Paino & Heavey Lex No. 64 Pty Ltd v Director General, Department of Transport
[1994] QLC 10
•15 April 1994
|
BRISBANE
FRIDAY, 15 APRIL, 1994
Re: Claims for compensation
Resumption for road purposes (A93-34/35)
Salvatore Paino A93-34
and
Heavey Lex No. 64 Pty Ltd A93-35
v.
The Director General, Department of Transport
J U D G M E N T
By Proclamation published in the Government Gazette of 6 November, 1992, an area of about 2.703 hectares being part of Lot 2 on Plan NR5809 contained in D/G Volume N898, Folio 165, County Nares, Parish Smithfield, was taken by the Director General, Department of Transport (the respondent) for road purposes. A Proclamation amending the Proclamation was published on 11 June, 1993, under which the area taken was amended to 2.704 hectares.
The parcel from which the land was taken (the parent parcel) was a regular shaped parcel (almost square) containing 40.13 hectares with a frontage on the west to the Captain Cook Highway of about 622 metres and to McGregor Road on the north of about 646 metres. The parcel is situated about 16 kilometres north of the city of Cairns and about 1.5 kilometres north of the junction of the Captain Cook Highway and the Kennedy Highway at Smithfield. On the north-western corner of this junction there exists the Smithfield Shopping Centre comprising a Woolworths supermarket, 47 specialty stores and associated therewith a tavern and liquor barn, two banks, post office and a Mulgrave Shire Council administration branch. Kuranda and other areas of the Atherton Tableland may be accessed via the Kennedy Highway. The Captain Cook Highway also serves destinations north of Cairns (Mossman - Port Douglas, etc) and at the date of resumption served as the principal access to the various residential/resort areas of the northern beaches - the area generally is referred to as the Marlin Coast. The parent parcel had been used for cane growing purposes prior to purchase by the claimant company in 1987. At the date of resumption the land was zoned Rural C under which the minimum lot size in subdivision is 40 hectares. The parcel was purchased by Heavey Lex No. 64 Pty Ltd by transfer registered on 18 August, 1987. An option to purchase the land had been taken in 1986. The lot was purchased for the purpose of establishing a resort. This company (Heavey Lex) is in the control of Mr Salvatore Paino. In June of the year following the purchase, Heavey Lex leased to Mr Paino 15.823 hectares of the lot covering generally the western area, save for a strip of about 25 metres along the Highway frontage. Under the terms and conditions of the lease, the lessee was required to maintain a palm tree plantation. The lease was preceeded by an agreement entered into between Heavey Lex and Mr Paino in January, 1988 under which it was agreed among other things -"(1)Salvatore Paino will sell to the purchaser all the trees necessary to complete the landscaping at the proposed Gemini Resort for a consideration of $235 per tree of 3 years maturity;
(2)Heavey Lex No. 64 Pty Limited estimates that 25,000 to 30,000 trees will be required and agrees to purchase a minimum of 27,000 trees;
(3)Heavey Lex No. 64 Pty Limited agrees to pay the vendor an amount of $10 per tree per annum for the maintenance of the trees at the completion of 3 years from the date hereof, such maintenance to be paid on a minimum of 27,000 trees;"
At the date of purchase the parcel was (and has remained) zoned Rural C under which the proposed resort use is a consent use. An application to use the lot for this purpose was made on 26 February, 1988. Consent was granted on 20 April, 1988 to use the land for "accommodation, units and ancillary uses" subject to conditions specified in the letter granting the consent. The proposal envisaged the provision of -
"225 luxury motel units, 325 budget motel units, pools, refreshment centres, tennis courts, amphitheatre, reception building, restaurants and bar building, recreation centre, transport centre and workshop, staff accommodation, interpretive centre, child care centre, nursery, manager's and caretaker's residences and general store."
The development has not proceeded but the consent remains live until April 1995 when if not substantially acted upon will lapse. The nursery/plantation proceeded and at the date of resumption contained of the order of 30,000 palm trees. A manager resides on the premises in a demountable home and the operation includes a commercial aspect as well as preserving the intent of the lease. However, in the period between the purchase of the property and the date of resumption in 1992, this area and generally the area in and around Cairns has seen a boom and bust in resort development and needless to say rises and falls in property values; the residential base has suffered but has continued to grow and the planning scheme of the area which is within the area of the Mulgrave Shire Council (the Council) has been reviewed. Growth of course brings with it demands for public and private facilities. In the former category lies the subject resumption. The scheme is officially described as a scheme to upgrade the Captain Cook Highway from a two lane road to a divided four lane road extending northwards from the junction of the Kennedy Highway at Smithfield to a point north of the McGregor Road intersection. Under the scheme this intersection will, after the construction of the works, be controlled by a substantial roundabout (sufficient in size to permit the construction of a fly-over without the need to acquire further land) which will upgrade the intersection from one controlled by stop signs for traffic entering or crossing the Highway to a roundabout designed to carry two lanes of traffic from each of the four arms of the intersection. Facilities from the private sector which are relevant in providing for and sustaining growth include the provision of shopping facilities. These facilities (including public sector facilities) are matters considered by the Council in drafting the relevant planning documents. A proposed planning scheme went on public display in 1990 (objections closed in May 1991) and at the date of hearing was before the relevant Minister for his consideration before gazettal. The scheme, as put on display, speaks about the need for increased shopping facilities, where they should be located and, the extent to which the document may speculate on the future, when such facilities may be required. In Part B of the scheme (the supporting documents) the vicinity of the intersection of the Captain Cook Highway and McGregor Road is identified as a locality which in the long term may cater for an expected demand for additional district level retail and commercial facilities. In other respects, under the scheme proper, the parcel is proposed to be zoned Rural. On the strategic plan map the land is included in an urban designation under which residential use (single family dwellings) is intended to dominate. The relationship between tourist development areas and permanent residential areas is defined under the proposed development controlled plan for tourist development. The relevant plan shows the subject land as being within a "discrete residential area" the intent of which is to foster use of land for permanent residential use (which may include areas of medium density accommodation used for permanent occupation) and to prohibit development for tourist facilities. Further the plan states that it is not desired for non-residential or "foreign traffic" to be attracted through discrete residential areas. It follows and not in dispute, that were the application made for the tourist development intended for the subject land subsequent to the publication of the proposed planning scheme, the application would not likely meet with approval. The plan of development submitted by Heavey Lex with the application of February, 1988 shows the residential components of the proposed resort as consisting of a number of modules spread over the eastern section of the parent parcel and across the southern area to the Captain Cook Highway. Access to the area is depicted as being about midway along the McGregor Road frontage which leads to a large circular car park in the central western area (from which guests would be taken to reception, etc by motorised vehicles) from which one access spreads south easterly and then circles the resort northerly ending in a cul-de-sac east of but not connected to the entry. Another internal access proceeds from the car park to the south west to service a number of facilities proposed in that section including a nursery and general store. A copy of the site Master Plan accompanying the application is appended as Annexure A. It may be seen that no structures and no description is given to a large area in the north west section. The proposal put before the Council refers to the plan accompanying the application as Stage 1. Viewing the plan and such references any person could be excused for thinking that Stage 2 would comprise a duplication in the north western corner of that proposed in the north eastern section. Nevertheless the Council could only approve that which was before it and this was approved as being "both specific to the area indicated as being developed in the application and the details of the scope and type of development proposed in the application." Another plan accompanying the application indicated that the application was made in the awareness that a twenty metre wide strip would be required for highway duplication purposes and for a ten metre buffer strip in parallel therewith. The latter is and has been a policy requirement of the Council since 1982. This requirement which is reflected in the approval for consent use states that the strip is to be "densely landscaped to the satisfaction of the Shire Parks Superintendent and also incorporate a raised earthen mound to the height of 1.5m". Other conditions speak of the responsibility on the applicant for the upgrading of McGregor Road and the upgrading of the intersection of that road with the Captain Cook Highway to the satisfaction of the Transport Department and the Shire Engineer. And there is also a requirement that ingress/egress to the site be located on the McGregor Road frontage not less than 150 metres from the future alignment of the Captain Cook Highway. This is a reflection of Council policy restricting access to the highway.
