CFT No. 8 Pty Ltd v Sydney Metro

[2025] NSWLEC 42

Land and Environment Court

New South Wales

Medium Neutral Citation:

Telado Pty Ltd; CFT No. 8 Pty Ltd v Sydney Metro [2025] NSWLEC 42

Hearing dates:

21, 22, 23, 24, 25, 28, 29, 30 and 31 October 2024; 1, 4, 7, 8, 11 and 12 November 2024

Date of orders:

08 May 2025

Decision date:

08 May 2025

Jurisdiction:

Class 3

Before:

Duggan J

Decision:

See orders at [221]-[224]

Catchwords:

COMPULSORY ACQUISITION – objection to compensation – determination of public purpose – highest and best use – disturbance – determination of compensation

Legislation Cited:

Electricity Network Assets (Authorised Transactions) Act 2015 (NSW)

Energy Services Corporations Act 1995 (NSW)

Environmental Planning and Assessment Act 1979 (NSW), Pt 3A

Land Acquisition (Just Terms Compensation) Act 1991 (NSW), ss 42, 49, 50, 55, 56, 59, 66, 71A, Pt 3 Div 4

Transport Administration Act 1988 (NSW), ss 3, 38A, 38B, 38C, 38D, Sch 1 Pt 2 cl 3, Sch 1 Pt 3 cl 11

Sydney Local Environmental Plan (2012), cll 6.21D, 6.21E

Cases Cited:

Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209; (1999) 167 ALR 575

Coffs Harbour City Council v Noubia Pty Ltd [2024] NSWCA 19; (2024) 258 LGERA 351

G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20; (2023) 256 LGERA 319

Goldmate Property Luddenham No 1 Pty Ltd v Transport for New South Wales [2024] NSWCA 292; (2024) 262 LGERA 24

Goldmate Property Luddenham No 1 Pty Ltd v Transport for New South Wales [2024] NSWLEC 39

oOh!media Fly Pty Limited v Transport for New South Wales [2024] NSWCA 200; (2024) 261 LGERA 273

Roads and Traffic Authority (NSW) v Mosca [2006] NSWCA 159; (2006) 146 LGERA 335

Sydney Metro v G & J Drivas Pty Ltd [2024] NSWCA 5; (2024) 113 NSWLR 429; (2024) 258 LGERA 197

Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259; (2008) 82 ALJR 489; (2008) 170 LGERA 345

Yates Property Corporation Pty Ltd (in Liq) v Darling Harbour Authority (1991) 24 NSWLR 156; (1991) 73 LGRA 47

Category:

Principal judgment

Parties:

In proceedings 2022/00391925:
Telado Pty Ltd (Applicant)
Sydney Metro (Respondent)

In proceedings 2022/00391937:
CFT No. 8 Pty Ltd (Applicant)
Sydney Metro (Respondent)

Representation:

Counsel:
A Galasso SC, R White and L Nurpuri (Applicants)
J Lazarus SC and J E Taylor (Respondent)

Solicitors:
Beatty Hughes & Associates (Applicants)
Clayton Utz (Respondent)

File Number(s):

2022/00391925; 2022/00391937

Publication restriction:

Nil

TABLE OF CONTENTS

Nature of proceedings - [1]

Facts - [2]

Planning regime - [14]

Issues for determination - [21]

Highest and best use of the Acquired Land – application of the statutory disregard in s 56(1)(a) of the Just Terms Act

Statutory disregard – s 56(1)(a) of the Just Terms Act - [27]

Applicable principles - [30]

Public purpose of the acquisition of 33 Bligh St - [43]

Evidence - paragraph 47

The Applicants’ position - [48]

The Respondent’s position - [53]

Findings - [57]

If Metro CSW is a different public purpose, there was no impact on market value - [71]

Evidence - [76]

No acquisition of 33 Bligh St; acquisition only for leasehold interest

Applicants’ position - [77]

Respondent’s position - [82]

Findings - [87]

Acquisition of 33 Bligh St causally connected to Metro West and to be disregarded

Applicants’ position - [96]

Respondent’s position - [100]

Findings - [102]

Conclusion on impact of acquisition of 33 Bligh St on availability of 33 Bligh St - [104]

Steps that would have been taken absent the acquisition - [105]

Principles to be applied - [113]

Evidence relating to redevelopment of Acquired Land - [118]

Applicants’ position - [119]

Respondent’s position - [142]

Finding on the statutory disregard in s 56(1)(a) of the Just Terms Act relating to combined redevelopment with 33 Bligh St - [170]

Council’s position caused by the public purpose - [173]

Pivot to USP - [184]

Would combined redevelopment with 33 Bligh St have been pursued? - [192]

USP as a proxy? - [198]

Availability of 33 Bligh St in the short to medium term - [209]

Disturbance - [214]

Conclusion - [219]

Determination of compensation - [221]

JUDGMENT

Nature of proceedings

1. The Applicants’ land was acquired by Sydney Metro. These proceedings relate to the determination of the appropriate amount of compensation payable.

Facts

2. CFT No. 8 Pty Ltd (CFT 8) is the Applicant in proceedings 2022/00391937 and Telado Pty Ltd (Telado) is the Applicant in proceedings 2022/00391925 (together, the Applicants). The Applicants are constituent entities with common directors that form part of the Coombes Property Group (CPG).

3. CFT 8 was the owner in fee simple of 28 O’Connell Street, Sydney (28 O’Connell) and Telado was the owner in fee simple of 48 Hunter Street, Sydney (48 Hunter) (together, the Acquired Land).

4. On 2 September 2022 (the Date of Acquisition), Sydney Metro (the Respondent or Sydney Metro) compulsorily acquired the Acquired Land by notice in the NSW Government Gazette. That notice provided that such acquisition was made “under the provisions of the Land Acquisition (Just Terms Compensation) Act 1991 as authorised by section 38C and clause 11 of Schedule 1 of the Transport Administration Act 1988 for the purposes of the Transport Administration Act 1988.”

5. On 8 December 2022, the Respondent offered CFT 8 compensation in respect of 28 O'Connell in the sum of $128,082,003 as determined by the Valuer-General under s 42(1) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act), comprising $127,500,000 for market value and $582,003 for losses attributable to disturbance.

6. On 23 December 2022, the Respondent offered Telado compensation in respect of 48 Hunter in the sum of $49,582,003 as determined by the Valuer-General under s 42(1) of the Just Terms Act, comprising $49,000,000 for market value and $582,003 for losses attributable to disturbance.

7. On 29 December 2022, by the filing of Class 3 Applications, the Applicants objected to those amounts of compensation pursuant to s 66 of the Just Terms Act, contending for compensation for market value in the following amounts:

1. CFT 8: $203,680,917.04, later amended to $320,235,616; and

2. Telado: $71,017,921.96, later amended to $110,964,384.

8. The Acquired Land had a combined total land area of 1,022m², comprising the constituent land areas of:

1. 28 O’Connell with a land area of 759m²; and

2. 48 Hunter with a land area of 263m².

9. Prior to acquisition:

1. 28 O’Connell comprised a 14-storey commercial office and retail building, originally completed in 1974, with various refurbishments and building upgrades completed since then. It was purchased by CFT 8 in September 2016; and

2. 48 Hunter comprised a commercial building, originally completed in 1961, with various refurbishments and building upgrades completed since then. It was purchased by Telado in December 1991.

10. The Acquired Land was situated at the corner of Hunter and O’Connell Streets in the Sydney CBD. To the north, the Acquired Land adjoined 33 Bligh Street (33 Bligh St) and to the east of the Acquired Land was 37 Bligh Street (37 Bligh). 33 Bligh St was acquired by the Respondent on 5 November 2021 and 37 Bligh was acquired by the Respondent on 2 September 2022.

11. Prior to its acquisition, 33 Bligh St was owned by Alpha Distribution Ministerial Holding Corporation, a Ministerial Holding Corporation constituted for the purposes of the Electricity Network Assets (Authorised Transactions) Act 2015 (NSW). 33 Bligh St was subject to a long-term lease and sublease to various entities collectively referred to as Ausgrid, a statutory corporation established under the Energy Services Corporations Act 1995 (NSW) (Ausgrid). As from August 2017 until the date it was acquired, 33 Bligh St had been occupied and used by the Respondent for construction purposes.

12. Prior to its acquisition, 37 Bligh was a strata title building comprising retail and commercial offices with multiple strata owners.

13. The Acquired Land and adjoining site of 33 Bligh St are represented below:

Planning regime

14. As at the Date of Acquisition, the Acquired Land was zoned “B8 Metropolitan Centre” (now SP5 Metropolitan Centre). The Sydney Local Environmental Plan (2012) (SLEP 2012) was substantially amended on 26 November 2021 pursuant to Amendment No 64 which introduced provisions giving effect to the Central Sydney Planning Strategy (CSPS).

15. The B8 zoning permitted development of:

1. A maximum height of building of 235m and to be determined by sun access and design excellence provisions; and

2. A maximum floor space ratio (FSR) of 8:1 plus additional floor space and design excellence bonuses which when applied to the subject property for commercial development would produce a maximum of 14.05:1.

16. The Acquired Land was also mapped within a “Tower Cluster Area”. Where land was identified within such an area the provisions of cl 6.21E of the SLEP 2012 provided:

(5)   A building located in a tower cluster area may exceed the maximum height shown for the land on the Height of Buildings Map if—

(a)   the consent authority is satisfied that the building demonstrates design excellence as the winner of an architectural design competition carried out in accordance with the City of Sydney Competitive Design Policy, and

(b)   the building height does not exceed the following—

(i) sun access plane controls in clause 6.17,

(ii) overshadowing controls in clause 6.18,

(iii) view plane controls in clause 6.19,

(iv) view of Sydney Harbour controls in clause 6.19A.

17. The Tower Cluster Area in SLEP 2012 required a minimum land area of 2,000m², which could not include heritage items in the calculation of this minimum land area. As the Acquired Land was below 2,000m² (at 1,022m²) the Tower Cluster Area provisions were not available for the Acquired Land. However, if the Acquired Land was developed in conjunction with 33 Bligh St the Tower Cluster Area provisions could be utilised as the combined land area would be 3,062m². 33 Bligh St could be developed in accordance with the Tower Cluster Area provisions without the need to amalgamate with any other land.

18. Where land with a site area of more than 2,000m² was located within a mapped Tower Cluster Area additional FSR and height capacity could be unlocked without the need for a planning proposal. Through this process, if certain tests were met, the maximum FSR could be increased by 50% of the base and accommodation controls in lieu of the usual 10% design excellence bonus afforded under cl 6.21D of the SLEP 2012.

19. The Council’s “Guideline for Site Specific Planning Proposals” allowed planning proposals on sites greater than 1,000m². A planning proposal could therefore be lodged for the Acquired Land without relying on the Tower Cluster Area provisions. Planning proposals were to be assessed on a site-by-site basis and in accordance with Council’s Guideline which included a requirement that an applicant demonstrate that it had used best endeavours to promote amalgamation to achieve appropriate tower setbacks and outlook, and the efficient use of land.

