E J Cooper and Son Pty Limited v Baulkham Hills Shire Council
[2003] NSWLEC 383
•12/12/2003
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Land and Environment Court
of New South Wales
CITATION: E J Cooper & Son Pty Limited v Baulkham Hills Shire Council [2003] NSWLEC 383 PARTIES: E J Cooper & Son Pty Ltd (Appl)
Baulkham Hills Shire Council (Resp)FILE NUMBER(S): 30607 of 2003 CORAM: McClellan CJ KEY ISSUES: Valuation of Land :- Challenge to council valuation of resumed land
En globo value to be determined by sales of comparable properties in area
Future cost of remediation of fill on land to be taken into account
Additional claim for compensation for disturbanceLEGISLATION CITED: Rivers and Foreshores Improvement Act 1948
Land Acquisition (Just Terms Compensation) Act 1991
s 59(f)CASES CITED: DATES OF HEARING: 8-12 December 2003 EX TEMPORE
JUDGMENT DATE :
12/12/2003LEGAL REPRESENTATIVES: M I Bozic SC/M S Henry (Resp)
N Hemmings QC/C Leggat (Appl)
Marsdens Law Group (Sol - Appl)
Matthews Folbigg Pty Ltd (Sol - Resp)
JUDGMENT:
IN THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES
30607/03
FRIDAY 12 DECEMBER 2003McCLELLAN J
- Applicant
- Respondent
Introduction
1 HIS HONOUR: This is an appeal in relation to the amount of compensation offered by Baulkham Hills Shire Council in respect of land at Castle Hill. On 10 December 2003 I determined a number of preliminary questions which had been identified by the parties as appropriate for separate determination. My reasons for decision in relation to those separate questions record the factual matters necessary to determine those questions. I shall not repeat them in these reasons.
2 However, it is necessary to recapitulate the fact that the land which was acquired is comprised of two lots, known as lots 14 and 15 in DP 1041791 at Castle Hill. The resumed land has an area of approximately 4.3 hectares and formed part of a larger holding owned by EJ Cooper and Son Pty Limited. The land is now zoned residential 2(b) under the relevant planning instrument.
3 The questions which were separately identified and answered raised for consideration the status of the land, or a substantial part of it, under the Rivers and Foreshores Improvement Act. I answered the questions raised in a manner favourable to the applicant, concluding that a prudent purchaser would not have discounted the price which it was prepared to pay for the land by reason of the possibility that the acquired land contained protected land or protected waters within the meaning of the Rivers and Foreshores Improvement Act, 1948.
4 Although both parties prepared evidence in relation to a number of prospective issues in these proceedings, the isolation of the separate questions and a mature consideration by the parties of their respective positions has enabled the issues which ultimately require resolution to be significantly reduced. The parties are to be commended for the way in which these proceedings have been conducted. It has ensured that the Court’s time has been devoted to the resolution of critical matters and accordingly, I am able to give my reasons for decision within a shorter compass than might otherwise have been the case.
5 Although alternative methods of valuation were advanced by the parties, agreement was reached that the primary approach to the resolution of the amount of compensation which is appropriate, is that reflected by ascertaining the en globo value of the resumed land.
6 There were two valuers, one retained by the applicant and one by the council. The valuers had a number of meetings in an endeavour to identify the areas of agreement and disagreement. A document prepared by the valuers was tendered in evidence, Exhibit S. It approached the matter on an en globo basis.
7 Mr Phippen, one of the valuers retained and called by the applicant, determined the highest value for the land. He expressed that value as a rate of $340 per square metre. Mr Szalay, on the same basis, determined a value of $318 per square metre.
8 The valuer retained by the council, Mr Brown, determined a lesser sum and indicating that he believed that it was necessary to deduct the costs of remediation of a large body of fill located on the subject land and also to deduct a significant amount for what were referred to as “drainage box culverts.”
9 As it happens, the council has not called Mr Brown to give evidence and I have been expressly told by senior counsel for the council that I am to ignore any reference to anything which Mr Brown may have said or written which has found its way into evidence. Accordingly, this matter falls to be determined having regard to the evidence of Mr Phippen and Mr Szalay.
10 The valuers, in the usual manner, sought evidence of the en globo value of the resumed land by seeking out sales of comparable parcels of land within the area. Each of the valuer’s reports refers to a number of sales beyond those which the parties ultimately agreed were the primary sales which I could rely upon for the purpose of ascertaining the value of the resumed land. The sales which fell into this category numbered five and I shall come to each of those in a moment.
11 During the course of the proceedings a further sale was identified which was the acquisition by the council of a parcel of land known as the Schwarz land which is lot 6 in DP 28985. That parcel of land is to the immediate north of the resumed land on the other side of Wrights Road and immediately adjacent to the now developed regional shopping centre. Upon becoming aware of that sale, the applicant’s valuers believe it is appropriate to have regard to it and notwithstanding that a full analysis of the sale could not be undertaken, both valuers believe it confirms the value which they had otherwise derived for the resumed land.
