Cidneo Pty Ltd v Chief Executive, Department of Transport and Main Roads [2013] QLC 47

LAND COURT OF QUEENSLAND CITATION: Cidneo Pty Ltd v Chief Executive, Department of Transport and Main Roads [2013] QLC 47 PARTIES: Cidneo Pty Ltd ACN: 105 454 064 (Applicant) v. Chief Executive, Department of Transport and Main Roads (Respondent) FILE NO: AQL325-10 DIVISION: Land Court of Queensland PROCEEDINGS: Application for the determination of compensation under the Acquisition of Land Act 1967 DELIVERED ON: 26 July 2013 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: His Honour Mr WL Cochrane ORDER: 1. Compensation is payable by the Respondent to the Applicant for the taking on 22 February 2008 of an area of 8.385 Ha being Lot 1 on SP218520 being part of the land contained in Title Reference 50553649, County of Stanley, Parish of Oxley in the sum of Six Million Nine Hundred Thousand Dollars ($6,900,000). CATCHWORDS: Acquisition of Land Act 1967, ss 20, 27, 28 Land Court Act 2000, s.34 Transport Infrastructure Act 1991 Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of SA Ltd (1947) 74 CLR 358 Brisbane City Council v Mio Art (2011) LGERA 352 Turner v Minister of Public Instruction (1956) 95 CLR 245 RTA v Mosca (2006) 146 LGERA 335 Electricity Commission of New South Wales v Arrow (1994) 85 LGERA 418 Willoughby Municipal Council v Valuer-General Gregory v Federal Commissioner of Taxation (1971) 123 CLR 547 -- 1 of 71 -- 2 Boland v Yates Property Corporation Pty Ltd (1999) 167 ALR 575 Spencer v Commonwealth (1907) 5 CLR 418 Yalgan Investments Pty Ltd v Albert Shire Council (1997) 17 QLCR 331 Kenny & Good Pty Ltd v MGOCA (1992) Ltd (1999) 199 CLR 413 Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 Tooheys Limited v Housing Commission of New South Wales (1952) 20 LGR (NSW) 236 at 240 Brisbane City Council v Mio Art Pty Ltd (2011) 1 83 LGERA 352 Townsville City Council v Department of Main Roads [2003] QLCR 241 APPEARANCES: Mr MD Hinson S.C. with him Mr BD Job instructed by Anderssen Lawyers for the Applicant. Mr DR Gore Q.C. with him Ms JS Brien instructed by Clayton Utz Lawyers for the Respondent. -- 2 of 71 -- 3 TABLE OF CONTENTS Cidneo Pty Ltd v Chief Executive, Department of Transport and Main Roads [2013] QLC 47 ........... 1 Background.............................................................................................................................................. 4 1. The Subject Land .............................................................................................................................. 4 2. The Resumption Process .................................................................................................................. 4 3. Legal Issues ...................................................................................................................................... 5 4. The Hearing and Witnesses ........................................................................................................... 10 5. The Issues ....................................................................................................................................... 12 6. Lay Witnesses ................................................................................................................................. 13 7. Town Planning Issues .................................................................................................................... 16 8. Engineering Issues ......................................................................................................................... 24 Summary ................................................................................................................................. 25 9. Traffic Issues .................................................................................................................................. 26 10. Valuation Issues ............................................................................................................................. 53 11. ORDER ........................................................................................................................................... 71 -- 3 of 71 -- 4 Background [1] On or about 22 February 2008 the Respondent resumed an area of about 8.385 Ha (including about 1623 square metres being part of Easement A on RP852753) being part of Lot 2 on SP177845, county of Stanley, Parish of Oxley, contained in title reference: 50553649 depicted on a drawing identified as drawing no. R13-1407LA(E). [2] By Originating Application filed on 18 August 2010 the Applicant dispossessed landowner seeks determination of the valuation of resumed land. [3] In its Originating Application the Applicant contends that the Land, Improvements, severance and injurious affection should be valued at $36,500,000. [4] The issue of disturbance has been resolved by agreement and there is no need for the Court to consider that issue. 1. The Subject Land [5] The parent parcel, prior to resumption comprised 100.477 Ha and was located at the confluence of the Centenary Highway and the Ipswich Motorway. [6] It has an access restricted frontage to Ipswich Road and direct accessible frontage to Boundary Road and to Production Street. [7] Following a Tender Program completing in May 2005 the Applicant purchased the land from the Department of Defence and settled on it on 16 September 2005. [8] The land from which the resumption occurred was one of three lots which comprised the parcel purchased by the Applicant. [9] The other two lots were Lot 1 on SP177827, with an area of 1.452 Ha; and Lot 2 on RP129729 with an area of 16.79 Ha. [10] Lot 2 on RP129729 lies on the other side of Boundary Road to the subject land. 2. The Resumption Process [11] By correspondence dated 2 May 2007 the then Department of Main Roads wrote to the Applicant advising of an intention to resume the land and enclosing the appropriate Notice of Intention to Resume. [12] The purpose identified in the Notice of Intention to Resume was “… to take the land described in the attached schedule and shown on attached plan R13-1407LA(C) for the purpose of transport, in particular, road purposes {Cunningham Arterial Road (Ipswich Motorway)}”. [13] The area proposed to be resumed pursuant to that Notice was 7,038 square metres including 226.8 square metres being part of Easement A on RP852753. -- 4 of 71 -- 5 [14] An amended Notice of Intention to Resume was issued on 23 August 2007 identifying the resumed area as being 8.385 ha (including about 1623 m², being part of Easement A on RP852753). [15] The taking of land was formalised by AMENDING TAKING OF LAND NOTICE (No. 1413) Published in the Government Gazette of Friday 22 February 2008. [16] By letter 12 December 2008 the solicitors for the Applicant applied to the Department of Main Roads as constructing authority for an advance against compensation which was paid. A total of $3,800,000 on 8 July 2009 with a further advance of $4,185,209 on 19 December 2011. [17] With respect to the before resumption situation each of the valuers engaged by the parties agrees with the other that the whole of the subject land before resumption had a value of $60,000,000.1 [18] As indicated above an area of 8.385 ha was resumed and applying the $60,000,000 figure to the original area of the parent parcel (100.477 ha) produces a figure of $60/m² so that, on that basis alone, has a value of $5,031,000. [19] As indicated above the Applicant initially contended for a compensation figure of $36,500,000. At the beginning of the appeal the Respondent sought leave (which was granted) to amend the claimed figure to $25,000,000. The Respondent for its part says that the loss is between is $6,000,000 and not more than $6,877,000.2 [20] The task for the Court is to resolve that enormous difference of some $18,000,000 or $19,000,000 in the valuation. 3. Legal Issues [21] This proceeding is a determination of assessment pursuant to the provisions of the Acquisition of Land Act 1967 (“AQL”). [22] Section 20 relevantly provides: “20 Assessment of compensation (1) In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also— (a) to the damage, if any, caused by any of the following— i. the severing of the land taken from other land of the claimant; ii. the exercise of any statutory powers by the constructing authority otherwise injuriously affecting the claimant’s other land mentioned in subparagraph (i); and 1 See Exhibit 29, Report of Hamilton, p. 3 and Exhibit 30 Report of Brett, p. 18(?). 2 Exhibit 61, p. 7. -- 5 of 71 -- 6 (b) to the claimant’s costs attributable to disturbance. Note— See, however— (a) the Geothermal Energy Act 2010, section 350D in relation to geothermal interests under that Act; and (b) the Greenhouse Gas Storage Act 2009, section 369D in relation to GHG interests under that Act; and (c) the Mineral Resources Act 1989, section 10AAD in relation to mining tenement interests under that Act; and (d) the Petroleum Act 1923, section 124C in relation to 1923 Act petroleum interests under that Act; and (e) the Petroleum and Gas (Production and Safety) Act 2004, section 30AD in relation to petroleum interests under that Act. (2) 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. (2A) However, in assessing the compensation, a contract, licence, agreement or other arrangement (a relevant instrument) entered into in relation to the land after the notice of intention to resume was served on the claimant must not be taken into consideration if the relevant instrument was entered into for the sole or dominant purpose of enabling the claimant or another person to obtain compensation for an interest in the land created under the instrument. (3) In assessing the compensation to be paid, there shall be taken into consideration, by way of set-off or abatement, any enhancement of the value of the interest of the claimant in any land adjoining the land taken or severed therefrom by the carrying out of the works or purpose for which the land is taken.” [23] It is well established by other cases which have come before the Court that, unlike the situation in a revenue case, in a case of compensation doubts are resolved in favour of a more liberal estimate.3 [24] In that Dixon J observed4 “I should like, however, to add for myself that there is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. … In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate.”5 3 See Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of SA Ltd (1947) 74 CLR 358. 4 (1947) 74 CLR 358 Page 373-374. 5 See also Gregory v Federal Commissioner of Taxation (1971) 123 CLR 547, Boland v Yates Property Corporation Pty Ltd (1999) 167 ALR 575. -- 6 of 71 -- 7 [25] The principal is sometimes expressed in a resumption by saying that it is the duty of the Court to see that compensation is “the maximum amount the owner could have obtained under the best possible circumstances”.6 [26] Kirby P (as he then was) observed in Electricity Commission of New South Wales v Arrow7 “Valuation is not a science. It is an imprecise, opinionative activity involving the consideration of many variables, sometimes with equally legitimate outcomes.” [27] Earlier His Honour had observed: “The acceptance by the primary decision maker of one method of evaluation, and the rejection of another, alternative evaluation adopted by the appellants’ valuers has been held not to involve an error of law giving rise to appeal; see Melwood Units Pty Ltd v Commissioner of Main Roads (1979) AC 426 at 430.”8 [28] Mention must, at this point, be made of the decision in Spencer v Commonwealth9. [29] The dictum most frequently referred to is that of Griffiths CJ and Isaacs CSJ. [30] Griffiths Chief Justice observed:10 “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.” [31] Similarly Isaacs J said:11 “In the first place the ultimate question is, what was the value of the land on 1 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 6 Willoughby Municipal Council v Valuer-General (1934) 12 LGR (NSW) 41. 7 Electricity Commission of New South Wales v Arrow (1994) 85 LGERA 418 (at 419). 8 Ibid. 9 Spencer v Commonwealth (1907) 5 CLR 418. 10 Spencer v Commonwealth (1907) 5 CLR 418 page 432. 11 Spencer v Commonwealth (1907) 5 CLR 418 at 440-441. -- 7 of 71 -- 8 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.”12 [32] Those two passages of Griffiths CJ and Isaacs J were specifically referred to by learned Senior Counsel for the Applicant who also pointed to the observation in Yalgan Investments by Member Mr Scott who observed that the hypothetical prudent purchaser is not to be taken to be a “dewy-eyed” dreamer who will take the most optimistic view in all matters”, nor is the purchaser taken to be taken to be “a wilting lily who will proceed with such pessimism that all problems will be seen to result in failure”.13 [33] Learned Senior Counsel for the Applicant then pointed to what he contended were five important points which should be emphasised about the application of the Spencer test. [34] It is most efficient to simply quote what learned Senior Counsel said in that regard: “12. First, the market for the property is assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property.14 The knowledge attributed to the parties includes the predicted impacts of future events as well as the experience of the past.15 But knowledge of events subsequent to the date of taking must be ignored as recently confirmed by the Court of Appeal in Brisbane City Council v Mio Art Pty Ltd (2011) 183 LGERA 352 – see in particular [18], [28], and [77]-[80]. 13. Second, the parties will take a business like or practical approach in fixing a price rather than a legal approach. In Turner v Minister of Public Instruction (1956) 95 CLR 245 at 267 Dixon CJ said that it is not easy to suppose that the law determines what the opinion of the hypothetical prudential purchaser about the fair price of the land should be. Rather, the hypothetical purchaser’s thoughts remain in those of business life, not law. As Mr Scott said in Yalgan (at 342) the court is to review the evidence from the perspective of the hypothetical prudent purchaser not that of a judge of the Planning and Environment Court, and must consider the practical issues that would attract the attention of the hypothetical purchaser. 14. Third, the focus of the enquiry is on the buyer rather than the seller. As Isaacs J said in Spencer, the all important fact is the opinion 12 13 Yalgan Investments Pty Ltd v Albert Shire Council (1997) 17 QLCR 331 at (341). 14 Kenny & Good Pty Ltd v MGOCA (1992) Ltd (1999) 199 CLR 413 at 436 [49]-[50]. 15 Ibid. -- 8 of 71 -- 9 regarding the fair price of the land which a hypothetical prudent purchaser would entertain, and the dispossessed owner’s loss cannot exceed what a prudent purchaser would be prepared to pay.16 15. Fourth, compensation cannot be claimed to the extent to which the value of the land resumed is enhanced by the purpose for which the land was resumed, and conversely compensation is not to be assessed by reference to any depreciation in value of the resumed land caused by that purpose.17 While the purpose of the acquisition is to be put out of mind, that does not mean that the amenities and social and economic conditions in the area are to be disregarded. Mr Brett correctly appreciated this18 but Mr Beard did not.19 16. In RTA v Mosca (2006) 146 LGERA 335 at 344-345 it was held, applying Woollams v Minister (1957) 2 LGRA 338, that the court is entitled to assume that conditions in the area would have improved to the extent there was no road proposal. In Albany v Commonwealth (1976) 2 ALR 201, Jacobs J was dealing with a claim for compensation for the acquisition of land for ‘the planned development and control of the City of Darwin and its adjacent areas’. His Honour said (at 209-210):- ‘The compulsory acquisition, or the likely compulsory acquisition, of the land prior to or in conjunction with the proposed development of a new town should not be taken into account. It has been submitted that likewise the purpose of the acquisition, the planned development and control of the city of Darwin and its adjacent areas, should not be taken into account. I would agree that the purpose of the acquisition as such should not be taken into account but, in my view, the correct approach is to take account of the fact that the town area of Darwin would be extended in order to cater for the increasing population and that the extension would be in accordance with a scheme of development designed by the Administration. It is therefore necessary to ignore the fact that the development would be by way of acquisition but to recognise that the development would be controlled according to a designed and ordered planning scheme.’ 17. Applying that passage to the present case, the purpose of the acquisition (the Wacol to Darra proposal) should not be taken into account, but account is to be taken of the fact that the major road network including the AusLink National Road would be upgraded to cater for the increasing population and intended development of the area. It is necessary to ignore the fact that road upgradings would be by way of compulsory acquisition but also to recognise that such upgradings would be controlled and planned. That control and planning is evident in the 2005 SEQRP20 and GARID. Ms Mitchell’s evidence was that planning for an upgrade to the Ipswich Motorway began in May 1999.21 18. Fifth, in a compensation case (as opposed to a revenue case) doubts in valuing property are to be resolved in favour of a more liberal estimate (as opposed to a more conservative estimate in a revenue 16 See also Turner at 267 per Dixon CJ. 17 Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 at 434 and 435. 18 See T7-13 LL15-30 and more generally T7-9 to T7-13. 19 See paragraph 86 below. 20 See Ex 59 particularly at p. 115 and the map at 116 identifying road improvements to the Ipswich Motorway and Centenary Highway in a suite of road improvements. Page 106 of the SEQRP refers to improvements to existing roads being planned to address the most congested parts of the network. 21 Affidavit (Ex 46) paragraph 6. -- 9 of 71 -- 10 case).22 What must be ascertained is the full return which may reasonably be expected from the sale of the land not the most conservative value: see Turner at 264.” 4. The Hearing and Witnesses [35] At the hearing of the matter each party called a number of expert and lay witnesses. [36] For the Applicant the following expert witnesses were engaged and evidence was received from them: a) Mr L Hamilton23, Valuer. b) Mr Peter Cumming24, Town Planner. c) Mr Neil Viney25, Traffic Engineer. d) Mr David Hassall26, Ecologist. e) Mr Scott Thomas27, Engineer. [37] For the Respondent the following expert witnesses were engaged and evidence was received from them: a) Mr R Brett28, Valuer. b) Mr David Perkins29, Town Planner. c) Mr Colin Beard30, Traffic Engineer. d) Mr Alan Chenoweth31, Ecologist. e) Mr Maurice McAnany32, Engineer. [38] The lay witnesses called by the parties were as follows: a) The Applicant called a Mr Brian Matthews a Town Planner in the employ of a firm called Axis33 and a Mr Alan Gregory the Director of a company selling woodworking equipment whose office was located in Richlands.34 b) The Respondent also called Ms Julianne Mitchell the Chief Engineer of the Department of Transport and Main Roads who produced an affidavit setting out effectively the history of the road works in and 22 Commissioner of Succession Duties (SA) v Executor Trustee & Agency Co of South Australia Ltd (1947) 74 CLR 358 at 373-374 and Boland v Yates Property Corporation Pty Ltd (1999 74 ALJR 209 at 279-280 [356]. 23 Exhibits 23, 25, 27, 28, 29. 24 Exhibits 18 and 19. 25 Exhibits 21, 22, 23, 24, 38, 44. 26 Exhibit 17. 27 Exhibit 18. 28 Exhibits 26, 27, 28, 30, 61, 66, 74. 29 Exhibit 19. 30 Exhibits 21, 22, 23, 25, 37, 48, 49. 31 Exhibit 17. 32 Exhibit 18. 33 Exhibit 31. 