Canal Aviv Pty Ltd v Roads and Maritime Services

[2018] NSWLEC 52

Land and Environment Court

New South Wales

Medium Neutral Citation:	Canal Aviv Pty Ltd v Roads and Maritime Services [2018] NSWLEC 52
Hearing dates:	27 and 28 February and 1, 2 and 5 March 2018
Date of orders:	24 May 2018
Decision date:	24 May 2018
Jurisdiction:	Class 3
Before:	Moore J
Decision:	See directions at [284]
Catchwords:	COMPULSORY ACQUISITION - portion of landholding acquired for WestConnex project - agreement on value of acquired land - no agreement on impact on value of residue land - consideration of impacts on residue land - overall negative impact on residue land - extent of impact on value determined - compensation to be ordered MODEL LITIGANT POLICY - applicant complains respondent has not acted in accordance with its obligations imposed by the State’s Model Litigant Policy - not a matter for the Court - alternative avenues for complaint lie in the hands of the applicant COMPULSORY ACQUISITION - claim for stamp duty for replacement property - Fitzpatrick basis for considered and rejected - consideration of decision in SNS - SNS provides no alternative basis for claim - stamp duty claim rejected COMPULSORY ACQUISITION - claim for reimbursement for land tax - claim made as either part of market value or as a disturbance claim pursuant to s 59(1)(f) of the Land Acquisition (Just Terms Compensation) Act 1991 - neither statutory provision provides support for the claim - claim rejected
Legislation Cited:	Land Acquisition (Just Terms Compensation) Act 1991 Land Tax Act 1956 Land Tax Management Act 1956, s 10AA
Cases Cited:	Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259 Carlewie Pty Ltd v Roads and Maritime Services [2017] NSWLEC 78 Dial A Dump Industries Pty Ltd v Roads and Maritime Services [2017] NSWCA 73 Dial A Dump Industries Pty Ltd v Roads and Maritime Services [2016] NSWLEC 39 George D Angus Pty Limited v Health Administration Corporation (2013) 205 LGERA 357; [2013] NSWLEC 212 Hatzivasiliou v Roads and Maritime Services [2017] NSWLEC 9 Housing Commissioner of New South Wales v Falconer and Others [1981] 1 NSWLR 547 Konduru t/as Warringah Road Family Medical Centre v Roads and Maritime Services [2017] NSWLEC 36 Leichhardt Council v Roads & Traffic Authority of NSW (2006) 149 LGERA 439; [2006] NSWCA 353 SNS Pty Ltd v Roads and Maritime Services [2018] NSWLEC 7 Speter v Roads and Maritime Services [2016] NSWLEC 128 Sydney Water Corporation v Caruso [2009] NSWCA 391 The Melbourne Steamship Company v Moorehead 15 CLR 333 Toveno Pty Limited v Roads and Maritime Services [2014] NSWLEC 1266
Category:	Principal judgment
Parties:	Canal Aviv Pty Ltd (Applicant) Roads and Maritime Services (Respondent)
Representation:	Counsel: Mr J Lazarus and Mr L Waterson, barristers (Applicant) Mr P Tomasetti SC/Ms F Berglund, barrister (Respondent)   Solicitors: King and Wood Mallesons (Applicant) Herbert Smith Freehills (Respondent)
File Number(s):	130795 of 2017
Publication restriction:	No

TABLE OF CONTENTS

Introduction

The effect of the acquisition

The public purpose

The issues in dispute

The evidence

1-3 Ricketty Street, Mascot

The site inspection

The relevant statutory framework

Valuation methodology

The position of the valuers

The Model Litigant Policy

Introduction

The Company's written submissions

Mr Lazarus' oral closing submissions

My exchange with Mr Lazarus on this point

Conclusion on the Policy

The acquisition impact on the value of the residue land

The comparable sales relied upon

The starting rate for the residue land

Introduction

Mr Lunney's post-acquisition position

Mr Davis’ post-acquisition position

Conclusion on the starting value for the residue land

Potential adjustment factors for the residue land

Introduction

Access to the residue land

Introduction

Construction access to the residue land

Access from the north

Egress from any redevelopment on the residue land

Introduction

Additional exposure to passing traffic

Ricketty Street into Venice Street

Timing of development activities

Introduction

Construction of Venice Street

Development of the residue land

Valuation adjustments for the residue land

Introduction

Mr Davis’ adjustments to the starting value of the residue land

Introduction

Mr Davis’ starting value

Mr Davis’ general adjustments

Mr Davis’ further adjustment of 10%

Conclusion on Mr Davis’ approach to the residue land

General conclusion on the valuers’ evidence concerning the residue land

Consideration of the various factors potentially impacting the residue land

Introduction

The impact of the broader WestConnex project

Reduction in size

The impact of redevelopment commencement timing

Reduction in rental income potential

Reduced building footprint on the residue land

The new access from the north

Egress from the residue land post-redevelopment

Overall conclusion of impacts on the residue land

The stamp duty claim

Introduction

The relevant passage in SNS

Mr Ronen’s evidence

Consideration of this claim

Introduction

The Fitzpatrick principles

The decision in SNS

Conclusion on the stamp duty compensation claim

The land tax claim

Introduction

Quantum of the land tax claim

The valuers’ land tax evidence

The Carlewie decision.

The RMS’ submissions

The Company's position

Consistent practice

Conclusion on the market value land tax claim

Land tax and s 59(1)(f) of the Land Acquisition Act

Conclusion on the land tax compensation claim

Conclusion

Introduction

Impact on the value of the residue land

The stamp duty claim

The land tax reimbursement claim

Costs

Directions

JUDGMENT

Introduction

1. HIS HONOUR: In early September 2015, Canal Aviv Pty Ltd (the Company) entered into a “put and call” option to purchase 1-3 Ricketty Street, Mascot (the parent parcel). Shortly thereafter, Mr Ronen, the director and sole shareholder (and therefore guiding mind) of the Company, was made aware that portion of the parent parcel would be required to be acquired for an element of the major public road project known as WestConnex. Nonetheless, Mr Ronen caused the Company to complete the acquisition of the parent parcel, an acquisition which took place in late 2015.

2. On 24 February 2017, the required portion of the parent parcel was compulsorily acquired by Roads and Maritime Services (the RMS) for the purposes of the new M5 element of the WestConnex project (the New M5). The consequence was that the compensation provisions set out in the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act) were triggered. The Company did not accept the compensation determined by the Valuer General to be appropriate and exercised its right to commence an appeal to this Court pursuant to the relevant provisions of the Land Acquisition Act.

The effect of the acquisition

3. The parent parcel comprised Lot 24 in Deposited Plan 515070, Lot 25 in the same Deposited Plan and Lot 1 in Deposited Plan 551509. The portion of the parent parcel which comprised Lot 1 was compulsorily acquired for the purposes of the New M5.

4. Although discussed more fully later, it is sufficient for present purposes to observe that Lot 1, pre-acquisition, was used for the purposes of providing access to Lots 24 and 25 from Ricketty Street. After the acquisition of Lot 1, it is currently being reconstructed as a public road to be known as Venice Street (Lot 1 will be referred to, subsequently in this judgment, as either the “acquired land” or “Venice Street” as the context demands). Lots 24 and 25 remain owned by the Company and are to be referred to, for the remainder of this judgment, as the “residue land”.

The public purpose

5. The land for Venice Street was acquired to form part of works described as the New M5 (the public purpose), an element of the larger WestConnex road project.

The issues in dispute

6. At the commencement of the proceedings, the matters that were in dispute between the Company and the RMS were:

1. The value of the acquired land as at the date of acquisition;

2. The impact (if any) of the acquisition of the acquired land on the value of the residue land as at the date of acquisition;

3. The claim that the Company was entitled to be reimbursed for a portion of the land tax which it was required to pay in instalments during 2017, with the land tax liability arising as a consequence of the Company's ownership of the parent parcel as at 31 December 2016;

4. A claim for the RMS to meet the future stamp duty costs to be incurred by the Company on the acquisition of replacement land to take the place of the acquired land; and

5. The amounts for which the Company was entitled to reimbursement of various expenses arising from the acquisition and compensation determination process. Agreement on these amounts was reached during the hearing and did not require my determination.

The evidence

7. A large volume of documentary material in three volumes of the Court Book was tendered and, during the course of the trial, a number of further documents were also tendered. Individual expert reports and, as necessary, joint expert reports, were tendered in the following disciplines:

• Town planning;

• Traffic management;

• Valuation; and

• Architecture.

8. Limited oral evidence was required during the hearing from expert witnesses, with this being required from:

1. Mr Hollyoak for the RMS and Mr McLaren for the Company (traffic management); and

2. Mr Lunney for the RMS and Mr Davis for the Company (valuation).

9. Mr Ronen also provided an affidavit in the proceedings and was required for cross-examination.

1-3 Ricketty Street, Mascot

10. The parent parcel had an area of 11,470 square metres. Of this area, 2,529 square metres comprised the acquired land and 8,941 square metres comprised the residue land. Pre-acquisition, the parent parcel had a frontage of approximately 84 metres to Ricketty Street and a frontage, post-acquisition, of approximately 63.7 metres to that street. Pre-acquisition, access to the parent parcel was via that element which became the acquired land with the acquired land having been used to provide some 58 parking spaces serving the parent parcel, as well as providing access to those elements of the parent parcel that became the residue land.

11. Post-construction of Venice Street, access to the residue land will be from it rather than directly from Ricketty Street. There will be around 130 metres of parking spaces along Venice Street, providing parking for around 21 cars.

12. The parent parcel had a western boundary of approximately 151.1 metres comprising a gently curving frontage to the Alexandria Canal. This boundary remains unchanged for the residue land but plays a role, as a consequence of development constraints arising from applicable planning controls, in consideration of future potential uses of the residue land.

