Activerain Pty Limited v Minister Administering the Environmental Planning and Assessment Act 1979

[2006] NSWLEC 708

Land and Environment Court

of New South Wales

CITATION:

Activerain Pty Limited v Minister Administering the Environmental Planning and Assessment Act 1979 [2006] NSWLEC 708

PARTIES:

APPLICANT
Activerain Pty Limited

RESPONDENT
Minister Administering the Environmental Planning and Assessment Act 1979

FILE NUMBER(S):

31407 of 2004

CORAM:

Jagot J

KEY ISSUES:

Compulsory Acquisition of Land :- compensation - effect of public purpose on value - market value

LEGISLATION CITED:

Environmental Planning and Assessment Act 1979
Land Acquisition (Just Terms Compensation) Act 1991

CASES CITED:

Boland v Yates Property Corporation Pty Ltd and Another (1999) 167 ALR 575 ;
Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited and Others (1947) 74 CLR 358;
Roads and Traffic Authority of New South Wales v Perry and Another (2001) 52 NSWLR 222

DATES OF HEARING:

4/9/2006, 5/9/2006, 6/9/2006, 7/9/2006, 8/9/2006, 3/10/2006

 
DATE OF JUDGMENT: 

11/22/2006

LEGAL REPRESENTATIVES:

APPLICANT
N Hemmings QC with M Carpenter
SOLICITORS
Allens Arthur Robinsons

RESPONDENT
R Lancaster
SOLICITORS
Pike Pike & Fenwick

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Jagot J

22 November 2006

31407 of 2004

ACTIVERAIN PTY LIMITED
Applicant

MINISTER ADMINISTERING THE ENVIRONMENT PLANNING AND ASSESSMENT ACT 1979
Respondent

JUDGMENT

Jagot J:
A. Introduction

1 Activerain Pty Limited owned land at 534-536 Great Western Highway, St Marys, held in three lots - lots 1, 2 and 3 in DP 1047092. On 30 April 2004, the Minister acquired this land by compulsory process for the purposes of the Environmental Planning and Assessment Act 1979. At that time, the land was vacant, although it had remnants of a demolished dwelling present on it. Activerain initially claimed $4.67 million compensation. In accordance with the provisions of the Land Acquisition (Just Terms Compensation) Act 1991, the Minister offered compensation determined by the Valuer-General of $220,000. Activerain objected to this offer, as contemplated by s 66 of the Just Terms Act.

2 Activerain revised its claim to $2.29 million. The Minister said that Activerain was entitled to $300,000 compensation. Activerain and the Minister disagree about the decrease in the value of the land caused by the proposal to carry out the public purpose. The parties agree that the pubic purpose was to provide a corridor, which purpose first arose in 1968 and culminated in the imposition of the 5(d) (Corridors Zone) in 1991. That purpose, and all its effects (direct and indirect), must be disregarded in assessing the market value of the land in accordance with s 56(1)(a) of the Just Terms Act. The matter must be approached as if the public purpose never existed (Roads and Traffic Authority of New South Wales v Perry and Another (2001) 52 NSWLR 222 at [14] – [17], [24] – [43], [52], [56]).

3 Activerain contended that, but for the public purpose, the land would have been zoned 4(b) Special Industry under the Penrith Local Environmental Plan 1996 at the acquisition date, with development potential for bulky goods retail or industrial/warehousing development suitable for the highway location of the land.

4 The Minister contended that, but for the public purpose, the land would have been zoned 1(b) (Rural “B” Zone – Smallholdings) under the Penrith Local Environmental Plan No 201 (Rural Lands) 1991 at the acquisition date, with development potential for one dwelling.

5 I must resolve the compensation to which Activerain is entitled in accordance with Pt 3 of the Just Terms Act.

6 Activerain called evidence from Mr Player, town planner, Mr Varga, traffic engineer, Mr Tooker, civil and water engineer, and Mr Dobrow, valuer. The Minister called evidence from Mr Ludvik, town planner, Dr Phillips, civil and water engineer, Mr Heggie (with respect to contamination), Mr Makin, quantity surveyor, and Mr Wood, valuer. I will deal with their evidence below in section C. But first I provide the context within which their evidence must be assessed.

B. Background
General

7 The land is within St Marys, in the western suburbs of Sydney. It is located to the south and below the level of the Great Western Highway, bounded by Putland Street on the south, the highway to the north and the unformed Macquarie Street to the east. The land has a total area of 5870.4 m2 (lot 1 has 2362 m2, lot 2 has 3213 m2 and lot 3 has 295.4 m2). At the acquisition date, the land was vacant. It was zoned Special Uses 5(d) – Corridors Zone under the Rural Lands Local Environmental Plan 201, made in 1991. In the 5(d) zone, development for any purpose permissible on land in an adjoining zone may be carried out with consent and the concurrence of the Minister, provided the land is not included in a priority program for acquisition (which this land was not) (cl 26(5)).

8 The 5(d) zone reflects the public purpose for which the land was acquired, and its effect on value must be disregarded in accordance with s 56(1)(a). The corridor purpose, from its inception in 1968 to its culmination in the 5(d) zone imposed in 1991, was intended to provide land for recreation and community purposes, to provide a physical and visual buffer between urban areas, and to set aside land for the development of services, facilities and special uses by public authorities for the benefit of the community. The corridor purpose was not related to flooding. The condition of the land at the acquisition date, including its propensity to flood, is not to be disregarded.

9 At the acquisition date, the land was part of a large area zoned 5(d), separating the St Marys’ urban centre from the urban development further to the west. The land adjoined the 4(b) zone to the east across the unformed Macquarie Street and residential development to the southeast across Putland Street. It is located between South Creek (to the west) and Byrnes Creek (to the east).

Planning history

10 On 27 June 1951, the land was designated as part of the rural area under the County of Cumberland Planning Scheme Ordinance. The St Marys’ urban area was north of the highway, and east of the land. The rural area divided St Marys from the next urban centre at Penrith.

11 On 18 March 1960, the Penrith Planning Scheme Ordinance was made. It zoned the land Non-Urban “A”. Under that instrument, the western most extent of the urban area of St Marys ended at Macquarie Street, an unformed road adjoining the eastern boundary of the land. The non-urban zoning also extended south and north of the land across the highway. The 4(b) zone was to the immediate east. To the immediate southeast, a residential zone applied, which continued to a point just south of Wilson Street. Victoria Park, located to the south of the highway and north of Putland Street (between Princess Mary Street and Pages Road), was zoned open space. South Creek appears as a large watercourse on the zoning map. Other smaller watercourses are also shown, including Byrnes Creek.

12 In March 1968, the NSW Government released the Sydney Region Outline Plan, reviewing its overall metropolitan development strategy. The land was within the west sector extending to the Blue Mountains, a sector identified as a priority for further urban development. The plan proposed the expansion of the Penrith and Blacktown town centres in particular, with Parramatta as the regional centre. The plan included a concept of special use corridors between the urban areas. The map accompanying the plan shows a proposed corridor between St Marys and Penrith.

13 Interim Development Order No. 42, made on 30 November 1973, reflected the corridor purpose, as it suspended the provisions of the 1960 Ordinance insofar as they applied to the land and other land in the proposed corridor, and required the concurrence of the State Planning Authority to the carrying out of development.

14 Interim Development Order No. 54, made on 24 December 1975, also reflected the corridor purpose. It repealed IDO 42 (at least in part) and enabled interim development to be carried out with the concurrence of the NSW Planning and Environment Commission except for certain development purposes, and regulated subdivision. IDO 54 applied to most of the land affected by IDO 42.

