Council of the City of Ryde v Azizi

[2019] NSWSC 1605

Supreme Court

New South Wales

Medium Neutral Citation:

Council of the City of Ryde v Azizi [2019] NSWSC 1605

Hearing dates:

30 September 2019, 1 October 2019

Date of orders:

20 November 2019

Decision date:

20 November 2019

Jurisdiction:

Common Law

Before:

Payne J

Decision:

(1) A declaration that the Determinations of Compensation made by the Third Defendant (Valuer General’s reference VVGC.JT02800 dated 21 December 2018 and Valuer General’s reference VVGC.JT02799 dated 21 December 2018) (“the Determinations”) purportedly pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (“the Act”) and in relation to the Plaintiff’s compulsory acquisition of land identified as Lot C in Deposited Plan 410408 (known as 86 Blenheim Street, North Ryde) and Lot D and Lot E in Deposited Plan 410408 (known as 12A and 14 Epping Road, North Ryde) (“the Acquired Land”) from the First and Second Defendants (“the Acquisition”), respectively, are void and of no effect;
(2) Order that the Third Defendant determine compensation in relation to the Acquisition in accordance with the Act;
(3)   Order the Plaintiff to pay 30 per cent of the costs of the First and Second Defendants;
(4)   No order as to costs between the Plaintiff and the Third Defendant.

Catchwords:

ADMINISTRATIVE LAW – jurisdictional error – judicial review of Determinations of Compensation issued by the Valuer-General under s 47 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) – whether the Determinations with respect to underlying zoning and development standards lacked probative evidence and were legally unreasonable – whether the Determinations with respect to the comparable sales method of valuation were legally unreasonable – not legally unreasonable – impermissible merits review – no jurisdictional error

 

ADMINISTRATIVE LAW – jurisdictional error – whether there was power to award certain disturbance costs under s 59(1)(a) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) – where the Valuer-General misdirected himself to the date from which disturbance costs were claimable in accordance with Hoy v Coffs Harbour City Council [2016] NSWCA 257 – whether the legal error made by the Valuer-General in making the Determinations has the consequence that the Determinations are liable to be set aside for jurisdictional error – jurisdictional error – Determinations set aside – declaration made

 

CIVIL PROCEDURE – stay – orders made by consent staying the legal effect of the Valuer-General’s Determinations until the final disposition of the proceedings – whether the Court can stay the operation of an Act

  COSTS – party/party – issues severable – first and second defendants successful on 70 per cent of issues in the case – plaintiff to pay 30 per cent of the first and second defendants’ costs

Legislation Cited:

Building and Construction Industry Security of Payment Act 1999 (NSW), s 22
Civil Procedure Act 2005 (NSW), s 98
Evidence Act 1995 (NSW), s 57
Interpretation Act 1987 (NSW), s 48
Land Acquisition (Just Terms Compensation) Act 1991 (NSW), ss 23, 24, 26, 33, 37, 39, 40, 41, 42, 43, 43A, 47, 48, 49, 50, 54, 55, 56, 59, 66, 68
Ryde Local Environmental Plan 2014 (NSW)
Supreme Court Act 1970 (NSW), s 69
Uniform Civil Procedure Rules 2005 (NSW), r 42.1
Valuation of Land Act 1916 (NSW), ss 8, 68

Cases Cited:

Amaba Pty Ltd (Under NSW Administered Winding Up) v Booth; Amaca Pty Ltd (Under NSW Administered Winding Up) v Booth [2010] NSWCA 344
Attorney-General for the States of New South Wales v Quin (1990) 170 CLR 1; [1990] HCA 21
Ballina Shire Council v Knapp [2019] NSWCA 146
Blacktown City Council v Concato [2018] NSWSC 1039
Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
Castlemaine Tooheys Ltd v State of South Australia (1990) 169 CLR 436; [1990] HCA 1
Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146; [2008] HCA 2
Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219
El Boustani v Minister for Administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33
Electricity Commission of New South Wales (trading as Pacific Power) v Arrow (1994) 85 LGERA 418
Elliott v Minister administering Fisheries Management Act 1994 [2018] NSWCA 123
Federated Municipal and Shire Council Employees’ Union of Australia v Melbourne Corporation (1919) 26 CLR 508; [1919] HCA 73
Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20
ISPT Pty Ltd v Valuer General [2009] NSWCA 31
Health Administration Corporation v George D Angus Pty Ltd (2014) 88 NSWLR 752; [2014] NSWCA 352
Hossain v Minister for Immigration and Border Protection [2018] HCA 34; 92 ALJR 780
Hoy v Coffs Harbour City Council [2016] NSWCA 257
James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296
Kruger v The Commonwealth (1997) 190 CLR 1; [1997] HCA 27
Maloney v Minister Administering the Environmental Planning and Assessment Act 1979 [2011] NSWLEC 121
Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council [2010] NSWCA 145
Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8
Melino v Roads and Maritime Services (2018) 98 NSWLR 625; [2018] NSWCA 251
Minister for Immigration and Border Protection v SZFW [2018] HCA 30; 92 ALJR 713
Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18
Minister for Immigration and Citizenship v SZIAI [2009] HCA 39; 83 ALJR 1123
Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611; [1999] HCA 21
Moloney v Roads and Maritime Services (2018) 98 NSWLR 651; [2018] NSWCA 252
Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2018] NSWCA 304
New South Wales Cremation Company Pty Ltd v Valuer General [2016] NSWLEC 135
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4
R v Hardiman; Ex parte Australian Broadcasting Tribunal (1980) 144 CLR 13; [1980] HCA 13
R v Secretary of State for Transport, Ex parte Factortame Ltd (No 2) [1991] 1 AC 603
Re Kerry [2010] NSWCA 232
Re Lambie (2018) 263 CLR 601; [2018] HCA 6
River Bank Pty Ltd v Commonwealth (1974) 48 ALJR 483
Roads and Maritime Services v Desane Properties Pty Ltd (2018) 98 NSWLR 820; [2018] NSWCA 196
Roads and Maritime Services v United Petroleum Pty Ltd [2019] NSWCA 41
Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) (2016) 95 NSWLR 157; [2016] NSWCA 379
Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251
Turner v Minister of Public Instruction (1956) 95 CLR 245; [1956] HCA 7

Texts Cited:

M Aronson, M Groves and G Weeks, Judicial Review of Administrative Action and Government Liability (Thomson Reuters, 6th ed, 2017)

Category:

Principal judgment

Parties:

Council of the City of Ryde (Plaintiff)
Raymond Boutros Azizi (First Defendant)
Alnox Pty Ltd (Second Defendant)
Valuer-General of New South Wales (Third Defendant)

Representation:

Counsel:
J K Kirk SC / S B Nash (Plaintiff)
I Hemmings SC / A Oakes (First and Second Defendants)
L Waterson (Third Defendant)

  Solicitors:
Bartier Perry (Plaintiff)
Madison Marcus (First and Second Defendants)
Crown Solicitor’s Office (Third Defendant)

File Number(s):

2019/00039094

Publication restriction:

Nil

Judgment

Findings of fact

The present proceedings

The pleadings

Submissions of the parties

Ground 1 – Underlying zoning

The Council’s submissions – No evidence

The Council’s submissions – Unreasonableness

The Council’s submissions – Application to the present case

The former owners’ submissions

Valuer-General’s submissions

Ground 2 – Comparable sales method of valuation

The Council’s submissions

The former owners’ submissions

Ground 3 – Disturbance costs

The Council’s submissions

The former owners’ submissions

Valuer-General’s submissions

Consideration

Legislative provisions

Ground 1 – Underlying zoning

Ground 2 – Comparable sales method of valuation

Ground 3 – Disturbance costs

The stay granted in this case

Costs

Conclusion and orders

Judgment

1. PAYNE J: On 24 August 2018, the plaintiff, the Council of the City of Ryde, (“the Council”) compulsorily acquired three contiguous parcels of land adjacent to Blenheim Park at North Ryde. The acquisition was for a public purpose, namely the provision of public open space through the expansion of Blenheim Park.

2. The first and second defendants are the former owners of the acquired land (“the former owners”). One lot was owned by Mr Raymond Boutros Azizi and two lots were owned by Alnox Pty Ltd (“Alnox”), a property development company owned and operated by Mr Raymond Boutros Azizi’s two sons. Mr Raymond Azizi (one of Mr Raymond Boutros Azizi’s sons) is Alnox’s sole shareholder and Mr Patrick Azizi, another son, is Alnox’s sole director.

3. On 21 December 2018, the third defendant, the Valuer-General, appointed under s 8 of the Valuation of Land Act1916 (NSW), determined the amount of compensation to be offered to each of the first and second defendants (“the Determinations”) [1] under s 41 of Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (“Just Terms Act”) and provided copies of the Determinations to the Council and Mr Azizi and Alnox. The Council did not give the first and second defendants a compensation notice together with the Determinations within 45 days as required by s 42 of the Just Terms Act.

   1. Each entitled “Valuer-General’s Determination of Compensation”.

4. Instead, the Council sought judicial review of the Determinations issued by the Valuer-General. In circumstances I will return to, a judge of this Court granted a “stay”, effectively, of the further operation of the Just Terms Act including the obligations under s 42 of that Act, pending the outcome of these proceedings. As a result, in respect of the property acquired by the Council on 24 August 2018, there still has not been any compensation notice served on the first and second defendants. A further result of the “stay” is that, unlike an interlocutory injunction, assuming one were addressed to the first and second defendants, the Council has not been required to, and has not given, the first and second defendants an undertaking as to damages.

Findings of fact

5. This case is an administrative law challenge based on alleged jurisdictional error(s) in making the Determinations, brought under s 69 of the Supreme Court Act1970 (NSW). In addressing the issues raised by this administrative law challenge I propose only to apply standards of administrative review and not undertake any review of the merits. The findings of fact made here are intended as a basis for addressing the Council’s case which raised only the existence of alleged jurisdictional error(s). In this regard, I will restrict any observations about the factual matters to the question of whether the conclusions reached by the Valuer-General were open to him on the material before him.

