Shepherds Properties (NQ) Pty Ltd v The Cairns Port Authority
[1991] QLC 28
•30 August 1991
|
BRISBANE.
30th August, 1991.
Re:Determination of Compensation -
Resumption for Cairns Airport and to render safer or more convenient the use of the Cairns Airport for the landing and taking off of Aircraft
(A90-26)
Shepherds Properties (NQ) Pty Ltd
v.
The Cairns Port Authority
JUDGMENT
By proclamation dated 6th September, 1986 the respondent Cairns Port Authority resumed two parcels of land comprising an aggregate area of 13.225 hectares from Shepherd's Properties (NQ) Pty Ltd for the above stated purpose. The resumed parcels are more particularly described as Lot 1 on RP 738764, Parish of Cairns containing an area of 4708 m2 and Lot 3 on RP 738764, Parish of Cairns containing an area of 12.754 hectares. The resumed lots are situated adjacent to the southern perimeter of the Cairns International Airport and are serviced by the Cairns Airport Access Road (Airport Avenue) which is built on land which severs the resumed parcels and which was formerly resumed by the Cairns Port Authority, being Lot 2 on RP 738764, Parish of Cairns. The resumed lots 1 and 3 are zoned "Light Industry" under the provisions of the City of Cairns Town Planning Scheme except for a negligible area in the extreme south western corner of Lot 3.
On 12th June, 1990 Shepherds Properties (NQ) Pty Ltd filed in the Land Court Registry a claim for compensation in the sum of $545,770. At the outset of the hearing of the matter leave was sought and was granted to amend this claim to $439,000 so as to accord with a valuation of the resumed land by Russell Geoffrey Brown who is a registered valuer with the valuation firm Taylor Byrne. The amended claim is made up as follows:
Value of Lot 1 on RP 738764 - $ 25,000
Value of Lot 3 on RP 738764 - $404,000
Value of Land resumed $429,000
Compensation for disturbance $ 10,000
Total Claim $439,000
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Before proceeding any further, it should be said that compensation for disturbance, comprising legal and valuation fees involved in the preparation of the amended claim for compensation, has been agreed between the parties in the sum of $3,750. As a result the claim was further amended to $432,750. To illustrate the extent of the difference in compensation assessments, I should here say that the respondent Cairns Port Authority, acting on valuation advice, advanced to the claimant company a sum of $84,200, by way of compensation on 2nd April, 1990. Soon after the hearing commenced, it became apparent that the principal cause for the widely divergent views as to the value of the resumed land was the diverse stand taken by the parties as to the potential of resumed Lot 3 on RP 738764 for light industrial subdivisional development. The claimant company on the one hand sees it as being very suitable for and capable of economic development and subdivision, while the respondent Authority considers such development as being completely uneconomic. Both resumed parcels are comprised almost in their entirety of tidal mangrove flats with Lot 3 being bi-sected by a tidal watercourse aptly named Saltwater Creek. It is also the view of the Cairns Port Authority that any development of either resumed lot would not have been likely to gain the approval of the Minister responsible for the Department of Primary Industries Portfolio (Fisheries Branch) as it would involve the destruction of mangroves for which an appropriate permit under the provisions of Section 71 of the Fisheries Act 1976 - 1989 would be necessary and which it is contended would be unlikely to issue.
The hearing of the case was a long and protracted event. The Court sat in Cairns in the week commencing 18th February, 1991 and again during the week of 15th July, 1991. Numerous witnesses were called by both parties and many documents were subpoenaed. The transcript runs to 634 pages. It occurs to me that it is not at all a profitable or a necessary exercise to clutter this judgment by discussing what I consider periphery evidence or evidence lacking in relevance to the aforementioned central issue in the case. I therefore intend to refer only to such evidence as I consider necessary and of assistance to me in my task of the determination of compensation.
Mr Brown assesses compensation of the resumed land on two bases as follows:-
Direct comparison basis (primary basis of valuation)
Lot 1 - 4708m2 - industrial site requiring
services and fill - say $25,000
Lot 3 - 5.9 hectares in globo subdivisional
land to the south of Saltwater Creek requiring
external services and fill to develop at
$6/m2 $354,000
6.85 hectares balance land north of Saltwater
Creek - Long term holding proposition for subdivision
at 75 cents/m2 $ 50,000 $404,000
$429,000
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Hypothetical development basis
Lot 1$ 25,000
Lot 3 - 5.9 ha in globo development land $363,000
Balance area of lot 3 - 6.85 ha to the north
of Saltwater Creek $ 50,000 $418,000
$438,000
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Mr Brown has not considered in his valuation that Airport Avenue provides access to either of the resumed lots since it is in the ownership of the Cairns Port Authority. It is to be noted however that Airport Avenue is an open dedicated road from the intersection of it with Fanning Street (at the southern boundary of the resumed lots) to the Captain Cook Highway, but from its intersection with Fanning Street North to the Cairns International Airport, Airport Avenue is owned by the Cairns Port Authority. Mr Brown stresses that the subject lots are very well situated for light industrial development being only 2 kilometres from the Cairns Airport terminals and 3 kilometres from the Central Business District of Cairns. Due mainly to its prime location and exposure to traffic using Airport Avenue, Mr Brown sees Lot 3 as being very well suited to an airport service style light industrial subdivisional development. He sees access to Lot 3 as being available along the unformed Fanning Street requiring the formation of approximately 40 metres of road along that street from Airport Avenue.
Mr Brown considers that Lot 3 at date of resumption had a highest and best use for the development of a light industrial subdivision with the capacity to immediately produce 30 industrial sites. He pointed out that the zoning is amenable to such use, and indicates that a problem for the full development of Lot 3 is the necessity to bridge Saltwater Creek, the cost of which prohibits economic subdivision of the northern section. Mr Brown considers this northern severance of Lot 3 with an area of 6.85 hectares represents a long term holding proposition for future development. He says there may be some potential for gaining access from Airport Avenue either through negotiation with the Authority or perhaps through legal channels under the provisions of the Property Law Act, but adds nothing to his compensation assessment for this possibility.
Mr Brown provided the Court with details as to his valuation of Lot 3 by the process of hypothetical subdivisional development. In so doing, he has relied upon a plan of subdivision prepared by John Oswald MacIsaac, who is a consultant surveyor, and for cost of development upon advice from Alan Charles McPherson, a consultant engineer. Details of Mr Brown's hypothetical subdivision development valuation exercise are:-
Gross Realisation
30 Lots @ $80,000 $2,400,000
Total Lots $2,400,000
Less Selling Costs:
Commission on Sale $ 73,500
Legals on Sale @ $700 $ 21,000
Advertising @ 2% $ 48,000 $ 142,500
Nett Realisation $2,257,500
Less Profit & Risk Allowance 40% $ 645,000
Total Capital Investment $1,612,500
Less Development Costs
Construction/Lot $30,680 $920,400
External costs $97,700 $ 97,700
Interest for half of full development
period .5 yrs @ 13.75% $ 35,000 $1,053,100
Total Land Costs $ 559,400
Less Interest on Land Purchase for Full Period
3.5 years @ $13.75% $ 181,750
$ 377,650
Land Purchase Costs
(including stamp duty & legals on purchase)
Less Purchase Costs @ 3.8% $ 14,350
LAND VALUE $ 363,300
ADOPT $ 363,000
Carried forward $ 363,000
Plus Balance lands of Lot 3 $ 50,000
Plus Lot 1 on RP 38764
4708 m2 industrial site $ 25,000
TOTAL$ 438,000
======
Mr Brown relies upon 4 sales as a basis to value the subject resumed lots on a direct comparison basis. Details as to each sale and as to his opinion of the comparison between each of them and the subject sites are incorporated within his tendered valuation report which is in the hands of the parties for reference (Exhibit 16). Brief details are:-
Sale No. 1 -Allotment 19 of Suburban Section 36, Parish of Cairns - 1.8853 hectares - Callaghan to Murphy & Dawson on 16th August, 1985 for $175,000 - zoning part heavy Industry - services available include power, water and sewerage - sale analyses to show an unimproved value of $126,000 ($6.63/m2) after allowance for fill. Situation McCoombe Street. Mr Brown considers this to be an inferior site to the subject lands.
