Expandamesh Pty Ltd v Sydney Metro (No 3)

[2022] NSWLEC 137

Land and Environment Court

New South Wales

Medium Neutral Citation:

Expandamesh Pty Ltd v Sydney Metro (No 3) [2022] NSWLEC 137

Hearing dates:

19, 20, 21, 26 and 27 September 2022

Date of orders:

24 November 2022

Decision date:

24 November 2022

Jurisdiction:

Class 3

Before:

Moore J

Decision:

See orders at [236]

Catchwords:

COMPULSORY ACQUISITION ‑ substratum compulsorily acquired for the purpose of construction of a railway tunnel for the Sydney Metro project ‑ claim for compensation for market value of the substratum and for the decrease in value of the residual land retained by the dispossessed owner ‑ three jurisdictional tests as prerequisites to being permitted to seek compensation pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 (the Just Terms Act) set by Sch 6B of the Transport Administration Act 1988 (the Transport Administration Act) ‑ first test is whether “the surface of the overlying soil is disturbed” ‑ geotechnical evidence establishes test is satisfied ‑ alternative tests not satisfied ‑ ability to claim compensation pursuant to the Just Terms Act established

MARKET VALUE CLAIM ‑ Applicant’s valuer assesses market value of acquired substratum on the basis of “blot on title” ‑ Respondent’s valuer assesses market value of acquired substratum as nil ‑ “blot on title” not an appropriate approach ‑ statutory requirement to consider a hypothetical transaction involving a willing, but not anxious, purchaser and a willing, but not anxious, vendor ‑ hypothetical vendor would not altruistically ascribe no value to the substratum ‑ only valuation evidence of appropriate compensation of $20,000 proposed by the Applicant's valuer ‑ appropriate to award the Applicant compensation for acquisition of the substratum in the quantum proposed by its valuer

CLAIM FOR COMPENSATION FOR IMPACT ON RESIDUE LAND ‑ town planning evidence of increased development potential of the site ‑ consideration of how increase in development potential was caused ‑ increased development potential caused by the public purpose ‑ dispute as to cost of additional geotechnical monitoring to permit realisation of future development potential arising from the public purpose ‑ cost of additional monitoring to realise increased development potential determined as $140,000 ‑ valuers disagree about value of increased development potential ‑ Applicant's valuer says no increase in value to be ascribed ‑ Respondent’s valuer proposes 10% uplift in value for future development potential ‑ Respondent’s valuer’s position preferred ‑ increase in value of residue land significantly greater than the cost of the necessary geotechnical monitoring ‑ no entitlement to compensation pursuant to s 55(f) of the Just Terms Act ‑ claim for compensation for decrease in value of residue land dismissed

COSTS ‑ Applicant partially successful ‑ no unreasonable conduct by Applicant ‑ Respondent to pay Applicant's costs as agreed or assessed unless notification within 21 days of a party seeking an alternative costs order.

Legislation Cited:

Land Acquisition (Just Terms Compensation) Act 1991, ss 3, 54‑56, 59 and 62

State Environmental Planning Policy Infrastructure 2007

Transport Administration Act 1988, Sch 6, cl 2(1)(a) and (b)

Cases Cited:

AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2008] NSWCA 325

Banno v Commonwealth of Australia (1993) 45 FCR 32

Barkat v Roads and Maritime Services [2019] NSWCA 240

Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404

Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328

Expandamesh Pty Ltd v Sydney Metro [2022] NSWLEC 43

Expandamesh Pty Ltd v Sydney Metro (No 2) [2022] NSWLEC 109

House of Peace Pty Ltd & Anor v Bankstown City Council (2000) 48 NSWLR 498; (2000) 106 LGERA 440; [2000] NSWCA 44

Hunter's Hill Council v Minister for Local Government; Lane Cove Council v Minister for Local Government; Mosman Municipal Council v Minister for Local Government; North Sydney Council v Minister for Local Government; Strathfield Municipal Council v Minister for Local Government [2017] NSWCA 188

Landan Development Pty Ltd v Sydney Metro; Opera Australia v Sydney Metro; Altomonte Holdings Pty Ltd v Sydney Metro [2019] NSWLEC 65

MMTR Pty Ltd v Roads and Maritime Services [2015] NSWLEC 177

Texts Cited:

Macquarie Dictionary

Category:

Principal judgment

Parties:

Expandamesh Pty Ltd (Applicant)
Sydney Metro (Respondent)

Representation:

Counsel:
Mr T Hale SC/Mr D Robertson, barrister (Applicant)
Mr R Beasley SC/Mr L Waterson, barrister (Respondent)

Solicitors:
ClarkeKann Lawyers (Applicant)
Crown Solicitors Office (Respondent)

File Number(s):

179897 of 2020

Publication restriction:

No

TABLE OF CONTENTS

Introduction

The interlocutory proceedings

The challenges to requirements to produce documents

Costs of the interlocutory proceedings

The relevant statutory provisions

Introduction

The Transport Administration Act

The Just Terms Act

No relevant extrinsic material

The Company’s Further Amended Points of Claim

The issues

Introduction

Representation

The evidence

Introduction

The additional documentary evidence

The electronic documentary material

The hearing

The site inspection

The geotechnical issues

Introduction

The actual occurrence of settlement

The dilapidation reports

Clause 2(1)(a) of Sch 6B

Introduction

The facts concerning surface disturbance

The monitoring points

The monitoring data

Mr Kotze’s trend line

Consideration of the extent of disturbance

Introduction

The Joint Expert Report

Mr Kotze's trend line

Matters of statutory construction

Introduction

Definitions and the use of dictionaries

The Company's submissions

Sydney Metro’s submissions

The Company’s reply submissions

Consideration

Clause 2(1)(b) of Sch 6B

Introduction

The Company's position

Sydney Metro's position

Consideration

Geotechnical redevelopment costs

Introduction

Mr Kotze's position

Mr Braybrooke’s position

Consideration

The town planning issues

Introduction

Redevelopment under the October 2017 planning controls

The potential for future redevelopment

Timing of redevelopment under altered planning controls

The cause of the increase in development potential

Consideration

Conclusion on the town planning evidence

The valuation issues

Introduction

The market value claim

Introduction

The Company’s position

Sydney Metro’s position

The Company’s reply submissions

Consideration

The claim for a decrease in value of the residue land

Introduction

The decision in AMP Capital Investors Limited v Transport Infrastructure Development Corporation

The Company’s position

Sydney Metro’s position

Consideration

The Company’s concluding position on compensation

Sydney Metro’s concluding position on compensation

The correct concluding position on compensation

Costs

Orders

Annexure A

Annexure B

Judgment

Introduction

1. Expandamesh Pty Ltd (the Company) owns a property at 175‑177 Botany Road, Waterloo (the site). On 11 October 2019, a substratum of the site was compulsorily acquired by Sydney Metro for the purpose of constructing tunnels to serve the Sydney Metro City and Southwest Project. The Valuer General has determined that the amount of compensation to be paid to the Company by Sydney Metro for the compulsory acquisition of the substratum through which the tunnel will run is nil.

2. The Company has commenced proceedings pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 (the Just Terms Act) disputing the Valuer General's determination. The Company seeks to be awarded compensation on two bases. The first is for the value of the substratum which has been acquired from it and the second is what the Company says is the reduction in value, for future development, of the site because of the additional restrictions that will apply on future development as a consequence of the existence of the railway tunnels.

The interlocutory proceedings

The challenges to requirements to produce documents

3. In order to seek documents regarded by the Company’s lawyers as necessary for the purpose of establishing their case, a Notice to Produce (the Notice to Produce) was served on the Company's behalf in December 2021 on Sydney Metro. Subpoenas were also issued on the Company's behalf to the Secretary of the Department of Planning, Industry and Environment (the Department) and to Infrastructure NSW (the subpoenas).

4. On 25 January 2022, Sydney Metro filed a Notice of Motion seeking to set aside the Notice to Produce addressed to it and the subpoenas issued to the Secretary of the Department and to Infrastructure NSW.

