McCann v Roads Corporation

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

VALUATION, COMPENSATION & PLANNING LIST

No. 5799 of 2009

GREGOR DONALD McINTYRE McCANN	Applicant
v
ROADS CORPORATION	Respondent

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JUDGE:	OSBORN J
WHERE HELD:	Melbourne
DATE OF HEARING:	11-14, 18, 27 October 2010
DATE OF JUDGMENT:	22 March 2011
CASE MAY BE CITED AS:	McCann v Roads Corporation
MEDIUM NEUTRAL CITATION:	[2011] VSC 96

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VALUATION AND COMPENSATION – Hypothetical highest and best use in ‘before’ situation – Effect of Bypass proposal on value to be disregarded – Strategic planning considerations – Factors supporting residential rezoning – Location – Topography – Need – Factors potentially adverse to residential rezoning – Landscape – Natural boundaries – Agricultural land – Break between Ceres and Geelong – Services – Appropriateness of power line easements as urban growth boundary – Council’s likely position – Claimant’s land ripe for residential rezoning at relevant date - Land Acquisition and Compensation Act 1986, ss 41(3), 43(1).

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr C Townshend SC with Mr S Goubran	Earl and Associates
For the Respondent	Mr J Delany SC with Ms M Foley	Garland Hawthorn Brahe

TABLE OF CONTENTS

The legal concepts.............................................................................................................................. 5

The Statutory Framework.......................................................................................................... 5
Expert Evidence....................................................................................................................... 12
Relevance of Planning Documents.......................................................................................... 14
Relevance of Planning History................................................................................................ 16

The land............................................................................................................................................. 18

Background to the planning dispute............................................................................................ 33

The trial.............................................................................................................................................. 35

Preliminary issues....................................................................................................................... 36

The planning policy framework and the test of net community benefit.................................. 37
Topography.............................................................................................................................. 51

Planning Considerations............................................................................................................ 53

Need and demand..................................................................................................................... 53
The landscape of the Barrabool Hills........................................................................................ 58
Natural boundaries.................................................................................................................. 61
Agricultural land..................................................................................................................... 62
The break between Geelong and Ceres..................................................................................... 63

Incidental matters....................................................................................................................... 64

Services.................................................................................................................................... 64
The power lines as a boundary................................................................................................. 65
The Council’s likely position.................................................................................................... 66
The status of the land as at the relevant date........................................................................... 67
Principal criticisms of the witnesses........................................................................................ 71

Conclusion......................................................................................................................................... 73

HIS HONOUR:

On 2 March 2007 (‘the relevant date’), Roads Corporation (‘the authority’) compulsorily acquired a tract of land from the applicant (‘the claimant’) in order to construct a section of the Geelong Bypass.

The acquired land was a 24.953 hectare strip running almost north-south. This strip bisected a larger parcel of land held by the claimant which was being used at the relevant date for agricultural purposes (‘the claimant’s land’). The acquisition comprised approximately 10 per cent of the claimant’s total land holding of 251.197 hectares prior to the acquisition.

Save for a strip of land fronting the Barwon River (which is zoned Public Conservation and Resource Zone), the claimant’s land east of the Bypass is, and was at the relevant date, zoned Residential 1 with a Development Plan Overlay Schedule 6 and a Design and Development Overlay Schedule 13. The claimant’s land west of the Residential 1 Zone was at the relevant date in a Rural Zone and subject in part to a reservation for public purposes (namely the proposed Bypass).

The claimant claims compensation pursuant to the provisions of the Land Acquisition and Compensation Act 1986 (‘the LAC Act’) and has referred a dispute with the authority over the amount of such compensation to the Court. The LAC Act provides that the Court ‘must determine the compensation payable in the particular circumstances of the case having regard to the provisions of this Act’.[1]
[1]LAC Act, s 90.

The primary measure of compensation in the present case will be the difference (if any) in the market value of the claimant’s land on a before and after basis.

The determination of both the before and after values requires an assessment of those values by reference to the highest and best use to which the land might reasonably be expected to be put at the relevant time.

Section 43(1) of the LAC Act also requires the question of highest and best use to be assessed disregarding the scheme which led to the acquisition. Section 43(1)(a) and (d) provide:
(1)In assessing compensation, the following matters must be disregarded—
(a)any increase or decrease in the market value of the interest in land which is acquired arising from the carrying out, or the proposal to carry out, the purpose for which the interest was acquired;
…
(d)in a case where the land in which the acquired interest subsists is reserved for a public purpose in a planning instrument, any restrictions upon the use or development of that land which are imposed by, or are a consequence of, the reservation;
The effect of s 43(1) is that the question of market value is to be assessed by reference to hypothetical assumptions which require the effects of the carrying out or proposal to carry out the Geelong Bypass to be disregarded.

The claimant in this case contends that if it were not for the Bypass proposal, planning policy would have recognised the electricity transmission easements to the west of the current Bypass reservation (and running generally parallel with it) as framing the boundary of the western extent of urban Geelong at the relevant date. In turn, the claimant contends that the highest and best use of the land to the east of the easements was residential use at the relevant date.

The authority disputes this contention. It contends that the effect of the Bypass proposal was to extend the urban growth of Geelong further west than would otherwise have occurred without the Bypass. The claimant’s land has thus achieved an increase in market value in respect of that portion of it which lies to the east of the Bypass. This increase should be disregarded in the before and after analysis. Likewise, it is contended that the land acquired and the land to the west of it extending to the easements should not be regarded as having any potential for residential use. By letter to the claimant dated 7 June 2007, the authority contended that the claimant’s land ‘enjoy[ed] an enhanced value….as a consequence of the acquisition’. This alleged enhancement resulted in a nil offer of compensation premised on the principle that a land holder should receive no more than fair compensation.

On 28 July 2010, I ordered (subject to further order) that the following questions be tried as preliminary questions in the proceeding:

1.For the purposes of assessing market value of the land in the “before” situation under the Land Acquisition and Compensation Act 1986 (Vic), what would have been the zoning of the land or any part of it at the acquisition date?
2. If the answer to question (1) is that the land, or any part of it, would not have been zoned for residential use at the acquisition date:
iWhat were the prospects of the land, or such part of it, being re-zoned for such use at any time after the acquisition date?
iiIf there was any such prospect of the land being re-zoned for residential use, when would such re-zoning be anticipated to occur?

These questions seek to address what has been identified as the first task of the valuer in cases of this type. They seek to clarify the basis on which the highest and best use of the land is to be resolved.

The resolution of the preliminary questions will necessarily confine the valuation issues between the parties. Those questions have now been tried. My conclusion is that as at the relevant date that portion of the claimant’s land to the east of the power line easements would have been ripe for rezoning if the Bypass proposal is disregarded. By this I mean that the hypothetical purchaser would confidently expect it to be rezoned to Residential 1 within two years thereafter.

Nevertheless, the probability of rezoning was subject to a residual risk of delay of rezoning which I assess at a 20 per cent risk that rezoning might not occur for five years. My reasons for this conclusion are as follows.

The legal concepts
The Statutory Framework

Section 30 of the LAC Act provides:

30 Right to compensation on acquisition
Subject to this Act, every person who, immediately before the publication of a notice of acquisition, had an interest in land that is divested or diminished by the acquisition of the interest to which that notice relates has a claim for compensation.

In turn s 41(1) of the LAC Act provides:

41 General principles on which compensation is to be based
(1)Except as otherwise provided in this Part, in assessing the amount of compensation payable to a claimant in respect of an interest in land which is acquired under this Act, regard must be had to the following factors—
(a)the market value of the interest on the date of acquisition;
(b)any special value to the claimant on the date of acquisition;
(c)any loss attributable to severance;
(d)any loss attributable to disturbance;
(e)the enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed from the acquired land by reason of the implementation of the purpose for which the land was acquired;
(f)any legal, valuation and other professional expenses necessarily incurred by the claimant by reason of the acquisition of the interest.

Section 5A of the Valuation of Land Act 1960 (‘VL Act’) provides an underlying framework for the valuation of land in the following terms:

5A Determining value of land
(1)Unless otherwise expressly provided where pursuant to the provisions of any Act a court board tribunal valuer or other person is required to determine the value of any land, every matter or thing which such court board tribunal valuer or person considers relevant to such determination shall be taken into account.
(2)In considering the weight to be given to the evidence of sales of other lands when determining such value, regard shall be given to the time at which such sales took place, the terms of such sales, the degree of comparability of the lands in question and any other relevant circumstances.
(3)Without limiting the generality of the foregoing provisions of this section when determining such value there shall, where it is relevant, be taken into account—
(a)the use to which such land is being put at the relevant time, the highest and best use to which the land might reasonably be expected to be put at the relevant time and to any potential use;
(b)the effect of any Act, regulation, local law, planning scheme or other such instrument which affects or may affect the use or development of such land;
(c)the shape size topography soil quality situation and aspect of the land;
(d)the situation of the land in respect to natural resources and to transport and other facilities and amenities;
(e)the extent condition and suitability of any improvements on the land; and
(f)the actual and potential capacity of the land to yield a monetary return.

The notion of compensation ordinarily envisages that an owner is entitled to be compensated fairly and fully for his loss, but is not entitled to receive more than fair compensation.[2] Quoting from Scott LJ in Horn v Sutherland Corporation[3] in Transport for London v Spirerose, Lord Neuberger referred to the underlying concept in the following terms:

‘the principle of equivalence which is at the root of statutory compensation, the principle that the owner shall be paid neither less nor more than his loss’, save, I should add, where the legislation otherwise provides.[4]

[2]Director of Buildings and Lands v Shun Fung Ironworks Limited [1995] 2 AC 111, 125; Waters v Welsh Development Agency [2004] 1 WLR 1304, 1307; Transport for London (formerly London Underground Limited) v Spirerose Limited [2009] 1 WLR 1797, 1822.

[3][1942] 2 KB 26, 49.

[4]Transport for London (formerly London Underground Limited) v Spirerose Limited [2009] 1 WLR 1797, 1814.

Section 40 of the LAC Act defines ‘market value’ in relation to any interest in land on a particular date as meaning:

the amount of money that would have been paid for that interest if it had been sold on that date by a willing but not anxious seller to a willing but not anxious purchaser;

This provision reflects the test formulated by the High Court in Spencer's case[5] and articulated by Isaacs J:

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. [6]

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

[6]Ibid, 441.

Section 41(3) of the LAC Act provides:

If less than the whole of the land in which a claimant's interest subsists is acquired or less than the whole of that interest is acquired, the market value of the acquired interest is the difference between the market value of the interest before the acquisition and the market value of the interest after the acquisition.

