Bautovich v The Minister administering the Environmental Planning and Assessment Act 1979

[2004] NSWLEC 389

Land and Environment Court

of New South Wales

CITATION:	Bautovich v The Minister administering the Environmental Planning and Assessment Act 1979 [2004] NSWLEC 389
PARTIES:	APPLICANT George Bautovich RESPONDENT The Minister administering the Environmental Planning and Assessment Act 1979
FILE NUMBER(S):	30883 of 2003
CORAM:	Talbot J
KEY ISSUES:	Compulsory Acquisition of Land :- effect of common constraints on englobo rate established by sales evidence
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 s 94 Pipelines Act 1967 Rivers and Foreshores Improvement Act 1948 s 2, s 3A, s 22B Liverpool Local Environmental Plan 237 Liverpool Local Environmental Plan 1997
CASES CITED:	Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2004] NSWLEC 315
DATES OF HEARING:	31/05/2004, 3/06/2004 (site inspection), 4/06/2004, 10/06/2004, 21/06/2004, 22/06/2004, 23/06/2004, 24/06/2004, 25/06/2004
DATE OF JUDGMENT:	07/22/2004
LEGAL REPRESENTATIVES:	APPLICANT Mr N A Hemmings QC SOLICITORS Allens Arthur Robinson RESPONDENT Mr J J Webster SC with Ms M Carpenter (Barrister) SOLICITORS Abbott Tout

JUDGMENT:

IN THE LAND AND

ENVIRONMENT COURT

OF NEW SOUTH WALES

30883 of 2003

Talbot J

22 July 2004

George Bautovich

Applicant
v

The Minister administering the Environmental Planning and Assessment Act 1979

Respondent

Judgment

Introduction

1 Until his land was compulsorily acquired by the respondent, the applicant was the owner of an area of land comprising 16.19 hectares, being lot A in DP 364030, known as lot A Stuart Road, Hoxton Park (“the land”). The compulsory acquisition took place on 15 November 2002 upon the publication of a notice in the NSW Government Gazette No. 220. The land was acquired by the respondent, pursuant to the provisions of the Environmental Planning and Assessment Act 1979 (“the EP&A Act”), for the purposes of the EP&A Act.

2 The land was identified and designated as Corridor in the Sydney Region Outline Plan published in 1968. Interim Development Order No. 43 placed the land in a holding zone on 4 July 1975 and the land was zoned 6(c) - Recreation Corridor by Liverpool Local Environmental Plan 1997 (“LLEP 1997”) on 9 August 1997.

3 It the applicant’s case that the land would have been zoned Residential 2(e1) under Liverpool Local Environmental Plan 237 on 6 July 1992 and Residential pursuant to LLEP 1997, subject to environmental constraints. The respondent does not dispute that a major part of the land would have been zoned Residential 2(e1) and Residential at the above dates respectively but part of the land, it says, would have been placed in a Special Uses 5(a) – Drainage zone.

4 The land is traversed across the northwestern corner by two natural gas distribution pipelines within the area of an easement resumed on 23 March 1976. Construction of the pipelines was carried out pursuant to a licence approved by the Minister pursuant to the Pipelines Act 1967.

5 Part of the land supports vegetation classified as Cumberland Plains Woodland (“CPW”). The respondent’s claim that part of the land falls under the provisions of the Rivers and Foreshores Improvement Act 1948 (“the RFI Act”) is disputed by the applicant. If, as the respondent contends, a drainage line or stream running through the land falls with the definition of a river under the RFI Act, a permit under s 3A of the Act would be required for any works within 40m of the watercourse.

6 Issues in relation to bushfire risk and protection of the CPW have largely been resolved between the experts. An argument remains as to whether an area of trees in the corner adjacent to the easement for pipeline would be preserved for aesthetic reasons.

7 In accordance with the Expert Witness Practice Direction (“the EWPD”), the valuers for the respective parties have conferred and agreed to give concurrent evidence in relation to how the market value of the land would have been determined at the date of resumption. This is dependant upon the Court’s finding as to whether the land would be valued at a residential englobo rate of $190m2 or whether it would be valued on the basis that the CPW land, gas pipeline easement land and any drainage reserve would not be accepted by Liverpool City Council (“the council”) as part of a contribution made pursuant to s 94 of the EP&A Act, in which case a differential rate of $70m2 or $35m2 would have been paid to take account of the effect of the applicable constraint over the relevant parts of the land.

8 The applicant recognises that the land could have been subject to the provisions of a Development Control Plan (“DCP”) that would have identified lands to be made available for open space.

9 If the Court determines that the land would have been sold for a price reflecting an englobo valuation on the basis that the CPW land and the gas pipeline easement land be accepted as part s 94 contributions, the valuers agree that at the rate of $190m2 the purchase price would have been $30,760,000, plus items of disturbance. Depending upon to what extent the constrained land would have been rejected for s 94 contribution purposes, they further agree that the purchase price could have been $23,051,000 or $25,227,500, plus disturbance.

