Cassidy v Sydney Water Corporation
[2008] NSWLEC 223
•18 August 2008
Land and Environment Court
of New South Wales
CITATION: Cassidy v Sydney Water Corporation [2008] NSWLEC 223
This decision has been amended. Please see the end of the judgment for a list of the amendments.PARTIES: Peter John Cassidy (First Applicant)
Hayley Estelle Cassidy (Second Applicant)
Sydney Water Corporation (Respondent)FILE NUMBER(S): 30233 of 2007 CORAM: Jagot J KEY ISSUES: Compulsory Acquisition of Land :- compensation - market value - identifying the public purpose for which the land was acquired - comparable sales - solatium LEGISLATION CITED: Environmental Planning and Assessment Act 1979
Growth Centres (Development Corporations) Act 1974
Land Acquisition (Just Terms Compensation) Act 1991
Local Government Act 1993
Sydney Water Act 1994
Water Board Act 1987CASES CITED: Carson v Department of Environment & Planning (1985) 3 NSWLR 99
Caruana v Port Macquarie-Hastings Council [2007] NSWLEC 109
D & C Dwight v Sydney Water Corporation Limited [1995] NSWLEC 72
Walker Corp Pty Ltd v Sydney Harbour Foreshore Authority (2008) 242 ALR 383
WG & C Nominees Pty Ltd v Sydney Water Corporation Limited (Unreported, Land and Environment Court, Talbot J, 19 June 1996)DATES OF HEARING: 28 - 31/7/08, 1/8/08
DATE OF JUDGMENT:
18 August 2008LEGAL REPRESENTATIVES: APPLICANTS
Mr P Tomasetti SC
SOLICITORS
Colin Biggers & PaisleyRESPONDENT
Mr J J Webster SC
SOLICITORS
Bartier Perry
JUDGMENT:
THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALESJagot J
18 August 2008
30233 of 2007
PETER JOHN CASSIDY
First ApplicantHAYLEY ESTELLE CASSIDY
Second ApplicantJUDGMENTSYDNEY WATER CORPORATION
Respondent
1 The applicants owned lot 9 in deposited plan 258947 at Memorial Avenue, Kellyville. On 22 September 2006 the respondent acquired part of that land for a public purpose. In accordance with s 42 of the Land Acquisition (Just Terms Compensation) Act 1991 (the Just Terms Compensation Act) the respondent offered the applicants compensation as determined by the Valuer-General. The applicants objected to this amount of compensation as provided for in s 66 of the Just Terms Compensation Act. Section 66(2) requires the Court to hear and dispose of the applicants’ claim for compensation. Compensation is to be determined in accordance with Div 4 of Pt 3 of the Just Terms Compensation Act.
2 Lot 9 is located at the intersection of Balmoral Road, Burns Road and Memorial Avenue, Kellyville. The area within which lot 9 is located became known (eventually) as the Balmoral Road Release Area. This area is in Kellyville between Windsor Road, Old Windsor Road, and the Norwest development. Burns Road turns into Memorial Avenue at the intersection with Balmoral Road. It provides the major connection between Windsor Road and Old Windsor Road through the middle of this area. Lot 9 is located immediately east of the point where Burns Road becomes Memorial Avenue.
3 Lot 9 is 20,496m2. It has long been cleared and has a small rural dwelling located in the northwestern corner. Lot 9 has a primary frontage to Memorial Avenue to the north (and a small frontage in the western corner to Balmoral Road near the existing intersection). To the east is a battleaxe handle providing access to a sporting complex owned by Baulkham Hills Shire Council. The access way in the battleaxe handle is not a public road.
4 Strangers (once known as Smalls) Creek bisects lot 9 running from the southwest to the northeast. This creek commences in Norwest Business Park to the south and flows north into Caddies Creek. Caddies Creek flows into the Hawkesbury River. The Strangers Creek catchment is in two parts (north and south). Lot 9 is in the south part of the Strangers Creek catchment.
5 The respondent acquired the eastern portion of lot 9 (an area of 15,320m2). This became lot 1 in deposited plan 1087781. The applicants retained the residue on the western side together with a sliver of land along the frontage to Memorial Avenue (an area of 5176m2). This residue parcel became lot 2 in deposited plan 1087781.
6 There is a substantial difference between the amounts of compensation each party claimed is the amount that, having regard to all relevant matters under Pt 3 of the Just Terms Compensation Act, will justly compensate the applicants for the acquisition of part of lot 9. The dispute mainly related to the market value of the acquired land. Market value means the amount that would have been paid for the land if it had been sold at the acquisition date by a willing but not anxious seller to a willing but not anxious buyer, disregarding, amongst other things, 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. The applicants claimed that the acquired land had a market value of between $5,542,500 and $5,884,250 at the acquisition date. The respondent claimed that the market value of that land was $1,608,600.
7 Numerous complex permutations were apparent in the competing experts’ opinions and parties’ submissions. However, the determination of market value in this case involves two basic issues:
(2) the proper analysis of certain comparable sales.(1) whether, and if so to what extent, the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired caused any increase or decrease in the value of that land at the acquisition date (s 56(1)(a) of the Just Terms Compensation Act); and
8 Some background facts will assist in understanding the competing positions.
A. Background facts
9 The rural areas to the northwest of Sydney have long been identified for urban development, particularly the provision of housing to accommodate anticipated population increases. As part of this strategy the NSW Government identified the Rouse Hill Development Area (the RHDA) as the first sector for release. The RHDA includes land in the Baulkham Hills and Blacktown local government areas. References below are to Baulkham Hills Shire Council unless otherwise indicated.
10 In the mid 1980s the NSW Government released its draft planning policies for the RHDA in the form of draft Sydney Regional Environmental Plan No 19 – Rouse Hill Development Area (SREP 19) and accompanying documents. The RHDA encompasses some 9400 hectares of land. The area was identified as having a capacity to accommodate a large population (70,000 new dwellings). Following extensive consultation, SREP 19 was made in 1989. SREP 19 and the background documents underlying it contemplated a staged release of the area with priority for release and rezoning based on the urban development program (a program controlled by the Department of Planning). The policies required services to be provided in advance of development. The anticipated cost of services over a potential development period of 30 years exceeded $3 billion. The NSW Government recognised that this could not be financed through local government funding. Instead the NSW Government accepted a proposal from major landholders in the RHDA for private upfront funding of water, sewerage and drainage services with funding costs to be recouped where possible through later statutory contributions (when levied on development) and through the increased development potential of land within the area. These major landholders had formed the Rouse Hill Infrastructure Consortium (or, later, Corporation) (the RHIC) for this purpose. Apparently these landholders owned about 60% of the land within one or more of the areas within the RHDA proposed for release in the first stage. These landholders did not own land in the area that became known as the Balmoral Road Release Area.
11 SREP 19 did not itself release or rezone land in the RHDA for urban development. The Minister for Planning may declare land to be a release area if “of the opinion that the land is required for urban development” (cl 6(1)). However, before doing so, the Minister has to be satisfied that “a council or other public authority which will be required to provide services to the land if the land is to be developed for urban purposes has been given an adequate opportunity to comment on the proposal to release the land” (cl 6(2)). Clause 7 contemplates that land declared to be a release area would be rezoned and redeveloped for urban purposes in accordance with local environmental plans. Clause 12 applies to flood liable land. It requires local environmental plans to be prepared having regard to the New South Wales Government Floodplain Development Manual and to contain provisions regulating the development of flood liable land to reduce the impact of flooding and flood liability on individual owners and occupiers, and reduce private and public losses resulting from flooding.
12 By 1989 the RHDA had also been declared a drainage area for the purposes of the Water Board Act 1987. This enabled the Water Board to levy service charges to land within the RHDA. The respondent is the same entity as and a continuation of the Water Board. I refer below to the respondent whether the respondent is identified in the evidence as the Water Board or the Sydney Water Corporation.
13 In February 1989 the Department of Planning identified the Parklea Release Area as the first proposed release of land for urban purposes within the RHDA. It also included this land in its urban development program. This is the area within which the founding members of the RHIC owned the majority (about 60%) of the land.
14 In mid 1989 Kinhill Engineers finalised a study of the drainage catchments in the RHDA for the Department of Planning. The Kinhill study proposed a trunk drainage scheme to manage the increased flows resulting from anticipated urban development. This scheme incorporated creeks as drainage channels maintaining natural channel shapes as far as possible and detention basins to maintain pre-development flow conditions at certain strategic locations. Kinhill proposed some of these detention basins along Strangers Creek north of Memorial Avenue (basins 15A to 15C). Kinhill noted that the timing for construction of basins 15A to 15C depended on the release of the area south of Windsor Road for urban development. Their plan also showed existing and proposed detention basins in the Norwest development forming part of this trunk drainage system.
15 In February 1990 Baulkham Hills Shire Council made a submission to the Minister identifying the Kinhill approach to drainage as “essential”. However, the Council considered that there were issues about the respondent having total control of the drainage system. The Council also observed that until the acquisition of the land below the 1:100 flood level and the respondent’s policy were known, those lands (that is, below the 1:100 flood level) should remain in a non-urban zoning. This is a reference to advice from the respondent to the Council that the respondent would be willing to acquire and maintain certain lands required for drainage but not land within the remainder of the floodway proposed for control by other means. Details of the ownership, control and maintenance of trunk drainage were to be the subject of further discussions with the Council.
16 The Council, by this time, had prepared a draft local environmental plan proposing the rezoning of land within certain parts of the RHDA including not only the Parklea Release Area but substantial land outside this area, such as the land between Windsor Road and Old Windsor Road, Kellyville (where lot 9 is located). Consistent with the position presented to the Department about land below the 1:100 flood level, the Council’s draft zoning map proposed 1(a) non-urban zones over the major creeks (including a swathe of 1(a) land through the eastern portion of lot 9). It also proposed that much of the surrounding land (including the balance of lot 9) be rezoned to 2(b) residential.
17 The Department of Planning rejected the Council’s draft zoning map on the ground that the proposal to rezone land outside the Parklea Release Area for urban development was contrary to the decision of February 1989 and the urban development program. The Department told the Council in May 1990 that this was inappropriate. It would create false development expectations; development of this other land was “many years off”, “services have not been committed”, and the rezoning would be contrary to long-held government policy not to permit major rezoning for urban purposes unless land had been recognised for release by inclusion in the urban development program. The Department was prepared to permit exhibition of a structure plan only for the broader area. In consequence, the Council could not publicly exhibit the proposed rezoning of any land not on the urban development program. The area between Windsor Road and Old Windsor Road was thus excluded from the Council’s draft plan.
