Doolan Properties Pty Ltd v Council of the Shire of Pine Rivers [1999] QLAC 1 (1999) 20 QLCR 210

IN THE LAND APPEAL COURT Re: Claim for Compensation - Acquisition of Land Act 1967. (REF A96-07). BETWEEN: DOOLAN PROPERTIES PTY LTD and Appellant/Claimant COUNCIL OF THE SHIRE OF PINE RIVERS Respondent J U D G M E N T Delivered at Brisbane this first day of February 1999. Following delivery of judgment by the Land Court in this matter on 24 December 1997, Doolan Properties Pty Ltd filed an appeal in the Land Appeal Court registry on 4 February 1998 in the name William Doolan as claimant. The appeal is against the determination by the Land Court of compensation in the sum of $142,000 for the resumption by the respondent Council on 17 August 1995, of an area of 1071 square metres of land described as Lot 6 on RP 881938 (to be registered in the Land Registry), Parish of Kedron, (the resumed land) for road purposes. Lot 6 on RP 881938 is part of a larger area of land (the parent land) described as Lot 3 on RP 864243, Parish of Kedron, containing an area of 6106 square metres. The retention area is described as Lot 5 on RP 881938, Parish of Kedron, with an area of 5035 square metres. The resumed land is situated at the corner of South Pine and Queens Roads, Everton Park. At resumption date, the resumed land and the retention area were zoned “Commercial” and “Home Industry” under the provisions of the Council of the Shire of Pine Rivers Town Planning Scheme. But in March 1994, Mr Doolan lodged with Council a combined rezoning and Column 3B application, the first component of which was to have the parent land excluded from the “Commercial” and “Home Industry” zones and included within the “Special Facilities” (Shop, Late Night Shop, Craft Shop and Columns 3A and 3B uses in the Commercial Area) zone. In [1999] QLAC 1 -- 1 of 15 -- 2 November 1994, Council advised Mr Doolan that the rezoning and column 3B components of the application were approved subject to certain conditions including the following: “3.04 Future Road Widening Development shall not be permitted to comprise the area designated for Future Road Widening on Pine Rivers Shire Council Drawing No 6/00778/A2 adopted by Council on 31 October 1994 (MP 94/4265). This land is required by the Council for Road Purposes in the future. The Developer agrees that no development shall occur which would in any way prejudice or compromise the future widening”. The rezoning conditions also include the following: “4.01 If not completed by others, the applicant shall complete interim frontage roadworks to the South Pine Road frontage of the subject land by providing: (a) Kerb and channel on an approved alignment, and (b) Sealed pavement widening to the new kerb and channel, and (c) Reinstatement or relocation of the existing pedestrian and bus stop, and (d) Any associated drainage, signage, linemarking, and lighting that may be required to comply with Council’s standards. 4.02 Site Access The applicant shall construct the accesses to be fully compatible (line and level) with the ultimate frontage roadworks to the satisfaction of the Director Works and Services. The applicant shall note that Queens Road and South Pine Road are designated as Urban Arterial Roads and that all turns access to the site will not be permitted ultimately. The applicant shall also note that Council intends upgrading the intersection of Queens Road and South Pine Road in the future and it is likely that this upgrading will incorporate a central median along the full frontage of the subject land to both Queens Road and South Pine Road. Notwithstanding the above, Council’s Director of Works and Services may approve temporary or interim ‘all turns’ access to the site having due regard to Council’s planning for the frontage roadworks upgradings and safety issues. ” The retention area land is now included within the “Special Facilities” (Shop, Late Night Shop, Craft Shop and Column 3A and 3B Uses in the Commercial Zone) zone. The notice of appeal contains the grounds that the learned Member erred in -- 2 of 15 -- 3 “(a) failing to conclude that the concept shown in ETS drawings (Exhibit 14) reflected the highest and best use of the subject land before the resumption; (b) failing to conclude that the sales evidence should be analysed by reference to dollar value per square metre of gross floor area achieved at the time of sale, rather than as a dollar value per square metre of site area; (c) his treatment of the roadworks conditions in the Council approval of 28 November 1994, as regards: (i) the development potential of the subject land before the resumption; (ii) the value of the subject land before resumption; (d) assessing the value of the subject land before resumption at too low an amount ($795,670), in the light of; (i) ground (1) of ground (2) or both; (ii) ground (3); (iii) alternatively to ground (2), a more reasonable assessment of the value of the land as a dollar value per square metre of site area than the adopted ($145/m².) An Amended Notice of Appeal dated 25 November 1998 was filed in the Land Appeal Court Registry. It seeks to amend the original Notice of Appeal in the following particulars: 1. The name of the appellant to be changed from William Doolan to Doolan Properties Pty Ltd ACN 061 428 724. 