Attard v Transport for NSW

[2014] NSWLEC 44

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Attard & Ors v Transport for NSW [2014] NSWLEC 44

Hearing dates:

13, 17-20, 24-28 February, 3 March 2014

Decision date:

24 April 2014

Jurisdiction:

Class 3

Before:

Biscoe J

Decision:

1. Determination of compensation in the eight proceedings:

(1) Attard 53 Schofields Road $2,619,857

(2) Attard 55 Schofields Road $2,728,025

(3) Xiguis 57 Schofields Rd $2,677,500

(4) Hsia 59 Schofields Rd $2,676,644

(5) Sultana 61 Schofields Rd $2,607,588

(6) Camilleri 67 Schofields Rd $3,265,088

(7) Milicevic 31 Tallawong Rd $3,422,246

(8) Camilleri partnership $94,349

2. The respondent is to pay the applicants' costs.

3. The exhibits may be returned.

Catchwords:

COMPULSORY ACQUISITION - of seven similar neighbouring rural residential properties of about two hectares each for the purpose of the North West Rail Link - claims under Land Acquisition (Just Terms Compensation) Act 1991 for compensation for market value, disturbance losses and solatium - properties located in Riverstone East precinct of North West Growth Centre under State Environmental Planning Policy (Sydney Region Growth Centres) 2006 - at acquisition date virtually certain that this precinct would be released and rezoned for residential subdivision under the SEPP - likely that rezoning would occur in late 2014 / early 2015 and be R2 zoning requiring minimum of 15 dwellings per hectare and 250 square metre lots - assessment of market value by reference to comparable sales - consideration of distinction between out of line sale, sale to an adjoining owner prepared to pay more for adjoining land, and sale to an anxious purchaser - selection of comparable sales - appropriate adjustments including for contamination of one of the acquired properties - claim for disturbance loss in respect of a truck haulage business carried on by a partnership on one of the acquired properties owned by one of the partners - whether all claimed disturbance losses compensable under s 59, if so, whether not payable under s 61 because would necessarily have been incurred in realising the potential on the basis of which the market value of the land was assessed.

Legislation Cited:

Environmental Planning and Assessment Act 1979 ss 91(4), 94, 94EE
Land Acquisition (Just Terms Compensation) Act 1991 ss 3, 4, 34, 37, 39, 41, 54, 55, 56, 59, 61,
Land Tax Management Act 1956 cl 6 of Schedule
Local Government Act ss 68(1), (2)
Blacktown Local Environmental Plan 1988
Environmental Planning and Assessment Model Provisions 1980
Metropolitan Strategy 2005 cll 2, 3, 8
State Environmental Planning Policy (Sydney Region Growth Centres) 2006
State Environmental Planning Policy No 4 -Development Without Consent and Miscellaneous Exempt and Complying Development cll 10(1), 10(2), 2(4)(b)

Cases Cited:

Bardsley-Smith v Penrith City Council [2013] NSWCA 200, (2013) 195 LGERA 34
Bingham v Cumberland County Council (1954) (1954) 20 LGR (NSW) 1
Bonomo v Transport for New South Wales [2014] NSWLEC 25
Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541
Chaudry v Liverpool City Council [2008] NSWLEC 251
Commonwealth v Milledge (1953) 90 CLR 157
Cook v Roads and Traffic Authority of NSW [2007] NSWLEC 136
Croghan v Hawkesbury City Council (1998) 99 LGERA 375
De Battista v Transport for New South Wales [2014] NSWLEC 39
De Marco v Chief Commissioner of State Revenue [2013] NSWCA 86, (2013) 83 NSWLR 445
Doueihi v Roads and Traffic Authority of New South Wales [2004] NSWLEC 51
El Boustani v Minister Administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33
George D Angus Pty Ltd v Health Administration Corporation [2013] NSWLEC 212
Horn v Sunderland Corporation [1941] 2 KB 26
Horton v Wyong Shire Council (No 2) [2005] NSWLEC 45
Lindon Print Ltd v West Midland County Council (1987) 2 EGLR 200
Liverpool City Council v Commonwealth of Australia [1993] FCA 539, (1993) 46 FCR 67
McDonald v Roads and Traffic Authority of New South Wales [2009] NSWLEC 105, (2009) 169 LGERA 352
Mac's Pty Ltd v Parramatta City Council [2012] NSWLEC 1356
Maidment v Roads and Traffic Authority of New South Wales [2006] NSWLEC 606, (2006) 153 LGERA 249
Minister of Environment v Petroccia (1982) 30 SASR 333
Mood v Cowra Shire Council [1999] NSWLEC 124, (1999) 103 LGERA 260
Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of NSW [1988] NSWLEC 177, (1998) 101 LGERA 30
Roads & Traffic Authority of NSW v McDonald [2010] NSWCA 236, (2010) 79 NSWLR 155
Sandhurst Trustees Ltd v Roads and Traffic Authority of NSW [2006] NSWLEC 243
Spencer v Commonwealth of Australia [1907] HCA 82, (1907) 5 CLR 418
Sydney Water Corporation v Caruso [2009] NSWCA 391, (2009) 170 LGERA 298
Taylor v Port Macquarie-Hastings Council [2010] NSWLEC 113
Warringah Shire Council v Raffles [1979] 2 NSWLR 299

Texts Cited:

Macquarie Dictionary

Category:

Principal judgment

Parties:

31254/12 and 31256/12
Joseph John Attard (Applicant)
Transport for NSW (Respondent)

30064/13
George Camilleri (Applicant)
Transport for NSW (Respondent)

30068/13
Chi An Hsia (First Applicant)
Ju Ji Hsia (Second Applicant)
Transport for NSW (Respondent)

30071/13
Victor Sultana (First Applicant)
Christina Sultana (Second Applicant)
Transport for NSW (Respondent)

30074/13
George Desmond Xiguis (First Applicant)
Ilse Xiguis (Second Applicant)
Transport for NSW (Respondent)

30095/13
Josip Milicevic (First Applicant)
Iva Milicevic (Second Applicant)
Transport for NSW (Respondent)

30262/13
George Camilleri (First Applicant)
Pauline Camilleri (Second Applicant)
Transport for NSW (Respondent)

Representation:

COUNSEL:
T F Robertson SC and M R Hall (Applicants)
I Hemmings SC and C Norton (Respondent)
SOLICITORS:
Colin Biggers & Paisley (Applicants)
Clayton Utz (Respondent)

File Number(s):

31254/13, 30064/13, 30068/13, 30071/13, 30074/13, 30095/13, 30262/13, 31256/13

Judgment

TABLE OF CONTENTS	Paragraphs
INTRODUCTION	1-5
ISSUES	6-11
PLANNING AND DEVELOPMENT POTENTIAL	12-57
MARKET VALUE	58-121
FREEHOLD DISTURBANCE LOSSES	122-162
CAMILLERI PARTNERSHIP DISTURBANCE LOSSES	163-207
ORDERS	208

INTRODUCTION

1. These are eight proceedings claiming compensation in relation to the compulsory acquisition of seven similar, neighbouring rural residential properties in the Sydney suburb of Schofields or (in one case) Rouse Hill under the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act). The properties were acquired on 21 September 2012 by the respondent, Transport for NSW, for the purpose of the Transport Administration Act 1988, in particular for the construction of the North West Rail Link and specifically for construction of stabling yards appurtenant to the proposed Cudgegong Rail Station.

1. Six of the acquired properties front the northern side of Schofields Road, Schofields and are oriented north-south. They are: 53 and 55 Schofields Road owned by Joseph Attard, 57 owned by George and Ilse Xigiuis, 59 owned by Chi An Hsia and Ju Ji Hsia, 61 owned by Victor and Christina Sultana, and 67 owned by George Camilleri. No 67, the easternmost, also fronts and is on the corner of Tallawong Road. The seventh, 31 Tallawong Road, Rouse Hill, owned by Josip and Iva Milicevic, is adjacent to the northern boundary of 61 Schofields Road and is oriented east-west rather than north-south. Each property is roughly rectangular and has an area of a little over two hectares, except for 31 Tallawong Road which has an area of 2.44 hectares. They fall down to the west and north-west, draining to First Ponds Creek. Disregarding the effect on value of the carrying out of the public purpose as required by s 61(1)(a) of the Just Terms Act, at the acquisition date all constituted prime development land suitable for residential subdivision development, subject to future rezoning, under State Environmental Planning Policy (Sydney Region Growth Centres) 2006 (Growth Centres SEPP). They are located on the southern edge of the Riverstone East precinct of the North West Growth Centre under the Growth Centres SEPP.

1. Annexed to this judgment is an aerial photograph on which has been marked the location of the subject properties, comparison sale properties to which the valuers had regard when assessing market value, and relevant precincts under the Growth Centres SEPP.

1. In seven of the proceedings (the freehold proceedings), the owners claim compensation for the market value of their acquired properties, disturbance losses and (except in one case) solatium. The eighth proceeding is by Mr and Mrs Camilleri for disturbance losses for the relocation of a one truck road haulage business conducted by them in partnership on Mr Camilleri's acquired land at 67 Schofields Road. Their partnership had a limited interest in Mr Camilleri's land under an informal equitable lease for the business. Under s 37 of the Just Terms Act this entitles them to be paid compensation. The partnership does not claim compensation for the market value of its interest in his land, and there is no suggestion that it had any market value.

1. I determine compensation as follows:

Applicants	Property	Market Value $ (rounded)	Solatium agreed $	Disturbance Losses $	Total $
Attard	53 Schofields	2,438,000	Nil	181,857	2,619,857
Attard	55 Schofields	2,438,000	25,020	265,005	2,728,025
Xiguis	57 Schofields	2,438,000	25,020	214,480	2,677,500
Hsia	59 Schofields	2,438,000	25,020	213,624	2,676,644
Sultana	61 Schofields	2,399,000	25,020	183,568	2,607,588
Camilleri	67 Schofields	2,893,000	25,020	347,068	3,265,088
Milicevic	31 Tallawong	3,148,000	25,020	249,226	3,422,246
Camilleri partnership	67 Schofields	Inapplicable	Inapplicable	94,349	94,349

ISSUES

1. There is a large difference in the competing market value assessments because the valuers adopt different sales as comparables and make different adjustments, which are largely influenced by different estimates of the timing of release and rezoning of Riverstone East precinct and the subsequent realisation of the undoubted residential subdivision development potential of the acquired properties. At the acquisition date it was virtually certain that Riverstone East precinct would be released and rezoned for residential subdivision under the Growth Centres SEPP. The likely rezoning was R2 requiring a minimum of 15 dwellings per hectare and 250 square metre lots. Direct access for the subject properties to Schofields Road would be denied for such residential subdivision when carried out under the Blacktown Growth Centre Precincts Development Control Plan 2010. Hence, the properties without an alternative frontage to Tallawong Road (ie all except the Camilleri and Milicevic properties) would require road access across other applicants' land to Tallawong Road. The rezoning timing for which the applicants contend is late 2014/ early 2015; the respondent contends for late 2016 / early 2017. It is common ground that the time to subdivision after rezoning should be 15-18 months.

1. The applicants' valuer derived from his comparables in Alex Avenue precinct a rate of $203 per square metre (psm), which he applied to the Camilleri and Milicevic properties fronting Tallawong Road. He discounted this rate by 5 percent to $194 psm for the other subject properties because they would not have direct access to Tallawong Road. The respondent's valuer derived from his comparables in Riverstone East precinct a rate of $90 psm, which he applied to the Camilleri and Milicevic properties. He discounted this to $80 psm (equivalent to about 11 percent) for the other acquired properties on the same logic as the applicants' valuer. He added the estimated value of improvements on the assumption of a longer interim use before rezoning and redevelopment. In the case of the Sultana land, he made a deduction for an estimated cost of remediating contamination.

