Steven v The Commissioner of Water Resources; The Commissioner of Water Resources v James Richard Steven
[1990] QLAC 24
•21 August 1990
|
TOWNSVILLE
Re: Claim for Compensation
The Acquisition of Land Act 1967 - 1986
The Irrigation Act 1922 - 1986
(A88-64)
BETWEEN James Richard Steven
v.
The Commissioner of Water Resources By Appeal
AND
The Commissioner of Water Resources
v.
James Richard Steven By Cross AppealDelivered the twenty-first day of August, 1990.
There are before the Court an appeal by the claimant/landowner, (James Richard Steven), and a cross appeal by the constructing authority (the Commissioner of Water Resources) against the decision of the Land Court awarding the claimant compensation for the taking of freehold Lot 388 on Plan SB209, County of Salisbury, Parish of Leichhardt Downs, under all heads of claim in the sum of $381,000. The land resumed contains an area of 479.606 hectares. The whole of the lot was taken by Proclamation published in the Government Gazette on 15th August, 1987. The Proclamation states that the land was taken "for a purpose of the Irrigation Act 1922 - 1986 viz: Burdekin River Irrigation Project." Since the publication of an Order in Council on 12th April, 1980, the land has been formally within an area of land constituted under the provisions of the Irrigation Act as the Burdekin River Irrigation area. The resumed land is not riparian to the river. Rather it is about 5.2 kilometres distant if taken from the pump site on the river. Nevertheless, in the course of time, irrigation water from the river became available to it. Firstly, from December 1974 when the claimant obtained a water license which authorised him to take, by pumping from the river, an annual allocation of 382 megalitres available only during the period from 1st December to 31st May, next following each season. Crops which were intended to be irrigated included rice, beans, maize and sorghum. The license also permitted a small allocation of water for stock and domestic purposes which was available through the months of June to November each year. The license is described as a summer license as distinct from a license which permits pumping all year round for both summer and winter crops. More importantly, however, the license became available as a distribution of water from the natural flow of the river and not as a result of the works constructed by the respondent. The potential in the land to obtain the benefit of the allocation was therefore a matter going to the value of the land and ran with the land from time "immemorial" as it were. That such was a factor for assessment in the value of the land on the resumption was not in dispute in the Court below and is not in dispute before us. The question critical to the assessment of compensation for this particular resumption comes about through the next step in the chronology of water allocations to the resumed land. It is a question which must be determined at the outset. Following continuous efforts made by the claimant for more water on a year round basis, he received in April, 1981, a license which swallowed up the former license, and authorised him to take from the river, for stock water and irrigation purposes, 600 megalitres per year on a year round basis. This license was current when the land was resumed. There is no dispute that this water became available to the claimant as a direct consequence of the construction of the Clare Weir on the Burdekin River which, it appears, was approved by resolution of Parliament in 1975, was constructed in 1977, was damaged by flooding and the reconstruction completed in 1979. For a better understanding of the issue the chronology will continue beyond the resumption and this will be covered shortly. But to return to the state of things at the date of resumption the claimant sought compensation for the land on the basis that the land possessed a water allocation of 600 megalitres. His valuer in the Court below, Mr Caleo, considered that any part of 200 hectares on the block could be irrigated either on a rotational basis or by intensive cultivation practices with such an allocation and his assessment of value was made on this basis. The valuer for the respondent, Mr Moloney, valued as irrigable land only so much land (58 ha) as he considered could be irrigated under the summer allocation of 382 megalitres. Both had the support of experts in the opinions they expressed on the extent of land which may be irrigated under the respective allocations. In making his assessment Mr Moloney ignored the enhancement flowing to the land from the license current at the date of resumption. His justification for so doing, it is submitted, is found in the principle often referred to as the Pointe Gourde principle (Pointe Gourde Quarrying and Transport Co. Ltd. v. Sub-Intendent of Crown Lands (1947) A.C. 565 P.C.). The principle, as presently defined, had its origin in Fraser and Ors v. City of Fraserville (1917) A.C. 187 P.C. At p. 194 Lord Buckmaster said that in substance the principle is this:
"....the value to be ascertained is the value to the seller of the property in its actual condition at the time of expropriation with all its existing advantages and with all its possibilities, excluding any advantage due to the carrying out of the scheme for which the property is compulsory acquired, the question of what is the scheme being a question of fact for the arbitrator in each case."
