Cidneo Pty Ltd v Chief Executive, Department of Transport and Main Roads
[2013] QLC 47
•26 July 2013
LAND COURT OF QUEENSLAND
CITATION: Cidneo Pty Ltd v Chief Executive, Department of Transport and Main Roads [2013] QLC 47 PARTIES: Cidneo Pty Ltd
ACN: 105 454 064
(Applicant)v.
Chief Executive, Department of Transport and Main Roads
(Respondent)FILE NO: AQL325-10 DIVISION: Land Court of Queensland PROCEEDINGS: Application for the determination of compensation under the Acquisition of Land Act 1967 DELIVERED ON: 26 July 2013 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: His Honour Mr WL Cochrane ORDER: 1. Compensation is payable by the Respondent to the Applicant for the taking on 22 February 2008 of an area of 8.385 Ha being Lot 1 on SP218520 being part of the land contained in Title Reference 50553649, County of Stanley, Parish of Oxley in the sum of Six Million Nine Hundred Thousand Dollars ($6,900,000). CATCHWORDS: Acquisition of Land Act 1967, ss 20, 27, 28
Land Court Act 2000, s.34
Transport Infrastructure Act 1991Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of SA Ltd (1947) 74 CLR 358
Brisbane City Council v Mio Art (2011) LGERA 352
Turner v Minister of Public Instruction (1956) 95 CLR 245
RTA v Mosca (2006) 146 LGERA 335
Electricity Commission of New South Wales v Arrow (1994) 85 LGERA 418
Willoughby Municipal Council v Valuer-General
Gregory v Federal Commissioner of Taxation (1971) 123 CLR 547Boland v Yates Property Corporation Pty Ltd (1999) 167 ALR 575
Spencer v Commonwealth (1907) 5 CLR 418
Yalgan Investments Pty Ltd v Albert Shire Council (1997) 17 QLCR 331
Kenny & Good Pty Ltd v MGOCA (1992) Ltd (1999) 199 CLR 413
Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426
Tooheys Limited v Housing Commission of New South Wales (1952) 20 LGR (NSW) 236 at 240
Brisbane City Council v Mio Art Pty Ltd (2011) 1 83 LGERA 352
Townsville City Council v Department of Main Roads [2003] QLCR 241APPEARANCES: Mr MD Hinson S.C. with him Mr BD Job instructed by Anderssen Lawyers for the Applicant.
Mr DR Gore Q.C. with him Ms JS Brien instructed by Clayton Utz Lawyers for the Respondent.
Table of Contents
Cidneo Pty Ltd v Chief Executive, Department of Transport and Main Roads [2013] QLC 47
Background
1. The Subject Land
2. The Resumption Process
3. Legal Issues
4. The Hearing and Witnesses
5. The Issues
6. Lay Witnesses
7. Town Planning Issues
8. Engineering Issues
Summary
9. Traffic Issues
10. Valuation Issues
11. ORDER
Background
On or about 22 February 2008 the Respondent resumed an area of about 8.385 Ha (including about 1623 square metres being part of Easement A on RP852753) being part of Lot 2 on SP177845, county of Stanley, Parish of Oxley, contained in title reference: 50553649 depicted on a drawing identified as drawing no. R13-1407LA(E).
By Originating Application filed on 18 August 2010 the Applicant dispossessed landowner seeks determination of the valuation of resumed land.
In its Originating Application the Applicant contends that the Land, Improvements, severance and injurious affection should be valued at $36,500,000.
The issue of disturbance has been resolved by agreement and there is no need for the Court to consider that issue.
The Subject Land
The parent parcel, prior to resumption comprised 100.477 Ha and was located at the confluence of the Centenary Highway and the Ipswich Motorway.
It has an access restricted frontage to Ipswich Road and direct accessible frontage to Boundary Road and to Production Street.
Following a Tender Program completing in May 2005 the Applicant purchased the land from the Department of Defence and settled on it on 16 September 2005.
The land from which the resumption occurred was one of three lots which comprised the parcel purchased by the Applicant.
The other two lots were Lot 1 on SP177827, with an area of 1.452 Ha; and Lot 2 on RP129729 with an area of 16.79 Ha.
Lot 2 on RP129729 lies on the other side of Boundary Road to the subject land.
The Resumption Process
By correspondence dated 2 May 2007 the then Department of Main Roads wrote to the Applicant advising of an intention to resume the land and enclosing the appropriate Notice of Intention to Resume.
The purpose identified in the Notice of Intention to Resume was
“… to take the land described in the attached schedule and shown on attached plan R13-1407LA(C) for the purpose of transport, in particular, road purposes {Cunningham Arterial Road (Ipswich Motorway)}”.
The area proposed to be resumed pursuant to that Notice was 7,038 square metres including 226.8 square metres being part of Easement A on RP852753.
An amended Notice of Intention to Resume was issued on 23 August 2007 identifying the resumed area as being 8.385 ha (including about 1623 m², being part of Easement A on RP852753).
The taking of land was formalised by AMENDING TAKING OF LAND NOTICE (No. 1413) Published in the Government Gazette of Friday 22 February 2008.
By letter 12 December 2008 the solicitors for the Applicant applied to the Department of Main Roads as constructing authority for an advance against compensation which was paid. A total of $3,800,000 on 8 July 2009 with a further advance of $4,185,209 on 19 December 2011.
With respect to the before resumption situation each of the valuers engaged by the parties agrees with the other that the whole of the subject land before resumption had a value of $60,000,000.[1]
[1] See Exhibit 29, Report of Hamilton, p. 3 and Exhibit 30 Report of Brett, p. 18(?).
As indicated above an area of 8.385 ha was resumed and applying the $60,000,000 figure to the original area of the parent parcel (100.477 ha) produces a figure of $60/m² so that, on that basis alone, has a value of $5,031,000.
As indicated above the Applicant initially contended for a compensation figure of $36,500,000. At the beginning of the appeal the Respondent sought leave (which was granted) to amend the claimed figure to $25,000,000. The Respondent for its part says that the loss is between is $6,000,000 and not more than $6,877,000.[2]
[2] Exhibit 61, p. 7.
The task for the Court is to resolve that enormous difference of some $18,000,000 or $19,000,000 in the valuation.
Legal Issues
This proceeding is a determination of assessment pursuant to the provisions of the Acquisition of Land Act 1967 (“AQL”).
Section 20 relevantly provides:
“20 Assessment of compensation
(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—
(a)to the damage, if any, caused by any of the following—
i.the severing of the land taken from other land of the claimant;
ii.the exercise of any statutory powers by the constructing authority otherwise injuriously affecting the claimant’s other land mentioned in subparagraph (i); and
(b)to the claimant’s costs attributable to disturbance.
Note—
See, however—
(a)the Geothermal Energy Act 2010, section 350D in relation to geothermal interests under that Act; and
(b)the Greenhouse Gas Storage Act 2009, section 369D in relation to GHG interests under that Act; and
(c)the Mineral Resources Act 1989, section 10AAD in relation to mining tenement interests under that Act; and
(d)the Petroleum Act 1923, section 124C in relation to 1923 Act petroleum interests under that Act; and
(e)the Petroleum and Gas (Production and Safety) Act 2004, section 30AD in relation to petroleum interests under that Act.