6. In making the Determinations, the Valuer-General had before him a large volume of material including expert reports dealing with town planning issues and valuation issues. Before descending into the detail of that material it is convenient to first identify those expert reports and the party who commissioned each report:

Party	Ryde Council	Former owners	Valuer-General
Town planning	• Planning Ingenuity Report dated 31 October 2018	• Think Planners Report dated March 2017 • Ingham Planning Peer Review dated 7 November 2018	• Turnbull Planning Report dated August 2018 • Turnbull Planning Further Letter Submission dated 12 December 2018 • Ethos Urban Peer Review dated 20 December 2018
Valuation	• Southern Alliance Report dated 8 March 2018 • Lunney Watt and Associates Report dated 14 November 2018	• Dempsey Valuation and Advisory Report dated 19 July 2018 • Dempsey Valuation and Advisory Review dated 8 November 2018 • Cushman & Wakefield Peer Review dated 12 November 2018	• Kenny & Good Preliminary Determination of Compensation Report dated 19 October 2018 • Kenny & Good Final Determination of Compensation Report dated 21 December 2018

7. As an initial observation, in the context of a case which asserts jurisdictional error on the basis there was “no evidence” of critical matters about town planning before the Valuer-General, it is to be observed that the Council put before the Valuer-General an expert town planning report together with two separate expert valuation reports. Those reports were plainly taken into account in making the Determinations. The former owners put before the Valuer-General two expert town planning reports and three separate expert valuation reports. Those reports were also taken into account in making the Determinations. The Valuer-General commissioned and had before him two expert town planning reports and an expert valuation report. Those reports were taken into account in making the Determinations. Following distribution to the parties of the draft Determinations, and following complaints made by the Council supported by an opinion from Mr Tomasetti SC, the Valuer-General commissioned another expert town planning report as a peer review of all of the town planning material before the Valuer-General. This report, which considered in detail the complaints made by the Council about the earlier reports which had been obtained, was the Ethos Urban peer review dated 20 December 2018. That report and the subsequent expert valuation report commissioned by the Valuer-General were plainly taken into account in making the Determinations.

8. The essence of the debate between the town planners relates to the correct assumptions to be made in the case of a compulsory acquisition under the Just Terms Act. That question, in turn, was affected by the assumptions made by each town planner about the test to be applied. The issue was framed in this way by Mr Le Bas of Turnbull Planning in his report (commissioned by the Valuer-General) dated August 2018:

“Resumed land is to be valued and compensation is to be determined based on the land value of the land having regard to the existence of the restrictions applicable by planning instruments, while disregarding any increase or decrease in the value of the land arising from the carrying out, or the proposal

to carry out, the purpose for which the land was resumed: see Royal Sydney Golf Club v Federal Commissioner of Taxation (1957) 97 CLR 379; Port Macquarie West Bowling Club Ltd vMinister [1972] 2 NSWLR 63.

In the case of Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority (2008) 233 CLR 259 the High Court of Australia looked at this principle and determined that restrictions on land use maintained as a result of consultation with the resuming authority must also be ignored for the purpose of assessing the value of land when resumed by that authority.

In the case of Housing Commission (NSW) v San Sebastian Pty Ltd (1978) 140 CLR 196 the High Court of stipulated that this principle applies in cases where there is a direct relationship between the planning restriction and the scheme of which resumption is a feature and extends to cases where there is a merely indirect relationship, provided that the planning restrictions can properly be regarded as a ‘step in the process’ of resumption.”

9. Although no complaint was made by the Council about this issue, Mr Hemmings SC, for the former owners, accepted that the use of language by Mr Le Bas was not the language of s 56 of the Just Terms Act. It is to be noted that in Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251 at [41] Basten JA said:

“The action (or inaction) of the Council was relied upon by the trial judge as constituting “steps in the resumption process”. As already noted, that terminology does not fall expressly within the language of s 56(1)(a): accordingly, it is necessary to see whether such a construction is justified or required by authority.”

10. What was hotly in dispute was the quality and nature of evidence required before any town planning opinion could be formed. This was, at least implicitly, a debate which played out over many pages before the Valuer-General between non-legally qualified experts about legal concepts and mixed questions of fact and law. In this mix of material before the Valuer-General, the opinion of Mr Tomasetti SC must also be considered. That opinion, which was more in the nature of a submission, essentially entered the debate about factual matters and their relevance to the Valuer-General’s task. As I have said, having regard to threats of legal action which accompanied Mr Tomasetti’s advice, the Valuer-General sought and obtained a further expert town planning report to obtain a peer review of all of the town planning material before him.

11. The question was, in the absence of the proposal to carry out the public purpose effected by the acquisition, the restrictions which would likely have been imposed on any plan for development of the acquired properties. That is, what assumptions should be made in assessing the value of the land at its highest and best use at the date of acquisition?

12. The background to the debate between the town planners is that prior to 8 March 2016, the acquired land was zoned under the Ryde Local Environmental Plan 2014 (NSW) (“Ryde LEP”) R2 Low Density Residential (“R2”) with a maximum floor space ratio of 0.5:1 and a maximum building height of 9.5 metres. Looking ahead, each of those integers is critical to the value of the acquired land – the relevant zoning, the maximum floor space ratio and the maximum building height.

13. The relevant land is next to a major traffic corridor to the north-west of Sydney, Epping Road, and forms part of the precinct known as the Macquarie Park Corridor. This, in turn, refers to the very substantial development which has occurred around Macquarie University and nearby Macquarie Park where various public transport options converge. In relation to land adjacent to Epping Road, on the side of the road where Delhi Road joins Epping Road, there was, during the relevant period, a very substantial amount of high-rise residential and office development. The acquired land, however, is on the opposite side of Epping Road from the high-rise development that occurred then. The relevance of this was a matter debated at length between the town planning experts before the Valuer-General.

14. The first series of interactions between the Council and the first and second defendants which form relevant background occurred in 2012:

1. on 22 February 2012, Alnox wrote to the Council to enquire about a proposed application to rezone the land which was ultimately acquired. That proposed application was to rezone the land, under the Ryde LEP, R4 High Density Residential (“R4”), to increase the maximum floor space ratio to 2.8:1 and to increase the maximum building height to 25 metres. This proposal was made prior to any formal planning proposal being lodged;

2. on 5 March 2012, the Council wrote to Alnox, stating that Alnox could lodge a formal planning proposal but noting that Council staff had indicated to Alnox at various meetings that a planning proposal in those terms was “unlikely to be supported”;

3. around 22 May 2012, the Council wrote to Alnox, stating that Alnox’s rezoning request “would not be supported due to the context of the site and the nature of the surrounding low scale residential area” and was contrary to the Council’s strategy for the site. The Council suggested that any development of the site should be a development that complied with the land use and planning controls of the R2 zone;

4. on 24 July 2012, Alnox’s rezoning request was considered at a Council meeting. The Council considered a report prepared by the Council’s strategic planner, which stated that “a high density residential development may have adverse impact on Blenheim Park” and recommended that “the R2 zone associated planning controls are retained”.

15. It is apparent that from at least 2014 the Department of Planning and Environment promoted “A Plan for Growing Sydney” which identified the land which was acquired as part of the Macquarie Park Corridor. The acquired land was also located within the “Global Economic Corridor” which was identified by the Department as suitable for development that supported concentrated employment, economic activity and other uses in centres, transport gateways and industrial zoned land extending from Port Botany and Sydney Airport, through Sydney CBD, north-west through Macquarie Park, and towards Norwest, Parramatta and Sydney Olympic Park.

15. A matter of some significance to the town planning issues before the Valuer-General was that despite the Council’s decision in 2012 about the proposal described above, on 12 March 2013, the Council resolved to invite the submission of a planning proposal by the former owners. The (unanimous) resolution said that the planning proposal “be accepted for consideration”. This is in the context of the evidence in the Department’s Pre-Gateway Review that during the preparation of the 2014 Ryde LEP the “Council provided a willingness to consider greater development opportunities on the site, including residential development up to 7 storeys” (page 6) and the evidence about “Council’s invitation to the [first and second defendants] to submit a 7 storey redevelopment proposal” (page 9). It is clear that despite what the Council (although inadmissibly) through Mr Mead now seeks to assert as the relevant “fact”, it was open to the Valuer-General to conclude that in 2013 the Council actively solicited a proposal from the former owners of the acquired properties for a 7 storey redevelopment on the site.

16. In July 2015, the former owners submitted a planning proposal with the Council addressing each of those critical matters – rezoning the land to R4, increasing the maximum floor space ratio to 4.3:1 and increasing the maximum building height to 45 metres.

17. On 21 September 2015, the Council wrote to Alnox, advising that a planning proposal seeking such a scale of redevelopment in the intended location was premature. Again, this is an issue of some significance. A rezoning of the land to R4 combined with such a dramatic increase in maximum floor space ratio to 4.3:1 and maximum building height to 45 metres was opposed by the Council. On all of the material before the Valuer-General, however, it is clear that in the absence of giving effect to the public purpose of rezoning the acquired property for an increase in the size and amenity of Blenheim Park, it was open to the Valuer-General to conclude that a planning proposal involving a change in zoning of the land and an increase in maximum floor space and maximum building height would have been achieved.

18. On 8 March 2016, the Council’s Planning and Environment Committee recommended that the Council not support the former owners’ planning proposal proceeding to a Gateway Determination. Basten JA and I described a number of the aspects of a Gateway Determination during the relevant period in Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2018] NSWCA 304. I will not repeat that discussion here.

19. On 22 March 2016, the Council resolved not to support the former owners’ planning proposal. The Council also resolved to investigate and action the acquisition of the subject land for open space to be incorporated into Blenheim Park. The date 22 March 2016 thus became the first in a series of possible dates in the consideration of the issues by the town planning experts, leading to a lively debate about whether the resolution should properly be regarded as the first manifestation of the proposal to carry out the public purpose within the meaning of s 56(1) of the Just Terms Act.

20. On 26 April 2016, the Council resolved to prepare and submit to the Department of Planning and Environment a planning proposal to rezone the subject land from R2 to RE1 Public Recreation (“RE1”).

21. On 28 April 2016, the former owners applied to the Department of Planning and Environment for a Pre-Gateway Review of the Council’s decision not to support their planning proposal. As explained in Tanlane, development proposals via the Gateway procedure did not necessarily involve support for the proposal by the Council.

