Chief Executive, Department of Transport and Main Roads v Cidneo Pty Ltd [2015] QCA 96 (2015) 207 LGERA 448

SUPREME COURT OF QUEENSLAND CITATION: Chief Executive, Department of Transport and Main Roads v Cidneo Pty Ltd [2015] QCA 96 PARTIES: CHIEF EXECUTIVE, DEPARTMENT OF TRANSPORT AND MAIN ROADS (applicant/appellant) v CIDNEO PTY LTD ACN 105 454 064 (respondent) FILE NO: Appeal No 6645 of 2014 LAC 006 of 2013 DIVISION: Court of Appeal PROCEEDING: Appeal from the Land Appeal Court ORIGINATING COURT: Land Appeal Court of Queensland – [2014] QLAC 3 DELIVERED ON: 5 June 2015 DELIVERED AT: Brisbane HEARING DATE: 20 November 2014 JUDGES: Chief Justice and Fraser JA and Dalton J Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDERS: 1. Grant the application for leave to appeal only in relation to ground 1 in the draft notice of appeal. 2. Allow the appeal in relation to ground 1. 3. Set aside the orders made in the Land Appeal Court dismissing the cross-appeal and order instead that: (a) The cross appeal be allowed in relation to ground 1 of the cross-appeal only. (b) The matter be remitted to the Land Court for the determination of compensation in accordance with the reasons of this Court. 4. The parties have leave to make submissions about costs within 21 days of today or within such other period as is fixed by a Judge of Appeal or the Registrar. CATCHWORDS: REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – ASSESSMENT – MARKET VALUE – BEFORE AND AFTER METHOD – where the appellant’s land was resumed – where the Land Court assessed compensation using the ‘before and after’ method – where the assessment required consideration of the likely contribution for external roadworks – where, subsequent to the resumption, the -- 1 of 23 -- 2 contribution for external roadworks was agreed upon – where the Land Court, in assessing compensation, did not take into account post-resumption events – whether post-resumption events ought to have been taken into account when assessing compensation REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – ASSESSMENT – SEVERANCE – where s 20 of the Acquisition of Land Act 1967 (Qld) requires that in assessing the compensation to be paid regard must be had to any severance damage or injurious affection damage – where the Land Court concluded that the transport infrastructure contribution was neither severance damage or injurious affection damage – whether the transport infrastructure contribution was severance damage or injurious affection damage Acquisition of Land Act 1967 (Qld), s 20 Adelaide Fruit and Product Exchange Co Ltd v Adelaide Corporation (1961) 106 CLR 85; [1961] HCA 20, considered Barns v Department of Transport (1997) 16 QLCR 22, cited Brisbane City Council v Mio Art Pty Ltd [2012] 2 Qd R 1; [2011] QCA 234, followed Carson v Minister for Environment and Planning (1990) 70 LGRA 215; [1990] NSWLEC 70, cited Commonwealth Custodial Services Ltd v Valuer General (2007) 156 LGERA 186; [2007] NSWCA 365, cited Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority (NSW) [2006] NSWCA 314, cited Spencer v The Commonwealth (1907) 5 CLR 418, [1907] HCA 82, followed Suntown Pty Ltd v Gold Coast City Council (1979) 6 QLCR 196, cited COUNSEL: D G Gore QC, with J S Brien, for the applicant/appellant M D Hinson QC for the respondent SOLICITORS: Clayton Utz for the applicant/appellant Anderssen Lawyers for the respondent [1] CHIEF JUSTICE: The central concern in this appeal is how compensation payable by the Department of Transport and Main Roads (“DTMR”) to Cidneo Pty Ltd (“Cidneo”) for partial land resumption under s 20 of the Acquisition of Land Act 1967 (Qld) should be calculated. [2] The underlying factual matrix and litigation history are sufficiently explained by Fraser JA in paragraphs [7] – [25]. [3] I agree with Fraser JA’s conclusion that only ground one in the applicant’s notice of appeal raises an appellable question. Accordingly, leave to appeal should be limited to that ground. [4] I also agree that the appeal should be allowed because the Land Appeal Court failed to accept the submissions of DTMR that the Land Court should have considered the -- 2 of 23 -- 3 post-resumption agreement regarding the amount of transport infrastructure contribution in calculating the quantum of compensation payable to Cidneo. [5] Therefore, I would make the same orders as those proposed by Fraser JA at [47]. [6] FRASER JA: This application for leave to appeal from a decision of the Land Appeal Court concerns the amount of compensation payable by the applicant (“DTMR”) to the respondent (“Cidneo”) upon the resumption of part of Cidneo’s land. As a condition of the development of the land Cidneo retained after the resumption, Cidneo was required to make a transport infrastructure contribution to DTMR for the cost of roadwork external to Cidneo’s land. The parties’ arguments in this application focussed upon the question whether the amount of the contribution to be taken into account in the assessment of the compensation under s 20 of the Acquisition of Land Act 1967 (Qld) (“ALA”) should be fixed (as the Land Court and the Land Appeal Court held) as an estimate of the amount of the required contribution which parties to a hypothetical sale would have anticipated as at the date of resumption, or (as DTMR contends) by reference to the very much smaller amount of the contribution which was actually required under an agreement made after the resumption. Factual background and the decisions in the Land Court and Land Appeal Court [7] Before identifying the issues in more detail I will outline the factual background and the analyses in the Land Court and the Land Appeal Court concerning the treatment of the transport infrastructure contribution in the assessment of compensation. [8] Cidneo owned 100.477 hectares of land (“the land”) on the southern side of the Ipswich motorway to the west of its intersection with the Centenary Highway. In 2006 Metroplex Management Pty Ltd (“Metroplex”) submitted a development application for Cidneo’s land to the Brisbane City Council. DTMR was a concurrence agency under the Integrated Planning Act 1997 (Qld) for the development application. In July 2007, DTMR gave notice of the conditions to be imposed in respect of that application. The proposed conditions included the construction of a road through the site and monetary contributions totalling $30,000,000 towards the upgrading of road interchanges. [9] In September 2007, Metroplex appealed the deemed refusal of its application to the Planning and Environment Court. In that appeal DTMR contended that the appeal should be dismissed unless the Planning and Environment Court was minded to impose a condition requiring payment of $27,000,000 for the contributions sought in its concurrence agency response. The Planning and Environment Court dismissed the appeal but that decision was overturned in this Court. The development application was subsequently amended in a way that reduced the scope of the proposed development. No agreement was reached upon the amount of the traffic infrastructure contribution (if any) required. [10] By notice published in the Government Gazette on 22 February 2008, DTMR resumed 8.385 hectares of the north-eastern corner of the land for purposes related to the Ipswich Motorway project, leaving Cidneo holding 92.092 hectares (“the retained land”). Years later, on 6 December 2011, Metroplex reached agreement with DTMR upon the conditions for approval of the amended development application, including conditions requiring a transport infrastructure contribution for specified external road work. The cost of that work was subsequently assessed as $1,087,110.76. -- 3 of 23 -- 4 [11] Before that agreement was made the question of the compensation payable to Cidneo upon the resumption was referred to the Land Court. In so far as s 20 allowed for the recovery of the market value of the land resumed, that value was to be determined in accordance with the well-known test in Spencer v The Commonwealth.1 It was not contentious that the highest and best use of the land at the resumption date and of the retained land after the resumption was to secure development approval and subdivide the land as an industrial estate in accordance with identified plans in each case. The valuers who gave evidence in the Land Court agreed that the diminution in the value of the land as a consequence of the resumption was the difference between the market value of the land immediately before and unaffected by the resumption (“the before case”) and the market value of the retained land immediately after and as affected by the resumption (“the after case”), and that the most appropriate method for assessing market value in both cases was by cash flow feasibility analyses of the developments. That was not in contention between the parties in the Land Court until an agreement upon the transport infrastructure contribution actually required was reached. As the Land Appeal Court observed, however, the ‘impacts’ the cash flow method of assessment would take into account included “injurious affection” in addition to the value of the land resumed. That too was not contentious. [12] The Land Court’s assessment of $60,000,000 in the before case was not in issue in the Land Appeal Court. A cash flow analysis prepared by the valuer called by Cidneo, Mr Hamilton, assumed that no transport infrastructure