(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.
(2A)However, in assessing the compensation, a contract, licence, agreement or other arrangement (a relevant instrument) entered into in relation to the land after the notice of intention to resume was served on the claimant must not be taken into consideration if the relevant instrument was entered into for the sole or dominant purpose of enabling the claimant or another person to obtain compensation for an interest in the land created under the instrument.
(3)In assessing the compensation to be paid, there shall be taken into consideration, by way of set-off or abatement, any enhancement of the value of the interest of the claimant in any land adjoining the land taken or severed therefrom by the carrying out of the works or purpose for which the land is taken.”
It is well established by other cases which have come before the Court that, unlike the situation in a revenue case, in a case of compensation doubts are resolved in favour of a more liberal estimate.[3]
[3]See Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of SA Ltd (1947) 74 CLR 358.
In that Dixon J observed[4]
“I should like, however, to add for myself that there is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. … In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate.”[5]
[4] (1947) 74 CLR 358 Page 373-374.
[5]See also Gregory v Federal Commissioner of Taxation (1971) 123 CLR 547, Boland v Yates Property Corporation Pty Ltd (1999) 167 ALR 575.
The principal is sometimes expressed in a resumption by saying that it is the duty of the Court to see that compensation is “the maximum amount the owner could have obtained under the best possible circumstances”.[6]
[6] Willoughby Municipal Council v Valuer-General (1934) 12 LGR (NSW) 41.
Kirby P (as he then was) observed in Electricity Commission of New South Wales v Arrow[7]
“Valuation is not a science. It is an imprecise, opinionative activity involving the consideration of many variables, sometimes with equally legitimate outcomes.”
[7] Electricity Commission of New South Wales v Arrow (1994) 85 LGERA 418 (at 419).
Earlier His Honour had observed:
“The acceptance by the primary decision maker of one method of evaluation, and the rejection of another, alternative evaluation adopted by the appellants’ valuers has been held not to involve an error of law giving rise to appeal; see Melwood Units Pty Ltd v Commissioner of Main Roads (1979) AC 426 at 430.”[8]
[8] Ibid.
Mention must, at this point, be made of the decision in Spencer v Commonwealth[9].
[9] Spencer v Commonwealth (1907) 5 CLR 418.
The dictum most frequently referred to is that of Griffiths CJ and Isaacs CSJ.
Griffiths Chief Justice observed:[10]
“In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring 'What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?' It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.”
[10] Spencer v Commonwealth (1907) 5 CLR 418 page 432.
Similarly Isaacs J said:[11]
“In the first place the ultimate question is, what was the value of the land on 1 January 1905?
All circumstances subsequently arising are to be ignored. Whether the land becomes more valuable or less valuable afterwards is immaterial. Its value is fixed by Statute as on that day. Prosperity unexpected, or depression which no man would ever have anticipated, if happening after the date named, must be alike disregarded. The facts existing on 1st January 1905 are the only relevant facts, and the all important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted. The plaintiff is to be compensated; therefore he is to receive the money equivalent to the loss he sustained by deprivation of his land, and that loss, apart from special damage not here claimed, cannot exceed what such a prudent purchaser would be prepared to give him. 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 fix as the value of the property.”[12]
[11] Spencer v Commonwealth (1907) 5 CLR 418 at 440-441.
[12]
Those two passages of Griffiths CJ and Isaacs J were specifically referred to by learned Senior Counsel for the Applicant who also pointed to the observation in Yalgan Investments by Member Mr Scott who observed that the hypothetical prudent purchaser is not to be taken to be a “dewy-eyed” dreamer who will take the most optimistic view in all matters”, nor is the purchaser taken to be taken to be “a wilting lily who will proceed with such pessimism that all problems will be seen to result in failure”.[13]
[13] Yalgan Investments Pty Ltd v Albert Shire Council (1997) 17 QLCR 331 at (341).
Learned Senior Counsel for the Applicant then pointed to what he contended were five important points which should be emphasised about the application of the Spencer test.
It is most efficient to simply quote what learned Senior Counsel said in that regard:
“12.First, the market for the property is assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property.[14] The knowledge attributed to the parties includes the predicted impacts of future events as well as the experience of the past.[15] But knowledge of events subsequent to the date of taking must be ignored as recently confirmed by the Court of Appeal in Brisbane City Council v Mio Art Pty Ltd (2011) 183 LGERA 352 – see in particular [18], [28], and [77]-[80].
[14] Kenny & Good Pty Ltd v MGOCA (1992) Ltd (1999) 199 CLR 413 at 436 [49]-[50].
[15] Ibid.
13.Second, the parties will take a business like or practical approach in fixing a price rather than a legal approach. In Turner v Minister of Public Instruction (1956) 95 CLR 245 at 267 Dixon CJ said that it is not easy to suppose that the law determines what the opinion of the hypothetical prudential purchaser about the fair price of the land should be. Rather, the hypothetical purchaser’s thoughts remain in those of business life, not law. As Mr Scott said in Yalgan (at 342) the court is to review the evidence from the perspective of the hypothetical prudent purchaser not that of a judge of the Planning and Environment Court, and must consider the practical issues that would attract the attention of the hypothetical purchaser.
14.Third, the focus of the enquiry is on the buyer rather than the seller. As Isaacs J said in Spencer, the all important fact is the opinion regarding the fair price of the land which a hypothetical prudent purchaser would entertain, and the dispossessed owner’s loss cannot exceed what a prudent purchaser would be prepared to pay.[16]
[16] See also Turner at 267 per Dixon CJ.
15.Fourth, compensation cannot be claimed to the extent to which the value of the land resumed is enhanced by the purpose for which the land was resumed, and conversely compensation is not to be assessed by reference to any depreciation in value of the resumed land caused by that purpose.[17] While the purpose of the acquisition is to be put out of mind, that does not mean that the amenities and social and economic conditions in the area are to be disregarded. Mr Brett correctly appreciated this[18] but Mr Beard did not.[19]
[17] Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 at 434 and 435.
[18] See T7-13 LL15-30 and more generally T7-9 to T7-13.
[19] See paragraph 86 below.
16.In RTA v Mosca (2006) 146 LGERA 335 at 344-345 it was held, applying Woollams v Minister (1957) 2 LGRA 338, that the court is entitled to assume that conditions in the area would have improved to the extent there was no road proposal. In Albany v Commonwealth (1976) 2 ALR 201, Jacobs J was dealing with a claim for compensation for the acquisition of land for ‘the planned development and control of the City of Darwin and its adjacent areas’. His Honour said (at 209-210):-
‘The compulsory acquisition, or the likely compulsory acquisition, of the land prior to or in conjunction with the proposed development of a new town should not be taken into account. It has been submitted that likewise the purpose of the acquisition, the planned development and control of the city of Darwin and its adjacent areas, should not be taken into account. I would agree that the purpose of the acquisition as such should not be taken into account but, in my view, the correct approach is to take account of the fact that the town area of Darwin would be extended in order to cater for the increasing population and that the extension would be in accordance with a scheme of development designed by the Administration. It is therefore necessary to ignore the fact that the development would be by way of acquisition but to recognise that the development would be controlled according to a designed and ordered planning scheme.’
