Chapman v Brisbane City Council [1999] QLAC 59

IN THE LAND APPEAL COURT OF QUEENSLAND BRISBANE Re: An appeal from a determination of the Land Court - Acquisition of Land Act 1967 - Compensation payable consequent upon a resumption of land. (A97-87) BETWEEN: Joseph Ronald Chapman and Kay Lorraine Chapman Appellants AND Brisbane City Council Respondent J U D G M E N T Judgment delivered at Brisbane this Third day of June 1999 This is an appeal against the decision of the Land Court which determined that compensation be payable by the respondent to the appellants in the total amount of $84,400. The claim for compensation arose following the resumption of easements for water supply purposes over two adjoining parcels of land being Lots 2 and 3 on Registered Plan 218548 containing areas of 4.004 ha and 4.292 ha respectively. The resumed easements are fully located within areas occupied by previously existing easements registered on the relevant titles. However, the detail of those pre-existing easements are not relevant for present purposes. The resumption took place on 9 July 1993. At that time the two allotments were used by the appellants for residential purposes and as the site for a business known as the "Bellbowrie Turf Farm". A dwelling was located on Lot 3. Lot 2 is elevated in its south-eastern corner, then falls into a gully towards the north which then drains into Pullen Pullen Creek. That gully has been dammed in two places and acts as a source of water for the blue couch turf grown on the land. The resumed easements are surveyed as a strip 10 metres wide commencing in Lot 2 on its eastern boundary near Pullen Pullen Creek, then travelling across Lot 2 through Lot 3, then into land to the west. The area of the easements totals 1,800 m² approximately and it will be [1999] QLAC 59 -- 1 of 18 -- convenient in these reasons to refer to this gross area as "the easement area" rather than to the individual easement areas on each lot. Following the resumptions a large trunk water main (1670 millimetres diameter) was laid underground within the easement area and associated works in the form of manhole covers, sawn post markers and a steel pipe post to act as a "test point" were also installed. At first instance the learned Member determined compensation as follows: Diminution in land value including blot on titles $ 5,000 Injurious Affection: Loss of turf stock – 28,000 m² @ $2/m² $56,000 Loss of profit $15,000 Erosion prevention stone pitching or concreting below dam wall $ 1,800 $72,800 Disturbance: Legal and valuation fees (as agreed including interest) $ 6,600 Total Compensation $84,400 The appellant does not complain about the $5,000 allowance for diminution in land value including blot on titles; legal and valuation fees in the amount of $6,600; nor erosion prevention stone pitching at $1,800. The appeal before us is concerned only with the issues of loss of turf stock and loss of profit and, in the context of these two issues, with the proposition that compensation should have been awarded to remediate certain damage done to the land during construction of the water main. At the time of the resumptions 5.6 ha of the appellants' land had been developed as a turf farm with 4.1 ha established with turf classified as A-grade quality and 1.5 ha of B-grade turf. The 4.1 ha of A-grade turf includes the 1,800 m² area contained in the easement area. During the process of the laying of the trunk water main the 1,800 m² area was most heavily disturbed, with soil and clay being removed to allow the pipe to be placed underground and the pipe then being covered largely by clay. It is common ground that following the installation of the water main the easement area required remediation before it could be used to grow A-grade turf. In addition to the physical impact on the easement area of the operations of the respondent or its workers or contractors, relatively large areas of land external to that 1,800 m², but within the appellants' land, were traversed by vehicles including heavy vehicles, plant and -- 2 of 18 -- machinery in connection with the process of the installation of the pipeline. This area was referred to in evidence as "the balance land" and we adopt that designation in these reasons. The balance land became compacted, rutted and contaminated with foreign grass seeds as a result of the respondent's operations. The affected areas of the balance land were identified by Mr Chapman, one of the appellants, as containing 1.8 ha of A-grade blue couch turn (including the 1,800 m² in the easement area) and 1.0 ha of B-grade turf. The remaining area of the turf farm said to be of 2.8 ha was unaffected by vehicle movements, although efficient husbandry of that otherwise unaffected area was disrupted during installation of the pipeline by interference with the irrigation infrastructure and consequential disruption to