Pajares v State of Queensland
[2003] QLC 44
•23 June 2003
LAND COURT OF QUEENSLAND
CITATION:Pajares v State of Queensland [2003] QLC 0044
PARTIES:Luis James Pajares
(claimant)
v.State of Queensland
(respondent)
FILE NO: A2001/0689
DIVISION: Land Court of Queensland
PROCEEDING: Claim for compensation consequent upon the resumption of land for National Park Purposes by the State of Queensland under the Acquisition of Land Act 1967
DELIVERED ON: 23 June 2003
DELIVERED AT: Brisbane
HEARD AT: Townsville
MEMBER: Mr JJ Trickett, President
ORDERS:1. Compensation is determined at Three Million Six Hundred and Ninety-six Thousand Dollars ($3,696,000).
2. I order that the respondent pay interest at the rate of 6 per cent per annum on the amount of $3,670,000 from the date of resumption, 19 November 1999, until 13 April 2000 when the advance was paid; and on the amount of $1,840,000 from 14 April 2000 until 25 August 2000 (which the parties agreed is the appropriate date that the legal and valuation fees were paid); and then on the amount of $1,866,000 from 26 August 2000 up to the day immediately preceding the date upon which payment of compensation is made.
CATCHWORDS: Resumption - Valuation - principle of valuation - Land resumed for national park purposes - Habitat for mahogany glider - Highest and best use of undeveloped land - Potential for grazing and sugar cane - Acquisition of Land Act 1967
Valuation - Particular factors in valuation - Town planning restrictions - Pointe Gourde principle - Other obstacles for development - Potential to drain low-lying land
Valuation - Method of valuation - Direct comparison with comparable sales - Different stages of development sales and subject land - Appropriate sales - Whether fall in the market for sugar cane land - Added value of timber treatment
Resumption - valuation - Principles of valuation - Special value - Appropriate case for special value - Special value and disturbance - Assessment of special value - Percentage of land value applied
Valuation - Particular factors in valuation - value of commercial timber - Method of assessment.
Resumption - Disturbance - Costs to purchase replacement property - Land not used but held for expansion of claimant's agricultural and grazing business
Resumption - Disturbance - Professional fees incurred in preparation and lodgment of claim - Claimant changed solicitors - Claim for disturbance restricted to preparation of claim prior to serving on constructing authority. S.24(2A) Acquisition of Land Act 1967.
SOLICITORS: Suthers Taylor, Lawyers, for the claimant Crown Solicitor, Crown Law, for the respondent
APPEARANCES: Mr CL Hughes SC and Mr RM Needham for the claimant Mr DR Gore QC and Mr RS Jones for the respondent
This is a claim for compensation by Mr Luis James Pajares (the claimant) consequent upon the resumption of an area of 1,248 ha by the State of Queensland (the respondent) for National Park Purposes on 19 November 1999.
The Resumption
On 28 May 1999 the respondent served on Mr Pajares a Notice of Intention to Resume an area of about 1,240.7 ha from his land described as Lot 122 on Plan CWL2991, Parish of Tyson, County of Cardwell, containing an area of 2,311 ha. The land was formally taken for national park purposes by notice published in the Government Gazette on 19 November 1999. The area was later amended to 1,248 ha.
A statement of reasons dated 21 May 1999 by the Director General of the Department of Environment and Heritage, set out the reasons for the proposed compulsory acquisition:
"The reasons for the decision to acquire lot 122 (part) on plan CWL2991 are as follows:
1. The area is particularly significant for the maintenance or restoration of habitat of the endangered Mahogany Glider, and includes endangered lowland rainforest habitat for the endangered Southern Cassowary. In addition there are extensive and diverse wetland ecosystems, including forested freshwater wetlands, brackish bulkuru swamps and mangroves.
2. On the basis of its nature conservation values and the proposal to designate the subject lands as critical habitat, the view was formed that it is an area of major interest in accordance with section 102 of the Nature Conservation Act 1992."
The Claim for Compensation
On 15 February 2000, a claim for compensation was served by the claimants then solicitors on the respondent under s.19 of the Acquisition of Land Act 1967, the details of which are as follows:
Land $5,030,000.00
Improvements Clearing $60,000.00
Timber $200,000.00
Disturbance: Fees and Outlays – acquisition of alternative property $211,600.00
Valuation, legal and consultancy fees $50,000.00
Total $5,551,600.00
That claim was referred by the claimant's present solicitors to the Land Court by way of Originating Application filed in the Land Court Registry on 16 November 2001.
Then on 30 January 2003 (the last day of hearing), Mr Hughes SC, senior counsel for the claimant was granted leave to amend the claim to $5,578,018.75, made up as follows:
Land (cleared to grazing standard)
123ha (Class 1 arable) @ $8,000 per ha $984,000.00
72 ha (Class 2 arable) @ $6,000 per ha $432,000.00
254 ha (Class 2/3 arable) @ $5,000 per ha $1,270,000.00
387 ha (Class 3A arable) @ $4,500 per ha $1,741,500.00
145 ha (Class 3B drainage not feasible) @ $3,000 per ha $435,000.00
52 ha (Class 4 land grazing) @ $3,000 per ha $156,000.00
215 ha (Class 4/5 mangrove) @ $775 per ha $166,625.00
1,248 ha$5,185,125.00
Less cost to clear to grazing standard 1,033 ha @ $750 per ha $774,750.00
$4,410,175.00
Plus special value at 15% $661,526.00
$5,071,701.00
Plus value of commercial timber $182,000.00
$5,253,701.00
Plus disturbance:
· Legals and stamp duty to purchase replacement property $207,257.00
· Legal, valuation and other consultants'
fees for preparation of claim $117,060.75
Total$5,578,018.75
The Final Position of the Respondent
The final position of the respondent with regard to the assessment of compensation was $1,802,527 made up as follows:
Land$1,566,500.00 Special Value $78,325.00 Disturbance $26,000.00 Commercial timber $131,702.00 Total $1,802,527.00
Background
The claimant, Mr Pajares, is a cane farmer, having been involved in the sugar cane industry for nearly 50 years. His father and grandfather were also involved in the sugar cane industry. Together with his wife and two adult sons, he lives on a cane farm of about 100 ha (the home farm) which he inherited from his father situated near Euramo, just south of Tully.