22. On 26 May 2016, the Council made submissions to the Department of Planning and Environment in opposition to the former owners’ Pre-Gateway Review. The Council’s primary concerns with the former owners’ planning proposal were summarised as follows:

“• Bulk and scale;

• Site context;

• Shadowing of adjacent public open space;

• Lack of policy context; and

• Traffic issues.”

24. On 19 July 2016, the Department of Planning and Environment completed its report for the Pre-Gateway Review and referred the matter to the Sydney East Joint Regional Planning Panel. Upon a fair reading of that Pre-Gateway Review it was open to the Valuer-General to conclude that, absent the proposal to carry out the public purpose, a planning proposal rezoning the acquired land to R3 Medium Density Residential (“R3”) and increasing the maximum floor space ratio and maximum height would have been approved. This is because of the “strategic merit assessment” of the Panel, which it was open to the Valuer-General to conclude was an important contemporaneous indication of the likely course of events absent the proposal to carry out the public purpose.

25. That Pre-Gateway Review – Information Assessment and Recommendation Report stated:

“4. PROPOSAL ASSESSMENT

4.1 Strategic merit assessment

4.1.1 A Plan for Growing Sydney 2014

In December 2014, the Department released A Plan for Growing Sydney (Plan), the long term strategic plan for metropolitan Sydney.

The site is located in the North Subregion and is adjacent to the Macquarie Park Corridor. The site is also located within the Global Economic Corridor which is identified for “concentrated employment, economic activity and other uses in centres, transport gateways and industrial zoned land extending from Port Botany and Sydney Airport, through Sydney CBD, north-west through Macquarie Park, and towards Norwest, Parramatta and Sydney Olympic Park”.

The proposal is consistent with the following directions and actions in the Plan

• Direction 2.1 and Action 2.1.1 as it would increase the local housing supply and choice in close proximity to jobs and serviced by frequent public transport;

• Direction 2.2 and Action 2.2.2 as it would facilitate urban infill and increase housing production around a strategic employment centre and transport corridors;

• Direction 2.3, Actions 2.3.2 and 2.3.3 as it would provide a range of housing choices to suit different needs and lifestyles;

• Direction 3.3 as it would support a healthy built environment by providing housing in walking distance to existing employment and services;

• North Subregion priority to accelerate housing supply, choices and affordability and build great places to live.

The proposal is consistent with priorities for the Macquarie Park centre, including:

• working with council to concentrate capacity for additional mixed-use development around train stations, including retail, services and housing; and

• investigating potential future opportunities for housing in areas within walking distance of train stations.

4.1.2 State Environmental Planning Policies

The proposal is not considered to be inconsistent with any State planning policies.

4.1.3 Section 117 Directions

The proposal is consistent with the following relevant Section 117 directions:

• Direction 3.1 Residential Zones

• Direction 3.4 Integrating Land Use and Transport

• Direction 7.1 Implementation of A Plan for Growing Sydney (2014)

…

4.2.2 Proposed use of land

The proposal will facilitate a 16 storey residential tower comprising:

• Approximately 120 dwellings;

• ground floor retail; and

• 2 levels of basement car parking.

The proposal seeks to amend the development controls for the site to the following:

Control      Explanation

Zoning                   R4 High Density Residential

Building height      45 metres

Floor space ratio   4.3:1

4.2.3 Built Form

…

The Department supports an increase in the maximum building height and FSR for the site as it will provide additional housing and greater housing choice in the Macquarie Park Strategic Centre and near public transport options. This will assist in achieving the strategic direction of the North Subregion in A Plan for Growing Sydney, as it will provide additional housing near employment, education and transport services.

The proposal notes that the nearest residential neighbour to the site is 135 metres away and therefore the edge/boundary impacts typically associated with a rezoning for greater height and FSR are not a factor in this proposal. The Department does not support the proposed height and FSR as the proposal’s interface with Blenheim Park and the adjoining low density residential area south of Blenheim Park has not been fully considered by the proposal.

The Department recommends the Panel considers the recommendations of the approved Part 3A developments in Allengrove Crescent and Whiteside Street/David Avenue, North Ryde which resulted in developments of 5-6 storeys, when considering the maximum building height for the site. Another relevant consideration is Council’s invitation to the proponent to submit a 7 storey redevelopment proposal. Reducing the proposed building height and FSR would provide a more appropriate interface to Blenheim Park, whilst maintaining the amenity of the existing low residential density area south of Blenheim Park.

…

6. CONCLUSION

It is recommended the proposal be referred to the Sydney East Joint Regional Planning Panel for independent review. The proposal demonstrates broad strategic merit. It is consistent with objectives and directives under A Plan for Growing Sydney, relevant State Environmental Planning Policies, section 117 Directions and local policies.

The proposal seeks to maximise development potential on a site that has strong public transport links, good access to jobs and services, open space and community facilities. The proposal would also deliver a variety of housing within close proximity to the Macquarie Park Strategic Centre to accommodate future workers expected in the area.

However, the proposed bulk and scale of development is considered excessive and out of character with its immediate context and would result in adverse impacts on the character of Blenheim Park.

…

7. RECOMMENDATION

It is recommended that the Deputy Secretary:

1. form the opinion that sufficient justification has been provided and the request is eligible for review; and

2. agree to forward the request to the Sydney East Joint Regional Planning Panel for advice.”

26. The critical conclusion of the Pre-Gateway Review for present purposes was that the first and second defendants’ proposal demonstrated “broad strategic merit” and was consistent with objectives and directives under “A Plan for Growing Sydney”, relevant State environmental planning policies, Section 117 Directions and local policies. It is clear, however, that the Pre-Gateway Review also concluded that the “proposed bulk and scale of development is considered excessive and out of character”. It was open to the Valuer-General to conclude that it was unlikely that, in the absence of the acquisition here, the first and second defendants’ proposal would have been successful, and that it was likely, having regard to the matters referred to in the Pre-Gateway Review, and in particular the contemporaneous, very substantial development occurring in the immediate vicinity of the acquired properties, that a less aggressive development application would have been successful. I will return to the details of this finding when addressing the expert town planning evidence which was before the Valuer-General for the purposes of making his Determinations.

27. On 31 August 2016, the Sydney East Joint Regional Planning Panel recommended that the former owners’ planning proposal should not be submitted for a Gateway Determination. On 10 October 2016, the Deputy Secretary of the Department of Planning and Environment wrote to the former owners, stating that their planning proposal would not be proceeding to a Gateway Determination.

28. On 25 July 2017, the Council resolved to proceed with the compulsory acquisition of the former owners’ land. On 22 August 2017, the Council resolved that the Ryde LEP be amended to rezone the acquired land to RE1 and remove the planning controls. On 24 November 2017, the Ryde Local Environmental Plan 2014 (NSW) (Amendment No 15) commenced, rezoning the subject land to RE1 and identifying it as reserved for acquisition by the Council.

29. On 9 February 2018, the former owners each submitted hardship applications to the Council pursuant to s 23(1) of the Just Terms Act. On 27 March 2018, the Council resolved to proceed with the compulsory acquisition. On the same day, the Council resolved to accept the former owners’ hardship applications.

30. On 14 May 2018, the Minister for Planning wrote to the Council, proposing that it consider initiating a moratorium on new planning proposals for residential developments in the Ryde Local Government Area (“Ryde LGA”). On 26 June 2018, the Council unanimously resolved to initiate a moratorium on new planning proposals for residential developments.

31. On 25 July 2018, the former owners’ solicitors wrote to Mr Goldsmith of Property NSW Valuation Services, enclosing Section 39 Claim for Compensation forms, a planning report prepared by Think Planners dated March 2017 and a valuation report prepared by Dempsey Valuation and Advisory dated 19 July 2018. The Think Planners report dated March 2017 noted the “documented history of discussions, submissions and reviews of the future planning potential of the site by both Ryde City Council and the Department of Planning and Environment” as being relevant to “the most likely future development outcome”. The report concluded that the site would have been rezoned to “R4 – High Density, with a Height of Building of 25m (7 storeys) and Floor Space Ratio of approximately 2.5-2.8:1”. The Dempsey Valuation report adopted the Think Planners parameters of the three critical variables, zoning, maximum floor space ratio and maximum height, and opined that the correct value of the properties was $20,000,000.

32. On 1 August 2018, the Minister wrote to the Council, agreeing to amend the State policy for rezoning reviews to exclude its application to the Ryde LGA from 26 June 2018 to 1 July 2020 and stating that the Department of Planning and Environment would not accept any rezoning reviews for residential developments in the Ryde LGA until 1 July 2020.

33. The existence of the moratorium on new planning proposals was a principal plank of at least part of the Council’s case in this Court. To the extent that in the present case it is necessary to make any finding about this issue, I find that it is likely that, absent the proposal to carry out the public purpose here, it was open on the evidence for the Valuer-General to conclude that it was likely that the first and second defendants would have made an amended development application before the moratorium came into effect.

34. On 24 August 2018, the subject land was acquired. The acquisition notice in the NSW Government Gazette (No 82) stated that the land was to be acquired “for Public Recreation purposes for the extension of Blenheim Park, North Ryde”.

35. On 14 September 2018, Property NSW Valuation Services wrote to the former owners and the Council, enclosing an independent town planning report prepared by Turnbull Planning dated August 2018. Mr Le Bas of Turnbull Planning was instructed by Property NSW Valuation Services to determine the development potential of the subject land and review the Think Planners report dated March 2017. I have earlier set out at [8] how Mr Le Bas framed the way he approached that task. Mr Le Bas addressed the surrounding lands and the proximity of various infrastructure including transport, retail and open space, considered the absence of environmental impact that a higher density residential use would have, as regards other adjoining and nearby properties and considered comments that the Department of Planning and Environment had made regarding “broad strategic merit”. Mr Le Bas concluded that it was highly likely that absent the proposal to carry out the public purpose, the acquired land would have been rezoned to R4 with a floor space ratio of around 2.5:1 and a maximum height of 25 metres. In so concluding Mr Le Bas said that “the current RE1 Public Recreation zoning of the various sites the subject of this report can only reasonably be seen to be a ‘step in the process’ of resumption”. Mr Le Bas also reviewed the Think Planners report and was critical of a number of aspects of that report. My conclusion, having read the reports, is that it was well open to the Valuer-General to accept Mr Le Bas’ conclusions. Those conclusions, at the very least, were intelligible and well-reasoned.

