Yalgan Investments Pty Ltd v Council of the Shire of Albert
[1997] QLC 88
•6 June 1997
LAND COURT BRISBANE
[1997] QLC 88
6 JUNE 1997
Re: A94-94
Determination of Compensation -
Resumption by the Council of the Shire of Albert for Park Purposes -
Acquisition of Land Act 1967
BETWEEN:
Yalgan Investments Pty Ltd and
Council of the Shire of Albert
Claimant
Respondent
J U D G M E N T
Land owned by the claimant was resumed by Proclamation on 4 November 1994 for park purposes and from that date vested in the respondent in fee simple in accordance with the provisions of the Acquisition of Land Act 1967. The Notice of Intention to Resume which initiated the process towards acquisition issued on 17 June 1994.
The respondent in this case, the Albert Shire Council, was the Constructing Authority for the purposes of the acquisition at the relevant date of the issue of the Proclamation, however, following this on 22 March 1995 there was a merger with the then old Gold Coast City Council to form a new amalgamated Local Authority.
The land which is the subject of the acquisition is in two lots totalling 38.834 ha and is encumbered by two easements. One easement has a Gold Coast City Council water main located on it, is 20 metres wide and covers 8,200 m² of the land. During evidence, the presence of this easement was not mentioned as a particular disability to the land, however, there was general agreement that the second easement, which carries high voltage electricity supply lines and supporting towers, did detract from the visual amenity of the subject land. This easement, in favour of the Queensland Electricity Commission, is 120 metres wide, covers about 7.1 ha and is located in an approximately east-west direction, traversing land which is subject to flooding.
The subject land is of irregular shape not unlike a poorly drawn map of Australia with most of Queensland missing and Tasmania joined to Victoria. At the relevant date the land was zoned “Special Facilities -
Resort Hotel (maximum 300 rooms), Accommodation Units (maximum 112), Residential Housing (maximum 15 home sites) and Recreation Facilities”.
The land comprises flood-prone creek flats off both Mudgeeraba and Bonogin Creeks, the latter to which it has a 250-metre frontage, and has low forest ridges along the southern and northern boundaries and a central ridge touching the western boundary. A detailed survey of the land has been carried out by Keilar Fox & McGhie and this shows 18.04 ha as being flood- prone, based on a 100-year frequency, and 20.76 ha as flood-free. The elevated land affords a predominantly rural outlook, together with some aspect of established rural residential estates to the south and west. The land is located westerly of the Pacific Highway with the Township of Mudgeeraba being within some 2.5 km to the north. Mudgeeraba offers a mix of shopping and service facilities. The Robina town centre now located about 4.5 km (or 7 km by road) to the east of the land was undeveloped at the relevant date, but the proposal was well publicised. Similarly, it was known that the new Gold Coast Railway Terminus would be nearby. The Mudgeeraba area was, around the relevant date, enjoying an expansion in residential development in common with other Gold Coast fringe areas.
Electricity, water and telephone services were available to the land at the relevant date, whilst sewerage connection could be had by extending existing facilities. An old timber dwelling is located in the northern part of the land which, to be made habitable, would require extensive repair.
Access to the land is provided by Hardys Road which is a fairly busy collector road, having a 475-metre frontage to the subject land. In the vicinity of the subject land it is developed with a two-lane bitumen sealed carriageway. Hardys Road meets the Gold Coast-Springbrook Road about 900 metres to the north of the entry from Hardys Road onto the subject land. The Gold Coast-Springbrook Road joins the Pacific Highway which provides access to the south and to the coast and northerly to Brisbane City which is about 70 km away.
In company with counsel, I viewed the subject land and most of the sales referred to by the valuers who were called by each side. This assisted me in my appreciation of the evidence.
The claim for compensation was lodged in the Court on 23 December 1994, however, leave was granted to amend this claim to the following:
Land $5,045,000.00
Expenditure thrown away $139,671.30
Costs in formulating and lodging claim $8,000
Total $5,192,671.30
The land component of the claim was supported by the valuation of Mr Kevin Noel Stapleton, a registered valuer. Valuation evidence for the claimant was also provided by Mr Lawrence John Hamilton, also a registered valuer who valued the land at $5,000,000. The respondent’s valuation evidence was provided by registered valuer Mr Terence John Lacey. Mr Lacey’s valuation tendered in evidence at the commencement of the hearing showed a land value of $2,500,000, however, this value was based on incorrect information as to the areas of the subject land above and below flood level. Mr Lacey later provided an amended valuation in the amount of
$2,750,000. As will be seen in due course, there was some disagreement between the parties in the detail of what disturbance items are properly payable, however, the difference in land value occupied centre stage. In respect of this, the primary question relates to the highest and best use of the land, however, before detailing the different views expressed on this matter, a brief historical discussion may be useful.
Rezoning of the subject land from “Rural B” to the zoning current at the relevant date was gazetted on 16 November 1989 following an application lodged by the then owner in February of that year. The 1988 Albert Shire Council Town Planning Scheme which was in force at the date of acquisition applied at the time of rezoning. That scheme was replaced by a new scheme on 24 February 1995, that is some three months after the relevant date, the new scheme having been put on display in November 1993. A plan of development, Drawing No. 4066, prepared by the firm of Weathered Howe (“Plan 4066”) accompanied the rezoning application, however, was not referred to in the resulting “Special Facilities” zone description which appeared in red lettering on the zoning map, though a copy was tendered showing development controls inscribed on it indicating a clear intention by the Local Authority that the rezoning would be subject to “Plan 4066” as a plan of development. A letter dated May 1989 from the local authority to the landowner’s consultants was also tendered showing the conditions sought to be imposed, including the condition that development should occur in accordance with “Plan 4066". Had the zone description which appeared in red lettering on the zoning map included reference to a plan of development, the use to which the land could be put would be conditional upon the adherence to the contents of that plan and the development controls expressed on it. Such
an outcome is provided for in the town planning scheme. In addition, had the local authority entered into a rezoning deed which reflected the conditions attaching to the proposed rezoning, including reference to the plan of development, such an agreement would have been enforceable between the parties, that is, between the then land owner and the local authority and would, according to the usual practice, have provided for any subsequent owners of the subject land to enter into an agreement expressed in similar terms. For some inexplicable reason, but probably because of an oversight, no such agreement was entered into. Certainly it is the case that the claimant who became the owner of the land in 1993 did not become a party to an agreement of the type outlined above. Given these circumstances, the claimant proceeded on the basis that neither it nor any hypothetical prudent purchaser would be bound to develop the land in the way envisaged in “Plan 4066”. Brian Simpson & Associates Pty Ltd, Architects, was commissioned to prepare a plan (the “Simpson Plan”) which included the major elements of “Plan 4066”, but differently configured on the land. The development proposed on the subject land as reflected in the “Simpson Plan” was often referred to in evidence as “Mudgeeraba Equestrian Estate”, and it was the claimant’s contention that the various uses were complementary: a matter I comment upon further below.