By 1970, the home farm was fully developed for sugar cane and in seeking a larger area of land for expansion of his sugar cane enterprise or for diversification of crops, Mr Pajares entered a Government ballot for some leasehold land. He was successful in obtaining Portion 122, Parish of Tyson (later described as Lot 122 on Plan CWL 2991), which was the largest portion of land offered. The block was heavily timbered and had no improvements. There were conditions attaching to the lease requiring the lessee to develop the land for pastoral purposes, including the clearing and planting of a certain area to pastures and the construction of cattle yards and fencing.
In about 1974, Mr Pajares applied to freehold Portion 122, having complied with the conditions of the lease. He purchased the freehold interest in the land in 1980. However, prior to the conversion of tenure, some timber had been removed by the Crown.
Mr Pajares commenced developing the land immediately after obtaining the lease. He purchased his own clearing machinery and started at the north-western part of the property. As development continued, he purchased more and more cattle and was breeding and selling cattle successfully on the leasehold land, in addition to working the home farm for sugar cane. Cattle were run on Portion 122 from about 1975 until about 1995.
In about 1975, he was granted an assignment on part of Portion 122 and since then he has grown sugar cane in conjunction with cattle grazing. After freeholding Portion 122, he continued to develop the land and both his sons have their own farms on his retained land, with their own assignments to the Tully Sugar Mill. His sons live on the home farm and work with him. Prior to the resumption, it had been his intention to develop Portion 122 as a family enterprise.
Mr Pajares stated that it had always been his intention to subdivide Lot 122 so that his two sons would each have their own farms. Another block would be transferred to his wife, while he retained the balance of the land. An application to subdivide Lot 122 into four lots was conditionally approved by the Cardwell Shire Council in November 1993. The plan accompanying the Council's conditional approval shows that the land east of the stock route (road reserve) was to be subdivided into three lots each of about 405 ha, with the balance of Lot 122 being that area west of the stock route.
The conditions relating to the subdivisional approval included the following:
·the subdivision must be commenced and the plan of survey lodged with the Council within two years, or the approval lapsed;
·upgrading the existing and proposed access road to a rural gravel standard, including 8 metres wide formation and 4.3 metres of gravelling;
·all mangrove lands to be excised from the property and surrendered to the Crown for inclusion in the Murray River Fish Habitat Reserve;
·dedication of a 100-metre wide esplanade between the mangrove lands and the property;
·in all other areas, a 20-metre esplanade to be dedicated on the property frontages to the Murray River and Bedford Creek;
·areas of existing tea-tree to remain undeveloped or excluded from the subdivision, until the potential and existence of acid sulphate soils had been fully investigated and determined.
Mr Pajares explained that he did not proceed with the subdivision because he considered the conditions to be too harsh. He was able to achieve his goal of providing each of his sons with his own farm and assignment, by leasing part of his land to each of them. In any case, before the subdivision approval had expired, Mr Pajares was aware in June 1995 that the State Government required part of his land.
For the purpose of developing the property, Mr Pajares acquired a considerable amount of machinery and equipment, which is housed in a large machinery shed on the retained land, incorporating a mechanical workshop with all necessary tools and equipment. In addition, Mr Pajares owns equipment for the harvesting and cultivation of sugar cane and undertakes the harvesting of some nearby farms.
In the mid-1990's, the Tully Sugar Mill extended its tramline to the property. It terminates on the retained land. Mr Pajares contributed financially to the installation of the tramline.
Mr Pajares explained that his method of development was to crash the timber at least two years prior to its being needed for sugar cane. Once crashed, the fallen timber was stacked into windrows prior to seeding for pastures. The windrows were not always burnt. Cattle were then run on the newly developed land until, as assignments became available, the land was further developed for sugar cane. Having his own machinery, it was easier and cheaper to develop the land as he needed it.
Some of the land which was developed on the retained land required some drainage, but not to an unusual extent for the Tully area. Substantial stands of timber were left for shade and along watercourses.
Mr Pajares claimed that he successfully produced crops of bananas, watermelons, pumpkins and soya beans, in addition to sugar cane. Neighbouring lands also grow those crops in conjunction with sugar cane.
The State Government started to show interest in part of the property in the early 1990's. Mr Pajares said that in about 1995 he was advised that the Government wanted to negotiate the purchase of part of his land to protect habitat for the mahogany glider. However, he did not want to sell any of his land because it was needed for future expansion of the family's agricultural and grazing enterprise. Furthermore, the loss of such a large area of land would have resulted in his having more machinery than required.
The Government's interest in the land was manifested by the issue on 19 June 1995 of an interim conservation order under the Nature Conservation Act 1992 by the Minister for Environment and Heritage. Mr Pajares said that he was in the process of crashing a number of areas when that first interim conservation order was issued. The order was to remain in force for 60 days and it effectively prevented him from clearing any of the land covered by that order, which appears to approximate the area which was eventually resumed.
According to Mr Pajares, it was after receipt of that interim conservation order that he was notified by the Department of Environment that the Government wanted to acquire part of his land. Negotiations were then commenced and Mr Pajares attended a number of meetings. During those negotiations he did not recommence clearing his land. By late 1997, when nothing had come of the negotiations, he recommenced clearing.
Then on 17 December 1997, a second interim conservation order was issued, also for 60 days, over part of the property, once again, approximating the area eventually resumed. That interim conservation order expired in mid-March 1998, but by that time Mr Pajares had negotiated an agreement with the then Minister for the Environment, Mr Brian Littleproud, that approximately 650 ha of land would be resumed in accordance with a plan signed by Mr Pajares and the Minister and dated 3 March 1998. The plan covered the eastern part of the property, but the area was significantly smaller than the 1,248 ha eventually resumed.
At the time of signing the plan, Mr Pajares understood that a binding agreement had been reached as to the area to be purchased. The only outstanding issue was the amount to be paid. Following the agreement, an officer of the Department, Mr Peter Morrison, was sent to peg out the agreed line (the Littleproud line).
