C. Bonora v The Minister Administering the Environmental Planning and Assessment Act, 1979
[1988] NSWLEC 38
•08/25/1988
Land and Environment Court
of New South Wales
CITATION: C. Bonora and Anor v. The Minister Administering The Environmental Planning And Assessment Act, 1979 [1988] NSWLEC 38 PARTIES: APPLICANTS
C. Bonora and AnorRESPONDENT
The Minister Administering The Environmental Planning And Assessment Act, 1979FILE NUMBER(S): 30418 of 1980 CORAM: Hemmings J KEY ISSUES: :- LEGISLATION CITED: State Planning Authority Act 1963 CASES CITED: Housing Commission of New South Wales v. San Sebastian Pty Limited, 37 L.G.R.A. 214.;
E. Bergman v. Council of the Municipality of Holroyd, 6th July, 1988 (unreported).;
Woollams v. The Minister, 2 L.G.R.A. 338 at 347;
Tatmar Pastoral Company Pty Limited and Anor v. The Housing Commission of New South Wales;
Cripps J. 17th March, 1982 (unreported).DATES OF HEARING: DATE OF JUDGMENT:
08/25/1988LEGAL REPRESENTATIVES:
JUDGMENT:
HIS HONOUR: On 5th January, 1968 the Minister for Local Government, by notice in the Government Gazette, resumed Lot B, North Parade, Mount Druitt, being the whole of the land in Certificate of Title Volume 7204, Folios 241 and 242 ("the land") for the purposes of the State Planning Authority Act 1963. The applicants were at that time the registered proprietors of the land which by such notification was vested in the State Planning Authority of New South Wales ("the S.P.A."). The applicants' interest in the land was thereby converted into a claim for compensation which was valued by the respondent at $32,000 and by the applicants at $292,500. The Court is required to determine the amount of such compensation.
The applicants purchased the land in 1956 and used it as a family home and for agriculture and storage. A building described as a "temporary dwelling" and a garage converted to residential purposes, together with sheds and poultry runs, were the only improvements on the land. It had an area of 7.5 acres and a frontage to a gravel road. Water, electricity and a sanitary service were provided to the land.
At the date of resumption the land was situate within a rural area (5 acre minimum) under the County of Cumberland Planning Scheme and, with the consent of the responsible authority, may be used for any purpose except -|CF2.|PSI
"Dwelling-houses other than Country Dwellings and dwelling-houses for rural workers residing on or adjacent to the places where they are employed as rural workers; residential buildings; commercial premises; professional chambers; industries other than rural industries, extractive industries and offensive or hazardous industries; warehouses; bulk stores."|CF1.|PSO
The Blacktown Municipal Council in April, 1959 exhibited a Draft Planning Scheme which proposed that the whole of the land and adjoining parcels be zoned "living area". In 1960 the New South Wales Government decided to develop a new town in the Mt Druitt area, and the Housing Commission and War Service Homes commenced the construction of dwellings in a major scheme to provide new homes. The planning for such development, and an ultimate population in the district of 170,000, was initiated by the Cumberland County Council ("the C.C.C.") in conjunction with Council.
Between 1961 and 1963 the C.C.C. had prepared plans wherein different proposals such as living area, special uses or open space were proposed in the vicinity of the subject land. In a 1963 342 AS Certificate, Council advised that |CF2.|PSI"The Cumberland County Council is preparing a Development Plan for the Mt Druitt-Rooty Hill area which might affect the zoning of this land."|CF1.|PSO In March, 1965 the Blacktown Council Draft Planning Scheme was re-exhibited, and the subject land was included in an area left unzoned and described as "Town Development Area". After its creation the S.P.A. assumed responsibility for such planning and by February, 1965 had prepared plan 10747 D23 which detailed distributor roads in the Town Development Area and, inter alia, discrete areas for living, open space industry, and a "town centre area".
That plan was adopted by the S.P.A. on 7th May, 1965. Westfield Development Corporation Limited ("Westfield") by its agent, John Biro, on 30th June, 1965 purchased 14 acres of land which was centrally located within the Town Centre Area in such plan.
By August, 1965 the S.P.A. had also prepared, in some detail, a |CF2.|PSI"layout of proposed town centre development". |CF1.|PSOThis plan not merely indicated the location of the Town Centre, but also the location of roads, road closures, buildings, carparking and open space.