The Simpson and Plan 4066
The claimant’s valuers carried out their respective valuations based to different degrees on the “Simpson Plan”, whilst Mr Lacey adopted “Plan 4066” subject to one significant modification. In that area of the subject land where “Plan 4066” envisaged a resort hotel, Mr Lacey included a townhouse development: a matter I will discuss further later in this judgment.
Given the difference of approach that I have just outlined, it will be useful if I give some detail of the differences between the two plans. “Plan 4066” was made up of a number of precincts whose proposed uses and areas were:
Precinct A1 and A2 - rural homesites 7.1 ha
Precinct B - accommodation units 2.8 ha
Precinct C - resort hotel 1.7 ha
Precinct D - recreation facilities 0.7 ha
Precinct E - recreation area 19 ha
Precinct F - public open space 6.3 ha The 1.2 ha balance of the land was taken up in access ways and roads.
The resort hotel site (Precinct C on which the old residence was located at
the date of acquisition) was located on the high land in the northern part of the parcel and was to be accessed by an internal roadway which tracked past the recreation facilities (Precinct D), a small part of the rural homesites’ area (Precinct A1) and the edge of the accommodation units’ land (Precinct B). Precinct C overlooked the recreation area (Precinct E) and was located some distance from Hardys Road. The rural homesites (Precincts A1 and A2) were located on that part of the land bordering Hardys Road and along a large part of the southern boundary of the subject land, that is where it adjoined developed rural homesites to the south. The public open space land (Precinct F) was located on the eastern corner of the site. I will make use of those precinct designations throughout this judgment.
“Plan 4066” was based to some extent on an incorrect placement of the flood line which separated the flood-prone land from the flood-free land, as was shown by the Keilar, Fox McGhie survey which took place later in time. “Plan 4066” assumed approximately 13.3 ha as flood-free and the balance of about 25.5 ha as flood-prone. This may be compared with the Keilar, Fox McGhie figures of 20.76 ha flood-free and 18.04 ha flood-prone. The “Simpson Plan” utilised this detailed survey information and has, therefore, a greater intrinsic accuracy, in this regard, than does “Plan 4066”. Given this, Mr Lacey altered his valuation by increasing his Precinct B area from
2.8 ha to 9.7 ha and reducing Precinct E from 19 ha to 12.1 ha. The remaining precinct areas were not altered.
The “Simpson Plan” modifies “Plan 4066” in a number of ways. The resort hotel has been moved from Precinct C, which becomes a large rural homesite including the old house and which also extends into and includes most of the previous Precinct D. The resort hotel is now located along about half of the frontage to Hardys Road, occupying the previous Precincts A1 and most of Precinct B and a small part of Precinct A2. A townhouse development is also now located on the Hardys Road frontage and I will call this the “Hardys Road townhouse development”. It should be noted that I use the term “townhouse” for convenience although during evidence reference was made to villas and the word “unit”was also used as a shorthand form of reference. Fourteen rural homesites are located in the previous Precinct A2 along the southern boundary of the subject land, extending a little into the previous Precinct F, and extending in to the previous Precinct E and part of the previous Precinct B. An “inland” townhouse development site is now located in the southern part of the previous Precinct E. The configuration of the public park area has changed slightly.
Mr Stapleton provided a useful table showing the areas of each
component in the “Simpson Plan”:
14 Rural Homesites 5.874 ha
1 Large Rural Homesite 4.7613 ha
Hardys Road Townhouse Development 2.4277 ha
Inland Townhouse Development 2.4949 ha
Resort Hotel 5.4180 ha
Equestrian Centre 12.0920 ha
Public Park 3.8428 ha
Total 36.9105 ha
The balance of the land would be taken up with access ways and internal roads.
In the contest which developed during the hearing, the significant points of difference between “Plan 4066” and the “Simpson Plan” were
identified as: Resort Hotel:
·Its relocation from a site removed from Hardys Road and the rural homesites opposite, to a site abutting Hardys Road and closer to the rural homesites.
·The nature of the proposed development, it being contended by the respondent that the proposal is not consistent with that part of the zone description of “Resort Hotel (maximum 300 rooms)”.
Rural Homesites and Townhouses:
·The relocation of the rural homesites (except for one) away from the Hardys Road frontage and the positioning of the Hardys Road townhouse development (and the Resort Hotel) on that frontage.
The Question of Rezoning
Putting aside for the moment the question of highest and best use, the first question posed for me relates to the view that the hypothetical prudent purchaser would take of the matter of whether he should be confident of being able to develop the subject land untrammelled by the conditions which the local authority had sought to impose on the rezoning. That is, in particular, whether he would be able to develop the land in the way envisaged in the “Simpson Plan” or some reasonable variation of it, for if development is bound by the development controls on “Plan 4066” and the conditions attached to the local authority letter, and if the “Simpson Plan” does not conform with those controls and conditions, then an application would need to be made to the local authority to allow development as envisaged by the “Simpson Plan”. Alternatively, development would have to be in accordance with “Plan 4066" or some reasonable variation.
