Drovandi v North Burdekin Water Board [2005] QLC 32

LAND COURT OF QUEENSLAND CITATION: Drovandi v North Burdekin Water Board [2005] QLC 32 PARTIES: Grazia Drovandi and Grazia Drovandi as personal representative (claimants) v. North Burdekin Water Board (respondent) FILE NO: A2004/0099 DIVISION: Land Court of Queensland PROCEEDING: Claim for compensation consequent upon the resumption of an easement over the land described as Easement A in Lot 6 on RP 704897 on RP 731245, with an area of 1.23 ha, in the Parish of Jarvisfield, for the purpose of the Water Resources Act 1989 viz: channel construction, under the provisions of the Acquisition of Land Act 1967 DELIVERED ON: 21 June 2005 DELIVERED AT: Brisbane HEARD AT: Townsville MEMBER: Mr JJ Trickett, President ORDERS: 1. Compensation is determined at Twenty-seven Thousand Eight Hundred and Eighty Dollars ($27,880). 2. The respondent pay interest at the rate of 5.75% per annum on the sum of Twenty-five Thousand Dollars ($25,000) from the date of resumption up to the day immediately preceding the date upon which payment of compensation is made. CATCHWORDS: Resumption - Easement resumed for construction of a channel to distribute irrigation water - Land already burdened by four easements for drainage purposes - Acquisition of Land Act 1967 -- 1 of 24 -- 2 Valuation - Method of valuation - Effect of easement - Claim for value of land and improvements - Injurious affection APPEARANCES: Mr M Drew for the claimant Mr D Honchin for the respondent SOLICITORS: Ruddy Tomlins & Baxter for the claimants Dickinson Simeoni & Robbins for the respondent [1] This is a claim for compensation by Mrs G Drovandi in her own right and as personal representative of her husband's estate ("the Drovandis") consequent upon the resumption of an easement with an area of 1.23 ha of land, for construction of an irrigation channel by the North Burdekin Water Board ("the Board"), an area which was burdened by four easements for drainage purposes. The servient tenement is owned by the Drovandis and is used for the growing of sugarcane. The Resumption [2] A Notice of Intention to Resume (by way of easement) dated 6 February 1998, was served on the Drovandis giving notice that the Board intended to take an easement over the land described as Lot 6 on Registered Plan 704897 ("Lot 6") owned by the Estate of Mr Drovandi and by Mrs Drovandi as tenants in common. Then on 26 March 1999, the easement was formally taken by proclamation published in the Government Gazette of that date. The servient tenement, Lot 6, has an area of 13.04 ha and the easement runs diagonally through it. The Claim for Compensation [3] A claim for compensation for $86,025 under s.19 of the Acquisition of Land Act 1967 dated 31 January 2002 was served by the Drovandis on the Board. That claim was referred by the Drovandis' solicitors to the Land Court by way of originating application filed in the Land Court Registry on 11 May 2004. Then on the last day of hearing, counsel for the Drovandis, Mr M Drew, sought and was granted leave to amend the claim to $237,880, claiming an additional amount of $155,000 for injurious affection. Details of the amended claim are summarised as follows: Loss of land and improvements $80,000 Injurious affection to the claimants' balance lands $155,000 Disturbance $2,880 Total claim $237,880 [4] The amount of $2,880 for disturbance had been agreed between the parties. That was for legal and valuation fees necessarily incurred in the preparation and lodgement of the claim for compensation. -- 2 of 24 -- 3 [5] Counsel for the Board, Mr D Honchin, advised me that its final position was that no compensation was payable. The Board's contention was that far from suffering a loss, the Drovandis' land was enhanced as a result of the resumption. However, he agreed that the amount of $2,880 for disturbance should be allowed. Purpose of the Resumption [6] The North Burdekin Water Board is a water board constituted at the date of resumption under the Water Resources Act 1989. It provides irrigation water to farmers in its area, almost exclusively, to cane farmers. Part of that process involves the artificial recharge of the aquifer. The easement was resumed in connection with the Klondyke/Lilliesmere Scheme, which distributes irrigation water throughout its area by a system which pumps water from Hutchings Lagoon through a pipeline to a natural lagoon, from which water gravitates through a series of natural watercourses and channels, using existing drains where possible, under the North Coast Railway line, then under the Bruce Highway to the Lilliesmere Lagoon. [7] The easement was resumed for the construction and maintenance of an irrigation channel in the base of an already constructed drain which bisected Lot 6. The area taken for the easement was already burdened by four drainage easements and a drain had been constructed on it. [8] The Proclamation taking the land states that the easement gives the Board, its authorised officers, servants and agents, the right to use the land for the construction and maintenance of a channel for the conveyance of water by the Board to Lilliesmere Lagoon, for replenishment purposes for the benefit of the land or any adjoining or neighbouring property or properties, and for the purpose of constructing, inspecting, cleansing, amending, replacing and repairing all such works, with the right to unrestricted access to any other land appurtenant to such works and to enter upon and pass over, along and under the land. The Drain [9] The drain already constructed on the easement area was described by Mr Eales, the valuer for the Drovandis, as an earth-formed drain having a depth of approximately 2 metres and with an average width of 30 metres. The drain has a length of 468 metres, of which approximately 300 metres has been excavated, with the balance being a partly excavated gully. It was a vital part of an extensive drainage system which drains water from low- lying cane farming land situated some distance to the west. [10] Mrs G Drovandi gave evidence about the construction and purpose of that drain. The Drovandis own substantial farming lands ("the Drovandi farm") on the western side of the -- 3 of 24 -- 4 Sexton Highway, which is upstream of Lot 6. The Drovandi farm and other farms in the area had suffered acute drainage problems because the Sexton Highway acted as a barrier to drainage waters running off. Worst affected were the Drovandi farm and farming land owned by the Grasso family ("the Grasso farm"). According to Mrs Drovandi, their family farm had lost in excess of 2,500 tonnes of cane after heavy rainfall events, when water lay on the property for a week or more. [11] At that time Lot 6 was part of what was known as the Quagliata farm. Mrs Drovandi explained that the owners of that farm were approached by the flood affected farmers to grant a drainage easement through Lot 6. They were reluctant to do so, but eventually after a complex and costly process, an easement was granted through Lot 6 in favour of the Drovandi, Grasso and Honeycombe farms. While other farmers ultimately benefited from the drainage scheme, they made no financial contribution. [12] In order to get the water to the Quagliata farm, a drain had to be constructed through the Grasso farm and for that purpose, the Grassos granted easements to the Drovandi farm and to the Honeycombe farm. The drain was constructed by contractors and was a large and costly undertaking. The construction work included a concrete