Palfery v Brisbane City Council
[2001] QPEC 65
•22 October 2001
PLANNING AND ENVIRONMENT COURT
OF QUEENSLAND
CITATION: Palfery v Brisbane City Council [2001] QPEC 065 PARTIES: KEITH ERNEST EDWARD PALFERY AND PATRICIA MARION PALFERY
Appellants
and
BRISBANE CITY COUNCIL
RespondentFILE NO/S: No. 733 of 1998 DIVISION: Planning and Environment PROCEEDING: Appeal ORIGINATING COURT: Brisbane DELIVERED ON: 22 October 2001 DELIVERED AT: Brisbane HEARING DATE: 8, 9 October 2001 JUDGE: Judge Robin QC ORDER: Compensation for “injurious affection” ordered CATCHWORDS: City of Brisbane Town Planning Act 1964, s13, s14, s15, s16 – appeal to Planning and Environment Court against local government’s refusal to pay compensation for injurious affection allegedly caused by rezoning of appellants’ land – 1978 Town Planning Scheme for City of Brisbane allocated Non-Urban land between Future Urban and Open Space zones – contest as to whether Open Space land was “developable” by rezoning Residential A resolved in negative in favour of appellants, notwithstanding advice to them from chairman of Council’s Development and Planning Committee indicating part of such land was “possibly acceptable for development, under certain circumstances” – compensation assessed on basis the appellants’ sale in 1993 (upon which their compensation claim arose) realised nothing for the Open Space land and that but for the rezoning a purchaser would have paid $250,000 for a notional further ten residential allotments achievable – consideration of appropriate rate and commencement date for interest.
Local Government Act 1936
Lubrano v Brisbane City Council (1995) QPLR 81
Marchese v Emerald Shire Council (1999) QPELR, 342 G-H
Minister for Immigration and Ethnic Affairs v Kurtovic (1999) 21 FCR 193
Sparke v Noosa Shire Council (1999) QPELR 126, affirmed (2000) QPELR 36
Sam Industries Pty Ltd v Mulgrave Shire Council (1995) QPLR 166 F-G
Smith v Brisbane City Council (No. 2) (1995) QPLR 265 C-E.
Wort v Whitsunday Shire Council (2001) QCA 344COUNSEL: Mr C Hughes for the appellants
Mr M Hinson SC for the respondentSOLICITORS: Broadley Rees for the appellants
Brisbane City Legal Practice for the respondent
In this appeal the court’s task is to assess what if any compensation is payable by the respondent Council to the appellants pursuant to sections 13 and following of the City of Brisbane Town Planning Act 1964 having regard to injurious affection allegedly caused to their interest in land in the City of Brisbane which occurred upon the gazettal of the 1978 Town Planning Scheme. Mr and Mrs Palfery acquired the land in 1954. Its address is 208 Gaskell Street, Eight Mile Plains. The area is 3.769 hectares; the land extends from Gaskell Street to Bulimba Creek, falling away from the former to the latter. About .463 hectares lies below the flood regulation line which approximates the Q100 floodline; the parties were apart (by less than 200 m2) as to the precise area. Mr Palfery says the land has never been flooded in his time. According to the 1965 Town Planning Scheme for Brisbane, the land was zoned Non-Urban, which was described as a holding zone for land destined to become residential, after a rezoning. One of the comparable sales considered by the parties’ valuers (the Navyworth land) which is located near to the subject land in Underwood Road, at the junction with Gaskell Street is an example of Non-Urban land being so dealt with.
In the 1978 Town Planning Scheme, the land acquired split zonings, the 2.117 hectares closest to Gaskell Street becoming Future Urban, the rest of the land Open Space. In respect of the latter, where as-of-right uses are virtually non-existent, a claim for compensation may arise. The appellants’ valuer, Mr Kinivan, confirmed, as one would anticipate, that sales of land entirely within the Open Space zone are a rarity, but recalled one from a lady with equestrian interests to a school for sporting or recreational use. The consideration, not disclosed, was so modest that Mr Kinivan (mistakenly) assumed there could have been some gift aspect to the transaction.