18 The Council proceeded with the balance of the plan. The draft plan as exhibited maintained the 1(a) zoning over land below the 1:100 year flood level as defined by Kinhill. The Council’s structure plan, also consistent with Kinhill’s recommendations, showed major creeks as drainage corridors. An accompanying phasing plan for development showed nearly all of the RHDA released for development in a series of stages. However, the area between Windsor Road and Old Windsor Road was not identified within any phase for release on this plan.
19 In December 1990 Sinclair Knight completed a drainage study on behalf of the RHIC refining the drainage concept proposed by Kinhill. By this time I infer that the RHIC and respondent had reached agreement on detailed aspects of the RHIC’s upfront funding and provision of services to the areas proposed for the first stage release. Sinclair Knight recommended certain changes to basin locations and design but the proposal remained one of trunk drainage using existing major creeks and detention basins along the creeks. The object remained ensuring that, on a catchment wide basis, post-development flows did not exceed pre-development flows at critical locations. One of the changed basin locations in the south Strangers Creek catchment (not proposed for release) affected lot 9. Sinclair Knight’s recommendations show a dry basin (15D) located south of Memorial Avenue along Strangers Creek on lot 9 (rather than north of lot 9).
20 A report to the Council in January 1991 about the draft plan recorded that the Council was reviewing drainage areas with the respondent and expected the review to be completed within the week. The following week a further report to the Council said that the land previously retained in the 1(a) zone for drainage purposes would be placed in either the 5(a) trunk drainage zone (to be acquired by the respondent), the 6(a) open space zone (to be acquired by the Council) or (where land was to be retained under private ownership) a zoning in accordance with the adjoining zone but subject to special (restricted) development controls. The report also recorded the position with respect to the land deleted from the draft plan. It said the land near Annangrove and Mungerie Roads may be included in the urban development program but there was no commitment on the Memorial Road/Balmoral Road area (that is, the land between Windsor Road and Old Windsor Road).
21 The Baulkham Hills Local Environmental Plan 1991 was subsequently made. Amendment No 1, made on 28 June 1991, rezoned land in the designated release areas for urban purposes. Consistent with the position of the NSW Government the land release related to about 50% of the RHDA (and did not include the land between Windsor Road and Old Windsor Road).
22 In October 1992 the Council wrote to the Department of Planning noting that it had received representations from owners of land between Windsor Road and Old Windsor Road who were pursuing the rezoning of their land. The letter recorded the Council’s previously unsuccessful attempt to have this area included within the land release observing that the owners, with the Council’s support, were seeking to have the matter reconsidered. The letter noted that the owners had been discussing the issue with the Department, the RHIC, the former Minister, and their local member. As part of these discussions the owners sought provisional membership of the RHIC, but the RHIC resolved on 26 May 1992 not to accept them as provisional members on the basis that their application be considered “when their land has been designated for rezoning”. The Council concluded that the RHIC’s resolution showed that, despite the owners’ best efforts, their attempts to resolve the future development of their land had proved unsuccessful. The Council supported the rezoning and sought a meeting with the Department to examine the merits of the rezoning and whether there were any impediments to the Department’s support for it.
23 The Department responded on 22 December 1992. The response recorded that the area had been excluded from the proposed release as it was considered “unsuitable for inclusion due to fragmented ownership and servicing problems”. The area was identified as part of the medium/long-term development program for Rouse Hill. The Department had advised the owners to consult the respondent and RHIC about the provision of upfront funding for services so the rezoning could be considered. The letter recorded that the respondent had no objection to the rezoning of the area subject to a provision in the local environmental plan that the developer make satisfactory arrangements with the respondent for the upfront funding of water, sewerage and drainage and with the RHIC for scheduling of water. Further, the RHIC advised that the area would not be included in the phasing program until designated for rezoning. The Department thus considered a meeting unnecessary.
24 In 1993 the Department of Planning issued a policy document about multiple uses of drainage systems. The policy recognised that drainage areas may be suitable for other uses, particularly open space and recreation uses.
25 The owners of the land between Windsor Road and Old Windsor Road commissioned their own rezoning strategy also in or about 1993. This document was the Kellyville Rezoning Strategy, described in a later assessment on behalf of the Council (the Balmoral Road Release Area Environmental Resource and Physical Infrastructure Assessment, 2001) as “a community led investigation into the capacity of the land for development”. However, the land was not placed on the urban development program and attempts to facilitate a rezoning did not bear fruit. Meanwhile, urban development of the surrounding land continued apace. The rural land between Windsor Road and Old Windsor Road became surrounded by urban development and began to look like (and became known as) “the hole in the donut”.
26 Rapid development of the surrounding areas and increasing population pressure ultimately led to the land between Windsor Road and Old Windsor Road being placed on the urban development program in 1998. In October 1999 the Council commissioned the preparation of a local environmental study for the area. In November 2000 the Council established a working group to facilitate the release and rezoning of the area, now known as the Balmoral Road Release Area. Background documents to the local environmental study identify the area as containing about 500 hectares of largely cleared land traversed by two creeks (Elizabeth Macarthur Creek and Strangers Creek). Ownership was “very fragmented” with over 230 owners, and many properties owner-occupied. The documents also record the long-held policy to maintain creeks in their natural form in preference to permitting engineered channels to increase development areas. Further, that the respondent would be responsible for providing drainage infrastructure in the Balmoral Road Release Area and was undertaking its own studies for this purpose.
27 The local environmental study was exhibited in April 2001. One unresolved issue in the study was the proposed heavy rail link between Castle Hill and the Rouse Hill regional centre. A corridor to accommodate this rail link had to be provided but its final alignment was not known and the NSW Government had not committed funding for the construction of the rail line.
28 A report to the Council in August 2001 recorded the results of the exhibition of the local environmental study. Most of the submissions related to the proposed heavy rail corridor and objected to the reservation of land for that purpose. The report noted that the Council was liaising with the Department of Transport about the alignment of the rail corridor. The respondent was also liaising with the Council and other government departments about the preferred drainage strategy for the Balmoral Road Release Area. These issues were said to be delaying the Council’s progress.
29 In October 2001 the Council published a drainage strategy for the Balmoral Road Release Area (incorporating the outcomes of the respondent’s work). This strategy identified the creeks in the area as degraded weed infested drains and the object of the strategy to provide a rehabilitated creek system and easily accessible trunk drainage land promoting community use. This was to be done by (amongst other things) the Council zoning and the respondent acquiring for trunk drainage all land below the 1:100 flood level. This strategy also referred to the proposed heavy rail link as subject to investigation and a proposed bus transitway service scheduled for 2006.
30 In October 2003 a report to the Council recorded that the Balmoral Road Release Area was not included in the earlier rezoning of land in the RHDA because of fragmented land ownership and financial requirements for the participation by landowners in the RHIC. Further, that release and rezoning of the land had been delayed over the past two to three years by the NSW Government’s continuing assessment of the northwest rail link. The Department of Planning announced the preferred alignment of the rail link in July 2003, so the report informed the Council that the urban release of the Balmoral Road Release Area could now occur.
31 The report identified objectives for the Balmoral Road Release Area including protecting and rehabilitating creek systems and, for floodplain risk management, ensuring no development occurred below the identified 1:100 year flood level. The respondent was to acquire land below this level. By this time the transitway proposal had also developed, with a T-way interchange station (and future rail station) to be located between Balmoral Road and Burns Road. Commercial development was intended to be at three major nodes with small neighbourhood centres within walking distance of houses.
32 The report attached a structure plan for the Balmoral Road Release Area predicated on the construction of the rail link (although the NSW government funding had not committed funding for that purpose). The draft structure plan showed lot 9 proposed to be zoned part trunk drainage (the eastern portion), part high density residential (the south-western portion), and part commercial for neighbourhood shops (the north-western portion adjoining the roads). The zonings straddled lot boundaries, with the commercial zoning extending onto the adjoining land and following the road frontages. The other proposed neighbourhood shops precincts were on Windsor Road to the north and south, with the transit centre functioning also as the major commercial node.
33 By November 2003 the RHIC had completed the concept design of the trunk drainage infrastructure for the Balmoral Road Release Area.
34 On 5 March 2004 Sydney Water and the RHIC entered into an agreement for the supply of infrastructure to stage 3 of the RHDA (namely, the Balmoral Road Release Area). By this time the RHIC had been transformed into a not-for-profit corporation facilitating the provision of services. Under the agreement RHIC will (through its nominee company) procure the financing, design, and construction of infrastructure works in the Balmoral Road Release Area. Sydney Water pays RHIC by (amongst other things) remitting various statutory charges. The agreement also contemplates RHIC entering into landowner contribution deeds with owners within the Balmoral Road Release Area.
35 In April 2005 the NSW Government issued the Floodplain Development Manual (replacing the 1986 and updating the 2001 Manuals). The primary objectives remain reducing the impact of flooding and flood liability on owners and occupiers of flood prone property, and private and public losses from floods. The approach remains one based on merits to ensure flood-prone land is neither unnecessarily sterilised nor developed in a manner inconsistent with its flooding exposure. Ministerial directions under s 117 of the Environmental Planning and Assessment Act 1979 (the EPA Act) had been in force for many years in different forms. The directions prevent draft local environmental plans from rezoning flood liable land from zones described as special uses – flood liable, rural, open space, scenic protection, conservation, environment protection, water catchment or costal lands or similar description to a zone described as residential, business, industrial, special use, village or by a similar description.
36 By July 2005 the Council had prepared and exhibited a draft local environmental plan for the Balmoral Road Release Area. The Council had also prepared and exhibited a new general local environmental plan for the area as a whole. The Baulkham Hills Local Environmental Plan 2005 (the 2005 LEP) was made on 26 August 2005. The Balmoral Road Release Area remained in a 1(a) zoning pending the making of the local environmental plan for that area.
37 On 13 April 2006 Amendment No 5 to the 2005 LEP was made. Amendment No 5 rezoned and thus enabled the urban development of land in the Balmoral Road Release Area. The zoning map shows the whole of the eastern portion of lot 9 zoned 5(a) Special Uses (Trunk Drainage) and the balance on the western side zoned 3(a) Business (Retail), with a sliver along the frontage 5(b) Special Uses (Existing and Proposed Road). The 3(a) zone crosses lot boundaries and includes a small area of land to the south of lot 9, the whole of the adjoining lot (lot 8), Balmoral Road (which is shown terminating some distance short of the Memorial Avenue /Burns Road intersection), and extends west of the road to take up a small triangle in the adjoining lot (known as the Polito land). There are two other areas zoned 3(a) in the Balmoral Road Release Area, both on Windsor Road.
38 Amendment No 5 also introduced cl 25(2) as follows:
Despite any other provision of this plan, development (other than development for the purpose of bridges, demolition of existing structures, environmental protection works, public open space and storm water drainage) must not be carried out on land within 20 metres of the centreline of a creek, as shown on the map marked “Baulkham Hills Local Environmental Plan 2005 (Amendment No 5)”.
