Brisbane City Council v Mio Art Pty Ltd & Anor [2011] QCA 234 [2012] 2 Qd R 1; 183 LGERA 352

SUPREME COURT OF QUEENSLAND CITATION: Brisbane City Council v Mio Art Pty Ltd & Anor [2011] QCA 234 PARTIES: BRISBANE CITY COUNCIL (applicant) v MIO ART PTY LTD ACN 121 010 875 (first respondent) GREENER INVESTMENTS PTY LTD (in liquidation) ACN 110 036 452 (second respondent) FILE NO/S: Appeal No 13875 of 2010 LAC No 1 of 2010 LAC No 2 of 2010 DIVISION: Court of Appeal PROCEEDING: Miscellaneous Application - Civil ORIGINATING COURT: Land Appeal Court at Brisbane DELIVERED ON: 13 September 2011 DELIVERED AT: Brisbane HEARING DATE: 19 May 2011 JUDGES: Margaret McMurdo P, Fraser JA and Fryberg J Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDERS: 1. Application for leave to appeal granted, with costs to be assessed. 2. Appeal allowed with costs to be assessed. 3. Set aside the order of the Land Appeal Court allowing the appeals to that court. 4. Order that the matter be returned to the Land Appeal Court for decision in accordance with the reasons for judgment of this court, and with costs of the further hearing at the discretion of that court. 5. Order that respondents pay the Council's costs of the appeal to the Land Appeal Court to be assessed, save for the costs of the further hearing pursuant to order 4. CATCHWORDS: REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – ASSESSMENT – MARKET VALUE – GENERALLY -- 1 of 32 -- 2 – – – – SPECIAL VALUE – GENERALLY – Value to dispossessed owner – Relevance of events after acquisition date Acquisition of Land Act 1967 (Qld), s 20 Land Court Act 2000 (Qld), s 56(2) Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209, cited Buckler v Department of Natural Resources and Water [2011] QLC 7, considered Bwllfa & Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426, cited CMB No 1 Pty Ltd v Cairns City Council [1999] 1 Qd R 1; [1997] QCA 456, cited Housing Commission of NSW v Falconer [1981] 1 NSWLR 547, considered Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR, cited Leichhardt Council v Roads & Traffic Authority of NSW [2006] NSWCA 353; (2006) 149 LGERA 430, followed Maurici v Chief Commissioner of State Revenue (NSW) [2003] HCA 8; (2003) 212 CLR 111, cited Minister Administering the Crown Lands Act v Illawarra Local Aboriginal Land Council [2009] NSWCA 289; (2009) 168 LGERA 71, cited Minister for Public Works v Thistlethwayte [1954] AC 475, cited Minister for the Army v Parbury Henty & Co Pty Ltd [1945] HCA 52; (1945) 70 CLR 459, distinguished Mio Art Pty Ltd v Brisbane City Council [2009] QLC 177, considered Mio Art Pty Ltd v Brisbane City Council; Greener Investments Pty Ltd (In Liquidation) v Brisbane City Council [2010] QLAC 7, considered Nelungaloo Pty Ltd v The Commonwealth [1947] HCA 58; (1948) 75 CLR 495, cited O'Kane v The Commissioner of Main Roads (1976) 3 QCLLR 331, cited Pastoral Finance Association Ltd v The Minister [1914] AC 1083; [1914] UKPC 77 Shire of Gingin v Coombe [2009] WASCA 92, cited Spencer v The Commonwealth (1907) 5 CLR 418; [1907] HCA 82, followed The Commonwealth v Milledge [1953] HCA 6; (1953) 90 CLR 157, cited Thorpe v Brisbane City Council [1966] Qd R 37, distinguished COUNSEL: M Hinson SC for the applicant D Gore QC and D Smith for the first respondent G M Griffin QC for the second respondent -- 2 of 32 -- 3 SOLICITORS: DLA Piper for the applicant Delta Law for the first respondent Griffins Lawyers for the second respondent [1] MARGARET McMURDO P: This application for leave to appeal should be granted and the appeal allowed for the reasons given by Fryberg J. I agree with the orders proposed by Fryberg J. [2] FRASER JA: I have had the advantage of reading the reasons for judgment of Fryberg J. I agree with those reasons and with the orders proposed by his Honour. [3] FRYBERG J: The Council seeks leave to appeal from a decision of the Land Appeal Court in a case about compensation for the acquisition of land. History [4] Until 31 August 2007 the first respondent (―Mio‖) was the owner and the second respondent (―Greener‖) was a mortgagee of 8,825 m² of land on Montague Road, South Brisbane. On that date the Council compulsorily acquired 5,643 m² of the land for the Hale Street Bridge. The parties were unable to agree on the amount which ought to be paid for compensation. They did agree that the ―before and after‖ approach was the appropriate one, and that the value of the residue of 3,182 m² after the acquisition was $9 million. They also agreed that the highest and best use of the land before resumption was for commercial office development; that it was appropriate to use a ―hypothetical development‖ method of valuation; and that a prudent purchaser would value the land on the basis that the relevant hypothetical development would be one which required a code assessable development application rather than an impact assessable one. They differed as to the type of building which would have been approved for the land. [5] The dispute came before the Land Court for assessment of compensation in February and March 2009. In a lengthy and carefully reasoned judgment, the President determined the pre-acquisition value of the land to be $25,600,000 and consequently determined the compensation to be $16,600,000. [6] Mio and Greener appealed to the Land Appeal Court, where the appeal was heard in August 2010. The appeal had a number of grounds. In November 2010 that court allowed the appeal on one ground only. It held that the President had wrongly disregarded a planning proposal published subsequently to the date of resumption in her consideration of the size of the development which a prudent vendor and purchaser would have expected to have been approved. [7] The present application seeks leave to appeal from the order of the Land Appeal Court that the appeals to that court be allowed. The reasons for judgment of the Land Court [8] The President approached the task of valuation by examining the amount per square metre paid for sales of comparable land. She compared the qualities of the land in the comparable sales with those of the subject land, including in particular plot ratios, and by the exercise of her judgment valued the subject land at $2,900 per -- 3 of 32 -- 4 square metre. She established the value of the land by multiplying that figure by the area. [9] Calculating the plot ratio possible on the subject land required a determination of the largest gross floor area which would have been contemplated by the hypothetical prudent purchaser. That in turn required some estimation of the type of development, and in particular the height of development, which that purchaser would have anticipated would be permitted on the site. Each of the parties had given evidence of such a development. The learned President identified the function of the court: ―It is not the function of this Court to decide whether the planning authority would approve a particular proposal. Rather it is the function of the Court to determine, having heard the relevant evidence, how the hypothetical prudent purchaser referred to in the judgments in Spencer would have viewed the potential financial return if a proposal were considered that included one or other of the proposed plans.‖1 [10] The President concluded that the prudent purchaser would have contemplated development which generated a plot ratio of 5. That conclusion was based (with adjustments) on the finding that such a purchaser ―would conclude that, as compared with the other designs, the [Council‘s] proposed design more closely resembles that type of development that would receive Council approval.‖2 That finding was in turn based on, among other things, a finding of the perceived maximum average height of buildings which would have been approved on the site. That finding in turn depended in part on the relevant planning instruments. [11] A prudent purchaser (and vendor) might have thought that there were at least four possibly relevant planning documents. They were: (a) the West End Woolloongabba District Local Plan; (b) the West End Woolloongabba District Local Plan Code; (c) the Centre Design Code; and (d) the draft Kurilpa Structure Plan, Version 1. The President held that all four would have been taken into account by the purchaser, and that finding was not challenged. [12] The President further held: ―[32] Kurilpa 2 was published some 3 or 4 months after the date of resumption. That Plan indicated a building height of 12 storeys in the vicinity of the subject. Both Dr Smith (for Mio Art) and Mr Horsburgh (for Greener) suggested to witnesses that this Plan could be taken into account in determining the development potential of the subject site as at the date of resumption, because the purchaser, having acquired the site as at 31 August 2007, would not have finalised development plans by December 2007, when Kurilpa 2 was published. 1 Mio Art Pty Ltd v Brisbane City Council [2009] QLC 177 at [12], citing De Ieso v Commissioner of Highways (1981) 27 SASR 248; (1981) 47 LGRA 412 at p 417. 2 Ibid at [177]. -- 4 of 32 -- 5 [33] While it may be correct that such a purchaser would not have obtained development approval by December 2007, I do not accept that that of itself leads to the conclusion that its content can be taken into account. Section 20(2) of the Act provides that compensation is to be assessed according to the value of the estate or interest of the claimant in the land taken as at the date of resumption. This means that the prudent purchaser, as described in the quotes from Spencer set out above, must be assumed to know the relevant facts about the land as at that date. Evidence of events occurring after that date is not generally relevant to the assessment of compensation unless it is evidence which confirms a foresight held by the prudent purchaser as at the date of resumption.4 4 Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547 at 558. … [36] I accept that it is likely that the prudent purchaser would have been informed in August 2007 that Kurilpa 1 was under review. However, there is no evidence as to the content of any review at that time and in particular as to whether the proposal to raise the relevant height limit to 12 storeys was in circulation. In those circumstances I do not consider that Mr Buckley's evidence on this point was sufficient to enable me to say that this was information that was available to the prudent purchaser as at the date of resumption.‖3 She therefore did not consider the impact which version 2 of the draft Kurilpa Structure Plan, published in December 2007, might have had on the hypothetical purchaser. The appeal to and the reasons for judgment of the Land Appeal Court [13] Mio appealed against the President‘s decision to the Land Appeal Court in January 2010. Ground seven of its notice of appeal was: ―7. The learned trial Judge erred in law: a. … ; b. when she rejected any reliance on the Kurilpa 2 Planning instrument when there was evidence: (sic) c. … ; d. … .