David Fox v Planning Ministerial Corporation
[2023] NSWLEC 109
•20 October 2023
Land and Environment Court
New South Wales
- Amendment notes
Medium Neutral Citation: David Fox v Planning Ministerial Corporation [2023] NSWLEC 109 Hearing dates: 5 to 9, 13 to 15, 22 and 29 June and 14 July 2023 Date of orders: 20 October 2023 Decision date: 20 October 2023 Jurisdiction: Class 3 Before: Moore J Decision: See directions at [487]
Catchwords: COMPULSORY ACQUISITION – determination of compensation – land compulsorily acquired on the Sydney Harbour foreshore at McMahons Point – necessity to determine the public purpose for which the land was acquired –public purpose to be disregarded for the purposes of assessing compensation – the Applicants propose that the public purpose was the creation of a foreshore park identified in 1948 and incorporated in the County of Cumberland Planning Scheme Ordinance 1951– Applicants propose underlying zoning at the date of acquisition was R3 Medium Density Residential after disregarding the public purpose – the Ministerial Corporation's position is that the acquisition was for the purpose of completing the already existing open space reserve surrounding the site – Ministerial Corporation proposes underlying zoning at the date of acquisition was B1 after disregarding the public purpose – public purpose was that advanced by the Ministerial Corporation – resultant underlying zone is B1 Neighbourhood Centre at the date of acquisition
VALUATION – valuation of site on an underlying zoning of B1 Neighbourhood Centre – consideration of the extent of a hypothetical B1 development on the site – hypothetical development of three storeys with one ground floor commercial level with basement and a single level apartment above – hypothetical purchaser an owner/occupier not a developer looking to construct the hypothetical development and on‑sell it – consideration of value of commercial component – consideration of value of residential component – two-level hypothetical B1 development subject of quantity surveying evidence – necessity to derive a value after consideration of valuation and quantity surveying costing – necessity to make allowance for risk of obtaining development – valuation of acquired property on B1 underlying zoning basis to be derived from applying nominated adjustments to the valuation analysis of a three-level shop top housing development – directions given for calculating outcome
VALUATION – contingent R3 valuation undertaken as a precaution if B1 Neighbourhood Centre incorrect underlying zoning – comparable sales method appropriate basis for valuation assessment –expert valuers consider multiple potential comparable sales – consideration of whether sales were truly comparable – only one sale truly comparable – analysis and adjustment of comparable sale results in valuation of acquired property on R3 underlying zoning basis of $17,200,000
DISBURSEMENTS – dispute as to limited range of disbursements made in support of preparation of Applicants case – disbursements made for the purposes of enabling legal advice to be given to the Applicants – disbursements to be reimbursed pursuant to s59(1)(a) of the Land Acquisition (Just Terms Compensation) Act 1991
COSTS – consideration of costs entitlement of dispossessed owners – dispossessed owners’ case not advanced unreasonably or in a fashion causing unnecessary expense – dispossessed owners entitled to costs, even if resultant B1 development less than Valuer General's determination
Legislation Cited: Civil Procedure Act 2005, s98(1)
County of Cumberland Planning Scheme Ordinance 1951
Environmental Planning and Assessment Act 1979, cll 30 and 31 of Pt 6 of Sch 2
Land Acquisition (Just Terms Compensation) Act 1991, ss 4, 7, 55, 56(1), 59(1)(a) and 66
Land and Environment Court Act 1979, s 38(2)
North Sydney Local Environmental Plan 2013, cll 4.3, 4.6, 5.1, 5.10 ,6.9 and the Land Use Table
North Sydney Development Control Plan 2013, cl 9.8.8
Trees (Disputes Between Neighbours) Act 2007
Uniform Civil Procedure Rules 2005, rr 1.5, 38.10, 42.1 and 42.15 and Sch 1
Cases Cited: AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2008] NSWCA 325
Arco Iris Trading Pty Ltd v North Sydney Council [2015] NSWLEC 1113
Banno v Commonwealth of Australia (1993) 45 FCR 32
BGP Properties Pty Limited v Lake Macquarie City Council [2004] NSWLEC 399
Blackmore Design Group Pty Ltd v Manly Council [2014] NSWLEC 164
Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404
Buhach v Transport for New South Wales [2022] NSWLEC 148
David Fox v North Sydney Council [2016] NSWLEC 1366
Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 553
Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328
Eureka Operations Pty Ltd v Transport for New South Wales [2021] NSWLEC 41
Fox v North Sydney Council [2020] NSWLEC 1056
G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20
Halley v Minister Administering the Environmental Planning and Assessment Act 1979 [2010] NSWCA 361
Hrsto v Canterbury City Council (No 2) [2014] NSWLEC 121
James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296
oOh!media Fly Pty Limited v Transport for NSW [2023] NSWLEC 26
Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendant of Crown Lands [1947] AC 565
RD Miller Pty Ltd v Roads and Maritime Services NSW [2020] NSWCA 241
Roads and Maritime Services v Desane Properties Pty Ltd [2018] NSWCA 196
RTA v Perry & Anor (2001) 52 NSWLR 222; [2001] NSWCA 251
Sales v Transport for NSW (No 2) [2021] NSWLEC 96
Sydney Water Corporation v Caruso and Ors [2009] NSWCA 391
Turner v Minister of Public Instruction (1956) 95 CLR 245
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5
Waters & Ors v Welsh Development Agency [2004] WLR 14 May 2004
Zhang v Canterbury City Council (2001) 115 LGERA 373; [2001] NSWCA 167
Category: Principal judgment Parties: David Fox and Josette Hazzouri (Applicants)
Planning Ministerial Corporation (Respondent)Representation: Counsel:
Solicitors:
P Tomasetti SC/ D Robertson, barristers (Applicants)
N Eastman/H Rogers, barristers (Respondent)
Dentons (Applicants)
Ashurst (Respondent)
File Number(s): 59433 of 2022 Publication restriction: No
Judgment
Prologue
An initial observation
Introduction
The ownership of the site
The acquisition by the Planning Ministerial Corporation
The hearing
Representation
Relevant statutory and planning provisions
Introduction
The Land Acquisition Act
The Environmental Planning and Assessment Act
The 2013 LEP
Introduction
The RE1 zone
The other potentially relevant zones requiring consideration
Introduction
The R3 zone
The R4 zone
The B1 zone
The IN4 zone
Other potentially or applicable planning controls in the 2013 LEP
A relevant definition in the 2013 LEP
The 2013 DCP
Past development proceedings
The zoning history of McMahons Point
The issues for determination
The evidence
A further introductory observation concerning the scope and complexity of the evidence
Introduction to the form of the evidence
The disputes about admissibility of proposed evidence
The expert witnesses
The field inspection
Introduction
The notes of the field inspection
The dispute as to the “public purpose”
Introduction
Short summaries of the parties’ competing public purpose arguments
The Applicants’ position
The Ministerial Corporation’s position
Determination of the public purpose
Introduction
The acquisition-effecting documents
Introduction
The Minister's letter
Proposed Acquisition Notice
The Ministerial approval to initiate acquisition
The Government Gazette notice
The opening submissions for the Applicants
The opening written submissions for the Applicants
The opening oral submissions for the Applicants
The opening submissions for the Ministerial Corporation
The opening written submissions for the Ministerial Corporation
The opening oral submissions for the Ministerial Corporation
The closing submissions for the Applicants
The closing written submissions for the Applicants
The closing oral submissions for the Applicants
The closing submissions for the Ministerial Corporation
The closing written submissions for the Ministerial Corporation
The closing oral submissions for the Ministerial Corporation
The submissions in reply for the Applicants
Consideration
A potential IN4 hypothetical zoning
Introduction
Conclusion on IN4 zoning pleading
The form of a B1 development for the site
The planning evidence on B1 development potential
Introduction
Mr McKenzie’s individual expert report
Mr Chamber’s individual expert report
The first joint expert town planners’ report
Conclusion on the broad town planning position
Constraints on any hypothetical B1 development
Introduction
Heritage matters
Defining an approvable B1 building envelope
The Moreton Bay Fig tree
Introduction
The arboricultural evidence
Conclusion on the Moreton Bay Fig
The concurrent architectural and planning evidence
Introduction
Mr Aspinall’s B1 designs
Mr McKenzie's evidence
Mr Aspinall’s general view on developability
Consideration
The defects in Mr Aspinall's Exhibit 6 schematic for the B1 zoning hypothetical development
The roof form of a hypothetical development
A cl 4.6-dispensation request
Introduction
The town planning evidence
Mr Chambers’ evidence on a cl 4.6 dispensation request
Consideration
Any issues associated with parking requirements
The planning role of the 2013 DCP
Conclusion on the form of the hypothetical B1 development
Valuation of the B1 hypothetical development
The Applicants’ purchase of the property
The B1 hypothetical development valuation evidence
The attack on Mr Garnsey’s evidence – his mathematical imprecision
A slightly higher B1 schematic development
Mr Dale’s valuation report in reply
Mr Garnsey’s initial assessment of a B1 value
The joint valuers’ report on the B1 zoning assumption
Consideration
Introduction
The nature of the developer
Deriving a B1 site valuation outcome
Introduction
Detailed consideration of Mr Garnsey's Table 10
Introduction
The hypothetical development proponent
The southern residential terrace absence deduction
Valuation of the commercial space
Mr Lawson’s pricing includes the relevant risk
An adjustment to Mr Lawson’s TKD B1 scenario costing
The R3 hypothetical development
A contingent residential valuation
Introduction
Consideration of the appropriateness of the sales relied upon
Introduction
The built form of a residential development
The valuers’ comparable residential sales
Introduction
The attack on Mr Garnsey’s evidence – his residential sales evidence
Defining the pool of the comparable sales
A north/south market divide
Consideration of market division
The properties on the northern side of the harbour
Introduction
The valuation evidence – 11 Bay View Street, Lavender Bay
Consideration
Alterations necessary to be made to Mr Dale’s adjustments
Introduction
View adjustment
Market movement
An additional adjustment
Conclusion on the derived value of the site
Disputed disbursement costs
Introduction
Applicants’ written submissions on disturbance costs
Relevant Legal Principles
The Applicants’ chronology concerning the disputed costs
The Applicants’ position
The Ministerial Corporation’s position
Consideration
Overall conclusions
Costs
Directions
Judgment
Prologue
-
Given that there is a degree of urgency in finalising these proceedings (at least at first instance), I provide the following brief summary of the conclusions which I have reached. These are:
the proper understanding of the public purpose contended for by the Planning Ministerial Corporation (the Ministerial Corporation) is correct;
it therefore follows that the underlying hypothetical zoning is B1 Neighbourhood Centre;
the hypothetical developer would be an owner/occupier;
the hypothetical development form capable of being achieved on the site is a three-level “shop top housing” development – being a basement and ground floor commercial space with the upper level as a single residence;
achieving that development potential would require a successful dispensation request pursuant to cl 4.6 of the North Sydney Local Environmental Plan 2013 (the 2013 LEP) and there is a modest risk attaching to such a dispensation request. This risk can be accommodated by making a modest downward adjustment to what would otherwise be the value to be ascribed to the B1 hypothetical development;
if I am found to be wrong in my determination of characterisation of the public purpose, I have undertaken a contingent R3 Medium Density Residential valuation, deriving a resultant value for the site of $17,200,000 on that basis; and
whatever the resultant value of my hypothetical B1 valuation for the site when compared to the compensation determination made by the Valuer General or any settlement offer which may have been made for the Planning Ministerial Corporation (the Ministerial Corporation), I have concluded that it is appropriate that the Applicants have their costs of the proceedings at first instance whatever might be its final outcome.
