Ballina Waterways Pty Limited v Roads and Traffic Authority of New South Wales

[2009] NSWLEC 96

Land and Environment Court

of New South Wales

CITATION:

Ballina Waterways Pty Limited v Roads and Traffic Authority of New South Wales [2009] NSWLEC 96

PARTIES:

APPLICANT
Ballina Waterways Pty Limited

RESPONDENT
Roads and Traffic Authority of New South Wales

FILE NUMBER(S):

30929 of 2006

CORAM:

Sheahan J

KEY ISSUES:

COMPENSATION :- compulsory acquisition of land - public purpose of diverting a major highway around a town - land undeveloped while route reconsidered - market value - "before and after" method - "underlying zoning" - alternative development scenarios - geotechnical constraints - injurious affection - disturbance - costs

LEGISLATION CITED:

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

CASES CITED:

AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2007] NSWLEC 397
AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2008] NSWCA 325
BMP Manufacturing Pty Ltd and Ors v Road and Traffic Authority of New South Wales (No.2) [2009] NSWLEC 41
Caruso and Ors v Sydney Water Corporation [2008] NSWLEC 320
Constantino v Roads and Traffic Authority of New South Wales [2004] NSWLEC 517; (2004) 135 LGERA 365
Kalambaka Pty Ltd v The Minister Administering the Environmental Planning and Assessment Act 1979 (No.2) [2009] NSWLEC 65
Penrith City Council v Sydney Water Corporation [2009] NSWLEC 2
Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438
Smith v Roads and Traffic Authority of New South Wales [2006] NSWLEC 670
Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2008] HCA 5

DATES OF HEARING:

20 November 2008 (site visit)
21, 24, 25 November and 9 December 2008.

 
DATE OF JUDGMENT: 

22 June 2009

LEGAL REPRESENTATIVES:

APPLICANT
Mr J Webster SC with Ms A Pearman
SOLICITORS
Sommerville Laundry Lomax

RESPONDENT
Mr J Maston
SOLICITORS
Blake Dawson

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Sheahan J

22 June 2009

30929 of 2006 Ballina Waterways Pty Limited v Roads and Traffic Authority of New South Wales

JUDGMENT

A. Introduction

1 His Honour: This case concerns the compensation payable by the Roads and Traffic Authority of NSW (“RTA”) under the Land Acquisition (Just Terms Compensation) Act 1991 (“JTC Act”) in respect of its acquisition of an area of freehold land (“the acquired land”), approximately 3.5 kilometres to the west of Ballina, for a public purpose namely the Ballina Bypass project. The compulsory acquisition was notified in the Government Gazette on 23 June 2006 (Exhibit R2, tab 6).

2 The “parent parcel” was owned by the applicant company for many years prior to its acquisition. Whether or not it was purchased with a view to its eventual development for urban purposes as part of the West Ballina “extension area”, it remains to this day “cane land”, and has been effectively “frozen” as such since 1973-74 by a zoning reflecting the route originally proposed for the highway bypass. It is common ground that the applicant’s land is low lying and subject to flooding (T 24.11.08, p12, L36-38), and is in an area generally described as involving flood plain, and land requiring fill, but also as land considered valuable for agriculture (Exhibit R2, tab 45, fol 637, item 3.4.1).

3 The parent parcel, known as Lot 1 of DP 238009, comprised an area of 19.51 ha. The acquired land has an area of 2.49 ha, comprising Lot 17 (1.54 ha) and Lot 26 (0.951 ha) in DP 1011575, leaving the “residue” land, identified as Lot 11 DP 1011575, having an area of 17.018ha. Lot 26 is bounded by the Pacific Highway on its southern boundary and Teven Road along its western boundary, and Lot 17 sits to the north of Lot 26, also bounded by Teven Road on the west (see Plan 1.2, Exhibit B1, fol 4).

4 The Ballina Bypass will upgrade the Pacific Highway from a two lane carriageway to a four lane motorway, with a roundabout and later a fly-over interchange at its intersection with Teven Road, which will represent the western gateway to Ballina. The original route for the bypass was formally announced by the RTA in November 1973, and the preferred route, requiring much less of the applicant’s land, was announced in 1997. The bypass will run north-south just east of Teven Road.

5 The applicant objected to the amount of compensation assessed by the Valuer General, and offered by the respondent, for the acquired land ($275,000 plus disturbance), and appeals to the court.

6 Amended Points of Claim filed in court on 9 December 2008 claim compensation of $5,377,925, comprising $5,369,400 (as the difference between “before” and “after” valuations), plus $8,525 for “disturbance”. An alternate claim is made in the sum of $1,308,525, comprising $996,000 for loss in market value, $304,000 for injurious affection, and $8,525 for disturbance. Mr Webster SC put to the court in his closing submissions (T 9.12.08, p32, L29 – p33, L13) that, if I accepted both his town planning and valuation evidence, the applicant would be entitled to $5,369,400, and if I accepted his town planner but the respondent’s valuer, the figure would be $1.612M, both figures exclusive of disturbance, but the latter number would appear to include injurious affection twice.

7 Amended Points of Defence filed in court on 9 December 2008 assert that the value of the applicant’s residue land in the “after” scenario is greater than the value of the whole of the parent parcel in the “before” scenario (resulting in “betterment”), and that the compensation payable for market value of the acquired land should, therefore, be “nil”, pursuant to the decision of the Court of Appeal (affirming that of Pain J in this court) in AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2008] NSWCA 325 (on appeal from [2007] NSWLEC 397).

8 The parties ultimately agreed that the compensation payable for disturbance should be $7,750 (T 9.12.08, p50, LL 29-31).

B. The statutory scheme

9 Section 55 of the JTC Act relevantly provides:

“ 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,
…
(d) any loss attributable to disturbance,
…
(f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired .”

10 “Market value” is defined by s.56 of the JTC Act in the following terms:

“(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.

(2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition .”

11 The traditional approach to be adopted by the judicial valuer in applying s 56(1)(a) is well stated by McClellan ChJ in Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438 (“Smith No.1”), “in simple terms” at [63], thus:

“1. Identify the zoning of the land at the date of acquisition.
2. Determine whether that zoning was imposed or retained in order to facilitate the implementation of the public purpose for which the land was acquired.
3. If the answer to question 2 is yes, that zoning is notionally set aside, and the potential of the land and ultimately its market value is assessed by determining how the land would have been zoned, at the date of acquisition, but for the proposal to carry out the public purpose.
Although the cases demonstrate that the answers to those questions may involve complex factual matters, they have been understood as the appropriate steps to give effect to s 56(1)(a) of the Land Acquisition(Just Terms Compensation) Act 1991.”

12 The principles/approach in Smith No.1 are still applicable following the High Court’s decision in Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2008] HCA 5. (See Caruso and Ors v Sydney Water Corporation [2008] NSWLEC 320, and also pars [70]-[85] of Smith No.1).

C. The Town Planning Evidence

13 The court has been assisted by town planning evidence presented by Mr Stephen Connelly for the applicant and Mr Anthony Rowan for the respondent. These experts produced individual reports (Exhibits B1 & R1 respectively) and a joint report (Exhibit R6). By the morning of the first day of the hearing, following the view and some further conferencing, agreement was reached between them as to the zoning of the applicant’s land from 1969-1986 (absent the public purpose), and in the “after” situation (ie date of acquisition), leading to the production of an addendum to their joint report (Exhibit R7). It is to the town planning evidence that the court must now turn.

C1: Relevant Periods

14 The applicant’s land was originally zoned 1(b) non-urban under Interim Development Order No1 (“IDO 1”) (Exhibit R2, tab 14). This zoning extended from Teven Road in the west to Fishery Creek to the east, with the Pacific Highway forming its southern boundary. This zoning allowed agricultural and forestry type uses, and under cl 22 of IDO 1 “caravan parks and motels” were permissible with the consent of Council. Clause 22 development was restricted to a depth of 191.94 metres, measured from the boundary with the Pacific Highway within the 1(b) zone (see Exhibit R7, figure 1).

