Noubia Pty Limited v Coffs Harbour City Council No 3

[2023] NSWLEC 36

Land and Environment Court

New South Wales

Medium Neutral Citation:

Noubia Pty Limited v Coffs Harbour City Council No 3 [2023] NSWLEC 36

Hearing dates:

29, 30, 31 March 2021, 1 April 2021, 25 November 2021, 14, 15, 16 December 2022

Date of orders:

31 March 2023

Decision date:

31 March 2023

Jurisdiction:

Class 4

Before:

Pain J

Decision:

See below in [255]-[257]

Catchwords:

CIVIL ENFORCEMENT – amount of compensation payable for land transferred to local council in 2007 pursuant to condition of development consent – condition requires compensation to be determined in accordance with Land Acquisition (Just Terms Compensation) Act 1991 (NSW) – identification of public purpose – decrease in value of land transferred to local council as result of public purpose – hypothetical purchaser likely to consider hypothetical residential subdivision would be approved – appropriate valuation methodology – compensation awarded in amount sought by applicant

Legislation Cited:

Land Acquisition (Just Terms Compensation) Act 1991 (NSW), ss 54, 55, 56

Cases Cited:

Boland v Yates Property Corp Pty Ltd (1999) 74 ALJR 209Coffs Harbour City Council v Noubia Pty Ltd (2020) 246 LGERA 56; [2020] NSWCA 142

Coffs Harbour City Council v Noubia Pty Limited [2022] NSWCA 32

Noubia Pty Ltd v Coffs Harbour City Council [2019] NSWLEC 113

Noubia Pty Limited v Coffs Harbour City Council (No 2) [2021] NSWLEC 142

Texts Cited:

Compensation for Economic Loss (2022) 96 ALJ 832

Category:

Principal judgment

Parties:

Noubia Pty Limited (Applicant)
Coffs Harbour City Council (Respondent)

Representation:

Counsel:
R Lancaster SC with H Irish (Applicant)
I Hemmings SC with A Pearman (Respondent)

Solicitors:
Pikes & Verekers Lawyers (Applicant)
Wilshire Webb Staunton Beattie Lawyers (Respondent)

File Number(s):

2017/83167

Condition 1

Brief history of Council planning for North Boambee Valley, Noubia’s 2003 development application

History of proceedings

Summary of issues

Evidence

Issue 1: whether the statutory disregard in s 56(1)(a) can be relied upon by Noubia

Sub-issue 1(a) – identification of the public purpose

Evidence relied on by Noubia

Evidence relied on by Council

Council’s submissions

Noubia’s submissions

Consideration of Sub-issue 1(a)

Sub-issue 1(b) – whether the decrease in value of Lot 94 was caused by the carrying out of the public purpose

Evidence relied on by the Council

Council’s submissions

Noubia’s submissions

Consideration of Sub-issue 1(b)

Issue 2: likelihood of development consent being granted in 2003 for 32 residential lots (alternative hypothetical subdivision) on Lot 94

Can the Council raise the adequacy of riparian corridor width at all?

Finding on riparian corridor issue

Noubia’s objection to part of town planning evidence of Ms Brown upheld

Town planning evidence

Noubia’s submissions

Council’s submissions

Consideration of Issue 2 likelihood of obtaining development consent

Issue 3 – valuation of Lot 94 for residential use

First valuation JER dated 28 February 2019 and second valuation JER dated 19 March 2021

Third valuation JER

Mr Maher’s oral evidence before Sheahan J in 2019

Mr Davis’ oral evidence before Sheahan J in 2019

Mr Maher’s oral evidence in 2021

Mr Davis’ oral evidence in 2021

Noubia’s submissions

Council’s submissions

Consideration of Issue 3

Conclusion on Issue 3

Costs

Orders

Judgment

1. The Applicant Noubia Pty Limited (Noubia) seeks compensation for the value of land transferred to Coffs Harbour City Council (the Council) on 18 May 2007 under the terms of a development consent (the Consent) granted by the Council on 11 April 2003. The land became known as Lot 94 in Deposited Plan 1111430 from the date of transfer to the Council. These Class 4 proceedings seek to enforce a development consent condition which calls up the determination of compensation for the value of Lot 94 in accordance with the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (JT Act). The date of transfer of Lot 94 to the Council was 18 May 2007. The parties agreed issues in relation to other lots formerly in dispute in the course of the proceedings and these do not need to be further considered.

2. The relevant sections of the JT Act state:

Division 4 Determination of amount of compensation

54 Entitlement to just compensation

(1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land.

…

55 Relevant matters to be considered in determining amount of compensation

In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division)—

(a) the market value of the land on the date of its acquisition,

…

(f)  any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

56   Market value

(1)  In this Act—

market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid)—

(a)  any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired…

…

Condition 1

3. The Consent was granted subject to Condition 1 inter alia on 11 April 2003. The current applicable terms of Condition 1 were finalised pursuant to a modification application granted on or about 25 September 2006. Since 25 September 2006, Condition 1 of the Consent provided:

•   The applicant must transfer or dedicate the lands set aside for acquisition within the approved plan of subdivision the subject of the development application, being those lands identified in the North Boambee Valley Stage 1 Release Area Developer Contributions Plan for Koala Management, Traffic Management, Water quality and community facilities. The lands must be transferred or dedicated to the Council in fee simple free of encumbrances, other than those acceptable to Council at or prior to the registration of the plan of subdivision.

The Council must compensate the applicant for the lands. The value is to be determined at the date of transfer or dedication in accordance with section 54(1) of the Land Acquisition (Just Terms Compensation) Act 1991 with the relevant matters to be considered as set down by Section 55 of the Act.

•   Acquisition of public land by Council is to occur on a staged basis. The staging is to coincide with the release of adjoining land by the developer unless other arrangements have been made to the satisfaction of Council.

•   Additional lands proposed by the developer for public ownership not detailed in the North Boambee Valley Stage 1 Release Area Developer Contributions Plan are to be dedicated at no cost to Council at the time of Linen Plan registration.

•   Land being dedicated to or acquired by Council for a public purpose being improved by the removal of dead and dangerous trees, weeds, rubbish and all plants on Council [sic].

4. The Council accepts that it is obliged to pay Noubia for Lot 94 in accordance with Condition 1 and has given an express undertaking to that effect. It disputes the amount that is payable. Noubia accepted that as the applicant in this Class 4 proceeding it bears the onus of establishing entitlement to compensation. Having said that the parties also accept, appropriately, that the Court is acting as a judicial valuer for the purposes of applying the JT Act albeit within this Class 4 proceeding. Noubia contends for a value of $2,965,000 and the Council for a value of $110,000. Given the Council’s undertaking Noubia accepts that it is unnecessary to deal with the various alternative bases in the pleadings by which Noubia sought to fix the Council with liability to pay compensation for the transfer of Lot 94.

Brief history of Council planning for North Boambee Valley, Noubia’s 2003 development application

5. This proceeding relates to land which was previously rural in character in the North Boambee Valley, near Coffs Harbour. In 1991, as part of the Council’s investigations into the North Boambee Valley release area, it commissioned a study by Bewsher Consulting Pty Ltd (the Bewsher study) to “define the 1% AEP floodplain in the North Boambee Valley Development Area as part of the draft LEP process”. In 1997 the Council commissioned an environmental impact statement (EIS) from GHD Pty Ltd for the North Boambee Valley to examine the construction and operation of permanent stormwater pollution control structures (i.e. detention ponds, artificial wetlands and stormwater pollution control structures) to facilitate the Stage 1 Release Area, the first urban release stage identified in the Council’s Masterplan for the North Boambee Valley. The EIS had regard to the Bewsher study. The EIS proposed a two lakes scheme to deal with stormwater issues in Stage 1.

6. On 20 April 2000, the Coffs Harbour Council Local Environmental Plan came into operation. The North Boambee Valley Stage 1 Release Area Developer Contributions Plan 1999 (the Contributions Plan) came into operation on 23 February 2000 and was amended on 16 October 2003. The Contributions Plan required certain lands to be acquired for a variety of public purposes including water quality and stormwater management purposes. Since the Stage 1 release area is located upstream of existing urban development, the Contributions Plan also provides that (a) it is necessary to provide flow retarding basins to maintain the 1% AEP flood discharge from the development area at the rate it was prior to urban development, and (b) a water quality objective requires the export of nutrients from urbanisation of the Boambee Valley to not exceed the levels existing prior to urbanisation. The area now known as Lot 94 is identified in the Contributions Plan for use for water quality and stormwater management purposes.

7. On 22 September 2000, the Council adopted the North Boambee Valley Information Sheet (Information Sheet) relating to the Stage 1 release area, which was a relevant policy at the time Noubia’s development application was being considered. The land developed by Noubia which included Lot 94 is part of the Stage 1 release area.

8. Umwelt (Australia) Pty Ltd (Umwelt) consultants commissioned by Noubia produced a development concept which modified the two lakes scheme envisaged in the 1997 EIS to a five lakes scheme. On or about 20 September 2002, Noubia lodged with the Council development application DA 575/03. This ultimately led to the Consent for the staged subdivision of land including Lot 94 to create 160 residential lots, a community centre lot, public reserves and one future development lot (collectively known as the Lakes Estate).

9. On or about 18 May 2007, Noubia transferred land which became known as Lot 94 DP 1111430 to the Council in accordance with Condition 1. Lot 94 is 2.719 ha³.

10. Noubia has constructed the Lakes Estate pursuant to the Consent, including the creation of five artificial lakes. Lakes 3 and 4 were constructed on Lot 94 prior to its transfer to the Council in 2007.

History of proceedings

11. Noubia filed a summons dated 17 March 2017, amended on 8 September 2017. Supreme Court proceedings were also commenced and subsequently transferred to the Court. In Noubia Pty Ltd v Coffs Harbour City Council [2019] NSWLEC 113 (Noubia No 1) Sheahan J determined matters in favour of Noubia and ordered compensation for the three lots then in issue in the amounts contended for by Noubia. In Coffs Harbour City Council v Noubia Pty Ltd (2020) 246 LGERA 56; [2020] NSWCA 142 (Noubia CA) the Court of Appeal allowed the Council’s appeal and remitted the matter to this Court for a rehearing on Lots 94 and 163. The grounds upheld included failure to deal with disputed evidence and competing submissions. The parties have now agreed on the compensation payable in respect of Lot 163.