‖ [14] By a separate notice of appeal, Greener also appealed to the Land Appeal Court in January 2010. Its notice of appeal made no reference to either document; indeed it appears to have been concerned only with the aspect of disturbance. However at the hearing (by which time it was in liquidation), its solicitor adopted the submissions made on behalf of Mio. The Council made no objection to this course. [15] In a joint judgment the Land Appeal Court held that it was foreseeable in August 2007 that the building heights allowed under the West End Woolloongabba District 3 [2009] QLC 177 (emphasis added). -- 5 of 32 -- 6 Local Plan and Kurilpa 1 would be increased (at some unspecified future time); that evidence of events subsequent to acquisition is admissible if it confirms what was foreseeable at the date of acquisition, citing Thorpe v Brisbane City Council4 and CMB No 1 Pty Ltd v Cairns City Council5; that Kurilpa 2 confirmed what was foreseeable at that date; and that therefore ―[89] ... it was erroneous to exclude Kurilpa 2 from consideration, and to assess the development potential of the site, and ultimately to determine compensation, on the basis that building heights would, on average, not exceed 10 storeys.‖ The court continued: ―[91] … Had the further change in the Council's attitude to building heights which had become apparent in Kurilpa 2 been taken into account, it is difficult to think that the Land Court would have concluded that the prudent purchaser would assume that development on the land would be limited to an average height of 10 storeys. [92] It follows that compensation should have been assessed on the basis of the case presented on behalf of Mio Art, namely, that the prudent purchaser would consider that a development with a height of 12 storeys would be accepted by the Council. Given the attention paid to this matter in the reasons of the Land Court, it seems clear that the application of sales evidence would have been affected by any significant change to that Court's finding about the development potential of the land.‖6 [16] The court did not make any quantitative assessment of the likelihood (apparent to the hypothetical vendor and purchaser as at the date of acquisition) of an increase in the building heights in the West End Woolloongabba District Local Plan or Kurilpa 1 or in the height limit likely to be accepted by the Council upon consideration of development applications for the subject site; nor did it make any finding as to when those parties would have perceived that any such change was likely to occur. The proposed grounds of appeal [17] The proposed grounds of appeal are: ―C. The decision of the Land Appeal Court to allow the appeal miscarried having regard to, inter alia, the following matters:- 2.1 The Land Appeal Court erred at law in holding (at paragraph 88 of the Reasons for Judgment (RJ)) that any increases in allowable building height under the West End and Woolloongabba District Local Plan and Kurilpa 2 subsequent to the date of resumption could be considered in determining the development potential of the subject site as if at the date of 4 [1966] Qd R 37. 5 [1999] 1 Qd R 1; [1997] QCA 456. 6 [2009] QLC 177. -- 6 of 32 -- 7 resumption, there was ‗foresight‘ of such an increase as at the date of resumption. 2.2 The Land Appeal Court erred at law in holding (at paragraph 87 of the RJ) that no particular level of likelihood was required to establish a ‗foresight‘. 2.3 The Land Appeal Court erred at law in finding (at paragraph 88 of the RJ) that there was evidence of ‗foresight‘ as at the date of resumption that allowable building heights would be increased in relation to the subject site under the West End and Woolloongabba District Local Plan and Kurilpa Draft Plan on the basis of the ‗Smart Cities Report‘ when there was no evidence of such a ‗foresight‘ in that report. 2.4 The Land Appeal Court erred at law in finding (at paragraphs 88 to 91 of the RJ) that there had been confirmation of the ‗foresight‘ that allowable building heights in relation to the subject site would increase under the relevant planning instruments when there was no evidence of such a confirmation. The allowable building heights under the West End and Woolloongabba District Local Plan have not increased since the date of resumption from 10 storeys and indeed the Kurilpa 2 has still not been enacted. 2.5 The Land Appeal Court erred at law by determining for itself (at paragraphs 87 to 92 of the RJ) the height that would be likely to be approved for a commercial office development on the subject site, namely 12 storeys, without first identifying a relevant error by the Trial Judge in the determination of that issue.‖ No submissions were addressed to the court in support of the last of these grounds. Events after the acquisition date (ground 1) [18] Adopting a passage from Hyam‘s The Law Affecting Valuation of Land in Australia,7 the Council submitted that events arising subsequent to acquisition must be ignored in assessing market value for compensation purposes. [19] The respondents submitted that leave to appeal on this ground should be refused because the point was conceded in the Land Appeal Court. In the alternative they submitted that the statement in Hyam was wrong. The concession submission [20] I reject the respondents‘ first submission for two reasons: first, on a proper understanding of proceedings in the Land Appeal Court, no such concession was made; and second, it is not suggested that the course of proceedings in the Land Appeal Court would have been any different had the alleged concession not been made, and the point is one of importance. 7 4th ed (2009), p 502. -- 7 of 32 -- 8 [21] The supposed concession was said to have been made in the course of the Council's written submissions provided to the Land Appeal Court before the commencement of the hearing. The submissions were framed in response to those of Mio which were also provided to the court. The latter provide a convenient starting point to establish context. [22] Mio had submitted that Kurilpa 2 confirmed the foresight that the area ―was changing dramatically and that an increase from 10 to 12 stories would certainly be within the realms of reasonable expectations‖8. It had also submitted that the 2009 South Brisbane Riverside Renewal Strategy Summary could be taken into account and given ―real weight‖. As authority for the latter proposition it submitted: ―It is well established that, in valuation cases, evidence of subsequent events is admissible, not to prove a hindsight, but to confirm a foresight48, and the whole tendency of the Courts has been to admit evidence of subsequent events which will throw any real light on the issues49. As it was colourfully put in one case – ‗the Court should never speculate where it knows‘50. 48 Housing Commission of NSW v Falconer [1981] 1 NSWLR 547, 558; CMB No 1 Pty Ltd v Cairns City Council [1999] 1 Qd R 1, 21. 49 see eg Daandine Pastoral Co Pty Ltd v Commissioner of Land Tax 1943 7 The Valuer 299, 304 (with reference to Australian Apple and Pear Marketing Board v Tonking [1942] 66 CLR 77, 108); Thorpe v Brisbane City Council [1966] Qd R 37, 44-45; CMB No 1 Pty Ltd v Cairns City Council [1999] 1 Qd R 1, 13-14, 19-21. 50 Curwen v James [1963] 1 WLR 748, 753 (referred to CMB at 13, per McPherson JA, at 20, per Williams J (as he then was)).‖9 [23] But there was a tension between that submission and one which had been made by Mio in relation to another aspect of the case in the Land Appeal Court. In connection with the weight which ought to have been given to what was described as ―the Multiplex development application material‖, Mio had submitted: ―32. Moreover, there is ample authority to support the rule that, to give effect to the Spencer formulation34, the knowledge of the hypothetical parties to the assumed sale is limited to the knowledge that would ordinarily be available to the parties35. 34 Taken from Spencer v Commonwealth (1907) 5 CLR 418 35 Gosford Shire Council v Green (1980) 48 LGRA 201, 210; Manufacturers Mutual v Gosford City Council [1982] The Valuer 214, 215; Hall and Hedge v Chief Executive, Department of Transport (1997) 18 QLCR 284, 299-308; Coundrelis v Roads and Traffic Authority (NSW) [2008] NSWLEC 72 at [50]-[60]; see also Davey v Minister of Agriculture (1979) 1 SA 466, 469.‖10 [24] The Council responded to the latter submission first. It described the proposition that ―the knowledge of the hypothetical parties to the assumed sale is limited to knowledge that would ordinarily be available to the parties‖ as an ―accepted 8 AR 1034. 9 Ibid. 10 AR 1030. -- 8 of 32 -- 9 principle‖.11 Later it dealt with Mio‘s submission that the Land Court erred in not adopting the 12 story height proposed by Mio. As to that the Council submitted: ―First, Mio Art, correctly, does not dispute that evidence of events occurring after the date of resumption are not generally relevant to the assessment of compensation unless it is evidence which confirms a foresight held by the hypothetical prudent purchaser as at the day of resumption.71‖.12 Note 71 lead the reader to para [33] of the Land Court reasons for judgment, quoted above.13 The submission then attempted to demonstrate that there was no evidence of a relevant foresight prior to the date of resumption. [25] In that context I do not understand the Council‘s submission to amount to a concession that the ―accepted principle‖, earlier adopted by both sides, was being abandoned. Rather, the submission should be understood as one made in the alternative. In other words, it was a submission to the effect that even if future events could be taken into account to confirm foresight, Kurilpa 2 and the SBR renewal strategy did not satisfy that test. [26] Second, even if that be wrong, there has been no suggestion that the supposed concession in any way affected the course of events in the Land Appeal Court. The appeal in that court was decided on the record of the proceeding in the Land Court; no further evidence was called. It was argued over two days; submissions on behalf of Mio occupied the first day and a little of the second day. The point is undoubtedly one of law14 and there is no suggestion that Mio is in any way disadvantaged if it is allowed to be raised now. It is also an important point, which must arise frequently in Land Court cases. The decision of the Land Appeal Court is binding on the Land Court in future cases.15 If that decision is wrong, it has the potential to result in numerous future miscarriages of justice. This court should decide the point. The parties’ submissions [27] Mio submitted that the Land Appeal Court was correct in ruling that, at least to the extent that they confirmed what was foreseeable at the date of acquisition, subsequent events could properly be taken into account in assessing market value. It submitted that the decision of this court in CMB No 1 Pty Ltd v Cairns City Council16 resolved the question in its favour. That case applied the decisions in Thorpe v Brisbane City Council17 and Housing Commission of NSW v Falconer18. Hyam did not cite CMB nor other New South Wales cases consistent with it and was wrong, at least in relation to Queensland. [28] The Council submitted that the following quotation was a correct statement of legal principle: 11 AR 1061. 