20. In addition, a site-specific planning proposal could be utilised on land which exceeded the minimum land area for application of cl 6.21E of the SLEP 2012 for development that exceeded the development potential conferred by that clause.

Issues for determination

21. The parties take divergent approaches to the determination of the market value of the Acquired Land. The market value of the Acquired Land is to be determined having regard to the highest and best use of that land as at the Date of Acquisition: Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209; (1999) 167 ALR 575. The divergence had its genesis in what was considered to be the highest and best use of the Acquired Land.

22. The Applicants contended that the highest and best use of the Acquired Land was redevelopment in conjunction with the adjoining land at 33 Bligh St. On that basis, the parties contended significantly different values for the Acquired Land varying from $210,000,000 (Respondent) to $431,200,000 (Applicants), with a variety of alternative value scenarios ranging between these amounts.

23. The Respondent contended that the highest and best use of the Acquired Land was the use of the Acquired Land as at the Date of Acquisition. The value on that basis determined as a capitalisation of passing rent, represented a value of $200,000,000. If the highest and best use was determined as the current use of the Acquired Land (which the Applicants dispute) the Applicants do not dispute the value derived for this use.

24. For the purposes of the determination of market value in this matter, the parties agreed that such determination should be made on the basis that the two parcels of land comprising the Acquired Land should be treated as a single consolidated site, with the ultimate determination of value for each site being apportioned by reference to the land area of each parcel on a pro rata basis.

25. In order to determine the matters in dispute, the following issues arise for determination:

1. Was the highest and best use of the Acquired Land a combined redevelopment in conjunction with 33 Bligh St, having regard to:

1. The operation of s 56(1)(a) of the Just Terms Act with respect to:

1. Whether the acquisition of 33 Bligh St was to be disregarded in whole or in part;

2. Whether the Acquired Land in conjunction with 33 Bligh St would have been rezoned to permit a combined redevelopment either at the Date of Acquisition or a date thereafter; and

3. To what extent were any increases or decreases in the value of the Acquired Land to be disregarded for the purposes of determining market value as required by s 56(1)(a)?

2. If the acquisition of 33 Bligh St was not to be disregarded in whole or in part would the hypothetical purchaser consider that 33 Bligh St would be available for redevelopment either at the Date of Acquisition or some later date?

2. If the highest and best use of the Acquired Land was for a combined redevelopment in conjunction with 33 Bligh St:

1. On what assumptions as to the development of the Acquired Land and 33 Bligh St should the determination of value be made? and

2. What would the market value of the Acquired Land be on the basis of the assumptions as determined?

3. If the highest and best use was the current use as at the Date of Acquisition what is the market value of the Acquired Land?

4. Disturbance.

26. I will deal with each of these issues in turn.

Highest and best use of the Acquired Land – application of the statutory disregard in s 56(1)(a) of the Just Terms Act

Statutory disregard – s 56(1)(a) of the Just Terms Act

27. Section 55(a) of the Just Terms Act provides:

55   Relevant matters to be considered in determining amount of compensation

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

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

28. The concept of market value is further provided for in s 56(1)(a) of the Just Terms Act in the following terms:

56   Market value

(1)   In this Act—

market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid)—

(a)   any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and…

29. The Applicants contended that what is commonly referred to the “statutory disregard” in s 56(1)(a) of the Just Terms Act had two applications in the determination of value in this matter:

1. It required the acquisition of 33 Bligh St to be disregarded as a decrease in the value of the Acquired Land caused by the proposal to carry out the public purpose for which the Acquired Land was acquired; and

2. It required the disregard of the acquisition of the Acquired Land and consequently the making of a finding that, by the Date of Acquisition, the Applicants would have negotiated a combined redevelopment proposal in conjunction with 33 Bligh St and that a rezoning to permit such redevelopment would have been imminent or approved.

Applicable principles

30. In applying the statutory disregard in s 56(1)(a) of the Just Terms Act it is necessary to identify the public purpose for which the Acquired Land was acquired.

31. Section 4 of the Just Terms Act defines “public purpose” as meaning:

any purpose for which land may by law be acquired by compulsory process under this Act

32. In Goldmate Property Luddenham No 1 Pty Ltd v Transport for New South Wales [2024] NSWCA 292; (2024) 262 LGERA 24 (Goldmate CA) the Court of Appeal held at [76] that the definition of “public purpose” is to be read into s 56(1)(a) of the Just Terms Act to be the relevant purpose to which the causation question in s 56(1)(a) is to be determined.

33. It further held at [71] that on a proper construction of s 56(1)(a) of the Just Terms Act the following steps are to be taken:

(1)   the identification of the acquiring authority;

(2)   the identification, by reference to the empowering legislation, of the public purpose or purposes for which the acquiring authority (identified in (1) above) has the power to acquire land;

(3)   the identification of the acquiring authority’s public purpose in acquiring the land, which must fall within the purpose or range of purposes identified in (2) above; and

(4)   the determination of the question, which is one of fact, whether there has been 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, identified in (3) above (any such increase or decrease is to be disregarded).

34. In this case, there is no dispute as to step (1) that the Respondent was the acquiring authority.

35. As to step (2), the empowering legislation that related to the Respondent was the Transport Administration Act 1988 (NSW) (TA Act). Relevantly, s 38C of the TA Act provided:

38C   Metro infrastructure development functions

(1) Sydney Metro may exercise the functions described in clause 3(1) of Schedule 1 in relation to the metro as if—

(a)   references in that clause to TfNSW were references to Sydney Metro, and

(b)   references to transport infrastructure were references to a metro.

(2)   Clauses 3(2) and (3), 11 and 12 of that Schedule apply accordingly.

36. A metro is defined at s 3 of the TA Act as meaning:

metro means a mass transit infrastructure system, and associated facilities, that—

(a)   provides high-frequency, high-capacity passenger services, and

(b)   is operated using automated or partly-automated systems from one or more central control points.

37. The objectives of Sydney Metro were set out in s 38A of the TA Act as:

38A   Objectives of Sydney Metro

(1)   The principal objectives of Sydney Metro are as follows—

(a)   to deliver safe and reliable metro passenger services in an efficient, effective and financially responsible manner,

(b)   to facilitate and carry out the orderly and efficient development of land in the locality of metro stations, depots and stabling yards, and proposed metro stations, depots and stabling yards.

(2)   The other objectives of Sydney Metro are as follows—

(a)   to be a successful business and, to that end—

(i)   to operate at least as efficiently as any comparable business, and

(ii)   to maximise the net worth of the State’s investment in the metro,

(b)   to exhibit a sense of social responsibility by having regard to the interests of the community in which it operates,

(c) where its activities affect the environment, to conduct its operations in compliance with the principles of ecologically sustainable development contained in section 6(2) of the Protection of the Environment Administration Act 1991.

38. The functions of Sydney Metro were provided at s 38B of the TA Act as:

38B   Functions of Sydney Metro

(1)   Sydney Metro has the functions conferred or imposed on it by or under this or any other Act.

(2)   Sydney Metro may—

(a)   design, construct, develop and operate a metro to provide safe, reliable and high-frequency metro passenger services, or other associated transport services, to the public, and

(b)   deliver services in connection with, or related to, the operation or proposed operation of the metro, and

(c)   assist the relevant planning and transport authorities in the preparation of strategic and other plans for the development of land in the locality of metro stations, depots and stabling yards, and proposed metro stations, depots and stabling yards.

(3)   Sydney Metro may—

(a)   conduct any business (whether or not related to its functions) that it considers will further its objectives, and

(b)   operate other transport services, including bus services, whether or not in connection with its metro passenger services, and

(c)   build, modify, hold, manage, maintain, finance and establish transport assets vested in or owned by it, or to be vested in or owned by it, and

(d)   acquire, build, modify, hold, manage, maintain, finance and establish metro assets vested in or owned by it, or to be vested in or owned by it, and

(e)   dispose of metro assets vested in or owned by it (other than a metro), and

(f)   acquire, build, modify, manage, maintain and establish transport assets vested in or owned by, or to be vested in or owned by, another public transport agency, and

(g)   make and enter into contracts or arrangements for the carrying out of works, or the performance of services, or the supply of goods or materials, and

(h)   make and enter into contracts or arrangements with any person for the operation, on such terms as may be agreed on, of any of Sydney Metro’s passenger or other transport services or of any of Sydney Metro’s businesses, and

(i)   make and enter into leases or licences, or other arrangements, with persons for developing metro assets, and

(j)   provide goods, services or facilities to the transport industry, and

(k)   appoint agents, and act as agents for other persons.

(4)   Sydney Metro may—

(a)   acquire any land, and

(b)   develop, sell, lease or otherwise dispose of any of its land, and

(c)   with the consent of the owner of any land, exercise in relation to the land any function that Sydney Metro could so exercise if Sydney Metro were the owner of the land, and

(d)   exercise in relation to any land in which Sydney Metro holds an interest any function that a private individual could so exercise if the private individual were the holder of the interest.

(5)   The operation of any railway service by Sydney Metro is subject to the requirements of the Rail Safety National Law (NSW).

39. In addition, Sydney Metro had land development functions as provided for in s 38D of the TA Act as:

38D   Other land development functions of Sydney Metro

(1)   Sydney Metro may carry out, finance, manage or otherwise participate in development for residential, retail, commercial, industrial, mixed use, community, public open space or recreational purposes on land in the locality of a metro station, depot or stabling yard, or a proposed metro station, depot or stabling yard, being the land shown on a map adopted by an order of the Minister for Planning, made with the concurrence of the Minister, published in the Gazette for the purposes of this section.

(2)   Sydney Metro may, for the purposes referred to in subsection (1), acquire land by agreement (including an interest in land).

(3)   The imposition or conferral of a function on Sydney Metro by this section does not limit the imposition or conferral of a function by another provision of this Division.

40. In relation to Transport infrastructure development, Sch 1 Pt 2 cl 3 of the TA Act provides:

3   Transport infrastructure development

(1)   TfNSW may—

(a)   develop, establish, hold, manage and maintain transport infrastructure on behalf of the State, and

(b)   hold, manage, maintain and establish assets associated with transport infrastructure developed or proposed to be developed by TfNSW, and

(c)   make and enter into leases or licences, or other arrangements, with persons for developing transport infrastructure, and

(d)   provide goods and services to the bus, rail, ferry or other transport industries.

(2)   In this clause, a reference to developing transport infrastructure includes—

(a)   carrying out development for the purposes of or incidental to transport infrastructure (including development of land in the vicinity of transport infrastructure), and

(b)   facilitating, managing, financing or maintaining any such development, and

(c)   carrying out any function ancillary to any such development.