Sale No. 2 -Allotment 18 of Suburban Section 36, Parish of Cairns - 2.023 hectares - Callaghan to Commonwealth of Australia on a date prior to 28th April, 1986 for $245,000 - zoning part heavy industry - services available include power, water and sewerage - sale analysed by Mr Brown to show an unimproved value of $147,000 ($7.35/m2) after allowance for fill. Situation McCoombe Street. Mr Brown again considers this to be an inferior site to the subject lands.
Sale No. 3 -Lot 24 on RP 719342, Parish of Cairns - 1.06 hectares - Chapman to Avago Holdings Pty Ltd on 26th February, 1986 for $365,000 - zoning Industry - services available include power, water and sewerage - situation Aumuller Street. Mr Brown says this site is in a good location in an established industrial area and analyses it show on an unfilled basis a site value of $260,000 ($26/m2). Mr Brown again considers it to be inferior to the subject land.
Sale No. 4 -Lot 226 on Plan NR 7886 and Portion 498, Parish of Cairns - 2.903 hectares - Smart to Marnatro Pty Ltd and Another on 16th April, 1987 for $520,000 - zoning heavy industry - services available include power and water - situation Arnold Street. Mr Brown comments that this site has good exposure to the highway and has potential for subdivision. He considers it to be comparable to the subject lands upon development. It is an after date sale and it analyses to show a site value after allowance for fill of $247,000 ($9.50/m2).
Mr Brown sees his Sales Nos. 1 and 2 lands as being somewhat identical each to each and as aforestated inferior overall to the subject Lot 3. They are earlier sales in comparison with the resumption date, and he sees them to have inferior zoning (part only heavy industry) and having inferior exposure and location. Both are low lying parcels with a similar depth of fill required for development, but have superior services and access. Mr Brown sees these sale lots as being slightly out of the main industrial area of Cairns whereas he stresses that the subject Lot 3 has an excellent situation and exposure to Airport Avenue.
Mr Brown does not place much reliance upon his Sale No. 3 since it is much smaller than is the southern severance of Lot 3 and is located in Aumuller Street which is in the mainstream of the Industrial Area of Cairns. He does, however, place a great deal of reliance upon his Sale No. 4 which he considers to be most persuasive evidence of the value of Lot 3 on a direct comparison basis. Mr Brown compares Sale No. 4 land on an unfilled basis as being comparable but slightly inferior in zoning, superior in services, with a good location and excellent exposure to the highway and in this respect similar to Lot 3. Sale No. 4 land has comparable access to subject Lot 3 after development, and had a similar subdivision potential as Lot 3 although smaller in size. It was filled land at date of sale except for a small area of Special Lease at the rear of the site. Sale No. 4 land has been subdivided into industrial lots since the date of purchase. On a filled basis, this sale shows a value of $20/m2 for the area of 2.6 hectares which was filled.
Mr Brown told us that in applying his sales evidence on a direct comparison basis, the costs of supplying services and road access to the subject site have to be considered. His advice from Mr McPherson is that approximately $97,700 would be involved as a capital outlay to fully service and access the southern area of Lot 3 for the construction of the 30 lots, and if this development was in place at resumption date, then the southern severance would compare favourably with the land contained in his Sale No. 4 on an unfilled basis. After making an allowance for the size of Lot 3 (12.75 ha) and for the cost of gaining access and services, Mr Brown sees the value of the southern severance (5.9 ha) as aforestated to be $354,000 ($6/m2), and regards the northern severance of Lot 3 to be a holding proposition.
Mr Brown in valuing Lot 1 at $25,000 has taken into consideration the land's potential value of about $100,000 if fully developed and serviced. Lot 1 lies adjacent to an unformed esplanade and is accessed via the unformed Fanning Street across Airport Avenue. It is devoid of services.
Mr Brown did not anticipate that his valuation of the yielded 30 lots in his hypothetical subdivisional exercise for the southern severance of Lot 3 would be disputed by the respondent Authority, especially since it is in line with the Valuer-General's assessment of lot values of "light industry" zoned sites nearby. He did, nonetheless, research sales evidence and produced for the Court details of a series of industrial zoned lot sales, which, he says support his average lot value of $80,000 ($60/m2). Details of these sales are in evidence (Exhibit 23).
Mr Brown relied upon Mr McPherson in respect of the filling cost component part of the cost of construction of the hypothetical development of Lot 3. His fill costing is based on the proposition that 22,000 cubic metres of fill can be gained from the site by excavation and 79,000 cubic metres of fill which would be imported to the site. For this reason his total construction cost of $920,400 is below Mr McPherson's cost of $1,169,900 on an all imported fill basis - more about that later.
In assessing compensation Mr Brown told us that in this case he is looking at the loss sustained by the dispossessed owner company as a result of the resumption, and the owner company is an owner-developer since Mr Shepherd, who is managing director of the claimant company, has in the past put his hands to site developments. In particular Mr Brown has taken into account Mr Shepherds' expertise in lowering the cost of filling a site such as subject Lot 3.
Mr MacIsaac tendered in evidence his subdivisional layout plan of resumed Lot 3 both for a 30 lot subdivision (south of Saltwater Creek) and for a subdivisional layout for the whole of the parcel. We are not concerned about the subdivisional plan for the whole of Lot 3 since compensation is assessed by Mr Brown in relation to the 30 lot subdivision. Mr MacIsaac considers his plan complies with Cairns City Council subdivisional by-laws in the "Light Industry" zone. His only qualification is that he has accessed the 30 lot subdivision from Airport Avenue where it is a public road and this access is across Crown land and the unformed Fanning Street. There then arises the question of the legality of such proposed access. Level data used by Mr MacIsaac was restricted to survey information available at the boundary of Saltwater Creek and Airport Avenue, and perhaps understandably no attempt was made to take levels in the deep mangroves.