17.Applying that passage to the present case, the purpose of the acquisition (the Wacol to Darra proposal) should not be taken into account, but account is to be taken of the fact that the major road network including the AusLink National Road would be upgraded to cater for the increasing population and intended development of the area. It is necessary to ignore the fact that road upgradings would be by way of compulsory acquisition but also to recognise that such upgradings would be controlled and planned. That control and planning is evident in the 2005 SEQRP[20] and GARID. Ms Mitchell’s evidence was that planning for an upgrade to the Ipswich Motorway began in May 1999.[21]
18.Fifth, in a compensation case (as opposed to a revenue case) doubts in valuing property are to be resolved in favour of a more liberal estimate (as opposed to a more conservative estimate in a revenue case).[22] What must be ascertained is the full return which may reasonably be expected from the sale of the land not the most conservative value: see Turner at 264.”
[20]See Ex 59 particularly at p. 115 and the map at 116 identifying road improvements to the Ipswich Motorway and Centenary Highway in a suite of road improvements. Page 106 of the SEQRP refers to improvements to existing roads being planned to address the most congested parts of the network.
[21] Affidavit (Ex 46) paragraph 6.
[22]Commissioner of Succession Duties (SA) v Executor Trustee & Agency Co of South Australia Ltd (1947) 74 CLR 358 at 373-374 and Boland v Yates Property Corporation Pty Ltd (1999 74 ALJR 209 at 279-280 [356].
The Hearing and Witnesses
At the hearing of the matter each party called a number of expert and lay witnesses.
For the Applicant the following expert witnesses were engaged and evidence was received from them:
a)Mr L Hamilton[23], Valuer.
b)Mr Peter Cumming[24], Town Planner.
c)Mr Neil Viney[25], Traffic Engineer.
d)Mr David Hassall[26], Ecologist.
e)Mr Scott Thomas[27], Engineer.
[23] Exhibits 23, 25, 27, 28, 29.
[24] Exhibits 18 and 19.
[25] Exhibits 21, 22, 23, 24, 38, 44.
[26] Exhibit 17.
[27] Exhibit 18.
For the Respondent the following expert witnesses were engaged and evidence was received from them:
a)Mr R Brett[28], Valuer.
b)Mr David Perkins[29], Town Planner.
c)Mr Colin Beard[30], Traffic Engineer.
d)Mr Alan Chenoweth[31], Ecologist.
e)Mr Maurice McAnany[32], Engineer.
[28] Exhibits 26, 27, 28, 30, 61, 66, 74.
[29] Exhibit 19.
[30] Exhibits 21, 22, 23, 25, 37, 48, 49.
[31] Exhibit 17.
[32] Exhibit 18.
The lay witnesses called by the parties were as follows:
a)The Applicant called a Mr Brian Matthews a Town Planner in the employ of a firm called Axis[33] and a Mr Alan Gregory the Director of a company selling woodworking equipment whose office was located in Richlands.[34]
b)The Respondent also called Ms Julianne Mitchell the Chief Engineer of the Department of Transport and Main Roads who produced an affidavit setting out effectively the history of the road works in and around the subject site.[35] I will refer to the evidence given by Ms Mitchell when I descend to considering the traffic engineering evidence.
[33] Exhibit 31.
[34] Exhibit 32.
[35] Exhibit 46.
The Applicant also called James Rohan Whitelaw Chartered Accountant.[36] Mr Whitelaw swore an affidavit setting out the alternative arrangements which may be entered into by developers seeking to minimise or regularise their exposure to Goods and Services Tax (“GST”) and also gave about staying developments.
[36] Exhibit 33.
Mr Whitelaw’s affidavit exhibits a copy of the contract entered into between the Applicant Cidneo Pty Ltd and the Commonwealth Department of Defence for the purchase of the land.
He points out that the contract for the purchase of the subject land was drawn specifically for the transaction and reflected the terms of the “tender form” prepared by the Department of Defence and completed by Cidneo which tender form specifically offered an amount of $48,110,656 excluding GST for the purchase of the land.[37]
[37] Exhibit 33 page 4 para 26.
Mr Whitelaw drew the Court’s attention to the provisions of Clause 31 of the contract conditions which deals specifically with the Goods and Services Tax and pointed out “Clause 31.2 provided that, in the case of a supply which is a taxable supply, the consideration payable or otherwise provided to the vendor under the provisions of the contract was to be increased by the amount equalled to the Applicable GST. The result of these contract provisions was that the Subject Land was purchased by Cidneo on a “GST Exclusive Basis”. That is, the purchase price was $48,110,656 plus GST of $4,811,065.60 being a total amount of $52,921,721.60.[38]
[38] Exhibit 33 page 4 para 30.
Accordingly, Mr Whitelaw points out, the purchase of the subject land was a taxable supply and Cidneo was entitled to an input tax credit, that is a refund of the GST paid, in the amount of $4,811,065.60.
The expert witnesses had all participated in meetings with their peers and produced joint reports setting out areas of agreement and disagreement. Detailed reference will be made to those reports later.
The agreement between the valuers with respect to the $60/m² or the $60,000,000 before valuation tends to make things somewhat illusorily simple but, as Mr Gore of Queens Counsel submitted in his observations at the opening of the case:
‘… $60 million doesn’t take into account the two things that I have emphasised: (1) That on the respondent’s case the traffic problems in the before case were relevantly no different, in assessment terms, to the after case. I mean counter-intuitively you ask why else would the department be doing all the major road works in the area that they did if everything was so fine in the before case?
And secondly, it was a speculative market. I'm not taking a point about it but it needs to be understood that the respondent's case has tried to balance things in favour of the claimant at the point.”[39]
[39] T1-60 LL 12-25.
The Issues
In its closing submissions to the Court the Applicant submitted that the following was an apt summary of the issues which arise the determination:
(a)The nature and extent of the impact of the loss of the two Centenary Highway ramps which were in place in the before case but which were removed in the after case as part of the project which the land was resumed.
(b)Whether there was any enhancement of the retained land in the after case because of the upgrading works constituting the project for which the land was resumed.
(c)What provision the parties to a hypothetical sale would make for monetary contributions likely to be imposed by DTMR when considering a development application for the highest and best use in the before and after cases.
(d)The value of the land in the after case.
The Respondent through its counsel identified the issues for determination as those set out in the joint list of issues filed by the parties pursuant to the order of the Court made on 1 November 2011 namely with respect to two issues:
(a)Traffic;
(b)Valuation.
With respect to Traffic the joint list of issues contain the following:
TRAFFIC
1. The nature and amount of any transport infrastructure contribution or other condition likely to be imposed by DTMR and likely to be taken into account by the hypothetical vendor and purchaser in:
(a)the before case; and
(b)the after case.