34 Exhibit 32. -- 10 of 71 -- 11 around the subject site.35 I will refer to the evidence given by Ms Mitchell when I descend to considering the traffic engineering evidence. [39] The Applicant also called James Rohan Whitelaw Chartered Accountant.36 Mr Whitelaw swore an affidavit setting out the alternative arrangements which may be entered into by developers seeking to minimise or regularise their exposure to Goods and Services Tax (“GST”) and also gave about staying developments. [40] Mr Whitelaw’s affidavit exhibits a copy of the contract entered into between the Applicant Cidneo Pty Ltd and the Commonwealth Department of Defence for the purchase of the land. [41] He points out that the contract for the purchase of the subject land was drawn specifically for the transaction and reflected the terms of the “tender form” prepared by the Department of Defence and completed by Cidneo which tender form specifically offered an amount of $48,110,656 excluding GST for the purchase of the land.37 [42] Mr Whitelaw drew the Court’s attention to the provisions of Clause 31 of the contract conditions which deals specifically with the Goods and Services Tax and pointed out “Clause 31.2 provided that, in the case of a supply which is a taxable supply, the consideration payable or otherwise provided to the vendor under the provisions of the contract was to be increased by the amount equalled to the Applicable GST. The result of these contract provisions was that the Subject Land was purchased by Cidneo on a “GST Exclusive Basis”. That is, the purchase price was $48,110,656 plus GST of $4,811,065.60 being a total amount of $52,921,721.60.38 [43] Accordingly, Mr Whitelaw points out, the purchase of the subject land was a taxable supply and Cidneo was entitled to an input tax credit, that is a refund of the GST paid, in the amount of $4,811,065.60. [44] The expert witnesses had all participated in meetings with their peers and produced joint reports setting out areas of agreement and disagreement. Detailed reference will be made to those reports later. [45] The agreement between the valuers with respect to the $60/m² or the $60,000,000 before valuation tends to make things somewhat illusorily simple but, as Mr Gore of Queens Counsel submitted in his observations at the opening of the case: 35 Exhibit 46. 36 Exhibit 33. 37 Exhibit 33 page 4 para 26. 38 Exhibit 33 page 4 para 30. -- 11 of 71 -- 12 ‘… $60 million doesn’t take into account the two things that I have emphasised: (1) That on the respondent’s case the traffic problems in the before case were relevantly no different, in assessment terms, to the after case. I mean counter-intuitively you ask why else would the department be doing all the major road works in the area that they did if everything was so fine in the before case? And secondly, it was a speculative market. I'm not taking a point about it but it needs to be understood that the respondent's case has tried to balance things in favour of the claimant at the point.”39 5. The Issues [46] In its closing submissions to the Court the Applicant submitted that the following was an apt summary of the issues which arise the determination: (a) The nature and extent of the impact of the loss of the two Centenary Highway ramps which were in place in the before case but which were removed in the after case as part of the project which the land was resumed. (b) Whether there was any enhancement of the retained land in the after case because of the upgrading works constituting the project for which the land was resumed. (c) What provision the parties to a hypothetical sale would make for monetary contributions likely to be imposed by DTMR when considering a development application for the highest and best use in the before and after cases. (d) The value of the land in the after case. [47] The Respondent through its counsel identified the issues for determination as those set out in the joint list of issues filed by the parties pursuant to the order of the Court made on 1 November 2011 namely with respect to two issues: (a) Traffic; (b) Valuation. [48] With respect to Traffic the joint list of issues contain the following: TRAFFIC 1. The nature and amount of any transport infrastructure contribution or other condition likely to be imposed by DTMR and likely to be taken into account by the hypothetical vendor and purchaser in: (a) the before case; and (b) the after case. 2. The nature and extent of the effect of the loss of the two ramps between the Centenary Highway and Boundary Road. 39 T1-60 LL 12-25. -- 12 of 71 -- 13 [49] The Respondent, in its submissions makes reference to other issues which have arisen since the date of filing the Joint Issues List. Their submissions say as follows: “3. Other important issues have arisen since the Joint List was filed. On 6 December 2011, Metroplex Management Pty Ltd (‘Metroplex’)40 and the respondent (‘DTMR’) agreed to resolve issues between them in respect of transport infrastructure contributions or works relating to development proposed by Metroplex for the land retained by Cidneo41. As foreshadowed by the DTMR on 1 December 201142 (the last day of the hearing), additional issues raised are: (a) whether, in determining any compensation for injurious affection, evidence of the settlement between Metroplex and the DTMR is admissible; (b) whether the assessment of compensation for any injurious affection should be based on a cash flow analysis method, or on some other method.” [50] With respect to Valuation the joint list of issues contain the following: VALUATION 3. The effect of 1 and 2 above on the assessment of compensation on the cash flow analysis approach. 4. Other elements of the cash flow analysis approach being:- (a) the rate of sale of the last 3 stages in the before case; (b) the rate of sale for all stages in the after case; (c) gross realizations in the before and after cases; (d) the application of GST and the margin scheme; (e) whether in both the before and after case allowance should be made for a traffic network analysis report and the timing allowed for that report. 5. The use to be made of the direct comparison approach. 6. The amount payable for disturbance. 6. Lay Witnesses [51] The Respondent tendered an affidavit from Mr Brian Matthews43, Mr Matthews was a town planner and a Director of a Town Planning Consultancy known as Axis Planning whose offices are located at 23 Overlord Place Acacia Ridge. [52] Axis occupied those premises since 2011 and prior to that its premises were located in Boundary Road Richlands. [53] Mr Matthews was called to tell the Court of his experience travelling to the Axis office located in Boundary Road at Richlands. 40 Metroplex is a company which is related to Cidneo: Whitelaw T7-64. 41 Affidavit of PR MacGregor of 17 February 2012 para 158. 42 T7-73 LL40-50; T7-78 LL20-30. 43 Exhibit 31. -- 13 of 71 -- 14 [54] He began work with Axis in July 2008 and initially had to travel to the Boundary Road office from Paddington a central city suburb. [55] His route of travel was along the Centenary Highway through the roundabout across Ipswich Road and then continuing along the Centenary Highway until he reached the Kelliher off-ramp along which he travelled to turn left into Boundary Road to the Axis offices. [56] On his return journey his path of travel was across Boundary Road to what was then Bakery Road which became an on-ramp of the north bound Centenary Highway lanes and from there travelled along the Centenary Highway to the city. [57] He followed a similar route towards Ipswich. [58] His evidence was that prior to the beginning of road works which occurred shortly after July 2008 his travel pathways were generally clear simple and efficient. [59] His evidence was to the effect that the road works including the construction of the Centenary Highway interchange had a substantial and adverse impact upon his travel to and from the Axis offices. [60] He gave a detailed description which it is unnecessary to recite here of the path of travel after the road works began. The important point was that the new route of travel added about 4 km of additional travel to work in the morning. He estimated that to add about 5 minutes to his time of travel. [61] He also gave evidence that available alternatives were unattractive because they also had to confront congestion on the Ipswich Motorway and had to negotiate three merge lanes when getting onto the Ipswich Motorway from the Centenary Highway. His evidence about other destinations including Ipswich was of a similar tanner all of which related to increased congestion on the road system. [62] Mr Matthews observed:44 “Since the interchange was constructed, there seemed to be a lot more northbound car traffic travelling along Pine Street and Archerfield Road and from there, into the local surrounds and the Ipswich Motorway. I definitely noticed that this vehicle traffic had increased, but I cannot say from where those vehicles are coming from, other than from places south of Pine Street.” 44 Exhibit 31, p. 5 para 27. -- 14 of 71 -- 15 [63] Comparing the post-road works situation with the pre-road works situation Mr Matthews observed45 “Under the previous road network, businesses in the area had easy access to the Centenary and Ipswich Motorways and from there could travel easily in any direction. Access is now significantly less convenient and I have real difficulty in seeing how it can ever be restored to the practical and functional levels that previously existed.” [64] Earlier in his affidavit Mr Matthews had made observations about the operation of the “new” Centenary motorway. He said:46 “I often referred to the new Centenary Motorway as being the ‘wedge’. That is because, in my view, it has driven a wedge between Richlands and Wacol and created two different and largely unconnected areas. One area is bounded by Progress Road, the Centenary Motorway and the Ipswich Motorway; and the second situation is boarded by the Centenary Motorway, Progress Road and Archerfield Road. These two areas have had their previous road connections removed and there seems to me to be no capacity for an easy future connection of these two areas.” [65] Under cross-examination from Mr Gore of Queens Counsel, Mr Matthews upon being taken to diagrams contained within supplementary report of Mr Beard (Exhibit 37) and paying particular attention to traffic counts in 2008 and 2011. [66] Mr Matthews confirmed that a fair précis of his evidence was that: “… before the works done by the Department were carried out, there was often congestion but after the works were carried out, it wasn’t congested very often on the Ipswich Motorway.”47 [67] In his re-examination Mr Matthews confirmed that: “Even without road works, you could have some congestion there.” [68] I regard the evidence of Mr Matthews as somewhat equivocal and not of great assistance to me. [69] The Applicant also called Mr Alan Maxwell Gregory a Director of Gregory Machinery Pty Ltd which has occupied and traded from premises at 807 Boundary Road Richlands since 200348. [70] Mr Gregory’s company Gregory Machinery Pty Ltd deals in woodworking equipment to the cabinet making industry and also to the DIY hobbyist markets and the education systems. [71] Mr Gregory’s evidence was to the effect that before the construction of the Centenary Highway Interchange his business and customers had very easy and direct access to the north, south, east and west from their premises and once the 45 Exhibit 31, p. 7 para 39. 46 Exhibit 31, p. 5 para 29. 47 T2-6 L 38. 48 Exhibit 32. -- 15 of 71 -- 16 roundabout at the intersection of the Centenary Highway and Ipswich Road was signalised it functioned well and congestion was not a problem.49 [72] Mr Gregory gave evidence that access to his property from all points of the compass was easy and convenient in the “before scenario”. [73] He was not as happy with the “after scenario” and observes in his affidavit: “In my opinion, the changes that happened to the final design of Centenary Highway Interchange have resulted in this no longer being a go ahead area; it has become isolated from all major arterial roads and has lost its vibrancy. I have no doubt that the removal of the Centenary Highway on and off ramps has had an adverse impact on my business and many businesses in the area.50 [74] Mr Gregory’s evidence was to the effect that, in his opinion, the road works have caused a diminution in the amount of custom his business enjoys as a consequence of customers having difficulty finding their way to his premises. [75] Mr Matthews gave evidence that prior to 2011 Axis Planning for whom he works had its offices at Unit 6B, 848 Boundary Road Richlands and at the time he lived at Paddington in the City. Mr Matthews evidence was to the effect that he as a result of the location of his home and the then location of the Axis offices travelled the Centenary Highway across Ipswich Motorway and along the Kelliher Road off-ramp advance into Boundary Road. [76] The Gravamen of Mr Matthews evidence was, at the end of the day, that in both the before and after situation with respect to the resumption of the subject land and the road works at the various interchanges there was in his experience always congestion around the various interchanges. [77] It was Mr Matthews contention as a non-expert observer of traffic affairs that access as it presently exists was significantly less convenient than previously particularly with respect to access to the Centenary and Ipswich Motorway51. [78] Referring to the southbound movement on the Centenary Highway through the Ipswich Motorway roundabout.52 7. Town Planning Issues [79] Mr Peter Cumming the Town Planner was engaged by the Applicant. As indicated above the corresponding expert engaged by the Respondent was Mr David Perkins. Both Mr Cumming and Mr Perkins are experienced Town Planners. 49 Exhibit 32 page 2 para 11. 50 Exhibit 32 page 5 para 30. 51 Exhibit 31 page 7 para 39. 52 T2-7 L 12. -- 16 of 71 -- 17 [80] Prior to the hearing Mr Cumming and Mr Perkins met for the purpose of preparing a Joint Report53 setting out areas of agreement and disagreement and the reasons for any disagreement. [81] They were provided a detailed report setting out the areas of agreement and noted54 that there were no matters of disagreement between the planners regarding the Lands Statutory Planning Designations at the time of the resumption. [82] That should not be taken to suggest that there were no areas of disagreement because later in their joint report they were able to identify and describe some areas of disagreement. [83] It is appropriate to identify the key areas of agreement which were reached between the town planners as to the relevant statutory planning instruments and designations as at the time of resumption. [84] The planners identified the following planning instruments as being relevant at the time of resumption: (a) The South-East Queensland Regional Plan 2005-2026 (b) The Brisbane City Council City Plan 2000 including: The Western Gateway Local Plan. The Richlands Area Infrastructure Contributions Planning Scheme Policy and; The Draft Local Growth Management Strategy (LGMS).55 [85] Pursuant to the provisions of the South-East Queensland Regional Plan 2005- 2026 the subject land was: (a) Within the Urban Footprint. (b) Potentially suitable for Urban purposes. (c) Within an area described as the “Western Corridor”. (d) Located in Wacol which is identified in the Regional Plan as a major economic activity area and industrial cluster and a key area for industrial development. (e) Affected by the Employment and Economic Activity Areas Policy to “encourage employment growth in regional activity centres and economic activity locations”.56 [86] The location within the Western Corridor is a matter of some significance. [87] Within the SEQRP the Western Corridor has been identified: 53 Exhibit 19 – Joint Planning Report September 2011. 54 Exhibit 19 – page 10 section 6.8. 55 Exhibit 19 page 7 para 6.1. 56 Exhibit 19 page 7 page 6.2. -- 17 of 71 -- 18 (a) Significant growth area for South East Queensland providing major opportunities for economic development and employment creation; (b) Has an area to which increased economic development of population growth is intended to be attracted and; (c) Has an area in which employment and industry growth is supported. [88] Reflecting its previous use as property owned by the Department of Defence the subject land, under the Brisbane City Plan 2000 was designated as a Special Purpose Centre (SP3) Major Defence and Communications Facility. Within the area in which it was located it was designated for general and future industry. [89] Clearly its uses as Defence and Communications’ Centre has been discontinued preparatory to sale to the Applicant. [90] It is also proximate to a Special Purpose Centre (Mixed Industry/Business Area) Designation on the Strategic Plan. [91] Both the Town Planners agreed that the subject site could reasonably be expected to come under the umbrella of the Mixed Industry Business Area Designation. [92] They also agreed about other indicia which pointed to the subject site being developed for industrial and related purposes. [93] Those indicia included the inclusion of the subject land in the Western Gateway Local Plan which contemplated major industrial development being concentrated south of the Ipswich Motorway. [94] Significantly the Town Planners agreed that57 “The Statutory Planning Regime in place at the time of resumption indicated that the Wacol precinct and the subject land: 1. Was seen as a catalyst for industrial and employment growth in the Western Corridor; 2. Was seen as an industrial area of city wide and regional significance; 3. Industrial development on the subject land was to be supported by specialised retail and commercial centre; and 4. The Mixed Industry and Business designation of the Ipswich Motorway/Centenary Highway/Progress Road triangle in the Brisbane Strategic Plan recognised the strategic potential of the land for industry and business activities and employment.” [95] Having reached that level of agreement the planners then turned to considering the impact of the resumption on plans for development. At the time they conducted their joint meeting in September 2011 the Planners had before them development plans before and after the resumption date which were exhibited to the Joint Report as figures 8 and 9 and before and after preliminary approval documents which they annexured to their report as Annexure 2. 57 Exhibit 19 page 9 para 6.7. -- 18 of 71 -- 19 [96] The Planners agreed that, with respect to the differences between the before and after plans, the development plans show: “1. Development staging in four stages to the east and west of a central park which encompasses Bullockhead Creek and its environs. 2. In both Plans the green areas represent proposed public parkland and the hatched green areas, land proposed to be held in private ownership but where trees cannot be removed. 3. The numbered white areas in both plans indicate lots to be used for industry and associated purposes. 4. Lot numbered 20 in both Plans is proposed as the location for a small convenience centre with up to 6,000 m² of floorspace (the ‘Etro’). 5. The Before Plan 7096-102 in Figure 8 shows a mixture of development land, public open space and a hatched green area which cannot be built on in the northeast of the land adjacent to the Ipswich Motorway. 6. Both Plans show areas of stormwater detention/retention, although the suitability of these basins (locations, configurations and sizes) would be subject to further detailed engineering review. 7. The After Plan shows the DMR resumption area of 8.365ha in the northeast of the site and an increase in the Public Open Space and green hatched areas on the remainder of the land. The latter reflects a decision of the Planning and Environment Court in November 2009 relating to an earlier development application, and, subsequent Development Applications and negotiations with Brisbane City Council.”58 [97] There was disagreement between the Planners about the sequencing of the development and Mr Cumming took the position that the numbering of the development stages was nominal only and that in the before case, “Stage 3” was proposed to be developed first.59 [98] By the time the case was concluded Mr Cumming prophecies were shown to be realistic as a number of options were advanced with respect to the sequencing of the development stages. There was no disagreement that any development which did occur on the subject site would be staged. [99] The Joint Report set out a table showing the Before and After Resumption Land Use Comparison60: TABLE 1 – BEFORE AND AFTER RESUMPTION LAND USE COMPARISON Land Use Before area (ha) After area (ha) Difference (ha) Stage 3 area 35.415 27.028 -8.387 Lot Yield 23 20 -3 Lot area (developable land) 22.874 17.537 -5.337 Parkland 6.777 4.363 -2.414 Common Property 0.080 0.080 0 Road 4.954 4.385 -0.569 Private Open Space 1.881 0.720 -1.161 58 Exhibit 19, page 10 para 7.1. 59 Exhibit 19, page 10, para 7.1. 