1972

15 In September 1972 the State Planning Authority (“SPA”) suggested a new non urban 1(d) (Holiday Centre) zone which would have permitted “tourist facilities” (see Exhibit R2, tab 24, fol 273). Clause 22 was omitted from IDO 1 in favour of the 1(d) zoning (see Exhibit R7, figure 2 and T24.11.08, p.28, LL4-7). The planners agree that but for the public purpose this new 1(d) zone would have been introduced and would have covered the land bounded by the Pacific Highway on the south from the eastern boundary of Portion 122 east through to Fishery Creek. Portion 122 immediately adjoins the applicant’s land and is currently occupied by the “Riverbend” manufactured home estate. The applicant’s land would still have retained its 1(b) zoning but without cl 22 of IDO 1 applying.

1974 -1986

16 The planners agree that in the period 1974-86, but for the public purpose, the applicant’s land would have been zoned 1(b); the land abutting it on its eastern boundary east to Fishery Creek would have been zoned 1(d); and the land bounded by Fishery Creek on the west and “enclosed” by the Pacific Highway would have been included in the 1974-76 Development Control Plan (“DCP”) land usage investigation (see Exhibit R7, figure 3).

17 Relevantly in 1977 a “doughnut” local government amalgamation occurred, joining Ballina Municipality with the surrounding Tintenbar Shire, giving the town access to land to its north, in the old shire, suitable for urban development. There have always been known constraints on the development of land near the acquired land on the western side of Ballina and, not surprisingly, the land available to the north was of interest to the local Council.

1986-2006

18 The planners disagree, in respect of the period from 1986 until the date of acquisition, as to the zoning of the applicant’s land but for the public purpose (ie the “before” scenario). In order to appreciate their differing positions it is necessary to outline a few historical occurrences which give context to them.

19 As mentioned earlier, the original bypass proposal was announced in November 1973. Mr Connelly opines that from this date forward that proposal became the dominant planning consideration for the area, including the applicant’s land (Exhibit R6, fol 1). The 1973 route crossed the parent parcel west to east, and the 9(a) zoning which reflected that route covered most of the parent parcel. As a consequence, the proposed motorway became a real “barrier” to urban development in West Ballina, seriously affecting the applicant’s land.

20 The town clerk of the day, in a letter of 24 April 1974 to the State Planning Authority (re: Council’s application for rezoning), stated that “[I]t would appear that this Motorway which is to be constructed over low lying country subject to inundation and presently farmed with cane should form the logical barrier to urban development westwards”. The town clerk went on to say that “[f]urther residential development particularly would be better encouraged northerly up the coast where some relief could be achieved in the undulating country and where drainage would not present a problem.” It was considered that “Canal and Fishery Creek with good stands of timber along their banks form a natural barrier from future residential development to the south and the east” (Exhibit R2, tab 35, fol 411).

21 Similar sentiments are expressed in further correspondence of 30 May 1974 (Exhibit R2, tab 35, fol 414), and the Shire Engineer, in a report of 28 July 1977 (Exhibit R2, tab 31, fol 315), suggested to Council “that the proposed motorway should become the barrier to the west between urban and rural development”.

22 Mr Connelly opines that but for the public purpose a cadastral boundary, such as, logically, Teven Road (on the western boundary of the parent parcel) would form the logical western boundary to Ballina’s residential development (Exhibit R6, fol 5), rather than Fishery Creek, which is put forward by Mr Rowan as the logical western boundary of the town.

C2: Ballina Local Environmental Study (“LES”) 1979-1982

23 Soon after the commencement in 1979 of the Environmental Planning and Assessment Act 1979, Council embarked on a LES (as a preliminary step in the development of the Ballina Local Environmental Plan (“BLEP”)). The LES included the following investigations:

· Tall building study (Exhibit R2, tab 37);

· Residential development paper (Exhibit R2, tab 38);

· Infrastructure paper (Exhibit R2, tab 39).

Tall building study

24 The tall building study was released in October 1982. The report was commissioned by the Council as a study for “the preparation of a report and other work relating to tall buildings within the shire.” (Exhibit R2, tab 37, fol 425).

25 The planners disagree as to the influence the public purpose had on the area studied in the tall building study. Mr Connelly, who was employed by Council at the time of this study, says “without equivocation that it was never the intent of the study to consider land north of the bypass alignment for urban purposes” (Exhibit R6, fol 3). He further said that the area of the study was limited to those lands identified as future urban lands shown on p10 of the study (see fol 432 of the exhibit).

26 The map on page 10 of the study shows the applicant’s land in area 13, a “non-urban” area. On a map at fol 494 of the study it is included in area 36, which has the notation “Potential for residential development”. The influence of the public purpose is also evident in the following statement - “The proposed by-pass, Pacific Highway, should act as the limit to future growth of the urban area of Ballina” (Exhibit R2, tab 37, fol 494).

27 Mr Connelly states that: “[I]n the West Ballina area the public purpose was the line of limitation for the studies recommendations about Tall Building development. It is an error to conclude that the Tall Building Study somehow excluded the subject land.” (Exhibit R6, fol 3).

28 Mr Rowan disagrees that the limitation of the study was defined by the map on p10, and does not agree with the view of Mr Connelly that land to the north-west and west of the then public purpose alignment was not considered. Page 6, in his view, identifies the study area and describes it generally, as (Exhibit R2, tab 37, fol 428):

“ the “Ballina/Lennox Head Corridor” and consists of the land from Ballina to Lennox Head which is a coastal strip of approximately 11 kilometres long and 3 kilometres wide - it also extends west from Ballina along the Richmond River for approximately 6 kilometres. ”

29 The map at p6 of the study appears to include an outline boundary of the area described above as the study area.

30 Mr Rowan points out that the study assessed land north-west and west of the bypass, (at p72, fol 494 of the exhibit), which encouraged “agricultural viability” in the use of those lands.

Residential development paper

31 The residential paper was released in December 1982, and sought “to identify the issues of low medium and high density residential accommodation and the changes to housing styles which may occur over the next two decades.” The introduction of the paper states that: “[I]n order to determine the potential for future residential development in the Shire a study is made of existing urban areas and the land required to accommodate the medium growth projection of an additional 31,000 people by 2001.” (Exhibit R2, tab 38, fol 522).

32 The planners agree that “West Ballina” comprised all land south of the then preferred bypass route and west of Fishery Creek (Exhibit R7, fol 3).

33 The study identified that in 1982 “West Ballina had a total permanent population of 1085 and is projected to increase to 5200 by 2001. In order to accommodate this population an additional 1430 dwelling units will need to be constructed ... requiring an additional 115 hectares of land.” The study went on to say that this “area of land is available in West Ballina however it is presently low lying and flood liable”; that the new bypass may alleviate flooding; and that no further rezoning should be considered until flood studies have been carried out. (p23 of the study; fol 548 of the exhibit). The applicant’s land was included in an area designated “Development Potential Subject to Flood Study” (Exhibit R2, tab 38, fol 547, map 7).

Infrastructure paper

34 The infrastructure paper was also released in December 1982, and it set out “to give a detailed description of the existing situation of the Shire’s infrastructure together with a description of developments or works proposed or seen to be necessary to meet the demands and service the requirements of the Shire’s residents for the future.” (Exhibit R2, tab 39, fol 582).

35 The planners agree that the paper indicates that adequate water and sewer facilities were available to meet the needs of future development in the West Ballina locality for a population of over 5,000 persons. Also, the public purpose may act as a flood mitigation levy. (Exhibit R6, fol 4).

C3: Draft planning principles

36 Mr Rowan argues that Council’s planning principles sought to achieve a population of 5,200 persons for West Ballina with various studies assuming that this could be accommodated by land south and east of the public purpose alignment. The public purpose did not restrict the achievement of these projections, which did not require inclusion of land north of it. (Exhibit R6, fol 4).