13. The northern boundary of the parent parcel had a length of 83.9 metres abutting industrial land located to the north. Pre-acquisition, there was no vehicular access across the northern boundary of the parent parcel. Post‑acquisition, the northern boundary of the residue land will be approximately 63.8 metres and access (in a fashion requiring some detailed description later) will also be available from the north, as a consequence of the construction of Venice Street as a slip road linking to Gardeners Road (one-way traffic from Gardeners Road to it joining Venice Street proper at its turning bulb and hence two-way to Ricketty Street).

14. As to the eastern boundary of the parent parcel and, subsequently, of the residue land, there is no functional difference apart from the fact that the consequence of the resumption of the acquired land has moved this boundary some 20.12 metres the west.

The site inspection

15. During the afternoon of the first day of the hearing, a site inspection was undertaken. The inspection comprised an inspection of the parent parcel and a drive-by viewing of 202-212 Euston Road, Alexandria (202‑212 Euston Road). What follows is a description of that which was observed during the course of the site inspection and the various locations from which those observations were made.

16. The topography of the parent parcel was near level. The acquired land comprises an almost north-south-running, rectangular-shaped lot. The parent parcel is located on the northern side of Ricketty Street, approximately eight kilometres south from the City of Sydney, with truck and vehicle access now available from Gardeners Road as a consequence of the acquisition of land for creation of Venice Street to the north of the acquired land.

17. First, we travelled along Gardeners Road, a public road, before continuing to travel, by way of a truck and vehicle access route off Gardener Road, in a generally south-westerly direction into the residue land. The parent parcel had been developed some time ago with two separate buildings - one with a Ricketty Street frontage and the other toward the northern boundary of the site.

18. We were taken to the site frontage to Ricketty Street. This portion of Ricketty Street comprises two eastbound lanes with a speed limit of 60 kilometres per hour. A third eastbound lane commences to the east of the site. There is a median strip preventing a right turn in from or out to Ricketty Street from the acquired land.

19. A large tar-sealed parking area separated the two buildings. This parking area had been subject to a lease to Secure Logistics Pty Ltd (Secure Logistics) to be used for truck parking. This use gives rise to matters requiring consideration as to what value the loss of availability of this space for truck parking purposes might play, post-acquisition, on the value of the residue land pending redevelopment.

20. The acquired land is situated on the northern side of Ricketty Street and had a southern frontage to Ricketty Street of 20.12 metres. Stage 1 of construction of Venice Street was underway on the acquired land. Part of the acquired land was constrained by a temporary construction fence, with pedestrian access on it left open to enable access to Ricketty Street from the residue land.

21. Venice Street is to be a two-way, two-lane road with a left-in-left-out intersection with Ricketty Street. A bulb will be located on Venice Street to the north of the acquired land to be used as a turning circle. We were taken to the location of the future head of Venice Street and viewed the area where the slip road from Gardeners Road would join the bulb.

The relevant statutory framework

22. The process pursuant to the Land Acquisition Act earlier described has been invoked by the Company with respect to the compensation determined by the Valuer General for the compulsory acquisition of land on 24 February 2017 for the creation of Venice Street. There are four provisions of the Land Acquisition Act which are relevant to these proceedings. The first is s 66 of the Land Acquisition Act, the provision which sets out the basis upon which the Company can object to the Valuer General’s determination. The provision is in the following terms:

66   Objection against amount of compensation offered

(1)   A person who has claimed compensation under this Part may, within 90 days after receiving a compensation notice, lodge with the Land and Environment Court an objection to the amount of compensation offered by the authority of the State.

(2)   If any such objection is duly lodged, the Land and Environment Court is to hear and dispose of the person’s claim for compensation.

(3)   …

(4)   …

23. The second relevant provision is that which specifies an exhaustive list of the matters that are to be considered in determining the amount of compensation to which the Applicant is entitled. The relevant elements of this provision, s 55 of the Land Acquisition Act, are in the following terms:

55   Relevant matters to be considered in determining amount of compensation

In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division):

(a)   the market value of the land on the date of its acquisition,

(b)   …

(c)   …

(d)   any loss attributable to disturbance,

(e)   …

(f)   ...

24. The two further relevant provisions are set out below:

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.

(2)   ...

(3)   …

59   Loss attributable to disturbance

(1)   In this Act:

loss attributable to disturbance of land means any of the following:

(a)   …

(b)   …

(c)   …

(d)   …

(e)   …

(f)   any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.

(2)   …

Valuation methodology

25. Mr Lunney and Mr Davis agreed that the appropriate valuation methodology to be applied was the before-and-after method. This methodology requires an assessment of the value of the parent parcel, on a rate per square metre basis, as at the date of acquisition. That rate per square metre, they agreed, was appropriate to be determined by a process of analysis of relevant comparable sales. The derived, analysed rate from the relevant sale(s) was then to be applied to the area of the acquired land for the purposes of calculating the compensation to be paid to the Company for the acquisition of that land.

26. For the purposes of assessing what compensation (if any) should be paid to the Company for impacts on the residue land as a consequence of the resumption of the acquired land, a derived starting rate per square metre is to be taken with adjustments (if required) to be made to that rate before deriving an analysed rate per square metre, post-acquisition, for the residue land. The difference between the pre-acquisition rate per square metre for the parent parcel and the post-acquisition rate for the residue land is then applied to the area of the residue land to calculate the amount of compensation (if any) to which the Company is entitled as a consequence of the impact of the acquisition of the acquired land for Venice Street, as part of the New M5 project on the value of the residue land.

The position of the valuers

27. Mr Lunney and Mr Davis each prepared individual expert reports on the valuation matters arising for consideration in the proceedings. Having done so, they then undertook a joint expert conferencing process which resulted in the preparation of two joint expert reports.

28. At the commencement of the conferencing process, the issues which were in dispute between them were:

1. The value of the parent parcel as at the date of acquisition (from which the value of the acquired land could be determined);

2. The extent (if any) to which the acquisition of the acquired land impacted on the value of the residue land; and

3. The extent to which the proportionate outstanding land tax liability relating to the acquired land would be taken into account in any hypothetical transaction involving the parent parcel as at the date of acquisition.

29. For the purposes of their comparable sales analysis to establish the value of the parent parcel as at the date of acquisition, Mr Lunney and Mr Davis agreed that the most relevant comparable sale was the sale of the parent parcel itself, as that sale was an arm’s length transaction with the purchase price having been struck without the purchaser (the Company) being aware of future impact of the requirement to resume the acquired land for the purposes of constructing Venice Street as part of the New M5.

29. Although Mr Lunney relied on other sales at 12-18 Burrows Road, St Peters and 202-212 Euston Road to assist with his analysis, they played no major role in his derivation of an analysed rate for the parent parcel, at the date of acquisition, of $1,650 per square metre.

30. Mr Davis also agreed that the sale of the parent parcel was the most relevant comparable sale but, in addition, he relied upon the sale of the Slazenger site and the site at 202-212 Euston Road for the purposes of his analysis. Mr Davis derived an analysed rate of $1,500 per square metre of the parent parcel, as at the date of acquisition, for the purposes of preparation of his individual expert report.

31. During the course of the joint conferencing process, Mr Lunney and Mr Davis reached agreement that, having regard to their individually derived rates, it was appropriate to compromise and agree that the rate per square metre for the parent parcel (and thus appropriate to be applied to the area of the acquired land) to compensate the Company for its acquisition was $1,575 per square metre. As a consequence of Mr Lunney and Mr Davis reaching agreement on this rate, the amount of compensation due to the Company for the resumption of the acquired land was no longer in dispute.

32. However, the second and third of the items in dispute between Mr Lunney and Mr Davis remain for my determination. The written and oral evidence concerning these two matters requires further consideration (particularly with respect to what is said by Mr Davis to be the adverse impact of the acquisition for, and the creation of, Venice Street on the residue land).

The Model Litigant Policy

Introduction

34. During the course of his closing submissions, Mr Lazarus, counsel for the Company, handed up a copy of the State Government’s Model Litigant Policy (the Policy). He did so for the purpose of addressing what he said were contradictory positions which the RMS had taken in relevant court proceedings, including these proceedings before me. In this regard, he was contrasting an element of that which had been submitted to Pain J in SNS Pty Ltd v Roads and Maritime Services [2018] NSWLEC 7 (SNS) and what had been submitted to me on the same point in these proceedings.

The Company's written submissions

35. The relevant portion of the Company's written closing submissions on this point were in the following terms (Applicant’s written submissions at (54)):

The RMS’ contention in these proceedings is the exact opposite of the contention it made in SNS. This is blatantly inconsistent with the NSW Government’s Model Litigant Policy, which obliges the RMS to act “consistently” in litigation. That a higher standard of fairness and consistency is required of the State and its agencies in respect of the conduct of litigation has been recognised in numerous authorities. In those circumstances, the RMS should not be permitted to put the submission at all. It should be bound by its conduct in SNS. [footnotes excluded]

Mr Lazarus' oral closing submissions

36. Having handed to me a copy of the Policy, Mr Lazarus made submissions concerning how I should have regard to the Policy in these proceeding in light of what he said were submissions made on behalf of the RMS in the SNS proceedings (Transcript, 5 March 2018, page 306 line 10 to page 307 line 35):

LAZARUS: Thank you, your Honour. Before I take your Honour to the policy, the submission that I'm going to put to your Honour is that the RMS should not be permitted, because of the Model Litigant Policy, to put the submission that Mr Tomasetti foreshadowed in opening - should not be permitted. The reason for that, your Honour, is that if one considers the Model Litigant Policy one sees para 2.1, so it's a policy clearly applying to the RMS in this case.

3.1, "The obligation to…and court rules," and it requires the State and its agents "to act with complete propriety, fairly and in accordance with the highest professional standards."

TOMASETTI: This is a Bar Association complaint, is it? Really.

LAZARUS: My friend can put what submissions he wants but he really shouldn't interrupt because this is important. 3.2, "The obligation requires…claims and litigation", and your Honour will see (c) which is the one to which we draw particular attention, "acting consistently in the handling of claims and litigation."

What we say, your Honour, is that the RMS put a diametrically opposed position to the position they wish to put in this case in SNS. They submitted to Pain J that she should not have regard to any post acquisition material because of - well, that was the submission that was put. I'll take your Honour to it. I think your Honour should have a copy of the SNS because I think my friend handed it up in opening. Does your Honour still have that?

