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  4. Stony Creek Pty Ltd (in liquidation) v Chief Executive, Department of Transport and Main Roads - [2017] QLC 3

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Stony Creek Pty Ltd (in liquidation) v Chief Executive, Department of Transport and Main Roads[2017] QLC 3

Stony Creek Pty Ltd (in liquidation) v Chief Executive, Department of Transport and Main Roads[2017] QLC 3

LAND COURT OF QUEENSLAND

CITATION:

Stony Creek Pty Ltd (in liq) & Anor v Department Of Transport and Main Roads [2017] QLC 3

PARTIES:

Stony Creek Pty Ltd ACN 123 517 073 (in liquidation)

(applicant)

and

Kenjad Pty Ltd ACN 131 282 721

(second applicant)

 

v

 

Chief Executive, Department of Transport and Main Roads

(respondent)

FILE NO:

AQL868-12

DIVISION:

General Division

PROCEEDING:

Application for the determination of compensation under the Acquisition of Land Act 1967

DELIVERED ON:

14 February 2017

DELIVERED AT:

Brisbane

HEARD ON:

16, 17, 18, 19, 23 March 2015

HEARD AT:

Brisbane

MEMBER:

WL Cochrane

ORDER/S:

  1. Compensation is determined in the amount of $83,520.00.

CATCHWORDS:

REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – Compensation – Assessment – Market Value – Hypothetical subdivisions – Potentialities – Disturbance

Acquisition of Land Act 1967

Pastoral Finance Associate Ltd v The Minister [1914] AC1083

Spencer v The Commonwealth (1907) 5 CLR 418

Park v Allied Mortgage Corporation Ltd (Unreported, Federal Court of Australia, Hill J, 5 July 1995)

APPEARANCES:

Mr BG Cronin of counsel, instructed by All About Law for the applicant.

Mr DA Quayle of counsel, instructed by Clayton Utz for the respondent.

  1. [1]
    This is a determination in respect of a claim for compensation for land resumed pursuant to the provisions of the Acquisition of Land Act 1967 (“the AQL”).
  1. [2]
    That statute provides for compensation to be paid to dispossessed land owners whose land is compulsorily acquired by what is described as a “constructing authority.” (See the dictionary (Sch 2) to the Act).
  1. [3]
    Within the Act s 20 provides for assessment of compensation to be paid to a dispossessed land owner.
  1. [4]
    That section relevantly provides:

20 Assessment of compensation

  1. (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—
  1. (a)
    to the damage, if any, caused by any of the following—
  1. (i)
    the severing of the land taken from other land of the claimant;
  1. (ii)
    the exercise of any statutory powers by the constructing authority otherwise injuriously affecting the claimant's other land mentioned in subparagraph (i); and
  1. (b)
    to the claimant's costs attributable to disturbance.
  1. (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.

…

  1. (5)
    In this section—

costs attributable to disturbance, in relation to the taking of land, means all or any of the following—

…

  1. (e)
    other financial costs that are reasonably incurred or that might reasonably be incurred by the claimant, relating to the use of the land taken, as a direct and natural consequence of the taking of the land;
  1. (f)
    an amount reasonably attributed to the loss of profits resulting from interruption to the claimant's business that is a direct and natural consequence of the taking of the land;
  1. (g)
    other economic losses and costs reasonably incurred by the claimant that are a direct and natural consequence of the taking of the land.

Example of costs for paragraph (g)—

cost of school uniforms for children enrolled in a new school because of relocation from the land taken

  1. [5]
    On or about 28 October 2011 the respondent Department of Transport and Main Roads issued a Notice of Intention to Resume land otherwise described as Lot 994 on SP218284 County of Nares, Parish of Grafton which land had an area of 2,516 m2. 
  1. [6]
    That resumption was perfected by way of a gazettal notice published on 24 February 2012.
  1. [7]
    In the gazettal notice the taking of the land was described as being:[1]

“…for the purpose of transport, in particular, road purposes, as from 24 February 2012”.

  1. [8]
    The compensation claimed in the originating application filed by the applicants was in the sum of $1,684,032.05.
  1. [9]
    In order to understand the totality of this case it is necessary to spend some time examining the genesis of Lot 994.
  1. [10]
    On or about 24 January 2007 the Cairns Regional Council granted a development approval to reconfigure land described as Lot 900 on SP189704 located at Petersen Road in Edmonton in the Cairns Regional Council Local Authority area.
  1. [11]
    As was not uncommon at that time the development approval was subject to compliance with what was described as concurrence agency conditions.
  1. [12]
    In particular condition 38 of the development approval was in the following terms:

“38. Concurrence Agency Conditions

The Applicant / owner is to comply with the Concurrence Agency Conditions contained within the letter dated 29 November 2006, Queensland Transport Reference No. CRN-37 P21305890/1223 and letter dated 9 October 2006, Department of Main Roads Reference No.158/10p/102(922.02).”

  1. [13]
    That Concurrence Agency Condition was expressed in the following terms:

“2.   Land requirement for Future Road Purposes:

i) An area requirement for future road purposes associated with the intersection of the Bruce Highway and Petersen Road is identified on the attached DMR plan.  This area is hereafter referred to as the “exclusion area”;

ii) The applicant/land owner shall not construct any structure/s nor commence any development under, on or over the “exclusion area” unless the Department of Main Roads agrees to the proposed structures/works.

iii) Should the State of Queensland not have acquired the “exclusion area” within twelve (12) months of:

  • The dating and approval of the plan of survey by Council creating residential allotments within 100 metres of the “exclusion area”, and
  • The applicant/land owner formally requesting, in writing, the District Director of the Cairns Office of DMR, or its successor or assign, to acquire/resume the land,

   then parts (i) and (ii) above shall cease to have effect.

iv) Road Traffic Noise & Visual Treatment

  (a) Creation of buffer strip

The applicant/land owner shall create a 10 metre wide buffer strip within the subject land.  The buffer strip shall be located adjacent to the SCR boundary and along the full length of the subject lands SCR boundary.  This buffer strip shall be provided at no cost to Council or the State of Queensland.

   The buffer strip shall be created via:

  • A 6 metre wide freehold strip located adjacent to the SCR boundary; and
  • A 4 metre wide registered covenant located adjacent to and generally west of the above freehold strip generally in accordance with the DMR Buffer Plan.

The freehold section of the buffer strip shall be created and transferred to Council Ownership.  The registered covenant section of the buffer strip shall be created, and the covenant agreement shall be registered in the Titles Office of the Department of Natural Resources.

All three aforementioned requirements shall be completed to the Council dating and approving a Plan of Survey creating residential allotments within a 100 metres of the CSR boundary [sic].”

  1. [14]
    Upon reconfiguration of the parent parcel, Lot 994 incorporating the exclusion zone, and Lot 993 representing the freehold portion of the buffer zone, were created.
  1. [15]
    The applicant’s basis for its claim is set out in Annexure 1 to its originating application in the following terms:

“Due to the imposition of the condition by the respondent as Concurrence Agency the applicant’s ability to develop the land was diminished in the prior to the imposition of the condition and the resumption that followed the applicant would have had the ability to develop 41 lots as part of stage 6 of the Stony Creek Estate as a result of the acquisition of 2,516 m2 stage 6 was required to be reduced to 33 lots.”

  1. [16]
    The applicant then sets out details of a contractual arrangement it had with Laurence Court Pty Ltd who was a builder of houses in the following terms:
  • “Stony Creek had a contractual arrangement with Laurence Court Pty Ltd where Laurence Court Pty Ltd paid a rebate of approximately $50,000.00 exclusive of GST to Stony Creek Pty Ltd for each house built in Stony Creek Estate.  Laurence Court Pty Ltd has built every house in the estate.  As a result of the acquisition the Applicant had to reduce the number of lots from 41 to 33 and suffered economic loss of approximately $400,000.00.
  • Because of the failure of the Respondent to pay the Applicant adequate compensation, the Applicant lacked equity for Bank finance which resulted in the Applicant having to enter into a costly arrangement with its Civil Contractor, Kenfrost (1987) Pty Ltd to complete earthworks on the next stage of the development (See “Annexure 2” for particulars of arrangement).”
  1. [17]
    In its originating application the applicant particularised the basis of its claim for $1,684,032.05 in the following schedule.

SCHEDULE

COMPENSATION

PARTICULARS OF CLAIM

RELEVANT SECTION Acquisition of Land Act 1967

AMOUNT

Value of Land Taken

Value of land at 12/06/2010, being date on which land was sterilised by the Constructing Authority by transfer to Cairns Regional Council

Section 20(1)(a)

 

 

 

 

$695,454.55

Disturbance

Valuation (fees paid to Preston Rowe  Paterson Cairns Pty Ltd)

    $13,000.00 

Stamp Duty $24,300.00

  Legal Expenses

           $110,000.00

Town Planning expenses

$15,397.50

Subdivisional Design Expenses

                $3,880.00 

Engineering Expenses

 $7,000.00

Total Disturbance:

Section 20(1)(b)

Section 20(5)(a)

 

 

 

 

 

 

 

 

 

 

 

 

$173,577.50

Interest

2 June 2010 – 19 July 2011

(from when the Transfer of land to Council was sanctioned by DTMR until land transferred back to Stony Creek Pty Ltd)

 $66,000.00

 

19 July 2011 – 24 February 2012

(interest on borrowings to Across Australia Commercial Finance Pty Ltd)

 $84,000.00

 

25 February 2012 – Settlement

 $35,000.00

 Total Interest:

Section 28

 

 

 

 

 

 

 

 

 

 

 

 

$185,000.00

Economic Loss

Loss of sale of four (4) lots to Kenfrost (1987) Pty Ltd (Civil Contractor) –

              4 x $20,000.00 = $80,000.00

 

Loss of 3 house lots on those lots

              3 x $50,000.00 (excluding GST) = $150,000.00

 

Because of the failure of the Respondent to pay Stony Creek Pty Ltd lacked equity for Bank finance obliging Stony Creek Pty Ltd to make a costly arrangement with a Civil Contractor for earthworks

Section 20(5)(g)

 

 

 

 

 

 

 

 

 

 

$230,000.00

Loss of Profits

Due to interruption of business to build eight (8) houses at $50,000.00 each excluding GST

Section 20(5)(f)

 

 

$400,000.00

 

 

TOTAL CLAIM

 

 

$1,684,032.05

  1. [18]
    The relationship between Stony Creek Pty Ltd, the first applicant, and Kenjad Pty Ltd, the second applicant, was explained in the course of the opening for the applicants by Mr Cronin.
  1. [19]
    Stony Creek was the owner of the subject land and as at the date of resumption Stony Creek went into liquidation.
  1. [20]
    The liquidators of Stony Creek assigned the rights to compensation to Kenjad and on 22 May 2013, Kenjad was added as a party to the proceedings.
  1. [21]
    At the hearing of this matter Stony Creek and Kenjad were represented by Mr Cronin of counsel and Mr Quayle of counsel appeared for the respondent.
  1. [22]
    At the opening of the hearing Mr Cronin sought leave to rely upon a Further Amended Statement of Facts Matters and Contentions which was not resisted by the respondent.[2] 
  1. [23]
    At paragraph 24 of the amended claim the following appears:[3]

“Since the commencement of these proceedings, the parties have participated in mediation proceedings as a consequence of which only those issues appearing in this Further Amended Statement of Facts, Matters and Contentions remain in issue between the parties.”

