Parkside Development Pty Ltd v Director-General, Department of Transport
[1997] QLC 189
•2 December 1997
|
BRISBANE
2 December 1997
Re: Determination of Compensation -
Resumption for Future Road Requirement purposes
under the provisions of the Acquisition of
Land Act 1967 and the Transport Infrastructure
(Roads) Act 1991 -
Ref. A96-24.
Parkside Development Pty Ltd
v.
Director-General, Department of Transport
(now Department of Main Roads)(Hearing at Townsville)
J U D G M E N T
By agreement under the provisions of Section 15 of the Acquisition of Land Act 1967, the respondent Director-General, Department of Transport, resumed on 25 March 1994, certain lands with an aggregate area of 9.2686 hectares from the claimant Parkside Development Pty Ltd (Parkside) in the County of Elphinstone, Parishes of Ross and Coonambelah, for Future Road Requirement purposes. The real property descriptions and areas of the lands resumed are:
(a)an area of 3.875 hectares being the whole of Lot 101 on Plan 860270 contained in Certificate of Title Volume N1504, Folio 244;
(b)an area of 8,966 square metres being the whole of Lot 102 on Plan 860270 contained in Certificate of Title Volume N1504, Folio 244; and
(c)an area of 4.497 hectares being the whole of Lot 12 on Plan 860271 contained in Certificate of Title Volume N788, Folio 103.
While the Proclamation describes the resumed parcels as separately surveyed lots, they are in reality part of two larger parcels of land owned at Proclamation date by Parkside and which were then described as Lot 2 on RP 724190, Parish of Ross, containing an area of 22.5671 hectares and the balance of Lot 100 on RP 812595, Parish of Ross, containing an area of 61.8816 hectares. From this it can be seen that the aggregate area of the parcels from which the resumed land was taken was 84.4487 hectares. Lot 2 is free of detrimental encumbrances, while Lot 100 is encumbered by a power transmission line easement and several easements for drainage purposes.
The parent parcels of land are situated within the City of Thuringowa lying within the established low density residential suburb of Condon, about 11.5 kms south west from the Townsville City Centre. They are located at the closest point within 500 metres of "The Willows" regional shopping centre and Thuringowa Central Post Office. The parcels comprise level coastal forest country - free from flooding, and are generally unimproved vacant residential in-globo land except for the full development of Stage 10 of "The Palms" residential subdivision which included roadworks, sewerage, water reticulation, power and subdivisional earthworks for sixteen (16) subdivided lots.
The land was resumed as part of the land which was required as a corridor for what is described as the Townsville By-Pass Road, and effectively severs the aggregate parent parcel so as to leave a northern severance area of 18.07 hectares (described as Lot 11 on RP 860271) and a southern severance area of 57.11 hectares (still balance of Lot 100 on RP 812585).
In so far as it directly affects the retention areas, the proposed By-Pass Road involves the construction of a major interchange with Upper Ross River Road (on the eastern boundary of the parent parcels), an overpass over the existing Upper Ross River Road, a two-lane bridge across the Ross River and a Road Connection through to Angus Smith Drive. Part of the northern retention area, described in evidence as a mushroom shaped lot containing 8501 square metres is located in the east of the severance close to and accessed from Upper Ross River Road and severed from the balance area by the resumption, will be adjacent to and surrounded by clover-leaf style access ramps at the major intersection.
On 3 June 1996, the claimant Parkside filed a claim for compensation in the Land Court registry dated 5 May 1994, in the sum of $1,958,775 which is made up as follows:
Land $ 770,920
Improvements NIL
Disturbance $ 20,800
Injurious Affection $1,167,055
TOTAL CLAIM $1,958,775
At the outset of the hearing of the matter, Counsel for the claimant Parkside sought and was granted leave to amend the claim for compensation to $1,473,742.69 made up as follows:
Land, injurious affection and severance $1,263,000.00
Disturbance $ 210,742.69
TOTAL CLAIM FOR COMPENSATION $1,473,742.69
The claim for disturbance was further amended, as the evidence of the claimant unfolded, to a sum of $213,839.69. More about this aspect of the claim later in this judgment.
The amended claim for compensation in the sum of $1,263,000 for land, injurious affection and severance is based upon an assessment of compensation made by practising Registered Valuer Geoffrey William Eales. To indicate the extent of the dispute in so far as compensation for loss of land is concerned, another practising Registered Valuer Bernard James Duncan, who was called in evidence by the respondent Constructing Authority, assesses compensation, exclusive of that for disturbance in the sum of $535,000.
Both valuers used the "before" and "after" method of valuation, which is widely recognised and accepted as being the most suitable method when the valuation task at hand is to assess compensation for the partial taking of land, especially as it results in a compensation assessment which includes compensation, if any, for injurious affection and severance.
Mr Eales assesses compensation having regard to the effect of the resumptions on each of the parent parcels. He values Lot 2 on RP 724190 (called during the case "Riverside North" Estate) before resumption in the sum of $1,543,500 and after resumption in the sum of $1,051,500. He values balance Lot 100 on RP 812595 (called during the case "The Palms" Estate) before resumption at $2,436,000, and after resumption in the sum of $1,665,000. His assessed compensation for the loss of land, severance and injurious affection is then calculated as:
Loss in value of "Riverside North" Estate $ 492,000
Add Loss in value of "The Palms" Estate $ 771,000TOTAL CLAIM FOR LOSS OF LAND, INJURIOUS
AFFECTION AND SEVERANCE $1,263,000
Mr Duncan has assessed compensation for the resumption on the basis of its effect on the value of the parent parcels as a whole. He values the aggregate parent area of 82.5 hectares, along with 16 developed residential lots in "The Palms" estate, prior to resumption in the sum of $4,215,000 and the retention area of 73.23 hectares, along with the 16 developed lots, post resumption, in the sum of $3,680,000. It is from these valuations he derives his compensation assessment using the "before" and "after" method of $535,000.
It is, I think, helpful if I here indicate the zonings of the parent parcels, and that of the retention areas, which are relevant under the provisions of the Town Planning Scheme for the City of Thuringowa, which was gazetted on 20 October 1988, and which, the evidence suggests, was under review at the date of gazettal of the "Parkside" resumptions. Lot 2 on RP 724190 was zoned "Residential A" while the balance of Lot 100 on RP 812595 was zoned in part "Residential A" and in part "Residential B". The total area of the parent parcels zoned "Residential A" was 43.24 hectares, with 41.21 hectares zoned "Residential B". Subsequent to the resumption, 18.07 hectares of the retention area (being the whole of the northern severance - "Riverside North") - was zoned "Residential A". The southern severance retention area ("The Palms" Estate) was zoned as to 13.95 hectares "Residential A", and 41.21 hectares "Residential B". In addition to these in-globo lands, the 16 developed residential lots referred to in Mr Duncan's valuation with an aggregate area of 1.95 hectares were, of course, zoned "Residential A".