2. The nature and extent of the effect of the loss of the two ramps between the Centenary Highway and Boundary Road.
The Respondent, in its submissions makes reference to other issues which have arisen since the date of filing the Joint Issues List. Their submissions say as follows:
“3.Other important issues have arisen since the Joint List was filed. On 6 December 2011, Metroplex Management Pty Ltd (‘Metroplex’)[40] and the respondent (‘DTMR’) agreed to resolve issues between them in respect of transport infrastructure contributions or works relating to development proposed by Metroplex for the land retained by Cidneo[41]. As foreshadowed by the DTMR on 1 December 2011[42] (the last day of the hearing), additional issues raised are:
(a) whether, in determining any compensation for injurious affection, evidence of the settlement between Metroplex and the DTMR is admissible;
(b) whether the assessment of compensation for any injurious affection should be based on a cash flow analysis method, or on some other method.”
[40] Metroplex is a company which is related to Cidneo: Whitelaw T7-64.
[41] Affidavit of PR MacGregor of 17 February 2012 para 158.
[42] T7-73 LL40-50; T7-78 LL20-30.
With respect to Valuation the joint list of issues contain the following:
VALUATION
3. The effect of 1 and 2 above on the assessment of compensation on the cash flow analysis approach.
4. Other elements of the cash flow analysis approach being:-
(a)the rate of sale of the last 3 stages in the before case;
(b)the rate of sale for all stages in the after case;
(c)gross realizations in the before and after cases;
(d)the application of GST and the margin scheme;
(e)whether in both the before and after case allowance should be made for a traffic network analysis report and the timing allowed for that report.
5. The use to be made of the direct comparison approach.
6. The amount payable for disturbance.
Lay Witnesses
The Respondent tendered an affidavit from Mr Brian Matthews[43], Mr Matthews was a town planner and a Director of a Town Planning Consultancy known as Axis Planning whose offices are located at 23 Overlord Place Acacia Ridge.
[43] Exhibit 31.
Axis occupied those premises since 2011 and prior to that its premises were located in Boundary Road Richlands.
Mr Matthews was called to tell the Court of his experience travelling to the Axis office located in Boundary Road at Richlands.
He began work with Axis in July 2008 and initially had to travel to the Boundary Road office from Paddington a central city suburb.
His route of travel was along the Centenary Highway through the roundabout across Ipswich Road and then continuing along the Centenary Highway until he reached the Kelliher off-ramp along which he travelled to turn left into Boundary Road to the Axis offices.
On his return journey his path of travel was across Boundary Road to what was then Bakery Road which became an on-ramp of the north bound Centenary Highway lanes and from there travelled along the Centenary Highway to the city.
He followed a similar route towards Ipswich.
His evidence was that prior to the beginning of road works which occurred shortly after July 2008 his travel pathways were generally clear simple and efficient.
His evidence was to the effect that the road works including the construction of the Centenary Highway interchange had a substantial and adverse impact upon his travel to and from the Axis offices.
He gave a detailed description which it is unnecessary to recite here of the path of travel after the road works began. The important point was that the new route of travel added about 4 km of additional travel to work in the morning. He estimated that to add about 5 minutes to his time of travel.
He also gave evidence that available alternatives were unattractive because they also had to confront congestion on the Ipswich Motorway and had to negotiate three merge lanes when getting onto the Ipswich Motorway from the Centenary Highway. His evidence about other destinations including Ipswich was of a similar tanner all of which related to increased congestion on the road system.
Mr Matthews observed:[44]
“Since the interchange was constructed, there seemed to be a lot more northbound car traffic travelling along Pine Street and Archerfield Road and from there, into the local surrounds and the Ipswich Motorway. I definitely noticed that this vehicle traffic had increased, but I cannot say from where those vehicles are coming from, other than from places south of Pine Street.”
[44] Exhibit 31, p. 5 para 27.
Comparing the post-road works situation with the pre-road works situation Mr Matthews observed[45]
“Under the previous road network, businesses in the area had easy access to the Centenary and Ipswich Motorways and from there could travel easily in any direction. Access is now significantly less convenient and I have real difficulty in seeing how it can ever be restored to the practical and functional levels that previously existed.”
[45] Exhibit 31, p. 7 para 39.
Earlier in his affidavit Mr Matthews had made observations about the operation of the “new” Centenary motorway. He said:[46]
“I often referred to the new Centenary Motorway as being the ‘wedge’. That is because, in my view, it has driven a wedge between Richlands and Wacol and created two different and largely unconnected areas. One area is bounded by Progress Road, the Centenary Motorway and the Ipswich Motorway; and the second situation is boarded by the Centenary Motorway, Progress Road and Archerfield Road. These two areas have had their previous road connections removed and there seems to me to be no capacity for an easy future connection of these two areas.”
[46] Exhibit 31, p. 5 para 29.
Under cross-examination from Mr Gore of Queens Counsel, Mr Matthews upon being taken to diagrams contained within supplementary report of Mr Beard (Exhibit 37) and paying particular attention to traffic counts in 2008 and 2011.
Mr Matthews confirmed that a fair précis of his evidence was that:
“… before the works done by the Department were carried out, there was often congestion but after the works were carried out, it wasn’t congested very often on the Ipswich Motorway.”[47]
[47] T2-6 L 38.
In his re-examination Mr Matthews confirmed that:
“Even without road works, you could have some congestion there.”
I regard the evidence of Mr Matthews as somewhat equivocal and not of great assistance to me.
The Applicant also called Mr Alan Maxwell Gregory a Director of Gregory Machinery Pty Ltd which has occupied and traded from premises at 807 Boundary Road Richlands since 2003[48].
[48] Exhibit 32.
Mr Gregory’s company Gregory Machinery Pty Ltd deals in woodworking equipment to the cabinet making industry and also to the DIY hobbyist markets and the education systems.
Mr Gregory’s evidence was to the effect that before the construction of the Centenary Highway Interchange his business and customers had very easy and direct access to the north, south, east and west from their premises and once the roundabout at the intersection of the Centenary Highway and Ipswich Road was signalised it functioned well and congestion was not a problem.[49]
[49] Exhibit 32 page 2 para 11.
Mr Gregory gave evidence that access to his property from all points of the compass was easy and convenient in the “before scenario”.
He was not as happy with the “after scenario” and observes in his affidavit:
“In my opinion, the changes that happened to the final design of Centenary Highway Interchange have resulted in this no longer being a go ahead area; it has become isolated from all major arterial roads and has lost its vibrancy. I have no doubt that the removal of the Centenary Highway on and off ramps has had an adverse impact on my business and many businesses in the area.[50]
[50] Exhibit 32 page 5 para 30.
Mr Gregory’s evidence was to the effect that, in his opinion, the road works have caused a diminution in the amount of custom his business enjoys as a consequence of customers having difficulty finding their way to his premises.
