Regal Pty Ltd as Trustee for the Regal Property Trust v Chief Executive, Department of Main Roads
[2001] QLC 116
•29 October 2001
|
BRISBANE
29 OCTOBER 2001
Re: Claim for Compensation consequent upon the
resumption of land for Future Road Requirement Purposes
under the Acquisition of Land Act 1967 and the Transport
Planning and Coordination Act 1994.
(A00-20).
Regal Pty Ltd as Trustee for the Regal Property Trust
v.
Chief Executive, Department of Main Roads
(Hearing at Mackay)
J U D G M E N T
Introduction
This case involves a claim for compensation following the resumption of an area of 3,793 m² from Lot 4 on Registered Plan 883737, Parish of Bassett, County of Carlisle, containing an area of 1.9773 ha (the subject land), for the purposes of the construction of the East-West Connector Road in Mackay.
Background
The subject land is situated in Malcomson Street, North Mackay, approximately 2 km north of the Mackay Central Business District. It is located on the south side of the intersection of Evans Avenue, Malcomson Street and Hodder Street, with frontage to Malcomson Street and side access to Hodder Street. Malcomson Street is a dual-lane, two-way, bitumen sealed street, with concrete kerbing and channelling. However, as it will be explained later, access to the subject land is only fair. On-street parking is restricted in Malcomson Street, with only about five car parks in Hodder Street, which is a short dead-end access street.
Prior to the construction of the Ron Camm Bridge over the Pioneer River in the 1980s, Malcomson Street was part of the Bruce Highway. Traffic travelled from the Mackay CBD across the Forgan Bridge, north over the Pioneer River and north-west along Evans Avenue, then west along Malcomson Street. With the construction of the Ron Camm Bridge, the Bruce Highway was relocated to the west. Malcomson Street then became a major local traffic access to North Mackay, the Harbour and Slade Point. At the date of resumption, Malcomson Street was the major access to North Mackay and the northern suburbs. It carried approximately 20,000 vehicles per day, plus approximately 1,500 heavy vehicles. The parties agree that with the construction of the connector road the traffic using Malcomson Street will be halved.
The Resumption
By Notice of Intention to Resume dated 21 April 1998, the claimant was advised that the respondent intended to take approximately 3,690 m² from the subject land for road purposes. Attached to the notice was a Statement of Reasons advising that the respondent required the land for construction of a roadway from Sams Street to Harbour Road, to form part of the infrastructure needed to provide an efficient, effective and acceptable transport system for Mackay City.
The benefits that were said to be derived from construction of the roadway included:
· improved safety associated with heavy vehicle movements through North Mackay;
· reduced travel times enhancing efficiency of freight movement to the Port of Mackay and commuter movement to Mackay CBD;
· improvement in air quality and noise reduction within commercial/residential areas of North Mackay;
· reduction of traffic congestion within the existing commercial precinct of North Mackay enhancing development opportunity; and
· improved flood immunity for North Mackay.
The proclamation resuming the land was published in the Queensland Government Gazette on 19 February 1999 when an area of about 3,690 m² was taken for road purposes. However, a survey of the resumed land dated 15 June 1999 showed the area to be 3,793 m² (Lot 201 SP121144), while the balance area of the former Lot 4 was 1.598 ha (Lot 20 SP121144).
A later plan, SP121165, dated 7 July 1999, showed that a further 401 m² was taken by agreement from the corner of Malcomson Street and Hodder Street, for the purpose of providing for a roundabout at the Malcomson Street, Evans Avenue and Hodder Street intersection. It seems that the claimant agreed to the taking of that land without compensation in order to expedite the resolution of traffic problems at that intersection. However, that resumption plays no part in the present matter.
Although a corridor of land was resumed from the subject land and from other lands for the purposes of constructing the East-West Connector Road, no construction has commenced or is proposed in the near future. It seems that the delay is the result of environmental concerns about the destruction of mangroves. However, there is no dispute that the uncertainty about the future of the road can have no effect on the manner in which compensation is assessed.
The Claim for Compensation
On 26 April 2000, the claimant lodged a claim for compensation with the respondent claiming $503,000. That claim was filed in the Land Court on 5 October 2000. On the final day of hearing, Mr R Needham, Counsel for the claimant, sought and obtained leave to amend the claim to $336,150, comprising $330,000 for loss of land and injurious affection (based on the valuation of registered valuer, Mr GW Eales) and $6,150 for legal and valuation fees. That amendment of the claim was not opposed by Mr R Jones, Counsel for the respondent.
The final valuation put in evidence by the respondent was the valuation of registered valuer, Mr GW Clacher, in the sum of $1,000. However, Mr Clacher qualified that valuation by stating that if as a matter of law the claimant is entitled to some loss arising from a loss in traffic, he would assess compensation at $58,000.
The Subject Land
Before the resumption, the subject land comprised an almost rectangular parcel of land on the southern side of Malcomson Street, with an area of 1.9774 ha. It had a frontage to Malcomson Street of approximately 80 metres and a depth of approximately 247 metres. On the east it had approximately 110 metre frontage to Hodder Street, the full length of that street.
The land slopes gently from Malcomson Street for about 150 metres, where it falls away into a tidal affected mangrove area associated with Barnes Creek. Part of the land (8,000 m² according to Mr Eales, 7,000 m² according to Mr Clacher) had been filled with 2 to 3 metres of fill about four years ago. Otherwise the land was undeveloped.
The resumed land of 3,793 m² is mostly low-lying, undeveloped, mangrove swamp at the rear of the partially filled land. An area of 721 m² at the south of the property comprising tidal creek bed, is severed by the resumption.
There are commercial type developments in the immediate vicinity of the subject land, including a small centre to the east fronting Evans Avenue, with rear access from Hodder Street. To the west is a caravan park. There are other small-scale commercial developments in the area, interspersed with residential areas to the north and west.
There was evidence that the claimant had intended commercial development of part of the site in the early 1990s, as an application had been submitted to the Council by the claimant in 1993 for proposed commercial development. The proposed development was to comprise a 1,027 m² commercial building of seven tenancies as Stage 1 at the north-east corner, followed by a larger commercial building (Stage 2) at the north-west corner and a Stage 3 development to the south of those two buildings. Potential tenant interest had been received from a newsagent, chemist, electrical retailer and various professional offices. During the application process, the Council was advised by the respondent that a 60-metre wide strip was subject to a proposal to build an East-West Connector Road. However, that development did not proceed. There was some evidence that the Department of Transport and the Council were concerned about traffic congestion.
Mr Jewell, who was at the time Director of Planning and Development, at the Mackay City Council, gave evidence of the approval by the Mackay City Council to include 1.23 ha of the subject land in the "Commercial" zone, subject to conditions.
Plans dated September 1994 (Sewerage and Drainage Plan) and October 1994 (Site Development Plan) were tendered showing the proposed development as part of the "Commercial" zoned area.
According to Mr Eales, on 10 August 1995, the Mackay City Council had approved a building application for a single-level commercial development on the site, containing a 2,431 m² staged shopping/professional office complex, 223 m² freestanding restaurant and 152 car parks. However, Mr Eales stated that construction did not proceed because of uncertainty about traffic solutions and that approval has lapsed.