(3)   In this clause—

development means development within the meaning of the Environmental Planning and Assessment Act 1979 or an activity within the meaning of Part 5 of that Act.

transport infrastructure includes—

(a)   infrastructure associated with the use or operation of transport infrastructure, and

(b)   retail, commercial and residential development associated with or developed in conjunction with transport infrastructure.

41. With respect to the power to acquire land, Sch 1 Pt 3 cl 11 of the TA Act provides:

11   Acquisition of land

(1)   TfNSW may, for the purpose of the exercise of TfNSW’s functions, acquire land (including an interest in land) by agreement or by compulsory process in accordance with the Land Acquisition (Just Terms Compensation) Act 1991.

(2)   The other purposes for which land may be acquired under subclause (1) include for the purposes of a future sale, lease or disposal, that is, to enable TfNSW to exercise its functions in relation to land under this Act.

(3)   An acquisition of land under this clause is not void merely because it is expressed to be for the purposes of exercising the functions of TfNSW or for the purposes of this Act.

(4)   Without limiting the generality of this clause, the purposes for which land may be acquired under this clause include acquiring land for future use for transport infrastructure or services.

42. As to steps (3) and (4), in Goldmate Property Luddenham No 1 Pty Ltd v Transport for New South Wales [2024] NSWLEC 39 (Goldmate LEC) the general settled principles upon which the public purpose is to be determined were set out at [20]. Whilst the determination of the identification of the relevant public purpose was overturned in Goldmate CA the identification of the relevant principles upon which such a determination was to be made were not. The parties accepted that the relevant principles were those identified in Goldmate LEC at [20] as:

20   The manner in which a dispute as to the identification of the public purpose is to be resolved has been considered in a number of authorities. The general settled principles to be discerned from those authorities can be summarised as:

(1) In identifying the public purpose for which the land was acquired, it is the public purpose of the acquiring authority which is relevant: Coffs Harbour City Council v Noubia Pty Ltd [2024] NSWCA 19 (Noubia) at [61];

(2) In determining what increase or decrease in value occurs “by reason of” or is “caused by” the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, it is first necessary to identify the public purpose and its relevant scope or generality: AMP Capital Investors Ltd and Another v Transport Infrastructure Development Corporation (2008) 163 LGERA 245 (AMP) at [96];

(3)   Once the public purpose is identified, it may then be necessary to identify what is comprehended by “the proposal to carry it out” and/or “the carrying out of” the purpose. If so, it may be necessary to identify the scope of what occurs “by reason of” or is “caused by” these things: AMP at [96];

(4)   There are no “clear rules” determining how the relevant public purpose at the appropriate level of generality is to be determined. Factors to be taken into account may include the degree of continuity and consistency of various elements of what is proposed and done, and fairness to both the claimant and the acquiring authority: Noubia at [62]-[63];

(5) In addressing fairness to both the claimant and the acquiring authority the legislative purpose of the Just Terms Act is important. Section 3(1) sets out the objects of the Act, which include the following:

(a)   to guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition, and

(b)   to ensure compensation on just terms for the owners of land that is acquired by an authority of the State when the land is not available for public sale…

see Noubia at [64];

(6) When interpreting s 56(1)(a) of the Just Terms Act, the Pointe Gourde principle has little, if any, application. The statutory language of s 56(1)(a) must be applied on its own terms: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259 (Walker) at [45]. It follows that earlier decisions in this Court which applied the Pointe Gourde principle should be approached with considerable caution: Noubia at [66];

(7) The proposition drawn from Housing Commission (NSW) v San Sebastian Pty Ltd (1978) 140 CLR 196 that an “indirect relationship”, where the maintenance of the planning restriction by the Council was seen as a “step in the process of resumption” was a sufficient causal connection, does not apply to s 56(1)(a) of the Just Terms Act given that a direct causal connection was required: Walker at [53]-[54]. See also RD Miller Pty Ltd v Roads and Maritime Services NSW (2020) 103 NSWLR 234 at 270;

(8)   The mere circumstance that the public purpose is a contributing factor to changes which in turn affect value is not necessarily sufficient, particularly if the changes depend also on discretionary decisions made by other authorities: AMP at [99]; and

(9) The causal question needs to be directed to the effects on the value of the land of the carrying out, or proposal to carry out the public purpose, not to the effects of the proposed acquisition of the particular land: Sydney Metro v G & J Drivas Pty Ltd [2024] NSWCA 5 at [39] (Drivas).

Public purpose of the acquisition of 33 Bligh St

43. Fundamental to the success of the Applicants’ case is that 33 Bligh St was available to be redeveloped in combination with the Acquired Land. To this end, the Applicants contended that the acquisition of 33 Bligh St by the Respondent was to be disregarded by operation of s 56(1)(a) of the Just Terms Act. The gravamen of this submissions is that:

1. The value of the Acquired Land was decreased by the acquisition of 33 Bligh St, it being no longer available for a combined redevelopment with the Acquired Land; and

2. Such decrease in value of the Acquired Land was caused by the carrying out of the public purpose for which the Acquired Land was acquired – the public purpose being the same purpose as that for the acquisition of 33 Bligh St.

44. Should the public purpose for which 33 Bligh St was acquired not be the same public purpose as the acquisition of the Acquired Land issues arise as to the manner in which 33 Bligh St was to be treated in so far as its availability for a combined redevelopment with the Acquired Land absent the operation of s 56(1)(a) of the Just Terms Act.

45. Section 56(1)(a) of the Just Terms Act is directed to a consideration of an increase or decrease in the value of the Acquired Land caused by the carrying out of, or the proposal to carry out, the public purpose for which the Acquired Land was acquired. The facts of this case indicate that if 33 Bligh St was available for a combined redevelopment a hypothetical purchaser would have paid more for the Acquired Land than if the combined redevelopment was not available (the quantum of such increase is disputed). Therefore, it is necessary to determine whether the acquisition of 33 Bligh St was acquired as part of the relevant public purpose to which s 56(1)(a) is directed.

46. Contrary to the Applicants’ case, the Respondent contended that 33 Bligh St was acquired for a separate and different public purpose such that the acquisition of 33 Bligh St was not to be disregarded. The consequence being that, as at the Date of Acquisition, 33 Bligh St would not have been available for a combined redevelopment proposal and the highest and best use of the Acquired Land was for the use being carried out on that date.

Evidence

47. The relevant facts relating to the acquisition of the Acquired Land and 33 Bligh St are:

1. In March 2016, Sydney Metro identified 33 Bligh St for freehold acquisition as part of the Metro City and South West Project (Metro CSW).

2. On 14 November 2016, Transport for NSW (TfNSW) announced Metro West.

3. On 8 August 2017, TfNSW compulsorily acquired, by agreement, a sub-sublease for construction works for Metro CSW for an initial term of 3 years (Construction Lease) and an option for a further 1 year, 3 months and 1 day.

4. On 10 September 2018, Sydney Metro (to whom the sub-sublease in respect of 33 Bligh St had been formally vested from TfNSW on 20 June 2018) sent a letter to Ausgrid requesting a meeting to explore the possibility of extending the Construction Lease. The letter stated, inter alia:

As you are aware, Sydney Metro and Ausgrid entered into a construction lease for 33 Bligh Street, Sydney, which will expire (inclusive of all extension options) on 1 November 2021.

Since execution of the construction lease, Sydney Metro has further refined its program for post-tunneling construction activities and it has been identified that there are benefits to Sydney Metro to pursue an extension to the current construction lease for a further period of two (2) years.

The proposed extension would ensure certainty of occupation for Sydney Metro and allow the project to maintain a central CBD Metro access point from 33 Bligh Street, which will assist the post-tunneling (sic) project works including the installation of track, ballast and signaling (sic) and communication equipment.

5. On 8 August 2019, the “Final Business Case Supplement Update Sydney Metro West” (Metro West) identified key changes in scope of the initial business plan. As it related to Hunter and Bligh Streets it noted that the original business case was for a construction lease to be acquired over 33 Bligh St during construction with “cut and cover construction required in Hunter Street traffic lanes and temporary street closure”. The changed scope included acquisition of the freehold of 33 Bligh St to enable “construction confined to acquired property and no closure of Hunter Street”. The rationale for this change was stated to be:

The Refined Project Concept design, as per the Final Business Case Supplement, for Hunter Street Station is a mined double-height cavern, with an island platform arrangement, and entries at George Street and the intersection of Bligh and O'Connell Streets. While the station arrangement is similar to the previous design in the Final Business Case Concept design, the property area and boundaries associated with the Bligh and O'Connell Street entry were changed for the Refined Project Concept.

Value enhancement activities for Hunter Street Station as part of the Refined Concept development sought to reduce the permanent property acquisition costs by acquiring 33 Bligh Street as a temporary site for construction under a construction lease, by extension of the current lease acquired for construction of Martin Place Station. It was also a consideration that the owner of 33 Bligh Street, Ausgrid, has a development application approval to construct a substation on the site.

As a result, part of the station entry building planned for the 33 Bligh Street site would need to be constructed below the road in Hunter Street. The impact of this would be the requirement to close part of Hunter Street over several years for a cut and cover method of construction, and related impacts CBD traffic and buses. The reduced permanent footprint available for the station entry design results in a compromised station planning and a poorer urban design outcome compared to the initial Project Concept in September 2018.

Since completion of the Final Business Case Supplement design, further consideration has been given to the impacts, risks and constructability issues associated with cut and cover construction in Hunter Street.

In particular further investigations have been undertaken in relation to existing major utilities that would be affected by construction at this Sydney CBD location. The conclusion reached is that relocation and/or protection of major utilities presents a high degree of risk to the Project in terms of cost, program, constructability and community. Other major impacts include traffic management and re-routing of buses during temporary closure of Hunter Street.

These considerations would have major impacts to constructability and the surrounding businesses, which lead to the conclusion that 33 Bligh Street is required for project construction to mitigate these risks. Additional benefits of acquiring 33 Bligh Street are improved station functional planning and interchange with the Martin Place Station.

6. On 19 December 2019, Sydney Metro by letter to Ausgrid exercised the option to renew the Construction Lease.

7. On 28 October 2020, Sydney Metro exercised its option to renew the Construction Lease for a further term of 1 year and 2 months commencing 1 August 2020.

8. On 14 December 2020, the briefing note to the Minister with respect to the acquisition of 33 Bligh St stated:

The current requirements for the Sydney Metro City & Southwest project will require ongoing occupation of 33 Bligh Street beyond the current November 2021 construction lease expiry date. Occupation of this site will be required through to operations (2024) to enable delivery of the Sydney Metro City & Southwest Trains, Systems, Operations and Maintenance (TSOM) and Line-wide delivery packages.

In addition to the Sydney Metro City & Southwest requirements, the acquisition of 33 Bligh Street will provide Sydney Metro with a central CBD location which will support Sydney Metro West construction activities and place-making benefits over the next decade.

