Arkinstall v Queensland Electricity Commission [1992] QLC 26

LAND COURT, BRISBANE. 30th July, 1992. Re: Determination of compensation - Resumption of Easement for Electric Works (Transmission line) purposes - A91-60 RD and EB Arkinstall v. Queensland Electricity Commission J U D G M E N T Falling for determination is compensation following resumption by the respondent Commission on 9th June, 1990 of Easement A in Lot 1 on RP 108871 (herein after simply referred to as Lot 1), Parish of Nerang containing an area of 2.089 hectares. Lot 1 contains an area of 16.09 hectares and the easement encumbers a strip of land 45 metres in width adjacent to and extending along the whole of the northern boundary of the parcel where it fronts a formed road known as Matilda Road. Lot 1 is situated on the western side of the Nerang-Connection Road about 1 km north of the Nerang Post Office. The land is zoned "Future Urban" under the provisions of the Shire of Albert Town Planning Scheme. There is a conditional approval from the Shire of Albert for rezoning Lot 1 to "Light Industry". The resumption has been made to enable the respondent Commissioner to erect a 275 kv transmission line on the easement. This line will connect from Greenbank to the Molendinar Substation. [1992] QLC 26 -- 1 of 25 -- - Page 2 - On 1st March, 1991 the claimants Arkinstall filed with the Queensland Electricity Commission a claim for compensation in the sum of $260,000 made up as follows:- Diminution of value of land covered by easement $155,000 Injurious affection to balance area $105,000 Total Claim $260,000 ===== At the outset of the hearing of the matter, counsel for the claimants sought and obtained leave to amend the claim for compensation for the loss of use of the encumbered land, including severance to the balance area of Lot 1, and injurious affection, in the sum of $350,000. Called in evidence was Elizabeth Barbara Arkinstall who is one of the claimants. Miss Arkinstall told the Court that Lot 1 on RP 108871 has been in the ownership of her family since about 1954. Originally the family owned an area of about 48 hectares but this area was cut up by what is now known as the Pacific Highway. The Arkinstall sisters purchased Lot 1 from the family in 1970. It has never been put on the market for sale although over time there have been many enquiries from potential purchasers of the land. There has been a concept plan prepared in about 1987 to develop the site as to half for residential purposes (southern half) and half for light industrial purposes (northern half). Miss Arkinstall informed the Court that the claimants are very concerned about the area chosen by the Queensland Electricity Commission for the powerline easement. They had another proposal to subdivide the whole of the land for light industrial development, and approval was obtained from the Albert Shire Council on 6th May, 1988 for an appropriate rezoning of the land. Due to increasingly depressive economic times, the proposal did not proceed and the rezoning was not gazetted. Advice furnished to the claimants from a Mr Hugh Anthony Parker, who is a partner and director of Burchill Bate Parker and Partners Pty Ltd, Consulting Engineers and -- 2 of 25 -- - Page 3 - Town Planners, was to the effect that the best type of use for Lot 1 was for it to be totally developed for residential purposes. This advice was received after the issue of the notice of intention to resume the easement on 29th June, 1989. James Lawrence Forsyth, who is a project coordinator with Burchill Bate Parker and Partners Pty Ltd, and who has had considerable experience with the design, drawing and supervision of subdivisional developments in the Gold Coast region, is also of the opinion that Lot 1 is suitable for residential development. He has prepared subdivisional layouts for the land and is the author of two proposed residential subdivisional designs placed in evidence, one prepared before the easement resumption was promulgated, one after the resumption. Mr Forsyth's plans cater for a minimum lot area of 600 m2 in the subidivisional layout with the southern section of Lot 1 designed for "Residential B" or "Special Residential" type development (cluster housing). Mr Forsyth had allowed in his design for certain earthworks to be undertaken in the vicinity of Matilda Road where the easement has been resumed and where there is a gully which would require filling, and for certain lots which need to be reshaped. Allowance has been made for the provision of a replacement culvert under Matilda Road near the north eastern corner of Lot 1. Mr Forsyth has prepared an estimate of the development costs for his subdivisional designs both before and after resumption. They read:- Before resumption (125 lots and 3.28 ha "Residential B" lots) 1. Earthworks E/0 standard roadworks - $292,500 2. Roadworks and drainage $904.900 3. Water reticulation $131,585 4. Sewerage reticulation $413,400 5. Sewer rising main and pump station $112,700 6. Electrical reticulation - Overhead $ 19,950 Underground $239,200 Contingency $211,423 -- 3 of 25 -- - Page 4 - 7. Headworks $537,200 8. Sealing and lodging fees $ 19,500 9. Professional fees (a) Engineering $181,401 (b) Survey $ 91,000 TOTAL COST $3,154,759 ====== After resumption (102 lots with 3.28 ha "Residential B" lots) 1. Earthworks E/O standard roadworks - $216,000 2. Roadworks and drainage $868,580 3. Water reticulation $104,385 4. Sewerage reticulation $353,600 5. Sewer rising main and pump station $112,700 6. Electrical reticulation - Overhead $ nil Underground $234,600 Contingency $188,986 7. Headworks $437,818 8. Sealing and lodging fees $ 16,050 9. Professional fees (a) Engineering $162,150 (b) Survey $ 74,900 TOTAL COST $2,769,769 ====== Mr Forsyth has had regard to a contour map which was prepared by licensed surveyors when preparing his subdivisional concept designs. The significant feature in Mr Forsyth's