Edgarange Pty Ltd v Council of the Shire of Redland [1997] QLC 173
LAND COURT
BRISBANE
29 October 1997
Re: Claim for Compensation - Acquisition of Land Act 1967
(A95-49)
Edgarange Pty Ltd
v.
Council of the Shire of Redland
JUDGMENT
Introduction
By proclamation dated 23 March 1995 and published in Queensland Government
Gazette No. 61 on 24 March 1995, the Governor declared that certain land in Birkdale was
taken by the Council of the Shire of Redland (the “respondent”) for Parks (Environmental
Reserve and Open Space) purposes and vested in the respondent from 24 March 1995. The
resumed land was Lot 207 on Plan S312736 (with an area of 2.226 hectares) and Lot 208 on
Plan S312736 (with an area of 2.226 hectares) which together comprised the whole of the land
in Deed of Grant 15669241 in the Parish of Capalaba (Exhibit 2). Subsequent to the
proclamation, some of the resumed land adjacent to the western boundary of Lot 207 (with an
area of 931 square metres) was transferred to Edgarange Pty Ltd which owns the adjoining land.
Although the area of the land taken was reduced from about 4.452 hectares to about 4.359
hectares, there was no suggestion that the transfer had any effect on the assessment of
compensation (Exhibit 13 page 2).
[1997] QLC 173
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In December 1994, notice of intention to resume the land was given to Edgarange Pty
Ltd (the “claimant”) although, at that date, the registered owner of the land was Lorna Maud
Johnston, as executor of the will of Maud Sophia Major, deceased (Exhibit 1). Both on that
date and the date on which the land was resumed, the claimant was the purchaser of the resumed
land under a contract of purchase dated 22 February 1994. The contract also included other
blocks of land, namely Lot 16 on RP 14149 and Lot 206 on Plan S312736, which together with
the resumed land had an area of 6.475 hectares (Exhibit 35). The total purchase price was
$1,800,000.00. The contract was due to settle on 22 April 1995.
There was no dispute about the claimant’s right to bring these proceedings. The
claimant had an equitable interest in the resumed land as it was the purchaser pursuant to a
contract in writing at the date of resumption. The contract subsequently settled and the vendor
assigned all rights of compensation to the claimant. The claimant’s rights were recognised by
the respondent when it addressed the notice of intention to resume the land on the claimant in
December 1994 (see Exhibit 1). If further evidence of the claimant’s entitlement be necessary,
the respondent has paid a substantial sum of money by way of advance compensation to the
claimant.
In its claim for compensation dated 11 April 1995, the claimant sought a total of
$1,577,115.00, being a claim of $1,515,000.00 said to be the market value of the land and
$62,115.00 for disturbance. At the start of the hearing, the claimant (with the leave of the Court
pursuant to section 24(2) of the Acquisition of Land Act 1967 and with the consent of the
respondent) amended the claim to a total of $1,278,990.20, comprising $1,263,000.00 for the
loss of land and $15,990.20 for disturbance (being legal and valuation fees).
The respondent’s contention about the appropriate amount of compensation changed
during the hearing. The first of the valuation reports tendered on behalf of the respondent
(Exhibit 14) assessed the compensation payable as a result of the resumption to be $612,000.00
plus reasonable legal and valuation fees if incurred and interest at the appropriate rate from the
date of resumption to the date of settlement. Later versions of the report assessed the
compensation to be $650,000.00 if, as it submitted, the respondent would only approve 32
residential lots on the land (Exhibit 38) or, alternatively, $830,000.00 if, as the claimant
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submitted, a 41 lot subdivision would have been approved (Exhibit 39). Again, reference was
made to legal and valuation costs and to interest.
By the end of the hearing the parties had agreed that the amount payable to the claimant
for disturbance was $12,088.00, comprising $5,888.00 for valuation fees and $6,200.00 for legal
and survey fees.
The claimant was represented in these proceedings by Mr CL Hughes of counsel. Oral
evidence was given on the claimant’s behalf by Mr RT Campbell (a civil engineer), Mr JL
Fiteni (a registered builder and land developer who is the principal director of the claimant) and
Mr MJ Slater (a registered valuer). The respondent was represented by Mr SM Ure of counsel.
Oral evidence was given on the respondent’s behalf by Mr BF Wing (a consulting engineer), Mr
BT Appleton (a civil engineer who is the Manager of Development Services of the respondent)
and Mr BA Hall (a registered valuer).
On the first day of the hearing, the representatives of the parties and the Land Court
inspected the resumed land and neighbouring parcels owned by the claimant.
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.
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(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 did not include claims for damage (either by severance or injurious affection)
or of enhancement but was confined to the value of the land taken and disturbance costs
comprising legal and valuation fees.
Valuation methodology
The parties’ valuers agreed on two key points in relation to the valuation of the
resumed land. First, each valuer considered that the highest and best use of the land is for
residential subdivision purposes (Exhibit 13 page 5, Exhibit 38 page 2, Exhibit 39 page 2).
Second, each valuer stated that the most appropriate method of assessing the value of
the resumed land was by reference to a hypothetical development of that land. Mr Slater
explained that he had been unable to identify any sales of in globo residential development
land which might provide a reliable guide to the value of the land by direct comparison. He
considered that, in the circumstances of the subject land at the date of resumption, the
uncertainties sometimes associated with this method are minimised because reliable data was
available to formulate the elements used in the calculation (Exhibit 13 page 5). He suggested,
however, that the value of $1,263,000.00 which he calculated for the resumed land, and
which was an average of $283,693.00 per hectare (not the $270,000.00 he suggested), was
“reasonable having regard to sale prices of englobo land in other areas of similar quality and
considering the attributes of the subject land” (Exhibit 13 page 6).
Similarly, Mr Hall stated that the appropriate and accepted method of valuation to
take into account the specific features of the subject land is by the hypothetical valuation
method. In the first three versions of his valuation report (Exhibits 44, 14 and 48) Mr Hall
referred to three other in globo sales in the area in 1994 but wrote:
“At best, sales of inglobo future subdivision land, are only a general guide to
the market value of other inglobo land as development costs, lot yield and
council conditions vary considerably from block to block even when the
blocks are adjoining.
Therefore, without the benefits of detailed Feasibility Studies on each block
of inglobo land sold, it is not possible to make use of inglobo sales for direct
comparison purposes.
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In view of this inability to make an accurate comparison with sales
evidence, the market relies on detailed feasibility studies to determine the
price a developer is prepared to pay for inglobo subdivision development
land, so as to achieve an acceptable profit and risk margin.
It is this perceived ability to achieve an acceptable profit margin and not the
price someone else has paid for another block of land that determines the
market value of inglobo subdivision land.
Therefore, the appropriate and accepted method of valuation to take into
account the specific features of the subject land is by the hypothetical
valuation method.”
In light of later detailed evidence concerning the subject land, Mr Hall said that the
other in globo sales to which he had referred in the first three versions of his report lost any
significance which they may have had.
Valuation - the competing calculations
The claimant’s final claim for $1,263,000.00 for the loss of land was based on the
following calculations made by Mr Slater.
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Gross realisation 41 Lots at $ 76,244 average $3 126 000
Less: Selling Costs
Commission REIQ 3.09% $96 600
Advertising & Promo per lot $650 $26 650
Legals per lot $250 $10 250
$133 500
$2 992 500
Net realisation
Less: profit and risk 25.00% $598 500
$2 394 000
Less: Development costs
roadworks & drainage $351 361
sewerage reticulation $ 84 454
water reticulation $ 38 230
sewerage headworks $ 98 400
water headworks $ 98 400
underground electricity $ 70 818
Council fees PAID
tree planting $ 2 050
survey fees $ 36 080
engineering fees $ 44 324
contingencies 10 % $ 544 863 $ 54 486
titles & legals per lot $70 $2 870
per lot $ 21 499 $881 473
$1 512 527
Less Interest on Development costs
half of 17.7 months at 9.70% $ 62 940
$1 449 587
Less: holding charges
Rates $650 000
0.94% Hold. Per $6 078 per annum average $0
Dev. Per $10 973
Land Tax
125% Hold. Per $8 060 per annum average $0
Dev. Per $10 075
$ 21 048
$1 428 539
Less: Interest on land and acq costs
Holding Period
0 months 9.70% $0
Development and sale period half
22 months 9.70% $115 024
$115 024
$1 313 515
Less: Acquisition costs 4.00% $50 520 SAY $ 50 520
Value of land $1 262 995
ADOPT $1 263 000
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It is appropriate to make a number of observations about Mr Slater’s approach. First,
the 41 lot selling prices for the resumed land were adopted having regard to sale prices
achieved principally in the subdivision immediately to the west of the resumed land.
According to Mr Slater, each lot was priced separately and the notional gross realisation was
$3,126,000.00 showing an average price of $76,244.00 (see Exhibit 13 page 5, Exhibit 43).
Mr Fiteni’s evidence suggested that a less precise hypothetical method was used, so that the
average price of 41 parcels developed on the land adjoining the resumed land (that is,
$76,244.00) was applied to the 41 notional allotments on the resumed land. Whichever
approach was used, the average figure was adopted by both parties in these proceedings.
Second, the development cost estimates were prepared by Ross Campbell and Associates,
consulting engineers. Mr Campbell gave evidence at the hearing and his figures were
adopted by both parties. Third, Mr Slater adopted a profit and risk factor of 25%, about
which more will be said later in these reasons for decision. Fourth, as noted earlier, Mr Slater
considered that the resulting value of $1,263,000.00 was “reasonable having regard to sale
prices of englobo land in other areas of similar quality and considering the attributes of the
subject land” (Exhibit 13 page 6).
The respondent provided two sets of calculations of the value of the resumed land
prepared by Mr Hall.
