Arkinstall & Spies v Gold Coast City Council [1997] QLC 45 (1997-1998) 17 QLCR 90

LAND COURT BRISBANE 11 APRIL 1997 Re: A94-74 Determination of Compensation - Resumption by the Council of the Shire of Albert for Rubbish Depot Purposes - Acquisition of Land Act 1967 BETWEEN: Elizabeth B. Arkinstall and Royleen D. Spies Claimants and Gold Coast City Council Respondent Constructing Authority J U D G M E N T By proclamation published in the Government Gazette on 22 July 1994, the Council of the Shire of Albert, as it then was, took from that date, a number of parcels of land near Nerang for rubbish depot purposes. One of those parcels was owned by the claimants in this matter and was described as Lot 2 on Registered Plan 142778 containing an area of 2.979 ha, being the whole of the land in Certificate of Title Volume 6405, Folio 190, Parish of Nerang. The land is situated about 1 km north-east of the Town of Nerang, a short distance easterly of the Pacific Highway overpass of the Southport-Nerang Road. It has frontage to Southport-Nerang Road as its south-eastern boundary, has slightly irregular rhomboid-type shape, running through in a north-westerly direction to the Pacific Highway. All town services namely electricity, town water, telephone, sewerage and garbage collection were available to the subject land. The land falls slightly away from the Southport-Nerang Road frontage before rising moderately to a centrally positioned ridge then gradually falls away to the rear Pacific Highway boundary. It is vacant land with green and regrowth timber cover. The land was zoned “Future Urban” under the 1988 Town Planning Scheme for the Shire of Albert in force at the date of resumption and remained within that zone in the 1995 Town Planning Scheme, the draft of which had been displayed in 1993. In the 1982 and 1988 Strategic Plans, the location of the subject land was in the vicinity of the non-cadastral and “broadbrush” boundary of the “Industry” and “Open Space” designation of preferred dominant land use. In the draft Strategic Plan displayed in 1993 the “Open Space” designation was changed to “Special Development” although still with the broadbrush boundary between it and the “Industry” designation. In the Strategic Plan as gazetted subsequent [1997] QLC 45 -- 1 of 24 -- 2 to the resumption (in 1995) the Southport-Nerang Road alignment was shown with more precision with the subject land clearly within the “Industry” designation of preferred dominant land use. The principal issue in this matter is whether the potential of the land at the date of resumption was for rezoning to permit multi-unit residential development (the claimants’ case) or light industrial development (the respondent’s case). The neighbouring property to the north-east, between the subject land and Old Coach Road was also taken by the Council for the same purpose one week later (29 July 1994). This property was owned by Mr P.F. Laerkesen, and for similar reasons dispute had arisen as to the compensation payable consequent upon that resumption. The claimants in this matter and Mr Laerkesen through their respective solicitors, had instructed Mr J.E. Gallagher, QC, assisted by Mr T.N. Trotter, Barrister, and engaged Mr K.P. Walsh, Valuer; Mr C.L. Buckley, Town Planner and Mr D.W. Knobel, Engineer, to provide expert advice relative to their professional disciplines. At the request of the claimants, the two matters were called on for hearing at the one time. Part of the respective cases was that the potential highest and best use of both properties was capable of being achieved through joint rezoning and development. Much of the overall evidence was common to both properties and as a matter of practicality, that common evidence and the transcript of proceedings forms part of the record in each matter. The subject matter (“Arkinstall”) became the primary hearing, followed immediately by the second (“Laerkesen”). Separate determinations are necessary. However, as the factual matters and findings will be primarily contained within this judgment, both judgments should be read together. In the subject Arkinstall matter, the original claim filed in the Court was in the amount of $4,000,000 as the value of land resumed. Leave was sought and granted for the claim to be amended as follows: “ 1. Value of land taken $1,388,000.00 2. Disturbance - Legal costs of and incidental to preparation of Claim for compensation $3,153.00 Valuation Fees $9,396.00 Town Planning Fees $1,039.98$13,588.98 3. Interest” During the course of the hearing agreement was reached between the parties as to disturbance awards in the following amounts: Legal Fees $2,000 Town Planning Fees - Round to $1,040 Subsequent to the hearing the Court was advised that agreement had also been reached in the amount of $6,264 for valuation fees. -- 2 of 24 -- 3 The agreed total amount of $9,304 under the heading of “Disturbance” is awarded accordingly. The amended claim for the value of land taken was in accordance with the formal valuation of Mr Walsh. He had approached that valuation on the basis that had it not been for the resumption, the most likely scenario for the realisation of the highest and best use of the Arkinstall land would have been joint marketing/developing with the Laerkesen land, as multi-residential attached housing. It was his opinion that the land was suitably located and physically suited for such development. Land immediately to the west of the Arkinstall land (in the triangle formed by the Pacific Highway and Southport-Nerang Road intersection) comprised a multi-residential development serviced by an internal road, Parkridge Drive, off the Southport-Nerang Road. Mr Walsh’s evidence was that from a valuation point of view, the “Future Urban” zoning of the land was the base from which the potential for residential use emerged. In his assessment of highest and best use he had been assisted by the town planning opinion of Mr Buckley and the engineering investigation carried out by Mr Knobel. Mr Buckley had concluded after his considerations “appropriate to the determination of the likely end use” and upon a review of the relevant Planning Scheme instruments that the development of the Arkinstall/Laerkesen lands for residential purposes at a “Residential B” style density was a realistic outcome. Mr Knobel had investigated the development potential of the Arkinstall and Laerkesen lands both separately and jointly, from the aspect of estimated development costs for attached housing; special residential - 400 m² lots (detached housing); and light industrial lot subdivision. A concept plan for each development scenario had been prepared and detailed development costs estimated for each use. Mr Knobel considered that permanent access to the Arkinstall land from the Southport-Nerang Road frontage (a divided four-lane section) would be undesirable for all development scenarios. Such an entrance would require a median break, associated road widenings and turning lanes, but its location was also considered far too close to existing median breaks at Parkridge Drive and Old Coach Road. However, left- in/left-out access was seen as an acceptable interim measure (except for light industrial subdivision) until a road connection could be provided through the Laerkesen land to Old Coach Road. That was the only permanent access which could be recommended. For reasons associated with topography and shape, the cost of servicing a low yield development (as in a light industrial subdivision) was found to be disproportionately high compared to high intensity uses (as in multi-residential). Mr Knobel had concluded after detailed