contribution would be required in the before case. For the after case, Mr Hamilton’s cash flow analysis assumed a contribution of $20,000,000. Upon that assumption, his cash flow analysis in the after case resulted in a figure of $35,000,000, thereby implicitly assessing compensation of $25,000,000. Cash flow analyses prepared by the valuer called by DTMR, Mr Brett, allowed for a transport infrastructure contribution of $3,000,000 both in the before case and in the after case. His analyses resulted in a difference between the resulting figures for the before case and the after case of $6,877,800. [13] The agreement between DTMR and Metroplex upon the transport infrastructure contribution was reached after the completion of the oral evidence in the Land Court hearing. Following an adjournment to enable the parties to address the impacts of that agreement, DTMR contended both that the contribution actually required should be used to assess compensation and that it would be better to adopt a piecemeal method of assessment rather than the before and after method. [14] DTMR adduced in evidence and relied upon Mr Brett’s Further Supplementary Report dated 14 March 2012. It included assessments that took into account the $1,087,110 transport infrastructure contribution actually required as a condition of the development of the retained land. In that report Mr Brett discussed the impact of transport infrastructure contributions for the Ipswich Motorway/Progress Road intersection and for the Ipswich Motorway/Centenary Highway intersection. He referred to DTMR’s contentions that in the before case the proposed development of the land would have required a contribution towards the cost of upgrading the Centenary Highway intersection and to a lesser extent the Progress Road intersection, and that in the after case works associated with the resumption removed the need to contribute towards the former intersection but increased the contribution for the latter intersection. Mr Brett referred to the evidence that $1,087,110 was a realistic assessment of the required contribution towards the Progress Road intersection in the after case. Whilst he opined that the total amount of the contribution towards both intersections would have 1 (1907) 5 CLR 418. -- 4 of 23 -- 5 been greater in the before case, he expressed an opinion upon the assumption (described in his report as “alternative (b))” that the total amount required would be the same in both cases. In his opinion, using $1,087,110 in the cash flows in both the before case and the after case resulted in an assessment of compensation of $6,377,800.2 Mr Brett’s Further Supplementary Report also referred to a figure of $6,064,359, rounded up to $6,100,000, in a “check valuation” which valued the resumed land at $4,533,954 and “injurious affect” at $1,530,405. He agreed in cross-examination that this “check valuation” was derived from data used in the cash flow analyses.3 [15] Cidneo adduced in evidence and relied upon a supplementary report by Mr Hamilton. He expressed the opinion that if the actual cost of $1,087,110.76 should be taken into account in assessing compensation, DTMR’s demand in 2010 for a contribution of $13.7 million (for what was submitted to be materially the same development) and the time and cost required to achieve the reduction in the transport infrastructure contribution to that amount also should be taken into account in the cash flows.4 Upon that basis Mr Hamilton assessed the before case at $60,000,000 and, assuming a pre-construction phase of 33 months, he assessed the after case at $32,650,000, implying compensation of $27,350,000; alternatively, assuming a pre-construction phase of 25 months, he assessed the after case at $37,750,000, implying compensation of $22,250,000.5 [16] The Land Court did not act upon either of those reports. The Land Court accepted Cidneo’s argument that the agreement upon the transport infrastructure contribution could not be taken into account because the law did not permit knowledge of an event after resumption to be taken into account in assessing market value.6 In determining that the just amount of compensation was $6,900,000 the Land Court accepted that the evidence supported Mr Brett’s assumptions in his earlier report that the appropriate allowance for the transport infrastructure contribution was $3,000,000, which Mr Brett took into account in the cash flows for the before case and the after case. [17] Cidneo appealed and DTMR cross appealed. The Land Appeal Court upheld Cidneo’s appeal against the Land Court’s determination of compensation on the ground (ground 1) that the Land Court had not considered or it had not given adequate reasons for rejecting evidence which arguably supported a conclusion that a very much larger sum than $3,000,000 was a reasonable estimate of the transport infrastructure contribution required for the development of the retained land. (The Land Appeal Court also upheld grounds 2 and 3 of Cidneo’s appeal, which were not related to the transport infrastructure contribution.) The Land Appeal Court set aside the Land Court’s decision and remitted the matter to that court for the determination of compensation. [18] In DTMR’s cross appeal it contended that the Land Court erred in law in concluding that it could not take into account the transport infrastructure contribution actually required when assessing the just amount of compensation. DTMR contended that, using the known cost of $1,087,110 instead of the estimated cost of $3,000,000, compensation should have been less than the amount determined in the Land Court. Upon that footing, and assuming that an assessment using a combination of the before and after method and cash flow analyses was appropriate, DTMR contended that the amount of compensation should be reduced to $6,377,800 in accordance with Mr Brett’s Further Supplementary Report. 2 Ex. 61, pp 3, 5, 16-26; AB, pp 1537, 1539, 1551-60. 3 Transcript, 20 November 2014, at 7-48; AB 597-48. 4 Addendum to L Hamilton’s Compensation Report, 2 March 2012, Ex. 71, pp 3-4; AB, pp 1641-42. 5 Addendum to L Hamilton’s Compensation Report, 2 March 2012, Ex. 71, pp 5-6; AB, pp 1643-44. 6 [2013] QLC 47 at [235]. -- 5 of 23 -- 6 [19] The Land Appeal Court held that for the following reasons the Land Court Member was correct in refusing to take into account the transport infrastructure contribution actually required: (a) The determination of the value of the land taken by the before and after method required a consideration of the likely contribution for external roadworks as an element of the assessment of the value of the land in each case. Cases in which subsequent events were taken into account to determine compensation involved separate claims for severance or injurious affection (for example Barns v Department of Transport (1997) 16 QLCR 22 and Adelaide Fruit & Product Exchange Co Ltd v Adelaide Corporation (1961) 106 CLR 85). (b) The requirement to pay contributions for external roadworks did not fall within the expression “damage…caused by…the severing of the land taken from other land of the claimant” in s 20(1) of ALA. (c) It was arguable that the contribution might satisfy the description in s 20 of “damage…caused by… the exercise of any statutory powers by the constructing authority otherwise injuriously affecting the claimants other land” (from which the resumed land is taken), but the imposition of the contribution for external roadworks as part of an approval for development of the land retained by the land owner did not in truth fall within s 20(1)(a)(ii) because: (i) The character of that requirement did not differ from the requirement which another authority might require for a different form of external works which, on DTMR’s own case on the appeal, had to be taken into account to determine the value of the land before resumption (when no question of severance or injurious affection could arise). (ii) The imposition of the contribution was “not an act of DTMR as constructing authority, that is, when carrying out the project which led to the resumption”7 but was instead a consequence of the DTMR’s role in the approval process as an aspect of the regulation of development.8 (iii) The decision of DTMR as a concurrence agency requiring the contribution as a condition of development approval did not amount to the exercise by it of a statutory power “injuriously affecting” the claimant’s (retained) land; it did not affect the land itself but was simply part of the price for carrying out the particular development of the land. (iv) The question concerning the likely contribution did not arise in the context of determining compensation for injurious affection but in the context of determining the value of the land retained by Cidneo at the date of resumption, so that the value fell to be determined by reference to the approach adopted in Brisbane City Council v Mio Art Pty Ltd.9 [20] DTMR also contended in its cross appeal that the Land Court erred in failing to prefer a method of assessment which separately assessed each head of Cidneo’s loss under 7 The Land Appeal Court compared the decisions in Suntown Pty Ltd v Gold Coast City Council (1979) 6 QLCR 196 at 207 – 208, and Marshall v Director General, Department of Transport (2001) 205 CLR 603, 616 [20], 617 – 619 [25], 625 [45]. 