First, on the assumption that 32 lots would be approved, he valued the land at
$650,000.00. His calculations were as follows:
Gross Sales
Gross sales of 32 lots at average price of $76,244 per lot $2,439,808
Less Selling Costs
Commission at $2,356 per lot $ 75,390
Advertising at $650 per lot $ 20,800
Legals at $250 per lot $ 8,000 $ 104,190
NET REALISATION $2,335,618
Profit and Risk
Less Developers Profit and Risk at 57% $ 847,963
$1,487,655
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Development Costs
Less Development Costs as per Michael Slater’s valuation
@ $21,499 per lot $687,968
Plus interest on Development Costs for half
17.7 months @ 9.7% $ 49,217 $ 737,185
$ 750,470
Less Holding Charges - Rates & Land Tax allow $ 16,428
$ 734,042
Less Interest on Inglobo land value and acquisition
costs for half 22 months @ 9.7% $ 59,929
$ 674,113
Less Acquisition costs @ $4% $ 26,965
In Globo land value $ 647,148
ADOPT - $650,000.00
On the alternative basis that the resumed land would yield 41 residential lots, he
calculated the value of the land to be $830,000.00. His calculations, contained in Exhibit 39,
were as follows:
Gross Sales
Gross Sales of 41 lots at average price of $76,244 per lot $3,126,000.00
Less Selling Costs
Commission at 3.09% $96,600
Advertising at $650 per lot $26,650
Legals at $250 per lot $10,250 $ 133,550
NET REALISATION $2,992,450
Profit and Risk
Less Developers Profit and Risk at 57% $1,086,431
$1,906,019
Development Costs
Less Development Costs as per Michael Slater’s valuation $ 881,473
$1,024,546
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Plus interest on Development Costs half of 17.7 months @ 9.7% $ 62,940
$ 961,606
Less Holding Charges - Rates & Land Tax $ 21,048
$ 940,558
Less Interest on Inglobo land value and acquisition
costs for half 22 months @ 9.7% $ 76,790
$ 863,768
Less Acquisition costs @ 4% $ 34,550
In Globo land value $ 829,217
ADOPT - $830,000.00
As Mr Hall’s calculations show, he adopted the figures used by Mr Slater in relation
to the average sale price of each allotment, the selling costs (that is, commission, advertising
and legal costs), development costs, interest on development costs, holding charges (rates and
land tax), the rates of interest on land and acquisition costs, and the percentage allowed for
acquisition costs. He differed from Mr Slater in allowing a profit and risk factor of 57%.
For the respondent it was submitted that two other checks support the valuation of the
resumed land. First, the average rate per hectare on the purchase price paid by the claimant
for 20.903 hectares of the resumed land and adjoining land was $186,576.00. Applying that
rate to the subject land gives a total of $830,637.00. (There was other evidence that the area
of the subject land was 20.902 hectares, which gives an average of $186,585.00 per hectare.
The figure of 20.902 is used in these reasons for decision, but nothing turns on the
difference.) That approach is premised on all parcels in the aggregation being of equal value.
There was evidence about the relative value of the resumed land and other land within the
aggregation. That evidence is discussed later in these reasons for decision. For immediate
purposes I note that, in his valuation report on a 32 lot development, Mr Hall wrote:
Because of the amount of the subject resumed area susceptible to Q100
flooding and requiring a drainage reserve, it is considered that the resumed
area is less valuable per hectare than the overall aggregation average rate.
However, this valuation is based on the assumption that the subject land is
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similar to the average of the balance of the aggregate apart from the
assumption that Council would only approve 32 lots.” (Exhibit 38 page 3)
Second, the respondent relied on Mr Fiteni’s statement that he does not pay more than
$20,000 per lot for the raw land value of areas which he intends to develop. On that basis, if
41 lots could be developed, the value of the resumed land would be up to about $820,000.00.
Mr Hall characterised that approach as a “developer’s rule of thumb method” and not one
used by valuers. Nor, for present purposes, is it a method of determining the value of land
with approvals in place for its highest and best use for residential subdivision purposes.
The issues
During the course of the hearing some of the matters in dispute between the parties were
resolved. Consequently, by the end of the hearing, it was apparent that the determination of this
claim depends on the answers to two questions namely:
(a) At the date of resumption, did the resumed land have potential to be developed for 32
residential blocks or 41 residential blocks?
(b) What is the appropriate rate to be allowed for profit and risk in determining the amount
of compensation payable?
The answer to the first question turns on whether, if the land had not been resumed, part of the
land which is below the Q100 floodline would have been subdivided and developed for sale for
residential purposes.
To answer these questions, it is necessary to consider the physical features of the
resumed land and compare that land with the neighbouring blocks purchased by the claimant. It
is also necessary to consider the respondent’s policy concerning development around
watercourses, such as the one which traverses Lot 207 on the resumed land, and whether the
respondent would have approved development of some of the watercourse land or, if the
respondent would not have approved such development, whether proceedings in the Planning
and Environment Court would have led to the development being approved.
The resumed land and the remaining land
Physical features: The resumed land comprises two of a seven lots aggregation in the suburb
of Birkdale, bounded to the north by Collingwood Road and to the south by Burbank Road -
namely Lots 204, 205, 206, 207 and 208 on Plan S 312736 and Lots 15 and 16 on RP 14149
(the “subject land”). The subject land has a total area of approximately 20.902 hectares.
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The resumed land is rectangular in shape. Its southern boundary has a frontage of 221
metres to Burbank Road, and it has a depth of 201 metres. Immediately to the west of the
resumed land are (from east to west) Lots 206, 205 and 204. Immediately to the north of Lots
204-207 are Lots 15 and 16 which together have a northern boundary of approximately 350
metres to Collingwood Road. The claimant owns all of Lots 15, 16, 204, 205 and 206 (Exhibit
4).
A report prepared by Brannock Humphreys, Planning and Environment Consultants,
describes the subject land in the following terms:
“The topography of the subject land can be described as gently sloping and
elevated. The land rises gradually in the north west from Burbank Road
towards the south, and slopes from the west to the east, with a gully traversing
Lot 207 in a north-east to south-west direction. The land rises gradually from
Lot 207 to the east of the subject land. A slight ridge is evident on the subject
land to the centre of Lot 205, and extending across the northern boundary of
Lots 205 and 206.” (Exhibit 11, page 2)
The resumed land is of medium elevation with the highest area at about 30 metres AHD
in the south-eastern corner. The land falls from here with an easy slope generally in a south-east
to north-west direction at 1 in 15, or 6.5 %, gradient to the gully. The land is well drained, “well
forested” or “reasonably heavily forested”, and is the subject of a Tree Preservation Order so
that only selective clearing would be permitted and this would only be within the designated
areas for construction purposes (Exhibits 13, 15, 17, 17A, 39).
There was some disagreement about the relative merits (and hence the relative values) of
the various Lots. When comparing the resumed land with the average of the other parts of the
subject land Mr Hall said that, if a 41 lot subdivision was approved, the resumed land would
be similar to that land but, if 32 lots were approved, it would be inferior. Mr Slater agreed
that, if the land below the Q100 level was “undevelopable”, it would be correct to say that the
resumed land is less valuable on a rate per hectare basis than the subject land generally on a rate
per hectare basis. In his opinion, however, the low land could be developed.
Mr Fiteni described the resumed land as “definitely better” than the adjacent Lot 206
and “slightly better” than Lot 16. In his opinion, Lot 206 is “definitely ... the worst parcel in the
whole lot by far”. His assessment was influenced by “the quality of the land up top on the high
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side of 208” and by other factors, such as the need to cut into two of the blocks on Lot 206
where it was not possible to fill them.
The expert valuers took a less extreme view, but were in general agreement about the
relative worth of those parcels. As Mr Slater stated, the slope on the Lot 206 land is “somewhat
steeper” than the slope across the resumed land (see Exhibit 13 Annexure C). In his opinion,
the market for residential lots is becoming increasingly resistant to lots with a “significant slope
across them”. Consequently, at least one developer has adopted the practice of “levelling and
retaining” blocks for sale in that part of a residential estate where the land was “steeper but not
greatly steeper” than Lot 206 (see photographs Exhibit 45). Most of the part of the resumed
land which would have been developed has a more gradual slope and, because fill would be
required on the blocks proposed to back on the watercourse traversing Lot 207, those blocks
would have been relatively level before sale.
Mr Hall considered that “overall” Lot 206 and the resumed land were “somewhat
similar”, but that the resumed land is “slightly better” when the “advantage” of the higher land
on the eastern side of Lot 208 and the “disadvantage” of the low land on the western side of Lot
207 are taken into account. He considered that the resumed land had a disadvantage of being on
a westerly slope with more difficult access to the prevailing south-east breezes. Lot 206,
although “slightly steeper”, had the advantage of an easterly slope and a smaller proportion of
low lying, gully-type land.
Mr Fiteni said that, as a house builder, he had no concerns that the westerly aspect
provided by lots on the resumed land would affect the marketability of house blocks. In Mr
Slater’s experience, the westerly aspect of allotments on the resumed land would not have had a
“great impact” on the sale price. That assessment was confirmed by reference to the sale prices
obtained for allotments with a westerly aspect on Stage 1 of the development of the subject land
to the west of the resumed land.
Mr Slater also stated that, so long as any fill material is of a reasonable quality and is
properly placed and compacted, the presence of fill on land would not have “any effect at all on
the end price”. Again there is some sales evidence from Stage 1 (as well as other developments)
to support that observation. Mr Fiteni had not experienced any market resistance to blocks with
fill and he did not expect that the proposed housing allotments which backed onto the
watercourse on Lot 207 would have achieved dramatically lower prices because of the fill. He
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contended that he “would have got approximately the same prices” for the 41 developed blocks
on the resumed land as were paid for the 41 blocks in Stage 1 of the development on the
neighbouring land, which averaged $76,244.00 (see Exhibit 43).