1. The main valuation issues are determination of the sales which provide the most reliable comparative guide to the market value of the subject properties, and determination of the adjusted rate to be derived therefrom. There is an issue as to whether any of the sales mainly relied on by the applicant's valuer were to an anxious buyer and therefore not at market value or were out of line. There is also an issue as to the extent to which the rate applicable to the Camilleri and Milicevic properties because of their road frontages to Tallawong Road, should be discounted in respect of the other subject lands.

1. There is a contamination issue potentially affecting the market value of the Sultana land only. It arises because of the presence of total petroleum hydrocarbons and asbestos in soil on the Sultana land. The contamination experts agree that further testing is required and have come up with a range of estimates for the potential cost of carrying out remediation ranging from about $39,500 to over $250,000. The applicants' valuer made no adjustment for the presence of contamination. The respondent's valuer considered that the risk of remediation costs diminishes market value. The respondent submits that market value should be reduced by about $138,000 for the cost of remediation. The Sultanas submit that there should be no reduction. The issues are whether market value at the acquisition date was reduced on account of the contamination and, if so, by what amount.

1. In relation to the disturbance claims in all the proceedings, the difference of principle between the parties is whether s 61 of the Just Terms Act prevents recovery of relocation costs, on the basis that they are financial losses that would necessarily have been incurred in realising the potential use which forms the basis of the market value assessment. In addition, there are some individual claims, the s 59 compensability of which the respondent disputes.

1. The Camilleri partnership proceeding seeks disturbance costs relating to the relocation of property of the truck haulage business conducted by Mr and Mrs Camilleri in partnership from Mr Camilleri's acquired property and additional costs claimed to be incurred by the partnership due to the timing of the acquisition. Issues include whether the business was unlawfully conducted on the acquired property because it was prohibited or did not have development consent, whether lawfulness is a condition of recovery for relocation costs or should be taken into account under s 59, and the reasonableness of some of the claimed costs.

PLANNING AND DEVELOPMENT POTENTIAL

1. In summary, for the reasons that follow, my main conclusions concerning the development potential of the acquired land at the acquisition date, disregarding the effect on value of the public purpose (as required by s 56(1)(a) of the Just Terms Act) are as follows:

(a) It was virtually certain that Riverstone East precinct would be released and rezoned for residential subdivision under the Growth Centres SEPP.

(b)   It was likely that the rezoning would be R2 requiring relatively small 250 square metre lots and a minimum of 15 dwellings per hectare.

(c) It was likely that release of Riverstone East precinct would occur by about mid 2013 and rezoning in late 2014 / early 2015. The major influence on this projected timing was the NSW government's announcements in June, July and August 2012 to accelerate the provision of infrastructure, particularly for sewage, to support housing to meet a severe housing shortage in the Sydney region.

(d) Upon rezoning, the acquired land would be ripe for residential subdivision development under the Growth Centres SEPP. Such development, by retail subdivided lots being put to market, would likely occur 15-18 months after rezoning.

1. The acquired land is rural residential land zoned 1(a) General Rural under the Blacktown Local Environmental Plan 1988 (LEP). In that zone the LEP prohibits medium density housing (meaning three or more dwellings on the same parcel) and residential flat buildings. The intent of the Growth Centres SEPP is to make mostly rural residential land in the Sydney region available for denser residential subdivision.

1. The market value of the acquired land depends largely on the market's estimate, at the acquisition date, of how long it would take for Riverstone East precinct to be released and then rezoned under the Growth Centres SEPP and for residential subdivision redevelopment to thereafter occur on the subject land.

1. I consider that at the acquisition date the market would forecast that a development application for residential subdivision would likely be lodged promptly after rezoning. The planners agreed and I accept that about 15-18 months after lodging a development application, development would occur on subdivision completion by retail subdivided lots being put to market. If the product to be put to market were houses on subdivided lots, that would add a further 6 to 9 months. The typical development timeframe from rezoning to new dwellings on subdivided lots was about two years in Sydney Water's experience.

Timing of release and rezoning

1. At the acquisition date, it was virtually certain that Riverstone East precinct would be accelerated for release and residential rezoning under the Growth Centres SEPP, with a small sliver of the frontages on Schofields Road acquired for road widening by Road and Maritime Services (RMS). The parties' planners agreed that the likely rezoning would be R2. The R2 "Low Density" zone requires relatively small 250 square metre lots and a minimum of 15 dwellings per hectare (in contrast to the R3 "Medium Density" zone which requires a minimum of 25 dwellings per hectare but prohibits single dwelling houses). In other parts of the Sydney region, the R2 zoning could be regarded as medium density. The logic that the rezoning would mirror the R2 rezoning in draft planning proposals (disregarding the public purpose) for the other side of Tallawong Road in Area 20 precinct is compelling. In the R2 zone two hectare properties such as the subject properties can obtain subdivision approval for 66 residential lots, as has occurred in the case of Mr Dobrow's comparable sale property at 44-46 Schofields Road in Alex Avenue precinct.

1. The progression from rural residential land such as the subject land to dwellings on lots in residential subdivisions involves the following steps:

(a) the "release" by the Minister of the precinct under the Growth Centres SEPP;

(b)   detailed precinct planning, which dictates the zoning and location of subdivision roads and their access points to external roads;

(c)   rezoning;

(d)   subdivision completion (development consent, civil works and connection to essential services);

(e)   completion of dwellings on the retail lots.

1. The respondent suggests an additional step of agreement or cooperation between rezoning and subdivision completion, where owners of internal lots without direct road access cooperate to obtain the road access. In the present case, the evidence shows that at the acquisition date the applicants had a strong bond of cooperation whereby, in my view, the market would be reasonably confident that they would be agreed on such access by the time rezoning occurred.

1. In order to determine the market's anticipated timing, at the acquisition date, of the release and rezoning of Riverstone East precinct, it is necessary to consider the planning history of the North West Growth Centre, particularly the NSW Government's plans announced in June 2012 to accelerate construction of essential infrastructure and taking other steps to support the release of housing in north-western Sydney.

1. The NSW Government created the North West and South West Growth Centres in metropolitan Sydney as areas which will accommodate 180,000 new dwellings and employment land for around half a million new residents through to 2030. The subject land is within the North West Growth Centre. The North West Growth Centre is approximately 10,000 hectares and is within the local government areas of Baulkham Hills, Blacktown and Hawkesbury. It will be supported by a Major Centre at Rouse Hill and will contain about 70,000 new dwellings plus employment land. It is made up of 16 "precincts", which are areas that will be progressively released by the Minister to 2030.

1. The Growth Centres SEPP is the initial environmental planning instrument component of the government's Metropolitan Strategy 2005 for the release of land for urban and employment development in areas suitable for growth in the Sydney region. Clause 2 states its aims, which include: to coordinate the release of land for residential, employment and other urban development in the North West and South West Growth Centres; to enable the Minister from time to time to designate land in these growth centres as ready for release for development; to provide for comprehensive planning for those growth centres; and to provide for the orderly and economic provision of infrastructure in and to those growth centres. The North West Growth Centre has the boundaries shown on the North West Growth Centre Precinct Boundary Map (cl 3(1)), which shows 16 precincts. Zoning of a precinct follows its release and detailed precinct planning and is effected by an amendment to the Growth Centres SEPP.

1. Clause 276 of the Environmental Planning and Assessment Regulation 2000 empowers the Minister, for the purposes of the Growth Centres SEPP, to release precincts for urban development and to arrange for a development code that provides guidelines (in conjunction with the Growth Centre Structure Plan) to assist environmental planning in released precincts.

1. The following precincts in the North West Growth Centre have been or are in the process of being rezoned for urban purposes:

Precinct	Planning Status	Projected Development Yield
Box Hill	Rezoned April 2013	9,600 dwellings
Marsden Park	Rezoned October 2013	10,000 dwellings
Alex Avenue	Rezoned May 2010	6,300 dwellings
Riverstone	Rezoned May 2010	9,000 dwellings
Colebee	Rezoned 2007	1,100 dwellings
Area 20	Rezoned October 2011	2,500 dwellings
Schofields	Rezoned May 2012	2.950 dwellings
Marsden park Industrial Precinct	Rezoned November 2010	1,200 dwellings
North Kellyville	Rezoned December 2008	4,500 dwellings
Vineyard	Released March 2013	2,500 dwellings
West Schofields	Released March 2013	400 dwellings
Riverstone East	Released August 2013	5,300 dwellings
Total	55,350 dwellings

1. Under the Growth Centres SEPP, the acquired land is within Riverstone East precinct. Schofields Road forms the southern edge of this precinct. In addition to having a projected development yield of 5,300 dwellings, Riverstone East precinct is to cater to four to six neighbourhood centres and (along Schofields Avenue near Alex Avenue) a mixed-use employment corridor.

1. At the acquisition date, Riverstone East precinct was adjoined on three sides by the released and rezoned precincts of Area 20 to the east on the other side of Tallawong Road; Riverstone to the west on the other side of First Ponds Creek; and Alex Avenue to the south/south-west on the other side of Schofields Road. To the north it is adjoined by Box Hill precinct. To the south-east of Riverstone East precinct on the other side of Schofields Road, is a large, quite densely developed and attractive new suburb of large houses known as The Ponds. The Ponds is immediately east of Alex Avenue precinct except that its final and westernmost stage (Stage 4), which is subdivided but with no houses as yet, is in Alex Avenue precinct. The Ponds was developed by Landcom, the NSW Government's property developer. Development of The Ponds moved one kilometre west and one kilometre north in five years from 2007 to 2012 until it was close to the subject land on the other side of Schofields Road. The Ponds was one of the most sought after residential development locations in the Sydney region. Throughout 2012 demand for residential lands in The Ponds was extraordinary.

1. By 2011, it was well known that there was a severe shortage of housing in the Sydney region. A major bank's 2011 annual report indicated a shortfall of 110,000 homes in the Sydney region.

1. In August 2010, the NSW Government formally committed to the construction of the North West Rail Link. On 12 December 2011, the NSW Government announced that documents would be lodged with the Department of Planning for approval of the North West Rail Link, including eight stations and an extra 1,000 commuter car parks. It stated that the population of the North West is expected to grow by more than 200,000 to more than 600,000 over the next 40 years.

1. Services infrastructure is the trigger for urban development in the growth centres. In October 2011, Sydney Water, the authority responsible for delivering water and wastewater services, announced that it does not build infrastructure before a precinct is rezoned because, operating as a successful business, it targets its capital expenditure to those areas that are more likely to develop first, otherwise its assets would be under-utilised. It stated that the process of obtaining development consent following rezoning is such that there is usually a gap of two years between rezoning of a precinct and the building of a new home in the precinct.

1. At the acquisition date, Riverstone East precinct had sufficient services infrastructure except that it did not have sewer infrastructure. Nor did much of Riverstone precinct. By 2012, part of Alex Avenue precinct (including the Mirvac development site in Alex Avenue) was serviced by sewer infrastructure to the west, and it was known that the remainder of that precinct, to the extent of 400 new dwellings (net of Landcom's requirements), would have access to interim sewer services from May 2014. Prior to June 2012, the latter part of Alex Avenue precinct together with Riverstone East precinct and much of Riverstone precinct were due to be serviced by permanent sewage infrastructure via the future First Ponds Creek carrier, but it was not due to be completed until 2020. As was known to the market by the date of acquisition, the NSW Government's infrastructure acceleration program announced in June 2012 (discussed below) caused this date to be brought forward to late 2014.