Mr Matthews gave evidence that prior to 2011 Axis Planning for whom he works had its offices at Unit 6B, 848 Boundary Road Richlands and at the time he lived at Paddington in the City. Mr Matthews evidence was to the effect that he as a result of the location of his home and the then location of the Axis offices travelled the Centenary Highway across Ipswich Motorway and along the Kelliher Road off-ramp advance into Boundary Road.
The Gravamen of Mr Matthews evidence was, at the end of the day, that in both the before and after situation with respect to the resumption of the subject land and the road works at the various interchanges there was in his experience always congestion around the various interchanges.
It was Mr Matthews contention as a non-expert observer of traffic affairs that access as it presently exists was significantly less convenient than previously particularly with respect to access to the Centenary and Ipswich Motorway[51].
[51] Exhibit 31 page 7 para 39.
Referring to the southbound movement on the Centenary Highway through the Ipswich Motorway roundabout.[52]
[52] T2-7 L 12.
Town Planning Issues
Mr Peter Cumming the Town Planner was engaged by the Applicant. As indicated above the corresponding expert engaged by the Respondent was Mr David Perkins. Both Mr Cumming and Mr Perkins are experienced Town Planners.
Prior to the hearing Mr Cumming and Mr Perkins met for the purpose of preparing a Joint Report[53] setting out areas of agreement and disagreement and the reasons for any disagreement.
[53] Exhibit 19 – Joint Planning Report September 2011.
They were provided a detailed report setting out the areas of agreement and noted[54] that there were no matters of disagreement between the planners regarding the Lands Statutory Planning Designations at the time of the resumption.
[54] Exhibit 19 – page 10 section 6.8.
That should not be taken to suggest that there were no areas of disagreement because later in their joint report they were able to identify and describe some areas of disagreement.
It is appropriate to identify the key areas of agreement which were reached between the town planners as to the relevant statutory planning instruments and designations as at the time of resumption.
The planners identified the following planning instruments as being relevant at the time of resumption:
(a)The South-East Queensland Regional Plan 2005-2026
(b)The Brisbane City Council City Plan 2000 including:
The Western Gateway Local Plan.
The Richlands Area Infrastructure Contributions Planning Scheme Policy and;
The Draft Local Growth Management Strategy (LGMS).[55]
[55] Exhibit 19 page 7 para 6.1.
Pursuant to the provisions of the South-East Queensland Regional Plan 2005-2026 the subject land was:
(a)Within the Urban Footprint.
(b)Potentially suitable for Urban purposes.
(c)Within an area described as the “Western Corridor”.
(d)Located in Wacol which is identified in the Regional Plan as a major economic activity area and industrial cluster and a key area for industrial development.
(e)Affected by the Employment and Economic Activity Areas Policy to “encourage employment growth in regional activity centres and economic activity locations”.[56]
[56] Exhibit 19 page 7 page 6.2.
The location within the Western Corridor is a matter of some significance.
Within the SEQRP the Western Corridor has been identified:
(a)Significant growth area for South East Queensland providing major opportunities for economic development and employment creation;
(b)Has an area to which increased economic development of population growth is intended to be attracted and;
(c)Has an area in which employment and industry growth is supported.
Reflecting its previous use as property owned by the Department of Defence the subject land, under the Brisbane City Plan 2000 was designated as a Special Purpose Centre (SP3) Major Defence and Communications Facility. Within the area in which it was located it was designated for general and future industry.
Clearly its uses as Defence and Communications’ Centre has been discontinued preparatory to sale to the Applicant.
It is also proximate to a Special Purpose Centre (Mixed Industry/Business Area) Designation on the Strategic Plan.
Both the Town Planners agreed that the subject site could reasonably be expected to come under the umbrella of the Mixed Industry Business Area Designation.
They also agreed about other indicia which pointed to the subject site being developed for industrial and related purposes.
Those indicia included the inclusion of the subject land in the Western Gateway Local Plan which contemplated major industrial development being concentrated south of the Ipswich Motorway.
Significantly the Town Planners agreed that[57]
“The Statutory Planning Regime in place at the time of resumption indicated that the Wacol precinct and the subject land:
1. Was seen as a catalyst for industrial and employment growth in the Western Corridor;
2. Was seen as an industrial area of city wide and regional significance;
3. Industrial development on the subject land was to be supported by specialised retail and commercial centre; and
4. The Mixed Industry and Business designation of the Ipswich Motorway/Centenary Highway/Progress Road triangle in the Brisbane Strategic Plan recognised the strategic potential of the land for industry and business activities and employment.”
[57] Exhibit 19 page 9 para 6.7.
Having reached that level of agreement the planners then turned to considering the impact of the resumption on plans for development. At the time they conducted their joint meeting in September 2011 the Planners had before them development plans before and after the resumption date which were exhibited to the Joint Report as figures 8 and 9 and before and after preliminary approval documents which they annexured to their report as Annexure 2.
The Planners agreed that, with respect to the differences between the before and after plans, the development plans show:
“1.Development staging in four stages to the east and west of a central park which encompasses Bullockhead Creek and its environs.
2.In both Plans the green areas represent proposed public parkland and the hatched green areas, land proposed to be held in private ownership but where trees cannot be removed.
3.The numbered white areas in both plans indicate lots to be used for industry and associated purposes.
4.Lot numbered 20 in both Plans is proposed as the location for a small convenience centre with up to 6,000 m² of floorspace (the ‘Etro’).
5.The Before Plan 7096-102 in Figure 8 shows a mixture of development land, public open space and a hatched green area which cannot be built on in the northeast of the land adjacent to the Ipswich Motorway.
6.Both Plans show areas of stormwater detention/retention, although the suitability of these basins (locations, configurations and sizes) would be subject to further detailed engineering review.
7.The After Plan shows the DMR resumption area of 8.365ha in the northeast of the site and an increase in the Public Open Space and green hatched areas on the remainder of the land. The latter reflects a decision of the Planning and Environment Court in November 2009 relating to an earlier development application, and, subsequent Development Applications and negotiations with Brisbane City Council.”[58]
[58] Exhibit 19, page 10 para 7.1.
There was disagreement between the Planners about the sequencing of the development and Mr Cumming took the position that the numbering of the development stages was nominal only and that in the before case, “Stage 3” was proposed to be developed first.[59]
[59] Exhibit 19, page 10, para 7.1.
By the time the case was concluded Mr Cumming prophecies were shown to be realistic as a number of options were advanced with respect to the sequencing of the development stages. There was no disagreement that any development which did occur on the subject site would be staged.
The Joint Report set out a table showing the Before and After Resumption Land Use Comparison[60]:
[60] Exhibit 19, page 11 Table 1.
TABLE 1 – BEFORE AND AFTER RESUMPTION LAND USE COMPARISON
| Land Use | Before area (ha) | After area (ha) | Difference (ha) |
| Stage 3 area | 35.415 | 27.028 | -8.387 |
| Lot Yield | 23 | 20 | -3 |
| Lot area (developable land) | 22.874 | 17.537 | -5.337 |
| Parkland | 6.777 | 4.363 | -2.414 |
| Common Property | 0.080 | 0.080 | 0 |
| Road | 4.954 | 4.385 | -0.569 |
| Private Open Space | 1.881 | 0.720 | -1.161 |
The ETRO Precinct which is referred through much of the planning evidence is a business or commercial centre (otherwise described as a convenience centre) with up to 6,000 m² of floor space.