This sub-section requires the assessment of market value in the present case to be undertaken by way of a before and after analysis. A before and after analysis will embrace not only the loss of the value of the land acquired but also the effect of the acquisition upon the value of the balance of the land at the date of acquisition.

Further, as s 5A of the VL Act envisages and s 41(2) of the LAC Act reflects,[7] market value is to be assessed by reference to the potential highest and best use available to the land as at the relevant date. Such an approach is necessary to reflect the full value of the land to the owner.[8]
[7]Section 41(2) of the LAC Act provides:
(2)If the market value of an interest in land is assessed on the basis that the land had potential to be used for a purpose other than the purpose for which it was used on the date of acquisition, compensation must not be allowed for—
(a)any special value in respect of any pecuniary advantage that would necessarily have been forgone in realizing that potential; and
(b)any loss attributable to disturbance that would necessarily have been incurred in realizing that potential.
[8]Turner v Minister of Public Instruction (1956) 95 CLR 245, 264; March v City of Frankston [1969] VR 350, 356.

The development potential of the land may affect its highest and best use. In ISPT Pty Ltd v Melbourne City Council,[9] the Court of Appeal cited with approval[10] the elaboration of the relevant concept by Biscoe J in Commonwealth Custodial Services Ltd v Valuer-General (NSW):[11]

There is no statutory definition of “highest and best use”. It has been described in the High Court as “the most advantageous purpose for which [the land] was adapted”: Spencer v The Commonwealth.[12] It “is the present value alone of such advantages that falls to be determined”: Cedars Rapids Manufacturing and Power Co v Lacoste.[13] In Park v Allied Mortgage Corporation Ltd[14] Hill J said at [70]: “As Spencer’s case itself makes clear the valuation must proceed by reference to the best use of the property. For this purpose the valuer will take into account not only the present use to which the land is applied, but any more beneficial use to which it may reasonably be applied. This is the process which a purchaser negotiating to purchase the property would undertake. Thus, it is not inappropriate in valuing property to take into account a potential development of the property, for among the range of hypothetical purchasers can be assumed to be a person who would undertake such a development as would maximise the usage of the land”. In Adelaide Clinic Holdings Pty Ltd v Minister for Water Resources[15] Jacobs J said:
Common experience shows that land ideally suited for commercial development will fetch a higher price per unit of area than residential land, but it does not follow that the highest and best use of all land is a commercial use, for the highest and best use means exactly what it says — the most advantageous use of the subject land having regard to planning and all other relevant factors affecting its present and future potential. The first task of the valuer is to determine what that use is and then to value the land on that basis. It is not appropriate to determine the highest and best use by reference only to value.

[9](2008) 20 VR 447.

[10]Ibid, 458-9.

[11](2006) 148 LGERA 38, [15].

[12](1907) 5 CLR 418, 441 (Isaacs J).

[13][1914] AC 569, 576 (Lord Dunedin).

[14](Unreported, Federal Court of Australia, 5 July 1995).

[15](1988) 65 LGRA 410, 415.

The potential highest and best use of land may itself be to hold the land for a potential future use. Thus, there is a distinction which may be drawn between land ripe for subdivision and land having the potential for future subdivision.[16]
[16]Crompton v Commissioner of Highways (1973) 5 SASR 301, 318-319.

As I have already said, s 43(1) of the LAC Act also requires the question of highest and best use to be assessed disregarding the scheme which led to the acquisition. Section 43(1)(a) and (d) provide:

(1)In assessing compensation, the following matters must be disregarded—
(a)any increase or decrease in the market value of the interest in land which is acquired arising from the carrying out, or the proposal to carry out, the purpose for which the interest was acquired;

…
(d)in a case where the land in which the acquired interest subsists is reserved for a public purpose in a planning instrument, any restrictions upon the use or development of that land which are imposed by, or are a consequence of, the reservation;

The section is to be understood in the light of the judgment of the High Court in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority.[17] That judgment was concerned with analogous New South Wales legislation and focuses upon the causal requirement postulated by the parallel provision.
[17](2008) 233 CLR 259.

The submissions of the authority emphasise that what is to be disregarded is governed by the words of the statute. As the decision of the High Court in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority[18] makes clear this is undoubtedly correct.[19]
[18]Ibid.
[19]See also Mount Lawley Pty Ltd v Western Australian Planning Commission [2007] WASCA 226, [25].

Nevertheless, the terms of s 43(1)(a) are broad and, as the submissions of the authority concede, when comparison is made with New South Wales and Western Australian legislation, s 43(1)(a) is not expressed in terms of effects caused by steps in the scheme giving rise to the acquisition.

The traditional approach to determining the zoning parameters of the assessment of highest and best use for the purposes of a hypothetical valuation of land enabling the assessment of compensation for a compulsory acquisition was described by McClellan CJ in Smith v Roads and Traffic Authority of New South Wales:[20]

1 Identify the zoning of the land at the date of acquisition.
2Determine whether that zoning was imposed or retained in order to facilitate the implementation of the public purpose for which the land was acquired.
3If the answer to question 2 is yes, that zoning is notionally set aside, and the potential of the land and ultimately its market value is assessed by determining how the land would have been zoned, at the date of acquisition, but for the proposal to carry out the public purpose.

[20](2005) NSWLEC 438, [63].

McClellan CJ held at [70] that a ‘decision must be made as to the zoning which the land would have had at the date of acquisition so that the development potential of the land, if any, can be identified and the market value, unaffected by the proposal to acquire the land, determined.’

I accept that this approach does not necessarily mirror the language of the Victorian statute. Apart from anything else, it does not reflect the dual components of s 43(1)(a) and (d). Section 43(1)(d) applies to part only of the subject land, whereas by reason of s 41(3) the whole of the land is affected by s 43(1)(a).

Moreover, the breadth of the terms of the LAC Act is not to be constrained by the Smith formulation. After analysing the sequence of decisions with respect to the dispute between Walker Corporation Pty Ltd and the Sydney Harbour Foreshore Authority[21] the authority submitted:

there is a real and critical difference between the New South Wales legislation which requires, in order that a matter be disregarded, that there be a “causal connection” between zoning and the resumption or the proposal to resume and the Victorian legislation. The test adopted in Smith, just as it is not to be applied to section 56(1)(a) [of the NSW Act] is not applicable to the different language of the [LAC Act]. Question 2 in Smith inquires as to whether zoning was “imposed or retained by or in order to facilitate”.[22] That is not the language of the [LAC Act]. Similarly, whilst the word “proposal” in the [LAC Act] might be read as if a reference to “the Scheme” in San Sebastian as discussed above, the Victorian legislation does not require the identification of “steps in the Scheme”, as was the approach in Mount Lawley. The [LAC Act], which adopts the words “arising from” rather than to identify steps in the scheme or matters or events “caused by” the proposal is broader in terms of what must be disregarded.[23]

[21]Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251; Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No 2) [2006] NSWCA 386; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWLEC 219.

[22]The words ‘by or’ do not appear in Smith.

[23]Authority’s Written Closing Submissions, [27].

I accept, as the authority concedes, that the words of the LAC Act are broad and that they are not to be read down by reference to decisions with respect to other legislation. In particular, the words ‘arising from’ are broad words.[24] The ultimate question for this Court is how as a matter of fact they are to be applied to the evidence in this case. As counsel for the authority conceded in final address, the evidence may or may not permit a conclusion that another zoning would apply to the land but for the proposal.
[24]Hi Fert Pty Ltd v Kiukiang Maritime Carriers (1996) 150 ALR 54, 60.

It is common ground between the parties that:

[T]here is no scope under those provisions to deem events which did not in fact occur or deem improvements which were not in fact made to the land.[25]

[25]Claimant’s Written Closing Submissions, [11].

The claimant articulated this concept by reference to the observations of Dixon CJ in Turner v Minister of Public Instruction[26] with respect to the concept of value to the owner:

That value was necessarily affected by all the advantages which the land possessed and these might be a matter of future or even contingent enjoyment. Future advantages or potentialities must not be excluded. At the same time the value of these things must be assessed according to the condition of the land as it stood at the time of resumption: “it is the present value alone of such advantages that falls to be determined”. You must not notionally bring what is only potential into actual being and value it as if it existed.[27]

[26](1956) 95 CLR 245, 268.

[27]Ibid. Citations omitted.

Likewise, it is common ground that, insofar as the terms of the relevant planning policy and controls were the product of the proposal to implement the Bypass, they must be disregarded.

It will be a question of fact as to whether particular planning scheme provisions are to be regarded as resulting from the proposal for the Bypass or not.

A further question may arise as to the effect of the Bypass proposal upon the planning potential of the land insofar as that may be found to have crystallised in a failure to change the pre-existing zoning of parts of the claimant’s land from rural to residential. In this regard, the authority draws attention to the observations of Basten JA[28] in Walker (No 1)[29] concerning NSW legislation:

The existence of the two separate limbs of s 56(1)(a) [the first being the effect on value caused by the carrying out of the public purpose for which the land was acquired and the second being that of the proposal to carry it out] does, however, affect the operation of that provision in two significant ways. First, where the effect to be disregarded is the failure to change an existing zoning, rather than the imposition of a zoning consistent with the public purpose, the value of the land to the hypothetical purchaser is likely to depend upon an assessment of the prospect of rezoning: in most cases it will be inappropriate to treat the land as having been rezoned, on the basis that this would have happened on the probabilities. That exercise is to substitute a view of the Court for the view of the hypothetical purchaser. That approach may have been required under [previous legislation] but it is not the correct approach under s 56(1)(a).[30]

[28]Authority’s Written Closing Submissions, [22].

[29]Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (2005) 63 NSWLR 407, [83].

[30]Ibid.

This issue also falls to be addressed on the evidence as to the facts in this particular case and in accordance with the Victorian legislation. In my view, however, it may in an appropriate case be possible to postulate a loss of value ‘arising from’ a proposal for public works due to a refusal or failure to rezone which results from that proposal.

Expert Evidence

The parties each rely on town planning opinion evidence as to the assessment of the preliminary questions before the Court. There was some dispute as to the manner in which the expert witnesses and in turn the Court should treat evidence of the actual history of planning and development within the relevant area.