12. Justice Sheahan having retired, the remitted hearing commenced before me on 29 March 2021 with a site view on 30 March 2021 and proceeded to 1 April 2021. During the hearing it became clear that the state of the stormwater engineering evidence was unhelpful. Proceedings were adjourned to enable the preparation of further evidence. On 6 May 2021 I ordered that the expert stormwater engineers produce a further supplementary (third) joint report (JER 3). That report was filed on 27 October 2021. In Noubia Pty Limited v Coffs Harbour City Council (No 2) [2021] NSWLEC 142 (Noubia No 2), I allowed Noubia to rely on the further supplementary (third) JER. The Council appealed that decision, necessitating vacation of hearing dates on 14-17 March 2022. In Coffs Harbour City Council v Noubia Pty Limited [2022] NSWCA 32 (Noubia CA 2) the Court of Appeal dismissed the Council’s appeal. The part-heard matter recommenced on 14 December 2022 with the compensation payable in respect of Lot 94 continuing to be in dispute.

Summary of issues

13. The valuation of Lot 94 is to be undertaken in accordance with the JT Act as required by Condition 1, albeit no compulsory acquisition under the JT Act has occurred. This has resulted in a number of complexities in the issues presented by the parties. Market value is defined in s 56(1) in hypothetical terms as the amount a willing but not anxious buyer would pay to a willing but not anxious seller.

14. The first issue arising is whether Noubia can rely on the so-called statutory disregard pursuant to s 55(a) and s 56(1)(a) of the JT Act. The Court must, when determining the market value of Lot 94, disregard any increase or decrease in the value of land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. In determining this question the Court must identify the nature of the public purpose for which the land was acquired. The identification of the public purpose is disputed (Sub-issue 1(a)). Further, on the Council’s case, the Applicant bears the onus of demonstrating to the Court (or the Court must determine) whether the carrying out of the public purpose for which the land was acquired caused a decrease in value of Lot 94, as without satisfaction of that causative requirement the statutory disregard in s 56(1)(a) cannot be relied upon by Noubia (Sub-issue 1(b)).

15. If Issue 1 is determined in Noubia’s favour, Issue 2 arises of whether the Court can be satisfied that the hypothetical development application for the development of Lot 94 for 32 residential lots incorporating the alternative hypothetical subdivision and drainage scheme designed by the engineers (reflected in Ex A36) was likely to be approved by the Council in 2003 (the date of the original development application for Noubia’s five lakes scheme). It is agreed that the date of hypothetical approval must be the date in 2003 when the Consent was granted rather than 18 May 2007 (the date of transfer of Lot 94), because Lot 94 formed part of a larger development area for which approval would have hypothetically been sought.

16. Noubia accepts that it bears the onus of establishing on the balance of probabilities the likelihood that prospective hypothetical buyers of Lot 94 would consider it likely that development consent would have been granted for a hypothetical development of the lot for residential purposes. The Council considers that the hypothetical development application was not likely to be approved.

17. Issue 3 is the appropriate valuation approach to determine compensation, the resolution of which will depend in part on how the other issues are resolved.

Evidence

18. Given the complexity of this proceeding, and progress over several years and multiple hearings, there is a large volume of material in evidence. Evidence relied on was adduced before Sheahan J in 2019, before me in 2021, and again in 2022. The following exhibits were tendered:

1. Aerial images from Google maps in 2019 of the current Lakes Estate (Ex A5);

2. The alternative hypothetical subdivision of Lot 94 before the Court in 2019 (Ex A6);

3. Plan of a neighbouring property to the Lakes Estate, which the parties referred to as the Gill property (Ex A8);

4. The letter dated 1 October 2002 from Umwelt to Mr Shanahan, director of Noubia, proposing the modification of the two lakes scheme to a five lakes scheme (Ex A10);

5. The Umwelt report on the Lakes Estate development dated October 2004, commissioned by Astoria Developments, a related company to Noubia (Ex A11);

6. Exhibit KFS-1 to the affidavit of Mr Shanahan dated 12 February 2019 (Ex A21);

7. The alternative hypothetical subdivision of Lot 94 and drainage scheme before the Court in 2021(Ex A30);

8. A marked-up plan showing the riparian areas in the 1997 EIS scheme (Ex R4);

9. The Statement of Environmental Effects (SEE) dated 19 September 2002 accompanying the 2003 development application (Ex R7);

10. The North Boambee Valley Information Sheet dated 22 September 2000 (Ex R8);

11. The EIS prepared by GHD dated August 1997 (Ex R9);

12. The Bewsher study dated November 1991 (Ex R13); and

13. Plan of the alternative hypothetical subdivision of Lot 94 and drainage scheme before the Court in 2022 (Ex A36).

19. The affidavits of Mr Shanahan dated 12 February 2019 and Mr Mutkins, employee of the Council dated 5 February 2019 were read.

20. The following stormwater engineering expert reports were tendered before the Court:

1. Report of Mr Jamieson engineer dated 11 October 2018 (Ex A2);

2. Report of Dr Martens engineer dated 4 February 2019 (Ex R1);

3. Supplementary report of Dr Martens dated 1 March 2019 (Ex R2);

4. First engineering joint expert report (JER) dated 20 February 2019 (Ex A3);

5. Supplementary report of Mr Jamieson dated 20 November 2020 (Ex A22) (Noubia CA judgment response);

6. Second engineering JER dated 1 March 2021 (Ex A23); and

7. Third engineering JER dated 27 October 2021 (Ex A33).

21. The third engineering JER states:

In respect of the outcomes of Modelling Round 4, DM [Dr Martens] and PJ [Mr Jamieson] agree:

a) The modelled outcomes provided in Table 1 are acceptable from a hydrologic and hydraulic modelling perspective.

b) That the revised alternative drainage scheme, which includes retention of Lake 5 and an 18.6 m wide channel, would comply with Council requirements and would in our opinion have been acceptable to Council in terms of satisfying site flood conveyance and on-site detention objectives.

22. The third engineering JER resolved one of the major issues which arose before Sheahan J in 2019, was a major basis for the appeal in Noubia CA, and one of the major issues before me in the first hearing in 2021 concerning the operation of an alternative drainage scheme to adequately deal with upstream stormwater if Lot 94 was developed for a 32 lot residential subdivision. It is therefore unnecessary to set out much of the previously disputed engineering evidence before Sheahan J in 2019, refer to what the Court of Appeal considered in 2020 and what was tendered before me in the first hearing in April 2021. An enlarged plan of the alternative hypothetical subdivision and drainage scheme considered by the engineers, Annexure A of the third engineering JER, was tendered as Ex A36 (see above in [18(13)]).

Figure 1: Annexure A of the third engineering JER (Ex 33)

23. In summary, the alternative hypothetical subdivision (Ex A6) before Sheahan J in 2019 provided for 35 residential lots, no Lakes 3, 4 and 5 and a channel width of 16.5 m. Some of the evidence referred to by the parties was prepared in relation to that scheme. A similar possibly identical scheme was tendered in 2021 (Ex 30). The revised scheme I am now considering as a result of the agreement of the engineers (Ex A36) provides for 32 residential lots on Lot 94, no Lakes 3 and 4, reinstatement of lake 5 (reducing the number of lots by three) and a wider channel width of 18.6 m.

23. The only remaining hydrological issue, which Noubia particularly referred to, is the suitability of Lot 94 overall for residential subdivision if vacant in 2003. According to Mr Jamieson’s report and subsequent JERs Lot 94 was suitable for such development. Given the agreement of the engineers in the third engineering JER this issue appears to have diminished. In the third engineering JER at par 7 the engineers provided comments on certain parts of the 1997 Bewsher study. Mr Jamieson considered that the Bewsher study’s relevance to the alternative hypothetical subdivision was to define areas that should be restricted from future development in terms of flooding considerations, and no such areas in what is now the Lakes Estate were identified. The study found there were no significant flood storage area within the study area and no high hazard flood fringe area defined. Mr Jamieson identified that no areas that should be restricted from future development were identified in the study area. Dr Martens stated that the study was commissioned with a view to rezoning an area for urban development. The study had to comply with the Council’s ‘Technical Guidelines for Subdivisions and Development’. The study demonstrated that low lying areas of the site were located on floodplain and were flood liable. It included an assessment of the hydrologic and hydraulic effects of urbanisation within the site and concluded that a series of flood retarding basins should be constructed to off-set the impact of urbanisation.

24. In oral evidence, Mr Jamieson considered water flow could be readily managed in the hypothetical subdivision with flows from upstream, able to be adequately conveyed within a 20-23 m corridor and the proposed width of corridor within the remaining 250 m channel having a top width of 18.6 m. Dr Martens agreed in oral evidence on 6 March 2019 that Lot 94 in its undeveloped state was no different from land around it from a flooding perspective.

25. The following town planning expert reports were tendered:

1. First town planning JER dated 21 February 2019 (Ex A14);

2. Supplementary report of Ms Hunter town planner (including CV) dated 20 November 2020 (Ex A24);

3. Second town planning JER dated 11 March 2021 (Ex A25); and

4. Third town planning JER dated 24 December 2021 (Ex A34).

27. The following valuation expert reports were tendered:

1. Report of Mr Maher valuer on Lot 94 dated 8 October 2018 (Ex A15);

2. Report of Mr Davis valuer on Lot 94 dated 13 February 2019 (Ex R10)

3. First valuation JER on Lot 94 dated 28 February 2019 (Ex A18);

4. Second valuation JER on Lot 94 dated 19 March 2021 (Ex A26); and

5. Third valuation JER on Lot 94 dated 20 January 2022 (Ex A35).

28. The third JERs prepared in relation to town planning and valuation matters were to enable consideration by those experts of the third engineering JER.

Issue 1: whether the statutory disregard in s 56(1)(a) can be relied upon by Noubia

29. In order to address the parties’ conflicting submissions on the application of s 56(1)(a) of whether Noubia can establish a decrease in value of Lot 94 through disregarding the public purpose, two sub-issues are addressed. The first sub-issue is the identification of the public purpose as referred to in s 56(1)(a).

Sub-issue 1(a) – identification of the public purpose

30. The parties relied on different evidence and made conflicting submissions about the public purpose which should be considered in applying s 56(1)(a) of the JT Act to Lot 94.

Points of claim and defence

31. At par 11 of the points of claim, Noubia pleaded the following:

Lot 94 in DP 1111430 ('Lot 94')

11 . On or about 18 May 2007 the Applicant caused the transfer of Lot 94 in DP 1111430 to the Respondent in reliance on Condition 1 (as modified on 25 September 2006).

Particulars

(a) Lot 94 is land identified in the North Boambee Valley Stage 1 Release Area Developer Contributions Plan ('the Contributions Plan') for water quality and stormwater management purposes.

…

32. The Council pleaded in its points of defence:

Lot 94 in DP 1111430 ("Lot 94")

11. The Respondent admits that on or about 18 May 2007 the Applicant caused the transfer of Lot 94 in DP 1111430 to the Respondent.

a) The Respondent admits particular (a) and further states Lot 94 is split by Torrens Way [sic] and now generally consists of two lakes referred to as Lake 3 and Lot 4.