The Town Planning Issues
At the date of resumption, the use of the land was controlled by the Pioneer Shire Council Planning Scheme, administered by the Mackay City Council since the amalgamation of the two local government areas. It was designated "Shopping and Commercial" in the Pioneer Shire Strategic Plan. However, the subject land was zoned "Commercial" from its Malcomson Street frontage south to include an area of approximately 1.1854 ha, the remaining 7,920 m² being zoned "Residential A". Prior to July 1994, the whole of the subject land was zoned "Residential A", but following an application for rezoning, the Council had approved the rezoning of part of the land to "Commercial".
At the date of resumption, the Mackay City Council had prepared a draft planning scheme, which had been through the public consultation process and which was gazetted on 21 May 1999, just three months after the date of resumption. The Strategic Plan map shows the northern part of the subject land as having a preferred dominant land use of "Commercial", the centre part "Higher Density Residential" and the southern part, including the whole of the resumed land and the severed area, "Open Space".
Under the new Town Plan, the area formerly zoned "Commercial" is zoned "Local Business", while the area formerly zoned "Residential A" is zoned "Rural". However, the town planners, Mr Dance, who gave evidence for the claimant, and Mr Jewell, who gave evidence for the respondent, agreed that the "Rural" zoning is an anomaly and that the more appropriate zone would be "Urban Residential".
Both Mr Dance and Mr Jewell agreed that prior to resumption it would have been possible to obtain approval for unit development purposes on the 3,406 m² of partially filled land between the edge of the "Commercial" zone and what became the northern resumption boundary. At the date of resumption, an area of 7,920 m² was included in the "Residential A" zone, but contained an area of significant marine vegetation, which was virtually wholly included within the resumed area. They also agreed that it would be normal planning practice to transfer any development density applicable to that part of the site to other parts of the site which are devoid of marine vegetation. After resumption, the area available for development remained the same at 3,406 m², but the development density area was reduced to 4,127 m², which included the 721 m² of severed land.
Both town planners agreed that based on a development density of one unit per 200 m², it would have been possible to develop 39 units before resumption and 20 units after resumption. Under the planning scheme in existence at the date of resumption, the relevant zoning was "Residential B", the density at one unit per 250 m² could be calculated over the area of 7,920 m², giving a yield before resumption of 31 units. After resumption, it is calculated over 4,127 m², a yield of 16 units.
Mr Jewell thought that having regard to the design and engineering issues, a realistic, achievable number of units before resumption would be 28, in a three-storey development; in a five-storey potential option there could be 30 units. While Mr Jewell knew of no 28-unit development in Mackay, except for those near the beach at the Marina, he thought that a staged development of the subject land could be undertaken with two complexes of 14 units on two sites each of 1,700 m². He suggested that with car parking on the ground floor, the upper floors of the units would catch the breezes more efficiently and would have views back to the city and down to the coastline. The views would overlook mangroves but, he said, many of the residential areas of Mackay are close to mangroves.
Mr Dance agreed that usually the theoretical maximum density can not be achieved while satisfying all the other performance criteria. He thought that five-storey developments were confined to special cases, such as those near a beach. The only evidence of five-storey developments was in relation to those at the Marina and at Nelson Street, fronting the Pioneer River. There were no special features about the subject land. Once the commercial area at the front was developed, the residential land at the rear of the site would be surrounded on two sides by commercial development, on one side by the caravan park and on the other side by low-lying mangrove swamp.
According to Mr Jewell, the roundabout planned for the Malcomson Street, Hodder Street and Evans Avenue intersection has been put on hold, because the Main Roads Department has concerns about upgrading access through that intersection.
For convenience, the land zoned "Commercial" at the date of resumption will be referred to as the commercial component, while the land zoned "Residential A" will be referred to as the residential component.
Mr Norling's Evidence - The Potential of the Commercial Component
Mr Jon Norling, an urban economist, who provides economic and market-based advice to the property development industry, gave evidence for the respondent, focusing on the potential for retail and commercial facilities on the site. Mr Norling had been involved closely with development assessments in Mackay, including the retail centres strategy for the Mackay City Council Strategic Plan. He had also advised Franklins Ltd about suitable locations in Mackay.
Mr Norling pointed out that the intent of the "Local Business" zone was to provide local shopping facilities and small-scale business, professional and community services in convenient locations to serve the immediate needs of the local population. He explained that the Mackay City Council had identified North Mackay as the location for development as a Neighbourhood Centre, the lowest in the hierarchy of commercial centres, which ranged from Regional Centres (the CBD), Sub-Regional Centres (such as Mt Pleasant) and Major Neighbourhood Centres. Neighbourhood Centres, including North Mackay, were intended to provide a focus for accessible neighbourhood shopping and community facilities, which meet the needs of residents in nearby suburbs. Council envisaged a total retail floor space of 5,000 m² at such centres.
Mr Norling had conducted a land use and retail floor space survey of commercial facilities in the North Mackay area in April 2001. He found them to be aged, with a high vacancy rate and with strong competition from recently developed commercial sites elsewhere. Retail facilities totalled 7,635 m², of which at least 20% was vacant at the resumption date. He thought the high vacancy rate suggested that 5,000 m² may well be the limit of viable retail space.
After considering trade area, population, demographics, retail expenditure base and demand for retail space, Mr Norling concluded that the floor space available at North Mackay in 1999 was well in excess of the supportable level and explained why that retail node was not performing well, with its high vacancy rate, poor stock levels, low standard of fit-out and poor state of the buildings.
He formed the view that at the date of resumption, there were very limited prospects for commercial development of the site. Due to the small trade area, limited population growth and continuing strong competition, those prospects were unchanged in the longer term. However, he believed it was possible for some commercial activity to be developed on the site, but any new development would adversely affect the existing facilities and would result in an upgrading and replacement of existing stock.
There was evidence that Franklins were interested in establishing a supermarket of between 2,500 m² and 3,000 m² on the site in December 1998 (Exhibit 19). However, Mr Norling was of the opinion that the claimant's proposal to develop a major shopping centre on the site, including a Franklins Fresh Supermarket as an anchor store, had no commercial prospects of being implemented. In his opinion, Franklins would not consider locating at North Mackay; Franklins had asked his views about North Mackay and he had advised that it was very much a secondary market to Mt Pleasant and did not have the catchment to support a major supermarket.
Mr Norling expressed the view that if a commercial building was constructed, it would have difficulty attracting large numbers of retail tenants; the types of non-retail tenants would include professional services, accountants, solicitors, medical practitioners and a range of service industry activities, which he described as secondary retail activities. Having regard to the type of tenants, Mr Norling thought that the re-routing of traffic would not impact significantly on the viability and operation of businesses on the site. However, he acknowledged that there were many such businesses that would seek lower rentals and overheads than could be obtained in larger centres. Under cross-examination he admitted that even those types of secondary retail activities look for exposure.