1. From 12 June 2012, there were a number of public announcements or media releases by the NSW Government that it was accelerating and funding infrastructure to support housing, particularly in north-western Sydney. Unfortunately, not all relevant 2012 government media releases are in evidence before me, for others are referred to in the recent judgment of the Court in De Battista v Transport for New South Wales [2014] NSWLEC 39 (Pain J), and are in evidence in Chircop v Transport for New South Wales in which my judgment is presently reserved. I propose to confine myself to the evidence before me.

1. The most significant media release in evidence was the first, on 12 June 2012, by the Minister for Planning and Infrastructure (not in evidence is a media release of that date by the Premier that is in evidence in Chircop containing additional information). It was there announced that more than half a billion dollars would be invested in new infrastructure to "unclog the arteries blocking housing development across NSW"; and that the 2012-13 budget delivered "a comprehensive package to accelerate housing development, stimulate private sector development and restore confidence to the NSW housing market". It was stated that the budget package included $481 million dedicated to a Housing Acceleration Fund to be invested in infrastructure needed to support housing across the State, particularly in greenfield areas; $50 million for a new Urban Activation Precinct Program to unlock infill development opportunities; and $30 million for a Local Infrastructure Renewal Fund to provide subsidised loans to local councils to unlock over $1 billion of contributions for local infrastructure projects. The Housing Acceleration Fund would enable "an accelerated start" on 10 identified projects in major housing growth areas. Two of those 10 infrastructure projects directly or indirectly affected the subject land:

(a)   The more important of the two, being the one that directly affected the subject land, was construction of the First Ponds Creek carrier wastewater infrastructure to service Riverstone East precinct, as well as much of Alex Avenue and Riverstone precincts that did not have permanent sewage infrastructure. I note that on 6 August 2012, Sydney Water wrote to applicants advising that the Housing Acceleration Fund would allow delivery of the First Ponds Creek carrier to be brought forward from 2020 to 2014 to provide wastewater services to the remaining unserviced land in Riverstone and Alex Avenue precincts, "and will ultimately provide initial services to the Riverstone East precinct when rezoned".

(b)   The other was construction of Schofields Road from Railway Terrace to Veron Road. I note that although this is a considerable distance west of Riverstone East precinct, it is part of the proposed upgrading of the whole of Schofields Road from a rural road to a sophisticated four lane "transit boulevard". Stage 1 of that upgrading between Windsor Road and Tallawong Road directly affected the subject land. Prior to the 12 June 2012 announcement, Stage 1 had either commenced or it was known it would soon commence.

1. In a 13 June 2012 media release, the Premier of NSW announced that the government had brought forward the construction of essential infrastructure to support the release of up to 19,000 housing blocks and the creation of around 10,000 jobs in North Western Sydney. He stated: "7,000 housing lots will be on the market sooner due to fast-tracked sewerage connections at North Kellyville and First Ponds Creek...Both connections were due to begin in 2016/17. They will now start next financial year...The State package provides $481 million to fast track critical infrastructure". In the same media release the Treasurer said that the package providing $481 million to fast-track critical infrastructure together with the most generous first home buyer scheme for new dwellings in the nation would help to get housing construction back on track.

1. On 17 July 2012, the NSW Government announced that the government would extend financial assistance to councils to help deliver essential infrastructure required to support new housing by continuing to provide for councils when the cost of delivering essential infrastructure was greater than the amount they could collect from capped s 94 contributions. Already $18 million had been paid to Blacktown and Hills Shire Council.

1. On 29 August 2012, the Minister for Planning and Infrastructure announced an additional $100 million project to provide water infrastructure to enable the development of 13,000 new homes in Sydney's north-west. These funds would enable 24 kilometres of water pipelines, two reservoirs, two pumping stations and 10 kilometres of pipelines to service residential and land release areas in Box Hill and Schofields. This was on top of the $481 million committed in the budget to the Housing Acceleration Fund for infrastructure.

1. On 6 September 2012, the Minister for Planning and Infrastructure and the Minister assisting the Premier on Infrastructure NSW announced that a new government unit, the Housing and Infrastructure Delivery Office, would be established in the Department of Planning and Infrastructure "to drive housing delivery in greenfield and urban renewal areas and report on housing supply". According to the applicants' planner Mr Gary Rhodes, $20 million was set aside to fund it.

1. As noted earlier, the subject properties were compulsorily acquired by the respondent on 21 September 2012.

1. Although not evidence of market knowledge at the date of acquisition, a March 2013 NSW Government fact sheet stated that Riverstone East precinct was released for planning in March 2013. It was formally released in August 2013. In October 2013 the Department of Planning indicated that it was anticipated that Riverstone East precinct would be rezoned in early 2015.

1. By the acquisition date I consider that the government's announcements in June, July, and August 2012 had generally reinforced market confidence that the government would act to accelerate release of housing land and stimulate demand. The announcements appear to have influenced an increase in new housing approvals and commencements. In October 2012, there were 4,159 approvals for dwellings, the strongest month since May 2004. In 2009, only 13,752 new homes were built in Sydney. By the end of 2012, housing completions had risen to 18,186, the highest level since 2006. As the government's target was 27,400 new homes in Sydney every year, it was announced that another 9,000 homes would be achieved by (amongst other things) "the release of three additional North West Growth Centre precincts where planning will start for a further 8,200 homes".

1. Prior to the government's June, July and August 2012 announcements, the time between release and rezoning of North West Growth Centre precincts had ranged from about 2.25 to 5 years. On the basis of the announcements, I consider that at the acquisition date the market would anticipate that the time between the future release and rezoning of Riverstone East precinct would be much shorter.

1. The applicants' planner, Mr Gary Rhodes, considered that at the acquisition date the market would have expected release of Riverstone East precinct in early 2013 and rezoning in late 2014 / early 2015. The respondent's planner, Mr Anthony Rowan, considered that at the acquisition date the market would have expected release in late 2014 and rezoning in late 2016 / early 2017. Thus, about two years divide them.

1. As stated earlier, I have concluded, similarly to Mr Rhodes, that at the acquisition date the market would have expected Riverstone East precinct to be released around mid 2013 and rezoned in about late 2014 / early 2015 under the Growth Centres SEPP. My conclusion is based on the planning history of the North West Growth Centre outlined above and the following considerations.

1. First, Mr Rhodes' estimates are more consistent with the NSW Government's 2012 announcement of substantial funding to accelerate housing supply, connoting an intention to do so both in terms of servicing and rezoning, Mr Rhodes' forecast of the time for rezoning is also supported by the forecast that he obtained from a Department of Planning and Infrastructure officer.

1. Secondly, Mr Rhodes provided persuasive reasons to support his market estimate of the rezoning timetable:

(a)   Because Riverstone East precinct was surrounded by four rezoned precincts, the rezoning process for Riverstone East precinct would be less complex given that the work that had been completed for the other four precincts could be applied to Riverstone East precinct.

(b)   The government's policy to accelerate housing supply necessarily involved an acceleration of the bureaucratic steps needed to release land for development.

(c) Rezoning would occur when services became available because not only would that implement the government's policy of accelerating housing supply but it was also the most efficient way for it to recoup capital expenditure. Recoupment would be through sewage and water charges and stamp duty on the sale of lots; and 75 percent of the costs of the works on Schofields Road would be funded by developers paying the State Infrastructure Contribution imposed under s 94EE of the EPA Act.

(d)   The politics of the of the matter: having spent many millions of dollars on servicing of land, the government would hardly expose itself to the criticism of forgetting to rezone it promptly thereafter, consistently with its announced acceleration program.

(e) There was a severe shortfall of housing in the Sydney region that could obviously be ameliorated by releasing more serviced lots sooner.

(f)   The Government had reshaped the bureaucracy to coordinate the acceleration of housing supply.

(g)   Most of the Housing Acceleration Fund was being applied, in the first instance, to the North West Growth Centre.

1. Thirdly, Mr Rhodes' estimates have so far proved to be more reliable than those of Mr Rowan. In August 2012, just prior to the acquisition date, Mr Rowan advised the respondent that the earliest consideration by the government of the release of Riverstone East would be after completion of the First Ponds Creek carrier in late 2014. In fact the government announced the release in March 2013 and it was formally released in August 2013. Mr Rowan also predicted that if this precinct was released in 2014, it would not be rezoned until 2016. In fact in October 2013 the government indicated that rezoning was expected in early 2015. Mr Rowan also erred in his August 2012 report in stating that after rezoning 6-12 months were required for detailed precinct planning. In fact, as he conceded in oral evidence, that task precedes rezoning.

1. Fourthly, Mr Rowan's main reasons for his longer estimate of the time required for rezoning are unpersuasive:

(a)   His first reason was that the Premiers' June 2012 budget announcement did not single out Riverstone East precinct; therefore the timing of delivery of infrastructure was not determinative of the time when it would be rezoned. In my opinion, that reasoning is flawed. The real purpose of the announcement was to establish a target of accelerated housing. Riverstone East precinct was to be a beneficiary of the government's plans to accelerate completion of the trunk sewer for the area by late 2014 and to upgrade Schofields Road (Stage 1 in 2015 and Stage 2 in 2017). As discussed above, rezoning promptly upon provision of the trunk sewer was the most efficient way for the government to recoup its capital costs faster.

(b) Mr Rowland's second reason was that the past timeframe for rezoning of other precincts reflected the timeframe for future zoning: for example, Alex Avenue and Riverstone precincts were released in mid 2006 and rezoned in mid 2010. I agree with Mr Rhodes that by the acquisition date the past timeframe did not reflect the current government's policy of seeking to accelerate housing supply both in terms of servicing and rezoning. Earlier, a number of precincts had been rezoned without services and without any plan for the government to provide services other than the failed user pays principle where developers could fund them. In 2012, prior to the date of acquisition, the government announced a massive infrastructure boost to meet the shortfall of homes in the Sydney region.

1. Finally, in August 2012, Sydney Water had advised that the First Ponds Creek carrier would service Riverstone East precinct when it was rezoned. By the acquisition date, it was known that this servicing would occur by the end of 2014. Accepting the logic that the government would not provide services to unzoned land, the market would be confident that rezoning would occur by late 2014 / early 2015.

Upgrading of Schofields Road

1. It is convenient at this point to consider in more detail the NSW Government's plans to upgrade Schofields Road. In May 2011, the government published the "North West Growth Centre Road Framework". It identified three categories of major road. Schofields Road was included in the category of "transit boulevards", defined as "major roads that link with principal arterials and incorporate significant public transport facilities. They offer more of a balance between transport and local access functions, with moderate speeds around lower traffic volumes, are tree lined, give priority to buses, and are attractive and comfortable for pedestrians and cycle access". It stated that vehicular access onto this major road corridor is permitted only at major intersections, with potentially some left-in / left-out access. It stated that direct vehicular access to adjacent development is not permitted and access to these developments is to be from the local road system, which can include service roads along the corridor boundary.

1. I have earlier mentioned the reference in the government's June 2012 announcement of the accelerated upgrading of Schofields Road between Railway Terrace and Veron Road.

1. In August 2012, a Roads and Maritime Services (RMS) "Community Update" stated that it was widening Schofields Road from a two-lane rural road to a four-lane divided road (a "transit boulevard") between Windsor Road, Rouse Hill and Tallawong Road, and that construction would commence in late 2012. It stated that this was Stage 1 of the Schofields Road upgrade; that Stage 2 of the upgrade would be between Tallawong Road and Veron Road, for which a concept plan and review of environmental factors was planned for display in late 2012; and that Stage 3 would be between Veron Road and Richmond Road (for which a concept design was currently underway). The upgraded Schofields Road would constitute a major east-west connection between Windsor Road and Richmond Road. RMS identified features of Stage 1 including realignment of Tallawong Road to line up with Ridgeline Drive (on the other side of Schofields Road), a signalised intersection at their junction, a tree lined corridor, an off road shared path on both sides for cyclists and pedestrians, street lighting, and a generous central median strip to divide traffic and for pedestrians.

