T M Burke Estates Pty Ltd v Noosa Shire Council

[1997] QCA 267

IN THE COURT OF APPEAL	[1997] QCA 267
SUPREME COURT OF QUEENSLAND

Appeal No. 7781 of 1996

Brisbane

[T.M. Burke Estates P/L v. Noosa Shire Council]

BETWEEN:

T. M. BURKE ESTATES PROPRIETARY LIMITED

ACN 004 130 732

Appellant

AND:

COUNCIL OF THE SHIRE OF NOOSA

Respondent

Davies J.A.
Shepherdson J.

White J.

Judgment delivered 2 September 1997

Judgment of the Court

APPEAL ALLOWED. PRELIMINARY QUESTIONS ANSWERED AS FOLLOWS:

1.    COMPENSATION IS PAYABLE, IN ACCORDANCE WITH ORDINARY PRINCIPLES OF VALUATION, BY COMPARING THE VALUE OF THE LAND, IMMEDIATELY BEFORE 5 MAY 1995, WITH THE PROSPECT IT HAD THAT ITS LIKELY FUTURE USE WAS RESIDENTIAL IN A RESIDENTIAL SINGLE UNIT ZONE WITH ITS VALUE, IMMEDIATELY AFTER 5 MAY 1995 WITHOUT THAT PROSPECT AND WITH THE LIKELIHOOD THAT ITS FUTURE USE WOULD BE PUBLIC AND PRIVATE OPEN SPACE.

2.     THE PLANNING SCHEME DOES NOT BY ITS OPERATION LIMIT THE SIZE OF ALLOTMENTS NOR IS IT ONE UNDER WHICH THE SUBDIVISION OF LAND IS RESTRICTED.

THE APPELLANT TO HAVE ITS COSTS HERE AND BELOW.

Rural Pursuits under the respondent's planning scheme - this land could not be subdivided but there were reasonable prospects that at some future time rezoning would be permitted to allow subdivision for residential use - respondent amended the planning scheme and this ended these prospects - whether compensation was payable to the appellant pursuant to s.3.5 of the Local Government (Planning and Environment) Act 1990 by virtue of ss.3.5(4)(c) and 3.5(4)(g).

Counsel:	Mr. G. J. Gibson Q.C., with him Mr. M. D. Hinson for the appellant Mr. P. J. Lyons Q.C., with him Mr. T. N. Trotter for the respondent
Solicitors:	O'Shea Corser & Wadley for the appellant Wakefield Sykes for the respondent
Hearing Date:	20 August 1997

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 7781 of 1996

Brisbane

Before Davies J.A.
Shepherdson J.
White J.

[T.M. Burke Estates P/L v. Noosa Shire Council]

BETWEEN:

T. M. BURKE ESTATES PROPRIETARY LIMITED

ACN 004 130 732

Appellant

AND:

COUNCIL OF THE SHIRE OF NOOSA

Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 2 September 1997

This is an appeal from a judgment of the Planning and Environment Court determining a

preliminary question of law. That determination was that compensation was not payable to the appellant

pursuant to s.3.5 of the Local Government (Planning and Environment) Act 1990 by virtue of

ss.3.5(4)(c) and 3.5(4)(g).

Section 3.5 of the Act provides for compensation to a person who has an interest in premises

within a planning scheme area and that interest is injuriously affected by the coming into force of any

provision contained in a planning scheme. The phrase "injuriously affected" is not defined but it was

submitted by the appellant and not contested by the respondent that this meant "reduced in value". That
view is supported by the way in which compensation is required to be assessed: sub-s.(8)(a).

Sub-section (4) of that section then provides that compensation is not payable in a number of

specific cases. Those relied on by the respondent and found by the learned Judge to preclude

compensation were contained in paragraphs (c) and (g) of the sub-s.(4) which, relevantly, provide that

compensation is not payable:

"(c) where an interest in premises is affected by a planning scheme which by its operation ... limits the size of allotments ... ;

...

(g) in respect of any affection of an interest in premises by or pursuant to a planning

scheme or a local law made by a local government under which the subdivision of the
land is prohibited or restricted;".

The relevant facts in the present case are undisputed and in short compass. The appellant was

the owner of 59 hectares of land in the Noosa Shire prior to 5 May 1995 and remains the owner of that

land. At all material times it had been zoned Rural Pursuits under the respondent's planning scheme and,

prior to 5 May 1995, was designated Urban Area under the respondent's strategic plan. Under

Chapter XXXI, the Subdivision of Land By-Law, in the Rural Pursuits zone there is a 40 hectare

minimum area for allotments. However, under the strategic plan, areas designated Urban Area are

"those areas which will be developed for residential uses, comprising both permanent and tourist

accommodation". Thus, although, as presently zoned, the land could not be subdivided, because the

strategic plan saw residential use as its future use, there were reasonable prospects that, at some time

in the future, rezoning would be permitted to allow subdivision for residential use. The appellant

proposed to develop the land in accordance with a concept plan which would require rezoning to the

Residential Single Unit Zone which would permit subdivision into allotments ranging in size from 600

square metres.

On 5 May 1995 the planning scheme for the Shire of Noosa was amended in two respects. First, under the strategic plan the designation of the subject land was changed from Urban Area to Public and Private Open Space. Areas designated Public and Private Open Space in the strategic plan

are stated to include "National Parks, Fauna Reserves, Conservation Reserves, Environmental Parks,

Recreation Reserves, Parks and State Forests". Secondly a development control plan was gazetted

applying solely to this land. It had, as one of its objectives, the institution of controls "that ensure that

no forms of urban development are permitted within the Development Control Plan Area" and it stated

that the preferred future use of the land "is limited to open space purposes with an associated

appropriate tenure providing for its permanent preservation and for certain road reservation purposes".

