Applicant v Respondent [2012] VSC 319 | Case summary

Supreme Court of Victoria|2012-08-20|Before: EMERTON J

LAND ACQUISITION - Compensation for compulsory acquisition of part of land - Before and after value - Market value - Highest and best use - Hypothetical zoning - Hypothetical availability of services - Ecological constraints - Comparable sales - Special value and disturbance - Expert evidence - Land Acquisition and Compensation Act 1986 (Vic) ss 40, 41, 43.

2 This proceeding concerns the compensation to which Murdesk is entitled under the Land Acquisition and Compensation Act 1986 (Vic) (the 'LAC Act') as a result of the compulsory acquisition of the subject land.

3 The parties to the proceeding are a long way apart on the amount of compensation to which Murdesk is entitled. Murdesk contends that the subject land was a premium or 'investment grade' parcel of land that would have attracted a significantly higher price per hectare than other land in the vicinity, and that it had a special value to Murdesk and its sole director and shareholder, Mr Mervyn Dickey, who was in a unique position to take full advantage of the special attributes of the land. Mr Dickey, the Court was told, intended to develop the subject land as a high quality business park, and was uniquely placed to do so.

4 The subject land is in a prominent position on the northern outskirts of Melbourne, approximately 18 kilometres from the Melbourne CBD. It has extensive frontage to Cooper Street on its northern boundary and to the Hume Freeway-Craigieburn Bypass (the 'Bypass') on its western boundary. The on/off ramps for the Bypass at Cooper Street are located on its north-western corner. Cooper Street itself is dual carriageway and forms a major east-west connection between the town centre of Epping (Epping Plaza and the Northern Hospital) to the east and the Hume Highway industrial band at Campbellfield and Somerton to the west.

5 The subject land was originally part of a 74.56 hectare parcel of farming land acquired by Murdesk in February 2000 from George and Doris Bell, elderly siblings whose family had farmed the land for many years. The subject land was zoned Rural, but the area around Cooper Street had already been earmarked by the City of Whittlesea to be development for employment generating purposes and Murdesk wasted no time in formulating a development plan that involved rezoning the land to enable its development for both commercial and residential purposes. It engaged Coomes Consulting Group Pty Ltd[2] ('Coomes') to prepare a 'vision statement' for Cooper Street south, involving the development of a business/technology park with exposure to the proposed re-alignment of the Hume Freeway, Cooper Street and the Edgars Road extension, and a residential development to the south of that.

6 On 11 February 2002, the Roads Corporation of Victoria served on Murdesk a notice of acquisition for a 16.48 hectare corridor of land running north/south through the land for the purpose of constructing the Bypass.[3] The acquisition of this corridor resulted in the creation of a 'sliver' of land of a mere 2.9 hectares on the western side of the Bypass and the parcel of 55.14 hectares on the eastern side of the Bypass that is the subject land.

7 Murdesk remains the owner of the 'sliver' but, as a result of the compulsory acquisitions in 2002 and 2005, has essentially been divested of the significant parcel of land that it acquired from the Bell siblings in February 2000.

8 Pursuant to the proposal for the relocation of the MWM, the subject land has been consolidated with a 79.39 hectare parcel of land immediately to its east, which was referred to throughout the proceeding as the 'Haberfield land'. The Haberfield land was compulsorily acquired in May 2005, some 5 months before the compulsory acquisition of the subject land. It formed part of a deceased estate[4] of which Mr Peter Haberfield was the executor. The land owned by the estate comprised a total of approximately 132 hectares (the 'Haberfield estate land'). In late 2004, Mr Haberfield sought expressions of interest in the Haberfield estate land, and received responses from major developers in both industrial and residential markets, described as a 'who's who' of the Melbourne development community. However, the expressions of interest campaign undertaken by Mr Haberfield came to an abrupt end when the government announced that the Haberfield land was required for the purposes of the MWM and its ensuing compulsory acquisition.

9 It is common ground that the proposals to develop the Haberfield land and the subject land for the MWM form part of the same proposal for the purposes of assessing value under the LAC Act. The value of the subject land as at the date of acquisition is therefore not to be assessed on the basis that the neighbouring land would become the MWM, but rather on the basis that that the Haberfield land, like the subject land, was farming land that was to be rezoned for commercial and industrial development in accordance with the development plan prepared by the City of Whittlesea.

10 Under the LAC Act, Murdesk is entitled to compensation as a result of the compulsory acquisition of the subject land. It has already received an advance of compensation in the amount of $17,370,000.

11 By Amended Particulars of Claim dated 13 September 2011,[5] Murdesk claims the following:

(a) Pursuant to s 41(1)(a) of the LAC Act, market value of the subject land as of the date it was acquired (28 October 2005):

(b) Pursuant to s 41(1)(b) of the LAC Act, the special value of pecuniary advantage to Murdesk which was incidental to ownership and occupation of the subject land determined as follows:

Market value (as assessed by the Court) multiplied by 2.5% per month for such period as the Court may determine as being a reasonable time for the respondent to acquire replacement land with equivalent attributes, plus 6%, being a sum attributable to acquisition costs. (The multiplier of 2.5% representing, on the evidence before the Court, an average capital growth post 28 October 2005).

(c) Pursuant to s 41(1)(d) of the LAC Act, sums as loss attributable to disturbance in the form of consequential loss, namely pecuniary loss suffered by Murdesk as the natural, direct and reasonable consequence of the acquisition, being a sum calculated in the same way as the claim for special value.

(d) Pursuant to s 41(1)(f) of the LAC Act, sums for legal, valuation and other professional expenses estimated at $50,000 less the sum advanced of $50,000.

(e) Pursuant to s 44(1)(d) of the LAC Act, as solatium: $3,300,000

12 By the amended particulars of claim, Murdesk therefore claims in total $18,582,600 plus the amount for special value or loss attributable to disturbance referred to in paragraphs (b) and (c). The claims for special value or loss attributable to disturbance are made in the alternative. Murdesk also claims as solatium 10% of what it says is the market value of the subject land.

13 In its final submissions, the Secretary submitted the Court should conclude that the amount of compensation to be paid is as follows:

(a) as compensation for loss of market value on 28 October 2005:

No less than $15,120,000 and no more than $18,000,000

(d) in respect of legal and other expenses $43,148.86

14 The Secretary therefore submits that the compensation that Murdesk is entitled to be paid is in the range of $15,163,148.86 to $18,143,148.86, less amounts previously advanced.

15 There is therefore a significant dispute between the parties as to:

(a) the market value of the subject land at the relevant date;

(b) whether Murdesk is entitled to additional compensation for loss of special value or for disturbance; and

16 I deal with each of these questions in turn below.

17 The LAC Act provides for an interest in land described in a notice of acquisition given pursuant to that Act to vest in the acquiring authority upon publication in the Government Gazette of the notice of acquisition. Section 30 confers on any person who, immediately before the publication of the notice of acquisition, had an interest in land that was divested or diminished by the acquisition of the interest, a claim for compensation. Section 41(1) of the LAC Act then provides:

(1) Except as otherwise provided in this Part, in assessing the amount of compensation payable to a claimant in respect of an interest in land which is acquired under this Act, regard must be had to the following factors -

(a) the market value of the interest on the date of acquisition;

(b) any special value to the claimant on the date of acquisition;

(c) any loss attributable to severance;

(d) any loss attributable to disturbance;

(e) the enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed from the acquired land by reason of the implementation of the purpose for which the land was acquired;

(f) any legal, valuation and other professional expenses necessarily incurred by the claimant by reason of the acquisition of the interest.

