Noubia Pty Limited v Coffs Harbour City Council No 3

Judgment

1. The Applicant Noubia Pty Limited (Noubia) seeks compensation for the value of land transferred to Coffs Harbour City Council (the Council) on 18 May 2007 under the terms of a development consent (the Consent) granted by the Council on 11 April 2003. The land became known as Lot 94 in Deposited Plan 1111430 from the date of transfer to the Council. These Class 4 proceedings seek to enforce a development consent condition which calls up the determination of compensation for the value of Lot 94 in accordance with the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (JT Act). The date of transfer of Lot 94 to the Council was 18 May 2007. The parties agreed issues in relation to other lots formerly in dispute in the course of the proceedings and these do not need to be further considered.
2. The relevant sections of the JT Act state: Division 4 Determination of amount of compensation 54 Entitlement to just compensation (1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land. … 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division) - (a) the market value of the land on the date of its acquisition, … (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. 56 Market value (1) In this Act - market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid) - (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired… …

Condition 1

1. The Consent was granted subject to Condition 1 inter alia on 11 April 2003. The current applicable terms of Condition 1 were finalised pursuant to a modification application granted on or about 25 September 2006. Since 25 September 2006, Condition 1 of the Consent provided: • The applicant must transfer or dedicate the lands set aside for acquisition within the approved plan of subdivision the subject of the development application, being those lands identified in the North Boambee Valley Stage 1 Release Area Developer Contributions Plan for Koala Management, Traffic Management, Water quality and community facilities. The lands must be transferred or dedicated to the Council in fee simple free of encumbrances, other than those acceptable to Council at or prior to the registration of the plan of subdivision. The Council must compensate the applicant for the lands. The value is to be determined at the date of transfer or dedication in accordance with section 54(1) of the Land Acquisition (Just Terms Compensation) Act 1991 with the relevant matters to be considered as set down by Section 55 of the Act. • Acquisition of public land by Council is to occur on a staged basis. The staging is to coincide with the release of adjoining land by the developer unless other arrangements have been made to the satisfaction of Council. • Additional lands proposed by the developer for public ownership not detailed in the North Boambee Valley Stage 1 Release Area Developer Contributions Plan are to be dedicated at no cost to Council at the time of Linen Plan registration. • Land being dedicated to or acquired by Council for a public purpose being improved by the removal of dead and dangerous trees, weeds, rubbish and all plants on Council [sic].
2. The Council accepts that it is obliged to pay Noubia for Lot 94 in accordance with Condition 1 and has given an express undertaking to that effect. It disputes the amount that is payable. Noubia accepted that as the applicant in this Class 4 proceeding it bears the onus of establishing entitlement to compensation. Having said that the parties also accept, appropriately, that the Court is acting as a judicial valuer for the purposes of applying the JT Act albeit within this Class 4 proceeding. Noubia contends for a value of $2,965,000 and the Council for a value of $110,000. Given the Council's undertaking Noubia accepts that it is unnecessary to deal with the various alternative bases in the pleadings by which Noubia sought to fix the Council with liability to pay compensation for the transfer of Lot 94.

Brief history of Council planning for North Boambee Valley, Noubia's 2003 development application

1. This proceeding relates to land which was previously rural in character in the North Boambee Valley, near Coffs Harbour. In 1991, as part of the Council's investigations into the North Boambee Valley release area, it commissioned a study by Bewsher Consulting Pty Ltd (the Bewsher study) to "define the 1% AEP floodplain in the North Boambee Valley Development Area as part of the draft LEP process". In 1997 the Council commissioned an environmental impact statement (EIS) from GHD Pty Ltd for the North Boambee Valley to examine the construction and operation of permanent stormwater pollution control structures (i.e. detention ponds, artificial wetlands and stormwater pollution control structures) to facilitate the Stage 1 Release Area, the first urban release stage identified in the Council's Masterplan for the North Boambee Valley. The EIS had regard to the Bewsher study. The EIS proposed a two lakes scheme to deal with stormwater issues in Stage 1.
2. On 20 April 2000, the Coffs Harbour Council Local Environmental Plan came into operation. The North Boambee Valley Stage 1 Release Area Developer Contributions Plan 1999 (the Contributions Plan) came into operation on 23 February 2000 and was amended on 16 October 2003. The Contributions Plan required certain lands to be acquired for a variety of public purposes including water quality and stormwater management purposes. Since the Stage 1 release area is located upstream of existing urban development, the Contributions Plan also provides that (a) it is necessary to provide flow retarding basins to maintain the 1% AEP flood discharge from the development area at the rate it was prior to urban development, and (b) a water quality objective requires the export of nutrients from urbanisation of the Boambee Valley to not exceed the levels existing prior to urbanisation. The area now known as Lot 94 is identified in the Contributions Plan for use for water quality and stormwater management purposes.
3. On 22 September 2000, the Council adopted the North Boambee Valley Information Sheet (Information Sheet) relating to the Stage 1 release area, which was a relevant policy at the time Noubia's development application was being considered. The land developed by Noubia which included Lot 94 is part of the Stage 1 release area.
4. Umwelt (Australia) Pty Ltd (Umwelt) consultants commissioned by Noubia produced a development concept which modified the two lakes scheme envisaged in the 1997 EIS to a five lakes scheme. On or about 20 September 2002, Noubia lodged with the Council development application DA 575/03. This ultimately led to the Consent for the staged subdivision of land including Lot 94 to create 160 residential lots, a community centre lot, public reserves and one future development lot (collectively known as the Lakes Estate).
5. On or about 18 May 2007, Noubia transferred land which became known as Lot 94 DP 1111430 to the Council in accordance with Condition 1. Lot 94 is 2.719 ha³.
6. Noubia has constructed the Lakes Estate pursuant to the Consent, including the creation of five artificial lakes. Lakes 3 and 4 were constructed on Lot 94 prior to its transfer to the Council in 2007.

History of proceedings

1. Noubia filed a summons dated 17 March 2017, amended on 8 September 2017. Supreme Court proceedings were also commenced and subsequently transferred to the Court. In Noubia Pty Ltd v Coffs Harbour City Council [2019] NSWLEC 113 (Noubia No 1) Sheahan J determined matters in favour of Noubia and ordered compensation for the three lots then in issue in the amounts contended for by Noubia. In Coffs Harbour City Council v Noubia Pty Ltd (2020) 246 LGERA 56; [2020] NSWCA 142 (Noubia CA) the Court of Appeal allowed the Council's appeal and remitted the matter to this Court for a rehearing on Lots 94 and 163. The grounds upheld included failure to deal with disputed evidence and competing submissions. The parties have now agreed on the compensation payable in respect of Lot 163.
2. Justice Sheahan having retired, the remitted hearing commenced before me on 29 March 2021 with a site view on 30 March 2021 and proceeded to 1 April 2021. During the hearing it became clear that the state of the stormwater engineering evidence was unhelpful. Proceedings were adjourned to enable the preparation of further evidence. On 6 May 2021 I ordered that the expert stormwater engineers produce a further supplementary (third) joint report (JER 3). That report was filed on 27 October 2021. In Noubia Pty Limited v Coffs Harbour City Council (No 2) [2021] NSWLEC 142 (Noubia No 2), I allowed Noubia to rely on the further supplementary (third) JER. The Council appealed that decision, necessitating vacation of hearing dates on 14-17 March 2022. In Coffs Harbour City Council v Noubia Pty Limited [2022] NSWCA 32 (Noubia CA 2) the Court of Appeal dismissed the Council's appeal. The part-heard matter recommenced on 14 December 2022 with the compensation payable in respect of Lot 94 continuing to be in dispute.

Summary of issues

1. The valuation of Lot 94 is to be undertaken in accordance with the JT Act as required by Condition 1, albeit no compulsory acquisition under the JT Act has occurred. This has resulted in a number of complexities in the issues presented by the parties. Market value is defined in s 56(1) in hypothetical terms as the amount a willing but not anxious buyer would pay to a willing but not anxious seller.
2. The first issue arising is whether Noubia can rely on the so-called statutory disregard pursuant to s 55(a) and s 56(1)(a) of the JT Act. The Court must, when determining the market value of Lot 94, disregard any increase or decrease in the value of land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. In determining this question the Court must identify the nature of the public purpose for which the land was acquired. The identification of the public purpose is disputed (Sub-issue 1(a)). Further, on the Council's case, the Applicant bears the onus of demonstrating to the Court (or the Court must determine) whether the carrying out of the public purpose for which the land was acquired caused a decrease in value of Lot 94, as without satisfaction of that causative requirement the statutory disregard in s 56(1)(a) cannot be relied upon by Noubia (Sub-issue 1(b)).
3. If Issue 1 is determined in Noubia's favour, Issue 2 arises of whether the Court can be satisfied that the hypothetical development application for the development of Lot 94 for 32 residential lots incorporating the alternative hypothetical subdivision and drainage scheme designed by the engineers (reflected in Ex A36) was likely to be approved by the Council in 2003 (the date of the original development application for Noubia's five lakes scheme). It is agreed that the date of hypothetical approval must be the date in 2003 when the Consent was granted rather than 18 May 2007 (the date of transfer of Lot 94), because Lot 94 formed part of a larger development area for which approval would have hypothetically been sought.
4. Noubia accepts that it bears the onus of establishing on the balance of probabilities the likelihood that prospective hypothetical buyers of Lot 94 would consider it likely that development consent would have been granted for a hypothetical development of the lot for residential purposes. The Council considers that the hypothetical development application was not likely to be approved.
5. Issue 3 is the appropriate valuation approach to determine compensation, the resolution of which will depend in part on how the other issues are resolved.

Evidence

1. Given the complexity of this proceeding, and progress over several years and multiple hearings, there is a large volume of material in evidence. Evidence relied on was adduced before Sheahan J in 2019, before me in 2021, and again in 2022. The following exhibits were tendered: 1. Aerial images from Google maps in 2019 of the current Lakes Estate (Ex A5); 2. The alternative hypothetical subdivision of Lot 94 before the Court in 2019 (Ex A6); 3. Plan of a neighbouring property to the Lakes Estate, which the parties referred to as the Gill property (Ex A8); 4. The letter dated 1 October 2002 from Umwelt to Mr Shanahan, director of Noubia, proposing the modification of the two lakes scheme to a five lakes scheme (Ex A10); 5. The Umwelt report on the Lakes Estate development dated October 2004, commissioned by Astoria Developments, a related company to Noubia (Ex A11); 6. Exhibit KFS-1 to the affidavit of Mr Shanahan dated 12 February 2019 (Ex A21); 7. The alternative hypothetical subdivision of Lot 94 and drainage scheme before the Court in 2021(Ex A30); 8. A marked-up plan showing the riparian areas in the 1997 EIS scheme (Ex R4); 9. The Statement of Environmental Effects (SEE) dated 19 September 2002 accompanying the 2003 development application (Ex R7); 10. The North Boambee Valley Information Sheet dated 22 September 2000 (Ex R8); 11. The EIS prepared by GHD dated August 1997 (Ex R9); 12. The Bewsher study dated November 1991 (Ex R13); and 13. Plan of the alternative hypothetical subdivision of Lot 94 and drainage scheme before the Court in 2022 (Ex A36).
2. The affidavits of Mr Shanahan dated 12 February 2019 and Mr Mutkins, employee of the Council dated 5 February 2019 were read.
3. The following stormwater engineering expert reports were tendered before the Court: 1. Report of Mr Jamieson engineer dated 11 October 2018 (Ex A2); 2. Report of Dr Martens engineer dated 4 February 2019 (Ex R1); 3. Supplementary report of Dr Martens dated 1 March 2019 (Ex R2); 4. First engineering joint expert report (JER) dated 20 February 2019 (Ex A3); 5. Supplementary report of Mr Jamieson dated 20 November 2020 (Ex A22) (Noubia CA judgment response); 6. Second engineering JER dated 1 March 2021 (Ex A23); and 7. Third engineering JER dated 27 October 2021 (Ex A33).
4. The third engineering JER states: In respect of the outcomes of Modelling Round 4, DM [Dr Martens] and PJ [Mr Jamieson] agree: a) The modelled outcomes provided in Table 1 are acceptable from a hydrologic and hydraulic modelling perspective. b) That the revised alternative drainage scheme, which includes retention of Lake 5 and an 18.6 m wide channel, would comply with Council requirements and would in our opinion have been acceptable to Council in terms of satisfying site flood conveyance and on-site detention objectives.
5. The third engineering JER resolved one of the major issues which arose before Sheahan J in 2019, was a major basis for the appeal in Noubia CA, and one of the major issues before me in the first hearing in 2021 concerning the operation of an alternative drainage scheme to adequately deal with upstream stormwater if Lot 94 was developed for a 32 lot residential subdivision. It is therefore unnecessary to set out much of the previously disputed engineering evidence before Sheahan J in 2019, refer to what the Court of Appeal considered in 2020 and what was tendered before me in the first hearing in April 2021. An enlarged plan of the alternative hypothetical subdivision and drainage scheme considered by the engineers, Annexure A of the third engineering JER, was tendered as Ex A36 (see above in [18(13)]). Figure 1: Annexure A of the third engineering JER (Ex 33)
6. In summary, the alternative hypothetical subdivision (Ex A6) before Sheahan J in 2019 provided for 35 residential lots, no Lakes 3, 4 and 5 and a channel width of 16.5 m. Some of the evidence referred to by the parties was prepared in relation to that scheme. A similar possibly identical scheme was tendered in 2021 (Ex 30). The revised scheme I am now considering as a result of the agreement of the engineers (Ex A36) provides for 32 residential lots on Lot 94, no Lakes 3 and 4, reinstatement of lake 5 (reducing the number of lots by three) and a wider channel width of 18.6 m.
7. The only remaining hydrological issue, which Noubia particularly referred to, is the suitability of Lot 94 overall for residential subdivision if vacant in 2003. According to Mr Jamieson's report and subsequent JERs Lot 94 was suitable for such development. Given the agreement of the engineers in the third engineering JER this issue appears to have diminished. In the third engineering JER at par 7 the engineers provided comments on certain parts of the 1997 Bewsher study. Mr Jamieson considered that the Bewsher study's relevance to the alternative hypothetical subdivision was to define areas that should be restricted from future development in terms of flooding considerations, and no such areas in what is now the Lakes Estate were identified. The study found there were no significant flood storage area within the study area and no high hazard flood fringe area defined. Mr Jamieson identified that no areas that should be restricted from future development were identified in the study area. Dr Martens stated that the study was commissioned with a view to rezoning an area for urban development. The study had to comply with the Council's 'Technical Guidelines for Subdivisions and Development'. The study demonstrated that low lying areas of the site were located on floodplain and were flood liable. It included an assessment of the hydrologic and hydraulic effects of urbanisation within the site and concluded that a series of flood retarding basins should be constructed to off-set the impact of urbanisation.
8. In oral evidence, Mr Jamieson considered water flow could be readily managed in the hypothetical subdivision with flows from upstream, able to be adequately conveyed within a 20-23 m corridor and the proposed width of corridor within the remaining 250 m channel having a top width of 18.6 m. Dr Martens agreed in oral evidence on 6 March 2019 that Lot 94 in its undeveloped state was no different from land around it from a flooding perspective.
9. The following town planning expert reports were tendered: 1. First town planning JER dated 21 February 2019 (Ex A14); 2. Supplementary report of Ms Hunter town planner (including CV) dated 20 November 2020 (Ex A24); 3. Second town planning JER dated 11 March 2021 (Ex A25); and 4. Third town planning JER dated 24 December 2021 (Ex A34).
10. The following valuation expert reports were tendered: 1. Report of Mr Maher valuer on Lot 94 dated 8 October 2018 (Ex A15); 2. Report of Mr Davis valuer on Lot 94 dated 13 February 2019 (Ex R10) 3. First valuation JER on Lot 94 dated 28 February 2019 (Ex A18); 4. Second valuation JER on Lot 94 dated 19 March 2021 (Ex A26); and 5. Third valuation JER on Lot 94 dated 20 January 2022 (Ex A35).
11. The third JERs prepared in relation to town planning and valuation matters were to enable consideration by those experts of the third engineering JER.

Issue 1: whether the statutory disregard in s 56(1)(a) can be relied upon by Noubia

1. In order to address the parties' conflicting submissions on the application of s 56(1)(a) of whether Noubia can establish a decrease in value of Lot 94 through disregarding the public purpose, two sub-issues are addressed. The first sub-issue is the identification of the public purpose as referred to in s 56(1)(a).

Sub-issue 1(a) - identification of the public purpose

1. The parties relied on different evidence and made conflicting submissions about the public purpose which should be considered in applying s 56(1)(a) of the JT Act to Lot 94.

Points of claim and defence

1. At par 11 of the points of claim, Noubia pleaded the following: Lot 94 in DP 1111430 ('Lot 94') 11 . On or about 18 May 2007 the Applicant caused the transfer of Lot 94 in DP 1111430 to the Respondent in reliance on Condition 1 (as modified on 25 September 2006). Particulars (a) Lot 94 is land identified in the North Boambee Valley Stage 1 Release Area Developer Contributions Plan ('the Contributions Plan') for water quality and stormwater management purposes. …
2. The Council pleaded in its points of defence: Lot 94 in DP 1111430 ("Lot 94") 11. The Respondent admits that on or about 18 May 2007 the Applicant caused the transfer of Lot 94 in DP 1111430 to the Respondent. a) The Respondent admits particular (a) and further states Lot 94 is split by Torrens Way [sic] and now generally consists of two lakes referred to as Lake 3 and Lot 4. …

Evidence relied on by Noubia

1. The following evidence of the Council was relied on by Noubia.

Mr Mutkins' affidavit sworn 5 February 2019

1. Mr Mutkins had been employed by the Council for 21 years in 2019. As development contributions officer he was responsible for the management of the Council's developers' contributions portfolio. In respect of Lot 94, he deposed: Lots 94 in DP 1111430 (Lot 94) … 24. The Contributions Plan required certain lands to be acquired for a variety of public purposes, including koala management, traffic management, water management and quality and community facilities. 25. The Development Consent required Astoria to transfer land that was required to be dedicated on a staged basis as each linen plan was registered. 26. Stormwater Drainage, flood mitigation and water quality were to be addressed by a series of stormwater pollution control structures being detention ponds based on a design by Astoria's stormwater engineering consultant Umwelt. There were to be five structures referred to as "Lakes". 27. The Umwelt "Lakes" system was designed to meet the objectives of the EIS which was prepared as part of the rezoning proposal for the North Boambee Valley Stage 1 Release Area however is a modification to the original EIS design and Part 5 approval. The modified design comprises a five pond/lakes system in lieu of a two lakes system however met the objectives of the EIS. 28. Lot 94 is identified in the Contributions Plan for water quality and stormwater management purposes and was transferred to Council on or about 18 May 2007. Lot 94 now generally consists of Lakes 3 and 4.

