Dobson v Gold Coast City Council [2013] QLC 48

LAND COURT OF QUEENSLAND CITATION: Dobson v Gold Coast City Council [2013] QLC 48 PARTIES: Terrence Dobson (applicant) v. Gold Coast City Council (respondent) FILE NO: AQL176-12 DIVISION: General Division PROCEEDING: Application to determine compensation under the Acquisition of Land Act 1967 DELIVERED ON: 29 July 2013 DELIVERED AT: Brisbane HEARD ON: 15, 16, 17, 18, 19, 22 April 2013 Submissions received and decision reserved 2 July 2013 HEARD AT: Brisbane MEMBER: W A Isdale ORDERS: 1. Compensation is determined in the amount of One Million One Hundred and Twenty-three Thousand Dollars ($1,123,000). 2. Disturbance, in addition to that paid in the advance, is determined in the amount of Forty Thousand Dollars ($40,000) being the sum agreed by the parties. 3. Interest is payable to the applicant at the rates applicable for the relevant years and as published on the Land Court website, that is: 2007 6% 2008 5.75% 2009 5% 2010 5.5% 2011 5% 2012 4% 2013 3.5% 4. Interest is payable on and from the date of resumption to and including the day immediately preceding the date on which payment of the sum due is paid. -- 1 of 23 -- 2 5. Any application for costs is to be filed and served within 14 business days of the publication of these reasons and any reply is to be filed and served within 14 business days of the application. CATCHWORDS: Acquisition of land ― valuation ― competing methods ― mixed use development likely to be approved despite residential use zoning ― considerations affecting proportions of residential and commercial uses likely to be approved Acquisition of Land Act 1967 Integrated Planning Act 1997 Brisbane City Council v Bortoli [2012] QLAC 8 Brisbane City Council v Mio Art Pty Ltd and Greener Investments Pty Ltd (In Liquidation) (2011) 32 QLCR 285; [2011] QCA 234 De Ieso v Commissioner of Highways (1981) 27 SASR 248; (1981) 47 LGRA 412 Minister for Public Works v Thistlethwayte [1954] AC 475 Mio Art Pty Ltd & Ors v Brisbane City Council (2009) 30 QLCR 213; [2009] QLC 177 O’Kane v The Commissioner of Main Roads (1976) 3 QLCR 331 Spencer v The Commonwealth (1907) 5 CLR 418 APPEARANCES: Mr JA Griffin QC and Mr D Wilson, instructed by Chan Lawyers, for the applicant Mr BG Cronin, instructed by Gall Standfield & Smith, for the respondent Background [1] By taking of land notice (no. 39) 2007 the respondent (council), acting under authority of the Acquisition of Land Act 1967 (the Act) took from the applicant certain land. The land was described as Lot 906 on SP (survey plan) 207807 and having an area of 4,404 m², being part of the land in Title Reference 50202981, parish of Coomera. The land was taken for road purposes and was vested in the council for an estate in fee simple on and from 14 September 2007. The taking of land notice was published in the Queensland Government Gazette on 14 September 2007, no. 11, page 202. At the request of the parties, an inspection of sites as agreed to by them, was carried out on the first day of the hearing. [2] When the respondent was compulsorily deprived of this land, part of a larger 30,840 m² parcel owned by it, there arose, under s.12(5) of the Act, an entitlement to compensation for the value of the land taken. The parties having been unable to agree on this value, -- 2 of 23 -- 3 the applicant has come to this Court for it to determine compensation in accordance with s.20 of the Act. [3] Section 20(2) of the Act provides that: “Compensation shall be assessed according to the value of the estate or interest of the claimant in the land taken on the date when it was taken.” The “value” referred to in s.20(2) of the Act is accepted to be the value to the applicants as dispossessed owners.1 The word “value” is not defined in the Act, its meaning has been accepted to be the market value determined in accordance with the decision of the High Court in Spencer v The Commonwealth.2 The relevant passages appear in the judgments of Griffiths CJ and Isaacs J. The learned Chief Justice said: “In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring ‘What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?’ It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.”3 Isaacs J said: “In the first place the ultimate question is, what was the value of the land on 1st January 1905? All circumstances subsequently arising are to be ignored. Whether the land becomes more valuable or less valuable afterwards is immaterial. Its value is fixed by Statute as on that day. Prosperity unexpected, or depression which no man would ever have anticipated, if happening after the date named, must be alike disregarded. The facts existing on 1st January 1905 are the only relevant facts, and the all important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted. The plaintiff is to be compensated; therefore he is to receive the money equivalent to the loss he sustained by deprivation of his land, and that loss, apart from special damage not here claimed, cannot exceed what such a prudent purchaser would be prepared to give him. To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.”4 1 Brisbane City Council v Mio Art Pty Ltd and Greener Investments Pty Ltd (In Liquidation) (2011) 32 QLCR 285; [2011] QCA 234 per Fryberg J at [31] where his Honour referred to O’Kane v The Commissioner of Main Roads (1976) 3 QLCR 331 at p.333 and Minister for Public Works v Thistlethwayte [1954] AC 475 at p.491. 2 (1907) 5 CLR 418. 3 (1907) 5 CLR 418 at 432. 4 (1907) 5 CLR 418 at 440-441. -- 3 of 23 -- 4 This Court’s role concerning the land’s development potential [4] In cases such as the present, this Court does not concern itself with the precise details of what the local authority would have approved to be built. Its role was explained by the learned President in the following way: “It is not the function of this Court to decide whether the planning authority would approve a particular proposal. Rather it is the function of the Court to determine, having heard the relevant evidence, how the hypothetical prudent purchaser referred to in the judgments in Spencer would have viewed the potential financial return if a proposal were considered that included one or other of the proposed plans.”5 When I come to consider drawings of possible developments provided by the parties, my consideration of them will be with this explanation firmly in mind. Areas of agreement and disagreement - an overview [5] Some appreciation of the scope of the disagreement between the parties concerning the value of the land taken may be gained from their positions as expressed in money terms. At the commencement of the hearing, Queen’s Counsel for the applicant sought and obtained the Court’s leave to amend the claim to $1,204,678.89 exclusive of interest, which was also sought. The respondent’s position may be gauged by its payment of