37 Mr Connelly argues that at the core of the Council’s adopted planning principles was a fundamental town planning consideration to create discrete “neighbourhoods” within the Shire which had sufficient populations (between 4,000 to 5,000) to sustain the full range of “neighbourhood level” services and amenities as well as a primary school. The aspiration for West Ballina was indeed 5,200 persons. As at the 2006 census, the West Ballina area has a population of about 3,000 persons. (Exhibit R6, fol 4).

C4: Ballina Local Environmental Plan 1987

38 On 22 February 1987 the BLEP was gazetted. The zoning of the applicant’s land under this instrument was as follows (See plan “2.4” – Exhibit B2):

· part Zone 1(a2) Rural - Coastal Lands Agriculture

· part Zone 1(b) Rural - Secondary Agricultural Land

· part Zone 9(a) Road - Main Road Proposed

· part Zone 1(d) Rural - Urban Investigation.

39 In correspondence with the Department of Environment and Planning in February 1988, the Council expressed the view that the land zoned 1(d) urban investigation adjacent to the proposed Ballina bypass (including part of the applicant’s land - see Exhibit B2) is “well suited for residential purposes given the availability of services and its proximity to the existing town centre of Ballina” (Exhibit B7, unpaginated).

40 At a Special Council meeting on 13 August 1987 consideration was given to an application to rezone 1(d) urban investigation land to 2(t) Tourist Area. The recommendation of the Council was to “support the application for rezoning of the subject land to enable development for comprehensive tourist facilities and that upon rezoning to part Living Area - 2(a) and part Tourist Area - 2(t), Council prepare a detailed development control plan for the precinct as provided for in the stated objectives of such zones” (Exhibit B7).

41 In a March 1988 Department of Environment and Planning Minute Paper concerning BLEP Amendment No.1 (included in Exhibit B7), it is noted that a departmental staff member advised Council’s planner of the following:

“ The Department believes that on the advice of the PWD (Highway Construction Study) the proposed development of the subject 1(d) land at West Ballina does not constitute major infill development and may be rezoned through the LEP process prior to the abovementioned study [Floodplain Management Study] if Council’s urban release strategy shows a significant shortfall in urban land in Ballina.
Related to the above point if Council’s urban release strategy shows a significant shortfall in urban land then Council will need to justify its proposed rezoning approximately half of the West Ballina triangle for tourist development rather than residential .”

42 In March 1988 Council released its “Residential Development Strategy” (included in Exhibit B7), with the aim of assessing “the amount of environmentally suitable residential land that is likely to be required to accommodate the Shire’s increasing population”. Table 12 – “Housing Balance Sheet” records a deficiency of 41.7 ha of land between the total effective supply of land and the total land demand projected at 1991. Section 7.1 of the strategy notes a shortage of land of that order in Ballina, and states that land should be made available “preferably in East and West Ballina”.

43 The study then says that: “Council presently is considering proposals to rezone land in these two locations. The West Ballina site is located immediately north of the Pacific Highway and comprises an area of approximately 27.6 ha”. It is reported that rezoning applications in both East and West Ballina comprise about 60 ha of land which would meet the demand for land in the short term – “it is noted that substantial time is likely to elapse before the land is actually available for development”. Of note also is the statement that “[t]he areas proposed for rezoning are relatively free of environmental constraints. Furthermore, reference to the section of this report relating to servicing indicates that infrastructure to cater for the proposed developments is either in place or can be economically provided”. The report noted the need for longer term residential releases in West Ballina:

“ In the longer term, and subject to review of this strategy, further areas of land in West Ballina and within the Ballina-Lennox Head corridor will be assessed with a view to rezoning to cater for residential expansion. ”


C5: Amendment of Ballina LEP

44 Amendment No. 1 to BLEP was gazetted in October 1988. The 1(d) rural - urban investigation zone within the applicant’s land was replaced with a residential 2(a) - living areas zone. The zoning of the land thus became (see plan “2.5” – Exhibit B3):

· part Zone 1(a2) Rural - Coastal Lands Agriculture - 0.413ha

· part Zone 1(b) Rural - Secondary Agricultural Land - 2.703ha

· part Zone 9(a) Road - Main Road Proposed - 12.73ha

· part Zone 2(a) Residential - Living Area - 3.664ha (total = 19.51ha).

45 In May 1998 Council resolved to prepare a further draft amendment to the BLEP to allow consideration of a development application for an urban development to be known as “Ballina Waters Estate” (Exhibit R2, tab 45, fol 635). This land is also known as the “Macleay” land; it is on the western side of Teven Road, and outside the 1(d) urban investigation zone, being zoned 1(a2) agricultural (Exhibit R2, tab 44, fol 630).

46 In early 2002 the RTA requested Council to amend the BLEP “to delete the existing zoned Main Road corridor in West Ballina...” (ie the 9(a) zoning). Council resolved to re-zone the 9(a) zoned land, changing part to a 9(b) - Local Roads zone to facilitate a future Council-funded West Ballina Arterial Road, and the remainder to be re-zoned in a manner contiguous with its adjacent rural zones (see Exhibit R1, p8/fol 70). On the applicant’s land, the 9(a) land designated for the bypass slip lane was to be rezoned 1(b) rural - secondary agricultural lands, with the remaining 9(a) on the site to be rezoned 1(a2) rural - coastal lands agriculture. The 2(a) residential zoning over part of the land remained unaltered. (see Exhibit R2, tab 11, and compare maps at fols 239 & 240). These intended changes to the BLEP do not appear, as yet, to have been made.

C6: The “before” situation or “underlying” zoning

The Applicant’s case

47 The applicant contends that, but for the public purpose, the entirety of the applicant’s land at the date of acquisition would have been zoned 1(d) Rural - Urban Investigation (Exhibit R6, fol 4), and thereafter as 2(a) Residential (see figures 4 & 5, Exhibit R7), its use being for urban purposes. Mr Connelly puts forward the following primary reasons for this view (Exhibit R6, fol 12):

“ 1. Designation of the land in the immediate vicinity as 1(d) Urban Investigation zone is a key indicator of Council’s intention to rezone such lands at some time in the future for urban purposes;
2. The land has no unmanageable environmental constraints;
3. The topography of the land was easily developed, basically only requiring fill to be placed;
4. There was significant development pressure in the locality. At the time of LEP Amendment No. 1, a date I consider it likely that the land would have been rezoned for urban purposes, the locality had 2 of the areas major land developers active;
5. The area had access to the full range of urban infrastructure services;
6. Ballina Shire Council has historically been growth orientated seeking to develop simultaneously the number of localities and provide a range of overarching infrastructure (e.g. sewage treatment plants; airports; arterial roads and bridge infrastructure etc);
7. Certain persons who own land north of the Pacific Highway were in positions of key political influence at the time;
8. Traditionally, growth of neighbourhoods has followed a pattern of developing either side of the arterial road with the arterial road forming a spine to the evolving urban area;
9. The site has excellent “visual exposure” and accordingly is highly attractive to land uses such as a highway centre or bulky goods type retailing. ”

48 Mr Connelly sets out the development potential of the applicant’s land but for the public purpose (ie in the “before” situation) (see Exhibit B1, section 5). Plan 5.1 (p44/fol 48) sets out a division of uses on the land (parcels 1 - 5). A 60 metre wide floodway corridor, required to mitigate flooding, is depicted running north-south across the property with parcels 1 and 2 adjoining the corridor on the west; parcels 3 and 4 adjoin on the east; and parcel 5 is further to the east (of parcels 3 and 4).

49 He opines that parcels 1 and 2 were suitable for development as a highway service centre (these parcels abut the Pacific Highway on the south and Teven Road on the west), parcels 3 and 4 suitable for development for bulky goods uses or residential, and parcel 5 would have been suitable, pre-1995, as a conventional residential subdivision; and post-1995 as a “managed residential development”. (1995 is when difficulties associated with differential “settlement” of soils in the area had come to be observed as a serious planning consideration – see the geotechnical evidence considered below). Each of the development parcels would need to be flood proofed.