According to Mr Pajares, on 2 November 1998, he and one of his sons started crashing timber with two bulldozers and a chain in the area that he was to retain under the agreement with Mr Littleproud. On 9 November 1998, after crashing for about a week, they were stopped by another interim conservation order for 60 days. That order was extended for another 90 days. Then on 9 April 1999, a further interim conservation order was issued for 60 days and that was extended for a further 90 days. A final interim conservation order was issued on 3 September 1999 for 60 days and was also extended for a further 90 days.
Those interim conservation orders extended from 2 November 1998 up to the date of resumption. They effectively prevented Mr Pajares from developing the land up until the subject land was resumed on 19 November 1999. The area resumed was much larger than had been agreed with Mr Littleproud. Mr Pajares said that following a change of government, the Department had informed him that the agreement with Mr Littleproud was off and that negotiations would commence in respect of the larger area. Mr Pajares said that he felt that he had been unfairly treated in this matter.
Mr Pajares claimed that the interim conservation orders were issued while he was progressively clearing his land and he had been advised on numerous occasions that the clearing activities were the cause of the orders being issued. He was therefore reluctant to implement his future plans for development. As a result of the prohibition on clearing, he was prevented from clearing regrowth on land which he had previously chained in 1993. It had been his practice to leave the areas that had been chained, while development was undertaken elsewhere. Because of the interim conservation orders he had insufficient land to graze cattle, being forced to use pasture land to expand his sugar cane operations. However, Mr Pajares did not precisely identify the location of the area that had been crashed prior to the interim conservation order of 9 November 1998.
Claims for compensation in respect of some of the interim conservation orders had been lodged with this Court, in addition to the claim for compensation for the resumption. Those claims will be considered separately.
Clearly the Government was interested in and resumed most of the timbered land. According to Mr Cross, the valuer for the respondent, approximately 665 ha (or 63%) of the area retained by Mr Pajares was developed for sugar cane at the date of resumption, while on a further 110 ha the timber was crashed awaiting further development. The remaining 288 ha was timbered land. Mr Pajares gave evidence that most of the retained land had been developed at the date of resumption. He estimated that perhaps a further 200 ha would be available for development and assignment
There was little clearing on the resumed land. Mr Eales, the valuer for the claimant, mentioned an area of approximately 20 ha that had been crashed and burnt, but which had reverted due to extensive regrowth. Mr Cross made no mention of any clearing. However, during his evidence-in-chief, Mr Pajares' attention was drawn to an area of thinner vegetation north of the "tongue" of the retained land, which shows clearly on the aerial photograph dated October 1997.
When questioned about that area of thinner vegetation, Mr Pajares explained that it had all been crashed and a lot of it had been stacked into windrows but regrowth had come up since. However, he could not recall when he crashed that area as they had been crashing timber for 30 years and to remember specific areas was practically impossible.
It seems that during the negotiations with Mr Pajares about compensation, the respondent obtained a number of valuations of his land from Mr Cross. The claimant's solicitors obtained the details of three of those valuations under the Freedom of Information Act 1992.
·The first of those valuations was made as at 2 May 1997. It was for an area of approximately 1,482 ha for a total of $1,745,000 for the value of the land.
·The second valuation was made as at 12 January 1999 for an area of approximately 1,240 ha. The total valuation was $2,840,000, comprising $2,745,000 for the value of the land and $95,000 for the value of timber.
·The third valuation was made as at the date of resumption, 19 November 1999, also in respect of an area of approximately 1,240 ha. The total of that valuation was $1,830,000, comprising $1,594,473 for the value of the land, $130,000 for the value of timber, $79,723 special value and $25,000 for professional fees.
When questioned as to the substantial difference in the land value in the second and third valuations, Mr Cross explained that an area of 100 ha, shown on DPI sugar suitability mapping as Class 1, had been shown by later contour information (the photogrammetry) to be low lying, so he had downgraded it to Class 4. In addition, he had concluded that values for sugar cane land had fallen substantially. These matters will be considered in detail later in these reasons.
Mr Pajares was paid an advance against compensation of $1,830,000 on 13 April 2000. At that time, if not earlier, he would have been aware of the respondent's downgrading of compensation offered.
The Subject Land
There are several descriptions of the resumed land in the various reports of the expert witnesses in this case, all of them contentious to some degree. However, it was accepted that the subject land was resumed from a larger irregular shaped parcel of land of 2,311 ha, situated on the lower reaches of the Murray River flood plain, which is subject to periodic inundation. The Murray River formed part of the western boundary and the whole of the southern and eastern boundaries. Near the most easterly point is the confluence of the Murray River and Bedford Creek, which forms the north-eastern boundary of the parent parcel. In its natural state, the parent parcel comprised level to easily undulating coastal forest and scrub, parts of which are low lying, with areas of rainforest vine scrub fringing the Murray River. Towards the east, there is an area of low-lying tea-tree forest, swampy in parts, while areas of mangroves fringe the lower Bedford Creek and part of the eastern Murray River. The confluence of the Murray River and Bedford Creek is only a short distance from the mouth of the Murray River where it discharges into the Pacific Ocean.
The virtually undeveloped resumed land comprises the eastern area of the parent parcel, separated from the largely developed retained land by a boundary running roughly north/south, except for a "tongue" of partially developed land protruding into the resumed land. It is essentially bounded by the Murray River on the south and east and by Bedford Creek on the north-east. The northern boundary extends from Bedford Creek for a distance of approximately 1 km westerly to the retained land. The resumed land includes part of the rainforest, part of the easily undulating sandy coastal forest, virtually all the low-lying tea-tree country and swamps and all the mangrove areas.
Mr Lait, the drainage expert for the claimant, provided the following useful description of the land forms and natural drainage features of the resumed land:
"The resumed land comprises elevated beach ridges and swales in the west, giving way to a broad undulating flood plain at the confluence of Bedford Creek and the Murray River. A complex system of shallow, interconnected waterways and cut-off meanders has developed within the flood plain. Natural drainage of this area is compromised by sand dune development to the east. Natural drainage is restricted to a few poorly defined outlets on the Murray River. The north-south tending ridges on the western side of the area rise to 8 or 9 metres whilst areas near the confluence of Bedford Creek and the Murray River are at or below 2 metres AHD.