8 The Land Appeal Court referred to the relevant provisions in the Integrated Planning Act 1997 (Qld): s 3.5.11(1), the definition “concurrency agency” in schedule 10, and the provisions of Part 3 of Chapter 3 particularly ss 3.3.16 and 3.3.18. 9 [2012] 2 Qd R 1. -- 6 of 23 -- 7 s 20 of ALA. DTMR argued that the before and after method would not produce a fair assessment of compensation and that (any) injurious affection or severance damage should have been separately assessed with reference to the actual amount of the transport infrastructure contribution. Under that ground of the cross appeal DTMR contended that the compensation should be reduced to $6,100,000 in accordance with the “check valuation” in Mr Brett’s “Further Supplementary Report” which separately valued the resumed land at $4,533,954 and “injurious affect” at $1,530,405. [21] In relation to that issue the Land Appeal Court held that if Cidneo’s appeal was allowed the submission that the use of the before and after method would result in an unfair assessment of compensation was somewhat speculative. Furthermore, because the contribution was relevant to the value of the land at the resumption date its amount was not to be determined by reference to knowledge of subsequent events except where they demonstrated the existence of facts known to the parties at the resumption date; it followed that the assessment of compensation was not unfair despite subsequent events turning out to be different from those known, or taken to be likely, at the date of the resumption. The application in this Court [22] DTMR seeks leave to appeal to this Court against the Land Appeal Court’s decision to allow Cidneo’s appeal, dismiss DTMR’s cross appeal, and remit the matter for the determination of compensation. Such an appeal may be brought by leave on the ground of error or mistake in law, or absence or excess of jurisdiction.10 [23] In accordance with the Court’s usual practice in matters of this kind, the Court heard argument on the merits of the proposed appeal together with the application. Cidneo supported the Land Appeal Court’s analysis. DTMR’s arguments focussed upon challenges to the Land Appeal Court’s reasoning set out in [19](c)(i) – (iv) and [21] of these reasons. [24] At the hearing of the application DTMR did not make submissions in support of the challenge in ground 2 in its draft notice of appeal to this Court’s decision in Brisbane City Council v Mio Art Pty Ltd. The applicant’s written outline stated that ground 2 had been included only “out of caution”. Accordingly leave to appeal should not be given upon that ground. [25] DTMR initially pressed the following grounds at the hearing: “1. The Land Appeal Court erred in law in deciding: (a) That, for the purposes of s 20(1) of the Acquisition of Land Act 1967 (reprint no 5A) (“ALA”), in considering the damage (if any) caused to the retained land of the Respondent, the Land Court was not entitled to take into account events subsequent to the resumption on 22 February 2008, in particular, the cost of external roadworks agreed between the Applicant and the Respondent on 6 December 2011 (“the external roadworks costs”); (b) That neither the external roadworks costs nor any estimated transport infrastructure contributions were relevant to, or came within, severance damage or injurious affection damage, for the purposes of s 20(1) of the ALA; 10 Land Court Act 2000 (Qld), s 74. -- 7 of 23 -- 8 (c) That, where the before and after approach is used to determine compensation, in the assessment of the value of the retained land in the after case, either s 20 of the ALA or the decision in Brisbane City Council v Mio Art Pty Ltd [2012] 2 Qd R 1 (“Mio Art”) requires that the quantum of any costs must be fixed at the date of resumption, without taking into account any known subsequent increase or decrease in such costs; . . . 3. The Land Appeal Court erred in law: (a) In rejecting the Applicant’s contention that the use of the before and after approach was inappropriate in principle (e.g. because it may result in an unfair or incorrect assessment of compensation); (b) In concluding that the Applicant had not identified a proper basis for applying a method of assessment which assessed each head of the Respondent’s loss under s 20 of the ALA individually.” [26] Ground 1 involves questions of law and is reasonably arguable. It is appropriate to grant leave to appeal upon that ground. [27] In relation to ground 3, at the hearing of the application there was debate about whether DTMR had advanced arguments to that effect in the Land Court. As appears from [13] - [15] of these reasons, DTMR did advance such arguments at the appropriate time and issue was addressed in evidence adduced by both parties. In the course of debate about this ground, however, DTMR acknowledged that the way it ran its case in the Land Court was that either the before and after method of assessing compensation or the “piecemeal method” could be adopted, but that whilst Mr Brett’s way of using the former method was appropriate Mr Hamilton’s way of using that method was inappropriate.11 The challenge was to Mr Hamilton’s application of the before and after method;12 if that method was used the best information at the time of the assessment should be taken into account.13 [28] This argument did not add anything of substance to the arguments agitated under ground 1. Furthermore, it is not clear that ground 3 raises a question of law, given that paragraph (a) contends only that the use of the before and after method “may” (rather than “must”) result in an unfair or incorrect assessment, and whether or not this or a similar question will arise at the remitted hearing in the Land Court and, if so, in what factual context, involved mere speculations. For these reasons DTMR should not be given leave to appeal upon ground 3. [29] I will therefore consider only ground 1 in DTMR’s draft notice of appeal. Consideration [30] DTMR contended that if compensation was assessed using the before and after method as it was used in the Land Court, the Land Court should have taken into account the transport infrastructure contribution of $1,087,110.76 actually required rather than the hypothetical estimate of $3 million.14 11 Transcript, 20 November 2014, at 1- 22. 12 Transcript, 20 November 2014, at 1- 25. 13 Transcript, 20 November 2014, at 1- 29. 14 Transcript, 20 November 2014, at 1- 12. -- 8 of 23 -- 9 [31] Section 20 of ALA15 provides: “(1) In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also to the damage (if any) caused by either or both of the following, namely --- (a) the severing of the land taken from other land of the claimant: (b) the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land. (2) Compensation shall be assessed according to the value of the estate or interest of the claimant in the land taken on the date when it was taken. (3) In assessing the compensation to be paid, there shall be taken into consideration, by way of set-off or abatement, any enhancement of the value of the interest of the claimant in any land adjoining the land taken or severed therefrom by the carrying out of the works or purpose for which the land is taken.” [32] In Mio Art,16 Fryberg J (with whose reasons McMurdo P and I agreed), after stressing the importance of keeping the statutory text in mind, held that the following two points followed from the text of s 20: “The first is that value of the land taken is quite separate from damage caused by severance or injurious affection and disturbance costs. They are not elements of land value under the Act. The second is that, unlike compensation for the value of the land taken, compensation for severance, injurious affection and disturbance is not explicitly required to be assessed by reference to the date of acquisition. They are indirectly connected to that date by the requirement for causation (“damage … caused by”, “costs attributable to”), but the section gives no indication of the appropriate test of remoteness of damage. Whether that test is one of foreseeability by the hypothetical purchaser, as suggested in the Council’s submission, need not be determined in this appeal. It is sufficient to observe that compensation for severance, injurious affection and disturbance is awarded in respect of matters which often will arise or be quantified after the taking.” [33] After an extensive discussion of cases, Fryberg J concluded that none of the cases limited the extent to which regard might be had to post-resumption events (subject to proof of causation) where, as in the case of s 20 of ALA, the relevant statute makes specific provision for injurious affection, severance and disturbance damages. Fryberg J further considered that none of the cases demonstrated that post-resumption events could be taken into account in assessing market value.17 DTMR acknowledged that Mio Art is authority for the proposition that subsequent events are admissible in assessing injurious affection, severance, and disturbance damages but are generally 15 References to ALA are to that Act in the form it was in at the date of the resumption in February 2008. Section 20 was subsequently amended by Act No 5 of 2009 in a way which is not material for present purposes. 16 [2012] 2 Qd R 1 at [30]. 