the summer watering requirements of the turf. This interference contributed to the loss of profits of the turf farm The appellants approach the matter on the basis that the whole of the 2.8 ha of land affected by the process of the installation of the water main should be treated as requiring remediation back to the original state which supported the growing of turf and with compensation being determined on that basis. There was evidence, accepted by both sides, that the in situ value of turf on a turf farm was $2 per m², and it was on this basis that the Court at first instance determined that compensation for the damaged turf should be limited to the loss of turf stock which had a total value of $56,000 (28,000 m² x $2/m²). Evidence was accepted by the learned Member that the cost of reinstatement of the easement area would total $38,660. However, it was held that "no reasonable person would be expected … to expend that amount of money to reinstate an area which represented 3.2% of the total stock". That stock at a value of $2 per m² would, we observe, have been worth only $3,600. There was disagreement between the parties at first instance concerning the cost of remediation of the balance land, with the respondent having led evidence of a figure of $2 per m² on average remediation and the appellants' evidence indicating an estimated figure of $4.68 per m² or $161,352.50 plus $1,800 for erosion prevention. It was submitted before us that the learned Member erred in principle in accepting the respondent's estimate of the costs of remediation in the balance land, however, we do not need to decide that question given the manner in which we approach the question of remediation. The appellants' case was that the total 2.8 ha of turf was effectively destroyed necessitating the remediation of the land to accommodate the re-establishment and growth of turf. The appellants' submission is that s.20 (1)(b) of the Acquisition of Land Act is a remedial provision which must be construed to give the fullest relief which the fair meaning of its -- 3 of 18 -- language will allow and which ought not to be read down as it was by the Court at first instance. Section 20(1)(b) relevant provides: "20(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 the damage (if any) caused by either or both of the following, namely – … (b) the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land." There are numerous examples where this provision has been treated by this Court as not requiring an award of compensation based on the costs said to be associated with the injurious affection flowing from the exercise of statutory powers of the constructing authority. Rather, the matter is usually approached on the basis that the loss occasioned by such injurious affection is to be assessed according to the diminution in the value of the land of the dispossessed owner (The Crown v. Corbould (1986) 11 QLCR 50; Syme v. The Commissioner for Railways (1988) 12 QLCR 98; Ernest Glen Baillie v. The Commissioner for Railways (1986) 11 QLCR 95 to cite a few of many such cases). In any event, we are of the view that the activities of the constructing authority in this case are not activities which arise from the exercise of statutory power, though statutory power would be an essential prerequisite to the carrying out of the works, but arise from the rights acquired by the constructing authority in the terms of the easement resumed from the appellants, which expressly allows utilisation of the appellants' land outside the easement area for purposes associated with the installation and management of the water main. Thus it is the first paragraph of s.20(1) to which one needs to refer and in particular to the "value of land taken". Having said that, it makes no real difference if one applies this provision rather than the one referred to by the appellants, for in considering compensation to be paid having regard to "the value of the land taken", we need to be concerned with the loss occasioned by the resumption and that is often expressed as being the difference between the value of the land before the resumption and the value after, (see for example, Brisbane City Council v. Lansbury (1977) 4 QLCR 502). The part of the appellants' argument with regard to this aspect of the appeal concentrated more, however, on the submission that the compensation awarded ought to be based on the principle of reinstatement. There is nothing in s.20 to expressly provide for reinstatement, however, it has been generally held that an approach to assessing compensation by employment of the reinstatement -- 4 of 18 -- method is appropriate in assessment of "value to the owner" of the land taken, subject, however, to certain qualifications. See for example, N.S.W. Lawn Tennis Association Limited v. The Public Transport Commission of New South Wales (1975) 33 LGRA 39 at 42. The