HIS HONOUR: It doesn't matter. I can get it.

LAZARUS: I do wish to take your Honour to certain sections of the judgment.

HIS HONOUR: I understand that. Yes, I'm there.

LAZARUS: Your Honour sees, turning first to para 185, "The RMS objected…at that date." That was their position in a case to do with land a few hundred metres away, the same project in a case decided less than a month ago. Her Honour dealt with that submission at para 184. I'll take your Honour to that.

HIS HONOUR: I'm there.

LAZARUS: Her Honour says, "A threshold issue…establish a hindsight." Then her Honour refers to Allandale at 60 to 61, which were the principle paragraphs to which my learned friend drew attention in opening. Consideration of events after the date of acquisition, where a claim was made based on in duress affection, in relation to the level of risk of access to land was allowed.

Then her Honour refers to her decision in Bligh to which I might add there was no adverse reference on this topic made in the Court of Appeal. I found that Allandale did not expressly support an approach that events up to the date of hearing can be considered. Greater consistency of approach to valuation is achieved in the before and after methods if events are the date of acquisition are justified by a falconer.

And your Honour, we say, that is entirely consistent with the principle, is not inconsistent with Allandale and your Honour should follow it unless your Honour is convinced that it’s clearly wrong, as a matter of comity if nothing else. Now, we deal with the question of the authority of Allandale at para 52 as we point out that Allandale itself was solely concerned with the assessment, separate assessment, I should say under 55F and not the market value of the acquired land under 55A.

Thus, to the extent that, some parts of the judgment are consistent with the proposition that regard may be had to post acquisition evidence this cannot be transposed to the present case where a before and after method is used to assess both the market value of the acquired land and in duress affection under 55F. It just doesn't work if one is undertaking a before and after case and methodology, I should say, that is, what Pain J has found.

And until the Court of Appeal says that she was wrong to distinguish Allandale in that fashion your Honour should follow it, follow her decision. And we explain that at paras 55 and 45. Paragraph 57, there's simply, we say that once you disregard the post-acquisition matters there's simply no evidence for the RMS's assumptions. And indeed, we would submit your Honour there's no evidence in support of those assumptions, in particular the last two assumptions made by Mr Tomasetti at all, at all. And that would have been a simple matter for the RMS to address had that been the correct position but they haven't.

HIS HONOUR: And it follows from what you say that, I, on your submission, therefore exclude what I saw concerning the staging in Venice Street during the site inspection.

LAZARUS: Correct. Correct, but the alternative submission is, even if you have regard to it, you place very little weight on it for the reasons that I gave a little while ago.

My exchange with Mr Lazarus on this point

37. During the course of Mr Lazarus' closing submissions, I had the following exchange with him concerning the propositions he was advancing concerning the Policy. This exchange was in the following terms (Transcript, 5 March 2018, page 308, lines 1 to 18 and page 308, line 34 to page 309, line 1):

HIS HONOUR: Right, let me just take you back to the Model Litigant Policy in the extent to which you complain about it. In this context I am not to be taken to be commenting on what her Honour said at 184 merely the proposition that you advances with respect to the Civil Litigant Policy. Isn't it the fact that, it would not be appropriate for me to enter into what might or might not be a proper debate about the conduct of Mr Tomasetti's client as a litigation strategy to the extent that there might be any legitimacy in that.

And I'm not to be taken to be saying that there is. The Model Litigant Policy is a political document in a small “p” fashion to the extent that there might be anything that could be regarded as binding the RMS in it. Is that not a matter properly dealt with in the political arena either directly with the RMS's political mistress or through, for example, the ombudsman?

LAZARUS: No, no, your Honour, well, yes, but we would be submit that it has wider implications. And that is because the Model Litigant Policy and its predecessors have been considered to affect or should affect litigation in a substantive sense.

...

HIS HONOUR: Well, to the extent that, perhaps, the appropriate descriptor might be in your proposition ought not be permitted as opposed to should not. And to the extent that that gives rise to something that should be dealt with I'm testing you on the proposition as to whether this is the appropriate forum in which to deal with it to any extent beyond, if I were minded to do so.

And by saying so, I'm not indicating that I am or am not by saying, yes, the RMS has been naughty in that respect or - and has apparently adopted mutually contradictory positions. But not that I should then, in effect, give rise to some sort of estoppel about them proceeding to rely on the contradictory position.

LAZARUS: Well, I think that, with respect the estoppel analogy is an apposite one, that's the way, we submit that, this should operate. This operates as a promise on behalf of the government and it's a promise that should be enforced by the Courts. The RMS should not, on our submission, be permitted to blow hot and cold on the same legal issue and say one thing one week and the complete opposite thing the next...

Conclusion on the Policy

38. In his written submissions on this point, Mr Lazarus had referred to the reasons of Basten JA in Mahenthirarasa v State Rail Authority of New South Wales (2008) 72 NSWLR 273; [2008] NSWCA 101 (Mahenthirarasa), at [16] to [20].

39. In his oral submissions, Mr Lazarus spoke further on this point (Transcript, 5 March 2018, page 308, lines 18 to 33):

LAZARUS: …we give your Honour the reference, at footnote 59, to a decision of Basten J, I won't attempt to pronounce or attempt to pronounce the name of the case but it's the SRA case in 2008.

HIS HONOUR: Yes.

LAZARUS: I think his Honour held in that case - the policy was not merely to be regarded as an aspirational document as it were but actually affected matters in the litigation in a substantive sense. It wasn't the same proposition, that is, the consistency obligation. But we would submit that, it's but a short extension to say that the Model Litigant Policy requires the RMS to act in a particular way. It binds the RMS and the RMS should not be permitted to advance a diametrically opposed legal proposition in one case from the proposition that was put in a case that was decided a month, they just shouldn't be permitted to do that. So that's what we say on that that topic.

40. In Mahenthirarasa, the State Rail Authority opposed the application made to the Workers Compensation Commission. On judicial review proceedings, in the Supreme Court and the Court of Appeal, the State Rail Authority filed a submitting appearance and attended proceedings by its legal representative, making no submissions throughout. The paragraphs of the judgment referred to by Mr Lazarus ((16) to (20)) contain Basten JA’s review of the authorities regarding the standards expected by the courts of the executive branch in its conduct of litigation.

41. A consideration of the cases set out in [16] to [22] of Mahenthirarasa indicates that the assistance expected of the executive branch of government (and to which it is required to adhere) are standards of fair dealing at a level of broad generalisation, “best appreciated in its particular exemplifications in individual cases” (The Melbourne Steamship Company v Moorehead 15 CLR 333 at [45]). These observations were made by Basten JA, at [22]:

On the appeal, this Court expressly invited the State Rail Authority to reconsider its position and provide assistance to the Court. It declined to do so. Again, it should be assumed that, upon the institution of the appeal, the State Rail Authority gave consideration to whether it should actively defend the benefit it had obtained in the lower Court or concede that the judgment should fairly be set aside. Whatever view was formed, on appropriate advice, this Court did not have the assistance which might have been offered consistently with the view adopted by the State Rail Authority. The principles applicable to a model litigant required it to deal with claims promptly, not to cause unnecessary delay, to endeavour to avoid litigation wherever possible, not to resist relief which it believes to be appropriate and not to decline to provide appropriate assistance to the court or tribunal whether expressly sought or not. It is probable that those principles were not applied.

42. Mr Tomasetti SC, counsel for the RMS, addressed me during the course of the closing submissions in reply on behalf of the RMS, expressing concerns not only at the appropriateness of the submission but also the language used in the written element earlier reproduced. It is not necessary for me to address his submissions for the purposes of dealing with this issue.

43. I have concluded that what I foreshadowed as a position potentially able to be taken, was in fact the correct one. To the extent that the Company (and/or its legal advisers) have some concern of the nature articulated before me, those concerns, even if well-founded (a position about which I am not to be taken to making any evaluative comment whatsoever), find no proper forum in these proceedings. If such a complaint was desired to be pursued by the Company, the proper forum, in my view, is with the makers of the Policy, the New South Wales Government, concerning either the terms of the Policy or its implementation as a matter of general principle.

44. To the extent that the Company might wish to complain, specifically, concerning the position of the RMS in these proceedings, the appropriate first port of call would appear to be its responsible Minister, the Minister for Roads. Even if there was some alternative pathway for complaint (such as to the Ombudsman, as I posited to Mr Lazarus), one matter, in my perception, is completely clear - that is that this Court is not the appropriate forum for ventilating such complaints and, certainly, it should not, through its judgments, provide commentary (let alone any determinative conclusion) based on such a complaint.

The acquisition impact on the value of the residue land

The comparable sales relied upon

45. I have earlier noted that Mr Lunney and Mr Davis agreed that the before‑and‑after valuation methodology was the appropriate approach to take. In addition, although alternative valuation methodologies may also have been explored, in the final analysis they agreed that consideration of comparable sales was the appropriate methodology to be used.

46. For the purposes of their comparable sales analysis, Mr Lunney and Mr Davis agreed that the sale of the site in 2015 to the Company was the best comparable sale. Given their agreement as to the appropriate rate per square metre for the parent parcel as at the date of acquisition, it is unnecessary to unpick how they may have derived that agreement. However, the same is not the position with respect to analysis of the position when seeking to ascertain what adjustments might need to be made to reflect the changed position that might arise with the residue land after the acquisition of the land for the creation of Venice Street.

47. Mr Lunney’s position remained that it was unnecessary to go beyond consideration of the residue land when compared to the parent parcel and he undertook his consideration of whether or not there should be adjustments made to the starting value derived from the parent parcel to make adjustments to derive the appropriate rate for the residue land. As later discussed, it was his view that, although there were a number of impacts of the acquisition, some were positive and some were negative, with the resultant position being, in his opinion, there was no net impact on the value of the residue land.