17 [2012] 2 Qd R 1 at [75]-[77]. -- 9 of 23 -- 10 inadmissible in assessing the value of the land resumed.18 (In the latter case subsequent events may be taken into account only to the extent that inferences may be drawn from such events about the position at the time of the resumption.19 In this application that possibility may be put to one side because the Land Court was not persuaded to draw any such inference20 and it was not a ground of the proposed appeal that the Land Appeal Court erred in law in not drawing such an inference. Disturbance may also be put to one side as having no arguable relevance in this application.) [34] In order to apply those principles to this case it is necessary to bear in mind Cidneo’s claim in relation to the requirement for a transport infrastructure contribution, the Land Court’s findings about that requirement, and Cidneo’s case on appeal to the Land Appeal Court. [35] In the Land Court Cidneo claimed that the contribution requirement amounted to injurious affection or severance damage affecting the retained land.21 Cidneo’s valuer, Mr Hamilton, gave evidence that no amount was required to be taken into account in assessing the market value of the land in the before case and that $20,000,000 was required to be allowed in assessing the market value of the retained land in the after case.22 Mr Hamilton described the requirement for a transport infrastructure contribution as “severance” damage. He gave evidence that it arose because “the changed road system has taken from the property a significant advantage…” in that the retained land “… no longer has convenient, direct access to Centenary Highway which in turn isolates the site from Ipswich Motorway…” and he summarised the basis of the claim as being a “loss in accessibility” and “loss of Ipswich Motorway exposure…” after the resumption.23 The evidence upon which Cidneo relied included the claim by DTMR in July 2007 for $30,000,000 made in anticipation of the resumption and concerning only the retained land.24 (That related to a larger development than the hypothesised development found to be the highest and best use of the retained land.) No other basis was pleaded for Cidneo’s claim that it was entitled to be compensated for the diminution in value of the retained land resulting from the requirement to pay a transport infrastructure contribution. In particular, Cidneo did not claim that the contribution requirement bore upon the market value of the resumed land or upon any additional or special value to Cidneo as the owner of the resumed land. [36] Contrary to that basis of its claim, after Metroplex and DTMR reached agreement in 2011 about the required transport infrastructure contribution Cidneo argued that evidence of the contribution actually required was irrelevant because the requirement to pay the contribution was not injurious affection or severance damage but was “simply one of the ordinary business considerations related to the land, concerned with its development for its highest and best use…”.25 Cidneo repeated that argument in the Land Appeal Court, in which it challenged the Land Court’s assessment of the value only of the retained land. [37] The language of s 20(1) of ALA makes it clear that injurious affection is a form of damage that adversely affects the retained land (the “other land” in the terms of s 20(1)). 18 Transcript, 20 November 2014, at 1-10. 19 [2012] 2 Qd R 1 at [79]. 20 See [2013] QLC 47 at [228]-[235]. 21 Applicant’s Statement of Facts and Contentions, at [14]. 22 Transcript, 29 November 2011, p 5-6, 5-25, 5-38; AB 447, 466, 479. 23 Valuation Report of L. Hamilton, Ex. 29, pp 49-50; AB, pp 1072-73. 24 Applicant’s Written Submissions in the Land Court, 2 April 2012,at [76]-[79] and [100]. 25 Applicant’s Written Submissions in the Land Court, 2 April 2012 at [148]. -- 10 of 23 -- 11 The Land Appeal Court has described severance damage as “as a specialised form of injurious affection to the retained land” and as the “depreciation in the value of the retained land resulting from its division into two or more parts, or its reduction in area and consequent loss of value for some current or higher [potential use]”.26 It is therefore not difficult to accept Cidneo’s submission that the requirement for a transport infrastructure contribution should be considered when assessing the market value of the retained land under the Spencer test as one of the “ordinary business considerations”27 affecting the price a prudent purchaser would be prepared to pay for that land. However the value of the retained land is not a head of compensation in s 20 and, as I have already mentioned, Cidneo’s claim for compensation did not include any contention that the contribution requirement affected the value of the resumed land, which is a head of compensation in that provision. [38] Because Cidneo did not claim that the contribution bore upon the value of “the land taken” s 20(2) would not apply, so that there would be no restriction upon reference to post-resumption events in assessing compensation. It follows that if the contribution requirement was compensable, on Cidneo’s claim the amount of compensation could be assessed taking into account the contribution which was actually required for the development of the retained land ($1,087,110.76) rather than an estimate of the likely contribution which would have been taken into account by parties to a hypothetical sale of the retained land on the resumption date. [39] The Land Court rejected important aspects of Cidneo’s claim in relation to the contribution. The learned Member of the Land Court analysed the evidence of the traffic engineers called by each party and made the following findings. Not all aspects of the external roadworks were the same in the before and after cases, but from a traffic engineering perspective there was no difference between them.28 There was no substantial difference with respect to traffic generation and traffic flows.29 DTMR should not have sought a transport infrastructure contribution in either the before case or the after case.30 Three million dollars should be allowed in both the before case and the after case “by way of contingency to allow for additional but unsustainable demands being made by [DTMR] for external road works contributions”31 and as the amount a prudent purchaser would have paid upon the date of resumption in each case.32 [40] One question agitated in the parties’ arguments in this application was whether the contribution requirement was properly taken into account by the entry of $3 million in the cash flow analyses for both the before case and the after case. Upon the Land Court’s findings summarised in the preceding paragraph and the evidence to which I have so far referred, it might be thought that whether $3 million or $1,087,110.76 was used in the cashflow analyses in each of the before and after cases the entries 26 Gold Coast City Council v Suntown (1979) 6 QLCR 196 at 207. It is not necessary to consider whether that statement comprehends all permissible claims for severance damage. 27 Spencer per Isaac J at 441. 28 [2013] QLC 47 at [245]. 29 [2013] QLC 47 at [260]. 30 [2013] QLC 47 at [244] – [245]. 31 [2013] QLC 47 at [259], with reference to the approach of Mr Beard, a traffic engineer called by DTMR who gave evidence that a contribution of the order of $3,000,000 should be allowed in both the before and after cases (Transcript, 20 November 2015, 4-54; ARB, p 380). 32 [2013] QLC 47 at [403], adopting the figures in the Supplementary Valuation Report of R. Brett of 24 November 2011, Ex. 61, p 5 (which allowed the contribution in the cash flow analyses in both the before and after cases). -- 11 of 23 -- 12 would cancel each other out and the contribution requirement therefore would not be reflected in the assessed compensation. That does not seem to have been the result. Upon Mr Brett’s evidence, with reference to which the Land Court assessed compensation, the amount of compensation varied in accordance with the amount of the contribution even though the same amount was taken into account in the before case and the after case; a reduction of half a million dollars in the assessment ($6,377,800 instead of $6,877,800) resulted from using the actual contribution of $1,087,110.76, instead of the estimated amount of $3 million, in the cash flow analyses in each case. The difference may result from changes in the interest component33 arising from changes in assumptions in the after case and the before case about the times when the contribution or expenditure associated with the contribution would be incurred. Whatever is the precise reason for the difference, it remains the case upon the Land Court’s findings that the requirement for the transport infrastructure contribution did not bear upon the value of the resumed land so that s 20(2) did not apply in relation to any compensation in relation to that requirement. [41] Cidneo argued that the post-resumption agreement should not be taken into account because any damage attributable to the imposition of the transport infrastructure contribution was not to be assessed “independently and without reference to the market value of the land.”34 It pointed out that in some cases it has been remarked that the identification of the correct head of compensation was not important35 and that in cases where subsequent events were taken into account, compensation under those heads of compensation were assessed separately from the assessment of the value of the land resumed.36 [42] It should be noted that the argument was not that the requirement