Mr Cumming confirmed to the Court that he, as a planner, was happy that the 6,000 m² ETRO described as a small convenience centre was congruent with the notion of a specialised retail and commercial centre.[61]
[61] T2-16 L 40.
Mr Cumming also confirmed that Bullockhead Creek which runs through the site has an impact on hydraulics and the staging of the various phases of development.
He had been asked about the observation by Mr Hamilton, the valuer called by the Applicant, in his report where he observed[62] said:
“A period of 18 months from the date of resumption has been adopted in the after resumption scenario (together with an additional cost of $100,000) to allow for necessary approvals plus a comprehensive traffic analysis and redesign of the estate particularly in terms of the construction of Boundary Road and the hydraulics on Bullockhead Creek.”
[62] Hamilton Report p 56.
When asked what, in terms of the redesign of the estate and the hydraulics on Bullockhead Creek was the difference between the before and after case that needs to be looked at, Mr Cumming’s evidence was as follows:[63]
“Well the hydraulics – the difference is in the before case there was a lot of work – a body of work done by a group of professional consultants which could be used in the before case application. In the after case stage one was looked upon to be from the west rather than the east. Therefore, a lot of the hydraulic reports, a lot of the traffic analysis, the bulk fill and earthworks would have had to have been redone. In the case of drainage, for example ----
HIS HONOUR: Is that because of staging? -- Yes, because of the staging detail. In the case of drainage it also relates to the resumption area. There’s a new road alignment. The DMR doesn’t like more water going into their roads causing flooding and drainage problems than exists at the – at the existent time. Therefore, drainage studies would have to reconceptualise. The eastern sector so that they fitted in with the new road pattern and the service road provided there and also on the western side of the stage one more detailed work would have had to have been done, and that’s a similar exercise for bulk earthworks, particularly because reconceptualising the bulk earthworks, there was an assumption in the early work that cut would come from the west and go the east. If you’re using the west as stage one that would have to be reconceptualised, and there’s an extensive amount of work required to do that. The other thing is in the resumption area it falls away quite steeply to the service road in the after case, so again the cut and fill exercise would have to take into account that some of the cut that was going into the resumption area would no longer go into that area. A place would have to be found somewhere else in the subdivision. As your Honour would be aware from visiting the site, the site is a sloping site, it’s not a flat site, so – and it’s got the creek in the middle and the creeks at either end, so matters of drainage and cut and fill would take some considerable time on this land, because in the end with an industrial site you’ve got to end up with flat pads and a bench situation. It can’t be like a residential development where you can go with the flow of topography.
MR HINSON: The highest and most elevated part of the land was in the north-eastern corner of the land that was resumed; is that correct? -- No. That was the resumption – the resumption area in the north-east is lower.
The north-west, yes? -- Yes.
But in terms of its appearance from the motorway it’s visible from the motorway in the before case? -- Yes.
And was the one of the reasons why you’d start at the east? -- The eastern – there was some contention early on in the joint experts’ report about staging. The office and the site office on the site is on the eastern side for the very good reason that in the before case we had ramps to – Metroplex had ramps to the Centenary Highway, so that was the easiest and convenient access. It was only 3 or 400 metres away and that too -----
HIS HONOUR: When you say Metroplex had ramps, the road system ----? -- Sorry, the road system had ramp access to the Centenary Highway. So that also on the eastern side was the place for – if I could show again a board and explain that.”
[63] T2-17, 2-18 LL20 – 20.
Under cross-examination by Queens Counsel for the Respondent, Mr Cumming conceded that as a planner in matters of traffic engineering particularly on matters of specificity he would defer to the opinions of traffic engineers. Relevantly Mr Cumming under further cross-examination by Mr Gore QC conceded, with respect to the potential for a demand by the Department of Transport and Main Roads for a $30 million road works contribution, that no part of that $30 million was referable to the Centenary Highway, Ipswich Interchange Motorway Upgrade and that, in the before case, he understood that the Court has to assume that the Department did not intend to upgrade the interchange.[64]
[64] T2-25 L 30.
The consequence of that was that in the before case the scenario involves the old interchange with whatever problems it had.[65]
[65] T2-25 L 42.
Although not a traffic engineer, Mr Cumming was pressed by Mr Gore that respect to the interchange prior to the road works upgrading being carried out it was what he described as “highly problematical”.
He declined to concede that the interchange was any more problematic than other major intersections in peak hour periods.
Having conceded that the project involved the loss of the Kelliher Road ramp and the Bakery Road ramp this proposition was put to Mr Cumming and he agreed with it.
“So necessarily what you are saying is that motorists using the Kelliher Road off-ramp will be coming through the old Centenary Highway/Ipswich Motorway interchange, otherwise there is nothing to complain about; correct?”[66]
[66] T2-26 L 50.
Similarly he conceded that those that go up the Bakery Road on-ramp are going to go through the Centenary Highway/Ipswich Motorway Interchange.[67]
[67] T2-26 L 52.
That led to Mr Gore being able to put to Mr Cumming that:
“What you’re telling us is that on that information there will be some major percentage of the 4,000 vehicles per hour that go through what I’m calling the old intersection; correct?”[68]
[68] T2-27 L 10.
Mr Cumming agreed with that proposition and then this passage of cross-examination emerged:[69]
[69] T2-27, 2-29 LL 14-26.
“And if the old intersection is already highly congested you don’t need to be an expert to work out that a proposal that intends to put a significant proportion of 4,000 vehicles per hour through that heavily-congested intersection could have approval problem? – Yes. If – sorry. Not approval problems, I think that’s a different issue, but I’d point out this is a contraflow development. This is a planners – what we try and what transport planners try to achieve in the urban area, getting jobs out to the mid range point to prevent traffic coming into the city, and also increase contraflow. And by ----
MEMBER: By ‘contraflow’ you mean drags traffic in a opposite direction to what might be typical of peak hour? – Exactly. So in the morning peak the big – the big line of traffic is not going north to Metroplex or destinations at Wacol, it’s coming south from Springfield and residential areas, so this is a contraflow development, so in that context ---
Do you mean heading north or coming from north in that example you just gave? -- The big flow in the morning peak, and you could so it then, you can see it now, and you can see it on every other road that leads to the CBD is northbound. The big flow is not southbound.
MR GORE: You’ve got no basis at all for saying that, that’s a guess? --- Well, I do because I - I have visited this site since 2005.
To describe it as a contraflow development, I’m suggesting, is really just guesswork? – It’s observation over that period of time. A long line of traffic coming from the south ----
No, no, no -----?-- ----- and a lesser line coming from the north.
-----you’re missing the point, you ‘re missing the point. The development that you’re describing as ‘contraflow’ doesn’t exist at the moment; correct? -- That’s right.
