claimed, fairness does not require that the authority should be responsible for such expenditure. Expressed in other words, losses or expenditure incurred unreasonably cannot sensibly be said to be caused by, or be the consequence of, or be due to the resumption. "
Counsel for the claimants submitted that the general law principles of mitigation of damages apply to claims for financial loss in these circumstances. That view is supported by M.S. Jacobs QC in "The Law of Resumption and Compensation in Australia" LBC 1998 page 405.
If that view is correct, then the duty is no higher than that expressed by Viscount Haldane, LC, in the House of Lords in British Westinghouse Electric and Manufacturing Co Ltd v. Underground Electric Railways Co of London Ltd [1911-13] All ER Rep.63. In discussing the quantum of damages in relation to breach of contract, his Lordship expressed the view that there were certain broad principles which were quite well settled. He continued at page 69:"The first is that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed. The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent upon the breach, and debars him from claiming in respect of any part of the damage which is due to his neglect to take such steps.
…
… [T]his second principle does not impose on the plaintiff an obligation to take any step which a reasonable and prudent man would not ordinarily take in the course of his business. But when, in the course of his business, he has taken action arising out of the transaction, which action has diminished his loss, the effect in actual diminution of the loss which he has suffered may be taken into account, even though there was no duty on him to act. "
It has been said that the threshold of such reasonable conduct is not a high one. (See Sydney Jacobs, "Damages in a Commercial Context", LBC 2000, page 207). Authority for that proposition was based on the remarks of Lord Macmillan in Banco de Portugal v. Waterlow & Sons Ltd [1932] AC 452 where his Lordship said at 506:
"Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in the nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken."
In the present case I am of the opinion that the claimants have taken reasonable measures and have acted reasonably. They have reinstated the lost office/caretaker's building in an appropriate location, they have brought forward the construction of Block L and Block M in order to accommodate the lost storage space from Block A and part of Block B, and they have done this while keeping the business operating, which cannot have been easy.
I accept Mr Kreicbergs' evidence that the claimants did not even consider expanding the self storage enterprise onto part of Lot 21. Certainly, there is no evidence that the claimants ever intended to do so. There is, however, evidence of an application for town planning consent to extend the self storage facility onto Lot 12, but that seems to have been more for strategic town planning purposes than with any real intention to expand the facility onto Lot 12. There is no evidence of any steps having been taken by the claimants to extend the facility onto Lot 21.
I accept that the claimants are holding Lot 12 and Lot 21 for other purposes after the industrial potential of Cairns Street has been realised. Since Mr and Mrs Kreicbergs own other self storage facilities in other areas it is reasonable that rather than expand the present facility onto the other lots, they would prefer to use them for other enterprises.
In the circumstances, I am of the view that the claimants' duty to act reasonably does not extend to using other land which they are holding for other purposes in order to mitigate the loss of future business profits. In my view, the claimants have acted reasonably in taking the steps that they have taken. Therefore, I find that the claimants did not have a duty to mitigate their loss by expanding the self storage enterprise onto Lot 21 in order to reinstate the lost storage space. Consequently, the method adopted by the respondent in assessing compensation on that basis is not appropriate.
I turn now to consider the "before and after" valuation approach adopted by the claimants' valuer, Mr Olive.
Mr Olive's Assessment of Compensation:
Mr Olive assessed compensation by two methods; his Method A (his preferred method) was essentially an assessment of the loss in value of the property as a going concern, comprising both business and real estate, on a "before and after" valuation basis, but excluding the reinstatement of the office/caretaker's building. He derived the value both before and after the resumption by ascertaining what he considered to be the "estimated net operating profit" both before the resumption and after the resumption, capitalising each of them at the rate of 11.5%, with the difference of $497,051 being the loss in value of the property.
His Method B (which he regarded simply as a check), was an assessment of the loss in value of the real estate only, leaving the assessment of business loss to Mr Cooper. The Method B assessment was also undertaken on a "before and after" basis, by capitalising what he considered to be the market rentals for land and improvements within the complex, both before the resumption and after the resumption. The difference of $385,778 represented the loss in value of the land and improvements as a result of the resumption.