10 The underlying issue to be determined is whether comparable englobo sales demonstrate a sale price at the rate of 190m2 for residential land notwithstanding similar environmental constraints to those found on the subject land. If that is the case, then many of the issues raised regarding the exact extent of land to be set aside for open space or drainage purposes and whether it would be accepted as part of s 94 contributions will not be relevant. On the other hand, if it is apparent from an analysis of comparable sales that purchasers do take into account the extent of the constraint and whether constrained land will be accepted for the purposes of s 94 it will be necessary to resolve the various issues arising in respect of the application of a diminished rate per square metre for affected land.

Sales evidence

11 Terence Alfred Large, under instruction from the applicant, assesses the value of the subject property primarily in relation to comparable sales of land zoned Residential 2(a) for immediate development or land zoned Rural 1(e) in the West Hoxton precinct, which, he says, will be developed in the next two years. Kent Donald Wood, the respondent’s consultant valuer, considers the appropriate prime method of valuation to be used is the direct application of englobo sales evidence in the immediate and nearby localities at or about the date of compulsory acquisition supported by the hypothetical development calculation which a prudent developer would undertake as part of its feasibility assessment.

12 Marco Grezar, from the State Valuation Office considered, in his primary valuation statement, that the best valuation method is by adopting a hypothetical development of the site involving a determination of the most suitable development for the property, estimating the cost of development and allowing a margin for developers expected profit and risk. Surveyors were commissioned to design a subdivision of the land.

13 After the valuers were directed to confer pursuant to the EWPD, they confined the alternative methods of valuation in the manner described in [9] above, more particularly as follows:-

(a) The subdivision pursuant to the Hardy Plan:

On the basis that the whole of the land can be developed, the Cumberland Plain Woodland and the Gas Pipeline Easement land would be accepted as part Section 94 Contributions as per the Hardy Plan, at Residential Englobo Values we agree the value of the acquired land would be at the rate of $190 per square metre ($ 30,760,00 ), plus items of disturbance.

(b) The subdivision pursuant to S. Abbott Plan No. 2:

On the basis that the Cumberland Plain Woodland, Gas Pipeline Easement land and Drainage Reserve would not be accepted as Open Space land (Section 94 Contributions), at Residential Englobo Values in accordance with S. Abbott Plan No 2, plus items of disturbance:

10.64 hectares at $190 per square metre $20,216,000

2.55 hectares at $70 per square metre $1,785,000

3.00 hectares at $35 per square metre $ 1,050,00

$23,051,000

(c) The subdivision pursuant to S. Abbott Plan No 3:

On the basis of S. Abbott Plan No 3:

Developable land –12.62 hectares @ $190 per square metre $23,978,000
Constrained land – 3.57 hectares @ $ 35 per square metre $ 1,249,500
$25,277,500
(d) Englobo land:
In determining the values under (a), (b) and (c),it was agreed that the best evidence of value was at a rate per square metre based on sales of Englobo Residential Land, having regard to land use categories, plus items of disturbance.

14 The Hardy Plan, S Abbott Plan No. 2 (“Abbott Plan 2”) and S Abbott Plan No. 3 (“Abbott Plan 3”) are annexed to this judgment and are respectively marked “A”, “B” and “C”.

15 In his original valuation, Mr Grezar noted a lack of supply and, therefore, a lack of sales evidence of residential zoned englobo sites. He also observed that recent sales tended to be sites zoned Rural 1(e) selling up to $160m2. Nevertheless, he noted a consensus among valuers and agents operating in the market that values at the date of acquisition were at about $185m2. His original value of the subject site at $20,730,000 shows $128.04m2. Given the lands constraints and size, that rate was considered to be in keeping with available evidence of englobo site sales. Mr Grezar agrees with Mr Large that the two-year head start that the subject land would have over the Hoxton Park Aerodrome precinct in the Rural 1(e) zone would equate to approximately two years’ interest and holding charges. The sales of Rural 1(e) land noted by Mr Grezar are in the range from $124m2 to $167m2. Mr Large has identified comparable sales of Rural 1(e) in a range of $160m2 to $200m2, which he adjusts to between $185m2 up to $230m2 to be comparable with the subject land.

16 Based on a potential yield that he says takes account of constraints, Mr Wood has prepared a schedule of comparable englobo sales of lands zoned “Residential”, ranging from $145m2 to $188m2 (as adjusted). In his original valuation, he attributed a rate of $60m2 to areas subdivided into large lots and $25m2 to constrained land and drainage reserves.

17 The figure of $190m2, identified by the valuers in their agreed statement, represents a compromise, which they respectively recognise falls within the acceptable margin of error for the value of developable land. Whether the hypothetical purchaser would apply the rate of $190m2 across the whole of lot A is the subject of the debate.