36. On 23 October 2018, Property NSW Valuation Services wrote to the Council and the former owners, enclosing a preliminary determination of compensation report prepared by Mr Hurst of Kenny & Good dated 19 October 2018 and inviting submissions from the parties in response to the preliminary report. Mr Hurst concluded that given the existing RE1 zoning is a step in the process of acquisition, he set such a zoning aside and identified the most likely zoning and land use potential had the public purpose not been effected. After discussing the strengths and weaknesses of the various town planning reports he had been provided with, Mr Hurst concluded that the floor space ratio adopted by Mr Le Bas of 2.5:1 was both practically and financially achievable upon the land. After considering the maximum number of units that could have been built on the site using that maximum floor space ratio, he turned to consider comparable sales evidence. Despite including some information about disturbance costs under s 59 of the Just Terms Act, Mr Hurst noted that the Section 39 Claim for Compensation forms submitted by the former owners had not included disturbance costs and they were yet “to be assessed”. Mr Hurst concluded on a preliminary basis that the current market value was $14,400,000, apportioned as $5,678,388 for 86 Blenheim Road and $8,721,612 for 12A and 14 Epping Road. It was well open to the Valuer-General to accept Mr Hurst’s conclusions. Those conclusions, at the very least, were intelligible and well-reasoned.

37. On 15 November 2018, the former owners lodged their submissions with Property NSW Valuation Services in response to the preliminary determination of compensation report. The former owners enclosed a valuation review prepared by Cushman & Wakefield dated 12 November 2018, a review of the preliminary determination of compensation report prepared by Dempsey Valuation and Advisory dated 8 November 2018 and a planning peer review prepared by Ingham Planning dated 7 November 2018. Mr Dyson of Cushman & Wakefield concluded, relevantly, that a valuation based on a floor space ratio of 2.5:1 and a floor space ratio of 2.8:1 would be more appropriate. Whatever the merits of that conclusion, it was both intelligible and well-reasoned. Mr Dempsey was instructed by the former owners to review the preliminary determination of compensation report. Mr Dempsey concluded that a floor space ratio of 2.8:1 was more appropriate and on that basis the total market value of the properties was $16,100,000. Ingham Planning reviewed the Think Planners report dated March 2017 and the Turnbull Planning report dated August 2018. The author, Mr Juradowitch, concluded that the correct use for valuation purposes was “around 2.8:1”. He opined that, absent the proposal to carry out the public purpose, the subject land would have been zoned R4, with a maximum building height of 25m and a maximum floor space ratio of 2.8:1.

38. On 16 November 2018, the Council lodged its submissions with Property NSW Valuation Services in response to the preliminary determination of compensation report. The Council enclosed legal advice from Mr Tomasetti SC dated 15 November 2018, a valuation report prepared by Lunney Watt and Associates dated 14 November 2018 and a town planning report prepared by Mr Mead of Planning Ingenuity dated 31 October 2018. Mr Tomasetti’s advice was more in the nature of a submission. He asserted that “a failure to consider Mr Mead’s planning report and the matters of fact set out therein with due care and consideration will inevitably lead to a major legal controversy and overpayment of compensation of approximately $9 million”. It was well open to the Valuer-General to regard Mr Tomasetti’s advice as providing additional submissions about factual matters and debating the merits of the decision rather than addressing any question of legal principle.

26. Mr Mead’s report, the subject of Mr Tomasetti’s assertion, concluded that disregarding the carrying out of, or the proposal to carry out, the public purpose for which the properties were acquired, the properties would have been zoned R2 pursuant to the Ryde LEP. Based on a variety of matters, including enquiries he made with the Council, Mr Mead opined that the Turnbull Planning report was “wrong” and that any valuation based on the Turnbull Planning report was “wrong”. Mr Mead gave numerous reasons for reaching this conclusion. He also asserted, which assertion he repeated in the evidence filed for the purposes of these proceedings, that the moratorium I have described above at [30] would have precluded the submission of any planning proposal until the earlier of 1 July 2020 or the completion of the new city-wide housing and infrastructure strategy through the LEP review process.

27. It is clear that the Valuer-General took into account Mr Mead’s report dated 31 October 2018 and considered the claims made therein. Whatever the merits of Mr Mead’s claims, the Valuer-General was not bound to accept as “facts” matters that Mr Mead asserted in that report. That is, he was not bound to accept that the matters asserted by Mr Mead were established. Much less was the Valuer-General obliged to conclude that the opinions expressed in the other town planning reports were “wrong” for any of the reasons asserted by Mr Mead.

28. Mr Hollinshead of Lunney Watt and Associates provided a report based on Mr Mead’s conclusions and opined that the market value of the acquired land, on the basis of a zoning of R2, was $5,000,000. In the alternative, if a zoning of R4 were adopted he concluded that a maximum value of $13,530,000 was appropriate. I observe in passing that the focus upon the zoning of the land was only one of the three principal drivers of the value, maximum floor space ratio and maximum height being the others. Whilst of course there is a relationship between those matters it was open to the Valuer-General to conclude that the report prepared by Mr Hurst was a more nuanced and well-reasoned report than the Lunney Watt report.

29. On 5 December 2018, the Council’s solicitors wrote directly to Mr Le Bas of Turnbull Planning, stating that the “Council finds your Report misleading in at least two fundamental respects” and concluded “we are instructed to remind you of the duty of care that the law imposes upon an expert advisor in these circumstances. If compensation is ultimately awarded in excess of the proper amount based upon some acceptance that this land would have been zoned R4 High Density, Council will look to your firm for damages”. The Council’s letter of 5 December 2018 was subsequently withdrawn by the Council. I was informed from the bar table that the Council’s solicitors have apologised to Mr Le Bas. In those circumstances I do not propose to take the matter any further save to observe that such a letter should never have been written directly by a solicitor for the Council to Mr Le Bas.

30. This correspondence, however, explains why on 12 December 2018, Mr Le Bas provided the Valuer-General with a further submission, wherein he said that, having regard to all of the material relied upon by the Council, “I remain very much of the opinion that it is likely that, absent the public purpose, … the land would have been rezoned to R4 High Density Residential with a residential development of 7 storeys and a [floor space ratio] of around 2.5:1, but for the acquisition and change to a [RE1 zoning]”.

31. On 17 December 2018, Ms Chandler of the Department of Finance, Services and Innovation wrote to the Council’s solicitors, pointing out that the office of the Valuer-General “takes all submissions on its draft determinations seriously” and stating that “[g]iven the views expressed by the parties and their advisors in this matter” the following course of action would be taken: the Valuer-General would engage an independent expert town planner of its own choosing to review each of the town planning reports and the relevant opinions expressed by the parties, provide that advice to the valuer engaged to advise the office of the Valuer-General on the matter and review and consider the final valuation opinion and finalise the statutory determination. The inferences I draw from this exchange (and the subsequent relevant events narrated below) are:

1. the Valuer-General had regard to all of the town planning expert evidence (including the town planning reports enclosed in the parties’ submissions) and would have regard in particular to the report of the independent expert town planner who would be retained to review all of the town planning reports;

2. the independent expert town planning report would be given to the Valuer-General’s appointed valuer;

3. the Valuer-General promised the parties that he would review and consider the final valuation opinion and thereafter finalise the statutory determination; and

4. the Valuer-General in fact reviewed and considered all of the material before him, including the independent expert town planning report and final valuation opinion and thereafter made the Determinations of Compensation.

45. On 20 December 2018, Ethos Urban provided the peer review of planning advice referred to immediately above. Ethos Urban was provided with all of the town planning material I have described above. The brief to Ethos Urban was comprehensive:

“… we have been requested, with particular reference to s 56(1)(a) of the Land Acquisition (Just Terms Compensation) Act 1991, to provide the following specific planning advice requested by Valuation Services to assist in establishing the correct approach to valuing the land:

a) Ignoring the existing RE1 and SP2 zone which were created as a result of the public purpose, advise what the land would have been zoned as at the Date of Acquisition.

b) Advise on the highest and best use of the land at the Date of Acquisition including maximum FSR, height limit and density.

c) Prior to the land being zoned RE1 and SP2, the zoning was R2 Low Density Residential If your advice is that the land would have been R2 at the date of acquisition, but the land would have potential to be rezoned for a higher and better use, please advise the form that likely rezoning may take and what planning controls in terms of height and FSR may have been approved and how long after the date of acquisition it may have taken for such a rezoning to occur.

d) Provide details of sites on the southern side of Epping Road that have been rezoned to R4.”

46. Ethos Urban concluded that all planning actions by Ryde Council relevant to the acquired land after 22 March 2016 when the recommendation (see [20] above) was endorsed and adopted by the Council should be considered to be influenced by the proposal to carry out the public purpose and should be disregarded when considering the relevant underlying planning controls.

47. Ethos Urban concluded that as at the date of acquisition, but for the proposal to carry out the public purpose, the acquired land would have been zoned R3, with an additional permitted use to permit a cafe or restaurant with development consent. The maximum building height would have been 23 metres (maximum 6 storeys, allowing for a ground floor cafe/restaurant and roof-top plant) and the maximum floor space ratio would have been 1.7:1.

48. All of the other town planning reports were reviewed at some length. Ethos Urban generally agreed with Mr Le Bas’ conclusion that the site was likely to be rezoned to achieve a higher intensity of residential development than was permitted under the former R2 zoning but concluded that Mr Le Bas had overstated the likely development potential.

