Courtney Bay Pty Ltd v Gold Coast City Council
[2004] QLC 103
•29 November 2004
LAND COURT OF QUEENSLAND
CITATION: Courtney Bay Pty Ltd v Gold Coast City Council [2004] QLC 0103 PARTIES: Courtney Bay Pty Ltd
(claimant)v. Gold Coast City Council
(respondent)FILE NO: A2003/0714 DIVISION: Land Court of Queensland PROCEEDING: Claim for compensation payable consequent upon the resumption by the Gold Coast City Council of an easement for drainage purposes DELIVERED ON: 29 November 2004 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mr RP Scott ORDERS: 1. I order that the respondent pay to the claimant compensation in the amount of One Hundred and Ten Thousand Five Hundred and Fifty Dollars ($110,550).
2. In the exercise of the discretion granted under s.28, Acquisition of Land Act 1967, I order that interest be paid by the respondent to the claimant on the amount of One Hundred and Ten Thousand Five Hundred and Fifty Dollars ($110,550) from 22 March 2002 at a rate of 5.5 per cent per annum up to and including the date upon which final payment of compensation is made.
CATCHWORDS: Resumption - Determination of compensation - Taking of drainage easement - Before and after valuation method appropriate
Resumption - Determination of compensation - Difficult case - Use of broad 50% discount not approved
Resumption - Determination of compensation - Pointe Gourde principle - Finding as to scheme - Works outside resumed drainage easement included
Resumption - Determination of compensation - Authority of Court to determine notwithstanding error or timidity by claimant
Resumption - Determination of compensation - Goods and Services tax - deal with separately from compensation - Letter of undertaking from respondent to claimant suitable
Resumption - Determination of compensation - Drainage easement - Loss in value of resumed area includes activities of constructing authority in managing easement - Additional injurious affection on balance land also possible
Resumption - Determination of compensation - Drainage easement - No discount for visual unattractiveness to balance land - Use not for residential or retail but for possible mini storage
Valuation - Sales - General reliance on basket of sales - Insufficient explanation as to how applied figures derived - Rationale necessary
Valuation - Use of top-down method - reliability of development costs - Two optional methods employed
Valuation - Sales comparison - Site constraint expressed as a cost - Whether appropriate - Site constraints on sales not expressed as a cost - Comparison method
Valuation - Town planning - Development condition - - Construction of drain at developer's expense - Whether relevant or reasonably required - s.3.5.30 Integrated Planning Act 1997
Valuation - Sales - Goods and Services Tax - Should be disregarded in applying sales
Evidence - Expert witness - Valuers often required to provide evidence the expertise of others - Evidence of experts (engineers) preferred for engineering issue
APPEARANCES: Mr G Hiley QC with him Mr A Skoien for the claimant
Mr B Cronin for the respondentSOLICITORS: Quinn Box & Muller for the claimant
Gall Standfield & Smith for the respondent
In this proceeding the claimant seeks compensation pursuant to ss.12 and 20 of the Acquisition of Land Act 1967 in respect of a drainage easement ("Easement C") taken on 22 March 2002 by the respondent over land at 166 Fryar Road, Eagleby, described as Lot 3 on RP 900630, County of Ward, Parish of Boyd ("Lot 3").
The process for the taking of Easement C commenced on about 28 June 2000 when the respondent provided in the form of a letter notice of its intention to acquire an easement. The procedure was then advanced by the provision of a Notice of Intention to Resume under the provisions of the Acquisition of Land Act on 5 June 2001. Taking of Easement C was effected by gazette resumption notice published on 22 March 2002. That becomes the relevant date for the purpose of assessment of compensation (s.12(5), s.20). The easement comprises a rectangular drainage easement 20 metres wide and 142.697 metres long containing an area of 2,854 m². Easement C runs directly north across the balance parcel from a point about a third of the way along its southern boundary.
The matter was referred to the Court by the claimant by way of an Originating Application dated and filed on 26 September 2003 in which compensation was sought in the amount of $546,234. By leave that amount was amended on the last day of hearing to $271,410 of which $260,000 was for loss of land value and $11,410 was for fencing of the Easement C area.
At the commencement of the hearing the respondent contended for an assessment of Nil compensation. On the fourth day of hearing the respondent adjusted its position to an assessment of compensation of $35,000. A major reason for the difference between the compensation figures of the claimant on the one hand and the respondent on the other lay in the respondent's contention that before resumption the claimant would have been required, as a condition of development of its land, to have constructed a major drain through it. Following resumption and the construction of the Easement C drain, no such drain (which I call the developer's drain) would need to be constructed as a condition of development, thus in the respondent's view there would be a considerable saving in development costs.
Subsequent to the taking of Easement C the respondent has performed certain works within Easement C including the placement of box culverts ("the southern crossing") from the southern end of Easement C for a distance north of some 16 metres into the balance parcel. It has also constructed a 16 metre wide open drainage channel generally grassed but with a narrow concrete invert at its low point from the opening of the culvert crossing to the northern boundary of the balance parcel: a distance of some 126 metres. It seems that these works were completed in around June 2003. The easement structure is designed to carry water from an underground pipe to its south and to discharge that water into an open drain to its north.
The Land
Prior to resumption, Lot 3 contained an area of about 2.235 ha in a roughly hatchet shaped block of land, though the head was a large rectangular block and the handle was a substantial piece of land. It was bordered by parkland on the north and the west. To the south the head was bordered by land developed for community/commercial/retail purposes and a large bituminised car park area. To the east of the head lay land developed as a shopping centre. Lot 3 was subject to a drainage Easement B running from a point towards the eastern end of the southern boundary with the easement boundary being approximately 6 metres from the eastern boundary of the head. Easement B runs directly north to the northern boundary, where it flows into a drain travelling west to east in the park land located there. Prior to the development of the tavern discussed below, Easement B was an open drain with a concrete invert at its low point.
The enlarged handle of the hatchet and a small part of the head of Lot 3 had, prior to the subject resumption, been developed for the purpose of a tavern, with a bottle shop, which has a car park towards its rear, that is towards its western end. That car park intrudes slightly into the head of the hatchet and over the location of the northern part of Easement B. A diversion drain was constructed to take flow from the open drain in Easement B that would not be accommodated by 600 mm pipes placed under the car park as part of the tavern development. The tavern development proceeded following an appeal by the developer to the Planning and Environment Court and pursuant to a consent order of that Court of 15 September 1999. Lot 3 was purchased by the claimant on 23 December 1999 for $650,000, according to Mr Snape, a valuer called by the claimant.
I will from this point refer to the head of the hatchet as the balance parcel. It is rear land. That parcel was vacant at the date of resumption and remained so at the time of hearing. Driveway access had been developed in conjunction with the development of the tavern land. The driveway access runs parallel to the northern boundary of Lot 3 and feeds into the car park at the rear of the tavern building. The driveway access therefore provides physical access to Lot 3, including the balance parcel, from Fryar Road which Lot 3 fronts to the east. Physical access to the western part of the balance parcel, which contains the land most suited to development, would need to cross the diversion drain or the suggested developer's drain.
The balance parcel is located in the Local Shopping zone of the Town Planning Scheme for the Gold Coast City Council in force at the relevant date, being a transitional planning scheme under the Integrated Planning Act 1997. It is located in the Town Centre and Convenience Sub-Precinct of the draft planning scheme being located in the town of Eagleby.
Witnesses
The claimant called the following witnesses:
· Greg Connors, a town planner
· William Douglas Weeks, an engineering hydrologist
· Ian Murray Snape, a certified practising valuer
· David Nigel Dover, a civil engineer.
