Dibb v Transport for NSW

[2023] NSWLEC 114

Land and Environment Court

New South Wales

Medium Neutral Citation:

Dibb v Transport for NSW [2023] NSWLEC 114

Hearing dates:

29, 30 May, 1, 2, 5, 6, 7, 8, 9 June, 7 July 2023

Date of orders:

26 October 2023

Decision date:

26 October 2023

Jurisdiction:

Class 3

Before:

Pain J

Decision:

See below in [444].

Catchwords:

COMPULSORY ACQUISITION – market value of acquired land – underlying zoning at acquisition date low density residential – numerous constraints on development of land for 26-lot subdivision in mind of hypothetical purchaser – river on land with need to obtain approval to pipe and traffic access and topography constraints affect consideration of risk in valuation process – relatively risk free 7-lot subdivision should be valued – disputed comparable sales adjustments considered – disturbance claim that actual use of land for land banking accepted

Legislation Cited:

Coffs Harbour Local Environmental Plan 2013 (NSW), cl 7.6, Land Use Table

Coffs Harbour City Local Environmental Plan 2000 (NSW)

Interpretation Act 1987 (NSW), s 33

Land Acquisition (Just Terms Compensation) Act 1991 (NSW), ss 42, 54, 55, 56, 59, 61, 66

Local Government Act 1993 (NSW)

North Coast Regional Environmental Plan 1998, cl 38

Rivers and Foreshores Improvement Act 1948 (NSW), s 2

Valuation of Land Act 1916 (NSW), s 6A

Water Management Act 2000 (NSW), ss 91, 91E, Dictionary

Water Management (General) Regulation 2018 (NSW), reg 3, Sch 2

Cases Cited:

Attard v Transport for NSW (2014) 205 LGERA 396; [2014] NSWLEC 44

Azzopardi v Gosford City Council (2002) 123 LGERA 118; [2002] NSWCA 234

Blacktown Council v Fitzpatrick Investments Pty Ltd [2001] NSWCA 259

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

Chaudry v Liverpool City Council [2008] NSWLEC 251

Coffs Harbour City Council v Noubia Pty Limited [2022] NSWCA 32

Everest Project Developments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2010) 177 LGERA 43; [2010] NSWLEC 88

G Capital Corporation Pty Ltd v Roads and Maritime Services (2019) 103 NSWLR 543; [2019] NSWCA 243

G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20

Harrison v Perdikaris [2015] NSWLEC 99

Hoy v Coffs Harbour City Council [2015] NSWLEC 128

Knezovic v Shire of Swan-Guildford (1968) 118 CLR 468; [1968] HCA 38

Olefines Pty Ltd v Valuer-General (NSW) (2018) 234 LGERA 444; [2018] NSWCA 265

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

Rocco Fraietta v Roads and Maritime Services [2017] NSWLEC 11

SNS Pty Ltd v Roads and Maritime Services (2018) 232 LGERA 224; [2018] NSWLEC 7

Spencer v the Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82

Speter v Roads and Maritime Services [2016] NSWLEC 128

Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391

SZTAL v Minister for Immigration and Border Protection (2017) 91 ALJR 936; [2017] HCA 34

Woollams v the Minister (1957) 2 LGRA 338

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

Zouki v Water Administration Ministerial Corporation (2001) 118 LGERA 229; [2001] NSWLEC 258

Texts Cited:

Alan Hyam, The Law Affecting the Valuation of Land in Australia (6th ed, 2020, Federation Press)

Austroads, Guide to Road Design Part 3 – Geometric Design (February 2021)

Coffs Harbour City Land Urban Capacity Assessment 2004

Coffs Harbour Urban Development Strategy 1996

Coffs Harbour Rural Residential Strategy 1999

Development Specification Design 0074 Stormwater Drainage (Design)

Natural Resources Access Regulator, “Guidelines for controlled activities on waterfront land – Riparian corridors” (May 2018)

M Taylor and R Stokes, “Up the creek: what is wrong with the definition of a river in New South Wales?” (2005) 22 EPLJ 193

Macquarie dictionary, revised 3rd ed, 2001

Our Living City Settlement Strategy 2008

Pacific Highway Planning Strategy Discussion Paper

Category:

Principal judgment

Parties:

Raymond Joseph Dibb (First Applicant)
Wendy Lynn Dibb (Second Applicant)
Transport for NSW (Respondent)

Representation:

Counsel:
I Hemmings SC with L Nurpuri (Applicants)
J McKelvey with H Grace (Respondent)

Solicitors:
Pikes & Verekers Lawyers (Applicants)
Maddocks Lawyers (Respondent)

File Number(s):

2022/137180

Index

Land Acquisition (Just Terms Compensation) Act 1991 (NSW)

Issues

Evidence

Applicants’ evidence

Respondent’s evidence

Issue 1: What would the land have been rezoned at acquisition date?

Expert town planning evidence

Applicants’ submissions

Respondent’s submissions

Finding on underlying zoning

Issue 1: Conclusion

Issue 2: Lot yield if land rezoned low density residential at acquisition date

Development risk arising from hydrological features on land

Water Management Act 2000 (NSW)

Water Management (General) Regulation 2018 (NSW)

Coffs Harbour Local Environmental Plan 2013 (NSW)

Applicants’ evidence

Respondent’s evidence

Expert hydrology evidence

Expert town planning evidence

Applicants’ submissions

Respondent’s submissions

Finding on development risk arising from hydrological features on the Land

Issue 2: Conclusion

Issue 3: Valuation

MFI 3

Expert valuation evidence

Expert valuation oral evidence

Applicants’ submissions

Respondent’s submissions

Finding on valuation

Issue 3: Conclusion

Issue 4: Disturbance

Applicants’ evidence

Respondent’s evidence

Applicants’ submissions

Respondent’s submissions

Finding on disturbance

Issue 4: Conclusion

Costs

Orders

JUDGMENT

1. Mr and Mrs Dibb the Applicants seek compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act) for the compulsory acquisition of their property in Bruxner Park Road, Korora (the Land). The Land was acquired on 30 July 2021 for the Coffs Harbour Bypass Project.

2. The Land is a slightly irregular shaped lot situated on the northern side of Bruxner Park Road, about 200m west of the A1 (Pacific Highway) with a total area of 2.719ha. It is located approximately 3.7km north-east of Coffs Harbour central business district. Compensation in the amount of $5,500,000 is sought plus disturbance.

3. The Court went on a view of the Land and properties identified by the valuers as comparable. The Land was occupied by the Respondent and extensive work had been undertaken on it in pursuit of the public purpose.

Land Acquisition (Just Terms Compensation) Act 1991(NSW)

4. The Just Terms Act provides relevantly as follows:

Part 3 Compensation for acquisition of land

…

Division 4 Determination of amount of compensation

54 Entitlement to just compensation

(1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land.

(2) If the compensation that is payable under this Part to a person from whom native title rights and interests in relation to land have been acquired does not amount to compensation on just terms within the meaning of the Commonwealth Native Title Act, the person concerned is entitled to such additional compensation as is necessary to ensure that the compensation is paid on that basis.

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) any special value of the land to the person on the date of its acquisition,

(c) any loss attributable to severance,

(d) any loss attributable to disturbance,

(e) the disadvantage resulting from relocation,

(f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

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) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and

(c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law.

(2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition.

(3) If—

(a) the land is used for a particular purpose and there is no general market for land used for that purpose, and

(b) the owner genuinely proposes to continue after the acquisition to use other land for that purpose,

the market value of the land is taken, for the purpose of paying compensation, to be the reasonable cost to the owner of equivalent reinstatement in some other location. That cost is to be reduced by any costs for which compensation is payable for loss attributable to disturbance and by any likely improvement in the owner’s financial position because of the relocation.

…

59 Loss attributable to disturbance

(1) In this Act—

loss attributable to disturbance of land means any of the following—

…

(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),

…

(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.

…

61 Special provision relating to market value assessed on potential of land

If the market value of land is assessed on the basis that the land had potential to be used for a purpose other than that for which it is currently used, compensation is not payable in respect of—

(a) any financial advantage that would necessarily have been forgone in realising that potential, and

(b) any financial loss that would necessarily have been incurred in realising that potential.

…

Division 5 Objections and appeals to Land and Environment Court

66 Objection against amount of compensation offered

(1) A person who has claimed compensation under this Part may, within 90 days after receiving a compensation notice, lodge with the Land and Environment Court an objection to the amount of compensation offered by the authority of the State.

(2) If any such objection is duly lodged, the Land and Environment Court is to hear and dispose of the person’s claim for compensation.

….

(4) If the Land and Environment Court decides that the amount of compensation payable (without the addition of interest) does not exceed by more than 10% the amount of compensation offered by the authority of the State, the Court may cancel or reduce the amount of interest that has accrued under this Act in respect of the compensation since the institution of the proceedings.

5. The location of the Applicants’ Land and the Coffs Harbour Bypass Project are identified on the map below.

6. The Land is currently zoned SP2 Infrastructure under the Coffs Harbour Local Environmental Plan 2013 (LEP 2013).

Issues

7. The following issues arise for determination:

1. Underlying zoning at date of acquisition disputed by parties. The Applicants contend the Land would have been zoned low density residential (R1 General Residential (R1) or R2 Low Density Residential (R2)). The Respondent contends the Land would have been zoned rural residential (R5 Large Lot Residential). If zoned R5 town planners and valuers agree assumed yield for valuation purposes is two large lots (1ha minimum). The valuers disagree how to value these lots.

2. If zoned low density residential town planners and valuers disagree the assumed yield (400m-500m² blocks) for valuation purposes.

1. If stormwater can be piped, assumed yield is 26 lots on Applicants’ case (25 small lots and one large lot). The Respondent contends for 20 small lots.

1. Hydrology – what is the allowance for risk of a river flowing west-east across the Land and whether it could be piped?

2. Road access - whether impact on lot yield and risk.

3. Topography – whether impact on lot yield and risk.

2. If stormwater cannot be piped, the assumed yield of six residential lots and one large rural residential lot is agreed. The valuers disagree how these should be valued. The Applicants contend the hypothetical purchaser would value the Land higher than the 7-lot subdivision.

3. Lot value of R1 and R5 sales disagreed based on valuers’ approaches to R1 and R5 comparable sales and how the valuers account for risk.

4. The parties disagree the loss attributable to disturbance under s 59(1)(f) of the Just Terms Act. The Respondent contends that the Applicants were not in the business of subdivision, while the Applicants contend they were.

8. The Court is acting as the judicial valuer in this case: Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391 (Caruso) at [3], [35], [37], [146] and [150] and Yates Property Corporation Pty Ltd (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156; 73 LGRA 47 (Yates). A well-established principle of valuation for a dispossessed owner is that property should be compensated for on the basis of its highest and best use: Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209; [1999] HCA 64 (per Callinan J) at [271]. The concept of highest and best use was described in Olefines Pty Ltd v Valuer-General (NSW) (2018) 234 LGERA 444; [2018] NSWCA 265 by Basten JA at [16] (there referring to s 6A of the Valuation of Land Act 1916 (NSW) as the most financially rewarding use permitted.

9. The Land must be valued in the condition in which it existed at the acquisition date with regard to its potential for redevelopment: Yates at 175-176. The parties are assumed to be “perfectly acquainted with the land, and cognizant of all circumstances which might affect...[its] value”: Spencer v the Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82 at 441 per Isaacs J. They are to be taken to be “fully informed” and as having made “all proper inquiries”: Everest Project Developments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2010) 177 LGERA 43; [2010] NSWLEC 88 at 58.

10. As a general principle, in determining compensation doubts should be resolved in favour of the applicant. However, “[t]hat does not … detract from the need to engage with and evaluate evidence and competing witnesses”: Caruso at [3] per Allsop P. The Court must evaluate the expert evidence in the usual way: Caruso at [4].

