Anijiri Pty Ltd v Brisbane City Council [1991] QLC 41

LAND COURT BRISBANE 6th December, 1991 Re: Claim for compensation - Resumption for road purposes. (A91-29). Anijiri Pty Ltd v. Brisbane City Council J U D G M E N T By Notification of Resumption published in the Government Gazette of 23rd May, 1987, Brisbane City Council, pursuant to the provisions of the Acquisition of Land Act 1967-1986, resumed for road purposes in the County of Stanley, Parish of Indooroopilly, City of Brisbane, Lot 3 on Plan 212551 containing an area of 604 square metres and being part of the land contained in Certificates of Title, Volume 5762, Folios 132 and 133. The Notice of Intention to Resume the land was given on 12th September, 1986. The resumed land is situated in the suburb of Kenmore. It provides a link between Wyndarra Street and Gem Road. It was formerly part of two lots in the ownership of the claimant. The Notice of Intention to Resume stated that the intended resumption would take approximately 49 square metres from Lot 70 (760m2) and approximately 542 square metres from Lot 72 (2062m2), both lots being lots on Registered Plan 158245. In October, 1990, a claim for compensation was filed on the respondent in the sum of $40,000 plus interest. In the hearing of the matter, leave was sought and obtained to amend the claim to - Land $10,000.00 Valuers fees $ 1,393.50 Town planner fees $ 467.50 Engineers fees $ 422.00 Legal fees are also claimed. Interest is claimed on compensation. Professional fees as claimed (valuer, town planner and engineer) and incurred in the preparation and lodgment of [1994] QLC 41 -- 1 of 16 -- 2 the claim are agreed but are not admitted as it is the case for the respondent that no compensation is payable because it is submitted that the value of the land remaining after the resumption exceeds the value of the land before the resumption. Anijiri Pty Ltd is a company controlled by the Ruddy family. Mr M.H. Ruddy gave evidence on its behalf. He is a director of the company. Evidence was also given by Mr V.G. Feros who is a consultant town planner and by Mr K.P. Walsh, registered valuer. The assessment of compensation made by Mr Walsh is the sum claimed. This was derived by the common and what may appear on the surface to be an appropriate method in the circumstances of the subject case by valuing the lots (two) before the resumption and the lots (two) after the resumption. He had also considered the matter from the point of view of subdivision and sale of the relevant lands before and after the resumption but concluded that at the relevant date such an exercise would not be viable. Compensation was assessed on behalf of the respondent by Mr G.J. Bertenshaw, registered valuer, who is in the employ of the respondent. In his opinion the highest and best use of the land before and after the resumption was for subdivision - into four lots before the resumption (Plan 434N-4) with Lot 103 becoming road and into three lots after the resumption, with Lot 2 (formerly Lot 72) being subdivided into two lots. The first exercise yielded a land value in round figures of $74,500. The second yielded the same value. He also did an exercise in sale of the lands as subdivided before and after the resumption. This approach yields this contrast - Walsh Bertenshaw Before Before Lot 70 - 760m2 - 40,000 30,000 After After Lot 1 - 9452 - 45,000 45,000 Before Before Lot 72 - 2062m2 - 65,000 40,000 After After -- 2 of 16 -- 3 Lot 2 - 12732 - 50,000 40,000 Compensation $10,000 Nil I should add a qualification to these figures by saying that in both these exercises Mr Walsh envisaged a sale of the lots to separate buyers on the given day, whereas Mr Bertenshaw envisaged a sale of the lots to the one purchaser for purposes of resale separately and hence allowed for certain holding charges, etc., which would not be incurred were the land sold to separate purchasers. Whichever method is used, the end result if followed before and after the resumption is of a comparable sum. The principles governing the particular question may be found in the words of Else-Mitchell J. at p. 137 of the judgment in Canberra Freeholds Ltd v. Queanbeyan Municipal Council (1971-73) 27 L.G.R.A. 134: "As I see the position, it is a question of fact for determination by the tribunal assessing compensation in the light of the circumstances of each resumption, whether one should assume the immediate sale of the entirety of the land resumed to one purchaser or the sale of individual subdivided lots to several purchasers; and according to whichever assumption is made it will usually be necessary to consider also how far the market price would be affected and to what extent any delay in the sale of all the sub-divided parcels might ensue. " The circumstances of the subject case do not warrant