The applicants had earlier had difficulty in obtaining consent to erect a brick dwelling, and thereafter sought from Council development approval to erect two shops and a dwelling on the land. On 5th October, 1965 Council advised that such application was rejected |CF2.|PSI"on the grounds that approval of the application could be at variance with subsequent proposals, which are yet to be published for this part of the municipality".|CF1.|PSO
The planning by the S.P.A. for the Town Centre had proceeded without reference to Council and as a consequence of a complaint to the Minister in November, 1965, the Chairman of the S.P.A. and his officers attended a special meeting of Council on 10th January, 1966 to explain the Mt Druitt plan. Apparently some confidential communication had taken place already with staff of Council regarding such plan. On 3rd February, 1966 Westfield purchased an adjoining 3 acres 3 roods 5.5 perches of land in the proposed Town Centre Area.
I am satisfied that in January, 1966 Council was informed of the details of Plan 10747 D23 and invited by the S.P.A. to participate financially in the development of the proposed Town Centre Area. On 5th March, 1966 Council informed the S.P.A. that it adopted the proposal, but was not able to contribute financially. On 20th April, 1966 Westfield acquired a further adjoining 6 acres 3 roods 37.25 perches in the Town Centre Area.
The Chairman of the S.P.A. on 27th April, 1966 reported to the Authority on the Town Centre and consultations with Council. He advised that the only alternatives |CF2.|PSI"now appear to be:-
ownership and merely zone it for the purpose b) for the Authority to wholly undertake the "The principal feature of the plan, however, is the 136 acres adjacent to the railway and Mt Druitt composite arrangement of community establishments and clubs, civic centre (including library, hall, centre. It is also probable that some high density proposal is illustrated on the plan herewith tagged "The Authority has examined all available land near town centre, particularly as regards extent, existing and proposed development, a site, the displacement of settled residents or the demolition costs for compensation and re-settlement of railway station were closely investigated and the considerations and factors enumerated is the site Mt Druitt submitted to the Minister. Apart from tract of land of adequate extent for commercial number of persons will be displaced, it is in close affords better facilities than any other location bridge across the railway as far as costs and the existing road pattern in the area is area.
This site proposed by the Authority, is |CF1.|PSO
Miss J.H.A. Bonney, a Town Planner called by the respondent, was of the opinion that had the S.P.A. not planned a Town Centre in the subject location, commercial development would have occurred "naturally" about one kilometre further to the west and as a north and south extension of the existing shopping centre at Mt Druitt Railway Station. She emphasised that even after Council was informed in 1966 of S.P.A. plans for the location of the Town Centre, Council made representations for a railway crossing at the location of the existing station.
The Town Centre was part of a plan prepared by the regional planning authority in conjunction with Council to amend the County of Cumberland Planning Scheme and was intended for ultimate development for a shopping centre, offices, banks, hotels and clubs by the private sector, and for land to be "allocated" for civic buildings, high school, hospital and a town sports centre. In a comprehensive report, too large to set out herein, Miss Bonney detailed the steps in the planning of the Town Centre and the reasons for the decision for its acquisition by compulsory process.
In my judgment, the evidence clearly establishes that the zoning of a large area within the Town Development Area and in the vicinity of the subject land as "Town Centre" or the like was regarded by developers and planners from 1965 onwards as inevitable . Indeed, experienced developers were either aware of the proposed location of the Town Centre planned by the S.P.A., or correctly guessed it. The precise location of such area was actually fixed upon agreement by Council in March, 1966. Such agreement was not essential for the planning of the area and therefore it is likely that such location was virtually fixed when approved by the S.P.A. on 7th May, 1965.
The location of the Town Centre was not known to Council in 1965, but was discussed with Council planners in late 1965. It is apparent from a memo of the Principal Planner of the S.P.A. that prior to November, 1965 the Town Centre and participation by major developers in its construction was discussed by officers of the S.P.A. with such major developers. Whilst the said Planner refused to reveal the location of the Town Centre to a developer in November 1965, it is not known to what extent, if any, it was disclosed to other developers.
Unfortunately, whilst Council from early 1966, and probably some major commercial developers at least from early 1965, were aware of the proposed location of the proposed Town Centre, the public nor affected land owners were not. I am satisfied that secrecy as to the location of the Town Centre was sought to be maintained to facilitate acquisition by the S.P.A. A body known as the Mt Druitt Project Property Owners' Association had requested on 24th February, 1967 that it be provided with a copy of the plan of the Town Centre which had been shown by the S.P.A. to Council. In a publication dated March 1967, the S.P.A. gave reasons which sought to justify its decision to acquire land for the town centre. By letter of 7th March, 1967 the S.P.A. denied that |CF2.|PSI"there is in existence a definitive plan for the Town Centre"|CF1.|PSO. This statement was, in my opinion, deliberately ambiguous. Whilst layout plans had been prepared and shown to Council, the said plan 10747 D23 had been adopted by the Authority and
detailed the precise approved location and boundaries of the Town Centre.