49. Ethos Urban also considered the Planning Ingenuity report dated 31 October 2018. Mr Mead’s interpretation and assessment of the planning history briefly described above at [39] was discussed. Ethos Urban disagreed with Mr Mead’s views and provided compelling reasons for that disagreement. Certainly, the Valuer-General was entitled to accept Ethos Urban’s criticisms of Mr Mead’s report. The Ethos Urban report made the point that the Pre-Gateway Review I have described above at [24]-[26] occurred in the context of a planning proposal for a R4 zoning, a maximum building height of 45 metres and a maximum floor space ratio of 4.3:1. The Valuer-General was entitled to accept Ethos Urban’s conclusion that the controls that Mr Le Bas nominated as being appropriate involve a development intensity that is approximately half of that considered in the former owners’ planning proposal and that it is not reasonable to suggest that comments made by the Department of Planning and Environment or the Sydney East Joint Regional Planning Panel about the former owners’ planning proposal would equally apply to a separate planning proposal for either the controls suggested by Mr Le Bas or another planning proposal for an increase in density above the prior R2 zone. This was at the heart of the dispute on the town planning evidence. Whatever the merits of the claim, to describe the acceptance by the Valuer-General of the well-reasoned Ethos Urban report as unreasonable is unwarranted. Further, as will become apparent, there was abundant evidence contained in the Ethos Urban report, which was open to be accepted by the Valuer-General.

50. Ethos Urban’s report went further, and relied upon the Pre-Gateway Review – Information Assessment and Recommendation Report I have described above as providing strong support for the conclusion that an increase above the existing R2 zoning and accompanying development standards was likely, absent the proposal to carry out the public purpose. Detailed and cogent reasons were given by Ethos Urban for their conclusions and their rejection of Mr Mead’s version of the relevant history. It was open to the Valuer-General to prefer Ethos Urban’s conclusions to those of Mr Mead.

51. Ethos Urban also addressed the moratorium. All of the information about that moratorium said by the Council to have been overlooked was set out at length. The critical difference between the view Mr Mead took of the situation and that taken by Ethos Urban is set out in the following passages:

“The moratorium is correctly identified by Mr Mead, but is not discussed or contemplated in Mr Le Bas’ report or subsequent planning letter. It is noted that the moratorium relates only to new Planning Proposals for residential development, and would not have affected any Planning Proposal that had already been submitted.

The moratorium was in effect at the Date of Acquisition, and accordingly a new Planning Proposal could not have been submitted to Ryde Council to rezone the Acquired Land. The most likely avenue for the rezoning of the land after this time would have been dependent on Ryde Council supporting a change in planning controls to the Acquired Land through the LEP Review process, which is expected to be completed by early-2020. There is some potential that this support may have been achieved, however, this is not certain.

Notwithstanding the above, and as set out in Section 6.0 below, we believe that, absent the public purpose, the Former Land Owners would have commenced preparation of an amended Planning Proposal shortly after the decision by the JRPP on 31 August 2016 in relation to the earlier Planning Proposal by the Former Land Owners. Accordingly, the amended Planning Proposal would have been well progressed or even completed and the new controls gazetted by the time that the moratorium was mentioned in the Minister for Planning’s letter or the resolution passed by Ryde Council on 26 June 2018.”

52. It was open to the Valuer-General to consider that the conclusions reached by Ethos Urban were soundly based. Ethos Urban’s conclusions may be summarised thus:

1. Absent the public purpose (or the proposal to carry out the public purpose), there would be good prospects of achieving a rezoning of the acquired land. The primary reasons for this conclusion were:

1. the resolution of the Council of 12 March 2013. This was contemporaneous evidence of the Council’s position prior to the public purpose occurring. That position was that higher intensity development of the site would be likely to have strategic merit;

2. the statements made by the Department of Planning and Environment in their 2016 report to the Sydney East Joint Regional Planning Panel. These statements indicated the Department’s view that the acquired land was likely capable of a medium-scale residential apartment development of up to 5-7 storeys in height, being commensurate in scale with other comparable sites along the Epping Road corridor;

3. the number and comparability of sites with comparable strategic and local attributes that are located along the southern edge of Epping Road in the Macquarie Park-North Ryde corridor that have been rezoned or otherwise approved for a scale of development higher than that currently permitted on the acquired land. The Valuer-General was entitled to accept the report’s conclusion that these sites provided a positive precedent and context for a future “up-zoning” of the acquired land.

2. Absent the public purpose, Ethos Urban concluded (having examined in some detail the chronology of events described above) that the former owners would have commenced preparation of an amended planning proposal shortly after the decision by the Sydney East Joint Regional Planning Panel on 31 August 2016. Ethos Urban concluded that the likely timeframe from lodgement of a planning proposal to gazettal would be in the order of 18 to 24 months. Given that substantive work had already been undertaken, Ethos Urban opined that a revised planning proposal could have been submitted prior to the end of 2016. Based on this timeframe, at the date of acquisition either amended controls would have been gazetted and in force under the Ryde LEP or gazettal of these provisions would have been imminent. The acquired land would have been zoned R3, with an additional permitted use to permit a cafe or restaurant with development consent. The Valuer-General was entitled to accept the report’s conclusion on this issue.

3. Having specific regard to the heights and floor space ratios obtained on the broadly comparable sites outlined in its report and taking into account the need to minimise overshadowing to Blenheim Park, Ethos Urban opined that the principal development standards which would have applied would have been as follows:

1. maximum building height of 23 metres (maximum 6 storeys, allowing for a ground floor cafe/restaurant and roof-top plant);

2. maximum floor space ratio of 1.7:1.

53. The Ethos Urban report contained evident, rational and intelligible justifications for its conclusions. The Valuer-General was entitled to accept the report’s conclusions on these issues.

54. On 21 December 2018, Mr Goldsmith of Property NSW Valuation Services, on behalf of the Valuer-General, issued Determinations of Compensation to the former owners. The covering letter to the Determinations stated:

“The Valuer General is independent of government and is required by the Land Acquisition (Just Terms Compensation) Act1991 (the Act) to determine the amount of compensation to be paid to you by Ryde City Council because your interest in [86 Blenheim Road and 12A and 14 Epping Road] has been compulsorily acquired.

The Valuer General is responsible for ensuring you are fairly compensated. Your compensation has been determined through a rigorous valuation approach, open exchange of information and the opportunity to raise concerns throughout the determination of compensation process.

…

The determination of compensation (TAB A) and valuation report (TAB B) are attached. This information has also been provided to Ryde City Council.

Property NSW Valuation Services (PNSW VS) has completed this determination on behalf of the Valuer General.

Making the determination

Information sharing

All information considered in the determination of compensation has been shared with you and the acquiring authority and is listed in the attached document (TAB C).

Preliminary report

Before we finalised the determination of compensation we wrote to you and Ryde City Council on 2 October 2018 to provide you both with an opportunity to consider the preliminary valuation report.

You provided your submissions to us on 16 November 2018.

Ryde City Council provided their submissions to us on 16 November 2018.

Responses to submissions have been included in the final determination report.

Quality assurance

Your valuation report was prepared by a qualified, experienced contract valuer. Before being accepted, a qualified valuer from PNSW VS checked all aspects of the valuation to ensure accuracy, fairness, transparency and compliance with the Act. The report was then reviewed and approved by a valuer with delegated authority from the Valuer General.”

55. The Determination of Compensation dated 21 December 2018 issued to the first defendant stated:

“ACQUIRING AUTHORITY: City of Ryde Council

CLAIMANT: Raymond Boutros Azizi (Registered Proprietor) and National Australia Bank Limited (Mortgagee)

…

PARTICULARS OF LAND ACQUIRED: Lots C in DP410408

DATE OF ACQUISITION: 24/08/2018

DETERMINATION OF COMPENSATION: Four Million and Thirty Two Thousand Nine Hundred and Twenty Nine Thousand Dollars ($4,032,929)

The above determination comprises:

Market value Section 55 (a) $3,864,458

Special value Section 55 (b) Nil

Severance Section 55 (c) Nil

Disturbance Section 55 (d) $90,090

Disadvantage resulting from relocation Section 55 (e) $78,381

Increase in the value of other land Section 55 (f) Nil

Decrease in the value of other land Section 55 (f) Nil

…

The valuation report VVGC.JT02800 that was considered in making this determination is annexed.

…

Signature: [Signed]

Name: Paul Goldsmith

Certified Practicing Valuer

Principal Valuer Compensations

for Simon Gilkes, NSW VALUER GENERAL”

56. The Determination of Compensation dated 21 December 2018 issued to the second defendant stated:

“ACQUIRING AUTHORITY: City of Ryde Council

CLAIMANT: Alnox Pty Limited (Registered Proprieter) and National Australia Bank Limited (mortgagee)

…

PARTICULARS OF LAND ACQUIRED: Lots D & E Deposited Plan 410408

DATE OF ACQUISITION: 24/08/2018

DETERMINATION OF COMPENSATION: Six Million and Seventy Three Thousand Nine Hundred and Fifteen Dollars ($6,073,915)

The above determination comprises:

Market value Section 55 (a) $5,935,542

Special value Section 55 (b) Nil

Severance Section 55 (c) Nil

Disturbance Section 55 (d) $138,373

Disadvantage resulting from relocation Section 55 (e) Nil

Increase in the value of other land Section 55 (f) Nil

Decrease in the value of other land Section 55 (f) Nil

…

The valuation report VVGC.JT02799 that was considered in making this determination is annexed.

…

Signature: [Signed]

Name: Paul Goldsmith

Certified Practicing Valuer

Principal Valuer Compensations

for Simon Gilkes, NSW VALUER GENERAL”

57. Enclosed as Tab B was a final determination of compensation report prepared by Mr Hurst of Kenny & Good dated 21 December 2018. Mr Hurst proceeded by setting out all of the town planning advice with which he had been provided. Mr Hurst adopted the Ethos Urban peer review for the purposes of his determination of compensation and assumed that the acquired land would have been subject to the following planning provisions or that the implementation of these controls would have been certain and imminent at the date of acquisition:

1. R3 Medium Density Residential zone with an additional permitted use to permit a cafe or restaurant with development consent;

1. maximum building height of 23 metres (maximum 6 storeys, allowing for a ground floor cafe/restaurant and rooftop plant);

2. maximum floor space ratio of 1.7:1;

3. 1 unit per 75 square metres of floor space giving a total of 45 units.

