Davies v The Water Resources Commission [1991] QLC 8

LAND COURT, BRISBANE. 17th May, 1991. Re: Determination of Compensation - Resumption for a purpose of the Water Resources Act 1989 - viz Peter Faust Dam - A90-66 C.R. and W.J. Davies -v- The Water Resources Commission J U D G M E N T Pursuant to the provisions of the Acquisition of Land Act 1967 - 1988, the respondent Water Resources Commission resumed on 10th March, 1990 land described as Lot 1 on Plan HR 2032, county of Herbert, parish of Crystal Brook containing an area of 31.75 hectares for the above stated purpose. The resumed lot, conveniently referred to throughout the hearing of the matter as part of the "Wine Glass" area, comprised part of Rangemore Pastoral Holding No. 05/5032 and is situated on the South Bank of the Proserpine River about 25 kilometres west of the Town of Proserpine. Access to the resumed land at resumption date was by way of a bitumen and gravel road. Prior to resumption, Rangemore Holding contained an area of 1748 hectares. Consequent upon the resumption, the dispossessed owners filed in the Land Court Registry a claim for compensation in the sum of [1991] QLC 8 -- 1 of 13 -- - Page 2 - $65,500. This claim is made up as follows:- Value of Land Resumed $24,000 Severance $32,500 Injurious affection $ 9,000 Total claim $65,500 ==== At the outset of the hearing of the matter, leave was sought and was granted to amend the claim for compensation to $67,875 so as to accord with an assessment of compensation made by practicing registered valuer Malcolm Allan Bishopp. Mr Bishopp's assessment is $55,000 for the value of land resumed and $12,875 as compensation for severance for reinstatement of a water supply. I should mention here that the respondent Commission's assessment of compensation for the value of the land resumed is $4,763. This assessment was made by registered valuer Robert Joseph Moloney who is in the employ of the respondent Commission. Both the claimants, who are brothers, were called in evidence. Clive Reginald Davies left the Court in no doubt that the dispossessed owners were disappointed in the way in which officers and staff of the Water Resources Commission proceeded to use the land prior to its resumption without the owners' permission and in the manner in which improvements were constructed outside the resumed area and on their land. Be that as it may, I should now comment that if a claim should arise for damage caused to the claimants' leased land prior to the resumption, then that is not a matter for this Court to consider. It may give rise to and be actionable elsewhere, but this Court is charged solely with the determination of compensation consequent upon the resumption of land under the provisions of Section 26 of the Acquisition of Land Act. Mr Davies, who is a school teacher by profession, informed the Court that he and his brother carried on a business in partnership as graziers on Rangemore Holding and on a property called "The Farm" and on a parcel called "Roys Block" and on a Special Lease adjoining Rangemore. "The Farm" runs stud cattle and higher grade brahman cattle. The Special Lease is used for cattle breeding, young cattle and running heifers. Rangemore -- 2 of 13 -- - Page 3 - Holding is run as a cattle grazing proposition in conjunction with "The Farm" and the Special Lease. The Davies brothers assumed ownership of Rangemore from their father in February, 1985. Their father drew the Holding in a ballot in 1930 when there were no improvements on the property. He progressively worked away at the development of it and was assisted in his task by his claimant sons. Improvement work on Rangemore consists of fencing, timber clearing and pasture development, yard building, the sinking of wells and the establishment of permanent water points on that part of the property away from the Proserpine River frontage. Mr Davies told us that of the total area of Rangemore of about 1750 hectares, about 650 hectares had potential for development. This area is located in the southern and eastern areas of the Holding and well away and separated from the resumed "Wine Glass" shaped area by high and rough terrain. Mr Davies informed the Court that he and his brother brought in a large amount of equipment for the development work including a D-6 Dozer, 4 tractors and various implements and while his father went as far as he could with his limited resources in developing Rangemore and the other properties, it was not until he and his brother took over that Rangemore was developed to its present state. Mr Davies says that the development of Rangemore was on the southern side of the property away from the Proserpine River frontage because it was convenient to the other properties for working in conjunction, but it was always the Davies' intention to fully develop Rangemore to its maximum potential including the "Wine Glass" resumed area. Block fences were constructed to prevent cattle crossing over the rough and fairly inaccessible terrain into the "Wine Glass" area since the "Wine Glass" area was not completely boundary fenced. No development work on the resumed "Wine Glass" area was ever carried out. It