Arcpoint Pty Ltd v The Director-General, Department of Transport [1992] QLC 17 (1992-1993) 14 QLCR 115

LAND COURT, BRISBANE. 15th May, 1992. Re: Claim for Compensation. Resumption for Road purposes. A91-20 Arcpoint Pty Ltd v. The Director-General, Department of Transport J U D G M E N T By Proclamation published in the Government Gazette of 26th August, 1989 the respondent resumed for Road purposes as from that date an area of 1809 m2 being part of the land contained in Lot 1 on RP 211863, County of Ward, Parish of Moffatt. Lot 1 prior to the resumption contained an area of 3560 m2. The land is situated at Bethania and about 6 kilometres from Beenleigh. The claimant (Arcpoint) is the owner of the land in fee simple. At the date of resumption the land was in a vacant state. The land was zoned "Light Industry" and had been in the ownership of Arcpoint since purchase in 1985. Arcpoint since that date had considered proposals for the development of the area including development for local business which was refused; for service station purposes which was abandoned due to expected road requirements and for industrial units (strata title) which before planning was complete was interrupted by the resumption. The parcel is a long rectangular shaped parcel having a depth of about 25 metres and a frontage of about 140 metres to the Kingston-Beenleigh Road on both the northern and eastern boundaries. The western boundary is the Beenleigh-Beaudesert railway. A level crossing of the railway is at the rear of the northern boundary of the lot. This main road carries traffic from the [1992] QLC 17 -- 1 of 12 -- - Page 2 - southern suburbs of Brisbane to Beenleigh. It is a busy road carrying up to 15,000 vehicles per day. The lot is within close proximity to the heart of Bethania being opposite a neighbourhood shopping centre and adjoins on the south "Light Industry" or service industry type uses. Travelling southerly from Brisbane to Beenleigh this road which is a dual carriageway of bitumen construction passes over virtually level land as it approaches the railway crossing. There is then a right angle turn around the corner of the subject land before travelling southerly and swinging away in a south easterly direction as it rises up hill. At the point where the road turns in a south easterly direction and at about the southern boundary of Lot 1 there is another road running directly south which is called High Street. Between High Street and the main road taking up a triangular parcel at the intersection is a BBC Hardware store which was developed and on sold by Arcpoint. Abutting the southern boundary of Lot 1 and with frontage to High Street and with a rear boundary on the railway is another long narrow parcel of the same depth as Lot 1 with comparable frontage and contour which was also developed by Arcpoint for industrial strata uses. These strata titles were sold and uses at date of resumption comprised mower sales and repairs, auto electrician, marine fabrication, cabinet maker, mechanical repairs and sandstone tiles. Lot 1 at the southern end is below the level of the road pavement by about 1 - 1.3 metres and rises towards the northern boundary. The main road at this juncture has graded earth gutters. A 450 mm concrete culvert discharges into a shallow drain which crosses the land at one point and further north there is a 375 mm stormwater drain discharging into an open ditch adjoining the road. It is agreed that the Department of Transport (Railways) will accept discharge of stormwater on to the railway reserve. The resumption takes an area of 1809 m2 from the southern area (frontage of 71.83 m) leaving a corner parcel of 1751 m2. When the works are complete the Kingston-Beenleigh Road will by-pass the right angle and the level crossing. It will proceed over the resumed land and the railway by an overbridge which will be about 6 metres or so above existing ground level. High Street where it meets this road will -- 2 of 12 -- - Page 3 - become a cul-de-sac and on the northern side what is now the Kingston-Beenleigh Road will become a cul-de-sac urban road. Following the resumption a claim was served on the constructing authority in the sum of $200,000. In the hearing of the matter leave was sought and obtained to amend the claim of $192,485 which comprises - Loss of loss $188,205 Legal costs incurred in preparation of claim $2,000 Valuers fees $2,280 The amount of the valuation finally put in evidence by the respondent is $118,000 plus disturbance ($4,280) as claimed. This assessment was the result of a review of an assessment made during the proceedings after considering engineering evidence in respect of the primary sale used to support it. The assessment was previously $90,000. An advance against compensation