Cidneo Pty Ltd v Chief Executive, Department of Transport and Main Roads [2014] QLAC 3 (2014) 35 QLCR 247; 201 LGERA 395

LAND APPEAL COURT OF QUEENSLAND CITATION: Cidneo Pty Ltd v Chief Executive, Department of Transport and Main Roads [2014] QLAC 3 PARTIES: Cidneo Pty Ltd ACN 105 454 064 (appellant) v Chief Executive, Department of Transport and Main Roads (respondent) FILE NO: LAC006–13 Land Court File No: AQL325-10 DIVISION: Land Appeal Court of Queensland PROCEEDING: Appeal from the Land Court of Queensland ORIGINATING COURT: Land Court at Brisbane DELIVERED ON: 6 June 2014 DELIVERED AT: Brisbane HEARING DATE: 25 – 26 November 2013 THE COURT: Peter Lyons J CAC MacDonald, President of the Land Court WA Isdale, Member of the Land Court CATCHWORDS: REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – ASSESSMENT – GENERALLY – where the appellant owned a parcel of land, part of which was resumed by the respondent in order to upgrade the Ipswich Motorway – where the compensation was determined by the before and after method and use of hypothetical cash flows – where the method required assumptions about future contributions for road works – where the appellants submit that the contributions constituted injurious affection – whether compensation should be assessed under each head under s 20(1) of the Acquisition of Land Act 1967 (Qld) or by use of the before and after method REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – ASSESSMENT – MARKET VALUE – BEFORE AND AFTER METHOD – where the compensation to be paid to the appellant was determined by -- 1 of 32 -- 2 application of the before and after method and cash flow analyses – where the valuer for the respondent assessed the compensation to be $6,877,800, with a period of 62 months for the development and sale of the land post-resumption, which was ultimately adopted by the Land Court – where the valuer for the appellant assessed the compensation to be $25,000,000, with 76 months for the development and sale of the land to take into account redesign, further traffic analysis, and slower rates of sale – where the valuers for the appellant and respondent used different assumptions about the time to commence development, the rate of sale and the construction program – whether the Land Court Member erred in not adopting the approach of the appellant’s valuer – whether the Land Court Member gave sufficient reasons for his findings REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – ASSESSMENT – MARKET VALUE – BEFORE AND AFTER METHOD – where the valuers for both parties agreed that the best method to assess compensation payable to the appellant for the resumption of part of its land was by application of the before and after method – where valuers for both parties used cash flow analyses and internal rates of return to determine the value of the retained land after resumption – where the valuer for the respondent derived an internal rate of return from the cash flow analysis rather than adopting the rate as input for the analysis, which was the approach of the valuer for the appellant – where the internal rate of return adopted by the valuer for the respondent was significantly lower than that adopted by the valuer for the appellant – whether the Land Court Member failed to address the question – whether the Land Court Member erred in adopting the approach of the valuer for the respondent REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – INJURIOUS AFFECTION OF ADJOINING PROPERTY – where the assumptions to be used for the cash flow analyses were to be determined by reference to knowledge available to the hypothetical vendor and purchaser at the date of resumption – where the respondent submits that contribution is an element of injurious affection under s 20(1) of the Acquisition of Land Act 1967 (Qld) and therefore the contribution agreed upon some years after resumption could be considered in determining the value of land at the date of resumption – where the respondent submits that fair compensation for the impacts of injurious affection should be assessed by reference to the contribution actually required – whether contribution for external road works constitutes injurious affection for the purposes of s 20(1) of the Acquisition of Land Act 1967 (Qld) – whether the Land Court Member erred in refusing to take into account the final contribution -- 2 of 32 -- 3 HIGHWAYS - CONSTRUCTION, MAINTENANCE AND REPAIR - LEVYING CONTRIBUTIONS FOR PARTICULAR WORKS OR EFFECTING AT INDIVIDUAL'S EXPENSE – where prior to resumption the land was the subject of a development application – where the respondent was a concurrence agency under the Integrated Planning Act 1997 (Qld) for that application – where the respondent gave notice of conditions to be imposed on that development application, one of which was a $30,000,000 contribution to upgrade the major roads – where that application was not approved – where the respondent submitted that in the current case $3,000,000 should be assumed as the contribution for external road works because of the reduced size of the development – where the appellant submitted that a contribution of $16,550,000 should be assumed – whether the Land Court Member erred in adopting the respondent’s assumption – whether the Land Court Member overlooked evidence APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - RIGHT OF APPEAL - WHEN APPEAL LIES - ERROR OF LAW - PARTICULAR CASES INVOLVING ERROR OF LAW – FAILURE TO GIVE REASONS FOR DECISION – ADEQUACY OF REASONS - where the Land Court Member favoured the evidence presented by the respondent in regards to contribution, time for the development and sale of the land, the internal rate of return, and compensation - where the appellant submits that the Land Court Member overlooked evidence and did not provide adequate reasons for his conclusions - whether the Land Court Member failed to give adequate reasons for decision Acquisition of Land Act 1967 (Qld), s 20(1) Integrated Planning Act 1997 (Qld) Adelaide Fruit & Produce Exchange Co Ltd v Adelaide Corporation (1961) 106 CLR 85; [1961] HCA 20 Barnes v Department of Transport (1997) 16 QLCR 22 Beale v Government Insurance Office (NSW) (1997) 48 NSWLR 430 Brisbane City Council v Mio Art Pty Ltd [2012] 2 Qd R 1; [2011] QCA 234 Drew v Makita (Australia) Pty Ltd [2009] 2 Qd R 219; [2009] QCA 66 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413; [1999] HCA 25 Metroplex Management Pty Ltd v Brisbane City Council & Ors [2009] QPELR 270 -- 3 of 32 -- 4 Mifsud v Campbell (1991) 21 NSWLR 725 Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 Pettitt v Dunkley [1971] 1 NSWLR 376 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Spencer v Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82 Suntown Pty Ltd v Gold Coast City Council (1979) 6 QLCR 196 COUNSEL: M D Hinson QC for the appellant D R Gore QC, with J Brien, for the respondent SOLICITORS: Anderssen Lawyers for the appellant Clayton Utz for the respondent THE COURT: [1] The Land Court determined compensation payable to the appellant (Cidneo) for the resumption for part of a parcel of land, in the sum of $6,900,000. The compensation was assessed under all heads (save for disturbance) as the difference between the value of Cidneo's land before and after the resumption (before and after method). [2] As was apparent from its outline of argument, Cidneo's appeal relates to a number of matters relevant to determining the value of its retained land after the resumption (after value), derived from a cash flow analysis. One is, the contribution which would have been payable in respect of the development of Cidneo's retained land, as a consequence of a requirement imposed by the respondent (DTMR) for a development approval for the land. Two others relate to periods of time, one being for the approval of the development; and the other being for carrying it out, and selling the resulting lots. The fourth related to the internal rate of return used in the cash flow analysis adopted by the Member. [3] In his determination, the learned Member held that, as a matter of law, he was not entitled to take into account the contribution ultimately payable to DTMR in respect of the development of the retained land. DTMR has cross-appealed, on the basis that the learned Member was wrong to take that approach; and contending that the compensation should be less than was determined in the Land Court. At the hearing it added by leave a ground to its cross-appeal, alleging that the Land Court erred by assessing compensation by the before and after method, rather than assessing separately compensation under each of the heads provided for in s 20 of the Acquisition of Land Act 1967 (Qld) (AL Act). Background [4] Before the resumption, Cidneo owned three parcels of land (site) having a total area of 100.477 hectares. The site had in times gone by been the location of the -- 4 of 32 -- 5 Sananander Army Barracks (sometimes referred to as the Wacol Army Barracks). It lay on what might be described as the southern side of the Ipswich Motorway, a short distance outbound, or west, of the intersection between the Motorway and the Centenary Highway. Further outbound from the land was the intersection of Progress Road and the Motorway. The land may be described as generally rectangular in shape, with its long axis roughly parallel to the Motorway; and with a rectangular extrusion on its southern (or south eastern) side. Boundary Road, which was generally parallel to the Motorway, ran along part of the southern boundary of the site, separating what has been referred to as the extrusion from the balance of the site. Where it separated the extrusion from the balance of the site, Boundary Road, though dedicated, was not a constructed road. [5] Bullockhead Creek runs in a roughly northerly direction through the centre of the site. The resumption cut off the north eastern (or possibly northern) corner of the site, east of Bullockhead Creek, adjacent to the Motorway, and the boundary nearest the Centenary Highway. [6] The resumed land has an area of 8.385 hectares, Cidneo retaining 92.092 hectares (retained land). The resumption was effected by a notice published in the Government Gazette on 22 February 20081. [7] The Notice of Intention to Resume stated that the land was to be resumed “for the purpose of transport, in particular, road purposes {Cunningham Arterial Road (Ipswich Motorway)}. [8] There was no issue about the scope of the scheme or project for which the land was resumed. It was the upgrading of the Ipswich Motorway, from Wacol to Darra, extending from Argyle Parade and Acanthus Street, which are to the east of the Centenary Highway, to the Progress Road interchange2. [9] Prior to the resumption, the Centenary Highway interchange was grade-separated. Essentially, traffic from the Centenary Highway entered a large loop which sat above the Ipswich Motorway (similar, at least conceptually, to an over-sized roundabout). The interchange then permitted a vehicle approaching it from one direction to depart in any of the other three directions. Traffic travelling to the site from the major road system could travel from the interchange south along the Centenary Highway exiting at the Kelliher Road offramp, and looping back to Boundary Road which then passed above the Centenary Highway to the site (Boundary Road East). Traffic from the site could travel along Boundary Road East turning north to what was referred to as the Bakery Road onramp, joining the Centenary Highway just south of the interchange. [10] As a result of the project, the Centenary Highway interchange was substantially altered3. Changes of direction for traffic travelling from the south to the west, and from the west to the south, were no longer accommodated at the interchange, but involved the use of Progress Road between the Centenary Highway and the Ipswich Motorway4. The Bakery Road onramp and the Kelliher Road offramp (together the 1 See s 12(5) of the AL Act. 2 Appeal Hearing Transcript (T) 1-12, lines 9-40; see also Appeal Record Book Vol 3 (AR3) p 716. 3 See Appeal Record Book Vol 5 (AR5) pp 1397-1398. 