Centro Holdings Pty Ltd v Transport for NSW

[2017] NSWLEC 108

Land and Environment Court

New South Wales

Medium Neutral Citation:	Centro Holdings Pty Ltd v Transport For NSW [2017] NSWLEC 108
Hearing dates:	17, 18, 23 August 2017
Date of orders:	24 August 2017
Decision date:	24 August 2017
Jurisdiction:	Class 3
Before:	Pain J
Decision:	The Applicant’s notice of motion dated 4 August 2017 is dismissed
Catchwords:	PRACTICE & PROCEDURE – compulsory acquisition of leasehold interest in land – late introduction of new claim – no adjournment of hearing granted
Legislation Cited:	Civil Procedure Act 2005 ss 56, 57 Environmental Planning and Assessment Act 1979 Land Acquisition (Just Terms Compensation) Act 1991 s 59 The Hills Local Environmental Plan 2012 (Amendment No 19) Uniform Civil Procedure Rules 2005 r 14.28
Cases Cited:	Almona Pty Ltd v Roads and Traffic Authority of New South Wales [2008] NSWLEC 112
Category:	Procedural and other rulings
Parties:	Centro Holdings Pty Ltd (Applicant) Transport for NSW (Respondent)
Representation:	COUNSEL: T Robertson SC (Applicant) N Eastman (Respondent)   SOLICITORS: Madison Marcus (Applicant) Clayton Utz (Respondent)
File Number(s):	16/292095

Judgment

1. The Applicant Centro Holdings Pty Ltd (Centro) has commenced an appeal contesting the amount of compensation it received for the compulsory acquisition of a leasehold interest in land it owns next to the proposed Kellyville Station commuter car park in the Sydney Metro North West Project. The leasehold was acquired on 22 January 2016 and is for a period of four years and six months. The land will be used for a road. The matter is set down for hearing on 29-31 August 2017.

2. To date Centro has been claiming market value and holding costs for that land and demolition costs of the road to be constructed by the Respondent Transport for NSW at the end of the leasehold period. Those claims appear to be entirely orthodox.

3. By notice of motion filed 4 August 2017 Centro applied for an adjournment of the hearing of 29-31 August 2017 relying on a letter dated 12 May 2017 in which the Respondent indicated that it would acquire the freehold interest in the land. That notice of motion has been stood over several times for argument to 17, 18 and finally 23 August 2017. The motion was initially made on the basis that the matter would be more efficiently dealt with if this appeal and any appeal in relation to the freehold acquisition were heard together. Further clarification of the Respondent’s intentions in relation to freehold acquisition suggested that this was not definite according to the Respondent’s solicitor Mr Doueihi’s affidavit dated 14 August 2017 read on 17 August 2017.

4. A further letter from the Respondent dated 17 August 2017 was received by Centro (Exhibit A). It states:

I refer to Transport for NSW’s (TfNSW) letter to you dated 12 May 2017.

The purpose of this letter is to clarify the reasons for TfNSW’s letter and the circumstances in which TfNSW may need to proceed with an acquisition of a freehold interest in the subject site.

Background

As you are aware, TfNSW's Operations, Trains and Systems Contractor is constructing a road on the Land pursuant to the Lease which was compulsorily acquired by TfNSW on 22 January 2016. The road is an essential part of the Sydney Metro North West Project (Project). It is needed to provide access to the new Kellyville Metro Station commuter car park from Samantha Riley Drive.

The road is also intended to form part of, and integrate with, the perimeter road (or “ring road”) envisaged by Part D, Section 16 of the Hills Development Control Plan 2012 (DCP) to be constructed to service the future residential development also contemplated by the DCP on Centro's surrounding land and other land currently owned by Sydney Water Corporation.

TfNSW determined that, having regard to the development contemplated by the DCP, a leasehold interest was all that was required for it to deliver the commuter car park for the Project. In this way, Centro would be able to utilize the full extent of its land to maximize the developable area on the subject site. It follows that if the residential development proceeds in accordance with the DCP in a timely manner, it will be unnecessary for TfNSW to proceed with any freehold acquisition of any interest in the subject site.