An inference that developers had probably been shown such Plan also arises because Mr Irwin M.P. is reported in Hansard on 11th May, 1967 as alleging that the S.P.A. had also shown layout plans of the Town Centre to representatives of the Australian Broadcasting Commission.
The S.P.A. adopted, in my opinion, unusual procedures in the preparation of the amending planning scheme so far as it applied to the so-called Town Development Area. The Blacktown Planning Scheme, in accordance with prescribed procedures, was exhibited in draft form for public comment, however the Town Development Area was merely identified and unzoned. I am satisfied that steps taken to achieve secrecy as to the planning proposals for that area were connected with an intention to acquire, which was at the request of and for the benefit of major development companies interested in acquiring and developing land in the Town Centre.
However, whilst rezoning was therefore deliberately postponed, I am not satisfied on the evidence that, had the S.P.A. not taken such action, rezoning for commercial purposes would have taken place prior to the date of resumption.
The applicants submit:
1. That the S.P.A. took steps in the resumption process which had a depreciating effect upon the value of the land.
2. Such depreciating effect upon value must be ignored; Housing Commission of New South Wales v. San Sebastian Pty Limited, 37 L.G.R.A. 214.
3. Alternatively, at date of resumption the land had an identified potential for commercial development.
4. Whilst land had been acquired by developers in the locality for future commercial development, such sales must be adjusted to allow for escalation in value of land at date of resumption.
The respondent submits:
Whether or not the effect of secrecy or delay in prescription of the commercial zoning of the land is ignored, the land had little value for commercial purposes over its residential value.
It is common ground that if the land is valued as having commercial potential the applicants are not entitled to the value of the existing improvements which are not required for such notional use; see also my decision in E. Bergman v. Council of the Municipality of Holroyd, 6th July, 1988 (unreported).
Valuation evidence for the applicants was given by Mr N.J. Bridger. He was of the opinion that the value of the land at resumption date must reflect a commercial potential. He accepted the second and third Westfield sales as representing the value of land in the locality prior to the effect on values of the acquisition activities of the S.P.A.; i.e. $5,800 per acre. He estimated escalation in value of comparable land to the date of resumption to be at a rate of 10% per month (twenty months). In his opinion the value of the land was $39,000 per acre, i.e. $292,500. He also sought to analyse a lease in 1972 of land in the area to deduce the value of land. He sought to check such assessment by comparison with the sale price in 1968 of fully serviced commercially zoned land at Rooty Hill and Blacktown at $43,386 per acre and $107,600 per acre respectively. I am unpersuaded that the evidence enables the value of the subject land to be deduced from the sales of serviced land in long established areas and already zo
ned for commercial purposes. Such sales compel not only adjustment for the effect on value of the delay in rezoning and the uncertainty of the precise nature of future zoning, but also for important matters such as different location, date of sale and the timing and cost of the provision of services and access.
Mr K.J. Parkinson, valuer for the respondent, had been a practitioner in the locality at the relevant time, and in 1971 had carried out, for others, valuations of the claims of a number of dispossessed owners in the area, including the applicants. As now, he then concluded that |CF2.|PSI"the subject section of Mt Druitt was 'over-ripe' for release"|CF1.|PSO and that the subject land should be valued as having a commercial potential. At that time, however, he was of the opinion |CF2.|PSI"that the best price that can be supported for the dispossessed owners in this area is a price based on those paid to other property owners in the area by the S.P.A."|CF1.|PSO. He examined also the "Hodgekiss" purchase at $6,597 per acre and the "Westfield" purchase which he then analysed at $3,403 per acre. It now appears that particulars available at that time as to the "Westfield" sales were somewhat erroneous. He examined a sale in the Green Valley Housing Commission Estate of 7 acres 11.5 perches of serviced commercial lan
d representing $40,000 per acre as at 1968, and other commercial sales in Blacktown. In his 1971 valuation it was his opinion that the value of a typical centrally located level site in the Town Centre Area at resumption date was $9,600 per acre.
However, he was of the opinion that prices paid by the S.P.A. in the locality exceeded residential value, and assessed the value of the subject land at $31,875, i.e. $4,250 per acre.