4 See AR5 p 1433. -- 5 of 32 -- 6 ramps) were no longer retained. These changes had implications for the manner of development of Cidneo's land. [11] The resumed land was used to accommodate a link for traffic approaching the interchange from the north, seeking to depart west on the Motorway5. [12] In July 2006, Metroplex Management Pty Ltd had made a development application to Brisbane City Council for a development approval for Cidneo's land. The principal forms of development were large format retail, residential, centre activities, offices and industry. The application was revised as a result of an information request under the Integrated Planning Act 1997 (Qld) (IP Act), with the result that the anticipated development included industrial development with a gross floor area (gfa) of 386,000 square metres; office development with 98,000 square metres gfa; and retail and services development of 6,000 square metres gfa6. A traffic report prepared by Mr Neil Viney predicted that this development would generate some 3,946 traffic movements (in and out of the site) in the daily peak hours of traffic7. Mr Viney’s projections were reviewed on behalf of DTMR, and were considered satisfactory8. [13] DTMR was a concurrence agency under the IP Act for the Metroplex application. By a letter dated 11 July 20079 it gave notice of the conditions to be imposed in respect of the Metroplex development application. They included the construction of Boundary Road through the site; and the payment of a total of $30,000,000 by way of monetary contributions in respect of the upgrading of interchanges on the major roads. The amount consisted of a contribution of $12,000,000 in respect of the Progress Road/Ipswich Motorway interchange; a contribution of $12,000,000 to the upgrading of the Boundary Road/Logan Motorway interchange; a contribution of $3,000,000 to the upgrading of access to the Motorway at Argyle Parade and Acanthus Street; a contribution of $2,000,000 towards cycling infrastructure in the Ipswich Motorway corridor; and a contribution of $1,000,000 towards the Main Roads Intelligent Transport System (the Court was told, without objection, that this system provided signs on major roads giving the distance and estimated travel times to exits from the major road). [14] On 21 September 2007, Metroplex Management appealed to the Planning and Environment Court against a deemed refusal by Brisbane City Council of the Metroplex development application (Metroplex appeal). DTMR participated in the appeal, contending that, if that Court were to approve the Metroplex development application, it should impose a condition requiring the payment of $27,000,000 in respect of the contributions sought in its concurrence agency response; and alternatively that Metroplex’s appeal should be refused10. The Metroplex appeal was dismissed by the Planning and Environment Court. This decision was overturned in the Court of Appeal. Subsequently, Metroplex further amended its application, omitting the proposed office development. On 6 December 2011, agreement was reached with DTMR about conditions for the approval of the 5 See AR5 p 1398. 6 See Appeal Record Book Vol 7 (AR7) p 1735. 7 AR7 p 1736. 8 AR7 pp 1739-1740. 9 AR3 pp 693-694. 10 See Metroplex Management Pty Ltd v Brisbane City Council & Ors [2009] QPELR 270, 294 [149], [151]. -- 6 of 32 -- 7 amended development application11 (2011 conditions agreement). The agreed conditions required the completion of works on the Progress Road/Ipswich Motorway outbound offramp and the Progress Road approach, the parties agreeing that the cost of those works was $1,087,110.7612. Land Court’s reasons for judgment [15] To appreciate some of the recorded findings of the Land Court, it is necessary to note some aspects of the valuation evidence. The valuers called by the parties prepared joint reports. They agreed that the highest and best use of Cidneo’s land in February 2008, both omitting the resumption from consideration (before resumption) and taking the resumption into account (after resumption), was to secure approval for the development of, and subsequently to subdivide, Cidneo’s land as an industrial estate in accordance with plans identified by the valuers13. It was agreed that the diminution in the value of Cidneo’s retained land, consequent upon the resumption, was appropriately identified as the difference between the values of its property immediately before (and unaffected by), and again immediately after (and affected by), the resumption14. It was also agreed that sales of englobo industrial properties provided a guide to the market value of Cidneo’s land in February 2008; but that a comparison with such sales was insufficient to properly assess the difference in value before and after resumption; and accordingly it was appropriate to undertake cash flow feasibility analyses of the development, “which will better account for the resumption impacts”15. It is clear that such impact would include the effects (if any) of severance of the taken land, and what is commonly referred to as “injurious affection”16. [16] Mr Brett was the valuer called by DTMR. Ultimately Mr Brett concluded the value of the land before resumption to be $60,000,00017, a figure derived by an analysis of sales evidence18. He then adopted this value for the purpose of a cash flow exercise to generate an internal rate of return (slightly under 15%), which he used in a similar cash flow exercise for the purpose of identifying the after resumption value of the retained land19. Ultimately that exercise produced a difference between the value of Cidneo’s land before resumption, and its value immediately after, of $6,877,80020, adopted by the Land Court as the compensation payable to Cidneo21. His approach assumed that a contribution of $3,000,000 would be required for road works. [17] In broad outline, there are similarities between the approach taken by Mr Brett, and that of Mr Hamilton, the valuer called in Cidneo’s case. Mr Hamilton adopted the direct comparison approach as his initial methodology, resulting in a before resumption land value of $60,000,00022. He then carried out a cash flow analysis, 11 AR7 p 1928, para 158. 12 Land Court reasons for judgment (RJ) [226]-[227]. 13 Appeal Record Book Vol 4 (AR4) pp 1189, 1194. 14 AR4 p1189. 15 AR4 p 1189. 16 See s 20(1) of the AL Act. 17 AR5 p1370. 18 See AR5 pp 1368-1370, 1355; Appeal Record Book Vol 2 (AR2) pp 402-403. 19 AR2 p 403, lines 6-25. 20 AR5 p 1378. 21 RJ [405]. 22 AR5 p 1284. -- 7 of 32 -- 8 with an internal rate of return of 21.7 percent, based on a land value of $60,000,00023. The two exercises resulted in his adopting a value of $60,000,000 for Cidneo’s land, unaffected by the resumption24. Mr Hamilton then assessed the value of Cidneo’s land after the resumption by a cash flow analysis. His internal rate of return for this analysis was 21.46 percent25. Significant for his approach were his assumptions that, before resumption, no transport infrastructure contribution for road works external to the site would be required; but after resumption, contributions of $20,000,000 would be required. His analyses resulted in a value of the land, after resumption of $35,000,000; with an implicit assessment of compensation of $25,000,00026. It is convenient to mention that he produced an alternative cash flow based on transport infrastructure contributions of $3,000,000, resulting in a market value after resumption of $42,000,00027. [18] The learned Member recorded the agreement of the valuers about the value of Cidneo’s land before resumption28, though he did not make an express finding adopting it. He described the cash flow analyses as being a “modelling exercise”, and expressed concerns about their reliability and accuracy29. He noted a number of differences in the matters assumed by each of the valuers for the purpose of the cash flow analyses. With reference to the rates of sale and sale prices adopted by the valuers, he said that they were “premised upon speculation and estimation”30. Having expressed these concerns, the learned Member said, “the best that the Court can do is to prefer one approach over another”31. He expressed some criticism of Mr Hamilton’s response to a suggestion in cross-examination that he had not correctly applied evidence relating to a property described as the “Motorway Business Park”, as he had not sufficiently recognised the difference in the sizes of lots to be produced from that land and the sizes of the lots adopted for the cash flow analysis for Cidneo’s land32. He then referred, somewhat critically, to Mr Hamilton’s application of sales evidence to derive prices of lots produced by the development of Cidneo’s land, in particular that it did not seem to reflect an adjustment in the rate per square metre, related to the size of those allotments33. After reference to sales evidence in one of Mr Brett’s reports, the learned Member took the view that the sales evidence relating to developed lots seemed more consistent with the approach taken by Mr Brett than that taken by Mr Hamilton34. [19] The learned Member then dealt with the criticism of Mr Brett’s approach; and the use made by Mr Brett of the internal rate of return, it being described as an output rather than an input into Mr Brett’s cash flow analysis (apparently referring to the exercise in relation to Cidneo’s land, before resumption). He then referred to criticism of Mr Brett’s internal rates of return as being too low to be acceptable to an intended purchaser, Mr Brett stating that the sale prices for englobo parcels indicated that purchasers were expecting to make a profit because the prices would 23 AR5 p 1285. 24 AR5 p 1286. 25 AR5 p 1286. 26 AR5 p 1287. 27 AR5 p 1296. 28 RJ [17], [267]. 29 RJ [270]-[280], [325], [327], [351]. 30 RJ [347]. 31 RJ [352]. 32 RJ [370]-[373]. 33 RJ [374]-[379]. 34 RJ [388]. -- 8 of 32 -- 9 continue to increase, rather than from the development of the land; and to Mr Brett’s comment that, in the cash flow analysis, the assumed prices for the lots produced by subdivision could not be raised above those shown by the sales evidence, a view which the learned Member regarded as sensible35. He then accepted that a prudent purchaser would assume the contribution for road works external to the site to be $3,000,00036. He concluded that because of his reservations previously expressed about the evidence of Mr Hamilton, his acceptance of most of the evidence of Mr Brett, and his acceptance of Mr Brett’s assessment of economic conditions relating to the prices of lots resulting from the subdivision, and the rates of sale, compensation should be in accordance with the figures which appeared in Mr Brett’s report of 23 November 201137. [20] The learned Member had earlier considered the question of contributions to external road works, when discussing the traffic engineering evidence. He found that development of Cidneo’s land, whether before or after the resumption, would have a significant impact on traffic in the adjacent road system38. He referred to the evidence of Mr Beard, a traffic engineer called on behalf of DTMR, that development in accordance with the highest and best use of Cidneo’s land would generate less traffic than would the development which had been the subject of the DTMR’s concurrence agency response; and accordingly a different concurrence agency response would be expected for an application for approval to develop the land in accordance with its highest and best use39. He concluded, on the basis of the evidence of Mr Viney, a traffic engineer who gave evidence in Cidneo’s case, that a traffic engineer would have advised the hypothetical prudent purchaser of the land that there was no proper basis for DTMR to demand contributions for external road works, save for the construction of Boundary Road; and that accordingly it was unlikely that a prudent purchaser would have paid $60,000,000 for the land, burdened by a contingency of paying $30,000,000 for road work contributions to DTMR40. [21] The learned Member referred to Mr Viney's evidence that a request for contributions for road works (save relating to the construction of Boundary Road) would be unreasonable. He also referred to Mr Viney’s evidence that DTMR's concurrence agency response requiring the imposition of a condition for payment of a contribution of $30,000,000, was a reason to think that DTMR was likely to seek some contribution41. Mr Viney calculated this to be $16,550,000 by reason of the reduced size of the development42. The learned Member also referred to Mr Viney's evidence that he considered that no contribution (save for Boundary Road) should be imposed in respect of development of Cidneo's land after resumption43. He also referred to Mr Beard's evidence that in fact the developer and DTMR would have entered into negotiations (evidence based upon what in fact occurred subsequent to 35 RJ [394]-[397]. 