Camp v Department of Main Roads [2004] QLC 31 (2004) 25 QLCR 63
LAND COURT OF QUEENSLAND
CITATION: Camp v Department of Main Roads [2004] QLC 31
PARTIES: Alan Frederick Camp
(applicant)
v.
Chief Executive, Department of Main Roads
(respondent)
FILE NO: A2002/0809
DIVISION: Land Court of Queensland
PROCEEDING: Determination of compensation payable consequent upon
the resumption of land by the Department of Main Roads
for transport purposes under the provisions of the
Acquisition of Land Act 1967
DELIVERED ON: 7 April 2004
DELIVERED AT: Brisbane
HEARD AT: Brisbane
MEMBER Mrs CAC MacDonald
ORDERS: The compensation payable by the respondent to the
claimant as a result of the resumption is determined at
$383,361.
The respondent is ordered to pay interest at the rate of
6.25% per annum on the amount of $252,000 for the
period commencing 5 May 2000 up to and including 22
January 2001.
It is further ordered that the respondent pay interest at
the rate of 6.25% per annum on those of the
disturbance items which were paid by the claimant
prior to 23 January 2001 for the period commencing
on the days, to be proved by the claimant, on which the
claimant paid each of the amounts up to and including
22 January 2001.
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It is further ordered that interest at the rate of 5.5%
per annum be paid by the respondent to the claimant
on the balance outstanding above $300,000 of any
disturbance items paid prior to 23 January 2001
together with any disturbance item paid during the
period commencing on 23 January 2001, from the
dates, to be proved by the claimant, on which the
claimant paid each of these amounts up to and
including the day immediately preceding the date that
the respondent pays these amount to the claimants.
CATCHWORDS: Town Planning - Development permit conditions -
Requirement for buffer zone - Proposed buffer zone area
resumed by State - whether different buffer zone still
required in balance area - View of Council planning
officers
Town Planning - Development permit - Conditions
running with land - Such more relevant to binding
successors in title - Not related to where resumption of a
strip of land subject to conditions
Resumption - Scheme of resumption - Pointe Gourde
principle - Proposed buffer zone (under development
permit) on claimant's land resumed - No evidence buffer
zone imposed as part of resumption scheme - Pointe
Gourde not applicable
Resumption - Town planning - Need for new town
planning application for development on balance area -
More intense development on smaller area - Likely
"material change of use"
Resumption - Prerequisites to claim - Need for claimant to
act reasonably to mitigate loss - Lessee granted additional
area for loss of part of leased land to resumption - Whether
such reasonable response to resumption
Valuation - Valuation methodology - Parent parcel
contained leased areas and vacant area - Balance land to
contain new leased areas and vacant land - Capitalisation
of lease rentals before and after resumption - Sales used
for remaining vacant area
Valuation - Capitalisation of rentals - appropriate rate -
Evidence from sales to establish net return - Increased rate
in "after" resumption situation to allow for uncertainty
APPEARANCES: Mr J Gallagher of Queens Counsel and Mr J Horton of
Counsel for the claimant.
Mr R Jones of Counsel for the respondent.
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SOLICITORS: Thynne and Macartney for the claimant.
Crown Law for the respondent.
[1] The claimant seeks a determination of compensation payable in respect of the resumption
of land for transport purposes by the respondent, the Chief Executive, Department of
Main Roads on 5 May 2000. The land resumed is described as part of Lot 1 on RP 17822
(about 450 square metres), part of Lot 1 on RP 178221 (about 784 square metres) and part
of Lot 1 on Crown Plan SL 4780 (about 1,329 square metres) in the County of Stanley,
Parish of Yeerongpilly.
[2] The details of the amended claim as presented at the commencement of the hearing were:
Diminution in value of land and improvements $390,000
Disturbance $238,176
Interest to be determined
[3] The respondent contended that the value of the land resumed as at the date of resumption
was $120,000 and also contested liability in respect of a number of the items (totalling
$183,899) included in the disturbance claim.
[4] The claimant was represented at the hearing by Mr J Gallagher of Queen’s Counsel and
Mr J Horton of Counsel, instructed by Thynne and Macartney. The respondent was
represented by Mr R Jones of Counsel instructed by Ms P Pavey of Crown Law.
[5] Evidence was given on behalf of the claimant by
Mr CG Buckley, a town planner, of Buckley Vann, Town Planners
Mr PC Lynn, Company Director of Lynn Civil Pty Ltd, which is a tenant of part
of the land affected by the resumption
Mr DH Neale, real estate agent, of L.J. Hooker Commercial, Brisbane South Side,
and
Mr KP Walsh, registered valuer, of Taylor Byrne Valuers.
Evidence was given on behalf of the respondent by
Mr DE Brown, a town planner, of Planning Australia and
Mr JD Horrigan, a registered valuer of Horrigan Kamitsis, Valuers.
[6] The resumed land formed part of a property situated at 2680, 2686 and 2700 Logan Road,
Eight Mile Plains within the Brisbane City Council Local Government Area. At the time
of resumption parts of the property were leased to two tenants one of whom carried on a
nursery business and the other a landscape supply business. Prior to the resumption, the
total area of the property was 25,153 square metres, the resumed land was 2,559 square
metres in area, leaving a balance remaining of 22,594 square metres after the resumption.
About 950 square metres was resumed from the nursery lease area, about 1,330 square
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metres from the landscape lease area, and approximately 280 square metres from the area
designated for use as a Veterinary Surgery.
[7] The property is bounded on the north-east by the South East Freeway, on the south-west
by Logan Road and, partially, on the east by School Road. It comprises three lots with
access to all the lots provided via an internal driveway from School Road. The claimant
was advised by the Main Roads Department in 1991 that it proposed to acquire a strip of
land adjoining Logan Road, but that proposal has not been implemented.
[8] At the time of resumption, the site was improved with various structures relating to the
plant nursery and landscape supply businesses to which further reference will be made
later in this decision.
[9] At the time of the resumption, the subject land was zoned “Non-Urban” under the 1987
Brisbane Town Plan and was designated “Green Space Area” under the Strategic Plan.
Substantial amendments had been made to the Strategic Plan and to the provisions
relating to the Non-Urban zone in 1997 and 1998.
[10] The property is situated in an area where land use is relatively low key, land in the
locality being used for residential, commercial and church activities conducted on larger
than average allotments.
[11] The land resumed was a strip of varying width running the length of and adjacent to the
northern border of the property which adjoins the South East Freeway. As described
further below, most of the resumed land was subject to a condition, imposed by the
Brisbane City Council in the consent permit granted in 1996, that it be retained as a buffer
zone to the freeway.
[12] Three consent permits have issued in respect of the site since 1988.
[13] On 27 June 1988 a consent was issued to Bedroc Landscaping Supplies for a garden
centre, veterinary surgery and caretaker’s flat. That permit was varied on 24 January
1991. The appellant purchased the property in May 1991 while that permit was still
current. Mr Camp said that at that time two of the lots, Nos 2686 and 2700 Logan Road,
were being unlawfully used as a dump by local residents. A house and some old sheds
were located on 2680 Logan Road, but the rest of the property was dilapidated and
overgrown.
[14] A new town planning consent was issued on 17 September 1992, on the application of the
appellant. That consent also allowed the development, in stages, of a garden centre,
veterinary surgery and caretaker’s flat. Mr Camp and his wife established and ran the
nursery from 1993 to 1994 and then applied to the Council to vary the 1992 permit
particularly in relation to the conditions concerning the landscape supply business.
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[15] A new consent issued on 29 April 1996 which approved the development of a garden
centre, veterinary surgery and caretaker’s flat. The approved plan allowed a 5 stage
development:
Stage 1 – Nursery
Stage 2A – Landscape Supply
Stage 2B – Mower and Handyman Tools Sales and Hire
Stage 3 – A retail centre for concrete products, outdoor furniture, barbecue and
irrigation supplies
Stage 4 – A centre for landscape designs and pools
Stage 5 – Veterinary surgery, including animal sick bay, and caretaker’s residence
The plan also provided for access to the site (from School Road only) and parking. It
required that reciprocal easements be granted across the allotments for the purposes of
access, vehicle manoeuvring and car parking. Other conditions covered a range of
standard town planning and environmental impact matters. The permit also required that
trees be planted within a 10 metre landscaped buffer to the South East Freeway to visually
screen the development from the freeway. The other boundaries of the property were to
be landscaped also, to varying widths. It is agreed by the parties that the 1996 approval
was in force at the time of the resumption.
[16] By letter dated 26 June 1996, the appellant was advised by Queensland Transport that
preliminary investigations indicated that Lot 1 on SL 4780 might be affected by a
proposed upgrade of the South East Freeway.
[17] Stage 2A of the development, the landscape supply area, was leased to Lynn Civil Pty Ltd
on 4 January 1997 for a term of 4 years, with an option to purchase and an option to
renew. The options have not been exercised.