  1. [24]
    Accordingly agreements have been reached between the parties as to the value of land taken and the disturbance items.
  1. [25]
    The Court was not informed of what agreement had in fact had been reached or the basis upon which the value of the land had been agreed between the parties.
  1. [26]
    It is appropriate that this point to refer to the long standing authority constituted by the High Court decision in Spencer v The Commonwealth.[4]
  1. [27]
    Mr Quayle of counsel for the respondent, in his written submissions delivered at the conclusion of the case, referred to the dicta of Isaacs J in the Spencer decision.
  1. [28]
    Issacs J said:[5]

“To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to dix as the value of the property.”

  1. [29]
    As Mr Quayle pointed out, and as is ubiquitously known, the decision in Spencer has been applied on very many occasions throughout all states of Australia.
  1. [30]
    Mr Quayle highlighted dicta from several such cases.
  1. [31]
    Amongst those referred to by Mr Quayle was Pastoral Finance Association v The Minister, a Privy Council decision.[6] In the decision the Privy Council observed:

“That which the [claimants] were entitled to receive was compensation not for the business profits or savings which they expected to make from the use of the land but, for the value of the land to them. No doubt the suitability of the land for the purpose of their special business affected the value of the land to them, and the prospective savings and additional profits which it could be shown would probably attend the use of the land in their business furnished material for estimating what was the real value to them. But that is a very different thing from saying that they were entitled to have the capitalised value of these savings and additional profits added to the market value of the land in estimating their compensation. They were only entitled to have them taken into consideration so far as they might be fairly said to increase the value of the land. Probably the most practical form in which the matter can be put is that they were entitled to that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it.”

  1. [32]
    Mr Quayle also drew the Court’s attention to the Federal Court’s decision in Park v Allied Mortgage Corporation Ltd.[7]
  1. [33]
    In that matter Hill J said:[8]

“As Spencer’s case itself makes clear the valuation must proceed by reference to the best use of the property. For this purpose the valuer will take into account not only the present use to which the land is applied, but any more beneficial use to which it may reasonably be applied. This is the process which a purchaser negotiating to purchase the property would undertake. Thus, it is not inappropriate in valuing property to take into account a potential development of the property, for among the range of hypothetical purchasers can be assumed to be a person who would undertake such a development as would maximise the usage of the land.”

  1. [34]
    Mr Quayle observed:[9]

“The value of a parcel of englobo development land includes the potential of the land. The same is equally true of a fully developed, subdivided parcel of residential land. If land (of either kind) is lost or resumed, once the owner is paid a fair value for the land so lost or resumed, then the owner is returned to the pre-loss/resumption position – made whole.”

  1. [35]
    Mr Quayle submitted that his observations were a full answer to the claims of the applicant for the loss of profits in this proceeding.
  1. [36]
    He said:[10]

“These principles amount to a total answer to the claim for loss of profits in this proceeding. The parties have settled the issue of the value of the land resumed. As such, the case proceeded on the basis that the applicants have been paid full value for that land. On the above authorities, the value of the three lots lost by the resumption includes the future potentialities of those lots. Upon the payment to the applicants of full value for those lots the applicants were returned to the pre-resumption position, including as to the lost land’s future potential. That is, the profit the first applicant may have made upon the sale of the lost lots it is part of the future potentials of those three lots and is reflected in the sum the applicants have been paid for them.”

  1. [37]
    I shall return to the propositions advanced by Mr Quayle later in this decision.
  1. [38]
    In his written submissions Mr Cronin of counsel for the applicants loosely summarised the remaining issues in dispute in the following terms:[11]
  • the loss of rebate from the builder identified in paragraph 24(d) of the Amended Statement of Facts Matters and Contentions.[12]
  • the claim for loss of profits[13] as set out in the Joint Valuation Report between Geoff Eales, the valuer for the Applicants and Cameron Harris, the valuer for the Respondent and identified at paragraph 12 of the Amended Statement of Facts Matters and Contentions; and
  • interest on the above claims; and
  • costs of the proceedings.
  1. [39]
    As to the sum claimed for loss of profits, there is, within the Further Amended Statement of Matters Facts and Contentions, no remaining paragraph 12 and no relevant mention of a loss of profits, save for the identification of $65,000 in paragraph 23A. Clearly that reference is a mistake.
  1. [40]
    Paragraph 20B of the Further Amended Statement of Facts Matters and Contentions provides as follows:

“20B. The arrangement referred to in the previous two paragraphs was an oral arrangement:

  1. (a)
    made between Geoffrey Vance Landrey on behalf of the First Applicant and Laurence Court on behalf of Laurence Court Pty Ltd in a series of conversations;
  2. (b)
    words to the following effect were said in each of the conversations:
  1. (i)
    Landrey to Court – I’ll give you all the houses to build in return for a fixed price to me;
  2. (ii)
    Landrey to Court – Give me a rebate according to the difference in the two price lists.
  1. (c)
    the conversations occurred at the offices of the First Applicant and the offices of Laurence Court Pty Ltd in late 2009;
  2. (d)
    the conversations variously occurred in person and by telephone.”
  1. [41]
    As to paragraph (b) above claiming a loss of profits, paragraph 23B says:[14]

“In the premises the loss of profit arising from the development of the land and a consequential resumption is $65 000.00.”

  1. [42]
    In the course of his opening Mr Cronin informed the Court that the applicant proposed to call four witnesses, namely:
  1. (a)
    Geoffrey Vance Landrey who was identified as a former sole Director of Stony Creek Pty Ltd and the sole Director of Kenjad Pty Ltd.  Mr Landrey’s evidence consisted of a number of statements which became exhibits 5, 6, 7, 8, 9 and 15.
  1. (b)
    Laurence Mark Court, a builder whose evidence consisted of three statements which had been filed in Court, namely exhibits 10, 11, 12 and 20.
  1. (c)
    Mr Nolan Jonson, an accountant whose evidence consisted of two statements which became exhibits 13 and 14.[15]
  1. [43]
    The fourth witness was Mr Geoffrey William Eales, a valuer whose statement became Exhibit 25. Mr Eales was not required for cross examination.
  1. [44]
    Mr Cronin was also able to tell the Court that in the process of mediation it was agreed between the parties that three lots were not able to be developed and sold as a consequence of the resumption.
  1. [45]
    That agreement no doubt had bearing upon the discussions which resulting on the resolution of all issues relating to compensation for the value of the land taken.
  1. [46]
    Indeed, on Mr Quayle’s submissions referred to above, it bore not only upon compensation for the value of the land taken but that agreement should have reflected any agreement as to the loss of profits which ensued upon resumption of the land so that the loss of profits issue became, effectively, bundled up into the discussions which lead to resolution of the amount of compensation due for the loss of the land.
  1. [47]
    As observed above, the court was not provided with any details about the basis upon which the value of the land taken was determined.
  1. [48]
    There remained an issue between the accountants as to the timing at which the developer was likely to be deprived of the benefit of the sale of three lots.
  1. [49]
    Within the joint valuation report however, at paragraph 12 there is reference to Mr Eales’ calculation for a loss of profit relating to a pre-resumption yield of 38 lots and a post-resumption yield of 33 lots (evidencing a loss of 5 lots) of $90,000.00.
  1. [50]
    Within the applicant’s Further Amended Statement of Facts, Matters and Contentions dated 1 August 2014 there is an annexure constituted by a letter from Opteon of which Mr Eales was the senior valuer.
  1. [51]
    That Annexure A refers to a pre-resumption yield of 36 lots and a post-resumption yield of 33 lots which is calculated to have caused a loss of profit of $65,000.00. That reflects paragraph 23B of the Further Amended Statement of Facts, Matters and Contentions.
  1. [52]
    There was a request made by the respondent for further amended particulars of the Further Amended Statement of Facts, Matters and Contentions.
  1. [53]
    That was responded to, it seems, by letter on 3 September 2014.
  1. [54]
    One of the enquiries sought particulars of the term “profit risk”.[16]
  1. [55]
    The particulars, which appear at page 61 of the agreed bundle of documents, are as follows:[17]

“The owner of the land which can be developed and subdivided for sale as allotments would have fully considered the costs included in preparing the land for sale in subdivision and the return likely to accrue to him upon realisation. His estimate will also include a profit to him upon completion of the project.

The profit required or expected would be estimated and allowed for when he made the purchase. That is he would buy the in globo [sic] parcel of land at a price that would allow him to reap an estimated set profit figure upon the sale of the residential lots.

Various factors would be considered by the purchaser when assessing the amount of profit expected from the development, but two major items in his calculations would see a sum to cover the element of risk and a sum for profit. The risk factor relates to the security of the capital invested in the development and is a form of insurance against error in the estimate of costs and realisations. The other item is in relation to profit, or net return on the money invested. These two items cannot be separated that is cannot be apportioned as between the elements of profit and risk.

The risk to develop 36 lots as compared to 33 lots does not change as the risk of changes in the development costs were known. Therefore, the owner’s loss is any change of profit below that which was originally estimated when the owner determined the value of the englobo land.”