36 RJ [403]. 37 RJ [404]. The report was Ex 61 in the Land Court; because of an error in the compilation of the appeal record, this report became Ex 1 in the appeal; see p 5. 38 RJ [163]. 39 RJ [187]. 40 RJ [208]. 41 RJ [209]. 42 RJ [210]. 43 RJ [211]. -- 9 of 32 -- 10 the resumption)44. He also referred to evidence, the effect of which was that Mr Beard and Mr Viney both considered that the same requirements for external road works contributions could reasonably be imposed for the development of Cidneo's land before resumption, as could be imposed after resumption; the difference between them being that, in both cases, Mr Beard considered that some contribution could be required in respect of the upgrading of the intersections of the Motorway with the Centenary Highway and Progress Road45. [22] The learned Member stated that the "only truly objective evidence" of the likelihood of a contribution was the concurrence agency response previously referred to, though it related to a larger development46. He summarised Mr Viney's evidence as being to the effect that if DTMR persisted in seeking the contribution for external road works which was identified in the concurrence agency response, and that was challenged, there was a high prospect that the challenge would be successful47. The learned Member then stated that he preferred the approach of Mr Beard, who proposed that a contingency of $3,000,000 be allowed, in respect of "unsustainable demands being made" by DTMR for external road works contributions48. [23] The learned Member then stated that he also preferred the approach of Mr Beard to that of Mr Viney on the question of traffic generation and traffic flows, because Mr Beard was "somewhat less pessimistic and more pragmatic"49. That preference, the learned Member said, led him to prefer Mr Beard's approach in the context of likely contributions for external road works (other than for works relating to Boundary Road)50. [24] The learned Member also stated that he was unwilling to accept "the direct relevance" of the DTMR's concurrence agency response, which related to "a much larger project with much higher traffic generation features"51. That led the learned Member to regard the response as a "first offer", and somewhat speculative in view of the uncertainty about the form of the proposed development52. Submissions on appeal [25] The first ground of appeal was that the learned Member erred in determining, for the purpose of the cash flow analysis, that the appropriate figure to adopt for a contribution for road works (other than on Boundary Road) was $3,000,000. In relation to that ground it was submitted for Cidneo that the learned Member erred in law by disregarding relevant evidence. That evidence was that in 2008, traffic engineers (Mr Beard and Mr Eppell) considered that substantial contributions were justified in respect of the development, the subject of the Metroplex appeal53; evidence that the contribution nominated in DTMR's concurrence agency response could be proportionately reduced to identify a likely contribution which DTMR 44 See RJ [213]. 45 RJ [219]-[223]. 46 RJ [243]. 47 RJ [247]- [258]. 48 RJ [259]. 49 RJ [260]-[263]. 50 RJ [264]. 51 RJ [265]. 52 RJ [266]. 53 AR4 p 1075; see also Appeal Record Book Vol 1 (AR1) pp 209-211. -- 10 of 32 -- 11 would require for the highest and best use of the land retained by Cidneo54; the evidence of Mr Cumming, a town planner, that in February 2008, he would have advised a potential purchaser of the land retained by Cidneo that the contribution nominated by DTMR in its concurrence agency response would likely be reduced by reason of the smaller development proposed as the highest and best use, but that there was a substantial risk that there would be no further reduction of the contribution55; Mr Beard's evidence relating to what he would have told a potential purchaser in February 2008 as to the likely contributions to be required for the development of the site56; Mr Viney's evidence about the advice he would have given a potential purchaser in February 200857; the evidence of Ms Mitchell (contrary to the evidence of Mr Beard in the Land Court), denying that DTMR's concurrence agency response was an instruction to negotiate58; and Mr Beard's evidence that DTMR's concurrence agency response was technically defensible and not outrageous, having regard to the traffic to be generated by the development then under consideration59. It was also submitted that the learned Member failed to take into account that there was no evidence that DTMR had reduced by negotiation contributions notified in a concurrence agency response in any analogous case, in contrast to the evidence in Townsville City Council v Department of Main Roads60. Given the delay between the hearing and the delivery of the learned Member’s reasons, it could not be assumed that this evidence was not overlooked61. [26] It was also submitted that the learned Member erred by failing to give adequate reasons for judgment, as they did not deal with the evidence just referred to. [27] It was submitted that the learned Member erred in accepting Mr Beard's evidence as to the likely contribution to be required by DTMR as establishing the contribution to be adopted for the purpose of the cash flow analysis. Indeed it was submitted that the learned Member erred by determining what contribution he would impose, if he were sitting in the Planning and Environment Court hearing an appeal in respect of a condition relating to the payment of such a contribution; rather than by asking what contribution should be assumed for the purpose of a valuation being made by use of a cash flow analysis, carried out on 22 February 2008. [28] It was also submitted that the learned Member erred in misdescribing the evidence of Mr Beard, by referring to a requirement for a contribution of $3,000,000 for “unsustainable” demands by DTMR, when his evidence was that the contribution should be between $3,000,000 and $5,000,000, and in a worst case scenario, could be between $10,000,000 and $12,000,000; by referring to an irrelevant matter, namely, that a prudent purchaser was unlikely to pay $60,000,000 for the land, burdened by a contingency of $30,000,000 for road contributions, said to refer to the price to be paid for the land before resumption; and by asking on what basis the value of the land taken might be elevated from $5,000,000 to a figure between $6,800,000 and $25,000,000. 54 Ms Mitchell at AR1 p 272, lines 34-44; see also Mr Beard at AR1 p 219, lines 22-39. 55 AR3 p 918, para 8. 56 AR1 pp 208, lines 27-51; 226, lines 5-15, 38-43; 228, lines 20-22. 57 AR4 p 1079. 58 AR1 p 278, lines 1-8. 59 AR1 p 223, lines 25-49. 60 (2003) 24 QLCR 241. 61 The submission relied on Monie v Commonwealth (2005) 63 NSWLR 729 at [43] especially at (6). -- 11 of 32 -- 12 [29] Ground 2 of the Notice of Appeal alleged that the Land Court erred in not accepting and acting on evidence called in Cidneo's case that, in assessing the value of its retained land after resumption, an additional period of six months should have been allowed for the time assumed to be taken to develop and sell lots resulting from the subdivision of the land. The written submissions for Cidneo supported this ground. The submissions identified the six month period as being an extra six months in part occasioned by the need for a further traffic analysis, but also by the need to redesign the estate in relation to the construction of Boundary Road, and the hydraulics associated with Bullockhead Creek62. It was orally submitted that the evidence in support of this longer period was uncontradicted, but not referred to in the reasons of the learned Member. It was submitted that the reasons identified the issue63, but did not resolve it. Alternatively, if the issue was taken to be implicitly resolved by the adoption of Mr Brett's valuation, then the Land Court erred in failing to give reasons for doing so. [30] Ground 3 of the Notice of Appeal alleged that the Land Court erred in adopting Mr Brett's period of 62 months for the development and sale of the land in the post- resumption case. Mr Hamilton's cash flow analysis assumed a period of 76 months. The submissions for Cidneo made clear that, of the 14 months' difference, six months was accounted for by the period the subject of Ground 2. In relation to the balance (8 months), it was submitted that the Land Court erred in particular in accepting Mr Brett's evidence as to his rate of sale for lots produced in Stage 3, being two sales per month. It was submitted that the Land Court Member erred in failing to take into account evidence from Mr Whitelaw and Mr Hamilton criticizing this rate of sale; as well as Mr Brett's own acknowledgement that in February 2008 it could be expected that credit (and, if it be different, finance) was tightening. It was also submitted that Mr Brett in his cash flow analysis assumed an overlap in the construction of stages of the development (thus reducing the time required for the project); which he acknowledged might not be the approach of the prudent purchaser; but the learned Member failed to deal with this evidence. [31] As formulated, Ground 4 of the Notice of Appeal alleged that the Land Court erred in accepting Mr Brett's evidence that in February 2008 a low internal rate of return was acceptable for his cash flow analysis. The submissions for Cidneo in relation to this ground of appeal criticised Mr Brett's approach of deriving an internal rate of return from a cash flow analysis, rather than adopting such a rate as an input for the analysis. It was submitted that his explanation that in February 2008 the market was speculative, was inconsistent with the agreed highest and best use of the land for development for industry and warehouse purposes; as this use did not include land banking. It was submitted that these matters were not dealt with in the reasons for judgment. [32] With respect to Ground 1 of the appeal, for DTMR it was submitted that the assumption made on behalf of Cidneo that, without the resumption, DTMR would not require a contribution for transport infrastructure, but that post-resumption, a contribution of $20,000,000 would be required, involved significant weaknesses, and faced significant hurdles. In particular, it was submitted that the upgrade of the Ipswich Motorway was undertaken because of significant traffic problems being experienced generally on the Motorway, and at the Centenary Highway interchange. 62 AR5 p 1285. 