18 Murdesk claims to be entitled to be compensated for the market value of its interest in the land on the date of acquisition and for the special value to it of the land. Alternatively to special value, it seeks compensation for losses attributable to disturbance.

19 Section 40 of the LAC Act defines 'market value', in relation to any interest in land on a particular date, to mean:

the amount of money that would have been paid for that interest if it had been sold on that date by a willing but not anxious seller to a willing but not anxious purchaser;

20 As this court has repeatedly stated,[6] the definition of market value in s 40 of the LAC Act reflects the test formulated by Isaacs J in Spencer's case:[7]

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 cognizant 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.[8]

21 In this case, as only part of the land owned by Murdesk was acquired by the Secretary - the sliver remains in the hands of Murdesk - market value is to be assessed by way of a 'before and after' analysis. Section 41(3) of the LAC Act provides:

If less than the whole of the land in which a claimant's interest subsists is acquired or less than the whole of that interest is acquired, the market value of the acquired interest is the difference between the market value of the interest before the acquisition and the market value of the interest after the acquisition.

22 This embraces not only the loss of the value of the land acquired but also the effect of the acquisition upon the value of the balance of the land - the sliver - at the date of acquisition.

23 Section 43(1)(a) provides that in assessing compensation, any increase or decrease in the market value of the interest in the land arising from the carrying out, or the proposal to carry out, the purpose for which the interest was acquired must be disregarded. This reflects what is known as the 'Pointe Gourde principle'.[9] The effects of the implementation of a public purpose may be direct or indirect. The market value of land may be affected by the impact of the implementation of the public purpose not only on the land that has been acquired, but also on surrounding land or land in the surrounding area.[10]

24 In this case, it was agreed that the effects of the development of the Haberfield land for the purposes of the MWM were to be disregarded.

25 Section 5A of the Valuation of Land Act 1960 (Vic) also prescribes how the value of land is to be determined. It provides:

5A Determining value of land

(1) Unless otherwise expressly provided where pursuant to the provisions of any Act a court board tribunal valuer or other person is required to determine the value of any land, every matter or thing which such court board tribunal valuer or person considers relevant to such determination shall be taken into account.

(2) In considering the weight to be given to the evidence of sales of other lands when determining such value, regard shall be given to the time at which such sales took place, the terms of such sales, the degree of comparability of the lands in question and any other relevant circumstances.

(3) Without limiting the generality of the foregoing provisions of this section when determining such value there shall, where it is relevant, be taken into account -

(a) the use to which such land is being put at the relevant time, the highest and best use to which the land might reasonably be expected to be put at the relevant time and to any potential use;

(b) the effect of any Act, regulation, local law, planning scheme or other such instrument which affects or may affect the use or development of such land;

(c) the shape size topography soil quality situation and aspect of the land;

(d) the situation of the land in respect to natural resources and to transport and other facilities and amenities;

(e) the extent condition and suitability of any improvements on the land; and

(f) the actual and potential capacity of the land to yield a monetary return.

26 It has been said that the approach that market value is to be assessed by reference to the potential highest and best use available to the land as at the relevant date ensures that the assessment reflects the full value of the land to the owner.[11] In this case, there was little or no dispute that the highest and best use of the land was for development for industrial and/or employment generating uses in accordance with what the Council proposed in the anticipated C31 amendment to the Whittlesea Planning Scheme.

27 Of course, pursuant to s 41, market value is not the only basis upon which compensation falls to be assessed. In Minister for Public Works v Thistlethwayte,[12] Lord Tucker said:

It must not be forgotten that it is the value of the land to the owner that has to be ascertained, and that the willing seller and purchaser is merely a useful and conventional method of arriving at a basic figure to which must be added in appropriate cases further sums for disturbance, severance, special value to the owner and the like.[13]

28 To similar effect, in Turner v Minister for Public Instruction,[14] Dixon CJ said:

The ultimate purpose of the inquiry is to find a figure which represents adequate compensation to the land owner for the loss of his land. Compensation should be the full monetary equivalent of the value to him of the land. All else is subsidiary to this end.[15]

29 Section 40 of the LAC Act defines the concept of special value in relation to an interest in land as being the value of any pecuniary advantage, in addition to market value, which is incidental to the claimant's ownership or occupation of the land. This was explained by Callinan J in Boland v Yates Property Corporation Pty Ltd[16] as follows:

The special value of land is its value to the owner over and above its market value. It arises in circumstances in which there is a conjunction of some special factor relating to the land and a capacity on the part of the owner exclusively or perhaps almost exclusively to exploit it. None of the examples given by the Full Federal Court are true examples of special value. There will in practice be few cases in which a property does have a special value for a particular owner. Obviously neither sentiment nor a long attachment to it will suffice. The special quality must be a quality that has an economic significance to the owner. A possible case would be one in which, for example, a blacksmith operates a forge in the vicinity of a racetrack on land zoned for residential purposes as a protected non-conforming use, the right to which might be lost on a transfer of ownership or an interruption of the protected use. Such a property will have a special value for its blacksmith owner, and perhaps another blacksmith who might be able to comply with the relevant requirements to enable him to continue the use but to no one else.[17]

30 In Arkaba Holdings Ltd v Commissioner of Highways (SA),[18] Bray CJ said:

...special value must, in my view, arise from some attribute of the land, some use made or to be made of it or advantage derived or to be derived from it, which is peculiar to the claimant and would not exist in the abstract hypothetical purchaser. Would a prudent man in the position of the claimant have been willing to give more for this land than the market value rather than fail to obtain or regain it if he had been momentarily deprived of it? A typical case of special value is where the land is peculiarly adapted to a particular kind of use made or intended to be made of it by the claimant, eg a doctor's consulting rooms, or agricultural land work in conjunction with a neighbouring residence or farm buildings'.[19]

31 In Coastal Estates Pty Ltd v Bass Shire Council,[20] Gobbo J described the concept of special value in the following terms:

In some cases it may be an advantage, such as particular knowledge or expertise or associated goodwill, which advances this owner but not another owner in the market.[21]

32 In Collex Pty Ltd v Roads and Traffic Authority (NSW),[22] Talbot J observed that special value could only arise where, at the time of compulsory acquisition, the owner was actually putting the property to some use for which it was especially well suited.[23]

33 Loss attributable to disturbance is defined in s 40 of the LAC Act to mean any pecuniary loss suffered by a claimant as a natural direct and reasonable consequence of the fact that an interest of the claimant in the land has been divested or diminished, being a pecuniary loss for which provision is not otherwise made in Part 4 of the LAC Act.