18 It is not in dispute that a suitable model for subdivision of the subject land is the Landcom subdivision at Greenway Park, which is separated from the subject land only by lot B in DP 364030 as shown on Abbott Plan 2 and Abbott Plan 3.

19 Mr Large relies upon the Hardy Plan, which he says embraces the natural characteristics associated with CPW, bushfire control requirements and drainage lines and incorporates them into the Master Plan for the estate. It is his evidence that most of the comparable sales analysed have some form of defect, be it natural drainage, CPW, flooding, aircraft noise or heavy traffic impact, whereas none of the comparable sales have a high elevated location with the views of the city skyline that are available on the subject land.

20 Taking a different approach to Mr Large, Mr Wood identified the area of developable land to calculate the potential yield on the basis that land the subject of CPW or easements is not generally accepted by the local authority in lieu of s 94 contributions. Moreover, his opinion is that, where dedication of land is accepted as part of s 94 contributions, it is accepted at a value which is considerably less than it would be if the land was unaffected by the constraints. Mr Wood does not agree that the CPW and gas pipeline easement land shown on the Hardy Plan would have been accepted for the purposes of s 94 contributions. However, if the Court finds to the contrary, he would agree that the theoretical purchase price of the land at the date of resumption could be calculated on the basis set out in section (a) of the joint statement set out in [13] above. Mr Wood’s opinion is that the hypothetical prudent purchaser would have taken account of the doubt whether the constrained lands would be accepted as open space land as a credit towards s 94 contributions and would have adopted the more conservative approach identified in Abbot Plan 3 and excluded the easement for pipeline from any potential lot.

21 The area of 2.55 hectares shown, at the rate of $70m2 for the purposes of Abbott Plan 2, is the western corner of the land incorporating (within large lots) the easement for pipeline and an area of bushland identified by the respondent’s experts as being valuable, either as CPW or because of its visual amenity. The three hectares shown at a rate of $35m2 for the purposes of Abbot Plan 2 takes account of CPW vegetation in the northern and southeastern corners of the land, together with the drainage areas. In Abbott Plan 3 the 3.57 hectares allowed at $35m2 incorporates the CPW vegetation in the northern and southeastern corners of the land as well as 0.57 hectares, which is the area of the pipeline easement. The different treatment of the area of the gas pipeline easement is that in Abbot Plan 2 it is incorporated within the larger lots.

22 Both Mr Wood and Mr Large place particular reliance upon a sale of land comprising 5.98 hectares at the corner of Camden Valley Way and Bernera Road, Prestons (“the Prestons sale”) as a primary comparable sale. However, they analyse it in conflicting ways. The sale price of $10,000,000 reflects a raw rate of $167m2. When adjusted for time at two per cent from the date of sale to the date of resumption, the equivalent value, according to Mr Large, is $194m2. Mr Wood adjusts the sale price by discounting for a seven month deferred settlement to $161m2 and then relies on that adjusted figure to support Abbott Plan 2 and Abbott Plan 3. On the other hand, Mr Large applies a two per cent adjustment on $161m2 to the date of resumption to show $187m2 or, by applying the Residex average at 2.5 per cent, $193m2 or, at a rate of three per cent, $200m2.

23 Furthermore, according to Mr Large, Mr Wood’s analysis of the Prestons sale does not take into account the additional cost of demolition of an old milk depot on the property, fill removal, possible contamination remediation costs, extensive road widening to two major roads, the close proximity of a transmission line easement and the local industrial precinct, CPW in the centre of the lot (as distinct from the area shown as environmentally significant land on the LLEP 1997 map) drainage and flood liable land and significant truck movements between Camden Valley Way and the industrial precinct via Bernera Road. Mr Wood, on the other hand, says that, according to his enquiries, the milk depot was demolished by the vendor and that there was an environmental assessment carried out on the site prior to purchase which found that site contamination does not pose a significant risk and nothing untoward was encountered. Furthermore, he says, in relation to endangered species, the CPW is significantly degraded and not worthy of retention. Mr Wood also allows for 2,300m2 at only $25m2 in respect of that part of the land zoned Special Uses Drainage 5(a). He then adjusts the sale price to $166m2 for land that, he says, can be developed by allowing for the deferred settlement. He makes no allowance for the presence of CPW. After allowing an adjustment of 12 per cent for market creep up to the date of resumption, Mr Wood concludes that the developable land was purchased for the equivalent of $187m2 at the relevant date.

24 The Court now has evidence from Roger Steven Lembit, the applicant’s environmental consultant, and Ian Andrew Perkins. Mr Perkins has been retained by the respondent to give evidence in regard to remnant ecological communities. They agree that there is an area of degraded CPW on the western part of the land at Prestons, higher quality remnants of a different endangered community comprising Sydney Coastal River Flat Forest and a small area of CPW on the eastern boundary covering in all approximately one third of the land. Furthermore, there is evidence that the creek floods beyond the area of the 15m drainage easement and that a 30m wide drainage reserve will be required.

