Bonomo v Transport for New South Wales

Case •

[2014] NSWLEC 25

•

25 March 2014

Land and Environment Court


New South Wales

Medium Neutral Citation: Bonomo v Transport for New South Wales [2014] NSWLEC 25
Hearing dates:18,19,20,21,22 November 2013
Decision date: 25 March 2014
Jurisdiction:Class 3
Before: Sheahan J and Brown C
Decision:

(1) The compensation payable to the Applicants' land the subject of the present appeal is determined at $3,694,304.22.

(2) All exhibits may be returned.

(3) The question of costs is reserved.

Catchwords: COMPULSORY ACQUISITION: zoning of land, absent the public purpose - market value of land - compensation payable
Legislation Cited: Land Acquisition (Just Terms Compensation) Act 1991
Transport Administration Act 1988
State Environmental Planning Policy (Infrastructure) 2007
State Environmental Planning Policy (Sydney Regional Growth Centres) 2006
Cases Cited: Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413
Spencer v Commonwealth (1907) 5 CLR 418
Category:Principal judgment
Parties: Beveline Dawn Bonomo (Applicant)
Transport for New South Wales (Respondent)
Representation: Mr J Hatzistergos, barrister (Applicant)
Mr I Hemmings SC (Respondent)
Michael Charles Vassili (Applicant)
Hunt & Hunt (Respondent)
File Number(s):30070 of 2013

Judgment

Introduction

  1. On 21 September 2012, the Respondent compulsorily acquired Lot 16 in DP 27220, and known as 81 Schofields Road, Rouse Hill ('the Land'), for a public purpose under the Land Acquisition (Just Terms Compensation) Act 1991 ('the Act'). The Applicant was the registered proprietor of the land at the time of the compulsory acquisition.

  1. Pursuant to s 42 of the Act, the Respondent served a notice on the Applicant, advising of her entitlement to compensation, and of the amount of compensation determined by the Valuer General pursuant to s 47 of the Act.

  1. The Applicant objects to the amount of compensation offered by the Respondent, and brings these proceedings pursuant to s 66 of the Act.

  1. I have been greatly assisted by Commissioner Brown in my consideration of the matter, and we have determined total compensation of $3,694,304,22.

The Land

  1. The Land is generally rectangular, with a frontage of 71.063 m to Schofields Road, and 256.623 m to Cudgegong Road, and has an area of 2.023 ha. It is generally level, with a gentle slope up from Schofields Road; it falls to the rear boundary, and has a cross fall to the east.

  1. At the time the Land was compulsorily acquired, it was occupied by a dwelling, machinery shed, garage/shed, some landscaping, and a "turkey-nest" dam to the rear. However, at the time of the hearing, work had commenced on the public purpose, and all improvements have been removed from the Land.

The public purpose

  1. The Notice of Compulsory Acquisition that appeared in the NSW Government Gazette No. 94 on 21 September, 2012 states:

TRANSPORT ADMINISTRATION ACT 1988
LAND ACQUISITION (JUST TERMS COMPENSATION) ACT 1991
Notice of Compulsory Acquisition of Land
TRANSPORT FOR NEW SOUTH WALES declares, with the approval of Her Excellency the Governor that the land described in Schedule 1 below, excepting the interests in land described in Schedule 2 below, is acquired by compulsory process under the provisions of the Land Acquisition (Just Terms Compensation) Act 1991 as authorised by and for the purposes of the Transport Administration Act 1988.
Dated at Sydney, this 12th day of September 2012 to the notice.

  1. The Land is described in Schedule 1 to the notice.

  1. The objects of the Transport Administration Act 1988, "... with respect to the administration of the transport services provided to the people of New South Wales, include the following:

(a) to provide an efficient and accountable framework for the governance of the delivery of transport services,
(b) to promote the integration of the transport system,
(c) to enable effective planning and delivery of transport infrastructure and services,
(d) to facilitate the mobilisation and prioritisation of key resources across the transport sector,
(e) to co-ordinate the activities of those engaged in the delivery of transport services,
(f) to maintain independent regulatory arrangements for securing the safety of transport services."

  1. In this case, the Land was acquired to be used in conjunction with the North West Railway corridor and Cudgegong railway station.

The assessment approach

  1. The market value of the land is to be assessed under s 56 of the Act, which states:

56 Market value
(1) In this Act:
market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid):
(a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and
(b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and
(c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law.

  1. Section 56(1)(a) requires the market value to be based on the zoning of the Land, absent the public purpose for which the land was compulsorily acquired, namely, railway corridor and railway station.

  1. The parties disagree on, firstly, the zoning of the Land, absent the public purpose, and, secondly, the appropriate value of the Land.

  1. The town planning experts for the parties, Mr Shiels for the Respondent, and Mr Fletcher for the Applicant, have adopted different zonings, absent the public purpose, so it is necessary to first determine the appropriate zoning for the Land, and then consider its value.

  1. The expert valuers, Mr Dyson for the Respondent, and Mr Ellis for the Applicant, have each adopted the zoning of their respective expert town planner in their assessment of the market value of the Land, but have helpfully addressed the alternate zonings advocated by their opposing expert.

  1. We turn first to determine the zoning of the Land, absent the public purpose.

What is the zoning of the Land, absent the public purpose?

