Introduction – the Pointe Gourde principle and enhancement

This article examines two recent cases in which compensation for the compulsory acquisition of private land for public purposes was held to be nil. It also examines an additional case adopting the same principles.

The cases examine the application of the principle of enhancement in s 20(3) of the Acquisition of Land Act (1967) Qld (ALA) and also the long established Pointe Gourde principle.

Section 20(3) provides that:

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 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.

Section 20(4) provides that:

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.

The onus is on the constructing authority to establish that the value of a claimant’s interest has been enhanced.1

The Pointe Gourde principle is derived from the case of Pointe Gourde Quarrying and Transport Co., Ld. v Sub-Intendent of Crown Lands [1947] AC 565 at 572:

 “It is well settled that compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition.”

The Pointe Gourde principle applies in Queensland, despite that position not being available on a literal reading of the ALA. The Court of Appeal said:

“The High Court has noted that the Pointe Gourde principle has application in Queensland: The Crown v Murphy. It has very recently affirmed the principle in Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority. This approach is consistent with the central principle of the law applying to compensation for compulsorily acquired land: the purpose of compensation is to provide the former owner of the property with the full money equivalent of that of which the owner has been deprived. See Nelungaloo Pty Ltd v Commonwealth and Walker Corp.

The Pointe Gourde principle has been applied in reverse on many occasions in Queensland: see, for example, Doolan Properties Pty Ltd v Pine Rivers Shire Council (2000) Q Conv R 54-239; [2000] QCA 76. A literal reading of the terms of s 20(2) without reference to relevant case law, is capable of supporting the contentions of the Council. But, as I have noted, the Pointe Gourde principle and its application in reverse are a well-established part of Queensland law.”2

There is a difference between the Pointe Gourde principle – which considers enhancement caused by the “scheme underlying the acquisition” in valuing the land actually resumed – and the expression in s 20(3) – “enhancement of the value of the interest of the claimant 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.” This significance was discussed in the Springfield and Tinplatter cases discussed below.

The Springfield cases

This series of cases involved the acquisition of land by the State by agreement, following notices of intention to resume:

“for future transport purposes including the facilitation of transport infrastructure (namely road and busway, rail or light rail) for the South-West Transport Corridor”.

The land acquired was owned by Springfield Land Corporation (No. 2) Pty Ltd and formed a part of a "very large residential development project, containing 2,851 hectares and expected to house at least 60,000 people. It was developed from a greenfield site. Almost from the outset the respondents [Springfield Land Corporation Pty Ltd and Springfield Land Corporation (No. 2) Pty Ltd] proposed that the development would include the construction of a major road running from the Centenary Highway (where it then ended at the Ipswich Motorway) through the Springfield land, and in particular through or close to the proposed Springfield Town Centre, and continuing west beyond the Springfield land."3

The South West Transport Corridor (Transport Corridor) referred to in the notices of intention to resume was a regional transport corridor. It was succinctly described by Justice McMurdo in the Supreme Court decision:

By the end of 1998 the Centenary Highway had been extended to the Springfield land and by June 2000 it had been further extended to the Springfield Town Centre. This road construction was described by the arbitrator as “very much a joint venture type arrangement” between the Queensland government, the respondents, a contractor and a financier, under which the respondents paid for the construction. The arbitrator also found, at least from 1994, that it had been intended that this road would continue beyond the Springfield Town Centre and in turn from the western boundary of the Springfield land to the area of Ripley and ultimately to the Cunningham Highway. In January 2004, the government announced that the section of the transport corridor from Springfield to Ripley would be built and later that year, it announced the preferred route for this corridor. In early 2005, it announced that it was committed also to the extension of the corridor from Ripley to the Cunningham Highway.”4

The Department of Main Roads had acquired at least some land required for the corridor, including some land owned by Springfield. It then became apparent that some realignment was required to the Transport Corridor, with some of Springfield’s land not required and, consequently, returned. Instead an alternative area of Springfield’s land was required. This alternative area of land was the subject of the notices of intention to resume.