In the absence of an enforceable agreement between the local authority and the land owner, it was held in the Giant Supermarket Case (1993) QPLR 228:
“the conditions referred to in Council’s resolution whereby the rezoning application was approved cannot fetter or qualify in any way the Applicant’s rights to use the subject land in accordance with the provisions of the Town Plan Scheme as it now stands.” (P.231)
On the authority of this decision, the hypothetical prudent purchaser would understand that he has a right to develop the land in accordance with the zone description and that as long as the “Simpson Plan” conforms with that description it is authorised. As a separate, more important issue is the question of whether the contents of the “Simpson Plan”, or for that matter of “Plan 4066”, represent the highest and best use of the land. As will be read later in this judgment, I have concluded that there is insufficient evidence for me to be convinced that the hypothetical prudent purchaser would consider the subject land as an appropriate location for the development of a resort hotel as described in the evidence. Given that and the consequences of that finding, it is not strictly necessary for me to decide whether the implementation of a development based upon the “Simpson Plan” would necessitate an application for rezoning or development approval, however, I see some benefit in my setting out some of the views that I formed on that matter. In this regard, I will consider the question of the practicality of carrying out a development in accordance with the “Simpson Plan” and I used the word “practicality” in its broadest sense, for the hypothetical purchaser envisaged in Spencer must not be taken to be a dewy- eyed dreamer who will take the most optimistic view in all matters; nor a wilting lily who will proceed with such pessimism that all problems will be seen to result in failure. I must view the evidence from the perspective of the hypothetical prudent purchaser and not from that of a Judge of the Planning and Environment Court. My task is not to decide the outcome of town planning issues as if I were hearing an appeal in that Court. Bearing this in mind, I will consider the practical issues that would attract the attention of the hypothetical purchaser.
A question relating to whether the proposed construction of a “day stables” building on the subject land called for a rezoning of the land or town planning consent, or whether the proposed structure was contemplated in the words of the zone, “Recreational Facilities” came before Quirk DCJ. His Honour accepted the invitation of the parties to refer to “Plan 4066” and the development controls inscribed on it as an aid in deciding the question. He found that the words “equestrian facilities” included in the development controls were sufficient to cover the proposed structure and that the placement of the day stables building on the flooded part of the subject
land was consistent with what was intended in “Plan 4066”. (Yalgan Investments Pty Ltd v. Council of the Shire of Albert (unreported) 2 November 1994).
This decision leads me to say that a hypothetical prudent purchaser would be adopting an unduly optimistic position were he to view the zoning description of the subject land alone as being an unqualified expression of the uses permitted on the land. Moreover, the local authority seems to have exhibited a willingness, when the opportunity presents, to address its apparent oversight in not executing a rezoning deed which incorporated “Plan 4066” and appropriate conditions. The question is whether development of the subject land in accordance with the “Simpson Plan” would raise the prospect of the developer having to lodge an application with the local authority which may result in a requirement for the reinstatement of “Plan 4066” as conditioned or something similar. On the evidence that I heard, the hypothetical prudent purchaser would be concerned as to whether the local authority may be presented with opportunities to regularise the situation.
The first opportunity may relate to the proposed resort hotel and whether the hotel proposed in the “Simpson Plan” is encompassed by the zoning description “Resort Hotel (maximum 300 rooms)”. This is a matter I deal with in some detail later. There is a requirement under the Building Act 1975 that building approval be obtained from the local authority (s.30A)
andin this regard s.30BA(1) and (2) are particularly relevant: “30BA.(1) This section applies if -
(a)an application for approval to carry out building work is made under this Act to a local government; and
(b)a planning scheme applies, or interim development control provisions apply, to the land to which the application relates.
(2) The local government must consider the purpose of the application and must decide whether, because of the planning scheme or the interim development control provisions, the building work may be lawfully carried out only if -
(a)the land is rezoned; or
(b)the local government’s approval, consent or permission is obtained; or
(c)the land is rezoned and the local government’s approval, consent or permission is obtained.”
Perhaps the clearest opportunity, however, for the local authority to revive the conditions that it sought to impose on the original rezoning would be presented when the developer of the land makes application for subdivision of the land into various components which represent each of the
intended uses. Given the nature of the proposed development in each precinct and the different titling arrangements involved, the need for subdivision was agreed to by the parties as a requirement needed to ensure the orderly development of the land. What was not agreed to, however, was whether that subdivision process would result in the imposition of conditions similar to those sought by the local authority in the original rezoning.
The Local Government (Planning and Environment) Act 1990 (ss.4.4(5); 5.1(6) and 6.1(1)(c)) provides that an application for rezoning or subdivision may be subject to conditions that are “reasonable and relevant”. It is arguable that the types of conditions usually imposed at rezoning would not be reasonably or relevantly imposed at subdivisional stage, however, the attitude of the Planning and environment Court towards the
“Special Facilities” zone warrants some consideration in this regard.
In Vedalgo v. Brisbane City Council (1990) QPLR 226, Row DCJ provided a view as to how that Court perceives this form of zoning:
“As the proposed rezoning, if approved, would permit the particular form of development the rezoning application is to that extent akin to a development application in respect of the proposed development.” (p.227-228)
In Cass v. Albert Shire Council & Anor (1990) QPLR 161 His Honour indicated how the Court views an application for rezoning to the “Special
Facilities” zone:
“ Although the application before the Court is one for the rezoning of land, if rezoning is approved the particular form of development as indicated on the plan of development or by red lettering on the zoning map would be permitted development under column 3 of the table of zones. In such circumstances the factors to be taken into account on the hearing of the appeal include not only those relevant to a rezoning application as prescribed under Section 33(6A)(e) of the Local Government Act but in addition those relevant to a development application as in a sense the subject application is akin to a development application in regard to the nature of the proposed zone.” (P.163)
The potential purchaser would be reasonably concerned that conditions of the type which were sought to be imposed at the original rezoning stage might be imposed on subdivision. Mr Michael Cabella Challoner, a Consultant Town Planner, who gave evidence for the claimant went a step further than this in agreeing during cross-examination that a rezoning would be appropriate, otherwise the full description of the “Special Facilities” zone would apply to each subdivided parcel. It would be quite incongruous for a rural homesite, for example, to have a zoning that allowed for the
construction of a resort hotel or an equestrian centre. Notwithstanding such incongruity, there was evidence of a number of examples of this very outcome in the relevant local authority area. It was suggested from the claimant’s side that such examples showed the local authority practice in this regard. Putting aside that the evidence relating to the examples may have been incomplete, I think that it would take the matter too far to suggest that either the local authority was bound to follow this practice or that the Planning and Environment Court would endorse it. Indeed, I note that s.5.1(3)(a) of the Local Government (Planning and Environment) Act 1990 provides that the proposed use of each proposed allotment is a matter properly to be taken into account in the consideration of a subdivision application. I think that Mr Challoner put the matter correctly and that an application for rezoning would be required and that would give the local authority an opportunity to impose reasonable and relevant conditions whether the intended development was to be as indicated on the “Simpson Plan” or on “Plan 4066".