authority often cited as the pre-eminent source of expression of the reinstatement principle is the House of Lords decision of Birmingham City Corporation v. The West Midland Baptist Association (1969) 3 All ER 172. The following quotation comes from p.175: "Apart from severance and injurious affection there is only one subject for compensation – the value of the Land (see Inland Revenue Comrs v. Glasgow & South Western Ry. Co (1887) 12 App. Cas. 315). But it was convenient and it became customary to value separately the market value of the land and the other elements comprised in its value to the owner and then to add these together to obtain the total value to the owner. And it further became customary to add 10 per cent. in respect of the expropriation being compulsory. Rule (1) abolished this addition of 10 per cent. But it came to be recognised that this method did not always produce a fair result and in certain classes of cases the cost of reinstatement was adopted as giving a better assessment of the value of the land to the owner who was being dispossessed. In Metropolitan Ry. Co. & Metropolitan District Ry. Co. v. Burrow (1883) Lord Coleridge, CJ said: '… according to my recollection, in my very moderate experience of such things when I was at the bar, it was not at all an uncommon way of testing what sums of money you were to pay to a claimant to look at the position in which he was when the railway company turned him out and say what it would cost him to get into the same position, or a position equally advantageous to that from which he had been displaced by the company. If that is so, what will it cost to reinstate me in the position from which you have precluded me? It is perfectly true you are not bound to do that. You are only bound to pay damages; but if the sum he has to pay to get into the equally advantageous position is a sum forced upon him by the action of the company against him in invitum, then that is the measure of damages which they have occasioned him. It is merely a question, I say, of how you can describe it. Perhaps it is better to avoid the word reinstatement, for it is not in the Act; but the idea is substantially there, and may be used as a means of ascertaining what sum of money is to be paid.' And in an arbitration arising out of the taking by the North British Railway Company of a part of West Princes Street Gardens, Edinburgh (1892) Lord Shand acting as arbiter said (Ibid., at pp.917, 918): 'Where a church or public building or business premises are taken or so seriously interfered with by a railway company that they can no longer be properly used for the purpose for which they were erected or occupied, the -- 5 of 18 -- cost of reinstatement is, generally speaking, a fair mode of fixing the compensation due.'" It can be seen then that in determining to adopt the reinstatement method of valuation, (and setting aside the English statutory rules) that not only were their Lordships concerned with assessing the value to the owner, but in so doing, have turned to the reinstatement method only where a "fair result" is not produced by the adoption of other more frequently employed methods. The place of reinstatement as a method to be employed in assessing compensation was considered by Mahoney, JA in Housing Commission of New South Wales v. Falconer (1981) 1 NSWLR 547 at 570 where he said: "Where there is no appropriate market or for some reason a market sale is not seen as the appropriate measure of compensation, other approaches may be adopted. The court may adopt the conventional capitalization formula: see Geita Sebea v. Territory of Papua (1941) 67 CLR 544, at pp.559, 560; Emerald Quarry Industries Pty Ltd v. Commissioner of Highways (1979) 24 ALR 37, at p.50, per Mason J at p.55, per Aicken J; or some other formula, more or less artificial: see, eg, Seatainer Terminals Ltd v. Valuer-General (Court of Appeal, 5 February 1976 unreported). See generally The Valuer Vol 22, p.82 et seq, and the cases there referred to. But in some cases the ordinary formulae may be, of their nature, inapplicable. There may be no market. The property may not have been income-producing. Or the application of the more normal formulae may simply not 'produce a fair result': see the Birmingham Corporation case [1970] AC 874 at p.893, per Lord Reid. The reinstatement principle may, in an appropriate case, be used." The employment of the reinstatement principle is appropriate, therefore, only where other approaches to assessment of value have been shown to be inappropriate or as not producing a fair result. Reinstatement is not a method of first resort. The following quotation is taken from Cripps Compulsory Acquisition of Land 11th Edition paragraph 4-203: "Before the Acquisition of Land Act, 1919, reinstatement value, instead of market value, was sometimes given so as to give proper effect to the principle