The starting point must be the general principle that an expert must reveal the factual and intellectual basis of an opinion, as Heydon JA as he then was stated in Makita (Australia) Pty Ltd v Sprowles:[31]

In short, if evidence tendered as expert opinion evidence is to be admissible, it must be agreed or demonstrated that there is a field of 'specialised knowledge'; there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; the opinion proffered must be 'wholly or substantially based on the witness's expert knowledge'; so far as the opinion is based on facts 'observed' by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on 'assumed' or 'accepted' facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached: that is, the expert's evidence must explain how the field of 'specialised knowledge' in which the witness is expert by reason of 'training, study or experience', and on which the opinion is 'wholly or substantially based', applies to the facts assumed or observed so as to produce the opinion propounded. If all these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert's specialised knowledge. If the court cannot be sure of that, the evidence is strictly speaking not admissible, and, so far as it is admissible, of diminished weight. And an attempt to make the basis of the opinion explicit may reveal that it is not based on specialised expert knowledge, but, to use Gleeson CJ's characterisation of the evidence in HG v The Queen,[32] on 'a combination of speculation, inference, personal and second-hand views as to the credibility of the complainant, and a process of reasoning which went well beyond the field of expertise'.[33]

[31][2001] 52 NSWLR 705.

[32](1999) 197 CLR 414, [41].

[33]Makita (Australia) Pty Ltd v Sprowles [2001] 52 NSWLR 705, 743-744, [85].

It may be that a planning opinion can be based at least in part upon the planning history of comparable land. On the other hand, it may be that the situation will be one where the opinion must be more theoretically based. The expression of opinions based on hypothetical circumstances presents particular difficulties in this regard.

In Smith v Eurobodalla Shire Council,[34] McClellan AJA (with whom Mason P and Santow JA agreed) said of valuation opinion given in circumstances presenting evidentiary difficulties as to its basis:

There is no doubt that the foundation for an expert's opinion must be adequately proved. This will include the evidence necessary to qualify the person as an expert in the relevant field and proof of the facts in respect of which the expert is requested to give an opinion. As Heydon JA acknowledges, this can give rise to difficulties in areas such as land valuation where, in many cases, the available market evidence is limited and the expert's judgment must be based upon accumulated experience. Sometimes when evidence of comparable sales is not available, alternative but less satisfactory methods of valuation may be utilised. (Various methods are discussed in Alan Hyam, The Law Affecting the Valuation of Land in Australia, 3rd ed, p 113ff). But there will be many cases, particularly in relation to sales of "unique" property, where this may not be possible and a valuer will be required to exercise his or her judgment having regard to the objective material which is available, however inadequate. If there is simply no direct market evidence in relation to a particular property, this does not mean that a valuer cannot express an opinion as to its value. As McClure J points out in the Full Court of the Supreme Court of Western Australia case in Western Australian Planning Commission v Arcus Shopfitters,[35] Makita does not mean that an opinion will be excluded where the objective material is not complete "but the valuer must reveal as far as possible the reasoning process actually employed so as to enable the court to evaluate the evidence and the expert's conclusions." [36]

I respectfully agree. In the present case the town planners must reveal as far as possible the reasoning process adopted by them so as to enable the Court to evaluate the evidence and the expert’s conclusions. It will be a question of fact and opinion to what extent the relevant issues can be resolved by reference to historical material and to what extent they cannot.

[34][2004] NSWCA 479.

[35](2003) WASCA 295.

[36][2004] NSWCA 479, [121].

Relevance of Planning Documents

Each of the expert witnesses in the present case has referred to documents which evidence the strategic planning of the area in question. The authority makes the global submission that strategic planning documents which were historically premised in part upon the Bypass proposal, must be disregarded for evidentiary purposes. In particular, it seeks to exclude reference to documents (with one exception) in the following categories:

[D]ocuments which:
(a)adopt, for the purposes of definition of their study area, the bypass reservation as a planning boundary;
(b)proceed on the basis that the bypass reservation exists and is relevant in a strategic planning context to the work, of each such study or strategy;
(c)do not question what “would have been” but for the bypass proposal; and
(d)are the product of the bypass proposal.[37]

[37]Authority’s Written Closing Submissions, [52].

What s 43(1)(a) of the LAC Act requires is a disregarding of the effect upon value arising from the Bypass proposal. It does not follow from this provision that documents of the kind objected to are necessarily irrelevant. The relevance of their contents will turn upon the purpose for which regard is had to them.

(a) They may contain factual material which is relevant to the underlying land use planning of the area. In particular, such documentation may assist in the identification of inherent characteristics of the land and its context.[38]

(b) They may demonstrate by analogy a probable conclusion to a particular developmental or planning issue affecting the claimant’s land despite the context in which they were formulated.

(c) They may be expressed in terms which permit relevant strategic planning principles to be identified despite the framework in which they were formulated.

[38]Mount Lawley Pty Ltd v Western Australian Planning Commission (No. 2) [2008] WASCA 1, [28], [100].

Resolution of the relevance (if any) of particular contents of documents formulated within the context of the Bypass proposal will thus be a question of fact turning upon the particular purpose for which reliance is placed upon them and the nature of their content. The same considerations may affect the weight that can be placed upon aspects of the documents.

Neither the effect of the Bypass proposal upon the history of planning in the area nor the effect of the acquisition upon the claimant’s land should be approached in an artificial way. In Director of Buildings and Lands v Shun Fung Ironworks Limited[39] the Privy Council had to consider whether actions which pre-dated a resumption of land could be said to be caused by the resumption. Lord Nicholls of Birkenhead observed:

The starting point for a consideration of this conundrum must be to remind oneself that, far from furthering the legislative purpose of providing fair compensation, the Crown’s contention would have the opposite effect. It would stultify fulfilment of that purpose. Coming events may cast their shadows before them, and resumption is such an event. A compensation line drawn at the place submitted by the Crown would be highly artificial, for it would have no relation to what actually happens. That cannot be a proper basis for assessing compensation for loss which is in fact sustained.[40]

[39](1995) 2 AC 111.

[40]Ibid, 136.

Likewise, in the current case the ultimate enquiry is: what was the loss of market value actually sustained as a result of the process of acquisition?

Relevance of Planning History

The planning history of the area includes the following steps to which reference was made in evidence:

(a) the strategic planning since 1959 of a western bypass or other new north-south road connection through or around Geelong;

(b) a series of investigations as to the optimal location and form of the new road link including the Geelong Regional Commission Strategy Plan 1974 and Geelong: A Road Strategy 1975;

(c) the planning scheme adoption of the Bypass alignment which includes the claimant’s land in 1980;

(d) structure planning for the Wandana area east of the Bypass by way of the Wandana/Montpellier Structure Plan 1981 as exhibited (‘the WMSP Report 1981’) and as adopted (‘the WMSP’);

(e) urban growth strategy planning for Geelong including the 1988 Geelong Regional Strategy which contemplated a growth area around Ceres and infill development to the east of the Bypass;

(f) the preparation of an urban growth strategy report by Mr Whitney’s firm Perrot Lyon Mathieson as consultants in 1996 (‘UGS report’) and the adoption of an urban growth strategy by the planning authority in modified form shortly thereafter (‘UGS’);

(g) the preparation of a Rural Land Use Review for the Greater Geelong area in 1997;

(h) the City of Greater Geelong Wandana Structure Plan 1998 (‘WSP’);

(i) the formulation in 2000 of a Municipal Strategic Statement for Geelong (‘MSS’) reflecting land use strategies based on the UGS report and articulating strategic land use principles as at the relevant date;

(j) rezoning of Wandana to the east of the Bypass in 2004 pursuant to amendment C35 to the Greater Geelong Planning Scheme (‘GGPS’);

(k) the release of a Rural Land Use Strategy in May 2007 (ie after the relevant date);

(l) the report of an independent panel enquiry into the residential rezoning of the urban growth area at Armstrong Creek.

The documentation relating to this planning history falls to be considered by reference to particular issues. It is not simply to be disregarded as fruit of the poisoned tree on the basis that the longstanding planning of Geelong has included the proposal for the Bypass as a significant component.

Nevertheless, I accept the authority’s submission that the long history of the Bypass proposal makes assessments of the ‘before’ situation difficult and, to a substantial extent, a matter of conjecture. The Bypass was regarded as giving form and definition to the urban edge of Geelong for many years prior to the relevant date. It was also regarded as maintaining more long term options for Geelong’s outward expansion than other alignments.

As Mr Whitney said, this case ‘probably more than any’ has been a very difficult one to assess because of the longstanding fact that the road reservation has been in place.

The land

The claimant’s family have held land in and around the Ceres and Geelong area since the mid 1800s. The claimant’s land was purchased by the claimants’ family in 1901. It lies to the east of the historic settlement of Ceres and south of the Barwon River. It has some southern frontage on Barrabool Road and some Barwon River frontage to the north.

The following aerial photograph (plan 2) shows the Bypass (denoted by a black line) running from north to south crossing the Barwon River and bisecting the claimant’s land (outlined in red). The aerial photograph also has highlighted upon it (by way of a yellow line) the power line easements to the west of the Bypass, which the claimant contends would constitute the boundary of feasible urban development as at the date of acquisition but for the Bypass proposal. The plan also highlights Scenic Road running generally north-south some distance to the east of the claimant’s land.

The southern portion of the claimant’s land comprises part of an elevated escarpment rising above the valley of the Barwon River. The escarpment is heavily dissected with a series of valleys separated by subsidiary ridges running generally towards the north and north-west.

The escarpment constitutes part of the eastern end of the Barrabool Hills. Map 93 E4, which follows, shows the configuration of the Barrabool Hills and the manner in which they rise over an extended area along the southern edge of the valley of the Barwon River to the north.

Map 451 A7 which follows, shows the topography of the eastern end of the Barrabool Hills which contains the claimant’s land. Amongst other things it shows the high point to the east of Scenic Road and the contour lines of a series of subsidiary ridges running to the north and north-west in the vicinity of the claimant’s land. It also shows the street layout in the ‘after’ situation generally as it currently is.

The claimant’s land lies to the west of the suburb of Highton which encroaches onto the eastern most portion of the Barrabool Hills.

Historically Highton extended only to Scenic Road, the north-south roadway, which was for many years the division between the rural shire of Barrabool and the urban development of Geelong. Scenic Road also runs between two water supply reservoirs elevated above the surrounding area. As at 1981, the WMSP prepared for the Geelong Regional Commission showed a pattern of rural ownership in accordance with the following plan.

Like Highton, the claimant’s land offers elevated views which extend in part over Geelong to Corio Bay to the north-east.

The authority contends that but for the Bypass proposal residential development would not have extended west beyond a ridge line generally in the vicinity of Scenic Road.