15 Interim Development Order No. 87, made on 18 May 1979, applied to a parcel of land zoned open space under the 1960 Ordinance north of the highway, aligned with Victoria Park. IDO 87 permitted development of part of that land for shops. That land was not subject to IDO 42 or IDO 54.

16 Interim Development Order No. 88, made on 31 August 1979, enabled a parcel fronting the highway and Pages Road zoned 4(b) under the 1960 Ordinance, including a small open space reservation, to be developed for the purpose of a hardware and tyre shop with consent.

17 Penrith Local Environmental Plan No. 50, made on 30 July 1982, enabled the land zoned 4(b) under the 1960 Ordinance, fronting Neale Street and to the immediate west of the parcel subject to IDO 88, to be used for displaying and retailing electrical equipment.

18 Penrith Local Environmental Plan No. 150, made on 16 April 1987, rezoned certain land 3(d) Special Business (Service Area) for special business purposes associated with major roads or involving activities inappropriate to traditional and general business centres. The rezoned land included the land subject to IDO 88 and LEP 50, which LEP 150 repealed. LEP 150 also applied to the land south of Wilson Street adjoining Mamre Road, zoning it 3(d). Shops, other than convenience stores, general stores and shops trading principally in bulky goods, were prohibited, as were commercial premises (except those used in conjunction with permissible purposes). Alterations to this zoning were also subsequently made. The adjoining block to the west was also released for residential purposes, although I do not know when that occurred.

19 The Rural Lands LEP 201 was made on 12 July 1991. It repealed IDO 54 and amended the 1960 Ordinance so that it did not apply to the land to which the Rural Lands LEP 201 applied. The Rural Lands LEP 201 remains in force, and regulates the development of rural and certain other land within Penrith. It creates three rural zones – 1(a) (Rural “A” Zone – General), 1(b) (Rural “B” Zone – Smallholdings) and 1(c) (Rural “C” Zone – Rural Residential). It also creates four special use zones, including zone 5(d) (Corridors Zone). The land was zoned 5(d) under this instrument.

20 The 5(d) zone objectives reflect the corridor purpose - to provide land for recreation and community purposes, to provide a physical and visual buffer between urban areas and to set aside land for the development of services, facilities and special uses by public authorities for the benefit of the community. Clause 26, as noted, provides for the acquisition of land zoned 5(d) by the Minister, and enables it to be developed for any purpose permissible in an adjoining zone prior to acquisition with consent and concurrence, provided the land is not within a priority program for acquisition.

21 The 1996 LEP was made on 28 February 1997 and remains in force. It applies to industrial lands within Penrith, and repeals all instruments that previously applied to such land. The parcels to the east of the land, bounded by the highway, Neale, Putland and Macquarie Streets, are zoned 4(b) Special Industry Zone under the 1996 LEP. This area was zoned 4(b) under the 1960 Ordinance. A report from a 1992-1993 Council file about the draft 1996 LEP identifies the Putland Street area in St Marys (east of Macquarie Street and zoned 4(b) under the 1960 Ordinance) as suitable for the new 4(b) zone due to the main road location, adjacent to the existing highway service zoning (I understand this to be a reference to the 3(d) zoned land between Neale Street and Pages Road) and to support the St Marys town centre.

Flooding instruments and works

22 In December 1986, the State government released the Floodplain Development Manual. The manual assists consent authorities to deal with flood liable land in accordance with the government’s policy. The primary objective of the manual is to reduce the impacts of flooding and flood liability. To achieve that objective, the manual distinguishes between developed and undeveloped land. The manual provides that the flood and liability impacts on developed land are to be managed by various measures (for example, flood mitigation works). Potential flood losses in all new areas are to be “contained by the application of effective planning and building controls”. In applying this policy, all development and building proposals are to be treated on their merits, taking into account social, economic, ecological and flooding considerations, as “floodplains should not be unnecessarily sterilised and development not unreasonably restricted”.

23 The manual defines flood storage, floodways and high hazard (among other terms).

Flood storages : - those parts of the floodplain that are important for the temporary storage of floodwaters during the passage of a flood.

Floodways : - those areas where a significant volume of water flows during floods. They are often aligned with obvious naturally defined channels. Floodways are areas which, even if only partially blocked, would cause a significant redistribution of flood flow, which may in turn adversely affect other areas. They are often, but not necessarily, the areas of deeper flow or the areas where higher velocities occur.

High hazard : - possible danger to life and limb; evacuation by trucks difficult; potential for structural damage, social disruption and financial losses could be high.

24 The manual recognises the role of planning instruments in regulating flood impacts on developed and undeveloped areas as follows:

2.7.1 Undeveloped Areas
Rezoning to minimize exposure to flood losses is readily applicable where there are little or no expectations, demands or rights for development such as in rural areas. In general, Councils should maintain existing low development zones over land liable to significant flooding and adopt development strategies which avoid any expectations or demands for development on flood liable land. This can be done where sufficient alternative flood free land is available for development.

Where alternative flood free land is not available, and there is a demand for additional urban land, alternative strategies involving higher densities, avoidance of the worst areas, appropriate conditions for development and structural mitigation measures will need to be considered. Local environmental plans prepared in these circumstances should be supported by a suitably detailed floodplain management plan.

2.7.2 Existing Developed Areas
In existing higher intensity zones the situation is more complex and the scope for high flood loss reduction is usually less. Nevertheless the principle of reducing the intensity of development or, at worst, not increasing it should be pursued. The circumstances in which it is particularly important to limit or even reduce development potential are in zones which allow high intensity uses, especially residential-type uses or in urban zones over floodways, and high hazard areas. Great care is needed in areas where adequate flood proofing cannot be achieved or safe access cannot be maintained in times of flood.

25 The manual distinguishes between the hydraulic and hazard categories of land. Hydraulic categories are a classification of the impact of development on flooding. The manual recognises three hydraulic categories - floodways, flood storage and flood fringe, which are generally determined by a study of the floodplain. Hazard categories are a classification of the impact of flooding on development. The manual recognises two hazard categories – low and high hazard.

26 With respect to hydraulic categories, the manual provides that:

In the absence of an hydraulic model capable of measuring impacts, floodways and flood storages can be defined initially, on the basis of hydraulic criteria as detailed below.

Floodways – those areas where the product of depth (m) and velocity of flow (m/s) is greater than 1.0; and/or those areas where removal of the cross section area available to pass flood flows will cause adjacent upstream flood levels to increase by more than 0.1m during major flooding.
Flood storages – those areas outside floodways that if completely filled with solid material would cause peak flood levels to increase anywhere by more than 0.1m and/or would cause the peak discharge anywhere downstream to increase by more than 10%.

Areas being tested by the above criteria should be treated as a contiguous whole, having regard for their topography and location within the overall flood liable area. They should not be subdivided or considered in piecemeal fashion.

27 The prime factors in assessing the hazard category are depth and velocity of floodwaters, effective evacuation time and difficulties associated with evacuation. Figures 6 and 7 in the manual show velocity and depth relationships and provisional hazard categories. Where the depth exceeds 1m, the provisional hazard is deemed to be high irrespective of velocity.

28 The policy annexed to the manual reiterates the objectives identified above. To facilitate the objectives, the policy provides for “the facilitation of development within existing zoned urban areas, outside of hazardous floodways, with appropriate flood proofing” and “a flexible ‘merit based’ approach when dealing with floodprone land planning, development and building matters to facilitate development wherever practical”.