…

Evidence relied on by Noubia

33. The following evidence of the Council was relied on by Noubia.

Mr Mutkins’ affidavit sworn 5 February 2019

34. Mr Mutkins had been employed by the Council for 21 years in 2019. As development contributions officer he was responsible for the management of the Council’s developers’ contributions portfolio. In respect of Lot 94, he deposed:

Lots 94 in DP 1111430 (Lot 94) …

24. The Contributions Plan required certain lands to be acquired for a variety of public purposes, including koala management, traffic management, water management and quality and community facilities.

25. The Development Consent required Astoria to transfer land that was required to be dedicated on a staged basis as each linen plan was registered.

26. Stormwater Drainage, flood mitigation and water quality were to be addressed by a series of stormwater pollution control structures being detention ponds based on a design by Astoria's stormwater engineering consultant Umwelt. There were to be five structures referred to as "Lakes".

27. The Umwelt "Lakes" system was designed to meet the objectives of the EIS which was prepared as part of the rezoning proposal for the North Boambee Valley Stage 1 Release Area however is a modification to the original EIS design and Part 5 approval. The modified design comprises a five pond/lakes system in lieu of a two lakes system however met the objectives of the EIS.

28. Lot 94 is identified in the Contributions Plan for water quality and stormwater management purposes and was transferred to Council on or about 18 May 2007. Lot 94 now generally consists of Lakes 3 and 4.

Subdivision plan creating Lot 94

35. Lot 94 was created by subdivision in DP 1111430 registered on 18 May 2007. Lot 94 was transferred to the Council pursuant to this plan of subdivision. Lot 94 was labelled as a public reserve in the plan of subdivision, within the exhibit to Mr Shanahan’s affidavit.

Council Planning, Environmental and Development Committee report on Noubia’s development application

36. The report of the Council’s Planning, Environmental and Development Committee on Noubia’s development application dated 20 March 2003 was attached to the first town planning JER. The report identified that the subdivision proposed within Stage 1 of the development application would include stormwater pollution control structures and public reserves. The report noted that the developer sought to modify the EIS to construct a five lakes scheme instead of a two lakes scheme. It also noted that the release area controls include environmental protection such as establishing wetlands and detention basins. The report stated that the subdivision proposal is generally in accordance with the Information Sheet, and that the proposed five lakes scheme has been reviewed internally and externally and will have less environmental impact.

Evidence relied on by Council

37. The Council referred to Mr Jamieson’s report, the engineer for Noubia, dated 20 November 2020. The part of the report relied on details the underlying principles Mr Jamieson used to assess the alternative hypothetical subdivision and drainage scheme. Mr Jamieson assumed the water management system would convey existing upstream flows and upstream developers would be responsible for the management of any developed flows.

38. The Council referred to pars 5, 7, 8, 9, 15 and 21 of the report. In par 5 of the report Mr Jamieson disagreed with Basten JA’s summary of his evidence in Noubia CA at [90]. He did not disregard the conveyance of flows from the existing catchment. In par 7 Mr Jamieson quoted a letter from Umwelt to Mr Shanahan dated 9 July 2013 that stated:

A hypothetical alternative to Noubia constructing the five lakes scheme would be for Noubia to construct sufficient conveyance, detention and water quality controls for the Lakes Estate alone leaving the provision of conveyance, detention and water quality controls for upstream areas the responsibility of the upstream developers.

39. At par 8 Mr Jamieson specified that he was referring to any additional flows and water quality impacts that would result from future development of the upstream catchment.

40. In pars 9, 15 and 21 of the report Mr Jamieson stated:

9. I consider that is clear from paragraph 5 of the second page of the letter that the Alternative Hypothetical subdivision makes provisions for the conveyance of then existing upstream flows through the site in accordance with the 1 in 100 year Average Recurrence Interval Standard.

…

15. As set out paragraphs 5 to 14 above, provision of the conveyance of existing flows from upstream catchment through the proposed development site is and has been since July 2013, part of the water management system for the Alternative Hypothetical subdivision.

…

21. I am of the opinion that the amended Alternate Hypothetical subdivision layout could be constructed to comply with hydraulic conveyance (flow), water quality and detention requirements for the Lakes Estate site and existing (i.e. undeveloped) upstream flows of 27m³/s during a 1 in 100 Year Average Recurrence Interval event.

…

Council’s submissions

41. The Council submitted orally that the public purpose underpinning the transfer of Lot 94 was narrow, being the management of stormwater arising from the developed upstream catchment (in contrast to the natural flow of upstream water from undeveloped land) relying on the evidence of Mr Jamieson engineer called by Noubia.

42. As Noubia was otherwise responsible for management of the stormwater on its own site arising from the natural flow of stormwater from the upstream undeveloped catchments (because this is an inherent characteristic of Noubia’s land), this use of Lot 94 did not form part of the public purpose. The public purpose for which Lot 94 was acquired should be characterised as being to deal with the stormwater flows from the developed upstream catchments (and no other stormwater).

43. Reliance was placed on parts of the judgment of Basten JA in Noubia CA at [34], [69]-[71], [80]-[90] which was submitted to be persuasive albeit obiter dictum. The comments were said to reflect an agreement with the Council’s approach to the public purpose and to be directed to assisting the trial judge in this proceeding, taking them beyond merely dictum.

44. In this case, Noubia’s land is subject to the constraints (applying Noubia CA at [81]) that it would need to deal with upstream flows as a consequence of natural topography and a feature which contains a public element given the effect on neighbouring landowners. The obligation to deal with flows from the developed upstream catchment was not one Noubia was forced to accept by virtue of the natural characteristics of the land and therefore this is the relevant public purpose of the acquisition. The characteristic to which Basten JA is referring in [89] is the obligation to deal with their own flows and the undeveloped upstream flows.

45. The Council accepted that Basten JA’s comments at [90] were a misstatement of Mr Jamieson’s evidence, as Mr Jamieson’s supplementary report dated 20 November 2020 demonstrated.

Noubia’s submissions

46. Noubia argued that the public purpose of the acquisition of Lot 94 was for water quality and stormwater management purposes and therefore that purpose must be disregarded. It was the carrying out of that public purpose which visited Lakes 3 and 4 on Lot 94, compared with the alternative hypothetical subdivision and drainage scheme agreed by the engineers (Ex A36). The land should be valued on the basis that it was not home to two lakes. Rather it would have been occupied by a hypothetical subdivision of 32 residential lots incorporating the alternative drainage scheme.

47. This description of the public purpose had been accepted in the proceedings until the Council’s oral submissions to the contrary on 14 and 15 December 2022. Noubia also relied on a paragraph in its earlier submissions in 2021 which stated that the public purpose was not and is not contested. The Council’s submission should not now be heard.

48. If it is to be heard, it should be rejected as demonstrably wrong. Noubia relied on the points of claim par 11 and the Council’s admission in its points of defence par 11 (above in [31]); the identification of the land for water quality and stormwater management purposes in the Contributions Plan as identified in the evidence of Mr Mutkins (above in [34]); the identification in the new subdivision plan dated 18 May 2007 of Lot 94 as a public reserve (above in [35]); and the descriptions of what the subdivision would comprise in the Council’s assessment report for Noubia’s development application (above in [36]).

49. The proposition that the public purpose was solely so that the Council would be in a position to deal with developed upstream flows from the rest of the Stage 1 Urban release area is not shown in any documents or pleadings. Mr Jamieson certainly gave evidence about developed and undeveloped upstream flows, both in his original evidence and since Noubia CA in 2020. That evidence has never been directed to explaining or identifying the public purpose of the acquisition. It was given in the quite different context of asking whether the Council would have regarded the alternative hypothetical subdivision and drainage scheme as an acceptable proposal or not.

50. The successful ground of appeal in Noubia CA was constructive failure to exercise jurisdiction. The comments of Basten JA relied upon by the Council beginning at [88] are plainly obiter dictum. His Honour at [88] stated that his indications about how the legal issues ought to be addressed will not determine the factual outcome. The Council here seeks to use the comments to determine the factual outcome. Furthermore, both parties acknowledge that there was an error in the way Basten JA approached these matters at [90] of Noubia CA. Mr Jamieson’s supplementary report explained why his Honour was mistaken. This should lead the Court to be careful in applying his observations. His Honour’s comments at [90] are a general statement of principle with which Noubia complies in this case. The issue of the characterisation of the public purpose was not debated in the Court of Appeal.

51. In determining compensation there must be a wholesale disregard of the agreed public purpose of the acquisition of Lot 94 for water quality and stormwater management purposes. Nevertheless, the alternative hypothetical subdivision of Lot 94 should maintain the 1% AEP discharge at the rate it was prior to urban development and nutrient export should not exceed the standards set by Council in relation to the 1997 EIS two lakes scheme or the 2003 Council-approved five lakes scheme. For the purposes of maintaining the 1% AEP discharge rate this includes management of the undeveloped upstream flows in addition to the developed flows generated by the alternative hypothetical subdivision. Whereas the ultimate development of the Stage 1 Release Area planned for 533 lots, the Noubia land comprises only 246 lots, or 46% of 533.

52. Alternatively, even if the Council’s narrower public purpose is accepted, the analysis does not change. If the public purpose is to deal with developed upstream flows, this was central to the requirement to transfer Lot 94 to the Council. The whole of Lot 94 was required to deal with that public purpose.

Consideration of Sub-issue 1(a)

53. The parties conflicting submissions arising surprisingly late as the public purpose nominated by Noubia was not disputed in the Council’s points of defence. In relation to the identification of the public purpose the parties conflicting submissions suggest an initial question to answer is when the public purpose of the transfer of Lot 94 to the Council should be identified. The public purpose at and leading up to the time of the transfer of Lot 94 to the Council is the timeframe most consistent with the statutory scheme under the JT Act. It is also the timeframe identified in Condition 1 which states:

•   The applicant must transfer or dedicate the lands set aside for acquisition within the approved plan of subdivision the subject of the development application, being those lands identified in the North Boambee Valley Stage 1 Release Area Developer Contributions Plan for Koala Management, Traffic Management, Water quality and community facilities. …

The Council must compensate the applicant for the lands. The value is to be determined at the date of transfer or dedication (emphasis added) in accordance with section 54(1) of the Land Acquisition (Just Terms Compensation) Act 1991 with the relevant matters to be considered as set down by Section 55 of the Act….

54. Consistent with such an approach the parties otherwise agree that all other aspects of determining value are to be determined as at May 2007 or earlier in 2003 when DA 575/03 was approved.