1. Stage 1 directly benefits the Camilleri property. Stage 2 directly benefits the other subject properties on Schofields Road. At the acquisition date, as the planners agreed, the market understood that Stage 1 would be completed by early 2015 and Stage 2 in 2017. The timing of the upgrade would not affect the timing of the rezoning of Riverstone East precinct.

1. Upon completion of upgrading of Schofields Road, future development (after future urban rezoning) along the southern edge of Riverstone East precinct, including the subject properties, would no longer have direct access to Schofields Road. Thereafter the Camilleri and Milicevic properties would have direct access to Tallawong Road which they fronted, but the other subject properties would have to rely on new internal roads to connect with Tallawong Road. Such was the degree of cooperation between the applicants that, in my view, the market would be reasonably confident at the acquisition date that such road access would occur cooperatively.

1. The applicants suggest that upon urban development denying access to Schofields Road, RMS would provide them, as a matter of policy, with alternative access to Tallawong Road, which they could utilise in the residential subdivision of their properties. This is based on an RMS information guide of February 2012, which states: "If part of a property is acquired RMS will adjust services and public utilities as needed at RMS' cost. These adjustments will take place prior to or during roadwork. In addition, RMS will relocate fencing and, where appropriate, reinstate access to the road network...If necessary, RMS will prepare a plan detailing property adjustments for consideration by the land owner. If this plan is acceptable it may form part of the contract for sale". Given the way the case has developed, I do not think it is necessary to rule on this point. Through the applicants' cooperation (established by their unchallenged evidence), they would all obtain road access to Tallawong Road for urban development of their properties, and the valuers agreed that the Camilleri and Milicevic properties were more valuable than the others because they front Tallawong Road. For this reason the applicants' valuer discounted the derived comparables sales rate per square metre by 5 percent and the respondent's valuer by $10 or about 11 percent when assessing a market rate for the internal acquired properties.

1. I consider, as did Mr Rhodes, that at the acquisition date it was known that the likely location of future subdivision roads in Riverstone East precinct would follow the pattern of existing zoned precincts where the general approach was to create subdivision roads along common boundaries In addition, there existed at the acquisition date a draft indicative layout plan of the south-western portion of Area 20 precinct (on the eastern side of Tallawong Road) fronting Schofields Road (prior to the public purpose) showing the road layout and a "neighbourhood services location" (including for shops) on the principal road therein. A notional extension of that road across Tallawong Road appears to run along the boundary between the subject Camilleri and Milicevic properties: at the acquisition date this would have suggested a future subdivision road along that boundary.

False infrastructure services issues

1. Infrastructure issues potentially affecting the market value of the acquired land evaporated at the hearing. The most significant concerned the timing of sewer infrastructure services to comparable sales properties in Alex Avenue precinct favoured by the applicant's valuer. After much evidence and a change of position by the applicants' valuer, the issue evaporated in the following circumstances.

1. At the date of acquisition of the subject properties, Riverstone East precinct was neither rezoned nor sewer serviced, Alex Avenue precinct was rezoned and partly sewer serviced and partly would be serviced by an interim sewer by May 2014, and Riverstone precinct was zoned but not sewer serviced. As a result of the government's June 2012 acceleration announcements, at the date of acquisition of the subject land the market knew that permanent sewage services would be available from late 2014 via the First Ponds Creek carrier to Riverstone East, Alex Avenue and Riverstone precincts.

1. As regards comparable sale properties in Alex Avenue precinct (discussed below), which had an expected 6,300 dwelling lot yield, the market knew at their respective dates of sale, insofar as they were prior to the government's June 2012 acceleration announcements, that the western side of that precinct was serviced by existing sewage infrastructure to the west, and that the eastern side would have an interim sewage service from May 2014 for 400 residential subdivision development lots (net of Landcom's requirements for The Ponds development). The effect of the June 2012 government acceleration announcements was to make permanent sewer to the latter available from late 2014. Prior to the hearing, the applicants' valuer erroneously understood that they would not have any sewer services until the same time as the subject lots. Upon conceding the error at the hearing, he made an adjustment to his rate derived from his comparables in Alex Avenue precinct for the fact that they would have sewer services seven months earlier than the subject lands (May 2014 compared with December 2014).

1. Another infrastructure services issue that evaporated at the hearing was whether each subject lot not fronting Tallawong Road would be able to obtain internal road access across neighbouring land to Tallawong Road for a future residential subdivision. Vehicular access directly onto Schofields Road from the subject properties fronting that road will be denied under any future rezoned development consent under the Blacktown Growth Centre Precincts Development Control Plan 2010. Therefore, each subject property without a frontage to Tallawong Road (ie all except the Camilleri and Milicevic properties) would require alternative road access across neighbouring properties to Tallawong Road. It is clear, on the applicants' unchallenged evidence, that the degree of cooperation between the applicants at the date of acquisition was such that the market would have been reasonably confident that they would cooperatively provide road access to Tallawong Road for the internal subject lots. At the end of the day, the parties' valuers agreed that in the case of the internal subject lots there should be a downward adjustment of the applicable rate derived from their respective comparables on account of this factor. The real issue is the quantum of the downward adjustment. The applicants' valuer opined 5 percent; the respondent's valuer opined a dollar adjustment which represented about 12 percent.

MARKET VALUE

Overview

1. Section s 55(a) and 56 of the Just Terms Act provide:

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,

...

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, and

(b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and

(c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law.

...

1. The market value of the acquired land is the minimum compensation under the Just Terms Act and otherwise the amount of compensation is subject to a just compensation override. This is apparent from ss 3(1)(a) and (b), 10(1)(a) and 54(1):

3 Objects of Act

(1) The objects of this Act are:

(a) to guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition, and

(b) to ensure compensation on just terms for the owners of land that is acquired by an authority of the State when the land is not available for public sale, and

10 Statement of guaranteed acquisition at market value

(1) When, on request by or on behalf of an owner or prospective purchaser of land, an authority of the State gives a person written notice to the effect that the land is affected by a proposal for acquisition by the authority, the notice must contain the following:

(a) a statement that the Land Acquisition (Just Terms Compensation) Act 1991 guarantees that, if and when the land is acquired by (insert name of authority) under that Act, the amount of compensation will not be less than market value (assessed under that Act) unaffected by the proposal,

...

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.

...

1. The parties' competing contentions as to the market value of the acquired properties at the acquisition date, and my assessment (rounded) for the reasons set out below, are as follows:

Area m2	Applicant $	Respondent $ (Rounded) + Improvements - Contamination remediation	Court $ (Rounded) - Contamination remediation
Attard 53 Schofields	20,320	3,942,080 194 psm	1,700,000 80 psm + 75,000	2,438,000 120 psm
Attard 55 Schofields	20,320	3,942,080 194 psm	1,875,000 80 psm + 250,000	2,438,000 120 psm
Xiguis 57 Schofields	20,320	3,942,080 194 psm	1,725,000 80 psm + 100,000	2,438,000 120 psm
Hsia 59 Schofields	20,320	3,942,080 194 psm	1,725,000 80 psm + 100,000	2,438,000 120 psm
Sultana 61 Schofields	20,330	3,944,020 194 psm	1,615,000 80 psm +125,000 - 138,000	2,439,000 120 psm - 40,000 2,399,000
Camilleri 67 Schofields	22,260	4,518,280 203 psm	2,150,000 90 psm + 150,000	2,893,000 130 psm
Milicevic 31 Tallawong	24,220	4,916,660 203 psm	2,300,000 90 psm + 100,000	3,148,000 130 psm

1. The market value of the acquired properties is to be assessed on the basis of their highest and best development potential at the acquisition date, disregarding the effect on value of the carrying out of (or the proposal to carry out) the public purpose as required by s 56(1)(a) of the Just Terms Act. I have earlier concluded that at the acquisition date it was virtually certain Riverstone East precinct in which they are located would be rezoned for residential subdivision under the Growth Centres SEPP, the likely rezoning would be R2 and occur in late 2014 / early 2015, and the subject land would then be ripe for residential subdivision redevelopment which would likely occur 15-18 months after rezoning.

1. The valuers were Mr Walter Dobrow for the applicant and Mr David Lunney for the respondent. They differed as to the timing for rezoning by two years. Based on the differing estimates of the planners, Mr Dobrow assumed rezoning would occur in late 2014 / early 2015, Mr Lunney assumed late 2016 / early 2017.

1. The valuers adopted the direct comparison method of valuation. Mr Dobrow's comparable sales of direct importance to him were in Alex Avenue precinct, which was rezoned in 2010. Mr Lunney's comparable sales of direct importance to him were in Riverstone East precinct, the same precinct as the subject land, but well to the north of the subject land. In closing submissions, the respondent placed reliance on Mr Lunney's Tallawong Road sales in Riverstone East precinct and on a sale at 28 Tallawong Road in Area 20 precinct that Mr Dobrow had considered was only a supporting sale.

1. The valuers' adoption of different sales as comparables was influenced by their different estimates of the timing of realisation of the undoubted residential subdivision development potential of the acquired land compared with the comparables. In oral evidence Mr Lunney said that he thought the class of potential purchasers of the subject land was more like an interim purchaser than a residential subdivider. He explained that an interim purchaser, who could be an owner occupier or an investor, would hold with a view to on-selling to a residential subdivider. It appears that he would regard purchasers of his comparables in Riverstone East precinct as interim purchasers and purchasers of Mr Dobrow's comparables in Alex Avenue precinct as residential subdividers.

1. For the reasons that follow, I consider that the Riverstone East precinct sales are not directly comparable because the residential subdivision potential of the subject land is likely to be realised several years earlier because of the influence of the creep or flow of The Ponds development on the other side of Schofields Road; that the Alex Avenue or Area 20 precinct sales are not directly comparable because, among other things, those precincts had already been rezoned at the dates of those sales; and I propose to adopt a bottom up approach based on the Riverstone East precinct sales.

Direct comparison valuation method: principles

1. The direct comparison method of valuation involves the identification of other sales of land claimed to be comparable and subjecting them to critical appraisal before they are put to direct use, including adjusting the sale price rates to allow for the differences between the other land and the subject land. Some adjustment is almost always necessary, but too much adjustment will make it unsafe to use a sale: Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541 per Wells J. The use of comparable sales is based on "the supposition that the parties who concluded a given sale were led to fix the price through negotiations conducted at arms length, in which the natural and ordinary operation of the market forces were allowed free play. If some extraordinary or unnatural factor is known to have brought, or quite possibly to have brought, its influence to bear on the parties, the result should be that some suitable allowance should be made to the recorded price to offset that influence, if to do so is practicable; but if it is not, the sale should be excluded from consideration": Minister of Environment v Petroccia (1982) 30 SASR 333 at 339. In arriving at his opinion, the valuer may draw upon his general knowledge and experience: Bingham v Cumberland County Council (1954) (1954) 20 LGR (NSW) 1.

1. In Taylor v Port Macquarie-Hastings Council [2010] NSWLEC 113 at [131] I wrote:

The many different forces in the market that bring parties to a sale are ordinarily brought to a state of equilibrium when the bargain is finally struck. When assessing comparability the subjective intentions of the parties are generally irrelevant and the valuer looks to fundamental objective particulars of the sale such as the price, date, area, location, zoning, land use (actual and potential), physical constraints, services and amenities. However, there may be special circumstances relating to the buyer or the seller which plainly affect the comparability of a sale by showing that it is in no sense comparable or that it requires adjustment to be a reliable yardstick. Special circumstances include those which establish that the seller or buyer was anxious or unwilling and thus outside the statutory test, or not at arms length. Special circumstances also include those showing that the buyer, to the knowledge of the seller, had a higher potential use in view, perhaps not permitted by the existing zoning, which commanded a price higher than the price commanded by a lower and less rewarding use...