The respondent called the following witnesses:
· Russell Jon Ryter, a town planner
· Trevor Charles Johnson, a civil engineer.
· Gregory Alan Morrison Lambert, a certified practising valuer
It is not disputed in this proceeding that the "before and after" method of valuation is the appropriate method of assessing the compensation payable to the claimant. That method has the advantage of measuring the compensation due to the taking of an interest in land together with severance and injurious affection (Brisbane City Council v Lansbury (1977) 4 QLCR 502). Furthermore, both parties have adopted the approach that the value of the tavern land should not be included in the valuation calculations either before or after the acquisition of Easement C.
In company with counsel and the two valuers I inspected the balance parcel and its surrounds, as well as the various sales properties referred to by the valuers in their valuation reports. With the consent of the parties, I recently carried out a further inspection of the balance parcel. These inspections assisted me in my understanding of the evidence.
Flooding
The balance parcel has two issues related to flooding and drainage. First, it is located in an area of inundation of the floodplain of the Albert and Logan Rivers though is well away from the main flow paths of the river and is an area of backwater. Such flooding may be referred to as backwater flooding.
The second issue is that there is a local catchment that flows through the property from the south. The runoff from the local catchment ultimately flows to the river. That can be referred to as the local catchment flow which drains through a low-lying part of the land, including Easement B.
Backwater flooding, as an issue, may be further subdivided into two issues. The first is the requirement to ensure that development undertaken in the form of buildings on the relevant land be above the defined flood level. The second issue is a potential loss of floodplain storage produced by any filling on the property which may increase flood levels elsewhere in the floodplain. The floodplain storage is indicated by way of a non-fill encroachment contour line. Any filling below that line, if permitted, would need to be compensated for by the provision of a similar volume of flood capacity elsewhere in the floodplain.
In his report Dr Johnson said that runoff from the site must be allowed to flow across the site. In addition, any development on the land must allow adequate drainage waterway area to ensure that no constriction of the flow path from upstream increases upstream water levels or divert the flow path. Whilst Dr Weeks employed different language I understand him to have agreed with these propositions.
Council policy which applies to the filling on the balance parcel is embodied in the Flood Affected Code which is referenced in the Town Plan. This Policy requires:
· The land to be built upon must be filled to or be at the post-filling designated flood level of AHD RL5.8 metres
· Only that portion of the site above the non-fill encroachment line (at RL4.33 metres) can be filled without provision of compensatory earthworks
· Filling below the encroachment line is permitted if the total flood storage volume is maintained by compensatory earthworks
· Filling below the encroachment line may be permitted if hydraulic studies are carried out to demonstrate that there would be no change in flood levels.
Prior to the resumption and construction of Easement C there was a flow across the parking area to the south of the balance parcel which would have naturally flowed towards the south-eastern corner of the balance parcel, then down Easement B. Higher flows would have entered the low-lying area in the balance parcel. Near the south-eastern corner and abutting the southern boundary of the balance parcel is, however, a block of land upon which a childcare centre has been constructed. That effectively places the childcare centre on the natural flow path. Development of the childcare centre included the provision of a pipe but not one which would have accommodated all of that natural flow. Much of the flow, therefore, was directed to a point west of the childcare centre where it then flowed onto the balance parcel at a point some distance from the south-eastern corner and Easement B.
The respondent has constructed a major culvert under the parking area which collects runoff from the catchment upstream of River Hills Road which bounds the parking area to its south. That culvert carries flow under the car park then through Easement C on the balance parcel. The local drainage from the car park is discharged through smaller pipes under the childcare centre and into Easement B on the balance parcel.
Before the construction of the underground drainage through the car park there would, in Dr Johnson's opinion, have frequently been a flow across the car park. That flow would have included flow from the catchment upstream of River Hills Road.
Land Areas
Before resumption, Lot 3 could conveniently be divided into a number of identifiable parts. The resumption of Easement C further complicated that division. The identification of the areas of each part is important to the exercise of assessing compensation in this case. Mr Connors provided evidence of relevant areas in his report, however Mr Lambert performed his own calculations which "for the sake of simplicity" the claimant adopted. Those areas were contained in Mr Lambert's initial valuation tendered at the commencement of proceedings, though I hasten to add they were varied in some respects in an amended valuation which he later relied upon. The claimant did not adopt those amended areas. The relevant areas in his initial valuation are as follows:
Easement B579 m²
Eastern Strip (between Easement B and eastern boundary of
balance parcel where it abuts the shopping centre) 467 m²
Western Block (to the west of Easement B) 15,082 m²
Total of Balance Parcel 16,128 m²
Tavern Land 6,222 m²
Total of Lot 3 22,350 m²
Mr Lambert later in his amended valuation adjusted these areas, for reasons discussed below, to:
Easement B 245 m²
Eastern strip 467 m²
Developer's drain 3,089 m²
Western development area 12,075 m²
Eastern development area 252 m²
Total of balance parcel 16,128 m²
TavernLand 6,222 m²
Total of Lot 3 22,350 m²
The parts of the land can be broken up as follows:
After resumption
Easement B* 579 m²
Eastern Strip* 467 m²
Eastern development section* (between eastern
boundary of Easement C and western boundary
of Easement B) 2,662 m²
Easement C2,854 m²
Western Severance (west of western boundary of Easement C) 9,566 m²
Total of Balance Parcel 16,128 m²
Tavern Land 6,222 m²
Total of Lot 3 22,350 m²
*Overall called the eastern severance.
The western block of 15,082 m² before resumption includes, towards its east, an area that falls within the non-fill encroachment line. On the respondent's view the developer's drain would be located within that low-lying area, leaving 12,135 m² of western development area in Mr Lambert's initial report or 12,075 m² in his amended report. In his initial report he adopted a developer's drain design provided by Dr Johnson. It was located in such a way that it left a roughly triangular portion to its east which included part of Easement B and the eastern strip. That "triangular area", as I will call it, had an area of 1,046 m². Whilst the claimant did not concede that the developer's drain would be required, its final position was that the development area to the west of the low-lying area would be about 12,000 m².
Before Valuation
It will be convenient to first introduce Mr Lambert's approach which was to proceed on the assumption that in comparison with sales the balance parcel was all sound land apart from Easement B and the eastern strip; to strike a value on that basis at $43 per m² ("the top value") then to deduct the estimated cost of bringing the land to that top value, that is of rectifying unusual site constraints to immediate development. The net figure is the value that Mr Lambert applied. This approach may be called the top-down method. In the initial valuation tendered in evidence he struck his top value in this way:
Triangular Area
1,046 m² x $43.000/m² @ 50% diminution factor $22,489
Area lost for Developer's Drain
2,947 m²Nil
Remaining area
12,135 m² x $43.00/m² $521,805
$544,294
He had engineering advice from Dr Johnson that the total cost of providing the developer's drain, access over the drain and associated matters would be $216,000 including a 15% contingency allowance. He, therefore, deducted these costs from his top value to yield a net value of $328,294.
In his amended valuation, which was the valuation Mr Lambert adopted as his final valuation, he employed a similar top-down approach. In this valuation, however, his top value was $522,249, though still based on a value of $43 per m² for sound land.