A very low area exists just to the east of the currently developed sugar cane block in the centre of the resumed land. This land is an abandoned estuary and marine plain that may have been a former confluence and mouth of the Murray River and Bedford Creek. Sand-dune development by the prevailing southeasterly winds has accreted sand and cut off this former mouth. This area is very low, with low gradients. [Mr Ridge] has identified that a potential for acid sulphate soil types may also exist in this area.
This low area was excluded from the potential areas of agricultural development without further consideration."
Situation and Access
The retained land is situated approximately 16 km south of Tully and approximately 3 km east of the Bruce Highway. Access to it is by means of the formed gravel Stamp Road, which runs to within 1.8 km of the resumed land. Although there are two points of legal access to the resumed land by way of surveyed roads, neither is made. The only practical access is through Mr Pajares' retained land.
The Case for the Claimant
The amended claim for compensation for $5,578,018.75 comprised various components which depended upon the advice of several experts. The principal component was the valuation of $5,071,701 made by registered valuer, Mr GW Eales. The valuation of commercial timber of $182,000 was made by timber expert, Mr M Bell. The disturbance item of $207,257 for legal and stamp duty costs of purchasing a replacement property was based on a percentage of Mr Eales' valuation. The other disturbance item of $117,060.75 for legal and other professional fees involved in the preparation of the claim by solicitor, Mr BG Taylor. Issue was joined by the respondent on each item of the claim.
The Case for the Respondent
The final position of compensation assessed by the respondent of $1,802,527 also depended upon the advice of various experts. The principal component of the respondent's figure was the valuation made by registered valuer, Mr SA Cross, of $1,644,825. The valuation of commercial timber of $131,702 was made by timber expert, Mr A Davis. The disturbance item of $26,000 was based on what the respondent considered to be the legal and valuation fees that would reasonably be involved in the preparation of the claim for compensation.
Before examining the details of the valuations made by Mr Eales and Mr Cross, it is first necessary to consider the assumptions and advice upon which the valuers relied. One of the initial issues to be resolved is in relation to the highest and best use of the subject land.
The Highest and Best Use
It was common ground between the valuers that the highest and best use of part of the land would have been in its immediate potential for the growing of sugar cane. Mr Eales was of the view that there was also potential for bananas and tropical fruit trees, such as papaws. However, they disagreed as to the area of land suitable for sugar cane. In each case, that was largely dependent upon the advice of other experts.
Mr Eales assumed that an area of 836.7 ha could have been developed for sugar cane, while the balance area of 411.3 ha would not have been developable for that purpose. On the other hand, Mr Cross assumed that only 512 ha could have been developed for sugar cane production, with the balance 736 ha unable to be developed.
Town Planning Restrictions
It was common ground between the parties that at the date of resumption the Cardwell Shire Council could not have prohibited development of the subject land for agricultural purposes. The only real issue related to the conditions that may have been imposed in respect of development of part of it.
Under the 1983 Shire of Cardwell Town Planning Scheme, part of the subject land was zoned "Rural (Agriculture)" and part "Rural (General Farming)". In both zones agriculture (including growing of sugar cane) and animal husbandry (including grazing) were permitted uses and did not require consent of the Council. However, the 1997 Town Planning Scheme was gazetted on 15 May 1997. While the northern part of the land was included in the "Agriculture" zone, where use for neither growing sugar cane nor grazing required Council consent, the greater part of the land was included in the "Natural Resource Protection" zone. In that zone, both agriculture and animal husbandry were "permitted development subject to conditions". However, an application for development could not have been refused.
The respondent argued that consistent with the stated intent of the zone, "to conserve, preserve and enhance the Shire's natural resources", the Council could have imposed conditions requiring any applicant to alter the proposed development or scale it down.
The claimant argued that the effect of the inclusion of part of the land in the "Natural Resource Protection" zone and the Council's power to impose conditions on permitted uses, must be ignored. The claimant relied on the principle in Pointe Gourde Quarrying and Transport Co Ltd v. Sub-Intendent of Crown Lands (Trinidad) [1947] AC 565. The application of that principle was explained and developed by the High Court in Housing Commission (NSW) v. San Sebastian Pty Ltd (1978) 140 CLR 196.
In San Sebastian, the High Court found that where zoning or planning restrictions on the use of the resumed land was simply a step in the process leading to the resumption of that land, those restrictions on use should be ignored in valuing the land for purposes of assessing compensation. In that case, the High Court was considering a statutory statement of the principle in the New South Wales Act, but the Court's findings are of general application. The High Court said at 206:
"A greater difficulty in applying the principle of assessment which is enacted in S124 of the Public Works Act arises as a result of planning and land use legislation and the processes whereby statutory restrictions on land use are imposed. Restrictions on land use, so that, explicitly or practically, use is restricted to a use for a public purpose for which the land might be resumed, are commonly imposed as a result of consultation with or direction by the public authority concerned with the carrying out of the particular public purpose. In such a case where there is a direct relationship between the restriction on land use and the proposed establishment of the public works the effect on value of the zoning or restriction ought to be ignored."
The 1997 Planning Scheme for the Shire of Cardwell was gazetted on 15 May 1997, but would have been in the course of preparation long before that. There is evidence that various Government instrumentalities were discussing the Government's interest in the subject land and other lands with the Council, during the preparation of the plan. On 31 October 1995, the Department of Housing, Local Government and Planning wrote to the Cardwell Shire Council referring to the gazettal of the Nature Conservation (Mahogany Glider) Conservation Plan under the Nature Conservation Act 1992. The letter went on to require that "in any planning scheme review, Council should ensure scheme provisions are consistent with the conservation plan."
Prior to that letter, the Government had manifested its interest in acquiring the subject land. The first interim conservation order had issued in June 1995 and after that the Government had opened negotiations with Mr Pajares with a view to purchasing the land. Perhaps the most compelling evidence of the Government's concern to ensure restrictions were imposed on the use of the land was given by Mr Morrison of the Environmental Protection Agency (EPA). Under cross-examination by Mr Hughes SC, senior counsel for the claimant, he frankly conceded that the EPA had been trying to get other instrumentalities to help it protect the mahogany glider land. A little later, he stated that he was aware that the EPA had influenced the Cardwell Shire Council to put land in which the Queensland Government was interested in a zone which helped to protect mahogany glider habitat.
