Doolan Properties Pty Ltd v Council of the Shire of Pine Rivers [1997] QLC 204

LAND COURT BRISBANE 24 December 1997 Re: Claim for compensation - Acquisition of Land Act 1967 Council of the Shire of Pine Rivers (A96-07) Doolan Properties Pty Ltd v. Council of the Shire of Pine Rivers OUTLINE OF JUDGMENT Page Introduction 3 Assessing the amount of compensation payable - the statutory criteria 5 The claim for compensation 5 The subject land 6 . Features 6 . Rezoning 7 Highest and best use 9 . Rezoning conditions 10 . Other features 12 . Scale of development 14 . Development potential after resumption 15 . Development potential before resumption 24 . Development potential before and after resumption compared 34 Assessing the amount of compensation payable - two approaches 35 . The claimant’s approach 35 . The Council’s approach 41 . Determining the appropriate approach 41 [1997] QLC 204 -- 1 of 73 -- 2 Sales Evidence 42 . Claimant’s sales 42 . Council’s sales 47 . Assessing the sales evidence 55 . The appropriate valuation method 57 Enhancement 60 . The issue 60 . Cost and value of roadworks 62 Disturbance 68 Conclusion and order 70 -- 2 of 73 -- 3 LAND COURT BRISBANE 24 December 1997 Re: Claim for compensation - Acquisition of Land Act 1967 Council of the Shire of Pine Rivers (A96-07) Doolan Properties Pty Ltd v. Council of the Shire of Pine Rivers JUDGMENT Introduction Doolan Properties Pty Ltd (the “claimant”) owned three contiguous parcels of land which together comprised a corner block with frontages to South Pine Road and Queens Road, Everton Hills (the “subject land”). The properties were amalgamated into one lot, Lot 3 on RP 864243 being the whole of the land described within Certificate of Title 50079378. The total area of the subject land was 6,106 m². Three notices dated 16 November 1994 (Exhibit 1) informed Mr William Edward Doolan, then the owner of the subject land, that the Council of the Shire of Pine Rivers (the “Council”) intended to take for road purposes the following parcels of land in the County of Stanley, Parish of Kedron:  part of Lot 2 on RP 847806 containing an area of approximately 858 m²;  part of Lot 1 on RP 847806 containing an area of approximately 199 m²; and  part of Lot 809 on SL 11078 containing an area of 95 m². The notices were given under the Acquisition of Land Act 1967 and the Local Government Act 1936. -- 3 of 73 -- 4 Letters dated 17 November 1994 from the Shire Solicitor which enclosed the Notices of Intention to Resume stated that the land was required "for future road widening and intersection improvement works". The Council was proposing to widen South Pine Road from Queens Road to Camelia Avenue and to upgrade the intersection of Queens Road and South Pine Road. By Proclamation dated 17 August 1995 and published in the Government Gazette on 18 August 1995, the Governor declared that some 1,071 m² (or 17.6 per cent.) of the subject land (the “resumed land”) was taken by the Council for road purposes and vested in the Council for an estate in fee simple from 18 August 1995, which is the relevant date for determining compensation. The resumed land is Lot 6 on RP 881938, a strip of varying widths along the road frontage. The land retained by the owner after resumption, Lot 5 on RP 881938 (the “remaining land”), has an area of 5,035 m². In January 1996 the claimant lodged with the Council a claim for compensation pursuant to the Acquisition of Land Act 1967. The claim was amended on 12 February 1996, and on 13 February 1996 the claimant’s solicitors referred the claim for compensation to the Land Court for hearing and determination. A total amount of $1,790,026.80 was claimed, comprising $1,556,000.00 for land and injurious affection and $234,026.80 for disturbance (being reasonable legal and valuation costs). At the hearing, the claimant amended its claim and sought $1,077,700.00 in compensation for land and injurious affection together with $93,772.97 for disturbance and interest (Exhibit 19). The Council estimated that the difference between the value of the subject land before resumption and the remaining land after resumption was $85,680.00 (Exhibit 16, page 9), but that the value of the remaining land was enhanced in value by the cost of roadworks of about $89,700.00. Consequently, no compensation is payable. At the hearing, the claimants were represented by Mr DR Gore QC. Mr RS O'Regan QC represented the Council. On the first day of the hearing, the Land Court and counsel representing the parties inspected the subject land and various other parcels of land to which reference was made in valuation reports. Each party relied on sales or other evidence about some of those parcels to support certain valuations of the subject land as at the date of resumption and the remaining land after resumption. -- 4 of 73 -- 5 Assessing the amount of compensation payable - the statutory criteria The Acquisition of Land Act 1967 provides: “Assessment of compensation 20(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 to the damage (if any) caused by either or both of the following, namely - (a) the severing of the land taken from other land of the claimant; (b) the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land. (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. (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. (4) But in no case shall subsection (3) operate so as to require any payment to be made by the claimant in consideration of such enhancement of value.” The claim for compensation The claim as made had two components, a claim for loss of land and injurious affection and a claim for reasonable legal and valuation costs, described generally as a claim for disturbance. The key issues raised in this case are as follows: (a) What was the highest and best use of the subject land immediately before resumption and the highest and best use of the remaining land after the resumption? More specifically, what was the development potential of the land in the before and after resumption situations? (b) What method (or methods) should be used when analysing sales evidence for the purpose of valuing the relevant parcels of land before and after resumption? More -- 5 of 73 -- 6 specifically, should the sales evidence be analysed by reference to the value per square metre of gross floor area achieved at the time of sale or by reference to the value per square metre of the site area? Should calculations based on hypothetical developments on the land, before and after resumption, be relied on in determining the value of the land? (c) When determining what compensation, if any, should be paid to the claimant, should any allowance be made for any enhancement to the value of the remaining land by the carrying out of certain roadworks on the resumed land? (d) What amount should be allowed for disturbance to the claimant, by way of legal and valuation and other costs, as a consequence of the resumption? The subject land Features: The subject land comprised two narrow rectangular parcels and an irregularly shaped parcel which together formed an irregularly shaped block which slopes steeply away from the frontage of the land to the north-western corner of South Pine Road and Queens Road. The land is of broken contour, cut by a number of gullies running into dams at the rear of the property. The resumed land is a strip along the elevated front portions of the subject land. The subject land was substantially cleared but had no structural improvements other than stock fencing which added no value to the land. A small drain enters the site along the South Pine Road frontage. Services available to the subject land include electricity, town water, telephone connection. The subject land is approximately ten kilometres north-west of the Brisbane GPO and two kilometres north-west of the Brookside Shopping Centre. Other shopping centres are located at Everton Park (two kilometres away), Ferny Hills (four kilometres away) and Arana Hills (two kilometres away). Access to the subject land was available from South Pine Road and Queens Road, sealed bitumen surface roads which follow a ridge line. Queens Road has a central concrete pedestrian strip which returns around the corner to portion of the South Pine Road frontage. Both roads are classified as Urban Arterial Roads by the Council. The South Pine Road frontage accommodated a bus stop and associated shelter and a pedestrian crossing adjacent -- 6 of 73 -- 7 to the western boundary. These limited vehicular access to the property from South Pine Road. At the date of resumption the subject land was zoned Commercial (one lot with frontage to South Pine Road) and Home Industry (two lots with Queens Road frontage). Land to the west is generally included in the Commercial Zone and the Service Industry Zone. Land to the north of the site is included in the Home Industry Zone. Land adjoining the western boundary of the site is used for an indoor swimming pool and gym, and the next property along South Pine Road is developed with a child care centre. The precinct is dominated by the large industrial buildings in Timms Road. To the north-east of the site the deep allotments with frontage to Queens Road contain detached houses generally located at the front of the land. Opposite the subject land is residential land. In the Hills District Development Control Plan No. 1 (the “DCP”) the subject land is included within Precinct 3 - Industrial Area - Timms Road. The land is not listed on the Contaminated Sites Register. At the date of resumption and at the hearing the subject land was vacant. Rezoning: In March 1994 Mr Doolan lodged with the Council a combined rezoning and 3B application. The first component of the application was to have the subject land excluded from the Commercial and Home Industry zones and included in the Special Facilities (Shop, Late Night Shop, Craft Shop, and Column 3A and 3B Uses in the Commercial Zone) zone. The various purposes for which premises may be erected or used are listed in the Town Planning Scheme for the Shire of Pine Rivers (Exhibit 20 pages 222, 232). Following discussions with the Council and amendment of the application, the Council advised Mr Doolan in November 1994 that the rezoning and 3B components of the application were approved subject to certain conditions. The Council approved use of the land for Offices, Restaurant, Medical Centre and “uses as per zoning description to be indicated on site plans to be submitted and approved by Council”. The 3B approval was not to come into force or effect until the rezoning of the site was gazetted (but was to lapse if the use was not commenced within a period of two years from the date of the approval, being the date of Gazettal of the Rezoning). The rezoning conditions included the following: “3.04 Future Road Widening Development shall not be permitted to comprise the area designated for Future Road Widening on Pine Rivers Shire Council Drawing -- 7 of 73 -- 8 No. 6/00778/A2 adopted by Council on 31 October, 1994 (MP 94/4265). This land is required by the Council for Road Purposes in the future. The Developer agrees that no development shall occur which would in any way prejudice or compromise the future widening.” The rezoning conditions also included the following: “4.01 If not completed by others, the applicant shall complete the interim frontage roadworks to the South Pine Road frontage of the subject land by providing: (a) Kerb and channel on an approved alignment, and (b) Sealed pavement widening to the new kerb and channel, and (c) Reinstatement or relocation of the existing pedestrian crossing and bus stop, and (d) Any associated drainage, signage, linemarking, and lighting that may be required to comply with Council’s standards. 4.02 Site Access The applicant shall construct accesses to be fully compatible (line and level) with the ultimate frontage roadworks to the satisfaction of the Director Works and Services. The applicant shall note that Queens Road and South Pine Road are designated as Urban Arterial roads and that all turns access to the site will not be permitted ultimately. The applicant shall also note that Council intends upgrading the intersection of Queens Road and South Pine Road in the future and it is likely that this upgrading will incorporate a central median along the full frontage of the subject land to both Queens Road and South Pine Road. Notwithstanding the above, Council’s Director of Works and Services may approve temporary or interim ‘all turns’ access to the site having due regard to Council’s planning for the frontage roadworks upgradings and safety issues. ... ... 4.04 Frontage Roadworks and Intersection Contribution The applicant is required to contribute towards the ultimate upgrading of the Queens Road and South Pine Road frontages and the intersection of Queens Road and South Pine Road based on traffic generated (including turning -- 8 of 73 -- 9 movements) from the site against total traffic using the frontage roads. ... The cost of upgrading the intersection and frontage roads shall be as per Council’s cost estimates or in the event that the work has been completed the actual costs shall be used. ...” The same conditions (although numbered 10.01 - 10.04) attached to the 3B approval. The claimant anticipated that, upon development of the property for a neighbourhood shopping centre as proposed, access to the property would be restricted to the eastern bound lanes only of the roads. The land is now within the Special Facilities (Shop, Late Night Shop, Craft Shop, and Column 3A and 3B Uses in the Commercial Zone) zone. At the date of resumption, however, it was still zoned partly Commercial and partly Home Industry. Highest and best use Mr Doolan purchased the subject land (and two neighbouring lots immediately to the north of the subject land) from the Public Trustee in 1993. He paid $310,000.00 for the five lots and immediately on-sold the two northern lots which he thought had more potential for residential use than commercial use. He purchased the land for the purpose of developing a shopping centre. In his opinion, the Public Trustee did not see that there was “any real commercial flavour to this property”. As far as he was aware, commercial developers were not at or involved in the auction and most if not all purchasers at such auctions are “residential buyers”. Before entering into a contract to purchase the land Mr Doolan held discussions with consultants and the Council to obtain preliminary views about the viability of the site for a shopping centre and the likelihood of an application for rezoning being looked upon favourably. In January 1995, after the notice of intention to resume but before the date of resumption, Mr Doolan sold the subject land to the claimant. At the time when Mr Doolan purchased the land and at the date of resumption, the subject land was vacant land in the Commercial and Home Industry zones with a potential for rezoning to a Special Facilities zone, in particular, for rezoning to the Special Facilities (Shop, Late night Shop, Craft Shop, and Column 3A and 3B Uses in the Commercial Zone) zone. That potential, although not realised at the date of resumption, was well demonstrated by the conditional approval given by the Council in November 1994. Accordingly, at the date of resumption, a purchaser could reasonably have expected that the rezoning would take place. -- 9 of 73 -- 10 For the claimant, Mr Gore submitted that it was common ground that in both the before and after resumption situations the highest and best use of the land was for development for a retail and commercial use, specifically a neighbourhood shopping centre. The valuation report prepared for the claimant by Mr Kevin Walsh, a registered valuer, described the development potential of the land for a neighbourhood shopping centre (Exhibit 6, para 4.5). Mr O’Regan for the Council also submitted that the highest and best use of the subject land at the date of resumption had to be determined having regard to planning and all other relevant factors affecting its present and future potential. He noted that the potential of the land was represented by the Council’s conditional approval for rezoning, which ultimately led to the rezoning of the land to Special Facilities. Although the rezoning took place some months after the date of resumption, the process was “well in train” at the date of resumption. The principal evidence in support of the Council’s submission came from Mr John Wood, a registered valuer, who, in the valuation report prepared for the Council, stated that the highest and best use of the property “is for a mix of commercial/retail development in accordance with the rezoning that has been approved by Council” (Exhibit 16 page 8), that is, the Special Facilities zoning. Before considering the submissions of the parties on the extent of the development potential of the land, it is appropriate to look, first, at the relevant conditions on which the Council gave rezoning and 3B approval in relation to the subject land and, second, at some of the features of the land which are directly relevant to its development potential. Both Mr Walsh and Mr Wood described the development potential and highest and best use of the remaining land by reference to that conditional rezoning approval. Rezoning conditions: The rezoning approval described the layout as depicted on the Concept Plan (Drawing No SK.CO1) received in September 1994 as “generally acceptable” but “not approved”. That plan proposed a four storey building - a ground level, one storey above ground level and two levels below ground level. The Council required the applicant to prepare a concept plan to the satisfaction of the Council for inclusion in the Rezoning Deed. That concept plan, when approved by the Council, would be the Plan of Development and development of the site shall be in accordance with that plan. -- 10 of 73 -- 11 The rezoning conditions provided that the Plan of Development would contain various specified components, including the area of the site required for future road widening, and shall be generally in accordance with the Plans SK01/B, SKO3/B, SKO4/B by Rhonan O’Brien, architects, submitted with the rezoning application and SKO2/F, SKO5/C and SKO6/B received subsequently as amended by the rezoning conditions. Both the rezoning and 3B approvals have the same conditions relating to matters such as the location of retail components, building setbacks, provision of carparking and landscaping. In summary: (a) The Special Facilities Shop, Late Night Shop and Craft Shop component shall be located on the South Pine Road ground floor level only. (b) In accordance with concept plan SK.CO1 the Building shall be setback at least 5 metres from the northern boundary and 6.5 metres from the western boundary. The Council may give consideration to the relaxation of this requirement at the time of approval of the plan of development for rezoning of the site. (c) Carparking shall be provided on the site at a rate of 1 space/15m² of gross floor area (“GFA”) for the ground level uses of the building; a sealed loading and unloading area which is readily accessible to all tenancies on the site shall be provided on the ground storey level; the carparking area shall be designed to accommodate turning manoeuvres of service vehicles; and the basement level carpark shall primarily be used by employees. (d) Landscaped strips, with a minimum width of 2 metres, shall be planted along the frontage of the site between the carpark and the “ultimate road alignment”. A minimum area (15 per cent. of the site) located predominantly along the road frontages shall be landscaped, although the area required may be relaxed by the Council having regard to the physical constraints of the site and the amount of road widening required to the frontage. As noted earlier in these reasons for decision, condition 3.04 of rezoning approval was that the development does not prejudice or compromise the area designated for Future Road Widening on a Drawing adopted by the Council on 1 October 1994. The condition stated: “This land is required by the Council for Road Purposes in the future. The Developer agrees that no development shall occur which would in any way prejudice or compromise the future -- 11 of 73 -- 12 widening”. Mr Feros agreed that the condition imposed a substantial restriction on the uses to which the area could be put, but specifically nominated landscaping and manoeuvring of motor vehicles for the land on the front apron of the development as possible uses. Other features: In addition to the conditions of approval imposed by the Council, the location and physical features of the site influence its development potential both before and after resumption. First, the land, both before and after resumption, is in what Mr Walsh described as a “high exposure” position because it faces a fairly major intersection and high volumes of traffic pass it. That was one of its “prime advantages” in terms of its potential for development as a shopping centre. The volume of traffic passing the land, however, might “present a degree of difficulty” to someone wanting access to the land by motor vehicle. He thought that pedestrians, including people from