5. On 25 January 2022, Infrastructure NSW also filed a Notice of Motion seeking to set aside the subpoena issued to that body.

6. I heard the two Notices of Motion on 17 March 2022. I gave my decision on 27 April 2022 (Expandamesh Pty Ltd v Sydney Metro [2022] NSWLEC 43). Each party had partial success.

Costs of the interlocutory proceedings

7. I heard the Company’s costs application on 24 August 2022. I gave my decision on this application on 31 August 2022 (Expandamesh Pty Ltd v Sydney Metro (No 2) [2022] NSWLEC 109). It is not necessary to detail the mixed result outcome.

The relevant statutory provisions

Introduction

8. Provisions of the Transport Administration Act 1988 (the Transport Administration Act), the Just Terms Act and of State Environmental Planning Policy Infrastructure 2007 (the SEPP) ‑ as the terms of the SEPP were as at the date of the acquisition of the substratum (it is not necessary to set out the provisions of the SEPP).

The Transport Administration Act

9. The Transport Administration Act sets out, in cl 2 of Sch 6B, the restrictions on potential claims for compensation of the value of any substratum when that substratum is acquired, as is here the case, for the purpose of underground rail facilities. As can be seen from its provisions set out below, the clause limits the circumstances when such a claim for compensation might be triggered to the three circumstances set out in it. If none of those circumstances arise, the former owner of such a substratum is precluded from seeking compensation under the Just Terms Act for the acquisition of the substratum. In these proceedings, the Company relies on the first two of the potential avenues to found a claim for compensation. The third potential avenue is clearly irrelevant.

2   No compensation for acquisition of land for underground rail facilities

(1) If land under the surface is compulsorily acquired under the Land Acquisition (Just Terms Compensation) Act 1991 for the purpose of underground rail facilities, compensation is not payable under that Act unless—

(a)   the surface of the overlying soil is disturbed, or

(b)   the support of that surface is destroyed or injuriously affected by the construction of those facilities, or

(c)   any mines or underground working in or adjacent to the land are thereby rendered unworkable or are injuriously affected.

(2) Section 62(2) of the Land Acquisition (Just Terms Compensation) Act 1991 does not apply to the compulsory acquisition of land under that Act for the purpose of underground rail facilities.

(3) Expressions used in this clause have the same meaning as in the Land Acquisition (Just Terms Compensation) Act 1991.

(4)   This clause extends to the acquisition of land for the purpose of underground rail facilities before the commencement of this clause, but not so as to affect any payment or award of compensation made before that commencement.

The Just Terms Act

10. A number of provisions of the Just Terms Act potentially require consideration. As can be seen from that which has been set out above concerning the Transport Administration Act, the various provisions now set out from the Just Terms Act will not arise for consideration unless one or other of the preliminary gateways to accessing the Just Terms Act is found to be open for the Company in the circumstances of the acquisition of the substratum under the site.

11. Although not requiring specific later consideration, it is appropriate to set out the objects of the Just Terms Act. They are reproduced below:

3   Objects of Act

(1)   The objects of this Act are—

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

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

(c)   to establish new procedures for the compulsory acquisition of land by authorities of the State to simplify and expedite the acquisition process, and

(d)   to require an authority of the State to acquire land designated for acquisition for a public purpose where hardship is demonstrated, and

(e)   to encourage the acquisition of land by agreement instead of compulsory process.

(2)   Nothing in this section gives rise to, or can be taken into account in, any civil cause of action.

12. It is next appropriate to set out the terms of s 54 of the Just Terms Act, this being the provision that makes it clear that the only matters which could potentially provide a foundation for compensation are those which are set out in Div 4 of Pt 3 of the Just Terms Act.

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)   …

13. Following the broad restrictive proposition set out in s 54(1) reproduced above, it is also appropriate to note that s 55 sets out, in express terms, the only six bases upon which compensation could be sought for any acquisition for which a compensation claim under the Just Terms Act is permitted. The provision is in the following terms:

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.

14. It is next appropriate to set out the terms of s 56 of the Just Terms Act, the provision that is engaged for the purpose of assessing the value of the substratum acquisition element of the Company's claim for compensation if it does arise for consideration:

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

15. The next relevant provision (s 59) is that which find its foundation in s 55(d) of the Just Terms Act as earlier set out. This provision sets out a number of headings pursuant to which losses attributable to disturbance may be claimed by a dispossessed owner. For present purposes, the Company only makes a claim pursuant to s 59(1)(a) reproduced below:

59   Loss attributable to disturbance

(1)   In this Act—

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

legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land,

16. I was recently advised that agreement has been reached between the Company and Sydney Metro as to the amount to which the Company would be entitled pursuant to s 59(1)(a) if the Company is entitled to compensation for the acquisition of the substratum (the necessity for the establishment of such an entitlement is expressly clear from the wording of the provision). The parties have agreed that, if the Company does have an entitlement to compensation, it is also entitled to its legal costs reasonably incurred in the agreed sum of $40,829.25.

17. It is also appropriate to note the terms of s 62 of the Just Terms Act. It is the provision in this legislation which, in s 62(2), sets out the three tests arising before any claim for compensation of a non‑rail tunnel might potentially be available. It is to be noted that the terms of s 62(2)(b) differ from the terms of cl 2(1)(b) of Sch 6B of the Transport Administration Act. That difference is a matter later discussed as arising from submissions made on behalf of the Company in these proceedings.

62   Special provision relating to acquisition of easements or rights, tunnels etc

(1)   If the land compulsorily acquired under this Act consists only of an easement, or right to use land, under the surface for the construction and maintenance of works (such as a tunnel, pipe or conduit for the conveyance of water, sewage or electrical cables), compensation is not payable except for actual damage done in the construction of the work or caused by the work.

(2)   If land under the surface is compulsorily acquired under this Act for the purpose of constructing a tunnel, compensation is not payable (subject to subsection (1)) unless—

(a)   the surface of the overlying soil is disturbed, or

(b)   the support of that surface is destroyed or injuriously affected by the construction of the tunnel, or

(c)   any mines or underground working in or adjacent to the land are thereby rendered unworkable or are injuriously affected.

(3)   If the land compulsorily acquired under this Act consists of or includes an easement or right to use the surface of any land for the construction and maintenance of works (such as canals, drainage, stormwater channels, electrical cables, openings or ventilators), the easement or right is (unless the acquisition notice otherwise provides) taken to include a power, from time to time, to enter the land for the purpose of inspection and for carrying out of any additions, renewals or repairs. Compensation under this Part is payable accordingly.

No relevant extrinsic material

18. It is to be noted that the explanatory notes to the relevant Bills, when s 62 of the Just Terms Act and when Sch 6B of the Transport Administration Act were passed by the Parliament, contain nothing which provides any assistance to understand what might have been intended by the expressions contained in cl 2(1)(a) or (b) of Sch 6B of the Transport Administration Act.

19. Similarly, there is nothing in the Hansard of the Ministerial Second Reading speeches, at the time of introduction of the legislation containing these provisions, which provides any assistance in understanding what was intended by either of them or how they were expected to operate.

The Company’s Further Amended Points of Claim

20. The Company's Further Amended Points of Claim filed on 12 September 2022 sets out the nature of the Company's claim as addressed during the hearing. It is in the following terms:

1   The applicant (Expandamesh) at all material times, has been the registered proprietor of land at 175‑177 Botany Road, Waterloo (Land), 1/DP841108.

2   The respondent (Transport):

(1)   Is a corporation constituted pursuant to Transport Administration Act 1988 (TAA) Part 1A;

(2)   Is responsible for, inter alia, the provision of facilities and the operation of public transport activities in NSW;

(3)   Exercises the above responsibility in conjunction with Sydney Metro, a corporation constituted per TAA Part 3D, with respect to certain underground railway facilities and operations.