any serious consideration being given to whichever is the preferred method. For the sake of simplicity, bearing in mind that the end result will be of a comparable sum, I will for the purpose of considering this exercise envisage a sale of the lots to separate purchasers both before and after the resumption. I come now to matters of an historical nature which are relevant in understanding the evidence and the approach taken to the assessment of compensation by the valuers. Prior to the resumption the lots through which the land was resumed were adjoining lots, one of hatchet shape and the other of irregular shape. They are shown on Plan 158245 - attachment A. These lots were originally part of a substantial subdivision of about 100 lots, approval for which was given in the year 1976. That approval provided for the dedication of Wyndarra Street and for its connection with Gem Road. An extract of the plan of that proposed subdivision and -- 3 of 16 -- 4 taken from attachment 4 to the report of Mr Bertenshaw shows the proposed design - attachment B. The subdivision proceeded with the exception of Lots 70, 71 and 72 which part of the subdivision was withheld pending the final design for the intersection of Wyndarra Street and Gem Road. That, according to Mr Bertenshaw, was dependent on the development of adjoining lands opposite Gem Road. Eventually the subdivider went into liquidation and lots 70 and 72 in the form in which they appear on Plan 158245 (attachment A) were purchased by the claimant and in separate titles. A plan of subdivision of those lots into four lots including one lot for road (Lot 103) was lodged with the Council in late 1985 (Plan 434N-4) - attachment C; and approved subject to conditions which included condition (a) as follows: "As offered by letter dated 11th December, 1985, the subdivider/s to transfer to Council for future road purposes, free of compensation, land shown on proposal plan 434-N dated 25th March, 1986 as Lot 103. The cost of such transfer is to be met by Council. " In subsequent correspondence with the Council, more particularly by letter dated 18th July, 1986, the claimant (through Mr Ruddy Senior, now deceased) indicated that it had no complaint with the conditions set out in the letter of approval. It was said in the same letter that the company could not afford to hold the land - "the simple fact is that my capacity to co-operate with the Council is now exhausted in that my bank has taken it out of my hands. I've been allowed a short, ill-defined period within which to resolve this problem and as an alternative it appears that these lots will be liquidated." This was July 1986. The Notice of Intention to Resume the land issued on 12th September, 1986. The plan of the land after the resumption is shown on Plan 212551 (attachment D). Lot 3 becomes the new road linking Wyndarra Street and Gem Road with the southern road alignment in Gem Road opposite coinciding with the southern alignment of Lot 103 - "The actual right angle bend in Gem Road was shifted further south so that area adjacent to Lot 70, although remaining road reserve, was not -- 4 of 16 -- 5 constructed roadway" - Mr Bertenshaw. The effect of the road link is that access to Gem Road for traffic from the subdivision of which the subject land originally formed part has, after the resumption, been split between this link and Annabel Street to the south. With this evidence on the file of the respondent, Mr Bertenshaw made the statement that it was always the intention of the Council to have a connection between Wyndarra Street and Gem Road. He formed the opinion after consulting the Planning Department of the respondent that "any proposal to resurvey and subdivide the original lands would have been subject to this requirement for future road". It is this issue which is challenged by the claimant at the outset. The submission put is that the matter must be viewed and a decision made on the factual basis whether at the date of resumption it would be reasonable and relevant to subject an application by an owner (unrestricted) of Lots 70 and 72 on Plan 158245 to subdivide those lands into four lots or less (by adapting Plan 434N-4) to the "requirement" for future road. In order to answer this question properly it is necessary to ignore the agreement that existed between the respondent and the original subdivider of the land - that opportunity was lost when Plan 158245 was sealed by the respondent and registered in the real property office. It is also required in my opinion to ignore any question whether the provision of the road link is in the public interest - there is no doubt that it is and the resumption says that it is but it does not follow ipso facto that the particular owner at any given time is required to donate the relevant land for road