Following the resumption claims were served on the respondent by Heavey Lex and by Mr Paino as lessee (holding over). The claim by Heavey Lex is as follows:
Land $1,200,000.00
(ii) Valuer's fees 8,000.00
(iii) Town planning advice 1,670.00
(iv) Legal fees 15,675.00
$1,225,345.00
The claim made by Mr Paino as lessee is in the sum of $1,126,749.00 being the sum of some sixteen heads of claim relative to the plantation/nursery. In the hearing of the matters the claims were amended and made out as follows:
Heavey Lex No. 64 Pty Ltd
(a)Land $2,602,170.00
(b) Loss of buffer vegetation 400,000.00
(c) Fencing 8,366.00
Paino
(a) Loss of cultivated palm trees 525,335.00
(b) Redirection of water pipes 3,226.00
(c) Relocation nursery and dwelling 89,140.00
(d) Removal costs of stored material 608.00
(e) Removal of potting mix 575.00
(f) New storage room (on resumed land) 4,000.00
(g) New entrance 17,880.00
(h) Loss of palm trees (new buffer required) 858,973.00(i) Additional labour cost 10,072.00
(j) Irrigation block 2 2,766.50
Cost of Compiling Claim
(a) Valuation fee 5,000.00
(b) Legal costs (solicitor) 20,739.00
(counsel) 850.00
(c) Employees costs 19,192.00
TOTAL (both claims) $4,567,803.50
For the claimant, Heavey Lex, the assessment for land was derived by the valuers called on behalf of the claimant by a consideration of the present value of an assumed potential in the land in the north western corner of the lot for higher order retail development both before and after the resumption. These exercises brought with them evidence from other relevant consultants. Mixed up with this approach were considerations as to the stability of the resort approval; whether that area suffered damage by the resumption (a loss of potential site coverage) and lastly the effects of the resumption upon the nursery. The respondent in the valuation finally put in evidence assessed compensation in the sum of $235,000. This sum is derived by the assessing officer (Mr TJ Gould, Registered Valuer) as follows:
"I value the land before resumption as being suitable for residential subdivision over all of its 40.134 hectares, at a value of $120,000 per hectare. This indicates a total value of $4,816,080.
After the resumption I value the remaining 37.43 hectares at $123,000 per hectare or a total value of $4,603,890.
Compensation can therefore be arrived at by the following calculation:-
Land Value Before Resumption $4,816,080
Land Value After Resumption $4,603,890
INITIAL ASSESSMENT $ 212,190
As no accurate stock count has been
undertaken in respect of all the trees
on the subject land before resumption,
and those remaining after, the valuation
of trees can only be done on the basis of
the count of trees actually lost on the
resumed land. In this matter I am relying
on a count undertaken by others and the
added value of trees is calculated as
1,775 trees @ $11.50 each $ 20,413
TOTAL ASSESSMENT $ 232,603
For practical purposes, I would round this assessment up to TWO HUNDRED AND THIRTY-FIVE THOUSAND DOLLARS ($235,000)."
The case for the claimant produced a rather long and tangled web. For the respondent the position may be stated briefly. Mr Gould considered firstly that the consent for tourist development had no value and did not at the date of resumption represent the highest and best use of the relevant land; secondly, he reasoned in the absence of the consent use that the highest and best use of the land would be for residential subdivision which is a use consistent with the proposed planning scheme; thirdly, although recognising that there was a possibility that approval might be gained for some form of commercial or higher density residential use in the north western section of the parent parcel, he concluded that contributions to the upgrading of roads would limit compensation (by way of enhancement) to such an extent that the claimant would be better off receiving an assessment based on a residential use. Thus the valuation before and after the resumption was made on a residential basis and the likely contributions for the upgrading of external roads assessed on this basis. As no contribution could be claimed from the developer by the Department of Transport towards the upgrading of the intersection (because of the resumption), works which follow were seen as an enhancement to the land to the extent of the contributions which would likely be required had the resumption not taken place. For a residential subdivision the enhancement is assessed at $435 per lot or $3,300 to $3,500 per hectare. Included also in this reasoning was the consideration that the site, assuming it possessed a commercial potential in the north western corner before the resumption retained that potential after the resumption. His reasoning necessarily included the assumption that if the size of the area in the north western section with this potential was reduced to an extent by the resumption which affected the potential of the area for some form of commercial or higher order residential development, a prudent owner would retain that size by dropping off land of lower potential - ie. single unit residential land or in this instance, land to the east with consent approval.
Witnesses who were called in support of the claims by Heavey Lex and Mr Salvatore Paino comprised Mr Paino; Kenneth Law Hutton who manages the nursery on the subject land; George Charles James, architect who designed the resort proposal and produced conceptual plans of possible retail developments upon which the valuers assessed compensation; Mr Peter John Jeffries, registered valuer; Christopher Gerard Buckley, town planner; Patrick Vincent Flanagan, engineer; Rodney Louis Brett, registered valuer; Alan Charles McPherson, engineer; Peter Edward Cronin, chartered accountant; Peter John Spencer, quantity surveyor; Rodney James Bradley, proprietor of a newsagency in the Smithfield Shopping Centre; George Robert Gummow who operates a nursery; and Valerie Haigh, shopkeeper in the Smithfield Shopping Centre. For the respondent the Court heard from Mr Gould; RM Woods, property consultant; Victor George Feros, town planner; Glen Bechtel, property consultant with Richard Ellis; Keith Rodney Bryars, engineer; Robert John Griffiths who operates a nursery; Kim Francis Morris who also operates a nursery; Roger Humphrey Brameld, traffic engineer; Jon Mark Norling, retail analyst and Michael Cabella Challoner, town planner. The evidence of a number of these witnesses was confined to the effects of the resumption upon the nursery.
Heavey Lex is a family company controlled by Mr Paino. He has had years of experience in the real estate industry in Sydney and of later years in motels, one of which is at Randwick and another at Griffith. The business investments have included proposed/developments of large scale tourist resorts south of Sydney. In 1986 Mr Paino canvassed the Cairns region for such likely development and purchased the parent parcel for the purpose. He says that he has always had in mind the possibility of some commercial development in the north western corner of the parcel. Following the purchase he immediately implemented plans to bring the proposed development to fruition by applying for consent for tourist development, establishing the nursery and so forth. It is found in the evidence of Mr Cronin, who was called to give evidence on the economics of the development of the resort and also in respect of dealings he has had with Mr Paino on the purchase of some palm trees after the resumption, that the company around 1987 or 1988 had plans for floating a public company to take over the assets of Heavey Lex including the proposal at Cairns. The proposal was deferred pending the outcome of an objection taken by Heavey Lex to an application by the Council to rezone land to the east of the subject land to general industry which it was thought would be damaging to any resort development. Such proceedings were heard by the Local Government Court in 1989. Mr Cronin said that by 1990 it was impossible to float anything. Mr Paino's evidence is that in contesting the objection to the Council's application he expended a sum of about $164,000. This evidence is put forward in demonstrating his bona fides with respect to the development of the tourist proposal. The application resulted in an area of ten hectares being rezoned to general industry. This land is separated from the subject land by an area of balance land which with adjoining land was sold to Daikyo in March 1990 for golf course condominium type development. The sale covered 38.46 hectares and was made for a consideration of $2.9 million or about $7.50 per m2. Mr Paino said that about that time he heard of proposals by the Department of Transport to put a by-pass road through the parent parcel. He said that he wanted to be "out". In March 1991 he entered into a contract with Daikyo to sell the land and the palm trees for $9.8 million. No apportionment was given between land and nursery stock. The contract was subject to the Foreign Investment Review Board approval which was not obtained. He said that he is working towards making substantial progress in the construction of the resort prior to 1995 when in the absence thereof the consent would lapse. He proceeded to say in his evidence that it was always intended that the resort would be developed before a shopping centre development but "it is important to retain all of the area formerly allocated for shopping centre to remain for the same use otherwise the consequences being that the development of the tourist resort would be reduced in size." Exercises followed from the evidence of Mr Cronin of the effects of a reduction in area of the resort assuming that density per hectare of the existing approval was retained and as a consequence opinions and feasibility studies of a resort of that size, its viability, etc, were given by other witnesses including Mr Woods of Horwath and Horwath which firm specialises in this area. The particular issue was not pursued by the claimant to finality and for reasons which will become evident I will address it not further. However, before proceeding with consideration of the highest and best use of the area and the methods of valuation adopted by Mr Jeffries and Mr Brett I may say contrary to the statement made by Mr Paino that which is certain on the evidence is the approval for the resort (subject to substantial compliance) and that ideas/potential for any commercial development of the north western section was ambulatory. He admits that in respect of that area he kept his options open. Those options no doubt would be determined by growth and growth trends. As it has transpired, the proposed planning scheme in the supporting documents and with full knowledge of the consent approval but without any input from Heavey Lex, has seen fit to identify the vicinity of the intersection as the preferred location for the development of a district level shopping centre if there is a need for such facility in the long term. In the workings done by Mr Brett, he has put 29 hectares aside as being covered by the resort consent leaving 10.66 hectares available for other use (prior to the resumption). This division which was made from a plan provided to him by the claimant and annexed as Annexure B appears to me to borrow from the resort area in the south west. The question whether the resumption will have an effect upon the resort proposal or in the mind of the prudent purchaser would require a modification of the plans for the resort, is one which turns upon the potential of land in the vicinity of the corner for commercial or other higher order development in the long term. This aspect is critical to the assessments made on compensation. However, in order to emphasise the degree of importance which is required in the matters I will outline the calculations made by Mr Jeffries and Mr Brett. The area with commercial potential was calculated as - pre-resumption 10.6656 hectares and after resumption 8.4120 hectares.
Mr Jeffries after referring in his report to the area with the consent approval, says "the remaining 10.7 hectares, we understand, has long term plans for the development of a sub-regional shopping centre." He was briefed to derive values based on hypothetical development of that area before the resumption and 8.412 hectares after the resumption. He relied on plans drawn by Mr James providing before the resumption a gross floor area (GFA) of 36,152 m2 with a site coverage of 33.81% and with a gross lettable area (GLA) of 28,592m2 and parking for 1854 vehicles. The plan after the resumption provided a GFA of 26,050 m2 with a site coverage of 30.78 %; a GLA of 21,257 m2 and parking for 1343 vehicles.