60 Exhibit 19, page 11 Table 1. -- 19 of 71 -- 20 [100] The ETRO Precinct which is referred through much of the planning evidence is a business or commercial centre (otherwise described as a convenience centre) with up to 6,000 m² of floor space. [101] Mr Cumming confirmed to the Court that he, as a planner, was happy that the 6,000 m² ETRO described as a small convenience centre was congruent with the notion of a specialised retail and commercial centre.61 [102] Mr Cumming also confirmed that Bullockhead Creek which runs through the site has an impact on hydraulics and the staging of the various phases of development. [103] He had been asked about the observation by Mr Hamilton, the valuer called by the Applicant, in his report where he observed62 said: “A period of 18 months from the date of resumption has been adopted in the after resumption scenario (together with an additional cost of $100,000) to allow for necessary approvals plus a comprehensive traffic analysis and redesign of the estate particularly in terms of the construction of Boundary Road and the hydraulics on Bullockhead Creek.” [104] When asked what, in terms of the redesign of the estate and the hydraulics on Bullockhead Creek was the difference between the before and after case that needs to be looked at, Mr Cumming’s evidence was as follows:63 “Well the hydraulics – the difference is in the before case there was a lot of work – a body of work done by a group of professional consultants which could be used in the before case application. In the after case stage one was looked upon to be from the west rather than the east. Therefore, a lot of the hydraulic reports, a lot of the traffic analysis, the bulk fill and earthworks would have had to have been redone. In the case of drainage, for example ---- HIS HONOUR: Is that because of staging? -- Yes, because of the staging detail. In the case of drainage it also relates to the resumption area. There’s a new road alignment. The DMR doesn’t like more water going into their roads causing flooding and drainage problems than exists at the – at the existent time. Therefore, drainage studies would have to reconceptualise. The eastern sector so that they fitted in with the new road pattern and the service road provided there and also on the western side of the stage one more detailed work would have had to have been done, and that’s a similar exercise for bulk earthworks, particularly because reconceptualising the bulk earthworks, there was an assumption in the early work that cut would come from the west and go the east. If you’re using the west as stage one that would have to be reconceptualised, and there’s an extensive amount of work required to do that. The other thing is in the resumption area it falls away quite steeply to the service road in the after case, so again the cut and fill exercise would have to take into account that some of the cut that was going into the resumption area would no longer go into that area. A place would have to be found somewhere else in the subdivision. As your Honour would be aware from visiting the site, the site is a sloping site, it’s not a flat site, so – and it’s got the creek in the middle and the creeks at either end, so matters of drainage and cut and fill would take some considerable time on this land, because in the end 61 T2-16 L 40. 62 Hamilton Report p 56. 63 T2-17, 2-18 LL20 – 20. -- 20 of 71 -- 21 with an industrial site you’ve got to end up with flat pads and a bench situation. It can’t be like a residential development where you can go with the flow of topography. MR HINSON: The highest and most elevated part of the land was in the north-eastern corner of the land that was resumed; is that correct? -- No. That was the resumption – the resumption area in the north-east is lower. The north-west, yes? -- Yes. But in terms of its appearance from the motorway it’s visible from the motorway in the before case? -- Yes. And was the one of the reasons why you’d start at the east? -- The eastern – there was some contention early on in the joint experts’ report about staging. The office and the site office on the site is on the eastern side for the very good reason that in the before case we had ramps to – Metroplex had ramps to the Centenary Highway, so that was the easiest and convenient access. It was only 3 or 400 metres away and that too - ---- HIS HONOUR: When you say Metroplex had ramps, the road system ----? -- Sorry, the road system had ramp access to the Centenary Highway. So that also on the eastern side was the place for – if I could show again a board and explain that.” [105] Under cross-examination by Queens Counsel for the Respondent, Mr Cumming conceded that as a planner in matters of traffic engineering particularly on matters of specificity he would defer to the opinions of traffic engineers. Relevantly Mr Cumming under further cross-examination by Mr Gore QC conceded, with respect to the potential for a demand by the Department of Transport and Main Roads for a $30 million road works contribution, that no part of that $30 million was referable to the Centenary Highway, Ipswich Interchange Motorway Upgrade and that, in the before case, he understood that the Court has to assume that the Department did not intend to upgrade the interchange.64 [106] The consequence of that was that in the before case the scenario involves the old interchange with whatever problems it had.65 [107] Although not a traffic engineer, Mr Cumming was pressed by Mr Gore that respect to the interchange prior to the road works upgrading being carried out it was what he described as “highly problematical”. [108] He declined to concede that the interchange was any more problematic than other major intersections in peak hour periods. [109] Having conceded that the project involved the loss of the Kelliher Road ramp and the Bakery Road ramp this proposition was put to Mr Cumming and he agreed with it. 64 T2-25 L 30. 65 T2-25 L 42. -- 21 of 71 -- 22 “So necessarily what you are saying is that motorists using the Kelliher Road off-ramp will be coming through the old Centenary Highway/Ipswich Motorway interchange, otherwise there is nothing to complain about; correct?”66 [110] Similarly he conceded that those that go up the Bakery Road on-ramp are going to go through the Centenary Highway/Ipswich Motorway Interchange.67 [111] That led to Mr Gore being able to put to Mr Cumming that: “What you’re telling us is that on that information there will be some major percentage of the 4,000 vehicles per hour that go through what I’m calling the old intersection; correct?”68 [112] Mr Cumming agreed with that proposition and then this passage of cross- examination emerged:69 “And if the old intersection is already highly congested you don’t need to be an expert to work out that a proposal that intends to put a significant proportion of 4,000 vehicles per hour through that heavily- congested intersection could have approval problem? – Yes. If – sorry. Not approval problems, I think that’s a different issue, but I’d point out this is a contraflow development. This is a planners – what we try and what transport planners try to achieve in the urban area, getting jobs out to the mid range point to prevent traffic coming into the city, and also increase contraflow. And by ---- MEMBER: By ‘contraflow’ you mean drags traffic in a opposite direction to what might be typical of peak hour? – Exactly. So in the morning peak the big – the big line of traffic is not going north to Metroplex or destinations at Wacol, it’s coming south from Springfield and residential areas, so this is a contraflow development, so in that context --- Do you mean heading north or coming from north in that example you just gave? -- The big flow in the morning peak, and you could so it then, you can see it now, and you can see it on every other road that leads to the CBD is northbound. The big flow is not southbound. MR GORE: You’ve got no basis at all for saying that, that’s a guess? - -- Well, I do because I - I have visited this site since 2005. To describe it as a contraflow development, I’m suggesting, is really just guesswork? – It’s observation over that period of time. A long line of traffic coming from the south ---- No, no, no -----?-- ----- and a lesser line coming from the north. -----you’re missing the point, you ‘re missing the point. The development that you’re describing as ‘contraflow’ doesn’t exist at the moment; correct? -- That’s right. And, for all you know, all the people that work there might want to live at Springfield because it’s convenient and travel to this site in the morning, hardly contraflow; correct? – That’s right, but it also, if they do that, they then take off traffic from the Centenary Highway between the Ipswich Motorway and the real point of disaster on the Centenary Highway road system, which is the Moggill roundabout on Milton Road. 66 T2-26 L 50. 67 T2-26 L 52. 68 T2-27 L 10. 69 T2-27, 2-29 LL 14-26. -- 22 of 71 -- 23 Let’s get back to my question. You’ve accepted that if a significant proportion of the 4,000 vehicles per hour peak generation, identified in table two of your report, utilise the old interchange, that’s an issue for the approval process – I’ll try to put it in neutral terms – correct? – Well, I – my answer to that question is perhaps, and I answer it in this way, as a city planner: intersections since the 1980s of this ilk have been funded by the Federal Government, usually because they need so much money. It’s not normally part of the planning system where you say, well, an individual developer, albeit, you know, a 60 or 70 hectare developer, contributes to these sort of intersections. In the 1980s the national freight system under the Hawke Government came in and the Federal Government realised they had to fund major freight routes and roads, and this is that – that sort of intersection. So the proposition I think you’re pushing – putting to me is that this was important for the approval process for Metroplex. My answer to that would be I think it’s much more of a point for the approval of a development like Springfield, which – Metroplex is 60 to 70 hectares of developable land, creating employment at a point, which is desirable in city planning terms, whereas Springfield is almost 3,000 hectares of residential development which creates far, far greater problems. So, you know, I think the question of whether this is an approval, whether in the approval process this is related to Metroplex, I think it’s far more related to much, much bigger developments within this area. How does the 4,000 vehicles per hour generated by Metroplex compare with the peak volumes through the old interchange as at February 2008, do you know? -- No, I don’t, and I looked for that figure in Mr Beard’s report for a total figure and I couldn’t find it. You see, if it was, say – let me try to make the questions easy – if it was a figure of, say 2,000 ----? -- Yes -----that was using the intersection before Metroplex was taken into account, and Metroplex is 4,000, you can forget about Springfield, this is a problem for Metroplex if it’s going to triple the number of vehicles gong through the intersection; correct? -- Well, the first thing is, I thought it was agreed that the before and after scenario development was industrial only – No, no, no, no, don’t move away from my question. Please don’t move away from my question?-- Well, I don’t -- I don’t ----- If the figures are as I’ve asked you to assume -----? -- Yeah. ---that’s a problem for Metroplex. That’s a problem for the approval process, isn’t it? -- It is. It’s a consideration. Absolutely. If 2,000 represents a heavily-congested intersection and Metroplex wants to put 4,000 more vehicles through that intersection it’s pointless talking about Springfield , that’s a problem for Metroplex, isn’t it? -- Well that’s not an opinion I share because Springfield is currently 23,000 people and is proposed to be a hundred and 10,000 people. So you think that the Metroplex application would probably be approved because even though it was increasing the traffic through the intersection from 2,000 to 6,000 vehicles per hour, in circumstances where it’s accepted that the 2,000 vehicles per hour represents a high level of congestion, you don’t see that as a problem? -- You’re talking about the approval process. That’s not necessarily to do with impact. So in the approval process you‘re considering a whole range of things. For example, Boundary Road. I think Mr Viney has well put the fact that if Boundary Road is throughput, and the Department of Main Roads knew the importance of Boundary Road, that would negate a lot of the impact on the Ipswich Motorway and Centenary Highway -- 23 of 71 -- 24 because that creates then a major suburban route behind the highway system which alleviates highway traffic.”70 [113] Consequent upon that passage of cross-examination Mr Gore took Mr Cumming to the report (Exhibit 25) prepared by Mr Beard the Traffic Engineer engaged by the Respondent. [114] In particular he took Mr Cumming to page 10 in paragraph 6A where Mr Beard said that: “There is no traffic engineering basis for a claim that external road works required pursuant to the 'after' development scenario would have been more than those required pursuant to the 'before' development scenario?” [115] Mr Cumming conceded that he had read that and went on to explain that he disagreed with the proposition in Mr Beard’s paragraphs 6A from a planning point of view. [116] While it might appear that the answers given by Mr Cumming under cross- examination were evasive I think, fairly considered, they might be taken merely to reflect his particular skill set as a town planner and not an adoption by him of any particular traffic engineering point of view. [117] His apparent view of the road works after the removal of the ramps was that contributions were sought for the cost of removing the ramps rather than the contribution being sought because of a need to upgrade the various intersections in and around the subject site. If that is his view then, in my opinion, he is incorrect from a traffic engineering point of view. [118] Mr Cumming’s evidence71 was unconvincing with respect to his apparent lack of awareness of what constituted an unacceptable queue length or an unacceptable degree of saturation of an intersection’s capacity. [119] With respect to completing the “missing link” Boundary Road Mr Cumming agreed, in response to a question from me, that from a planning perspective it much more preferable to complete the “missing link”.72 [120] He also confirmed that that preferable outcome applied in both the before and after case.73 8. Engineering Issues [121] Scott Thomas, Engineer acting on behalf of the Applicant and Robert Marshall an Engineer acting on behalf of the Respondent met together to consider a conceptual design layout for works which were identified by the Respondent to provide additional east-bound capacity to Progress Road to better accommodate 70 T2-27-29 L 71 T2-33,34 and 35. 72 T2-39 LL 15-30. 73 T2-39 L 41. -- 24 of 71 -- 25 the traffic exiting from the Ipswich Motorway south-bound off-ramp. That conceptual design layout was shown in two Cardno sketches, No. CEB06133- 022-SK001 Revision B and No CEB06133-002-SK002 Revision A74. [122] Cardno (Queensland) Pty Ltd also supplied opinion with respect to cost dated 14 February 2012, Version 3 for the construction of the works.75 [123] Thomas and Marshall agreed: “That the attached opinion of cost dated 14 February 2012, Version 3 (Final) is a realistic assessment of anticipated development costs for the works depicted on the aforementioned conceptual design layout”. [124] They also agreed if the extent of works assumed in the opinion of costs of 14 February 2012 was altered by the opinions of experts and other disciplines then the costs would have to be re-evaluated. The costs identified in the opinion of costs are as follows: Summary Schedule A: Consultants Fees = $127,500.00 Schedule B: Civil Works = $470,051.19 Schedule C: Bridge Works = $268,500.00 _______________ Sub-Total = $866,051.19 Project Contingency (20% of Construction Costs) = $173,210.24 Provision For Cost Escalation (5% of (Construction Cost) = $43,302.56 Q-Leave (0.525% of Total Cost) = $4,546.77 _______________ Total = $1,087,110.76 [125] Engineers engaged by the parties Mr Thomas (Applicant) and Mr Maurice McAnany (Respondent) met to consider civil engineering matters. [126] They had earlier been provided with proposed development layouts in respect of the properties and reached a number of points of agreement. It is convenient and useful to set out those points of agreement here because they inform the opinions and reports of other experts engaged by the parties. There was unanimity between these two engineers and no points of disagreement emerged in the course of their meeting. Accordingly there was no need for them to be called either to give evidence or to be cross-examined. 74 Exhibit 71. 75 Exhibit 71. -- 25 of 71 -- 26 76 9. Traffic Issues [127] It is appropriate to describe in some detail the road system within which the subject site is located. [128] I borrow from the Report prepared by Mr Beard the Traffic Engineer engaged by the Respondent when he says77: “The subject site, having a total area of approximately 101.4 hectares, is located in the north-east corner of the triangle of land which is largely industrial in nature between the Ipswich Motorway, the Logan Motorway and the Centenary Motorway. Progress Road and Boundary Road are the primary roads providing access to and through the triangular area. Progress Road is classified by Brisbane City Council in the City Plan as an Arterial Road, while Boundary Road is classified as a suburban route (essentially a sub-arterial road). … Between the northern and southern portions of the subject site, Boundary Road is unconstructed, with no bridge over Bullockhead Creek. Historically, the land was owned by the Commonwealth (Defence Department) and used as barracks. It was classified in the City Plan as Special Purposes Centre reflecting its previous use.” 76 Exhibit 18, page 2. 77 Exhibit 25, page 2. -- 26 of 71 -- 27 [129] There were a number of meetings between Mr Beard and Mr Viney the Traffic Engineer engaged by the Applicant. [130] Mr Viney had been engaged by the Applicant since it purchased the site and has calculated a range of various design traffic generations relevant to different developments scenarios which had been advanced at various times. [131] A detailed description of the background traffic planning from the Department of Transport and Main Roads was provided to the Court in an affidavit from Julianne Mitchell who between 2005 was the Manager, Transport Planning in the Metropolitan Region in the Respondent Department. [132] Ms Mitchell’s affidavit also sets out in some detail the background to the changes which occurred to the site as part of the project for which the subject land was resumed. [133] It is unnecessary to set out in detail all of the matters set out in the affidavit of Ms Mitchell. Counsel for the Respondent has, in their submission to the Court summarised what they have described as the problems prior to the project being undertaken. They expressed them in these terms which they acknowledge are extracted mostly from the affidavit of Ms Mitchell but also from the report of Mr Beard.78 They said this: “The Ipswich Motorway was declared as a motorway in 1994. It is part of the national highway network. From 1999, both the Federal Government and the State Government began to plan an upgrade to the Ipswich Motorway. Key reasons underpinning the need for an upgrade identified in a planning study undertaken between 2000 and 2002 included the heavy demand on the network evident in congestion, the low standard geometry of the existing road, high accident rates and strong growth. In 2005 the Prime Minister announced an allocation of $320 million to upgrade the Wacol to Darra section of the Ipswich Motorway including the Progress Road and Centenary Highway interchanges. The Centenary Highway also had sub-standard geometry. Both the Ipswich Motorway and the Centenary Highway carried significant (and similar) traffic volumes during the years prior to the resumption.79 [134] Ms Mitchell’s affidavit sets out the scope of the Ipswich Motorway Wacol to Darra Upgrade project. She says this: “22. In 2006 the Ipswich Motorway Wacol to Darra Upgrade project scope included: an upgrade of the Ipswich Motorway from the Logan Motorway interchange to Jervis Street in Darra to six lanes; associated service roads in this section; an upgrade of the Centenary interchange to three tiers with both right turns, north to west and south to east are grade separated out of the roundabout; and minimum amendments to the Progress Road interchange. 78 Mitchell affidavit Exhibit 46. Beard Exhibit 48 Table 16. 79 Outline of submissions of the Respondent paragraph 26. -- 27 of 71 -- 28 24. A locality plan with the proposed extent of the Ipswich Motorway to Darra Upgrade works is attached at ‘JM-2’. A photomontage of the 2006 proposed layout of the Centenary Highway Interchange is attached at ‘JM-3’. 