[18] On 19 September 1997, the nursery area was leased to C and N Van Motman for a term of
3 years with two options to renew of three years each. The lessees exercised the first
option to renew on 1 June 2000, but no new lease has been executed.
[19] The Notice of Intention to Resume the property was given on 26 October 1999.
[20] The remaining stages of the development were not completed because of the uncertainty
created by the issue of the Notice of Intention to Resume.
[21] In 1999 a draft of the new Brisbane City Plan was published.
[22] On 5 May 2000, the land was resumed.
[23] In October 2000 the Brisbane City Plan came into force. The subject land is designated
as a Rural Area, and is also affected by the Kuraby Local Plan where it is identified as
Broad Hectare Land.
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[24] Against this background, the major issues in contention between the parties were:
whether, given that the land subject to the buffer zone had been resumed, it was
necessary to establish another buffer adjacent to the new boundary;
whether the claimant’s proposal to reconfigure the lease areas by granting
additional land to the lessees to “compensate” them for the land taken from each
of the lease areas was a reasonable response to the resumption;
whether it would be necessary for the claimant to apply to the Brisbane City
Council for development approval for the proposed changes of use to the balance
site.
Valuation Methodology
[25] Section 20 of the Acquisition of Land Act 1967 provides that:
“Assessment of compensation
(1) In assessing the compensation to be paid, regard shall in every case be
had not only to the value of land taken but also to the damage (if any)
caused by either or both of the following, namely –
(a) the severing of the land taken from other land of the claimant;
(b) the exercise of any statutory powers by the constructing authority
otherwise injuriously affecting such other land.
(2) Compensation shall be assessed according to the value of the estate or
interest of the claimant in the land taken on the date when it was taken.
(3) In assessing the compensation to be paid, there shall be taken into
consideration, by way of set-off or abatement, any enhancement of the
value of the interest of the claimant in any land adjoining the land taken or
severed therefrom by the carrying out of the works or purpose for which
the land is taken.
(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.”
[26] Both valuers adopted the same approach to the assessment of the value of the land taken,
by valuing the property before and after the resumption. I have accepted that this is an
appropriate methodology to adopt for the purposes of determining the value of that land.
Such an approach means that the market value of the land before and after the resumption
is to be determined. The difference between the two values will encompass the value of
the land taken and any damage caused by severance and injurious affection to the balance
land remaining in the hands of the claimant. The amounts proved as disturbance items
should be added to determine the claimant’s total compensable loss.
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[27] To determine the market value of the land before and after the resumption, the well
known principles contained in Spencer v The Commonwealth of Australia (1907) 5 CLR
418 should be applied. For example, Griffith CJ said (at 432):
“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.”
[28] The valuations were made by capitalising the net rental income from the leased areas, and
adding a further sum for the balance area. That amount was determined by comparison
with sales of similar properties.
Mr Walsh’s Valuation
Before Resumption
Capital value of leased areas
$86,276 x 100 = $821,676.19
10.5
Balance land
11,977 m² x $45/m² = $538,965.00
$1,360,641.19
Rounded to $1,360,000.00
After Resumption
(Includes parts of the vacant land into the tenancies to maintain the tenant, and
reinstatement of infrastructure to the Logan Road nursery tenant by resuming authority.)
Capital value of leased areas
$98,283 x 100 = $786,264.00
12.5
Balance land
7,994 m² x $23/m² = $183,862.00
$970,126.00
Rounded to $970,000.00
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Diminution in Value $390,000.00
Mr Horrigan’s Valuation
Before Resumption
Capital value of leased areas
$87,984 x 100 = $765,078.00
11.5
Balance land
11,979 m² x $55/m² = $658,845.00
$1,423,923.00
Rounded to - $1,425,000.00
After Resumption
The after valuation was determined by applying a reduction in rental to the landscape
supply lease of 10% and to the nursery lease of 20% resulting in a net rental of $75,857
per annum.
Capital value of leased areas
$75,857 x 100 = $659,626
11.5
Balance land
11,707 m² x $55/m² = $643,885
$1,303,511
Rounded to $1,305,000
Diminution in value - $120,000
Highest and Best Use
[29] The parties are agreed that, at the time of resumption, the existing use of the property as a
garden centre, nursery and landscape supplies with consent for further development of
complementary uses was the highest and best use of the land.
Town Planning – Buffer Zone
[30] The 1996 consent permit provided that, as a condition of the permit, the development was
to proceed in accordance with various specified plans of layout, and also provided in the
General Conditions that
“A Prior to or at the time of lodgement of the building application:
…
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(i) A satisfactory landscaping plan, conforming with all the relevant
provisions of the approved plan/s of layout, is to be submitted to and
approved by the Manager, Department of Recreation and Health. In
particular, the plan must show:-
(i) the retention of as many existing trees and shrubs as
possible and further planting of trees and shrubs and be generally
in accordance with Plan No 92035/1 Rev B and 92035/4 including
10 metres of landscaping to the South-East Freeway (to screen
visually the development from the Freeway), 6 metres of
landscaping to Logan Road and School Road and 3 metres of
landscaping to adjoining properties;”
Clause D(ac) provided that:
“Any office or display showroom is to be and remain strictly limited to
that area shown on the approved plan/s of layout and is to be and remain at
all times strictly ancillary to the use of the premises for the purpose of
Garden Centre, Landscape and Nursery Supplies; Veterinary Surgery and
Caretaker’s flat.”
[31] The buffer zone which was in place as required by condition (i)(i) constituted most of the
resumed land. The natural vegetation had been retained on the buffer land. There was
conflicting evidence as to whether any additional planting had been carried out. One
major issue between the parties was whether, after the resumption, the claimant would be
required to set aside a further 10 metres of land adjacent to the new northern boundary of
his land to ensure compliance with this condition. Reservation of such an area would
have a significant impact on the area of the balance land available for development and
therefore on the value of the claimant’s land after the resumption. It would also have the
effect that the existing shade house and part of the carpark of the nursery lease would
have to be moved or demolished and the animal sick bay planned as part of Stage 5 could
not be constructed as proposed.
[32] The claimant contended that it would be necessary to set aside a new buffer zone, relying
principally on the evidence of Mr Buckley in support of this submission. Mr Buckley
said that the condition was not standard for this type of consent and that its purpose was
to screen the development, visually, from the freeway. In Mr Buckley’s opinion the
condition ran with the land and, therefore, the obligations imposed by the condition
remained after the resumption, with the result that the owner was required to set aside a
further 10 metre buffer zone which would impact materially on the use of the remaining
land. If a fresh application for approval were lodged with the Council, he considered that
it was likely that a similar buffer would be required.
[33] Mr Buckley said that he had telephoned Ms M Mog, the town planning officer who had
issued the Consent, as delegate of the Brisbane City Council, to ascertain her opinion as
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to whether it would be necessary to reinstate the buffer zone. Ms Mog told him that she
did not have as strong a view about the buffer zone as he held. Although she had not
been presented with the relevant plans, she considered that a relevant factor that would be
taken into account was whether the intent of the buffer was preserved in the works to be
carried out by the resuming authority.
[34] Mr Buckley said that, in his opinion, Ms Mog’s approach could cause some difficulty
because the Council would not be in a position to control what occurred on the resumed
land. Prior to the resumption the condition applied to land owned by the appellant so that
compliance with the condition lay completely within the control of the appellant. After
the resumption, the resumed land was no longer under the control of the appellant and as
a matter of town planning principle this factor, together with the fact that town planning
conditions should be final and certain, and should run with the land, would be taken into
account by the Council in making a decision. Moreover, the plans drawn up by the
respondent indicated that the resumed land was to be excavated and used for drainage
purposes. In Mr Buckley’s opinion it was likely that the resumed land would be too low
lying to provide an effective visual screen to the claimant’s land. He therefore considered
that there must at least be some doubt that the Council would simply abandon the
requirement that there be a 10 metre buffer zone.
[35] Counsel for the claimant submitted that the buffer would remain a condition of the 1996
consent, notwithstanding the resumption. It would continue to bind the claimant and any
successor in title and the Council would have power to enforce the buffer. This was
particularly so because of the purpose-specific nature of the condition. Failure to comply
with the condition would render the whole development illegal.
[36] Mr Brown said that he had visited Ms Mog to discuss the matter with her and took with
him the plans that formed part of the 1996 consent, the plan entitled “Effect of
Resumption” (annexed to Mr Buckley’s report, Exhibit 8) and three plans prepared by the
Main Roads Department showing the proposed landscaping on the land resumed. Among
other matters, Mr Brown asked Ms Mog whether it would be necessary to replace the
landscaped buffer zone in any new approval.