I should add to this discussion the point that Mr Challoner explained in some detail that he saw the “Simpson Plan” as not being inconsistent with the development controls noted on “Plan 4066”. As a general proposition, I need not consider his views on this because the state of affairs is clearly one where it is not the conditions which were sought to be imposed that is relevant, but what the outcome of the fresh rezoning application might be, having regard to the highest and best use of the land and the relevant town planning circumstances at the time of application, which, for present purposes, I take to be 4 November 1994 or soon after. To the extent that it is appropriate, only, the conditions pertinent to the original rezoning may be of some assistance in indicating the local authority’s views.
The Equestrian Centre
I return now to the question of highest and best use and the relationship between that and the zoning of the land.
In the case before me, there was disagreement between the parties as to whether a resort hotel and equestrian centre each represent part of the highest and best use of the land. There was little between the parties on the value to be applied to the land designated for the equestrian centre, however, given the suggested complementarity of uses and an issue relating to disturbance, I need to apply myself to the question of this usage.
The concept of the equestrian centre was explained by Mr John Stanley Kingston, a senior consultant with Ernst & Young, Chartered Accountants, Brisbane, who was called by the claimant. The proposal involved the
construction of 228 stables in approximately eight individual stable blocks with associated storage facilities and an amenities building. There would be a large “grand prix” arena with grandstand seating, a polo ground and four small practice arenas. A cross-country jumping course was also proposed. While it was intended that the construction would be of high quality and design, the complex would be located on the flood-prone land over which the electricity transmission line travels. Although this would impact on the visual aspect of the proposed centre, it is clearly a considered development option for this part of the subject land.
Mr Kingston provided a feasibility study in evidence and this showed that, based on two marketing scenarios and various assumptions, the equestrian centre development would provide a return which he considered to be reasonable based on three years of development and marketing. Average returns or investment over the three-year period ranged between 26.2% and 37.7%. It is important to note that the feasibility study did not purport to be a valuation and the scenario calculations and results did not form the basis of any valuation tendered before me. It is my understanding that it is the claimant’s contention that the feasibility study points out only that an equestrian centre is a valuable use of the flooded land; a use that would reasonably be in the contemplation of the hypothetical prudent purchaser. Certain criticisms were made of the study in cross-examination and these
were:
·Many of the assumptions upon which the feasibility study were founded were provided to Mr Kingston by his clients, the claimant, and were not independently substantiated excepting for land value which is a separate matter dealt with later in this decision. I note that Mr Kingston assumed optional land values of $750,000 and $1,000,000 for the 12.1 ha in the equestrian centre - values which are higher than those proposed by any of the valuers or than that determined by me later in this judgment. The effect of this is that the anticipated returns would be higher than those calculated by Mr Kingston.
·No allowance for interest was allowed in the calculations carried out by Mr Kingston on the basis that interest payments would depend on the amount of capital invested and the amount of any loan monies obtained by the developer. In my view, the opportunity cost of investment moneys should have been taken into account.
·Marketing costs were not taken into account. Mr Kingston was of the view that such costs would be reflected in the overall cost of the development, however, I hold that it would have been appropriate to attribute some marketing costs to this element.
·Whilst a broad statistical analysis of the available market was
12
presented, no detailed survey of the potential target market for the subject equestrian centre development was presented. I accept Mr Kingston’s response that the available data pointed to a participation rate in equestrian activities in Queensland and showed that a sizeable market was available. No doubt further market segmentation could be carried out in the future.
·There were criticisms that there were a number of flexible elements in the study presented which, on my understanding, had the effect of either increasing or reducing the end return in such a way that compensating adjustments could be made to the final figure. I take such flexibility as being an appropriate part of a feasibility study.
The main attack by the constructing authority on the proposed equestrian centre usage focused on the suggested inappropriate juxtaposition of that centre with the proposed townhouse development. Town planning evidence for the respondent was provided by Mr David Wayne Perkins who listed in his written report what he thought might be the practical nuisances arising from the proposed equestrian centre usage:
·visual impacts (facilities appearance and the prospect of night lighting being used);
·dust;
·flooding and filling of land;
·possible run-off of sediment and effluent into the watercourse;
·traffic impact;
·odour and noise.
Of these, the matters of odour and noise only were pressed during evidence, possibly because the other listed matters could be adequately addressed in design and management of the proposed facilities. Mr Kingston, who has some useful local and overseas experience in equestrian matters, convinced me that noise would not be an issue and that odour was able to be addressed by design and management. From a planning perspective Mr Challoner conceded that the “day stables” were possibly closer than desirable to the townhouses. Some adjustment to the layout therefore appears to be desirable
- a point agreed to by Mr Perkins. In the result, I am confident that the various matters raised by Mr Perkins do not militate against the adoption of an equestrian centre similar to the type described by Mr Kingston becoming part of the highest and best use of the subject land. Indeed, it seems to me that the proposed equestrian centre would be a positive feature in the marketing of many of the townhouses, whether that be to absentee landlords or to owner/occupiers. A small proportion only of the total number of townhouses might be said to be impacted upon in some direct way by the presence of the equestrian centre. Those electing to rent or purchase in
the vicinity of the centre would not only be tolerant of the aspect offered, but could well perceive substantial advantages in such a location. The opportunity to purchase an easily managed townhouse as a residence in association with the facilities offered by the equestrian centre would seem to me to represent a distinct advantage to some over the alternative need to purchase acreage land. In marketing terms the equestrian aspect would, as Mr Kingston said, provide a “theme” for the development. It would distinguish the development from run-of-the-mill competition and would capitalise on the rural aspect adjacent to Mudgeeraba. I should say that I have given regard to the suggestions put from the respondent’s side that the presence of the equestrian centre would be a disability in marketing terms, particularly in sale to absentee landlords, however, have concluded that such a view is one of undue pessimism. No doubt, as Mr Hamilton said, adjustments could be made to the layout and elements to the equestrian centre as marketing requirements became clearer.