The hearing of the matter was lengthy, occupying 13 sitting days, and the issues complex. The complexity was brought about mainly by the valuers using different methods of valuation. Mr Eales used the valuation method in both of his "before" and "after" compensation assessments of hypothetical residential subdivision, whereas Mr Duncan's method was to value the land both "before" and "after" using a value per unit area (hectare) method related to in-globo sales evidence. Mr Duncan did produce a valuation of the parent parcels and the retention areas using a hypothetical residential subdivision method, but discarded it since it produced an off-line (low) compensation assessment when compared with that derived from his in-globo valuations. It is also appropriate to indicate here that Mr Eales gained comfort for his before valuation on the hypothetical residential subdivision method by comparison with "in-globo" sales evidence.
Apart from the valuers, numerous witnesses were called and it is perhaps useful if I now indicate who they were. The claimant called:Russell Richard Clarke - a practising Civil Engineer and Associate Director of Cardno and Davies Queensland Pty Ltd, Consulting Engineers
Anthony Russell Brown - a practising Acoustical Engineer and Principal Consultant, Ron Rumble Pty Ltd
Timothy Dunstan Brazier - a practising Licensed Surveyor of Brazier and Motti, Licensed Surveyors and Town Planners
Marcus David Williams - Manager of Tropical Homes Pty Ltd (a related home constructing company of the claimant, Parkside Development Pty Ltd).
Ian Cramb Hamilton - a practising Civil Engineer and Director, Cardno and Davies Queensland Pty Ltd, Consulting Engineers
Eric John Keenan - the Financial Controller/Company Secretary of the Parkside Group of companies, and
Wilfred Anthony Tapiolas - a Director of Parkside Holdings Pty Ltd.
The respondent Director-General called:
Peter Ernest Honeycombe - Director of The Honeycombe Group of companies
John Jack Rowlands - a Licensed Surveyor of Rowlands Surveys Pty Ltd
Phillip Alexander George Dance - a Consultant Town Planner
Frederik Hendrik Kamst - a Scientist specialising in Environmental Acoustics
Robert Arnold Henwood - Director of Planning Services for the City of Thuringowa
Leslie Cecil Johnstone - a Civil Engineer and a Principal of the firm LC Johnstone and Associates Pty Ltd
Colin Bruce Horman - a professional Traffic Engineer, and
Roger Humphrey Brameld, a professional Engineer specialising in Traffic Engineering and Land Development.
Now, as is the usual situation in a long trial, there is so much evidence that it is not possible, or indeed profitable for me to refer to it all in this judgment. The transcript of proceedings alone runs to 723 pages and the exhibit list numbers 89. I simply say that I will refer to such parts of the evidence which lead me to my ultimate finding in the matter. In so doing I am conscious that I might put in reference to evidence I may have left out, or worse still, might leave out reference to evidence which I should have put in. Be that as it may.
But firstly, I should briefly and broadly comment that it has been a long established valuation principle that the best basis for valuation of in-globo lands which are ripe for residential subdivision is a sale, or sales, of land with a similar development potential, if they are available. The reason, of course, is obvious. Valuation by the process of hypothetical subdivision carries with it inherent risks and factors of variance, the input of which within the parameters of the valuation exercise, can dramatically affect the resultant in-globo land valuation. Examples are differences in gross lot realisations, profit and risk factors, development costs, development periods, and the interest rates used in the valuation calculations.
I am indebted to Senior Counsel for the respondent for reminding me that these matters were the subject of comment by Wells J. in Brewarrana Pty Ltd v. Commissioner of Highways (1973) 32 LGRA 170 p.181-2, and by Gobbo J. in Re: Coastal Estates Pty Ltd v. Bass Shire Council (1992-3) 79 LGRA 188 p.198. A comment made by Wells J. is that in using the hypothetical subdivision method of valuation, it must be borne in mind that any of the items that together constitute the likely costs and expenses are in themselves imprecise, uncertain, and even conjectural; that is, they are subject to error, often quite marked error.
Gobbo J. said in Coastal Estates (supra):"There is one particular aspect about the use of the hypothetical analysis method that increases the uncertainties associated with its use. One of the key ingredients has always been the allowance for profit and risk. The choice of this figure was traditionally supported by evidence as to what minimum figure professional subdividers expected from the particular kind of development, with different rates being sought according as to whether the subdivision was an industrial, residential or resort subdivision. The rate so arrived at might then be modified, according as to whether the time lines were especially long or short. This sensible and practical approach has been somewhat obscured and even distorted by an increasing practice, manifested in this case, of analysing particular purchases of broad acre lands suitable for subdivision by reference to what the purchaser was said to have had in mind when it purchased the property. This was not related to an actual formal analysis but to narratives, often garbled, of what was said to be in the purchaser's mind. This is productive of much dispute and is an unfortunate trend in valuation practice. It serves to illustrate vividly why reliance on comparable sales, even where limited in number is to be preferred to the hypothetical analysis method if it creates so much uncertainty and speculation. " (emphasis added).
A case in this jurisdiction in which comment was made upon the use of the hypothetical subdivision method of valuation was Myer Realty Ltd v. Commissioner for Railways (1980) 7 QLCR 87 where, at page 92, a former President of this Court, Mr Barry (he was then a Member) said:-
"Once again, it is brought home to me, the problems which continue to arise when the hypothetical subdivisional method of valuation is relied upon as the basis presented to the Court as acceptable to determine an award of compensation. I have grave doubts as to its practical utility in other than the most simple of cases. The result should always be compared, if possible, with some sales. "
So that in this case, it is clear that for a meaningful decision to be made as to an award for compensation, the valuation evidence must be carefully weighed and examined so that a decision can be made as to what is the best basis of valuation - both before and after resumption - the in-globo sales evidence relied upon by Mr Duncan for his "before" and "after" resumption valuations, or the hypothetical subdivision method used by Mr Eales in both his "before" and "after" resumption valuations (checked in his "before resumption" valuation by reference to in-globo sales evidence).
I think it is expedient to now include details of the valuers' compensation assessments. But before so doing, I should say that it is a critical assumption in both of the assessments that suitable traffic noise amelioration fencing be installed at the expense of the Department of Transport on or near both the northern and southern boundaries of the road resumption. By way of endorsement of this arrangement, a written undertaking under the hand of ID Rose (District Engineer - Townsville - Department of Main Roads) dated 22 August 1997 was tendered during the proceedings. In this document the State of Queensland undertakes to erect at no cost to the registered proprietor (Parkside Development Pty Ltd) a noise barrier to the standard employed by the Department of Main Roads at the time of the road construction, along or parallel to the common boundary of the acquired land and the balance land, or at such other location if any (within the road corridor) as may be considered to be more effective. It follows then, that my determination of compensation in this case is subject to and dependent upon the erection of such an appropriate noise amelioration barrier at no cost to Parkside especially as compensation determinations made by this Court for resumption under the provisions of the Acquisition of Land Act 1967 are on a "once and for all" basis.
