LAND COURT OF QUEENSLAND CITATION: McPherson v Caloundra City Council [2005] QLC 43 PARTIES: Graham E and Judith H McPherson (applicants) v. Caloundra City Council (respondent) FILE NO.: A2004/0129 DIVISION: Land Court of Queensland PROCEEDING: Determination of compensation payable consequent upon the resumption by the Caloundra City Council under the provisions of the Acquisition of Land Act 1967 for sewerage farm, disposal works and depots, recreation grounds and parks purposes of Lot 10 on SP 107372, County of Canning, Parish of Bribie containing 73.59 hectares DELIVERED ON: 26 August 2005 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mrs CAC MacDonald ORDERS: 1. The compensation payable by the respondent to the claimants is determined at $2,699,000. 2. The respondent is ordered to pay interest to the claimants at the rate of 5.5% per annum on the amount of $2,699,000 for the period commencing 12 December 2003 up to and including 5 April 2004, then on the amount of $1,849,000 for the period commencing 6 April 2004 up to and including the day immediately preceding the date that amount is paid by the respondent to the claimant. CATCHWORDS: Valuation – method of valuation – piecemeal or overall approach – clear distinction between flooded and flood- free land – piecemeal approach adopted. Valuation – use of sales – acceptable sales – property not advertised at time of purchase – purchased for exchange with another vendor – purchaser an experienced land developer – willing purchaser and vendor – sale adopted. Valuation – use of sales – unacceptable sales – differences in location, topography, views, country types – adjustments necessary – no substantive evidence as to how adjustments made – sales not adopted. Valuation – particular factors in valuation – potential for sand extraction – no separate allowance for such – potential included in overall sale price. APPEARANCES: Mr DR Gore, QC for the applicants Mr M Gynther for the respondent SOLICITORS: Griffiths Parry for the applicants Garland Waddington for the respondent [1] This matter has been referred to the Land Court under the provisions of the Acquisition of Land Act 1967 (the Act) for hearing and determination of a claim for compensation in respect of the resumption of land owned jointly by Graham Eric and Judith Helen McPherson (the claimants). The land was resumed on 12 December 2003 by the Caloundra City Council (the respondent) for sewerage farm, disposal works and depots, recreation grounds and parks purposes. The land is described as Lot 10 on Survey Plan 107372 in the County of Canning, Parish of Bribie and has an area of 73.59 hectares. It is located at Sunset Drive, Meridan Plains, Caloundra. [2] The claimants have claimed an amount of $3,050,000 and interest as compensation for loss of the land. Although Senior Counsel for the claimants indicated that a claim for disturbance might also be pursued, no evidence as to any disturbance losses was lead. [3] The respondent contended that the value of the land as at the date of resumption was $2,030,000. [4] An advance of $850,000 was paid to the claimants on 6 April 2004. [5] The claimants were represented at the hearing by Mr DR Gore QC. Mr M Gynther appeared on behalf of the respondent. [6] Evidence was given on behalf of the claimants by – Mr JA Jameson - a registered valuer and the Acquisitions Manager of AV Jennings Mr CF Stewart - company director Mr TW Morrow - accountant and company director Mr GE McPherson - accountant and one of the claimants Mr RR Henderson - registered valuer of Bob Henderson Valuers Pty Ltd 2 [7] Evidence was given on behalf of the respondent by Mr AF Carrick, a registered valuer of AF Carrick and Associates. The Land [8] The land taken was the whole of Lot 10 on SP 107372, an area of 73.59 hectares. Lot 10 was burdened by an easement in gross for drainage purposes in favour of the Caloundra City Council. The land is situated on the southern side of Sunset Drive, approximately 7 kms north-west of the Caloundra Post Office and CBD. Sunset Drive is a gravel formed road along the frontage of the subject land and is part bitumen sealed and gravel formation for approximately 2.5 kms to the east of the subject where it becomes fully sealed. [9] There are no services connected to the subject land. Power and telephone are available to the land and town water is available approximately 400 m to the east. [10] Mr Henderson described the subject land as a quality, well located parcel of coastal grazing country with a good house site, and situated within minutes of Caloundra services and beaches. Residential development is located close to the rear boundary, and a proposed