25 Initially, Mr Wood analysed the Prestons sale by treating the price as an overall rate per square metre and made no distinction between land affected by CPW or drainage or any other of the defects identified by Mr Large. Mr Large notes generally that Mr Wood did not treat any of the comparable sales relied upon in the same manner as he and Mr Grezar now contend the subject land should be analysed and dissected. Mr Large’s opinion is that a hypothetical purchaser would look at the subject land, observe that it has some CPW present and that it has a measure of drainage problems but nonetheless, after assessing the area, would determine to pay a lump sum. He does not believe that the initial assessment carried out by a purchaser would have the benefit of a series of expert reports identifying the specific detriments and the exact total area that could be developed.

26 Apart from the Prestons sale, all of the sales relied upon by Mr Large were zoned Rural 1(e). Mr Large says these sales corroborate his valuation of the subject land at an overall englobo rate. One parcel of land in the Rural 1(e) zone at 35 Fifteenth Avenue, West Hoxton sold three months after the date of resumption at the rate of $193m2, notwithstanding the evidence that approximately half of the land is covered by CPW and that it backs on to land nominated as open space in the Liverpool Contributions Plan 2001. The Court has the benefit of direct evidence from the two horticultural consultants, Mr Lembit and Mr Perkins, who agree that there are trees and understorey plants which represent CPW on the site and they cover approximately half of the land.

27 It is Mr Wood’s contention that the sales used by Mr Large at West Hoxton in the Rural 1(e) zone had potential under the South Hoxton Park Aerodrome Master Plan (also known as the Smart Growth Plan) that is quite distinct from the type of residential development envisaged for the subject land consistent with the Greenway Park development. Apart from that distinction, he says, the sales occurred in the different context of land designated for residential development but not yet re-zoned to allow that to occur. Therefore, the sales in the Rural 1(e) zone must be approached bearing this in mind.

28 Mr Wood refers to a sale at 50-60 Fifteenth Avenue, West Hoxton zoned part 2(a) Residential and part 1(e) Rural, which after adjustment for time, he analyses at $188m2. Apart from a road widening impact, he says this land has no identified physical constraints. Mr Wood included the area of 2,166m2 set aside for road widening at residential value on the assumption that the council would ultimately pay the owner for that land when it was acquired. He did not check whether the LEP identified the land as reserved for a road. In fact, the LEP shows merely that it was excluded from the 2(a) zone and, accordingly, remained in the 1(e) zone. He agreed that if there was no obligation on the council to acquire the land and if it was zoned residential it could have been developed for residential purposes. There is no evidence the council is required to acquire the area of 2166m2 and, accordingly, it is reasonable to assume that the purchaser paid $188m2 for the whole of the land, including the land zoned 1(e) Rural.

29 Mr Wood also paid attention to a sale of the former Hoxton Park School site at the corner of First Avenue and Hoxton Park Road. At the time of sale it was in a Special Uses School zone although it was a condition of the contract that the land would be re-zoned Residential. After allowing for market creep, Mr Wood initially placed a value on this land, which he calculated at $141m2. In oral evidence, this figure was altered to $149m2, after adjustments. The land is subject to flooding, has environmentally significant constraints and is affected by a transmission line easement. Although Mr Wood agreed that the land was inferior and situated in an inferior location to the subject land, it would be easier to develop than the subject land. He claims that the sale supports the overall englobo rate of $142m2 based on the Abbott Plan 2.

30 Mr Wood further says the same result can be derived for the Abbott Plan 2 from a sale of land in Cowpasture Road, West Hoxton adjusted at $145m2 for market creep. Apart from a minor drainage difficulty, he claims the land had no other constraints. The sale, however, was a complicated one according to Mr Large and does not, therefore, provide good evidence of value.

31 Mr Grezar generally agrees with Mr Wood and favours adoption of the Abbott Plan 2 scheme. He believes that any hypothetical purchaser would approach the purchase of land that has constraints differently to land that does not. He says that he finds it hard to accept that, with the exception of the constraints, a hypothetical purchaser would look at two lots that were identical in all other respects and arrive at the same value for both lots.

32 Mr Wood introduced a late sale in respect of land situated at 175 McIver Avenue, West Hoxton. It analysed at $106m2. The land was covered by the Smart Growth Plan. However, according to Mr Wood, approximately one third of the site was affected by CPW. His deduction is that by adopting a value of $160m2 for land free of constraint this sale shows that the purchaser would have placed no value on the environmentally sensitive CPW land. According to him, 8,000m2 out of a total area of 2.44 hectares could not be developed. At the very least, he says, the sale demonstrates that a purchaser will differentiate between unaffected land and constrained land. Under LLEP 1997, the front section of this land is in the 6(c) Recreation – Corridor zone. In the draft Amendment No 71 Plan the rear part is shown as being within an environmental corridor. The front section is designated for standard residential and small lot residential development in accordance with the Smart Growth Plan. A cursory reading of the LEP and draft amendment LEP maps suggests that the purchaser would have assumed that more than one half of the land could not be developed for residential purposes as a consequence of the zoning.