39 The 2005 LEP contained existing provisions as follows:
11
(1) For the purpose of enabling development on land within any zone to be carried out in accordance with this plan or with a consent granted under the Act, any agreement, covenant or other similar instrument that restricts the carrying out of that development does not apply to the extent necessary to serve that purpose.
(2) Nothing in subclause (1) affects the rights or interests of any public authority under any registered instrument.
23
(1) Consent must not be granted for development of land that, in the opinion of the consent authority, may be subject to flooding, unless the consent authority has taken into account the following aim of this plan:
to reduce the impact of flooding on owners and occupiers and to reduce private and public losses resulting from flooding, whilst ensuring the environment is conserved and protected.
42
(1) The owner of any land within Zone 5(a) or 5(c) may, by notice in writing, require:(2) On receipt of a notice referred to in subclause (1), the public authority concerned must acquire the land.
…
…(b) in the case of land within Zone 5 (a) and lettered on the map “Water Storage”, “Pumping Station”, “Sewage Treatment Works” or “Trunk Drainage”, Sydney Water Corporation, or
as the public authority that has responsibility for acquisition of the land for the purpose for which the land is zoned, to acquire the land.
…
40 On 22 September 2006 the respondent acquired the land within lot 9 zoned 5(a) (Trunk Drainage) “for the purpose of the Sydney Water Act 1994”.
41 In January 2007 the Council adopted Development Control Plan (DCP) No 20 for the Balmoral Road Release Area. Although not in force at the acquisition date DCP 20 must have been exhibited before January 2007. I infer from the zoning map that the draft DCP probably existed in some form as early as April 2006.
42 DCP 20 has to be read in conjunction with DCP 8 adopted in April 2006 and applying to all land zoned 3(a), 3(b) and 3(c), as well as the s 94 contributions plan for the Balmoral Road Release Area in September 2006. The DCP includes a planned road layout. This layout includes the closure of Balmoral Road before its intersection with Memorial Avenue and Burns Road, and a new enhanced collector road within that part of lot 9 zoned 3(a) immediately adjacent to the 5(a) land. The new intersection between the enhanced collector road and Memorial Avenue/Burns Road is shown as controlled by traffic lights. I deal with the balance of the DCP provisions, where relevant, in the context of the parties’ submissions.
43 Two other facts should be noted at this stage.
44 In 1979 the Council registered a restriction on use over lot 9. The circumstances in which it did so appear to relate to the subdivision creating lots 9 and 7 from a larger lot. The restriction burdens the entire eastern part of lot 9 and the eastern part of lot 7 (to the south). It prohibits any building or structure being erected or remaining on the affected areas.
45 A certificate issued under s 149 of the EPA Act on 5 October 2006 notes the policy of the Council not to permit any development on land expected to be inundated during the 1:100 average recurrence interval design flood.
B. Section 56(1)(a) issues
Submissions about s 56(1)(a)
46 The applicants relied on expert evidence from Mr Bewsher (flood engineer), Mr Harding (planner), and Mr Phippen (valuer). Mrs Cassidy also gave evidence, as did Mr Chesher, a solicitor employed by Woolworths Limited (the buyer of the residue parcel from Mrs Cassidy and of other land zoned 3(a) in the Balmoral Road Release Area).
47 The respondent relied on expert evidence from Dr Joliffe (flood engineer), Mr Rowan (planner), and Mr Dempsey (valuer).
48 The expert evidence of the flood engineers and planners incorporated many opinions that did not (or, rationally, could not) bear upon the determination of compensation given the other evidence in the proceedings, including the opinions of the valuers about the market for land in the Balmoral Road Release Area. Accordingly, I deal with the expert evidence insofar as it is potentially material to the final competing submissions.
49 The parties’ submissions started from the propositions about s 56(1)(a) stated by the High Court in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 242 ALR 383. However, as disclosed below, they diverged thereafter.
50 The applicants’ submissions involved the following steps:
(1) The public purpose for which part of lot 9 was acquired was identified in the notice of acquisition, namely, “for the purpose of the Sydney Water Act 1994”.
(2) Those purposes included all of the respondent’s functions of storing or supplying water, providing sewerage services, providing stormwater drainage systems, and disposing of wastewater (s 12 of the Sydney Water Act).
(3) Consequently, s 56(1)(a) of the Just Terms Compensation Act required the entire involvement of the respondent in the Balmoral Road Release Area to be disregarded.
(4) Alternatively, the particular purpose for which the land was acquired involved the respondent’s function of providing stormwater drainage systems, in this case the trunk drainage system along Strangers Creek including the use of part of lot 9 for trunk drainage and a dry detention basin.
(5) The release of land in the RHDA was controlled by the capacity to service land. The NSW Government accepted the proposal of the RHIC to fund and construct the major service infrastructure (water, sewerage, drainage) upfront, after which it would be transferred to the respondent. Thus, the RHIC and respondent controlled the timing of land releases in the RHDA (and, I infer, the RHIC’s involvement is to be disregarded in common with that of the respondent).
(6) The RHIC and respondent decided not to provide infrastructure to the Balmoral Road Release Area in the early 1990s. Accordingly, that area was excluded from the release of land at that time. The RHIC and respondent were not ready to provide services to the Balmoral Road Release Area until many years later. This caused the Balmoral Road Release Area to become the “hole in the donut” – rural land surrounded by urban development.
(7) It was always known that the respondent and the RHIC would eventually provide services to the Balmoral Road Release Area. The difficulty was the timing of this service provision. The area was thus left in limbo until the respondent and the RHIC were ready to provide the services. There was significant pressure on the Council to release this land. The Council in fact supported the release of this land. If the respondent had not been involved in the provision of services (including trunk drainage) to the Balmoral Road Release Area then the area would have been released much earlier than 2006, with the Council providing trunk drainage or taking easements over land required for that purpose. Alternatively, drainage solutions as proposed by Mr Harding would have been implemented.
(9) The most conservative assumption for lot 9 would be that, but for the public purpose, all of the land above the 1:100 year flood level would be available for retail development (subject to the planned enhanced collector road and road widening). The land below the 1:100 year flood level, whilst protected from development and performing a floodway and drainage function, would represent potential floor space. Alternatively, but for the public purpose, the land above the 1:100 year flood level available for retail development could be increased by modifying the creek generally as recommended by Mr Bewsher.(8) For these reasons, on the assumption required by s 56(1)(a) of the Just Terms Compensation Act, the area surrounding lot 9 would have been developed for urban purposes similar to the other parts of the RHDA at the acquisition date. Lot 9 itself would have been zoned 3(a) Business (Retail) in its entirety. Although development on the flood liable land would have been precluded, the floor space from those parts of lot 9 would have been available for use on the flood free parts of the lot. Although the market for the land at the acquisition date would have been retail developers interested in developing a single storey supermarket and associated specialty shops with at-grade parking, this additional floor space potential would have added to the value of this centrally located site (which has major road frontage, proposed T-way connections, and a nearby proposed rail link).
51 The respondent’s submissions were as follows:
(1) The acquisition notice is but one part of the available evidence. Consideration of the whole of the evidence discloses that the public purpose for which the land was acquired was the provision of land to the respondent for trunk drainage (either per se or including detention basins) in the Balmoral Road Release Area.
(2) Without any involvement from the respondent, other authorities (the Department of Planning and the Council in particular) had decided that land below the 1:100 year flood level should be used as drainage channels. This policy decision was unconnected to the respondent. It cannot be disregarded under s 56(1)(a).
(3) The respondent agreed to acquire land below the 1:100 year flood level in the RHDA in February 1991. This was the inception of the public purpose for which the land was acquired.
(4) But for the respondent agreeing to acquire the land below the 1:100 year flood level for trunk drainage (and facilitating the funding for these services by agreement with the RHIC), the Balmoral Road Release Area would not have been released for urban development by the acquisition date. As early as 1992 the Department of Planning had offered the Council an alternative to the RHIC’s phasing plan. This would have enabled an earlier release subject to upfront funding by the owners of land in the Balmoral Road Release Area. However, nothing happened at the instigation of the Council or the owners. Instead, they elected to wait until the agreement between the respondent and the RHIC in 2004 provided the upfront funding required and enabled the release of this area. They did so because there was no feasible alternative.
(6) Alternatively, if the Balmoral Road Release Area had been rezoned for urban development at the acquisition date then, on the assumption required by s 56(1)(a) of the Just Terms Compensation Act, the land below the 1:100 flood level would have remained in the rural 1(a) zone functioning as a drainage channel.(5) For these reasons, on the assumption required by s 56(1)(a) of the Just Terms Compensation Act, the Balmoral Road Release Area would have remained in the rural 1(a) zone at the acquisition date. It would have been at least five years after the acquisition date before the area could be ready for urban development, assuming the owners had a feasible funding solution available by then.
General observations
52 The High Court (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ) held as follows in Walker Corporation:
[53] The Foreshore Authority submitted that (i) the statutory definition required what might be called a Spencer’s case valuation in the sense explained above; but (ii) this was to be followed by any disregard which para (a) required; and (iii) the reference in para (a) of the objects set out in s 3(1) to eventual acquisition indicated that the proposal might predate by a significant period the acquisition of the land in question; (iv) but (iii) did not render applicable to s 56(1) the proposition drawn from San Sebastian as to the sufficiency of an “indirect relationship” where the maintenance of the planning restriction by the council is seen as “a step in the process of resumption”; (v) this is because the market value disregard in para (a) looks to the public purpose for which the land might by law be acquired by the Foreshore Authority by compulsory process under the Compensation Act and to “the proposal” to carry it out; (vi) “the proposal” here was not that of the council as the proposed resuming authority, or some aggregation over time of the policies of the council and later of the Carr government; (vii) to give the statutory expression that operation, as had the primary judge in fixing upon “unity of purpose displayed by the two arms of government”, was an error of law.
[54] This reasoning should be accepted. The construction of the market value disregard in para (a) for which the Foreshore Authority correctly contends, links “the proposal” to that of the resuming authority. It puts aside anterior discussions or agitations by the council and others in favour of classifying the land as public space. In this way there is reflected in the terms of para (a) of s 56(1) a policy to require a disregard only of that increase or decrease (as in this case) in value for which the resuming authority is responsible.
53 These paragraphs emphasise two aspects of the focus required by s 56(1)(a). First, the public purpose is the purpose for which the resuming authority acquired the land by compulsory process (consistent with the definition of public purpose in s 4(1) of the Just Terms Compensation Act, namely, “public purpose means any purpose for which land may by law be acquired by compulsory process under this Act”). Second, the section requires only that there be disregarded any increase or decrease in the value of the land caused by the carrying out of that purpose or the proposal to carry out that purpose.