The evidence of relative value just summarised finds some support in marketing
evidence. If the resumed land is to be valued on the basis that an average lot would sell for
$76,244.00, it should be noted that that price is not significantly higher than the average price of
$75,792.00 being asked for the 12 developed lots (which ranged in price from $72,000.00 to
$80,000.00) on the Lot 206 land, even allowing that three of the blocks front the bushland park
(see Exhibits 42, 47).
No detailed comparison was made between the resumed land and each other part of the
subject land. The question of how many allotments could have been developed on the resumed
land will be discussed later in these reasons for decision.
Purchase price: The respondent sought to place some reliance on the purchase price for the
subject land to indicate the value of the resumed land at the date of resumption. Although it was
only to be used as a check on the result reached by Mr Hall, much attention was given to the
purchase price in the course of the hearing.
The various Lots comprising the subject land were all purchased by the claimant subject
to three contracts for purchase dated 22 February 1994. Lots 204 and 205 were sold for
$1,050,000.00 (Exhibit 33), Lots 206, 207, 208 and 16 were sold for $1,800,000.00 (Exhibit
35), and Lot 15 was sold for $1,050,000.00 (Exhibit 34). The total purchase price was
$3,900,000.00, an average of almost $186,600 per hectare for all the land purchased. According
to Mr Fiteni, he had had a price in mind for the whole aggregation and had offered separate
amounts for the parcels purchased separately. In his opinion, the claimant paid a fair market
price for the land.
There was some discussion about whether the apportionment of the total purchase price
among the aggregated parcels reflected the relative values of those parcels. The purchase price
for the aggregation of lots which included the resumed land was an average of about
$277,992.00 per hectare. A letter from the claimant’s solicitors to the vendor’s solicitors in
February 1995, before settlement of the purchase, apportioned the total consideration for the
land between Lot 206 ($240,000.00), Lot 16 ($640,000.00) and Lots 207 and 208 ($920,000.00
- an average $206,649.00 per hectare). That apportionment was made on the purchaser’s
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instructions “based on elevation of the land, the number of blocks which are approved by
council in the subdivisional approval and based on the values and contract prices for the
purchase of lots 15, 204 and 205” (Exhibit 14). It was also made after the claimant was aware
of the respondent’s intention to resume the land. Mr Fiteni said that the amount apportioned to
the resumed land was calculated taking into account the relative benefits of the various lots only
in so far as the resumed land “was average land”.
The average price per hectare in each of the three contracts is significantly different from
the others, with the purchase price for the land including the resumed land having the highest
average price per hectare. Without evidence about the features of all of the parcels other than
Lot 206 it is not possible to ascertain whether the apportionment bore a direct relationship to the
relative worth of the various parcels. Such an assessment is not crucial, however, to the
determination of this case.
Having heard the evidence of Mr Fiteni about the purchase of the subject land
(including the resumed land), Mr Hall formed the opinion that the claimant purchased the
subject land at what the claimant considered to be fair market value and that the sale took
place under conditions recognised to be conducive to a fair market value being paid.
Mr Hall placed “full credence” on the purchase price for the subject land but questioned
whether the apportionment of prices between the three contracts reflected the relative values of
the parcels so purchased. In his opinion, there is not the variance in value between the various
parcels on a per hectare basis that the contract prices suggest. In particular, he did not accept
that the price of $1,800,000.00 for land including the resumed land reflected the true value of
that land. He preferred the average rate of $186,576.00 per hectare for the subject land rather
than the average rate of $277,992.00 per hectare calculated by reference to the $1,800,000.00. I
agree, and did not detect any strong disagreement on the part of the claimant. Accordingly, it is
appropriate to consider only the purchase price of the whole of the subject land as any guide to
the possible value of the resumed land at the date of resumption.
It was suggested by the claimant’s representatives that, when determining the value of
the resumed land at the date of resumption, two factors about the purchase price for the subject
land must be borne in mind. First, because the date of the contract was about 13 months before
the date of resumption, regard should be had to shifts in the market for in globo land through
that period. Second, completion of the purchase was conditional on rezoning and subdivision
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approval being given, and the purchaser bore the cost of obtaining the relevant approvals.
Having regard to those factors, Mr Slater commented that the contract price and the value of the
resumed land at the date of resumption “are not necessarily reconcilable”. Indeed, he expressed
the view that the property contracted for in 1994 was “a vastly different proposition” from the
property resumed in 1995.
With respect to the first factor, the claimant submitted that gains in the market for in
globo land would have resulted in the resumed land being more valuable at the date of
resumption than at the date of contract. By constrast the respondent submitted that given the
lack of movement or decline in the market for residential land the date of the contract was
sufficiently close to the date of resumption for the purchase price to provide clear guidance
about the value of the resumed land at that later date.
The claimant relied on opinion evidence from Mr Slater that the market for in globo
land was “very very strong” and “was certainly increasing through that period” between the date
of the contract and the date of resumption. Although firm in his opinion, Mr Slater conceded
that it would not be possible to find evidence of movement in that market.
Mr Hall acknowledged that at least eight developers (including the claimant) were
competing for in globo parcels of land in the district of the subject land between 1994 and 1995,
but he did not agree that there was a rising market for such land in the period between the date
of the contract and the date of resumption. In his opinion, the market for residential sites was
“quite strong” until May-June 1994 when it “started to downturn”. The number of sales of
residential blocks started to drop, and the market continued to be “very tight, very subdued”.
He said that the residential market “declined substantially” in that period and he expected that
developers would not have been prepared to pay as much in early 1995 as they would have been
in early 1994. In Mr Hall’s opinion, the markets for residential land and in globo land are
essentially the same in the sense that the residential lot market is the product of the in globo
development market.
There was documentary evidence that interest rates increased between September 1993
and January 1995 and that, for the years 1993 to 1995 inclusive there was a steady drop in the
annual number of vacant land sales in Redland Shire generally and Birkdale in particular
(Exhibit 46). Mr Slater, however, stressed that that documentary evidence was of little
relevance to these proceedings. First, it related to residential house lots rather than in globo
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land. Given the scarcity of in globo land, there had been no correlation between the rates of
sales of residential lots and the value of in globo land. Second, the schedule did not show the
availability of lots for sale and the absence of such information was relevant in assessing market
factors.
I am persuaded that, although there may be a strong link between the market for in globo
land and the market for residential home sites developed from in globo land, Mr Slater drew an
appropriate distinction between the two for the purposes of this case. Consequently, I conclude
that the market for in globo land was not declining between the date of the contracts and the
date of resumption. Although Mr Slater’s critique of that part of the respondent’s case is
accepted, there was no sales evidence from the claimant to demonstrate the extent of the
movement in the market for in globo land subsequent to the purchase of the subject land. In the
absence of such evidence I can do no more than conclude that, although the market did not
decline in the 13 months after the contracts for purchase, the extent of any rise in the market was
not proved.
There was also dispute about the second factor, namely the significance of the
conditions in the contracts of purchase of the subject land for the purchase price of the land and
the value of the resumed land at the date of resumption. To reach a conclusion about that
matter, it is necessary to consider what factors the claimant took into account when agreeing to
buy the subject land and the relevant conditions of the contracts of purchase.
Before the claimant contracted to purchase the subject land, Mr Fiteni was aware that
the then owner of the land had, in November 1993, obtained support from the respondent for an
application for consideration in principle for the rezoning of the subject land from Rural/Non
Urban to Residential A Zone and for subdivision of the land into 144 allotments (Exhibits 9,
10). Mr Fiteni had received advice from his surveyor that the subject land would yield in the
order of 211 allotments. The latter figure, together with a preliminary estimate of development
costs and of the price which developed lots would bring in the local market at that time, had
influenced what he assessed to be a fair market price for the subject land. A total purchase price
of $3,900,000.00 for land capable of yielding 211 blocks is an average price of about
$18,500.00 per block and is consistent with his expressed willingness to pay up to about
$20,000.00 per allotment for the raw land.
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Two of the three contracts to purchase lots in the subject land - including the contract for
the purchase of the resumed land and adjoining Lots 206 and 16 - provided that the contract
“has been entered into by the purchaser with the intent of developing the subject land” and
accordingly was subject to certain conditions being satisfied within specified time periods. For
present purposes it is relevant to note, in relation to the resumed land, that the special conditions
included, in summary:
(a) rezoning of the land being recommended by the respondent (without objector appeals
being filed with the Planning and Environment Court) within 300 days from the date of
contract;
(b) publication in the Gazette of an Order in Council rezoning the land to the Residential A
zone within 365 days from the date of the contract;
(c) approval being given by the respondent of subdivision of the land “into individual
residential allotments of a design and in a number desired by the purchaser, such
approval to be in terms and conditions totally satisfactory to the purchaser”.
The vendor authorised the claimant purchaser to “make all applications necessary to
obtain the approvals referred to in these special conditions” and agreed to assist in specified
ways. It was agreed that “all costs relative to such applications and plan registration shall be the
costs of the purchaser including but not limited to consultants expenses, application fees,
advertising fees and all other expenses properly and necessarily incurred in relation to such
applications”. Evidence was given that the application costs incurred by the claimant in relation
to seeking the rezoning and subdivision of the resumed land totalled $19,327.00 (Exhibit 36).
One must be cautious in equating cost with value in these circumstances.
In Mr Hall’s opinion, the subject land was not more valuable at completion than at the
date of the contract because the price was subject to approvals being given and the price “was
struck on the basis of a price for approved land”. The claimant’s activity between the date of
the contract and the date of resumption amounts to being able to consummate a contract for
approved land. That assessment, however, does not fully reflect the context or content of the
contract.