Evidence in this regard was also given by town planner, Mr C Schomburgk, who was called by the claimant. Mr Schomburgk was unable to find that the Mahogany Glider Conservation Plan had ever been gazetted. It was only ever in the draft stage. After examining the relevant material, Mr Schomburgk concluded that the State Government had influenced the change in the planning scheme.
There was further evidence of the Government's influence in this regard. As part of the negotiations in September 1996 to purchase a neighbouring property owned by J & D Jones, the Department of the Environment arranged for the Council to remove the Jones' retained land from the "Natural Resource Protection" zone and include it in the "Agriculture" zone in the draft town plan. The 1997 scheme was not gazetted until May of the following year.
For the purposes of his valuation, Mr Eales for the claimant, ignored the effect of the "Natural Resource Protection" zone. On the other hand, Mr Cross, for the respondent, was of the view that conditions similar to those which were imposed by the Council on the conditional approval for the subdivision of Lot 122 into four lots in November 1993, would be imposed.
Mr SA Cole, the town planner for the respondent, contended that the conditions of the 1993 approval would have been a starting point for consideration of an application for notification to use the land in the "Natural Resource Protection" zone. He said that between the date of the approval and the date of resumption, there had been a lot more emphasis on environmental aspects.
However, in my view, the evidence clearly established that there was a direct relationship between the zoning restriction on the land and the proposed resumption. While the Cardwell Shire Council may not have been directed to impose the "Natural Resource Protection" zone on the required land, there is no doubt that the zoning was imposed "as a result of consultation with ... the public authority concerned with the carrying out of the particular public purpose." (San Sebastian 206) Therefore, in accordance with the San Sebastian principle, the effect of the change of zoning from "Agriculture" to "Natural Resource Protection" on the value of the resumed land must be ignored.
The respondent argued that there was no Pointe Gourde issue in this case, as it was analogous to the well-known turtle rookery case, The Crown v Murphy (1990) 71 LGRA 1. In that case, after discussing the principle in San Sebastian, the High Court went on to state at 4:
"Of course, a characteristic or attribute of the land which affects its value must be taken into account in the assessment of compensation even if the planning restriction which is a step in the process of resumption is dependent upon or directed to that characteristic or attribute."
Mr Hughes, for the claimant accepted that a characteristic or attribute of the land which affects its value must be taken into account, but contended that in this case the attribute was confined to the river frontage as a fauna corridor. This, he argued, was catered for in the concept scheme of development advanced by the experts for the claimant.
In my view, it is not valid to compare the possibility that the subject land is habitat for the mahogany glider, with a world recognised turtle rookery confined to a specific part of the Queensland coast. The presence of the mahogany glider on the subject land is far from proven. Approximately 75,000 ha of the species habitat was under some kind of protective tenure, while a further 23,940 ha of habitat was on freehold land. According to the zoologist called by the respondent, Dr SM Jackson, there have been no sightings of the mahogany glider on the subject land, but its cry was heard in November 1995.
In any case, if the attribute did exist in the Murphy sense, it would have been limited to the relatively narrow corridors along the Murray River and Bedford Creek. Mr Morrison confirmed that where the EPA had a concern about mahogany gliders, its recommendations for the development of sugar cane lands were to the effect that where areas were identified as important habitat corridors, a riparian zone of 20 metres each side of a creek should be allowed.
In Murphy, rezoning was required to allow the proposed development. In this case, no approvals would have been necessary to achieve the highest and best use of agriculture and grazing. In my view, it is quite different to the Murphy situation.
The Likelihood of Sugar Cane Assignments
In addition to ascertaining the requirements of the Cardwell Shire Council for the development of the subject land for sugar cane growing, a prudent purchaser of that land would have investigated the likelihood of being granted an assignment to grow sugar cane.
Most of the sugar cane lands in the area have assignments to the Tully Mill, although there was evidence from several witnesses that some lands even further afield were supplying sugar cane to the Mourilyan and South Johnstone Mills, with subsidised transport costs. However, as all the sugar cane lands of the claimant and his family are assigned to the Tully Mill and the cane tramline to that mill is only a short distance away on the retained land, a prudent purchaser would have first endeavoured to obtain assignments from the Tully Mill.
Those investigations would have revealed that the body responsible for granting assignments, the Tully Local Board, had adopted the recommendations of the Department of Environment and Heritage and the Department of Natural Resources regarding conditions attaching to new assignments. Those conditions in draft form were appended to a letter dated 1 September 1998 to the Chairman of the Tully Local Board from officers of those two Departments, including Mr Morrison, who was chairman of an advisory body, the Technical Review Committee. The immediately relevant recommended conditions were as follows:
" Draft Conditions for Attachment to New Assignments
1.This grant of assignment must be utilised on land categorised as classes 1, 2 or 3 by the Department of Primary Industries' land suitability criteria.
2.This grant of assignment excludes those areas of land which are:
(a)Land categorised as classes 4 or 5 by the Department of Primary Industries' land suitability criteria.
(b)Watercourses, natural drainage lines and preferential flow paths.
(c)Wetlands, swamps, marshes, lagoons and lakes.
(d)Mangrove areas and other areas naturally subject to tidal inundation.
(e)Riparian zones of a width which complies with the CSRIT method of assessment along watercourses, drainage lines and preferential flow paths.
(f)Areas below the 3.00 metre contour (Australian Height Datum)
...
8.Areas of significant remnant habitat as delineated on a Property Management Plan negotiated and endorsed by QDoE are expressly excluded from this grant."
According to Mr Morrison, where areas had been identified as important habitat corridors for the mahogany glider, riparian zones of 20 metres on both sides of a watercourse were recommended.
In this case, the most controversial aspects of those conditions concern the recommendations that assignments be granted only in respect of land categorised as Class 1, 2 or 3 by the DPI land suitability criteria, and that land below 3 metres AHD contour be excluded from any assignment.