Subdivision plan creating Lot 94

1. Lot 94 was created by subdivision in DP 1111430 registered on 18 May 2007. Lot 94 was transferred to the Council pursuant to this plan of subdivision. Lot 94 was labelled as a public reserve in the plan of subdivision, within the exhibit to Mr Shanahan's affidavit.

Council Planning, Environmental and Development Committee report on Noubia's development application

1. The report of the Council's Planning, Environmental and Development Committee on Noubia's development application dated 20 March 2003 was attached to the first town planning JER. The report identified that the subdivision proposed within Stage 1 of the development application would include stormwater pollution control structures and public reserves. The report noted that the developer sought to modify the EIS to construct a five lakes scheme instead of a two lakes scheme. It also noted that the release area controls include environmental protection such as establishing wetlands and detention basins. The report stated that the subdivision proposal is generally in accordance with the Information Sheet, and that the proposed five lakes scheme has been reviewed internally and externally and will have less environmental impact.

Evidence relied on by Council

1. The Council referred to Mr Jamieson's report, the engineer for Noubia, dated 20 November 2020. The part of the report relied on details the underlying principles Mr Jamieson used to assess the alternative hypothetical subdivision and drainage scheme. Mr Jamieson assumed the water management system would convey existing upstream flows and upstream developers would be responsible for the management of any developed flows.
2. The Council referred to pars 5, 7, 8, 9, 15 and 21 of the report. In par 5 of the report Mr Jamieson disagreed with Basten JA's summary of his evidence in Noubia CA at [90]. He did not disregard the conveyance of flows from the existing catchment. In par 7 Mr Jamieson quoted a letter from Umwelt to Mr Shanahan dated 9 July 2013 that stated: A hypothetical alternative to Noubia constructing the five lakes scheme would be for Noubia to construct sufficient conveyance, detention and water quality controls for the Lakes Estate alone leaving the provision of conveyance, detention and water quality controls for upstream areas the responsibility of the upstream developers.
3. At par 8 Mr Jamieson specified that he was referring to any additional flows and water quality impacts that would result from future development of the upstream catchment.
4. In pars 9, 15 and 21 of the report Mr Jamieson stated: 9. I consider that is clear from paragraph 5 of the second page of the letter that the Alternative Hypothetical subdivision makes provisions for the conveyance of then existing upstream flows through the site in accordance with the 1 in 100 year Average Recurrence Interval Standard. … 15. As set out paragraphs 5 to 14 above, provision of the conveyance of existing flows from upstream catchment through the proposed development site is and has been since July 2013, part of the water management system for the Alternative Hypothetical subdivision. … 21. I am of the opinion that the amended Alternate Hypothetical subdivision layout could be constructed to comply with hydraulic conveyance (flow), water quality and detention requirements for the Lakes Estate site and existing (i.e. undeveloped) upstream flows of 27m³/s during a 1 in 100 Year Average Recurrence Interval event. …

Council's submissions

1. The Council submitted orally that the public purpose underpinning the transfer of Lot 94 was narrow, being the management of stormwater arising from the developed upstream catchment (in contrast to the natural flow of upstream water from undeveloped land) relying on the evidence of Mr Jamieson engineer called by Noubia.
2. As Noubia was otherwise responsible for management of the stormwater on its own site arising from the natural flow of stormwater from the upstream undeveloped catchments (because this is an inherent characteristic of Noubia's land), this use of Lot 94 did not form part of the public purpose. The public purpose for which Lot 94 was acquired should be characterised as being to deal with the stormwater flows from the developed upstream catchments (and no other stormwater).
3. Reliance was placed on parts of the judgment of Basten JA in Noubia CA at [34], [69]-[71], [80]-[90] which was submitted to be persuasive albeit obiter dictum. The comments were said to reflect an agreement with the Council's approach to the public purpose and to be directed to assisting the trial judge in this proceeding, taking them beyond merely dictum.
4. In this case, Noubia's land is subject to the constraints (applying Noubia CA at [81]) that it would need to deal with upstream flows as a consequence of natural topography and a feature which contains a public element given the effect on neighbouring landowners. The obligation to deal with flows from the developed upstream catchment was not one Noubia was forced to accept by virtue of the natural characteristics of the land and therefore this is the relevant public purpose of the acquisition. The characteristic to which Basten JA is referring in [89] is the obligation to deal with their own flows and the undeveloped upstream flows.
5. The Council accepted that Basten JA's comments at [90] were a misstatement of Mr Jamieson's evidence, as Mr Jamieson's supplementary report dated 20 November 2020 demonstrated.

Noubia's submissions

1. Noubia argued that the public purpose of the acquisition of Lot 94 was for water quality and stormwater management purposes and therefore that purpose must be disregarded. It was the carrying out of that public purpose which visited Lakes 3 and 4 on Lot 94, compared with the alternative hypothetical subdivision and drainage scheme agreed by the engineers (Ex A36). The land should be valued on the basis that it was not home to two lakes. Rather it would have been occupied by a hypothetical subdivision of 32 residential lots incorporating the alternative drainage scheme.
2. This description of the public purpose had been accepted in the proceedings until the Council's oral submissions to the contrary on 14 and 15 December 2022. Noubia also relied on a paragraph in its earlier submissions in 2021 which stated that the public purpose was not and is not contested. The Council's submission should not now be heard.
3. If it is to be heard, it should be rejected as demonstrably wrong. Noubia relied on the points of claim par 11 and the Council's admission in its points of defence par 11 (above in [31]); the identification of the land for water quality and stormwater management purposes in the Contributions Plan as identified in the evidence of Mr Mutkins (above in [34]); the identification in the new subdivision plan dated 18 May 2007 of Lot 94 as a public reserve (above in [35]); and the descriptions of what the subdivision would comprise in the Council's assessment report for Noubia's development application (above in [36]).
4. The proposition that the public purpose was solely so that the Council would be in a position to deal with developed upstream flows from the rest of the Stage 1 Urban release area is not shown in any documents or pleadings. Mr Jamieson certainly gave evidence about developed and undeveloped upstream flows, both in his original evidence and since Noubia CA in 2020. That evidence has never been directed to explaining or identifying the public purpose of the acquisition. It was given in the quite different context of asking whether the Council would have regarded the alternative hypothetical subdivision and drainage scheme as an acceptable proposal or not.
5. The successful ground of appeal in Noubia CA was constructive failure to exercise jurisdiction. The comments of Basten JA relied upon by the Council beginning at [88] are plainly obiter dictum. His Honour at [88] stated that his indications about how the legal issues ought to be addressed will not determine the factual outcome. The Council here seeks to use the comments to determine the factual outcome. Furthermore, both parties acknowledge that there was an error in the way Basten JA approached these matters at [90] of Noubia CA. Mr Jamieson's supplementary report explained why his Honour was mistaken. This should lead the Court to be careful in applying his observations. His Honour's comments at [90] are a general statement of principle with which Noubia complies in this case. The issue of the characterisation of the public purpose was not debated in the Court of Appeal.
6. In determining compensation there must be a wholesale disregard of the agreed public purpose of the acquisition of Lot 94 for water quality and stormwater management purposes. Nevertheless, the alternative hypothetical subdivision of Lot 94 should maintain the 1% AEP discharge at the rate it was prior to urban development and nutrient export should not exceed the standards set by Council in relation to the 1997 EIS two lakes scheme or the 2003 Council-approved five lakes scheme. For the purposes of maintaining the 1% AEP discharge rate this includes management of the undeveloped upstream flows in addition to the developed flows generated by the alternative hypothetical subdivision. Whereas the ultimate development of the Stage 1 Release Area planned for 533 lots, the Noubia land comprises only 246 lots, or 46% of 533.
7. Alternatively, even if the Council's narrower public purpose is accepted, the analysis does not change. If the public purpose is to deal with developed upstream flows, this was central to the requirement to transfer Lot 94 to the Council. The whole of Lot 94 was required to deal with that public purpose.

Consideration of Sub-issue 1(a)

1. The parties conflicting submissions arising surprisingly late as the public purpose nominated by Noubia was not disputed in the Council's points of defence. In relation to the identification of the public purpose the parties conflicting submissions suggest an initial question to answer is when the public purpose of the transfer of Lot 94 to the Council should be identified. The public purpose at and leading up to the time of the transfer of Lot 94 to the Council is the timeframe most consistent with the statutory scheme under the JT Act. It is also the timeframe identified in Condition 1 which states: • The applicant must transfer or dedicate the lands set aside for acquisition within the approved plan of subdivision the subject of the development application, being those lands identified in the North Boambee Valley Stage 1 Release Area Developer Contributions Plan for Koala Management, Traffic Management, Water quality and community facilities. … The Council must compensate the applicant for the lands. The value is to be determined at the date of transfer or dedication (emphasis added) in accordance with section 54(1) of the Land Acquisition (Just Terms Compensation) Act 1991 with the relevant matters to be considered as set down by Section 55 of the Act….
2. Consistent with such an approach the parties otherwise agree that all other aspects of determining value are to be determined as at May 2007 or earlier in 2003 when DA 575/03 was approved.
3. The next issue to identify is the source of the public purpose. It is almost trite to state that the Council was the source of the public purpose underpinning the transfer of Lot 94 in May 2007. It undertook the planning process including the Contributions plan developed for the Stage 1 release area in the North Boambee Valley, a brief history of which is set out above in [5]-[10]. That process lead to the transfer of Noubia's land in Lot 94 to the Council. Consequently evidence addressing the Council's purpose in the 2003-2007 timeframe is the most relevant, and is in fact the only evidence before the Court in the relevant period. The identification of the public purpose as confirmed by the documents prepared by the Council in evidence and summarised above in [33]-[36] relied on by Noubia are indicative of why the Council required the transfer of Lot 94 as part of approving the residential subdivision of the Lakes Estate in 2003 for management of water quality and stormwater management.
4. No evidence supporting the narrow public purpose submitted orally by the Council's counsel was before the Court whether in 2003 or since. The Council's submissions on public purpose now pursued were not made in writing during the numerous stages of this litigation. Indeed par 6 of the Council's submissions dated 28 March 2021 stated that the public purpose could be accepted to be stormwater detention and water quality. The attempted adoption of Mr Jamieson's evidence about the different categories of stormwater to be dealt with in the lakes system on Noubia's land is irrelevant to the identification of the public purpose of the transfer of Lot 94 to the Council. Firstly this evidence was not directed to identifying the public purpose as Noubia identified in [49] above. Secondly, this evidence is an unlikely source for identifying the Council's public purpose in 2003-2007 given that Mr Jamieson has never been employed by the Council in relation to the development of which Lot 94 is a part. His evidence relied on by the Council was prepared for this proceeding in 2019-2022 and was directed to whether the Council was likely to grant development consent for an alternative development. The public purpose of the Council would more usually be identified in its documents, as for example the Council Planning, Environment and Development Committee's report concerning the 2003 development application relied on by Noubia identified above in [36] inter alia.
5. The Council relied heavily on parts of the judgment of Basten JA in Noubia CA. For the reasons articulated by Noubia set out above in [50] those obiter observations cannot assist the Council. The obiter comments of Basten JA in Noubia CA referred to by the Council did not identify the public purpose, let alone the one now relied on by the Council. The paragraphs relied on in his Honour's judgment identified issues that needed to be resolved which differences in the parties' evidence had thrown up at that stage. Basten JA concluded those issues were not resolved by the trial judge at first instance. As noted above in [22] the substantial differences in the stormwater engineering evidence in 2019 have now been completely resolved and that topic no longer requires resolution by me in this remitted hearing. Accordingly the context for Basten JA's observations identifying an issue that the trial judge had not resolved, one of the appeal grounds, no longer exists. It is also not apparent that the evidence of public purpose I have been asked to consider by Noubia, being largely the Council's own documents, was before the Court of Appeal.
6. The public purpose of the Council underpinning the transfer of Lot 94 in May 2007 is that identified in the points of claim of water quality and stormwater management.

Sub-issue 1(b) - whether the decrease in value of Lot 94 was caused by the carrying out of the public purpose

1. Regardless of the public purpose identified a second sub-issue arises on the Council's case, namely that Noubia must prove a causal connection between the decrease in value caused by the carrying out of the public purpose and the decrease in value of Lot 94. This inquiry is said to arise from the statutory language in s 56(1)(a) of the JT Act, as indeed that section states. Given my finding on sub-issue 1(a), the public purpose is water quality and stormwater management. The parties disagreed about the correct approach to this issue.
2. The Council submitted that Noubia bore the onus of proving that the approved five lakes scheme was caused by the carrying out of the public purpose. Noubia submitted that it is not required to satisfy the Court that the five lakes scheme was caused by the carrying out of the public purpose given the nature of the hypothetical exercise required in determining market value under the JT Act and the effect of Condition 1.

Evidence relied on by the Council

1. The Council relied on extensive evidence concerning the planning processes undertaken by Noubia in negotiation with the Council leading up to the approval of the five lakes scheme in 2003. Noubia submitted this evidence was all irrelevant as it did not address the correct question.