3   On 11 October 2017 (Date of Acquisition), pursuant to the provisions and powers in the TAA Sch 1, cl 11 and the Land Acquisition (Just Terms Compensation) Act 1991 (JTA), Transport acquired a horizontal stratum, below the surface, of the Land (Acquired Land) for the purposes, inter alia, of constructing underground railway facilities associated with the Sydney Metro City & Southwest project.

Particulars

The Acquired Land was defined in the NSW Government Gazette No 115 of 11 October 2017 as being that part of the Land ‘affected by Plan of Acquisition Lot 201 in PPN DP 1231704. The acquisition published in the Gazette of 11 October 2017 was later ‘corrected’ in Gazette No 123 of 10 November 2017.

4   On and from the Date of Acquisition, that part of the Land remaining after the acquisition of the Acquired Land (Remaining Land) and Expandamesh as its registered proprietor and its occupier became burdened by, and subject to, the provisions set out in TAA Sch 6B cll 3 to 8.By JTA ss 37 & 54,

5 Expandamesh is entitled, pursuant to and subject to the provisions, inter alia of the JTA and the TAA, to be compensated in such amount as will justly compensation it for acquisition of the Acquired Land.

6   The Notice of Acquisition of 15 March 2018 issued for the Acquired Land included a Determination of Compensation of 23 January 2018 (Determination) for the purposes of JTA and the Valuation of Land Act 1916, which determined the compensation due to Expandamesh to be $nil.

7   The Determination broke down the calculation of compensation as providing $nil for those factors set out in JTA s 55(a) and (d), and asserting that the factors set out in JTA s 55(b), (c), (e), (f), and (g) were ‘not applicable’ to the calculation.

8   Expandamesh says that the compensation in the Determination does not provide just compensation to it for the acquisition, and brings these proceedings, per Class 3, Land & Environment Court Act 1979 for orders for the proper amount of compensation.

9   Expandamesh anticipates that Transport may seek to raise an argument in support of the Determination some argument based upon TAA Sch 6B cl 2(1), and if, which is not admitted, the acquisition of the Acquired Land is subject of that cl 2(1), Expandamesh says:

(1) That, in advancing such assertion, Transport bears the onus of establishing that no compensation is payable to Expandamesh by reason of that cl 2(1).

(2) That, in any event, for the purposes of that clause 2(1)(a), the surface of the overlaying soil of the Remaining Land is relevantly disturbed;

(3)   Further that by Antoni Kuras’ report of 1 August 2017 attached to the Determination & served upon Expandamesh with the Notice of Acquisition, Transport admits that the surface of the overlying soil of the Land will be disturbed by the acquisition & construction of the relevant facilities.

(4) And further that, in any event, the support of the surface of the Remaining Land was injuriously affected by the construction of the relevant underground rail facilities within the meaning pursuant to the acquisition of the Acquired Land destroyed or injuriously affected the support of the surface of the overlying soil, lying at & immediately below the surface of the Remaining Land for the purposes of cl 2(1)(b).

(5) By Antoni Kuras’ report of 1 August 2017 attached to the Determination & served upon Expandamesh with the Notice of Acquisition, Transport admits that the support for the surface of the overlying soil, lying at & immediately below the surface of the Remaining Land will be destroyed or injuriously affected for the purposes of cl 2(1)(b).

10   For the avoidance of doubt, Expandamesh says that by the provisions of TAA Sch 6B cll 3‑8 contribute to the injurious affectation of the Remaining Land for the purposes of cl 2(1)(b) of that Schedule, as well as involving matters that call for consideration in the calculation of compensation pursuant to the various subjects included within the terms of JTA s 55.

Particulars in relation to paragraphs 8, 9, & 10

Expandamesh will rely upon:

(1)   The engineering reports dated 26 February 2020, 17 August 2021, and 27 July 2022 from Douglas Partners as a basis for the determination of the compensation to which the applicant was entitled. The applicant also relies on the engineering report dated 1 August 2017 from Parson Brinkerhoff to the respondent in respect of the land, which the respondent provided to the Valuer General as a basis for the determination of the compensation to which the applicant was entitled and authorised the Valuer General to provide that report to the applicant for the purpose of the applicant relying on it;

(2) The findings and conclusions in those reports, including that it was predicted that in the carrying out of the construction proposed by the respondent there would be movement of the ground at the surface of the land, surface displacement in the form of settlement, such movement of the ground, surface displacement and settlement constituting the disturbance of the surface of the overlying soil of the land within the meaning of clause 2(1)(a);

(3) The findings and conclusions in that report, including that it was predicted that in the carrying out of the construction proposed by the respondent there would be significantly reduced maximum loads that could be placed on the ground surface, indicating that the support of the surface of the overlaying soil of the land will be injuriously affected within the meaning of clause 2(1)(b);

(4)   The fact that at all relevant times prior to 11 October 2017 the respondent had conducted itself on the basis that the applicant was entitled to such compensation that might be assessed even though it was ultimately assessed as $nil.

(5)   The town‑planning reports of David Haskew dated 12 August 2021 and 19 July 2022.

(6)   The valuation report of Michael Dyson dated 1 September 2022.

11   Applicant's Claim for Compensation ‑ Requirements set out in Land & Environment Court Practice Note Class 3: Compensation Claims cl 13(a)‑(g)

(1) JTA s 55(a) ‑ (f)

(a). Compensation pursuant to s 55(a) for the value of the Acquired Land, and compensation pursuant to s 55(f) for the decrease in value of the Remaining Land above the substratum are to be assessed in combination.

(b). The Applicant claims that it is entitled to compensation of $20,000 pursuant to s 55(a) for the market value for the Acquired Land

(d). The Applicant claims that it is entitled to compensation of $405,000 pursuant to s 55(f) for the decrease in the value of the Remaining Land by reason of the additional delays, uncertainty cost in redeveloping the Remaining Land due to the requirement of the concurrence of the rail authority to any development application on the Remaining Land pursuant to clause 86 of State Environmental Planning Policy (Infrastructure) 2007.

(e).   The Applicant will provide particulars of the quantum of the claim after service of its expert valuation report.

Particulars

(i)   The Applicant relies on the report of Michael Dyson dated 1 September 2022, paragraphs 119 to 121.

(2)   Schedule of Losses ‑ JTA s 55(d), 59(1)(a)‑(f)

(a). Pursuant to JTA s 59(1)(a): Legal Costs ‑ $50,000

(b). Pursuant to JTA s 59(1)(b): Valuation Fees ‑ $7,001.25

(c). Pursuant to JTA s 59(1)(f) ‑ The Applicant contends that in a redevelopment of the Remaining Land the Applicant will incur additional development costs. The Applicant contends that the incurring of such costs is a matter which is relevant to the claim for compensation pursuant to s 55(f) referred to above. To the extent that those costs are not compensated pursuant to that head of claim, the Applicant makes a claim for them as financial costs pursuant to s 59(1)(f), namely:

Item	Estimated Cost (A)	Estimated Cost (B)
Drilling of at least one fully cored borehole to 37m	$8,000.00
‑   If piezometer and/or extensometer is required	$10,000.00
2D numerical modelling and preparation of a report covering the required stages and information	$20,000.00
‑   If 3D modelling required	$30,000.00
Independent verification	$10,000.00	$10,000.00
Application for track possession, hire of protection officer, hire of Hi‑Rail, installation of crack tell tales, vibration monitor and tilt meter, together with preparation of a vibration monitoring plan	$80,000.00	$80,000.00
Three tunnel dilapidation surveys, together with a protection officer and application for track possession	$20,000.00	$20,000.00
Ongoing tunnel instrument monitoring over two years	$320,000.00	$320,000.00
Removal of instruments which also requires a protection officer and an application for a track possession	$9,000.00	$9,000.00
TOTAL ESTIMATED COSTS	$467,000.00	$479,000.00

The issues

21. The issues requiring determination in these proceedings can be explained comparatively simply. There are only two of them.

