Summers v Council of the City of Mackay
[1999] QLC 109
•7 October 1999
LAND COURT
BRISBANE
7 October 1999
Re: A99-31
Determination of Compensation -
Resumption by the Council of the City of Mackay
for Drainage Purposes -
Acquisition of Land Act 1967Ian Summers
Claimant
v.
Council of the City of Mackay
Respondent
(Hearing at Sarina)
J U D G M E N T
The claimant owns a parcel of land with an area of 2,527 m² located at 9 Perkins Street, North Mackay, in a suburban locality about 3 km north of the Mackay Post Office. I refer to that land throughout these reasons as the "claimant's land", or similar.
A Notice of Intention to Resume an easement over part of the claimant's land issued on 4 March 1994. On 3 February 1995 (the "relevant date") an easement for drainage purposes covering 667 m² was resumed by proclamation published in the Government Gazette that day. I refer to that easement in some detail later in these reasons.
Following the issue of the Notice of the Intention to Resume, but before publication of the proclamation, the parties entered into an agreement which allowed the respondent to enter the claimant's land for the purpose of carrying out works of the type contemplated in the easement which was subsequently acquired. That agreement was executed by Mr Summers on 16 December 1994 and by the respondent on 9 January 1995. The agreement was without prejudice to Mr Summers' rights to compensation. It appears that the works authorised by the easement were carried out before the date of proclamation. These works consist of drainage pipes covered with soil, creating an even, smooth surface. The level of this surface is about 1.5 metres below the level of the bulk of the claimant's land as filled above its natural surface level. There is an all-but vertical drop between the level of the filled land and the level of the soil covering the underground drain. The assessment of compensation by both parties proceeded on the basis that the claimant's land had a potential for multi- unit residential development. It is common ground between the parties that the easement area would be of no practical use in any development of the claimant's land for multi-unit residential purposes, unless the area can be filled to a sufficient height to allow a gradient which might be practically utilised together with the main part of the land.
The original claim for compensation lodged by the claimant was for compensation expressed as follows:
Land $15,000.00 Improvements Severance Injurious Affection Loss of Potential Profits on development $46,000.00 The total amount of compensation claimed $61,000.00 That claim was subsequently amended, with leave, during the course of the
claimant's case to:
Diminution in value of land $45,000.00 Or in the alternative: loss of land $15,000.00 Subsequently that amended claim was further amended, with leave, to the
following:
Diminution in value of land $45,000.00 Or in the alternative: loss of land $35,000.00 Valuation fees expended in preparation of the claim $ 1,600.00
In due course the parties settled upon a figure of $1,200 as compensation with respect to valuation fees and I will determine disturbance compensation for this item in that amount.
Mr Summers gave evidence in support of his claim for compensation, whilst valuation evidence on his behalf was provided through Gregory William Clacher, a registered valuer. Mr Clacher relied in his valuation on a multi-unit residential layout design provided by Bruce Alfred Kearney, a building designer, who also gave evidence. The respondent contended for a compensation figure in the amount of $4,000 and Barry John Deacon, a registered valuer, gave evidence in support of that figure. John Hadyn Caldwell, the Manager, Planning Services, Mackay City Council, also gave evidence for the respondent, that evidence being concerned with the potential for multi-unit development on the claimant's land before and after the resumption. Whilst there was some consistency between the views expressed by Mr Caldwell and those relied upon by Mr Deacon, I should point out at this stage that Mr Caldwell's evidence was largely in response to the claimant's case and did not form the original basis for Mr Deacon's valuation.
The claimant's land is situated on the northern side of Perkins Street and is part of a developed residential area with mixed redevelopment of multi-unit properties. The rear of the property backs onto the Gooseponds Reserve which is a low-lying area, which receives drainage from the claimant's land and adjoining properties. The Gooseponds Reserve was at the relevant date proposed for development in the form of beautification, together with flood protection works, and at the time of hearing much of the intended work had been completed. Those works included the construction of a levee bank or bund wall which is clearly visible from the claimant's land and which inhibits a view of the more attractive aspects of the Gooseponds development scheme. The claimant's land was originally a low-lying site which had been filled at the date of proclamation in the manner and to the extent that I describe later in these reasons. The land is of irregular shape, though might generally be described as triangular with part of the base of the triangle fronting Perkins Street and the western and north- eastern boundaries comprising the two somewhat elongated sides of the triangle, with the apex pointing towards the Gooseponds Reserve. It has a frontage to Perkins Street of approximately 21.83 metres and "a depth varying to some 86.92 metres", in Mr Clacher's language.
Whilst a single easement was resumed, in reality it has two "arms". One of these having a width of about 5.3 metres is located along the north-eastern boundary and takes drainage from Perkins Street, whilst the other (about 4 metres wide) is along the western boundary and joins the north-eastern arm at the apex of the triangle. That western arm of the easement takes drainage from allotments which abut the south- west of the claimant's property and which I discuss in more detail later in these reasons.
Mr Clacher's valuation says that there was a small shed of no value on the claimant's property and that the front boundary was fenced with 1.8 metre high steel columns and wooden palings. To this Mr Deacon added that there is a fence frame of similar construction located parallel to the north-eastern boundary. This fence frame becomes relevant later in these reasons.