The Respondent’s case

50 The respondent contends that, but for the public purpose, the applicant’s land would have been zoned Rural 1(a2) - Coastal Lands Agricultural, making it “usable for the growing of sugar cane” (Exhibit R1, p23/fol 85). Mr Rowan opines (Exhibit R1, p21/fol 83) that:

“ absent the public purpose, in the preparation of documentation for the draft Ballina LEP during 1981-87, low-lying land west of Ballina would not have been identified as being suitable for urban development. This would have been due to concern associated with flood affectation, and the strategic value placed upon its ongoing use for sugar cane farming. Land west of Fishery Creek would not have been identified within Zone Rural 1(d) Urban Investigation in the initial making of the draft LEP, after being discounted in the evaluation of the LES in 1982, and thereafter would not have been the subject of further discussion for urban development. This approach reflects that which was adopted for land north of the proposed Bypass. The Parent Parcel would have remained identified as land required for the growing of sugar cane. ”
C7: The “after” situation, when zoning influenced by the public purpose

51 The planners agree that the zoning as at the date of acquisition (ie the zoning influenced by the public purpose, or the “after” situation) was as appears in BLEP, as amended by Amendment No.1 (the 1(d) urban investigation zoning having changed to 2(a) residential with the making of amendment 1 to the BLEP in 1988).

52 The relevant components of the residue land, as zoned, are as follows (see Exhibit R6, fol 6, cf fol 4):

· 1(a2) Rural - Coastal Lands Agriculture - 0.345ha

· 1(b) Rural - Secondary Agricultural Land - 2.208ha

· 9(a) Road - Main Road Proposed - 10.714ha

· 2(a) Residential - Living area - 3.753ha (total = 17.02ha).

53 Exhibit B3 reveals that a large area of the residue parcel is zoned 9(a) to cater for the original bypass route including a slip lane. To the east of the site there is a triangle of land zoned 2(a) residential. South of the 9(a) zone and abutting the Pacific Highway is zoned rural 1(b). At the extreme north of the applicant’s land (ie mapped “above” the 9(a) land) is a “sliver” of agricultural 1(a2) land.

C8: Development scenarios post-acquisition

54 In the joint town planning addendum report (Exhibit R7), agreement is reached as to three possible development scenarios applicable to the residue land after acquisition (ie in the “after” situation).

Scenario 1

55 Scenario 1 assumes no restriction on use of zone 9(a) land, taking a liberal view of compliance with zone objectives. The initial route proposed for the bypass as reflected in the 9(a) zoning in the BLEP traversed the applicant’s land in a mainly east-west direction. The more north-south 1997 route resulted in the acquisition of only the western end of the applicant’s land. Despite requests to amend the BLEP map to facilitate the new alignment of the bypass, this has, to date, not occurred.

56 The single objective of the 9(a) Main Road zone is “to reserve those lands which are required for the purposes of main roads.” Clause 9(7) of the BLEP states (Exhibit R1, p25/fol 87):

“ Except as otherwise provided by this plan, the council shall not grant consent to the carrying out of development on land to which this plan applies unless the carrying out of the development is consistent with the objectives of the zone within which the development is proposed to be carried out. ”

57 Mr Rowan (Exhibit R1, p25/fol 87) notes that the “implications of this clause are that, despite the land to which the zone applies not being required for the initial Bypass, it remains subject to a use consistent with the objective of the zone.”

58 In this scenario the planners propose the following uses of the residue land:

· manufactured housing estate

· service station

· motel/hotel.

59 Mr Connelly believes that the “use of 1(b) land as a handle to that manufactured home park ... would not be permissible” (ie the use of a private road across the 1(b) land for access) (T24.11.08, p.54, LL37-39; p.55, LL1-9). Mr Connelly conceded, in answer to a proposition put to him by Mr Maston, Counsel for the respondent, that if he is wrong about this access issue, “whether it be a private or public road to the 1(b) land, the proposition would simply stand that a manufactured housing estate would be an available use in the after scenario on any view...” (T24.11.08, p.55, LL32-38).

60 The planners agree that in this scenario, neither residential sub-division nor bulky good or industrial purposes development can be envisaged (unless included in a “specific study”).

Scenario 2

61 Scenario 2 assumes restricted use of the zone 9(a) land, taking a restrictive view of the zone objective.

62 The planners propose the following uses of the land:

· Service station to main road with access only on 9(a) land. A service station use is consistent with the 9(a) zone objectives and is permissible within the 1(b) zone.

· Motel on the 1(b) land.

· Manufactured housing on 2(a) land (only if integrated with and accessed through “Riverbend”, the manufactured home estate adjacent to the residue land to the east) in order to address Mr Connelly’s “access” concerns.

Scenario 3

63 Scenario 3 assumes a rezoning as per Council resolution of 2002.

64 The following development alternatives are proposed in this scenario:

· Service station.

· Motel on the 2(a) and 1(b) land.

· Manufactured housing on 2(a) land (again here, only if integrated and accessed with “Riverbend”, the manufactured home estate adjacent to the residue land) in order to address Mr Connelly’s “access” concerns.

D. The valuation evidence

65 The court has been assisted by valuation evidence produced by Mr Kent Wood (“KW”) for the Applicant and Mr Laurence (Laurie) Hamilton for the respondent, who have produced a joint report (Exhibit B4) in which there is no dispute between them that the public purpose, for the purpose of their valuation exercise, is the Ballina bypass (Exhibit B4, p3).

66 This joint report was finalised before the addendum to the joint town planning report (Exhibit R7) was produced, so the court then required the valuers to prepare a further report, entitled “After resumption scenarios as per joint planners report addendum” (Exhibit R11).

67 It is necessary to set out the full analysis put forward by the valuers in respect of each of the planners’ scenarios, as the figures in Exhibit R11 are derived by the valuers from that earlier analysis.

68 This is a very complex case – and it is not a matter where I have found any reason to criticise the valuers for the disparity in their views (cf Talbot J in Smith v Roads and Traffic Authority of New South Wales [2006] NSWLEC 670 (“Smith No.2”), at [32], Lloyd J in Penrith City Council v Sydney Water Corporation [2009] NSWLEC 2, at [5], adopted by Biscoe J in Kalambaka Pty Ltd v The Minister Administering the Environmental Planning and Assessment Act 1979 (No.2) [2009] NSWLEC 65 at [5]).

D1: Applicant’s valuation

69 Mr Wood considers that it is incorrect, in principle, to adopt a different zoning in the “after” scenario from that adopted in the “before” scenario, and refers the court to the decision of Bignold J in Constantino v Roads and Traffic Authority of New South Wales [2004] NSWLEC 517; (2004) 135 LGERA 365 (“Constantino”).

70 In Constantino, Bignold J held that the “before and after” valuations proffered by the applicant in that case were legally flawed (see par [58] of His Honour’s decision), not because the valuers adopted a different zoning in the “before” compared with the “after” situation, but rather because the zoning adopted in the “after” scenario was not a result of the public purpose, the Council having proposed to rezone the residue lands “open space”, which deflated the “after” value.

71 Bignold J when referring to the “before and after” method stated at [32]:

“ [A]s a matter of valuation principle, the employment of the before and after valuation method in the present case can be expected to yield a single figure which at the one stroke reflects (i) the market value of the compulsorily acquired land unaffected by the public purpose ; and (ii) the decrease in value of the Applicant's residue lands by reason of that public purpose . ” (His Honour’s emphasis).

