Roads Corporation v Carter
[2010] VSC 273
•18 June 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
VALUATION, COMPENSATION & PLANNING LIST
No. 9605 of 2008
| ROADS CORPORATION | Applicant |
| v | |
| REGINALD VICTOR CARTER in his capacity as legal personal representative of REGINALD HERBERT CARTER (deceased) and BARRY JAMES CARTER in his capacity as legal personal representative of REGINALD HERBERT CARTER (deceased) | Respondents |
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JUDGE: | OSBORN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1-3 June 2010 | |
DATE OF JUDGMENT: | 18 June 2010 | |
CASE MAY BE CITED AS: | Roads Corporation v Carter | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 273 | |
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VALUATION AND COMPENSATION – Hypothetical highest and best use in ‘before’ situation – Effect of Bypass proposal to be disregarded – Strategic planning considerations – Factors supporting residential rezoning – Subregional growth area proposal inconsistent with extractive use zoning and strategic importance of limestone resource – Legacy site case – Whether topography is a natural barrier to rezoning – Whether extractive use zone is a bar to rezoning – Whether ‘infill’ development – Whether a need for rezoning – Good prospect of residential rezoning at the relevant date subject to a risk as to uncertainty – Land Acquisition and Compensation Act 1986, ss 41(3), 43(1)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N Pane with Ms L Hannon | Garland Hawthorn Brahe |
| For the Defendant | Mr M J Wright QC with Mr P Connor | Bowman and Knox |
TABLE OF CONTENTS
The land............................................................................................................................................... 6
The planning debate........................................................................................................................ 20
The subregional growth area case................................................................................................ 26
The legacy site case.......................................................................................................................... 29
(a) The natural barrier............................................................................................................... 35
(b) The SU7Z and planning strategy relating to the protection of stone resources
suitable for extraction.......................................................................................................... 38
(c) Would the proposal constitute an infill development?................................................... 39
(d) Need....................................................................................................................................... 41
Conclusion......................................................................................................................................... 41
HIS HONOUR:
On 30 June 2005 (‘the relevant date’) the applicant (‘the Authority’) compulsorily acquired a portion of land owned by the respondents (‘the claimant’) for the purpose of constructing a section of the Geelong Bypass.
The area acquired comprised a 5.852 hectare strip traversing a larger parcel of land which was leased to a quarry operator. The acquisition separated a 7.288 hectare remnant parcel to the south-east from a 38.52 hectare remnant parcel to the north-west. Prior to the acquisition the whole of the land comprised 51.66 hectares.
The claimant claims compensation pursuant to the provisions of the Land Acquisition and Compensation Act 1986 (‘the LAC Act’). The primary measure of that compensation is the difference in the market value of the claimant’s interest in the land calculated on a before and after basis. Section 41(3) of the LAC Act provides:
If less than the whole of the land in which a claimant's interest subsists is acquired or less than the whole of that interest is acquired, the market value of the acquired interest is the difference between the market value of the interest before the acquisition and the market value of the interest after the acquisition.[1]
[1]LAC Act, s 41(3).
In order to value the land in the before situation, it is necessary to hypothesize its highest and best use as at the relevant date. Section 5A of the Valuation of Land Act 1960 (‘the VL Act’) requires regard to be had to the highest and best use to which the land might reasonably be expected to be put at the relevant time.
The development potential of the land may affect its highest and best use. In ISPT Pty Ltd v Melbourne City Council,[2] the Court of Appeal cited with approval[3] the elaboration of the relevant concept by Biscoe J in Commonwealth Custodial Services Ltd v Valuer-General (NSW) :[4]
There is no statutory definition of “highest and best use”. It has been described in the High Court as “the most advantageous purpose for which [the land] was adapted”: Spencer v The Commonwealth.[5] It “is the present value alone of such advantages that falls to be determined”: Cedars Rapids Manufacturing and Power Co v Lacoste.[6] In Park v Allied Mortgage Corporation Ltd[7] Hill J said at [70]: “As Spencer’s case itself makes clear the valuation must proceed by reference to the best use of the property. For this purpose the valuer will take into account not only the present use to which the land is applied, but any more beneficial use to which it may reasonably be applied. This is the process which a purchaser negotiating to purchase the property would undertake. Thus, it is not inappropriate in valuing property to take into account a potential development of the property, for among the range of hypothetical purchasers can be assumed to be a person who would undertake such a development as would maximise the usage of the land”. In Adelaide Clinic Holdings Pty Ltd v Minister for Water Resources[8] Jacobs J said:
Common experience shows that land ideally suited for commercial development will fetch a higher price per unit of area than residential land, but it does not follow that the highest and best use of all land is a commercial use, for the highest and best use means exactly what it says — the most advantageous use of the subject land having regard to planning and all other relevant factors affecting its present and future potential. The first task of the valuer is to determine what that use is and then to value the land on that basis. It is not appropriate to determine the highest and best use by reference only to value.
[2](2008) 20 VR 447.
[3]Ibid, 458-9.
[4](2006) 148 LGERA 38, [15].
[5](1907) 5 CLR 418, 441 (Isaacs J).
[6][1914] AC 569, 576 (Lord Dunedin).
[7](Unreported, Federal Court of Australia, 5 July 1995).
[8](1988) 65 LGRA 410, 415.
The potential highest and best use of land may itself be to hold the land for a potential future use. Thus, there is a distinction which may be drawn between land ripe for subdivision and land having the potential for future subdivision.[9]
[9]Crompton v Commissioner of Highways (1973) 5 SASR 301, 318-319.
Section 43(1) of the LAC Act also requires the question of highest and best use to be assessed disregarding the scheme which led to the acquisition. Section 43(1)(a) and (d) provide:
(1)In assessing compensation, the following matters must be disregarded—
(a)any increase or decrease in the market value of the interest in land which is acquired arising from the carrying out, or the proposal to carry out, the purpose for which the interest was acquired;
…
(d)in a case where the land in which the acquired interest subsists is reserved for a public purpose in a planning instrument, any restrictions upon the use or development of that land which are imposed by, or are a consequence of, the reservation;
The section is to be understood in the light of the judgment of the High Court in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority.[10] That judgment was concerned with analogous New South Wales legislation and focuses upon the causal requirement postulated by the parallel provision. In the present case there was no dispute the Bypass proposal had affected the strategic planning of Geelong’s urban growth over the last 50 years. The dispute was essentially one of fact, regarding what the zoning situation would hypothetically be at the relevant date if the Bypass proposal were disregarded.