His top value was arrived at as follows:
Easement B - 245 m² Nil
Eastern Strip - 467 m² Nil Area lost for developer's drain - 3,089 m² Nil
Western development area - 12,075 m² @ $43 per m² $519,225
Eastern development area - 252 m² $3,024
Total$522,249
Of greatest impact in his amended before valuation was, however, the adoption of a costs figure of $101,775 including a 15% contingency allowance, instead of the original $216,000 advised to him by Dr Johnson. The deduction of this new costs figure from his amended top value yields a net land value of $420,474. I descend into the details of those various figures below. At this point, though, I can say two things about those costs. First, the respondent has abandoned the costs which appeared in Mr Lambert's initial valuation in favour of those included in his amended valuation. Second, the estimated cost of the developer's drain, based on Dr Johnson's design, was accepted by the parties as being $25,000: an estimate provided by Mr Dover.
Mr Snape did not describe the highest and best use of the balance parcel in his report, however accepted the description provided by Mr Lambert:
"I consider the highest and best use of the balance rear subject land both before and after resumption to be that of an industrial nature, i.e. service industry, showroom, car repair station, transport terminal and warehousing."
Mr Lambert noted that mini storage units had been proposed for the balance parcel in a plan prepared for the claimant by Eldon Bottcher.
In his primary valuation report Mr Snape valued 15,121.7 m² of land before resumption at $45 per m², totalling $608,476.50. He arrived at the land area by deducting from the Lot 3 total area of 22,350 m², the area of the tavern land, the eastern strip and Easement B, all of which he included at 7,228.3 m². His value of $45 per m² therefore included land below the non-fill encroachment line. Mr Snape did not place a value on the Easement B area and the eastern strip. That is not to say that he placed a nil value on these areas; they were simply not included in his valuation report as part of his before or after valuations, apparently being treated in a similar manner to the tavern land, that is of having the same value before as after. In submissions senior counsel for the claimant maintained support for Mr Snape's value per m² but said that the developable area of the balance parcel was some 12,000 m² only.
In his valuation process Mr Snape said that he took into account the nature of the subject land without making any express allowance for any particular feature. He conceded that he had not proceeded on the basis that the land was susceptible to flooding. Mr Snape had proceeded on the basis that the balance parcel did not require fill, whereas the need for some filling and site preparation of the western development area was identified by the claimant in its case. Fill costs were not introduced by the claimant until Mr Dover's response report to Dr Johnson's report. Mr Snape made no mention of the need to provide access over the diversion drain, though it was submitted for the claimant that such access would need to be provided. For the sake of clarity, I should point out that such access would not be needed on the respondent's argument, as it proposed the developer's drain whose construction would displace the diversion drain. The developer's drain would, however, require access to be constructed over it.
In an addendum to his primary valuation report Mr Snape provided some calculations showing the land, as if sound, to have a value of about $55 per m² then a net value of $45 per m² after costs including filling costs are deducted.
It was submitted for the claimant to the effect that Mr Snape's value of $45 per m² took into account the possibility of additional costs associated with the perception of unusual site constraints. It is neither explicit not apparent in Mr Snape's primary valuation report that specific site constraints affecting the balance parcel were taken into account. Access bridging, drainage and filling are not mentioned in that report. Moreover, there is no mention in his consideration of his sales evidence, to which I refer below, of points of comparison between the individual sales and the subject property identifying site constraints as being material in the valuation process. Apart from that, he said in oral evidence that it was the benefit of the engineering report that led him to adopt $55 per m² as a top value. In short, it was a calculated figure, not a figure arrived at by consideration of sales evidence.
Indeed, there is no reasoning apparent on the face of his valuation report which attempts to judiciously place the value of the balance parcel at a level which might be demonstrated by his sales. His figure of $45 per m² was settled on after a general consideration of the sales only. Such an approach was criticised in the Supreme Court of Western Australia in Flotilla Nominees Pty Ltd v Western Australian Land Authority & Anor [2003] 129 LGERA 65 where at 89 Pullin J said:
"In my opinion, it is not enough for a valuer to select a basket of sales said to be comparable, showing a large range of prices and then settle on a figure within the range, without explaining how it is derived from the basket of sales information relied upon."
In the instant case Mr Snape said that he could find no comparable sales, though he failed to include the sale relied on by Mr Lambert, which I find below to be the most comparable basis. The absence of truly comparable sales or the failure to find them will often be the lot of a valuer, however that does not negate the need to present a rationale as to the value finally adopted.
In his valuation report Mr Snape relied in part on a town planning report prepared by Mr Connors. Mr Connors' report suggested a gross floor area (GFA) possible on the before resumption land based on a theoretical maximum and a loss of GFA calculated on the same basis. Mr Snape did not slavishly adopt Mr Connors' theoretical figures but approximately halved them. I accept that the real potential GFA was probably less by half again than the figures assumed by Mr Snape. He appeared to concede as much in cross-examination.
Notwithstanding this apparent error in Mr Snape's valuation, it is not an error that, by itself, demonstrably infects his approach, in my view. That is because his error would presumably have been applied consistently in the process of his consideration of the sales. Before dealing with the sales evidence provided by the two valuers, it will be convenient to dispose of a number of other issues.
Access - Before Resumption
In the before resumption scenario the balance parcel, as part of Lot 3, had legal access to Fryar Road which the lot fronted. Physical access would probably have been via the access constructed on the tavern land to a point towards the north-east corner of the balance parcel. Access into the balance parcel from that point now falls for discussion.
If I were to assume for the moment that the prudent purchaser would not envisage construction of the developer's drain, then there is, nevertheless, an issue of access to the developable land in the western part of the balance parcel. This is because there is a need to cross the diversion drain and because, as Dr Johnson said, there is an obligation in constructing such a crossing not to worsen the flood conditions. The evidence was that the diversion drain is outside the boundary of Easement B, however it is within the non-fill encroachment line and cannot be peremptorily filled. A crossing which allows the drainage to continue unimpeded would need to be constructed. There would be a similar need if the developer's drain was to be constructed.
The cost of providing physical access by bridging a developer's drain or the diversion drain before resumption, or Easement C after, was a matter in issue between the parties. Whilst various estimates of cost for a single lane crossing were raised in evidence, the parties settled on an amount of $25,000 plus 15% contingencies as not being an inappropriate estimate. The real question came down to whether the prudent purchaser would proceed on the basis of a single or double lane crossing. The claimant acknowledged the need to cross the diversion drain, assuming no developer's drain, but did not suggest a particular cost. I will proceed on the assumption that the cost would have been similar to that of crossing either the developer's drain or the Easement C drain.
In a letter of 23 April 2004 which was tendered by consent following the removal of an objectionable paragraph, Colin Beard provided evidence on this issue. I take judicial notice that Mr Beard is a qualified traffic engineer. His opinion was premised on the after resumption scenario, but would seem to apply equally to that before. He suggested that an access point of entry to the west would need to accommodate vehicle and pedestrian movements, and would necessitate a crossing of approximately 9 metres in width.
A letter from the respondent dated 4 May 2004 provided for the purpose of evidence in the trial, said that a two-way vehicular/pedestrian crossing would need to be up to 8 metres wide. Such a crossing would be needed for an intensive use such as industrial. A 3.6 metre wide crossing would suit a single vehicle design. The letter said that the actual crossing requirement would depend on any development application actually made, but went on to suggest that a 3.6 metre crossing would be acceptable for a low volume use storage unit facility within Lot 3, provided two-way movement could be provided by the side of the access structure. Dr Johnson thought such an arrangement would be acceptable.
Mr Lambert assumed a two-way crossing in his amended valuation and in submissions Senior Counsel for the claimant offered no strong objection to that. I will proceed on the basis that whilst a prudent purchaser may seek to reduce costs and argue for a single crossing, he would probably be forced to accept the commercial realities that for a development of about 12,000 m², hopefully with an industrial component, a two-way crossing would be required at a cost of $50,000 plus 15% contingency.