Perkins Street is a full-width bitumen sealed road with concrete kerbing and channelling. Reticulated town water, electricity and telephone services are available to the claimant's land and a primary school is situated within 200 metres of the property, whilst other urban facilities are available within a short distance.
| At the request of the parties, I viewed the claimant's land and this inspection At the relevant date the claimant's land was zoned "Residential A" under the | assisted me in my appreciation of the evidence. "before and after" method of valuation. This method involves the application of a value to the land before resumption, then again after, with the difference between the two values representing compensation for the loss of the interest in the land, severance and injurious affection. The method is frequently employed where part only of a claimant's land is taken and has been accepted as such by this Court on many occasions. (See, for example, Brisbane City Council v. Lansbury (1977) 4 QLCR 502). In his valuation Mr Clacher valued the claimant's land on the basis that it had potential for the development of six units before resumption and four after. He made reference to five sales transactions and concluded from that evidence that a value of $22,500 per unit should apply to the claimant's land, both before and after resumption. His approach might be presented in simple form thus: |
6 units x $22,500 – before $135,000 4 units x $22,500 – after $90,000 Difference $45,000
Mr Clacher mentioned in examination-in-chief that the value per m² of the claimant's land before resumption, based on the above figures, would be $53 per m², whilst the after resumption figure would be $48 per m². He said that the use of the per m² values was equally as valid as the per unit method. It is clear, however, that his approach was not based on these per m² values. In any event, no explanation was given as to why there would be a consistency between the per unit values applied by him before and after resumption, whilst the per m² values before and after differ.
Mr Clacher's valuation was carried out on the basis that the whole of the claimant's land was usable before resumption, but that after the resumption the whole of the 667 m² of the resumed easement (the "easement area") would not be of any practical use for multi-unit development, given that the easement area was about 1.5 metres lower than the filled surface of the main part of the land. His reasoning was based on the proposition that the claimant would not be permitted to fill the easement area to such a level as to make it a practically useable part of the overall site. I come to that issue shortly however will mention now that, subject to the respondent's views about the north-eastern arm of the easement which I outline below, it was common ground that practical utilisation of the easement area would require that area to be filled above its present level.
Mr Deacon prepared his valuation on the basis that the claimant's land would be capable of similar development both before and after resumption. He valued the land at $30 per m², having considered four sale properties, and applied a 20% diminution in value to the 667 m² contained within the easement area. Using this method the value of the easement area prior to resumption would have been $20,010 ($30 x 667 m²) and the diminution in value was 20% of that figure, that is $4,002, rounded down to $4,000.
Mr Deacon's valuation proceeded on the basis that the north-eastern arm of the easement would have been required for drainage purposes as a condition of development had the resumption not occurred, thus there would be no difference with respect to that part of the claimant's land before or after resumption. Mr Deacon's valuation report dealt with the western area in this way:
"The easement along the western boundary may detrimentally affect the siting of any multiple dwellings on the site, however it would be logical in such a concept to provide for a rear yard/courtyard to each proposed dwelling. It is unlikely that this effect would limit the potential appropriate yield from the property."
He therefore proceeded on the basis that the easement area; and he was particularly concerned with the western arm at this point; may be filled to such a level as to make that area a usable integrated part of the land even if no building is constructed on this part. As such, the reasoning is in direct conflict with that advanced by Mr Clacher.
The case for the respondent concerning the suggested requirement for a drainage condition before resumption was based on Mr Deacon's understanding that a drain existed along the north-eastern boundary at the relevant date, therefore it would have been appropriate for the local authority to impose such a condition. Application for town planning consent would be made under s.4.12(1) of the Local Government (Planning and Environment) Act 1990. Section 4.13(5) allows the local authority to give an approval subject to conditions, whilst under s.6.1 a local authority is not to "subject its approval of that application to a condition that is not relevant or reasonably required in respect of the proposal to which the application relates, notwithstanding the provisions of a planning scheme". It is the submission of the respondent that because there was an existing drain, the suggested drainage condition is "relevant or reasonably required". The legal basis for that submission was not challenged by the claimant, who says simply that there was no drain there before resumption, therefore there was no basis for the imposition of the condition.
There are, therefore, two primary factual issues which fall for consideration: first, there is the question of whether there was a drain along the north-eastern boundary of the claimant's land before resumption and unconnected with the resumption; and, second, whether permission to fill the easement area would have been expected following the resumption. In the context of these two issues, it will be useful if I first of all set out the history concerning the placing of fill on the claimant's land.
Mr Summers said that the land was in a flood area and therefore required filling in order that the development might be permitted to proceed. He said that a small amount of fill was on the property when he purchased it. Following his purchase of the land, he made contact with Messrs Ullman & Nolan, consultants to the Pioneer Shire Council and was given advice as to the level of fill needed to allow a multi-unit development. According to Mr Clacher's report, fill would be required to a minimum level of RL 6 and it was his understanding that fill to above that level had been placed on the land before the relevant date. It appears that that fill was placed there with the understanding of the local authority, however, without a formal permit having issued.
Whilst Mr Summers' recollection is that no fill was placed on the land after the relevant date, it was Mr Deacon's understanding that that was not the case. He did not, however, give detailed evidence on the difference in fill levels, as he saw them, between the relevant date and the date of hearing.
Mr Summers did not give evidence as to how he had actually gone about filling his land, but Mr Deacon suggested that the filling appears to have been carried out in such a way as to leave unfilled what Mr Deacon saw as a natural drainage along the north-eastern boundary from the Perkins Street frontage towards the Gooseponds area. He suggested that the placing of fill may have had the effect of concentrating the drainage along this boundary, but that nevertheless there was a drain there beforehand.
The natural topography of the claimant's land was one that allowed flow from higher land along Perkins Street over the claimant's property, together with adjoining lands, towards the lower Gooseponds area. Mr Caldwell said that the majority of flow would have been in the form of sheet flow, but referred also to there being a drain along the north-eastern boundary of the claimant's land. Mr Caldwell's report refers to this as a drain that existed at the relevant date. Nevertheless, it is quite clear that he had no personal knowledge or recollection of the presence of a drain in the vicinity of the north-eastern boundary and relied on Mr Deacon's report and evidence in that regard. Equally, I am reticent to place reliance on his description of sheet flow though this is not inconsistent with my conclusion on this issue.