…

Impact on Owners and Community

Owner: Sydney Metro currently occupies the Land at 33 Bligh Street, Sydney under a construction lease which was acquired by agreement. Since 2017, the land has been occupied by the Sydney Metro City and Southwest project for construction-related purposes associated with the Martin Place Metro station.

There is minimal impact to the owner given the existing occupation and use of the land by Sydney Metro with the entire site enclosed with acoustic structure, due to its central CBD locality.

Community: The acquisition of all interest in the land will provide Sydney Metro with full ownership and secure tenure which takes into account the requirements for the continued occupation of the land for construction purposes. Given its current use and acoustic structure in place, ongoing occupation of the site is considered to have limited impact to the community.

Sydney Metro will continue to work with the community and adjoining property owners to manage any impacts associated with the Sydney Metro Project.

9. By letter dated 17 December 2020, the Respondent wrote to Ausgrid with respect to the commencement of commercial negotiations for the acquisition of 33 Bligh St. That letter stated that the acquisition was “for the ongoing delivery and future operation of Sydney Metro's standalone driverless train network”. The letter went on to state, inter alia:

The acquisition of 33 Bligh Street will ensure certainty of occupation for Sydney Metro past November 2021 and allow the project to maintain a central CBD Metro access point from 33 Bligh Street, which will assist in the post-tunnelling project works including the installation of track, ballast and signaling (sic) and communication equipment.

We note that there may be a requirement for Ausgrid to retain part of the site for a sub-station over the longer term and if this is the case, Sydney Metro will work with Ausgrid on finding a solution where this can be accommodated and under this instance the acquisition will be a partial rather than full acquisition. We would like a quick decision on whether a sub-station is needed or not to allow planning and design of the proposed station to be progressed.

…

It further identified under the heading “Sydney Metro (Projects)”:

Sydney Metro is the NSW Government agency responsible for the delivery of Australia’s largest public transport program. A new standalone driverless train railway network which will revolutionise the way Sydney travels.

There are currently four core Project components:

(a)   Sydney Metro Northwest

(b)   Sydney Metro City & Southwest

(c)   Sydney Metro West

(d)   Western Sydney Airport

…

It further stated:

Property acquisition

Sydney Metro’s intention is to acquire all compensable interests in the Land. Noting that Sydney Metro is committed to working closely with Ausgrid during the acquisition process to minimise any impacts to Ausgrid’s ongoing or future operations as much as possible.

Should the freehold acquisition not be completed on or before the sub-sub-lease expiry date of 1 November 2021, a further extension of the current sub-sub-lease agreement will be required by Sydney Metro. Sydney Metro is open to exploring an extension of the current sub-sub-lease agreement until the agreed deferred acquisition date in our upcoming negotiations at a revised rental arrangement so as to guarantee continuous uninterrupted occupation and tenure for Sydney Metro.

Should agreement be reached quickly, then it would be a part of that agreement that Ausgrid agree to a shortening of the various notice periods etc. to assist Sydney Metro to conclude arrangements in line with that agreement.

10. On 22 March 2021, Sydney Metro sent letters to Alpha Distribution Ministerial Holding Corporation and Mirvac commencing the acquisition of 33 Bligh St. The letter to Alpha Distribution Ministerial Holding stated, inter alia:

The purpose of this letter is to confirm that Sydney Metro intends to acquire the Land for the Sydney Metro City and South West Project (Project).

11. On 12 May 2021, Sydney Metro announced Sydney Metro CBD Stations including the Hunter Street station for Metro West, at the corner of Bligh and O’Connell Streets.

12. On 18 June 2021, letters were sent by Sydney Metro to CPG commencing acquisition of the Acquired Land for Metro West.

13. On 9 July 2021, Sydney Metro sent a letter of offer to Ausgrid to acquire the freehold interest in 33 Bligh St. Ausgrid responded by letter on 3 September 2021.

14. On 29 July 2021, Sydney Metro issued Proposed Acquisition Notices (PANs) in respect of the freehold and leasehold interests in 33 Bligh St. The PANs stated, inter alia, that the interest in the land was being acquired:

…for the purposes of the Sydney Metro City & Southwest Project and the Sydney Metro West Project.

The covering letter sent to Ausgrid notified that Ausgrid entities had been issued with PANs stated, inter alia:

As you are aware, Sydney Metro currently occupies the whole of the Land under a sub-sublease agreement with Ausgrid, which will expire on 1 November 2021. As previously advised, Sydney Metro requires the Land to maintain a central CBD Metro access point from 33 Bligh Street to assist with the post-tunnelling works for the City & South West project. Following the announcement of the Sydney Metro West CBD stations locations on 12 May 2021, Sydney Metro also requires the Land as a future CBD station for the West project.

…

15. On 5 November 2021, Sydney Metro compulsorily acquired 33 Bligh St by notice in the NSW Government Gazette.

The Applicants’ position

48. The Applicants contended that the two stated metro projects for the acquisition of 33 Bligh St were in fact a single public purpose, namely for the provision of a metro and therefore, the acquisition of both the Acquired Land and 33 Bligh St should be disregarded by operation of s 56(1)(a) of the Just Terms Act for the purposes of determining market value.

49. The Applicants relied upon a construction of the enabling legislation, the TA Act, to assist in the determination of the public purpose. In considering the TA Act it was to be noted that:

1. The power conferred on the Respondent to acquire land was in wide terms: s 38B(4);

2. The general power to acquire land was expressed broadly without reference to any particular purpose. It was to be considered by reference to the objects of Sydney Metro, which objects were generally expressed by reference to “metro” infrastructure and not to particular projects: s 38A;

3. The functions of the Respondent referenced a singular “metro”: s 38B(2)(a) and (b); and

4. The term “metro” was not limited to a particular project or component of an overarching system: s 3.

50. Taken together, the provisions of the TA Act established a single overall power and function which indicated the single public purpose and did not support a limitation of the public purpose to a single project or component part of the broader metro.

51. Further, the facts do not support a finding that the two projects comprised separate parts of the public purpose, rather, the opposite, as:

1. The covering letter to the PANs, whilst referring to two projects, references a single public purpose: see [47(14)] above;

2. The announcement of Metro West on 14 November 2016 identified as a project within the broader metro network: see [47(2)] above;

3. On 14 December 2020, the decision to acquire 33 Bligh St merged the two projects. In fact, if the purposes were to be divided, the briefing note demonstrates that the acquisition of both the Acquired Land and 33 Bligh St was for the Metro West “public purpose”: see [47(8)] above;

4. The business case for Metro West converted the 33 Bligh St proposed acquisition status from a leasehold to freehold. The business case related to Metro West, and it demonstrated that the freehold acquisition of 33 Bligh St was precipitated by Metro West rather than Metro CSW: see [47(5)] above;

5. The commencement of acquisition letter sent to Alpha Distribution Ministerial Holding Corporation (see [47(10)] above) referenced an acquisition for the public purpose as a metro network, rather than any notion of dividing the projects. In addition, the acquisition of 33 Bligh St was said to ensure certainty of occupation for Sydney Metro past November 2021 and allow an access point without reference to any particular project; and

6. As part of the same letter there was a heading “Sydney Metro (Projects)”. The narrative identified the agency’s responsibility of Sydney Metro being the relevant public purpose. The narrative then splits into “four core Project components”, that is, each of the identified core projects were projects within the overall public purpose.

52. For each of those reasons, the Applicants contended that the public purpose was the single public purpose of the provision of the metro network, comprising, in part, Metro West and Metro CSW.

The Respondent’s position

53. The Respondent contended that the application of the statutory disregard required by s 56(1)(a) of the Just Terms Act only related to an acquisition for the public purpose for which the Acquired Land was acquired, namely, Metro West. The acquisition of 33 Bligh St was for two separate and distinct public purposes – Metro West and Metro CSW. As a consequence, s 56(1)(a) only permitted the disregarding of the Metro West public purpose, the Metro CSW public purpose would remain a public purpose that was not to be disregarded. Therefore, 33 Bligh St, as at the Date of Acquisition, was not available for redevelopment in conjunction with the Acquired Land, as it had been acquired for the Metro CSW and that acquisition was not to be disregarded.

54. The two distinct purposes were identified in the PANs and letter accompanying the PANs. The PANs identified that the freehold in 33 Bligh St was acquired for two or “dual” purposes, only one of which was the public purpose subject to the statutory disregard, namely, Metro West. The covering letter to the PANs stated that there were two distinct purposes for which the acquisition was required. The covering letter also noted that the acquisition of the Acquired Land was for both Metro West and Metro CSW.

55. There was no warrant to go behind the PANs and their covering letter in this case. The Acquired Land was “required” for the Metro CSW. Disregarding Metro West, the freehold of 33 Bligh St was acquired for the Metro CSW and was not available to amalgamate with the Acquired Land at the Date of Acquisition.

56. The consequence was that 33 Bligh St was not available for amalgamation as at the Date of Acquisition, and the Acquired Land therefore could not be valued on the basis of its potential to be amalgamated with 33 Bligh St.

Findings

57. It is apparent from the PANs that both the Acquired Land and 33 Bligh St were acquired for the purpose of the provision of a metro. The PANs issued in connection with each acquisition indicated that each property was acquired for the purpose of a part of the metro, namely:

1. The Acquired Land was acquired for Metro West; and

2. 33 Bligh St was acquired for Metro West and Metro CSW.

The question is whether the relevant public purpose was comprised by the identified part or the greater whole.

58. In determining the scope of the relevant public purpose the principles to be applied, as identified above, highlight that there are no strict rules for determining the public purpose at the appropriate level of generality, however, factors to be taken into account may include the degree of continuity and consistency of various elements of what is proposed and done, and fairness to both the claimant and the acquiring authority.

59. In the application of the relevant principles to the facts of this case, it is apparent that whilst there is a broad metro network that network is made up of a number of different lines (together with future proposals subject to investigation). Each of the lines provide separate stations and destinations, they do not interlink. Whilst it is described as a metro network it is apparent that each part of the network provides for the meeting of different demands for transportation in different localities. To the extent that the different lines may appear as operating as a single line, it is also apparent that the line was constructed as distinct parts of the network, for example, the termination of the Metro City line at Chatswood and its continuation on as the North West line: see The Sydney Metro Network (Exhibit 1).

60. With reference to the two components of the metro network, the subject of these proceedings, Metro West and Metro CSW, it is also to be observed that:

1. The two lines do not intersect;

2. The two lines do not share a station;

3. For the purposes of the movement of travellers between the two lines some common or interconnecting pedestrian infrastructure has been provided; and

4. The two lines were conceived at different times and were constructed at different times, albeit with some overlap in timing.

61. Having regard to the factors identified above, in this case, identifying the public purpose as the metro network as a whole is too broad to describe it as the public purpose for which the Acquired Land (or 33 Bligh St) was acquired. The distinct lack of consistency and continuity in the design, approval and construction of the two projects speaks to a separation of the public purpose by reference to each of the two projects, namely Metro West and Metro CSW. To cast the public purpose at the broad level of the metro network requires a disregard of the process of acquisition which indicated different decision-making and distinct acquisition processes for the timing and approval for each project.

