Compensation determination for resumption of land remitted to Land Court of Queensland to separately determine appropriate rate per hectare and appropriate discount

In brief

The case of Desbois v Chief Executive, Department of Transport and Main Roads; Chief Executive, Department of Transport and Main Roads v Desbois [2022] QLAC 1 concerned an appeal to the Land Appeal Court of Queensland (Land Appeal Court) in respect of the determination of compensation under the Acquisition of Land Act 1967 (Qld) (Acquisition Act) by the Land Court of Queensland (Land Court) in the case of Desbois v Chief Executive, Department of Transport and Main Roads [2021] QLC 43 (LC Judgment) for land resumed (Resumed Land) by the Department of Transport and Main Roads (DTMR) for the Mackay Ring Road Project.

The grounds of appeal submitted by the Landowner and DTMR related to the following issues:

• Town Planning Ground – The likelihood of a development approval for a material change of use for a service station and truck stop (Proposed Use) being granted (Service Station Approval).

• Commercial Area Ground – The area, if any, of the land before resumption (Subject Land) that ought to be the subject of the Proposed Use.

• Acceleration Lane Ground – The risk of a development condition being imposed on the Service Station Approval, which requires an acceleration lane of a length that would require the widening of a nearby railway bridge (Acceleration Lane Condition).

• Risk Discount Ground – The appropriate discount to be applied to the appropriate rate per hectare to reflect the risk of the Acceleration Lane Condition being imposed.

• Land Value Ground – The method to be used to determine the appropriate rate per hectare.

The Landowner was successful in respect of the Risk Discount Ground and Land Value Ground for the reason that the Land Court erred by conflating the tasks of determining the appropriate rate to be applied per hectare of the Resumed Land and the appropriate discount to be applied to the derived rate per hectare. All the other grounds of appeal were dismissed.

The matter was remitted to the Land Court to correctly determine the compensation in accordance with the Land Appeal Court's reasons.

Background

The Subject Land adjoins the Bruce Highway west of Mackay. Prior to resumption, the Subject Land had a total area of 59.556 hectares. The total area of the Resumed Land was 1.934 hectares.

The Land Court had determined compensation under section 20 (Assessment of compensation) of the Acquisition Act in the total amount of $948,961 (rounded), which comprised $781,355 for the loss in land value, $83,576.08 for the interest on the loss in land value, and $84,000 for disturbance.

Land Court's determination

The Land Court relevantly held the following in respect of the issues the subject of the grounds of appeal:

• Town Planning Ground – The Proposed Use of the relevant part of the Subject Land does not conflict with the Mackay City Planning Scheme 2006 (Planning Scheme), and compensation for the Resumed Land should be assessed on the assumption that the Service Station Approval has good prospects of success (see [13] to [82] and [123] of the LC Judgment).

• Commercial Area Ground – The area to be assessed for the Proposed Use being the potential highest and best use of the relevant part of the Subject Land, which includes the Resumed Land, is 2.25 hectares (at [128] of the LC Judgment).

• Acceleration Lane Ground – A hypothetical developer would be advised that the Service Station Approval would include a condition for a lane of no longer than 315 metres that would not require the widening of the nearby railway bridge (at [123] of the LC Judgment).

• Risk Discount Ground – In recognition of the risk that the Acceleration Lane Condition may be imposed and thus require the widening of the railway bridge, a discount of 15% ought to be applied to the derived rate per hectare (at [153] of the LC Judgment).

• Land Value Ground – As the rate of $400,000 per hectare is too low because the "…rate is heavily discounted for the [comparable] sale's un-costed flood mitigation risks and does not reflect the superior locational attributes…" of the Resumed Land, a 15% discount in respect of the risk of the Acceleration Lane Condition being imposed ought to be applied instead of the 30% discount submitted by DTMR (see [152] and [153] of the LC Judgment).

Town Planning Ground – No material error

DTMR contended that the Land Court erred in finding that the Service Station Approval had good prospects of success because the decision (see [29]):

• incorrectly relied on a superseded version of the Planning Scheme and involved a misdirection or misapplication of the relevant provisions of the Planning Scheme; and

• involved a misapplication of the test under section 326 (Other decision rules) of the Sustainable Planning Act 2009 (Qld) by failing to be satisfied that there were sufficient grounds to justify the Service Station Approval despite the non-compliance with the Planning Scheme (Sufficient Grounds Test).