[10](2008) 233 CLR 259.
In the present case the claimant contends that if it were not for the Bypass proposal, planning policy would have further endorsed development of the Fyansford township at the relevant date and the urban growth of Geelong would have extended further westward. The claimant’s land would either have been zoned Residential 1 or have had an excellent prospect of being so zoned in the immediate future. The Authority disputes this contention and contends that the effect of the Bypass proposal at the relevant date was in fact to extend outward the immediately foreseeable limit of urban zones to the west of Geelong further than would have occurred in the absence of the Bypass, and not to constrain the extent of those zones. Accordingly, the residential rezoning of the claimant’s land was a long term prospect only.
The resolution of this dispute will necessarily confine the valuation issues between the parties. Accordingly, on 19 May 2010 I ordered (subject to further order) that the following question be tried as a preliminary question in the proceeding:
As at the date of acquisition what zoning of the claimant’s land should be assumed in the ‘before’ situation, and what prospect (if any) was there of the land being rezoned for urban purposes?
That question has now been tried and my conclusion is that as at the relevant date the probability (if the Bypass proposal is disregarded) was that the claimant’s land would have been rezoned from Special Use 7 (‘SU7Z’) to Residential 1 within five years, but that probability was subject to a residual risk of uncertainty of 20 per cent.[11] My reasons for this conclusion are as follows.
[11]Crouch v Minister for Works (1976) 13 SASR 553, 560-561; Transport for London (formerly London Underground Limited) v Spirerose Limited [2009] 1 WLR 1797, 1811. See also Lord Neuberger at 1817; cf Malec v J C Hutton Pty Ltd (1990) 169 CLR 638, 642-3.
The land
The claimant’s land is adjacent to the historic settlement of Fyansford. It lies on the western side of the Moorabool River.
It forms the central holding of three contiguous parcels of land running north from Fyansford and referred to in evidence as the Synot land, the Carter land and the Dryden land.
Figure 2 below from the report of Mr Gerner tendered in evidence[12] is a plan showing the location, dimensions and zoning of these parcels of land as at the relevant date.
[13]
[12]Gerner, M Planning Report: Carter Estate v Roads Corporation Supreme Court No 9605/08 Golder Associates, 14 December 2009 (‘Gerner Report’).
[13]Gerner Report, Figure 2.
The Fyansford settlement is centred around a crossing over the Moorabool River a short distance upstream from its confluence with the Barwon River. It is located below a steep escarpment running generally north-south and containing the western edge of residential development within Geelong at the relevant date (being the suburb of Herne Hill).
The portion of Fyansford on the eastern side of the Moorabool River accommodated a substantial cement works for the greater part of the 20th century. The cement works ceased operation in 2002 but remained zoned Industrial 1 (‘IN1Z’) and included land subdivided into relatively small scale allotments.
On the western side of the Moorabool River Fyansford historically accommodated the Buckley’s Falls Paper Mill situated next to the Barwon River. This mill closed in the first half of the 20th century. At the relevant date however the western portion of Fyansford included a former bluestone quarry hole south of the Hamilton Highway, contained in a SU7Z, and an area of subdivided land to the west of this in the vicinity of the highway and Upper Paper Mills Road. This subdivision was also zoned IN1Z.
To the north of the Hamilton Highway the greater part of the Synot land, the Carter land and the Dryden land were also zoned SU7Z. This zone was separated from the core of Fyansford by a parcel of land zoned rural. The three parcels were occupied by a single quarry operator and the subject of a single works authority pursuant to extractive industry controls. The zoning of the area as at the relevant date was as follows:
[14]
[14]Gerner Report, Figure 3.
The land use situation in 2002, 3 years prior to the relevant date, was thus as is shown in the aerial photograph below.
[15]
[15]Gerner Report, Figure 1.
The cement works was still operating. The Fyansford tip was operating in a former bluestone quarry hole south of the Hamilton Highway. A quarry was operating on the Synot land and a quarry hole also existed on the Carter land, extending into the Dryden land. The Carter land and Dryden land was leased by the operator of the quarry on the Synot land. An industrial subdivision extended to the west of the tip south of the Highway. The cluster of uses constituted by the cement works, the tip and the quarry was inimical to residential development at Fyansford.
Since 2002 however, the cement works has ceased operation, the Bypass has been constructed, the landfill has progressed, and the quarry operations have ceased.
Since the relevant date, the cement works land (together with some adjoining land) has also been rezoned into Residential 1, Business 1 or Mixed Use zones pursuant to amendment C17 to the Greater Geelong Planning Scheme (‘GGPS’). The amendment was approved on 9 March 2004 and gazetted on 23 December 2008 following a dispute over land ownership.
[16]
[16]Biacsi, Andrew Town Planning Report: 100 Clarkes Road, Fyansford Contour Consultants Australia, April 2010 (‘Biacsi Report’), Attachment 4.
This amendment was known to be approved at the date of the acquisition of the relevant portion of the claimant’s land.
The land to the north of the C17 land has also been rezoned by amendment C18 to the GGPS[17] (shown below) with that portion of land unaffected by floodway concerns being placed in a Residential 1 zone.
[18]
[17]The amendment was approved on 13 November 2007 and gazetted on 6 March 2008.
[18]Biacsi Report, Attachment 5.
The Synot land and south-eastern corner of the Carter land have also been rezoned pursuant to amendment C119 to the GGPS[19] into a combination of Residential 1, Mixed Use and Business 1 zones as shown below. The amendment facilitated approximately 960 residential lots and some other mixed use outcomes.
[20]
[19]The amendment was approved on 12 August 2008 and gazetted on 23 December 2008.
[20]Biacsi Report, Attachment 6.
The land to the north of the C119 land is comprised in the Bypass reserve and the land to the north of that (including the bulk of the Carter land) remains in the SU7Z. That zone extends to the Midland Highway to the north and the Fyansford-Gheringhap Road to the west as shown below.
[21]
[21]Biacsi Report, Attachment 3.
The planning debate
The precursors to the current GGPS have recognised a proposal for the Bypass in its present location since 1959.
