Australia: Court upholds a valuation of $4.1 million for a compulsory acquisition of land

IN BRIEF

The case of Moreton Bay Regional Council v Caseldan Pty Ltd [2017] QCA 72 involved an application for leave to appeal a decision of the Land Appeal Court to the Court of Appeal. The Council sought to challenge the decision of the Land Appeal Court regarding the value of land located adjacent to South Pine Road in Brendale which was compulsorily acquired by the Council.

The Council compulsorily acquired the land for "recreation ground purposes". At the first instance the Land Court ordered that the Council pay $1.8 million in compensation to the owner of the land. A subsequent appeal to the Land Appeal Court increased the compensation to $4.1 million.

The Council applied to the Court of Appeal for leave to appeal the decision of the Land Appeal Court. The Court of Appeal ultimately ordered that the Council's application be refused and that it pay the owner's costs on the basis that the proposed appeal had no real prospects of success.

COUNCIL COMPULSORILY ACQUIRED LAND OWNED BY CASELDAN AND SUBSEQUENTLY APPEALED THE VALUATION OF THE LAND

On 20 July 2012, the Council compulsorily acquired 10.1 hectares of land adjacent to South Pine Road, Brendale for "recreation ground purposes".

The owner of the land applied to the Land Court for a determination of the compensation to be paid under the Acquisition of Land Act 1967. On 9 December 2014, the Land Court determined that the compensation for the land was $1.8 million. The owner later appealed this determination to the Land Appeal Court. On 24 June 2016, the Land Appeal Court determined the compensation for the land to be $4.1 million.

On 4 August 2016, the Council filed an application for leave to appeal to the Court of Appeal under section 74 of the Land Court Act 2000 to challenge the Land Appeal Court's order.

LAND ADJOINED COUNCIL PROPERTY AND WAS APPROVED FOR A RANGE OF LAND USES

The land was configured in a "c" shape and was included within the sport and recreation zone of the Pine Rivers Plan 2006 . The land was utilised as a 10 hole golf course with an associated restaurant.

At the time of acquisition, a hotel and motel had been approved on the southern portion of the land and an appeal concerning a development application for a supermarket on the northern portion remained unresolved. The land had poor access to the surrounding road network with a strip of Council owned land separating the land from the Council owned South Pine Sporting Complex.

LAND COURT ADOPTED A VALUATION FOR THE LAND CONSISTENT WITH THAT OF THE COUNCIL'S VALUER

The Land Court determined that at the date of resumption a hypothetical prudent purchaser would have determined that sport and recreation was the highest and best use of the land.

The Land Court adopted a valuation of $1.8 million provided by a valuer engaged by the Council. The member rejected the findings of a valuer engaged by the owner who valued the land at $5,555,000 on the basis that its highest and best use was a mix of residential, commercial, sport and recreational uses in line with the findings of an expert town planner. Evidence of three offers ranging from $4 million to $4.5 million were also excluded.

LAND APPEAL COURT FOUND THAT THE LAND COURT ERRED IN DECIDING THE VALUE OF THE LAND AND ADOPTED ITS OWN VALUATION AMOUNT

The Land Appeal Court held that the Land Court had erred in a number of respects. In relation to the highest and best use of the land, the Land Appeal Court found that the Land Court had erroneously concluded that a hypothetical and prudent purchaser would determine the prospects of obtaining access for mixed uses to be low. Putting access aside, the Land Appeal Court held that the prospects of obtaining approval for mixed use development was good.

The Land Appeal Court ultimately rejected the findings of both the Council's and the land owner's valuers and concluded that the value of the land was $4.1 million, an amount which was not inconsistent with previous unconditional offers to purchase the land.

COUNCIL CHALLENGED THE LAND APPEAL COURT'S DECISION MAKING PROCESS ON VARIOUS GROUNDS

The Council alleged that the Land Appeal Court had heard the appeal as an appeal de novo despite the decision in Mahoney v Department of Transport and Main Roads [2014] QCA 356 which established that appeals to the Land Appeal Court are rehearings rather than true appeals. The Court of Appeal found that this proposition was misconceived and patently incorrect.

Section 74(1) of the Land Court Act 2000 affords a right of appeal to the Court of Appeal from a decision of the Land Appeal Court only on grounds that there had been an error or mistake of law, absence of jurisdiction to make a decision or exceedance of jurisdiction occurred. The Council relied on three primary grounds of appeal, which all alleged an error of law on the part of the Land Appeal Court.

THE COURT OF APPEAL DISMISSED SUGGESTIONS THAT THE LAND APPEAL COURT'S ASSESSMENT OF THE LAND'S ACCESS AMOUNTED TO AN ERROR OF LAW

The Council submitted that the Land Appeal Court had mistakenly applied the decision in Intrapac Parkridge Pty Ltd v Logan City Council & anor [2014] QPEC 48 to mean that there was a "high probability" that the Council would be required by the Planning and Environment Court to allow the resumed land to have access over the Council land.

The Court of Appeal found that this submission was ill-founded and of dubious merit as the Land Appeal Court made no such assessment with regards to access. Rather, the Land Appeal Court thought that a hypothetical potential purchaser would consider access might be available over the Council owned land, however, there was a significant risk in achieving access as proposed.

Further, the Court of Appeal found that the Council's complaint in this regard was concerned with an alleged error of fact which is not a valid ground for an appeal to the Court of Appeal.

THE COUNCIL CONTENDED THAT THE LAND APPEAL COURT HAD ERRONEOUSLY GIVEN WEIGHT TO THE LAND’S ZONING WHEN CONSIDERING SUFFICIENT GROUNDS TO OVERCOME CONFLICT WITH THE PLANNING SCHEME

The Council argued that section 326(1) of the Sustainable Planning Act 2009 contains no provision which allows the Land Appeal Court to give weight to the zoning of the land when determining sufficient grounds to overcome conflict with a relevant planning scheme.

The Court of Appeal accepted the Council’s interpretation of section 326(1) but rejected the notion that the Land Appeal Court had addressed how these provisions operate or proposed an alternative methodology. The Court of Appeal found that the Land Appeal Court had only expressed a view on a matter of fact, being how a hypothetical purchaser would weigh the current zoning of the land.

COUNCIL ALSO CHALLENGED THE COURT’S DECISION ON THE BASIS THAT IT HAD ERRONEOUSLY CATEGORISED OFFERS MADE FOR THE LAND

The Council also challenged the decision of the Land Appeal Court on the basis that it had erroneously categorised an offer known as the “Flaskas offer” as unconditional and gave it no weight because it was aged. The Court of Appeal found that the Land Appeal Court had erred in categorising the offer as unconditional, but held that this decision did not vitiate the valuation of the land as the methodology employed did not rely on the details of particular offers.

COURT OF APPEAL REFUSED THE COUNCIL'S APPLICATION ON THE BASIS THAT IT HAD NO REAL PROSPECTS OF SUCCESS

The Court of Appeal found that the Council had failed to successfully make out any of the grounds of appeal. The Court subsequently refused the Council’s application, upheld the Land Appeal Court's compensation of $4.1 million and ordered that the Council pay the owner's costs on the basis that its appeal had no real prospects of success.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Ian Wright
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