Mr Olive likened this method to that where a "head lessee" had its business affected by resumption, by which I took him to mean the situation where a single lessee was leasing the land and improvements and then subleasing parts of the land, in this case renting the storage space. In effect, it is not much different from the present circumstances where ASS "rents" the land and improvements from Nevis and the Super Fund and then rents out storage space to customers.
Whether rent is actually paid by ASS was not revealed during the hearing, the profit and loss statements for ASS from 1996 to 2000 do not include rent as an expenditure item.
The two capitalisation approaches are recognised methods of valuation, but they rely on different bases and achieve different results, in that the capitalisation of net profits is used to ascertain the going concern value of a business enterprise, while the capitalisation of rentals is used to ascertain the value of land and improvements. However, the results achieved by Mr Olive produced some remarkable inconsistencies. For example, his Method A exercise showed that before resumption the going concern value of the enterprise (land, improvements and business) was $4,682,794, while Method B showed a before resumption value for land and improvements only of $5,700,445. The conclusion would seem to be that the business itself had a negative value of $1,017,651.
This would seem to be reinforced by the assumption that in Method A the net income of the business was $538,521, while in Method B almost the same amount ($513,040) could be made by simply renting out the land and improvements. To put it another way, before resumption after paying rent of $513,040 to the owners of the land, a lessee of the complex would have made only $25,481 profit from the business, based on Mr Olive's assumed net operating profit of $538,521, before resumption.
Similar unusual results can be obtained by examining the after resumption scenarios for each method.
Furthermore, when the loss in value derived from Method B is deducted from the total loss in value derived by Method A, the result shows a loss in value of the business of $111,273, remarkably similar to Mr Cooper's assessment of $111,104, later adjusted to $96,678 in Exhibit 29. But how could that be if, as previously explained, the business had a negative value? When such circumstances were pointed out to him, Mr Olive endeavoured to explain such inconsistencies by attributing them simply to the vagaries of the market or the difference between a valuer's approach and an accountant's approach.
It is necessary, therefore, to examine more closely Mr Olive's reasoning in each of his methods of valuation.
Mr Olive's Method B can be disposed of shortly. It was not his preferred method; it was simply a check. However, as discussed above, it proved to be inconsistent with Method A. Mr Slater, valuer for the respondent, attacked many of Mr Olive's assumptions, particularly his adopted net rental rate of $80 per square metre and his capitalisation rate of 9%. Mr Olive admitted that the evidence from which his $80 per square metre was derived was not strong. It came from sales of large well-leased industrial complexes, not from sales of self storage complexes. It seems also that Method B was undertaken at a later stage than Method A, as Mr Olive was requested to provide a rental breakdown so that Mr Cooper, the accountant, could undertake his assessment. In my view, no reliance can be placed on Method B.
Apart from any other consideration, the inconsistencies between Method A and Method B could be the result of trying to compare an assessment of the going-concern value based on the net profits derived from what is, despite the corporate structures, essentially an owner/operator business, with a value of the real estate derived from a notional rent.
Turning to Method A, Mr Olive did not rely on the profit and loss statements from 1996 to 2000 for the enterprise. He did not think that they provided a true indication of future income, principally because of the disrupting effect that roadworks in the vicinity had on the business of the self storage complex between 1995 and 1997. He accepted Mr Kreicbergs' opinion that the roadworks and changed access had affected the take-up rate of storage by potential new customers and so had adversely impacted upon income. He therefore thought it appropriate to assess what he considered would be the income in "a stabilised trading year". He did not accept the profit and loss statement for 2000, when Blocks L and M were in operation, because of the disrupting effect of the demolition and construction works on the site.
One of the difficulties experienced by both the accountants and the valuers in this case related to the fact that the configuration of the compartments in the various storage blocks was continually changing to meet market demand. Not surprisingly, the smaller compartments attracted a higher rental per square metre than the larger ones. This meant that income also changed with the different configurations, which made for difficulties in calculating not only the income but also the occupancy rate.