I am satisfied that the claimant paid a fair market price for the subject land and that the
price was fixed having regard to the potential for the land to be developed in a way which, in
general terms at least, was known to the vendor and the purchaser. The conditions of the
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contract relating to rezoning and subdivision approval, and the vendor’s agreement to do what
was necessary and appropriate to assist the claimant to obtain the approvals, also show that the
land was purchased on the understanding that the land had potential for development in the way
contemplated by the claimant. The respondent’s response to the previous application for
consideration in principle for the rezoning and subdivision of the subject land (albeit into fewer
allotments than the claimant hoped to achieve) confirms that the potential was there. At the date
of purchase, however, the land could not be said to have achieved its potential. Indeed, the fact
that two contracts provided that the claimant was to bear the cost of obtaining approvals and the
fact that the completion of those two contracts was conditional upon the approvals first being
obtained, demonstrate that the purchase price could not be characterised as reflecting the value
of the land in a state where all relevant approvals were in place. Had the approvals been granted
on or before the date of resumption, the land would, for that reason alone, have been more
valuable than the purchase price suggests.
The picture is further complicated by the fact that, although two of the contracts were for
delayed completion subject to conditions, the purchase of Lots 204 and 205 was settled 30 days
from the date of the contract (Exhibit 33). It was suggested that:
(a) the latter contract provided an incentive to the claimant to purchase all of the subject
land;
(b) because the price paid for land in an unconditional contract might have been less than
the price on a conditional contract where settlement was deferred for one year, the total
price might have been influenced by the different conditions on which the various Lots
were sold; and
(c) although the total price for the subject land may have reflected a fair market value for all
that land at the date of contract, the three contract prices and the subsequent
apportionment of values do not provide an accurate guide to the value of the respective
Lots at the date of purchase.
For completeness, it should be noted that there were no separate valuations of the various
parcels of land which were aggregated to comprise the subject land.
I am satisfied that those factors should be taken into account when considering the
relevance of the purchase price to the determination of the value of the resumed land at the date
of resumption.
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Having regard to the market factors discussed earlier and the contractual conditions just
described, that the value of the resumed land at the date of resumption cannot be determined
simply by multiplying the average rate per hectare in the 1994 contract price for all the subject
land by 4.452. If the matter had been so easy to resolve, it is unlikely that the parties would
have brought the dispute to this Court.
Consequently, it is necessary to deal with the matter in the way agreed by the parties,
with the principal focus being on the development potential of the resumed land at the date of
resumption and the appropriate profit and risk factor to be used in the calculations.
Development potential of the resumed land
In deciding whether, if it had not been resumed, the resumed land could have been
subdivided and developed for 41 or 32 residential allotments, it is possible to look at the
respondent’s design standards, as well as plans, applications and approvals for the rezoning and
subdivision of land which adjoins or, in relevant respects, is comparable to the resumed land.
Although there was no dispute that the land, including the resumed land, had potential
for residential development, the extent of the development potential of the resumed land can be
determined by reference to the development of other parcels of the subject land.
For present purposes it is appropriate to consider the subject land as three separate sites:
Site 1 (comprising Lots 204 and 205) has an area of 4.046 hectares
Site 2 (comprising Lots 207 and 208 - the resumed land) has an area of 4.452 hectares
Site 3 (comprising Lots 206 and Lots 15 and 16) has an area of 12.404 hectares.
For reasons associated with the different ownership circumstances of three sites that
comprised the subject land, and the proposed staging of the development, three separate
rezoning and subdivision applications (for a total of 207 allotments) were made.
An application was made for the rezoning of the Site 1 land from Rural/Non Urban
Zone to Residential A Zone and the subdivision of the land into 41 allotments. As the
respondent had failed to decide the application within the statutory prescribed time limit, the
claimant appealed to the Planning and Environment Court on the basis of a deemed refusal. It
was Appeal No. 211 of 1994. Despite numerous objections to the rezoning (more objections, Mr
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20
Fiteni said, than for the application in relation to the resumed land), the matter was resolved by a
consent order of the Court in January 1995 (Exhibit 5).
The application for rezoning of the Site 2 land from Rural/Non Urban Zone to
Residential A Zone and the subdivision of the land into 41 allotments was, on the basis of a
deemed refusal, the subject of Appeal No. 252 of 1994 in the Planning and Environment Court.
By consent, and on the respondent undertaking to take certain steps to facilitate the resumption,
the Court did not decide the appeal but in January 1995 adjourned it to a date to be fixed
(Exhibit 7). Consequently, at the date of resumption, the land was zoned Rural/Non Urban.
The application for the rezoning of Site 3 from Rural/Non Urban Zone to Residential A
Zone and the subdivision of the land into 125 allotments was, on the basis of a deemed refusal,
the subject of Appeal No. 257 of 1994 in the Planning and Environment Court. It was resolved
by a consent order of the Court in January 1995 (Exhibit 6).
The relevance of the appeals to the Planning and Environment Court will be discussed a
little later in these reasons for decision. However, it is important to note that, consistently with
the application in relation to Site 2, the claimant’s application for compensation was calculated
on the basis of a hypothetical subdivision of the resumed land into 41 allotments. The
respondent contended that only 32 allotments could be permitted on the resumed land.
Although there was some mention of the possibility that an intermediate number of allotments
might have been approved, that possibility was not actively pursued by either party. Given the
level of agreement between the parties on a range of relevant matters, I am content to adopt the
two figures as the obvious alternative outcomes of the hypothetical subdivision exercise.
Use of land below the Q100 floodline: The number of allotments which might have been
permitted on the resumed land is determined by deciding whether, if the land had not been
resumed, approval would have been granted for that part of the resumed land below the Q100
floodline to have been subdivided and developed for sale for residential purposes. The location
of the Q100 level across Lot 207 and the south-eastern corner of Lot 206 was clearly marked on
a plan tendered by the claimant (Exhibit 18). Mr Campbell explained why the watercourse did
not coincide at all points with a particular contour.
Plans showing the proposed subdivision of the subject land, including the resumed land,
demonstrated that at least nine of the proposed housing allotments would back on to the creek
and would include areas requiring fill below the Q100 line. The fill would be placed not only
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on land below that line but, because of the respondent’s requirements that fill be 300 mm above
the level of the Q100 line, would extend onto parts of the land above that line.
The evidence which suggested that the claimant would not have secured approval for
the subdivision and development of Lots 207 and 208 in a way which would have involved
the filling of some of the land below the Q100 line included:
various Council documents which contained design standards for such areas and
which were operative at the date of resumption;
evidence of the technical advice which the respondent would have received from its
staff about whether to approve the proposed subdivision and development of the
resumed land;
the failure (amounting to a deemed refusal) of the respondent to approve other
projects in the Shire which involved filling land below the Q100 line; and
the fact that the resumed land was taken for Parks (Environmental Reserve and Open
Space) purposes.
Evidence indicating that the claimant might have secured approval for subdivision and
development of Lots 207 and 208 in a way which would have involved the filling of some parts
of the land below the Q100 line included:
early advice from some Council officers;
approvals given by the respondent to other proposed developments which involved
filling areas below the Q100 line; and
as already mentioned, consent orders of the Planning and Environment Court allowing
development of land in the district of the resumed land and which was below the Q100
line.
Because the evidence pointed to different conclusions, it is appropriate to consider in some
detail the competing factors which are relevant to the determination.
Design standards: Various documents setting out the respondent’s design standards for
subdivisions were tendered. The respondent highlighted those passages concerning
watercourses, and it is appropriate to quote them.
The Design Standards for Subdivisions dated December 1991, which were operative at
the time when the rezoning and subdivision applications were made, provided:
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“5.0 NATURAL STREAMS
5.1 Existing watercourses and bank vegetation shall be
maintained.
4.2 (sic) Filling shall not be permitted in land below the 100 year ARI
flood level.
5.3 Allotment levels adjacent to streams shall not be lower than
the higher of 500 mm above the 50 year ARI flood level or 300
mm above the 100 year ARI flood level.
5.4 ...” (Exhibit 21)
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23
The Interim Design Standard for Developments dated January 1995, provided:
“5.0 NATURAL STREAMS
Existing watercourses and bank vegetation shall be maintained.
Filling shall not be permitted in land below the 100 year ARI flood level.
Allotment levels adjacent to streams shall not be lower than 300 mm above
the 100 year ARI flood level.” (Exhibit 23)
Those Interim Design Standards were in operation at the date of resumption and were
referred to in the consent orders of the Planning and Environment Court in relation to Site 1
and Site 3.
The revised version of the Interim Design Standards for Development, dated December
1995, stated:
“5.0 NATURAL GULLIES, DRAINAGE PATHS AND FLOOD PLAINS
Natural vegetation shall be maintained in all natural gullies or drainage paths
and flood plains.
Filling shall not be permitted on land below the 100 year ARI flood level.
Allotment levels adjacent to watercourses and natural gullies, drainage paths
and flood plains shall not be less than 300 mm above the 100 year ARI flood
level.
For the purpose of this assessment a natural gully or drainage path shall be
defined as land, primarily in a natural state, which is inundated from time to
time by the passage of stormwater runoff from a catchment exceeding an area
of 5 ha. Where the catchment is less than 5 ha. and the stormwater runoff from
a development cannot be contained in the underground system combined with
the overland flow for the ARI 100 year storm, the natural drainage path shall
be retained upstream for the extent required. In such situations, the catchment
may be less than 5 ha. Refer Section C of this Chapter, regarding limitations
on proportions on underground drainage and overland flow.
Council is continually upgrading flood information in the Shire and, in the
future, will endeavour to provide “regulation lines” which will define the
limits of the ARI 100 year storms in various catchments. When available, this
information will be obtainable on request.