[37] Mr Brown said that Ms Mog’s view was that the Council had accepted in other matters
that landscape areas are lost with resumptions and it would not seek to reinstate the buffer
in any rearrangement of the site. In the context of such a reconfiguration, she said that the
Council would seek to include some alternative landscaping on the undeveloped parts of
the site, where practicable. Ms Mog also said that in determining the adequacy of
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landscaping the Main Roads Department’s plans to landscape the edge of the freeway
would be taken into account.
[38] Mr Brown said that he considered that the Council recognized that it had to be practical
about the operational needs of the user and that the Council is not in the business of
removing a person’s user rights on the basis of a resumption by a public authority.
Because the land which was to have constituted the buffer zone had been resumed, he
considered that it was no longer possible nor necessary to fulfil the condition that required
that a buffer zone to be located on the boundary adjoining the freeway. Further, it was
not necessary for the owner to apply for a cancellation of the condition under s.3.5.33 of
the Integrated Planning Act 1997 (IPA), even though compliance with the condition was
no longer possible.
[39] In my opinion, the evidence indicates that although there is some prospect that the
Council would insist on the reinstatement of the buffer zone along the new boundary of
the land, the prudent purchaser would consider that it is unlikely that this would occur.
There are a number of reasons for this conclusion.
[40] Both the town planners consulted Ms Mog, the relevant town planning officer, who did
not indicate to either of them that it was likely that the Council would reimpose the buffer
zone. Although the purpose of the zone was to screen the development from the freeway,
Ms Mog’s opinion was that the Council would endeavour to ensure that this was achieved
by alternative means. In particular, the Council would take into account the plans of the
resuming authority to landscape the resumed land and the prospect of alternative
landscaping on the balance site. Mr Buckley was critical of Ms Mog’s apparent intention
to take into consideration the respondent’s activities on the resumed land and I accept that
the Council could not force the resuming authority to maintain a landscaped area adjacent
to the subject land. Nevertheless, it is open to the Council to take into account the plans
of the resuming authority, and I consider that it is likely to do so in a case where the
buffer zone was removed by a compulsory acquisition and where the Council is seeking
to achieve the desired outcome as practically as possible.
[41] Counsel for the claimant submitted that any benefit which flows to the subject land if the
Main Roads Department were to landscape the resumed land must be ignored because any
increase in market value arising from the carrying out, or the proposal to carry out, the
resumption must be disregarded: s.20 Acquisition of Land Act 1997, Pointe Gourde
Quarrying and Transport Co Ltd v. Sub-Intendent of Crown Lands (Trinidad) [1947] AC
565. I do not consider that the Pointe Gourde principle applies in this case. There is no
evidence that the buffer zone was originally imposed on the claimant’s land as part of the
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scheme for which the land was resumed. Nor is there any evidence that the value of the
subject land was enhanced by the scheme. The Council’s officer has indicated that the
Council will seek to achieve its purpose in other ways and therefore there will be no
necessity to reimpose the buffer zone. That is a decision which the Council has power to
make and that decision does not form part of the resumption scheme.
[42] Another factor to be taken into account is that if the buffer zone were reimposed, a
consequence would be that parts of the existing structures on the land would be
demolished. Clause 28.1.2(b) of the 1987 Town Plan provides that the acquisition of part
of a site shall not of itself be taken to prevent the continuance of an existing use. While
that provision is not decisive, it does indicate an intent that existing uses should be
continued after a partial resumption. Demolition of the structures would appear to be
contrary to the intent of cl.28.1.2(b).
[43] Clause 28.1.3(a) of the Town Plan provides that the continuation of any existing use shall
be subject to any conditions to which the use was subject immediately before the
acquisition. It seems to me that this provision cannot be relied on to determine the
question of the location of the buffer zone after the resumption. The issue here is whether
the condition will continue to apply in the changed circumstances, in other words,
whether the consent permit should be interpreted to mean that the condition is to apply
after the land which was subject to the buffer has been resumed.
[44] Finally, I do not accept the proposition that because planning conditions run with the
land, the obligation imposed by clause A(i)(i) will automatically transfer to the balance
land following a resumption. No authority was cited which supports that proposition.
Moreover the concept of conditions attaching to and running with the land is relevant to
the issue of whether such conditions bind successors in title to land (see Matijesevic v
Logan City Council (1982) 51 LGRA 29; s.3.5.28 IPA), not whether they continue in
force after a resumption of the strip of land which was subject to the condition.
Reconfiguration of the Leased Areas
[45] At the date of resumption, there were two leases in place over parts of the claimant’s
property, one over Stage 1 of the development, the “nursery lease” and the other over
Stage 2A, the “landscape supply lease”.
The nursery lease
[46] The lease was granted on 19 September 1997 to C and N Van Motman for a term of three
years with two options to renew of three years each. The evidence was that the original
area of the lease was approximately 3,725 square metres although Mr Camp said that
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there was a dispute on foot between himself and the lessees as to the size of the area
leased. That particular dispute is not material to these proceedings, other than to say that
it forms part of a larger dispute between the lessor and lessees which appears to have
arisen primarily because of the resumption. Details of the larger dispute were not in
evidence. However, Mr Walsh said that he understood that part of the dispute concerned
the relocation of the nursery outdoor display area. The rent payable under the lease at the
date of resumption was $33,600. In addition the tenant is required to pay a proportionate
share of the rates, and to insure and maintain the property.
[47] The improvements to the leased area consist of a garden centre building and adjacent
shade house, a bitumen paved car park, outdoor display area, landscaping and bitumen
surfaced entry driveway. The effect of the resumption was to take an area of
approximately 947 square metres from the nursery lease area. Most of that land lay
within the 10 metre buffer zone, although a small area of land outside the buffer zone was
taken. That land comprised hardstand and two large car parks. The evidence did not
establish clearly how much land outside the buffer zone was taken. Mr Jones suggested
that it was 45 square metres but Attachment 4 to Mr Horrigan’s report (Exhibit 14)
indicates that the 45 square metres was the area outside the buffer zone taken from what
became Lot 20 on SP 133759. The nursery lease also included part of what became Lot
30 on SP 133759. By comparison with Exhibit 9, the large plan of the effects of the
resumption report by Geo-Eng, I have estimated that about another 75 square metres of
land was unaffected by the buffer zone, making a total of 120 square metres.
[48] At the time of the resumption the tenants were in occupation pursuant to the lease of 19
September 1997. They subsequently exercised the first option to renew on 1 June 2000,
that is some three weeks after the resumption.
[49] There was evidence before the Court (Exhibit 18) that the lessees had written to Mr Camp
on 22 March 2000 (that is, before the date of resumption) indicating that it would be
necessary, following the resumption, for the lease area to be revised and for a new area to
be provided in addition to the balance nursery area. The lessees also said that they would
be prepared to enter into a new lease subject to the necessary approvals being given, the
lease to include the balance land and the additional land. The lessees have requested Mr
Camp to allocate to them an area to the east of the leased area adjacent to the carpark as a
substitute for the land taken. The result would be that the area of land occupied by the
tenants after resumption is the same as that originally leased to them. Mr Camp said that
he is prepared to grant the additional land to the lessees and it appears that the boundaries
of the new lease area have been surveyed (Lease B in Lots 20 and 30 on SP 133759), but
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the parties have been unable to agree on the terms of the new arrangements, and no new
lease has been signed. The tenants have not gone into occupation of the additional area.
They remain in occupation of the balance of the original area.
[50] The additional land is designated in the plans that form part of the development approval
as part of the future Veterinary Surgery. The implications of the proposed
reconfiguration are discussed below.
The landscape supply lease
[51] The landscape supply lease was granted to Lynn Civil Pty Ltd for a term of 4 years
commencing on 4 January 1997. The lessee was also granted an option to purchase, and
an option to renew the lease. The options have not been exercised. The rent payable at
the date of resumption was $52,676. In addition the tenant is required to pay a
proportionate part of the rates, and to insure and maintain the property.
[52] At the time of resumption, the improvements on the leased area consisted of an
administration office, two storage sheds, a dispatch office, a warehouse shed, 33
landscape supply bins, landscaping and all weather gravel handstand.
[53] There is an easement for drainage purposes in favour of the Commissioner of Main Roads
over approximately 1,351 square metres at the northern end of the original leased area.
There is a drainage gully/creek within the easement area containing an earth drain used
for storage and recycling of water. The water was used by the lessee to keep the dust
down in the leased area. The lessee had improved the waterway area with a bridge and
rock batters with a view to developing an attractive area for customers.
[54] An area of approximately 1,330 square metres of land was resumed from the landscape
supply lease area. The land resumed was generally low lying and subject to occasional
flooding. Approximately half the resumed land was subject to the buffer zone. Some of
the buffer zone land was also the subject of the easement. Of the remaining land
resumed, approximately 354 square metres was burdened by the easement. The area of
resumed land which was not affected by the easement or the buffer zone was about 250
square metres. Part of the resumed land was to be developed by the lessee for use as a
display area for landscape supply products.