63 At RJ [354]. -- 12 of 32 -- 13 Mr Viney had not done a relevant assessment of the impact of traffic generated by the development of Cidneo's land on the road network. Without the upgrade, the traffic engineering evidence indicated that Cidneo's land could not be substantially developed. The assumed development of Cidneo's land, without the upgrading of the Motorway, was premature. It was submitted that it was common ground that there was no difference between the before and after cases from a traffic engineering perspective. It was also submitted that Mr Viney had consistently taken the view that the contribution of $30,000,000 identified in the concurrence agency response could not be maintained. The learned Member correctly preferred the analysis and contentions advanced by Mr Beard, to those advanced by Mr Viney. His conclusion was supported by Mr Hamilton's evidence that no prudent purchaser would take $30,000,000 (or even $16,550,000) off the price of a property of the order of $57,000,000; and by the fact that Mr Hamilton's primary assessment of compensation of over $25,000,000 significantly exceeded the uncontested assessment of Mr Brett of the value of the resumed land at $4,535,000. It was submitted that the reasons of the learned Member sufficiently referred to relevant evidence, and appraised the parties of the broad outline and constituent facts of the reasons upon which he had acted. [33] For DTMR it was also submitted that Mr Beard's evidence about the likely contribution was not to be characterised as hindsight, but was rather a forensic exercise to determine the advice which would have been given to a prudent purchaser at the date of resumption64. It was submitted that it was relevant that the concurrence agency response did not include a contribution for the upgrading of the Centenary Highway interchange. It was also submitted that that response related to a development more than twice the size of the development representing the agreed highest and best use of Cidneo's retained land after the resumption. It was submitted that the Land Court had in truth focused on the advice which a prudent purchaser would have received as at the date of the resumption, about the likely contribution to be required in respect of the development of the retained land. It was submitted that the learned Member correctly regarded as more relevant, the fact that the traffic engineers would have advised that the same contribution would have been imposed whether one was considering the development of the land before resumption, or its development after resumption; than the concurrence agency response itself65. It was submitted that, although the valuers might have come to the same conclusion about the value of Cidneo's land in the before resumption case, it was not correct to say that it was only necessary to focus on the post-resumption value, when a cash flow analysis was used to determine the difference between the value of Cidneo's land in the before resumption and after resumption cases. It was submitted that Mr Beard had (no doubt correctly) pointed out that DTMR would rely on its manual for the generation rates of traffic resulting from the development of Cidneo's land, and not just on the generation rates relied upon by Mr Viney at the time of the Metroplex application66. It was submitted that when it is appreciated that the monetary contributions for the external road network would be the same in the before resumption case and the after resumption case, that demonstrates that the value adopted by the learned Member for the retained land was correct67. It was submitted that it was not possible to determine the correct value for the land 64 T 2-12, lines 24-32. 65 T 2-13, lines 39-45. 66 T 2-24, lines 18-20. 67 T 2-27, lines 14-17. -- 13 of 32 -- 14 retained by Cidneo after resumption, without appreciating the evidence relating to its value before the resumption. It was submitted that (most of) the compensation claimed by Cidneo was either severance or injurious affection; and that if the contributions were the same before and after resumption, then no compensation was payable under these heads. [34] It was submitted that Mr Beard (like Mr Viney) considered that, in the before resumption case (i.e., without the upgrading of the Motorway), development of Cidneo's land was premature. The difference between his current evidence and that which he gave in the Planning and Environment Court should not be held against him, as in the Land Court he was asked to assume that Cidneo's land could be developed without the upgrading of the Motorway. It was submitted that, if the learned Member incorrectly decided the likely contribution to be taken into account by a prudent purchaser in February 2008, then that would throw doubt on the determined value of Cidneo's land before resumption. [35] It was submitted that the learned Member should have adopted a piecemeal approach to the assessment of compensation (a point more directly relevant to DTMR's ground of cross-appeal, added by leave). [36] Reliance was placed on Mr Brett's evidence that the value attributed to the land by Mr Hamilton after resumption was too low, when compared with the englobo sales68. [37] It was submitted that Mr Hamilton gave no explanation for his 20 per cent risk margin, and in particular its application to the likely contribution payable to DTMR for external road works69. It was submitted that Mr Brett did not say that the market had fallen away by February 200870 (relevant to the time allowed for completing the hypothetical development of the land); nor did he say that the highest and best use of the land was land banking71. [38] It was submitted, by reference to the tests formulated in Drew v Makita (Australia) Pty Ltd 72 and Mitchell v Cullingral Pty Ltd73, that it was not necessary for the learned Member to refer more fully to the evidence of Mr Viney, nor to the earlier views expressed by Mr Beard. The learned Member's preferences for the evidence of Mr Beard and Mr Brett was adequately explained. [39] It was also submitted that, if Ground 1 of the appeal was upheld, then the matter should be remitted to the Land Court for further determination. [40] With respect to Ground 2, it was submitted for DTMR that the proposition that an additional six months would be required for a traffic analysis report and other approval related issues had been challenged. That appears to have been on the basis that no more time would be required for these matters in the after resumption case than in the before resumption case74. The correct assumption was said to be that the 68 T 2-38, lines 1-23. 69 T 2-39, lines 40-42. 70 T 2-40, lines 42-46. 71 T 2-41, lines 1-2. 72 [2009] 2 Qd R 219 (Drew). 73 [2012] NSWCA 389 (Mitchell). 74 See Respondent’s Outline of Argument on the Appeal filed 11 November 2013 (ROAA) paras 23-24; T 1-76 to 1-78. See also AR2 p 454, lines 20-29. -- 14 of 32 -- 15 parties, at the date of resumption, knew all the relevant facts; and accordingly there was no question of a need to carry out a redesign for the development75. Further, Mr Hamilton's evidence was based on the evidence of Mr Viney; and the learned Member had preferred the evidence of Mr Beard to that of Mr Viney. To the extent that Mr Hamilton's evidence might have been based on the evidence of Mr Cumming, Mr Cumming’s evidence in this area was "marginalised"76, and the learned Member concluded that it was "unconvincing"77. [41] With respect to Ground 3 of the appeal, it was submitted for DTMR that Mr Hamilton's evidence "looked wrong", because in the after case there were fewer allotments to develop and sell than in the before case; he was wrong in respect of the six month period, the subject of Ground 2; and he left substantial gaps between the end of Stage 2 and the release of Stage 3; and the end of Stage 3 and the release of Stage 4. Although it was submitted that Mr Whitelaw's evidence was not truly independent, reliance was placed on the fact that he accepted that Mr Hamilton's gap between Stages 3 and 4 was too long; and on his acceptance of a quicker rate of sale for lots in Stage 3 than was adopted by Mr Hamilton. It was submitted that Mr Brett's rate of sale for lots in Stage 3 was justified by the fact that the lots were smaller. It was also submitted that, in a number of places, the learned Member explained his preference for the evidence of Mr Brett. [42] With respect to Ground 4, it was submitted that the learned Member was correct in accepting Mr Brett's approach to the internal rate of return, and that he adequately explained his reasons for doing so. [43] Overall, it was submitted that an appellate court should not lightly interfere with a determination at first instance, particularly in a valuation case. Submissions on cross-appeal [44] With respect to the ground stated in the unamended Notice of Cross-Appeal, DTMR submitted that, in the after resumption situation, the contribution likely to be required for external road works was an element of injurious affection; and accordingly, by reference to Adelaide Fruit & Produce Exchange Co Ltd v Adelaide Corporation78 compensation in respect of it could be determined with the benefit of hindsight. It was not accepted that the description of injurious affection found in Suntown Pty Ltd v Gold Coast City Council79 was an exhaustive definition of that term. It was submitted also that, in its pleadings in the Land Court, Cidneo had alleged the likely contribution to be an element of injurious affection; and its departure from that position in contesting the cross-appeal would be prejudicial to DTMR. [45] In relation to the added ground for the cross-appeal, DTMR pointed to the significant discrepancy between the value of the land taken of $4,535,000; and the amount claimed by Cidneo as compensation. It was submitted that the difference could only properly be explained as compensation for injurious affection; and accordingly it was necessary to assess what damage in truth was suffered by Cidneo 75 T 1-79, lines 18-24. 76 ROAA para 23. 77 At RJ [118]. 78 (1961) 106 CLR 85 (Adelaide Fruit), 90. 79 (1979) 6 QLCR 196 (Suntown), 207-208. -- 15 of 32 -- 16 under this head. Accordingly the learned Member erred in assessing compensation by using the before and after approach, rather than by assessing separately compensation under each of the heads identified in the AL Act. [46] For Cidneo, it was submitted that a consideration of the likely contribution to be required by DTMR was an element of the determination of the value of its land at the date of compensation, and for that purpose facts must be determined as at that date, and without the benefit of hindsight80. Cases where the use of hindsight was permitted for the determination of injurious affection or severance damage were cases where compensation under these heads was assessed separately from the value of the land. Barnes v Department of Transport81 was a case where compensation for injurious affection was allowed in respect of stock losses and the remediation of water quality in a dam, the damage being suffered after the resumption, and independently of the value of the retained land. Similarly, in Adelaide Fruit, compensation for severance was assessed by reference to the cost of building a wall to replace a wall on the resumed land; and to build toilets. That compensation had nothing to do with land value. These cases did not support the ground originally raised by DTMR's cross-appeal. Some principles relating to a court’s duty to give reasons [47] As Muir JA held in Drew82, a court from which an appeal lies must state adequate reasons for its decision; and its failure to do so constitutes an error of law. His Honour then went on to identify additional bases for the requirement to state reasons, beyond the need to give effect to a right of appeal83. [48] The requirement to give reasons has been described as an incident of the judicial process84. It may be obvious, but it is the duty of a judicial officer deciding a proceeding at first instance to determine the relevant issues presented for determination by the parties85. A judicial officer accordingly is required to determine those issues of fact and law which it is necessary to decide in order to determine whether any, and if so what, relief is to be granted. Each issue of fact is to be determined by reference to so much of the evidence as is potentially significant for the determination of that issue. The legal issues are to be determined by the identification and application of the relevant legal principles. While it will not always be necessary for reasons to demonstrate that each of these steps has been taken, perhaps because that will be evident from other sources, a failure to give reasons showing the taking of these steps may lead to a conclusion that justice has not been seen to be done; and accordingly that there has been an error of law on the part of the judicial officer86. [49] The duty to give reasons, and whether it has been fully complied with, has been more fully examined in a number of cases, which form the basis of the following 80 Relying on Brisbane City Council v Mio Art Pty Ltd [2012] 2 Qd R 1 (Mio Art), 12 [33], 18 [53], 23 [68] and 26 [77]. 81 (1997) 16 QLCR 22 (Barnes). 82 At 237 [57]. 83 At 237 [58]. 84 Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378, 386; Public Service Board (NSW) v Osmond (1986) 159 CLR 656, 667. 85 Compare Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 (Soulemezis), 278. 