1. Sales to acquiring authorities who have not entered the open market are admissible but should be treated with caution: Chaudry v Liverpool City Council [2008] NSWLEC 251 at [21] - [28]; Cook v Roads and Traffic Authority of NSW [2007] NSWLEC 136 at [37]; De Battista v Transport for New South Wales [2014] NSWLEC 39 at [77]-[78]. That is because the acquiring authority may have paid more than market value in recognition of the availability under the Just Terms Act of compensation for (among other things) disturbance (including legal and valuation fees and relocation expenses), solatium and special value, the likelihood that it would be ordered to pay the dispossessed owner's costs if the matter proceeds to litigation, and the uncertainty of litigation. It is of assistance if the contract for sale distinguishes between market value and any additional amount for other matters.

1. Where there are no sales which are directly comparable, a "top down" or "bottom up" methodology is commonly used. For example, where the actual zoning does not reflect the potential future zoning that must be taken into account in determining market value, in a "bottom up" valuation land is valued on the basis of its existing zoning with an adjustment upwards for the chance of future zoning. In a "top down" valuation, land is valued on the basis of the prospective future zoning but a deduction is made for the chance that development may not eventuate and the time required before it may eventuate: Sandhurst Trustees Ltd v Roads and Traffic Authority of NSW [2006] NSWLEC 243 at [73]-[75] per Biscoe J; Maidment v Roads and Traffic Authority of New South Wales [2006] NSWLEC 606, (2006) 153 LGERA 249 at [51] per Biscoe J. In assessing the evaluation of a chance, it will seldom be possible to determine a figure that is demonstrably correct; one can only consider all relevant factors and make a judgment or "best guess": Liverpool City Council v Commonwealth of Australia [1993] FCA 539, (1993) 46 FCR 67 at [58] per Wilcox J.

Structural improvements

1. Each valuer's market value per square metre rate was a land value rate. Mr Lunney, but not Mr Dobrow, added value for structural improvements on the subject properties because he applied the principle that as a property becomes more ripe for urban redevelopment, the added value for occupation or rent of structural improvements including dwellings decreases because they are almost always demolished when the property is redeveloped. This principle played out differently in the valuers' respective market value assessments because Mr Dobrow's assumption as to when residential subdivision redevelopment would occur on the subject properties was much sooner than that of Mr Lunney. Consequently, each assumed a different class of purchaser for whom the value of structural improvements pending urban redevelopment would either generally be nil or small (Mr Dobrow) or of some limited value (Mr Lunney).

1. Thus, in assessing market value Mr Dobrow did not attribute value to structural improvements on the subject properties nor (with one minor exception) on his comparable sales properties in Alex Avenue precinct because, on his estimate of when their urban redevelopment would occur, he thought that such value would be nil or little in comparison with the sale price for their common class of purchaser - a developer - and would be offset by demolition costs for larger improvements, such that it was subsumed into the sale price and his sales analysis exercise. In contrast, Mr Lunney, in assessing market value, estimated a substantially longer time before urban redevelopment of the subject land and his comparable sales properties in Riverstone East precinct would occur. Therefore, he assumed that the likely class of purchaser of both would be an owner occupier or investor for whom existing structural improvements would be "of some limited value" as accommodation or for rental income prior to redevelopment. Consequently, he analysed his Riverstone East sales in a manner which was "consistent with" his valuation of the subject properties; that is, "by allowing only a nominal or a significantly depreciated amount for any existing structural improvements" thereon. He explained further that the existing structural improvements have a short term value and, in his opinion, an investor or owner occupier would likely assign a substantially lower value than those improvements would have in a conventional rural residential situation.

Alex Avenue precinct sales

1. Mr Dobrow derived a market value of $203 psm from the July and September 2012 sales of four adjoining properties at 90, 98 100 and 102 Hambledon Road in Alex Avenue precinct to the Minister for Education for the purpose of a school (the school sales). He applied that rate to the Camilleri and Milicevic properties fronting Tallawong Road. He discounted this by 5 percent to $194 psm for the other subject properties because they do not have direct access to Tallawong Road. It is unnecessary to consider his addition of a premium for the Attard properties for the fact that they were adjoining, because the applicants did not press it in closing submissions, I understand because there was no evidence to support it.

1. The applicants submit that the most relevant comparable sales in Alex Avenue precinct are the school sales and also 28 Tallawong Road in Area 20 precinct to the respondent in April 2012 notwithstanding that the latter was in the shadow of compulsory acquisition for the purpose of the North West Rail Link and that Mr Dobrow only classified 28 Tallawong Road as a supporting sale. It will be recalled that Alex Avenue precinct is on the other side of Schofields Road from the subject properties and Area 20 precinct is on the other side of Tallawong Road, and that they were rezoned for urban development in 2010. Riverstone East precinct, the precinct where the subject properties are located, at the date of their acquisition was not yet released or rezoned for urban development although it was virtually certain that it would be.

1. 90, 98 and 100 Hambledon Road were marketed and sold in July 2012. Mr Dobrow gave particular weight to the fourth school sale, of 102 Hambledon Road, because it was in September 2012, the closest in time to the date of acquisition of the subject lands. He listed the four school sales and 84 Hambledon Road, all in the R2 zone, as his comparable sales "of direct importance" (but as I have said, he really relied on the four school sales):

Address	Area m2	Sale date Purchaser	Sale Rate $ psm	Adjusted rate Dobrow $ psm
100 Hambledon Rd Schofields	20,600	5.7.12 Min. Education	223	210
98 Hambledon Rd Schofields	20,500	5.7.12 Min. Education	193	195
90 Hambledon Rd Schofields	30,900	5.7.12 Min. Education	192	194
102 Hambledon Rd Schofields	24,000	28.9.12 Min. Education	239	215
84 Hambledon Rd The Ponds	20,230	7.8.12 Rawson Homes	178	164

1. Mr Dobrow listed the following, which were not in Alex Avenue precinct, as "supporting sales":

Address	Area m2	Sale date Purchaser	Sale Rate $ psm	Adjusted rate Dobrow $ psm
832 Windsor Rd Rouse Hill	20,400	20.11.09 Min. EPA Act	142	142
77 Schofields Rd Rouse Hill	19,940	19.1.12 Respondent	175	180
97 Schofields Rd Rouse Hill	20,200	April 2012 Respondent	176	165
28 Tallawong Rd Rouse Hill	20,200	April 2012 Respondent	199	183
31-55, 79 Alex Ave Schofields	121,500	Dec 2011 Mirvac	175	175

1. Mr Dobrow also classified the following sale in Area 20 with an R3 zoning as a "background" sale:

Address	Area m2	Sale date	Sale Rate $ psm	Adjusted rate Dobrow $ psm
822 Windsor Rd Rouse Hill	20,400	16.4.12	162	180

1. All but the last of Mr Dobrow's supporting sales were to acquiring authorities in the shadow of compulsory acquisition - three of them to the respondent for the purpose of the North West Rail. They need to be treated with caution to ensure that the sale price represents market value and does not include other items of compensation under the Just Terms Act, or a component for the uncertainty and legal costs of Just Terms Act proceedings where the acquiring authority is usually ordered to pay the applicant's costs. The same degree of caution is not required when considering the first three school sales, notwithstanding that the purchaser Minister for Education is an acquiring authority, because the Minister entered the market. As to the fourth, the Minister as an adjoining owner negotiated with the vendor's agent. Whether, as the respondent submits, the school sales or any of them were out of line such that no or limited reliance should be placed on them is a separate issue that I address below.

Whether the school sales are out of line

1. In my opinion, as the respondent submits and Mr Lunney opined, the four school sales in Alex Avenue precinct on which Mr Dobrow relied were an out of line "spike", for three reasons. First, earlier and later sales to developers of other land in the Alex Avenue precinct were significantly lower, in the range of $150 to $180 psm. Secondly, internal documents of the Department of Education indicate that the Minister was paying a premium over market value according to valuation advice that the Department had obtained. Thirdly, two developers (Rawson and Custodian Land) lodged expressions of interest in 90, 98 and 100 Hambledon Road at prices representing lower rates of, respectively $132 and $165 psm (taking into account the terms of extended settlement). Their offers were rejected, as was the Minister's initial expression of interest at $180 psm.

1. As to the first reason, the school sales appear out of line in the following chronology of sales of land to developers in Alex Avenue precinct (Mr Lunney's adjustments are for extended settlement periods):

Date	Address	Purchaser	$ psm
23.12.11	31-55, 79 Alex	Mirvac	175
30.5.12	114 Hambledon	Landcom	179 Dobrow adjusted
5.7.12	90 Hambledon	Minister Education	192]
5.7.12	98 Hambledon	Minister Education	193] average 201
5.7.12	100 Hambledon	Minister Education	223]
7.8.12	84 Hambledon	Rawson Homes	170 Lunney adjusted
28.9.12	102 Hambledon	Minister Education	239
7.12.12	44-46 Schofields	Custodian Lands	165 Lunney adjusted
22.12.12	34 Alex	Rawson Homes	140 Lunney adjusted
4.7.13	44 Alex	Rawson Homes	155 Lunney adjusted
June 2013	48-50 Schofields	Hong Chen	180 Lunney adjusted

1. On the basis of Mr Dobrow's suggested adjustment to $175 psm for 114 Hambledon Road, the respondent submits that prior to the July 2012 school sales the highest market value paid in Alex Avenue precinct was $175 psm. That means the two school sales in July 2012 of $192 and $193 psm were plus 10 percent, the average of $201 psm for the three July 2012 school sales was plus 15 percent, and the rate of $223 psm for the third July school sale was plus 27 percent.

1. 90, 98 and 100 Hambledon Road were marketed as one on the open market, and the purchaser's single offer, which was accepted, translates to $201 psm. There were two vendors who allocated that price among the three properties in the contracts of sale at $192, $193 and $223 psm for, respectively, 90, 98 and 100. The evidence does not disclose the basis on which they did so. In the circumstances, I think it appropriate to take the rate of $201 psm as the sale price for those three properties.

1. The school sales rates are substantially higher than the other Alex Avenue precinct sales rates. This is so even allowing for the fact that 84 Hambledon Road, sold in August 2012, was (and still is) located next to a property used for an industrial purpose, a sand yard, which is likely to have depressed its sale price; and that the sale of 114 Hambledon Road was by a deceased estate such that the price may have been lower than it otherwise would have been. I would not, without more evidence, accept Mr Dobrow's characterisation of the latter sale as by an "anxious" vendor.

1. The respondent's second and third reasons for submitting that the school sales were out of line or to an anxious buyer may be dealt with together. The second is that internal documents of the Education Department indicate that it was paying more than market value according to valuation evidence it had obtained. The third is that, as those documents evidence, two developers lodged expressions of interest at about the same time as the Minister's initial expression of interest, at rates of $132 and $165 psm (after taking into account extended settlement terms). The Education Department documents in evidence, which are obviously incomplete, are as follows:

(a)   On 27 April 2012, Corporeal Pty Ltd, the Department of Education's valuer, wrote to the Department opining that the market value range for Nos 90, 98 and 100 was $150 to $180 psm. The valuer referred to six comparable sales in the range of $123 to $175 psm in Schofields in Alex Avenue precinct: 84 Hambledon Road $123 in November 2011, 249 Railway Terrace $137 in August 2010, 53 Alex Avenue $170 in February 2012, 55 Alex Avenue $174 in February 2012, 77 Schofields Road $175 in January 2012, and 112 Hambledon Road $160 in December 2004. The valuer said that the larger combined site area (about 7.2 hectares) and location adjacent to the existing Ponds subdivision with services in place would be particularly attractive to developers and anticipated there would be considerable interest in the sale of this land.