In summary, Mr Norling concluded that the site had very limited prospects for commercial development, due to planning policies, the progressive deterioration of the North Mackay Neighbourhood Centre and the strong competition from the Mt Pleasant Sub-Regional Centre. At the date of resumption, the highest and best use was for commercial development within the 'Commercial' zoned land, but he thought that a substantial component would comprise non-retail uses.
The Valuation Evidence
Both valuers originally proceeded on the assumption that the claim for compensation was made on the basis that the resumed land, which comprised low-lying tidal mangrove land, could be cleared and filled for future development. A permit had been issued to Mr Lawton, a principal of the claimant, on 12 July 1993 under the Queensland Fisheries Act 1976, for the removal of mangroves and marine plants associated with the construction of a car park to service a proposed shopping complex, within a maximum disturbance area of 2 ha. That permit would seem to be in respect of the area at the rear of the land later rezoned "Commercial", which has been cleared and partially filled. The permit was current for 12 months from the date of issue. Mr Lawton had advised that the civil works on the site were completed on 29 July 1994.
A statement by Ms Dawn Couchman, a Fisheries Scientist in the Marine Fish Habitat Unit of the Department of Primary Industries, was tendered by consent. Ms Couchman traced the history of the issue of that permit. She stated that should further clearing of mangroves be required, a fresh application would have to be made. However, she was of the opinion that at the date of resumption it was unlikely that permits for clearing of mangroves would be granted as it was departmental policy not to support the issue of permits for mangrove clearing for non-marine oriented purposes, such as car parking.
The valuers agreed that no filling would have been allowed on any of the resumed land at the date of resumption.
The Approach of the Valuer for the Claimant
Mr Eales, the valuer for the claimant, assessed compensation at $330,000, by using the "before" and "after" method of valuation. He considered that the highest and best use of the land, both before and after the resumption, was for commercial purposes on the commercial component and for higher density residential purposes on the 3,406 m² of the residential component.
In describing the effects of the resumption, Mr Eales mentioned not only the loss of 3,793 m² of land, but injurious affection to the remaining land as the East-West Connector Road will direct traffic away from Malcomson Street to the rear of the subject land, so that the balance residential land will be detrimentally affected due to noise and visual pollution, while the commercial land fronting Malcomson Street, will be detrimentally affected due to the decreased volume of traffic.
Significantly, Mr Eales thought the resumption resulted in no betterment to the balance lands. However, he did concede that a roundabout would improve the access and egress from Hodder Street into Malcomson Street and to Evans Avenue/Canberra Street and that a roundabout would enhance the value of the subject property as to its viability as a commercial site. (Exhibit 5, page 11)
Mr Eales went on to say that 20 years ago the North Mackay area was a very popular commercial area, but had deteriorated because of the parking problems in Malcomson Street. He believed that the business area of North Mackay will be rejuvenated over time. However, it became clear that it was not only traffic and parking problems that had led to that deterioration. Since the construction of the Ron Camm Bridge, there had been a concentration of commercial activity north of that bridge in the Mt Pleasant and Greenfields areas.
Mr Eales thought that the potential of the residential component of the subject land depended on how the commercial component was developed. If it was a great success, a developer might decide on a five-level unit development, otherwise it might be a three-level development, with car parking on the lower level as is common in most provincial cities. Despite what the town planners agreed was the theoretical maximum density of 31 or 39 units, Mr Eales thought that 28 units would be a more comfortable maximum.
He thought that the potential for such development could extend to holiday-type units, or units for the aged. He referred to the successfully operating caravan park which he said had a big holiday trade. The outlook to the south from the upper floors of units constructed on the subject land, would be quite pleasant "… in Mackay terms …", as he put it, looking over mangroves and to the city centre; Mackay is relatively flat, with not too many areas with views.
Mr Eales considered that the residential land will be injuriously affected after the resumption and diminished in value, because of the visual impact and noise from the new road. Units would be harder to sell. In addition, a developer had lost the greater development density and any negotiating advantage with Council over the future of the mangrove area for open space, in return for relaxed development conditions.
Mr Eales considered that the commercial land will be injuriously affected because of the reduced volume of traffic passing the site. In his opinion, the greater volume of traffic generally means the higher the value per m², provided access and egress are reasonable and acceptable. As the purpose of the connector road was to get traffic away from Malcomson Street, Mr Eales thought that even if the same volume of traffic was passing at the rear of the site and there was the same exposure (which he rejected), that traffic was not going to find a way to exit the connector road and return to Malcomson Street.
In his opinion, it was the potential loss of exposure when the land was fully developed that had to be considered. When it was fully developed as he envisaged it, there would be units at the rear and so the exposure of the commercial site from the road would be lost; in any case, in his view, exposure to the rear is not as valuable as exposure to the front of a commercial centre.
The Residential Component
To value the residential component of the subject land before resumption and after resumption, Mr Eales referred to 12 sales of land in various parts of Mackay which sold between June 1995 and June 1999, with areas ranging from 1,624 m² (Sale 8) to 8,498 m² (Sale 11) mostly zoned "Residential" or "Residential B", at prices ranging from $87,500 to $357,500. However, most of those sales were clearly superior to the subject land and Mr Eales conceded that he derived little assistance from them. He relied principally on the sales at 23 Malcomson Street, 21 Malcomson Street and to a lesser extent, the sale at 19 Perkins Street.
Mr Clacher was of the opinion that development of the residential component would be uneconomic. Although an area of 3,406 m² of residential land was available for development, most of it is low lying, requiring at least 3 metres of fill. It would cost $121,500 to fill 3,000 m² to a depth of 3 metres at the agreed rate of $13.50 per m³; in addition to the cost of fill must be added the cost of providing services and access from Hodder Street; furthermore, Council and Main Roads Department approval would be required for access to Malcomson Street and that would result in conditions for upgrading the street or contributions to costs.
According to Mr Clacher, the unit market was in decline in Mackay at the date of resumption because of an oversupply and a fall in demand. He also referred to several sales of residential land, but it was obvious that only three sales were of any assistance to the valuers in arriving at the value of the residential component of the subject land before and after resumption.
The Sale at 23 Malcomson Street
That property sold in November 1998 for $175,000. It had an area of 6,222 m², but it was common ground that the purchaser, a Mr Snell, purchased the property with the knowledge that part of the land was to be resumed by the Main Roads Department for the East-West Connector Road. On 19 February 1999, the same date of resumption as for the subject land, an area of 1,642 m² of low-lying land at the rear of that property was taken.
The sale property has about 29.5-metre frontage to Malcomson Street and side access to Harvey Street for about three-quarters of its after-resumption depth. The land required filling before development could proceed.
Mr Eales considered it to be directly comparable to the residential component of the subject land in the after resumption situation, except that it has frontage to Malcomson Street. In his opinion, the residential component of the subject land is slightly superior to the sale, as it has no frontage to Malcomson Street and therefore is not subject to the noise from that street.
Mr Eales analysed the sale before resumption to show $28 per m², or $7,300 per unit site (for 24 units maximum at one unit to 250 m²). If considered in the after resumption situation, when its area was reduced to 4,584 m², the sale shows $38 per m², or about $9,700 per unit site (for 18 units maximum at one unit to 250 m²). However, he ignored any value in the dwelling house situated on the land at the time of sale, reasoning that the house would be demolished before any development could be undertaken.