An initial observation
-
In truth, a hypothetical purchaser engaged in a transaction pursuant to s 56(1) of the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act), even for a site of the significance of the one that is the subject of these proceedings, would not descend into the valuation assessment quagmire to the extent of the expert evidence that has been involved in these proceedings. The position is that such a hypothetical purchaser might readily be expected to enquire of a town planner:
what the town planner expected that the development potential of the site would be; and
what risk might be associated with seeking to realise that potential with that risk being one of both time and money.
-
The hypothetical purchaser might also seek advice from that town planner as to the likely building envelope capable of achievement in such a hypothetical development.
-
Such advice would not be extensive and in complex detail.
-
That hypothetical purchaser would likely also seek some comparatively uncomplicated valuation advice as to what the site might be worth in light of the town planning advice.
-
It beggars belief that such a hypothetical purchase would be transacted on the basis of expert professional advice to the extent of the scope, cost and delay that has been brought to bear in these proceedings.
-
Said facetiously, the hypothetical purchaser assembling such a team of hypothetical experts might well discover that the resulting advice did not arrive until several weeks after a hypothetical transaction would be concluded with a different hypothetical purchaser who did not feel constrained by the necessity to consult such a range of experts to the extent brought to bear for the purposes of this litigated hypothetical transaction.
Introduction
-
1 Henry Lawson Avenue, McMahons Point (the site) - Lot 1 in DP 915829 - is located on the southern side of Henry Lawson Avenue with Henry Lawson Reserve on both its east and west sides and with a frontage to Sydney Harbour to the south. Henry Lawson Reserve is an open grassed area with a sandstone sea wall along the harbour. The site has an area of 365.5sqm with a street frontage of 15.24m. The site contains two dilapidated existing two storey buildings with the eastern building being the smaller of the two.
-
The reproduced map extract below shows the contextual location of the site.
-
The site has dramatic views to the southeast, south and southwest toward the Harbour Bridge, the Opera House, the skyline of the Sydney CBD and other Sydney Harbour foreshore elements.
-
The site was used for ship building/ship repair purposes from the 19th century until such operations ceased in the 1980s (the precise date being immaterial for present purposes). However, as a result of these past maritime activities, heritage constraints apply to any use of the site.
-
The site contains two parallel slipways. The western slipway consists of a concrete slope with iron rails with a timber boat cradle presently on it. The concrete apron and rails extend 20m into the harbour (and beyond the seaward boundary of the site). The eastern slipway is a tidal slipway extending from the harbour into the site with the rails extending under the eastern building on the site. A stone seawall lines the outer sides of each slipway and joins the Henry Lawson Reserve seawall at each harbour boundary point of the site.
-
Henry Lawson Avenue runs from west to east from Blues Point Road to the McMahons Point ferry wharf. It slopes gently downward from the west until it flattens out as it approaches its turning circle head at the wharf. In addition to the public ferry service from the wharf, there is also a regular bus service from the wharf along Henry Lawson Avenue and thence up Blues Point Road toward the North Sydney CBD.
-
On its right, travelling from west to east, all of the land fronting Henry Lawson Avenue, other than the site, is public open space.
-
Immediately to the west of the site, in the public open space, is a substantial Moreton Bay Fig Tree, a tree whose canopy extends over the site and whose crown is some five metres or so higher than the ridgeline of the present buildings on the site. It is not disputed that this tree is self‑sown. As was observed during the course of the field inspection later described, there has been some past pruning of tertiary branches which have obviously extended toward the site. There is also no dispute that this tree is in good condition.
-
On the northern side of Henry Lawson Avenue, there has been long past sandstone quarrying undertaken (presumably for local construction purposes). Because of the fall of Henry Lawson Avenue toward the east, the old sandstone quarry face becomes gradually higher as one moves to the east down the slope of Henry Lawson Avenue. There are various vegetation elements growing on, or hanging over, portions of this historic quarry face. The cliff across Henry Lawson Avenue from the site has a height of approximately 11 metres. This cliff backdrop is relevant for considering any hypothetical redevelopment proposal for the site in the circumstances where the public purpose is subject to the later described statutory disregard. Atop this cliff is located residential development with its primary outlook appearing to be toward the harbour (understandably) and having frontages to Warung Street.
The ownership of the site
-
The site was owned, at the time of its compulsory acquisition, by Mr David Fox and Ms Josette Hazzouri (together, the Applicants). The site was purchased in August 2009 for $7,500,000 (GST exclusive).
The acquisition by the Planning Ministerial Corporation
-
The property was compulsorily acquired by the Planning Ministerial Corporation (the Ministerial Corporation). The acquisition was effected by a notice published in the Government Gazette on 21 June 2021.
-
Compensation was subsequently determined by the Valuer General pursuant to the Land Acquisition Act as comprising $9,150,000.00 for the market value of the site (s 56 of the Land Acquisition Act) and $228,857.00 for disturbance (s 59(1) of the Land Acquisition Act). The Applicants, being dissatisfied with the compensation amounts determined by the Valuer General, have appealed to this Court (s 66 of the Land Acquisition Act) to have the amount of compensation to which they are entitled determined by the Court.
The hearing
-
As noted on the coversheet, the hearing was held on 5 to 9, 13 to 15, 22 and 29 June and 14 July 2023. A field inspection was held on Tuesday 6 June as later discussed.
Representation
-
The Applicants were represented by Mr P Tomasetti SC and Mr D Robertson, barristers. The Ministerial Corporation was represented by Mr N Eastman and Mr H Rogers, barristers.
Relevant statutory and planning provisions
Introduction
-
For present purposes, provisions of the Land Acquisition Act, the Environmental Planning and Assessment Act 1979 (the EPA Act), the North Sydney Local Environmental Plan 2013 (the 2013 LEP) and the North Sydney Development Control Plan 2013 (the 2013 DCP) arise for consideration in these proceedings.
The Land Acquisition Act
-
The first of the relevant provisions appropriate to be set out, from the Land Acquisition Act, are the definition of “public purpose” contained in s 4(1) together with s 7, the provision which makes it clear that the Land Acquisition Act does not, itself, authorise compulsory acquisition but merely provides a process for compensation for such compulsory acquisition. The power to acquire, compulsorily, land for a public purpose must be given by some other statutory enactment. It is also appropriate to set out ss 55, 56(1) and 59(1)(a) of the Land Acquisition Act.
-
As earlier noted, the Applicants have appealed to the Court pursuant to s 66 of the Land Acquisition Act as they are dissatisfied with the compensation determination made by the Valuer General for their compulsorily acquired property. There is no necessity to set out the terms of this provision.
-
The relevant provisions needing to be set out are in the following terms:
4 Definitions
(1) In this Act:
…
public purpose means any purpose for which land may by law be acquired by compulsory process under this Act.
…
7 Act not to empower authority to acquire land
(1) This Act does not empower an authority of the State to acquire land if it does not have the power (apart from this Act) to acquire the land.
(2) …
55 Relevant matters to be considered in determining amount of compensation
In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division)—
(a) the market value of the land on the date of its acquisition,
(b) …,
(c) ...,
(d) any loss attributable to disturbance,
(e) …,
(f) ….
56 Market value
(1) In this Act—
market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid)—
(a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and
(b) – (c) ….
(2) …
(3) …
59 Loss attributable to disturbance
(1) In this Act—
loss attributable to disturbance of land means any of the following—
(a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land,
(b) valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land),
(c) – (e) …
(f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.
(2) Subject to the regulations, a reference in this section to a qualified valuer is a reference to a person who—
(a) has membership of the Australian Valuers Institute (other than associate or student membership), or
(b) has membership of the Australian Property Institute (other than student or provisional membership), acquired in connection with his or her occupation as a valuer, or
(c) has membership of the Royal Institution of Chartered Surveyors as a chartered valuer, or
(d) is of a class prescribed by the regulations.
The Environmental Planning and Assessment Act
-
The ability to acquire the site from the Applicants compulsorily arose as a consequence of the exercise of powers granted to the Planning Ministerial Corporation by a combination of cll 30 and 31 of Part 6 of Schedule 2 of the EPA Act. The relevant elements of these provisions are reproduced below:
30 General land functions of Corporation
(1) ...
(2) ...
(3) ...
(4) In addition to other functions conferred or imposed on the Planning Ministerial Corporation under this or any other Act, the Corporation may, for the purposes of this Act—
(a) – (h) …
(i) by notification published in the Gazette, dedicate any land vested in the Corporation as a reserve for public recreation or other public purposes and fence, plant and improve any such reserve.
(5) ...
(6) ….
31 Power of Corporation to acquire land etc
(1) The Planning Ministerial Corporation may, for the purposes of this Act or pursuant to any function conferred or imposed on the Minister or the Planning Secretary by an environmental planning instrument, acquire land by agreement or by compulsory process in accordance with the Land Acquisition (Just Terms Compensation) Act 1991.
(2) Without limiting the generality of subclause (1), the Planning Ministerial Corporation may acquire in any manner authorised by that subclause—
(a) any land to which an environmental planning instrument applies and which the Minister considers should be made available in the public interest for any purpose, or
(b) – (d) ….
(3) - (7) ….