It is plain that these amendments together put an end to the prospects, which existed before 5 May

1995, that the ultimate use of the subject land would be urban residential and that, to that end, it would

be subdivided in the kind of way envisaged by the appellant's concept plan.

The appellant contended below and maintains the contention that the effect of the amendments

to the planning scheme on 5 May 1995 was to injuriously affect its interest in the subject land within the

meaning of s.3.5(1) of the Act and that it was and is entitled to compensation in the sum of $4.5M, that

being the difference between the value of the land with the prospect of subdivision which it had prior

to 5 May 1995 and a nil value which it now has in consequence of the amendments on that day.

However the respondent contends, and the learned Judge held that no compensation was payable

because both paragraphs (c) and (g) of s.3.5(4) applied; that is that the planning scheme by its

operation limited the size of allotments and that, under the planning scheme, the subdivision of land was

prohibited or restricted.

The appellant's existing right to subdivide the land did not change on and after 5 May. Nor did

the permitted size of allotments on the land change. Immediately prior to that date it had no right to

subdivide the land; there was a 40 hectare minimum for allotments and the land was only 59 hectares. It could not therefore legally be subdivided. Immediately after that date, of course, it remained in the

same zone with the same minimum area of allotments.

The effect of the changes on 5 May were to the potential future use of the land. There is no

doubt that they reduced its value because, as we have said, they put an end to the prospect which

previously existed of the land being used for residential use and, consequently, of being subdivided for

that purpose. The question is whether these were changes which "by their operation" limited the size

of allotments or "under which" the subdivision of land was prohibited or restricted. It is no doubt

possible to give these phrases a broad meaning, as his Honour did, to reach that result. But in order

to see whether that was the intention of the legislature it is necessary to see how that construction would

operate in the context of the Act.

In the context of s.3.5(4) it is necessary to refer to paragraph (d) which relevantly provides that

compensation is not payable:

"(d) ... where an interest in premises is affected by a planning scheme which by its operation prohibits or restricts the use of land ... for a particular purpose, unless the applicant establishes that the applicant had a legal right immediately before the provision in question of the planning scheme came into force to use the land ... for the particular purpose which is so prohibited or restricted."

It is paragraph (d) rather than paragraphs (c) or (g) which would apply where a rezoning

rezoned land to a less intensive use. Such a rezoning would "by its operation" prohibit or restrict the use

of land for a particular purpose for which it could previously have been used. It would ordinarily also

indirectly affect both the right to subdivide and the size of allotments.

To give such a rezoning the effect that either paragraph (c) or (g) would apply would have, it

seems to us, a consequence unintended by the legislature in a case which comes within the exception

in paragraph (d). Where it does, paragraph (d), which is specifically concerned with the use of land, and consequently rezoning which directly affects that use, would not preclude the payment of

compensation. But if paragraphs (c) and (g) are to be given the construction which his Honour gave

them, each of them would preclude it in such a case because any prohibition or restriction on the use

of land in consequence of a rezoning to a less intensive use would also ordinarily indirectly prohibit or

restrict subdivision of land and limit the size of allotments. In other words they would deprive the

exception in paragraph (d) of any operation in one circumstance when it appears it was plainly intended

to operate.

In order to avoid such a construction it is necessary to distinguish between the direct operation

of rezoning, the change in use to which land may be put, and its indirect operation, that in consequence

it may affect subdivision and the size of allotments. That is the way in which these paragraphs in s.3.5(4)

should, in our view, be construed.

The changes made on 5 May have an even less direct effect on subdivision and allotment sizes.

Indeed they have only an indirect effect on land use which, as we have already indicated, remains

unchanged. They indicate no more than the objectives and future intent of the plan as to the use of the

subject land. And in that sense only they indicate, indirectly, that, to that end, subdivision will be

restricted and allotment sizes limited.

It follows from the construction which we prefer that neither paragraph (c) nor paragraph (g)

applies in the present case. This then disposes of the second of the questions asked as preliminary

questions of law. The first of those questions was:

"whether compensation is payable in respect of the development of land in accordance with plan X329-280B (attached to the claim), when the Appellant did not have a legal right to develop the land in accordance with the plan immediately before 5 May 1995 when the Marcus Development Control Plan, and the amendment of the Strategic Plan referred to in the claim, came into force."

Unless paragraphs (c) or (g) applies, as these are the only preclusion provisions relied on, the

appellant is entitled to compensation for the injurious affection to its interest and the amount of that

compensation is the amount by which the interest is reduced in value by the amendments of 5 May

1995: sub-s.(8)(a). The only relevance, in determining that value, of the fact that the appellant had no

legal right to develop the land in accordance with the plan immediately before 5 May 1995 is that what

must be valued, in determining the value of the land before that date is the prospect that its likely future

use was urban residential in a Residential Single Unit Zone rather than the certainty that that was its

present use.

We would therefore allow the appeal and we would answer the first preliminary question as

follows:

compensation is payable, in accordance with ordinary principles of valuation, by

comparing the value of the land, immediately before 5 May 1995, with the

prospect it had that its likely future use was residential in a Residential Single Unit

Zone with its value, immediately after 5 May 1995 without that prospect and with

the likelihood that its future use would be public and private open space.

We would answer the second preliminary question as follows:

the planning scheme does not by its operation limit the size of allotments nor is it

one under which the subdivision of land is restricted.

The appellant should have its costs here and below.