Mr Clacher agreed with the analysis of $38 per m², provided the highset weatherboard/fibro and CGI dwelling could be ignored. He interviewed the purchaser and was advised that the property was purchased as a long-term investment; the rental of the house for $180 per week generated income until its potential was realised. The purchaser could not decide if the bypass road would be a positive or a negative for his development.
Mr Clacher found it difficult to ignore the fact that there was a substantial house on that land and the fact that the purchaser was looking to its long-term development, but was gaining some return in the meantime. While Mr Eales thought the sale was directly comparable to the residential component of the subject land, Mr Clacher considered it to be much superior.
The Sale at 21 Malcomson Street
That property sold in July 1998 for $140,000. It had an area of 8,498 m², but the purchaser, Northern Developments Pty Ltd, a local development company, purchased it with the knowledge that the Main Roads Department intended to acquire the rear part of the land to construct the East-West Connector Road. At the same date of resumption, on 19 February 1999, an area of 1,933 m² was taken for road purposes.
This site is an inside block, with a frontage of 39 metres to Malcomson Street and before resumption had a depth of 226 metres. It was common ground that the site required filling before development could proceed and that the purchaser has placed a considerable amount of filling on the land since purchase.
Mr Eales analysed the sale to show $16.50 per m², or $4,250 per unit site (for a maximum of 33 units). However, if the after resumption area of 6,548 m² was used, the sale shows $21.38 per m², or $5,384 per unit site (for a maximum of 26 units).
Mr Clacher noted that approximately 6,500 m² of the site was filled to approximately RL 5.5, with the balance falling to lower lying mangrove land (the resumed area). According to Mr Clacher, the remaining land has been partly filled at a cost of $97,000 since purchase. Mr Eales disagreed that there was any filling on the sale land prior to purchase. He had been informed that all the filling was subsequent to the sale. It seems that the fill placed on the sale land was opportunity fill obtained by the purchaser (Northern Developments) from its other development sites.
Mr Clacher considered the sale to be much superior to the residential component of the subject land, while Mr Eales regarded the sale as inferior.
Mr Eales and Mr Clacher agreed that this sale is of primary importance. It is in close proximity to the subject land and vacant. It was purchased by a developer for future residential development. The purchaser, a local builder, was aware that the road was going through. It was purchased with the intention of filling and developing it for some kind of residential development.
The Sale at 19 Perkins Street
That property sold in June 1998 for $150,000. It has an area of 5,729 m². It is situated in North Mackay to the north of the subject land and is not affected by the resumption. According to Mr Eales, the site has potential for 14 units. He analysed the sale to show $26.18 per m², or $10,700 per unit site.
Mr Eales described it as low-lying and running into mangroves. A cottage was demolished to allow development. He considered it to be directly comparable to the residential component of the subject land, but he thought that prior to the resumption the subject land had slightly superior aspect and superior potential access.
Under cross-examination Mr Eales conceded that this sale was not really comparable with the subject land. He originally thought that it was, but on reflection and reinspection, he had changed his mind.
Mr Clacher described this land as low-lying, with an average RL of 3 metres, requiring fill to above RL6. According to him, it was purchased by a builder for unit development as long-term opportunity fill becomes available. It has frontage to Goose Ponds Reserve, comprising mostly low para-grass country. The sale reflects $26 per m² for low-lying land. He regards it as superior to the residential component of the subject land.
Mr Clacher agreed with Mr Eales that the sale is in a different category to the subject land and to the two Malcomson Street sales. It is in a quiet residential street, with mainly detached houses.
It is obvious that the two valuers viewed the residential component of the subject land quite differently, as they did the two main sales used to value that land. Mr Clacher thought that residential development of the land was uneconomic. Mr Eales thought it was unfair to say that as the purchaser of 21 Malcomson Street had partly filled the land to the equivalent of $220,000 worth of fill, which would result in a higher level of cost per unit site than the residential component of the subject land.
Mr Clacher provided details of his estimates of the cost to develop the residential land before resumption, which extended beyond the cost of filling and providing access and services. A considerable amount was to provide for a rock wall for scour protection. He reasoned that the East-West Connector Road would be constructed in such a manner as to effectively provide flood protection for North Mackay. Prior to the resumption, the Pioneer River Improvement Trust (PRIT) had investigated the construction of a flood levee for the North Mackay area. When doubt was raised as to whether the connector road would be constructed, the PRIT investigated an alternative standalone levee and prepared a preliminary layout. In Mr Clacher's opinion, before resumption any proposed development would have been referred to the PRIT as a referral agency. He thought the PRIT would have been unlikely to have approved the development of the rear portion of the subject land, unless it incorporated a high level flood levee and rock armouring to prevent scouring. However, Mr Clacher conceded that he had not checked with the PRIT as to its requirements and had received no engineering advice.
In addition to the cost of development, Mr Clacher thought that any proposed development of the residential component would involve sacrificing part of the commercial land for access as well as obstructing the exposure of any development on the commercial component from the East-West Connector Road.
In Mr Clacher's opinion, the unit market in Mackay had declined after 1994. Building approvals for units fell from 267 in 1993/94 to only 77 in 1998/99, and he thought that in February 1999 the majority of unit developments were restricted to small inner city sites, or those with special features, such as beach frontage.
Far from having a potential for 28 units before resumption, as proposed by Mr Eales, in Mr Clacher's view, the site would have potential for only 11 units which, when the land was filled, would have a maximum value of $15,000 per unit site, equivalent to a maximum price of $165,000. As most of the value is in the fill ($121,500), without allowance for provision of services or profit, Mr Clacher concluded that any residential development was uneconomic so there could be no injurious affection for loss of amenity due to the resumption.
Mr Clacher's conclusions were challenged by Mr Eales, who thought that detailed development costs would not be considered by a potential purchaser until later, when an integrated development plan with the commercial land was considered. He thought that market reports from the valuation firm Herron Todd White contradicted Mr Clacher's conclusion about the fall in the market. But, in Mr Clacher's view, the optimistic Herron Todd White reports referred more to unit development with special features, such as those at the Marina, in Nelson Street overlooking the Pioneer River and at the Anchorage. He thought those optimistic reports would not apply to the subject land situated as it was behind proposed commercial development in North Mackay, with no special features. Despite cross-examination by Mr Needham raising some doubt about the accuracy of the building approval figures, Mr Clacher remained firm in his opinion that there had been a fall in demand for units at the relevant date and considered that Mr Eales' sales confirmed his opinion, as all but one or two of the 12 remained vacant and undeveloped.
The Commercial Component of the Subject Land
Mr Eales stated that in valuing the "Commercial" zoned land he relied on direct comparison with sales of vacant commercial sites in Mackay. He set out the details of 10 sales of land which he regarded as commercial development sites which sold before and after the date of resumption.