an advance to the claimant. It paid $481,010.10 on 8 August 2008. Of this, $10,233 was on account of items of disturbance. The disturbance amount claimed by the applicant, in addition to what has already been paid on that account, has been agreed by the parties as $40,000. The land [6] The land, at 19 Kristins Lane, Upper Coomera, is about 1.5 km west of the Coomera Town Centre and railway station. The land was taken for the widening of Days Road, to which the remainder of the applicant’s land has a frontage. Days Road and Kristins Lane intersect. The land is zoned for residential use and is adjacent to a Woolworths supermarket and associated shopping centre which had been approved and was under construction in this residential precinct prior to the date of acquisition. The zoning [7] Although the land was, at the relevant date when it was taken, zoned for residential use, the applicant’s case was that the applicable Local Area Plan had been overtaken by events. Development that had been approved in the neighbourhood made it clear that the land had a substantial commercial potential with, accordingly, a substantial commercial element enhancing its value. The valuation relied on by the applicant takes this 5 Mio Art Pty Ltd & Ors v Brisbane City Council [2009] QLC 177 at [12], citing De Ieso v Commissioner of Highways (1981) 27 SASR 248; (1981) 47 LGRA 412 at 417. This passage was quoted by Fryberg J in Brisbane City Council v Mio Art Pty Ltd and Greener Investments Pty Ltd (In Liquidation) [2011] QCA 234 at [9]. See also Brisbane City Council v Bortoli [2012] QLAC 8 at [39]. -- 4 of 23 -- 5 commercial potential into account. The respondent’s valuation evidence was provided on the basis that it was correct to value the land taken as having the potential solely for residential use, in accordance with its actual zoning. The neighbourhood [8] The population in this area was growing rapidly, from a low base. The statistical local area population doubled from 7,650 in 2001 to 15,562 in 2006, representing an average annual growth rate of 15.3% compared to 3.7% per annum for the whole of Gold Coast City.6 The expert evidence The economic analyses Mr Mike McCracken [9] Mr Mike McCracken was engaged on behalf of the applicant. In his report7 an aerial photograph8 shows the site from which the subject land was taken and its relationship with nearby development. The Coomera City Centre with its Woolworths supermarket and surrounding shops was under construction at the date of resumption.9 This centre is owned, and was developed by, Lewani Springs Resort Pty Ltd which also owns 5.37 ha of land adjoining the subject land’s northern boundary. Also at the time of resumption a two storey mixed-use development, with retail and office space, was under construction on the south-east corner of Days Road and Old Coach Road, on the opposite side of Days Road to the subject land and quite close to it.10 Both of these developments were being constructed on land that was still designated for residential uses, despite their approval and being actually under construction.11 [10] At the date of resumption, there was an application by “Family Assets” for a 4,000 m² neighbourhood centre with a Coles supermarket and specialty shops on a 3.3 ha site on the north-west corner of Days Road and Old Coach Road. The Council had refused this application and that refusal was in the process of being appealed to the Planning and Environment Court. In February 2008 that court dismissed the appeal.12 [11] From developments actually taking place, those planned and in view of the population pressure, Mr McCracken was of the opinion that at the date of the resumption, a properly informed prudent purchaser would have considered it a high probability13 that 6 Exhibit 5, paragraph 16. 7 Exhibit 5. 8 Exhibit 5, page 4, paragraph 15. 9 Exhibit 5, page 2, paragraph 10. 10 Exhibit 5, page 3, paragraph 11. 11 Exhibit 5, page 3, paragraph 13. Transcript (T) Day 2, page 10, lines (L) 40-50. 12 Exhibit 5, page 4, paragraph 14. 13 Exhibit 5, page 14, paragraph 47. -- 5 of 23 -- 6 the Council would be satisfied that there was economic and community need for complementary and ancillary non-residential uses of the land in conjunction with higher density residential development.14 [12] Mr McCracken was asked about the economic need report prepared for the respondent by Mr Marcus Brown of Economic Associates Pty Ltd.15 Mr McCracken disagreed with Mr Brown’s view16 that the land would be suitable for residential development towards or possibly exceeding the upper limit allowed under the Local Area Plan on the basis that the limit was four storeys. This would be too dense for the location, as it was not near a railway station. In his view the highest and best residential use would be a townhouse development.17 [13] Mr McCracken agreed with Mr Brown that at the time of resumption of the land the market was still very buoyant. This was before the collapse of Lehman Brothers in 2008.18 He saw Mr Brown’s projected population growth in the area of 19.9%19 as “overly optimistic”20 and his Retail Expenditure Analysis21 as unhelpful.22 Additionally, he did not find Mr Brown’s use of a turnover density benchmark, a broad-brush indicator,23 particularly useful.24 [14] In view of the development going on in the area, Mr McCracken was of the view that there would be only a “very low bar”25 to hurdle for a developer to obtain approval for a change of use of this land to include commercial use. Mr McCracken was of the view that a large two level 700 m² medical centre on the land, as considered in the respondent’s case, would be unlikely due to other medical centres planned for the area, its large size and the likelihood that a chemist would be included in such a development. Under the Australian Community Pharmacy Authority’s location rules a 1.5 km separation is required between pharmacies and that rule would stand in the way of such a development.26 [15] In summary, Mr McCracken concluded that a mix of residential and non-residential uses, presented to the Council as a master-planned development, would have a “high 14 Exhibit 5, page 14, paragraph 47. 15 Exhibit 8. 16 Exhibit 8, page 7, paragraph 21. 17 T 2-25 L 35-48. 18 Exhibit 8, page 11, paragraph 33. T 2-26 L 40 to T 2-27 L 1. It is notorious that Lehman Brothers Holdings Inc. filed for chapter 11 bankruptcy protection at 1.45 am on September 15, 2008, marking the beginning of the Global Financial Crisis (GFC). 19 Exhibit 8, page 12, Table 4. 20 T 2-27 L 29. 21 Exhibit 8, page 13, Table 5. 22 T 2-27 L 45-60. 23 Exhibit 8, page 15, paragraph 41. 24 T 2-28 L 10-38. 25 T 2-32 L 12. Compare “a fairly low bar” at T 2-79 L 15. 