the nearby light industrial estate, would also go to the shopping centre. Mr John Wood, a valuer called by the Council, agreed that it is a “high exposure ... prominent site” and that prominence can be an advantage for a retail development. He said, however, that in his experience difficulties can arise on heavily trafficked fronting roads, particularly curved roads, unless there is ease (and perceived ease) of ingress and egress. Mr Wood also agreed that the site has the advantage of being proximate to an industrial area, and that the advantage can be reflected in day time patronage from employees at and visitors to industrial premises. It could also attract early morning trade to some of the proposed tenants, as well as evening and late night customers and some customers who would travel from beyond the immediate neighbourhood to patronise particular specialty stores. Mr Christopher Shaw, a valuer and property developer called by the Council, also identified different types of customers for the different stores and services which were proposed to be provided on the developed site. Daytime users, including those from the industrial estate, might provide patronage for takeaway food. Other businesses, such as the medical centre and video store, would rely on people other than nearby workers. Second, although the location and exposure of the site commend its development for a neighbourhood shopping centre, the slope of the land makes it somewhat unusual for such a development. Most shopping centres are built on level or nearly level sites and the subject land would create some challenges for a builder. Mr Shaw stated that, as a general rule, suburban -- 12 of 73 -- 13 convenience retail should be restricted to one level with the majority of car parking on grade and directly accessible to the majority of shops (Exhibit 26 page 5). The slope of the land, however, allowed the architect to incorporate a floor at road level and a car parking level below road level. Mr Walsh referred to the advantage of a lower level being able to be developed without excavation. Mr Victor Feros, a town planner called by the claimant, expressed the opinion that, because of the location, scale and nature of industrial land use to the rear of the subject land, the height and appearance of the rear elevation of the development is not a constraining factor. In other words, “issues of amenity aren’t pertinent to the degree that they might otherwise be” (Exhibit 4 page 8). Although the topography of the site has the advantage of permitting different levels and a greater gross floor area for a relatively small site, Mr Feros and Mr Walsh agreed that the slope adds to the costs of development, and Mr Wood described it as a “difficult site” because of the contour and the drain line through it. Third, it may be that, because most of the parking would be under the building rather than at the front, some potential users may be deterred from driving onto the site. Mr Feros thought that because what was proposed was more in the nature of a local or neighbourhood centre it would attract return users who would become familiar with and undeterred by the parking arrangements. Mr Walsh suggested that the existence of some ground level parking would be sufficient to attract a user and the under cover parking, with its shade and protection from rain, would be attractive to people who drove onto the site. Mr Shaw, however, stressed the need to have a site with exposure and a level (or the impression of a level) site. In his opinion, a successful suburban retail development is “almost entirely dependent upon convenience (accessibility and parking) and exposure” (Exhibit 24). People need to be able to get shopping trolleys conveniently from the stores to their vehicles, and parking must be “easy and direct”. In his opinion, it is very difficult to identify any comparable development where retail has worked on a level under the main level because, even though low levels may have access for parking, they do not have visibility. Mr Alan French, a valuer called by the Council, considered that convenience centres and shopping centres work best where the potential customer can see both the shops and where they are going to park their vehicles. For a site such as the subject land, a deck could be constructed, with additional construction costs, to support both car parking and tenants. Mr Russell Lister, an architect in the ETS Group called by the -- 13 of 73 -- 14 claimant, said that it is “very important that people driving past are able to see that there is quick, easy parking”, rather than driving down several levels. The proposals for the subject land and the resumed land show that such concerns can be largely met with some parking at road level and additional undercover parking beneath the retail level. Such undercover parking, though not visible from the road, may prove attractive to returning customers seeking a car park sheltered from sunshine and extremes of weather. Fourth, Mr Doolan described the dams on the subject land as “future retention basins”. They will be stabilised, with overflow being discharged ultimately into the stormwater system that crosses neighbouring parcels of land. Drainage approval had been sought and Mr Doolan did not anticipate any problems in obtaining it. Scale of development: The parties have, in effect, agreed that the land, in both the before and after resumption states, had potential for retail and commercial development, specifically a neighbourhood shopping centre that would meet the conditions on which rezoning was approved. The dispute between the parties relates to the scale of development. The claimant relies on drawings prepared by the ETS Group of architects as showing the highest and best use of the site before and after resumption. The Council contends that the concepts shown in the ETS Group’s drawings represent an over-development of the land both before and after resumption. To help put the issue in a town planning context, Mr Feros noted that under the DCP the preferred uses on land fronting South Pine Road are commercial uses and retail uses up to 650 m² GFA. In considering and approving the combined application in November 1994, the Council accepted: (a) that the designated retail area on the Precinct Map is indicative only, and that other sites, such as the subject land, are appropriate for a local retail use consistent with the DCP; and (b) that the limit of 650 m² GFA is not appropriate given that a need exists for local convenience shopping facilities, which cannot be met at other nominated sites due to a lack of available land for expansion (Exhibit 4 pages 9, 14). Mr Feros also noted that the Town Planning Scheme does not rely on plot ratios or maximum building heights. As a result, the development intensity on any particular site is -- 14 of 73 -- 15 indirectly controlled by the requirement to meet car parking ratios and building setback requirements (Exhibit 4 page 13). Because a Plan of Development was approved by the Council in relation to the resumed land it is easier to assess the scale of the development potential of the subject land and the remaining land by considering first the potential of the remaining land. Development potential after resumption: As noted earlier, the Council had considered a concept plan SK.CO1, prepared by Rhonan O’Brien, architects, to be “generally acceptable” but was “not approved”. The ETS Group, engaged by Mr Doolan, submitted amended concept plans (SPO2E, SPO3E, SPO4A, SPO5B) to the Council in March 1995 and the Council sought “further clarification and/or amendments” to the plans in relation to specified issues. In October 1995 the Council advised Mr Doolan that ETS Group’s Plan No. 96645 SP01 Issue ‘B’ had been approved by the Council as the Plan of Development. That proposal envisaged a two storey development containing 2,133 m² of GFA with provision for 120 car parking spaces and the required landscaping (Exhibit 14). A GFA of 2,133 m² for the 5,035 m² of the remaining land gives a GFA density of development of 42.36 per cent., a relatively high density when compared with the density of development on the seven sale blocks listed in Mr Walsh’s valuation report, and discussed later in these reasons for decision. Six of those sale blocks showed a density in a range between 21.5 and 35 per cent., and one showed a density of 41 per cent. The slope of the remaining land, however, permits a higher density of development than might be available on a level site of the same size, and the claimant’s proposal should be considered in that light. The claimant’s case was put on the basis that designs prepared by the ETS Group provided the best indication of the potential of the remaining land. The ETS Group was retained by the claimant to prepare a design for the development of the subject land. The brief included evaluating alternatives, advising on the “optimum solution” and developing drawings sufficient for submission for building approval. After initial discussions and preparation of several design alternatives a concept was selected for development in January 1995. Mr Lister said that, when they first became involved with the project, the ETS Group was told by the Council about the resumption and so prepared designs on the basis that the resumption had taken place. The plan provided for a two level -- 15 of 73 -- 16 development - the ground level being at road level and having the key retail uses, and the lower ground level including the medical centre and associated car parking. The structure would extend above the sloping land and would be supported by columns. In its written report on the proposed development (Exhibit 12), the ETS Group contrasted its proposal with the plans for the site prepared previously by Rhonan O’Brien and which had been submitted to the Council. It is apparent from the ETS report that:  The ETS Group had previously prepared a proposal for Seymour Developments in relation to the subject land. The ETS proposal had “significantly reduced floor areas” when compared with the proposal prepared by Rhonan O’Brien because Seymour Developments believed the O’Brien scheme “was not commercially viable”.  The amended concept plans were prepared for the claimant without reference to the plans of Rhonan O’Brien.  The plans were prepared on the basis that there would be a resumption of 10 metres along the frontage to the subject land.  The design reduced the building from four floors to two floors, with integrated parking at each level.  In the ETS Group’s opinion, the revised development “is a more commercially viable use of the land”.  The original Rhonan O’Brien plans provided for a gross floor area of 2,768 m². The gross floor area of the revised development is approximately 2,132 m².  Although there is a reduction in the floor area, it was the ETS Group’s opinion that the revised development “is more commercially viable” because: - parking areas were simplified; - upstairs spaces previously designated for certain purposes were deleted (because market rentals for those spaces did not give adequate return on development costs and were potentially likely to suffer a lower occupancy rate) which allowed the required carparking to be contained within two building levels, thus adding further economy; - the layout of retail spaces enabled optimum depth/width ratio for tenancies and enabled greater flexibility for subdivision into smaller spaces. -- 16 of 73 -- 17 Mr Doolan said that based on advice from the ETS Group, he was “satisfied that the design as proposed by the ETS Group represents the most efficient use of the remaining land taking into account the topography of the land and the commercial viability of developing a shopping centre”, even though the design results in less GFA than was provided in the original Rhonan O’Brien design. In his opinion, “the centre as currently proposed will be more viable in terms of the obtaining of tenants” (Exhibit 5 para 44). Not surprisingly, it is apparent that the assessment of the commercial viability of the proposed development was the result of an exchange of views between developers and their technical advisers. Mr Lister said that the assessment came initially from the ETS Group’s association with Seymour Developments, who previously were interested in the subject land. The conclusion that the revised proposal is “more commercially viable” than the Rhonan O’Brien design was made on the basis that his firm’s client wished to proceed and that he was convinced that it was viable to put a shopping centre on the site. The ETS Group “reduced the project down to something that was more in line with the location of the development”. The ETS Group’s plans (96645 DD01(B), DD02(B), and DD03(B) - Exhibit 14) show the following results allowing for the land resumption: Area GFA NLA CARS Ground Level Shops 1,162m² 1,128m² 78 Lower Level Shops 970m² 500m² 13 Medical Centre N/A 350m² 24 Total 2,132m² 1,978m² 115 The claimant submitted that the proposed development of the remaining land as shown on Plan No. 96645 SPO1 Issue ‘B’ cannot be characterised as an over development of the site from a town planning viewpoint because in 1995 the Council had approved it as the Plan of Development for the site (Exhibit 15 part 36). I agree. The chief point of attack, however, was the Council’s submission that the approved development is an over development from a commercial viewpoint. Mr Doolan, who was committed to proceed with the development, gave evidence of a level of tenant interest which demonstrated that, in his view at least, the project was worth -- 17 of 73 -- 18 pursuing. He said that a 40 to 60 per cent. pre-commitment from prospective tenants indicates that a development is a “goer”. Mr Doolan estimated that the leases, agreements for lease, and “softer forms of pre-commitment such as letters of intent” showed pre-commitment in the order of 75 to 85 per cent. Although letters of intent do not bind a person to become a tenant, some people had proceeded from such letters to leases and agreements to lease. Leases were more likely to be entered into as building was underway. Construction was expected to commence within four weeks after the hearing. Information about the identity and level of commitment of prospective tenants was given by Mr Doolan (Exhibit 5) and Mr Walsh (Exhibit 6). In summary, it is apparent that at the time of the hearing there were two executed leases (for the Mahoney Coffee Shop and Abeck Captain Snapper - seafood), letters of intent in respect of eight others (Clarke and Hardcastle - pharmacy, Rebel Liquor - bottle shop, Nightowl - convenience store, Subway - takeaway food, Brumby’s Hot Bread - bakery, Medico Centre - medical centre, Sklavos - dentist and Hartwell - Video-Ezy) and indications from three others that they would proceed to tenancy (Baskin and Robbins - ice cream shop, Rocksports - rock climbing, Brodies Chicken & Burger - takeaway food). The shop spaces covered by those leases or other communications were nominated as shops 1, 2, 3, 3A, 4, 9, 10, 13, 14, 15 on the ground level, and shops 1/2/3, 4 and 5/6 on the lower ground level (Exhibits 5, 6). The two leases were each for five years with an option to renew for five years. The Council sought to cast some doubt on the likelihood of a pharmacy being located in the proposed shopping centre. Mr Shaw suggested that, because of the approval which is required for new chemist stores, it is unlikely that a chemist would be secured for the site. More specifically he understood that the only way a chemist could be secured would be if the pharmacy in Camelia Avenue was induced to relocate to the site. His inquiries indicated that the chemist would not relocate. Mr Shaw suggested that if a chemist is not secured, the viability of the medical centre may be affected (Exhibit 24 pages 5, 7). Mr Doolan explained that he was “very familiar” with the conditions applying to new chemist shops and was confident that the pharmacists with whom he had negotiated would be signing a lease even though there was a pharmacy located at Camelia Avenue, less than two kilometres from the subject land. He did not know whether the relevant permission had been obtained but was confident that Clarke and Hardcastle would overcome any difficulties. I am satisfied that -- 18 of 73 -- 19 serious negotiations had taken place to secure a pharmacist tenant and that there was a real possibility of a pharmacy being secured for the development. When calculating the rental for the proposed premises, Mr Walsh included a restaurant with an area of 213 m² on the ground level, paying rent at a rate of $400/m² (Exhibit 6 page 6). By the time of the hearing a restaurant had not been secured. Mr Doolan suggested that a restaurant would not necessarily be put on the site. In his opinion, a restaurant is “as good a use as a number of others”. The area could be divided into two or could be let to a different type of tenant. Mr Walsh listed the rents to be paid by different tenants for different areas in the building as if the premises were fully tenanted (Exhibit 6 page 6). He based his hypothetical development analysis on the assumption that there had been genuine pre-commitments by all the tenants identified in his report Mr Shaw, whose McDowall Village Shopping Centre is a direct competitor of the claimant’s development, gave evidence about his experience in getting people from letter of intent stage to a signed lease. At the time of the hearing, the McDowall Village Shopping Centre had prospective tenants at various stages from letters of intent, agreements to lease, and offer and acceptance. Construction was expected to commence in October 1996. Mr Shaw said that it is “not a difficult process”, indeed it is “normally quite easy”, to get someone to sign a letter of intent. It is “a far more difficult process” to get someone to sign a lease. He also pointed to the different circumstances surrounding negotiations with franchisors who need to have a franchisee before the franchisor will commit to a lease. A developer can be more confident where discussions between franchisor and franchisee demonstrate their keenness to be involved. Ultimately it is a signed lease or firm commitment which will satisfy a developer and, it seems, the developer’s financier. Although letters of intent are not legally binding, Mr Walsh understood that it is the practice in developments such as this to use such letters to consider what level of commitment is likely to be achieved. In his opinion, as a project develops and people can see what is going to materialise, the level of commitment would increase. He agreed that it is possible, however, for people to decide not to become tenants and for other prospective tenants to take their places. -- 19 of 73 -- 20 Based on the information in Mr Walsh’s report, Mr Shaw calculated the proposed rental structures as: Ground floor level: $403 per square metre gross or $372 per square metre net Lower level: $297 per square metre gross or $266 per square metre net. Mr Shaw described the achieved net rents at this level as “optimistic”. In his opinion the most reasonable and realistic assessment of net rents is a maximum of $325.00 to $350.00 per square metre for the ground level and $200.00 to $250.00 per square metre for the lower level. That opinion was based on rentals for specialty stores (which are typically average in the range of $350.00 to $385.00 per square metre net) achieved at other shopping centres, all but one of which are anchored by a supermarket. By comparison, McDowall Village has more than twice the GFA of the claimant’s development, with Franklins as the anchor tenant and a McDonalds store. It was apparently on target to achieve specialty rents of approximately $350.00 per square metre net. Mr Shaw also queried the rental levels which some prospective tenants were said to be willing to pay for space at the claimant’s proposed shopping centre, and suggested that an appropriate relativity between the rentals for the two levels should result in a significant discount to the rates on the lower level (Exhibit 24 page 6). Mr Shaw believed that higher rents might be considered reasonable if a smaller scheme was proposed (Exhibit 24 page 5). Mr Doolan, however, gave evidence about the rental levels achieved and the forms of lease incentives offered to some tenants. He said that the rents had been “generally well received” by prospective tenants and were “right on the button” given the location of the site and the relatively low outgoings. Tenants would be charged gross rents. The claimant would absorb the cost of outgoings, which he estimated would be $22/m². Although costs of outgoings in the range of $40/m² to $56/m² are “quite commonly charged to tenants”, the $22/m² was calculated, in part at least, by reference to the scale of the proposed development which would attract lower costs than smaller developments. Rents were tailored to the special fit out requirements of at least one tenant (Rocksports). Because fit out costs were substantial and the medical centre will make very close use of the amenities, such as the lift, the rent is higher for the medical centre than for the dentist. The rate for Brodies was apparently