Section 13 of the Act is:
“Claims for compensation. (1) Subject to this Act any person –
(a)who has an estate or interest in land in the City of Brisbane and such estate or interest is injuriously affected -
(i)by the coming into operation of any provision contained in the Plan; or
(ii)by any prohibition or restriction imposed by or under the Plan; or
(b)........
shall, if he makes a claim therefor within the time prescribed, be entitled to obtain from the Council compensation in respect of such injurious affection or expenditure.
(2)Subject to subsection (3) of this section, where under the
Plan any land is included in a Special Uses “A” Zone, or a Special Uses “B” Railways Zone, or a Proposed Open Space Zone, or an Existing Open Space Zone or is affected by a proposed road (not being a road widening), no claim for compensation shall arise against the Council for injurious affection to that land due to prohibition or restriction of the use thereof because of such inclusion or proposed road until –
(a) ......
(b) ......
(c) ......
(3) Before compensation is awarded in a case to which paragraphs (a) or (c) of subsection (2) of this section applies –
(a) Where the land is sold, the Court shall be satisfied -
(i) that the owner of the land has sold the land at a lesser price than he might reasonably have expected to receive had there been no such prohibition or restriction as aforesaid; and
(ii) that the owner sold the land in good faith and took reasonable steps to obtain a fair and reasonable price for the land;
(b) .....”
(Counsel were content for the court to use the Red Statutes version of the Act, accepting that such amendments as there may have been were insignificant in this appeal.)
As can be seen, sub-s (2) had the effect of postponing of the appellants’ claim until a sale of their land. After a considerable history of attempts to get the respondent to reduce the area zoned Open Space, they finally entered into a contract dated 24 July 1993 to sell the land for $700,000; completion occurred on 24 August 1993.
Counsel referred to s 14 of the Act which provides, in part:
“.....
(1) Compensation shall not be payable in the following cases:-
.....
(d) where an estate or interest in land is affected by any provision
of the Plan which prohibits or restricts the use of land or the erection or use of a building or other structure thereon for a particular purpose, unless the applicant establishes that he had a legal right immediately before the provision in question of the Plan came into force to use the land or erect or use a building or other structure thereon for the particular purpose which is prohibited or restricted as aforesaid.
This paragraph (d) shall not apply in relation to subsections (2) or (3) of section thirteen of this Act;
......
(2) The onus of proving that compensation is not payable in any case by virtue of any of the provisions of subsection (1) of this section shall be upon the Council.”
The Council did not attempt to invoke sub-s (2). Mr Hughes accepted that his clients, the appellants, bore the onus of proof.
Section 15 of the Act is:
“15. Claims for compensation for injurious affection. (1) Every claim for compensation under this Act shall be made on the form prescribed by the Council by ordinance and the person making the claim shall fully complete and sign the same and lodge it with the Council, and the Council shall not be obliged to consider the claim until all information reasonably required by the form to be supplied has been supplied by the claimant.
(2) A claim shall be deemed to have been made on the date on
which it is received by the Council.
(3) The time within which a claim under this Act may be made shall be three years after the date on which the claim arose.
(4) If within forty days after the receipt by the Council of a duly completed claim for compensation under this Act the Council has not made a decision on the claim, or having made a decision thereon has not communicated its decision to the claimant, or if the Council having made a decision thereon and communicated the same to the claimant within the time aforesaid the claimant is not satisfied with such decision, the claimant may appeal to the Court which shall have jurisdiction to hear and determine the claim.”.
Section 16 provides in part:
“In assessing compensation in respect of the injurious affection of an estate or interest in land, the following provisions shall, subject to subsections (2) and (3) of section thirteen of this Act, have effect:-
(a) the amount of compensation shall, subject to these provisions,
be a sum equal to the difference between the market value of such estate or interest immediately after the time of the coming into operation of the provision of the Plan by virtue of the operation whereof the claim for compensation arose and what would have been the market value of that estate or interest if such provision had not come into operation;
(b) ....
(c) there shall be taken into account any benefit which may accrue to any land adjacent to the land in respect of which compensation is claimed in which the claimant has an estate or interest –
(i) by reason of the coming into operation of the provision in question or any other provision of the Plan;”
There was no specific contention that any “benefit” as referred to in s 16(1)(c) occurred, although Mr Hinson SC, for the Council suggested that, to the extent there may have been a benefit, it had necessarily been taken into account by the Council’s expert valuer, Mr Walsh. No assertion that there was a benefit was put to Mr Kinivan. Although a consent order made by his Honour Judge Brabazon QC on 17 May 2001 required the value of any benefit to be calculated and taken into account in diminution of compensation payable, there was, in the end, no benefit issue.