48. Mr Davis, on the other hand, took a different approach. He concluded that a number of factors impacted adversely on the value of the residue land. These factors, and his evidence, written and oral, concerning them are dealt with in a later section. However, for the purposes of identifying sales said to be comparable for the purposes of analysis, Mr Davis relied, for his consideration of valuing the residue land, on two sales in addition to the sale of the parent parcel in 2015. Those sales were 202-212 Euston Road and a site described as the Slazenger site in Burrows Road.

49. The site at 202-212 Euston Road comprises a land area of 16,800 square metres, with three major road frontages - Euston Road to the north-west, Burrows Road to the south-east and Campbell Road to the south-west. The Slazenger site was made up of 132-138 McEvoy Street, Alexandria and 9‑15 Bowden Street, Alexandria. The Slazenger site had extensive frontages to Bowden Street on the north-east and McEvoy Street on the north-west. At the time the Slazenger site was sold in March 2015, it was zoned B7 ‑ Business Park with a total area of 16,487 square metres.

50. As earlier noted, during the course of the site inspection a drive-by was undertaken of 202-212 Euston Road. The parties did not consider it necessary to drive past the Slazenger site. As a consequence of the fact that, although Mr Davis traversed the Euston Road and Slazenger sites in his written evidence, only limited attention was paid to these sites during the course of the valuers’ oral evidence and submissions by counsel for both sides did not focus extensively on these sites, I do not consider it necessary to address these sales in any detail. I am fortified in this view by the agreement between the valuers that the particularly relevant sale, to inform their (and my) consideration of valuation issues in this appeal, was the arm's-length sale of the parent parcel to the Company in 2015.

51. I do not find the limited material concerning the Euston Road and Slazenger sites to be of assistance. This is because of the agreement of the valuers about the significant (indeed dominant) relevance of the sale of the parent parcel itself in 2015.

The starting rate for the residue land

Introduction

52. As earlier noted, Mr Lunney and Mr Davis agreed that the appropriate valuation methodology to be applied, was the before-and-after approach. Although there was agreement between them as to the “before” rate per square metre to be applied to the acquired land, there was no such agreement between them as to the rate to be applied to the residue land. The calculation of the “after” rate to be applied to the residue land arises because the RMS is liable to pay compensation to the Company for any reduction in the value of the residue land from its “before” rate per square metre, if that rate per square metre is reduced as a consequence of the resumption by the RMS of the acquired land for the creation of Venice Street.

52. Mr Lunney and Mr Davis agreed that the appropriate basis for considering whether such a reduction in value had occurred was also to undertake a comparative sales analysis in the “after” circumstances, having regard to relevant comparable sales evidence and undertaking an appropriate analysis and adjustment process to derive the relevant post-acquisition rate per square metre to be applied to the residue land.

53. Mr Lunney and Mr Davis each undertook that process.

54. However, unlike the derived rate per square metre applicable in the “before” situation for valuing the acquired land, Mr Lunney and Mr Davis were unable to resolve the question of whether or not there had been any reduction in the derived rate per square metre in the “before” acquisition position appropriate to be applied to the residue land post-acquisition.

55. Indeed, Mr Lunney and Mr Davis were unable to agree about whether the derived pre-acquisition rate per square metre should be applied to the residue land as the starting point to be used for deriving an analysed post-acquisition rate per square metre to be applied to the residue land.

56. During the course of the hearing, Mr Lunney and Mr Davis undertook a further joint conference addressing this issue. It is therefore necessary to consider the relevant elements of their individual expert reports; their first Joint Report and this Supplementary Joint Report for the purposes of my determination of what is the correct derived rate per square metre to be applied to the residue land post-acquisition.

Mr Lunney's post-acquisition position

58. Mr Lunney's post-acquisition position concerning the value of the residue land is to be understood as coming from two basic propositions. First, he considered that the starting rate per square metre for the acquired land post‑acquisition should be the derived rate per square metre upon which he and Mr Davis had agreed as being the rate per square metre to be applied to the parent parcel as at the date of acquisition, $1,575 per square metre - this being the rate which had been applied to calculate the compensation payable to the Company to represent the value of the acquired land (Transcript, 2 March 2018, page 286, lines 2 and 3).

59. Second, he considered that there were a number of factors which potentially impacted the residue land as a consequence of the acquisition but that, as he considered some of those factors were positives whilst others were negatives, they were all small and, in a cumulative fashion, cancelled each other out. He set out his commentary on these factors in a table forming part of Exhibit J (a supplementary joint report with Mr Davis).

Mr Davis’ post-acquisition position

60. While Mr Lunney adopted the simple proposition that the starting value for considering whether or not any post-acquisition adjustment is warranted to the value of the residue land was that the agreed parent parcel value of $1,575 per square metre, as at the date of acquisition, was appropriate, Mr Davis, on the other hand, adopted an entirely different approach. I have earlier described the process by which Mr Lunney and Mr Davis reached agreement on the $1,575 per square metre value for the parent parcel as a compromise on the values that they had originally proposed in their individual expert reports.

61. In his individual expert report, Mr Davis adopted his analysed value for the parent parcel based primarily on a time adjustment applied to the sale value when the Company purchased the parent parcel. This time-adjusted rate was $1,459 per square metre. Although accepting that $1,575 was the value per square metre of each and every square metre of the parent parcel as at the date of acquisition of the land for the construction of Venice Street, Mr Davis then opined that his rate of $1,459 per square metre remained the valid starting point for consideration of the impact of the acquisition when calculating what might be the impacted value of the residue land for this element of the Company's claim.

62. Mr Davis was cross-examined by Mr Tomasetti at some length on the question of what was the appropriate starting point for valuing the residue land post-acquisition (Transcript, 2 March 2018, page 278 line 38 to page 285 line 20). It is unnecessary to reproduce the entirety of that exchange. However, I do reproduced below, the concluding element of it (Transcript, 2 March 2018, page 284 line 24 to page 285 line 20). This element is in the following terms:

TOMASETTI: Let's go back to paragraph 17 of exhibit J. You say, "Whilst my calculated rate for the residue land was not assessed by applying a discount to the agreed before rate, I note the rate is equivalent to 85.7% or a discount of 14.3% to rate agreed by the valuers in the before scenario.

WITNESS DAVIS: Yes.

TOMASETTI: So what you've done, I suggest, is to take the after agreed - the before rate as agreed by the value - as agreed between you and Mr Lunney, 1,575, and now you're replying different deductions to give rise to a different alternative, a different residue figure.

WITNESS DAVIS: Well, with respect, I think what you're doing is taking the percentage and fixating on that. It happens to be a different percentage, it happens to be a greater amount. But that's because the value of the before land was agreed at a higher rate than my original 1500.

TOMASETTI: Do you say that the sale of the subject land to Canal Aviv in September or November 2015, it’s getting late, 2015 is only the best comparable insofar as the sale of the before parcel is concerned?

WITNESS DAVIS: No, I'm saying that it has relevance to both of them but because I'm comparing it to different sites, the levels of adjustment are different.

TOMASETTI: But you're comparing it to the same sites, I suggest. The table on page 33 of your original report is Slazenger, Euston Road, Ricketty Street.

WITNESS DAVIS: I'm not denying‑‑

TOMASETTI: In the second comparison in the after it's the same sites.

WITNESS DAVIS: Yeah, and in one exercise I'm comparing them to the before property and in the separate discreet exercise I'm comparing them to the after property. That's what happens in a before and after valuation.

TOMASETTI: Well, I suggest to you as a matter of logic, Mr Davis, I take it you don’t agree, but you needed to reapply the discounted rate that that you found to the reagreed rate of the parent parcel, $1575.

WITNESS DAVIS: I have done. Yeah, I've done it in relation to the before site but not the after site.

TOMASETTI: And I suggest to you as a matter of consistent methodology you have to do it to both?

WITNESS DAVIS: No, I disagree.

63. I have carefully read and reread (several times) this passage of cross‑examination by Mr Tomasetti of Mr Davis concerning how he concluded that, at the instant of acquisition of the land for Venice Street, this acquisition (without having regard to any of the matters I am later required to consider as potentially impacting on the residue land), caused an immediate, significant reduction in the value of the residue land.

64. Mr Davis was unable to provide any satisfactory explanation to justify why there was some miraculous alchemaic transmutation of the value of the residue land at the instant of the transformation of its status from being part of the parent parcel to being the standalone residue land.

Conclusion on the starting value for the residue land

65. It is clear that the position adopted by Mr Lunney is the logically correct one and, hence, the starting value for considering whether or not there has been any impact on the value of the residue land, as a consequence of the acquisition of the land for the construction of Venice Street, is $1,575 per square metre.

Potential adjustment factors for the residue land

Introduction

66. Before turning to consider whether (and if so, to what extent) issues raised should impact on the analysed value to be applied to the residue land, it is first necessary to make an assessment of what impacts and/or risks of impacts might be considered by the hypothetical purchaser.

67. It is only having made those factual assessments as to outcomes (positive, negative or neutral) do the steps of whether each of the factual conclusions give rise to a valuation impact and what adjustments (if any) might be appropriate to be made reach an overall cumulative position on what the valuation adjustment post-acquisition (if any) is required to the residue land.

Access to the residue land

Introduction

68. Four elements of access to the residue land arise for consideration. They are:

1. First, what impact the construction of Venice Street would have on any redevelopment of the residue land during the construction phase for creation of that street;

2. Second, what is the extent of the benefit to the residue land of the slip road/Venice Street access to the residue land for vehicles westbound along Gardeners Road;

3. Third, what would be the impact of the operation of Venice Street on egress from any redevelopment of the residue land; and

4. Fourth what impact would the design of the Ricketty Street/Venice Street intersection have on access to any redevelopment on the residue land?

Construction access to the residue land

69. Mr McLaren expressed the opinion that he would expect that there would be constraints on access to the residue land during the course of construction activities for the RMS in the creation of Venice Street. These constraints, he opined, would potentially impact on the ability of a hypothetical purchaser undertaking a redevelopment of the residue land. This would be because the nature and timing of Venice Street construction activities might limit access of large vehicles to the residue land. Large (or overlarge) vehicles might have their access to the residue land impeded when deliveries of construction materials or construction equipment (such as cranes or excavators) might be needed to be made to the residue land.