subdivisional layout post resumption is that there are no lots designed -- 4 of 25 -- - Page 5 - in the area encumbered by the easement, and that the designed internal access road from Matilda Street to the subdivision before resumption has been abandoned so that post resumption, internal access is provided only from the Nerang-Connection Road. Mr Forsyth has allowed in his engineering costs before resumption for the upgrading of Matilda Road on the basis of two-thirds of the construction cost of the road itself, and for kerbing and channelling on one side of the road only. Mr Forsyth says that several of the design lots close to Matilda Road are very steep but he expressed the view that there are many residential lots like that in the Gold Coast region. He points to a series of lots in Panorama Vista Estate (known as Highland Park) which had similar terrain. Mr Forsyth has not made any use of the easement area as part of his subidivisional layout post resumption since it has been his experience that there is buyer resistance to lots encumbered by powerline easements. He is aware that some use can be made of easements for parkland dedication purposes. Mr Parker, who is a registered Town Planner, was called in evidence by the claimants. He describes the topography of Lot 1 as comprising a series of pronounced ridges and gullies tending from north to south and draining easterly under the Nerang-Connection Road and the Pacific Highway. Mr Parker says that Lot 1 is located in a mixed use area. To the north of Matilda Road is an old rural subdivision, to the east is a small light industry/commercial subdivision which is almost fully built out and occupied with modern buildings. To the south there is a strip of residential A land and to the west is a large forest reserve. Mr Parker informed the Court that Lot 1 is designated "Urban Residential" in the Albert Shire Strategic Plan. He sets out in his tendered report the intent of this designation. Mr Parker says that in terms of the strategic plan, the use of the land for residential purposes as per the concept plans prepared by Mr Forsyth, which provide for both Residential A development and Special Residential development, is entirely consistent with the provisions of the strategic plan, and he sees it as appropriate that -- 5 of 25 -- - Page 6 - "Residential A" and "Special Residential" zoning be sought if any rezoning application is made for Lot 1. He expresses the opinion that the "Special Residential" zone would be considered more desirable by Council than the "Residential B" zone, as it allows Council to maintain greater development control after rezoning. Mr Parker agrees with Mr Forsyth in that after resumption, access for residential development of Lot 1 is only available from the Nerang-Connection Road He feels there is no economic sense in expending costs in upgrading Matilda Road and then providing access across the powerline easement without obtaining any residential lots fronting such upgraded and new road. Mr Parker does not believe that a buffer strip along the Nerang-Connection Road would be necessary if Lot 1 is to be developed for residential purposes. He agrees that it is not advisable to extend residential subdivisions to the easement area. He regards the easement area as a void. Mr Parker tendered in evidence a plan which he prepared for a residential subdivision at Robina which made no use of a SEQEB easement for residential lots. It is registered practicing valuer Lloyd Sydney Parsons who furnished the compensation assessment in the sum of $350,000 as per the amended claim for compensation. Mr Parsons describes Lot 1 land to comprise mostly timbered, gently to moderately undulating ridges intersected by two gullies. He says the land enjoys a prominent location with some exposure to the Pacific Highway. There is ease of access to the land. Mr Parsons considers that Lot 1 is unique in that it adjoins a "Residential A" subdivision to the south, a "Rural/Residential" subdivision to the north, a state forest to the west and is opposite a "Light Industrial" subdivision to the east. Mr Parsons is of the opinion that the residential market in the Gold Coast area peaked in December, 1988 with the expected result of a slowing in volume of sales and an easing in demand for subdivisional land. As at the relevant date, he says the residential market had flattened out and that as in all real estate property recoveries, the first signs of activity are in the lower end of the residential sector. Mr Parsons -- 6 of 25 -- - Page 7 - says that the appropriate way to view Lot 1 as at the date of resumption is on a residential basis, and he sees the highest and best use of the land to have been for residential development purposes. Mr Parsons has adopted the subdivisional plans produced by Mr Forsyth as a basis for a "before and after" valuation of Lot 1. He also adopts Mr Forsyth's estimates of engineering costs as set out earlier in this judgment. For his valuation in this matter, Mr Parsons considers it critical to have regard to the hypothetical development method of valuation as a primary approach, and then to check his valuation by direct comparison with sales evidence as englobo land. Mr Parsons believes that the "before and after" hypothetical development approach to valuation is the only method which can determine with any accuracy what affect the resumption of the easement has on the value of the balance area of Lot 1 by way of severance and injurious affection. Mr Parsons has produced the following "before and after" valuations using the hypothetical development method:- Before Resumption - 125 lots + 3.28 hectares "Special Residential" Gross Realisation 125 lots at $45,000 per lot average $5,625,000 Special Residential land (3.28 ha) (Five lots) $1,560,000 $7,185,000 Less selling costs 5% Commission $238,125 Advertising $ 56,125 Legals $ 65,000 $ 359,250 Net Realisation $6,825,750 