purposes. The principal source of authority referred to by Counsel for the claimant is Cardwell Shire Council v. King Ranch (Australia) Pty Ltd (1984-85) 54 L.G.R.A. 110 where at p. 113, Gibbs J. said - "The statutory test that has to be applied by a local authority in deciding whether to attach conditions to its approval in a case such as the present is whether the conditions are reasonably required by the subdivision. This means that the local authority, in deciding whether a condition is reasonably required by the subdivision, is entitled to take into account the fact of the subdivision and the changes that the subdivision is likely to produce - for example, in a case such as the present, the increased use of the road and of the bridge - and to impose such conditions as appear to be reasonably required in those circumstances. " -- 5 of 16 -- 6 Mr Feros addressed this question. His advices to Mr Walsh were that under the town planning scheme operative at the time the land could have been subdivided into four lots. He was of the opinion that the requirement for the road spoken of would be untenable and unnecessary as Lots 70 and 72 "had in fact dual access potential from the stub end of Wyndarra Street and also to Gem Road". His opinion is the only opinion I have of a planner. The relevant principles support it and I accordingly adopt it. He recognised what appears to have been recognised by the traffic planners since the 1976 design - "Q.But you see if one looks at, for example, the configuration of the end of Wyndarra Street to the extent that, if you like, it impinges on original Lots 72 and 103, what one would expect that that would not be what was envisaged to be the final position, would you agree? A.Again I don't believe that one could categorically come to that conclusion. One of the reasons I would say that is if one were to take the stub end and attempt to connect it through to Gem Road, there would be quite a severe problem in geometry, a residual problem in geometry at the Gem Road end which would have to be resolved only by taking further lands for road purposes. " This latter evidence in my opinion can be taken only as far as strengthening an opinion which may be formed by a purchaser of Lots 70 and 72 before the resumption, that some day land may be taken from him for the purpose of linking Wyndarra Street and Gem Road. He, in prudence, were he to plan a subdivision of the land would take that into consideration not for the purpose of providing land for a public road free of cost but rather for the purpose of keeping his returns on sale to the maximum possible by confining the potential resumption to one lot, for example, Lot 103. The next question which must be answered is whether the claimant, having applied for subdivision and in doing so having made the offer quoted previously, is estopped (my word) from denying the respondent that advantage in these proceedings. Were the application live and did these proceedings emanate from a dispute concerning the approval, there may exist many reasons for finding that to be so. The circumstances, however, determine otherwise. This is a resumption. The claimant now stands, in -- 6 of 16 -- 7 my opinion, in the same position as any purchaser from it, had the lands been liquidated as was proposed immediately prior to the issue of the Notice of Intention to Resume. Thus, the valuation approach taken by Mr Bertenshaw may be reconsidered in this light. The ramifications become readily apparent in considering his exercise in hypothetical subdivision before and after the resumption. The workings after the resumption (Plan 212551) with Lot 2 being subdivided into two lots (three lots altogether) have the lots priced at $45,000 (Lot 1) and the subdivisions of Lot 2 at $30,000 and $35,000 which reflects a gross selling price of $110,000. A land value to a purchaser of $74,500 is derived. In the exercise before the resumption based on an adaptation of Plan 434N-4, a subdivision of four lots could be obtained. In that exercise (as three lots) Lots 70, 71 and 72 are priced at $45,000, $35,000 and $30,000 respectively giving a gross selling price of $110,000. Were a lot placed generally in the location of Lot 103, he would regard it as a substandard lot for reasons that vehicle lights at night coming along Gem Road would be shining directly into the allotment and that the allotment has stormwater pipes running through it. As a rough estimate he would price that lot at $25,000, thus increasing the gross selling price to $135,000. As a subdivision comprising four lots, Mr Bertenshaw said that a number of adjustments would be required, including reconsideration of the selling prices of the proposed lots and the profit and risk factor. Notwithstanding, it is difficult to imagine that the adjustments would