72 His Honour then explained why the taking into consideration of the “open space” zoning in the “after” scenario was erroneous (at [33]-[35]):

“ [33] However, it is immediately obvious that the single figure yielded by the before and after valuations undertaken by the Applicant's Valuers does not reflect the decrease in value of the residue lands by reason of the public purpose but rather, also reflects the considerable decrease in value of the residue lands, not by reason of that public purpose, but by reason of the proposed open space zoning . It is this factor inserted by each of the Applicant's Valuers into his "after value" which is an entirely foreign element (which is conspicuously absent from the "before value"), which generates a distorted and false result in terms of the Just Terms Act, s 55.

[34] The decrease in the value of the Applicant's residue lands that is factored into Mr Juniper's and Mr Neskowski's "after value" in their before and after valuation (to the extent of some $1.5 million in the case of each valuation) is expressly attributed to the proposed open space zoning of the residue lands under the draft local environmental plan.

[35] It makes no claim or pretence to be a decrease in value "by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired" in terms of the Just Terms Act, s 55(f). ” (His Honour’s emphasis).

73 No such problems exist in the present case because the zoning in the “after” scenario (agreed by the planners to be that reflected in Amendment No. 1 to the BLEP) is directly attributable to the public purpose.

74 Mr Wood undertook his valuation exercise using four scenarios - Rowan scenarios 1 and 2, Connelly scenario 3, and KW scenario 4 (Exhibit B4, p38).

Rowan scenario 1

75 This scenario is based on the zoning of the land being 1(a2) agricultural in both the “before” and “after” situation. Mr Wood values the cane land as $100,000/ha ($10/m2) giving a value of $1,951,000 for the parent parcel in the “before” situation. The $100,000/ha is derived from Mr Hamilton’s miscellaneous sales 2 and 3 (Exhibit B4, pp22 & 23), which show a value of $89,700/ha and $89,600/ha for 1(a2) Rural - Coastal Lands Agriculture land. Mr Wood reasons that the applicant’s land is better located than those lands, being on the corner of Teven Road and the Pacific Highway with close proximity to sport and recreational facilities, etc, and, therefore, attracting a higher value of $100,000/ha (T25.11.08, p.72, L10 - p.73, L11).

76 In the “after” situation he values the residue land at $100,000/ha, less 20% for the injurious affection resulting from the proximity of the new motorway (see s 55(f) of the JTC Act) leaving a value in the “after” scenario of $1,361,440 ($80,000/ha ($8/m2) x 17.018 ha) (Exhibit B4, p42). In this scenario the loss in value of the applicant’s land as the result of the acquisition is $590,000 (rounded up from $589,560).

Rowan scenario 2

77 In this scenario Mr Wood adopts the same “before” situation as in the Rowan scenario 1 (ie rural 1(a2) agricultural land used for cane farming is valued at the same rate, being $100,000/ha). In the “after” situation a 20% increase has been applied to the “before” rate per hectare to take into account the potential for some urban development. The “before” value ($1,951,000) minus the “after” value ($2,042,160) leaves a “betterment” figure of $91,160 the result of the acquisition.

Connelly scenario 3

78 This scenario adopts the Connelly conclusion that the parent parcel in the “before” scenario (ie absent the public purpose; referred to generally as “the underlying zoning”) would have been zoned for urban purposes, be that for use as a service centre, bulky goods, and/or residential development.

79 Of the four residential sales he analysed, Mr Wood says that the most comparable sale on a “residential” basis is the sale of “River Oaks” (now Ferngrove Estate) at North Ballina. This sale reveals a rate of $49/m2, and is considered similar to the applicant’s land for the following reasons (Exhibit B4, pp30-31):

· Closest in time [January 2005 sale compared with June 2006 acquisition]...

· Similar topography - below 1:100 year flood height (requires 1.5m fill)

· Has frontage to existing Pacific Highway, although the immediate development north of the highway is industrial

· Similar distance to Ballina strip shopping centre

· Inferior location to subject.

80 From this $49/m2 Mr Wood deducts 20% for the time and risk involved in obtaining Development Consent, leaving a residential value of $40/m2 (rounded up from $39.20/m2).

81 Seven sales analysed for a bulky goods (retail) use exhibit $48/m2 for that type of use. Mr Wood says that the Homeworld Ballina Pty Ltd sales (sales 1 & 2) provide the best evidence of comparable bulky good (retail) value. These sales reveal rates of $52/m2 and $70/m2 respectively (reduced to $60/m2 to take into account the 20% risk involved in obtaining development consent).

82 Based on the above evidence Mr Wood adopts $50/m2 as the value of the applicant’s land if used for a service centre, bulky goods, and/or residential development. Therefore, the value of the land in the “before” scenario is $9,755,000 (19.51 ha x $500,000/ha ($50/m2)) and in the after scenario is $8,509,000 (17.018 ha x $500,000/ha ($50/m2)), meaning that compensation payable in the Connelly scenario 3 is $1,246,000 ($9,755,000 - $8,509,000).

KW scenario 4

83 In this scenario Mr Wood contends that the underlying zoning is Residential 2(a) in both the “before” and “after” situations. In the before situation the land is valued at $40/m2 giving a “before” value of $7,804,000 (19.51 ha x $400,000/ha ($40/m2)).

84 The “after” value is derived by applying a 20% deduction to the residue land which adjoins the new bypass (parcel A in the Connelly “after” scenario, plan 5.2 (Exhibit B1, p47/fol 51)) which is 3.8 ha, because of the injurious effect of the new motorway - s55(f) JTC Act. The value of the land in the “after” situation is thus $6,502,800 (3.8 ha @ $32/m2 ($1,216,000) + 13.217 ha @ $40/m2 ($5,286,800)).

85 If the court were to adopt this valuation, compensation for loss attributable to the acquisition would be $1,301,200 ($7,804,000 - $6,502,800) (Exhibit B4, pp38-39).

D2: Respondent’s valuation

“Before” scenario 1

86 This scenario is based on Mr Rowan’s “before” scenario, which regards the whole of the applicant’s land and the adjoining lands as 1(a2) Rural - Coastal Lands Agriculture, and leads to a value which reflects the potential of the applicant’s land as a sugar cane farm with a building entitlement (Exhibit B4, p11).

87 Mr Hamilton relies on five comparable sales to derive a value of $75,000/ha, which equates to a value of $1,460,000 (19.51 ha x $75,000/ha = $1,463,250 (rounded down)) for the applicant’s land in the “before” scenario.

“Before” scenario 2

88 This scenario is based on Mr Connelly’s “before” scenario, which regards the whole of the land as zoned for urban purposes.

89 Mr Hamilton considers that the highest and best use of the land in this scenario would be for a manufactured home estate, similar to “Riverbend”, which adjoins it. He discounts the potential for a highway service centre in this “before” situation, based on the evidence of the service station valuers, and likewise discounts the potential for a bulky goods complex, based on the Council’s evidence.

90 Mr Hamilton values the land at $190,000/ha, giving a “before” value of $3,700,000 ($190,000/ha x 19.51 ha = $3,706,900 (rounded down)) (Exhibit B4, p17). The $190,000/ha is derived by reducing the “after” scenario figure of $200,000/ha (see below), by 5% because of the benefits added by the bypass, such as (Exhibit B4, p17):

· The overall road system will be superior;

· The Bypass will direct the majority of through traffic away from the site;

· Before the Bypass the site suffered from heavy highway traffic along its entire frontage;

· The prospect of a highway service centre has been enhanced.

“After” Scenario

91 Mr Hamilton relies on the agreed position of the planners that the residue land is to be valued on the basis of its current zoning, and says that the highest and best use of the property after resumption is for an urban purpose, but, after considering both the geotechnical and flooding evidence, that use would be as a manufactured housing estate development, like “Riverbend”. Mr Hamilton does not believe that a prudent purchaser at the date of acquisition would have considered purchasing the property on the basis that it had bulky goods use potential. Nor does he consider it viable, based on the evidence, as a site for a highway service centre.