34 In Roads Corporation v Love,[24] Osborn J summarised the principles applicable to an award of compensation for disturbance loss:

(a) The application of the requirement that the relevant pecuniary loss be suffered as a consequence of the divestment of an interest in land may give rise to difficult questions of fact;

(b) The expression 'natural direct and reasonable consequence' is to be understood by the use of the three adjectives in combination, to connote a very close and limited connection between the event giving rise to a right to compensation and the financial loss suffered;

(c) The notion of disturbance loss is drawn from common law principles, which apply to causation except as modified or supplemented by statute; and

(d) The question of whether a consequence is a reasonable consequence within the meaning of a statutory definition requires the application of an objective test.[25]

35 Murdesk pressed upon the Court the concept of a 'liberal estimate' when assessing compensation for compulsory acquisition.[26] In Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd,[27] Dixon J identified a difference of purpose in valuing property for revenue cases and in compensation cases: in the compensation cases the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the revenue cases it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. His Honour then said:

While this difference cannot change the test of value, it is not without effect upon a court's attitude in the application of the test. In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate.[28]

36 Likewise, in McBaron v Roads and Traffic Authority of New South Wales,[29] Talbot J said:

... it is appropriate to seek to do justice by adopting a generous approach in favour of the resumee to ensure that just compensation is paid so far as the Act allows. Therefore any discretion should be exercised in favour of the claimant where practicable in order to achieve a just result.[30]

37 By the same token, the notion of compensation envisages that an owner is entitled to be compensated fairly and fully for his or her loss, but is not entitled to receive more than fair compensation.[31] It has been said that the principle of equivalence is at the root of statutory compensation, and unless the legislation provides otherwise, the owner is entitled to neither more nor less than his or her loss.[32]

38 In order to evaluate the valuation evidence and Mr Dickey's evidence as to the special value of the subject land for Murdesk and/or the disturbance that it has suffered as a result of the acquisition, it necessary to describe briefly how the subject land was positioned on the northern outskirts of Melbourne, the planning history of the area, the development history of the area, including the availability of broadacre land in the northern region, and possible constraints on development in the Cooper Street area.

39 The subject land is in the City of Whittlesea in an area referred to as the 'Epping Bulge', which is one of Melbourne's growth areas. The City of Whittlesea was already experiencing high population growth in October 2005. By the end of 2005, large housing estates were being developed or were foreshadowed to the north and north-east of the subject site, and the population in the municipality was increasing rapidly. In November 2005, the State government extended the Urban Growth Boundary ('UGB') to the immediate north in response to population pressures.

40 As early as 1995, the City of Whittlesea had identified land along Cooper Street as appropriate to be rezoned for industrial and/or employment-generating uses in order to create employment opportunities for the burgeoning local population. In the City of Whittlesea, development along Cooper Street unfolded largely from east to west, but the route for the Bypass was announced in 2001, providing significant impetus for commercial and industrial development further west in the vicinity of the subject land.

41 Nonetheless, in October 2005, the subject land and the Haberfield land immediately to its east were still zoned Rural and remained undeveloped for purposes other than farming.

42 By contrast, the land opposite the subject land at 360 Cooper Street was rezoned to 'General Industrial' by way of a site specific amendment in 1997. This land, on the northern side of Cooper Street abutting the Bypass, was owned by interests associated with Mr Robert Scanlon and was being developed as the Northpoint Enterprise Park ('Northpoint'). Northpoint was and continues to be developed as a joint venture between interests controlled by Mr Scanlon and the McMullin Group, a privately owned commercial property development company.

43 An aerial photograph of 360 Cooper Street taken in late August 2005[33] shows very limited development of Northpoint at that time. Although most of the road network for the enterprise park appears to have been developed, there is very limited construction of buildings on the land.

44 Land to the east of 360 Cooper Street was acquired by the Northpoint joint venture in the second half of 2004. In August 2004, 310 Cooper Street (immediately to the east of 360 Cooper Street) was acquired by Edgars Road Pty Ltd, a Scanlon/McMullin joint venture vehicle. In November 2004, the joint venture also acquired 300 Cooper Street, which is located between 310 Cooper Street and the more established and older style industrial development along Yale Drive, Epping, to its east. 300 Cooper Street is now the site of a large medical complex, which complements the Northern Hospital on the other side of Cooper Street.

45 However, as at October 2005, both 310 Cooper Street and 300 Cooper Street were zoned Rural and largely undeveloped.

46 Directly to the north of the Northpoint properties (300, 310 and 360 Cooper Street) were a series of rural properties fronting O'Herns Road. The most significant of these for the purposes of this proceeding is 135 O'Herns Road, which was acquired by interests associated with the McMullin Group in June 2006.

47 At the relevant date, the Haberfield land adjoined the subject land to its east forming part of the larger parcel of Haberfield estate land that 'wrapped around' the subject land to the east and south. The southern portion of the Haberfield estate land abutted residential areas in the suburb of Lalor and was earmarked for residential development (and has now been redeveloped for that purpose). It did not form part of the area around Cooper Street targeted for development for employment generating uses.

48 The Haberfield land and the subject land are now being developed together for the MWM.

49 In order to support its claim that the subject land had 'premium value', Murdesk relied heavily on the preparedness of the City of Whittlesea to support development in what became known as the 'Cooper Street Employment Area'[34] and the extensive and sophisticated forward-planning undertaken by the City of Whittlesea from about 1996 onwards.

50 The expert planning evidence called by the parties was uncontroversial. Mr David Whitney prepared an expert report at the request of the Secretary's solicitors and Mr Robert Milner prepared a report on instructions from Murdesk.[35] Messrs Milner and Whitney then prepared a joint report for the Court summarising what they considered to be the planning position as at the relevant date, to which I will refer presently.

51 Mr Milner gave evidence that the Cooper Street Employment Area benefited from a very engaged and forward-thinking local government and that from 1996 onwards, the City of Whittlesea was probably the leading exponent of orderly strategic planning and development in Victoria.

52 The City of Whittlesea identified Cooper Street as a location for industry and other employment-generating activities, and as a significant opportunity for long-term public and private investment. Strategic planning for the Cooper Street area commenced in 1995 with the City of Whittlesea General Plan, which identified the potential for urban uses in the Epping North and Cooper Street areas. Later that year, the City of Whittlesea released the Epping Bulge Position Statement recommending that land south of Cooper Street and land extending north to O'Herns Road be investigated and developed for a range of employment generating purposes. Land north of O'Herns Road was to be developed for residential purposes. The Position Statement provided for the allocation of infrastructure capacity to employment-generating developments along Cooper Street, in priority to its allocation to residential development.

53 The Cooper Street Precinct Strategy was published in 1996.[36] It was jointly commissioned by the Cities of Whittlesea and Hume to establish a framework for the future planning and development of the nominated study area along Cooper Street and focused on improving the attractiveness of Cooper Street as a location for industry and other employment-generating activities. The subject land was included in a precinct identified as an area of transition between more intensive industrial uses to the west and residential uses to the east and which was to include low density, general light industrial uses, office and commercial buildings. A staging plan envisaged new development building upon existing development, from east to west. The subject land was included within 'Stage 2', with the notation that the ability to service Stage 2 would be based upon the availability of additional sewage capacity.

54 In 1997, Amendment L143 to the Whittlesea Planning Scheme secured the re-zoning of 360 Cooper Street from 'General Farming B' to 'General Industrial'. Despite a planning panel recommendation to the contrary, the Council promoted the amendment and gained Ministerial support for it. It was gazetted in February 1998 and resulted in the re-zoning of 360 Cooper Street to enable the development of Northpoint.