29 In or about 1989, the Council constructed a flood levee on the eastern boundary of the land, which acts to protect the developed area to the east from South Creek flooding. The highway crosses South Creek by a multi-span bridge about 150 metres west of the western boundary of the land. Immediately east of the land, to the north of the levee, there is a second major culvert crossing. One culvert services flows from Byrnes Creek, and four service flows from South Creek. Accordingly, the land sits outside the protection of the levee. Activerain does not contend that the levee related to the public purpose.

30 In February 1991, the Department of Water Resources released the South Creek Floodplain Management Study. The study did not take into account the levee. It identified the South Creek catchment as the principal drainage basin for the western Sydney region, parts of which were urbanised, but much rural. The study was required given the proposed further urban development in the region. The study identified the hydraulic limits of floodways in the catchment in the 100 year ARI (average recurrence interval) flood. It did so by identifying cross section areas available to pass flood flows which, if removed, would cause adjacent upstream flood levels to increase by more than 0.1m during major flooding (that is, the second criteria in the identification of a floodway recommended by the 1986 manual). The maps accompanying the study divide the hydraulic categories into floodway and flood fringe (with no areas identified as flood storage). Moving from south to north, the maps show the area south of Wilson Road released for residential and commercial development located outside the floodway, adjacent to a flood fringe area. North of Hall Street almost all land west of Victoria Park is in the floodway. The floodway continues north, taking in the South Creek park area north of the highway. The land released under IDO 87 is outside the eastern extent of the floodway and flood fringe areas. The land west of Pages Road, including the subject land, is within the floodway, however.

31 The Council adopted an interim policy for the development of flood liable land in 1991. The policy largely reflects the 1986 manual. Objectives include a “merit approach” to all development and building decisions, and preventing the introduction of unsuitable land uses into flood liable areas. The definitions of flood storage and floodway are similar to those in the manual. The general policy section includes a statement that the Council “will consider development on flood liable land but will not grant consent to development in floodways or high hazard areas”. It also states that the Council will not support the rezoning of land in such areas.

32 The State government released a draft revised Floodplain Management Manual in January 2001. That draft refines the 1986 manual, and I do not consider it necessary to record its provisions.

33 On 19 July 2005, the Council answered an inquiry from Activerain’s solicitors to the effect that the Council had adopted RL 25.4m AHD as its standard flood level (being the 1% annual exceedance probability or AEP level). As the land was partly below that level, the Council considered the land to be subject to its interim flood policy, which provided for a “merits based approach” to the assessment of building and development applications.

34 I understand there to be no relevant difference between the concepts of 1% AEP level and 100 year ARI flood level for present purposes.

Development in the vicinity of the land

35 In 1991, the Council granted consent to residential development to the immediate southeast of the land, fronting Putland Street. This site had been zoned residential under the 1960 Ordinance. The 1991 consent lapsed in 1996. In or about November 1996, the Council granted another consent to multi-unit residential development on this site. The report to the Council indicated an initial proposal for 32 units, with filling of an average of 0.8m to raise the land above the 100 year flood level, the maximum flood depth being in the north and south western corners of the site (to 2m). The applicant for consent lodged a revised proposal, due to concerns about filling the rear of the site, which acted as a drainage path. Filling was limited to the front part of the site. The Council granted consent, and the residential units were developed. This site is within the extent of the floodway defined in the 1991 study.

36 In 1992, the Council granted consent to a service station to the immediate east of the land on a site zoned 4(b) at 526 Great Western Highway (and which had been zoned 4(b) in 1960). In or about May 1998, the owner of that land lodged a development application proposing development of a consolidated site (516 to 524 Great Western Highway), including the service station site, for an integrated service centre and industrial units. The application referred to a drainage channel running through the site, 6m wide (being part of Byrnes Creek flowing east to west through the development site). The survey identified this channel as “open channel stormwater drain”. The application proposed a drainage easement and stormwater detention basin on site to deal with drainage issues. The Council noted that the site was flood liable, with a 100 year ARI flood level of 24.6m AHD. The Council identified the flooding sources as South Creek backing up from downstream along Byrnes Creek, and directly from Byrnes Creek flowing through the site in the channel. It required the applicant to deal with the Byrnes Creek flows by pipes capable of dealing with the 1% AEP flows, with a peak discharge figure of 25m3/s. The Council granted consent to the development on 14 December 1998, subject to conditions, including a requirement for a hydrologic and hydraulic study to ensure that the detailed design did not increase flood risk to adjoining properties. This site is within the extent of the floodway defined in the 1991 study.

37 In May 2003, a report to the Council recorded that PlanningNSW (the Minister’s Department) requested that the Council consider rezoning a site within the 5(d) zone about 4 to 5 kilometres north of the land. The site the subject of this request is within the extent of the floodway defined in the 1991 study. The site formed part of a much larger holding through which a rail line runs. The area to the east of the line was zoned 4(a). The Minister granted consent to the carrying out of State significant development comprising an intermodal rail freight facility, sand recycling plant and grain processing silos in December 2000 (as prohibited development). FreightCorp commenced the consent as a State government instrumentality, but was later privatised. PlanningNSW was concerned that the privatised body might require the Minister to acquire the 5(d) zoned land. The report observed that the site could be rezoned General Industrial 4(a) and Open Space 6(a) immediately adjacent to the South Creek corridor, and recommended that the Council so resolve. The fate of the report is not known, but Mr Player understood the Council deferred the matter to be dealt with as part of an overall consolidated planning instrument for Penrith.

38 The rezoned land south of Wilson Street has been developed for commercial and residential purposes. The eastern block is partly affected by Byrnes Creek. This land is not in the floodway as depicted in the 1991 study, but the flood fringe affects part of the western block (zoned residential).

39 There are some other developments within the 5(d) corridor to the west of the land. They include a service station and McDonald’s and another older style service station on the western edge of the 5(d) zone (west of South Creek), and the remnants of a derelict tavern between the land and South Creek. I do not know when these developments were constructed, reconstructed or abandoned. A Hog’s Breath Café has been constructed east of Charles Hackett Drive on land at 455 Great Western Highway, on land zoned part 2(a) and part 5(d). The flood fringe area of the 1991 study appears to affect that land.

C. Effect of public purpose
Evidence

40 Mr Player concluded that, if the land had not been affected by the corridor purpose since 1968, it would have been zoned 4(b) Special Industry under the 1996 LEP. He placed weight on the 4(b) zoning of the adjoining land (since the 1960 Ordinance), the direct frontage of the land to the highway, the pattern of urban expansion in Sydney and the pressure for such expansion, and Mr Tooker’s engineering advice. In Mr Player’s opinion, the logical boundary of the 4(b) zoning under the 1960 Ordinance would have been South Creek but for the corridor purpose. The highest and best use of the land would thus be for bulky goods or industrial/warehouse development, on an elevated platform as proposed by Mr Tooker.

41 Mr Ludvik concluded that the westward extent of urban development associated with St Marys was set by the 1960 Ordinance (well before the corridor first emerged as a purpose) along the unformed Macquarie Street, and that land west of this unformed road was and remains an integral part of Penrith’s rural land resource. Mr Ludvik accepted that Mr Tooker’s engineering solution of an elevated accessway and platform on columns was technically feasible, but did not believe that the issue of zoning would have been influenced by the capacity to erect an elevated concrete slab over the land. He considered that the highest and best use of the land was for one dwelling house.

42 Mr Player and Mr Ludvik agreed that they had not been able to locate any documents disclosing the basis for the boundaries of the urban land in St Marys when the 1960 Ordinance was made. Mr Player, as part of the process of conferencing between experts, clarified that, in his opinion, the land would not be suitable for urban development if the whole of the land were classified as high hazard and floodway. He did not consider the high hazard classification alone sufficient to displace the merits based approach reflected in the Council’s interim policy with respect to that part of the land identified by Mr Tooker as flood storage, given the other developments east of the land also affected by flooding. Mr Ludvik did not consider flooding east of the land comparable. He characterised the Byrnes Creek catchment as vastly different from the South Creek catchment.