in the sum of $87,000 was paid on 15th June, 1990. The valuers who wrote these assessments were Mr L.A. Crane of R.S. Melloy Pty Ltd and Mr W.I. Chalmers who is in the employ of the Department of Lands. Besides Mr Crane evidence for the claimant was given by Mr G.M. Kempe, consulting engineer, on matters relevant to development costs, by Mr R.H. Brameld, civil engineer, who specialises in traffic engineering matters and by Mr M.J. Ryan, director of Arcpoint. Mr V.K. Dippelsmann, who is in the employ of the respondent, as Senior Engineer, Planning and Development gave evidence on behalf of the respondent on matters of development costs and road requirements. In each case the assessment of compensation was made on the "before and after" method of valuation. In summary the valuations are as follows - Mr Crane "Before" 3560 m2 @ $75/m2 $267,000 "After" 1751 m2 @ $45/m2 $78,795 -- 3 of 12 -- - Page 4 - Compensation $188,205 Mr Chalmers "Before" 3560 m2 @ $50/m2 $178,000 "After" 1751 m2 @ $34/m2 $60,000 Compensation $118,000 In order to appreciate these differing opinions something must be said as to the basis upon which they were made before comparing the site before and after the resumption with the sales evidence. This primary matter is really governed by the manner in which the subject land would likely be developed. For comparison purposes Mr Crane saw the subject land as a lot below road level requiring some internal drainage works, some earthworks and some roadworks for development within the zoning of "Light Industry". Mr Chalmers although envisaging a development within that zoning brought the land up to road level with filling (ready for building), which with drainage and external works resulted in an expenditure estimated as follows - -imported fill $32,340 -piping of stormwater drainage $9,350 -road upgrading $36,450 - sewerage & water headworks charges $6,645 The summation of these costs is $84,785 or $24/m2. What he does then is to bring these matters into account for comparison purposes. This was done for reasons which will soon become apparent. Mr Kempe in considering the same issues rejected the concept of filling the lot to road level. He would develop the lot by cutting and filling within the lot. His estimate of development costs (excluding headworks charges which he said were paid in 1985)were as follows - -- 4 of 12 -- - Page 5 - Grading and levelling $ 5,000 Stormwater (accept respondent's estimate) $ 9,350 External roadworks $36,450 = $50,800 or $14.25/m2 This is what he said - "The cost of land preparation depends on the type of building that is to be constructed and the stormwater drainage implications. Given the fact that the appellant has constructed five (5) industrial units adjacent to the subject land, one would expect that this would be a reasonable use for the subject land. If one would assume that this type of development would have continued along the subject land, then the development costs would be insignificant. It would all depend on the level the building was to be constructed relative to the roadway. If it was to be built below the road level, as is the case on the existing units, then no fill would be required. If it was to be built at or above the road level, then the building could be constructed on concrete piers with parking underneath. This would take advantage of the minimum set-back area and provide maximum coverage." Mr Ryan gave evidence on this issue also. His evidence is that a factory unit type development would have been very attractive on the site and would follow the existing profile of the development to the south. Such development in his opinion enables a roller door and shop front construction with car parking in front. Were the same profile to be followed cut to fill was all that would be required to gain a level lot and site coverage would be of the order of about 55%. Historically the site whilst in the ownership of Arcpoint has been considered as a site for local business which was refused by the Council and subsequent to that for service station purposes which met with one objection and was subsequently abandoned, not only for that reason but because as Mr Ryan said the expected road requirements "just blew it out of the water for us". Future road requirements made known to Arcpoint at this time included the provision of a round-a-bout on the right angle intersection (which has Church Road as entering from the north and King Arthur Boulevarde to the east); the up-grading of the Kingston-Beenleigh Road to four lanes; a substantial truncation of the corner of the lot and the dedication of a strip of land along the frontage for road purposes. In -- 5 of 12 -- - Page 6 - considering the possibility of any development of the site it is conceded by