  1. [56]
    The letter itself of 3 September 2014 (Annexure B to that response) went on to conclude “this is a business loss not foreseen by the owner and directly caused by the resumption.”
  1. [57]
    The evidence for the respondent was given by Mr Norbert Charles Calabro who is a forensic accountant who had participated in joint meetings with Mr Joson for the applicants and had prepared a statement of evidence which became an exhibit before the court.[18]
  1. [58]
    The respondent also had the benefit of advice from Mr Cameron Harris, a valuer. Like Mr Eales, Mr Harris was a co-author of the joint valuation report[19] but was not required to give evidence. His role appeared to be limited to assisting with negotiations for the resolution of the value of the land taken.

The Evidence of Mr Landrey

  1. [59]
    The second supplementary statement of Mr Landrey sets out in some detail the background to the staging of the development which is set out in the following terms:[20]

“The Estate developed in the following way:-

  1. (a)
    Stage 3 consisted of residential Lots 52 to 78 and was contained in SP 189704 which was registered at the Office of the Registrar of Titles on 21 September 2007;
  2. (b)
    Stage 4 consisted of residential Lots 79 to 106 and was contained in SP 214847 which was registered  at the Office of the Registrar of Titles on 14 November 2008;
  3. (c)
    Stage 5 consisted of residential Lots 107 to 129 and was contained in SP 214847 which was registered at the Office of the Registrar of Titles on 14 November 2008;
  4. (d)
    Stage 6 consisted of residential Lots 130 to 162 and was contained in SP 218284 which was registered  at the Office of the Registrar of Titles on 20 May 2010;
  5. (e)
    Stage 7 consisted of residential Lots 163 to 233 and was contained in SP249796 which was registered  at the Office of the Registrar of Titles on 6 August 2012;
  6. (f)
    Stage 8 consisted of Lot 900 and was also contained in SP 249796 which was registered at the Office of the Registrar of Titles on 6 August 2012, the whole of which was sold to Kenfrost (1987) Pty Ltd pursuant to a contract of Sale dated 14 December 2012.
  7. (g)
    The plans of subdivision referred to above also contained lots for drainage, park and sound attenuation purposes which were transferred either to the Crown or to the relevant Local Authority but these lots have been ignored for the purposes of this statement.”
  1. [60]
    Mr Landrey was the guiding hand behind the development of the parent parcel Lot 900, Petersen Road Edmonton near Cairns.
  1. [61]
    Stages 1, 2 and 3 of the relevant development were developed and sold during 2007, 2008 and 2009.[21] 
  1. [62]
    Stage 6 of the development, which seems to be the relevant stage for consideration of compensation, was granted title in June 2010 and had achieved sales at a rate of up to three sales per month.[22]
  1. [63]
    In his statement Mr Landrey pointed out that up to the end of Stage 5 Stony Creek Pty Ltd – the then owner – had only offered house and land packages but that between June and December 2010 Stony Creek Pty Ltd had to change its marketing strategy because the Bank of Scotland was no longer providing the finance for the construction of houses with the consequence that Stony Creek Pty Ltd could no longer pre-build houses and from that point on would sell only land to potential purchasers.[23]
  1. [64]
    In his affidavit Mr Landrey explains the relationship with Laurence Court Pty Ltd as having changed in 2010 to an arrangement whereby purchasers would negotiate an independent contract with Laurence Court Pty Ltd to build a house on the land after purchasing the land from Stony Creek Pty Ltd.
  1. [65]
    In his affidavit Mr Landrey describes the arrangement between Stony Creek and Laurence Court Pty Ltd after 2010 in the following terms:[24]
  1. “(a)
    Laurence Court Pty Ltd would be the exclusive and only builder to construct houses in Stony Creek Estate.
  1. (b)
    Purchasers in the Estate were required to purchase land and construct a house on that land within approximately 12 months;
  1. (c)
    For Stages 1 – 5 of Stony Creek Estate a purchaser would buy a house and land package from Stony Creek Pty Ltd who would then contract Laurence Court Pty Ltd to build the house.
  1. (d)
    For Stage 6 of Stony Creek Estate purchasers would negotiate to purchase the land from Stony Creek Pty Ltd while at the same time negotiating a contract with Laurence Court Pty Ltd to build one of the houses designed by Laurence Court Pty Ltd for Stony Creek Pty Ltd;
  1. (e)
    The deal that was eventually struck with Laurence Court Pty Ltd was that Laurence Court Pty Ltd agreed to pay a sum of money from the retail contract price from the sale of each house to Stony Creek Pty Ltd.
  1. (f)
    Laurence Court Pty Ltd worked out the wholesale price to construct each of the houses which was then deducted from the retail price to determine the payment to Stony Creek Pty Ltd.”
  1. [66]
    As set out in Annexure A to the Further Amended Statement of Facts, Matters and Contentions:

“We confirm that out loss of profit figure contained in the Joint Valuation Report prepared by Geoff Eales and Cameron Harris dated 27 November 2013 has been revised based on 36 Lots rather than 38 Lots. Our calculations based on 36 Lots in the before scenario are set out below:

            Profit Before Resumption (36 Lots)  $760,000 (rounded)

            Profit After Resumption (33 Lots)  $694,000 (rounded)

            Loss Of Profit    $66,000

            Adopt   $65,000”.

  1. [67]
    Curiously, annexed to the Applicant’s Response to the Respondent’s Request for Further and Better Particulars was a document described as Annexure B which is a letter dated 3 September 2014 over the signature of Mr Eales, which contains the following:

“I refer to the Respondent’s request for further and better particulars of the further amended Statement of Facts matter [sic] and contentions dated 1st of August 2014.

Paragraph 23A

The loss of profit is shows as $90,000 for 38 lots after reference to the annexed documents headed

Mr Geoff Eales

Before & After Hypothetical Development Assessments

The amended statement of claim under Paragraph 17 of amended statement sets out that only thirty-six lots could have been developed before resumption.

The amended Hypothetical Development then shows a reduced profit of $65,000 (rounded) due to the reduced number of lots that is

Profit Before Resumption $799,000 (rounded)

Profit After Resumption  $732,500 (rounded)

  Loss of Profit  $66,500

  Rounded  $65,000

The facts, matters and circumstances relied upon to support the allegation that the profit that would have been earned by the Applicant but for the resumption as set out in the Joint Experts Reports Page 9 is set out as follows:-

The owner of the land which can be developed and subdivided for sale as allotments would have fully considered the costs included in preparing the land for sale in subdivision and the return likely to accrue to him upon realisation. His estimate will also include a profit to him upon completion of the project.”

  1. [68]
    It can be seen that that letter also contends for a loss of profit of $65,000 but utilises what are, to my mind, significantly different figures.
  1. [69]
    No explanation was advanced for two different sets of figures both contending for the same loss of profits.
  1. [70]
    The amended compensation claim became Exhibit 4 and detailed the claim in the following terms:

“(a) Loss of Profits:     $65,000.00 ex GST

(b) Loss of Rebate from builder  $156,753.00 ex GST 

Total $221,753.00”.

  1. [71]
    Mr Landrey’s statement goes on to assert that every house in Stage 6 of the Stony Creek Estate was subject to the agreement between Laurence Court Pty Ltd and Stony Creek Pty Ltd set out above.
  1. [72]
    It can be seen that from the extract from Mr Landrey’s affidavit that the marketing strategy for Stages 1 – 5 was markedly different to the marketing strategy for Stage 6.
  1. [73]
    Those changed arrangements reflected changes in the finance and property markets in particular with respect to the relationship between Stony Creek Pty Ltd and its financing organisations.
  1. [74]
    Mr Landrey’s statement also asserted that there was no written contractual arrangement between the parties and that the arrangement was oral and based exclusively on a pre-existing working relationship between Mr Landrey and Laurence Court, the principal of Laurence Court Pty Ltd.
  1. [75]
    Mr Landrey’s statement explained that in order to carry out his arrangement with Stony Creek Pty Ltd Laurence Court set up a separate business called Laurence Court Pty Ltd which business then designed houses exclusively for Stony Creek Pty Ltd.
  1. [76]
    Those houses were cheaper designs than the range of individually designed homes which had previously been designed and constructed by Laurence Court trading, in that event, as Courthouse Classics.
  1. [77]
    Mr Landrey’s statement also explained that to account for the rebate Stony Creek Pty Ltd would invoice Laurence Court Pty Ltd at various times and the payment was generally made by offset against the balance of all monies owed to Laurence Court Pty Ltd under that agreement and other contracts.[25]
  1. [78]
    Mr Landrey’s evidence was that the land sales from Stage 6 onwards were dealt with in a different way. [26]
  1. [79]
    Mr Quayle of counsel for the respondent elicited from Mr Landrey a concession that Mr Court had no beneficial interest in the outcome of this appeal.
  1. [80]
    Under cross examination Mr Landrey told the Court that the apparently wholesale selling price to Mr Court of the houses that he constructed was calculated on the basis that:[27]

“He presented to me what his costs were and then added 10 000 onto it for himself and then gave me that price.”

  1. [81]
    Later he acknowledged that there was, in fact, a profit, albeit a small one, for Mr Court in each house he built.[28]
  1. [82]
    And then later that the apparently “low profit margins for Laurence Court”… were “offset by high volumes of work.”[29]
  1. [83]
    Later in cross examination Mr Landrey told the Court:[30]

“There was no speculative construction of the houses.”

  1. [84]
    And then in response to a question from Mr Quayle trying to unravel the details of the commercial arrangements between Mr Landrey and the Court Mr Quayle asked:[31]

“Well, it’s unnecessary how we got here, Mr Landrey, but these are your statements. This was your development, and what this material reveals on a fair reading of it is that the only change that occurred between stage 5 and 6 was that because of some reason – which we’ll turn to later – you wereno longer in position to sell house and land packages, but all that happened, the only change was that from after stage 5 was that in stage 6 at least for some of the land, there is a direct contract with the buyer and Laurence Court for construction. That’s what these documents reveal?”

Mr Landrey answered, “That’s correct.”