The compensation payable in this case depends upon the area of land that could have been developed for sugar cane and for grazing. The claimant contended for a significantly greater area than the respondent. However, in presenting their respective cases, both of them relied on information which could not have been available to a prudent purchaser at the date of resumption. Of critical importance is the information with regard to mapping and contour levels that was available to such a prudent purchaser as at 19 November 1999.
The Information available at the Date of Resumption
There was no dispute that at the date of resumption the best information available, in addition to aerial photography flown in October 1997, was the soil mapping produced by the CSIRO and agricultural land suitability assessment produced by the Department of Primary Industries. This information was available in the early 1990's. For convenience, I will refer to it as the DPI soils and land suitability mapping.
That mapping was used by the Tully Local Board, together with the aerial photographs, to determine areas suitable for granting assignments. The difficulty in making such assessment without better information was conceded by Mr Morrison in his joint letter to the Tully Local Board of 1 September 1998 which stated:
"Adopting a conservative approach it is recommended that no new assignment be granted below the 3.00 metre contour. This is very difficult to assess because of the lack of detailed contour information in the areas of the applications for this year." (p.5)
More accurate contour information was produced in 1999 as part of a topographic mapping project for the Riverside Murray Valley Water Management Board (RMVWMB), using funding under the Sugar Industry Infrastructure Project (SIIP) administered by the Department of Natural Resources. The purpose of the project was to obtain topographic mapping over the Tully River and Murray River floodplains, to assist with the future development of sugar cane production. According to the project manager, Mr H van der Heide, the mapping data was delivered to the RMVWMB progressively between 4 November 1999 and 5 January 2000. The crucial digital terrain model (DTM) was delivered on 19 November 1999, coincidentally the date of resumption. However, the contour mapping and the DTM (which were derived from photogrammetry) were not made available to the Tully Local Board and to the general public until some time in 2000. It was common ground that this information was not available at the date of resumption.
The question arises as to what extent, if at all, regard can be had in this case to information which a potential purchaser of the subject land could not have obtained at the date of resumption. To answer this question, it is necessary to return to first principles, to the decision of the High Court which formulated and defined the concept of the market value of land as the presumed sale of the land between a hypothetical prudent purchaser and vendor, at the date of resumption.
In Spencer v The Commonwealth (1907) 5 CLR 418, Griffith CJ laid down the following test of market value at 432:
"In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring 'What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?' It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together."
Another member of the Court, Isaacs J, explained further at 440-441:
"All circumstances subsequently arising are to be ignored. Whether the land becomes more valuable or less valuable afterwards is immaterial. Its value is fixed by Statute as on that day. Prosperity unexpected, or depression which no man would have anticipated, if happening after the date named, must be a like disregarded. The facts existing on 1 January 1905, are the only relevant facts, and the all-important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted. The plaintiff is to be compensated; therefore he is to receive the money equivalent to the loss he has sustained by deprivation of his land, and that loss, apart from special damage not here claimed, can not exceed what such a prudent purchaser would be prepared to give him. To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding beaches, 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 test for market value, then, is to ascertain the price that would be agreed upon between fully informed parties, both of them willing to enter into the transaction but neither of them over-anxious to do so. But to what extent are the hypothetical vendor and purchaser of the land to be assumed to be "... perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially ..."?
In the present case, both the claimant and the respondent called a large number of expert witnesses to give evidence on the various factors which might impact upon the value of the land. The valuers for the parties considered the advice of those experts in arriving at their respective valuations. But is this detailed advice the type of information that would have been sought by or available to a hypothetical prudent purchaser?
Obviously there must be a limit to the inquiries and investigations which such a purchaser would carry out. In Davey v Minister of Agriculture (1979) (1) SA466, Kumleben J held that the type of evidence customarily led in resumption cases from a broad range of experts, is not the manner in which a buyer or seller decides the price at which to conclude a sale. Kumleben J went on to say that the practical steps which would be undertaken would depend on the property concerned. He continued at 469:
"Obviously a more detailed investigation can be expected in the case of a transaction involving a large sum of money. It is, however, to my mind implicit in the test to be applied that the facts a court should take into account are those which would be known to a buyer, who had taken such practical steps as are reasonably necessary to become properly acquainted with the property he has in mind purchasing."
I will return later to those practical steps that I consider would have been reasonably necessary for a prudent purchaser of the subject land to be properly acquainted with the property. Obviously, a most important step would be to investigate the information that was available at the date of resumption. Can regard be had to information that became available only after the date of resumption?
Dixon J in Spencer was emphatic: "All circumstances subsequently arising are to be ignored." (at 440) However, there have been some exceptions to this strict principle in assessing special value to the owner, or disturbance, or in the application of the reinstatement principle and in certain circumstances, sales of comparable properties. In all those exceptions the test seems to be as described by Hope JA in Housing Commissioner of NSW v Falconer [1981] 1 NSWLR 547 at 558:
"... evidence of future events is admissible not to prove a hindsight, but to confirm a foresight."
In my view, in the present case, the topographical information of the photogrammetric contour mapping and the DTM does not come within those exceptions and the general principle should apply. Any proper inquiry by a prudent purchaser at the date of resumption would not have yielded that information.
This finding eliminates the need to deal with the evidence of some witnesses whose evidence was based on the photogrammetry and significantly restricts the weight which can be placed on the evidence of others. However, in a transaction involving such a significant area of land, I am of the view that it would be reasonable for a prudent purchaser to seek advice from a number of sources about the potential for development and hence the value of the subject land. However, those experts must not be taken to possess any special prescience in that regard: Edinburgh v The Minister (1962) 8 LGRA 45 at 50.
It is clear from the evidence that the type of information available to a prudent purchaser contemplating purchasing the subject land at the date of resumption would include:
·the guidelines adopted by the Tully Local Board for the granting of assignments;
·the broad-scale DPI soil and suitability mapping;
·the 1997 aerial photography.