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It is Council’s intention, as stated in Local Planning Policies, that
watercourses, flood plains and significant natural drainage paths be retained
for environmental purposes.” (Exhibit 22)
A comparison of the January 1995 text with the subsequently revised version shows a
change in terminology from “natural streams”, “watercourses” and “streams” to “natural
gullies” and “drainage paths”, together with a definition of those two terms. Mr Campbell
traced the change in terminology to an exchange of correspondence between himself and the
respondent in which, he said, he drew the respondent’s attention to the “natural stream”
provisions and, apparently, convinced the respondent to allow fill on the neighbouring Lot 206
because the watercourse crossing Lots 206 and 207 was not a “natural stream”.
The claimant attempted to demonstrate that there was a substantial difference between
natural streams, to which the design standard in operation on the date of resumption referred,
and other watercourses covered by the subsequent standards. According to Mr Campbell, the
appropriate design standards or interim draft design standards allowed (or did not prohibit)
filling below the Q100 line.
Mr Campbell described how water flowing through the watercourse on the resumed land
comes from a fully urbanised area upstream of Burbank Road by way of a man-made open
drain. Parts of the watercourse on the resumed land were previously cleared and are now
revegetated. At the northern end of Lot 207 water is piped towards Palgold Court (with an
overflow area) and on to Collingwood Road, from where it passes through various man-made
channels and pipes to a canal estate then into the sea. Although he accepted that it is a tributary
of Tarradarrapin Creek, Mr Campbell did not agree that the part of the watercourse on the
subject land is a natural watercourse, or a “natural stream” of the type referred to in the relevant
Design Standards in operation on the date of resumption.
The respondent’s conditions on the approval of plans for works on Lot 206 describe that
part of the watercourse on Lots 207 and 206 as an “open channel” (Exhibit 19A). Mr Appleton
said that, in his opinion, the watercourse is “a natural stream” because it is “formed by well
formed embankments and topography”. In Mr Wing’s view, the watercourse traversing Lot 207
was a natural stream.
In my opinion, the distinction between the types of watercourses referred to in the
various versions of the design standards is not as significant as Mr Campbell suggested.
Although the relevant parts of the 1991 and early 1995 documents were headed “Natural
-- 24 of 43 --
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Streams”, the paragraphs referred, perhaps more inclusively, to “watercourses” and
“streams”. The documents contained no definition of those terms. The subsequent 1995
revision of the standards seems to have added more examples of what, arguably, are the same
class of geographical feature.
There is, however, no need for a decision on that point. In my opinion, that part of the
watercourse which traverses Lot 207 is a natural stream or watercourse. Although there may
have been some clearing and revegetation of parts of the watercourse land, there was nothing
in the evidence to suggest that that part of the course along which water flows was man-made.
The fact that water enters the resumed land by way of a man-made open drain, and leaves the
land through pipes does not prevent its route across the resumed land retaining its character as
a natural stream.
On the basis that the design standards applied to the resumed land, the question is
whether those standards as administered by the respondent could and would have permitted
the filling of some parts of the eastern bank of the watercourse below the Q100 line.
The documents to which reference has been made all stated that filling “shall not be
permitted” on land below the 100 year ARI flood level. Mr Appleton explained that the
consequence of allowing filling in flood plains is an incremental increase in the hydraulic grade
which, if not controlled, can lead to flooding of upstream properties. He agreed that there have
been developments in Redland Shire where an agreement has been struck between the
respondent and the developer that there be no fill below the Q 100 line and where land below
that line remains in the area set aside for park or drainage purposes.
Mr Appleton said that, if the proposed plan of subdivision for Lots 207 and 208 had
been lodged as an application to the respondent, he would have recommended, in relation to the
allotments which are partially below the Q 100 line, that “the boundary between allotments and
the drainage reserve be shifted away from the drainage reserve to a point which coincides with
the Q 100 line”. Consequently, there would be no allotments or portions of allotments below
the Q 100 line.
A version of the preliminary report by consulting engineers Saunders & Partners Pty Ltd
on the proposed residential subdivision of Lots 207 and 208, apparently prepared in about
August 1995, stated:
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“Council’s present Policy on Parks within new subdivisions will not permit
filling below the Q100 level. From our assessment it appears that Lots 32-41
are significantly affected and Lots 31-41 in particular would not be approved
for development.
All allotment levels are required to be 300mm above the Q100 level.
With the restrictions advised, Lots 33-41 may only be suitable for future Park
land, although this land would be predominantly below the Q100 level. It
would be necessary to consult with Council for their opinion on the suitability
of this land and permissible uses.” (Exhibit 15)
Mr Appleton said that matters such as this were approached consistently with the Policy
Statement of the respondent on “Parks Requirements in New Subdivisions” dated 30 June 1995
(after the date of resumption), the primary objectives of which included:
“It shall be a primary objective of Council to ensure that creeks and their flood
plains should be returned as far as possible to their natural state and that filling
of floodplains should not be permitted for any purpose.” (Exhibit 20, page 3)
Although the respondent’s policy on parks may not have been relevant to a decision
whether to approve subdivision and development along the edge of the watercourse, the other
documentary and oral evidence strongly suggests that, if the design standards and the advice of
the relevant officer were followed, the respondent would not have approved the subdivision of
the resumed land into 41 lots.
There is authority for the proposition that, even if the testimony of the relevant
officers that an application for subdivision would be likely to be approved is accepted, and
even if the evidence is unqualified in content and stood unchallenged in fact, that evidence is
not decisive : De Ieso v Commissioner of Highways (SA) (1981) 47 LGRA 412 at 417-418.
The converse must also be accepted. In other words, evidence that an application would be
unlikely to be approved is not decisive, particularly where, as in this case, there is provision
for appeal to the Planning and Environment Court.
Mr Appleton said that, if a rezoning application was refused in accordance with his
recommendations and a developer appealed to the Planning and Environment Court, he would
maintain his opposition to the application. Although his evidence is accepted it does not
constitute unqualified and unchallenged evidence of what had occurred in relation to
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applications involving fill of areas below the Q100 line on land comparable to the resumed land.
Indeed Mr Appleton agreed that, while it is generally accepted that residential allotments in
south-east Queensland should be above the Q100 line, there were many examples of residential
allotments filled to the Q100 level or above at the date of resumption. Approvals of engineering
drawings for some such developments were in evidence in these proceedings.
Mr Appleton also acknowledged that a diagram illustrating a regulation line in a flood
plain in the respondent’s policy statement on Park Requirements in new Subdivisions showed
filling about 1 metre deep at an allotment, the boundary of which followed the Regulation line.
In his opinion, however, the overriding principle is contained in the primary objectives of the
policy. The diagram illustrates special circumstances where filling is permitted on residential
allotments under the Q100 line, such as the circumstances which applied on the neighbouring
Lot 206 land.
There was other evidence that the written policy was not always followed. In an
undated version of the preliminary report on the proposed residential subdivision of Lots 207
and 208 - apparently prepared in June 1995 before the document marked Exhibit 15 quoted
earlier in these reasons - Saunders & Partners Pty Ltd stated:
“From discussion with Council Planning and Works Department Officers it
was indicated that the drainage channel adjacent to the proposed park should
be retained in its natural state.
The Council considered that the 20m Drainage Reserve as shown was
adequate for the design flows forecast. The Department Officer would not
want piping or concrete inverts to the Drain Reserve.
We were advised that providing the Drainage flows can be contained within
the Reserve the Council would permit development of the low lying lots
fronting. It would however be necessary to fill the lots to 30mm (sic) above
the determined Q100 level.” (Exhibits 17, 17A)
Mr Wing identified the source of the advice and said that changes in key passages of the
preliminary report were made between the first version (Exhibit 17) and the second version
tendered by the respondent (Exhibit 15) because the earlier document drew on discussions with
the respondent’s Works Department and the later report drew on discussions with the
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28
respondent’s Planning Department which had “another idea of just what ... we should be
working to in terms of ... that parks for that policy”.
Mr Campbell said that the statement in Exhibit 17 that the respondent would permit
development of the low lying lots accorded with his understanding of the respondent’s policy at
the time when he was working on the subdivision. Indeed, in his experience, “it was common
practice to fill below Q100”. Thus it would have been possible for the proposed 41 lot
subdivision to proceed while retaining the drainage channel (or 20 metres wide drainage
reserve) in its natural state.
Two technical issues were raised, namely, whether the presence of fill would cause
flooding on the land and what amount of fill would be necessary to create the allotments along
the watercourse. First, Mr Campbell said that it would have been possible to fill the blocks to
300mm above the determined Q100 level and for the drainage flows to be contained in that area
without causing problems to upstream allotments. He did not agree that such an intrusion
would dramatically change the level of major storm flows in the drainage path. Nor did he
agree that it would detrimentally affect existing allotments constructed by the claimant as part of
the adjacent Stage 1 project or land upstream, south of Burbank Road.
Although there was a challenge to the methodology used by Mr Campbell, he explained
the appropriateness of what he had done and produced his calculations (Exhibits 29, 31). Mr
Wing said that he would not have a lot of confidence in the calculations without a more
thorough analysis of the stream to determine whether there would be any complications
upstream, downstream or within the site. His concern was that, until the relevant level is
established, “we have great difficulty in determining whether there is a problem on the
subdivision of that land and filling of those blocks”. Mr Wing had not done separate modelling
and calculations and, subject to his general concerns, he seemed content to accept key aspects of
Mr Campbell’s calculations.
Second, there was an issue about the amount of fill which would be required to bring the
levels of the proposed allotments to a level which complied with the respondent’s requirements.