55 In 1999, the City of Whittlesea prepared a new format planning scheme. The Municipal Strategic Statement noted the opportunities for growth in the Epping Bulge and the intended role of Cooper Street as an area for employment-generating industrial and business park uses. It stated that the City of Whittlesea would 'continue to work with all servicing agencies to resolve issues relating to the provision of infrastructure within the Cooper Street growth area' and would support 'employment-generating industries in the Cooper Street Precinct'.

56 For some time, however, the re-zoning of land in the Cooper Street area remained in limbo because of uncertainty about the route for the Bypass. That issue was resolved on 21 February 2001 with the announcement of the Bypass route, and the City of Whittlesea moved to prepare the necessary documentation to amend the Whittlesea Planning Scheme to re-zone the Cooper Street precinct to facilitate urban development. This resulted in the preparation of Amendment C31 to the Whittlesea Planning Scheme.

57 Amendment C31 was exhibited between June and August 2004. It covered approximately 400 hectares of land referred to as the 'Cooper Street Employment Area' consisting of land to the eastern side of the Bypass and the western side of Edgars Road[37] on the northern and southern sides of Cooper Street, including the subject land. Under Amendment C31, the Cooper Street Employment Area would be re-zoned to a Comprehensive Development Zone in which uses such as office, research and development, industry and restricted retail premises would be encouraged. The land uses nominated were intended to take advantage of proximity to major infrastructure projects, including the Bypass, the duplication of Cooper Street, the Northern Hospital, the Epping Plaza and the public transport corridor from Lalor station to Epping North.

58 As it applied to the subject land, Amendment C31 envisaged primarily business uses along its Cooper Street frontage to a depth of approximately 150 metres, with industrial uses to the south.

59 The centrepiece of Amendment C31 was the Cooper Street Employment Area Development Plan (the 'Development Plan') and accompanying Contributions Plan. The Development Plan aimed to facilitate the establishment of a range of employment-generating uses and to contribute to the Council's objective of achieving a jobs/housing balance.

60 The progress of Amendment C31 through the planning panel stage was impeded by the announcement on 9 November 2004 of the Government's intention to acquire the Haberfield land for the MWM. The panel decided to suspend hearings until the Haberfield acquisition was resolved. That occurred on 5 May 2005, when the Secretary to the Department of Infrastructure compulsorily acquired the Haberfield land. On 28 October 2005, the notice of acquisition for the subject land was also gazetted.

61 In his expert report, Mr Milner described the progress of Amendment C31 following the announcement of the decision on the relocation of the MWM to Cooper Street. The City of Whittlesea suggested that Amendment C31 be divided into two parts: part 1, dealing with the area to the north of Cooper Street, and part 2, dealing with the land to the south, namely the subject land and the Haberfield land. The panel accepted this approach, although it subsequently recommended that Part 2 be abandoned and a new amendment be prepared to facilitate the development of the MWM. The City of Whittlesea amended the Development Plan so that it covered the area north of Cooper Street only.

62 The panel recommended that Amendment C31 be approved generally in accordance with the amendment proposed by Council. Following the adoption of Amendment C31 by the City of Whittlesea in August 2006, it was approved and ultimately gazetted as Ministerial Amendment C100 in May 2007.

63 It was Mr Milner's evidence that this outcome would not have been any different had the subject land remained in the area covered by Amendment C31. Amendment C31 would have been gazetted in August 2005, prior to the acquisition of the subject land in October 2005, had it not been for the disruption caused by the Government's actions to secure a site for the MWM.

64 In their joint report,[38] Messrs Milner and Whitney agreed, in respect of planning issues (putting ecological issues to one side for the moment), that:

(a) There was a long and progressive planning history that identified the subject land and the Cooper Street area for an industrial and business role dating back to 1996;

(b) Through a series of events and planning processes, the intention to use land at Cooper Street had advanced by June 2004 from a strategic concept and planning report to a proposed and exhibited amendment (Amendment C31) that provided for the subject land to be rezoned Comprehensive Development Zone. Amendment C31 proposed to give effect to the Development Plan;

(c) The exhibition of Amendment C31 was completed by August 2004, and shortly afterwards it became known that the MWM was being considered for the Cooper Street area;

(d) There was a set of reasonable circumstances in which the subject land and the land affected by Amendment C31 would have been rezoned prior to the relevant date (28 October 2005) had it not been for the implications of the proposal for the MWM;

(e) If the subject land had not been rezoned by the relevant date, there was an extremely high probability of the land being rezoned shortly thereafter, and a prudent purchaser would have had a high level of assurance of the land being rezoned generally as contemplated by Amendment C31;

(f) At the relevant date or shortly thereafter, the land would have been rezoned to Comprehensive Development Zone and the provisions of the Second Schedule to the Whittlesea Planning Scheme would have applied. It would have referenced the Development Plan and required:

(i) all land uses, including open spaces, to be generally in accordance with the Development Plan; and

(ii) in respect of any decision concerning a subdivision of the land, consideration to be given to the effect of the proposed subdivision on any area of environmental or cultural significance identified in the Development Plan.

65 I accept these conclusions. Moreover, I accept that a prudent hypothetical purchaser would have had a high level of assurance of the subject land being rezoned generally as contemplated by Amendment C31 had it not already been rezoned at the relevant date. I also find that the prudent hypothetical purchaser would have had a high level of certainty, based on the Development Plan, about the extent and nature of the development that would be permitted on the subject land and on land in the Cooper Street Employment Area more generally.

66 The Development Plan is an impressive document, particularly for its time. Whilst principally directed to facilitating the establishment of the Cooper Street Employment Area for employment generating uses and expressing the Council's commitment to the establishment of a high quality industrial and business area, the Development Plan contains analysis of flora, fauna and habitat significance, heritage and cultural significance, waterways, drainage and catchments, and transport networks. It articulates a 'development vision' and 'design philosophy', specifically provides for conservation areas and open space, and discusses service provision. Many of these things come together in Figure 29, 'Development Plan & Design and Development Overlay'. Figure 29 is colour-coded map that shows land uses (business/employment, industrial/employment, servicing authority infrastructure), unencumbered open space, encumbered land (wetlands, detention basins, drainage channels, creek corridors), areas of environmental importance (including those with the highest priority for retention), pedestrian and bicycle links, collector roads and access streets.

67 Importantly, the Development Plan contains a development contributions scheme to fund the relevant matters and includes an 'open space land budget' for individual properties. The contributions that must be made for open space by land-owners are thereby fixed.

68 Having regard to the Development Plan, I accept that there was, as at the relevant date, a detailed framework in place allowing for the commercial and industrial development in the Cooper Street area which received strong support from the City of Whittlesea. That framework anticipated high quality development for business and industrial uses to take place on the subject land and the Haberfield land, as well as on Northpoint and on the other land acquired by the Northpoint interests on the northern side of Cooper Street.