43 Mr Dobrow observed that the 1960 Ordinance did not contemplate the expansion of Sydney, and that it was “obvious that South Creek was the logical western boundary of the St Marys township, due to the existing “Tavern” development to the west of the subject property, and would have flourished” absent the corridor purpose. He thought that, even if the land had been zoned non-urban at the acquisition date as Mr Ludvik concluded, the hypothetical seller and buyer would see the land as an opportunity for higher and better uses through rezoning (for bulky goods retail, industrial/warehouse uses consistent with the land to the east), given its highway location and long frontage to the highway, the uses on the adjoining land to the east, the level of the land (below the highway) lending itself to Mr Tooker’s engineering design of an elevated accessway and platform to accommodate the development, and Mr Tooker’s advice about flooding. He also thought that the large area affected by the 5(d) zoning blighted the whole area, including the urban area. He observed that, at the acquisition date, the industrial market was very buoyant and competitive, with vacant land in the immediate area relatively scarce. He also considered that, as the land was in three lots, it would yield two dwelling entitlements with potential for a home industry use, if not able to be exploited for its commercial and industrial potential.

44 Mr Wood said that St Marys had “been in the doldrums for years”. It was an old munitions area that had been struggling for the past decade or so against Penrith, which was attracting auto-oriented uses away from St Marys. But for the 5(d) zoning, Mr Wood thought that the lots would have been subject to a consolidation requirement, given the non-urban controls in the Rural Lands LEP 201. He thought that a buyer would not even consider commercial development on land west of the levee.

45 Mr Dobrow and Mr Makin gave evidence about the costs of constructing the elevated roadway and platform as recommended by Mr Tooker. I do not consider that this issue would have played any role in the Council’s resolution of the planning controls applicable to the land between the unformed Macquarie Street and South Creek over time, absent the corridor purpose. I accept that this issue is relevant to the issue whether the hypothetical seller and buyer would see the land as presenting an opportunity for higher and better uses, even if assumed to be zoned non-urban at the acquisition date. I will deal with this aspect of the evidence in that context.

46 Mr Tooker identified the land, and the areas 250m to the west and 150m to the east as flood liable, with the highway acting as a barrier creating greater flooding upstream (south). Mr Tooker did not consider the 1991 study floodway extent accurate, as it extended over the whole of the South Creek floodplain. He classified the land near the South Creek Bridge and the former Byrnes Creek culverts (the south-eastern part of the subject land) as floodway, based on the criterion of substantial flows. He classified the land, and an area around it (designated floodway in 1991), as flood storage on the same basis. Mr Tooker’s marked up plans of that area disclose velocities in the 100 year ARI flood of about 0.4m/s or lower, which he said were low velocities. Mr Tooker identified that the land was within the high hazard classification, due to flood depths significantly exceeding 1m in the 100 year ARI flood. Mr Tooker noted that 516-524 Great Western Highway would also be classified as high hazard, and was affected by local flooding from Byrnes Creek (the channel of which traversed that site as a floodway).

47 Mr Tooker concluded that the land could be developed in conformity with the Council’s interim policy by using a suspended slab, the slab and piles to be designed to withstand loadings from floodwaters, and the associated implementation of an emergency response plan to allow evacuation to the highway at the western end of the land. Mr Tooker recommended wide spaced piles to avoid the potential to trap debris, and that the building should not extend over that part of the land he classified as floodway.

48 Dr Phillips considered that the whole of the land was subject to inundation directly from South Creek, which has a discharge in the 100 year ARI flood of around 1,100m3/s. In the 100 year ARI flood, the land would be inundated for approximately 23 hours, peaking at RL 24.5m AHD based on the 1991 study. The surveyed ground levels on the land vary from RL 20.4m AHD to 23.1m AHD. The land is inundated in floods less than the 20 year event, and perhaps as frequently as the 5 year event. Dr Phillips did not accept Mr Tooker’s focus on the velocity of floodwaters as determinative of either hydraulic or hazard classification – as hydraulic classification relates primarily to discharge or flows, and hazard primarily to depth and velocity. Dr Phillips also modelled the impact of the levee. He concluded that the levee had increased flood levels on the land by 0.2m AHD, and reduced flood levels east of the levee. Dr Phillips considered that, in accordance with the Council’s interim policy, the land could not be developed, as it was both floodway and high hazard, and unsuitable for urban development.

49 Mr Tooker and Dr Phillips agreed that the land was subject to flood levels as follows based on the 1991 study:

Event	Flood Level (m AHD)	Max Flood Depth (m)
PMF	27.9	4.8 – 7.5
100 yr ARI	25.4	2.3 – 5.0
50 yr ARI	25.0	1.9 – 4.6
20 yr ARI	24.4	1.3 – 4.0

50 They agreed that the approach to defining the floodway extent in the 1991 study was consistent with the methods in the 1986 manual for identifying a floodway. They agreed that the development would have been allowable under the 1986 manual (absent any Council policy), if the consent authority were satisfied that the development met the considerations for development in high hazard floodways (table 6). They agreed that the Council’s policy did not contemplate development on a suspended slab above floodwaters.

51 Dr Phillips observed that the flows through the land were different from the flows across the land to the east. He viewed the area east of the levy as “classical flood storage”, where floodwaters moved in, were stored and then retreated. In contrast, floodwaters flowed through the land with the primary movement of waters in the peak towards the culvert, from south to north, supporting the 1991 floodway classification of the land. Mr Tooker considered that the flows through the land were not substantial in comparison to the balance of the floodplain, and that magnitude of flows was the unique characteristic of a floodway.

Submissions

52 Activerain submitted that, but for the corridor purpose which emerged in 1968, the land would have been rezoned 4(b) Light Industrial under the 1960 Ordinance (at some time after 1968), and then 4(b) Special Industry under the 1996 LEP (which zoning would have applied at the acquisition date). Activerain identified numerous factors to support this conclusion. The land adjoined the 4(b) zone. The adjoining land was subject to comparable flooding constraints, and had been developed in accordance with the 4(b) zoning. The land further to the east had been zoned 3(d). Part of that land had been zoned open space under the 1960 Ordinance, but had been rezoned to permit commercial development and developed, despite its similar flood constraints. The land fronted the highway, and had good exposure. The pattern of urban expansion in Sydney supported the release of the land for urban purposes, given its location and other attributes. This was apparent from the releases of other land affected by flooding (see above). The land was not within a priority program for acquisition, and thus could have been developed under cl 26(4) of the LEP. The Council’s position can also be discerned from its officers’ recommendation to rezone land affected by the corridor and South Creek in May 2003. The western boundary set by the 1960 Ordinance was arbitrary, reflecting a cadastral boundary. No Council document supported the Minister’s position.

53 The Minister submitted that, but for the corridor purpose, the land would have been zoned non-urban under the Rural Lands LEP 201 at the acquisition date. The Minister said that this conclusion was compelled by the land’s flood affectation, the proper categorisation of the land as a floodway and the historical attitude of the Council that the western edge of St Marys should be set by a line running south from the highway along the unformed Macquarie Street. According to the Minister, there was no reasonable prospect that the land (zoned non-urban in the 1960 Ordinance) would have been rezoned 4(b) between 1968 (the first manifestation of the corridor purpose) and the acquisition date. Had there been any such prospect before the late 1980’s, the construction of the levee certainly eliminated it.