55. The next issue to identify is the source of the public purpose. It is almost trite to state that the Council was the source of the public purpose underpinning the transfer of Lot 94 in May 2007. It undertook the planning process including the Contributions plan developed for the Stage 1 release area in the North Boambee Valley, a brief history of which is set out above in [5]-[10]. That process lead to the transfer of Noubia’s land in Lot 94 to the Council. Consequently evidence addressing the Council’s purpose in the 2003-2007 timeframe is the most relevant, and is in fact the only evidence before the Court in the relevant period. The identification of the public purpose as confirmed by the documents prepared by the Council in evidence and summarised above in [33]-[36] relied on by Noubia are indicative of why the Council required the transfer of Lot 94 as part of approving the residential subdivision of the Lakes Estate in 2003 for management of water quality and stormwater management.

56. No evidence supporting the narrow public purpose submitted orally by the Council’s counsel was before the Court whether in 2003 or since. The Council’s submissions on public purpose now pursued were not made in writing during the numerous stages of this litigation. Indeed par 6 of the Council’s submissions dated 28 March 2021 stated that the public purpose could be accepted to be stormwater detention and water quality. The attempted adoption of Mr Jamieson’s evidence about the different categories of stormwater to be dealt with in the lakes system on Noubia’s land is irrelevant to the identification of the public purpose of the transfer of Lot 94 to the Council. Firstly this evidence was not directed to identifying the public purpose as Noubia identified in [49] above. Secondly, this evidence is an unlikely source for identifying the Council’s public purpose in 2003-2007 given that Mr Jamieson has never been employed by the Council in relation to the development of which Lot 94 is a part. His evidence relied on by the Council was prepared for this proceeding in 2019-2022 and was directed to whether the Council was likely to grant development consent for an alternative development. The public purpose of the Council would more usually be identified in its documents, as for example the Council Planning, Environment and Development Committee’s report concerning the 2003 development application relied on by Noubia identified above in [36] inter alia.

57. The Council relied heavily on parts of the judgment of Basten JA in Noubia CA. For the reasons articulated by Noubia set out above in [50] those obiter observations cannot assist the Council. The obiter comments of Basten JA in Noubia CA referred to by the Council did not identify the public purpose, let alone the one now relied on by the Council. The paragraphs relied on in his Honour’s judgment identified issues that needed to be resolved which differences in the parties’ evidence had thrown up at that stage. Basten JA concluded those issues were not resolved by the trial judge at first instance. As noted above in [22] the substantial differences in the stormwater engineering evidence in 2019 have now been completely resolved and that topic no longer requires resolution by me in this remitted hearing. Accordingly the context for Basten JA’s observations identifying an issue that the trial judge had not resolved, one of the appeal grounds, no longer exists. It is also not apparent that the evidence of public purpose I have been asked to consider by Noubia, being largely the Council’s own documents, was before the Court of Appeal.

54. The public purpose of the Council underpinning the transfer of Lot 94 in May 2007 is that identified in the points of claim of water quality and stormwater management.

Sub-issue 1(b) – whether the decrease in value of Lot 94 was caused by the carrying out of the public purpose

59. Regardless of the public purpose identified a second sub-issue arises on the Council’s case, namely that Noubia must prove a causal connection between the decrease in value caused by the carrying out of the public purpose and the decrease in value of Lot 94. This inquiry is said to arise from the statutory language in s 56(1)(a) of the JT Act, as indeed that section states. Given my finding on sub-issue 1(a), the public purpose is water quality and stormwater management. The parties disagreed about the correct approach to this issue.

60. The Council submitted that Noubia bore the onus of proving that the approved five lakes scheme was caused by the carrying out of the public purpose. Noubia submitted that it is not required to satisfy the Court that the five lakes scheme was caused by the carrying out of the public purpose given the nature of the hypothetical exercise required in determining market value under the JT Act and the effect of Condition 1.

Evidence relied on by the Council

61. The Council relied on extensive evidence concerning the planning processes undertaken by Noubia in negotiation with the Council leading up to the approval of the five lakes scheme in 2003. Noubia submitted this evidence was all irrelevant as it did not address the correct question.

SEE and attachments, Umwelt documents

62. Extensive reference was made to the SEE supporting the 2003 development application and supporting documents, as well as the 2002 Umwelt letter to Noubia. Paragraph 12 of the Council’s submissions gathers together the evidence relied upon as follows:

12. …

From the Astoria Developments letter dated 6 August 2002 (Exhibit R7 Attachment 2)

• The revised scheme “generally adhered to” Council’s Development Control Plan and subsequent Information Sheet (North Boambee Valley Information Sheet, Exhibit R8).

• “The lakes have generally been located in areas which follow the original watercourse rather than filling those areas.”

• “To provide a balance between cut and fill earthworks.”

• Because of a concern about “failure of the structures” proposed in the 1997 EIS.

• To avoid impact upon a “significant stand of trees”.

• “The lakes have now generally been located adjacent to road reserves giving ownership of the lakes and open space to the community”.

• “A limited number of allotments (approximately 8-10 in number) will front the lakes”.

Senior Environmental Engineer’s email 19 June 2002 (Exhibit R7 Attachment 2)

• “The layout of the proposed basins and subdivision looks good in terms of the location of the basins over the alignment of the existing watercourse”.

• “This will assist with flow routing through the subdivision and reduce the amount of excavation and filling works that was required for the previous basin layouts.”

• “The location of the basins over the existing watercourse will also be will [sic] be much more appealing from an ecological point of view as it will minimise habitat destruction and retain a lot more of the existing riparian vegetation along the watercourse than the previous basin layout.”

• “The layout and position of the basin seems satisfactory in terms of access for both pedestrians and maintenance vehicles.”

Doug Gow & Associates 6 August 2002 (Exhibit R7 Attachment 2)

• Page 8: “the site has been developed about three major site attributes remnant vegetation, waterway and distant views.”

• Page 9: “the establishment of a water feature in the foreground to this entrance will further enhance the creation of the initial landmark features in the estate.”

• Page 9: “the existing drainage line, which runs through the estate, will have two [sic] retention and water quality functions extended by embellishing it [sic] curtilage to create a water or wetland feature.”

• Page 9: “It is proposed that by the creation of a series of water features or ponds interspersed by smaller drainage lines (acting as flood ways) and a surrounding open space network combined with the use of mature vegetation, as landmarks will further enhance the community focal points.”

• Page 9: A criticism of the Information Sheet was that the “size and shape of water features…will require significant site filling”. A further criticism was that “the location of the water features is not in relation to the existing waterway, which is proposed to be filled.” In light of those criticisms the author then states “the engineering works required to both retain the water and place the filling be [sic] economically costly and require sophisticated engineering design solutions. Notwithstanding the above the potential for the failure of those works is substantially increased.”

• Page 15: “because of the amount of filling required to contain the proposed design of the pond system it is expected the existing significant vegetation will be lost. The design will also mean the existing drainage lines will be filled and not enhanced as part of the site’s natural features.”

• In response to another criticism of the 1997 EIS concept was:

• Page 15: “as per the previous discussion the smaller ponds will require less significant structures to contain the water. In this sense they are less likely to require maintenance and ensure their ongoing performance.”

• Page 16: “long batters, which would have been prominent in the previous proposal will be eliminated providing safer mowing.”

• Page 16: “by having some of the abutting land in private ownership the requirement to maintain the whole length of the perimeter of the pond will be eliminated.”

• Page 16: “the linking of the green belts will also make it economic to run mowers through the entire length without crossing major roads etc”.

• Page 16: “it is felt the configuration as shown will have major savings in both regular maintenance and the long term, issues associated with maintaining the functions of Earthen Embankment.”

• Page 17: “the lakes and surrounding housing have been configured to avoid back of lots looking directly into the back of other lots”.

• Page 17: “the revised layout puts more development in the flatter areas, which whilst it will require engineering solutions in regard to drainage (a major component being the excavation of the ponds) will make for cost efficient and economic development of dwellings.”

• Page 18: “the links will incorporate a brook type water feature, which will potentially contain the outlet of the stormwater drainage from the roads and building including trash raking, and reed beds”.

• Page 19: “the open space runs through the centre of the main residential prescient [sic]: precinct providing open space a short walk from all residence.”

• Page 19: “the open space combines the remnant vegetation and will include a series of water features, which will enhance the setting”.

• Page 19: “Interconnecting the water features are a series of small grassed areas which whilst acting as flood ways will provide opportunities for passive recreation.”

• As a criticism of the 1997 EIS concept:

• Page 20: “the concept plan places the open Space around the lake in a ribbon type effect. Because of the filling required the natural attributes of the land will be lost, it is therefore concluded that the natural features desirable in Open Space will need to be installed rather than the existing site attributes installed [sic].”

• Page 21: “The embellishment of the waterway by the creation of the water features and interconnection Open Spaces will be able to be excavated in to the site”.

• Page 22: As part of the criticism of the 1997 EIS concept “because of the proposed elongated length, which runs down the existing grades, their creation will require substantial filling to contain the water and provide land suitable for the Residential Development above the 1% AEP. The extent of the filling will mean the existing vegetation on the flatter areas will need to be removed to accommodate their construction.”

• Page 22: In continuing the criticism of the 1997 EIS concept “because of the long nature of the lakes going up the natural grade lines the construction of the lakes to the design as depicted in the Concept Plan will require significant cost in:

• earthworks to construct the dam at the outfall;

• site filling to make dwelling sites and surrounding roadways and land flood free;

• loss of vegetation surrounding the existing watercourse which is required to be filled.”

• Page 22: the response to that criticism included “if using a performance basis in regard to detention and water quality issues, the lakes can be significantly reduced in size than what is proposed in the Concept Plan.”

• Page 23: “From an aesthetics point of view the long straight lines of the edge will make it difficult to accommodate the infrastructure required to pre-treatment the water.”

• Page 23: “Where the lakes depart from the previous design it is envisaged they will:

• Replicate a natural creek system of interconnecting waterholes. The open bodies of water will provide a visual feature.

• Be excavated across the grade and further into the ground rather than based on site filling.”

• Page 23: “The resulting structure to retain the water at its outfall will be significantly smaller structures which will:

• Require less design and construction associated with it. As a risk management philosophy this will dramatically reduce the likelihood of failure and the impact if it does.

• Improve the aesthetics of the development by reducing the size and the bulk of the retaining structures.”

• Page 23: “It is therefore taken the smaller ponds will provide the functionality as outlined in the Information Sheet but will not create the substantial costs associated with the creation of larger structures required for less ponds.”

• Page 25: “The combination of the Ponds, Larger Vegetation and the interconnecting green belts will provide the greatest opportunity to satisfy the aims of the Information Sheet which is to:

• Create a variety of Open Space settings;

• Provide pedestrian and bicycle access through the green belt areas;

• Develop wetland areas and retention basins as landscape features.”

• Page 25: “The configuration of the Open Space generally abutting the ponds on one side and private lands abutting on the other side is a product of the combined functions of the ponds.”