As alternatives to the equestrian centre as described, Mr Lacey suggested either a centre of less ambitious dimension or a 9-hole golf course. I think it is hard to justify the nomination of a 9-hole golf course as being an appropriate use for the flooded land. To my mind, a 9- hole course would have the effect of representing the development as being substandard when compared with 18-hole courses located in other developments.
The Resort Hotel
Mr Brian Alan Simpson, Architect, gave evidence with respect to what I have called the “Simpson Plan”. He described the resort hotel as comprising
138 2-bedroom and eight 3-bedroom self-contained hotel strata title units similar to the accommodation units or townhouses located elsewhere on his concept plan. That is, the hotel units contained bedrooms, dining room and laundries and some had balconies. I assume that a lounge or living area was also included or possibly combined with the dining room. Additional facilities in the form of a swimming-pool, tennis courts and perhaps a restaurant would also be provided in the hotel. There was criticism from the respondent’s side of the resort hotel concept Mr Simpson described and with its location on the subject land abutting the Hardys Road frontage, thought it is important that I say that Mr Perkins said in respect of the development of a resort hotel on the site: “I’m unable to say it’s unsuitable from a town planning point of view”. Considerable disquiet was expressed from the respondent’s side, however, as to the nature of the facility described by Mr Simpson. It was strongly suggested that the
proposal was really nothing more than a collection of accommodation units similar to the townhouse component of the plan and the implication of this suggestion is that the resort hotel as proposed does not accord with the zoning description “Resort Hotel (maximum 300 rooms)”. Unfortunately, no definition of the term “resort hotel” is provided in the Town Plan and it is not appropriate to import a definition from elsewhere. The definition of “hotel” provided in the Town Plan describes an establishment licensed under the Liquor Act 1992 and though I would assume that some form of liquor licensing was envisaged, I doubt that the term “resort hotel” as used was intended to describe an average Queensland licensed hotel. Something different would have been contemplated, both in terms of the nature of the facility presented and in the recreational opportunities offered. The inclusion of tennis courts and a swimming-pool no doubt go part way in this regard and the proximity of the equestrian centre would add to this aspect. I am prepared to proceed on the basis that these elements satisfy the concept of “resort hotel”, however, the matter of greater concern is whether the Simpson design accords with the requirement that the resort hotel have a maximum of 300 rooms. From the respondent’s side it was put that the Simpson concept clearly involved a greater number of rooms than 300, giving the term “room” its widest meaning, whilst Mr Challoner expressed the understanding that the term “room” in the context used would refer to bedrooms. I think Mr Challoner is probably right. If the design had included 300 bedrooms together with en suite toilet and bathroom facilities, the addition of these facilities would not have transgressed the zoning description. It is argued for the claimant that, given that the total number of bedrooms in the Simpson design does not exceed 300, it accords with the zoning description, however, I very much doubt that in town planning terms it is appropriate to consider a development from such a narrow perspective. Certainly the potential population occupying the hotel units would be no greater on the Simpson design than in a more restricted
300 bedroom design, however, the overall dimension and impact of the Simpson design is substantially greater than that which, in my view, was in the contemplation of the local authority at the time of approving the rezoning. The Simpson hotel design covers 5.4180 ha, whereas in “Plan 4066” the hotel, which was located in Precinct C, was to cover only 1.7 ha. If reference is made to the development controls noted on “Plan 4066”, it can be readily seen that the intention at the time of the rezoning to “Special
Facilities”was that a much more modest structure be developed: “Precinct C - Hotel
PermittedDevelopment: Hotel, restaurant, small shops and associated facilities MaximumDensity: 1 room per 60 square metres ProposedNo.: Three hundred (300) BuildingHeight: Three storey maximum BuildingSetback: Ten metres from side boundary Site Coverage: Forty percent maximum of precinct area.”
This may be contrasted with the control relating to accommodation units which allowed one per 250 m².
I conclude then that the Brian Simpson resort hotel design is not in accordance with the zoning and that either the design would need to be modified or a rezoning applied for if the developer wished to proceed with that proposal. Another consequence of my finding is that I have no clear basis for ascertaining a value for a resort hotel site were a more moderate proposal to be developed on the subject land. Mr Hamilton made reference to a 1996 sale of a 2.5 ha site within the Palm Meadows Resort which he calculated at a sale price of $10,938 per suite. He did not, however, rely on this as a comparable sale and preferred to value the resort hotel site in comparison with his value for the townhouse sites. This evidence is of no use to me, given my conclusions thus far.
The result of my deliberations having regard to the totality of the evidence put before me is, however, not that the question of the proposed resort hotel should be answered in terms of a town planning issue, but rather that the matter is one of whether the market place would have included a resort hotel as part of the land’s highest and best use. Although the claimant went to the trouble of providing detailed evidence through Mr Kingston in support of the proposed equestrian centre, the proposition that a resort hotel would be part of the highest and best use was not supported by evidence of a similar nature, reliance being placed on the opinions of Messrs Stapleton and Hamilton, neither of whom squarely addressed the resort hotel use in their respective written reports. They did, however, provide oral evidence on the matter.
Mr Stapleton said that he had prepared his valuation on the understanding that a strata title development was proposed, pitched in terms of price to compete favourably with beach-side properties. A 3 to 5-star quality hotel was not envisaged. The hotel would attract both permanent and short-term residents. Mr Hamilton said that he thought individual units would be sold to investors who may occasionally use such units or, more likely than not, let them out. A high proportion of units would be occupied by permanent residents. Whilst Mr Challoner expressed the view that the hotel would enjoy “a higher degree of facilities than one would normally
find in association with other types of hotels”, I do not see that view as being necessarily in conflict with the views outlined by Messrs Stapleton and Hamilton.
The claimant’s valuers referred to the “Isle of Palms” at Palm Beach (or Currumbin), the “Kooralbyn Resort” at Kooralbyn (near Beaudesert), “Sailfish Cove” Resort, “Robina Lakes” Resort and “Paradise Island” in Surfers Paradise as examples of the type of establishment envisaged. Apart from passing comment that the “Kooralbyn Resort” was in receivership, there was no evidence of the level of profitability or viability of these enterprises or of their occupancy rates.