2. (d)(i) Deletion of ground 1 and ground 2 and inclusion of ground (a) or ground (b) or both; (d)(ii) Deletion of ground 3 and the inclusion of ground (c); (d)(iii) The deletion of ground (2) and the inclusion of ground (b). The application for leave to amend was opposed by the respondent. It gives rise to two separate issues, namely – a. whether it is open to the Court to give leave to amend the notice of appeal to permit the name of the appellant to be changed from William Doolan to Doolan Properties Pty Ltd and, if so, whether leave should be granted; and -- 3 of 15 -- 4 b. whether there is power to permit the appellant to amend the notice of appeal to include an appeal from the decision of the Land Court in this matter on 22 July 1998 and, if so, whether leave should be granted. Doolan Properties Pty Ltd was the claimant in the matter under appeal. There was no suggestion in the proceedings before the learned Member that Mr Doolan, rather than Doolan Properties Pty Ltd, was the appropriate party. After the conclusion of the hearing at first instance the appellant changed its solicitors. Mr Doolan, a director of the appellant, gave oral instructions to the new solicitors to lodge an appeal on behalf of the appellant. For a reason which the solicitor who has had the conduct of the appeal throughout is unable to explain, the name of the appellant was erroneously stated in the notice of appeal as William Doolan. Mr O’Regan QC, who appears for the respondent, drew the Court’s attention to the fact that the identity of the appellant was raised at a directions hearing on 6 August 1998. That was within 42 days of the decisions of 6 July 1998 and 22 July 1998. However, it was not until 3 November 1998 that an amended notice of appeal was lodged which sought to change the name of the appellant to Doolan Properties Pty Ltd. It is submitted on behalf of the respondent that as the mandatory appeal requirements have not been complied with, the Court has no jurisdiction to proceed with the appeal notwithstanding the purported amended notice of appeal filed in this Court on 3 November 1998. In our view, the notice of appeal filed on 4 February 1998 was defective in that the name of the appellant was incorrectly described. But this is not a case in which an appeal was commenced by an incorrect party and the correct party seeks to be substituted as appellant. That being the case, the appeal is properly constituted and this Court has power under section 44(11)(d)(ii) of the Land Act 1962 to allow the amendment sought. If authority for this conclusion is required, it may be found in a passage in the reasons of Donaldson LJ in Evans Constructions Co Ltd v. Charrington & Co Ltd [1983] QB 810 at 821, referred to with approval by McHugh J in Bridge Shipping Pty Limited v. Grand Shipping S.A. (1991) 173 CLR 231. It was not suggested by Mr O’Regan QC, quite properly, that the respondent had suffered any prejudice through the appellant’s error. -- 4 of 15 -- 5 We turn now to the second preliminary issue. On 25 November 1998 a further amended notice of appeal was produced which sought to appeal against the learned Member’s decision of 22 July 1998 in respect of disturbance costs. Mr O’Regan QC submitted that the appeal in relation to disturbance is incompetent as it was not lodged within time and no reasonable explanation has been given for the appellant’s non- compliance. Mr Gore QC, for the appellant, contended that no decision of the Land Court was relevantly pronounced until the matter was finally disposed of by the learned Member on 22 July 1998. It was then, it was submitted, that time commenced to run for the purposes of section 44(11). The original notice of appeal was lodged on 4 February 1998. It is submitted that this notice can serve as the notice of appeal from all three decisions, even though it preceded those handed down in July 1998. Bock v. Don-Rex Furniture (Qld) [1981] Qd R 326 is cited as authority for that proposition. Having regard to the view we take of the decision of 22 July, it is unnecessary for us to consider whether the requirements of section 44(11) can be satisfied by a notice of appeal which precedes the decision appealed against. We remark in passing that it is difficult to understand how the principle of construction applied in Don-Rex could operate so as to authorise the filing and service of a notice of appeal at a time before the handing down of the decision the subject of the appeal. We are unable to accept the submission that there was no decision to appeal against until the decision of 22 