The acquisition of the land was ultimately performed under contract, with the principles of compensation to be determined in accordance with the ALA. Compensation was assessed, under the contract, by an arbitrator and not in the Land Court. This necessitated an application to the Supreme Court in order to dispute the arbitrator’s decision, with the Supreme Court’s decision subsequently appealed to the Court of Appeal.

The debate in the cases centred largely on how to define the works or purpose for which the land was taken.

The nature of the works that would occur on the resumed land was a realignment of the corridor. Springfield argued the purpose of the works was to effect a realignment of the transport corridor. If Springfield was correct there would be no enhancement to the balance of its land; the realignment itself adding no value. The State argued the purpose was broader: it was the extension of Transport Corridor. If the State was correct, there would be enhancement to the balance land by virtue of the entire transport corridor.

Springfield’s land had been subdivided into a number of lots, and not every lot was contiguous with the resumed land. Springfield argued that those lots that were not contiguous ought to be ignored in assessing enhancement.

Under arbitration, Springfield was successful and the purpose of the resumption was defined as the realignment only. Accordingly, no enhancement had been caused to the balance of Springfield’s land. In addition, the arbitrator found that “adjoining land” did not have a broad meaning and relied on the definition of adjoining as “directly abutting, contiguous”. The end result was that only those lots directly contiguous to the resumed land might be considered for the purpose of determining whether their value was enhanced.

In Supreme Court proceedings instituted by the State, Justice McMurdo found that the purpose of the resumption was broader than the realignment. Instead, the realignment was a part of the purpose of providing the corridor. Accordingly, the balance of Springfield’s land had been enhanced.

Some of the significant findings from the Supreme Court were:

1. Justice McMurdo considered Road and Traffic Authority of New South Wales v Perry5. That case involved the acquisition of land for the purpose of providing fill that would be used in the construction of an embankment for a section of the Pacific Highway. The Court found in Perry that the resumption of that land was for the broader public purpose of the extension of the Pacific Highway. Justice McMurdo said, about Perry:

But for the proposal to construct the road west from the town centre, the transfer land, consisting of these few hectares, would not have been required. The works for which they were required could not be realistically defined in terms of part of the width of a relatively small section of a proposed road. As to the relevant purpose, it was not to realign something depicted upon a map, but to provide some of the land which was required for the construction of a single road, which the applicant was prepared to accept was the road yet to be constructed from the town centre westwards.”6

2. The purpose was the “public benefit or end to be achieved, rather than some means to that end”.7 Confining the relevant works or purpose to the particular land resumed “could distort the assessment of the value of the land to be resumed” and “it could distort the assessment of the compensation for injurious affection”.8

3. While the s 20(3) question and the Pointe Gourde principle question are addressed to different areas of land, the question as to the “scheme” is similar in both instances9, but the Pointe Gourde principle does not apply directly to the s 20(3) question.10

4. The question of the land “enhanced” does not restrict its application to just contiguous lots. It applies to lots within the same ownership that adjoining lots directly contiguous to the land acquired. The ALA makes a distinction between a lot and land in its provisions and the term land is used in s 20(3). Land is broadly defined in the ALA. It is not just lots. In addition, the purpose of s 20(3) should not be affected by a difference in whether land is in the form of a number of subdivided lots, or an englobo parcel. In addition, Harris v Lee (1900) 21 NSWR 173 supports the broader interpretation of the term land. This position is supported by case law about land considered to be severed by an acquisition – lots that are not contiguous to the resumed land may suffer severance damage.11

 The Court of Appeal upheld the decision of the Supreme Court. Some of the key findings of the Court of Appeal are:

  1. The “but for” analysis of a resumption is not a sufficient method on its own. The but for test adopted by the arbitrator was that “but for” the notice of intention to resume for the very narrow purpose of a realignment, there would have been no claim for compensation and no cause to assess enhancement.12
  2. Section 20(3) does not support a piecemeal analysis of identifying the particular works to be undertaken on the particular parcel of land resumed: “the text of s 20(3) does not speak of "the enhancement of the value of the interest of the claimant … derived from the carrying out of works on or immediately adjoining the land taken” 13
  3. Adopting Springfield’s piecemeal analysis would mean that because of a small obstacle a landowner can obtain compensation without regard to enhancement, while also having enhanced land, while a neighbour does not.14
  4. In determining the purpose or works under s 20(3), a broad perspective must be taken. The question is not limited to the purpose or works on the land resumed. It is the broader purpose and works that are of significance.15 This point was illustrated by an example:

it is difficult to discern… an intention on the part of the legislature that a landowner whose land is taken to enable an unexpected obstacle to be sidestepped in the course of constructing a road well into the planning and construction should be in a better position, so far as compensation is concerned, than a neighbour whose land was always designated as land to be taken for the purposes of the construction of the same road.”16

5. The purpose of s 20(3) is to ensure that a landowner whose land is taken for public purposes is compensated for, but not aggrandised by reason of, the acquisition.17

6. It does not matter that the agency responsible for the implementation of the purpose or works has changed over time – as had occurred in this instance.18

Tinplatter case

The recent Land Court decision of Tinplatter Pty Ltd v Chief Executive, Department of Transport and Main Roads [2010] QLC 0131 involved a claim for compensation under the Act for land valued at $1,006,000 and an additional claim of $357,000 for injurious affection. In November 2009 this claim was amended to a claim for $3,000,000 and an additional $357,000 for injurious affection.

The resuming authority, the Department of Transport and Main Roads (DTMR), resumed land for the construction of the same Transport Corridor referred to in the Springfield cases. Here, the land resumed was part of the Transport Corridor. Sales evidence and town planning evidence was that the Transport Corridor “unlocked the urban development potential” of the land. The conclusion contended for by the DTMR, and found by the Court, was that the nature of the enhancement from the Transport Corridor was so great that compensation should be calculated as nil. The evidence made it clear that the enhancement in value was due to the construction of the road in the resumed transport corridor.

Sales evidence led by the resuming authority was that the property fetched a price of $2,420,000 in July 2004 (for an area of 42 hectares). In 2007, after the taking of the land by the resuming authority, the sale of the property (for an area of 32 hectares) fetched a price of $8,000,000. Clearly, the land remaining after the resumption was worth much more than the whole of the land was worth prior to the resumption of the land.19 Further evidence was led to demonstrate the impact of the resumption on property valuations in the area. The 2004 sale of land on Ripley Road, in close proximity to the subject land, fetched a price of $1,250,000. The same property was resold in June 2007 for a much higher price of $4,200,000.

The Court in Tinplatter examined the case of State of Queensland v Springfield Land Corporation Limited (No.2) p/L & Anor [2009] 169 LGERA 284.

The Court followed McMurdo’s finding that s 20(3) and the Pointe Gourde principle refer to different areas of land – that taken and that retained, respectively, but that case law involving the Pointe Gourde principle may assist with the application of s 20(3).

Note that Tinplatter must be treated with some caution as it was not a contested hearing, nor was any evidence contested, the claimant not making any appearance. That said, the principles in Springfield appear to have been correctly applied. The conclusion was that works or purpose were the overall transport corridor project, rather than for some lesser or different purpose motivating just the taking of the subject land.20

 Halcyon case

The recent Land Court case of Halcyon Waters Community Pty Ltd v Chief Executive Gold Coast City Council [2010] QLC 0138 involved the resumption of land at Hope Island for park, recreation and road purposes. The applicant was the owner of a parcel of land (Lot 11), the northern part of which was resumed by the resuming authority (resumed land) and the southern part of which was retained (retained land) by the Applicant. The resumed land (highlighted in dark grey in Figure 1 below) and retained land (highlighted in brown in Figure 1 below) were separated by an existing road, Halcyon Way.

Adjacent to the retained land lay four lots, lots 131 – 128. Bordering the retained land to the east lies lot 131 which was adjacent to lot 130 (lots 130 and 131 are highlighted in red in Figure 1 below). Immediately to the east of Lot 130, were lots 129 and 128 (highlighted in light grey in Figure 1 below). Lots 129 and 128 were separated from the resumed land by lots 130 and 131 in which the applicant had no interest. However, lot 129 lay adjacent to the retained land.