69 Mr Mervyn Dickey gave detailed evidence about Murdesk's plans for the land. Mr Dickey is and was the sole director of Murdesk and the driving force to acquire and develop the subject land. He gave evidence that he was an experienced and successful property developer with over 30 years of investment and development experience.[39] It would not be overstating the position to say that Mr Dickey believed the subject land to be the opportunity of a lifetime as one of the best, if not the best, parcel of in globo land in Melbourne.

70 Mr Dickey said that he was first was introduced to the Epping area in around 1998, when he was looking for land for his church. In February 1999, he decided to focus his investment and development activities in the Epping Bulge. Such was the extraordinary opportunity that it shortly became his sole business focus.[40] In 1999 and 2000, Mr Dickey bought four properties in the Epping Bulge, including the subject land.[41] Each property was purchased with a different purpose in mind, but the subject land was 'the jewel in the Crown'.[42] Mr Dickey said that in his 30 years as a developer he had not known any other opportunity that approached the subject land.

71 Mr Dickey was greatly impressed with the City of Whittlesea and its forward looking, pro-development perspective. After consultation with officers from the Council, he retained Coomes to develop a vision statement for the subject land. The vision statement was presented to the Council in May 2001.[43]

72 Mr Dickey identified Northpoint as the model of the type of development that he wished to pursue on the subject land. He saw it as a high quality development that attracted premium businesses. It was his preference to develop the subject land as a business park of this kind and to hold it as a long term investment. He also had other options, such as subdividing and development, perhaps in conjunction with the Haberfield land. Alternatively, he could have held some of the lots in prime locations for investment purposes, including leasing and possible joint venturing. In these alternative scenarios, he would be 'chasing the market' by completing buildings to tenant specifications and then renting them out in order to build up a rental stream.[44]

73 Mr Dickey believed he had the support of the City of Whittlesea, which was keen to encourage development for employment generating uses on Cooper Street as quickly as possible. Mr Dickey believed that the Council's Director of Planning, Mr David Turnbull, would 'stretch the boundaries in as many ways as he could to help [Mr Dickey].'[45] The Council's goals for the development of the subject land coincided with those of Murdesk, and if an opportunity came up in the market place, Mr Turnbull would raise it with Mr Dickey.

74 According to Mr Dickey, there was a 'gamut' of opportunities for the subject land.[46] Due to the high profile nature of the property, high end users could put offices and showrooms at the front; and industrial uses could be developed at the rear of the site. Zoning flexibility meant that the site could accommodate ancillary uses for the Northern Hospital. At one point Mr Dickey spoke to the Council about developing a retirement village and a hotel and Mr Turnbull had agreed he would consider an eight story building on the site. Mr Dickey said:

That in my mind would raise the profile of this site, particularly when the freeway was at my door. It's a site that would be known by almost everybody in Melbourne. It would be the only eight level building anywhere in the area.[47]

75 Mr Dickey told the Court that if office developments were not possible early on, he would consider car yards, which needed a lot of space but not a lot of capital. After 15 or 20 years, the time would be right to move from car yard to office uses. This ability to 'take another bite of the cherry' gave the investor, in Mr Dickey's words, the opportunity to do many things that a developer could not do. As a business park operator and as the owner of the land, he could maintain the quality of the business park.[48]

76 In his affidavit made on 16 August 2011, Mr Dickey stated that as at the relevant date, Murdesk was in a dominant position by reason of the special attributes of the land. These special attributes, which he believed were ignored by the Secretary's valuers, were described by Mr Dickey as follows:

(a) The sheer quality of the subject land: it was fully 'investment grade';

(b) Its location in one of Melbourne's prime corners;

(c) Excellent access and exposure to the Freeway and a main arterial road (Cooper Street), which gave it potential for B Double traffic;

(d) The logistics advantage of the site's location. Its geographic location in the north of Melbourne and the proximity of the Hume Freeway and the large amount of freight it handles offered further advantages;

(f) It is only 18 kilometres from the Melbourne CBD;

(g) Its size (55.14 hectares) provided economies of scale and offered the developer more control;

(h) It was in a deemed comprehensive development zone, which is a superior and flexible zone which allows high end uses in addition to industrial uses;

(j) The City of Whittlesea was pro-development and was very keen to develop employment opportunities;

(k) The Council had the expertise to envisage and assist to achieve the potential of the subject land;

(l) It was a relatively easy, flat, ex-farmland property to develop;

(m) Flooding issues were a feature in the area but not on the subject land;

(n) There were no easements or development restrictions of that kind on the subject land.

77 The special attributes of the subject land, and whether they were properly taken into account (or taken into account at all) by the Secretary's valuers, was the subject of a large amount of evidence and submission in the proceeding, which is described and analysed below. Suffice to say that for his part, Mr Dickey considered the subject land to present unique opportunities, which Murdesk was well placed to exploit. Those opportunities arose not only from the qualities of the subject land, but from the far-sighted and pro-development Council and the strength of Mr Dickey's relationship with senior managers in Council and with their advisers, Coomes. This confluence of factors would enable Murdesk to develop the subject land for 'higher' uses than other industrial land which, according to Mr Dickey, made the subject land much more attractive than comparable industrial land. The business or office park model was therefore central both to Murdesk's plans for the subject land and to what Mr Dickey and Murdesk's valuers considered to be its 'premium' value.

78 Mr Dickey's evidence about the development potential of the subject land was both supported and challenged by evidence given by Mr Robert Papaleo on behalf of the Secretary.[49] Mr Papaleo is the Director of Strategic Research at Charter Keck Cramer, specialising in property research and strategic market analysis. Among other things, he has advised about longer term opportunities for industrial and business park developments in Melbourne's northern and western corridors.

79 Mr Papaleo was instructed by the Secretary's solicitors to prepare a report on the release and take-up of land earmarked and then used for industrial purposes in Epping and the surrounding suburbs in the years leading up to and following the relevant date. Mr Papaleo gave evidence about the development prospects of industrial land in the northern region and, generally, about the availability of comparable land in the north.

80 Mr Papaleo's expert report incorporated a report prepared by him in March 2006 in support of a proposed rezoning of land in Craigieburn for industrial purposes (the '2006 reference report'). The 2006 reference report considered demand and supply affecting the industrial land market in the northern region in the period leading up to the relevant date. More specifically, the 2006 reference report dealt with development prospects in the North Industrial Node,[50] based on information in the Urban Development Program Annual Report 2005 (the '2005 UDP').[51] It emphasised the relative proximity and accessibility of strategic infrastructure, including the airports, national freight routes, multi-modal interchanges, ports, docks and wharves, the Western and Northern Ring Roads, the Hume Highway and the Bypass. It noted that the Bypass was expected to significantly increase the attractiveness of the Cooper Street industrial precinct in Epping, given the direct access to Melbourne's strategic road infrastructure that it would facilitate.

81 As a result, Mr Papaleo identified 'a number of inherent location advantages and economic resources which make [the North Industrial Node] an attractive location for investment by a range of industrial space users and other related businesses'.[52] It was well located with respect to connection points between Melbourne and other regional and interstate centres and, after the opening of the Western and Northern Ring Roads, Hume's previously poor inter-regional links had improved dramatically. Furthermore, there were improvements to the local road network, including the Cooper Street duplication, the Edgars Road extension and the Somerton Road duplication.