Evidence

Applicants’ evidence

11. The Applicants tendered the following evidence inter alia:

1. Court book (Ex A);

2. Two volume evidence book (Ex B);

3. Seven volume tender bundle (Ex C); and

4. Applicants’ bundle of documents tabs one to five (Ex D).

Respondent’s evidence

12. The Respondent tendered the following evidence inter alia:

1. Respondent’s supplementary tender bundle (Ex 3); and

2. Site inspection itinerary and maps (Ex 4).

Issue 1: What would the land have been rezoned at acquisition date?

13. The first issue is but for the public purpose what would the Land have been zoned at the acquisition date.

14. By Amendment 34 to Coffs Harbour City Local Environmental Plan 2000 (NSW) (LEP 2000) on 15 June 2012 the Applicants’ land was zoned Special Uses 5A Community Purposes Zone. That was the first time a public purpose zoning was applied to the Land. According to the Applicants, setting aside the public purpose the Court must determine what would the Land have been rezoned upon the making of Amendment 34 to the LEP 2000 on 15 June 2012.

15. A chronology of relevant strategic planning decisions contained in the evidence (evidence book, tender bundle, the Applicants’ bundle of documents and the Respondent’s supplementary tender bundle) referred to by the parties is set out in summary form below.

Coffs Harbour Urban Development Strategy 1996

16. In 1996 the Coffs Harbour City Council (The Council) prepared the Coffs Harbour Urban Development Strategy 1996 (CHUDS). The Coffs Harbour Urban Development Strategy Five-Year Plan 1996-2001 identified the Korora Basin and West Korora as a “special investigation” area for urban and rural residential potential.

Coffs Harbour Rural Residential Strategy 1999

17. In Coffs Harbour Rural Residential Strategy 1999 the Council identified “preferred development areas” being considered for rural residential development. The Land was located within the preferred “Korora Investigation Area” as shown on the preferred area map below:

Coffs Harbour City Local Environmental Plan2000

18. When the LEP 2000 was made, the Land was zoned Rural 1A Agriculture Zone. The parties agreed this zoning was not influenced by the public purpose.

Amendment 3 to LEP 2000 gazetted 2004

19. Draft Amendment 3 to LEP 2000 was exhibited on or around 12 April 2001. On the rezoning map (extracted below) the Land was shown as Rural 1B Living Zone (being rural residential living) and along the northern boundary Rural 1A Agriculture Zone (being general rural) due to existing vegetation:

20. In September 2001 the Roads and Traffic Authority (now Transport for NSW) placed the Pacific Highway Planning Strategy Discussion Paper on public exhibition.

21. On 24 January 2002 the Council considered draft Amendment 3 to LEP 2000 on the zoning of rural residential lands in Korora. The Council officer’s report on draft Amendment 3 before the Council on 24 January 2002 stated:

Background:

The Coffs Harbour Rural Residential Strategy 1999 identified a demand for rural living opportunities in Coffs Harbour. The Rural Residential Strategy was undertaken to provide a strategic direction to planning for rural residential development. The Korora rural residential area is the first release under the Strategy.

Rural residential development has the potential to provide an alternative lifestyle option of low density living in a rural setting.

The Korora area was selected to provide opportunity for rural living close to urban areas, allowing access to employment, commerce, recreation and community facilities.

…

5. Impact of the Coffs Harbour Highway Planning Strategy – Inner Route – on the study area.

The Inner Route of the Coffs Harbour Highway Planning Strategy is shown to cross lands in the West Korora Road area and to connect with the current alignment of the Highway immediately north of the Bruxner Park Road intersection. The western “edge” of this inner route extends to the north to the Korora Nature Reserve, thus having a potential impact on properties on the north of Bruxner Park Road.

The lands in the west Korora area are identified to be “deferred” from the rezoning pending further investigations. This could coincide with the decision process for the highway route selection and eventual by-pass construction.

The Bruxner Park Road (and north) lands will remain included in this rezoning, however the Highway Planning Strategy may impact upon these lands.

22. An area of land south of Bruxner Park Road was identified as deferred in draft Amendment 3 before the Council. The Land did not form part of the “deferred area” as shown on the map extracted below from draft Amendment 3 (attached to the agenda to ordinary meeting of the Council on 24 January 2002): 

23. The Council adopted the following recommendation in the minutes of the ordinary meeting of the Council on 24 January 2002:

PED1 DRAFT AMENDMENT NO. 3 TO LOCAL ENVIRONMENTAL PLAN 2000: RURAL RESIDENTIAL LANDS, KORORA

RECOMMENDED (Palmer/Ovens) that Council:

1. Adopt Local Environmental Plan 2000 (Amendment No. 3) as attached to PED1 for the Korora area and forward it to planning NSW for gazettal.

2. Defer from the Local Environmental Plan (Amendment No. 3) all that area shown as ‘Deferred Area’ on the map attached to PED1 until issues relating to potential urban land and Pacific Highway Planning Strategy are resolved.

3. Adopt the Korora Rural Residential Development Control Plan, as circulated to Councillors.

4. Place the amended Developer Contributions Plan, as circulated to Councillors, on exhibition for a period of one month.

5. Advise all landowners in the Korora Investigation Area of Council’s decision.

24. In a letter sent from the Council to the Department of Planning on 2 April 2002 a copy of the LEP 2000 (Amendment 3) was enclosed for gazettal. The letter noted that part of the area had been deferred from rezoning.

25. On 16 May 2002 the Department of Planning sent a reply letter to the Council stating:

More importantly, there are difficulties in processing a plan for any land releases in this area before the Pacific Highway Planning Strategy is complete. I appreciate that some of the land has been deferred for consideration after decisions on the highway route have been made. However, I believe it is premature to process the plan for any of this area [Korora] until decisions on the highway’s location are finalised.

26. On 20 May 2002 the Council responded to the letter stating the Council considered "the most appropriate mechanism to deal with the highway issue was to defer the land identified [see above in [22]] as likely to be impacted by the proposed highway realignment.”

27. In a report to the Council dated 15 August 2003 addressing draft Amendment 3 under the heading Highway Issues deferred areas were identified in accordance with the map below: [I note the deferred area north of Bruxner Park Road is referred to as the “Triangle” in the town planners’ oral evidence and the parties’ submissions.] 

28. On 27 February 2004 Amendment 3 to LEP 2000 was made. The Land was located within the deferred area.

Coffs Harbour City Land Urban Capacity Assessment 2004

29. In 2004 the Council prepared the Coffs Harbour City Land Urban Capacity Assessment 2004 (CHCLUCA). The Land was not included in the urban investigation or release areas under CHCLUCA.

Our Living City Settlement Strategy 2008

30. In 2004 the Council prepared a draft Our Living City Settlement Discussion Paper that did not include the Land within an area described as “possible area for urban expansion”. The draft discussion paper considered the possibility of three development scenarios being the “compact city”, the “expanding city” and the “dispersed city”.

31. Council staff made the following recommendations for the Our Living City Settlement Strategy (OLCSS) to the Council in an ordinary meeting on 1 December 2005 based on community feedback:

• Rural Residential Development

Council has gradually been releasing rural residential land stocks in recent years in accordance with its Rural Residential Strategy 1999. The most recent has been the Korora rural residential release area, and land at Coramba and Nana Glen.

A number of submissions in support of the compact city development scenario have criticized rural residential development, particularly on steeper land in the coastal hinterland. Several have stated that if people wish to live a rural type lifestyle we should provide this style of development in our rural hinterland in proximity to Coramba and Nana Glen. Several of the government authorities have also questioned the need for rural residential development, and the difficulties it has created in terms of ribbon development along the Pacific Highway. There are serious long-term implications with respect to rural residential development in terms of its footprint over the land, environmental impacts, underutilisation of a scarce resource and subsequent pressure on Council for the servicing of such land.

It is recommended that Council consider no future rezonings for rural residential development in the coastal part of the LGA with the exception of residue land in Council’s Rural Residential Strategy 1999. This would mean that land at Bonville proposed for rural residential development could still be undertaken in accordance with the existing Rural Residential Strategy, and given a Priority 2 listing for release, which is consistent with the release timing in that Strategy. Residue lands at Tiki Road and West Boambee are no longer considered appropriate and are not to be included in this strategy.

It may be appropriate to consider additional rural residential development in proximity to Coramba and/or Nana Glen in future years, to cater for people who want a true rural residential lifestyle, rather than for people who want to live on larger residential lots close to existing urban centres.

A number of submissions have been received from people with small lot rural lands and banana lands who request rural residential subdivision because their banana lands are no longer viable. Often these lands have significant constraints in terms of steepness and vegetation, and the subdivision of such land proves difficult in terms of environmental sustainability (the Korora rural residential land release is a case in point). It is considered more suitable that a Sustainable Agriculture Strategy be developed by Council to address the viability of small lot horticulture, rather than simply allowing these lands to be subdivided for residences.

• Development and Release Areas

The Land Capacity Assessment 2004 identified a number of lands along the coastal strip that are capable of urban development, and which are not overly constrained by environmental or servicing issues. These lands have been shown on a map in the Discussion Paper, and listed as “Possible Development Areas”. That map did not define whether these uses should incorporate residential, rural residential or employment zones.

This was done to make the community aware the Settlement Strategy was in very draft form, and to encourage community comment. Now that it is recommended that Council choose the Compact City option, the following analysis is provided for various areas of the LGA.

Map 1 attached shows the recommended urban investigation areas, and gives priority release recommendations based on Priority 1 (short term within less than 5 years), Priority 2 (mid term within 5 – 10 years) and Priority 3 (longer than 10 years). Additional lands are noted as long-term urban investigation. Demand and supply analyses have not yet been completed until Council confirms its direction for these release areas. This work will be completed prior to the finalisation of the Draft Strategy.

West Korora and Mastracolas Road

Many submissions have been received from landholders in this general vicinity. There have been many requests that this area be zoned for residential development. Whilst there are significant constraints for parts of the land (generally in terms of slope, future highway noise and vegetation), parts of it are suitable for development. This land would form a logical extension of Coffs Harbour urban area and could be given a Priority 1 listing. The matter of Submission No. 28 was reported to Council on 18 August 2005, and Council offered its support in principle for urban development of this land, upgrading of the site, and its inclusion in the Settlement Strategy.

Council’s City Services staff have confirmed that the 55m AHD contour is the upper limit for development in this location. Lands higher than this are unable to be serviced, without significant and costly upgrades, which are not included in Council’s current servicing program. This constraint therefore divides the land into two land release parcels – land fronting West Korora Road and land fronting Mastracolas Road, which would be linked via land near The Summit development area.

It is recommended that this entire area below the 55m AHD contour be included in the Settlement Strategy, and given a Priority 1 listing. Environmental studies prior to rezoning will confirm the capacity of this land for urban development and the final lands that should be rezoned.

32. On 1 December 2005, the Council resolved:

1. That Council adopt the principle of a Compact City scenario, in order to progress a draft settlement strategy.

2. That Councillors undertake a workshop with Council staff to progress the details of the Compact City scenario, prior to completing the draft Settlement Strategy.

3. That Council adopt the development areas as outlined in Map 1.

4. That Council adopt the priority release recommendations outlined on Map 1.

5. That all persons who made submissions to the Settlement Strategy be advised of Council’s resolution.

33. In the Council meeting minutes dated 1 December 2005 the Land was mapped as Priority 1 – Residential in the “Coffs Harbour North Development Area” as shown below in red. Urban investigation of Priority 1 areas was recommended within 5 years: 

34. The draft OLCSS was publicly exhibited in June 2006. Exhibited map 6A extracted below shows the Land as Priority 1 for “investigation areas for urban purposes”: 

35. The draft OLCSS identified the Land within an area of “possible residential expansion” in Korora on the map extracted below: 

36. On 5 July 2007 the Council resolved to send the OLCSS to the Department of Planning “for endorsement”.

37. On 6 November 2007 the Department of Planning responded to the Council pursuant to cl 38 of the North Coast Regional Environmental Plan 1998 extracted below:

PART 4 – URBAN DEVELOPMENT

DIVISION 1 – Strategic Planning

…

38. (1) “the council shall not decide to prepare a local environmental plan which permits development which constitutes in the opinion of the Council (subject to directions given by the Director of Environment and Planning) significant urban growth unless it has prepared an urban land release strategy for the whole of its local government area.”