the experts that entry would be restricted to north bound traffic (left in and left out). For the purposes of development of the land for factory units the "minimum external roadworks is for construction of a lane with kerb and channel along the full frontage of the property together with associated land dedication" (Mr Dippelsmann). The area required for dedication has been calculated at 212 m2. Mr Brameld accepts that provision would have to be made for a deceleration and acceleration lane. What follows from the whole of the evidence on this question is that if the Kingston-Beenleigh Road were to be retained (no resumption) any potential in the land for a high traffic generator use such as a service station or for local business is constrained wholly or substantially by likely road requirements. The evidence in my opinion points clearly in one direction and this is that the preferred development is one of factory units below road and generally following the profile of the adjoining development. For the purpose of ascertaining a value of the site before the resumption Mr Crane relied on two sales for purposes of direct comparison with more weight being given to a sale which I will refer to as Sale 1 of a parcel of 4024 m2 described as Lot 1 on Plan WD 3701 and situated on the northern alignment of the Kingston-Beenleigh Road in the block between Spanns Road and Alexandra Street. The sale land is zoned "Light Industry". It is of rectangular shape. The sale land is vacant but is adjoined by developed land. The land sold for $300,000 in January, 1990 or about $74.50/m2. The contour of the sale land is partly above the road in the western area and partly below the road in the south eastern area (about 3 metres above the roadway in the west and about 2.7 metres below the road way in the south eastern section). Mr Crane approached his comparison on general lines. This being in his opinion the attitude which would be taken by a prospective purchaser although recognising the problems that do exist. He looked at comparable attributes such as frontage, main road position, size, zoning and potential uses and comparable -- 6 of 12 -- - Page 7 - disabilities such as internal earthworks, drainage requirements and some road upgrading. In the end he regarded the subject land as having comparable value with the sale land. Hence, the application of a value of $75/m2 to the subject site. Support for the price paid for the sale land is found in the second sale used for this purpose. This sale is of an area of 3179 m2 described as Lot 1 on RP 215070 which is situated on the corner of the main road and Harburg Drive with access from Harburg Drive but only left in and left out. The land is zoned "Light Industry" and sold on 6th June, 1988 for $240,000 or $75.50/m2. The lot is a developed lot but has a major electricity easement across the Harburg Drive frontage and along about 50% of the main road frontage. The primary sale considered by Mr Chalmers for his assessment is sale 1. His exercise was dominated by the principle that if the comparison is to be correct the blocks must each be brought to a state where the comparison is strictly one of like with like. He therefore brought both sites to sites level with the road and ready for building. The subject land was to be filled, piped and roadworks provided. His first view of the sale land produced an analysis whereby the site would be levelled. The cost to do the work required was estimated at $36,000 or $9/m2 (road upgrading, headworks charges and levelling) which as a developed lot would reflect, by applying the sale a value of $84/m2. He then made allowances under the following headings - -deduct an allowance because the sale occurred 5 months after the date of resumption, in a rising property market. -deduct an allowance for the potential loss of land (212 m2) from the subject for future roadworks. -deduct an allowance for the relatively poor shape of the subject. (Sales potential site coverage is 70%, subject is 54% approximately). -add an allowance for the subject being a corner lot. and arrived at a value of the subject lot in a developed state ready for building at $66/m2 which after allowing for development costs estimated at $84,785 ($24/m2) he derived a value of $42/m2 or $150,000 overall. When the evidence of Mr Kempe was -- 7 of 12 -- - Page 8 - given this analysis was reviewed. Were the sale land to be reduced to road level Mr Kempe was of the opinion that the following works (excluding headworks) would be required - Earthworks $24,000 Retaining walls $85,600 Stormwater drainage $10,000 (nominal) Headworks (paid 1985) Road upgrading $31,500 Lowering water main $ 9,500 Lowering trunk sewer $17,000 Telecom relocation $12,000 TOTAL (say) $189,000 or $47/m2 ===== The