82 However, Mr Papaleo also noted poor perceptions of the region among the business and general community - although these perceptions were changing - and an economic base which suffered from a relative lack of service/knowledge industries.

83 Consistently with Mr Dickey's ambitions for the subject land, however, Mr Papaleo observed that since the late 1990s, industrial development in the North Industrial Node had become more characterised by higher quality business and industrial parks compared to previous development which was disconnected and typically on a smaller scale. Developers had increasingly been institutional investors rather than private developers. This change in profile had had a significant impact on the scale and quality of development in the north and the type of user that was attracted.[53]

84 Moreover, in arguing that there would be a high take up of land in the north in the future, Mr Papaleo referred to the following matters:

(a) There were diminishing opportunities to develop land in established precincts in Hume and Whittlesea;

(b) Improvements in transport infrastructure were making the region more attractive;

(d) The North Industrial Node had been attracting a proportionately higher share of metropolitan demand because of the continuing availability of land;

(e) Larger sites and facilities were being required by industrial land users involved in transport, warehousing and distribution;

(f) Major investors, traditionally underrepresented in the region, would seek to gain greater exposure to this area and would in turn offer property solutions through their networks to others.[54]

85 As to the availability of industrial land in the North Industrial Node more generally, Mr Papaleo gave evidence that in mid-2005 there was about 440 hectares net of zoned developable land in the North Industrial Node. This was sufficient to satisfy 10 years of demand, assuming the high scenario consumption rate of 45 hectares per annum. There was a further 360 hectares[55] of unzoned net developable land within the pre-November 2005 Urban Growth Boundary ('UGB') across the North Industrial Node. This took into account the 50 hectares of Haberfield land committed to the MWM and the 20 hectares adjoining the MWM site that was to be expected to be rezoned residential.[56] The unzoned land was sufficient to accommodate a further 8 years of demand assuming the 'high scenario' consumption of 45 hectares per annum.

86 In his oral evidence, Mr Papaleo said that if 50 hectares that had been taken out for the MWM were added back in, supply would increase by up to 9 years.[57]

87 Mr Papaleo also noted that in November 2005 there was an unexpected extension of the UGB, resulting in 1,058 hectares of unzoned and vacant land becoming available as future major industrial areas at Craigieburn and Mickleham/Kalkallo which could satisfy a further 23 years of demand.[58]

88 It was therefore Mr Papaleo's evidence that there was no shortage of in globo development land in the North Industrial Node. However, he conceded in cross-examination that there would be some scarcity associated with a very large site available for development and available for sale.[59] I accept his evidence both as to the general availability of in globo development land in the north and the relative scarcity of zoned land available for development and for sale.

89 I also accept Mr Papaleo's evidence that the North Industrial Node had a number of inherent location advantages and economic resources which made it an attractive location for investment to a range of industrial users and related businesses, that improvements in transport infrastructure made the region more attractive than it had previously been, that larger sites and facilities were being required by industrial land users involved in transport, warehousing and distribution.

90 I note his prediction (in March 2006) that major investors were likely to seek to gain greater exposure to the area, but also his observation that there was a poor perception of the region among the business and general community - although those perceptions were changing.

Possible constraints on the development of the subject land

91 As at the relevant date, the subject land was not connected to the sewer. There was evidence that there were limitations on sewerage capacity in the area and the Secretary submitted that at the relevant date, sewerage to the north or front section of the subject land was neither available nor assured in terms of timing or cost. This had the consequence, all other things being equal, that the subject land was less desirable than sewered land in the vicinity of the subject land.

92 Ms Elizabeth Hamila, a civil engineer and senior associate at Coomes, gave evidence about the servicing of the subject and surrounding land, and as to the availability of sewerage services in particular.[60] In Murdesk's 2002 claim against Roads Corporation in respect of the Bypass acquisition,[61] the provision of sewerage facilities was held to be a constraint on immediate development of the subject land. According to Ms Hamila, this constraint had been overcome by the allocation of an additional 2,500 lots capacity to the area when Yarra Valley Water revised its sewerage strategy for the Cooper Street and Epping North areas in 2003.

93 Yarra Valley Water's sewerage servicing strategy for Cooper Street[62] identified dry weather capacity for an equivalent 4,750 residential lots at connection points on the Edgars Creek system (750 lots), the Darebin Creek system (2,500 lots), the Central Creek system (200 lots) and the Merri Creek system (1300 lots). A flow control facility at Cooper Street would control discharges initially to the Edgars Creek sewer and later to the Darebin Creek sewer. However, Yarra Valley Water flagged that temporary servicing strategies might also be considered.

94 Ms Hamila also noted that in July 2005, new funding arrangements for Water Authority infrastructure works were introduced in accordance with Essential Services Commission guidelines. Works deemed to benefit more than one development would be funded by the Water Authority. However, if works were deemed to be constructed 'ahead of program' with respect to normal progression of development, a 'bring forward' contribution would apply in lieu of standard per lot charges for the area.

95 Ms Hamila estimated that a 'bring forward' contribution of 26% should be applied to the permanent outfall works. She prepared development costs for a 44 lot subdivision plan on the subject land on the basis of advice from Yarra Valley Water[63] that to access up to 750 equivalent lots capacity in the Edgars Creek sewers required the construction of a flow control facility ($2.2 million), sewerage pumping station ($1 million) and a rising main ($200,000); and that to access equivalent 2,500 lots capacity in the Darebin Creek sewer required a rising main to the Darebin Creek system ($2.3 million).

96 Ms Hamila addressed the availability of sewerage services to the subject land by dividing it into three sections from north to south. Different sewerage arrangements would have had to be made for each of those sections, at least in the short to medium term following the relevant date:

(a) The northern portion of the subject land would discharge to an existing branch sewer on the north side of Cooper Street. This would require the construction of a flow control facility and a pressure main south to access 750 lots capacity in the Edgars Creek system and then east to the 2,500 lots capacity in the Darebin Creek system;

(b) The central portion of the land would be serviced by the Haberfield branch sewer traversing the Haberfield land and discharging to the flow control facility and Darebin outfall;

(c) The southern portion of the land would ultimately be serviced by the golf course branch sewer connecting to the Central Creek and Merri Creek systems. This southern catchment would not be developed prior to the completion of sewer relief works in 2011.

97 The costs have been apportioned between the three major development sites, Northpoint, the subject land and the Haberfield estate land. Murdesk would contribute one quarter to the cost of the flow control facility, one third to the cost of the pumping station and two thirds of the golf course branch sewer.

98 Thus, in her costings for the 44 lot subdivision, Ms Hamila costed the sewerage works that would have to be undertaken by a developer purchasing the subject land at $1.023 million.

99 In Ms Hamila's view, informed prospective purchasers would have been aware that reimbursements for developer funded sewerage outfall works might be deferred or discounted. Prospective purchasers might also have considered the opportunities for shared funding of works with other developers in the Cooper Street area.