12 AR 1063. 13 Paragraph [12]. 14 Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111 at p 116. 15 It has already been applied: see Buckler v Department of Natural Resources and Water [2011] QLC 7. 16 [1999] 1 Qd R 1; [1997] QCA 456. 17 [1966] Qd R 37. 18 [1981] 1 NSWLR 547. -- 9 of 32 -- 10 ―Events arising subsequent to acquisition must be ignored in assessing market value for compensation purposes. However they may be taken into account in the assessment of special value to the owner, damage sustained by disturbance, and the application of the reinstatement principle, to the extent to which they were foreseeable by the hypothetical prudent purchaser at the date of acquisition. Subsequent sales of comparable properties are admissible as evidence as to the value of the subject land at the relevant date.‖19 It submitted that the decision in CMB turned on different legislation and did not answer the present question. The legal foundation [29] The assessment of compensation for the acquisition of land in Queensland is controlled by s 20 of the Acquisition of Land Act 1967. That section must be the starting point in any consideration of the issue dividing the parties. The first two subsections provide: ―(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 — (a) to the damage, if any, caused by any of the following — (i) the severing of the land taken from other land of the claimant; (ii) the exercise of any statutory powers by the constructing authority otherwise injuriously affecting the claimant‘s other land mentioned in subparagraph (i); and (b) to the claimant‘s costs attributable to disturbance. (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.‖ It is important to keep the text of the section firmly in mind, and not to replace it with judicial dicta from cases dealing with differently worded provisions. In this area of law, statutes do not always, nor in all jurisdictions, use words, even terms of art, in a uniform sense. As Spigelman CJ has written: ―35 Matters of valuation turn in large measure on the precise statutory scheme. These schemes differ from one area of discourse to another. It is always important to commence with the precise words of the statute. There appears to be a tendency to take a judgment about one statutory regime and classify its conclusion as a ‗valuation principle‘ which is applied to any process of valuation, no matter how different the statutory regime may be.‖20 [30] Two points follow 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 19 Hyam, The Law Affecting Valuation of Land in Australia, 4th ed (2009), p 377. 20 Leichhardt Council v Roads & Traffic Authority( NSW) [2006] NSWCA 353; (2006) 149 LGERA 439. -- 10 of 32 -- 11 is that, unlike compensation for the value of the land taken,21 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. [31] ―Value‖ is not a defined term in the Act. It has long been accepted in Queensland and, indeed, throughout Australia that the value referred to in the section is value to the dispossessed owner.22 Ordinarily that value is the market value determined in accordance with the decision of the High Court in Spencer v The Commonwealth.23 Exceptionally, cases arise where land has additional or special value to the owner over and above its market value. It was not suggested in the present case that the land acquired by the Council had any such value. Here, value fell to be assessed in accordance with Spencer's case. [32] The relevant passages are well-known, but in the light of the submissions in this court, they bear repetition. Griffith CJ said: ―In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring ‗What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?‘ It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.‖24 Isaacs J said: ―In the first place the ultimate question is, what was the value of the land on 1st January 1905? All circumstances subsequently arising are to be ignored. Whether the land becomes more valuable or less valuable afterwards is immaterial. Its value is fixed by Statute as on that day. Prosperity unexpected, or depression which no man would ever have anticipated, if happening after the date named, must be alike 21 Sub-section 20(2). 22 See for example O’Kane v Commissioner of Main Roads (1976) 3 QLCR 331 at p 333; Minister for Public Works v Thistlethwayte [1954] AC 475 at p 491. 23 [1907] HCA 82; (1907) 5 CLR 418. 24 Ibid at p 432. -- 11 of 32 -- 12 disregarded. The facts existing on 1st January 1905 are the only relevant facts, and the all important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted. The plaintiff is to be compensated; therefore he is to receive the money equivalent to the loss he has sustained by deprivation of his land, and that loss, apart from special damage not here claimed, cannot exceed what such a prudent purchaser would be prepared to give him. To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.‖25 [33] Griffith CJ spoke of persons ―conversant with the subject‖. Isaacs J enlarged on that idea, referring to persons ―perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially‖. Among the circumstances to which he referred he instanced the words emphasised in the quoted passage. Those words show that in assessing market value it is relevant to take into account the likelihood of future events to the extent that such likelihood would have been known to the parties to the hypothetical transaction (or to appropriate experts whom they might reasonably have been expected to have engaged). Future events such as unexpected prosperity or unanticipated depression were to be ignored. The reasoning of the Land Appeal Court [34] The Land Appeal Court accepted the finding of the Land Court that it was likely that a prudent purchaser would have been informed at the date of acquisition that Kurilpa 1 was under review. It held that on the evidence it was foreseeable at that time that the building heights in Kurilpa 1 and the West End Woolloongabba District Local Plan would be increased. It held that Kurilpa 2 confirmed that foresight. Subject to ground of appeal 2.3, those are findings of fact which would not be open to challenge in any appeal to this court. [35] The next step in the reasoning was to find that on those facts, the application of Thorpe and CMB made it erroneous to exclude Kurilpa 2 from consideration. Implicit in that step is the proposition that those cases are authority for holding that in assessing market value, evidence of events occurring after the date of acquisition may be taken into account, at least if that evidence confirms what was foreseeable at that date. Indeed, since the court was sitting on appeal and identified the failure to take Kurilpa 2 into account as an error, it is implicit in that step that such evidence 25 Ibid at p 441 (emphasis added). -- 12 of 32 -- 13 must be taken into account. That raises issues about the nature of an appeal to the Land Appeal Court. For present purposes it is sufficient to deal with the first implication. Thorpe v Brisbane City Council26 [36] Thorpe came before the Full Court on a case stated by the Land Appeal Court. Two questions of substance were put in that case: ―1. Were we right in holding that the Claimants could not lawfully accept the offer of the Council contained in the letter referred to in paragraph 4 of this case? 2. Was it open to us as a matter of law to assess compensation in respect of the Claimants‘ shop premises on the basis that to reinstate the said shop premises involved in the circumstances as aforesaid rebuilding the same in fire- resisting material?‖27 [37] The relevant facts were summarised by Gibbs J, with whom the other members of the court agreed: ―The respondents were the owners of an allotment of land which had a frontage to Lutwyche Road of 46 feet 10.3 inches and a depth of 126 feet and on which was erected a wooden building, consisting of two shops, which stood on the street alignment, behind which were a dwelling house and certain ancillary structures. The appellant Council on March 29, 1960, resumed portion of the land to a depth of 22 feet back from the road along the whole frontage, for the purpose of widening the road. After the resumption, part of the shop building stood on the resumed land and part on the land retained by the respondents. None of the other buildings were on the resumed land.‖28 [38] Compensation fell to be assessed under the City of Brisbane Improvement Acts 1916. Section 18 provided: ―18. Compensation, how estimated. In estimating 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 – (a) By the severing of the land taken from other land of the claimant; or (b) By the exercise of any statutory powers by the Council otherwise injuriously affecting such other land; and compensation shall be assessed according to the value of the land, estate, or interest of the claimant on the date of the notice of resumption taking the land. In estimating the compensation to be paid, there shall be taken into consideration, by way of set-off or abatement, any 26 [1966] Qd R 37. 27 Ibid at p 39. 28 Ibid at pp 39-40. -- 13 of 32 -- 14 enhancement in 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 for which the land is taken; but in no case shall this provision operate so as to require any payment to be made by the claimant in consideration of such enhancement of value.