More recently in Melwoods Units Pty Ltd v. Commissioner of Main Roads (1979)
A.C. 428 P.C. their Lordships at p. 434, said this -
"Under the principle in Pointe Gourde Quarrying and Transport Co Ltd v. Sub-Intendent of Crown Lands (1947) A.C. 565, the landowner cannot claim compensation to the extent to which the value of his land is enhanced by the very scheme of which the resumption forms an integral part: the principle in their Lordships' opinion operates also in reverse."
It is appropriate now to continue the chronology beyond the date of resumption. Under the powers vested in the Commissioner by the Irrigation Act he may take any land within and without an irrigation area which is required for a purpose of the Act, or any land within an irrigation area which in his opinion is suitable for closer settlement - s.15A. The use which will be made of the subject land by the Commissioner falls into the second category. The land will become part of the subdivision of land for closer settlement as irrigated land. In the final paragraph of his statement of evidence Mr T.M. Fenwick, the respondent Commissioner, said -
"The purpose for which land of the type owned by Mr Steven was resumed was to subdivide the existing large farms and to form them into smaller farms which would be provided with reticulated water supply and which the Water Resources Commission would dispose of by way of auction, thus satisfying the purpose for which the Burdekin River Irrigation Project was established."
In fact we were informed that when the subject land goes back on the market and is sold by the Commissioner, in excess of 90% of the area will comprise irrigable land. The work which contributed directly to this proposal was the construction of a dam at Burdekin Falls which was completed in 1987 following approval by resolution of the Legislative Assembly on 18th March, 1980, and the Undertaking established by Order in Council published in the Government Gazette of 12th April, 1980. It can thus be seen that the Pointe Gourde principle in its primary sense is not in issue - the claimant makes no claim for that in excess of 90% of the land has a potential for irrigation under the proposal which followed the availability of water stored by the dam at Burdekin Falls.
The respondent argued before the lower Court that the construction of the Clare Weir was an integral part of an overall scheme (more akin to an aspiration in our opinion) embracing the construction of dams and weirs on the Burdekin River system (including a dam at Burdekin Falls) for the purposes of tapping the potential resources of land at the Lower Burdekin and hence any enhancement flowing from the construction of the weir was not compensable on the application of the principle. It was submitted that the weir, in its own right, was of little value as an irrigation project. Therefore its worth (mainly as a ponding pool) was dependent upon a continuous supply of water from dams or weirs upstream.
The proposal to construct the Clare Weir was approved by Cabinet in 1974. The approval covered the construction of the weir, irrigation and auxiliary works. The weir was positioned so as to make full use of any dams or weirs which might subsequently be constructed upstream. At the time of the approval it was proposed that the source of water supply for the weir would comprise the construction of a dam on the Broken River (a tributary of the Burdekin). The combined scheme was referred to in the submission to Cabinet as the Burdekin Extension (Urannah Dam) Scheme. Funding for the Urannah Dam was not forthcoming. Notwithstanding, the decision was made to construct the Clare Weir. Immediate benefits were identified in its capacity to irrigate about 2,000 hectares. Cabinet approved the proposal and its submission to the Legislative Assembly for approval in the first session of Parliament in 1975.
The proposal to construct the dam at Burdekin Falls which overtook the Urannah Dam proposal became firm in a report published by the Burdekin Project Assessment Committee in 1978. This report officially laid to rest a much earlier proposal (the Kemp Report of 1951) to construct a dam at the Falls for the purpose primarily of generating electricity. Following the 1978 Report, a report was presented to Parliament in March, 1980, for the purpose of obtaining the approval of the Legislative Assembly to the proposal, to establish the Undertaking and constitute the Extended Burdekin River Irrigation Area. Under the heading "Nature and Extent of Works" the report refers, inter alia, to the construction of a dam at Burdekin Falls which "would provide water supplies for irrigation and possible future urban and industrial development in the Lower Burdekin in conjunction with the existing storages at Clare Weir, Gorge Weir and Blue Valley Weir on the Burdekin River and Eungella Dam on the Broken River" and to the resumption of lands required for the scheme including the resumption of lands in the proposed extension of the irrigation area currently used for cattle grazing for the creation of new irrigation farms. The proposal entitled "The Burdekin River Project Irrigation Undertaking" was approved by resolution of the Legislative Assembly on 18th March, 1980, and the Order in Council establishing the Undertaking was published in the Government Gazette of 12th April, 1980. It was by the same Order in Council that the subject land was by law included within the Irrigation Area - this being a condition precedent to the taking of the land for closer settlement (s.15A).