(2) A local environmental plan referred to in subclause (1) shall be generally consistent with the strategy referred to in that subclause.

(3) The strategy referred to in subclause (1) shall-

(a) be based on a land release program and population projects agreed between the council and the Director;

(b) give preference to area which are the most economic to service;

(c) not include for development land that is unsuitable due to any environmental hazard unless the council has made an assessment of the risk and considered it to be minor or alternatively has made provision for the control or reduction of that hazard; and

(d) not include for development land which has conservation value or which has heritage, environmental or cultural significance.

And shall be exhibited for public comment and be available for public inspection, without charge, at the office of the council during normal office hours.

38. The Department of Planning granted an interim agreement for OLCSS on 6 November 2007 as follows:

I understand that Council is currently undertaking various planning tasks to address its immediate growth needs and in order to allow Council to continue this process I am proposing to grant an interim agreement to the Our Living City strategy. However, for the longer-term planning identified in Council’s strategy it is more appropriate that the Mid North Coast Regional Strategy planning be completed prior to my considering the rest of Council’s strategy.

As a result, pursuant to clause 38(3) of the North Coast Regional Environmental Plan, I issue an interim agreement to cover the following specific short-term 2006-2011 areas and minor housekeeping matters identified in the Our Living City strategy:

(i) the two priority 1 areas identified as proposed agreed growth areas for residential development at Korora and shown red on map 6B;

…

39. The OLCSS was published in February 2008 (and amended in November 2010 following the development of the Mid North Coast Regional Strategy). The Korora proposed growth area, granted interim agreement by the Department of Planning, is identified on map 6B extracted below: [I note Map 6C constraints identifies a small section on the northern boundary of the Land constrained by existing vegetation.] 

Thakral Lands

40. An adjoining property to the south and east of the Land (the Thakral Lands) was the subject of a private proponent-lead planning proposal to rezone land. The Thakral Lands were zoned Rural 1A Agriculture Zone, Environmental Protection 7A Habitat and Catchment Zone and Environmental Protection 7B Scenic Buffer Zone under LEP 2000. A Local Environmental Study dated 18 June 2010 found the Thakral Lands were most suitable to be rezoned to allow for a mixture of urban development, open space and recreation and environmental impacts.

Local Environmental Study Amendment 34 2010 and 2011

41. The Council prepared the first draft of Local Environmental Study (LES) dated 7 October 2010 of the North Coffs Release Area for Amendment 34 of the LEP 2000. The North Coffs Release Area was the proposed growth area identified in the OLCSS as a potential area for future urban growth (see above [39]). The draft LES stated:

The study area is mapped in the OLCSS as being an investigation area for urban purposes. It was previously identified as being a potential area for urban development in the Coffs Harbour Urban Development Strategy. This indicates that although the study area contains viable agricultural land, development for urban purposes is considered to be a more optimum land use.

42. The opportunities and constraints map that also identifies the study area of the draft LES is extracted below: 

43. The structure plan in the draft LES identified potential residential precincts. The North Coffs Release Area Structure Plan and precinct R5 identified for low density residential zoning are shown on the map extracted below. The draft LES stated that “standard residential lots within this precinct [R5] would be an appropriate form of development.” 

44. The land to the east and south of precinct R5 are the Thakral Lands (identified on the map below and excluded from the study area so that the study area does not follow the Pacific Highway corridor) progressed by a separate private planning proposal for a change of zoning. 

45. The recommended zoning map in the draft LES is extracted below: [The Land is identified as Rural 1A Agriculture Zone and precinct R5 is identified as Residential 2A Low Density Zone.] 

46. In the second draft of the LES dated 8 June 2011, there were no changes to the opportunities and constraints mapping (see above in [42]). Precincts R4 and R5 were not recommended for rezoning and not included in the North Coffs Release Area Structure Plan based on advice from the Department of Industry and Investment dated 3 July 2006 and 21 December 2010 as follows:

Upon its review of the draft LEP no. 31, I&I expressed concerns regarding potential development sites located along West Korora Road, and also a potential development site adjoining the Thakral Lands of Bruxner Park Road.

I&I were not in favour of the disjointed nature of these potential development sites.

I&I reiterated the need to apply 150m buffers between urban development and agricultural banana land uses due to the high potential for land use conflict.

I&I recommended that the potential development sites/ areas in question are not included in the North Coffs release area structure plan nor the rezoning recommendations for urban development.

Amendments 34 and 38 to LEP 2000

47. Amendment 34 was adopted by the Council on 9 February 2012. The Land was rezoned Special Uses 5A Community Purposes Zone on 15 June 2012 when Amendment 24 was made. The Thakral Lands were rezoned Residential 2A Low Density Zone in Amendment 38 to LEP 2000 on 1 June 2012.

Expert town planning evidence

48. The following expert town planning evidence was filed in this proceeding:

1. Expert report of Mr Connelly town planner called by the Applicants dated August 2022 (Connelly #1);

2. Expert report of Mr Rowan town planner called by the Respondent dated 12 August 2022 (Rowan #1);

3. Joint expert report (JER) of Mr Connelly and Mr Rowan dated 2 September 2022 (town planning JER #1);

4. Expert Report of Mr Connelly on lot yield dated February 2023 (Connelly #2);

5. Expert Report of Mr Hams subdivision engineer called by the Respondent on lot yield dated 17 February 2023 (Hams #1);

6. Supplementary expert report of Mr Rowan dated 21 February 2023 (Rowan #2);

7. Supplementary expert report of Mr Connelly dated March 2023 (Connelly #3); and

8. Joint expert report of Mr Connelly, Mr Hams and Mr Rowan dated 2 May 2023 (town planning JER #2).

49. The evidence of Mr Hams is largely relevant to lot yield rather than underlying zoning.

Report of Mr Connelly (Connelly #1)

50. In Connelly #1 Mr Connelly’s opinion was that the Land was destined for residential zoning had it not been for the highway by-pass. The highway alignment was the only constraint on the Land. Alternatively, he envisaged that following Amendment 38 for the Thakral Lands or an owner-initiated planning proposal the Land would have been zoned for residential purposes. In his opinion that process would have been a straightforward and cost-efficient exercise given the research that had already been compiled for Amendments 34 and 38. I note the Applicants do not submit that the land would have been rezoned in an owner-initiated planning proposal.

Report of Mr Rowan (Rowan #1)

51. In Rowan #1 Mr Rowan opined that absent the public purpose the Land would have been zoned R5 Large Lot Residential under LEP 2023 at the date of acquisition for the following reasons:

a.   the subject land would not have been precluded from the zoning map to which Amendment No.3 to LEP 2000 as was gazetted in 2004 (' Amendment No.3 ');

b.   the subject land would have retained a zoning of 1B under Amendment No.3 as had been publicly exhibited, and subsequently adopted by resolution of Council post­ exhibition on 24 January 2002, to be so upon final gazettal of the instrument. The subject land was not identified at the time of the Council resolution for inclusion in a Deferred Area that was identified for future urban investigation, i.e. comprising land south of Bruxner Park Road that was therefore precluded from the draft instrument ('Deferred Area');

c.   the subject land was only identified in the Deferred Area due to the public purpose. Subsequent actions of the Department (in reply to a Council request for the gazettal of Amendment No.3 in accordance with the Council resolution of 24 January 2002) were due to the influence of the public purpose. Those actions resulted in a subsequent modification of the draft zoning map of Amendment No.3, i.e. the footprint of the Deferred Area adopted the indicative alignment of the public purpose for its western and northern boundaries. As a consequence, the Deferred Area was extended northwards of Bruxner Park Road which included the subject land, i.e. so precluding it from being rezoned under Amendment No.3; and being subsequently evaluated for future urban investigation;

d.   absent the public purpose, the subject land would have been initially zoned under Amendment No.3 to Zone 1B Rural Living and be subject to a 1 ha minimum lot size under LEP 2000. A portion of the subject land, along its northern boundary would have retained its former 1A Agriculture (or potentially resulted in a 7A Environmental Conservation zoning (to reflect an area of identified koala habitat vegetation on the land as was initially identified on the adopted draft zoning map of 24 January 2004); and

e.   the subject land would have been zoned in a like manner to other land which had been initially proposed for rezoning to 1 B under Amendment No.3 as per the Council resolution of 24 January 2004 (absent any influence of the public purpose); and thereafter zoned in that manner within LEP 2000. Those properties were consequently zoned RS Large Lots Residential in the making of LEP 2013; and remained subject to a minimum lot size provision of 1 ha for land subdivision.

52. Mr Rowan summarised the consideration and impact of community submissions on Amendment 3 as follows.

38. On 24 January 2002, the Council prepared a report that considered public submissions to Draft Amendment No.3. The officer report included:

a. the consideration of submissions by some landowners who had requested their land be considered for residential zoning. In response to those submissions, it was advised that a preliminary investigation (by Council's engineers) of some land up 55AHD in the West Korora Area (to be referred to as Area B) had determined that such land could potentially be supplied with reticulated water, for which further investigation and detailed calculations were required (by consultants for the landowners). On that assumption, the officer report recommended that some land proposed to be rezoned under Draft Amendment No.3 be otherwise mapped as a Deferred Area 'to allow examination of their potential for residential development' (' Deferred Area');

…

43. Thereafter, in August 2003,21 regarding Draft Amendment No.3, Council considered, and resolved to adopt, an amended zoning map that differed from that which had been adopted by the Council on 24 January 2002 (for gazettal by the Department). The revised zoning map had been prepared following consultation with the RTA and the Department22 ('draft August 2003 map'). The western and northern extent of the Deferred Area on the draft August 2003 map was seemingly defined by the proposed alignment of the public purpose so-called Inner Corridor route; and its eastern boundary, the current highway (Image 18). Unlike that which been adopted on 24 January 2002, the modified footprint of the Deferred Area on the draft August 2003 map extended north of Bruxner Park Road to the location where the indicative alignment of the Inner Corridor route was shown (on public purpose mapping) to intersect with the existing highway north of Coffs Harbour. The revised footprint of the Deferred Area on the draft August 2003 map included the subject land (Image 18).

…

44. In December 2003, the Council submitted the revised draft documentation for Draft Amendment No.3 including the draft August 2003 map, as had been adopted by the Council to the Department. The forwarded instrument excluded the Deferred Area as had been adopted on 21 August 2003 (including the subject land) from rezoning under that instrument. Thereafter, on 27 February 2004, Amendment No.3 to LEP 2000 was gazetted in that manner. The remaining footprint area of the Preferred Area (i.e. excluding the footprint of the Deferred Area) previously considered suitable for future 1ha subdivision in the Korora RRRA was primarily zoned 1B Rural Living (with some minor portions zoned 7A) in the final Amendment No.3 instrument under LEP 2000. Its related DCP was also adopted at that time.

53. Mr Rowan attached the following extract from a topographical mapping in a LES prepared in March 2001 for draft Amendment 3 to his report:  

Town planning joint expert report of Mr Connelly and Mr Rowan (town planning JER #1)

54. In the town planning JER #1 Mr Connelly and Mr Rowan agreed the timing of gazettal of Amendment 3 was delayed to 27 February 2004. Absent the public purpose Amendment 3 would have been gazetted and taken affect soon after the resolution of the Council at its meeting of 24 January 2002. Absent the public purpose the Land would not have been included within the footprint of the deferred area for future urban investigation. The experts also agreed the following about underlying zoning of the Land upon gazettal Amendment 3 to LEP 2000 in 2004:

21. As at 2002, upon finalisation of Amendment No.3, absent the public purpose, the underlying zone of the subject land would have been primarily 1B, and 1A along the northern boundary of the subject land under LEP 2000.

55. The town planning experts disagreed absent the public purpose as to whether the land would have been zoned for residential purposes in the finalisation of Amendment 34. Mr Connelly asserted the land would have been zoned for residential purposes. The Land was included in the draft OLCSS. The Land was below RL 55M AHD and that is the key strategic planning criteria in West Korora. Land below RL 55M AHD was suitable for residential development as later confirmed by the draft LES for Amendment 34. The Land was not identified as high biodiversity land, is not prime crop or pastural land and was not located within 150m of active banana farming land. The Land was proximate to the Pacific Highway intersection which was to be upgraded to facilitate the Thakral Lands development and will have excellent connectivity to the urban area of Coffs Harbour.