proposed by the tenant. That evidence supports a finding that although the rentals -- 20 of 73 -- 21 are at or near the upper end of commercial rates, it is likely that they will be achieved on the proposed centre when leases are signed. Mr Doolan described the types of lease incentives being offered to some, though not all, potential tenants. They included assistance with fitout, the costs of which would be amortised against leases over one to three months. He said that none of the incentives was other than standard commercial practice for a development of this kind. The commercial potential of the proposed development was questioned in other respects. In Mr Shaw’s opinion, medical centres now ideally require and demand as much retail exposure as any other tenant, and a video store operator (particularly the likes of Video Ezy) also requires high exposure and retail space. Accordingly, he queried the likelihood of success for tenants trading in the lower level where there is no exposure (Exhibit 24 page 6). Mr Doolan, however, described video stores as places which require relatively cheap rental. Because they are destination tenants they require good positioning and good car parking facilities. He referred to video stores which are operating successfully on lower ground floor car parking levels at Greenslopes and Sunnybank. Mr Doolan argued that medical centres do not require high exposure (because most of the users are repeat users) but do require a high standard of amenity, which would be provided by the proposed development. He suggested that the high exposure provided by the site would overcome any difficulties that the form of access and egress and the nearby roundabout might provide. He also pointed out that the lower level premises would not be subterranean but would be above ground level with the benefit of good natural light on three sides. Although the site presents difficulties in providing prominent signage for motorists (especially those travelling from the west along South Pine Road), tenants may use signs on the premises to notify potential customers or users of the location of the video store or medical centre. The proposed development would provide 115 parking spaces, of which 53 would be at ground level and the remainder at the lower level, providing convenient under cover parking for people using the medical centre and a lift from that car park. The Council criticised the claimant’s submissions on two bases. First, Mr Walsh’s analysis was speculative and neither his nor Mr Doolan’s experience in neighbourhood shopping centre development matched the experience of Mr French and Mr Shaw. Second, -- 21 of 73 -- 22 Mr Shaw and Mr French gave evidence to show that the proposed development was not commercially viable. Mr Shaw described the Brisbane suburban retail market as “extremely buoyant” in the period from the early 1990s until early 1995 when “sales and leasing activity have abated and very soft conditions now characterise the market”. That market was characterised by a number of new convenience shopping centre developments, typically in the range of 500 m² to 1,500 m² of net lettable area. These were driven by “strong leasing inquiry” from a number of major franchise operators (including those who had expressed interest in tenancies in the proposed development of the remaining land). A combination of factors including economic uncertainty and its effect on the retail industry, a shortage of good development sites and, more particularly, the acknowledged downturn in the retail sector of the property market had caused a “significant decline” in this type of development activity. The market for the next 12 to 18 months, including the date of resumption, was then characterised by subdued levels of leasing and reduced investor confidence causing investment yields to deteriorate (Exhibit 24 page 2). In Mr Shaw’s opinion, the schemes proposed by the claimant for the site before and after resumption represent an overdevelopment of the site because: (a) market demand does not demonstrate a need for a retail facility of the size proposed; and (b) more importantly, the cost of development is prohibitive and demonstrates that the project would not be viable in its proposed form. On the first point, Mr Shaw acknowledged that the pre-commitments by a number of leading retail tenants is “good evidence that demand exists for a retail facility”. The size of the development would need to be determined by reference to further market research and inquiry from other tenants. Mr Shaw identified a number of competitive retail facilities in the primary and secondary catchment area of the land. The existing centres which generated competition were located at Camelia Avenue, Everton Hills; Stafford Road, Everton Park; Flockton Village, McDowall; and Chinook Street, Everton Hills. He also identified potential new sources of competition at the McDowall Village Shopping Centre at the corner of Beckett and Hamilton Roads (in which, as a director and joint owner of the developer, he has an interest); the Woolworths Marketplace at Albany Forest; a neighbourhood centre at Saturn -- 22 of 73 -- 23 Close, Bridgeman Downs; and the proposed $6,000,000.00 expansion of the Everton Park Shopping Centre. A preliminary overview of the catchment area for the proposed development suggested, in his view, that local shopping need is satisfied by a majority of these developments as well as the proposed expansion of Everton Park. The probable development of the McDowall Village Shopping Centre will reinforce the situation. In light of that information, Mr Shaw considered that there is qualified support for a lesser development than that proposed by the claimant (Exhibit 24). On the second point, Mr Shaw referred to the dilemma with developments where construction costs become excessive and rents obtained from the lower level are not sufficient to recover the cost of construction. Typically a developer would be aiming to have construction costs in the range of 30 to 40 per cent. of gross realisation, but it would be a much higher percentage in this case. As already noted, the slope of the land poses challenges for a developer, though more GFA may be achieved than on a level site. The construction of a building on the land is more expensive than on a level site and that cost is relevant to an assessment of the commercial viability of the project. Mr Andy Steele, a quantity surveyor, estimated that the development costs would be $3,969,840.00 ($1,204/m² GFA) in the before resumption situation and $2,689,700.00 ($1,261/m² GFA) after resumption (Exhibit 8). The reduction in costs was about 32 per cent., a figure consistent with the reduction in possible GFA of about 35 per cent. between the GFA of the ETS Group’s pre-resumption development and the approved development for the remaining land. Mr Steele based his calculations on scenarios for Mr Walsh and by reference to plans prepared by the ETS Group and drawings prepared by Ove Arup. Mr Shaw also queried whether the development would succeed in the long term and suggested that, given the nature of the prevailing real estate market, the leasing of such a shopping centre would be protracted. In his opinion, a combination of factors (such as the price range, location and concerns about the durability of the income stream because rent levels may not be maintained and a high level of vacancy could be expected) would mean that demand for the investment on completion would be somewhat limited (Exhibit 24 page 8). Despite cogency of some of the doubts raised and the force of the Council’s submission, I am satisfied that the scale and type of development approved by the Council -- 23 of 73 -- 24 constitutes the highest and best use of the remaining land. According to Mr Doolan, the claimant had carried out market research and some of the prospective tenants, who are experienced operators, may have made their own assessments based on the demographics of the area. Mr Doolan also stated that the proposed development of the remaining land was the largest venture in which he had been involved on his own to date, three times the size of developments he had attempted before this project and it is clear from his evidence that he is seeking to maximise the financial return from the development. But he is operating in a commercial environment and has to consider what is achievable by reference to such matters as the types of tenants who would be suitable for and attracted to the site. He sought and had accepted expert advice about what was the most commercially viable and efficient use of the land rather than attempting to maximise its building potential. Although the ETS Group did not state that the proposed development would necessarily be commercially viable, it opined that its proposals were “more commercially viable” than larger developments on the resumed land. Furthermore, the claimant accepted the conditional rezoning approval, entered into a rezoning deed on 12 February 1996 which incorporated the Plan of Development for the site, and elected to submit a Plan of Development for 2,132 m² despite the fact that the rezoning conditions allowed for a larger development. There was a significant level of pre- commitment from a range of apparently sound, experienced tenants of the appropriate type. The number and type of tenants and the proportion of the floor area in which they had shown a degree of interest or commitment compared favourably with the level of pre-commitment to the nearest potential competitor, McDowall Village Shopping Centre, which was at a comparable stage of development. Indeed, Mr Shaw acknowledged that the pre-commitments by a number of leading retail tenants is good evidence that demand exists for a retail facility (though not necessarily of this size). Although I am willing to accept that the rents achieved may be at the levels stated by Mr Doolan and Mr Walsh, there has to be a question, especially in light of evidence regarding the state of the market in 1995, whether it is safe to assume that all the premises would be tenanted on a long term basis. But that qualification does not influence the finding about the highest and best use of the remaining land. -- 24 of 73 -- 25 In summary, the scale of development for the highest and best use of the remaining land is the development as approved by the Council and shown on the plans prepared by the ETS group. Development potential before resumption: The assessment of the possible scale of development on the subject land before resumption involves questions of what would have been permitted on the land and what might have been commercially viable. Scale of permitted development: The first issue involves a consideration of whether a development on the subject land should be considered as being subject to rezoning restrictions with building lines or set backs referrable to future road widening proposals (the Council’s approach), or whether any such development should be considered as if there was no road widening scheme immediately before the date of resumption (the claimant’s approach). The ETS Group prepared plans showing the scope of a possible development as if the resumption had not taken place. The removal of the resumed land requirement enabled larger lettable floor space but necessitated adding a level of carparking to accommodate another 40 cars. To have provided additional carparking space on the other two levels would have reduced “dramatically” the lettable floor space on those levels. Even with the additional car parking area, the majority of cars would be on the other two levels. The plans (96645 RO1(C), RO2(B), and RO3(D) - Exhibit 14) show: Area GFA NLA CARS Ground Level Shops 1,715m² 1,688m² 114 Lower Level Shops 1,580m² 748m² 16 Medical Centre N/A 738m² 24 Total 3,295m² 3,172m² 154 In the opinion of the ETS Group, it “would not be commercially viable” to redesign the proposed shopping centre by adding a level of offices and a restaurant. Increasing the GFA of the ETS Group’s scheme to that indicated in the Rhonan O’Brien drawings “would not provide a correct comparison with the scheme that is planned for construction” on the -- 25 of 73 -- 26 remaining land (Exhibit 12). Nor would it give a realistic indication of the commercial potential of the land, assuming that the Rhonan O’Brien concept plan for the remaining land was, as described by another experienced developer, Seymour Developments, who was apparently interested in commercial development of the subject land, “not commercially viable”. The extent of potential for development on the subject land was limited by planning constraints such as the location of the building line for land along Queens Road (see Pine Rivers Town Planning Scheme clause 86 - Exhibit 20). The form of potential development was influenced by such things as the Development Control Plan which required that “car parking, driveway and landscaping is to be provided between the proposed commercial or retail buildings and the South Pine Road frontage of the land” (see Precinct 3 - Industrial Areas, Timms Road section (4)(d)(iv) - Exhibit 20). Mr Feros described the requirement as being consistent with common design practice for developments with frontage to Main Roads to ensure that on-site car parking is visible to motorists and to therefore encourage its use (Exhibit 4 pages 15-16). Mr Feros described the ETS Group’s plans for the potential development of the subject land, when considered from a town planning point of view, as “a practical and reasonable retail and commercial centre” which is in conformity with the relevant site development parameters and conforms with the concepts accepted by the Council in dealing with the combined rezoning and 3B applications. (Exhibit 4 page 17) In making his assessment, Mr Feros proceeded on the assumption that the Council would have approved such a development, including partly waiving the building line requirement. He agreed that no such development was approved by the Council and, although there was a reasonable expectation that the land would be rezoned Special Facilities, there was a constraint on the use of the 10 metre depth of frontage to the land. At no time was a GFA specified in association with the conditions for rezoning and 3B approval. Yet he was satisfied that the development proposal shown in those plans was a logical exercise in light of what had been accepted by the Council for the remaining land. Similarly, Mr Lister noted that the proposed GFA is permissible under the town plan. He was willing to assume that there was no reason why the Council would have felt constrained to apply further conditions or otherwise modify the plans. Mr Walsh also was willing to assume that the same -- 26 of 73 -- 27 type of development as proposed for the remaining land “would have expanded proportionately to use the area that it would have had in the before situation”, without the restrictions on the use of the road frontage land which were linked to the road widening scheme, and that such development would have been approved by the Council. He also assumed that the additional floor area would be as readily lettable as the area for the approved development. As noted earlier, one condition of rezoning approval was that development shall not be permitted to compromise the area designated for Future Road Widening. Mr Gore did not dispute that the condition was proper, nor did he dispute that it attached to the land. In his submission, those factors are irrelevant because the condition was imposed as part of a resumption scheme and those circumstances attract the Point Gourde principle in reverse. He relied on a passage from the decision of the Privy Council in Melwood Units Pty Ltd v Commissioner of Main Roads (1978) 52 ALJR 593 at 596 which he adapted (as indicated) for the purposes of this case as follows: “A resuming authority cannot by its project of resumption destroy the potential of the whole (6,106 m²) for development as a drive-in shopping centre, and then resume and sever on the basis that the destroyed potential had never existed. Moreover, ... the principle remains applicable in a case such as the present, notwithstanding that planning permission had not been given for the whole (6,106 m²) and would not have been given, when the lack of such permission was manifestly due to the (road widening) project, and it is established that, without the (road widening) project such planning permission would have been given for the whole (6,106 m²). To hold otherwise would enable the acquiring authority to inflict by its project the same injustice at one remove.” In Mr Gore’s submission, the scheme in this case could be described as the road widening works or could be described more broadly to include the roundabout. In either case, the scheme affects the subject land. The history of road widening proposals for South Pine Road dates back to at least 1993. There was evidence that on 29 March 1993 the Council requested the Shire Engineer to report on “the timing and needs and approximate cost for the road widening in South Pine Road, Everton Hills on the northern side between Montague Court to Buckland Road to two lanes with and without kerb and channelling”. On 26 October 1993 the Works Committee -- 27 of 73 -- 28 requested the Manager, Traffic and Design, to “prepare detailed planning layouts for South Pine Road, Everton Hills, from Montague Court to Queens Road” (see Exhibit 15 item 4). In his written statement, Mr Doolan said that in November 1993, when he entered the contract to purchase the subject land and adjoining parcels he was “aware that part of the land had originally been resumed by the Council”. The land resumed was on the corner of South Pine Road and Queens Road and was taken for the purpose of the proposed roundabout at that intersection. Mr Doolan was of the view that “since there had been a previous resumption it was unlikely that there would be any further land resumed” (Exhibit 5 para 7). He also said that, between the date of settlement of the contract and the lodging of the rezoning application on 4 March 1994, there had been no mention of any further resumption of land. Indeed, he said that he had been advised by Council officers that, although the town planning scheme nominated certain setbacks for building, it was unlikely that those requirements would be strictly observed and he should consider his development on the basis that the likely setbacks would be eight metres for the Queens Road frontage and for the South Pine Road frontage. (Exhibit 5) Between 4 and 17 March 1994 he was advised by the Council, although not in writing, that the combined application for rezoning and 3B consent was unlikely to succeed in the form lodged because the Council was proceeding with deliberations on road widening which “would probably involve a resumption of land to the extent of three metres”. The combined application was amended to take into account a possible resumption of land to a depth of three metres. In a letter to Rhonan O’Brien dated 7 April 1994, the Council advised that “widening of South Pine Road between Queens Road and Camelia Avenue is currently being investigated by Council. As the subject land of your application has frontage to South Pine Road and Queens Road, any proposed road widening would have direct implications for your development. Consequently, Council has accelerated investigations regarding the road widening and this project is on the agenda for the first meeting of the Planning & Environment Committee of the new Council to be held on 12 April, 1994. If dealt with at that time it will be further considered by Council at the General Meeting on the 18 April, 1994” (Exhibit 15 part 4). -- 28 of 73 -- 29 Enclosed with the letter was an extract from minutes of the Council meeting on 26 October 1993 dealing with the possible widening of South Pine Road. In a letter to Rhonan O’Brien dated 26 April 1994 the Council advised that “the widening of South Pine Road and Queens Road is still being investigated. The Department of Works and Services has advised that Council is not expected to make a resolution on this issue until possibly June 1994.” (Exhibit 15 part 6) In a letter to the Council dated 15 August 1994 Mr Doolan referred to “the proposed 10m widening of South Pine Road”. (Exhibit 15 part 11.) At the request of the Council various technical reports and plans were prepared and provided to the Council. On 24 August 1994 Mr Doolan received a letter from the Council advising that the Council had resolved to consult the public about the widening of South Pine Road. A letter from the Council dated 25 August 1994 enclosed two “preliminary proposals” for road widening - one involved a service lane proposal and the other involved a parking lane proposal. Each option involved an additional area for road widening along the northern side of South Pine Road. Those options had been considered by the Council at a meeting on 4 July 1994. In a letter dated 9 September 1994 the Council advised Mr Doolan that the widening of South Pine Road “is a critical issue which will ultimately effect capacity and traffic flow along this road. ... The layouts being considered encroach upon your site and