Background to the North West Railway corridor

  1. Mr Shiels helpfully provided a comprehensive summary of the background to the North West Railway corridor.

  1. In May 2006, the Transport Infrastructure Development Corporation submitted the North West Rail Line ('NWRL') Concept Plan Application ('MP 06_0157') to the then Department of Planning ('DoP'). The Part 3A Major Project relevantly included:

  • a new electrified passenger railway (approximately 22 kilometres in length) between Epping and Rouse Hill via Castle Hill, within a 40 metre wide corridor; and
  • associated infrastructure including stations, train stabling, roadways, car parks, bus interchanges, public amenities, and intermodal facilities.

  1. A Preliminary Environmental Assessment and subsequent Environmental Assessment were prepared and both stated, inter alia:

"Based on preliminary investigations, approximately 140 properties would be potentially affected by the project. However, the exact number of affected properties would be subject to further investigation."

  1. The Land was not identified as being affected by the project at that time.

  1. On 21 December 2007, State Environmental Planning Policy (Infrastructure) 2007 ('SEPP 2007') was gazetted. SEPP 2007 was introduced to facilitate the delivery of infrastructure across NSW, and has specific planning provisions and development controls for a number of types of infrastructure, including rail infrastructure facilities and rail corridors.

  1. Division 15 of SEPP 2007 relates to railways and provides the planning provisions for rail infrastructure facilities. Clause 79 provides the types of development that are permitted with consent, and states that development for the purpose of a railway or rail infrastructure facilities may be carried out by or on behalf of a public authority without consent, on any land.

  1. On 5 May 2008, the then DoP granted Concept Plan approval for MP 06_0157 for the construction and operation of the western section of the North West Metro/NWRL.

  1. On 14 December 2011, Transport for NSW submitted an application to the now Department of Planning and Infrastructure (to which we will continue to refer as 'DoP'), for a Staged State Significant Infrastructure Modification ('MP06_0157 MOD 1') for the NWRL involving major civil construction works generally between Epping and Rouse Hill. The modification included:

  • a change to the NWRL definition;
  • the relocation of Kellyville station;
  • the provision of additional stations at Bella Vista and Cudgegong Road;
  • minor changes to the location of the Hills Centre station;
  • a change to the Area 20 route alignment (the Land being located within Area 20); and
  • vertical alignment changes between Bella Vista and Rouse Hill.

  1. Following additional studies to refine the alignment of the NWRL corridor, it was determined that the best route to service the North West Growth Centre ('NWGC') was an extended alignment parallel to Schofields Road. The modification would also locate a permanent train stabling facility in the vicinity of Tallawong Road, which was previously a temporary stabling facility located adjacent to Windsor Road.

  1. On 25 September 2012, the DoP granted approval for the Modification MP06_0157 MOD 1. The Director-General's Environmental Assessment Report on the NWRL stated, inter alia:

"The number of properties permanently or temporarily acquired as a result of the staged SSI approval comprised 92 buildings, approximately 50 less than the estimated 142 properties that were identified as being potentially affected by the project, within the Concept Plan."

  1. The modified alignment and railway station affect the Land.

The planning documents

  1. Both Mr Shiels and Mr Fletcher provide a comprehensive analysis of the planning controls, studies and draft planning documents that have affected the Land over time, including the 1951 County of Cumberland Planning Scheme, the 1968 Sydney Region Outline Plan, the 1998 Metropolitan Strategy, the 1995 Cities for the 21st Century, the 2005 Metropolitan Strategy, and the 2010 Metropolitan Plan for Sydney 2036.

  1. With the exception of the County of Cumberland Planning Scheme, all those documents anticipate the urban expansion of Sydney in a north-westerly direction, in the general area of the Land. The latter documents included the general location of public transport corridors. For the purposes of these proceedings, the relevant documents are:

Blacktown Local Environmental Plan 1988 ('LEP 1988')

  1. LEP 1988 was gazetted on 28 October 1988. The Land was zoned 1(a) General Rural under LEP 1988. The objectives of the zone were:

(a) to ensure that actual or potential agriculturally productive land is not withdrawn unnecessarily from production,
(b) to ensure that development in rural areas is carried out in a manner that minimises risks from natural hazards and does not unreasonably increase demand for public services,
(c) to provide for urban support functions, and
(d) to ensure that development within the rural zones does not hinder the proper and orderly development of any future urban lands.

  1. Clause 11 provides a minimum lot size of 40 ha, and effectively provides a holding zone for future urban development.

State Environmental Planning Policy (Sydney Regional Growth Centres) 2006 ('SEPP 2006')

  1. On 28 July 2006, SEPP 2006 was gazetted and applies to all land within the North West and South West Growth Centres. This area is shown on the Precinct Boundary Maps, and includes the Land, within the NWGC.

  1. SEPP 2006 gives effect to the North West Structure Plan ('NWSP'), the Indicative Layout Plan ('ILP'), Precinct Plans, and the Blacktown City Council Growth Centre Development Control Plan 2010. The NWGC has been divided into 16 precincts with the Land being located within Area 20.

  1. The North West Growth Centres Structure Plan ('NWGCSP') is part of the planning process, and is contained in the maps for SEPP 2006. The NWGCSP provides the framework for the detailed planning of individual precincts, once these areas have been approved for release by the DoP, and identifies the pattern and strategic direction in the NWGC.

  1. The Area 20 ILPs were amended as planning progressed, and contain the basis for urban development, by setting out the road network, public transport routes, the open space and drainage networks, the locations of land uses (including residential development, schools, community facilities, utilities, centres and employment lands), areas requiring protection because of environmental or heritage values, and the density and types of housing that are preferred in various parts of the Precinct.

  1. SEPP 2006 was amended on 21 October 2011 to include the zoning and planning provisions for Area 20. Under SEPP 2006, the Land is zoned SP2 Infrastructure (Railway) and SP2 (Classified Road), and this was the zoning at the date of acquisition.