56. The Council had adopted a “compact city” approach to future urban development. All regional strategic planning since 1988 was leading to increase in the density of residential development proximate to Coffs Harbour primary urban area as supported by the Department of Planning. In Mr Connelly’s opinion it would have been wasteful to provide for development only on the southern side of Bruxner Park Road. The mapping area for the North Coffs Development Area and the deferred area plan did not mimic each other in all instances. The boundary of the Norths Coffs Development Area adopted the RL 55M AHD contour or the highway bypass alignment. In summary, Mr Connelly’s opinion was that if not for the public purpose the North Coffs Development Area would have generally included all land below the RL 55M AHD contour that enjoyed reasonable accessibility to the pacific highway.

57. Mr Connelly contacted Mr Fry an officer of the Council who oversaw the LES preparation process who advised precinct R5 was removed from the final draft of the strategy due to the costs involved in road and utility services. Based on the development considered in the draft LES, Mr Connelly calculated the development costs for precinct R5 in the order of $147,000/lot. Based on that figure Mr Connelly understood why the Council withdrew precinct R5 from the final LES, however he estimated a yield of 105 lots from a collaborative development with adjoining landowners that would reduce development costs depicted below in [63].

58. Mr Rowan stated that absent the public purpose the Land would have been Rural 1B Living Zone and Rural 1A Agriculture Zone. He observed that none of the land zoned for residential purposes had been developed since Amendments 34 and 38 were made, and none of the road construction or works for Bruxner Park Road had been undertaken. The Council reasoning as to why former draft precinct R5 was removed is quite clear in the Council’s final draft LES (see above in [46]) and in the report to the Council prior to exhibition of draft Amendment 34 (not in evidence). In his view there is no evidence that would alter the decision-making of the Council in the preparation of Amendment 34 to omit those lands absent the public purpose. He stated the Land could not be distinguished for strategic planning purposes from other land identified as precinct R5 prior to it being omitted from Amendment 34. Considerations for precinct R5 being omitted relate to agricultural concern and isolation from community services that also apply to the Land.

59. In response to the comments of Mr Connelly, Mr Rowan observed the Land is suitable for banana production and would not have been identified for residential zoning. While the Council acknowledged the Land was not subject to significant site constraints the Council still determined not to recommend the Land for residential zoning for broader strategic planning reasons unrelated to the public purpose. The draft LES and report to the Council that informed the proposed public exhibition of Amendment 34 also identified strategic planning reasons beyond those conveyed to Mr Connelly by Mr Fry for why precinct R5 was removed from Amendment 34.

60. The town planning experts disagree to the underlying zoning of the Land absent the public purpose at the date of acquisition. Mr Connelly’s reasons for disagreement about the underlying zoning at the date of acquisition absent the public purpose were:

1. The Land would have been zoned R1 in an identical fashion to the adjacent Thakral Lands. The Land that was unconstrained, below RL 55M AHD and located further than 150m from banana farming would have achieved a residential zoning in accordance with regional and local strategic planning;

2. Alternatively, following the Thakral Lands LEP Amendment 38 or an owner-initiated Planning Proposal the land would have been zoned for residential purposes; and

3. The vegetation at the Land does not qualify for a conservation zoning pursuant to the criteria defined by the Northern Councils E Zone Review (finalised in March 2016) that guides zoning of land for environmental protection purposes.

61. Mr Rowan’s reasons for disagreement were:

1. The same strategic planning matters that resulted in the Land being omitted from Amendment 34 were likely to have remained valid;

2. The Council was unlikely to revisit land that had been formerly considered under Amendment 34 for rezoning particularly in the absence of development on land zoned for residential development;

3. A planning proposal was unlikely to resolve the strategic planning issues that caused precinct R5 to be omitted from consideration for future urban development given residential land under Amendments 34 and 38 was yet to be developed and road works and construction had not been completed; and

4. The Land would have been rezoned primarily in the same manner as would have been existing in the initial making of LEP 2013 being Zone R5. Along the northern edge, the land would have been zoned RU2 or E2 due to existing vegetation.

62. Mr Rowan did not give any weight to the Northern Council E Zone Review relied on by Mr Connelly given its recommendations were not applicable to the Council’s local government area.

Report of Mr Connelly on lot yield (Connelly #2)

63. In Connelly #2 Mr Connelly attached an amended map that was originally produced in the JER to depict an owner-initiated planning proposal for the Land that relied on the collaboration of four landowners to yield 105 residential lots. The map was amended as extracted below to show areas Mr Connelly excluded from the potential development envelopes due to the proximity to existing banana cultivation uses by a broken purple coloured line. 

Town planning joint expert report of Mr Connelly, Mr Hams and Mr Rowan (town planning JER #2)

64. I note that the two different planning proposals were put forward by the town planners in the evidence and considered by the experts in town planning JER #2. The Applicants did not ultimately press a private planning pathway as a basis to rezone the Land. This evidence has not therefore been included in this judgment.

65. The following table prepared by Mr Connelly and Mr Hams detailed the estimated development costs for contribution planning for a planning proposal to rezone the Land: [Development costs are relevant to the valuation of the Land.]

Mr Connelly’s oral evidence

66. In cross-examination, Mr Connelly was referred to the chronology of strategic planning decisions he set out in Connelly #1. He agreed Amendment 3 was not chronologically included in his timeline of strategic planning decisions and stated that was an oversight. He agreed he knew about Amendment 3 which he referred to later in the report.

67. Referred to draft Amendment 3 attached to an agenda for a Council meeting on 24 January 2002, he agreed that Bruxner Park Road was basically the northern boundary of the deferred area (see above in [22]). He agreed that the Land was to be rezoned Rural 1B Living Zone. Referred to the minutes of the Council meeting on 24 January 2002, Mr Connelly agreed the Council were recommended to adopt the details proposed in the agenda item and to defer the deferred area (see above in [23]).

68. Referred to correspondence from the Council to the Department of Planning, he agreed the correspondence observed that part of the area had been deferred from rezoning. Referred to correspondence from the Department of Planning to the Council dated 16 May 2002, he took note of the paragraph extracted above in [25].

69. Mr Connelly disagreed that the source of the “triangle” (deferred area north of Bruxner Park Road) was the Land being included in the deferred area under the heading “Highway issues” in Draft Amendment 3 as extracted above in [27]. He stated the “triangle” is part of the deferred area as it is land on the eastern side of that highway footprint. He agreed but for the highway alignment the Land would not have been in the northern deferred area.

70. Asked whether the documents show that but for the carrying out of the public purpose, or the proposal to carry out the highway, the Land would never have been deferred, he agreed that there was an additional deferred area because of the bypass. Referred to the OCLSS (see above in [39]), asked whether the western boundary of the investigation area is defined by the public purpose being the highway bypass, he agreed.

71. Asked whether he should have included the lengthy dissertation about Amendment 3 he was just referred to in Connelly #1, he answered that he did his best to compile all the things he thought were important. Asked whether this was the first instance that there has been a direct impact noted by the highway on the strategic planning direction for the Land, he answered yes.

72. Asked whether Mr Connelly considered the Land to be zoned R1 or R2 as at LEP 2013, he answered it would have been zoned R1. Asked at what point in time he thought it would have been zoned R1, he stated it would have been with the making of Amendment 34. He stated that in Connelly #1 he considered if he was wrong about Amendment 34 the Land could have been the subject of a privately initiated planning proposal. The planning proposal would have been resolved prior to the date of acquisition.

73. Mr Connelly agreed he did not have any evidence about why the Thakral Lands have not been developed. His opinion was that the Thakral Lands had not been developed in order to have the benefit of the public purpose including the construction of the intersection.

74. When asked whether the 26-lot subdivision layout (extracted below in [121]) is indicative of the “high water mark” yield on the Land, he agreed.

Mr Rowan’s oral evidence

75. In cross-examination, Mr Rowan agreed Amendment 3 was considering a change from Rural 1A Agriculture Zone to Rural 1B Living Zone being large lot residential. Asked whether RL 55M AHD had been identified as a relevant constraint for a change of zoning by 24 January 2022, Mr Rowan stated that the report to the Council (referred to above in [21]) introduced the constraint. Mr Rowan agreed that there was a series of concerned residents in the West Korora area who wanted their land to change from rural to residential. He agreed that as a consequence of the submissions by those landholders that the deferred area was initially identified. He agreed the consequence of the deferral was to make no decision in relation to its rezoning as part of Amendment 3 and retain its original zoning as Rural 1A Agriculture Zone.

76. Asked whether the next relevant event was the deferred area extending north of Bruxner Park Road, he replied yes. He disagreed with the proposition that the precise route of the proposed highway bypass was not known by that stage. He stated there was discussion between the Department of Planning and the Roads and Traffic Authority that led to the determination that western alignment of the light blue area as seen above in [27] reflected the corridor as it would be at that date. He understood the boundary followed a curvature of a potential highway route.

77. He agreed that by the end of the process of constraint mapping for Amendment 34 the precise area of the land required for the Pacific Highway bypass was known. He agreed that the “milky white land” was ultimately able to be zoned Special Uses 5A Community Purposes Zone in Amendment 34 (see LES constraints mapping above in [42]). He agreed that in 2002 when the deferred area and extended deferred area was considered there was knowledge of a highway option in the location of the western boundary. He agreed that the area of land required to provide for the highway upgrade was not known in detail until Amendment 34.

78. In response to the proposition that the Council turned its mind to rezoning the land in the urban investigation area due to urgings of concerned residents and to implement the requirements of the state government, Mr Rowan stated the public purpose created a new cadastral boundary separating the area to the north that was going to be zoned Rural 1B Living Zone which left a residue of land between the eastern and western boundary. That land got subsumed into the deferred area for investigation.

79. Referring to the plan above in [27] he agreed that the eastern side of the “triangle” was the western edge of the existing Pacific Highway. He agreed the western edge of the “triangle” was the anticipated location of the Pacific Highway bypass as anticipated in August 2003. He stated the area north of Bruxner Park Road was being deferred because of the public purpose. The area south of Bruxner Park Road was being deferred for a different reason. The Department of Planning would not allow the Council to progress the rezoning of the area north of Bruxner Park Road. The boundary line followed a curvature that did not follow the cadastral boundaries and suggests to him that somebody had drawn a line defining the road corridor.

80. Mr Rowan stated that Amendment 3 went on to rezone the area west of the blue area to become zone Rural 1B Living Zone (see deferred area map above in [27]). The Land was deferred in Amendment 3 to cater for the public purpose after discussion with the Roads and Traffic Authority.

81. Mr Rowan accepted that it is not surprising that there is no evidence of a coalition of landowners that would be seeking to prepare a planning proposal to set aside the public purpose. He agreed that there was a coalition of landowners south of Bruxner Park Road at the time of Amendment 3. He stated there were landowners north of Bruxner Park Road at the time of Amendment 3 who asked but were not included in the deferred area. He agreed the residents north of Bruxner Park Road became part of the deferred area.

Applicants’ submissions

Land zoned low density residential by Amendment 34

82. After the preparation of the first draft of the LES for Amendment 34 (in order to implement the Department of Planning’s interim agreement to the OLCSS) it is the inescapable conclusion that but for the proposal to carry out the public purpose the Land would have been zoned low density residential.

Site unconstrained but for public purpose

83. The Land and precinct R5 are (1) within the potential development area, (2) not affected by native vegetation needing to be retained, (3) not affected by the 1:100 year flood event, (4) below the RL 55M AHD contour and (5) for the most part has a slope less than 25% as shown on the opportunities and constraints map (see above in [42]). The only constraint preventing low density residential zoning was the Pacific Highway Bypass Route. The adjoining land to the south of Bruxner Park Road (being the only land in proximity below RL 55M AHD and not covered by the Pacific Highway Bypass Route) was proposed zoning R2 in the LES for Amendment 34. The Thakral land adjoining that to the east was also proposed to be in the LES for Thakral Lands (and ultimately was in Amendment 38) zoned Residential 2A Low Density Zone.