70. Mr McLaren also expressed the opinion that, at the very least, close and frequent coordination and cooperation would be necessary between those supervising construction of Venice Street and any redevelopment of the site.

71. However, Mr McLaren acknowledged that construction scheduling and critical path analysis for construction projects were outside his area of expertise. As a consequence, as I understood his evidence, he would advise a hypothetical purchaser that, from a traffic management perspective, he considered that there were risks potentially arising for redevelopment construction access for the residue land and that further expert advice appropriate to enable a proper assessment of those risks should be sought.

72. The position put on behalf of the RMS was that condition D49 of the project approval, when considered in conjunction with the two-step staging plan adopted (and being implemented, as could be observed during the course of the site inspection), were sufficient to demonstrate that any such risk, if it existed, was so small as to not warrant any valuation adjustment as a consequence. For this factual assessment, it is, therefore, appropriate to set out the terms of condition D49 and to describe the staging plans and actual construction activities being undertaken for creating Venice Street.

73. Condition D49 of the project approval is in the following terms:

Access to all properties must be maintained during construction, where feasible and reasonable, unless otherwise agreed by the relevant property owner or occupier. Any access physically affected by the SSI must be reinstated to at least an equivalent standard, unless agreed with by the property owner.

74. The argument was put forward by the Company that condition D49 failed to give any degree of certainty concerning access to the residue parcel during the construction period of Venice Street. In his submissions, Mr Lazarus relied on the decision in SNS, saying (Transcript, 5 March 2018, page 358, lines 1 to 25):

If I can turn then to my learned friend's submissions about SNS and in particular his attempt - valiant though it was - to distinguish her Honour's finding in relation to D49 - para 290. He endeavoured to do that in two ways, firstly he said to your Honour that SNS was distinguishable on the facts because it was access to the acquired land rather than - as in this case - access to the residue land.

But the problem, your Honour, is that her Honour's analysis in SNS was entirely - or perhaps if I can put it this way - was not concerned with the facts of that case as distinct from how a potential purchaser would read and understand those conditions. And as I've submitted to your Honour, they would be understood as not conveying any level of certainty whatsoever.

That position of complete uncertainty is not assisted one iota by my learned friend's reference to the defined terms of feasible and reasonable which her Honour also considered in her Honour's judgment. They just do not bear upon the question of assisting a hypothetical purchaser with the issue of certainty because - to be perfectly honest, your Honour - they add uncertainty rather than remove it in the highly imprecise manner in which those terms are expressed.

In any event, I've submitted to your Honour why we say condition D49 is imprecise and uncertain and we maintain those submissions and Pain J's decision in that regard should stand.

75. In response, Mr Tomasetti noted that, as the decision had not been made available at the time of the acquisition of the acquired land it could not be relied upon (Transcript, 2 March 2018, page 260, lines 33 to 46), and, in the alternative, the decision was wrong and ought not be followed (Respondent’s closing submissions, page 11). In closing submissions, Mr Tomasetti submitted further on the certainty of the condition (Respondent’s closing submissions, page 7):

A condition of approval is a legally enforceable right and it is the expectation that a person, and in particular a responsible NSW Government authority, will comply its legal obligations.

76. The wording of this condition would have been able to be ascertained by the hypothetical purchaser of the residue land as a consequence of the fact that the determination to give approval of the project was made on 21 April 2016 and the terms of the project approval became available on the relevant departmental website as a consequence.

77. In SNS, Pain J considered the extent to which, in the circumstances with which she was dealing, condition D49 could be regarded as providing sufficient certainty for future redevelopment access. She said:

290   In relation to the assumptions the prudent hypothetical parties would make about access to the Acquired Land, they would not consider that condition D49 in the WestConnex Project approval provides much certainty in gaining access for construction purposes. The condition is imprecisely drafted and does not refer to construction access explicitly. The definition of “reasonable and feasible” in the approval conditions is very unclear and cannot provide any certainty to a prudent party about its application. Having to resort to court action to enforce vaguely worded obligations would be considered highly risky and would lead to potentially lengthy delay even assuming success. Construction access sought is potentially invasive in that a narrow strip of the Acquired Land is required on the whole of the Bourke Street boundary for varying periods and is likely to have greater impact than say the maintenance of existing pedestrian and/or vehicular ground level access. Reliance by RMS on Allandale (CA) does not assist as the Court of Appeal held the major project approval condition in that case was clearly drafted and certain with consequently no risk of non-fulfilment at the date of acquisition. This case is quite different.

291   Mr Royal attested in his first affidavit to conversations with RMS’ contractors before the date of acquisition in which he was told that no access across Bourke Street would be provided unless required by law, as summarised in pars 59-60 above. The nature of these conversations was confirmed by him in cross-examination, summarised in par 66 above. The tenor of the correspondence between SNS and RMS after the date of acquisition concerning access is similarly unhelpful. This can be assumed to be the kind of information that the prudent hypothetical parties would receive.

78. Although Mr Lazarus places reliance on these comments as supporting the proposition that I should adopt a similar position concerning condition D49 as applicable to the residue land, I am unable to agree. I have reached this conclusion for three reasons:

1. First, although Mr McLaren expressed non-expert views on how the interrelationship between construction of Venice Street and redevelopment traffic to the residue land might need to be managed, he did not suggest (even accepting as valid his non-expert opinion) that these issues were overly complex. He certainly did not suggest they were insurmountable;

2. Unlike that which can be seen was the position in Bourke Street confronting her Honour, here the construction of Venice Street is not inherently in conflict with a redevelopment of the residue land; and

3. Third, unlike the position in SNS, there is here no evidence of any contact on behalf of the Company with the RMS to explore options for access. Mr Royal’s position - explained in [291] of her Honour’s decision quoted above - is not replicated in evidence now before me.

79. As a consequence, I consider the prudent hypothetical purchaser would be satisfied that, in these circumstances, condition D49 provided an appropriate assurance of access to the residue land for redevelopment purposes.

80. In August 2017, some six months after the date of acquisition, two plans were produced showing the intention of the RMS to construct Venice Street in two stages. Although Mr Lazarus challenged the utility of the plans in the present proceedings because of concerns he raised as to the provenance of the plans, I understood this objection to be pressed but faintly (as opposed to his more substantial objection later considered concerning the date of the plans and, as a consequence of that time gap after the date of acquisition, it was appropriate to have regard to the plans). It is to be noted that, as discussed in the earlier description of the site inspection, that the construction of Stage 1 of Venice Street is currently being undertaken and that that construction is, in general terms, being carried out in a fashion consistent with the staging plans.

81. My factual conclusion concerning these access issues is that, if both condition D49 and the staging of construction of Venice Street were factors to which positive regard should be had by the hypothetical purchaser, the risk of disruption of redevelopment construction on the residue land would be sufficiently low as not to impact on the value of that land. On the other hand, if both of these elements are to be disregarded, there would be some risk requiring weighing as part of the valuation of the residue land.

Access from the north

82. Prior to the acquisition of the land for the construction of Venice Street, the acquired land provided the sole access to the parent parcel. There was no access to the parent parcel from the north. The access to the parent parcel was only available by a left-turn-in by vehicles travelling in an easterly direction along Ricketty Street. There was no right-turn-in access for vehicles travelling west along Ricketty Street.

83. After the completion of construction of Venice Street, and the associated elements at its north-eastern end where it will create a slip lane for vehicles debouching from Gardeners Road when travelling in a westerly direction through the elements of Gardeners Road being constructed as part of the New M5, access will become available for vehicles travelling in a westerly direction along Gardeners Road. This access will be by utilising the slip-road element of Venice Street, traversing the bulb at the northern end of the two-way portion of Venice Street and travelling south along Venice Street to such entrance(s) as would be established for any redevelopment of the residue land.

82. In his individual statement of evidence, Mr Hollyoak noted the positive benefit of this additional access, saying (Exhibit A, folio 292):

The property will enjoy an improvement to its access, this being that westbound vehicles along Gardeners Road can access the site via the newly constructed Venice Street. This will improve access to the site, travel times to the site from the road network and will provide a perception that the site is easier to access than in the before scenario.

85. Mr McLaren concurred in the assessment of this benefit to the site, as can be seen from the Supplementary Joint Traffic Report which said (Exhibit H, page 6):

31.   It is agreed by CM and KH that for traffic travelling to the site from the East (i.e. westbound) that vehicles will turn left off Gardeners Road via the proposed slip road and into the northern cul-de-sac end of Venice Street. Both CM and KH also agreed that the future access from Gardeners Road constitutes an improvement on the existing access arrangements.

86. Mr Tomasetti also submitted that this northern access should also be seen as a benefit in providing an alternative path for long vehicles travelling in an easterly direction and seeking to enter the residue land from Ricketty Street if that manoeuvre was unable to be undertaken for some reason arising from the configuration of the intersection of Ricketty Street and Venice Street. He submitted that any such access difficulty, post-construction of Venice Street and redevelopment of the residue land, would be able to be resolved by such a vehicle continuing along Ricketty Street; turning left into Kent Road; turning left again into Gardeners Road; and entering the slip-lane element of Venice Street before traversing the bulb at the northern end of Venice Street proper; and using Venice Street southbound to access the residue land. This, he submitted, would provide an appropriate alternative path involving an additional travel distance of only some 700 metres or so. I accept this submission (as an element of the positive benefits of the northern access [although this does not entirely address concerns about the design of the intersection of Venice Street with Ricketty Street, as later discussed]).

87. It is clear that this northern access should be regarded as a benefit to the residue land in any consideration of value impacts on the residue land as a consequence of the acquisition of Lot 1 for the purpose of constructing Venice Street.