The 2013 LEP
Introduction
-
The 2013 LEP is the principal (but not only) environmental planning instrument potentially requiring consideration in these proceedings. Within the potentially applicable uses in the Land Use Table of the 2013 LEP are set out not only the objectives and uses for the site provided for by its present zoning but also the relevant provisions that would otherwise be applicable, potentially, for the site, disregarding the public purpose for which the site has been acquired (as mandated by s 56 of the Land Acquisition Act as earlier set out).
-
In addition to the actual zoning of RE1, there are four other zones set out in the Land Use Table of the LEP which require consideration. All five of the elements of the LEP's Land Use Table are set out below.
The RE1 zone
-
The RE1 zone is that which applies to the site. The relevant element of the Land Use Table for this zone is in the following terms:
Zone RE1 Public Recreation
1 Objectives of zone
• To enable land to be used for public open space or recreational purposes.
• To provide a range of recreational settings and activities and compatible land uses.
• To protect and enhance the natural environment for recreational purposes.
• To ensure sufficient public recreation areas are available for the benefit and use of residents of, and visitors to, North Sydney.
2 Permitted without consent
Environmental protection works.
3 Permitted with consent
Aquaculture; Building identification signs; Business identification signs; Community facilities; Environmental facilities; Information and education facilities; Kiosks; Recreation areas; Recreation facilities (outdoor); Restaurants or cafes; Roads; Water recreation structures.
4 Prohibited
Any development not specified in item 2 or 3.
The other potentially relevant zones requiring consideration
Introduction
-
The position advanced on behalf of the Applicants is that the underlying zoning that would presently be applicable, if the public purpose was to be disregarded as required, would be for residential purposes. Two zonings, R3 and R4, are advanced for the Applicants in the alternative as potentially available on this basis. Although it is appropriate to set out the relevant elements of the Land Use Table of the LEP applicable to each of these zones, for reasons later addressed the site is constrained by existing site characteristics in a fashion which does not mean that there would be any difference in hypothetical development potential whichever of these zones was applicable (if either of them was found to be applicable in the counter‑factual circumstances requiring consideration).
The R3 zone
-
The relevant elements of the LEP's Land Use Table applicable to the R3 zone are in the following terms:
Zone R3 Medium Density Residential
1 Objectives of zone
• To provide for the housing needs of the community within a medium density residential environment.
• To provide a variety of housing types within a medium density residential environment.
• To enable other land uses that provide facilities or services to meet the day to day needs of residents.
• To encourage the development of sites for medium density housing if such development does not compromise the amenity of the surrounding area or the natural or cultural heritage of the area.
• To provide for a suitable visual transition between high density residential areas and lower density residential areas.
• To ensure that a high level of residential amenity is achieved and maintained.
2 Permitted without consent
Environmental protection works
3 Permitted with consent
Attached dwellings; Boarding houses; Centre-based child care facilities; Community facilities; Dual occupancies (attached); Dwelling houses; Group homes; Home-based child care; Hostels; Information and education facilities; Multi dwelling housing; Neighbourhood shops; Oyster aquaculture; Places of public worship; Recreation areas; Respite day care centres; Roads; Semi-detached dwellings; Seniors housing; Tank-based aquaculture
4 Prohibited
Pond-based aquaculture; Any other development not specified in item 2 or 3
The R4 zone
-
The relevant elements of the LEP's Land Use Table applicable to the R4 zone are in the following terms:
Zone R4 High Density Residential
1 Objectives of zone
• To provide for the housing needs of the community within a high density residential environment.
• To provide a variety of housing types within a high density residential environment.
• To enable other land uses that provide facilities or services to meet the day to day needs of residents.
• To encourage the development of sites for high density housing if such development does not compromise the amenity of the surrounding area or the natural or cultural heritage of the area.
• To ensure that a reasonably high level of residential amenity is achieved and maintained.
2 Permitted without consent
Environmental protection works.
3 Permitted with consent
Attached dwellings; Boarding houses; Centre-based child care facilities; Community facilities; Dual occupancies (attached); Dwelling houses; Entertainment facilities; Home-based child care; Hostels; Information and education facilities; Multi dwelling housing; Neighbourhood shops; Oyster aquaculture; Places of public worship; Recreation areas; Residential flat buildings; Respite day care centres; Roads; Semi-detached dwellings; Shop top housing.
4 Prohibited
Pond-based aquaculture; Tank-based aquaculture; Any other development not specified in item 2 or 3.
The B1 zone
-
As was observed during the course of the field inspection, the Sails Restaurant is located on the waterfront of the foreshore of Lavender Bay at the turning circle head of Henry Lawson Avenue, some 140 metres from the boundary of the site. The site of the restaurant is zoned B1. The relevant elements of the Land Use Table in the 2013 LEP for this zone as at the date of acquisition were in the following terms:
Zone B1 Neighbourhood Centre
1 Objectives of zone
• To provide a range of small-scale retail, business and community uses that serve the needs of people who live or work in the surrounding neighbourhood.
• To encourage active street life while maintaining high levels of residential amenity.
• To encourage development for the purpose of shop top housing.
2 Permitted without consent
Environmental protection works
3 Permitted with consent
Boarding houses; Business premises; Centre-based child care facilities; Community facilities; Entertainment facilities; Health services facilities; Information and education facilities; Kiosks; Medical centres; Neighbourhood shops; Neighbourhood supermarkets; Office premises; Oyster aquaculture; Places of public worship; Public administration buildings; Recreation areas; Recreation facilities (indoor); Respite day care centres; Restaurants or cafes; Roads; Shops; Shop top housing; Signage; Tank-based aquaculture; Take away food and drink premises
4 Prohibited
Pond-based aquaculture; Any other development not specified in item 2 or 3
-
It is relevant here to note that shop top housing (the definition of which is later set out) is permissible in this zone.
The IN4 zone
-
The final potential underlying zoning applicable to the site is that which would be in force if it was to be regarded as zoned for waterfront industrial activities, consistent with what had been the past history of such activities on the site. The zoning, if such a hypothetical use was applicable, is the IN4 zone. The relevant element of the Land Use Table for the IN4 zone is in the following terms:
Zone IN4 Working Waterfront
1 Objectives of zone
• To retain and encourage waterfront industrial and maritime activities.
• To identify sites for maritime purposes and for activities that require direct waterfront access.
• To ensure that development does not have an adverse impact on the environmental and visual qualities of the foreshore.
• To encourage employment opportunities.
• To minimise any adverse effect of development on land uses in other zones.
2 Permitted without consent
Environmental protection works.
3 Permitted with consent
Aquaculture; Boat building and repair facilities; Boat launching ramps; Charter and tourism boating facilities; Jetties; Kiosks; Light industries; Marinas; Roads; Signage.
4 Prohibited
Any development not specified in item 2 or 3.
Other potentially or applicable planning controls in the 2013 LEP
-
Six other provisions of the 2013 LEP are also appropriate to be reproduced. These are set out below:
4.3 Height of buildings
(1) The objectives of this clause are as follows—
(a) to promote development that conforms to and reflects natural landforms, by stepping development on sloping land to follow the natural gradient,
(b) to promote the retention and, if appropriate, sharing of existing views,
(c) to maintain solar access to existing dwellings, public reserves and streets, and to promote solar access for future development,
(d) to maintain privacy for residents of existing dwellings and to promote privacy for residents of new buildings,
(e) to ensure compatibility between development, particularly at zone boundaries,
(f) to encourage an appropriate scale and density of development that is in accordance with, and promotes the character of, an area,
(g) to maintain a built form of mainly 1 or 2 storeys in Zone R2 Low Density Residential, Zone R3 Medium Density Residential and Zone C4 Environmental Living.
(2) The height of a building on any land is not to exceed the maximum height shown for the land on the Height of Buildings Map.
(2A)–(2C) (Repealed)
4.6 Exceptions to development standards
(1) The objectives of this clause are as follows—
(a) to provide an appropriate degree of flexibility in applying certain development standards to particular development,
(b) to achieve better outcomes for and from development by allowing flexibility in particular circumstances.
(2) Development consent may, subject to this clause, be granted for development even though the development would contravene a development standard imposed by this or any other environmental planning instrument. However, this clause does not apply to a development standard that is expressly excluded from the operation of this clause.
(3) Development consent must not be granted for development that contravenes a development standard unless the consent authority has considered a written request from the applicant that seeks to justify the contravention of the development standard by demonstrating—
(a) that compliance with the development standard is unreasonable or unnecessary in the circumstances of the case, and
(b) that there are sufficient environmental planning grounds to justify contravening the development standard.
(4) Development consent must not be granted for development that contravenes a development standard unless—
(a) the consent authority is satisfied that—
(i) the applicant’s written request has adequately addressed the matters required to be demonstrated by subclause (3), and
(ii) the proposed development will be in the public interest because it is consistent with the objectives of the particular standard and the objectives for development within the zone in which the development is proposed to be carried out, and
(b) the concurrence of the Planning Secretary has been obtained.
(5) - (8) ……
5.1 Relevant acquisition authority
(1) The objective of this clause is to identify, for the purposes of section 3.15 of the Act, the authority of the State that will be the relevant authority to acquire land reserved for certain public purposes if the land is required to be acquired under Division 3 of Part 2 of the Land Acquisition (Just Terms Compensation) Act 1991 (the owner-initiated acquisition provisions).
(2) The authority of the State that will be the relevant authority to acquire land, if the land is required to be acquired under the owner-initiated acquisition provisions, is the authority of the State specified below in relation to the land shown on the Land Reservation Acquisition Map (or, if an authority of the State is not specified in relation to land required to be so acquired, the authority designated or determined under those provisions).
Type of land shown on Map
Authority of the State
Zone RE1 Public Recreation and marked “Local open space”
Council
Zone RE1 Public Recreation and marked “Regional open space”
The corporation constituted under section 2.5 of the Act
Zone SP2 Infrastructure and marked “Classified road”
Transport for NSW
Zone C1 National Parks and Nature Reserves and marked “National Park”
Minister administering the National Parks and Wildlife Act 1974
Zone C2 Environmental Conservation and marked “Local open space”
Council
Zone C2 Environmental Conservation and marked “Regional open space”
The corporation constituted under section 8 of the Act
(3) Development on land acquired by an authority of the State under the owner-initiated acquisition provisions may, before it is used for the purpose for which it is reserved, be carried out, with development consent, for any purpose.
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Although the theoretical development constraints that would apply to the site are elsewhere discussed in the context of each of the potential counter‑factual zonings requiring consideration, it is appropriate to note that the 2013 LEP makes express provision for the mapping of foreshore building lines. It does so in cl 6.9, a clause in the following terms:
6.9 Limited development on foreshore area
(1) The objective of this clause is to ensure that development in the foreshore area will not impact on natural foreshore processes or affect the significance and amenity of the area.