Fill - Before
Putting aside the non-fill encroachment line Easement B and the eastern strip, the higher developable land was not all to a level which would have allowed development without some filling. Council's general requirement consistent with the Queensland Urban Drainage Manual was that the minimum floor level of buildings be 300 mm above the Q100 flood level with that particular level being nominated by Council. Contour RL5.8 AHD which part of the developable land fell short of, was the identified Q100 contour.
In his report Dr Johnson proceeded on the assumption that the minimum level of the developable land would need to be RL5.8 metres and that to achieve this about 1.08 ha would need to be filled to an average depth of about 1 metre. This would require 10,750 m³ of material in total. He estimated that 2,000 m³ of this would be available from the developer's drain. He costed the net 8,750 m³ @ $12 per m³, placed and compacted. The total cost was therefore estimated at $105,000.
Mr Dover said that in his experience Council had often relaxed its requirements in commercial developments such that the floor level of buildings could be at the Q100 level, not 300 mm above it. One example where such relaxation did not occur was in the development of the tavern on Lot 3; another was in the development of a Harvey Norman electrical appliance and furniture outlet. The probable development on the balance parcel both before and after resumption would be at the lower end of the commercial class of development as I understand the evidence, such that the prospect of there being some relaxation of requirements might be considered by a hypothetical prudent purchaser to be more probable than in the case of a development such as the tavern or a Harvey Norman outlet.
A prudent developer would usually not proceed on the basis that there was no risk that Council would insist on its standard requirement. Indeed Dr Johnson said that his advice to a client would be to assume the worse case scenario – though Dr Johnson professed no experience in developments where relaxation had occurred. Nevertheless, Mr Lambert's unqualified adoption of Mr Dover's estimate indicates that he was prepared to exclude any consideration of risk of this nature.
Whilst Mr Dover said that floor levels of buildings would need to be at the RL5.8 level at least, surrounding areas including car parks could be at RL5.5 or lower and landscape areas could be lower again.
Based on this assumed scenario Mr Dover calculated the need for 5,375 m³ of fill. Of this total he assumed, as Dr Johnson had, that 2,000 m³ would come from the developer's drain and that the balance of 3,375 m³ would be obtained by the cut and fill technique. He costed the cut and fill exercise at $4 per m³. His costing was therefore $13,500 plus contingencies and in Mr Lambert's amended valuation he adopted this figure.
The claimant's submission was however that the developer's drain would not have been a Council requirement. On that basis the 2,000 m³ of fill from the developer's drain would have been available only if the developer extracted that fill.
The cost of obtaining that fill was included in Mr Dover's estimated cost for the construction of the developer's drain at $8.00 per m³ therefore totalling $16,000 plus contingencies.
Mr Dover's fill volumes were based on an average fill depth of 500 mm therefore the 2,000 m³ would have covered an area of 4,000 m². Assuming a sound land value of either $43 per m² or more, the exercise of extracting and utilising 2,000 m³ from the area of the developer's drain would appear to be worthwhile.
On the basis discussed thus far fill costs would have been $29,500 ($13,500 plus $16,000) before any allowance for contingencies.
Mr Dover was drawn to say that the filling exercise discussed above would be part of a "normal" site development cost for a commercial development. The valuation task that I think needs to be undertaken is to ascertain in comparison with sales evidence the extent to which the need for such works might vary site to site. None of the sales on which I have placed reliance below was so level as to not require any site preparation for the provision of a building pad and an evenly presented non-building area. It is fair to conclude therefore that in a cost estimate of $29,500 there would be an element of site preparation that the filling process has addressed. This is a matter that needs to be taken into account in the process of comparison with the sales as in the case of the balance parcel, the costing results in the production of a level building pad in addition to the filling exercise.
If I were to undertake this exercise in an arbitrary fashion I would estimate the proportion of $29,500 that represents site preparation. There are, however, other matters that enter the equation. One such matter is that the level of site preparation depends on the type of development to be undertaken. A development such as that of the tavern which took place on Mr Snape's Sale 7 involved the use of the high land for the main building and the low land for car parking (see para [92]). Such a development has a large area of car parking because of the nature and level of visitation. However the developments suggested for the balance parcel before resumption would not appear to fall into that category.
Another matter that falls for consideration under this topic is that whilst in the case of the balance parcel I have the advantage of detailed expert evidence on the topic of site filling, such evidence has not been provided with respect to the comparable sales. That is not a reason however for disregarding the evidence presented. It was submitted for the claimant that in the comparison process the cost of fill was not a matter of such significance that it should separately be taken into account. Reliance was placed on what Gobbo J said in Waalt Homes v Road Construction Authority (1987) 64 LGRA 346, at 352:
"If one is seeking to arrive at the common starting point of a vacant land sale, more or less capable of being developed, then one should take into account any significant expense to bring the sale in question to that point. This is on the basis that the purchaser would have taken this likely expense into account in formulating his price."
The claimant emphasised the phrase "significant expense" and submitted that $13,500 for fill did not meet that description. As a proportion of the price that might be paid for the balance parcel on the basis of it having a value of $43 per m² for about 12,000 m², the suggested fill cost was not significant, it was submitted.
My reasoning has led me to conclude that the fill costs that a prudent purchaser would calculate would be higher than $13,500. More importantly is the view that I have formed that though the judgment in Waalt Homes refers to costs as that was the evidence under consideration, what His Honour appears to have had in mind was the significance of the relevant feature in the mind of the hypothetical prudent purchaser. Filling of the balance parcel is a feature of such significance that it is appropriate in my view for a valuer to take it into account when conducting the process of comparison with sales.
Drainage Issues – Developer's Drain
Had the childcare centre not been built or had sufficient drainage capacity been provided as part of its development, the upstream flow, including that to the south of River Hills Road, would have entered the balance parcel towards its south-east corner in the vicinity of Easement B. What appears to the claimant to have been an ill-considered decision in not catering for drainage along its natural path is, however, a product of history confronting any developer of the balance parcel at the date of resumption. It might have been a different matter had there been evidence to the effect that the low volume drainage under the childcare centre resulted from an intention of the respondent to construct the drainage from River Hills Road and through Easement C and therefore formed part of the scheme of which the resumption was part.
I must view the balance parcel as it existed at the relevant date but without any effect that the scheme of resumption may have had on the land. (Pointe Gourde Quarrying and Transport Co. Ltd. v. Sub-Intendent of Crown Lands (Trinidad) [1947] AC 565). I find that scheme comprises both the culvert which runs from upstream of River Hills Road then under the car park and Easement C which now traverses the balance parcel.
There was considerable debate between the parties as to whether the Gold Coast City Council ("the Council") would have in granting consent to development of the balance parcel, imposed a condition requiring the construction of a drain through the land at the developer's expense. That developer's drain would, in the respondent's submission, be similar in specification to Easement C and would be the subject of a grant of easement to the Council in accordance with the usual practice. It would be located in the low-lying part of the balance parcel; that is, further to the east than Easement C.
Stormwater naturally flowed to the south-east corner of the balance parcel in the vicinity of Easement B. The imposition of the childcare centre on that flow path diverted that water to its west. A development of the balance parcel would need to ensure that the stormwater which touched that site found its way to the vicinity of Easement B; that there be no constriction of flows onto the land and that stormwater generated on the development land be disposed of. It was submitted for the claimant that a development of the balance parcel which did not include Easement B or the eastern strip could satisfy the requirement that flow be directed to the area of Easement B by the provision of a collection structure on the upstream boundary of the site. The overland flow that skirted to the west of the childcare centre would then enter the balance parcel, proceed to drain down into the lower land within the lower land and the area of Easement B. The evidence of both Dr Weeks and Dr Johnson was to the effect that this was feasible. The adequacy of Easement B to take the upstream flow would, in the claimant's submission, be irrelevant to its suggested development proposal.