·the adjoining Marsilio land of similar elevation growing sugar cane under assignment
In addition, the prudent purchaser would carry out further investigations, including:
·an inspection of the subject land and the surrounding area both on the ground and by air (probably by helicopter);
·consulting relevant experts, particularly with regard to the suitability of the Class 4 (marginal) land for sugar cane production and also a grazing expert about that possible alternative use.
The Suitability of the Subject Land for Sugar Cane
It was common ground that if the photogrammetric mapping was not available, the DPI soil and land suitability mapping was essentially the sole indicator of whether land was suitable for sugar cane. According to Mr PD Lucy, the secretary of the Tully Local Board, the Board would have adopted the standard conditions for the granting of assignments. As indicated earlier, Mr Morrison pointed out the difficulty of assessing whether land was below the 3.0 metre contour level because of the lack of detailed contour information. He conceded that the DPI soil and suitability mapping was "the main determinant of areas suitable for assignment grant".
The DPI soil and suitability mapping shows that large areas of the subject land would have satisfied two of the standard conditions. It shows an area of Class 1 land, that is, suitable land with negligible limitations and an area of Class 3 land, that is, suitable land with moderate limitations. It does not show any Class 2 land. On the tests applied at the time, the areas of Class 1 and Class 3 land would have satisfied condition 1 of the standard conditions, because if an area was categorised as Class 1, 2 or 3, it was considered suitable for sugar cane and no further inquiry would be undertaken about its contour level. The later photogrammetric mapping cast doubt on the accuracy of some of the suitability mapping, but that was not available at the relevant date.
The respondent contended that survey information, such as that obtained by surveyors Brazier Motti for engineers Connell Wagner, to establish levels in the Class 1 area would have been sought by a prudent purchaser. I do not accept that contention. The Brazier Motti survey was commissioned by Connell Wagner for the purpose of determining the accuracy of the DTM. Connell Wagner had been engaged by the respondent to assess the feasibility of draining land below 3.0 metres AHD. There would have been no reason for a purchaser who had no knowledge of the DTM to establish levels in an area which would have been accepted as suitable for sugar cane with minor limitations. There would have been nothing to prove.
In my view, a prudent purchaser at the date of resumption would accept as a starting point, that the subject land comprised at least 100 ha of Class 1 land and 512 ha of Class 3 land, suitable for sugar cane. These were the measured areas on the soil suitability map in Appendix 11 to Mr Cross' report, Exhibit 38.
Those areas differ from those adopted by Mr Eales, but his areas were derived from investigations carried out by agronomist, Mr Ross Ridge. Mr Ridge in turn relied on a drainage concept plan designed by hydrogeologist, Mr RW Lait. However, Mr Lait's drainage plan depended upon the photogrammetric mapping and the DTM, which would not have been available. Mr Ridge calculated the areas of land suitable for sugar cane on the assumption that the drainage plan would have been able to drain what he considered to be the suitable lower lying areas.
However, Mr Cross did not entirely accept the DPI soil suitability mapping. He originally downgraded the Class 1 land to Class 3, based on advice from soil scientist, Mr Doug Smith. As explained by Mr Smith, the classification of that area as Class 1 land was based on aerial photography interpretation of the vegetation community as vine scrub or rainforest. This generally indicated the presence of Tully soil series, which would normally occur on higher elevated lands or alluvial levees along watercourses.
However, following the height data survey undertaken by Brazier Motti, Mr Smith concluded, without inspection, that the land could not be Class 1. He formed the view that there would be a higher percentage of poorly drained Coom or Timara soils, more reflective of Class 3 than Class 1. He advised Mr Cross accordingly. Mr Cross went even further and assumed that because the Brazier Motti survey showed it to be so low lying, the area should be assessed as a natural drainage area, Class 4.
I have rejected the proposition that a prudent purchaser would have undertaken a survey of levels in the Class 1 area. The best evidence at the date of resumption was the DPI suitability mapping showing the area as Class 1. As will be discussed later, based on information which would have been available at the date of resumption, other witnesses confirmed the suitability of the Class 1 land and Mr Smith changed his opinion.
The Obstacles to Development
Despite the fact that the valuers agreed that at least part of the subject land was suitable for sugar cane and valued it accordingly, the respondent took the point that there would have been a number of legislative obstacles to the clearing of the timber on the subject land. The 1997 aerial photographs show that at the relevant date the Class 1 and Class 3 land was timbered, even if some of it was regrowth.
First, the respondent argued, if the relevant Minister declared a development to be a controlled action under the Commonwealth Environmental Protection and Biodiversity Act 1999, the approval of the Minister would have been required. However, at the relevant date, there was no requirement for an owner to seek approvals under that Act. Although it was assented to on 16 July 1999, it did not come into effect until 16 July 2000, some eight months after the date of resumption. The respondent argued, however, that because of its significance, an informed potential purchaser must be assumed to have known of the potential impact of the Act. Furthermore, development of the resumed land would have taken place over many years.
Second, the Vegetation Management Act 1999 was assented to on 27 December 1999 and came into force in September 2000. Although this was some 10 months after the date of resumption, because of the publicity which preceded it, the respondent argued that a prudent purchaser would have been well aware of the restrictions to be imposed on clearing vegetation on freehold land.
Third, a witness for the claimant (Mr Schomburgk) suggested that if a prudent purchaser had known about those two pieces of legislation, such a purchaser would have cleared as much land as possible before the Acts took effect. However, Mr Gore QC, senior counsel for the respondent, pointed out that such large-scale clearing may well have fallen foul of the Environmental Protection Act 1994 and the Integrated Planning Act 1997. Furthermore, development of such a large area of timbered land would have taken years, allowing for wet season delays and the process of development which had been described by Dr Teitzel.
Fourth, even assuming that a prudent purchaser had been able to clear all the land suitable for sugar cane, the respondent referred to the evidence of Mr Lucy, which was to the effect that a landowner would have been granted an assignment to the Tully Mill of only about 22 to 26 ha in 1999. At that rate, it would have been many years before all the suitable land was assigned.
However, all this ignores the fact that Mr Pajares' development plans were curtailed from mid-1995 by the interim conservation orders issued under the provisions of the Nature Conservation Act 1992. At that time, the Pajares' family was in the process of crashing a number of areas. They did not recommence until 2 November 1998, when they crashed for about five days, before being stopped by the interim conservation order dated 9 November 1998. The issue of further interim conservation orders prevented any additional clearing up to the date of resumption.