62. In undertaking an assessment of the public purpose whilst it is relevant to consider the enabling legislative provisions there is no warrant that such provisions dictate the scope of the public purpose, there being a distinction between power and purpose: see Goldmate CA at [73].

63. The enabling legislation provides the Respondent with broad powers and functions in the context of the equally broad objects as provided for in the TA Act as they relate to the Respondent. In that context, the provisions speak of a metro network as a single enterprise. However, such provisions do not dictate the scope of such network. The elements of the network remain at the discretion of the Respondent (subject to approval and funding) and the timing and extent of the network is also left to the Respondent. Therefore, I consider that the legislative provisions, whilst relevant, do not dictate an overarching single public purpose of the metro network as a whole.

64. As to the terms of the PANs and the letter accompanying the PANs I do not accept that the PANs or the letter accompanying the PANs identifies a single public purpose. It is apparent when comparison is made between the PANs and letters sent to the Applicants and the PANs and letter sent to 33 Bligh St that the representation of the term “public purpose” for 33 Bligh St was linked to the identification of the two separate elements of the network described by reference to the separate and distinct project forming part of the whole, whereas the Acquired Land has a reference solely to Metro West.

65. To the extent that the reporting and approval documents were raised as being relevant to this determination, I consider that these documents identify the separation of the parts of the network into identifiable separate parts, by reference to a project name. To that extent, those documents support a construction of the public purpose as, in this case, two identifiable separate parts operating independently within the broader context of the overall metro network. Whilst in some documents (see, for example at [(47(8)] above) the impacts of Metro West and Metro CSW are identified as overlapping, I do not accept that such treatment identifies a “merging” of the two public purposes. Rather, such treatment is a recognition of two parallel purposes. A merging of the two projects would be indicated by the two projects being subsumed into a single enterprise, that did not occur.

66. Having regard to the lack of consistency and continuity between Metro West and Metro CSW, the facts of this case warrant the finding that, albeit part of the larger metro network, the public purpose for the acquisition of 33 Bligh St was for the two distinct and separate purposes of Metro West and Metro CSW.

67. For the above reasons, I determine that:

1. The public purpose of the acquisition of the Acquired Land was for the purposes of the Metro West; and

2. There were two distinct public purposes of the acquisition of 33 Bligh St. The public purposes for the acquisition of 33 Bligh St were for Metro West and Metro CSW.

68. The consequence of my finding above is that for the purposes of s 56(1)(a) of the Just Terms Act the acquisition for Metro West is to be disregarded and the acquisition of Metro CSW is not to be disregarded.

69. The disregarding of Metro West requires a determination of what the circumstances would have been absent the Metro West, but with Metro CSW. The Respondent contended that 33 Bligh St would be unavailable for the combined redevelopment. The Applicants contend that such an outcome is not certain.

70. The Applicants contended that if the acquisition for Metro CSW was not to be disregarded there would be no relevant impact upon the highest and best use of the Acquired Land for a combined redevelopment in conjunction with 33 Bligh St. The Applicants contention relies upon making certain factual findings, I will address these factors below.

If Metro CSW is a different public purpose, there was no impact on market value

71. Notwithstanding my finding as to the public purpose and the scope of the statutory disregard in s 56(1)(a) of the Just Terms Act as it related to 33 Bligh St, the Applicants contended that I would find that there would be no relevant impact on the determination of the highest and best use and therefore, upon the market value of the Acquired Land. The Applicants identified three factual scenarios that would be found to exist, any of which would influence the determination of the market value of the Acquired Land, as at the Date of Acquisition, as having the potential for 33 Bligh St to be redeveloped in combination with the Acquired Land.

72. The “three” scenarios in relation to 33 Bligh St were identified by the Applicants as:

1. Even if Metro CSW was a separate public purpose, if Metro West was to be disregarded there would have been no acquisition of 33 Bligh St. That is, that on the facts of the case, if Metro West was to be disregarded 33 Bligh St would not have been acquired at all;

2. In the alternative, if 33 Bligh St was taken to be acquired it would only be an acquisition of a leasehold interest and would only occur because of a failure to negotiate an extension to the Construction Lease; and

3. If the acquisition of 33 Bligh St was taken to have been an acquisition of the freehold rights:

1. That acquisition was motivated by Metro West, in which case the effect (on value) was causally connected to Metro West and as such is to be disregarded; or

2. In the further alternative, if there was a stand-alone acquisition for Metro CSW:

1. A planning proposal for the combined redevelopment of the Acquired Land together with 33 Bligh St would have been developed and lodged prior to the Date of Acquisition;

2. The planning proposal would have been suspended (not terminated) by the Respondent’s acquisition of 33 Bligh St;

3. The Respondent would have only utilised 33 Bligh St for construction up to 30 December 2024 and would have, at that date, released 33 Bligh St for sale in the open market; and

4. Upon the sale of 33 Bligh St in December 2024, the purchaser together with the owner of the Acquired Land would have immediately restarted the planning proposal process such that construction for the combined project would have been completed within the construction programming expected absent the acquisition of 33 Bligh St.

73. The Applicants asserted that on any of the above scenarios the highest and best use of the Acquired Land would be the combined redevelopment with 33 Bligh St. Depending upon which scenario is found, market value would, thereafter, be determined taking into account the impacts of time and assumptions as to the maturity of a planning proposal on such market value.

74. The first of the two factual scenarios, whilst identified as distinct by the Applicants, are interlinked and the outcome of each is codependent upon a finding of the hypothetical circumstances relating to 33 Bligh St which are necessary to be determined absent the Metro West public purpose. For that reason, I will address these outcomes together.

75. The two alternatives in the third scenario are divorced from each other. The first alternative raises a further application of s 56(1)(a) of the Just Terms Act as to whether the impact of the Metro West sufficiently motivated the acquisition such that the necessary causal connection arose to compel its disregard. The second alternative is unconnected to the first alternative. The second alternative raises for determination the same factual and causal matters raised for determination with respect to the potential for approval of a planning proposal for the combined redevelopment with 33 Bligh St. For those reasons, I will deal with the alternative scenarios separately.

Evidence

76. In addition to the evidence summarised above at [47], the parties identified the following evidence as relevant in determining the Applicants’ further factual scenarios identified at [72] above:

1. In the March 2016 briefing note – “Approval to Commence Acquisition 33 Bligh St Sydney”, approval was sought to acquire the freehold interest in 33 Bligh St.

1. The purpose of the acquisition was noted as:

As part of the development of the Reference Design for Sydney Metro City & Southwest, a number of issues have been identified with Martin Place Station that impact on the customer experience and constructability. These include:

surface pedestrian movements - initial pedestrian modelling suggests that a single entrance to Martin Place will mean periods of congestion and reduced walk times;

station cavern construction will be constrained to the use of two road headers;

traffic congestion - Castlereagh St is intended to be the route for construction traffic for both Martin Place and Pitt St stations, however buses have also been diverted onto this street to support the delivery of the CBD & Southeast Light rail.

These issues have prompted investigations to see if additional property acquisition would lead to improvements.

A timely opportunity is the availability of 33 Bligh St for acquisition (see Attachment A).

2. The availability for acquisition was noted as:

Ausgrid acquired 33 Bligh Street from lnvesta Property Group in about 2009 for a new electricity sub-station site to replace the existing City East Substation at Woolloomooloo.

Demolition of the existing building on the Bligh St site has commenced, and is approaching completion.

However, Ausgrid has recently determined that it no longer requires the site for a sub-station, and has approached Sydney Metro City & Southwest to establish its interest in acquiring the property.

3. The advantages to the project were identified as:

Key advantages to the CSW project that acquisition allows include:

an additional station entry to Martin Place via an underground pedestrian connection (from Bligh and/or O'Connell streets), to aid distribution of Metro (and possibly Sydney trains), customers into the CBD north precinct;

a potential location for early mining of the platform cavern, and an improvement in the overall construction program for Martin Place Station through increasing road header access from 2 to 4 machines. This could reduce the excavation program for Martin Place considerably;

provision of direct access to the Eastern Distributor via Hunter Street for heavy construction vehicle access, independent of Elizabeth and Castlereagh Streets, thus reducing street congestion impacts of construction.

…

4. It was noted that Ausgrid and Investa had entered into an agreement that provided Investa with a put and call option to purchase the airspace above the site after Ausgrid completed its substation development. As to the impact on the proposed acquisition of this agreement it was noted:

Ausgrid has confidentially advised that Investa may be amenable to a mutual termination of the option agreement subject to the parties agreeing an amount of compensation. TfNSW's preferred outcome would be for Ausgrid and Investa to agree to the termination of the option agreement prior to it acquiring the property from Ausgrid. Accordingly, any such agreement needs to be completed before the end of March 2016.

If the Investa option agreement is not terminated by agreement, the preferred option proposed by CSW's legal advisor (draft legal advice at Attachment C) is to extinguish the option over the property. This will result in a liability for TfNSW to pay compensation to Investa, but ensure maximum flexibility to:

Optimise the design of the access and ancillary infrastructure associated with Martin Place Station;

Consider opportunities for Over Station Developments, without the encumbrance of any existing commercial agreements; and

Enable appropriate time to explore development opportunities.

…

5. With respect to the financial impact of the acquisition it was noted:

…The net financial impact of acquiring, developing, and re-selling the property at 33 Bligh St. is estimated to be neutral (conservatively). Additional opportunities to increase value are yet to be explored.

…

2. The Environmental Impact Statement (EIS) for Metro CSW in May 2016:

1. Identified a potential connection through to 33 Bligh St from the Martin Place Metro station: the diagrammatic depiction of “potential underground connection to Bligh Street (subject to further investigation)” is reproduced as Annexure A hereto. It was stated that:

Further investigations are currently being carried out in relation to an underground pedestrian connection at the northern end of the Martin Place Station platform concourse to 33 Bligh Street. The connection would be at platform level leading to an exit via escalators to street level at O’Connell Street and / or Bligh Street. Provision of this connection would aid in the distribution of Metro and Sydney Trains customers into the northern Sydney CBD precinct, from Martin Place Station. A connection from the station to the 33 Bligh Street could also help separate metro customers from vehicular traffic movements at the Castlereagh Street / Hunter Street intersection.

Further investigations are being carried out to refine the optimal station entrance location for the pedestrian connection to 33 Bligh Street.

2. The construction methodology was addressed as follows:

Initial investigations have been carried out to determine the construction activities required for the underground pedestrian connection to 33 Bligh Street. These investigations have identified:

Demolition of the site has recently been carried out under a separate approval by Ausgrid

Excavation of the underground pedestrian connection would be via a mined technique to avoid cut-and-cover works across Hunter Street

Construction of the pedestrian access for the station would be carried out from 33 Bligh Street towards the main station shaft, with spoil removal from 33 Bligh Street and 12 O’Connell Street

Spoil removal, and associated truck movements would load and unload from both Bligh Street and O’Connell Street, via Hunter Street to the Eastern Distributor.