A drainage easement of the type proposed by the respondent would not have been required for a development that did not include the Easement B land or the eastern strip, according to the claimant, on the basis that it would not have been reasonable or relevant in terms of ss.3.5.30 of the Integrated Planning Act:-
"3.5.30 Conditions must be relevant or reasonable
(1) A condition must -
(a)be relevant to, but not an unreasonable imposition on, the development or use of premises as a consequence of the development; or
(b)be reasonably required in respect of the development or use of premises as a consequence of the development.
(2) Subsection (1) applies despite the laws that are administered by, and the policies that are reasonably identifiable as policies applied by, an assessment manager or concurrence agency."
I am prepared to accept that submission. The conclusion I draw on this issue was arrived at on the basis of the arguments presented by the parties. Questions were put by the respondent to expert witnesses namely Mr Connors, Dr Weeks and Dr Johnson suggesting that any development of Lot 3 would require a drain of the order of that proposed by the respondent and such questions were answered in the affirmative. I do not know what was in the witnesses' minds as to the development of Lot 3 when providing their evidence, but it seems that it could not have been confined to a development that did not include Easement B and the eastern strip. Presumably they each had in mind some comprehensive development of Lot 3 of the type represented in the Eldon Bottcher plan; or possibly that the Council would be likely to prefer that a developer construct the drain at his expense, rather than the task of constructing the drain being left to Council resources. Council's attitude and preference would, however, be subject to the law.
In his expert report Mr Ryter said "... any development proposal for Lot 3 immediately prior to the relevant date would have been required to accommodate stormwater, including stormwater from upstream in the catchment ...". He referred to clause 17.16 of the Planning Scheme which provided that the Council would need to consider "whether the land should be drained and/or filled to make a satisfactory building site". That is not a suitable basis which supports the above opinion, nor does it lead to a conclusion that the developer would reasonably be required to construct a developer's drain of the type proposed by the respondent. Such a drain is irrelevant to a building site.
The development of the tavern was a development of Lot 3. The consent order of the Planning and Environment Court included a development condition that required a flood study of the "subject land", that is Lot 3 and, I stress, not just part of Lot 3. Another condition provided:
"3.Sufficient drainage is to be provided through the subject land, verified by the hydraulic analysis, at no cost to the Respondent and to the satisfaction of the Respondent's Chief Executive Officer, to demonstrate that the proposed works can allow the passage of the 2, 10 and 100 year ARI flows through the subject land without causing detrimental flooding impact on adjacent properties, or safety concerns for pedestrian and vehicular traffic." (my emphasis)
The drainage provided in the relevant part of Lot 3 included the piping under that part of the tavern car park that extended into the balance parcel and the provision of the diversion drain.
It did not require the provision at the developer's expense of a drain similar to the developer's drain. The low-lying area might be characterised as being at the rear of the tavern land but, nevertheless, part of Lot 3. The fact that it is at the front of the balance parcel does not mean that it would attract a different requirement from that which applied in the case of the tavern land. In the claimant's proposal for the development of 12,000 m² to the west of the low-lying area, none of "the proposed works" would affect the passage of flows through the subject land except to the extent that the flow to the west of the childcare centre would need to be directed away from the development site towards the Easement B and diversion channel flow path within the balance parcel. The same might be said of the 12,135 m² in the same vicinity included in Mr Lambert's initial valuation, though I adjust this area for other reasons below.
The urbanisation of a parcel of land results in that land generating a greater volume of flow downstream than it would have generated in its natural state. To that extent a parcel of land at the downstream end of a catchment will need to accommodate a greater flow than it would have before upstream development occurred. Before that downstream parcel of land has been developed it will have taken a certain volume of flow and must, after development, continue to take that flow and not inhibit it. In addition, the development of that land must manage the concentration and increase of flow from its own urbanisation. As long as those two requirements are met, the development will have complied with reasonable and relevant local council requirements.
A hypothetical prudent purchaser with knowledge of the conditions relevant to the tavern project and the nature of the development that took place there, would justifiably conclude, I think, that no drainage requirement of the order of that proposed by the respondent would lawfully be imposed as a condition of consent to develop the western 12,000 m² or so of the balance parcel as suggested by the claimant or the 12,135 m² in Mr Lambert's initial valuation.
The conclusion that I have drawn does not fully, however, dispose of the issue in favour of the claimant. The collection structure proposed by the claimant and mentioned above would have, on Dr Johnson's estimate which the claimant accepted, cost $10,000. In addition to this cost there would also be the cost of obtaining fill in the amount of $16,000 in addition to the fill obtained by the cut and fill technique. The total cost of these two items at $26,000 exceeds the cost of $25,000 which the respondent accepted as being the cost of the developer's drain. The $25,000 figure was provided by Mr Dover and it included a cost of $16,000 for excavation and the winning of fill. On the basis of those figures alone, to which should be added a contingencies allowance of 15%, a prudent developer would elect to construct the developer's drain.
The appropriate conclusion to draw in these circumstances is that a hypothetical prudent purchaser would elect to construct the developer's drain as part of the development. It may be that the developer would elect to grant a drainage easement to the Council over the developer's drain, however that is not, as I see it, a matter relevant to value. Apart from the small advantage in cost in constructing the drain compared with the approach suggested by the claimant, a developer would, I think, prefer a well constructed and grassed drain located at the entrance to his development to the unsightly diversion drain that was placed there as part of the tavern development.
Developer's Drain Design
In contrast to Easement C which is constructed straight across the balance parcel and does not take advantage of the low-lying land, the parties agreed that the developer's drain could be designed in a way that was more sympathetic to the development potential of the balance parcel. The developer's drain would be constructed such that it took stormwater from a point on the southern boundary of the balance parcel to the west of the childcare centre, then in a design presented by Dr Johnson it would swing towards the eastern boundary and track parallel to that until it flowed out over the northern boundary. The distance from the eastern boundary would be dictated by the edge of the tavern car park tarmac. The drain would utilise the low-lying land in the balance parcel. The design location of that drain was, for the purpose of argument, accepted by the claimant, however Mr Dover suggested that a narrower drain design would have been appropriate. That question of the drain design was, however, disposed of as an issue by Mr Lambert's acceptance of Mr Dover's cost estimates for the drain.
In his initial valuation Mr Lambert had employed the developer's drain design provided by Dr Johnson and in so doing concluded a top value of $544,294. In his amended valuation he employed his own developer's drain design and using the same top land value of $43 per m², he estimated the top value at $522,249. The difference in top values came about both because Mr Lambert presented his version of a possible location of the developer's drain and because he modified the value he applied to that part of the balance parcel lying to the east of the developer's drain. I will first consider Mr Lambert's drain location.
Mr Lambert's design modified Dr Johnson's design by having the drain curve across from its point of entry to the eastern boundary, then track back along that boundary to the north until it came to the tavern car park whence it curved to the west then back to the north, running parallel to the Easement B pipes under the car park. It would partly be superimposed on the Easement B open drainage section. It is that which led him to reduce the area of Easement B in his amended valuation (see paras [22] and [23]). Mr Lambert's developer's drain design was promoted by the respondent as being advantageous to a developer, compared with Dr Johnson's layout, because it provided a slightly larger block of land to the west. The development area to the west for Mr Lambert's amended design was measured by him at 12,075 m². That is, however, a little smaller than the area for that land included in his initial valuation (12,135 m²), though that might be because Dr Johnson's layout of the drain failed to take into account the extent of the tavern car park works. In Mr Lambert's design the area of land occupied by the drain would be larger than in the case of Dr Johnson's design.