Egress from any redevelopment on the residue land

Introduction

88. The extent to which there might be increases in the eastbound traffic volumes in Ricketty Street which potentially impacts on the ability of trucks, particularly, to exit from a future development on the residue land by turning right into Venice Street and then left into Ricketty Street, Mr Hollyoak and Mr McLaren agreed that this impact only had the potential to arise as a consequence of queuing of southbound traffic in Venice Street during the afternoon peak. They agreed that, at other times of the day, such queuing would not give rise to any potential blockages of egress from the residue land by the queuing preventing a long vehicle from being able to turn right and stack in Venice Street waiting to turn left into Ricketty Street. However, there was significant disagreement between them as to the likely impact of future increased traffic volumes, in the longer term, when the New M5 was completed and, additionally, the overall WestConnex project was completed.

89. Each of them used modelling software to produce SIDRA analyses of what might be the length of an afternoon peak queue of traffic seeking to turn from Venice Street into Ricketty Street. The outcomes produced by these SIDRA analyses are, necessarily, dependent on what assumptions are made concerning the various input factors for the modelling.

90. Initially, the position adopted by Mr Hollyoak and Mr McLaren was that there existed no published future traffic volume predictions for future traffic movements along Ricketty Street past the intersection with Venice Street. During the course of the hearing, this position changed, as discussed immediately below.

Mr Hollyoak's data discovery

91. During the course the hearing, Mr Hollyoak undertook a further reading of the RMS’s WestConnex New M5 Environmental Impact Statement and discovered predictions of future traffic volumes for eastbound movements in Ricketty Street. He discovered these projections in a section of the document dealing with anticipated future vehicle crashes. The data was contained in this section of the document as such crash incidents, it is to be inferred, are dependent on traffic movement volumes. Mr Hollyoak candidly admitted that traffic volume data of the nature he had found was located in a part of the WestConnex New M5 Environmental Impact Statement to which he would not normally have regard for the purposes of seeking traffic volume predictions. Mr McLaren did not do demur from this observation.

92. It seems to me, in these circumstances, it is reasonable to assume that any traffic consultant engaged by the hypothetical purchaser of the residue land would only go to those portions of the RMS’ WestConnex New M5 Environmental Impact Statement where such expert would reasonably expect to find relevant data which would enable advice to be given on this issue. That an experienced expert, in the context of a court contest of the nature with which I am dealing, could not (in an ordinary reading of the document) find the information without undertaking an intense examination of areas which would not ordinarily be examined renders this information irrelevant to what advice might be given to the hypothetical prudent purchaser contemplating acquisition of the residue land.

The contest about queuing in Venice Street

93. The question of queuing in Venice Street needs to be examined in the context of what are likely to be, as earlier noted, the future volumes of traffic eastbound in Ricketty Street. The differences between Mr McLaren and Mr Hollyoak were significant. Although Mr McLaren and Mr Hollyoak had each undertaken limited traffic counts (albeit at different locations) at the present time, given the conclusion I have set out above concerning the material discovered by Mr Hollyoak being of no practical assistance in a hypothetical purchaser scenario, the position is that there are two quite different expert propositions requiring consideration.

94. On the assumptions adopted by Mr McLaren for his modelling, there was the potential of a significant impact for queuing in Venice Street if future traffic volumes grew at the rate he hypothesised.

95. On the other hand, Mr Hollyoak's assumptions demonstrated that there would not be any impact of significance warranting, in the hypothetical redevelopment of the residue land, any risk to the ease of (particularly truck) egress from the land turning to the south into Venice Street.

96. I am satisfied that it is not necessary for me to reach any definitive conclusion about what would be the realistically expected numerical traffic volume outcome. It is sufficient to note that there is a realistic and informed difference of opinion between reputable experts on this point. This, it seems to me, is sufficient to conclude that there is some risk of such an impact and that the hypothetical purchaser of the residue land as a redevelopment site would be advised to, and would, take into account this risk as part of the negotiation process for the hypothetical purchase transaction.

97. As a consequence, it is the extent to which this risk might require to be priced in that requires consideration - not the making of some mathematically precise determination of what might be the traffic counts or any consequential more specific probability as to the frequency when a left turn out into Venice Street to use the bulb at the northern end for a truck to be able to queue to access turning into Ricketty Street would arise.

98. I should observe, for completeness, in this context that it does not matter in these circumstances, in my view, whether the hypothetical redevelopment would have two access points to and from Venice Street or merely a single, centrally located one. It is the fact that the risk arises that would be taken into account by a reasonably advised hypothetical purchaser.

Additional exposure to passing traffic

99. One of the factors which Mr Lunney identified as being a positive for the residue land (which he bundled up with the northern access discussed immediately above) was the additional exposure which the residue land would have as a consequence of visibility to passing traffic using Venice Street.

100. Whilst it might be expected that virtually all northbound traffic in Venice Street would be seeking to access the residue land, that is not the position with southbound traffic using Venice Street. Such southbound traffic (although agreed by Mr Hollyoak and Mr McLaren to be likely to be purely local - comprising workers or clients exiting from premises with a Gardeners Road-oriented frontage to the Venice Street slip lane) will nonetheless be able to view any promotional material displayed along the eastern frontage of the residue land.

101. There would not be any increase to the available exposure of promotional material along the Ricketty Street frontage as the active frontage element in that direction will remain unchanged.

102. Mr Ronen expressed the view that, for the purposes of his proposed development, exposure to Venice Street was irrelevant and, as I understood him, there would not be either any promotional material, or none of any significance, directed to Venice Street. That is a position potentially generally applicable only to his proposed development. In a broader context, there is some potential for exposure along the Venice Street frontage for a development constructed on the residue land.

103. However, given the limited queuing times for vehicles travelling south in Venice Street (even adopting Mr McLaren's most pessimistic position on this point), I am unable to conclude that this exposure would warrant any positive adjustment for the residue land. This arises as a consequence of the fact that not only will the exposure times be short, but that the exposure, as a consequence of this passing traffic, is likely to be of local origin and (at least significantly) to workers in the vicinity who would have regular exposure to such promotional material, rather than being one-off exposure to persons passing southward along Venice Street on an irregular basis.

Ricketty Street into Venice Street

104. Mr McLaren produced a swept-path analysis showing what would be the movement of large rigid or articulated vehicles when travelling east on Ricketty Street and seeking to access the residue land by turning left into Venice Street. This analysis was based on the intersection configuration shown on the relevant element of the project plans (Exhibit H, Annexure E). The swept paths disclosed that, on the basis of the depiction of the configuration of the western corner of the intersection, effecting the turning movement for these vehicles would require them to cross onto the traffic lane for vehicles travelling south in Venice Street to turn left in the Ricketty Street.

105. This was the subject of discussion by Mr Hollyoak and Mr McLaren during the course of their oral evidence. It is unnecessary to extract from the transcript the terms of this discussion. As I understood their evidence, the position, in summary, was:

• the present configuration of the western corner aspect of the depicted design of the Ricketty Street/Venice Street intersection was undesirable;

• it was capable of rectification by alteration to the design of the corner by chamfering the curb which would eliminate the necessity for such vehicles to cross into the oncoming traffic lane in Venice Street;

• it was reasonable to expect that (subject to the discovery of any unexpected impacts on services) that there would be no difficulty in accommodating such a design change;

• it was not unreasonable to propose such a design change to the RMS and have the RMS incorporate that design change into the final construction design for this intersection (although Mr McLaren expressed the view that there was some small risk that this would not occur); and

• it was Mr McLaren's opinion that any additional cost of rectifying this aspect of the intersection would be met by the RMS. Mr Hollyoak did not disagree with this position concerning cost of rectification.

106. The consequence of this evidence, in my assessment, is that any prudent hypothetical purchaser contemplating acquiring the residue land, as at the date of acquisition of the land resumed for Venice Street, would not, if given traffic advice concerning this intersection (even if in the mildly more pessimistic terms postulated by Mr McLaren), regard the risk as be so significant as to warrant it effecting a reduction in the value of the residue land.

107. This is not only because of the significant (and almost, if not entirely, inevitable) probability that the RMS would rectify the design if this defect was pointed out, but also, as Mr Tomasetti submitted, although occasioning an additional travel path of less than 750 metres, such vehicles could avoid making this turn and still readily access the residue land by utilising the Venice Street slip road and travelling south down Venice Street proper, to turn right into the residue land.

Timing of development activities

Introduction

108. One aspect requiring consideration for the purposes of assessing whether or not there has been any impact on the value of the residue land as at the date of acquisition is the timing of development which might hypothetically or actually be expected to take place. There are two development activities here that require consideration in this context. The first is the timing expected to be required for the construction of Venice Street, whilst the second is the likely time period that would need to run, post-acquisition, for the necessary preliminary steps antecedent to commencing a redevelopment project on the residue land for an industrial complex of the type identified by the architects as representing the highest and best use (this being represented by the design prepared by Mr Farkash (who gave written expert design evidence for the Company) and reproduced at folio 524 of Exhibit A).

Construction of Venice Street

109. The agreed position concerning the construction period for Venice Street (whether undertaken in the staged development process discussed elsewhere or not) involves a construction period of two years from the date of acquisition. As a consequence, to the extent that there might be any impact on the residue land as a result of the construction activities for the creation of Venice Street, this would be limited to a maximum of two years.

Development of the residue land

110. Although it took Mr Ronen until late 2017 to lodge a development application for his proposed self-storage facility on the residue land, he accepted that the period between the date of acquisition and the lodgement of the development application was longer than he might have expected in a theoretical model because of consideration of multiple iterations of a potential design before he was satisfied with a design to be submitted.

111. The timing appropriate for the theoretical redevelopment is one which would allow for:

1. Preparation of a development application and supporting documentation - Mr Davis, in cross-examination, said six to nine months (Transcript, 2 March 2018, page 272, lines 29 to 32);

2. Assessment and approval processes - Mr Davis said, ‘it would be about nine months maximum to get a development consent’ (this appears to include time for design and lodgement of DA) (Transcript, 2 March 2018, page 272, lines 40 to 44; also see (140) of individual report at folio 1046 of Exhibit B). Mr Lunney did not cavil with the nine‑month (for lodgement of application and consent) estimate (Transcript, 2 March 2018, page 208, lines 26 to 28);

3. Preparation of the necessary detailed construction certificate plans - Mr Ronen, in cross-examination, estimated three to six months (Transcript, 1 March 2018, page 166, lines 33 to 34); Mr Davis, in cross-examination, said two to three months (Transcript, 2 March 2018, page 273, lines 6 to 18); and

4. The time for tendering for construction based on those construction plans before redevelopment actually commenced - Mr Lunney estimated “a month or so” (Transcript, 2 March 2018, page 208, lines 29 to 31).