  1. [85]
    When pressed by Mr Quayle as to the origin or basis of the “exclusivity” contractual arrangement between himself and Mr Court, Mr Landrey conceded that there was no written agreement. All agreements, to the extent they existed, were purely oral.[32]
  1. [86]
    My observation of Mr Landrey’s evidence about the exclusivity of the arrangement between himself and Mr Court and the reality that, at law, it was terminable on notice as with any other oral agreement, was that he was somewhat evasive and disinclined to confront the legal reality.[33]
  1. [87]
    Mr Landrey had the presumable advantage of understanding complex commercial dealings, of coming to the court, having previously being a solicitor in practice for some years (although he did not at the time of the hearing hold a current practicing certificate).
  1. [88]
    I was unimpressed with some of Mr Landrey’s evidence insofar as he seemed disinclined to acknowledge the clear meaning of words set out in the pleading upon which he relied to bring this matter before the court. In particular this is exemplified by a passage of dialogue between myself and Mr Landrey trying to make clear what was meant by paragraphs 20A and 20B of the Further Amended Statement of Facts, Matters and Contentions.
  1. [89]
    Paragraph 20A stated as follows:

“ 20A. The arrangement referred to in the previous paragraph arises as a result of the following facts:

  1. a)
    By oral agreement reached between Laurence Court Pty Ltd and the First Applicant, Laurence Court was the sole builder on the estate which was developed by the First Applicant.
  1. b)
    The First Applicant sold residential lots together with houses erected thereon by Laurence Court Pty Ltd, thereby enabling the First Applicant to obtain not only the sale price of the land but also a profit from the construction and sale of the house.
  1. c)
    Laurence Court Pty Ltd and the First Applicant agreed on a pricelist for the construction of a number of different designs for houses on each of the 33 lots in Stage 6.
  1. d)
    The pricelist contained the following:
  1. The price for the house that would be paid by the purchaser.
  2. The sum required to be received by Laurence Court Pty Ltd for the construction of the house.
  3. The rebate amount that would be paid by Laurence Court Pty Ltd to the First Applicant.”
  1. [90]
    The dialogue between myself and Mr Landrey was as follows:[34]

HIS HONOUR: Mr Landrey, you’re a qualified lawyer, if not a currently practising lawyer. Do you suggest that the first phrase in paragraph 20A, sub small (b), where it says, “The first applicant sold residential lots, together with houses erected thereon, by Laurence Court Pty Ltd” means anything other than that you sold houses and land as a package?---We – well, perhaps. Are we referring to stages 1 to 5, or stage 6?

Well that will become clear from other evidence. I’m just worried about 20A---?---Right. Houses erected - - -

- - - subparagraph (b), and what you contend is the proper meaning of it, which seems to confound the literal meaning of the words used in that sentence?---No, no, I misunderstood that. Okay. That’s – I’ve read it completely differently. The first applicant sold residential lots with the houses erected on them, enabling the first applicant to not only sale price the land, but have profit from the house. Yes, that’s right.”

  1. [91]
    Earlier in cross examination there had been an extensive passage between Mr Quayle for the respondent and Mr Landrey in which emphasis was placed upon a proposition by Mr Landrey that the rebate back arrangement between himself and Mr Court was based upon what happened in stage 6 which came later in the development sequence. Such a proposition is improbable.
  1. [92]
    After a lengthy passage of cross examination[35] it became clear that, in simple terms, the alleged arrangement Mr Landrey had was that he sold the house and land package to a home purchaser but in selling that package he was effectively buying the constructed home from Mr Court and then selling it with the land as a package and at a profit. There was in no sense, judging by the sworn evidence of Mr Landrey, a rebate.
  1. [93]
    That is so, notwithstanding the determined way in which Mr Landrey continued to assert that he was getting “a rebate”.[36]
  1. [94]
    Mr Quayle then sought in cross examination to clarify with some precision the arrangement with respect to land which was sold in Stage 6 which, it must be remembered, was at a time when – because of changed economic and financial circumstances – home owners were no longer buying a house and land package from Stony Creek but were buying land from Stony Creek with an obligation to build a home by Mr Court on that subject land. In the transcript the following passage of dialogue occurs between Mr Quayle and Mr Landrey:[37]

“You see, the two are mutually exclusive, I suggest. You can’t have a mechanism that involves Mr Court for whatever reason saying I’ll build you this house for X, and you can do with it as you wish. There’s no need for a price list that involves the retail price because he’s unconcerned by that apparently. In stage 1 to 5 you negotiate with him and say, “in relation to an XYZ house, you’ll build it for Y dollars,” and he is unconcerned about what you sell it for?---In stages 1 to 5?

Exactly?---Okay.

And there’s no rebate at all. It’s not like you pay him some money which he then kicks back to you. There’s no rebate in 1 to 5. We’ve resolved that. But what I’m suggesting to you is the language in 20B(b)(i) is confused again, isn’t it – back dealing with the notion of a of a fixed price to you?---Back – back from stages 1 to 5; is that what you’re saying?

Yeah. Well it’s using the language now we understand applicable only to stages 1 to 5, not to stage 6 with which we’re concerned?---But you said it’s back.

Yes. Back – it’s back talking about stage 1 to 5 when this is all about stage 6. This document. Yes. Take my word for the moment that it’s about stage 6?---Okay.

Do you agree that it appears to be inaccurate?---I’ll take your word for it.

Do you accept that it’s inaccurate in that – on that assumption?---It’s not inaccurate as to the principle on the words you’re suggesting, yes.

It’s not inaccurate on the principle on the words you’re suggesting, yes.

It’s not inaccurate on the principle. It is inaccurate?---As to the principle. He supplied me houses at a price on which Stony Creek able to make a profit. It was just the vehicle with which Stony Creek was to garner that profit in stage 6 was – had to be different.

So you see then (ii):

Give me a rebate according to the difference in the two price lists.

So this change apparently rort after the end of stage 5, it was – occurred, what, suddenly, or - - -?---Which change are you referring to? The method of getting the profit?

No. The – forget the method by – you say it’s method to get profit. What we’re concerned with, and what your evidence goes to, it seems now, is that the way in which transactions were structured between both Stony Creek and the third party buyer, and Stony Creek and Laurence Court, changed from the beginning of stage 6 onwards. That’s as we understand the evidence now. Do you agree?---The house contracts – I’m not sure whether I do. The house contracts in stage 6 were between the purchaser and Laurence Court.

Exactly. Whereas, I think we’ve established before the break, that for stage 1 to 5 the third party buyer had nothing to do with Laurence Court. All it knew was that somebody would build it a house on the block of land and it had paid Stony Creek for both?---No, not somebody. They knew it was Laurence Court. I advertised.”

  1. [95]
    It should be observed that even in stage 6 the contractual arrangements were not constant. In Mr Landrey’s supplementary statement[38] the following appears:[39]

“In Stage 6 of the Stony Creek Estate there were 33 Lots. Ten of these lots were sold as house and land packages. The remaining 23 Lots were sold as land packages and each of the purchasers entered into a separate contract with Laurence Court Pty Ltd for the construction of one of the houses.

For the 10 house and land packages built in Stage 6 were the same in their contractual structure as the contracts for the sale of the house and land packages in Stages 1 to 5. However, in response to pressure from buyers to reduce stamp duty costs, the remaining 23 Lots in Stage 6 were land packages only and the purchaser independently engaged Laurence Court Pty Ltd to build a house.”

  1. [96]
    There is exhibited to the statement[40] exhibit GVL-5 which sets out the contract price for each of the ten house and land packages so that Stony Creek owed Laurence Court Pty Ltd a sum of $10,376,728.00 for houses which were sold as a house and land package.
  1. [97]
    Mr Landrey’s statement says:[41]

“6. Of the 23 land contract sales in Stage 6, twelve were sold to persons who were members or related parties to members of a syndicate of 39 such persons who had provided finance to Stony Creek Pty Ltd.

7.  The return of the money to these financiers had been delayed. In order to address this situation, Stony Creek Pty Ltd offered to provide a house deposit of 20% for those members of the syndicate lenders who agreed to buy one of the lots and enter into a contract for the construction at the normal retail price of one of the houses. Thus Stony Creek was responsible to Laurence Court Pty Ltd for 20% of the house contract price as partial repayment of the debt owed to the particular financier.”

  1. [98]
    That particular aspect of the operations of Stony Creek was sought to be explored by Mr Quayle for the respondent. Mr Landrey’s responses were less than illuminating.
  1. [99]
    In summary I found the evidence of Mr Landrey evasive, confusing and at times contradictory. It is difficult to give it any substantial weight.
  1. [100]
    Beyond establishing matters not in dispute between the parties, the various affidavits generated to support Mr Landrey’s case did little in that regard.
  1. [101]
    The evidence from Mr Landrey was far from impressive. At all times Mr Landrey and his evidence sought to cloak the transfer of land to the members of the syndicate of financiers with an aura of commercial transaction for sale of land when, I’m satisfied from the cross examination, it was in order to reduce debt because he was unable to pay the money owed to the syndicate.
  1. [102]
    At one point Mr Quayle asked Mr Landrey:[42]

“The reason you did the deal, according to your statement, is in order to address the situation of you being late in paying them back?”

To which Mr Landrey responded:

“Well that’s right.”

  1. [103]
    I attempted to allow Mr Landrey to provide an explanation of the transfer of the land to the finance syndicate but his answers, as any inspection of the transcript will reveal, remain evasive.
  1. [104]
    The actual transactions appear to be illusory and something of a “round robin” transaction. So much is clear from the following passage of the transcript:[43]

“What I'm trying to understand is, the situation seems to flow upon the description from the assertion that the return of the money to the financiers had been delayed. And if you've got delay that means something should happen at one time and it's not going to happen until another, doesn't it?---Yes. I think it had been delayed by the fact that where we were selling four a month, we were now selling three a month. I think that's what I'm trying to say there.

Right. Well, then, what I was interested in, is this offer to pay a house deposit of 20 per cent are those members of the syndicate lenders who had agreed to buy one of the lots?---Yes.

Well, that's you paying 20 per cent to yourself, is it?---No, it's the profit from – that Laurence Court is paying back to me. When they entered a contract with him they only had to pay him 80 per cent of the contract price.

Well, you say here, you offered to provide a house deposit of 20 per cent. What do you understand by the term "deposit"?---The 20 – the 20 per cent that Laurence Court was going to pay Stony Creek was made available to those purchasers. So, if a house is 250,000 they only had to pay him 200.

So, the 20 per cent was illusory for deposit, was it?---No, that's – no, they entered a contract price for 250,000. And he effectively paid – paid it to me and I paid it back to them.