(2) Development consent must not be granted for development on land in the foreshore area except for the following purposes—
(a) the extension, alteration or rebuilding of an existing building wholly or partly in the foreshore area,
(b) the erection of a building in the foreshore area, if the levels, depth or other exceptional features of the site make it appropriate to do so,
(c) boat sheds, sea retaining walls, wharves, slipways, jetties, waterway access stairs, swimming pools, fences, cycleways, walking trails, picnic facilities or other recreation facilities (outdoors).
(3) Development consent must not be granted under subclause (2) unless the consent authority is satisfied that—
(a) the development will contribute to achieving the objectives for the zone in which the land is located, and
(b) the appearance of any proposed structure, from both the waterway and adjacent foreshore areas, will be compatible with the surrounding area, and
(c) the development will not cause environmental harm such as—
(i) pollution or siltation of the waterway, or
(ii) an adverse effect on surrounding uses, marine habitat, wetland areas, fauna and flora habitats, or
(iii) an adverse effect on drainage patterns, and
(d) the development will not cause congestion or generate conflict between people using open space areas or the waterway, and
(e) opportunities to provide continuous public access along the foreshore and to the waterway will not be compromised, and
(f) any historic, scientific, cultural, social, archaeological, architectural, natural or aesthetic significance of the land on which the development is to be carried out and of surrounding land will be maintained, and
(g) in the case of development for the alteration or rebuilding of an existing building wholly or partly in the foreshore area, the alteration or rebuilding will not have an adverse impact on the amenity or aesthetic appearance of the foreshore, and
(h) sea level rise or change of flooding patterns as a result of climate change has been considered.
(4) In this clause—
foreshore area means the land between the foreshore building line and the mean high water mark of the nearest natural waterbody shown on the Foreshore Building Line Map.
foreshore building line means—
(a) the line that is landward of, and at the distance specified on the Foreshore Building Line Map from, the mean high water mark of the nearest natural waterbody shown on that map, or
(b) if no distance is specified, the line shown as the foreshore building line on that map.
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In the context of cl 6.9 of the 2013 LEP, it is to be noted that the relevant element of the mapping, which addresses the foreshore building line on the two sides of the McMahons Point Peninsula, sets foreshore building lines for the waterfront properties with residential zoning on this peninsula. It is to be noted that no foreshore building line is mapped for any of the RE1 land at the head of the peninsula where site is located. However, it will be necessary to comment (briefly) on the hypothetical limitation which would apply to the site as a constraint on its development potential in the counter‑factual highest and best use assessment. The foreshore building line clause in the LEP makes provision for development to be permitted forward of that building line in certain circumstances.
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The site is also subject to the heritage provisions of the LEP (the impact of the existence of former maritime harbourside industrial uses and remnant slipways and associated equipment on the site providing constraints on hypothetical development in all potential counter‑factual zoning circumstances) which arise as a consequence of the heritage provisions in the 2013 LEP. The clause, cl 5.10, is in the following terms:
5.10 Heritage conservation
(1) Objectives The objectives of this clause are as follows—
(a) to conserve the environmental heritage of North Sydney,
(b) to conserve the heritage significance of heritage items and heritage conservation areas, including associated fabric, settings and views,
(c) to conserve archaeological sites,
(d) to conserve Aboriginal objects and Aboriginal places of heritage significance.
(2) Requirement for consent Development consent is required for any of the following—
(a) demolishing or moving any of the following or altering the exterior of any of the following (including, in the case of a building, making changes to its detail, fabric, finish or appearance)—
(i) a heritage item,
(ii) an Aboriginal object,
(iii) a building, work, relic or tree within a heritage conservation area,
(b) altering a heritage item that is a building by making structural changes to its interior or by making changes to anything inside the item that is specified in Schedule 5 in relation to the item,
(c) disturbing or excavating an archaeological site while knowing, or having reasonable cause to suspect, that the disturbance or excavation will or is likely to result in a relic being discovered, exposed, moved, damaged or destroyed,
(d) disturbing or excavating an Aboriginal place of heritage significance,
(e) erecting a building on land—
(i) on which a heritage item is located or that is within a heritage conservation area, or
(ii) on which an Aboriginal object is located or that is within an Aboriginal place of heritage significance,
(f) subdividing land—
(i) on which a heritage item is located or that is within a heritage conservation area, or
(ii) on which an Aboriginal object is located or that is within an Aboriginal place of heritage significance.
(3) When consent not required However, development consent under this clause is not required if—
(a) the Applicant has notified the consent authority of the proposed development and the consent authority has advised the Applicant in writing before any work is carried out that it is satisfied that the proposed development—
(i) is of a minor nature or is for the maintenance of the heritage item, Aboriginal object, Aboriginal place of heritage significance or archaeological site or a building, work, relic, tree or place within the heritage conservation area, and
(ii) would not adversely affect the heritage significance of the heritage item, Aboriginal object, Aboriginal place, archaeological site or heritage conservation area, or
(b) the development is in a cemetery or burial ground and the proposed development—
(i) is the creation of a new grave or monument, or excavation or disturbance of land for the purpose of conserving or repairing monuments or grave markers, and
(ii) would not cause disturbance to human remains, relics, Aboriginal objects in the form of grave goods, or to an Aboriginal place of heritage significance, or
(c) the development is limited to the removal of a tree or other vegetation that the Council is satisfied is a risk to human life or property, or
(d) the development is exempt development.
(4) Effect of proposed development on heritage significance The consent authority must, before granting consent under this clause in respect of a heritage item or heritage conservation area, consider the effect of the proposed development on the heritage significance of the item or area concerned. This subclause applies regardless of whether a heritage management document is prepared under subclause (5) or a heritage conservation management plan is submitted under subclause (6).
(5) Heritage assessment The consent authority may, before granting consent to any development—
(a) on land on which a heritage item is located, or
(b) on land that is within a heritage conservation area, or
(c) on land that is within the vicinity of land referred to in paragraph (a) or (b),
require a heritage management document to be prepared that assesses the extent to which the carrying out of the proposed development would affect the heritage significance of the heritage item or heritage conservation area concerned.
(6) Heritage conservation management plans The consent authority may require, after considering the heritage significance of a heritage item and the extent of change proposed to it, the submission of a heritage conservation management plan before granting consent under this clause.
(7) Archaeological sites The consent authority must, before granting consent under this clause to the carrying out of development on an archaeological site (other than land listed on the State Heritage Register or to which an interim heritage order under the Heritage Act 1977 applies)—
(a) notify the Heritage Council of its intention to grant consent, and
(b) take into consideration any response received from the Heritage Council within 28 days after the notice is sent.
(8) Aboriginal places of heritage significance The consent authority must, before granting consent under this clause to the carrying out of development in an Aboriginal place of heritage significance—
(a) consider the effect of the proposed development on the heritage significance of the place and any Aboriginal object known or reasonably likely to be located at the place by means of an adequate investigation and assessment (which may involve consideration of a heritage impact statement), and
(b) notify the local Aboriginal communities, in writing or in such other manner as may be appropriate, about the application and take into consideration any response received within 28 days after the notice is sent.
(9) Demolition of nominated State heritage items The consent authority must, before granting consent under this clause for the demolition of a nominated State heritage item—
(a) notify the Heritage Council about the application, and
(b) take into consideration any response received from the Heritage Council within 28 days after the notice is sent.
(10) Conservation incentives The consent authority may grant consent to development for any purpose of a building that is a heritage item or of the land on which such a building is erected, or for any purpose on an Aboriginal place of heritage significance, even though development for that purpose would otherwise not be allowed by this Plan, if the consent authority is satisfied that—
(a) the conservation of the heritage item or Aboriginal place of heritage significance is facilitated by the granting of consent, and
(b) the proposed development is in accordance with a heritage management document that has been approved by the consent authority, and
(c) the consent to the proposed development would require that all necessary conservation work identified in the heritage management document is carried out, and
(d) the proposed development would not adversely affect the heritage significance of the heritage item, including its setting, or the heritage significance of the Aboriginal place of heritage significance, and
(e) the proposed development would not have any significant adverse effect on the amenity of the surrounding area.
A relevant definition in the 2013 LEP
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It is also appropriate to set out the definition of shop top housing from the 2013 LEP as it becomes engaged if the underlying zoning is B1 Neighbourhood Centre as is a permissible form of development in this zone (as can be seen from the earlier set out extract from the Land Use Table):
shop top housing means one or more dwellings located above the ground floor of a building, where at least the ground floor is used for commercial premises or health services facilities.
The 2013 DCP
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The DCP contains specific provisions for the site in Part C 9.8.8. These provisions are in the following terms:
9.8.8 1 Henry Lawson Avenue
Diversity
P1 To be purchased by the State government to complete the regional public open space network created along the entire southern foreshore of McMahons and Blues Points.
P2 The site is redeveloped with cognisance of the former use of the site.
P3 Until the site is purchased for public use, the site may continue to be used as a boat building or repair facility with ancillary residential accommodation. No more than 50% of the gross floor area may be used for residential purposes and must be located above the ground floor level.
Form, massing and scale
P4 Heritage listed slipways and sea walls to be retained.
P5 A two to three storey form.
Setbacks
P6
Front:
1m (minimum).
P7
Rear:
(to Sydney Harbour):
5.8m minimum.
P8
Side:
Non-residential component:
0m minimum.
Residential component:
1.5m minimum.
Colours and materials
P9 Development uses muted colours and non-reflective materials, such as brick and timber to ensure that the scenic and environmental qualities are preserved.
Past development proceedings
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A planning proposal was submitted to the Council on behalf of the Applicants seeking the rezoning of the site but was not proceeded with and does not require, therefore, to be explored further.
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However, there have also been two development applications made to the Council which resulted in Class 1 proceedings in the Court. Each of these applications had relied on the beneficial and facultative provisions of cl 5.10(10) of the 2013 LEP as the basis for why redevelopment of the site for shipbuilding and repair use with associated ancillary residential development should be permitted. Clause 5.10(10) of the 2013 LEP has earlier been set out.
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The first of the Class 1 appeals was determined by O'Neill C in 2016 (David Fox v North Sydney Council [2016] NSWLEC 1366). The Commissioner dismissed the appeal and refused development consent for the proposed development. The second Class 1 appeal was heard and determined in 2020 by Walsh C (Fox v North Sydney Council [2020] NSWLEC 1056). The Commissioner dismissed this appeal and refused development consent for that proposed development.
