The Weekend Australian Financial Review 24-25 July, 2004
Report Stephen Wisenthal and Tina Perinotto
After more than three decades, the land sale scandal embroiling Queensland’s Russell Island refuses to stay submerged, and the local council has lost a landmark valuation case that could cost millions of dollars in compensation payments.
Brisbane’s Land Court ruled on Friday that Redland Shire Council did not have the right to rezone a waterfront block on Russell Island and then resume it, based on the lower valuation resulting from the rezoning.
The decision is a victory for Ipswich pensioner Mike Atkin, and potentially for thousands of others whose land has been compulsorily purchased by the Redland council over the past few years.
Many of the blocks were in tidal areas and were sold sight-unseen to out-of-state investors in the submerged land scandal in the late 1960s and early 1970s.
Ironically, land prices on Russell and other nearby low-lying islands between Stradbroke Island and southern Brisbane have been booming. Many blocks have more than doubled in value over the past two years.
The so-called bay islands, for years tainted by the scandals of three deceases ago, have been caught up in the rush to invest in coastal property all around Queensland.
Valuer Iain Herriot, managing partner of Herriots, said the court decision set new boundaries on what local councils could do when they resumed land.
“Land law has been changed in Queensland,” he said.
“A local authority cannot resume land under circumstances where it puts a zoning on the land for its own purposes.”
Mr Atkin, who had been offered as little as $2,000 for his waterfront land when it was resumed for drainage purposes in 2002, has now been awarded just over $80,000 in compensation, plus interest.
About 3000 blocks on Russell and nearby islands had already been resumed under similar circumstances, and 763 more were to follow. Owners will now be able to use Mr Atkin’s case as a precedent to claim more compensation.
Mr Atkin, a Royal Australian Navy veteran, said he was happy with the win, although price appreciation since his block was expropriated would make it worth more than $200,000 today.
“I’m very pleased, not only for myself, but for all the other poor Australian pensioners that own land on the island,” the 70-year-old said after the judgement.
Land Court member Carmel McDonald said in her ruling that the block should have been valued as a potential building lot.
“The prudent purchaser would have decided that, as at the date of resumption, it was likely that council would have approved a development application for the construction of a house,” she said.
Much of the judgement involved determining whether the land lay below the 100-year flood level, and whether a house that could withstand a flood could be built on the block.
Ms McDonald said she accepted evidence that the whole 721-square-metre block, in its natural state, would be under water in a one in 100-year flood.
The solicitor for Mr Atkin, Geoff Horne of McLaughlins Solicitors, said engineers proved that development problems with the land could be overcome.
“The crux of the whole case is that these allotments can be built on,” he said.
“It’s a constitutional issue. What you’ve got is a lawful entitlement to build on any residential land in Australia, and the only thing the council can do is impose conditions.”
Mr Herriot said that submergence problems could be overcome by building on concrete piers.
Sewage problems could be overcome with adequate treatment devices.
A spokeswoman for Redland Shire said the chief executive officer and the mayor had not yet had an opportunity to study the judgment and to make a comment.
Source: The Weekend Australian Financial Review 24-25 July, 2004