25. The 2006 three-tier Centenary Interchange Upgrade proposal was to provide the following advantages: (a) enable independent turning movements; (b) provide a new overpass for movement from the Centenary Highway to the Ipswich Motorway; (c) provide connectivity across the Ipswich Motorway in Darra; (d) provide Centenary Village residents with access to the north, south, east and west; (e) separate through traffic from local traffic; and (f) provide service road connections between residential and industrial areas. 26. The proposed benefits of the Ipswich Motorway Wacol to Darra Upgrade project included improved travel time on the Ipswich Motorway, a target of 50% reduction in accident frequency, reduced motorist complaints and more efficient freight movements. The cost benefit analysis for the Ipswich Motorway Upgrade at the time had a calculated Benefit/Cost Ratio of 6.27.”80 [135] Ms Mitchell also identifies a number of other projects she describes as being in either close or strategic vicinity to the Ipswich Motorway Wacol to Darra Upgrade those included: “27. In 2006 there were also other projects in either close or strategic vicinity to this project that were either in the short term planning stage or were being undertaken, including: (a) the Logan Motorway Interchange at Goodna with construction to begin in September 2006 and completed in 2008. (b) the South West Transport Corridor (SWTC) being an extension of the Centenary Highway. The State Government announced funding to extend the Centenary Highway from Springfield to Yamanto. The project was estimated at $270 million with construction to begin mid 2006 and completed by 2009. (c) the Kelliher Road Upgrade at Darra being the construction of a short section of high standard motorway link from the Centenary Highway at Darra to Brisbane’s south-western suburbs started in September/October 2005 with the project taking 15 months. The project was jointly funded by the Department and the Brisbane City Council at a cost of $44 million. That section of the Centenary Highway was and still is under the control of Brisbane City Council and the section is in the process of being declared a State controlled road and eventually declared a motorway.’81 [136] As submitted by counsel for the Respondent subsequent to the filing of the joint list of issues other issues arose and in particular the Respondent points to the fact that on 6 December 2011 some three and a half years after the resumption the then developers of the subject land and the respondent reached agreement for resolution of issues between in respect of transport infrastructure 80 Exhibit 46, paragraphs 22, 23, 24, 25. 81 Exhibit 44, paragraph 27. -- 28 of 71 -- 29 contributions or works relating to development proposed by Metroplex for the land. I will return to this matter later. [137] That agreement then raised the following additional issues namely: (a) Whether in determining any compensation for injurious affection, evidence of the settlement between Metroplex and the Department is admissible? and; (b) Whether the assessment of compensation for any injurious affection should be based on a cash flow analysis method, or on some other method?82 [138] An issue had also arisen as to the nature of the project for which Cidneo’s land was resumed in the first place. [139] That issue was resolved by correspondence from the Respondent’s solicitors to the Applicant’s solicitors of 14 October 201183 which was exhibited to the Traffic Report prepared by Mr Viney for the Applicant. [140] That letter provided, in part, “As you are aware, the issue of the separation of the various projects is a complex one and our client has been investigating the issue for some time. Our instructing client has recently met with various officers and project managers from the Department and has reached the conclusion that:  planning for each of the various projects in the area was undertaken to accommodate each other project;  there was never any planning undertaken for the Darra to Springfield Transport Corridor which did not also contemplate the upgrading up the Ipswich Motorway Upgrade;  the upgrade of the Centenary Highway on its own would have required a systems interchange on the Ipswich Motorway and Centenary Highway interchange (and therefore a resumption of land from your client). On the basis the Department is prepared to accept that the loss of the Centenary Highway ramps were caused by the Ipswich Motorway Upgrade Project (Project), being the project for which your client’s land was resumed. Our client’s current position in the ‘before’ scenario is that the ramps were in place and the road network had not yet been upgraded as part of the Project. This accords with Scenario 1 set out in the further joint report prepared by the traffic engineers. Our client’s position in the ‘after’ scenario is that the ramps were lost and the road network had been upgraded as a result of the Project. This accords with Neil Viney’s Scenario 4A in the further joint report prepared by the traffic engineers.” 82 Respondent’s outline of submissions para 3. 83 Exhibit 24 page 85. -- 29 of 71 -- 30 [141] In the second Joint Report Mr Beard’s position with respect to the before scenario was expressed as follows: “Without the Ipswich Motorway and the Centenary Highway Interchange Upgrading, the major road network in the area would be seen as heavily congested, so the proposed development would be seen as premature. However, approval of a stages development spread over (say) ten years could probably have been negotiated subject to construction of Boundary Road sooner rather than later, and works at the Progress/Ipswich Interchange of $2.0 to $3.0 million. The application history would have been an impediment to negotiations.84 [142] The acknowledgement by the Respondent in the correspondence of 14 October 2011 somewhat but not completely simplifies the traffic analysis because it is an acceptance that the loss of the ramps was caused by the project for which the subject land was resumed. [143] Mention should also be made of the works constructed on Boundary Road to complete the “missing link”. [144] As I perceive the evidence it was acknowledged by both parties that in each of the before and after cases it was necessary to construct parts of Boundary Road to accommodate traffic generated by the proposed development of the subject land and adjoining land to achieve its highest and best use. [145] The Boundary Road works was important not only to the Applicant in the development of the subject land but also to the resuming authority, the local government and business in the area to be able to make better use of the road network. [146] In my view the evidence is compelling that in the before situation i.e. prior to the resumption, anybody seeking to develop the subject land would have to have confronted the serious traffic congestion already extant in and around the subject site as well as having to recognise that development of the subject land to achieve its highest and best use would necessarily have been a significant generator of additional traffic into the existing already congested system. [147] The evidence, in my view, is similarly compelling that development of the subject land would require more than the Boundary Road road works and that, at very least, an attempt would have been made by the Respondent to extract some contribution for road works in the area. This would be particularly emphasised if Mr Beard’s point was accepted that any development prior to works aimed at reducing the existing congestion would be regarded as premature. [148] This is confirmed by the traffic engineer for the Respondent, Mr Viney, who on 11 April 2007, in response to an information request issued by the Department 84 Exhibit 22 page 2. -- 30 of 71 -- 31 of Main Roads and Transport in relation to any earlier proposal for development of the subject site, wrote as follows: “In relation to increased traffic flow, the site will be a significant traffic generator. However, the Ipswich Motorway is to be upgraded to a six lane facility and the upgraded facility will be able to accommodate the additional traffic flows. The development of the site will be dependent on the concurrent construction of the motorway upgrade. Similarly, the Centenary Highway extension will be increasingly of importance in providing access to expanding residential areas being proposed for development by the State. The site will become an important employment node for the expanding residential areas to the south-west and will consequently reduce the need for travel further inbound for employment purposes for those residents. Provided the intersection upgradings that are required for the ultimate site generation are completed, there is no reason that general construction traffic should cause unacceptable levels of congestion. There will be a need to stage the infrastructure improvement programme to suit site development and management of construction traffic will be a part of this staged upgrading process. In relation to late night truck noise, it is noted that the type of development proposed for the Metroplex @ Westgate project does not generate high heavy vehicle flows at those times. Truck terminals, large warehousing or heavy manufacturing operations are generally not the type of uses that would be permitted to establish in Metroplex @ Westgate. Consequently, it is expected that the uses proposed will be controlled to ensure that late night traffic is not significant.” [149] Apparently as a result of reconsideration of that particular development application there was a reduction in the scale or intensity of the proposed development which led to Mr Viney meeting with another traffic engineer and Mr Beard for the purpose of a Planning and Environment Court Appeal. [150] That meeting occurred on 1 May 2008 and one of the points of agreement between those three traffic engineers (i.e. Mr Viney, Mr Beard and another) was that: “While it appears that at least some part of the subject development could be approved now subject to appropriate conditions, it is also likely that the total development cannot reasonably proceed until other network upgradings, by both Council and DMR, are committed. It is likely that the subject development should be making some contribution to some of those upgradings; and … Irrespective of the subject development, the connection of the missing section of Boundary Road through the subject site is increasingly important in the local road network.”85 [151] It seems to me that if the position in May 2008 was such that the development of the subject site would be seen as premature until such time as upgrading of the road network occurred that points to the high likelihood of the Department of Main Roads seeking a contribution to Road Upgrading in the before situation that may have been satisfied by the Boundary Road works. 85 Exhibit 47 Tab 3 page 1 – Report on Meeting of Experts – Traffic, 1 May 2008. -- 31 of 71 -- 32 [152] How much that contribution would be is another question. [153] Mr Beard had also prepared, subsequent to his primary report a number of other tables notably Table 1786 which was an analysis of the impact of Metroplex generated traffic on the north-eastern intersection at the “before” roundabout at the Ipswich/Centenary Interchange. [154] Table 17 showed in respect of each of the morning and afternoon peak hours that the average delay was generally doubled and the queue lengths increased by between 10 and 60%. In each case the intersection degree of saturation rose from 1.53 and 1.50 to 2.05 and 2.35 respectively. [155] That document summarised the impact of Metroplex generated traffic on the north-eastern intersection at the ‘before’ roundabout at the Ipswich/Centenary Interchange which was based upon the generation rates proposed by Mr Viney for directional distribution adopted in his evidence-in-chief given on 24 November 2011 and the traffic volumes derived from a 2011 traffic count87. [156] That Table 1788 showed the nominated traffic generation and the traffic movements through the critical north-eastern intersection to be 14.3% higher over the 2007 base volume of 3,129 vehicles per hour. [157] Mr Beard contended in his Table that that would increase, in the morning peak hour the intersection degree of saturation 1.53 to 2.05, the east bound queue from 86 to 91 metres, the south bound queue from 1,765 metres to 2,784 metres and an average south bound delay from 8.6 minutes to 16.5 minutes. [158] Similarly for the afternoon peak hour Table 17 demonstrated that there would be an 11% increase in traffic movements through the critical north-eastern intersection over the 2007 base volume of 3,537 vehicles per hour. [159] Mr Beard contended that those figures would increase the intersection degree of saturation from 1.50 to 2.35, increase the east-bound queue from 56 to 82 metres, increase the southbound queue from 2,176 metres to 3,509 metres and cause an average southbound delay to increase from 8.1 minutes to 21.0 minutes. [160] When those figures were put to Mr Viney he conceded that the approach taken by Mr Beard in producing that document was a valid approach89. [161] In essence Mr Viney accepted the validity of the calculations done by Mr Beard to produce his Table 17 and further accepted that if they came to fruition they 86 Exhibit 49. 87 Exhibit 48. 88 Exhibit 49. 89 T3-33 L 48. -- 32 of 71 -- 33 would constitute significant increases but Mr Viney’s position was that those increases would not necessarily occur. [162] The following appears in the cross-examination of Mr Viney90 “So do you accept that those increases in the degree in saturation in the queue lengths and in the delay are significant increases?-- I accept that they would be significant increases, but I - I would say that they wouldn't necessarily occur. And is this what you wanted to add-----?-- Yes. -----earlier? And why do you say they wouldn't necessarily occur?-- Because once you get a saturated intersection - and Mr Beard's figures show that even before Metroplex is applied in the before case, the intersection is - is way over saturation with long queues. The - the normality is that once you get to a certain point, no matter how much extra traffic you think you're going to put onto that intersection, it doesn't increase that much because people find alternative arrangements. They either come earlier, or - it's called peak spreading. Either - like, most tradesmen will refuse to travel at peak hours, they - they arrive at your doorstep if you're going to do some work at your place at 6 o'clock or 7 o'clock, and they leave at - before 3 o'clock because they wish - wish to meet - to avoid the peak, so there's - the peak spreading would come into effect. There would be avoidance techniques, people would avoid the intersection. So although what Mr Beard has done is technically correct, that you would get a much longer queue length, in practice, I don't think it would happen because of peak spreading and avoidance techniques. And really, what the department has done with building a systems interchange here, has - has forced those impacts on Metroplex generation. Instead of being able to go through the interchange, you - you would probably find some other way of getting there. That - that's why, in their - in their approval, the concurrence agency's response, they ordered upgradings for other intersections because they realised that they would be pushing traffic through other intersections or interchanges.” [163] Notwithstanding the contentions of Mr Viney with respect to the peak spreading and avoidance behaviour by people seeking to avoid congestion it remains clear that the development of the Metroplex site both in the before and after situation would have significant impact on traffic in the adjacent road system. [164] Prior to any cross-examination about Mr Beard’s Table 17 Mr Viney had been cross-examined about the contents of Mr Beard’s Table 15a91. [165] It was put to Mr Viney in the context of Table 15a that: “So, the first step I want to emphasis is that it's 000 for degree of saturation delay and queue length at the Centenary-Ipswich Motorway interchange in the current situation?” To which Mr Viney responded: “Yes. Can I just make that one other point, you're talking only about a - a peak hour. If you look at any other time during the day there is no delay at that interchange on any approach. And we're talking about - if you're talking about Metroplex you're talking about a - a place where the commerce of the industrial development takes place during the day, not at peak hour. So the peak hour delay is placed on the people that 90 T3-35 L 32 T3-36 L9. 91 Exhibit 37 page 6. -- 33 of 71 -- 34 work there. For the trucks that are bringing goods and so forth to the site they don't have this delay. So it is a peak hour problem.”92 [166] That passage seems to demonstrate that the project for which the land was taken had some significant positive impacts upon the congestion which existed prior to those road works being carried out. However, the analysis of both traffic engineers supports the contention that serious degrees of peak hour congestion still remain compared to the significant queue lengths and delay times prior to the project. [167] I am of the view that the analysis and contentions advanced by Mr Beard should be preferred over those of Mr Viney. [168] I do however accept the opinions expressed by Mr Viney that achieving access to the subject site may now be somewhat more circuitous than it was previously. That is, in my view, not an unusual circumstance in areas developed for industrial estates which necessarily involve, from time to time high levels of heavy vehicular traffic. [169] Mr Viney in Appendix 6 to his 9 August Joint Traffic Report develops a Table 1 which sets out the changes in site accessibility between the before and after cases93. 92 T3-28 L 48 T3-29 LL1-2. 93 Exhibit 21 Appendix 6 Table 1. -- 34 of 71 -- 35 [170] Counsel for the Respondent contends that that Table, with which Mr Beard agreed94, demonstrates that access between the subject land and the main arterial routes being the Ipswich Motorway and the Centenary Highway is significantly less convenient in the after case compared to the before case. [171] The Joint Traffic Report of the traffic engineers of 20 September 2011 was prepared at a time prior to the Respondent conceding that the loss of the Centenary Highway ramps was a consequence of the project for which the land was resumed. [172] In that report the traffic engineers agreed as follows: “5. Impact on Accessibility of the Subject Site of the Removal of the Centenary Highway Ramps It was agreed that a significant proportion of total vehicle trips generated by development of the subject site would utilise the Centenary Highway ramps (northbound on-ramp from Bakery Road and southbound off-ramp to Kelliher Road) if they were in place. Further it was agreed that more generated traffic would utilise the interchange between Progress Road and the Ipswich Motorway if the ramps were not in place.”95 [173] While they agreed in the terms set out above there was a considerable difference of view between the traffic engineers as to the consequence of the loss of the ramps. 94 T3-70 LL28-32. 95 Exhibit 22 page 5. -- 35 of 71 -- 36 [174] As set out in the 20 September report (which it might be noted was not signed off on until 28 September 2011) their views were articulated as follows: [175] As indicated elsewhere in this decision in September 2006 an application was made over the subject land for a preliminary approval to override a planning scheme. [176] The initial application in September 2006 was amended on at least two occasions. The traffic documents from Planning and Environment Court proceedings relevant to that application for a preliminary approval were tendered before the Court. Contained within those documents is a Traffic Engineering Report prepared by Colin Beard who gave evidence in these proceedings. [177] Mr Beard's report contains a description of each of the forms of application for preliminary approval.96 The first form of development proposal had the following characteristics: 96 Exhibit 47 Document 7 page 3. -- 36 of 71 -- 37 (a) Industrial Development 250,000 m² (b) Commercial/Office Development 160,000 m² (c) Large Format Retail Centre 90,000 m² Total 500,000 m² [178] Mr Viney produced a Traffic Impact Assessment Report in respect of that first proposal and calculated the following peak hour traffic generations: (a) AM Peak Hour Traffic Generations 4,599 vehicles per hour (b) PM Peak Hour Traffic Generations 6,219 vehicles per hour [179] Apparently the initial application resulted in an Information Request being made by the Department of Main Roads and as a consequence the application was amended. [180] The characteristics of the second form of the proposal were as follows: (a) Industrial Development 386,000 m² (b) Commercial/Office Development 98,000 m² (c) ETRO Precinct (Centre Activities) 6,000 m² Total 490,000 m² (a) AM Peak Hour Traffic Generations 3,946 vehicles per hour (b) PM Peak Hour Traffic Generations 3,946 vehicles per hour [181] Those figures emerged from a Transport Report in response to the Information Request dated 11 April 2007.97 [182] The proposal was further amended in April 2008 with the following characteristics: (a) Industrial Development 337,259 m² (b) Commercial/Office Development 98,000 m² (c) ETRO Precinct (Centre Activities) 6,000 m² Total 441,259 m² (a) AM Peak Hour Traffic Generations 3,551 vehicles per hour (b) PM Peak Hour Traffic Generations 3,551 vehicles per hour98 [183] The Department of Main Roads was a referral agency and on 11 July 2007 they provided a referral agency response setting out the conditions of approval mandated by the Department of Main Roads as a concurrent agency.99 Included in the various conditions imposed on that preliminary approval were the following: 97 Exhibit 47 Document 2 page 3. 