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Each of these development applications relied on the beneficial and facultative conservation incentive provision in cl 5.10(10) of the 2013 LEP earlier set out. That provision, as can be seen, allows consent to be given to otherwise impermissible development, if relevant heritage protection works are incorporated in such a development proposal.
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Those circumstances do not arise here as, after the application of the statutory disregard which necessitates the setting aside of conservation zoning, the various development scenarios requiring consideration in these proceedings do not require any reliance on cl 5.10(10) of the 2013 LEP in order to be capable of being approved.
The zoning history of McMahons Point
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The zoning history of McMahons Point was set out in the written evidence of Mr Chambers, the Applicants’ town planning expert (Evidence Book, pages 179 to 180):
The issues for determination
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Mr Tomasetti's written opening submissions summarised what were said, on behalf of the Applicants, to be the issues requiring determination in these proceedings. They were described as being:
22. Given the parties’ positions, the issues which the Court will be required to determine at the hearing fall into four broad categories:
(a) The identification of the public purpose for which the Property was acquired;
(b) The zoning of the Property as at the date of acquisition but for the proposal to carry out the public purpose;
(c) The matters to be disregarded in determining the market value of the Property; and
(d) The most appropriate valuation method to apply to determine the market value of the Property as at the date of acquisition.
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Mr Eastman’s written opening submissions proposed that the issues requiring determination could be summarised as being:
E. ISSUES FOR DETERMINATION
35. As a consequence of the matters identified above, the Respondent contends that the issues for determination in these proceedings are:
a. What is the “public purpose” for which the land was acquired?
b. What is the underlying zoning and the relevant development standards and other planning controls which would apply to the site, in circumstances where the public purpose is to be disregarded?
c. If zoned B1: is residential development (in the form of shop top housing) achievable?
d. If zoned R3, what residential development is achievable (e.g. height, FSR, setbacks, heritage constraints, car parking)?
e. Whether zoned B1 or R3: What is the correct valuation method to apply?
f. If zoned B1: what are the inputs into the residual analysis?
g. If zoned R3: what are the appropriate comparable sales and how are they to be adjusted?
h. What is the appropriate amount for disturbance for legal, valuation and consultant fees?
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Although that which I have set out above was subject to some later refinement toward the conclusion of the hearing, I am satisfied that what is set out in the preceding two paragraphs provides a sufficient and accurate reflection of what I need to address in this judgment.
The evidence
A further introductory observation concerning the scope and complexity of the evidence
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It is appropriate, prior to the commencement of addressing preliminary evidentiary issues and then listing the details of the expert witnesses and their areas of expertise, to observe that the complexity and detail of what has become engaged for the purposes of this almost eleven day hearing and has necessitated my preparation of a judgment of north of 200 pages in length has been the proposition best encapsulated by what Mr Eastman advanced (Transcript 7 June 2023, page 72, lines 12 to 16) where he said:
Because it's not enough, in my submission, just simply to identify that if it is to be B1 or, indeed, IN4, not setting out what the controls and constraints would be, would be an error, because a hypothetical purchaser would make that inquiry in some detail of the planners, of a heritage consultant, of an architect, and of a quantity surveyor, on my case.
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Whilst I accept that there is a degree of particularity concerning this site arising from the legitimate contest between the Applicants and the Ministerial Corporation as to the public purpose requiring to be set aside as a consequence of the statutory disregard in s 56(1) of the Land Acquisition Act, I am unable to accept the broad proposition inherent in Mr Eastman's submission above (a submission not initially embraced on behalf of the Applicants but, as later discussed, apparently reluctantly embraced - I am prepared to assume), of the necessity to rely on detailed and complex expert evidence going well beyond what would reasonably be expected to be sought by a hypothetical prudent purchaser before engaging in private treaty negotiations with the hypothetical vendor for the purchase of this site.
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Unfortunately, the embracing of the degree of detail in areas other than conventional valuation evidence (evidence which is necessary for the task upon which I have needed to embark) has caused both duration of hearing and of judgment preparation (including judgment length) that are, perhaps, quite unwarranted under the circumstances.
Introduction to the form of the evidence
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The evidence in the proceedings was primarily tendered in electronic form, enabling relevant historical photographs and planning maps to be displayed on screen in the courtroom. Limited evidentiary material was admitted in paper documentary form.
The disputes about admissibility of proposed evidence
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There was limited controversy as to the admissibility of any of the evidentiary material. It is not necessary to go into any great detail by setting out the past procedural history and rulings which had been made by Duggan J concerning applications foreshadowed (but not made) for the Applicants to be permitted to rely on additional expert evidence (these procedural matters having arisen in the period shortly prior to the hearing dates).
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These matters arose before Duggan J in circumstances where the proceedings had been commenced on 1 March 2022 and initial procedural directions had been made by Pepper J in July 2022 (including, at that time, addressing the qualification of expert witnesses for the Applicants and the Ministerial Corporation in nominated disciplines and when the Applicants disavowed any intention to rely on expert evidence in several areas where the Ministerial Corporation proposed to do so).
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It is sufficient for present purposes to note that, at the pre-trial mention before me on 31 May 2023, Mr Eastman foreshadowed that there would be objections to what was proposed to be appended to the Town Planning Joint Expert Report as material upon which Mr Chambers had relied as providing foundational assumptions for his town planning evidence. If this material was to be admitted, the Ministerial Corporation would be at a significant evidentiary disadvantage, he submitted.
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Consideration of the objections foreshadowed at the pre-trial mention was deferred to be dealt with if such material was sought to be relied upon for the Applicants at trial.
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In this context, it is to be noted that the material to which objection was foreshadowed comprised hypothetical residential development plans and associated materials prepared by Tanner Kibble Denton Architects (TKD) and photomontage material prepared by Virtual Ideas, a 3D visualisation company, which provided images (looking toward and looking out from) the hypothetical residential development postulated in the TKD documents. The material also included an arboriculture report from Mr Peter Castor responding to the potential for the presence of the substantial Moreton Bay Fig Tree providing constraints on giving effect to any development proposal in any of the hypothetical zoning outcomes being considered.
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The Ministerial Corporation also objected to two heritage reports prepared by Mr Brooks for the Applicants (one dated March 2023 and, second, a supplementary expert report dated May 2023).
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On the third day of the hearing, I dealt with the objections pressed by the Ministerial Corporation to any of these documents being permitted to be relied upon.
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For the purposes of addressing those matters, affidavits from Mr Hill (the Ministerial Corporation’s legal representative) and Ms Vatala (the Applicants’ legal representative) were read and folders of documents referenced in those affidavits were tendered. Mr Tomasetti also tendered an earlier affidavit of Mr Hill which had been relied upon in an earlier interlocutory hearing.
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I indicated to Mr Tomasetti that, if he continued to seek to be able to rely upon the material that was sought to be “slipstreamed in” as expert evidence by being incorporated by attachment to Mr Chambers contribution to the Town Planning Joint Expert Report, I was unlikely to agree to that course. However, I indicated that if he wished to make an immediate (belated) oral application for leave to rely on the various documents as expert material and (if admitted) make their authors available for cross‑examination (if required), I would permit him to make such an application orally and address it forthwith. Mr Tomasetti elected to make that application.
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Although Mr Eastman submitted that the making of an oral application for the Applicants to be permitted to rely on the objected‑to material as expert evidence would be contrary to r 38.10 of the Uniform Civil Procedure Rules 2005 (UCPR), he also (quite properly) conceded that the Ministerial Corporation had commenced to prepare to respond to the Applicants’ architectural material if it was admitted. He also indicated that, if the Applicants were permitted to rely on the material from Mr Castor, his cross-examination of Mr Castor would be comparatively brief.
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I indicated to Mr Eastman that it seemed to me that s 38(2) of the Land and Environment Court Act 1979 (the Court Act) permitted me to inform myself as I saw fit in Class 3 proceedings such as these (subject to the requirement that my doing so did not deny the Ministerial Corporation procedural fairness and natural justice).
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I indicated that I was minded to permit the Applicants to rely on the TKD architectural material prepared in support of the Applicants’ proposal that an R3 Residential hypothetical zoning was to be accepted as appropriate and, for this purpose, to permit Mr Castor's report, as relevant to such matters, also to be admitted.
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In light of Mr Eastman's concessions, I was satisfied it was appropriate to permit the Applicants to rely on the TKD architectural material and on Mr Castor's report as expert evidence, provided necessary timetable adjustments were made to accommodate the Ministerial Corporation having sufficient time to respond.
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However, permitting the Applicants to rely on this additional material required allowing some further time for the Ministerial Corporation’s architect to be prepared to respond to it. As a consequence, in order to permit this and to permit any necessary further joint conferencing between the town planners and the architects (on an all‑in basis) and for the Ministerial Corporation’s quantity surveyor to consider the new architectural material, a day was lost out of the originally scheduled hearing timetable and the additional day I had been able to make available on the Friday of the first week of the hearing (when the hearing had not been originally scheduled) was unable to be utilised.
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The parties settled an agreed timetable for completing the matter and, as a consequence of another matter for which I had been listed not proceeding, I was able to allocate an additional day on 29 June 2023 to enable completion of the matter in a timely fashion.
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I ruled that I would not permit the Applicants to rely on the second additional expert report prepared by Mr Brooks. I did so (Transcript 7 June 2023, page 105, lines 30 to 42) on the basis that this document had been prepared by Mr Brooks late and on his own initiative rather than being a document arising as a consequence of some further matter raised with him by others during the course of conferencing.
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I also ruled that I was not prepared to admit the photomontage report prepared by Virtual Ideas for two reasons. The first, and primary, reason for this was that providing a photomontage demonstrating what might be the view to the south-east toward the Harbour Bridge and beyond was not necessary to be demonstrated by a photomontage as it was something I had observed for myself during the course of the field inspection (as had also been observed by those accompanying me on that inspection). Second, to the extent that that photomontage did not incorporate any obstruction to that potential view that might arise from any hypothesised residential development on the element of the reserve immediately to the east of the site (such hypothetical development being an element of the Applicants’ case theory), the photomontage was not an accurate depiction in any event.