was the claimants' intention to utilise the resumed area and the balance of the "Wine Glass" area for fruit growing and for grazing. It was also their intention to access the "Wine Glass" area through to the Proserpine River for cattle and vehicles by dozing a track over the hills. The only other access to the River from the majority of Rangemore is through a neighbours' -- 3 of 13 -- - Page 4 - property (Mr Allan) who has given the Davies brothers permission to access through his property although he denied such access to the claimants' father. The fruit trees intended for the resumed area were pawpaws and custard apples, and Mr Davies claims that the "Wine Glass" area would also have been as useful as a bull depot. He intended to plant about 15,000 fruit trees on about 5 hectares of the resumed land. Mr Davies has had experience with commercial growing of pawpaws on land he owns adjacent to "The Farm". He had 3,200 trees in production on 3 acres (1.2 ha) and believes the Proserpine River frontage of the Rangemore "Wine Glass" area would have been ideal for the production of pawpaws as he would have been able to draw water from the Proserpine River. Mr Davies believes that there would have been a reasonable prospect of obtaining an irrigation licence to irrigate the pawpaws. No enquiry has been made about a prospective irrigation license from the Water Resources Commission. In reality no use at all has ever been made of the "Wine Glass" area. Some filling would be required in gullies to develop the orchard but Mr Davies says that the cost would be reasonable as the claimants have their own dozer. Mr Davies also saw the resumed area as being suitable for a homestead but due to the reduced size of the "Wine Glass" area because of the resumption, he believes this is now not a suitable option, even though a small area with river frontage has been excluded from the resumption. Mr Davies can see the only possible enhancement in the value of the "Wine Glass" area post resumption as being brought about by the upgrading of the access road to the Faust Dam to bitumen standard. William John Davies is the operator of the bulldozer and is responsible for the operation of the every day to day activities on Rangemore. Mr Davies outlined for the Court in general terms the progress and method of development of Rangemore. All available land has been cleared and pulled, excluding that near the dam site which Mr Davies claims would have been now developed but for the resumption. He says the area would have needed fencing but would have been an ideal paddock for young cattle during the wet season with a carrying capacity of 60-70 head. Mr Davies agrees with his brother in that there are ideal -- 4 of 13 -- - Page 5 - areas aggregating about 4 hectares which would be suitable for pawpaw production. He says that the "Wine Glass" area post resumption is not suitable for running cattle as the road to the dam would need to be fenced on both sides and grids installed. In addition it would be necessary to pump water from the river and to established water troughs across the new road to the dam. Mr Davies believes he could make a track through the "Wine Glass" area of Rangemore from south to north in about two days with his D-6 dozer. Brief evidence was called from Donald George Large who is an experienced grazier and who owned land in the area south and southwest of Proserpine. Mr Large is familiar with Rangemore. He has inspected the "Wine Glass" area of Rangemore recently and says this part of the property is important to the Holding due to its river frontage, and can see no reason why this land, although steep, could not have been developed for cattle grazing with a carrying capacity of about 1 beast to 2 hectares. Glen Sidney Gatton, who is a works supervisor with the Whitsunday Shire Council was called by the claimants and informed the Court that the access road which crossed through the resumed land before resumption was maintained by the Council. Mr Gatton described the road as having been a formed rural gravel sheeted road. It was not wholly located on dedicated land. Mr Bishopp prepared an initial valuation and compensation assessment for the claimants' Solicitors on 25th July, 1990. This valuation was updated by way of a supplementary statement dated 15th March, 1991 and this statement is to be read in conjunction with the earlier valuation. Mr Bishopp describes the resumed area as comprising approximately 20 hectares undulating forest ridges and river frontage and 11.75 hectares of medium to steep and stony forest ridges. Soils are generally sandy clay loams of fair depth and quality. The resumed area has about 910 metres frontage to the Proserpine River. Mr Bishopp describes the whole of Rangemore Holding as a cattle breeding property with about two-thirds medium to steep forest ridges and one-third easy to undulating forest flats and ridges. He considers the highest and best use of the resumed land to be for grazing or agricultural use for fruit growing (mangoes) on 25 hectares in conjunction with grazing -- 5 of 13 -- - Page 6 - on the balance of the "Wine Glass" area. Mr Bishopp has assumed that there