‖ [39] The first element of compensation was the value of the land taken. The parties agreed that value was ₤1,200. The remaining claims were for damage caused by severance and injurious affection. More than 2½ years after the date of resumption the Council offered to move the buildings back from the resumed land so that they stood wholly on the retained land. In the Land Court it was held that this was a reasonable offer and that compensation for the damage should be assessed on the basis that the claimants could be reinstated on the balance land basically in the manner proposed by the Council.29 [40] In the Land Appeal Court a new issue arose. The claimants submitted that reinstatement as proposed by the Council would be unlawful under the city ordinances. These prohibited construction of external walls of any material other than fire-resisting material. In the alternative they submitted that it was reasonable that compensation be assessed on the basis that reinstatement should be carried out in fire-resistant materials. The court accepted the first submission. [41] The Full Court held that the decision of the Land Appeal Court was wrong and that question one in the stated case should be answered, No. By the time the matter came before the Full Court the parties had agreed that compensation should be assessed on the basis that the claimants were entitled to be reinstated into shops on the remaining land. The point at issue between them was how reinstatement was to be effected. [42] The court resolved that issue in this way: ―It was then argued on behalf of the respondents that in any case it was not correct to assess compensation on the basis that the Council would hand back the part of the building that it had acquired by the resumption. It was submitted that the respondents were entitled to compensation in money and were not bound to accept it in kind. As was pointed out in the judgment of the Land Appeal Court, both parties agreed that the principle of reinstatement is applicable in the assessment of compensation in the present case. It was agreed in other words that the respondents should receive sufficient money to enable them to set up two shops on the land retained to take the place of the two existing shops. In answering the question how much money is necessary for this purpose it becomes necessary to inquire in what manner the reinstatement should be effected. The question is in other words whether the manner of reinstatement proposed by the respondents is reasonable in the circumstances. (See A and B Taxis Limited v The Secretary of State for Air (1922) 2 K.B. 328, at pp. 337 and 343, and Bidder v North Staffordshire Railway Co. (1878) 4 Q.B.D. 412, at p. 432). Since the existing shops were not built of fire-resisting material it would not be reasonable for the respondents 29 Thorpe v Brisbane City Council (1962) 29 QCLLR 367 at p 373. -- 14 of 32 -- 15 to insist on rebuilding in brick unless the ordinance compelled them to do so. They would be compelled by Ordinance 1A to rebuild in brick unless they could move the existing shops back to the new alignment. If the Council offered to move back the existing shops it seems to me prime facie that the reasonable course was for the respondents to accept that offer, if, as I have held, it was lawful for them to do so.‖30 [43] The claimants had anticipated such a conclusion by submitting that the Council's offer was not made until more than two years after the date of resumption and that compensation had to be assessed as at the latter date. The court might have disposed of that submission on the basis that it was correct only to the extent that the compensation being assessed comprised the value of the land. That value was not in issue in the case; it had been agreed. What was in issue was initially how much compensation should be awarded for damage as a result of severance and injurious affection. In the Full Court that was transformed into an issue of reinstatement, as appears in the passage just quoted. None of these types of compensation had to be assessed as at the date of resumption, either by the terms of the legislation or by reason of the decision in Spencer’s case. [44] But the court did not dispose of the submission in that manner. It rejected it on a different basis. It held, applying a dictum of Williams J in Minister for the Army v Parbury Henty & Co Pty Ltd, that in assessing the amount of compensation, subsequent facts could to some extent be taken into account. The application of the dictum was not inappropriate. To see why that is so it is necessary to consider Parbury Henty in more detail Value to the owner: Minister for the Army v Parbury Henty & Co Pty Ltd31 [45] As noted above32, ―value‖ in s 20 means value to the owner. In most cases that is market value but there are exceptions. In those exceptional cases it is not the Spencer test which is applied in the determination of compensation, but the test stated by the Privy Council in Pastoral Finance Association Ltd v The Minister: ―Probably the most practical form in which the matter can be put is that they were entitled to that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it.‖33 [46] In Pastoral Finance it was common ground that the land in question had a special suitability for the purpose to which the claimant had intended to put it. It was, in other words, a case involving additional or special value to the owner. In the way of the common law, the idea of value to the owner was subsequently expanded to comprehend more than simply market value and additional or special value to the owner. It is unnecessary to rehearse the full history of its development in Australia. It suffices to quote the words of Spigelman CJ: ―24 The traditional formulation of ‗value to the owner‘ was developed as a gloss on the statutory words ‗value of land‘ or 30 [1966] Qd R 37 at p 44. 31 [1945] HCA 52; (1945) 70 CLR 459 at p 514. 32 Paragraph [31]. 33 [1914] UKPC 77 at p 6; [1914] AC 1083 at p 1088. -- 15 of 32 -- 16 equivalent appearing in a statute authorising compulsory acquisition. It was a unifying concept which encompassed ‗market value‘, ‗special value‘, ‗disturbance‘ and ‗severance‘. ‗Value to the owner‘ was not a concept which, at least in its origins, operated as an addition to market value. Rather, market value was, in most cases, the way of computing ‗value to the owner‘. As Barton ACJ said in MacDermott v Corrie at 233, the test in Spencer’s case was ‗a broad rule for ordinary cases of resumption‘ and constituted ‗value to the owner‘.‖34 [47] In the context of statutes containing express provision for compensation for disturbance, severance and injurious affection or enhancement, recent authority has emphasised that these heads of damage should be excluded from the unified notion of value to the owner.35 That, however, is a modern approach derived from the terms of the statute. It was not the approach taken in Parbury Henty. There, the Lands Acquisition Act 1906-1934, under which compensation fell to be assessed36, contained no express provision for damage caused by disturbance, specifically for costs incurred in moving business premises to a new and suitable location. Williams J wrote: ―The established principle upon which compensation should be assessed is to ascertain the value of the property taken to the person dispossessed (Horn v. Sunderland Corporation (72)), and for this purpose to estimate what sum a reasonably willing vendor could have expected a reasonably willing purchaser to pay, if he had been willing to sell his proprietary interest with all its existing advantages and future possibilities on the date of dispossession. In the present case, each company was occupying the premises of which it was dispossessed for the purposes of its business. … [In one case] the premises had the additional existing value of being so situated and equipped that it was an advantage to the company to occupy them and carry on its business there. … [In the other case, the] premises also had the additional value that they were so situated and equipped that it was an advantage to the company to occupy them and carry on its business there. The right to compensation arises at the moment of acquisition, just as the proprietary right of the owner of property upon a voluntary sale is converted into a right to receive the purchase money when the contract is made. The amount of compensation, being a matter of assessment, can, like damages, be calculated in the light of any subsequent facts to the extent to which they throw light upon the items of value which can properly be taken into account in the calculation, having regard to the circumstances existing at the date of acquisition (Australian Apple and Pear Marketing Board v. Tonking (105); McCathie v. Federal Commissioner of Taxation (106)). In the present case it would have been reasonable for the companies, as willing sellers of the proprietary interests acquired by the Minister, to have claimed, not only for the value of the 34 Leichhardt Council v Roads & Authority of NSW [2006] NSWCA 353. 35 Ibid at [29] ff; Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 at pp 226 (Gleeson CJ), 269 (Callinan J). 36 See Parbury Henty at p 491 per Latham CJ. Section 28 referred only to the value of the land and to severance and injurious affection or enhancement. -- 16 of 32 -- 17 proprietary interests so acquired, but also for what can be compendiously called the expenses of removal into premises at least as commodious and congenial, taking a broad view of the matter, as those of which they were dispossessed. … A prudent purchaser must have expected that he would have to provide a sum to meet these expenses as a part of the purchase money sooner than fail to obtain the premises (Pastoral Finance Association Ltd. v. The Minister (107)). In other words, in the circumstances, the companies as reasonably willing vendors would have been entitled to demand a price which would enable them to reinstate themselves in equally suitable premises. Another method of calculating the compensation which leads in this instance to the same result is to ascertain what sum is required to reinstate the person dispossessed in equally convenient buildings on an equally convenient site.‖37 [48] In that way Williams J assimilated the removal costs into the value of the land to the owner. When he spoke of having regard to subsequent facts, he did so only in relation to such costs, as part of the value of the land to the owner within the meaning of a statute which made no separate provision for disturbance. [49] The correctness of Williams J‘s approach was implicitly affirmed in the joint judgment of Dixon CJ and Kitto J in The Commonwealth v Milledge: ―There remains the item of the plaintiff's claim described as business disturbance. Though it was considered convenient in this case, as it often is, to deal with this topic as a separate matter, it must always be remembered that disturbance is not a separate subject of compensation. Its relevance to the assessment of the amount which will compensate the former owner for the loss of his land lies in the fact that the compensation must include not only the amount which any prudent purchaser would find it worth his while to give for the land, but also any additional amount which a prudent purchaser in the position of the owner, that is to say with a business such as the owner's already established on the land, would find it worth his while to pay sooner than fail to obtain the land. But a prudent purchaser in the position of the owner would not increase his price on account of the special advantage he would get by not having to move his business, unless the amount he would have been prepared to pay apart from that special advantage was the value of the land considered as a site for that kind of business. Disturbance, in other words, is relevant only to the assessment of the difference between, on the one hand, the value of the land to a hypothetical purchaser for the kind of use to which the owner was putting it at the date of resumption and, on the other hand, the value of the land to the actual owner himself for the precise use to which he was putting it at that date.‖38 37 [1945] HCA 52; (1945) 70 CLR 459 at pp 514, 515 (underlining added). 