54 Earlier decisions about the RHDA, and the roles of the respondent and the RHIC within it, pre-date the authoritative statement in Walker Corporation (for example, D & C Dwight v Sydney Water Corporation Limited [1995] NSWLEC 72 and WG & C Nominees Pty Ltd v Sydney Water Corporation Limited (Unreported, Land and Environment Court, Talbot J, 19 June 1996).
55 It is possible to identify four descriptions of the public purpose from the parties’ submissions and the evidence. Those descriptions are: - (i) the respondent carrying out any function under its enabling statute in the Balmoral Road Release Area (the applicants’ first description), (ii) the respondent providing trunk drainage in the Balmoral Road Release Area (the applicants’ second description), (iii) vesting in the respondent all of the land required for the regional or trunk drainage strategy adopted by the Department of Planning and the Council for the Balmoral Road Release Area or, putting it another way, bringing that land into the respondent’s ownership in addition to its ownership of the works comprising the trunk drainage system by dint of s 37 of the Sydney Water Act 1994 (the respondent’s description), or (iv) the provision of regional or trunk drainage in the Balmoral Road Release Area per se (Mr Harding’s description).
Discussion about s 56(1)(a) issues
56 The focus on the language of s 56(1)(a) required by the High Court’s decision in Walker Corporation leads to the following conclusions on the facts in this case.
57 The Balmoral Road Release Area (as it became known) was part of a wider land release identified by the NSW Government (the RHDA). The NSW Government decided that the RHDA would be released in stages. It decided also to avoid upfront public funding of basic (and costly) infrastructure services by accepting a proposal from the RHIC to arrange funding and construction of certain services (particularly water, sewerage and drainage). In so doing it accepted a staging program that ensured areas in which the RHIC members owned land were released for urban development first because they would be serviced first.
58 Insofar as it might be relevant to the applicants’ submissions, I am satisfied that these facts are not the result of a mere conjunction of historical accident and self-interest. I infer that the RHIC came into existence, in its initial form, because its members controlled sufficient land in locations capable of orderly and economic servicing. This enabled the members to both agree on their own role and present a rational and persuasive submission to the NSW Government that the RHIC could function as an effective infrastructure service provider (including taking on debt for the upfront funding and the associated risks with respect to the timing and intensity of development). Where land ownership is highly fragmented (as in the Balmoral Road Release Area) there is less potential for owners to agree and persuade government of their capacities to deliver critical aspects of an orderly and economic release of land. These facts arise from the character of landholdings in the area, the initiative and effectiveness of the RHIC, and the policy decisions of the NSW Government. They are unconnected to the respondent or any characterisation of the public purpose for which part of lot 9 was acquired.
59 Strangers Creek bisects lot 9 running from the southwest to the northeast. As a result 9369m2 of land within lot 9 is below the 1:100 year flood level. Strangers Creek is one of two major creeks carrying flows out of this part of the catchment. While those flows are shallow and slow moving in a flood event, the Council turned its face from permitting development of land inundated in the 1:100 year event before the RHDA existed and maintained that position thereafter. I infer that the restriction on use imposed by the Council in 1979 related to the fact that most of the eastern part of lot 9 is inundated in the 1:100 year flood event. Hence, the Council prevented the erection of any building within this area by the restriction on use. The Council’s policy position that land below the 1:100 year flood level should not be built upon is also apparent in other documents including the notation on the certificate under s 149 to the same effect. These facts are also unconnected to the respondent or any characterisation of the public purpose for which part of lot 9 was acquired.
60 The Department of Planning and the Council decided that the major creeks within the RHDA should be used as drainage corridors taking post-development flows out of the catchment. In so doing they adopted a policy of trunk drainage management via creeks rehabilitated (insofar as possible) to their natural form within the RHDA. They may have done so in possible anticipation of the respondent agreeing to acquire and subsequently manage all of the land in those drainage corridors. But the fact that they did not know the respondent’s position did not cause any deviation from the strategy. In any event mere anticipation that another authority (the respondent) might exercise one of its functions (acquiring land to provide drainage) in a particular manner in the future does not permit a finding of a “unity of purpose” between these different arms of government. In other words, the policy of a trunk drainage strategy existed independently of any actions of the respondent.
61 These facts disclose part of the problem with Mr Harding’s evidence.
62 Mr Harding said that there were two basic solutions to drainage in release areas – regional or individual. Trunk drainage is a regional strategy. In his view, if that strategy must be disregarded, those involved necessarily would have turned to the alternative. The Balmoral Road Release Area thus would have been rezoned in the early to mid 1990s without a trunk drainage strategy. Every individual landowner would have been required to ensure (presumably by on-site detention) that the development of their site did not adversely affect flows into the creek system (I infer, in terms of volume, velocity and timing of flows). Owners of land through which a creek flowed (such as lot 9) would be bound by the same obligation. In addition, those owners would not be able to carry out any works to the creek on their land adversely affecting either the creek’s capacity to carry flows out of the catchment or the impacts of such flows on other land. On this basis Mr Harding considered that the whole of lot 9 would have been zoned 3(a) at the acquisition date. Although the flood liable area could not have been developed, he also considered that its notional development potential could be used on the flood free land because the Council’s planning policies permit floor space ratio to be calculated over the entire site area.
63 Mr Rowan did not accept that the public purpose could be “trunk drainage”. Creeks provide drainage as part of their natural function. Mr Rowan also considered the trunk drainage strategy of such importance to the release and rezoning of land within the Balmoral Road Release Area that he found it almost impossible to envisage any release and rezoning without it. This, and the Council’s lack of financial capacity to fund a trunk drainage solution, was the basis for his principal conclusion that, but for the public purpose, the Balmoral Road Release Area would have remained in a rural 1(a) zoning at the acquisition date with at least five years of work ahead to devise an alternative solution.
64 I consider that the Department of Planning and the Council were committed to a strategy of trunk drainage for the RHDA using the existing creeks, including Strangers Creek, irrespective of any action of the respondent. They were committed to this strategy, moreover, for good planning reasons. One of the objects of the EPA Act is the orderly and economic use and development of land (s 5(a)(ii)). The RHDA was large (9400 hectares). It was intended to accommodate a large number of new homes (70,000 dwellings). An approach based on individual site solutions as advocated by Mr Harding would have burdened each developer with a potentially expensive drainage study to prove that the development of their site met the required performance standards. It would have burdened each development site with perpetual obligations to maintain on-site detention systems with failures in maintenance by individual landowners threatening increased flood impacts. It would have required the consent authority to satisfy itself that each and every development application met the performance standards. For land through which the creeks flowed it would have placed an urban zoning over all private land yet bound every owner to accept that no land below the 1:100 flood level could have a building erected on it. Further, the starting point for development would be the entry of the creek onto land from the adjoining upstream owner. The exit point of the creek (in its natural or modified form) would thus impact on the development potential of the adjoining downstream land. However, neither the consent authority nor any individual landowner could dictate the order in which lots along the creek would be developed. The one certainty would be that each individual landowner would act in accordance with what appeared to be their best interests at the time. Authorising a large-scale land release on this basis would be likely to hinder, rather than attain, the objects of the EPA Act. Mr Rowan was thus correct in having difficulty envisaging any real possibility of Mr Harding’s alternative finding favour.
65 The Norwest Business Park does not support Mr Harding’s opinions. The Norwest Business Park is at the top of the Strangers Creek catchment. As the flooding reports disclose, Norwest Business Park includes a trunk drainage strategy with four detention basins. To this end the primary drainage land in the Norwest Business Park is in a single lot. In other words, Norwest Business Park was not developed relying on individual site solutions to drainage but a trunk drainage strategy albeit limited to the extent of the Business Park. It was also released well before the RHDA.
66 The chance of either the Department of Planning or the Council adopting a strategy of individual site drainage for such a large and important land release was remote in the extreme. I am supported in this conclusion by the events in 1992 and 1993 and thereafter. The Council supported early release and rezoning of the Balmoral Road Release Area. It informed the Department to that effect in October 1992. The Department advised the Council that the respondent had no objection to rezoning subject to a provision in the local environmental plan that satisfactory arrangements be made for the upfront funding of, amongst other things, drainage. This proposal was never implemented.
67 The applicants submitted that this lack of action in response to the Department’s letter proved nothing because the letter implicitly insisted on a trunk drainage solution funded by landowners. This is true, but it overlooks the opportunity that existed in December 1992. If a different approach to drainage (such as individual site solutions) had any real prospect of being adopted, then the opportunity to agitate for that approach arose in December 1992. The Council and the landowners did not have to accept the terms of the Department’s letter. They were free to initiate alternatives. Circumstances were ripe for alternative solutions because the Balmoral Road Release Area had not yet even made it onto any phasing plan. In fact, the owners of land in this area commissioned their own rezoning strategy in 1993. The only reason for the owners to bring such a document into existence was to persuade the relevant authorities to rezone the Balmoral Road Release Area for urban purposes without waiting for the RHIC and the respondent. The owners had the Council on side in principle, yet nothing apparently happened in response to the owners’ rezoning strategy. This indicates that individual site drainage did not present itself in 1993 as a feasible or appropriate method to enable this area to be released for urban development.
68 I am satisfied that the dichotomy between a policy of trunk drainage/no trunk drainage is not required or permitted by s 56(1)(a) of the Just Terms Compensation Act. The policy of adopting a trunk drainage strategy existed and would have continued to exist independently of any action of the respondent. Hence, using the language of Walker Corporation, there is no link between the respondent and that policy; the respondent cannot be responsible for any increase or decrease in the value of the acquired land caused by that policy. I also note that Mr Bewsher’s evidence was not the source of this dichotomy. Mr Bewsher suggested methods by which the flood free land on lot 9 could be increased assuming either a regional drainage strategy or individual site solutions. In Mr Bewsher’s opinion, however, a regional (or trunk) drainage strategy incorporating detention basins was a “preferred means” of compensating for the effects of catchment development. This opinion is consistent with the conclusions above.
69 Accordingly, three descriptions of the public purpose remain in this case as described above. Unlike the fourth purpose (trunk drainage per se) each at least discloses a direct link with the respondent.
70 I do not consider the evidence capable of supporting the first description of the public purpose. Although the acquisition notice refers to the acquisition as “for the purpose of the Sydney Water Act 1994” other facts disclose that the relevant function of the respondent was the power to acquire land to be used for the provision of stormwater drainage systems (ss 37, 47(1), 5(2) and 12(1)(b) of the Sydney Water Act). The third description is consistent with the approach in Walker Corporation (particularly the focus on “the purpose for which the land might by law be acquired by …[the respondent] under compulsory process…and the proposal to carry it out”). My findings above about the independence of the policy to implement a trunk drainage strategy mean that disregarding the respondent providing trunk drainage in the Balmoral Road Release Area does not lead to the conclusion that trunk drainage would not have been provided. Whether the public purpose is as described in either of the second or third descriptions my conclusions remain the same. In the paragraphs below references to the public purpose should be understood as referring to either or both of the second and third descriptions.