Mr Summers did not recall seeing a drain at the time he purchased the land. Soon after purchase, he had the block surveyed and, according to him, that survey did not reveal any existing open drains. No survey plan was tendered, nor is it clear to me whether the survey was a boundary identification exercise or a survey of a more detailed nature.
Mr Clacher included an orthophoto in his valuation, however, the detail and scale of that was not suitable to indicate existing drainage flow. For his part Mr Clacher said that he had no specific knowledge of the location of drains at the relevant date, however, his report says at one point, "The generally level surrounding contour suggests no indications of pre-existing drains or water courses on the subject property". I understand this viewpoint to have been based, at least in part, on the orthophoto.
The respondent tendered the first page of a letter dated 21 May 1993 from the then Pioneer Shire Council to Mr Summers concerning the proposed easement. That letter said in part, "You will note the easement covers the existing open drain and recent works Council has performed". It is not clear to me what "recent works" are referred to, however, Mr Deacon said that when he inspected the claimant's land in May 1994 the local authority had constructed an underground drain along what is now the western arm of the resumed easement. That date of construction is not consistent with the agreement between the parties to which I referred earlier in these reasons and which appeared to anticipate construction commencing some time after the execution of the agreement by the local authority in January 1995. Nevertheless, I do accept Mr Deacon's evidence concerning that western drain, given that it is supported both by evidence concerning the date of his inspection and photographs he took on that occasion. In any event, the critical point is that it is suggested by the respondent that the term "existing open drain" referred to in the Shire Council's letter is to be taken as a reference to a drain along the north-eastern boundary of the claimant's land.
Photographs taken by Mr Deacon in May 1994 show steel columns and two rails which comprise a frame for a partly constructed fence located inside the north- eastern boundary and apparently parallel to that and along the inland side of what Mr Deacon describes as the open drain located along that boundary. Mr Deacon said that, given the condition of the concrete wall at the base of the fence construction, the fence had apparently been in place for some time before the date of his initial inspection in May 1994. Another photograph taken by Mr Deacon at the time of his inspection shows fill recently placed on the claimant's land extending up to but not impinging upon the location of the suggested drain. This photograph provides support for Mr Deacon's contention that the placing of fill on the land took place in such a way that the drain be preserved and that any sheet-water flow over the claimant's land be concentrated further in that drain.
I find, on the balance of probabilities, that the evidence points to there being a drainage path located along the north-eastern boundary of the claimant's land and that that drain existed at the date of resumption. I also find that there is no evidence that the respondent constructed that drain in anticipation of resumption. Accordingly, I also find that the local authority would have been justified, pursuant to an application for consent to develop a multi-unit residential development on the claimant's land, to impose a drainage condition requiring that the developer provide a drainage easement along the north-eastern boundary similar in dimensions and conditions to that which resulted from the resumption.
There was no evidence of any drain being found along the western boundary of the claimant's land prior to the resumption, apart from the underground drain apparently constructed by the respondent in that location. It was suggested by counsel for the respondent that flow of water to what became the western arm of the easement would have been generated from the rear of two allotments, one of which abutted the south-western boundary of the claimant's land. The other adjoined that allotment. Counsel drew from Mr Caldwell evidence that the development of the claimant's land would have been subject to a requirement to accommodate upstream flow from those two allotments.
Mr Kearney expressed the view that these two allotments could drain directly into the Gooseponds Reserve as they also abut that area and therefore did not require a flow across the claimant's land.
The evidence is that at the date of hearing there were drainage easements located at the rear of these two allotments, such easements probably having been acquired at around the same date as the subject resumption, but in any event, I would conclude as part of the same "scheme". Pointe Gourde Quarrying and Transport Co Limited v. Sub-Intendent of Crown Lands (Trinidad) [1947] AC 565 is authority for the proposition that the value of resumed land may not for compensation purposes be increased, having regard to any enhancement resulting from the scheme of which the resumption is part. In Melwood Units Pty Ltd v. Commissioner of Main Roads (1978) 5 QLCR 145 the Privy Council said with respect to the principle authorised by the Pointe Gourde case:
"In their Lordship's opinion it is part of the common law deriving as a matter of principle from the nature of compensation for resumption or compulsory acquisition, that neither relevantly attributable appreciation nor depreciation in value is to be regarded in the assessment of land compensation." (at 153)
In accordance with these authorities, I should disregard the presence of these drainage easements which clearly form part of a scheme. This is not to say that I should disregard the fact of any flow of water upstream of the claimant's land and onto that land at the relevant date, however, there is no evidence that in the absence of the drainage easements over the two allotments to which I have referred, the flow of water would have been located in the vicinity of the easement path now found along the western boundary of the claimant's land. I cannot therefore conclude that there would have been a pre-existing requirement for a drainage easement to be located in that vicinity. I hasten to add that it was not an opinion expressed by Mr Deacon in his valuation that such an easement would have been required, nor was his valuation predicated on such a finding. I now turn to the question of whether a prudent developer of the claimant's land after resumption would have anticipated being able to fill the easement area to allow the inclusion of the easement area physically within the practical development of the main part of the land.