In fact residential rezoning has occurred and residential development is continuing in the area between Scenic Road and the Bypass.

The authority contends that this infill development would not have occurred but for the Bypass proposal.

The landform of the area in issue can be further understood by reference to two plans prepared for the purpose of outline development planning of the infill or Wandana/Montpellier area.

The landscape elements plan contained in the WMSP report shows a major ridge curving to the north-east from Barrabool Road across to a highpoint immediately to the east of Scenic Road. Between Scenic Road and Barrabool Road this ridge is relatively flat-topped. A series of narrower subsidiary ridges and substantial valleys run down to the Barwon River. The area now in issue includes part of the western-most subsidiary spur which, as the landscape elements plan demonstrates, extends to the western side of the freeway alignment.

This topography was described in the WMSP as follows:

Topographically the study area can be split into two main sectors, one north of the main ridge and one south. There is a dominant ridgeline traversing the study area from the Montpellier water basins in the north east, to the Ceres Lookout in the south west. In the northern half, drainage is north, directly into the Barwon River, and in the south, drainage is south east and east into the Highton catchment.
The study area is rolling country with some steeper slopes approaching 1:5. The northern half contains a series of 4 north-running ridges and gullies. Topography similarly varies in the south, with general south-easterly and easterly aspects. The interesting and varied topography highlights an obvious outstanding residential development potential.
The provision of services is necessarily affected by topography. Headworks capacities in existing systems are also important considerations (constraints)…

The study area analysed in the WMSP report is confined to the west by the then proposed, and now actual Bypass.

There is significant dispute between the parties as to the proper planning response to this topography in the absence of the Bypass proposal.

As can be seen in the map below, the historic township of Ceres is approximately 1.5 kilometres south-west of the claimant’s land. There is also dispute between the parties as to the desirable extent of the separation between Ceres and urban Geelong in the absence of the Bypass proposal.

The acquired land divides the claimant’s land so that approximately 15 per cent of the remaining land in the claimant’s total holding is to the east of the Geelong Bypass. Approximately 100-150 metres to the west of the Bypass and running parallel to it are two major overhead power line easements, which are 80-94 metres wide in aggregate. The easements, which are registered on title to the claimant’s land, are in favour of the State Electricity Commission, and have encumbered the land for over 40 years.[41] The aerial photograph following has been marked up to show the eastern boundary of the power line easements in yellow, the Bypass reserve in blue and Mr Whitney’s plotting of significant ridgelines in red. (It may be noted that the ridgelines of the two westernmost subsidiary spurs plotted have not been taken down to the equivalent contour line of that plotted adjacent to Scenic Road.)

[41]Claimant’s Written Opening Submissions, FN 32.

On 18 March 2004, Amendment C35 to the GGPS rezoned the claimant’s land east of the Bypass to Residential 1 Zone, and rezoned a 200 metre wide band adjacent to the Barwon River as Public Conservation and Resource Zone. The land to the west of the Bypass remained, and still remains, within a Farming Zone.

Background to the planning dispute

By order of this Court made on 28 May 2009, a conference of town planning experts was held on 16 June 2009 and a joint report was provided by them. Mr Robert Milner of CPG Australia Pty Ltd[42] attended on behalf of the claimant and Mr David Whitney of Whitney Planning[43] attended on behalf of the authority. The joint report states:
[42]Mr Robert Milner has practised as a town planner since 1977. He was a director of CPG Australia Pty Ltd at the time of this conference. When appearing as a witness in this proceeding he was Adjunct Senior Planning Councillor for CPG Australia Pty Ltd, and a director of 10 Consulting Group Pty Ltd, a Victorian planning based consultancy. His experience spans rural, regional and urban issues, including advising on projects for government agencies such as a 2008 ‘Review of the Rural and Green Wedges’ and 2009 ‘Rural living and settlement policies’.
[43]Mr David Grenfell Whitney has practiced town planning continuously since 1969 and has had continual involvement in planning matters for, but not limited to, State and local government, community groups, native title claimants and educational establishments since this time. Amongst other professional awards, he received the 2006 National Lifetime Achievement Award from the Planning Institute of Australia. Mr Whitney was also involved in the preparation of the City of Greater Geelong’s 1996 planning strategy, Urban Growth Strategy.

Background
Both planners were retained to provide various advices on the probable zoning and highest and best use of the land in the event that the Geelong Bypass had not been proposed to pass across the land. David Whitney in his report considers the implications for other proximate land in addition to the land owned by Gregor McCann. Robert Milner in his report looks only at the McCann land. His report differs in so far as it considers the development potential in the “before” and “after” situation because he comes to a conclusion that part of the land would have been zoned residential at the relevant date (the 2^nd March 2007). This is not a matter considered by David Whitney as he concluded the land would have been zoned for rural use.
David Whitney has previously provided strategic planning advice to the City of Greater Geelong in the form of the Urban Growth Strategy (1996). An important influence on his advice in this matter is a conclusion that he drew when preparing his recommendations in 1996.
Matters of agreement
At the relevant date the McCann land was located in the Rural Zone. The portion of the land located to the east of the bypass was located in a Residential 1 zone. A Public Acquisition Overlay lies over portion of the site. A Development Plan Overlay (DPO6) and two Design and Development Overlays (DDO13 & DDO14) apply to the residentially zoned land.
The land abuts the edge of urban Geelong, is proximate to the central business district; can be serviced and is set on the rolling Barabool Hills which offer a high quality amenity and outlook, attractive for residential use. The Barabool Hills are also an attractive visual landscape with an agricultural role and potential.
An important feature of the landscape and character of the area is the separation between urban Geelong and the towns and villages of the surrounding region. Both planners share the view that the integrity and perception of Ceres as a separate community and town should be protected and that the urban areas of Geelong should not extend to the township.
The presence of the Geelong Bypass has influenced planning policy and the definition of the western edge of urban Geelong for many decades. The extent of current residential development at Wandana was in part influenced by the alignment of the bypass.
Both planners agree that issues of topography, landscape, serviceability, urban containment, agriculture and land supply are relevant considerations in determining the urban boundary of Geelong.
Points of difference
Robert Milner holds the view that the power line easement and infrastructure that bisects the McCann property would have marked the western boundary of residential development, in the event that the bypass had not been proposed. He relies on the following considerations in forming this view:
·From the 1980’s there was an explicit acknowledgement by the Geelong Regional Commission that the Wandana area offered outstanding opportunities in a regional context and was highly suited to residential use,
·Geelong needed this land for residential and urban expansion as it had few other choices for growth. Armstrong Creek and the region south of Geelong were insufficiently advanced in terms of strategic and statutory planning approvals to constitute a practical alternative location.
·The land would have been zoned and developed for residential purposes regardless of the bypass. The bypass constituted a clear physical, defensible boundary to a justifiable expansion, but not the sole reason for westward growth.
·Using the power-line as an urban growth boundary would have had almost the same urban design consequence as relying on the bypass, given they are proximate to each other and on the same alignment.
·An appropriate balancing of completing [sic] considerations would be reflected in such an outcome. Those competing considerations were the suitability of the land for growth; the constraints in the locality upon protection of agricultural land and important landscapes; the limitations on servicing, and the separation of Ceres from urban Geelong.
·Studies in the 1980’s had noted the historic role of Scenic Road as a boundary but were not prepared to uphold that boundary given the need for additional land and the few significant choices in terms of other locations.
·In 1996 the City of Greater Geelong did not accept Mr Whitney’s recommendations that the limits of urban Geelong should be Scenic Road. This was a time when some uncertainty surrounded the commitment to the bypass.

David Whitney relies upon the ridgeline at Scenic Road to the east of the McCann land to mark the extent of urban development in the absence of the bypass. This was an opinion he first formed in 1996, as noted previously, and he stands by that relying on the following points.
·The high quality agricultural land should be protected,
·Development should have been contained to those catchments that drain towards Corio Bay.
·Development west of Scenic Road had no useful catchment boundary.
·The physical break between Ceres and Scenic Road protects the sense of physical identity to the two settlements.
·While accepting that the site is proximate to central Geelong and might contribute to urban consolidation policies, he can see no other answer to where the urban growth boundary might have been if it was not Scenic Road.
·There was sufficient land in the Wandana area to meet the housing requirements for the foreseeable future and therefore any land west of the bypass alignment was not warranted.
·The Council would have placed a higher priority on the protection of the agricultural land resource.

The trial

Evidence was called on the trial from three town planning witnesses: Mr Milner, Mr Clarke[44] and Ms Emons[45] on behalf of the claimant and from Mr Whitney on behalf of the authority.
[44]Mr Andrew Maurice Clarke has practised as a town planner since 1982. When appearing as a witness in this proceeding he was director of Matrix Planning Pty Ltd. He has particular experience in the area of planning and development approvals, including advising government agencies on projects such as the Princes Highway Traralgon Bypass in 2007. Since 1988 he has been regularly appointed by the Minister for Planning to sit on and chair planning panels and enquiries, including those concerned with planning scheme amendments. He is a former secretary and chair of the Australian Association of Planning Consultations (Victorian Division).
[45]Ms Sarah Kate Eamons has practiced as a town planner since 1995. When appearing as a witness in this proceeding she was director of Urbis Pty Ltd. She has particular experience in strategic planning, policy development, masterplanning, and major project facilitation, including preparing a major Urban Framework Plan and Vision for the Government of Dubai.

The Court undertook a view of the claimant’s land and its surroundings together with representatives of the parties including Mr Clarke and Mr Whitney.

Preliminary issues

The planning witnesses called at the trial agreed with the identification of underlying relevant considerations contained in the joint statement referred to above, namely topography, landscape, serviceability, urban containment, agriculture and land supply.

There was a difference in the emphasis placed upon these considerations and I have reached two preliminary conclusions as to the manner in which they are to be approached.

First, I accept the claimant’s submission that they are to be approached within the overall framework of the GGPS as it was at the relevant date, but discounting policy statements premised upon the Bypass proposal.

Secondly, it is apparent that the cases for the claimant and the authority differ in large part as to the consequences of the first factor mentioned above, namely the view taken of the topography within which the claimant’s land lies. Judgments as to the consequences of this factor inform the conclusions by the experts as to the capacity of the site to meet relevant planning objectives relating to the other factors.

It is appropriate, before going to specific planning considerations, first to summarise the evidence as to the relevant policy framework and second to summarise my conclusions as to the critical topographical opportunities and constraints identified in evidence by the witnesses.

The relevant policy framework articulates, firstly, the test of net community benefit which would have been applied to any decision to rezone the claimant’s land at or prior to the relevant date.