SEE and attachments, Umwelt documents

1. Extensive reference was made to the SEE supporting the 2003 development application and supporting documents, as well as the 2002 Umwelt letter to Noubia. Paragraph 12 of the Council's submissions gathers together the evidence relied upon as follows: 12. … From the Astoria Developments letter dated 6 August 2002 (Exhibit R7 Attachment 2) • The revised scheme "generally adhered to" Council's Development Control Plan and subsequent Information Sheet (North Boambee Valley Information Sheet, Exhibit R8). • "The lakes have generally been located in areas which follow the original watercourse rather than filling those areas." • "To provide a balance between cut and fill earthworks." • Because of a concern about "failure of the structures" proposed in the 1997 EIS. • To avoid impact upon a "significant stand of trees". • "The lakes have now generally been located adjacent to road reserves giving ownership of the lakes and open space to the community". • "A limited number of allotments (approximately 8-10 in number) will front the lakes". Senior Environmental Engineer's email 19 June 2002 (Exhibit R7 Attachment 2) • "The layout of the proposed basins and subdivision looks good in terms of the location of the basins over the alignment of the existing watercourse". • "This will assist with flow routing through the subdivision and reduce the amount of excavation and filling works that was required for the previous basin layouts." • "The location of the basins over the existing watercourse will also be will [sic] be much more appealing from an ecological point of view as it will minimise habitat destruction and retain a lot more of the existing riparian vegetation along the watercourse than the previous basin layout." • "The layout and position of the basin seems satisfactory in terms of access for both pedestrians and maintenance vehicles." Doug Gow & Associates 6 August 2002 (Exhibit R7 Attachment 2) • Page 8: "the site has been developed about three major site attributes remnant vegetation, waterway and distant views." • Page 9: "the establishment of a water feature in the foreground to this entrance will further enhance the creation of the initial landmark features in the estate." • Page 9: "the existing drainage line, which runs through the estate, will have two [sic] retention and water quality functions extended by embellishing it [sic] curtilage to create a water or wetland feature." • Page 9: "It is proposed that by the creation of a series of water features or ponds interspersed by smaller drainage lines (acting as flood ways) and a surrounding open space network combined with the use of mature vegetation, as landmarks will further enhance the community focal points." • Page 9: A criticism of the Information Sheet was that the "size and shape of water features…will require significant site filling". A further criticism was that "the location of the water features is not in relation to the existing waterway, which is proposed to be filled." In light of those criticisms the author then states "the engineering works required to both retain the water and place the filling be [sic] economically costly and require sophisticated engineering design solutions. Notwithstanding the above the potential for the failure of those works is substantially increased." • Page 15: "because of the amount of filling required to contain the proposed design of the pond system it is expected the existing significant vegetation will be lost. The design will also mean the existing drainage lines will be filled and not enhanced as part of the site's natural features." • In response to another criticism of the 1997 EIS concept was: • Page 15: "as per the previous discussion the smaller ponds will require less significant structures to contain the water. In this sense they are less likely to require maintenance and ensure their ongoing performance." • Page 16: "long batters, which would have been prominent in the previous proposal will be eliminated providing safer mowing." • Page 16: "by having some of the abutting land in private ownership the requirement to maintain the whole length of the perimeter of the pond will be eliminated." • Page 16: "the linking of the green belts will also make it economic to run mowers through the entire length without crossing major roads etc". • Page 16: "it is felt the configuration as shown will have major savings in both regular maintenance and the long term, issues associated with maintaining the functions of Earthen Embankment." • Page 17: "the lakes and surrounding housing have been configured to avoid back of lots looking directly into the back of other lots". • Page 17: "the revised layout puts more development in the flatter areas, which whilst it will require engineering solutions in regard to drainage (a major component being the excavation of the ponds) will make for cost efficient and economic development of dwellings." • Page 18: "the links will incorporate a brook type water feature, which will potentially contain the outlet of the stormwater drainage from the roads and building including trash raking, and reed beds". • Page 19: "the open space runs through the centre of the main residential prescient [sic]: precinct providing open space a short walk from all residence." • Page 19: "the open space combines the remnant vegetation and will include a series of water features, which will enhance the setting". • Page 19: "Interconnecting the water features are a series of small grassed areas which whilst acting as flood ways will provide opportunities for passive recreation." • As a criticism of the 1997 EIS concept: • Page 20: "the concept plan places the open Space around the lake in a ribbon type effect. Because of the filling required the natural attributes of the land will be lost, it is therefore concluded that the natural features desirable in Open Space will need to be installed rather than the existing site attributes installed [sic]." • Page 21: "The embellishment of the waterway by the creation of the water features and interconnection Open Spaces will be able to be excavated in to the site". • Page 22: As part of the criticism of the 1997 EIS concept "because of the proposed elongated length, which runs down the existing grades, their creation will require substantial filling to contain the water and provide land suitable for the Residential Development above the 1% AEP. The extent of the filling will mean the existing vegetation on the flatter areas will need to be removed to accommodate their construction." • Page 22: In continuing the criticism of the 1997 EIS concept "because of the long nature of the lakes going up the natural grade lines the construction of the lakes to the design as depicted in the Concept Plan will require significant cost in: • earthworks to construct the dam at the outfall; • site filling to make dwelling sites and surrounding roadways and land flood free; • loss of vegetation surrounding the existing watercourse which is required to be filled." • Page 22: the response to that criticism included "if using a performance basis in regard to detention and water quality issues, the lakes can be significantly reduced in size than what is proposed in the Concept Plan." • Page 23: "From an aesthetics point of view the long straight lines of the edge will make it difficult to accommodate the infrastructure required to pre-treatment the water." • Page 23: "Where the lakes depart from the previous design it is envisaged they will: • Replicate a natural creek system of interconnecting waterholes. The open bodies of water will provide a visual feature. • Be excavated across the grade and further into the ground rather than based on site filling." • Page 23: "The resulting structure to retain the water at its outfall will be significantly smaller structures which will: • Require less design and construction associated with it. As a risk management philosophy this will dramatically reduce the likelihood of failure and the impact if it does. • Improve the aesthetics of the development by reducing the size and the bulk of the retaining structures." • Page 23: "It is therefore taken the smaller ponds will provide the functionality as outlined in the Information Sheet but will not create the substantial costs associated with the creation of larger structures required for less ponds." • Page 25: "The combination of the Ponds, Larger Vegetation and the interconnecting green belts will provide the greatest opportunity to satisfy the aims of the Information Sheet which is to: • Create a variety of Open Space settings; • Provide pedestrian and bicycle access through the green belt areas; • Develop wetland areas and retention basins as landscape features." • Page 25: "The configuration of the Open Space generally abutting the ponds on one side and private lands abutting on the other side is a product of the combined functions of the ponds." • Page 25: "Opposite the waterbody Lots, which abut the pond will be able to establish private yards through landscaping which provide a backdrop to the water feature." • Page 26: A criticism of the Concept was "because extent of filling required in the construction of the ponds the existing vegetation will be lost. The result and layout therefore has little response to the site attributes and would create an unattractive Open Space without considerable effort to replicate what already exists." • Page 29: "To provide a stormwater system that minimises erosion and utilises Open Space in a manner that does not detract from its principal functions." The SEE dated 19 September 2002 (Exhibit R7) • Page 6: The SEE describes the features of the development including: • "Main distributor road having no access with five lakes separated by public reserves and linked with landscape pedestrian and cycleway. • Access road/courts with lake/public reserve frontage." • Page 12: "The five lake system as proposed has been designed to minimise earthworks and achieve the original objectives." • Page 13: "The proposed lake system, connected by landscaped public reserve and cycleways with landscape verges, will enhance the undulating nature of the land and vegetated watercourses." • Page 15: "The proposed construction of five lakes has been designed to provide a balance of earthworks and to meet the objectives of the [1997] EIS." • Page 17: "Astoria Pty Limited proposes to develop a fully landscaped neighbourhood with a lakeside theme and to establish a high standard of housing using a selected group of local building companies". • Page 17: "the proposed development meets the overall objectives of the housing, traffic, community and natural environmental strategies set out in the North Boambee Valley Information Sheet." The Umwelt letter dated 1 October 2002 (Exhibit A10) • Page 4: "Umwelt revisited the proposed detention pond layout to explore if the amount of earthworks required for the development could be reduced whilst still providing adequate flood retention on site (approximately 22,500 m3 of surcharge storage capacity). • Page 4: These changes reduced the amount of excess material generated by creation of the detention ponds from approximately 108,000 m3 for the GHD design to approximately 65,650 m3. • Page 5: As part of this revision, the footprint of the ponds was relocated where possible to be in close proximity to existing drainage lines, hence minimising the amount of earthworks required." • Page 5: As a result of this review, five ponds with a combined permanent storage volume of 23,350 m3 and a combined surcharge storage volume of 24,450 m3 are proposed. The proposed surcharge storage volume of 24,450 m3 is between the 22,500 m3 indicated as being required by GHD and the 31,100 m3 indicated by the initial modelling undertaken by Bewsher Consulting. • Page 8: As can be seen from Table 8, the net amount of fill generated by construction of the proposed five pond system is approximately 30,000 m3. This volume of material will be readily used on site in filling lots adjacent to the ponds, and road construction, Reduction of the total earthwork quantities for the detention ponds will significantly reduce the environmental impact and cost associated with removal and disposal of approximately 108,000 m3 of material that would have resulted from the construction of Ponds B3 and C2 as proposed in the GHD EIS.
2. Attachment 2 to the SEE, a concept plan justification report, contained a letter dated 6 August 2002 from Astoria Developments to the Council which in turn attached an email from an engineer at Umwelt to Mr Shanahan. The letter stated that "The redesigned scheme meets retention capacity as originally proposed by the GHD scheme" and refers to the attached email where it is stated "The proposed base area of the basins in the new layout is 26,164m2, which should be able to yield the required 22,500m3 storage as determined in the GHD EIS".
3. The Council referred to plans showing the riparian areas in the 1997 EIS scheme and the Information Sheet. On the final page of the Information Sheet is a 'Drainage and Water Quality diagram'. The Information Sheet states "Drainage and layout of proposed subdivisions are to be compatible with the stormwater pollution control measures and flood detention structures shown in the Drainage and Water Quality diagram".
4. The Umwelt letter stated that following development of a four pond layout (by Umwelt), that layout was further revised to explore if pond locations could be moved to be more consistent with the topographic features of the site and to see if the potential lot layout could be further enhanced in a five pond scheme.
5. The Umwelt report stated that the five lakes scheme proposed (by Umwelt) in 2002 had been further modified to be compatible with changes to the preferred development layout. This included the design of an additional wetland downstream of the five lakes.

Council's submissions

1. The Council's written submissions focussed on what Noubia had to demonstrate. The Council submitted orally that it is irrelevant whether the inquiry is subjective to Noubia or viewed from the position of the reasonable developer in Noubia's position, because the same evidence and considerations are relevant.
2. Firstly, Noubia could not satisfy the Court that the five lakes scheme which includes lakes 3 and 4 on Lot 94 were not caused by the public purpose (bearing in mind the Council identified a narrower public purpose in its submissions, as discussed above).
3. Noubia's decision to have a five lakes scheme was multi-faceted, being a design choice to achieve a certain lot lay-out which achieved maximum lot yield and amenity across the whole site. This varied from the Council's preferred scheme as identified in the EIS of a two lakes scheme. None of the reasons supporting the five lakes scheme (identified in the evidence above in [62]-[63]) suggest that Noubia was addressing the additional volume of upstream water resulting from development in the catchment - the narrow public purpose the Council contended for and which I have rejected above - in developing the five lakes scheme. The documents in the SEE and attachments (Ex R7) were produced because it was necessary for Noubia to justify its departure from the two lakes scheme. They demonstrate that Noubia was saving costs relative to the significant extent of the 1997 EIS scheme (as seen in Ex R4 and R7 above in [64]) and seeking to reduce the extent of land consumed by the scheme to maximise subdivision yield. The area occupied by the waterbodies decreased in Noubia's five lakes scheme from 4.5 hectares to 2.3 hectares. Enhancing potential lot layouts was an explicit goal (see above in [65]). The original five lakes design was modified in 2004 to be compatible with a preferred development layout (see above in [66]). The three lakes and channel scheme as reflected in the latest alternative hypothetical subdivision and drainage scheme (Ex A36) was never proposed.
4. Furthermore, the Council submitted that Noubia's valuation expert did not carry out a before and after valuation, as he conceded in cross-examination. This issue is squarely raised later in this judgment, but is relevant to the issue of causation in s 56(1)(a) because if the five lakes scheme was the highest and best use, this would be the option the developer would be expected to choose. If it could not be demonstrated that the three lakes and alternative drainage scheme (Ex A36) was the highest and best use, the finding could not be made that this scheme would have been selected by Noubia in 2003. The Council submitted that Mr Maher, Noubia's retained valuer, did not carry out a before and after valuation, as demonstrated by his concession in cross-examination, which was extracted in Noubia CA at [93] (see below in [218]-[219]).
5. Secondly, in order for Noubia to demonstrate the causal connection required by s 56(1)(a) of the JT Act, Noubia was required to satisfy the Court that in 2003 Noubia would have sought consent for the revised alternative hypothetical subdivision (Ex A36). If it would not have done so, it cannot be said that the decrease in value was caused by the carrying out of the public purpose.
6. Noubia cannot do that because it has not carried out a before and after valuation. The failure to carry out that before and after valuation - which according to Mr Maher would have been the proper methodology (below in [195]) - was a deliberate forensic decision taken by Noubia early in this proceeding.
7. In the Council's submission the Court need go no further. Noubia cannot demonstrate that there has been a decrease in value which was caused by the carrying out of the public purpose. The result is that the hypothetical transaction, being the sale of Lot 94 in 2007, was of land subject to the requirements of the 2003 consent. It was inundated land forming Lakes 3 and 4 being an integral part of the stormwater and drainage system for the subdivision of the land.

Noubia's submissions

1. Noubia submitted that the Council was asking the wrong question in posing the issue as 'whether in 2003 firstly Noubia would have sought consent for the revised alternative subdivision and whether the Council would have granted consent to it'. No comparison of the alternative hypothetical subdivision of Lot 94 with the currently approved and built five lakes scheme is required. The valuation exercise is objective, not focussed on the subjective experience of Noubia. The question to be determined is the market value of Lot 94 on 18 May 2007 by asking what the development potential of the land was based on the highest and best use of that lot at the relevant time. A comparison of the alternative hypothetical subdivision of Lot 94 with the currently approved outcome is not required. Whether Noubia would have sought consent in 2003 for the alternative hypothetical subdivision is also irrelevant. The value of Lot 94 can be assessed by considering the value of an acceptable residential subdivision development, that being its highest and best use. The land is zoned to permit such development and there is such development in the locality.
2. The question posed by the Council is inconsistent with Condition 1 of the Consent. The land being transferred cannot fairly be valued on the basis that the land was subject to the requirements of the Consent where that Consent required the transfer in order to put into effect the public purpose.
3. It is plain that the carrying out of the public purpose of water quality and stormwater management on Lot 94, which involved the construction of Lakes 3 and 4, caused a decrease in value of the land. The land was previously zoned residential and available for residential purposes and thereafter it was unavailable for residential development and inundated with water. By mandating compensation, Condition 1 clearly acknowledged that there has been a decrease in value and that Lot 94 had a higher and better use than water quality and stormwater management purposes.
4. It was entirely open to Mr Maher to conclude - and he did conclude - that not carrying out a particular kind of before and after valuation (as put to him in cross-examination) was not material to the valuation opinion which he did express, which was based on a different type of before and after comparison which was considered by Mr Maher to be fair and reasonable.
5. It is wrong of the Council to assert that Noubia has not established causation, because the very same Consent that approved the five lakes scheme was the Consent that required the Applicant to transfer Lot 94 and it was that Consent that referred to the Council's obligation to pay compensation for the transferred land. It would be fundamentally inconsistent with that background - and would amount to an abuse of process by the Council - to allow the Council to maintain a submission now that Noubia has not established "causation" in that sense.
6. Noubia was entitled to explore, when it sought consent in 2003, how the Council's water quality and stormwater management purposes were to be achieved to the Council's satisfaction so as to obtain development consent. Neither the Council nor Noubia was ultimately constrained by the 1997 EIS as the only single way to achieve the Council's water quality and stormwater management purposes and at the same time maximise the subdivision yield.
7. The Council does not refer to what is summarised above in [63] about that which is contained in the SEE. The proposed five lakes scheme met the requirements of retention in the 1997 EIS scheme. This is confirmed in the Umwelt letter. The same characteristics were maintained in the 2004 design as proposed by Umwelt.
8. The fact that the five lakes scheme took up less area than the scheme the subject of Council's 1997 EIS does not assist the Council. Both were acceptable ways to maintain the same level of downstream flows and achieve an equivalent level of water quality. It is also irrelevant that the hypothetical three lakes and channel system was never proposed by Noubia in 2003. That is akin to saying that a valuer cannot value a vacant residential lot on the basis that it is ripe for development as a residential flat building because no-one has ever actually applied for a residential flat building on the land.
9. Posing the relevant question in the Council's terms, whether for a broad or narrow purpose, does not properly reflect the statutory disregard referred to in s 56(1)(a) and ignores the requirement of the Council that Lot 94 be transferred to it. Consequently Lot 94 was unavailable to Noubia for residential development as a result of that transfer, its highest and best use. That Noubia was able to devise a satisfactory five lakes scheme using Lot 94 for Lakes 3 and 4, which the Council approved, is not a relevant inquiry.
10. The carrying out of the public purpose of water quality and stormwater management on Lot 94 resulted in Lakes 3 and 4 inundating Lot 94 and therefore a decrease in value. That decrease in value caused by the carrying out of the public purpose must be disregarded. The market value of the land therefore should be determined on the basis that Lot 94 could be developed for residential subdivision. Consequently, the issue arises of whether a hypothetical development application for the development of Lot 94 with 32 lots and the alternative drainage scheme (Ex A36) would be approved.

Consideration of Sub-issue 1(b)

1. Resolution of this sub-issue requires consideration of the valuation task necessitated by the determination of market value of Lot 94 under the JT Act in light of the disregard in s 56(1)(a).
2. A key difference between the parties is the extent to which a subjective or objective assessment of the assumptions underpinning the consideration of market value must be applied. The Council emphasised that the Court must consider whether Noubia could have lodged a DA in 2003 for the alternative hypothetical subdivision and drainage scheme being a three lakes and channel system (Ex A36) and asserted that a finding of fact had to be made that the Council would have approved such as DA. I would not describe a finding of a likelihood of a grant of development consent to a hypothetical subdivision as a matter of fact. That submission asserts a greater level of certainty of outcome than the hypothetical exercise under the JT Act requires. An alternative argument made was that if the party considered was a reasonable developer the same considerations would nevertheless apply. For the reasons given by Noubia I do not agree.
3. The Council's submission that Noubia had to show that its five lakes system was caused by the public purpose, and could not because that design resulted from a multi-faceted process which included lot yield maximisation inter alia, is not addressing the correct question for the purposes of the hypothetical exercise I must consider. The Council approved the five lakes system underpinning Noubia's DA in 2003 presumably then accepting that it met the requirements of the North Boambee Valley Stage 1 release area requirements in relation to water quality and stormwater management. As Noubia highlighted the SEE identified that the five lakes scheme met the requirements of the 1997 EIS. That Noubia undertook an extensive process to develop the proposal as identified in the Astoria developments letter dated 6 August 2002, Senior Environmental Engineer's email dated 19 June 2002, the Doug Gow & Associates report of 6 August 2002, the SEE dated 19 September 2002, the Umwelt letter dated 1 October 2002 as relied on by the Council as set out above in [62] is ultimately irrelevant to the question I must address in valuing Lot 94 under the JT Act.
4. As Noubia submitted above in [75], the question as posed by the Council is inconsistent with Condition 1 of the Consent. The land being transferred cannot fairly be valued on the basis that the land was subject to the requirements of the Consent where that Consent required the transfer in order to put into effect the public purpose. 'Causation' of the loss of value of Lot 94 arises from the transfer to the Council for the public purpose. Noubia is not required to establish more in terms of causation and certainly not that its five lakes scheme was caused by the public purpose.
5. The second argument of the Council was that Noubia had to satisfy the Court that in 2003 it would have sought consent for the alternative hypothetical subdivision (Ex A36). As it cannot do so causation has not been established according to the Council and consequently the transfer of land in 2007 must be assumed to include the inundated Lot 94.
6. Noubia's submissions once again reflect the orthodox approach to the question of the disregard focussing as they do on Lot 94. As Noubia emphasised the Council required the transfer of Lot 94 to it under Condition 1 for the public purpose of water quality and stormwater management. Lot 94 is no longer in the ownership of Noubia as a result of Condition 1 of the Consent. Whether an alternative development could have been sought in 2003 by Noubia, the hypothetical three lakes scheme, is irrelevant to the hypothetical exercise I am undertaking.
7. The inundation of Lot 94 resulted in a loss of value of that land which must be valued for the purposes of the JT Act. The Council argued in relation to both its principal arguments that as Noubia's valuer had not undertaken a before and after analysis for valuation purposes that also supported a finding that Noubia could not establish the requisite causation. I consider separately in Issue 3 an appropriate valuation approach for the compensation for Lot 94. It is not appropriate that in answering the present issue that I resolve at this point in the judgment whether a before and after approach to valuation is the only permissible valuation methodology available, as the Council submitted.

Overall conclusion on Issue 1

1. Noubia can rely on s 56(1)(a) as if a decrease in value of Lot 94 was caused by the public purpose of water quality and stormwater management underpinning the transfer of Lot 94 to the Council.