It was suggested from the claimant’s side that the hotel would be used by people participating in equestrian events, and I understood that the equestrian theme was seen as a useful marketing tool with respect to the hotel units. I have accepted that there would be some marketing benefit supplied to the townhouse components of the development, in particular for residents who could stable their horses nearby and use the facilities in the centre, and it may be that some of that benefit would flow onto an hotel; however, it would be clearly of a different nature, particularly if the hotel as finally approved and developed was not of the type described in the “Simpson Plan”. I see some conflict between the evidence which suggests a high level of permanent residency and use of the hotel for equestrian events.
Mr Lacey expressed the view in his written report that “there would be little or no demand for the subject property as an hotel site, particularly in relation to its relatively isolated position when compared to existing hotel precincts in Surfers Paradise and Broadbeach”. Mr Hamilton accepted that the areas referred to by Mr Lacey were “traditionally the areas where the demand has been”, however, he said that the type of development proposed
would be a suitable attractant. Mr Perkins wrote in his report:
“In my opinion the site is not well located for the development of a tourist hotel given its setting remote from the central tourist area of the Gold Coast, its location at the edge of a rural residential area and the site’s limited visual amenity(because of the low lying nature of much of the site, and the power lines and water main which traverse the site).
Mr Challoner thought that the proximity of the proposal hotel to a rural residential area was not an issue as long as any interface issues were addressed, and went on to say that the site is not “without attraction from a visual point of view ... its part of an area that is generally ... flat and devoid of a great many, of a large number of features to add interest to that area. But, nevertheless, there are features of interest. There are
areas of trees. And it is to my mind (a) not unattractive open space area”.
The praise is faint and does not distinguish the land as an obvious choice for a resort hotel.
There is nothing in the evidence which could lead me with any confidence to a conclusion that a resort hotel of the type described from the claimant’s side, or some variation of that if needed to meet the zoning description, would be part of the highest and best use of the site. The fact that the claimant had in April 1993 applied to the local authority to rezone the subject land to the “Residential A” zone makes me pause to wonder whether he entertained similar doubts.
It is appropriate in matters of compensation such as this that I should lean in favour of the dispossessed owner - a principle that I have been mindful of throughout my deliberations; however, the claimant has not adduced evidence before me that could be seen to tip the scales in its favour. The argument in favour of the resort hotel usage seems to be founded mainly on the zoning of the land. It is certainly the case that there is a connection between the permitted use of land and its zoning in the sense that, in the absence of the appropriate zoning or any real prospect of achieving it, a desired use cannot be described as an achievable highest and best use. (Gallagher v. Brisbane City Council (1975) 2 QLCR 368 at 381). It does not follow, however, that the existence of a particular zoning on a piece of land necessarily implies the highest and best use of that land, for it may be the view taken in the market place that the permitted use or uses are not marketable and that a change in zoning is desirable, and possible, to achieve an appropriate use. There was evidence from the respondent of a number of pieces of land in the Gold Coast area whose zoning had for some years allowed hotel development yet development had not taken place. Now this does not indicate to me that hotel development is generally an unsuitable form of development, but it does serve as a useful reminder that highest and best use is served by demand which is supported by zoning and not by zoning alone. I would have thought that there would, in Queensland, be sufficient raw data available which could have been referred to to indicate the prospects of a proposed resort hotel being profitably sustained on the subject land if, indeed, that is what the available evidence of demand would point to.
Highest and Best Use
It is my firm conclusion that there was insufficient evidence to support the view that a hypothetical prudent purchaser, looking to acquire the subject land at the relevant date, would seek to develop a resort hotel
on the site. What, then, is the highest and best use of the site given the conclusions that I have drawn thus far? There was agreement between the parties that the development of 15 rural homesites and a number of townhouses on the land is appropriate and I have accepted that an equestrian centre of the type described earlier would be part of the highest and best use. Mr Lacey proposed the development of townhouses on Precinct C, that is on the site designated for resort hotel on “Plan 4066”, but otherwise adopted the “Plan 4066” configuration in his original valuation and an adjustment of that plan in his final valuation. Although the claimant attacked Mr Lacey’s reliance on “Plan 4066", there was no challenge to the proposition that a townhouse development was an appropriate alternative to the resort hotel development if I were to find that the resort hotel was not part of the highest and best use.
It was Mr Perkins’ unchallenged evidence that if it was considered appropriate to seek local authority permission for a different kind of development in place of the resort hotel, then a rezoning of the whole of the site would be needed. As he explained, “This is based on (the) fact that the zone description covers the whole of the land and if only the hotel site had been rezoned the balance area would have maintained reference to resort hotel in its description”. He expressed the view that an application to rezone the site to delete the resort hotel and substitute further townhouses would have reasonable prospects of success. Having regard to this view, I consider that it is not appropriate to simply adopt a modified “Plan 4066” unless it can be shown that this plan represents the highest and best use of the land and that good town planning leads to such a conclusion.
There is merit in Mr Perkins’ criticism of the location on the “Simpson Plan” of the more intensive uses of resort hotel and townhouses fronting Hardys Road and that it would be appropriate that rural homesites be located in that position as was the case in “Plan 4066”. This is consistent with the draft planning scheme designation for that part of the land, discussed later; and with the application for subdivision lodged by the claimant in 1994 mentioned later when I deal with the question of disturbance. Mr Challoner considered that Hardys Road, together with some added landscaping located on the subject land, could provide a sufficient buffer between the rural homesites on the other side of Hardys Road and any intensive development on the subject land; but that the location of rural homesites along the southern boundary was of greater significance, given the proximity of rural homesites abutting that boundary. I have considered what
Mr Challoner had to say but have concluded that Mr Perkins’ opinion is better founded.
For the purpose of drawing conclusions on the values that will apply to the component parts of the subject land, I am going to commence with some assumptions on the areas to be designated for each component of use. In so doing, I am proceeding on the basis of a collection of uses on the subject land which are drawn from the evidence and my conclusions on that and on the basis of certain uses occupying particular parts of the land. I recognise that some adjustments could be made to such areas based on final design and negotiations with the local authority.
I am proceeding on the basis that the equestrian centre occupies about
12.1 ha and that public open space is about 6.3 ha. The location of these components on the site would be as indicated on the “Simpson Plan” or somewhat similar, whilst the rural homesites which cover 7.1 ha would be located in a similar fashion to that represented on “Plan 4066”, that is along Hardys Road and abutting the southern boundary of the subject land. The low-level commercial facilities covering 0.7 ha would be located in Precinct D on “Plan 4066”, whilst townhouse development could be spread over three sites totalling about 11.4 ha, including Precincts B and C on “Plan 4066” and the inland site on the “Simpson Plan”. I discuss below the basis of the three sites and the inclusion in the “Simpson Plan” of a large rural homesite in Precinct C.