However, Mr Clacher noted that all 10 commercial sales were in developing commercial areas north of the Ron Camm Bridge in the vicinity of the Sams Road and Malcomson Street intersections with the Bruce Highway near Mt Pleasant and did not reflect the commercial prospects of the subject land which was in a static commercial area, with difficult access.
It emerged in Mr Eales' oral evidence that he placed little or no reliance on most of those sales, principally relying on his Sale 3. That was the sale of a property with an area of 15,636 m², situated on the corner of Sams Road, Willetts Road and the Bruce Highway, which sold in December 1996 for $1,375,000. That sale analysed to show $88 per m².
Mr Eales described the land as a major development site on the Bruce Highway to the north of the Pioneer River, which forms part of a developing commercial precinct. He explained that it was purchased by a motor dealer under option, with a long settlement period; approximately two-thirds of the site required about 1 metre of fill and the block will also require some access roadworks.
Comparing the sale land with the subject commercial land, Mr Eales said that in 1996 the area in which the sale is located would have been "pioneer country" for a commercial developer. It was a cane-farming area which had taken some time to mature. Settlement of the sale was delayed and development in the area had since enhanced the value higher than $88 per m². Mr Eales regarded that sale as the most helpful of the sales in arriving at the value of the commercial component of the subject land.
Mr Clacher also referred to that sale (in Exhibit 9), describing it in much the same manner as Mr Eales. However, in his opinion, the sale is much superior to the commercial component of the subject land. Mr Clacher did not regard it as "pioneer country" in December 1996. He said that the Ron Camm Bridge had been constructed for some time and development in the area had commenced. According to Mr Clacher, a McDonalds outlet had opened in the area in the early 1990's; the purchaser of this site had a block adjoining where he had an open car yard; there were other car yards in the area; and nearby the development of a Harvey Norman site had commenced. There was even further development by the time the contract had settled in 1998, and it was known to be an area of continuing commercial development.
Mr Eales also placed some reliance on his Sale 4, a property of 19,053 m², situated on the corner of Highway Plaza and the Bruce Highway, Mt Pleasant, which sold in April 1998 for $1,095,000, or approximately $57 per m² overall. Mr Eales described that property as consisting of 10,945 m² of higher land on the highway, with lower flood plain along Goose Ponds Creek, which is suitable only for open space. He commented that it was purchased for development with an A-Mart Furniture outlet, with the land to the rear purchased for motel development. He described it as having good exposure, but with direct access only from northbound traffic, the southbound traffic having to double back. He analysed the sale to show $100 per m² for the available land.
Mr Clacher also referred to this sale and essentially agreed with Mr Eales' description and his analysis of $100 per m² for the available development land. He considered it to be much superior to the commercial component of the subject land.
Mr Jones suggested to Mr Eales that no sensible comparison could be drawn between the rates per m² paid in the Mt Pleasant area and that of the subject land. Mr Eales responded that perhaps the subject land should be higher, as it is closer to the city. However, later he conceded that the rates per m² paid in the Mt Pleasant area would be significantly higher than those in the area of the subject land. Apart from the CBD itself, the Mt Pleasant area attracted all the major commercial trade away from the other fringe locations. While he agreed that the rate per m² for the subject commercial land should be less, he thought that the rate of $73 per m² that he had applied was appropriate. He did not agree that Mr Clacher's assessment of $50 per m² was more realistic.
Mr Clacher considered the commercial area of North Mackay to be relatively static, because of the lack of car parking in the area, together with competition from the rapidly developing commercial area adjacent to the Bruce Highway north of the Ron Camm Bridge. However, he accepted that the subject land was well located, close to amenities and was suitable for future commercial use. However, he thought that parking was a problem. Although Mr Clacher agreed that the subject land had some potential for commercial development, he thought the delay in its development had arisen partly because of the need to upgrade access at the Malcomson Street/Hodder Street intersection because of the high traffic flows. He concluded that the resumption would redirect some traffic away from Malcomson Street and relieve traffic pressure, but in his opinion the subject land would continue to have all its former exposure, some at the Malcomson Street frontage and some at the rear. Unlike Mr Eales, Mr Clacher did not envisage the development of units at the rear of the subject land obstructing exposure of the commercial development from the East-West Connector Road. He believed no injurious affection arose from the resumption.
The Sale of the Gasworks Site
In arriving at his value for the commercial component of the subject land, Mr Clacher referred to five sales in various parts of Mackay, including the two sales relied on by Mr Eales, which he saw somewhat differently, as discussed earlier.
The most useful sale, in Mr Clacher's opinion, was the sale of the former Mackay Gasworks site. That property is situated at 137 Shakespeare Street on the southern outskirts of the Mackay Central Business District and has an area of 1.253 ha. It sold in April 1995 for $810,000, or $64.64 per m². It was zoned "Light Industry" at the time of sale, with good road frontage to a sub-arterial road. It had been purchased for commercial redevelopment and was subsequently developed with "The Gasworks", a small neighbourhood shopping precinct.
The purchasers of that site, a group of Mackay businessmen, were aware there may be contamination, but not the serious contamination later discovered to about 30% of the area towards the rear, requiring the redesign of their initial concepts. According to Mr Clacher, they had obtained professional advice before purchase that remediation would cost approximately $300,000. If that cost was added to the sale price, the sale shows $88.60 per m².
In Mr Clacher's opinion, the sale is much superior to the commercial component of the subject land, with a higher frontage to depth ratio.
Mr Eales said that he would not consider analysing the sale of a contaminated site such as the Gasworks site. It could cost a great deal of money to remediate the site with many potential problems. While he conceded that such sites have some value, he thought that prudent purchasers would either avoid them, or substantially discount the sale price.
Mr Eales' assessment of Compensation
Mr Eales' assessment of compensation was as follows:
Before Resumption
Value of commercial land:
7,800 m² @ $85 per m² $663,000
4,054 m² @ $50 per m² $202,700
11,854 m² @ $73.03 per m² $865,700Residential land:
7,919 m² @ $30 per m² $237,570
Total $1,103,270
Adopt $1,100,000
After Resumption
Value of commercial land:
7,800 m² @ $70 per m² $546,000
4,054 m² @ $35 per m² $141,890
11,854 m² @ $58.03 per m² $687,890
Residential land:
4,126 m² at $20 per m² $82,520
Total $770,410
Adopt $770,000
Compensation
Value before resumption $1,100,000
Value after resumption $770,000
Compensation payable $330,000
Mr Eales explained that the injurious affection to the commercial land resulted from the diminution in traffic caused by the re-routing of that traffic to the connector road. For the residential land, injurious affection is due to the noise and visual impact from that road. He admitted that his reasoning was not scientific, but he thought that reducing traffic volumes from 20,000 down to 10,000 per day would reduce the value by at least 20%, which was $17, but he rounded it back to $15 to be conservative. He said that if it had been a high volume commercial site he would have reduced it by 30%, or even 40%.
Mr Eales conceded that the sales were not really helpful in determining injurious affection and it really depended on his skill and experience as a valuer. He agreed that it was a subjective view; he had adopted $15 per m², while Mr Clacher had adopted $5 per m² (if, as a matter of law there was any injurious affection).