Less Profit and Risk Allowance (25%) $1,365,150 $5,460,600 -- 7 of 25 -- - Page 8 - Less Development Costs * Construction Costs as supplied $3,154,759 * Acquisition Costs on purchase Legals $ 8,000 Stamp Duty $50,000 $ 58,000 * Interest Charges at 12.75% per annum On construction costs for 18 months $ 300,000 On land for 22 months $ 350,000 $3,862,759 $1,597,841 ====== Adopt $1,600,000 for practical real estate purposes After Resumption - 102 lots + 3.28 hectares "Special Residential" Gross Realisation 83 lots at $45,000 per lot average $3,735,000 19 lots adjoining easement at $40,000 lot $ 760,000 Special Residential land (3.28 ha) (Five lots) $1,560,000 $6,055,000 Less selling costs 5% Commission $199,525 Advertising $ 49,225 Legals $ 54,000 $ 302,750 Net Realisation $5,752,250 Less Profit and Risk Allowance (25%) $1,150,450 $4,601,800 -- 8 of 25 -- - Page 9 - Less Development Costs * Construction Costs as supplied $2,769,769 * Acquisition Costs on purchase Legals $ 7,000 Stamp Duty $40,000 $ 47,000 * Interest Charges at 12.75% per annum On construction costs for 18 months $ 265,000 On land for 22 months $ 275,000 $3,356,769 $1,245,031 ====== Adopt $1,250,000 for practical real estate purposes It is the difference between the "before and after" valuations which is the basis for Mr Parsons' assessment of compensation in the sum of $350,000. Mr Parson comments that for his hypothetical development valuation exercise, he has allowed a period of six months to obtain rezoning approval for the land, a development period of 18 months, and a selling rate of 6 lots per month with continuous staged development, and a total development and selling period of 32 months for the "before" resumption valuation and of 29 months for the "after" resumption exercise. The interest rate of 12.75% is said by Mr Parsons to be in line with the long term bond rate. Mr Parsons sees his land valuation before resumption at the rate of $99,440/ha as being in line with market evidence on a direct comparison with englobo sales. He cites in particular the following sales evidence:- Lots 3 and 16 on RP 803239 (formerly part of Lot 1 on RP 196110) - 13.71 hectares - Star Holdings (Qld) Pty Ltd to Ocean Resort Club of Australasia Pty Ltd on 2nd November, 1990 for $1,680,000 ($122,538/ha) - zoning "Residential A" - Situation Old Coach Road, -- 9 of 25 -- - Page 10 - Mudgeeraba. Mr Parsons describes this land as being irregularly shaped and on the western fringe of Mudgeeraba Township. It is intersected by a high voltage powerline easement and a drainage easement and is regarded by Mr Parsons as being superior land to the subject Lot 1. Lot 1 on RP 227021 containing 10.8 hectares sold 17th October, 1989 from Swift Properties (Gold Coast) Pty Ltd to the Queensland Housing Commission for $1,740,000 ($161,111/ha) - zoning "Residential A" - situation Nerang-Advance Town Road, Nerang. This is the balance area of Swift Park Estate with zonings and approvals in place to permit immediate subdivision. Mr Parsons again sees this parcel to be superior to the subject Lot 1 in all respects. Lots 1, 2, and 3 on RP 809036 containing 32.44 hectares sold on 5th September, 1990 from Lensworth Finance Australia Pty Ltd to Department of Housing and Local Government for $4,275,000 ($132,582/ha) - Zoning "Future Urban" - situation Explorers Way, Nerang. Mr Parsons says this land originally formed part of the "Highland Glen" Estate. It is located to the south of Nerang in a major Residential A locality. It has potential to yield 253 Residential A lots on subdivision. Mr Parsons sees this sale land to be similar to the subject Lot 1 as land but to be superior to Lot 1 in so far as it forms part of an established residential estate. In note that it is also a much larger area than is the subject Lot 1. Mr Parsons' residual value post resumption reflects a value of $77,688/ha including the easement area, or $89,280/ha excluding the easement area. He sees the relativity in the before and after englobo values as being reasonable. Mr Parsons lists a series of sales of "Residential A" zoned sites in the "Highland Park" and "Clear Water Estates" at Nerang and the "Merridown Estate" at Merrimac in support of his average valuation of $45,000 per lot for the yielded lots in his hypothetical subdivision of the subject land. These sales prima facie support his adopted average value of $45,000 per lot. Mr Parsons endeavoured to obtain sales evidence to demonstrate the diminution in value caused by powerline easements but was unable to locate any really satisfactory evidence. He also says that most developers in the Gold Coast region exclude residential lots from subdivisions where the land is encumbered with -- 10 of 25 -- - Page 11 - powerline easements. Mr Parsons commented in evidence that he had reduced the value of the 19 lots in his post resumption valuation exercise because, due to the contour of the land, the outlook from those lots would be towards the powerline easement. Evidence in the case suggests that when the powerline in constructed there will be one tower site on the easement area on the top of a ridge near Matilda Road. Practicing registered valuer Kerry George Magee was called in evidence by the respondent Commission. Mr Magee describes the nature of the land in Lot 1 as comprising moderate to steep undulating forest ridges and deep broken gullies with a generally south easterly aspect overlooking existing industrial development. Mr Magee says that many of the gullies have been filled over the years with domestic refuse which he believes constitutes a particular problem in establishing foundations for future developments. Mr Magee is of the opinion that Lot 1 has considerable potential for industrial use but the availability of fully developed industrial lots in the surrounding precinct dictates that industrial development at the date of resumption, especially taking into account the abnormally