Mr Eales' valuation reads:
BEFORE RESUMPTION "RIVERSIDE NORTH" ESTATEPARCEL A
Gross Realisation
190 lots as set out in Schedule (Annexure XIII) $ 8,189,000
Less, Selling Costs
Advertising $23,750
Legals $66,500
Commission $290,225 $ 380,475
$ 7,808,525
Less, Profit & Risk Allowance 25% $ 1,561,705
$ 6,246,820
Less, Development Costs
Subdivision Application Fees $11,780
Headworks
190 lots @ $2919.74/lot $554,751
Parkland $ -
External Works
Contribution Drainage $320,931
Bohle Mitigation
190 lots @ $400/lot $76,000
Development Costs $2,283,000
TCC Supervision 2.5% $73,121
Engineering $1550/lot $294,500
Survey $730/lot $138,700
NORQEB
Street lights $90/lot $17,100
Capital Guarantee/190 lots $171,000
Sealing of Plans $5,700
Telecom $ -
Title Documents $11,214
Contingencies
(5% of Development Costs
of $2,677,052) $133.853
$4,091,650
Interest on Development
Costs for 9.5 Stages
over 6.3 years @ 7.95%
(2/19 of $4,091,650) $ 107,858 $ 4,199,508
GROSS LAND VALUE $ 2,047,312
Less, Holding Costs
Rates & Taxes - Say $41,095
Interest on Land and
Acquisition Costs @ 7.95%
over half the development
& selling period of 6.3 years $401,789 $ 442,884
LAND VALUE INCLUDING ACQUISITION COSTS $ 1,604,428
Less, Stamp Duty and Legals on Purchase $ 60,891
$ 1,543,537
ADOPT $ 1,543,500
AFTER RESUMPTION "RIVERSIDE NORTH" ESTATE
PARCEL A
Gross Realisation
143 lots as set out in Schedule (Annexure XIV) $ 5,885,500
1 lot @ $50,000 $ 50,000
$ 5,935,500
Less, Selling Costs
Advertising $18,000
Legals $50,400
Commission $213,187 $ 281,587
$ 5,653,913
Less, Profit & Risk Allowance 25% $ 1,130,783
$ 4,523,130
Less, Development Costs
Subdivision Application Fees $8,866
Headworks
144 lots @ $2919.74/lot $420,443
Parkland $ -
External Works
Contribution Drainage $314,746
Bohle Mitigation
143 lots @ $400/lot $57,200
Development Costs $1,639,000
TCC Supervision 2.5% $48,844
Engineering $1550/lot $221,650
Survey $730/lot $105,120
NORQEB
Street lights $90/lot $12,870
Capital Guarantee/143 lots $128,700
Sealing of Plans $4,320
Telecom $ -
Title Documents $8,499
Contingencies
(5% of Development Costs of
$2,002,590) $100,130
$3,070,388
Plus Cost to Develop Lot 13 $41,590
$3,111,978
Interest on Development
Costs for 7 Stages
over 4.75 years @ 7.95%
(1/7 of $3,111,978) $ 83,940 $ 3,195,918
GROSS LAND VALUE $ 1,327,212
Less, Holding Costs
Rates & Taxes - Say $28,281
Interest on Land and
Acquisition Costs @ 7.95%
over half the development
& selling period of 4.75 years $ 206,302 $ 234,583
LAND VALUE INCLUDING ACQUISITION COSTS $ 1,092,629
Less, Stamp Duty and Legals on Purchase $ 41,199
$ 1,051,430
ADOPT $ 1,051,500
BEFORE RESUMPTION "THE PALMS" ESTATE
PARCEL B
Gross Realisation
361 lots as set out in Schedule (Annexure XIII) $14,423,500
Lot 1 @ $150,000 $ 150,000
$14,573,500
Less, Selling Costs
Advertising $ 45,250
Legals $126,700
Commission $527,237 $ 699,187
$13,874,313
Less, Profit & Risk Allowance 25% $ 2,774,863
$11,099,450
Less, Development Costs
Subdivision Application Fees $22,382
Headworks
86 lots @ $2592.04/lot $222,915
73 lots @ $2919.74/lot $213,141
202 lots @ $4346.74/lot $878,041
Parkland $ -
External Works
Contribution Drainage $487,069
Bohle Mitigation
361 lots @ $400/lot $144,400
Development Costs $4,600,000
TCC Supervision 2.5% $127,177
Engineering $1550/lot $559,550
Survey $730/lot $263,530
NORQEB
Street lights $90/lot $32,490
Capital Guarantee $ -
Sealing of Plans $10,380
Telecom $25/lot $9,025
Title Documents $21,306
Contingencies
(5% of Development Costs of
$5,214,246) $ 260,712
$ 7,852,568
Interest on Development
Costs for 9 Stages
over 4.6 years @ 7.95%
(1/9 of $7,852,568) $ 159,538 $ 8,012,106
GROSS LAND VALUE $ 3,087,344
Less, Holding Costs
Rates & Taxes - Say $ 90,432
Interest on Land and
Acquisition Costs @ 7.95%
over half the development
& selling period of 4.6 years $ 463,275 $ 553,707
LAND VALUE INCLUDING ACQUISITION COSTS $ 2,533,637
Less, Stamp Duty and Legals on Purchase $ 97,736
$ 2,435,901
ADOPT $ 2,436,000
AFTER RESUMPTION "THE PALMS" ESTATE
PARCEL B
Gross Realisation
312 lots as set out in Schedule (Annexure XIV) $12,263,500
1 lot @ $150,000 $ 150,000
$12,413,500
Less, Selling Costs
Advertising $39,125
Legals $109,550
Commission $451,187 $ 599,862
$11,813,638
Less, Profit & Risk Allowance 25% $ 2,362,728
$ 9,450,910
Less, Development Costs
Subdivision Application Fees $19,344
Headworks
106 lots @ $2919.74/lot $309,492
206 lots @ $4346.74/lot $895,428
Parkland $ -
External Works
Contribution Drainage $484,254
Bohle Mitigation
312 lots @ $400/lot $124,800
Development Costs $4,252,000
TCC Supervision 2.5% $118,406
Engineering $1550/lot $483,600
Survey $730/lot $228,490
NORQEB
Street lights $90/lot $28,080
Capital Guarantee $ -
Sealing of Plans $9,420
Telecom $25/lot $7,825
Title Documents $18,532
Contingencies
(5% of Development Costs of
$4,854,660) $ 242,733
$7,222,404
Interest on Development
Costs for 8 Stages
over 4 years @ 7.95%
(1/8 of $7,222,404) $ 143,545 $ 7,365,949
GROSS LAND VALUE $ 2,084,961
Less, Holding Costs
Rates & Taxes - Say $78,572
Interest on Land and
Acquisition Costs @ 7.95%
over half the development
& selling period of 4 years $ 275,251 $ 353,823
LAND VALUE INCLUDING ACQUISITION COSTS $ 1,731,138
Less, Stamp Duty and Legals on Purchase $ 66,143
$ 1,664,995
ADOPT $ 1,665,000
COMPENSATION PAYABLE
Parcel A "Riverside North"
- Before Resumption $ 1,543,500
- After Resumption $ 1,051,500
$ 492,000
Parcel B "The Palms"
- Before Resumption $ 2,436,000
- After Resumption $ 1,665,000
$ 771,000
TOTAL COMPENSATION - LAND $ 1,263,000
Mr Duncan's compensation assessment of $535,000 is derived from the following
valuation:
Direct Comparison Valuation
Before Valuation
41.29 hectares Residential A Englobo Land Net of Stock @
$52,000 per hectare $2,147,080
31.25 hectares Residential B Englobo Land @
$45,000 per hectare $1,406,250
9.96 hectares Residential B @ $10,000 per hectare Say $ 100,000
82.50 hectares Total Valuation $3,653,330
For Practical Valuation Purposes Adopt $3,655,000
(Equates to $44,303 per hectare overall).