(b)   On 30 April 2012, the Department's representative lodged an expression of interest at a price which represented a rate of $180 psm subject to the Minister's approval of the purchase price. On 3 May 2012, two developers, Rawson and Custodian Land, lodged expressions of interest at prices which represented rates of, respectively, $132 and $165 psm (taking into account extended settlement terms).

(c)   On 9 May 2012, the valuer wrote to the Department of Education noting that the vendors had rejected the Department's offer of $12,960,000 for 90, 98 and 100 Hambledon Road based on the valuer's earlier valuation, and had counter-offered $14,500,000. He said he had conducted further investigations but had been unable to confirm any sales which support that value. He said he understood that the Department had identified the properties as ideally suited for a school site, and consequently, there was a strong desire to obtain them. He advised that a premium of 10 to 20 percent above market value could be added as special value to the Department in lieu of the Department acquiring the properties under the Just Terms Act. This resulted in valuations of $14,256,000 (including a premium of 10 percent) and $15,552,000 (including a premium of 20 percent). The valuer noted that the vendor's asking price of $14,500,000 lay towards the bottom end of that range.

(d)   On 31 August 2012, a Department briefing note to the Minister In relation to 102 Hambledon Road - after the purchase of 90, 98 and 100 in July - recorded that the owner had made a final offer of $5.8 million or $238 psm, which was above the sales range for the area; that the Department had paid $201 psm for Nos 90, 98 and 100; and that the valuer had advised that the upper end of the market value range for No 102 was $200 psm. (I note in passing the applicants' suggestion that this indicates that by August 2012 the valuer accepted that the upper end of the market value of all the school lots was $200 psm). The Department briefing note also stated that the Minister could compulsorily acquire No 100 but this was not advised because the cost under the Just Terms Act was likely to be close to the asking price having regard to likely liability (in addition to market value) for disturbance costs which may include the other party's legal costs, interest due to delay and payment for stress/hardship. The briefing note records the Minister's acceptance of the Department's recommendation to accept the owner's offer. The briefing note refers to attachments which are not attached to the copy of the briefing note in evidence, at least one of which is not in evidence at all, namely, the Minister's previous approval of acquisition of the site for $19 million.

1. The respondent submits that the fourth school sale in September 2012 at a rate of $239 psm was at a premium over market value due to adjoining owner influence, and indeed was to an "anxious" buyer. The definition of market value of acquired land in s 56(1) of the Just Terms Act requires a notional purchaser who is not "anxious". The statutory definition does not in terms apply to comparable sales. But the same concept applies to comparable sales because the statutory definition encapsulates the general law concept of market value discussed in Spencer v Commonwealth of Australia [1907] HCA 82, (1907) 5 CLR 418. What is an "anxious" purchaser? The concept has not been well explored. In Spencer at 441 Isaacs J spoke of "neither of them [the purchaser or the vendor] so anxious to [trade] that he would overlook any ordinary business consideration". The market value of acquired land may include a premium attributable to adjoining owner influence - the so-called "adjoining owner influence": Croghan v Hawkesbury City Council (1998) 99 LGERA 375 per Bignold J (following earlier decisions); followed in Mood v Cowra Shire Council [1999] NSWLEC 124, (1999) 103 LGERA 260 at [28] per Talbot J. In Croghan ten percent was added to what otherwise would have been the market value of compulsorily acquired property on account of adjoining owner influence: at 390. This reflected the resuming authority's "keen interest" in acquiring the resumed land as a necessary adjunct to its adjoining sewage treatment plant: at 387. In Mood at [28] Talbot J said of the decision in Croghan:

...I find it sufficient for the purposes of this case to adopt his conclusion that s56(1)(a) of the Just Terms Act does not disqualify a claim for compensation in addition to the ordinary market value by reason of its position adjoining land owned by a potential purchaser who has a particular need or interest in buying the land. The adjoining owner, as a prudent purchaser, may pay more for the land rather than lose the opportunity to acquire it, thereby increasing the market value.

1. There is a more recent conflicting decision in Mac's Pty Ltd v Parramatta City Council [2012] NSWLEC 1356 at [89] by two Commissioners of this Court who held that "when a premium is paid for some special commercial reason applicable only because the purchaser is the owner of an adjoining property, such purchaser falls outside the concept of a willing but not anxious purchaser": at [89]. Both parties submit that this decision is clearly wrong, conflicts with authority and should not be followed. I accept the submission and respectfully disagree with the Commissioners. They did not refer to, and appear not to have had the benefit of being referred to, the earlier conflicting authorities. That does not mean that an adjoining owner can never be an anxious buyer. Particular factual circumstances (such as the largeness of the premium the adjoining owner is prepared to pay) may indicate that it was. Moreover, where a comparable sale includes an adjoining owner influence premium but the resumed land would not have attracted such a premium at the resumption date, it would be necessary to make an adjustment for the premium when assessing the market value of the resumed land.

1. Mr Dobrow considered that the school sales were not out of line and that all the Education Department was doing was meeting the market because: (a) they were a consolidated parcel from which the purchaser got efficiencies in development; (b) the June 2012 government announcement would have resulted in a significant uplift in sale prices in Alex Avenue precinct; (c) the forward movement or "creep" of The Ponds development has had an upwards effect on prices in Alex Avenue precinct; and (d) in the case of 102 Hambledon Road, it was on top of a hill, had a large house which is still there today (whereas the other purchased school sites have had their houses removed) and it was a prime development site. In my view, having regard to the evidence to which I have referred, those considerations are insufficient to explain the price of $201 psm for the first three school properties and $239 psm for the fourth school property.

1. In my view, the Department documents in evidence and the comparison with other sales in Alex Avenue precinct in 2012 set out earlier lead to the conclusion that the school sales were out of line and included a premium above market value such that it would be unsafe to rely on them.

28 Tallawong Road sale

1. The applicants submit that 28 Tallawong Road in the already rezoned Area 20 precinct is a reliable comparable because it is the most proximate comparable to the subject properties, shares some of their characteristics and enjoys similar locational advantages. This submission is made notwithstanding that Mr Dobrow only identified 28 Tallawong Road as a supporting sale. In my view, it is not a reliable comparable sale. First, it was acquired by the respondent in the shadow of resumption and not on the open market. Secondly, on the evidence, the basis on which the sale price was agreed is unclear. There is sparse evidence that the acquiring authority's valuer at the time of that transaction considered that the structural improvements had a value of $385,000. This led to a difference of opinion between Mr Dobrow and Mr Lunney in which Mr Lunney deducted that amount to derive a market value of $180 psm whereas Mr Dobrow did not to derive a rate of $199 psm. Although part of the contract of sale is in evidence and distinguishes between land value and disturbance, the evidence does not reveal how the land value was arrived at. It does not reveal how the value of structural improvements figured in the calculation of the sale price by each of the vendor and the purchaser, whether the vendor and the purchaser assumed different underlying zoning, and whether extraneous matters such as the cost and uncertainty of litigation under the Just Terms Act were a factor. In the result, the caution about utilising a sale in the shadow of resumption and not in the open market is increased, such that I think it unsafe to adopt 28 Tallawong Road as a comparable sale.

A top down approach?

1. Mr Lunney did not favour Mr Dobrow's top-down approach of assessing the market value of the subject land by discounting land in Alex Avenue precinct already zoned under the Growth Centres SEPP because the Alex Avenue precinct already zoned land was being bought to buy, develop and sell, with no delay for rezoning. But if the Court favoured that approach, then Mr Lunney considered that a more reliable guide to the "top" than the school sales on which Mr Dobrow relied is provided by the following sales to developers of residential subdivision zoned land in Alex Avenue precinct (allowing for the extended settlement period in most cases), considered showed (at the most) a top rate of $175 psm which would require a downward adjustment for zoning of 50 percent:

Address Area m2	Sale date Purchaser	Sale rate $ psm	Extended settlement	Adjusted rate Lunney $ psm	Adjusted rate Dobrow $ psm
114 Hambledon Road, The Ponds 20,300	30.5.12 Landcom	163	175
84 Hambledon Rd, The Ponds 20,230	7.8.12 Rawson Homes	178	12 months	170	164
44-46 Schofields Rd, Schofields 40,125	7.12.12 Custodial	170	165	155
48-50 Schofields Rd, Schofields 41,260	31.7.13 Hong Chen	195	18 months	180	174
34 Alex Ave, Schofields 42,510	21.12.12 Rawson Homes	155	Oct 2014	140	147
44 Alex Ave, Schofields 21,080	4.7.13 Rawson Homes	171	22 months	155	158

Adjustment for zoning

1. An adjustment for zoning is necessary on account of the fact that Alex Avenue precinct was rezoned in 2010 under the Growth Centres SEPP, whereas (as I have earlier determined) the Riverstone East precinct where the acquired properties are located, viewed at the acquisition date, was not likely to be rezoned until about 2.5 years after the acquisition date at which time it would be ripe for residential subdivision development.

1. Mr Dobrow's "rezoning delay" adjustment for the school sales was only minus 5 percent. Mr Lunney considered that to be grossly inadequate and thought that his comparison between 39 Gordon Road (zoned for urban purposes, $110 psm) and 131 Tallawong Road (unzoned for urban purposes, $74 psm) indicated that an adjustment for zoning of 50 percent or more is required. During the hearing Mr Dobrow included his rezoning delay adjustment in a "time" adjustment of 8 percent for the first three school sales and 9 percent for the fourth. The "time" adjustment otherwise included an adjustment to correct an error he had made as to the timing of sewer services to properties in Hambledon Road.

1. The large truck (a B-double prime mover), was used to haul material for one customer, Boral Australia. The business received daily orders for pickups and deliveries from Boral Australia, which were normally performed six days per week between about 5am and 6pm. The material never entered the acquired property; the truck was empty when garaged at the acquired property. Mr Camilleri conducted the business except for administration, including driving the truck and servicing it on an almost daily basis (sometimes assisted by his mechanic son). Truck parts are a large part of the business (almost 30 percent of total expenses in 2012). Mrs Camilleri looked after the administration including bookkeeping at the family home 20 to 30 hours per week, and also assisted with cleaning the truck.

1. Except for its resumption, the acquired land would be sold after it was rezoned for residential subdivision in (as I have determined) late 2014 /early 2015. At that time the moveable partnership property would have to be relocated. Because of the resumption, the partnership property had to be relocated earlier, in mid 2013. The partnership claims disturbance losses on the basis that because of the resumption the property of the business had to be relocated sooner than would otherwise have been required.

1. In mid 2013, the partnership moveable property and business was relocated to a rural residential property at Nelson purchased by Mr Camilleri to replace his acquired property. At the Nelson property he is building a house, and the partnership has constructed a large shed to conduct the business. However, apart from garaging (incidental uses such as washing) the truck, the partnership cannot lawfully carry on the business in the shed at the Nelson property because there is no development consent to do so. They therefore propose to lease an industrial unit elsewhere where the truck will be maintained and serviced.