However, in February 2016, Centro lodged a submission with the Department of Planning and Environment in respect of the Kellyville Station Precinct Proposal (Proposal). The Proposal assumes that development of the subject site will proceed in accordance with the DCP. Centro's submission relevantly stated that it proposes to redevelop the subject site in accordance with existing property boundaries and not the DCP. The architectural plans submitted with Centro's submission did not provide for a perimeter road.

In circumstances where:

•   the DCP authorises a development of the subject site which provides for a perimeter road, and which road would permit access from Samantha Riley Drive to the Kellyville Metro Station commuter car park currently under construction;

•   the DCP authorises a development of the subject site which provides for a perimeter road, and which road would permit access from Samantha Riley Drive to the Kellyville Metro Station commuter car park currently under construction;

•   Centro has foreshadowed its intention to seek to amend the planning controls that apply to the subject site which amendments, if approved, do not provide for a perimeter road; and

•   no proposal to amend the planning controls has been progressed to date,

TfNSW was concerned that on expiry of the Lease In 2020, no right of access will exist for the public to access the commuter car park. TfNSW's letter dated 12 May 2017 was intended to provide advance notice to Centro of the potential need for TfNSW to acquire a freehold interest in the subject site to facilitate access, if that access was not otherwise provided (including pursuant to a development consistent with the DCP). This fact could then be factored into any proposal by Centro to amend the planning controls applicable to the site.

Acquisition process

As previously identified in our letter, under section 10A(2) of the Land Acquisition (Just Terms Compensation) Act 1991 (Act), TfNSW is required to negotiate with Centro for at least six months before issuing a proposed acquisition notice (PAN) pursuant to section 11 of the Act. The issuing of that letter does not oblige TfNSW to proceed with any acquisition, nor does it set a timeframe within which TfNSW must initiate any compulsory acquisition process. Having regard to the circumstances set out above, it is unnecessary for TfNSW to shorten the minimum six month negotiation period.

At this stage, TfNSW anticipates that the likely timing of the freehold acquisition, if any, would be shortly before the expiry of the Lease in 2020, unless the Land has been dedicated to the Hills Shire Council as a public road before that time, in which case, a freehold acquisition would not be necessary.

TfNSW has decided to commence the negotiations with Centro as early as possible, in good faith, so that:

•   Centro has maximum opportunity to progress the development of its land to its maximum potential;

•   there is maximum available time for the negotiations to take their course, having regard to any decision by Centro to pursue a proposal to amend the planning controls; and

•   Centro is kept informed of any relevant developments.

5. Prompted by that letter Centro presses its application for an adjournment of the hearing next week on a different basis. It now seeks to add a new claim (Claim 4) in its draft points of claim which it says arises from that very recent letter. Centro seeks time to gather additional evidence it says it needs to pursue Claim 4. Claim 4 is made under s 59(1)(f) of the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act) (any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition).

6. Claim 4 is headed “The Applicant's claim for disturbance under s 59(1)(f) of the Just Terms Act where the leasehold interest was acquired for the purpose of constructing the ring road”. It states:

38   The acquisition of leasehold was to part construct the proposed ring-road, whose purpose is to give public road access to commuters entering the car park from SRD from the east (by turning right at the new intersection to be constructed as part of the public purpose) and leaving the car park to the south-west or north-west (by turning right from the ring-road at the intersection) Part of the purpose involved removal of the existing roundabout adjacent to the Property, which presently enables traffic movements both ways along SRD.

39   On 13 August 2011, the applicant lodged a planning proposal for the Property which did not include the ring-road. After receiving a Gateway Determination, the planning proposal was put on public exhibition from 15 May 2012 to 15 June 2012.

40   The proposed layout of the Kellyville Railway Station Precinct as identified within the Northwest Rail Link EIS 2 (2012), did not include a ring-road around the subject site Access was directly from one entry/exit point on Samantha Riley Drive.

41   On 28 May 2013, at an Ordinary Meeting of The Hills Council a modified concept design was reviewed which included the proposed ring-road. This was in response to submissions made by the respondent.

42   An amended Planning Proposal was given Gateway Determination on 12 September 2013. The revised Planning Proposal was publicly exhibited from 14 January 2014 to 14 February 2014. The modified planning proposal was endorsed by Council on 29 April 2014 and The Hills LEP 2012 was amended on 3 October 2014.