Add, In Line Value 16 Developed Lots (1.95 hectares) $ 560,000
Total Valuation $ 4,215,000
After Valuation With Deed of Agreement in Place for Noise Amelioration
14.12 hectares Residential A Englobo Land Net of Stock @
$55,000 per hectare $ 776,600
.8501 hectare mushroom lot Allow $ 15,000
10.85 hectares Residential A Englobo Land @
$50,000 per hectare $ 542,500
6.2 hectares Corridor Residential A Englobo Land @
$45,000 per hectare $ 279,000
31.25 hectares of Residential B Englobo Land @
$45,000 per hectare $ 1,406,250
9.96 hectares Residential B @ $10,000 per hectare Say $ 100,000
73.23 hectares
Total Valuation Englobo Land $ 3,119,350
For Practical Valuation Purposes Adopt $ 3,120,000
(Equates to $42,605 per hectare overall.)
Add, In Line Value 16 Developed Lots (1.95 hectares) $ 560,000
Total Valuation $ 3,680,000
Compensation Payable
Before Valuation $4,215,000
After Valuation $3,680,000
Compensation Payable $ 535,000
Now it is to be immediately observed that the valuations placed in evidence do not significantly differ in quantum in the "before" resumption situation. Mr Eales values the parent parcels before resumption in the sum of $3,979,500 ("Riverside North" @ $1,543,500 and "The Palms" @ $2,436,000), whereas Mr Duncan values them at $4,215,000. This is notwithstanding the differing methods of valuation. But the valuations differ slightly in detail. Mr Eales' gross realisation is based on a subdivisional survey plan prepared by Mr Brazier (Exhibit 15) which includes 16
developed lots in Stage 10 of "The Palms" estate while Mr Duncan's valuation treats the valuation of these lots not as part of the hypothetical subdivision, but as retail lots, since he says that by the date of resumption Stage 10 development had been completed with the plan of subdivision sealed by Council. Of course, had Mr Eales valued Stage 10 lots similarly, then his before resumption valuation would have been higher, and on my estimate, quite a deal closer to that of Mr Duncan.
It is recognised in evidence that although there is a quantum gap between the valuers in their respective "before" resumption valuations, it is relatively minor and an acceptable one in valuation terminology as each valuation can be, and has been supported with reference to the available in-globo sales evidence. In these circumstances, and bearing in mind that in cases of this nature, any doubt as to the amount payable by way of compensation should be resolved in favour of "liberal estimates" (vide Dixon J in re Commissioner of Succession Duties (SA) v. Executor Trustee and Agency Company of SA Limited (1946-47) 74 CLR 358 p.374), I find that for the purpose of this decision, the value of the parent parcel before resumption is $4,215,000. It follows then that the remainder of this judgment in respect of the determination of compensation payable for the loss of land, injurious affection and severance is mainly concerned is directed to the respective "after" resumption valuations of the land.
The Claimant Parkside's Valuation - Mr Eales
Mr Eales told us that Parkside has been a well established and significant subdivider of land in the Townsville/Thuringowa region for over 20 years. In addition, he says that Parkside has been one of the largest builders of homes in the region during that period of time operating under the business name of "Tropical Homes Pty Ltd". Parkside's practice was to subdivide land for the purpose of the construction of new homes by "Tropical Homes". As a result, sales of vacant residential land by Parkside to other home builders was severely restricted with only occasional lots being sold.
At the time of the resumption, Mr Eales says Parkside had completed the development of Stage 9 of "The Palms" estate which comprised 34 lots and which commenced selling on 10 August 1993, along with Stage 10 comprising 16 lots which commenced selling on 4 January 1994. Some development works had been carried out for Stage 11. Mr Eales told us that generally each lot sold included a separate building contract for the construction of a new dwelling house by "Tropical Homes". For these reasons, and particularly given the history of the subdivision of the "The Palms" estate land, and the development experience of Parkside, which was actually seeking approval to develop the land at the time of the notice of resumption, Mr Eales believes the correct method of valuation (both "before" and "after" resumption) is on a hypothetical subdivision basis.
Mr Eales tabulates the attributes of the land for residential subdivision. They are:
•being located close to an existing High School and proposed Primary School.
•being located opposite a developed park and nature strips along an attractive reach of Ross River.
•being located within 500 metres at the closest point of a major regional shopping centre and associated commercial developments.
•the provision of easy access to the main feeder and arterial roadways.
•being adjacent to existing medium to good quality built up residential areas.
•the immediate access to the services infrastructure of the previously developed subdivision eg: sewerage, water, telephone and drainage.
•the extensive promotion which had been carried out on "The Palms" Estate establishing it as a well defined product in the market with proven acceptance.
•the potential purchasers from two residential markets - first home market and the brick/block 115m2 covenant market.
Set out in Mr Eales' tendered valuation document are comprehensive lists of vacant residential lot sales within the suburbs of Deeragun, Kirwan, Annandale/Murray, Rasmussen, Garbutt/Mount Louisa, Kelso, Condon and Mount Low. These recorded sales took place during the Calendar Years 1992, 1993 and 1994. The purpose of the tabulation by Mr Eales of these listings is twofold. Firstly, he believes that the lot values applied by him when developing his hypothetical subdivision gross realisation values are supported by the sales evidence. Secondly, he draws comfort from the sales material for his estimated selling period of 4.75 years. More about the selling period soon, but I should say that Mr Eales' hypothetical subdivision lot values appear to be well supported by the sales evidence with the possible exception of those along or near the resumption boundary where he applied a considerable value reduction factor in his post-resumption hypothetical subdivisional valuation exercise. I think it could be fairly said that apart from these corridor affected lots, and perhaps some lots facing the potentially busily trafficked Beck Road, there was no serious challenge to the lot values applied by Mr Eales in his hypothetical subdivision valuations.