Adding to this difficulty was the fact that if there had been no resumption, Block L would not have come on stream until December 1999 and Block M not until December 2000. However, because the resumption resulted in the loss of Block A and part of Block B, the construction was brought forward and Block L and Block M came on stream about July 1999.
Based on information provided by Mr Kreicbergs, Mr Olive undertook an analysis of unit mix in Blocks A and B for 1997-1998 and the occupancy rates for the units available throughout the whole complex from January 1998 to June 1999. However, his calculations were distorted to some extent, as they included the units in Blocks L and M which were not constructed until June 1999.
From his analysis of unit mixes and rental rates, Mr Olive found that before resumption 583 units of various sizes, with a total storage area of 5,443.3 square metres, produced a total weekly rental of $15,947.50, for an annual rental of $829,270. After resumption, 539 units of various sizes with a total storage area of 4,962.1 square metres, produced a total weekly rental of $14,565, or an annual rental of $757,380. Therefore, Mr Olive came to the conclusion that the reduction in weekly rent at 100% occupancy was $1,382.50.
Mr Olive then analysed in some detail the weekly occupancy rate of the self storage enterprise for the 18 months from January 1998 to June 1999. His analysis was made on the premise that the total number of units available remained constant at 454. During that period the occupancy rate did not fall below 80%, occasionally rising to 89%, the average occupancy rate being 84%.
However, Mr Olive considered that occupancy rate to be below the optimum operating capacity, because during that period access to the site had been disrupted by roadworks. He thought that a long-term occupancy rate of 87% could be expected when access conditions stabilised. He explained that any higher occupancy rate would lead to problems. 95% occupancy would be full. An occupancy rate of 90% would indicate to an operator that prices should be increased. At 87% he considered that supply and demand were in balance.
Blocks A and B had been configured as smaller units as they were closer to the office and the entry to the complex. From his analysis of the economic occupancy of those blocks for 1997-98, Mr Olive found that the occupancy rate for those units was above the average for the total complex, averaging 87.12% over that period.
Mr Olive then made an assessment of the estimated net operating profit for the enterprise before and after the resumption, as follows:
Before Resumption
Projected Gross Annual Income
Sundry income $ 12,000
Self storage fees at 100% $829,270
Operating level 87%
Gross annual income $733,465
Deduct Discounts $ 34,950
Sustainable Gross Annual Income $698,515
Deduct Operating Expenses $159,994
Estimated Net Operating Profit $538,521
After Resumption
Projected Gross Annual Income
Sundry income $ 10,800
Self storage fees at 100% $757,380
Operating level 87%
Gross annual income $669,721
Deduct Discounts $ 31,912
Sustainable Gross Annual Income $637,808
Deduct Operating Expenses $156,448
Estimated Net Operating Profit $481,360
The net operating profit figures before resumption and after resumption became the bases for the capitalisation exercise as explained later. However, it is immediately apparent that the sustainable gross annual income shown in the before resumption exercise differs substantially from the total income shown in the profit and loss statements for ASS from 1996 to 2000 which were as follows:
Year 1996 1997 1998 1999 2000
Total
Income ($) 401,459 386,053 463,910 500,801 577,096
Mr Olive gave three reasons why the actual figures in the profit and loss statements were not appropriate: first, the business was adversely affected by roadworks, particularly the Redland Bay roundabout; second, the business was affected by the construction of Blocks L and M and the impact of the relocation of the office/caretaker's building; third, the potential for growth.
Mr Slater disagreed that these were valid reasons. He considered that the effect of the roadworks should not be taken into account and expressed the view that the potential for growth would be reflected in the capitalisation rate rather than the income figures. He thought also that the income figures reflected the fact that there was competition from the "Storage King" facility which opened at Springwood in early 1999.