Issue 2: likelihood of development consent being granted in 2003 for 32 residential lots (alternative hypothetical subdivision) on Lot 94

1. The Court must now determine whether in 2003 the Council would, on the balance of probabilities, have been likely to grant development consent to the alternative hypothetical subdivision and drainage scheme (Ex A36) which provides for the location of 32 residential lots on Lot 94.
2. Noubia accepted that in undertaking the hypothetical exercise it is necessary to hypothesise the alternative controls that could have been put in place to service the alternative hypothetical subdivision of Lot 94. It relied on the agreement in the third engineering JER that controls could have been put in place to service the alternative hypothetical subdivision of Lot 94 which would comply with the Council requirements and would have been acceptable to the Council in relation to flood conveyance and on-site detention objectives.
3. The Council identified two areas the subject of expert evidence which it submitted would have meant it would not have granted development consent to the alternative hypothetical subdivision in 2003, being (i) riparian corridor concerns arising from the engineering evidence and separately (ii) town planning concerns. Water quality management issues were initially identified by the Council as another reason why development consent would not have been granted but this was not ultimately pressed by the Council. As I do not need to consider that issue further the parts of Ms Brown's evidence in the third town planning JER concerning water quality in pars 3.6-3.20 are not summarised.

Can the Council raise the adequacy of riparian corridor width at all?

1. Whether the Council can raise the issue of the adequacy of the riparian corridor width at all in light of the third engineering JER arises. Related to my finding on that issue is the need to rule on the objection of Noubia to that part of Ms Brown's planning evidence which addressed riparian corridor width.
2. The third engineering JER states : In respect of the outcomes of Modelling Round 4, DM and PJ agree: a) The modelled outcomes provided in Table 1 are acceptable from a hydrologic and hydraulic modelling perspective. b) That the revised alternative drainage scheme, which includes retention of Lake 5 and an 18.6 m wide channel, would comply with Council requirements and would in our opinion have been acceptable to Council in terms of satisfying site flood conveyance and on-site detention objectives.
3. According to Noubia, the proper inference from this agreement is that Dr Martens has no subsisting concerns in relation to the riparian corridor. Noubia submitted that the transcript of 1 April 2021 demonstrates that I did not limit the experts when producing their latest JER and they were invited to make any observations they wished to make. When the experts agreed that the alternative drainage scheme (Ex A36) would comply with Council requirements, they should be taken to mean that the scheme would comply with the Council's requirements in all respects. Noubia also relied on Noubia No 2 at [5], where the Court's orders of 6 May 2021 were extracted, and [26]-[28], where I made observations about the purpose of the third engineering JER.
4. The Council submitted that there was no agreement about riparian corridor width in the third engineering JER as the issue was not revisited. If the transcript from 1 April 2021 is viewed, the reasons for the adjournment and the production of the third engineering JER is that only two specific topics were to be addressed, namely the difference in the modelling used and affording Mr Jamieson a chance to review the Bewsher study and address that further if need be. The previous evidence about riparian corridors therefore remains relevant.

Finding on riparian corridor issue

1. The third engineering JER extracted above in [96] explicitly refers to a corridor width of 18.6 m inter alia and states that all council requirements have been met. There is no reason not to give these words their full effect. If remaining concerns existed on Dr Martens' part I have no doubt that he would have identified these in the report. The engineers had the opportunity to raise any matters in that report and did not.
2. I have reviewed the transcript of the hearing on 1 April 2021 pp 167-170 concerning what further work the engineers would do. While the focus of discussion was the need for the engineers to address two matters in particular, which the Council emphasised, Noubia's submissions accurately reflect the content and tenor of the relevant transcript extracts from the entire discussion in court on 1 April 2021. The further evidence was to provide the engineers an opportunity to consider all outstanding issues as between them.
3. No basis exists for revisiting earlier riparian corridor evidence of the engineers.

Noubia's objection to part of town planning evidence of Ms Brown upheld

1. In respect of the outstanding objection to part of Ms Brown's evidence at pars 3.6-3.20 of the third town planning JER referring to riparian corridors, Noubia submitted that it was not for Ms Brown to opine on matters of engineering. It was inconsistent with her agreed approach, which was to rely on the engineers in assessing whether the alternative drainage scheme was adequate and would have enabled the approval of the alternative hypothetical subdivision. Riparian corridor width was dealt with finally by the engineers.
2. The Council submitted that in pars 3.6 to 3.13 of the third planning JER Ms Brown was commenting on her reflections on the issues still outstanding from the third engineering JER. From pars 3.14 to 3.20 Ms Brown expressed opinions concerning compliance with the Information Sheet. I note that par 3.16 deals with water quality and is not pressed. These matters fall into a different category to the matters addressed by the engineers. Noubia submitted that pars 3.14 to 3.20 were not in a different category, because Ms Brown was elaborating on objections to the alternative hypothetical subdivision now agreed by the engineers.
3. Having reviewed paragraphs 3.6-3.20 of Ms Brown's evidence in the third town planning JER I consider all the paragraphs dealt with engineering matters now resolved by the agreement of the engineers. These paragraphs cannot be read, consistent with my finding above concerning the scope of the third engineering JER. All matters of engineering have been resolved between them and evidence of a town planner on the same matters is otiose.

Town planning evidence

1. Noubia submitted that no town planning issues stood in the way of the likely approval of the alternative hypothetical subdivision. The Council maintained that there were significant issues which would have resulted in the Council not approving it. Noubia's retained town planner was Ms Hunter and the Council's was Ms Brown. Much of the relevant oral evidence was given in 2019.

First planning JER 21 February 2019 (Ex A14) and second planning JER 1 March 2021 (Ex A25)

1. In the first and second town planning JERs considering the alternative hypothetical subdivision in 2019 (Ex A6) and 2021 (Ex A30) respectively, Ms Hunter considered that the schemes would have received development consent as they were permissible with consent, met the relevant planning controls and guidelines, provided alternative drainage measures, and preserved lakes, parks and vegetation to maintain residential amenity. Ms Hunter considered that water quality and drainage system issues were the only barrier to approval (and believed that Ms Brown agreed with that position), which were resolved by the alternative drainage scheme. The presence of Lakes 1 and 2 (noting that in the final alternative drainage scheme Lake 5 is retained, while in the previous scheme it was removed) were sufficient to retain amenity and that the 2003 planning controls had no requirement to provide lakes as a means of providing amenity of character within the Stage 1 release area.
2. Ms Brown considered that the alternative hypothetical subdivisions (Exs A6, A30) would not have been likely to be approved by the Council. Apart from relying on Dr Martens' evidence about the prospects of the alternative drainage scheme being approved, the absence of Lakes 3, 4 and 5 would remove the lakes 'character' of the estate and there would be a resulting loss of character and amenity.

Ms Hunter oral evidence

1. In examination-in-chief in 2019, Ms Hunter confirmed that the alternative hypothetical subdivision proposal (then Ex A6) was permissible with development consent, that the land would need to be filled to deal with a one-in-100-year flood event, that the subdivision met the requirements and concept of the Information Sheet, 1997 EIS, strategies and applicable controls, and was consistent with the character of the Lakes Estate. There was no planning reason why the proposal would not have been achieved.
2. In cross-examination in 2019 Ms Hunter agreed that the actual grant of consent in 2003 was a relevant consideration for the purposes of assessing whether the Council would approve a hypothetical development application. In response to questioning about the cubic metres of fill required to implement the alternative subdivision, Ms Hunter stated that 20,000 cubic metres of fill was not an impediment to the Council approving the subdivision, using an example of a recent approval of a 100-lot subdivision at Coffs Harbour airport which required 100,000 cubic metres of fill.
3. Ms Hunter was cross-examined in 2021. Asked whether she could derive assistance from the decision to grant consent in 2003, at which time the statutory policy assessment framework differed, Ms Hunter opined that the Council has continued to approve similar subdivisions to the one proposed in the same area, which is indicative of its appetite for such development.
4. Ms Hunter was cross-examined about the outlook from particular lots in the alternative hypothetical subdivision (Ex A30). She agreed that the level of amenity would be reduced from certain lots if the outlook from those lots would be onto other lots rather than a lake and park. She agreed that the amenity would change. Ms Hunter did not know whether a lake aspect was a key factor in the design of some dwellings. Some lots appeared to have been designed to take advantage of a northern aspect, rather than looking out over a lake. Interpreting the aerial photograph of the proposed alternative subdivision, in conjunction with the site view, some residents had not enjoyed an aspect over the lake and parkland. Some properties overlooking the lake lost privacy. Ms Hunter opined that the change in amenity would depend on what residents valued, and if they valued a lake and park view, amenity would decrease. If they valued gardening or thermal efficiency, for example, amenity may not decrease.
5. In re-examination, Ms Hunter was asked about the Gill property, by reference to plans showing that it was an area of low hazard floodway. Ms Hunter confirmed that there was a strip of low hazard floodway on the Gill property in accordance with the floodway mapping carried out in the Bewsher study.

Ms Brown oral evidence

1. In cross-examination in 2019, Ms Brown was asked whether she relied on Dr Martens' evidence about the deficiencies of the drainage scheme as a reason for thinking consent would have been refused, and whether, absent those concerns, there were no other additional planning issues that would have led to the Council refusing consent. She answered, "in isolation that is correct", which she later clarified meant the development consent could have been achieved aside from stormwater issues. She had not identified any other planning issue. Absent concerns over the drainage scheme, the Council would have been likely to approve the alternative hypothetical subdivision, if they were prepared to let the creek be filled in. She agreed that the Council granted consent in 2003 to a development involving the filling of lower order water courses. Ms Brown agreed that what the Council actually approved in 2003 is relevant to her assessment, because it shows the Council's approach to various issues involved in that application.
2. Ms Brown also agreed that a 2010 Office of Water (OoW) approval, in respect of the drainage system approved on Lot 163, was relevant as a demonstration of the approach the OoW would have taken. Ms Brown agreed that it would be reasonable to assume that the OoW may approve the channel as shown in the alternative hypothetical subdivision (Ex A6) because it was of similar albeit slightly narrower width. Having regard to the Council's approach, Ms Brown agreed that it would be reasonable to expect that the Council would have approved similar arrangements to the channel on Lot 163 if it was for the simple conveyance of water and systems were in place to meet water quality, stormwater and flood mitigation requirements.
3. Ms Brown was asked whether the alternative hypothetical subdivision (Ex A6) proposed a channel or riparian area of superior size and quality to any channel or riparian area to the south of the lakes. She answered that the channel proposed would be superior in width if it had vegetation of a higher standard, although she had not inspected the areas to the south.

Third town planning JER

1. In respect of the alternative drainage scheme before the Court in 2022 (Ex A36), Ms Brown's evidence was that the channel proposed would encroach upon the area of Lake 5 and the neighbouring property. There would also be encroachment from the linear floodway channel into the neighbouring senior's housing development. Ms Hunter's response was that the senior's housing development and the neighbouring aged care facility had not been built in 2003. There was no reason that the channel width could not have been accommodated given this would have been a greenfield site and given the opportunities to modify subdivision infrastructure.
2. In respect of the alternative hypothetical subdivision layout in Ex A36, the town planners agreed that it did not affect their earlier evidence, noting the deletion of proposed lots 33, 34 and 35.
3. Ms Hunter considered that the alternative hypothetical subdivision would have been likely to be approved by the Council in 2003 and 2007.
4. Ms Brown considered that Lakes 3, 4 and 5 as approved and constructed contribute to the visual and residential amenity of the Lakes Estate. The alternative hypothetical subdivision layout would result in significant loss of amenity for residents within the Lakes Estate with the loss of the riparian corridors and open space networks associated with Lakes 3 and 4 and to a lesser extent the revised Lake 5.
5. Ms Brown considered it unlikely that relevant agency approval would be granted to the alternative hypothetical subdivision and drainage scheme presently proposed. She referred to Ms Hunter's evidence in the first town planning JER of the concerns that NSW Department of Lands and Water Services (NSW DWLS) raised against the five lakes scheme compared to the two lakes 1997 EIS system. These included reduced reserve amenity, reduced social and recreational amenity and safety, and health and safety concerns. She considered that the alternative drainage scheme would significantly reduce the area of reserve amenity from the approved five lakes scheme, moving further from the original proposal under the EIS, and would reduce the social and recreational amenity available under the five lakes scheme. A longer channel system with steep constructed sides would introduce potential safety concerns.
6. Ms Brown noted the observations of Dr Martens in the third engineering JER in relation to the Bewsher study (set out above in [24]) and in particular that: 1. The study assumed that urban development would not occur within 30 m of each side of creeks (Appendix A to the study). 2. The study was to comply with Council's 'Technical Guidelines for Subdivisions and Development', which were provided at Appendix A to the study. 3. The study demonstrated that low lying areas of the site were located on a floodplain and were flood liable. 4. The study concluded that a series of flood retarding basins should be used to off-set the impact of urbanisation.
7. Ms Hunter noted that while NSW DWLS preferred the two lakes scheme, it issued general terms of approval for the five lakes scheme. Ms Hunter considered that the town planners brief was limited to comments only in relation to the drainage scheme agreed by the engineers. That scheme did not cause her to change any of her earlier evidence.

Noubia's submissions

1. Two issues of hydrology arise. Firstly the hydrological condition of Lot 94 prior to the creation of the lakes system and therefore its suitability for residential subdivision. Secondly the feasibility of the alternative hypothetical subdivision in light of likely controls on water quality and stormwater management, now addressed by the engineers' agreement.
2. In relation to the first matter, Noubia relied on the evidence of Mr Jamieson set out above in [24]-[25] to identify that Lot 94 was suitable for residential subdivision development being no more subject to flooding than many other lots in the vicinity which were developed for residential purposes. His evidence in Ex A2 (before Sheahan J), par 21 of Ex A22, his oral evidence in 2019 and 2021 confirm this.
3. Concerning town planning, in 2019 Ms Hunter confirmed her written evidence that the proposed subdivision of Lot 94 was permissible with development consent and that the land would need to be filled so that it was above the 1 in 100 Average Recurrence Interval (ARI) event (see above in [108]). Ms Hunter said that the hypothetical subdivision was designed to meet objectives of the 1997 EIS and the Information Sheet and was within the character of the Lakes Estate. Further, she considered that the alternative drainage arrangement based on Mr Jamieson's evidence met the 1997 EIS and Information Sheet, and therefore she could see no reason why the Council could not have approved that subdivision (Ex A6). For the purposes of assessing the next alternative hypothetical subdivision (Ex A30), Ms Hunter's individual report and her opinion in the second town planning JER maintained her previous opinions that: 1. The alternative hypothetical subdivision was permissible with consent between 2003 and 2012. 2. The alternative hypothetical subdivision was compatible with the relevant planning controls and guidelines that were in effect between 2003 and 2012. 3. The alternative hypothetical subdivision is of a similar scale and character to the approved subdivision. 4. The alternative hypothetical subdivision provides alternate, suitable, trunk drainage measures. 5. The remaining lakes, channelised drainage corridor, neighbourhood parks and native vegetation reserves maintain the residential amenity of the Lakes Estate despite the alternative drainage system.
4. Ms Hunter said that the Council has continued to approve similar subdivisions notwithstanding the low hazard floodway affectation, for example the Gill property next door (see above in [110], [112]). Ms Hunter was not dissuaded by cross-examination about particular lots in the 2020 alternative hypothetical subdivision (Ex A30), or the putative outlook or aspect of particular lots or the orientation of their 'backyard' or 'living areas', from her opinion that the overall residential amenity of the Lakes Estate would be maintained (see above in [111]). Where existing houses are located on lots developed for residential purposes in the actual subdivision is not determinative of the reduced amenity of hypothetical lots. In any event, amenity afforded by outlook can incur a loss of privacy or be outweighed by a resident's preferences (see above in [111]).
5. The engineers' alternative drainage scheme (Ex A36) does not affect the 32-lot subdivision of Lot 94, as agreed by the town planners (see above in [117]), or any of Ms Hunter's evidence. This is borne out by Ms Hunter's most recent evidence. Ms Hunter considers the alternative drainage scheme would comply with the Council requirements and would have been acceptable to the Council in terms of satisfying site flood conveyance and on-site detention objectives and that the alternative hypothetical subdivision proposed would have been likely to be approved by the Council in 2003 and 2007.
6. In relation to Ms Brown's evidence, Noubia observed: 1. Putting aside the issues the subject of the engineering evidence, there are no planning issues giving rise to possible rejection of a hypothetical development application for the hypothetical subdivision of Lot 94 (see above in [113]). In 2003, all of the land on which the hypothetical subdivision and channel would have been constructed was owned by Noubia, including the land on which the nursing home is located (as confirmed by Mr Maher in oral evidence - Tcpt 1 April 2021, p 245(21-30)). Reference was also made to the discussion above in [116] to support this submission. The channel is now shortened to 18.6 m, in line with the agreement of the engineers. 2. In relation to filling requirements, there would have been no planning reason (including the existence of watercourses) to refuse the hypothetical development application (see above in [113]). Council's attitude to neighbouring development and development of the subject land, such as what Council actually approved, was relevant to the assessment of these issues (see above in [113]). Ms Hunter's evidence was that the amount of fill required for the hypothetical subdivision would not be an impediment when regard is had to the amount of fill required for other nearby developments. For example, a recent subdivision in which Ms Hunter had some involvement near the Coffs Harbour airport required over 100,000 cubic metres of fill (see above in [109]). 3. The OoW approval in 2010 in relation to the drainage system on Lot 163 is a relevant factor in considering the approach that that office would have taken (see above in [114]). 4. It was reasonable to expect, in respect of the alternative hypothetical subdivision relevant in 2019 (Ex A6) and 2021 (Ex A30), that the OoW would have looked favourably on the application and would have been satisfied with similar riparian area downstream of Lake 2. In terms of its form and function, it would be reasonable to assume the OoW may approve a channel in the proposed location (see above in [114]). 5. If the proposed channel met water quality and stormwater detention requirements, the Council may have approved it (see above in [114]). The Court now knows that it does meet such requirements. 6. The proposed channel shown on the alternative hypothetical subdivisions relevant in 2019 (Ex A6) and 2021 (Ex A30) (noting that the current proposal (Ex A36) does not affect the 32 lot subdivision on Lot 94) is superior to the riparian corridors south of the lakes (see above in [115]). 7. Riparian corridor requirements were not in place in 2003 (see above in [113]).
7. The February 2019 NSW DWLS concerns in relation to the five lakes scheme when compared against a two lakes scheme are irrelevant in circumstances where there is now an agreed alternative drainage scheme retaining Lake 5. Ms Hunter's response above in [122] demonstrates that Ms Brown's opinion based on such concerns has no probative value.
8. Ms Brown's evidence above in [119] is not explicitly that the Council would have refused consent for the proposed alternative hypothetical subdivision. Even if that were her evidence, the Court would reject it. There would be no material diminution in residential amenity. The subdivision will still have Lakes 1, 2 and 5 and the channel. There is no reason to think that the Council that granted consent to the actual development would refuse consent for this hypothetical development.
9. In reply, the question is not whether there is a comparative difference in amenity between the existing scheme and the alternative hypothetical subdivision, but whether the amenity afforded by the alternative hypothetical subdivision would have been a reason to refuse an application for it to be developed. Ms Hunter did not consider amenity would have been a reason for refusal.
10. In reply to the Council's submissions below in [136], this list is not supported by any referenced evidence. The matters listed appear to be cherry-picked from the documents supporting the development application for the Lakes Estate, an inherently unreliable way to infer that these matters were of importance to the Council, given the Council gave no reasons for the decision to grant the Consent.
11. The OoW can be considered as likely to have given its concurrence as Ms Hunter identified.
12. In reply to the Council's submission below in [142] relying on Ms Brown's comments, the 1991 Bewsher study informed but was superseded by what came after and provides no reason for refusal.
13. The surest guide to determining whether the Council would have granted consent to the alternative hypothetical subdivision is Ms Hunter's evidence and the evidence of what the Council actually approved in 2003.