would have been sufficient water for irrigation available from the Proserpine River. The total area of the "Wine Glass" area prior to resumption was about 150 hectares, of which 30 hectares is in Mr Bishopp's opinion valueless due to steep terrain. He believes that the development of the "Wine Glass" area did not commence because of the resumption, since it takes the best part of the potential fruit growing area. He also says that after the resumption it is not feasible to fence the road to the dam as this would leave a small severed area which would prove uneconomic to provide water and because of the cost involved in the installation of cattle grids. Mr Bishopp believes that the "Wine Glass" area could have been developed as a separate area of Rangemore. Easy flat vehicular access is available through the Allen property, but if this becomes unavailable, then the making of a road over the ridges within Rangemore may be necessary. Mr Bishopp emphasises that the "Wine Glass" section of Rangemore was a natural severed area prior to resumption. Mr Bishopp's assessment of compensation is made as follows:- (a)Loss in land value Value before resumption - Rangemore holding"Wine Glass" area $ 65,000 Balance of Holding $415,000 $480,000 Less value after resumption:- Balance of holding (as before) $415,000 Balance of "Wine Glass" section - 90 ha easy to steep ridges $ 10,000 $425,000 Loss in land value $55,000 ==== (b) severance - reinstatement of water to provide water supply facility across the road severance to $9,300 remaining lands -- 6 of 13 -- - Page 7 - Provision of replacement of water supply facility every 20 years - $465/annum capitalised at 13% $3,575 $12,875 TOTAL COMPENSATION $67,875 ==== In making his assessment of the value of the "Wine Glass" area after resumption, Mr Bishopp has taken into account that the resumption takes the best of its area and because of the increased activity in the area, it has removed the future viability of an orchard, and has rendered the balance area less economic for grazing purposes. As for the allowance of $9,300 for the cost of the provision of a water facility, Mr Bishopp relies upon a quote provided by a Mr Noel Roberts of Southern Cross, Mackay. Details of the Mr Robert's quote are in evidence. For the respondent Commission, Mr Moloney describes the nature of the resumed area as comprising broken sloping river frontages to the Proserpine River rising to steep range county along the south east boundary. He does not regard any of the resumed land to be of arable quality, and accordingly sees it as having a highest and best use for cattle grazing, probably by a neighbour. Mr Moloney confirms that there was no irrigation licence attaching to Rangemore Holding at the date of resumption. His enquiries suggest that water supplies from the annual yield in the Proserpine River were fully committed and there was little or no likelihood of finding supplies of commercially irrigable water quantities in the locality. Although the resumed land severs the balance of Rangemore Holding from a small area (about 2 hectares) of river frontage, Mr Moloney cannot see any loss in monetary value due to severance because of the absence of present and potential utility of this isolated "Wine Glass" area of Rangemore. He similarly sees no injurious affection resulting from the resumption and for the same reasons. Mr Moloney's valuation reads - Resumed Land - 31.75 ha @ $150/ha $4,763 Mr Moloney has had the area of the "Wine Glass" area of Rangemore calculated by a -- 7 of 13 -- - Page 8 - surveyor to be 134 hectares prior to resumption. He stresses that it contains quite steep erosion prone slopes and is not used in conjunction with the balance of Rangemore. Mr Moloney's enquires with the Whitsunday Shire Council confirm that if the balance area of "Wine Glass" is to be used for grazing, then fencing of the new road to the dam would be required. However he is of the view that it is not justified on economic grounds. Mr Moloney is of the opinion that Mr Bishopp's valuation of the "Wine Glass" area before resumption is totally excessive and unreasonable. He has also made enquires as to the cost of providing a water facility across the new road. The advice is that a suitable facility to access water from the Proserpine River would cost $4,830, to which he adds a capitalised cost of annual maintenance making a total cost of $10,662. Leon Malcolm Leach who is a hydrologist in the employ of the Water Resources Commission at Ayr, was called in evidence by the respondent Commission. He expressed an opinion on the likely prospect of the dispossessed owners obtaining an irrigation licence to divert water from the Proserpine River if an application for such licence had been made. Mr Leach told the Court that owing to the unreliability of the Proserpine River to sustain adequate surface water flows during the July to December period in most years, then to his knowledge no application has been made to divert surface flow from the river for irrigation purposes. Once surface flows cease, then any diversion of water from spears in the river is considered to be from ground water, and this would