Secondly, it sets out a policy framework within which that test would fall to be assessed.

The planning policy framework and the test of net community benefit

The State Planning Policy Framework (‘SPPF’)[46] contained in the GGPS makes clear that the ultimate test against which a proposal for rezoning of the claimant’s land was to be measured was one of net community benefit and sustainable development. The introduction to cl 11 of the GGPS stated in part:

It is the State Government’s expectation that planning and responsible authorities will endeavour to integrate the range of policies relevant to the issues to be determined and balance conflicting objectives in favour of net community benefit and sustainable development.[47]

[46]Section 7 of the Planning and Environment Act 1987 provides for the inclusion of State standard provisions and local provisions in a planning scheme. The SPPF constituted State standard provisions.

[47]Clause 11.01. See also cl 11.02.

The planning witnesses differed essentially as to the net balance that would have been achieved if residential development extended to the power line easements in the absence of the Bypass. Each of the witnesses conceded such a proposal would have benefits and detriments.

Mr Milner summarised his opinion as to the net community benefit in oral evidence:

The factors that favour Wandana to the power line easement are there was a need for the land. Secondly, it was extremely proximate to Geelong and maximised services. Thirdly, it created a highly liveable environment and amenity. Fourthly, it had access to physical and community infrastructure. Fifthly, it suited the timing and the availability of major new land opportunities around Geelong. Sixthly, there was another manmade constraint called a power line that was there all the time and finally, that was, in my opinion, a long term, defensible boundary to prevent uncontrolled urban sprawl. On the other side of the equation, that is, the negative side of the equation, I take the view that the ridge line catchment argument is a weakened argument. It is not a pure reinforced clearly apparent case and any technical issues associated with the catchment could be addressed.
Secondly, yes, there is a loss of agricultural land and a cost associated with it but that agricultural land is of not such prime importance that it has a commanding position in terms of the argument. And finally, the other negative is, yes, there is a reduction in the non urban break but the reduction in the non-urban break is not to the point that it is critical that the party observing it after the – the works had been done would conclude there is no break at all. And it's for those reasons that I think the transmission easement would have been, sensibly, a way of addressing the growth of Greater Geelong.

Ultimately each of the witnesses undertook a similar exercise, although each approached it somewhat differently. Mr Whitney’s evidence referred back to, and adopted, a matrix analysis contained in the UGS report, listing a series of factors and giving nine potential growth areas either a tick or a cross in respect of each factor.[48]
[48]Urban Geelong, Lara, Lovely Banks, Wandana Heights, Mount Duneed/Armstrong Creek, Ocean Grove, Leopold, Drysdale/Clifton Springs, and Wallington.

Under the heading ‘Natural Environment’, Wandana was given a cross in respect of ‘high quality agricultural land should be protected from urban development and proximate land uses that constrain the use of the land for viable agricultural purposes.’ It was given a tick in respect of ‘areas of environmental sensitivity, including flora, fauna, wet lands and coastal areas should be protected from urban development.’ It was given a tick in respect of ‘urban development should be restricted in catchments which drain into sensitive eco-systems…’. It was given a tick in respect of ‘areas of extreme fire hazard, subject to flooding, or exposed to unacceptable levels of aircraft noise should not be developed for normal or medium density residential development.’ It was given a tick with respect to ‘within broadly suitable areas for residential development, priority should be given to locations with good solar access, low exposure to extreme winds and gently undulating land.’

Under the heading ‘Conservation and Heritage’, it was given a cross with respect to ‘landscapes which have aesthetic value should be protected from development which diminishes this aesthetic value.’ It was given a tick with respect to ‘residential land with high amenity is likely to be more attractive to the market and would provide an improved quality of life.’ It was given a tick with respect to ‘sites and areas of indigenous significance should be protected from inappropriate development.’

Under the heading ‘Population and Housing’, it was given a tick with respect to ‘future growth areas should be located, where possible, to maximise accessibility of existing social and community infrastructure.’

Under the heading ‘Settlements’, it was given a tick with respect to ‘the long standing planning policy of maintaining a non-urban break between Geelong and Melbourne should be upheld.’ It was given a tick with respect to ‘the long standing planning policy of maintaining non-urban breaks between settlements should be upheld to foster a separate spatial/physical identity for each of the townships outside Geelong City.’ It was given a cross with respect to ‘where possible, natural boundaries should form the edge of urban areas to assist in reducing development pressure on the fringe of the existing townships and Geelong City.’ It was given a cross with respect to ‘urban consolidation should be encouraged as an urban form that enables existing boundaries of townships to be maintained and increased densities that will justify the provision of additional services.’

Under the heading ‘Infrastructure’, it was given a cross with respect to ‘urban growth should be located so as to be economically efficient in terms of construction costs, infrastructure and service provision.’

Under the heading ‘Transport’, it was given a cross with respect to ‘future growth areas should be located to maximise accessibility to facilities and services as a crucial component of quality of life.’ It was given a tick with respect to ‘the existing and future land use needs of Avalon Airport should not be compromised in order that this economic asset can continue to benefit Greater Geelong.’

Under the heading ‘Industry/Employment’, it was given a tick with respect to ‘the future land requirements of existing industries must be protected in order that particularly the key stone industries have the opportunity to maximise operations.’ It was given a tick with respect to ‘additional industrial/employment land of high amenity needs to be provided to accommodate the changing needs of industry towards more office/showroom space, quality warehousing and manufacturing.’

As Mr Whitney accepted in cross-examination, this form of analysis begs the question of weighting of factors. The reality is that the evidence shows that either a positive or negative view of the suitability of the claimant’s land for residential development as at a particular date might have been justified by reference to the principles identified in the matrix and discussed by the planning witnesses.

This proceeding requires a judgment as to the probable view that the planning authority and in turn the hypothetical purchaser would take of the acceptability of residential development of the claimant’s land as at the relevant date.

The framework for assessment of net community benefit was further articulated by the SPPF. Clause 11.03-1 provides:

Planning is to anticipate and respond to the needs of existing and future communities through provision of zoned and serviced land for housing, employment, recreation and open space, commercial and community facilities and infrastructure. Planning is to recognise the need for, and as far as practicable contribute towards:
§ Health and safety.
§ Diversity of choice.
§ Adaptation in response to changing technology.
§ Economic viability.
§ A high standard of urban design and amenity.
§ Energy efficiency.
§ Prevention of pollution to land, water and air.
§ Protection of environmentally sensitive areas and natural resources.
§ Accessibility.
§ Land use and transport integration.

Mr Whitney properly conceded the applicability of the underlying principle that planning should anticipate and respond to the needs of existing and future communities for the provision of residential land.

He also accepted that the concept of need embraces the notion of diversity of choice.

He fundamentally disputed that the rezoning of the claimant’s land out to the power line easements would give rise to a high standard of urban design in terms of response to the site context. The claimant’s witnesses took issue with him on this.

At the relevant date, cl 12.03-2 of the SPPF further stated the following policy with respect to regional cities.

Promote the growth of regional cities and key towns on regional transport corridors as part of a ‘networked cities’ model by:
§ Planning and supporting regional centres of Geelong, Ballarat, Bendigo and the towns of the Latrobe Valley that are close to Metropolitan Melbourne as viable alternative urban locations to Metropolitan Melbourne.
§ Ensuring that infrastructure services are in place so that Geelong, Ballarat, Bendigo and the towns of the Latrobe Valley and their surrounding regions are able to take advantage of opportunities for growth that will accrue from improved linkages to Metropolitan Melbourne.
§ Encouraging planning for regional areas and cities that:
§Delivers an adequate supply of land for housing and industry to meet forecast growth.
§Ensures that new development is supported by strong transport links that provide an appropriate choice of travel.
§Limits the impact of urban development on non-urban areas and supports development in those areas that can accommodate growth.
§Protects conservation and heritage values and the surrounding natural resource base.
§Develops and reinforces the distinctive roles and character of each city.
§Fosters the development of towns around the regional cities that are on regional transport routes.

It can be seen that this policy explicitly nominates Geelong as a growth centre. It supported the delivery of an adequate supply of land for housing to meet forecast growth but also sought to limit the impact of urban development on non-urban areas and supported development in those areas that could accommodate growth. It sought to protect conservation values and reinforce the character of each city.

The claimant’s witnesses emphasised the strategic support for Geelong as an urban growth centre and the fundamental need to deliver an adequate supply of land for residential use. They noted the affirmation of Geelong as a growth centre under the State planning policy Melbourne 2030 in 2002.

Mr Whitney’s evidence accepted the need for an adequate land supply but emphasised the availability of Armstrong Creek as a growth area and the desirability of achieving urban containment by adopting a natural boundary to the western extension of Geelong along the Barrabool Hills.

Clause 14 of the GGPS also encouraged the facilitation of orderly urban development by structure planning. The evidence demonstrated the nature of structure planning undertaken for the Wandana area immediately to the east of the Bypass. Aspects of that planning address underlying physical characteristics of the land and suggest solutions to particular planning concerns.

Looked at in the broad, the SPPF contained in the GGPS would have applied to the claimant’s land as at the relevant date irrespective of the Bypass proposal. It makes clear the fundamental test of net community benefit governed rezoning proposals. It endorses the fundamental community need to anticipate and respond to the need for residential zoned and serviced land. It endorses Geelong as a growth centre and encourages planning which responds to the need for adequate land supply for housing, limits the impact of urban development on non-urban areas, protects conservation values and reinforces the character of the city.

Clause 21 of the GGPS sets out a MSS,[49] articulating policy at a local as distinct from state level. It described Geelong’s significance as deriving from the following matters:
[49]Sections 7(3) and 12A of the Planning and Environment Act 1987 required the inclusion of a MSS in the GPS after 1996. The new format planning scheme relevantly containing the matters to which I refer commenced on 27 July 2000.

Geelong’s proximity to Melbourne is a key strength for the City in positioning itself for the 21^st century.
The heart of Geelong, located on Corio Bay and the Barwon River, is 75 kilometres south-west of Melbourne. This places Geelong only an hour away by the Princes Freeway and a similar time by train.
Geelong’s significance derives from:
§ Its coastal location with deep water port facilities.
§ Its proximity and accessibility to Avalon Airport.
§ Proximity to Melbourne and situation within the sphere of metropolitan influence.
§ Good infrastructure connections to Melbourne (by the Princes Freeway and rail).
§ Its strength as a regional and national industrial and business location.
§ Its role as a government, administrative, educational, legal and medical service centre for the wider South West of Victoria, extending to the South Australian border at Mount Gambier.
§ Proximity and ease of access to attractive coastal locations and national parks.
§ An attractive regional lifestyle; and
§ Well developed sporting facilities and the host of a national competition AFL team.