92 In this “after” scenario the following considerations are pertinent (Exhibit B4, p12):

· The residual land area of 17.01 hectares, shape, exposure and access;

· The flood prone nature of the land with the necessity to fill the land to an estimated depth of 1.25 to 1.75 metres;

· The fill will have to be stabilised, a process which will take a considerable period of time;

· The internal civil costs have been estimated in the S. Connelly report to be $15,600,000 or $91/m2;

· There are no development approvals attaching to the property...;

· The potential for a highway service centre on the site has been examined by 2 valuers who possess expertise in this field. My preliminary advice is:

o The site was not suitable for a highway service centre in the before resumption situation; and

o The site is a marginal highway service centre site in the after resumption situation.

· Development of the site has to make provision for the north - south Emigrant Creek - Richmond River floodway and the Council’s proposed West Ballina arterial road;

· Location of the Ballina Bypass through traffic lanes and overall altered road system which removes much of the through traffic away from the property”.

93 “Riverbend”, in Mr Hamilton’s opinion, becomes the most comparable sale, considering its topography, location, zoning, potential highest and best use, geotechnical attributes, and surrounding development. However, he urges caution with the use of the “Riverbend” sale, because of the time lapse between that sale and the date of resumption of the acquired land.

94 The “Riverbend” site was purchased in December 2001 subject to development approval, and the sale settled in January 2003 for $875,000. To take account of an increase in the market value of residential land in Ballina between 2002 and 2006, Mr Hamilton adopted annual increases of 15% over four years giving a value of $100,000/ha ($10/m2).

95 Of five sales analysed by Mr Wood only one is considered useful by Mr Hamilton, that being Wood sale No. 4 which reveals a value $19/m2. Mr Hamilton dismisses Mr Wood’s sales of sites for bulky goods, supermarkets or regional shopping centres as being of no assistance in establishing the value of the applicant’s land. Considering the sale of “Riverbend” and KW sale No. 4, Mr Hamilton derives a value of $20/m2 in the “after” scenario, arriving at the value of $3,400,000 (Exhibit B4, p14).

96 In summary, Mr Hamilton’s evidence is that if one adopts the zoning in the “before” situation as proposed by Mr Rowan, that being 1(a2) Rural Agricultural, the difference between the value of the land in the “before” and in the “after” will be an increase in value or “betterment” of $1,940,000 ($3,400,000 – $1,460,000). If one adopts the zoning in the “before” situation as proposed by Mr Connelly, that being 2(a) residential, the land would have decreased in value by $300,000 as a result of the acquisition ($3,700,000 - $3,400,000).

D3: Valuation - the planners’ three “after” scenarios

97 In response to the planners addendum report (Exhibit R7) the valuers produced Exhibit R11. (The three relevant scenarios agreed and used by the planners are described in section C8 of this judgment, at [54]ff).

98 The first “after” scenario assumes (1) a liberal view of the requirement to comply with the 9(a) zone objectives, and (2) that the zoning of the land was as it was at acquisition (minus the acquired land).

99 Mr Wood values the residue parcel in this scenario at $4,881,020, and Mr Hamilton at $3,275,000 (Exhibit R11).

100 Mr Wood values the 9(a) component of the land at $320,000/ha ($32/m2), as he does the residential 2(a) land (assumedly the 9(a) and 2(a) land carry the same value because under this scenario residential usage is permitted in both zones). This figure is derived by reducing the $400,000/ha ($40/m2) Mr Wood assigned to the 2(a) land in the “before” scenario (based on his four comparables) by 20% to take into account noise and dust from the new bypass (T25.11.08, p.55, LL15-30). Mr Hamilton values the 9(a) and 2(a) components of the residue land at $200,000/ha ($20/m2) (see T25.11.08, p.86, LL4-21; p.87, LL15-34).

101 Mr Wood values the 1(b) rural - secondary agricultural land and the 1(a2) rural - coastal lands agriculture, in this scenario, at $100,000 /ha ($10/m2), which is based on two comparable sales adjusted upwards to take account of the better locality. Mr Hamilton values the 1(b) and 1(a2) lands at $150,000/ha ($15/m2). Because so much of this evidence was formulated as the case ran on, one is left to decipher the oral evidence and the joint report to derive a basis underlying those figures. Doing the best I can, it would appear that Mr Hamilton has assigned a higher value to the 1(b), and 1(a2) agricultural lands in the “after” situation, compared to the “before” situation, because that land can be used for some ancillary purpose such as stormwater management, landscaping, buffering to the residential component (ie manufactured home estate, as proffered by the planners). The agricultural land on the “Riverbend” site, apparently, is being used for stormwater management. Hence the potential for the use of that component of the land for something greater than agriculture, attaching to it a higher value (T25.11.08, p.93, LL21-32).

102 The second “after”’ scenario assumes (1) a more restrictive view of the requirement to comply with the 9(a) zone objectives (main road purposes only), and (2) that the zoning of the land was as it was at acquisition (minus the acquired land). Mr Wood values the residue parcel in this scenario at $2,434,600, and Mr Hamilton at $2,868,000.

103 Mr Wood values the 9(a) component of the land at $100,000/ha ($10/m2) apparently because of the greater restriction on use, compared with the first scenario. A manufactured housing estate is not permissible on the 9(a) land in this scenario, but it is in scenario 1. Mr Hamilton values the 9(a) land at $175,000/ha ($17.50/m2) in this scenario, again, apparently, because of the restriction on use of that land.

104 Mr Wood values the 2(a) residential component of the land at $300,000/ha ($30/m2). This figure is derived by reducing the $400,000/ha “before” value by 25% to take into account the advice of Mr Connelly that access to that land could be gained only through the adjoining “Riverbend” Estate (T25.11.08, p.55, LL15-30). Mr Hamilton values the 2(a) land in this scenario at $180,000/ha ($18/m2) in order to take into account the access restriction (T25.11.08, p.65, LL5-48).

105 Mr Wood values the 1(b) and 1(a2) agricultural lands at $100,000/ha ($10/m2), as he does for the first scenario. Mr Hamilton values the agricultural lands at $125,000/ha ($12.50/m2), believing that the land could be put to some ancillary use (as in the first scenario), but the value has been reduced, apparently because a manufactured home estate in this scenario would be restricted to the 2(a) land (it not being permissible on the 9(a) land), so there would be less potential for that ancillary use.

106 The valuers have come to an agreed position in regard to this second scenario on the basis that access is available to the 2(a) land, via a public road over the 1(b) land or via a Council arterial road (T25.11.08, p.65, LL18-30). The valuers agree that the value of the land in this scenario would be $2,941,400; the 9(a) land being valued at $175,000/ha, the 2(a) at $200,000/ha, the 1(b) at $125,000/ha, and the 1(a2) also at $125,000/ha.

107 The third “after” scenario assumes (re)zoning as per the Council resolution of 2002, where the 9(a) zone on the residue land would dissipate, with that land becoming part of the existing 1(b) and 1(a2) zones. Under this (re)zoning, over 9 ha would be added to the 1(a2) zone, and 0.4 ha to the 1(b) zone.

108 Mr Wood values the residue parcel in this scenario at $2,434,600 (the same as in second scenario), and Mr Hamilton values it at $2,088,000. The only adjustment Mr Hamilton makes is to decrease the value of the 1(a2) land by $25,000/ha to $100,000/ha ($10/m2) because of the lower potential for use of this land for ancillary purposes (T25.11.08, p.93, LL22-32).

109 The valuers have come to an agreed position in regard to the third scenario, again on the basis that access is available to the 2(a) land, via a public road over the 1(b) land or via a council arterial road (T25.11.08, p.65, LL18-30). The valuers agree that the value of the land in this scenario would be $2,161,637; the 2(a) land being valued at $200,000/ha, the 1(b) at $125,000/ha, and the 1(a2) at $100,000/ha.