Costs of construction for both exercises were provided by Rider Hunt Quantity Surveyors and estimated at $35,800,000 pre-resumption and $26,750,000 post resumption. Specialty shop rentals from Peninsula Fair Shopping Centre, Kippa Ring; Capalaba Park Shopping Centre and Sunnybank Plaza as at November, 1993 of $434 per m2; $426.36 per m2 and $478.85 per m2 respectively were factored up over four years at 5% per annum and a rental of $500 per m2 applied in the exercises. Current rental rates for the major stores and the remaining stores were applied "as most of these operators rely on a fixed base rent with income growth being satisfied by turnover provisions within lease agreements." A capitalisation rate pre-resumption of 11% was applied. A rate of 10.7% was applied after the resumption as the development may be more readily saleable because of its lower capital value. A profit and risk factor of 20% was applied in each exercise. The exercise pre-resumption is as follows -Discount Department Store 6000 m2 at $130 p.s.m. $ 780,000.00
Discount Department Store 5030 m2 at $130 p.s.m. $ 653,900.00
Supermarket 4200 m2 at $130 p.s.m. $ 546,000.00
Supermarket 2000 m2 at $100 p.s.m. $ 200,000.00
Mini Major 1000 m2 at $120 p.s.m. $ 175,000.00
Discount Pharmacy 500 m2 at $350 p.s.m. $ 160,000.00
Sizzler Restaurant 700 m2 (gross) $ 160,000.00
Pizza Hut 300 m2 (gross) $ 90,000.00
Kentucky Fried Chicken 300 m2 (gross) $ 90,000.00
McDonalds 250 m2 (gross) $ 90,000.00
Electrical 350 m2 (gross) $95,000.00
Specialty Stores 8002 m2 at $500 p.s.m. $ 4,001,000.00
Totals 28,632 m2 $ 7,000,900.00
Less Owners Shortfall
Land Tax Say $180,000.00
Major Traders $166,000.00
Owners Contribution
to Marketing $120,000.00
Total $466,000.00
Net Income $ 6,534,900.00
Capitalise Net Income at 11% $59,408,181.00
Estimated Market Value of Completed
Development say $59,400,000.00
Less:
Profit and Risk 20% $ 9,900,000.00
Construction Costs
(as per Rider Hunt Estimate) $35,800,000.00
Leasing
Inducements and incentives
say $ 600,000.00
Commissions $ 700,000.00
Land Holding Charges
3 Years $ 750,000.00
Marketing Costs 1% $ 594,000.00
Interest on Construction
18 Months at 10% $ 2,685,000.00
Total Development Cost $51,029,000.00
Estimated Land Value at November 1996 $ 8,371,000.00
Estimated Land Value at November 1992
Discount Value at November
1996 for four years at
10% per annum = $ 5,717,477.00
Less:
Stamp Duties and Legals
at 4% $ 219,903.00
Estimated Land Value at November 1992
on 10.701 hectares $ 5,497,574.00
In the exercise, post resumption provision is made for one discount department store of 7,000 m2 and for two supermarkets of 4,000 m2 and 2,000 m2. The same rentals were applied to the respective stores except for the electrical store which on a reduced area of 300 m2 was given a gross rental of $90,000.00. This exercise followed the same process as that made prior to the resumption. The resultant land values were - pre-resumption $5,497,574 which yields a value per square metre of about $51. The land value found after the resumption of $2,813,312 is equivalent to a value per square metre of $33. Mr Jeffries said that his experience with shopping centres has been limited to developed centres and that he has had no experience in a green field situation. He acknowledged that in this situation, which is the situation in the subject case, there is no development, no leases, no expressions of interest, no subdivision of the relevant land from the parent parcel and of course no rezoning which would permit the development. His expertise lies in the mix which should apply given that a site is ripe for such development. He worked on the assumption (based on town planning advice) that construction would begin at the end of 1996 and that the centre would be open in mid 1998. He said that before any development would take place major tenants would have to be secured and that funding for the development may not be obtained unless some 70% of the development was committed to leases. He agreed that in a green field situation a prospective developer would rely on consultants to assess the "need". It is found in the exercises that contributions towards external road works have been confined to the upgrading of McGregor Road and have been estimated at $300,000. These costs were provided by Mr Spencer. The rates supplied were rates current at November, 1993. The figures obtained by Mr Jeffries would support compensation in round figures of $2.6 million. The assessment made by Mr Brett yields compensation in the sum of $1,785,000. He also relied upon town planning advice but differed from the approach taken by Mr Jeffries in the pre-resumption exercise by applying a sale of land at Smithfield. Mr Brett's actual method in assessing compensation may be prefaced with extracts from other areas in his report and valuation. At page 5 under the heading "Improvements" he says -
"The value of this property lies in its redevelopment potential. Existing buildings, comprising an old home and various small sheds, are of no value in this context.
Part of the property has been developed with an extensive nursery of assorted trees and shrubs. These have been grown specifically for landscaping a major resort project intended to be developed on part of the land. They are of considerable value for that purpose. Alternatively they could be sold on the retail market.
Their value does not form part of this report."
Later in discussing the nature of the surrounding developments he said -
"Proposals of particular note in the immediate vicinity of the subject property include the Cairns campus of the Captain Cook University located diagonally across the Cook Highway/McGregor Road intersection, recent approval for a local shopping complex directly opposite the subject in McGregor Road and a town planning approval for a shopping centre next to the existing Smithfield centre on the western side of Captain Cook Highway."
and under the heading of "Existing approvals" these comments are made -
"Although no approvals have yet been sought, it is evident from the Draft Town Planning Scheme, and Buckley Vann's conclusions, that the prominent position on Lot 1 on the Highway/McGregor Road intersection lends itself to future commercial use.
It is also evident from conclusions reached in the Town Planning report that any significant changes to the resort site approval caused by the resumption or, by implication, through the need to sacrifice resort land in an endeavour to maintain the integrity and original size of the corner site, may prejudice the status of that approval."
The reference to Lot 1 is a reference to the area he valued.
The sale relied upon by Mr Brett is situated about 500 metres south of the subject site adjoining the Smithfield Shopping Centre on the north. Details of the sale are as follows -
"R.P.D. : Lot 1 on R.P. 728070
Area : 8.723 hectares
Price : $2,300,000.00
Date : November, 1992
Purchaser : CMB No. 1 Pty Ltd." - CMB "the site"
This site which is referred to as CMB is a vacant site and has been identified as a potential shopping site at least since September, 1989 when the Council recommended a rezoning of the area from Residential A to Local Shopping subject to compliance with various conditions. The land was then in the ownership of the owners of the existing Smithfield Shopping Centre. The rezoning did not proceed. The contract with CMB was not subject to obtaining the necessary rezoning or development approval. Mr Brett says that the initial intention was to develop a number of fast food outlets on the site. He described the site as follows -
"It is broken by two deep gullies, one of which results in a permanent physical separation of this site from the adjoining Smithfield Centre. The second bisects the property, splitting any future development into two distinct sections. An area of 1.07 hectares is lost to these gullies leaving 7.65 hectares of useable land. It is not a corner site and has significant access problems."
In August, 1993, the Council again approved rezoning of the area to local shopping subject to conditions which include conditions providing for vehicular access to the site via a highway underpass, on/off ramps and acceleration/deceleration lanes which were to be constructed at cost to the applicant. It is also necessary for the site to be drained. Cost to provide these road and drainage works were estimated by Mr Flanagan who was engaged by CMB as consultant engineer in the application for rezoning. These costs have been estimated by Mr Flanagan as follows -
Straightening and lining on-site drainage
channels $ 500,000
Culverts under Captain Cook Highway $ 300,000
Highway vehicle underpass $1,000,000
Off ramps $ 850,000
Acceleration/deceleration lanes $ 150,000
$2,800,000
Mr Flanagan said that the site was constrained by two drainage lines which traversed the site from east to west. He said that the southern drainage channel which includes natural vegetation (and running beside the southern boundary) would be retained and that the northern channel will be "rationalised" in the form of straightening works to enable the channel to effectively deliver stormwater flows across the site where they are contained within a defined channel and to permit use of other areas on the site for car parking, etc. Such car parking is to include decking above the channel. Mr Flanagan said that the project will provide a GFA of 28,000 m2 with a NLA of 20,000 m2. The proposal has reached the stage where the rezoning deed has been signed and actioned with the applicant awaiting gazettal. The plans put in evidence of the proposed road works show that south bound traffic may access the centre by leaving the highway then proceeding through a roundabout (which will also serve Cattana Road in the east) and under the highway to an internal roundabout servicing car parking in the northern section of the proposed centre and from there southerly to another roundabout (either wholly on the proposed site or partly on the site of the existing Smithfield Centre) through which access may be gained to the existing Smithfield Centre. Access will be available to both centres via this roundabout for north bound traffic. Mr Flanagan agreed that Mr Beard, traffic engineer who did the traffic study for the EIS of the proposed development, looked at traffic flows from the two sites and worked on the totality of the two in designing the traffic solution. With the works in place at the costs estimated by Mr Flanagan, Mr Brett saw the site for comparison purposes as having a value of $5.1 million which when applied to an area of 7.65 hectares (exclusive of drains) reflects a value of $66.66 per square metre. The sale was applied to the subject site pre-resumption as follows -
"Total outlay in order to achieve an accessible, useable site is:-
Purchase price $2,300,000
Extra-ordinary costs $2,800,000
Total $5,100,000
i.e. 7.65 hectares @ $66.66 per square metre.