1. The partnership applicants claim the disturbance losses listed in the following table under "Applicants". The respondent submits that none of the claimed disturbance costs are payable because the business on the acquired land was a use for an unlawful purpose. That is said to be because the business was prohibited in that location under the relevant planning instrument, or alternatively the business (or land improvements it utilised) did not have development consent. Alternatively, assuming that unlawfulness does not impact on recovery and (as I have earlier held) s 61 does not bar any part of the claim and urban rezoning would be at the end of 2014, the respondent contends that the partnership applicants are entitled to the amounts set out in the following table under "Respondent". Finally, the table sets out my determination in relation to each item, for the reasons set out below:

Applicants $	Respondent $	Court $
Section 59(a)
(a) Legal Fees	12,792	12,792	12,792
Section 59(b)
(a) Valuation Fees	8,981	8,981	8,981
Section 59(c)
(a) Construction of shed on Nelson property	70,975	-	50,000
(b) Loss of profit relating to reduction in deliveries including:
Diarised time away from the business	2,861	2,861	2,861
Saturdays not worked due to relocation	5,709	5,709	5,709
Relocation time (13 days)	9,161	-	9,161
(c) Outsourcing costs incurred for maintenance work - past	971	971	971
Outsourcing costs incurred for maintenance work - anticipated	9,100	-	-
(d) Rent for an industrial unit	36,666	-	-
(e) Additional travel time to/from Nelson	3,874	3,874	3,874
TOTAL	161,090	35,188	94,349
Alternatively the applicants claim the above under s 59(f)

Whether use of the acquired land was lawful

1. In determining whether the use of the acquired land was lawful, the relevant planning instruments are Interim Development Order 133 (IDO); Blacktown Local Environmental Plan 1988 (LEP) which replaced the IDO and was in force at the acquisition date; and State Environmental Planning Policy No 4 - Development Without Consent and Miscellaneous Exempt and Complying Development (SEPP 4), which did not apply to a prohibited use under the LEP but dispensed with development consent for uses for certain purposes that were "ancillary or incidental" to a purpose for which land may be used.

1. The respondent submits that the overall purpose of the partnership's use of the acquired land was as a "road transport terminal", which was a prohibited purpose under the LEP at the time; alternatively, that development consent was required but not obtained for the business and the improvements other than the main shed for which there was development consent. The applicants submit that (a) lawfulness is not a requirement of s 59; (b) anyway, the use of the acquired land was lawful because it was not used for a prohibited road transport terminal, there were development consents for a tool shed and garage as well as for a dwelling, the other improvements were ancillary or incidental and therefore did not require development consent by reason of SEPP 4, and the administration of the business) was not development and therefore did not require development consent; and (c) anyway, the applicants would have been entitled to take steps to make the activity at the acquired land lawful, and they are entitled to compensation for the loss of that chance.

1. If it is relevant, Council officers came to the acquired land from time to time but never raised a complaint about what was being done thereon.

1. The test of characterisation of the purpose of a use is as stated in El Boustani at [130] per Preston CJ of LEC (Beazley P and Gleeson JA agreeing):

The purpose of a use is the end which is seen to be served by a particular use of land. It describes the character which is imparted to the land on which the use is pursued: Shire of Perth v O'Keefe (1964) 110 CLR 529 at 534. The characterisation of the purpose of a use needs to be done at the appropriate level of generality, not too narrow or not overly wide. The test is not so narrow that it requires characterisation of the purpose in terms of the detailed activities, transactions or processes which have taken or which may take place, but not so general that the characterisation can embrace activities, transactions or processes which differ in kind from the use which the activities, transactions or processes as a class have made or may make of the land: Royal Agricultural Society (NSW) v Sydney City Council (1987) 61 LGRA 305 at 310.

Whether a prohibited transport terminal

1. The respondent submits that the applicants' use of the acquired land was unlawful because they were using it as a "transport terminal". The LEP at the acquisition date prohibited "transport terminals" in the zone in which the subject land was located. The respondent's submission proceeds on the basis that the LEP incorporated the Environmental Planning and Assessment Model Provisions 1980, which define "transport terminal" as including a building or place used as a "road transport terminal" and "road transport terminal" as "a building or place used for the principal purpose of the bulk handling of goods by transport for road, including facilities for the loading and unloading a vehicle used to transport those goods and for the parking, servicing and repair of those vehicles". The respondent submits that when one looks at the scale of activities carried out on the subject land, it was a road transport terminal as defined in the model provisions and therefore was a use for a prohibited purpose. I do not accept the submission. The LEP in cl 5 adopts the model provisions except for a number of definitions therein, including the definition of "road transport terminal". The ordinary and natural meaning of "road transport terminal" therefore applies. The Macquarie Dictionary relevantly defines "terminal" as "the end of a railway line, shipping route, air route etc, at which large scale loading and unloading of passengers, goods, etc takes place". On that definition, which I adopt, it cannot be said that the subject land was being used for the purpose of a prohibited road transport terminal.

Development consents

1. In addition to a development consent for the dwelling house on the acquired land, in 1982 a development consent was issued under the IDO for development described as "tool shed and garage". This is Shed 1. In 1988 the IDO was replaced by the LEP. By s 109B(1) of the EPA Act, nothing in the LEP prohibited, or required a further development consent to authorise, the carrying out of development in accordance with the 1982 consent. One of the conditions of the 1982 consent was that "no damaged vehicles, spare parts or trade waste is to be stored at any time outside the building". There was no specific development consent for the later improvements erected by the partnership on the land and used for the purpose of the partnership business or for administration of the business carried out at the family home.

1. The respondent submits that the use specified in the 1982 consent is not broad enough to encompass the overall use of the acquired premises for a road haulage business; rather, it permits the construction of the shed/garage and normal garaging of vehicles and the storage of tools within that approved building.

1. In construing the 1982 consent, I consider it permissible to look at the plans accompanying the development application in order to understand the dimensions and details of the "tool shed and garage" that it authorised, consistently with the constraints on construing development consents by reference to development applications referred to in Bardsley-Smith v Penrith City Council [2013] NSWCA 200, (2013) 195 LGERA 34 at [66]-[67]. Those plans show a shed with dimensions so large that it could accommodate a large truck. The applicants submit that the consent also authorised the use of the "tool shed and garage" for the purpose specified in the development application under s 91(4) (now s 81A(1)) of the Environmental Planning and Assessment Act 1979 (EPA Act), which provided: "A consent to a development application for the carrying out of development, being the erection of a building, shall be sufficient to authorise the use of the building when erected for the purpose for which it was erected where that purpose is specified in the development application". In this way, the applicants invite reference to the purpose specified in the development application, which was "truck garage and machinery store". I do not accept that construction of s 91(4) although I do not think it makes much difference in this case. When a development consent goes beyond merely authorising the erection of a building and states the purpose for which the building is to be used - in this case as a "tool shed and garage" - I do not think that the statutory provision permits recourse to a different purpose stated in the development application. Nevertheless, it is clear from the dimensions in the plans of the authorised "tool shed and garage" that its authorised garaging extended to a large truck as well as its use for the purpose of a tool shed. The condition of the consent to which I have referred confirms that the consent contemplates that spare parts could be located within the tool shed and garage. Consent to such a large garage and tool shed obviously capable of garaging a large truck necessarily contemplates its use for commercial purposes. A development consent for a garage and tool shed, whether it be for a truck or for a domestic motor vehicle, carries with it, I think, consent to carrying out within the garage maintenance and repairs to the vehicle. I think it is reasonably ancillary to the 1982 consent to this garage and tool shed that spare parts and tyres could be stored and used in the garage, the truck could be maintained and repaired therein, and the truck could be cleaned on the premises.

1. Condition 8 of the building permit for the garage provided that it was not to be used for commercial, industrial or habitable purposes without the prior consent of the Council. In my view, such "consent" was provided for commercial purposes in the 1982 consent. Even if that is not within the contemplation of condition 8, I do not think that a condition of a building permit can subtract from the terms of a development consent.

SEPP 4

1. Just before the commencement of the business, SEPP 4 was gazetted, on 4 December 1981. Clause 10 permitted development of minor environmental significance to be carried out without development consent. Clause 10(1) and (2) provided:

10 Certain ancillary or incidental development

(1) This clause applies to development on land for a purpose that is ancillary or incidental to a purpose for which the land may be used, being development:

(a) for the purpose of parking, loading facilities, drainage, workers' amenities, pollution control, security or for other similar purposes, or

(b) which consists of the erection of fences, garages, fuel sheds, tool houses, milking bails, haysheds, stables, fowl houses, pig sties, barns or the like.

(2) Development that, but for this clause, could not be carried out except with development consent being obtained therefor may be carried out without that consent.

1. In my view, as the applicants submit, each of the contentious improvements constructed or used for the purpose of the business fell within cl 10(1) and (2) of SEPP 4 because they were "ancillary or incidental" to a purpose for which the subject land may be used under one or other or both of the development consents for the erection of Shed 1 and the dwelling house. By dint of cl 2(4)(b), SEPP 4 could not authorise prohibited development but I have earlier concluded that there was no prohibited development.

Administration

1. The respondent submits that the business administration carried out in the family home was an innominate use requiring development consent in the relevant residential zone under the LEP. The applicants dispute this, submitting that planning law is directed to land uses not commerce, commerce may be carried out without any use of land, and generally speaking commerce itself does not require development. The applicants submit that if the respondent is correct, the use of a computer in a home for the purpose of ordering clothes or trading shares, or a barrister's responses to the emails of an instructing solicitor late into the night are all land uses which would require consent (unless exempt development or permissible without consent). The applicants submit that if a distinct part of a home is used for a business, and it involves signage, visits from clients and other such uses of the land, then the position may well be different, but merely because there is a business which sits above the particular uses of the land for the purposes of garaging, maintaining and servicing a truck does not convert those land uses into something different which can then be labelled as an innominate use requiring consent.

1. The administration of the business carried on from the family home may come within the definition of "home activity" in the Blacktown LEP and may have required development consent. However, it is unnecessary to express a concluded view because the claimed relocation costs do not relate to the moving of papers or other items involved in the administration of the business (or, if they do, they are de minimis).

Whether ss 55(d) and 59 have a lawfulness requirement

1. The respondent submits that:

(a) ss 55(d) and 59 contain an implicit requirement of lawfulness of the purpose of the use, which automatically excludes a claim for relocation of a business conducted unlawfully;

(b) alternatively, relocation costs of a business conducted unlawfully would almost always, including in the present case, not constitute costs "reasonably incurred", which is a requirement of s 59(a)-(f).

1. I do not accept the first submission. I agree with the alternative submission to a point, in that relocation costs of an intrinsically unlawful business, for example a business of manufacturing illegal drugs, would not be "reasonably incurred", but that that is necessarily the case where the purpose of the use is permissible with development consent.

1. Neither s 55(d) nor 59 contain any explicit requirement that the purpose of a use be lawful, in contrast to s 56(1)(c). Section 56 confines itself to defining "market value" for the purposes of the Act. Section 56(1 )(c) requires the Court in assessing market value to disregard "any increase in the value of the land caused by its use in a manner or for a purpose contrary to law". That includes its use for a purpose which would be permissible only with consent, when that consent has not been obtained: Doueihi v Roads and Traffic Authority of New South Wales [2004] NSWLEC 51. The proposition that "contrary to law" includes "without current consent" was not challenged on appeal. The specific restriction in s 56(1) concerning market value to exclude increased value caused by use in a manner or for a purpose contrary to law gives some weight to an inference that there is no similar exclusion from the other heads of compensation in s 55, relevantly disturbance losses under s 55(d) and 59.