Further investigations are currently being carried out to refine the construction methodology, and potential impacts.

…

3. Chapter 3 of the EIS – “Clarifications with Additional Investigations” provided with respect to the pedestrian connections that continued negotiations were ongoing with Ausgrid regarding the use of 33 Bligh St. It identified further details as to the need and justification as:

Chapter 9 (Operational traffic and transport) of the Environmental Impact Statement identifies that additional pedestrian crossing capacity may be needed at the intersection of Hunter and Castlereagh streets as a result of the proposed Martin Place metro station. As a result, an underground pedestrian connection between the metro station and O’Connell Street and / or Bligh Street was identified as one possible response, with a potential entry / exit at 33 Bligh Street. The site for the entry / exit point was identified on the basis of the opportunity provided by the current development work being carried out by Ausgrid (which is the landowner). The major benefits of an underground pedestrian link at this location would include:

Reduced pedestrian queuing and congestion at the intersection of Hunter and Castlereagh streets and adjoining footpaths (particularly Hunter Street)

Improved safety, with a reduction in informal crossings in the general vicinity of this intersection

Improved operational performance of the metro station by:

simplifying pedestrian movements at platform level at the northern station entry

splitting pedestrian demand and reducing congestion on the escalators at the northern station entry,

Transport for NSW has continued its investigation into this option in consultation with Ausgrid. However, at this stage, it has determined that it would be necessary for any design and fit-out associated with an additional station entry / exit at this location to be incorporated into the future architectural design and construction of the new building at 33 Bligh Street. This building currently has a Concept and Project approval under Part 3A of the Environmental Planning & Assessment Act 1979.

As part of the construction of Martin Place metro station, it is now proposed to excavate the tunnel for the underground pedestrian link (refer to Section 3.3.2). This construction work would be in addition to work assessed in the Environmental Impact Statement. However the provision and fit out of the station entry / exit would be subject to a separate assessment and approval process given the need for it to be integrated into the proposed building development at this site.

This is a similar approach to future over station developments, in that the future underground connections would be designed and constructed to account and provide for the physical provision for potential elements associated with the station entry and pedestrian link.

Transport for NSW is continuing to negotiate with Ausgrid regarding the use of this site and to ensure appropriate planning and legal mechanisms are in place to maintain the opportunity for this site as a future entry / exit for Martin Place Station.

4. In August 2016, there was a project update for Metro CSW that noted:

…The EIS outlined that a potential underground pedestrian link between Martin Place and O’Connell Street was being investigated and would form part of a further assessment.

The project has completed the assessment and now proposes to include the future underground pedestrian link as part of the project’s scope.

Transport for NSW will continue to liaise with the owner of the site around opportunities for the underground pedestrian link to become a future station entry to the new Martin Place Metro Station. If the site were to become an additional station entry it would be subject to a separate assessment and approvals process.

Key site activities

The proposed underground pedestrian link would run between the 33 Bligh Street and the Martin Place North construction site (see map overleaf).

In addition to enabling a future station entry, the site would support the excavation and construction of the new Martin Place Metro station and provide an overall reduction in the duration of impacts associated with construction. Construction activities proposed at the site are consistent with those identified in the EIS and would involve:

Excavation of a shaft

Excavation of underground connections from the shaft using a mined technique

Support the excavation of the Martin Place station caverns.

5. In August 2017, briefing note #2, #3 and #4 relating to Metro CSW sought approval to acquire a construction lease over 33 Bligh St: In order to improve the constructability of Martin Place Station. It stated as one of the key reasons:

Following detailed investigations, the Land (Attachment D) was identified as the most suitable location for construction access for the Martin Place Metro Station and the construction works for the Sydney Metro City & Southwest Project. The use of the Land for construction of the station will provide an overall reduction in the duration of impacts associated with construction.

6. In November 2019, Sydney Metro sought approval for the exercise of the Construction Lease option. The briefing note stated that:

The site is critical to the constructability of Martin Place Station and the City & Southwest Project and therefore continued occupation of the site is required.

The reasons given were:

The Land was identified as being the most suitable location for construction access for the Martin Place Metro Station and the construction works for the City & Southwest Project.

The exercise of the option term will allow critical works to continue in order to improve the constructability of the Martin Place Metro Station and will provide an overall reduction in the duration of impacts associated with construction.

The tunnelling contractor will require continued access from 33 Bligh Street to the Martin Place Station cavern until at least the end of October 2020. Other Sydney Metro C&SW contractors will then require access from the site until the end of the new sublease term (01 November 2021). Continued access from the site is essential to meeting critical milestones for the C&SW project program.

7. On 30 November 2020, briefing note #1 – “Approval to Commence Property Acquisition, Sydney Metro Projects, 33 Bligh St Sydney” stated:

Purpose: To seek the Chief Executive’s approval to commence property acquisition of all affected freehold, leasehold and associated substratum interests at 33 Bligh Street, Sydney (Lot 1 in Deposited Plan 626651) Attachment A – for delivery of both Sydney Metro’s City & Southwest and Metro West projects (the Projects), as authorised under Section 38C and clause 11 of Schedule 1 of the Transport Administration Act 1988 (NSW) and in accordance with the Land Acquisition (Just Terms Compensation) Act 1991.

Analysis: In order to deliver vacant possession of 33 Bligh Street, Sydney within the timeframes required for the Projects, it is necessary for Sydney Metro to commence the property acquisition process, noting the following:

City & South West (CSW) – currently occupies the whole of 33 Bligh Street under a construction lease agreement with Ausgrid which is required for delivery of the Martin Place metro station. This agreement was recently extended under its final option term to renew the lease through to 1 November 2021.

CSW will require ongoing occupation of 33 Bligh Street beyond the current November 2021 construction lease expiry date. Occupation of this site will be required through to operations (2024) to enable the delivery of the CSW Trains, Systems, Operations and Maintenance (TSOM) and Line-wide delivery packages.

Sydney Metro West (MW) – In addition to the CSW requirements, acquisition of 33 Bligh Street will provide Sydney Metro with a central CBD location which will support MW construction activities and place-making relating to a Sydney CBD station.

In summary, the acquisition of 33 Bligh Street will provide Sydney Metro with the certainty required to maintain its central CBD CSW construction site post November 2021, and will provide MW with a central CBD location which would support construction works and placemaking associated with a Sydney CBD station. The Sydney CBD location for MW is subject to further design work and a statutory planning approval process.

Reason for deadline: Property acquisition is a critical path activity for delivery of both Projects. It is essential that following NSW Government approval, property acquisition process commences in order to mitigate any delays to the delivery programs.

No acquisition of 33 Bligh St; acquisition only for leasehold interest

Applicants’ position

77. The Applicants contended that if Metro CSW was a separate public purpose and not required to be disregarded pursuant to s 56(1)(a) of the Just Terms Act, on the facts the acquisition of 33 Bligh St was “infected” by the necessity to acquire 33 Bligh St for Metro West. That is, it would not necessarily follow that absent Metro West the acquisition of 33 Bligh St would have occurred.

78. Absent Metro West, there was no need for any acquisition of 33 Bligh St because 33 Bligh St was only required for construction purposes for Metro CSW. As the Construction Lease was in place (and not to be disregarded) there was no necessity for further acquisition beyond the lease to give effect to Metro CSW as it related to 33 Bligh St. There was capacity to extend the Construction Lease, which had been foreshadowed in the letter to Ausgrid dated 10 September 2018 (see [47(4)] above). Nothing further was required.

79. Accordingly, whilst Metro CSW may have been a separate public purpose because the acquisition of 33 Bligh St was also acquired for the purpose of Metro West it does not follow that the acquisition of 33 Bligh St would have occurred anyway and it is open to the Court to conclude that there would in fact have been no “acquisition”, and certainly no compulsory acquisition, of 33 Bligh St.

80. If, however, some further steps were required to facilitate Metro CSW such steps would be limited to construction purposes only. Construction of Metro CSW was only required until 2024 (see [76(7)] above). Therefore, any acquisition would be limited in time and the land released back to the owner of the freehold in 2024.

81. Alternatively, if acquisition of the freehold of 33 Bligh St was found, again, such acquisition would only be to facilitate construction of Metro CSW to 2024. At completion of construction at the end of 2024, 33 Bligh St would be released by sale back into the open market.

Respondent’s position

82. The Court should accept the clear statement in the PANs for 33 Bligh St (at [47(14)] above) that the freehold of 33 Bligh St was required to facilitate Metro CSW. There is no warrant to go behind the clear evidence in the PANs, to determine the purposes for which the land at 33 Bligh St was acquired.

83. If the Court were to look behind the PANs, a consideration of the long history of Sydney Metro's engagement with 33 Bligh St does not support a finding that there would be no acquisition. That is, as follows:

1. In 2016, 33 Bligh St was initially identified for freehold acquisition as part of the Metro CSW. However, negotiations pivoted to a construction lease in favour of Sydney Metro over 33 Bligh St. On 8 August 2017, the construction lease was entered into. At that point in time in 2017, a construction lease with options extending to November 2021 was considered to be sufficient. That early estimate later proved to be inadequate;

2. The acquisition of the freehold in 33 Bligh St was once again contemplated by Sydney Metro around mid-2019, this time for the then proposed Metro West. The briefing note prepared for the Chief Executive dated 30 November 2020 (see [76(7) above] identified that Metro CSW would require ongoing occupation of 33 Bligh St beyond the current November 2021 construction lease expiry date; and

3. 33 Bligh St was said to be a “critical path activity for delivery of both Projects”.

84. The Court should accept the explanation given in a briefing note for the Chief Executive: the acquisition of 33 Bligh St would provide Sydney Metro with the certainty it required for the construction of Metro CSW.

85. Any acquisition of the freehold of 33 Bligh St should be taken to be for an unlimited time. There is no evidence to support a finding that 33 Bligh St would be released back into the open market at the end of 2024 even if the acquisition was limited to construction purposes as:

1. Sydney Metro has powers that include redevelopment – the contemplation of redevelopment of 33 Bligh St as part of Metro CSW was identified in 2016: see [76(3)] above;

2. The Respondent’s dealing with “surplus” metro land had not demonstrated a pattern of release back on the open market; and

3. As at the Date of Acquisition, any uncertainty as to whether the Respondent would retain 33 Bligh St at the conclusion of construction would operate against an assumption of its availability in 2024 and therefore, also operate against the hypothetical sale of the Acquired Land being undertaken on the highest and best use of the Acquired being a combined redevelopment with 33 Bligh St.

86. Metro West was not the “true motivating element” of the acquisition of the freehold of 33 Bligh St. To accept the Applicants’ position would require the Court to engage in a fact-intensive counterfactual exercise to consider what Sydney Metro would have done if 33 Bligh St were not acquired for the purpose of Metro West. That would be a speculative exercise.