12 In my earlier reasons for judgment I described the resumed land. It is generally flat and by reason of its location in the catchment it would logically have been developed with a roadway generally through the centre which would have incorporated drainage taking water from both the resumed land and from lands further up in the catchment. It is plain that a significant drainage system would have been required to manage this water. However, I am satisfied that whatever may have been required by way of drainage would not have reflected any unusual characteristic of this land in comparison with sales of comparable land in the area. If this site had had to carry the burden of increased drainage in order to manage the water from other lands, offsets would undoubtedly have been achieved when negotiating with the council in relation to appropriate section 94 contributions. It must be remembered that this site is a substantial parcel of land with an area which is fast undergoing redevelopment where detailed planning has been undertaken and where detailed contribution plans have been prepared.
13 Turning to the evidence of the two valuers, Mr Phippen, as I have indicated, derived a value of $340 per square metre. Mr Phippen gave his evidence in a direct and confident manner. He did not appear to readily accept any criticisms of the detail of the work which he had undertaken and it seems to me that some criticism is appropriate. Of the five sales which became central to the assessment of value, three of them occurred some months after the resumption. Sale one occurred in July 2003, sale four in August and sale five in June. Mr Phippen gave evidence, which I accept that there has been a rising market for land for residential purposes in the area exacerbated by a shortage of land suitable for development.
14 In those circumstances I am satisfied that it would have been appropriate to make adjustments for sales occurring in the order of six months after the date of resumption when seeking to determine the appropriate value of the resumed land. Mr Phippen did not accept that the consequence of his, as he put it, mistake in not adjusting those sales should be reflected in that manner. I have come to the conclusion that for that reason, and having regard to the whole of his evidence, I would not prefer Mr Phippen as against Mr Szalay.
15 Mr Szalay gave his evidence in a somewhat more cautious manner than Mr Phippen. He conceded matters which it was appropriate to concede and I have come to the conclusion that I would accept his evidence as to the value of the subject land as against that of Mr Phippen.
16 With respect to the particular sales, I am satisfied that the best evidence of value is to be obtained by an analysis of the sale which was sale one, lot 2 Rosebery Road, Kellyville. That is an area of approximately two hectares which sold in July 2003. Adjusted appropriately for time, it reveals a value per square metre of $308. The parcel is elevated and for that reason, would be superior to the resumed land. However, it is located further from the commercial centre of Kellyville and as a consequence does not have the benefit of proximity to shops, schools and other facilities which the resumed land would have.
17 Mr Szalay believes that those attributes of the resumed land would make that land slightly superior to the sale and I accept that evidence.
18 Both valuers had regard to the sale of lot 11, Old Castle Hill Road, Castle Hill. That was a sale of a parcel of approximately the same size as the resumed land. It sold in July 2002 and, adjusted for time, reveals a value of $375 per square metre. Although an attractive parcel of land with significant tree cover, it is steep. In parts it was accepted to have a slope of approximately 20 per cent and has a natural water course through it which would, in the opinion of the valuers, at least be required to be maintained as a natural watercourse in any development. There is no evidence of the intention of the purchaser in relation to that land nor of the ultimate development potential which it has. However, there is evidence of a knowledge of slippage difficulties in some parts of it and the consequences of the need to retain the waterway are uncertain.
19 Notwithstanding those disadvantages, the valuers accept that the land is in a superior location to the lot in question. There is no question that it is within Castle Hill which is believed to be a superior address to Kellyville. The subject land would also carry a Castle Hill postal address, the boundary with Kellyville, as I understand it, being Wrights Road. However, while the land may be within the postal district of Castle Hill, its proximity to the Kellyville regional shopping centre would, in my opinion, have the consequence that many people will think of as being part of Kellyville rather than Castle Hill. It is of course difficult to quantify what, if any, difference that might make to the value of the land but it certainly would be a significant factor.
20 I accept that sale two is some evidence of value but I am satisfied it is at the highest end of the range of sales of land for residential purposes within this area and its utility is limited.
21 There are three further sales, 46 Wrights Road Kellyville, which is a sale of about 1.4 hectares which occurred in November 2001 and which, adjusted for time, realises $307 per square metre. The fourth sale is lot 15 Kirkwell Avenue Castle Hill. That sold in August 2003 and again adjusted for time, reveals a value at date of resumption of $304 per square metre. Lot 340 Chepstow Drive Castle Hill is the fifth sale near to the fourth sale having a significantly smaller area than the resumed land as does sale four which, adjusted for time, shows a value of $289 a square metre. For various reasons, those sales in my opinion set the lower end of the range appropriate in the present case. Mr Szalay was also of this view for he defined the potential range of values for the resumed land as falling between $300 and $340 per square metre.