In consequence, planning for Geelong generally has also proceeded for the last 50 years on the basis that the logical limit to western growth of urban Geelong is the Bypass.
In turn Geelong has itself expanded in a form constrained to the west by the Bypass route. It extends significantly further to the south than it does to the west. It has adopted an elongated form constrained by the Bypass alignment.
The longstanding history of the Bypass proposal means that if its absence is hypothesized, a central plank of the planning strategies which have been formulated over the last 50 years is removed. There is no easy way to deduce from the documents evidencing strategic planning for Geelong, what form Geelong would have taken in the absence of the Bypass proposal. The hypothetical zoning of the Carter land in the absence of the Bypass scheme is thus a matter of opinion.
The Geelong Ring Road Strategic Study published by the Authority in 2002 stated:
The alignment of the Western Bypass has long been considered the western edge of urban Geelong, and this is reinforced in the Greater Geelong MSS. If the Western Bypass reservation were to be abandoned, this notional boundary would disappear. In such an event, there may be scope to replan the western edge of Geelong to accommodate further urban development.[22]
[22]Roads Corporation, Geelong Ring Road Strategic Study 10 October 2002, 63.
This statement confirms the hypothetical potential of the claimant’s land for urban development in a general sense assuming the absence of the Bypass.
Both the claimant and the Authority called two expert witnesses to give evidence as to the relevant hypothetical opinion. Mr Gerner and Mr Strates gave evidence on behalf of the claimant and Mr Whitney and Mr Biacsi gave evidence on behalf of the Authority. All are experienced town planners with extensive and impressive curriculum vitae. Mr Gerner, Mr Whitney and Mr Biacsi have somewhat greater experience than Mr Strates, but on the other hand, Mr Strates acted for the proponents of C17, C18 and C119 and has a close knowledge of the relevant area.
Whereas, historically, town planning controls implemented by law may be understood to have developed from a desire to minimise conflict between potentially inconsistent land uses, they are now understood to have the further fundamental purpose of facilitating appropriate land use and development. Section 4 of the Planning and Environment Act 1987 thus provides:
(1) The objectives of planning in Victoria are—
(a)to provide for the fair, orderly, economic and sustainable use, and development of land;
(b)to provide for the protection of natural and man-made resources and the maintenance of ecological processes and genetic diversity;
(c)to secure a pleasant, efficient and safe working, living and recreational environment for all Victorians and visitors to Victoria;
(d)to conserve and enhance those buildings, areas or other places which are of scientific, aesthetic, architectural or historical interest, or otherwise of special cultural value;
(e)to protect public utilities and other assets and enable the orderly provision and co ordination of public utilities and other facilities for the benefit of the community;
(f)to facilitate development in accordance with the objectives set out in paragraphs (a), (b), (c), (d) and (e);
(g)to balance the present and future interests of all Victorians.
Clause 14 of the State Planning Policy Framework contained in the Victorian planning schemes, which deals with urban settlement, indicates how these considerations may be applied to the development of new urban areas in a general sense.
14.01-1 Objective
To ensure a sufficient supply of land is available for residential, commercial, industrial, recreational, institutional and other public uses.
To facilitate the orderly development of urban areas.
14.01-2 General implementation
Planning authorities should plan to accommodate projected population growth over at least a 10 year period, taking account of opportunities for redevelopment and intensification of existing urban areas as well as the limits of land capability and natural hazards, environmental quality and the costs of providing infrastructure.
In planning for urban growth, planning authorities should encourage consolidation of existing urban areas while respecting neighbourhood character. Planning authorities should encourage higher density and mixed use development near public transport routes.
Planning authorities should facilitate the orderly development of developing urban areas through the preparation of structure plans or precinct structure plans. The plans should take into account the strategic and physical context of the location, provide for the development of sustainable and liveable urban areas in an integrated manner, facilitate the development of walkable neighbourhoods and facilitate the logical and efficient provision of infrastructure.
Structure plans may consist of a hierarchy of plans that provide the broad planning framework for an area as well as the more detailed planning requirements for neighbourhoods and precincts within an area. Planning authorities should facilitate the preparation of a hierarchy of plans appropriate for the development of an area.
Precinct structure plans for land in the Urban Growth Zone are to be prepared in accordance with the applicable Precinct Structure Planning Guidelines approved by the Minister for Planning.
Responsible authorities should use any relevant structure plan or precinct structure plan in considering applications for subdivision.
Environmentally sensitive areas with significant recreational value such as the Dandenong and Macedon Ranges, the Upper Yarra Valley, Western Port and Port Phillip Bays and their foreshores, the Mornington Peninsula, the Yarra and Maribyrnong Rivers and the Merri Creek, the Grampians, the Gippsland Lakes and its foreshore, the coastal areas and their foreshores and the Alpine areas as well as nominated urban conservation areas, historic buildings and precincts should be protected from development which would diminish their environmental conservation or recreation values.
Decision making by planning and responsible authorities must be consistent with any relevant requirements of State environment protection policies and waste management policies.[23]
[23]Clause 14.01-1 and 14.01-2, Victoria Planning Provisions, State Planning Policy Framework. Department of Planning and Community Development at 15 June 2010.
At the relevant date, the Municipal Strategic Statement (‘MSS’) contained in the GGPS stated in part:
The City of Greater Geelong is the most populous municipality in Victoria. Indeed Geelong is Australia’s eleventh largest city, Victoria’s second city and its most important provincial centre.
In a regional perspective Geelong is the principal settlement and economic centre in the Barwon and South West regions of Victoria, providing access to important primary services such as hospital, specialist medical, tertiary education, retail shopping and other commercial and community facilities and key infrastructure assets such as the port and Avalon airfield. Geelong is in the fortunate position of having all the benefits of a large city, without the accompanying congestion and air pollution.
…
Geelong’s proximity to Melbourne is a key strength for the City in positioning itself for the 21st century.
The heart of Geelong, located on Corio Bay and the Barwon River, is 75 kilometres south-west of Melbourne. This places Geelong only an hour away by the Princes Freeway and a similar time by train.
Geelong’s significance derives from:
· Its coastal location with deep water port facilities.
· Its proximity and accessibility to Avalon Airport.
· Proximity to Melbourne and situation within the sphere of metropolitan influence.
· Good infrastructure connections to Melbourne (by the Princes Freeway and rail).