July 1998. The decision of 24 December 1997 plainly determines the amount of compensation payable by the respondent to the appellant and finally disposes of the matter except for – “ a. the rate of interest payable on the amount of compensation; b. what amount should be awarded to items of disturbance; c. whether any of the disturbance costs have been paid by the claimant, and, if so, when they were paid and the rate or rates of interest payable in relation to the various costs; and d. any application for costs. ” The document which contains the Member’s decision is described in it as a “JUDGMENT”. After the reasons for the decision have been set out there appears, on -- 5 of 15 -- 6 p.70, the heading “Conclusion and order”. The Member’s conclusions are then summarised and it is provided – “Compensation payable by the respondent Council to the claimant is determined in relation to the value of the land taken, injurious affection and severance in the sum of one hundred and forty-two thousand dollars ($142,000).” The determination was not expressed to be provisional and it is therefore a decision within the meaning of section 44(11) of the Land Act. For the sake of completeness, we should incorporate within this decision brief details of the assessment of compensation made by the valuers called before the Land Court and of the Land Court’s determination of compensation. For the claimant, Registered Valuer Kevin Patrick Walsh of the valuation firm, Taylor Byrne, assessed compensation for the loss of land as follows: Value before resumption - 3295m² GFA (Gross Floor Area) @ $780/ m² $2,570,100 Less Value after resumption - 2132m² GFA @ $700/m² $1,492,400 Compensation $1,077,700 It is to be noted that the original claim for compensation for loss of land and injurious affection filed in the Land Court registry on behalf of the claimant in the sum of $1,556,000 was amended during the hearing below to accord with Mr Walsh’s assessment of compensation. For the respondent Council, Registered Valuer John Richard Wood of John Wood & Associates assessed compensation for the loss of land as follows: Value before resumption - 6106m² @ $80/m² $ 488,480 Less Value after resumption - 5035m² @ $80/m² $ 402,800 $ 85,680 Mr Wood adds to his valuation the comment that the value of enhancement should be deducted from this figure. This is equivalent to the unquantified cost of -- 6 of 15 -- 7 carrying out development approval roadworks - found by the Land Court to be $89,700. It follows that Mr Wood’s assessment of compensation is NIL due to what he believed was the factor of enhancement. The basis of the Land Court determination of compensation in the sum of $142,000 for the value of the land taken, injurious affection and severance is set out in a subsequent and separate decision by the learned Member on disturbance items and costs dated 6 July 1998. It reads: “Subject land - 6106m² @ $145/m² $ 885,370 Less cost of external roadworks $ 89,700 $ 795,670 Less remaining land - 5,035m² x $130/m² $ 654,550 $ 141,120 Adopt $142,000. ” Now the allowance made for the cost of external roadworks (rezoning conditions 3.04, 4.01 and 4.02) in the sum of $89,700 is the result of the adoption by the Court of an engineering cost estimate by consulting engineers Gutteridge Haskins and Davey Pty Ltd. No challenge is made to the determination of the cost of external roadworks but the appellant submits that application of the Pointe Gourde principle requires that the cost of the roadworks be ignored in assessing compensation. It was further submitted that the approach of the Member to the application of the Pointe Gourde principle was erroneous as it, in effect, confined its application to circumstances in which the resumption scheme altered the type of development rather than its scale. The passages in the reasons which were the subject of these complaints are as follows- “In my opinion, the claimant’s submission on the reverse Pointe Gourde principle cannot succeed. In this case there is not a change in kind to the highest and best use of the land which is referrable to the road widening scheme. At all material times South Pine Road and Queens Road existed. The potential for the subject land to be re- zoned to achieve its highest and best use was not influenced by the road widening. This is not a case where, say, a new expressway or dam through or on the land completely changed its potential or -- 7 of 15 -- 8 assisted it to achieve its potential. With or without the road widening the potential for the highest and best use of the land remained the same. Rather it is the area of land which can be developed for that highest and best use which is affected by the roadworks. The extent to which the land can be used for that purpose will be influenced by conditions on rezoning. Those matters can be taken into account in determining the before and after value of the land. Accordingly, it is appropriate to