Given the corner position of the subject site, ease of access and its size and homogeneous nature, I consider that, prior to acquisition, it was 30% more valuable than the sale.
$66.66 per square metre + 30% = $86.66/sq m
i.e. - 10.6656 hectares
@ $86.66/square metre = $9,243,000
To maintain a proper comparison with the sale this value must be adjusted for three factors
cost of expected off-site road works
(ii)time delay before the site is ready for development
(iii)a risk component to provide for the rezoning process.
i.Off-site development works likely to be imposed as conditions for approval are discussed in the Buckley Vann report. These include improvement to McGregor Road and the Highway intersection.
This work has been costed by McPherson Maclean Wargon Chapman at $223,000.
Adjustment $9,243,000
Less $ 223,900
$9,019,100
ii.Allowing three years until full rezoning and development applications are needed.
Present value of $9,019,100 due in three years
discounted at 10% per annum $6,776,183
iii.Discounting 10% for risk
Value as is $6,098,564
This represents $57.20 per square metre over the 10.665 hectare site.
Value before acquisition $6,100,000"
The value of the site after the resumption was derived along these lines -
"Clearly the "after" land value, expressed as a rate per square metre, is diminished below that applicable to the previously unaffected land.
A reduction of at least 15% will be needed to account for the combination of lower average rents and higher development costs.
i.e. $57.20/sq m less 15% = $48.62/sq m
Enhancement:- Completion of the round-a-bout and other roadworks by Department of Transport results in enhancement equivalent to the value of contributions which otherwise would have been required as a condition of rezoning and development of the commercial land.
Providing D.O.T. does not seek to impose such conditions on a future application, the enhancement is valued at $223,900, being the earlier allowance for off-site road works.
The "after" value is then calculated as:-
8.412 hectares @ $48.62 per sq m $4,090,000
Plus enhancement $ 223,900
$4,313,900
Value after Acquisition $4,315,000
Loss:-
"Before" value : $6,100,000
"After" value : $4,315,000
$1,785,000"
In the process of carrying out the development scenarios the process necessarily involved evidence of requirements for access and contributions which may be necessary and reasonable in upgrading external roads. Mr McPherson and Mr Brameld considered these issues. The enhancement applied in the valuation of Mr Brett came from an estimate of contributions assessed by Mr McPherson. Mr Brameld, on the other hand, was of the opinion that for a development of this nature traffic considerations could only be solved by the provision of a fly-over which would have to be brought forward (not expected to be required before about the year 2000) some years in order to accommodate the development. He would advise a proposed developer to budget on at least a million dollars for road contribution. It may be noted that in respect of the CMB site access to the site by under-pass is equivalent for practical purposes to the provision of a fly-over. The relevance however of this evidence depends upon the primary consideration stated earlier herein. A conclusion can only be reached by a consideration of the planning documents and the evidence given by the planners and other experts on both the interpretation of those documents and growth and need for such facilities. At the outset, in looking at the possibilities for any development of the scale approximating a district shopping centre (in local planning terms) in the vicinity of the intersection, it is reasonable to conclude on the evidence before the Court that the subject site being a vacant site and unrestrained in physical and practical terms (accepting that at the relevant date the McKellar development (opposite on the north) was committed to the extent of the subsequent approval) would be seen as the logical site for such development. The question of potential of the site is governed by the evidence about to be discussed. Mr Buckley provided the assessment on behalf of Heavey Lex. Among the conclusions stated in his report he says -
"The Strategic plan clearly articulates that the intersection of McGregor Road and the Captain Cook Highway is the preferred location for additional retail and commercial facilities in the northern beaches. In the long term this locality will result in the creation of the principle retail and business centre for the subregion;".
The proposed Strategic plan map designates the preferred location for four business centres, namely Gordonvale, Edmonton, Smithfield and Trinity Beach. The latter are within the area of the Marlin Coast. The plan states that -
"Smithfield has a well established sub-regional business centre which is likely to expand as the region grows. The orderly expansion of this centre has been provided for providing that such expansion meets appropriate standards regarding amongst other things suitable and safe vehicular access, provision of adequate parking to meet project demands and the minimal intrusion on adjoining and neighbourhood residential areas."
Part B (supporting information) of the plan which deals with options for centre development has led to the principal submission put before the Court on behalf of the claimant. Extracts from this document are contained in the report of Mr Buckley. They are as follows -
"The existing Smithfield Centre performs the function of a district/sub-regional centre, providing a national chain supermarket, several secondary retailers and specialty shopping. The existing centre provides convenience and limited comparison shopping facilities to the Northern Beaches localities, with its area of influence extending to include Kuranda and adjoining rural residential areas.
Extension of this centre to provide a discount department store and additional specialty retail facilities would upgrade this centre to regional status with the retail hierarchy." (p. 176) .....
"Expansion of the existing Smithfield Centre is conceivable in the short to medium term. However, such extensions may pose serious problems with respect to vehicular access, and should only be permitted if it can be satisfactorily demonstrated that safe and convenient access can be achieved. Further, an extension to the centre would achieve ultimate development for the site, given the constraints of adjoining land uses and access restrictions.
In the longer term, there is likely to be a demand for the provision of alternative retail facilities to serve the Northern Beaches, resulting from ongoing rapid population growth. The location of such additional facilities will depend upon the functional characteristics of the proposed use. It is likely that if a new centre of this scale is developed it should be located south of Trinity Beach.
Neighbourhood - level facilities are expected to locate in locations convenient to services areas. At Palm Cove and Trinity Beach, expansion of existing facilities would be the most appropriate, while urban expansion in other localities should make provision for neighbourhood retail facilities.
In the long term, there shall be a demand for additional district level retail and commercial facilities in the Northern Beaches. The preferred location for this facility is in the vicinity of the Captain Cook Highway/McGregor Road intersection. There are a number of factors indicating the desirability of establishing such a facility in this area, including convenience to residents of the Northern Beaches, access from a major arterial route and relative lack of conflicting of competing land uses. In the long term, beyond the life of this Plan, it is likely that development in this location will result in the creation of the principle retail and business centre serving the Northern Beaches. However, the transfer of dominance away from the existing Smithfield Centre should not be allowed to interfere with the viability of that centre. (emphasis added)
While urban expansion within Freshwater Valley, Redlynch and Brinsmead will create a demand for the provision of local and neighbourhood retailing, it is expected that district level retail demands will be met by existing facilities located within Cairns City, principally by the Raintrees and Brinsmead Plaza centres. Preferred locations for neighbourhood centres, while not indicated on the Plan, have been designated for the Redlynch and Brinsmead Valley locations on the D.C.P. - Freshwater Valley."
(p. 181-182) .....
"It is expected that higher order retailing, commerce and administration will continue to congregate within Cairns City. The Smithfield Shopping Centre may be the exception to this rule if the expected expansion occurs.
Major changes to the shopping hierarchy structure in Mulgrave Shire is not expected to expand in the wake of urban expansion. Careful consideration should be given in the placement of these facilities to maximise community access while limiting impacts on the surrounding areas and the road system."
(p. 183) .....
"Four business centres have been designated on the Strategic Plan Map. Commercial development within Gordonvale and Edmonton will lead to consolidation of the retail and business areas within these townships, while maintaining their district level function.
It is envisaged that expansion of the Smithfield Centre to create a Regional Centre will occur, providing appropriate planning criteria can be met.
Continued growth of the Marlin Coast will create demand for a district level centre, the preferred location of which is adjacent to the Captain Cook Highway/McGregor Road intersection. Development of this centre, however, will not be carried out before the population warrants it so as not to compromise the viability of existing centres." (P. 229)
From these extracts Mr Buckley concluded -
1)The Strategic plan clearly articulates that the intersection of McGregor Road and the Captain Cook Highway is the preferred location for additional retail and commercial facilities in the northern beaches. In the long term this locality will result in the creation of the principal retail and business centre for the subregion;
2)It is considered that population growth and tourist accommodation growth will create an opportunity to open a proposed new retail centre in 1997. Time associated with planning approvals, appeals, and construction would necessitate a decision to proceed in at least 1996.