for the contribution bore upon the market value of the resumed land. Indeed, the argument appears to have assumed that the contribution requirement in this case amounted to injurious affection or severance damage to the retained land. No case was cited in which expert witnesses’ endorsement of any particular method of assessing compensation was held to preclude consideration of subsequent events in assessing compensation for a loss that was claimed to be compensable only as injurious affection or severance damage. The choice of the appropriate assessment method in any particular case must be driven by the requirement to make a fair assessment of the allowable heads of compensation in accordance with s 20 of the ALA. It was not contentious in this application that the before and after method is apt to include in the assessment both the value of the resumed land and other losses, including injurious affection and severance damage, but those various heads of compensation remain conceptually distinct. It is conventional for injurious affection and severance damage to be assessed with reference to events occurring after resumption. As soon as the relevant event occurred in this case (the agreement upon the required transport infrastructure contribution) DTMR contended that it should be used in the assessment of compensation. The evidence did not suggest that there was any substantial practical 33 Senior counsel for DTMR referred to that possibility in his submissions in the Land Court: Transcript, 3 April 2012, p 9-17 line 45; AB 634. 34 Respondent’s Outline of Argument, at [27]. 35 Adelaide Fruit & Produce Exchange Co Ltd v Adelaide Corporation (1961) 106 CLR 85, 91; Townsville City Council and Delfin Limited v Department of Main Roads [2003] QLCR 241 at [646], [826]; LGM Enterprises Pty Ltd v Brisbane City Council [2009] QLC 178, [7]. 36 See Adelaide Fruit & Produce Exchange Co Ltd v Adelaide Corporation (1961) 106 CLR 85; Barns v Department of Transport (1998) 19 QLCR 9; Marshall v Department of Transport (1998) 19 QLCR 175; Marshall v Department of Transport (1999) 106 LGERA 349; Marshall v Department of Transport (2001) 205 CLR 603; Marshall v Department of Transport (2004) 25 QLCR 7. -- 12 of 23 -- 13 difficulty in taking the actual amount of the required contribution into account in the assessment of compensation, as s 20 allowed. Upon Mr Brett’s evidence, doing so in this case would affect the amount of compensation significantly and a failure to do so would result in an unmerited windfall to Cidneo. In those circumstances, a compensation method that did not take into account the actual amount would not fairly assess the compensation and should not have been used. [43] For these reasons I respectfully conclude that the Land Appeal Court erred in law in rejecting DTMR’s contention that the Land Court should have taken the agreement upon the amount of the transport infrastructure contribution into account in determining the compensation to which Cidneo was entitled. Disposition [44] DTMR argued that Cidneo’s appeal to the Land Appeal Court should have been dismissed because it was brought upon the legally flawed premise that the Land Court had correctly found that the post-resumption agreement upon the required transport infrastructure contribution should not be taken into account. However, DTMR’s argument did not include any criticism of the decision in the Land Appeal Court to allow the appeal on grounds 2 and 3 (see [17] of these reasons). [45] DTMR also argued that the Land Appeal Court should have allowed DTMR’s cross appeal and assessed compensation in accordance with Mr Brett’s Further Supplementary Report. The argument was based upon the circumstance that the compensation of $6,900,000 determined in the Land Court (taking into account the estimate of $3,000,000 for the transport infrastructure contribution) exceeded the assessment of $6,377,800 in Mr Brett’s Further Supplementary Report (which took into account the transport infrastructure contribution of $1,087,110 actually required). In response, Cidneo pointed to Mr Hamilton’s opinion that if the transport infrastructure contribution actually required should be taken into account, so too should DTMR’s demand in 2010 for a contribution of $13.7 million and the time and cost required to achieve the reduction in the transport infrastructure contribution be taken into account in the cash flows. As I have mentioned, upon that basis Mr Hamilton’s evidence implied an assessment of compensation of $27,350,000 (based on a pre-construction phase of 33 months) or $22,250,000 (based on a pre-construction phase of 25 months). [46] The exercise conducted by Mr Hamilton appears to involve contestable valuation judgments and assumptions, including an assumption that Cidneo’s holding costs (which apparently account for most of the amounts mentioned by Mr Hamilton) would not have been incurred but for the delay in reaching agreement upon the amount of the contribution. Neither the Land Court nor the Land Appeal Court has addressed those issues or made any determination with reference to the calculations in Mr Brett’s Further Supplementary Report. If it becomes necessary to do so, the Land Court, as the specialist tribunal established to resolve issues of that kind, should determine them. For that reason, I would hold that the Land Appeal Court was correct in not determining compensation in an amount claimed in the cross appeal. Instead, the matter should have been remitted to the Land Court for the determination of compensation. Proposed orders [47] I would make the following orders: 1. Grant the application for leave to appeal only in relation to ground 1 in the draft notice of appeal. -- 13 of 23 -- 14 2. Allow the appeal in relation to ground 1. 3. Set aside the orders made in the Land Appeal Court dismissing the cross- appeal and order instead that: (a) The cross appeal be allowed in relation to ground 1 of the cross-appeal only. (b) The matter be remitted to the Land Court for the determination of compensation in accordance with the reasons of this Court. 4. The parties have leave to make submissions about costs within 21 days of today or within such other period as is fixed by a Judge of Appeal or the Registrar. [48] DALTON J: This is an application for leave to appeal from a decision of the Land Appeal Court made 6 June 2014. The Land Appeal Court had before it an appeal, which it allowed, and a cross-appeal which it dismissed. The Land Appeal Court granted the land-owner’s appeal against the Land Court’s assessment of compensation on a resumption, and remitted the matter to the Land Court to undertake that exercise again. For the reasons which follow, my view is that this course is still required, notwithstanding that this appeal should succeed in part. [49] The Land Appeal Court dismissed contentions by the resuming authority, the Department of Transport and Main Roads, which were, relevantly to this appeal: (a) that evidence subsequent to the resumption ought to be used to fix the amount of the transport infrastructure charge (TIC) which fed into a cash flow valuation,37 and (b) the Land Court ought not have used a before and after approach in fixing compensation pursuant to s 20 of the Acquisition of Land Act 1967 (Qld) (the Act). [50] My view is that the first of these grounds of appeal ought be allowed. I think that the time at which elements of compensation pursuant to s 20 of the Act must be assessed is a matter of law38 and that both the Land Court and Land Appeal Court erred in thinking that the TIC in this case was required, as a matter of law, to be assessed only on facts known or reasonably foreseeable in February 2008. [51] The second appeal point raised ought to be dismissed. The appellant never distinctly urged the Land Court to reject the before and after method of valuation. Whether such a method will be appropriate in any given case is likely to be a mixed question of fact and law. In this case, I cannot see that the use of the before and after method was wrong in principle. For these reasons, I would not grant leave in relation to this ground. The Resumption [52] Prior to February 2008 Cidneo owned about 100 hectares of land at Boundary Road Wacol, the old Wacol Army Barracks. On 22 February 2008 the Chief Executive of the Department of Transport and Main Roads resumed about eight hectares of that property. The resumed land was to be used as part of the land on which major roadworks at the confluence of the Ipswich Motorway and the Centenary Highway were constructed (the Roadworks). 37 An alternative to the first ground of appeal was advanced. Because of my views as to the first ground of appeal, this need not be addressed. It involved a plainly wrong interpretation of the decision in Brisbane City Council v Mio Art Pty Ltd & Anor [2012] 2 Qd R 1, [29]. 