consider the constraints on the potential development of the subject land as including conditions restricting work where road widening may occur. Rather than provide enhancement of that land, I consider that the undertaking of the works was a condition of rezoning and 3B approval and the cost of carrying out those works is a cost which would probably have been borne by the owner of the subject land as the cost of consent to develop that land for its highest and best use. Accordingly, I have concluded that the cost would (be) taken into account by a prospective purchaser of the subject land who would have factored that into the purchase price. Consequently, if the land was ripe for development but the price of achieving that potential was $89,700 then that amount would be deducted from the amount which a purchaser would otherwise have paid for the subject land. ” Mr O’Regan QC, correctly in our view, did not attempt to uphold the Member’s conclusion that, in the circumstances under consideration, the impact of the road widening condition upon the development potential of the land ought be ignored. He argued that the Member was correct though in taking the cost of roadworks into account on the basis that - “The roadworks requirement although a step in anticipation of resumption was one of many rezoning conditions. He correctly characterised it as ‘a cost which would probably have been borne by the owner of the subject land as the cost of consent to develop the land for its highest and best use’ and ‘the cost would [be] taken into account by a prospective purchaser of the subject land who would have factored that into the purchase price’. Thus the Member found that the cost was one which would have to be incurred regardless of the resumption scheme and therefore should be brought into account. ” In Housing Commission of NSW v. San Sebastian Proprietary Limited (1978) 140 CLR 196, Jacobs J, with whose reasons the other members of the Court agreed, said that section 124 of the Public Works Act (NSW) states in statutory form the -- 8 of 15 -- 9 principle expressed in Pointe Gourde Quarrying and Transport Co Ltd v. Sub- Intendent of Crown Lands [1947] AC 565 at 572. The section was paraphrased by his Honour in the following terms – “… s. 124 of the Public Works Act … so far as is material, provides that the assessing tribunal shall assess the compensation according to what they find to have been the value of resumed lands at the time of publication of notification of the resumption without reference to any alteration in such value arising from the establishment of railway or other public works upon or for which such land was resumed.” In Director of Buildings and Lands v. Shun Fung Ironworks Ltd [1995] 2 AC 111 the principle was explained in the following terms in the advice of the Judicial Committee of the Privy Council – “A landowner cannot claim compensation to the extent that the value of his land is increased by the very scheme of which the resumption forms an integral part. That principle applies also in reverse. A loss in value attributable to the scheme is not to enure to the detriment of a claimant: see Melwood Units Pty. Ltd. v. Commissioner of Main Roads [1979] A.C. 426. The underlying reasoning is that if the landowner is to be fairly compensated, scheme losses should attract compensation but scheme gains should not. Had there been no scheme those losses and gains would not have arisen.” As the above passage makes plain, the principle applies in respect of any change in value of the land caused by a scheme of which the resumption forms part. In The Crown v Murphy (1990) 64 ALJR 593, it was said in the Judgment of the Court at 595 – “One purpose of this principle is to ensure that a resuming authority does not employ planning restrictions to destroy the development potential of the land and then assess compensation for its resumption on the basis that the destroyed potential had never existed: Melwood Units Ltd v Main Roads Cmr [1979] AC 426 at 434. The principle applies in cases where there is a direct relationship between the planning restriction and the scheme of which resumption is a feature and extends to cases where there is merely an indirect relationship, provided that the planning restriction can properly be regarded as a step in the process of resumption: Housing Commission of NSW v San Sebastian Pty Ltd, at 206-207. ” It was accepted on behalf of the respondent that a road widening scheme came into existence in about March 1993 when the respondent first took steps towards the -- 9 of 15 -- 10 planning and implementation of a widening of South Pine Road. In April 1994 the respondent advised the appellant that a proposed road widening would affect the appellant’s March 1994 application. In our view, the evidence demonstrates a direct relationship between the road widening requirement imposed by the Council and the scheme. The imposition of the road