The likely zoning, absent the public purpose?

The Shiels evidence

  1. Mr Shiels states that in identifying the zoning absent the public purpose, the relevant planning considerations include considering the surrounding zonings, and analysing which of those zonings might be most suited to the Land, absent the public purpose. In his assessment of the zoning, there are two possible scenarios, absent the public purpose:

1. considering the relevance of the surrounding zones; and

2. would the planning of the precinct surrounding the site be any different?

  1. The underlying assumption is that, absent the public purpose, Area 20 and the NWGC would still proceed, albeit in a modified form.

  1. Considering the first scenario, and using the land use configuration in the precinct, there are arguably three zoning options for the Land:

  • Firstly, the Light Industrial IN2 zone ('the IN2 Zone') could be extended to the Land, with the natural break point of Cudgegong Road. There is some synergy between industry and the electricity generating works on the opposite side of Cudgegong Road.
  • Secondly, the R3 Medium Density Residential zone ('the R3 zone') could be extended to include the Land and the adjoining site facing Schofields Road. The area to the north of the Land is zoned R3 as it is close to a major nodal point, being the proposed railway.
  • The third option is an extension of the R2 Low Density Residential ('the R2 zone') to the south, to extend north to the Land.

  1. Mr Shiels states that, in his opinion, the zoning, absent the public purpose, is likely to be R2, although there is the potential for the Land to be zoned IN2 or R3.

  1. Considering the second option, and absent the public purpose, the planning for Area 20 would likely be quite different. The major nodal point would more likely be in close proximity to Rouse Hill, and around the Schofields railway station. The emphasis on the road network strategy is to retain existing road patterns, as the NWGCSP identifies Schofields Road as a Mixed Use Employment Corridor. This corridor was to be facilitated with a three-stage widening program for Schofields Road, which is likely to be completed in 2016. This Mixed Use Employment Corridor designation on the NWGCSP has, however, changed with the more detailed precinct planning.

  1. Mr Shiels acknowledges that there is potential for any of the IN2, R2 and R3 zones, but he opines that the planning for Area 20 would have a totally different focus. Without a key nodal point in the form of the Cudgegong Railway Station, the B2 Local Centre zone ('the B2 zone') and the R3 zone would not be appropriate, as this precinct is 1.0 km from Rouse Hill, and 3.7 km from Schofields Railway Station. Hence, it is less likely to be R3, and more likely to be R2.

  1. Mr Shiels concludes his evidence by opining that it is likely that the highest and best use of the Land would be those uses permissible in the R2 zone, which is comparable and commensurate with the development on the opposite side of Schofields Road, which consists of a major residential development called "The Ponds". The draft ILPs (drafts ILP-01 to ILP-08), which were the subject of the Further Joint Report of Town Planning Experts, support the conclusion that R2 is the likely zoning for the Land, absent the public purpose.

  1. Mr Shiels also addresses two draft zoning plans dated December 2009 and March 2010, which further support this conclusion. The December 2009 plan indicates that the majority of the precinct is proposed to be within the R3 zone, and Mr Shiels notes that this is not consistent with any of the ILPs from ILP-01 to ILP-08. However, the second and more complete draft zoning plan generally follows the land use pattern of ILPs 05-08. It would be speculative, according to Mr Shiels, for a prospective purchaser to assume that the highest and best use of the land would be R3, if an objective exercise of removing the public purpose were undertaken.

The Fletcher evidence

  1. Mr Fletcher states that determining the likely zoning of the Land, had it not been compulsorily acquired, is made difficult for two reasons. Firstly, strategic planning for the locality is driven largely by the proposed location of the possible new Cudgegong Railway Station, and, secondly, the strategic land use planning for the locality is not settled, even in light of the proposed railway station location.

  1. Mr Fletcher agrees with Mr Shiels that Area 20 will remain as a precinct, irrespective of the inclusion of a railway station, perhaps being more of a car based centre, but provided with a good level bus service. The land use make-up of Area 20 would likely still incorporate a mix of uses. In his opinion, the possibilities for zoning of the Land, absent the public purpose, would be IN2, B2, R3, B4 (Mixed Use), or a mix of these zones.

  1. Mr Fletcher notes that the Area 20 Retail and Employment Study, prepared by SGS Economics and Planning in November 2010 ('the November 2010 SGS Report') has assessed the potential for employment land uses along the Schofield Road corridor. Interestingly, the mapping shows the employment area extending east to Cudgegong Road to incorporate the Land. The November 2010 SGS Report states that this area shows potential for local light industry, freight, and logistics jobs, with 438 jobs forecast. Whilst the location of the Cudgegong Station industrial lands has been chosen to an extent on the basis that the land would be of poorer amenity due to the station location, the land can also be seen as highly accessible by road. It would act as a buffer to residential uses within Area 20 from Schofields Road which, is set to become a significant regional road. Consequently, it would be reasonable to assume that the IN2 zone to the west of the Land would remain in place, if the railway were not to proceed. Therefore, a likely "underlying zoning" of the Land would be IN2.

  1. Absent the public purpose, Mr Fletcher opines that the Land could be placed in a scaled down B2 or B4 zone, providing for 2000 sq m to 3000 sq m commercial floor space, relocated from its current location further to the north, with the balance of the land in the IN2 zone. The November 2010 SGS Report, and its peer review, titled Retail Planning Advice for Area 20 - North West Growth Centre, prepared by Leyshon Consulting Pty Ltd (the Leyshon report), consider the likely demand for retail and commercial space in terms of resident and commuter spending. It follows that, should Area 20 proceed with its projected resident population, there would remain a need for commercial and retail uses, irrespective of the existence of a railway station. Notwithstanding, as acknowledged in the November 2010 SGS Report and the Leyshon report, the commercial demand would be reduced.