• Page 25: “Opposite the waterbody Lots, which abut the pond will be able to establish private yards through landscaping which provide a backdrop to the water feature.”

• Page 26: A criticism of the Concept was “because extent of filling required in the construction of the ponds the existing vegetation will be lost. The result and layout therefore has little response to the site attributes and would create an unattractive Open Space without considerable effort to replicate what already exists.”

• Page 29: “To provide a stormwater system that minimises erosion and utilises Open Space in a manner that does not detract from its principal functions.”

The SEE dated 19 September 2002 (Exhibit R7)

• Page 6: The SEE describes the features of the development including:

• “Main distributor road having no access with five lakes separated by public reserves and linked with landscape pedestrian and cycleway.

• Access road/courts with lake/public reserve frontage.”

• Page 12: “The five lake system as proposed has been designed to minimise earthworks and achieve the original objectives.”

• Page 13: “The proposed lake system, connected by landscaped public reserve and cycleways with landscape verges, will enhance the undulating nature of the land and vegetated watercourses.”

• Page 15: “The proposed construction of five lakes has been designed to provide a balance of earthworks and to meet the objectives of the [1997] EIS.”

• Page 17: “Astoria Pty Limited proposes to develop a fully landscaped neighbourhood with a lakeside theme and to establish a high standard of housing using a selected group of local building companies”.

• Page 17: “the proposed development meets the overall objectives of the housing, traffic, community and natural environmental strategies set out in the North Boambee Valley Information Sheet.”

The Umwelt letter dated 1 October 2002 (Exhibit A10)

• Page 4: “Umwelt revisited the proposed detention pond layout to explore if the amount of earthworks required for the development could be reduced whilst still providing adequate flood retention on site (approximately 22,500 m3 of surcharge storage capacity).

• Page 4: These changes reduced the amount of excess material generated by creation of the detention ponds from approximately 108,000 m3 for the GHD design to approximately 65,650 m3.

• Page 5: As part of this revision, the footprint of the ponds was relocated where possible to be in close proximity to existing drainage lines, hence minimising the amount of earthworks required.”

• Page 5: As a result of this review, five ponds with a combined permanent storage volume of 23,350 m3 and a combined surcharge storage volume of 24,450 m3 are proposed. The proposed surcharge storage volume of 24,450 m3 is between the 22,500 m3 indicated as being required by GHD and the 31,100 m3 indicated by the initial modelling undertaken by Bewsher Consulting.

• Page 8: As can be seen from Table 8, the net amount of fill generated by construction of the proposed five pond system is approximately 30,000 m3. This volume of material will be readily used on site in filling lots adjacent to the ponds, and road construction, Reduction of the total earthwork quantities for the detention ponds will significantly reduce the environmental impact and cost associated with removal and disposal of approximately 108,000 m3 of material that would have resulted from the construction of Ponds B3 and C2 as proposed in the GHD EIS.

63. Attachment 2 to the SEE, a concept plan justification report, contained a letter dated 6 August 2002 from Astoria Developments to the Council which in turn attached an email from an engineer at Umwelt to Mr Shanahan. The letter stated that “The redesigned scheme meets retention capacity as originally proposed by the GHD scheme” and refers to the attached email where it is stated “The proposed base area of the basins in the new layout is 26,164m², which should be able to yield the required 22,500m³ storage as determined in the GHD EIS”.

64. The Council referred to plans showing the riparian areas in the 1997 EIS scheme and the Information Sheet. On the final page of the Information Sheet is a ‘Drainage and Water Quality diagram’. The Information Sheet states “Drainage and layout of proposed subdivisions are to be compatible with the stormwater pollution control measures and flood detention structures shown in the Drainage and Water Quality diagram”.

65. The Umwelt letter stated that following development of a four pond layout (by Umwelt), that layout was further revised to explore if pond locations could be moved to be more consistent with the topographic features of the site and to see if the potential lot layout could be further enhanced in a five pond scheme.

66. The Umwelt report stated that the five lakes scheme proposed (by Umwelt) in 2002 had been further modified to be compatible with changes to the preferred development layout. This included the design of an additional wetland downstream of the five lakes.

Council’s submissions

67. The Council’s written submissions focussed on what Noubia had to demonstrate. The Council submitted orally that it is irrelevant whether the inquiry is subjective to Noubia or viewed from the position of the reasonable developer in Noubia’s position, because the same evidence and considerations are relevant.

68. Firstly, Noubia could not satisfy the Court that the five lakes scheme which includes lakes 3 and 4 on Lot 94 were not caused by the public purpose (bearing in mind the Council identified a narrower public purpose in its submissions, as discussed above).

69. Noubia’s decision to have a five lakes scheme was multi-faceted, being a design choice to achieve a certain lot lay-out which achieved maximum lot yield and amenity across the whole site. This varied from the Council’s preferred scheme as identified in the EIS of a two lakes scheme. None of the reasons supporting the five lakes scheme (identified in the evidence above in [62]-[63]) suggest that Noubia was addressing the additional volume of upstream water resulting from development in the catchment – the narrow public purpose the Council contended for and which I have rejected above – in developing the five lakes scheme. The documents in the SEE and attachments (Ex R7) were produced because it was necessary for Noubia to justify its departure from the two lakes scheme. They demonstrate that Noubia was saving costs relative to the significant extent of the 1997 EIS scheme (as seen in Ex R4 and R7 above in [64]) and seeking to reduce the extent of land consumed by the scheme to maximise subdivision yield. The area occupied by the waterbodies decreased in Noubia’s five lakes scheme from 4.5 hectares to 2.3 hectares. Enhancing potential lot layouts was an explicit goal (see above in [65]). The original five lakes design was modified in 2004 to be compatible with a preferred development layout (see above in [66]). The three lakes and channel scheme as reflected in the latest alternative hypothetical subdivision and drainage scheme (Ex A36) was never proposed.

70. Furthermore, the Council submitted that Noubia’s valuation expert did not carry out a before and after valuation, as he conceded in cross-examination. This issue is squarely raised later in this judgment, but is relevant to the issue of causation in s 56(1)(a) because if the five lakes scheme was the highest and best use, this would be the option the developer would be expected to choose. If it could not be demonstrated that the three lakes and alternative drainage scheme (Ex A36) was the highest and best use, the finding could not be made that this scheme would have been selected by Noubia in 2003. The Council submitted that Mr Maher, Noubia’s retained valuer, did not carry out a before and after valuation, as demonstrated by his concession in cross-examination, which was extracted in Noubia CA at [93] (see below in [218]-[219]).

71. Secondly, in order for Noubia to demonstrate the causal connection required by s 56(1)(a) of the JT Act, Noubia was required to satisfy the Court that in 2003 Noubia would have sought consent for the revised alternative hypothetical subdivision (Ex A36). If it would not have done so, it cannot be said that the decrease in value was caused by the carrying out of the public purpose.

72. Noubia cannot do that because it has not carried out a before and after valuation. The failure to carry out that before and after valuation – which according to Mr Maher would have been the proper methodology (below in [195]) – was a deliberate forensic decision taken by Noubia early in this proceeding.

73. In the Council’s submission the Court need go no further. Noubia cannot demonstrate that there has been a decrease in value which was caused by the carrying out of the public purpose. The result is that the hypothetical transaction, being the sale of Lot 94 in 2007, was of land subject to the requirements of the 2003 consent. It was inundated land forming Lakes 3 and 4 being an integral part of the stormwater and drainage system for the subdivision of the land.

Noubia’s submissions

74. Noubia submitted that the Council was asking the wrong question in posing the issue as ‘whether in 2003 firstly Noubia would have sought consent for the revised alternative subdivision and whether the Council would have granted consent to it’. No comparison of the alternative hypothetical subdivision of Lot 94 with the currently approved and built five lakes scheme is required. The valuation exercise is objective, not focussed on the subjective experience of Noubia. The question to be determined is the market value of Lot 94 on 18 May 2007 by asking what the development potential of the land was based on the highest and best use of that lot at the relevant time. A comparison of the alternative hypothetical subdivision of Lot 94 with the currently approved outcome is not required. Whether Noubia would have sought consent in 2003 for the alternative hypothetical subdivision is also irrelevant. The value of Lot 94 can be assessed by considering the value of an acceptable residential subdivision development, that being its highest and best use. The land is zoned to permit such development and there is such development in the locality.

74. The question posed by the Council is inconsistent with Condition 1 of the Consent. The land being transferred cannot fairly be valued on the basis that the land was subject to the requirements of the Consent where that Consent required the transfer in order to put into effect the public purpose.

75. It is plain that the carrying out of the public purpose of water quality and stormwater management on Lot 94, which involved the construction of Lakes 3 and 4, caused a decrease in value of the land. The land was previously zoned residential and available for residential purposes and thereafter it was unavailable for residential development and inundated with water. By mandating compensation, Condition 1 clearly acknowledged that there has been a decrease in value and that Lot 94 had a higher and better use than water quality and stormwater management purposes.

76. It was entirely open to Mr Maher to conclude – and he did conclude – that not carrying out a particular kind of before and after valuation (as put to him in cross-examination) was not material to the valuation opinion which he did express, which was based on a different type of before and after comparison which was considered by Mr Maher to be fair and reasonable.

77. It is wrong of the Council to assert that Noubia has not established causation, because the very same Consent that approved the five lakes scheme was the Consent that required the Applicant to transfer Lot 94 and it was that Consent that referred to the Council’s obligation to pay compensation for the transferred land. It would be fundamentally inconsistent with that background – and would amount to an abuse of process by the Council – to allow the Council to maintain a submission now that Noubia has not established "causation" in that sense.

78. Noubia was entitled to explore, when it sought consent in 2003, how the Council’s water quality and stormwater management purposes were to be achieved to the Council’s satisfaction so as to obtain development consent. Neither the Council nor Noubia was ultimately constrained by the 1997 EIS as the only single way to achieve the Council’s water quality and stormwater management purposes and at the same time maximise the subdivision yield.

79. The Council does not refer to what is summarised above in [63] about that which is contained in the SEE. The proposed five lakes scheme met the requirements of retention in the 1997 EIS scheme. This is confirmed in the Umwelt letter. The same characteristics were maintained in the 2004 design as proposed by Umwelt.

80. The fact that the five lakes scheme took up less area than the scheme the subject of Council’s 1997 EIS does not assist the Council. Both were acceptable ways to maintain the same level of downstream flows and achieve an equivalent level of water quality. It is also irrelevant that the hypothetical three lakes and channel system was never proposed by Noubia in 2003. That is akin to saying that a valuer cannot value a vacant residential lot on the basis that it is ripe for development as a residential flat building because no-one has ever actually applied for a residential flat building on the land.