Conclusions – land use planning

54 There was no issue between the parties with respect to the principles of assessment of compensation to be applied. They agreed that the statutory hypothesis in s 56(1)(a) of the Just Terms Act requires an assumption that the corridor purpose never existed, and an assessment of the course of planning and development controls that would have applied on that assumption. They agreed that market value must be assessed at the acquisition date, having regard to the actual condition of the land at that time, with all its advantages and disadvantages. They agreed that any genuine doubt with respect to value of the land taken should be “resolved in favour of a more liberal estimate” (Boland v Yates Property Corporation Pty Ltd and Another (1999) 167 ALR 575 at [356], citing Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited and Others (1947) 74 CLR 358 at 373 – 374).

55 The parties agreed the public purpose for which the land was acquired (that of the corridor), and that this purpose first arose in the Sydney Region Outline Plan 1968. They agreed that the levee constructed in 1989 was unrelated to the carrying out of that purpose, and that the affectation of the land by flooding both before and after construction of the levee could not be disregarded.

56 Clause 26(4) of the Rural Lands LEP 201 (providing that land zoned 5(d) may be developed for any purpose permissible on adjoining land with consent and concurrence, if the land was not within a priority program for acquisition) applies exclusively to land in the 5(d) zone. The clause must be inferred to be present in the instrument as part of the scheme to implement the corridor purpose. Insofar as cl 26(4) itself increased or decreased the value of the land, s 56(1)(a) requires its effect to be disregarded. Accordingly, I do not give weight to the evidence and submissions relying on the presence of cl 26(4) in the Rural Lands LEP 201.

57 The extract of the map accompanying the 1960 Ordinance applying to the St Marys area depicts zone boundaries that largely followed cadastral boundaries. I accept Mr Player’s suggestion that the western most extent of St Marys at the unformed Macquarie Street accorded with the cadastre. That does not mean that the boundary was arbitrary. South Creek is a very large watercourse, and was depicted as a significant topographic feature on various maps and plans from 1951 onwards. The flooding implications associated with South Creek would have been readily apparent to the Council at all material times. Even absent a flood study (which did not occur until 1991), it would have been obvious that the highway acted as a barrier, increasing flood levels south of the highway, and that flood impacts would be likely to be greater closer to the channel of South Creek. The western boundary of the land is about 150m from the South Creek channel. Flooding from South Creek could not have been immaterial to the western extent of the urban area of St Marys determined in 1960.

58 I accept that the areas east and southeast of the land, zoned 4(b) and residential 2(a) under the 1960 Ordinance, were affected by South Creek flooding, and that the Council would have appreciated that fact when the 1960 Ordinance was made. In other words, being flood liable did not necessarily exclude land from urban release in 1960. But I do not accept that distance from the South Creek channel would have been perceived as irrelevant to land use potential (particularly south of the highway, which acted as an embankment). I also do not accept any suggestion that South Creek (with a 100 year ARI event discharge of about 1,100m3/s at the highway) and Byrnes Creek (piped through the adjoining land with a peak discharge in the 100 year ARI event calculated by the Council as 25m3/s) would have been seen as raising similar planning issues in the mind of the Council at any time. The two creek systems were manifestly different. Mr Ludvik’s observation, that the Byrnes Creek and South Creek catchments must be recognised as vastly different, is compelling. Byrnes Creek is a local watercourse, influencing a relatively small area, carrying peak flows that bear no resemblance to the flows carried through South Creek. The difference would have been within the contemplation of the Council at all times, irrespective of the availability of peak flow calculations.

59 The agreement that the corridor purpose first arose in the Sydney Region Outline Plan 1968 is significant, because it discloses the absence of any influence of the corridor purpose in the planning controls in the 1960 Ordinance, a situation that prevailed until release of the Sydney Region Outline Plan eight years later. No evidence suggests that, during this period, circumstances supported extending the 4(b) zone west to South Creek. Between 1960 and 1968, the 1960 Ordinance continued unamended (insofar as relevant).

60 The Sydney Region Outline Plan identified the western sector generally as an area for further urban growth and contained the beginnings of the corridor purpose. The planning regimes thereafter were affected by the corridor purpose, which must be disregarded. Two interim development orders (IDO 42 and IDO 54, made in 1973 and 1975 respectively) specifically reflect the corridor purpose.

61 Disregarding the corridor purpose, a material planning step (IDO 88, made in 1979) occurred four years later, involving the small area of land reserved for open space and adjoining Pages Road to the east and land zoned 4(b) to the west. If it were the case that the curved boundary of that parcel reflected the alignment of Byrnes Creek then, as I have said, I do not accept that the Council, at any time, would have considered the flooding from that source comparable to flooding from South Creek. In circumstances where this small area was otherwise well within the urban area of St Marys, I think Mr Ludvik’s opinion that IDO 88 should be seen as a refinement or rationalisation of the zones in the 1960 Ordinance is sound.

62 IDO 87 (made a few months before IDO 88 in 1979) should be similarly understood. The land subject to IDO 87, zoned mainly open space under the 1960 Ordinance, was also within the overall boundaries of the area zoned for urban purposes in 1960, to the north of the highway above Victoria Park, and east of the residential development adjoining Princess Mary Street. Moreover, that land connects through to the main commercial strip zoned for general business purposes under the 1960 Ordinance. In that context, IDO 87 (like IDO 88) represented a zoning amendment to facilitate infill development.

63 LEP 50 (made in 1982) represented a minor adjustment of the existing 4(b) zone to permit retail sale of electrical devices, generally consistent with the retail development (hardware and tyre sales) permitted by IDO 88 on the adjoining land.

64 LEP 150 (1987) involved the first substantial adjustment to the zones depicted by the 1960 Ordinance in the relevant part of St Marys. It provided that the 1960 Ordinance did not apply to land to which it applied. Apart from rationalising the effect of IDO 88 and LEP 50 to the land near Pages Road (which LEP 150 repealed), LEP 150 extended the urban area of St Marys south of Wilson Street along Mamre Road by creating a new commercial zone in that area. As noted, at some time, land to the immediate west of that commercial area was also released for residential development. I accept Activerain’s submission that this represented an expansion of the urban area from that identified in 1960 near South Creek and on land partly affected by Byrnes Creek. This further urban development involved commercial and residential uses, in an area with existing residential development (zoned as such under the 1960 Ordinance) to both the east (across Mamre Road) and north (across Wilson Street).

65 I accept that the history of development across the Sydney Metropolitan area has involved pressures for urban expansion. That pressure is reflected in the 1968 Sydney Region Outline Plan and is otherwise well known. Accepting that general proposition does not resolve the present issue, however. In this case, the corridor purpose first arose in 1968, eight years after the western boundary of the 4(b) zone was depicted in 1960. Nothing between 1960 and 1968 suggests any pressure to expand the industrial area of St Marys to the west past the alignment of Macquarie Street. Between 1968 and 1987, the Council undertook relatively minor zoning adjustments in St Marys to permit infill development of land within the overall urban area. One small parcel in the immediate area was released for industrial development – the open space area to the east of the existing 4(b) zone fronting Pages Road. The 1987 expansion of the urban area to the south did not involve industrial uses, adjoined existing residential development to the east and north, and was well east of the residential development between Pages Road and Schleicher Street.

66 The fact that the planning history reveals that flood impacts did not exclude urban development potential does not mean that flood impacts, or their severity, were immaterial to planning decisions from 1960 onwards. I do not consider that inference reasonable, given the large non-urban areas around South Creek in the 1960 Ordinance zoning map (absent the corridor purpose). The highway location, the proposed (in 1960) adjoining industrial land to the east, the distance from other urban centres, and the topography of the land below the level of the highway also all existed in 1960, absent the corridor purpose. Other factors would also have been in play, as I have said – particularly flooding from South Creek.