100 As will be seen, the Secretary's valuers held the view that, notwithstanding Yarra Valley Water's sewerage servicing strategy for Cooper Street, the provision of sewerage to the subject land raised issues of timing, cost and commercial cooperation. As to commercial co-operation, Mr Torr gave evidence of a conversation he had had with Northpoint's Mr Peter Scanlon in which Mr Scanlon asked rhetorically why he should share sewer costs and introduce a new competitor to the location. According to Mr Torr, there was also a risk that the service provider, Yarra Valley Water, might not provide the infrastructure required for Stages 1 and 2 at the time that the land was otherwise ready for development. Even if a 'bring forward' contribution of 26% was paid by the developers, Yarra Valley Water would still have to find in its budget 74% of the amount required, which might pose difficulties given the amounts involved in sewerage provision. Finally, Stage 3 (the southern portion of the land) had a downstream delay in that it could not be serviced without very great expense until some six years after the relevant date.

101 When cross-examined, Ms Hamila accepted that a competing developer such as Mr Scanlon of Northpoint might not want to assist the development of the subject land. If Northpoint did not contribute to the flow control facility, the cost of $2.2 million would be borne entirely by the developer of the subject land and the Haberfield land. Accordingly, there was a risk that the cost of sewerage works could be higher than the estimated $1.023 million.

102 I accept Ms Hamila's evidence. I find, however, that at the relevant date a hypothetical purchaser would have considered there to be some uncertainty about the timing for the provision of sewerage services to the subject land, such uncertainty arising from the need to obtain the cooperation of the nearby landholders and the contribution to funding by the services provider in the case of Stages 1 and 2 and from the anticipated delay to 2011 in the case of Stage 3.

103 A further important question was raised about the extent, if any, that a prudent hypothetical purchaser would have regard to possible constraints, costs and/or delays resulting from native vegetation requirements and the presence of listed species on the subject land. Mr Torr reduced his valuation based upon evidence of potential flora and fauna issues on the subject land and, in particular, the presence of the Golden Sun Moth ('GSM'), a listed species under the Environment Protection & Biodiversity Conservation Act 1999 (Cth) (the 'EPBC Act').

104 According to the Secretary, the net effect of the ecological evidence that was placed before the Court was that the advice that a hypothetical purchaser would have received from ecologists on the relevant date was that:

(a) the relevant ecological approvals would take at least 12 months;

(b) 7.887 hectares would need to be set aside for native vegetation, along with a corridor for the Growling Grass Frog;

(c) Costs estimated at about $650,000 would be incurred for surveys, referrals, project management plans, net gain requirements and the provision of offset habitat.

105 The Secretary led expert evidence from Mr Stephen Mueck, botanist, and Mr Daniel Gilmore, zoologist, both of Biosis Research Pty Ltd ('Biosis'), about the results of a habitat hectare assessment carried out on the MWM site in August 2008 and earlier surveys of GSM on the site.[64] Murdesk called evidence from Mr Geoffrey Carr, botanist, of Ecology Australia Pty Ltd.[65] Mr Carr was one of the co-authors of a report prepared on behalf of Major Projects Victoria, 'Flora and Fauna Assessment - Melbourne Wholesale Market Extension, Cooper Street, Epping' dated 5 October 2006 ('Mr Carr's 2006 report'). Mr Carr's 2006 report contained the results of field surveys carried out on the MWM site in August and September 2005.

106 However, Murdesk's principal submission was that in October 2005 a prudent purchaser would have had regard to the ecological constraints on the development of the subject land that were identified in the Development Plan. The Development Plan refers to a study carried by Practical Ecology in 2001, which formed part of a series of studies undertaken by the City of Whittlesea to identify constraints on the development of the land in the Cooper Street Employment Area, including of an environmental and cultural heritage nature. Those constraints were mapped in the Development Plan. A particular area of environmental importance was identified on the subject land that was rated as being a priority for retention. The Development Plan incorporated into areas of open space all sites rated as being a priority for retention. It also required secondary vegetation surveys to be undertaken on all parcels of land prior to completion of subdivision designs, which were to be submitted to Council with permit applications. The requirements of the Victorian Native Vegetation Management Framework, including guidelines for net gain, also had to be addressed.

107 The planning experts, Messrs Milner and Whitney, reported jointly on the planning implications of the ecological evidence.[66] In their joint report they agreed:

(a) At the relevant date, if the prudent purchaser had the report of Mr Mueck and the report of Mr Carr, the implications of their advice would not have affected the timing for the rezoning of the land. Both reports would have necessitated a referral under the EPBC Act, but the time needed to obtain development approval may not have been any different.

(b) The importance of the Cooper Street Employment Area is such that its value for employment purposes would generally outweigh the need to set aside land for conservation purposes.

(c) Modifications could be made to the 44 lot Coomes plan to accommodate some of the implications of the report prepared by Mr Mueck. Other implications would have been addressed by a habitat hectare contribution.

108 Mr Milner also stressed that the land budget in the Development Plan, which showed how much land could be developed and how much land was required to be set aside for open space, had been incorporated into the Planning Scheme to 'lock in' the open space requirements, including for the protection of flora and fauna. The land budget operated as an equalisation scheme across all of the land in Cooper Street. In order to change these settings, the Whittlesea Planning Scheme would need to be amended.

109 Murdesk therefore submitted that the prudent purchaser would have had regard to the exhibited version of the Development Plan to understand what was required in respect of flora and fauna, and would reasonably have taken the view that the responsible authority had done the appropriate work and identified the important strategic areas that needed to be set aside for flora and fauna conservation. The prudent hypothetical purchaser would therefore have concluded that the balance of the land was available for business and industry.

110 However, Mr Carr's 2006 report identified a number of issues which could not be adequately resolved simply by reference to the Development Plan. The field surveys conducted on 12 August and 9 September 2005 identified a possible dispersal corridor or habitat link for the Growling Grass Frog and the occurrence of Matted Flax-Lily. Mr Carr reported that the occurrence of Matted Flax-Lily and the potential occurrence of Growling Grass Frogs could be a constraint on development and that an EPBC referral would need to be submitted to the Commonwealth Department of Environment, Heritage, Water and the Arts ('DEHWA') if the development were to have a significant impact on the Growling Grass Frog. Moreover, the removal of indigenous vegetation would be subject to requirements under the Native Vegetation Framework.

111 Mr Carr did not identify GSM on the MWM site. However, Mr Gilmore gave extensive evidence about the 'rediscovery' of GSM in Melbourne in around 2004, the species not having been sighted there for 100 odd years. That evidence was, in summary, as follows:

(a) In 2004/2005, GSM was recorded in a number of localities within the Craigieburn grasslands and Cooper Street grasslands reserves;

(b) In about 2005, there was a referral to DEWHA under the EPBC Act because GSM was found on grasslands adjacent to 25 Cooper Street. As a result of the referral, funds were made available for further studies. Surveys were carried out in 2005/2006 and 2006/2007, the summer period being the flight season for the species and the optimum time to carry out surveys.

(c) In 2007, Biosis prepared two reports forming part of a sub-regional survey of the GSM to map its distribution. These reports showed that GSM was more widespread than was previously thought.

(d) In 2008, two surveys for GSM were carried out on the MWM site. GSM was very apparent at that time.