22. The first is whether the construction of the tunnels under the north‑western corner of the site has impacted the site in a fashion which satisfies cl 2(1)(a) or (b) of Sch 6B the of the Transport Administration Act. This provision has earlier been set out. It is clear from its terms that each of the elements noted sets a gateway test. One or other of them must be open to provide a basis via which the Company can be permitted to make a claim for compensation pursuant to the Just Terms Act.

23. The case advanced on behalf of the Company is that both of these gateways are open, whilst, unsurprisingly, the position advanced on behalf of Sydney Metro is that neither is open.

24. The second issue (if the first is resolved in favour of the Company) is what compensation (if any) is to be paid to the Company for the substratum acquired by Sydney Metro for the construction of the twin tunnels for the project.

25. In this regard, the position advanced by the Company is that:

1. the acquisition of the substratum constitutes a “blot on title” of the surface land remaining in the Company's ownership and that the Company is entitled to modest compensation ($20,000) for this. This element is said to reflect the market value of the acquisition of the substratum (s 55(a) of the Just Terms Act); and

2. the presence of the tunnels imposes additional mandatory approval requirements from Sydney Metro for any future redevelopment of the site. These additional approval requirements arose, as at the date of acquisition of the substratum, by virtue of the operation of the earlier set out cl 86 of the SEPP. The Company says that the value of this impact is $405,000. This compensation is said to arise as a consequence of the presence of the tunnels having decreased the value of the surface land remaining in the ownership of the Company (s 55(f) of the Just Terms Act).

26. Thus, on the Company's case, it is entitled to total compensation of $425,000.

27. Sydney Metro's position on each of these claim elements (elements which, on Sydney Metro's case, do not arise for consideration in any event) is that:

• the substratum acquired had no market value; and

• the carrying out of the public purpose (construction of the Sydney Metro project incorporating the new public access option of Waterloo Station in fact operated to increase the future development potential (and, hence, value) of the site and that this increase in value of the site was significantly greater than any additional cost which would need to be incurred as a consequence of the presence of the tunnels for the realisation of that increased development potential.

28. As a consequence, Sydney Metro's position is that the Company has no entitlement to compensation on either basis advanced.

Representation

29. Mr T Hale SC represented the Company. Mr R Beasley SC and Mr L Waterson, barrister, represented Sydney Metro. The advocates provided helpful written submissions.

The evidence

Introduction

30. Written and oral expert evidence was given in three disciplines. These disciplines and the experts giving the evidence in them were:

1. Geotechnical evidence was given on behalf of the Company by Mr Braybrooke and on behalf of Sydney Metro by Mr Kotze. Mr Braybrooke provided four expert reports (dated 26 February, 27 July, 17 August and 16 September 2022), and Mr Kotze provided a single expert report (dated 23 May 2022). They provided an initial Joint Expert Report (dated 4 August 2022) and, as later described, a Supplementary Joint Expert Report (dated 20 September 2022). Mr Braybrooke and Mr Kotze gave concurrent oral evidence;

2. own planning evidence was given by Mr Haskew on behalf of the Company and by Mr Grech on behalf of Sydney Metro. Mr Haskew provided an expert report dated 19 July 2022 and a Statement of Evidence dated 12 August 2021 and Mr Grech provided an expert report dated 23 May 2022. They provided a Joint Expert Report dated 16 August 2022. Mr Haskew and Mr Grech also gave concurrent oral evidence on 20 September 2022;

3. Valuation evidence was given by Mr Dyson on behalf of the Company, and Mr Lunney on behalf of Sydney Metro. Mr Dyson provided a written report signed on 31 August 2022 and Mr Lunney provided a written report dated 26 August 2022. They also provided a Joint Expert Report dated 6 September 2022. Mr Dyson and Mr Lunney gave oral evidence with this occurring on 21 September 2022.

31. It is to be noted that Sydney Metro raised objections to limited elements of two of Mr Braybrooke's written reports. Minor elements of those two documents were rejected on the basis that they expressed legal opinions relating to the application of cl 2(1)(a) or (b) of Sch 6B of the Transport Administration Act as applied to the geotechnical related facts in his evidence. It is to be observed that the rejection of these elements did not impact the overall general tenor of his evidence.

The additional documentary evidence

32. Sydney Metro read an affidavit from Mr Lemish, Sydney Metro's (now) Associate Director Engineering, Civil and Structures, Engineering Design and Assurance, Projects Division. From 2014 to 2020, he was Principal Manager Infrastructure, Civil, Structures and Track. Although holding qualifications which would have permitted him to give expert evidence, the purpose of his evidence was to provide a vehicle for the tendering of a wide range of documentary material providing background information (including geotechnical data and information concerning its sources). This material provide a proper understanding of the facts considered in the three expert disciplines earlier described. As later noted, three images from this material are reproduced as annexures to this decision. The bundle of documents became Exhibit 1.

The electronic documentary material

33. With limited exceptions (Mr Braybrooke's supplementary written report of 19 September 2022; the supplementary joint geotechnical expert report of 20 September 2022 and the e‑mail and attachments from the Company's legal representatives concerning the basis of the Company's claim for reimbursements pursuant to s 59(1)(a) and (b) of the Just Terms Act), the documentary evidence was all provided electronically. Material provided electronically was given an appropriate identifying exhibit letter or number and recorded on the exhibit sheet for the Court’s file as necessary.

The hearing

34. The substantive dispute between the Company and Sydney Metro had been set down for a nine‑day hearing commencing on 15 September 2022. The ordinary hearing times on some days were adjusted to enable the vacating of 22 September 2022 to enable observance of the National Day of Mourning for the death of Queen Elizabeth II.

The site inspection

35. A short site inspection was undertaken. This involved a walk around the block bounded by Cope, McEvoy, George and John Streets, Waterloo. The site is located opposite the south‑western corner of this block. The site inspection enabled an understanding of the site in its context relevant to the south‑western corner of the Waterloo Estate and the construction site for the Waterloo Station element of the Sydney Metro project. This station’s construction site is located a block further to the north along Cope Street, on the same (western) side of that street as the site.

36. No matters of detail concerning the site or the building erected upon it require to be noted arising from the site inspection.

The geotechnical issues

Introduction

37. Critical to understanding issues relating to cl 2(1)(a) of Sch 6B is the geotechnical evidence given by Mr Kotze and Mr Braybrooke, the parties’ geotechnical experts. How that geotechnical evidence addressing what is known about such impact as the construction of the two tunnels may have had on the site is critical for determining whether or not the gateway in cl 2(1)(a) is open to permit the Company to proceed to making a compensation claim pursuant to the Just Terms Act.

The actual occurrence of settlement

38. For reasons I explained in Landan Development Pty Ltd v Sydney Metro; Opera Australia v Sydney Metro; Altomonte Holdings Pty Ltd v Sydney Metro [2019] NSWLEC 65, the mere anticipation of the possibility/probability of settlement of the surface of the land under which Sydney Metro proposed to build rail tunnels was not a sufficient basis to consider whether or not either of the gateways cl 2(1) of Sch 6B of the Transport Administration Act was open to provide access to advancing a compensation claim pursuant to the Just Terms Act. What was necessary, I then determined, was that the tunnelling needed to have been completed so that there could be a consideration of whether (and, if so, to what extent) any settlement had actually been occasioned by the tunnelling.

39. In this instance, the tunnelling under the site took place in mid‑2019 and there is monitoring evidence available to provide a basis for Mr Kotze and Mr Braybrooke to give their expert opinions on what is to be taken from that monitoring data.

The dilapidation reports

40. Sydney Metro commissioned dilapidation reports of the development on the site. The first of these was prepared prior to the tunnelling activities undertaken through the substratum which had been acquired and the second was conducted after the tunnelling activities were completed. There is no dispute that the second of these reports does not disclose any damage having been occasioned to the development on the site as a consequence of the construction of the twin tunnels.