38 [1953] HCA 6; (1953) 90 CLR 157 at p 164; see also Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 at p 226. -- 17 of 32 -- 18 [50] Before parting from Parbury Henty, it is helpful to consider what Latham CJ wrote in the same case: ―Compensation is to be paid for what is taken. Thus the value of the land taken must be paid. This rule is applied in England under the Lands Clauses Consolidation Act 1845 - see e.g. Stebbing v. Metropolitan Board of Works (42) as cited in MacDermott v. Corrie (43) - and also in Australia: Spencer v. The Commonwealth (44). In some special cases, e.g. hospitals, schools, churches, for which there is ordinarily no market, the cost of reinstatement may be adopted as the measure of value - though probably the property taken would not bring in the market any sum approaching the cost of reinstatement. But the general rule applied is that the value is the amount which would be paid by a willing buyer to a not unwilling but not anxious- to-sell vendor (Spencer's Case (45)). But ‗value‘ in cases of compulsory acquisition has proved to be a word of very elastic meaning. It is not necessarily the ‗mere saleable value‘ - Spencer's Case (46). It may include compensation for loss of business or goodwill - costs of removal - value of fixtures if taken, or loss if not taken - but these items are, theoretically, considered only as factors or elements affecting what is called the value to the owner.‖39 The application of Williams J's dictum in Thorpe [51] As noted above, by the time Thorpe reached the Full Court the characterisation of the amount in dispute had changed from injurious affection and severance to reinstatement costs.40 It is difficult to think that the parties (or the court) were using ―reinstatement‖ to refer to the reinstatement principle conventionally described by Latham CJ in the passage quoted above. Nor is there any advantage in speculating about whether it was Williams J's reference to the reinstatement method which led the parties to cite the case to the Full Court. What matters is that in Thorpe, the land value component of the compensation had been agreed. In calculating the balance of the compensation it was appropriate to take post-acquisition events into account. [52] It is true that in Thorpe the Full Court followed its reference to Parbury Henty thus: ―In the present case at the date of the resumption it was reasonable to expect that the Council would offer to make the building available, since the purpose of the resumption was to widen a road and possession of portion of a building could be of no use to the Council. The fact that it has since made the offer may be regarded to show that as at the date of resumption the building would have been available.‖41 The meaning of the last sentence of that passage is not altogether clear. If it was intended to convey that from the fact that the offer was made, it could be inferred that the building was available to the claimants more than 2½ years earlier, the logic is questionable. It does not matter. The Full Court had no need to discuss the theoretical basis for establishing the value of land within the meaning of the Act, nor did it do so. The evidence of the offer was relevant on the basis already 39 [1945] HCA 52; (1945) 70 CLR 459 at pp 491-492. 40 Paragraph [43]. 41 [1966] Qd R 37 at p 45. -- 18 of 32 -- 19 discussed. Perhaps it is best to regard Thorpe as one of the ―cases in which the distinction between special value and disturbance and perhaps ‗reinstatement‘ may not be clearly drawn‖.42 [53] In summary, I find no support in Thorpe v Brisbane City Council for the proposition that subsequent events can be directly taken into account in assessing market value. CMB No 1 Pty Ltd v Cairns City Council43 [54] CMB was a case about the assessment of compensation under s 3.5(1)(a) of the Local Government (Planning and Environment) Act 1990 for injurious affection of an interest in land by reason of the coming into force of a provision in a town planning scheme which had altered the zoning of the land. That section provided (so far as is immediately relevant): ―Compensation 3.5(1) Where a person— (a) has an interest in premises within a planning scheme area and the interest is injuriously affected— (i) by the coming into force of any provision contained in a planning scheme; or … the person is, subject to compliance with this section, entitled to obtain from the local government compensation in respect of the injurious affection or expenditure and may claim that compensation in accordance with this section. … (8) … the following provisions are to have effect in assessing compensation in respect of a claim made under subsection (1)(a)— (a) the amount of compensation is (subject to paragraphs (b), (c) and (d)) to be an amount equal to the difference between the market value of the interest immediately after the time of the coming into operation of the provision of the planning scheme by virtue of the operation whereof the claim for compensation arose and what would have been the market value of that interest if the provision had not come into operation; … .‖ A majority of this court (McPherson JA and Williams J, Cullinane J dissenting) held that in assessing such compensation, evidence of events occurring up to five months and 10 days after the day on which the new planning scheme came into operation could be considered. [55] In the present case the Land Appeal Court rightly did not regard that decision as a binding precedent. However it apparently found the reasons of the majority highly persuasive: 42 Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 at p 270 per Callinan J. 43 [1999] 1 Qd R 1; [1997] QCA 456. -- 19 of 32 -- 20 ―[83] It is difficult to see that the decision in CMB, drawing as it does on Thorpe, and relating a determination of compensation for injurious affection to other assessments of compensation, should not be of great weight in determining the relevance of post-resumption events to the assessment of compensation payable under the AL Act.‖44 It is therefore necessary to examine those reasons in some detail. [56] The circumstances giving rise to the case were, to say the least, unusual. CMB owned an area of over 8 ha of land in the Cairns suburb of Smithfield. On or before 3 December 1993 the land was rezoned from residential A to local shopping and in mid-January 1994 CMB agreed to sell it to a developer for $5 million. In the meantime, on 17 December 1993, a new town planning scheme came into force. Under its provisions the local shopping zone was replaced by a new zone called commercial. By an error on the part of the Council, the land was zoned in the new plan not commercial but rural. As soon as the parties to the agreement drew the Council‘s attention to the error, steps were taken to rectify it. On 21 March 1994 the Council resolved to apply to the Governor in Council to have the land rezoned to commercial and formal application was made on 27 April. The land was rezoned to commercial by Order in Council published on 27 May 1994. McPherson JA held that this outcome was to be expected, apparently at all material times. The contract proceeded pending rezoning, albeit with some minor amendments including a condition for rezoning, and settled for the agreed price of $5 million on 10 June 1994. [57] McPherson JA described the issue in the appeal in these terms: ―There is little doubt that the respondent sustained some losses in consequence of the rezoning on 17 December 1993. The delay in settling the contract of sale of the land and the reduction in the amount of the deposit from $250,000 to $50,000 were two sources of such loss, in the latter instance because it involved a reduction in the interest earned by the respondent on that deposit. The real issue on this appeal, however, concerns the use, if any, to which evidence of the subsequent rectification of the erroneous rezoning of 17 December 1993 can be put in arriving at the amount of compensation determined in accordance with s.3.5(8)(a).‖45 [58] His Honour began his consideration of the merits of the appeal by referring to the fact that, notwithstanding the terms of the section, the claim was one for injurious affection. He wrote: ―[I]t does not follow that, in applying that [the statutory] measure, precisely the same results will ensue in the case of compensation for injurious affection as for a resumption. In the latter case, the owner is permanently deprived of his interest in the land, which at the moment of taking is transformed into a statutory right to compensation measured by its value at that date. In the case of injurious affection ownership of the land is retained even if its utility, and consequently its value, is diminished by the coming into force of the town 44 [2010] QLAC 0007. 45 [1999] 1 Qd R 1 at p 8. -- 20 of 32 -- 21 planning provision or restriction. If that provision or restriction is later removed, the utility of the land is restored to its former condition. In this and other ways, a claim for compensation in respect of injurious affection of an estate or interest in land differs in various respects from a claim for compensation for resumption, and, as Sugerman J. observed in Bingham v. Cumberland County Council (1954) 20 L.G.R. (NSW) 1, 26, ‗reasoning by analogy from the law of compulsory acquisition may, therefore, not always be reliable‘.‖46 In considering a case where the statutory definition of injurious affection was so unusual, the reverse is also true. Moreover I regard that warning as significant. His Honour was in my judgment indicating that his reasoning should be confined to the particular statutory context to which it applied. [59] CMB submitted that it was not permissible to give direct effect to subsequent facts (including the making of the contract) in arriving at the compensation payable for injurious affection. It submitted that events which impinged on value after the date for determination were irrelevant in assessing value as at that date except to the extent that the parties would at that date have foreseen and taken them into account as likely to occur. McPherson JA noted that submission and referred to Spencer's case. He noted that the valuers in their evidence at first instance took the subsequent circumstances into account, and he speculated that ―the broad statements by Isaacs J may have undergone a degree of qualification in practice during the period since that decision was given in 1908‖.47 [60] His Honour then referred to the decision of the New South Wales Court of Appeal in Housing Commission of NSW v Falconer48, discussed below. That led him to cases relating to the assessment of damages for breach of contract. After distinguishing the decision of the House of Lords in Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Company49, he came to the decision in Thorpe v Brisbane City Council. That, he said, was less readily to be distinguished. He did not expressly notice that the compensation at issue in that case was not based on market value, but was compensation for reinstatement. [61] Then his Honour referred to a number of cases demonstrating that ―[t]aking account at the hearing of the fact that a contingency affecting value has in fact been fulfilled before the date as at which the compensation falls to be assessed has, since the decision in the Bwllfa case, become the practice in assessing damages in the law of torts.