84. After the preparation of the draft LES, and prior to the making of Amendment 34, no further constraints were identified that would have changed the conclusion that the Land would be low density residential.

85. There was a change to the remaining pockets of land in precincts R4 and R5 proposed to be zoned residential in the northern part of the West Korora precinct in the next draft of the LES. The reason that the recommendation for precinct R5 changed from residential to remaining rural following advice from the Department of Industry and Investment as set out above in [46] was caused by the proposal to carry out the public purpose. That change in zoning cannot result in departure from the conclusion that the land would be low density residential.

83. The Department of Industry and Investment submitted the precincts R4 on West Korora Road should be removed from the Norths Coffs Release Area Structure Plan (and rezoning) due to the disjointed nature of the land portions and possible land use conflicts arising between development and existing agricultural uses. In regard to precinct R5 the Department of Industry and Investment recommended minimum separation distances between residential areas and different types of agricultural activities.

84. The Applicants submit it is necessary to determine whether the Department of Industry and Investment would have made those recommendations but for the proposal to carry out the public purpose. But for the proposal to carry out the public purpose precinct R5 would not have been isolated or disjointed. But for the proposal to carry out the public purpose, precinct R5 would have a significant extent of land to its west and north (including the Thakral Lands to its east) that would have been similarly unconstrained and recommended for low density residential zoning. In those circumstances the need for buffer distances would not arise.

85. The Court would conclude that but for the proposal to carry out the public purpose:

1. The first draft LES would have included the Applicants’ land (and the other land within the “triangle” below RL 55M AHD) as low density residential; and

2. In those circumstances the Department of Industry and Investment’s concerns that led to the change of precinct R5 from low density residential to rural simply would not arise.

89. All of the land within the “triangle” was zoned Special Uses 5A Community Purposes Zone (reflecting the public purpose) with the consequential impact on precinct R5 that it was zoned Rural 1A Agriculture Zone.

Land likely considered for rezoning without deferral under Amendment 3

90. The Respondent submits that but for that extension of the deferred lands from Amendment 3 the Land would not have been considered for rezoning. That submission would be rejected for a variety of reasons.

91. Firstly, even in its original form, although the deferred area was retained to the south of Bruxner Park Road it was acknowledged that “the Bruxner Park Road (and north) land will remain included in this rezoning, however the Highway Planning Strategy may impact upon these lands” (see above in [21]).

92. Secondly, the apparent driver for the initial deferred lands only being to the south of Bruxner Park Road was not any relevantly identified constraint, topographical feature or suburb boundary. Rather, it was that there had been submissions made by persons to the south of Bruxner Park Road.

93. Thirdly, Amendment 3 followed two of the Council’s strategy documents (the 1996 CHUDS and the 1999 Rural Residential Strategy). It preceded the OLCSS. In order for the Council to consider the rezoning of land it was a necessary requirement of cl 38 of the North Coast Regional Environmental Plan 1998 that Council prepare an Urban Land Release Strategy for the whole of its local government area. Under the OLCSS the Land was considered specifically for upzoning from its deferred state and was identified as a Priority 1 growth area for residential development. The Department of Planning’s interim agreement for the OCLSS in the response dated 6 November 2007 (see above in [38]) identified the land needed to meet the Council’s immediate 2006-2011 growth requirements. There is simply no support for any suggestion that but for the extension of the deferred land into the “triangle” it would not have been considered as part of the OLCSS.

94. Fourthly, the OLCSS through its various versions has considered by reference to identified constraints those areas of the Council’s local government area available for urban release. There is simply nothing that the Respondent can point to, to suggest that but for the proposal to carry out the public purpose that land in the “triangle” would have been excluded from the OLCSS consideration.

95. Fifthly, in any event, the decision to defer was a decision to not change the zoning of the land. If the extension of the deferred area into the “triangle” was caused by the public purpose, that merely meant that at that point in time the land remained Rural 1A Agriculture Zone where, but for the proposal to carry out the public purpose, it may at that time have been rezoned Rural 1B Living Zone.

96. There can be no suggestion that whether it was deferred, or had been rezoned Rural 1B Living Zone, that the land within the “triangle” would simply have stagnated. It would have been, and was, assessed in the subsequent OLCSS and the two versions of the LES for the making of Amendment 34.

97. There is nothing about Amendment 3, nor the areas deferred from it, that leads the Court to a different conclusion in relation to the underlying zoning of the Land.

Respondent’s submissions

Land zoned large lot residential at the acquisition date

98. The Applicants’ contention that the Land would have been zoned R1 or R2 at the acquisition date is speculative. In all likelihood, the Land would have been zoned R5 Large Lot Residential.

Land would not have been considered for rezoning but for public purpose

99. As at 24 January 2002 the Land did not form part of deferred area which was proposed to be considered for rezoning (see above in [22]), which area included land south of Bruxner Park Road only.

100. This is highly significant because this is the last time that consideration was given to how the Land should be zoned absent the influence of the public purpose. It is the best evidence of how the Land would have been treated in the absence of the public purpose because it does not require the Court to speculate about what would have happened. Critically, it establishes that Council was not proposing to consider the Land for rezoning in the absence of the public purpose. Only land to the south of Bruxner Park Road was proposed to be deferred for that purpose. Council distinguished between land situated south of Bruxner Park Road that was suitable for rezoning and land north of Bruxner Park Road that was not. This is so notwithstanding that landowners to the north of Bruxner Park Road were actively seeking for their land to be included for consideration as residential land.

101. The town planning experts agreed above in [54] that the public purpose meant that the gazettal of the Amendment 3 was delayed until 27 February 2004. This is significant because between 24 January 2002 and 27 February 2004 the public purpose resulted in the Land being included in the deferred area (see above in [27]).

102. The town planning experts agreed above in [54] that absent the public purpose, the Land would not have been included within the footprint of the deferred area for future urban investigation. The deferred area only would have included land to the south of Bruxner Park Road and the Land would have been rezoned Rural 1A Agriculture Zone and Rural 1B Living Zone (along the northern boundary). The western and northern extent of the deferred area was determined by the public purpose.

103. The die was cast at this point. After this time the Land continued to be included in the areas for investigation for future rezoning because it was included in the deferred area in Amendment 3. The Land never would have been included in the deferred area were it not for the public purpose as the experts agreed.

Land not suitable for rezoning under Our Living City Settlement Strategy

104. Under the Our Living City Settlement Strategy, the Land was not included in the “Possible Areas for Urban Expansion”. The area earmarked for potential rezoning was limited to land that was located south of Bruxner Park Road. The Land’s exclusion from the “Possible Areas for Urban Expansion” reinforces the view that the Council did not consider it to be suitable for rezoning.

Site specific consideration for rezoning required; site constrained

105. The Council having considered the opportunities and constraints of the Land within the investigation area rezoned some parts of the Priority 1 land for residential purposes. Not all parts of Priority 1 land were rezoned, including precinct R5 that is zoned RU2 rural landscape. Regardless of the public purpose there could never be any assurance that any particular land would be rezoned for residential purposes. The rezoning depends upon a proper consideration of the opportunities and constraints of each parcel of land.

106. In that context, the reference to that part of the Investigation Area in the vicinity of the Land as the “triangle” is apt to mislead. It suggests an area of land in which the various parcels or lots of land have a high degree of similarity such that they would be treated the same. In this case the Applicants say the relevant unifying characteristic is whether a parcel of land is beneath the RL 55M AHD contour but that is an oversimplification. It ignores the need for a rezoning authority to have regard to the particular circumstances of each parcel of land, such as:

1. topography including steep slopes (which are present on the Land);

2. access (which presents a problem for the Land);

3. vegetation communities (which are present on the Land);

4. services and infrastructure (which are wanting in the area and would have been wanting but for the public purpose);

5. bushfire risk (which exists on the Land);

6. neighbouring land uses (which are rural and agricultural); and

7. demand and in particular demand in the location.

107. The RL 55M AHD contour was a negative criterion: it identified what land would not be rezoned. It did not identify land that would be rezoned. That was the beginning of the inquiry not the end, as Mr Connelly appears to assume. Although the Land’s elevation is relevant, it is only a threshold issue. The fact that the Land is beneath RL 55M AHD only meant that it qualified for consideration not that it would be viewed favourably: all land beneath RL 55M AHD was being investigated.

108. The Applicants try to cast all land in the “triangle” as the same and overlook the site specific constraints that make the Land uniquely unsuited to rezoning. These constraints were well known to the Council back in 2002 when Amendment 3 was originally prepared (see above in [53]). If these constraints are properly kept in mind it is easy to understand why the Land would not have been rezoned but for the public purpose.

109. The reasons given by the Department of Industry and Investment above in [46] to remove precinct R5, ultimately adopted by the Council, demonstrates that constraints other than the public purpose would apply to the Land and the surrounding areas.

Costs of rezoning the Land prohibitive

110. At the time of Amendment 34 it would have been prohibitively expensive for the Council to rezone the Land. At this time, the Thakral Lands and nearby land had not been developed, the internal road to link Bruxner Park Road with West Korora Road via the Thakral Lands had not been constructed and none of the formerly identified roadwork to Bruxner Park Road and its intersection with the existing highway had been undertaken. Mr Connelly speculates that the costs would have been satisfactory if adjoining properties formed part of the Council led rezoning). He provides the Court with none of the information necessary to make informed judgment about that matter. He stated that Lots A, B, C and D would yield 105 lots but provided no basis for this hypothesis. He has not provided the Court with the information necessary to assess whether this would be a tenable proposal.

Finding on underlying zoning

111. The question I am considering is what the prudent hypothetical purchaser and vendor would consider was the applicable zoning of the Land at the date of acquisition being 30 July 2021 setting aside the public purpose. This is often expressed as but for the public purpose what would the zoning of the Land have been. There is no dispute that the current zoning is a result of the public purpose and that zoning or similar has applied to the Land since 2012. Knowledge of the possible impact of the public purpose was known in the Coffs Harbor area many years earlier than 2012, since 2001 according to Mr Dibbs evidence, below in [402], and the release of the Pacific Highway Planning Strategy Discussion Paper in 2001. Given that this is a hypothetical scenario the likelihood of certain zoning existing at the acquisition date needs to be determined. Likelihood can be contrasted with mere speculation, the essential criticism of the Applicants’ case by the Respondent. The public purpose affected the planning and zoning of the land for a considerable period before the date of acquisition. The town planners agreed that but for the public purpose in 2002 the land would have been zoned Rural 1B Living Zone and Rural 1A Agriculture Zone along the northern boundary. The Land was zoned Special Uses 5A Community Purposes Zone in Amendment 34 in June 2012 reflecting the effect of the public purpose and is zoned SP2 Infrastructure under the LEP 2013.

112. As outlined in the summary of the relevant council planning strategies and amendments to LEP 2000 above in [16]-[47], the Council has been considering how best to expand the residential capacity in and around Coffs Harbour for many years (decades). The evidence commences with the planning strategies embarked on from 1996, when Korora Basin and West Korora where the Land is located was identified as a “special investigation area” for urban and rural residential potential. The Land was included in the “Korora Investigation Area” in the 1999 rural residential strategy. It remained zoned Rural 1A Agriculture Zone when the LEP 2000 was made. In draft Amendment 3 publicly exhibited on or around 12 April 2001 the Land was shown as Rural 1B Living Zone and Rural 1A Agriculture Zone. The Land was ultimately included in the deferred area because of the highway upgrade proposal when Amendment 3 was made in 2004, as identified above in [27]-[28].

113. The CHCLUCA 2004 did not include the Land in urban investigation release areas. The preparations of the draft OLCSS included submissions from council staff in December 2005 extracted above in [31] which identified that two parts of West Korora would be suitable for urban development other than those areas subject to steep slopes, future highway noise and vegetation (which presumably required protection). Areas along West Korora Road and Mastracolas Road were identified, being areas to the south of the Land. It was recommended that entire area below the RL 55M AHD be included in the settlement strategy. The region was identified as forming a logical extension of Coffs Harbour urban area and could be given a priority 1 listing meaning urban investigation is recommended in 5 years. The Land was also included in the area to be investigated as priority 1 in the plan above in [34], excluding land which was located above RL 55M AHD, that was publicly exhibited.