of compensation on the basis of value to the owner. Generally it was only given in respect of property which was of such a nature (for example a school, church hospital, house of exceptional character, business premises in which the premises could only be carried on under special conditions or by means of a special licence) that there was no market or general demand for such property; and a market value deducted from the income derived would not constitute a fair basis in assessing the value to the owner." This source was cited with approval in the Queensland case of A.W.U. v. Townsville City Council (1982) 8 QLCR 195 at p.197. -- 6 of 18 -- It is to be noted that in Cripps there is no suggestion that one has regard to the fairness of assessment in a general sense, but only in the sense that traditional methods of valuation do not give proper effect to the principle of compensation on the basis of value to the owner. It is thus not a matter of simply having regard to all of the evidence, and based upon that, determining that a reinstatement method of valuation ought to be employed, for the essential question which must be asked in a case of this nature, is what is the value to the owner of the land acquired compulsorily. Reinstatement has been employed as a method of the assessment of compensation in cases involving lands for which there is no general market, such as churches and synagogues. In A.W.U. v. Townsville City Council (Ibid.) at p.198, the Court in enunciating the tests to be employed for what we will term the "classical formulation", said: "… there must be:- (a) an identifiable and clearly defined body of people for whom the premises compulsorily acquired are to be reinstated; (b) a specific site for the new premises already identified at the date of the assessment of compensation; (c) a firm intention to reinstate in substantially the same form." Clearly, the destruction of turf and remediation of the whole of the 2.8 ha is not a sustainable approach based upon the classic formulation of the application of the reinstatement formula. We are concerned here with a business conducted on rural residential property, not with an exclusive usage for which there is no general market or demand. It remains to be seen however, whether the classical formula has been applied in all cases, and to decide whether the appellants may bring themselves within some other application of the reinstatement principle. In many cases involving resumptions of or from land used for business reasons, reinstatement has been employed as a method of assessment of compensation. These cases can be placed into three categories; the first being cases where part of the subject land was taken, involving the demolition of part of the structure which would otherwise have remained upon the parent block. Such cases include Commissioner of Highways v. George Eblen Pty Ltd (1975) 34 LGRA 207 (a 7 foot strip was resumed from the front of a service station and car sales site); Thorpe v. Brisbane City Council (1963) 30 CLLR 153 (portion of shop premises were on the resumed land – this case also reported on one aspect only in (1966) Queensland Reports 37); National Bank of Australia Limited and Bank of New South Wales v. Council of the Shire of -- 7 of 18 -- Kingaroy (1972) 39 CLLR 1 (part of the bank premises were acquired together with the resumed land); and New South Wales Lawn Tennis Association v. Public Transport Commissioner of New South Wales (supra) (part of the tennis clubhouse was on the resumed area). Importantly, there was no issue in those cases concerning the question of whether the expenditure involved in reinstatement would make sound business sense. The second category of such cases, which we need not dwell on, involves either the acquisition of a lease, or acquisition from a fee-simple title of possession for a limited period. In such cases, it may be appropriate that reinstatement be considered as in moving to more expensive premises, a dispossessed owner is simply incurring greater expense without the advantage of acquiring an interest in land which would afford him some prospect of capital gain, or asset enrichment. The cases which fall into this category include – Keogh v. Housing Commission of Victoria (1969) 18 LGRA 295; Carrier Airconditioning Limited v. The Minister for the Army 70 CLR 459; Minister for Army v. Parbury Henty & Co (1945) 70 CLR 459; Riverstone Meat Co Ltd v. Sydney County Council (1956) 1 LGR 216; and Reo Motors Pty Ltd v. Commonwealth of Australia (1950) (Vol 11)The Valuer 38. There are other instances however, where compensation for loss of land upon which a business is located has been assessed by way of the reinstatement method. For example, in A & B Taxis Ltd v. Secretary of State for Air (1922) 2 KB 328 and Harrison and Hetherington Ltd v. Cumbria County Council 1984) 272 EG 1283; however, such cases fall into the category where there was no general demand in the marketplace for the property in question for the use to which it was being put In summary, at this stage then, we can say that there are four categories of application of reinstatement. These are: 1. Application in the classical sense as it applies to churches, schools and the like where reinstatement of the whole of the structure may be the subject of the award. 