widening requirement can properly be “regarded as a step in the process of resumption”. In those circumstances, we can see no justification in principle for the restrictive approach urged by the respondent. Consequently, by application of the Pointe Gourde principle, the value of the parent land before resumption must be assessed without reference to the cost of the external roadworks. An additional consequence of rejecting the Member’s approach to the application of the Pointe Gourde principle is discussed later. Apart from the reverse Pointe Gourde submission, the decision of the Land Court was placed under attack by the appellant in other areas. Counsel submitted that it is clear from the transcript that the learned Member misinterpreted the evidence of valuer Walsh when he said in his decision that Mr Walsh suggested that, if he valued the land on a per square metre basis, then he would have applied a value in the range of $100 to $150 per square metre. But reference to the transcript reveals that Mr Walsh did qualify this opinion when he said that “I would have thought that, assuming that the capability aspect has nothing really to do with it, I would have thought that, looking at the sales, the rate should be more like between $100 and $150 a square metre from the sales we have”. (Transcript p.78). (The underlining is ours). It is also clear that Mr Walsh was firmly of the opinion that the development capability of the subject land should be taken into account, and he sees it as being superior to most of the sales introduced in evidence with the possible exception of his sale No. 7 (AR 414). It is further contended by the appellant that the learned Member should have placed more weight in his decision on the use of the “Gross Floor Area” method of valuation and sales comparisons. He found that “there are weaknesses in both the GFA and the rate per square metre approach to determining the “before” and “after” value of the land”. Before us, Counsel for the appellant company submitted that it is open for this Court to determine compensation using the GFA method of assessment. -- 10 of 15 -- 11 He suggests we could reduce Mr Walsh’s GFA of 3295m² before resumption by a factor of 25% given the Member’s conclusion that “there are commercial reasons why, in my opinion, the highest and best use of the subject land would not be realised in the form proposed by the ETA Group”. The appellant urges us to determine compensation for loss of land using the GFA method as follows:- Value before resumption - 2470m² GFA (3295m² less 25%) @ $780m² $ 1,926,600 Less value after resumption - 2132m² GFA @ $700m² $ 1,492,400 Compensation $ 434,200 In the event that this Court does not favour the use of the Gross Floor Area method of valuation, Counsel for the appellant submitted that, using a value per square metre method of assessment, viewed in the light of Mr Walsh’s sales and in particular his sale No. 7 (AR 414) and his remarks that “that’s a superior location and a superior position, it shows as a price per square metre of land at $338. If I were to work on a value of land - a value of dollars per square metre of land I would have to be taking cognisance of the $338 as shown in that sale” (Transcript p.117), it is open for us to make the following finding on a per square metre valuation basis: Value before resumption - 6106m² @ $200/m² $1,221,200 Less value after resumption - 5035m² @ $150m² $ 755,250 Compensation $ 465,950 A further attack was launched by the appellant against a remark of the learned Member that Counsel for the claimant submitted that he should make a separate assessment of compensation for severance by reference to the difference of $121,524 in construction costs in the proposed “before” and “after” developments. We note -- 11 of 15 -- 12 there was no separate allowance made for severance. But Counsel submits that he was not talking about a separate allowance for severance. He was merely talking about additional development costs in the “before” resumption scenario, but dealing only with the cost penalty in the “after” scenario ($57 per m² additional cost on “after” resumption Gross Floor Area of 2132m²) of $121,524 (2132m² GFA x $57). We agree that some allowance should be made in the “before” and “after” land values for the additional development costs in the “after” resumption scenario but not to the extent of $121,524, and Counsel for the appellant submits “he (the Member) hasn’t given this factor, whether it’s $121,000 or something less than that - but plainly he hasn’t given it enough weight”. But the learned Member identified, correctly in our view, that the “before” and “after” method (of compensation assessment) which he had adopted effectively takes up any severance and injurious affection suffered by the dispossessed owner. It is submitted by Counsel for the respondent that the adoption of a Gross Floor Area method of valuation to the exclusion of