26 Exhibit 6, page 2, paragraph 7. -- 6 of 23 -- 7 probability” of satisfying it that there was an economic and community use for it.27 In this he stands apart from Mr Brown, who concluded that medium density residential development, in the form of attached townhouses, would be expected. In Mr Brown’s view the only high level of economic need that could be demonstrated would be for a long day child care facility.28 There was more than sufficient warehouse space available for several years into the future so this use was not part of the site’s potential.29 [16] Mr McCracken was shown the concept design drawings prepared for the applicant by Mr Douglas Pearson of Inscape Design.30 Mr Pearson’s plans A101 and A102 show two possibilities. Both involve a small component of Small Office/Home Office (SOHO) apartments, a controversial use which would be unique in this area. Drawing A101 includes a child care centre and both have shops, retail or service industry buildings along the Days Road frontage and apartments behind. Those concept drawings accord with Mr McCracken’s view of the highest and best use of the land before the resumption. [17] Mr Pearson also drew two concept drawings showing uses of the remaining land after the resumption, which took a 15 m wide strip of the land along its Days Road frontage so as to allow the widening of Days Road. In the previous drawings, A101 considered 74 apartments and A102, 62 apartments and 15 townhouses. The apartments, two levels over ground-level carparking, were not considered economic for this area so Mr McCracken’s concepts for the use of this land has not been entirely reflected in these drawings. [18] Drawings A103 and A104 reflect, respectively, 68 apartments and a childcare centre in A103 and 15 townhouses and 58 apartments in drawing A104. In the case of all of the before and after drawings, the commercial uses were placed along the Days Road frontage. [19] Mr Peter Devenport, an architect, was engaged by the respondent and prepared concept design drawings based on the respondent’s advice of the development potential of the land. He described these as indicative master plans for the pre and post-resumption land.31 In both cases there were two commercial buildings in the north-west area of the land. These would be potentially utilised for a child care centre in one and a medical centre, cafe and offices in the other. In both cases the same area, 6,400 m², was given over to commercial uses and the balance to townhouses. The resumption had the effect 27 Exhibit 7, page 10, paragraph 31. 28 Exhibit 7, page 10, paragraph 32. 29 Exhibit 7, page 9, paragraph 29. 30 Exhibit 2. 31 Exhibit 3. -- 7 of 23 -- 8 of reducing the number of townhouses from 80 to 66 due to the loss of the resumed area. [20] These drawings both place townhouses on the Days Road frontage, along which is a vehicular entry serving both the commercial and residential uses. In neither case does the commercial component propose to exploit the frontage to Days Road which, in the area reserved for commercial use, is carparking space and vegetation landscaping. Mr McCracken was of the view that this proposal did not represent the highest and best use of the land fronting Days Road.32 [21] In cross-examination of Mr McCracken it was highlighted that this land was in a residential, not a commercial area, according to the town planning documents. He maintained his view that this land, sandwiched between industrial uses to the east and commercial to the north and east had “a very good chance”33 of gaining the Council’s approval of a development application incorporating some commercial and residential uses.34 The Council, in his opinion, would recognise that this area was in transition35 and that existing development was a better indication of the area than the zoning36 which allowed for medium density residential use of about 33 units per hectare.37 Mr McCracken did not agree that non-residential use of the land would be very small and minor in nature.38 The economic need analysis by Mr Marcus Brown [22] Mr Marcus Brown of Economic Associates Pty Ltd provided an economic need analysis for the respondent. His anticipated population growth rate for the area, 19.9%,39 while above that applied by Mr McCracken also indicated that robust growth was to be expected in this area. He used a turnover density benchmark40 to convert retail expenditure to demand for floor space and concluded that existing and approved floor space in the area would be sufficient to meet projected demand until 2011.41 On this analysis there would not be a need for such additional bulky goods floor space at the time of the resumption in 2007 when there was a “potential oversupply”.42 Mr Brown did see a need for long day care43 and was of the view that the site would be suitable to 32 T 2-41 L 20-22. 33 T 2-58 L 41. 34 T 2-58 L 40. 35 T 2-58 L 42. 36 T 2-58 L 45. 37 T 2-58 L 12, T 2-63 L 17. 38 T 2-77 L 37-41. 39 Exhibit 8, page 12, Table 4. 40 Exhibit 8, page 15, paragraph 41. 41 Exhibit 8, page 16, paragraph 47. 42 Exhibit 8, page 18, paragraph 57, T 3-25 L 1-5, Exhibit 7, page 9, paragraph 29. 43 Exhibit 8, page 20, paragraph 67. -- 8 of 23 -- 9 meet some of that need.44 He agreed with Mr McCracken that the uses for the site included at least one, possibly two, long day child care centres and medium density residential use, including some small office/home office use.45 These experts differed in relation to mixed use retail/commercial development, Mr Brown seeing a minor to moderate need for some at the western end of the site and Mr McCracken seeing it as appropriate along the Days Road frontage.46 [23] If there was to be approval for commercial use along the Days Road frontage, Mr Brown did not see that there would be any difference to the exposure to Days Road between before and after resumption as the land would be still fronting the, widened, Days Road.47 He was of the view that, generally speaking, commercial land was more valuable than residential land48 and that where land had a mixed residential and commercial use, if some was to be taken then the owner would seek to retain the higher value commercial component and “crimp” the lower value residential part.49 He saw long day care as the most compelling commercial use50 followed, at quite a distance, by commercial office space.51 The Pacific Highway would be something of a boundary52 and those who lived east of it would probably mostly do business at Helensvale.53 Conclusions on the economic needs evidence [24] In this area of very robust population growth a prudent and properly advised purchaser would have been comfortably convinced that the Council, on the basis of its past behaviour, would present a relatively low bar to use of this land beyond the residential use for which it was nominally designated at the date of resumption. There was clear economic need for commercial use of at least one, perhaps two, long day care facilities on the site. There was not a high likelihood of a medical centre being approved due to the restrictions imposed by the Commonwealth authority on the propinquity of pharmacies, one of which would have been a likely accompaniment to a medical centre. There was a minor to moderate need for some commercial space, either along Days Road or at the western corner of the site. The content of commercial use, other than for child-care, is disputed. Multi-storey apartments are not suitable for the site but townhouses are. Land having a commercial potential is generally more valuable than 44 Exhibit 8, page 20, paragraph 68. 