2. Reinstatement of business premises of a type where there is no general demand in the marketplace for the type of property under consideration. 3. Reinstatement applying where the reconstruction of part of an essential component within a single undertaking is appropriate. 4. In the case of the resumption of a lease, or of possession, for a limited period, of fee simple land. We now turn to consider the circumstances of the instant appeal. The appellants submitted that whilst the Land Court's award of $56,000 for loss of turf was -- 8 of 18 -- appropriate as far as it went, it ought also to have included an amount for the loss of the capacity of the land affected by the works to support the ongoing production of turf as part of a turf farm without remediation. In considering this submission, we have placed reliance on the fact that it is common ground between the parties that the highest and best use of the appellants' land was as two rural residential sites and that the value of turf was an adjunct to that use. If the 2.8 ha affected by the works were rendered unsuitable for turf farming, that area of land would not lose any capital value as it would retain value as a recreational area attached to a rural residential site. Now it is clear that our treatment of this issue is in the context of the third category described above, the other categories not being applicable. Some guidance consistent with the principles discussed above is provided by Commissioner of Highways v. Shipp Bros Pty Ltd (1978) 195 SASR 215 where the Court there was considering the question of whether it would be appropriate to allow the costs of relocation. Wells J observed at p.221: "if the costs of available relocation plainly and substantially would exceed the value of the business as a going concern (after making due allowance for retained moveable assets) it would not be the reasonable and natural consequence of expropriation to incur such costs, and hence compensation could not justifiably be assessed by reference to them." That quotation was cited with approval by Wilcox J in Banno v. Commonwealth of Australia (1993) 81 LGERA 34 at 45. We are of the view that a similar approach should be adopted in the instant case and that the question which should be asked is whether it would be reasonable for a prudent turf farmer to expend moneys in the remediation of the affected 2.8 ha. Before the resumption the appellants farmed the total area of turf on their lands and after the resumption were left with an area of 2.8 ha approximately which they continued farming until they elected to cease that activity in 1996. This continuation indicates that the 2.8 ha area was sufficient upon which to conduct a viable turf farm operation. Indeed, there was no challenge in the appeal to the finding of fact by the Land Court Member that an area of 1.35 ha was sufficient to service the level of historic sales of turf. There was no evidence to suggest that there was any loss to the turf farm, apart from loss of profits, other than the loss of 2.8 ha of turf and the capacity of that 2.8 ha to support the growth of turf without remediation. There was no evidence that the destroyed turf would add any value to the turf farm other than its value as stock for the purpose of cultivation and sale, albeit stock in excess of historic requirements. The loss of turf on the affected area of 2.8 ha therefore comprises the loss of turf as part of the stock in trade of a turf farm operation, which is accepted by the parties as having a value of $2 per m² or $56,000 in -- 9 of 18 -- total. The question for the purpose of our considering the issue of reinstatement becomes, therefore, one of whether the prudent dispossessed owner would act to reinstate that turf for the purpose of conducting turf farm activities. The question in our view is therefore simply one of asking whether a prudent turf farmer would spend an amount of money, which we accept for present purposes as being the appellants' figure of $161,352.50 (plus the $1,800 for the erosion prevention), to remediate the 2.8 ha affected, and to reinstate turf which would then, following that expenditure, have a value of $56,000 in situ. In our view, the clear answer is that it would be imprudent in the extreme for such an expenditure to take place, and it follows from this that it would not be appropriate to assess compensation on the footing that reinstatement of the affected turf area would or