Capitalisation Rate:
The rate at which the income should be capitalised in order to arrive at the value of the enterprise as a going concern proved to be one of the issues between the valuers. Mr Olive examined the evidence of eight sales of self storage complexes between 1994 and 1999 over a wide ranging area from inner city Brisbane to Caringbah in New South Wales, which showed yields ranging from 11% to 13.2%. He adopted a capitalisation rate of 11.5%, which he considered to be appropriate for the business entity which on his analysis was operating on an occupancy rate of 87%.
His decision was influenced by the location of the complex in the Loganholme commercial and residential area, with a population base of approximately 100,000, and its situation on a major arterial road with excellent exposure. In his opinion, the investment market had accepted self storage complexes as sound business investments and yields had been lower than for other classes of investment due to strong demand. He was also influenced by the design and construction of the improvements and the quality of management of this complex.
Mr Slater thought that the capitalisation rate adopted by Mr Olive was too low. He was critical of the sales basis which Mr Olive used to derive the capitalisation rate, suggesting that some of the sales information relied on by Mr Olive was incomplete and in other cases the sales were not comparable. In summary, Mr Slater thought that a capitalisation rate of 11.5% was optimistic, but not out of the question, provided that it took into account the potential for growth which could be achieved by expanding onto Lot 21 and that it was applied to actual income, not to income that would not be achieved on his calculations for approximately four years.
On the other hand, Mr Olive said that if there was potential for future development he would have adopted a lower capitalisation rate but, in his opinion, with the development of Blocks L and M, the site was fully developed. He agreed that the business could expand onto Lot 21 or Lot 12, however he rejected that approach for several reasons; not only was the land in different ownerships, but there were town planning problems; the owners lost the opportunity to use that land for some other, perhaps higher use later; and most significantly, the owners had no intention of doing so.
Mr Olive rejected the suggestion that his capitalisation rate was too low and should have been 13.5%. He said in arriving at an appropriate capitalisation rate, it was necessary to consider the following characteristics of the self storage industry:
· the businesses sell at relatively low yields compared to other businesses;
· complexes are generally tightly held and rarely trade;
· the businesses have a comparatively low personal goodwill and are less reliant upon the operator than other businesses;
· demand for self storage accommodation originates from a variety of sources, therefore reducing the impact of economic and property cycles;
· whilst the occupancy is on a more informal basis than other property investments, the multi-tenancy nature of the business provides a high degree of risk spreading; and
· users of self storage accommodation place a considerable degree of importance upon security aspects, convenience and cleanliness.
Mr Olive's assessment was as follows:
Before ResumptionProjected Annual Net Income $ 538,521
Capitalised at 11.5% $4,682,794
After Resumption
Projected Annual Net Income $ 481,360
Capitalised at 11.5% $4,185,743
The difference between the value of the enterprise before the resumption and its value after resumption was therefore $497,051, which he concluded was the loss in value of the self storage enterprise as a result of the resumption.
Mr Slater's Valuation Approach:
Mr Slater took the view that as each of the legal entities owning the land was effectively controlled by Mr and Mrs Kreicbergs, there was no impediment to his method of valuation. After seeking legal advice as to the appropriateness of the approach, his assessment of the loss sustained as a result of the resumption was based on the reinstatement of the lost storage space onto part of Lot 21. In his opinion, that was in keeping with the highest and best use of Lot 21, the balance of which still had potential for development in the future, probably with Lot 12.
According to Mr Slater, before the resumption there were eight storage blocks comprising 11 structures, with a total of 489 storage units of varying sizes, with a total storage capacity of 4,486 square metres. A further two blocks, Blocks L and M, were under construction at the date of resumption, or construction commenced shortly thereafter. They had storage areas of 482.4 square metres and 477 square metres respectively, a total of 959.4 square metres and were configured to 69 storage units. He agreed that with the completion of Blocks L and M, the site would have been fully developed, if it could not expand onto other land.
Mr Slater questioned whether 8 of the 12 bays of Block B were required to be demolished, as the new building is of greater floor area than the one that it replaced. However, because, in his words, "this assessment arises from a compulsory acquisition", he accepted that 8 bays were required.