therefore road widening may have direct implications on the development of the site.” (Exhibit 15 item 15). In a letter dated 21 September 1994 the Council advised Mr Doolan that the rezoning and 3B applications had been considered and that the Council “is likely to resume the land required for road widening”. The Council had yet to determine the extent of road widening but it was clear that the road widening would affect the rezoning application. Mr Doolan was invited to amend his application “such that the design will not compromise the Council’s Road Widening proposals”. (Exhibit 15 part 19) On 31 October 1994 the Council resolved to resume land for road purposes for up to 10 metres in depth and wrote to Mr Doolan on 1 November 1994 to advise him of that decision (Exhibit 15 part 22). In notices dated 16 November 1994, Mr Doolan was notified that the Council intended to take the resumed land for road purposes (Exhibit 15 part 24). -- 29 of 73 -- 30 The letter from the Council to Mr Doolan on 30 November 1994 notified him of the Council’s approval of the rezoning application which was subject to the following condition: “3.04 Future Road Widening Development shall not be permitted to compromise the area designated for Future Road Widening on Pine Rivers Shire Council Drawing No. 6/00778/A2 adopted by Council on 31 October, 1994 (MP 94/4265). This land is required by the Council for Road Purposes in the future. The Developer agrees that no development shall occur which would in any way prejudice or compromise the future widening.” That letter was annexed to the Deed of Agreement between the claimant and the Council dated 12 February 1996 in which the claimant agreed to comply with the requirements of the Council . The Deed expressly did not detract from the rights of the claimant to claim compensation under the Acquisition of Land Act 1967 (Exhibit 25). As Mr Gore pointed out, the letter from the Council dated 30 November 1994 informing Mr Doolan of its approval of the rezoning application came after the letter, dated 17 November 1994, enclosing the Notice of Resumption. The implications of that series of events for the claimant were reflected, Mr Gore submitted, in the changing requirements for development of the subject land. From an early stage, the claimant was required by the Council to take the resumption into account in the design, initially as a three metre widening, and later a ten metre widening. It was those requirements, rather than commercial considerations which, it was submitted resulted in a building with a reduced floor plan being ultimately submitted to the Council for approval. There never was a practical opportunity to present to the Council a 3,295 m² proposal. Accordingly, Mr Gore submitted, the process of reduction in the gross floor area was not driven by any lack of confidence in the viability of the initial proposal but was driven by a progressive change of mind on the Council’s part as to the extent of the widening required and by the form which the architect thought the design should take. Mr O’Regan conceded that the rezoning condition was a step in anticipation of the ultimate resumption of the resumed land. In his submission, however, the resumption did not destroy the potential of the remaining land for a shopping centre development. The effect of -- 30 of 73 -- 31 the rezoning was to increase the value of the land. The effect of the additional lane will be to increase the exposure of the remaining land. In my opinion, the claimant’s submission on the reverse Point Gourde principle cannot succeed. In this case there is not a change in kind to the highest and best use of the land which is referrable to the road widening scheme. At all material times South Pine Road and Queens Road existed. The potential for the subject land to be rezoned to achieve its highest and best use was not influenced by the road widening. This is not a case where, say, a new expressway or dam through or on the land completely changed its potential or assisted it to achieve its potential. With or without the road widening the potential for the highest and best use of the land remained the same. Rather it is the area of land which can be developed for that highest and best use which is affected by the roadworks. The extent to which the land can be used for that purpose will be influenced by conditions on rezoning. Those matters can be taken into account in determining the before and after value of the land. Accordingly, it is appropriate to consider the constraints on the potential development of the subject land as including conditions restricting work where road widening may occur. If I am wrong on that point, however, there are commercial reasons why, in my opinion, the highest and best use of the subject land would not be realised in the form proposed by the ETA Group. I turn now to consider the commercial factors. Commercial viability: The other critical issue in relation to the proposal for the subject land is whether a project of that scale was the highest and best use of that site. Mr Lister was unable to say whether the plan was the best use of the site. The revised drawings were produced on the basis of what could be achieved on the site if the resumption had not gone ahead. The ETS Group did not look, for example, at what type of development could go on the site. It had not, however, included a second floor of restaurant and offices as contemplated by the Rhonan O’Brien plan because it did not feel that a consistent rental rate could be achieved to make that level viable, given the extra costs of construction. In his opinion, the plan for a GFA of 3,295 m² showed the maximum use of the site for a shopping centre. He acknowledged that there would be increased costs but considered that the increased floor area of that size of development justified the increased cost. Significantly Mr Doolan gave no evidence about the commercial viability of the proposed project. -- 31 of 73 -- 32 The difficulties in tenanting a much larger building were highlighted by Mr French. For example, it may be difficult to secure the same levels of rentals. Although developments up to about 1,500 m² of net lettable area can be undertaken without the support of a major tenancy providing an anchor to the development, larger projects usually require such a tenant. In those circumstances, an anchor tenant may take between 50 and 70 per cent. of the lettable area. As is apparent from the tables in these reasons, the net lettable area of the development on the resumed land is 1,978 m², which Mr French described as “close to or the maximum development sustainable in this location without the support of a major tenancy and also having regard to the two level nature of the development” (Exhibit 27 page 3). The proposed development on the subject land has a net lettable area of 3,172 m². If it were necessary or appropriate to take an anchor tenant for a large area (for example a small supermarket such as Bi-Lo or Spa renting about 1,200 m² to 1,600 m²) that tenant could be expected to pay a lower rate of rental per square metre, thus reducing significantly the average rent for the premises. To attract additional tenants it may be necessary to increase lease incentives or lower the rents. In any case, as Mr Walsh recognised in his calculations, it may take longer to attract tenants to the larger development than the smaller one. I am satisfied that one cannot extrapolate the average rental rates and the level of occupancy achieved in the resumed land directly to the substantially larger projected development for the subject land. Mr O’Regan pointed out that the plans submitted and approved for the remaining land were for a smaller scale of development than what might have, strictly speaking, been permissible as the maximum scale of development on the site. He submitted that the claimant proceeded with a more modest proposal because that was the scale which was, in the developer claimant’s opinion more commercially viable. The evidence summarised earlier in these reasons supports that conclusion. Mr O’Regan then submitted that it is highly speculative to assume that the Council would have approved a development of the size contained in the ETS Group’s plans for the subject land or than such a proposal would be commercially viable. The Seymour Group had considered that the Rhonan O’Brien concept plan for a GFA of 2,768 m² was not commercially viable. In Mr O’Regan’s submission, an inference can be drawn from the more modest development proposal submitted in the after resumption situation that, in the before resumption situation, the claimant must have had in mind questions about the commercial -- 32 of 73 -- 33 viability of a development with an area of 3,245 m². The ETS Group’s plans for the subject land provided for an increase of 54.5 per cent. over the GFA planned for the remaining land, even though the subject land was only 1,071 m² (or 21.3 per cent.) larger than the remaining land. It is clear from Mr Doolan’s evidence that he accepted the ETS Group’s plans for the remaining land as providing the most efficient use of that land taking into account, among other things, the commercial viability of developing a shopping centre. Although he gave no evidence in relation to the plans for the subject land pre-resumption, I am satisfied that Mr Doolan, and therefore the claimant, would have approached the development of the subject land in the same way as the development of the remaining land, that is, by seeking sound technical advice and considering that advice from a commercial perspective. Mr Gore submitted that the best evidence of demand for the development of the subject land is the interest shown by the tenants in the proposed development of the remaining land (the evidence about which is discussed earlier in these reasons for decision). Doubts expressed by the respondent’s witnesses about the feasibility of the before resumption scheme were “unduly pessimistic”, and did not pay sufficient regard to the particular circumstances of the subject proposal and site. He further submitted that, given the principle that doubt should be resolved in favour of the dispossessed owner or a more liberal estimate (see, for example, Commissioner of Succession Duties (SA) v Executor Trustee & Agency Co of South Australia Ltd (1947) 74 CLR 358 at 374), it is appropriate to conclude that the ETS drawings do depict the highest and best use in the before resumption situation. He also urged a finding that, contrary to questions raised by Mr French and Mr Shaw about achievable levels of rent, it was probable that pre-resumption rents in a larger development would have been closer to the rents being achieved in the after case than the lower rents urged by other witnesses. Various factors are relevant to a consideration of what might have been a viable development on the subject land. I am satisfied that a building significantly larger than that proposed for the remaining land would have attracted a different mix of tenants and would probably have required an anchor tenant to succeed. The anchor tenant would take a substantial proportion of the floor space and would pay a lower rate of rent than specialty tenants. It would have taken longer to let the premises and the average rent even among -- 33 of 73 -- 34 specialty shops would have been lower than the project on the remaining land was expected to achieve. At the relevant period the market was not buoyant and there was strong competition from comparable developments in the district for tenants of the type necessary to make a project on the subject land successful. On a more positive note, Mr Steele’s figures show that the cost of constructing a building on the subject land would be lower on a rate per square metre GFA than the cost of building on the remaining land only. Because I have concluded that the development of the subject land would have been subject to restrictions on the use to which some of the road frontage land could be used, and because the state of the market at the relevant period suggests that either a much larger development on the land would not necessarily achieve the same level of tenant commitment as for the development on the resumed land, I am satisfied that the development on the subject land would have been larger than that on the resumed land but not 54 per cent. larger. In other words I am not convinced that the taking of 17.6 per cent. of the subject land resulted in a loss of 35 per cent. of development potential (as expressed in GFA). Development potential before and after resumption compared: The development proposed for the subject land and the remaining land was a neighbourhood shopping centre and appurtenances. The ETS Group’s plans show that before the resumption a GFA of 3,295 m² was achievable on the subject land. After resumption, a GFA of 2,132 m² was achievable on the remaining land - a loss of 1,163 m² or 35 per cent. of the gross floor area. The total net lettable areas dropped from 3,172 m² to 1,978 m², an area of 1,194 m² or a reduction of almost 38 per cent. (Exhibit 6 page 5). Mr Gore submitted that the loss of land is more significant on a sloping block such as the subject land (where more than one level of development is permitted below street level but above natural ground level) than on a flat site where the highest and best use was for a single level shopping centre. Thus the loss of the resumed land is more significant in reducing the value of the land than the loss of the same area from a level block. The higher than average density of development proposed and permitted on the remaining land demonstrates the greater potential of the land. A purchaser of the subject land for its highest and best use would have taken that into account in determining what price to pay for that land and, because the subject land had much greater development potential, would have paid a -- 34 of 73 -- 35 proportionately greater price than its area would suggest. In Mr O’Regan’s submission, the same allowance should be made for potential in both the before and after situations. In summary, it is clear that at the date of resumption the subject land and the remaining land had potential for retail and commercial development, specifically a neighbourhood shopping centre that would meet the conditions on which rezoning was approved. As noted earlier, it is necessary to bear in mind that at the date of resumption the subject land was zoned Commercial (one lot) and Home Industry (two lots). The Council agreed in 1996 to the rezoning of the land to Special Facilities zone, consistently with conditional approval given to the rezoning on 30 November 1994. Accordingly it is correct to say, as Mr O’Regan submitted, that the potential was unrealised at the relevant date. Consequently, the land must be valued in the before and after resumption states in accordance with the zoning at that date but as land with the as yet unrealised potential (see McKenna v Burnie Municipality (1970) 22 LGRA 402 at 409 per Burbury CJ quoting with approval Beard v Director of Housing (Tas) [1961] Tas SR 141 at 148 per Crisp J;. see also Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 at 313 quoted in FW Hughes Pty Ltd v Minister for Conservation (1950) 17 LGR (NSW) 275 at 277, Yates Property Corp Pty Ltd v Darling Harbour Authority (1991) 73 LGRA 47 at 65-7 per Handley JA). Assessing the amount of compensation payable - two approaches The next issue in this case is which method should be used to determine whether any compensation is payable to the claimant and, if so, the amount. In the most general terms there was no difference between the parties about how the amount of compensation (if any) should be calculated. Essentially the approach was the conventional one of valuing the subject land (as previously zoned with potential for Special Facilities rezoning) in both the before and after situations, then making allowance (if any) for enhancement and adding a sum for reasonable professional costs incurred by the claimant in preparing the claim (described as disturbance costs). There were, however, critical differences in the methods used by the parties’ valuers. The claimant's approach: The amount of compensation was assessed by the valuer called by the claimant, Mr Walsh, using what he described as a twofold approach, namely, "to consider both the evidence of sales and the development capability of the subject land". By that analysis, -- 35 of 73 -- 36 he argued, one could determine "what a prudent vendor and purchaser would consider to be a reasonable price for the land as at August 1995" (Exhibit 6 page 9). The twofold approach was described in the following terms in Mr Walsh's valuation report: “Assessment of compensation is generally made by valuation of the property both before and after resumption, with the difference in the two values being considered to include compensation for land taken, injurious affection to the balance land and any severance loss in value as a consequence of being severed from the resumed land. To have regard to the development capability of the land, consideration is given to a valuation (upon completion) by capitalisation of estimated net rental, then deduction from that completed value the costs of development and an allowance for profit and risk, to arrive at a price which a prospective developer could afford to pay for the land for the purpose of such a project.” (Exhibit 6) A “hypothetical development scenario” was provided to calculate the development capability of the land. It gave before and after resumption values to the subject land and the remaining land respectively. In his oral evidence, Mr Walsh acknowledged both the importance, in the ordinary case, of a comparative sales approach and the relative inferiority of a hypothetical development approach. He suggested that the valuation should be done primarily by the comparison with sales evidence. A schedule of seven sales relevant to an assessment of the value of the land before and after resumption was included as an annexure to his report. He agreed that the sale of vacant land for a certain price reflects the development potential of the land because that is what a developer is prepared to pay for it. But other matters are factored into the calculations in order to determine the value of land if its development capability was marginally greater. Furthermore, there was no sale land which is directly comparable to the subject land in such features as the quality of the site or position. Consequently, although the sales might assist in determining “broadly what the parameters are for the value of the land”, there was insufficient sales evidence to assist in determining the difference before and after the resumption. In his opinion, the sales provided the “parameters of value” and he had primarily used the hypothetical development scenario “to try and grasp the difference ... between the before and after resumption position”. -- 36 of 73 -- 37 Mr Walsh said that, although he had arrived at his conclusions by the use of two techniques, the primary method of assessing value was always going to be the comparison with sales of other vacant land. Analysis of the seven sales was made to the dollar value per square metre of GFA achieved at the time of the sale “in order to take into consideration the development potential of the land and its relationship to sale price”. The value per square metre of GFA which was achieved, or seemed to be achievable, on each site would, he suggested, also reflect such factors as location, exposure, traffic flow, position in relation to competitor properties, and proximity to the city. It allows a comparison of blocks on the basis of their capabilities irrespective of the different constraints imposed in different local government areas. There was no dispute with the method of analysis per se. Indeed Mr Shaw agreed that it is a common practice to take account of the development potential of an area by reference to its GFA. In this case, however, he thought it was not appropriate because the site is complicated and there may not be enough matching factors with other sale properties for a sound comparison to be made. Mr Wood also expressed the view that the GFA method is not helpful in this situation because the GFA achieved on a site is influenced by various factors including different town planning requirements, the developer’s assessment of the market (including the nature of the market and the level of competition or opposition in the area), and whether the developer wishes to develop the land in stages. Those differences are not necessarily reflected in the different rates per square metre of GFA. It is also important, when comparing sites, to recognise that the area let to different tenants will attract different rents. A large anchor tenant such as Coles will pay at a different rate from that paid for much smaller areas by speciality tenants, and those tenants will pay different rates for such uses as specialty shops, food stores, and restaurants. In his opinion, the variables in and between shopping centres are greater than for residential home units where there are fewer variables and the method is more reliable. Mr French