Mr Eales told us during the course of his evidence that he has had regard to the potential for residential subdivision of "Riverside North" and "The Palms" both before and after resumption as separate parcels (or residential estates) when preparing his hypothetical subdivision valuations of the land, particularly in respect of his estimate for the selling period. He suggests that the parent parcels had the potential at resumption date to have been subdivided into 551 Residential "A" and Residential "B" lots and one large Residential "B" lot (190 lots in "Riverside North" and 361 lots in "The Palms"). Post resumption, Mr Eales says that the subdivisional potential is reduced to 455 subdivided lots after resumption (143 lots in "Riverside North" and 312 lots in "The Palms"). In this respect, Mr Eales has adopted the lot yields from a subdivisional lay-out prepared by Mr Brazier. The regard for the subdivisional potential of each parent parcel viewed individually, and not collectively is an important factor in Mr Eales' valuations as he postulates that both in the "before" and in the "after" resumption, a developer could aim the developed lots into two different markets - "Riverside North" into an up-market brick/block covenant 115 square metre market with relatively high lot values, and "The Palms" into a first home-buyers market with lower lot prices. The influence of this on his valuation is that both the estates could be marketed at the same time and not necessarily competing in the market place with each other. This is a factor of vital influence upon the estimated selling period used in his hypothetical valuation calculation after resumption of 4.75 years for "Riverside North" and 4 years for "The Palms". Mr Eales contends that under what he calls the favourable market conditions prevailing at the date of resumption, it is reasonable to anticipate that the development and selling period could be calculated on the basis of 108 lot sales per annum (30 sales from "Riverside North" and 78 sales from "The Palms").
In support of his adopted selling rate (108 lots per annum), Mr Eales outlined details of the market share of various developers in the first home-buyer market and in the brick/block 115 square metre covenant market. Patrick & Hansen gained 59 sales per annum (or 11.5% of the first home-buyers market segment) in an estate at Deeragun from a commencement date of 1 December 1992. In the same market Ochad Pty Ltd (an associated company of Patrick & Hansen) gained 46.4 sales per annum (or 9% of market segment) at Glenrock. Townacre Development Pty Ltd gained 44 sales per annum (or 8.5% of the market segment) in a development at Kelso from a commencement date of 16 September 1992, at Mount Louisa. Bayswater Village Pty Ltd gained 35 sales per annum (or 6.8% of the market segment) at Mount Louisa from a commencement date of 7 October 1992, and Amalgamated Holdings Pty Ltd gained 53.6 sales per annum (or 10.5% of the market segment) in a development also at Mount Louisa. Mr Eales believes that it would be reasonable to expect a market share greater than in any of the above estates in the first home market unit at "The Palms". Accordingly, he adopts a selling rate of 78 lots per annum, (or a market segment of 15.2%) for "The Palms". As for the brick/block 115 square metre covenant market in "Riverside North", Mr Eales refers to the following achievements by developers:Kern Bros Pty Ltd148.8 sales per annum (or 30.1% of market segment) at "The Willows"
Annandale Estates Group213.6 sales per annum (or 43.2% of the market segment at Annandale), and
Townacre Developments Pty Ltd60.6 sales per annum (or 12.3% of market segment) from a commencement date of 4 September 1993 at Kingsmead - located behind Kirwin.
As a result, and considering the market share of lots held by developers, Mr Eales believes "Riverside North" Estate would achieve lot sales of 6.1% of market share - or 30 lots per annum.
By way of support for his adopted selling rates, Mr Eales produced a schedule showing the number of vacant residential sales in the previously mentioned suburbs during each half of the year during the period from 1 January 1992 to 30 June 1994. I might here comment that while the schedule statistically shows the overall number of sales, it also shows that the total number of sales in the suburbs actually dropped from the second half of 1993 to the first half of 1994 from 596 to 486. This is of significance when the state of the market for residential lots in Townsville/Thuringowa as at the date of resumption is discussed later in this judgment.
Mr Eales stressed during the course of his evidence that the road works proposed for the resumed land will detrimentally impact on the retention area lands owned by Parkside, principally due to noise pollution, and especially on the value of potential lots immediately to the north and south of the proposed By-Pass and interchange. He says this impacts on the saleability of lots in the vicinity of the interchange and on a band of land which in the post resumption situation is bounded by the By-Pass and the existing powerline transmission line easement which runs diagonally across the balance of Lot 100 retention area to the south of the resumption. As well, Mr Eales suggests that the proposed roadworks will cause a significant diminution in the value of the retention area lands in close vicinity to the By-Pass route. It is for these reasons that Mr Eales has discounted the value of 107 lots adjacent to or in close proximity to the resumption boundaries in both "Riverside North" and "The Palms" Estates post-resumption in comparison with his pre-resumption lot values. He discounts the value of 17 lots by a factor of 20%, two by a factor of 17.5%, 34 by a factor of 15%, 17 by a factor of 10% and 37 by a factor of 5%. His greater discounts are for lots adjacent to the resumption lines, and the Clover Leaf Interchange, and the lesser discounts are for lots located within 75 metres of the resumption lines.
The evidence mainly relied upon by Mr Eales in support of his corridor lot value reductions due to noise pollution is of residential lot sales in the suburb of Annandale situated adjacent to and of other lots well removed from University Road, which is a busy thoroughfare, the pavement of which has been duplicated of recent times. There is a noise amelioration barrier along University Road but its effectiveness has now been called into question since the more recent roadworks which have elevated the road surface. Mr Eales points to the sales of Lot 11 in Jondaryn Court on 12 December 1994, for $43,000, of Lot 7 in Niall Court also on 12 December 1994, for $43,000, and to Lot 6 in Niall Court in September 1994 for $44,000. These three lots abut University Road. He compares these prices with prices achieved for lots in Glendhill Court, which is well removed from University Road, and accordingly removed from the road noise pollution and which were then selling for in the order of $49,000 to $50,000 - or at a premium of 10%-12% over the University Road lots.
Mr Eales believes his allowance for profit and risk (a factor of 25%) is justified in his hypothetical valuation exercises for several reasons. They include that, firstly, Parkside is a long established residential subdivision development company with an excellent track record and with proven success at "The Palms". He says Parkside has succeeded in gaining Local Authority approvals for its subdivision and that it could have expected to have obtained on-going approvals from Thuringowa City Council for the further subdivision of its land, but for the intervening resumption. Also known to Parkside at relevant date were the development costs, selling prices, and it would have been in a position to pass on all this experience and the benefit of his consultant's work to an assumed hypothetical purchaser of the unsubdivided land. As a result then, Mr Eales believes that, in this case, the profit and risk factor allowance of 25% is virtually all profit, as he sees the risk factor to be virtually negligible.
Mr Eales claims further support for his profit and risk allowance from his analyses of three sales of in-globo land parcels each with potential for residential subdivision. They are:•Highland Park Estate, Rasmussen - deduced profit and risk factor 25.23%
•The Willows Gardens, Kirwan - deduced profit and risk factor 22.65%
•Annandale Grammar School site - deduced profit and risk factor 25.49%
Details of Mr Eales' comprehensive analyses are in evidence (Exhibit 17). I do not feel the need to include details here or to further comment upon them.
As earlier foreshadowed, Mr Eales offered his view as to the state of the residential land market in the area at the date of resumption. He says at that time there was no reflection in the sales statistics previously mentioned in this decision which would show a major downturn in the volume of sales at that time, but he says there is no doubt that in the second half of 1994, they show a reduction in the volume of vacant land sales. Mr Eales says that at the date of the resumption, the lot market volume was lower than at the high point of 1993, but it had not fallen much below the previous normal average. But this seems to be at odds with the statistical information supplied by him as included in his tendered valuation document (Exhibit 4) - an unnumbered page between pages 19 and 20.