71 I am satisfied that the public purpose did not materially delay the release and rezoning of the Balmoral Road Release Area. The events (or non-events) after late 1992 indicate that the owners of the land in the Balmoral Road Release Area took the opportunity to try to convince the relevant authorities to release and rezone their land without waiting for the RHIC and the respondent and (I infer) without requiring up front funding of, amongst other things, drainage infrastructure. Their attempts were unsuccessful.
72 As noted, the applicants submitted that the lack of action after 1992 resulted from the common knowledge of the respondent’s involvement in the Balmoral Road Release Area. That submission is not persuasive for a number of reasons apparent from the discussion above. The owners were keen for their land to be released. The owners had tried and failed to become members of the RHIC. They had commissioned their own rezoning strategy. The Council was on side. The Department wanted to see the land in the RHDA released and become available for urban development but in an orderly and economic manner. The phasing plan for the RHDA did not indicate any timetable for the provision of services to the Balmoral Road Release Area. Hence, the Department saw any release of that land as a medium to long-term proposition. In these circumstances if there had been any feasible and appropriate alternative enabling the release of the Balmoral Road Release Area materially earlier than in fact occurred, the alternative would have emerged in or about 1993. But the alternative did not emerge. Hence, I may put to one side any suggestion that the public purpose decreased the value of the acquired land by delaying the release and rezoning of the Balmoral Road Release Area, and thus delaying surrounding urban development.
73 The respondent, for its part, took the fact that no alternative emerged as evidence that there was no alternative available at all. This supported the respondent’s submission that, but for the public purpose, the Balmoral Road Release Area would not have been released and rezoned by the acquisition date. Rather, there would have been a further five years of work from that date for some alternative regime to be implemented so as to permit the rezoning of the area. This latter opinion appears to assume that some alternative would have been found by the acquisition date. This is understandable. If that possibility were not acknowledged the Balmoral Road Release Area, on the respondent’s case, would remain non-urban land in perpetuity.
74 In my view the answer is this - the fact no alternative emerged from late 1992 onwards capable of providing trunk drainage services to the Balmoral Road Release Area does not necessarily mean that there would have been no alternative at all; it indicates only that such alternatives as there might have been did not offer a materially better outcome than the public purpose. This latter point undermines the applicants’ arguments of a hypothesised release much earlier than the acquisition date. If the public purpose is disregarded as s 56(1)(a) requires, then the options would have been individual site drainage solutions (dismissed above as having no prospect of adoption) or another trunk drainage solution not involving the respondent. If those were the only options from 1991 or 1992 onwards a method of achieving the second solution (trunk drainage not involving the respondent) would have been found.
75 Many factors would have led to the solution. The Balmoral Road Release Area is a central and relatively large part of the RHDA. The release and rezoning of the surrounding areas led to rapid urbanisation, with continuing demand for more urban land. The surrounding development must have involved bringing services to the boundary of the Balmoral Road Release Area during the mid to late 1990s. As noted, the owners were keen for release and rezoning for obvious reasons. The release and rezoning of this area, provided it could be achieved in an orderly and economic manner, was the objective of the both the Council and the Department of Planning. The RHIC, having largely and apparently successfully completed its responsibilities for the earlier release phases, was willing to (and did) transform itself into an entity with more general interests.
76 Insofar as the parties suggested that the RHIC should be disregarded, they go too far. The RHIC dealt with the respondent in implementing the public purpose and its activities (to that extent) must be disregarded. But the RHIC existed independently of the respondent. The RHIC had no reason to care whether its dealings were with the respondent or some other body or entity provided the release and rezoning of the RHDA could be achieved in a financially feasible manner. The respondent is not the only entity capable of levying statutory charges for drainage. Moreover, statutory charges are not the only available option for cost recovery for provision of services.
77 In these circumstances the idea that the Balmoral Road Release Area would have been left in a rural zone well beyond the acquisition date is untenable. The pressures for release and rezoning of this land would have been too great. If the public purpose is disregarded, an alternative trunk drainage solution would have emerged. The form the alternative might have taken involves supposition. The relevant fact is that alternatives were available. The RHIC existed. It was willing to enter into an agreement with the respondent to enable the respondent to implement the public purpose. There is no reason to assume that the RHIC would have been unwilling to deal with some other body or entity to achieve the rezoning of the Balmoral Road Release Area.
78 In addition, the Council had (or could have had) available sufficient powers to ensure the provision of trunk drainage services to the Balmoral Road Release Area (for example, ss 7, 24, 56 – 66, 186 – 189, and 496A of the Local Government Act 1993 and Div 6 of Pt 4 of the EPA Act). The Council would have been under pressure from numerous sources to find a way forward. The Department of Planning would also have come under pressure to find a solution. The Department’s Minister had powers under the EPA Act to find a way forward (including the powers in Div 1 of Pt 2, ss 55, 117 and 118 and Div 6 of Pt 4 of the EPA Act). The NSW Government had other options available as well (for example, those in the Growth Centres (Development Corporations) Act 1974).
79 For these reasons I am satisfied that, disregarding the public purpose, a solution to the provision of trunk drainage services to the Balmoral Road Release Area would have been found one way or another. The solution would almost certainly have involved the RHIC for two reasons unaffected by the public purpose. The NSW Government had decided in the mid 1980s that services had to be provided and funded upfront and had accepted the RHIC’s proposal to that end. The RHIC existed, had the relevant capacity and the confidence of the NSW Government, and was willing to take on these responsibilities for the Balmoral Road Release Area after the first release stages had been brought to completion.
80 I have recorded my conclusion that if the Balmoral Road Release Area could have been rezoned materially faster than permitted by the public purpose then that option would have emerged in 1993, but did not. If the public purpose is disregarded from inception there was sufficient time for an alternative to emerge and be implemented before the acquisition date. It is true that the owners tried and failed in 1993 (but the nature of their proposal is unknown). This fact, with the other matters identified above, indicates that the timing of this alternative solution would have been dictated largely by the position of the RHIC. As noted, I do not accept any general unity of purpose between the RHIC and the respondent requiring the RHIC itself to be disregarded. The RHIC existed because its members wanted to have their land rezoned. The RHIC developed a staging or phasing plan that ensured the land of its members was rezoned. The NSW Government accepted the RHIC’s proposals because they enabled its policy objectives to be satisfied. Those matters arose independently of any action on the respondent’s part. The respondent is also not responsible for the fact that the interests of the original members of the RHIC coincided with the NSW Government’s objectives of seeing the RHDA released with the least possible financial risk to government.
81 These considerations support the conclusion that, disregarding the public purpose, the Balmoral Road Release Area would have been rezoned and released at much the same time as in fact occurred. The RHIC was ready to take on the Balmoral Road Release Area at this time. The problems with the alignment of the rail link through the area were not resolved until mid 2003. The release would not have occurred earlier for the reasons already given. It is possible that it might have occurred later but not materially later. The surrounding circumstances (including the rapid take up of land released for urban development earlier and the continued existence and position of the RHIC) all point to a release and rezoning of the Balmoral Road Release Area in or about 2006. In fact the area was rezoned about five months before the acquisition date. Even if there had been some delay in the alternative trunk drainage solution I am satisfied that rezoning of the area would have been certain and imminent by the acquisition date, with no consequential decrease in value of the acquired land for that reason.
82 Accordingly, and disregarding the public purpose as required by s 56(1)(a) of the Just Terms Compensation Act, I am satisfied that the Balmoral Road Release Area would have been rezoned for urban purposes on or about the acquisition date or, at the least, such rezoning would have been certain and imminent at that date. Further, the Balmoral Road Release Area would have included a system of trunk drainage to carry stormwater run-off down the two major creeks and out of the catchment. Hence, Strangers Creek and the land surrounding it generally below the 1:100 year flood level would have been identified as necessary for trunk drainage.
83 There was debate between the experts and the parties about the amount of land in lot 9 that would have been required for drainage purposes disregarding the public purpose. In this regard, I am satisfied that insofar as it might affect the value of the land:
(1) The zoning of the eastern portion of lot 9 as 5(a) (Trunk Drainage) on the zoning map must be disregarded. This zoning was imposed as part of the public purpose of bringing the land required for trunk drainage into the respondent’s ownership. But for that purpose the 5(a) zoning would not have been imposed.
(2) The proposal to construct a dry detention basin on the eastern portion of lot 9 must be disregarded. The respondent ultimately controlled the manner in which the policy to provide trunk drainage would be implemented. Hence, the respondent controlled the location of the detention basins. It must have decided that the eastern portion of lot 9 should be used as a dry detention basin. It did so as part of the public purpose. Other land along Strangers Creek had the same or similar capacity to be used as a detention basin. There is no reason to assume that the costs associated with the alternative would be materially different from the costs of providing it on lot 9. Whatever the costs they must be embedded in the comparable sales and no adjustment on that account is required.
(3) The inundation of part of lot 9 in the 1:100 year flood event cannot be disregarded.
(4) The Council’s decision to impose a restriction on use preventing buildings on the eastern portion of lot 9 (the area affected by flooding) cannot be disregarded. Nor can the Council’s policy of prohibiting buildings on land below the 1:100 year flood level.
(6) In terms of land use zoning the Council (responsible for preparing the local environmental plan) would be dealing with large areas of land on the basis of general planning policies. It would not deal with lots on a site-specific basis without some compelling reason. Hence, the Council would have taken a fairly broad brush approach whilst, nevertheless, attempting to ensure the most orderly planning arrangements available. These facts cannot be disregarded.(5) The condition of Strangers Creek through lot 9 as a highly modified and degraded watercourse, with no surrounding vegetation, cannot be disregarded. Nor can the policy objective (of both the Council and the Department of Planning) of restoring creeks to a more natural form so that creeks could perform drainage, ecological and aesthetic functions.
84 On this basis I consider that the pre-development 1:100 year flood extent would have generally defined the western zoning boundary on lot 9. West of that general line would have been zoned (or about to be zoned) 3(a) Business (Retail) at the acquisition date. Positive findings about zoning of the land east of that line involve more difficult conjecture. For example, the respondent proposed (but the applicants rejected any possibility) that the area east of that line could have remained in a 1(a) zoning because the 1(a) zone objectives have nothing to do with drainage and it would be improper for the Council to avoid acquisition obligations if the land in fact were being used for drainage purposes. The applicants’ position overlooks four matters. First, the 1(a) zone objectives include providing land “on which development may be carried out that assists the operation and functioning of development in adjoining residential areas” in circumstances where the majority of land in the Balmoral Road Release Area is zoned residential. Second, irrespective of the purposes of any public authority, part of lot 9 has a creek running through it carrying flows from land upstream. Third, the Council decided to leave the land along the major creeks in the 1(a) zone before the respondent agreed to acquire the land. Fourth, the Minister’s s 117 direction contemplated that rural zonings might well be appropriate for flood liable land. Thus, but for the public purpose, leaving the creek lines and surrounding lands below the 1:100 year flood level in the 1(a) zone was a real possibility.