consideration of -- 3 of 24 -- 4 the development options that attached housing provided the best opportunity to maximise the use of the land at reasonable cost. Mr S.M. Ure, Barrister, appeared for the respondent constructing authority. Expert evidence was called through Mr T.J. Lacey, Valuer; Mr D.W. Perkins, Town Planner; Mr J.M. Webb, a Town Planner who at the date of resumption had been the senior Strategic Planner with the Albert Shire Council, and Mr D.R. Davis, Engineer. Mr Lacey’s valuation for the Arkinstall land was in the amount of $800,000. This valuation was based on its “legal highest and best use” potential being for rezoning to allow light industrial subdivision. Contrary to Mr Walsh’s perception, prior to specific town planning considerations, that the ambience of the land was orientated towards residential development, Mr Lacey held the opinion that the land was dominated by the arterial road systems and an industrial-type environment. He referred to the high volume traffic and consequent noise associated with the Pacific Highway abutting the north-west of the Arkinstall land and the Southport-Nerang Road abutting to the south-east. Apart from the multi-residential development abutting the Arkinstall land to the west, bounded by both the abovementioned roads, Mr Lacey described the locality, particularly to the northern side of the Southport-Nerang Road as comprising “a rocky sub-strata, whereby, nearby properties have been utilised for temporary quarrying purposes as a means of preparing the land for future industrial use.” There had been a light industrial subdivision planned for a quarry site easterly of Old Coach Road and the railway reservation for the Robina Railway. (That site - the “Astway” land had also been resumed for rubbish depot purposes and this Court had determined compensation for that resumption on the basis of potential for development as a private land fill.) Mr Lacey had then relied on the town planning advice of Mr Perkins who accepted that, as far back as the 1982 Strategic Plan, the Arkinstall and Laerkesen lands had been intended to be designated for industrial purposes. Mr Perkins saw “no town planning justification for intrusion of residential land uses into industrial areas, as residential uses can be readily accommodated in a wide number of locations. Such a proposal would clearly have been contrary to the 1982, 1988 and draft 1995 Strategic Plans”. He found that “a rezoning and subdivision for light industrial purposes would have been supportable from a town planning point of view at the date of resumption. If the land had not been so developed it is likely to have remained as a large rural residential type allotment”. Mr Davis had been engaged to carry out preliminary designs and estimates for a light industrial subdivision only, on the Arkinstall and Laerkesen lands both as individual and combined developments. There was some engineering -- 4 of 24 -- 5 conflict in both the design and estimates of costs (particularly with regard to drainage and the question of allowances for contingencies) between Mr Davis and Mr Knobel. Suffice to say that the level of value found by Mr Lacey for a highest and best industrial use was not challenged by the claimants and the engineering evidence does not require further examination or comment in so far as it relates to industrial subdivision. While Mr Lacey’s (and the constructing authority’s) valuation before the Court was based on industrial potential, the Court had been informed at a preliminary Directions Hearing where the conflict between the parties lay. An indication had been given at that time that the Court might well be assisted by valuation evidence from both parties as to the alternative potentialities to be argued. Mr Lacey had obliged by preparing evidence as to the quantum of his valuations had he been convinced (which he was not) that the potential was as Mr Walsh had accepted - for multi-dwelling residential rezoning and development. If Mr Lacey was asked to accept as Mr Walsh had done, that there was no, or no significant risk, involved in obtaining rezoning to “Residential B” his valuation would have been in the amount of $1,370,000 for the Arkinstall land as an individual site. That was after allowance for what were seen to be abnormal costs and deferral for a period to allow rezoning. That valuation had been based on a concept design proposed by Raymond Design, whereby a mixed townhouse/villa density potential of 89 units was suggested. That proposal was more dense than the design produced by Mr Knobel (75 units). Had Mr Walsh limited his valuation to a separate rezoning and development of the Arkinstall land then his valuation was in the amount of $1,260,000. While some differences emerged in the residential-based valuation evidence, eg Mr Lacy seeing no advantage in a joint development and holding the opinion that the Arkinstall land was more costly to develop than development sites which had produced the sales evidence, it is possible that the parties to this action may have resolved those differences between themselves. However, it is understandable, the difference in market value of sites with potential for “Residential B” as opposed to “Light Industrial” rezoning, being what it was at the relevant date, why the dispossessed owners and the constructing authority have taken their respective stances. The issues are therefore narrowed to the rezoning potential of the land; the risks involved in realising that potential and finally the market value of the land as zoned at the date of resumption. Town Planning Issues Mr Buckley’s Evidence -- 5 of 24 -- 6 In his report, Mr Buckley referred to the difference between the actual zoning of the land as compared to a strategic plan designation. He highlighted the fact that the intent of the “Future Urban” zone in which both the Arkinstall and Laerkesen properties were included, was to set aside areas planned for predominantly urban residential development, until the required services can be provided, while other non-residential uses may also be included. The full extract of the intent as was included in his report is as follows: “ 4. Future Urban - The intent of this zone is to set aside areas planned for urban development until all services and all urban facilities can be provided. The ultimate predominant use will be residential although other non-residential uses necessarily associated with urban areas may also be included.” Mr Buckley saw the quoted intent as “typical” of the role “Future Urban” zonings play in Town Planning Schemes, the zone acting as a holding zone for future residential use. He saw it as clear that in Albert Shire, the predominant use in the “Future Urban” Zone was to be residential. He quoted the permitted and permissible uses which he saw as more consistent with “a future residential amenity and land use context than uses that are likely to be converted to, or be part of an industrial or some other non-residential nature. He went on to state: “When considering a proposal to rezone land it is considered that the rights which attach to an existing zone both in terms of use entitlements and the reasonable expectations gleaned from the intent of the zone are considered to be significant. In my opinion these rights and expectations, considered in concert with a Strategic Plan which acknowledges the possible adjacency of industrial and residential development in certain circumstances, and where the Strategic Plan designation for the greater part of the land is considered to reflect its landscape quality, convey strong development expectations. Expectations are also relevant