ought to reasonably be undertaken. It follows that the maximum of compensation with respect to the 2.8 ha of turf destroyed by the works of the constructing authority should be assessed at $56,000 being a value based on the proposition that the turf was totally destroyed. It may be the case that the works of the constructing authority have created an eyesore on the appellants' lands or have reduced their level of attractiveness having regard to their value as rural residential sites, however, we have no evidence upon which we can make any determination of compensation on that basis. The award of compensation for loss of profits of $15,000 made at first instance was based on evidence that, during the construction of the works on the resumed easement areas, there was interruption to the irrigation system which serviced the remaining 2.8 ha which continued to be farmed by the appellants. The effect was that the production of turf for sales was reduced, and income and therefore profits were reduced. The parties agree that an amount of $15,000 is an appropriate figure to apply in the circumstances outlined, however, the appellant argued before us that, in addition, we ought to award compensation relating to loss of profits associated with the 2.8 ha of turf to be restored to the affected area. In short, the argument says that income and therefore profits of the Bellbowrie Turf Farm will not immediately flow from the remediation of the affected area, but will have to await the maturing of that turf. The argument concludes that during that period of maturation it would have been the case had the resumption not taken place, that turf would have been produced and been available for sale for the generation of income and profits. We have already held that it would not be appropriate for a prudent turf farmer to reinstate turf on the affected 2.8 ha area and therefore the question about the continued loss of profits from an assumed reinstatement does not arise. Accordingly, no amendment to the determination -- 10 of 18 -- below is warranted. The appellants have therefore not persuaded us that the learned Member was in error, and the appeal, in our view, must fail. (RP Scott) MEMBER OF THE LAND COURT (NG Divett) MEMBER OF THE LAND COURT -- 11 of 18 -- IN THE LAND APPEAL COURT OF QUEENSLAND BRISBANE Re: An appeal from a determination of the Land Court - Acquisition of Land Act 1967 - Compensation payable consequent upon a resumption of land. (A97-87) BETWEEN: Joseph Ronald Chapman and Kay Lorraine Chapman Appellants AND Brisbane City Council Respondent JUDGMENT Judgment delivered at Brisbane this third day of June 1999 1 I am pleased to adopt the statement of facts set out in the reasons for judgment of Mr Scott and Dr Divett which I have had the opportunity of reading. 2 The appeal concerned only that part of the determination of compensation by the learned member which related to injurious affection. The appellants contended that they were entitled to the costs of restoring the adversely affected land to the condition it was in prior to its being damaged by the operations of the respondent. They also claimed that the amount awarded for loss of profits should have been $74,000 rather than $15,000. The appellants’ case in this regard appeared to be based upon the assumption that profits would have been generated from use of the turf contained within the adversely affected land. In his reasons the learned member observed - “The respondent has accepted that in the exercise of its statutory powers it has injuriously affected land of the claimants other than the encumbered land (see s.20(1)(b) - Acquisition of Land Act 1967) and damage which is a reasonable and -- 12 of 18 -- 13 natural consequence of such injurious affection is compensable, as was found in the judgment of the Land Appeal Court in Barns v. Director-General, Department of Transport, dated 15 August 1997 (as yet unreported).” 3 These observations were not disputed on appeal. The learned member declined to award the appellants the costs of reinstatement on the basis that any such reinstatement was unreasonable and impractical, having regard to his findings that the highest and best use of the land was for rural residential purposes and that reinstatement was not necessary for the purposes of the turf farm business conducted by the appellants on the land. 4 It was common ground that the appellants’ claim was pursuant to s.20(1)(b) of the Acquisition of Land Act 1967. That section relevantly provides - “20.(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 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. ...” 5 The appellants contended that section 20(1)(b), being a remedial provision, should be “construed so as to give the fullest relief which the fair meaning of the language will allow”. They relied on Birmingham Corporation v West Midland Baptist Trust Association Inc [1970] AC 874 and other cases dealing with the reinstatement principle. 