Amongst other things it described the different areas of Geelong. It also identified projected growth areas.

Urban Geelong is comprised of:
§ the Central Activities Area;
§ the inner suburbs of Geelong, Geelong West, South and East Geelong, Newtown, Manifold Heights, Rippleside and Drumcondra;
§ the northern and north-western suburbs of North Geelong, Hamlyn Heights, Herne Hill, Norlane, Corio, Bell Post Hill and Bell Park;
§ the southern and south-western suburbs of Highton, Wandana Heights, Waurn Ponds, Grovedale and Belmont; and
§ the south-eastern suburbs of Newcomb, St Albans Park and Whittington.

This projection was made in a context which included the Bypass.

The MSS recorded an ongoing decline in household sizes throughout the municipality and especially in urban Geelong. It projected that the city would grow by 41,000 to 71,000 persons between 1996 and 2020.

It described the nature and built environment of Geelong and stated in part that protection of the rural and coastal landscapes, and maintenance of the non-urban break between Geelong and Melbourne and between settlements within the municipality, are primary goals of the City of Greater Geelong. It stated the following policies with respect to settlements:

§ The long standing planning policy of maintaining a non-urban break between Geelong and Melbourne should be upheld.
§ The long standing policy of maintaining non-urban breaks between settlements should be upheld to foster a sense of spatial/physical identity for each of the townships outside urban Geelong.
§ Where possible, natural boundaries should form the edge of urban areas to assist in reducing development pressure on the fringe of existing townships and urban Geelong.
§ Urban consolidation should be encouraged to enable existing boundaries of the urban area and townships to be maintained and provide for increased densities that will not only justify the provision of additional services but also utilise surplus capacity in existing services.
§ Each township outside urban Geelong should have a definable urban form in terms of the scale of buildings permitted to provide some certainty to existing and future residents.
§ As the role of each township changes according to variations in population profile, appropriate local services need to be provided.[50]

[50]Clause 21.05.

I accept that the general principles stated in this policy would have been recognised as at the relevant date irrespective of the Bypass proposal. They articulate more fully the notions underlying the issues of landscape and urban containment to which I have referred.

The MSS also stated the following policy principles with respect to rural areas:

§ High quality agricultural land will be protected from urban development, as should inappropriate proximate land uses that constrain the use of the land for viable agricultural purposes.
§ Rural land use and subdivision will be based upon land capability assessment.[51]

[51]Clause 21.05.

Clause 21.08 of the MSS was directed to the issue of urban growth. It stated by way of background:

From its early settlement in the 1830’s urban Geelong has undergone steady expansion so that it now covers approximately 325km2 of the total municipal area.
Market preferences initially led to development in the south and east of Geelong away from the concentrated industrial locations, into areas of more interesting topography, with proximity to the coast and where land was cheaper to service. At the same time, the Bellarine Peninsula offered an alternative place for retirement as well as being an attractive living environment for those working in Geelong.
The variance of settlement types – coastal and rural townships and hamlets, inner city living, the suburbs, fringe development and rural residential living easily satisfies locational demand which Council seeks to maintain. Regardless of which settlement people reside in there is throughout the municipality a feeling that the country and coast are always close at hand. And this is a quality the Geelong community wishes to retain.
With a projected increase of 71,000 people, current land availability and future land requirements is one of the critical factors in determining the growth direction. The City of Greater Geelong Residential Lot Supply Report, 1995, surveyed all vacant broad-hectare residential and future urban zoned land and all vacant individual residential lots.
An assessment of the lot supply in 1995 against dwelling approvals estimated that the number of years supply of vacant zoned residential land available for development was 17 to 23 years (the former figure based on a take-up rate of 10 dwellings per hectare and the later on 15 dwellings per hectare).
Calculations using the lot supply data and the projected population can be used to determine the amount of land that will be required to be zoned for residential use in the future.
The projected population of 71,000 translates into 26,018 new households. On the basis of 10 dwellings per hectare, 14,537 households can be accommodated within existing zoned areas leaving a balance of 11,481 households to be accommodated within new growth areas. If development proceeds at 15 dwellings per hectare (Council’s preferred density), then the figures substantially change to requiring only 6,025 lots to be created additional to the existing zonings.[52]

[52]Clause 21.08.

It then referred to the Council’s UGS of 1996 and the factors governing the management of urban growth areas.

Council has in place a Strategy (Urban Growth Strategy 1996) for directing and managing the expected urban growth. Council’s Strategy nominates the most suitable areas for growth to the year 2020 based on the following factors:
§ Maintaining a relatively compact urban form and rejecting uncontrolled urban sprawl
§ Maintaining non-urban breaks between Geelong and Melbourne and between settlements within Greater Geelong
§ Recognising the amenity of the Bellarine Peninsula and its role as a tourist drawcard, and a residential and retirement location
§ Ensuring that the environment is not detrimentally affected by uncontrolled urban sprawl
§ Retention of valuable agricultural land
§ Maintaining the Bellarine Peninsula as a predominantly rural area
§ Maximising infrastructure efficiencies – both social and physical (transport and hydraulic services)
§ Providing a range of future development fronts to ensure that locational preferences and consumer choice can be satisfied
§ Accounting for existing natural and man-made constraints[53]

[53]Clause 12.08.

Once again, I accept that the factors identified are not the product of the Bypass proposal and are factors of general relevance which a hypothetical purchaser would have confronted irrespective of the Bypass proposal as at the relevant date. They reflect and amplify the policy imperatives identified in the SPPF. They articulate more fully the underlying considerations applied by the planning witnesses to the facts in issue.

The MSS articulated the specific objective of directing urban growth to selected locations.

The MSS went on to state:

Council’s urban growth directions include:
§ Designation of Stage 1 of Armstrongs Creek/Mount Duneed as the primary growth corridor for future urban growth.
§ Designation of Wandana Heights for limited future urban growth;
§ On-going consolidation within Urban Geelong;
§ Continued growth of townships in accordance with the existing structure plans;
§ Future urban growth on the Bellarine Peninsula focussed at Ocean Grove and Drysdale/Clifton Springs;
§ Investigating opportunities of future urban growth at Lara (subject to resolution of physical and infrastructure constraints; and
§ Limited future extension to the Leopold township.
The Armstrongs Creek/Mt Duneed corridor is the primary urban growth direction of Geelong. Stage 1 of the corridor will accommodate the bulk of Geelong’s long term growth. It is relatively close to the centre of Geelong, is immediately adjacent to the Melbourne-Warrnambool railway line and possibly railway station providing excellent public transport access to Geelong and Melbourne, and the SurfCoast and Princes Highway. The area is adjacent to existing development which means that servicing can be incremental in line with the pace of development – a major advantage. Gently undulating with minimal environmental constraints, sensitive subdivision would provide future good quality residential living well located to all major services and facilities in Geelong.
Wandana Heights is a limited growth location on the western edge of urban Geelong. The area is identified in the Growth Strategy and will provide locational choice and an alternative though limited development front to Armstrongs Creek/Mt Duneed.[54]

[54]Clause 21.08.

The real issue in this case is the assessment of those considerations. I accept the authority’s submission that the fact that the claimant’s land might provide a ‘premium’ residential product and is geographically proximate to the CBD would also need to be weighed against:

(a) policies which sought to protect the landscape qualities of the Barrabool Hills;

(b) policies to the effect that natural features should form planning boundaries;

(c) policies which sought to protect agricultural land from urban development; and

(d) policies seeking to enforce a strategic break between Geelong and settlements such as Ceres.

I shall deal with each of these issues in turn before coming to other incidental matters, namely:

(a) services;

(b) the appropriateness of the power lines as a boundary;

(c) the Council’s likely position;

(d) the status of the claimant’s land at the relevant date; and

(e) principal criticisms of the witnesses.

The landscape of the Barrabool Hills

I accept that planning policy prior to, and as at the relevant date, emphasised the importance of Geelong’s landscape context and the attractive juxtaposition between ‘city, country, coast’.

Likewise, I accept Mr Whitney’s view that the claimant’s land forms part of a visually prominent landscape feature when viewed from the north and is also a component of the view to the north-east from the vicinity of Barrabool Road between Ceres and Highton. It is a view with qualities evoked historically by Eugene von Guerard in one of the most famous depictions of the landscape of the area.

I further accept that residential development would impact adversely to some extent upon the aesthetic qualities of this landscape.

This said, any major expansion of urban Geelong must necessarily have intruded into the adjoining countryside as in fact the Armstrong Creek proposal did.

I accept the view of the claimant’s witnesses that the real issue is whether extension to the power line easements would result in an unacceptable impact on the landscape. For the reasons I have set out with respect to my conclusions in respect of the topography of the area, I do not accept the residential rezoning of the claimant’s land would have been refused for landscape reasons. In terms of extent of impact, it would have resulted in a further partial incursion onto the eastern end of the Barrabool Hills. In effect, it would be an extension of Highton which sits on the Geelong end of the Barrabool Hills. The bulk of the Barrabool Hills would be unaffected. As Mr Milner said, the development would be at the edge of the Barrabool Hills only.

I also accept Mr Clarke’s view that the landscape in issue is a modified one which has been extensively cleared. It is not unattractive but it is not pristine.

Further, as Ms Emons said, the landscape consists of rolling hills which break up view lines from different perspectives.

In terms of logical boundaries, Mr Whitney postulates a landscape unit defined by the main east-west ridge of the Barrabool Hills and a subsidiary ridgeline running north-west below Scenic Road.[63] I do not accept the subsidiary ridgeline is a significant divider in the landscape. I do not accept that it sensibly defines a distinct separate landscape unit.
[63]See the aerial photograph reproduced at [71]. The relevant ridgelines are shown in red.

Furthermore, in terms of degree of impact I accept that the visual impact of urban development of the claimant’s land was capable of amelioration through design and development measures. Despite Mr Whitney’s criticisms of it, I do not accept the existing development of Wandana demonstrates that residential development would have been unacceptable but for the Bypass.

The WMSP took the position that there were satisfactory means available to minimise visual degradation resulting from residential development in that portion of Wandana with which it was concerned. It included a Development Scheme Example Plan which depicted how design principles could be implemented, including the provision of extensive linked open space along the Barwon River, keeping roads off ridge tops, providing adequate buffers between the freeway reserve and residential development, providing public open space on prominent knolls, providing walkways on ridge tops, and identifying a conceptual state primary school and shop location. Other design measures were further discussed under the heading of ‘Visual Intrusion’ which was said to be a ‘formost [sic] consideration throughout the investigation of development options for the study area.’