with respect to adjoining and neighbouring residents. Such residents, particularly those in Park Ridge Drive have a reasonable expectation, having regard to the provisions of the zone, of urban residential development being constructed on the subject lands.” While the zoning of the land remained “Future Urban” in the draft planning scheme displayed in 1993, the intent of the zone was interpreted by Mr Buckley as a change in direction from the intent in the 1988 plan, in that it stated that the zone applied “to both Urban, Residential and Industry areas” (the intent, it is observed, also states that “rezoning to other zones will be determined in accordance with the provisions of the Strategic Plan and relevant Control Plans”. Mr Buckley recognised the significance of a Strategic Plan being acknowledged by the provisions of the Local Government (Planning and Environment) -- 6 of 24 -- 7 Act, “which at Section 4, when addressing rezoning applications and other planning scheme amendments it states: (5A) The Local Government must refuse to approve the application if .. (a)the application conflicts with any relevant Strategic Plan or Development Control Plan; and (b)there are not sufficient planning grounds to justify approving the application despite the conflict.” Mr Buckley took the view, particularly with regard to the subject lands and the absence of cadastral detail in the relevant Strategic Plan, that it sought “to indicate only broad development intentions” and could not “be regarded as having precise definition as to the likely potential rezoning of any given site”. The Arkinstall and Laerkesen lands and the existing adjacent residential development of Parkridge Drive “appear to straddle two designations being ‘Industry’ and ‘Open Space’.” The latter appeared to Mr Buckley “to include the ‘green’ environs of the Nerang River and substantial parts of the subject lands which at the time of resumption were heavily vegetated.” The boundary between the two designations appeared to Mr Buckley “to follow the ridge line within the two sites” extending into the adjoining Parkridge Drive development. Mr Buckley saw the ridge line as providing a reasonable feature upon which to base the boundary between the designations, topographical features affording acceptable boundaries. He saw those parts of the Arkinstall and Laerkesen lands south of the ridge as being “topographically and florally part of the ‘open space’ corridor based on the Nerang River. Their context is substantially different to the landscape context north of the ridge line, which is cleared and substantially disturbed and levelled.” He saw the need for care to be taken in interpretation of the Strategic Plan, as to the category of preferred dominant land use within which a particular parcel of land may be contained and particularly at the interfaces of designations or where existing land use patterns “cloud” a strict transposition from the Strategic Plan’s intended use to actual site development. The subject locality was seen as one such example. One Objective of the open space preferred dominant land use (6(a)) was “to conserve some visually significant areas of the Shire in a natural or rural state.” Then paragraph (iii) of the Implementation Provisions was: “The Strategic Plan map shows in general terms areas of open space which are known to have a development constraint including flooding, drainage, steepness, landscape quality or ecology. Detailed planning will be required to determine the precise extent and nature of the open space areas, particularly where the area is the subject of a development application.” Mr Buckley stated: “Two aspects of this implementation provision are relevant. Firstly that the map shows the designation in general terms, and secondly that -- 7 of 24 -- 8 the constraint of landscape quality is one of the criteria applied in the broad determination ...., the landscape quality of the subject land is considered to be significantly different to the quality of those lands in this location to the north of the aforementioned ridge.” Reference was also made by Mr Buckley to the Development Control Plan for Nerang which was gazetted in 1990. That plan did not cover the Arkinstall and Laerkesen lands but did include the adjoining Parkridge Drive lands, designated “Open Space” or “Industrial” in the Strategic Plan, but “Residential Medium Density” in the Development Control Plan. (That was in conformity with the existing development and the evidence is that rezoning to “Residential B” had been gazetted prior to the 1982 Strategic Plan.) Then on the southern side of Southport-Nerang Road, land which Mr Buckley saw as clearly within the “Open Space” designation of the Strategic Plan map, was designated “Residential Medium Density” on the Development Control Plan. (The evidence is that such designation resulted from a development application subsequent to the 1988 Strategic Plan). Mr Buckley interpreted the written provisions pertaining to the Industry designation as reinforcing the general nature of the Strategic Plan. He quoted the written provisions at (8) Industry, Objective (b): “(b) To preclude as far as possible interference with industrial activities caused by non-industrial traffic and the proximity of non-industrial land uses.” He stated: “It is considered the words “as far as possible” are significant. They recognise that it is common for judgements to be made at the interface of industrial and non-industrial activities which require an assessment of the particular circumstances of the case.” Then he interpreted the Industry implementation provision 8(b)(iii) as contemplating residential development, in certain circumstances, in close proximity to industrial development. That provision is as follows: “Development of land for residential or other non-industrial purposes near existing or proposed industrial areas will be permitted only where an adequate buffer area can be provided. The width treatment and nature of the buffer area will be determined taking into account the compatibility of the proposed activity with the industrial development.” Repeated here in full is a segment of Mr Buckley’s report: “3.3 Conclusions - Town Planning Schemes At the date of resumption the gazetted Town Planning Scheme would have had significant weight, although because the draft Scheme had been advertised for public comment its provisions are of assistance. It is considered that upon consideration of the written provisions and the broad nature of the designations on the plan, that some form of non-industrial activity would have been potentially achievable on the subject lands. This is reinforced by the: -- 8 of 24 -- 9 zoning of the land; land use considerations. The physical context of the subject land both topographically and in terms of orientation, and also in terms of visual quality are substantially different to those lands immediately to the north. It is also significant in my opinion that notwithstanding the designation of ‘Industry’ applying to at least a small part of the subject land and the land to the north, that such rights have not been taken up and the land remains vacant. The land immediately to the north has been included in the Light Industry zone since 1988. There is no evidence of any demand for industrial allotments in this locality notwithstanding the zoning. In view of the provision of the ‘open space’ designation and the likelihood of residential development and industrial development being co-located in certain circumstances it is considered that further investigations pertaining to residential development on the subject lands would have