Mr Deacon had spoken to Michael Jewell, the Shire Planner, concerning the question of fill and had been advised that the local authority would have had no objection to the filling of the easement area to a level which would permit practical incorporation of that area within a development of the land. I am not aware as to whether the Shire Planner saw the claimant's land, nor on what basis his opinion was given, in particular what questions he was asked. He is an employee of the respondent and whilst I would not impute any suggestion of bias, I must treat such hearsay evidence with reservation, particularly given its significance in the context of the case. In addition to his inquiry of the Shire Planner, Mr Deacon independently formed the view that there would be no need for an overflow drainage path along the easement area as drainage along the western arm of the easement was provided by way of an underground pipe. That view is not, however, consistent with evidence referred to by Mr Clacher in the form of a letter from the Shire engineer, which I will come to shortly, nor with the terms of the resumed easement which include the following:
"The Council shall have the full and free right to construct a drainage pipeline and all appurtenances thereof either above or below or partly above and partly below the surface of the said land within the whole or part thereof and/or to construct upon the surface of the whole or part of the said land an open drain and to use the same. …."
and
"The said Registered Proprietor shall not nor will he at any time build upon the said land or any part thereof or use or permit the said land to be used in such a way as to obstruct or interfere with the said drainage pipeline and/or open drain and the proper and effective use thereof by the said Council. …."
Mr Clacher wrote to Mr Ian Angus, Shire Engineer, in July 1994 asking four
questions:
"A. Will drains on both sides of land be piped? B. When will construction be finalised? C. Will owner be permitted to fill over easement? D. Will owner be permitted to build over any part of easement?" The response from Mr Angus was as follows:
"A. The drains on both sides of Lot 9 will be piped. B. Construction will be completed by Christmas. C. The filling over the Easements will be restricted to specified heights. This filling will be undertaken as part of the construction work. D. No building would be permitted over any part of the Easement as they act as overflow drainage paths for Q5 + flows."
It is Question C and the response to that which are of particular relevance with regard to the question of fill. It is the claimant's contention that the Shire Engineer's response to the question should be understood as indicating that filling over the easement area will be to a certain "specified" height and that no filling above that height will be permitted; and that filling to that height will be undertaken by the respondent as part of the construction work.
The respondent says, however, that it is not clear what the "specified" height would be and that, therefore, a subsequent application based on proper hydraulic investigation and advice may result in the local authority allowing fill above the level of the fill placed there as part of the drainage construction work. The respondent says that it would not have been expected that a local authority would cover underground pipes with any greater level of fill than the minimum required, in particular not to fill to the same level as filling placed on the claimant's land without the benefit of a local authority permit. It was also suggested that one would not expect a local authority to go to the expense of designing overflow drainage paths as such work would usually be carried out by intending developers at their own expense.
I think that the meaning and the intent of the Shire Engineer's Answer C is quite clear and I adopt the claimant's view as to that meaning. I also conclude that overland drainage along both arms of the easement would be compromised if fill were to be placed on those easement areas above the level resulting from the completion of the drainage construction work. Having said this, I must say that I doubt that what the Shire Engineer said would have such an effect as to bind all future actions. For example, if the adjoining lots to the south-west of the claimant's land were filled for development, raising the height at which water flowed over the land, it may be that fill could be placed on the western arm of the resumed easement to a similar level. I doubt, however, that fill would be permitted on the north-eastern arm as drainage from Perkins Street may be affected. Notwithstanding the view that I have expressed concerning the prospect of filling of the western arm in the fullness of time and dependent upon the development of the adjoining lots to the south-west, I must say that I doubt that the possibility of that consent being forthcoming would be such that a prudent purchaser would pay value for it, nor would he defer development in contemplation of that possibility.
Armed now with my conclusion on the primary questions of fact which arose in this matter, I now turn to the valuation methods employed in the assessment of compensation.
As I said earlier, Mr Clacher based his valuation on the claimant's land before resumption having potential for development of six multi units. That number of units was based on a layout plan provided by Mr Kearney, who had originally been approached by Mr Summers before resumption, and at that time had designed a six- unit proposal. Unfortunately, copies of that earlier proposal were not available at the time of hearing, the six-unit plan tendered in evidence having been prepared only shortly before the hearing.
The multi-unit layout provided by Mr Kearney was based on six 300 m² lots, each with a detached 3-bedroom low-rise residence, though two of the residences' garages were attached. There was a common entrance driveway and a parking/open- space area. Clearly, the layout represented a group title development, however, Mr Kearney said, unconvincingly, that the local authority might be convinced to accept the development as a subdivision together with the dedication of the driveway and the common area.
Mr Kearney's layout was based on utilisation of the whole before resumption site. On that basis it cannot be accepted, as I have found that there would be a requirement for a drainage easement along the north-eastern boundary as a condition of development approval. Consistent with what I have said about the north-eastern arm of the resumed easement, a developer could not reasonably expect permission to fill that easement required as a condition of town planning consent to allow its practical incorporation into a development of the balance of the claimant's land. As such, it would be of no practical use in the physical development of the claimant's land for multi-residential units though would be taken into account in calculating the maximum permissible yield of units.
Mr Caldwell did not provide a layout design but, using a mathematical calculation based on the provisions of the town plan, deduced that a maximum of eight units was possible but that given the shape of the land and the assumed requirement to provide a drainage easement along the north-eastern boundary, fewer than eight units would be capable of practical development. In the report that Mr Caldwell provided in evidence, he said this about the before resumption potential:
"Using this available area and the allowable density of 1 per 300 square metres, this equates to an effective unit yield of 6 units. It should be noted that this figure is still a theoretical potential yield based on an assumption that design of such units would be acceptable to Council. If one was to undertake detailed design of the site using these aforementioned constraints and the guidelines detailed in the Australian Model Code of Residential Development (AMCORD), then the likely number of units that are likely to be able to be approved on the site is five multiple dwellings."