According to the preliminary reports prepared by Saunders & Partners Pty Ltd for the proposed
residential subdivision of Lots 207 and 208, the Council had determined that “the Q100 level as
calculated is 18.4m at Burbank Road and further north is approximately 16.8m AHD at the
Boundary” (Exhibits 15, 17, 17A). Mr Campbell said that he agreed with the 18.4m figure but
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had determined the figure at the northern boundary to be 16.3m AHD. By his calculations,
approximately 4,000 cubic metres of fill would be needed and much, though not all, of it could
be found on the resumed land (Exhibits 24, 25). He also calculated that the depth of fill
required for allotments along the watercourse on the resumed land would be “significantly less”
than the maximum depth of fill permitted on the adjacent Lot 206. Mr Wing suggested that, if
those calculations were made on the basis that the tailwater was 16.13 metres rather than the
16.8 metres stated by the respondent, the level for filling would be reduced from that point back
to Burbank Road. He, however, adopted the 16.8 m figure given to him by the Council, without
inquiring about how it was calculated, and estimated that 6,800 cubic metres of soil would be
necessary to fill the allotments to the required level.
It is not possible, on the evidence before the Court, to resolve these technical issues.
What the evidence discloses is that, if it had been necessary for either the respondent or the
Planning and Environment Court to resolve those issues, detailed measurements would have
been made. Appropriate calculations would have been undertaken concerning the amount of fill
required for the proposed allotments. Modelling concerning 1 in 100 year flood events could
have been undertaken. Only then could accurate predictions have been made about the effect of
such flood events on nearby land, including upstream land.
The evidence did not demonstrate that Mr Campbell’s calculations were wrong. They
were queried, but on the basis that further measurements, modelling and calculations were
necessary - the more thorough analysis to which Mr Wing referred.
Examples of fill permitted below the Q100 line: There was documentary evidence of
instances where fill had been permitted below the Q 100 line on land adjacent or comparable to
the watercourse portion of the resumed land.
The claimant’s proposed subdivision of land on Burbank Road, Birkdale, Stage 1, was
approved in July 1995 (Exhibit 19A). The plan shows filling below Q100 on three allotments
in a proposed subdivision plan of Lot 206 adjacent to the western boundary of resumed land
Lot 207 and part of the same watercourse as traverses the resumed land (see Exhibit 18). The
area has fill and a log retaining wall. Before approval was given, and in reply to requests
from the respondent, Mr Campbell provided the respondent with hydraulic calculations for
the open drain downstream from Burbank Road. According to Mr Campbell, the effect of
filling in the allotments on Lot 206 “only marginally raises levels in the adjacent drainage
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reserve and will not cause any additional property damage” (Exhibit 29) and “will not have an
adverse effect on ARI Q100 flood levels upstream” (Exhibit 30). Mr Appleton described the
approval as a negotiated settlement where the claimant had shown to the Council’s
satisfaction that no other allotments would be affected by flooding. He said that the
incremental increase in hydraulic grade is eliminated at the boundary with Burbank Road. As
a consequence of the crossing and the culverts, the upstream allotment owner is not affected
by the small encroachment into the Q100 flood plain. By contrast with the Council’s
satisfaction concerning the fill on the adjacent Lot 206 land, Mr Appleton said that “at this
stage” he had not been assured that the proposed fill on the resumed land would have little or no
effect, especially for the upstream allotment owner to the south of the Burbank Road crossing.
The claimant’s proposed subdivision of adjacent land on Collingwood Road,
Birkdale, Stage 2 was approved in May 1996 (Exhibit 19B). The plan shows filling below
Q100 on all of three, and parts of six, proposed allotments in the subdivision plan at and
around the intersection of Lorina Street and Collingwood Road (see Exhibit 18). The low
lying area was a depression with a contributing catchment area which filled with water after
heavy storms. It is not part of a natural watercourse and has no defined channel into or out of
it. The susceptibility of the depression to ponding was exacerbated by the construction of the
Collingwood Road embankment. I accept Mr Appleton’s opinion that the considerations
relevant to a decision about fill on that land are different from the considerations relevant to a
decision about filling land near to natural streams. Consequently, the approval to fill that area
does not assist in resolving the issue in this case.
The Iconacastle Pty Ltd proposed subdivision of land on Main Road, Wellington Point
was approved in March 1995 (Exhibit 19C). The plan shows filling below Q100 on five
allotments in the western part of the subdivision land. Although some of the land was most
recently the site of a dam, it was part of a watercourse (though not necessarily a natural
watercourse) with a number of drainage structures constructed on it. Mr Appleton considered
that it was appropriate to approve the filling of that flood plain, particularly the refilling of the
man-made excavation.
The claimant also gained approval for staged subdivisions of land on Main Road,
Wellington Point. Stages 1B and 1C were approved in May 1992 and the subdivisional
approval may have been given earlier. The plans show, respectively, filling below the Q100
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line in the north-western corner over all of three proposed allotments and parts of three other
proposed allotments (Exhibit 27) and on allotments along the proposed western boundary
(Exhibit 28). The plan of the subdivision approved in February 1996 shows filling below
Q100 on at least six allotments in the south-east of the subdivision land (Exhibit 19D).
Apparently the approvals for this estate derive from a rezoning approval granted by the
Planning and Environment Court. Mr Appleton acknowledged that there is a watercourse on
part of the land within that scheme.
The claimant also obtained approval for the subdivision of land on the corner of
Starkey and Duncan Streets, Wellington Point. At least some of those approvals were
obtained by consent orders of the Planning and Environment Court. The Stage 1 plan,
approved in November 1994, shows a substantial portion of the area, including 16 allotments,
with filling below Q100 (Exhibit 19E). The plan of Stage 1A plan, approved in May 1995,
shows a substantial portion of the area, including 21 allotments, with filling below Q100
(Exhibit 19F). The plan of Stage 2, immediately adjacent to the land shown on Exhibit 19D,
was approved in February 1996. It shows most of the area, including 14 allotments, with fill
below Q100 line (Exhibit 19G). Mr Appleton acknowledged that filling below the Q100
floodline was approved, but noted that the Court order required the developer to construct an
appropriate drainage channel.
The final example cited was the proposed subdivision by Fourteenth Floor Agencies
Pty Ltd of land on Boundary Street, Redland Bay for which engineering approval was given
in April 1993 and subdivisional approval was given earlier (Exhibit 26). The Stage 1 plan
shows filling below Q100 over various proposed allotments in the north-western corner. That
part of the estate is adjacent to a watercourse which is affected by the culverts beneath
Boundary Street.
Although each approval was subject to numerous conditions, they did not (subject to one
exception) expressly refer to the area below the Q100 line nor to the type or quantity of fill.
Rather, there were conditions to the effect that all works must be performed in accordance with
Council standards and by-laws and that allotment filling (wherever it occurred) would be in
accordance with a nominated standard and level of compaction. Only in the approval relating to
land immediately to the west of Lot 207 was express mention made of the low lying land, and
then only to require that the Engineering Drawings be amended to show the ARI Q100 flood
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32
levels across Burbank Road and in the “open channel” which is that part of the watercourse
which traverses Lot 207 (Exhibit 19A).
Mr Fiteni said that he had not had problems gaining approval for filling below Q100
line when Mr Campbell had provided relevant information, such as the results of computer
modelling. Had approval been refused, Mr Fiteni would have taken the matter on appeal to
the Planning and Environment Court. Indeed, he did so in relation to the resumed land, but
the proceedings were adjourned because of the pending resumption of the land. On the basis
of the approvals given to developments below the Q100 line shown in Exhibit 19A-G, Mr
Campbell said that he did not believe that the Council could reasonably have refused to allow
filling below the Q100 line on the resumed land.
It must be noted, however, that most of the applications discussed were approved
following Court proceedings. Although, in each case a consent order was made, the appeals
went to the Planning and Environment Court from the deemed refusal, or the failure, of the
respondent to approve applications for rezoning and subdivision. Such refusal was, it appears,
in accordance with the respondent’s policy not to approve the filling of lots below Q100, at least
where the land was adjacent to the flood plain of a watercourse.
Submissions and conclusions: Mr Ure submitted that this Court could not be satisfied that
41 lots would have been approved because such an approval would have been contrary to the
Design Standards for Subdivisions (Exhibit 21) and the Interim Design Standards for
Development (Exhibits 22 and 23), and, if it be relevant, to the philosophy of the subsequent
Policy Statement - Parks Requirements in New Subdivisions (Exhibit 20). He also relied on
the engineering evidence of Mr Wing and Mr Appleton that Mr Campbell’s workings
(Exhibits 29 and 30) were not sufficient to persuade them that the “not insignificant degree of
fill” that would have to be placed on the eastern side of the drainage channel would not lead
to problems on other allotments. Consistently with the recommendation of Mr Appleton, the
respondent would have refused the application.
Further, Mr Ure submitted, this Court could not be satisfied that, if the matter had
gone on appeal, the Planning and Environment Court would have allowed the appeal. As he
observed, there were three parties to the proceedings in relation to neighbouring parcels of
land in respect of which consent orders were made - the claimant, the respondent and the
Birkdale Progress Association Inc. The third party, described as a respondent by election,
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represented numerous objectors to the proposal. Although the Birkdale Progress Association
consented to the orders made in the other cases, in my opinion it would be going too far to
assume that the consent given in those cases would, without more, lead this Court to conclude
that such consent would necessarily have been forthcoming in relation to the proposed
subdivision if the land had not been resumed.
It is clear from the oral and written evidence that, at about the date of resumption, the
respondent did not usually grant approval to housing allotments below the Q100 line or to the
filling of residential allotments to ensure that their levels were raised to above Q100. It is
equally clear, however, that, having regard to a range of relevant considerations such as
possible flood consequences for upstream properties, the respondent may have been
convinced to allow fill below the Q100 line. If it did not agree, proceedings in the Planning
and Environment Court may have resulted in an order (by consent or otherwise) allowing the
fill on that land.