Mr McPherson has examined the levels survey and has related it to levels on nearby subdivisional land. He says that soil investigations were carried out in six locations on Lot 3 to determine the type and quality of material underlying the area. He has prepared his development cost estimates on the basis that the existing Airport Avenue road would have been available for access to the Captain Cook Highway from both the southern severance and the northern severance of Lot 3, and that the Cairns City Council would allow sewerage from the subdivision to be discharged into the existing pumping station near the corner of Fanning Street and the highway. Further assumptions made by Mr McPherson are that the Cairns City Council would have allowed the water reticulation system to be connected to the existing water main at the same corner, and that Council would accept a proposal that the proposed park area of 1.7 hectares would be developed as a lake/recreation area and that material excavated to create the lake can be used as a final layer of fill material. Mr McPherson points out that one of the subdivisional designs produced by Mr MacIsaac required a bridge over Saltwater Creek within the subdivision so as to obviate the need to access the northern severance from the Cairns Port Authority owned section of Airport Avenue. Mr McPherson estimates that the cost of this bridge would have been $450,000. This capital outlay was regarded by the claimant not to have been economic for the proposes of subdivision, and as a result a plan of a 55 lot subdivisional design for the whole of Lot 3 was abandoned. Mr McPherson estimates the cost for the 30 lot subdivision, based on contracts awarded by his office between 1985 and 1987 to be:-Clearing of site $ 23,000
Filling of site $ 619,000
Road construction $ 153,400
Stormwater drainage $ 26,100
Water reticulation $ 41,700
Sewer reticulation $ 70,000
Sewer pump stations $ 40,000
Council contributions $ 48,000
FNQEB Power $ 56,000
Engineering fees $ 38,100
Survey fees $ 54,600
TOTAL $1,169,900
======
Mr McPherson says that at resumption date the claimant company may have obtained fill for nothing from a quarry site in the area as it seemed rock quarry operators were prepared to give overburdened material away provided it was removed from the quarry site. Mr McPherson says that the cost of $619,000 for filling may have been reduced to $468,000 if fill material was provided at no cost. He further contemplates that if, at resumption date, sand was available from the nearby coastline, and if it could have been pumped to the site, the filling costs could have been further reduced to $421,500.
Mr McPherson informed the Court that the soil tests carried out revealed that the material underlying Lot 3 was marine clay containing traces of sand. He claims that, based on experience on a nearby industrial estate, if this material is excavated, stock piled and allowed to drain then it is re-useable as non structural fill material suitable as a top layer provided it was no deeper than 500 mm. His costings allowed for this material to be used from the proposed park area to provide a final layer of about 400 mm over the site, but I note from the design plans that if only the 30 lot subdivision was to be considered an economic proposition then there is no park area available to the south of Saltwater Creek for such excavation.
Mr McPherson, who has been in his own practice in Cairns for 19 years, told us that he has, over time, seen mangroves filled and drained in the City. In a number of areas swamps have been removed by filling and in one case adjacent to the subject land, mangroves were removed and up to three metres of fill was used. He instanced that mangroves have been removed for the Cairns trawler base and for the Portsmith Industrial area development.
The fill quantities calculated by Mr McPherson are based on bringing the level of Lot 3 to the level of RL 2.65 AHD which he says is 300 mm above the highest recorded flood level in the area of the Airport Industrial Estate, which is also a Shepherd's Properties (NQ) Pty Ltd development. Mr McPherson was involved in that development in an engineering sense, and says it was filled to RL 2.65 in 1973 and it has never flooded despite major floods in 1974, 1977 and 1979. Mr McPherson acknowledges that he previously expressed the opinion in a letter dated 15th January, 1987 to Herron Todd White Valuers that the resumed land would most likely need to be filled from its existing level to RL 2.9 AHD, but he says this was based on rough work and using a rule of thumb estimate. He was also of the mind that RL 2.9 AHD was the maximum level to which the site may have been required to be filled.
Mr McPherson, who has had considerable experience with land development proposals in the Cairns area, suggests that approval from any development such as for Lot 3 would be sought primarily from the Cairns City Council which may have directed the applicant to the Harbours and Marine Department (at that time) in respect of possible problems about Saltwater Creek and the destruction of the Mangroves. He believes that at resumption date there would not have been any problem in obtaining permission to clear the mangroves and fill the site. This is in contrast to the more difficult position a few years later when great concern has been expressed by Authorities about the destruction of mangroves on the coastal frontage.
As for his filling costs, Mr McPherson has allowed $7/m3 solid measure for the cost of supply, cart, and compaction on the following basis-
Winning and Pushing $1.90m3
Loading $1.50m3
Carting $1.40m3
Placing and Compaction $2.20m3
$7.00m3
On the basis of fill being obtained free, then this cost becomes $5.10/m3 and this seems to be the rate used by Mr McPherson in his calculation for the cost of imported fill.
Mr McPherson referred in evidence to a number of contracts to support his filling cost of $7.00/m3 including winning and pushing. He has a cost of $7.50/m3 for 8,000 m3 in mid 1987 at Yorkey's Knob with a 15 kilometre lead from source. Another contract in 1986 was for $9/m3 for 900 m3, and in 1986 he has a contract for $7.10 m3 for 1500 m3.
There was considerable debate between Senior Counsel for the respondent Authority and Mr McPherson about what was alleged to be his inadequate allowance for stormwater drainage, water reticulation, sewer reticulation etc but I do not refer to this discussion here since it will become obvious later in this judgement that to do so would not be helpful.
Blair Campbell Shepherd who is the managing director of the claimant company informed the Court that his company purchased the subject land in early 1970 and that he was attracted to it because of its water frontage. In 1977 he caused a design plan to be prepared for a proposed marina development for the land which he had hoped to develop as he perceived there was demand for boat berths in Cairns, particularly from the numerous marlin fishing vessels. Mr Shepherd owned a dredge at that time, and he envisaged using it in the development of the Marina. He says the dredge had a pumping capacity of 100 m3 per hour. The dredge was sold by the date of resumption but if he filled the subject land by dredging at that date, then the cost to him was infinitesimal - possibly 50cents/m3. Although he had sold the dredge, Mr Shepherd says there were plenty of dredges available for his use.
Mr Shepherd told us that a property developer named Price was anxious to buy the subject land from him during 1983/84, so much so that he offered $500,000 for it, but subsequent history shows that this offer was rejected. He entered into an additional contract to sell the subsequently resumed Lot 1 on 16th December, 1985 to RG and WC Fisher for $22,500 subject to the purchaser obtaining approval for the Cairns City Council to clear, fill and compact the land to council regulations but this contract also fell down.
Mr Shepherd told us that he had arranged to have some soil tests to be taken on Saltwater Creek. About 6 test holes were drilled and the results showed a layer of mud about 1 metre deep beneath which there was clear sand. No tests were taken into the adjacent bay. Mr Shepherd also informed the Court that a Mr Price was operating two quarries in the area and there was a plentiful supply of over burden from Mr Price available for filling purposes.
Mr Shepherd tendered in evidence photographs taken by him showing the destruction of mangroves on land at Portsmith and Smith's Creek and suggests that the mangroves destroyed were similar in quality to those on the resumed property, and confirmed that it was his intention to develop the subject lands were it not for the resumption.
It was Anthony John Price, who is a property developer and formerly a car dealer in Cairns for many years who confirmed that he offered Mr Shepherd $500,000 for the resumed lands in 1984. He saw the northern side of the City of Cairns as being a growth corridor and viewed the subject land as being ideal for light industrial development. Mr Price also confirmed that he had enough fill available from over burden in his quarry to fill the subject land many times over, and that he would have given fill to Mr Shepherd if he asked for it since he could not sell it and it had to be removed. Mr Price estimated that if he had the opportunity to fill the subject land, then his cost would be around about $2/m3 to cart to the site, $1.40/m3 for dozer for spreading and $3.40/m3 for compaction - a total cost of $6.80m3. Mr Price has not had experience filling mangrove swamps but has filled fresh water swamps. He also pointed to areas in Cairns where mangroves have been removed to make way for development. He referred to the destruction of mangroves at the Harbour Office, the Pier Wharf Development, hundreds of acres by the Harbour Board and a large area at Smith Creek by the Department of Industrial Development. It transpired in evidence that Mr Price sold his quarry in late 1985 or early 1986, and as a result did not personally have material to supply for filling purposes at the date of resumption in this case. Although we have no evidence on the point, it may be reasonably be assumed that the material would still have been available from the quarry in the new ownership, and Mr Price pointed to the availability and abundance of fill material from other quarries in the area.