high earthwork costs, would not have been prudent. Mr Magee agrees that the strategic plan for the Albert Shire dictates a preference for future urban use for Lot 1. For this reason he also considered that the highest and best use of Lot 1 would be for future residential development rather than for industrial development. Mr Magee describes the area encumbered by the subject easement to be extremely steep broken forest ridges under heavy regrowth. For residential use, he says the area along the Matilda Road frontage is severely compromised since it has steep almost vertical slopes along the entire frontage to the road and there are two major gullies which should be preserved to carry runoff water from major catchment areas. There is also a low lying area at the north eastern corner of Lot 1 and there are large gullies inside the boundary with slopes in excess of those suitable to provide -- 11 of 25 -- - Page 12 - internal access to housesites. As a consequence, Mr Magee is of the opinion that medium density residential development over the part of the property encumbered by the easement is considered not to be viable and that the potential for optimising the Matilda Road frontage is seriously impaired. Mr Magee thinks that future subdivision of the whole property may well prove more viable by adopting an internal road system commencing at the southern frontage. It is perhaps again worth noting here that this is the type of access provision made by Mr Forsyth in his "after" resumption subdivisional design. Mr Magee believes that the imposition of the conditions specified in the easement proclamation will no doubt have a serious impact on the development of the subject land by impairing the potential of optimum development for residential sites over an otherwise unencumbered area of accessible road frontage. For this reason Mr Magee feels a reasonably high proportion of fee simple value of the land encumbered by the easement should be allowed to compensate for the loss of amenity in the subject area. Mr Magee has made two approaches to his assessment of compensation. One is on a potential residential basis, the other on a potential industrial basis. I need only to consider his approach on a potential residential basis as both he and Mr Parsons have indicated that this was the highest and best use of Lot 1 at resumption date. Mr Magee's valuation reads: - Fee simple value of land encumbered by easement - 2.089 ha at $70,000/ha $146,230 Diminutive effect of easement - 66.6% $ 97,389 Tower site - one only $ 2,500 Assessment of compensation $ 99,889 ===== The principal sale relied upon by Mr Magee for his valuation of the easement area on a residential basis is that of Lot 1 on RP 22555, Parish of Gilston containing -- 12 of 25 -- - Page 13 - an area of 22.46 hectares from Lensworth Finance Pty Ltd to Chaltara Pty Ltd on 22nd March, 1990 for $2,500,000 ($111,300/ha). This is a "Residential A" zoned site situated in Armstrong Way, Nerang. The nature of this land is moderate to steep ridges from which good views are available over a wide expanse of the Gold Coast. Mr Magee says that the sale land has better access than the subject land and all services are available. Mr Magee sees the relationship between the sale land and subject land to be properly reflected in his fee simple valuation of the easement area as part of Lot 1 at the rate of $70,000/ha. It transpired in evidence that Mr Magee unfortunately did not obtain full details of sales from Lensworth Finance Pty Ltd to Chaltara Pty Ltd due to his confining his sale searches to parcels with areas similar in size to Lot 1. Mr Parsons alerted us to the omission of the sale on the same date between the same parties of the nearby Lot 4 on RP 802557, Parish of Gilston containing an area of 2.322 hectares for $2,000,000. Mr Parsons and Mr Forsyth have both spoken to a Mr Robert Pitt who represented the vendor Lensworth Pty Ltd and who is an experienced subdivisional developer. Mr Pitt assured them that the whole deal was struck on the basis of a sale price of $4,500,000 for the two parcels. Somehow or other, it appears there must have been a separate notice of change of ownership (Form VG1) filed for each lot with the Valuer-General. A copy of one of the VG1 forms is in evidence. Taken together as one transaction, what in reality was sold is an area of 24.782 hectares for $4,500,000 - at the rate of $181,583/ha. Mr Magee does not agree with the approach taken by Mr Parsons and by Mr Forsyth in treating the resumed easement area as a void. He says the taking of an easement is taking a right over land and the owner still has residual use of the land. Mr Magee is of the opinion that the encumbered land could be used as part of residential lots in a subdivision but concedes that the easement and future transmission lines limit the total enjoyment of the encumbered land. Mr Magee sees two of Mr Parsons' englobo sales as being of doubtful use as reflecting englobo value of land standing possessed of potential for residential -- 13 of 25 -- - Page 14 - subdivision at their respective sale dates. They are the sales to the Queensland Government (Housing Commission) which he describes as a special type of buyer which provides welfare housing at the lower end of the scale at little developer risk. Mr Magee also expressed the opinion that the valuation by the process of hypothetical subdivision involves too many assumptions, not the least being Mr Parsons' allowance of 25% for profit and risk which he says is unreal for a property such as Lot 1. Mr Magee considers that an appropriate allowance for profit and risk in a hypothetical subdivisional valuation exercise for Lot 1 such as that undertaken by Mr Parsons should be much more than 25% since it involved a subdivision of more than 100 lots plus special residential development. He feels that a profit and risk factor of 25% would only be appropriate for a guilt