In submissions the claimant placed no value on the area to the east of the developer's drain. That was done, as I understand it, on the basis of its submission that if the development of the balance parcel did not include Easement B and the eastern strip, no developer's drain would have properly been required by the Council. Mr Snape placed no value on this area though, as I have observed at para [33], that was apparently for other reasons. Given my conclusion that a prudent developer would construct the developer's drain in any event, I see no need to place an embargo on some value being placed on this area.
The angle of layout of the developer's drain in Mr Lambert's layout is such that it creates a small (252 m²) triangle of land to its east referred to as the eastern development area in Mr Lambert's amended valuation. Mr Lambert placed a value of $3,024 on that land on the basis of its value as a source of fill for the western development land. He assumed a one metre depth of fill being extracted from that land at $12 per m³ in value to produce his estimated value. The need for that fill is not apparent on the evidence, given that Mr Lambert adopted Mr Dover's fill cost estimate.
Dr Johnson's developer's drain layout severed an area of 1,046 m² in the area between that drain and the eastern boundary of the balance parcel. I have referred to this earlier as the triangular area. In his initial valuation Mr Lambert placed a value of $22,489 on that land on the basis that it was worth 50% of his top value of $43 per m² for development land. He explained in oral evidence that he considered that area of 1,046 m² of land to have such a value on the basis of its potential use for outdoor storage or parking. Neither he nor Mr Snape was critical of that aspect of his initial valuation. In fact, nothing much was said about it. Mr Lambert said quite simply in cross-examination that he had approached his valuation for a similarly located but smaller area in his amended valuation on the basis that the drain layout was different.
There is no compelling reason, therefore, for me to adopt Mr Lambert's drain layout, particularly as it led him to a lower valuation for this area which was not adequately justified. Mr Lambert was not sworn as an expert in such matters as drain design. I recognise that registered valuers will often be called upon to provide evidence in respect of matters that are the expertise of others. In the present case, however, there were two qualified engineers who gave evidence on this matter. In the circumstances, I must prefer their evidence. I adopt Dr Johnson's drain layout.
In the circumstances, I place no reliance on that part of Mr Lambert's amended valuation which values the land under discussion at $3,024. It became clear to me, once I came to focus on after resumption valuation issues that the value of the eastern severance, including the area under discussion were affected by similar though not identical issues. They were probably issues of the type which led Mr Lambert to his valuation approach to this area in his initial valuation, though were not articulated there. I see no reason to differentiate between the value of this 1,046 m² either before or after resumption. To attempt to do so would be to bring an undue refinement into the valuation process,. I will, therefore, place a value of about $17 per m² on this 1,046 m² of land in accordance with the conclusion drawn at para [241]. That calculates to $18,000.
Before Costs
In summary, I conclude that the costs to be taken into account in the before valuation are:
Developer's drain (including $16,000 for fill) $25,000
Cut and fill of western development land $13,500
Crossing of developer's drain $50,000
$88,500
Contingencies 15% $13,275
$101,775
In oral evidence Mr Lambert said that a risk allowance should be added to this cost figure to cover risks associated with completing the works as planned. Mr Snape was not asked about this item and whilst there was some suggestion in cross-examination of Mr Lambert, particularly with respect to after resumption costs that a figure of perhaps 20% be included, I see no need to vary Mr Lambert's 10% in the before resumption scenario. A 20% allowance is more akin to that which might be required in a complete development of the land. Mr Lambert described this allowance as being for risk only with no profit element. Whilst I find difficulty with the theoretical correctness of such a proposition, I think that 10% is appropriate. Inclusion of this allowance brings the total costs before resumption to $111,952.50 which I will round down to $111,950.
Development Area
The claimant's estimate of the developable area in the before scenario was approximated only at 12,000 m². In his initial valuation Mr Lambert adopted 12,135 m² for this western land, but changed that to 12,075 m² in his amended valuation, based on his own developer's drain design. Now the 12,000 m² suggested by the claimant was not fixed as, in submissions, my attention was drawn to the availability of lower land to the east of that area that the claimant submitted could have been utilised for such things as road, parking and landscaping. Land put to such uses would have a value for that purpose, however no figure was suggested by the claimant. Melwood Units Pty ltd v The Commissioner for Main Roads (1976) 3 QLCR 209 at 233 provides authority for this Court to determine compensation notwithstanding any error or timidity on the part of a claimant. In the circumstances, I think it appropriate that I settle on a figure greater than 12,000 m² as being development land. In so doing I need to keep in mind that Mr Lambert's initial estimate of 12,135 m² was based on Dr Johnson's developer's drain layout which was a little further east than the tavern car park would have permitted. In the circumstances, I will settle on a figure of 12,100 m² as being developable land in the west of the balance parcel. I see no need to modify the fill cost estimates based on this small adjustment.
Sales
Both Mr Lambert and Mr Snape employed the method of comparison with sales in carrying out their respective valuations. Mr Snape said that he could find no sales that were directly comparable to the balance parcel so had general regard to selected sales in settling on his figure. He included 15 sales in his valuation. Sales 1(a),(b) and (c) comprised three sales in the Pacific Gateway Industrial Estate which sold for prices of $117 per m², $132 per m², and $135 per m² respectively. Mr Snape conceded that they are not comparable to the balance parcel but were included for the benefit of providing a global picture, as he put it.
His Sale 2 was of a property at 29A Logan River Road, Beenleigh having an area of 6,452 m² which sold on 31 July 2003 for $557,500, which calculates to $86.40 per m². He said that the sale land presents as a very similar situation to the balance parcel in that it is rear land with a long driveway access alongside industrial buildings. Whilst Mr Snape thought the Sale 2 property to be limited to industrial use, Mr Lambert said that there was a proposed mini storage development in the minds of the purchaser at the time of sale; that is, a use similar to the one designed by Eldon Bottcher for the balance parcel before resumption. The sale is an after-date sale in a market which Mr Snape acknowledged was more buoyant than that of the Eagleby area. He said that the sale was "not directly comparable to the subject in some respects".
Mr Snape's Sale 3 is located at 179 Main Street, Beenleigh having an area of 7,159 m². The sale took place on 4 June 1999 for a price of $865,000 which calculates to $121 per m² for the land. This sale took place prior to the purchase of Lot 3 by the claimant. Mr Lambert said that he could find no areas of comparability between this sale property and the balance parcel. Mr Snape did not press its comparability.
Sale 4 in Mr Snape's valuation is located at 38 Herses Road, Eagleby and has an area of 4.09 ha. The sale occurred on 20 December 2001 for $384,000 which equates to $9.40 per m². This sale is relied on by Mr Snape to support a figure of $15 per m² in his after-valuation for land suggested to have no direct economic use. I return to that issue below. I also deal with Mr Snape's Sale 5 later in these reasons.
The sixth sale in Mr Snape's valuation took place on 5 July 2003 for a price of $3,250,000. The sale is located at 204 Main Street, Beenleigh, has a land area of 2.9 ha and the price calculates to a figure of $112 per m². Mr Snape considered the sale property to be overall superior to the balance parcel whilst Mr Lambert's opinion was that the sale was so superior that it was not comparable with the land being valued. Clearly a sale at $112 per m² cannot be employed to support a value of about $45 per m² by direct comparison.