38 Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111, 116, citing Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426, 432; see s 74 Land Court Act 2000 (Qld). -- 14 of 23 -- 15 Traffic Infrastructure Charge [53] Before the resumption, but at a time when the Roadworks and resumption were planned and known, a company related to Cidneo, Metroplex, made a development application in respect of the land Cidneo would retain after resumption. In July 2007, in response to that development application, the Department of Transport, as a concurrence agency, asked for a TIC of around $30 million. In September 2007 Metroplex appealed against a deemed refusal of its development application. Matters consequent on that, including dispute as to the proper amount of the TIC, continued until, in December 2011, it was agreed that a TIC of only $1,087,000 would be required. [54] Meanwhile, the resumption with which this Court is concerned took place in February 2008, and proceedings for compensation began in the Land Court. Valuers for both parties in the Land Court took account of a hypothetical TIC as one of the expenses relevant to the cost of developing the subject land, and therefore, compensation. The valuers used estimates of the anticipated TIC. Their different estimates of this amount accounted for one of the most significant differences between them. The Land Court heard evidence in November 2011, including the valuers’ evidence. Evidence finished on 1 December 2011 and the matter was adjourned until January 2012 for submissions. The Land Court resumed on 12 January 2012, at which time the Member was informed of the agreement between the parties as to the TIC. The matter was then further adjourned so that the valuers could put in new reports in response to the new information. Statutory Compensation [55] It is important, as Fryberg J recognised in Mio Art (above), to have regard to the text of the section which is the source of a land-owner’s rights to compensation after resumption. Section 20 of the Act provides: “(1) In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also to the damage (if any) caused by either or both of the following, namely- (a) the severing of the land taken from other land of the claimant; (b) the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land. (2) Compensation shall be assessed according to the value of the estate or interest of the claimant in the land taken on the date when it was taken. (3) In assessing the compensation to be paid, there shall be taken into consideration, by way of set-off or abatement, any enhancement of the value of the interest of the claimant in any land adjoining the land taken or severed therefrom by the carrying out of the works or purpose for which the land is taken. …”39 Principles from Mio Art [56] The decision of this Court in Mio Art recognised that s 20 of the Act deals with two separate elements of compensation: the value of the land taken, and damage caused by severance, injurious affection and disturbance. The decision recognised that the 39 Reprint 5A applicable at the time of the resumption. -- 15 of 23 -- 16 Act requires that the value of the land taken be assessed as at the date of the acquisition. Further, that damage caused by the other three matters will often be quantified by reference to post-acquisition events – [51], [75]. Before and After Method [57] Where the entirety of a land-owner’s lot is resumed, the only relevant enquiry for the Court is the value of the land taken. However if part of a land-owner’s lot is resumed, the Court may in addition need to enquire as to: damage caused by severance, injurious affection, disturbance and enhancement. In cases of the latter type, a short- hand method of assessing compensation known as the “before and after method” has been used regularly. It is described by Spigelman CJ in Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales:40 “… That method involves subtracting the market value of the residue land (i.e. the part of the property that was not acquired and remains the property of the Appellant) from the market value of the entire property prior to acquisition. As Reynolds JA said in Gosford Council v Green … : ‘If the whole parcel is valued at the time of resumption and then the residue is valued, the difference is the ascertained amount of compensation, and severance damage and enhancement of the residue are comprehended without any necessity for specification.’” [58] Spigelman CJ described the before and after method as working in a “rolled-up way” because it does not separately address each of the matters to be compensated pursuant to the statute. He said that it was “… equivalent to the measure of damages in tort. I do not wish to suggest that this is the criterion, because it bears a close analogy with a reinstatement basis for valuation to which [the statute is] not directed. Nevertheless, in an appropriate case, the before and after method can be used to determine ‘just compensation’.” – [46]. [59] In Commonwealth Custodial Services Ltd v Valuer General41 the New South Wales Court of Appeal, per Tobias JA, it was said that on the facts of the case before the Court there was no reason why the before and after method should not have been adopted adding: “It is also well established, as Callinan J observed in Boland v Yates Property Corporation Pty Ltd … , that there is no legal principle that purports to, or could close for all times, the categories of methods of valuation which might be acceptable in a particular case. So in the present case the method adopted by Mr Jackson could only be ‘closed’ if the Act, properly construed, led to that result.” [60] The before and after method is not anything more than a tool to assess compensation which s 20 of the Act allows. If it is used, it can only be used to assess that compensation which s 20 allows. There are no doubt cases where it is not apt to do so and, in such cases, the Court must reject it as a proper method.42 Whether or not the method is apt 40 [2006] NSWCA 314, [10]–[11]. 41 [2007] NSWCA 365, [37]. 42 Carson v Minister for Environment and Planning (1990) 70 LGRA 215, 221 per Hemmings J. -- 16 of 23 -- 17 in any particular case will depend upon the facts and evidence in that case. Moreover, there are cases in which, while as a matter of principle there could be no objection to the before and after method being used, the way in which a valuer has approached his or her task, including the inputs the valuer has used, might make that valuer’s application of the before and after method inapt to assess s 20 compensation in that case.43 The Task Undertaken by the Valuers in this case [61] The valuers44 made a joint witness statement dated September 2011 which provided at p 3: “It is agreed between the valuers that the highest and best use of the land in February 2008, both before and after the resumption, was to secure approval for and to subsequently subdivide the property as an industrial estate in accordance with before and after plans adopted in the body of this report. The purpose of this Joint Expert Report is to assist the Land Court in respect of quantifying compensation payable for such diminution in the value of the englobo parcel as results from the scheme of the resumption. RB and LH agree that the appropriate methodology for quantification of the diminution (if any) is to assess the market value of the whole of the property immediately before (and unaffected by) the acquisition and again immediately after the acquisition. The difference between the two is the measure of the loss suffered or value gained as a result of the scheme for which the land was acquired. Although reference to sales of other englobo industrial properties provides a guide to this property’s February 2008 market value this approach alone is insufficient to properly assess the value difference. Accordingly both valuers agree it is appropriate to undertake cash flow feasibility analyses of the project (in addition to the sales comparison) which will better account for the resumption impacts. RB and LH agree that the respective market values are premised on the following: ∙ That both the vendor and purchaser are fully informed and are willing but not anxious parties to the envisaged transaction on which the market value is based, and ∙ The sale of the land would be the subject of a contract which is unconditional in respect of securing development approval for the agreed highest and best use, and ∙ The value is based on matters which were known or reasonably foreseeable in February 2008.” [62] The first point about this is that the experts set out on a task “quantifying compensation payable for such diminution in the value of the englobo parcel as results from the scheme of the resumption”. This is not the task required by s 20 of the Act. They state that they will: “measure … the loss suffered or value gained as a result of the scheme for which the land was acquired”. This is not a task required by s 20. 