acknowledged that the GFA method is useful in analysing some CBD commercial properties but is more appropriate in boom times when people are more inclined to develop every site to its full capacity. It is less reliable in a market, such as that existing in the period including the date of resumption. Mr French did not reject the method completely. -- 37 of 73 -- 38 In his opinion, however, the real difficulty with that approach is that one needs to know a lot about each particular sale and the form of development approval and the form of development actually carried out, as well as the economics of the development. to be able to use the form of analysis accurately. Mr Walsh, however, analysed seven sales to show a range in value of between $375 and $1,500 per m² GFA. He ultimately disregarded Sales 5 and 6 with the highest price per square metre of GFA. He concluded that a range of between $700.00 and $800.00 per square metre of GFA was appropriate for the subject land given the percentage of gross floor area to site area on the ETS Group’s plans for development on that land. Specific amounts per square metre GFA for the subject land and the remaining land were calculated by reference to hypothetical developments on the land before and after resumption because “the sales aren’t that finely tuned that we can get a guide as to that aspect of it”. Mr Walsh assessed the before resumption value of the subject land as $2,558,513.00 or $776/m² gross floor area and the after resumption value of the remaining land as $1,493,180.00 or $700/m². He expressly described the rates per square metre GFA as being the “result of the Hypothetical Development exercise” (Exhibit 6 page 11). He considered these rates to be “broadly in keeping with the rates of value shown by sales evidence” and “the analysis confirms that prior to resumption the value of the land per square metre of GFA would have been slightly greater than the value per square metre of GFA after resumption” (Exhibit 6 page 10). In conjunction with the consideration of sales evidence, he had examined the development capability of the subject land and the remaining land, commencing from the position of an “on completion” value for the property. A schedule of neighbourhood shopping centre sales was included with his valuation report for consideration of the hypothetical “on completion” value, in order to have regard to the price which a developer would be likely to pay for the land given its development capabilities (Exhibit 6 page 8). Mr Walsh noted that, in developing his hypothetical development analysis, the after situation had more known features because there is Council approval for a particular development and there are some commitments for tenancies. Any analysis of the before resumption situation must be hypothetical. Such calculations, he said, “will always be fraught with difficulty because of the variables that can be inputted and the differences in -- 38 of 73 -- 39 judgment and the differences of opinion between valuers and anybody else who cares to use that calculation.” The variables can include such factors as the level of tenancies and rental income and the cost of outgoings. That conclusion is supported by a comparison of Mr Walsh’s valuation and the results of the hypothetical development approach taken by Mr French. Mr Walsh agreed that the hypothetical development analysis should only be used to check a comparable sales method of analysis, which is the one that is always to be preferred. He suggested that the comparable sales method was the one which he had used as his primary tool, although he had interpreted the sales evidence to determine the “development capabilities” of parcels of land by reference to the density of development rather than simply compare the values of comparable land with similar zonings on a rate per square metre basis. Mr Walsh attempted to reconstruct the before resumption situation by reference to the after resumption situation, taking into account the additional GFA and consequent net lettable area available before resumption. He had tried to “fine tune the evidence from sales to see what the difference was ... between the before and after”. He noted that (using Mr Steele’s figures) construction costs after resumption were $57.00 per m² dearer for the 2,132 m². Using a hypothetical development scenario for the project both before and after resumption (details of which are contained in Exhibit 6), Mr Walsh calculated the compensation in the following manner: Before resumption - Land value represented by 3,295 m² GFA @ $780= $2,570,100.00 After resumption - Land value represented by 2,132 m² GFA @ $700= $1,492,400.00 Difference = $1,077,700.00 Accordingly, compensation was assessed at $1,077,700.00, together with disturbance costs incurred pursuant to preparation of the claim. The table containing the calculations leading to those figures, together with other parts of his valuation report, demonstrate that, even if Mr Walsh’s principal method of valuation -- 39 of 73 -- 40 was not hypothetical development, that method was an important element in his assessment of compensation. Each set of calculations contained assumptions that were queried by Mr O’Regan. For example, the before resumption scenario assumes that the Council would have approved a development of the size suggested and that the additional GFA would be as readily lettable as the GFA for the development that the Council approved and that the rents paid on the smaller project would be paid on the larger one. The risks inherent in using the hypothetical development method of analysis to value the subject land and the remaining land were highlighted in Mr Shaw’s comments on Mr Walsh’s calculations. Mr Shaw suggested that, to fully reflect the development process, the following elements should be included in the analysis: (a) the net income relied upon for valuation purposes should have allowed for vacancy; (b) outgoings of $22 per square metre before statutory costs is unrealistic and total operating costs should be in the range of $40.00 to $56.00 per square metre; (c) a yield of 11 per cent. is optimistic; (d) the selling costs associated with the project on completion should be deducted and typically represent approximately 2.5 per cent. of the selling price; and (e) although total development costs include construction, consultants’ fees, incentives, real estate commissions, holding costs, contingency and interest, the analysis done by Mr Walsh only allowed construction costs and interest. Other witnesses raised similar concerns. For example, Mr French’s suggested that outgoings would be at least $45 per square metre. Although Mr Doolan attempted to rebut at least some of those criticisms, it is clear that there are significant components which, if varied, can substantially influence the result. The consequences of varying key components is well illustrated by a feasibility analysis of the proposed development undertaken by Mr Shaw. He followed the approach taken by Mr Walsh, starting with the same gross rental but deducting 10 per cent. of that amount for vacancies, deducting outgoings at an average of $45.00/m² (rather than the $31/m² adopted by Mr Walsh). The resulting net income of $546,570.00 (compared with $645,254.00 calculated by Mr Walsh) was capitalised at 11.5 per cent. (rather than 11 per -- 40 of 73 -- 41 cent.) and from that sum were deducted selling costs, an amount for profit and risk (at the same rate adopted by Mr Walsh) and a larger sum for development costs - including construction, interest, holding costs, incentives. The first set of calculations led to a land value of $173,000.00. The second set of calculations, using lower average rental rates ($375/m² for ground level and $250/m² for the lower level) but the same development costs led to a negative land value (Exhibit 24 page 9). Mr Shaw also made an alternative assessment to test whether the site would be viable if there was a smaller development, specifically a single level development of 1,128 m² of net lettable area (consistent with the claimant’s development but excluding the lower level). On the assumptions that the construction costs could be estimated by reference to the costs of the current proposal, that the Council would grant approval for the development (which may require the relaxation of car parking requirements), and that the pre-commitments are in place, he calculated the land value of the remaining land to be about $550,000.00 (Exhibit 24 pages 10-11). If, however, there was not the level of commitment from tenants for the space and at the rentals represented by the claimant, the rental structure would be reduced, and the yield and profit and risk allowance would increase. Consequently the land value would be significantly reduced from $550,000.00. (Exhibit 24 page 12) I note for completeness that Mr Shaw considered that the smaller scale development could take place on either the subject land or the remaining land. In other words, he did not suggest that a larger development would be appropriate in the pre-resumption state. On that basis, the before and after value of the land would be $550,000.00 and accordingly the value of the subject land could be calculated as approximately $90/m² and the value of the remaining land would be approximately $109/m² (Exhibit 24 page 11). Criticisms of the GFA method, particularly when linked with hypothetical development calculations, are easily made. But one must consider whether the alternative method advanced by the Council is any better. The Council's approach: The Council submitted that the correct valuation approach is to look at comparable sales and calculate the value of the land on a rate per square metre basis. The compensation payable is calculated by multiplying the area of land lost by the value per square metre of the subject land having regard to comparable sales. It relied on Mr Wood’s evidence in support of the proposition that that approach sufficiently takes account of the -- 41 of 73 -- 42 development capability of the subject site and allows a comparison to be made between sites. By contrast, it was submitted, the hypothetical development analysis is not appropriate and has many deficiencies because of the variables involved. Mr O’Regan cited the decision of the Land Appeal Court in GE Cominos and Co Pty Ltd v Chief Executive, Department of Lands (AV93-213, unreported decision dated 15 August 1996), and of State Supreme Courts in Coastal Estates Pty Ltd v Bass Shire Council ([1993] 2 VR 566 at 577-8 per Gobbo J) and Brewarrana Pty Ltd v Commissioner of Highways [No 1] ((1973) 32 LGRA 170 at 181-2 per Wells J) which are critical of the hypothetical development method of analysis. Mr Wood calculated that (before any consideration of enhancement) the amount of compensation would be $85,680.00. Set off against that amount is enhancement to the remaining land said to be the amount of $89,000.00. Mr O’Regan submitted that Mr Walsh’s before and after valuations were so different from those of the Council’s valuers because Mr Walsh adopted a “different and erroneous approach”. Determining the appropriate approach: The method of analysis of the sales evidence, and the utility (if any) of hypothetical development calculations, is clearly critical to the outcome of this case. The matter cannot be resolved in the abstract or as one of principle. There is a clear history of support for valuations based on a comparison of sales evidence either on a rate per square metre basis or, in appropriate cases by reference to GFA or even net lettable area. There is also a history of judicial criticism of primary reliance on hypothetical developments in other than unusual circumstances. But, as is often the case, the approach to be taken is influenced by the available evidence. In this case, the parties agreed that there was not a sale or series or sales of land which were so comparable to the subject land, or the remaining land, that the result could be readily determined. It is necessary to look closely at that evidence in order to establish which is the appropriate analytical tool to apply in determining what compensation, if any, is payable. Sales evidence The claimant relied on the sales of seven properties and the Council relied on sixteen sales. Only one sale was relied on by both parties. Claimant’s sales: Mr Walsh provided information about each sale in his valuation report (Exhibit 6), an expanded schedule (Exhibit 30) and orally. Other witnesses also made observations about the sales evidence. The sales were analysed by Mr Walsh to a rate of -- 42 of 73 -- 43 dollars per square metre of GFA, which process, in his opinion, “relates the purchase price directly to the development capability of each of the sale properties”. The GFA was determined as a result of inquiries about what was achievable, achieved or proposed for each block. Further consideration of other aspects such as location, and position with respect to competitor properties, was made in the comparison process for assessment of value. Mr Walsh observed that the sales to which he referred provided a range of rates of value, from properties considered inferior to those superior to the subject. Sale 1 is a 4,500 m² lot of vacant Local Business zoned land on Arlington Road, Arana Hills. It sold in June 1996 (nearly a year after the date of resumption) for $550,000.00, an average of about $122/m² of land area. A single level development was proposed for the site, which is within a developing residential area. The GFA was 967 m², giving a sale price average of about $569/m² GFA and a GFA density of development of 21.5 per cent. The sale land is the closest of the seven sales to the subject land. Mr Walsh described the sale land, by comparison with the subject land, as inferior in location or position with a smaller development. It is a flatter block with easier access than the subject, but less potential for GFA and net lettable area. The sale land is surrounded by a developing residential area. A suburban thoroughfare, Bunya Road, passes it. That road does not carry the volume of traffic that passes through the South Pine Road - Queens Road intersection. By comparison, Mr Walsh suggested that the base value of the subject “would have to be at least” $600/m² GFA. Mr Walsh highlighted the difference in the levels of exposure which the sites have to passing traffic, and Mr Wood accepted that the roads fronting the sale land would carry “considerably lower volumes of traffic”. He also accepted that the volume of traffic passing the frontage is material to the patronage of a neighbourhood centre. Mr Wood pointed, however, to the upgrading of Arlington Road and its potential “in the future [to] become a fairly heavy accessed road from the Samford Samsonvale area”. He did not agree that the lower volume of traffic passing the sale land made it inferior to the subject land. Rather, he considered that, by virtue of its contour and the type of development that is suitable for the land as well as the better access available to the site, the sale land was 50 per cent. superior and the superiority was reflected in the sale price per square metre. Although a small -- 43 of 73 -- 44 development was planned for the site, there was potential for expansion if the area expands. Mr Wood considered that the sale supported a value of $80/m² for the subject land. Mr Shaw also considered the sale to be among the most relevant evidence. He agreed that the position of the sale land was inferior to the position of the subject in terms of exposure to passing traffic, but he sought to highlight the differences between the properties in terms of the areas which they serve, their contours, and the surrounding development. In his opinion the subject land is not superior to the sale land. I am satisfied that as at the date of resumption the subject land was superior to the sale land at the date of sale in location (especially having regard to its exposure to passing traffic and the mixed residential and industrial neighbourhood), size, and development potential (especially as the remaining land has almost double the GFA density of development). The sale land was superior in terms of contours, ease of access and lower building costs. Overall, the subject land was superior to the sale land but, unlike many of the sales referred to in evidence, it does provide a useful comparison with the subject. Sale 2 is a 4,408 m² lot of vacant Local Business zoned land on Woodhill Road, Ferny Hills. It sold in December 1994 for $450,000.00, an average of about $102/m² of land area. A single level development was proposed for the site, which is within a developing residential area. The GFA was 1,200 m², giving a sale price average of $375/m² GFA and a GFA density of development of 27.2 per cent. Mr Walsh described the sale land, by comparison with the subject land, as being at an inferior location or position (adjacent to Cabbage Tree Creek and not adjacent to a major thoroughfare) with a smaller project to service the “very immediate environs” rather than passing traffic from outside that precinct. It is a filled and flattened site. Access is available near a roundabout, but there is much less traffic than will use the roundabout adjacent to the remaining land. In Mr Walsh’s opinion exposure to the traffic flow is the important difference between the sale and the subject land. Mr Wood agreed that the sale land is in an inferior location, but he had not relied on the sale apparently on the erroneous assumption that it was not an arm’s length transaction. Mr Shaw considered the sale land to be “exactly the same as” or “much of a muchness”, as the Sale 1 land. Each site is smaller and cheaper to develop than the remaining land and, he -- 44 of 73 -- 45 said, would have a higher yield once developed (less than 11 per cent.). Consequently, it would be necessary to pay a “lot less per square metre of GFA for the subject site”. I am satisfied that the Sale 2 land is similar to the Sale 1 land and, for the reasons given in relation to the Sale 1 land, I consider that the Sale 2 land is inferior to the subject land. Sale 3 is a 5,653 m² lot of Special Facilities zoned land on the corner of Anzac Avenue and School Road, Kallangur. It sold in July 1995 for $870,000.00, an average of about $154/m² of land area. It has been developed with single level shops, the types of shops being determined by the zoning. The GFA was 2,000 m², giving a sale price average of $435/m² GFA and a GFA density of development of 35 per cent. In terms of area and GFA density of development the land is quite similar to the remaining land. The land is a level, prominently located corner site next to a medical centre. It has been developed for retail purposes with a GFA of 1,830 m² of space including an internal mall. This sale was the only common sale with those on which the Council relied. Mr Walsh described the sale land, by comparison with the subject land, as being at an inferior location and more remote, that is, further north away from the Brisbane central business district (“CBD”). He thought that, generally speaking, the value of land of that type would be lower the further it was away from the CBD. The sale land is, however, similar in size to the remaining land, has a similar type of special facilities approval and has a similar GFA density of development. It has good exposure and ground level parking but, because of its location, Mr Walsh expected that the rentals which could be achieved there would not be as high as could be achieved at the subject site. Mr Wood described the sale land as comparable to the subject land because it is a prominent site on heavily trafficked roads and has very comparable zoning. It is, however, superior because of its contours, the surrounding development in the Kallangur shopping centre and the nature and extent of the neighbouring residential development. He disagreed with Mr Walsh that the sale land was in a comparatively inferior location. In his opinion, neighbourhood shopping centres exist to service a neighbourhood and the market within that neighbourhood. Consequently, the value depends on the neighbourhood, the market within the neighbourhood and the competition within the neighbourhood - not on the distance from -- 45 of 73 -- 46 the Brisbane CBD. For reasons which are set out more fully later I am satisfied that this site is comparable to the subject land and the remaining land. Sale 4 is a 2.862 hectares lot of land on Telegraph Road, Bracken Ridge, with Particular Development zoning in place. It was sold in February 1994 for $3,000,000.00, an average of about $105/m² of land area. A much larger development than that proposed for the remaining land was constructed. Although the GFA was apparently unknown at the time of sale, 6,500 m² GFA was eventually achieved, 2,500 m² of which was leased to GJ Coles. On those figures the land had an average price of about $461/m² GFA and a GFA density of development of 22.7 per cent. Mr Walsh described it as being in an inferior position to the subject land because, like Sale 1, it is on a suburban feeder road rather than a major traffic road. Because of the size and nature of the development on the sale land, Mr Wood