Mr Price does not agree with a proposition put to him that there is 5 to 7 metres of marine clay under the resumed lands. He says there is 300 mm of mud over white quartz.
Warren Wilson Lennon was called in evidence by the claimant company. Mr Lennon is a Brisbane based consulting engineer. One of his duties was to seek and identify land which was available for development at a profit. Mr Lennon knows the resumed lands and considers it to be a good property for development. He points to the favourable zoning which he says would be worth 2 years within the development timeframe. Mr Lennon instanced a successful development he has undertaken on "general industry" zoned site on the way to the Brisbane Airport and he sees no reason why development of the subject lands would not have proven just as successful.
Registered Valuer John Harold Frew was also called. Mr Frew's task was to search the records of the Valuer-General to ascertain the unimproved values placed upon the subject land and on numerous other "Light Industry" zoned sites in Sheridan Street, North Cairns. The result of his research is incorporated within a tendered report. While it is interesting to note the levels of unimproved values applied during the respective years, this evidence is really not of any great assistance since it does not result in a conclusion as to the value of the resumed land - understandably I suppose since Mr Frew did not undertake an inspection of it before preparing his report. Mr Frew also included within his report details of some sales of "Light Industry" zoned sites in Sheridan Street but his conclusions as to analysed unimproved value is of little weight since he relied in the main for his valuation of the structural improvements on the sale sites upon a report by Mr MacIsaac as to the floor area of the buildings and upon photographs illustrating the nature of the buildings. Really the very least that is required if valuation evidence is to be of assistance is a physical inspection of the properties prior to a valuer drawing valuation conclusions.
Brief evidence was also called from Wayne Stanley Price who also was a property developer in Cairns. The tenure of Mr Price's evidence is to support the view taken by most of the witnesses called by the claimant that the resumed land was prime land for development having excellent exposure, favourably zoned and being easy to develop. Mr Price perhaps goes a little further than other witnesses when he says that "one couldn't have bought better land for light industrial development anywhere in Cairns - it is absolutely prime." Mr Price considers Saltwater Creek to be a bonus to the land since it could be dredged and pumped to provide fill.
Also called in evidence by the Claimant was Trevor William Shaw who is a Financial and Management Consultant from the Gold Coast. Mr Shaw knows Mr Shepherd and is very familiar with the resumed land. He too describes it as being well located for light industrial development and for the same reasons espoused by all the Claimants Witnesses - its adjacency to the Airport, its major exposure from Airport Avenue, its close proximity to the City, and its compatible zoning. Mr Shaw sees the low-lying nature of the land as not necessarily being a detriment - in fact he says it is no impediment at all since the industrial estate at Sheridan Street comprised similar land and required a similar amount of fill. Be that as it may, it does seem surprising that it can be claimed that the low-lying tidal nature of the resumed land does not create an impediment. Mr Shaw confirmed in evidence that Mr Brown's allowance for profit and risk at 40% in his hypothetical subdivisional valuation exercise is realistic - he likes to accomplish figures on developments in the range of 20% to 40%.
The Court heard Town Planning evidence from Town Planning Consultant Victor G Feros, who has been a consultant in Cairns since 1970. He confirms that the subject land is zoned "light industry" having been rezoned on 6th May, 1976, and told us that land to the south and to the west is zoned "open space". He describes the subject land as being located 800 metres east of the existing industrial and commercial area adjoining both sides of Sheridan Street and nominates the land use within that area. Mr Feros sets out in his tendered report the "as of right" uses and "consent" uses and prohibited uses within the "light industry" zone and contends that there existed significant opportunities for establishing a variety of land uses on the subject resumed sites prior to resumption, in particular for the "as of right" uses - ie commercial purposes, home occupations and light industry. Mr Feros stresses that due to the location of the subject site in close proximity to the Cairns Airport, considerable opportunities existed also for the establishment of aviation related industries in accord with the zoning, but due to that proximity there are a number of development requirements encompassing the subject site relating to height restriction on buildings and design restrictions on outdoor lighting. Mr Feros comments that the rezoning of the subject land on 6th May, 1976 from "Residential Single Unit" zone and the "Open Space - Rural" zone to the "Light Industry" zone recognised the need and demand for industrial land in the vicinity of the airport, and the suitability of the site for industrial purposes. Mr Feros suggests the unconstructed road reserve (Fanning Street) is sufficient to provide access to the subject site following development for industrial purposes. It is to be noted that no scheme of development for the subject land put before the Court envisages the use of Fanning Street for accessing the site - it is Airport Avenue which is used. Mr Feros sees the subject site as being of sufficient size and configuration to enable a rational and efficient internal subdivision to be developed upon it, and being well located capable of providing for the need and demand for additional aviation and service industry uses.
Mr Feros expressed the view that there was no absolute prohibition on the reclamation of the subject mangrove areas at date of resumption, or even now. He points to the recent development of a major marina at Shute Harbour involving removal of mangroves and also to a permit to remove mangroves at False Cape in the Mulgrave Shire and claims both reclamation sites were similar to the subject land. Another development application in the immediate vicinity of Cairns Airport was made last year at Reddon Island where a substantial area of mangroves was to be removed to provide for a tourist facility.
The respondent Authority called in evidence practicing Registered Valuer Terence Joseph Gould who valued the resumed land at $84,200 ($18,200 for Lot 1 and $66,000 for Lot 3). This valuation report was prepared on 23rd June, 1987. Mr Gould briefly and adequately describes the resumed land as tidal mangrove swamp land.
Mr Gould advised the Court that although the subject parcels are within development control Plan No. 2 within the City of Cairns Town Planning Scheme and that the recommended use compatibility within the control plan for the majority of Lot 3 is for commercial or industrial use, subject to an analysis of building noise reduction requirements, for practical purposes these limitations have no effect on land value as the whole area is already restricted to a maximum building height of 7.5 metres.
Mr Gould confirms that practical access to the resumed parcels could be obtained from Airport Avenue which is about 2 metres above the natural ground level and tidal water level which flows through several culverts along its length. He confirms that Airport Avenue is a public road from the southern boundary of the resumed lands to Sheridan Street, and that through the subject lands and to the Airport, Airport Avenue is not a public road but is vested in the ownership of the Cairns Port Authority. Mr Gould says that his legal advice is that access to both Lots 1 and 3, at resumption date, could only be obtained via the dedicated section of Airport Avenue up to the southern boundary of Lot 2 (Cairns Port Authority land) and then across the unformed sections of Fanning Street.
Mr Gould informed the Court that resumed Lot 1 has a useable area of 4550m2 with 158 m2 lost by severance by Saltwater Creek, and that resumed Lot 3 has an area of 6.5 hectares to the north of Saltwater Creek, 5.5 hectares to the south of Saltwater Creek and 0.7542 hectares within the bed and banks of Saltwater Creek. Mr Gould has had discussions with the Cairns Port Authority and says it is clear, as a result, that the Authority would have been totally opposed to granting any form of access to Lot 3 across its land at time of resumption. As a result, he concludes that Lot 3 only has a potentially useable area of 5.5 hectares to the south of Saltwater Creek.
Mr Gould suggests that the sole saving feature of the resumed land is that it has good exposure to the Airport access road on Lot 2 and that this must have some commercial value, if only for advertising purposes. Mr Gould is of the opinion that there would have been a considerable number of obstacles and elements of risk in any proposal to realise on the resumed land's potential for industrial usage. He suggested that the first of these obstacles results from advice from the Authority's engineers that the resumed land is some 2 metres below the level required for development, and that after allowance for primary and secondary compaction rates, the land would require the application of an average of 2.3 m of loose fill overall, and that this would only be available at a cost of $11.00 m3.