[55] Following the resumption, the claimant has allowed the lessee to occupy an additional
area of land. Mr Lynn, a director of the lessee company Lynn Civil Pty Ltd, said that he
would have moved his business to other premises, following the resumption, unless Mr
Camp had agreed to a lease over the additional land. A new lease document (Exhibit 19)
has been prepared which describes the interest to be leased as Lease A on SP 132321.
Although the lease document does not quantify the area to be leased, SP 132321 identifies
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Lease A as comprising Lot 10 on SP 133759 – 8,119 square metres (which is the balance
of the original leased area following the resumption) and Lot 20 on SP 133759 – 733
square metres (which is extra land adjoining the south-eastern boundary of the original
lease area). The total area proposed in the new lease document is, therefore, 8,852 square
metres. The document provides for a term of 4 years commencing on 1 March 2001, with
an option to renew for a further term of 4 years. The rent payable is $59,260 for the first
year with provision for an annual market review. The status of the lease document is
unclear. The copy tendered as Exhibit 19 had not been executed. Lynn Civil Pty Ltd is in
occupation of the 8,552 square metres and a further 2,023 square metres of land (referred
to in Mr Walsh’s report as Area C) adjoining the south-eastern boundary of the new lease.
Area C is occupied by Lynn Civil Pty Ltd as a monthly tenant paying rent of $12,007 per
annum and is used as a display area. The result of these arrangements is that the total area
of additional land allocated to Lynn Civil Pty Ltd following the resumption is 2,756
square metres and the combined area is 1,426 square metres larger than the original lease
site. Mr Lynn said that he had signed a lease over the whole area, but that document was
not produced in evidence.
[56] A new shed, which is used for administrative purposes by Lynn Civil Pty Ltd, has been
constructed on the part of the additional area which is the subject of the proposed lease
tendered as Exhibit 19. It appears that the building work was approved by the Brisbane
City Council although such a building was not envisaged in the 1996 development
approval. Mr Lynn said that prior to the resumption he had intended to use an existing
shed located between the two lines of storage bins as a supervisory area for the proposed
display area for landscape supply products on the northern side of the land. He said that
the effect of the resumption was that he had lost that display area and that it was
necessary, therefore, to establish a new display area on the additional land. The
consequence was, said Mr Lynn, that it was necessary to construct the new shed in its
current position to provide effective supervision of the new display area. The shed
between the storage bins was now used for bag storage.
[57] The effect of allocating the 2,756 square metres of additional land is that the area
designated in the development permit as Stage 2B and a small part of the area designated
as Stage 3 are now occupied by Lynn Civil Pty Ltd.
[58] Two issues are raised in relation to the claimant’s response to the requests of the lessees
of both leases. One is whether the claimant’s conduct can be seen as a reasonable
response to the resumption. The second is whether such a reallocation of land would
jeopardise the further development of the site pursuant to the 1996 development approval.
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Is the reconfiguration of the leased areas a reasonable response to the resumption?
[59] As described above, the claimant is proposing to allocate additional land to the lessees of
both leases as a response to the demands of the lessees consequent on the resumption.
Although the arrangements have not been formalised, and in the case of the nursery lease
they have not been finalised, I have taken the view that the prudent purchaser who was
seeking to buy the property immediately after the resumption would know that the
reconfigurations are proposed and the background reasons for that. It seems appropriate
therefore, for the purposes of this determination, to treat the reconfigurations as though
they will occur. That raises the issue as to whether the claimant’s response to the
resumption is reasonable because it appears from the valuation evidence that the
reconfigurations may have adversely affected the value of the balance land.
[60] Lord Nicholls of Birkenhead said in Director of Buildings and Lands v Shun Fung
Ironworks Ltd [1995] 2 AC 111 at 126 that for compensation to be awarded,
there must be a causal connection between the resumption and the loss in
question; and
the loss must not be too remote; and
the claimant must have behaved reasonably to eliminate or reduce any losses
“If a reasonable person in the position of the claimant would have taken
steps to eliminate or reduce the loss, and the claimant failed to do so, he
cannot fairly expect to be compensated for the loss or the unreasonable
part of it. Likewise if a reasonable person in the position of the claimant
would not have incurred, or would not incur, the expenditure being
claimed, fairness does not require that the authority should be responsible
for such expenditure. Expressed in other words, losses or expenditure
incurred unreasonably cannot sensibly be said to be caused by, or be the
consequence of, or be due to the resumption.”
As the learned President said in Nevis v Chief Executive, Department of Main Roads
(A2000-0005, unreported, Land Court 23 March 2001) at 15:
“It has been said that the threshold of such reasonable conduct is not a
high one. (See Sydney Jacobs, “Damages in a Commercial Context”,
LBC 2000, page 207). Authority for that proposition was based on the
remarks of Lord Macmillan in Banco de Portugal v. Waterlow & Sons Ltd
[1932] AC 452 where his Lordship said at 506:
‘Where the sufferer from a breach of contract finds himself
in consequence of that breach placed in a position of
embarrassment the measures which he may be driven to
adopt in order to extricate himself ought not to be weighed
in the nice scales at the instance of the party whose breach
of contract has occasioned the difficulty. It is often easy
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after an emergency has passed to criticise the steps which
have been taken to meet it, but such criticism does not
come well from those who have themselves created the
emergency. The law is satisfied if the party placed in a
difficult situation by reason of the breach of duty owed to
him has acted reasonably in the adoption of remedial
measures, and he will not be held disentitled to recover the
cost of such measures merely because the party in breach
can suggest that other measures less burdensome to him
might have been taken.’ ”
Nursery lease
[61] As described above, the claimant is proposing to allocate land on the south-eastern side of
the original lease to the lessees to substitute for the part of the leased area lost by the
resumption.
[62] In relation to this lease, Counsel for the respondent submitted that
all but 45 square metres of the land taken was in the buffer zone and the balance
of the land taken affected two car parks only; [The area appears to be 120 square
metres – see discussion at [47]].
the buffer areas were not available for lawful commercial use;
the nursery business was apparently unlawfully using the buffer zone for
commercial purposes;
the replacement area was vastly superior to the land lost because it has better
shape and dimensions and is able to be used for commercial purposes;
the tenants have sought to exploit the resumption and the claimant has not acted
reasonably in responding to the tenants’ demands;
there is therefore, no causal connection between the resumption and the claimant’s
response and the lease arrangements were not a natural and reasonable
consequence of the taking of the land.
[63] Mr Camp was faced with a situation where the lessees were insisting that he allocate
additional land to them. The resumption took place on 5 May 2000. The nursery lease
was due to expire on 18 September 2000 and the negotiations between the tenants and Mr
Camp as to the reallocation of land were, therefore, taking place in a context where it was
possible that the lessees could walk away from the property. Both Mr Camp and Mr
Walsh said it was extremely important to maintain the income from the property. Mr
Walsh also said, and I accept, that the property would be less attractive to a purchaser if
there were no tenants in place, because of the lack of an income stream and also because
the existence of continuing tenancies would provide some incentive for potential tenants
of the other stages to move on to the property. I consider that the reasonable landowner
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would endeavour to maintain the income stream from the lessees, and to do what was
reasonable to keep them in place. While there is a limit to the demands to which a
reasonable lessor might accede, in principle, a reallocation of land is not, it is considered,
an unreasonable response to the resumption.
[64] Although the resumed land lay within the buffer zone, it formed part of the total leased
area for which the lessee paid rent. Septic trenches and other services were located there.
Use of the buffer zone for commercial purposes was prohibited in the consent permit. It
appears that the lessee may have been in breach of that condition in that part of the buffer
zone was used for displaying small pot plants for retail sale and a children’s playhouse
had been constructed on another part. However, even if these uses are ignored, the land
in the buffer zone was part of the leased area and provided an appropriate backdrop to the
nursery business, and, perhaps, could have been used to display the lessees’ products. As
I said above, it was not unreasonable for the claimant to accede to the lessee’s request that
substitute land be provided. Once that point is reached it is difficult to criticise the
claimant for reallocating the land on the eastern side of the original leased area. While I
accept that the additional land is superior to that in the buffer zone, in that the additional
land can be used for commercial purposes, the claimant had little choice as to what land
could be reassigned. The only land adjoining the leased area available to be allocated to
the lessees was that which is proposed to be allocated. This is because the access road
through the site forms the southern boundary of the leased area, the landscape lease area
forms the western boundary and the resumed land runs along the northern boundary.
[65] Counsel for the respondent suggested that the substitute land should be limited to passive
uses, so that it was similar to that which the lessees had lost. There was no evidence to
indicate that such a restriction would be agreed to by the lessees. Moreover, on the view
that I have taken of the town planning implications of the reconfiguration of the leased
areas, (discussed further below), I do not consider that such a restriction would be likely
to have a significant impact on the outcome of any application for approval.