The expert witnesses
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Generally, the expert witnesses gave written and oral evidence in pairs by discipline. The Applicants’ heritage expert gave evidence by audio‑visual link as he was on leave overseas at the time of the hearing. Each of the experts provided an individual expert report. Joint expert reports were provided as appropriate:
Heritage evidence was given by Mr Graham Brooks for the Applicants and Mr Stephen Davies for the Ministerial Corporation;
Town planning evidence was given by Mr Bob Chambers for the Applicants and Mr Garth McKenzie for the Ministerial Corporation;
Architectural/urban design evidence was given by Mr Lachlan Rowe for the Applicants and Mr John Aspinall for the Ministerial Corporation;
Quantity surveying evidence was given by Mr David Lawson for the Ministerial Corporation; and
Valuation evidence was given by Mr Paul Dale for the Applicants and by Mr Nicholas Garnsey for the Ministerial Corporation.
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Oral evidence was also given concurrently by the town planners and the architectural/urban design experts on an “all in” basis as part of the evidence concerning hypothetical designs which might be advanced to the Council for approval in the counterfactual possibility that the underlying zoning of the site was either R3 or B1.
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Written and oral arboricultural evidence was also given for the Applicants by Mr Peter Castor.
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An expert quantity surveying report was also produced by Mr David Lawson for the Ministerial Corporation. It is to be noted that the Applicants did not elect to seek to adduce any expert quantity surveying evidence. In addition to his initial statement of evidence in the Evidence Book (dated 22 February 2023), Mr Lawson subsequently provided a supplementary expert report dated 13 June 2023 that addressed the hypothetical development designs prepared by Mr Rowe and Mr Aspinall. This report became Exhibit 9. It will later be necessary to refer to some detail of this report for the purposes of examining how a B1 shop top housing development of the nature I have concluded it is appropriate to be hypothetically envisaged for the site is able to be valued.
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As a consequence, when I later come to address my valuation conclusions on the basis of a B1 hypothetical development for the site, Mr Lawson’s quantity surveying evidence concerning costing of the designs of the Applicants’ architect and the Ministerial Corporation’s architect stands as the uncontradicted evidence on such costing matters. I will later turn to address Mr Eastman's submissions as to why I should make a concluded valuation determination based on a hypothetical B1 shop top housing development proposal by reliance on Mr Lawson's evidence for this. In this context, it is appropriate also to observe that Mr Lawson was not required for cross-examination and his evidence is, therefore, unchallenged.
The field inspection
Introduction
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On the second day of the hearing, a field inspection was undertaken. At the request of the Applicants’ representatives, it was undertaken by boat to view not only the site, but also the various waterfront properties considered by the valuers in their various comparable sales analyses. The viewings of these properties from the water were not only ones which permitted an understanding of the location and orientation of each of them but, turning the boat at right angles to the water frontage of each of these properties enabled us to obtain an understanding of the views able to be enjoyed from any development (present or future) on those properties.
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Photographs of this aspect observed during the field inspection were taken and subsequently tendered to supplement the relevant photograph in the Evidence Book. The only location at which we left the boat to undertake a walkaround was at the site.
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To the extent that observations were made by the experts during the course of the site inspection, they are reflected in the settled notes of the field inspection later set out.
The notes of the field inspection
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Notes were taken of the field inspection and a set of joint notes subsequently settled by the legal representatives of the parties. These notes were subsequently tendered and are reproduced below:
Agreed notes from the site views on 6 June 2023
The Court and the parties met at Man O’War Steps Wharf at 9am on 6 June 2023.
Court
Applicant
Respondent
His Honour Justice Moore
Associate to Justice Moore
Peter Tomasetti SC
David Robertson
Stephanie Vatala, Dentons
Shirley Leung, Dentons
Paul Dale (valuer for Applicants)
Bob Chambers (town planner for Applicants) (only for site view)
Chris Ashjian (Applicants’ representative)
Nick Eastman
Harry Rogers
Nicole Purves, Ashurst
Nick Garnsey (valuer for Respondent)
Garth McKenzie (town planner for Respondent)
Danyal Ibrahim (representative for Respondent)
Sonna Yawary (representative for Respondent)
Jenny Byrnes (representative for Respondent)
Felix Lin (representative for Respondent)
The inspection of the subject site and the comparable sales properties took place by boat. The parties also walked around the foreshore of the subject site and its immediate surrounds.
His Honour Moore J requested that photos be taken looking outward to harbour views. The two valuers were instructed by the parties to take photographs throughout the site and comparable sales view.
Moore J stated that representatives were to convey matters of fact only; no assumptions or conclusions.
The following statements were made when viewing each of the properties:
4 Cove Street, Watsons Bay
• Paul Dale stated that:
○ One quarter of the site extends to below the mean high-water mark.
○ When the transaction took place, the property was only partially built and the purchaser had to complete the build.
○ The property was last sold in November 2021 for $27 million.
• Peter Tomasetti pointed out the nearby public wharf and public walkway, and that you can see the CBD outline and the top of the arch of the Harbour Bridge from the property but there is no view of the Opera House.
1 Wingadal Place, Point Piper
• Paul Dale said that:
○ The property has two view elements.
○ Other than from the top level of the property, the view from the property is to Double Bay.
○ Top level of property has views over neighbouring properties toward the bridge.
○ When the property was sold, the property was a prestige house. The house has now been rebuilt.
○ The property was last sold in April 2021 for $38 million.
• Nick Garnsey said:
○ The property was in good condition when sold.
○ There is a turn table in garage.
42 Wolseley Place, Point Piper
• Paul Dale noted that access to the property was through a shared driveway, and the site was steep and had a shallow waterfront. Paul Dale also noted the property has two counterparts; top level and lower level.
• Peter Tomasetti said that the driveway serves the property and the property next door.
• Nick Garnsey said that the owners of the 2 properties each owned half the driveway with reciprocal rights of carriageway
• Nick Garnsey said that the property sold twice first in 2019 for $22M and the second time in 2022 for 2022 for $27M acquired by Yakob the owners of 42A.
• Paul Dale said the property was sold for $22 million in November 2019. Paul Dale also said that the property sold for $22 million in November 2021 and sold for $27 million in July 2022.
• Paul Dale noted the property was grass land.
• Peter Tomasetti said we can see the Harbour Bridge from where we are.
6 & 2A Castra Place
• Paul Dale said that:
○ No. 6 has a 6 metre-wide frontage and adjoins the marine facility.
○ No. 6 and No. 2A fronts onto a public beach. There is “quite an odour” coming from the drainage, especially at low tide.
○ No. 6 sold in April 2021 for $26 million to Malouf and then Malouf bought 2A in June 2021 for $35 million.
• Nick Garnsey noted that there is a sign on no. 6 for a DA for internal alterations and additions.
• Peter Tomasetti noted that there is no view of the Opera House or CBD from no. 2A or no. 6 but there is a view into the bay.
• Nick Garnsey noted that the aspect is due north from both no. 6 and no. 2A. He said that there was a development consent for no. 6 for alterations and additions, and that nos. 6 and 2A are owned by different registered proprietors.
• Paul Dale said that the views were not as good at no. 2A and no. 6 as from the subject site because the views at no. 2A and no. 6 are not iconic.
27 Elamang Avenue, Kirribilli
• Nick Garnsey said that:
○ The property with the crane is no. 27.
○ At no. 27 there is a much deeper waterfront than the subject site and the site area is 626m2. Nick Garnsey said the property has the same width as the subject site but is deeper.
○ At the time of the sale, there was a 1960s house and after the sale, a DA was obtained to demolish that house and re-build.
○ Sold for $19.1 million in February 2022.
• Paul Dale said there was not a lot of residual value in property.
17 Elamang Avenue, Kirribilli
• Nick Garnsey said that:
○ The house at no. 17 is a federation house and is locally heritage listed.
○ No. 17 sold for $18.7 million in April 2022.
○ No. 17 has a deep waterfront the same width as the subject site but is deeper
• Paul Dale said that:
○ From advertising photos No. 17 appears very dated internally. He agreed that it is heritage listed.
○ No. 17 was sold in April 2022.
○ Parking for no. 17 is at street level. There is no protected ingress and egress from parking spaces to the house.
2-4 Stannards Place, Kirribilli
• Nick Garnsey noted that the property was sold in October 2022 for $19.8 million with $7.5 million for the smaller property, and $12.3 million for the larger one. There is no DA attached to the property.
• Nick Garnsey said No. 2 was approximately 858sqm in area and No. 4 was approximately 400sqm in area.
• Nick Garnsey pointed out the slipway.
• Paul Dale asked the Court and parties to observe the view corridor. Mr Dale noted that there is a boat repair facility opposite to the property and that there are boat activities next door.
11 Bay View Street, Lavender Bay
• Peter Tomasetti pointed out the fig tree that sits on the property.
• Nick Garnsey said that:
○ The site area was about 1404m2 and was 30 metres wide.
○ The property is made up of 5 titles: 3 long narrow parcels and 2 wider parcels.
○ Residence is at the base of the property.
○ The property was state heritage listed in the 1990s and sold in December 2022 for $42.2 million.
• Paul Dale noted that the views from the residence are different to the views from the guest home. The residence is set back with a large tree in the backyard.
• Paul Dale also noted the windows are different to what would be approved today for a newly built home.
5 Bay View Street, Lavender Bay
• Nick Garnsey noted that no. 5 Bay View is a block of apartments (red brick development) that was sold in one line and has a site area of 714m2.
• Nick Garnsey noted that the property was sold for $8.1 million in April 2013.
• Paul Dale noted that no. 5 Bay View is an elongated site.
• Nick Garnsey noted that no. 5 is a used as an example to compare to the 2009 sale of the subject,
3 Bay View Street, Lavender Bay
• Nick Garnsey said the property is a white modern building and sold for $10.3 million in around December 2012 while the building was built in 2014 or 2015. No building at time of sale.
• Nick Garnsey noted the land is 955sqm in area.
• Nick Garnsey said he also had information about the sale of 9 Bay View Street, Lavender Bay
• Paul Dale said it was important to note the shape of the lots of nos. 3 and 5 which were very elongated.
1 Henry Lawson Avenue, McMahons Point
Whilst on the water:
• Peter Tomasetti pointed out the following:
○ Sails Restaurant
○ There is a division that was created in the 1990s between Henry Lawson Reserve and Blues Point Reserve.
○ There is a fig tree on the land adjoining the subject site.
○ There is an indent in the sea wall into the site as MHWM used to go higher up into the site.
○ There is a galvanised dinghy rack and other moveable heritage items on the subject site.
○ The rock wall is 13-14 metres.
○ Shipway rails go underneath the building extension.
○ Rusted wheels on the site, along with the digging rack and removable heritage items.