D4: Service station valuation

110 The court has been assisted by specialist Service Station and Highway Service Centre (“HSC”) valuation evidence provided by Mr Barry Coad for the applicant and Mr Michael Paris for the respondent, who produced a joint report (Exhibit R10), and gave brief concurrent oral evidence.

111 In the “before” scenario (ie absent the bypass proposal) these specialist valuers agree that “there was little to no potential for a service station or HSC” (Exhibit R10, fol 4). In the “after” scenario (with the completion of the bypass) the valuers opine that the residue land has some potential for a HSC, but high construction and additional costs are “significant detriments to the viability of this service site” (Exhibit R10, fol 5).

112 Mr Paris’s conclusion during concurrent evidence was that a HSC “has some potential, but I don’t think it’s viable…” (T 25.11.08, p22, L45 – p23 L1).

Geotechnical evidence

113 The court has been assisted with geotechnical evidence prepared by Dr Fiona MacGregor, as a Parties’ Single Expert (Exhibit R4). According to Dr MacGregor (p3/fol 97, pars 6.1-6.2) a prudent purchaser of the applicant’s land “would engage a geotechnical consultant to provide an assessment of the possible geotechnical constraints to development of the site... The geotechnical assessment may include drilling of test bores or cone penetration tests, depending on the amount of money the purchaser is prepared to spend and whether permission to access the land can be obtained from the vendor.”

114 A visual inspection of the site and the publicly available documents point to the following geotechnical features of the site (p5/fol 99, par 8.1):

· a flat low lying site with poor drainage and a high groundwater table;

· probably underlain by thick layers of soft compressible soils; and

· probably underlain by acid sulphate soils.

115 During her oral evidence Dr MacGregor, relying on the West Ballina Constraint Study, estimated that the depth of the compressible soils on the applicant’s land to be approximately “8 metres on the western side increasing to greater than 10 metres, 15 metres to the east “ (T21.11.08, p.47, LL39-46).

116 According to Dr MacGregor the main geotechnical constraints to development of the subject land, in both the “before and after” scenarios, are likely to be (p6/fol 100, par 8.2):

· long term settlement of compressible soils under loads of structures and/or filling;

· poor foundation conditions;

· potential for acid sulphate soils, if excavation of soils below 1 m is required;

· high groundwater table would also affect excavations below 1 m; and

· poor trafficability, particularly after wet weather.

117 Accordingly, the site is more constrained under certain uses than others. The following extract from Dr MacGregor’s report sets out her views on the constraints on use (pp6-7/fol 100-1, par 8.5-8.12):

“ 8.5 A) Rural residential / sugar cane farm . The site has previously operated as a sugar cane farm and a previous residence on the site has been removed. The only geotechnical constraint to operating a sugar cane farm on the site is that the presence of potential acid sulphate soils beneath the site means that excavation of new drainage trenches or deepening of existing drainage trenches may require treatment of the excavated soils to prevent acid drainage into nearby waterway. Trafficability across the site will continue to be difficult after periods of wet weather.
8.6 A rural residence may be constructed on the site, as previously, but it would be ideally be (sic) a flexible timber structure supported on pole foundations elevated above the ground surface to be higher than flood levels. A standard brick or concrete house constructed on a filled platform would have a number of issues as indicated below.
8.7 B) Residential dwelling house subdivision . Most current residential subdivisions are developed such that lot purchasers can build houses supported on concrete slabs-on-ground. In this area this type of subdivision would require a filled platform of 1-2 m to raise the ground level above the 1 in 100 year peak flood level. Assuming that there are deep compressible soils beneath the site then there is likely to be significant ongoing settlement due to the filling and the loads of the houses which could result in cracking of the new houses, roads and associated underground services. The settlement is likely to continue for decades and the damage to houses could be severe.
8.8 C) Caravan park / motel / hotel . All of these options are likely to require construction of fill platforms to raise the site above flood levels and the fill platforms will undergo significant ongoing settlement. The caravans in a caravan park can be moved and relevelled to allow for this settlement but associated structures such as amenities blocks, roads and underground services are likely to be damaged by the settlement.
8.9 Motel and hotel buildings tend to be more rigid structures and, unless they are fully articulated flexible structures, would have to be designed as suspended structures supported on deep pile foundations. Even if the structures are fully suspended, there are still likely to be interface problems between the piled building and the surrounding pavements and any underground services as the fill around the building continues to settle over time.

8.10 D) Service station / bulky goods retail / motor showroom . It is assumed that all of these options would again require a fill platform to be constructed to raise the site levels to above the 1 in 100 year flood level. All the structures would be affected by the ongoing settlement unless they are designed as fully suspended structures supported on piles. Even if the structures are fully suspended on piles then any surrounding pavements and connecting underground services will still be affected by the settlement.
8.11 The service station option has the added complication of requiring excavation for underground tanks into potential acid sulphate soils with a high groundwater table. Local temporary dewatering would be required during excavation, together with treatment of any acid sulphate soils. In addition the buoyancy of the underground tanks, particularly during flood events, would need to be considered.
8.12 E) Manufactured home residential development . Manufactured homes are better suited to development in this area because they can be moved and relevelled as the filling platform settles. The roads and any underground services, however, would still be affected by the ongoing settlement and there would be a need for flexible service connections to the homes and allowance for ongoing maintenance or replacement of services and roads.”

118 Various mitigation strategies are available to address the geotechnical constraints on the applicant’s land. The “preloading” or “surcharge” method is the subject of some discussion in the evidence (see Dr McGregor’s report Exhibit R4 at p8/fol 102, and Mr Connelly ‘s report Exhibit B1, p29). When talking about the long term settlement of deep compressible soils, settlement can be divided into two components: primary settlement - the consolidation of the soils; and secondary settlement – “creep”. Dr McGregor says (p7/fol 101, par 9.2):

“The magnitude and time required for primary settlement is usually considered to be a function of the properties of the clays, the applied load, the thickness of the clay layers and the possible drainage paths. Secondary creep is more unpredictable, continues for many years and is not necessarily related to the applied load.”

119 The construction of a fill embankment to a level higher than the required soil level is proffered as the easiest treatment option (surcharging or preloading), but it may take 10-20 years for settlement to reach a level which would be suitable for development, especially if there are thick layers of soft clays. Constructing the fill embankment significantly higher than the proposed soil level ie “surcharging”, should accelerate settlement, but more than 2-3 metres of fill embankment may cause shear/slip failures through weak soils. Surcharging may still mean many years of settlement before development is deemed possible. Installation of wick drains and construction of embankments supported on a grid of piles and a bridging layer of crushed rock (piled embankment), may reduce settlement time but is very expensive (see p8/fol 102, pars 9.3-9.6).

120 Absent a suitably engineered fill embankment, any structure will have to be constructed on supporting piles (made of either driven timber or precast concrete piles) drilled into a firm layer, estimated at 10-20m (p8/fol 102, par 9.7).

121 Excavation requires stockpiling of soil and treatment with lime to neutralise any acids within acid sulphate soils. “Excavation below the groundwater will require temporary dewatering which would involve installation of a number of spear points around the perimeter of the proposed excavation and possibly also construction of a low permeability barrier wall.” (p8/fol 102, pars 9.8-9.9).

122 With regard to poor trafficability, Dr McGregor observes (p9/fol 103, par 9.10):

“[I]n dry weather it is likely that the surface soils will form a hard crust on which construction traffic can drive. During wet periods, however, this surface layer is likely to become saturated and a bridging layer comprise (sic) a layer of compacted crushed rock probably placed over a layer of geogrid will be required to allow vehicles to move across the site.”

Hydrological evidence

123 The court has been assisted by hydrological evidence prepared by Dr Ian Joliffe, as a Parties’ Single Expert (Exhibit R3). Dr Joliffe would advise a hypothetical purchaser (fol 14, par 8.2) to engage “a competent person to make the following enquiries:

· View the Council web site and obtain information that was publicly available from that source in respect to the site topography, existing zoning, potential changes to zoning, applicable policies applicable to the site, draft policies that were on exhibition or had recently been on exhibition and any other relevant information;

· Viewed the RTA website to examine any applicable documentation relevant to the site; and

· Possibly visit Council to make further enquiries of the planners, and/or possibly engineers after the above had been reviewed and considered.