43 See Hieronymus & Anor v Minister for Education [1989] NSWLEC 62, pp 9-10 per Hemmings J. 44 Mr Laurie Hamilton and Mr Rodney Brett, who refer to themselves in their joint statements as LH and RB. -- 17 of 23 -- 18 [63] The second point to note about the joint statement of the experts is that they set out to value the land Cidneo owned, before and after the resumption, having regard to matters which were known or reasonably foreseeable in February 2008. They do not explain why. It is not self-evident. Section 20(2) demands that it is the value of the land taken which is assessed “on the date when it was taken”. As Mio Art recognises, matters otherwise relevant under s 20 of the Act may be assessed having regard to subsequent events. [64] It was submitted at the hearing of this appeal that experts are independent and, the implication was, beyond the parties’ control. However, it is the duty of lawyers to properly instruct experts so that they provide evidence relevant to the legal questions the Court must decide. Nowhere do the valuers state that the before and after method will quantify the compensation allowed by s 20, much less explain why they believe it will do so having regard to the facts of this case. Cidneo’s pleading in the Land Court did not plead a case for compensation based on a before and after assessment, ie, the valuers’ approach was not in accordance with the pleadings. [65] The third matter to note from the statement of the valuers is that they agreed that comparative sales were not a sufficient basis to undertake a valuation exercise and set out to value the site by the cash flow it would generate if it were subdivided as an industrial estate in accordance with the highest and best use of the land. That was bound to be a complicated exercise, and the cash flows which they modelled extended over more than 60 months, with a large number of inputs which were, of necessity, based on assumptions as to costs and sale prices, but also as to the time which various stages of the development would take; the order in which the estate would be developed and sold, and the holding costs and interest associated with these timing issues. [66] If that task were not complicated enough, the valuers attempted to build adjustments into their models to make appropriate allowance for damage for severance and injurious affection. I will outline one significant example of their doing so to illustrate that the ultimate figures from the valuers’ modelling are more than simply valuations: they are in fact “rolled-up” exercises which purport to account for severance, injurious affection and enhancement. The example is one relating to damage caused by severance. The land taken meant that the retained land lost its direct access to the Centenary Highway.45 I will refer to this as the Centenary Highway Access Example. [67] Cidneo’s valuer was of the view that the loss of access had an adverse impact on the accessibility of the subject property. The Department’s valuer agreed with this, but thought that the entirety of the Roadworks also enhanced the retained land, because it reduced traffic congestion in and around the land generally. The consequence of these ideas fed into their feasibility analyses. In the second valuer’s joint witness statement made in October 2011, Cidneo’s valuer is recorded as having reacted in the following way to his perceptions of the effect of loss of access: “LH has adopted in the after resumption scenario an average gross realisation for Stages 3 and 4 of $355/m2 and for Stages 1 and 2 of $360/m2. LH has reduced the gross realisation value of stages 3 and 4 by $30/m2 to reflect the inferior access arrangements and development staging. LH has reduced the gross realisation for stages 1 and 2 by $10/m2 to reflect the inferior access arrangements and development staging.” 45 By reason of the loss of the Kelliher Road/Boundary Road off-ramp and the Boundary Road/Baker Street on-ramp. -- 18 of 23 -- 19 [68] The Department’s valuer took the same theoretical approach, but because he thought there were both severance and enhancement aspects to the road development, made the following adjustments to his feasibility cash flow in the after scenario: “In respect of both these affects RB has reduced the gross realisation value of Stages 3 and 4 by 5% (about $19/m2) and does not consider there should be a reduction in the gross realisation for Stages 1 and 2.” Valuers’ Treatment of TIC [69] Quite separately to any issue as to severance damage, the valuers’ cash flow models took into account the cost of the conditions likely to be imposed under any development approval. Based on the advice of traffic engineers, both valuers had regard to the likelihood that a TIC would be imposed as a condition of development approval, and the likely amount of the TIC. Here the process ran into difficulty. In the first joint witness statement the valuers agreed that the reports of the traffic engineers left the likely TIC “entirely unresolved” – p 11. They referred to the extraordinary ranges of TIC mooted in the traffic engineers’ report – between a nil amount and the amount of $30 million – p 11. They thought they could not finalise their valuations until the traffic engineers reported with better clarity – p 12. They thought about the matter in terms of the Spencer test of a willing but not anxious purchaser, deciding what price to pay for the retained land, and expressed the view that no purchaser would go ahead on the scant information available to them. A purchaser would have discussions with the relevant authorities to resolve the matter – p 11. In the event, the traffic engineers did not provide more clarity and therefore nor did the valuers, at least not jointly – see the third (called second) valuers’ joint witness statement, pp 10 and 11. [70] Having filed three joint witness statements, the valuers filed individual valuation reports. Mr Hamilton’s was dated 10 November 2011. In his introduction Mr Hamilton says this about the central issue in this appeal: “A further important element of this compensation assessment is the likely approach taken by a prudent purchaser to the amount of transport infrastructure contribution to be paid in the before and after resumption valuation exercises. I have completed two after resumption assessments. The first adopts a transport infrastructure contribution of $20,000,000 and the other adopts a contribution of $3,000,000.” [71] Mr Hamilton made no allowance for any TIC in his “before” model. [72] At section 10 of his report Mr Hamilton said the following: “I have considered the effect of the resumption under the following headings:- » Loss of land and improvements; » Severance/Injurious affection; and » Disturbance Loss of Land and Improvements The resumption has resulted in the taking of 8.385 hectares which is a reduction of 9.2%. This has reduced the likely developed land yield from 666,670m2 to 613,300m2; a loss of 53,370m2 or 8%. -- 19 of 23 -- 20 Severance and Injurious Affection In the subject matter I do consider a claim for severance arises. The adverse impacts of the public works completed as part of this scheme have been discussed in detail by the Traffic Engineers. I consider the changed road system has taken from the property a significant advantage. It no longer has convenient, direct access to Centenary Highway which in turn somewhat isolates the site from Ipswich Motorway. The road system before resumption is superior to the road system after resumption. Further, the new system has resulted in the parent property no longer having good exposure to Ipswich Motorway. To reflect the loss in accessibility and the loss of Ipswich Motorway exposure I have adjusted my values for the developed land …” [73] The part of his report extracted above under the heading, “Severance and Injurious Affection” deals with the severance issue given as the Centenary Highway Access Example above. [74] At section 11 of his report Mr Hamilton addressed the issue of TIC. He said that Cidneo’s traffic engineer advised that the $30 million TIC sought in relation to the Metroplex development was based on a different plan of development, but in any case was unjustifiable. Nonetheless, he had advised that the Department would probably demand a substantial TIC and that the developer would be sensible to negotiate about that. If the matter were to be decided by appeal to the Planning and Environment Court, costs of up to $1 million and a delay of 12 months or more might result. He proceeded on the basis of allowing what he thought a “prudent purchaser” might allow for the cost of TIC in any development – p 52 of his report. The TIC fed into his cash flow analysis, “on a proportional basis in line with the size of each stage’s development area as a proportion of the total development area of the project” – p 53 of his report. [75] Mr Brett’s report is dated 17 November 2011. Mr Brett looked at the matter of the TIC in some detail. He pointed out there was never any study which examined the traffic impacts of a subdivision of this land before the Roadworks, ie, even though the Metroplex assessments were prior to the resumption and the Roadworks, they anticipated both of them. He accepted advice from the Department’s traffic engineer that, had there been a proposal before the resumption and the Roadworks were planned, the Department would likely have sought contributions towards an eventual upgrading of the road system. He concluded that a purchaser of the land before the resumption and Roadworks were planned would have commissioned a traffic report and negotiated with the Department of Transport to arrive at a TIC which would have been substantially the same as the TIC likely to be imposed after the resumption. He adopted a figure of $3 million, which was the Department’s traffic engineer’s estimate of what the Department was likely to ask for in relation to the hypothetical development the valuers used for their feasibility model. He used this amount in both his before and after scenario. [76] Under the heading “Valuation Matters” Mr Brett explained his cash flow method saying, “Analysis of both the before and after subdivisions quantifies the injurious affection and severance impact on the retained land by incorporating changes in lot prices and development and interest costs”. He then listed the components which fed into the cash