bridge over the drain on Lot 6, to allow vehicle access across it. Three-quarters of the cost was borne by the Drovandis, and one-quarter by the Grassos, in accordance with their farm peaks. [13] The drainage scheme involved breaking up the formation of the Sexton Highway and inserting large culverts under the road, to allow the water to run into the drainage system. According to Mrs Drovandi, the drain worked very well and increased the value of the Drovandi farm, the Grasso farm and the higher-up farms. The drain required little maintenance, except for spraying up to four times per year, to prevent weeds from blocking the drain. The cost of maintenance was shared by the Drovandis and the Grassos. [14] However, in addition to the previously mentioned drainage easements in favour of the Drovandi, Grasso and Honeycombe farms, in 1990 the then owner of Lot 6 had granted a further easement in gross to the Burdekin Shire Council over the same land, also for drainage purposes. In the early 1990s, the Drovandis acquired the Quagliata farm. [15] In 1998, the Drovandis received a notice that the Board intended to take an easement over the whole of the land comprising the drainage easement area on Lot 6, for the construction and maintenance thereon of a channel for water replenishment purposes. Mrs Drovandi said that they were concerned that after all their trouble and expense to alleviate their drainage problems, the use by the Board of a channel for water replenishment purposes within the drain, may cancel out its benefits. -- 4 of 24 -- 5 [16] Mrs Drovandi objected most strongly to the proposed acquisition and otherwise sought to prevent the easement being taken. However, all this was in vain and the easement was taken in March 1999. Despite assurances from the Board's experts that their fears were groundless, the Drovandis knew what had happened in the past and feared that the drainage system would be nullified if there was irrigation water in the drain at the same time as there was a significant rainfall event. [17] The Board's proposal was the subject of considerable public controversy, with community meetings, discussions and press publicity. Various alternative schemes were discussed. Mrs Drovandi was aware of a number of proposals, whereby the Board could have directed its water through grazing lands and/or Crown lands, rather than through Lot 6. However, she believed that the Board resumed the easement to acquire the benefit of the already constructed drain at the lowest possible cost. She had requested that the Board install underground pipes through her land, as it had done on other farms, but the Board refused to do so. [18] Mrs Drovandi gave evidence of a rainfall event which occurred early in 1994, which she contended demonstrated that her fears about the drain were well founded. She said that in excess of 200 millimetres of rain fell overnight and while previously such water would have drained from the Drovandi farm in about three days, on that occasion it took approximately 4½ days for the water to drain away. She feared that if such an event occurred when the Board's channel was at full capacity, their cane would be seriously affected, as it had been prior to the drain being constructed. [19] Notwithstanding the earlier easement in favour of the Burdekin Shire Council, Mrs Drovandi believed that the resumption had significantly devalued the Drovandi farm, through the increased possibility of flooding. In addition, she claimed that the easement had prejudiced any future development of Lot 6 for a higher purpose. She reasoned that prior to the resumption the Drovandis would have had the opportunity of relocating the drain, with the cooperation of the Burdekin Shire Council, to allow for such development. Furthermore, she felt that they had lost control of the land, as they could no longer undertake any works on the easement adjacent to the Board's channel. [20] Mrs Drovandi strenuously denied that the value of Lot 6 had been enhanced by the presence of the Board's irrigation channel. She contended that it was not practical to irrigate from the channel because of the cost of installing electricity and altering the existing irrigation system. Besides, the fall of the land is towards the channel, which would mean redesigning the paddock. The costs of redevelopment, she said, would be prohibitive. -- 5 of 24 -- 6 The Channel [21] Mr GJ Laidlow, manager of the North Burdekin Water Board, gave evidence relating to the resumption and the construction of the irrigation channel. He explained that the Board is a statutory authority with responsibility as a water service provider and resource management agency for approximately 25,000 ha of irrigated area, the vast majority used for the growing of sugarcane. Part of its responsibility is for artificial recharge of the aquifer. The Board is financed by the industry, with sugar millers contributing about one-third of its revenue and growers the rest. The Board operates on a cost recovery basis, which includes refurbishment and development costs. [22] The Board is a recharge authority, having a water allocation from the Burdekin Dam, recharging the aquifer by pumping water from the Burdekin River. The pumped water flows through predominantly natural watercourses for natural recharge, but there are also artificial recharge pits. The underlying responsibility is management of the groundwater resource. [23] Mr Laidlow went on to explain that the North and South Burdekin Water Boards commissioned Sinclair Knight Merz to report on a range of issues concerning the health of the aquifer and the underlying trends in the groundwater system. That report highlighted the ingress of saline water at great depth in the Brandon pumping depression, which falls away faster than surrounding aquifers in very dry years. In 1996, after a long run of dry years, such a problem arose. One option for the Board was to put fresh water into the aquifer to replace the extraction by bores. However, in the Brandon area the aquifer is deep and the overlying clay is devoid of permeable sands. Therefore, its only option was to develop a scheme, the Klondyke/Lilliesmere Scheme, to supply water to lessen the reliance on bores, in addition to its recharge function. Through a process of discussion and negotiation, Mr Laidlow said, the scheme received the general acceptance of most people. However, Mrs Drovandi continued to have concerns. [24] According to Mr Laidlow, the process commenced in 1995/96, but the scheme was not commissioned until 2000 and actual construction work took about two years. It was, he said, "a long-winded process", trying to get agreement from those people with concerns. [25] Mr Laidlow said that while the Board does not have formal responsibility for drainage, as much of its resource management is through natural drainage arteries, it makes sense for the Board to accommodate drainage. In this scheme, he said, the Board had gone out of its way to do so. [26] According to Mr Laidlow, various options for conveying the Board's water through Lot 6 were discussed with Mrs Drovandi. Her preferred option of piping the water by -- 6 of 24 -- 7 underground pipes through Lot 6, was far too expensive. Besides, the Board was trying to encourage as many people as possible to use its surface water rather than rely on bores. [27] In designing the scheme, Mr Laidlow said that the Board could not take too much notice of current ownership of land, or whether individual owners wanted to use surface water. The