did not see it as comparable with the subject land. I agree that, given its size and the nature and scale of the development on the land, it is not directly comparable to the subject land. Mr Shaw described the sale land as “not dissimilar to” the Albany Forest sale, discussed later in these reasons for decision. Sale 5 is a 2,415 m² lot of land in Gympie Road, Aspley. It was sold in November 1994 for $900,00.00 (an average of $372/m² of land area) then in February 1995 for $1,100,000.00 (an average of $455/m²). At the former sale date there was a GFA of 600 m² (or $1,500/m² GFA and a density of 24.8 per cent.) whereas there was a GFA of 860 m² at the latter sale date ($1,279/m² GFA and a density of 35 per cent.). Apparently a previous development approval was in place at the earlier sale date. The land has a far superior location to that of the subject, being by the highway and exposed to a higher volume of traffic. It has a much smaller development than was proposed for the resumed land. The sale land is used primarily as a medical centre with a Baskin and Robbins store. Mr Wood agreed that the sale site is superior to the subject site because the sale land is exposed to a higher volume of traffic. He also agreed that, all other things being equal, the closer a property is to the Brisbane CBD the higher the traffic volumes are likely to be. But it was a sale for a special purpose development and he did not consider it comparable to the subject land. Mr Walsh also concluded that the sale does not provide a guide with respect to -- 46 of 73 -- 47 the location or otherwise of the value of the subject land. Consequently, the claimant placed no reliance on the sale and it can be disregarded. Sale 6 is a lot of 4,703 m² on Lutwyche Road, Lutwyche. It sold in February 1994 for $1,170,000.00 or $249/m² of land area. At the sale of “Lutwyche Central” the GFA included a restaurant of 570 m². It was varied after purchase to include 1,114 m² GFA for all shops. At the date of sale it had a GFA of 1,210 m², an average sale price of almost $967/m² GFA and a density of 25.7 per cent. Mr Walsh described the sale land as superior in location to the subject but a smaller project. It is closer to the CBD, next to a major road and in an area of higher density of residential development. Together with Sale 5 it is at one end of the scale with values at the “very upper limit”. Mr Wood agreed that, for those reasons, the sale site is superior to the subject site. The claimant ultimately placed no reliance on the sale as it was characterised as out of the range of the subject land. Accordingly, it can be disregarded. Sale 7 is a lot of 3,650 m² of Business zoned land on Stafford Road, Stafford. It sold in July 1995 (near the date of resumption) for $1,235,000.00 or about $338/m² of land area. The GFA was 1,500 m² giving an average price of about $823/m² GFA and a GFA density of 41 per cent. The sale land is located adjacent to a busy road and has good exposure. It is smaller than the subject but Mr Walsh described it as overall superior. As he observed the GFA development capability of the land (41 per cent.) was about the same as the development capability of the remaining land. He suggested that the higher density of development permitted on the site is reflected in the average price per square metre of the sale land. Although Mr Wood agreed that the sale site is superior to the subject site because the sale land is exposed to a higher volume of traffic, he did not think it was comparable with the remaining land. A higher density development was mooted for the site but had not proceeded at the time of the hearing. Mr Shaw, a part owner of the sale land, said that an option fee of $125,000.00 raised the purchase price to $1,360,000.00. The site was purchased for redevelopment at some time in the future and was bought on a yield of 10 per cent. on the income being generated from the property. It had an approved development scheme with an area of 1,410 m² but no redevelopment was possible for three or four years when existing leases would expire. On -- 47 of 73 -- 48 those figures both the average price per square metre and the average price per square metre of GFA would be higher than those just quoted (that is, $372.60/m² GFA). The density of development would, however, drop to 38.6 per cent. Mr Shaw described sales 5,6 and 7 as so superior to the subject that they ought not to be considered, particularly as sales evidence about more similar land was available. As already noted, the claimant did not ultimately rely on Sales 5 and 6. It did, however, rely on Sale 7. Certainly the development on the Sale Land has a similar density to that on the remaining land. It is, however, clearly superior to the subject land and is at the top of the range of properties from which assistance may be gained. Little reliance can be placed on it in this case. Council’s sales: Evidence about 16 sales, including the one sale in common with the claimant, was given on behalf of the Council. Details of sales 1 to 14 are set out in Mr Wood’s valuation report (Exhibit 16). Sale 1 was a 6,259 m² parcel of Commercial and Home Industry zoned land comprising the subject land and a small area of additional land that was excised and amalgamated with adjoining land to the north. It was purchased in August 1993 by Mr Doolan for $134,200.00, an average of $21.44/m². The land was transferred to the claimant in January 1995 at a value stated to be $139,000.00, an average of $22.20/m². Sale 2 is a 2,055 m² lot of Home Industry zoned land on the western side of Queens Road, Everton Hills. It is at road level at the front and falls to the rear. It was improved with a dwelling. It was sold (in either November 1993 or May 1995) for $105,000.00, an average of $51/m². The land was amalgamated with a small area excised from the Sale 1 land. Mr Wood suggested that, despite the zoning, the land had potential for incorporation in the commercial development envisaged for the adjoining property. He referred to a passage in the Hills District Development Control Plan No 1 that supported such a conclusion. Sale 3 is a 2,080 m² lot of vacant, Industry zoned land on the western side of Queens Road. It sold in October 1993 to Mr Doolan for $82,000.00, an average of about $39.42/m² of land area. The land falls steeply in terraces to the rear. There is also a steep cross fall from the adjoining land to the south. The land overlooks industrial sheds to the west. The sale land adjoins Sale 2 and Mr Wood made the same comments regarding zoning as for that property. -- 48 of 73 -- 49 For the claimant it was submitted that sales 1 to 3 did not provide an accurate guide to the value of the subject land at the date of resumption. As noted earlier Mr Doolan purchased the subject land (Sale 1) and the two adjoining lots to the north (Sales 2 and 3) from the Public Trustee at auction for a total of $310,000.00. The Sales 2 and 3 lots were on-sold and settled simultaneously with his purchase of the subject land. In Mr Doolan’s opinion, the Public Trustee did not see that there was “any real commercial flavour to this property”. He had not seen the Public Trustee sell commercial property before or since that auction. As far as he was aware, commercial developers were not at or involved in the auction and most if not all purchasers at such auctions are “residential buyers”. He considers that such auctions provide “a good place to source stock from” at a price which is “cheap or worth the money”. The results of his inquiries of a town planner and the Council had suggested that it would be less likely that the Sales 2 and 3 lots would be rezoned. Having received town planning and quantity surveying advice, Mr Doolan sold the two lots which he bought with the subject land (Sales 2 and 3) because he perceived that they had “more residential potential” and lacked “the upside that the three retained did”. Indeed he characterised them as residential sales that, had he retained them, may have made the rezoning of the subject land more difficult. They were, in any case, surplus to requirements. Mr Walsh had placed no reliance on Mr Doolan’s original purchase as a guide to the value of the subject land at the date of resumption. First, the land had not been marketed by the Public Trustee as a commercial property, and this may have been an instance of someone getting a “good buy”. Second, in his opinion, the subject land had a different “status” or was “a different proposition” at the two dates. At the later date there was approval for rezoning subject to conditions, and there were a number of letters on intent from possible tenants. The Sales 2 and 3 lots were more in the nature of residential blocks. Mr Wood initially argued that Sales 1 to 3 were relevant because the Development Control Plan indicated that the Council would have considered a development proposal for the land, and Mr Doolan had the opportunity of incorporating the Sales 2 and 3 land into a development subject to the Council’s approval. The on-sale of Sales 2 and 3 showed the amount which Mr Doolan was willing to accept for the land rather than incorporate them into his commercial development. The Development Control Plan, however, did not indicate that -- 49 of 73 -- 50 the Sales 2 and 3 land had commercial potential of the type available on the subject land. In any case, when cross examined, Mr Wood said that he had not relied on Sales 1 to 3 to calculate the value per square metre of the subject land. Mr Shaw sought to place some reliance on Sales 1 to 3 as being among the “most relevant evidence”, but his reasons for doing so were unpersuasive. (Exhibit 24 page 12, t 174-5, 179) I am satisfied that, having regard to their zoning and the circumstances of their sale (and, in the case of Sales 2 and 3, resale) as just described, the Sales 1 to 3 parcels of land are not an accurate guide to the value of the subject land at the date of resumption. Sale 4 is the same as the claimant’s Sale 3, discussed earlier. Sale 5 is a 4,024 m² lot of Local Shopping zoned land on Oakey Flat Road, Narangba, in the Narangba Shopping Centre opposite the railway station. It sold in January 1994 for $465,000.00, an average of $115.55/m² of land area. It has been amalgamated with the Sale 6 land and developed as the Narangba Shopping Centre, a seven day convenience centre. Sale 6 is a 2,023 m² lot of land on Oakey Flat Road adjoining the Sale 5 land. It was sold in March 1994 for $225,000.00, an average of $112.22/m² of land area. It has been developed in conjunction with the Sale 5 land. Mr Wood said he derived assistance from Sales 5 and 6 in “a general sense”. They are on a fairly heavily trafficked road that provides the major access through the area and have been developed with a shopping centre that would have been “fairly appropriate” for the subject land. They are opposite the railway station and so are at the centre or focus of the Narangba development, which is “expanding at a fairly rapid rate” with very limited opposition. In his opinion, its distance from the Brisbane CBD is of little if any significance because it services the local neighbourhood market. It is a simple development which could be easily on-sold. From a development point of view it was “quite an attractive site”. Mr Shaw had not considered the sale land in his analysis but described it as a developed site which is “infinitely superior” to the subject land. Mr Walsh appeared to know relatively little about the sale land. He considered Narangba to be an inferior location in comparison with Everton Hills in terms of its distance from the CBD and thought that, if one bank’s rental was any guide, the site would be less valuable than the subject land, given the rents attracted there. -- 50 of 73 -- 51 I am satisfied that, having regard to their location and the volume of traffic passing the Sales 5 and 6 block, that land is comparable but somewhat inferior to the subject land. Sale 7 is a 17,910 m² parcel of Commercial zoned land on Gympie Road, Strathpine. The land is on a prominent ridge on the western side of the Bald Hills flats. It fronts a service road and Mott Street in the north. The land is cut by an open cut drain. It sold in March 1994 for $500,000.00, an average of $27.92/m² of land area. The sale land remains undeveloped. Mr Wood considered that it is inferior as a shopping centre site but suitable for commercial development and retail showrooms. He included this sale because it was at a value relatively comparable to the price which Mr Doolan paid for the subject land. It has “some contour difficulty”, and the development was a little bit more remote and speculative and difficult than some of the others. Mr Wood identified the open cut drain and access on the smallest road as particular difficulties with the sale land. When cross examined, Mr Wood said that he had not relied on this sale to arrive at the value of the subject land. Mr Walsh agreed with Mr Wood that the sale land is inferior to the subject as a shopping centre site. He drew attention to the gully passing through the sale land and the susceptibility of the land to flooding. For that reason he did not think that a serious comparison could be made between the two blocks. It is clear that no reliance should be placed on Sale 7 for determining the value of the subject land. Sale 8 is a 2.51 hectare lot of Local Business zoned land on Brickworks Road, Kallangur. It has been subdivided into three allotments and parkland and is programmed for redevelopment for retail and commercial purposes. After excision of 6,658 m² for parkland, the balance area for development is 18,410 m². It sold in May 1993 for $475,000, an average of $25.80/m² of land area after dedication of the park area. The sale land is a prominent site in a developed area, with further development taking place nearby. Again Mr Wood had included this sale because its value was about the price paid by Mr Doolan for the subject land. As noted earlier, the purchase price of the subject land is no guide to the value of the land at the date of resumption. The block competes with the Kallangur shopping centre and is a little more remote from demand. It is a low lying area with a gully drain passing through it - although the lowest part was to be transferred to the -- 51 of 73 -- 52 Council for park purposes. Mr Walsh did not see the sale land as bearing any serious comparison with the subject land in light of its remoteness, the difficulties encountered in developing the sale land and the relatively high costs of external works. It seems that Mr Wood placed no reliance on the sale in determining the value of the subject land. It can be disregarded for present purposes. Sale 9 is a 10,370 m² lot of land, improved with a block of three brick shops and produce agency, on the corner of Morayfield Road and Caboolture River Road. It sold in June 1993 (more than two years before the date of resumption) for $1,533,585.00 for retail development, an average of $147.88/m² of land area. The land is a very prominent even contoured property. The land is the sale lot most distant from the subject land and the CBD and, for that reason, Mr Walsh didn’t think that it was directly comparable with the subject land. Although he did not know its development capabilities, he noted that it was a fairly well exposed site. Mr Wood said that it assisted him because the land is a corner site on two busy roads which lead to various types of residential developments. There is other retailing commercial development nearby. For reasons set out more fully later, I am satisfied that this site is sufficiently comparable to the subject land the remaining land. Sales 10 to 14 are adjacent or near neighbouring blocks, the features of which should be considered before they are compared. Sale 10 is a 4,650 m² parcel of Central Commercial zoned land on North Shore Drive, Burpengary Hills. It adjoins the fast food outlet on the corner of Station Road and North Shore Drive, and adjoins the Woolworths Burpengary Plaza Development on its eastern side. The land shares common access from North Shore Drive to that property. It sold in November 1993 for $360,000.00, an average of $77.42/m² of land area. The land has been developed with a single level block of nine shops on its northern section and a gymnasium on the southern section. Sale 11 is a 3,063 m² parcel of Central Commercial zoned land on North Shore Drive, Burpengary, adjoining the Sale 10 land. It is a level vacant site at the level of the fronting road and was sold in November 1993 for $240,00.00, an average of $78.35/m² of land area. -- 52 of 73 -- 53 Sale 12 is a 12,990 m² lot of Central Commercial zoned land on the corner of Station Road and North Shore Drive, Burpengary. It is a large level corner site with extensive road frontage, and was sold in June 1994 for $1,670,000.00, an average of $128.56 m² of land area. The site now contains a large, highly improved shopping centre featuring a Foodstore Supermarket Garden Centre and specialty shops. It is fully developed with sealed parking. Mr Wood described the sale land as “superior”. Sale 13 is a 2,819 m² lot of Central Commercial zoned land on the corner of Station Road and North Shore Drive. The land is a level site slightly above road level and is a prominent location in the Burpengary Retail Centre. Access is gained from both streets and is shared with access to the large Burpengary Plaza. The land sold in October 1993 for $395,000.00, an average of $140/m² of land area. It has been developed in conjunction with the adjoining 600 m² property in Station Road. Mr Wood described the sale land as “superior”. Sale 14 is a 3,813 m² lot of Central Commercial land on North Shore Drive, Burpengary. It is a level site located on the western fringe of the Burpengary Commercial/Retail area. It was sold in October 1994 for $250,000, an average of $65.56/m² of land area. Sales 10-14 are near the Burpengary Plaza shopping centre, which is more a regional centre than a neighbourhood centre. The sale sites are the support development sites for Burpengary Plaza and also serve an area east of the Bruce Highway. The most valuable of the sales, on a rate per square metre basis, are Sales 12 and 13 which are corner blocks to Station Road and North Shore Drive. The values drop on blocks further south. Mr Wood valued the subject land on a par with Sales 10 and 11, one of which was vacant at the time of the hearing and each of which had measurably less exposure to traffic than the subject land. Although the sites are adjacent to the Burpengary Plaza, Mr Wood agreed that it is reasonable to infer that most patrons of that Plaza would not pass by or through Sales 10 and 11 land. He made the comparison in values with these level sites mainly on the basis that the contours of the subject land were disadvantageous. Again, Mr Walsh referred to the remoteness of the sale blocks from the subject land. He noted that there were vacant premises on Sales 10 and 12 which, in his opinion, indicated -- 53 of 73 -- 54 that the areas surrounding the locality are not as intensively developed as, say, Everton Hills or a locality closer to the CBD. Mr Walsh also noted that the gross rentals on those places were in the order of $200/m² to $220/m². He concluded that the price that someone would pay for land drawing those rentals would be less than what would be paid for a site to develop shops that can be let for $350/m² or $400/m². I am satisfied that, of the Sales 10 to 14, the two corner sites are most comparable to the subject land. The Council’s valuers also referred to two shopping centre sites which were said to have some bearing on the value of the subject land, namely, the Albany Forest shopping centre on Old Northern Road and Jagora Drive, and the McDowall shopping centre on the corner of Beckett Road and Hamilton Road. Albany Forest shopping centre: Woolworths report a sale price of $2,500,000.00 on 2.1 hectares of land zoned for the proposed centre, an average of $119/m² for land area. Mr Shaw estimated the GFA would be in the order of 5,500 m². On that basis the sale price gave an average of about $454/m² GFA and there was a GFA density of development of 26 per cent. Apparently the net lettable area was 4,948 m², comprising 3,418 m² for a supermarket and 1,530 m² for specialty shops. The average rents being sought were $420/m² for specialty shops, and included a medical use at $325/m², a baker at $500/m², Rebel Liquor at $450/m², coffee shop at $450/m², and a takeaway food store at $400/m². Mr Shaw described the rents as being “at the top end of the range”. Mr Shaw highlighted the fact that Woolworths had underwritten the sale and wanted to develop a supermarket there and to pre-sell the project before construction. (Exhibit 24 page 13, t 168) He volunteered that the proposed development on the sale land is bigger than for the remaining land. Consequently, “it’s not in the same category”. He considered that the site is superior, being an “ideal shopping centre site”. The only disadvantage which he nominated was the site’s close proximity to the Albany Creek development where Coles is located. McDowall shopping centre: The two hectare site is on the corner of Beckett Road and Hamilton