· Its strength as a regional and national industrial and business location.
· Its role as a government, administrative, educational, legal and medical service centre for the wider South West of Victoria, extending to the South Australian border at Mount Gambier.
· Proximity and ease of access to attractive coastal locations and national parks.
· An attractive regional lifestyle; and
· Well developed sporting facilities and the host of a national competition AFL team.[24]
[24]Department of Planning and Community Development, Greater Geelong Planning Scheme Municipal Strategic Statement Clause 21.02, 58.
These attributes of Geelong were accepted in the evidence before me.
The MSS also set out the following planning principles in respect of settlements:
· The longstanding planning policy of maintaining a non-urban break between Geelong and Melbourne should be upheld.
· The longstanding planning policy of maintaining non-urban breaks between settlements should be upheld to foster a sense of spatial/physical identity for each of the townships outside urban Geelong.
· Where possible, natural boundaries should form the edge of urban areas to assist in reducing development pressure on the fringe of existing townships and urban Geelong.
· Urban consolidation should be encouraged to enable existing boundaries of the urban area and townships to be maintained and provide for increased densities that will not only justify the provision of additional services but utilise surplus capacity in existing services.
· Each township outside urban Geelong should have a definable urban form in terms of the scale of buildings permitted to provide some certainty to existing and future residents.
· As the role of each township changes according to the variations in population profile, appropriate local services need to be provided.[25]
[25]Ibid, 71.
The principles identified in the third and fourth dot points above, relating respectively to natural boundaries and urban consolidation, were argued to be of central significance in this case by the witnesses called on behalf of the Authority.
The MSS also contained population projections and planned for urban growth on the basis of an increase in the population of Greater Geelong by 71,000 people by the year 2020, equivalent to 26,018 new households.[26] The MSS specifically referred to an Urban Growth Strategy of 1996 which identified the need to maintain a relatively compact urban form and reject uncontrolled urban sprawl. I shall return to other principles identified in this document below.
[26]Ibid, 77.
In 2004, prior to the relevant date, the Department of Sustainability and Environment produced predictions of household growth which were higher than those contained in the MSS:
The total number of households in Greater Geelong is projected to increase from 77,317 households in 2001 to 126,617 households in 2031. This represents an increase of 49,300 households over the 30 years from 2001 to 2031. The number of households in regional Victoria is projected to increase by 258,916 households over the same period.[27]
[27]Department of Sustainability and Environment, Victoria in Future 2004 Summary.
As Mr Strates observed, it appears that Geelong had increased in attractiveness as a residential location in the period leading up to the relevant date. I accept his evidence and the evidence of Mr Gerner that there was a substantial demand for residential land in Greater Geelong as at the relevant date. Mr Strates identified an ongoing annual growth of some 0.9% in the Greater Geelong population.
It was in effect common ground between the planning witnesses that the central issue governing the answer to the preliminary question, was whether residential rezoning of the claimant’s land at the relevant date was supported by strategic planning considerations.
The claimant’s case is put forward on two separate conceptual bases. It was first argued that the large triangular area between Batesford to the north and Fyansford to the south would, but for the freeway proposal, have been approved as a western urban growth area (the ‘subregional growth area case’).
In the alternative it was argued that the claimant’s land comprised a ‘legacy’ site, ie one which would logically have comprised land forming an appropriate component of urban renewal of Fyansford as at the relevant date (the ‘legacy site case’).
Mr Gerner instanced the award winning redevelopment of the Austral Brick site at Scoresby,[28] the Niddrie Quarry and other sites as examples of substantial quarry sites which have been transformed into residential redevelopments. He contrasted such redevelopment with what would occur if the claimant’s land was simply rehabilitated to the extent required by the relevant extractive industry work authority. This would simply require battering and other works necessary to make the site safe. Mr Gerner stated, and I accept, that redevelopment of such ‘legacy’ sites may materially facilitate their rehabilitation.
[28]A 58 hectare site redeveloped to accommodate approximately 1,000 houses.
Both scenarios were supported by some underlying fundamentals of strategic planning. First, at the relevant date State planning policy as embodied in the document entitled Melbourne 2030, designated Geelong as an accelerated growth centre.
Secondly, there was a need to provide housing in the Greater Geelong area to accommodate a substantial increase in population over the next 25 years.
Thirdly, both the triangular growth area postulated and the Fyansford area in particular, were conveniently proximate to central Geelong and able to be serviced. Each was more conveniently proximate than growth areas to the south such as Armstrong Creek.
The subregional growth area case
The subregional growth area case was most clearly articulated by Mr Strates.
I accept his opinion that the triangular area between Fyansford and Batesford nominated by him is potentially capable of connection by a new bridge to Church Street, Geelong, and that it is theoretically capable of constituting a substantial accretion to Geelong of some 2,500 hectares accommodating perhaps 30,000 persons.
The principal difficulty confronting this scenario was however elaborated by Mr Whitney and Mr Biacsi. The greater part of the triangle was at the relevant date (and remains) zoned SU7Z.
In turn, save for the basalt pits in the immediate vicinity of Fyansford, the primary purpose of that zone is to facilitate the exploitation of a substantial limestone resource.
The significance of that limestone resource was recognised by strategic planning at the relevant date. The Geological Survey Report 97 of 1992 relating to limestone resources of Victoria stated:
· The limestone requirements of the cement industry are largely met by Tertiary limestones in the Geelong area and appear to be satisfied for the foreseeable future. However, due to urban encroachment, resource evaluation and planning protection are needed to ensure optimum use of deposits particularly in the Geelong area.
…
The Batesford Limestone has provided the bulk of the raw material for cement manufacture in Victoria since 1890 (Spencer-Jones, 1970). Current annual production is 1.5 million tonnes which represent 55% of all limestone produced in the State and 65% of limestone produced for cement manufacture. …
With the present level of production the estimated reserve is sufficient for about 15 years supply. With the planned diversion of the Moorabool River the reserves are some 75 million tonnes, sufficient for about 40 years…[29]
[29]Inan, K, Summons, T G and King, R.L ‘Limestone Resources in Victoria’ Geological Survey Report 97, 1992, 6 and 88-9.