Mr Slater considered that the appropriate method of assessment of compensation was the application of the principles of reinstatement, which he reasoned should at least put the claimants in the position they were in prior to the resumption. He did not independently assess the cost of reinstatement of the office/caretaker's building, but relied upon the estimate of $297,604 by the quantity surveyor, Mr Tanner.
In Mr Slater's opinion, the lost storage space could be reinstated on part of Lot 21 with little, if any, disturbance to the operation of the storage facility. He accepted the advice of the town planner, Mr Brown, and the consulting engineer, Mr Breene, that there were no town planning or engineering impediments to so doing and he accepted their estimates of the costs of gaining approvals and of land development. The cost of reinstating a storage structure of 481 square metres had been estimated by Mr Tanner at $101,630. Mr Tanner accepted the claimants' estimate of the cost to reconfigure existing storage units of $13,044, which he thought was not unreasonable.
Mr Breene had calculated that 1,025 square metres of land would be required from Lot 21 to accommodate the storage space and Mr Slater valued that land at $50 per square metre, or $51,250. He reasoned that the industrial potential of that land would be realised in time, but was remote at the date of resumption; its highest and best use was for self-storage purposes. He found little available direct evidence, but had regard to four sales in the vicinity, of various sizes, which showed rates from $32 to $116 per square metre. In addition, the adjoining parcel to the west (Lot 10 RP203693, of 7,817 square metres) had been on the market for some time, the best offer for which had been $350,000, or $44 per square metre.
In commenting on Mr Cooper's assessment of disturbance, Mr Sheridan believed that disruption was over-stated. He noted that there was a loss of occupancy in 1996 and 1997 of about 7%, but could not say whether that was the result of roadworks. To reach disruption of between 10% to 20%, meant not just the loss of potential new customers, but that existing customers would be leaving in greater numbers, which he thought was unlikely; and even if it did happen, it would be unreasonable to suspect that income would fall immediately. He did not think that the future roadworks would necessarily have the same effect as the earlier roadworks, as disruption could be mitigated by business management.
Mr Sheridan's calculations were based on a weekly income of $14,913.50, taken from Mr Kreicbergs' snapshot of income capacity at June 2000. He felt that disruption would not be significant, adopting 2%. Such a loss of occupancy over 25 weeks amounted to $7,456.75, say $7,500. Mr Sheridan did not discount this figure to present value, as he said the additional amount would cover any cost of making temporary arrangements during the construction period.
After considering the respective arguments, I prefer the reasoning of Mr Sheridan in adopting weekly income of $14,913.50, as it is based on the snapshot in time of the potential income as at June 2000, rather than any theoretical calculation. But actual income as shown in the snapshot as at 30 June 2000 was only $12,319.50. With price adjustment and reconfiguration of units, the actual income may well have increased to $14,900 by the end of 2003. Despite Mr Kreicbergs' misgivings, I accept that the likely duration of the works will be 25 weeks and that it is likely to commence in late 2003.
A weekly income of $14,913.50 over 25 weeks will amount to $372,837.
I am of the opinion that the 15% disruption adopted by Mr Cooper is too severe and that the 2% adopted by Mr Sheridan is unrealistically low. Past disruption in the area has demonstrated that there was a down-turn in income by some 7%, based on Mr Sheridan's own calculations. The evidence suggests that the reduced income was caused by roadworks in the vicinity but not immediately in front of the self storage complex. The future works will take place on the service road giving access to the site and during construction at least one of the driveways will be closed from time to time. Evidence has been given of the deterrent effect of construction works anywhere near a self storage site. Potential customers seeing construction being undertaken are likely to take their business elsewhere.In all the circumstances, I feel that an allowance of 10% for future disruption over the 25 week period is not unrealistic, particularly having regard to the downturn in income during previous roadworks in the vicinity. Disruption to business of 10% will result in a loss of income of $37,284 and when this is discounted for present value at 5% for four years, amounts to $30,673.