43   The ring road forms part of Council's site specific “The Hills Development Control Plan (DCP) 2012, Part D, Section 16” which came into effect on 3 October 2014.

44   The Department of Planning & Environment exhibited the draft “Kellyville Station Precinct Proposal” (December 2015) from 7 December 2015 to 28 February 2016. This plan adopted the ring-road design around the Property.

45   The proposed ring road requires parts of Sydney Water land to be included as part of the development of the overall Property.

46   On 12 May 2017, the respondent wrote to the applicant and stated that it wished to commence the six month statutory negotiation period for the acquisition of the freehold of Acquired Land.

47   On 17 August 2047 the respondent wrote to the applicant and stated inter alia “The road (ring-road) is an essential part of the Sydney Metro North West Project (Project). It is needed to provide access to the new Kellyville Metro Station commuter car park from Samantha Riley Drive”. The respondent also stated that it did not intend to acquire the freehold interest until near the end of the lease period, if the ring road is not constructed and dedicated as a public road before that date in June 2020.

48   The applicant contends as follows:

(a)   the Acquired Land is the commencement of provision of the ring-road;

(b)   the lease is designed to enable the respondent to commence the construction of the ring-road which will be the only public road access from the Property;

(c)   the removal of the roundabout will prevent the applicant from providing access in that location for its proposed development to and from SRD;

(d)   the applicant will be required to complete construction of the remainder of the ring-road to develop its land so that access both ways along SRD can be achieved at the signalised intersection, to be constructed by the respondent, instead of the roundabout, to be removed by the respondent;

(e)   the applicant does not require the ring-road to develop the Property, but the respondent does require it to facilitate traffic movements in and out of the car park in the manner explained in para 38 above; and

(f)   in order to complete the construction of the ring-road, the applicant must buy Sydney Water land and expend money on construction which it would not otherwise have to do in order to develop its land.

49   The applicant claims the cost of purchasing the Sydney Water land and the cost of constructing the ring-road as a consequence of the acquisition.

50   The costs claimed will be provided once the works and land acquisitions are valued.

51   The applicant concedes that if this claim is successful, it cannot also claim for demolition costs of the road to be constructed on the Acquired Land. It also concedes that if the ring-road obviates the need to build other roads planned to develop the Property then the cost of those roads should be a set off from this claim.

7. Paragraphs 9 and 10 of Centro’s draft points of claim which outlines its definition of the public purpose are also relevant:

9   The purpose of the acquisition of the Acquired Land was identified in the Acquisition Notice published in the NSW Government Gazette as the Transport Administration Act 1988.

10    More specifically, the public purpose of the acquisition is the construction of a new Metro Rail system, known as the North West Rail LinK (NWRL), including: a new railway station at Kellyville, one of the major ‘park and ride’ stations for the NWRL with a total parking capacity of about 1360 vehicles in at-grade and multistorey car parks, as well as ‘kiss and ride’ and ‘kiss and park’ facilities, access to and from Samantha Riley Drive (SRD) to a construction area, permanent vehicular access to and from SRD, the construction of new signalised intersection at SRD, a new road to the east and a new ring-road in and around the Property (including the Acquired Land) to the west, the removal of the existing roundabout on SRD adjacent to the Property to encourage commuters to use the new signalised intersection and the ring-road, and a proposed commuter car park for the new Kellyville Station adjacent to the Property.

8. Centro tendered a letter from The Hills Shire Council to the Department of Planning and Environment (DPE) dated 10 January 2017 (Exhibit B). The letter outlined the planning history of the Kellyville Station precinct including Centro’s land from the Council’s perspective. Centro lodged its original proposal for the site in August 2011. The Council considered the proposal to be undesirable and unachievable in light of the State Government’s plans to amend the road network in the vicinity. A revised concept proposal including the ring road was considered to offer a vastly improved outcome for the site and precinct. The development would involve a land transfer between Centro, Sydney Water and the Respondent. This “good faith” arrangement was illustrated on a map attached to the letter. These land transfers have not been achieved.

9. Centro lodged a submission to DPE to request that land zoning and development standards be amended to reflect its existing project boundaries. The submission included a new concept proposal which does not include the ring road. In its letter the Council expressed its view that this proposal represents a “very poor planning and urban design outcome”. It urged DPE to help facilitate an outcome in conjunction with all stakeholders that will achieve the original intended development concept for the site.