‖ After recognising that those cases were not concerned with the assessment of compensation at a particular date before the hearing at which the assessment takes place, his Honour wrote: ―Nevertheless, I do not consider it possible, in determining compensation for injurious affection, in effect to insulate the assessment of market value from the impact of subsequent events, while at the same time admitting the relevance of such events for other purposes of the law, such as assessing compensation for reinstatement, or damages in tort. That conclusion is supported by the fact that, in the High Court decisions referred to, Williams J. 46 Ibid at p 9. 47 Ibid at p 10. 48 [1981] 1 NSWLR 547. 49 [1903] AC 426. -- 21 of 32 -- 22 specifically treated the assessment of damages as affording a direct supporting analogy with the ascertainment of value for compensation purposes.‖50 Part of that passage was quoted by the Land Appeal Court in its reasons for judgment in the present case. [62] The striking thing about the passage is that it is specifically limited to ―determining compensation for injurious affection‖. In that context consideration of subsequent events would, in a valuation case, be unremarkable. But McPherson JA was dealing with a case where injurious affection had a special meaning, a meaning which referred to market value. Had he intended the passage to apply to the assessment of market value generally, the reference to injurious affection would have been superfluous. If that passage were the fulcrum of the judgment, the reference would be surprising. [63] In my judgment that passage does not set out the key to his Honour‘s reasons. The key finding is in the paragraphs which follow: ―In the final analysis, however, the strength of the respondent‘s argument for excluding reliance on the happening of subsequent events may be thought to depend upon a strict and literal interpretation of the word ‗immediately‘ in s.3.5(8)(a). In assessing compensation, the statutory provision requires it to be an amount equal to the difference between (1) ‗the market value of the interest immediately after the time of coming into operation‘ of the planning scheme provision, and (2) ‗what would have been the market value of that interest‘ if that provision had not come into operation. It is the use of ‗immediately‘ in this statutory context that lends force to the contention that the rezoning to Commercial on 27 May 1994 cannot be given its full effect even though the contract was in fact executed on 28 March and completed on 10 June 1994 at the full price of $5 million which had been fixed by the parties at a much earlier date. Unless we are to return to the view adopted by Vaughan Williams L.J. in the Bwllfa case ([1902] 2 K.B. 135, 141) that it is irrelevant to the assessment of compensation that a particular contingency was fulfilled before the compensation hearing took place, it does not seem to me to be possible to give to the word ‗immediately‘ in s.3.5(8)(a) the literal effect for which the respondent in this Court is forced to contend. The statements in the High Court decisions to which I have referred, which recognise that the happening of the contingency before the hearing of the claim for compensation is capable of revealing its value at an earlier date, are sufficiently authoritative not to be affected by use of that word in s.3.5(8)(a) of the Act. In determining at the hearing in August 1996 whether or not the injurious affection on 17 December 1993 in fact reduced the market value of the subject land, the learned judge was, I consider, entitled and bound as a matter of law to take account of the fact that the error in rezoning was rectified on 27 May 1994; and that, some time before that event took place, the parties had already agreed to 50 [1999] 1 Qd R 1 at p 14. -- 22 of 32 -- 23 sell, and subsequently sold and completed their contract, at the same price of $5 million that they had always had in contemplation independently of that error. As in Thorpe v. Brisbane City Council [1966] Qd.R. 37, 45, regard may be had to those facts to show that immediately after the date of the injurious affection the land had a market value of $5 million. Looking back now at what in fact happened, there never was a time at which the market value of the land was, except in the most theoretical way, diminished by the error in rezoning that occurred on 17 December 1993 when the new Town Planning scheme came into effect on that date.‖51 In short, the case turned upon the flexibility which could be given to the word ―immediately‖. [64] Williams J agreed generally with McPherson JA. Nonetheless he set out the reasoning which primarily led him to the same conclusion. He referred to the meaning given to the word compensation in the judgment of Dixon J in Nelungaloo Pty Ltd v Commonwealth52, then drew attention to the whole of s 3.5(8). Paragraph (a) is set out above. The remaining paragraphs were: ―(b) any modification of the injurious affection that may be effected in consonance with the planning scheme is to be taken into account; (c) any benefit which may accrue to any land adjacent to the land in respect of which compensation is claimed in which the claimant has an interest— (i) by reason of the coming into operation of the relevant provision or any other provision of the planning scheme; or (ii) by reason of the construction or improvement by the local government at any time after the planning scheme comes into force upon the adjacent land of any work or service in pursuance of the planning scheme; is to be taken into account; (d) if the land in respect of which compensation is claimed has, since the date upon which the planning scheme came into operation, become or ceased to be separate from other land, the amount of compensation is not to be increased by reason of its having become or ceased to be separate from other land.‖ Of those paragraphs he said: ―It is immediately obvious that paragraphs (b), (c) and (d) must refer to events subsequent to the coming into operation of the planning scheme in question. … . At least to that extent the legislation makes it clear that subsequent events may be relevant to the determination of compensation.‖53 51 Ibid at p 14. 52 [1947] HCA 58; (1948) 75 CLR 495 at p 571. 53 [1999] 1 Qd R 1 at p 17. -- 23 of 32 -- 24 [65] His Honour then identified the ―real difficulty‖ in the case as arising because of the wording of s 3.5(8)(a). He saw no need to add to what McPherson JA had written on the significance of the word ―immediately‖. [66] Finally his Honour set out at length the calculations used by the valuers and asserted that they demonstrated a basis which necessarily took subsequent events into account. He accused the respondent of saying ―that it is permissible, if not necessary, to have regard to hypothetical subsequent events in determining compensation, but one must ignore what actually occurred.‖54 He held, ―There is nothing in the legislation, in my view, which forces one to accept that; it must generally be regarded as an absurd proposition.‖55 [67] Whether the valuer‘s hypothetical calculations did in fact take subsequent events into account might be debated, but that is of no consequence. Essentially his Honour agreed with McPherson JA as to the correct interpretation of ―immediately‖, and held that on the interpretation of the particular statute there was nothing to preclude taking the making and completion of the contract and the ultimate rezoning into account and some indication in s 3.5(8) in favour of doing so. [68] How then does the reasoning in the three cases just discussed relate to what was said in Spencer’s case? Parbury Henty and Thorpe were not cases about market value. CMB was about market value but in a very different context. More importantly, because of the meaning attributed to the word ―immediately‖ in the legislation there under consideration, it was not a case about events subsequent to the date of the hypothetical transaction. None of those cases provides authority for departing from what was said in Spencer’s case in relation to assessing market value. Housing Commission of NSW v Falconer56 [69] In this court both Mio and the Council referred at some length to Housing Commission of New South Wales v Falconer. That was a case where the dispossessed owner had spent money on plans for future development which had been prepared and were on the point of implementation on the date of acquisition. At first instance compensation was assessed by the application of the reinstatement principle. The application of the principle allowed recovery of inflated building costs incurred some seven years after that date. The majority, Hope and Mahoney JJA, held that this principle had no application in the circumstances of the case. Both characterised those costs as disturbance and held that something was recoverable for disturbance as an element of value to the owner. [70] The statute under consideration in that case provided that for the purpose of ascertaining compensation: ―regard shall in every case be had not only to the value of the land to be purchased or taken, but also to the damage (if any) caused by the severing of the lands taken from other lands of the owner, or by the exercise of any statutory powers by the Constructing Authority otherwise injuriously affecting such other lands; and the same shall 54 Ibid at pp 19-20. 55 Ibid at p 20. 56 [1981] 1 NSWLR 547. -- 24 of 32 -- 25 be assessed according to what is found to have been the value of such lands estate or interest at the time … notification (was) published …‖.57 There was no explicit provision allowing compensation for disturbance. [71] Two issues which are presently relevant were discussed by the majority. They were first, how the amount of compensation was to be determined, and second whether in determining it, regard could be had to events occurring after the date of acquisition. [72] Neither member of the majority held that the dispossessed owner could recover the full amount of the cost incurred in relation to the wasted expenditure and delay in rebuilding. Hope JA held that the amount fell to be determined as part of the value of the land to the owner by the application of the principle in Pastoral Finance Association Ltd v The Minister58, that value being the amount which a prudent man in the owner's position would have been willing to give to the land sooner than fail to obtain it. The Act required value to be assessed as at the date of acquisition. He held that the amount had to be assessed by considering: ―not what a prudent purchaser in the position of the owner would pay after he had obtained a knowledge of all the circumstances that in fact occurred after the date of resumption, but what a person in his position would pay in the light of knowledge available at the time of the resumption.