The City of Greater Geelong Urban Growth Study 1996 described the land as follows:
The land nestled between the Barwon and Moorabool Rivers is the site of an existing limestone quarry which has sufficient reserves for production until the year 2020. The elevation of this land is very low and is inappropriate for residential uses.[30]
[30]Perrot Lyon Mathewson Pty Ltd City, Coast, Country: City of Greater Geelong Urban Growth Strategy 1996 16 April 1996, 20.
The Geological Survey of Victoria Technical Record 1999/2[31] acknowledged the impending closure of the Fyansford cement works and stated:
…Batesford and Fyansford. This area has been a source of limestone for the production of cement over a period of many decades. Although the currently operating cement plant is due to close within about a year, substantial quantities of limestone sufficient for several decades’ worth of production at current rates remain in the area, especially south of the area now being quarried. There are also current operations extracting Newer Volcanic basalt in the south of this EIIA [Extractive Industry Interest Area]. Sand and gravel were extracted in the past from Tertiary and Quaternary sediments in the north of this area.
[31]Olshina, A and Jiricek, F ‘Geelong Supply Area – Extractive Industry Interest Areas’ Geological Survey of Victoria Technical Record 1999/2, 20.
Although it was no longer being exploited for cement production at the relevant date, the limestone resource was the subject of ongoing extraction for agricultural purposes (approximately 200,000 tonnes per annum).
The resource was not worked out and strategic planning favoured its protection at least in the medium term. I accept the view of Mr Whitney and Mr Biacsi that this was a significant strategic imperative.
In June 2008 an independent panel considered the amendment of the Geelong MSS (amendment C129 to the GGPS). It continued to recognise the limestone resource as significant. It stated as follows:
We think that Council should keep an open mind on what areas might be possible for growth and not exclude any areas on the periphery of Geelong from initial consideration. We say this because we think that no area stands out as a clearly superior growth area.
Fyansford area
We note the comprehensive submission from Adelaide Brighton[32] on the suitability of this land for development and agree that it has prima facie appeal as a development area. However, we are not convinced that this area will ultimately prove to have development potential. Two obvious issues concern us: the possible need to maintain the limestone resource and transport access.
The area has been identified as a limestone resource and while the current owners may not wish to use the resource, this does not automatically imply that it is no longer of strategic importance to Victoria. This is potentially a state policy hurdle that would need to be overcome before this area could be developed.
Road links from the area back into Geelong are sparse. Access to the rest of Geelong is via the Hamilton Highway including the narrow twisting Deviation Road adjacent to Zillar Crawcour Park. It is by no means obvious how other convenient links could be created. Simply observing that there is good connection to the Ring Road does not solve the problem of connection to the rest of Geelong. In planning for the growth of Geelong we think connection to the urban services of Geelong is probably going to be more important in creating liveable suburbs and a vibrant Geelong CBD than connection to a freeway and out of town services.
These issues might be fatal to the development of this area, and if they are then there is little point in carrying out more detailed assessment of the land.[33]
[32]The then owner of the limestone extraction area.
[33]Greater Geelong Planning Scheme Amendment C129 MSS and Local Policy Review Panel Report : June 2008, 37-8.
The statements as to road links were made in the context of the Ring Road which in effect severs the land from the urban area of Geelong. As I have said, I accept Mr Strates’ evidence that in the absence of the Ring Road a bridge connection to Church Street is reasonably capable of being hypothesized.
This said, the discussion of the continuing limestone resource tends strongly to confirm that, as at the relevant date, the continuation of the SU7Z insofar as it related to that resource was appropriate. The relevant SU7Z occupied the greater part of the potential subregional growth area hypothesized on behalf of the claimant. In my view, it is simply not probable that this area would have been regarded in 2005 as a potential major residential growth area but for the absence of the Bypass. I accept the view put forward by Mr Whitney and Mr Biacsi that it would have been regarded as inferior to the Armstrong Creek area (which was planned to include substantial subregional facilities and faced limited development constraints). In particular, I accept the view of Mr Biacsi that a rezoning of the scale in issue would not have been expected to occur in the short to medium term. He equated this with a period of 5-10 years.
Accordingly I do not accept the potential subregional growth area case.
The legacy site case
Paragraph 19 of the final submissions made on behalf of the Authority states:
The Applicant [Authority] accepts the proposition that in the hypothetical scenario, the process of winding down various quarrying operations in the first decade of this century may have provided the impetus for a fresh consideration of ‘what to do’ with SUZ7 (sic) land west of the river.
The Authority further submits however that:
The undertaking of a strategic assessment may have resulted in the land being identified for future investigation, however in any such assessment the potential for continued quarrying on the Carter Land would have been a substantial impediment to any rezoning in anything less than the long term.[34]
[34]Final submissions of Authority, [20].
Reference was made in support of this submission to evidence of Mr Biacsi with respect to the limestone resource. Reference was also made to the evidence of Mr Whitney that actual extraction of stone was only potentially the first stage of land use in a SU7Z. Such use may be followed by a landfill or other use that in effect builds on the landform and circumstances created by the initial extraction.
I find as a fact that the closure of the cement works at Fyansford, coupled with the substantial working out of basalt quarry operations, would have provided the occasion for reconsideration of the zoning of the basalt quarry pits at Fyansford as at the relevant date in the hypothetical circumstances with which I am concerned.
There was, at the relevant date, a need to identify and establish long term sustainable land uses for the precinct, in the sense contemplated by the independent panel which considered and reported on amendment C119.
It is considered that while the site has not previously been strategically identified as a candidate for urban development given an anticipated long term resource role there is a level of strategic support for rezoning based on the depletion of this resource and the need for a long term sustainable land use along with the sites (sic) location within the identified western edge of urban Geelong and policy objectives supporting urban consolidation, proximity to the CAA [Central Activities Area] and the Fyansford town centre and relationship with other Fyansford amendments.
The proposal offers significant environmental and open space opportunities in terms of providing for rehabilitation of the site, incorporation of the site into the Fyansford Township in conjunction with improvements in the health of the Moorabool River and environs and extending public ownership and public recreational access to the northern reaches of the river.[35]
[35]Greater Geelong City Council Minutes of Ordinary Meeting 24 January 2006, 33 (emphasis added).