The UGS report itself stated:

Urban development has already crept over the ridgeline north of the Barwon and Moorabool Rivers. Whilst the outlook created is not one of rolling paddocks as with the Barrabool Hills, the urban development is shielded in the most part by substantial plantings of trees that have now reached maturity. A similar outlook could be expected should the Wandana Heights area proceed.[64]

I accept this view.

[64]UGS Report, 35.

Likewise, the WSP ultimately formulated development principles appropriate to regulating urban development in an undulating and highly visible landscape of a distinctive character.

In turn, the GGPS imposed development plan overlay and design and development overlay requirements addressing detailed components of an appropriate urban design framework for the Wandana area as part of the amendment which rezoned that area for residential development.

I accept the evidence of the claimant’s witnesses that the impact of hypothetical residential development on the long distance views of the Barrabool Hills from areas to the north would have been regarded as acceptable, subject to appropriate design and development controls as at the relevant date. Views from the vicinity of the Barwon River would also have been regarded as acceptable provided their impact was addressed by a buffer zone, the control of development on prominent ridges, the provision of an open space framework and the control of design and development as postulated by Mr Milner and Ms Emons. As Ms Emons said, the design exercise would have required input from a landscape architect.

There would be some impact on views to the north-east from Barrabool Road, but these would sit within a substantial view shed and again would not be unacceptable. Their impact would be capable of being addressed by a combination of urban design and development controls.

In summary, I accept that residential development to the power line easements would materially modify the landscape and that it would potentially impact adversely upon the aesthetically attractive aspects of that landscape. I accept that the concerns identified in the UGS report and elaborated in evidence by Mr Whitney are genuine ones. Nevertheless, I am not persuaded that if weighed against the case of need as at the relevant date, they would lead to a conclusion that residential rezoning of Wandana would result in net community detriment. I prefer the view of the claimant’s witnesses that, subject to appropriate design and development controls, development would be regarded as generating net community benefit.

Natural boundaries

In turn, I do not accept the premise of Mr Whitney’s fundamental argument which he articulated as follows:

In itself, the topography of the subject properties is no barrier to their development, however topography defines catchments which make useful planning boundaries. In the ‘before’ situation, once development extends west of the ridgeline, there is no obvious or useful catchment boundary that would assist in determining an urban growth boundary. As such development would engulf the historic settlement of Ceres in contravention of council’s policy to maintain non-urban breaks between settlements.

It was an explicit policy of the MSS that where possible natural boundaries should form the edge of urban areas to assist in reducing development pressure on the fringe of existing townships and urban Geelong.

The use of natural boundaries to define the edges of urban areas was also identified as a strategy for maintaining non-urban breaks between existing settlements.

The adoption of natural boundaries was thus embraced as a mechanism for containing urban sprawl rather than as an end in itself.

Manmade features such as the Bypass may have a similar function. As Mr Milner pointed out, the UGS itself describes the Bypass as a ‘natural boundary’.

The conclusions I have expressed concerning topography mean that I do not accept the subsidiary ridgeline for which Mr Whitney contends was a natural boundary clearly demarcating a landscape unit.

Likewise, I do not accept that the ‘red road’ shown on the 1959 planning scheme as a potential ring road alignment traversing the slope of the escarpment constituted a satisfactory boundary. Although in fairness it was, as I understand it, put forward during the course of the hearing by counsel for the authority as doing no more than exemplifying a possible limit to urban growth adopting a form responsive to the landscape.

In turn, the power line easements do not respond directly to the topography but offer the possibility of a clear boundary to development. They are approximately 90 metres wide. The power lines are clearly legible in terms of purpose and they constitute long term infrastructure.

Mr Whitney agreed in cross-examination that it would be easy to design a firm urban edge into the landscape without reliance on the Bypass reservation. Further, the visual treatment of the edge of development is not necessarily coincidental with the planning scheme identification of the zone edge.

I prefer the view of the claimant’s witnesses that the preference for natural boundaries as a means of defining limits of urban growth should not be regarded as definitive of the fundamental issues in this case.

The better view is that a firm urban edge could be designed within the boundary defined by the power line easements.

Further, as Ms Emons said, the entrenchment of the boundary would be dependent upon appropriate planning scheme implementation.

Agricultural land

The planning authority’s Rural Land Use Strategy 1997 which was in force at the relevant date designates the Barrabool Hills as ‘high’ (level 2) land quality. There was no ‘very high’ (level 1) land within the municipality.

The strategy identified the protection of agricultural resources for future generations as a key strategic objective for Geelong. Nevertheless, I accept Mr Milner’s view that that objective fell to be balanced against other strategic objectives (including those favouring appropriate urban development adequate to accommodate residential need).

The urban development of the claimant’s land would lead to the loss of relatively high quality agricultural land. Once again, however, that loss would be directly comparable to that envisaged at Armstrong Creek at the relevant date. Much of the land at Armstrong Creek was similarly classified and subject to the same strategic objectives. As Mr Milner observed, if all such land were protected for agricultural use, Geelong had no possibility of extension by way of an urban growth corridor.

No substantial extension of Geelong to the south or south-west could occur without such a loss.

It should be noted that what was in issue was not the extension of residential use on substandard rural allotments but the planned extension of the urban area for residential use.

In my view, the evidence of the claimant’s witnesses is to be preferred and Mr Milner and Mr Clarke are correct in the view that the loss of agricultural land would not have been regarded as leading to net community detriment if residential development of it were otherwise appropriate.

The break between Geelong and Ceres

Mr Whitney explained, and I accept, that ideally the break between Geelong and Ceres should be such as to achieve a sense of arrival and departure in the two places.

I also accept that residential zoning of the Wandana area between Scenic Road and the power line easements would materially reduce the non-urban break between Geelong and Ceres.

In turn, I accept that this was a factor legitimately regarded by the UGS report and Mr Whitney as contributing to the assessment of the landscape implications of such a zoning.

Nevertheless, I prefer the claimant’s opinion evidence that the extension of development to the power line easements would still have left a material break between Geelong and Ceres. That break is emphasised by the dramatically incised landscape and the broad acre nature of farming within the break.

The view undertaken by the Court confirmed that urban development on and beyond Scenic Road can be seen from Ceres. The question is one of degree of intrusion into the intervening space.

As Ms Emons observed, it should also be noted that development extending along the major ridgeline identified by Mr Whitney would advance almost as close to Ceres on Barrabool Road as it would if the power line easements were treated as the appropriate boundary.

Mr Whitney agreed in cross-examination that the objective of a non-urban break did not mean that you should not be able to see another settlement from an existing settlement. He also conceded that the nature of the non-urban break between Ceres and the power line easements would not be a reason for development of the claimant’s land to be denied.

I prefer the view of the claimant’s witnesses that this consideration would not have been regarded as giving rise to net community detriment when weighed against the factors favouring residential development and, in particular, the case concerning need.

Incidental matters
Services

The area in question sits below the reservoirs on Scenic Road and would have required connection to urban sewerage, water supply and other services. Mr Milner gave evidence that drainage could be managed by relatively well understood techniques of the type envisaged by the WMPS and the adopted WSP.

As Mr Milner said, the drainage and servicing of Wandana between Scenic Road and the Bypass demonstrates that servicing to the power line easements was feasible and would have been regarded as practicable at the relevant date.

Advice given by Barwon Water in 2007 as to the servicing situation east and west of the Bypass does not sensibly detract from this conclusion.

The joint report contains agreement that the land was capable of being serviced. This agreement was reached on the basis that all utility services could be brought on to the land at the developer’s cost.

Mr Whitney did not ultimately press this issue in his oral evidence. He conceded that the servicing of the land at the relevant date was an engineering question and not an insurmountable one.

For completeness I should add that I accept the evidence of Mr Clarke and Ms Emons that one would expect residential development of Wandana to be serviced by bus and that the structure and subdivisional planning would facilitate access to bus stops.

The power lines as a boundary

I accept that the power line easements swing to the east, south of Barrabool Road and run through the extension of Greater Geelong south of the Barwon River. They have not proved a significant divider of urban Geelong.

Further, I accept that the instances of the use of power lines as zone boundaries cited by Ms Emons are not directly comparable to the present case.

Nevertheless, I also accept that the power line easements have the potential to be a ‘defensible’ boundary to further urban extension. Development beyond them would materially impact upon the residential separation between Greater Geelong and Ceres. In this sense they demarcate a boundary.

I do not accept that they are necessarily inappropriate as a boundary delineation. They do constitute a continuous line necessarily kept free from other developments.

They also constitute a line readily identifiable cadastrally.

I prefer the view of the claimant’s witnesses that the easements constituted a potentially sensible urban boundary. I accept Mr Milner’s evidence that urban development could be controlled by a boundary at the power line easements.

The Council’s likely position

Evidence was adduced from Ms Emons in cross-examination regarding a statement in December 2009 by the Senior Strategic Planner employed by the City of Greater Geelong over the previous 20 years. The evidence was that the planner stated that if the Bypass had not proceeded urban growth would have stopped at Scenic Road and that there had always been a strong Council line about holding the rural corridor west of the city ‘but not clearly defined and strongly in force until now, with the Bypass being that line’. I do not accept that any substantial weight can be given to this statement as to the probable situation at the relevant date in the absence of the Bypass. The basis of this statement was not explained. It was open to the authority to call the planner as a witness but it did not do so. I could not prefer the hearsay opinion to those which have been advanced and tested in evidence before me. None of the planning witnesses who gave evidence, including Mr Whitney, expressed the view that Scenic Road itself was the appropriate boundary for urban growth.

Further, I do not accept that the evidence satisfactorily shows what the hypothetical purchaser would have been told upon enquiry to the planning authority at the relevant date, if history had not included the Bypass proposal. In particular, it is not clear how the strategic planner’s understanding of historic events underpinned his opinion. If however the statement were to be accepted as evidence of what the strategic planner would have said at or about the relevant date to a hypothetical purchaser in the absence of the Bypass proposal then it still remains of little weight. It could be no more than a personal opinion. It was not a statement from the authority itself and if it were made by the individual in the relevant hypothetical circumstances, I do not accept that a hypothetical purchaser having the benefit of knowledge of all the matters put in evidence before me would regard it as determinative of the planning merits of the development potential of the claimant’s land.