Why would Mr Court pay you a deposit for a house he was going to sell to you?---No, it's the profit that he was paying back to me. He paid the profit back to me the same deal that he was doing on all of the houses and I gave - - -

That's only after the house was sold, wasn't it?---No, before it was sold.

I see. Yes, Mr Quayle. Is that a convenient time?”

The Evidence of Laurence Mark Court

  1. [105]
    Mr Court’s evidence is crucial as to the facts and circumstances surrounding the contractual arrangements between Mr Court and Mr Landrey and, in particular, with respect to the issue of the rebate.
  1. [106]
    Mr Court’s evidence is also relied upon by the applicant to corroborate and support the evidence given by Mr Landrey.[44]
  1. [107]
    Mr Court’s evidence in chief consisted primarily of a statement sworn by him on 31 March 2014 together with three supplementary statements sworn on 1 August 2014, 6 November 2014 and 16 March 2015 respectively. All of those statements became exhibits before the court.[45]
  1. [108]
    Mr Court’s statement evidenced that he encountered Mr Court consequential upon an introduction from his former wife Geena Court, who had been a real estate agent appointed to sell property within the Stony Creek Estate in 2007.
  1. [109]
    Mr Court’s statement asserted that from August 2007 up until December 2012 his company Laurence Court Pty Ltd had built every house from Stages 1 to 7 of Stony Creek.
  1. [110]
    He told the court that the primary focus of his involvement in the building and real estate industry in and around Cairns was as a builder for the high end housing market.[46]
  1. [111]
    Mr Court’s statement explained the relationship between Laurence Court Pty Ltd and Stony Creek Pty Ltd for Stages 1 to 3 of the development whereby Laurence Court Pty Ltd would be the only residential builder in the estate, on the basis that any purchaser in the estate could not simply buy a vacant block of land but had to either contract to have a house and land package constructed for them or, from Stage 6 onwards, contract to purchase the land from Stony Creek while at the same time negotiating a contract with Laurence Court Pty Ltd to build a house.[47]
  1. [112]
    Importantly in his sworn statement, confirmed by him in the witness box, Mr Court said:[48]

“In return for this exclusive arrangement, Laurence Court Pty Ltd agreed to pay a sum of money (rebate) from the retailer contract price from the sale of each house to Stony Creek Pty Ltd.

To calculate this amount of money, Laurence Court Pty Ltd negotiated a wholesale price with Stony Creek Pty Ltd for each house type/design.”

  1. [113]
    In his statement Mr Court deposed to having had a good relationship with Mr Landrey:[49]

“…which gave me the confidence to enter into an arrangement with Stony Creek Pty Ltd for the remainder of the estate.”

  1. [114]
    Mr Court goes onto say that: [50]

“Due to this relationship of trust with Stony Creek Pty Ltd I made a decision at the time that the potential benefits of that arrangement exceeded the risk and I did not consider entering into a formal contractual arrangement. So at the end of the day it was a gentlemen’s agreement (hand shake deal).”

  1. [115]
    Cross examination confirmed, as had been conceded by Mr Landrey earlier, that in Stage 6 the arrangement between Stony Creek and Court changed.
  1. [116]
    The consequence of the change was that the third party buyer had, after Stage 6 commenced, an opportunity to purchase land only from Mr Landrey and any contract for the erection of a house was entered into with Mr Court’s company.
  1. [117]
    That changed arrangement was aimed at avoiding a penalty in the form of having to pay extra stamp duty.[51]
  1. [118]
    In cross examination Mr Quayle for respondent sought to clarify the change in the position between Stages 1 to 5 and what the situation was subsequent to the beginning of Stage 6. The following passage of cross examination really reveals those differences:[52]

“Yes. Well, I don’t want to add – it’s unnecessary, really, to put to – all these sort of technical terms over everything. Really, at least in your – yours and my discussion, but there is a difference, you see, between the house and land packages. Because there what you did was you built a house for a price. And once you had built it it was left with Mr Landrey. And he could do what he liked with that house in terms of pricing. He put – he then took it away and gave – and put another price on it, which he gave which then extracted from the market; do you understand?---Yes. Yes.

There’s a difference. There might not be a practical – much of a practical difference, but there is a difference, in other transactions, because in those ones the full retail price came to you because the buyer – because of the stamp duty problem entered into contract for the building with you. So if the whole sale price of an Alamanda whatever was $100,000, let’s say, in the first group of transactions the house and land arrangements all from 1 through to 5 [indistinct] 5, and then partway through 6, you would get $100,000 for that house. And then it was – that was the end of your involvement in that house. There was no further exchange of money or anything else?---Yeah. That’s right.

In the other houses it worked slightly differently. You’d build that hundred – you’d build that house, and you’d actually receive $200,000 for it. And you’d give the amount that that exceeded the wholesale price back to Mr Landrey - - -?---That’s right.

- - - correct? Now, there is another feature of all of this, I suppose, Mr Court, and that’s this – that because of the way things were going, that is, Mr Landrey was buying and always had bought a lot of house and land packages, and, indeed, in stage 6 the same thing happened – there were 10 or eight house and land packages – Stony Creek always owed you more money than you owed him; do you know what I mean?---Yeah.”

  1. [119]
    I accept that Mr Court was an honest witness trying to assist the court to understand a contractual arrangement that became increasingly complex as it transitioned from Stages 1 to 5 through to Stages 6 and 7.
  1. [120]
    As I understood Mr Court’s evidence, he did not see any significant difference between selling a house to Mr Landrey on a wholesale basis in Stages 1 through 5 when Mr Landrey was entering into house and land packages with purchasers, and the situation that prevailed in Stage 6 whereby the contractual arrangements for house construction were made directly with Mr Court who then allowed a rebate or refund of money to Mr Landrey so that the sale of the house was effectively on a retail basis to the home erector and on a wholesale basis to Mr Landrey.

The Evidence of Mr Nolan Joson

  1. [121]
    Mr Joson was a chartered accountant by profession who had participated in a joint experts meeting with Mr Calabro which resulted in the production of a joint expert report dated 12 February 2015.[53]
  1. [122]
    Mr Joson also produced two statements which were admitted into evidence before the court.[54]
  1. [123]
    Mr Joson’s evidence is contained in his statements which are to the effect that his business Financial Alliance Pty Ltd, a boutique chartered accountancy practice, provided accountancy services to Stony Creek Pty Ltd from January 2007 to December 2012.
  1. [124]
    The provision of those services ceased when Ferrier Hodgson was appointed liquidator of Stony Creek Pty Ltd.[55]
  1. [125]
    The differences between the views of Mr Joson for the applicant and Mr Norbert Calabro, a forensic accountant engaged by the respondent, are clarified by the contents of the joint report prepared by them.
  1. [126]
    With respect to the issue of loss of profits, the distinctions between the two accountants appear clearly at paragraphs 12.9, 12.10, 12.11, 12.12 and 12.13 of the joint report, which states as follows:[56]

“12.9 With an average gross profit rate of approximately 6% which is to be reduced by variable costs that would not be incurred and which exceed 6% it is Calabro’s view that no loss has been incurred by the Applicant, Stony Creek, as a direct and natural consequence of resumption.

12.10 Both Calabro and Joson agree that the figure of $65,000 claimed by Stony Creek is not a figure which has been opined by Joson. It is a figure calculated by Mr G Eales.

However both Calabro and Joson agree that Joson was responsible for the preparation of a schedule (referred to as Schedule B in these proceedings) which reflects a gross profit of $1,739,906 for the whole of stage 6 or a gross profit of $52,724 per lot. The schedule has now been amended to include commission costs of $330,000 reducing the gross profit to $1,409,906 or $42,724 per lot.

The gross profit as calculated by Joson represent a gross profit rate of 41.6% of sales, and has been adjusted to approximately 34%. This is still considerably higher than the actual results disclosed.

12.11 Joson arrived at his figures by extrapolating all the tax invoices relating directly with the acquisition and development of stage 6.

12.12 Calabro does not agree with Joson’s approach because it will not necessarily provide accurate or reliable data about gross profit data and gross profit rate unless it is cross referenced to the general ledger to ensure that all data has been taken up in the extrapolation.

12.13 Calabro also says that the figures produced by Joson and reflected on his schedule B are significantly different than those reflected in the accounting records.

In Calabro’s opinion it is not possible to have two such different figures and both be correct.”

  1. [127]
    While, as evidenced in paragraph 9 of that report, Mr Calabro contends that there was no loss of profit as a direct and natural consequence of the resumption that is not the position of Mr Joson.
  1. [128]
    However, a careful reading of each of the statements of Mr Joson[57] reveals that nowhere in those statements does he actually contend for a particular figure calculated from his own accountancy analysis as evidencing the loss of profits.
  1. [129]
    Instead he relies upon the document that came to be referred to as Schedule B.[58]
  1. [130]
    Schedule B shows, for the 33 lots comprising Stage 6 of Petersen Road, Edmonton, an income from sales (net of GST) of $4,179,091with an associated cost of goods sold of $2,769,185 generating a gross profit of $1,409,906.
  1. [131]
    In cross examination Mr Quayle explored in considerable detail the genesis of the figures contained within Schedule B.
  1. [132]
    Mr Quayle put to Mr Joson the proposition that:[59]

“So when one is examining the financial history of a company as to what it did, what it expended, what it received – the central data base is the general ledger?”

  1. [133]
    Mr Joson’s response was to say:

“The general ledger and also other – you’ve got to take into account, also, Mr Quayle, all of the other supporting documentation, be it in the invoices and, you know, bank statements. Yes.”

  1. [134]
    He later confirmed that primarily all of the relevant financial figures find voice in the general ledger.[60]
  1. [135]
    Mr Quayle also put to Mr Joson that:[61]

“…the primary destination when considering the company’s financial history will be the general ledger”

with which proposition Mr Joson agreed.