The effect of the constraints

33 The circumstances set out in (a) at [13] above clearly envisages that the council would accept dedication of the CPW and gas pipeline land as a part of a s 94 contribution.

34 After being briefed by Mr Grezar and a representative of the respondent, the Urban Release and Local Planning Co-ordinator – City Development for Liverpool City Council, Milan Marecic provided a written opinion to the respondent’s solicitors on 31 May 2004. After noting that the proposed open space areas identified in a proposed plan of subdivision produced to him at the briefing were burdened by the constraints of a gas pipeline easement and stands of threatened species vegetation, such as CPW, he observes the following:-

Therefore, as a Council officer it appears highly unlikely that I could recommend to Council that it:

· Take ownership of land as open space given the current restriction of the gas easement or threatened species vegetation.

· Take ownership of the land through dedication as part of a formal development application, or

· Identify the land for inclusion within a Section 94 Contributions Plan.

35 In his oral evidence Mr Marecic was careful to qualify his opinion as follows:-

Items are only identified in the section 94 plan if they can be used as a public benefit or a park or something like that, it’s not solely identified for the Cumberland Plain Woodland.

36 In cross-examination, he agreed that at the relevant time any report or recommendation to the council in the assumed circumstances would have been subject to approval by, and finalised by, the Group Manager of Community and Environmental Planning, Gerard Anthony Turrisi. He further agreed that the decision as to whether part of the land was, or was not, suitable as open space would be the decision of Mr Turrisi after discussion with other managers within the council. Mr Marecic also agreed in cross-examination that if land which contained CPW or other threatened species was designated in a Master Plan for open space the council would nevertheless accept it as an open space contribution, provided the Master Plan was linked to a contributions plan prepared at the same time. Mr Marecic acknowledged that the South Hoxton Park Aerodrome Master Plan designated some areas containing CPW, and described as environmentally sensitive land, as open space and that the LEP for that area, which has now been proclaimed, provides for the council to acquire land for open space notwithstanding that it contains CPW. The distinction to be made, however, is that the provisions applied to the South Hoxton Park area do not relate to s 94 contributions. Nevertheless, they do recognise that the council is prepared and required to acquire land for open space notwithstanding that it contains CPW.

37 Although Mr Turrisi is no longer employed by the council, he has given evidence in support of the applicant’s case. He says that on 15 November 2002 the final determination of the theoretical circumstances addressed by Mr Marecic would have been referred to him. In his written statement of evidence Mr Turrisi asserts that the council would not have objected to the use of the CPW land on the subject property as private open space in the form of community title or the like and that he would have considered on its merits a review of the s 94 contributions that would have applied given that open space was being made available for the residents of the estate. He also would have advised that as the council accepts land containing utility services such as transmission lines and towers with or without easements as land dedicated for s 94 contributions, there would be no reason the council would not have accepted the land which is subject to the easement for a gas pipeline as open space. He would have advised an enquirer at the relevant time that the council could accept dedication of such utility land as a s 94 contribution.

38 Mr Turrisi says there is a planning advantage by providing open space in the northwest corner of the subject land because it would create connectivity with a regional open space corridor linking up to land reserved for that purpose in the Greenway Park estate. He would have accepted this land as open space notwithstanding that it contained CPW. He says that a similar principle would have been applied to the area containing CPW in the southern corner of the property. He agrees that the land within the gas pipeline easement is similar to areas designated as open space in the council’s development control plans and that it would also have a planning role as open space in terms of the issue of connectivity.

39 In cross-examination Mr Turrisi acknowledged, subject to a review of the s 94 plan to take account of the particular circumstances, that if land was not identified in a DCP or the relevant contributions plan as land to be dedicated for open space the council would only accept it at no cost to the council.

40 The Court has been told by the Landcom Manager of the Greenway Park development, Michael Anthony Burt, that only land identified in the s 94 contributions plan was accepted by the council as part of the contribution from Landcom and that other areas were dedicated at no cost to the council.

41 Relying on the evidence of Mr Turrisi, it can be reasonably assumed that the DCP applicable to lot A could have identified open space areas generally in accordance with the Hardy Plan of subdivision (a) and that the applicable contributions plan would have done the same. Alternatively, I accept that it would have been reasonable for the purchaser to assume this would be the case even if the DCP and the contributions plan, according to the usual practice, had not been made at the relevant date notwithstanding the re-zoning of the land to Residential. I am satisfied that the hypothetical purchaser would have paid a price for the land that anticipated the receipt of a s 94 contribution credit for that part of the land supporting CPW and the easement for pipeline. The respondent’s argument that the dedication of the open space land would impose a disadvantage to owners of land in other areas is untenable because it would have afforded amenity to the residents of the subdivision itself as well as providing the regional benefits identified by Mr Turrisi.