114. The draft LES for Amendment 34 in 2010 identified potential residential precincts including R5, very close to the Land, being directly across Bruxner Park Road from the Land. This was ultimately not progressed by the Council due to the submissions recommending against that course by the Department of Industry and Investment in June 2011 due to proximity to agricultural land and the creation of isolated pockets. That precinct R5 opposite the Land was not rezoned and is zoned RU2 rural landscape was emphasised by the Respondent. That decision was also affected by the public purpose in part because the public purpose caused the lands to be disjointed as the Applicants submitted above in [85]-[88], which I accept. That precinct R5 remained as a rural zone is not indicative of what would be likely to occur on the Land.

115. The likelihood that the Land would have been zoned low density residential is supported by the Council’s approval of the Thakral land for low density subdivision immediately nearby, about which the parties made conflicting submissions. The Thakral Land was the subject of a private rezoning application and was not considered in the Council’s strategic planning for residential development for that reason. The change of zoning of the Thakral Land to low density residential on 1 June 2012 supports the likelihood of the same zoning being applied on the Land over time. The Thakral Land is not affected by the proposed highway extension. The Thakral Land is very close to the Land and its development by way of private planning proposal for low density residential development does support a finding that this area would have been rezoned for low density residential use by the Council. That the Thakral Land has not yet been developed shows residential development may take place over an extended period, supporting the likelihood of long term planning for residential development in this area.

116. Further the evidence also shows that landowners to the north of Bruxner Park Road where the Land is located were lobbying the Council to have their land rezoned for residential use, in addition to landowners to the south of Bruxner Park Road, some of whose land was included in the Council’s strategic planning identifying new areas for residential zoning (see above in [31], [81] and below in [403]). The focus of the inquiry is what the Council is likely to have done between 2002 to 2005, and 2021 at a broad strategic planning level.

117. Essentially Mr Rowan’s opinion is that nothing is different about the Land in its locality in 2021 from the situation in 2002 to 2005 when the land was zoned Rural 1A Agriculture Zone to warrant finding that the zoning would have been any different at a later date but I consider that opinion is too static. The strategic planning being undertaken by the Council over a lengthy period does give rise to the likelihood that the land would have been zoned low density residential at the date of acquisition.

118. I do not consider the Respondent’s approach of focussing on the circumstances in 2002 when the Land was zoned for non-residential uses as determinative of later zoning as that underestimates the impact of the public purpose over an extended period of many years. For the reasons given by the Applicants summarised above in [90]-[97] in relation to the Council’s strategic planning processes considering the release of land for residential purposes over many years, I consider the zoning likely to have been in place at the date of acquisition was low density residential. I do not need to resolve if that zoning would be R1 or R2, subject to my consideration of constraints on the Land.

119. Turning to the Land itself, the Respondent sought to emphasise that numerous constraints existed on the Land which rendered it unsuitable for residential use, but I do not agree. It is not affected by the limit of RL 55M AHD applied in the Council’s strategic planning for the identification of residential areas. The presence of vegetation on the northern boundary does not affect more than a small portion of the Land and the steep slope affects only a smaller portion of the Land and it is not unduly flood affected. Access to the Land is achievable from the public road network. The town planners agreed at least a 7-lot subdivision was possible on the Land in light of constraints, relying on extensive evidence, identified in issue 2. No prohibitive constraint of some form of low density residential development exists on the Land.

Issue 1: Conclusion

120. The prudent hypothetical purchaser and vendor should be assumed to proceed on the basis the Land would be zoned low density residential.

Issue 2: Lot yield if land rezoned low density residential at acquisition date

121. The town planning experts agreed that if the Land was zoned low density residential at the acquisition date and the stormwater system is assumed to be not piped, the yield informing the valuation of the Land is six residential lots (fronting Bruxner Park Road) and one large rural residential lot. Mr Hams provided the following 7-lot subdivision layout of the Land in Hams #1:

390. Mr Rumble’s 1ha property sales are not strictly comparable as their purchasers will be a different market to those seeking to buy land to subdivide and I agree with Mr Lunney in this regard. The sales with no further development potential were showing rates almost double that of Mr Lunney’s sales of lots with development potential (and also risk), which Mr Rumble accepted in cross-examination (see above in [314]). That doubling in value reflects the prestige rural lifestyle value of Mr Rumble’s sales, which is not the same market of hypothetical purchasers for the Land who will seek to subdivide. Mr Lunney’s considered adjustment of these sales to render them comparable is identified above in [296]-[297] and shows a greatly reduced value. I was unable to understand how Mr Rumble adjusted the 1ha sales in a way that reflected the different markets in which the Land should be assessed as a subdividable area. I am not therefore assisted by these sales in valuing the Land.

391. Mr Lunney’s three key sales (#10 130 Bruxner Park Road, #15 10 Hardy Close and #16 69 Rippingales Road) need to be considered as more comparable in terms of the market for the Land. As adjusted by him they show rates of $328,500/lot (#10 130 Bruxner Park Road) to $463,088/lot (#15 10 Hardy Close). Two sales are close to the acquisition date, #15 10 Hardy Close and #16 69 Rippingales Road, but are less physically comparable to the Land than #10 130 Bruxner Park Road according to Mr Lunney. The large adjustments that had to be made to #10 130 Bruxner Park Road for time and because the sale took 15 months to complete was the subject of cross-examination above in [328]-[329] above. I consider these criticisms have merit so that Mr Lunney’s lowest rate based on #10 130 Bruxner Park Road is too low. The sales of #15 10 Hardy Close and #16 69 Rippingales Road are relatively close in rate suggesting a minimum $465,000/lot rounding up Mr Lunney’s rate/lot of #15 10 Hardy Close.

392. That leaves the rates derived from sales #15 10 Hardy Close and #16 69 Rippingales Road. Mr Lunney adjusted #15 10 Hardy Close by 32.5% to apply to the Land deriving a rate of $463,088. Mr Rumble adjusted this sale upwards by 37.5% as he adjusted topography by 5% more than Mr Lunney. Mr Lunney agreed in oral evidence that 40% of #15 10 Hardy Close was steep and had utility constraints (see above in [326]). Mr Rumble’s adjustment for topography can be accepted and therefore his adjusted rate of $487,333, which can be rounded up to $490,000/lot, is applied.

Issue 3: Conclusion

396. The value of the Land with low density residential zoning assumed is $840,000 and is $490,000 for the large lot assumed to be zoned R5, totalling $1,330,000.

Issue 4: Disturbance

397. The Applicants seek the following loss attributable to disturbance items in the Amended Schedule of Losses dated 5 June 2023 (Ex N):

398. The amount claimed for valuation and town planning fees under s 59(1)(b) of the Just Terms Act is $21,975. The Respondent has already contributed to a portion of those costs, and the Applicants accept that an adjustment to account for that contribution will need to be made. The parties agree the adjusted amount is $10,500.

399. The Respondent disputes stamp duty and legal costs for a replacement property (under s 59(1)(f) of the Just Terms Act) is compensable as it does not accept that the Applicants are in the business of developing land for subdivision and that the Land could be characterised as stock in trade.

Applicants’ evidence

400. The Applicants read the following lay affidavits:

1. Mr Dibb First Applicant sworn 22 and 26 May 2023; and

2. Mrs Dibb Second Applicant sworn 26 and 29 May 2023.

401. Relevant paragraphs of the affidavit of Mr Dibb sworn 22 May 2023 are extracted below:

Disturbance Losses – s59(1)(f)

15 Wendy and I purchased the Land in 1988 for the sole purpose of 'land banking', with the intention of developing it into residential allotments once future zoning for the Korora Basin changed to meet the housing and/or facility demands for the region.

16 Our objective was to hold the land for about 15 to 20 years and then immediately proceed with owner/development to subdivide the property into residential allotments when it became possible to do so. Our estimate of 15 to 20 years was based on enquiries with the Planning Department of Coffs Harbour City Council, availability at that time of development properties, population growth estimates and discussions with local real estate agents.

17 Once developed, we intended to build and reside on one lot and continue to hold the remaining allotments as a continued real estate investment and release them for sale in accord with the demand cycle for §uch lots andj"'//nanagement [sic].

18 The subject property was one of three properties that we owned and held for future development. The other two properties are:

a) Lot 2 in DP232037 - The Mountain Way Sapphire Beach, NSW, which is 8.3ha vacant land zoned non-urban that we are land banking; and

b) Lot 1 in RP201710-1374 Mt Cotton Road Burbank, Qld, which is 12.52ha vacant land zoned non-urban that we are land banking.

19 As a consequence of the acquisition of the Land by Transport for NSW, Wendy and I intend to replace the Land to carry out the objective referred to in the preceding paragraphs.

20 It is also necessary that we purchase a replacement property to rollover any requirement to pay Capital Gains Tax (CGT). I have been advised that the CGT amount could be approximately $950,000 'but for' the acquisition. This is not a payment that would need to yet be made.

21 In purchasing a replacement property, we will incur costs in relation to:

a)   Stamp duty; and

b)   Legal fees.

…

402. In the affidavit of Mrs Dibb sworn 29 May 2023, Mrs Dibb deposed to reading the affidavit of Mr Dibb sworn 22 May 2023 and agreed with the contents where Mr Dibb had referred to him and Mrs Dibb jointly as expressing a view, intention or agreement.

403. Relevant paragraphs of the affidavit of Mr Dibb sworn 26 May 2023 are extracted below:

Purchase of Subject Property

…

11. From late 1986 until the time of purchase [1988], the Subject Property was the only acreage property available for sale that was closest to the Coffs Harbour CBD and to the surfing beaches. I am aware of this as I would regularly research property sales listings in that area.

12. Our objective was to hold the Subject Property for about 15 to 20 years and then immediately proceed with owner/development to subdivide the Subject Property into residential allotments when it became possible to do so. Our estimate of 15 to 20 years was based on enquiries with the Planning Department of Coffs Harbour City Council, the availability at that time of development properties, population growth estimates and discussions with local real estate agents.

13. Once developed, we intended to build and reside on one lot and continue to hold the remaining allotments as a continued real estate investment and release them for sale in accord with the demand cycle for such lots and tax management planning.

14. Prior to its purchase, Wendy and I researched the viability of the Subject Property for future residential subdivision and found that it favourably met the criteria for such due to its location, substantial road frontage and the absence of hard physical and environmental constraints, and it also aligned with the then requirements for future urban land release, which was subsequently detailed at cl. 38(3) of the North Coast Regional Environmental Plan 1988.

15. Wendy and I have had a close connection with the Coffs Harbour region since 1976 and have always held a high level of confidence about the future potential of the Korora region as it represented the most desirable and prestigious area of the Coffs Harbour region.

16. Also, as the Subject Property is located within one kilometre from Korora and Charlesworth Bay beaches and is at the gateway of the Korora hinterland, it indicated to me a future potential for tourist-related development as it was in close proximity to resorts that included Sapphire Pines, Nautilus, Opal Cove, Pelican Beach, Aanuka, Charlesworth Bay Resort, Korora Bay Village and an abundance of various tourist accommodation that fronted the west side of the Pacific Highway.

17. Wendy and I considered our purchase of the Subject Property as a vital long term financial investment that would crystallise by the time we reached our mid-fifties and would serve as the basis for our early retirement and lifestyle change.

…

Our holding of the subject property

19. In the 33 years that we held the Subject Property:

a. at no time did we reside there;

b. we leased the property to 2 tenants for only a fixed nominal rent primarily for the purpose of preventing squatters, and to keep the pasture down and weed free;

…

20. In 1991, Wendy and I declined an offer from Pacific Bay Resort, which had land holdings on the east and west side of the M1 ln close proximity to the subject property. The offer was to purchase the Subject Property for $450,000 ($75,000 per acre) to utilise as a housing estate that would be part of a proposed golf course development on the west side of the highway on an area known as 'Thakral Lands'.