• Peter Tomasetti said that in the counterfactual scenario the Applicants say that the whole foreshore would have been developed for residential properties with dwellings.
• His Honour Justice Moore queried the eastern boundary line in relation to the cyclone fencing. Peter Tomasetti said he could not be sure but close to the fence line and the site speaks for itself in relation to the Western side.
• Paul Dale said this property has views in a different category to views from the other comparable sales properties.
• Nick Garnsey noted that the frontage of the site is 15 metres and the depth is 24 metres.
The Court and the parties then viewed 1 Henry Lawson Avenue, McMahons Point on land and the following observations were made.
• Peter Tomasetti pointed out:
○ The steel rails, bollard, wheels, and cradle on the site.
○ The state of timbers and the rails.
○ There are 2 buildings on the site and the upper floors were residences.
○ Retaining walls on either side of the property.
○ The views from the property to the Harbour Bridge, Opera House, Barangaroo, finger wharves, which would also be available from within the building on both levels.
• Nick Eastman queried where the foreshore line would lie. Peter Tomasetti said it is hard to say and would suggest there would be some setback.
• Peter Tomasetti said that in the counterfactual the adjacent lots would also be developed as residential properties, which may impact some of the views from the subject site.
• Bob Chambers pointed out the R4 and R3 zoning boundaries. The Sails restaurant is zoned B1.
• Garth McKenzie said the built form coming up to foreshore is reflection of building line map. Garth Mckenzie said that the subject site would have very little direct sunlight and that on 21 June most of the site would be in shadows probably from about 10am and into the afternoon the property would be completely in shadows.
• Peter Tomasetti said that car parking spaces at the front of the property. He also pointed out that on the other side of the road is a 2 hour parking area with permit holders excepted.
• Peter Tomasetti said plans of the B1 scheme show a café of sorts with 96 seats [Ashurst note: We understand this comment was in the context of Mr Aspinall's B1 100% commercial Scheme, see pages 789 – 790 of the Evidence Book].
• Garth Mckenzie said that the front boundary of adjoining properties to west is setback about 1-1.5 metre from the alignment of the front boundary of the acquired land.
The legal fees acquired in briefing the two valuers and reviewing their advice, totalling $3,586.
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The Ministerial Corporation contested the above claimed items because it says:
the fees arising because of briefing multiple valuers are not justified;
no adequate explanation has been advanced for the retention of both Mr Dempsey and Mr Dale;
costs of commencing the proceedings do not qualify is disturbance costs but could be the subject of a costs order in the proceedings; and
some costs appear to relate to a previous development application which was refused by the Court on 7 February 2020.
Relevant Legal Principles
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Mr Tomasetti submitted that:
“[T]he Court of appeal has found that the word ‘reasonably, governs the word ‘incurred’ and therefore the question is whether the valuation fees are incurred reasonably and not whether the costs are reasonable in themselves” and that the valuation costs must also be incurred “in connection with the compulsory acquisition of the land.”
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He suggested that this is the case of the Applicants. To support this proposition he cited Eureka Operations Pty Ltd v Transport for New South Wales [2021] NSWLEC 41 (where Duggan J said, at [153], that “the dispossessed owner is not to be responsible for the costs of obtaining appropriate (reasonable) legal services relating to the acquisition” and, further, at [153] when it is determined that further advice from an additional qualified person is required to inform legal advice, "… it would be inconsistent with the legislative purpose to compensate the dispossessed owner for only part of the fees required to be incurred to enable the legal advice to be provided.”)
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Mr Tomasetti also cited Sales v Transport for NSW (No 2) [2021] NSWLEC 96 (where Robson J accepted, at [272], that “the reasonable costs of obtaining legal advice includes the costs of obtaining third party information and advice, where this third party information and advice directly informs, in the sense of being required for the provision of, the legal advice. Simply stated, if a legal practitioner requires third party information and advice to provide proper and comprehensive legal advice, then this information and advice is properly considered a legal cost.”)
The Applicants’ chronology concerning the disputed costs
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Mr Tomasetti submitted that the relevant chronology was:
After receiving a letter on 21 March 2019 from the Minister for Planning, advising that the Respondent sought to commence negotiations regarding the acquisition of 1 Henry Lawson Avenue, McMahons Point (Property), the Applicants sought initial advice from Peter Dempsey. They chose not to proceed with Mr Dempsey (written submission C.14-15).
In mid-April 2019, the Applicants sought valuation advice from Lunney Watts & Associates Pty Ltd.
a report was prepared by Nicholas Garnsey on behalf of the Respondent (Garnsey Report). Mr Garnsey opined in the report that the market value of the Property was $5,700,000 (excluding GST), if the underlying zoning was B1 (written submission C.17).
The applicants submitted the following reports in response (written submission C.18):
A report by Anthony Alford of Lunney Watt & Associates date 25 June 2020, which concluded that given the assumption of underlying B1 zoning the market value of the Property would be $12,220,000.
A report by David Lunney (First Lunney Report) dated 11 March 2021 which concluded that the market value of the Property was $13,300,000, given a B1 zoning.
On 19 February 2021, Paul Dale was engaged to peer review the Garnsey Report, Alford Report and First Lunney Report on behalf of the applicants and produce a report for the Valuer-General.
On 7 April 2021, Mr Dale prepared this report (Dale Peer Review), which agreed with Mr Lunney’s assessment of market value at $13,300,000, given an underlying B1 zoning.
The Alford Report, First Lunney Report and Dale Peer Review were submitted to the Valuer- General in support of the Applicants’ claim for compensation.
On 1 June 2021, the Property was compulsorily acquired.
On 3 August 2021 a preliminary determination report prepared by David Knight (Knight Report) was issued by the Valuer-General.
Mr Lunney responded with a further report dated 26 August 2021 (Second Lunney Report) which concluded that the Valuer-General’s preliminary determination of $9,150,000 underestimated the market value of the Property given a B1 zoning.
The Second Lunney Report was provided to the Valuer-General.
The Lunney Watt valuation fees have not been contested by the Respondent.
The Applicants’ position
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Mr Tomasetti proposed that the Applicants be allowed Mr Dempsey’s fees and the associated legal costs for the following reasons (written submission D.27-31):
○ These costs were reasonably incurred for the purpose of providing legal advice to the Applicants and therefore fall within the scope of s59(1)(a) and (b) of the Just Terms Act.
○ The fact that they did not proceed with Mr Dempsey does not mean that the costs incurred by engaging him were not reasonably incurred by the Applicants at that stage.
○ The Applicants’ reasons for not continuing to engage Mr Dempsey are not relevant to whether the costs were reasonably incurred.
○ The Applicants were forced to engage a valuer to assist in negotiations with the Ministerial Corporation and should not bear the costs of Mr Dempsey or the associated legal fees as a result of undertaking the process of finding an appropriate valuer.
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The costs associated with Mr Dale’s peer review were reasonably incurred by the Applicants for the following reasons (written submission D.32):
○ It was necessary to obtain the opinion of another valuer to provide clarity on the market value of the site given that 3 significantly different valuations of the site had already been made (with a difference of $7.6 million between the values provided in the Garnsey report and the First Lunney Report).
○ The valuation exercise for the site is complex, given the unique nature of the site and absence of directly comparable sales.
○ The Ministerial Corporation, through its counsel in oral submissions, appears to rely on the Dale Peer Review. The costs associated with the Dale Peer Review were reasonably incurred in line with section 59(1)(b) of the Land Acquisition Act.
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The Ministerial Corporation asserted that the costs of the Dale Peer Review would not have been reasonably incurred had Mr Dale agreed with the approach taken by Mr Alford and Mr Lunney. However, in preparing the Dale Peer Review, Mr Dale was to consider the pre-existing valuation reports and adopt the same assumptions as the earlier valuers, not to perform a valuation assessment of the site (written submission D.33).
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Mr Tomasetti suggested that Mr Dale’s conclusion was irrelevant to the question of whether the costs associated with the Dale Peer Review were reasonably incurred.
The Ministerial Corporation’s position
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In reply to Mr Tomasetti on this issue, Mr Eastman for the Respondent agreed with the characterisation of the legal and valuation costs that remained in dispute. He also agreed with the total figure of such costs across the two disciplines.
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However, Mr Eastman turned to the decision of Pepper J in Buhach v Transport for New South Wales [2022] NSWLEC 148 (Buhach). He submitted that the relative complexity and quantum of proceedings was not, in and of itself, a justification for obtaining two or more valuation opinions, submitting (Transcript 14 July 2023, page 656, line 26 to line 46):
EASTMAN: Now can I just remind your Honour that what we’d said about this was that a straight application of Pepper J’s decision in Buhach is what we relied on…
….
EASTMAN: Your Honour sees that the submission mirrors the submission in this case, 284, “The applicants submitted that in proceedings of this complexity and quantum,” and I pause there and say it’s evident from the face of the judgment and obviously I was in that case, that was correct, however, it wasn’t enough to satisfy her Honour, as you’ll see in 285, that that justified in that case a second valuation opinion, let alone a third. The way her Honour disposed of it was to agree with Transport’s [the Respondent’s] submissions that it was “unreasonable and excessive on the evidence before the Court”.
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Mr Eastman rejected the proposition advanced by Mr Tomasetti that no inference should be drawn as to why the Applicant didn’t proceed with Mr Dempsey as a valuation expert, submitting (Transcript 14 July 2023, page 657, line 5 to line 8):
EASTMAN: What Mr Tomasetti also said was that there’s no explanation otherwise as to why they went off to someone else. That is what’s required in order to demonstrate the reasonableness of it, that’s what Pepper J said in Buhach and that’s what I’d ask your Honour to apply here.
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Mr Eastman submitted that the legal costs arising from consideration of the Dempsey report were ancillary to the valuation costs. In this context, he concluded his reply by submitting that the legal costs relating to those valuation reports were also not reasonably incurred (Transcript 14 July 2023, page 657, line 12 to 23).
Consideration
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It is to be observed that Robson J also said, at the conclusion of [272] in Sales:
272. … Simply stated, if a legal practitioner requires third party information and advice to provide proper and comprehensive legal advice, then this information and advice is properly considered a legal cost.
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It is also to be noted that, in oOh!media Fly Pty Limited v Transport for NSW [2023] NSWLEC 26, I concluded, at [474], that:
474. I am satisfied that Duggan and Robson JJ [in Eureka and Sales] were each not clearly wrong in the conclusion which they had reached concerning the appropriateness of ordering reimbursement for ancillary professional advice. Consistent with the approach by Duggan and Robson JJ (one which it would have been available to Transport to have challenged in the Eureka proceedings on appeal but was not - see Transport for NSW v Eureka Operations Pty Ltd [2022] NSWCA 56 at [62]) ….