In his valuation prepared for this case Mr Parkinson arrived at precisely the same sum, although assessed from different sales and by a different process of valuation. He considered that the purchases by Hodgekiss and Westfield, and ultimate sale to the S.P.A., |CF2.|PSI"best reflect the value of the subject resumed land"|CF1.|PSO. If I correctly understand his exercise, he gained greatest assistance from the sale to Hodgekiss. He emphasised the location, size and access to the subject land and was of the opinion that all of the sales, particularly the Hodgekiss purchase, were superior, more easily serviced, better located for commercial development and more valuable at resumption date than the subject land. I reject his contention that the Westfield and Hodgekiss land exhausted the need for commercial land in the forseeable future. He stressed the generally low level of land value in the district at the relevant time, and was firmly of the opinion that a rate of $4,250 per acre fully reflected the developmen
t potential of the subject land as at January, 1968. He rejected the valuation exercise of Mr Bridger and his escalation rates.
Neither party now relies to any significant extent upon the sales to the S.P.A. It is well established that such sales to a statutory body with power of compulsory acquisition must be treated with caution. However, there is no principle of law which compels this Court to reject such sales, whether they took place before or after the date of resumption. Whilst it is very difficult in most circumstances to accept such sales to be examples of "voluntary bargaining", in the absence of any other evidence the Court may be obliged to rely upon them; Woollams v. The Minister, 2 L.G.R.A. 338 at 347; Tatmar Pastoral Company Pty Limited and Anor v. The Housing Commission of New South Wales, Cripps J., 17th March, 1982 (unreported).
In this case, however, I am satisfied that each was based on a residential value only and therefore inappropriate for use in the assessment of compensation in this matter.
The prices paid by the S.P.A. for its acquisitions in 1967 ranged from $3,400 to $4,800 improved per acre. Contracts were not sighted by the valuers in this case, and relevant S.P.A. files have been lost or destroyed. I note, however, that in his submission in 1965, in which he canvassed reasons why the S.P.A. should acquire such lands, the Chairman reported that:|CF2.|PSI
"The Authority envisages acquiring the town centre lands at residential value which will allow an increment on the present non-urban value."|CF1.|PSO
The Senior Valuer of the S.P.A. estimated at that time an acquisition cost of $4,000 per acre, plus re-establishment costs. It was also intended that |CF2.|PSI"prices paid to all owners of land affected will be uniform"|CF1.|PSO, and that |CF2.|PSI"as a matter of equity, the Authority feels that the degree of compensation that any owner receives in the town area should not be dependent on the accident of whether his land is required for open space, residential, commercial or other development"|CF1.|PSO.
Vacant residential allotments could be acquired in Mt Druitt at date of resumption for between $1,200 and $2,000 per lot. In my judgment, the prices paid by the S.P.A. in its acquisitions in 1967 reflect only a residential value of such lands. In my opinion, there is a strong inference that such prices were obtained in some cases below the S.P.A. estimates of their true value as a consequence of the likely threat of resumption. I therefore reject the use of sales to the resuming authority. I also reject the valuation approach of Mr Parkinson which, in my judgment, is not supported by the sales evidence and reflects only the residential potential of the subject land.
It is common ground between the Valuers that the land must be valued at the date of resumption so as to reflect a commercial potential. However, in my opinion, for a number of reasons a direct application of none of the sales can fully reflect such potential. The most significant factor is that they took place well before the relevant date. I am satisfied that, at least from 14th January, 1967 when the S.P.A., a statutory body with powers of compulsory acquisition, made offers to buy the land in the Town Centre, a freeze was effected on private acquisition. It is also likely that even before that time the earlier discussions and negotiations between developers and the S.P.A. gave them the opportunity to stay out of the market and await acquisition by the S.P.A. before they sought to acquire land in this area.
Both parties rely upon the Hodgekiss and Westfield sales, but I also have reservations as to whether such sales fully reflect the potential of the properties at their respective contract dates. Whilst vendors would have been aware that their land was included in a Town Development Area and subject to further planning, the conduct of the S.P.A. and Council effectively denied them knowledge and confidence that their land was included in a Town Centre rezoning proposal. At the same time, however, discussions were being held between the S.P.A. and developers encouraging them to redevelop in the area.