…

28. As a part of the Strategy [Coffs Harbour Urban Development Strategy dated 25 October 2004], CHCC identified a cluster of properties located in the S/E corner of Korora, west of the Pacific Highway, which included the subject property ('the Cluster"), as having the best short-term potential for urban development.

29. This Cluster, which comprising of 14, 14A, 19-19A, 28, 58, 70, B4 & 100 Bruxner Park Road, were all relevantly not considered to be of high scenic conservation value as are the elevated east-facing slopes of the Korora Mountain backdrop.

30. In 1996, several landowners of properties within the Cluster wrote to CHCC to request assessment of their properties and approval that would allow them to apply for residential sub-division. A copy of these letters are annexed hereto and marked "C".

Knowledge of the Public Purpose

…

34. In 2004, the Bypass route was formally announced and all the Cluster properties, including the Subject Property, were consequently re-zoned 5A - Community Purposes', which effectively prohibited any 'better use' development being made for those properties.

35. The 5A zoning allowed the landowners of properties within the Cluster to seek early acquisition of their properties under hardship grounds, pursuant to Clause 20 under Part 4 of the Coffs Harbour City Local Environmental Plan 2000.

36. Wendy and I both agreed that we could not consider early acquisition under hardship grounds whilst there remained potential that the Subject Property would not be required for the Bypass.

37. In 2005, the NSW Government-owned Country Energy registered a power line easement over several of the properties within the Cluster, including the Subject Property, after these properties were already identified for future acquisition for the Bypass.

38. The Respondent first notified us on 24 September 2008 that the Subject Property was 'directly affected' by the Bypass proposal although Wendy and I knew it was within the proposed Bypass route since 2001.

…

Our intention to subdivide

57. Wendy and I purchased the Subject Property to subdivide it into allotments, being a process that we believed we are amply qualified and competent to undertake.

58. At all times since we purchased the property, we stood ready to immediately proceed with subdivision once we were permitted to do so, which we were certain would have occurred between 2004 and 2009.

59. We did not have any doubts as to the Subject Property's eligibility for subdivision by that time.

60. Since 2006, we have had the ability to easily and quickly raise capital of up to about $5 million through funding from our eldest son Justin, who resides abroad and is the founder of Allied Gold Corp, an operating mining company with holdings in Africa and Egypt.

61. If Wendy and I were not placed in a holding pattern by the Public Purpose, and its change in zoning deferred, I believe we would have subdivided the Subject Property into 26 lots by the date the Subject Property was acquired.

404. Mr Dibb annexed letters sent by several landowners of properties in Korora (referred to in pars 28 to 30 above) to the Council in 1996 and 2001 to his affidavit sworn 26 May 2023. The letters requested the Council consider their properties suitable for residential zoning in the Council’s strategic planning documents. The Coffs Harbour Urban Development Strategy dated 25 October 2004 and a letter from the Respondent dated 24 September 2018 were annexed to Mr Dibb’s affidavit.

405. In the affidavit of Mrs Dibb sworn 26 May 2023, Mrs Dibb deposed to reading the affidavit of Mr Dibb sworn 26 May 2023 and agreed with the contents where Mr Dibb had referred to him and Mrs Dibb jointly as expressing a view, intention or agreement.

Oral evidence of Mr Dibb

406. In cross-examination Mr Dibb when asked what made him want to move to Coffs Harbour answered that they purchased the Land with the intention of residing there. Asked why he chose Coffs Harbour, he answered that they have known the region since about 1976 and they felt it was a lifestyle change they would have enjoyed in later years. He agreed he currently lives in Queensland.

407. Asked what he meant by housing and/or facility demand for the region at par 15 in his affidavit of 22 May 2023, he answered that Coffs Harbour was on the precipice of expanding in the 1980s being a beach side city with proximity to Sydney and Newcastle. There were good opportunities for investment in Coffs Harbour. Visiting Coffs Harbour since 1976, they decided to focus on that area and made inquiries for about 12 months to look for acreage properties. They believed that the housing requirements and population growth for the area that was being advertised indicated that there was going to be residential housing development to meet the growing population needs.

408. Mr Dibb agreed the Sapphire Beach property (see par 18 above in [400]) is not far from the Land and is zoned R5 Large Lot Residential and C2 Environmental Conservation. He agreed that the Burbank property (see par 18 above in [400]) is located in Queensland and was purchased in 2011. He confirmed the Burbank property was currently used as a rescue facility and is zoned environmental management. He agreed a trustee company owns the Burbank property. The Applicants are trustees and their five children are the beneficiaries of that Trust.

409. Asked whether he had submitted any request for the Land to be zoned residential (in light of the letters to the Council by several landowners in Korora referred to above in [403]), he answered he had not. Asked whether the $5,000,000 he could raise for subdivision of the Land (see par 60 above in [402]) was how much he understood any road works and civil works would cost, he stated the amount of $5,000,000 reflected the line of credit available to him. Mr Dibb has not carried out a subdivision, nor obtained a development consent for the subdivision of any land he has owned.

410. Mr Dibb has not taken any steps to acquire a replacement property. When the Applicants were advised that the Land was going to be resumed in 2019, the Applicants went to Coffs Harbour for two reasons: (1) to search for a replacement property and (2) research the property market. He had five real estate agents in Coffs Harbour come up with a list of suitable properties. Asked whether he made any offers on a replacement property, he answered there were no properties that met his criteria.

411. He agreed that it was necessary to purchase a replacement property to roll over any requirement to pay capital gains tax (CGT). He understood that he has 12 months following a CGT event to purchase a replacement property to gain the benefit of the CGT rollover based on advice from accountants and legal representatives. The Australian Taxation Office (ATO) advised him that the 12 month period to buy a replacement property commences when he accepts consideration from the Respondent. For that reason he has not accepted the advance payment from the Respondent that is being held for him on trust.

412. Shown an extract from the ATO website summarised below in [415], he agreed the Respondent has taken possession of the Land. He agreed he was relying on a special circumstance extension. Asked whether he would replace the asset if not given a special circumstance extension, he thinks the Applicants would still replace the property but is unsure whether they would purchase it for the full compensation amount. He will decide once the known amount of funding is available.

413. Asked whether he would have disposed of the Land after developing it sometime between 2004 and 2009 and bought another a property, he answered no. The Applicants would have built (and lived) on the north-western corner of the Land and retained the subdivided properties as an investment to trickle sell the subdivided lots over the time. If they had developed in 2009, they may or may not have sold all the lots by the present time.

414. Asked whether he would have held up to $5,000,000 worth of debt to trickle sell, he answered yes. Asked whether he would have bought another property when all the parcels were sold, he answered most likely as the Applicants have a bias towards property investment as opposed to share investments.

Respondent’s evidence

415. The Respondent tendered the following evidence relevant to disturbance:

1. Aerial image of Mountain Way, Sapphire Beach property (see par 18(a) of Mr Dibb’s affidavit sworn 22 May 2023 above in [400]) (Ex 5);

2. Aerial image of Cotton Road, Burbank property (see par 18(b) of Mr Dibb’s affidavit sworn 22 May 2023 above in [400]) (Ex 6);

3. Extract from the ATO website on involuntary disposal of a CGT asset (see below in [415]) (Ex 7); and

4. Respondent’s amended reply to Applicants’ amended schedule of losses attributable to disturbance dated 7 June 2023 (Ex 12).

416. The extract from the ATO website detailed that when an asset is compulsorily acquired by an entity the time of the CGT event is the earlier of first receiving compensation from the entity or the entity occupying or taking possession of the asset. The website stated that to be eligible for the CGT rollover when purchasing a replacement property, expenditure must be incurred acquiring another CGT asset for the same or similar purpose by the end of the income year in which the CGT event occurs. That period may be extended in special circumstances.

Applicants’ submissions

417. The Applicants submitted the Land was held for land banking per Fraietta and stamp duty and legal fees incurred in the purchase of a replacement property is claimed.

418. The principle established in Blacktown Council v Fitzpatrick Investments Pty Ltd [2001] NSWCA 259 (Fitzpatrick) at [4]-[5] is that use of land does not have to be a physical use and that the holding of land for the purpose of a land development business is an actual use of land for the purpose of s 59(1)(f) of the Just Terms Act. If this kind of use can be established on the facts, as it can with the Land, the fact that the Land may have been leased to tenants does not alter the position: G Capital Corporation Pty Ltd v Roads and Maritime Services (2019) 103 NSWLR 543; [2019] NSWCA 243 at [17(b)], [25]-[27].

419. Mr Dibb (with Mrs Dibb agreeing) deposed to the circumstances surrounding the purchase of the Land above in [400], [402]. The Land was purchased in 1988 by the Applicants for the purpose of land banking with the intention of developing it into residential allotments once the zoning changed, which they estimated to be in 15 to 20 years’ time. Since 2006 they have stood ready and able to subdivide the Land, with access to sufficient financial resources to enable it to be carried out. The Land was purchased after significant research undertaken by Mr Dibb of the Coffs Harbour region. The Applicants’ maintained their intention with the Land, as evidenced by their rejection of an offer from Pacific Bay Resort in 1991.

417. Land banking the Land was not unusual to the Applicants. The Applicants hold the Sapphire Beach property (a short distance away from the Land) which they are similarly land banking until zoning permits its subdivision. This is no different to the circumstances accepted by Robson J in Fraietta.

418. The fact that no active steps had been undertaken by the Applicants to subdivide the Land is not a relevant matter in circumstances where, since 2001, the public had knowledge of the public purpose. From then, the Applicants were placed in a “holding pattern” which, but for the public purpose, would not have occurred, and the Applicants would have proceeded with subdividing the Land. The Respondent’s contentions that the Applicants are not in the business of land development are misplaced and should be rejected.

419. The Applicants intend to purchase a replacement property and have undertaken searches within the Coffs Harbour region. In cross-examination summarised above in [409], Mr Dibb explained the Applicants have not found a suitable property to purchase in their searches.

420. Mr Dibb’s intention to purchase a replacement property was further challenged in cross-examination in the context of the CGT rollover provisions. The Applicants have the benefit of the ruling by the ATO to rollover any CGT liability on the purchase of replacement property. Subject to meeting eligibility criteria, the Applicants can seek a special circumstance extension to apply the rollover provisions. If they do not receive that extension, they will be liable to pay CGT which may affect their ability to purchase a replacement property. Those matters have not yet crystalised, and there is no evidence to suggest the Applicants will not obtain an extension from the ATO.

421. The Applicants have made clear their intention to purchase a replacement property. The Applicants’ ability to purchase a replacement property will depend upon a number of factors including whether their claim for stamp duty in these proceedings is accepted. If it is not, it will naturally depend upon the Applicants’ financial ability to meet that cost themselves. That cost is not insubstantial on a replacement value equal to the Land. However, that cost remains one that might reasonably be incurred (adopting the words of s 59(1)(f)).

422. Having regard to the use of the Land, and the Applicants’ intentions to replace it, the Applicants are entitled to be compensated for stamp duty costs on the purchase of a replacement property of up to equal value to the market value of the Land under s 59(1)(f). Once that proposition is accepted, there ought be no dispute that the Applicants will also incur legal fees on the purchase of a replacement property. The amount of $7,150 for legal fees has not been challenged by the Respondent, and ought to be accepted in full.

423. Finally, the application of s 61 as contended by the Respondent would not be a bar to awarding disturbance costs. Section 61 applies where the land had potential to be used for a purpose other than that for which it is currently used where that potential remained unrealised: G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20 (G&J Drivas) at [417]. However, it is only in respect of a financial loss that would necessarily have been incurred in realising that potential under s 61(b) of the Just Terms Act.

424. The Applicants’ evidence is that they would have subdivided the Land and kept one subdivided lot to reside on. The basis upon which the Land is being valued is entirely consistent with this intention. Stamp duty is therefore not a financial loss that would necessarily have been incurred in realising that potential upon which the market value has been assessed, but rather an additional cost that might reasonably be incurred relating to the actual use of the Land, as a direct and natural consequence of the acquisition. Section 61, properly construed, is not engaged in the present circumstance. The purpose of the use of the Land (which is the relevant enquiry in s 61) for residential subdivision remains the same.