45 Exhibit 7, page 6, paragraph 21. 46 Exhibit 7, pages 6-7, paragraph 21. 47 T 3-28 L 37-43. 48 T 3-28 L 47-50. 49 T 3-28 L 50 to T 3-29 L 10. 50 Exhibit 8, page 26, paragraph 93. T 3-34 L 37-43. 51 T 3-34 L 50-55. 52 T 3-49 L 20-25. 53 T 3-50 L 22-27. -- 9 of 23 -- 10 residential land and where it could be used for either, an owner would seek to maximise the higher-value commercial use at the expense of the residential use. The resumption of the land fronting Days Road left the remaining land still with its frontage to Days Road. Building designer and architect’s evidence Mr Douglas Pearson of Inscape Design [25] Mr Pearson prepared a report, exhibit 2, for the applicant. He provided drawings to reflect the uses identified by Mr McCracken, engrossing two concepts, each considered, and drawn, before and after the resumption to illustrate its impact.54 He allowed for separate access for the residential uses55 and put the proposed commercial buildings along Days Road. His view was that this would provide optimal exposure to them, whether they were used for service industries or for retail showrooms as the passing traffic would generate good trade for them, something his clients’ seek.56 His drawings show the parking to be at the rear of the buildings, which he said the Council requires.57 In the two before and after possibilities he has drawn, he has kept the commercial buildings along the frontage to Days Road. In his second option he has narrowed the commercial buildings to what he considered to be the minimum depth that would be acceptable to a user.58 [26] Under both of the concepts drawn, there was a loss of gross floor area for non- residential uses in the post-resumption case, either 1,500 m² or 1,930 m².59 Mr Pearson saw a “great commercial advantage” in having the commercial buildings face Days Road.60 He noted that in Mr Devenport’s concept, prepared for the respondent, residential and commercial users would share an entry61 and that residential and commercial storm-water would be allowed to mix, whereas it was good to keep them separate.62 [27] Mr Pearson did not agree with Mr Devenport that the development potential of the site for non-residential uses does not change after the resumption as the result would just be loss of some residential area, the space dedicated to commercial uses being maintained. Mr Pearson noted that this assumes that one component of a mixed-use development 54 Exhibit 2, page 2, 2.4. 55 T 3-58 L 10-12. 56 T 3-58 L 15-26. 57 T 3-57 L 9. 58 T 3-59 L 20-38. 59 Exhibit 2, page 3, 3.1. 60 T 3-63 L 40-50. 61 T 3-64 L 20-30. 62 T 3-65 L 30-50. -- 10 of 23 -- 11 could be reduced and not the other. He worked on the basis of a “balanced reduction of the components of the scheme”.63 [28] Mr Pearson’s drawings included apartments and townhouses. He was not aware that the economic experts had agreed that two-storey townhouses were economic in this area and that apartments, one above the other and requiring a concrete ceiling/floor between each other, were not.64 [29] Mr Pearson accepted that it would be more desirable to a developer to maintain the same area of commercial use before and after resumption, it being a more valuable use of land.65 He could not point to any Council requirement for any particular balance between commercial and residential uses of the site.66 Mr Peter Devenport - Architect [30] Mr Devenport prepared a concept design for the respondent. He proceeded, as has already been noted, on the basis that there would be townhouses and a medical centre, cafe, offices and a child care centre. Before the resumption, there would be 80 townhouses and afterwards, 66.67 There would be no change to the non-residential uses, which would occupy 2,115 m² in the before and the after resumption cases.68 He worked to a density of 33 dwellings per hectare,69 as agreed by the planners to be appropriate.70 Apartment construction is significantly more expensive than townhouses.71 Conclusions on design and architecture [31] There would be a great commercial advantage in having commercial buildings face Days Road. A developer would wish to maintain the same area of commercial use after the resumption as that would maximise value. There is no Council requirement for any particular balance between commercial and residential uses of the site. Town planning evidence Mr Greg Ovenden of Craven Ovenden Town Planning [32] Mr Ovenden was engaged on behalf of the applicant. His report became exhibit 19. The joint report prepared by Mr Greg Ovenden and Mr Peter Bell of Place Design Group, engaged by the respondent, was exhibit 21. In exhibit 21, at page 10, paragraph 40, it is stated that: 63 T 3-66 L 30-53. 64 T 3-71 L 20-40. 65 T 3-73 L 1-10. 66 T 3-73 L 20-30. 67 T 3-81 L 40-50. 68 Exhibit 3, 2.3. 69 T 3-83 L 20. 70 T 3-81 L 54-55. 71 T 3-82 L 12-20. -- 11 of 23 -- 12 “The planners agree that generally the provisions of the Planning Scheme (and in particular the Coomera Local Area Plan) as they relate to the site and immediate locality, have been overtaken by events particularly given the approval of significant retail and commercial uses adjacent to the intersection of Old Coach Road and Days Road.” [33] Although the Coomera Local Area Plan is agreed by the planners to have been overtaken by events, the Table of Development for the area would be a relevant consideration.72 It does not contemplate showrooms and service industry activities in the area.73 Applications can be made for uses not listed in the Table of Development by means of a material change of use application which would be assessed against the desired environmental outcomes of the planning scheme and on its planning merit subject to s.3.5.14 of the Integrated Planning Act 1997.74 [34] Mr Ovenden was of the view that the Council would consider applications on a merits basis75 setting the bar to approval “fairly low”.76 At the resumption date it was clear that a shopping centre was going on residential land in this locality.77 Both planners agree that a prudent purchaser would contemplate a mixed-use development of medium- density residential use and non-residential activities complementary to the evolving centre and adjacent low impact industry and fringe business precinct to the east.78 They agree that “the site lends itself to