The Land Appeal Court rejected DTMR's submissions for the following reasons:

• The reliance on an unamended version of the "…Planning Scheme was not affected legally or factually by [the] reference to the unamended versions of those provisions" (at [48]) and the Land Court did not misconstrue or misapply the relevant provisions of the Planning Scheme, but even if it did, those errors would not cause the proposed development not to comply with the Planning Scheme (see [64], [68], and [80] to [82]).

• The Land Court did not need to apply the Sufficient Grounds Test because it held that the proposed development did not conflict with the Planning Scheme. In any event, whilst the Planning Act 2016 (Qld) (Planning Act) had not yet commenced it had been assented to, and thus it was reasonable that a hypothetical developer would be advised that the test under the Planning Act would apply instead of the Sufficient Grounds Test (see [94] and [104]).

• The task was not for the Land Court to determine whether it would have granted the Service Station Approval as if it were the assessment manager, "…but rather to find what advice a hypothetical developer would have been given as to the prospects of approval being granted for the proposed use. That advice would inform the price the hypothetical developer would be prepared to pay to purchase the resumed land at the date of resumption…" (at [104]).

Commercial Area Ground – No error in fact, law, or discretion

DTMR contended that, if the Service Station Approval had a likelihood of being granted, the Land Court erred in determining that it would be over 2.25 hectares of the Subject Land (see [13] and [108]) and that the Land Court erred in fact by accepting the evidence of the Landowner's town planning expert (at [111]).

The Land Appeal Court held that the Land Court's finding that the area the subject of the Service Station Approval would be 2.25 hectares was open on the expert evidence before it (at [112]).

Acceleration Lane Ground – No error in fact, law, or discretion

DTMR contended that the Land Court erred in finding that there were reasonable prospects that a development condition imposed on the Service Station Approval would require an acceleration lane of no longer than 315 metres because insufficient weight was given to the Austroads Guide to Road Design (Road Guide) and the findings in respect of low traffic were incorrect (see [114] to [122]).

The Land Appeal Court held that the Land Court did not misconstrue or misapply the Road Guide, which is not prescriptive and does not have regulatory force, and relevantly permitted an acceleration lane of less than 435 metres in certain circumstances; nor did the Land Court err in accepting the evidence before it (see [131] to [132] and [140] to [142]).

The significance or weight to be afforded by the Land Court to the Road Guide is a question of fact and the submission by DTMR that a different conclusion ought to be drawn "…does not reveal any error justifying appellate intervention" (at [139]).

Risk Discount Ground and Land Value Ground – Land Court erred by conflating determination of appropriate rate and appropriate discount

DTMR contended that the Land Court erred by applying a discount of 15%, which was too low for the risk that the Acceleration Lane Condition may necessitate the widening of the railway bridge (at [145]), and by reducing the discount from 30% to counterbalance using a lower rate per hectare (at [24]).

The Landowner contended that the Land Court erred by conflating the determination of the appropriate rate per hectare and the percentage discount for the risk of the Acceleration Lane Condition being imposed (at [21]). The Landowner argued that a discount of 15% was too high and the rate of $400,000 per hectare ought to have been $600,000 per hectare (see [24], [152], and [159]).

The Land Appeal Court held that the Land Court had erroneously conflated the determination of the appropriate rate per hectare and the appropriate discount to apply to that rate for the risk of the Acceleration Lane Condition. The Land Appeal Court noted that the Land Court (see [150] to [161]):

• "…[D]id not determine what should be the appropriate discount having regard to her assessment of the risk of the condition of approval...Instead, the primary judge reduced the discount to 15% to counterbalance her assessment that the value derived from the sale of $400,000 per hectare was too low".

• Erred "…on a principle of assessment in determining the loss of land value. Once the primary judge had determined that it was appropriate to discount the award for loss of land value to take account of the risk that a condition of approval for the proposed use might require a longer acceleration lane and hence the widening of the railway bridge, the primary judge can be seen to have constructively failed to exercise jurisdiction to determine what was the appropriate discount that reflected that risk".

• Erred in applying a rate of $400,000 per hectare because it had expressly found that rate to be too low, but counterbalanced the low rate by applying a 15% rather than 30% discount.

The Land Appeal Court dismissed the Landowner's submission that the appropriate rate per hectare was $600,000 because, whilst the Land Court acknowledged that the appropriate rate was higher than $400,000 per hectare, the exact rate had not been determined by the Land Court (at [162]).

Conclusion 

The Land Court, in determining compensation for the Resumed Land, failed to separately determine the appropriate rate per hectare and the appropriate discount to be applied to that rate. Thus, the matter was remitted to the Land Court to determine compensation for the Resumed Land in accordance with the Land Appeal Court's reasons.