Council's submissions

1. In the circumstances of Noubia's alternative hypothetical subdivision, it is necessary for the Court to determine, as a fact, whether in 2003, if Noubia had lodged the alternative hypothetical subdivision (which for the reasons submitted above it would not), consent would have been granted.
2. The decision to support a variation to the 1997 EIS concept involved detailed negotiations with Council and detailed justification of the variation against the Council's controls and policies. Important matters according to the Council's counsel relevant to that justification that are lost by the alternative drainage system include: 1. The channel will not be over the alignment of the existing watercourse. 2. Significant components of the water or wetland features will be removed. 3. Communal focal points around lakes and open space networks will be removed. 4. The "safer mowing" benefit of the open space around the lakes compared to the grassed channel will be gone. 5. Back of lots will now look directly into the back of other lots. 6. The removal of the water features will no longer "enhance the setting". 7. Areas for passive recreation will be lost. 8. The channel will not "replicate a natural creek system of interconnecting water holes". 9. The channel will not provide a visual feature. 10. Open space will be lost. 11. Pedestrian and bicycle access through the open space around the lakes will be lost. 12. Wetland areas and retention basins as landscape features will be lost. 13. The development could no longer be described as a "fully landscaped neighbourhood with a lakeside theme".
3. Absent those matters relied upon by Noubia to justify approval, the Council would not have granted consent to the alternative drainage system and subdivision.
4. The Court would prefer Ms Brown's evidence. Ms Brown stated in relation to the alternative hypothetical subdivision proposal: 1. That Lakes 3, 4 and 5 as approved and constructed contribute to the visual and residential amenity of the Lakes Estate. She considers that the alternative hypothetical subdivision would result in a significant loss of amenity for residents within the Lakes Estate, specifically the loss of Lakes 3 and 4 which she says primarily contribute to the visual and residential amenity of the Lakes Estate (see above in [119]). Ms Brown adds that the longer channel system with steep constructed sides would introduce potential safety concerns. 2. Would not enable the establishment of pedestrian and cyclist access through open space areas associated with the lake. 3. Would not deliver a residential subdivision with amenity and riparian and open space corridors in an interconnected lake system as delivered under the five lakes scheme and envisaged under the EIS.
5. At 3.21 Ms Brown considers that Lakes 3, 4 and 5 as approved and constructed contribute to the visual and residential amenity of the Lakes Estate. She considers that the alternative hypothetical subdivision would result in a significant loss of amenity for residents within the Lakes Estate, specifically the loss of Lakes 3 and 4 which she says primarily contribute to the visual and residential amenity of the Lakes Estate.
6. Ms Brown considered it unlikely the OoW approval would be granted to the alternative hypothetical subdivision as proposed (see above in [120]).
7. Ms Brown's evidence above in [121] was also relied upon. Finally, Ms Hunter agreed that the grant of consent in 2003 was a relevant consideration in trying to understand the mind of the Council in 2003 in order to work out whether the Council would approve the alternative hypothetical subdivision (see above in [109]). It is instructive that the Council approved a development with lakes.

Consideration of Issue 2 likelihood of obtaining development consent

1. The alternative hypothetical subdivision which must be considered under the JT Act, given form in Exs A33 and A36, must be considered on its own 'merits' to the extent that is possible to be done hypothetically. A direct comparison between it and the five lakes scheme approved in the Lakes Estate is not the appropriate question to ask under the statutory scheme. That finding means that the approach of both the Council and Ms Brown in numerous respects was not correct.
2. It is also important to note that in the alternative hypothetical subdivision now agreed Lake 5 has been incorporated again. In other words, while Lakes 3 and 4 would not be built Lakes 1, 2 and 5 can be assumed to exist in the alternative hypothetical subdivision. There will continue to be lake side amenity available to some properties albeit less than in the Lakes Estate. While I have said that is not a relevant comparison immediately above in [143], that observation means I do not accept Ms Brown's evidence that a refusal is likely due to absence of lake side amenity. Ms Brown's evidence was couched as a comparison of the amenity of the existing Lakes Estate with the alternative hypothetical subdivision, an impermissible approach.
3. Noubia's submissions addressed at some length the first of the hydrology issues which Noubia considered arose, namely the hydrological condition of Lot 94 as vacant land before the creation of the lakes system and its suitability for residential subdivision. This topic does inform the likelihood of the Council granting development consent for the alternative hypothetical subdivision in 2003. Given the agreement now reached by the engineers that stormwater and water quality issues are able to be addressed in the alternative hypothetical subdivision the importance of this topic is somewhat reduced. Further, the Council did not address this issue. As summarised above in [24] Mr Jamieson's evidence before Sheahan J and in subsequent reports was that Lot 94 was able to be developed for residential purposes. His oral evidence was not seriously contradicted by Dr Martens in this respect. There is no evidential basis to conclude other than Lot 94 was able to be developed for residential subdivision with appropriate changes to address stormwater conveyance and water quality in terms of filling and channel widths.
4. Relatively little remains in relation to town planning considerations given the agreement of the engineers, and certainly no issue that is so obviously negative that a prudent hypothetical purchaser might consider it likely that development consent would be refused. Ms Hunter confirmed her opinion in the third town planning JER set out above in [118] that the alternative hypothetical subdivision was permissible and comparable with relevant planning controls. That does not appear to be disputed by Ms Brown.
5. The evidence of the town planners and Ms Brown in particular does not suggest any insurmountable town planning reasons for refusal of development consent for the residential subdivision of Lot 94 in accordance with the alternative hypothetical subdivision relied on by Noubia. Ms Hunter's evidence is to be preferred given that her approach reflects the application of the JT Act and appears reasonable in relation to the town planning matters she identifies, including through support from what has been approved next door on the Gill property and elsewhere in the Coffs Harbour area in relation to filling of land. I accept Ms Hunter's opinion that the alternative hypothetical subdivision is of a similar scale and character to the approved subdivision.
6. In relation to the likelihood of approval by the OoW, while Ms Brown considered approval was unlikely, as Ms Hunter identified the OoW did approve the Lakes Estate scheme substantial elements of which remain in the agreed alternative hypothetical subdivision. A prudent hypothetical purchaser most likely a developer would consider approvable by the OoW is likely.
7. The Council's counsel's submissions in [136] above essentially invite the Court to undertake its own merit analysis of the various matters identified by way of comparison between the approved five lakes scheme and the proposed alternative hypothetical subdivision. As already identified above that is not the correct approach to the question at hand, and is not an approach the Court can be expected to take in this proceeding. I agree with Noubia's criticisms in [132] above.
8. I also note for completeness that as Lot 94 is vacant and Noubia owns the land the location of the current nursing home inter alia would have been able to be accommodated. Consequently the impact of the alternative hypothetical subdivision on the current footprint is irrelevant, as Noubia submitted in [128(1)] above.
9. For the reasons given by Noubia development consent for the alternative hypothetical subdivision on Lot 94 was likely to have been granted by the Council in 2003. More accurately given that compensation for market value is to be determined in accordance with the JT Act a prudent hypothetical purchaser would have been likely to consider at that date development consent for the alternative hypothetical subdivision on Lot 94 would have been granted.

Issue 3 - valuation of Lot 94 for residential use

1. The parties disagreed on the appropriate approach to the valuation of Lot 94 in accordance with the JT Act. Mr Maher is Noubia's retained valuer and Mr Davis is the Council's. Given my findings on Issues 1 and 2, Mr Davis' primary approach, arriving at $110,000 based on a constrained land analysis of Lot 94 (occupied by lakes not lots) need not be considered. I have held that the alternative hypothetical subdivision and drainage scheme in Ex A36 could have likely achieved approval in 2003. The hypothetical subdivision plan for 32 lots informs any valuation.
2. The respective approaches of the valuers to the hypothetical analysis required for the valuation task differed substantially. Mr Maher in his original report considered the highest and best use of Lot 94 was low density residential subdivision. Applying a direct residential analysis on the basis that development consent would have been obtained for the surrounding area including Lot 94, roads such as Lakes Drive were formed and all utilities provided, sales of 17 nearby properties close to the transfer date were considered and adjusted for physical characteristics such as size, layout, slope by comparison with the hypothetical subdivision layout. Making allowance for development costs inter alia he considered the market value was $3,256,000. In the second valuation JER in 2021 this amount was reduced to $2,965,000 as more construction costs of $272,800 were deducted. This amount was maintained by Mr Maher in the third valuation JER in 2022.
3. Mr Davis' original report that considered his constrained land approach which resulted in a value of $110,000 does not need to be set out in any detail. Applying his alternative comparison sales approach in 2019 Mr Davis considered the market value was $1,440,000 (Ex A6). In 2021 (Ex A30) Mr Davis considered the value to be $859,805 ($1,600,000 less betterment of $740,195). This amount was maintained in the third JER (Ex A36) in 2022 by Mr Davis.

First valuation JER dated 28 February 2019 and second valuation JER dated 19 March 2021

1. In the first valuation JER and second valuation JER the same fundamental differences between the experts were apparent.
2. Mr Maher valued the land at its highest and best use of residential subdivision. He based his valuation on the alternative hypothetical subdivision into 35 residential lots before the Court in 2019 (Ex A6) and 2021 (Ex A30) respectively. Lakes 3 and 4 (Lake 5 was at that time not part of the alternative hypothetical subdivision now relied on) were disregarded as they would never have been required for the public purpose. Mr Maher first considered englobo market evidence for direct comparison to Lot 94 and its position within a master planned estate. He concluded this approach was not warranted and used what he referred to as the residual land value approach, of directly valuing the land as if it were a vacant lot ripe for development in 2007 during the staged development for which consent was hypothetically sought in 2003. It was assumed that Stage 1 had been completed or was nearing completion and Stage 2, including the alternative hypothetical subdivision on Lot 94, was preparing to commence.
3. Mr Davis' valuation of the land utilised firstly, a comparison sales analysis using englobo market evidence and, secondly, a feasibility analysis based on the development of the alternative hypothetical subdivision. Mr Davis considered the latter was less preferable due to the large number of adjustments needed. He valued Lot 94 at $1,600,000 in the second valuation JER based on the comparison of englobo land. Based on the feasibility analysis, his valuation was $1,275,000. As the comparison sales methodology was preferred, Mr Davis' valuation was $1,600,000. Mr Davis also conducted an analysis of what he called betterment, resulting from the loss of lake views and frontages for lots if Lakes 3, 4 and 5 were not built which he considered should be deducted.
4. The valuers relied heavily on material from the second valuation JER in their third JER. Where this has occurred, such evidence will be subsumed under the heading of the third valuation JER below.

Third valuation JER

1. The valuers agreed in the third valuation JER that other than the removal of lots 33, 34 and 35 (resulting in a 32 lot subdivision rather than 35 lots), the alternative hypothetical subdivision and drainage scheme (now Ex A36) remained the same as considered in earlier reports.

Mr Maher's valuation

1. The approach, methodology and outcome of Mr Maher's valuation is the same as in previous reports. Mr Maher approached his valuation task on the basis that Lot 94 was subdivided into 32 lots as part of a further stage of the Stage 1 Release Area, being a direct development (residual land value) approach. The hypothetical setting aside of lakes 3 and 4 had no material effect on the rest of the development scheme. This is confirmed by Mr Maher's analysis of market evidence to assign values to lots with or without lake views, as undertaken in the second valuation JER in Annexure 3 for 17 sales.
2. In the hypothetical valuation scenario, Lot 94 comprises a vacant parcel ripe for development with roads made and extended from the southeast frontages and all utilities available for extension. The land occupied by Lot 94, along with the land immediately adjoining, is the best land in the development scheme. It is gently undulating, meaning the developed lots will be nearly level to gently sloping with little to no earthworks required for dwelling construction. They will generally be suitable for 'slab construction' and as such comprise good building land. The assumption was made that no established houses, gardens, lawns and fences north of Wallace Circuit; no established trees, lawns and edges on the banks of Lakes 3 and 4 (which do not exist and will never be built); and Lot 94 and the adjoining land to the north have not had the benefit of 14 years of presence in the market, establishment and exposure.
3. In his opinion, on or about 18 May 2007 the hypothetical purchaser would have used the previous sales achieved in the immediate locality, as he had done, to determine the price for the 32 lots to be created on Lot 94. There would have been no reason not to do so. Such prices would have been paid by the market, a residual land value approach. He used the same construction, development and finance costs as in his previous evidence. Annexure 3 identifies 17 sales before, around and after (December 2004 to May 2009) within the Lakes Estate, the majority on the same contours as Lot 94 and therefore with similar physical attributes which was the market evidence used to determine the estimated value of the hypothetical lots.
4. To consider whether there was any difference in the value of residential lots with and without views of Lakes 3 and 4 Mr Maher undertook an analysis comparing prices paid for lots with direct views of Lakes 3 and 4 and prices for lots without lake views, in Annexure 5 - 26 lots have been identified with lake views, and 26 without, showing a higher value of 1.12%. Fifteen of 26 lots showed no difference in value and 11 showed a difference. This difference was likely attributable to physical attributes of the land other than views such as shape, frontage, aspect, position, depth and slope. The landowner advised Mr Maher that the development scheme of which Lot 94 was a part was never marketed as having water bodies that became known as Lakes 3 and 4 and no premium was placed on the asking prices for proximity to the 'lakes' or 'lake views'. To consider whether there was a difference in the value of residential lots with and without lake views of Lake 5 analysis of the prices paid for lots with direct and indirect lake views, and the prices paid for lots without Lake 5 views was undertaken, in Annexure 6. This showed a small negative value of lots with lake frontage of 0.44%.
5. Annexure 7 of the second valuation JER contained a schedule of construction costs and extension of all utilities Mr Maher applied. Construction, development and finance costs were provided to him by Noubia. The costs included earthworks, erosion and sediment controls, road construction, drainage, sewer construction, water pipes and crossings, conduits for phone and electrical services, lot improvements, and excavation inter alia. Annexure 8 contained a comparison of construction costs between what Noubia paid (about which it informed Mr Maher) and what consultants hired by the Council estimated, as relied upon by Mr Davis. Contributions payable to the Council as of March 2007 were $12,216.65 per lot. A finance period of nine months was assumed. The cost of constructing the channel (the design of which has changed since the second valuation JER) was estimated at $54,054. The following table identifies Mr Maher's calculations:
6. A lot value of $92,656 equates to $2,965,000.
7. When comparing lots with lake views to lots without them (in the immediately proximate area) (Annexure 5 of second JER) there was a higher value for lake views of 1.12%.
8. Mr Maher examined the englobo market evidence Mr Davis relied on for direct comparison to Lot 94 and its position within a master planned estate. In his opinion that evidence is not comparable for the following reasons: 1. Lot 94 is part of a staged development of the Estate and 'shovel ready', with roads constructed and utilities readily available for connection or extension. 2. The direct development (residual land value) approach highlights the superior 'shovel ready' state of the land at the date of acquisition compared to raw englobo evidence. 3. This makes the land superior and of higher value compared to raw englobo land and no directly comparable market evidence of englobo land has been identified. 4. The 'risk' of undertaking the subdivision of Lot 94 has been significantly reduced as the earlier Stage 1 has been successfully completed. Development and infrastructure and market acceptance of the quality of the Estate is beginning to be established, which is likely to contribute to a higher return on investment from development of Lot 94 as part of the Estate, which should be reflected in the assessment of compensation. 5. It is considered less desirable and impractical, given the unreasonable amount of adjustments that would need to be made, to use englobo market evidence of inferior raw land in an inferior state of readiness for subdivision and of greater risk for direct comparison to the subject land as the primary method of valuation. 6. Further, having regard to s 56(1) of the JT Act it is Mr Maher's opinion that a willing prudent and knowing hypothetical purchaser would be aware that he or she would be buying into an approved master planned estate and would accept that a higher price would have to be paid compared to inferior raw englobo land. 7. Conversely a hypothetical seller would be a willing and not anxious seller if the price offered by a hypothetical purchaser was in line with their expectations and at a value reflecting the quality of the land and the benefits contributing to its value above that of raw inferior englobo land. 8. It is Mr Maher's opinion that the likely willing hypothetical buyer would be an experienced professional developer. Such buyers use the Residual Land Value Method to determine the price they are willing to pay to achieve the required profit at their accepted level of risk. 9. Professional developers in using this method to buy land are determining the englobo value of land that is recorded as the sale price. 10. Based on points (a) to (g) above Mr Maher is of the opinion that it is fair and reasonable to adopt the Residual Land Value (hypothetical development) valuation methodology to determine the value of Lot 94 and is the best valuation approach in this case.