roadway will be constructed at the rear of the property which will provide a buffer to existing development. [11] Lot 10 is an irregular shaped parcel lying in the Mooloolah River flood plain. The land is level to gently undulating. Mr Henderson said that the area at the north-east of the land is selectively cleared with a good assortment of hardwood timbers and an area of scrub adjoining to the east. It has a view of the Glasshouse Mountains to the south. There is a waterhole near the north-western corner of the land and a substantial drainage channel runs from south to north through the land. The property is fenced with four barbed wires on timber posts. [12] Mr Henderson said that the land is constituted as follows: Pasture improved (mostly Narok Setaria) - 50 ha approx Grassed - 10 ha approx Standing scrub - 8 ha approx Land above Q100 flood level in north-east - 6 ha approx section, suitable for a house site Comparable vegetation areas of Dominant (of concern) Regional Ecosystems are noted on the subject, as well as on Mr Henderson's Sales 1, 2 and 3. [13] Mr Carrick classified the land as follows: 8 ha – wet melaleuca and wallum understorey vegetation 7 ha – thinned and grassed open forest/woodland 3 58 ha – cleared to pasture He said that 7.1 hectares of the land lies above the Q100 flood level, and 25 hectares is below the Q2 flood level. The drainage easement discharges into that area. [14] The land lies within the Meridan Plains Extractive Resource area and contains an exploitable reserve of sand of unknown quantity. The significance of this resource is considered later in this decision. [15] As at the date of resumption, the subject land was in the Rural zone of the Caloundra City Planning Scheme (gazetted on 2 August 1996). It was in the Open Space area of the Strategic Plan and the Resource Elements were Extractive Industry – Resource Areas (Generalised). A new Draft Caloundra City Plan was published in July 2003 and came into force on 29 September 2004, some 9 months after the date of acquisition. Under that Plan, the subject is located within the Rural precinct of the Mooloolah Valley Planning Area and is subject to the following overlays – Extractive Resource Area, Extractive Resource Areas (Heritage Routes), Flood Management, Acid Sulfate Soils, Biting Insect, Aviation Affected and Habitat and Diversity. There is no potential to subdivide the land. [16] The parties' valuers agree that, as at the date of resumption, the highest and best use of the land was – Dwelling house (immediate) Sundry grazing (immediate and continuing until ripe for extractive industry) Extractive industry (estimated 5 to 10 years time frame from the date of acquisition). They also agree that a dwelling house and the extractive industry use could co-exist on the subject land with adequate separation buffering. Valuation Methodology [17] Section 20 of the Act provides – "Assessment of compensation (1) In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also to the damage (if any) caused by either or both of the following, namely – (a) the severing of the land taken from other land of the claimant; (b) the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land. (2) Compensation shall be assessed according to the value of the estate or interest of the claimant in the land taken on the date when it was taken. (3) In assessing the compensation to be paid, there shall be taken into consideration, by way of set-off or abatement, any enhancement of the value of the interest of the claimant 4 in any land adjoining the land taken or severed therefrom by the carrying out of the works or purpose for which the land is taken. (4) But in no case shall subsection (3) operate so as to require any payment to be made by the claimant in consideration of such enhancement of value." There is no claim in respect of severance or injurious affection in this matter, nor any set- off for enhancement. The central issue for determination is, therefore, the value of the estate or interest of the claimant in the land taken as at the date of resumption. [18] The parties' valuers valued the subject land by comparison with sales of comparable properties. The major areas of disagreement between them were the identification of suitable sales and whether a piecemeal valuation or an overall approach valuation should be adopted. [19] The claimants' valuer, Mr Henderson, carried out two valuations of the subject land. The first, which was dated 20 October 2004, valued the subject property as at the date of resumption at $2,640,000. The second valuation was dated 18 February 2005 and valued the subject as at the date of resumption at $3,050,000.