Townhouse Density
An important issue that would excite the attention of the hypothetical prudent purchaser would be concerned with the density of townhouse development which may be allowed. In considering the question of density, I proceed on the basis that an application for rezoning is made on or about 4 November 1994, that is the date of acquisition. In November 1993 the draft Albert Shire Planning Scheme had been placed on public display and, given that the scheme was gazetted in February 1995, the process of promulgating the new scheme was clearly well advanced in November 1994. In such circumstances, it was submitted by counsel for the constructing authority and conceded by senior counsel for the claimant that it would be appropriate, in considering the rezoning location, to take into account the contents of the new draft plan insofar as they may be relevant. Such an approach is supported by Lewiac Pty Ltd v. Gold Coast City Council (1994) 83
LGERA 224 where Thomas J, who wrote the leading judgment, said:
“It is obvious that a strategic plan cannot be prepared overnight. Its production is part of a wider on-going process of planning with provision for regular review. It would be extraordinary if a planning strategy which was well on the way
to adoption, or even adoption with amendment, could be frustrated by developments created in circumstances where neither the Council nor the court could give any weight to the plan as it had so far emerged. That is not to say that it should be given decisive weight, but in circumstances where one proposal is as good as another, it does not seem inappropriate that an existing draft strategic plan be given some weight.” (p.228)
It was the draft strategic plan, only, that was referred to by the parties and Mr Perkins explained that, in that document the bulk of the subject land was identified as “special development”, whilst that part bordering Hardys Road was designated as “park residential”. I have noted earlier that this latter designation tends to support the view that the proposed rural residential lots on the subject land should be located along the Hardys Road frontage, at least in part. The strategic plan element of a planning scheme needs to be accorded respect. The import of s.4.4(5A) and s.4.7(5A) of the Local Government (Planning and Environment) Act 1990 is that specific planning decisions shall not conflict with a strategic plan unless there are sufficient planning grounds to justify proceeding with the proposal despite the proposed conflict. Those provisions make clear that which had been the attitude of the Planning and Environment Court previously. In, for example, Kriecbergs Developments Pty Ltd v. Logan City
Council (LGA No. 227 of 1990 unreported) Quirk DCJ said this:
“I am well aware that the Strategic Plan designations are indicative of preferred dominant land uses and do not have the force of zonings. The Court [LGC] has, however, repeatedly stressed the importance of strategic planning and the need to respect and support the integrity of the important planning tool which the Strategic Plan is. There may be cases where a departure from the Strategic Plan could be justified; where, for example, the planning strategies which it represents, having been overtaken by events (or for some other reason), clearly no longer have any application; or where it can be demonstrated plainly the land has been given a designation that was and remains invalid. One would expect such cases to be rare and I am far from persuaded that this is one of them.”
Mr Perkins provided a copy of the section of the strategic plan which identifies the intent, objectives and considerations to be taken into account in the assessment of a “development proposal” (which I take to include a “Special Facilities” rezoning together with a plan of development) and concluded, amongst other things, that the part of the subject land designated special development “could likely be developed at a basic gross site density not exceeding seven dwellings per ha”. Notwithstanding this, he expressed the view under cross-examination that the rigid adherence to density indicators would be inappropriate, given the requirement to deal
with a variety of complex planning matters on a site such as the subject site, particularly given its special development designation.
The suggested seven dwelling houses per ha is found in the 1995 Strategic Plan in paragraph (c) under the heading “Land Use Planning Considerations for Development Proposals” and is introduced by the words, “The following features will be sought by Council in the assessment of development proposals:-” Paragraph (c) provides:
“Urban development is to be clustered to maximise opportunities to provide large useable and/or visually prominent areas of open space. Subject to more detailed planning a basic gross site density of 7 dwelling houses per hectare is to apply throughout the area, as a suitable balance that takes into account the area’s high accessibility, desirable open space/recreational character and physical constraints; this basic density may be modified subject to more detailed planning, where other forms of residential development are included, and/or public open space, private open space and/or waterways are incorporated. Sections
1.5.4.13 and 13.2.3 provide a guide to appropriate approaches to modifying the basic gross site density for development proposals in this area.”
An appreciation of the issue of the number of dwellings per ha can be more easily had if I explain that Mr Lacey’s amended valuation (with townhouses on Precinct C which was the resort hotel site in “Plan 4066”) proceeded on the basis of the subject land being able to have 217 3-bedroom townhouses developed on it, that is 170 units on Precinct B and 47 units on Precinct C. Mr Lacey’s figure of 217 results from a calculation which is based on the gross figure of seven dwellings per ha provided by Mr Perkins and referred to in paragraph (c) above. The Lacey calculations may be represented thus:
Subject overall area 38 ha Less rural residential area 7 ha 31 ha 31 ha x 7 dwellings = 217 total.
Perhaps this would be more accurately represented as:
(38.834 ha - 7.1 ha) x 7 dwellings = 222 total.
The 1995 planning scheme provides that, for the calculation of residential density, the basic indicator is that of a “dwelling-house” which is the equivalent of a townhouse of three or more bedrooms. A 2-bedroom townhouse equates to 0.67 of a dwelling-house and a hotel room is equivalent
to 0.5 of a dwelling-house. It will be recalled that the calculation carried out by Mr Lacey was based directly on dwelling houses, therefore his
217 townhouses would have three or more bedrooms. Indeed, he said that for the townhouse market in the area of the subject land 3-bedroom townhouses were more desirable than 2-bedroom townhouses. He tendered a schedule in support of this contention and was not seriously challenged on this point though it was suggested from the claimant’s side that a mix of 2 and 3- bedroom townhouses would provide a range of product for marketing purposes.