flow model, such as sale prices, sale rates, construction costs, holding -- 20 of 23 -- 21 costs, profit margin, etc. One of the components he lists at this part of his report is, “Infrastructure Charges: Noting [the Department’s traffic engineer’s] advice a purchaser would expect infrastructure charges to be similar before and after the resumption. I have adopted $3,000,000.” – p 22 of his report. [77] Towards the end of his report Mr Brett says that he has performed a check valuation by “separately quantifying the value of the resumed land and the impacts the resumption works have on the value of the retained land”. He says, using a square metre rate, that the value of the resumed land is $4.5 million and then says: “Value of injurious affect, severance and enhancement: What remains to be checked is the resumption’s impact on the value of the retained 74.227 hectares of developable land. The per square metre value of the retained land will be reduced to the extent that the resumption reduces lot prices and increases development costs. The cash flow quantifies each.” – p 25 of his report. [78] By reference to the adjustments he has made to his cash flows, such as in the Centenary Highway Access Example, Mr Brett concludes that the impacts due to the resumption are $1,313,818. He summarises this part of his valuation as follows: Value of resumed land: $4,535,000 Impacts on retained land: $1,313,818 Total $5,848,818 Valuers’ Reports on Changed Facts [79] Both valuers prepared new reports after the agreement of the TIC at $1,087,000. Mr Brett46 outlined two scenarios. In the simplest, he substituted the new figure of $1,087,000 as the TIC cost in both his before and after scenarios. He presents his opinion only in a form analogous to the check valuation at the end of his November 2011 report, this time calling “impacts on retained land”, by the label, “injurious affect”. His new table is as follows: Injurious affect $1,530,405 Value of resumed land $4,533,954 Total $6,064,359 Rounded to $6,100,000 [80] It is puzzling that his amount for injurious affect has risen notwithstanding that the cost of development in both the before and after scenarios has fallen. I cannot determine the reason for this when I have regard to the cash flows. In fact, the cash flows show that both development costs and interest have fallen, as one might expect, but so also have net realisations in the after scenario. I cannot discern the reason for this. Even more puzzling is why a change in the TIC, which on Mr Brett’s view of things was: (i) always going to be charged (ie, in the before and after scenario) and, (ii) was not going to increase because of the resumption, could affect the figure for what he calls “injurious affect”. This inconsistency was not explained for, although the valuers made new reports after the TIC was agreed, there was no more oral evidence. 46 Report 14 March 2012, AB 1535ff. -- 21 of 23 -- 22 [81] Mr Hamilton47 acknowledges that he has been ordered to prepare a report dealing with the new agreed TIC, but it is clear that he thinks it is irrelevant for valuation purposes because it would not have been foreseen by a purchaser as at February 2008. He continues: “As I am being asked to consider post-resumption events that could not have reasonably been foreseen, then it would not be appropriate, in my opinion, to consider the cost to the works which were ultimately agreed in isolation and out of context with the totality of post resumption events. In this instance, I consider that the timeframe and costs required to achieve a reduction in the infrastructure contributions have to be taken into consideration in the cash flows.” – pp 3-4. [82] He then sets out two cash flows which have been adjusted in accordance with his thinking. Nature of TIC in this case [83] In this case both valuers used the TIC as a development expense in their cash flows for the hypothetical development they assumed would take place on the land. Albeit for different reasons, both sides were required to accept the position on this appeal that the TIC in the after-case was not damage within the meaning of s 20(1)(a) or (b), ie, was not damage in the nature of severance or injurious affection.48 (a) The Department was in that position because its evidence (traffic engineer and valuer) was to the effect that there would have been a TIC of the same monetary amount imposed on any major development of this land, whether that took place before or after the resumption. (b) Cidneo was in that position because its submission to the Land Appeal Court was that the TIC was not injurious affection or severance damage, just a development cost relevant to the cash flow analysis.49 Further, because the Land Appeal Court found that the imposition of the TIC, although made by the Department of Transport and Main Roads, was in its character as a concurrence agency, not in its character of a constructing authority.50 Cidneo did not appeal this finding, even though on its valuer’s evidence there was room for the argument that, because of the resumption, or at least the overall scheme of the Roadworks, the TIC was higher than it would have been in the before scenario. In these circumstances I would note my view that there may be cases where a TIC might amount to damage caused by severance or injurious affection. In this case, it is the facts, not principle, which determine otherwise. [84] So characterised the TIC in this case was simply something which fed into the development feasibility models or cash flows as an expense, in the same way as bank interest would have. I agree with the conclusions of the Land Appeal Court that the TIC could not sensibly be said to be damage caused by severance – [95] – and was not, in this case, injurious affection – [96]–[98]. While the TIC was just a development cost which fed into the before and after models, and while those models were aimed 47 Report 2 March 2012, AB 1639ff. 48 The applicant’s counsel conceded this at t 1-31 at the hearing of the appeal, and the respondent’s counsel acknowledged it at t 1-33. 49 AB 2148 – AB 2150. 50 See [97] of the judgment of the Land Appeal Court. -- 22 of 23 -- 23 at valuing Cidneo’s land, I cannot, with respect, agree that this compelled the Land Court to reject evidence of the agreed TIC at $1,087,110 because that agreement was not made or reasonably foreseeable at the time of resumption. [85] Section 20 of the Acquisition of Land Act does not require that the total land before resumption, or the land retained after resumption, should be valued. It contemplates valuation of the land taken, and assessment of damage caused by severance, injurious affection, disturbance, and allowance for any enhancement. The only way which the valuers’ evidence in this case could have been relevant was if it was in truth an assessment of all those matters, albeit in a rolled-up way, to adopt the words of Spigelman CJ. The statute required that compensation for land taken be assessed as at the date the land was taken. It did not require that if a valuation was made of the englobo land, or the retained land, as part of a rolled-up before and after exercise, that that valuation be at any particular date. Far less did the statute require that, if a cash flow method of valuing the englobo or retained land was adopted, the inputs to the cash flow be based on information obtaining at any particular date. Given that Mio Art allows evidence of subsequent events to be used in assessing all matters relevant to s 20 compensation other than the value of land taken, there is no warrant to assume as a general rule that all information fed into that rolled-up process must be known or foreseeable at the time of resumption. In any case, it is a matter for the valuers to use information which most accurately produces an assessment of the compensation required by s 20 of the Act. [86] One would hope that the valuers’ evidence would address the elements of s 20 and explain why information they chose to include in a feasibility model was apt to do that. The valuers’ reports in this case did not do so. The valuers originally assumed that all matters should be assessed as though they were valuing the land taken in accordance with the Spencer test – at the date of resumption, on facts known or reasonably foreseeable then. Whether this was a misapprehension of the law, or a calculated decision, is not known, for there is no explanation in the reports. [87] As I indicated at the commencement of my judgment, my view is that the matter does need to return to the Land Court. The fact that there has been an agreement about the cost of the TIC does not necessarily mean that it can be substituted as Mr Brett did in the valuation he provided in March 2012. A decision needs to be made as to the matters raised by Mr Hamilton in his March 2012 report. Quite apart from that, the matters decided by the Land Appeal Court as to appeal ground 2 and appeal ground 351 are not resolved by an agreement as to the amount of TIC. They need to be determined by the Land Court. As well, it seems to me that the valuers will need to revisit their evidence, and that the parties will need to spend some time ensuring that the evidence which is presented to the Land Court is coherent and in a framework consistent with s 20 of the Act. Disposition [88] I agree with the orders proposed by Fraser JA. 51 Paragraphs [68]–[88]. -- 23 of 23 --