mixed use development but equally could be developed solely for medium density residential purposes”.79 Mr McCracken was of the view that a range of uses, like printing and copying or dry-cleaning, could seek to locate on the site. They would be “an entirely appropriate use and its complimentary to the centre activities that are occurring on the adjoining land”.80 There was significant development activity in close proximity to the subject land at the date of resumption. Mr Ovenden sets out a list in his report.81 The first item on his list is the Coomera City Centre, anchored by the Woolworths supermarket. The centre was approved in 2005 and under construction at the date of resumption. Although applied for under a superseded planning scheme to that in force at the relevant time, the Woolworths-anchored shopping centre was a fact in being at the date of the resumption. [35] The planners agree on the potential of this land for a mixed-use development, but disagree on its make-up. An impact assessment would be required. Under the then 72 Exhibit 21, page 10, 5.4 paragraph 41. 73 Exhibit 21, page 10, 5.4 paragraph 41 Table 1. 74 Exhibit 21, page 11, paragraph 43. 75 T 4-11 L 29-45. 76 T 4-12 L 7. 77 Exhibit 21, page 10, Table 1. 78 Exhibit 21, page 12, paragraph 48. 79 Exhibit 21, page 12, paragraph 49. 80 T 4-13 L 44-49. 81 Exhibit 19, page 4, 2.4. -- 12 of 23 -- 13 applicable Integrated Planning Act 199782 the assessment must not conflict with the planning scheme unless there are sufficient planning grounds to justify it doing so. The scheme had been overtaken by events83 so that the Coomera Local Area Plan was not a barrier to a mixed-use development. The need for that sort of development was not changed by the resumption84 and the frontage to Days Road was not materially reduced by it.85 [36] Mr Ovenden agreed that a prudent purchaser would seek to maximise the commercial component of the land to the same extent after the resumption as was available before.86 Some of the approvals for developments may have been processed under previous planning schemes.87 They do, however, exist as facts on the ground.88 [37] While local governments push for car parking for commercial premises to be at the rear there was no requirement here that all car parking be behind such buildings.89 [38] This section of Days Road is commercial and to have this site approved for non- residential use along its face to Days Road almost completes the centre.90 Mr Peter Graham Bell’s evidence [39] Mr Bell was engaged by the respondent. His reports became exhibits 13, 14 and 15 and he contributed to exhibit 21, the joint report of the town planners. Mr Bell also provided exhibit 9, a chronology of commercial proposals in the area. Mr Bell was of the view that after the resumption the land probably had better exposure than before, as it has a four lane road in front of it.91 At the time, obtaining Council approval could take 18 months to two years and cost a couple of hundred thousand dollars, including $30,000 to $40,000 in Council fees.92 He would include a medical centre as an appropriate use of the site.93 Mr Brown was of the view that the Council would resist an application for commercial uses on the site.94 In his opinion, “commercial uses which may be found in residential areas could be acceptable uses for the site”.95 Subdivision and operational works were approved for the Woolworths-anchored centre on 21 September 2006, 82 Integrated Planning Act 1997 s.3.5.14, Reprint 6C. 83 Exhibit 19, page 13, 4.22 and exhibit 13, page 10, 8.2. 84 T 4-31 L 34-38. 85 T 4-31 L 45-52. 86 T 4-32 L 45-51. 87 T 4-61 L 30-51. 88 T 4-60 L 2. 89 T 4-77 L35 to T 4-78 L 14 and exhibit 23 Performance Criteria PC 19 and T 5-10 L 7-10. 90 T 4-80 L 26-50. 91 T 5-12 L 57 to T 5-13 L 1. 92 T 5-8 L 20 to T 5-9 L 5. 93 T 5-12 L 40-50. 94 T 5-13 L 17-27. 95 Exhibit 13, page 9, 6.14. -- 13 of 23 -- 14 which “paved the way” for this area to be considered as an adjunct to the shopping centre.96 A mixed use development was a reasonable expectation.97 [40] In Mr Bell’s view the loss from resumption is the loss resulting from not being able then to build an extra 14 dwelling units.98 Despite a mixed use development being a reasonable expectation,99 Mr Bell holds the view that the highest and best use of the land was for residential development.100 Conclusions on planning [41] The Woolworths-anchored centre and the other commercial development in the area would lead a reasonable purchaser to have confidence that the subject land, where it fronts Days Road, had good potential for approval of non-residential uses, this section of the road having acquired a commercial potential from its proximity to the approved commercial development. A prudent purchaser would seek to maximise the commercial component of the land so that it was not reduced by the resumption, which did not materially reduce that frontage. The valuation evidence Mr Laurie J Hamilton, Taylor Byrne [42] Mr Hamilton was the valuer engaged on behalf of the applicant. His report became exhibit 25. The joint valuers’ report is exhibit 26. He has valued the loss due to the resumption at $1,123,000.101 The majority of the land is zoned RD 1 and a small sector, in the western corner is RD 2.102 The mix of land uses has not been altered by the resumption.103 He believes that a prudent purchaser, properly advised, would see a development application for the uses shown in the Inscape Design drawings as having good prospects of being approved.104 Mr Hamilton does not consider that there is any claim for severance, injurious affection or enhancement105 although Mr Parsons, the valuer for the respondent, has allowed for a slight increase in the m² rate post- resumption, from $133 to $135 m².106 Mr Parsons calculated compensation as $510,000.107 96 Exhibit 13, page 13, 8.23. 97 Exhibit 13, page 14, 8.27. 98 Exhibit 13, page 14, 9.3. 99 Exhibit 13, page 14, 8.27. 100 Exhibit 13, page 16, final paragraph. 101 Exhibit 25, page 2, 1.9. 102 Exhibit 25, page 9, 3.6. T 5-35 L 50-53. 103 Exhibit 25, page 14, 4.4. T 5-37 L 15-20. 104 Exhibit 25, page 14, 4.4. 105 Exhibit 25, page 20, 8.0. 106 Exhibit 16, page 15, 5.5. 