The planning of the Clare Weir to take advantage of any subsequent development upstream led the respondent into the submission agitated in the Court below. Before us the respondent abandoned this submission. His case was put on a very simple basis, namely that the relevant scheme was the placing of water on an area of land. The building and maintenance of dams, it was said, was no part of the relevant scheme. This proposition cannot be accepted. The word scheme has a large variety of connotations and what it means in a particular context is a question of fact. It seems to us that in the present context the only sensible view that could be taken is that the relevant scheme involves the whole Undertaking, including the construction and maintenance of the source or sources of supply of the water, that is, the Undertaking as established by the Order in Council published in April, 1980.
The circumstances in the subject case can be distinguished in many respects from those cases (cited in support of the submission) where the principle has been applied in a wider sense (See Wilson and Another v. Liverpool City Council (1971) 1 All. E.R. at p. 628) in that we are not concerned with the effects the overall idea since its inception may have had in the minds of potential purchasers or speculator purchasers of land in the area but rather with the specific question whether the enhancement flowing directly from one undertaking which may usefully be integrated with any subsequent undertaking should be excluded in the assessment of compensation when land is resumed for the purposes of any subsequent undertaking. Undertakings of the kind under consideration require the approval of the Legislative Assembly and the establishment of the Undertaking by Order in Council - See ss. 7, 8, 9 and 15A of the Act. In considering a question of similar vein when land was resumed for purposes of the "Emerald Irrigation Project", the Land Appeal Court said:"On our reading of the Irrigation Acts in particular Sections 7, 9 and 15A - and the facts before us in evidence, the scheme of the subject resumption embraces the Undertaking as approved by Parliament and the constitution, redesign and development of the Irrigation Area in relation thereto. All works and structures in implementation of this Undertaking and Area are necessarily part of the scheme."
(Marshall v. Commissioner of Irrigation and Water Supply (1973) 40 C.L.L.R. 71 at p. 75)
In the context of the case as argued before us, the respondent has failed to prove what was submitted as the relevant scheme. It is not for the Court, having adjudicated against the respondent on the case which he chose to put, to fish around in the evidence to ascertain whether there is any other basis on which he might succeed and then adjudicate the matter on that basis. But if we were to go further, it would appear to us on consideration of the legislative provisions which govern the establishment of schemes of this nature that one could reasonably hold that the scheme at the time of the enhancement (which we think was, at the latest, the completion of the Clare Weir) was not the same as the scheme at the time of the acquisition. At the former time the scheme embraced only existing works, because it could not be said with any degree of confidence what would be the next step in relation to the storage of water. At the latter time, the scheme embraced significant additional works, and was not the same scheme.
We turn then to the merits of the claim. The record of proceedings in the Land Court were exhibited before us and most of the relevant evidence was referred in the 52 page judgment under appeal. No useful purpose is served in restating this material here. Suffice it to say that this judgment should be read in conjunction with that of the now learned President. We shall simply refer to such additional relevant evidence which was placed before us. For the sake of clarity, we repeat here the finding of the Court as to the determination of compensation. It reads:-
24 hectares irrigable arable land at $1,650 per hectare $ 39,600
46 hectares irrigable arable land at $1,400 per hectare $ 64,400
106 hectares dry arable land at $416 per hectare $ 44,096
304 hectares grazing land at $250 per hectare $ 76,000
102 hectares clearing to cultivation stage at $500 per hectare $ 51,000
66 hectares clearing and grassing at $350 per hectare $ 23,100
7 hectares clearing and cultivation at $350 per hectare $ 2,450
$300,646
Structural improvements $ 75,100
Total award of compensation (excluding disturbance) $375,746
=====
Now following what has already been discussed, it is clear that compensation is to be determined on the basis of the market value of the resumed property taking into account its right to receive and use irrigation water from the Clare Weir in accordance with the terms and conditions of Waterworks License No. 35555. This license authorises the diversion of 600 megalitres of water per annum from the pump site near the Weir for stock and for irrigation. It was on this basis that the case for the claimant was framed in the Court below. We have, at page 469 of the record of proceedings, a valuation on this basis by the Valuer for the respondent Commissioner - Mr Moloney. It reads:-
The land is valued as is with allocation of 600 megalitres available year round (License No. 35555) pumped through Kelly's system. Losses once again are estimated at 10% due to infiltration, evaporation and neighbour's cattle consumption.
License to be renewed upon application.