  1. Mr Fletcher notes that both R2 and R3 zones extend along parts of Schofields Road. The eastern part of Area 20, extending towards Windsor Road includes land zoned R3, as does the frontage of the Riverstone Precinct to Schofields Road, further west on Schofields Road. If IN2-zoned land were not located to the west of the Land, fronting Schofields Road, it would be Mr Fletcher's view that the R3 zone would be appropriate along this frontage.

  1. Mr Fletcher states that he did not consider the draft ILPs (draft ILP 01 to ILP 10) as they were not publicly available but, if the North West Growth Centre Zoning Map and Area 20 Precinct plan were used, as they represent the last publicly available planning document prior to the railway, then the likely zoning would be R3, as this plan zones the Land and a large part of Area 20 as R3. It is also an appropriate zone, being adjacent to "The Ponds" residential development to the south, fronting Schofields Road.

  1. In summary, Mr Fletcher states that the most likely underlying zoning for

the Land, were it not to be required for acquisition, and on the premise that

industrial lands were to remain to the west on Schofields Road, would be either IN2 or, possibly, a scaled down B2 or B4 zone, relocated from its current position further to the north. If it were to be assumed that the industrial lands to the west did not remain, an R3 zone may be possible.

Findings on Zoning

  1. As a starting point, there are a number of assumptions that were not disputed, and are fundamental to the question of the zoning of the land, absent the public purpose. These are:

1. the Land and Area 20 will still form part of the NWGS,

2. the current identified land uses for Area 20 in SEPP 2006 would be significantly different without the existence of the rail corridor and proposed rail station,

3. the planning process for the NWGS is an evolutionary process, and, as more detailed planning is undertaken, the assumptions and conclusions in higher order or broader planning documents may be amended or even abandoned, and

4. documents that refer to, or are prepared in the anticipation, of the proposed railway, should be considered with caution.

  1. In this context, and on the question of the likely zoning of the Land, absent the public purpose, we accept the conclusions and reasoning of Mr Shiels, that the most likely zoning of the Land would be R2, for a number of reasons.

  1. First, and contrary to the approach of Mr Fletcher, any documents used to establish the zoning, absent the public purpose, do not need to be publicly available (see Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413). The availability of the draft ILPs was not a matter raised by Mr Hatzistergos in his submissions. On this basis, we agree with Mr Shiels that the draft ILPs (drafts ILP-01 to ILP 10), that were the subject of the Further Joint Report of Town Planning Experts, add significant weight to his evidence, and reinforce the conclusion that an R2 zoning is the likely zoning for the Land, absent the public purpose.

  1. Draft ILPs 01 to 08 are very important in determining the zoning of the Land, absent the public purpose. They provide the evolution of the detailed planning approach for Area 20 by the DoP, absent the public purpose. These documents are prepared by the DoP, the planning authority charged with the responsibility of allocating scarce land resources within the NWGC for particular land uses. That role, importantly, relates not only to Area 20, but to the wider NWGC. Without a holistic approach to the wider planning issues of the NWGC, planning for Area 20 cannot be properly undertaken. Draft ILP-08 represents the culmination of this planning approach at the time, prior to the public purpose.

  1. In our opinion, it is reasonable to accept that Draft ILP-08 represents the preferred planning approach to Area 20 at the time immediately prior to the NWRL. Confirmation of this is available from the Minutes of the Project Control Group Meeting on 25 June 2010 between the DoP and Blacktown City Council where the Minutes state:

Exhibition timing
  • Area 20 is proposed to be placed on exhibition as soon as possible; however, this may be impacted by the Metro Transport Plan.
  • DoP is working with Transport NSW to resolve this issue.

  1. Draft ILPs 09 and 10 continue the progressive strategic planning for Area 20, but include the public purpose, and, as such, are of little, if any, benefit to the Court.

  1. To understand the progressive planning of Area 20, a summary of the Draft ILPs indicates the following:

  • Draft ILP-01 (14 August 2009) indicates low density residential for approximately 67% of the Land, and medium density residential for approximately 33% of the site. The centre piece to the cluster of medium density residential was a park. Draft ILP-02 (27 August 2009) generally reflects this same pattern of land use.
  • Draft ILP-03 (19 October 2009) introduces a change that has less land suggested for medium density residential, and an increase in the land proposed for low density residential. The Land is proposed for low density residential.
  • Draft ILP-04 (27 October 2009) reverts back to a central park, with surrounding medium density residential. Approximately 50% or 60% of the Land is proposed as medium density, with the remainder proposed as low density residential.
  • Draft ILP-05 (13 November 2009) reflects a major change in the planning for Area 20, i.e. a concentration of medium density residential in the vicinity of Rouse Hill, with the majority of the land to be used for residential purposes to the west, primarily designated as low density residential. There is a cluster of medium density residential to the north of the Land, in the vicinity of Cudgegong and Rouse Roads, and in close proximity to schools and a large park. The Land is shown low density residential on this ILP.
  • Draft ILP-06 (4 February 2010) continues the pattern contained in ILP-05, with the concentration of medium density towards Rouse Hill. The medium density proposed in the vicinity of Cudgegong and Rouse Roads, near the school and open space, is similar to ILP-05. The Land is shown as low density residential.
  • Draft ILP-07 (also dated 8 February 2010) retains the same draft densities proposed in ILP-06. The Land is proposed to be low density residential.
  • Draft ILP-08 (12 May 2010) contains a few modifications to ILP-07, but the concentration of medium density residential development close to Rouse Hill remains. Similarly, the proposed medium density in the vicinity of Cudgegong and Rouse Roads is generally the same. The Land is now shown as approximately 70% low density residential and approximately 30% special uses, drainage and infrastructure.