42 Using the figures in the current s 94 contributions plan at the date of resumption, it is the applicant’s case that the hypothetical purchaser would have assumed that there could have been a credit of $180m2 in respect of the land affected by CPW so that the purchaser would not have made any allowance in respect of the CPW land in determining the purchase price. There was no DCP or s 94 contributions plan which had effect in respect of the subject land at the relevant date. I am satisfied, on the balance of probabilities, that even if the purchaser had consulted Mr Marecic it would have made an assumption that the CPW land could be dedicated for open space and that it would have received a credit against s 94 contributions on that account. The guarded response by Mr Marecic in the initial letter of advice to the respondent’s solicitors must be understood in the light of his subsequent cross-examination and the unequivocal evidence of Mr Turrisi.

43 The purchaser would have been entitled to assume that the council would have accepted the land subject to the gas pipeline easement consistent with the treatment of land impacted by electricity transmission lines. There is an underlying logic in Mr Turrisi’s approach to the utilisation of this land for the purpose of providing a corridor or connection to other open space in the locality, including regional open space. Even though the terms of the easement imposed a burden on the land in a practical sense, it clearly could be used for passive recreation notwithstanding that no structures can be built without consent of the pipeline authority. The Hardy Plan contemplates that it will be set aside as a long narrow strip of open space. This is consistent with the initial presumption by Mr Abbott, acting under instruction from the respondent’s valuer. This presumption has not been effectively rebutted to the extent necessary in order to discount the prospect that the theoretical purchaser would have been entitled to assume that the area of the easement land would be recognised by the council as land that it would accept as a dedication for open space on the basis that its value could be taken into account for the purpose of assessing s 94 contributions.

44 Moreover, an analysis of the sales evidence does not identify any occasion when the purchaser adopted the process that Mr Grezar and Mr Wood developed. I am satisfied by the evidence of Mr Large that purchasers were prepared to pay at least $190m2 for englobo land, notwithstanding the impact of the type and extent of the constraints affecting the subject land. This conclusion is reinforced by the analysis of the Prestons sale and the sale at 35 Fifteenth Avenue, West Hoxton. In my opinion, both of these sales reflect an englobo price per square metre that takes no account of impediments, in so far as the impediments can be compared to those affecting the subject land.

45 The further question to be answered is the purchaser would have assumed that a permit was required under Pt 3A of the RFI Act for any works within 40m of a watercourse with a consequential allocation of a riparian corridor to both the left and right banks of a so-called river running across the southern section of the land.

46 Part 3A of the RFI Act in effect forbids excavation of, or removal of materials from protected land or the doing of anything which is likely to obstruct or detrimentally affect the flow of protected waters without the authority of a permit under the Part. Protected land means the bank of protected waters or land within 40m of the bank. Protected waters include a river.

47 The definition of “river” appears in s 2 of the RFI Act as follows:-

"River" includes any stream of water, whether perennial or intermittent, flowing in a natural channel, or in a natural channel artificially improved, or in an artificial channel which has changed the course of the stream of water and any affluent, confluent, branch, or other stream into or from which the river flows and, in the case of a river running to the sea or into any coastal bay or inlet or into a coastal lake, includes the estuary of such river and any arm or branch of same and any part of the river influenced by tidal waters.

48 The Hardy Plan assumes that the low-lying area running across the southern eastern part of the land could be and would be piped. No allowance is made for a drainage easement. The first plan prepared by Mr Abbott made the same assumption about piping but allowed for a drainage easement over the area where the pipes would be laid.

49 Dr Stephen Webb is the applicant’s expert retained to advise on flooding, stormwater management and riparian issues. In his opinion, the hypothetical subdivision plan proposed by Mr Hardy would have more than satisfied the drainage requirements applicable at the time of acquisition. He notes that the proposed pipes would traverse the site broadly following “the alignment of the existing creek”. Dr Webb’s summary comment from his statement of evidence in chief prepared in May 2004 reads as follows:-

Although I believe that the main drainage channel in the lower part of the site could be deemed to fall within the province of the R&FI Act on a strict interpretation, I do not believe that a responsible purchaser would have considered there was a need to apply for a permit. I draw this conclusion primarily because of the fact that the almost adjoining Greenway Park development, on similar land, has clearly made no such provision. The fact that Lot A is in the upper reaches of the catchment, has a very small contributing catchment area, and has no obvious riparian vegetation, would reinforce this view in the mind of a responsible purchaser.