addition of this sum to the purchase price of $300,000 brings up a sum of $489,000 or $121/m2. Which instantly raises the question why a person would pay that sum for the site when land can be bought nearby for $75/m2 (Harburg Drive). This exercise is complicated by a number of factors. The view seems to have been taken, apart from the reasons dominating Mr Chalmers exercise, that optimum use of the sale land could not be achieved unless it was reduced to a state where the land had full exposure to the road. Secondly it seems that development would comprise the type of development envisaged for the subject site - industrial units. Mr Chalmers' review of the sale land was made with the assistance of Mr Dippelsmann. The result of the review may be summarised briefly as follows - 1.That prudent development of the sale land would comprise industrial units based on a stepped development following the contours from west to east with a service road (internal) along the frontage. 2.That no land is required for road dedication as the future road planning (4 lanes) allows for land coming from land on the southern alignment 3.That there is no requirement to lower services. -- 8 of 12 -- - Page 9 - On this basis Mr Dippelsmann's estimate of costs amounted to $80,330 or $20/m2 to put the site into a condition ready for building. For comparison purposes the sale would then reflect a value of about $95/m2 from which Mr Chalmers would make the allowances stated previously in addition to items of general comparison such as for situation etc. On the assumption that a developer would level the site and lower services Mr Dippelsmann estimated total costs of the order of about $124,000. This sum when added to the purchase price would reflect a value per square metre of $105 which again raises the question raised on the result of Mr Kempe's exercise. It thus appears that cutting and filling in steps as suggested by Mr Dippelsmann may be the appropriate form of development - the result tends to conform reasonably well with the market, although I might add that that is not the determining factor. By applying that method for comparison purposes Mr Chalmers derived a value for the subject lot at $74/m2 as a developed lot and $50/m2 in an undeveloped state. But there remains a doubt which I have as to whether after all this exhaustive examination of the sale land there remains a market for the land for a development which was included in Mr Kempe's evidence as an option open in the development of the subject site. That is, for a building on piers with parking underneath. However, in the absence of evidence as to how the sites would compare in this light and evidence as to what was in the mind of the purchaser of the sale land I must proceed with the comparison on the evidence as presented. The second sale of Mr Crane occurred in June, 1988 and reflected a value of $75.50/m2 for a site 3179 m2. It is a corner site with exposure but is encumbered by an easement and therefore may be viewed (although developed) as a site with some problems. In the evidence of Mr Chalmers there is another sale of a lot which he said was always in the background but not used for purposes of direct comparison. This is the sale of the Caltex service station site comprising an area of 4047 m2 in July, 1989 for a consideration of $355,000 or $87/m2. This site is situated within a short distance of the subject land travelling towards Brisbane. At sale the site was a developed site and level with the kerb. It had the appropriate zoning. The -- 9 of 12 -- - Page 10 - reasoning of Mr Chalmers is that if a valuation of the subject site is adopted at $75 and Mr Kempe's costs adopted ($50,800) the resultant value of $89/m2 could not stand up against the sale. It follows that the position would be worse if the costs estimated by Mr Chalmers were applied in the comparison. Here again whilst something may be said as to the comparability of the sites as land to land there is little similarity in use except to say that if both were compared as potential service station sites the subject site would on the historical evidence be the inferior site. If the subject site is brought to the state where it is level with the road, costs per square metre excluding headworks charges is about $78,000 or about $22/m2. If Sale 1 is developed as envisaged by Mr Dippelsmann, costs are of the order of $90,000 (drainage for the purpose being taken at $15,000 being $5,000 in excess of the estimate made in respect of the subject lot) or about $22/m2. The full circle has thus revealed that the sale lot can be compared comfortably with the subject lot as an undeveloped lot reflecting a value of $75/m2 with problems identifiable but not quantified exhaustively or as a developed lot reflecting