  1. We accept that there is considerable merit in Mr Shiels's conclusions that the progression of planning through Draft ILPs 01 to 08, and the most recent March 2010 draft zoning plan, show a sound town planning approach for Area 20, by concentrating medium density residential close to Rouse Hill, and reducing medium density further to the west of the Rouse Hill centre, in the vicinity of the Land, and in the Area 20 Precinct.

  1. Second, the evidence does not support a finding that the likely zoning, absent the public purpose, would be IN2. Mr Fletcher accepts that documents, such as the November 2010 SGS Report, which provide a small amount of support for the IN2 zone, are influenced by the location of the railway, and are of little help in determining the likely zoning of the land, absent the public purpose. In any event, the Land is not included in the industrial use designation. The Leyshon report was referred to during the hearing however this document addresses the November 2010 SGS Report that refers to the railway corridor and as such is of little or no help in determining the zoning of the Land, absent the public purpose.

  1. The earlier Area 20 Retail and Employment Study by SGS Economics and Planning (the May 2010 SGS Report) was prepared at a time prior to the railway corridor, and does not raise the potential for industrial use of the Land to a level that would challenge the findings on the likely zoning of the Land as R2. While the report identifies land along Schofields Road as "Industrial" (Figure 18), it is a diagrammatic representation for the purposes of the modelling undertaken in the report. Figure 18 has no scale. We accept the submission of Mr Hemmings that this report provides the only indication that the Land, in part or in full, could potentially be used for industrial purposes. However, estimates of the area marked Industrial suggest an area of around 24 ha, whereas the modelling provides for only 5398sq m of floor area in the long term (Table 32).

  1. We are also satisfied that the NWGCSP provides little support for the IN2 zoning for the Land, in part or in full. While the area along Schofields Road (including the Land) is designated "Mixed Use Employment Corridor", the evolution of the planning process has moved well beyond the broad description in the NWGCSP. This is consistent with the approach of providing greater detail as the process proceeds. Inherent in this process is that assumptions in earlier phases of the planning process may be abandoned or significantly amended because of the increased amount of knowledge available for the more detailed planning phases.

  1. The document titled Schofields Road Upgrade - Review of Environmental Factors, 3 December 2007 ('the Schofields Road REF') is relevant, as it predates the location of the railway. The importance of the Schofields Road upgrade was also raised in the context of the potential IN2 zoning of the Land, although we are not satisfied that it necessarily supports this zoning, or, in fact, any particular zoning. The document (Exhibit R2, tab, 1 fol 9)relevantly states in the section on site and strategic background (pt 1.2.1):

The upgrade and widening of Schofields Road is one of the proposed improvements to regional transport infrastructure in the North West Growth Centre and is shown on the Growth Centres Structure Plan as one of two east-west mixed use employment corridors.
Development within the Growth Centre, including the Rouse Hill Regional Centre, Second Ponds Creek and surrounding Release Areas comprising Area 20, Riverstone East, Riverstone and Alex Avenue, will result in a significant increase in traffic volumes.
The NSW Government's Metropolitan Strategy for 'Managing Sydney's Growth Centres' has identified road works to be undertaken in the next five years and includes converting Schofields Road from an existing two lane road to a four lane divided road to service the Rouse Hill Regional Centre and North West Sectors.
In formulating plans for development in the North West Growth Centre the Growth Centres Commission and the Department of Planning have identified Schofields Road as a 'Transit Boulevard', which is to have two lanes in each direction separated by a wide median. The boulevard vision provides for an attractive and functional entrance to the North West Growth Centre. In acknowledgement, Schofields Road between Windsor Road and Hambledon Road has recently been gazetted as an RTA classified main road.

  1. The Court was not made aware of any reference in the Schofields Road REF, specifically addressing the potential, or even suitable, land uses for the land that adjoins Schofields Road. The Schofields Road REF is clearly not a document which should address strategic land use planning, but it should and does address the wider access issues associated with the NWGC. The Schofields Road REF (published 3 December 2007) predates Draft ILP-08 (12 May 2010) by a number of years.

  1. It is unlikely that the upgraded and realigned Schofields Road could not be adapted, if necessary, to accommodate any future land use ultimately thought appropriate for this part of Area 20.

  1. Further, the evidence does not support a finding that the likely zoning, absent the public purpose, would be B2 Local Centre or B4 Mixed Use.

  1. The May 2010 SGS Report addresses retail floor space for Area 20. It states that, considering the volume of unrealised retail floorspace in the NWGC and Rouse Hill, and the objectives for density and transport in Area 20, an appropriate centre for the Area 20 Precinct would be a small village centre, the role and function of which would be to meet the basic retail and service needs of the residents in the immediate vicinity.

  1. The May 2010 SGS Report (Exhibit R2, tab 3, fol 554) further relevantly states:

From a sub-regional, supply-side perspective, the market analysis finds that Area 20 will not attract strategic employment. However, this is still potential for the area to accommodate local jobs to serve the new population. The population driven retail floorspace figure of 3,647 sqm should be considered a minimum when planning for future provision.