A further legal obstacle cited by Mr Gould and one which would have to be overcome, is the clearing of Mangroves on the subject tidal lands. He points to the control of mangrove destruction by the Fisheries Management Branch of the Department of Primary Industries under the provisions of Section 71 of the Fisheries Act. Mr Gould considers any proposal to reclaim either of the subject sites in the hope of realising their full potential could not be regarded as a safe proposition due to the considerable risks involved.
Mr Gould has compared the subject land with a number of sales of industrial and future industrial land in the vicinity of the airport and in the Pioneer Industrial area off the Bruce Highway at the southern approach to the City of Cairns. Most of the sales evidence was of filled or near filled sites which Mr Gould suggested is useful in assessing the end value for any potential reclamation of the subject parcels. Mr Gould says there is also some sales evidence of low-lying areas requiring substantial fill, and has compared this evidence directly to value the subject sites after appropriate allowances for size, shape, location and exposure.
Mr Gould has also carried out valuation exercises using the hypothetical development method. Details of his valuation of Lot 1 by this method are in evidence and from them he derives his valuation of $18,200. As for Lot 3, Mr Gould says that the useable area of the site (5.5 ha) if filled and levelled, could only be sold as a site for industrial subdivision, and that on the basis of his sales evidence, the very maximum value achievable would be $18/m2 and at a cost to fill in excess of $20/m2 the proposition is not viable. Based on sales evidence, Mr Gould believes subject Lot 3 on a filled and serviced basis would be worth $12/m2. Nonetheless, he acknowledges that no land has a negative value, and since Lot 3 has immediate potential for advertising, and for possible reclamation of a small area along the boundary of Airport Avenue, or just as a long term holding proposition with a view to some future development, then it has been valued on that basis.
The sales evidence relied upon by Mr Gould is -
Sale No. 1 -Cnr Arnold Street and Captain Cook Highway, Stratford - a 3,220 m2 site zoned "heavy industry" sold in February, 1986 for $199,000. ($62/m2)
Sale No. 2 -A 3,139 m2 local shopping site located at the Cnr Stanton Road and Captain Cook Highway, Smithfield, sold in April 1986 for $210,700. ($67/m2)
Sale No. 3 -This a 2.943 hectare site located off the Bruce Highway at Woree. The land is low lying and may need some fill to reach its full potential. The land sold in June 1986 for $140,000 ($4.76/m2). It is zoned "noxious and hazardous" industry
Sale No. 4 -A 37.77 hectare site in 16 separate surveyed areas again located off the Bruce Highway at Woree. This land was purchased by the Industry Development Department for an industrial subdivision. it has a tendency to be low-lying. It sold in July, 1986 for $2,500,000 at a rate of $6.62/m2. The land is zoned "light industry".
Sale No. 5 - A 1.259 hectare site at the corner of the Captain Cook Highway and Johnstone Street, Aeroglen. This land sold in February, 1987 for $30,000 and is mostly low lying ti-tree and paperbark swamp. It enjoys good exposure to high traffic volumes along the highway and reflects a rate of $2.38/m2. This was a transfer of land from the Cairns Port Authority to the Cairns City Council and not a lot of evidentiary weight is placed upon it by Mr Gould.
Sale No. 6 -A large 2.903 hectare "heavy industry" zoned site just north of the subject property at the corner of Captain Cook Highway and Arnold Street, Stratford. This Mr Brown's Sale No. 4. At time of sale is was developed with two old fibro houses and some timber warehouses but is predominantly a redevelopment site. The sale analyses to a rate of $18/m2. Mr Gould places a lot of weight on this sale and he confirms that it has been subdivided into an industrial estate since purchase. He says that the site required no imported fill for its development. It has good exposure to the highway.
Mr Gould has prepared a supplementary valuation report and it shows that he is in disagreement with Mr Brown's valuation of $60/m2 for the yielded lots in his 30 lot hypothetical subdivisional exercise. He says a value of $60/m2 is far too high. He sees a value of $45/m2 on average as being more in line with the market, and envisages a range in value of $55/m2 for the lots facing Airport Avenue back to $35/m2 for the lots in the rear of the subdivision. Mr Gould bases this opinion on a series of sales in the suburbs of Portsmith, Stratford and Bungalow which range in area from 810 m2 to 3220 m2 and in prices from $35/m2 to $64/m2. Details are in evidence (Exhibit 26).
Mr Gould provided the Court in his supplementary statement four hypothetical subdivision valuation exercises for resumed Lot 3. The first is for a 44 lot subdivision requiring external access roadworks and the construction of a bridge across Saltwater creek in which he uses a filling cost of $10/m3 compacted. This exercise shows a negative $2,227,505 value for the land. The second exercise is for a 22 lot subdivision on the land south of Saltwater Creek requiring external access roadworks, again using a filling cost of $10/m3 compacted. This scenario shows a negative land value of $824,727. The third exercise is for a 44 lot subdivision requiring external access roadworks and again the construction of a bridge over Saltwater Creek using a land filling cost of $7.90/m3 compacted. This scenario shows a negative land value of $1,635,036. The final exercise is for a 22 lot subdivision again requiring external access roadworks but again not utilising the land to the north of Saltwater Creek in order to save bridge construction costs. Using filling costs of $7.90/m3, again a negative land value results, this time $553,847. In each of his exercises, Mr Gould relies upon engineering costs as advised by the engineering firm Gutteridge Haskins and Davey. It is perhaps worthy of note that Mr Gould allows interest for a 2 year period for development and filling for his 44 lot subdivision and 1¼ years for his 22 lot subdivision as opposed to Mr Brown's interest allowance for a 6 month period for development and for a 3½ year period on land for the development and selling period for his 30 lot subdivision.
Further valuation evidence was called by the respondent Authority from Registered Valuer Glen James Coonan, who says the highest and best and most profitable legal use of the resumed sites is for a single industrial development site or as a holding proposition pending possible future potential for industrial development. Mr Coonan values resumed Lot 1 on this basis at $30,000 and resumed Lot 3 at $75,000 - a total valuation of $105,000. Mr Coonan made it clear that, as part of his instructions, he was to disregard the effect of whatever problems any potential hypothetical purchaser of the sites may have had with an application to remove the mangroves from the resumed lands, and was instructed to assume there was no lack of dedicated access to the land from Airport Avenue.
Mr Coonan points out that the resumed parcels, although zoned "light industry" are not in an established industrial precinct and he would have expected that demand in the market place for industrial land in this location would have been very limited at the date of resumption. Mr Gould says that services were available for connection to the resumed land but only at substantial cost.
Mr Coonan too has undertaken a valuation exercise for resumed Lot 3 by the process of hypothetical subdivision. He postulates subdivision into 41 lots and has valued them, as did Mr Gould, at $45/m2 based on some 8 sales of industrial sites in Cairns. Mr Coonan also has relied on engineering costs provided by Gutteridge Haskins and Davey. He makes an allowance of 35% for his profit and risk margin in his hypothetical exercise as opposed to 40% as used by Mr Gould and Mr Brown. Mr Coonan's interest allowance periods are 2 months for approval, 9 months for construction and 27 months for selling. Details of his workings are in evidence - suffice it to say that they too reveal a negative land value, this time in the sum of $2,638,653. As a result, Mr Coonan concludes that it would have been an exercise in futility to proceed with an industrial subdivision at resumption date.