Board had to take an overall approach and look at the long term. [28] There were two options for taking water through Lot 6, either piping water along the railway line, as Mrs Drovandi had requested, or dropping water into the drainage easement. The Board adopted the latter, as it was the most cost effective option. However, in doing so, he emphasised that the Board had to ensure that there would not be any negative impacts on the drainage capabilities of the drain, so it commissioned a design report by McIntyre & Associates. [29] The 1997 McIntyre and Associates design report described how the scheme was designed so that there would be no negative impacts of increased flooding by the implementation of the irrigation scheme. [30] Mr Laidlow recognised that there would be problems in introducing irrigation water into a drainage system and the resulting design successfully addressed those issues. The Board also had to satisfy the Burdekin Shire Council that there would not be a problem. [31] Mr Laidlow explained that in constructing the channel, the Board reprofiled the drain for better maintenance, laser levelling the base of the drain and taking out the irregularities and undulations where water used to pond and grow weeds. The irrigation channel was constructed on the right-hand bank of the drain, about 600 millimetres below the level of the drain. [32] Mr Laidlow appreciated the importance of the drain to the Drovandis and could understand their concerns about any interference with the drainage easement and the possible effect on flooding. However, he thought that a lot of the public concern about the potential for flooding as a result of the works was based on misinformation. The Board's experts had attended public meetings and held discussions which addressed those misconceptions. Eventually, out of eight or nine farmers directly affected by the scheme, only Mrs Drovandi remained unconvinced. [33] One of Mrs Drovandi's concerns was that access to the easement to maintain the drain would be denied. However, according to Mr Laidlow, the Board had cleaned the drain on several occasions at no cost to the Drovandis. If there was a problem, such as a blockage in the channel, the Board would allow the Drovandis to overcome it, or if advised of the problem, the Board would have it dealt with quickly and efficiently. However, he conceded that the Drovandis would not have as-of-right entry onto the easement, but he -- 7 of 24 -- 8 contended that they had effectively lost control when the Council was granted the drainage easement in 1990. [34] Further evidence regarding the channel was given by Mr BP Wright, manager of the Environment Group North Queensland for Maunsell Australia Pty Ltd. Mr Wright had been involved with the 1997 McIntyre & Associates design report for the Klondyke/Lilliesmere Scheme. He had also been responsible for the Maunsell "Irrigation Scheme Impacts South Brandon Drain" Report of August 2004. The channel in the easement through Lot 6 is at the western end of the South Brandon Drain. [35] The 2004 Maunsell Report was commissioned by the Board to summarise the design philosophies with respect to drainage associated with the construction of the Klondyke/Lilliesmere Scheme and, in particular, to comment on any impacts the scheme would have on the South Brandon Drain at flood capacity. The adopted design philosophy of the scheme was stated thus:  limit inter-catchment flood flow;  where existing drainage is used for combined irrigation and drainage, the capacity of the augmented drain will have capacity for the irrigation flow, plus the capacity of the existing drainage;  increased capacity of the drainage system where possible;  minimise backwater effects of the irrigation flows. [36] The report explains that the scheme traverses two catchments, drainage channels in each of which have been used in part to convey irrigation water. The irrigation channel extends through the catchment divide on the section running parallel with the North Coast railway line. If left unchecked the channel could convey storm flows from one catchment to the other. However, two automated control gates have been installed, so that when water reaches threshold levels in the channel, the gates close and the pumping station shuts down. [37] The channels are designed to ensure the flood capacity of the drainage system is not compromised. Where possible, a dedicated irrigation channel is constructed within the drain profile and below the drain bed level, without compromising the storm capacity of the drain. When there are no irrigation flows coincident with a flood event, the overall hydraulic capacity of the drainage channel to take flood flows is increased. [38] The report concludes that there is a net positive benefit to drainage improvement in the drain. However, Mr Wright concedes that if there is a peak of water coming in from the channel and it coincides with a peak coming down the drain, there will he an increase in potential peak flow, but that concentration will be very short. However, no computer modelling has been done on that aspect. -- 8 of 24 -- 9 [39] According to Mr Wright, the construction of the irrigation channel is no impediment to the functioning of the drain. He was aware of the allegation of flooding on the Drovandi land to the west of the Sexton Highway, but denied that it could have been caused by the irrigation channel. He explained that the hydraulic capacity of the drain was improved where the drain coincided with the channel. [40] However, the hydraulic assessment of the condition of drainage schemes upstream of where the channel enters the drain has not been examined. The Valuation Evidence for the Drovandis [41] The valuer for the Drovandis, Mr GW Eales, adopted a somewhat novel approach to the assessment of compensation. He was well aware that prior to the resumption, the easement on Lot 6 was used for drainage purposes for the benefit of lands owned by the Drovandis and of two neighbouring properties. He was also aware that what he called a "consent easement" was granted to the Burdekin Shire Council in 1990, also for drainage purposes. [42] Mr Eales conceded that from that time, the owners of Lot 6 and the others with drainage easements had no right to alter the drain, to use the easement for an inconsistent purpose, or even to drive a vehicle on or over the easement, without the consent of the Council. However, he thought that as long as those activities were directed to the improvement of drainage, Council consent would have been readily forthcoming. [43] However, following the resumption by the Board, Mr Eales reasoned that the easement was used for a different purpose. Although drainage would continue, the Board's main purpose was for distributing irrigation water and while the Drovandis' legal rights under the easement may not have changed, Mr Eales thought that their concerns were justified. [44] Mr Eales asserted that the resumption allowed the Board to use the land and improvements for a purpose which conferred no benefit on the Drovandis' land. However, the Board benefited as it did not have to construct the drain. [45] Mr Eales denied that the benefit of the drain was lost to the Drovandis' aggregation when the Burdekin Shire Council acquired the easement in gross for drainage purposes in 1990. As far as the Drovandis were concerned, the drain continued to be used for the intended purpose. However, the situation was very different following the resumption by the Board. Mr Eales