85 But there would have been other possibilities depending on the circumstances. Other local environmental plans, for example, include private open space and environmental protection zones (including with a riparian focus). Such zones permit limited forms of development without any acquisition obligation (consistent with the reasoning in Carson v Department of Environment & Planning (1985) 3 NSWLR 99). The 2005 LEP does not include such zones because circumstances did not require them. If circumstances had been different it is likely that the zones in the 2005 LEP would also have been different.
86 Negative findings about the land east of the line involve less conjecture and are sufficient for the purposes of the Just Terms Compensation Act. I do not accept the applicants’ submission that the whole of lot 9 would have been zoned 3(a). That zoning would have raised expectations for development inconsistent with the development potential of the land affected by flooding. It would also have been inconsistent with the Minister’s direction under s 117 of the EPA Act. The zoning maps showing creek lines within the same zones as adjoining land do not support the applicants’ submission. Leaving aside rural land, the zoning maps show small tributaries in the same zoning as adjoining land. Most major flow lines are in either a trunk drainage or open space zone except, perhaps, in the more established areas of West Pennant Hills and Castle Hill. I am satisfied that there was no prospect of a 3(a) zoning over the whole of lot 9, disregarding the public purpose.
87 I also do not accept the applicants’ submission that the Council’s planning instruments, disregarding the public purpose, would have permitted or contemplated allocating the notional floor space potential from the flood liable parts of lot 9 to the balance. Mr Harding formed that opinion based on the provisions of the Council’s development control plans and an assumption (rejected above) that the whole of lot 9 would have been zoned 3(a). Given that there was no prospect of that circumstance, there was also no prospect of any allocation of notional development potential from the flood liable part of lot 9 to the balance of the lot. It is convenient also to note at this time that Mr Phippen initially adopted this approach in his valuation of the acquired land. Mr Phippen subsequently (and properly) agreed with Mr Dempsey that supermarket retailers dominated the market for 3(a) Business (Retail) land in the Balmoral Road Release Area. These retailers wanted to buy 3(a) land to develop a single storey supermarket and at-grade car park with a few surrounding specialty shops. They did not need, and were not paying extra for, any additional notional development potential. Hence, the debate between the parties about this issue was moot. Given the market, it did not affect the value of the acquired land one way or another.
88 Although I accept that the extent of the 1:100 year flood could be modified to some extent by works (cut and fill), I do not accept that the Council would have entered into a process of site-specific planning when formulating its local environmental plan unless some obvious anomaly presented itself. Without some obvious anomaly, the desire to see the Balmoral Road Release Area rezoned on an equitable basis would have worked against any site-specific solution involving substantial modification of the creek. So too would the desire to restore creek lines to the most natural form possible.
89 The Council might have been persuaded, however, that the flood free land on the eastern side of lot 9 was anomalous and should be sacrificed only in exchange for a capacity to create some more flood free land on the western side. The degraded state of the creek, my inference of the capacity to make up the area by works within lot 9 without adverse impact on surrounding land based on Mr Bewsher’s evidence, the planning objective of not creating small slivers of isolated urban land with no practical access, and fairness to the owners, all indicate that there was real potential for such an argument to find favour. In my view this is an issue where there is genuine doubt that should be resolved in the applicants’ favour.
90 Accordingly, and disregarding the public purpose as required by s 56(1)(a) of the Just Terms Compensation Act, I am satisfied that lot 9 would have been zoned (or about to be zoned) 3(a) generally west of the pre-development 1:100 year flood line, with an additional 1390m2 within this 3(a) zone (in exchange for sacrifice of the strip of flood free land on the eastern side). The land east of this line might have been zoned 1(a) or, possibly, for some private open space or environmental protection purpose with a riparian focus. Whatever the zoning this land could not have had buildings or structures erected upon it.
91 On this basis the area that would have been zoned (or about to be zoned) 3(a) on the western side of lot 9 is 11,127m2 (9737m2 + 1390m2). 9737m2 would have been capable of urban (retail) development in accordance with the Council’s planning polices (which include an enhanced collector road through that land). 1390m2 would require resolution of suitable works to modify the creek without adverse impact on surrounding land or unacceptable compromises to the policy of restoring creeks to their natural condition as far as possible. This is an issue that would be resolved at the development application stage and thus involves the views of the hypothetical buyer and seller under s 56(1)(a). A small part of this overall area (697m2) would have been set aside for road widening. However, the road widening is itself subject to an acquisition obligation (with the Roads and Traffic Authority designated as the relevant acquiring authority).
92 The balance of lot 9 (9369m2) would not have been zoned 3(a) or for any other urban purpose. The balance would have been zoned 1(a) or, possibly, for some private open space or environmental protection purpose with a riparian focus, subject to provisions (like cl 25(2) of the 2005 LEP) excluding the erection of buildings or structures. A small portion of this land (239m2) would be set aside for road widening but, again, subject to an acquisition obligation.
93 In summary (and disregarding the roads), s 56(1)(a) of the Just Terms Compensation Act requires lot 9 to be treated as follows:
Before acquisition Land to be valued on 3(a) zone basis (9737m2 + 1390m2)
Land to be valued on below 1:100 flood level basis
Total
After acquisition
Land to be valued on 3(a) zone basis
Land to be valued on basis of below 1:100 flood level
Total
C. Valuation Issues
Valuation and related evidence
94 By the conclusion of their evidence the valuers both exclusively adopted the before and after method of valuation using comparable sales (Mr Phippen had originally used a hypothetical development analysis in addition to direct comparison). Consideration of these sales led Mr Phippen to conclude that land zoned 3(a) at the acquisition date had a value of $506 per m2 (which, in the applicants’ final submissions, was rounded down to $500 per m2). The same process (involving mostly the same sales) led Mr Dempsey to the view that land zoned 3(a) at the acquisition date had a value of $255 per m2.
95 Mr Phippen and Mr Dempsey both identified the sale at 22 Sentry Drive, Stanhope Gardens in April 2006 as relevant but Mr Phippen later discarded this sale. The valuers both identified the sale price as $6,283,882 for an area of 26,350m2 (that is, $237 per m2). Mr Phippen described this sale site as vastly inferior to lot 9. I do not accept that description. The sale site is well located, adjoining an existing retail development (being an adjoining owner sale to increase the size of the shopping centre). The shopping centre presents as a new, quality retail destination in a more established area than lot 9. Nevertheless, there is a difficulty with the evidence about this sale. The sale price of $6,283,882 does not fully reflect the contractual provisions. The valuers had not examined the contract for sale before completing their reports. The applicants submitted that the sale price was a base price to which additional (unknown) amounts were added (depending on net profits after the first year’s trading). I read the contract as requiring payment of the sale price in instalments, with the instalment amounts to be determined by a formula adding up to the sale price. Either way the contract discloses more than a sale on usual terms and conditions for an agreed price. It is difficult to make any use of this sale as neither valuer had analysed it with knowledge of the contractual provisions. Accordingly, I do not consider it further.
96 Mr Phippen and Mr Dempsey both identified the sales at 71 and 73 – 75 Windsor Road, Baulkham Hills as relevant. Coles apparently bought 71 Windsor Road and Woolworths 73 – 75 Windsor Road. The sale sites include land zoned 2(a2) and 3(a). The 2(a2) land (a medium density zone permitting townhouses and villas but not apartments) fronts Windsor Road with the 3(a) land at the rear. Access is to be via a proposed collector road system off Windsor Road. The collector road system requires construction and dedication by adjoining owners. Part of this system is located on the block to the immediate west of 75 Windsor Road.
97 71 Windsor Road has an area of 10,710m2. It sold in February 2007 for $3,300,000 ($308 per m2). About 6692m2 is zoned 2(a2) and 3748m2 3(a). Mr Phippen assessed the value of the 2(a2) land at $263 per m2 based on opinions of Mr Dempsey and another valuer in other proceedings. This gave a value of $392 per m2 for the 3(a) land. He considered lot 9 at least 20% better than the sale site due to access issues (the sales are dependent on adjoining land for access when developed and lot 9 has the proposed collector road through it), lack of exposure and a less central location.
98 Mr Phippen carried out the same analysis for the sale of 73 – 75 Windsor Road. The two sites were sold to Woolworths in December 2006. The sites are 10,470 and 12,870m2. The sites sold for $3,104,400 and $3,958,000 ($308 and $303 per m2). The land zoned 2(a2) has an area of about 9009 and 7067m2 and the land zoned 3(a) about 3861 and 3403m2. Applying a value of $263 per m2 to the 2(a2) land gave Mr Phippen values of $411 and $366 per m2 for the 3(a) land. Again, he considered lot 9 at least 20% superior to the sale sites.
99 Mr Dempsey disagreed with this analysis. The rate of $263 per m2 related to a property zoned 2(a2) in a different location on Windsor Road. There were two sales of land zoned 2(a2) close to the retail sales (at 69 and 53 Windsor Road). Those sales showed higher values ($289 and $301 per m2). Although the sale sites had dwellings on them they were zoned for more dense residential development and at least one was sold to a developer. Hence, Mr Dempsey made no allowance for the existing dwellings. He considered the sale sites at 71 and 73 – 75 Windsor Road enjoyed a superior location to lot 9. The surrounding area was already developed. Access would be via a collector road off Windsor Road, a main arterial road. The collector road did not involve any risk as, in reality, shopping centres are constructed after the majority of residential development so that a market for the shopping centre exists. Thus the collector road system will already be constructed before the retail development is required. The sites were elevated and flood free without any requirement for flooding works. Consideration of these sales, with the 2(a2) sales at 69 and 53 Windsor Road, indicated that the 3(a) and 2(a2) land in this Windsor Road location was worth about the same amount ($300 per m2).
100 Mr Chesher, a solicitor employed by Woolworths who acted on the purchase of 73 – 75 Windsor Road, said that Woolworths had no intention of developing the 2(a2) land but would either apply for a rezoning to 3(a) or sell it for residential development. The Woolworths’ Board proceeded with the purchase on the basis that the 2(a2) land (I infer, presuming it was not rezoned to 3(a)) had an estimated value of $150 per m2.