58. Mr Hurst set out his methodology, which he described as “the sales comparison method of valuation on an analysis of and comparison with available sales evidence” and applied that method in identifying value. This was a lengthy process in which the similarities and differences of a number of potentially comparable properties were analysed. Ultimately Mr Hurst adopted values of $2,875/square metre of permissible floor space and $210,000/unit site for his assessment of current market value for the determination of compensation. Mr Hurst concluded:

“21.4 Section 55(a) Market Value

My assessment of current Market Value on the basis outlined in 21.3 above is established as –

acquired land having an area of 2,004.4 square metres,                   $9,796,505

with a permitted floor space ratio of 1.7:1

@ $2,875/square metre of permissible floor space

acquired land having the potential for 45 units @ 210,000/unit site   $9,450,000

Current Market Value adopted at the higher end of this range (as)   $9,800,000

Which may reasonably be apportioned on a site area basis as:

86 Blenheim Road (Lot C DP 410408)                                              $3,864,458

12A & 14 Epping Road (Lots D and E DP 410408)                           $5,935,542

21.5    Section 55(b) Special Value

I am of the opinion that compensation for any Special Value is nil.

21.6    Section 55(c) Severance

I am of the opinion that compensation for any Severance is nil.

21.7 Section 55(d) Disturbance Costs

I have also given consideration to an assessment of reasonable compensation for Disturbance costs in accordance with Section 59 of the Land Acquisition (Just Terms Compensation) Act, 1991 as a result of the acquisition.

Costs relating to the acquisition (including GST) include –

Section 59(a) Legal costs

Madison Marcus Lawyer Fees                           $153,782

(up to 14 November 2018)   

Madison Marcus Lawyer Fees (to Settlement)   $16,500    $170,282

Barrister Fees (A Galasso SC)                           $2,420

Barrister Fees (T S Hale SC)                             $9,350      $11,770

Section 59(b) Valuation fees

Dempsey Valuation & Advisory                          $27,599

Cushman & Wakefield                                        $3,520      $31,119

Section 59(c) Financial Costs in connection with the relocation    NIL

Section 59(d) Stamp Duty for the purchase of alternative             NIL

property    

Section 59(e) Financial Costs for discharge and execution of       NIL

mortgages    

Section 59(f) Any other Financial Costs

Think Planners Pty Ltd                                        $9,900

Ingham Planning                                                 $4,592

Garden/lawn maintenance (since acquisition)     $800       $15,292

Total Disturbance Costs (including GST)                           $228,463

which may reasonably be apportioned on a site

area basis as:

86 Blenheim Road (Lot C DP 410408)                              $90,090

12A & 14 Epping Road (Lots D and E DP 410408)          $138,373

21.8 Section 55(e) Disadvantage Resulting from Relocation

I am of the opinion that compensation for this Disadvantage for the property occupied by Raymond Boutros Azizi, Lot C in Deposited Plan 410408, 86 Blenheim Road is $78,381.

21.9    Section 55(f) Increase or Decrease in the Value of any other Land

I am of the opinion that compensation for any Increase or Decrease in the value of any other land is nil.”

59. Mr Hurst considered in painstaking detail all of the material provided to him on behalf of the Council, including Mr Tomasetti’s advice. The Valuer-General was entitled to accept Mr Hurst’s report, including the reasons for rejecting the assertions made in the material provided by the Council.

60. Somewhat unusually in a challenge in the Court’s supervisory jurisdiction the Council read evidence going to the substantive issues. The Council read the affidavits of Alexina Janet MacDonald sworn on 12 September 2019, Peter John McSwiggan sworn on 12 September 2019 to which the Preston Rowe Paterson report dated 6 September 2019 was annexed and Jeff Mead sworn on 12 September 2019 to which the Planning Ingenuity report dated 23 July 2019 was annexed.

61. Objection was taken by the former owners that the attached reports were each irrelevant. I admitted the evidence provisionally under s 57 of the Evidence Act 1995 (NSW). I propose to admit the affidavits and reports of Mr Mead and Mr McSwiggan, subject only to the rulings on specific paragraphs which I made at the hearing. In particular I rejected Mr Mead’s assertion (paragraph 13) that there was “no evidence” to support Ethos Urban’s conclusion. I have decided to admit the remaining evidence as relevant only on the basis that some of the references in the reports touch upon expert methodology which has a limited and tangential bearing on the issues I have to decide. In general, each of those reports was of very little use and I have afforded them very little weight. The same cannot be said of the affidavit of Ms Macdonald which I reject in whole as irrelevant to the issues before me. I make the following specific findings about the evidence:

1. the Planning Ingenuity report dated 23 July 2019 prepared by Mr Mead was argumentative and contained an increasingly strident series of what were in effect submissions. It addressed the same complaints as were made earlier by Mr Mead and which were comprehensively dealt with in the Ethos Urban peer review. The report reiterated in strident terms the same series of complaints that he had earlier made to the Valuer-General about views which differed from his own. He asserted that there are “no R3 zones in the Ryde LGA that have the same site characteristics as the acquired land”. He criticised the comparability of a number of sites with the acquired land. He expressed views about whether there was “any evidence” to support various conclusions. He purported to lay out the steps in the “test” of an examination of the prospects for a rezoning or land-use capability. The report was plainly an attempt at impermissible review of the merits. In fairness to Mr Mead, the fact that these were judicial review proceedings was not grappled with by those instructing him. The critical question posed to Mr Mead was “whether there was any evidence to support the conclusion that the underlying zoning of the acquired land, absent the public purpose …, should have been [zoned] R3 Medium Density Residential … [with a] FSR of 1.7:1 and … [a] height of 23 metres”. In effect, Mr Mead was invited to write a report addressing the merits of the Valuer-General’s Determinations. He did so. This is the very thing the Court cannot consider;

2. Ms Macdonald’s affidavit, as sworn, was replete with assertions of mixed fact and law and was of no assistance. She was at the relevant time the “coordinator of strategic planning” and responsible for “undertaking strategic planning functions”. There is no evidence that Ms MacDonald was ever a decision-maker about any issue of possible relevance in these proceedings. I had already limited under s 136 the inadmissible assertions made in paragraphs 10, 11, 14, 15, 16 and 18 to Ms Macdonald’s state of mind. Upon reflection, her state of mind is not relevant to any issue before me so those paragraphs must be rejected. Much of the remainder of the affidavit was not read. What remained was a summary of documents already in evidence and an assertion in paragraph 19 that the R3 zoning has not been “regularly applied” in the Ryde LGA. All of her evidence is of no assistance in determining any relevant issue. I reject it. The extent to which Ms Macdonald addressed issues which would lead the Court to engage in impermissible merits review is reflective of much of the Council’s case before me. I will return to that topic when addressing the costs of the proceedings;

3. Mr McSwiggan’s report essentially addressed the merits. It was of some assistance in that he opined that the comparable sales method, which he described, was “broadly applied appropriately” by Mr Hurst. Like Mr Mead, however, Mr McSwiggan was instructed by the Council to address the merits. He was asked to provide “a critique of the Kenny & Good final determination of compensation report”. This he did, largely by an appeal to the merits of Mr Hurst’s conclusions and the Valuer-General’s Determinations.

The present proceedings

62. On 5 December 2018, the Council commenced proceedings in this Court seeking judicial review of the Determinations of Compensation.

63. On 5 February 2019, the Council filed a notice of motion seeking an order that “the requirement for the issue of a compensation notice under s 42 of the Just Terms Act” in respect of the plaintiff’s compulsory acquisition of the land “is stayed until the final disposition of these proceedings”.

64. On 15 March 2019, Walton J made orders by consent “staying” the effect of the Valuer-General’s Determinations of Compensation as follows:

“1. The legal effect of the third defendant’s determination of compensation of 21 December 2018 in respect of the plaintiff’s compulsory acquisition of land identified as Lot C in Deposited Plan 410408 (known as 86 Blenheim Street, North Ryde) and Lot D and Lot E in Deposited Plan 410408 (known as 12A and 14 Epping Road, North Ryde) from the first and second defendants, respectively, is stayed until the final disposition of these proceedings on the following conditions:

…

2. Order (1) does not derogate from the plaintiff’s statutory entitlement to obtain a deed of release and indemnity, and the title document to the property on completion of the first and second defendants’ claim for compensation.”

The pleadings

65. By amended summons filed on 6 September 2019, the Council raised a number of grounds of review. These crystallised in written submissions as follows:

1. The Determinations failed to undertake the necessary statutory task with respect to the underlying zoning of the acquired land, because:

1. they lacked probative evidence; and/or

2. they were infected by legal unreasonableness.

2. The Determinations were infected by an error of valuation principle in the manner in which the comparable sales valuation was undertaken, rendering them void.

3. There was no power to award certain disturbance compensation. Namely, the sum of $228,463 for legal costs incurred in connection with the acquisition was awarded, when a substantial part of those costs were not recoverable in accordance with Hoy v Coffs Harbour City Council [2016] NSWCA 257 at [59]-[60].

66. The plaintiff did not press ground 1(d) of the amended summons relating to contamination.

67. As noted at the outset, alleged jurisdictional error in making the Determinations was the basis of each of the Council’s claims.

Submissions of the parties

Ground 1 – Underlying zoning

The Council’s submissions – No evidence

68. The Council submitted that where an exercise of statutory power by a body is dependent on the existence of a fact or holding of a particular opinion, the absence of probative evidence to support that finding of fact can vitiate a decision: Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council [2010] NSWCA 145 at [97]. It was submitted to be uncontroversial that, in order to assess the market value of the acquired land under s 55(a) of the Just Terms Act, it was necessary under s 56(1)(a) to disregard the RE1 zone under the Ryde LEP because that zone had been imposed to facilitate the carrying out of the public purpose. This was said to involve a three-step process in applying s 56(1)(a), as follows (drawing on Maloney v Minister Administering the Environmental Planning and Assessment Act 1979 [2011] NSWLEC 121 at [90]-[91] per Biscoe J, referring in turn to earlier authority):

1. identify the zoning of the land at the date of acquisition;

2. determine whether the imposition or retention of that zoning was part of the carrying out of the public purpose or part of the proposal to carry out the public purpose for which the land was acquired;

3. if the answer to Step 2 is “yes”, that zoning is notionally set aside, and the potential of the land and ultimately its market value is assessed by determining how the land would have been zoned, at the date of acquisition, but for the proposal to carry out the public purpose.

69. The Council submitted that the determination of how the land “would have been zoned” is a “classical example of a hypothetical fact”. It was submitted that this fact was a “critical step” in making the decision. Accordingly, the absence of probative evidence in relation to how the land would have been zoned amounted to jurisdictional error.