The appellants, by their (then) solicitors advised of their claim in a letter of 21 October 1993 to the Council, which advised that quantum of the claim was still being formulated. A document dated 13 April 1994 followed, which claimed $500,000, but this has been reduced to $291,800 in accordance with Mr Kinivan’s letter of 16 June 1998 (Exhibit 11) which put up a “before” market value of the area above the flood regulation line, understood to be 3.306 hectares, valued at $300,000 per hectare, producing a total of $991,800, with which the sale price, of course, compares unfavourably. Mr Hughes has sought leave to amend the claim as set out in the Notice of Appeal filed 23 February 1998 of $267,500, which apparently depended on Mr Kinivan’s having worked on a smaller area above the flood regulation line.
For purposes of the court applying the formula in s 16(1)(a), it is agreed that $700,000, the price obtained by the appellants, represents the market value of the land as affected by the 1978 zonings. What the court must determine is “what would have been the market value” if the 1978 provisions “had not come into operation”. It was common ground that the highest and best use of the appellants’ land (by reference to which market value must be determined) was represented by rezoning and subdivision for residential purposes, which has been the history of surrounding properties. The appellants do not confront the difficulty encountered in Sparke v Noosa Shire Council (1999) QPELR 126, affirmed (2000) QPELR 36, of inability to establish an ability to rezone. See also Garbler v Redland Shire Council, Appeal 3401 of 1998, 9 April 2001.
Although the parties’ valuers have been able to resolve many issues, as contemplated by Judge Brabazon’s order, and in particular by agreeing that apart from the 1978 rezoning, there were no impediments to residential subdivision of the land, they have not been able to agree on the “before” market value. Mr Kinivan and Mr Walsh have identified where it is that they part company, and greatly assisted resolution of the matter by identifying for the court a single issue of fact and/or principle to be resolved. This concerned what might be called the developable area in the “before” situation, that is immediately before the sale in the second half of 1993, on the basis that the 1978 zoning change had not happened. Developable land at the time of the sale was said by Mr Kinivan to have a market value of something like $300,000 per hectare, or $28,000 per residential lot achievable. There was not much significant difference in Mr Walsh’s views of the matter. He said at page 110 of the transcript:
“The main difference between myself and Mr Kinivan and our approach is the extent of land which can be utilised for residential lot development. I have placed weight on the documentation that I have seen from the council in relation to the long and arduous negotiations which the residents of Gaskell Street had with the council which resulted in numerous or some letters being sent out indicating the extent of their land which could be developed, and I have placed weight on those negotiations and the resultant letters as being an indication of what development area could be expected for the land in the after position. Mr Kinivan has considered that the council would have held the line, so to speak, being the zoning line, as being the difference between the land that’s developable and that that’s not developable for residential lots. That’s the major difference.”
Both valuers accepted that land below the flood regulation line could not be developed. Mr Kinivan’s view was that the rest of the land, had it remained in the Non-Urban zone, could have been developed as Residential A. Following the rezoning, in his view, only the Future Urban land could be so developed, that rezoned Open Space had no value. The rezoning resulted in a diminution in value explicable in terms of loss of 10 to 14 residential allotments. Mr Walsh thought there had been no such loss, relying on the “documentation” he mentioned which, crucially, was Exhibit 15, a letter from Alderman Quinn to the Palferys dated 9 June 1993 in the terms following:
“Thank you for attending the meeting held in my office on Wednesday 21st April with the Manager of the Department of Development and Planning, Mr. Michael Kerry and Mr. Juergen Hanisch.
At that a meeting, discussions took place as to the extent of your land in Gaskell Street which could be developed if the balance of Open Space zoned land were dedicated as parkland. During the course of those discussions, I agreed with your request to provide you with a plan indicating the extent of lands which Council would be likely to approve for rezoning, should an application be received by Council.