101 Mr Phippen and Mr Dempsey both identified the sale at Beaumont Hills as relevant, although Mr Phippen later discarded this sale. Mr Phippen analysed the sale as showing $264 per m2 for the land zoned 3(a). He considered the sale site inferior to lot 9. Mr Dempsey provided a more detailed analysis of these sales. The site sold in June 2006 in two parts. It has a total area of 17,265m2 (zoned part 3(a), part 2(a), part 1(a) and part 6(a)). The main sale tranche involved 7532m2 mostly of land zoned 3(a) (at a rate of $186 per m2). Mr Dempsey analysed the second (and more complicated sale given the different zonings) as showing a rate of $255 per m2 excluding the 1(a) land (and noting that the vast majority was in the 3(a) zone). Mr Dempsey noted that the sale site had immediate development potential (as the surrounding area was fully developed) whereas development of lot 9 would be delayed as the surrounding area had not been developed at the acquisition date.
102 Mr Phippen (but not Mr Dempsey) considered an old sale in April 2000 at Wrights Road, Kellyville. The sale site is zoned 3(a) and showed $263 per m2. Mr Phippen described it as an inferior and not fully developed location at the sale date.
103 Neither valuer had the opportunity before the hearing to analyse the sale of the residue parcel (lot 2 in deposited plan 1087781) to Woolworths. The applicants sold the residue (5176m2 of land) in December 2006 for $1,000,000. Despite the benefit of a sale of the residue, the valuers reached irreconcilable opinions about the value it showed for 3(a) land in this location.
104 Mr Phippen considered that the proposed enhanced collector road on the residue parcel (although zoned 3(a)) had no value because a developer would be required to construct and dedicate that road at no cost to the Council. Mr Phippen also assigned no value to the road widening area. He divided the sale price over the reduced land area (having deducted the area of the enhanced collector road and road widening area) to give a rate of $597 per m2 over the balance. He reduced this by 15% given the conditions in the contract (permitting Woolworths not to complete if certain requirements, including purchase of the adjoining land, were not satisfied), thus leading to his rate of $506 per m2 for 3(a) land on lot 9.
105 Mr Dempsey disagreed with Mr Phippen’s approach to the sale of the residue parcel. Mr Dempsey noted that payment of the balance of the price was deferred until completion. Taking that into account the sale price was $932,066. Woolworths paid that amount for the whole of the residue parcel (5176m2 or $180 per m2). The road widening area could not be disregarded as it was subject to an acquisition obligation disregarding the road widening purpose. The enhanced collector road could not be disregarded as it gave the buyer access (access from Memorial Avenue would be denied on redevelopment) and ensured the buyer control over the area zoned 3(a). No deduction for the contractual conditions was required (and I note Woolworths’ Board had authorised waiver of the conditions if need be from the outset). Even allowing for risk on the future acquisition of the road widening land (and a reduced value for that part of the road widening land affected by flooding to the east), Mr Dempsey said the sale could not properly be analysed to show anything greater than about $204 per m2 for the land zoned 3(a) within the residue parcel.
106 The parties adduced other evidence to support the competing positions on the sale of the residue parcel. Mr Dempsey had a conversation with the Woolworths’ development manager. He said the enhanced collector road was valuable as Balmoral Road would be closed, and controlling the enhanced collector road put Woolworths “in the box seat” for development of this area of 3(a) land. Mrs Cassidy had a conversation with the same person in November 2006 (before the contract was signed) in which she was told that Woolworths had no interest in the enhanced collector road as it was of no use to them. Both valuers had another conversation with the development manager during the hearing in which he said that Woolworths wanted to develop all of the land zoned 3(a) in this location. Mr Chesher, the solicitor, gave a statement in which he described the area of the residue parcel able to be developed in terms excluding the enhanced collector road. He referred to negotiations with the adjoining owner not yet having succeeded as they wanted more than the $500 per m2 Woolworths paid for the residue parcel. The applicants also tendered an offer from Aldi in June 2006 in which Aldi referred to the area of the land able to be developed (2000m2) and their offer to pay $1,000,000 or $500 per m2 for that land subject to conditions (including purchase of part of the adjoining land).
107 The parties became aware of another sale (the Polito land) during the hearing. In April 2008 Woolworths entered into a contract to buy the Polito land. This is a small triangle (1230m2) of land zoned 3(a) that is part of a larger lot (mostly zoned 2(a2)) fronting Burns Road. The contract is conditional on subdivision of the 3(a) land from the 2(a2) land and has an 18 month settlement period. The sale price was $1,000,000 ($813 per m2 ignoring the extended settlement). The valuers spoke to the Woolworths’ development manager about this sale. He said it is a key parcel with good frontage to Burns Road. Woolworths wanted to develop this 3(a) precinct. The purchase meant that Woolworths owned the two “bookends” of 3(a) land in this location (that is, the residue parcel from lot 9 to the east of the proposed new road and this small parcel to the west). As a result the development of the larger area of 3(a) land (lot 8) in the middle by another developer in isolation would not “stack up”. There would thus be few buyers for lot 8 due to Woolworths owning both ends of the precinct.
108 Mr Phippen considered this sale supported his analysis of $500 per m2 for 3(a) land on lot 9. Mr Dempsey did not. Although they agreed that the market for retail land was steady between the acquisition date and the hearing date, Mr Dempsey emphasised the context of the sale of the Polito land. In his view, the sale involved a piecemeal acquisition of a small area of 3(a) land from a much larger site. Woolworths already owned the residue parcel. Woolworths wanted to develop this precinct. Buying the small 3(a) area at the other end enabled it to do so. It was a strategic acquisition of a small area in order to control the precinct. It had the effect of discouraging alternative purchasers of the 3(a) land in the middle. The sale was obviously out of line with the sales of other land zoned 3(a) in the area. It cannot be equated to the position of lot 9 at the acquisition date disregarding the public purpose. In the before situation that part of lot 9 would have been a larger parcel capable of development in its own right. The Polito sale thus could not be taken at face value and applied to lot 9 before the acquisition.
109 The valuers also treated the flood liable land on lot 9 differently.
110 Mr Phippen, relying on Mr Harding’s advice, considered flooding not to be an issue in the sense that notional floor space from the flood affected land could be allocated to the flood free land. In oral evidence Mr Phippen agreed with Mr Dempsey that the market for 3(a) land in this area consisted of major retailers wanting to buy land to develop for a standard single storey supermarket with some specialty shops and at-grade parking. Mr Phippen’s acknowledgement of this fact was appropriate; no other conclusion would be open having regard to the sites observed during the view. Mr Phippen also acknowledged that this fact made the idea of notional floor space allocation difficult to maintain, but emphasised that the potential still existed and could not be discounted. This potential assumed a 3(a) zoning over the whole of lot 9 disregarding the public purpose (a proposition rejected above). Mr Phippen presented another alternative of $85 per m2 for flood liable land based on an agreement reached in other proceedings. The applicant, however, pressed for a rate of $250 per m2 (or 50% of the value they sought for the 3(a) land) as reasonable.
111 Mr Dempsey identified a sale at Samantha Riley Drive of land zoned 6(a) and affected by flooding. The sale showed $70 per m2 for the flood liable land. Mr Dempsey assessed a value of $75 per m2 for the flood liable land on lot 9.
Discussion about valuation issues
112 One general observation is necessary. Mr Dempsey consistently maintained his general valuation method and value for 3(a) land ($255 per m2). He was criticised by the applicants for changes to his evidence and not examining the contract for the Stanhope Gardens sale. Mr Dempsey’s alterations mainly related to additional sales, including the sale of the residue parcel and Polito land raised by the applicants during the hearing. He agreed that examining the contract for the Stanhope Gardens sale would be “advantageous”.
113 Mr Phippen’s valuation methods and opinions changed substantially over time. Originally Mr Phippen adopted an unconventional approach of adding together what he described as the value of the residential potential and the retail potential of lot 9. In analysing the available retail sales when he wrote his report in November 2007, Mr Phippen concluded that they showed a value for 3(a) land at the acquisition date of $300 per m2. In his further statement prepared during the hearing Mr Phippen did not press for this approach given his acceptance of Mr Dempsey’s description of the market at that date. Nevertheless, Mr Phippen continued to press for application of his revised rate for retail land of $506 per m2 (based on the sale of the residue parcel) over the whole of lot 9 (excluding the road widening area and the enhanced collector road) by reference to the allocation of notional development potential from the flood liable to the flood free land. I queried the relevance of this given Mr Phippen’s acceptance of Mr Dempsey’s description of the market. Mr Phippen accepted the difficulty in this aspect of his evidence.
114 A realistic appreciation of the nature of the relevant market is fundamental to the valuer. The evidence did not support an opinion of the use of land zoned 3(a) in this area for anything other than a single storey supermarket, specialty shops, and at-grade parking. A planner’s identification of mere permissible uses on land is not a substitute for a valuer’s independent analysis of the highest and best use of the land. Mr Phippen’s original approach of adding together a retail value and a residential value (because of the permissibility of shop top housing in the 3(a) zone) was untenable. A realistic appreciation of sales is also fundamental. In November 2007 Mr Phippen analysed four sales to support a conclusion of a value of $300 per m2 for land zoned 3(a) in this area at the acquisition date. Once the sale of the residue parcel became known during the hearing, Mr Phippen discarded most of those sales. By assigning no value to some 67% of the land Woolworths acquired, Mr Phippen analysed the sale of the residue parcel as showing a rate of $506 per m2 for the balance. These changes relate to basic issues of valuation method and reasoning. They affect the assessment of the reliability of Mr Phippen’s opinions about value.
115 The starting point for the sale of the residue parcel is that Woolworths paid $1,000,000 (or a deferred value of $932,066) for a parcel of 5176m2 ($180 per m2). Analysing this sale to show a rate of $500 per m2 for 3(a) land by various arithmetical processes is inherently unpersuasive. Aldi’s offer did not lead to a sale. It cannot be treated as having that weight. To that may be added the obvious point that statements during the course of an offer or negotiations for the purchase of land do not necessarily give an accurate picture of a party’s overall position or strategy. Potential buyers knew that the trunk drainage land would be acquired leaving a separate residue parcel. They knew the residue parcel would include 3(a) land and a small area of road widening land that the RTA would have to purchase at a price disregarding the road widening. They knew that the proposed enhanced collector road was in the residue parcel and zoned 3(a). They knew they would have to build the road and dedicate it to the Council at no cost. They knew also that Balmoral Road (zoned 3(a)) would be closed and perhaps become available to be incorporated into any future development. Owning the land on which the new road is to be located, in these circumstances, has obvious advantages to a retail developer. They would be in a good position to negotiate with the Council about the precise location of the new road and the closure and sale of the old road. They could integrate the new road and the old road with their own development proposals. They could control the timing of construction (presumably building the new road as part of and to best service their overall development, thus minimising any additional construction cost). In these circumstances, I do not accept the proposition that the area of the road widening and enhanced collector road can be presumed to have no value. Accordingly, I do not accept Mr Phippen’s analysis of the sale of the residue parcel.