a value of about $95/m2, subject however to the qualification that if the highest and best use of the subject lot is the preferred development below road Mr Kempe's costs become relevant and if the highest and best use of the sale lot is that proposed by Mr Dippelsmann his costs become relevant. As such the sale lot is dearer to develop ($22 to $14/m2). I come then to the question of the allowances made by Mr Chalmers. On the basis of the preferred development being a duplicate of the development adjoining on the south it appears reasonably certain that a site coverage of about 55% is the best that can be obtained. It may be accepted as certain that an area of about 212 m2 of land would be required for road dedication. Whereas with sale 1 a potential site coverage of about 70% may be expected and no land is required for road dedication. The sale is nearer Beenleigh but after hearing Mr Crane and Mr Kempe there does not appear to be much involved in this question. If the sale lot is developed as envisaged by Mr Dippelsmann it would remain in part about 3 metres or so above the level of the road -- 10 of 12 -- - Page 11 - with consequential effect on exposure, whereas the subject site would be just below road level and with better exposure. The two principal sales relied upon by Mr Crane occurred before the resumption and after the resumption. He could speak freely on numerous sales and formed the opinion that the market could be taken as stable between the date of resumption August, 1989 and the date of sale 1 January, 1990. Mr Chalmers said that sale 1 in May, 1987 sold for $180,000 which on a straight line reflects an increase of about 2% per month. He went on to say that his sale 2 in Pease Court sold in July, 1989 for $50,400 at auction and resold in December, 1989 for $65,000 which shows a rate of appreciation of about 5% a month. This direct evidence would support the assumption that the market was rising. It may also assist in resolving the apparent disparity in value between the two sales (assuming that Sale 1 requires development costs of about $22/m2). The telling feature between the two sites which renders the subject site overall inferior to sale 1 lies in my opinion on the loss of land for road and potential site coverage. In balancing the features as best I can, I have come to a conclusion that the value of subject site may be taken at $215,000 or about $60/m2 as an undeveloped site. The balance land is a corner site of 1751 m2. When works are complete it will have a frontage to a cul-de-sac. Visibility and exposure to the main road traffic will be considerably lessened. For the purpose of this assessment development is envisaged to take the same format as that before the resumption. According to Mr Dippelsmann minimum road requirements would comprise kerbing and channelling joining the existing pavement with no land required for road dedication and internal works comprising filling and piping. His estimate of development costs for the area is of the order of $17,695. Mr Crane values the site at $45/m2 or $78,795. Mr Chalmers would value the site at $46/m2 undeveloped or $34/m2 ($60,000) after making allowances for development works. An abundance of comparable sales exists for this purpose but all sales are off the main road (which it is said accounts for the difference between values reflected in these sales and those sales used for the before resumption exercise). The sales -- 11 of 12 -- - Page 12 - comprise developed lots and are therefore superior to that extent. However, Mr Crane whilst recognising this point said that an allowance must be made for the exposure the subject lot has to the main road limited though it may be. When development costs are of the order of $10/m2 or $17,000 (excluding headworks) in a valuation of around $70,000 to $80,000 any reasonable allowance for better exposure will soon offset those costs wholly or substantially. In giving weight to Mr Crane's opinions in this regard a value of $70,000 will be adopted. Accordingly compensation is assessed as follows - Value before resumption $215,000 Value after resumption $ 70,000 Compensation $145,000 ===== Legal and valuation fees incurred in the preparation and lodgement of the claim are agreed in the sum of $4,280. Compensation under all headings is therefore determined in the sum of $149,280. An advance against compensation in the sum of $87,000 was paid on 15th June, 1990. Interest on the sum of $149,280 at the rate of 11.75 percentum per annum is ordered to be paid from and including the date of resumption up to and including the 15th June, 1990 and thereafter on the sum of $62,280 up to and including the day immediately preceding the date that sum is paid. Acting President of the Land Court. -- 12 of 12 --