was of the view that the grantor's interest, now vested in the Drovandis, was lost. They had largely lost the use of the drain for the purpose for which it was originally intended, ie, for drainage. They had also lost part of their improvement on the easement land. They were excluded from it. It is now being used by the Board for another purpose. -- 9 of 24 -- 10 [46] Mr Eales' reasoning proceeded as follows: although the drain is still used for drainage purposes, exclusive use as such is denied to the Drovandis for nine months of the year. Therefore, the loss suffered by them is the proportion of the value of the easement land and of the drain for the period of the year which the easement is used for another purpose. [47] In accordance with that reasoning, Mr Eales calculated compensation as follows: Loss of land 1.23 ha @ $14,000 per ha $17,220 Loss of improvements Drain 18,000 m³ @ $5 per m³ $90,000 Total Loss $107,220 Owners' loss 75% of total loss $80,415 Adopt $80,000 [48] Mr Eales stated that sales of assigned cane land at the date of resumption, showed $14,000 per ha. In adopting that value, Mr Eales reasoned that if the land was not used for the drain, it could have been used for growing cane. [49] Initially, Mr Eales made no assessment of injurious affection, stating "the effect on drainage of the subject property of the total aggregation is considered to be minimal as set out in the McIntyre & Associates report." The passage in that report referred to by Mr Eales stated: "Cross-channel drainage structures have been provided to allow local drainage to pass directly into and then out of the channel relatively unimpeded. The level of the overflow has been set to correspond with the operational level of the irrigation flow so that the majority of the local run-off inflow will exit via the overflow." (emphasis added) [50] Mr Eales expressed uneasiness about the emphasised passage in the McIntyre Report, which he interpreted to mean that not all of the inflow from drainage will exit via the overflow within the channel. That, he thought, was far from saying that the channel improves the drainage. In his view, a prudent purchaser would conclude that the Board had acquired an interest in the easement and undertaken works which may be a detriment to the Drovandis' aggregation. The Valuation Evidence for the Board [51] That evidence was given by valuer, Mr Peter Honnef, who concluded that no compensation was payable. In fact, he was of the opinion that the construction of the channel had actually enhanced the value of Lot 6. He took the view that the new irrigation channel, had improved the drain's capacity. In addition, channel irrigation water was now delivered to Lot 6. He was of the opinion that the value of Lot 6 was enhanced and consequently no compensation was payable. -- 10 of 24 -- 11 [52] Mr Honnef reasoned that Lot 6 was severed by multiple easements prior to the resumption; the Board's easement follows the alignment of the existing easement; therefore, there was no additional effect or loss. He conceded that both as the owners of the servient tenement, Lot 6, and having largely contributed to the funding of the drain, the Drovandis have a vested interest in the drainage works. However, when the earlier easements had been granted in 1977 and the easement to the Burdekin Shire Council in 1990, the then owner of Lot 6 had lost any right to claim compensation in respect of that easement area. He believed that the consideration of only 10 cents for the granting of the Council easement in 1990, supported his conclusion that the resumption of any subsequent easement over that area would attract no compensation. [53] Mr Honnef expressed the view that in addition to the other enhancing features, the Board now maintains the drain and clears any water flow obstructions. He had been told by Mr Laidlow that previously the drain had been overgrown and untidy. [54] In considering the various heads of compensation, Mr Honnef reasoned that no land was actually taken, as the irrigation channel was constructed in the drain in the area already subject to easements. The use of the land for farming and growing sugarcane had been lost with the original grant of the drainage easements. He also reasoned that there was no severance, as Lot 6 was already severed. The Drovandis had continued their farming operations undisturbed by the actions of the Board. [55] In addition, since the taking and use of the easement by the Board had no adverse effect on Lot 6, in Mr Honnef's view, there was no injurious affection. In fact, he was of the opinion that the Drovandis' land adjoining the resumed easement had been enhanced by the provision of channel irrigation water. He expressed the view that if two identical farms were offered for sale, one with access to an irrigation channel and the other watered by bores, a prudent purchaser would pay a higher price for the farm with access to the channel. He stated: "We have on file anecdotal evidence supporting this notion where purchasers pay premiums for farms with channel water access as compared to farms that derive their irrigation water from insufficient or poor quality underground bores." (emphasis added) [56] However, it emerged in cross-examination that this "anecdotal evidence" was based on telephone conversations which he had with two farmers just before he gave his evidence. One of the farmers was from the Burdekin area and one from the Herbert River district, where there was no channel water. The Burdekin farmer had a farm in the Mona Park area and also a farm in the Delta. However, Mr Honnef was not sure if the Delta farm was channel supplied. -- 11 of 24 -- 12 [57] There was no suggestion that there was a problem with the Drovandi bores, but Mr Honnef's point seemed to be that the irrigation channel provided insurance in case there ever was a problem. [58] In calculating whether or not compensation was payable, Mr Honnef adopted the traditional "before and after" method of assessment, but confined to Lot 6 only. His before resumption valuation was made by direct comparison with sales of irrigated sugarcane farms, from which he concluded that the irrigable/arable land should be valued at $15,000 per ha, while for the balance land, comprising headlands and drainage, he adopted $2,500 per ha. His "before" valuation was calculated as follows: 11.5 ha of irrigable/arable land, including stools @ $15,000 per ha $172,500 1.544 ha of headlands and drain @ $2,500 per ha $3,860 13.044 ha $176,360 Adopt $176,000 [59] Mr Honnef reasoned that after the resumption and following the construction of the irrigation channel, a prudent purchaser would be prepared to pay a higher price for the arable land, because access to that water provides a greater degree of water security. He adopted $15,500 per ha. However, he felt that there was no need to adjust the valuation of the balance land. [60] His "after" valuation was calculated as follows: 11.5 ha irrigable/arable land with stools @ $15,500 per ha $178,250 1.544 ha of headlands and drain @ $2,500 per ha $3,860 13.044 ha $182,110 Adopt $182,000 [61] The difference between the "before" and "after" valuations led him to the conclusion that the resumption and the construction of the irrigation channel had resulted in a slight enhancement in value, therefore no compensation was payable. [62] Mr Eales disagreed with Mr Honnef's conclusion. In his opinion, there was no enhancement, because additional irrigation water was not required. Water was supplied