112 According to Mr Gilmore, the original expectation was that GSM was likely to be found only in natural grassland, that is, on sites that had a minimum 40% cover of native wallaby grass. However, more recent research had found that GSM is more flexible than previously thought. The surveys undertaken by Biosis in 2005/2006 and 2006/2007 identified GSM on sites that were considered suboptimal for the species. One of those sites was virtually entirely covered in exotic vegetation. However, this fact was initially not widely known because the results of surveys were not widely available in the ecological community. The fact that GSM was not as specialised as had been thought only became widely known with the publication a paper co-authored by Mr Gilmore in 2008.

113 It was Mr Gilmore's evidence that in 2004/2005, there was generally a lack of knowledge about GSM. Prior to a flurry of publications commencing in 2007, there was very limited information about the occurrence of GSM in and around Melbourne. So far as Mr Gilmore was aware, it was the subject of only a very small number of publications. By 2005/2006, the state of knowledge had improved, but much of the information was embedded in consultant reports for private developers. It was not widely known that GSM occurred in Melbourne's north and west. Biosis, the Merri Creek Management Committee and one or two other researchers knew that to be the case, but they continued to be guided by the belief that GSM needed good grassland rather than degraded exotic grassland.

114 Mr Gilmore described the period from the middle of 2005 until October 2005 as a 'window period' during which it would have been acceptable for a person to fail to identify the GSM as an issue on the subject land.[67] However, when asked what his advice to a potential purchaser of the subject land would have been in October 2005 in respect of the occurrence of GSM, Mr Gilmore answered, 'I would have thought it was a likely occurrence at that time'.[68] He said he would have suggested that the potential purchaser undertake a targeted survey for GSM in the summer.

115 Mr Mueck conducted a habitat hectare assessment for the MWM site in August 2008 and gave evidence more generally about the potential implications of flora and fauna issues for the development of the MWM site. He focussed on native vegetation, the Matted Flax-Lily, and a number of species of fauna, including GSM, the Growling Grass Frog and the Striped Legless Lizard.

116 In his 2 September 2009 report, Mr Mueck prescribed reserves of 5.532 and 2.535 hectares respectively to conserve the range of ecological values that he had identified. These reserves would be required in order to avoid or minimise impacts on patches of native vegetation and to protect areas which supported Matted Flax-Lily and GSM, to allow for the passage of the Growling Grass Frog and retain some habitat of Striped Legless Lizard. Moreover, the clearing of the remaining vegetation would attract an offset prescription of 1.42 habitat hectares of very high conservation significance planes grassland. Development approval would most likely also require salvage of the Striped Legless Lizard and might require contribution to research and survey for nationally threatened species.

117 Mr Mueck provided a further report on 13 September 2010, in response to a series of questions about GSM, including whether its presence was an issue that a prudent purchaser of broadacre land for future development would have investigated at the relevant date or that a reasonably competent ecology consultant would have recommended to be investigated, whether the measures identified in his 2 September 2009 report would have been applicable to a prudent purchaser at the relevant date, and whether these requirements were sufficient for GSM.

118 Mr Mueck set out a brief history of the identification of GSM in Melbourne's north following its rediscovery in the Craigieburn Grasslands Flora and Fauna Reserve in 2003. Surveys which located significant populations of GSM had been undertaken in December 2004, January 2005 and in subsequent flight seasons (2005/2006). Mr Mueck confirmed that at the relevant date, prudent purchasers of broad acre land in the Craigieburn area were investigating sites for GSM. He also confirmed that at the relevant date, any assessment of native grassland by a reasonably competent consultant should have considered the presence of GSM, particularly near the known populations at Craigieburn and Epping.[69] Although an emphasis was placed on native grasslands environments at this time and the presence of GSM in areas supporting less than a 40% cover of wallaby grass was only suspected, Biosis had identified significantly more native vegetation on the MWM site than Ecology Australia. Mr Mueck concluded that while it was not the flight season, there was some potential at the relevant date to observe GSM on the subject land, and most likely an experienced ecological consultant with an up to date understanding of local issues, would have recognised the presence of potential GSM habitat.[70] Mr Mueck identified additional requirements for GSM including federal requirements for the protection and management of GSM habitat at least equal to the area of GSM habitat lost and a contribution toward research into the understanding of the distribution and ecology of GSM, estimated at $100,000.

119 By letter dated 17 August 2011, Mr Mueck described the advice he would give to a hypothetical purchaser about the impact of environmental controls on the use and development of the subject land.[71] Relevantly, he advised as follows:

(a) As at 28 October 2005, there were areas of native grassland, Matted Flax-Lily listed as endangered under the EPBC Act, and the potential presence of the listed GSM. Another listed species, the Growling Grass Frog, was likely to utilise the land as a movement corridor;

(b) Referral under the EPBC Act would be required and it was likely that development would be assessed as a controlled action;

(c) Approval was likely to require protection of habitat for GSM, salvage of Striped Legless Lizard, the construction of favourable habitat for the Growling Grass Frog and a contribution for research.

120 Mr Mueck advised that as at the relevant date, DEWHA was requiring an offset of at least 3 to 1 for areas of GSM habitat approved for clearing. In addition to the areas to be retained, there was at least another 30 hectares of GSM habitat. It was possible that DEWHA could therefore impose an offset prescription requiring the protection of at least 90 hectares of GSM habitat elsewhere. Further, any permit to clear native vegetation would be accompanied by a permit condition requiring offsets under the native vegetation framework.

121 By letter dated 18 August 2011, Mr Mueck provided an estimate of costs associated with the steps that he thought would be required to be undertaken. That estimate of costs was in the order of $650,000, not including a number of matters that were unquantifiable. Additionally, special construction and design would have to be undertaken to provide habitat for the Growling Grass Frog.

122 In a joint report prepared on 15 September 2011, Mr Mueck, Mr Gilmore and Mr Carr agreed on a number of important points, including the following:

(a) There were patches of native vegetation on site. Discrepancies in the type, extent, distribution and condition in the different reports is primarily due to the condition differences due to climatic and seasonal changes and difference in the time of the field assessments, grazing regimes by macropods and cattle, and due to the dynamic nature of the vegetation on site;

(b) Despite the differences in the vegetation mapping and habitat hectare scoring, the offset prescription described in the Biosis research report and Mr Carr's affidavit are not significantly different;

(c) The assessments of the likelihood of regular occurrence for GSM, Growling Grass Frog and Striped Legless Lizard within the Mr Carr's report were reasonable assessments;

(d) GSM was recorded as a species with a low to moderate likelihood of regular occurrence at the study site in the Mr Carr's initial report. It was not recorded on the site at this time and would not have been detected due to the timing of the survey. However, GSM was known to occur at the nearby Cooper Street grasslands before 28 October 2005;

(e) At the time of the Mr Carr's initial report, it was unlikely that GSM would have been predicted to occur at the site according to the DEWHA 'protected matters' search tool;

(f) At the time of the initial assessment undertaken by Mr Carr, the accepted habitat for GSM was vegetation with a cover of a minimum of 40% wallaby grasses. Such cover was not recorded on the site at the time and therefore it is agreed that the Mr Carr's assessment of GSM habitat is a reasonable assessment;

(g) Mr Carr's assessment of potential Growling Grass Frog habitat is a reasonable assessment;

Applicant v Respondent

At a glance

Court

Decision date

Before

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Judgment (809 paragraphs)

Parties

Legislation Cited (24)

Cases Cited (9)