also require a licence. Mr Leach has inspected the river bed in the vicinity of the resumed land. It consists of rocky areas interspersed with sandy areas. He estimates that the maximum volume of water, after cessation of surface flow in the river, for extraction by pumping from a spear would be 3.5 megalitres per annum. Mr Leach points out that there are six irrigation facilities and fourteen domestic facilities in the section of the river immediately downstream of the resumed land for a distance of 5.5 kms. These water users would have to be considered before a licence issued, and it is normal that licence applications would be forwarded to the Proserpine Water Advisory Committee for its consideration and advice to the Commission. Mr Leach says it -- 8 of 13 -- - Page 9 - would be very unusual for the Commission to disregard the recommendation of that Committee. Pending a favourable recommendation from the committee, then Mr Leach believes it is possible for what he describes as a meagre volume of ground water of up to 3.5 megalitres could have been available for allocation, and that a licence may have issued with a term limiting the period of pumping when there is no surface flow in the river, that a minimum distance term of 1,000 metres from the nearest spear be inserted, and that an allocation term of 3.5 megalitres per annum be included. A schedule showing the monthly and annual flow volumes in the Proserpine River at the Dam site during the years 1956-7 and 1989-90 was placed in evidence. This schedule strongly supports Mr Leach's suggestion that there is normally little surface flow in the river during the July - December period in most years. Mr Leach expressed the expert opinion that a volume of 3.5 megalitres of water would normally be sufficient to irrigate a little over 1 hectare of land and certainly completely insufficient to irrigate 15,000 pawpaw trees. He sees the volume of water required to irrigate such an orchard being closer to 15 megalitres. This is an opinion which is not shared by Mr Davies who claims a much lower volume would be sufficient if the irrigation is carried out by the trickle method. During the course of the case, counsel for both parties requested that I take a view of the resumed land and the balance of the "Wine Glass" area. This view has been taken and has been of considerable assistance to me in my appreciation of the evidence. Now the determination of compensation in this case really is dependent upon my finding as to whether the resumed land has, at resumption date, any potential for use as an orchard for the growing of pawpaws or a less likely crop such as avocadoes or mangoes. The parties are equally adamant at the suitability on the one hand and the unsuitability on the other of the soils and the terrain for orchard growing. Certainly there are areas of better type soil, but in places it is broken by gullies and has considerable slope, although along and close to the river the terrain is easier. After considering all the relevant evidence I have come to the conclusion that the assumed hypothetical prudent purchaser of Rangemore at relevant -- 9 of 13 -- - Page 10 - date would not be prepared to pay more than grazing land value for the resumed area and for that matter, for the balance of the of the "Wine Glass" area, for the following reasons :- 1.Soil quality and terrain render the prospect of use of the available land at best as doubtful for orchard establishment. 2.Should an informed assumed hypothetical purchaser have had access to the Irrigated Land Capability Soil Type maps prepared by the Department of Primary Industries for the Proserpine lowlands, which were placed in evidence, although not on the evidence always accurate, and which indicate with sufficient accuracy the resumed land is as being hills and unsuitable for irrigation. 3.The establishment of orchards in the area is not by any means common development. 4.The "Wine Glass" area is for practical purposes severed from Rangemore Holding by virtually inaccessible hills making ready access to and from a proposed orchard from within Rangemore Holding dependent upon unregistered access across the Allan property and, most importantly, 6.Enquiry at the Water Resources Commission would most likely have revealed that the prospect of obtaining a suitable irrigation licence for diverting water from the Proserpine River would have been virtually negligible. This is so because of the lack of sufficient volume from the ground water supply, the lack of surface flow in the river for a considerable period in any normal rainfall year, and that the Water Advisory Committee would need to recommend that the licence issue albeit on a restricted volume basis. So then where am I left with the valuation evidence. Mr Bishopp has included in his "before" valuation of the "Wine Glass" area what is obviously a significant potential for the value of the arable land. This is quite clear when his valuation of it ($65,000 for his area of 150 hectares or $433/ha) is compared with the level of values disclosed by the sales evidence used by both valuers. This is - "Dittmer" On Mr Bishopp's dissection, a value of $175/ha