107 Exhibit 16, page 15, 5.5. -- 14 of 23 -- 15 [43] Mr Hamilton expressed the view that where there was a blend of uses, residential and non-residential, the Council would seek a proportional reduction of each after the resumption and not allow the owner to change the proportions and alter the balance.108 In assessing compensation he relied on a number of sales. Mr Hamilton’s sales [44] Sale 1 at 7 Cunningham Drive South, Coomera for $2,650,000 exclusive of GST in April 2004 was of 1.3054 ha. It is close to the Coomera Town Centre and 1.5 km from the subject. It was purchased to be held for a long time. With no immediate development potential, it was valued at $203 m². It could be developed up to six storeys with residential and office uses as well as medical and associated uses, newsagent, florist and hairdressers. It is a dated sale inferior to the subject. I have had no regard to a reported offer in 2006. [45] Sale 2 adjoins sale 1, is 2.5 km from the subject and has the same potential. A 3 ha site, it sold in December 2004 for $5,500,000 excluding GST and was unlikely to be developed within 10 years. It was valued at $183 m². It is a dated sale, inferior to the subject, with higher potential which is more remote in time. [46] Sale 3, presently a car park near the Coolangatta airport, 48.6 km south of the subject, is zoned for community purposes and accessed through airport land. Some 2.83 ha in area, it sold on 27 February 2007 for $11,500,274 excluding GST. It has superior location and prospects to the subject and, at $406 m², a higher rate per m². [47] Sale 4, a sale of 1.4632 ha on 11 October 2006 for $3,750,000 excluding GST is 25.6 km west of the subject land. It was identified for local business purposes. It was valued at $256 m² and is significantly smaller than the subject, more remote and with inferior development potential. It was considered to have a relatively similar rate per m² to the subject. [48] Sale 5, of 4.92 ha sold for $9,250,000 exclusive of GST on 13 August 2007, is 3.9 km east of the subject. It is below flood level and required about 1 million cubic metres of fill and an overland path for flood water. The sale is close to the relevant (resumption) date. Mr Hamilton values it at $188 m². It was purchased with development approval. [49] Sale 6, of 1.957 ha, is 29.3 km south of the subject. It sold for $7,000,000 exclusive of GST on 3 February 2006. It had an approval in 2005 for industry and warehouse development. It was purchased subject to a development approval and has been valued at $358 m². It is inferior to the subject in terms of development yield and location but has the advantage of a development approval. 108 T 5-37 L 20 to T 5-38 L 12. -- 15 of 23 -- 16 [50] Mr Hamilton has set out a list of four sales, and one re-sale, of well located mixed use sites in order to demonstrate that the market for such sites in the general locality of the subject was sound to buoyant at the time.109 Mr Hamilton’s comments on Mr Parsons’ sales [51] Mr Hamilton was asked to provide his comments on the sales used by Mr Parsons in his valuation.110 In his report, exhibit 16, Mr Parsons referred to 10 sales. For the purposes of the hearing, numbers 6, 7 and 10 were not relied upon by the respondent. I will consider Mr Hamilton’s comments on the other sales seriatim. Sale 1 A child care centre. The subject has a superior location. Sale 2 Only 2,993 m² in area and without mixed use potential. Its rate of $367 m² is due to its small size. Sale 3 1 Ruth Terrace, Oxenford, was used by Mr Hamilton as one of his mixed use sales. It was also his re-sale in May 2008, which is the sale used by Mr Parsons. It is 4,078 m², much smaller than the subject, which, prior to resumption, was a 30,840 m² parcel. Sale 4 A watercourse runs through it. It will be a relatively low density residential estate. Mr Hamilton is of the view that it is not comparable to the subject land. Sale 5 Purchased by the Education Department, it was a kart club and adjoins a school. There was negotiation to move the club elsewhere and was not, so far as he was aware, advertised prior to the sale. Sale 8 There is no non-residential component, making it difficult to compare with the subject. Sale 9 There is no non-residential component, making it difficult to compare with the subject. [52] Mr Hamilton expressed the opinion that the appropriate method of valuation, which he applied, was a blended, or overall, rate per m². His reason for this was that there was still too much unresolved in the town planning to attribute certain areas to specific uses.111 [53] Mr Hamilton was of the view that the resumption would not change the pre-existing situation of an owner of the land seeking to maximise the commercial opportunities and 109 Exhibit 25, page 37, 9.0. T5-51 L20-30. 110 Exhibit 16. 111 T 5-56 L 25-40. -- 16 of 23 -- 17 the Council looking to maximise the residential use, in an environment where there is nothing in the planning scheme that says what the balance should be.112 [54] When asked about the differences between the concept drawings, Mr Hamilton made the points that in his view, the balance of uses to be arrived at before the resumption will be maintained after it, since the same forces will be operating, leading to a similar reduction in both components.113 He has accordingly kept the per m² rate the same.114 His use of a blended rate makes that approach possible.115 It is not affected by the use of a particular development scenario and will accommodate any reasonable plan.116 Variations in the plans will not impact on his valuation approach.117 The market at the time was quite sound, almost bullish.118 Mr Parsons’ evidence [55] Mr Lloyd Parsons was the valuer engaged on behalf of the respondent. He participated in the joint report, exhibit 26, and prepared his report, exhibit 16, and his supplementary report, exhibit 17. Mr Parsons was of the opinion that the highest and best use of the land would have been for a mixed use development with a child care centre, small commercial building located towards the western end of the site and medium density residential use of approximately 33 dwelling units per hectare.119 [56] Like Mr Hamilton, Mr Parsons used the before and after method of valuation, comparable sales and a rate per m².120 Mr Parsons did not use a blended rate. [57] Mr Parsons was not satisfied that there were directly comparable sales such that it was possible to establish a blended rate.121 He believed it to be more accurate to find and apply a residential and non-residential rate separately. He was of the view that the non- residential area would be the same, both before and after resumption,122 so looking at the separate components would be more accurate than using a blended rate.123 This is a departure from Mr Hamilton’s approach. [58] Mr Parsons was of the opinion that Mr Hamilton’s sales 1 and 2 were not useful as they are located in the Coomera Town Centre, adjoining the railway station, and will eventually be part of an area of “very intense” development.124 The sales dated back to 112 T 5-57 L 30 to T 5-59 L 10. 113 T 5-63 L 5-6. 114 T 5-63 L 40. 115 T 5-63 L 8-10. 116 T 5-63 L 30-40. 117 T 5-63 L 8-10. 118 T 5-98 L 8-10. 119 Exhibit 16, page 10, 5.1 second last paragraph. T 6-4 L 25-30. 120 T 6-5 L 26-36. 121 T 6-5 L 46-49, T 6-6 L 5-8. 122 T 6-6 L 18-21. 123 T 6-6 L 12-16. 