been appropriate. The degree of reliance on the change in intent of the Future Urban Zone, described in 3.2 requires discussion. This represents a change in status of the zoning which ought to be considered in the context of the history of planning for the tip and the Scheme preparation. The relevant history is as follows: Decision to include land in the tip precinct 25/5/92 First notices of intention to resume 19/6/92 Second notices of intention to resume 15/7/93 1993 draft Scheme advertised for public comment and objections 29/11/93 1993 draft Scheme public comment period closes 28/2/94 Date of resumption 22/7/94 The change in intent appears to have been made in the knowledge of the rubbish resumption planning. In view of the fact that since at least the 1982 scheme (the predecessor to the 1988 Scheme) the ‘ultimate predominant use’ within Future Urban zoned land is to be residential, this change may be considered to be a step in implementing the decision to develop a rubbish dump in this precinct. For this reason, it is considered that the zoning in force at the time of resumption, ie. as outlined in the 1988 plan, should be afforded considerable weight.” Mr Buckley provided five examples, one of which related to land adjoining the subject lands to the north where the preferred dominant land use designations differed from particular development approvals and/or actual developments. More will be said of the other examples later but significance was attached to the fact that the Council had approved rezoning of the adjacent land to the north from “Future Urban” to a residential orientated zone - “Special Facilities -- 9 of 24 -- 10 (Relocatable Home and Caravan Park)” - whilst remaining in the industry preferred dominant land use designation of the then relevant Strategic Plan. Approval for that rezoning was given in early 1985. Then, in 1988 the land was further rezoned this time to “Light Industry”. Mr Buckley advised that the claimants here and Mr Laerkesen were objectors to the later rezoning application. He saw as relevant that “the applicant proposed to provide and establish a buffer”. The need for a buffer in the subject circumstance related in his opinion, to the protection of the subject lands which at the time of approval of the rezoning (August 1988) remained in the “Future Urban” zone. There was no other boundary of this site which warranted a buffer to protect residential amenity. Mr Buckley saw the need for the buffer as provided in Part 7 of the Town Plan at (5) where it states: “(5) Where land in any industrial zone is adjacent to land not designated in the Strategic Plan or Town Planning Scheme for industrial or business use in any other zone such land shall not be used or buildings shall not be erected unless a buffer, fence and landscape strip of not less than ten (10) metres in width is provided along the common boundary between the two (2) zones within the industrial allotment. The fence shall be constructed to the Council’s specifications and the buffer strip shall be planted and maintained with screen landscaping which in the opinion of the Council is sufficient to provide a definite noise and visual buffer between the industrial zone and any other zone.” Mr Buckley saw the effect of this provision as appearing to support the view that the subject lands were contemplated for other than industrial use. His opinion was not supported however by Exhibit 26 which was tendered by the respondent during Mr Buckley’s cross-examination. The exhibit included a letter written on behalf of the applicant for that rezoning, dated 20 December 1989, to the Town Clerk. It seems that some negotiations had taken place between the owner of the land subject to the application and Mr Laerkesen regarding the exchange of land to allow resurvey of the irregular boundary between the two properties. Included in that correspondence was the following passage: “Discussions with Council’s Mr. J. Webb indicated that an internal buffer strip to the adjacent land (Lot 2 on RP 94750)” (identified as the Laerkesen land) “is not a necessity as there are no conflicting zones ...” More will be said of the circumstances surrounding the adjacent land when Mr Webb’s evidence is discussed. Mr Perkins’ Evidence Mr Perkins provided a detailed report relative to the various Town Planning Schemes, intent of the “Future Urban” Zone and the objectives and implementation statements within the Strategic Plans. -- 10 of 24 -- 11 He drew attention to the fact that there has never been a “Future Industry” Zone in the various Albert Shire Planning Schemes. He interpreted the intent of the “Future Urban” Zone as one providing a holding zone for both residential and non-residential uses. The reference to the intent of the zone being to set aside areas planned for predominantly urban residential development as highlighted by Mr Buckley, was interpreted by Mr Perkins to refer to the overall areas planned within the Shire when predominantly urban residential development would be expected. He stressed however that such intent should not be narrowly interpreted to refer to specific sites within the overall area included in the zone. Mr Perkins provided examples of land rezoned from the “Future Urban” Zone to “Light Industry”, when designated industry in a Strategic Plan. In Mr Perkins’ opinion, the intent of the “Future Urban” Zone in the 1995 Planning Scheme was not “a change of direction” as Mr Buckley had described it, but a more explicit identification of the “holding zone” function of the zone as confirmation that land within the zone may be used in the future for a variety of purposes. Mr Perkins’ conclusions are repeated here: “ 7.1The site is within an area which has been designated for industrial purposes for a considerable period of time. This planning intention is conveyed as far back as the 1982 Strategic Plan. The adjacent Residential B development is based on a zoning which was gazetted in 1979, before Council’s strategic planning explicitly determined the planning intent in this locality for industrial development. The existence of an existing isolated pocket of Residential B zoning does not provide a valid planning reason to have justified approving its extension into areas designated for industrial purposes. 7.2Industrial land is relatively difficult to locate and desirably is provided in consolidated areas designated such that long term needs can be met. There is no town planning justification for intrusion of residential land uses into industrial areas, as residential land uses can be readily accommodated in a wide number of locations. Such a proposal would clearly have been contrary to the 1982, 1988 and draft 1995 Strategic Plans. 7.3There is no justification in any case, for residential development at a density higher than that permitted in the Residential B Zone in this location given the area’s relative isolation -- 11 of 24 -- 12 from a wide range of community services and facilities which are available more centrally in Nerang. There is no outstanding geographical feature which might justify departure from this sound town planning principle, and in fact none of the land is particularly suited for residential development, given the existence of existing and proposed major transport corridors and existing and proposed industrial activities. 