If regard is had to the 2002 photograph (shown in paragraph 19 above) it can be seen by comparison that by the relevant date, Fyansford was at a point of generational change in terms of land use:
· the cement works had closed;
· the tip use was progressively filling the southern basalt quarry pit hole; and
· the basalt quarries to the north were nearing the end of their economic life.
It is necessary to say something more as to the potential for further stone extraction on the Carter land.
Mr Gary O’Connell who is the area manager for south west Victoria employed by Cemex Australia Pty Ltd deposes by affidavit that he was in charge of the business at the Cemex Fyansford quarry from February 2002. The quarry operations commenced in 1978. Basalt was extracted for use in road construction, domestic and commercial concreting applications. When he took over management of the site in 2002 active quarrying was being undertaken on the Synot land but not on the Carter land.
At the relevant date, Cemex leased both the Synot and the Carter land. Cemex was aware that there were reserves of low grade product on the Carter land. In 2008, Cemex ascertained that there was higher quality rock on the Carter land. He says that if the acquisition had not occurred, Cemex would have continued to extract and process what rock it could from the Synot land and would have opened a fresh pit on the Carter land.
Mr O’Connell’s evidence is that but for the Bypass acquisition, Cemex would have quarried the Carter land until approximately 2015 and extracted approximately 1 million further tonnes of rock. This would have generated approximately 500,000 cubic metres of additional air space on the Carter land.
Mr Robin Harvey Hocking, a valuer, also deposes on behalf of the claimant that the subject land has been part of a large quarry for many years under the control of CSR Readymix – now known as the Cemex Group. Cemex have held leases over the three adjoining properties, that is the Synot land, the Carter land and the Dryden land to the north of the Carter land. In the years leading up to the acquisition Cemex concentrated on the removal of stone from the Synot land. It was thought sensible to remove the stone in close proximity to the then current crushing and screening plant and then to proceed northwards into the Carter land towards the Dryden land (both of which had previously been partially extracted).
In February 1999, a geological investigation was completed by Mr Ian Stenhouse, a geologist for Cemex (‘the Stenhouse Report’). This report concluded that there were reserves of at least 736,128 tonnes of commercial basalt on the Carter land. The existing extraction rate was a minimum of 150,000 tonnes per annum and if Cemex continued at this rate the reserves could have been removed within five years.
George Arthur McLellan, a geologist, deposes by affidavit on behalf of the Authority that he agrees with Mr Hocking as to the estimate of 736,128 tonnes of commercial stone but is of the view that it was not of sufficient quality to make extraction economic. He stated in his affidavit:
Stone on the subject land was affected by a thick overburden. That characteristic and previous attempts to quarry rock in the area of the subject land suggested not all, and perhaps none, of the stone can be economically extracted, and that it is the case in both the ‘before’ and ‘after’ circumstances.
In his report, tendered in evidence, Mr McLellan stated:
With respect to the viability of continued quarrying of the land…generally I note that there has been little or no real activity on the Carter land for some considerable time. The best of the rock was extracted over 25 years ago, and the most recent activity was an attempt to economically extract rock from immediately east of the open pit. This is represented by (a) small decline … As noted this attempt foundered due to high costs and/or poor quality.[36]
[36]Exhibit GAM1, 7.
Mr McLellan also reviewed drill hole information derived during Mr Stenhouse’s geological investigation, and noted poor lateral continuity of targeted rock types, particularly commercial quality rock (a low value commodity) and RCA Class 3 rock, which commands higher prices than the former. He concluded that:
Any attempt to selectively quarry the better grey basalt would be extremely difficult and costly….Any product quarried from this area would be a varied mix…and could be sold as commercial quality only.[37]
[37]Exhibit GAM1, 4.
In these circumstances it was logical to review the zoning of both the Synot and Carter land consequent upon C17. The rezoning of the cement works land had fundamentally changed the urban context of the Synot and the Carter land, and the bluestone quarry operation was substantially worked out. I accept the Stenhouse Report adopted by both Mr Hocking and Mr McLellan as the best evidence of the extent of the stone reserve as at the relevant date. Whether the view is taken that the whole of the rock referred to by Mr Hocking could be removed or the more pessimistic view of Mr McLellan is adopted, the quarry was capable of being worked out in 5 years. The concession of the Authority quoted above at [61] reflects this reality.
In evidence, Mr Gerner described and supported ‘a model of exploring the opportunity to expand Fyansford … as a township or village, if you like, at the edge of Geelong.’
If an amendment relating to the claimant’s land had been put forward at or shortly after the date of acquisition, it would have been put forward on the same basis as C119, as recorded in the explanatory report which accompanied that amendment:
It is estimated, given current demand for bluestone and the quantity of the resource remaining that the ‘life’ of the quarry is the near future. The development would commence after the quarry closure and will not reduce the potential for utilising remaining resources within the existing site.[38]
[38]Department of Planning and Community Development Greater Geelong Planning Scheme Amendment C119 Explanatory Report, 3.
I also accept the claimant’s case that at the relevant date the land was suitable for residential development together with what became the C119 land:
(a) it was in relatively few ownerships, facilitating integrated structure planning and development;
(b) it could be serviced;
(c) it had the potential to create a residential environment of high amenity;
(d) it could facilitate the creation of a linear public open space along the western side of the Moorabool River, complementing and materially contributing to the open space network in the area;
(e) there was an underlying demand for housing in Greater Geelong;
(f) it was not materially different from the C119 land which was regarded as appropriate for residential redevelopment shortly thereafter;
(g) it was within a relatively confined area zoned SU7 south of the alignment of Church Street and comprised a distinct precinct.
In terms of overarching State planning policy the rezoning of the claimant’s land would also have been put forward on the same basis as C119 (recognising of course that the urban growth boundary referred to in respect of C119 was the Bypass).
· How does the amendment support or implement the State Planning Policy Framework?
The amendment is consistent with the relevant State objectives of the City of Greater Geelong Planning Scheme.
The State Planning Policy Framework (SPPF) Clauses relevant to this land and amendment are Settlement (Clause 14); Environment including protection of waterways, groundwater and catchments; floodplain management; open space; and heritage (Clause 15); Housing including medium density housing (Clause 16); Economic Development (Clause 17); and Infrastructure including declared highways; and water supply, sewerage and drainage (Clause 18).
It is considered that the proposal is consistent with the broad strategies of city growth in proposing a residential re-development of a former rural / industrial land holding within the city’s urban growth boundaries, resulting in an appropriate infill development better utilising existing physical and community infrastructure and services.