Mr Clacher rejected Mr Eales' assessment of injurious affection. In his opinion any loss which might arise from the loss of traffic and the reduced exposure of the commercial component, or of loss of amenity of the residential component from increased traffic noise and visual impact, would be offset by enhancement as a result of the new road. In Mr Clacher's view, the construction of the East-West Connector Road will allow the improvement of access, which will facilitate the development of the subject land.
Mr Clacher explained that access to the subject land would be via Hodder Street, a left-in left-out only intersection; there is provision for one inbound lane to turn right from Malcomson Street into Hodder Street, although traffic sometimes made access impractical. Main Roads Department studies had shown that a roundabout was not feasible with current levels of traffic and would remain so, until heavy vehicle traffic was relieved to allow construction of a roundabout, which would facilitate access to the commercial component of the property.Mr Clacher even suggested that after resumption a roundabout may not be necessary, as there were other potential solutions. He considered that the resumption will result in betterment to the commercial component of the subject land because there is potential for superior access in the after situation.
In summary, Mr Clacher thought the highest and best use of the commercial component of the subject land, both before and after resumption, would be for non-retail, secondary commercial usage, such as display centres, professional offices, etc, and that any loss through injurious affection was doubtful. He thought that the residential component would be uneconomic to develop, either before or after resumption. Its highest and best use would, he thought, be as a site for future development as an adjunct to the commercial site as "opportunity fill" became available. In making that assessment, Mr Clacher balanced betterment against any injurious affection. If it was not possible to construct a roundabout, he suggested that another traffic solution would be to signalise the intersection. In his opinion, the resumption and the construction of the new road would result in enhancement in value to the balance lands, first, by providing the opportunity to upgrade the intersection and second, by the connector road providing flood and scour protection.
Mr Clacher went on to say that despite his reservations, if as a matter of law, the claimant is entitled to some loss arising from a loss in traffic, he thought that any injurious affection would be minor. Balancing that loss against enhancement, he would adopt 10% for injurious affection for the commercial component
Based on the lack of development potential of the low-lying resumed land, Mr Clacher thought that compensation for the loss of that land was a nominal $1,000. Although an area of 721 m² was severed by the resumption, it was low-lying land in Barnes Creek and had no potential.
Mr Clacher concluded that there would be no injurious affection to the residential land as he thought that it had no foreseeable use.
Adopting that reasoning, Mr Clacher assessed compensation as follows:Before Resumption
Commercial -
11,854 m² @ $50 per m² overall or
7,000 m² filled @ $60 per m² $420,000
4,854 m² part filled @ $35 per m² $170,000 $590,000
Residential -
7,919 m² as
3,405 m² part filled @ $5 $17,025
4,515 m² nominal $1,000 $18,025
Total $608,000
After Resumption
Commercial -
11,854 m² @ $45 per m² $533,430
Rural -
7,919 m² as
3,405 m² part filled @ $5 $17,025 $550,455
Adopt $550,000
Value Before Resumption $608,000
Value After Resumption $550,000
Compensation $58,000
The Relevant Legislation
Compensation is required to be determined under the provisions of the Acquisition of Land Act 1967, s.20 of which provides:
"(1) In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also to the damage (if any) caused by either or both of the following, namely—
(a) the severing of the land taken from other land of the claimant;
(b)the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land.
(2) Compensation shall 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.
(3) In assessing the compensation to be paid, there shall be taken into consideration, by way of set-off or abatement, any enhancement of the value of the interest of the claimant in any land adjoining the land taken or severed therefrom by the carrying out of the works or purpose for which the land is taken.
(4) But in no case shall subsection (3) operate so as to require any payment to be made by the claimant in consideration of such enhancement of value."
In this case the resumed land is low-lying, undeveloped, tidal-affected, mangrove land, which both valuers agreed has no potential for development. Mr Clacher attributed a nominal value of $1,000 to that land. On the other hand, although he originally proceeded on the basis that the resumed land could be developed, Mr Eales later changed tack, arguing that the mangrove land (the land which was later resumed and the land which was severed) had value in calculating a higher development density on the developable land before resumption, than was available after resumption.
Clearly the most valuable land is the commercial component of the subject land comprising 11,854 m². That land is not directly impacted by the resumption, but Mr Eales contended that it will be injuriously affected by the loss of exposure by the reduction in the volume of traffic past the site which must affect the value of the land. He valued the commercial land before resumption at an average of $73 per m² and after resumption at an average of $58 per m², a reduction because of injurious affection of approximately 20%.
On the other hand, Mr Clacher did not think there was any injurious affection to the commercial land, or if there was, it was offset by enhancement. He valued the commercial land at $50 per m² both before and after the resumption. However, although Mr Clacher maintained his view that loss through injurious affection would be doubtful, he went on to state that:"If, as a matter of law, Regal is entitled to some loss arising from loss in traffic, and considering the available sales, we consider that such loss is minor."
In such circumstances he would value the commercial land after resumption at $45 per m², a reduction through injurious affection of 10%.
There is a considerable difference of opinion between the valuers about the value of the land at the rear of the commercial land, referred to as the residential land. Mr Eales valued the whole 7,920 m² of that land before resumption at an average of $73 per m² on the basis that 28 units could be built on the 3,406 m² which had been cleared and partly filled. He calculated the site density by having regard to the whole of the residential area, including the mangrove land, which both parties agreed could not be developed. At a site density of one to 250 m², a theoretical maximum of 31 units could be built on the residential component before resumption. However, Mr Eales thought that 28 units would be more comfortable.
After resumption there is only 4,127 m² of residential land remaining, 721 m² of which is severed, which at a site density of one to 250 m² would result in a theoretical maximum of 16 units. However, Mr Eales thought that the number of units after resumption would be 13.
Mr Eales valued the whole of the residential land before resumption at $30 per m², not just the 3,406 m² which he agreed is usable. After resumption, he valued the whole of the remaining residential land of 4,127 m², including the 721 m² of severed land, at $20 per m².
In my view, this is wrong and is the result of Mr Eales' original approach, before he abandoned the possibility of developing the mangrove area. The correct approach would be to value the developable land of 3,406 m² before and after resumption, making allowance for any greater site density allowable before the resumption.
Mr Eales attempted to justify his calculations by comparing the sales and the residential component of the subject land on a filled value per unit basis, by notionally costing the fill required to develop the sales and the subject land and arriving at a unit rate. However, I found this exercise to be unconvincing.
On the other hand, Mr Clacher regarded any development of the residential component as uneconomic, as he considered it to have no foreseeable potential use. As discussed previously, he thought that the cost of filling the land and providing services at a time when there was little demand for units would demonstrate that development at that time was not viable.
Therefore, before resumption, he attributed a value of only $5 per m² to the 3,406 m² of usable land, valuing the balance low-lying mangrove land at a nominal $1,000. After resumption, he considered the remaining 3,406 m² as unaffected by the resumption, valuing it at the same rate of $5 per m².