98 Exhibit 47 Document 7 page 3. 99 Exhibit 7. -- 37 of 71 -- 38 -- 38 of 71 -- 39 " [184] The parties agree that one of the issues for determination is for the Court to decide what would be the nature amount of any transport infrastructure or contribution or other condition likely to be imposed by the Department of -- 39 of 71 -- 40 Transport and Main Roads and likely to be taken into account by a hypothetical vendor or purchaser in each of the before case and the after case. [185] In addition to the total of $30,000,000 sought by way of contributions set out above the referral agency the response also contained other conditions. [186] Senior counsel for the Applicant in his submissions to the Court aptly summarised those other conditions as follows: (a) The land proposed to be resumed to be excluded from the proposed development (condition 8(i)); (b) For further development applications a traffic engineering assessment demonstrating the traffic generated by the proposed use or reconfiguration applied for can be accommodated by existing capacity in the road network (condition 13(i) and (ii)); and (c) Construction of the missing link at Boundary Road to a minimum two lane two-way pavement and dedication of land to accommodate an ultimate six lane cross section (condition 1). [187] Mr Beard in his Report to the Court100 made the following observations: "The 2007 DTMR Concurrence Agency Response is claimed to be of importance in this matter. The design weekday PM peak traffic generations of the development proposed at the time of that response were 5,434 vehicles per hour. The now claimed 'before' development scenario would have designed Traffic Generations calculated on the same basis of 2,550 vehicles per hour and those of the 'after' development scenario calculated on the same basis would be only 2,335 vehicles per hour. That is, the design traffic generations of the development scenarios now advanced are less than half those of the development proposed at the time of the 2007 Concurrent Agency Response. Naturally, a substantially different Concurrent Agency Response would be expected to a development proposal with these substantially lower design traffic generations." [188] In the Joint Report of 9 August 2011 (prepared before the concession by the Respondent that removal of the ramps was a consequence of the Project for which resumption had taken place), the Traffic Engineers gave consideration to Principal 3 of the Guidelines for Assessment of Road Impacts of Development (GARID) published by the Department of Main Roads in March 2006.101 That principal provides as follows: "In general, Main Roads considers a development's road impacts to be insignificant if the development generates an increase in traffic on SCRs of no more than 5% of existing levels. (Traffic is measured by either AADT or ESAs, terms which are defined in Appendix A.) However, there may be circumstances where an increase in traffic of less than five per cent might have significant road impacts (e.g. a road 100 Exhibit 25 page 4. 101 Exhibit 50 Chapter 1 – page 5. -- 40 of 71 -- 41 with low levels of ESAs, traffic growth or poor safety record). In other cases, an increase in traffic of more than five per cent might be possible without having a significant impact. Main Roads can advise the development proponent whether their proposals cold have a significant impact on the affected road and requires an RIA. The significance of a development's road impacts depends on the functional hierarchy of the roads involved. For example, planning for AusLink National Roads (formerly National Highways) takes into account their important role in freight transport and long distance travel and therefore assumes traffic will grow (significantly on some road sections). In contrast, local district roads may possibly experience little or no traffic growth. Consequently, AusLink National Roads and state strategic roads are expected to cope with greater increases in AADT and ESAs, except in extraordinary circumstances."102 [189] Having regard to the Principal 3 from the GARID document and Mr Beard's analysis which became Exhibit 49 the following was put to Mr Viney: "The exercise carried out by Mr Beard in Exhibit 49 involving only those two movements that, in effect, the south-bound flow and the east- bound flow for this particular intersection, given the configuration of the intersection, and the volumes involved is an entirely legitimate traffic engineering exercise?"103 [190] Mr Viney responded: "I think you're right that the department would do that exercise, it would say that you must look at the impact on this interchange of your proposal, and if I was responding to the department saying 'Yes, you know, the right to ask us to look at the impact in that intersection or that interchange', then I would look at the benefits involved in putting Boundary Road through, and I would say that if Boundary Road was constructed through, then the volumes going through the Centenary Highway, Ipswich Motorway interchange would drop, and the only impact on that interchange would be less, because that's the result that we found with the recent modelling."104 [191] Some controversy arose with respect to Mr Beard's final report for the appeal in the context of matters that were set out in what has come to be referred to as the "September 2011 Joint Report"105 and the "Third Joint Report" which was compiled with the valuers.106 [192] At page 2 of the "September 2001 Report" Mr Beard made reference to: "Approval of the staged development spread over (say) 10 years could probably be negotiated subject to construction of Boundary Road sooner rather than later, and works at the Progress/Ipswich Interchange of $2.0 to $3.0 million." [193] In his opening Mr Hinson of Senior Counsel took the Court to the Third Joint Report (Traffic Engineers and Valuers) and to the second paragraph on page 2 of that Report107. [194] At page 2 the following appears: 102 Chapter 1-p5. 103 T3-38 LL 1-10. 104 T3-38 LL 12-28. 105 Exhibit 22. 106 Exhibit 23. 107 Exhibit 23 page 2. -- 41 of 71 -- 42 "This further Joint Report is in part dependent on understanding and adopting the contents of the recently received second joint traffic engineers report. This Joint Report was prepared on Thursday 20 October 2011 and addresses the construction of Boundary Road and the Boundary Road bridge as part of the 'before' development scenario." [195] Mr Hinson then took the Court's attention to page 3 of the Report and the absence of any reference to works at the Centenary/Ipswich Motorway Interchange. [196] Mr Hinson asserted that the contents of the Third Joint Report constituted an abandonment of any reliance upon requirement to perform works at Progress Road Ipswich Interchange and at the Centenary/Ipswich Interchange. [197] Mr Hinson was clearly working towards the proposition that had been advanced in earlier Orders made by this Court that save with the leave of the Court parties would be precluded from adducing evidence inconsistent with agreements set out in Joint Reports of Experts. [198] In cross-examination by Mr Gore of Queens Counsel Mr Viney appeared to accept that Mr Beard had not resiled from his view that the 'before' case could be viewed as premature and that he had abandoned any assertion about contribution of 3 to 5 million dollars for Progress Road Upgrading. [199] Mr Viney conceded that the only matter discussed in the context of the preparation of the Third Joint Report was the works on Boundary Road.108 He also acknowledged that Mr Beard had not in any sense stated that he had abandoned his view with respect to the $2 or $3 million contributions.109 [200] In the context of the formulation of the Third Report110 Mr Beard said the following in response to the query: "… Now what his Honour is interested in, amongst other things, is whether in that joint report you have departed - sorry, in your appeal report you have departed from anything in that joint report?"111 [201] Mr Beard replied "Well, in my mind I haven't, but I happily concede that the third joint report, which was put together in the context of the mediation, probably didn't explain the context in which those discussions were held, anything like satisfactorily, because it's pretty clear that the parties to it now have different views of what the context of those discussions were. To my mind, what we were discussing arose out of a specific question that - that the mediator put to us, and it really related to the question of - of prematurity, and particular in the situation of - we were talking about the myth of - of the before situation where you effectively have to pretend that the project isn't happening, has never even been thought of, just put it completely out of your mind, and we talked about what was closer to the reality being - well, obviously the existing situation is heavily overloaded, we have to do something about it, there's a demand 108 T3-45 LL1-15. 109 T3-45 L25. 110 Exhibit 23. 111 T3-66 LL47-50. -- 42 of 71 -- 43 for an upgrading that's been recognised, we haven't actually done the planning yet, we don't know when we're going to build anything, but we recognise that we're going to have to do something about that interchange. So it was - it was a discussion about how we deal with the - this sort of a myth of this before, because as we've seen, the planning for that interchange upgrade started in 1998, a long time before the resumption occurred, 10 years before. Every decision that's been made by Cidneo in this matter, since they first bought the site, has been in the basis of the upgrading would occur. So when we discussed this specific issue, it was simply arising out of a - a comment that I'd made in either the first or the second joint report that in the before situation you would have the added cost penalty of being required to construct Boundary Road soon rather than later. And this joint report was really to discuss that specific issue. And as you can see from the reporting of it, what we concluded was that, yes, you would have to build it sooner in the before situation than you would in the after, but, in fact, the community benefits that Mr Viney's been talking about, associated with that upgrading, was such that the department would probably meet, in effect, the bring forward costs. So that's why the valuers were involved in the discussion. As they described it, that issue became cost neutral, which was the question that we were sent away to answer. Was there a cost impost associated with building Boundary Road sooner than later. Now, as Mr Viney said, we simply didn't discuss the upgrading of either the Progress Road interchange, or Centenary/Ipswich Interchange, or anything else. The only thing we discussed was the timing of the construction of Boundary Road. And that's all that's documented in that report."112 [202] It is not unusual for two highly qualified and experienced experts in the same area to come to opposing views about the outcome of development in an area where prior to that development there were already extant traffic problems. [203] That is a situation here. [204] I accept the proposition advanced by Mr Beard that his approach to the formulation of the Third Joint Report was one of focus only on the Boundary Road link and that he had not abandoned his other views. In any event, were it necessary having regard to the considerable period of time for which the Applicant had been in possession of Mr Beard's final Report, I would have granted leave to the Respondent to adduce the additional evidence. [205] The propositions advanced by Counsel for the Respondent in submissions regarding Mr Beard's approach is, in my view, persuasive. [206] Those submissions said as follows: "27. Mr Beard has consistently expressed views to the effect that: (a) the Cidneo property would have been reasonably perceived to be in an area where the major road network was congested, potentially making the development approval of major traffic generating uses on that property difficult; (b) no traffic engineer could submit a traffic impact assessment report which would conventionally demonstrate that a major traffic generating use could be approved without having unacceptable impacts on the adjacent road network."113 112 T3-66 L52 to T3-67 L41. 113 Para 204 Ref #15 – see e.g. ex. 21 p.13; ex.22 pp.2, 5-6; ex.25 pp.6-7, p.10; ex.47 tab 5 pp.1- 2. -- 43 of 71 -- 44 [207] I have also taken into consideration the purchase price of $50,390,655 for the total area of 101.36 Ha in May 2005 and the subsequent valuation as at the date of resumption in the 'before' context of $60,000,000. [208] A hypothetical purchaser would have been, had it bothered to take proper and sound traffic engineering advice, equipped with advice from its traffic engineer (for example Mr Viney) that in that traffic engineers opinion there was no proper basis for the Respondent to demand any contribution to external road works beyond the Boundary Road road works. In that circumstance I think it unlikely that any prudent purchaser would have paid $60,000,000 for the land burdened by a contingency of paying $30,000,000 by way of road works contribution to the Respondent. [209] With respect to the likelihood of a contribution being required in the 'before' or in the 'after' scenarios Mr Viney has consistently expressed the view that a request from the Respondent for any contribution for external road works save for the Boundary Road connection would be unreasonable but he also recognises that, given the conduct of the Respondent in its response to the preliminary approval application where in it sought a contribution of $30 million, it is likely to seek some contribution. [210] On a proportional basis Mr Viney calculates that to be a minimum figure of $16.55 million.114 [211] Similarly, Mr Viney expresses the view that no contribution should be sought in the 'after' case either he says: "In my opinion, no monetary contribution should have been sought by the Respondent (above and beyond the completion of Boundary Road) in either the 'before' or 'after' case."115 [212] Mr Beard in his report116 takes what he describes as a pragmatic approach. [213] He said referring to the background circumstances: "In those circumstances, a potential developer of the 'before' development scenario would need to enter into what would essentially be negotiations with DTMR on a pragmatic basis rather than a technical traffic engineering basis, although the traffic engineers would probably remain involved in the negotiations. This is essentially what actually occurred in similar circumstances in respect of consideration of the impact of what was effectively the 'after' development proposal on the Ipswich/Progress interchange. That was the scenario which was raised in the preceding mediation and addressed in the joint report of the traffic engineers and valuers dated 20th October 2011. Effectively, this scenario was based on the proposition that DTMR knew that the existing network was over- loaded, it had preliminary plans to complete the necessary upgradings, 114 Exhibit 24 page 9. 115 Exhibit 24 page 11. 116 Exhibit 25 page 7 and 8. -- 44 of 71 -- 45 but nothing was committed. It is my understanding that this not consistent with legal advice that 'the project' must be completely ignored in the 'before' development scenario, but it was a fiction adopted to allow a more realistic assessment of what would have happened in 2007/08 in that hypothetical circumstance."117 [214] Given Mr Beard's favourable inclination towards negotiating an infrastructure agreement it is appropriate to consider what would probably have been included. He says in his Report that the infrastructure agreement will probably have included the following: " ● Details of development staging; ● Details of external roadworks staging' ● Early construction of the Boundary Road link, as a two-way two-lane road except where it needed to be wider to accommodate development access intersections. This work would have reduced traffic loadings on the adjacent four-lane Ipswich Motorway; ● Works at the Centenary/Ipswich interchange – probably the construction of an additional southbound lane on the northern approach to the roundabout, to function as a roundabout bypass lane. It is possible that upgrading of the Kelliher Road off-ramp and the Bakery Road on-ramp would also have been required; ● Works at the Progress/Ipswich interchange, of the same basic type, but of lesser magnitude, as those being negotiated at this interchange in respect of the 'after' development scenario. As set out in Table 13 attached, traffic generations of the 'before' development scenario through this interchange would have been approximately 62.5 percent of the generations of the 'after' development scenario, including the traffic diversions associated with the closure of the Centenary Highway ramps. Therefore, if works of $3.0 to $5.0 million were required for the 'after' development scenario, then works for a lesser amount (approximately 62.5 percent, or $1.875 to $3.125 million) could reasonably be anticipated for the 'before' development scenario."118 [215] Mr Beard asserts "There is no traffic engineering reason to expect that the total cost of works required at the Ipswich Motorway interchanges for the 'before' development scenario would be lower than those for the 'after' development scenario which would have lower design traffic generations."119 [216] On being pressed under cross-examination by Mr Gore, Mr Viney's evidence was that he disagreed with the proposition advanced by Mr Beard in the Second Joint Report of September 2011 that there should be some contribution in the 'before' case for the Upgrading of the Progress Road Interchange. [217] Mr Viney's position, he summarised this way.120 "I do have a disagreement with that because the work that's been done with Bitzios Consulting recently indicates that if Boundary Road is constructed through, as is the premise for all - I'm saying about any approval for this site Boundary Road will be constructed through and the bridge constructed. But that Boundary Road will attract a lot of 117 Exhibit 25 Beard Traffic Engineering Pty Ltd page 7. 118 Exhibit 25 Beard Traffic Engineering Pty Ltd page 8. 119 Exhibit 25 page 8. 120 T3-50 LL20-35. -- 45 of 71 -- 46 traffic from the surrounding area. It will reduce the traffic on Ipswich Motorway. It will reduce the traffic on Centenary Highway and it will reduce the traffic on some of those critical elements of the Progress Road interchange. So, you've got to take that into the context of building Boundary Road. So, I do not accept Mr Beard's assertion that we must contribute to that upgrading." [218] Although, Mr Viney did acknowledge that he could see that Mr Beard could adopt the position he did even though he disagreed with it. [219] Mr Gore sought to summarise the position between Mr Beard and Mr Viney in this way. "So, accepting his evidence about that, just for the purposes of my questions, do you agree that the two of you as traffic engineers have this in common, that the two of you do not see any difference between the before and after cases from a traffic engineering perspective, albeit that there is some difference between you about the steps that you go through to get to that point? By that I mean this, that you say that in both the before and after case the contribution should be the same, namely the upgrading of Boundary Road in the manner that you've described." [220] Mr Viney agreed with that proposition. [221] Mr Gore continued: "Mr Beard says that in the before and after case that should occur plus, in the before case, there should be a contribution to two intersections, Centenary and Progress interchanges and in the after case a contribution to one intersection, Progress, in an amount that, in the after case, would be roughly equivalent to the total amount in the before case given the change from 20 per cent to 35 per cent of the generated trips using the Progress Road after change. Now, I'm sorry it's such a long- winded question?