And, for all you know, all the people that work there might want to live at Springfield because it’s convenient and travel to this site in the morning, hardly contraflow; correct? – That’s right, but it also, if they do that, they then take off traffic from the Centenary Highway between the Ipswich Motorway and the real point of disaster on the Centenary Highway road system, which is the Moggill roundabout on Milton Road.
Let’s get back to my question. You’ve accepted that if a significant proportion of the 4,000 vehicles per hour peak generation, identified in table two of your report, utilise the old interchange, that’s an issue for the approval process – I’ll try to put it in neutral terms – correct? – Well, I – my answer to that question is perhaps, and I answer it in this way, as a city planner: intersections since the 1980s of this ilk have been funded by the Federal Government, usually because they need so much money. It’s not normally part of the planning system where you say, well, an individual developer, albeit, you know, a 60 or 70 hectare developer, contributes to these sort of intersections. In the 1980s the national freight system under the Hawke Government came in and the Federal Government realised they had to fund major freight routes and roads, and this is that – that sort of intersection. So the proposition I think you’re pushing – putting to me is that this was important for the approval process for Metroplex. My answer to that would be I think it’s much more of a point for the approval of a development like Springfield, which – Metroplex is 60 to 70 hectares of developable land, creating employment at a point, which is desirable in city planning terms, whereas Springfield is almost 3,000 hectares of residential development which creates far, far greater problems. So, you know, I think the question of whether this is an approval, whether in the approval process this is related to Metroplex, I think it’s far more related to much, much bigger developments within this area.
How does the 4,000 vehicles per hour generated by Metroplex compare with the peak volumes through the old interchange as at February 2008, do you know? -- No, I don’t, and I looked for that figure in Mr Beard’s report for a total figure and I couldn’t find it.
You see, if it was, say – let me try to make the questions easy – if it was a figure of, say 2,000 ----? -- Yes
-----that was using the intersection before Metroplex was taken into account, and Metroplex is 4,000, you can forget about Springfield, this is a problem for Metroplex if it’s going to triple the number of vehicles gong through the intersection; correct? -- Well, the first thing is, I thought it was agreed that the before and after scenario development was industrial only –
No, no, no, no, don’t move away from my question. Please don’t move away from my question?-- Well, I don’t -- I don’t -----
If the figures are as I’ve asked you to assume -----? -- Yeah.
---that’s a problem for Metroplex. That’s a problem for the approval process, isn’t it? -- It is. It’s a consideration. Absolutely.
If 2,000 represents a heavily-congested intersection and Metroplex wants to put 4,000 more vehicles through that intersection it’s pointless talking about Springfield , that’s a problem for Metroplex, isn’t it? -- Well that’s not an opinion I share because Springfield is currently 23,000 people and is proposed to be a hundred and 10,000 people.
So you think that the Metroplex application would probably be approved because even though it was increasing the traffic through the intersection from 2,000 to 6,000 vehicles per hour, in circumstances where it’s accepted that the 2,000 vehicles per hour represents a high level of congestion, you don’t see that as a problem? -- You’re talking about the approval process. That’s not necessarily to do with impact. So in the approval process you‘re considering a whole range of things. For example, Boundary Road. I think Mr Viney has well put the fact that if Boundary Road is throughput, and the Department of Main Roads knew the importance of Boundary Road, that would negate a lot of the impact on the Ipswich Motorway and Centenary Highway because that creates then a major suburban route behind the highway system which alleviates highway traffic.”[70]
[70] T2-27-29 L
Consequent upon that passage of cross-examination Mr Gore took Mr Cumming to the report (Exhibit 25) prepared by Mr Beard the Traffic Engineer engaged by the Respondent.
In particular he took Mr Cumming to page 10 in paragraph 6A where Mr Beard said that:
“There is no traffic engineering basis for a claim that external road works required pursuant to the 'after' development scenario would have been more than those required pursuant to the 'before' development scenario?”
Mr Cumming conceded that he had read that and went on to explain that he disagreed with the proposition in Mr Beard’s paragraphs 6A from a planning point of view.
While it might appear that the answers given by Mr Cumming under cross-examination were evasive I think, fairly considered, they might be taken merely to reflect his particular skill set as a town planner and not an adoption by him of any particular traffic engineering point of view.
His apparent view of the road works after the removal of the ramps was that contributions were sought for the cost of removing the ramps rather than the contribution being sought because of a need to upgrade the various intersections in and around the subject site. If that is his view then, in my opinion, he is incorrect from a traffic engineering point of view.
Mr Cumming’s evidence[71] was unconvincing with respect to his apparent lack of awareness of what constituted an unacceptable queue length or an unacceptable degree of saturation of an intersection’s capacity.
[71] T2-33,34 and 35.
With respect to completing the “missing link” Boundary Road Mr Cumming agreed, in response to a question from me, that from a planning perspective it much more preferable to complete the “missing link”.[72]
[72] T2-39 LL 15-30.
He also confirmed that that preferable outcome applied in both the before and after case.[73]
[73] T2-39 L 41.
Engineering Issues
Scott Thomas, Engineer acting on behalf of the Applicant and Robert Marshall an Engineer acting on behalf of the Respondent met together to consider a conceptual design layout for works which were identified by the Respondent to provide additional east-bound capacity to Progress Road to better accommodate the traffic exiting from the Ipswich Motorway south-bound off-ramp. That conceptual design layout was shown in two Cardno sketches, No. CEB06133-022-SK001 Revision B and No CEB06133-002-SK002 Revision A[74].
[74] Exhibit 71.
Cardno (Queensland) Pty Ltd also supplied opinion with respect to cost dated 14 February 2012, Version 3 for the construction of the works.[75]
[75] Exhibit 71.
Thomas and Marshall agreed:
“That the attached opinion of cost dated 14 February 2012, Version 3 (Final) is a realistic assessment of anticipated development costs for the works depicted on the aforementioned conceptual design layout”.
They also agreed if the extent of works assumed in the opinion of costs of 14 February 2012 was altered by the opinions of experts and other disciplines then the costs would have to be re-evaluated. The costs identified in the opinion of costs are as follows:
Summary
Schedule A: Consultants Fees = $127,500.00
Schedule B: Civil Works = $470,051.19
Schedule C: Bridge Works = $268,500.00
_______________
Sub-Total = $866,051.19Project Contingency (20% of
Construction Costs) = $173,210.24Provision For Cost Escalation (5% of
(Construction Cost) = $43,302.56
Q-Leave (0.525% of Total Cost) = $4,546.77
_______________
Total = $1,087,110.76Engineers engaged by the parties Mr Thomas (Applicant) and Mr Maurice McAnany (Respondent) met to consider civil engineering matters.
They had earlier been provided with proposed development layouts in respect of the properties and reached a number of points of agreement. It is convenient and useful to set out those points of agreement here because they inform the opinions and reports of other experts engaged by the parties. There was unanimity between these two engineers and no points of disagreement emerged in the course of their meeting. Accordingly there was no need for them to be called either to give evidence or to be cross-examined.