In such circumstances I find it difficult to accept that both parties to each of the contracts were seized with details of all circumstances affecting the value of the land; Spencer v. The Commonwealth of Australia (1907) 5 C.L.R. 418 at 441. Whilst the Court in that matter was dealing with the manner in which compensation is to be assessed, in my opinion it provides the test to be applied to sales upon which such assessment may be based. Isaacs J. said:|CF2.|PSI
"We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property."|CF1.|PSO
The parties expressed regret at the paucity of sales evidence at the relevant date, but that does not alleviate the difficulty of the Court's duty to determine compensation. Undoubtedly the hypothetical purchaser and the vendor must fix the price based upon the same available evidence. In my judgment, the evidence supports the concession by Miss Bonney that, had a decision not been taken by the planning authority to acquire and sell off land in the Town Centre, in the ordinary course it would ultimately still have been zoned "Town Centre" or a mix of commercial, special uses and open space zonings in the Blacktown Planning Scheme. Further, if steps taken by the S.P.A. which have a depreciating effect upon value are ignored (San Sebastian, supra), both parties at the date of resumption would be fully aware of the S.P.A. proposals and would conclude that the rezoning of the land as town centre or the like, including commercial purposes, was imminent. They would also be aware of the interests of major developers
in other parts of that centre. The proximity to the Westfield land and knowledge that a development application for a shopping centre had not been rejected but deferred, would be of singular importance and encouragement. In my judgment, the Hodgekiss acquisition, with all of its uncertainties, was a free market transaction by a developer for commercial purposes, and by a vendor likely to have knowledge of the Westfield sales and inclusion of those premises in the Town Development Area. It is therefore the best available evidence upon which to base the valuation of the subject land. The Hodgekiss acquisition was the most proximate in time, but to the west and separated from Westfield land by a public road. I do not accept that the Hodgekiss land enjoyed a superior location or any significant advantage to warrant a higher value than the subject land.
I accept that the absence of sales evidence in the locality was a direct consequence of the activities of the S.P.A. in pursuance of its decision to purchase or compulsorily acquire all land in the Town Centre. It is common ground, however, that all types of land in the area escalated in value between 1965 and the date of resumption. The estimate of such escalation made by Mr Bridger is rejected because it is not supported by the sales evidence. The possibility that the later sales to Westfield could have been pursuant to an option also makes them unreliable for this purpose. In my opinion, the unreliability of the escalation figure adopted by Mr Bridger is demonstrated by the resultant rate per acre which approximates the value of zoned and serviced commercial land with good access in established shopping centres.
Mr Parkinson was of the opinion that there was little evidence to demonstrate that escalation rates for commercial land differed from those of residential land. In his opinion, whilst there was a substantial escalation between 1968 and 1970, between 1965 and 1966 it was, compounded, 3% per annum, 6% per annum between 1967 and 1968, and 15% per annum between 1967 and 1969.
In his 1971 valuation Mr Parkinson assessed the value of a centrally located level parcel in the Town Centre at resumption date as having a value of $9,600 per acre. This was based primarily on doubling the Hodgekiss sale to allow for escalation (which he thought would be too high) and comparing it with a sale of 7 acres of zoned commercial serviced land at Green Valley.
The first acquisition of land for commercial purposes in the Town Centre Area was the purchase by Westfield on 30th June, 1965 at $2,468 per acre. The last free market sale for the same purpose was the Hodgekiss sale on 7th October, 1966 at $6,597 per acre. A comparison of the two sales suggests a compound interest increase of 6.5% per month. The resumption was effected 14 months after the Hodgekiss sale. If an escalation rate of 6.5% per month was applied to the Hodgekiss sale price, it would indicate a rate per acre of approximately $16,000 as at the date of resumption.
To determine the value of the subject land at date of resumption I must, as far as possible, put myself in the position of persons fully conversant with the land and ascertain what the purchaser would have had to offer to induce a willing vendor to sell it. In other words, at what point would they reach agreement. In my opinion, the Hodgekiss sale is the best available evidence but, for reasons already given, is most likely not to reflect fully the potential of the land for commercial development and is possibly too low.
On the other hand, the only safe evidence of escalation of land with commercial potential is that calculated between the Hodgekiss sale and the first Westfield sale. In my opinion, the deduced escalation rate is probably too high.
However, in my judgment, a desirous purchaser and not unwilling vendor would take all of these matters into account. In my opinion, they would reject a rate per acre approximating that paid for fully serviced commercially zoned land and "come together" (Spencer, supra, at pp.432 and 441) at a per acre rate of $16,000. In my judgment, doing the best I can, I consider that such figure should be adopted because it satisfactorily resolves all doubts as to the value of the land to the owner at the relevant date. The land has an area of 7.5 acres, and the value to the owner of the resumed land is therefore $120,000.
I therefore make the following orders:
1. Compensation assessed at $120,000.
2. Exhibits may be released.
3. The respondent to pay the costs of the applicants.
0
0
1