The Council’s submissions – Unreasonableness

70. The Council submitted that the standard of reasonableness must be assessed as part of the statutory scheme: Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [67]. It was submitted that unreasonableness is not limited to a decision that is so unreasonable that no reasonable person could have arrived at it: Li at [68]. The Council submitted that “[u]nreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification”: Li at [76]. The Council also pointed to the High Court’s further consideration of the notion of unreasonableness in Minister for Immigration and Border Protection v SZFW [2018] HCA 30; 92 ALJR 713. Mr Kirk SC submitted orally that:

“… drawing all of that together, one can’t be exhaustive about what constitutes legal unreasonableness.  It has to be seen in the statutory context.  It includes irrational decision‑making; that is to say that will be an aspect of legal unreasonableness.  It can include where decisions lack in evidence and intelligible justification, or where it is not within a range of possible acceptable outcomes defensible in respect of the facts in law.  It’s not going to be common, but that doesn’t mean the Court must not scrutinise particular facts and circumstances carefully.”

71. Mr Kirk SC drew attention to the statement by the plurality in Li at [72]: “The more specific errors in decision-making, to which the courts often refer, may also be seen as encompassed by unreasonableness”. It was submitted: “In other words, the other grounds can feed into reasonableness.”

The Council’s submissions – Application to the present case

72. The Council submitted that the Valuer-General was required to make a decision based on probative evidence, reasonably and with an evident, rational and intelligible justification. Specifically, such a basis was needed to demonstrate that in lieu of the RE1 zoning – or the R2 zoning that applied prior to the acquisition date – the value of the acquired land should be assessed on the basis of the factual assumptions that the acquired land was zoned R3 with a maximum building height of 23 metres and maximum floor space ratio of 1.7:1. It was submitted that such a demonstrated basis was lacking in the Determinations.

73. The Council submitted that although the Valuer-General was the decision-maker, there were actually three levels of decision-makers in effect: the Valuer-General (through his delegate, Mr Goldsmith), Mr Hurst and Ethos Urban. It was submitted that Mr Goldsmith solely relied on the conclusions of Mr Hurst in his final report for the purposes of issuing the Determinations of Compensation. There was no suggestion that the Valuer-General made inquiries or independent findings of fact on which to issue the Determinations. The Council submitted that “the natural inference actually is that [Mr Goldsmith] read the report and that’s it, not the hundreds of pages of other material”. Accordingly, it was submitted that it is necessary to have regard to the Hurst report to understand the basis on which the Valuer-General purported to discharge his statutory obligations and duties under the Just Terms Act. It was submitted that, in turn, it is necessary to have regard to the Ethos Urban peer review because it is apparent from the express terms of the Hurst report that it had been informed by and based on advice provided by Ethos Urban. As a result, the attack on these grounds centred on an analysis of those reports, in particular their determinations of the underlying zoning and development standards.

74. The Council submitted that there were three strands of argument within this ground:

1. First, Ethos Urban made an unsupported conclusion of fact that the acquired land would have had an R3 zone with a maximum building height of 23 metres and maximum floor space ratio of 1.7:1. Mr Kirk SC submitted:

“A criticism here, and this is perhaps more of a no probative evidence point but overlapping with legal unreasonableness is that it’s a statement of belief without any evident or intelligible justification, and to put it in unreasonable terms and no probative evidence cited in support. Now, again accepting no duty to give reasons but one has to read what reasons have been provided and they just seem to amount to an assertion about what the former landowners would have done. As I said at the beginning of this section, it’s not a question of opinion, it’s a question of hypothetical fact, it’s not a risk assessment and that’s sort of correctly set aside in the previous dot point. There must be a finding of what the underlying zone would have been and what the development controls would have been for the purpose of 55 and related provisions.

So what that involves is piecing together all of the factual circumstances and saying, “If I disregard the RE1 zone what zone and development controls in fact would have applied and there must be probative evidence supporting a conclusion with evident and intelligible justification to reach that conclusion by reference to that evidence.” Instead we’ve got an unsupported statement of belief.”

2. Secondly, Ethos Urban failed to engage with the necessary relevant material, namely the Council’s view as to any likely rezoning and development standards, the characteristics of Blenheim Park which imposed an inherent constraint on any likely rezoning and development standards, and the fact that none of the other R3 zones in the Ryde LGA was comparable.

3. Thirdly, Mr Hurst abdicated his judgment by adopting the Ethos Urban report without further decision or explanation. Mr Hurst did not attempt to resolve the differences in the planning materials before him and it was beyond his apparent expertise to do so. Mr Kirk SC submitted:

“Now, nowhere within [the Hurst] report, or so far as I’m aware anywhere else, and I’m recognising we’re at the level of his reasoning, does he explain why.  He gives no reason whatsoever as to why he has adopted that report, save that by implication he considers it’s not something the other valuers should opine on.  In so doing, he seems to have abdicated decision making, and just accepted Ethos, as it seems, because it’s the last word.”

75. Taking these three strands together, it was submitted there was no evident or intelligible basis for the conclusions on which the Valuer-General ultimately relied. The Determinations were thus invalid.

The former owners’ submissions

76. The former owners submitted that it cannot be accepted that the Valuer-General “solely relied” on the Hurst report. Rather, the Valuer-General’s decision to accept the conclusions reached in the Hurst report regarding the market value of the acquired land must be understood in the context of the various other valuation and town planning reports provided to him when making the Determinations.

77. The former owners submitted that the Council’s submission that the Valuer-General had no evidence to reach his findings does not stand up to scrutiny. It was clearly reasonably open to the Valuer-General to accept the opinions of experts regarding town planning and market value in making the Determinations. It was submitted that to the extent the Council seeks to criticise the basis of the opinion reached in the Ethos Urban report, this requires the Court to engage in impermissible merits review.

157. The strength of the analogy between the Just Terms Act and the Act considered in Shade Systems is that Parliament has deliberately chosen to permit full merits review challenges to the Valuer-General’s Determination, but only at the suit of the former owner: Division 5 of the Just Terms Act. Additional support for the analogy is provided by the fact that the Just Terms Act provides a series of time limits which are designed to ensure that a compensation notice is given promptly to all former owners (s 42), that payment is made promptly after acceptance of the amount of compensation offered (s 44) and any appeal to the Land and Environment Court must be lodged within 90 days after receiving a compensation notice (s 66).

158. While there are some similarities with the scheme established by the Security of Payment Act, the Just Terms Act contains important differences which are, in my view, decisive of the present question. The most important of these is that under the former Act, the statutory entitlement to a progress payment and the procedure for recovery of a progress payment are separate from, and in addition to, a contractor’s entitlement under a construction contract to receive payment for completed work. It may much more readily be concluded that within a closely defined interim administrative procedure, which is subject to a full hearing at the instance of either affected party on a subsequent occasion, errors of law may be treated as non-jurisdictional.

159. Another important difference is that the Council, whilst an “authority of the State” as defined in the Just Terms Act, is not able to challenge the Valuer-General’s Determination made under s 47. If the Just Terms Act applied only to an “authority of the State” which was part of the executive government of New South Wales, the analogy with Shade Systems would be stronger. In that event, a deliberate choice by the New South Wales Parliament to allow only former owners to challenge a Determination by the Valuer-General would be a factor in favour of treating legal errors of the present kind as non-jurisdictional. The Council, however, is not part of the executive government of New South Wales: see Federated Municipal and Shire Council Employees’ Union of Australia v Melbourne Corporation (1919) 26 CLR 508; [1919] HCA 73; Re Lambie (2018) 263 CLR 601; [2018] HCA 6 at [41] per Kiefel CJ, Bell, Gageler, Keane, Nettle and Gordon JJ.

160. I do not discern an intention of the legislature that an acquiring authority in the position of the Council is bound by the Valuer-General’s decision about value, including amounts payable for disturbance. That is, I am unable to accept, by analogy with the adjudicator under the Security of Payment Act, that the Just Terms Act implicitly confers on the Valuer-General the authority to form an opinion about the interpretation of provisions of the Act that amplify the matters specified in ss 55 and 59 to which regard must be had and to act on an incorrect interpretation of those provisions in determining the amount of compensation under a Determination.

161. Whilst I was initially attracted to the proposition that the power of amendment in s 43A told in favour of legal errors made by the Valuer-General being treated as non-jurisdictional I have concluded that this is a factor which is at best neutral. This is because s 43A(2) encompasses the potential to amend a compensation notice for a range of reasons. Those reasons will not always be jurisdictional.

162. The task here is to construe the Act as a whole, and in context, and to give effect to harmonious goals. Unlike the Act the subject of Shade Systems, the Valuer-General’s Determination does not provide a “coherent, expeditious and self-contained” method of making what is essentially an interim decision. In the Just Terms Act, the Parliament has addressed very carefully the rights and responsibilities of acquiring authorities and land owners. The Parliament has not implicitly removed the entrenched right of the Council to challenge the Valuer-General for misinterpreting the statute. I accept, as Mr Kirk SC submitted, that the Act in context does not permit a delegate of the Valuer-General to ignore Court of Appeal decisions about the power granted by ss 55 and 59 of the Just Terms Act or be misinformed about those decisions. The Just Terms Act, properly construed, does not leave a litigant in the position of the Council with no ability to approach the Court to correct a clear legal error as amounting to jurisdictional error.

163. For these reasons I have concluded that the Valuer-General is not empowered by the Just Terms Act to make errors of law of the kind identified in this ground.

164. It follows that the Determinations are affected by jurisdictional error in this limited way and the Council is entitled to an order in the nature of certiorari to remove the legal consequences, or purported legal consequences, of an exercise or purported exercise of power which has, at the date of the order, a discernible or apparent legal effect upon rights. The Determinations must be set aside. I will make a declaration in the terms sought by the Council.