Nevertheless he conceded that six units were possible. Mr Caldwell's oral evidence and examination-in-chief therefore proceeded on the basis that there was no disagreement in the evidence from both sides on the potential before resumption use of the claimant's land. This assumption requires some clarification. Mr Caldwell's potential yield calculations were carried out on the basis that the required north- eastern drainage easement would not be available to be built over, but, as I understand, would be able to be filled and utilised for an entrance driveway, a common area or such like. Mr Kearney, on the other hand, assumed that the whole of the before resumption land was available without the requirement for a drainage easement and his layout design was carried out on that basis. Now it may well be the case that Mr Kearney's layout design could be adjusted in such a way that buildings are not located on the north-eastern easement, however, it seems to me that the apparent consensus in the evidence that six units were possible cannot be sustained, given my conclusion on the requirement for that easement to be provided and that filling of the easement area would not be permitted. I cannot, therefore, be confident in accepting that a before resumption development of six units was practicable.
In the after resumption scenario, Mr Kearney said that four units only could be achieved, that viewpoint being supported by oral evidence he gave suggesting adjustments to the six unit layout. The adjustments did not change the essential parameters of the pre-resumption layout design in that 300-metre lots, 3-bedroom units, low-rise unit design and units remaining detached all remained part of his suggested after resumption layout. Now while I say "after resumption layout", I should make it clear that no layout was actually provided, the evidence simply pointing to the pre-resumption layout where it was argued that the unit fronting Perkins Street and the one at the apex of the triangle would have to be deleted. For his part, Mr Caldwell said that there would be no change between the before and after unit yield of the claimant's land because it would be possible to fill the western arm of the easement and utilise that area as part of the courtyard of the units developed along that section of the land. Given my conclusion on the matter of fill, I cannot accept that viewpoint.
Mr Kearney's four-unit after resumption layout was challenged on the basis that the whole of the claimant's land is, as Ms Wall acknowledged in her report, still available as part of the calculation in determining maximum yield and that by adjustment of the design parameters, a yield similar to the before resumption yield was still possible. It was suggested that the introduction of a duplex design, the provision of two-storey units and the reduction from 3-bedroom to 2-bedroom residences a layout could be designed to maintain the before resumption yield. Mr Deacon said that the majority of developments in 1994 were 2-bedroom units but that there had been a recent trend towards 3-bedroom units. It was also suggested that even without these changes, adjustments to the layout would have preserved the before resumption yield, however, that is a viewpoint which I cannot accept.
Mr Clacher said that two-storey units were not as attractive in the marketplace as low-rise units, especially for the more elderly sector of the market. Mr Deacon, on the other hand, said that there were numerous examples of two-storey units in the Mackay area and that even in the before resumption situation he would have advised the development of two-storey units on the western part of the claimant's land as the increase in height would allow a better aspect over the Gooseponds Reserve. A more attractive and more competitive product in an area without other obvious attractions would result, in his view. Mr Kearney said that there were many two-storey dwelling unit developments in Mackay and that he had designed many of them.
I do not accept the suggestion that two-storey units should be excluded from consideration either before or after resumption. The point is, however, that the after resumption development will involve either fewer units of similar design to the before design or the same number of units but with, say, two instead of three bedrooms, duplexes or reduced curtilage or common areas or a combination of these adjustments. On the assumption that the before design was the more marketable, the result would be a reduction in gross realisation, possibly combined with an increase in risk.
A critical part of the claimant's case is that two fewer units are possible after resumption given the same type of unit design before and after. Mr Kearney was drawn to say in re-examination that if eight units, including two-storey units, were proposed for development before resumption, then the after resumption development figure would be six. No foundation was laid for that opinion, excepting perhaps an arguable consistency with his primary approach which involved six units before and four after. Mr Caldwell in cross-examination conceded that it may be the case that there would be a reduction of two units in the after resumption development from either eight or six before, that qualified concession being made on the basis, as I understand it, that the western arm of the easement would not be available for fill and practical inclusion in the development. There are two difficulties I have with this evidence. First, as I have indicated, I lack confidence in the viewpoint that six units was possible before, given the design parameters included in Mr Kearney's layout; whether eight units might have been possible before resumption with revised design parameters was not demonstrated to me; and the reduction from whatever the before resumption figure was to a figure two fewer than that in the after resumption situation was not supported with clear evidence. No layout plan was provided by Mr Kearney. During cross-examination he said with respect to his consideration of the after resumption design that he had "a bit of a go with" such a design.
In conclusion on this point: the evidence does not convince me that a loss of two units would be the probable outcome based on a standard design, however, on that basis I do accept that there would probably be fewer units developable after resumption. This conclusion calls into question Mr Clacher's valuation however I have other concerns with that.
Mr Clacher's valuation approach is in my view too simplistic and does not acknowledge that a range of before and after resumption designs were possible. Indeed, counsel for the claimant suggested the possibility of eight units before resumption, including the adjustment of design parameters to which I have referred above. I doubt that this suggestion included the proposition that the before resumption value of the claimant's land would be, for example, eight units by $22,500. Development will often involve a balanced judgment having regard to capital outlay, the target market, anticipated selling prices and the expected profit and risk involved. Such factors might be similar in similar standard blocks of land in a given location, however, the subject land is a parcel of land with specific shape, locational and topographic features which invite a range of design solutions. Indeed, Mr Deacon gave evidence that in 1994 Mr Summers contemplated the development of four units on the land, including three 3-bedroom units and one 2-bedroom unit. Now Mr Summers is not a novice in unit development in Mackay, having completed two previous developments in that city. In addition, there was evidence that in his consideration of the development of his land here, he drew on the expertise of both Mr Kearney and another firm involved in building design work. Apart from this I note that Mr Clacher said that the use of the per unit method of valuation is appropriate if one is considering the same sort of units in the process of comparison. He said that the per unit method was a rule of thumb that developers employ and that they are generally referring to a standard lowset 2-bedroom unit. Mr Kearney's design layout comprised, however, all 3-bedroom units.