edged type of development. Having regard to the access to Lot 1, to the slope difficulties and to the problems with the market conditions as at the date of resumption Mr Magee feels, a factor closer to 50% for profit and risk would be more appropriate. As to the methodology to be used in assessing compensation for easement resumptions, Mr Magee points to numerous Land Court determinations and Land Appeal Court judgments which adopt as a basis for the determination of compensation for powerline easement resumptions, a percentage of fee simple value as compensation. Evidence was called from Maxwell Gregory Poole who is an engineer and town planner with John Wilson and Partners (Queensland) Pty Ltd - Consulting Engineers and Town Planners, to provide the Court with a report on development costs for the subdivision of Lot 1 both before and after the resumption of the easement. Mr Poole describes Matilda Road as having grades of in the order of 12-32% along the frontage of Lot 1 and he says the site is generally hilly and quite steep. A 12% slope is 1 in 8, and a 32% slope is 1 in 3. 32% of the land would be, in Mr Poole's opinion, costly and difficult to develop. Mr Poole is also of the belief that Lot 1 is more suited for residential development than for light industrial development, but because of the -- 14 of 25 -- - Page 15 - steepness of the land and its proximity to major arterial roads and industrial areas, Mr Poole says that the allotments in a subdivisional design should be larger than normal - say 900 m2 to 1000 m2 - and adequate buffers would need to be provided to preserve and enhance the amenity of the site. Mr Poole has given consideration to the subdivisional layout prepared by Mr Forsyth. He says that before the resumption, Council would be likely to seek a buffer strip along the Nerang-Connection Road. He considers this to be good town planning practice. This is a requirement which would most likely affect the subdivisional layout after resumption in a similar manner, but it would reduce the lot yield. Mr Poole says that 8 allotments in the eastern extremity of the before subidivisional layout facing Matilda Road ( Lots 9 - 16) and one near adjacent lot (Lot 8) are not considered acceptable as residential allotments because of their location in and near a watercourse and in a drainage and flooding problem area. Mr Poole maintains this opinion even though there has been a suggestion by Mr Forsyth that these problems can be treated in proposed development works. Mr Poole suggested that the fill required for these lots would be of uneven depth and there would be settlement, and he submits that designers of homes would need to be advised of this since it is a dangerous situation to build houses on such filled blocks. Mr Poole says two additional allotments in this area would require drainage easements detracting from their value. He further says that allotments on the western side of Matilda Road again are not acceptable as grades on the natural surface are considered too steep for residential use without substantial and undesirable earthworks and other treatments. Mr Poole says that six lots (Lots 23 - 28) in Mr Forsyth's design should be larger and the most acceptable solution would be to combine the steepest and make three lots from the six. On this basis, Mr Poole suggests that the net yield in the subdivision is the loss of 12 lots, with drainage easements required over a further two lots. Mr Poole accordingly considers that a more realistic yield is 115 not 125 as promoted by Mr Forsyth. -- 15 of 25 -- - Page 16 - Mr Poole has made a calculation of the cost of development in the area where he suggests there should be a change to subdivision layout. The exercise reads:- 1. Before resumption Estimated yield of 34 lots (115 total) 2. Cost of development Roadworks - drainage and earthworks $244,945 Water supply and sewerage $192,025 Underground power $ 39,500 3. Zoning application - Res A at $50/ha - 3.978 ha at $50/ha $ 199 4. Subdivision plan Approval: New Road $80/100m $288 Sealing: New Road $325/100m $1,120 Sealing: Easement documents at $40 each $80 Street lighting - $175/lot $5,950 Footpath/bikeway - $125/lot $4,250 5. Headworks charges/lot Water - $1,471/lot $59,194 Sewerage - $1,741/lot $59,194 6. External pumping station and rising main $652/lot $31,250 7. Contingencies 10% $62,850 Cost of development works $690,850 8. Professional fees - Engineering 8% $55,268 Surveying (estimate) $20,000 Total development cost (34 lots) $766,118 or $22,530/lot Less Matilda Road costs applied to whole estate $6,263/lot Net cost per lot $16,269/lot -- 16 of 25 -- - Page 17 - Mr Poole says that in assessing the cost of development, he has assumed that council would require bitumen widening, drainage, kerb and channel, and under ground power on the Matilda Road frontage and that Council advisers confirm this. He says that the total cost of development of the Residential A lots in the proposed subdivision would be $1,870,935. Mr Poole suggests that Mr Forsyth's layout plan in the after resumption case is likely to be approved by Council if it is prepared to accept parkland in gullies and creeks. He points out that Council is entitled to fair average quality land for park purposes. He maintains his view that in the after subdivisional layout, the drainage easements are still required in the north eastern corner of the development. He says that in the after exercise, cul-de-sacs can be lengthened to provide more lots at very little extra cost. If this is done, then there are four additional lots gained making the yield of 107 lots. Mr Poole believes that more effort seemed to be applied by Mr Forsyth to the allotment yield in the "before" subdivisional design than in the "after" subdivisional design. To illustrate this, Mr Poole points to a before lot yield of 9.65 lots/ha (127 lots) and an after lot yield of 9.32 lots/ha (103 lots). Mr