This assessment is consistent with the City of Greater Geelong’s assessment of Amendment C17, relating to the Moltoni land to the east of the subject land. In its own right, the amendment responds to the above-mentioned Clauses as follows:
- Settlement – A high to medium settlement pattern is within the definable boundary of the City;
- Environment – Wastewater reuse, water sensitive urban design, the recognition and redesignation of a wildlife corridor, the protection of the riparian zone, and the provision of appropriate flood protection measures and appropriate riverside management all result in an environmentally-focused solution;
- Housing – A range of high quality housing solutions supported by adequate community infrastructure is proposed for this amendment area;
- Economic – This amendment creates employment opportunities during construction and will add retail and tourism industry growth for the City with economic multiplier effects throughout the region; and
- Infrastructure – Development flowing from the amendment will feature new ‘local’ street connectors, a range of pedestrian and recreational facilities, together with innovative, on-site wastewater processing. This infrastructure will be fully integrated with adjacent infrastructure wherever possible.[39]
[39]Ibid, 5.
I turn then to the principal objections to the legacy rezoning case. In summary these are as follows:
(a) that either the eastern escarpment above the Moorabool River or the Moorabool River itself, constituted a natural barrier to the western urban growth of Geelong which strategic planning would recognise and respect;
(b) that the SU7 zoning affecting the Carter land and the desirability of preserving residual stone resources would be recognised and respected as a bar to urban rezoning;
(c) that the proposed rezoning would not be the ‘infill’ development of a legacy site; and
(d) the claimant could not demonstrate a housing need for rezoning of the land.
(a) The natural barrier
The Urban Growth Strategy of 1996 stated as principles, among others:
· The longstanding planning policy of maintaining non-urban breaks between settlements should be upheld to foster a sense of physical identity for each of the townships outside Urban Geelong and protect the intrinsic qualities of the environs surrounding the settlements.
· Where possible, natural boundaries should form the edge of urban areas to assist in reinforcing the edge of urban centres and resisting development pressure on the fringe of existing townships and Urban Geelong.[40]
[40]Perrott Lyon Mathieson Pty Ltd City of Greater Geelong Urban Growth Strategy 1996 April 1996, 14..
As I have said, the MSS also adopted these principles. Mr Whitney and Mr Biacsi both invoked these principles in expressing the view that residential rezoning would not have been contemplated for the claimant’s land at the relevant date.
I accept the evidence of the claimant’s witnesses that the escarpment above the Moorabool River should not be regarded as a natural barrier desirably confining the limit of Geelong’s urban growth to the west at the relevant date for the following reasons:
(a) Fyansford had constituted an urban settlement since the 19th century.
(b) It had accommodated substantial industrial uses and in particular the Buckley’s Falls Paper Mill on the Barwon River and the cement works on the Moorabool River.
(c) The urban settlement of Fyansford included areas within the IZ1 zone at the relevant date and so zoned in contradistinction to adjoining rural zone land extending to the west and in contradistinction to SU7Z land to both the south and north of the Hamilton Highway.
(d) The industrial areas contained land subdivided in urban form both on the eastern side of the Moorabool River (where the cement works had formerly been located) and on the western side adjacent to the junction of the Upper Paper Mills Road and the Highway.
(e) The urban settlement contained subdivided land used for industrial purposes. It also included a small cluster of historic buildings such as hotels.
(f) The cement works land within the IZ1 was the subject of in principle approval for rezoning to enable residential development and both business and mixed use development adjacent to the river. It was expected that rezoning would shortly be implemented. The planning for the area thus expressly endorsed the continuation of urban development west of the escarpment with an activity centre node.
(g) The residential zoning implemented by amendment C17 was complemented by other urban zones.
(h) I do not accept that the cement works rezoning would not have occurred but for the Bypass. The rezoning substituted one form of urban zoning for another. It constituted an infill rezoning within the existing pattern of urban settlement. The land had a history of industrial land use, was zoned for industrial purposes and contained an extensive subdivision.
Likewise I accept the river should not be regarded as constituting a natural barrier confining the limit of Geelong’s urban growth to the west at the relevant date.
(a) Factors (a), (b), (c), (d) and (e) set out in the previous paragraph favour this conclusion.
(b) The land to the west of the Moorabool River included land which fell within an existing urban settlement in terms of existing land use, existing subdivision and existing zoning.
(c) The C119 rezoning demonstrates the capacity of Fyansford to accommodate a residential rezoning on the western side of the Moorabool River, which complemented the C17 rezoning and comprised part of an integrated urban settlement below the escarpment.
(d) The Barwon River has not been regarded as a barrier to the substantial growth of Geelong to the south.
(e) As Mr Wright put it, the Moorabool is not the rolling Mississippi. It is a relatively modest stream.
For the above reasons I do not accept strategic planning considerations required or favoured the treatment of either the Moorabool River or the escarpment as the western boundary of urban zones for Geelong.
(b)The SU7Z and planning strategy relating to the protection of stone resources suitable for extraction
The SU7Z embraced a series of pits used for the purpose of the extraction of basalt at Fyansford.
These pits ran in a north-south strip to the west of the Moorabool River and south of the east-west alignment of Church Street, Herne Hill.
This segment of the SU7Z contracts in width towards the alignment of Church Street.
The northern part of the SU7Z beyond this alignment comprises a very extensive area of limestone and contains a substantial future potential limestone resource. At the relevant date ongoing extraction of limestone was occurring for agricultural purposes but not for cement production.
Strategic planning has recognised the significance of the limestone resource for many years (although as the claimant points out, not latterly in terms which accorded it the same ongoing significance as the Waurn Ponds deposit).[41]
[41]See Department of Planning and Community Development, Greater Geelong Planning Scheme Municipal Strategic Statement Clause 21.25, 153.
There was however no strategic designation of the remaining stone in the chain of basalt pits as significant.
There was also in fact no significant basalt resource remaining in this chain of pits.
The SU7Z would not have been regarded as having strategic significance in respect of the basalt pit land. The logic of the common law maxim applies cessante ragione lex cessat ipsa lex (the reason of the law ceasing the law itself ceases). The primary purpose of the SU7Z was to facilitate extraction of stone.[42] That purpose was substantially exhausted.