-- No, I understand your question. I - I agree with your question. I'd just like to add that there is a rider to all that that you haven't mentioned and that is the $30 million. So, I agree with the premise that that's - that's where we are, but we have a disagreement about the $30 million."121 [222] Mr Beard summarised his position quite clearly in his evidence-in-chief when he said: "… Scenarios in this case that have true financial implications?-- I think in terms of traffic engineering issues, I don't think there's a significant difference in terms of the contributions. Now, Mr Viney, as he said, he believes that it's zero, apart from Boundary Road, in the before and after. My personal view is that that's unrealistic. I think that given the magnitude of the development we're talking about, you would have been required to make some contributions. In my view they would have been roughly equal in the before and after. So, in terms of impact on value of the property, both of our positions as traffic engineers are essentially identical. There's no difference between the before and after in terms of traffic engineering issues. There are still minor issues associated with, in the after, you could argue that the local accessibility, or the - it's not so much local access, it's access to the regional road network direct from the subject site. It is less direct than it was with the ramps to and from the Centenary Highway. I accept that it was, and I believe that the valuers have taken some account of that. But that's not really a traffic engineering issue, that's a valuation exercise. In terms of the traffic engineering issues and the 121 T3-51 LL1-18. -- 46 of 71 -- 47 contributions that would you be required to make, really there's nothing between Mr Viney and I at the end of the day.122 [223] And then in response to questioning from myself the following is recorded123: "HIS HONOUR: So - can I just interrupt, Mr Gore, just so that I understand. Mr Beard, you're saying that before resumption, the develop of this site required Progress Road, Ipswich Road, Centenary Highway/Ipswich Road, intersection upgrades, you needed the completion of Boundary Road. The extra traffic that might have been generated, consequent upon development of the resumed land, was inconsequential in terms of traffic impacts compared to the impacts of the development of the residual land?-- The - the----- Is that right or wrong?-- That's pretty right, your Honour. It's - there's only eight per cent difference in the design traffic generations between the before and after scenarios. So in terms of the - the order of - of accuracy that Mr Viney and I are talking about, that's the same basically, an eight per cent difference in - in that traffic generation overall would not be seen as a significant impact. So I - and again, I believe that's taken in account of in respect of the valuations in that they have looked at the total costs, in effect, being spread over a smaller development component in the after, and I'm not for an instance suggesting that's not legitimate, what I'm saying is that the total contribution levels that they would have had to make, despite the after being eight per cent less traffic, I believe they would have been making roughly similar contributions." [224] An issue arises with respect to the use that might be made of the knowledge placed before the Court in an affidavit of Mr McGregor that in the recent past the Respondent and the Applicant have been able to resolve the conditions of approval on two applications made in respect of the subject land which were made in respect of the western part of the site on 17 December 2009 and in respect of the eastern part of the site in February 2010124. [225] In each case the Department of Transport and Main Roads imposed a condition requiring a contribution to the upgrade of the Progress Road Interchange with the Ipswich Motorway based on traffic generated by the development and a preliminary cost for the initial stage of the Interchange Upgrade. That contribution was in the sum of $13.7 million.125 [226] Ultimately those approvals went to the Planning and Environment Court and shortly before one of the matters was scheduled to begin a Hearing (7 December 2011)126 the parties agreed on an Amended Condition which required the Applicant to complete works on the Progress Road and Ipswich Motorway outbound off-ramp and Progress Road approach in accordance with a specified set of drawings.127 122 T3-70 LL 12-36 123 T3-70 L38 to T3-71 L3. 124 Affidavit of Peter Robert McGregor (Exhibit 72) at paragraphs 28 and 93. 125 Affidavit of Peter Robert McGregor at paragraphs 77, 78, 126 and 127. 126 Affidavit of Peter Robert McGregor at paragraph 153. 127 Affidavit of Peter Robert McGregor at paragraph 158. -- 47 of 71 -- 48 [227] Those works as set out under the heading "Engineering Issues" earlier in this decision have been costed and agreed between the parties in the sum of $1,087,110.76. [228] The question then arises as to what use, if any, the Court is entitled to make of that information which is sought by the Respondent, to be relied upon to confirm an earlier foresight. [229] The Applicant in its submissions says the Court is not entitled to apply weight to that knowledge to confirm any foresights and in doing so quite properly draw the Court's attention to the Spencer test of the determination of market value.128 [230] The Respondent points in particular to the dicta of Isaacs J which is recited earlier in this decision.129 [231] The Respondent also points to the observations of Sugerman J in Tooheys Limited v Housing Commission of New South Wales where His Honour said130 "As I have pointed out more than once, there is no general rule entitling the Court to have regard to events which have happened after the relevant date and before hearing. The concept which is sometimes expressed in the phrase 'that facts when they are available, should be preferred to prophecy, it is not universally applicable. The question is one of relevance to the issue in each set of circumstances which arises." [232] The Respondent also points to the observations of Fryberg J in a Queensland Court of Appeal decision in which it was confirmed that events subsequent to the date of resumption cannot be taken into account in assessing market value.131 [233] In the Mio Art decision Fryberg J (with whom McMurdo P and Fraser JA agreed) observed: "The Spencer test postulates hypothetical parties in full possession of knowledge generally available on the date of acquisition. That knowledge includes knowledge of future possibilities, but only as possibilities, and with the weight which prudent persons would ascribe to them. It is difficult to imagine how the fact that a possibility subsequently became a reality could be directly relevant to that knowledge. I see no inconsistency between this approach and that which enables subsequent sales to be taken into account in assessing market price. Those sales are not taken into account as matters which would be present in the minds of the hypothetical parties. They are simply evidence of an event from which an inference can be drawn about the position at an earlier (but not very much earlier) time. The implicit assumption is that nothing material has changed in the meantime or that if it has, allowance can be made for the change. Consequently they are probative of the earlier position. There will probably be other cases in which inferences about the position on the date of acquisition might logically be drawn from subsequent events. For example, suppose in 128 Spencer v Commonwealth (1907) 5 CLR 418. 129 See [32]. 130 Tooheys Limited v Housing Commission of New South Wales (1952) 20 LGR (NSW) 236 at 240. 131 Brisbane City Council v Mio Art Pty Ltd (2011) 183 LGERA 352. -- 48 of 71 -- 49 circumstances similar to those in this case an acquiring authority denied that a change in building heights was under consideration at the date of acquisition. Publication of a document which would have taken six months to prepare on that topic only three months after the date of acquisition might tend to prove the falsity of the denial; it might support an inference that the topic was under consideration. But it would still be necessary to prove what would have been known by the hypothetical vendor and purchaser."132 [234] In the present case the knowledge of the actual cost of compliance with the condition imposed by the Respondent came more than 3.5 years after the date of resumption. [235] In the light of the observations of Fryberg J set out above and the cases referred to both by the Applicant and by Fryberg J in coming to his decision I have formed the view that I, as a matter of law, am not entitled to take into account the knowledge of the exact contribution ultimately accepted by the Respondent in resolving the appeals involving the two sites which constitute the subject site. [236] I should hasten to add that there are numerous authorities which entitle me to take into account events which occur after the date of resumption when trying to ascertain what might be the injurious affection damage visited on a dispossessed landholder by the project for which that landholder's property was resumed. [237] Counsel for the Respondent points out in their submissions133: "Cidneo's case, as revealed through the 2011 valuations of Mr Hamilton, assumes that there are significant differences between the before and after case scenarios with respect to external roadworks. However, from a traffic engineering perspective, that assumption is not supported by either Mr Viney or Mr Beard." [238] The Respondent's submissions then go on to summarise, I think in a fair way, the common ground between the two traffic engineers. The submissions say: "37. It was common ground between the 2 traffic engineers that there was no difference between the before and after cases from a traffic engineering perspective, even though there was some difference between them about what was common to both the before and after cases.134 It was common ground that the construction of the Boundary Road link (including the bridge over Bullockhead Creek) was required in both the before and after scenarios. The basic point of difference between the 2 engineers was that, in Mr Viney's view, that was all that was required whereas, in Mr Beard's view, more was required in both cases (in the before case, a contribution to 2 intersections – Centenary /Ipswich & Progress/Ipswich – and, in the after case, a contribution only to the Progress/Ipswich interchange, but at a higher amount; in simple terms, but realistically practical terms, Mr Beard viewed the differences between the before and after cases as cancelling out). 38. This is an important area of common ground between the 2 traffic engineers. It is one of several indicators that Cidneo's reliance 132 Mio Art Pty Ltd paragraphs 78 and 79. 133 Outline of Submissions of the Respondent page 11 para 36. 134 Viney T3-50 line 45 to T3-51 line 15; Beard T3-70 line 10 to T3-71 line 5. -- 49 of 71 -- 50 upon the $30M contribution in the 2007 Concurrence Agency Response ('CAR') is flawed."135 [239] On the question of how I should approach the issue of what if any monetary contribution may have been sought by the Respondent in response to any application of development of subject land the Respondent draws the Court's attention to a decision of Member Scott in Townsville City Council v Department of Main Roads136. [240] That was a case which dealt with a question of enhancement of the residual land in the unusual circumstances where in the before case a developer would have been required to contribute towards the cost of a bridge but no such contribution was likely to be sought in the after case. [241] In the course of that decision137 Member Scott says: "[73] … There needs to be an argument based on the evidence that the material circumstances would have been seen by a hypothetical prudent purchaser as so similar in each scenario that the Chief Executive would not be expected to require a contribution in the before, given that he had not in the after. The only similarity adverted to by the claimant is that there is a bridge as part of the Douglas Arterial in the after and a suggested developer bridge in the before. I cannot, based on those facts alone, appreciate an argument that confidently suggests the view that a hypothetical prudent purchaser would take." [242] Later in the decision the His Honour said: "… I think that a purchaser in 1994 would ascertain as best he could what the prospect would be for DMR requiring a contribution for the developer bridge on the assumption that the development would have a significant adverse impact on a State-controlled road. In ascertaining that prospect he would look to the marketplace for examples and he would seek to know what, if any, policy was employed by DMR in considering the application of s.40."138 [243] The only truly objective evidence of the likelihood of a contribution is the matter of the $30 million condition imposed on the preliminary approval application for a similar but larger development. [244] Both Mr Viney and Mr Beard agreed from a traffic engineering perspective that no contribution should have been sought by the Respondent either in either the 'before' or the 'after' case. [245] As Counsel for the Respondent has submitted it was common ground between the two traffic engineers that there was no difference between the 'before' and 135 Outline of Submissions of the Respondent page 11 paras 37 and 38. 136 Townsville City Council v Department of Main Roads [2003] 24 QLCR 241. 137 Townsville City Council v Department of Main Roads [2003] 24 QLCR 242 page 255 para [73]. 138 Section 40 of the Transport Infrastructure Act 1991 came into effect on 7 March 1994 and deals with the impact of certain local government decisions on State-controlled roads and obliged the local government to obtain the Chief Executive's written approval in some circumstances which approval may have required the carrying out of works or changes on a State-controlled road. -- 50 of 71 -- 51 'after' case from a traffic engineering perspective, even though there was some difference between them about what was common to both the 'before' and 'after' cases. It was common ground that the construction of the Boundary Road link including the bridge of Bullockhead Creek was required both in the 'before' and 'after' scenarios. [246] The Respondent goes on to point out that the basic point of difference between the two engineers was that, in Mr Viney's view, the construction of the Boundary Road link was all that was required whereas in Mr Beard's opinion in the 'before' case the contribution to both the Centenary and Ipswich and Progress Road and Ipswich intersections and in the 'after' case the contribution only to the Progress Road Ipswich Road interchange but at a higher amount. [247] Mr Viney's analysis of the circumstances surrounding the $30 million contribution demand led him to the view that the Applicant should not be liable for any part of the $30 million contribution made up by the five elements comprising the $30 million which were contributions for: 1. Progress Road Ipswich Road Motorway Interchange $12,000,000 2. Boundary Logan Interchange $12,000,000 3. Acanthus Street $3,000,000 4. Cycling Infrastructure $2,000,000 5. Intelligent Transport System $1,000,000 [248] Under cross-examination in response to the following question: "And it's a fact, is it not, that you have taken the view up until today, without change, that Cidneo should not be responsible for a single dollar of monetary contribution towards any road works, be it the development application, the subject of the Planning and Environment Court proceedings that were heard by Judge Rackemann, albeit the subject of the development application, the subject of the proceedings to be heard next month. You have consistently taken the view and advised the world at large - not just your client but the world at large that Cidneo should not be responsible for a single dollar, correct?"139 [249] To which Mr Viney answered: "Mr Gore, can I say, 'Correct', but can I just add that that was - that correctness was subject to my client building Boundary Road."140 [250] Cross-examination in that vein continued in the following way: "And your client has consistently taken the position to the world at large - I'm talking about anything confidential - but to the world at large its position has been exactly the same as yours, that it should not pay a single dollar to any of the Department's upgradings subject to the Boundary Road upgrading?-- Yes. And you're aware that its position in this Court that it should nevertheless be compensated to an amount of about $20 million on a 139 T3-20 LL21-31. 140 T3-20 LL32-33. -- 51 of 71 -- 52 different hypothesis, on the hypothesis that a prudent purchaser would have to factor in about $20 million in the after case. You're aware of that?-- I'm aware of that."141 [251] With respect to the $1 million sought for the Intelligence Transport System which is a monitoring system Mr Viney acknowledged that: "It's got nothing to do with the development as far as I can see."142 [252] That concession was reinforced when Mr Gore asked Mr Viney "And it would be your strongly held professional opinion that this Intelligent Transport System condition had virtually no prospects of being upheld by the Department. That would be your personally strongly held professional opinion?"143 [253] Mr Viney answered: "Yes." [254] With respect to the design and construction of the Cycling Infrastructure within the Ipswich Motorway corridor between the Centenary Highway and the Progress Road interchange Mr Gore put to Mr Viney: "And it would be your professional opinion that the provision of such infrastructure did not have a sufficient nexus with the proposal, as to justify the imposition of the condition? [255] Mr Viney confirmed that it was his view that that condition was unsupportable.144 [256] With respect what was described as the 'Acanthus Street' roadworks Mr Viney explained that that claim was required because of the proposal to form a Systems Interchange at Centenary Highway and the Ipswich Motorway and therefore generated traffic from the site would be dispersed to other interchanges. Mr Viney expressed the view that in his opinion that is the Department's fault for doing that so the Department should pick up the tab for changing the road network.145 [257] With respect to the contribution of $12 million in respect of the Boundary Road Logan Motorway Interchange Mr Viney confirmed that in his view that upgrading or changing was not required because of any development of the Metroplex site.146 [258] In summary Mr Viney informed Mr Gore that in the context of giving the theoretical prudent purchaser the benefit of specific experienced views relating to, for example, the Boundary Road Logan Motorway Interchange his opinion would be that if the Department persisted in asking for a contribution for such 141 T3-20 LL35-48. 142 T3-22 L32. 143 T3-22 LL41-44" 144 T3-23 L12. 145 T3-23 LL26-32. 