The decision of the South Australian Supreme Court (Wells J) in De Ieso v
Commissioner of Highways, cited earlier, assists in resolving this issue. In that case there was
a dispute about the plan for the after resumption use of the remaining land. Wells J discussed
the issues by reference to “governing principles as they were expressed in their pristine and
classical form” ((1981) 47 LGRA 412 at 415) in cases such as Spencer v The Commonwealth
((1907) 5 CLR 418). He concluded that a court is obliged to reach its conclusion by viewing
the opinions of the valuers, and the associated opinions of those who testified to the plans’
respective claims to recognition, “through the eyes of the sort of prospective purchaser fairly
to be contemplated, having regard to the nature of the highest and best use postulated and to
the choice that would face that purchaser” (at p 416). Testimony, even when given by persons
who would have been responsible for making or contributing to the decision at the relevant
date, is far from decisive because their opinions do not pronounce directly on the precise
issue before the Court. Such evidence, if accepted, may be used by the Court as evidence
from which it might be inferred that, in the circumstances pertaining at the relevant date, the
hypothetical purchaser would have been more or less disposed to regard the prospects of a
suggested plan of subdivision more or less favourably when working out the implications for
that purchaser of a valuation based upon that plan (at pp 417-18).
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34
Wells J also cautioned against too optimistic an interpretation of evidence about
planning approvals. In his opinion:
“it is impossible to overlook the very human tendency for a developer - like
an entrepreneur in any field of commerce - to cut his business risks as far as
reasonably practicable; and because the court must consider what the
decision of a hypothetical developer would have been before the purchase
took place, and not after it - when he could, within limits, feel his way - it
must give real weight to the possibility that the hypothetical developer
would be guided more by a plan from which there were absent, than by a
plan in which there were present, elements of controversy.” (at p 418)
While bearing that caution in mind, there was evidence in this case of the persistence
and success of Mr Fiteni in obtaining the relevant approvals in relation to land neighbouring
or comparable to the resumed land. There was no suggestion that he was imprudent or ill
informed, or that he was significantly different in his attitude and operations from other
developers working on similar projects.
Although the first issue is not an easy one to resolve, I am satisfied on the evidence
before the Court that, as at the date of resumption:
(a) the highest and best use of the resumed land was for residential subdivision purposes;
(b) the claimant, or a developer in the claimant’s position, would have taken all
reasonable steps to obtain approval for the subdivision of the resumed land into 41
residential allotments in order to maximise the profit from the development of the
land;
(c) the respondent would probably have granted approval for the subdivision of the land
into 32 allotments but it is more likely than not that the respondent would not have
approved the additional nine allotments;
(d) it is likely that, if the respondent had refused to grant approval for 41 lots (or had not
made a decision so that there was a deemed refusal) the claimant, or a developer in the
claimant’s position, would have appealed to the Planning and Environment Court;
and
(e) it is more likely than not that either an agreement would have been reached in relation
to the nine additional blocks or the Planning and Environment Court would, in light of
engineering and other evidence of the type presented to this Court including evidence
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35
about fill on neighbouring land and comparable land in the district of the resumed
land, have granted consent to the subdivision of the resumed land for 41 residential
allotments.
Profit and risk
The other matter in issue between the parties was the extent of profit and risk to be
allowed. Mr Slater used a factor of 25% which, in his expert opinion, was reasonable
considering the land quality and location of the resumed land and the market expectation as to
margins in the development of quality residential land at the date of resumption (Exhibit 13
page 5). At the hearing of the case, Mr Hall adopted a profit and risk factor of 57% and
provided the Court with his method of calculating that figure.
Courts have accepted that the rationale for making an allowance for profit and risk in
the valuation of in globo lands by the hypothetical subdivision method is the need to have
regard to the fact that a buyer would give only such a sum for the land as would show, when
sold in subdivision, a percentage return on the purchase price and on the purchaser’s
expenditure in preparing and submitting the land for subdivision (see, for example,
Cranbrook Playing Fields Ltd v Valuer-General (1936) 13 LGR (NSW) 62 at 64 per
Maxwell J).
In Minister for Environment v Florence ((1979) 21 SASR 108, 45 LGRA 127), Wells
J described the introduction of the profit and risk factor as “[p]robably the most important
step in assembling a calculation based on a hypothetical subdivision”. He stressed that the
profit and risk factor is related to other items in a calculation. Although it may be affected by
actual profits made in similar developments, and regard may be had in a general way to the
percentage given to this factor by other developers when assessing other prospective
developments, such influences “can only, however, be comparatively remote”. His Honour
continued:
What is far more important is the valuer’s appraisal, as a whole, of the
hypothetical subdivision under consideration, one of whose principal
characteristics is the interdependence of its several parts. ... The actual
obstacles to subdivision at the relevant time; the actual price set upon the
lots; the actual period decided upon for selling the subject land in its
hypothetical form; and the type of land and the state of the market with
respect to it, must all be looked at as a united whole in the particular
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36
circumstances of the case, and a percentage fixed accordingly.” (45 LGRA
at 146)
Although the list of factors specified by his Honour may not be complete, in the sense
that different factors may be relevant in different cases (for examples see A Hyam, The Law
Affecting Valuation of Land in Australia, 2nd edn, 1995, Law Book Company at pages 149-
150 and cases cited there), the factors just mentioned are relevant to this case and there was
evidence about them. The obstacles to subdivision were discussed earlier; the price set for
lots was calculated by reference to prices achieved on a comparable and neighbouring
development on adjoining land by the claimant; the sales period agreed to by the parties was
apparently derived by reference to that other development; and there was evidence about the
type of land, the state of the market and other particular circumstances of the case.
As the hearing of the case progressed there was an increasing convergence of opinion
between the experts for each party about such things as the relevant costs for the
(hypothetical) development of the resumed land. By adopting averages, however accurate
they might have been, there was a real risk than some of the special features of the resumed
land might not have been given full consideration. For example, if approval had been given
to develop the nine blocks whose area included land below the Q100 line, it would have been
necessary to provide fill (most, but not necessarily all of which would have come from
elsewhere on the resumed land), to compact the fill and to construct retaining walls along the
watercourse. Although the evidence suggests that, all other things being equal, such blocks
would have been sold for the same amount as blocks which did not require fill, the cost of
developing the blocks for sale would have been greater than for developing those other
allotments. By comparison, most of the blocks developed on the claimant’s land adjoining
the resumed land followed the natural land form and did not require cut or fill. Such matters
were not dealt with, the parties agreeing to adopt average figures for substantially comparable
developments. The parties are not to be criticised for that approach - indeed the narrowing of
the matters in dispute between them (including development costs) has assisted in
determining this case. But the more general the figures adopted, the less confident one can be
that the profit and loss factor is sufficiently accurate.
It is clear from the reasons given by Wells J in the Florence case that this is not a
matter which is susceptible to determination by precise mathematical calculation apart from
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37
the circumstances of the hypothetical subdivision being considered. Opinions will vary about
relevant factors. In dealing with the difference between the parties on this issue, it is useful to
bear in mind the observation of Else-Mitchell J that “the percentage deduction made for profit
and risk of realization ... is a matter upon which widely different estimates might be given by
expert valuers” (The Minister v Matford Nominees Pty Ltd [1973] 2 NSWLR 58 at p 60). It is
also useful to note the caution expressed by Gobbo J in Coastal Estates Pty Ltd v Bass Shire
Council ((1993) 79 LGERA 188) about “analysing particular purchases of broad acre lands
suitable for subdivision by reference to what the purchaser was said to have had in mind
when it purchased the property” (at p 198).
Basis of the claimant’s calculations: In advancing the 25% profit and risk factor Mr Slater
drew on his knowledge and experience as a valuer who is in constant contact with major
developers. He has observed in recent years “considerable pressure on the profits that a
developer can expect from subdivision or residential land”. That pressure comes from the
difficulty which developers face to buy in globo land that is suitable for early subdivision and
from the level of competition between “substantial players”. He gave examples of developers
working in the region with profit and risk factors in the range of 21% to 25%. In Mr Slater’s
opinion, a developer looking for profit in the range of 30% to 40% “would simply not be able
to buy any land”.
Mr Hall suggested that there may be differences between the way in which developers
and valuers think about profit. In his experience, some developers speak of profit in terms of
gross profit on gross selling price. Some support for that suggestion may be drawn from Mr
Fiteni’s evidence that he had not initially adopted a notional profit and risk margin, but “had
an idea in relation to sales from the other land I’d sold around, and I just worked out what I
would sell the finished lots for”. He later said that he does not calculate a profit and risk
factor when ascertaining whether or not to purchase land for a specific price. By contrast it is
accepted valuation practice to work out the profit and risk factor as a percentage of the total
of land and development costs, which can be a significantly higher figure. Even if Mr Hall’s
suggestion is accurate, there is no reason to believe that Mr Slater misunderstood the notion
of profit and risk. His 25% figure, being at the higher end of the range in which he
considered the market to be operating, seems to adequately reflect a level that was appropriate
for land with recognised subdivision potential at the date of resumption.
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38
Basis of the respondent’s calculations: The last in a series of calculations done by Mr Hall
to estimate the profit and risk factors (Exhibit 39) - the calculations on which the respondent
relied - used the total purchase price of the subject land averaged on a rate per hectare basis of
$186,576.00 over all that land to give a notional purchase price of $830,637.00 to the resumed
land. The figure was used despite suggestions that the resumed land was less valuable than
neighbouring parts of the subject land and although Mr Hall considered that it erred on the
claimant’s side. He also adopted the bond rate and time used by Mr Slater, and the holding
charges, land tax, rates and development costs calculated by reference to the neighbouring land
and extrapolated onto the resumed land. On the basis that the net realisation of the 41 lots
would have been $2,992,450.00 and the costs would have totalled $1,906,120.00, the potential
profit was calculated to be $1,086,330.00 which provides a profit and risk figure of 57%.