86 Beale v Government Insurance Office (NSW) (1997) 48 NSWLR 430 (Beale), 431, 441, 446; Soulemezis, 281; Mifsud v Campbell (1991) 21 NSWLR 725 (Mifsud), 728. -- 16 of 32 -- 17 statements. Since issues which depend on questions of fact are determined on the basis of evidence, a judicial officer must consider all evidence relevant to an issue, though it will not be necessary to refer to all the evidence in the reasons for judgment; but a failure to deal with evidence potentially critical to an important issue in the case tends to deny the fact and the appearance of justice having been done, and indicates that the evidence was excluded from consideration87. The duty to state reasons requires a judicial officer to record the steps taken to arrive at the result, including the examination of relevant material; so that a failure to refer to material evidence can properly be taken as showing that the judicial officer has erroneously overlooked or discarded it88. Where the reasons for judgment do not refer to evidence which is important or critical to the proper determination of an issue, an appellate court may infer that the judicial officer overlooked the evidence or failed to give consideration to it89. Where one set of evidence is accepted over a conflicting set of significant evidence, the reasons should refer to the existence of both sets of evidence, and make it apparent how the judicial officer came to prefer one over the other90. Where the evidence is expert evidence, which amounts to a coherent reasoned opinion, then its rejection should be explained by coherent reasoned rebuttal, or discounted for another good reason91. The reasons for judgment should make apparent the process of reasoning by which the judicial officer has reached his or her conclusions92. Overall, the reasons are to demonstrate that the judicial officer has grappled with the case as presented by each party93. [50] It is well established that a judicial officer is required to give reasons, so that the parties, and an appellate tribunal, can identify how the issues have been determined, and how, ultimately, the judicial officer has determined whether any, and if so what, relief is to be granted94. That would support the conclusion that, where a full right of appeal lies, the reasons for judgment must demonstrate a consideration of potentially significant evidence. Appeal ground 1: the contribution for road works [51] As has been mentioned, compensation was determined by reference to the value of Cidneo's land before and after resumption; and the value after resumption was determined by reference to cash flow analyses carried out by the valuers. In each of these analyses, the value of the land was to be determined at the date of the resumption. Subject to the ground stated in the Notice of Cross-Appeal, it was common ground that the assumptions to be used for the cash flow analyses were to be determined by reference to knowledge available to the hypothetical vendor and purchaser at the date of resumption; including advice they might receive from 87 See Mifsud, 728. 88 See Waterways Authority v Fitzgibbon (2005) 79 ALJR 1816, 1835 [130] (per Hayne J); 1821 [26] (per McHugh J); 1821 [28] (per Gummow J); see also 1819 [11] (per Gleeson CJ); Mitchell, [2] (per Allsop P); [3] (per McColl JA); [116] (per Campbell JA). 89 See Beale, 443, cited with approval in Drew at [63]. 90 Beale, 443, cited with approval in Drew at [63]; see also Camden v McKenzie [2008] 1 Qd R 39 at 48 [32]-[33]. 91 Eckersley v Vinnie (1988) 18 Con LR 1, 77-78 cited by Ipp JA in Wiki v Atlantis Relocations (NSW) Pty Ltd (2004) 60 NSWLR 127, 137; in turn cited with approval in Drew at 239 [65]. 92 Soulemezis, 273; Strebak v Newton (Unreported; New South Wales Court of Appeal; Gleeson CJ, Samuels and Priestley JJA, 18 July 1989) (see BC8901946 at p 7 per Samuels JA); Ansett Transport Industries (Operations) v Wraith (1983) 48 ALR 500 at 507; Beale at 443-444. 93 Mitchell, [116]. 94 See Pettitt v Dunkley [1971] 1 NSWLR 376, 380-382. 386-388. -- 17 of 32 -- 18 appropriately qualified experts about likely conditions to be imposed on the potential development of Cidneo's land. [52] The task which had to be undertaken was to determine the value of the land at 22 February 2008. That is to be done by reference to the approach formulated in Spencer v Commonwealth of Australia95 for the determination of market value. In that context, McHugh J said in Kenny & Good Pty Ltd v MGICA (1992) Ltd96 “In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value. Those matters will include the predicted impact of future events as well as the experience of the past…” [53] At the date of resumption, no application had been made for the development of the land in accordance with its highest and best use; and the contribution for external road works to be required in respect of the development of the land for that use was unknown. However the likelihood of such a requirement, known at the date of the resumption, to these hypothetical parties, or to appropriate experts they might reasonably be expected to have engaged, and the weight prudently to be given to the possibility of such a requirement, are plainly relevant to the determination of the value of the land97. Where regard is to be had to expert evidence on these matters, it follows that the focus must be on the likely state of mind of the expert at the date of the resumption, rather than on the expert’s view at the time of the hearing. Subsequent events may provide evidence of a state of affairs in existence at the date of the resumption; but that state of affairs will only be relevant if knowledge of it was available to the hypothetical vendor and purchaser at that date98. [54] The approach of Mr Beard adopted by the learned Member was described by him as “a figure of $3,000,000 being contemplated by way of contingency to allow for additional but unsustainable demands being made by (DTMR) for external roadworks contributions”99. This was further described as Mr Beards’ approach “in the context of likely contributions that might be required apart from the Boundary Road works”100. That appears to have led to the finding by the learned Member that “the appropriate figure to apply to a prudent purchaser contemplating a likely demand by (DTMR) for a contribution for road works external to the site and apart from the completion of the Boundary Road link would be $3,000,000”101. This in turn was relevant to the cash flow analyses relied upon for determining the value of the retained land102. A lack of precision in the language used by the learned Member provided a basis for a submission by Cidneo that he approached the matter as if he were sitting in the Planning and Environment Court to determine what the appropriate condition for a road works contribution should be. However, a consideration of the reasons for judgment as a whole indicates that the learned Member correctly appreciated that the question to be determined was what allowance the hypothetical vendor and purchaser would have made for a contribution for road works, if carrying out a cash flow analysis at the time of 95 (1907) 5 CLR 418 (Spencer). 96 (1999) 199 CLR 413, 436 [49]. 97 Mio Art, 12 [33], 26 [78]. 98 Mio Art, 26-27 [79]. 99 RJ [259]. 100 RJ [264]. 101 RJ [403]; as to the question considered by the learned Member see also RJ [184], [208]. 102 See RJ [281]-[282]. -- 18 of 32 -- 19 resumption. A question remains whether the reasons for judgment were directed to answering that question. [55] One submission made by Cidneo was that the learned Member failed to consider Mr Viney's evidence that in February 2008 he would have advised an intending purchaser that DTMR could be expected to seek a contribution of $16,550,000 for external road works; and that there was a real risk that such a purchaser would have to pay a substantial contribution to DTMR in respect of the development of the land retained by Cidneo for its highest and best use. [56] The reasons for judgment refer to the evidence of Mr Viney on the contribution likely to be required by DTMR103. Later, the reasons for judgment refer extensively to Mr Viney's view, that, in truth, a requirement for a contribution to external road works, similar to that sought in the concurrence agency response, could not be maintained104. Immediately after that, the learned Member expressed his preference for the approach of Mr Beard, whose evidence was that a contribution of $3,000,000 should be contemplated as the amount likely to be required to be paid for such contributions105. The expressed preference for the approach of Mr Beard, immediately following a discussion of Mr Viney's evidence, implicitly recognises a difference between them. It is sufficiently clear that in expressing this conclusion, the learned Member had in mind his earlier reference to the evidence of Mr Viney about the contribution for external road works, likely to be sought by DTMR. Further, it is difficult to see the discussion of Mr Viney's evidence about the unsustainability of a contribution requirement, other than as directed to a rejection of his view about the contribution to be taken into account by a hypothetical purchaser. [57] However, the learned Member referred to Mr Viney's evidence only insofar as Mr Viney expressed a view about the likely contribution which DTMR would seek to impose, and whether its position was maintainable. He did not refer to Mr Viney's further evidence that he would have advised an intending purchaser in February 2008 that if the purchaser were to enter into an unconditional contract for the land, then the purchaser should make an allowance for a contribution to which might be required by DTMR of $16,550,000 (and perhaps something more for risk); nor his evidence that he would have advised the purchaser, based on his experience of difficulties in negotiating a settlement with DTMR, that there was a real risk that a substantial contribution for external road works would have to be paid in respect of the development of the land; nor his evidence that the contribution would have been determined with reference to traffic engineering advice. [58] That evidence of Mr Viney was plainly of significance for determining the weight to be given to the possibility that a contribution would be required, if determining the value of the land in February 2008. The reasons for judgment do not demonstrate that it was considered by the learned Member. Rather, they support the contrary conclusion. [59] Of the concurrence agency response, the learned Member stated that he was unwilling to accept its direct relevance, because the application to which it related 103 See in particular RJ [209]-[210]. 104 RJ [244]-[258]. 105 RJ [259]. -- 19 of 32 -- 20 was "later largely abandoned", that application relating to a "much larger project with much higher traffic generation features"106. He considered it to be "somewhat speculative", because of the absence of "substantial detail about what final form of the proposed development would have taken [sic]"107. [60] Earlier the learned Member had referred to the concurrence agency response as the "only truly objective evidence of the likelihood of a contribution" to be imposed in respect of the development of Cidneo's land108. Although it related to what might be described as a subsidiary issue, its relevance was nevertheless a matter of considerable significance in the case. The learned Member's reasons for not accepting the direct relevance of the concurrence agency response indicate that he did so because of the size and traffic generation characteristics of a development to which it related. The stated reasons support the view that he did not take into account the evidence of Ms Mitchell and Mr Beard referred to in the submissions for Cidneo that the response could be used to identify a proportionate contribution likely to be required by DTMR for development of the land in accordance with the agreed highest and best use. The absence of any reference to this evidence again tends to indicate that it was not considered. [61] Mr Beard's evidence as to the likely level of contribution (at least so far as it was to be taken into account in the cash flow analysis) was plainly contentious. At face value there was a very marked discrepancy between that evidence, and the evidence which Mr Beard gave (both by way of a joint report and orally) in the Planning and Environment Court in 2008 that a contribution of $88,000,000 was justified; and the amount of the contribution nominated in the concurrence agency response represented a significant discount, notwithstanding the difference in size and traffic generation rates for the development the subject of the response, and the development to which the cash flow analysis related. That evidence is quite relevant in determining what advice he might have given in February 2008. To accept the evidence which Mr Beard gave in the Land Court, and adopt the amount of $3,000,000 as the contribution relevant for the cash flow analysis, without reference to his evidence in the Planning and Environment Court, rather strongly suggests that the latter evidence was not considered. Likewise, Mr Beard's evidence that in February 2008 he would not have advised a purchaser that the likely contribution was $3,000,000; and that he would have advised that a higher contribution would have been required, which in the worst case might be between $12,000,000 and $15,000,000, was highly relevant to the question the learned Member had to determine. The fact that the learned Member did not refer to this evidence rather strongly indicates that it was not taken into account. [62] The evidence given by Mr Eppell in the Planning and Environment Court in 2008 is also indicative of the state of mind of a relevant expert, and the advice which a prudent purchaser was likely to receive, in February 2008. Although less significant than Mr Beard's evidence from the same period, the fact that it was not referred to by the learned Member tends to suggest it was not considered; a conclusion which is more easily reached in light of the failure to refer to the evidence of Mr Beard which has just been discussed. 