7.4Section 4.4(5A) of the Local Government (Planning and Environment) Act (which was in force at the date of resumption) requires that where a proposed rezoning is contrary to a strategic plan, the rezoning should be refused by Council unless there are sufficient planning grounds to justify approving the applications despite the conflict. Any application at the date of resumption to rezone the subject site to a zone which would have allowed residential development would have been in conflict with this section of the Act. 7.5The history of zonings in this area and an analysis of the Future Urban zone’s intent in the relevant planning scheme indicates that it has, and continues to be used as a transitional zone for land designated Industry on the Strategic Plan which ultimately enters an industrial zoning. 7.6In summary, a rezoning and subdivision for light industrial purposes would have been supportable from a town planning point of view at the date of resumption. If the land had not been so developed it is likely to have remained as a large rural residential type allotment.” While Mr Perkins never doubted that the subject lands were intended to be designated Industry in the Strategic Plan in force at the relevant date, he had no cogent explanation for the configuration of the clearly non-cadastral boundaries between the “Open Space” and “Industrial” designations in the vicinity of the subject land. Criticism was directed at Mr Perkins’ somewhat inflexible acceptance of intended industrial use for the subject lands on several counts. -- 12 of 24 -- 13 Mr Perkins had not set out to find examples where land designated Industry in the Strategic Plans had been approved for development other than Industry. However, in considering the examples given by Mr Buckley, his response to the initial rezoning of the Industry designated “Future Urban” zoned land adjacent to the north was that the 1985 approval represented “a poor decision by Albert Shire Council”, but one which had been “rectified” by the subsequent 1988 rezoning to “Light Industry”. It is observed that if the decision was, as Mr Perkins suggested, “rectified”, it was not at the instigation of the Council, but the result of an application by the owner, no doubt for good commercial reason at the time. The fact is of course, that at the date relevant to this matter, the land remained in the “Light Industry” zone. Mr Perkins saw the inclusion of the adjoining Parkridge Drive site in the “Residential B” Zone as “an historical anomaly approved by Council” prior to the 1982 Town Planning Scheme “when the planning for the locality was still unresolved”. He had not seen the Development Control Plan details as provided by Mr Buckley as being relevant because the plan did not include the subject lands. The inflexibility criticism was however directed at the fact that while land immediately opposite the subject land zoned “Rural B” and close to the broadbrush boundary of the “Industrial” and “Open Space” designations had been designated partly “Residential Medium Density” and partly “Open Space” in the Development Control Plan he failed to make mention of it. Mr Perkins saw the Southport-Nerang Road as providing an acceptable interface between the preferred “Industry” use designation of the subject lands and the residential/open space designation on the Development Control Plan. Mr Webb’s Evidence Any doubt as to the Council’s interpretation of the intended designation of the land was removed by the forthright evidence of Mr Webb. It was within Mr Webb’s area of responsibility with the senior town planning position he held with Albert Shire Council to ensure that the Council’s interpretation of the forward planning intent of the relevant Strategic Plan was provided in response to any specific inquiry. I am satisfied on his evidence that the Council’s interpretation of the preferred future predominant use of both the Arkinstall and Laerkesen lands was “Industry”. Mr Webb was able to say this with certainty because of the known physical location of a water pipeline which was capable of identification on the 1988 Strategic Plan at least on mapping of the scale used at the Council. A copy of such plan at that scale was tendered, confirming that the pipeline could be identified. The pipeline did not establish any physical boundary of the -- 13 of 24 -- 14 “Industry” designation, but as the position of the pipeline, relative to the subject lands was known “on the ground”, Mr Webb was in no doubt that the subject lands were shown within the “Industry” designation Mr Webb reasoned that if the “Open Space” designation appeared to encroach into the locality of the subject land, that had been caused by the broadbrush approach in identifying preferred future dominant land use locations. The “Open Space” designation in that locality had been specifically intended to be associated with the Nerang River and its adjacent floodplain which was impossible to identify precisely on the Strategic Plan. On Mr Webb’s evidence I accept that a prudent vendor or purchaser or any person investigating the effect of the 1988 Strategic Plan or the draft 1995 Strategic Plan on the Arkinstall/Laerkesen lands would have, on proper inquiry at the then Albert Shire Council, been informed that the preferred future dominant use was “Industry”. Furthermore such designation had been unaltered, in effect, since 1982. There was veiled suggestion that Mr Webb’s unshaken opinion as to the inclusion of the subject lands within the “Industry” designation, might have been through some over-commitment to his employer, because of the resumption compensation ramifications. I am not so persuaded. I am confident that at least the opinion of Mr Webb, would not have altered had the land been suggested as being more valuable as industrial rather than residential, a not uncommon situation in the real estate market. Indeed, it is apparent from Exhibit 26, as referred to earlier, that Mr Webb’s view as to the preferred dominant “Industry” use of the Laerkesen land had remained unaltered since at least 1989, five years prior to the resumption. Findings relating to the Town Planning Issue I do not accept that any historical link existed between the chain of events surrounding the planning process, the intent of the “Future Urban” zone in the draft planning scheme, and the purpose of the resumption which might allow the preferred future “Industry” dominant land use designation to be ignored (see Housing Commission of New South Wales v. San Sebastian Pty Ltd (1978) 37 LGRA 214). While as Mr Gallagher submitted, it is legislative statement of the law as it existed, s.4.4(5A) of the Local Government (Planning and Environment) Act 1990, as amended, is relevant to the issue here and is repeated: “(5A) The local government must refuse to approve the application if - (a)the application conflicts with any relevant strategic plan or development control plan; and (b)there are not sufficient planning grounds to justify approving the application despite the conflict.” -- 14 of 24 -- 15 In Burmah Fuels (Qld) Pty Ltd v. Redland Shire Council (1995) QPLR 103 at 106, Quirk DCJ said: “To enliven the provisions of s.4.4(5A) conflict (as such) must be plainly identified. It must be added that such conflict alone is insufficient to rule out a particular proposal. The section offers to an applicant the opportunity to show ‘sufficient planning grounds to justify approving the application despite the conflict.’” I accept, on Mr Webb’s evidence, that the Arkinstall/Laerkesen lands were intended to be included in the Strategic Plan “Industry” designation and that an application to rezone the land for residential use would have been in conflict with the Strategic Plan. The question then is whether there existed sufficient planning grounds to justify approving the application despite that conflict. It is not the task of this Court to decide, but instead to ponder, as would operators in the