I think that in the circumstances the better method of assessment of loss is to adopt the price per m² method and to note that whatever number of units a prudent developer would be inclined to develop before resumption, he would either develop fewer after or would develop a similar number in a less attractive development. I have referred to those "less attractive" features in my above discussion, however, let me add to that the proposition that the western arm of the resumed easement presents a difficulty, not only in it not being available for filling and development, but it does, as Mr Caldwell put it, become an impediment to the site. A prudent developer would either fence out the easement area for safety purposes and would then either continue to maintain the vegetation on that easement area or would seek to surrender the land following development. This is an after resumption factor which needs to feature in the assessment of compensation.
Mr Deacon employed a method of valuation which involved a 20% discount of the value which he attributed to the easement area as part of the whole before resumption land, based on his judgment of the effect of the easement as an encumbrance to the title, but not one which had any practical effect on the development of the land. I acknowledge that the adoption of the 20% figure constitutes a professional judgment and therefore is not able to be reduced to precise explanation, however, there is one aspect of his method with which I am puzzled. On the basis of Mr Deacon's understanding that there would be no drainage requirement along the western boundary of the claimant's land before resumption and that that area was able to be filled after resumption, he applied a 20% value diminution to that area. On the other hand, he applied a 20% diminution to the land contained in the north- eastern arm of the easement, though on his understanding, that area would have been required as a drainage easement as a condition of before resumption development. No explanation for that apparent discrepancy was forthcoming, however, given the approach that I adopt below, I do not need to dispose of this issue.
The method of assessing compensation as a percentage of the value of that portion of the parent title directly encumbered by the easement has received judicial support in a number of cases (Joyce v. the Northern Electric Authority of Queensland (1974) 1 QLCR 171; Raynbird v. Southern Electric Authority of Queensland (1968) 35 CLLR 267; and Southport Softwoods Co-operative Plantation Society Limited v. Southern Electric Authority of Queensland (1974) 1 QLCR 241). The method adopted must, however, be "fit for the purpose" and must be directed towards an assessment of compensation which is valid on the available evidence. The Land Appeal Court in Joyce expressed that proposition in this language:
"The principles to be applied in the compulsory taking of an easement are no different from those applying when the full fee-simple is taken. This Court must restore, as best it may, the claimant in money form, to the position which he enjoyed prior to the taking of the easement. For practical purposes it becomes a matter of assessing the extent to which he has been disadvantaged as the natural and reasonable consequence of the taking of the easement. (at 177)"
I cannot adopt the method used by Mr Deacon both because of my factual conclusion regarding the prospect of gaining permission to fill the western arm of the easement and because it is really the claimant's land overall that suffers following resumption because of the smaller usable area which is available after resumption. Whilst the area calculations remain the same before and after resumption for the purpose of determining the maximum number of units which might be developed on the land, the would-be developer is confronted with choice concerning the nature of the after resumption development. Whatever choice is made, there will be a lesser development after resumption, either in terms of absolute numbers or in quality, and there remains the impediment of the unfilled western arm of the easement. That impediment also exists in the case of the north-eastern arm, however, on my factual conclusions the situation before and after is the same in that regard. Compensation, in my view, should be assessed by the employment of the "before and after" method.
Before I focus on the before and after value of the claimant's land, I will deal with the alternative claim of $35,000 which, on counsel's submission, is based on the proposition that the easement area of 667 m² is entirely lost. The $35,000 figure results by attributing to the whole of that area Mr Clacher's before resumption value which calculates to $53 per m². It was said by counsel that this alternative claim would be triggered were I to not accept the proposition that there is a loss of two units as the basis for assessing compensation. I have some difficulties with this alternative approach for a number of reasons. First, Mr Clacher did not describe this approach as an alternative that he had employed. It seems to me to have been a method suggested by counsel by simply utilising Mr Clacher's calculated $53 per m² value. Mr Clacher certainly did not explain any basis for the alternative approach. Second, the land has not been lost. That is, there is an easement, only, taken and as the parties agree, the easement area is relevant in calculating the maximum development possible on the land. If the easement area had been lost by total resumption, then drainage on the claimant's land could not be assumed to be addressed by the utilisation of the lost area, but would need to be arranged internally. In other words, there would have been a severance damage. Thirdly, I cannot see any logical connection between a finding with respect to the suggested loss of two units after resumption and this alternative method. It seems to me that if the alternative assumes that I have found there would be a similar development potential before and after resumption, the assumed loss of 667 m² could not equate to a pro-rata loss of value. Finally, I have found that based on standard design parameters there would probably be fewer units developable after resumption, however, I do not have sufficient confidence in the evidence to say what that fewer number would be. For the sake of my explanation assume that I had concluded that one unit would be lost. Now on Mr Clacher's primary approach that would mean a loss of $22,500, yet on the alternative approach the loss is said to be $35,000 if I found that the same number of units would be developed after as before.
Before dealing with the individual sales referred to by the two valuers, it will be useful if I first of all outline their evidence concerning the state of the multi-unit site market in Mackay. In his written valuation report Mr Clacher said, "The market for unit sites continued to improve over the 1994 to 1998 period". In examination-in- chief he said that during the earlier part of this period, which I take to be up to 1995, the market was "fairly flat" but that demand for unit development sites gradually increased as interest rates fell.