His reading of the documents leads him to conclude that it is expected that in the long term development in this vicinity will be of higher order than Smithfield. From that point he proceeds with a study of growth patterns within the catchment of the northern beaches, the Atherton Tableland particularly Kuranda, and areas north (Port Douglas, Mossman). Accepting a resident population of the catchment at 1989 of 25,305 persons (from part B of the proposed planning scheme) and by applying a growth rate of 5.5% (from the planning documents) and 7% (his projection) he arrives at expected populations within the catchment for the years 1996 and 1999 as follows -
5.5% 7%
1996 36,807 40,633
1999 43,220 49,814
If a factor of 10% is applied to allow for tourism and transient workers his estimates as at 1999 become 47,542 and 54,795 persons. If a retail floor space standard of 1.3 m2 per person is applied (this standard being adopted in the planning justification for the McKellar development) corresponding floor area requirements of the order of 61,805 m2 (low) to 71,223 m2 would be required. Existing floor space for the catchment is estimated at 33,300 m2 including the likely floor space of Smithfield and an estimate of the floor space contained within the McKellar development. Thus if the growth rate approximates 7% a short fall of 37,933 m2 will occur by 1999. He resolved that a need for a district level centre would occur by 1997. On the assumption that approvals may take up to three years to obtain (in a worst case scenario) he would recommend that securement of planning approvals should start by at least 1996. The workings of Mr Jeffries assumed that construction would commence at the end of 1996. Mr Brett allowed three years "until full rezoning and development applications are needed."
Evidence on these issues was also given by Mr Feros, Mr Challoner and Mr Norling. Mr Feros had provided Heavey Lex with a draft report under covering letter dated March, 1991, dealing with the potential to establish retail uses on the subject land. The letter reads -
"Dear Sir
PRELIMINARY RETAIL STUDY
SMITHFIELD FARM
Please find attached two copies of our Draft Report for your review and comment.
Following the conduct of the preliminary retail survey for the Marlin Coast encompassing the subject site, the following general observations are made:
*The Marlin Coast has undergone considerable residential and tourist growth.
*Although the level of residential and tourist growth is currently reduced, the Marlin Coast area can be expected to undergo further residential and tourist growth in the future.
*Based on an assessment of the existing Marlin Coast area and the application of retail floor space standards, there is a shortfall in 1991 of some 6220 m2 of retail floor space with a deficit of some 13,170 m2 by 1996.
*The levels of projected deficit reveal ample opportunity for the absorption of new retail developments in the catchment including, but not limited to, a moderated Smithfield Shopping Centre expansion, retailing associated with the university campus proposed for land in the vicinity of the subject site, and a shopping development on the subject site.
*Given the nature of the Merlin Coast and the likely urban expansion, there may exist potential for the establishment of a home-maker centre. It is envisaged that such a centre may involve the sale of household goods such as hardware, carpets, furniture, electrical appliances, etc.
In order to both confirm and quantify the need and demand for additional retail and commercial facilities on the Marlin Coast, determine the general suitability of the subject site and to provide supporting information for any town planning application lodged with Council, it is considered appropriate to undertake further detailed investigations and studies.
Such further detailed investigations and studies would include:
* A survey of both Marlin Coast residents and shoppers
*Town Planning Report to address town planning considerations
* An Economic Impact assessment report
* An Engineering Report
Should you require any clarification of the contents or findings of the attached Draft Report, please contact this office."
The report in discussing major retail proposals on the Marlin Coast referred, inter alia, to:
1)the refusal by the Council to an application to rezone land on the corner of the Captain Cook Highway/Poolwood Road intersection (about 3 km north of the subject site) to enable development of a shopping centre of 11,732 m2 based on one discount department store of 6,300 m2 and supermarket of 2,322 m2,
2) the proposed university development including the provision of retail facilities not exceeding 4,000 m2, and
3)the proposal covering the CMB site in 1987 which at that time was of the order of 13,630 m2 including one discount department store of 7,500 m2 and a grocery store of 2,000 m2.
Trends in population growth were taken from ABS information and the council's base information for the forward planning documents (5.5%). The likely population for the Marlin Coast is estimated by Mr Feros to be 20,530 for 1991, 26,840 as at 1996 and 33,250 by the year 2000. Growth is correlated with retail floor space at 1.1 m2 per person to take into account continued support for the Cairns Central Business District and the conclusion drawn that as at 1991 there existed a deficit in retail facilities of 6,220 m2 and a deficit as at 1996 of
13,170 m2.
Among the observations he made following the conclusions stated in the letter and contained in the report are these two paragraphs -
"*The anticipated development of a university and associated student accommodation on land in the vicinity of the subject site is likely to increase the demand for convenience goods shopping. The subject site is well located to provide such shopping facilities.
*Given that the Marlin Coast is an established urban area containing a large resident population and likely to experience considerable residential growth in the future, there may exist potential for the establishment of a home-maker centre. It is envisaged that such a centre may involve the sale of household goods such as hardware, carpets, furniture, electrical appliances, etc. It is noted that Mulgrave Shire Council's new Town Planning Scheme specifically recognises such uses within the "Retail Showroom" definition as previously discussed in Section 7.01 of this report."
Mr Feros recognised that with the provision of further facilities, leakage to the CBD would be lessened and thus the ratio of floor space per person may increase. In a report written for the respondent in 1993 and dealing with the same subject matter a different conclusion is reached. I find no need to address these conclusions which appear to have been drawn from a consideration of matters thought to have more significance than in 1991 save that certain pertinent changes have occurred which (although not directly addressed in the report) throw a different light on these considerations. These changes will be found in the evidence dealing with the McKellar development for which rezoning was obtained in July 1993 and in respect of the size of the proposed development for the CMB site. The following paragraphs which are found in the report of Mr Challoner are relevant -
"6.6The Volume 2 document containing information supporting the Strategic Plan is quoted in paragraph 5.10 as envisioning higher-order district and even regional level facilities at the intersection of the highway and McGregor Road. A district level facility has now been approved on the north-eastern corner of the intersection (the McKellar approval referred to in paragraph 5.4) and there is therefore no longer any potential for such a facility to be established on the subject parcel.
6.7The possibility of the subject parcel having or being seen to have potential for the development of commercial facilities of an even higher order must be considered in view of the reference at page 182 of the proposed Strategic Plan's supporting information document (see paragraph 5.10) to "the creation of the principal retail and business centre serving the Northern Beaches". It should be noted from the statement that if such a centre were to be established it is envisaged that it would be "in the long term, beyond the life of this Plan." The assumption that such a development would not take place for a long time is supported by the proviso that the development of a principal retail centre in this location "should not be allowed to interfere with the viability of that (the Smithfield) centre.
The Smithfield Shopping Centre can be expected to more than double in size in the near future in view of rezoning approvals granted by the Mulgrave Shire Council and also taking into account the reference on page 229 of the supporting information document (see paragraph 5.10) that the existing Smithfield centre is expected to expand into a regional centre. Accordingly I consider that the subject parcel has no real potential in town planning terms for any significant commercial development in the foreseeable future. Neither would I expect any prudent purchaser to see any such potential especially in view of the fact that the reference to the future development of a principal centre at the highway/McGregor Road intersection is contained only in the supporting information document (Volume 2) of the proposed Scheme and is not reflected in the main document (Volume 1).
7.1It is my opinion that at the relevant date the highest and best use of the subject parcel was for a low to medium intensity residential development catering for permanent residents. In addition there would have been seen scope for some very limited commercial development, probably in the vicinity of the intersection. Such development might possibly have comprised or included a service station with vehicular access from McGregor Road."
Mr Norling who specialises in economic and urban research provided a market assessment of the proposal put forward by Heavey Lex. He is not a town planner and does not profess to be one, however, in assessing "need" for such facilities he finds it usually helpful to examine the provisions of the relevant strategic plan. As the strategic plan for the Council has used a different nomenclature to that used by his company (PLI) he has included PLI's equivalent when discussing the hierarchy of shopping facilities. On this basis in discussing part A (the Strategic Plan) the reference to Smithfield as a "well established sub-regional centre" would on PLI's description be a "well established district centre." In discussing part B he says that it recognises the following retail hierarchy -
* Cairns CBD;
*regional (sub-regional) centres - eg. Earlville Shoppingtown and Westcourt Plaza;
*sub-regional (district) centres - eg. Smithfield;
* district (neighbourhood) centres - eg. Edmonton and Gordonvale; and
* local centres.