Clause 2(1)(a) of Sch 6B

Introduction

41. I have explained how cl 2(1)(a) of Sch 6B of the Transport Administration Act creates a factual gateway requiring to be considered in determining whether the Company can pursue a compensation claim under the Just Terms Act. It is appropriate to note that, for this gateway to be open, it is necessary that I form the conclusion that the surface of the site has been disturbed by the construction of the tunnels running through the substratum which has been compulsorily acquired.

42. Given the way that Sydney Metro advances its case that I should not conclude that this test is satisfied, what arises for my determination is a mixed question of fact and law. It is, first, appropriate to turn to the factual issues prior to considering how the terms of the clause should be interpreted for application to what the facts establish.

The facts concerning surface disturbance

The monitoring points

43. As earlier noted, Mr Braybrooke and Mr Kotze gave expert geotechnical evidence (both written and oral). That evidence was founded on monitoring data harvested from a series of nine monitors located on Botany Road (on the side of that road opposite the site). The location of the monitors, and their relationship with the alignment of Sydney Metro's twin tunnels as they approach and pass under the site, can be seen on the plan reproduced below (Exhibit 2, folio 1082):

44. As can be seen, the second‑most southerly of these monitors, SYW_02812_SP039, is located above the centre of the eastern of the two tunnels. Whilst the line of the monitors (following the alignment of Botany Road) diverges from that of the tunnels, as the alignment of the tunnels moves north in a direction heading a little to the east of the alignment of Botany Road, it was Mr Braybrooke's opinion (expressed during the course of the concurrent oral evidence he gave with Mr Kotze) that the data from the second‑most southerly of these monitoring points provided the most reliable information concerning the extent of the impact of the construction of the twin tunnels on the surface of the site. This was because it was the only monitor directly above the centre of the eastern tunnel that runs directly underneath the north‑west corner of the site.

44. Mr Kotze disagreed with this position, expressing the opinion that data from all nine of the monitors needed to be considered to obtain a broad and sufficiently accurate understanding of the impact of the tunnels’ construction on the site.

45. It is to be noted that, given the conclusion I have reached on how cl 2(1)(a) of Sch 6B of the Transport Administration Act is to be construed, it is unnecessary to resolve this difference of opinion. It is sufficient to note that the data from the single monitoring point preferred by Mr Braybrooke as a basis for analysis had the potential to demonstrate a somewhat greater degree of disturbance of the surface of the site than it is to be derived from Mr Kotze's approach to interpreting the data from all the monitoring points.

The monitoring data

47. Monitoring data from all of these monitoring points, during the period between July 2018 and the end of December 2019, formed part of Exhibit 1.

48. Mr Kotze produced a composite graph showing the data for surface movement recorded by each of the nine monitors during this period. The data for each monitor was assigned a different colour for the purposes of preparation of the graph. A copy of this graph (taken from Mr Kotze's individual expert report ‑ Exhibit 2, folio 1083) is reproduced below:

49. Because of the limited scale available by reproducing this graph in portrait alignment for present purposes, a copy of it at A4 scale in landscape alignment is also reproduced as Annexure A to this decision. It is also appropriate, for present purposes, to extract and additionally reproduce a copy of the key to this graph to enable a better understanding of what is shown above. That key is reproduced below:

50. As can be seen from the general shape of the graph of the monitoring data, there are three distinct phases depicted in it.

51. The first phase depicts data prior to the advent of the tunnel‑boring machines in proximity to the site.

52. The tunnel‑boring activity is depicted by the more intense and complex movement of the lines of the graph in the central portion of it. In this regard, it is to be noted that the two tunnels were bored through the Hawkesbury Sandstone in the substratum in two passes, with the more westerly tunnel being bored between 20 March 2019 and 29 March 2019 and the more easterly tunnel subsequently being bored under the site between 18 April 2019 and 2 May 2019. It is to be noted that, during the course of his oral evidence, Mr Braybrooke explained that this intensity of surface movement (both up and down) extended beyond the construction period (doing so until the end of July 2019) because there was a residual tapering‑off of surface movement (tapering‑off being my expression) until the end of July 2019. Mr Kotze did not disagree with this observation by Mr Braybrooke.

53. The third phase of the data on the graph shows what can be regarded as the “post construction impact” data.

Mr Kotze’s trend line

54. Mr Kotze's expert report also contained a second version of the above graph, a version upon which he had depicted what he considered to be the relevant trend line derived from a proper consideration of the entirety of the data shown analysed to provide a composite understanding of what Mr Kotze proposed should be seen to be the impact of the tunnel construction (and the tapering‑off of the construction impacts) on the surface of the site. A copy of the graph including Mr Kotze's trend line is reproduced below (Exhibit 2, folio 1084):

55. As with the base graph, this trend line‑containing version of the graph is reproduced in portrait to enable an understanding of the commentary on it (an A4 version, in landscape presentation, is also reproduced as Annexure B to this decision).

56. During the course of Mr Braybrooke’s and Mr Kotze's oral evidence, I asked Mr Kotze how he proposed I should understand and have regard to the trend line he had derived as depicted above. That exchange was in the following terms (Transcript 20 September 2022, page 66, lines 3 to 47):

WITNESS BRAYBROOKE: Sorry, I, I disagree with Greg Kotze's trendline as shown.

HIS HONOUR: All right. Mr Kotze, what is your response to that question?

WITNESS KOTZE: My response is that the data that we have here within ‑ marginally within, it could be argued within or without the level of accuracy that it's possible to read it, is suggestive of a possible settlement of one and a half millimetres or between 1 and 2 millimetres, which is why I've drawn that trendline.

HIS HONOUR: Do you say to me that I would be making a factual error if I relied on your trendline as a basis for drawing a conclusion as to what happened in the vicinity of the site at the relevant periods?

WITNESS KOTZE: I think it would be a fair assumption, but I have to say I'd stressed the word "interpretive", because with such small magnitudes‑‑

HIS HONOUR: I understand that. But you're the person who drew the trendline.

WITNESS KOTZE: Yes.

HIS HONOUR: It seems to me that the first element of the trendline shows, at its right‑hand end, a slight deviation upwards from the zero line.

WITNESS KOTZE: Yes.

HIS HONOUR: It then trends down, and at least doing as best I can after what I described yesterday as the "trampolining" that is shown in the middle portion of the graph, the trendline then appears to be horizontal at about 1.5 millimetres, is that correct?

WITNESS KOTZE: Yes, correct.

HIS HONOUR: If I was to say I accept your evidence based on the trendline that you have drawn to conclude that there has, as a result of the multiple readings through the relevant period when the drilling machines were under the site and in what Mr Braybrooke I think describes, if I'm correctly summarising him, the limited post departure continuing settlement period, the result of that is the horizontal line at the right‑hand end. If I rely on all of that to say I adopt your trendline as a conclusion, do you accept that that is an accurate reflection of your evidence?

WITNESS KOTZE: Yes.

57. It is to be observed that Mr Braybrooke did not accept the validity of the trend line as a basis for my drawing any conclusion from the monitoring data. This was because, as I have earlier explained, Mr Braybrooke considered that the data harvested from the only monitoring point located directly above the centre line of the tunnels provided a better representation of the conclusion to be drawn concerning the impact of the tunnel construction on the surface of the site.

58. As the tunnel‑boring machine reached the monitors, shown in the diagram at [43], and, at the end of March 2019, just before it commenced tunnelling in the vicinity of, and then under and beyond, the site, Mr Kotze’s trend line discloses an almost imperceptible upward deviation from his horizontal zero axis.

59. During the period of intense tunnelling activity and its subsequent tapering‑off until the end of July 2019, his trend line shows a steady level of subsidence until it stabilises, at the end of July 2019, when it steadies and continues horizontally at a level, recording a constant subsidence of approximately 1.5 millimetres.

60. It is thus the position, on Sydney Metro's own expert’s evidence, there has been this degree of subsidence on the site as a consequence of tunnel construction having taken place.