10. The affidavit of Mr Merhi Director of Centro sworn 20 December 2016 was read. Mr Merhi described the complicated planning processes concerning the Kellyville station precinct, the making of The Hills Development Control Plan 2012 (DCP) and the precinct planning process including his involvement in these processes. Of most relevance are his comments about the ring road. Through meetings with the Respondent and Council on 9 July 2012 and 18 January 2013 Mr Merhi became aware of the Respondent’s intention to remove the existing roundabout on Samantha Riley Drive, replace it with a signalised intersection to the east and connect the commuter car park with a ring road. Mr Merhi identified that the ring road would require significant amendment to Centro’s design concept plans and a land transaction between Centro, Sydney Water and the Respondent. He instructed architects to prepare various concept plans incorporating the ring road in March 2013. A revised planning proposal incorporating the ring road was provided to the Council on 15 May 2013.

11. Mr Merhi deposed that the leasehold interest acquired by the Respondent would in his view form part of the required ring road. The acquisition therefore significantly restricts the development potential of Centro’s land by forcing any development proposal to be designed on the basis of the proposed ring road. According to Mr Merhi the ring road is of no benefit to Centro.

12. Mr Merhi was of the opinion that the ring road was only adopted in the DCP as a consequence of the Respondent’s decision to situate the commuter car park in its proposed location adjoining and requiring access via Centro’s land. The Hills Local Environmental Plan 2012 (Amendment No 19) which rezoned part of Centro’s land to SP2 – Infrastructure was predicated on an assumption that there would be a land swap between Centro and Sydney Water to facilitate the construction of the ring road. But for this assumption the entirety of Centro’s land would have been zoned R1 – General Residential as originally proposed in its planning proposal.

13. Claim 4 is somewhat hard to grasp in the short time I have to do a judgment based on, frankly, inadequate submissions given the complexity of the claim sought to be pressed. Essentially the issue concerns the planning for a ring road around Centro’s land which will facilitate traffic flow for the Kellyville Station precinct including access to a large commuter car park if built. The ring road as identified in the relevant DCP occurs partly on Centro and partly on Sydney Water land and was the subject of extensive negotiations for a land swap involving Centro, Sydney Water and the Respondent as outlined in the letter dated 10 January 2017. I am informed the negotiations failed.

14. According to Centro it was not aware until the 17 August 2017 letter that the road proposed on the leasehold land is also intended to form part of and integrate with the ring road.

15. As I understand Centro’s new claim, it contends for an expanded public purpose as set out in par 10 of its draft points of claim to include extensive traffic changes including the ring road in the precinct which will impact on the development of its land. Centro now seeks to include its version of an expanded public purpose in this claim.

16. Centro submits that it is pressing Claim 4 now because there is uncertainty that the freehold interest will be acquired according to the 17 August 2017 letter. If the freehold acquisition was certain to proceed, this claim would be brought in that context and this application would not be made.

17. The Respondent submits that no adjournment should be granted and Claim 4 should be struck out because it is futile. Alternatively, such a claim if available could have been pressed much earlier as the essential facts underpinning it were known to Mr Merhi at the time he swore his affidavit on 20 December 2016 and were probably known to him much earlier. The application of s 57 of the Civil Procedure Act 2005 (CP Act) suggests that an adjournment ought not be granted in these circumstances.

Should Claim 4 be struck out?

18. The first issue to determine is whether Claim 4 should be struck out, as provided in r 14.28 of the Uniform Civil Procedure Rules 2005. If struck out there is no basis for an adjournment application. At issue is whether the claim discloses a reasonable cause of action or is futile as the Respondent argues. Given that the claim is unusual indeed novel in my view it is difficult to rule on this question based on the limited argument presented. I can say that Claim 4 is more readily understood in the context of an appeal in relation to a compulsory acquisition of the freehold interest in the same land.

18. Centro submits that provided I am satisfied it has an arguable case I should grant the adjournment. According to Centro, once the road is built on the leasehold land that will dictate the outcome of planning decisions to benefit the Respondent not Centro to have the ring road put in place through the planning process. That intersection with the planning process is reflected in pars 39-45 of Claim 4. Centro will be compelled to purchase land from Sydney Water to construct the ring road in compliance with the DCP. It asserts it can claim those costs as a disturbance claim in this appeal pursuant to the Just Terms Act.