Mr Hall’s assessment of what would be an appropriate profit and risk factor
developed as the preparation and presentation of the case progressed. In the first two versions
of his valuation report, Mr Hall valued the resumed land as if it would yield 32 lots. He
adopted a 30% profit and risk factor on the basis that subdivision developers were seeking a
profit and risk return of between 30% and 40%. He had adopted 30% “to give the benefit of
any doubt to the dispossessed owner” (Exhibit 44 page 7, Exhibit 14 page 7). In the third
version of the report, Mr Hall valued the resumed land as if it would yield a 41 lot
subdivision. He adopted a 30% profit and risk factor in relation to the 32 lots which the
respondent advised would be the maximum number of lots permitted. He also adopted a 50%
profit and risk factor for the extra 9 lots within the Q100 flood area due to the risk that the
respondent would not approve the subdivision of these blocks to the average developer
(Exhibit 48 page 7). In the latest versions of his valuation report (Exhibits 38 and 39), Mr
Hall adopted the same profit and risk factor of 57% irrespective of whether 32 or 41 lots
would have been approved and developed on the resumed land.
Mr Hall noted the rarity of having the market price of in globo land set just before the
date of resumption, as well as accurate costings and sale prices of very similar parcels of
subdivided land. He acknowledged, however, that 57% is a high figure. Indeed he said it is
“higher than I have experienced before.”
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39
The calculation of a 57% profit and risk factor proceeds on the basis that there was no
shift in the market for in globo land in the year or so between the date of sale of the adjoining
land and the date of resumption. As noted earlier, the evidence led to the conclusion that,
although the market did not decline in the 13 months after the contracts for purchase, the extent
of any rise in the market was not proved.
Mr Hall’s calculation also assumes that the in globo price of the land reflected its value
as land with subdivision and rezoning approvals in place at the date of resumption. As
mentioned earlier, the purchase price for the subject land and the conditional contracts for
purchase reflected the potential for the land to be rezoned and subdivided, but the purchase price
could not be said to have shown the true value of the land ready for its highest and best use as at
the date of resumption.
Accordingly, Mr Slater took issue with Mr Hall’s approach because, in his opinion, an
analysis which isolates the profit that the claimant would have achieved based on the average
hectare value of in globo land at the date of purchase is not relevant.
Mr Hughes made various criticisms of the profit and loss factor being set at 57%.
Among the most compelling were, first, that the figure is out of line with the level operating in
the general market place at about the date of resumption - a fact acknowledged by Mr Hall in his
oral evidence and evident from the earlier valuation reports which he had prepared (Exhibits 44,
14 and 48). Second, Mr Hall had relied on the contract price for the in globo land to calculate
the profit and risk factor but, with Mr Slater, had relied on the hypothetical development
approach rather than a direct comparison of in globo land to calculate the value of the resumed
land. Furthermore, the contract price was not a reliable basis for calculating the value of the
resumed land at the date of resumption because, although the contract was subject to approvals
being in place, that work had been done and consent orders had been made in relation to the
neighbouring parcels of the subject land as at the date of resumption. In other words, although
the contract price may have reflected a risk, there was no risk as at the date of resumption. But
for the resumption, the resumed land would have been rezoned as were the neighbouring Lots
204, 205, 206, 15 and 16.
Conclusion: There was no dispute that, but for the resumption, the resumed land was ripe
for subdivision. There was, however, a risk that although approval would have been granted
for a 32 allotment subdivision it would have been refused for a 41 allotment subdivision. I
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40
accept that, in assessing compensation, this Court is called upon to decide not whether a
particular plan of subdivision would have received the respondent’s approval but how a
hypothetical prospective developer would have viewed his or her potential financial return if
he or she were considering a proposal that included the adoption of one or other of the
suggested plans: De Ieso v Commissioner of Highways (SA) (1981) 47 LGRA 412 at 417.
It is apparent that Mr Fiteni was keen to develop the land to what he considered to be
its maximum potential (that is, 41 allotments), that he would have taken all reasonable action
to achieve that goal, and that he expected that either the respondent or the Planning and
Environment Court would have approved the claimant’s proposal. At the date of resumption,
approval had not been given and the Court had, by consent, adjourned the hearing of the
appeal on the undertakings that the claimant would not object to the resumption and the
respondent would facilitate the resumption.
Earlier in these reasons for decision, I concluded that it was more likely than not that an
application for development of 41 lots on the resumed land would not have been approved by
the respondent and that litigation in the Planning and Environment Court would have followed
the respondent’s decision. As a consequence, it is appropriate to adopt a higher profit and risk
factor than might ordinarily apply to such a development in the absence of such controversy and
consequential cost and delay.
I am satisfied that the issue is best resolved by following the approach taken by Mr Hall
in the version of his valuation report marked Exhibit 48, that is, to adopt one profit and risk
factor for the 32 lots whose approval was virtually assured and another for the nine lots for
which there was a significant risk that approval would not be granted. I acknowledge that Mr
Hall expressly disavowed that approach because he deduced from evidence given in these
proceedings that it was “a clear case ... of either 32 being accepted or 41 being accepted without
risk on either of them”. In order words, there was “either going to be a decision for 32 or 41 and
I see no added risk in that case once that decision is made.” It will be apparent that I do not
share his certainty on that point.
The evidence of Mr Slater and the submissions made on behalf of the claimant cast
doubt on both the method used to obtain the 57% figure and on the likelihood that the figure
could be in the range of what might be found in the market for land such as the resumed land at
the date of resumption. I am satisfied that the 25% figure adopted by Mr Slater is an appropriate
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41
sum for land where approval for redevelopment could be confidently predicted and there would
be no more than the usual delays and costs in securing approval for rezoning and subdivision.
That much can be said for the 32 allotments. With respect to the additional nine allotments, it is
clear that the claimant would have incurred additional costs and delay to secure the required
approvals. The risk would have been higher, though once approval had been given the return
expected on the allotments would have been on a par with comparable blocks nearby. The cost
and delay in gaining approval for the additional allotments would influence the time taken to
secure approval for the development of the resumed land generally, and hence the costs and
profitability of the whole enterprise. A profit and risk factor of 45% in relation to those
additional nine blocks is appropriate. The parties seemed to proceed on the basis that the costs
of development and the sale price for each block would be within a reasonably narrow range
and the net return could be averaged across the hypothetical allotments. On that basis, it is
possible to calculate from a 25% profit and risk factor for 32 blocks and 45% for nine
allotments - an average of approximately 30% for the resumed land.
Conclusions and orders
On the evidence before the Court I am satisfied that, as at the date of resumption:
(a) the highest and best use of the resumed land was for residential subdivision purposes;
(b) the claimant, or a developer in the claimant’s position, would have taken all reasonable
steps to obtain approval for the subdivision of the resumed land into 41 residential
allotments in order to maximise the profit from the development of the land;
(c) the respondent would probably have granted approval for the subdivision of the land
into 32 allotments but it is more likely than not that the respondent would not have
approved the additional nine allotments;
(d) it is likely that, if the respondent had refused to grant approval for 41 lots (or had not
made a decision so that there was a deemed refusal) the claimant, or a developer in the
claimant’s position, would have appealed to the Planning and Environment Court;
(e) it is more likely than not that either an agreement would have been reached in relation to
the nine additional blocks or the Planning and Environment Court would, in light of
engineering and other evidence of the type presented to this Court including evidence
about fill on neighbouring land and comparable land in the district of the resumed land,
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42
have granted consent to the subdivision of the resumed land for 41 residential
allotments;
(f) the claimant, or a developer in the claimant’s position, who purchased the land would
have been taking a much greater risk in relation to the additional nine allotments and
would have expected to incur costs in securing that approval and developing the land, as
well as delays (particularly if the matter had gone to the Planning and Environment
Court), which costs and delays would not have been incurred in relation to the approval
and development of the 32 allotments;
(g) it is appropriate to factor in a higher rate of profit and risk in relation to the additional
nine allotments (45%) than for the 32 allotments (25%), which - given the assumption
apparently made by the parties that the lots would have an equal average net realisation -
is an average profit and risk factor of approximately 30% for all of the resumed land.
Using the figures provided by the claimant and agreed to by the respondent, together
with a profit and risk factor of 30%, the value of the resumed land is calculated to be as follows:
Gross realisation on 41 lots $3,126,000
Less: selling costs $ 133,500
Net realisation $2,992,500.00
Less: profit and risk at 30% $ 690,577
Less: development costs $ 881,473
Less: interest on development costs $ 62,940
Less: holding charges $ 21,048
Less: interest on land and acquisition costs $ 109,131
Less: acquisition costs $ 47,205
Total costs and profit and risk $1,812,374.00
Value of land $1,180,126.00
To the amount of $1,180,126.00 must be added the sum of $12,088.00 for disturbance,
making the total amount of compensation payable one million, one hundred and ninety two
thousand and two hundred and fourteen dollars ($1,192,214.00).
The interest payable must have regard to the payment by the respondent to the claimant
of $490,000.00 on 28 July 1995. Consequently I order the respondent to pay to the claimant
interest at the rate of 8.5% per annum on:
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43
(a) $1,180,126.00 for the period from 24 March 1995 until 28 July 1995; and
(b) $690,126.00 for the period from 28 July 1995 until the date upon which the final
payment of compensation is made.
The claimant’s solicitors have advised the Deputy Registrar of the Land Court of the
dates when accounts for legal, valuation and survey fees were paid by the claimant. In reliance
on that advice, I further order that the respondent pay to the claimant interest on the items of
disturbance calculated as follows:
(a) on legal fees of $2,123.00 at the rate of 8.25% per annum from May 1995;
(b) on survey fees of $4,077.00 at the rate of 7.75% per annum from June 1996; and
(c) on valuation fees of $5,888.00 at the rate of 7.75% per annum from September 1996,
and ending on the date upon which final payment of compensation is made.
The parties have liberty to apply on five days’ notice to the other in respect of any of the
compensation and interest calculations.
GJ NEATE
MEMBER
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Official source: https://www.sclqld.org.au/caselaw/QLC/1997/173