from bores within the aggregation. The nature of the land was such that water would have to be pumped away from the channel to flood irrigate back towards it. There was no suggestion of any problem with the Drovandis' bores and Mr Eales could not understand how the property was enhanced. In his view, there would be a significant cost to the Drovandis to provide electricity to the channel, reorganise their irrigation system, set up the infrastructure and pay for the channel water. -- 12 of 24 -- 13 [63] Mr Eales regarded the nominal consideration paid by the Burdekin Shire Council when it acquired the easement in 1990, as irrelevant. He understood that the Council became involved with the drain to protect its assets under the Sexton Highway. In any case, the Council easement was not for an incompatible purpose. [64] In Mr Eales' opinion , Mr Honnef's "before" and "after" approach should not have been confined to Lot 6, but should have been applied to the Drovandis' aggregation as a whole. The drain had been constructed to remove the water from the Drovandi farm to the west of the Sexton Highway. It was pointless, in his view, to consider the effect on Lot 6 only, which was not subject to flooding. Any "before" and "after" valuations must consider the extra risk to the whole aggregation of the irrigation channel within the drainage easement and the possibility of the choking-up of the channel, as such risk would be perceived by a prudent purchaser of that aggregation. Injurious Affection [65] Initially, neither valuer had made any assessment of possible injurious affection to the Drovandis' other lands. Mr Eales thought they may well have been injuriously affected, but expert advice would be required to prove it. This had not been obtained because of the cost. Therefore, injurious affection had not been an element in his compensation assessment. [66] On the other hand, Mr Honnef's assessment was confined to Lot 6. [67] However, it was clear that Mrs Drovandi's evidence was related primarily to her concern that the Drovandis' other lands to the west of the Sexton Highway were diminished in value. Therefore, at the suggestion of the Court, both valuers made further assessments, addressing the aspect of injurious affection to those other lands. [68] Mr Eales' assessment was made in respect of the Drovandis' aggregation of cane lands, which, at the date of resumption, had an area of 167.94 ha, irrigated by means of bores. While 164.2 ha were assigned to the Pioneer Mill, the farm plan shows that only 154.61 ha were cultivated for the growing of sugarcane. [69] According to Mr Eales, the land to the west of the Sexton Highway is extensively drained by a series of open drains into a single drain under the highway. That drain proceeds to the north-east through what I assume is the Grasso farm, then to the north-west, through the easement on Lot 6, then under the railway line and later under the Bruce Highway. [70] In Mr Eales' opinion, since the Drovandis had lost control over and the unfettered use of the easement for drainage purposes, a prudent purchaser of the aggregation would be concerned as to whether the drain would be as effective with the Board's channel in it, or if that dual use may cause flooding and loss of cane during unseasonal or sudden rainfall -- 13 of 24 -- 14 events. In his view, the western part of the aggregation had been injuriously affected. His difficulty was how to assess it. [71] Mr Eales' assessment of compensation was based on the valuation of the aggregation before and after the resumption on an assigned irrigable/arable basis, excluding the value of structural improvements: Valuation Before Resumption: 154.6 ha of cane land @ $14,000 per ha $2,164,400 13.34 ha of balance land @ $5,000 per ha $66,700 Total $2,231,100 Adopt $2,230,000 Valuation After Resumption: 49.6 ha of cane land @ $14,000 per ha $694,400 105 ha of cane land @ $12,500 per ha $1,312,500 13.34 ha of balance land @ $5,000 per ha $66,700 Total $2,073,600 Adopt $2,075,000 [72] The difference between the valuation before resumption and the valuation after resumption amounted to $155,000, which Mr Eales attributed to injurious affection. [73] In making those calculations, Mr Eales had concluded that after the resumption, 105 ha of cane land had been reduced in value by 10%. He arrived at that conclusion by having regard to two sales in Hodel Road in the Horseshoe Lagoon area, one of which had drainage and ponding problems while the other did not. Those sales showed a difference of over 30% in value per ha. A purchaser had paid a lower price per ha for the land with known drainage problems. [74] However, for the Drovandi aggregation the problem was not known, but perceived. The Drovandi farm takes water from other farms, not just from the aggregation itself. Mr Eales thought that if the drain was obstructed upstream, it might become a flood basin before the water dissipated, affecting the production of cane. Mr Eales concluded that after the resumption, a prospective purchaser would pay less for the 105 ha of lower lying land to the west of the Sexton Highway, because of that perceived or possible greater risk. [75] Mr Honnef's assessment of the impact of the resumption on the aggregation was quite different. In his view, any impact would be confined to Lot 6. Therefore he had not inspected the balance of the Drovandis' aggregation. He undertook the injurious affection exercise on the assumption that the value of irrigable/arable land would be the same as that on Lot 6. [76] After considering the aggregation on that basis, Mr Honnef came to the conclusion that the lands on the west of the Sexton Highway were not affected by the resumption and that their values before and after the resumption were the same. However, on the east of the -- 14 of 24 -- 15 highway, Lot 2 on RP 808406 adjoins Lot 6 to the west and parts of both parcels are used in conjunction to form a single paddock. Mr Honnef made a combined valuation as follows: Valuation Before Resumption: 42.5 ha irrigable/arable plus stools @ $15,000 per ha $637,500 2.48 ha headlands and drain @ $2,500 per ha $6,198 44.98 ha Total $643,698 Adopt $644,000 Valuation After Resumption: 42.5 ha irrigable/arable plus stools @ $15,500 per ha $658,750 2.48 ha headlands and drain @ $2,500 per ha $6,198 44.98 ha Total $664,948 Adopt $665,000 [77] The difference between the "before" and "after" valuations indicated that the combined lots had been enhanced by $21,000 after the resumption, so no compensation was payable. [78] As for the possibility of the channel increasing the risk of flooding, Mr Honnef clearly thought that the risk was slight. In any case, he said, the best farming land in the area is associated with the riverbanks and the delta, which is all subject to flooding. In his view, flooding is a risk that farmers are prepared to take and a prudent purchaser would attribute more weight to the fact that there is now an additional water supply available. The Case for the Drovandis [79] The Drovandis claim compensation on two bases: (a), the value of the resumed land, including the value of the improvement (the drain); and (b), injurious affection to their balance lands caused by the perception that the taking of the easement for the channel may result in flooding problems, thereby diminishing the value of the lands to the west of the Sexton Highway. [80] With respect to claim (a), the Drovandis contend that the Board made the decision to route the channel through the easement on Lot 