[66] My conclusion is, therefore, that even though I do not consider that it is likely that the
buffer zone will be reimposed, the claimant’s proposal to allocate the additional land to
the lessees of the nursery lease was reasonable in the circumstances and was causally
connected to the resumption.
Landscape Supply Lease
[67] In relation to the landscape supply lease, Counsel for the respondent submitted that:
All but 252 square metres of the land taken was either buffer area or easement
area. The remaining land was a low lying drainage area subject to periodic but
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severe flooding. A “dam” was located in this area but was subject to interference
by flooding and/or the respondent exercising its rights under the easement.
The buffer area was not available for lawful commercial use.
The replacement area was vastly superior to the land lost because the replacement
area
(i) had better shape and dimensions;
(ii) was not affected by an easement or flooding;
(iii) was about 1,400 m² larger;
(iv) comprised land available for commercial use unaffected by buffer.
The development which has subsequently occurred on the replacement area could
not have been achieved on the land taken.
[68] Mr Lynn said that Mr Camp had approached him prior to the resumption to advise him of
the impending resumption, and that he had responded by telling Mr Camp that he would
move his business to another site unless Mr Camp agreed to “subsidise us” with the
additional land to the side. Mr Lynn considered that it was essential to replace the
resumed land because that area was the only space available to be used for display
purposes.
[69] It appears that the additional land is superior to that lost by the tenant in that it is not
subject to any buffer restrictions, whereas approximately half the land resumed from this
tenancy was subject to such restrictions. Further, there are no easement restrictions on the
new land. The additional land is also more elevated than the resumed land and is not,
therefore, subject to flooding. It may also enable the lessee to market its products more
effectively although Mr Lynn said that if he had been able to implement his plans to
develop the resumed area, the resulting display would have been just as effective.
[70] For the same reasons as those that I gave in relation to the nursery lease, I consider that it
was reasonable for the claimant to allocate to the tenant an area of land equivalent to that
which was resumed. This is so even though the only land available was superior to that
taken.
[72] In this case, however, the claimant has allocated to the tenant not only an area of land
equivalent to that resumed from the tenancy (approximately 1,330 square metres), but
also an additional 1,400 square metres. Since I have concluded that a prudent purchaser
would form the opinion that it is unlikely that the buffer zone will be reimposed along the
new boundary, I consider that the allocation of the additional 1,400 square metres to the
lessee was not a reasonable response to the resumption because the lessee is now in
possession of an area that is much larger than that which was originally leased to it. In
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reaching this conclusion, I have taken into account Mr Lynn’s evidence that he would
have moved his business elsewhere if the claimant had not allocated all the additional
land demanded, and Mr Camp’s evidence that it was important to him to preserve the
rental income from the property. Nevertheless, I do not consider that the allocation of the
extra 1,400 square metres can be described as conduct that was caused by or which flows
from the resumption and it is not, therefore, a reasonable response to the resumption. The
respondent should not be expected to pay for losses which arise because of a failure to act
reasonably. It follows that any loss which the claimant has suffered as a result of that
particular aspect of the land allocation is not a compensable loss.
Town Planning - Necessity for Fresh Application
[73] At the time of resumption, the subject land was included in the Non-Urban Category B
zone of the 1987 Town Plan. Category B lands are rural or semi-rural areas having rural
diversity and open character values. The land was also included in the Green Space Area
on Strategic Plan Map 1, in the Rural, Semi-Rural/Semi-Natural and Open Landscape
Value Area on Strategic Plan Map 2 and in the Semi-Rural and Agricultural Area on
Strategic Plan Map 3. The relevant provisions of both the Non-Urban zone and the
Strategic Plan were introduced in 1997 and 1998. Mr Buckley said in his report that the
effect of those amendments to the Strategic Plan was that the subject land had been taken
out of the ‘urban fabric’ designation of the Town Plan and included in the Green Space
Area. The amendments to the Non-Urban zone recognised the environmental and
landscape contributions such land makes to the character of Brisbane and had entrenched
a strategic direction that such areas be retained as Open Landscape. The development
approvals relating to the site had been granted prior to the 1997 and 1998 amendments
when the provisions affecting the Non-Urban zone in relation to future landscape and
environmental character were not as strongly expressed.
[74] The 2000 City Plan came into force in October 2000. The subject land is designated
Rural Area in the 2000 City Plan, and the Intent expressed in the Plan for such areas is
that residential and rural uses which respect and preserve the Desired Environmental
Outcomes are permitted. Some broad hectare, low intensity uses such as riding schools
and camping grounds are accommodated when they have low environmental impacts. Mr
Buckley considered that although the uses approved for the subject property in the 1996
permit might be described as having low environmental impact, they were not within the
broad group of preferred uses for a Rural Area. Similarly, the Kuraby Local Plan
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indicates that areas such as the subject land should be retained in a Natural, Semi-Natural,
Semi-Rural or Rural state.
[75] Mr Buckley said that the effect of the resumption, including the reinstatement of the
buffer zone and the claimant’s proposed reconfiguration of the leases, was that the
amount of land available for the approved uses was significantly reduced, and that any
application for approval for the changes which sought to preserve all of the uses approved
in the 1996 permit would lead to a greater intensification of use on the site. The changes
therefore constituted a material change of use. In his opinion, there was a serious risk that
an application to the Council made immediately after the resumption date for approval for
such a material change of use would be unlikely to succeed. The changes in the planning
scheme due to come into force in October 2000 indicated that there was to be little or no
commercial activity on land such as the subject land and that any material change of use
for such land is generally to be regarded as inappropriate.
[76] Mr Buckley concluded that it was likely that the nursery and landscape leases could be
reconfigured in a way that would be acceptable to the Council because they were existing
going concerns, but, beyond that, it was very marginal as to what other approvals would
be given. He did not consider that all the uses currently approved would be approved
again. Although this meant that the landowner would lose some of his existing rights, in
Mr Buckley’s view the Council would consider that the landowner had had plenty of
opportunity to develop the land as approved and that the time had arrived when the
changes in the planning policy for the area should be implemented.
[77] Mr Buckley said that he had spoken to Ms Mog about the necessity for a fresh
application. Ms Mog told him that if a fresh application were made the new planning
provisions would make it very difficult for the Council to approve similar uses to those
approved in the 1996 consent approval.
[78] Mr Camp also gave evidence that he had been told by a Mr Cameron Doyle, a Brisbane
City Council officer, that the changes Mr Camp was proposing were not a minor variation
and that it would be necessary to make a new development application.
[79] Counsel for the claimant submitted that the changes caused by the resumption constituted
a material change of use because there would be a material change in the intensity or
scale of the use of the premises such that the development could not simply be
reconfigured by making use of the undeveloped areas. Such a reconfiguration would
result in an increased density in the development and a consequent reduction in green
space. Counsel submitted further that the planning scheme imposed by the 2000 City
Plan made it unlikely that a development of the present kind would be approved because
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the modifications necessary would involve a material change of use. The proposal
constituted a substantially different proposal having regard to its “measurable relativity”
with the approved development, taking into account factors such as the size, dimension,
degree and opposition to the proposed development.
[80] Mr Brown said that if after October 1997, the claimant had sought approval for a new
development having the character and intensity of the 1996 consent, it would have been
more difficult to obtain because of the amendments to the Strategic Plan that came into
effect on 9 October 1997. However, the issue in this case was whether the 1996 consent
could be amended, not whether a new equivalent of the 1996 approval could have been
obtained. He agreed that if it were necessary for the claimant to make a fresh
development application the 1997 amendments would be a significant factor to be taken
into account by the decision maker, but said that factors such as the continuing operation
and integrity of the businesses, and whether the objective of screening the development
from the freeway would be achieved as a result of the resumption must also be taken into
consideration.
[81] Mr Brown said that the effect of the resumption and the claimant’s proposed changes to
the lease areas was that –
a part of the site would not be used for any purpose;
existing development would be re-allocated to parts of the site intended, but not
currently used for approved development; and
an approved use, the veterinary surgery/caretaker’s flat, would be removed from
the overall development.
[82] In his view, this would lead to a reduction in the intensity or scale of the use of the
premises. It followed that the proposed changes did not constitute a material change of
use, and approval could be sought for a minor change of use under s.3.5.24 IPA.
[83] Mr Brown said that he also had spoken to Ms Mog at the Brisbane City Council about the
effect of the proposed changes and asked her whether, if it were assumed that the
replacement leases simply replaced the lawful uses which had been previously established
on the site, the changes would constitute a material change of use. Ms Mog had told him
that in her opinion this would not constitute a material change of use.
[84] Counsel for the respondent submitted that the proposed changes to the development
constituted a minor change of use only. This was because the resumption resulted in the
highway buffer being lost, the nursery and landscaping businesses being relocated and, to
varying degrees intensified, the loss of one of the uses (probably Stage 5 the veterinary
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surgery) from the overall development, and the loss of two car parks from the nursery
business.