  1. Given that the appropriate level of retail floorspace would result in a small village centre, and that its role and function would be to "meet the basic retail and service needs of the residents in the immediate vicinity", the issue of accessibility is an important consideration in locating the village centre.

  1. It is widely accepted (and has been adopted in Draft ILP-06, Indicative centres) that a 400 m walking distance is a desirable distance for residents to access local facilities. To optimise the convenience for future residents, the retail and service needs of the residents should be located centrally within Area 20 (as shown in Draft ILP-06, Indicative centres), and not on the periphery of the area, where the potential catchment is reduced.

  1. As the Land is located on the southern edge of Area 20, and Schofields Road forms a significant barrier for the residents of "The Ponds" (who would be within 400 m of the Land), I am satisfied that the likely zoning of the Land, absent the public purpose, would not be retail.

  1. The May SGS 2010 Report (above) addresses mixed uses and states that Area 20 could provide a mixed use corridor. However, it concludes unenthusiastically, by stating (at p78/fol 557) that:

It is considered that there is only minor potential for the use of Schofields Road as a Mixed Use Corridor. This is due to a combination of the following:
  • Supply of retail floorspace capacity in the Rouse Hill Centre and the significant supply of employment land in the North West subregion.
  • Policy direction which favours retail floorspace in the Rouse Hill centre and industrial land uses on strategic employment lands.
  • Insufficient traffic volumes on Schofields Road in comparison to nearby major roads.

  1. For this reason, we are satisfied that the likely zoning of the Land, absent the public purpose, would also not be mixed use.

  1. We conclude, therefore, that the likely zoning of the Land, absent the public purpose, is R2, and we now turn to the question of market value.

What is the market value of the Land?

The competing valuations

  1. The Applicant's expert valuation evidence establishes the market value of the Land at $4,046,000, based on a rate of $200/sq m for R2 zoned land.

  1. The Respondent's evidence establishes the market value of the Land at $3,350,000, based on a rate of $165/sq m for land zoned R2. However, the Respondent accepts the higher market value established by the Valuer General, namely $3,650,000, based on a rate of $180/sq m for such land, as the appropriate amount of compensation.

The evidence

  1. Mr Dyson and Mr Ellis provided a range of sales evidence for the different potential zonings suggested by their respective town planners, but, having found that the likely zoning, absent the public purpose, is R2, the consideration of the market value of the Land is restricted to their evidence relevant to that zoning.

The Dyson Sales

  1. Mr Dyson adopts the direct comparison method of valuation for determining the market value of the Land, and relies on the following sales, to varying degrees:

  • Sale 1 - 822 Windsor Road, Rouse Hill ($162.08/m2) - Near level site on western side of busy Windsor Road, zoned mostly R3 Medium Density Residential, and within the "Area 20" precinct release area, with an area of 2.036 hectares (or 20,360m2). I have adopted a minimal value of $40,000 for the improvements as the rental income before the site is developed. It provides a good indication of the value for the subject land as it is the main sale in the Precinct. The sale of this property occurred in April 2012, five months before the date of acquisition; it has a similar site area to the subject and slightly greater potential, although this may be limited by market expectations;
  • Sale 2 - 51 Terry Road, Rouse Hill ($80.98/m2) - Near level site on eastern side of the end of Terry Road, a quiet cul-de-sac zoned R3 Medium Density Residential, and within the "Area 20" precinct release area, with an area of 3.68 hectares (or 36,800m2). It is improved as a Caravan Park, which provides rental income before the site is developed. The sale of this property occurred in September 2010, two years before the date of acquisition, and before the rezoning was in place;
  • Sale 3 - 54, Terry Road, Rouse Hill (For sale at $165/m2) - Near level site on western side of the end of Terry Road, a quiet cul-de-sac zoned R3 Medium Density Residential, and within the "Area 20" precinct release area, with an area of 2.12 hectares (or 21,200m2). The property has been on the market since before the date of acquisition. It has a similar site area to the subject, and similar potential. It supports the sale at 822 Windsor Road, Rouse Hill at $160/m2 as being reflective of the market;
  • Sale 4 - 114 Hambledon Road, Schofields ($162.56 /m2) - Gently sloping site zoned R2 Low Density Residential and within the "Alex Avenue" precinct release area, with an area of 2.03 hectares (or 20,300m2). It provides a good indication of the value for the subject land, as it was rezoned for residential development in May 2010. The sale of this property occurred in May 2012, four months before the date of acquisition, it has a similar site area to the subject, and similar potential;
  • Sale 5 - 90 - 100 Hambledon Road, Schofields ($201.39/m2) - Three (3) gently sloping sites zoned R2 Low Density Residential and within the "Alex Avenue" precinct release area, with a total area of 7.20 hectares (or 72,000m2). This property clearly sold at a premium price, due to an over-anxious purchaser (Department of Education) having to negotiate after the position of the proposed school was announced by The Minister. The sale of this property occurred in July 2012, two months before the date of acquisition; it has a much larger site area than the subject, and similar potential;
  • Sale 6 - 102 Hambledon Road, Schofields ($238.75 /m2) - Gently sloping site zoned R2 Low Density Residential, and within the "Alex Avenue" precinct release area, with an area of 2.4 hectares (or 24,000m2). Price included large, good-condition late 1990s two-storey residence, sheds and business operated from property. It is considered this property sold at a significant premium, due to an over-anxious purchaser (Department of Education) requiring this property following acquisition of 3 adjoining sites for a proposed school;
  • Sale 7 - 84 Hambledon Road, Schofields ($122.52 /m2) - Gently sloping site zoned R2 Low Density Residential, and within the "Alex Avenue" precinct release area, with an area of 2.02 hectares (or 20,200m2). The sale of this property occurred in October 2011, eleven months before the date of acquisition; it has a similar site area to the subject, and similar potential, and supports the suggestion that the sales at 90-102 Hambledon Road were "over-market".