112. The advocates both addressed what would be the total time to be allowed, post-acquisition, prior to the commencement of a hypothetical redevelopment of the residue land.

113. Mr Lazarus’ closing submissions proposed that “construction works on the residue parcel would likely commence within 6 to 12 months of the acquisition date” (Applicant’s written submissions at (63)).

114. Mr Tomasetti, in closing oral submissions, proposed (Transcript, 5 March 2018, page 356, lines 39 to 45):

He acquires the land at the date of compulsory acquisition - February 2017, he plans to do his development application six, I think, Mr Ronen said, three to six months. Your Honour's not bound by that figure but this is a specialist Court, let's say, six months. Then you've got to get your construction certificate drawings together, another three months, say. Allow a period for contingencies, you're easily looking at 12 months before you start to turn the soil.

115. Noting the general consistency of these positions, the total reasonable period prior to actual commencement of the hypothetical redevelopment construction would be expected to be 12 months - I therefore adopt the beginning of March 2018 as the relevant time for this to occur. I later deal with the termination of its lease by Secure Logistics and how the likelihood of loss of rental income would be taken into account by the hypothetical purchaser.

116. I have earlier noted that the expected construction period for Venice Street is two years. However, I also explained at [78] to [81] why the construction of Venice Street and redevelopment of the residue land could coexist. As a consequence, I do not consider that the acquisition of land for, and the actual construction of, Venice Street would have any impact on the timing of any future redevelopment of the residue land.

Valuation adjustments for the residue land

Introduction

117. I have earlier discussed the various factors potentially impacting on the value of the residue land and, as a consequence, it is now necessary to turn to the extent to which each of them might warrant an adjustment to the post‑acquisition value of that land.

118. As earlier noted, some of those factors might, potentially, warrant an upward adjustment, whilst others might warrant a downward one. Having determined what might be the individual adjustments (if any), positive or negative, the cumulative adjustment derived is then to be applied to the starting value for the residue land to calculate what might be any negative impact on that land warranting compensation being awarded to the Company.

119. In this context, it is to be noted that Mr Lunney did not propose that there was any total overall beneficial impact that would arise from the acquisition and the subsequent construction of Venice Street. As I have concluded that there is an overall, modest, adverse impact on the residue land, the question of accounting for “betterment” does not arise.

120. An initial observation warrants being made concerning aspects of the valuation evidence given by both Mr Lunney and Mr Davis. In the course of his closing submissions, Mr Tomasetti submitted that one of the reasons why I should prefer Mr Lunney's valuation analysis over that of Mr Davis was that elements of Mr Davis’ evidence were self-evidently speculative. In this context, he pointed to a number of adjustment factors relied upon by Mr Davis, where Mr Davis was unable to dissect an aggregated adjustment factor to explain how he had taken each of the subsumed factors into account in deriving his amalgamated position (Transcript, 1 March 2018, page 188, line 11 to page 189, line 46; Transcript, 2 March 2018, page 216, lines 7 to 30; page 231, lines 1 to 10; page 236, line 43 to page 237, line 11; and page 268, lines 19 to 43). Mr Tomasetti’s criticism of Mr Davis is discussed in detail later - here I am merely dealing with the question at a greater degree of generality.

(d)   There is no default position under the standard contract for sale of land, since in each case the parties must agree "yes" or "no" to the proposition that land tax is adjustable under the contract;

(e)   There is no evidence supporting the proposition that the parties to the hypothetical transaction would have agreed that the purchaser would be liable to pay an additional adjusted amount in respect of land tax; and

(f)   In particular, there is no evidence as to the general practice (if there is one) in sales of substantial industrial land, so far as payment of land tax is concerned. There is no evidence supporting the applicant's submission that "the players in the market place are just [sic adjust] the land tax" (T506.35).

175 The Applicant eschewed any reliance on any specific head of compensation, including s 59(1)(f) of the JTC Act. The definition of “market value” in s 56(1) provides that “market value” of any 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.

176   We agree with the Respondent that the adjustment of the purchase price for land tax is something negotiated between an actual vendor and the actual purchaser of a property, and that the purchase price indicates the market value of the land, upon which the tax would be levied.

177   Had there been any evidence that it is a consistent practice in the market, with respect to the sale of industrial property, that land tax is adjusted in a particular way, there might have been some basis for the Applicant’s claim.

178 However, as the evidence stands, the Court must conclude that the Applicant has not made out a case for the inclusion of the amount of $73,735.00 in its claim for market value under s 55(a) of the JTC Act.

The RMS’ submissions

251. In his closing submissions, Mr Tomasetti dealt with the market value basis for this element of the Company's claim by saying (Respondent’s written submissions (54) to (57)):

54   … The Respondent says no compensation or Land Tax can be ordered.

55   The Applicant’s claim for an adjustment for land tax as part of market value is not supported by any evidence of a consistent approach in the market.

56   The valuation experts agree that, firstly, land tax would not in their opinion form a component of the market value of property.

57   Secondly, they agree that a land tax adjustment is a contractual option and not universal. It is but one of many adjustments that may be made as part of a contract for the sale and purchase of land.

The Company's position

252. The submission made by Mr Lazarus on this point was in the following terms (Transcript, 27 February 2018, page 25, lines 31 to 49):

…In relation to land tax, the facts very simply are these: my client has paid land tax for the calendar year 2017; no refund is possible from the OSR, so we've in effect paid for ten months' land tax in respect of the acquired land which they did not own at the relevant time.

As your Honour would no doubt be aware from your Honour's own experience but there is, in any event, evidence from Mr Davis to this effect, there is a common practice in the sale of industrial properties and, dare I say, most properties for land tax to be adjusted upon the sale so as to avoid the sort of detriment that we are talking in this case which is a windfall gain to the State government.

So we put that proposition either as part of the assessment of market valued under 55(a) or, in the alternative, we say it's wasted expenditure and, therefore, recoverable as disturbance under 59(1)(f) but viewed from the lens of just terms, your Honour, it can't possibly be just that we've paid land tax in respect of land that we didn't own to the State government but can't recover it back from the State government or indeed anyone else.

253. Mr Lazarus goes on to say, in his closing submissions (Applicant’s written submissions at (151) to (159)):

151. Section 56(1) of the Act defines market value as follows (emphasis added):

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…

152. The words used in s 56(1) are “the amount that would have been paid for the land.” This directs attention to the quantum of money paid by the willing but not anxious hypothetical purchaser in consideration for the obtaining of the relevant interest in land from the hypothetical seller. It is not necessarily the “purchase price” agreed between the hypothetical parties, but rather can also take into account the sort of adjustments (such as land tax) that are customarily made as between parties to a sale contract to bring to account amounts paid or liabilities incurred relating to the subject land in respect of a period of time after the change of ownership. Were it otherwise, the statutory “guarantee” of just compensation mandated by the Act would not be fulfilled.

Consistent practice

254. In Carlewie, his Honour said (as earlier reproduced):

177   Had there been any evidence that it is a consistent practice in the market, with respect to the sale of industrial property, that land tax is adjusted in a particular way, there might have been some basis for the Applicant’s claim.

255. I questioned Mr Tomasetti during the course of his opening submissions as to whether there was a practice on the part of the RMS to make an adjustment for land tax. His response was that there was not (Transcript, 28 February 2018, page 35, line 32).

256. Mr Lazarus, in his closing submissions, put forward the argument that:

153.   A relevantly identical claim was recently considered in Carlewie v Roads and Maritime Services [2017] NSWLEC 78 (see [169]-[178]).

154.   The Court in that case concluded that the applicant had not made out its claim but observed that there may have been a basis for the claim had there been evidence of a consistent practice in the market for an adjustment of land tax consistent with the amount claimed (see [177]-[178]).

155.   The applicant in these proceedings has adduced evidence of such a practice in two ways.

156.   First, Mr Davis, based on his experience, attests that such an adjustment would usually be made. Mr Lunney agrees that this is a common practice with sales of commercial and industrial land.

157.   Secondly, the contract for sale and purchase of the parent parcel itself, executed in November 2015 (relatively shortly before the acquisition date), included such an adjustment.

158.   This provides cogent evidence of a market practice for an adjustment reflecting the applicant’s claim - evidence that was absent in Carlewie.

Conclusion on the market value land tax claim

257. It seems to me, in the final analysis, that a market value-based claim pursuant to ss 55(a) and 56(1) of the Land Acquisition Act for reimbursement of land tax must inevitably fail on a first principles’ basis.

258. In this regard, the valuers have missed the fundamental point in their discussion of adjustments for incorporation in the settlement sum arising out of transactions for such properties. They have failed to note that such adjustments, if agreed to, occur in the calculation of the settlement sum, not in the negotiation of the market value recorded on the contract for sale. The market value, arising out of the hypothetical transaction mandated by the statutory provisions, has one determine what is the price for the land that would be agreed to between the hypothetical “willing but not anxious” vendor and a hypothetical “willing but not anxious” purchaser. Such a process envisages a meeting of minds to determine what would be that market value. The amount thus agreed would be “the amount that would have been paid for the land” for the purposes of s 56(1) of the Land Acquisition Act.

259. Having determined that amount, the parties may, depending on the basis of their agreement, make adjustments to that amount to derive the appropriate settlement sum to be paid by the purchaser to the vendor. What adjustment factors may have been agreed (whether land tax; non-fixture inclusions; council rates or other outgoings - whether statutory or not) is a matter that forms part of the negotiation but does not form part of the identified amount that would have been paid for the land. They are factors which are, if agreed to, ones that lead to the calculation of a final transaction price, a final transaction price likely to vary to some degree dependent on the settlement date when the outcome of the transaction is crystallised and ownership of the property passes from the vendor to the purchaser.