Mr Pajares did not indicate where the crashing had taken place. However a comparison of the aerial photographs flown in October 1997 with an aerial photograph flown in December 1998, shows that extensive areas had been crashed and windrowed between those dates on both the resumed and the retained land. According to Mr Pajares, two dozers would crash between 100 to 120 acres per day, so that in five days they could have crashed between 200 and 250 ha.
I have no doubt that if he had not been prevented by the series of interim conservation orders from clearing the vegetation, it would have been possible for Mr Pajares to have cleared all the developable areas on the subject land to improved pasture grazing standard, before being prevented from doing so by the relevant legislation. Those areas would then be available for later development for sugar cane.
In my view, it is not open for the respondent to contend that Mr Pajares would have been prevented from clearing the vegetation on his land because Commonwealth and State legislation would have prevented him from doing so. He was prevented from clearing by the interim conservation orders issued by an instrumentality of the Queensland Government, which was responsible for the resumption. It would be contrary to the Pointe Gourde principle for the respondent to claim that a step in the process of resumption devalued the resumed land by prohibiting clearing until such time when clearing would have been impossible or illegal. It is well settled that compensation for compulsory acquisition must exclude any advantage or disadvantage due to the carrying out of the scheme for which the property is resumed. In Abbey Orchard Property Developments Pty Ltd v Sydney City Council (1978) 37 LGRA 230, Roth J said at 242:
"What is to be excluded is any advantage or disadvantage due to the carrying out of the scheme for which the land was compulsorily acquired; and the question of what is the scheme is a question of fact."
In my view, the interim conservation orders were part of the scheme of resumption in this case. Any disadvantage to the subject land from the issuing of those orders must be excluded from consideration.
As for the granting of assignments, the evidence clearly established the rate of expansion of the Tully Mill and its policy of granting additional assignments each year. A prudent purchaser would have realised that it would be many years before all the suitable area on the resumed land would have been granted assignment. However, there is evidence that the Mourilyan and South Johnstone Mills were actively seeking cane and subsidising its transport from the general area.
There was one further obstacle to development raised by the respondent. An unmade road reserve, or stock route, cuts diagonally through the land suitable for sugar cane in the north of the subject land. However, it emerged in evidence that this area could have been incorporated into the development by the temporary or permanent closure of the road, or by a licence to occupy.
However, quite independently of my analysis of the obstacles to development raised by the respondent, there is, in my view, a complete answer to the respondent's contentions: no allowance for any of those obstacles was made by the respondent's valuer, Mr Cross, in his valuation upon which the respondent relied. That valuation assumed that 512 ha could be developed for sugar cane. Mr Cross made no allowance for the possibility that clearing may be prohibited. He assumed that development approval would be granted for the suitable area within the "Natural Resource Protection" zone. Apart from development conditions, which I have rejected, the only restriction that he mentioned was in respect of the Class 4 land surrounded by mangroves, which he recognised would require a permit under s.51 of the Fisheries Act 1994 for the destruction of mangroves to gain access.
On the matter of assignments, Mr Cross stated that his valuation was made on the basis that the highest and best use of the subject land was for sugar cane production. He went on to say that, "In this regard as is the case for some of the sales evidence, it has been in the main assumed, that the granting of assignment will be achievable for country classified as either 1, 2 or 3 ... for the Tully Sugar Mill expansion program."
Therefore, I am of the view that a prudent purchaser of the subject land at the date of resumption would have concluded that a substantial area of that land would have been suitable for development for sugar cane production. I am also of the view that such a purchaser would have concluded that there would have been no legal obstacles to that development.
Before considering the respective valuations, it is necessary to consider the contentious issue of the highest and best use of the land classified as unsuitable for sugar cane.
The Class 4 and Class 5 Lands
The claimant's case, based on the valuation of Mr Eales, was that all but 215 ha of Class 4/5 land would have been capable of development for either sugar cane (836 ha) and grazing (197 ha). On the other hand, the respondent contended that the area of mangroves is 326 ha (Class 5), while a further area of 321 ha of Class 4 land, based on the DPI soil suitability mapping, could not have been developed for sugar cane or grazing. The area which had originally been assessed as 100 ha of Class 1 land was downgraded to Class 4 because of its (allegedly) low-lying nature, the area being adjusted by Mr Cross to 89 ha on advice from Mr Smith, who later doubted both its classification and area.
Therefore, the cost of professional fees incurred after the claim was prepared were not costs that can be claimed as an item of disturbance. The amount of this head of claim is determined at $26,000.
Determination of Compensation
In accordance with my findings, compensation in respect of the resumption of land from the claimant is determined as follows:
Value of land taken $3,257,000
Special Value $244,275
Value of commercial timber $168,689
Disturbance - legal, valuation and other consultants' fees $26,000
Total$3,695,964
Round to$3,696,000
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. There seems to be no reason in this case for the Court not to follow its usual procedure and award interest. Interest may be awarded from the date of resumption until the day immediately preceding the date on which payment is made. In this case, an advance of $1,830,000 was paid on 13 April 2000. This must be allowed for in the calculation of interest.
However, it is well established that interest on professional fees incurred in the preparation and lodgment of the claim for compensation is payable only from the date of actual payment of those fees: Varitimos v Queensland Electricity Commission (1990-1991) 13 QLCR 1. In this case legal, valuation and other consultants' fees totalling $26,000 have been allowed.
Orders
1.Compensation is determined at Three Million Six Hundred and Ninety-six Thousand Dollars ($3,696,000).
2.I order that the respondent pay interest at the rate of 6 per cent per annum on the amount of $3,670,000 from the date of resumption, 19 November 1999, until 13 April 2000 when the advance was paid; and on the amount of $1,840,000 from 14 April 2000 until 25 August 2000 (which the parties agreed is the appropriate date that the legal and valuation fees were paid); and then on the amount of $1,866,000 from 26 August 2000 up to the day immediately preceding the date upon which payment of compensation is made.
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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