excluding stock, structures and sundries. On Mr Moloney's dissection - a value of $68.16/ha on the same basis. -- 10 of 13 -- - Page 11 - "Cattlevale" On Mr Bishopp's dissection $108/ha overall or $229 per hectare for the 47% of fairly accessible country exclusive of stock, plant and structures. On Mr Moloney's dissection $107.49/ha on the same basis. Part of "Pluto East Holding" On Mr Bishopp's dissection $132/ha ex-stock, sundries and structures. Mr Bishopp does not point to any sale of land with arable potential for orchard growing and relies upon his experience for his assessment. Without evidence from him as to the value attributable as a component part for the orchard potential land, it is not possible to discern his valuation of the resumed land on a grazing basis. It is to be noted however, that in his "after" valuation exercise, given that there is a road severance (which was there prior to resumption but without the requirement to fence) and deprivation of access for stock to water in the Proserpine River, his valuation is only $10,000 for an available area of about 90 hectares - or $110/ha. Certainly Mr Bishopp's valuation of the "Wine Glass" area pre resumption is on the assumed availability of an adequate irrigation supply and I have already dealt with that. After having given consideration to all the evidence, especially that of the valuers involved, and expressing the view that I do not think it likely that the cost of constructing an access track from Rangemore Homestead area to the "Wine Glass" area and to the Proserpine River would have proven to be an economic venture, I cannot but conclude that a value of $150/ha to the virtually unimproved resumed land as applied by Mr Moloney is fair to the dispossessed owners. I do not have a "before and after" valuation from Mr Moloney (no doubt due to the comparatively small area resumed from the whole of Rangemore Holding). Now while it is well recognised that the use of the "before and after" method of valuation is to be preferred when the task at hand is to determine compensation -- 11 of 13 -- - Page 12 - when part only of a property is resumed, the circumstances here, due to the relatively small area resumed dictate that to value only the resumed land is a common sense approach especially because of its lack of access from the Rangemore Holding area. I determine compensation for the value of the land resumed at $4,763. I turn now to consider the claim under the heading of severance for providing water to the land located to the south of the road severance. Now it is recognised that there has always been a road severance in this area but it was unfenced and with little likelihood of a Council requirement for fencing. Post resumption the situation has changed in that if the "Wine Glass" area is to be used for grazing, then it is a Council requirement that the new dam access road to be fenced. It is not claimed by the dispossessed owners that the cost of fencing is compensable, and this is understandable since neither the area or the road was securely fenced at resumption date. But there is no doubt that there is a road severance which effectively means that, if the area is grazed, cattle will not be able to water in the Proserpine River, since the area left to the north of the road severance is only about 2 hectares. Since in cases of this nature I should weigh any doubts I have in favour of dispossessed owners, I feel it is equitable and just to include in the compensation payable a sum which provides for the installation of a water point to the south of the intersecting road, notwithstanding that it is doubtful if the retention area of the "Wine Glass" is capable of economic grazing. Certainly an allowance for the reinstatement of water goes some of the way to compensate the dispossessed owners for the loss of access to the Proserpine River for livestock. I propose to determine compensation for the deprivation of access to water in the Proserpine River in the sum contended for by Mr Bishopp at $12,875. The only matter left for consideration in an unquantified claim for disturbance. This is for legal and valuation fees involved in the preparation and lodgement of the claim for compensation. They are agreed between the parties in the sume of $4,280. My formal determination of compensation for the resumption under all heads of claim is the sum of $21,918, made up as follows:- (a)Value of land resumed $ 4,763 -- 12 of 13 -- - Page 13 - (b) Severance $12,875 (c) Disturbance $ 4,280 Section 28 (1) of the Acquisition of Land Act 1967 - 1988 provides that the Court may order that interest be paid on the amount of compensation determined by it. I am informed that no compensation advance has been made by the constructing authority. Accordingly I order that in addition to the compensation payable, the respondent Water Resources Commission pay interest to the claimants on the sum of $21,918 at the rate of 12% per annum during the period commencing on the date of resumption (10th March, 1990) and ending on the day immediately proceeding the date upon which payment of compensation is made. (C.H. Carter) Member of the Land Court. -- 13 of 13 --