116 Mr Dempsey analysed the sale of the residue as showing $204 per m2 for the 3(a) land. He did so by treating the area of the enhanced collector road (zoned 3(a)) as having the same value as the other 3(a) land and reducing the value of the road widening area for risk and (in part) flood liability. Mr Dempsey’s general approach to this sale is persuasive. The sale thus does not support a value of $500 per m2 for lot 9 at the acquisition date.
117 The sale of the Polito land in April 2008 does not undermine these conclusions. The market for retail land remained steady but many other circumstances had changed. The development of the Balmoral Road Release Area was a year on. Woolworths already owned the residue parcel but had not succeeded in securing the middle lot. The Polito land zoned 3(a) was small but its acquisition gave Woolworths control of both ends of this proposed neighbourhood shopping precinct and substantially improved its negotiating position for purchase of the middle lot (and, for that matter, the part of Balmoral Road to be closed, which is also zoned 3(a)). I thus accept that the Polito sale cannot be taken at face value and applied to lot 9 before the acquisition.
118 The sales at 71 and 73 – 75 Windsor Road are in an established location, surrounded by existing development, set back a short distance from Windsor Road, a major arterial road. Lot 9 does not share these advantages. Lot 9 has the advantage of incorporating the access road and direct road exposure, but I do not consider these issues have the significance that Mr Phippen attached to them. The proposed access road for 71 and 73 – 75 Windsor Road is on an adjoining block. The 3(a) land on the sale sites is not landlocked in any real sense. The purchasers are major retail developers who would anticipate that appropriate design could readily provide sufficient exposure to Windsor Road. Woolworths apparently also anticipated a possible rezoning application for the 2(a2) land. I infer that the value of $150 per m2 for the residential land was a fallback if that land had to be sold for residential development. In these circumstances, I do not accept Mr Phippen’s opinion that lot 9 was at least 20% more valuable than these sale sites.
119 I also have difficulty with an approach to value that adopts agreements reached in another case (such as Mr Phippen’s $263 per m2 for 2(a2) land on Windsor Road). Apparent inconsistency might be relevant to an assessment of the reliability of a valuer’s opinion (in this case, the inconsistency was said to be that of Mr Dempsey). But that is different from a valuer (in this case, Mr Phippen) using an agreement between valuers in a different matter (one of whom was Mr Dempsey) to found an actual opinion about value. This approach makes it difficult, if not impossible, to test the opinion about value because it is not based on any primary evidence or any independent thought process capable of articulation by Mr Phippen; it is simply what two other valuers said in another case.
120 Mr Dempsey said the $263 per m2 related to different land. He identified, and I inspected during the view, two sales of 2(a2) land close to these sales on Windsor Road that show a higher value than $263 per m2. While both had substantial improvements, Mr Dempsey knew one purchaser was a development company. While it is possible that the purchasers may retain the improvements for some time, Mr Dempsey’s assumption that the sites had been bought for redevelopment is reasonable given the current improvements and the yields offered by the 2(a2) zoning. Accordingly, while I accept that these sales may show a slightly higher value for 3(a) land in this location than calculated by Mr Dempsey ($308 and $303 per m2), I do not accept Mr Phippen’s analysis of these sales.
121 The Beaumont Hills sale is difficult to analyse due to the multiple zonings. The sale site has the advantage of sale at a time when immediate retail development was feasible due to the completion of a substantial amount of surrounding residential development. Lot 9 does not have that benefit. Lot 9, however, has the advantage of a better and more central location, greater accessibility and proximity to the proposed T-way (with the proposed rail link, in my view, having little significance in the market given the history of rail proposals to the north-west).
122 The Wrights Road sale occurred six years before the acquisition date. While the surrounding area was not fully developed it was far more advanced than the land surrounding lot 9 at the acquisition date. Given the more recent sales this dated sale does not carry much weight.
123 In summary, I accept that lot 9 has a central location in the Balmoral Road Release Area. It has good exposure to Memorial Avenue/Burns Road along which the T-way is proposed. It incorporates the proposed enhanced collector road. But it is in an undeveloped area and thus would not justify immediate retail development. It would need to be held for some time for future development as the conversations with the Woolworths’ development manager confirm. Nevertheless, the take up of development elsewhere in the RHDA indicates that the Balmoral Road Release Area is very likely to be transformed within the next two to three years making land zoned 3(a) (or assumed to be so zoned) ripe for retail development in the not too distant future.
124 I have weighed up the competing advantages and disadvantages of the comparable sales and lot 9. I have taken into account, when dealing with the sale of the residue parcel, that it involved a small area incapable of individual development but of strategic importance as the first purchase of 3(a) land in this proposed neighbourhood shopping precinct. Disregarding the public purpose, lot 9 would have yielded a larger area of 3(a) land, also of strategic importance, but capable of individual development. Part of this area (1390m2) would have involved flooding issues and costs associated with creek works.
125 In all of these circumstances I prefer Mr Dempsey’s approach to the valuation task generally but consider his value of $255 per m2 to be at the low end of the likely range for the 3(a) land on lot 9 disregarding the public purpose. Lot 9 may be disadvantaged in terms of lack of immediate development potential for retail purposes but is in a central location, with no access issues, good road exposure and prospects of surrounding development taking off in the reasonably foreseeable future.
126 Resolving all doubts in the applicants’ favour I consider the sales evidence justifies a rate of $300 per m2 for 3(a) land in this location at the acquisition date disregarding the public purpose.
127 With respect to the 1390m2 of land involving flooding the buyer and seller posited by s 56(1)(a) would not deduct $480,000 as proposed by Dr Joliffe (or, in my view, any material sum) for flooding works because the whole flood area is being maintained free from development with only the additional 1390m2 dependent on a resolution of flooding issues. I do not accept that the buyer and seller would make any allowance for pipes under Memorial Avenue. They would assume that would be done by the Roads and Traffic Authority in the future as and when required. Mr Bewsher’s estimate of about $200,000 is also beside the point. Mr Bewsher assumed more extensive works along the entire creek within lot 9 than my conclusions contemplate. Given the small area of land involved and the other works required for development I consider that the buyer and seller would make no particular allowance on account of this issue.
128 The evidence does not support the applicants’ rate of $250 per m2 (being 50% of Mr Phippen’s rate for the 3(a) land) for the flood liable land. That rate cannot be justified on any view of the evidence. Mr Dempsey’s rate of $75 per m2 is supported by a sale. The sale had far more vegetation and ecological value than lot 9 but the fact is the flood liable land on lot 9 is incapable of development disregarding the public purpose. Mr Phippen’s alternative was $85 per m2. This small range between the valuers ($75 to $85 per m2) indicates a shared view about the value of land below the 1:100 year flood level. Resolving all doubts in the applicants’ favour I adopt the top end of this range ($85 per m2).
129 The road widening area has little, if any, significance. In the before situation it would have presented as a sliver some of which was flood liable and some of which was not. In the after situation, its value is embedded in the sale of the residue parcel. The road widening area simply would not justify separate consideration by a buyer and seller of either lot 9 or the residue parcel.
130 The best evidence for the value after acquisition is the sale of the residue parcel.
131 This leads to the following assessment of market value of the acquired land.
Before acquisition
Land to be valued on 3(a) zone basis (9737m2 +1390m2)
Land to be valued on basis of below 1: 100 flood level
Before value
After acquisition
Land to be valued on 3(a) zone basis
Land to be valued on basis of below 1: 100 flood level
After value
Value of acquired land
Disturbance and solatium
132 The parties agreed disturbance in the sum of $143,462 (most of which has already been paid). The applicants accepted that they could not be compensated for costs associated with their relocation because market value has been assessed on a basis “that the land had potential to be used for a purpose other than that for which it is currently used” (s 61 of the Just Terms Compensation Act). The applicants would have been required to relocate to realise that value.
133 The applicants claimed solatium in the maximum amount of $21,150. The respondent said that compensation was not payable because the respondent acquired the eastern portion of lot 9 whereas the house is on the western portion. According to the respondent, no part of the land on which the residence is situated was acquired within the meaning of s 60(4) of the Just Terms Compensation Act. The applicants had also been compensated on the basis of a higher and better use potential than rural residential home site.
134 Solatium is defined in s 60(1) to mean “compensation to a person for non-financial disadvantage resulting from the necessity of the person to relocate his or her principal place of residence as a result of the acquisition”. Section 60(4) provides that compensation “is payable in respect of solatium if the whole of the land is acquired or if any part of the land on which the residence is situated is acquired”. I do not accept the respondent’s submission that s 60(4) requires part of the dwelling house itself to be acquired. The residence was situated on lot 9. Part of lot 9 was acquired. That satisfies s 60(4). In any event, a “residence” is more than merely a structure comprising a dwelling. It is the place in which one resides. The applicants resided on lot 9.
135 In terms of the relevant considerations specified in s 60(3), the applicants were the owners of the fee simple in lot 9. They bought lot 9 in 1998 for the purpose of their family home and lived there until construction of the detention basin started in mid 2004. The construction company carried out works at times within 5 metres of the dwelling. They had to contend with not only the noise and dust associated with the construction of the detention basin but also safety issues given the accessibility of the construction site from her house. They moved out within a few months of the construction starting (more than two years before the respondent acquired the land). They had to rent alternative premises. The applicants suffered substantial inconvenience during the construction period (including wanting to move back in but being advised the further construction works were proposed). The respondent acquired a large part of lot 9 close to the house more than two years after the construction works started. The applicants suffered significant non-financial disadvantage resulting from the necessity to relocate their principal place of residence as a result of the acquisition (noting, by analogy to the temporal issue raised on the wording of s 60(1), the discussion in Caruana v Port Macquarie-Hastings Council [2007] NSWLEC 109 at [48] in particular).
136 I am satisfied that compensation on just terms in this matter includes solatium in the maximum amount of $21,150.
D. Conclusions
137 For the reasons above I determine that the applicants are entitled to compensation for the acquisition of part of lot 9 in deposited plan 258947 at Memorial Avenue, Kellyville (being the land in lot 1 in deposited plan 1087781) in the amount of $3,367,011. This amount is calculated as follows:
Market value of acquired land (s 55(a))
Disturbance (s 55(d))
Solatium (s 55(e))
Total
138 I list the proceedings for the making of final orders (including with respect to costs) at 9.00am on 25 August 2008. If the parties agree the final form of the orders they may file draft orders (identified as agreed between the parties) with my Associate before 5.00pm on 22 August 2008. If they are satisfactory, orders will be made in Chambers. Otherwise, the further date of 9.00am on 25 August 2008 will remain. The exhibits may be returned.
01/09/2008 - incorrect date - October 2002 should read October 1992 - Paragraph(s) 66
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