Both valuers assessed compensation by means of "before and after" valuations. That approach has the advantage of assessing the value of the land taken, plus the loss in value of the claimant's other lands caused by severance and injurious affection, offset by any enhancement in value to the claimant's adjoining land, without having to make separate assessments: Lansbury v. Brisbane City Council (1977) 4 QLCR 502.
In terms of s.20(1) of the Acquisition of Land Act 1967, the evidence of the two valuers indicates that there is little value in the low-lying tidal mangrove land that was resumed. Also, in terms of sub-s.(1)(a), there is no suggestion that the severing of the 721 m² of creek bed by the resumption has caused any damage. The real issue in this case is in terms of sub-s.(1)(b), whether or not there has been, or will be, damage caused by the exercise of any statutory powers by the respondent injuriously affecting other land of the claimant. If there was such injurious affection, is that to be offset by any enhancement of the value of the claimant's adjoining land, in terms of sub-s.(3)?
It is to the matter of injurious affection that I now turn:
Is the Claimant entitled to Compensation for Injurious Affection?The interpretation of s.20(1)(b) has recently been the subject of consideration by the High Court in Marshall v. Director-General, Department of Transport (2001) 114 LGERA 389. Prior to the decision of the High Court in that case, this Court had long considered itself to be bound by the principle established by the English Court of Appeal in Edwards v. Minister for Transport [1964] 2 QB 134. Edwards established that there was no entitlement to compensation for injurious affection unless, at least some of the damage to the appellant's residual land was caused by works performed, or to be performed, on the resumed land itself. Under the Edwards principle, it would be necessary for the claimant in this case to demonstrate that the loss in value to the balance lands arises from the proposed use of the land actually resumed from the claimant and does not extend to losses consequent upon the carrying out of the larger public purpose of the new road constructed on other land.
The claimant argued that the commercial component of the subject land will be damaged because of the reduction in traffic flow which, as a result of the resumption, will be diverted to the rear of the land. In addition, the claimant argued that the residential component will be damaged by the proposed use of the new road because of noise and visual impact. Therefore, to be successful in this case under the Edwards principle, the claimant would have be entitled only to injurious affection which arises from the use of the 3,793 m² resumed from the claimant's land and not from the use of other land. Clearly, in such a case compensation could only be nominal.
However, in Marshall, the High Court refused to follow Edwards. The Court held that s.20(1)(b) of the Act did not distinguish between the various activities carried out by a construction authority in the exercise of its statutory powers. Once the constructing authority acquired land for a statutory purpose and carried out the statutory purpose, it must compensate the dispossessed owner for the injurious effect upon the residual land resulting from the undertaking and the implementation of that purpose, actual and prospective.
Under the principle in Marshall, if the claimant in this case can show that the use of the proposed East-West Connector Road will damage the value of that commercial land by diverting traffic from Malcomson Street and reducing its exposure to that traffic, then the claimant is entitled to compensation for injurious affection.
Similarly, if the claimant can show that the use of the proposed East-West Connector Road will damage the value of the remaining residential component of the subject land by traffic noise and visual impact, then the claimant is also entitled to injurious affection for that damage.
Mr Clacher has conceded that if the claimant is entitled to compensation for injurious affection as a result of the loss of traffic, he would assess compensation at $58,000. However, he did not concede any injurious affection to the residential component.
It remains to consider whether the claimant has demonstrated that it is entitled to compensation.
The "Before" Valuation of the Commercial Land
There is little assistance from the sales relied on by the valuers. I accept Mr Clacher's opinion that Mr Eales' Sales 3 and 4, reflecting $88 per m² and $100 per m² respectively, are much superior to the commercial component of the subject land. They are situated in an area adjacent to the Bruce Highway north of the Ron Camm Bridge, which is an area of increasing commercial development.
On the other hand, the Gasworks site sale relied on by Mr Clacher, situated on the southern outskirts of the Central Business District, sold about four years prior to the date of resumption. It is difficult to analyse that sale because of the problems of contamination and cost of remediation. It shows $65 per m² unremediated, or $88.60 per m² if the purchasers' anticipated cost of remediation is included. It is acknowledged to be superior to the commercial component of the subject land.
That sales evidence, such as it is, in my view does not support the average of $73 per m² applied by Mr Eales to the commercial land before resumption. It hardly lends strong support to Mr Clacher's valuation of $50 per m² either, but all things considered, I think it is a more realistic assessment.
All witnesses recognise that the subject land had commercial potential before resumption, even though Mr Norling pointed out that there are abundant commercial facilities already in North Mackay and the competition from other commercial areas limits its value. There is unlikely to be demand for other than limited commercial uses, with a large proportion of non-retail uses. That is quite apart from the high volume of traffic and limited parking which further limit its potential. In particular, the access at the Hodder Street intersection would have to be improved before there could be any development. The evidence is to the effect that before the resumption, a roundabout at that intersection would not have been a practical solution because of the volume of traffic, especially the heavy commercial traffic.
There was no traffic engineering evidence, but it was suggested that a possible solution would be signalisation of the intersection. There was no suggestion that traffic lights at the intersection would be impractical. However, such a solution to the access problem would no doubt involve some contribution from a developer of the subject land, a matter which a prudent purchaser would consider in determining what to pay for the land.
After considering these matters, together with the limited sales evidence, I have come to the conclusion that a prudent purchaser would pay $50 per m² for the commercial component of the subject land before resumption. I do not think that such a purchaser would attempt to value the filled land and unfilled land separately, but would arrive at an overall rate per m².
The value of the commercial land after resumption depends on whether it is adversely affected by the resumption. I have found that injurious affection is payable as a matter of law if the land is adversely affected by the resumption.
Mr Eales contended that the commercial land is reduced in value by about 20% as a direct consequence of the resumption. He reasoned that by halving the daily traffic past the site, its exposure will be diminished. He saw no enhancement in the value of the land whatsoever arising from the resumption. However, Mr Eales conceded that he has no real basis for adopting 20%, relying on his skill and experience as a valuer.
On the other hand, Mr Clacher thought that if the value of the commercial land had been adversely affected by the resumption then that had to be offset by the enhancement. That enhancement arose because, with the reduced traffic and the re-routing of all heavy vehicles, the potential existed after resumption for an alternative solution to the intersection access by means of a roundabout. He thought that there would be no loss of exposure, as the businesses established on the subject land would have exposure to the re-routed traffic on the East-West Connector Road, but this time at the rear. This is consistent with Mr Clacher's view that there is no foreseeable potential in the rear land. He assessed injurious affection at $5 per m², or 10% of the before valuation of $50 per m².
In my view, Mr Eales was not correct in finding that there will be no enhancement with the construction of the connector road. The evidence is clear that any development of the commercial land will be largely non-retail, or at best, secondary retail, with a large proportion being professional offices, which are not as heavily dependent as retail businesses on exposure to passing traffic. However, any such development will depend upon solving the access problem at the intersection. The resumption will result in the re-routing of virtually all heavy commercial vehicles from Malcomson Street and half the other traffic. That will allow the potential for the construction of a roundabout as a solution to the access problem, an alternative which was not possible before the resumption.