Poole is of the view that in the after subdivision design, lots can be designed to continue into the easement area making more attractive allotments for prospective purchasers. Mr Poole has taken out costs of development in the after resumption exercise. Again his calculations apply only to areas where he suggests there should be a variation to Mr Forsyth's subdivisional layout. The exercise reads:- After resumption estimated yield of allotments - 24 (Total 107) 2. Cost of development Roadworks and drainage $92,655 Watersupply and sewerage $124,725 Underground power $12,000 Contribution per lot to intersection ($150) $3,600 3. Zoning application -- 17 of 25 -- - Page 18 - Residential A 50/ha - 2.085ha at $50 $104 4. Subdivision plan Approval: $80/100m $192 Sealing: New Road $325/100m $780 Sealing: Easement documents at $40 each $40 Street lighting $175/lot $4,200 Footpath/bikeway $125/lot $3,000 5. Headworks charges/lot Water - $1,741/lot $41,784 Sewerage - $1,741/lot $41,784 6. External pumping station and rising main - $701/lot $16,824 7. Contingencies - 10% $34,170 Cost of development works $375,868 8. Professional fees - Engineering 8% $30.069 Surveys $14,400 Total development costs $420,337 Cost per lot $17,514 Mr Poole again says that these costs can be applied to all of the "Residential A" lots. If this is done, then the total cost of development post resumption is $1,873,998. The result of Mr Poole's evidence is that there is a gross loss of 8 lots in the before and after design subdivision. Near the end of the hearing of this matter the question as to compensation payable for legal and valuation fees involved in the preparation of the original claim for compensation was raised. Council for the claimants informed the Court that legal costs and engineering advice costs are agreed between the parties in the sum of $895.84. There is however, no agreement as to the valuation fees. I am informed that the original claim was based upon a valuation prepared by registered valuer Lawrie J Hamilton of the firm Herron Todd White, Valuers. A copy of Mr Hamilton's -- 18 of 25 -- - Page 19 - valuation was put in evidence. As part of his assessment of compensation, Mr Hamilton values the land post resumption on a light industrial basis (at $2,189,221) and Counsel for the claimants urged that any award of compensation for the valuers fees be based on that capital sum. The respondent Commission urges that compensation for valuers fees be based on the compensation assessed by Mr Hamilton - in the amount of the original claim in the sum of $260,000. The claimants placed in evidence a copy of a memorandum of fees from Herron Todd White, Valuers dated 18th February, 1991 and addressed to the claimants in the sum of $4,600 for the assessment of compensation payable for the resumption of the subject easement. Also tendered is a copy of the Australian Institute of Valuers and Land Administrators recommended scale of fees and charges effective as at the date of resumption. Counsel for the respondent Commission also submitted that the valuers fees should be based on compensation finally determined or on a time basis. He suggests that on the recommended rate of $140/hr then the fee of $4,600 would suggest on a time basis that there would be have been about 33 hours of work involved. Now it well accepted that a "before and after" method of valuation for partial resumptions is a quite acceptable one, notwithstanding that in some cases such as for easement resumptions the Court may not, in the end, use this method as a basis for compensation determination. I cannot see that it is unreasonable for the claimants valuer to render a memorandum of fees on the basis rendered by Herron Todd White. Certainly I cannot find that the original claim for compensation, which was based on Mr Hamilton's valuation is vexatious or frivolous and certainly the assessment of compensation involves a difficult valuation exercise. I propose to award compensation in the sum of $4,600 for valuers fees and the agreed sum of $895.84 for legal fees and engineering fees involved in the preparation of the original claim for compensation. During the hearing of the matter the Court was invited the take a view of the -- 19 of 25 -- - Page 20 - subject land and the sales evidence parcels relied upon by the valuers. This view has been taken and it has been of assistance to me in my appreciation of the evidence. Now it is immediately apparent that I should make a finding as part of my consideration of the evidence and submissions in the matter as to what constitutes the best method of valuation for compensation assessment. The claimants case rests upon a valuation on a "before and after" method and the respondent's case involves the valuation of the fee simple of the land encumbered by the easement and an assessment of the diminution in that fee simple value for the effect of the easement on the encumbered land and on the balance area of Lot 1. I have researched many decisions of the Land Court and of the Land Appeal Court and cannot find a decision or judgment which adopts a method of compensation assessment for powerline easement resumptions other than that which directly determines compensation on a diminution of fee simple value basis. Among the judgments of the Land Appeal Court on the point is one which dates back as far as 1968 in re: Claim for Compensation - Resumption of easement for Electric Line Purposes - AH and AJ Raynbird v. Southern Electric Authority of Queensland (1968) 35 CLLR 267. The resumption of the powerline easement in that case was over land zoned "Rural" but land which stood possessed of potential for residential subdivision. Compensation was assessed on behalf of the claimant on a "before and after" basis and on behalf of the respondent Authority on a diminution in value of fee simple easement land basis. The Land Appeal Court adopted as a basis for its determination of