The status of the land as at the relevant date

In assessing the probabilities concerning the status of the land at the relevant date it is appropriate to apply the principles articulated by Wells J in Crouch v Minister for Works:[65]

Where a court finds facts in issue in a civil case it is empowered to act, of course, on the balance of probabilities, but where the circumstances of a case yield only probabilities to a court’s evaluation, leaving open doubts and misgivings, a valuer must, when dealing with the same circumstances, reflect, in his reasoning, not only the probabilities, but also the doubts and misgivings. In short, if the purchaser-developer judges that planning approval is virtually certain, the price that he will pay will be higher than that which he will pay if planning approval is no more than probable, and is attended by a real risk that it will be refused.
In my judgment, therefore, a correct application of the Spencer’s case[66] test implies that, if the valuer is proceeding on the basis of a hypothetical subdivision contemplated by the willing, but not anxious, buyer and seller alike, the risk that approval of the subdivision would have been refused must be taken into account in determining the bargain price, and cannot be eliminated by attributing to the valuer the liberty to treat as certain that which, in truth and in deed, would have been no more than probable. [67]

[65](1976) 13 SASR 553.

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

[67]Crouch v Minister for Works (1976) 13 SASR 553, 560-561.

It follows from the conclusions I have reached concerning need and demand, that I accept that as at the relevant date the hypothetical purchaser would regard the claimant’s land (in the absence of the Bypass proposal) as ripe for residential rezoning. By this I mean having good prospects of residential rezoning within two years. I accept that the hypothetical purchaser would have anticipated the rezoning process would have required this period of time. I also accept that there would be some risk (which in all the circumstances I assess at 20 per cent) that the rezoning might not occur for five years.

I rely particularly on the evidence of Mr Clarke and Ms Emons in this regard. I prefer Mr Clarke’s evidence as to a number of timing considerations because of his direct personal involvement in the Armstrong Creek growth area rezoning process.

Nevertheless, I have reached the view that the evidence (particularly as to the emergent need by the relevant date) does not enable a confident conclusion that, absent the Bypass proposal, the claimant’s land would have been rezoned residential at an earlier date.

It is the change in the factor of need which I accept would have led to a rejection of the position adopted in the UGS report by the relevant date in the absence of the Bypass proposal, although I accept other factors such as State policy support for Geelong as a growth centre and the increased emphasis on urban consolidation referred to in evidence would also have assisted.

The claimant’s witnesses support the view that, but for the Bypass, the whole of the claimant’s land up to the power line easements would have been zoned for residential purposes prior to the relevant date. I am not persuaded that the growing case as to need would have led to this result prior to the relevant date. I prefer Mr Whitney’s view that in the absence of the Bypass the position taken in the UGS report would have been accepted in 1996. Thereafter, the owner would have been required, in effect, to establish a material change of circumstances from that forming the basis of the UGS report. I am not persuaded that the factual basis for such a case would have been established at a date enabling rezoning to be achieved before the relevant date. But I am satisfied that by the relevant date the probabilities are clear.

I also accept Mr Clarke’s view that one or two years would be necessary for the rezoning process. As against this view (and assuming the land were to be rezoned for residential purposes), the authority pointed to the relatively slow process of rezoning Wandana and Armstrong Creek.

In my view, by 2007 there was a strong case to expedite rezoning of the claimant’s land and the hypothetical purchaser would have confidently expected that case would be accepted by the planning authority.

I further accept Mr Clarke’s view that in the absence of the Bypass it is more probable than not that the planning authority would have undertaken relevant structure planning prior to 2007. Such structure planning was in fact substantially undertaken with respect to Wandana and despite the fact that it occurred in the context of the Bypass proposal, I am not persuaded it would not have been undertaken in the absence of the Bypass proposal.

As Mr Whitney conceded in terms of study area and critical mass there is not a great deal of difference between Wandana to the east of the Bypass and Wandana to the power line easements. In my view, structure planning prior to the relevant date would have occurred whether or not the Bypass proposal had proceeded and, in turn, it is reasonable to regard the claimant’s land as a whole as ripe for residential rezoning as at the relevant date. Residential development extended to Scenic Road by 1970. Two structure plans were developed for Wandana in the subsequent 37 years, first in 1981 and then in 1998. The probability is that the potential for structure planning would have been explored prior to the relevant date in the absence of the Bypass despite the terms of the UGS report. The impetus for the structure planning would have been the emergent need for rezoned residential land.

Nevertheless, as Mr Clarke acknowledged, there is always a risk that the rezoning process may be delayed by unforeseen events and it is for this reason that I have allowed a 20 per cent risk margin that the rezoning process might be delayed for five years.

I should add for completeness that I accept Mr Clarke’s evidence that at about the relevant date the Lara structure plan was not regarded as a prerequisite to residential rezoning of Lara. A planning scheme amendment to facilitate residential growth was considered before the Lara structure plan was adopted, simply because of the chronic shortage of appropriate land in Greater Geelong. Mr Clarke’s evidence is that in the hypothetical situation of no Bypass, there would have been a sense of urgency in the planning authority by the early to mid 2000s concerning residential rezonings, because it was anticipated that the Armstrong Creek rezoning was going to take some time to come on. In turn, I am of the view that, even if I am incorrect in assuming that structure planning would have been substantially completed by the relevant date, it would not have materially delayed residential rezoning of the claimant’s land.

I turn then to the residential zoning of Wandana (including part of the claimant’s land) which in fact occurred prior to the relevant date. I am satisfied that this occurred in the specific context of the Bypass proposal.

I am satisfied on the balance of probabilities that the claimant’s land east of the Bypass achieved an increase in value prior to the relevant date as a result of the Bypass proposal. If a rezoning had been pursued by the claimant following the UGS report, the terms of that report would (in the absence of the Bypass proposal) have meant it would have been necessary for the claimant to persuade both the planning authority and, in all probability, an independent panel that the land should be rezoned. I am satisfied that the probabilities are that the claimant could not have got around the UGS report until the case as to need changed. In other words, Mr Whitney’s view would have been preferred until a change of circumstances occurred. I do not accept the view of the claimant’s witnesses that a rezoning up to the power line easements would have occurred prior to the relevant date.

Conversely, as I have said, I am satisfied that by the relevant date the whole of the claimant’s land that extended to the power line easements was ripe for residential development.

This reflects the primary approach I was encouraged to take by counsel for the claimants in final address, namely to treat the land as undeveloped greenfields land and then apply the competing considerations favouring rezoning to it.

Ultimately, the claimant’s case was in effect put on two bases. Either the land as a whole should be regarded as ripe for residential rezoning at the relevant date or it should be regarded as having already achieved rezoning for residential purposes as a whole (up to the power line easements).

Conversely, as I have said, the authority’s case was that, but for the Bypass, the claimant’s land would have remained rural. The conclusion I have reached is in effect an intermediate one between the opinions expressed orally by the claimant’s witnesses on the one hand and the authority’s witness, Mr Whitney, on the other.

The correct position in my view is that adopted by Ms Emons written report that there is a likelihood that residential development in this area ‘would eventually have been permitted.’ I have reached that conclusion on the basis of the factors identified by them and arrived at a view as to the most probable hypothetical outcome as at the relevant date.

Principal criticisms of the witnesses

A number of criticisms were made of the claimant’s witnesses and, of course, of Mr Whitney. I have already explained why I substantially prefer the ultimate conclusions of the claimant’s witnesses to those of Mr Whitney. I have done so on an issue by issue basis.

Nevertheless it is appropriate to record three general criticisms of the claimant’s witnesses. Mr Milner was criticised for, among other things, forming a view as to the probable extension of urban growth to the power line easements, on the assumption that urban growth had already occurred up to the Bypass. There are difficulties in precisely encapsulating the hypothetical task in issue and I accept Mr Milner did not always disentangle the conceptual framework of his evidence satisfactorily. Nevertheless, I have accepted critical components of Mr Milner’s evidence relating to particular considerations. Ultimately, I am also satisfied that it is Mr Milner’s view that but for the Bypass proposal residential growth would have extended to the power line easement.

Mr Clarke changed the views he expressed in an initial letter of advice to those subsequently expressed in his reports and in evidence before me (there was also criticism of differences between the terms of his reports). I accept that this occurred by reason of an initial failure to properly confront the hypothetical assumptions he was required to make and by an initial misunderstanding of the planning history of the area. Ultimately, his position was well articulated and I have preferred it on a number of significant evidentiary issues. Nevertheless, variation in Mr Clarke’s views tends to corroborate the proposition that different conclusions are reasonably open with respect to the ultimate issues in the case.

Detailed criticisms were also made of discrepancies between Ms Emons’ report and the extent and tenor of her oral evidence. I am not persuaded Ms Emons’ evidence was other than honest. Insofar as its detailed substance is concerned, I have indicated those significant matters on which I have accepted her view. Likewise, the fact that upon examination of the strategic history of Greater Geelong, Ms Emons discerned an underlying tension between competing pressures on the one hand for Geelong’s urban expansion and on the other hand for protection of the area’s environmental and agricultural assets, does not in my view invalidate her conclusions. I accept that she derived conclusions from the planning history of the area which were not invalidated by the role that the Bypass proposal played in that history.

For completeness I should add that Mr Whitney was criticised on the basis that his reliance on the UGS report did not take adequate account of the fact that the UGS was adopted in modified form and more particularly in a form which endorsed the development at Wandana. In my view, Mr Whitney was entitled to give weight to the independent work done by his firm. Further, it is apparent that the modification to the UGS report was in significant part responsive to the Bypass proposal and the characterisation of Wandana as an ‘infill’ area.

Conclusion

The answer to the preliminary questions is as follows:

1.For the purposes of assessing market value of the land in the ‘before’ situation under the Land Acquisition and Compensation Act 1986 (Vic), what would have been the zoning of the land or any part of it at the acquisition date?
Answer: the whole of the land would have been zoned Rural without any public purposes overlay for the purpose of the Bypass.
2.If the answer to question (1) is that the land, or any part of it, would not have been zoned for residential use at the acquisition date:
iWhat were the prospects of the land, or such part of it, being re-zoned for such use at any time after the acquisition date?
iiIf there was any such prospect of the land being re-zoned for residential use, when would such re-zoning be anticipated to occur?

Answer: the land east of the power line easements was ripe for residential rezoning within two years subject to a residual risk of 20 per cent that this would not occur for a period of five years and subject to the provision of a riverside buffer zoned Public Reserve and Conservation Zone.

[2011] VSC 96

22 March 2011