Several of the available documents from readily available sources have identified the site as being flood prone for the 100 year ARI event. This is the event that is generally adopted when considering whether a property is flood affected. ”

124 One of those publicly available documents is the “Ballina Floodplain Management Study” prepared by WBM Oceanics Australia, in October 1996 (Exhibit R2, tab 53), which aids in “[p]lanning for floodplain development and minimising flood related problems” (fol 689). Five anticipated development scenarios involving various filling of land and use of water canals or channels were modelled. One potential floodway (FW1) would encroach upon the applicant’s land (DA3) along the western portion in a north-south direction (fol 776), and would be 40 metres wide (fol 777).

125 In order to construct new buildings on the land it “would be necessary to fill the site to the 100 year ARI flood level without impacting on adjoining properties” (Exhibit R3, fol 15). Regard would also be had to the 40 metre wide floodway (cf 60 metres in par [48]) envisaged in the floodplain management study.

F. Consideration

126 Mr Maston, for the respondent, relies on (1) the aftermath of the Council amalgamation in 1977, and (2) Council’s support for Department of Agriculture desires for productive land to be retained for cane growing (see Exhibit R2, vol 2, tab 44), as evidence of Council’s long-held planning preference for Ballina to expand to the north, rather than to the west (see T 9.12.08, p36), the prominent impact of the 1973 bypass route having become a/the dominant influence on planning in the town area.

127 He downplayed the significance of Mr Connelly’s role in relevant events and decisions during his service with the local Council, and presented in his submissions comprehensive, but controversial, responses to Mr Connelly’s evidence, which drew from Mr Webster allegations of misrepresentation (T 9.12.09, p51ff).

128 On the other hand, Mr Webster, for the applicant, is very critical of the evidence given by both the “parties’ single experts”, Drs Joliffe and McGregor, evidence which the respondent accepts, relies upon, and was prepared to defend, on the issues of development constraints.

129 The court had the benefit of hearing and observing the two single experts during Mr Webster’s searching cross-examination, in the course of which the court was taken to some additional relevant expert evidence (the 1996 Carr report, in Exhibit R2 at tab 43, and the 1999 Coffey study, in Exhibit B6. See also Exhibit B7, Item 1). Mr Webster even put to the court that I should prefer Mr Connelly’s evidence to Dr McGregor’s on matters clearly within her area of specialty and beyond his. The court found Mr Connelly’s factual (rather than expert) comments on her report (eg at p29 of Exhibit B1) useful, but he is not an expert in such matters.

130 In the end analysis I can find no reason not to accept the opinions Drs Joliffe and McGregor expressed on the present matter, so far as they go – the site conditions call for compression of soils, installation of, flexible water/sewerage services, and other special measures as part of any development. Requirements based on the relevant flood studies will also clearly need to be imposed and catered for. The discovery by a hypothetical purchaser of some of the material to which Mr Webster pointed Dr McGregor should not be readily assumed – Dr McGregor considered it would depend on how much such a purchaser might wish to spend on such investigations.

131 So far as the possible returns from establishment of a highway service centre are concerned, I am satisfied, on the agreed evidence of Messrs Coad and Paris, that, even if it were feasible to expect consent, such a venture is simply not viable.

132 While I make no criticism of the very professional approach taken by the various other experts engaged by the parties, I find myself, as the judicial valuer, ultimately preferring the town planning evidence of the applicant (Mr Connelly) and the valuation evidence of the respondent (Mr Hamilton).

133 Mr Connelly has the distinct advantage of past professional involvement with Council as it grappled over his time (1981-86) with the complex issues at the core of this case – (1) extreme and constant urban pressures on and close to the Ballina town centre, (2) the virtual sterilisation of a substantial area of otherwise suitable land over a long period of years (1973-1997) before the dramatic change in preferred route for the highway bypass, and (3) the natural development constraints on and near the applicant’s land.

134 Although Smith No.1 and Smith No.2 concerned the bypassing of Alstonville, rather than of Ballina, the experience and observations of McClellan ChJ, and later Talbot J, are apposite to this present case. At [54]-[56] of his decision in Smith No.1, McClellan J, like me in this case, arrived at a preference for the witnesses who had relevant and close past associations with local Council decision-making. In this matter Mr Rowan’s Council experience (Woollahra 1991-93), though relevant and more recent than Mr Connelly’s, was in a vastly different development environment.

135 Mr Connelly’s evidence regarding the Ballina Council’s residential development strategy (1988) was particularly significant to my consideration of the case, whereas Mr Rowan considered that material of only peripheral relevance. Also, there is clear evidence to refute Mr Rowan’s principal opinion that the western boundary of residential development was preferred by Council to be Fishery Creek.

136 I have concluded that the most comparable property studied in the evidence, and inspected on the view, is “Riverbend”, rather than “River Oaks” (now Ferngrove Estate). While there are some unusual features about the “River Oaks” sale as such (see Talbot J in Smith No.2 at [19]), the evidence suggests that both land holdings may well suffer from the same geotechnical shortcomings or restrictions, perhaps to differing degrees (see Exhibit R13, p2 and Exhibit R14, but cf Mr Connelly’s evidence T 24.11.08, pp44ff).

137 The fact is that a more conventional residential development was allowed on “River Oaks” than on “Riverbend”, which is adjacent to the residue land. As Mr Connelly remarked, there was apparent movement over time in the Council’s approach to risk, but I accept Mr Hamilton’s evidence that the “River Oaks” site is superior to the applicant’s land in several respects.

138 Accepting that the highest and best use of the residue land would be as a manufactured housing estate, along the lines of the adjacent similar development at “Riverbend”, I have concluded that such use of the applicant’s land will make it simpler and more likely that any remaining question of access will be able to be resolved via “Riverbend” (T 25.11.08, p55, LL 20-30), if not by the use of any of the three public roads there will be in the immediate vicinity after the motorway is built (T 9.12.08, p43, LL1-14).

139 So far as the “Riverbend” sale having occurred so long ago is concerned, I am satisfied that Mr Hamilton has made adequate allowance for the movement in the market between the date of the sale and the date of acquisition (four years at 15% - see T 25.11.08, p35, LL37-42, and par [94] above).

140 I do not accept Mr Wood’s opinion that the bypass route will have a negative impact on residential development of the applicant’s land. There is clear evidence to suggest it may indeed improve it, because of the effect of prevailing wind patterns on possible problems in the area with dust and noise.

G. Conclusion

141 The acquired land should be valued on the basis of Mr Connelly’s Scenario 2 in the “before” situation, and the planners’ joint Scenario 1 in the “after”.

142 Accordingly, I have concluded that the value of the parent parcel before the subject acquisition was $3,700,000 (see par [90]), and the value of the residue parcel after acquisition is $3,275,000 (see par [99]).

143 I, therefore, determine compensation as follows:

Market Value $425,000

Injurious affection Nil

Disturbance (as agreed) $7,750

$432,750

144 As the respondent argued for nil compensation, and the applicant secured substantially more than the respondent’s statutory offer, the principles stated in my judgment in BMP Manufacturing Pty Ltd and Ors v Road and Traffic Authority of New South Wales (No.2) [2009] NSWLEC 41, and the cases there discussed, suggest that the applicant is entitled to an order that the respondent pay its costs on a party-party basis, as agreed or as assessed according to law. However, as the question was not argued at the hearing I will formally reserve it, in the hope that the parties can reach an agreement.

145 The formal orders of the court will be:

1. Compensation for the land compulsorily acquired by the respondent from the applicant is determined, at the date of acquisition 23 June 2006, in the sum of $432,750.
2. The question of costs is reserved.
3. All the exhibits may be returned.