turn up a value on the bottom line equal to or less than that which could be obtained in the subdivision of the land after the resumption. Prima facie, an exercise in this form would result in a loss (and compensation) following the resumption. I turn then to the common method. As can be seen on Plan 158245, Lot 70 was a hatchet shaped block. The lot sloped up from the street and had a 4 metre rise from the end of the access strip diagonally across the site to the north-eastern corner. The lot possessed a building area of about 625 square metres. -- 7 of 16 -- 8 The bulk of the area lies between contour lines 41-44 (Plan 434N-4). The lot is well elevated with good views over adjoining properties to the south. Some cutting and filling may have been necessary to provide a level building area. Lot 72 contained an area of 2062 square metres. This lot may be described as a large irregular shaped lot with frontage to Gem Road, Wyndarra Street and Hoana Place. Contours rise from about 36 (on Hoana Place) upwards. This lot is described by Mr Walsh in comparison with the former lot as "providing for, still, a good quality building site and space for additional recreational facilities". Mr Bertenshaw said that although the lot had a large area the irregular shape restricted the useable area. He said that the Gem Road frontage would have been subject to vehicle lights and that part of the land had stormwater pipes through it. Mr Walsh has valued Lot 70 at $40,000 whilst Mr Bertenshaw has valued it at $30,000. The sales principally relied on by Mr Walsh in supporting that value are situated in Gem Road (2) and Garnet Court, which were lots in the subdivision of land to the east of Gem Road and are distinguished by Mr Bertenshaw, generally on grounds that this subdivision overall was a more attractive subdivision. His testing material is found principally in a sale by the claimant of Lot 73 (see Plan 158245) containing 599 square metres which was sold in November 1987 for $30,000. The evidence of Mr Ruddy is that the sale was made under compulsion due to the financial position of the company. The lot was sold through real estate agents. Excepting the sale as a true indicator of market value, Mr Walsh sees Lot 70 as having better elevation than Lot 73 but other than that he says that the lots are not dissimilar in building area and he agrees that the subject lot is a hatchet shape. It appears that there is not much between the two lots. Lot 70 in my opinion would have the edge, due principally to elevation and aspect. Other sales within the subdivision of smaller lots which occurred in 1987 include 12 Melinda Street - 708 square metres at $33,000, and Lot 21 Wyndarra Street - 724 square metres at $30,000, and there is a sale of a low allotment with no outlook at 74 Gem Road (south of the subject land) for $31,000 in February 1987. It would appear that the market for -- 8 of 16 -- 9 lots of this size without any particular disability or any particular advantage had a value at the relevant date of around $30,000. The subject lot after the resumption is transformed into a regular shaped lot of 945 square metres. The Gem Road frontage and whatever advantage or disadvantage that frontage had before the resumption remains after the resumption. The valuers agree that the lot is worth $45,000 in this condition. That being so, I am unable to comprehend the difference reflected in the valuations before the resumption. The appreciation of $5,000 applied by Mr Walsh seems conservative whilst on the other side an appreciation of $15,000 seems to be generous. On the evidence before the Court, I would feel comfortable with the relationship being placed at $35,000 to $45,000 - an appreciation of $10,000. With Lot 72 there is before the resumption a large lot of irregular shape with a potential for subdivision. A sale at 32 Yarawa Street of 2023 square metres was a common basis and received the most consideration for comparison purposes. This lot sold for $51,700 in February 1987. The lot is amongst lots of similar size. It is basically of rectangular shape with a frontage of about 31 metres and with a moderate slope down from the street. The rear of the lot overlooks open space along Moggill Creek. Part of the area at the rear was flooded in 1974. The lot does not lend itself to subdivision. Mr Bertenshaw favours the sale lot for reasons that it is not surrounded by close-knit residential subdivision. It has in his opinion a broader outlook although not as well elevated as the subject lot. In this instance the potential for subdivision when compared with Yarawa Street weighed heavily in the mind of Mr Walsh, he not discounting that the potential was one which could be effected in conjunction with the owner of Lot 70. On the other side I am inclined to the view that Mr