compensation a diminution in the value of fee simple easement land at a factor of 75%. In Re: Claim for Compensation - Resumption for Electric Line Purposes - The Northern Electric Authority of Queensland v. P Joyce (1974) 1 QLCR 171 at p. 177. The Land Appeal Court said:- "The test is the attitude of hypothetical prudent purchaser and the extent to which in the opinion of such person the claimant has suffered diminution in the value of his property resulting from the erection of the easement (I think this should read -- 20 of 25 -- - Page 21 - powerline) including where appropriate severance and injurious affection damage. The approach adopted by the Court below is one often followed in these cases mainly to allow full fee simple value for land occupied by the base of the pylons or in tracks made by the constructing Authority and to assess the diminution in value of the land otherwise subject to the easement by adopting a percentage which it is considered fair and reasonable having regard to the terms of the easement by which the claimants proprietary rights to such easement land have been diminished. We see no reason to depart from this approach." It is to be noted that the encumbered land in Re: NEAQ v. Joyce was rural land. There is a more recent Land Appeal Court judgment in Re: Claim for Compensation - Resumption for Powerline Easement Purposes - The South East Queensland Electricity Board v. Beaver Dredging Pty Ltd (1984/5) 10 QLCR 166. The powerline resumption in that case encumbered 8479 m2 of land along and adjacent to the boundary of a parcel of land containing 33.3718 hectares and which was at resumption considered ripe for residential subdivision. The Land Appeal Court said, inter alia at p. 172 - "We now turn to consider the assessment of compensation. We can see no reason why we should depart, in this case, from the well established method for assessment of compensation for powerline easement resumptions. What has to be determined is the diminution (or loss) in the value of the claimants land at resumption date due to the taking of an easement over it for the carrying out of the proposed works. We find, therefore, that the method of valuation adopted by Mr Wenck is to be preferred to that used by Mr Schutz. At resumption date, it was unsubdivided land which was encumbered, albeit land with undoubted potential for future subdivision. We note that Mr Wenck valued the fee simple of the encumbered land at the rate of $41,000 per hectare based on the average sale price to Saltbush Pty Ltd - and assesses compensation at 10% of that fee simple value.................................. We now consider the diminution factor. Since the encumbered land is ripe for residential subdivision, and since some use was made of it (open space - in one case for a tennis court) we find that an appropriate diminution factor is 80%. This is consistent with the finding of this Court in Re: Claim for Compensation - Resumption of Easement for Electric Line Purposes - KJP Holmes v. S.E.A.Q. (1975) 2 QLCR 221." I have researched the record in Re: SEQEB v. Beaver Dredging Pty Ltd (supra) and it is to be noted that valuation evidence on behalf of Beaver Dredging Pty Ltd was based on a "before and after" method of assessment. It is well established and recognised that in compensation matters, each case is -- 21 of 25 -- - Page 22 - to be considered on its own merits. In this case I can see some merit in Mr Parsons using the "before and after" method of valuation, since as he says such a method not only assesses compensation for the loss in land value but also for the damage, if any, caused by severance or by the exercise of any statutory powers by the respondent Commission injuriously affecting the balance of the land owned by the claimants. However there is a problem in that valuations using the hypothetical subdivisional method are well recognised, as suggested by Mr Magee, to be fraught with difficulty. For example, Mr Magee does not believe that Mr Parsons' allowance for profit and risk in his "before and after" valuation exercises at 25% is realistic given the nature of the type of land in Lot 1 and the prevailing flat market conditions at the time of resumption. Although Mr Parsons is confident that his allowance is appropriate, given the size of the hypothetical subdivisions, the relatively difficult terrain (especially in the area encumbered by and in close proximity to the easement) I am inclined to favour the view taken by Mr Magee that an appropriate allowance for profit and risk should be considerably higher that 25%. Of course, if say a factor of 40% in more realistic, then it goes without further comment that Mr Parsons calculations of his "before and after" valuations are the subject of very considerable variation as to the end land value results. Added to this we have conflicting engineering and design evidence as between Mr Forsyth and Mr Poole as outlined earlier in this judgment. Further, Mr Parsons' exercises involve estimates as to development periods and these could be the subject of widely divergent views in the rather depressed market conditions operating at the date of resumption. Added to this, we have the development costs in the hypothetical development which are subject to considerable variation depending on such matters as to the appropriate subdivisional design, the requirements of Council on subdivisional approval etc. After considering the matter at length, I have come to the conclusion that it is better to continue to observe the precedents in determinations of this nature set by the Land Appeal Court to reduce the risk of falling into serious error in the determination of compensation. Further, even if I had an -- 22 of 25 -- - Page 23 - equal preference for each method (which I don't) then as a Member of this Court sitting alone I am bound in law by the judgments of the Land Appeal Court. It is better to rely upon the method