He sees ambiguity in the reference to the upgrading of Smithfield to regional (sub-regional on PLI's classification) centre standards when compared with the statements in the document following the reference to a demand in the long term for a district (neighbourhood) level retail facility in the vicinity of the Captain Cook Highway/McGregor Road intersection. His examination of the trade area (primary area being the area north of the Barron River to Palm Cove and west to the range, the secondary (south) area running south from the Barron River west of Cairns City and the secondary (west) comprising Kuranda and areas of the Atherton Tableland) indicates that population has increased from about 20,000 persons in 1986 to 26,400 in 1991 at an average of 6% per annum. He says that population has now reached 29,300 persons and is expected to reach 34,070 in 1996 and 40,700 by the year 2001. He expects the majority of the population growth to originate from the primary trade area which he estimates would reach a population of 25,000 persons by 2001. In the data he produced it is found, that there is a trend in single unit residential development away from the northern beaches and towards the southern area of Cairns at White Rock. He says that the existing network, besides the CBD of Cairns, is served by two regional centres being Earlville which totals about 30,000 m2 of NLA anchored by a David Jones Junior Department Store, a Big W, a Woolworths and Franklins Discount Department Stores and Westcourt Plaza of 18,000 m2 NLA anchored by a KMart Discount Department Store and a Coles Supermarket. Both centres are within 5 km of the central business district of Cairns in a south-westerly direction (towards White Rock). He said that these centres are more remote than the Cairns CBD for residents of the northern beaches. Within Cairns City there exists Festival Fair of 9,000 m2 anchored by a Woolworths Supermarket. In the area of the Marlin Coast there is Smithfield and Coastwatcher Centre at Trinity Beach the latter of which he says operates only at a local level and is anchored by a 400 m2 convenience supermarket. He says that as at 1992 there is a possibility of a major retail development being effected on the site of the Cairns Railway Station; that plans have been approved which allow for an expansion of Earlville to 44,000 m2 NLA enabling DJ's to double in size and for additions to the Target and the Woolworths Store; that plans lodged with the application in respect of the CMB site (and approved) provide for the construction of a centre having a NLA of 20,000 m2 including a discount department store, a supermarket, hardware store, fast food restaurants and specialty stores and that the McKellar development covering 2.3167 hectares opposite the subject land would allow for a development of about 7,000 m2 of retail facilities of which about 5,000 m2 could be provided on the larger corner site within the subdivision. In assessing need he concluded on a ratio .75 m2 per person (allowing for break-up of a usual 1.5 m2 of retail floor space per person in urban areas between regional centres down to the lowest level shopping) that the trade area could support a total floor space of 30,500 m2 by the year 2001. His exercise on turnover potential projected for the same period brought up a need for about 33,000 m2. He said that discount department stores require trade populations of between 40,000/50,000 persons and that major supermarkets required at least 20,000 persons with discount supermarkets able to be supported by a little less than 20,000 persons. A population of 40,700 would on these requirements support in his opinion one discount department store and two (possibly three) supermarkets at the district/sub-regional level. He says that a total floor space of 25,000 - 30,000 m2 should be sufficient to provide for the need. This need in his opinion can adequately be met by the existing Smithfield Centre, the development proposed for the CMB site and the development proposed for the McKellar land. This overall picture may be complemented by evidence covering a 20.84 hectare site purchased by the Mulgrave Shire in 1990 and referred to in evidence as the Kennedy Farm. This site is opposite Smithfield with frontage to Cattana Road on the north and the Captain Cook Highway on the west. It is a site which will benefit by the road works proposed for the development of the CMB site. There is no direct evidence before the Court as to the intentions the Council has with the site. The possibilities are found in the evidence of Mr Flanagan in answer to questions put in cross examination -
"Yes thanks. All right. Now, the - you have had some involvement as well, haven't you, with the land across the road from the CMB, or across from the Smithfield Shopping Centre, Kennedy's farm? - - In terms of I sponsored some suggestions to the - it's current proprietor, as to appropriate uses for it.
The current proprietor is the Mulgrave Shire Council? - - Yes.
They bought it a couple of years ago, I think? - - Yes.
And the Mulgrave Shire Council has some ideas as to the usage that they can make of that land? - - I understand so, yes.
The Mulgrave Shire Council has entered into some entrepreneurial sort of activities in so far as buying and selling land, isn't that so? - - I think that's what they call it, yes.
Yeah.And there has been, at times, a bit of controversy in the paper where developers get a little bit annoyed that the council is doing this? - - Some developers may form that opinion, yes. I can't deny that that's the circumstance.
Sure.What sort of - do you have any knowledge of the sort of plans that council has for that land, Kennedy's farm? - - I understand - I don't have knowledge of the reasons they purchased it, and what their outcomes are. I understand there have been a number of scenarios floated to them. I also have been informed by council officers, that there are other options of which I am not aware of that have been floated to them. My understanding of the circumstances are the council purchased that land to achieve three outcomes and that is, one was a capital gain on their purchase, obviously like any good entrepreneur would try and achieve. Two, the establishment of civic facilities. In other words, a town planning outcome which would establish an appropriate range of community facilities in that significant location called the Smithfield node. And three, a potential for possibly some commercial office space, or whatever that they may retain in that civic precinct, which would generate an income. And their ideas there were really to provide the sorts of community facilities that the State Government and the Commonwealth Government may provide, in terms of a CES and so forth. And therefore, they would rent those offices out to those instrumentalities and have a source of future income.
All right.The council generally bears in mind the commercial aspect of land that it owns in this sort of vicinity? - - Within the limits of their commercial understanding, yes.
Yes? - - I might put it that way.
And then they consult consultants about these matters where they need outside assistance? - - Yes."
A consideration of the whole of the evidence leads me to make the following observations:
1)In the context of the proposed planning documents the existing Smithfield Centre is seen as a well established sub-regional centre.
2)When the documents were written an approval existed for an expansion of the centre (not for an extension in the sense in which that word was used in evidence) by the provision of some 13,000 m2 of floor space on the CMB site.
3)The expansion as approved following purchase by CMB is consistent with the expectations of the proposed plan - an expectation that Smithfield would grow to regional status.
4)The qualification referred to in the planning documents (access) on such expansion has obviously been satisfied.
5)It would appear that in the mind of the Council the status of that shopping node is seen (at least as an option) as having the potential of a regional centre in the real sense by the provision of government, local government and community facilities within the environs of the shopping zone.
6)In the "long term", that which was envisaged for the vicinity of the Captain Cook Highway/McGregor Road intersection were facilities of district level - that is something of lesser level than the existing Smithfield Shopping Centre.
7)On the assumption that the Smithfield node proceeds as approved (whether with or without consideration of the options available in dealing with the Kennedy farm) the possibilities for development in the vicinity of the Captain Cook Highway/McGregor Road intersection become remote and place a severe qualification upon the words "In the long term, beyond the life of this plan ..." where used in Part B.
How then would the prudent purchaser/developer see the subject site?
It may be seen in the evidence that deficiencies in shopping facilities estimated by Mr Feros in 1991 of 6,220 m2 and possibly 13,170 m2 by 1996 were made in the absence of the McKellar development and on the basis that a development of the CMB site might be of the order of 13,000 m2. At that time Mr Feros identified a need within the area for a home-maker centre (a need which could be satisfied by the McKellar development) and he anticipated that with the development of the university and an anticipation that students would be accommodated in the vicinity of the university, a demand for convenience goods shopping would increase. There is also evidence that there is a need for a service station and for fast food outlets. However this last need appears not to have gone unnoticed - the CMB proposal (which a person described loosely in the evidence as "Mr Hungry Jack" controls) contains provision for this sort of development in the southern area of the site. Mr Challoner could see scope for some very limited commercial development. Mr Gould, speaking as a valuer, concluded that approval might be gained for some form of commercial use or higher density residential which is not unrealistic having regard to the evidence expressed in relation to the effects of the university development. Mr Norling put out of mind any need for a facility of a district level before the year 2001. In the context of the planning documents and the approvals Smithfield seems certain to develop as intended. The idea that the area may develop into regional centre status, as that term is understood in Brisbane and the Moreton Region (PLI description), by the provision of government and community facilities is not beyond the reach of possibility. The Council has demonstrated its faith in the proposed planning documents by refusing an application for some 11,000 m2 of retail at the junction of the Captain Cook Highway and Poolwood Road. To contemplate the Council whilst promoting the upgrading of Smithfield to regional status would almost contemporaneously therewith allow a development which would not simply compromise that development but destroy it cannot be countenanced. To that extent the wording of Part B of the plans upon which Mr Buckley relies so heavily can have no weight. Although projections on growth are varied and opinions have differed on trade areas, custom, and leakage to and from trade areas, it is clear to me that a prudent purchaser would not entertain the project envisaged by Heavey Lex either before or after the resumption and if looking for a form of commercial use for part of the area would turn his mind towards opportunities which may surface with development in the immediate area. The approval for the McKellar development would demonstrate that the Council sees the vicinity of the Captain Cook Highway and McGregor Road intersection as possessing a potential which may complement rather than compromise Smithfield. Consistent with Council's intent and as expressed in the McKellar approval in my opinion the prudent purchaser would consider that a case could be made out for some commercial development within the area of the subject land catering for a service station and some retail possibly of the order of that which generated the traffic report (TEC) appended to the statement of evidence of Mr McPherson (service station and 6,000 m2 of retail). Nothing of the order of ten hectares however would be required for this form of development. An owner when considering this potential may also give consideration to the question as to what should be done with the balance of the land in that area not covered by the consent approval, that is, whether it should be retained in an in globo state with the expectation that in years to come there may be a need for further commercial land in that location or alternatively to put it into some form of higher density residential use capitalising upon the growth which university students are expected to bring to the area.