81. Posing the relevant question in the Council’s terms, whether for a broad or narrow purpose, does not properly reflect the statutory disregard referred to in s 56(1)(a) and ignores the requirement of the Council that Lot 94 be transferred to it. Consequently Lot 94 was unavailable to Noubia for residential development as a result of that transfer, its highest and best use. That Noubia was able to devise a satisfactory five lakes scheme using Lot 94 for Lakes 3 and 4, which the Council approved, is not a relevant inquiry.

82. The carrying out of the public purpose of water quality and stormwater management on Lot 94 resulted in Lakes 3 and 4 inundating Lot 94 and therefore a decrease in value. That decrease in value caused by the carrying out of the public purpose must be disregarded. The market value of the land therefore should be determined on the basis that Lot 94 could be developed for residential subdivision. Consequently, the issue arises of whether a hypothetical development application for the development of Lot 94 with 32 lots and the alternative drainage scheme (Ex A36) would be approved.

Consideration of Sub-issue 1(b)

84. Resolution of this sub-issue requires consideration of the valuation task necessitated by the determination of market value of Lot 94 under the JT Act in light of the disregard in s 56(1)(a).

85. A key difference between the parties is the extent to which a subjective or objective assessment of the assumptions underpinning the consideration of market value must be applied. The Council emphasised that the Court must consider whether Noubia could have lodged a DA in 2003 for the alternative hypothetical subdivision and drainage scheme being a three lakes and channel system (Ex A36) and asserted that a finding of fact had to be made that the Council would have approved such as DA. I would not describe a finding of a likelihood of a grant of development consent to a hypothetical subdivision as a matter of fact. That submission asserts a greater level of certainty of outcome than the hypothetical exercise under the JT Act requires. An alternative argument made was that if the party considered was a reasonable developer the same considerations would nevertheless apply. For the reasons given by Noubia I do not agree.

86. The Council’s submission that Noubia had to show that its five lakes system was caused by the public purpose, and could not because that design resulted from a multi-faceted process which included lot yield maximisation inter alia, is not addressing the correct question for the purposes of the hypothetical exercise I must consider. The Council approved the five lakes system underpinning Noubia’s DA in 2003 presumably then accepting that it met the requirements of the North Boambee Valley Stage 1 release area requirements in relation to water quality and stormwater management. As Noubia highlighted the SEE identified that the five lakes scheme met the requirements of the 1997 EIS. That Noubia undertook an extensive process to develop the proposal as identified in the Astoria developments letter dated 6 August 2002, Senior Environmental Engineer’s email dated 19 June 2002, the Doug Gow & Associates report of 6 August 2002, the SEE dated 19 September 2002, the Umwelt letter dated 1 October 2002 as relied on by the Council as set out above in [62] is ultimately irrelevant to the question I must address in valuing Lot 94 under the JT Act.

87. As Noubia submitted above in [75], the question as posed by the Council is inconsistent with Condition 1 of the Consent. The land being transferred cannot fairly be valued on the basis that the land was subject to the requirements of the Consent where that Consent required the transfer in order to put into effect the public purpose. ‘Causation’ of the loss of value of Lot 94 arises from the transfer to the Council for the public purpose. Noubia is not required to establish more in terms of causation and certainly not that its five lakes scheme was caused by the public purpose.

88. The second argument of the Council was that Noubia had to satisfy the Court that in 2003 it would have sought consent for the alternative hypothetical subdivision (Ex A36). As it cannot do so causation has not been established according to the Council and consequently the transfer of land in 2007 must be assumed to include the inundated Lot 94.

89. Noubia’s submissions once again reflect the orthodox approach to the question of the disregard focussing as they do on Lot 94. As Noubia emphasised the Council required the transfer of Lot 94 to it under Condition 1 for the public purpose of water quality and stormwater management. Lot 94 is no longer in the ownership of Noubia as a result of Condition 1 of the Consent. Whether an alternative development could have been sought in 2003 by Noubia, the hypothetical three lakes scheme, is irrelevant to the hypothetical exercise I am undertaking.

90. The inundation of Lot 94 resulted in a loss of value of that land which must be valued for the purposes of the JT Act. The Council argued in relation to both its principal arguments that as Noubia’s valuer had not undertaken a before and after analysis for valuation purposes that also supported a finding that Noubia could not establish the requisite causation. I consider separately in Issue 3 an appropriate valuation approach for the compensation for Lot 94. It is not appropriate that in answering the present issue that I resolve at this point in the judgment whether a before and after approach to valuation is the only permissible valuation methodology available, as the Council submitted.

Overall conclusion on Issue 1

91. Noubia can rely on s 56(1)(a) as if a decrease in value of Lot 94 was caused by the public purpose of water quality and stormwater management underpinning the transfer of Lot 94 to the Council.

Issue 2: likelihood of development consent being granted in 2003 for 32 residential lots (alternative hypothetical subdivision) on Lot 94

92. The Court must now determine whether in 2003 the Council would, on the balance of probabilities, have been likely to grant development consent to the alternative hypothetical subdivision and drainage scheme (Ex A36) which provides for the location of 32 residential lots on Lot 94.

93. Noubia accepted that in undertaking the hypothetical exercise it is necessary to hypothesise the alternative controls that could have been put in place to service the alternative hypothetical subdivision of Lot 94. It relied on the agreement in the third engineering JER that controls could have been put in place to service the alternative hypothetical subdivision of Lot 94 which would comply with the Council requirements and would have been acceptable to the Council in relation to flood conveyance and on-site detention objectives.

94. The Council identified two areas the subject of expert evidence which it submitted would have meant it would not have granted development consent to the alternative hypothetical subdivision in 2003, being (i) riparian corridor concerns arising from the engineering evidence and separately (ii) town planning concerns. Water quality management issues were initially identified by the Council as another reason why development consent would not have been granted but this was not ultimately pressed by the Council. As I do not need to consider that issue further the parts of Ms Brown’s evidence in the third town planning JER concerning water quality in pars 3.6-3.20 are not summarised.

Can the Council raise the adequacy of riparian corridor width at all?

95. Whether the Council can raise the issue of the adequacy of the riparian corridor width at all in light of the third engineering JER arises. Related to my finding on that issue is the need to rule on the objection of Noubia to that part of Ms Brown’s planning evidence which addressed riparian corridor width.

96. The third engineering JER states :

In respect of the outcomes of Modelling Round 4, DM and PJ agree:

a) The modelled outcomes provided in Table 1 are acceptable from a hydrologic and hydraulic modelling perspective.

b) That the revised alternative drainage scheme, which includes retention of Lake 5 and an 18.6 m wide channel, would comply with Council requirements and would in our opinion have been acceptable to Council in terms of satisfying site flood conveyance and on-site detention objectives.

97. According to Noubia, the proper inference from this agreement is that Dr Martens has no subsisting concerns in relation to the riparian corridor. Noubia submitted that the transcript of 1 April 2021 demonstrates that I did not limit the experts when producing their latest JER and they were invited to make any observations they wished to make. When the experts agreed that the alternative drainage scheme (Ex A36) would comply with Council requirements, they should be taken to mean that the scheme would comply with the Council’s requirements in all respects. Noubia also relied on Noubia No 2 at [5], where the Court’s orders of 6 May 2021 were extracted, and [26]-[28], where I made observations about the purpose of the third engineering JER.

98. The Council submitted that there was no agreement about riparian corridor width in the third engineering JER as the issue was not revisited. If the transcript from 1 April 2021 is viewed, the reasons for the adjournment and the production of the third engineering JER is that only two specific topics were to be addressed, namely the difference in the modelling used and affording Mr Jamieson a chance to review the Bewsher study and address that further if need be. The previous evidence about riparian corridors therefore remains relevant.

Finding on riparian corridor issue

99. The third engineering JER extracted above in [96] explicitly refers to a corridor width of 18.6 m inter alia and states that all council requirements have been met. There is no reason not to give these words their full effect. If remaining concerns existed on Dr Martens’ part I have no doubt that he would have identified these in the report. The engineers had the opportunity to raise any matters in that report and did not.

100. I have reviewed the transcript of the hearing on 1 April 2021 pp 167-170 concerning what further work the engineers would do. While the focus of discussion was the need for the engineers to address two matters in particular, which the Council emphasised, Noubia’s submissions accurately reflect the content and tenor of the relevant transcript extracts from the entire discussion in court on 1 April 2021. The further evidence was to provide the engineers an opportunity to consider all outstanding issues as between them.

101. No basis exists for revisiting earlier riparian corridor evidence of the engineers.

Noubia’s objection to part of town planning evidence of Ms Brown upheld

102. In respect of the outstanding objection to part of Ms Brown’s evidence at pars 3.6-3.20 of the third town planning JER referring to riparian corridors, Noubia submitted that it was not for Ms Brown to opine on matters of engineering. It was inconsistent with her agreed approach, which was to rely on the engineers in assessing whether the alternative drainage scheme was adequate and would have enabled the approval of the alternative hypothetical subdivision. Riparian corridor width was dealt with finally by the engineers.

103. The Council submitted that in pars 3.6 to 3.13 of the third planning JER Ms Brown was commenting on her reflections on the issues still outstanding from the third engineering JER. From pars 3.14 to 3.20 Ms Brown expressed opinions concerning compliance with the Information Sheet. I note that par 3.16 deals with water quality and is not pressed. These matters fall into a different category to the matters addressed by the engineers. Noubia submitted that pars 3.14 to 3.20 were not in a different category, because Ms Brown was elaborating on objections to the alternative hypothetical subdivision now agreed by the engineers.

104. Having reviewed paragraphs 3.6-3.20 of Ms Brown’s evidence in the third town planning JER I consider all the paragraphs dealt with engineering matters now resolved by the agreement of the engineers. These paragraphs cannot be read, consistent with my finding above concerning the scope of the third engineering JER. All matters of engineering have been resolved between them and evidence of a town planner on the same matters is otiose.

Town planning evidence

105. Noubia submitted that no town planning issues stood in the way of the likely approval of the alternative hypothetical subdivision. The Council maintained that there were significant issues which would have resulted in the Council not approving it. Noubia’s retained town planner was Ms Hunter and the Council’s was Ms Brown. Much of the relevant oral evidence was given in 2019.

First planning JER 21 February 2019 (Ex A14) and second planning JER 1 March 2021 (Ex A25)

106. In the first and second town planning JERs considering the alternative hypothetical subdivision in 2019 (Ex A6) and 2021 (Ex A30) respectively, Ms Hunter considered that the schemes would have received development consent as they were permissible with consent, met the relevant planning controls and guidelines, provided alternative drainage measures, and preserved lakes, parks and vegetation to maintain residential amenity. Ms Hunter considered that water quality and drainage system issues were the only barrier to approval (and believed that Ms Brown agreed with that position), which were resolved by the alternative drainage scheme. The presence of Lakes 1 and 2 (noting that in the final alternative drainage scheme Lake 5 is retained, while in the previous scheme it was removed) were sufficient to retain amenity and that the 2003 planning controls had no requirement to provide lakes as a means of providing amenity of character within the Stage 1 release area.