Mr Eales gained comfort for his before resumption valuation by the process of hypothetical subdivision from comparison with in-globo sales evidence. He listed three such sales, but I do not find the need to refer to this evidence here as I have already found for a value of $4,215,000 for the parent parcels before resumption.
But Mr Eales has found no in-globo sales which he says are comparable to the parent parcels after resumption. He says for in-globo sales to be comparable they would have to be of a similar type of land in a similar area with a similar type of by-pass severance to give some valuation guide, and he is at a loss as to how to establish the severance and injurious affection allowance factor in his valuation of the balance land after resumption and the effect it would have in the marketplace, without comparable sales evidence. This, he says, is the reason why he relies solely upon the hypothetical subdivision valuation in the after resumption situation.
Evidence of Other Witnesses Called by the Claimant
As already mentioned, it is Mr Brazier who prepared the subdivisional plans used by Mr Eales in his valuation exercises. Mr Brazier told us that he received instructions to prepare the plans so that they would accord with the requirements of the Council of the City of Thuringowa, comply with its subdivision By-Laws, and provide for drainage requirements as advised by Parkside's engineers - Cardno and Davies. Provision was made for parkland in accordance with the By-Laws of the City of Thuringowa, and this was done also in accordance with his instructions. It is noted that, apart from an early parkland provision, it has not been Parkside's policy to provide parkland in "The Palms" estate subdivision - rather a parkland contribution in lieu has been made. But nothing turns on this, as parkland has been provided by Mr Brazier in both his before and after resumption subdivisional designs, so as to maintain a consistent parkland provision policy.
Mr Brazier offered some criticisms of the plans of subdivision prepared by Mr Rowlands who was called by the respondent Department of Transport. He says in the "before" resumption subdivisional plan for Lot 2 on RP 724190 ("Riverside North"), four allotments were less than the minimum area of 600 square metres, 15 allotments failed a 15m x 15m building envelope template test, a cul-de-sac with a width of 20 metres is not in accordance with Council requirements, and inadequate provision has been made for surcharge water flows into the northern main drain. Mr Brazier offered a design revision of Mr Rowlands' plan under which it could be modified to comply with Council requirements, and so as to provide a similar lot yield as does Mr Brazier's plan (190 lots) - after adjusting the number of yielded lots for parkland contribution.
As for Mr Rowlands' after By-Pass plan for Lot 2 on RP 724190, Mr Brazier suggests that 14 lots are less than 600 square metres, 13 lots failed the template test, and again there is inadequate provision in respect of the main northern drain. Once again, Mr Brazier has redesigned Mr Rowlands' plan so as to again comply with Council requirements, and again after adjusting the lots lost to parkland, suggests the amended yield would be 145 lots when compared with Mr Brazier's yield of 143 lots.
Mr Brazier has carried out similar exercises in the "before" and "after" subdivisional design by Mr Rowlands for Part Lot 100 on RP 812592 ("The Palms"). He says Mr Rowlands' "before" resumption design is defective and that it has one lot with an area less than 600 square metres, 4 lots fail the template test, 1 lot is less than 600 square metres external to the powerline easement, (the Council By-Laws are that lots are to have an area of not less than 600 square metres external to a powerline easement) and there is again inadequate provision for drainage. Mr Brazier also suggests that Mr Rowlands' plan does not show Stage 10 lots of "The Palms" Estate. After design revision, Mr Brazier suggests the Rowlands' after resumption plan would yield 156 lots compared with Mr Brazier's 159 lots. As for Mr Rowlands' plan for balance Lot 100 on RP 812592 after resumption, Mr Brazier says five lots are less than 600 square metres, nine lots fail the template test, eight lots are less than 600 square metres external to the powerline easement, and again there is an adequate provision for drainage. Mr Brazier suggests that this plan again does not show Stage 10 of "The Palms" Estate. After revision, Mr Brazier has adjusted Mr Rowlands' lot yield to 106 lots, the same number as designed by him.
But all this criticism of Mr Rowlands' design plan is relatively insignificant, for Mr Rowlands himself later in the hearing offered his own revision of his original design plans and this largely reconciled and embraced Mr Brazier's criticisms.
Engineering evidence was called by the claimant from Mr Hamilton whose company (Cardno and Davies) has, since October 1992, been involved in providing engineering advice to Parkside in connection with its development of "The Palms". At that time, Stages 1 to 3 had been designed and developed by another firm (McIntyre and Associates). Stage 4 had been designed by McIntyre, and Cardno and Davies were retained to design Stage 5.
Mr Hamilton was responsible for and has prepared engineering drawings in conjunction with Brazier and Motti for the balance of "The Palms" Estate and for the hypothetical development of "Riverside North". He investigated the engineering infrastructure which was required including internal and external open out-door drainage works requirements of the Council of the City of Thuringowa current at the date of resumption. Mr Hamilton says the design plans prepared by Mr Brazier, as used by Mr Eales, take into consideration such engineering infrastructure. Mr Hamilton has examined an engineering report prepared by Mr Jensen who is an associate of Cardno and Davies. This report was tendered in evidence (Exhibit 9), but Mr Jensen was not called as, in the end result, there was little dispute as to engineering costs (development costs) between the engineers based on Mr Brazier's and Mr Rowlands' respective plans of subdivision. Cardno and Davies development costs were eventually rationalised by agreement with the respondent's engineer (Mr Johnstone) to be $13,958 per lot before resumption, and $14,703 per lot after resumption. This is for both parent parcels and both retention areas. It is to be noted that these costs compare with the costs used by Mr Eales of $13,705 per lot before resumption for "Riverside North" and of $14,092 per lot before resumption for "The Palms", and of $13,662 per lot after resumption for "Riverside North" and of $15,180 per lot after resumption for "The Palms", or, on a combined basis, almost the same costs per lot as rationalised by Mr Johnstone.
Mr Clarke was called in evidence by the claimant since his role was to contact the Department of Transport in an attempt to obtain from it information on estimated traffic volumes on the future by-pass road and on the on/off ramps at the main intersection with Upper Ross River Road. This information was passed on to the noise consultant called by the claimant, Mr Brown. Mr Clarke has obtained traffic volumes based on an engineering judgment rather than on a detailed independent analysis, with critical assumptions for his engineering judgment being outlined in his report (Exhibit 37).
Mr Clarke's findings, as I interpret them, suggest that by the year 2003, 37,700 vehicles per day would be using the By-Pass road from the main intersection with Upper Ross River Road to the east. This will increase to 45,000 vehicles per day for this section of the By-Pass in the year 2011. From the intersection to the west (through the subject parent parcels) the calculated traffic volume is 26,000 vehicles per day in 2003, increasing to 33,000 in the year 2011. Mr Clarke says that it is anticipated that 11,000 vehicles per day will use the on/off ramps at the main intersection in 2003, increasing to 23,000 vehicles per day in 2011. He estimates the volume of traffic which will use Upper Ross River Road to be 27,000 vehicles per day in 2003, and 28,000 vehicles per day in 2011. Mr Clarke estimates that the volume of commercial vehicles would be 5% of the total number.