Road. Access is available from both roads. Beckett Road is a major thoroughfare and may be comparable to South Pine Road in terms of the volume of traffic it carries. At the -- 54 of 73 -- 55 time of the hearing, Hamilton Road was not a through road, so could not be considered a major thoroughfare. Mr Shaw referred to the sales of two one hectare parcels relevant to this proposal. The first was an unconditional purchase in July 1994 which settled, as contracted, in January 1996 for $600,000.00. The second was contracted in August 1994 with settlement subject to gazettal of rezoning for the proposed scheme. The purchase price was $650,000.00 with settlement anticipated, at the time of the hearing, for September 1996. The total purchase price for the two hectare site was $1,250,000.00, an average of $62/m² for land value. (Exhibit 24 page 13) Mr Walsh queried the relevance of that figure because at the time of purchase the land was differently zoned. The land had to be rezoned and that process was not complete at the time of the hearing. Thus at the time of purchase, the land was not comparable with the subject land at the date of resumption. The development on the McDowall land will be much larger than on the development on the resumed land, with a GFA of 5,000 m² comprising 2,500 m² of supermarket and 2,500 m² of specialties, giving a GFA density of development of about 25 per cent. Although 75% of the area was committed to about nine prospective tenants, including Franklins for the supermarket component, no leases had been executed at the date of the hearing, which was before construction commenced. About 20 or 22 specialty shops with different areas were planned. Leases were expected once the building was completed. The Franklins tenancy was expected to provide about 25 per cent. of the income from the development. Given the differences in zoning and the need for rezoning in order to effect the highest and best use of the land, the purchase price can provide little indication of the land value of the subject land. Assessing the sales evidence: It is clear from the preceding summary of the sales evidence that the following sales can be disregarded for the purpose of valuing the subject land and the remaining land: (a) Sales 5 and 6 on Mr Walsh’s schedule because they are outside the relevant range of value, at least on a GFA basis; (b) Sales 1, 2, 3, 7 and 8 on Mr Wood’s schedule of sales, for reasons given by Mr Wood; and -- 55 of 73 -- 56 (c) Mr Shaw’s McDowall shopping centre sale, given its different zoning at the time of purchase. The sales remaining for consideration are Sales 1 to 4 and, to a lesser extent, Sale 7 on Mr Walsh’s schedule, Sales 4 to 6 and 9 to 14 on Mr Wood’s schedule and the Albany Forest sale to which Mr Shaw referred. When assessing the value of the subject land Mr Wood applied a rate of $80/m² drawn from the sales evidence on which he relied. Using essentially the same sales evidence (and a hypothetical analysis of the proposed development), Mr Shaw considered that the value of the subject site lies in the range of $80.00 to $100.00 per square metre of land area (Exhibit 24 page 13). Although Mr Walsh did not rely on the rate per square metre of land area as the appropriate basis for the calculation, he suggested that the rate should be in the range of $100.00 to $150.00. If attention is focussed only on the relevant sales, the figures adopted by Mr Wood and Mr Shaw look out of line with the evidence. In the absence of directly comparable sales, it is necessary to ascertain those features which are sufficiently similar between the various sales and the subject land. One general observation also should be made. The claimant emphasised the location of the sales relative to the CBD as a relevant factor in the value of each property. The Council, however, emphasised the local nature of neighbourhood shopping centres and the need for such places to service neighbourhood and markets in relatively close proximity to the shopping centre, irrespective of its proximity to the CBD. The differences of opinion between valuer’s is well illustrated by their views in relation to the common sale - Mr Walsh’s sale 3 and Mr Wood’s Sale 4. There are arguments in favour of each approach. The sales evidence in relation to the properties finally in consideration does not conclusively establish that properties further away from the CBD have lower values. If the sale properties are listed in approximate location order from the CBD northwards and the average price per square metre is noted the results are as follows: Walsh sale 7 - $338/m² Walsh sale 2 - $102/m² Walsh sale 1 - $122/m² Walsh sale 4 - $105/m² -- 56 of 73 -- 57 Walsh sale 3/Wood sale 4 - $154/m² Wood sale 5 - $115/m² Wood sale 6 - $112/m² Wood sale 10 - $77/m² Wood sale 11 - $78/m² Wood sale 12 - $128/m² Wood sale 13 - $140/m² Wood sale 14 - $65/m² Wood sale 9 - $147/m². Even if there is such a general trend, it is qualified by reference to such factors as the nature and stage of development of surrounding areas and the exposure of the site to passing traffic. If the catchment area for a site is not fully developed that will influence the potential market to be serviced and the volume of traffic passing a site. Remoteness from the CBD may also influence, though to a lesser extent, the volume of traffic passing a site. It was common ground between the parties that, whatever its source, a high volume of traffic passing a site with good exposure to the road would influence the value of a site. Of the sale sites, those with the greatest exposure to traffic, including corner sites, were: Walsh sale 7 - $338/m² Walsh sale 3/Wood sale 4 - $154/m² Wood sale 5 - $115/m² Wood sale 6 - $112/m² Wood sale 12 - $128/m² Wood sale 13 - $140/m² Wood sale 9 - $147/m². Clearly the subject land was a busy traffic site; so busy that a lane had to be added with the result that the remaining land will be exposed to even more passing traffic in the future (see, for example, the Traffic Engineering Impact Assessment reports by Johnston Consulting: Exhibit 15 parts 9, 32). Furthermore, at least one of the tenants (Rocksports) is -- 57 of 73 -- 58 not simply a neighbourhood centre tenant but may rely on custom from a wider region. Exposure at such a busy site may be more relevant to tenants like that than some others. A comparison of the resumed land and relevant sale land on the basis of such factors as the exposure to and volume of passing traffic, and the neighbourhood in which the sites are located, supports a value on a rate per square metre basis in the range of $140.00 to $150.00. The appropriate valuation method: The next question is whether valuation by reference to a rate per square metre of land value is preferable to a rate per square metre of GFA. In my opinion there are weaknesses in both the GFA and the rate per square metre approach to determining the before and after value of the land. Mr Shaw agreed that when valuing commercial sites it is a common practice to take into account the development potential of the site by reference to GFA, particularly where there are “enough matching variables” and the valuer has sufficient knowledge about each of the sales. He said that it is not common practice to analyse neighbourhood convenience centre site sales and he considered that that was not appropriate in this case because the remaining land is “a complicated site”. As noted earlier, Mr Wood also pointed to the variables within shopping centre components (as compared with residential home units) such as specialty shops, food stores, supermarkets, and restaurants which influence the reliability of the GFA method. Mr French’s reservations with the method were also set out earlier in these reasons and need not be repeated. The GFA method as put by Mr Walsh attempted to compare different properties by reference to the common element of GFA. Even if it is accepted that the GFA method relates the purchase price directly to the development capabilities of each of the sale properties and that Mr Walsh gave proper consideration to aspects such as location and position with respect to competitor properties, there were risks inherent in hypothetical development calculations arising from such things as the assumption that the before and after developments would be fully tenanted and that each would attract rents at relatively high market levels. Consequently, I am not satisfied that I can rely on figures as precise as $776/m² GFA in the before situation and $700/m² in the after situation. The GFA method also proceeded on the basis that the GFA achievable on the subject land was 3,295 m² - a scale of development which I am not satisfied would have been achieved. -- 58 of 73 -- 59 Cogent and persuasive criticisms were made of the GFA method of valuation in the circumstances of this case. I am satisfied that, in the absence of a more detailed analysis of the sales evidence, it can provide no more than a general guide to a range of values for the subject land and the remaining land. Had there been a detailed analysis of the relevant properties on Mr Wood’s list of sales using the GFA method it may have been more persuasive. The claimant submitted that if the GFA method were not to be accepted by the Court, a rate per square metre of land should be adopted either: (a) at a price per square metre of land greater than all the sales referred to by Mr Wood and Mr Shaw and Sales 1 to 4 of Mr Walsh, together with an allowance for increased construction costs caused by the severance; or (b) by reference to a before value which is about double the after value used by the respondent (as shown in the calculations in Exhibit 31). In making the calculations referred to in (b) Mr Walsh used the $80/m² purchase price for the remaining land (nominated by Mr Wood) to calculate up to a completed value of $4,333,273 which, at a capitalisation rate of 11 per cent. gives an average net rental of $476,660.00 or $240/m² for a net lettable area of 1,978 m² (Exhibit 31). Assuming a net lettable area of 3,172 m² before resumption, an average net rental of $240/m² and a capitalisation rate of 11 per cent. he calculated down to a purchase price for the subject land of $932,670.00 or about $153/m² for land area. In light of my findings about the value of the land on a rate per square metre and the development potential of the subject land, I find those calculations to be of no assistance. In many respects the rate per square metre approach is no less precise than the GFA method. There are numerous factors which can influence the price a purchaser will pay for land to be developed commercially. Those factors need to be considered in determining the comparable values of properties. Assessments of one property being inferior or superior to the subject land, without more, does not give much more precision to the result than a more sophisticated series of mathematical calculations. On the evidence available in this case, however, that method has two advantages over the GFA method. First, there are more sales on which to draw. As only the claimant’s sales were analysed in GFA terms, there is no way -- 59 of 73 -- 60 of drawing on the other sales evidence. Second, it is a more direct method of comparison between properties. I will approach the determination of the before and after values in broad terms bearing in mind the evidence about such factors as the features of the subject land, sales of sufficiently comparable land, development potential, costs of construction, and planning restrictions, much of which is summarised in these reasons. I am satisfied that, having regard to the contour of the subject land, including the more level or gently sloping land near the road frontage, the subject land (even with development restrictions related to road widening) would be slightly more valuable on a rate per square metre basis than the remaining land. It is clear, for example, that building costs are higher the further back on the block the building goes. Whether one compares, first, the cost of a building constructed on the remaining land with the cost of a similar building constructed forward on that land and on part of the resumed land or, second, compares the cost of a building on the resumed land with the cost of extending that building forward onto the resumed land, it is apparent that the costs will be lower on the resumed land. The construction cost estimates provided by Mr Steele show a rate of $1,205/m² GFA before resumption and $1,262/m² GFA after resumption, a difference of $57/m² GFA. Mr Gore submitted that, if I were to prefer the rate per square metre method, I should make a separate assessment of severance by reference to the difference of $121,524.00 in construction costs in before and after developments. That amount assumes 2,132 m² GFA of additional development in the before resumption situation. Having rejected that before resumption development, I cannot adopt that figure for severance. However, the before and after method I have adopted effectively takes up any severance and injurious affection suffered by the dispossessed owner. Finally, there is a greater flexibility for a larger or differently designed building and the associated parking arrangements on the subject land. Access to the subject land is a little easier and driveways and carparks would be easier to construct there. I am satisfied that the resumed land, with unrealised potential for development as a neighbourhood shopping centre, was worth $130/m², a total of $654,550.00. Subject to the findings made a little later about the value of off site roadworks done on the resumed land consistently with a properly imposed condition of rezoning approval, I am satisfied that the -- 60 of 73 -- 61 subject land was worth approximately ten per cent. more, say, $145/m², a total of $795,670.00. Enhancement The issue: As noted earlier, section 20(3) of the Acquisition of Land Act 1967 provides that, 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”. The Council bore the onus of proving that the valuer of the remaining land was enhanced by the carrying out of the works or the purpose for which the resumed land was taken (see Emerald Quarry Industries Pty Ltd v Commissioner of Highways (1976) 14 SASR 486 at 496, Niall v District Council of Lacepede (1987) 66 LGRA 32 at 40, Zoeller v Brisbane City Council (1973) 40 CLLR 24 at 28 (LC), 40 CLLR 198 at 203 (LAC)). For the Council it was submitted that, because the obligation to carry out the road works is attached to the land, any developer of the land would have to comply with the condition. As the Council had undertaken to carry out the work, the claimant would be relieved of the obligation contained in the condition and would therefore gain an enhancement of the value of its interest in the land by the carrying out of the roadworks for which purposes the land was taken. The claimant submitted that the Council did not produce any direct evidence of the enhancement of the value of the retained land. A conventional before and after valuation should identify any enhancement (see Gilmour Developments Pty Ltd v Commissioner of Main Roads (1977) 4 QLCR 311 at 327). The claimant also submitted that an estimate of the costs of external roadworks does not equate, dollar for dollar, to an increase in the value of the land. Furthermore, the claimant put the following arguments. (a) The carrying out of the roadworks, following road widening, on the new alignment merely ensures that the value of the retained land is not diminished by the resumption. (b) The need for any “interim frontage roadworks” (condition 4.01) or any “interim all turns access” (condition 4.02) was caused by the resumption, such that if the works associated with the resumption scheme avoid the need for such works, there is no -- 61 of 73 -- 62 enhancement in the value of the retained land, only an avoidance of resumption- caused costs. In other words, had there been no resumption scheme, those costs would not have arisen. (c) Alternatively, the GHD estimate of costs (see Exhibit 22) is excessive. It involves a “Rolls Royce” treatment for temporary works and stands in stark contrast with the estimate provided by Mr Steele (Exhibit 43) and the security amount required by condition 5 of the rezoning approval, namely, $75,000.00 to “guarantee the satisfactory completion of the buildings, site works, landscaping, drainage works and any required works external to the land”. As described earlier, condition 4.01 and 4.02 of the Council’s approval of the rezoning application was the obligation on the claimant to “complete the interim frontage roadworks to the South Pine Road frontage of the subject land by providing” specified improvements. The obligation was qualified by the introductory words “If not completed by others”. As Mr O’Regan submitted, the condition attached to the subject land by operation of s 4.4(13) of the Local Government (Planning and Environment) Act 1990 which provides that the conditions imposed by the local government on its approval of a rezoning application made pursuant to section 4.3 “attach to the land and are binding on successors in title”. The acceptance of the conditions by the claimant is apparent from a deed dated 12 February 1996 between the claimant and the Council (Exhibit 25). Although the obligation was qualified by the words “If not completed by others”, Mr Walsh expressed the opinion that a hypothetical prudent purchaser of the subject land with the approvals in place would have considered that there was a strong possibility that he or she would have to do some of the interim works if the development was to be done fairly quickly. That assessment would have influenced the price paid for the land. Mr Wood also was of the view that a prudent purchaser at the date of resumption would have made allowance for the estimated cost to him of carrying out the interim roadworks. Mr Glen Lee, the Acting Director of Works and Services for the Council provided evidence that the Council, Brisbane City Council and the State Government had allocated money for the construction of the roundabout. The Council had commissioned Gutteridge Haskins & Davey Pty Ltd (“GHD”) to prepare final design plans for the works and tenders would be called for the work “in the near future”. Mr Lee envisaged the work would proceed -- 62 of 73 -- 63 within about six months after the hearing of this case (Exhibit 22). Consequently, the claimant will be relieved of the obligations contained in the condition by the Council’s undertaking the construction of the roundabout and neighbouring works in the immediate future. Thus, the Council submitted, the value of the claimant’s interest in the remaining land is enhanced by the carrying out of the works or the purpose for which the resumed land was taken. Mr Wood calculated enhancement because the works undertaken by the Council relieved the developer of carrying out certain works that he would otherwise have had to do in compliance with the conditions of rezoning and condition 3B approval. Cost and value of roadworks: Much attention was given to the cost of the roadworks required by the Council’s conditions 4.01 and 4.02 on the rezoning of the subject land. That evidence is relevant to two issues: first, what a land owner would have spent to carry out those works on the subject land, and, second, what value the works carried out on the resumed land had by way of enhancement, if any, of the remaining land. Costs: The type of work to be done must be determined by reference to the conditions imposed by the Council. Mr Thomas Johnston, a civil engineer who is the Principal of Johnston Consulting Pty Ltd, prepared an interim solution for access to the subject site which was shown on Johnston Consulting plan number 528-P08B (included in Exhibit 15 part 32) At the request of the Council, Gutteridge Haskins & Davey Pty Ltd (“GHD”), consulting engineers, prepared a preliminary estimate of the cost of external roadworks that were required by the conditions on rezoning and 3B approval. The estimate was made by reference to plan number 528-P08B. GHD estimated the cost of works to be $89,700.00 (Exhibit 22). Johnston Consulting Pty Ltd had estimated the relevant works to cost $27,500.00. In Mr Johnston’s opinion, certain works which were included by GHD were in excess of what would be consistent with the proposed interim plan and are in excess of what should reasonably be required by the Council as interim works. He particularised those works in his written statement (Exhibit 42). GHD reviewed the Johnston Estimate of costs and provided a comparative schedule of the GHD and Johnston estimates, identifying the items of comparability, the items which GHD included but Johnston did not include, and the items where GHD considered the -- 63 of 73 -- 64 Johnston estimate to be inadequate (Exhibit 38). GHD did not alter any of the cost estimates for individual items in light of that review. Evidence was given by Mr Johnston, Mr Steele (the principal of Andy Steele and Associates, quantity surveyors and building cost consultants) and Mr Lincoln Davis (Principal Engineer, Roads and Traffic, with GHD) about some items included, or not included, in the estimates of costs. It