Mr Davis' reply to Mr Maher

1. Mr Davis commented on Mr Maher's approach, as follows: 1. Lot 94 is part of a staged development with roads and services available, although comparison englobo sales referred to by Mr Davis also have such facilities nearby. 2. Feasibility analysis, contrary to Mr Maher's view, does not better capture the facilities than comparison sales analysis, in which transactions subsume all characteristics of land. There is little or no material difference which may not be addressed by appropriate adjustments between Lot 94 and the comparison sales Mr Davis utilised. Lot 94 would require development consent at the date of acquisition, and any water in the lakes would require draining and backfilling. 3. Mr Davis acknowledged that the existence of the surrounding Lakes Estate would improve market acceptance of development on Lot 94, although the success of sales of lots surrounding Lot 94 was significantly a function of the layout of the estate around the lakes. The success of sales in Lot 94 was influenced by the aesthetic influence of the lakes. Without them, the price of lakeside lots would have been lower. The infill development of the lakes would reduce the market appeal of the development. If consent to the alternative hypothetical subdivision is assumed in 2003, half the costs of the roads and services adjacent to the putative Lot 94 allotments would have to be reflected in the development costs of Lot 94. 4. Mr Davis did not believe that unreasonable adjustments needed to be made to utilise comparison sales of englobo subdivision lots. Less adjustment is needed for comparison sales than for feasibility analysis, which incorporates a relatively high level of assumptions. Mr Davis' experience was that comparison evidence is the preferred methodology. While Mr Maher stated that developers use residual land value analysis to determine their purchase price, they must still meet a market price when they purchase. They use residual land value analysis internally but look to market transactions to achieve a successful acquisition. 5. Mr Davis had regard to statistical data contained in a report for the March 2007 quarter by Residex Pty Ltd. This showed that house values in the North Boambee Valley were materially lower than those in the localities of Mr Davis' comparison englobo properties, which would reduce the relative value of englobo sites in Lot 94. 6. Mr Davis acknowledged that a hypothetical purchaser would take some comfort from the establishment and sales of surrounding lots, although adjustments would have to be made for the loss of value attributable to the loss of the lakeside lots. 7. Mr Maher's evidence above in [167(d)], is inconsistent with the notion that individual purchasers within the estate were not aware, and were not informed by marketing material, that they were purchasing lakeside lots commanding a higher price than those without that advantage.
2. Mr Davis criticised Mr Maher's opinion that the retail prices of allotments within Lot 94 could, at and around the date of acquisition, be informed by reference to sales of other lots in the immediate locality, as that approach ignores the circumstance that prices of lots in the vicinity of Lot 94 would have likely included a premium for lake frontage or views.
3. Mr Davis' analysis, in his view, more accurately depicted the relativity of lake side and non-lake side lots, used sales dates closer to the acquisition date, and had regard to lot size in reaching his conclusion of $50,000 per lot. The Maher valuation of $92,656 per lot, far in excess of market evidence for englobo land in and around Coffs Harbour, is indicative of error.
4. Mr Davis' analysis of lakeside versus non-lakeside lots compared the sales prices of 28 lots in the development. He separated these into categories of lots with lake frontage; lots with partial lake views; and lots with no frontage or view. The analysis demonstrated in his view that lots with partial lake views and those with no view or frontage commanded prices 13% lower than those with lake views. The latter lead a significant premium.

Mr Davis' valuation

1. Mr Davis' valuation maintained his position in previous reports. Mr Davis observed that in March 2007 the lakes had been constructed. As at the acquisition date, the alternative hypothetical subdivision would have required the construction of a drainage channel and the filling of Lakes 3 and 4. Those costs would have had to be taken into account by the hypothetical purchaser when determining market value.

Englobo sales

1. Mr Davis considered that englobo subdivisions for around 32 lots in the area around Coffs Harbour at or around the acquisition date were comparable. Comparison sales analysis is widely recognised as the most appropriate methodology for the valuation of such sites. (A feasibility analysis incorporates a relatively large number of assumptions. Such assumptions are subsumed by the market in comparison sales.) Mr Davis opined that there was little or no material differences which could not be addressed by appropriate adjustments between Lot 94 and the comparison englobo sales. Notwithstanding this, Mr Davis also carried out a feasibility analysis as a secondary methodology.
2. For his comparison sales approach he analysed sales of three englobo residential subdivision sites with the number of lots varying from 18, 25 to 47, near Coffs Harbour. Mr Davis made adjustments, comprising: 1. Adjustments for delayed settlement and any offset amount (e.g. purchase by the Council of environmental or collector road land from the developer), together with allowance for Council contributions, inclusive of water and sewer services; 2. Adjustments of the resulting gross amounts (including Council contributions) from the first stage for differences in topography, size and location; and 3. The resulting amounts then finally adjusted for the deductions applicable to the relativity of Lot 94.
3. Mr Davis deducted 10% from the value of lots in the hypothetical subdivision when comparing to lots with development consent, because he assumed the lots he was valuing would not have development consent in May 2007. He set out his adjustments in a table as follows: Figure 3: Mr Davis' analyses of property value after adjustments
4. After adjustment of sales for relativity, the equivalent value of Lot 94 is in a range of $28,101 to $48,082 per lot. Mr Davis identified that a large number of adjustments were necessary to apply these to Lot 94. In the absence of the lakes, Lot 94's particular aesthetic attraction is significantly diminished and its implied lack of proximity to water views makes it inferior to Emerald Beach, and lacks the undulating local bush views of Shephards Lane and Halls Road. Mr Davis' valuation equalled approximately $50,000 per lot, totalling $1,600,000.

Feasibility analysis

1. His alternative feasibility analysis was described as a residual land value analysis based on the valuation of gross proceeds of lot sales, less deductions for profit and risk margin and total costs. Twenty seven sales in the Lakes Estate between February 2004 and December 2007 were considered. No adjustment was made for market movement. These were used primarily to assess the characteristics of the market for residential lots in the Lakes Estate. Mr Davis considered that prices generally increased over time. Statistical analysis of sales prices as dollars per m² (psm) over time compared with average site area was used to derive an average and median sales price of $190,304 and $196,570, or $260 and $261 psm.
2. Mr Davis also undertook a comparison of the same 27 lots on the basis of their locations within the Lakes Estate, distinguishing between those with direct lake frontage, with some views/no lake frontage and no lake frontage or lake view. He considered there was a price difference between these three categories of lots, with lake frontage lots having significantly higher prices and pro rata values than other lots.
3. A smaller subset of 13 lots was considered in a direct comparison analysis of the values of the lots on Lot 94. The selected lots did not have lake frontages or views. Mr Davis had regard to the shape namely whether the lots are regular or irregular, topography namely whether level, elevated or sloping, general dimensions and frontage characteristics of the comparison lots. His gross realisation was $6,135,000, an average or median value of $191,719 and $185,000 per lot respectively. Mr Davis stated that these figures were proximate to his estimated sale prices, although the lot sizes on Lot 94 are marginally smaller.
4. His estimated development costs were $2,952,861, based on quantity surveying evidence and council advice and including development consent costs of $200,000. His adopted costs included the cost of building the hypothetical drainage channel, reconstructing Lakes Drive to accommodate the channel, and installing a new Lakes Drive. He also took into account costs for debt funding and a profit and risk allowance of 25%. His final valuation was $1,275,000 (being $39,844 per lot). Figure 4: Mr Davis' residual calculations
5. In Mr Davis' view betterment needs to be taken into account if it is assumed the alternative hypothetical subdivision was approved in 2003. All lots without lake frontage and/or views would have sold for lower values than, in reality, they achieved. Such lower prices must be reflected in the market value. Such lots would have had no water and riparian outlook similar to any other lot in a similar subdivision with less amenity. Not accounting for the benefit of the premium from selling lakeside lots would be 'double dipping'. Mr Davis was of the view that Noubia would have benefitted from betterment by $740,195. This amount should be deducted from the market value.

Mr Maher's reply

1. Mr Maher considered that Mr Davis does not understand the concept and purpose of the alternative hypothetical subdivision. The hypothetical subdivision is an alternative to what was constructed, setting aside the public purpose and valuing the land with its highest and best use. As a result, Lakes 3 and 4 are not required and would never have been built. As the subdivision of Lot 94 is hypothetically part of the approved master plan there is no requirement to obtain a separate development consent. The existing approval would operate for the alternative hypothetical subdivision equally as it did for the actual development. Mr Davis had interpreted the alternative hypothetical subdivision as a reconfiguration of what has been developed. Consequently in his hypothetical scenario, the lakes have been built and need to be removed, infrastructure would need to be installed, land filled, the existing lots reconfigured, and Lakes Drive reconstructed to accommodate the channel. This led to an erroneous valuation process whereby the land value has been determined looking back from today and removing what has been built, instead of looking forward from the date of valuation to how the land could have been developed in the alternative. As a result, Mr Davis committed errors in the use and application of market evidence, such as assigned lot values, consideration of betterment, and in assuming the need to remove the lakes and other infrastructure and realign Lakes Drive.
2. The market would not have conducted the statistical analysis and discussion around average and median land values and rates of value in dollars psm to assign value to the lots in 2007. They would simply use direct comparison with lots sold in the vicinity of Lot 94. Analysis on a dollar psm basis ignores and fails to take into account the other physical attributes of the land.
3. It is often the case that vacant residential land smaller in size sells for the same or more than larger sized lots that have similar development potential. Larger lots are also sometimes created by developers to compensate for other inferior attributes. Mr Maher included a table of sales from the Lakes Estate comparing the size of the lots and prices obtained to confirm this. Date of sale is also not a significant factor in assigning values to the hypothetical lots when the direct comparisons of sales are considered. Mr Maher considered that Mr Davis use of statistical analysis caused him to misinterpret changes in value as time based (date of sale) that in reality are changes in topography and other physical attributes of the proposed lots. Eight of the comparable sales relied on by Mr Davis are not comparable to lots on Lot 94 due to different topography. If these sales are removed from consideration then Mr Davis comparable sales are more in line with Mr Maher's. Lower value inferior sales should not be relied on when there is sufficient evidence of more recent comparable land sales. Averaging of land values is poor valuation practice when determining market value.
4. Mr Davis' selected market evidence is not comparable to the hypothetical lots. Comparable market evidence would be expected to reflect market conditions at the time of sale and the physical attributes of the land.
5. Eight comparison lots have incomparable physical attributes, in particular slope and shape. Mr Davis has used statistical analysis of selected variables, which is contrary to good practice and not used in the market. In Mr Maher's opinion, a hypothetical purchaser would not have used sales of inferior land to set values of the hypothetical lots. Instead they would have used more recent sales of more comparable land in the immediate locality of Lot 94 (Stage 2 of the Lakes Estate), for which sufficient information was available.
6. A deduction for betterment of $740,195 assumes the existence of the lakes. Lakes 3 and 4 do not exist if the alternative hypothetical subdivision is built. The use of inferior land in Mr Davis' sales comparisons has also led to an incorrect assessment of betterment. The valuation should be on the basis that the lots do not have lake views. Mr Davis' approach is 'double dipping'.
7. As Mr Davis' market valuation is based on direct comparison of englobo market evidence, it is unclear if this is the price a prudent, willing and not anxious hypothetical purchaser would pay for the land, why betterment is considered and assessed. There is no betterment when considering a hypothetical purchaser buying englobo land. Mr Maher did not accept that a hypothetical purchaser would pay significantly less than the englobo evidence relied upon by Mr Davis.
8. On Mr Davis' approach the 32 lots in the hypothetical Lot 94 bear the entire cost of the channel. A prudent seller would not offer the land and a prudent purchaser would not be willing to buy the land on this basis. This is especially the case where the purchaser would know that more lots would be developed at Stage 2 which will rely on the channel. There is also a substantial difference in the costs of the channel between the parties with Noubia determining costs of $54,054 and the Council $513,926. No information on how the Council's figure was determined was provided.
9. Mr Maher also noted that there were significant differences in the profit and risk figures and the contribution amount used by Mr Davis and himself. Mr Davis deducted $200,000 for the cost of seeking development consent, which would not be required as there would be an existing hypothetical development consent from 2003 at the date of acquisition. Even on Mr Davis' own approach, he did not include all of the alternative design and construction costs, such as the cost to remove and fill Lakes 3 and 4, the cost to remove the culverts connecting the lakes, and the costs to reinstate the roads and Lot 94 after such works.
10. Mr Maher further questioned the validity of the comparisons and Residex data used by Mr Davis in his comparison approach. Mr Davis' analysis was based on house sales in North Boambee Valley, Coffs Harbour and Emerald Beach, from which he identified a median house price. He did not address how the median is affected by the three uneven sets of sales. He also did not discuss the land on which the comparison sites sit in terms of location, position, aspect, shape, frontage, views and slope. Mr Davis did not discuss the construction material used in the comparison houses, the number of bedrooms and bathrooms, or the quality and state of improvements. The suburbs used are different in topography, views, accessibility, and quality and type of improvements. There are significant socioeconomic and demographic variations among the suburbs. Topographically and in location Lot 94 is far superior land to the englobo market evidence and significantly cheaper to develop, which is not reflected in Mr Davis' valuation. Lot 94 is part of a master planned estate. Stage 1 was successfully completed. The land is near level and its development straight forward, with little to no earthworks and little to no retaining walls unlike the englobo market evidence.
11. There is a difference of $10,156 per lot englobo between the feasibility and comparison approaches (or 25.5%: $39,844 versus $50,000), indicating that one or both valuations are incorrect. Mr Maher further commented that Lot 94 was valued by Mr Davis at $5,000 per lot less than another property that had a slope variation of 20 metres and 30 metres compared to Lot 94. Lot 94 was valued at $5,000 per lot more than another property which had a slope variation of 55 metres and 70 metres compared to Lot 94. If Mr Davis' two approaches were correct, in Mr Maher's view the valuations would be significantly more in line with each other.
12. In Mr Maher's opinion, there are relatively few assumptions to be made in using the residual land value analysis to value Lot 94 (as a 32 lot subdivision) and most, if not all, assumptions can be made based on objective assessment and measurement. Setting aside the public purpose, Lakes 3 and 4 do not exist. They should not be contemplated. Lot 94 is simply a development lot that would have been highly sought after by a hypothetical purchaser. The assumptions, approach, methodology (particularly the use of non-comparable market evidence), the contention that betterment applies, and the copious statistical analysis resulted in Mr Davis grossly underestimating land value.

Mr Maher's oral evidence before Sheahan J in 2019

1. Mr Maher was asked in examination-in-chief to summarise his analysis. He responded that Mr Davis' table of comparable sales is purely selective in respect of one physical attribute of those parcels namely location. The physical comparability of the land was not ascertained. The comparison parcels are steep, have narrow frontages and have significant crossfall.
2. Mr Maher was asked a series of questions about his methodology in cross-examination as follows: [p210] HEMMINGS: Now, if I want to work out if there is a change in value which is caused by the proposal to carry out the public purpose, I need to compare the difference in value of the subdivision that was approved actually in 2003. WITNESS MAHER: Yes. HEMMINGS: Compared to the one that hypothetically would allow lot 94 to be sold. WITNESS MAHER: Yes. HEMMINGS: Right. In order to do that, I need to carry out - I need to understand the value of the subdivision as a whole. WITNESS MAHER: Yes. So you're asking me the proper methodology would have been a before and after? [p211] HEMMINGS: Yes, I am. And that the before and after exercise needed to be in the before, so assuming the public purpose is not being carried out, what was the value of the subdivided land approved in the 2003 hypothetical consent on the one hand? And on the other, in the after, what was actually approved. WITNESS MAHER: I understand. That's exactly how I approached it when I was first instructed to do this job, and I went down that path, and the barrister that was acting for the land owner at that time thought it was too complicated, and told me that it was no good, and to do it exactly the way I've done it. HEMMINGS: So if you were trying to do it in accordance with your own opinion, to work out the difference in value, you would have done a before of the whole development, and an after of the whole development with the public purpose? WITNESS MAHER: The answer is yes, but I'd like to qualify it in the sense that I would look at it in terms of what had already been developed up to a point, because there were stages, and then I made an assessment of how many - what parcels I needed to consider in the before. So that we're trying to narrow it down to just doing exactly what you're suggesting. …
3. Mr Maher's cross-examination continued: [p 212] HEMMINGS: Well, your Honour, let me identify if I can to a high level, and perhaps Mr Maher can think about it over the morning tea adjournment. As part of any before and after exercise you are going to attempt to determine costs associated with the development scenario in both the before, and the after? WITNESS MAHER: Yes. HEMMINGS: Because you need to account for those costs because if the costs are different, the value will be different? WITNESS MAHER: Yes. HEMMINGS: If for example in one scenario you are having to carry out significant civil works like drainage systems at your own expense, but in the other you are carrying out significant civil works, and at this stage I'm just saying the same ones, lot 1 and 2, but for which you receive work in kind offsets for section 94 contributions, that is something for which you would need to account, is what I want to suggest to you. [p 213] WITNESS MAHER: Yes. HEMMINGS: If you were going to properly do a before and after for the development scenarios that we've just discussed. WITNESS MAHER: The answer to that is yes, if in the hypothetical they were going to take the contributions as - they might not have done those works in kind. It's all hypothetical. HEMMINGS: It is. WITNESS MAHER: At that time they might have decided to just incur the costs and not take the offsets. HEMMINGS: Well, no. That's - in - it's the reality that they've taken - they've carried out the works for the public purpose WITNESS MAHER: Yes, but if you're going to do - HEMMINGS: Just a moment. WITNESS MAHER: Sorry. HEMMINGS: It's the reality where they've carried out the public purpose and taken the offsets, it's in your hypothetical where they are apparently constructing lakes 1 and 2 for which they will incur significant costs, and will not get an offset. That's a difference which needs to be taken into account for the before and after scenario. You agree with that, don't you? WITNESS MAHER: Yes. HEMMINGS: It's one that has not been taken into account. WITNESS MAHER: No.