Accordingly, please find enclosed a map showing the extent of your land which was discussed at that meeting as being possibly acceptable for development, under certain circumstances.
I trust this will now place you in a better position to make decisions with regard to the development of your land.
Yours sincerely,
(sgd) Tim Quinn
K.O.T. Quinn
Alderman for The Gabba
Chairman, Development and Planning Committee”
The enclosed map contained no dimensions, but showed shaded as the “area discussed at meeting as being possibly available for development” the whole of the Future Urban land and, contiguous to it, about half of the Open Space land. The rest of the Open Space land is roughly bisected by the flood regulation line. Mr Walsh’s approach was that the land above that line would have been available to satisfy the common requirement of dedication of up to 10 per cent of land subdivided for residential development as park. Thus, in Mr Walsh’s opinion, nothing was lost by the rezoning.
Exhibit 15 was the culmination of years of effort by the Palferys and others in a similar situation. The Palferys were most anxious to have it to assist in the marketing of their property, and a sale was achieved soon after they got it. As Mr Hinson said (page 155) the letter was preceded by considerable effort to get the Council to either change the Open Space zoning at the rear of their parcels or allow them to develop to some extent beyond that which would be allowed if the Open Space zoning remained. Mr Hughes was highly critical of the letter insofar as it was sought to be relied on as providing any assurance about what it described as possible. I agree with Mr Hughes’ criticisms, which should not be taken as criticisms of the letter itself; it seems to me carefully drawn to avoid any commitment. I would not read “possibly acceptable for development, under certain circumstances” as encouraging. I would read the third paragraph of the letter as affirming the sentence which goes before and/or that there really was some substance in what was mentioned as “likely”. A recent example of the pitfalls of relying on this kind of communication is Wort v Whitsunday Shire Council (2001) QCA 344.
In a supplementary written submission, Mr Hughes cast doubt on Alderman Quinn’s authority, in any event. At the date of the letter, s 14(3) of the Local Government Act 1936 was still in force. It provided:
“All powers vested in the Local Authority may be exercised by the majority of the members present at any meeting duly held, and all questions shall be decided by a majority and by open voting.”
Under that Act the necessary application for rezoning, if there was to be residential development of the Open Space zoned land, required an application under s 33(6A)(a), which had to be decided by “the local authority”: sub-s (c) and (d). It did not appear that Alderman Quinn had any authority to bind the Council by Exhibit 15 (even if he had been setting out to do so). The supplementary submission contains a reminder that the landowners were not foreshadowing rezoning applications by themselves, rather they wished the Council to initiate a rezoning or amendment of the scheme itself. Finally, in the written submission Mr Hughes cited a statement of Judge Quirk in Lubrano v Brisbane City Council (1995) QPLR 81, which involved an application for compensation pursuant to s 13 of the City of Brisbane Town Planning Act, at 83:-
“If one has, in looking at the ‘before’ situation of the subject land, to exclude from consideration the impending change of zoning, it would follow, in my view, that one should not be distracted by informal (in the sense that they are not part of the Town Plan) expressions of planning strategy that contemplated and evidently led to the change in zoning.”
Mr Hinson’s written submission in response distinguishes Lubrano on the basis that there it was unsurprising that weight was denied a minute of the Council’s Planning Policy Advisory Committee of 18 October 1978, “some 8.5 years before the date when the claim for compensation arose (on 13.06.87).” Quirk DCJ noted that the evidence showed the Council’s planning “thinking” was “anything but clear in the events leading up to the gazettal.”
Mr Hinson’s submission helpfully shows the background here:
“2.The events leading up to the sending of Ex.15 are described in Ex. 16 and Ex. 21. At its 21.12.92 meeting the E&C Committee agreed with a recommendation to relocate the zoning boundary to align it with the 40 metre contour line, to acquire all land below the regulation line, to require 10 per cent of the balance to be dedicated for open space on subdivision and acquire the balance by negotiation, subject to the Chairman (of the Development and Planning Committee) checking with the Lord Mayor that this was the preferred approach: Ex. 16 pp. 36 and 41. Alderman Quinn (the Chairman of the Planning and Development Committee) later met with Gaskell Street residents on 24.02.93. On 04.03.93, it was recommended to the E&C Committee that an option described as Option 2 be pursued: Ex. 16 at pp.45-48 and 52. On 15.03.93 the Lord Mayor was informed of what occurred at the meeting on 24.02.93: Ex. 16 pp. 53-54.