50 On 28 November 2003 the Court appointed hearing dates for 8 March 2004 to 12 March 2004. These dates were vacated on 3 February 2004. On 30 April 2004 fresh hearing dates were appointed for 31 May 2004 to 4 June 2004. Despite efforts to maintain the latter hearing dates, when the matter commenced on 31 May, it became apparent that the matter was not ready to proceed. To accommodate the convenience of the valuers, the Court carried out a view on 3 June 2004 and heard evidence from the valuers in concurrent session on 4 June 2004. The final hearing commenced on 21 June 2004. This history is significant. The issue in respect of a Pt 3A permit was not raised until during the last week in May 2004.

51 Mr Abbott gave oral evidence that his plan was drawn following instruction from Mr Grezar to deal with the creeks in a similar fashion to Greenway Park and assume they would be piped. He did not turn his mind to whether or not the drainage lines were of such a scale that they should be regarded as a river for the purpose of the RFI Act until the end of March 2004. Following instructions from Mr Webster of counsel, he arranged a site walk over with the Department of Infrastructure, Planning and Natural Resources (“DIPNR”) officers, Messrs James and Brady, on 31 March 2004. On 2 April 2004 DIPNR wrote to Mr Abbott notifying him that four rivers had been identified on the site and that a Pt 3A permit is required under s 22B of the Act for any of the works referred to in the section. Furthermore, setbacks would be required to provide riparian zones. It is important to note that the site inspection by the DIPNR officers and Mr Abbott occurred and the advice was received after the expiration of the court-appointed date for filing and service of expert evidence.

52 Mr Burt gave evidence that some development applications lodged after 1 July 1998 in relation to Greenway Park were referred to DIPNR for assessment. A Pt 3A permit was obtained in respect of a creek line with a catchment of approximately 150 hectares. He made no application for a Pt 3A permit in respect of work done in three precincts of the Greenway Park estate where drains for a catchment in the order of 20 hectares were piped.

53 On 28 May 2004 the respondent requested a civil and environmental engineer, Dr Daniel Michael Martens, to prepare a statement of evidence. He concluded that the most westerly section of the stream in lot A would fall under the provisions of the RFI Act and that a Pt 3A permit should be required for any works within 40m of the watercourse. Moreover, he says, the riparian corridor should exclude residential allotments and urban infrastructure.

54 Dr Webb replied to the evidence of Mr Abbott and Dr Martens to the effect that if the hypothetical purchaser had approached Mr Abbott or someone similar in November 2002 it would not have been advised to seek advice from DIPNR because Greenway Park, a clearly comparable development, was not considering such issues while developing entirely similar land. In his view, the primary factor would have been the development of Greenway Park almost immediately adjoining the subject land with very similar topography. While Dr Webb agrees that the subject drainage channel in its lower part could be deemed to fall within the definition of a “river” in the RFI Act (on a strict interpretation), a lack of any “channel” in most other locations would be a serious impediment to identifying them as rivers. The lack of connectivity with any riparian corridor upstream, the lack of riparian vegetation and the small contributing catchment area are further factors relied upon by Dr Webb to support his conclusion.

55 Even following the joint conference with Dr Webb, pursuant to the EWPD, Dr Martens maintains his view that sections of the drainage line fall under the definition of a river under the RFI Act in that they display a continuous, albeit variable, bed and bank configuration. He also referred to his observation of many fluvial processes in the area to justify his opinion. Dr Webb, on the other hand, continues to strongly disagree with Dr Martens because although there is a drainage depression, he reiterates there is no channel bed or bank. According to Dr Webb, the drainage depression is induced by man-made land use changes, essentially clearing, and is not a natural occurrence. He would have told the hypothetical purchaser not to be concerned as firstly, the drainage area is well above the area looked at for trunk drainage and secondly, it relates to such a small catchment. Dr Martens would have told the same purchaser that there is definitely an issue in relation to managing the watercourse and that an application would be required under Pt 3A so that negotiations with DIPNR should be commenced as early as possible.

56 Dr Webb concedes that a section of the drainage area could be incorporated in a riparian zone as part of a structural transition below the piped section. As a matter of prudence, there is a need to have same water management adjacent to the CPW in that area in order to provide energy dissipation, rather than for the purpose of complying with the RFI Act.

57 Ultimately, after concurrent evidence and cross-examination of both witnesses, the issues between Dr Webb and Dr Martens were not resolved. It is apparent, therefore, that the hypothetical purchaser would most likely have been in a position where it could have received conflicting advice from engineers, if they were consulted.

58 The Court has inspected the site. The drainage area resembles a depression with some areas more eroded than others to give the impression of formed banks. There is doubt in my mind that the purchaser would have foreshadowed there were extensive problems and may not have pursued the matter at that time any more than Mr Abbott did before he was coerced to do so by the lawyers. However, the hypothetical purchaser would have recognised that some works would be required to dissipate energy from flows during peak periods. Obviously the flows would increase in intensity as a consequence of development. In my opinion, any discount applied by the purchaser on that account would be minimal.