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It is appropriate to set out the entirety of the relevant portion of the decision of Pepper J in Buhach, at [484] to [487], as this makes it clear that the additional expert advice for which reimbursement had been sought was valuation advice with this being sought pursuant to s 59(1)(b) of the Land Acquisition Act. This portion of her Honour's decision is in the following terms:
Dobrow Valuations Fees
284. The applicants submitted that in proceedings of this complexity and quantum, they have reasonably incurred the costs of obtaining a second opinion as “a reality check of the advice” that they had obtained by commissioning the Dobrow Valuations report, and therefore, the costs were claimable under s 59(1)(b) of the JT Act.
285. I agree with the submissions of TNSW that the commissioning of the Dobrow Valuations report was unreasonable and excessive on the evidence before the Court. There is nothing before the Court to demonstrate that these valuation costs are not, as they plainly appear to be, duplicate costs (cf Penfold and Bracey v Health Administration Corporation [2009] NSWLEC 157 at [135]-[136] per Biscoe J), or that there is some other circumstance that renders the additional report necessary (such as ill health of a valuer or the valuer not able to be a witness in the proceedings: see, for example, the facts in Cook v Roads and Traffic Authority of New South Wales [2007] NSWLEC 136 at [80] per Jagot J).
286. To the extent that the applicants relied upon the decision in Croghan v Blacktown City Council (2019) 100 NSWLR 757; [2019] NSWCA 248, that case does not assist them. That decision concerned a different issue, namely, a successful appeal against an award of costs by the trial judge on an ordinary and indemnity basis (the date from which the acquiring authority made an offer of compromise).
287. In summary, I find that there is insufficient evidence to demonstrate that the Dobrow Valuations fees have been “reasonably incurred” and, therefore, they are not compensable.
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Here, the basis upon which reimbursement is sought, not merely for the additional legal costs of briefing counsel to advise on the earlier valuation advice together with the various (slightly differently context valuation advices) is that these fees fell within the scope of the reimbursement power in s 59(1)(a) in the fashion utilised by Duggan J in Eureka and followed by Robson J in Sales and by me in oOh!media.
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Although Mr Eastman proposed (by necessary inference) that some explanation was necessary to be given as to why the applicants did not rely on Mr Dempsey for these proceedings, I am satisfied that it does not arise because the valuation advice given by Mr Dempsey was for the purposes of enabling the Applicants’ legal representatives to be properly informed prior to the commencement of this litigation. Having commenced the litigation, the nature of the experts proposed to be relied upon for the proceedings involves legitimate forensic considerations – not ones requiring to be explored by me.
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Although the distinction between the two bases of claim might be regarded by some as being a matter of fine distinction, this is not the case. Costs incurred and claimed pursuant to the first basis must be costs antecedent to, and in preparation for, litigation contesting the quantum determined by the Valuer General to compensate the dispossessed owner of the interest in land which has been acquired. Conventionally, the second provision is utilised to compensate for freestanding advice given direct to a dispossessed owner by a valuer whose qualifications are identified in s 59(2) of the Land Acquisition Act.
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Here, the disputed amount totalling $16,109.50 has been claimed pursuant to s 59(1)(a) and is claimable under that provision. The Applicants are therefore to be reimbursed for this disputed amount pursuant to that provision.
Overall conclusions
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I have concluded that:
a proper consideration of the documents effecting the compulsory acquisition and consideration of the relevant statutory provisions enabling this to occur means that the public purpose required to be disregarded, as a consequence of s 56(1)(a) of the Land Acquisition Act, is the inclusion of the site in the existing foreshore reserve at the southern end of McMahons Point and thus accepting that, for hypothetical development purposes, the site is surrounded by the existing reserve (and that the Moreton Bay Fig Tree on the allotment to the west is, to the extent necessary, required to be considered as part of the framework for assessing the development potential of the site on a counterfactual basis);
as a result of the above determination and its application by the statutory disregard, the underlying zoning for hypothetical development consideration is B1 Neighbourhood Centre under the 2013 LEP;
a hypothetical B1 Neighbourhood Centre shop top housing development on the site would be of three levels with a three‑bedroom apartment atop two lower levels of commercial space (one level being a basement);
the hypothetical purchaser would be advised (and would accept the advice) that there was sufficient prospect of a successful application made to the Council (or by the Court on appeal), pursuant to cl 4.6 of the 2013 LEP, to be permitted to increase the maximum height of the hypothetical development beyond the otherwise applicable 8.5‑metre limit in order to be able to achieve this hypothetical development outcome;
the precise nature of the roof form for such a hypothetical development is a matter of detail which would be resolved during the development application process and is not a matter impacting on the potential approvability of such a hypothetical development;
the value to be found for the hypothetical B1, shop top housing development on the site is that to be derived from Table 10 in Mr Garnsey's expert report but with the adjustments to that table’s values as I have earlier set out (to result in a higher value to be derived from Table 10 than that which is currently set out in Table 10);
if I am wrong in my determination that the statutory disregard requires the assumption that the site is to be regarded as having an underlying hypothetical zoning of B1 Neighbourhood Centre but it should have an underlying zoning of R3 after applying the statutory disregard, the value of the site would be $17,200,000;
for the reasons earlier set out, the Applicants are entitled to be reimbursed the disturbance costs which are in dispute; and
whatever the outcome of making the adjustments I have determined are required to Mr Garnsey’s Table 10, for the reasons discussed below, the Applicants should have their costs of the proceedings.
Costs
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It is to be noted that, in compulsory acquisition compensation proceedings, costs do not follow the event, as might otherwise be expected, as r 42.1 of the (UCPR) does not apply in such proceedings (UCPR r 1.5, Sch 1). Costs are in the discretion of the Court (s 98(1) of the Civil Procedure Act 2005).
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In Banno v Commonwealth of Australia (1993) 45 FCR 32 (Banno), Wilcox J observed, at 51, concerning compensation claims made by dispossessed owners of property which has been compulsorily acquired for a public purpose:
But this is not ordinary litigation. The relationship between the parties giving rise to the litigation did not arise out of their mutual desire; it arose because of a unilateral decision of the Commonwealth to acquire the applicants' land in order to satisfy a perceived public need. The acquisition left the applicants in the position of either accepting the Commonwealth's assessment of the proper compensation or of having the Court rule on its adequacy.
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His Honour's conclusion in those proceedings was that compulsory acquisition of private real property, when subject to curial proceedings to determine the quantum of compensation to be paid to the dispossessed owner, will usually be followed by a costs order in favour of the dispossessed owner. This has been adopted as applicable in this jurisdiction for compensation litigation pursuant to the Land Acquisition Act by the Court of Appeal in Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 (Dillon), per Basten JA at [70] to [72].
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Even in circumstances where the result is a mixed one, where a dispossessed owner does not achieve complete success, but only succeeds on some elements, nonetheless, it is appropriate to make a costs order in favour of the dispossessed owner (Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404) per Tobias AJA at [95] to [98].
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Although, conventionally in Class 3 compensation proceedings, costs are only awarded to a dispossessed owner if that owner obtains a compensation result which is greater than that which had been originally determined by the Valuer General or proposed in the proceedings by the acquiring authority, that is not the universal position. I am given a broad discretion by s 98(1)(a) of the Civil Procedure Act 2005 to determine how costs of these proceedings should fall.
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The unusual nature of the contest between the parties – particularly the resolution of what was the public purpose to which the statutory disregard was to be applied engages my consideration of this costs discretion whatever the financial outcome for the Applicants.
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That these proceedings concerned statutory construction as applied to the facts, where it could not be said that the propositions advanced on behalf of the Applicants were so entirely lacking in merit as to be fanciful, means that there is no basis upon which I could conclude that the litigation was commenced and continued on behalf of the Applicants in any unreasonable fashion nor at unnecessary expense.
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As a consequence, I am satisfied that, despite the overall result of the proceedings being that the Applicants may not have obtained an assessment of market value greater than that determined by the Valuer General (an observation I make as I am awaiting final computation of the B1 site value in the fashion earlier set out), I am nonetheless satisfied that it would be appropriate to order that the Ministerial Corporation pay the Applicants’ costs of these proceedings.
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Although a considerable portion of the evidence and of the time taken in the proceedings was devoted to consideration of development potentiality of either hypothetical underlying zoning and what would be resultant valuation on the R3 Medium Density Residential basis advanced for the Applicants and they were unsuccessful on these points, the unusual nature of the contest between the parties – one of dominance requiring the resolution of what was the public purpose as the starting point for the following valuation process – means that I can see no basis why any question of costs apportionment should arise (although this is possible - James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296).
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I have also considered the potentiality that my conclusion as to the statutory disregard might be appealed unsuccessfully (my earlier valuation conclusion on an R3 basis being provided to assist the parties in the event of a successful appeal by the Applicants). In doing so, I have turned, on a contingent basis, to what might be the costs outcome in this jurisdiction should there have been any potentially relevant offer of compromise (whether on a Calderbank offer or UCPR r 42.15 basis being irrelevant) made which might potentially impact on costs outcomes.
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Although applying to the specific circumstances, the position taken in a recent case in the Court of Appeal (Croghan v Blacktown City Council [2019] NSWCA 2480) resulted in the dispossessed owner - acting reasonably in all circumstances - still having a costs order in his favour for the costs of the hearing in the first instance despite rejecting a higher offer of compromise.
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It strikes me that, given the nature of the contest before me, that this should also, prima facie, be the position arising if there are one or more offers of compromise in play here.
Directions
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I give the following directions:
The matter is listed for mention on 25 October 2023 at 9.00am;
The Ministerial Corporation is directed to provide orders (copied to the Applicants) giving effect to my determinations made concerning valuation of the hypothetical B1 development outcome and my disbursements determination with those orders to be provided to my Associate by 12:00pm on 23 October 2023; and
If direction (2) is complied with and the Applicants do not notify my Associate by 3:00pm on 24 October 2023 that the mention remains required for some reason, I will make orders in chambers and vacate the mention on 25 October 2023.
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Amendments
23 October 2023 - Name of the Respondent changed from "Ministerial Planning Corporation" to "Planning Ministerial Corporation".
23 October 2023 - Name of the Respondent under the "Parties" heading changed from "Ministerial Planning Corporation" to "Planning Ministerial Corporation".
Decision last updated: 23 October 2023
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