165. To the extent that it may assist the parties in addressing necessary consequences of the orders I will make, I will set out the passage from the submissions of Mr Kirk SC about the consequences of those orders, which submissions I accept:

“KIRK: As I put yesterday, I agree you don’t have to start again in the sense of you pick up the file, which is probably that big by now, and you turf it in the recycling and you say, right, let’s get a new delegate, new valuer, all that sort of stuff. To that extent I agree with him that you just don’t have to do that; you can take account of it subject to, first, I agree also with Mr Hemmings that they obviously have to correct what they did wrong, but secondly, they’re still making a fresh decision and if there is new material before them, for example, if the facts have changed or if we manage to put in a submission, perhaps even a new report, they’re obliged to take account of it and ultimately that’s consistent I think we referred in our submissions to Peko Wallsend. It’s often forgotten that the ultimate holding in Peko Wallsend was that there is in general an implied statutory duty to take account of relevant material available to the decision maker prior to making the decision. You can’t just ignore what’s on file. So we would be perfectly entitled to say you were wrong on that issue and, by the way, you’re still wrong on those two issues and here are six reasons why you’re wrong, they would need to think about it. They don’t have to agree but they’d need to think about it.”

166. Given that the Council made the hardship determination in 2016 and acquired the first and second defendants’ property on 24 August 2018, it is to be hoped that the necessary further consideration of the Valuer-General’s statutory task will occur speedily.

The stay granted in this case

167. Before leaving this case there is an important issue of principle raised by the way in which this case came to be heard in this Court many months after the statutory time limits in the Just Terms Act, in particular s 42.

168. It will be recalled that a judge of the Court made orders by consent on 15 March 2019 staying the effect of the Valuer-General’s Determinations of Compensation as follows:

“1. The legal effect of the third defendant’s determination of compensation of 21 December 2018 in respect of the plaintiff’s compulsory acquisition of land identified as Lot C in Deposited Plan 410408 (known as 86 Blenheim Street, North Ryde) and Lot D and Lot E in Deposited Plan 410408 (known as 12A and 14 Epping Road, North Ryde) from the first and second defendants, respectively, is stayed until the final disposition of these proceedings on the following conditions:

…

2. Order (1) does not derogate from the plaintiff’s statutory entitlement to obtain a deed of release and indemnity, and the title document to the property on completion of the first and second defendants’ claim for compensation.”

169. Those orders replicate the orders made by another judge of the Court on 6 July 2018 granting a stay in a case which apparently raises similar issues to the present case: Blacktown City Council v Concato [2018] NSWSC 1039. I was informed from the bar table that the former owners took the view that as a stay was unsuccessfully opposed in Concato, the appropriate course was to consent to orders in the same terms in this case.

170. I am persuaded that Mr Kirk SC correctly identified the juridical problems with the Court granting a stay of the operation of a statutory scheme:

“KIRK: You may or may not require a lot of persuasion to do that [grant an injunction], but you can injunct people. You can’t injunct an Act. At least it is not yet, to my knowledge, been established. I’m not saying it’s impossible, but it has not yet been established in Australian law you can injunct an Act; and if you can’t injunct an Act, you can’t stay an Act. The closest it came constitutionally, I think, was in the Castlemaine Tooheys’ litigation …”

171. In Elliott v Minister administering Fisheries Management Act 1994 [2018] NSWCA 123 Basten JA (with whom Beazley P and I agreed) said:

“[93] The power of a court to grant an interlocutory injunction to protect the interests of parties adversely affected by legislation, in circumstances where they seek to challenge the constitutional validity of such legislation, was established by Castlemaine Tooheys Ltd v State of South Australia. That case involved South Australian laws designed to require that manufacturers of bottled beer use refillable bottles. The law was challenged under s 92 of the Constitution. The plaintiffs, being bound by the law they sought to challenge, sought interlocutory injunctions restraining the State “from enforcing or causing to be enforced against the goods of the plaintiffs in interstate trade and commerce”. Mason ACJ accepted that there was jurisdiction and power to grant an interlocutory injunction in such a public law case, including a constitutional challenge to the validity of the law. He stated that:

“In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction.”

[94] The Chief Justice noted a number of cases in which the jurisdiction had been conceded, but in none of which did the court restrain the defendant from commencing prosecutions for breach of the statutes whose validity was impugned. He also accepted a statement in a Canadian case that “the balance of convenience normally dictates that those who challenge the constitutional validity of laws must obey those laws pending the court’s decision.” The harm to be suffered by the manufacturers was to be weighed against the damage to the public interest underlying the regulatory provisions. The application for interlocutory injunctions was dismissed.

[95] A similar jurisdiction was invoked in Richardson v Forestry Commission, although the boot was on the other foot. The Commonwealth Minister sought an interlocutory injunction restraining the Tasmanian Forestry Commission and a logging company from undertaking operations in the Lemonthyme and Southern Forests of Tasmania, pending determination of the validity of the Commonwealth legislation. Mason CJ granted interlocutory relief to enforce the challenged legislation.” (Footnotes omitted.)

172. Basten JA explained the position in England and Wales which is arguably different. In R v Secretary of State for Transport, Ex parte Factortame Ltd(No 2) [1991] 1 AC 603, the owners of some 95 Spanish fishing vessels, which had been, but could no longer be, registered in Britain, sought interlocutory relief allowing them to continue to fish in British waters, pending the determination of their challenge under the European Communities Act 1972 (UK) c 68 to the relevant provisions of the Merchant Shipping Act 1988 (UK) c 12. The UK courts initially held that they were unable to grant relief which would in effect suspend the operation of British law. In response to a ruling of the European Court of Justice that such a jurisdiction existed, interim injunctions were granted.

173. Basten JA in Elliott explained that it is not necessary to compare the approach adopted in Factortame with that adopted in Castlemaine Tooheys Ltd v State of South Australia (1990) 169 CLR 436; [1990] HCA 1. That was because there is no doubt that the power to grant an interlocutory injunction against the authority responsible for enforcing the law is available in circumstances where regulations are challenged on the basis of inconsistency with the empowering statute. Usually one would expect the application for an interlocutory injunction to be resisted by the body charged with enforcing the public interest underlying the impugned legislation. The public interest is likely, in accordance with the principles stated in Castlemaine Tooheys, to hold sway. Even in Factortame the relief ultimately granted was an interim injunction.

174. I am aware of no authority, which permits the grant of a “stay”, in effect, of the operation of an Act of Parliament. In particular I am unable to agree that the decision of Young JA (sitting on his own as referrals judge) in Re Kerry [2010] NSWCA 232 provides any support for the proposition that the Court has jurisdiction to stay the operation of a statute. In Re Kerry, what Young JA actually decided was that the Court had jurisdiction to grant a mandatory interim injunction (in that case permitting access to a child) ancillary to relief sought under s 69 of the Supreme Court Act. Assuming that is so, I do not think that the case supports the existence of a jurisdiction to stay the continuing operation of a statute.

175. I accept Mr Kirk’s pithy analysis – “if you can’t injunct an Act, you can’t stay an Act”. The judgments in Castlemaine Tooheys and Elliott, which are inconsistent with the existence of such a jurisdiction, were apparently not brought to the attention of the Court when granting the stay. The stay of the “legal effect of the third defendant’s determination of compensation” granted in this case, in my respectful view, should not have been granted. Whatever the form of injunction, if one had been sought, each of the matters described by Mason ACJ in Castlemaine Tooheys, including the undertaking as to damages and the balance of convenience, would necessarily have been addressed.

Costs

176. Section 98 of the Civil Procedure Act2005 (NSW) confers on the Court a wide discretion with respect to costs. Under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW), the general rule is that the Court is to order that costs follow the event. The “event” may be characterised in more than one way. Generally the “event” refers to the result of the claim or counterclaim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] (Ward, Emmett and Gleeson JJA). Where there has been a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court: Doppstadt at [19]; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22.

177. The relevant principles for the determination of costs on an issue-by-issue basis were stated in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] per Beazley, Ipp and Basten JJA:

“• Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported).

•    In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: SabahYazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.

•    If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27].

•    Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).

•    A separable issue can relate to “any disputed question of fact or law” before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].

• Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272.”

178. The Council has succeeded in obtaining the relief that it sought but the great bulk of the evidence and the written submissions related to issues on which the Council failed. The matters critical to the determination I have made in the Council’s favour were in a short compass. As can be seen from the lengthy recitation of facts, the Council’s case roamed far wider than the matter upon which they have enjoyed success. I have concluded that the issues upon which the Council failed are severable. In this case the Council has succeeded in relation to one aspect of its challenge. Issues related to town planning and valuation, however, occupied by far the larger part of the material before me and the written submissions. As I have said, much of the Council’s evidence on the issues where it failed involved an impermissible appeal to the merits.

179. Applying the appropriate broad bush approach based on matters of impression and evaluation, the Council should be assessed as having had 30 per cent success in the case having obtained the relief it sought (only on the basis of the disturbance costs issue), but having failed on the principal issues it litigated. The first and second defendants should be assessed to have been 70 per cent successful on the severable issues in the case. Considering the relevant “event” overall and taking into account the success of both parties on the separable issues in this case, the Council should be ordered to pay 30 per cent of the first and second defendants’ costs to reflect a set-off.

180. That is, rather than make an award for one part of the case and a separate award for the other, I have decided that the best course, adopting the appropriate broad brush approach, is to order that the Council pay 30 per cent of the first and second defendants’ costs.

178. The third defendant played a limited role in the proceedings in accordance with Hardiman and there should be no order as to costs between the plaintiff and the third defendant.

Conclusion and orders

182. For the foregoing reasons I have concluded that grounds 1 and 2 should be dismissed. Ground 3 should be upheld.

183. The orders of the Court are:

1. A declaration that the Determinations of Compensation made by the Third Defendant (Valuer General’s reference VVGC.JT02800 dated 21 December 2018 and Valuer General’s reference VVGC.JT02799 dated 21 December 2018) (“the Determinations”) purportedly pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (“the Act”) and in relation to the Plaintiff’s compulsory acquisition of land identified as Lot C in Deposited Plan 410408 (known as 86 Blenheim Street, North Ryde) and Lot D and Lot E in Deposited Plan 410408 (known as 12A and 14 Epping Road, North Ryde) (“the Acquired Land”) from the First and Second Defendants (“the Acquisition”), respectively, are void and of no effect;

2. Order that the Third Defendant determine compensation in relation to the Acquisition in accordance with the Act;

3. Order the Plaintiff to pay 30 per cent of the costs of the First and Second Defendants;

4. No order as to costs between the Plaintiff and the Third Defendant.

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Endnote

Decision last updated: 20 November 2019