‖59 He held that a prudent purchaser, properly advised, would have anticipated a significant rise in building costs, but not to the extent that occurred between 1974 and 1981. Consequently that rise could not be taken into account in assessing compensation. Evidence of future events was admissible not to prove a hindsight, but to confirm a foresight. Reported decisions concerning compensation for disturbance where regard had been had directly to actual costs subsequently incurred could be explained on the basis that no challenge was made to the way in which the evidence of what had in fact happened should be used, either because of the shortness of the timespan, because the assessment was not tied to any particular date, because of different legislation or for some other reason. [73] Mahoney JA took a different approach. He referred to the cases where the full costs which an owner would incur in moving to equivalent premises, the loss of trade or production involved during the period of the move and the cost of setting up in the new premises, were taken into account in assessing value to the owner. How and in what circumstances this could be done was a question of fact. In the case at hand the loss caused by reasonable and justified delay went to the value of the land to the owner. The increased cost caused by delay was recoverable, subject only to discounting to take into account its immediate receipt and the various contingency factors affecting it. [74] His Honour held that the judge at first instance was entitled to have regard to events subsequent to the date of resumption which disclosed the relevant increase in the actual costs of the buildings erected and also the estimated cost of erecting buildings not yet erected. He addressed the Commission‘s argument that by reason of the 57 Ibid at p 552. 58 [1914] UKPC 77; [1914] AC 1083. 59 [1981] 1 NSWLR 547 at p 557. -- 25 of 32 -- 26 requirement of the Act that compensation be assessed at the date of the resumption, regard could not be had to subsequent events, thus: ―In determining the effect which may be given to events occurring subsequently to the date of resumption, it is necessary to draw certain distinctions. There are some cases in which the theory or principle on which the compensation is to be assessed prevents regard being had to subsequent events. Thus, where the compensation which is to be given is measured by the ordinary market price of the property taken, the principle on which that market price is to be determined prevents (or at least restricts) reference to subsequent events. That market price is the price acceptable to a willing but not anxious vendor and purchaser on the relevant date. Such persons are to be taken to know what an appropriately informed person would know on that date. That being the principle, it follows that such persons (and the court, as determining what they would have done) cannot be seen as knowing more. The price which such persons would accept at that date will be affected by the uncertainties as at that date, as to, for example, the future demand for land at the relevant time, future decisions of zoning authorities, and the like. Those uncertainties and the effect of them on the postulated vendor and purchaser help to determine what price will be found acceptable. In that regard, therefore, evidence of what subsequently has occurred in relation to such matters may not ordinarily be referred to. This does not operate so as necessarily to exclude evidence of subsequent sales … . The amounts here in question are of the third kind [disturbance]. Amounts of this kind are not given because they are part of the market price of the land: see the Birmingham Corporation case [1970] A.C. 874 at 896 per Lord Reid; see generally Minister for Army v. Parbury Henty & Co. Pty Ltd (1945) 70 C.L.R. 459 at 491, 492. If this be so, then the reasons which, in the case of market price compensation restrict reference to subsequent events, do not apply. As a general rule, the courts prefer facts to prophecy, particularly if the prophecy is based on artificial assumptions, and it is therefore necessary to consider whether there are any other reasons why, in quantifying the amounts here in question, the courts should not have regard to events subsequent to the resumption. In my opinion, there is nothing in the principle or theory on which such amounts are awarded which restricts that being done; and, in addition, there is authority which suggests that it should be done. I do not think that it is necessary to examine exhaustively the principle or basic theory on which amounts for disturbance and other amounts of this kind are awarded. It has long been accepted that, in assessing compensation under statutes providing for compensation for resumption, such amounts are to be awarded as part of the value of the land to the particular owner. It has generally been accepted in this State that this is so in resumptions under the Public Works Act. I do not think that the terms of s 124 operate to prevent the inclusion of such amounts in the compensation to be awarded. That section provides that, in ascertaining the compensation to be paid ‗regard -- 26 of 32 -- 27 shall ... be had ... to the value of that land ... to be taken‘ and ‗the same shall be assessed according to what is found to have been the value of the land ... at the time‘ the land was resumed. Once it be accepted that ‗value‘ in that context is not limited to market value but includes value to the owner, in the sense to which I have referred, then no difficulty arises in including in the compensation amounts of the present kind. But the argument has been that, because the relevant value to the owner is the value at the time when the land was resumed, regard cannot be had to subsequent events. Thus, it has been said that the matter of compensation may be tested by asking what a person in the position of the owner would pay rather than fail to secure the land for himself: see the cases to which I have referred, above. This question must, it has been suggested, be asked at the time of the resumption and, as the cases have pointed out, the amounts which constitute the value of the property to the owner are not simply to be added to the market value simpliciter, but are to be ‗taken into account‘ in the way to which I have referred. I do not think that these are matters inconsistent with the view that the court may take into account subsequent events in the assessment of amounts of this kind. In particular, I do not think that the court, in determining what is the amount which is to be ‗taken into account‘ in quantifying the value of the property to the owner, should not look to such subsequent events. This is illustrated by what happened in Minister for Army v. Parbury Henty & Co. Pty Ltd (1945) 70 C.L.R. 459.‖60 In short, his Honour held that in disturbance cases subsequent events may be taken into account. He did not adopt the foresight/hindsight aphorism. Summary of the cases [75] Parbury Henty and Falconer were disturbance cases. So, on its proper analysis, was Thorpe, although in the Full Court the parties converted it into a reinstatement case. They show that where no statutory provision for compensation for disturbance exists, such compensation is given as an element in the assessment of value to the owner, and in that assessment events subsequent to the date of acquisition can be taken into account. So, by extension of the reasoning, may compensation be given as such an element for severance, injurious affection, reinstatement costs and special or additional value to the owner in the absence of statutory provision. In such cases subsequent events may similarly be taken into account. CMB was not a valuation case and turned on the interpretation of the particular statute applicable in the case. [76] None of the cases discussed demonstrates that where statutory provision is specifically made for elements once encompassed in the ―unifying concept‖ of value to the owner, there is any limitation on the extent to which regard may be had to events subsequent to the date of acquisition (subject, of course, to proof of causation). Section 20 of the Acquisition of Land Act 1967 makes specific provision for injurious affection, severance and disturbance. It is unnecessary to comment at 60 Ibid at pp 576-7 (emphasis added). -- 27 of 32 -- 28 length on the position in relation to the reinstatement principle and special or additional value to the owner. There is much to be said for the view of the law espoused by Mahoney JA in Falconer. [77] None of the cases discussed demonstrates that events subsequent to the date of acquisition can be taken into account in assessing market value. Subsequent events and market value [78] Mio submitted that Kurilpa 2 could be taken into account in assessing market value under s 20 ―not to prove a hindsight, but to confirm a foresight‖ of the likely approval of a 12 storey development61. The meaning of that catchy dictum is unclear.62 So is its logic. For direct proof of market value, it were an aphorism best forgotten.63 The lack of clarity is hardly surprising. The Spencer test postulates hypothetical parties in full possession of knowledge generally available on the date of acquisition. That knowledge includes knowledge of future possibilities, but only as possibilities, and with the weight which prudent persons would ascribe to them.64 It is difficult to imagine how the fact that a possibility subsequently became a reality could be directly relevant to that knowledge. [79] I see no inconsistency between this approach and that which enables subsequent sales to be taken into account in assessing market price. Those sales are not taken into account as matters which would be present in the minds of the hypothetical parties. They are simply evidence of an event from which an inference can be drawn about the position at an earlier (but not very much earlier) time. The implicit assumption is that nothing material has changed in the meantime or that if it has, allowance can be made for the change. Consequently they are probative of the earlier position. There will probably be other cases in which inferences about the position on the date of acquisition might logically be drawn from subsequent events. For example, suppose in circumstances similar to those in this case an acquiring authority denied that a change in building heights was under consideration at the date of acquisition. Publication of a document which would have taken six months to prepare on that topic only three months after the date of acquisition might tend to prove the falsity of the denial; it might support an inference that the topic was under consideration. But it would still be necessary to prove what would have been known by the hypothetical vendor and purchaser. [80] No such inference was relevant in the present case. The President held that a prudent purchaser would have been aware that Kurilpa 1 was under review, but not aware of the content of the review. The subsequent publication of Kurilpa 2 could not affect that finding. 