106 RJ [265]. 107 See RJ [266]. 108 RJ [243]. -- 20 of 32 -- 21 [63] The learned Member concluded that the concurrence agency response should be regarded as "first offer" and "somewhat speculative"109, because of the lack of substantial detail about the ultimate form of development. The learned Member made no reference to the evidence of Ms Mitchell referred to in Cidneo’s submissions; nor, indeed, to the fact that the response was based on generation rates provided by Mr Viney and reviewed on behalf of DTMR by another traffic engineer, Mr Dunne, who regarded them as "generally satisfactory"110. The DTMR memorandum of 1 August 2007 also indicated the reasoning which led to the concurrence agency response. Again, this evidence was relevant to the question whether the response should have been treated as a position DTMR was likely to maintain; or simply a first offer, made on a highly speculative basis. The fact that the evidence was not referred to again suggests that it was not considered. [64] Like the evidence of Mr Eppell, the evidence of Mr Cumming about the risk that DTMR would require a significant contribution might not, in isolation, be regarded as particularly significant; so that an absence of reference to it might by inference reflect the view that this evidence was of little weight. However, having regard to other, more significant, evidence of a similar character which was not referred to, it is easier to conclude that this evidence too, was not taken into account. [65] It is convenient to summarise the considerations set out above in relation to Ground 1. The learned Member appeared correctly to identify the question as being what advice the hypothetical prudent parties would adopt for road contributions, for the purpose of carrying out a cash flow analysis, in February 2008, to be determined by reference to advice they would then have been likely to receive from a traffic engineer. The adoption of the figure of $3,000,000 from Mr Beard’s evidence in the Land Court is inconsistent with his own evidence about the advice he would have given in February 2008; and sits uncomfortably with his evidence in the Planning and Environment Court given later that year. It is also inconsistent with the evidence of Mr Viney and Mr Cumming as to what advice they would then have given. The evidence given by Mr Eppell in the Planning and Environment Court in 2008 also rather strongly suggests that, had he been asked to advise on the likely contribution, he would not have accepted that a figure as low as $3,000,000 was correct. The adoption of that amount by the learned Member, and his approach to the concurrence agency response, are inconsistent with the evidence of Ms Mitchell. The reasons for judgment do not reveal that these matters were considered. Alternatively, they do not provide an adequate explanation for the learned Member’s conclusion, in light of these matters. It follows that the learned Member erred in law. [66] For DTMR it was submitted that the valuation which the learned Member adopted of the land retained by Cidneo was correct, because the road works contributions payable to DTMR were likely to be the same in the before and after cases. A number of its other submissions seem to have been directed to supporting this proposition. The point of the submission appears to have been that, on that basis, since neither party suggested a significant contribution for external road works in the before case, the learned Member was right to reach the conclusion he reached for the after case. That does not address the question whether the learned Member considered relevant evidence, and gave adequate explanations for his reasons. Nor 109 RJ [266]. 110 AR7 p 1740. -- 21 of 32 -- 22 does it address the question whether he erred in the conclusion he reached about the value of the retained land. Cidneo’s submissions may cast doubt on the correctness of the assumptions about contributions, and on the value of the land, in the before resumption case; but these matters were not in issue in the appeal. [67] Cidneo should succeed on Ground 1. Appeal Ground 2: assumed period prior to commencement of works [68] The cash flow analyses presented by Mr Brett assumed a period of 12 months from the commencement of the project, until the commencement of development works, in both the previous resumption and post-resumption cases111. The cash flow analyses put forward by Mr Hamilton made the same assumption in the before resumption case, but assumed the period was 18 months in the after resumption case112. Mr Hamilton explained that the periods were allowed for obtaining necessary pre-construction approvals; and the additional six months was to allow for a comprehensive traffic analysis and a redesign of the estate, particularly relating to the construction of Boundary Road and the hydraulics on Bullockhead Creek113. Mr Cumming gave evidence that he advised Mr Hamilton that a period of 12 months would be required in the before resumption case, and 18 months in the after resumption case, before work could commence, and of his reasons for the longer period in the latter case114. Essentially, his evidence depended on the proposition that at the date of resumption some investigation and design work had been carried out, the benefit of which would be available to a potential purchaser in February 2008; but in the after resumption case, some of this work would have to be redone115. That was because the original work assumed development from east to west; whereas with the project which led to the resumption, the development would be carried out logically from west to east. There would also be the need to reconsider hydraulic work, and the treatment of cut and fill; and, as a result of the road resumption, there would be a new road alignment. Mr Viney also gave evidence that the longer period would be required in the after resumption case, because negotiations with DTMR about road access would be more complex, the final form of the Centenary Highway interchange not having yet been determined116. [69] Although the civil engineers retained by the parties for the Land Court proceedings had agreed that 12 months would be sufficient for the design and approval process, the uncontroverted oral submissions for Cidneo pointed out that that agreement was based on civil engineering considerations only, and did not take into account planning and traffic issues117. [70] Mr Brett's adoption of a 12 month period in each case, and no more, was ultimately based on advice he had from Mr Beard118; although Mr Beard's evidence was that 111 See Appeal Ex 1 pp 8, 12. 112 AR5 pp 1290, 1293. 113 AR5 p 1285. 114 AR1 p 10. 115 See AR1 p 10, lines 20-27. 116 AR1 p 89, lines 5-28. 117 Appeal Record Book Vol 9 (AR9) pp 2168 para 32; 2169 para 38. 118 See AR2 pp 454, line 20 to 455, line 9. -- 22 of 32 -- 23 more time would be required for the traffic impact assessment process in the before resumption case than in the after resumption case119. [71] The reasons for judgment in the Land Court made reference to the evidence of Mr Hamilton and Mr Cumming in support of the longer period in the after resumption case120. The learned Member adopted the cash flow analyses of Mr Brett, that adoption carrying with it the acceptance of the shorter time frame for the period before the commencement of works in the after resumption case. However the reasons do not set out any analysis of the evidence in support of the longer period, or any explanation for the rejection of that evidence. [72] The submissions for DTMR sought to glean an explanation for the implicit rejection of the evidence of Mr Viney and Mr Cumming on this point. Thus it was said that the evidence of Mr Cumming "was marginalised"121 and that his evidence was found to be "unconvincing", by reference to passages in the reasons for judgment122. It is apparent from a reading of those paragraphs that the learned Member was referring to the evidence of Mr Cumming so far as it dealt with matters which are particularly the province of a traffic engineer, namely, traffic generation and flow, and queue lengths and degrees of saturation predicted for particular intersections. The learned Member was not considering his evidence on the time likely to be required prior to the commencement of development work. [73] The implicit finding of the learned Member as to the length of this period was also supported, it was submitted on behalf of DTMR, by the learned Member's preference for the evidence of Mr Beard over the evidence of Mr Viney123. Apart from a problem which arises because the learned Member has not referred to a substantial body of evidence which supported Mr Viney's approach to the appropriate assumption about a contribution for external road works, the preference for Mr Viney's evidence over Mr Beard's evidence occurred in relation to questions other than the question now under consideration. It could not be said that in expressing that preference, the learned Member was addressing the question whether 12 months or 18 months was the appropriate period to allow before the commencement of development work, in the after resumption case. [74] There was a real issue between the parties on this question. It was raised by the differences in the cash flow analyses, and was the subject of submissions on behalf of Cidneo in the Land Court124. The matters raised by Mr Viney and Mr Cumming in support of the longer period are not obviously without substance, so that a failure to discuss them might be explained on that basis. The reasons for judgment provide no basis for thinking that the learned Member considered this issue, and decided to accept the approach taken by Mr Brett on the basis of such a consideration. So far as is apparent from the reasons, the opposite is true. [75] The submission made on behalf of DTMR that the matter is covered by the assumption, apparently derived from Spencer, that the parties are aware of all relevant facts, is novel. No authority was cited in support of it. It is difficult to see 119 AR4 p 1061. 120 RJ [103]-[104]. 121 ROAA para 23. 122 See RJ [105]-[116], [118]. 123 RJ [167], [205], [206], [259], [261], [264]. 