67 I do not accept that South Creek represented the logical western boundary of the 4(b) zone but for the corridor purpose. That was not the boundary selected in 1960, absent the corridor purpose. The presence of the derelict tavern and other development within the corridor (identified above) does not support South Creek as the boundary of the industrial zone. Awareness of flood impacts from South Creek is consistent with the pattern of planning decisions taken during this period – namely, rezoning to facilitate urban development generally within the overall boundaries of the existing urban area depicted in the 1960 Ordinance, albeit affected by South Creek flooding and local flooding in part.

68 General blight of the urban area by reason of the corridor purpose, as proposed by Mr Dobrow, is not a persuasive explanation for the planning context described above. I can see no reason why preservation of a corridor as proposed in 1968, and reflected in IDO 42, IDO 54 and the 5(d) zoning imposed by the Rural Lands LEP 201, should have blighted other land zoned for urban purposes, or acted to depress any pressure for expansion of St Marys.

69 In this context, general pressure to expand areas for urban development across the Sydney metropolitan region and in its western sector from the late 1960’s to the late 1980’s and the other factors relied on by Activerain are an inadequate and unpersuasive basis upon which to hypothesise that, absent the corridor purpose, the 4(b) zone south of the highway would have been extended to South Creek at some time between 1968 and 1987. I consider that, but for the corridor purpose, the western extent of the 4(b) zone would have remained the alignment of Macquarie Street, as depicted in the 1960 Ordinance, at least until 1987. Absent the corridor purpose, I am satisfied that the land would have remained in its non-urban zoning under the 1960 Ordinance throughout this period. I turn now to the situation from 1987 onwards.

70 I accept that the general pressures for urban development in the Sydney metropolitan region continued to increase through the late 1980’s to the acquisition date, and that there is no reason to assume that the St Marys area would have been excluded from that dynamic. LEP 150 reflects this circumstance. What would the effect of that general trend have been, absent the corridor purpose between the late 1980’s and the acquisition date?

71 The zonings introduced by LEP 150 in 1987 largely coincided with the release of the 1986 manual with respect to flood management. From 1986 onwards, various steps were taken reflecting the significance of the 1986 manual for planning and development decisions. These steps included the construction of the levee on the eastern side of the land to reduce flood impacts from South Creek on urban land to the east of the levee, the preparation of the 1991 study relating to South Creek flooding and the release of the Council’s interim policy in 1991. I am satisfied that, after release of the 1986 manual, issues associated with the relationship between development and flooding would have been seen by the Council as significant, requiring appropriate resolution in a manner generally consistent with the manual.

72 Given the provisions of the 1986 manual, I do not consider that the Council’s development decisions in the 1990’s and more recently with respect to the development of land within the 4(b) and residential zones to the east of the land support the conclusion that, but for the corridor purpose, the 4(b) zone would have extended to South Creek. The 4(b) land and residential zones to the east and southeast of the land had been in place since 1960. The 1986 manual recognises the complexity of dealing with development of flood liable land within existing zones that were intended to facilitate higher intensity development. It emphasises the lesser scope for action to address potential flood losses in such areas, compared to land within lower intensity zones. The land would have remained within a non-urban zone in 1987, in accordance with my finding above, and would have been dealt with in planning decisions on that basis from 1987 onwards. Accordingly, the land to the east is not analogous, and would not have been seen as such by the Council or others.

73 Consistent with the opinion of Mr Ludvik, I consider that the capacity for an engineered solution to be implemented, allowing development of the land on an elevated platform and access by an elevated roadway, would not have been a determining factor in any decision about the planning controls affecting the land. I am satisfied that decisions about planning controls from 1987 would have reflected the concepts within the 1986 manual, particularly the hydraulic and hazard classifications of the area under consideration. The Council would have factored information into land use planning decisions as and when it became available (including the construction of the levee in or about 1989, the 1991 flood study and the 1991 interim policy of the Council).

74 I am satisfied that no steps would have been taken to release land south of the highway and west of Macquarie Street either generally or on a site specific basis after release of the 1986 manual, absent a flood study. The 1991 study was consistent with the requirements of the manual, and identified a large area of land within the South Creek floodway, including land west and east of Macquarie Street, at least up to Pages Road. Having regard to Dr Phillips’ evidence, it is apparent that the 1989 levee constructed on the eastern boundary of the land provided significant protection from South Creek flooding to areas east of the levee. This approach of protecting existing developed areas was also consistent with the 1986 manual.

75 I do not accept Mr Tooker’s evidence that, absent any additional modelling, it would be recognised by any competent engineer that the floodway designation in the 1991 study was too broad, and that an area of lesser velocities and flows could be identified around the land warranting a flood storage (not floodway) designation. The 1986 manual provides a definition of floodway and two initial methods to identify hydraulic classification absent an hydraulic model capable of measuring impacts. The 1991 study used one of those methods. In that circumstance, I can see no prospect of the Council having accepted that part of the land and a relatively small area surrounding it ought to be classified as flood storage, absent detailed modelling and results supporting that conclusion. This is consistent with the approach taken by Dr Phillips, which I accept. I am also satisfied that Dr Phillips was correct when he observed that the levee would be seen as relevant not only because it protected the urban area east of the land, but also because it operates as an embankment and would be seen as potentially increasing flood levels on the land. That factor too would have been inconsistent with any ready rejection of the floodway classification in the 1991 study.

76 Mr Tooker’s markings of the area he would classify as flood storage on Dr Phillips’ velocity models disclose some of the difficulties in Activerain’s case. The area marked by Mr Tooker as flood storage is confined to the land and areas to its immediate south and west. Mr Tooker’s flood storage area does not extend to or approach South Creek. Mr Player’s opinion was that the 4(b) zone would have extended to South Creek, however. Mr Player also concluded that if the whole of the land were classified as floodway and high hazard, then “it would not be suitable for urban development”. Mr Tooker identified that the building footprint of the elevated slab should “not extend over [his] definition of the floodway”. Mr Tooker did not suggest that the land outside his flood storage area to the west, approaching South Creek, was anything other than floodway. Accordingly, Mr Tooker’s limited flood storage area is inconsistent with any notion of the 4(b) zone being extended to South Creek after release of the 1986 manual.

77 I do not accept Activerain’s submission that the evidence of Mr Player and Mr Tooker was to the effect that the potential of the land should still be approached on its “merits” if the land was within a floodway (there being no debate that it was a high hazard area). Mr Player and Mr Tooker plainly considered that land within the high hazard category, which was also within a floodway, should be seen as generally unsuitable for urban development. This was the very purpose of Mr Tooker re-assessing the floodway classification in the 1991 study, determining that an area (including a large part of the land) was not within a floodway, but was flood storage, and recommending that industrial and commercial uses could appropriately occur over the flood storage part of the land, but not the floodway part of the land. It was also the purpose of Mr Player clarifying that he would only consider the land unsuitable for urban development if both high hazard and a floodway, but not if the land were high hazard or a floodway.

78 This conclusion is also consistent with table 6 of the 1986 manual which, when read with the text of the manual (particularly sections 2.7, 4, the development guidelines tables generally and the flood policy in appendix A), discloses that “new development is not generally considered appropriate in a high hazard floodway area”, but may be acceptable under special conditions. The manual contemplates that recourse to the special conditions may be appropriate if the development demand must be accommodated, alternative flood free land is not available, a suitably detailed floodplain management plan is prepared, in which event the “worst areas” should still be avoided if possible. This lends weight to acceptance by Mr Player and Mr Tooker that the land would not be considered suitable for urban development if within the floodway.