I turn now to head of claim H for $12,261.25, the claim for additional expenses to monitor the site during the construction period.
Mr Kreicbergs foreshadowed the necessity to close off one or other of the driveways and the need to employ someone to monitor customers entering and leaving the site by the remaining driveway. He estimated that one of the driveways would be closed off for at least 10 weeks of construction time. However, the claim for $12,261.25 is calculated on the cost of employing a person for 13 hours per day for 5 weeks, with penalty rates at weekends, amounting to $2,252.25 per week. The evidence of Mr Lutton is to the effect that disruption to access will not be anything like that feared by Mr Kreicbergs, but there will be occasions when one of the driveways is closed to traffic.
Mr van Reit suggested an alternative solution. He had made enquiries about a means of dealing with that situation. His proposed solution was to fit an additional card-reader so that access could be obtained both ways at the entry and exit gates.
Mr Tanner had provided Mr van Reit with the costs of such a system, comprising approximately $300 for two bollards, $100 for conduit and cable, $430 for a reader and $400 for labour, a total cost of approximately $1,230, but he admitted that $1500 to $2000 would be reasonable.
In the circumstances I will adopt the amount of $2,000 to cover this head of claim but as it is approximate, I will not discount it to present value.
Therefore, in respect of the claim for compensation for disruption during future roadworks and associated costs I will award the sum of $32,673.
Determination of Compensation:
For convenience I will adopt the heads of claim set out in the claimants' amended claim, Exhibit 56.
Compensation is awarded under the following heads:
A Loss of going concern value $ 301,040.00(for loss of profit during future roadworks see
head of claim H)
B Construction costs of new office/caretaker's ($ 466,573.00
accommodation (
C Other miscellaneous costs incurred in (
demolition and reconstruction are included under (head of claim B (
D Compensation for time of directors of ASS $ 21,000.00
E Legal, valuation and accounting fees incurred in
preparation of claim (agreed) $ 24,880.69
G Bank charges (agreed) $ 4,825.00
H Loss of profits and other costs that will be
incurred during future roadworks $ 32,673.00
I Work required to reconfigure and transfer lots $ 3,727.29*
TOTAL $ 854,719.00
* An amount of $4,002.29 was claimed under head of claim I. The respondent agreed to all items except for $275.00 for surveyor's costs yet to be incurred to amend a plan. No evidence was provided in respect of that item of claim, so it was not allowed.
Interest:
This Court has the discretion to order that interest be paid on the amount of compensation determined, excluding any amount of compensation advanced by the constructing authority: Acquisition of Land Act 1967, s.28. Interest may be awarded from the date of resumption until the day immediately preceding the date on which payment is made. In accordance with the usual practice of this Court, I intend to award interest for the whole of the period.
I was advised that advances totalling $528,040 have been paid as follows:
(a) $ 251,400 on 21 December 1999
(b) $ 276,640 on 16 May 2000
However, interest on professional fees incurred in the preparation of the claim for compensation is payable only from the date of payment of those fees: Varitimos v. Queensland Electricity Commission (1990-91) 13 QLCR 1. Professional fees totalling $24,880.69 were set out under head of claim E in the claimants' amended claim, Exhibit 56. I was informed that all these fees have been paid.
Determination and Orders:
Compensation is determined in the sum of Eight hundred and fifty-four thousand, seven hundred and nineteen dollars ($854,719) and the respondent is ordered to pay the claimant that amount.
I further order that the respondent pay interest at the rate of 6.25% per annum making allowance for the various professional fees agreed under head of claim E, at the dates upon which such fees were paid;
· on the amount of $854,719 from date of resumption 25 June 1999 until 21 December 1999 when the first advance was paid;
· on the amount of $603,319 from 22 December 1999 until 16 May 2000 when the second advance was paid;
· on the amount of $326,679 from 17 May 2000 up to the day immediately preceding the date on which payment of compensation is made.
(JJ Trickett)
President of the Land Court
0
0
0