3.There is no need to find some statutory source of power for every activity carried out in the ordinary course of administering the affairs of government: Commonwealth v Rian Financial Services (1992) 36 FCR 101 at 105-106 and Coogee Surf Motel v Commonwealth (1983) 50 ALR 363 at 379 and 383.
4.Here, to use the language in Coogee (p.378 ll.35-40), the transaction of sending the Quinn letter was one with which the Council’s department of Development and Planning was concerned, and the official with whom Mr and Mrs Palfery were dealing (Alderman Quinn, the Chairman of the Development and Planning Committee) was purportedly acting on departmental business.
5.The analogy to be drawn is with a consideration in principle application and decision thereon: see s.4.2 of the P&E Act. Such a decision is not binding where a subsequent planning application is made (s.4.2(6), but the decision may be tendered as evidence and given such weight as the court considers appropriate: s.4.2(7).
His argument concluded:
“Having regard to the background leading up to it, a hypothetical prudent purchaser and vendor would have taken Exhibit 15 as exactly what it says it is i.e. a plan indicating the extent of lands which Council would be likely to approve for rezoning should an application be received.”
Tellingly, the folly of reliance being placed on Exhibit 15 is indicated by determinations of the Council in response to applications for consideration in principle relating to other properties in Gaskell Street in similar case to the appellants’, before, shortly after and long after the sending of Exhibit 15. The Council indicated that rezoning to Residential A would be approved only for the portion of the site within the Future Urban zone, and that all land zoned Open Space should be dedicated free of cost to the Council for park purposes. See Exhibit 33 (25 July 1991, relating to 150 Gaskell Street), Exhibit 34 (18 October 1994, relating to 48 Gaskell Street) and Exhibit 35 (27July 1998, relating to 106-170 Gaskell Street).
Accepting what was said in Coogee (regarding the authority of the permanent head of the Commonwealth Department of Services and Property to make a contract committing the Commonwealth to purchase land), I do not think Alderman Quinn’s letter was intended to or would have been taken by persons in the market to bind the Council. It was not even on the ordinary Council letterhead, but on the letterhead of “Brisbane City Council Aldermen’s Rooms”. (As to the difficulty of mounting any kind of estoppel argument based on the letter see the judgment of Gummow J in Minister for Immigration and Ethnic Affairs v Kurtovic (1999) 21 FCR 193.)
I accept Mr Kinivan’s opinion that in the market for developable land, no value was placed on sites or parts of sites in the Open Space zone. The only value such parts might have would be as the source of parkland which might be required or as the location of roadway giving access to residential allotments – which appears to have happened on adjoining land.
My conclusion that Exhibit 15 is entitled to no more weight from the point of view of influencing market value than was the committee minute in Lubrano effectively disposes of this appeal. I mean no disrespect to Mr Kinivan or Mr Walsh by foregoing any detailed examination of their careful valuation exercises, which, otherwise, were not far apart. Mr Walsh’s approach led him to allocate or ascribe value to the whole of the sites in his comparable sales, whereas Mr Kinivan allocated all of the consideration to the Future Urban zoned land or the developable part of the predecessor zoning, Non-Urban.
Mr Hughes claimed support for a market value for developable land of $300,000 per hectare from internal Council documents (most of them in Exhibit 16), in particular a Council officer’s estimate (page 46 of Exhibit 16, bearing a date stamp 4 March 1993) that, if the Council had to pay to acquire the Open Space land it ultimately required, it might have to meet a price as high as $300,000 per hectare, although owners might be “negotiated” down to $100,000. It is clear that proper concerns were harboured relating to protecting the ratepayers’ funds, but unfortunate in retrospect for the Council that a clearly defined position was not reached and announced. What has happened in the long term is that the Council has adhered to the Open Space zoning and its concomitant restrictions in relation to all of these sites. Its case boiled down to the claim that there was a “window of opportunity” (page 161 line 1) established by Exhibit 15 and current at the time of their sale of the land by the appellants when they could have developed the land to the maximum extent contemplated by Exhibit 15. As Mr Hinson said, “we are not interested in the position in ’91 or in ‘94”.