[85] The proposed modifications will involve changes to the approved plans of layout which
form part of the 1996 consent. The clause of the Consent Permit which requires that
development take place in accordance with those plans is described as a condition of the
consent. The changes therefore will be considered under s.3.5.33 IPA rather than s.3.5.24
(see Rhema Management Services Pty Ltd v Noosa Shire Council [2000] QPELR 15).
Section 3.5.33 enables a person to apply for a condition to be changed by making a
request to the relevant authority. The section only applies if no assessable development
would arise from the change (s.3.5.33(1)(b)). An assessable development arises if there is
a material change of use of the premises as defined in s.1.3.5 IPA. In this matter,
paragraph (c) of that definition is the relevant provision. It provides that a “material
change of use” of premises means a material change in the intensity or scale of the use of
the premises. If the proposed changes constitute a material change of use, it will be
necessary to make a fresh application for a development permit.
[86] In Martin v Whitsunday Shire Council [2001] QPELR 348 at 349, 350, Wall QC DCJ said
that whether a change involves a “material change in the intensity or scale of the use of
the premises”, is a question of fact and degree depending on the circumstances of each
case. Relevant factors to be taken into consideration include whether the proposed
change would be likely to attract an adverse submission that was not provoked by the
proposal in its original form, and whether the form is so different as to require separate
assessment. The latter includes a consideration of the degree and extent to which the use
of the premises is or would be changed by the new proposal.
[87] I have already said that I consider that a prudent purchaser would consider that it is
unlikely that the Council would reimpose the buffer zone in the form originally specified
along the new boundary of the land. I have also said that I consider that the claimant’s
proposal to allocate an additional 1,400 square metres to the landscape supply lease is not
a reasonable response to the resumption. On that basis, the purchaser would need to
consider the nature of an application to the Council for approval for a reconfiguration of
the leases which allocated an additional 2,560 square metres to the lessees and sought to
retain all the stages approved in the 1996 permit. Since such an application would be
made in respect of an area of land which is some 2,560 square metres smaller than the site
before the resumption, I consider that the prudent purchaser would conclude that there is
likely to be a material change in the intensity or scale of use of the premises and a
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consequent decrease in the undeveloped areas of the property. It would therefore be
necessary to make a new application for development approval.
[88] That application would be made at a time when the planning laws had changed from those
in place at the time of the 1996 approval. Although City Plan 2000 was not in force at the
time of resumption, its content was well known and would have been taken into account
by a planning officer dealing with a development application at that time. I consider that
it is likely that the existing businesses will retain their approval and it is likely that the
proposed reallocation of land to the lessees will also be approved. The impact assessment
provisions in the new planning scheme indicate that an application for a material change
of use is considered to be generally inappropriate and that commercial use of the subject
land would not be approved. Given those changes in the planning scheme and the
increased intensity of the development, I consider that a prudent purchaser would think
that there would be a serious risk that the Council would not allow all of the remaining
uses to be developed on the balance site. Some modification would be necessary. It is
likely that the Council would seek to maintain a similar proportion of green space on the
site to that which was provided prior to the resumption, and to ensure that the uses
approved lead to no more intensive usage of the site. I do not consider that it is likely that
the Council would restrict the use of the balance site to one usage, given the particular
history of approvals for the site, and the fact that the need for a change of use has been
caused by a resumption over which the claimant had no control. The type of modification
that might be approved would be that Stage 5 (the veterinary surgery and caretaker’s flat)
be removed and also that Stage 2B (the mower and tool site) may be in some jeopardy.
Stages 3 and 4 remain. The resulting development would not appear to be significantly
more intense than the original approved development. Both Mr Buckley and Mr Brown
agreed that an approval of that nature could be granted.
[89] Having reached that conclusion, the question then arises as to whether the allocation of
the additional 1,400 square metres to the landscape supply lessee has any further adverse
impact on the prospects of obtaining an approval allowing development of the type
referred to in the previous paragraph. The effect of the allocation is that the land that was
to be used for Stage 2B is no longer available for that purpose. This would mean that
Stage 2B is unlikely to survive in any form. The land would remain available, however,
for commercial use as part of the landscape lease and should be valued on that basis.
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Valuation Evidence
[90] As stated above, both valuers adopted the same general approach to their valuations. The
leased areas of the property were valued on a before and after basis by capitalisation of
the rental. The balance land was valued on a before and after basis by comparison with
sales of similar properties. Although the property is constituted by three lots, it has been
valued as a single site by the valuers, and the determination of compensation is made on
that basis.
[91] The effect of my conclusions to this point is that I consider that the prudent purchaser of
the property immediately after the resumption would purchase on the basis that:
there is a small possibility that the buffer zone will be reimposed;
the lease areas have been or will be reconfigured as discussed above; and
it is probable that it will be necessary to make a development application to the
Council for approval of the proposed changes, and that as a result two of the uses
approved in the 1996 Consent will not continue.
The valuation evidence will be considered on that basis.
Leased Areas – Capitalisation Rates
Pre resumption
[92] Mr Walsh, for the claimant, valued the leased areas before resumption by capitalising the
net rental at 10.5%. Mr Horrigan capitalised the rental at 11.5%. The valuers agreed that
prior to the resumption, the claimant was in receipt of a regular income from the leased
areas from stable tenants. The leases were relatively short term but each contained an
option to renew. The only market evidence given in support of the capitalisation rates
was supplied by Mr Walsh who relied on two sales to establish the net return expected by
an investor for the type of development. I have therefore accepted Mr Walsh’s
capitalisation rate of 10.5% as appropriate. There is also a small difference between the
valuers as to the rental payable under the leases, and I have applied Mr Walsh’s figures.
Post resumption
[93] After the resumption, Mr Walsh capitalised the rental payable under the new
arrangements between the lessor and the lessees at 12.5%. Mr Walsh said that he had
increased the capitalisation rate in the post resumption valuation from 10.5% to 12.5% for
both leases, because there was an increased risk of retaining the existing tenants in place,
after the resumption, at the same rents, or in the case of the landscape lease, at a higher
rent.
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[94] Mr Walsh said that in the case of the nursery lease, this was because the parties were in
dispute over a range of issues, and the tenant considered the property to be more difficult
to manage and had demanded that the point of sale for the business be relocated. Further,
the proposed reallocation of additional land to the tenant was not authorised by the
current consent and therefore placed that consent at risk. In addition, if the ten metre
buffer zone were reimposed, the main shadehouse structure would have to be relocated.
[95] Similarly, Mr Walsh said in relation to the landscape supply lease, there was a risk that
the buffer zone would be reimposed which would necessitate the relocation of sand and
soil bins. The lessee had also lost a supplementary water supply from the gully on the
northern side of the site. In addition, the land reallocated to the lessee is being used
contrary to the development consent.
[96] On the basis that there had been a reduction in size of the lease areas, Mr Horrigan
reduced the rental payable under the existing leases by 20% for the nursery lease and
capitalised the balance figure at 11.5%. Mr Horrigan said that he had maintained the
same capitalisation rate after the resumption because he considered that the risk of
maintaining the rents from the existing tenants was similar in the before and after
situation, and the development approval in place before the resumption would remain in
place after the resumption, which would allow the additional businesses to be developed.
[97] In the after valuation, there are different considerations affecting each of the leases and I
will therefore deal with them separately.
A. Nursery lease
[98] As indicated previously, I do not consider that it is appropriate to simply reduce the rental
from this lease to allow for the effects of the resumption on this part of the land. The
tenants indicated to Mr Camp, in the face of the impending resumption, that they required
additional land to be substituted for the resumed land. Mr Camp is prepared to do that but
no new lease has been signed. The evidence is that there are ongoing disputes between
the tenants and Mr Camp and that those disputes originated in the resumption. While the
details of these disputes were not in evidence, it is clear that there is an element of
instability in the relationship which did not exist prior to the resumption, and which is
primarily attributable to the resumption. It will also be necessary for the claimant to
obtain approval from the Brisbane City Council for the reallocation of the land. In
addition, there is some limited risk that the buffer zone will be relocated over part of the
lease.
[99] To allow for those uncertainties, I consider that the capitalisation rate should be increased
in the after valuation. Given that I consider that there is only a small risk that the buffer
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zone will be reimposed, I have decided that an increase in the capitalisation rate of 1.5%
is sufficient to allow for the uncertainties in the relationship between the parties to the
nursery lease, post resumption.
B. Landscape Supply Lease
[100] Mr Camp has acceded to the tenant’s request to reallocate land to substitute for that lost in
the resumption. In addition, he has allowed the tenant to occupy approximately 1,400
square metres extra land. Mr Walsh valued the whole area occupied by the tenant post
resumption by capitalising at 12.5% the total of an annual rental figure of $52,676 for the
Lease A area (8,852 square metres) and $12,000 payable under the monthly tenancy of
Area C (2,023 square metres). He selected $52,676 as the appropriate figure to apply in
relation to the lease A area as that was the rent payable under the original lease at the time
of resumption.