61. Although Mr Braybrooke proposes that reliance on the monitoring data recorded from his preferred monitoring point (being that which he believed provided more accurate data from which to draw any inference as to the extent of settlement on the site and which would show a greater degree of disturbance), it remains the position that, on Mr Kotze’s evidence, I should accept that there has been a minimum disturbance of 1.5 millimetres across the site.

62. To the extent that it would be open to me to adopt the position proposed by Mr Braybrooke as being preferable, I am satisfied that it is not necessary to seek to resolve this disagreement. I have reached this conclusion because it seems to me that, for the next stage of my consideration of the disturbance of the site (namely, whether the extent of the disturbance satisfies the requirement of cl 2(1)(a) of Sch 6B of the Transport Administration Act, the question of whether the subsidence is 1.5 millimetres or modestly greater is a matter of irrelevance.

63. I am satisfied that I should conclude that, at a minimum of 1.5 millimetres (and accepting the possibility that there might be some minor increment on that number), the subsidence would be imperceptible but, nonetheless, has taken place.

64. The question which now arises for consideration is whether some such subsidence, as a matter of law on a proper construction of the relevant statutory provision, opens the gate to permit the Company to be able to make a valid application for compensation pursuant to the Just Terms Act. I here note that I deliberately use the word “application”, as whether or not any entitlement to compensation actually arises could only be addressed after proper consideration of relevant matters engaged for consideration of applications made out of the Just Terms Act.

Consideration of the extent of disturbance

Introduction

65. I therefore now turn to consider the submissions made on behalf of the Company and Sydney Metro as to how the above empirical conclusion derived from the geotechnical monitoring is to be construed in the context of the relevant statutory provision.

66. During the course of questioning by Mr Beasley, Mr Braybrooke acknowledged that there were external factors that could impact data from the monitors where that monitoring data was unrelated to impacts from the construction of the tunnels. The relevant exchange was in the following terms (Transcript 20 September 2022, page 53, lines 20 to 48):

BEASLEY: You also agree ‑ and this is set out in Mr Kotze's report ‑ that these monitoring devices have a margin for error of about 2 to 3 millimetres?

WITNESS BRAYBROOKE: Correct.

BEASLEY: They can show changes from one reading to another based on things other than tunnel construction, for example, weather, correct?

WITNESS BRAYBROOKE: Weather, yes, yes.

BEASLEY: Whether it's very hot one day and then the next day the reading, it's either cooler or hotter again?

WITNESS BRAYBROOKE: Correct.

BEASLEY: Or particularly wet weather?

WITNESS BRAYBROOKE: Yes.

BEASLEY: Or heavy traffic?

WITNESS BRAYBROOKE: Yes. And also the accuracy of the instrument itself.

BEASLEY: Yes, which we discussed has the margin for error. On any particular reading, there's no certainty that any change in a reading from one reading to another is related to tunnel construction, for example?

WITNESS BRAYBROOKE: Not as in an individual one, no.

The Joint Expert Report

67. Mr Kotze and Mr Braybrooke had conferred and had produced a Joint Expert Report (Exhibit E). Paragraph 6 of this report was in the following terms:

6   It was agreed by the experts that very minor ground surface settlement may have occurred at the subject site as a result of underlying tunnel construction. Mr Braybrooke in Reference 3 refers to individual peak vertical displacement monitoring data of 4.7mm downwards and 3.5mm upwards. Mr Kotze in Reference 4 (Section 3 and Appendix E) describes an overall monitoring data trend during tunnel construction that is suggestive of level settlement (downwards) in the order of between ‑1 and ‑2mm. It was agreed that all the level monitoring data was consistent with the documented impact assessment prediction of less than ‑5mm (lowest risk category 1) and that level movements would have had no adverse impact on the existing or possible future usage of the site.

68. It was agreed by the experts that very minor ground surface settlement may have occurred at the subject site as a result of underlying tunnel construction. Mr Braybrooke, in Reference 3, refers to individual peak vertical displacement monitoring data of 4.7 millimetres downwards and 3.5 millimetres upwards. Mr Kotze, in Reference 4 (Section 3 and Appendix E), describes an overall monitoring data trend during tunnel construction that is suggestive of level settlement (downwards) in the order of between ‑1 and ‑2 millimetres. It was agreed that all the level monitoring data was consistent with the documented impact assessment prediction of less than ‑5 millimetres (lowest risk category 1) and that level movements would have had no adverse impact on the existing or possible future usage of the site.

69. It is to be noted that, during the course of his being questioned by Mr Beasley, Mr Braybrooke made the following observation concerning his agreeing to the inclusion of the word “may” (a word of contingent meaning) in the first line of the above‑reproduced paragraph (Transcript 20 September 2022, page 59, lines 11 to 50):

BEASLEY: Can I ask ‑ and if we need to, I'll come back to you, Mr Braybrooke, but I asked Mr Braybrooke about the use of the word "may" in paragraph 6 of this joint report. It's a matter of obviousness. It's not my joint report. You two have agreed to phrase it this way: that very minor ground surface settlement may have occurred at the site. Now, for you, Mr Kotze, did the use of the word "may" have any particular significance?

WITNESS KOTZE: I used that word deliberately because whilst the trendline, that's my trendline, suggested it might have, it may have gone down by 1 or 2 millimetres. Because the accuracy of this type of equipment is plus or minus 2 to 3 millimetres, most of those readings are within that plus or minus 2 to 3 millimetres and therefore are not crystal clear and can't be guaranteed, hence the use of the word "may".

BEASLEY: Do I take that answer to mean that whilst in your opinion it's possible that the changes in vertical displacement represented on this graph might indicate settlement of the subject site as a result of the tunnel‑boring machine, you're not prepared to say it's probable?

WITNESS KOTZE: No, I'm prepared to say it might have. Can I just add that if, if the displacement was 23 and a half or, or 13 and a half, most definitely, but within that band, within that limited scope, I've used the word "may".

BEASLEY: For the reasons you've expressed, Mr Braybrooke, you think it's more likely than not that‑‑

WITNESS BRAYBROOKE: Yes, again for a number of reasons. Firstly, if we look at this, this particular blue line up here which is 046, that point is well away from the tunnel and therefore, I would expect not to have as much ‑ not be influenced as much as by the tunnel itself. When we start putting a trendline like that, we are taking these points into account which should not be taken into account in my view because it is not relevant to what's happening over and immediately adjacent to the tunnel. That is well away from the tunnel. Now, that then starts bringing this trendline down. Secondly ‑ and I must admit that when I signed this, I hadn't read the word "may". If I had and understood what was there, I would not have signed it as such.

BEASLEY: I see.

WITNESS BRAYBROOKE: Anyway, that's my problem. I signed it.

70. It is to be observed that, given my conclusion concerning the geotechnical evidence and cl 2(1)(a) of Sch 6B of the Transport Administration Act, it is unnecessary for me to derive any detailed conclusion concerning Mr Braybrooke's reservation now expressed concerning the phrasing of this passage in the joint geotechnical report.

Mr Kotze's trend line

71. As can now be seen from the two earlier reproduced graphs, the amplitude of the movements (both up and down) of the monitoring data from this monitoring point shows the greatest displacement (in either direction) from the zero baseline. Again, it is to be noted that, given the conclusion which I have reached concerning cl 2(1)(a) of Sch 6B of the Transport Administration Act, this does not need to be explored further.

Matters of statutory construction

Introduction

72. I now turn to consider how the extent of the maximum disturbance established, arising out of the geotechnical evidence, is to be regarded in the context of cl 2(1)(a) of Sch 6B of the Transport Administration Act.

73. First, it is appropriate to note that the ordinary principles of statutory construction for considering the text and context of the words of cl 2(1)(a) of Sch 6B of the Transport Administration Act are engaged for my assessment of whether the case advanced for the Company establishes that the test there posed is satisfied. Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28, at [70] and [71], made it clear that the meaning of the provisions of a statute is to be ascertained by examining the context in which the language of those provisions is used and seeking to give effect to the purpose and language of the provisions.