Findings

87. In light of the finding above that Metro CSW was a separate public purpose and not to be disregarded for the purposes of s 56(1)(a) of the Just Terms Act, it is necessary to determine what effect such an assumed circumstance would have on the Acquired Land and 33 Bligh St as at the Date of Acquisition.

88. The fundamental element of the Applicants’ case is that absent Metro West the Acquired Land would not be acquired, and 33 Bligh St would only be required for construction purposes and if so, required only for a limited period until 2024. Such a contention, however, is predicated upon viewing the utility of 33 Bligh St through the lens of what in fact occurred with both Metro West and Metro CSW being undertaken at the relevant time. The lens is contrary to what s 56(1)(a) of the Just Terms Act requires, which is the disregard of the impact on value caused by Metro West. In the circumstances of this case, that involves disregarding the necessity for freehold acquisition for Metro West and determining what would likely have been the situation if that acquisition had not occurred.

174. Having regard to the correspondence either alone or in conjunction, it is not apparent that the Council’s position would be refusal as a consequence of the public purpose. The first letter (see [118(33)] above) made detailed assessment of the merits of the PSI Concept as prepared by the Applicants. The Council indicated that it was inviting the Applicants to consider the observations relating to the merits and provide further information in any later submission. The letter identifies merit considerations. The reference to the Sydney Metro was a factual observation and was not a request for the application to be withdrawn or an invitation to assume that further applications would be rejected, instead, it was a request to be kept informed.

175. The second letter (see [118(39)] above) was the Council progressing the application for consideration by the DAP. That panel considered and again made merit assessment of the proposed PSI Concept. The reference to the Metro was not an indication of a position of refusal, but rather an invitation to resubmit a proposal that addressed the concerns raised by the DAP, in the event that: if the opportunity to proceed remains, we encourage you to continue working with the City to refine your proposal to meet the Central Sydney Planning Framework.

176. Neither letter, either expressly or impliedly, indicated that due to the public purpose the Council would not proceed to consider any application. Such a finding is also consistent with the broader context of the PSI Concept, including the conversations with Mr Jahn and the Applicants’ responses to the correspondence. There is no evidence of the conversations with Mr Jahn (or any other Council officer) that indicate that an application would be refused due to the public purpose. To suggest that the Council was influenced by the public purpose to refuse any application for a planning proposal on the Acquired Land is patently inconsistent with the Council’s actions where it: considered the application made; assessed the merits of the application; and referred the application for consideration by the DAP. Further, after the issue was first raised with Mr Coombes in the first letter, the Applicants pursued the PSI Concept denouncing any impact, at that time, of a public purpose on the determination of the PSI Concept: see [118(35)] above.

177. On the evidence, at no time did the Council refuse or discourage the making of a planning proposal for the Acquired Land. Further, at no time did the Council refuse or discourage the making of a planning proposal for the redevelopment of the Acquired Land in conjunction with 33 Bligh St as no such proposal was ever raised with the Council for consideration. Notwithstanding the Council’s clearly stated preference that to support a development proposal in excess of the base planning controls the Acquired Land should be amalgamated with adjoining land, at no time did the Applicants pursue such approach. Such a position is significant in light of the Applicants’ conclusion at [119(3)] that the prospect of an approval absent amalgamation was futile.

178. What is apparent from the interactions with the Council was that Council’s reluctance to endorse the planning proposal related to its assessment that on merit the development on the Acquired Land alone at such a density could not be supported. Such factors were unrelated to the public purpose.

179. The failure of the Applicants to pursue any application for a planning proposal – either in the form of the Updated PSI Concept or in conjunction with 33 Bligh St – was caused by the decisions taken by the Applicants independent of the proposal to carry out the public purpose. That is, the public purpose had no causal significance in the failure to take the steps necessary to obtain the support of the Council and obtain a rezoning of the land by pursuing a planning proposal. Such actions by the Applicants are not to be disregarded by operation of s 56(1)(a) of the Just Terms Act: see Drivas at [59].

180. For those reasons, there is no evidence that would justify, on balance, a finding that the Council had determined to reject any application on the Acquired Land alone or in conjunction with adjoining land due to the public purpose.

Pivot to USP

184. Whilst Mr Coombes and the Applicants refer to a Pivot Decision, the relevance of such decision and the extent of this decision to the matters for determination remain unclear.

185. First, the Pivot Decision was described at [118(27)] above as a shifting of focus. The shifting of focus was not an abandonment of the planning proposal for the Acquired Land but rather the introduction of a “parallel” proposal comprising the USP. Whilst Mr Coombes considered the financial benefits of the USP warranted its pursual, he never abandoned or disengaged from the planning proposal. Such is apparent from the effort that was expended upon by the planning proposal after the Pivot Decision: see [118(30)-(31)], [118(33)], [118(35)], [118(37)] and [118(39)] above.

186. Secondly, it seemed to be suggested that the apparent support for the USP had an effect upon the pursuit of the planning proposal in that it shifted focus. Again, such is inconsistent with the contemporaneous evidence. It is apparent that there were two projects underway in the period from March 2020, but as identified above, each project was pursued. CPG remained actively engaged with the planning proposal whilst also engaging with the USP.

187. To the extent relevant, I also reject the suggestion that the apparent support of the USP was a causal connection in the Pivot Decision such that the pivot, if it had any impact on value, was to be disregarded under s 56(1)(a) of the Just Terms Act. The contended encouragement by Government Departments (including the acquiring authority) for the USP is not borne out on the evidence as having a causal connection. The USP was a proposal developed by the Applicants and their partners – not a proposal invited by the Government or the acquiring authority. The meeting to which the Applicants derive the notion of “encouragement” was a preliminary meeting in the process of the unsolicited proposal. Such a positive remark at such an early stage of the process cannot be found to be one upon which the Applicants can rely as inferring a causal link between its actions and the public purpose. The USP process, as it developed in this case, was wholly caused by the decision-making of the Applicants and not caused by the proposal to carry out the relevant public purpose.

188. Further, as any pivot to the USP, such decision was made independently of any Council position. As Mr Coombes deposed, his decision was motivated by identifying a potential solution to maintain CPG's valuable development rights above any proposed metro station: see [118(27)] above.

189. At the time the USP was developed there had been no identification of the location of any potential Metro West station. Mr Coombes deposed that the USP was in fact an invitation to provide the station on the USP land, a position not reflective of the proposal for the public purpose yet identified by the Respondent. He did so to increase the value of the Acquired Land, not in response to a reduction in the value of the Acquired Land.

190. The Applicants’ pivot was to exploit the uncertainty of the possible acquisition to invite its land to be included in the public purpose for the resultant financial benefit. Such decision was not caused by the carrying out of, or the proposal to carry out, the public purpose rather it was an independent decision made by the Applicants.

191. For those reasons, I find the Pivot Decision, on any construction, is not to be disregarded pursuant to s 56(1)(a) of the Just Terms Act.

Would combined redevelopment with 33 Bligh St have been pursued?

192. On the evidence of this case, even if the Applicants had established that the Council’s position on redevelopment had been caused by the public purpose, or that the Pivot Decision was caused by the public purpose, I would not find that the Applicants would have pursued the combined redevelopment with 33 Bligh St as at the Date of Acquisition for the reasons that follow.

193. The first compelling reason is that the Applicants had eschewed amalgamation with adjoining sites at all stages of its dealings with the Council with respect to the redevelopment of the Acquired Land. It is apparent that at each stage of dealing with the Council the Applicants had limited their redevelopment proposals to the Acquired Land as was demonstrated by the following:

1. The Council first raised the issue of amalgamation prior to the purchase of 28 O’Connell: see [118(8)] above;

2. The response was to prepare the Concept Assessment and the Crone Concept Study which limited the proposed development to the Acquired Land: see [118(5)-(9)] above. Mr Coombes deposed as to his belief that a redevelopment of the Acquired Land alone would provide a more profitable use than the current use of the Acquired Land: see [118(4)-(9)] above;

3. Discussions continued with the Council indicating that amalgamation with other sites should be considered: see [118(18)] above; and

4. The response to Council as a consequence of these discussions was to pursue the development of the Acquired Land and seek to justify why amalgamation was not desirable: see [118(23)(b)] above.

194. Whilst the Applicants submitted that as at the Date of Acquisition the Applicants had pursued amalgamation and made material progress to achieve amalgamation such that it would continue to do so absent the public purpose (see, for example, at [127] above) such a submission is not borne out on the evidence as:

1. The Applicants had commissioned studies to identify amalgamation opportunities with 33 Bligh St and 37 Bligh, however, none of the proposals identified in those studies had been developed into a proposal ever submitted to the Council;

2. None of the amalgamation studies that included 33 Bligh St had been discussed with the owners of 33 Bligh St;

3. No fruitful discussions had been had with any adjoining owner as to combined redevelopment apart from the USP, for example:

1. The discussions with 37 Bligh had been abandoned due to a failure to reach agreement on price;

2. As to 33 Bligh St, apart from the single conversation with Mr Lowry as detailed at [118(20)] above, the content of which is merely to continue to work together, there is no evidence of pursuing such loose agreement or consideration on the part of the Applicants that would support a finding of a substantive desire to pursue a combined redevelopment with 33 Bligh St; and

3. As late as December 2019, Mr Coombes wrote to Sydney Metro (see [118(25)] above) describing the redevelopment potential of the Acquired Land as being a planning proposal related to the Acquired Land.

195. To the extent that Mr Coombes deposed that he would have continued to pursue redevelopment with adjoining properties including 33 Bligh St it is not apparent what he is suggesting would be “continued”. To the extent that he suggests some proposal was on foot for any type of combined redevelopment scheme in addition to the Acquired Land I cannot accept his evidence as it is unspecific assertions contrary to the contemporaneous documentary evidence.

196. Whilst an inference could be drawn that the Council was unlikely to approve any redevelopment of the Acquired Land of a type that required the making of a planning proposal absent some combined redevelopment with the adjoining land, the Applicants actions were not to pursue a development proposal to facilitate the Council’s preferences, rather, the Applicants actively sought to convince the Council to change its position on amalgamation.

197. For each of these reasons, I find that the Applicants would not, as at the Date of Acquisition have pursued amalgamation of the Acquired Land with 33 Bligh St.

USP as a proxy?

198. A fundamental aspect of the Applicants’ case was that if the Applicants were to be taken to have been proceeding to achieve a combined redevelopment of the Acquired Land with 33 Bligh St by way of a planning proposal, such planning proposal would have been approved, or an approval imminent, as at the Date of Acquisition. Absent such finding, the Applicants’ case would not have supported a determination of market value on the basis of the combined redevelopment being the highest and best use of the Acquired Land.