The resuming authority argued that lots 129 and 128 had been enhanced by the resumption of the resumed land. Essentially, the resuming authority was arguing that the enhancement to these lots should be set off against the compensation payable to the applicant for the resumed land under s 20(3) of the Act.  

Click here for Figure 1: Survey Plan

While lot 129 adjoined the retained land, the question for the Court was whether the retained land adjoined the resumed land. The land owner said that the retained land did not adjoin the resumed land because the two were separated by Halcyon Way. The land owner further submitted that s 20(3) of the Act required the land adjacent to the resumed land to be enhanced and that the case of Springfield was not precedent for enhancement to land that did not abut the resumed land.21 Conversely, the resuming authority submitted that it was sufficient for the purpose of s 20(3) that enhancement be shown to any part of the land which adjoined the resumed land.22

 In Halcyon, the Court examined the case of State of Queensland v Springfield Land Corporation Limited (No.2) p/L & Anor [2009] 169 LGERA 284. The Court upheld the purposive approach adopted in Springfield, that is, that the land owner’s interest in the whole parcel of any land adjoining the resumed land is to be considered in determining any question of enhancement.23

However, the Court held that the retained land did not adjoin the resumed land within the meaning of s 20(3) of the Act because the two portions of land were separated by a road reserve, namely, Halcyon Way.24

Section 20(3) of the Act provides that the amount of compensation should be set off by any enhancement to the “land taken or severed therefrom”. The resuming authority did not base its enhancement submission on severance.25 Therefore, it is questionable whether the outcome in Halcyon would have been different if the resuming authority argued that the balance land had been “severed” from the resumed land because at the time of the resumption they were the same lot – Lot 11.

Principles to guide the assessment of compensation

It is useful to summaries some key principles that should be used in considering compensation payable for the compulsory acquisition of land:

  1. Care should be taken when assessing compensation to properly identify the works or purpose for the purpose of s 20(3) or for the application of the Pointe Gourde principle. A broad approach ought to be taken to defining the works or purpose. This applies equally to those drafting a notice of intention to resume – the broader the purpose stated in the notice, the broader the “scheme” that might be encompassed. That is not to say that the actual scheme of a resumption can be broadened artificially by the words used in a notice, but that care should be taken not to unintentionally narrow the scheme.
  2. When considering land that is affected by resumption, the term “adjoining” is given a broad interpretation. Land need not be directly touching the land resumed. Rather, it can include other land, provided there is some continuity in ownership from the land resumed to the land affected. This principle applies equally to retained land that is severed or injuriously affected by an acquisition. This continuity in ownership is removed if another lot, different ownership, or a road (and possibly other things, such as a creek) cuts between two areas of land.
  3. The Springfield cases do raise the question about when a purpose or scheme has finished. The question was more easily answered in the Springfield cases because the realignment occurred during the course of design of the Transport Corridor. However, consider the situation where the Transport Corridor has been built, but its design was considered unsatisfactory a year later – say for a safety reason – and a realignment was then required. Would the realignment fall under the same purpose or scheme as the original Transport Corridor? Some of the findings of the Court of Appeal are relevant:

There can be no suggestion that the realignment was necessitated as a response to traffic conditions of peculiarly local significance which arose independently of the carrying out of the transport corridor project.”26

it may be conceded immediately that there may be cases where the purpose of an acquisition of a small parcel of land is solely for realigning a short stretch of road. Whether or not the need for the realignment, considered alone, sufficiently identifies the "works or purpose for which the land is taken" will, no doubt, depend on the facts of the particular case.”27

“It would, for example, be easier sensibly to conclude that a realignment is a purpose in itself if the road of which it was an adjunct had been constructed many years earlier or if the realignment was a response to the exigencies of transport functions in the immediate vicinity of the stretch of road being realigned.”28

4. The answer to the hypothetical question is probably that the purpose of the realignment is separate to the original purpose or scheme. It is for road safety purposes. However, there will undoubtedly be instances where the definition of the purpose or scheme is considerably greyer.