59 My conclusion in relation to this issue is supported by the fact that DIPNR, representing the respondent Minister, did not see fit to consult itself as the responsible authority until the hearing was imminent. During the lengthy preparation period it had the advice of expert consultants and lawyers who characteristically examine these matters far more assiduously and in much greater detail than the hypothetical purchaser would normally do preparatory to entering a contract for purchase.

60 On the balance of probabilities, the purchaser would have regarded the area in question as a drainage depression. After inspecting the site and hearing all the evidence, it is my opinion that even if it was considered to look like a creek, the prospective purchaser almost certainly would not have regarded it as a river. In the circumstances, any allowance made by the purchaser would, in my opinion, have been minimal. The sales evidence supporting an englobo rate of 190m2 confirms this view.

61 Moreover, if the purchaser had consulted the council or DIPNR at the time of the theoretical purchase, it is most likely that no issue about a Pt 3A permit would have been raised. This prospect is again confirmed by the respondent’s failure to raise the prospect until May this year.

62 The matters raised by the respondent in relation to the application of the RFI Act and the manner in which they were raised leaves me unconvinced that any part of the area in dispute would have been zoned 5(a) – Drainage.

Conclusion

63 Repeating what I said in Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2004] NSWLEC 315, unreported, the Court’s role is not to determine what would have been approved, but rather to decide how the hypothetical purchaser acting prudently after obtaining the advice of relevant experts familiar with and experienced in developments of residential subdivisions, would have assessed the potential for the development of the subject land.

64 I have assumed that the hypothetical purchaser would be prudent and have taken appropriate advice from experts. That would have included town planners, surveyors, engineers, horticultural consultants and valuers. The town planners would have accepted that the land could be subdivided and developed in a manner similar to the adjacent Greenway Park. The surveyor would have designed a plan of subdivision generally along the lines of the Hardy plan, which is itself generally consistent with the plan first prepared by Mr Abbott. If an engineer was consulted, s/he would have addressed the issues in respect of drainage and, taking the line adopted by Dr Webb (which I prefer), would have advised the purchaser that, apart from dissipation structures required at the lower end of the land, the run-off to, through and off the property could be adequately managed by piping. Horticultural consultants most certainly would have recognised and assessed the extent and quality of CPW and the importance of other vegetation on the land, including the trees on the higher ground at the western extremity of the property. The advice would have been that the CPW could be retained in areas set aside for open space. Some account would need to be taken of the stands of trees in the Storey Avenue corner, although the latter did not present as a significant constraint to lot yield. The valuation advice would have been that sales evidence showed at least 190m2 was the rate being currently paid for comparable land, irrespective of size. Furthermore, in many cases, the land the subject of sales in the area could be recognised as having CPW on the site to a degree not dissimilar to the subject land. Consultation with the appropriate person at the council would have left the inquirer with a high level of confidence that the land identified as constrained by CPW would be accepted as a part contribution for the purposes of s 94 of the EP&A Act. The constraints imposed by the gas pipeline easement would not have been posed as a problem in the mind of the purchaser who, in my opinion, would have been advised, and decided on the basis of that advice, that the council could be favourably disposed to accepting the utility of the area of the easement as suitable for use as open space.

65 Finally, accepting the agreement between the valuers, I find that the rate paid by the hypothetical purchaser would have been in the order of 190m2. I recognise that Mr Large has demonstrated that he could have argued for a higher figure with a reasonable expectation of success. Nevertheless, that recognition has not persuaded me to increase the value determined by the valuers pursuant to option (a) but it does provide a measure of comfort that the price determined in that way is reasonable and, accordingly, represents a figure that would have been determined by the hypothetical purchaser after taking account of the potential constraints and the possible advice the purchaser could have received at the relevant time.

66 The applicant contends that the respondent is estopped from claiming that the land within the pipeline easement was less valuable as a consequence of the effect of the terms of the easement because there was an alleged understanding at the time the easement was taken that full compensation would be paid when the whole of the land was resumed for corridor purposes. In the circumstances, it is unnecessary to resolve this issue. Similarly, it is now irrelevant to make a finding whether the taking of the pipeline easement was a step in the resumption process and should therefore be ignored for present purposes. The area covered by the easement has been effectively included in the other land acquired on the basis that the englobo rate of 190m2 applies to it.

67 I determine, therefore, that the market value of the subject land for the purpose of determining compensation, at the date of resumption on 15 November 2002, is $30,760,000.

68 Issues of disturbance and costs remain to be determined either by agreement or further argument. The parties are directed to bring in orders reflecting the determination of the Court and any other matters determined by agreement within 14 days or to apply by formal notice of motion within that time.

69 The exhibits may be returned.

“B”

“C”