The parcel that the Court is dealing with stands as an unsubdivided parcel zoned Rural C with consent approval hovering over an area of about 29 hectares unaffected by the resumption save for a strip of .4504 ha. in the south western section for which Mr Brett would assess compensation at $50,000 or $11 per m2. A rezoning would be required to enable any commercial development. Although rezoning may be obtained on a metes and bounds description a sale of the area would require subdivision. In these exercises risks are involved. In assessing compensation I propose to regard about two hectares of the corner as having a potential for commercial development and to regard the balance as having a value slightly in excess of the value which was assessed by Mr Gould at $12 per m2. There is no sale in evidence of a small shopping centre site, either generally or of a site for the uses identified as being possible uses for the relevant area. In Mr Gould's evidence there is a sale in May 1992 of 49.829 hectares of land at Edmonton (in the Edmonton/White Rock growth corridor) for residential development purposes and containing a designated future shopping centre site in the long term of about 8 hectares and for stage 1 of 1.8 hectares. The total area was purchased for $5,350,000 or $107,366 per hectare (about $10 per m2) in a contract providing for staged settlement through to December, 1994. Mr Gould considers that the subject land would fetch higher lot prices in residential subdivision. He made no attempt to apportion the added value of the commercial component in the sale. His value of the parent parcel as residential land with the potential that he identified is at a rate of $12 per m2 or $120,000 per hectare. He said in evidence that McDonalds paid about $25 per m2 for a site of about 4,000 m2 on the southern approaches to Cairns and I note that in the Bamchin case - A92-72 - Bamchin Holdings Pty Ltd v. The Director-General, Department of Transport, he applied $65 per m2 to an area of 2,000 m2 of potential commercial land. As the subject area will remain part of the parent parcel, the only reasonable means of assessing compensation is to consider what the potential in this area may add to the parcel as a whole. In resolving all doubts I have concluded that a value of $16 m2 overall may be applied to the relevant area. A development of the nature envisaged could be achieved as effectively after the resumption as before the resumption and without affecting the area subject to the consent approval. Compensation may therefore be assessed by applying the value derived of $16 m2 to the area resumed of 2.704 hectares. The sum is $432,640.
The next question is that of enhancement. It is submitted and I accept that this may be measured by a consideration of likely contributions towards the upgrading of the intersection had the resumption not taken place. The evidence is that the McKellar development paid a sum agreed between the parties of $160,000. On Mr Brameld's methods of assessing such matters he is of the opinion that a demand could have been made of the order of $350,000. Working on the assumption that the roundabout would cost about $400,000 Mr McPherson calculated a contribution equivalent to $80 per vehicle which he would discount by 50% in order to reflect use made of the intersection by other developments. The evidence given on behalf of the respondent by Mr Bryars is that the roundabout will cost more than double the estimate assumed by Mr McPherson. Vehicle numbers were taken from the TEC report estimated (excluding the resort) at 536 (service station-200; shopping centre-336). For a residential development Mr Gould would allow enhancement at around $3,300 per hectare. In the absence of any precise form of development for the area and of an apportionment between commercial and other possible uses, an arbitrary amount can only be ascertained which I fix in the sum of $80,000 (excluding any consideration of contributions required in respect of the resort approval).
Accordingly, compensation for land will be determined in round figures in the sum of $355,000. I will now address the remaining headings of compensation.
The claim by Heavey Lex for land is followed by a claim for -
1)loss of buffer vegetation in the sum of $400,000 and
2)fencing $8,366.
The western boundary of the parcel prior to the resumption was unfenced. A drain or gully about 4.6 metres wide and one metre deep ran along this boundary. Commencing some distance to the south of the north western corner of the parcel and continuing south for some 360 metres or so, there stood some natural vegetation comprising predominantly black wattle. The balance of the frontage contained no vegetation. Photos of the drain taken prior to the road works being constructed show the vegetation as being predominantly within the drain and some within the road reserve. Land between the drain and the nursery was cleared land. The claim for loss of vegetation is based on the premise that by preserving the vegetation or doing something with it, the buffer requirement on development could be satisfied. Condition 10 of the conditions attached to the resort approval provides -
"10.The applicant shall be responsible for the dedication of a 10 m buffer strip along the full frontage of the site that abuts the Captain Cook Highway. This 10 m buffer strip shall be part of a 30 m strip along the Captain Cook Highway including the resumption by the Main Roads Department. This buffer strip shall be densely landscaped to the satisfaction of the Shire Parks Superintendent and also incorporate a raised earthen mound to the height of 1.5 m."
A quote from Woodlands Nurseries to cultivate an area of 360 metres by 6.5 metres with mounding 1.5 metres high; to supply and plant trees, install irrigation, supply mulch and maintain for twelve months was put in evidence. The sum quoted is $413,084.
Buffer requirements on development adjacent to the Captain Cook Highway have been in place since the policy was adopted by resolution of the council in 1982 (modified in 1988). The policy is carried forward in the proposed planning documents which sees the Captain Cook Highway as providing a landscaped theme route requiring improvements in accordance with a co-ordinated theme landscaping programme. No buildings or signage is permitted to exist above tree canopy. The buffer policy finds further expression in conditions applying to the McKellar development. The landscape master plan of the Council contains tree species recommended for buffer purposes. Included are melaleuca and swamp bloodwood, cassia and fishtail palm with shrubs including callistemon and bougainvillea. Remnant natural vegetation communities may be preserved and complemented for the purpose of providing a buffer. In the subject case however, the remnant natural vegetation, assuming it fits that description, is within the drain and partly on the road reserve. No evidence was given as to gains or savings which may be made by incorporating the natural vegetation within the buffer nor can I see evidence as to how the physical constraints presented by the existence of the drain could be overcome in fulfilling the intent of the policy. This claim is disallowed for lack of any demonstrable proof.
The claim for fencing this boundary has a relationship with the drain. It is submitted that the drain with the vegetation grass and undergrowth acts as a deterrent to would be trespassers. The sum claimed is based on the cost of constructing a 1.8 metre high galvanised chain wire fence along 454 metres (the relevant part) of the frontage. I accept that the drain assists in securing the plantation. After the resumption this area of the plantation is as open to the public as the McGregor Road frontage was prior to the resumption. That frontage is secured by a four strand barbed wire fence. Costs obtained to provide a fence of similar standard along the western boundary are between $2 per metre to $3 per metre using steel posts. These estimates were obtained by Mr Gould. Mr Gummow who gave evidence dealing with other issues of the nursery agreed that a fence of this description would be sufficient. Compensation for this item will be allowed at the rate of $3 per metre rounded off in the sum of $1,400.
The remaining headings of compensation are related to the effects upon the nursery/plantations. The heads of claim are as follows:-
(a)Loss of cultivated palm trees 524,335.00
(Lessee's claim)
(b)Redirection of water pipes 3,226.00
(c)Relocation nursery and dwelling 89,226.00
(d)Removal costs of stored material 608.00
(e)Removal of potting mix 575.00
(f) New storage room (on resumed land) 4,000.00
(g) New entrance 17,880.00(h)Loss of palm trees (new buffer required) 858,973.00
(i) Additional labour cost 8,398.00
(j) Irrigation block 2 2,766.50
The establishment of the palm plantation was to provide for a ready supply of plants for landscaping of the resort project. It was expected that the plants would be needed in two to three years of the date of the establishment of the nursery. At that time the market for palms was buoyant and had that market continued considerable savings would have been made in having plants on hand (assuming that the resort was developed as planned). A recession followed. The resort has not been developed. The consent approval will lapse if substantial compliance has not been made by April 1995. Mr Paino says that he intends to pursue the development. He has an agreement for sale of the plants to Heavey Lex. The agreement covers about 27,000 plants. At the date of resumption it is estimated that there were some 30,000 plants on the land. Plants which were not required for the landscaping of the resort would be sold. There is no evidence before the Court to say that following the resumption the supply of trees available from the plantation is insufficient to meet the needs of the proposed resort development should development progress. Further, in considering this issue and others which follow it is necessary to consider the attitude which the hypothetical prudent purchaser of the parcel would take accepting (as I have accepted) that part of the north western area has a potential for commercial development and the balance of that area for possible higher density residential development. In these circumstances it is reasonable to assume that a prudent purchaser of the whole parcel in the position of Mr Paino would act reasonably and would plan the retreat, as it were, in a manner which would cause the least disturbance and result in savings.
Trees that were on the resumed land comprised inground trees, trees in bags which could be easily removed and trees in bags which, through passage of time, had become rooted to the ground or entangled with roots of other plants. These last plants could be removed by simply slashing the roots. However in the negotiations which took place orally and not reduced to writing there was some confusion. It is clear that the respondent accepted responsibility for inground trees. These trees could be regarded as fixtures running with the land. It also seems clear that the claimant (on the understanding of Mr Hutton who was acting as his agent) accepted that movable trees were his responsibility. The position in respect of the third category was unclear. He (Mr Hutton) being of the opinion that trees with roots which had overshot or broken out of the bags were the responsibility of the respondent. Under section 20(2) of the Acquisition of Land Act compensation is required to be assessed "according to the value of the estate or interest of the claimant in the land taken on the date when it was taken." In Theo & Ors v. Brisbane City Council (1990-91) 13 QLLR 160 the Land Appeal Court rejected a claim for furniture the claimants left in the resumed premises on grounds that furniture formed no part of the estate or interest of the claimants in the land taken. In this case it appears to me that a distinction can readily be drawn between inground stock and containerised (bagged) stock. The latter in my opinion (including those plants with roots outside the bags) are in the nature of chattels and do not run with the land.