Mr Clarke is of the opinion that there would be, due to actual and projected vehicular traffic in Upper Ross River Road, a need for traffic signalisation on road access from the overall subject subdivisional development to that road. In the post-resumption situation, Mr Clarke also believes that access from the "Riverside North" subdivision to Upper Ross River Road would require signalisation although obviously the traffic volume using that intersection would be lower. He believes also that traffic signalisation is required at the intersection of Gregory Street and Upper Ross River Road to the north of the By-Pass road, since his traffic flow analysis shows that, with certain traffic flow assumptions he has made (percentage turning left and percentage turning right out of Gregory Street), the intersection does not operate satisfactorily.
Mr Brown used the figures supplied by Mr Clarke as a basis for his report on road traffic noise assessment caused by the proposed new By-Pass road. Mr Brown told us that the bounds for assessing the degree of noise impact have been set relative to the 63dBA limit as contained within the Department of Main Roads interim guidelines, and the 55dBA limit for standard construction dwellings. As a result of his assessment, Mr Brown says that some 135 allotments in the post-resumption subdivision proposed in Mr Brazier's plan may be subject to road traffic noise levels exceeding the 55dBA noise level limit. He anticipates that some or all of these allotments would need to be discounted in value when placed on the market to offset the effect of traffic noise intrusion. But this remark is one which really falls outside the area of Mr Brown's expertise - it is in the province of the valuer. Further, Mr Brown comments that it is likely that any residential construction on these affected lots would need to be airconditioned if compliance with Australian Standard 3671 has to be achieved.
Mr Brown describes the new road scheme as involving construction in two stages, initially as a two-lane road with a three-lane bridge over the Ross River with a connection road to Angus Smith Drive together with a two ramp interchange with Upper Ross River Road. The ultimate development is also described by Mr Brown as consisting of a four-lane road to connect the new bridge to Harveys Range development road.
Mr Brown told us that, as is commonly experienced, road traffic noise levels attenuate with distance of separation from the road. He says that consequently, if a noise barrier is erected along the road to ensure that the 63dBA level is met at all residential allotments abutting the road reserve, road traffic noise levels will steadily attenuate with distances from the residences. Nonetheless, he confirms that on either side of the road reserve, in the event of subdivisional development, there is likely to be a band of residences which are subject to road traffic noise levels equal to or greater than 55dBA.
Mr Brown has conducted a series of noise level calculations to establish where the 55dBA noise level contour would be expected to be on the retention areas after the completion of the By-Pass. He tendered to the Court a plot of the likely location of the contour (Figure 2 in Exhibit 39). It is based on this Noise Level Contour Plan that Mr Brown has calculated the number of likely noise affected lots previously mentioned (135). It is to be observed, also as aforementioned, that Mr Eales discounted the value of 107 lots adjacent to or in near proximity to the road resumption line.
Mr Williams, who is currently the manager of Tropical Homes Pty Ltd, was called in evidence by the claimant to support its contention that allotments backing onto a highway should be discounted in value. Mr Williams referred to his experience when earlier managing another construction company - Spinnaker Homes - of having attempted unsuccessfully to interest purchasers in blocks backing onto busy Thuringowa Road in an estate called "Reana Developments". But I should briefly say that Mr Williams' evidence really does not further the evidence about valuation reduction for noise pollution - both parties in this case recognise that land adjacent to busy roads is affected in value terms by noise pollution, and it is really only a question of degree.
Mr Keenan's evidence was mainly directed to the substantiation of a significant segment of the disturbance claim, specifically in respect of the claim for lost profit by Parkside because of the resumption on its purchase of 17 lots of land from outside its land stocks to continue with Tropical Homes' house construction operations. I will discuss this aspect of his evidence later. But Mr Keenan did comment by way of support for Mr Eales' allowance in his hypothetical valuation exercises upon what he sees as being an appropriate allowance for profit and risk. Mr Keenan says that he understands that profit and risk allowances in valuation exercises are intended to represent a reward for effort involved in the reimbursement of management costs, return on capital invested, and an allowance in the return achieved for the risk involved in the subdivision project. Now Mr Keenan has carried out a mathematical exercise adopting a profit and risk factor of 25%, showing various rates of return based on four different scenarios. Again I do not feel the need to discuss this material in this decision. But after discussing the scenarios, Mr Keenan expressed the view that a prudent investor in subdivisional land would ordinarily seek a return after effort, reward and management costs of in the order of 25%, subject to specific knowledge and risk. Mr Keenan believes the only risk Parkside would have been subject to in the proposed subdivisional exercises was that during the selling period the demand for allotments could decrease.
The final witness called by the claimant was Mr Tapiolas, whose evidence was also largely directed to supporting many of the items in the disturbance claim. But Mr Tapiolas outlined the history of land development by Parkside and its relationship with the associated building company Tropical Homes Pty Ltd. He says it was the overall company strategy to develop its lands, erect houses upon them and then sell the property as a house and land package. It was not Parkside's policy, as it was with other developers, to simply develop land for sale to the market generally. At the time of the resumption, Mr Tapiolas regarded the company landholdings in the subject (Condon) area to have been premium lands for residential development. This was particularly so because of the proximity to the development of "The Willows" area and the desirability of having land situated close to shopping facilities.
Mr Tapiolas outlined for us the history of his company's involvement with the development of Lot 100 - "The Palms" Estate. Lands forming Stage 1 were released for sale in 1991. By August 1992, the development of "The Palms" was well under way. Stages 1 to 4 had been approved covering 82 lots. Stage 4 covered 30 lots. By then all Stage 1 lots had been sold. In Stage 2, three only had not been settled, and in Stage 3, 13 remained not settled, but of those 7 were under contract. On 20 August 1992, Parkside lodged with Thuringowa City Council an application for approval to develop Stages 6, 7, 8 and 9 of "The Palms". In relation to Stage 4, Council approval had been granted. A NORQEB subdivisional agreement was entered into on 14 August 1992, and construction and development works were scheduled to commence on 1 September 1992. Stage 5 with 25 lots was approved by Council on 25 June 1992. On 24 July 1992, Brazier and Motti had instructed McIntyre & Associates to prepare the appropriate engineering plans.
Mr Tapiolas told us that it was always Parkside's strategy to deal with "Riverside North" development in a manner differently to other lands forming part of "The Palms" Estate. "Riverside North" was always considered by the company to be a more up-market parcel of land than "The Palms" and quite suitable for a different type of development. Mr Tapiolas is confident that had his company proceeded with the development of "Riverside North", then the sale prices achievable for lots would have been only marginally below those in the upmarket "The Willows" residential subdivision, and would have been not less than $45,000 per lot. Mr Tapiolas is of the opinion that an independent land developer could have expected to achieve an annual sale rate in "Riverside North" of 40 lots per annum, and if "Riverside North" was not developed, the sales by an independent developer in "The Palms" Estate at date of resumption could have been at figures of between 105 and 100 per annum. But even if "Riverside North" was developed at the same time, Mr Tapiolas is confident that 85 sales per annum would have been reasonably achievable by an independent developer in "The Palms".