74. It is to be noted that, in Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707; [2004] NSWCA 422 (Pallas Newco), at [60], examples were set out by Spigelman CJ where questions of a jurisdictional fact were engaged.

75. Although not precisely analogous, I am satisfied that I do not need to set out those examples in Pallas Newco for present purposes, given the assumption that I have made that I should proceed on the basis that cl 2(1)(a) of Sch 6B of the Transport Administration Act does give rise to consideration of whether or not a jurisdictional prerequisite exists.

76. It is the overall statutory context that provides the framework within which I need to determine whether or not Parliament intended the existence of the fact to both objectively exist and be essential, notwithstanding the element of fact and degree, or even of judgement, that was required in the process of determining whether or not the relevant fact existed.

77. Although the High Court has said that it is permissible to read additional words into a statutory provision such as cl 2(1)(a) of Sch 6B (see Taylor v The Owners of Strata Plan 11564 and Others (2014) 253 CLR 531; [2014] HCA 9), if it is necessary to do so to enable giving full effect to the operation of the provision there is no obvious lacuna in cl 2(1)(a) of Sch 6B that would require such an importation of the requirement to have regard to such externalities.

78. For present purposes (on the assumption that the drafters of cl 2(1)(a) of Sch 6B of the Transport Administration Act intended that consideration of a jurisdictional test was involved), I now undertake an objective determination, on the facts which are here available, as to whether or not “the surface of the overlying soil” has been “disturbed” by the construction of the Sydney Metro tunnels.

79. It is, therefore, necessary that I confine myself to the evidence concerning this and how that is to be understood in its statutory context.

Definitions and the use of dictionaries

80. The written opening submissions, on behalf of Sydney Metro, set out, at paragraph 41, the definition of “disturbed” taken from the current online edition of the Macquarie Dictionary. That definition is in the following terms:

"2. to interfere with; interrupt; hinder. 3. to throw into commotion or disorder; agitate; disorder; disarrange; unsettle"

81. The Court of Appeal has cautioned overreliance on dictionaries, as explained by Basten JA in Hunter's Hill Council v Minister for Local Government; Lane Cove Council v Minister for Local Government; Mosman Municipal Council v Minister for Local Government; North Sydney Council v Minister for Local Government; Strathfield Municipal Council v Minister for Local Government [2017] NSWCA 188, at [77]‑[78]:

77.   … Resort to dictionaries to determine the meaning of a word used in a legal context is rarely favoured. Such judicial disfavour is not a result of some dismissive or precious attitude towards the compilers of dictionaries. The point is rather that dictionaries reflect common usage and common usage may not be reflected in a particular statutory context. Thus, it used to be said that the ordinary meaning of a word, other than a technical term, is a question of fact, whereas the construction of the statutory provision in which the word is found is a question of law. Since Collector of Customs v Agfa‑Gevaert Ltd that distinction is no longer applied. As explained by Lord Hoffmann in R v Brown, referred to in Agfa‑Gevaert:

“The unit of communication by means of language is the sentence and not the parts of which it is composed. The significance of individual words is affected by other words and the syntax of the whole.”

78.   That is not to say that dictionaries may not be helpful, or are not used, although they are rarely referred to in judgments. Their function is, however, limited.

82. I set aside any detailed consideration of dictionary definitions, as I do not consider that they are of significant assistance and are to be approached with caution in having regard to the meaning of the potentially jurisdiction‑triggering expression in cl 2(1)(a) of Sch 6B of the Transport Administration Act (House of Peace Pty Ltd & Anor v Bankstown City Council (2000) 48 NSWLR 498; (2000) 106 LGERA 440; [2000] NSWCA 44, at [25] ff).

The Company's submissions

83. Mr Hale submitted that the use of the word “may” in paragraph 6 of the joint expert geotechnical report was to be considered in light of the terms of a Parsons Brinckerhoff letter appended to Mr Kotze's individual expert report, a letter which ascribed certainty to the expectation of settlement as a consequence of tunnel‑boring and construction activities. The relevant portion of this letter was in the following terms:

Methods of construction

The excavation under the Property will be carried out using tunnel‑boring machine (TBM) tunnelling techniques. The running tunnels will be supported using a passive structural lining. A precast concrete segmental lining will be installed immediately behind the TBMs as the excavated face is advanced. For this reason, only limited surface displacement (in the form of settlement above the excavation) is predicted.

Analysis technique

A Gaussian model recommended in a published paper entitled “Prediction of ground movements and assessment of risk of building damage due to bored tunnelling” (Mair, RJ. et al., 1996) has been used to predict an idealised settlement trough at surface level from tunnelling activities. This approach assumes that the settlement profile will not be affected by the presence of buildings and structures at or below surface level (i.e. commonly referred to as ‘greenfield’ conditions). The excavation required to construct the Underground Rail Facilities will cause some level of deformation of the surrounding ground. The movement of the ground at surface during excavation can be attributed to the contraction of the recently formed opening.

Following this approach, the settlement at surface as induced by tunnelling is idealised to occur in the shape of a trough. The area contained within the trough is set by the volume loss parameter, expressed as a percentage of the tunnel area. A trough width parameter determines the steepness and the width of the settlement trough. The effect of multiple tunnels on settlement at the surface is assessed by applying superposition principles. The assessment of settlement takes account of the layout and size of the tunnels, as well as the thickness and quality of the material that lies above the tunnels.

This approach has been calibrated on previous projects using numerical modelling to prove its applicability to rock conditions in Sydney. These projects include the Epping to Chatswood Rail Link and the Sydney Airport Link.

Based on the application of this analysis technique, it is predicted that the maximum surface settlement within the boundaries of the Property will be less than 5 mm.

84. This set the scene, Mr Hale submitted, for understanding how I should approach the question of acceptance that there had, in fact, been settlement across the site in a fashion that would satisfy the first of the gateway tests I was required to consider.

85. He also submitted that Mr Kotze's oral evidence should be regarded as supporting this approach, where Mr Hale submitted (Transcript 27 September 2022, page 246, line 44 to page 247, line 1):

HALE: Yes. His explanation of what he means by "may", at p 59 of the transcript, and I took you to it this morning, 59.24. He says there "Most of the…not crystal clear". He's looking for certainty and can't be guaranteed. Hence the use of the word "may". So in our submission it has been established beyond any doubt that there was settlement. It was predicted, the science expected it and the results confirmed it. While there was some criticism of Mr Braybrooke that he didn't pick up the word "may", nonetheless he accepted it.

86. The oral evidence Mr Hale referred to is in the following terms (Transcript 20 September 2022, page 59, lines 18 to 23):

WITNESS KOTZE: I used that word deliberately because whilst the trendline, that's my trendline, suggested it might have, it may have gone down by 1 or 2 millimetres. Because the accuracy of this type of equipment is plus or minus 2 to 3 millimetres, most of those readings are within that plus or minus 2 to 3 millimetres and therefore are not crystal clear and can't be guaranteed, hence the use of the word "may".

Sydney Metro’s submissions

87. Mr Beasley submitted that it could not be concluded that, for the purposes of assessing whether the gateway in cl 2(1)(a) was open, the Parliament intended that surface settlement of a trivial nature, as was here the maximum potential impact of the tunnels’ construction, was intended to open that gateway to provide access to the Just Terms Act.

The Company’s reply submissions

88. In the course of his oral submissions in reply, Mr Hale submitted that the approach taken on behalf of Sydney Metro to the interpretation of cl 2(1)(a) mandated the reading of additional words into the provision. He proposed that, for the position advanced on behalf of Sydney Metro to have validity, it would be necessary to read in words such as “imperceptible” or “not trivial” into the provision.

89. He proposed that, had the Parliament intended that such additional words were to be understood as part of the terms of that element of cl 2(1), the Parliament would have inserted such words into the provision. In that regard, he submitted that the cases to which Mr Beasley had taken me provided no assistance to Sydney Metro as to how the provision should be construed, because those cases, when dealing with the question of disturbance, were dealing with that term where the facts and circumstances bore no relevant relationship with the circumstances arising in these proceedings.