146 T3-23 L48. -- 52 of 71 -- 53 works and that contention was challenged the prospects were high that it could be overturned. [259] I prefer the approach contended for by Mr Beard who suggests a figure of $3,000,000 being contemplated by way of contingency to allow for additional but unsustainable demands being made by the Respondent for external road works contributions. [260] With respect to traffic generation and traffic flows there is really, at the end of the day, not a substantial difference between the two traffic engineers with respect to the impacts and traffic flow generation. In my view the differences between flows consequent upon the development may appear to be substantial but when taken into the context of the total traffic flows in and around the subject site the differences are inconsequential. [261] I prefer, however, the approach of Mr Beard to the question of traffic generation and traffic flows. [262] I came to the view that he was somewhat less pessimistic and more pragmatic than Mr Viney. [263] It is inescapable that there is some increased traffic congestion and conflicts on some trips but, at the same time, the evidence is inescapable that in other respects traffic flows to and from the subject site are improved. [264] My preference for the approach of Mr Beard with respect to the traffic impacts leads me also to prefer his approach in the context of likely contributions that might be required apart from the Boundary Road works. [265] I am unwilling to accept the direct relevance of the $30 million contribution which was raised back in 2007 in the light of the application later largely abandoned for preliminary approval for a much larger project with much higher traffic generation features. [266] In my view that demand should be regarded as a 'first offer' and somewhat speculative in the light of an absence of substantial detail about what final form of the proposed development would have taken.147 10. Valuation Issues [267] As indicated above at the outset the valuers had agreed upon the 'before' valuation of the subject property valuing it at $60/m² so that given the area of the land in the 'before' case at 100.477 Ha the value of the land in the 'before' case is $60,286,200 which the valuers have generally rounded down to $60 million. [268] The land taken had an area of 8.385 Ha. 147 See the evidence of Mr Beard at 3-71. -- 53 of 71 -- 54 [269] The application of simple mathematics to that area of 8.385 Ha at $60/m² produces a figure of $5,031,000 for the land taken. [270] In his Report148 Mr Brett takes the agreed pre-resumption en-globo value of $60,877,800 and divides it by the 80.2 Ha of developable area to generate a figure of $75.90/m² for developable land. Applying that figure of $75.90/m² to what Mr Brett says is the developable area of the resumed land, its value unaffected by injurious affection and/or severance impacts is $4,535,000. (5.973 Ha at $75.90/m²) [271] The Applicant claims an amount of $25,000,000 plus disturbance and interest whereas the Respondent contends for a valuation of $6,800,000 plus disturbance and interest. [272] It is thus a matter of finding on what basis the value of the land taken should be elevated from something just in excess of or regarding developable area just under $5,000,000 as a bare valuation exercise to a figure of somewhere between $6,800,000 and $25,000,000. [273] In addition, the other common ground between the valuers was that each of them adopted as the appropriate valuation methodology a before and after assessment of market value. [274] There is a useful discussion of the before and after method in Hyam.149 [275] The learned Author makes the general observation about the extent of judicial approval which has been given to the approach in several decisions. He says this: "This method has received judicial approval in several decisions and its effect and application were explained by Reynolds JA in Gosford Shire Council v Green (1980) 48 GLRA 201 at 208: This question refers to a method of arriving at the amount of compensation payable under s 124 of the Public Works Act where part only of the claimant's land is resumed. It has been pointed out by Walsh J in Parkes Developments Pty Ltd v Burwood Municipal Council (1969) 17 LGRA 257 at 264 that the whole provision deals with a single concept of compensation in which the figure arrived at takes account of damages caused by severance as well as enhancement and the reference in the question is to a convenient method of arriving at this sum of compensation and dealing with both damages for severance and enhancement in value at one stroke. It is a method which was expounded by Roper J in Realty Corp Ltd v Commissioner for Main Roads (1940) 14 LGR 204 as being the easiest and proper way to ascertain the compensation to be paid. [See also Kerswell v Commissioner for Main Roads (Court of Appeal, 13 July 1978, unreported)]. If the whole parcel is valued at the time of resumption and then the residue is valued, the difference is the ascertained amount of compensation and severance damage and enhancement of the value of the residue are comprehended without any necessity for specification. 148 Exhibit 30 page 18. 149 The Law Affecting Valuation of Land in Australia, Alan Hyam, Federation Press 4th Ed. 2009 pages 174 -178. -- 54 of 71 -- 55 It was also applied by Cripps J in Manufacturer's Mutual Insurance. Ltd v Gosford City Council (1981) 27 The Valuer 214. That case was concerned with a claim for compensation following the resumption of part of the plaintiff's land for the purpose of providing, controlling and managing a car parking station." [276] And then later in the same section the Author observes: "The method was further explained by Tobias JA, with whom McColl JA and Hunt AJA agreed, in Roads & Traffic Authority of NSW v Muir Properties Pty Ltd [2005] NSWCA 460 at [103], in the context of s 55(f) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW): It is often the case that when only part of a dispossessed owner's land is compulsorily acquired, a 'before' and 'after' valuation exercise of the whole of the owner's land is conducted. In other words, the market value of the land before acquisition is determined (including the acquired land) as is its value after acquisition (excluding the acquired land). In this way the difference between the two values determines not only the market value of the acquired land but also captures any injurious affection to the retained land by reason of the acquisition for the public purpose."150 [277] The 'before' and 'after' method in the presence case adopted by each valuer involved a cash flow analysis. [278] It needs to be remembered in assessing the outcomes of 'before' and 'after' exercises conducted by valuers in the manner in which it was done in this case that it is effectively a modelling exercise. [279] It is trite to observe that the reliability and accuracy of the output of a modelling exercise is only as accurate and realistic as the assumptions and inputs underlying the modelling exercise are also accurate and realistic. [280] In the present case there a number of inputs, subtle changes in each of which can have a significant impact on the figure finally generated by the modelling exercise. [281] So much is highlighted in the submissions of the Applicant who points to eight areas of disagreement with respect to the cash flow analyses. [282] Those areas of disagreement are: (a) The gross realisations; (b) Accounting for GST; (c) The internal rate of return; (d) Rates of development and sale of the four stages of the development; (e) The quantification of the loss of access; (f) The amount of DTMR contributions; (g) What allowance should be made for a traffic network analysis report; 150 Hyam p. 177. -- 55 of 71 -- 56 (h) Whether an additional 6 months should be allowed in the after case before the start of construction.151 [283] For example, things like general economic conditions, interest rates, take-up rates of land developed and available for sale, conditions specific to particular industry and government policies are all imponderables which cannot be known with any certainty. The occurrence of the global financial crisis is good evidence of this. [284] Mr Hamilton in his Report152 identifies his assessment approach in the following terms: "Compensation is considered best assessed by valuation of the property both before and after the resumption, with the difference between the two values being the quantum of compensation, to which applicable interest and disturbance costs are additional. I have adopted the direct comparison approach as my initial methodology. This approach provides a broad pattern of values from which I then via various adjustments required due to differences in land area, location, planning status etc establish a value for the subject property. I have utilised the cash flow analysis methodology as it has the flexibility to take into consideration changes in development costings, development timeframe and development yields." [285] To facilitate his direct comparison approach Mr Hamilton considers both some en-globo land sales as well as some developed industrial land sales. [286] Mr Hamilton contemplated four en-globo land sales which he felt were of assistance in a valuation exercise which he undertook. [287] En-globo land sale #1 was of an area of 12.95 Ha otherwise described as Lot 2 on WD4654 which is land located at 222 Staplyton-Jacobs Well Road at Staplyton 36 radial kms from the Brisbane CBD. That sale occurred in November 2007 at a sale price of $11,655,000 excluding GST. [288] That Staplyton land was in a future industrial precinct under a Local Area Plan. [289] Mr Hamilton said "It is of an inferior location without highway exposure". [290] His analysis of that sale yielded a calculation of $90/m² for the gross land area and $97.98/m² of approximate development land area of 119,062 m². [291] From that en-globo sale it calculates a range for the subject land of between $65 and $75/m². [292] Mr Hamilton's second en-globo land sale involved land with an area of 30.09 Ha described as Lot 3 on SP134124 located at Lot 3 Peachy Road at Yatala some 36 radial kms from the Brisbane CBD. That sale occurred in November 2007 at a sale price of $19,090,100 excluding GST. 151 Applicant's submissions page 39 para 165. 152 Exhibit 29 page 55. -- 56 of 71 -- 57 [293] That land was in the General Industry Zone within the Yatala enterprise area Local Area Plan. [294] As with his first sale Mr Hamilton says "That land had an inferior location and no direct access to the highway". [295] For the purpose of his valuation exercise Mr Hamilton analysed that en-globo land sale to generate a figure of $63.45/m² of gross land area and $85.54/m² for the approximate developable land area of 245,500m². [296] Applying those values to the subject land Mr Hamilton generates a range between $60 and $70/m². [297] Mr Hamilton's third en-globo land sale involved land with an area of 61.51 Ha otherwise described as Lot 281 on W31523 located at 281 Peachy Road Yatala some 36 radial kms from the Brisbane CBD. [298] The sale occurred in March 2007 at a price of $29,300,000 excluding GST. [299] Again the land the subject of the third sale was identified by Mr Hamilton as having an inferior location and no direct access to the highway. [300] His analysis of that third en-globo land sale generated a rate of $47.63/m² of gross land area and $75.37/m² of approximate developable land area of 427,600m². [301] Having regard to en-globo land sale #3 Mr Hamilton calculated a rate range for the subject property between $55 and $65 per m². [302] Mr Hamilton's sale #4 was of an area of 21.23 Ha of land located at Beaudesert Road (Mt Lindesay Highway) at Parkinson some 21 radial kms from the Brisbane CBD. The sale occurred in February 2006 and was at a price of $21,000,000 excluding GST. [303] Again the land had an inferior location to the subject. [304] The analysis of that en-globo land sale #4 produced figures of $98.91/m² of gross land area and $141.89/m² of approximate developable land area of 148,000m². [305] Applying the information from his en-globo land sale #4 to the subject land Mr Hamilton calculates a range between $60 and $80/m². [306] Mr Hamilton also considered developed industrial land sales in the period January 2007 until March 2008 across five different industrial estates.153 [307] The first sale considered by Mr Hamilton was in the Buildev Yatala Industrial Estate located at Stanmore Road Yatala which area had been developed as a primarily warehouse estate since 2005. 153 Exhibit 29 pages 34-43. -- 57 of 71 -- 58 [308] Across a 14 month period the estate achieved sales of 1.25 sales per month but Mr Hamilton identifies it as an inferior estate to that proposed for the subject land. I note from his Report154 the Buildev Estate achieved prices ranging from $200/m² for a 1.172 Ha site to $357/m² for a site which was just under half a hectare. Generally the higher prices per m² reflected smaller lot sizes. [309] The second developed industrial land sale considered by Mr Hamilton were located in the Access Business Park at Stanmore Road Yatala a Business Park Area predominantly approved with good quality warehouses and factory units. [310] Between May and August 2007 three lots sold in that estate all of comparable sizes and prices ranging between $280/m² and $340/m². Mr Hamilton noted that the Access Building Park was in direct competition with land sales from the Buildev Estate considered earlier. [311] The third developed industrial land sale considered by Mr Hamilton were in the Motorway Business Park located on the Pacific Motorway Service Road at Ormeau. The Motorway Business Park is very well located and has good exposure to the Motorway. Between August 2007 and March 2008 there were four sales of land in that estate ranging from $330/m² for a 0.7426 Ha site to $370/m² for a 2,500m² site. [312] The fourth developed industrial land sale considered by Mr Hamilton was in the Southlink Estate at Johnson Street and Beaudesert Road Parkinson. Like the Motorway Business Park it has good access and is located just off Beaudesert Road. [313] During January and February 2008 there were six sales of land in that estate ranging from $430/m² for a 2,949m² lot down to $360/m² for three other sales all of the order of a half hectare. [314] The uptake rate in that estate overall up to the date of resumption Mr Hamilton says was 3 lots per month. [315] The fifth developed industrial land sale considered by Mr Hamilton were in the State Government Developed Lytton Industrial Estate at Lytton Road Lytton. [316] This is in a sense a Special Purpose Estate because it was developed predominantly to attract port related industries. During April 2007 and January 2008 there were 10 sales of lots in that estate ranging in price from $330/m² for a 2.18 Ha site to $375/m² for a 4,111m² site. [317] In respect of all those developed industrial land sales Mr Hamilton makes the following observations: 154 Exhibit 29, page 35. -- 58 of 71 -- 59 "1. 'Buildev Yatala' was achieving values in excess of $300/m² and this estate is significantly inferior to the Metroplex at Westgate estate due to:  Inferior location and exposure;  Many blocks are subject to retaining walls;  Lower quality premises being constructed; and  Limited open space. 2. 'Access Business Park' and 'Motorway Business Park' were achieving values in excess of $340/m². These estates are located close to grade separated interchanges to the Pacific Motorway. Metroplex would achieve higher values due to:  Metroplex has a superior location;  It has a more attractive environment proposed; and  There is limited competition in immediate locality. 3. 'Southlink' was achieving values in excess of $360/m². Metroplex would achieve higher values due to:  Metroplex has a superior location;  Metroplex has a superior access and exposure;  It has more attractive environment; and  There is limited competition in the immediate locality. 4. 'Lytton Industrial Estate' was achieving values in excess of $360/m². Metroplex would achieve higher values due to:  Metroplex has superior location at the junction of Centenary Highway and Ipswich Motorway;  There is limited competition in the immediate locality; and  The proposed environment is more attractive."155 [318] Consequent upon his analysis of all of those sales both developed and en-globo lots Mr Hamilton adopts a developed value of $385/m² for Stages 3 and 4 of the proposed development before resumption. [319] Mr Hamilton says that that price of $385/m² for Stages 3 and 4 reflects the following advantageous factors: " ● Metroplex propose to establish a high quality estate similar to the successful Metroplex at Gateway. They are proposing to develop the best industrial estate in the Western Gateway region. ● The subject site has a sought after location only 16 kilometres from Brisbane Central Business District within the western development corridor. ● Good access is available to Centenary Highway and henceforth to Ipswich Motorway and the regional road network. ● Relatively low density development with attractive open space. ● Etro centre to offer a range of convenience and service outlets. ● There is limited directly comparable vacant industrial land available in the immediate vicinity." 156 155 Exhibit 29 page 44. 156 Exhibit 29 page 44. -- 59 of 71 -- 60 [320] Mr Hamilton also157 usefully sets out a summary of the 'before' and 'after' plans of subdivision which should be read in conjunction with Exhibit 18 the Joint Statement prepared by Messrs McAnany and Thomas. "5.1 Before Resumption Prior to resumption it was proposed to develop the site from east to west. To achieve this the display office had been constructed on the eastern entry to the site. Set out below is a summary and staging for the development of the site as per the agreed highest and best use. Stage No. Total Developed Area (m²) No of Lots Average Lot Size (m²) 3 228,740 23 9,945 4 148,880 14 10,630 1 158,490 11 14,440 2 130,560 8 16,320 Total 666,670 56 11,905 5.2 After Resumption After resumption, as a result of the loss of the eastern access, the property has to be developed from west to east. Set out below is a summary and staging of the proposed subdivision as per the agreed highest and best use. Stage No. Total Developed Area (m²) No of Lots Average Lot Size (m²) 1 158,490 11 14,440 2 130,560 8 16,320 3 173,370 20 8,768 4 148,880 14 10,630 Total 613,300 53 11,572 158 [321] The figures in the above table were adopted and relied upon by each of the valuers. [322] Mr Brett contemplated seven en-globo sales including the four considered by Mr Hamilton and three others namely: (a) Land at 255 Archerfield Road Richlands; (b) Land at 3277 Beaudesert Road Parkinson; and (c) Land at Bognuda Street Bundamba. [323] He provides in his Report159 a schedule of the en-globo sales together with some observations about the value on a per m² basis and the amount of open space. [324] He makes the point160 "The Cidneo land is considerably larger than any of the sales, a circumstance with generally results in a lower per m² value." 157 Exhibit 29 page 24. 158 Exhibit 29 page 24 section 5.1 and 5.2. 159 Exhibit 30 page 17, Attachment 6. 160 Ibid. -- 60 of 71 -- 61 [325] The figures produced by the cash flow analysis in the hands of the valuers give the appearance of accuracy and precision but in fact, in my view, are, at best, sophisticated estimations and predictions and at worst wild guesses. [326] Mr Brett161 identifies the basis upon which he has proceeded to construct his valuation exercise. " ● Had this resumption and its related works not occurred a purchaser of this land would need to have commissioned a traffic report addressing the proposed development's impact on the surrounding road network, including the Centenary Highway interchange, the Kelliher and Bakery Roads off and on ramps and the intersections between these two. ● There would be a degree of uncertainty in respect of the outcome of negotiations with the Department of Transport and Main Roads addressing these impacts but an infrastructure agreement would be successfully negotiated. I have adopted 12 months in both cases. ● That the traffic report and infrastructure agreement would necessarily occupy part of the time preceding the start of a development had there been no resumption, and that time, would be commensurate with the pre-development time required after resumption. I have adopted 12 months in both cases. ● That infrastructure charges addressing necessary works would have been substantially the same with or without the now completed road works. I have adopted $3,000,000. ● That if it is the case these works are part of the purpose of this resumption enhancement is to be considered." [327] The reservations I expressed earlier about the precise reliability of the cash flow figures generated from a modelling exercise were really acknowledged by Mr Hamilton under cross-examination when Mr Gore "put to him" that developing a cash flow was an 'iterative process'.162 [328] Mr Hamilton agreed that it was a detailed process which relied upon different inputs. [329] Mr Gore said: "Different inputs, you changed some of the assumptions to see what effect those changed assumptions have on the results and on other outcomes?"163 [330] Mr Hamilton acknowledged that the modelling exercise relied upon changed inputs until such time as there was an internal rate of return which was comparable to the 'before' case internal rate of return. [331] That figure from Mr Hamilton's point of view was 21.67%.164 161 Exhibit 30 page 12. 162 T6-12 L30. 163 T6-12 L38. 