Sale 7 is located at 98 Distillery Road, Eagleby, has an area of 9,068 m² and sold on 21 December 2001 for $700,000 according to Mr Snape's valuation report. On that basis the sale equates to a figure of $77 per m².
Mr Lambert said that the price allocated to this sale land resulted from an apportionment of a sale totalling $1,550,000 which involved the sale land, another parcel of land, a liquor licence and an offsite bottle shop. Mr Snape was not aware of this complication to the sale, however expressed the view that the apportionment seemed appropriate. How he might have formed that view without an appreciation of the full nature of the transaction is not known to me.
Sale 7 suffers the disability of being at a price whose validity as representing market value depends on the opinion of the valuer who seeks to rely on it. Even if I put aside this disability, as I call it, the proposed use of the sale land as a tavern is quite superior to that probable on the balance parcel. The sale land is well exposed with a two-street frontage and has exposure to the Pacific Motorway. Its apportioned sale price of $77 per m² is quite removed from the value either valuer suggests for the balance parcel.
One point of comparison that should be noted is an opinion expressed by Mr Snape that the lower car park land is below flood level whilst the main tavern building has been constructed on the high land. That opinion was reinforced by the tender of Exhibit 28 which indicated the sale land as being almost fully flood affected. That singular point of comparison does not however elevate the sale to a position of utility in the valuation process.
Not far from the Sale 7 property we find Mr Snape's Sale 8 at 89 Distillery Road, Eagleby. That land has an area of 3.44 ha which sold on 13 February 2003 for $710,000. Mathematically that equates to a figure of $20.64 per m². Mr Snape said that a significant proportion of the rear sale land is low lying river floodplain and unsuitable for building. The land is surrounded by low quality industrial and horse grazing uses and was considered by him to be inferior to the balance parcel.
Mr Lambert said that he accepted this sale as having "some elements of comparability" as he put it though at one stage also said that he did not think the sale to be relevant. I take the second of these comments to be a convenient response during cross-examination.
The Sale 8 land has a major drain on the south-eastern corner and has a large area of land that is low lying river front land. Exhibit 28 suggests that all of the land is below the non-fill encroachment line. Mr Lambert suggested that the land had commercial potential whilst Mr Snape thought it would be limited to open storage uses.
It transpired that on 28 November 2003 the Council approved, subject to conditions, a development of a showroom on the front section of the Sale 8 land covering an area of 8,800 m² or 23.25% of the site. The Council had on 17 May 2002 refused an application for a material change of use for a showroom, catering business, timber yard, and retail nursery, having a greater scale and intensity to that finally approved. The purchaser would have had the benefit of the earlier application and its treatment by the local authority to refer to. It seems the purchaser was well prepared as the application which was finally successful was lodged on 13 March 2003, that is one month after the date of the contract of purchase.
Two other factors would appear to operate to reduce the cost of fill. First, there is the prospect that I mentioned earlier of spoil being available on site from excavations for footings and such like. Second, there is the prospect that all of the fill proposed by Mr Lambert would not be needed. There is no need to fill the car park areas to RL5.8 metres. This would be of particular interest if the bulk of car parking was to be located in the eastern severance as Mr Lambert suggested. Immunity against a Q10 event only was required for the tavern car park development.
The claimant was critical of Mr Lambert's fill volume estimation on the basis that he is not an expert in such matters. That is fair criticism, however it does not mean that a useful estimation exercise cannot be undertaken based on the evidence available. I have perused the contour plan which indicates that whilst there was quite a bit of land in the eastern severance overall below RL4.2 metres, the land in the eastern development section is much higher. Mr Lambert has not, I think, been ungenerous in his estimate of 1.6 metres, however I will add a further 20% to his figures to allow a conclusion in favour of the claimant in circumstances where the fill estimate was not provided by the relevant expert. That is, fill volume should be increased to 7,120 m³ at a cost of $12 per m³, totalling $85,440. The addition of a contingencies allowance of 15% would yield a figure which I round to $98,000.
Filling within the encroachment line can take place only if it is compensated for by making available within the encroachment line a similar capacity to receive backup flood water. The construction of the drain in Easement C has increased the flood receiving capacity on the balance parcel, but I do not know how the respondent might take that into account in any application to fill within the non-fill encroachment line. That drain was constructed at the Council's cost. I have no evidence to say that it would be taken into account in considering an application to fill within the non-fill encroachment line, nor do I have sound evidence of the extent of compensatory flood capacity created by the construction of Easement C. Apart from that there is a need for a flood study to be carried out if a landowner wishes to fill within the encroachment line. No flood study with that in mind has been prepared, as I understand it. I lean to the view, however, that permission might be granted given the longstanding position of the respondent that Easement B could be surrendered. Council would be presumed to know that such a surrender would be of value to a landowner only if filling in the manner proposed by Mr Lambert was contemplated. A not insubstantial risk, however, remains.
Piping Easement B
Mr Lambert assumed that the open drain section of Easement B would be piped in a 600 mm pipe to connect with the pipe of that same dimension which presently lies under part of the tavern car park. His adoption of a 600 mm pipe costing was based on advice provided directly by Dr Johnson to Mr Lambert in a document not tendered. I have already expressed my concern at the adequacy of such a pipe.
The pipe length would be 87.2 metres in Mr Lambert's estimate and was costed by him at $400 per lineal metre, totalling $34,880, plus contingencies. The evidence points, I think, to this cost being low given the doubt that I have expressed as to the adequacy of a 600 mm pipe. I will, in the circumstances, carry out my own estimation. Dr Johnson provided evidence in his report that 1,650 mm pipe would cost $710 per metre. Now I would think, without the benefit of expert opinion, that such a pipe would be larger than would be needed to pipe Easement B. The best that I can do is to assume a pipe of a size between 600 mm and 1,650 mm at a price of, say, $450 per metre. That is the all up price would be $39,240 plus contingencies. An alternative might be to run two 600 mm pipes, given that there is a 600 mm pipe only under the tavern car park.
The larger pipe would feed into the 600 mm pipe presently in place under the tavern car park. I do not know the cost of removing the existing 600 mm pipe under the car park and replacing it, so will assume that the flow down the pipe in Easement B could be split into two. One of these would be the existing 600 mm pipe and the other an additional 600 mm pipe running parallel to that for a distance that the claimant suggests to be 55 metres. The cost of that parallel 600 mm pipe would be $22,000 at a costing of $400 per metre plus contingencies. The cost of piping Easement B could therefore be $61,240 plus contingencies, though the claimant suggested a figure of $56,800 plus contingencies. I will adopt the claimant's suggested figure for the purpose of the exercise, though I express no confidence in either it or my own estimate. The costs of site works on the eastern severance are difficult to estimate with any accuracy.
The cost of site works would at a maximum be $163,320 including contingencies ($98,000 filling and $65,320 piping). I do not accept the respondent's contention that these costs should be reduced by $10,000 to cater for a suggested enhancement in the claimant not being required to carry out a flood study after resumption. There was no evidence pointing to a flood study having been carried out by the respondent as part of the Easement C works that would have been suitable to the claimant's needs after resumption. Nor was there evidence that the claimant could have cost-free access to any such study that might have been carried out. Dr Weeks' opinion was that a suitable flood study would be needed after resumption, not withstanding the completion of the Easement C works. I accept his opinion which was specific in its application to the circumstances of this case.