marketplace, the fate of any rezoning application which would have been necessary to establish the legal highest and best use of the land. There is no doubt that the best use of the land from the point of view of market value was, at the relevant date, for residential purposes. However, the respondent’s submission leaves me in no doubt that while a rezoning application for “Industry” would have been favourably considered, a rezoning application for “Residential” would have been refused. Not only did the conflict with the Strategic Plan exist, but the respondent’s experts were convinced that there were not sufficient, if any, town planning grounds to justify approval of a residential rezoning application. For residential rezoning to be achieved, an appeal to the Planning and Environment Court would realistically have been seen as a necessary procedure. Success in that jurisdiction depended on the answer to the question of sufficiency of planning grounds. The evidence before this Court from the town planning experts is committed, without flexibility, to the polarised stance of the claimants and the respondent. In the Planning and Environment Court, the onus would have been on the applicants to prove that sufficient planning grounds did exist. The claimants in this Court took on the same challenge. It is not difficult to find some merit in each of the opposing submissions. I do not agree that the intent of the existing zone (“Future Urban”), as it applied to the Albert Shire Town Planning Scheme, implied predominance of residential use on any specific site. The “Future Urban” zone was clearly a holding zone for urban development and the intent is interpreted to intend, as Mr Perkins suggested, predominantly residential within the overall zone within the Shire, but not necessarily on any particular site. It is seen as relevant -- 15 of 24 -- 16 that there was no “Future Industry” zone within the Albert Shire Town Planning Scheme. The claimants took considerable comfort in their submissions, from the strategic planning flexibility indicated by the specific examples given by Mr Buckley, but particularly the rezoning history of the land adjoining to the north. I accept the thrust of the submissions that a Strategic Plan, whilst a forward planning document which cannot be ignored, must also be interpreted with the flexibility suggested by s.4.4(5A) of the Act. Even if the 1985 decision relative to the land to the north had been reasonable at that time, it should not, in my opinion, be inferred that it would have been necessarily correct at the date of resumption. Had that land remained in a residential orientated zone in 1994 however, it would have had a significantly different impact on my considerations. Against the submissions of the respondent, I am persuaded that the Nerang Development Control Plan should have had a role in supporting future residential use of the subject lands. The inclusion of the Parkridge Drive land within the preferred residential designation is recognition of fact with residential development actually existing on that adjacent land. Mr Perkins saw that development as an “anomaly”, the rezoning approval having been given in 1978 prior to the 1982 Strategic Plan. However, even if the development had been seen to be futuristic when it was first planned, it did occur and significant similar development has subsequently taken place along the Pacific Highway corridor. The Parkridge Drive land is in relatively close proximity to the amenities of Nerang. Indeed, the then Albert Shire Council Administration Centre is nearby. It is not surprising that as a result of an application to develop land, on the southern side of the Southport-Nerang Road and opposite the subject lands, the “Open Space” requirements for the Nerang River flood plain were cadastrally defined, and the preferred use of the topographically suited balance area altered to “Residential”. No doubt, in comparison with the subject lands, that land on the southern side of the road has superior residential amenity due to the riverine/open space environment, yet it still fronts a busy arterial road within the highway and railway corridor. The effect of forward planning decisions relative to the land on the southern side of the road, is not necessarily indicative of the Strategic Plan having been “overtaken”. However, identification of another significant area of preferred residential use in this immediate locality has, in my opinion, allowed a more meaningful consideration of the Strategic Plan objectives of the “Industry” designation as it applied to the subject lands. It is not reasonable, in my opinion, to adopt, in the absence of other considerations, the Southport-Nerang Road as an acceptable interface between the “Residential” designation on the Development Control Plan -- 16 of 24 -- 17 and the “Industry” designation on the Strategic Plan. The topography of the subject lands would surely be a planning ground consideration. Not only does the subject land identify topographically with the Southport-Nerang Road, but that topography serves as a natural buffer between the Development Control Plan “Residential” land and the “Light Industry” zone to the north between the Pacific Highway and Old Coach Road. The excavation and levelling of that industrial land has allowed the elevated subject lands to be effectively buffered as separate entities but that in turn complements the buffering effect to the land to the south and west. It is seen as a topographic fact that the land immediately north of the Southport-Nerang Road best serves the amenity of the area at the eastern gateway to Nerang from Southport, through its potential to buffer the Southport-Nerang Road from the industrial development. That has been recognised in the proposed use of the land in the resumption scheme. If there had been proposed private development of the subject lands, “Residential” use would be seen to have provided a superior topographic interface than would have “Industrial” use, between existing and proposed residential nodules and the zoned industrial lands in the immediate locality. That would be particularly so if industrial use required significant benching or disturbance to natural topography. It is part of the claimants’ submission that need for industrial development in the immediate locality to the north and east of the subject land had not been demonstrated at the relevant date. Instead, the lack of any such industrial development on the land to the immediate north was suggested as being relevant to that argument. It is observed that in counter to that submission, neither has development resulted from the “Residential” designation opposite. Clearly forward planning must provide an adequate bank of land for “Future Urban” or any other needs. It is a question of the extent of land that is necessary to be so held. The Strategic Plan clearly identifies that there was a limited supply of land available for “Future Industry” in the “southern areas of the Shire”. Interestingly, the implementation criteria (ii) in Objective 8(a) identified limited supply of “Future Industry” land in the “Currumbin and West Burleigh ‘Industry’ areas”. In those locations it was pointed out that intrusion of non-industrial uses “will be strongly resisted”. That appears to me to be a significantly stronger implementation objective than might be read into the future “Nerang ‘Industry’ area”. In summary, the town planning evidence and argument suggests to me that, on the planning grounds issue, a strong challenge to a residential rezoning refusal was capable of being mounted. Nevertheless it would be cavalier