Bertenshaw gave this potential little consideration and seems to have placed too much emphasis on configuration and frontages affecting the subject land. If $35,000 is correct for Lot 70 before the resumption, this lot would I expect reasonably fetch a sum of $50,000. After the resumption it becomes a lot of 1273 square metres with a frontage to Wyndarra Street, still oblique which it is suggested, could be regularised by applying to -- 9 of 16 -- 10 the Lands Department to close and purchase from the Crown the triangular unrequired part of Wyndarra Street. Fees, time, and purchase money would be required to realign that frontage. The lot now becomes closer in comparability with Lot 1. It possesses a few hundred metres of additional area, it has a lower elevation and is more comparable in shape. A fair relationship may be in the sum of $40,000 to $42,500. The equation on this basis, resolving doubts in favour of the claimant, becomes - Before After Lot 70 $35,000 Lot 1 $45,000 Lot 72 $50,000 Lot 2 $40,000 This relativity, that is, after the resumption, with Lot 2 being valued lower than Lot 1, is confirmed in the submission of the respondent by evidence of the sales of those lots after the resumption whilst Mr Walsh claims support in the Valuer-General's relationship which has Lot 2 more valuable than Lot 1. These sales occurred well after the relevant date on a rising market and are useful for no purpose other than one of supporting relationship. I favour the conclusion drawn by Mr Bertenshaw, particularly when elevation and aspect is considered - Lot 1 sits well above the road whilst Lot 2 is level with or below the road. It would appear on these figures that no compensation is payable. I will now attempt to solve the fallacy of the above approach. It can be seen in respect of Lot 70 that an enhancement has occurred which I have set at $10,000. This enhancement is not wholly the result of the resumption - the enhancement has come about for reasons of (a) adding 213 square metres of the land of the claimant to the lot; (b) giving the lot a better shape; and (c) turning it into a frontage lot with a fully developed road along one boundary. The enhancement coming from (a) and (b) could have been provided by the claimant by realignment of the boundary. The enhancement must therefore be shared. In the case of Lot 72, there is a depreciation brought about by loss of area. The lot now has a road on three boundaries but is of better shape, which shape again could have been -- 10 of 16 -- 11 effected by the owner. Again some split is required but limited in my opinion to savings gained by the claimant in the resurvey effected by the respondent. If the hypothetical subdivisional exercise performed by Mr Bertenshaw is redone on the basis of a subdivision of the land into four lots before the resumption and three lots after resumption, there is prima facie a case for some compensation. This last exercise would on the balances yield in my opinion some compensation. The third method is simply to ask what would be a reasonable consideration to induce a vendor to part with 604 square metres (which land has the potential to form one lot) for road purposes from the parcels as an aggregation but essentially coming from the larger lot, worth say $50,000 before the acquisition. A sum of $5,000 would not appear unreasonable when the savings which I have identified are brought into the exercise. Accordingly, compensation for the taking will be determined in the sum of Five thousand dollars ($5,000). It follows that professional fees incurred by the claimant in the formulation and lodgment of the claim are compensable. The agreed fees covering the fees of valuer, town planner and engineer totalling $2,283 will be added to the sum. Legal fees incurred for the purposes of the lodgment of the claim are now agreed in the sum of $1,870. Compensation under all heads is therefore determined in the sum of $9,153. It is ordered that interest at the rate of 12.5 per centum per annum be paid on the sum of $5,000 from and including the date of resumption until the day immediately preceding the date when that sum increased by the agreed sums for disturbance as and when paid is paid. It is further ordered in the exercise of the Court's discretionary powers that the respondent pay the claimant's costs of and incidental to this action. The amount of such costs shall be ascertained and fixed by the Taxing Officer of the Supreme Court of Brisbane according to the Scale of Costs prescribed by law for the time being in respect of proceedings in the Supreme Court and in accordance with the -- 11 of 16 -- 12 provisions of section 41(9) of the Land Act 1962 (as amended). Member of the Land Court (Signed) D.M. White -- 12 of 16 -- -- 13 of 16 -- -- 14 of 16 -- -- 15 of 16 -- -- 16 of 16 --