124 T 6-7 L 13-15. -- 17 of 23 -- 18 2004. Regarding Mr Hamilton’s sale 3, it is at Coolangatta airport and within walking distance to the beach. It can be developed intensely.125 Sale 4 is a retail shopping precinct area126 and Sale 5 had an approval, dating back to 2002, for three storey apartments,127 which was not viable.128 That sale was out of line with the market.129 [59] Mr Parsons saw Mr Hamilton’s sale 6 as not useful130 as it was sold with approval for warehouse and industry and had $1.2M of earthworks done.131 Concerning Mr Hamilton’s mixed use site sales,132 Mr Parsons referred to his comments at page 29 of exhibit 26, the joint report, and noted that they are smaller, fully developed sites.133 He believes that Mr Hamilton’s 8% discount rate is significantly understated.134 Mr Parsons’ sales [60] Mr Parsons was of the opinion that his best sale was his sale 1.135 At 228 Billinghurst Crescent, Upper Coomera and zoned for residential use, it sold on 14 August 2007, this being the most relevant date of sale, it having also sold in April 2007 and in February 2010. Its area is 9,421 m² and was sold improved for $1,900,000, which is $202 per m², with a brick and tile dwelling which Mr Parsons assessed as adding little or no value. There was an approval for a child care facility, dwellings and a two lot subdivision. It was valued at $1,400,000 for the child care component of 5,005 m² at $280 m² and $500,000 for the residential site of 4,417 m², being $50,000 per dwelling or $113 m². Significantly smaller than the subject and sold with the development approval, which the subject does not have the certainty of, 53% of this land was approved for commercial use. Mr Parsons valued this land as significantly superior on a rate per m² basis. [61] Sale 2, of 2,993 m² residential zoned land at 35 Nicola Way, Upper Coomera, took place on 21 September 2006 for $1,100,000 which is $367 m². Originally four vacant allotments, they were subsequently amalgamated and developed as a child care centre. An approval for a 75 place child care centre was given in May 2005 and the purchaser later gained approval for a further 63 places in an extended facility. Mr Parsons does not 125 T 6-8 L 50-55. 126 T 6-9 L 7-13. 127 T 6-10 L 3-5. 128 T 6-10 L 25. 129 T 6-9 L 45, T 6-10 L 30-32. 130 T 6-12 L 3-4. 131 T 6-12 L 17-18. 132 Exhibit 26, page 29. 133 T 6-13 L 1-3. 134 Exhibit 26, page 34. T6-14 L1-15. 135 Exhibit 16 page 12, exhibit 17 page 2, T 6-14 L 27. Mr Parsons rated the subject land as superior overall to his sale 1. T 6-29 L 50-53. -- 18 of 23 -- 19 see this as directly comparable to the subject but indicates the value for an approved child care centre in the area.136 [62] Sale 3, the common sale, was of 4,078 m² land zoned “Park Living” and located at 1 Ruth Terrace, Oxenford. It was sold for $1,385,000 on 8 May 2008, with a house which has since been demolished. This equated to $340 m² and it was sold with approval for construction of a 120 place child care facility. The purchaser was able to obtain an increase to 150 places. Mr Parsons does not see this as directly comparable to the subject land but illustrative of the value of land with an approved commercial potential.137 [63] Sale 4, at 203 Baileys Mountain Road, Upper Coomera, sold on 26 April 2007 for $1,883,636, which is $59 per m². Its area is 31,800 m². It is in the residential precinct, gently to moderately undulating and uncleared. It is partly covered by a conservation and landscape protection zone. It sold without any development approval. In November 2008 an approval was gained for 44 attached and six detached dwellings. The subject land is superior in location and development potential and on a rate per m² basis.138 [64] Sale 5, at Lot 2, Old Creek Road, Upper Coomera, was the Kart Club land adjoining the school. The Education Department bought it by negotiation for $3,000,000 on 25 January 2008. Its area is 37,700 m², which is $80 per m². Zoned residential, its highest and best use was for dwellings.139 [65] Sales 6, 7 and 10 in Mr Parsons’ report were not relied upon so the next sale of relevance is Sale 8. Located at 70 Finnegan Way, Coomera and having an area of 36,830 m² and zoned residential, it sold on 27 March 2008 for $3,409,090, which is $93 per m². Most of the land was zoned RD1 for 25 dwellings per ha, a little was zoned RD2 for 33 dwellings per ha, just as the subject is likewise zoned with a little RD2 land although nothing turns on this. Sold without any development approval, the purchaser obtained approval for 71 dwellings, which is a net density of 36 dwellings per ha. With similar land, services and zoning, the subject has a superior location and is superior to this land, in Mr Parsons’ opinion, on a per m² basis.140 [66] Sale 9 at 52 Finnegan Way, Coomera, was of 38,100 m² residential zoned land on 9 May 2007 for $3,035,000, which is $80 per m². It was sold with a large modern “federation” style house on it and had fenced paddocks and a medium sized dam. It was sold without any development approval and the purchaser obtained approval for 62 136 Exhibit 16, page 12, 5.3. 137 Exhibit 16, page 12, 5.3. 138 Exhibit 16, page 13, 5.4. T6-35 L35-37. 139 Exhibit 16, page 13, 5.4. 140 Exhibit 16, page 14, 5.4. -- 19 of 23 -- 20 dwelling units at a net density of 32.2 per ha. Similar to the subject in land, services and zoning, Mr Parsons was of the opinion that the subject has a superior location next to a shopping centre and may have a superior development potential to this land. He assessed the subject as superior overall on a rate per m² basis.141 [67] Mr Parsons stated that the subject land was resumed at the peak of the market.142 In his valuation approach, the commercial component is not reduced after the resumption.143 He has applied a notional division of the land into residential and commercial components144 in circumstances where there is only a notional division based on indicative plans. Reality could be quite different.145 Mr Parsons proceeds on the basis that the loss of the resumed land, with its commercial potential, can be dealt with by keeping the commercial area the same at the expense of the lesser-valued residential land so that the resumption is the equivalent of taking the rear (residential) land.146 Conclusions on the valuation evidence [68] The competing approaches are that the land be either valued at a blended rate, as Mr Hamilton proposes, or as land having set areas of residential and commercial potential so that the area of commercial potential is not reduced by the resumption and residential land is reduced accordingly so that the loss may be ascertained by the value of residential land in this locality. That is Mr Parsons’ approach. It is convincing that an owner would seek to maximise value by retaining, after resumption, the same area of land for the more valuable commercial uses that had been agreed with the Council before the resumption. The approach taken by Mr Parsons assumes that it would be likely to be successful in doing so. This is however in an environment where there is no rule for setting the amount of land that would be available for non-residential uses in the before-resumption case. [69] It is clear that despite the zoning, the land had potential, prior to the resumption, for the approval of a mixed use development consisting of a residential component and some commercial uses. It is uncertain what the precise commercial uses would be but likely that a child care facility, or two, would be among them. The owner would seek, in the absence of a rule determining the outcome, to maximise the area allowed for the more valuable commercial uses and the Council, with an eye to the actual zoning and to maintaining the strategic thrust of its planning scheme, would seek to maximise the area 141 Exhibit 16, page 14, 5.4. 