a “per square metre” basis would be to adopt the primary method of valuation used by Mr Walsh and to exclude the opinions expressed by three other valuers called in the case that the preferable method of valuation is the per square metre basis. For this reason, the respondent says that the learned Member’s approach to compensation assessment, being based on the respondent’s method of valuation and on its evidence, should not be disturbed because no error of law has been demonstrated. We do not favour the use of a “Gross Floor Area” method of valuation to the exclusion of a “per square metre” method when the task at hand is to value commercial-type properties. The obvious weakness in using a “Gross Floor Area” method is that it makes the underlying assumption that the subject land and the sales evidence parcels will ultimately be developed to the maximum permissible gross floor area within the particular commercial zoning. But this may not, and often is not, achieved upon the development of a vacant commercial site for any of a number of reasons - e.g. site topography, building design, economic feasibility studies of the building design etc. We prefer the use of the “per square metre” method of valuation but emphasise that valuers must take care when valuing commercial land on a “per -- 12 of 15 -- 13 square metre basis” to carefully consider all aspects of the application of basic sales evidence, including giving proper weight to development potential and/or capability. We should add the comment that there is simply no evidence upon which we could adopt the appellant Counsel’s submission that the GFA used by Mr Walsh in his before valuation should be reduced by a factor of 25%. He has taken the liberty of selecting a reduction factor in the GFA since the Land Court was satisfied that the development on the subject land would have been larger than that on the retained land but not 54% larger. It seems to us that the only evidence which could be used to nominate a percentage reduction factor in the GFA would be the pre-resumption Development Plan (SK02 - Part Exhibit 14) prepared by Rhonan O’Brien Pty Ltd in February 1994 for rezoning application, and this plan provides a GFA of 2768m² - or a factor of 16% less than the GFA used by Mr Walsh in his valuation exercise. But it seems these plans prepared by Rhonan O’Brien Pty Ltd were not considered by the client at that time (Seymour Developments) to have been commercially viable - vide Report E.T.S. Group (AR 263 Pt 6). The values per square metre submitted for our consideration by Counsel for the appellant have no support in the evidence in the Record. But we are convinced that Mr Walsh would have applied a higher value than “$100 per square metre to $150 per square metre” in valuing the subject land before resumption having regard to its “development capability”. We are also satisfied that the value of the parent land should be marginally higher than that found by the learned Member, mainly because of its better topography and consequent greater development capability when the road widening is to be ignored because of the application of the Pointe Gourde principle in reverse. Another factor is that the development costs pre-resumption are lower per m² GFA than they are post-resumption. But the value of the parent parcel is to be determined in the light of the notional restoration of the pre-resumption access to the site which is considered satisfactory by Mr Walsh but not looked upon so favourably by Mr Wood. The appeal is allowed, and the determination of compensation in the sum of $142,000 by the Land Court is set aside. We make the following compensation determination: -- 13 of 15 -- 14 Value of land before resumption - 6106m² @ $150/m² $915,900 Less Value of land after resumption - 5035m² @ $130/m² $654,550 Compensation for land resumed and for severance (additional development costs on retention area) $261,350 This determination of compensation is rounded off to $261,500. Costs: The appellant/claimant has succeeded in the appeal to the extent that the compensation determination by the Land Court has been increased from $142,000 to $261,500. It is entitled to recover its costs of the appeal. Accordingly, in accordance with the provisions of section 44(16) of the Land Act 1962, we ORDER that, in addition to compensation payable, the respondent Council of the Shire of Pine Rivers pay the claimant’s/appellant’s (Doolan Properties Pty Ltd) costs incurred in relation to this appeal, such costs to be ascertained and fixed by the Taxing Officer of the Supreme Court at Brisbane according to the scale of costs prescribed by law for the time being in respect of proceedings in the Supreme Court and the Taxing Officer is authorised and required to ascertain and fix such costs in accordance with this order. J. Justice of the Supreme Court President of the Land Court -- 14 of 15 -- 15 Member of the Land Court -- 15 of 15 --