Mr Coonan has also undertaken a hypothetical subdivision exercise for the land south of Saltwater Creek. This yields 20 lots, and again produces a negative land value of $934,075 prior to making allowance for holding and purchase costs. With all this in mind, Mr Coonan concludes that the assumed prudent purchaser would not have contemplated subdivision of Lot 3 at the relevant date, and that any subdivision was futuristic at best, this adding only a nominal premium to the value of the subject property.
Mr Coonan also points to the sale of the better located 2.903 hectare parcel at the corner of Captain Cook Highway and Arnold Street on 16th April, 1987 for $520,000. He also confirms that this site has been subdivided since sale for industrial development. The sale reflects a value of $17.91/m2 and Mr Coonan says that this sale is further evidence that Lot 3 would not have realised a value based on its potential for subdivision since his engineering advice is that Lot 3 would cost $24.68/m2 to fill. In addition he says that given the higher risk associated with the subdivision of subject Lot 3, its larger area and greater external and internal costs, then any perceived future subdivision of it would not have impacted significantly on its market value.
Mr Coonan also refers to the unfulfilled contract of sale for subject Lot 1 for $22,500 on 16th December, 1985. This, he suggests, provides the best basis for valuing Lot 1 notwithstanding that the contract was never consummated due, he says, to the pending resumption. Giving any benefit of doubt to the dispossessed owner, Mr Coonan places a value of $30,000 on Lot 1 and $75,000 on Lot 3 which he describes as a large predominantly unusable site but for which a premium could be expected in the market place as it has possible potential to subdivide into two large sites. I say here that I am conscious of and obliged to be mindful of Mr Coonan's instructions relative to the mangroves and access to the sites.
Mr Coonan has prepared a hypothetical subdivision analysis of Lot 3 using the development costs adopted by Mr Brown but applying as a basis for his gross realisations his adopted rate of $45/m2 for the 30 yielded lots. This exercise shows a residual land value of $39,713, and as a result below his valuation of $75,000 as a single undeveloped site.
Mr Coonan suggests, as did Mr Gould, that the industrial sites in Aumuller and Scott Streets are much superior sites than would be yielded from a subdivision of Lot 3 since they are in what he describes as a prime industrial area. He also believes that industrial sites in Sheridan Street are much better because of their greater exposure to Captain Cook Highway traffic.
Mr Coonan does not agree with Mr Brown's method of comparison between Lot 3 and his sales evidence in that Mr Brown deducted the value of fill (if any) from the sale prices before comparing the respective sale lands with Lot 3. He prefers to consider the sale properties in their filled state and then to take into account the cost to fill the subject Lot 3. I see more merit in using Mr Coonan's method because it takes account more directly what is to be an appropriate allowance to be made for fill volume and costs necessary in the notional development of Lot 3.
The respondent Port Authority called Peter Robinson who is a Town Planning and Development Consultant in Cairns, and who was employed as a Town Planner with the Mulgrave Shire Council from 1980 to 1988. Mr Robinson's task was to examine constraints upon the possible development of Lot 3 for industrial use. These constraints, he says, are physical, administrative and statutory. Mr Robinson has had discussions with the Cairns City Planner (Mr Bruce Hedley) and with a City Engineer (Mr Brian Smyth) whose functions include advice on subdivisional matters.
Mr Robinson told us that the most significant constraint relates to the statutory requirement for a developer to obtain the approval of the Department of Primary Industries (as it then was) to interfere with, clear or destroy mangroves. He points out that this approval would be necessary both for interference with mangroves on Lot 3 as well as on vacant Crown Land between the Airport Avenue and Lot 3 where the claimant company proposes access could be gained to that lot. Mr Robinson's experience in the adjoining Mulgrave Shire is that from around 1983 - 84 it became progressively more difficult to obtain approval to interfere with, clear or destroy mangroves, particularly on Crown Land. He says that any application to destroy mangroves would have to be accompanied by an expensive long term study to show there would have been no adverse results on the fisheries habitat.
The second constraint pointed to by Mr Robinson is the need to obtain Lands Department approval to dedicate and use part of vacant Crown Land for road purposes, and it is his experience that the Lands Department would not act independently of other Authorities such as the Cairns City Council and the Department of Primary Industries. In the event of approval having been granted, then Mr Robinson suggests such an approval may contain conditions relating to intersection construction, roadworks, services and a constraint to ensure that the resultant works would not adversely affect mangrove communities. In addition, compensation would be required to be paid to the Crown by the applicant.
Mr Robinson stresses that Fanning Street is a very narrow reserve and he would not have considered it to have been suitable for the provision of access roads and services to Lot 3 in the event of industrial development.
Mr Robinson sets out in a tendered report his idea of possible conditions of subdivisional approval for Lot 3. They include setting a minimum fill level of RL 2.9 AHD.
Mr Robinson is aware of the development approval granted by the Mulgrave Shire for land on Reddon Island. He says it provided for the removal of only 2.8 hectares of mangroves, but a condition was that the applicant reinstate the mangroves with 1.5 times the area of mangroves removed. At False Cape, he says the development involved the removal of only a handful of mangroves.
Brief evidence was called from Brian Joseph Smyth (to whom Mr Robinson spoke) who is a Civil Engineer and Manager, Corporate Planning with the Cairns City Council. Mr Smyth has been made aware of the hypothetical plan to subdivide resumed Lot 3 and he told us that if such a subdivisional application had been made in 1986, then it would have been his duty to report to Council in conjunction with the Town Planning Department. Mr Smyth has examined Mr MacIsaac's plan of subdivision and he would have recommended as a condition of approval that a landscaping buffer of a minimum of 5 metres be put along the frontage of parent Lot 3 to Airport Avenue due to the importance of that avenue as a main visitors' entry to and from the Airport. He would recommend a minimum permanent level of the subdivision to be RL 2.65 AHD which is something of the order as the existing airport subdivision in Sheridan Street. Mr Smyth regards RL 2.65 AHD to be the absolute minimum assuming that settlement has taken place and for drainage purposes, portions of the parcel would have to be filled to a greater level than RL 2.65 AHD by some 300-400 mm.
Mr Smyth expressed the view that it would have been likely that Council would have required a monetary contribution rather than the park land proposed in Mr MacIsaac's subdivision plan, although I note that there is no park land allocation within his 30 lot subdivision south of Saltwater Creek as afforestated. Mr Smyth would be concerned about the use of marine clay from the proposed park land for use over fill as the final 400 mm of non structural fill, and would require a geotechnical report from a consultant geotechnical engineer in respect of its suitability for such use.
Mr Smyth expressed the view that in the event of subdivision of Lot 3, then Council would require a developer to make a 100% contribution to the cost of providing an intersection at the access point with Airport Avenue, and he feels it appropriate that the intersection be lit. Mr Smyth also confirmed that Fanning Street is not wide enough to service Lot 3.
Evidence was called upon by the respondent Port Authority from Dr John Peter Beumer who has been a Senior Fish Biologist with the Department of Fisheries since 1986. Dr Beumer told us of the procedure to be followed when his Department receives an application to destroy mangroves under the provisions of Section 71 of the Fisheries Act. He says that applications made in an area where there is existing development are viewed differently by the Department from others which may be located away from development. Mangrove population in Trinity Inlet has been under investigation as a result of a grant by the National Trust for a number of years. This study has not yet resulted in a declaration of a fish habitat.