[42]Greater Geelong Planning Scheme – schedule 7 to clause 37.01 provides way of purpose:
To recognise or provide for the use and development of land for extractive industry.
To encourage interim use of the land compatible with the use and development of nearby land.
To encourage land management practice and rehabilitation that minimises adverse impact on the use and development of nearby land.
Mr Whitney also conceded in cross‑examination that in the real world if what remains is not viably worked out, that is a good reason not to give priority to the protection of the resource.[43]
[43]T194.
Further, the relevant portion of the SU7Z was readily severable from the balance of that zone, in effect mirroring the strip of land comprised in the C17 and C18 rezonings on the opposite side of the Moorabool River. This portion of the SU7Z was not comprised in the huge broad scale limestone reserve north of the alignment of Church Street, which does not itself contain obvious and convenient internal boundaries. The Dryden land also provided a buffer between the claimant’s land and the balance of the SU7Z to the north.
C119 proceeded despite covering land in part previously within the SU7Z and included part of the claimant’s land. It did so not simply because it related to land inside the Bypass but also because it related to land in respect of which the primary purpose of the SU7Z was exhausted.
It follows that I do not accept that the SU7Z would have prevented rezoning of the claimant’s land at the relevant date.
(c) Would the proposal constitute an infill development?
The Urban Growth Strategy of 1996 also expressed the following principles:
· Urban growth should be located so as to optimise access to existing infrastructure and service provision and minimise additional costs of service provision.
· Urban development should occur on an incremental basis from existing urban areas and services, utilising land already zoned for residential purposes, to maximise efficiency in service provision and minimise costs of development.[44]
[44]Perrott Lyon Mathieson Pty Ltd City of Greater Geelong Urban Growth Strategy 1996 April 1996.
Again, as I have already indicated, the MSS at the relevant date endorsed a policy of urban consolidation for these and other reasons.
It is submitted for the Authority that whereas notions of urban consolidation and proper strategic planning would favour infill development within the existing urban boundaries of Geelong, the rezoning of the claimant’s land would not have constituted such an infill.
For the reasons I have set out above, the rezoning of the C17 land and C119 land can properly be regarded as comprising infill rezonings. This is not simply because they fell inboard of the Bypass alignment, but also because they fell within an existing urban settlement which contained existing industrial zones, existing urban subdivision and existing urban land use.
I find that in the absence of the Bypass the claimant’s land would be seen as the logical extension of the C119 land (which as I have said included part of the claimant’s land). It was after all being leased and worked as a single quarry holding. It comprised part of a single land use unit. It also comprised a logical extension of the C119 land in essentially the same way that the C18 land was subsequently regarded as forming a logical extension of the C17 land. The logical boundary to the planning unit north of the Hamilton Highway on each side of the Moorabool River was the alignment of Church Street.
If the Carter and the Synot land comprised a planning unit in terms of existing use, zoning, nature of stone resource and severability from the balance of the SU7Z, then it seems to me that Mr Gerner is correct and both the Carter land and the Synot land were capable of being regarded as potentially accommodating an infill rezoning within the Fyansford settlement area. This is so irrespective of the presence or absence of the freeway. It is the freeway which has constrained the capacity for infill urban development along the boundary of the C119 land.
(d) Need
The rezoning of the claimant’s land would have been responsive to the overall strategic need to provide substantial additional residential land within Greater Geelong. It would not have materially affected overall growth area strategy. It was not a substantial area such as the triangular area suggested by Mr Strates and Mr Gerner for subregional growth. It would have been responsive to need in the same way that the C17, C18 and C119 amendments were responsive to need. It fits within the same strategic equation in terms of constituting a relatively modest accretion to the provision of residentially zoned land within Greater Geelong, in a potentially attractive form at a convenient location. Mr Gerner estimates that the claimant’s land could potentially have accommodated between 500 and 700 dwellings with a population of 1,350 to 1,850 persons. He saw the land as offering a parallel alternative to development elsewhere such as Armstrong Creek. I accept this view.
Conclusion
It follows from the above reasons that I accept that but for the Bypass the probability is that the claimant’s land would have had an expectation of rezoning for residential purposes within five years of the relevant date. This period would have enabled final working out of the basalt resource and detailed structure planning. The need for structure planning was emphasised by Mr Strates. The five years reflects some additional period to that which was required for C119.
Although I am satisfied that the prospects of rezoning at the relevant date were good, nevertheless they would be subject to a remaining risk of uncertainty which I assess at 20 per cent. The hypothetical vendor and the hypothetical purchaser would not be certain that the land would be rezoned within the period I have identified. There would be a risk that rezoning might not occur for ten years or more.[45] It is this risk that I assess at 20 per cent.
[45]Mr Biacsi gave a minimum estimate of ten years for rezoning. The critical dispute was as to the short to medium term prospect of rezoning.
The underlying principle was stated by Wells J in Crouch v Minister for Works:[46]
Where a court finds facts in issue in a civil case it is empowered to act, of course, on the balance of probabilities, but where the circumstances of a case yield only probabilities to a court’s evaluation, leaving open doubts and misgivings, a valuer must, when dealing with the same circumstances, reflect, in his reasoning, not only the probabilities, but also the doubts and misgivings. In short, if the purchaser-developer judges that planning approval is virtually certain, the price that he will pay will be higher than that which he will pay if planning approval is no more than probable, and is attended by a real risk that it will be refused.
In my judgment, therefore, a correct application of the Spencer’s case[47] test implies that, if the valuer is proceeding on the basis of a hypothetical subdivision contemplated by the willing, but not anxious, buyer and seller alike, the risk that approval of the subdivision would have been refused must be taken into account in determining the bargain price, and cannot be eliminated by attributing to the valuer the liberty to treat as certain that which, in truth and in deed, would have been no more than probable. [48]
[46](1976) 13 SASR 553.
[47]Spencer v Commonwealth (1907) 5 CLR 418.
[48]Crouch v Minister for Works (1976) 13 SASR 553, 560-561.
In the present case the probability of planning approval requires some discount.
The answer to the preliminary question is that at the relevant date a Special Use 7 zone should be assumed in the before situation accompanied by the probable prospect of a rezoning to Residential 1 within five years subject to a risk factor of 20 per cent that such a zoning would not occur for 10 years or more.
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