142 T 6-40 L 20-28. 143 T 6-49 L 27-33. 144 T 6-50 L 39-41. 145 T 6-50 L 43-60. 146 T 6-53 L 35-40, T 6-56 L 40 to T 6-57 L 26. -- 20 of 23 -- 21 used for residential purposes. In that situation, a compromise would be arrived at, with some blend of residential and commercial uses. After the resumption, the land will have, effectively, the same frontage to Days Road, which is attractive for commercial purposes. Mr Hamilton considers that the Council would not simply permit the owner to realise the same area of commercial development as before but would again seek a compromise, with proportionality of uses, which would in fact reduce the actual area available for commercial uses. Mr Parsons emphasises the desire of the owner to maintain the previous area of commercial approval but to do so is to neglect that there must once again be an agreed compromise to which the Council, with the same motivations as before, is one of the two parties. There is no reason why the Council ought not to be expected to act as before and once again seek to maximise the residential component of a development that would be acceptable to it. In doing so, I have concluded that the Council would seek to keep the same proportions of use as would have been acceptable to it in the before-resumption case. [70] As only indicative drawings presently exist, deciding that a certain area would be approved for residential uses and a certain area for commercial uses would be an arbitrary choice made on a quite limited range of possibilities. Selecting one of these arbitrary possibilities will determine the outcome of the present proceedings in a way which, being arbitrary, ought to be avoided. As the content of the blend of uses will be determined by interaction of the owner and the Council justice to the parties may best be done by adopting a method which does not assume a particular outcome of that negotiation. [71] Arriving at the balance of uses would be governed by the same considerations in the before and after-resumption cases and it is most likely that the proportion set would be the same in both cases. In order to avoid the uncertainty of selecting the areas which would be likely to be allowed to be used for residential and for non-residential, commercial uses, a blended rate for the land as having this blended potential appears to offer the best reflection of the circumstances applying to it. This will, desirably, make it unnecessary to select a precise apportionment of uses. The valuation provided by Mr Hamilton proceeds in this way, which I am satisfied, for the reasons that I have given, is the appropriate method. Overall conclusions [72] Mr Hamilton’s valuation methodology is consonant with my conclusions in relation to planning and recognises the commercial potential of the land while not attempting to predict how many square metres will be permitted to be developed for such uses in the -- 21 of 23 -- 22 context of the competing priorities of the owner and Council. It is also consistent with the conclusions which I have drawn from the economic needs analysis, namely that commercial development is suggested by the population growth and that the owner would seek to maximise that sort of use. The evidence on building design and architecture also sits consistently with the approach which Mr Hamilton has adopted as his method will obviate the need to take into account any particular development, a disadvantage of the approach employed by Mr Parsons. The use of sales evidence [73] Criticisms of Mr Hamilton’s sales evidence illustrates that the valuer’s task of finding comparable sales may not always be an easy one. Certainly, the sales which took place in 2004 had to be considered in what was agreed to be a robustly advancing market at the well-removed date of acquisition. The valuer’s expert opinion is based on his professional skill and judgment applied using the best sales that are able to be located, the selection of which are themselves a matter of professional judgment. I am satisfied that having chosen Mr Hamilton’s method, there is no proper basis to comminute his report and attempt to derive conclusions from parts of it or to incorporate parts of Mr Parsons’ report. I accept Mr Hamilton’s report and his conclusion that compensation payable for the resumption of this land is $1,123,000. Interest [74] Interest ought to be allowed so as to preserve the value of the compensation which the Court has determined. Interest is allowed at the rates set out below on and from the date of resumption on 14 September 2007 to and including the day immediately preceding the date upon which payment is made. Interest rates [75] The interest rates applicable are: Year Rate 2007 6% 2008 5.75% 2009 5% 2010 5.5% 2011 5% 2012 4% 2013 3.5% -- 22 of 23 -- 23 Disturbance [76] Disturbance, in addition to that paid in the advance, is determined in the amount of $40,000 being the sum agreed by the parties. Costs [77] Any application for costs is to be filed and served within 14 business days of the publication of these reasons and any reply is to be filed and served within 14 business days of the application. Orders 1. Compensation is determined in the amount of One Million One Hundred and Twenty-three Thousand Dollars ($1,123,000). 2. Disturbance, in addition to that paid in the advance, is determined in the amount of Forty Thousand Dollars ($40,000) being the sum agreed by the parties. 3. Interest is payable to the applicant at the rates applicable for the relevant years and as published on the Land Court website, that is: 2007 6% 2008 5.75% 2009 5% 2010 5.5% 2011 5% 2012 4% 2013 3.5% 4. Interest is payable on and from the date of resumption to and including the day immediately preceding the date on which payment of the sum due is paid. 5. Any application for costs is to be filed and served within 14 business days of the publication of these reasons and any reply is to be filed and served within 14 business days of the application. WA ISDALE MEMBER OF THE LAND COURT -- 23 of 23 --