19. A key matter in achieving success will be defining the public purpose in the broad terms identified in par 10 of the draft points of claim in the context of this leasehold acquisition and linking that to the planning process under the Environmental Planning and Assessment Act 1979 as contended for by Centro. In par 48 of the draft points of claim Centro contends that the acquired land (meaning leasehold interest) is the commencement of provision of the ring road. At this stage given that no freehold interest has been acquired that depends on what planning requirements are placed on Centro to develop its land as par 48 alludes to.

20. The Respondent submits relying on Almona Pty Ltd v Roads and Traffic Authority of New South Wales [2008] NSWLEC 112 at [55]-[61] that no such claim is available under s 59(1)(f) as the use of the land must be Centro’s whereas Claim 4 is based on the Respondent’s use of the land. Centro did not respond to this argument but I surmise that it will argue its use of the acquired land relates to its intention to develop it.

21. The current planning circumstances are outlined in the letter of 17 August 2017 whereby Centro has placed before the Minister for Planning a development proposal for its site which does not conform with the DCP in relation to the provision of a ring road. Its proposal is to develop the land it owns absent the ring road. If the Minister is assumed to approve what Centro has proposed as part of the current precinct planning process Claim 4 would presumably not arise. It is not clear how Claim 4 relates to the date of acquisition of 22 January 2016, the date Centro’s claim crystallises.

22. I am not able given my current limited understanding of Claim 4 to safely conclude it is futile in the sense of doomed to fail. I consider it has a number of substantial hurdles on matters of principle to overcome before it can succeed as a claim under the Just Terms Act.

Claim 4 is late

24. The Respondent submitted that Claim 4 did not arise from the 17 August 2017 letter. The circumstances now sought to be relied on were well known to Centro as is clear from Mr Merhi’s affidavit which identify the planning issues concerning the ring road and the Respondent’s role in seeking to have the ring road incorporated into the relevant planning instruments. I agree. Events relied on in relation to Claim 4 were well known to Mr Merhi in 2013, as attested to in his affidavit sworn 20 December 2016. Mr Merhi’s affidavit identified the ring road as desirable from the Respondent’s perspective not Centro’s, gives his opinion that is the reason why the DCP provides for it and identifies that earlier negotiations with the Respondent would not have needed to consider a land swap if only the lease of a small part of the overall property was needed.

25. Further, there is inconsistency in Centro’s approach. No Claim 4 was made before or immediately after the letter of 12 May 2017 from the Respondent to Centro identified the likely compulsory acquisition of the freehold interest in the land. Only when the possibility that compulsory acquisition may not proceed in the letter of 17 August 2017 did Claim 4 emerge. That circumstance was essentially the same since this appeal commenced on 29 September 2016.

26. This application is very late.

Prejudice occasioned by adjournment

27. The exercise of my discretion is finely balanced in these complicated circumstances. Decisions on practice and procedure must be determined mindful of ss 56 and 57 of the CP Act. The matter has been before the Court since September 2016 and is otherwise ready to proceed to hearing next week. Adjournment of the proceedings at this late stage will cause substantial loss to both parties given the expert evidence marshalled.

Exercise of discretion

28. Submissions from the bar table about what evidence is needed to support Claim 4 such as valuation of Sydney Water land and subpoenaed documents from the Respondent do not assist in the Court understanding the extent to which new material is really needed. For example, there were extensive negotiations with Sydney Water in relation to the land swap for the ring road during which I am informed that Sydney Water sought market value for its land, one of the reasons the negotiations failed. It is likely that valuations of land were obtained in the course of those negotiations and could be relied on in these proceedings.

29. One option identified by the Respondent was that Claim 4 proceeds next week. On balance I do not consider the matter should be adjourned so that Centro’s notice of motion should be dismissed. I will not strike out Claim 4 at present. Centro has to consider whether it wishes to press Claim 4 given my decision not to adjourn the matter.

Order

30. The Court orders that the Applicant’s notice of motion dated 4 August is dismissed.

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Decision last updated: 28 August 2017