1. Section 59 contains its own filters under each of its sub-heads, to ensure that only appropriately incurred losses or costs are compensable. These are that the cost or loss be "reasonably incurred", and that it either falls within one of the defined classes of cost in s 59(a) to (e), or alternatively that it relates to "the actual use of the land" as specified in s 59(f). In my opinion, to add, as a matter of construction, an additional restriction that those costs are automatically not recoverable if the acquired land was being used for an unlawful purpose is unwarranted. That conclusion is strengthened by the language of s 59(f) which refers to "the actual use of the land", focusing attention on the factual question of what the land was being used for, rather than the legal question of what was or was not permissible.

1. The rule of construction that the express mention of one thing implies the exclusion of the other (expressio unius est exclusio alterius, as one used to say) is always applied cautiously. However, in my view, that, or similar, is applicable here. In De Marco v Chief Commissioner of State Revenue [2013] NSWCA 86, (2013) 83 NSWLR 445 the Court of Appeal considered a similar question in the context of the Land Tax Management Act 1956. The question there was whether the appellants were entitled to the benefit of provisions of the Act which applied to land used as "his or her principal place of residence". They had lived upon the land in a caravan, but that use had been unlawful as approval had not been obtained under s 68(1) of the Local Government Act 1993. The relevant provisions of the Land Tax Management Act contained no requirement that the occupation be lawful. In contrast, other sections of the Land Tax Management Act, particularly cl 6 of the same Schedule as contained the provisions relied upon, contained a requirement that the "intended use and occupation not be unlawful". The majority, Basten JA and Gzell J held that that specific reference in cl 6 militated against an implied requirement of lawfulness in cll 2, 3 and 8. Basten JA (with whom Gzell J agreed) said at [156]-[157]:

The requirement in clause 6(ii)(c)of the Schedule that the intended use and occupation not be unlawful and the absence of that specific requirement in clauses 2, 3 and 8 militates against an implication of that requirement in those clauses.

It was submitted on the Chief Commissioner's behalf that it was not necessary to specify the requirement in clauses 2, 3 and 8 of the Schedule as the legislature could be presumed to have assumed that the requirement was implied in those provisions. That is drawing too long a bow.

1. It follows, in my opinion, that there is no automatic exclusion of compensation under s 59 of the Just Terms Act in the case of a use for a purpose which requires but does not have a necessary development consent.

1. However, in my opinion, lawfulness of the purpose of a use is a factor in determining whether the claimed costs were "reasonably" incurred, which is a requirement of all the provisions of s 59. Where a use was for a prohibited or intrinsically unlawful purpose, for example where the acquired land was used for the business of manufacturing unlawful drugs, the costs of relocating that business would not be "reasonably" incurred. In the present case, the purpose of the use is not intrinsically unlawful. It was not a prohibited purpose. This is a case where the use was for a purpose which was lawful with development consent but the development consent that had been obtained covered some but not all aspects of the business purpose use on the acquired land.

Reasonableness of relocation expenses

1. The Camilleri partnership claims a number of items of expenses for the relocation of their business. The respondent submits that, if the Court finds (contrary to its submissions) that there is no reason related to the lawfulness or otherwise of the operation of the business on the subject land that prevents recovery of those expenses and recovery of those expenses is not prevented by reason of s 61, then some of the relocation expenses claimed by the applicant are recoverable, but not all of them as some are not "reasonably incurred" in relation to the acquisition. The contentious items in the table at [162] above are:

(a)   13 days relocation time $9,161.

(b)   Cost of construction of shed at Nelson $70,975.

(c)   Outsourcing costs of maintenance work - anticipated $9,100.

(d)   Rent for industrial unit $36,000.

Background to the partnership's claims

1. The Camilleris learned of the need to move from the acquired property in November 2011, nearly a year before the land was actually acquired. New land at Nelson was located the next month and was purchased over a period of about six months, with contracts exchanged in mid June 2012 and completion in mid July 2012. Mr Camilleri noted time spent away from the business connected with this process, including diarised time and Saturdays away from the business. The respondent accepts these claims for, respectively, $2,861 and $5,709.

1. The Camilleris were given until the end of May 2013 to vacate the property. There was accordingly a period of about 18 months from when they first learned of the acquisition to the date they needed to vacate. There was a period of around 10 months from when Mr Camilleri completed the purchase of the Nelson property to the time they had to leave the acquired land.

1. Mr Camilleri took a period of two weeks off work in order to move - packing, driving to and from the Nelson property, transporting the machinery, parts and tools, and unpacking. It is this period off work that gives rise to the disputed claim for relocation time.

1. Mr Camilleri intended to operate the business from the new property at Nelson. He approached Hills Shire Council to discuss submitting a development application for a new shed to use as the new depot for his truck. However, the Council told him - before applying for consent - that he could not do on the Nelson property what he did at the acquired property. A Council officer told him:

You can't do that on this property. If you want your DA to be approved, you are going to have to say that you are only going to park your truck in the shed. So this shed will be used for secure parking and visual inspections only.

1. Following this conversation, Mr Camilleri submitted his development application and obtained consent to build the new shed/garage. The evidence does not support the applicants' submission that the Council did not give any indication that it was unreasonable to proceed. Despite being told by a Council officer what the limited scope of lawful activity on the Nelson property was, he "decided that I would try and see if I could get away with maintaining and washing the truck on the Nelson property".

1. He has received complaints about his activities from neighbours and believes:

It is only a matter of time before Council prevents me from carrying out maintenance and the like at the Nelson property. When that occurs, I will have to find an industrial unit to maintain, wash and refuel the truck. I will park the truck on the Nelson property overnight and travel to and from the industrial unit when needed. I have started looking for an industrial unit.

1. He states that he does not intend to seek consent to carry out those activities at the Nelson property as consent is likely to be refused.

1. The partnership seeks to recover the cost of building the shed at Nelson; the cost of six months maintenance costs during the period they are seeking an industrial unit; and rental for the industrial unit. All these claims are disputed.

13 days relocation time $9,161

1. Mr Camilleri had 13 days off work (he worked 6 days per week) in order to relocate the property of the business to the Nelson property. Quantum is agreed at $9,161. This is much less than the cost of engaging professional removalists. The only argument that the respondent advances is one which in effect appears to assume the application of s 61 which I have earlier rejected (ie along the lines that relocation costs are not reasonable because they have been incurred in realising the potential for residential subdivision). Accordingly, I allow this claim under s 59(c).

Cost of construction of shed at Nelson $70,975

1. It is common ground that the business cannot be lawfully conducted from the Nelson property, except for the garaging of the truck.

1. So much was made clear to Mr Camilleri by the Hills Shire Council even before he submitted his development application for the shed. However, Mr Camilleri chose to ignore that advice and decided he would "see if I could get away with" doing what the Council had specifically advised he could not do. He built a large shed at a cost of over $70,000 in order to run his business from there, including garaging and maintaining his truck, storing the items used for maintenance, and running a small business office where his wife does administrative work. The Camilleris do not yet live on the Nelson property because they are awaiting completion of construction of a house thereon. In the interim they are living in another house at Schofields and have been travelling between there and Nelson to carry on the business, albeit unlawfully. They now accept that they do not have, and will not obtain, consent for this use at Nelson (apart from garaging the truck in the new shed) and have to move the business to different premises.

1. Given these circumstances, in my view it is unreasonable for the partnership to claim the cost of $70,000 to build such a large shed that is a white elephant, apart from the garaging of the truck. If the business was in compliant premises, there would be no need for such a large shed. The respondent submits that the truck could be garaged at the other premises; that it would make sense for materials needed to maintain the truck to be stored there as well, as that is where maintenance is to be carried out; and that there is nothing done in the shed that could not be done more reasonably and efficiently elsewhere. The respondent submits that given that the Camilleris do not currently reside at Nelson (and will not do so until at least Christmas 2014), if they were to establish a location elsewhere for the maintenance of the truck, it would be highly inefficient to maintain the truck at one location, drive it to Nelson to garage it, then drive back home.

1. It was reasonable to garage the truck at the acquired premises and in my view it is reasonable to garage it at the Nelson premises. They respectively were and are where Mr Camilleri lived and will live. His driving hours are restricted by law. It is natural that he would maximise the profitable driving time and minimise the time spent travelling to and from work. On nights when no repairs or maintenance are required, it would be natural for him to continue to drive the truck home and park it there.

1. In my opinion, the cost of a shed of similar dimensions to Shed 1 on the acquired land, sufficiently large to garage the truck at the Nelson property, would have been a reasonably incurred cost. That is because the partnership lawfully and reasonably garaged the truck in Shed 1 on the acquired land and were lawfully entitled to store tools therein, but should have taken the truck elsewhere to lawfully carry out the substantial maintenance and repairs routinely required. It was reasonable to continue to do lawfully at the Nelson property what they had lawfully and reasonably been doing on the acquired land. However, the shed constructed on the Nelson property is approximately 120 percent larger than the lawfully constructed shed on the acquired land. A downward adjustment of its cost should therefore be made to arrive at a reasonably incurred cost. This should not be done on a strictly proportionate basis since some element of cost would be incurred regardless of size. Doing the best I can, I would allow $50,000 as a reasonably incurred cost.

Anticipated outsourcing costs of maintenance work and rent for industrial unit

1. These two claims are put on the basis that once Mr Camilleri decides to move, he will cease maintaining the truck at Schofields and find an industrial unit to carry out maintenance activities on the truck. During the period of about six months estimated to find and obtain consent for an industrial unit, Mr Camilleri will need someone else to maintain the truck, and labour costs are claimed over this period. Once the unit is located, rent will be at an amount agreed by the experts of about $55,000 per year.

1. As discussed earlier in the context of the freehold disturbance claims, the principles relating to recovery of relocation costs under s 59(c) were reviewed in George D Angus Pty Ltd v Health Administration Corporation [2013] NSWLEC 212 at [67]-[78]. The relocation referred to in s 59(c) will usually be from the acquired land to a different place, but can in some circumstances encompass moving from land other than the acquired land, provided there is a sufficient connection with the acquired land and the acquisition. In George D Angus it was the claim for a second move that was disallowed. An obstetrician/gynaecologist had initially relocated from the acquired land to other premises in Wagga Wagga, but was incurring losses practising from those new premises due to additional difficulties with his practice caused by operation from that location. After two years, he decided to move his practice to Newcastle, incurring further losses. It was held that the incurring of those losses would not be reasonably incurred, and would not be a direct and natural consequence of the acquisition: (at [191]).

1. In this case, the respondent has accepted the reasonable costs associated with a move from Schofields (subject to s 61). However, the respondent submits that the proposed second move from Nelson is too remote from, and is not a consequence of, the acquisition, but is a consequence of the unwise and unreasonable decision of the applicants to move their business in the first instance to land where they had been warned they could not operate the business. I agree. Accordingly, I disallow these two claims.

Summary

1. For these reasons the amounts that should be awarded to the Camilleri partnership applicants are as indicated in the table set out above at [168].

ORDERS

1. I have summarised at [5] above the components of my assessment of the compensation payable to the applicants. The orders of the Court are as follows:

1. Determination of compensation in the eight proceedings:

(1)   Attard 53 Schofields Road $2,619,857

(2)   Attard 55 Schofields Road $2,728,025

(3)   Xiguis 57 Schofields Rd $2,677,500

(4)   Hsia 59 Schofields Rd $2,676,644

(5)   Sultana 61 Schofields Rd $2,607,588

(6)   Camilleri 67 Schofields Rd $3,265,088

(7)   Milicevic 31 Tallawong Rd $3,422,246

(8)   Camilleri partnership $94,349

1. The respondent is to pay the applicants' costs.

1. The exhibits may be returned.

ANNEXURE

Amendments

18 June 2014 - 29/4/14 amendments - Corrigendum: slip rule corrections:[96] The last sentence should read:

Amended paragraphs: [96], [113], [114], [168]

Decision last updated: 18 June 2014