I think that approach too strained to command acceptance. If Exhibit 15 could have been taken as an assurance that a good part of the Open Space zoned land was developable, the Palfreys would have obtained a better price. I think the effect of the evidence is that the letter was made available to potential purchasers.
Mr Hughes reminded me of a statement made in Garbler to the effect that the court should treat with reserve the case presented by a local government which will have to pay any compensation assessed by the court as to what might have been done with “affected” land. In Garbler the local government files going back for years bespoke concern that the subject land had drainage problems. Here, the background documents I have referred to tend to show (a) that the Council had not in any relevant sense decided to change its approach along the lines set out in Exhibit 15 (taking it to promise something), and (b) that the Council’s actions were to deny Gaskell Street owners enjoyment of the prospects held out by it and similar documents. (The evidence suggested that all affected owners were sent such letters.)
In assessing the difference between the “before” market value in this case and the $700,000 achieved, I find it preferable in the circumstances to follow Mr Kinivan’s approach at pages 52-53 of the transcript, rather than apply a per hectare value, although the outcomes are effectively the same. In a commendable exhibition of resistance to being “talked up” by Mr Hughes, he gave a range of 10 to 14 as the number of additional allotments that might have been produced had the 1978 rezoning not occurred or, alternatively, had Exhibit 15 come true, saying that “11 or 12 might be a reasonable expectation”. The determining factor would have been the Council’s requirements for park contribution. Although Mr Hughes strove for 11, I think it is right, in the context of the appellants carrying the onus of proof, to adopt 10. Mr Kinivan volunteered that the additional allotments thus gained were inferior to those closer to the road, so that the apellants’ loss, when they were able to sell for $700,000 “25 allotments giving as a raw cost $28,000 per allotment”, was the loss of a further 10 allotments to sell for which Mr Kinivan “would have expected something less, you know, 25 or a little more, 25 to 26 thousand a lot in globo” (page 53). This approach indicates a sale price of $950,000, a “round” sum of the kind which the comparable sales indicate vendors and purchasers are likely to agree on, rather than a calculated figure based on a round sum per developable hectare.
(I note, simply for the purpose of making clear that it had no impact in this appeal, that for purposes of the Gateway Arterial Road, a resumption has occurred of a good deal of the eastern end of the subject property and its neighbours, along Bulimba Creek. In 1993, when the Palfreys sold, the Freeway and the prospect of resumptions were yet to be known to the public. The valuers, to the extent that they placed reliance on subsequent comparable sales in giving opinions of value, have had to take account of the impact of the Freeway, as to whether the vendor or the purchaser had the right to compensation from the Main Roads Department, and as to the impact on sale prices otherwise, it being common ground that residential allotments within a few hundred metres of a freeway reduce in value.)
It follows from the foregoing that the court should assess compensation under s 16 in the amount of $250,000.
So far as interest is concerned, at the hearing (page 167) I intimated a view that interest would run from 24 August 1993, being the date of completion of the sale, and the point to which the Act deferred any entitlement to compensation. I further intimated (page 168) that interest might be allowed at the rate which the appellants could show they might have obtained otherwise for their money, which might well be less than the “common law practice interest rate” which Mr Hughes suggested. Mr Hinson’s final written submission states that the court’s practice as to interest has been to allow it from the date the claim for compensation is received by the local government to the date of judgment at the rate applicable to default judgments when judgment is given, citing Marchese v Emerald Shire Council (1999) QPELR, 342 G-H and also Sam Industries Pty Ltd v Mulgrave Shire Council (1995) QPLR 166 F-G and Smith v Brisbane City Council (No.2) (1995) QPLR 265 C-E. On this basis, the date from which interest should be calculated would appear to be 13 April 1994 (Exhibit 10) when the Council were advised the amount of the claim (then $500,000) pursuant to the “formal notification” by letter of 21 October 1993 (Exhibit 9). In Lubrano, interest at 11% was allowed. At page 168, the parties were content to leave the issue of interest for possible resolution by them, when the court’s view as to compensation was known. For the moment, I proceed on that basis. Accordingly, the making of formal orders is deferred until the court hears further from the parties.
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