Mr Deacon said that his firm has analysed the market in Mackay and that this analysis shows an increase in unit site values throughout the 1990's. He said that unit development activity decreased from about 1994, as I understand him, but that nevertheless the prices of unit sites continued to increase.
Whilst the opinions expressed by the valuers do not coincide, this evidence does suggest to me that care needs to be taken in using sales which took place at a time removed from the relevant date. Whilst Mr Clacher said that prices were relatively flat during the period leading up to the relevant date, I prefer Mr Deacon's evidence on this aspect, both because his analysis appears to have been a little more sophisticated and because such a perspective leans in favour of the claimant. Having said this, I would suggest that in the final analysis the level of value is not a matter of major significance given that I have adopted a before and after method of assessment based on a price per m² method. I now turn to consider Mr Clacher's sales evidence.
His Sale 1 was also Mr Deacon's Sale 2 and this involved the sale of a property at 16-18 Beaconsfield Road, Beaconsfield. The sale land comprised an area of 5,466 m² with the sale having occurred in July 1993 at a sale price of $198,500. The sale comprised two adjoining elongated, near rectangular shaped lots which are slightly elevated at the front and which fall gently to the rear. Mr Deacon's valuation reveals that the property was purchased for the development of a child care centre but both valuers expressed the view that the site would have suited a unit development. Mr Clacher said that the purchaser was required to pay external drainage contributions. I am not aware of the level of contributions involved, however, some allowance would need to be made for such payment in a comparison with the subject land. Putting aside this contribution figure, the sale reveals a sale price of $36 per m². Mr Clacher said in his written valuation that the sale land is situated in a "similar established residential area" to the claimant's land but is further removed from amenities. He thought the area to be less desirable; however, Mr Deacon disagreed with that, saying that the land was slightly to moderately elevated and in a more modern suburb than the North Mackay area which he described as an older relatively declining area. He said that the area of the sale property would be preferred as the claimant's land has an aspect over low-lying para grass marine clay which is noted for mosquitoes and sandflies. He agreed that the Gooseponds development provided the claimant's land with glimpses of water, but said this was not as attractive an aspect as the claimant's side suggested. He disagreed with the suggestion that the sale land was further removed from amenities, saying that there were a number of schools in the vicinity.
The valuers agreed that the larger area of the sale property would have reflected a lower per m² price and this factor would need to be taken into account in a comparison with the claimant's land. In addition, I note that the shape of the sale land would be superior to the claimant's land. The sale took place some 19 to 20 months before the date of resumption and as I have said, some escalation in value during this period needs to be taken into account.
It may be useful if I introduce at this point Mr Deacon's Sale 3, a sale located at 3 Beaconsfield Road, Beaconsfield. That sale took place in June 1994 at a price of $180,000 and involved the sale of a regular shaped inside lot with an area of 4,047 m². The sale land rises gently from the road to the rear and at the time of sale had a home on it which would have had some removal value, according to Mr Deacon, though the land had a highest and best use for unit development. As improved with the house, the sale reflected a price of $44 per m². The general comments concerning the Beaconsfield area made with respect to Mr Clacher's Sale 1 (Mr Deacon's Sale 2) would apply to this sale also. In addition, Mr Clacher observed the larger size of the sale would need to be taken into account in a comparison with the claimant's land.
Mr Clacher's second sale property is located at 13 Pacific Drive, Blacks Beach, a beachside suburb north of Mackay City proper. This sale took place in January 1994 and involved the sale of 3,630 m² at an overall price of $283,000 or $78 per m². The sale land has esplanade frontage and is suited to unit development. Mr Clacher acknowledged that the sale land was in a different market from that which would apply to the claimant's land as the sale property would involve development of units for the tourist and holiday market, not the residential or retiree market of the North Mackay area. He also acknowledged that the sale property is located in a superior area, but said that given the zoning of the sale land as "Comprehensive Development", the requirement to obtain Council consent to development would have provided an opportunity for the local authority to impose conditions. Mr Deacon said that in that regard the sale property was similar to the claimant's land which also required the consent of the local authority. He did not think that the sale property provided a useful yardstick in valuing the subject property. He described Blacks Beach as being one of the nicest Mackay beaches.
To some extent Mr Clacher's Sales 3, 4 and 5 might be considered as a group. Sale 3 at 7 Meadow Street, North Mackay, has an area of 2,977 m² and sold in November 1996 for $175,000 or $60 per m². The sale property had an older style dwelling but was purchased for redevelopment to eight residential units. The sale land adjoins the Gooseponds Reserve and was zoned "Residential A" at the date of purchase. Sale 4 at 22 Perkins Street, North Mackay, sold in December 1996 for $90,000. This sale land has an area of 1,386 m² and revealed a sale price of $65 per m². Sale 5 at 21 Meadow Street, Mackay, has an area of 1,905 m² and sold in August 1997 for $174,000 or $91 per m². This sale property also adjoins the Gooseponds Reserve and is adjacent to Mr Clacher's Sale 3 property. This property was zoned "Residential A" at the time of purchase.
The first thing to note with Sales 3, 4 and 5 is the date of each transaction, in particular Sale 5 which took place some 30 months after the relevant date. Mr Clacher noted that a comparison between his Sales 3 and 5 indicated the increase in value for unit development sites during that period. He also acknowledged that these three sales are superior to the claimant's land, with Sales 3 and 5 having an outlook over parkland and a lake fully developed at the time of sale as part of the Gooseponds development. Mr Deacon expressed the view that Sales 3 and 5 were considerably superior because of this feature. He described these two sales as being elevated at the front and falling slightly to the rear and said that each was suited to a very attractive multi-unit development.