79 Against this background, the fact that it might have been possible to satisfy the special development considerations in table 6 to the 1986 manual is neither determinative nor indicative of the planning controls that would have applied to the land throughout this period. The hydraulic and hazard classifications of the land would have been of paramount importance.

80 I consider that Dr Phillips’ approach to the hydraulic and hazard issues appropriately reflects the requirements of the 1986 manual, which the Council would accept as appropriate. If significant pressure for further releases of industrial land in this part of St Marys unable to be accommodated elsewhere had pointed in the direction of zoning this land 4(b), then further flood modelling (consistent with that carried out by Dr Phillips) would have been carried out to re-assess the hydraulic classification of the land. Particular pressure for industrial releases in St Marys is not apparent from the evidence. Moreover, the fact that the 1991 floodway affected substantial areas already zoned and developed for urban purposes would not have been seen as a sound or appropriate reason for the Council to release further severely flood affected land. Absent additional modelling, the Council would have accepted the floodway classification in the 1991 study – and there would have been no prospect of zoning the land 4(b) in the face of its high hazard floodway status merely because of general pressure across the whole metropolitan area for urban development and the other factors relied on by Activerain.

81 If additional modelling had been carried out, then the results would have been consistent with the work of Dr Phillips. Dr Phillips’ modelling does not support Mr Tooker’s approach of classifying part of the area west of Macquarie Street as flood storage rather than floodway. The modelling is consistent with Dr Phillips’ conclusion that floodwaters flow through the land with a primary movement of waters in the peak towards the culvert, from south to north, rather than a temporary filling of the land by flood waters and the recession of those waters – that is, that the whole of the land is part of the South Creek floodway, rather than flood storage. I accept Dr Phillips’ opinions in this respect.

82 The severity of the impact of South Creek flooding on the land is also significant, and would have been recognised as such. The engineers agreed that the land could be inundated as frequently as the 5 year ARI event, and would be inundated in less than the 20 year ARI event. In that event, flood levels across the land vary from 1.3m to 4m. In the 100 year ARI event, the flood levels range from 2.3m to 5m, with the land remaining inundated for approximately 23 hours. Leaving aside the lower ground levels created at the foot of the levee, the minimum flood levels are sufficient, of themselves, to place the whole of the land in the high hazard category under the 1986 manual. While the velocities in the peak of that event are not high, I do not accept Mr Tooker’s view that they are low in the context of the depth. I accept Dr Phillips’ opinion that attempts to isolate velocity from depth and flow or discharge are inappropriate, and would have been recognised as such by the Council at least from the release of the 1986 manual.

83 The fact that, absent any flood modelling, Mr Tooker accepted that the land probably could not be filled without creating unacceptable impacts elsewhere (hence, his proposed suspended slab and roadway), is also significant. Although Dr Phillips was criticised for describing the development concept as highly artificial, I did not understand his evidence to suggest that industrial, commercial and retail development had not been or could not be constructed on flood-affected land. There are many examples of such development. Dr Phillips’ focus was on the fact that the whole of this development, including its sole means of access, would be suspended out from the highway on an elevated platform on columns, above land that will be inundated for some 23 hours in the 100 year ARI event. This is not analogous to the development of the adjoining property (zoned for industrial purposes since 1960), part of which was suspended over the piped drainage channel, with some filling and an area of compensatory flood storage, or the other developments Activerain identified. I consider Dr Phillips’ characterisation of the development reasonable in the circumstances.

84 Accordingly, I am satisfied that at all times between the release of the 1986 manual and the acquisition date, the Council would have considered the land to be within a floodway and a high hazard area. Given the severity of flooding from South Creek in this location, I do not accept that, absent the corridor purpose, the location and physical characteristics of the land (highway frontage and adjoining the 4(b) zone near the St Marys urban centre), in the context of accepted increasing pressure for urban development across the Sydney metropolitan region generally and in the St Marys area as a whole, would or was likely to have resulted in an extension of the 4(b) zone west of Macquarie Street, south of the highway. I consider that there was no real possibility of that occurring, absent the corridor purpose. The land would thus have remained in its non-urban zoning under the 1960 Ordinance, absent the corridor purpose, until the Rural Lands LEP in 1991. At that time, the land would have been placed in a rural zone, very likely 1(b) (Rural “B” Zone – Smallholdings) as Mr Ludvik concluded. Contrary to Activerain’s submission, this is not to misapply the 1986 manual and inappropriately sterilise land. It recognises, as I am satisfied the Council would have done, that this location is part of a floodway and a high hazard flooding area, subject to very severe flood impacts from South Creek.

85 The application to rezone land in the South Creek corridor north of the land in May 2003 is not an appropriate basis to reach any contrary conclusion. The report on the rezoning request discloses the unusual circumstances in which the request was made. The proposal included an open space zoning adjacent to the South Creek channel. Although the officer recommended approval, the fate of the request remains unknown some three years later. Mr Ludvik and Mr Player also did not place weight on this request in reaching their conclusions.

86 The letter from the Council to Activerain’s instructing solicitors of 19 July 2005 also does not point to a contrary conclusion. The letter is concerned with development and building applications, not land use planning. The letter places weight on the Council’s interim policy of 1991. That policy is generally consistent with the 1986 manual. While Activerain focused on the references in the interim policy to a “merit approach” to development and building decisions in that policy, the Minister emphasised the references to containing flood losses by effective planning controls, preventing the introduction of unsuitable land uses onto flood liable land, and the statements that the Council would not grant consent to development in floodways or high hazard areas (when it had done so on the areas to the east and southeast of the land) and would not support the rezoning of any such land.

87 Read as a whole, the policy is generally consistent with the 1986 manual. The fact that the Council had granted consent to developments in high hazard floodways long zoned for urban development does not suggest abandonment of the policy. It suggests that the Council recognised that dealing with the development of flood liable land, long zoned for urban purposes, raises difficult issues requiring appropriate resolution (as the documents associated with the developments relied on by Activerain disclose in fact occurred). The Council would not have seen that as inconsistent with maintaining the non-urban zoning over the land west of Macquarie Street (imposed for reasons unrelated to the corridor purpose, and, as I have found, maintained for reasons also unrelated to that purpose). This is particularly so given the protection afforded to land east of the levee after it construction in 1989. Activerain’s reliance on those developments as supporting its approach is not persuasive.

88 In this context, the planning controls for the land up to the acquisition date would recognise its hydraulic classification (floodway) and hazard category (high).

89 For these reasons I am satisfied that, disregarding the corridor purpose, the land would have been zoned 1(b) (Rural “B” Zone – Smallholdings) under the Rural Lands LEP 201 at the acquisition date.

Higher and better use potential?

90 Although the land would have been zoned 1(b) at the acquisition date, all of its potentialities at that date must be taken into account in assessing market value. What of Mr Dobrow’s opinion that the hypothetical buyer (and seller) would have seen the land (zoned non-urban) as an opportunity for higher and better uses (for bulky goods retail, industrial/warehouse style uses consistent with the land to the east)?

91 Many of my conclusions above apply to this aspect of Mr Dobrow’s evidence. In particular, I do not consider that a “merits approach” to the development potential of the land would have resulted in anything other than the hypothetical buyer (and seller) recognising the status of the land as part of a high hazard floodway, generally unsuitable for urban development.