Mr Tapiolas explained that, as a result of the works proposed by the Department of Transport on the lands resumed from his company, there will be detrimental effects suffered by part of the retained lands. He referred to Mr Brazier's after resumption subdivisional plan and says that about 94 lots will suffer disabilities as a result of the presence of the future roadway and the interchange. Mr Tapiolas calculates that 54 lots will actually back onto the roadway and that another 40 will suffer from some residual disability as a result of the presence of the roadway and the interchange when coupled with the presently-existing overhead powerline which runs through the southern severance. Notwithstanding the Deed of Undertaking placed in evidence about the noise amelioration barrier, it is Mr Tapiolas's experience that sales of developed blocks affected by the roadway will show a significant diminution in prices from those achieved for blocks not so affected.
Mr Tapiolas has had experience of this from dealings in which Tropical Homes Pty Ltd was involved in the construction of houses in estates developed by other developers - namely Greenwood Estate and Annandale Estate. In Greenwood Estate, a large number of lots backed onto Thuringowa Drive which he says is a busy thoroughfare. The developer found these lands very difficult to sell, notwithstanding that a masonry screen fence had been erected along the road boundary. Mr Tapiolas said these lots were eventually sold by the developer allowing a cash rebate of up to $8,000 per lot. This was in June 1995, when the normal pricing of the blocks was approximately $49,000. It is Mr Tapiolas' opinion that the sale prices of Parkside lots backing onto the By-Pass road will be diminished by up to 15% from the sale prices of lots not so affected. He says that even lots up to 100 metres from the By Pass will be affected but to a lesser extent. But Mr Tapiolas believes that a reduction of 10% in the price for these more distant lots would result in their sale within a reasonable selling period. Mr Tapiolas also believes that the total discount which would need to be given for affected lots between the powerline and the By Pass Road would not be less than 25%.
During the course of his evidence, Mr Tapiolas was asked by Senior Counsel for the respondent about the state of the residential land market in the area at the time of resumption. He expressed the view that developers would normally experience a drop-off in enquiry and sales prior to a drop-off appearing as a statistic in sales records. But Mr Tapiolas does not believe that a drop-off in sales was evident in the first quarter of 1994, or not as evident as it is today looking back at the statistics. He says the market did not come off the boil until the end of 1994, and sales activity was still happening and quite strongly at that time.
It is submitted by the respondent that this component of the claim is not compensable since it is too remote from the resumption and associated works to be seen as such. But in the event that the Court finds that it is compensable, then compensation, it is submitted by the respondent, should be limited to the loss of the developer's profit on the purchase of 5 lots in the sum of $39,500, since 12 of the purchases were made in the Rosewood Estate and in Bayswater Village where the company did not have a presence, and Mr Tapiolas did not argue in evidence that the purchases in Rosewood Estate and Bayswater Village were not for the purpose of obtaining a presence. But there is no evidence that the reason for the purchase of the lots was for Tropical Homes to build display homes on them, so the submission by the respondent about presence loses most of its force.
But that is not what is troubling me about this aspect of the disturbance claim. Mr Tapiolas told us that the 17 lots were purchased, not by Parkside, but by Tropical Homes Pty Ltd. Now it is clear that Tropical Homes cannot claim for disturbance because it was not the owner of the resumed land. Nor was the claim made by Tropical Homes. It is contended by Parkside that it lost the developer's profit it would have made if it was free to continue and develop the 17 lots on "The Palms". But Parkside still has land it could use to develop the lots.
At best the only loss of Parkside's developer's profit is a loss which really has to be deferred until the end of the development of "The Palms" and "Riverside North" estates, since only then will Parkside not have the land to produce the 17 lots. We have no evidence as to when it is likely that the subdivisional development of "The Palms" and "Riverside North" will be completed, but I should say that on the projected lot yields in both surveyors' subdivisional plans, and the evidence about development and selling periods, and the recent market slump, it may well be a long way off. In this event, the amount claimed would need to be so significantly discounted by the use of appropriate interest tables to a very much reduced figure, perhaps even close to nominal. In the end, I have come to the conclusion that there is no assessable loss of the developer's profit, and no award of compensation is made for this item in the claim.
Accordingly, my determination of compensation for disturbance is:
(a) Engineers' Fees.
(i)McIntyre & Associates Pty Ltd $ 17,985.90
(Re-design of Stage 4 and the drain
including documentation and approvals)
(ii) McIntyre & Associates Pty Ltd $ 3,911.33
(Engineering design & drafting
- Stage 5)
(iii) Ariotti, Hamilton & Bruce $ 18,150.00
Design, Plan preparation,
documentation - Stage 5)
(iv) Ariotti, Hamilton & Bruce $ 4,606.46 $ 44,563.69
(Re-design master plan
"The Palms" and "Riverside
North" - New stages and services).
(b) Council application fees thrown away
(Stages 5 to 8 totally lost) $ 6,500.00
(c) Schomburgk & Long Pty Ltd Nil
(Town Planning Fees - Re-design
considerations as a result of
Department of Transport involvement)
(d) Brazier & Motti Pty Ltd Survey Fees
(i) Survey fees - Stage 5 $ 8,210.00
(ii)Survey fees - Stages 6 to 10 incl. $ 2,590.00 $ 10,800.00
(e) Preparation and lodgement of claim
(i) Valuation Fees -
Collins & Eales $ 8,500.00
(ii) Legal Fees -
Ruddy Tomlins & Baxter $ 2,500.00
(iii) Before proposed development
plan - survey fee $ 1,989.00 $ 12,989.00
(f) Loss of employee's time Nil
(g) Loss of developer's profit Nil
TOTAL AWARD OF COMPENSATION FOR DISTURBANCE $ 74,852.69
I would normally round this figure off in my determination of compensation, but to do so would have implications for the pending award of interest.
A summary of my determination of compensation for the resumption is therefore:
(a) Compensation for loss of land and injurious affection $ 757,000.00
(b) Compensation for disturbance $ 74,852.69
TOTAL AWARD OF COMPENSATION $ 831,852.69
Section 28 of the Acquisition of Land Act 1967 provides that the Land Court may order that interest be paid upon the amount of compensation determined by it, and further that such interest shall be of such rate percentum per annum as the Court deems reasonable. It provides further that interest shall not be payable in respect of any amount of compensation advanced under the provisions of Section 23 of the Act.
The Court is advised that an advance against compensation in the sum of $505,000 was paid by the respondent Director-General to the claimant on 23 June 1994. I order that, in addition to compensation payable, the respondent Director-General, Department of Transport, pays to the claimant Parkside Development Pty Ltd interest at the rate of 8.5 percent per annum on the following sums and for the following periods:
On the sum of $757,000 for the period commencing on 25 March 1994 (the date of resumption) and ending on 23 June 1994 (the date of the payment of the advance); and
On the sum of $252,000 for the period commencing 24 June 1994 and ending on the day immediately preceding the date upon which final payment of compensation is made; and
On the compensation award for disturbance items commencing upon the dates the respective award items were paid by Parkside Development Pty Ltd (if they were paid) and ending upon the day immediately preceding the date upon which final payment of compensation for disturbance is made.
(CH Carter)
Member of the Land Court
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