6 because it benefited the Board to use the existing drainage structure to pass the water under the railway line culverts on the northern boundary of Lot 6. There is evidence that the Board's decision was driven by economic considerations. [81] The Drovandis argue that notwithstanding the other easements, in particular the easement in gross granted to the Burdekin Shire Council by their predecessors-in-title, prior to the resumption they had the right to enter onto the easement for any purpose consistent with its use for drainage purposes. However, with the resumption and the powers given to the Board, they have lost control of the drainage easement; they (and the Grassos) have -- 15 of 24 -- 16 ceased to be responsible for the cleanliness and weed control of the drain, which has not been carried out to their satisfaction, as demonstrated by photographs tendered by Mrs Drovandi. [82] The drain had been constructed by them with considerable difficulty and expense. They contend that they have lost not only an interest in land, but also the improvement on that land and must be compensated for that loss. They argue that the principles in Sri Raja Vyricherla Narayana Gajapatiraju Bahadur Garu v. Revenue Divisional Officer, Vizagapatam [1939] 2 All ER 317, and in Collins v Livingstone Shire Council (1972) 127 CLR 477, apply. They also contend that their right to compensation was not lost when the easement was granted to the Burdekin Shire Council in 1990: Rogerson v The Minister (1968) 16 LGRA 400. [83] In respect of claim (b), the Drovandis rely on Mrs Drovandi's evidence of floodwaters on their lands to the west of the Sexton Highway ponding for longer since the resumption and the construction of the channel. They also refer to the evidence that before the resumption there had been considerable public controversy about the possibility of flooding in the area which may result from the construction of the channel in the drain. In other words, there was a public perception that flooding may result. Despite the assurances of the engineer, Mr Wright, that the construction of the channel in the drain will have no effect on the capacity of the drain, or cause any additional flooding on their lands, they contend that there was a degree of uncertainty remaining. For example, no hydraulic investigation had been carried out on the lands to the west of the drain on Lot 6; there was also the potential for floodwater to flow into the easement via the channel faster than previously, notwithstanding the control gates in the channel. There was the potential for more water to arrive at the easement more quickly than previously. [84] Notwithstanding the Board's attempts to allay the concerns of the public, the people most directly affected, the Drovandis, were not convinced. It was their submission that a prudent purchaser would be aware of all this and would pay less for their lands. The Case for the Respondent Board [85] The Board contended as follows: the resumption takes a further easement over land already burdened by four easements. The rights and obligations set out in the proclamation taking the easement are for the construction and maintenance of an irrigation channel. However, nothing stops or restricts the access which the Drovandis previously had to Easement A. -- 16 of 24 -- 17 [86] Of the four easements over the area, the most significant was that granted to the Burdekin Shire Council in May 1990; extensive restrictions on the grantors' (now the Drovandis') right to access the easement area are contained in the covenants between the Burdekin Shire Council and the grantor. Therefore, it was argued, the resumption by the Board was of a "limited easement"; the loss of proprietary rights by the owners of Lot 6 had occurred as a result of the granting of the 1990 easement. [87] In any case, the Board argued, with the construction of the channel, there is now irrigation water available to the Drovandis. Far from being diminished in value by the resumption of the easement, the value of Lot 6 is enhanced by the presence of that water. [88] With regard to the Drovandis' injurious affection claim, the Board submits that Mrs Drovandi's evidence of floodwaters on the lands west of the highway taking longer to drain, should be rejected; it is only speculation that it had anything to do with the channel works on Lot 6; there is no evidence of a causal connection between those works and the flooding. The Issues [89] There was no suggestion on behalf of the Board that the Drovandis did not have a valid claim for compensation. It was accepted that they had an estate or interest in the land taken for the easement, notwithstanding the other easements over that land. Under the provisions of s.12(5) of the Acquisition of Land Act 1967, on and from the date of resumption, 26 March 1999, the easement was vested in the Board and the estate and interest of every person entitled to the whole or any part of the land was converted into a right to claim compensation under the Act and every person whose estate and interest in the land was injuriously affected by the easement has a right to claim compensation under the Act. [90] It is clear that the principles to be applied in the compulsory taking of an easement are no different from those applying when an estate in fee-simple is taken: Joyce v Northern Electric Authority of Queensland (1974) 1 QLCR 171. The test to be applied is the attitude of a hypothetical prudent purchaser as defined by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418, and the extent to which in the opinion of such a person, the claimants have suffered diminution in the value of the property resulting from the construction of the irrigation channel and the restrictions imposed on the claimant's use of the land. [91] The issues in this case relate both to the value of the land taken and any injurious affection to the Drovandis' other lands. -- 17 of 24 -- 18 [92] However, before dealing with those issues, it is appropriate to consider the applicable legislation. In the case of compulsory acquisition of land, compensation is determined under the provisions of the Acquisition of Land Act 1967. Section 20 of that 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 adjoining the land taken or severed therefrom by the carrying out of the works or purpose for which the land is taken. (4) But in no case shall subsection (3) operate so as to require any payment to be made by the claimant in consideration of such enhancement of value." [93] The Drovandis are therefore entitled not only to the value of their estate or interest in the land taken for the easement, but also to any diminution in value of their other land caused by severance and/or injurious affection, set off by any enhancement in the value of their land adjoining the land taken or severed therefrom, by the carrying out of the works or purpose for which the land was taken. [94] Both valuers agreed that the "before and after" method is appropriate for the assessment of compensation and both have applied it in this case. However, they disagree as to the extent to which it should be applied. [95] The "before and after" method was considered by the Land Appeal Court in Brisbane City Council v Lansbury (1977) 4 QLCR 502. After referring to a number of authorities and texts on the method, the Land Appeal Court concluded at 509: "We are satisfied that the 'before and after' method is not contrary to statute and is an appropriate one to apply in determining compensation where