is relevant to note that: (a) condition 4.01 of the rezoning provided that the applicant shall complete the interim frontage roadworks and that “Any associated drainage, signage, linemarking, and lighting that may be required to comply with Council’s Standards”; and (b) condition 4.02 of the rezoning provided that the applicant shall construct the accesses to be fully compatible (line and level) with the ultimate frontage roadworks “to the satisfaction of the Director Works and Services”. Accordingly, it is apparent that the standard to be met in satisfying the conditions is the standard that is set by the Council or is acceptable to its designated officer. Although that does not mean that the Council should expect a landowner to do work in addition to or of a different nature from that required by the conditions, there may be work which is consequential or directly related to the specified tasks which it is reasonable to expect the land owner to undertake. I approach the matter of roadworks costs on the basis that the person doing the work would have to comply with the conditions to a standard set by the Council but at a cost no greater than was necessary to meet that standard. It might be expected, by comparison, that similar roadworks carried out as part of a more extensive road widening and upgrading scheme by neighbouring Councils using their funds and State funds would be more extensive and at an overall higher cost. The Councils might, for example, take the opportunity to upgrade or replace facilities rather than merely relocate them. On key items there was no dispute about the appropriate rates for work to be done. Indeed Mr Steele expressly did not criticise the rates adopted by GHD for such things as drainage, pavement and hand placed concrete. The real issue, as he pointed out, was the extent of work to be undertaken. -- 64 of 73 -- 65 There were significant items in relation to the roadworks that were in dispute or the cost of which were in dispute, with the resulting gap between the amount of costs estimated by each party. The thrust of the evidence of Mr Johnston, Mr Steele and Mr Davis concerning those items can be appreciated from the following seven examples. First, Mr Johnston noted that the Council had indicated in a letter dated 30 November 1995, after plan number 528-P08B, that a minimum 5.5 metre travel lane in front of the accesses, increasing to a 6.5 metre minimum was required to be incorporated into a final design. He stated that if it was necessary to produce an interim solution for the construction then, as part of the submission accompanying that detailed design, it would be “strongly argued that these additional requirements were unnecessary for the interim solution” (Exhibit 42). In oral evidence Mr Johnston explained that what he proposed would be adequate to allow cars to be driven around a stalled car. But he volunteered that most traffic engineering solutions end up with a value judgment as to what is reasonable and acceptable. Mr Davis assumed, not unreasonably, that the dispute would be resolved in favour of the Council. Second, and on a more modest scale, condition 4.01(c) requires the reinstatement or relocation of the existing pedestrian crossing and bus stop. Mr Johnston said that in his opinion GHD had based its estimate on an upgrading of the facilities whereas he had proceeded on the assumption that those items were not being upgraded. GHD had allowed $2,500.00 for grinding out the existing pedestrian crossing and painting a new one, $1,000.00 for signs and $5,000.00 for street lights associated with the pedestrian crossing. Mr Johnston had allowed $850.00 for removal and relocation of the pedestrian crossing and $400.00 for the relocation of associated signs. Mr Steele explained that the $850.00 amount was based on information from a local contractor who carries out such work. The amount for signs was only a relocation allowance. Mr Davis rejected those figures on the basis that a sub- contractor would be unaware of how he would work with the main contractor in the staging of works. He also said that any signs which are not of a sufficient standard would need to be replaced at a cost of $250.00 per sign. At that rate an allowance for four signs is not generous. Mr Johnston took issue particularly with the GHD estimate of $5,000.00 for lighting, noting that the existing crossing was not flood lit. He expressly assumed that the Council did not consider it necessary to provide lighting at present so could not reasonably require a developer to provide it. It should be noted, however, that condition 4.01 (d) obliges -- 65 of 73 -- 66 the person completing the interim frontage roadworks to provide “any associated ... lighting that may be required to comply with Council’s Standards”. Mr Johnston agreed, reluctantly, that if, following the submission of detailed plans and despite a developer’s protests, the Council insisted on that standard of work then work would have to be done to that standard. GHD allowed $2,600.00 for the removal and relocation of the bus stop shelter, including the construction of a concrete slab on which to erect it. By contrast, the claimant suggested that $610.00 would cover the cost. Mr Johnston said that it was intended to pour a new concrete slab and put the existing shelter on it. Mr Davis said that the timber shelter would have to be dismantled, parts of it would have to be replaced, and it would have to be refabricated. The site would have to be made good - a “messy, fiddly job” for which $2,000.00 was a proper allowance. Third, GHD estimated that various drainage works would cost $10,760.00. In Mr Johnston’s opinion, the minor pavement works associated with the interim solution would not have any significant effect on the existing stormwater drainage and consequently storm water was not intended to be upgraded (Exhibit 42). He qualified that statement by saying that his observations would be subject to a final detailed design. Mr Davis explained that he had made allowance for a pit at the western end of the full widening just before the taper and for that pit to be piped to the west where it can connect into an existing stormwater line. The present pit is blocked off and does not connect to anything. Fourth, Mr Johnston stated that because the works associated with the interim access arrangements at two access points are considered to be minor works, it is not necessary to upgrade the route street lighting in South Pine Road and Queens Road. (Exhibit 42, t 215) GHD, however, included seven street lights associated with roadworks at a cost of $17,500.00. Mr Davis stated that street lighting will be required at each island nose, though they would be positioned on the footpath on the northern side of South Pine Road and Queens Road. Fifth, GHD allowed for the relocation of four Telecom poles ($8,000.00) and the SEQEB pole ($2,000.00). Mr Johnston allowed $3,000.00 to relocate one Telecom pole. That estimate on the cost of relocating one pole was revised in light of discussions with SEQEB who stated that it would cost $900.00 to $1,000.00 to relocate a SEQEB pole. Thus the $3,000.00 estimate was “generous”. Mr Davis corrected the basis of the GHD calculation -- 66 of 73 -- 67 by saying that it makes allowance for the relocation of three Telecom poles, a Telecom pit on the Queens Road frontage and a fire hydrant in the middle of the driveway at the Queens Road entrance. Those services are in the way of the works required by the Council and so need to be relocated. Sixth, GHD allowed $2,000.00 for survey costs, $5,500.00 for design, $1,500.00 for materials testing and $3,500.00 for supervision, giving a total of $1,250.00. Mr Johnston had allowed $700.00 for survey, $1,800.00 for design and $1,000.00 for construction survey. He speculated that the GHD figures were percentages of other costs. The percentages were “probably reasonable” and the percentages were applied in the “normal manner”. The real issue was “what’s above the line that you’re applying it to”. Mr Steele also thought the percentages “appear reasonable” and noted that although he had not allowed an amount for materials testing, his rate for pavement formation was somewhat higher than GHDs and includes an allowance for testing. Seventh, Mr Steele queried the GHD allowance of $5,000.00 for the control of vehicular traffic during roadworks on the basis that the reduced extent of work on Mr Johnston’s estimate would not give rise to a need to control traffic. He drew some support from the pedestrian crossing contractor who said that it would not be necessary to control traffic for the removal and relocation of the pedestrian crossing. I am satisfied however that the scale of works would be such as to interrupt traffic flow and it is appropriate to make such an allowance. For the Council, Mr O’Regan submitted that Mr Davis was the person who was consulted by the Council about the work to be done. He had quantified the reasonable costs in accordance with the Council’s instructions. Mr O’Regan acknowledged that there have been negotiations between the developer and the Council about what work has to be done and in what manner, and that matters could be resolved in a way which results in a revision of the original figures. In his submission, however, there was abundant evidence that would support a figure of $89,700.00. Contrary to Mr Gore’s submission that the amount estimated by GHD involves a “Rolls Royce” treatment for interim or temporary works, I am satisfied that the GHD estimate takes into account, in a comprehensive and practical way, the direct and consequential works -- 67 of 73 -- 68 which would have to be undertaken and ascribes costs which are not unreasonable to those items. Value: The Council’s submission was that the amount quantified as the cost of the roadworks was the value of the enhancement to the remaining land. The claimant disagreed, submitting that an estimate of costs of external road works does not equate dollar for dollar to an increase in the value of the land. In more general terms, Mr Gore submitted that the present case was not one of enhancement as that term is properly understood. I am not satisfied that the value of the remaining land was enhanced by the off site road works. At all relevant times there was a road network which carries a heavy volume of traffic. The remaining land is not significantly enhanced by having the additional roadworks or treatment on the resumed land. A higher standard of kerbing and channelling, new lights and relocated poles do not add significantly, if at all, to the amenity or value of the remaining land. Although the land may be more accessible as a result of the relocation of the bus stop and pedestrian crossing, no additional services are provided as a result of the road treatment works. Rather than provide enhancement of that land, I consider that the undertaking of the works was a condition of rezoning and 3B approval and the cost of carrying out those works is a cost which would probably have been borne by the owner of the subject land as the cost of consent to develop that land for its highest and best use. Accordingly, I have concluded that the cost would taken into account by a prospective purchaser of the subject land who would have factored that into the purchase price. Consequently, if the land was ripe for development but the price of achieving that potential was $89,700.00 then that amount would be deducted from the amount which a purchaser would otherwise have paid for the subject land. In summary, if the subject land with potential for development was valued at $145/m² then its total value would be $885,370.00. From that should be deducted $89,700.00 for the cost of compliance with the roadworks condition, giving a land value of $795,670.00. Disturbance As part of the award of compensation, the claimant sought an amount for disturbance constituting “reasonable legal and valuation costs”. The original application to the Court -- 68 of 73 -- 69 identified town planning, architect, quantity surveyor, valuer, proprietor, engineer, barrister and solicitor costs totalling $234,026.80 (Exhibit 3). The amended claim identified town planning, architect, quantity surveyor, valuer, engineer, barrister and solicitor costs totalling $93,772.97 (Exhibit 19). Documents were tendered providing itemised accounts for the disturbance items (Exhibits 7, 8, 9, 10, 11, 12, 13, 21, 23). At the end of the hearing there was an issue about the amount of disturbance costs which should be awarded. It was submitted that the issue might be resolved by the judgment in relation to the claim for compensation or, if not, should be the subject of submissions after judgment is delivered. As I understand it, the Council contends that, if the claimant is unsuccessful to the extent that this Court does not accept its before resumption case, the claimant is not entitled to recover the disturbance costs referrable to the preparation of the before resumption scenario or, as Mr O’Regan expressed it, the “costs associated with buttressing that methodology”. The claimant did not accept the basis of the Council’s argument. Mr Gore submitted that the claimant’s entitlement to recover disturbance costs is not contingent upon the claimant demonstrating that the claim is sound. He agreed however, that if the Court found against the claimant on that submission and on the before resumption case it would become necessary to isolate which costs are recoverable. In support of the claimant’s entitlement to recover costs incurred in preparing the claim, Mr Gore referred to the “ordinary rule” that professional costs incurred in the preparation of the claim are recoverable notwithstanding that the valuation approach on which the claim was based is later held to be incorrect, provided only that that approach is not frivolous or lacking in bona fides. He cited the decision of the Land Appeal Court in Stanfield v Brisbane City Council (1990) 70 LGRA 392 where the Court (at pages 416-17) quoted with approval the following passage from the judgment of the Land Appeal Court in Merivale Motel Investments Pty Ltd v Brisbane Exposition and South Bank Redevelopment Authority (1985) 10 QLCR 268 at 288: “Our charge as judicially interpreted is to compensate for items which are the reasonable and not too remote consequence of the resumption (Harvey v Crawley Development Corporation [[1957] 1 QB 485; (1957) 55 LGR 104]). Dispossessed owners are entitled to seek professional advice and assistance in order to comply with the requirements of the Acquisition of Land Act insofar as lodging claims for compensation are concerned. Providing the valuation advice is not frivolous or lacking in bona fides, a fee -- 69 of 73 -- 70 based on the claimant’s valuation should be reimbursed. To refuse this would be lacking in fairness and generosity to the claimant and too restrictive of its personal right of choice irrespective of whether or not the claim is successful.” The Land Appeal Court in Stanfield went on to note that it had been the practice of the Land Court and the Land Appeal Court to allow a dispossessed owner as an item of disturbance the costs incurred for legal and valuation fees during the period from receipt of the notice of intention to resume up to the date of lodgment of a claim in court. The Court considered that there may be cases where some adjustment of a claim for such fees may require variation, but no such grounds applied in that case even though the Court had determined that the valuation approach on behalf of the claimant was not the proper approach. Mr Gore submitted that in the present case the claimant had adopted a conventional before-and-after valuation approach. It involved reference to a technique which the Council’s witnesses said could not be ruled out. Even if the approach is not accepted by this Court, it could not be found to be frivolous or lacking in bona fides or completely untenable from the beginning. Accordingly, he submitted, the claimant’s disturbance costs should be recovered in full. Mr O’Regan used the first sentence of the passage just quoted to submit that costs are only recoverable if they are reasonable. The Court’s discretion is not limited to rejecting only those claims which are frivolous or lacking in bona fides. He agreed that one way of doing justice in this case might be to award a proportion of the amount for disturbance which the claimant sought. Given the way in which this issue was argued by the parties, the fact that there are findings in favour of and against each party in relation to different issues dealt with in this judgment, and the fact that there is an award of compensation for the taking of the resumed land, it is appropriate that the representatives of each party be given an opportunity to make submissions about the amount to be awarded for disturbance. Conclusion and Order For reasons given earlier I have come to conclusions which are summarised as follows: (a) At the date of resumption, the subject land (that is, the land immediately before resumption), and the remaining land (after the resumed land was taken) had potential -- 70 of 73 -- 71 for retail and commercial development, specifically a neighbourhood shopping centre that would meet the conditions on which rezoning was approved. Because, at that date, the subject land was zoned Commercial (one lot) and Home Industry (two lots) and conditional approval had been given to rezoning but the land had not been rezoned, the land had unrealised potential for its highest and best use. Accordingly, the land must be valued in the before and after resumption states in accordance with the zoning at that date but with the unrealised potential for development. (b) At the date of resumption, the scale of development of the remaining land to achieve the highest and best use was the proposed development as submitted to and approved by the Council and described on plans prepared by the ETS Group showing a gross floor area of 2,132 m². The scale of development on the subject land to achieve its highest and best use was probably larger than that proposed for the remaining land but was not of the size described on plans prepared by the ETS Group showing a gross floor area of 3,295 m². (c) In all the circumstances of this case, the appropriate method of determining the amount of compensation for land taken and any injurious affection or severance suffered by the claimant is the before and after method relying on a comparison of the subject land and the resumed land with sales of comparable land on a rate per square metre basis. (d) Subject to the findings made about the value of off site roadworks done on the resumed land consistently with a condition of rezoning approval, I am satisfied that the subject land, with unrealised potential for development as a neighbourhood shopping centre, was worth $145.00 per square metre, a total of $885,370.00. The resumed land, with unrealised potential for the same purpose, was worth $130.00 per square metre, a total of $645,000.00. (e) The cost of complying with the condition on rezoning that certain off site roadworks be undertaken was $89,700.00. (f) I am not satisfied that the value of the remaining land was enhanced by the off site roadworks. Rather, the undertaking of the works was a condition of rezoning and 3B approval and the cost of carrying out those works is a cost which would probably have been borne by the owner of the subject land as the cost of obtaining consent to -- 71 of 73 -- 72 develop the land to its highest and best use. That cost would have been taken into account by a prospective purchaser of the subject land who would have factored it into the purchase price by deducting it from the amount which the purchaser would otherwise have paid for the subject land. The value of the land ($885,370.00) less the cost of the works ($89,700.00) gives a land value of $795,670.00. (g) The amount of compensation for the loss of land and for any injurious affection or severance suffered by the dispossessed owner is, in round figures, $142,000.00. (h) Given the way in which the parties addressed the issue of the amount to be paid for disturbance, the fact that there are findings in favour of and against each party in relation to different issues dealt with in this judgment, and the fact that there is an award of compensation for the taking of the resumed land, it is appropriate that the representatives of each party be given an opportunity to make submissions about the amount to be paid for disturbance. Compensation payable by the respondent Council to the claimant is determined in relation to the value of the land taken, injurious affection and severance in the sum of one hundred and forty-two thousand dollars ($142,000.00). I will hear submissions from the representatives of each party in relation to (a) the rate of interest payable on the amount of compensation; (b) what amount should be awarded in relation to items of disturbance; -- 72 of 73 -- 73 (c) whether any of the disturbance costs have been paid by the claimant and, if so, when they were paid and the rate or rates of interest payable in relation to the various costs; and (d) any application for costs. GJ NEATE MEMBER -- 73 of 73 --