Mr Deacon said that Mr Clacher's Sale 4 is a near level site which has, since purchase, been developed to three detached townhouses. It is a smaller site than the claimant's land and in Mr Deacon's view represents a different type of development from that which would be considered for the claimant's land. He noted that the sale included a house and said that the elongated rectangular shape of the sale property allowed a reasonably efficient development of the land. I come now to Mr Deacon's remaining sales.
His Sale 1 is located at 11 Perkins Street and adjoins the claimant's land along its north-eastern boundary. The sale property at 3,200 m², is about 700 m² larger than the claimant's land and the sale price of $75,000 which was paid in September 1994 shows an analysed price of $23 per m². The land has an elongated irregular shape, and is superior in that regard to the claimant's land. The sale land is low lying and unfilled. At the date of sale it was improved with an aged low-set corrugated iron cottage which Mr Deacon said could be rented out to help cover any holding charges until a development took place. This sale appears to have been Mr Deacon's main basis for valuation. He noted that the sale date, the adjoining location and the comparable size of the sale land meant that the sale would be of assistance in striking a value for the claimant's land. He acknowledged that a significant amount of fill was required on the sale property: a point focused on from the claimant's side. Unfortunately, Mr Deacon did not give evidence of the expected volume of fill required, nor the expected cost of such fill, nor the possible availability of opportunity fill.
Mr Deacon's Sale 4 at Grendon Street, North Mackay, has an area of 4,047 m² and sold in September 1994 for $150,000. He described the sale land as having a rectangular shape with a near level topography, but with a narrow unformed road access off Grendon Street. The sale price analyses to a figure of $37 per m² and Mr Deacon acknowledged that in a comparison between that sale property and the claimant's land, some allowance would need to be made for the larger size of the sale property. Mr Clacher said that this sale property is located in an older established area, which Mr Deacon said was not unlike the area in which the claimant's land is found. Mr Clacher said that the sale property did not have the potential for an improvement in its environs in the manner of the Gooseponds redevelopment. In response, Mr Deacon said that the sale property looks over wetlands which are part of the Bassett Basin.
It seems to me that the sale at 16-18 Beaconsfield Road, Beaconsfield, needs to fall for consideration in striking the before resumption value of the claimant's land, if only because it is a sale common to each of the valuations. In addition, Mr Deacon's Sale 3 should be referred to as it is also located in the Beaconsfield area and tends to support the level of value in the common sale. I really have no way of reconciling the difference in opinion between two experienced valuers concerning the quality of the Beaconsfield area compared with North Mackay, however, I think there are important features concerning the common sale which need to be taken into account. First there is the substantial area differential between the sale property and the claimant's land which must in a dollar per m² valuation favour the latter, as must the earlier date of the sale transaction. Those two pluses for the claimant's land need to be offset by its inferior shape and also a factor which I have not mentioned thus far in considering these sales: the fact that a drainage easement would be required along the north-eastern boundary of the claimant's land and at a level some 1.5 metres below the filled surface level of the main part of the land.
I would exclude from consideration Mr Clacher's Sale 2 at Blacks Beach as being a property in a quite different market from the North Mackay area. I would also exclude his Sale 5, which I think is too far removed in time from the relevant date to provide any useful guidance. His Sales 3 and 4, whilst superior in land content to the claimant's land and at a sale date when a higher level of values applied in the marketplace do provide some assistance, however, in indicating a ceiling value, though one which on my appreciation of the evidence is substantially above the value of the claimant's land.
Mr Deacon's sale adjoining the subject land must be considered to be one of the more useful sales in the group of sales referred by the two valuers. I am concerned, however, that his application of that sale to the claimant's land does not sufficiently reveal the manner in which the fill requirement on the sale property should be taken into account and in this regard I think it appropriate that any comparison between those two properties must lean in favour of this superior feature of the claimant's land. I view Mr Deacon's Sale 4 as providing supporting evidence to the other sales to which I have referred.
In the result, I think that Mr Clacher has been led to an inflated figure by his reliance on Sales 3, 4 and 5 in his valuation, as well as Sale 2 which is, as I have said, in a different market. In the result, I conclude that the value of the claimant's land before resumption would be approximately $35 per m², which I round up to a figure of $90,000 overall.
In the after resumption scenario the claimant's land suffers the disability of the resumed easement, in particular the western arm of that easement which is not available for filling. Mr Caldwell's report indicates that the area of the north-eastern arm of the resumed easement would be 429m², thus the western arm of the easement has an area of 238m² or about 9.5% of the before resumption area. Whilst that area can be taken into account in the calculation of the maximum yield of the after resumption land, the area cannot be built over and would remain an impediment to the land. As I have said, the after resumption land would support a lesser development than before and one with an unattractive easement arm on the west. A reduction in value is warranted above the pro-rata value of the area of 238m². I conclude that the after resumption value of the claimant's land would be $72,000. Compensation for the loss of land is determined in this way:
Before value $90,000 After value $72,000 Reduction in value $18,000
To this figure must be added the disturbance figure of $1,200. Accordingly, I determine compensation under all heads at nineteen thousand, two hundred dollars ($19,200).
No advance against compensation has been made yet on my appreciation of the evidence the works authorised by the resumed easement were constructed prior to the date of resumption. In these circumstances I think it appropriate that interest be paid on the amount of compensation determined. Section 28 of the Acquisition of Land Act 1967 authorises this. I order that interest on the amount of $19,200 be paid by the respondent at the rate of 7.25 per cent per annum calculated from 3 February 1995 up to and including the day immediately preceding the date of payment.
Member of the Land Court
0
0
0