Evidence of the value of the plants was given by Mr Hutton and Mr Gummow on behalf of the claimant and by Mr Griffiths and Mr Morris on behalf of the respondent. The evidence included opinions as to the general condition of the nursery; as to whether it has been well tended, etc, in eradicating disease, thinning out, and so forth. As a general statement I find that the condition of this nursery was general to the area - given that all nurseries were affected by the recession and that where care and attention was not duly given market value is affected. It is agreed that on the resumed land there were about 1,775 inground palm trees of twelve species. Mr Hutton was instructed by Mr Paino to price these trees according to the agreement with Heavey Lex. At $235 per tree and allowing one years maintenance at $10 per tree, a value is put at $434,875 from which is deducted a saving of $35 per tree (from the agreement) resulting in a value claimed of $372,750. Mr Gummow would value these trees at $118,020 based on wholesale prices and at $89,935 as the amount he would expect a purchaser to pay were he to continue the business. Mr Griffith derived a value of $35,900 and Mr Morris reached a sum of $39,291. Mr Griffith reached his conclusions on market values applying at the date of resumption. Mr Morris set his values to attract a buyer (in one line) based on the sale of a business. There is no dispute that demand at the relevant date was low and virtually non existent for this type of stock. Mr Gummow agreed that a potential purchaser of this number of trees in one line could command a substantial discount - to such an extent that were the vendor to ask $10 per palm they would most likely still be in the ground. Assessments of value were provided by Mr Gummow and Mr Morris based on values which might be paid by a purchaser buying a business. The problem I find with this approach is that the nursery has a limited life and whilst it may continue to operate so as to satisfy the purpose for which it was established (and make way for any development in the north west of the parcel) no purchaser of the parcel as a whole with the uses intended for it would view the nursery as a business in a normal market sense. These considerations are reflected in every head of compensation which I will deal with now -
Loss of inground trees on resumed land.There is no dispute that at the date of the resumption demand for inground palms of this size and quality was almost non-existent. Mr Gummow spoke of odd lot sales of 50/60 trees at $50-$75. He is of the opinion that were the lot to be sold in one line a price of $10 per tree may not be obtained. In the opinion of Mr Griffiths, a landscaper would not pay anything more than $20 per tree. Values applied by Mr Morris yield an average of about $22.50 per tree. Mr Cronin paid an average of $8 per palm for about 8,000 inground trees on areas cleared for headland purposes. The trees were removed at his cost to other areas of the plantation and will be maintained at cost for one year. He admitted that the transaction carried tax advantages for him. Previously on the calling of tenders for these trees a tender of $7 per tree was received subject to consent to sell (for a period) the trees from the site. The tender was not accepted. In the circumstances, it seems to me that the claimant will be justly compensated at the valuation provided by Mr Griffiths of $35,900 which averages a little in excess of $20 per tree.
Re-direction of water pipes.
In the area of the north west, around the curve of the proposed roundabout, irrigation lines have had to be relocated. Relocation was necessary in preserving the irrigation system. The claim is allowed in the sum of $3,226.
Relocation of nursery and dwelling.
The amount claimed is $89,140, made up of $87,620 being an estimate of the cost of relocation of the dwelling some 200 metres to the back of the leased area and $1,520 labour costs to move plants from the present position of the shade house. The home is a portable home. It was put on the land following its purchase by Mr Paino. The claim was supported by Mr Hutton. His opinions were governed by considerations that the nursery should be returned to the position it was in prior to the resumption. There could be merit in this reasoning were the plantation, set up as a business for the purpose of operating indefinitely. This is not the case. The mere fact that a portable home was put there in the first instance is consistent with the intentions the owner has for the land. After the resumption the home is nearer the pavement of the highway. The trees between the home and the pavement have gone. Ambience is affected. Occupation of the residence is within the salary package of Mr Hutton. There is no evidence that its continued occupation in its present position would deter likely managers from accepting their employment. In my opinion no prudent owner/purchaser with the intentions for development of the property as the evidence displays would go to the expense of moving it. Accordingly the claim for removal of the home is disallowed. The claim for removal of part of the shade house is also disallowed (including claims for trees in ground and containerised on those areas) on grounds that access and manoeuvrability of vehicles may be retained by the provision of some works identified in the evidence of Mr Brameld.
Removal costs of stored material.
The claim is for $608 for the cost of removing material stored in old barracks which were on the resumed land and since demolished. The claim has some support and is allowed in the sum claimed of $608.
Removal of potting mix.
This is a claim for removing some 16 cubic metres of potting mix stored on land resumed and near the western boundary. The claim is allowed in the sum of $575.
New storage room.
This is a claim for the cost of purchasing and constructing a pre-fabricated steel shed to replace the use made of the old barracks situated on the resumed land which were used to store tractor implements. The claim is in the sum of $4,000. No estimate is in evidence of the value of the barracks for the purpose. Photographic evidence presents them as being rather derelict. I can appreciate that they would have had some use in storing implements. In the absence of evidence of the added value of the barracks in their depreciated state compensation will be assessed in a proportion of the sum claimed. In the circumstances I propose to allow a sum of $1,000.
New entrance.
A claim in the sum of $17,880 is made covering an estimate (quotation) of the cost of filling holes from trees removed and to construct a 4 metre wide road to the nursery area with three metres of pavement consisting of gravel base 150mm deep. The proposed entrance will come in from McGregor Road and follow the curve of the road south to the nursery area. This area prior to the resumption and since the resumption obtained access from the highway directly in front of the nursery. Since the resumption entry from the highway is left in and left out. It is said to be dangerous. It is also argued that there is insufficient space in front of the nursery for comfortable maneuvering of trucks. In view of the evidence and conclusions reached dealing with the future of the parcel, I could not see a purchaser going to any expense in providing a second entry. The evidence is that semi-trailers may call up to six times a year. It is the opinion of Mr Brameld that an expenditure of $6,000-$8,000 in improving access from the highway and in providing a hard stand area in front of the nursery would be sufficient. Compensation under this heading will be allowed in the sum of $8,000.
Loss of trees on new buffers/headlands.
A claim is made of $858,973 for loss of trees (based on the agreement with Heavey Lex) in establishing a 20 metre buffer following the curve of the new boundary in the north west and for an area in the southern part of the parcel. The width suggested is essentially a replacement of that which existed previously which appears to have been governed by the line of road widening made known long before the resumption. The evidence of the witnesses who were called to price the plants agree generally that six metres is sufficient. The strips contain inground, containerised and potted stock. I have confined my considerations to the claim for inground stock only. The evidence does not provide for reconciliation between quantity and value bearing in mind that the trees have been sold to Mr Cronin. Compensation will be allowed in the sum of $8,000.
Labour costs and irrigation.
Claims are made in the sums of $8,398 to cover costs of employing additional labour during the period between February and August, 1993 in order to assist in reorganising farm practices and $2,677.50 to cover costs of removal of plants in pots and irrigation systems. The claims include additional labour (some casual labour), tractor hire, estimates of the cost of running farm implements and Mr Hutton's remuneration. Some of the claims are within the bounds of reasonableness - necessary and reasonable as a consequence of the resumption - whilst others, for example Mr Hutton's time, are doubtful unless a loss could be said to result by his inattention to other areas of management when supervising and assisting in removal and reorganisation. There is no evidence by which the claims may be broken and in recognising that some allowance may be made for removal of potted plants (which I have regarded as chattels) the claim will be allowed in full at $11,075.
Employer's costs in compiling the claim.
This claim is in the sum of $18,915. The claim is based on hours spent by Mr Hutton in compiling information, rearranging the farm practice, telephone calls to Mr Paino, time in attending calls from Mr Paino, obtaining quotations and other matters including attendance upon the claimant's solicitors. In all respects he was standing in the shoes of the claimant. The validity of such claims has been considered in numerous cases by this Court and rejected, see Shann v. Commissioner of Water Resources (1986/87) 11 QLCR p. 194 and pp. 224 and 225. In applying those authorities I find that these are costs which follow the event. Claims for valuation fees and other professional costs reasonably incurred in the preparation and lodgment of the claim are agreed as follows:-
Valuation fees $5,000
Town Planning fees $1,670
Legal fees (Counsel) $850
Solicitors fees $10,000
These fees were paid on 31 March, 1993 except for solicitors fees which were paid on 19 March, 1993.
Accordingly compensation is determined as follows:-1)In respect of the claim by Salvatore Paino as lessee (holding over) compensation is determined in the sum of $68,384, and
2)In respect of the claim by Heavey Lex No. 64 Pty Ltd compensation (including the agreed sums for professional fees) is determined in the sum of $373,920.
Negotiations for the taking of possession of the resumed land by the respondent and for the removal of stock and plants began in March, 1993. For the purpose of awarding interest on compensation I have adopted 1 March, 1993 as the effective date. Interest at the rate of 7.25 per centum per annum is therefore ordered to be paid on -
1)The sum of $68,384 from and including 1 March, 1993 up to and including the day immediately preceeding the date the sum is paid, and
2)On the sum of $373,920 from and including 1 March, 1993 up to and including the day immediately preceeding the date an advance was paid and thereafter on the balance of the said sum up to and including the day immediately preceeding the date the balance of the sum is paid.
DM WHITE
President of the Land Court
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