[76]
[76] Exhibit 18, page 2.
Similarly with respect to the Access Business Park and the Motorway Business Park where sales were in excess of $340/m² Mr Hamilton expressed a view that the subject would attract higher values due to a superior location a more attractive environment proposed and limited competition in the immediate locality.
Similarly the Southlink Estate where values were in excess of $360/m² was said by Mr Hamilton to have an inferior location, inferior access and exposure, a less attractive environment and more competition in the immediate locality.
He expressed similar views with respect to the Lytton Industrial Estate where sales reflected values in excess of $360/m².
I cannot glean in Mr Hamilton's report any concession on a m² basis for the fact that the Lot sizes are typically substantially greater than in the estates he considered.
One consequence of the larger Lot size in the both the 'before' and 'after' redevelopment of the subject site is that each individual Lot will command a large absolute figure to achieve a sale.
Reference to Mr Brett's first Supplementary Report[179] shows in the 'before' case a significant number of Lots valued at above $5,000,000 and, indeed, one priced at $14,414,400.
[179] Exhibit 61 page 16.
In the 'after' the prices are similarly high with 14 Lots selling for prices above $5,000,000 with the most expensive selling for $13,693,680.
In the Buildev Yatala Industrial Park the highest price gathered was just over $5,000,000 for a Lot with an area of 1.967 Ha with four other Lots having areas in excess of 1 Ha selling for just under $5,000,000.
Interestingly, each of those sales yielded a per m² rate of less than $300/m².[180]
[180] Exhibit 29 page 35.
In the Motorway Business Park Estate none of the four sales was for a Lot with an area in excess of 1 Ha with only two sales exceeding $1,000,000.[181]
[181] Exhibit 29 page 39.
Similarly the Southlink Estate in which there were six sales had no sale of a block in excess of 1 Ha and no sale exceeding $3,000,000 as a price.[182]
[182] Exhibit 29 page 41.
The Lytton Industrial Estate was the only estate of four which had Lots with an area in excess of 1 Ha (3 Lots) and one sale at a price of $8,550,000 for a 2.375 Ha Lot.
Taken as a whole that developed industrial land sale evidence seems to my mind to be more consistent with the approach taken by Mr Brett in his Report than the approach taken by Mr Hamilton.
With respect to the take up or sales rates and the rates of development they are reflected in the table above at paragraph [339][183], as Counsel for the Applicant point out even though the positions as between the valuers are slightly different this has no great impact on the overall result given the overall timeframes of 61 months adopted by Mr Hamilton and 67 months adopted by Mr Brett.
[183] Exhibit 29 page 56.
So much is reflected in the evidence of Mr Brett who, when that proposition was put to him, agreed that the difference of six months had no great impact.[184]
[184] T7-20 L 45.
Counsel for the Applicant urges upon me that I should reject Mr Brett's analysis because he, it is said, failed to regard the internal rate of return as an input into his cash flow analysis in order to determine as an output the value of the land or what a prudent purchaser could afford to pay for the land.[185]
[185] See T7-34 LL40-50 and T7-63 LL55 to T7-64 L1, T6-.56 LL30-35 and T7-69 L40.
Mr Brett explained his approach in the course of cross-examination by Mr Hinson of Senior Counsel.
Mr Brett confirmed that in carrying his analysis he used the land value as an input and the software generated an internal rate of return. He also acknowledged that normally he would do that the other way around.[186]
[186] T7-35 LL40-50.
His reasoning he explained this way[187]
"Well, that's what I did in the first instance. Then after the discussions with Mr Hamilton and a review of those en-globo values and accepting that the speculative market continued to February '08, that I should run with the level of values demonstrated by the market irrespective of whether that resulted in what I would think is an unreasonably low return."
[187] T7-34 LL50-60.
Mr Brett went on though to deny that the rate of return produced by his cash flow analysis would turn an intending purchaser away.
He said:
"No. I mean, again if we look at those sales, those en-globo sales, in the year 2007, which are referred to in our various reports, if you are using those as a benchmark and accepting that as applying to how much someone would pay for this in its en-globo state, the only way in which that level can be justified is indeed if people were paying that money in a speculative market in anticipation of values rising and really get their return by capital return rather than a direct return on the development."
He asserted, I think sensibly, that
"You just can't pump the realisations in order to satisfy the bottom line, the level of return that you think will justify the investment. Those realisations still have to be viewed in a proper context of how far they might accede anything. That is presently historically achieved."[188]
[188] T7-35 L20.
Mr Brett's view of the gross realisations was that they would be lower than those contended for by Mr Hamilton.
Mr Hinson put to Mr Brett that:
"If the realisations on sales were higher than you have allowed your internal rate of return would come up."[189]
[189] T7-36 L20.
Mr Brett agreed but said:
"Yes, but it still won't come up as far as Mr Hamilton's because of the 3 million dollar infrastructure charge but if my lot prices go up and you didn't incur the 3 million dollar infrastructure charges, I would be more or less on a par with Mr Hamilton but the risk isn't accommodated in it going up, the risk is in accommodating it in going down. That is why there is a risk component to accommodate some unforeseen downside."[190]
[190] T7-36 LL21-28.
Each of Mr Brett and Mr Hamilton produced reports which dealt with the possibility that the road works contributions may have to have been contemplated as being as low as $1,087,110 based upon the Joint Statement of the Civil Engineers Thomas and Marshall.[191]
[191] Exhibit 71.
For the reasons set out earlier in this Report I feel unable to apply that figure to the likely road works contribution. The reasons for that are set out elsewhere in this decision.
I am however satisfied that the appropriate figure to apply to a prudent purchaser contemplating a likely demand by the Respondent for a contribution to road works external to the site and apart from the completion of the Boundary Road link would be $3,000,000.
Because of the reservations I have expressed above with respect to the evidence of Mr Hamilton and because of my acceptance for most of the evidence of Mr Brett and because I accept that Mr Brett's assessment of economic conditions relevant to the setting of prices and the uptake of developed land is to be preferred to Mr Hamilton's. I am accordingly satisfied that compensation should be ordered in accordance with the figures advanced by Mr Brett in his Supplementary Report of 24 November 2011.[192]
[192] Exhibit 61 page 5.
Accordingly, I find that the appropriate compensation to be paid by the Respondent to the Applicant is $6,877,800.
I acknowledge that Mr Brett's check valuation calculations produce a somewhat lower figure of $6,000,000 but in line with the liberal estimate principal I am satisfied that the loss should be rounded up to $6,900,000.
That figure is exclusive of disturbance items which I am told have been agreed between the parties.
I will hear the parties with respect to interest.
11. ORDER
1. Compensation is payable by the Respondent to the Applicant for the taking on 22 February 2008 of an area of 8.385 Ha being Lot 1 on SP218520 being part of the land contained in Title Reference 50553649, County of Stanley, Parish of Oxley in the sum of Six Million Nine Hundred Thousand Dollars ($6,900,000).
HIS HONOUR, WL COCHRANE
MEMBER OF THE LAND COURT
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