Dr Beumer has inspected the resumed lands. He informed the Court that he is familiar with the recognised industrial areas within the City of Cairns where mangroves have been removed to make way for development, and he says the mangroves on the resumed area are predominantly true mangrove with more than 95% vegetated. There are at least 5 species of Mangroves on the land and the community is well established ranging from mature trees to seedlings. He described the area within Lot 3 and the adjacent wetlands as being in very good condition and of a high value to local and regional fisheries. As a result, the wetlands immediately to the south and to the east of Lot 3 have been proposed for inclusion within the Wetland reserve of this portion of Trinity Bay.
Dr Beumer says that the assessment of an application over Lot 3 for a Section 71 permit to remove or destroy mangroves would have been undertaken in terms of a number of criteria, including the size of area, the degree of disturbance, the destruction and extent of mangrove vegetation, the community stability and the diversity of the mangroves. Also falling for consideration would have been the reason for the application and the nature, extent and impact of works within the land in question and on adjacent and nearby lands. On the basis of his inspection and the legislation applicable in 1986, Dr Beumer would have recommended to the then Minister for Primary Industries that a Section 71 permit not be issued for the removal of mangroves on resumed Lot 3.
Peter John Quinn who is a Consulting Engineer in Cairns provided a report on a possible application for an intersection serving the area of Lot 3 south of Saltwater Creek from Airport Avenue. He has had access to the subdivisional layout prepared by Mr MacIsaac. He sets out in his tendered report a calculation of potential traffic generation by the subdivision and estimates that around 1458 vehicles per day would be accessing the intersection from and to the subdivision - from Airport Avenue, which itself was carrying 2890 vehicles per day based on a Main Roads Department assessment. Mr Quinn provided the Court with a Design Plan for what he considers to be an appropriate intersection based on the 1979 NAASRA Guidelines which he says is highly accepted within the engineering profession. The design provides for a right hand turn from subject Lot 3 into Airport Avenue and a right hand turn from Airport avenue into the subdivision. Mr Quinn provided the cost of his proposed intersection at $173,000 as at resumption date. Details are:-Clearing (including visibility) $ 7,000
Filling 4500m2 at $10 $45,000
Pavement 1400 m2 at $35 $49,000
Lines/signs $10,000
Lighting $20,000
$131,000
Contingencies 20% $26,000
Fees/testing 12% $16,000$173,000
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Since preparing the above costings, which Mr Quinn suggests were prepared in haste due to short notice, he has had a more thorough look at his workings. He has drawn up a dimensional plan of the required intersection, and has measured the total area of pavement within the intersection limits to be 6600 m2 and the amended areas of new pavement to be 3000 m2. Mr Quinn also re-estimated the volume of filling required at 10,250 m3 comprising 5,500 m3 for widening and 3,800 m3 for the access road, with the latter increased by a factor of 25% for losses. His revised estimate also included costs for extending existing culverts, including demolishing and rebuilding headwalls, which was not included in his original estimate. In the following revised estimate, Mr Quinn used lesser unit cost rates than he did originally since the basis for computation of quantities is more accurate. The amended costings are:-
Clearing $6,100
Filling 7350m3 at $10 $73,500
Geofabric (placed under fill) $10,160
Pavement 3000 m2 at $17.60m3 $52,800
Culverting - including headwalls $11,680
Lines/signs $5,240
Lights $7,000
$166,480
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Mr Quinn would expect that any developer of an industrial subdivision on Lot 3 would have to pay for the intersection. He acknowledges that it is hard to be specific on filling costs but believes his allowance at $10/m3 is realistic.
We also heard from Geoffrey M Byrne, who is a Director of Hollingsworth, Dames and Moore, and whose expertise lies in Engineering Geology. His firm was requested to review probable sub-surface conditions which occur in the vicinity of resumed Lots 1 and 3. Mr Byrne listed the available bore hole data on Airport Avenue and at the Cairns Airport. It indicates a typical profile in the area to consist of soft, compressible marine clay overlaying older, consolidated alluvium. Some upper levels of marine clay contain sandy zones. Mr Byrne says the available data suggests that the thickness of the marine clays vary between 5.5 metres and 7.00 metres over Lots 1 and 3.
Mr Byrne has been informed that site levels on any subdivision of resumed Lot 3 would have to be raised to a minimal level of RL 2.65 AHD with levels after completion of settlement ranging from RL 2.65 AHD and RL 2.90 AHD. This indicates a placement fill thickness of between 1.7 and 1.95 metres not allowing for settlement. He says settlements due to primary consolidation of the marine clay would have an estimated magnitude ranging between 370 and 460 mm. Mr Byrne estimates the fill requirement for Lot 3 of 2.24 metres as suggested by Gutteridge Haskins and Davey to be conservative.
James Grahame Bruce who is a Civil Engineer and Consultant to Gutteridge Haskins and Davey in Cairns furnished engineering evidence on behalf of the respondent Port Authority. Mr Bruce tendered in evidence his firm's costings to produce a 30 lot subdivision on that part of resumed Lot 3 to the south of Saltwater Creek in accordance with Mr MacIsaac's plan. His firm's costing is:-
Clearing $23,000
Filling of Site $1,182,720
Internal & external road works and
stormwater drainage $306,790
Water Reticulation Internal $46,000
External $28,000
Sewer Reticulation Internal $90,000
External $15,500
Sewage Pump Station $44,000
Council Contributions $74,700
FNQEB - Power Supply $55,200
Engineering fees & Survey fees $70,000
$1,935,910
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Mr Bruce has calculated his compacted fill volume on the basis of an average 2.24 metre depth over an area of 5.3 hectares based on advice from Mr Byrne. He costs the filling at $10/m3 for the estimated volume of 118,270 m3 required. Mr Bruce says unit rate costs in 1986 were:-
Winning $1.00 to $1.50 m3
Loading $1.20 to $1.50 m3 (loose)
Cartage $0.12 to $0.15 m3/km (loose)
Placement & Compaction $3.50 to $5.00 m3 (compacted)
Mr Bruce estimates that based on a cartage from quarries with a route distance of 8 kms from the subject land, the minimum cost of fill (supplied free) would have been:-
Cost of supply nil
Winning $1.40m3
Loading $1.68m3
Cartage $1.34m3
Spreading & Compaction $3.50m3
Say $7.90/m3 but ranging up to $11.00/m3.
Mr Bruce placed in evidence a series of contracts for filling at various locations around Cairns and prepared a graph which indicates that for normal fill quality (as apposed to selective fill) the average cost at resumption date was $11.20 m3. Mr Bruce does not feel Mr McPherson's costings per cubic metre to be realistic, nor that his estimate of volume of fill is sufficient.
Mr Bruce has estimated the cost of the connecting road and the intersection to Airport Avenue at $102,000 as opposed to Mr Quinn's revised estimate of $166,480, but the location of his proposed intersection is closer to the airport and his design is not of a similar standard. Mr Bruce has not allowed for contingencies, but suggests an appropriate factor is 5% on total cost. Complete details of Mr Bruce's workings are in evidence.
It is Jeffrey Neil Crofts who is an associate of Gutteridge, Haskins & Davey and principal engineer - water and sewerage - who made the water supply and sewerage cost calculations for sewerage and water as contained in Mr Bruce's report. Again complete details of his costings are in evidence. Mr Crofts says his prices are based on contracts. During evidence Mr Crofts conceded that if water was drawn for the proposed subdivision from a council water main which passes Lot 3 to service the Airport, then there could be a reduction of $17,000 in the cost of providing external water supply.
Near the conclusion of evidence in the matter Mr McPherson was recalled for the purpose of supporting his development costings on the basis of actual contracts from 1985 to mid 1987. Again this material was reduced to and presented in schedule form. Mr McPherson also furnished his estimate of the cost of Mr Quinn's intersection to be $52,800.