22 Sale number six is the parcel of land acquired by the council immediately to the north of the resumed land. It has an area of 2.023 hectares with a Kellyville address. It is zoned in a similar way to the resumed land but adjoins the shopping centre and its car park. It would also appear to be affected by Smalls Creek which from my observation on the view, would appear to be a river under the Rivers and Foreshores Improvements Act. As a consequence this would represent a potential difficulty for the redevelopment of the land and may have the consequence that part of the land would be precluded from development. The land was apparently acquired by the council after litigation had been commenced in this Court and the price paid shows a value for that land of $320 per square metre.
23 Mr Szalay was not aware of that sale when he prepared his valuation. Upon becoming aware of it, he is satisfied that the appropriate value to be given to the resumed land is the same as that for lot 6 being $320 a square metre.
24 I previously referred to the fact that the resumed land has on it a body of fill. As I understand it that fill was retrieved from immediately-adjoining lands when they were subdivided and was deposited on the resumed land.
25 Mr Szalay had access to a report of a geotechnical engineer of considerable experience, Mr Katauskas, when he prepared his valuation. That report indicates the manner in which the fill would be dealt with in the course of the development of the resumed land. In general it would be necessary to retrieve it, prove that it was sound, and then return it to the land in appropriate places ensuring that it was adequately compacted. The assumption which Mr Szalay made when he prepared his valuation was that the cost of those works would be in the order of $900,000.
26 It is difficult to determine from the evidence whether the presence of the fill on the site would be an advantage or disadvantage in the hypothetical development of the resumed land. It is plain, as has occurred on adjoining lands, that there would be a need to fill some of the resumed land and perhaps the greater part of it to ensure that it was appropriate for residential use. There is also a necessity to construct roads, perhaps bridges, culverts and the like. The presence of the fill which is comprised mainly of topsoil would obviously be an advantage if filling of the resumed land was otherwise necessary.
27 During the course of these proceedings the parties reached agreement that the cost of the works that Mr Katauskas describes in his report would be somewhat greater than $900,000, the agreed sum being $1.2 million. It was submitted by the council that as this figure had now been adjusted upwards it would be necessary to make some adjustment to reflect the change in cost in the valuation of Mr Szalay.
28 The evidence does not enable me to reach that conclusion.
29 Although the theoretical cost of dealing with the fill has undoubtedly increased, the extent, if any, to which that would be reflected in the en globo value of the land cannot be ascertained from the evidence. Mr Szalay was of the view that although there was an increase against the cost which he had in mind when he prepared his valuation he did not believe that that would be sufficient to reflect any identifiable change in the value which he would attribute to the resumed land. Having regard to sale six as I have referred to it he believed that the appropriate value for the resumed land, even having regard to the increase in costs, should be $320 per square metre.
30 The values which I have discussed and the price paid in relation to each of the sales are exclusive of goods and services tax. Accordingly the value which I determine and the compensation payable with respect to that determination are exclusive of GST.
31 In my opinion it is appropriate to adopt the value determined by Mr Szalay for the resumed lands. I do so conscious of the fact that it is necessary to resolve any doubts I have in relation to particular aspects of the matter in favour of the applicant. That is an appropriate way in which to deal with the question of the engineering treatment of the fill and also any uncertainties in relation to sale 6.
32 Accordingly I am satisfied that the compensation payable in respect of the resumed land should be determined by valuing the land at $320 per square metre. I invite the parties to bring in minutes of order which reflect that position.
33 There is a further issue which was debated, being the question of disturbance. Evidence was given by Mr Camilleri, who is the managing director of the applicant company, in which he indicated that the resumed land was originally part of the lands utilised by the company for its intensive poultry breeding activities. However as is plain those activities could not continue on the land and in recent years the company turned its energies into the subdivision and development of the land for residential purposes.
34 The company is part of a group of companies which as I understand it comprise a family business of some significance. One aspect of the business, but by no means the only component of it, is the development of land. Mr Camilleri gave evidence that the intention of the company is to continue that business by the acquisition of further lands and its subdivision and re-sale.
35 Accordingly the funds released from the compensation payable in relation to the resumed land will be utilised for that purpose.
36 In those circumstances I am satisfied that a claim pursuant to s 59(f) of the Land Acquisition (Just Terms Compensation) Act 1991 in relation to the costs of acquiring land as an asset to replace the asset resumed is appropriate. As I understand the position following the evidence of Mr Camilleri the council did not contest such a finding.
37 The applicant seeks an order for costs. The council does not wish to be heard in relation to the matter. It is plain that the applicant has achieved a value for the land far in excess of that which was determined by the respondent.
38 In those circumstances in my opinion costs should follow the event and accordingly an order will be made for the applicant’s costs.
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