  1. Additional sales evidence was provided by Mr Dyson, in the Joint Report of the valuers, in respect of:

  • Sale A - 31-85 Alex Avenue Schofields: 8 individual properties sold to the same buyer, and zoned R2 Residential, that, adjusted for delayed terms of sale, realise a rate of $170/sq m;
  • Sale B - 44-46 Schofields Road, Schofields: 2 individual properties, zoned R2 Residential, that, after adjustment for options, realise a rate of $170/sq m; and
  • Sale C- 48-50 Schofields Road, Schofields: 2 individual properties, zoned R2 Residential, that, after adjustment for options, realise a rate of $185/sq m.

  1. As at the date of acquisition, Mr Dyson's primary sales evidence is Sale 1, with support from Sales 2 to 4, and 7, which are all considered comparable. Mr Dyson states that it has been established that, in Sales 5 and 6, the Department of Education paid a premium over-market price, as it was required to acquire the properties after the location of the proposed school had been publicly announced, prior to commencement of negotiations.

  1. Mr Dyson considers that the sales evidence in the Area 20 precinct at 822 Windsor Road, Rouse Hill, and in the Alex Avenue precinct at 114 Hambledon Road, Schofields, and 84 Hambledon Road, Schofields, support a value of $165/sq m for the Land, based on an R2 Zoning.

  1. Mr Dyson adds that this is further supported by his additional sales A, B and C. All the sales are in the Alex Avenue precinct, and are 2 ha sites zoned R2, while the sale at 822 Windsor Road is zoned R3.

  1. Mr Dyson considers that the value of R3 zoned land is the same as R2 zoned land in these greenfield areas, due to the uncertainty for units competing in the same price range as individual homes, and the high cost of construction for unit buildings.

  1. The limited site sales available within Area 20 shows a rate from $162/sq m, and between $122/sq m and $162.56/sq m for sites in the Alex Avenue precinct, zoned R2.

The Ellis Sales

  1. Mr Ellis submits that should the Land be zoned R2, absent the public purpose, the following sales are relevant:

  • Sale 1 - 239 Railway Terrace Schofields ($187/m2) - 16/02/2013, $3,850,000.00, 2.064 Hectares zoned R3 Medium Density: Predominately vacant five acre parcel having street frontages to Railway Terrace and Pelican Road. Basic two-bedroom cottage considered to be of nil value based on the development potential of the land. The property is well located in relation to Schofields train station, which is approximately 300 metres to the north, and is situated to the southern boundary of a proposed Coles Supermarket Development, which could have an effect on the proposed development, in terms of traffic movements, access, noise and odours;
  • Sale 2 - 822 Windsor Road Rouse Hill (Dyson Sale 1);
  • Sale 3 - 69 Winchester Street Schofields ($192/m2) - 29/03/2012, $1,500,000, 7714.00 sq m zoned R2 Low Density residential: Rectangular shaped land within the Riverstone precinct of the northwest growth centre. Infrastructure has been completed. The land was sold with development approval for a 13 lot subdivision. Existing improvements at the time of sale comprised a three bedroom cottage, which had income potential until development commenced;
  • Sale 4 - 90, 98, 100 and 102 Hambeldon Road, Schofields (Dyson Sales 5 and 6).

  1. Additional sales were provided by Mr Ellis, in the Joint Report of the valuers, in respect of:

  • Sale A - 88A Mc Culloch Street Riverstone: 8821 sq m, zoned R2 Residential; realises a rate of $200/sq m;
  • Sale B - 27 Cranbourne Street Riverstone: 8094 sq m, zoned R2 Residential; realises a rate of $173/sq m;
  • Sale C - 85 Alex Avenue Schofields: (part Dyson Sale A).

  1. Mr Ellis opines that the best available sales evidence is 88A McCulloch Street, Riverstone (sold March 2013 at $227/sq m, or $200/sq m, adjusted for 12 month option), and 85 Alex Avenue (sold December 2012, at $199/sq m).

  1. Therefore, his value for the Land, if zoned R2, is in the range of $190/sq m to $200/sq m of site area.

Consideration

  1. As a starting point, we accept the submission of Mr Hemmings that the Dyson Sales 5 and 6 and Ellis Sale 4 (90, 98 and 100 Hambeldon Road, Schofields) are "out of line", based on the evidence provided in Exhibit R10.

  1. The sales do not satisfy the approach required for the determination of market value, where there is an assumption of a hypothetical sale between a willing, but not anxious, vendor, and a willing, but not anxious, purchaser (Spencer v Commonwealth (1907) 5 CLR 418).

  1. The purchases were driven by the designation of the properties by the Department of Education for a school site, prior to any form of acquisition. The evidence suggests that the first purchase was at a "premium", or "special value", and that the second purchase was, in fact, a "premium" on a "premium". There seems little option but to disregard these sales.

  1. Ideally, the comparable sales for the Court's purposes in the present case should (1) be located within Area 20, (2) have an R2 zoning, (3) be of similar size and topography, and (4) occur around the date of acquisition of the Land.

  1. The Area 20 sales are limited to (a) Dyson Sale 1/Ellis Sale 2 - 822 Windsor Road, Rouse Hill, at $162.08/sq m; (b) Dyson Sale 2 - 51 Terry Road, Rouse Hill, at $80.98/sq m; and (c) Dyson Sale 3 - 54 Terry Road, Rouse Hill - noting that the property has not been sold, but is for sale at $165/sq m.