92 My conclusions are consistent with the views Mr Wood expressed - that the hypothetical buyer (and seller) would not contemplate commercial development of the land, given the significance of the flooding constraints to which it is subject, and the difficulties and risks associated with addressing those constraints through a zoning and development process (necessary given my finding that, but for the public purpose, the land would have been zoned 1(b) at the acquisition date).

93 I do not accept that the hypothetical buyer (or seller) would look past the levee to the east, see that development had been permitted on flood affected land, and assume the land had the same or similar development potential, absent the corridor purpose. Rather, the hypothetical parties would have appreciated the proximity of the land to South Creek, its low lying topography, the presence of the levee, and recognised that all these matters pointed to the land being subject to severe flood impacts. Had the buyer been willing to investigate the land further, they would have obtained flooding advice. For the reasons given above, I consider it very likely that this advice would have been to the same effect as that of Dr Phillips. If the buyer had received advice consistent with Mr Tooker’s evidence, then I am satisfied that, in the circumstances that must be assumed to have existed at the acquisition date (that is, the non-urban zoning of the land), the advice would have identified a very substantial risk that the Council would not accept the flood storage classification, and would not countenance the development proposal.

94 In these circumstances, I do not accept that the hypothetical buyer (or seller) acquainted with the land and acting in accordance with ordinary business considerations, would have seen the land as presenting the opportunity perceived by Mr Dobrow. Given the magnitude of the risks to development presented by the flooding issue at the acquisition date, I do not think that the question of development costs for a commercial development would have arisen in the mind of the buyer, or that the buyer would have been willing to fund an expert opinion to explore the issue. This indicates that the evidence of Mr Dobrow and Mr Makin about development costs associated with the need for a suspended roadway and slab is immaterial (as is that of Mr Varga).

95 If development costs had arisen, then the evidence of both Mr Dobrow and Mr Makin about that issue had difficulties. The primary difficulty with Mr Dobrow’s evidence was that the hypothetical buyer would have seen Mr Tooker’s development concept of a wholly elevated development, including the means of access, as sufficiently unusual to warrant a detailed costing by a quantity surveyor such as Mr Makin. Mr Dobrow was not a quantity surveyor, and his broad-brush approach was not appropriate to the particular circumstances of this matter. The primary difficulty with Mr Makin’s evidence was that, as a consequence of his instructions, he used costing information that would not have been available at the acquisition date. Despite that, I found many of Activerain’s and Mr Dobrow’s criticisms of Mr Makin’s evidence unwarranted. Mr Makin is an experienced quantity surveyor, who is highly regarded in his profession (given his role as immediate past president of the Australian Institute of Quantity Surveyors). His detailed report and contribution to the joint statement disclose the care and thoroughness with which he approached his task. But for my concern that his instructions led him to focus on information brought into existence after the acquisition date (rather than an assessment of information at the acquisition date, projected into the future), I would have accepted Mr Makin’s general approach to the issue of development costs.

96 Various factors point to Mr Dobrow’s estimate of the costs of developing the land for commercial purposes as significantly too low. I do not accept that the relevant comparison was the additional costs of developing the land by the elevated roadway and slab compared to at grade. The common assumption of Mr Tooker and Dr Phillips was that the land could only be developed for commercial purposes by the elevated roadway and slab. A hypothetical buyer would compare the costs associated with that form of development with the costs of an at grade development generally. Mr Tooker (and the 1986 manual) emphasised the need for a structural design sufficient to withstand flood loadings, which suggests that Mr Makin’s allowances for matters such as professional fees was appropriate, and Mr Dobrow’s too low. Overall, I am satisfied that Mr Wood’s response to Mr Dobrow’s costing (that it was manifestly too low) was sound.

97 Accordingly, I do not accept that the hypothetical buyer (or seller) at the acquisition date would have seen the land as having potential for commercial development in the reasonably foreseeable future. The hypothetical parties would have recognised that the land was appropriately zoned non-urban, was severely affected by flooding, and had no prospect of rezoning to a higher and better use in the reasonably foreseeable future.

98 Would the land be seen as having the potential for two dwellings accommodating home industrial activities as suggested by Mr Dobrow? Mr Ludvik’s conclusion, that the land would be seen as suitable for a single dwelling house, is consistent with the zone objectives and subdivision controls in the 1(b) zone, and the degree of flood affectation of this land. Accordingly, I do not accept Mr Dobrow’s opinion.

99 The hypothetical buyer (and seller) of the land at the acquisition date, on the basis of my findings about the zoning and potential of the land, would not make any allowance for the removal of the materials on the land apparently associated with the demolition of the dwelling that once existed on part of the land. Accordingly, I consider the extensive contamination report immaterial.

100 The hypothetical buyer (and seller), consistent with my findings above, would approach the land at the acquisition date as one parcel of land in a non-urban zone, capable of development for the purpose of a single dwelling house, subject to severe flooding from South Creek, with frontage to the highway, and close to shops and services offered by the St Marys town centre.

D. Assessing compensation

101 My findings above mean that sales of industrial land are immaterial to the market value of the land. The sales of rural land identified by Mr Wood are relevant.

102 Mr Wood selected sales of rural land (affected by flooding if possible) in Llandillo and Shanes Park, some 10 to 12 kilometres north of the highway. Mr Wood also relied on the sale of the land itself in September 2001. I accept Activerain’s submission that the sale of the land, subject to the 5(d) zoning, is an unreliable and inappropriate indicator of the value of the land, disregarding the public purpose. I place no weight on that sale.

103 Mr Wood analysed the sales at Shanes Park and Llandillo as showing rates per m2 of rural land between about $17 and $46, with most around the $20 to $30 per m2 range (some adjusted to remove the value of improvements and otherwise adjusted for time). I consider Mr Wood’s adjustments for improvements and time reasonable.

104 Mr Dobrow did not identify any rural sales in his evidence. In oral evidence, he said that he thought the land would be worth about $1,000,000 on a rural zoning ($450,000 for lot 1 and $550,000 for lots 2 and 3, on the basis that the land was capable of accommodating two dwelling houses). If the land had potential for two dwellings (which I do not accept), none of the comparable sales support that opinion. Even allowing for the fact that the land is much closer to the urban amenities offered by St Marys than the sales in Shanes Park and Llandillo and might be able to exploit the highway location for some form of home industry, I do not accept Mr Dobrow’s opinions. As Mr Wood said, the hypothetical buyer of a parcel of rural land will not necessarily see the highway location and proximity to the urban centre of St Marys as an advantage.

105 Mr Dobrow considered the value of the land to be around $650,000 to $750,000, if it had potential to be used for a single dwelling house only, although he acknowledged that this represented a “spur of the moment” conclusion. This discloses a range of about $111 to $128 per m2. Again, the comparable sales do not support this range, or anything approaching it.

106 Mr Wood considered $50 per m2 fair and reasonable having regard to the comparable sales, the small area of the land compared to those sales, its location and flooding constraints. Having regard to those matters, I am satisfied that Mr Wood has adopted an appropriately liberal approach to the question of compensation, incorporating all advantages the land may have compared to the sales by reason of its location near the urban centre. Accordingly, I adopt Mr Wood’s rate of $50 per m2, resulting in market value at the acquisition date of $293,520, which Mr Wood rounded up to $300,000.

107 Activerain did not make any claim for disturbance. Accordingly, I determine compensation for the acquisition of the land as required by the Just Terms Act in the amount of $300,000.

108 I direct the parties to file orders within 7 days in accordance with my reasons, including interest and costs, if those matters are agreed. If the parties wish to be heard on the question of costs, then I direct the parties to file the orders in the form they each say should be made within 7 days, and to approach the Registrar within a further 7 days thereafter to obtain a further hearing date, if possible to commence at 9.00am.

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