[101] Mr Horrigan approached the valuation by reducing the rental payable under the lease
current at the date of valuation by 10% and capitalising the balance figure at 11.5%.
[102] The evidence did not indicate precisely when the new arrangements between the lessee
and the claimant were agreed. It appears however that they would have been in prospect,
at least, at the time of the resumption. It follows that a reasonable purchaser would know
of them immediately after the resumption. The advantage of the new arrangements is that
the owner is in a position to secure the income from the balance of the original leased
area, together with the area to replace the resumed land, and, as well, an immediate
income from the additional 1,400 square metres. While no formal lease over the whole
area has been executed by both parties, it appears that they are willing to execute one,
subject only to Mr Camp’s reluctance to jeopardise the planning consent. The parties’
willingness to enter into a binding transaction is further evidenced by the construction of
a new administration building on the reallocated land, and the extensive use of that land
by the lessee for display purposes.
[103] As with the nursery lease, there remains some small prospect that the buffer zone may be
reimposed over part of this lease and it will be necessary to obtain Council approval for
the reallocation of the land. Otherwise, in my opinion, there is a high degree of certainty
of securing an income from the whole of the new area, including the additional land. I
have concluded therefore that there should be an increase in the capitalisation rate for this
area of .5%.
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Sales Evidence – Balance Areas
Before Resumption
[104] Mr Walsh valued the balance land of 11,977 square metres (outside the leased areas) at
$45 per square metre. His report details a number of sales where the prices paid range
from $18 per square metre to $51 per square metre. Mr Walsh said that he had formed
the view, by comparing the subject with the sales, that the parameters for the valuation in
the before valuation were $25 per square metre to $51 per square metre. The subject land
was superior to the properties which sold at $25 per square metre because of the
multiplicity of uses permitted on the subject land. He considered that the subject was
inferior to the property sold at $51 per square metre (Sale No 4) because the sale was a
much smaller ridge top site, purchased for full redevelopment, and sold subject to
approval being given for a more intensive commercial use.
[105] Mr Horrigan valued the balance land at $55 per square metre. He relied on a number of
sales ranging in price from $15.70 per square metre to $92.81 per square metre. He said
that he had difficulty finding comparable sales. Sales Nos 1, 2 and 10 were improved
properties. Mr Horrigan provided no analysis of these sales and therefore his evidence is
not useful in the assessment of the value of the balance land, which is largely
unimproved. It is noted that Sale No 1 is the same transaction as Mr Walsh’s Sale No
8(a) and that Mr Walsh did analyse the sale. Sales Nos 6 to 9 were of land zoned Service
Industry, Park Residential or Particular Purposes which, on the face of it and in the
absence of any detailed evidence, do not appear to provide a useful comparison with the
subject. Sale No 3 is Mr Walsh’s Sale No 1, Sale No 4 appears to be Mr Walsh’s Sale No
5 and Sale No 5 is Mr Walsh’s Sale No 6. The prices paid for those properties range from
$26.93 per square metre to $15.70 per square metre. They do not support Mr Horrigan’s
value of $55 per square metre.
[106] I have accepted Mr Walsh’s valuation of the balance land outside the leased areas pre
resumption at $45 per square metre. The figure is supported by the evidence he gave, and
although Sale No. 4 took place in 1994, I have accepted Mr Walsh’s evidence that there
was little movement in the market for land of this nature in the intervening period.
After Resumption
[107] Mr Neale’s evidence was that the uncertainty as to the outcome of any application to the
Council for a change to the development approval, whether it be a minor or material
change of use, would increase the difficulties of attracting purchasers to the site by 20%
to 30%.
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29
[108] Mr Walsh said that he had relied on the opinion of Mr Buckley that a prospective prudent
purchaser who bought the balance land post resumption would not have confidence that
the pre-existing approved uses would be modified, as required, and that a fresh
application that the same uses be approved may not succeed because of the changes
introduced by the City Plan 2000. He therefore took the view that the remaining land was
similar in value to properties which had a single use only.
[109] Mr Walsh also said that in his valuation of the balance land post resumption, he had taken
into account the fact that a reasonable purchaser would be faced with uncertainty as to the
outcome of an application for changes of use and further uncertainty as to whether the
buffer zone would be reimposed. Taking into account all these factors, he had valued the
balance land of 7,994 square metres (after deduction of the resumed areas, and the new
areas allocated or to be allocated to the existing tenants), at $23 per square metre.
[110] Mr Horrigan started from the base that the balance land comprised 11,707 square metres
after deduction of the existing lease areas (that is, with no reallocation of land to the
tenants) and the area of land outside the leases which was resumed. He valued the 11,707
square metres at $55 per square metre. This was consistent with his general approach to
the valuation in that he considered that because most of the land resumed was within the
buffer zones in the two leased areas, the effect of the resumption was that the rental paid
under the two leases should be reduced proportionately. Otherwise, there was no impact
on the remaining land because the development approval remained in place, and there
was only a slight variation in the area of land, post resumption.
[111] For the reasons set out above, I have not accepted Mr Horrigan’s analysis of the effects of
the resumption. In my opinion, the valuation should be approached by allocating
additional land to the tenants to replace the land lost from each of the leased areas.
However, although I do not consider that the allocation of an additional 1,423 square
metres to the landscape supply tenant was an event that was caused by the resumption, the
view that I have taken as to the likely outcome of a new development application is that
that aspect of the reallocation will not have a significant impact on the content of the
approval. I consider, therefore, that that part of the land should be valued, together with
the rest of the landscape supply lease by capitalisation of the rental income. The balance
area to be valued, after the resumption, is therefore 7,994 square metres.
[112] On the basis that there is 7,994 square metres available for further development, I
consider that a prudent purchaser would expect to be able to obtain development approval
for two uses of a similar kind to those approved in the 1996 development approval. It
follows, therefore, that I do not consider that a value of $23 per square metre adequately
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30
reflects the value of this balance area because that valuation was made on the basis that a
single use only would be permitted on that area.
[113] Mr Horrigan said that the balance property had a higher commercial value than is
reflected in a value of $23 per square metre, because it would be possible to maintain
three of the uses. On that basis he considered that $35 per square metre would adequately
reflect the value of the balance site and said that such a figure allowed for the risks
associated with obtaining the necessary approval.
[114] The evidence was such that it is unlikely that the Council would approve a new plan
which increased the density of uses on the site. Since I consider that two uses would be
likely, I consider that $30 per square metre would reflect the value of the balance land.
Value of Resumed Land
Before Resumption
Capital Value of Leased Areas
$86,276 x 100 = $821,676.19
10.5
Balance Land
11,977 square metres @ $45/m² = $538,965.00
Total = $1,360,641.19
Rounded to $1,360,000.00
After Resumption
Capital Value of Leased Areas
A. Nursery Lease
$33,600 x 100 = $280,000.00
12
B. Landscape Supply Lease
$64,683 x 100 = $588,027.27
11
__________
$868,027.27
Balance Land
7,994 square metres @ $30/m² = $239,820.00
Total = $1,107,847.27
Rounded to $1,108,000.00
Diminution in value $252,000.00
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Disturbance Claim
[115] The items constituting the disturbance claim are divided into three categories. The
amounts claimed were supported by invoices or quotations from the suppliers.
[116] Part A - Costs of various works related to the landscape supply lease
A1 Relocating office, electrical, telecommunication and computer connections -
$17,561.00 (includes GST)
The building is a new administration centre. Mr Lynn’s evidence was that because of the
reallocation of the land it was necessary to move the administration centre from its
location towards the centre of the original site to provide satisfactory security and
supervision for the site and customer activity on the site. However, it appears that the
building that was used as the administration centre prior to the resumption was approved
for use as a vehicle and storage shed in the 1996 consent, and that its use for
administration purposes was unauthorised. That being so, the claim for relocation costs
of the administration centre is not allowed.
A2 Relocating Redback spider and paving display and stone pitching - $8,228.00
plus GST $823
These items were necessitated by the resumption and the amounts claimed appear to be
reasonable. Although the work has not been completed Mr Camp said that he intended to
do it and the only reason he had not done so was that he did not have sufficient money.
The claim is therefore allowed in full at $9,051.
A3 Earthwork for new site - $5,200.00 plus GST $520.
Mr Camp said that this sum was paid to resurface the area reallocated to the lessee with
hardstand. The area lost from the lease was 1,330 square metres which is approximately
50 per cent of the total land allocated to the lessee. I am prepared to allow half of this
claim, so that the amount allowed is $2,860 (includes GST).
A4 Installation of underground pipes to the new site - $8,800.00 (includes GST)
The function of the pipes appears to be to provide stormwater drainage to the new area.