199. The foundation for the Applicants’ case was that a finding would be made that the Applicants and those with an interest in 33 Bligh St would have acted to pursue the planning proposal with the same commitment and speed that was demonstrated in the development of the USP. The Applicants contended that, to that extent, the USP was to be taken as a “proxy” for the Refined Grimshaw Scheme.

200. On the evidence in this case, I do not accept that the USP can be found to be a proxy for the combined redevelopment of the Acquired Land and 33 Bligh St for the reasons that follow.

201. The most compelling reason to distinguish the USP from a planning proposal is that the USP was developed to respond to the yet undetermined location of a metro station to serve Metro West. In that context, the USP had to be developed and submitted to the Department of Premier and Cabinet before any definitive decision was made as to the location of any proposed metro station near the Acquired Land. The goal of the USP was to convince the NSW Government to determine the location of such a metro station on the Acquired Land. There was, therefore, an urgency that the USP be prepared and submitted prior to the NSW Government making a decision as to the metro station location.

202. The state of the relationship between the interest holders was reflective of the state of urgency. First, 37 Bligh, which land formed part of the USP was not a party to the USP. Secondly, Ausgrid although named in the USP had not committed to any proposal. The position of Ausgrid is identified in paragraph 3 of the heads of agreement with Mirvac at [118(38)] above. Thirdly, whilst having executed the heads of agreement, Mirvac had not negotiated any sale from Ausgrid, nor was there any evidence that any steps had been taken by Mirvac to finalise a sale price. Finally, the parties, whilst pursuing the USP had made no agreement as to the commercial arrangements that would need to be put in place to facilitate the construction of the USP if approved.

203. The Applicants past actions in connection with the PSI Concept planning proposal also speaks against an acceptance that all of the necessary parties would have acted with expedition absent the time imperative that influenced the preparation of the USP. If the PSI Concept proposal is examined, it is revealed that it took around 3 years to develop the first set of architectural plans to be submitted to the Council for consideration. The comments from the DAP indicated that the proposal required further consideration before the Council would support the planning proposal. The expectation that a combined redevelopment proposal would be undertaken in less time is not supported on the evidence.

204. The Applicants also contended that the Refined Grimshaw Scheme was sufficiently similar to the USP that the Court would find that there would be support for that scheme from 33 Bligh St. I do not accept that submission. I accept the Respondent’s submission that there is simply no evidence to enable a meaningful comparison between the Refined Grimshaw Scheme and the USP. It is not only issues of architecture but also cost and return that would influence a commercial acceptance of the Refined Grimshaw Scheme, there is no evidence as to the impacts of the excision of 37 Bligh and the station components of the USP. Further, from the evidence there is no indication that either Mirvac or Ausgrid have ever considered the Refined Grimshaw Scheme. Mr Waters’ evidence as to a likelihood of continuing discussions with respect to a combined redevelopment (see [118(49)] above) do not refer to the Refined Grimshaw Scheme but are limited to the scheme that it had expended energy and money, namely the USP.

205. It is submitted that the financial benefits of the Refined Grimshaw Scheme were so obviously apparent that the Court would find that the redevelopment in combination was as good as a foregone conclusion. This submission is difficult to establish on the evidence. First, there has been no separate valuation of 33 Bligh St as at the date of valuation taking into account all of its potentialities including the availability of the Tower Cluster Area benefits. The only evidence of value of 33 Bligh St are based upon statements made by Ausgrid in connection with the compulsory acquisition. The foundation of such valuations is unknown. Absent evidence of value the financial benefit to 33 Bligh St cannot be ascertained.

206. Secondly, the value that is said be self-evident is derived from the outcome of a necessary commercial arrangement between the parties. The Applicants ask the Court to accept that a commercial arrangement would be resolved consistent with the assumed commercial arrangement relied upon by their valuer, Mr Hillier. However, contrary to the assumption made by Mr Hillier, the evidence discloses that there are a variety of commercial arrangement that are commonly entered into for combined redevelopments of the kind suggested in these proceedings, of which Mr Hillier’s commercial arrangement is only one. In addition, there is no evidence adduced from Ausgrid, the owner of 33 Bligh St or Mirvac as the beneficiary of the put and call option as to whether it would have been prepared to enter into a combined scheme at the commercial arrangement as assumed by Mr Hillier. The terms of any commercial arrangement is critical to the determination of the market value of the Acquired Land is extremely relevant, as absent an agreement on the terms posed by Mr Hillier, the market value of the Acquired Land may vary vastly. Absent evidence of Ausgrid’s commercial requirements, the nature of the commercial arrangement that would be entered into to facilitate the combined redevelopment scheme is pure speculation.

207. The Court is also asked to accept that such an arrangement would be resolved within a short timeframe – within the time as identified in Ms Swan’s figure 25 at Annexure B which indicates “continued engagement with adjoining landholders” commencing in January 2020 and completed within 10 months. As found above, the evidence does not support that there were any substantive discussions, let alone agreement, between the Applicants and 33 Bligh St as to a combined redevelopment of those sites independent of the USP. Whilst Ms Swan’s timeline indicates that it may be possible for parties to obtain a planning proposal within her identified timeframe such is not enough to substantiate the Applicants’ claim. What is necessary is that the Applicants establish, on the balance of probabilities, that they would have obtained the planning proposal: Noubia at [121]-[122]. For the reasons outlined, the Applicants have failed, on the evidence, to establish such probability.

208. For those reasons, I find that even if I assume that the Applicants would have pursued a combined redevelopment with 33 Bligh St, I find that such redevelopment proposal would not have been finalised or imminent as at the Date of Acquisition.

Availability of 33 Bligh St in the short to medium term

209. The Applicants also contended that as at the Date of Acquisition a hypothetical purchaser of the Acquired Land would have had a reasonable expectation that 33 Bligh St would be released into the market and available in the short to medium term for redevelopment in conjunction with the Acquired Land. I do not accept such a finding is open on the facts.

210. First, as I have found that the freehold of 33 Bligh St would have been acquired such an expectation would be unreasonable. The powers of the Respondent include redevelopment of surplus land. The evidence from the annual reports of the Respondent indicates that there was no consistent manner of dealing with land upon completion of Sydney Metro’s construction. Whilst some land was released and some land was, by joint venture, redeveloped not all was. Further, the timeframe for making such decisions relating to surplus land was not short. In those circumstances, at the Date of Acquisition, a hypothetical purchaser would be merely speculating as to the future availability, if any, of 33 Bligh St.

209. Secondly, the reliance of the Applicants of a release to the market in around 2024 was based upon its contention that 33 Bligh St was only required for construction. I have, for the reasons outlined above, rejected such a finding.

210. I therefore find that as at the Date of Acquisition a hypothetical purchaser would not determine the market value of the Acquired Land upon an expectation of redevelopment in conjunction with 33 Bligh St.

211. Accordingly, as at the Date of Acquisition the highest and best use of the land would not be a combined redevelopment with 33 Bligh St.

Disturbance

214. The parties have reached agreement in relation to losses attributable to disturbance pursuant to s 59(1)(a) and (b) of the Just Terms Act in the following amounts:

1. Telado in the total amount of $565,085.65 comprising:

1. Legal fees – $469,000.23; and

2. Valuation fees – $96,085.42.

2. CFT 8 in the total amount of $565,085.65 comprising:

1. Legal fees – $469,000.23; and

2. Valuation fees – $96,085.42.

215. The Applicants also claim losses attributable to disturbance pursuant to s 59(1)(c)-(e), and in the alternative 59(1)(f) of the Just Terms Act in the form of costs associated with the purchase of replacement property. Specifically, the Applicants claim legal fees on the purchase of replacement property, stamp duty, and mortgage establishment costs.

216. The Applicants claim for disturbance is on the same basis as was raised in Drivas CA. In Drivas CA, it was held that the claims for stamp duty and mortgage cost under s 59(1)(f) of the Just Terms Act could not be maintained: see Drivas CA at [115]-[121].

217. The Applicants contended that the decision in Drivas CA as it related to the disturbance claim was without foundation.

218. I note the submissions made. I am bound by the decision in Drivas CA and as the claim in this case is subject to the findings in Drivas CA and the submissions only raise issues of purported error in the decision of Drivas CA, I find the claim for stamp duty, mortgage and legal costs cannot be sustained.

Conclusion

219. For the reasons outlined above, I find that:

1. The public purpose for the acquisition of the Acquired Land was for the purpose of Metro West.

2. The decrease in value to be disregarded as a consequence of the carrying out of, or the proposal to carry out, that public purpose that is to be disregarded for the purpose of s 56(1)(a) of the Just Terms Act is the acquisition of the Acquired Land.

3. The Acquisition of 33 Bligh St is not to be disregarded as:

1. Absent the public purpose the freehold of 33 Bligh St would have been acquired by the acquiring authority for Metro CSW; and

2. The hypothetical purchaser would not have considered that the acquisition of the freehold of 33 Bligh St for the purposes of Metro CSW would give rise to a reasonable expectation that 33 Bligh St would be available in the short or medium term to enable development of the Acquired Land in conjunction with 33 Bligh St.

4. The decisions made by the Applicants prior to the Date of Acquisition:

1. Not to pursue a planning proposal for a combined redevelopment with 33 Bligh St; and/or

2. To pursue the USP

to the extent that that resulted in the reduction in value of the Acquired Land (when compared to a situation where such choices were not made) such reduction in value was caused solely by reasons other than the public purpose for which the Acquired Land was acquired are not to be disregarded.

5. As at the Date of Acquisition the highest and best use of the Acquired Land was for the current use of the Acquired Land without a capacity to development in conjunction with 33 Bligh St.

220. In light of the findings above, the market value of the Acquired Land is determined in the agreed sum of $200,000,000 to be apportioned between the Applicants on a pro rata land size basis in the following amounts:

1. Telado: $53,750,000 plus disturbance as agreed; and

2. CFT 8: $146,250,000 plus disturbance as agreed.

Determination of compensation

221. In proceedings 2022/00391925 compensation under Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act), for the compulsory acquisition of Telado Pty Ltd’s interest in land in Certificate of Title Lot 1 in DP 59871 and Lot 2 in DP 217112 which were contained in Auto Consol 13536-104 known as 48 Hunter Street, Sydney NSW, is determined in the sum of $54,315,085.65 plus statutory interest being payable under sections 49 and 50 of the Just Terms Act.

222. In proceedings 2022/00391937 compensation under Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act), for the compulsory acquisition of CFT No. 8’s interest in land in Certificate of Title Lot 1 in DP 217112, Lot 1 in DP 536538 and Lot 1 in DP 1107981 which were contained in Auto Consol 11304-164 known as 28 O’Connell Street, Sydney NSW, is determined in the sum of $146,815,085.65 plus statutory interest being payable under sections 49 and 50 of the Just Terms Act.

223. Costs in each of the proceedings are reserved.

224. The proceedings are listed for mention at 9.30am on 22 May 2025 on the question of costs.

Annexure A

Annexure B

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Decision last updated: 08 May 2025