260. Properly understood, even if a land tax adjustment took place in the near universal circumstances envisaged by Mr Davis, the adjustment sum would not form part of the market value encompassed within ss 55(a) and 56(1) of the Land Acquisition Act.

261. This entirely conventional analysis of the statutory provision makes it obvious that the Company's claim for a compensation element for land tax based on ss 55(a) and 56(1) of the Land Acquisition Act must fail.

Land tax and s 59(1)(f) of the Land Acquisition Act

262. As I have earlier noted, Mr Lazarus submitted that the Company's land tax compensation claim was maintainable under s 59(1)(f) of the Land Acquisition Act, if it was not maintainable under s 56(1) of that Act. As I have explained why a claim is not maintainable pursuant to that provision, it is now necessary to turn to consider whether it is maintainable under the former one.

263. It is appropriate to start by setting out the terms of s 59(1)(f). It reads:

59   Loss attributable to disturbance

(1)   In this Act:

loss attributable to disturbance of land means any of the following:

…

(f)    any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition [emphasis added].

264. I now turn to consider the relevant statutory provisions concerning liability for, or exemptions from, land tax as they provide the framework for the Company's liability and the question of whether the Company's obligation to pay the tax can be said to fit within the scope of this “disturbance" provision of the Land Acquisition Act so as to give rise to a valid compensation claim under that provision.

265. As I have earlier noted, the Company's liability to pay land tax arises pursuant to the provisions of s 3AL of the Land Tax Act. This provision is in the following terms:

3AL   Levy of land tax after 31 December 2008

(1)   In respect of the taxable value of all the land owned by any person at midnight on 31 December in any year (commencing with 2008) there is to be charged, levied, collected and paid under the provisions of the Principal Act and in the manner prescribed under that Act, land tax for the period of 12 months commencing on 1 January in the next succeeding year and at the applicable rate.

(2)   For the purposes of this section, the applicable rate is:

(a)   the rate of land tax payable as specified in Part 1 of Schedule 13, except as provided for by paragraphs (b), (c) and (d), or

(b)   if the land is subject to a special trust—the rate of land tax payable as specified in Part 2 of Schedule 13, or

(c)   if the owner of the land is a non-concessional company and the taxable value of group land holdings of the non-concessional company does not exceed the premium rate threshold—the rate of land tax payable as specified in Part 3 of Schedule 13, or

(d)   if the owner of the land is a non-concessional company and the taxable value of group land holdings of the non-concessional company exceeds the premium rate threshold—the rate of land tax payable as specified in Part 4 of Schedule 13.

(3)   For the purposes of this section:

(a)   a reference to group land holdings of a non-concessional company is a reference to all land owned (whether jointly or severally) by members of the group of which the non-concessional company is a member on which land tax is payable, and

(b)   a reference to a group is a reference to a group within the meaning of section 29 (7) of the Principal Act.

(4)   This section is subject to section 27 (2A) of the Principal Act (which relates to the assessment of land that is the subject of a special trust or that is jointly owned by a non-concessional company).

(5)   If the total amount of land tax payable pursuant to this section by any person in any year would, but for this subsection, be less than $100, no land tax is payable. (emphasis added)

266. There are a number of statutory exemptions to the liability that would otherwise arise pursuant to this provision. Some, such as the concessional financial threshold below which land tax on landholdings does not arise, are entirely unrelated to the use of the land. Other exemptions arise as a direct consequence of the use to which the land is put by its owning entity. These exemptions include that the land is used by individuals who occupy the land as a principal place of residence (s 5B of the Land Tax Act) or the land is used for defined primary production purposes (s 10AA of the Land Tax Management Act 1956). Exemptions of this latter type clearly arise as a consequence of the nature of the use to which the land is put.

267. However, although some of the exemptions arise as a consequence of the use of the land, it is clear from the terms of the earlier set out provision that the basal liability that applies (unless the landowner is able to take advantage of one of the various nominated exemptions), arises solely from the ownership of the land. The use of the land is irrelevant in the context of the liability-imposing provision.

268. As at the date of acquisition of Lot 1 for the purpose of creating Venice Street, the use of that acquired land was, as earlier described, a combination of the provision of access and of parking spaces. The liability for payment of land tax pursuant to s 3AL of the Land Tax Act did not arise as a “direct and natural consequence” of these uses of the acquired land.

269. The liability arose solely as a consequence of the Company's ownership of the land as at 31 December 2014. The bare fact that the land tax liability arises from this ownership at that date, and that that liability remains on the Company despite the resumption of the acquired land, cannot, on a proper construction of the terms of s 59(1)(f) of the Land Acquisition Act, give rise to any entitlement to compensation in these circumstances pursuant to that provision.

Conclusion on the land tax compensation claim

270. As the Company's claim for compensation for land tax liability attaching to the acquired land is unable to be maintained on either of the two bases upon which Mr Lazarus submitted created such a right to compensation, the land tax compensation claim must be rejected.

Conclusion

Introduction

271. Following the agreement between the valuers on the rate per square metre to be applied to the acquired land and the agreement between the parties on disbursements, there remained three matters for my determination. Those were:

1. What was the extent, if any, of the impact of the acquisition on the value of the residue land;

2. Did the Company have an entitlement to allowance for stamp duty which would be incurred on the purchase of a property to replace the acquired land; and

3. Was the claim for reimbursement of land tax for portion of the land tax year within which the acquisition had taken place a claim able to be validly maintained pursuant to either s 56(1) or s 59(1)(f) of the Land Acquisition Act?

Impact on the value of the residue land

272. With respect to the impact on the value of the residue land, I have concluded that the appropriate starting rate per square metre for this consideration should be the rate per square metre agreed to by the valuers for the parent parcel as at the date of acquisition. For the reasons earlier set out, there is no valid basis to make any adjustment to this rate to establish some different, lower starting rate for consideration of impacts on the value of the residue land. As the consequence of this conclusion, the starting value for assessment of the potential impact on the residue land is $1,575 per square metre.

273. I have concluded, however, that there were impacts on the value of the residue land as a consequence of the acquisition of the land for the creation of Venice Street. In that context, I have not accepted the proposition advanced by Mr Lunney, for the RMS, that, on a “swings and roundabouts” basis, the positive and negative impacts cancel each other out. However, I have also concluded that the more global adjustments proposed by Mr Davis, for the Company, lacked proper foundation to support the basis of the quantum to be derived from the matters upon which he expressed an opinion (with the sole exception of the one adjustment - the uplift in value for the reduction in size - upon which Mr Davis and Mr Lunney had agreed).

274. As a consequence, doing as best I can as the judicial valuer, I have considered the various aspects of the traffic and valuation evidence said to have the potential to give rise to the necessity to conclude that there was an impact (whether positive or negative) on the value of the residue land. In summary, I have concluded that there were a number of factors giving rise to such impacts, with some being positive and some negative.

275. With respect to all but one of these impacts, the appropriate approach to be taken is to determine what was the cumulative impact, in a percentage adjustment sense, on the value of the residue land. Doing this has resulted in my conclusion that there was an overall negative impact on the value of the residue land of 4.3%, with this percentage to be applied to adjust, downward, the rate per square metre to the value of the residue land and thus enable the calculation of compensation to the Company for this impact.

276. However, the value to be attributed to one of the impacts on the residue land (arising from the impact on the rental income which would have been available to the owner of the residue land during the notional period between the acquisition date and commencement of a hypothetical redevelopment of the site) is appropriate to be ascertained by reference to the rental which had been obtained from Secure Logistics prior to its quitting the site. The compensation thus arising is able to be quantified, in my view, as a lump sum amount rather than a percentage adjustment to the value of the residue land.

277. As a consequence, in addition to the compensation to the Company arising from the cumulatively derived negative impact of 4.3% on the value of the residue land as noted above, a lump sum (calculated as earlier set out for the reduction in the hypothetical purchase price to compensate for the loss of income earning potential after Secure Logistics’ termination pending redevelopment) is to be added to the compensation derived from the downward adjustment of the rate per square metre of the residue land.

278. The parties are to bring in Short Minutes of Order to give effect to my determination as provided for in the directions at the conclusion of this decision.

The stamp duty claim

279. I am satisfied that the claim for stamp duty compensation for a future property acquisition to replace the acquired land cannot be supported, based on the principles to be derived from Fitzpatrick. I am not satisfied that the decision of Pain J in SNS provides any proper basis, when considered in light of the facts in this case, to depart from the general proposition that such stamp duty compensation claim is not generally available.

280. As a consequence, the Company fails on this claim and it is, therefore, rejected.

The land tax reimbursement claim

281. For the reasons earlier set out, I am satisfied that there is no valid statutory foundation for this claim to be founded on either a market value or a disturbance basis. It is, therefore, rejected.

Costs

282. As the Company has succeeded (although not to the extent sought) in its claim for compensation for a reduction in value of the residue land as a consequence of the compulsory acquisition of Lot 1 for the purpose of creating Venice Street, I am of the preliminary view that it is appropriate that the Company have its costs of the proceedings. Subject to that which follows, this should be reflected in the orders to give effect to this decision.

283. If either party proposes to seek some alternative costs order, the appropriate order is that costs are to be reserved and the parties can contact my Associate to advise whether a further hearing on costs is required or whether dealing with it on the basis of a timetable for written submissions (with the party seeking the variation going first) would be appropriate.

Directions

284. I therefore give the following directions to permit finalisation of the matter:

1. The parties are directed to provide my Associate, electronically, with Short Minutes of Order to give effect to this decision. These orders are to be provided by the close of business on Wednesday 6 June 2018;

2. The matter is listed for mention before me on Friday 8 June 2018 at 9.00 am; and

3. If Short Minutes of Order are provided in accordance with (1), orders will be made in chambers and the mention in (2) vacated.

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Decision last updated: 24 May 2018