Irrigable area = 600 mgl x 90% = 90 hectares
6mgl ha
Valuation:
Irrigable arable land in developed state
24 hectares @ $1650 (better development) $39,600
66 hectares @ $1400 (former rice lands) $92,400 $132,000
Non irrigable lands
LAND ONLY: (excludes development but fenced
and Watered)
118 hectares suited to rain fed cropping @
$300 ha $35,400
272 hectares grazing only @ $180 hectare $48,960
Development
70 hectares clearing (to cultivation stage)
@ $500 ha $35,000
66 hectares clearing & grassing @ $350/ha $23,100
7 hectares clearing and cultivation but
utilised by neighbour due to access problems
@ $350 hectare $ 2,450 $144,910
TOTAL LAND AND DEVELOPMENT: $276,910
PLUS: Structures
DWELLING: Platform and hoist replacement
cost $65,300 - depreciation 20% $52,240
SHED: 15.5m x 9.3m x 4.3m high, earth
floor, steel posts and roof trusses,
sawn timber battens, galvanised iron
roof and two ends.
144 m2 @ $75/m2 $10,800
depreciation 20% $ 8,640
WATER SUPPLY: 2 x 4.5 kilolitre tanks on
stands $3750 - depreciation 20% $ 3,000 $ 63,880
TOTAL COMPENSATION ESTIMATE: $340,790
The claimant before us called Malcolm Joseph Missingham, a registered valuer who has been in the employ of Herron Todd White, Valuers for the past 2½ years and who is presently Manager of that firm's Townsville Office. Mr Missingham maintains the thrust of the case presented below that an irrigation water allocation of 600 megalitres per annum with water conveyed through the long open drain from the Weir has the capacity to irrigate, after making an allowance of 10% for loss in water usage, 200 hectares of land. Mr Missingham sees a further loss in irrigated land value of 10% due to any risks associated with the maintenance of the Water Access Agreement through neighbouring lands. As we understand his evidence, Mr Missingham inspected the subject land, has perused the judgment of the Court below and the record of proceedings in so far as it is relevant to valuation, and has spoken to a Mr Shannon who was called by the claimant below, and then suggests that compensation determined by the Land Court is conservative in comparison with that determined consequent to the resumption of the adjoining "Zandonardi" land. He sees the subject land as having the advantage of more flexible management with the availability of irrigation water, of reduced risk due to its drought proof nature, of better access and of superior soil types. Mr Missingham sees a grazing land value of $581 per hectare for the subject property as not being unreasonable in comparison with the "Zandonardi" determination. Mr Missingham also believes that a much higher land value results from the application of the various land value components reflected in the judgment below when areas are adjusted to include the larger irrigable area of 200 hectares. He reconciles the judgment as follows:-
200 ha irrigable arable @ $2,025 ($2250/ha less 10%) $405,000
88 ha dry arable @ $416 $ 36,608
192 ha grazing land @ $250 $ 15,750
Clearing - 45 ha a@ $350 $ 15,750
Structures $ 75,100
$548,208
=====
Mr Shannon, who is an Agricultural Consultant, complemented his evidence below. He says that the use of the water available under the 600 megalitres license might result in a slightly less area of 178 hectares being available for rockmelons using the trickle irrigation system. In addition, Mr Shannon says it would be possible to irrigate 103 hectares of soya beans. Alternatively, the available water could irrigate 40 hectares of rockmelons, 80 hectares of pumpkins and 110 hectares of soya beans.
Mr Moloney again was called before us. Relevant evidence he furnished included information he gained from enquiry at the Department of Primary Industries that in 1987, a total area of 140 hectares of soya beans was planted in the Burdekin District, an area of 130 hectares was planted in 1988, 150 hectares in 1989 and 50 hectares in 1990. Mr Moloney urges this Court to find that the classified land values determined for the subject land in the Court below are excessive in relation to those for the "Zandonardi" land.
Now on our reading of the record of proceedings and appreciation of the additional evidence here, we are not convinced that practical usage of a water allocation of 600 megalitres per annum (effectively 540 megalitres after allowance for water wastage) would irrigate 200 hectares of the resumed land. We are satisfied, in spite of the use of trickle irrigation water on a large area on one farm owned by one "Rapisarda", that its use is relatively uncommon in the Burdekin District. We have evidence as to the higher costs of trickle irrigation, and of increased difficulties in working the land with the system in place. In addition, Mr Shannon postulates the irrigation of an area of soya beans on the subject land which approximately equates the total crop grown in the Burdekin District during 1987, 1988 and 1989, and exceeds the crop area grown in the District this year. In any event, for whatever reason, the growing of soya beans in the Burdekin District has been generally out of favour with farmers for a considerable period of time.
We are by no means satisfied that the assumed hypothetical prudent purchaser of the subject land at resumption date would be prepared to pay irrigable land value for 200 hectares on the subject property for the prospect of irrigating by the trickle irrigation system. Rather we feel that the assumed purchaser would utilize the available water as envisaged by Mr Day in the Court below.