107. Ms Brown considered that the alternative hypothetical subdivisions (Exs A6, A30) would not have been likely to be approved by the Council. Apart from relying on Dr Martens’ evidence about the prospects of the alternative drainage scheme being approved, the absence of Lakes 3, 4 and 5 would remove the lakes ‘character’ of the estate and there would be a resulting loss of character and amenity.

Ms Hunter oral evidence

108. In examination-in-chief in 2019, Ms Hunter confirmed that the alternative hypothetical subdivision proposal (then Ex A6) was permissible with development consent, that the land would need to be filled to deal with a one-in-100-year flood event, that the subdivision met the requirements and concept of the Information Sheet, 1997 EIS, strategies and applicable controls, and was consistent with the character of the Lakes Estate. There was no planning reason why the proposal would not have been achieved.

109. In cross-examination in 2019 Ms Hunter agreed that the actual grant of consent in 2003 was a relevant consideration for the purposes of assessing whether the Council would approve a hypothetical development application. In response to questioning about the cubic metres of fill required to implement the alternative subdivision, Ms Hunter stated that 20,000 cubic metres of fill was not an impediment to the Council approving the subdivision, using an example of a recent approval of a 100-lot subdivision at Coffs Harbour airport which required 100,000 cubic metres of fill.

110. Ms Hunter was cross-examined in 2021. Asked whether she could derive assistance from the decision to grant consent in 2003, at which time the statutory policy assessment framework differed, Ms Hunter opined that the Council has continued to approve similar subdivisions to the one proposed in the same area, which is indicative of its appetite for such development.

111. Ms Hunter was cross-examined about the outlook from particular lots in the alternative hypothetical subdivision (Ex A30). She agreed that the level of amenity would be reduced from certain lots if the outlook from those lots would be onto other lots rather than a lake and park. She agreed that the amenity would change. Ms Hunter did not know whether a lake aspect was a key factor in the design of some dwellings. Some lots appeared to have been designed to take advantage of a northern aspect, rather than looking out over a lake. Interpreting the aerial photograph of the proposed alternative subdivision, in conjunction with the site view, some residents had not enjoyed an aspect over the lake and parkland. Some properties overlooking the lake lost privacy. Ms Hunter opined that the change in amenity would depend on what residents valued, and if they valued a lake and park view, amenity would decrease. If they valued gardening or thermal efficiency, for example, amenity may not decrease.

112. In re-examination, Ms Hunter was asked about the Gill property, by reference to plans showing that it was an area of low hazard floodway. Ms Hunter confirmed that there was a strip of low hazard floodway on the Gill property in accordance with the floodway mapping carried out in the Bewsher study.

98.   The trial judge set out the submissions of the Council and referred to the evidence, at [180]-[181]. In other words, the issue was identified, but the submissions (and the evidence on which they were based) were neither assessed nor otherwise addressed.

99. The fact that Mr Maher’s valuation exercise may have been conventional in one sense did not address the question raised by the Council, which was that the valuation of one element of the alternative hypothetical subdivision failed to take into account the fact (demonstrated by correspondence between Noubia and its then consultant) that there would be both costs and benefits associated with the alternative proposal. There were undoubtedly consequences, both financial and aesthetic, in constructing the dams required by the two lake system and removing lakes 3, 4 and 5. That was the issue which the Council sought to raise by inviting consideration of a “before and after” valuation. The substance of the critique was not addressed by the trial judge.

100. The materiality of this issue can be explained in principle. A “before and after” valuation may have shown that the approved development was more or less financially advantageous than the alternative hypothetical subdivision. If more, the approved development was the “highest and best” use of the land for the developer. If the alternative proposal provided a more financially advantageous outcome, it would be necessary to assess the likelihood of it being accepted by Council. That would require an evaluation of whether it maintained the same level of downstream flows without lakes 3, 4 and 5, and achieved an equivalent level of water quality. This artificial exercise is one the hypothetical purchaser would be expected to undertake. The fact that Noubia in fact adopted the 5 lake system, might be evidence of such an assessment.

219. As the Court of Appeal stated, if the before and after method is not used then the valuation is not able to take into account the various costs and benefits associated with the consent as obtained. The Court does not have a before and after valuation before it. The Court cannot determine whether the alternative drainage scheme results in the highest and best use of the land. This has been a criticism levelled at Noubia’s valuation evidence since the hearing in 2019.

220. Even if that could be overcome, Mr Maher’s current methodology does not take into account a number of matters that he conceded in cross-examination should be taken into account. The Council relied on the cross-examination of Mr Maher extracted above in [195]. Mr Maher simply values the extra lots which would be available if Lot 94 was to be subdivided rather than used for lakes. The Court of Appeal at [94] has stated that this is not the same as a proper before and after methodology. Mr Maher conceded his methodological flaw in the cross-examination extracted above in [195].

221. Mr Maher has approached the valuation task by assuming that Lot 94 will be developed and accounting for the extra costs that this would require, for example constructing the channel. As the Court of Appeal stated, that analysis is different to a before and after analysis, and not capable of accounting for the totality of variants of costs and benefits between the actual subdivision as a whole and the alternative hypothetical subdivision. Only if one takes into account all of the costs can one determine whether there is an increase in value. Mr Davis’ $1,600,000 comparable sales approach is therefore the only satisfactory approach.

222. Section 55(1)(f) of the JT Act mandates that the valuation must take into account any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. Both of the valuers opine that there is an increase in the value of lots with lake views. Mr Maher’s analysis shows a 1.12% increase, whereas Mr Davis’ shows a 13% increase. Mr Davis’ evidence is consistent with common sense that lots with lake frontages would be more valuable by a higher figure than 1.12%.

Consideration of Issue 3

223. In Noubia CA 2 Preston CJ of LEC stated at [94]:

94. The task of determining an amount that will “justly compensate” Noubia for the lands it transferred to the Council pursuant to the condition of consent is not one confined to deciding merely the contest between the parties’ experts. The trial judge is not obliged to accept or reject the evidence of one or other of the parties’ valuers, for example, but may assign such weight to part or all of a witness’ evidence as the judge determines is appropriate and may reach a conclusion that does not coincide with the evidence of any witness although it is based on the evidence. As Mason P observed in Roads and Traffic Authority of NSW v Hurstville City Council (2001) 112 LGERA 223; [2001] NSWCA 11 at [50]: “In the field of judicial valuations, the task is ultimately evaluative.”

…

224. I will now undertake that evaluative task. As already identified above in [152], Mr Davis’ constrained land valuation of $110,000 does not need to be considered. Accordingly the balance of the valuation evidence and the valuers’ respective approaches must be evaluated.

Before and after analysis not sole valuation approach available

225. The Council submits based on cross-examination of Mr Maher in 2019 set out above in [195] and observations of the Court of Appeal in Noubia CA at [93]-[100] set out above in [218] above, that the only permissible way to value Lot 94 is by applying a before and after approach. As Mr Maher has not applied such an approach Lot 94 cannot be appropriately valued. The cross-examination extracted above in [196] does identify concessions by Mr Maher agreeing that certain matters could not be taken into account other than by undertaking a before and after valuation approach. As I identify below I don’t consider these concessions mean that another valuation method cannot be applied. The Court of Appeal’s observations were made in the context of an appeal by the Council based on a failure by the first trial judge not to determine essential issues which required determination and/or failing to give reasons for his conclusions. The Council’s argument that only with a before and after approach could the valuation of Lot 94 be appropriately valued was recorded, and the failure of the trial judge to address that issue identified. Contrary to the Council’s submissions, I do not interpret the observations of Basten JA as endorsing the only approach available to value Lot 94 as the before and after approach. The remitter by the Court of Appeal to the Court was not constrained in relation to the appropriate valuation methodology to be applied.

226. Valuation evidence in my experience rarely proceeds on the assumption that only one method must be applied. I adopt the extract of Callinan J in Boland v Yates Property Corp Pty Ltd (1999) 74 ALJR 209 at 267-268 cited by Justice Jagot then a judge of the Federal Court of Australia writing extra-judicially in Compensation for Economic Loss (2022) 96 ALJ 832 at 849. As the judicial valuer in this matter, I must ultimately determine if there is valuation evidence to support a valuation of Lot 94 which will justly compensate Noubia for that lot, as required by s 54(1) of the JT Act.

227. As a result of my findings on earlier issues, notably Issue 1 concerning the wide nature of the public purpose and rejection of the Council’s case that Noubia had to prove that the five lakes system of the Lakes Estate was caused by the requirement to transfer Lot 94 to the Council Condition 1 in order to take advantage of the statutory disregard in s 56(1)(a), suggests that a before and after approach is not the only valuation methodology available, and indeed may not be appropriate. I make no finding about whether the before and after method may be the optimal valuation approach.

228. I have been presented with lengthy valuation evidence from two expert valuers Mr Maher and Mr Davis, who both adopt valuation methodologies other than a before and after valuation. No criticism is intended of Mr Davis in observing that he did not undertake such an analysis. Other methods to value Lot 94 have been presented and the parties have had full opportunity to explore these through individual reports, three JERs and two sets of cross-examination in 2019 and 2021. No fundamental in these respective approaches has been identified to suggest that a valuation of Lot 94 on a basis other than a before and after approach cannot be carried out. Mr Maher’s concession in cross-examination in relation to the before and after approach does not completely undermine his valuation evidence. I do not consider the Council has established that it is the exclusive approach particularly given the evidence available. As will become clear below appropriate adjustments for matters such as profit and risk can be allowed for.

229. Mr Davis’ constrained land valuation of $110,000 cannot be relevant because of my earlier findings. Not to consider further compensation for Noubia at this point because no before and after valuation has been carried out by either valuer would not ensure payment of fair value for Lot 94 to Noubia, which Condition 1 requires the Council to compensate Noubia for.

230. I therefore turn to consider the valuation evidence which of necessity means I will not be considering a before and after approach.

Assumed state of Lot 94 - lots or lakes?

231. The lengthy evidence of the valuers set out above identifies their different approaches, reflecting a fundamental difference between them about the assumed state of Lot 94 that they are valuing as at 2003-2007. Mr Maher assumes that Lot 94 is vacant surrounded by some developed lots in other areas the subject of the 2003 development consent, with roads and utilities in place. Mr Davis assumes consistent with the Council’s approach that Lot 94 will contain two lakes which will need to be removed and land filled before any subdivision can proceed, a channel for water installed and an adjustment made to Lakes Drive. Given my earlier findings there is no basis for assuming that lakes would have existed on Lot 94 and that approach of Mr Davis is flawed. Surprisingly he continued to express that view in the third valuation JER despite the agreed position of the engineers in their third engineering JER. It is unclear to me why Mr Davis persisted with that view in the third valuation JER.