6 But s.20 does not provide or give rise to the consequence that where damage is caused to property by a constructing authority a person having an interest in that property is entitled to reinstatement in full regardless of the cost or utility of such reinstatement. 7 In Nelungaloo Pty Ltd v The Commonwealth (1946) 75 CLR 495 Nixon J said at 571 - “It is true that its meaning has been developed in relation to the compulsory acquisition of land. But the purpose of compensation is the same, whether the property taken is real or personal. It is to place in the hands of the owner expropriated the full money equivalent of the thing of which he has been -- 13 of 18 -- 14 deprived. Compensation prima facie means recompense for loss, and when an owner is to receive compensation for being deprived of real or personal property his pecuniary loss must be ascertained by determining the value to him of the property taken from him. As the object is to find the money equivalent for the loss or, in other words, the pecuniary value to the owner contained in the asset, it cannot be less than the money value into which he might have converted his property had the law not deprived him of it.” (emphasis added) Those words were expressed in relation to the compulsory acquisition of a parcel of land but they have relevance to a provision such as s.20(1)(b). 8 In the case of compulsory acquisitions of land, compensation will normally be assessed by reference to the “market value” of the land as that expression has been construed in a great many compensation decisions. Also normally recoverable are consequential losses suffered over and above market value such as costs of removal, loss of profits of a business etc, 9 The authorities recognise however that market value will not always provide a fair basis for compensating a dispossessed or affected owner. As Glass JA observed in Housing Commission of New South Wales v Falconer (1981) 1 NSWLR 547 at 564 - “In certain classes of premises it came to be recognized that the value of the land to the dispossessed owner could be more fairly assessed having regard to the cost of reinstatement: ibid per Lord Reid, at p.893. It was applied to churches, schools, hospitals and the like where the market could not supply a proper measure of the value to the owner.” His Honour then went on to quote with approval the following passage from the 5th ed of Cripps on Compensation which passage had been referred to with approval on by Lord Reid in Birmingham Corporation v West Midland Baptist (Trust) Association Inc [1970] AC 874 at 894 - “There are some cases in which the income derived, or probably to be derived, -- 14 of 18 -- 15 from land would not constitute a fair basis in assessing the value to the owner, and then the principle of reinstatement should be applied. This principle is that the owner cannot be placed in as favourable a position as he was in before the exercise of compulsory powers, unless such a sum is assessed as will enable him to replace the premises or lands taken by premises or lands which would be to him of the same value. It is not possible to give an exhaustive catalogue of all cases to which the principle of reinstatement is applicable. But we may instance churches, schools, hospitals, houses of an exceptional character, and business premises in which the business can only be carried on under special conditions or by means of special licences.” 10 It is well established though that a pre-requisite to the awarding of compensation on a reinstatement basis is that an award on that basis be reasonable. A and B Taxis Ltd v Secretary of State for Air (1922) 2 KB 328; Commissioner of Highways v Shipp Bros Pty Ltd (1978) 19 SASR 215; Brown Bros (Mayne) Holdings Pty Ltd v NSW Land and Housing Corporation (1991) 72 LGRA 50; Banno v The Commonwealth (1993) 81 LGERA 34; Brighton v Road Construction Authority (1985) 59 LGRA 26 2 and Thorpe v Brisbane City Council (1966) Qd R 37 at 44. 11 In Brighton, Gobbo J in discussing principles applicable to the reinstatement method of compensation, observed at 270 - “It appears implicit in all the various criteria for reinstatement that the core principle is one of reasonableness.” 12 Thorpe is of particular relevance for present purposes because the issue there under consideration was essentially whether compensation should be determined by reference to the moving of an existing building rather than by reference to the cost of its demolition and rebuilding. 