cases involve severance, injurious affection and/or enhancement." [96] Then after considering details of the case before it, the Land Appeal Court continued at 509: "The difference between the first mentioned valuation and the total of the last mentioned values must represent the total loss suffered by the claimants in that such difference must include the value of the land taken and injurious affection to the residues reduced by any enhancing factor that may arise as a consequence of the resumption and which is automatically reflected in the values of the residue areas. In our view this approach is a lucid and commonsense one." -- 18 of 24 -- 19 [97] Lansbury's case and the earlier authorities demonstrate the advantage of the "before and after" method of assessing compensation, as it includes the value of the land taken, severance and injurious affection to other lands of the claimant, offset by any enhancement to the claimant's adjoining land. However, the assessment of compensation by that method is not always appropriate. In some circumstances, it is more appropriate to have regard to each of the heads of compensation in s.20 of the Act and make a separate assessment in respect of each of them. It seems to me that the present matter is such a case. [98] For the reasons explained earlier, Mr Eales initially did not undertake a "before and after" assessment, although he thought that there may well have been injurious affection to the Drovandis' lands to the west of the Sexton Highway. His initial valuation was therefore confined to the effect of the resumption on Lot 6 itself. He made a piecemeal or summation valuation of $80,000 as explained earlier, comprising loss of land and loss of improvements. Later Mr Eales made a further assessment of compensation of $155,000, adopting the traditional "before and after" approach. [99] Mr Honnef adopted the "before and after" approach in making his assessment of whether or not compensation was payable. However, he confined that exercise to Lot 6 itself, which he considered to be enhanced in the "after" situation, because of the availability of irrigation channel water. He concluded that no compensation was payable. [100] When the issue arose as to whether there was injurious affection to the Drovandis' other land, Mr Honnef undertook further exercises and concluded that there was no effect whatsoever on the value of the land to the west of the Sexton Highway. As for the land to the east of that road, he concluded that there was no injurious affection, but the value of both parcels of land was enhanced because of access to the Board's irrigation channel. The Claim for Loss of Land and Improvements [101] The circumstances of the resumption are unusual. Both valuers found the assessment of compensation in this case to be difficult. The easement was taken over Easement A in Lot 6, which was already subject to four other easements. Therefore, there were several estates or interests in the land, including that of the Drovandis, both as the owners of the servient tenement, Lot 6, and as the owners of one of the dominant tenements to the west of the Sexton Highway, in respect of which one of the 1977 easements was granted. [102] In the assessment of compensation, both aspects of the Drovandis' ownership have to be considered in terms of s.20 of the Act. As far as Lot 6 is concerned, at the date of resumption, the owners' use of that area of land was already significantly restricted. With the resumption, there is another (fifth) easement burdening the land and a further set of -- 19 of 24 -- 20 restrictions was imposed. Setting aside for the moment the question of possible enhancement to Lot 6 by the availability of channel water, none of the easements benefits Lot 6. [103] It is difficult to say that there has been any loss of land by the Drovandis in the traditional sense. What has been lost, if anything, is the right to use their remaining interest in that land in the manner previously available. In other words, they have lost some rights. [104] The Drovandis argue that they are entitled to loss of 75% of the value of the land over which the easement has been granted and the improvement (the drain) thereon. However, that cannot be correct, as that land had been encumbered by a number of easements since 1977, culminating in the easement in gross granted to the Burdekin Shire Council in 1990. The Drovandis therefore had only limited rights in respect of that area and there had been a substantial loss in its value before the resumption. [105] They also contend that they had lost the use of the improvement (the drain), for nine months of the year, and that they are entitled to three-quarters of its value. Although it was conceded that the drain was still used as a drain, it was contended that the Drovandis had effectively lost the right to do with it as they saw fit; they had lost control of the drain. [106] However, the respondent contends, correctly in my view, that any control that the Drovandis may have had in that regard was largely lost when their predecessors in title granted the easement to the Burdekin Shire Council. That easement included a covenant between the grantor and grantee which set out the rights of the grantee to undertake certain works on the easement with respect to the drainage of the land. It also included the following: "3. The grantor shall not without the consent of the grantee raise the level of the surface of the subject easement by any further filling-in of the subject easement or the adjacent land above the existing surface level as at the date of the execution hereof by the grantor. 4. The grantor shall have no right to use or be upon the subject easement except for such purpose or in such manner as is consistent with the granting hereof and without limiting the generality of the foregoing shall have no right to place or erect any structure or object upon or to bring or drive any vehicle upon or over the subject easement without the prior written consent of the grantee. 5. The grantor will refrain from any action likely to jeopardise or prejudicially effect the safety or reliable working of any pipe drain equipment or fitting installed in under or upon the subject easement and will at all times after notice by the grantee and in an emergency without notice refrain from using the subject easement in a manner likely to hinder access thereto by the grantee." The owner of Lot 6 retained little control over the easement area after the granting of that easement. -- 20 of 24 -- 21 [107] Similarly, additional restrictions have been imposed on the easement held by the Drovandis as the owners of the dominant tenement in respect of which the 1977 easement was granted. In my view, similar principles apply to the Drovandis' interest in the easement granted to benefit their land to the west of the Sexton Highway. Mr Eales contends that the easement resumed by the Board is for a different purpose, the supply of irrigation water, which could be incompatible with its use as a drain. However, that does not affect the value of Lot 6, which is not subject to flooding, although it is relevant to any injurious affection to the Drovandis' other lands. [108] I have come to the conclusion that the taking of the easement over the area where there are already four easements, results in the loss to the owners of Lot 6 of only limited additional rights, as it was already significantly burdened. It is simply a further blot on its title. There is no evidence of how such a blot