  1. [136]
    In exploring how Mr Joson produced some of his figures Mr Quayle took him to an exhibit to his affidavit, namely a letter from Herron Todd White of 24 October 2014 which Mr Joson accepted, and which showed that the ex-GST price Stony Creek paid for the development land in about June 2007 was of the order of sixteen and a bit million dollars.[62]
  1. [137]
    The actual figure was $16,363,636.00.
  1. [138]
    Keeping that figure in contemplation, Mr Joson was then taken to the company’s general ledger.[63]
  1. [139]
    Within the general ledger as at 1 July 2011 the closing value of the development land was posted at $16.658 million.[64]
  1. [140]
    Mr Joson acknowledged that the closing figure was effectively the same.[65]
  1. [141]
    That latter figure was calculated at a time when, as Mr Joson acknowledged, a substantial part of the estate had been sold.[66]
  1. [142]
    And then this cross examination occurs:[67]

“And does that not reveal that that number could not possibly be right?---No, because, Mr Quayle, I think, like what we had said earlier, the asset value may be diminishing, but we’re also – we’re also expending expenditure in, you know, carrying out further works. Maybe – maybe some of these were house and land, so if there was construction going on, along with [indistinct] future stages and other costs. So, in essence, you know, some of those costs have – you know, have been attributable to the – to the asset.

Well, I understand the point. But, you see, at 30 June 2012 not only had stages 1 to 5 largely been sold, but most of stage 6, I think I’m right in saying, had been sold; that’s right, isn’t it? Most of stage 6 was sold in the financial years 2011 and 2012. There may have been a few after that. Three or four, perhaps. So what we’ve got is an asset that begins life being worth something north of $16 million. Then despite having something in the order of half of it or more being sold is banked at still something north of $16 million. And I suggest to you, Mr Joson, that there – even taking into account the type of thing you say, which cannot be measured, and is not measured anywhere, that is simply fantastic?---Could you please explain.

Well, I’m suggesting to you that the 16.58 cannot be right, even having regard to the phenomena you spoke of earlier?---No. I think that that was – that would have been the carrying value, taking into consideration those costs that we have capitalised to be released for future stages.

And is – behind this is there – do you recall – I mean, you prepared this. This - - -?---Yes.

- - - $16.658 million as at 30 June 2012 – reflects your considered professional opinion. So, I mean, you’re the best placed to tell his Honour as to whether it, in truth, is right. And do you recall – I mean, you investigated it?---I mean – yes. We always try to investigate to look at where the development is at through discussions with our client. And, you know, we also know that there was also – as – as you aptly put, Mr Quayle, as the development parcels were being reduced there was also other parcels within that development, you know, town planning. So there could have been – there was more lots that will be spawned out of certain blocks. So one – one needs to also take that into consideration, because, as you said, as we’re getting closer and closer to that stage some of those lots actually could be morphed into another hundred.”

  1. [143]
    Mr Joson acknowledged[68] that he had some disquiet about the number contained within his reporting.
  1. [144]
    As for the further genesis[69] Mr Quayle put to Mr Joson that he understood that the parties had come to an agreement about the value of the three lots which had been lost consequential upon the resumption but that Mr Landrey was also of the view that he lost something more in the nature of profit.[70]
  1. [145]
    Then this passage of this cross examination followed:[71]

“And what you were asked to do was produce a document, which demonstrated that his view was accurate?---Yes I was instructed, yes, by All About Law. Yes.”

  1. [146]
    In my view the following view of cross examination accurately describes the work done by Mr Joson in respect to Annexure B:[72]

“So, you see, it’s very important task you’ve undertaken, Mr Joson, and its one that rolls, as it were, off the pen easily when you produce something like annexure B. But in order for annexure B to be trusted by his Honour he needs to be, have some understanding of its origin and to know that all of the things that need to be included in it were included in it. So what we’re looking for is that assurance, and what we really come to, isn’t it, is that, can I suggest, a bit of a brick wall because we don’t ever really see where these invoices were collected and who by; that’s right, isn’t it?---Yes.

So these invoices were collected by Mr Landrey, can I suggest, and provided to you?---Yes. Mr Landrey, yes.

And then you used the invoices provided to you by Mr Landrey to develop annexure B, correct?---Yes.

Now, that obviously reflects the fact that this wasn’t an exercise in forensic accounting in the sense that you weren’t inserted into the storerooms or the record department of Stony Creek, because that’s remote to you. That’s somewhere in Mr Landrey’s office or something, and you weren’t set about to go and make an independent assessment of these things. You were provided with certain things and asked to carry out an accounting exercise in respect of them, were you not?---Yes.”

  1. [147]
    I am satisfied that the Annexure B does not constitute forensic accounting work of the sort that might be expected to support an argument for a loss of profits.
  1. [148]
    In cross examination after a luncheon adjournment Mr Quayle resumed his probing as to the basis upon which the capital value of the lots remained at $16 million even after approximately half of the lots had been sold. Ultimately he put to Mr Joson that the various explanations which he advanced to justify the retention of the 16 million dollar figure were speculation not based upon his independent recollection of what had happened, to which Mr Joson’s response was:[73]

“Yes. But that would have been the principles we would have adopted.”

  1. [149]
    Mr Quayle then embarked upon a detailed investigation of the formulation of the document Schedule B[74] Within that document is an item for opening land costs (33 lots x $22,000) of $726,000.
  1. [150]
    Mr Joson conceded that is not supported by any invoices but was based upon the calculation done by valuer Herron Todd White on 24 October 2014 which adopted a estimated value of:[75]

“around $22,000 per lot to be fair and reasonable.”

  1. [151]
    The next item under challenge was a matter of land acquisition cost of five percent which Mr Joson said was an allocation of the stamp duty cost but in respect of which he conceded it was not stamp duty but merely five percent of $726,000 – the opening land costs.
  1. [152]
    With respect to items claimed for planning consultants including survey of $35,405 Mr Joson acknowledged that that figure included work that was done partly in Stages 7 and 8 of the development.
  1. [153]
    Again within Schedule B there is an item of $330,000 for commissions paid which Mr Joson said, “I calculated your Honour” but then conceded that it was a calculation based upon individual sums provided to him by Mr Landrey.[76]
  1. [154]
    Mr Joson also confirmed that he saw no documents which evidenced those figures.[77]
  1. [155]
    With respect to a council headworks charge of $221,499 again Mr Joson confirmed[78] that he relied on documentation provided by Mr Landrey but did no independent investigation of that figure.
  1. [156]
    It became clear that a lot, if not all, of the figures relied upon and advanced by Mr Joson were based upon figures given to him by others, particularly Mr Landry, and he agreed with the proposition put to him by Mr Quayle that:[79]

“the limit of your investigations were to look at the date and say that looks about right; correct?”

To which Mr Joson answered:

“Correct.”

  1. [157]
    With respect to the interest item in an amount of $82,131 Mr Joson again confirmed that that was not a precise calculation but merely an allocation of figures for which the workings were not explained.[80]
  1. [158]
    Mr Quayle invited Mr Joson to compare figures appeared as an appendix to the joint forensic accountants’ report[81] where figures of $2,692,270 for year 2009, $1,740,000 for year 2010, $451,576 for year 2011 and $506,333 for financial year 2012 appeared to get Mr Joson to agree that:[82]

“in the face of those interest figures the 82,000 [contained within his Schedule B] might have been rather materially light on”.

  1. [159]
    Mr Quayle then moved on to deal with the gross margin figure which was apparent from Mr Joson’s Schedule B and which revealed, upon calculation, a gross profit margin of about 33.7%.[83]
  1. [160]
    Mr Joson agreed that 33.7% gross profit margin could be contrasted with the company’s performance at something very much lower.
  1. [161]
    Mr Quayle also put to Mr Joson that he had compiled one set of figures to give a proper accounting picture of the activities of the company and another set of figures for the purpose of producing his Schedule B. The real tension in that exercise is revealed by the following passage of cross examination:[84]

“ The schedule B, as I had stated in my – I think it was my supplementary statement, and also in the joint report, the land cost – we had used the Herron Todd White valuation of 22,000. And right after lunch we had – I tried to clarify that one can allocate the costs of the 16 million. Mr Quayle, you chose – you had set an example that one could use the Herron Todd White valuation, and after selling the 78 fully developed blocks – if you had allocated on that basis your closing stock of the remainder of the development is a lot less.

Yes?---And should I – if I had chosen another rate of allocating the land lots we will get a different answer again. Now, which ones of those are correct? Which ones of those are wrong? They’re all acceptable. It’s just that how we allocate it – and we took – I know that on the accounts – I think on – on the joint report I said that we had allocated it on a straight line basis, which meant that we were allocating it around 60-odd thousand dollars per block. So that would – that would account for the variance in the gross profit margin.

Okay. Well, I think the point you’re making is that at 12.8. Would you go to that? 407. You see that?---Correct.

So the short point is you’re saying in the financial statements I allocated the value of the land in one way, and in this document I chose another way?---Yes.

That – that’s the nub of it?---Yes.

And does that not – does that not introduce a degree of tension between these two documents? On the one hand, you see, Mr Joson, you’ve got a document that was prepared without any eye to the litigation. So it was prepared in a world where there was – you weren’t trying to reinforce something or to demonstrate something. Rather, you were carrying out an accounting exercise. And you chose a way to allocate value to the land at any particular time as we use that for an example – as you would explain in 12.18. Then in another time and in another place for another purpose, one to do with the litigation - - -?---Yes.

- - - you allocate a value to the land which has a rather more favourable outcome in that context. Do you accept that’s what’s happened?---I can accept that’s what’s happened.

Yes. That’s what’s happened, hasn’t it?---Yes.

And – and I suggest to you that that introduces a lack of rigour into these – into the numbers you’ve used for this litigation – That you ask his Honour to accept?---No. I don’t believe so, Mr Quayle. You know, I did – we’re talking about one number here, being the allocation of the land cost. And my methodology, whether – whether I’ve accelerated the rate of releasing that 16 million, I thought that the Herron Todd White valuation, who’s a qualified valuer – saying that’s what the undeveloped land would have cost at that time – would have been a more pertinent figure, or – or an amount to use.

HIS HONOUR: Would have been a more what figure?---More pertinent. More relevant.

But weren’t the original accounts drawn up to give a proper picture of the activities of the company?---They were, your Honour. They were.”