For the reasons set out in A3, I will allow half of this claim, namely $4,400.
[117] Subtotal of amounts allowed in Part A (includes GST) - $16,311
[118] Part B – Costs of works related to the nursery lease
B1 Relocation of Basic Nursery Improvements – $17,688.00
GST 1,769.00
$19,457.00
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This part of the claim consists of
Pool fencing $1,655.00
Children’s play area $1,500.00
Surface gravel (rocks) $2,000.00
Drainage gravel $680.00
Machinery hire $2,200.00
Dumping fees $500.00
Hire of labour, marking to move pots, statues, children’s play house etc.
$3,150.00
Sprinklers, fittings, etc $2,083.00
Marking out pot areas, internal fencing etc due to truncation
$3,000.00
Remove light, hard rail and lattice, repair and repaint
$1,000.00
Mr Camp agreed that the children’s play area was located within the buffer zone and that
a proportion of the claim of $3,150 for hire of labour, marking to move pots, statues,
children’s play house etc was attributable to commercial use by the tenant of the buffer
zone. Since it appears that use was not lawful I do not allow the claim of $1,500 for the
children’s play area, and I have reduced the claim for hire of labour etc by 50% to $1,575.
I consider that Mr Camp’s evidence established that the fencing was necessary to provide
security for the products on site. This part of the claim is therefore allowed at $14,613
plus GST of $1,461 making a total of $16,074.
B2 Construction of Car Park - $19,400 plus GST.
The effect of the proposed reallocation of replacement land to the nursery lessee is that
the existing car park would bifurcate the nursery. This is undesirable as management and
supervision of the customers in the nursery would be difficult. However, it is also
unnecessary to completely relocate the car park to deal with these security risks, and
although the evidence was sparse it appears that other alternatives are possible – for
example, Mr Camp spoke of turning the car park by 90 degrees to keep the cost down. In
the circumstances, and doing the best I can, I have allowed half of this claim, $9,700 plus
GST of $970, making a total of $10,670.
B3 Relocation of power pole and underground power - $11,313
B4 Installation of telecommunications systems - $3,495
Those items are agreed and allowed as claimed.
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B5 Earthworks - $7,000, plus GST.
This claim is for work associated with relocating the car park and covers removal and
disposal of asphalt, removal and stockpile of wheel stops, removal and disposal of the
kerb, stripping and stockpiling topsoil, excavating areas for road base and supplying,
placing and compacting road base.
For the reasons given in relation to the B2 claim, I will allow 50% of this claim, that is
$3,500 plus GST of $350, making a total of $3,850.
B6 Reinstatement of pavers, gardens etc.
- $853 includes GST
- $1,875 plus GST
- $2,310 includes GST
Mr Camp said that this part of the claim related to relocation of materials etc that were on
the resumed land, but he was unable to estimate what proportion related to land inside the
buffer zone. Since there was only a small proportion of resumed land (120 square metres
or 12.5%) outside the buffer, I am only prepared to allow that proportion of this claim.
The total claim including GST is $5,226. The amount allowed is $653 (12½% x $5,226).
B7 Relocation of nursery shade house from buffer area and provision of services
to relocated shade house - $49,600 plus GST of $1,000 on part.
This claim is made on the premise that the Brisbane City Council will relocate the buffer
zone along the new boundary of the land. As I have decided that this is unlikely to occur,
I do not allow this part of the claim.
[119] Subtotal of amounts allowed in Part B - $46,055 (includes GST)
Part C – Costs of relocation of proprietors’ services and other compensable costs
C1 Relocation of Fences - $22,429 (includes GST)
The respondent has agreed that an amount of $10,407 of this claim is payable in respect
of the relocation of the boundary fencing. The balance of the item, $12,022, is to
accommodate the reconfiguration of the leased areas. I have indicated that I consider
that, in general terms, it was reasonable for the claimant to allocate additional land to the
lessees. I am therefore prepared to allow this amount for fencing.
C2 Preparation of engineering plans to be submitted to the Brisbane City Council
- $15,000 plus GST of $1,500.
Mr Camp said that these are costs (which have not yet been incurred) associated with the
new development application to be made to the Brisbane City Council. The plans will
provide for the reconfiguration of the site layout, building layouts, building structural
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details, and site works and drawings. Mr Camp said that he intended to make such an
application.
[120] I have decided that it will be necessary for the claimant to make an application to the
Council for approval of change of use of the site and that the need for that application has
arisen because of the resumption. The claim is based on an estimate by NJA Consulting
of the anticipated costs. Their estimate was that the costs would be in the order of
$10,000 to $15,000 plus GST. In an endeavour to be fair to both parties, I consider that
this claim should be allowed in the sum of $12,500 plus GST - $13,750.
C3 Engineering Fees and Associated Outlays
(a) NJA Consulting Pty Ltd - $7,559 including GST
(b) Chilton Woodward and Associates - $1,518 including GST
(c) Brisbane City Council and other - $263 including GST
sundry cash receipts
Item (a) is a claim for costs paid by the claimant to a firm of consulting engineers who
undertook a coordinating role in relation to various works on site necessitated by the
resumption. The costs include
(i) $385 for redrawing plans associated with the reallocation of the lease areas
and redrawing the buffer line
(ii) $331.25 for making arrangements with surveyors to survey the reallocated
areas
(iii) $4,152.50 for arranging for plans be drawn up for the relocation of the septic
system, preparation of documents for tender, and subsequent discussion in
respect of a new sewer main
Items (i) and 2 are allowed because they are necessary expenses relating to the
reallocation of the lease areas. Item (iii) is allowed. Mr Camp’s evidence was that the
septic system was located on the resumed area prior to the resumption and that therefore it
was necessary to relocate it. Those plans were in progress when a third party approached
the claimant with a proposal to run a sewerage line through the subject land. As a result
the plans for relocation of the septic system were abandoned.
(iv) $632.50 for further discussion concerning the sewerage line and arranging
amended drawings
Although Mr Camp referred to this item as further costs associated with the abandoned
relocation of the septic system, it actually relates to the new sewerage line. As it was
necessary that some sanitary facility be installed and the costs claimed are considerably
less than those for a new septic system, this item is allowed.
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(v) and (vi) Each of these items is $811.25, claimed for further work by NJA Consulting
Pty Ltd in relation to the sewerage line, including discussions with the tenants
and the electrician. These claims are allowed.
(vii) $132 for copies of drawings. This is allowed.
(viii) $303.27 paid to NJA Consulting for costs associated with “Moving Icon
Butterfly”.
This item has been proved by way of a copy of a cheque butt. There was no specific
objection to the claim and it is allowed.
Subtotal of amounts allowed for (a) - $7,559 (includes GST)
Item (b) This claim is agreed to by the respondent and is allowed at $1,518 (includes
GST).
Item (c) is allowed at $263 (includes GST).
Subtotal of amounts allowed for C3 - $9,340 (includes GST)
C4 Legal Fees - Negotiations for new nursery lease - $2,454 (includes GST)
C5 Legal fees for work done until the lodgment of the amended claim for
compensation on 17 September 2002 - $15,714.
The parties have agreed that a total of $12,000 is payable in respect of C4 and C5.
C6 Surveyors fees for preparing new lease plans for the two tenants - $4,150
(includes GST)
This item is allowed as a loss caused by the resumption.
C7 Valuation fees - $5,177 (includes GST)
This item is agreed and allowed
C8 Town planning fees - $2,149 (includes GST)
This item is agreed and allowed.
Subtotal of amounts allowed for Part C - $68,995.
Total allowed for Disturbance Claims
Part A - $16,311
Part B - $46,055
Part C - $68,995
$131,361
ORDERS
[121] The compensation payable by the respondent to the claimant as a result of the resumption
is determined at $383,361 made up as follows:
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Diminution in value $252,000
Disturbance $131,361
$383,361
[122] The respondent paid an advance of $300,000 on 23 January 2001.
[123] The respondent is ordered to pay interest at the rate of 6.25% per annum on the amount of
$252,000 for the period commencing 5 May 2000 up to and including 22 January 2001.
[124] It is further ordered that the respondent pay interest at the rate of 6.25% per annum on
those of the disturbance items which were paid by the claimant prior to 23 January 2001
for the period commencing on the days, to be proved by the claimant, on which the
claimant paid each of the amounts up to and including 22 January 2001.
[125] It is further ordered that interest at the rate of 5.5% per annum be paid by the respondent
to the claimant on the balance outstanding above $300,000 of any disturbance item paid
prior to 23 January 2001 together with any disturbance item paid during the period
commencing on 23 January 2001, from the dates, to be proved by the claimant, on which
the claimant paid each of these amounts up to and including the day immediately
preceding the date that the respondent pays these amount to the claimants.
CAC MacDONALD
MEMBER OF THE LAND COURT
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Official source: https://www.sclqld.org.au/caselaw/QLC/2004/031