Mr Davis' oral evidence before Sheahan J in 2019

1. On the topic of betterment, Mr Davis was asked whether he agreed that ordinarily the concept of betterment is one which applies where there has been an acquisition of land that remains in the ownership of the party from whom it is acquired, and enjoys an increase in value by reason of this occurrence, adding that the increase would come about via the carrying out of a public purpose. Mr Davis stated that he was not putting forward betterment as a deduction, only as something he would like the Court to be aware of. He did not agree that he had not incorporated betterment into his valuation because he did not regard it as appropriate to apply as a deduction to the value of Lot 94. He stated that he was not sure how to handle these amounts. The betterment he identified arises from the existence of the lakes. The Lakes Estate was marketed as such. Without the lakes the properties fronting them, which had already been sold, would have been sold for less. The notion relies fundamentally on accepting the proposition that there was a difference in the value of lots with lake views and other lots. It was suggested to Mr Davis that there was no betterment in the sense he had described because his task was valuing the subdivided lots within a subdivision that is occurring for the first time. He agreed with that suggestion, also stating that this task is what he performed.

Mr Maher's oral evidence in 2021

1. In cross-examination Mr Maher accepted that there would be betterment if lakeside lots are valuable. He agreed that he had not taken into account the reduction in value from existing lots being reduced in size in the alternative hypothetical subdivision, on the assumption that smaller lots sell for less than larger ones. He agreed that he had done a comparable sales exercise for his residual land value approach. He agreed that one looks for constraints in the analysis stage. Then in the adjustment phase one looks to differences between the comparator and the subject and makes adjustments to make them comparable. He agreed that he would look to size, topography, aspect, view, regularity of shape, and size of frontage. Mr Maher was asked about a table of sales which he opined, in the second valuation JER, demonstrated that residential land smaller in size often sells for the same or more compared to larger lots with similar development potential (see above in [184]). The table showed direct comparison of sales prices as between lots of different sizes. Mr Maher accepted that the table did not show whether the sales were proximate, whether the lots were regular or irregular shape, or whether they are on the lake or not, whether one has a view or aspect and one does not. He stated that the table was not intended to provide assistance to his valuation. The table was merely to demonstrate that Mr Davis' assertion that a large lot will sell for more was not necessarily true.
2. In the second valuation JER Mr Maher included a table of sales purporting to show that date of sale is not a significant factor in assigning values to hypothetical lots (see above in [184]). He did not agree that between 2004 and 2009 it was necessary to adjust for date of sale. There was no adjustment for size in this table. He agreed the table does not let the reader know anything about the view or aspect, shape and topography (other than the fact that the sales were all in a similar area).
3. Concerning his opinion that a view or aspect of the lake does not increase value more than marginally, Mr Maher agreed that his analysis of lots with and without lake views made no adjustment for size or sales date, and shape. He was simply trying to ascertain whether a view was a very significant attribute giving rise to value. He did not accept that in order to determine whether a lake view made a difference, he would have to account for all other potential differences. This would become confusing. The table was merely trying to show whether the existence of a view was a significant contributor to value. He endeavoured to look for lots that were of the same size and regularity. Mr Maher did not accept that as a general proposition you would expect sales evidence would show an increase in value for properties with views, labelling it a logical fallacy. When it was put to him that he had not carried out an analysis to refute the common sense starting point that lake views increase value, he accepted that his evidence was simple. All of the relevant lots were on the same estate, similar in topography and amenity, and were subject to the same marketing. He did not accept that his method was flawed.
4. Mr Maher agreed that he valued the lots of the alternative hypothetical subdivision as if it had in fact been approved, showing the lots with their actual size, shape and location, rather than valuing something like the alternative hypothetical subdivision. He agreed that he had adjusted the market evidence of the lots on the alternative hypothetical subdivision, accounting for size, frontage, shape, date, topography and aspect. When asked at what point in time the hypothetical construction costs accounted for in his valuation were being incurred, Mr Maher answered that they were being incurred at a single time, although not at a specific date. Rather, he generalised that the works would be commenced sometime at the beginning of the commencement of Stage 2.

Mr Davis' oral evidence in 2021

1. Mr Davis in cross-examination agreed that the methodology he adopted assumed that the relevant date was 2007 and that the land he was valuing was an englobo parcel surrounded by the other lots in the Lakes Estate already developed. He agreed that if he had valued Lot 94 on the basis that by 2007 Lot 94 had already been approved for residential subdivision, his valuation would change, as he would not make allowances for the costs of obtaining the consent. He would also not need to account for the costs of moving roads and drainage channels because they would be part of the existing approval. Mr Davis accepted that if the valuation ought to be prepared on the assumption that it does not involve removing an existing Lakes Drive, the amount of $300,000 (his estimated costs for the reconstruction of Lakes Drive to accommodate the hypothetical drainage channel) would be taken out of his costings.
2. Concerning betterment calculations Mr Davis stated that it was clear from his comparative sales analysis that there was a premium for lake front properties. This was also a logical conclusion from the site view. Mr Davis agreed with Mr Maher that some properties in the Lakes Estate were larger albeit lacking lake frontage, which is why one must take into account size and other characteristics to determine the premium for lake frontage. He then agreed that he had just applied a 13% blanket reduction. He did not agree that this does not take into account variations of size, location, aspect inter alia because he had worked out the premium and applied it to the waterfront properties which would have been sold. The differences were reflected in the original prices that were obtained for those lots. Mr Davis did not agree that his analysis of a 13% diminution could only be accurate if it were assumed that the lake view was the only variable explaining the purchase prices. He replied that non-lake front properties would have been purchased on the same reasoning as lake front properties. The price that was struck for those properties would have reflected all of their characteristics and amenities.

Noubia's submissions

1. Mr Maher's hypothetical development analysis should be preferred, given that it was not seriously contradicted, challenged or dented by cross-examination. Based on an alternative hypothetical subdivision of Lot 94 into 32 lots, the value of Lot 94 was assessed at $3,256,000 after making deductions for realisation costs, profit and risk and development costs as set out in the report of Mr Maher at p 25. After allowing for a $272,800 increase in construction costs, Mr Maher assessed the value of Lot 94 at $2,965,000 in the second valuation JER, taking into account tcpt 1 April 2021 p 196(1-29) and p 245(37) to p 246(45). Mr Maher's $2,965,000 valuation is maintained by him in the third valuation JER.
2. The valuation exercise should not be approached as if there was an actual development application before the Council or Court on a Class 1 appeal. The alternative hypothetical subdivision and the risks associated with its rejection are dealt with as an aspect of risk in the valuation analysis. The possibility that a hypothetical development application would be refused is captured in the 25% risk factor. In circumstances where the engineering evidence and planning evidence overwhelmingly favours a finding that the alternative hypothetical subdivision has high prospects of success, a 25% risk factor allowed by Mr Maher is appropriate and probably conservative. In other words, even if the Court found that there were aspects of difficulty associated with the alternative hypothetical subdivision which has been put forward, it has been made clear that this is but one potential solution for addressing stormwater and water quality control in the lakes scheme notionally removed from consideration. The Court could adjust the risk factor applied in the alternative hypothetical subdivision analysis but 25% is appropriate on any view of the expert evidence.
3. Mr Davis referred to allowances for betterment and development costs but indicated in cross-examination that he did not put those amounts forward as deductions from the valuation he identified. He only proposed doing so in the third valuation JER for the first time. In any event, for the reasons set out below, the suggested allowances for betterment and development costs are not based on sound reasoning and would not be accepted. Mr Davis makes numerous factual errors, and errors of valuation principle, such that the allowances he raises for consideration in the context of his 'alternative valuation' are untenable.
4. The suggestion of betterment must fail for four reasons: 1. Firstly, the market evidence demonstrates that there is no premium for lots with lake frontage within this particular subdivision, for the reasons given by Mr Maher above in [187]. Noubia also submitted that Mr Maher's cross-examination above in [200] did not dent his evidence. Mr Davis' evidence about alleged premiums for lake frontage is not based on market evidence and involves a flawed analysis. His calculations are skewed by the inclusion of property sales which have completely different characteristics, such as sloping sites and narrow frontages which bear no resemblance to the hypothetical lots. 2. Secondly, on a proper construction of Condition 1, the compensation payable was not to include any allowance for either injurious affection or betterment. Condition 1 provides that "The Council must compensate the applicant for 'the lands'. 'The value' is to be determined at the date of transfer or dedication in accordance with [the JT Act]". The reference to 'the lands' is undoubtedly a reference to the land the subject of this proceeding (which includes Lot 94), and the reference to 'the value' is to the value of that land. The value of Lot 94 is not controlled or influenced by the value of other land. In this way, the payment of compensation was limited to the value of Lot 94, without regard to the value of any other land, because Condition 1 makes no reference to consideration of any other land, despite the general reference to s 55 of the JT Act. 3. Thirdly, no occasion to consider betterment arises on the facts because: 1. In the before scenario, where the public purpose is disregarded per s 56(1)(a) of the JT Act, the physical manifestation of the public purpose (i.e. the lakes themselves) must plainly also be disregarded and assumed not to exist; 2. In the after scenario, the lakes also do not exist, but are replaced by the alternative drainage channel. Accordingly, the existence of the lakes does not arise at any relevant point in time in the valuation exercise so as to give rise to a betterment under s 55(1) of the JT Act. 1. Fourthly, Mr Davis conceded in cross-examination that he was not putting forward betterment as a reason to deduct value from Lot 94, but rather stated he was not sure how to handle these amounts (see above in [197]).
5. Any approach whereby $2,525,000 or any other sum for development costs is deducted on account of relocating Lakes Drive and the loss of lots due to the installation of the drainage channel is flawed as a matter of valuation principle and should be ignored. That deduction relates to the loss of value of other land rather than directing attention to the value of Lot 94. This is to be determined in accordance with the hypothetical development method, where stormwater drainage works would simply be included as development costs. The approach does not accord with, and is inconsistent with, the alternative hypothetical subdivision layout. Mr Davis accepted in cross-examination (in respect of the first alternative hypothetical subdivision Ex A6) that his $2,525,000 is erroneous and that the loss of lots section of his valuation does not in truth fit into his valuation. He did not know how to handle the loss of lots calculations (see tcpt 8 March 2019, p 253(9-11)).
6. In the third valuation JER Mr Davis persists in his incorrect opinion that Lakes 3 and 4 would have to be filled in order to create new residential lots. He also persists in the opinion that if Lot 94 were for sale at the acquisition date, with the benefit or strong prospect of a development consent, it would represent an englobo subdivision for 32 lots. Mr Davis seeks to fortify his comparable englobo sales by reference to Residex data for the quarter ending March 2007. Nothing arises from the third engineering JER which warrants the introduction of such entirely new evidence. It should be ignored and in any event is answered by Mr Maher above in [191].
7. Mr Davis persists in the opinion that without the aesthetic influence of the lakes, the prices of lakeside lots would have been lower and the infill development of the lakes proposed would reduce the market appeal of the development (see above in [168(3)]). He does not acknowledge Mr Maher's analysis of lots with or without views, and does not acknowledge the retention of Lakes 1, 2 and 5 in the most recent alternative hypothetical subdivision.
8. Mr Davis maintains his betterment argument, except that he now says for the first time that the amount should be deducted from the compensation (see above in [181]), although this matter does not arise from the third engineering JER. Mr Maher answers this above in [187]. Mr Davis acknowledges that Lot 94 is part of a staged development with roads and services available but says that if a 2003 development consent is assumed, half the costs of roads and services adjacent to the putative Lot 94 would have to be reflected in the development costs. He does not explain why.
9. In reply, more than one valuation methodology may assist the Court, see Noubia CA No 2 at [91]-[95]. There is no reason to reject Mr Maher's evidence despite his acceptance that he was not carrying out a before and after analysis. Lot 94 is not constrained, and is capable of being developed for the purpose of residential allotments (land valued on that basis) given agreement of the hydrologists.
10. The remitter from the CA did not constrain the nature of the hearing. It was entirely open to Mr Maher to conclude - and he did conclude - that not carrying out a particular kind of before and after valuation (as put to him in cross-examination) was not material to the valuation opinion which he did express, which was based on a different type of before and after comparison which was considered by Mr Maher to be fair and reasonable. The alternative hypothetical subdivision is designed to fit in with the actual development of the surrounding land and has no material effect on it, such that the surrounding land would not have been developed differently in a before and after scenario.
11. The lots in the whole of the development actually approved by the 2003 consent were developed and sold between 2003 and 18 May 2007, the latter being the date on which Council was obliged to pay Noubia an amount equal to the value of Lot 94 determined in accordance with ss 54 and 55 of the JT Act, plus interest. It has not been demonstrated by either the Council or Mr Davis that a before and after valuation of the kind suggested by Council would result in any different valuation outcome than Mr Maher's $2,965,000. The Council makes a debating point but has not shown that it has a material effect on the bottom line of the valuation.
12. Mr Maher's approach was that he could confidently attribute value to Lot 94 without valuing the entire existing subdivision and then comparing it to a hypothetical subdivision. He could look to the value of the extra 32 lots because there would not be a radical change to the balance of the subdivision. Mr Maher has taken costs into account, including for earthworks, drainage and the channel. Lakes 1 and 2 are common to both scenarios, which is an answer to the cross-examination relied on by the Council above in [196]. Mr Maher deducted development costs which included construction costs (earthworks to fill site area of 1 m). Earthworks have been agreed at $353,470 (Annexure 8, Ex A26).
13. Further in relation to the cross-examination above in [195], it is not explained how what was put to Mr Maher as constituting a before and after methodology was not the exercise he carried out as described by the Council, being "simply value the extra lots which would be available if Lot 94 was to be subdivided, rather than used for lakes".
14. Even if Mr Maher's evidence is found wanting, the Court would need to determine a valuation and can reach a conclusion that does not coincide with the evidence of any witness, as per Noubia CA 2. The only possible consequence of accepting the Council's criticism of Mr Maher is that there would need to be some notional further adjustment to the costs involved in achieving the alternative hypothetical subdivision.

Council's submissions

1. The Council submitted that the proper methodology for valuation was addressed by the Court of Appeal in Noubia CA, which indicated how the legal issue of valuation ought to be determined at [88]. The proper methodology, as accepted by Mr Maher in [195] above, is a before and after exercise for the value of the whole of the land the subject of the development consent as granted compared to the value of the whole of the land the subject of the development consent if it were granted consistent with the alternative drainage scheme. As the Court of Appeal has said, only in that way can a conclusion be reached as to which of those two potential alternatives is the highest and best use of the land. The Council relied on Noubia CA at [93]-[100] (Basten JA), extracted below: 93. It was part of the Council's challenge to the valuation evidence provided by Mr Maher that he did not attempt an assessment comparing the overall value of the subdivision as approved, and the hypothetical subdivision. After some preliminary questions (which led to some confusion with the witness), the cross-examination of Mr Maher addressed the critical point in the following terms: "HEMMINGS: Now, if I want to work out if there is a change in value which is caused by the proposal to carry out the public purpose, I need to compare the difference in value of the subdivision that was approved actually in 2003. WITNESS MAHER: Yes. HEMMINGS: Compared to the one that hypothetically would allow lot 94 to be sold. WITNESS MAHER: Yes. HEMMINGS: Right. In order to do that, I need to carry out - I need to understand the value of the subdivision as a whole. WITNESS MAHER: Yes. So you're asking me the proper methodology would have been a before and after? HEMMINGS: Yes, I am. And that the before and after exercise needed to be in the before, so assuming the public purpose is not being carried out, what was the value of the subdivided land approved in the 2003 hypothetical consent on the one hand? And on the other, in the after, what was actually approved. WITNESS MAHER: I understand. That's exactly how I approached it when I was first instructed to do this job, and I went down that path, and the barrister that was acting for the land owner at that time thought it was too complicated, and told me that it was no good, and to do it exactly the way I've done it." 94. The detail of the issues raised by that concession need not be examined; its suffices to say that Mr Maher accepted that the "before and after" methodology was not the same as simply valuing the extra lots which would be available if lots 94 and 163 were to be subdivided for residential development. 95. The issue thus raised and expressly identified in the Council's written submissions was not directly addressed in Noubia's written reply. Those submissions merely asserted that Mr Maher's methodology was "well recognised", without engaging with the critique ostensibly accepted by Mr Maher. In oral submissions, counsel for Noubia identified the public purpose as "water quality management and stormwater and flooding control." Counsel continued: "The carrying out of the public purpose involved the establishment of the existing five lake system upon lot 94 [sic]. So to disregard the effect of the carrying out of the public purpose, which obviously enough has decreased the value of the land because it's under water … we must hypothesise about what would have occurred if that purpose had not been carried out and [it] was necessary, therefore, to ask what would have happened either in 2003 when a different development consent would have been applied for [and] achieved, or alternatively at the time of the transfer of lot 94 in 2007. In each case the answer is the same on the evidence." 96. This submission did not address either of the two critical matters set out above. In its terms, it required analysis of at least the second issue set out above. It follows that the judge's adoption of the case presented for Noubia could not answer the Council's case in respect of that issue without acknowledging and assessing the significance of Mr Maher's concession in cross-examination. That did not happen. 97. By way of response in this Court, Noubia contended that Mr Maher had said in re-examination that the instruction he was given to abandon a "before and after" valuation was "not material" to the opinion he expressed. That evidence was as follows: "LANCASTER: And is his Honour right to think that it was not material in your valuation opinion for lot 94? WITNESS MAHER: It's not material." What his Honour made of that evidence is not known. 98. The trial judge set out the submissions of the Council and referred to the evidence, at [180]-[181]. In other words, the issue was identified, but the submissions (and the evidence on which they were based) were neither assessed nor otherwise addressed. 99. The fact that Mr Maher's valuation exercise may have been conventional in one sense did not address the question raised by the Council, which was that the valuation of one element of the alternative hypothetical subdivision failed to take into account the fact (demonstrated by correspondence between Noubia and its then consultant) that there would be both costs and benefits associated with the alternative proposal. There were undoubtedly consequences, both financial and aesthetic, in constructing the dams required by the two lake system and removing lakes 3, 4 and 5. That was the issue which the Council sought to raise by inviting consideration of a "before and after" valuation. The substance of the critique was not addressed by the trial judge. 100. The materiality of this issue can be explained in principle. A "before and after" valuation may have shown that the approved development was more or less financially advantageous than the alternative hypothetical subdivision. If more, the approved development was the "highest and best" use of the land for the developer. If the alternative proposal provided a more financially advantageous outcome, it would be necessary to assess the likelihood of it being accepted by Council. That would require an evaluation of whether it maintained the same level of downstream flows without lakes 3, 4 and 5, and achieved an equivalent level of water quality. This artificial exercise is one the hypothetical purchaser would be expected to undertake. The fact that Noubia in fact adopted the 5 lake system, might be evidence of such an assessment.
2. As the Court of Appeal stated, if the before and after method is not used then the valuation is not able to take into account the various costs and benefits associated with the consent as obtained. The Court does not have a before and after valuation before it. The Court cannot determine whether the alternative drainage scheme results in the highest and best use of the land. This has been a criticism levelled at Noubia's valuation evidence since the hearing in 2019.
3. Even if that could be overcome, Mr Maher's current methodology does not take into account a number of matters that he conceded in cross-examination should be taken into account. The Council relied on the cross-examination of Mr Maher extracted above in [195]. Mr Maher simply values the extra lots which would be available if Lot 94 was to be subdivided rather than used for lakes. The Court of Appeal at [94] has stated that this is not the same as a proper before and after methodology. Mr Maher conceded his methodological flaw in the cross-examination extracted above in [195].
4. Mr Maher has approached the valuation task by assuming that Lot 94 will be developed and accounting for the extra costs that this would require, for example constructing the channel. As the Court of Appeal stated, that analysis is different to a before and after analysis, and not capable of accounting for the totality of variants of costs and benefits between the actual subdivision as a whole and the alternative hypothetical subdivision. Only if one takes into account all of the costs can one determine whether there is an increase in value. Mr Davis' $1,600,000 comparable sales approach is therefore the only satisfactory approach.
5. Section 55(1)(f) of the JT Act mandates that the valuation must take into account any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. Both of the valuers opine that there is an increase in the value of lots with lake views. Mr Maher's analysis shows a 1.12% increase, whereas Mr Davis' shows a 13% increase. Mr Davis' evidence is consistent with common sense that lots with lake frontages would be more valuable by a higher figure than 1.12%.