13 Gibbs J at 44-45, after observing that it was common ground between the parties that the principle of reinstatement applied to the assessment of the appellant’s compensation, said that - “In answering the question how much money is necessary for this purpose it becomes necessary to enquire in what manner the reinstatement should be effected. The question is in other words whether the manner of reinstatement proposed by the respondents is reasonable in the circumstances. (See A and B Taxis Limited v The Secretary of State for Air (1922) 2 K.B. 328, at pp.337 and -- 15 of 18 -- 16 343... It was pointed out that the offer was not made until more than two years after the date of resumption and that compensation had to be assessed at a later date. However, as was said in Minister for Army v Parbury Henty and Co (1945) 70 C.L.R. 459, at p.514: ‘The amount of compensation, being a matter of assessment, can, like damages, be calculated in the light of any subsequent facts to the extent to which they throw light upon the items of value which can properly be taken into account in the calculation, having regard to the circumstances existing at the date of acquisition.’ ” 14 If the appellants’ compensation for adverse affectation is to be assessed by reference to the principles referable to reinstatement, as the appellants claim, any reinstatement sought must be reasonable. I now turn to an application of these principles to the facts. There was no challenge on appeal to the following findings of fact made by the Land Court member - (1) that at the time of resumption about 4.1 hectares (including 1800m2 of the easement area) was cultivated with A-Grade turf and about 1.5 hectares with B-Grade turf); (2) that at no time had there been full utilisation of the full production capacity of the turf farm; (3) about 1.8 hectares (including the 1800m2 of the easement area) of A-Grade turf was damaged in the course of construction activities; (4) about 1.0 hectare of B-Grade turf was damaged in the course of construction activities; (5) about 2.3 hectares of A-Grade turf (4.1 hectares less 1.8 hectares which was damaged) was not damaged in the course of construction activities but was affected to some extent by interference with irrigation infrastructure; (6) that after the resumption the appellants continued their turf farming activities on -- 16 of 18 -- 17 that 2.3 hectare area until 1996; (7) that the 2.3 hectares of undamaged A-Grade turf was more than sufficient to meet the farm’s annual maintainable sales, some 1.35 hectares being sufficient for that purpose; (8) that if 2.8 hectares had been rendered unsuitable for turf farming, that area of land would lose no capital value, its value as a recreational area attached to a rural residential site having equivalent value to its value as a turf farm; (9) that there was additional value related to the value of turf in situ as the stock in trade of the turf-farming business; (10) that the in situ value of that turf was $2.00 per m2; (11) that the highest and best use of the land was as rural residential sites. The appellant’ counsel argued that the court should infer from the fact that the appellants (who were experienced turf farmers) and some other turf farmers in south-east Queensland maintained surplus stocks of turf that such stocks had some business use or efficacy. The precise use or efficacy was not identified. I do not accept the submission. The mere following of a business practice does not establish that the practice increases the profitability of, or adds value to, a business. The expert called by the respondent gave evidence concerning the undesirability, from a business viewpoint, of growing and maintaining more turf stock than was needed. It was not suggested to that witness in cross-examination that the excess turf stocks maintained by the appellants increased the capital value of the appellants’ land or business or added to the profitability of that business. When regard is had to the above facts, it becomes plain that reinstatement of adversely affected areas at a cost of $4.68 per square metre, on the appellants’ case, would be unreasonable. Such reinstatement may have increased the cost of maintaining the farm’s stock of turf but on the -- 17 of 18 -- 18 evidence before the Land Court and this Court it would not have resulted in any increase in sales or profitability. Nor would the value of the land or of any business conducted on it have been increased. As noted earlier, the highest and best use of the land was for rural residential sites and the appellants were compensated for the destruction of turf stock. In my view the above principles governing compensation were correctly applied at first instance and I agree with the member’s determination of injurious affection. 15 It follows from the above that the appellants are not entitled to further compensation for any alleged loss of profits attributable to the injuriously affected areas. The evidence does not support a finding of loss of profits as a result of the injurious affectation of that land. 16 I agree with the other members of the Court that the appeal should be dismissed. Justice of the Supreme Court -- 18 of 18 --