  1. [162]
    In a later passage of cross examination[85] Mr Joson, being taken to paragraph 12.31 of Exhibit 22, acknowledged that if you start with a block of land in globo and carry out development work to it and end up with a different set of blocks of land and then sell that land to the market, the selling price includes the profit.
  1. [163]
    Mr Joson twice confirmed that the selling price reflected in the Herron Todd White valuation included the incremental increase in the value, including the price of the land, the development cost and profit.[86]
  1. [164]
    That selling price of $108,187.00 (excluding GST) which together with allowances for 146 undeveloped lots 4,100m2 of commercial zoned land and 13.2 hectares of rural/residential land provided a total of $16,363,636, which after GST produced a figure of $18 million was derived from the Herron Todd White letter of 24 October 2015.[87]
  1. [165]
    In his supplementary statement[88] Mr Joson told the court that he accepted Mr Calabro’s comments that the approach adopted by Mr Eales was based upon a hypothetical profit-risk allowance in determining the residual value of the land as $1,700,000. He said that:[89]

“The ‘hypothetical profit – risk allowance’ presented by Mr Geoff Eales is based on gross profit less variable costs. It is not based on net profit.”

  1. [166]
    Importantly it became clear in the course of evidence that those calculations were not created from the accounts of the first applicant, nor by reference to the general ledger of the company, nor from invoices said to relate to Stage 6. The work done by Mr Eales[90] appears to be entirely notional and hypothetical and it is difficult, then, to see how Mr Joson felt able to rely upon it for the propositions which he advanced.
  1. [167]
    In his written submissions on behalf of the respondent[91] Mr Quayle of counsel said as follows:[92]

“Mr Joson is not independent of the applicants. He was the first applicant’s accountant from its incorporation until it was placed into liquidation. He remains the accountant to the second applicant and to Mr Landrey’s interests more generally. Mr Joson fairly acknowledged that he did not perform a forensic accounting exercise but rather was set the task of carrying out an accounting exercise in respect of some documents supplied to him by Mr Landrey; inferentially, Mr Joson was deployed to produce an expert opinion, reportedly independent, that endorsed the case the applicants were advancing. Mr Joson’s work in the case was clearly influenced by Mr Landrey who, again Mr Joson fairly acknowledged, had a hand in some of it. Mr Joson may have been doing his best to give his evidence, both written and oral, honestly, but the respondent submits that it was apparent on the face of both, that his evidence was unbalanced and parochial to the interests of the applicants.”

  1. [168]
    It is hard to resist the notion advanced by Mr Quayle that Mr Joson did not utilise the general ledger or the original accounting documentation because that was not what he was asked to do. He was asked to carry out an accounting exercise based upon material provided by Mr Landrey which was, in part, based upon material provided, as indicated above by Herron Todd White in a valuation exercise.
  1. [169]
    It is difficult to see how a forensic accountant can advance an expert opinion based upon valuation evidence rather than upon reference to general ledgers and books of account when they, clearly, were available to him.
  1. [170]
    Accordingly Exhibit 22A (Schedule B) is a document upon which I feel unable to place any substantial reliance for the purpose of the exercise which I must carry out in coming to a view in this case.

The Evidence of Norbert Charles Calabro

  1. [171]
    Mr Calabro is a forensic accountant who prepared reports for this matter.[93]
  1. [172]
    Mr Calabro had participated in meeting with Mr Joson for the applicants and the two of them had prepared a joint expert report.[94] In this report Mr Calabro set out his views in some detail. One significant aspect of Mr Calabro’s opinion related to the utilisation by Mr Joson of the Herron Todd White valuation in respect of 78 fully developed residential blocks.
  1. [173]
    In the joint report, his opinion is expressed in the following terms:

“12.25 Calabro has now had the opportunity to look at and consider the Herron Todd White report. In Calabro’s opinion the figures do not support Joson’s assertions. This because:

  1. a)
    Herron Todd White opined that seventy-eight (78) fully developed residential blocks were worth $108,187 excl. GST each;
  1. b)
    Joson’s schedule B (before adjusting for commissions which in any event don’t affect gross profit and neither does interest) puts a value of $73,915 excl.GST per lot. A difference of $34,272 per lot.
  1. c)
    If the fully developed blocks are $108,187 each, and the undeveloped blocks are $22,000 each then by simple deduction development costs must be $86,187.
  1. d)
    Based on Joson’s unadjusted schedule B the development costs amount to $50,815 per block.
  1. e)
    On the basis of the Herron Todd White report it seems that the position would be as follows:

Sales net of GST (as per Joson’s schedule B) $4,179,091

Less estimate of costs of fully developed lots 33×$108,187 $570,171

Gross Profit    $608,920

Gross Profit rate 14.6%

This is much more in line with the accounts.

12.26 Having said this however Calabro reiterates that the above is based on a property valuer’s view and in Calabro’s view the proper approach to adopt the company’s accounts as a base unless it is suggested that the accounts do not reflect the true position.

12.27 In Calabro’s view one of the two documents is wrong i.e. either the Joson statement is wrong or the financial accounts are wrong. They each cannot be correct.”

  1. [174]
    He indicated a preliminary conclusion that based upon the information available to him the company had not suffered any loss of profit as a consequence of the resumption of the property.[95]
  1. [175]
    He explained that conclusion in his report in the following way:[96]

“In respect of the loss of profits claim I say:

  • The approach adopted by Geoff Eales based on a “hypothetical profit – risk allowance” is not supported by the direct evidence as disclosed by the Applicant’s financial records.
  • The Applicant, Stony Creek has in fact incurred considerable losses in each of the three years to 30 June 2011 (in total approximately $3m for those three years).
  • The Applicant, Stony Creek, must have incurred losses of approximately 41.7m prior to 2009 because the accounts at 30 June 2011 as shows on Schedule 2 record accumulated loss of $4.7m compared to losses of approximately #m. for the period to 2009 to 2011.
  • I do not have accounts for 2012 and beyond, however having regard to the trading history of the company it is reasonable to assume that there would not have been a significantly material change to the trading results.
  • In my opinion the profit and loss statements provided by the Applicant in connection with the Applicant’s claim are not supported by the financial material disclosed by the Applicant.”
  1. [176]
    Under cross examination he expressed the view that $16,363,636 contained in the Herron Todd White letter of 24 October 2014[97] could not possibly be correct.[98]
  1. [177]
    In the course of cross examination Mr Calabro was taken to a number of invoices which, it was suggested to him, was evidence of the accuracy of the figures contained in Schedule B. To that proposition Mr Calabro responded by saying that unless you can refer the figures back to the ledger and be sure that every invoice had been taken into account there was no basis for asserting that Schedule B was correct.[99] He also pointed to the incongruity between the profit figures (losses), which emerged from an analysis of the general ledger figures, and the contention that the development was profitable. With respect to the issue of the claim for builder’s rebates Mr Calabro’s opinion is set out in these terms:[100]

“13.    Builder’s Rebates

Calabro Position

13.1 The accounts for 2012 disclose separately rebates received of $917,502. The accounts of prior years do not reflect any rebates. It is Calabro’s opinion that any loss of builder’s rebates can only be measured at the end of the development project and all house have been completed.

13.2 The thirty-three lots on stage 6 were completed and thereafter stage 7 started immediately. The builder could only build so many houses per year.

 Accordingly there were no delays in the construction of houses and therefore receipt of rebates due to the resumption.

13.3 Accordingly the loss, if any should be discounted to its Present Value from the estimated time of completion.

13.4 The discount rate that should be applied to calculate the Present Value of the loss is in Calabro’s opinion at least 11% to account for risk factors associated with property development.

13.5 On this basis Calabro has calculated the loss at $83,520 taking into account:

  • Estimated time to completion  -   69 months
  • Discount rate                  -  11%”.
  1. [178]
    Having heard the cross examination of Mr Joson, Mr Calabro prepared a document entitled ‘Assessment of Land and Development Costs’ which was tendered.[101]
  1. [179]
    The point of Mr Calabro’s exercise appears to be to show that by 30 January 2012 there should have been no carrying value for either land or development costs with the 78 lots of land which were sold between 2007 and 2008 (Stages 1 to 3). Similarly with Stages 4 and 5 because they were developed and sold in 2009 and 2010 there should have been no carrying value for any of those lots.
  1. [180]
    Mr Calabro’s exercise demonstrated, to my satisfaction, that the calculations contained within his exercise were more realistic and demonstrated the difference of some $8 million when compared with the Schedule B prepared by Mr Joson.
  1. [181]
    Mr Calabro had examined both the Schedule B which reference has been had above and the applicant’s profit and loss statements which were appended to the joint expert report prepared by himself and Mr Joson.[102]
  1. [182]
    He observed in his first affidavit:[103]

“…none of the figures in the two profit and loss statements in Schedule 3 bear much resemblance to the figures set out at pages 5 and 6 of the property valuers’ Joint Expert Report.”

  1. [183]
    In his first affidavit[104] Mr Calabro reproduced the trading figures and calculated the profits revealed by those figures.
  1. [184]
    Each of his calculations for the years 2009, 2010 and 2011 reveal an increasing level of substantial loss. Now that table is set out below:

Table 2

Summary of Operations

 

 

Sales Revenue

June 09

June 10

June 11

$

$

$

8,462,223

8,005,281

5,036,432

Less: Cost of Sales

­5,737,147

­6,540,529

­4,642,865

Gross Profit

2,725,076

1,464,752

393,567

Less other variable costs:

 

 

 

Advertising

286,519

157,228

70,775

Commissions

125,200

382,536

296,145

Legals

120,592

82,636

54,836

 

532,311

622,400

421,756

Contribution profit before fixed costs

2,192,765

842,352

­28,189

Less fixed costs

3,056,703

2,058,028

633,888

Net Profit

(863,948)

(1,215,676)

(622,077)

 

 

 

 

  1. [185]
    He calculated the total operating losses for each of those years approximated $3 million.[105]
  1. [186]
    Later he expressed the view that as at 30 June 2011 the company had a deficit of $4.7 million. Throughout the relevant cross-examination Mr Calabro maintained his opinion that the company (Stony Creek) was at all times trading as an insolvent company.
  1. [187]
    This is exemplified by some answers he gave to cross examination where he said:[106]

“Again, if you look at the figures up to 30th of June 2012 – and this is what I’m saying. I don’t know that the accounts are reliable, but up to the year ending 30th of June 2012, each showed that Mr Landrey had lent or supported the company to the tune of 40 million or whatever. Now, in June 2012, by the stroke of a pen of a journal entry, that’s reduced down to three million. And no explanation has been given – well, not to me anyway. So there’s a lot before one can make – there’s a lot more to be known about this company before one can make the assessment. But just as a general rule, if your liabilities exceed your current assets, one that you turn over in the normal trading cycle by such a huge margin, if anybody tells me that they’re not trading insolvent, I’ll be very surprised.”