  1. 822 Windsor Road was Mr Dyson's primary sale, at $162.08/sq m. It is located within Area 20, has a similar size and topography, and was sold on 16 April 2012, which is around the date of the Notice of Compulsory Acquisition of the Land on (21 September 2012), but it has an R3 zoning.

  1. Mr Ellis describes this property as inferior to the Land, and notes that it was sold as a deceased estate, which may have reflected some urgency to achieve a sale. The property may also require alternate access, being located on a major road. He may be correct, but there was no evidence to suggest any urgency in the sale, or that adjustments should be made because the property has a frontage to a main road, given that the potential access is not dissimilar to the main road frontage of the Land.

  1. Mr Dyson and Mr Ellis also differed on the effect of the R3 zoning on 822 Windsor Road, and on the adjustment needed to compare this property to the R2 zoning of the Land, and other sales. Mr Dyson maintains that the value of R3 land is the same as R2 land in greenfield areas, due to the uncertainty for unit development competing in the same price range as individual homes, and the high cost of construction for unit buildings. Mr Ellis states that R3 zoned land is more valuable as it provides a higher yield - 10% should be added to the market value of R2 land to achieve a market value for R3 land. Using this approach, the sale would have an adjusted market value of around $146/sq m, without any other adjustments.

  1. In our view, and without any evidence to support the respective positions of both Mr Dyson and Mr Ellis, we accept that 822 Windsor Road is a valid comparable sale, but we do not accept that there is no difference in market value between land zoned R2 and that zoned R3.

  1. Equally, we do not accept that the difference is likely to be in the order of 10%, as suggested by Mr Ellis.

  1. Ultimately, the range of between $146 and $162.08 largely supports the evidence of Mr Dyson. We note that Ellis Sale 1 - 239 Railway Terrace, Schofields, at $187/sq m - is zoned R3, and, if the adjustment suggested by Mr Ellis is made to this sale, the adjusted figure of around $168/sq m is consistent with Mr Dyson's rate/sq m value for the Land.

  1. At the time of the hearing, Ellis Sale 3 - 54 Terry Road, Rouse Hill - was still on the market, and, while the property is located within Area 20, and the asking rate supports the rate of Mr Dyson, this property should also be disregarded as, without a sale, the property provides little or no help in establishing the market value of the Land.

  1. The sales in the Alex Avenue precinct are also helpful. Even though this precinct does not adjoin Area 20, it is located just to the west of Area 20, adjoining the western rail line. Sale 4 - 114 Hambledon Road, Schofields at $162.56 /sq m - has an R2 zoning, is of similar size and topography, and has a sale date around the date of acquisition of the Land. We accept that this sale further supports Mr Dyson's market value for R2 land. Sale 7 - 84 Hambledon Road, Schofields at $122.52/sq m - has an R2 zoning, is of similar size and topography, but occurred some 11 months prior the date of acquisition of the Land. Some caution should be exercised in relying on this sale, as it too is out of line with other comparable sales.

  1. Ellis Sale 3 - 69 Winchester Street Schofields, at $192/sq m - is not directly comparable, in our view. It is a smaller site, and, as was agreed by the experts, would normally attract a higher rate/sq m. When combined with an existing approval for a 13 lot subdivision, that would also attract a higher rate/sq m. We accept that this sale supports the conclusions of Mr Dyson, if adjusted for the smaller size and existing approval. Similarly, if an adjustment is made for a smaller site, Ellis Sale A - 88A McCulloch Street Riverstone, at 8821 sq m, and a rate of $200/sq m - and Ellis Sale B - 27 Cranbourne Street Riverstone, at 8094 sq m, and a rate of $173/sq m - provide greater support for Mr Dyson's rate of $165/sq m than for Mr Ellis's rate $200/sq m.

  1. Mr Dyson also relies in his Sale A on the sale of 8 individual adjoining properties that make up 31-85 Alex Avenue, Schofields. All were in the Alex Avenue precinct, have a similar area (around 2.06 ha) to the Land, were sold to the same buyer, and were zoned R2 Residential. The rate/sq m varies between $150.27/sq m (39 Alex Avenue) and $208.13/sq m (69 Alex Avenue). After adjustment for delayed terms of sale for 85 Alex Avenue, they realise a rate of $170/sq m.

  1. Mr Ellis also relies in his Sale C on the sale, as a single property, of 85 Alex Avenue, Schofields, at a rate of $199.66/sq m, although he makes no adjustment for the 23 month settlement period.

  1. Accepting that the 8 Alex Avenue properties are slightly superior to the Land, the sales, individually and collectively, provide support for Mr Dyson's rate of $165/sq m.

  1. For the reasons we have stated, the market value of the Land is determined at $3,337,950, being $165/sq m for the 2.023 ha property.

Compensation payable

  1. The Applicant accepts the application of s 61 of the Act, and seeks only disturbance, pursuant to s 59 (a) and (b) of the Act, which has been agreed at $44,304.22.

  1. Given that the Respondent accepts the higher market value established by the Valuer General of $3,650,000, based on a rate of $180/sq m for R2 Residential land, as the appropriate amount of compensation for the market value of the Land, the total compensation payable is, therefore, $3,694,304.22.

Orders

  1. The orders of the Court are:

(1)   The compensation payable for the Applicants' land the subject of the present appeal is determined at $3,694,304.22.

(2)   All exhibits may be returned.

(3)   The question of costs is reserved.

**********

Decision last updated: 25 March 2014

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