Now it was said by Mr Challoner, and agreed to by Mr Perkins, that it would be appropriate on a rezoning of the subject land that the local authority take into account the existing zoning and the density of development permitted there. Given that the zoning which applied to the subject land at the relevant date allowed 300 hotel rooms, (and I have taken this to refer to bedrooms), and 112 townhouses, the simple equivalent calculations, would be:
300 hotel rooms x 0.5 = 150 dwelling houses 112 townhouses (assumed as 3-bedroom) = 112 262
The resort hotel proposed on the “Simpson Plan” was for 138 2-bedroom units and eight 3-bedroom units, that is, an equivalent of about 100 dwelling houses though, as will be noticed in the calculation presented above, the simple calculation based on 300 hotel bedrooms equates to 150 dwelling houses. I have no way of reconciling the two figures. The density of development proposed in the “Simpson Plan” was, however, substantially less than the maximum of 262, though I need to mention that I have no evidence from the 1988 scheme to indicate what the equivalent calculations would have been under that scheme for the type of development permitted by the zoning of the land, if indeed such equivalences were included in that scheme. I need to be mindful also that in referring to the density revealed on the “Simpson Plan” that the plan had in mind a resort hotel with a partially transient population. Nevertheless, it does serve as a practical expression of a density level which may be desirable on the subject land, having regard to its shape, topography and the other proposed uses on the land. I have also considered the relevant multi-unit sales evidence referred to later in this judgment and have noted that a number of the sales have densities of development similar to that revealed if I applied 222 townhouses over 11.4 ha or about 19 per ha for the subject land. In considering how the density revealed by such sales may be of guidance in the present case, I have had regard to the fact that most of the sale properties are discrete parcels of land quite different from the open environment the
subject land is placed in. A simple translation of high densities one to the other would lead to a wrong result on the subject. This view may well have influenced Mr Stapleton and Mr Hamilton, both of whom drew attention to the low density of townhouse development suggested by Mr Lacey, but neither of whom suggested that the density should be increased if one were to adopt Mr Lacey’s approach of replacing the resort hotel with a townhouse development.
Mr Challoner was quite categoric in saying that there was nothing in the 1995 Strategic Plan which would prevent development in accordance with the density permitted under the zoning, however, Mr Perkins, whilst accepting that the calculation of 217 maximum was a suitable start point, was concerned to ensure that the permitted density was appropriate to the site having regard to the “special purposes” designation in the draft strategic plan. In his view, the calculation of density could not be carried out independently of a consideration of the subject land and its designation and in this regard I note that the mention of seven dwelling houses per ha is prefaced in paragraph (c) quoted above, by the words, “subject to more detailed planning”. Mr Perkins also said that the basic gross density of 7 dwellings per ha should not be understood in the same sense as, for example, a subdivisional by-law which indicated the number of lots permissible under a particular zoning.
It was suggested to Mr Perkins that some extension of the seven dwelling houses benchmark may be achievable on the subject land, given the words in paragraph (c) quoted above which say that the basic density may be modified “where other forms of residential development are included, and/or public open space, private open space and/or waterways are incorporated.” In the subject case, the hypothetical prudent purchaser will not have the luxury of more detailed planning before arriving at a price, though he will be aware that other forms of residential development are included (the 15 rural residential lots) and that there is the equivalent of private open space of about 12.1 ha in the form of the equestrian centre. This is not to say, however, that a developer of the subject land can expect some sort of automatic reward in increased density for the presence of these factors. Moreover, I was not presented with any cogent evidence which would suggest a departure from the land gross density of seven dwellings per ha could be departed from, based on the factors listed in paragraph (c). For his part, Mr Perkins said that the pattern of development proposed for the subject land in its rural residential context did not lead him to the view that an increase in density could be expected.
subject land. Had the acquisition been stopped, the value of the expenditure would have been realised in the continuing development of the land. The incidental, though previously dominant, preoccupation of defeating the acquisition would have been consigned to last year’s diary. Such expenditure is, therefore, compensable given the continuation of the valid purpose. It would be quite a different matter, however, if the expenditure sought to be characterised as valid was incurred in other than a bona fide way.
I was referred to Yarn Traders Pty Ltd v. Melbourne and Metropolitan
Board of Works [1970] VR 427 where at 430 His Honour said:
“where a man with full knowledge of all the facts and dangers incurs expense which is calculated to inflate the compensation, it would be manifestly wrong to include in the award a reflection of these expenses by way of special value.”
There is no evidence before me that the claimant proceeded in a way calculated to inflate compensation. Let me now deal with the proposition that the expenditure, or the bulk of it, occurred whilst the claimant was faced with a constructing authority apparently committed to proceeding with the acquisition and therefore should not be allowed.
If the market value for the of the land in question moves up or down between the date of the Notice of Intention to Resume and the date of the Proclamation, then no distinction is drawn between the values at those dates for the purpose of assessing compensation. Neither should there be any distinction drawn if the value is affected by what is otherwise a valid exercise in preparing or managing the land for its highest and best use. If, for example, farming land was marked for acquisition and a Notice of Intention to Resume issued, it would be quite inappropriate, if the highest and best use of that land was for farming purposes, for the owner of the land to feel constrained to discontinue farming on the understanding that the acquisition was an inevitability. Under the procedures provided for in the Acquisition of Land Act 1967, the period between the issue of the Notice and the publication of the Proclamation could be up to 12 months and even following the exhausting of the objection process the constructing authority is not obliged to proceed. It is my view that as long as what is done by the landholder in prosecution of the highest and best use of the land is in accordance with normal practice it is appropriate that expenses associated with those activities be compensated for if thrown away. This is subject, of course, to the various requirements I have already referred to in dealing with this issue of disturbance.
The result is that, including refunds of Local Authority rates
($198.13) and Land Tax ($1,470) and costs in formulating and lodging the claim ($8,000), disturbance totalling $123,671.30 is allowed. Disturbance compensation plus compensation for the loss of the land is determined in the amount of $4,223,671.30.
Interest
Advances against compensation have been paid as follows: $2,000,000 on
25 November 1994, $500,000 on 5 January 1996 and $258,000 on 14 November 1996. It is therefore ordered that interest on the award of compensation at the rate of 8.5 percentum per annum be paid from and including 4 November 1994 to and including 25 November 1994; then on the amount of $2,223,671.30 to and including 5 January 1996; then on the amount of $1,723,671.30 to and including 14 November 1996 and thereafter on the amount of $1,465,671.30 up to and including the day immediately preceding the date this last mentioned amount is paid.
RP SCOTT MEMBER OF THE LAND COURT
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