  1. [188]
    Despite vigorous cross examination about that opinion, and various propositions put to him, Mr Calabro was not moved from his strong view that the company was, at all relevant times, insolvent.
  1. [189]
    He said:[107]

“…The company is insolvent. There’s no question about that. Now, whether it actually meets the criteria for trading whilst being insolvent is different, but the company is insolvent. It has got liabilities exceeding the assets by – on the books – nearly $6 million, and if you take the correct figure for the land, it’s $13 million: that it’s got a big deficit.

…So, no one can tell me that’s not insolvent.”

  1. [190]
    That opinion must be viewed positively in light of the un-contradicted fact that Stony Creek went into liquidation and assigned the rights to compensation to Kenjad.[108]
  1. [191]
    In light of what is set out above, I accept the views expressed by Mr Calabro and prefer those over the views expressed by Mr Joson. Mr Joson’s view as to the profitability is, in my opinion, a confection based upon work done by valuers rather than work and information extracted from the actual books of account including the general ledges for the company.
  1. [192]
    Accordingly I am bound to find that the company was unprofitable and given the extent of that unprofitability I am unable to find that the resumption of the land and the consequential loss of the three Lots had any impact upon its performance such as to entitle it to claim for a loss of profit.
  1. [193]
    As to the loss the rebate, while there was no serious challenge by the respondent to the evidence given by Mr Landrey and Mr Court about existence of some oral arrangement between them which entitled Mr Landrey to a “rebate” from Mr Court for work done in respect of lots developed in the course of stage 6 of the development. I prefer the evidence of Mr Calabro set out in the joint expert report of himself and Mr Joson that any compensation calculated for the loss of rebate must necessarily take into account the risk factors associated with property development and the uncertainty as to the time at which stage 6 would have been completed, the land sold, the houses constructed on the land and the rebate repaid by Mr Court to Mr Landrey.
  1. [194]
    Mr Calabro was not challenged about the propositions advanced by him in paragraphs 13.4 and 13.5 of the joint expert report which are set out above.[109]
  1. [195]
    Mr Calabro was not challenged with respect of his calculation of the loss of rebate taking into account the estimated time to completion of 69 months and a discount rate of 11% to achieve a loss of $83,520.
  1. [196]
    Accordingly, in respect of the claim for loss profit I find that the applicant has failed to demonstrate any entitlement to compensation for loss of profit. I also find that the applicant is entitled to compensation for the loss of the rebate in the sum of $83,520.
  1. [197]
    With respect to the finding that the applicant is not entitled to any compensation for loss of profit, I come to that view in reliance both upon the arguments advanced Mr Quayle, with respect to any profitability being subsumed into whatever figure (which remained unexplained) was agreed between the parties as compensation for the land taken, and I am also persuaded by my finding that the company was, in any event, unprofitable at the time that the resumption occurred. Given the findings set out above, I intend to allow the parties to make submissions with respect to the issue of, and calculation of, any interest to which the applicant may be entitled and also with respect to the question of costs given that the total sum claimed was:

Loss of profits $65,000 (exclusive of GST); and

Loss of rebate from builder $156,750 (exclusive of GST)

Total $221,750 (exclusive of GST).

Orders

  1. Compensation is determined in the amount of $83,520.00.

WL COCHRANE

MEMBER OF THE LAND COURT

Footnotes

[1]  Exhibit 2.

[2]  T 1-6 line 16.

[3]  Exhibit 5.

[4] Spencer v The Commonwealth (1907) 5 CLR 418.

[5] Spencer v The Commonwealth, 441.

[6] Pastoral Finance Associate Ltd v The Minister [1914] AC 1083.

[7] Park v Allied Mortgage Corporation Ltd (Unreported, Federal Court of Australia, Hill J, 5 July 1995).

[8]  Ibid [70].

[9]  Respondent’s Trial Submissions [19].

[10]  Respondent’s Trial Submissions [21].

[11]  Submissions of the Applicants [22].

[12]  There is, in fact, no paragraph 24(d) in the Amended Statement of Facts, Matters and Contentions and I take the reference to be, properly, a reference to paragraph 20B which refers to the oral agreement alleged between Landrey and Court.

[13]  It ought be noted that in the Amended Statement of Facts, Matters and Contentions and in the Further Amended Statement of Facts Matters and Contentions, para 12 (which was in any event deleted) did not address the issue of loss of profits. Paragraph 12 of the joint valuation report does deal with “Disturbance – Loss of Profit” and in the section composed by Mr Eales the valuer for the appellant the loss of profits claimed is $90 000.

[14]  Exhibit 5.

[15]  Exhibits 34 and 36.

[16]  Applicant’s Response to the Respondent’s Request for the Further Embedded Particulars of the Further Amended Statement of Facts, Matters and Contentions [18] and Annexure B.

[17]  Ibid.

[18]  Exhibits 22, 22A and 26.

[19]  Exhibit 19.

[20]  Exhibit 7 [4] and Annexure GVL-10.

[21]  Exhibit 5 [10]-[11].

[22]  Exhibit 5 [12].

[23]  Exhibit 5 [13].

[24]  Exhibit 5 [16].

[25]  Exhibit 5 [22]-[24].

[26]  T 1-47 lines 45-47.

[27]  T 1-52 lines 14-15.

[28]  T 1-53 lines 7-8.

[29]  T 1-53 lines 13-14.

[30]  T 1-54 lines 23-24.

[31]  T 1-56 lines 1-8.

[32]  T 1-58.

[33]  T 1-58 – T 1-59.

[34]  T 1-67 line 46 to T 1-68 line 13.

[35]  T 1-62 to T 1-66 line 22.

[36]  See for example: T 1-65 line 46.

[37]  T 1-69 line 15 to T 1-70 line 18.

[38]  Exhibit 6.

[39]  Exhibit 6 [3]-[4].

[40]  Exhibit 6 [11].

[41]  Exhibit 6 [6]-[7].

[42]  T 1-76 lines 18-20.

[43]  T 1-77 line 21 to T 1-78 line 3.

[44]  Submissions of the Applicants [10]-[11].

[45]  Exhibits 10, 11 and 12.

[46]  Exhibit 10 [9].

[47]  Exhibit 10 [13].

[48]  Exhibit 10 [13(d)-(e)].

[49]  Exhibit 10 [18].

[50]  Exhibit 10 [19].

[51]  T 2-98 lines 1-4.

[52]  T 2-99 line 32 – T 2-100 line 14.

[53]  Exhibit 22.

[54]  Exhibits 13 and 14.

[55]  Exhibit 14 [2].

[56]  Exhibit 22, pp 14-15.

[57]  Exhibits 13 and 14.

[58]  Exhibit 22A.

[59]  T 3-16 lines 3-7.

[60]  T 3-16 lines 9-10.

[61]  T 3-16 lines 20-21.

[62]  T 3-15 lines 20-21.

[63]  Exhibit 26 (Supplementary Affidavit of Norbert Charles Calabro, Ex NCC-4).

[64]  Ibid. Mr Quayle mistakenly identified the opening valuation as $16,658,000.00 – it was in fact $16,308,000.00. The closing figure was close to that amount, namely $16,658,000.00.

[65]  T 3-16 lines 30-31.

[66]  T 3-16 line 34.

[67]  T 3-16 line 36 to T 3-17 line 25.

[68]  T 3-22 lines 2-3.

[69]  Exhibit 22A.

[70]  T 3-23 lines 1-2.

[71]  T 3-23 lines 9-10.

[72]  T 3-26 lines 15-35.

[73]  T 3-30 lines 35-36.

[74]  Exhibit 22A.

[75]  Exhibit 13, Annexure NJ-2 Source Document 1.

[76]  T 3-34 lines 27-30.

[77]  T 3-34 lines 32-34.

[78]  T 3-35 lines 12-13.

[79]  T 3-35 lines 31-32.

[80]  T 3-36 lines 12-14.

[81]  Exhibit 22 and Appendix 1.

[82]  T 3-37 lines 22-24.

[83]  T 3-37 line 35.

[84]  T 3-38 line 20 to T 3-39 line 25.

[85]  T 3-44 lines 1-7.

[86]  T 3-44 lines 1-11.

[87]  Exhibit 13, Annexure NJ-2 Source Document 1.

[88]  Exhibit 14.

[89]  Exhibit 14 [8].

[90]  Exhibit 25.

[91]  Respondent’s Trial Submissions [33].

[92]  See in particular: T 3-8 lines 40-43; T 3-9 line 8; T 3-26 lines 30-35; T 3-23 line 14; T 3-21 lines 25-29.

[93]  Exhibits 22, 25 and 26.

[94]  Exhibit 22.

[95]  Exhibit 26 [5.1].

[96]  Exhibit 26 [5.2].

[97]  Exhibit 13, Annexure NJ-2.

[98]  T 4-20 lines 1-2.

[99]  T 4-25 lines 1-13.

[100]  Exhibit 22 [13].

[101]  Exhibit 27.

[102]  Exhibit 22A.

[103]  Exhibit 26 [4.6].

[104]  Exhibit 26 [4.7]. 

[105]  Exhibit 26 [4.7].

[106]  T 4-41 lines 17-26.

[107]  T 4-42 lines 18-22.

[108]  See [20] above.

[109]  Exhibit 22, p 20.

Close

Editorial Notes

  • Published Case Name:

    Stony Creek Pty Ltd (in liq) & Anor v Department Of Transport and Main Roads

  • Shortened Case Name:

    Stony Creek Pty Ltd (in liquidation) v Chief Executive, Department of Transport and Main Roads

  • MNC:

    [2017] QLC 3

  • Court:

    QLC

  • Judge(s):

    Member Cochrane

  • Date:

    14 Feb 2017

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Pastoral Finance Association Ltd. v Minister (1914) AC 1083
2 citations
Jump To
Cite 1 - (1914) AC 1083
Cite 2 - (1914) AC 1083
Spencer v The Commonwealth (1907) 5 CLR 418
3 citations
Jump To
Cite 1 - (1907) 5 CLR 418
Cite 2 - (1907) 5 CLR 418
Cite 3 - (1907) 5 CLR 418

Cases Citing

Case NameFull CitationFrequency
Philip Usher Constructions Pty Ltd v Cross River Rail Delivery Authority [2025] QLC 182 citations
1

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