However, I do not think that this enhancement totally outweighs the loss of exposure to passing traffic. As Mr Norling conceded, even the non-retail users rely on exposure to some extent. Furthermore, I do not think that a prudent purchaser of the subject land after resumption would place any weight on exposure of the rear of the commercial land from the East-West Connector Road. In my view, such a purchaser would consider that the rear land would be developed at some time in the future. In any case, exposure to the rear of the site is not as effective as exposure to the front.
Therefore, I have come to the conclusion that the injurious affection assessed by Mr Eales is excessive, while that assessed by Mr Clacher is somewhat conservative, but closer to the mark. In the result, I intend to assess the value of the commercial land after resumption at $44 per m².
The Value of the Residential Land
As discussed previously, the only sales of any assistance are those at 21 and 23 Malcomson Street, with some assistance from the sale at 19 Perkins Street to show the price a developer was prepared to pay for low-lying unit development land in a quiet residential street.
The valuers disagreed whether or not the Malcomson Street sales should be regarded as before resumption sales, or after resumption sales. Both sales took place before the date of resumption, but it is common ground that the purchasers of both of them were aware that the land at the rear of each block would be required for the connector road.
Mr Eales contended that they must therefore be regarded as after resumption sales, as the purchasers would adjust their sale prices accordingly, not only for the loss of the land, but for any injurious affection from the new road. He assumed that if those purchasers had been free of any concern about the resumption scheme, they would have paid higher prices for those lands.
On the other hand, Mr Clacher was of the view that the land resumed from each of the sales was undevelopable land and therefore of no value to the purchasers. Like Mr Eales, he analysed the two sales to a rate per m² after resumption, reasoning that there would have been little or no difference in the prices paid whether or not the purchasers were aware of the pending resumptions, as they would only have paid for the land which was developable in any case.
Mr Jones submitted that the two sales must be regarded as before resumption sales, as the purchasers bought the land knowing full well that they would be entitled to compensation for the loss of the land. He suggested that they may even regard the resumption as a positive, as they would not have to incur the cost of a rock armour wall to prevent erosion and would be given flood immunity. However, there was no evidence of the requirements of the PRIT before resumption.
In my view, it would be dangerous to assume that a prudent purchaser would pay more than the after resumption value for the two sale properties, in the hope that any additional amount would be claimable as compensation at a later stage. I would think that a prudent purchaser would consider the land that was to be resumed to be lost and not pay any more for it. Any compensation that could later be negotiated after the resumption would be regarded as a windfall and not something taken into account in the sale price.
However, there is simply no direct evidence of the attitude of the purchasers. There is some hearsay evidence from Mr Clacher that he was told by Mr Snell, the purchaser of 23 Malcomson Street, that he was undecided as to whether the road will be a benefit or a detriment to his development.
We are therefore left with the two sales of long narrow lots close to the subject land, both with direct frontage to Malcomson Street and both requiring substantial amounts of fill before any development can proceed. Based on its after resumption area, No. 23 shows $38 per m². However, in my view, some allowance must be made for the house which has returned an income while the purchaser awaits the maturity of the land's development potential. It has access to a side street which enhances its value over No. 21.
Number 21 Malcomson Street sold to a unit developer. It also required a considerable amount of fill before any development can proceed. The purchaser is progressively filling the land with opportunity fill. It has direct frontage to Malcomson Street which, even with the reduced traffic after resumption, would still make access difficult and dangerous. No traffic engineering evidence was given in this matter, but it seems to me that a prudent purchaser would consider that development approval may require the sacrifice of some of the frontage land for a slip lane, or service road, as a condition of development.
However, while there is simply no evidence of how the access problem may be solved, there is, in my view, good reason why this sale shows, based on its after resumption area, $21.38 per m², considerably less per m² than the sale of No. 23.
Mr Eales carried out an exercise to compare the sales and subject residential land on a filled per unit basis. However, the difficulty with such a comparison is that there is no evidence of the number of units that will be built on either the sales or the subject land. There is evidence of the theoretical maximum in each case, but I accept that at the date of resumption, the demand for units was not buoyant. No evidence was led of the purchasers' intentions to develop the sale properties in the near future. In the absence of such evidence, it is my view that the purchasers bought the two properties as long-term investments intending to develop them at some time in the future, perhaps when the unit market improves.
Because the resumed land is mangrove swamp and not able to be developed, the only value it could have to the purchasers was to increase the possible site density and hence the theoretical maximum number of units. In the circumstances, without evidence that they intended to build so many units, that would have been a nominal value only. There is no evidence that they considered the connector road would greatly adversely affect the value of the land after resumption.
Similarly, in my view, the residential component of the subject land was not ripe for unit development at the date of resumption. Any consideration of a 5-storey unit development was fanciful at that time. A prudent purchaser of the whole of the subject land would, in my view, consider it only as an adjunct to the commercial component. Such a purchaser would consider that if the commercial venture was a success, there may be potential to develop the residential component with units at a later date. No decision on the number of units or detailed costings would be undertaken until later, but the purchaser would know that the land required further fill, had no direct access except through the commercial land and would require the provision of services.
Having regard to what was paid for the properties at 21 and 23 Malcomson Street, after the purchasers of those properties became aware of the resumption, I have concluded that a prudent purchaser of the subject land would pay no more than $20 per m², or $85,125 before resumption. Having regard to the reduced development density and the effect of noise and visual impact from the new road, such a purchaser would pay something less after resumption. I have adopted $15 per m².
Compensation
In accordance with my findings as to the values of the land before and after resumption, I determine compensation using the before and after method of valuation as follows:
Value of land before resumption
Commercial Land
11,854 m² @ $50 per m² $592,700
Residential Land
3,406 m² (usable land) @ $20 per m² $68,120
Total $660,820
Value of land after resumption
Commercial Land
11,854 m² @ $44 per m² $521,576
Residential Land
3,406 m² @ $15 per m² $51,090
Total $572,666
Compensation
Value before resumption $660,820
Value after resumption $572,666
Compensation $88,154
Disturbance
The only disturbance items claimed by the claimant were for valuation and legal fees incurred in the preparation and lodgment of the claim for compensation. These were agreed in the sum of $3,150 for legal fees, which had not been paid at the date of hearing, and in the sum of $3,000 for valuation fees, which had been paid on 6 February 2001.
Therefore, total compensation in this case amounts to $94,304.
Interest
I was informed that no advance has been paid in this matter and there was no argument that this was not an appropriate case in which the Court should follow its usual practice and award interest on compensation payable from the date of resumption.
Determination and Orders
Compensation is determined in the sum of Ninety-four Thousand Three Hundred and Four Dollars ($94,304) and the respondent is ordered to pay the claimant that amount.
I further order that the respondent pay the claimant interest at the rate of 6 per cent per annum on the sum of Eighty-eight Thousand One Hundred and Fifty-four Dollars ($88,154) from the date of resumption, 19 February 1999, to 6 February 2001, when the valuation fees of $3,000 were paid and then on the amount of Ninety-one Thousand One Hundred and Fifty-four Dollars ($91,154) from 7 February 2001 up to the day immediately preceding the date upon which payment of compensation is made.
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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