Mr Lambert accepted as appropriate the need to add a risk factor to such costing figures. His 10% figure was for the purpose of completing the works and did not include any risk of permission being granted or risks as to the level of costing discussed above. I have already concluded that the surrender of Easement B would be a probability if its stormwater could be disposed of to the satisfaction of the respondent. The prospect of gaining permission to fill the non-fill encroachment line area is however a matter that is less clear. In the circumstances I think that a prudent purchaser would adopt a risk factor of 10% only if he was satisfied that permission would be forthcoming. I will, for the moment, assume that permission will be granted, so will settle on a gross maximum cost of $180,000 including a risk factor of about 10%.
Top Value
Whether a hypothetical prudent purchaser would consider carrying out such works depends on the gain to the value of the retained land overall. Mr Lambert put that value at $43 per m² overall. I have decided that this overlooks some points raised by Mr Snape, particularly that the splitting of the development into two parts would result in some inefficiencies in the development, including less flexible access. Mr Snape allowed a 20% discount catering for the splitting factor and others that seem to comprise either duplication or matters I have not allowed for, such as fencing. (see [242] et.seq.)
The value of the western severance is affected by the fact that access to it is required over Easement C. That feature is largely catered for by the inclusion of a cost estimate of $63,250 which includes contingencies and risk. I have found there to be a slight risk that access permission may not be granted in the preferred northern location and will discount the value of the land retained after resumption accordingly. An access risk does not apply only to the western severance as a failure to obtain permission to access the west in the preferred northern location would also impact in the east which would then be used in part as an access route. It is appropriate, therefore, that the discount for risk, such as it is, apply overall.
The claimant suggested that the need for fencing Easement C and the visual effect of the drain on the western severance would reduce its value. I have rejected those suggestions. The fact that the western severance is now smaller would not, I think, reduce its value in that it remains a sizeable development lot with a regular shape. It is rear land both before and after resumption. The eastern severance has an inferior shape after resumption which would reduce the flexibility of design and layout options available to it. On that basis the discount that applies to its top value must be greater than that applied to the western severance.
Prior to the application of a discount to cater for the abovementioned issues, the top value of the western severance would be $430,470 (9,566 m² x $45 per m²) and that of the eastern severance $166,860 (3,708 m² x $45 per m²). Having regard to the abovementioned discount factors, I will adjust these values to $420,000 and $150,000 respectively.
Based on these top values and employing Mr Lambert's top-down approach, but with the site costs as adjusted by me, the value of the balance parcel after resumption would be presented thus:
Exercise A
Top value of western severance $420,000
Top value of eastern severance $150,000
Overall top value $570,000
Less site costs $180,000
Net value$390,000
Now because the above site works would have produced a filled and drained site, there would be no need for the provision of a crossing of the diversion drain at a cost of $63,250. That cost would apply, however, if Easement B, the eastern strip and the low-lying land were not filled. An alternative way of carrying out a top-down approach would therefore be as follows:
Exercise B
Top value of western severance $420,000
Cost of fill$13,500
Cost of crossing Easement C $50,000
Cost of crossing diversion drain $50,000
$113,500
Plus 15% contingencies
Plus 10% risk $143,600
Net Value$276,400
A simple comparison of these two exercises demonstrates that it would be preferable to carry out the site works on the eastern severance as proposed by Mr Lambert. There are some other aspects, however, that need to be taken into account.
In the case of Exercise A, what the actual costs of fill and piping would be is uncertain as is the critical question of whether permission would be forthcoming to allow filling within the non-filled encroachment line. The uncertainty as to piping costs has been catered for in my adoption of a maximum cost and I have increased Mr Lambert's fill estimate. The risk of gaining permission to fill within the non-fill encroachment line is a factor that is difficult to take account of. There was no evidence to indicate how the Council might address this question in the particular circumstances that applied after the resumption and the construction of the Easement C drain. Nevertheless, it is tolerably clear to me that a hypothetical prudent purchaser would entertain the prospect of permission being granted.
On that basis then and assuming the floor price for the after resumption land to be $276,400 in accordance with Exercise B, a Spencer type transaction could be assumed to take place at a higher figure, given the potential gain demonstrated in Exercise A. Given my view as to the prospect of gaining permission to fill within the non-fill encroachment line, the price would, I think, be substantially higher than is revealed in Exercise B.
Now Exercise B does not include any value for the eastern severance. If one views the eastern severance as part of the whole of the retained land after resumption and assuming for the moment that its independent development potential is minimal or highly uncertain, it nevertheless offers some potential for use in conjunction with the western severance by way of the provision of car parking, landscaping and open storage. Its use for such purposes would require less fill than was the subject of discussion above; would therefore be less expensive to develop and would, presumably, attract less risk of approval to fill being granted. It seems similar in that respect to the low-lying land on Mr Snape's Sale 7 (see paras [94]-[95]).
The eastern severance lends itself, at the least, to providing most of the parking that would be required for the development of the western severance. There is one disadvantage in that approach, that being that there would be some disruption to the ease of use of the site. That is a disadvantage that needs to be taken into account, however it has a positive feature in that it allows the western severance to be developed more intensively than if it were a stand-alone site. I do not accept the claimant's submission that the western severance faces additional costs for loss of land for parking, road and landscaping. Not only is here no direct evidence of that, but it disregards the potential that lies in the eastern severance.
As part of the balance parcel whole, the eastern severance therefore would add a value to that of the western severance that value being also influenced by the possibility that it could be filled and Easement B piped and filled also. There is no precise way of ascertaining that value that was revealed to me. Nevertheless, it is an aspect that I think a prudent purchaser would take into account.
On that basis Exercise B would be adjusted by the inclusion of a value for the eastern severance.
My reasoning has led me to a figure of $340,000 for the value of the claimant's land after resumption. That figure accords with what I have said above. It assumes a value for the eastern severance for inclusion in Exercise B at about $17 per m². That figure sits comfortably, I think, with the development value of the western severance. It is also consistent with Mr Snape's Sale 4 discussed in para [90]. The value of the eastern severance must be higher given its development potential. It represents a risk factor of $50,000 on the Exercise A approach in para [233] which leans in favour of the claimant given the state of the evidence concerning filling below the non-fill encroachment line after resumption.
Fencing
The claimant claims $11,410 on the basis that it now has to fence Easement C for the safety of the developed site. The respondent's position on this question is that as there would have been a requirement for the construction of the developer's drain before resumption, any need to fence would be the same before as after. In any event the respondent submits there would be no need to fence a drain of the type proposed. An example of such an unfenced drain was provided in the form of the development at Labrador referred to earlier.
I accept that neither the developer's drain nor Easement C would need fencing. They are broad based drains and flow into another broad based drain to the north which is not fenced and is located in parkland open to the public.
The respondent has provided some fencing within Easement C at the headwalls to the culvert coming from the car park area. Such fencing is needed because of the steep drop created by those headwalls. I observe in passing that similar fencing would not appear to be required on the developer's drain as it would have been designed to take overland flow, thus obviating the need for a culvert and headwall.
The claimant did not take up and lead evidence supporting Mr Snape's suggestion that the resumption would lead to higher premiums for public liability insurance cover.
Conclusion
Compensation for loss of land is therefore determined as follows:
Before value $450,550
After value$340,000
$110,550
Orders
1.I order that the respondent pay to the claimant compensation in the amount of One Hundred and Ten Thousand Five Hundred and Fifty Dollars ($110,550).
2.In the exercise of the discretion granted under s.28, Acquisition of Land Act 1967, I order that interest be paid by the respondent to the claimant on the amount of One Hundred and Ten Thousand Five Hundred and Fifty Dollars ($110,550) from 22 March 2002 at a rate of 5.5 per cent per annum up to and including the date upon which final payment of compensation is made.
RP SCOTT
MEMBER OF THE LAND COURT
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