Respondent’s submissions

428. The Applicants’ claim for stamp duty and legal costs for the purchase of a replacement property under s 59(1)(f) must fail. The Land was not held by the Applicants for land banking but as passive investors. The Applicants must be more than a passive investor to seek costs under s 59(1)(f): Fraietta at [175] citing Speter v Roads and Maritime Services [2016] NSWLEC 128 (Speter) at [91]. Holding land as an investment rather than as trading stock is not an actual use of the land: Fraietta at [175] citing Speter at [91].

429. The evidence of Mr Dibb that the Applicants were land banking the Land should be rejected. There is no evidence that the Applicants were developers such that the Land could be characterised as stock in trade: Fitzpatrick at [30]-[35]; SNS Pty Ltd v Roads and Maritime Services (2018) 232 LGERA 224; [2018] NSWLEC 7 at [345]-[347]; G&J Drivas at [383]). Of the two properties relied upon by the Applicants to demonstrate a property portfolio, they only own the Sapphire Beach property and otherwise are trustees of a trust that owns the Burbank property under which they are not beneficiaries. They have never completed or obtained a development consent a subdivision of land that they have owned. They are not in the business of property development. They did not make submissions to the Council seeking a rezoning of the Land. At best, the characterisation of the Applicants’ interests in property is passive. In the absence of an actual use of the Land, the claims must fail under s 59(1)(f) .

430. In addition, Mr Dibb was equivocal in his oral evidence as to whether a replacement property would be purchased following the determination of compensation. He accepted that it would depend on whether he received an extension of time from the ATO to be able to use the CGT rollover that is permitted following the compulsory acquisition of land. It is evident that the Applicants must satisfy the Court that stamp duty on a replacement property (assuming the Court accepts that the Applicants do have an actual use of the land) might reasonably be incurred. The Court would not be so satisfied on the evidence before it.

431. Further, and in any event, given that it was the Applicants’ stated intention to subdivide the Land and live on one of the lots, the quantum of stamp duty would need to be reduced under s 61 of the Just Terms Act to account for the fact that it would not be the whole of the Land that the Applicants would seek to replace. The portion of stamp duty that would be attributable to the lot to be retained by the Applicants would be a loss they would simply necessarily incur in realising the subdivision potential and so s 61(b) would dictate a reduction in the quantum payable.

Finding on disturbance

432. The Applicants seek to rely on s 59(1)(f) of the Just Terms Act to claim the costs of stamp duty payable for a replacement property and legal fees incurred in purchasing a replacement property. The essential elements of subs (1)(f) include that the costs incurred must be financial, these costs must be “reasonably incurred (or might reasonably be incurred)”, an applicant must actually use the acquired land, the financial costs must relate to the actual use of the land and these costs must be incurred as a “direct and natural consequence of the acquisition”, per Fraietta at [171]. In light of the parties’ submissions the main element in contention is whether the Applicants were actually using the land at the date of acquisition.

433. In Fraietta the applicant held the acquired property with the intention of constructing a stone house. His claim for relocation costs was considered under s 59(1)(f), Robson J finding that subss (c),(d) and (e) did not apply as the applicant was not living on the land and did not therefore relocate from it. Robson J at [174]-[179] helpfully undertook an analysis of the relevant caselaw with respect to the actual use of land which I extract below and adopt:

Actual use

[174] Pursuant to s 59(1)(f) of the Just Terms Act, an applicant is entitled to seek financial costs which are either reasonably incurred or might reasonably be incurred, that both arise from the actual use of the land, and were incurred as a direct and natural consequence of the acquisition.

[175] The principles relating to “actual use” were recently summarised in Speter, where this Court stated at [91]:

This provision has been the subject of much judicial discourse, from which the following principles may be distilled:

…

(2) the actual use must exist in fact at the time of the acquisition, and cannot be either “a future use or potential use”: Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259 at [26]-[27] (Brownie AJA) (“Fitzpatrick”), Kirela at [12] (Cowdroy J);

(3) actual use can include “land banking” for future development of that land (Fitzpatrick at [31] (Brownie AJA)) and construction that is being conducted on the land at the date of acquisition (Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 254 at [44] (Biscoe J));

(4) an applicant must be more than “a passive investor”: Fitzpatrick at [34] (Brownie AJA); and

(5) holding land as an “investment rather than as trading stock” is not an actual use of the land: Cannavo v Roads and Traffic Authority of New South Wales [2004] NSWLEC 570 at [46] (Talbot J).

[176] It has recently been determined, both in Speter at [94] and by Preston CJ of LEC in G. Suonaf Holdings Pty Ltd v Roads and Maritime Services [2016] NSWLEC 116 at [61], that properties held as tenanted investments did not involve the actual use of those properties.

[177] Further to the principles above, it is also instructive to consider a number of authorities with similar factual scenarios in more depth. In Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259, where the Court of Appeal considered whether land held by a company for a proposed subdivision was an “actual use”, Brownie AJA stated:

[23] S59(f) of the Just Terms Act used a different expression: "actual use". [The primary judge] found that the business of the respondent was "the development of land by subdivision"; that it held the acquired land "for the purpose of development by way of residential subdivision"; that the "actual use for which it held the acquired land [was] for the purpose of development by way of subdivision"; that by reason of the acquisition, the respondent "lost its developable land", and replaced that land by "acquiring other developable land"; and that but for the acquisition the respondent could have developed the acquired land.

[24] …these findings of fact mean that "the use" to which the respondent put the land for its purposes, prior to the acquisition, was use for the purpose of residential subdivision. The acquired land formed part of what was called the respondent's "land bank", being land acquired and held for the purpose, when the time was ripe, of being subdivided and resold for profit.

[178] In Kirela, Cowdroy J considered whether the applicant was engaged in the “actual use” of a block of land which was intended to be used either for overflow parking, or to increase the FSR of a development planned on an adjacent block of land. His Honour found at [12] that the land “was not being used for any purpose but rather was awaiting development for some future purpose” at the date of acquisition, and continued at [19]:

The Court finds that the acquired land was not used in the sense referred to in Fitzpatrick Investments Pty Ltd v Blacktown City Council (No 2). There is no evidence of actual use of the land as a land bank. The proposal for its use remained only potential therefore the applicant is not entitled to recover compensation for stamp duty pursuant to s 59(f) of the Act.

[179] In Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 254 (‘Al Amanah’), Biscoe J considered whether the applicant was “actually using” land on which a school was being constructed at the date the acquisition was announced. His Honour stated at [37]:

…There is a distinction between land simply held in reserve for some future activity and land in respect of which work is being done — which does not have to be physical work on the land — preparatory to an intended use. The latter is, but the former may not be, an actual use of the land…The present case falls into the latter category. By the date of announcement of the acquisition on 20 July 2009, the applicant had caused work to be done preparatory to the intended use of the land as a school, for which it had incurred costs. The work included physical work on the land.

434. In Fraietta Robson J held that the applicant was more than a passive investor. The applicant was involved in the actual use of the land having undertaken work in preparation for its intended use of building a stone house (storing stones on the property to be used in construction) and had not let the land be idle (by managing weeds on-site). The applicant had also used the land in a manner similar to land banking with a specific development purpose in mind that but for the acquisition he would have carried out when the time was right, notwithstanding that the development was put on hold at the date of acquisition due to personal circumstances.

435. As emphasised by the various authorities referred to in Fraietta the activities of the Applicants must be considered to determine if any actual use of land was occurring at the date of acquisition, to be distinguished from holding land to use for future purposes.

436. The Applicants gave evidence that they intended to subdivide the Land, which they purchased in 1988, having held on to the Land in order to achieve that purpose once it was suitably zoned. The Applicants own one other property in the general area of Coffs Harbour at Sapphire Beach which they also intend to develop once rezoning to a residential use to enable that occurs. The Applicants have not undertaken subdivision development to date and have not applied for any subdivision development consent.

437. Mr Dibb’s unchallenged explanation for why they have not undertaken subdivision on the Land to date is that the public purpose on becoming known as a possibility in 2001 resulted in their plans being put on hold, with advice in 2008 confirming that the Land was potentially within the path of the proposed Coffs Harbour Bypass Project. I have found above in relation to issue 1 that but for the public purpose the land would have been zoned for low density residential purposes by the date of acquisition likely from 2013 which would have enabled the Applicants to pursue their stated objective of developing the land using the line of credit from their son to build a subdivision development which they could “trickle” sell onto the market. This evidence supports a finding of actual use of land as recognised in Fitzpatrick at [24] as cited in Fraietta at [177] set out above in [432]. It was there described as land banking in the context of that case. That description applies to what the Applicants are holding property for, on what could be described as modest scale, but nevertheless reflects their actual use of land. The Respondent’s submission that they are not land developers because they have no record to date of undertaking subdivision development is not accepted as reflective of their evidence. Their evidence confirms their current intention to subdivide the Land and separates them from a passive investor in land.

438. To return to the elements of s 59(1)(f) of the Just Terms Act, the claim is for financial costs which relate to the actual use of the Land. The written and oral evidence of Mr Dibb establishes that these costs might be reasonably incurred through the purchase of a replacement property. He has sought guidance from the ATO concerning the application of the special circumstance provision in relation to the GST rollover exemption and is awaiting the outcome of the proceeding to see how much money he has available to spend, a reasonable approach. Contrary to the Respondent’s submissions I do not consider his oral evidence should be described as equivocal. These are relevant factors informing the Applicants’ decision to purchase which cannot be finally resolved for them until the outcome of the proceeding is known. The overall tenor of Mr Dibb’s evidence was that the Applicants would seek to purchase a replacement property and a search to that end has been commenced by them to do so.

439. Section 61 applies if the market value of land is assessed on the basis that land had potential to be used for a purpose other than that for which it is currently used. For the reasons given by the Applicants above in [425] s 61 does not apply to the circumstances of the Applicants. The development of the Land for residential subdivision purposes remained the same regardless of whether the Applicants had in the future occupied one of the subdivided lots on the Land.

440. It is helpful to look at Attard v Transport for NSW (2014) 205 LGERA 396; [2014] NSWLEC 44 (Attard) where Biscoe J held at [148] that “the idea behind s 61(b) is that if the owner would have to relocate anyway in order to sell land at its higher value based on its potentiality, then it is inconsistent (and therefore unjust) that the owner should also recover relocation costs as disturbance loss. The purpose of s 61 is to prevent that perceived inconsistency.” The circumstances of the Applicants do not reflect the circumstances which s 61(b) is addressing, as highlighted by considering the extract from Attard.

441. The Applicants’ claim for stamp duty and legal fees under s 59(1)(f) is awarded as compensation for disturbance.

Issue 4: Conclusion

442. The Applicants are awarded their claim for:

1. Valuation and town planning fees under s 59(1)(b) of the Just Terms Act for the amount of $21,975 (the parties agree the outstanding payment amount is $10,500);

2. Stamp duty for replacement property under s 59(1)(f) of the Just Terms Act for an amount to be confirmed; and

3. Legal costs under s 59(1)(f) of the Just Terms Act for replacement property for $7,150.

Costs

443. The Applicants submit that the usual course in compulsory acquisition proceedings is that the Respondent should pay the Applicants’ costs as agreed or assessed. I will make an order that the Respondent pay the Applicants’ costs as agreed or assessed in seven days unless the Respondent makes an application for an alternative order other than the costs reserved on the Applicants’ notice of motion to amend points of claim dated 26 May 2023 which is yet to be determined. A timetable to do so will be agreed with the parties.

Orders

444. The Court orders that:

1. Compensation pursuant to Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) for the compulsory acquisition of the Applicants’ freehold interest in Lot 242 Deposited Plan 752834 known as 28 Bruxner Park Road, Korora is determined in the sum as follows:

1. $1,330,000 for market value under s 55(a);

2. $29,125 for disturbance under s 55(d); and

3. Stamp duty for replacement property under s 55(d) for an amount to be confirmed within seven days.

2. Costs reserved.

**********

Decision last updated: 27 October 2023