of compensation assessment used by Mr Magee, especially as it is one which as aforementioned has been given judicial approval on some many occasions. In so doing I am conscious that much of the detailed evidence provided, especially that by Mr Forsyth and Mr Poole, is of considerably less significance than it might otherwise have been. Mr Parsons says that his valuation of Lot 1 prior to the resumption at $1,600,000 reflects an englobo rate of $99,440/ha which, as aforestated, he sees as being in line with market evidence compared on a direct comparison with available sales evidence. I appreciate that this is an average value per hectare over the whole of Lot 1, and this may not necessarily be his englobo valuation of the encumbered land. On the other hand, Mr Magee values the fee simple of the easement area at the rate of $70,000 per hectare. But it is clear that the principal sale upon which Mr Magee's opinion is founded is subject to adjustment. I find that he should have, and in all probability would have, considered that the land which sold from Lensworth Finance Pty Ltd to Chaltara Pty Ltd was of an area of 24.782 hectares for a sale price of $4,500,000 - at the rate of $181,583/ha, if his sale searches had unearthed the sale of Lot 4 on RP 802557. On my calculations, this sale price reflects an increase over the sale price per hectare relied upon by Mr Magee of some 63%. I find that Mr Magee's fee simple valuation of the encumbered area should be adjusted upwards by this factor. The result is that on the basis of Mr Magee's principal (or only) sale, his valuation of the encumbered land should be in the order of $114,000/ha. But we also have Mr Parsons' opinion to consider. In the circumstances, and weighing any doubts I have in favour of the dispossessed owners, as I should in cases involving the determination of compensation consequent upon resumption I find that the fee simple value of the land encumbered by the easement at resumption date was $110,000/ha. I case it may be thought that this determination appears excessive in relation to the -- 23 of 25 -- - Page 24 - englobo sales evidence in view of the broken nature of the encumbered land, in must also be said that the value of the easement area as future residential subdivision land is enhanced by its long frontage to Matilda Road. I turn now to consider the diminution in fee simple value factor. I cannot agree with the claimants in that I should regard the encumbered area as a void. Apparently Mr Parsons is of the opinion that a roadway cannot be constructed over the easement, but on my reading of the terms and conditions of the proclamation, I cannot find this to be so. I agree with Mr Magee in that he says some use could be made of the easement area in a future subdivision of Lot 1. Notwithstanding the contention of witnesses called by the claimants that developers prefer to avoid easement areas in planning residential development designs in the Gold Coast region, I cannot see that a subdivisional design could not make some beneficial use of the easement area by way of increasing allotment sizes, perhaps even for parkland contribution. Nonetheless it is to be recognised that there will be injurious affection to the easement area and to such part of Lot 1 as is in close proximity to the proposed powerline, mainly due to its visual affects although the suggestion made by Mr Magee that the visual affect will be diminished due to dense vegetation in a gully which runs almost parallel to and in close proximity to the easement for about half its length seems to have merit. Having regard to the evidence on the point, I find that a diminution factor of 80% is fair and reasonable and makes allowance not only for the loss in value of the land encumbered by the easement but also for the factors of severance and injurious affection as raised by Mr Parsons. I propose to award compensation of $2,500 for the tower site as allowed for by Mr Magee. In the end result, then, compensation for the taking of the easement is determined as an end result of the following exercise - Fee simple value of easement area 2.089 ha at $110,000/ha $229,790 Diminution in fee simple value 80% - or $183,832 Add compensation for tower site $ 2,500 -- 24 of 25 -- - Page 25 - Total award $186,332 ==== I round off this determination of compensation to $186,500. As discussed previously, I award compensation for costs involved in the preparation and lodgement of the original claim for compensation in the sum of $5,495.84. Accordingly compensation for the resumption under all heads is determined in the sum of $191,995.84. Section 28 (1) of the Acquisition of Land Act of 1967 provides that the Land Court may order that interest be paid on the amount of compensation determined by it, and further that such interest shall be at such rate per centum per annum as the Court deems reasonable. I am informed that an advance was paid by the respondent Commission to the claimants in the sum of $85,700 on 11th September, 1991. I order that, in addition to compensation payable, interest be paid by the respondent Commission to the claimants at the rate of 11% per annum on the following sums and for the following periods - On the sum of $186,500 for the period commencing 9th June, 1990 (date of resumption) and ending on 11th September, 1991 (date of payment of advance) and On the sum of $100,800 for the period commencing 12th September, 1991 and ending on the day immediately preceding the date upon which final payment of compensation for the easement encumbrance is paid and On the award of compensation for legal fees engineering fees and valuation fees (total sum $5,495.84) for the period commencing upon the date upon which the respective fees were paid by the claimants and ending on the day immediately preceding the date upon which payment of compensation for such fees is made. (C.H. Carter) Member of the Land Court. -- 25 of 25 --