232. Consequently a large number of deductions Mr Davis considered had to be made for land filling, channel creation and construction of Lakes Drive need not be considered. To the extent his view that Lot 94 had to be valued as if constrained by the presence of lakes affected his choice of comparable sales this matter may also need to be considered.

233. Mr Maher’s approach is correct given my earlier findings, namely Lot 94 should be assumed to be vacant, generally available for residential development the highest and best use of the land and not occupied by Lakes 3 and 4.

Englobo sales not comparable

234. The two valuers undertook different sales comparisons in their respective approaches. Mr Maher applied what he called a direct development residential land value analysis, considering 17 sales of surrounding lots in the Lakes Estate in 2004-2009 as he considered these sales were the most directly applicable because of similar physical characteristics to Lot 94. I will return to this approach below. Mr Davis considered three englobo land sales in the Coffs Harbour area in his approach. I will first consider if the application of englobo land sales is the appropriate way of deriving market value for Lot 94.

235. The englobo sites are identified in the summary of Mr Davis’ evidence above in [175] being locations at Shepherds Lane Coffs Harbour, 72 Bluff Rd Emerald Beach and Halls Rd Coffs Harbour. Mr Davis made adjustments as set out above in [175] for delayed settlement, council contributions, topography, size and location and a final adjustment for relativity to Lot 94, as identified above in [174]. He made a further 10% adjustment on the assumption that the hypothetical subdivision would not have development consent in May 2007, at [175]. The number of lots on the three sites varied from 18 to 47. The value range of $28,101 to $48,082 per lot which he derived is a large range, which he further adjusted to arrive at $50,000 per lot for Lot 94 in [176].

236. Mr Davis sought to bolster his englobo land analysis in the third valuation JER by introducing Residex data above in [168(5)] which he considered supported his approach to englobo land sales. As Noubia submitted, this new evidence fell outside the scope of additional evidence permitted under the Court’s orders made on 22 July 2021. Strictly speaking this evidence should be disregarded for that reason. In any event, Mr Maher’s criticisms set out above in [191] are apposite and I do not consider the application of the englobo sales is justified by the Residex data.

237. I was not taken to any of the englobo sites on the view conducted during the hearing. I understand they are all at some distance from Lot 94. The adjustment of the sales of the three sites required to make them comparable to Lot 94 was substantial, and the derived amounts per lot had a wide range, suggesting the sites have limited comparability. Further, Mr Davis adjusted for Lot 94 to arrive at $50,000 which is higher than the range he derived from the three englobo sites.

238. Mr Maher criticised these sites on the basis of their comparability because of the ‘shovel ready’ state he considered Lot 94 should be considered to be in, which is not comparable to inferior raw land in an inferior state of readiness for subdivision of the englobo land relied on by Mr Davis, above in [167].

239. I accept Mr Maher’s view that Lot 94 was not comparable to englobo land in a ‘raw’ state because the existence of a development consent for Lot 94 could be assumed and roads and services would have been constructed in close proximity given the development of other parts of the Lakes Estate and the likely prudent hypothetical purchaser being an experienced professional developer as identified above in [167] inter alia. While the ‘rawness’ of the three englobo sales relied on by Mr Davis varied, none appeared to be as ‘shovel ready’ as Lot 94 and able to be considered in the context of an overall residential scheme undergoing development. Together with the substantial adjustments required in relation to the englobo lots with a value greater than the range derived from their consideration results in my concluding that the englobo sites are not comparable to Lot 94.

Appropriate valuation methodology

240. Having put englobo land sales to one side, Mr Maher’s residual land value approach and Mr Davis’ alternative feasibility approach remain.

241. Mr Maher and Mr Davis both looked at sales in the Lakes Estate in 2004-2009 and 2004-2007 respectively, applying differing analyses in significant respects. There was some overlap between Mr Maher’s 17 sales identified in Annexure 5 of the second valuation JER (above in [162]) and Mr Davis 27 sales of vacant lots by Noubia in the vicinity of Lot 94 (above in [177]). Mr Davis identified a subset of 13 sales which he further analysed (above in [179]).

242. Mr Maher selected sales of properties he considered were most physically similar to Lot 94. Mr Maher’s adjustments were relatively straightforward given that he selected sales based on what he considered were lots with similar physical characteristics undertaking a direct comparison. Mr Maher considered that a hypothetical purchaser would have the benefit of the surrounding development, with more recent sales of comparable lots to inform price. He did not consider that date of sale played an important part in making adjustments (Mr Davis did not agree).

243. Mr Davis’ feasibility approach was not entirely clear to me. He undertook a statistical analysis of 27 sales described as in the vicinity of Lot 94 in the period 2004-2007 to determine an average and median price of sales in that period. The purpose of this exercise was said to be to assess the characteristics of the market for residential lots in the Lakes Estate, with an average and median sale price derived (above in [177]). Mr Davis then analysed the same 27 lots based on whether they had direct lake frontage, some partial lake views and no frontage and no lake views or frontage (above in [178]), which he considered showed higher rates being paid for lots with lake frontage.

244. Mr Davis then considered 13 sales of lots near Lot 94, a subset of the 27 lot sales earlier analysed, which were lots he considered were comparable to Lot 94 and did not have lake frontage or lake views. From this analysis, identified above in [179] he calculated a gross realisation based on an average or median lot values, which he had calculated.

245. This approach was criticised by Mr Maher as not how a professional developer would approach determining a fair price, with the residual land value method more likely to be adopted. He also considered a number of Mr Davis’ residential lots were not comparable to Lot 94 in terms of physical characteristics and maintained that the sites he chose were most comparable to Lot 94. I accept Mr Maher’s criticisms identified above in [183]-[185], [193] as justified in the circumstances I am considering in light of my earlier findings in relation to Issues 1 and 2.

246. Mr Maher did not adjust for date of sale when he considered 17 sales in the period 2004-2009 as he did not consider this was warranted in light of the market in Lakes Estate in that period in [184] above. Mr Davis was critical of that approach as he considered an adjustment for a difference ought be made. In light of Mr Maher’s evidence summarised above in [184] I accept that the date of sale need not be adjusted for in relation to Mr Maher’s comparison sales.

247. Mr Davis’ rational for applying average median sales data to his comparable analysis was not clear, and consequently appeared unnecessarily complicated. The application of the residual land value approach of Mr Maher is an acceptable and appropriate approach to determining the value of Lot 94. I accept that he identified a large number of comparable lots from which a value for the lots in Lot 94 could be derived. I do not consider his evidence was undermined in cross-examination in 2021, outlined above in [197]-[200].

No deduction of market value for betterment (value of lots with/without lake views or frontage need not be determined

248. Mr Davis sought to determine if lots with lake views and/or frontage attracted a greater value in the market place, which in his view they did, see above in [178]. In Mr Davis’ analysis of a number of properties which he allocated between two groups of those with lake views/frontage and those without in the Lakes Estate he found a 13% increase in price was paid for lots with lake frontage/views in [171], [203] above. I note that this was the only attribute he adjusted for in this table. As a result of this analysis Mr Davis identified as an issue that betterment should be considered in the determination of market value. In his first report this was identified but no adjustment by way of reduction of market value was made. In subsequent JERs Mr Davis considered that a reasonably substantial sum should be deducted for betterment, as outlined above in [181].

249. Mr Maher disputed that betterment was relevant, firstly, because in the alternative hypothetical subdivision being considered Lakes 3 and 4 never existed so that lots with lake views in this location did not exist and consequently that consideration would not be in the mind of a hypothetical purchaser, who he considered was likely to be a property developer. Secondly, he did not consider that a finding of a 13% increase was justified by Mr Davis’ analysis. Mr Maher’s analysis above in [163], [166] suggested only a 1.12% increase resulted from this factor in relation to lots around Lakes 3 and 4 and a small negative effect (0.44%) in relation to lots around Lake 5 above in [163]. In Mr Maher’s view some lots in the Lakes Estate had favourable attributes valued in the marketplace unrelated to their location in relation to a lake, reflected in favourable prices for lots without lake views or frontages.

248. Regardless of either analysis I do not consider betterment arises in the particular valuation exercise I am undertaking for the reasons given by Mr Maher above in [187] concerning the absence of Lakes 3 and 4, and Noubia above in [207(2)]-[207(3)]. As Noubia identified Condition 1 requires the Council to compensate for ‘the land’, here Lot 94. The value of Lot 94 is not to be valued by reference to the value of other land. The public purpose of the lakes must be assumed not to exist and consequently can have no role to play in the valuation exercise. No deduction of market value on the basis of betterment arises given the statutory basis of market value I am determining in order to give effect to Condition 1. It is unnecessary that I resolve the difference in opinion between the experts about what the appropriate figure for betterment is. No betterment will be deducted from any market value.

Extent of deductions

251. The amount of deductions for development costs by Mr Davis was much greater than for Mr Maher, in large part because of assumptions he made about the presence of Lakes 3 and 4 and the need for their removal and filling of the land, building of the channel to a greater degree than Mr Maher and changing Lakes Drive. As already indicated above in [230] deductions for these amounts are not warranted in the hypothetical sale scenario I am considering in relation to Lot 94.

252. Development consent costs of $200,000 would also not need to be deducted contrary to Mr Davis’ approach.

253. Mr Maher’s lesser deductions as identified in the table extracted above in [162], supported by figures provided in Annexure 7 of the second valuation JER above in [164] are reasonable.

Allowance for risk

254. Mr Maher was criticised for failing to make allowance for development risk, as part of the criticism he did not use a before and after approach. As can be seen from the table above in [164] he allowed a figure of 25% risk as a deduction. Mr Davis allowed a similar figure as can be seen in his figure in [180] above. Given that agreement the figure of 25% allowance for profit and loss is appears appropriate and I will adopt that.

Conclusion on Issue 3

255. I will award market value of Lot 94 in the amount identified by Mr Maher in his table at [164] above, namely $2,965,000.

Costs

256. The parties asked that costs be reserved. Noubia has been successful in this Class 4 proceedings. The usual order is that costs follow the event so that the Council would pay Noubia’s costs as agreed or assessed in the absence of any disentitling conduct by Noubia.

Orders

257. Proceedings have progressed substantially over the period since the Further Amended Summons filed pursuant to leave granted on 4 March 2019. That summons seeks a variety of declarations and orders, most of which no longer appear relevant. Before making final orders I will confer with the parties in relation to the form of any declaration and/or order I should make.

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Decision last updated: 03 April 2023