Consideration of Issue 3

1. In Noubia CA 2 Preston CJ of LEC stated at [94]: 94. The task of determining an amount that will "justly compensate" Noubia for the lands it transferred to the Council pursuant to the condition of consent is not one confined to deciding merely the contest between the parties' experts. The trial judge is not obliged to accept or reject the evidence of one or other of the parties' valuers, for example, but may assign such weight to part or all of a witness' evidence as the judge determines is appropriate and may reach a conclusion that does not coincide with the evidence of any witness although it is based on the evidence. As Mason P observed in Roads and Traffic Authority of NSW v Hurstville City Council (2001) 112 LGERA 223; [2001] NSWCA 11 at [50]: "In the field of judicial valuations, the task is ultimately evaluative." …
2. I will now undertake that evaluative task. As already identified above in [152], Mr Davis' constrained land valuation of $110,000 does not need to be considered. Accordingly the balance of the valuation evidence and the valuers' respective approaches must be evaluated.

Before and after analysis not sole valuation approach available

1. The Council submits based on cross-examination of Mr Maher in 2019 set out above in [195] and observations of the Court of Appeal in Noubia CA at [93]-[100] set out above in [218] above, that the only permissible way to value Lot 94 is by applying a before and after approach. As Mr Maher has not applied such an approach Lot 94 cannot be appropriately valued. The cross-examination extracted above in [196] does identify concessions by Mr Maher agreeing that certain matters could not be taken into account other than by undertaking a before and after valuation approach. As I identify below I don't consider these concessions mean that another valuation method cannot be applied. The Court of Appeal's observations were made in the context of an appeal by the Council based on a failure by the first trial judge not to determine essential issues which required determination and/or failing to give reasons for his conclusions. The Council's argument that only with a before and after approach could the valuation of Lot 94 be appropriately valued was recorded, and the failure of the trial judge to address that issue identified. Contrary to the Council's submissions, I do not interpret the observations of Basten JA as endorsing the only approach available to value Lot 94 as the before and after approach. The remitter by the Court of Appeal to the Court was not constrained in relation to the appropriate valuation methodology to be applied.
2. Valuation evidence in my experience rarely proceeds on the assumption that only one method must be applied. I adopt the extract of Callinan J in Boland v Yates Property Corp Pty Ltd (1999) 74 ALJR 209 at 267-268 cited by Justice Jagot then a judge of the Federal Court of Australia writing extra-judicially in Compensation for Economic Loss (2022) 96 ALJ 832 at 849. As the judicial valuer in this matter, I must ultimately determine if there is valuation evidence to support a valuation of Lot 94 which will justly compensate Noubia for that lot, as required by s 54(1) of the JT Act.
3. As a result of my findings on earlier issues, notably Issue 1 concerning the wide nature of the public purpose and rejection of the Council's case that Noubia had to prove that the five lakes system of the Lakes Estate was caused by the requirement to transfer Lot 94 to the Council Condition 1 in order to take advantage of the statutory disregard in s 56(1)(a), suggests that a before and after approach is not the only valuation methodology available, and indeed may not be appropriate. I make no finding about whether the before and after method may be the optimal valuation approach.
4. I have been presented with lengthy valuation evidence from two expert valuers Mr Maher and Mr Davis, who both adopt valuation methodologies other than a before and after valuation. No criticism is intended of Mr Davis in observing that he did not undertake such an analysis. Other methods to value Lot 94 have been presented and the parties have had full opportunity to explore these through individual reports, three JERs and two sets of cross-examination in 2019 and 2021. No fundamental in these respective approaches has been identified to suggest that a valuation of Lot 94 on a basis other than a before and after approach cannot be carried out. Mr Maher's concession in cross-examination in relation to the before and after approach does not completely undermine his valuation evidence. I do not consider the Council has established that it is the exclusive approach particularly given the evidence available. As will become clear below appropriate adjustments for matters such as profit and risk can be allowed for.
5. Mr Davis' constrained land valuation of $110,000 cannot be relevant because of my earlier findings. Not to consider further compensation for Noubia at this point because no before and after valuation has been carried out by either valuer would not ensure payment of fair value for Lot 94 to Noubia, which Condition 1 requires the Council to compensate Noubia for.
6. I therefore turn to consider the valuation evidence which of necessity means I will not be considering a before and after approach.

Assumed state of Lot 94 - lots or lakes?

1. The lengthy evidence of the valuers set out above identifies their different approaches, reflecting a fundamental difference between them about the assumed state of Lot 94 that they are valuing as at 2003-2007. Mr Maher assumes that Lot 94 is vacant surrounded by some developed lots in other areas the subject of the 2003 development consent, with roads and utilities in place. Mr Davis assumes consistent with the Council's approach that Lot 94 will contain two lakes which will need to be removed and land filled before any subdivision can proceed, a channel for water installed and an adjustment made to Lakes Drive. Given my earlier findings there is no basis for assuming that lakes would have existed on Lot 94 and that approach of Mr Davis is flawed. Surprisingly he continued to express that view in the third valuation JER despite the agreed position of the engineers in their third engineering JER. It is unclear to me why Mr Davis persisted with that view in the third valuation JER.
2. Consequently a large number of deductions Mr Davis considered had to be made for land filling, channel creation and construction of Lakes Drive need not be considered. To the extent his view that Lot 94 had to be valued as if constrained by the presence of lakes affected his choice of comparable sales this matter may also need to be considered.
3. Mr Maher's approach is correct given my earlier findings, namely Lot 94 should be assumed to be vacant, generally available for residential development the highest and best use of the land and not occupied by Lakes 3 and 4.

Englobo sales not comparable

1. The two valuers undertook different sales comparisons in their respective approaches. Mr Maher applied what he called a direct development residential land value analysis, considering 17 sales of surrounding lots in the Lakes Estate in 2004-2009 as he considered these sales were the most directly applicable because of similar physical characteristics to Lot 94. I will return to this approach below. Mr Davis considered three englobo land sales in the Coffs Harbour area in his approach. I will first consider if the application of englobo land sales is the appropriate way of deriving market value for Lot 94.
2. The englobo sites are identified in the summary of Mr Davis' evidence above in [175] being locations at Shepherds Lane Coffs Harbour, 72 Bluff Rd Emerald Beach and Halls Rd Coffs Harbour. Mr Davis made adjustments as set out above in [175] for delayed settlement, council contributions, topography, size and location and a final adjustment for relativity to Lot 94, as identified above in [174]. He made a further 10% adjustment on the assumption that the hypothetical subdivision would not have development consent in May 2007, at [175]. The number of lots on the three sites varied from 18 to 47. The value range of $28,101 to $48,082 per lot which he derived is a large range, which he further adjusted to arrive at $50,000 per lot for Lot 94 in [176].
3. Mr Davis sought to bolster his englobo land analysis in the third valuation JER by introducing Residex data above in [168(5)] which he considered supported his approach to englobo land sales. As Noubia submitted, this new evidence fell outside the scope of additional evidence permitted under the Court's orders made on 22 July 2021. Strictly speaking this evidence should be disregarded for that reason. In any event, Mr Maher's criticisms set out above in [191] are apposite and I do not consider the application of the englobo sales is justified by the Residex data.
4. I was not taken to any of the englobo sites on the view conducted during the hearing. I understand they are all at some distance from Lot 94. The adjustment of the sales of the three sites required to make them comparable to Lot 94 was substantial, and the derived amounts per lot had a wide range, suggesting the sites have limited comparability. Further, Mr Davis adjusted for Lot 94 to arrive at $50,000 which is higher than the range he derived from the three englobo sites.
5. Mr Maher criticised these sites on the basis of their comparability because of the 'shovel ready' state he considered Lot 94 should be considered to be in, which is not comparable to inferior raw land in an inferior state of readiness for subdivision of the englobo land relied on by Mr Davis, above in [167].
6. I accept Mr Maher's view that Lot 94 was not comparable to englobo land in a 'raw' state because the existence of a development consent for Lot 94 could be assumed and roads and services would have been constructed in close proximity given the development of other parts of the Lakes Estate and the likely prudent hypothetical purchaser being an experienced professional developer as identified above in [167] inter alia. While the 'rawness' of the three englobo sales relied on by Mr Davis varied, none appeared to be as 'shovel ready' as Lot 94 and able to be considered in the context of an overall residential scheme undergoing development. Together with the substantial adjustments required in relation to the englobo lots with a value greater than the range derived from their consideration results in my concluding that the englobo sites are not comparable to Lot 94.

Appropriate valuation methodology

1. Having put englobo land sales to one side, Mr Maher's residual land value approach and Mr Davis' alternative feasibility approach remain.
2. Mr Maher and Mr Davis both looked at sales in the Lakes Estate in 2004-2009 and 2004-2007 respectively, applying differing analyses in significant respects. There was some overlap between Mr Maher's 17 sales identified in Annexure 5 of the second valuation JER (above in [162]) and Mr Davis 27 sales of vacant lots by Noubia in the vicinity of Lot 94 (above in [177]). Mr Davis identified a subset of 13 sales which he further analysed (above in [179]).
3. Mr Maher selected sales of properties he considered were most physically similar to Lot 94. Mr Maher's adjustments were relatively straightforward given that he selected sales based on what he considered were lots with similar physical characteristics undertaking a direct comparison. Mr Maher considered that a hypothetical purchaser would have the benefit of the surrounding development, with more recent sales of comparable lots to inform price. He did not consider that date of sale played an important part in making adjustments (Mr Davis did not agree).
4. Mr Davis' feasibility approach was not entirely clear to me. He undertook a statistical analysis of 27 sales described as in the vicinity of Lot 94 in the period 2004-2007 to determine an average and median price of sales in that period. The purpose of this exercise was said to be to assess the characteristics of the market for residential lots in the Lakes Estate, with an average and median sale price derived (above in [177]). Mr Davis then analysed the same 27 lots based on whether they had direct lake frontage, some partial lake views and no frontage and no lake views or frontage (above in [178]), which he considered showed higher rates being paid for lots with lake frontage.
5. Mr Davis then considered 13 sales of lots near Lot 94, a subset of the 27 lot sales earlier analysed, which were lots he considered were comparable to Lot 94 and did not have lake frontage or lake views. From this analysis, identified above in [179] he calculated a gross realisation based on an average or median lot values, which he had calculated.
6. This approach was criticised by Mr Maher as not how a professional developer would approach determining a fair price, with the residual land value method more likely to be adopted. He also considered a number of Mr Davis' residential lots were not comparable to Lot 94 in terms of physical characteristics and maintained that the sites he chose were most comparable to Lot 94. I accept Mr Maher's criticisms identified above in [183]-[185], [193] as justified in the circumstances I am considering in light of my earlier findings in relation to Issues 1 and 2.
7. Mr Maher did not adjust for date of sale when he considered 17 sales in the period 2004-2009 as he did not consider this was warranted in light of the market in Lakes Estate in that period in [184] above. Mr Davis was critical of that approach as he considered an adjustment for a difference ought be made. In light of Mr Maher's evidence summarised above in [184] I accept that the date of sale need not be adjusted for in relation to Mr Maher's comparison sales.
8. Mr Davis' rational for applying average median sales data to his comparable analysis was not clear, and consequently appeared unnecessarily complicated. The application of the residual land value approach of Mr Maher is an acceptable and appropriate approach to determining the value of Lot 94. I accept that he identified a large number of comparable lots from which a value for the lots in Lot 94 could be derived. I do not consider his evidence was undermined in cross-examination in 2021, outlined above in [197]-[200].

No deduction of market value for betterment (value of lots with/without lake views or frontage need not be determined

1. Mr Davis sought to determine if lots with lake views and/or frontage attracted a greater value in the market place, which in his view they did, see above in [178]. In Mr Davis' analysis of a number of properties which he allocated between two groups of those with lake views/frontage and those without in the Lakes Estate he found a 13% increase in price was paid for lots with lake frontage/views in [171], [203] above. I note that this was the only attribute he adjusted for in this table. As a result of this analysis Mr Davis identified as an issue that betterment should be considered in the determination of market value. In his first report this was identified but no adjustment by way of reduction of market value was made. In subsequent JERs Mr Davis considered that a reasonably substantial sum should be deducted for betterment, as outlined above in [181].
2. Mr Maher disputed that betterment was relevant, firstly, because in the alternative hypothetical subdivision being considered Lakes 3 and 4 never existed so that lots with lake views in this location did not exist and consequently that consideration would not be in the mind of a hypothetical purchaser, who he considered was likely to be a property developer. Secondly, he did not consider that a finding of a 13% increase was justified by Mr Davis' analysis. Mr Maher's analysis above in [163], [166] suggested only a 1.12% increase resulted from this factor in relation to lots around Lakes 3 and 4 and a small negative effect (0.44%) in relation to lots around Lake 5 above in [163]. In Mr Maher's view some lots in the Lakes Estate had favourable attributes valued in the marketplace unrelated to their location in relation to a lake, reflected in favourable prices for lots without lake views or frontages.
3. Regardless of either analysis I do not consider betterment arises in the particular valuation exercise I am undertaking for the reasons given by Mr Maher above in [187] concerning the absence of Lakes 3 and 4, and Noubia above in [207(2)]-[207(3)]. As Noubia identified Condition 1 requires the Council to compensate for 'the land', here Lot 94. The value of Lot 94 is not to be valued by reference to the value of other land. The public purpose of the lakes must be assumed not to exist and consequently can have no role to play in the valuation exercise. No deduction of market value on the basis of betterment arises given the statutory basis of market value I am determining in order to give effect to Condition 1. It is unnecessary that I resolve the difference in opinion between the experts about what the appropriate figure for betterment is. No betterment will be deducted from any market value.

Extent of deductions

1. The amount of deductions for development costs by Mr Davis was much greater than for Mr Maher, in large part because of assumptions he made about the presence of Lakes 3 and 4 and the need for their removal and filling of the land, building of the channel to a greater degree than Mr Maher and changing Lakes Drive. As already indicated above in [230] deductions for these amounts are not warranted in the hypothetical sale scenario I am considering in relation to Lot 94.
2. Development consent costs of $200,000 would also not need to be deducted contrary to Mr Davis' approach.
3. Mr Maher's lesser deductions as identified in the table extracted above in [162], supported by figures provided in Annexure 7 of the second valuation JER above in [164] are reasonable.

Allowance for risk

1. Mr Maher was criticised for failing to make allowance for development risk, as part of the criticism he did not use a before and after approach. As can be seen from the table above in [164] he allowed a figure of 25% risk as a deduction. Mr Davis allowed a similar figure as can be seen in his figure in [180] above. Given that agreement the figure of 25% allowance for profit and loss is appears appropriate and I will adopt that.

Conclusion on Issue 3

1. I will award market value of Lot 94 in the amount identified by Mr Maher in his table at [164] above, namely $2,965,000.

Costs

1. The parties asked that costs be reserved. Noubia has been successful in this Class 4 proceedings. The usual order is that costs follow the event so that the Council would pay Noubia's costs as agreed or assessed in the absence of any disentitling conduct by Noubia.

Orders

1. Proceedings have progressed substantially over the period since the Further Amended Summons filed pursuant to leave granted on 4 March 2019. That summons seeks a variety of declarations and orders, most of which no longer appear relevant. Before making final orders I will confer with the parties in relation to the form of any declaration and/or order I should make.

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DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 April 2023