124 See AR9 p 2169. -- 23 of 32 -- 24 how the assumption would account for the existence of a traffic study, no doubt to be presented in support of a development application. The submission should not be accepted. [76] It follows that Ground 2 should be upheld. Appeal Ground 3: balance of period for completion of project [77] There was a further difference of some eight months in the time assumed by Mr Brett for the completion of the development and sale of lots resulting from the project, and the period assumed by Mr Hamilton. Some explanation for this difference is found in the difference in the rates of sale of lots in Stage 3. Leaving aside what were described as "presales", there were 15 lots to be sold from this stage, Mr Brett assuming a sale rate of two per month, and Mr Hamilton one per month. The basis for this difference was explained in Cidneo's written submissions as being that Mr Brett's approach was "stock driven", while Mr Hamilton's approach was "cost driven"125. [78] Another factor affecting when sales in Stage 3 might be completed is the construction program assumed for the cash flow exercise. The submissions for Cidneo pointed out that Mr Brett's approach involved overlapping construction periods for stages. The relationship between this aspect of his approach, and the difference in the rates of sale in Stage 3, was not explained. [79] The written submissions for Cidneo contended, in effect, that Mr Hamilton's approach should have been preferred. However, it is also submitted that the learned Member failed to resolve these differences in the approaches of the valuers; or alternatively he did not give adequate reasons for preferring the approach of Mr Brett. [80] The learned Member expressly identified the grounds on which he adopted Mr Brett's approach in relation to the rate of sales in preference to that of Mr Hamilton126. They were the reservations he earlier expressed with respect to the evidence of Mr Hamilton; his acceptance of most of the evidence of Mr Brett; and in particular his acceptance "that Mr Brett's assessment of economic conditions relevant to the setting of prices and the uptake of developed land is to be preferred to Mr Hamilton's"127. [81] The reservations of the learned Member about Mr Hamilton's evidence were not better identified. A reading of the reasons for judgment would suggest that he considered that Mr Hamilton's approach "was driven by an internal rate of return"; while Mr Brett's approach attempted to reflect the reality of the market place, both in relation to costs and revenue from the sale of land128; Mr Hamilton’s response to criticism about the application of an analysis of what was referred to as the 125 By reference to AB2 pp 405, lines 36-45; 461, line 33 to 462, line 57; 465, lines 41-55; Appellant’s Outline of Argument on the Appeal filed 15 November 2013 (AOAA) para 34. 126 RJ [404]. 127 RJ [404]. 128 RJ [335]. -- 24 of 32 -- 25 Motorway Business Park129; and tension between the application of sales evidence by Mr Hamilton, and his comments on that evidence130. [82] It follows that the reasons for judgment indicate that the learned Member recognised the need to determine which rate of sales should be preferred; he expressed a preference for that adopted by Mr Brett; and he gave brief reasons for doing so. It cannot be said that he failed to determine the issue. Although brief, his reasons provide some explanation for his conclusion on this question. However the adequacy of these reasons requires further consideration. [83] Mr Brett's cash flow analysis for the after resumption case assumed a rate of sale (ignoring presales) of one lot per calendar month for the first stages to be developed (Stages 1 and 2); but adopted a rate of sale of two lots per calendar month for Stage 3, reverting to a rate of one sale per calendar month for Stage 4. The submissions for Cidneo pointed out that Mr Brett had identified that, by comparison with 2007, conditions had changed as a result of increasing interest rates and tightening credit, and an awareness of difficult economic conditions, both in Australia and elsewhere. These matters had the consequence that by February 2008 "both the cost of finance and its availability had become more difficult than was previously the case"131. He therefore considered that "at least a levelling of market demand and values was a reasonable anticipation at this time"132. The potential significance of this evidence in the context of his cash flow analysis is apparent from his oral evidence, where he made it clear that he was proceeding "on the basis of the kind of market that prevailed in 2007"133. [84] The other matter raised by Ground 3 related to the construction program. This matter (and the rate of sales) had been raised before the Land Court134. On Mr Brett's approach the construction of Stage 3 commenced before the completion of the construction of Stage 2, and before any income was received135. Mr Whitelaw is a chartered accountant who has specialised in property development financing with experience using cash flow modelling as a tool for seeking, gaining or providing finance in respect of development projects136. He gave evidence that the early commencement of Stage 3 assumed by Mr Brett was uncommercial, and not the action of a prudent developer137. In cross-examination, Mr Brett said that there was "a degree of realism" in Mr Whitelaw's review138. [85] It is not particularly easy to discern how the learned Member dealt with these matters. He made a number of comments pointing out that the results from a cash flow analysis might be significantly affected by the assumptions made, and the results might be "wild guesses"139. He also said that sales rates are based on 129 RJ [370]-[373]. 130 RJ [374]-[378]. 131 AR5 p1367. 132 AR5 p 1367. 133 AR2 p 466, lines 1-24; see also pp 464, lines 30-43; 405, lines 55-57; 461, lines 34-37; 462, lines 22- 26. 134 AR9 pp 2201-2203. 135 AR1 pp 316-317, especially p 317, lines 27-32. 136 AR7 p 1780, para 5. 137 AR7 p 1782, paras 19-21. 138 AR2 p 418, lines 36-37. 139 RJ [279], [280], [283], [325]. -- 25 of 32 -- 26 "speculation and estimation"140; and was sceptical about the utility of attempting to determine the appropriate assumption about staging, amongst other things141. He expressed the view that the best that could be done was "to prefer one approach over another"142. Nevertheless, he recorded that both matters relied upon by Cidneo were in issue143. After an analysis of sales, and their application by Mr Hamilton, a matter about which he was critical144, the learned Member expressed the view that the sales rates and rates of development had "no great impact on the overall result"145. Nevertheless he expressly accepted Mr Brett's "assessment of economic conditions relevant to … the uptake of developed land"146; but made no express finding about Mr Brett's approach to construction. [86] The learned Member’s observations about the difficulties with the use of a cash flow analysis only emphasised the importance of the assumptions on which each analysis was based. There was a real dispute about whether Mr Brett erred in his approach to the commencement of the construction work for Stage 3, in the after resumption case. It was therefore necessary for the learned Member to determine whether or not Mr Brett's approach, particularly to the construction program, was correct. Indeed, Mr Brett described the "primary difference" between his analysis and that of Mr Hamilton as being "the gaps between the release of stages"147, which appears to be a consequence of the differences in relation to this program. However the reasons for judgment do not indicate that the learned Member applied his mind to deciding this issue. It may be said that the issue was implicitly decided by the learned Member's adoption of the analysis undertaken by Mr Brett. If so, the reasons do not reveal any evaluation of the evidence of Mr Whitelaw and Mr Hamilton, critical of Mr Brett's approach. If, in fact, that evidence were evaluated and rejected, the reasons failed to disclose the basis on which that was done. [87] The learned Member's acceptance of Mr Brett's assessment of economic conditions relevant to the uptake of developed land148 appears to amount to a finding that he accepted Mr Brett's evidence on the rate of sale of lots in Stage 3. However, the reasons do not explain the learned Member’s approach, in light of Mr Brett's views about economic conditions in February 2008, on which Cidneo had relied. Acceptance of his evidence of economic conditions would include an acceptance of his view about them in February 2008. [88] These conclusions provide a sufficient basis on which to uphold the appeal on Ground 3. It should, however, be said that there must be a real doubt about the validity of Mr Brett's approach to the rate of sales. As has been mentioned, he proceeded on the basis that the speculative market of 2007 would continue, notwithstanding the increases in interest rates up to February 2008, and the increased difficulty in obtaining finance. Particularly against that background, there is a very real question whether the hypothetical prudent vendor and purchaser would assume the continuation of a speculative market for a further period approaching 140 RJ [347]. 141 RJ [350]-[351]. 142 RJ [352]. 143 RJ [353]. 144 RJ [356]-[388]. 145 RJ [389]. 146 RJ [404]. 147 AR2 p 460, lines 5-9. 148 RJ [404]. -- 26 of 32 -- 27 four years149. If Mr Brett’s rate of sales were not adopted, that could well have implications for the assumed construction program. With slower sales, a developer might be more inclined to delay construction for Stage 3, to reduce its risk and its interest liabilities. Ground 4: internal rate of return [89] Cidneo's submissions criticised Mr Brett's approach to the internal rate of return in his cash flow analyses on two bases. The first was that he adopted a value to generate an internal rate of return, when, it was submitted, the correct approach was to adopt an internal rate of return, and then generate a value for the land. The second was that his internal rate of return was unrealistically low. It was submitted that the learned Member failed to deal with this question. [90] As the submissions for DTMR point out, the learned Member in fact did consider the question, and addressed the criticisms of Mr Brett's approach150. The learned Member recorded that Mr Brett accepted that, in the ordinary course, an internal rate of return should be adopted, and a land value then arrived at, by the use of the cash flow analysis. However, it is apparent from the evidence referred to by the learned Member that Mr Brett formed the view that on this approach, a value would be attributed to the land which was not consistent with market evidence151. That led him to adjust his internal rate of return to produce an outcome consistent with the market value attributed to the land based on sales evidence. It is clear that the learned Member accepted the explanation, and the appropriateness of Mr Brett's approach. The learned Member's reasons on this issue, though brief, are adequate. [91] In Cidneo's oral submissions on the appeal, an explanation was given of Mr Brett's approach152. As has been mentioned, it commenced with the derivation of an internal rate of return from an adopted value for Cidneo's land of $60,000,000 in the before resumption case. This rate was then used to determine the value of the retained land. It might be observed that the internal rate of return adopted by Mr Hamilton for his after resumption cash flow analyses was also derived in a similar fashion153. [92] Once it is assumed that the market evidence showed the value of the land in the before resumption case to be $60,000,000, the cash flow analysis, based on the balance of Mr Brett's assumptions, inevitably resulted in the internal rate of return which he adopted post-resumption. Cidneo's case was that the rate of return in both cases was unreasonably low154. The correctness of its case would throw doubt on the assumptions, including the assumed value of the land before resumption. However, if the assumptions were correct, the internal rate of return must be low. If Mr Brett's assumptions are accepted, then no error has been shown in his approach to internal rates of return. To the extent that there has been, or may be, successful challenges to some of his assumptions, that provides a basis for upholding the appeal on other grounds. However Cidneo has not established that the appeal should succeed on Ground 4. 149 That is, until the finalisation of sales in Stage 3: see AR5 p 1420. 150 RJ [391]-[400]. 151 RJ [393]-[394]. 152 See T 1-71. 153 See AR5 p 1285. 