on the title would impact upon the value of Lot 6. [109] In this regard, the judgment of Hardie J, of the Land and Valuation Court of New South Wales, in Rogerson v The Minister (1968) 16 LGRA 400, is of some assistance. In that case an easement was resumed over a strip of land through which a sewer main had already been constructed and which was subject to statutory restrictions, similar to an easement. His Honour found that the existence of those statutory restrictions and of the resumed easement had a depreciatory effect on value. However, he did not accept that the whole of that depreciation should be ascribed to the existence of those statutory restrictions. He found that a prudent purchaser of the property would discount the value to some extent by reason of the very existence of the easement. [110] While admitting that the additional depreciation in value referable to the easement was a matter of considerable difficulty, his Honour found that the diminution in value caused by both of these factors should be apportioned between them. Significantly, he found that the greater impact was because of those earlier statutory restrictions. [111] Having regard to that reasoning in the circumstances of the present case, I have come to the conclusion that the resumption of the easement by the Board would have only a minor additional impact. Therefore, I propose to award a nominal figure of $5,000 for the further erosion of the Drovandis' interest in that land. The Claim for Injurious Affection [112] The Drovandis are also entitled to have that aspect of their claim for compensation considered. It is clear from her evidence that Mrs Drovandi strenuously opposed what she saw as interference with part of the drain which was so vital to alleviate the previously severe ponding of water on the Drovandi farm. Her major concern was that if -- 21 of 24 -- 22 the channel was carrying irrigation water at the time of a significant rainfall event, there could be an adverse impact on the drain's ability to carry away the floodwaters. She gave evidence of flooding which occurred in the early months of 2004 following overnight rainfall of about 200 millimetres. The resulting floodwaters on the Drovandi farm took 4½ days to drain away, whereas previously such water drained away in about three days. She blamed that on the Board's irrigation channel. [113] However, even if Mrs Drovandi's evidence about the flooding is accepted in its entirety, there is simply no evidence that it was caused by the channel on Lot 6. There could be several reasons why the water did not drain as quickly from the land. For instance, there is no evidence about the condition of the culverts under the Sexton Highway at that time, or as to the state of the drain in other parts of the system. [114] In the absence of that causal connection, I cannot accept that the Board's channel was responsible for the slower draining of the water. [115] However, there was evidence from a number of witnesses about the controversy concerning the proposed construction of the channel. A number of landowners and the Brandon community were concerned about the possible impact on flooding. Through public meetings and explanations by the Board's experts, it seems that the opposition to the works was largely overcome. Mrs Drovandi remained the sole objector. However, there is also evidence that of the eight or nine landowners who were originally concerned about the channel, none of them was as potentially severely affected as the Drovandis. There is evidence from Mr Eales that the water from other farms drains through the Drovandi property. This was illustrated by the maps attached to his second report, Exhibit 20, showing the system of drains. He said that the Drovandis are concerned that their farm may become a "flood basin" if there is any obstruction to the drain. [116] I have come to the conclusion that a prudent purchaser in the Spencer sense, would be well aware of the controversy and the concern that had been expressed about the possibility of increased flooding. Despite the assurances of the experts, particularly Mr Wright, no hydraulic assessment had been made of the area to the west of Lot 6. While Mr Wright was confident that the hydraulic capacity of the drain had not been compromised by the existence of the irrigation channel below it, the concern remains real for Mrs Drovandi. [117] In my view, in those circumstances, a prudent purchaser would prefer to buy a farm without that possibility, remote thought it may be. That could result in the Drovandi farm being more difficult to sell than if there had been no resumption and no irrigation channel constructed. -- 22 of 24 -- 23 [118] However, I do not think the matter can be approached as Mr Eales has approached it. He relied on the difference in sale price between a poorly drained farm and one which was well drained. That may well be evidence of the difference in value in circumstances where the drainage characteristics were known. Although he has only applied a proportion of that difference, I do not consider it to be appropriate to make such a comparison with the present circumstances. [119] While it is difficult to translate such concerns of a prudent purchaser into monetary terms, in my view, there is some injurious affection, although not to the extent assessed by Mr Eales. In the circumstances, I propose to make a nominal determination of compensation. Without any evidence to guide me, I think that a sum of $20,000 would be appropriate for injurious affection to the Drovandis' other lands. [120] Mr Honnef contends that Lot 6 is enhanced in value following the resumption, by the availability of channel irrigation water. That contention depends entirely on his opinion that a prudent purchaser would pay more because of that water. However, he could produce no reliable evidence to that effect. Nor was there any evidence that there was a problem with the Drovandis' present irrigation system. Indeed, there was some evidence that the cost of providing the infrastructure to utilise the channel water and the cost of that water would make the use of it unviable. In those circumstances, I do not accept Mr Honnef's reasoning. Therefore, the Board has not been able to prove that Lot 6 has been enhanced in value. Determination of Compensation [121] In accordance with my findings, I am of the view that compensation should be determined at $5,000 for the additional blot on the title of Lot 6 and at $20,000 for the injurious affection to the Drovandis' other lands. The parties agree on an amount of $2,880 for disturbance in relation to valuation and legal fees incurred in preparation of the claim for compensation. [122] Therefore, compensation amounting to $27,880 will be determined. Interest [123] Section 28 of the Acquisition of Land Act 1967 gives the Court the discretion to order that interest be paid on the amount of compensation awarded. In my view, there is no reason in this case why interest should not be awarded. However, I was advised that the valuation and legal fees have not yet been paid, so they attract no interest. -- 23 of 24 -- 24 Orders 1. Compensation is determined at Twenty-seven Thousand Eight Hundred and Eighty Dollars ($27,880). 2. The respondent pay interest at the rate of 5.75% per annum on the sum of Twenty-five Thousand Dollars ($25,000) from the date of resumption up to the day immediately preceding the date upon which payment of compensation is made. JJ TRICKETT PRESIDENT OF THE LAND COURT -- 24 of 24 --