for this Court or an informed marketplace favoured with both sides of the town planning -- 17 of 24 -- 18 argument, to accept as the claimants suggest, that there was little, if any, risk of eventual rezoning to residential being successful. I see the chance of successful residential rezoning as better, but not significantly so, than the chance of failure. Valuation Considerations The oft quoted words of Isaacs J in Spencer v. Commonwealth (1907) 5 CLR 418 at 441, are worth repeating here: “To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.” This Court is to suppose the land sold at the date of resumption, not by way of a contract conditional on rezoning to either “Light Industry” or “Residential”, but as zoned with consideration given to “all circumstances which might affect its value”. Mr Walsh took the view that, if the Arkinstall land was developed and marketed in conjunction with the Laerkesen land, and if it was zoned “Residential B”, it would have had market value of $1,650,000. In its “Future Urban” zoned condition, Mr Walsh accepted that rezoning costs would need to be outlaid and a period of one year would be required to achieve the rezoning. On his calculation this reduced the value to $1,388,000 as zoned. Alternatively if the Arkinstall land was developed as a separate entity, then that value would reduce to $1,260,000. Those valuations were founded on there being “a reasonable expectation” of rezoning for residential development. His evidence was that “reasonable expectation” equated to there being little, if any, risk involved in achieving Council approval. Nevertheless, he had given consideration to the effect of a Council refusal being appealed to the Planning and Environment Court when there would be a further estimated cost of $60,000 and delay up to a further six months. I indicated to the parties, before the hearing of this matter closed, that I had difficulty in accepting that, on the best case scenario for the claimants, the market would accept that there was no risk of approval or successful appeal against a refusal to rezone the land to residential. Both valuers were recalled. -- 18 of 24 -- 19 Mr Walsh confirmed that he had accepted that if risk did exist, it was primarily associated with the time it might take to achieve residential rezoning. He had in his opinion, recognised all risk elements by adopting a discount rate of 15% in finding the present, as zoned, value of the land at the relevant date, the rezoned value being deferred for the periods considered necessary to obtain either a rezoning in the first instance or a successful result in the Planning and Environment Court. As I understood his approach, that discount rate included any allowance for holding costs during the rezoning period. In a somewhat similar exercise, but for a shorter period, Mr Lacey had indicated that if he was asked to assume that “Residential” rezoning could be achieved, he would have allowed a discount rate of 12%, as I understood it, as an allowance for the cost of holding the land for the rezoning period. On his recall, Mr Walsh saw the worst case scenario, if he had to assume any further risk of successful rezoning, as being limited to a 10% reduction in his valuation. He took particular comfort in that one of the sales which he had used as basic evidence was a “Future Urban” zoned site which also required residential rezoning. He saw a like-with-like comparison with the subject land provided by that sale. The fact is, however, that the sale land was not designated “Industry” but “Urban Residential” in the relevant Strategic Plan. It seems that in that particular case the rezoning approval was obtained as a matter of course. If the subject land had been so designated the question of value, while still no doubt in dispute, should have been capable of resolution between the parties. When Mr Lacey was recalled, he confirmed that his opinion as to the worth of the land, ie $1,370,000, if its legal highest and best use was residential and not industrial, had been provided only on the assumption that there was little if any rezoning risk. In reality he thought that the risk of rezoning to residential was so great that no prudent purchaser would have paid any price greater than its worth with the near certain industrial potential. If the market value was enhanced by any prospect of the more valuable residential rezoning being achievable then, giving the benefit of what he saw as significant doubt, he could not envisage a prudent purchaser paying a premium greater than in the 10% to 15% range over and above the industrial level of value. Mr Lacey gave convincing evidence as to his analysis of market forces relevant at the date of resumption. He had at about that time, observed that while the market for “Residential B” type development sites had been strong with buoyant levels of value, there had been in the period immediately prior to the relevant date, a slowing in demand for the developed unit “end product” as well as for development sites. There had been at that time an expectation of -- 19 of 24 -- 20 increasing interest rates. He had formed the opinion based on statistical research which had been conducted at about the relevant date, that difficulties were emerging in the multi-unit residential market in the Gold Coast region removed from the beachfront influence. He felt that in the market which did exist, the length of time involved in achieving residential rezoning would have been of concern to a prudent developer. He saw it as unlikely that a developer interested in the residential potential would have entered into any contract of sale not conditional on satisfactory rezoning approval. He did not accept that there would have been a buyer in the market for the site as zoned for other than industrial rezoning. However to satisfy the inquiry of the Court, he had carried out broad risk exercise calculations on his valuation of the land if “Residential B” zoning had been capable of achievement. These calculations indicated that if a speculator developer paid a premium of $100,000 above his unchallenged valuation of the Arkinstall land on the basis of industrial potential, the profit margin available would have been about 45% including any holding costs. He felt that such a developer would be seeking at least 45% to 50% profit margin. Nevertheless, the input which a vendor would have in establishing market value cannot be ignored when the assessment of value is an imprecise exercise. As Griffith CJ said in the Spencer case (supra) at 432: “In my judgment the test of value is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring ‘what would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?’ It is, no doubt very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.” For the reasons given earlier I am prepared to accept that residential rezoning potential did exist but not in the absence of risk. A prudent vendor would, or should have understood that a speculative element of some significance faced a well-informed purchaser seeking to exploit that residential potential. The reality was that, with rezoning failure, any premium paid above industrial value would be thrown away together with the costs (including holding costs) involved in the abortive rezoning exercise. It has been judicially accepted that in circumstances where the realisation of a necessary rezoning has reasonable expectation of success, and the “top” -- 20 of 24 -- 21 and “bottom” levels of value are capable of being established, the “top-down” methodology is the correct valuation approach. Alternatively where there is no better than slight chance of success, then the “bottom-up” methodology should be employed. (See appeal by Seaworld Pty Ltd (LAC) 8 QLCR 213 at 216, 217). Here I adopt the “top-down” approach, because I have been persuaded that it was reasonable for the claimants to have more expectation of success than of failure in the eventual rezoning procedure. This is not however the same interpretation as that placed on “reasonable expectation” by Mr Walsh. It becomes necessary to consider in closer detail, the valuation criteria relative to potential residential rezoning. Mr Walsh’s primary approach was based on joint development of the Arkinstall/Laerkesen lands. The evidence is that the owners had a longstanding informal agreement to that effect. There were development cost savings related to joint development, with regard to access, earthworks, provision of services and external costs. It had been demonstrated that joint marketing/rezoning/development was a historically established probability and it is accepted that it represented a practical market expectation. Mr Walsh recognised the market disadvantage of the significantly larger than average sized development which would result from aggregation of the properties. However, in his opinion, the advantages outweighed the size disability. I accept that the joint development approach was warranted. It seems to me that, in the first instance, a joint rezoning application of this aggregation would have enhanced the eventual prospects of successful residential rezoning on the planning grounds justification submission. Mr Walsh’s joint development valuation was as follows: 6.62 ha with potential for a 161 unit multi-residential development - rezoned $3,542,000 Less Allowance for Rezoning Costs $115,000 $3,427,000 Less Allowance for Rezoning Period - deferred 1 year @ 15% per annum $2,980,000 Apportioned as: (1) Laerkesen (86 units) $1,592,000 (2) Arkinstall and Spies (75 units) $1,388,000 Mr Walsh had adopted a rezoned unit value of $22,000 for the 161 potential units. The basis for that level of value had been obtained from consideration of five sales. Very brief details of the sales are as follows: (1) “River View Gardens” - 25.5.94 - 104 units - $22,596 per unit. (2) Neilsens Road, Carrara - 17.2.94 - 124 units - $22,580 pe (3) “Paradise Palms” - 1.11.93 - 94 units - $18,936 per unit. -- 21 of 24 -- 22 (4) “Hatlowe Heights” - 26.5.93 - 75 units - $15,333 per unit. (5) “Tudor Rose” - 7.9.93 - 48 units - $14,000 per unit. His Sales (1) to (4) were each zoned for multi-unit residential development while the fifth sale was the one zoned “Future Urban” and referred to earlier. Mr Lacey had valued the Arkinstall and Laerkesen lands based on a higher unit potential density totalling 194 units comprising 89 on the Arkinstall land and 105 on the Laerkesen land. On the assumption that residential rezoning could be obtained, he had adopted a rezoned unit value of $18,000 per unit but had deducted from that value “abnormal costs” equivalent to $1,719 per unit for the Arkinstall land and $3,885 per unit for the Laerkesen land. These abnormal costs were based on the engineering evidence provided by Mr Davis. Mr Lacey had considered Mr Walsh’s Sales (1), (3) and (4) together with: “Bentley Park” - 8/93- 117 units - $13,290 per unit. (excluding headworks credit) McLaren Road, Nerang - 4/94- 100 units - $20,000 per unit. (or $17,600 on the analysed deferred settlement which had been negotiated). “Paradise Waters” - 5/94- 78 units - $21,000 per unit. It is evident from the valuation evidence that the market for multi-unit residential sites had risen strongly to the date of valuation. The earlier sales are found to be of little assistance. While Mr Walsh’s inquiries indicated that his Sale (2) was at arm’s length, Mr Lacey’s evidence was that the level of value shown was considered locally to be unrealistic and somewhat suspicious. Then, Mr Lacey’s inquiries relative to Mr Walsh’s Sale (3) revealed that that site had been improved by earthworks costing the equivalent of $4,728 per potential unit, although significant further site works were required. There was also some difference of opinion relevant to the physical qualities of the various sale sites in comparison with the subject lands. Mr Knobel, the claimants’ engineer, had given consideration to development cost comparisons between Mr Walsh’s sale sites and the subject lands. He had reported that internal development works would have been similar in cost “however each site has its own variable with external works: eg roadworks, stormwater drainage and sewerage”. I am persuaded that Mr Lacey’s “abnormal cost” deductions did not give consideration to the benefits of joint development potential. After consideration of the sales evidence overall, and particularly Mr Walsh’s Sale (1), and the “Paradise Waters” sale used by Mr Lacey, then the specific location of the subject lands relative to the Old Coach Road/Pacific Highway industry area, I have concluded that Mr Walsh’s valuation is too -- 22 of 24 -- 23 optimistic for a development proposal of the size indicated. Giving the benefit of some doubt to the claimants, and bearing in mind the lighter density of development in the claimants’ proposal as compared with the respondent’s proposal, I will adopt a potential unit site value of $20,000 as rezoned. Furthermore, as discussed, I am not convinced that Mr Walsh’s assessment of the market perception of risk in achievement of residential rezoning is realistic, when the totality of the town planning evidence is considered. I have decided to adopt a discount factor of 30% per annum for a deferral period of 1½ years for the combined proposal, on the acceptance that the Planning and Environment Court appeal procedure would be a necessary consideration. This criteria results in the following adjustment to Mr Walsh’s exercise: 6.62 ha with potential for development to a 161 unit proposal$3,220,000 Less allowance for rezoning and costs of Planning and Environment Court appeal $175,000 $3,045,000 Deferred for 1.5 years @ 30% (to include rezoning risks and holding costs) Adopt 161 potential units @ $12,750/unit - as zoned $2,052,750 Apportioned as: Arkinstall Land $956,250 Laerkesen Land $1,096,500 This result could be broadly analysed as follows: Market value as zoned $2,052,750 Add interest on land @ 9% for holding period of 1.5 years say $277,00 $2,329,750 Add rezoning and appeal costs $175,000 $2,504,750 Market value as rezoned $3,220,000 Available profit $715,250 Profit equates 28.56% ($715,250  $2,504,750) After weighing the opposing valuation opinions as to risk of rezoning, and given the finding I have made based on the town planning evidence, the entrepreneurial profit as indicated is considered a reasonable reflection of the perceived risk. The valuation result is considered to resolve doubts in favour of the claimants, but not to a significant degree. An as zoned (Future Urban) valuation of $956,250 is adopted for the subject land. -- 23 of 24 -- 24 Determination Compensation is determined as follows: Loss of Land - $956,250 Disturbance - as agreed - $9,304 Total $965,554 Interest An advance payment of $500,000 was made on 8 August 1994. There is no evidence before the Court as to the dates of payment, if any, by the claimants of the disturbance items. It is ordered that the respondent pay interest at the rate of 8.75% per annum to the claimants, on the amount of $956,250 from 22 July 1994 up to and including 8 August 1994, then from that date on the amount of $456,250 up to and including the day on which the balance of the compensation is paid. RE WENCK MEMBER OF THE LAND COURT -- 24 of 24 --