61 Quoting Hope JA – See paragraph [72]. 62 Out of context (which is how it is usually applied), it ―has a somewhat Delphic quality‖, as Hodgson JA observed in Minister Administering the Crown Lands Act v Illawarra Local Aboriginal Land Council [2009] NSWCA 289 at [69]. 63 See the discussion by Murray CJ under the heading ―Hindsight Bias‖ in Shire of Gingin v Coombe [2009] WASCA 92 at [43]. 64 Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413 at p 436 per McHugh J ([49]-[50]). -- 28 of 32 -- 29 Conclusion [81] The Land Court did not err in excluding Kurilpa 2 from consideration in assessing the market value of the land acquired by the Council. Level of certainty (ground 2) [82] That is sufficient to dispose of the appeal. However because the proposed second ground of appeal is related to that already discussed, I shall refer to it briefly. [83] The Land Appeal Court held that compensation should have been assessed on the basis of the case presented by Mio that ―the prudent purchaser would consider that a development with a height of 12 storeys [the Mio development] would be accepted by the Council‖65. It did so on the basis that ―had the further change in the Council‘s attitude to building heights which had become apparent in Kurilpa 2 been taken into account, it is difficult to think that the Land Court would have concluded that the prudent purchaser would assume that development on the land would be limited to an average height of 10 storeys.‖66 [84] It may be doubted that the case presented by Mio was accurately described by the Land Appeal Court. Mio‘s town planner, Mr Panaretos, did not prepare his report on the basis that the building heights in the West End Woolloongabba District Local Plan Code would be increased in light of Kurilpa 2. Instead he reasoned that the fact that Kurilpa 2 had an indicative building height of 12 storeys for land in the vicinity of the subject site was evidence that, if a ―view analysis‖ were undertaken, the site could be developed to at least 12 storeys and comply with the requirements of the existing planning laws for the preservation of views. The Land Court rejected that reasoning and the rejection was unchallenged in the Land Appeal Court. But in any case, the approach of the Land Appeal Court contained at least three errors. First, it proceeded on the basis that the prudent purchaser would consider it a certainty that a 12 storey development would be approved. Second, it presumed that the change in Council attitude reflected in Kurilpa 2 was equivalent to a change in the relevant town planning laws and policies. Third, it assumed that those laws and policies would be changed without delay. [85] The effect of the approach was to treat what would have been only a possibility in the minds of the hypothetical purchaser and vendor as a fait accompli. There was no attempt to assess the level of likelihood of the possibility of approval of the 12 storey development. Even if Kurilpa 2 had been public knowledge on the date of acquisition, it would still have been necessary to make allowance for the risks that the Council might not adopt the views of its planning officers after public comment was taken into account, that the government might not approve the Council‘s proposal and that there would be substantial delay in implementing the proposal. The evidence about the hypothetical development did not take these risks taken into account. In the absence of such evidence there was no scope for Kurilpa 2 to have any effect on the determination of market value of the land acquired. 65 [2010] QLAC 0007 at [92]. 66 Ibid at [91]. -- 29 of 32 -- 30 Orders [86] The Land Appeal Court had two separate appeals before it, that of Mio and that of Greener. Both appeals were allowed. The Council made one application for leave to appeal to this court in both matters. The application was fully argued as if it were the appeal. The respondents submitted that if the appeal were allowed the matter should be remitted to the Land Appeal Court. [87] The first reason advanced for remission was to enable redetermination of an application which Mio had made to that court for the admission of new evidence under s 56(2) of the Land Court Act 2000. Although the Council did not oppose that course, I would not make such an order for that purpose. It would be futile in light of the foregoing reasons for judgment. To explain that conclusion it is necessary to refer to the application and the circumstances in which it came to be made. [88] The Land Court hearing took place in February and March 2009. In July 2009, the Council published the final draft of a document entitled South Brisbane Riverside Renewal Strategy Executive Summary. Mio made no application to reopen the hearing in order to place the Summary in evidence. Judgment was delivered on 24 November 2009. Mio appealed to the Land Appeal Court on 5 January 2010. It filed its application to admit new evidence on 23 February 2010. The application was supported by an affidavit made by Mio's solicitor, to which the Summary was exhibited. It is unnecessary to describe its contents at length. In the words of the Land Appeal Court, ―For the subprecinct nominated in the 2009 Renewal Strategy which included the land, the maximum building height for sites with an area of less than 5000 square metres is 15 storeys; and for sites with a greater area, 30 storeys.‖67 The application was heard in May 2010 and the Land Appeal Court reserved its decision for determination with the merits of the appeal. [89] Mio wished to use the Summary in support of a submission that the President's decision68 to base the valuation on an average building height of 10 storeys instead of the 12 storeys for which Mio contended was wrong. Its submission is quoted in para [22] above. It also wished to use the Summary to demonstrate that certain evidence by the Council‘s town planner about a trend was wrong. [90] As to the former the court held: ― [93] Whether this document may be admitted into evidence on this appeal under s 56 of the LC Act depends upon whether its admission is necessary to avoid grave injustice. The effect of the document was to propose a maximum building height of 30 storeys for development on the land. [94] If the view which has been expressed above, namely, that Mio Art's contention that development potential of the land should have been assessed by reference to a height of 12 storeys rather than 10 storeys, is correct, then it is difficult to see how grave injustice would result from the exclusion of the 2009 Renewal Strategy. Accordingly, (subject to one consideration referred to 67 Ibid at [14]. 68 Paragraph [12] above. -- 30 of 32 -- 31 later in these reasons) a condition for its admission under s 56 of the LC Act has not been established.‖69 As to the latter (the ―one consideration‖ referred to) it held that the statutory requirement for admissibility (necessary to avoid grave injustice) was not satisfied. It did so on the basis that the trend to which the Council‘s town planner referred was ―not of great significance in the analysis‖70. It is true that in the following paragraph it advanced an alternative reason for ignoring the planner‘s failure to take the Summary into account, but that does not undermine its ruling. [91] Use of the Summary in support of the former submission would be inconsistent with these reasons for judgment. No injustice could now result from the refusal to admit it. The Land Appeal Court has ruled against its use in support of the latter submission. Any renewed application to admit it as new evidence would inevitably be refused. Consequently remitting the matter to the Land Appeal Court on this basis would be pointless. [92] The second reason advanced for remission was that the Land Appeal Court identified a mathematical error in the President‘s reasons for judgment71, but did not correct it because it became irrelevant when value fell to be calculated on the basis that Kurilpa 2 was taken into account. It is unnecessary to record the detail of the error. The Land Appeal Court determined that adjustment of the error would result in an increase in the gross floor area on which the hypothetical vendor and purchaser would rely from 44,000 m² to 44,250 m², but did not determine the impact which this would have on the market value of the land taken. The error arose from a misapprehension of the evidence of Mio‘s architect, Mr McNaughton. The Land Appeal Court commented, ―Given the way in which the evidence was expressed, that [misapprehension] is not particularly surprising.‖72 [93] This court will not make an order of remission lightly. A further hearing in the Land Appeal Court will impose significant costs on the parties, and the question arises whether the point which remains to be decided is worth incurring those costs. Moreover it is not easy to reassemble the identically constituted Land Appeal Court having regard to the various diverging commitments of the judge and the members who heard the case. [94] It is to be regretted that the Land Appeal Court did not determine the amount by which compensation should have been increased solely by reason of the mathematical error. One would not have thought that this would have made consideration of the appeal significantly more difficult or unduly lengthened the court‘s reasons for judgment. Unfortunately, this Court is not in a position to make an assessment of whether the amount hanging on the outstanding question is worth the cost of determining it. I have reluctantly concluded that there is no proper alternative to an order for remission. It is to be hoped that the parties can agree on the amount without the need for a further hearing. If the hearing is necessary, no doubt that the Land Appeal Court will take into account not only the circumstances of the further hearing but also the cause of the misapprehension giving rise to the need for it, in determining the costs of that hearing. 69 [2010] QLAC 0007. 70 Ibid at [118]. 71 Ibid at [111]. 72 Ibid. -- 31 of 32 -- 32 [95] The respondents succeeded on one ground only in the Land Appeal Court. They should not have succeeded on that ground. Save for the correction of the mathematical error, the appeals should have been dismissed with costs. [96] The orders which I propose are: 1. Application for leave to appeal granted, with costs to be assessed. 2. Appeal allowed with costs to be assessed. 3. Set aside the order of the Land Appeal Court allowing the appeals to that court. 4. Order that the matter be returned to the Land Appeal Court for decision in accordance with the reasons for judgment of this court, and with costs of the further hearing at the discretion of that court. 5. Order that respondents pay the Council's costs of the appeal to the Land Appeal Court to be assessed, save for the costs of the further hearing pursuant to order 4. -- 32 of 32 --