154 AR2 p 473, lines 2-4. -- 27 of 32 -- 28 Cross-appeal Ground 1: use of hindsight to determine road works contribution [93] The learned Member rejected DTMR's submission that the contribution ultimately imposed by DTMR in respect of the development of Cidneo's land could be considered, to determine the contribution which should be assumed for the purposes of the cash flow analyses155. DTMR submitted on the appeal that the contribution is in truth an element of injurious affection or severance damage, for the assessment of which the Court may take into account facts known at the time of assessment156. DTMR's submissions referred to the language in s 20(1)(a) of the AL Act, submitting that the contribution was in fact an element of one of the two heads of damage as described in that paragraph. [94] The submissions for Cidneo point out that, what the Land Court determined was the value of Cidneo's land at the date of resumption, assuming first that no resumption were to occur; and secondly on the basis that part of the land was then resumed. The determination of the value of the land on each basis required a consideration of the likely contribution for external road works. That was an element of the assessment of its value, in each case. Cases where subsequent events were taken into account to determine compensation were cases where there were separate claims for severance or injurious affection157. [95] The imposition of a requirement to pay contributions for external road works cannot sensibly be said to be (in the language of s 20(1) of the AL Act) "damage … caused by … the severing of the land taken from other land of the claimant". [96] It is arguable that such a contribution might satisfy the description from s 20 of "damage … caused by … the exercise of any statutory powers by the constructing authority otherwise injuriously affecting the claimant's other land (from which the resumed land is taken)". The words reproduced in parentheses are an attempt to state the effect of the words "mentioned in subparagraph (i)" which appear at the end of s 20(1)(a)(ii). [97] However, the question then arises whether the imposition of a contribution for external road works, as part of an approval for development of the land retained by the land owner, in truth comes within s 20(1)(a)(ii) of the AL Act. In character, a requirement for such a contribution is not different from a requirement which some other authority might require for some other form of external works, for example relating to water supply, drainage, or the supply of electricity. On DTMR’s own case on the appeal, it has to be taken into account to determine the value of the land, before resumption, when no question of severance or injurious affection can arise. Further, the imposition of the contribution is not an act of DTMR as constructing authority, that is, when carrying out the project which led to the resumption158. Rather, it is a consequence of its role in the approval process, as part of the planning regime which, at the time of the resumption of the land, regulated development in this State159. Nor does a decision of DTMR as a concurrence agency, requiring a 155 RJ [224]-[235]. 156 Relying in particular on Adelaide Fruit, 90; see also Mio Art Ltd, 10-11 [30], 26 [75]. 157 For example Barnes; Adelaide Fruit. 158 Compare Suntown, 207-208; Marshall v Director-General, Department of Transport (2001) 205 CLR 603, 616 [20], 617-619 [25], 625 [45]. 159 See in particular s 3.5.11(1) of the IP Act; together with the definition of "concurrence agency" in Schedule 10 of that Act, and the provisions of Part 3 of Chapter 3, particularly ss 3.3.16, s 3.3.18. -- 28 of 32 -- 29 contribution as a condition of a development approval, amount to the exercise by it of a statutory power "injuriously affecting the claimant’s (retained) land … ". Such a condition is simply part of the price for carrying out a particular form of development of the land, but does not affect the land itself. It might also be observed that the contribution identified in the concurrence agency response appeared to relate in part to works beyond the project (in particular, the upgrading of the Boundary Road/Logan Road interchange). [98] Moreover, the question of the likely road works contribution did not arise in the context of determining compensation for injurious affection under s 20(1)(a)(ii) of the AL Act. Rather, it arose in the context of determining the value of the land retained by Cidneo, at the date of resumption. That value must be determined by reference to the approach adopted in Mio Art. While it is commonly accepted that the approach described as the "before and after" approach will identify a sum representing both the value of land lost, and compensation for severance and injurious affection, it nevertheless requires the determination of the value of the retained land at the date of the resumption. The fact that the separate determination of compensation for injurious affection might take into account events which occur after the resumption is of no assistance in determining the value of the retained land, at the date of resumption. [99] It follows that the Land Court Member correctly refused to take into account a contribution agreed upon in 2011. [100] DTMR submitted that, in the Land Court, Cidneo's case was that the contribution likely to be imposed on the development of the land by DTMR caused either severance damage or injurious affection to its retained land, for the purposes of s 20(1)(a) of the AL Act; and accordingly it should not be permitted, in the cross- appeal, to assert that the contribution was an element of the value of the land, rather than an aspect of severance damage, or damage resulting from injurious affection. Particular reliance was placed on paragraph 14(e) of Cidneo's Statement of Facts and Contentions in the Land Court160. DTMR submitted that, had Cidneo pleaded that the contribution was an element of the value of the land, it might have conducted a further challenge to Cidneo’s pleading. [101] It might be noted that in paragraph 14(e) of the Statement of Facts and Contentions, Cidneo alleged that the imposition of the contribution both caused severance damage or injurious affection to its retained land; and reduced its value. At least on one reading, the latter assertion would justify Cidneo's reliance on the road works contribution as a matter relevant to determining the value of the retained land, in the after resumption case. That in fact is how the case was conducted by Cidneo in the Land Court. It was a case which DTMR sought to meet, by leading evidence from Mr Beard as to the amount to be taken into account in respect of the likely contribution, for the purposes of the cash flow analyses. Mr Beard suggested an amount of $3,000,000161; which differed from the amount of $1,087,110.76, the cost of what was ultimately agreed to in 2011162. 160 AR3 p 748. 161 See RJ [259]. 162 RJ [225]-[227]. -- 29 of 32 -- 30 [102] DTMR therefore was, in the Land Court, in a position to meet a case where Cidneo alleged that the likely contribution for external road works was to be taken into account in determining the value of its land at the date of resumption. On one view, that was consistent with Cidneo's pleaded case. Cidneo's submissions on the cross- appeal as to the character of this contribution are consistent with the cases conducted by the parties in the Land Court (although DTMR also contended for the determination of each head of compensation separately)163. There is no difficulty in the case Cidneo advanced on the appeal. Cross-appeal Ground 2: compensation should be determined separately under each of the heads in s 20(1) of AL Act [103] For DTMR it was submitted that the fair assessment of compensation meant that Cidneo should not recover more for the impact of injurious affection and severance on its land than was fair164, and accordingly that compensation for these should be assessed by reference to the contribution actually required by DTMR. That would carry with it a separate assessment for the value of the land taken. Depending upon the value adopted, that would result in compensation of either $5,622,110, or $5,877,800. DTMR's oral submissions have pointed to the difference between the only evidence of the value of land taken ($4,535,000) and the amount claimed by Cidneo, apparently to demonstrate that most of the compensation was not referrable to the value of the land taken, and accordingly fell under one of the other heads of compensation identified in s 20(1) of the AL Act. [104] The submissions for Cidneo referred to the fact that the valuers recognised that their role was to assist the Land Court to determine compensation for diminution in the value of Cidneo's land resulting from "the scheme of the resumption". They agreed that the appropriate methodology was to determine the value of the land immediately before, and unaffected by the resumption, and its value immediately after the resumption. They agreed that cash flow analyses provided the best method of carrying out this purpose165. The learned Member referred to the agreement of the valuers about the correct approach in his reasons for judgment166. The learned Member recorded judicial support for the approach167. Implicit in the submission is the proposition that the valuers agreed that the “before and after” method would capture compensation under all heads. [105] The “before and after” method is often regarded as appropriate for the determination of compensation, when only part of a landowner’s land is resumed168. It captures all heads of compensation, as well as any enhancing effect of the project169; and avoids 163 See, for example, AR9 p 2223 para 60. 164 By reference to Director of Buildings and Lands v Shun Fung Iron Works Ltd [1995] 2 AC 111, 125; see CMB No 1 Pty Ltd v Cairns City Council [1999] 1 Qd R 1, 15-16; Transport For London v Spirerose Ltd [2009] 1 WLR 1797, 1822. 165 AR4 p 1189. 166 RJ [273]. 167 RJ [275]. 168 See the discussion of the topic in Alan Hyam, The Law Affecting Valuation of Land in Australia (Federation Press, 4th ed, 2009), 174-178; Marcus Jacobs, Law of Compulsory Land Acquisition (Lawbook Co, 2010) (Jacobs), 454-456 [24.100]. 169 Section 20(3) of the AL Act; see Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority (NSW) [2006] NSWCA 314 at [11], cited in Jacobs at 454 [24.100]. -- 30 of 32 -- 31 the risk of double counting170. One author, after a survey of such cases where the method was not used, concluded that they demonstrated special circumstances; and were not authority for the proposition that the method could be rejected in the absence of such circumstances171. Whether or not that be correct, a proper basis must be shown for concluding that a court erred in using this method in such a case. [106] DTMR's submission appeared to be that the use of the before and after method would result in an unfair assessment of compensation. If the appeal is to be allowed, the submission is, at least to some extent, speculative. Moreover, the matters referred to in relation to Ground 1 of the cross-appeal show that the contribution for external road works expected to be imposed in respect of a particular development proposal is a matter relevant to the value of the land at the date of resumption. As was held in Mio Art, that may not be determined by reference to the knowledge of subsequent facts (save where those facts demonstrate the existence of facts at the date of resumption, known to the parties)172. It would follow that where events subsequently turn out to be different from those known, or taken to be likely, at the date of resumption, that does not have the consequence that the assessment of compensation is unfair. [107] DTMR has not identified the basis on which Ground 2 of the cross-appeal should be upheld. Disposition of appeal and cross-appeal [108] The appeal should be allowed, and the cross-appeal dismissed. At the hearing, the parties indicated that, should the appeal be upheld, they wished to make further submissions about the disposition of the case. It is therefore appropriate to hear further submissions from the parties about the orders to be made. PETER LYONS J CAC MacDONALD PRESIDENT OF THE LAND COURT WA ISDALE MEMBER OF THE LAND COURT 170 Parramatta City Council v Gestetner Pty Ltd (1978) 37 LGRA 246, 254; cited in Jacobs at 458 [24.120]. 171 Jacobs at 458 [24.120] – 460 [24.130]. 172 Mio Art, 6-27 [79]. -- 31 of 32 -- 32 IN THE LAND APPEAL COURT OF QUEENSLAND LAC006-13 BETWEEN Cidneo Pty Ltd Appellant and Chief Executive, Department of Transport and Main Roads Respondent Before The Honourable Justice P Lyons, Mrs CAC MacDonald and Mr WA Isdale BRISBANE The Seventeenth day of June 2014 The Court ORDERED that: 1. The appeal is allowed. 2. The cross-appeal is dismissed. 3. The matter is remitted to the Land Court for the determination of compensation. 4. The Chief Executive, Department of Transport and Main Roads pay the costs of the appeal and the cross-appeal, including reserved costs, if any, on the standard basis. By the Court Registrar -- 32 of 32 --