164 T6-12 L50. -- 61 of 71 -- 62 [332] The consequence of the foregoing as acknowledged by Mr Hamilton was that if you put in to the modelling exercise a higher land value you get a lower rate of return and conversely putting in a lower value of land generates a higher rate of return. [333] Further Mr Hamilton acknowledged that the $42,000,000 valuation was, in his case a function of his goal to obtain an internal rate of return which was equivalent or roughly equivalent to the 'before' case. [334] He also acknowledged that Mr Brett's analysis was no different just that his rates of return were lower.165 [335] I also formed the view that while Mr Hamilton's approach was driven by an internal rate of return Mr Brett's approach to the valuation exercise was more driven by attempting to reflect the reality of the market place in the values ascribed by Mr Brett to both input costs and land sales revenues. [336] In the 'before' case it was thought that there was agreement that the base rate for Stages 1 and 2 was $370/m² and for Stages 3 and 4 it was $385/m². [337] It was also agreed that a number of the Lots which were to be developed would have designated tree retention and rehabilitation buffer areas on them which would require an adjustment to be made to the full value per m² area of the Lot where the area encumbered by tree retention and rehabilitation buffer areas was 15% or less of the Lot area and otherwise a rate of 10% of the full value was applied to that encumbered part exceeding 15% of the Lot area.166 [338] The agreement about the $370 and the $380 rate per m² was illusory because on Mr Hamilton's analysis they were GST exclusive and on Mr Brett's analysis they were GST inclusive. [339] An Exhibit tendered to the Court clarified the position and enabled the Court to compare Lot prices before adjustments for tree rehabilitation areas etc but after corrections for GST so the prices were shown to be exclusive of GST.167 [340] In the 'before' case the figures were: Hamilton Brett Stage 1 370 336 Stage 2 370 336 Stage 3 385 350 Stage 4 385 350 165 T6-13 L22. 166 Taken from the Applicant's submissions page 40 para 166. 167 Exhibit 64. -- 62 of 71 -- 63 [341] In the 'after' case the relevant figures were: Hamilton Brett Stage 1 360 328 Stage 2 360 328 Stage 3 355 333 Stage 4 355 333 [342] The figures for Hamilton are of course those for which he originally contended and which exclude GST. Mr Brett's figures are reduced because of his inclusion of GST. [343] Ultimately it was agreed between the valuers and the parties that Cidneo the Applicant had not utilised the benefits of what is referred to as the "margin scheme" in dealing with GST and accordingly the figures that were referred to were GST exclusive. [344] Once the issue of whether the Lot prices in the 'before' and 'after' on a per m² basis are GST inclusive or exclusive it is appropriate then to turn to the differing approaches taken by the two valuers to the staging of development of the subject site. As both parties submitted it was common ground that in the 'before' scenario there were 56 proposed Lots in the hypothetical sub-division which would be developed in the order of Stage 3 (23 Lots), Stage 4 (14 Lots), Stage 1 (11 Lots) and Stage 2 (8 Lots). [345] It was common ground that the Lot yield was reduced by 3 Lots to 53 Lots as a consequence of some ingenious reconfiguration of the balance land so that development would proceed in the order of Stage 1 (11 Lots), Stage 2 (8 Lots), Stage 3 (20 Lots) and Stage 4 (14 Lots). [346] Each of the sales rates, arranged in the order in which the Stages were to be developed were set out in Reports of the valuers.168 Those sales rates were as follows: Before169: Hamilton Brett Stage 3 6ps + 2pcm 6ps + 2pcm Stage 4 4ps + 1pcm 2ps + 1pcm Stage 1 3ps + 1pcm 4ps + 1pcm Stage 2 3ps + 1pcm 1ps + 1 pcm 168 Exhibit 29 page 56 (Valuation Report of Mr Hamilton) and Exhibit 30 page 20 (Valuation Report of Mr Brett). 169 ps = presales, and pcm = per calendar month. -- 63 of 71 -- 64 After: Hamilton Brett Stage 1 5.5ps + 1.5pcm 5ps + 1pcm Stage 2 3ps + 1pcm 1ps + 1pcm Stage 3 5ps + 1pcm 5ps +2pcm Stage 4 4ps + 1pcm 2ps + 1pcm [347] The difficulty with the evidence of the valuers with respect to both sale prices and take up rates is that they are, in each case and with greatest respect to the valuers premised upon speculation and estimation. [348] It is informed speculation and estimation but at the end of the day it remains just that. [349] On the one hand anticipated sales can be wildly optimistic, prices extravagantly high and profits commensurately high. On the other hand a conservative approach to the highly speculative sales exercise may yield lower prices, slower take up rates and hence reduce profits and thereby a reduced value on the land. [350] A great deal of time and cerebral energy was spent considering the issue of staging, the time at which project works might be begun, the number of lots which might be held in reserve and the manner in which economic conditions may change several years down the track after development has begun. [351] I am somewhat sceptical as to the utility of such an exercise in attempting to produce a result which has an aura of accuracy and objectivity about it but which, upon careful analysis (it being the outcome of a modelling exercise) is shown to be merely the product of speculation and estimation. [352] The best that the Court can do is to prefer one approach over another. [353] In addition to sales and take up rates one other issue which required clarification was the staging and timing of development. In the 'before' scenario Mr Hamilton allowed 61 months for the development and in the 'after' scenario he allowed 76 months. [354] A part of that timing is that in the 'after' scenario six months is allowed for approvals, a comprehensive traffic analysis, a re-design re-conceptualisation of the overall development responsive to the Boundary Road works and hydraulic issues caused by utilisation of cut and fill between the east and the west sections of the whole site.170 170 T5-26 LL15-30 and T5-36 LL30-55. -- 64 of 71 -- 65 [355] Part of the extension in the 'after' scenario to 76 months Mr Hamilton explains was caused by his smoothing out of cash flows and a response to the Joint Engineers Report.171 [356] Each of the valuers has attempted to reflect what they identify as the injurious affection to the balance land after resumption and as a consequence of the road works carried out as part of the project. [357] For example Mr Hamilton in his Report identifies the following Adjustments:172 "I have reduced the base rate (before adjustments) for Stages 3 and 4 from $385/m² in the before resumption case to $355/m² after resumption. This is a reduction of $30/m² or 7.8%. The reasons for this reduction are:  Loss of direct Centenary Highway access and thus inferior access to the regional road system;  Loss of Ipswich Motorway exposure;  These are now the latter stages of the project and are thus unable to establish strong momentum; and  These stages are inferior to Stages 1 and 2. I have reduced the base rate (before adjustments) for Stages 1 and 2 from $370/m² to $360/m². This is a reduction of $10/m² or 2.7%. This reduction has been undertaken to reflect:  Inferior access arrangements due to the public works;  No benefits are derived from Stages 3 and 4 as these are now to be developed later;  The standard of development will be reduced compared to that which could have been achieved pre-resumption; and  There is no benefit from the proposed Etro Convenience Centre" [358] The sales rates which are set out above in an extract from Exhibit 29 and 30 were acknowledged by each of the valuers to reflect the Lot prices. [359] In its submissions to the Court the Respondent summarised that matter this way: "As identified by Mr Brett, the main issue in relation to the sales rates was really an issue in relation to the Lot prices, because Mr Hamilton uses higher Lot prices and sales rates than were achieved at the estates which the valuers used to develop their assumption. Lot prices and sales rates have an inverse relationship and, in Mr Brett's opinion, Mr Hamilton's Lot prices were too high to achieve the sales rates that Mr Hamilton assumed."173 [360] Unsurprisingly Mr Hamilton defends his prices and the take up rate on the basis that as he says, "the developed land would have had the following features":174 " ● Metroplex propose to establish a high quality estate similar to the successful Metroplex at Gateway. They are proposing to develop the best industrial estate in the Western Gateway region. 171 T6-15 LL15-20. Exhibit 29 page 57 section 12.4. 172 Exhibit 29 page 50. 173 Outline of Submissions of the Respondent paragraph 66. 174 Exhibit 29 page 44 section 8.4. -- 65 of 71 -- 66 ● The subject site has a sort after location only 16 kms from Brisbane Central Business District within the Western Development Corridor. ● Good access is available to Centenary Highway and henceforth to Ipswich Motorway and the regional road network. ● Relatively low density development with attractive open space. ● ETRO centre to offer a range of convenience and service outlets. ● There is limited directly comparable vacant land available in the immediate vicinity." [361] Mr Hamilton goes on to acknowledge that he had adjusted his adopted rates for Stages 3 and 4 in the 'before' case to reflect their inferior position. He made similar adjustments in the 'after' resumption case.175 [362] In his evidence Mr Hamilton acknowledged that he had generally picked prices which are at the top end of the market176. That reflects his view that the subject site was the estate of any of estates considered by either him or by Mr Brett. [363] I did not understand Mr Brett at any point in his evidence to suggest that the subject site was in some inferior to the estates considered by him and by Mr Hamilton but he did not seem to emphasise any suggestion that they were significantly superior either. [364] It is noteworthy of course that the Lot sizes on the subject land were going to be substantially larger than the Lots in each of the estates being compared. The Lots are generally in excess of 1 Ha in area. [365] In that context it is noteworthy that also Mr Hamilton conceded177 that as a general rule the price of a Lot decreases with an increase in the size of the Lot. [366] It appears that in Mr Hamilton's mind that is offset by other factors such as, for example, the availability of open space. [367] Mr Hamilton was also taken to page 20 of Mr Brett's primary Report which contained a convenient summary of Lot sizes in the 'before' and 'after' cases. [368] Reference to that Exhibit shows that each Stage had the following average areas for Lots: 1. Stage 1 - 14,444m² 2. Stage 2 – 16,295m² 3. Stage 3 – 9,944m² 4. Stage 4 – 10,634m² [369] For the 'before' resumption Lot areas and 'after' resumption only in Stage 3 does the average area of the Lot reduce to 8,767m². 175 Exhibit 29 page 45. 176 T5-60 L 21. 177 T5-47 LL 3-18. -- 66 of 71 -- 67 [370] Mr Gore put to Mr Hamilton that in his application of the Motorway Business Park figures that he derived from his own analysis he had not made sufficient allowance for the dramatic difference in Lot sizes between that estate and the subject site.178 [371] Mr Hamilton's response to that was to say: "The design of the estate allows flexibility in lot size and shape. So, it's only a matter of redesigning the layout. So, there's no fixed amount of land per lot. It can be varied, depending on the demand of the owner - of the potential purchaser. So, there is some flexibility available to the developer to accommodate potential buyers and the second point, these estates are ribbon estates down the highway, motorway. I would have thought - and as I say in my report - the Metroplex would have been able to establish a more attractive environment that would attract bigger users of land than the mum and dad or the spec builders that these other estates were attracting." [372] That evidence from Mr Hamilton seems to reflect a higher degree of flexibility than the rest of his Report revealed. It also suggests a movement away from what had previously been agreed between the parties with respect to Lot layout in both the 'before' and 'after' situation. [373] I found that aspect of Mr Hamilton's evidence less than persuasive. [374] There is some tension between Mr Hamilton's utilisation of the sales of developed Lots in each of the estates which he considered and his comments about the comparability of those estates. [375] With respect to the Buildev Development at Yatala which was achieving values in excess of $300/m² Mr Hamilton said that that development was significantly inferior to the subject because of: " 1. Inferior location and exposure; 2. Many blocks are subject to retaining walls; 3. Lower quality premises being constructed; and 4. Limited open space." [376] Similarly with respect to the Access Business Park and the Motorway Business Park where sales were in excess of $340/m² Mr Hamilton expressed a view that the subject would attract higher values due to a superior location a more attractive environment proposed and limited competition in the immediate locality. [377] Similarly the Southlink Estate where values were in excess of $360/m² was said by Mr Hamilton to have an inferior location, inferior access and exposure, a less attractive environment and more competition in the immediate locality. [378] He expressed similar views with respect to the Lytton Industrial Estate where sales reflected values in excess of $360/m². 178 T5-47 L 35. -- 67 of 71 -- 68 [379] I cannot glean in Mr Hamilton's report any concession on a m² basis for the fact that the Lot sizes are typically substantially greater than in the estates he considered. [380] One consequence of the larger Lot size in the both the 'before' and 'after' redevelopment of the subject site is that each individual Lot will command a large absolute figure to achieve a sale. [381] Reference to Mr Brett's first Supplementary Report179 shows in the 'before' case a significant number of Lots valued at above $5,000,000 and, indeed, one priced at $14,414,400. [382] In the 'after' the prices are similarly high with 14 Lots selling for prices above $5,000,000 with the most expensive selling for $13,693,680. [383] In the Buildev Yatala Industrial Park the highest price gathered was just over $5,000,000 for a Lot with an area of 1.967 Ha with four other Lots having areas in excess of 1 Ha selling for just under $5,000,000. [384] Interestingly, each of those sales yielded a per m² rate of less than $300/m².180 [385] In the Motorway Business Park Estate none of the four sales was for a Lot with an area in excess of 1 Ha with only two sales exceeding $1,000,000.181 [386] Similarly the Southlink Estate in which there were six sales had no sale of a block in excess of 1 Ha and no sale exceeding $3,000,000 as a price.182 [387] The Lytton Industrial Estate was the only estate of four which had Lots with an area in excess of 1 Ha (3 Lots) and one sale at a price of $8,550,000 for a 2.375 Ha Lot. [388] Taken as a whole that developed industrial land sale evidence seems to my mind to be more consistent with the approach taken by Mr Brett in his Report than the approach taken by Mr Hamilton. [389] With respect to the take up or sales rates and the rates of development they are reflected in the table above at paragraph [339]183, as Counsel for the Applicant point out even though the positions as between the valuers are slightly different this has no great impact on the overall result given the overall timeframes of 61 months adopted by Mr Hamilton and 67 months adopted by Mr Brett. [390] So much is reflected in the evidence of Mr Brett who, when that proposition was put to him, agreed that the difference of six months had no great impact.184 179 Exhibit 61 page 16. 180 Exhibit 29 page 35. 181 Exhibit 29 page 39. 182 Exhibit 29 page 41. 183 Exhibit 29 page 56. 184 T7-20 L 45. -- 68 of 71 -- 69 [391] Counsel for the Applicant urges upon me that I should reject Mr Brett's analysis because he, it is said, failed to regard the internal rate of return as an input into his cash flow analysis in order to determine as an output the value of the land or what a prudent purchaser could afford to pay for the land.185 [392] Mr Brett explained his approach in the course of cross-examination by Mr Hinson of Senior Counsel. [393] Mr Brett confirmed that in carrying his analysis he used the land value as an input and the software generated an internal rate of return. He also acknowledged that normally he would do that the other way around.186 [394] His reasoning he explained this way187 "Well, that's what I did in the first instance. Then after the discussions with Mr Hamilton and a review of those en-globo values and accepting that the speculative market continued to February '08, that I should run with the level of values demonstrated by the market irrespective of whether that resulted in what I would think is an unreasonably low return." [395] Mr Brett went on though to deny that the rate of return produced by his cash flow analysis would turn an intending purchaser away. [396] He said: "No. I mean, again if we look at those sales, those en-globo sales, in the year 2007, which are referred to in our various reports, if you are using those as a benchmark and accepting that as applying to how much someone would pay for this in its en-globo state, the only way in which that level can be justified is indeed if people were paying that money in a speculative market in anticipation of values rising and really get their return by capital return rather than a direct return on the development." [397] He asserted, I think sensibly, that "You just can't pump the realisations in order to satisfy the bottom line, the level of return that you think will justify the investment. Those realisations still have to be viewed in a proper context of how far they might accede anything. That is presently historically achieved."188 [398] Mr Brett's view of the gross realisations was that they would be lower than those contended for by Mr Hamilton. [399] Mr Hinson put to Mr Brett that: "If the realisations on sales were higher than you have allowed your internal rate of return would come up."189 185 See T7-34 LL40-50 and T7-63 LL55 to T7-64 L1, T6-.56 LL30-35 and T7-69 L40. 186 T7-35 LL40-50. 187 T7-34 LL50-60. 188 T7-35 L20. 189 T7-36 L20. -- 69 of 71 -- 70 [400] Mr Brett agreed but said: "Yes, but it still won't come up as far as Mr Hamilton's because of the 3 million dollar infrastructure charge but if my lot prices go up and you didn't incur the 3 million dollar infrastructure charges, I would be more or less on a par with Mr Hamilton but the risk isn't accommodated in it going up, the risk is in accommodating it in going down. That is why there is a risk component to accommodate some unforeseen downside."190 [401] Each of Mr Brett and Mr Hamilton produced reports which dealt with the possibility that the road works contributions may have to have been contemplated as being as low as $1,087,110 based upon the Joint Statement of the Civil Engineers Thomas and Marshall.191 [402] For the reasons set out earlier in this Report I feel unable to apply that figure to the likely road works contribution. The reasons for that are set out elsewhere in this decision. [403] I am however satisfied that the appropriate figure to apply to a prudent purchaser contemplating a likely demand by the Respondent for a contribution to road works external to the site and apart from the completion of the Boundary Road link would be $3,000,000. [404] Because of the reservations I have expressed above with respect to the evidence of Mr Hamilton and because of my acceptance for most of the evidence of Mr Brett and because I accept 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. I am accordingly satisfied that compensation should be ordered in accordance with the figures advanced by Mr Brett in his Supplementary Report of 24 November 2011.192 [405] Accordingly, I find that the appropriate compensation to be paid by the Respondent to the Applicant is $6,877,800. [406] I acknowledge that Mr Brett's check valuation calculations produce a somewhat lower figure of $6,000,000 but in line with the liberal estimate principal I am satisfied that the loss should be rounded up to $6,900,000. [407] That figure is exclusive of disturbance items which I am told have been agreed between the parties. [408] I will hear the parties with respect to interest. 190 T7-36 LL21-28. 191 Exhibit 71. 192 Exhibit 61 page 5. -- 70 of 71 -- 71 11. ORDER 1. Compensation is payable by the Respondent to the Applicant for the taking on 22 February 2008 of an area of 8.385 Ha being Lot 1 on SP218520 being part of the land contained in Title Reference 50553649, County of Stanley, Parish of Oxley in the sum of Six Million Nine Hundred Thousand Dollars ($6,900,000). HIS HONOUR, WL COCHRANE MEMBER OF THE LAND COURT -- 71 of 71 --