Nonetheless, for the purpose of calculating an irrigable area, we feel that this recommended usage at the rate of 6 megalitres per hectare per annum could be reduced to 5 megalitres per hectare to annum, especially bearing in mind that any doubts we have should be resolved in favour of dispossessed owners in cases of this nature. In the result then, we find that the 600 megalitre licence has to capacity to irrigate 108 hectares of the resumed land on the following calculation:-600 mgl x 90% = 108 hectares
5mgl/ha
We are not assisted in our task of finding a value for the resumed land from the evidence of Mr Missingham since he derives most comfort for his opinion as to compensation entitlement from a comparison with the adjacent resumed "Zandonardi" land. He has not inspected that land, save for a view of it over the fence from the subject land. The "Zandonardi" land comprised some 2,644 hectares and it seems to us to be an unrealistic expectation that a valuer could fully appreciate its advantages and disadvantages relative to the subject land without a full inspection of it.
One further matter falls for our consideration. It is the appropriate discount to apply to the irrigable land value for the disadvantage of having to supply irrigation water through the neighbouring land in terms of the Water Agreement. Mr Moloney considers, when the land is valued on the basis of a 600 megalitre entitlement, that an appropriate discounting factor is 30%. As aforesaid, Mr Missingham is of the view that a factor of 10% is appropriate. The determination of the Court below was of a factor of 30% for the summer license of 382 megalitres. We find, taking into account the evidence on the point, that it is appropriate to allow a factor of 20%. This results in a finding that the value found in the Court below for the irrigable land should be increased respectively from $1,600 per hectare to $1,850 per hectare, and from $1,400 per hectare (for the less developed irrigable land) to $1,600 per hectare. We can find no basis to disturb the remaining classified land values, nor the allowance made for development costs. We also adopt the value determined below for the structural improvements - no challenge was made upon it by either appellant here. It follows that our determination of compensation for the value of the subject property is:-Land (inclusive of water & fencing)
24 ha developed irrigable arable land @ $1,850/ha $ 44,400
84 ha developed irrigable arable land @ $1,600/ha $134,400
92 ha undeveloped dry arable land @ $416/ha $ 38,272
280 ha grazing land @ $250/ha $ 70,000
$287,072
Development
92 ha clearing & cultivation @ $500/ha $ 46,000
66 ha clearing of grazing land @ $350/ha $ 23,100
7 ha clearing & cultivation @ $350/ha $ 2,450 $ 71,550
Land - inclusive of timber treatment,
water and fencing $358,622
Structures
Dwelling $ 58,000
Shed $ 13,350
Tanks $ 3,750 $ 75,100
$ 433,722
To this sum is to be added compensation for disturbance (legal and valuation fees) in the determined sum of $5,420. The total award of compensation is accordingly $439,142, which award we round off to $440,000.
The Land Court made an award of interest on unpaid compensation monies as set out at pages 49 and 50 of the judgment under review. Some further evidence as to the use of the resumed land by the dispossessed owner since the resumption date was adduced before us but we can see no reason for not awarding interest, and on the same basis as the Court below. In the result then we make the following orders:-The appeal by James Richard Steven is allowed and the cross-appeal by the Commissioner of Water Resources is disallowed. Compensation payable by the respondent Commissioner is determined under all heads of claim in the sum of $440,000. We order the respondent Commissioner of Water Resources to pay to the claimant interest on the sum of $440,000 at the rate of 12.75% per annum for the period commencing 20th April, 1988 (date of lodgement of claim) and ending on 23rd December, 1988 (when the sum of $100,000 was paid by way of advance), and on the sum of $340,000 for the period commencing 24th December, 1988 and ending on 27th January, 1989 (when a further sum of $100,000 was paid by way of advance), and on the sum of $240,000 for the period commencing 28th January, 1989 and ending on the day immediately preceding the date upon which final payment of compensation is made.
The claimant's appeal has been successful and we cannot see any reason why he is not entitled to an award of costs in his favour. Accordingly it is ordered, in the exercise of the Court's discretionary powers, that the constructing authority pay the claimant's costs of and incidental to this action. The amount of such costs shall be ascertained and fixed by the Taxing Officer of the Supreme Court at according to the scale of costs prescribed by law for the time being in respect of proceedings in the Supreme Court and in accordance with the provisions of Section 44 (16) of the Land Act 1962 - 1989.
(J.P.G. Kneipp) J.
Judge of the Supreme Court.
(D.M. White)
Acting President of the Land Court.
(C.H. Carter)
Member of the Land Court.
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