Near the conclusion of the matter the Court was invited to take a view of the resumed land and the sites referred to in sales evidence. This view has been undertaken and I indicate that it has been of considerable assistance to me in my appreciation of the relevant evidence.
It is obvious that the claimant company's claim for compensation is based on the "special value to owner" concept especially as a result of Mr Brown's overall approach to his valuation but in particular to his allowance for filling in his hypothetical valuation exercise. Now the use of the special value concept in valuing lands the subject of resumptions has attracted the attention of the Courts over the years. Among the most relevant decisions is that in re: Commonwealth v. Reeve (1948) 78 CLR 410 where at P418 the High Court said:
"The value of land to the owner is what he can get for it. He can never get for it more that other people will give for it. But what other people will give for it is not unaffected by what the owner is prepared to take for it."
Again in Pastoral Finance Association Ltd v. Minister (1914) AC 1083 the Privy Council said:
"That which the appellants were entitled to receive was compensation not for the business profits or savings which they expected to make from the use of the land but for the value of the land to them"
So that it is clear that in this case what has to be determined is the value of the resumed land to Shepherds Properties (NQ) Pty Ltd as at the date of resumption, but this value cannot be more than the dispossessed owner could have obtained for it in the market place.
Should it have been necessary for me to totally reconcile the conflicting evidence of the engineers in this case, then I would indeed be facing a daunting task. I feel it is sufficient to say that should I have had to, I would certainly come down on the side of the engineering evidence relied upon by the respondent Port Authority if only for the reason that it is so comprehensive in nature. This comment is not to be taken that I was unimpressed with Mr McPherson, who faced well the task of repelling the exhaustive attack made upon many of his cost estimates during the long trial.
Now the reason for my not having to make a specific finding on the engineering evidence is that I cannot, after indepth examination of all the evidence, conclude that the subdivision of resumed Lot 3 for industrial development would have been at the relevant date anywhere near justifiable on economic grounds. The principle reason for this finding is that I cannot adopt with confidence Mr Brown's gross realisation lot values of $60 m2. Both valuers called by the respondent agree that $45 m2 is an appropriate value, and this does seem to be in line with the market as evidenced by the sales evidence produced by all the valuers, particularly that in Aumuller Street and Scott Street. Now when $45 m2 is used as the gross realisation value in Mr Brown's 30 lot valuation exercise, then the total gross realisation is $1,795,500 - some $604,500 less than the figure used by Mr Brown. After this the hypothetical development exercise fails to show a positive land value even using Mr Brown's considerably reduced filling costs. A significantly greater negative land value results if Mr McPherson's costs are used. On the basis of using the engineering costs used by the respondent Authority, the exercise of valuing by hypothetical subdivision is one of futility because of the very large negative land value. Given all this, the only conclusion to be drawn from the weight of the evidence is that the subject land did not stand possessed of any realisable potential for industrial subdivision at relevant date and this does not even take into account the constraints which would have been placed on the subdivision of the land as so aptly outlined by Mr Robinson.
It remains to consider the value of the resumed lands to the claimant company as unsubdivided sites. I have already indicated my preference to the method of valuation used by Mr Coonan in respect of the treatment of the sales evidence. Notwithstanding however, that Mr Coonan's instructions were to disregard the effect of the mangroves and access problems, I do feel that Lot 3 in particular had future potential for some type of industrial use, whether it be as a single site or for future subdivision, or as a holding proposition for when the market value of "light industry" zoned sites in Cairns is considerably higher than it was at resumption date. Although it is difficult on the evidence to say how much the assumed hypothetical prudent purchaser for Lot 3 would have been prepared to pay for the potential, I think that, taking into account in particular its favourable location within the City of Cairns, its good exposure to Airport Avenue as well as the negative features such as the probable difficulty to obtain a permit to destroy the mangroves, a sum of $125,000 would not be unrealistic in the market place, and should reflect, as I see it, the value to the owner and weigh any doubts, as it should, in favour of the dispossessed owner company. As for Lot 1, I see $30,000 as just and fair compensation for it at relevant date. I therefore determine compensation for the resumption of Lots 1 and 3 on RP 738764, Parish of Cairns at $155,000 - to which the agreed sum of $3,750 is added as compensation for disturbance.
It could easily be thought that this determination of compensation is inadequate in the light of the offer of $500,000 made by Mr Price for the subject lands in 1984. However, it is well established that offers to buy and sell land which do not result in a concluded contract do not constitute reliable evidence as to value. This matter was discussed by the High Court many years ago in re: The Deputy Federal Commissioner of Land Tax for NSW v. McDonald (1915) 20 CLR 231 P237 (Isaacs J) when it was said:-
"The next ground relates to the rejection of a letter written by Morton for McDonald to Ormond in 1908, offering to sell the property at a price.
Apart from the distance of time - three years - it is plain that the mere fact of a statement by an owner to a stranger that he would be willing to sell at a given figure, and that the offer was not accepted, for some reason undisclosed, is no evidence of what the Statute required, namely, the price which a willing buyer would give, supposing the seller announced reasonable conditions. ............ Nor is the refusal of the person to whom the offer was made to accept it, even if specifically on the ground of excessive amount, any more than an expression of his opinion on the point."
My research of subsequent authorities does not indicate any departure from this principle, and as a matter of law I am bound to disregard the evidence of the offer in this case.
Compensation is accordingly determined under all heads of claim in the sum of $158,750.
Section 28 of the Acquisition of Land Act 1967 - 1988 provides that the Court may order that interest be paid upon the amount of compensation determined by it, and that such interest shall be at such rate as the Court deems reasonable.
It is submitted by Counsel for the claimant company that interest should be awarded on compensation determined, and that the order should be for compound interest. The Court was referred to the judgment of the High Court in re: Hungerfords v. Walker (1989) 63 ALJR 210 where compound interest was awarded where there was a loss of the use of money directly attributable to the defendants' breach of contract or negligence.
Now it has been the practice of this Court, and of the Land Appeal Court, to award interest on compensation awards on a simple interest basis. My research of the numerous Judgments here do not disclose a case where it was argued that interest should be awarded on a compound basis. However, in re: South Australia Land Commission v. Perry (1977) 37 LGRA 25, the Supreme Court of South Australia (Jacobs J) had before it a claim that in the case of land having been compulsorily acquired, then interest should be awarded on the basis of compound interest pursuant to Section 33 of the Land Acquisition Act 1969 - 1972. After reviewing Authorities on the point, Jacobs J held that the claim to compound interest under Section 33 is misconceived and dismissed the application and awarded simple interest. I can see no provision within the interest provision of Section 28 of the Acquisition of Land Act 1967 - 1988 which enables me to distinguish between that Section and Section 33 of the Land Acquisition Act (SA) which read:-
"Where the Authority agrees with a claimant, or is ordered to pay a greater amount of compensation than that originally offered in respect of the acquisition of any land, the amount by which the subsequent amount exceeds that originally offered shall be increased by interest at the prescribed rate from the date of publication of the Notice of Acquisition."
I adopt the dictum of Jacobs J, and order that the respondent Cairns Port Authority pay to the claimant company interest calculated as simple interest at the rate of 12.75% per annum on the following sums and for the following periods:-
"On the sum of $158,750 for the period commencing 6th September, 1986 and ending on 2nd April, 1990 (date of receipt of advance of $84,200) and;
On the sum of $74,550 for the period commencing 3rd April, 1990 and ending on the date immediately preceding the day upon which final payment of compensation is made."
(C.H. Carter)
Member of the Land Court.
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