Consideration

90. The wording of cl 2(1)(a) of Sch 6B of the Transport Administration Act is to be contrasted with the language used in cl 2(1)(b), falling within the next section of this decision where words explanatory of, and qualifying the extent of, impact are used.

91. I am satisfied that there is no basis to conclude that the legislature intended that the provision with which I am here dealing should have any qualifying additional words read into it. The language is plain and clear.

92. For present purposes, I am satisfied that, on the balance of probabilities, there has been a disturbance of the surface of the site of at least 1.5 millimetres as a consequence of the construction of the two rail tunnels under the site’s north‑western portion. This, in my view, is sufficient to trigger the ability of the Company to make a claim for compensation pursuant to the provisions of the Just Terms Act. This triggering of the ability to claim compensation does not, however, automatically result in success for such a claim; the various bases upon which such a claim is advanced are considered in the remainder of this decision.

Clause 2(1)(b) of Sch 6B

Introduction

93. This provision is that which establishes the second potential gateway by which the owner of a compulsorily acquired tunnel substratum can access the provisions of the Just Terms Act to mount a claim for compensation for the acquisition of the substratum. Before moving to consider the submissions on this point, it is appropriate to repeat the terms of the provision, as it sets out that which must be found to exist, as a jurisdictional fact, before this gateway can be established as open. The provision requires that the following must be established:

(b)   the support of that surface is destroyed or injuriously affected by the construction of those facilities

94. In setting this out in this fashion, I am not to be taken to be expressing any view on how the onus falls ‑ I have already explained why, as a matter of factual consideration of the clause, this is irrelevant.

The Company's position

95. The primary position advanced on behalf of the Company on this point can be understood from Mr Hale's written closing submissions at paragraphs 35 to 38. These were in the following terms:

35. Clause 2(1)(b) applies where the “support” of the surface of the land “is destroyed or injuriously affected by” the construction of the underground rail facilities.

36.   The term “injurious affection” has been described as a “neat expressive way of describing the adverse effect of the activities of a resuming authority upon a dispossessed owner’s land”.

37.   The geotechnical experts agreed that any newly constructed building on the Site requires the surface of the land to support the building. Such support is provided by excavating the land and constructing foundations for the building. However, by reason of the excavation and construction of the tunnels below the surface of the Site, any excavation of the surface of the Site to construct any new building, including its foundations, below a depth of 2 metres, will require the concurrence of the rail authority.

38. Therefore, the injurious affection to the applicant’s Site by reason of the construction of the underground rail infrastructure beneath the Site is caused by the limitations which are imposed upon the ability of the landowner to excavate the Site for future development, namely the requirement for the concurrence of the rail authority for any development application for future development, due to the presence of the underground rail facilities beneath the Site. That is sufficient to engage clause 2(1)(b) of Schedule 6B to the TA Act.

96. Although Mr Hale addressed this provision in his oral closing submissions, it is not necessary to extract any material from the transcript of his closing submissions, as that which is set out above adequately comprehensively encompasses the position advanced on behalf of the Company.

97. It is appropriate, however, to note one specific matter raised by Mr Hale in his oral submissions on this point. It is that the requirements of cl 86 of the SEPP mandated the compliance with the technical requirements which had been set out at paragraph 26 of Mr Braybrooke’s Statement of Evidence dated 17 August 2021. Although there was some possibility that these requirements might be relaxed by a future rail consent authority, the terms in which they were expressed made compliance with both the requirements in Tables 10.1 and 10.2 of the Sydney Metro Underground Corridor Protection Technical Guidelines ‑ April 2021 mandatory. These requirements, as I understood him, were necessary responses to what was set out in cl 2(1)(b) of Sch 6B of the Transport Administration Act for any future redevelopment of the site.

Sydney Metro's position

98. The position advanced by Mr Beasley in response can be addressed in comparatively short compass. There are two aspects to his submissions.

99. The first and, as I understood it, primary position advanced on behalf of Sydney Metro by Mr Beasley was that the agreed position of Mr Kotze and Mr Braybrooke was that, even on the basis of construction of a 33‑storey building plus sufficient basement car‑parking to cater for a development of that size (a development possibility which had drifted into the potential future development mix in a fashion disavowed by the planning experts), construction of such a structure would be possible without the twin tunnels through the sandstone substratum having any impact on such development potential. That geotechnical evidence with respect to that (fanciful) development scenario demonstrated, Mr Beasley submitted, that those matters arising from cl 2(1)(b) were not engaged in any fashion for consideration in the context of such a hypothetical development. Given that position, it was clear, Mr Beasley proposed, that there was no possible way that this provision could be said to be engaged, in the fashion advanced for the Company, by the agreed future hypothetical development accepted as being the future potential for the site as defined by the likely more beneficial planning controls that would arise for the site (the timing of that being irrelevant for present purposes) of a six‑to‑eight‑storey redevelopment above basement car‑parking. Given that agreed future development scenario, there was no basis upon which the Company could satisfy me that this necessary jurisdictional gateway was open.

100. The second basis upon which Mr Beasley submitted that the Company's position lacked validity was the fact that, as was demonstrated by the Ministerial approval of the designation of the rail corridor on 9 January 2017, by the (then) Minister for Planning, the triggering of the necessity for consent from the rail authority required by cl 86 of the SEPP and the technical requirements arose from that date, with respect to any future excavation of greater than two metres below the surface. As the requirement operated from that time, rather than from any time associated with the actual construction of the tunnels through the acquired substratum, this requirement arose prior the date of the acquisition of the substratum and independently of the construction of the tunnels.

101. Mr Beasley submitted that, in the final analysis, there was absolutely no evidence which could support a conclusion that the gateway in cl 2(1)(b) was open. There was, he submitted, no possible geotechnical basis for such a conclusion, given the agreement between Mr Kotze and Mr Braybrooke that the presence of the tunnels would have no impact on the ability of the surface of the site to provide support for its redevelopment for a 33‑storey building with basement car‑parking, let alone the six‑to‑eight‑storey (with basement car‑parking and an FSR of 6:1) redevelopment as agreed by the town planners. That agreed evidence demonstrated that neither element of this provision was satisfied and that, therefore, this potential gateway to the Just Terms Act remained shut.

Consideration

102. I am satisfied that there is nothing arising out of the geotechnical evidence, which provides any basis to conclude that the support of the site has been destroyed. There is also no evidence that the surface of the site has been injuriously affected by the construction of the tunnels underneath it.

103. Indeed, as earlier set out at [40], the results of the dilapidation reports clearly demonstrate that there has been no adverse impact on the structure on the site as a consequence of the construction of the tunnels.

104. The result of this is that the gateway test established by cl 2(1)(b) of Sch 6B of the Transport Administration Act remains firmly shut and cannot provide an avenue pursuant to which the Company could found any application for compensation under the Just Terms Act.

Geotechnical redevelopment costs

Introduction

105. In addition to addressing the issue of surface disturbance, Mr Kotze and Mr Braybrooke also gave evidence concerning what would have been expected to be additional geotechnical monitoring costs associated with obtaining a future development consent as a consequence of the existence of the tunnels under the north‑western portion of the site. These additional costs would arise by virtue of the operation of the then‑applying cl 86 of the SEPP and its imposition of the requirement to satisfy the monitoring data harvesting requirements set out in Tables 10.1 and 10.2 of the Sydney Metro Underground Corridor Protection Technical Guidelines ‑ April 2021. There was a disagreement between Mr Kotze and Mr Braybrooke as to what would have been the advice given to the hypothetical purchaser, as at 11 October 2017, as to what would be the quantum of those costs. The competing positions can be explained in comparatively short compass.

Mr Kotze's position

106. Mr Kotze's position was that, given the fact that the construction of the tunnels was occurring through a substratum with the crowns of the tunnels being at a depth of more than 19 metres below the surface, at their shallowest under the site, and with them being entirely within a solid sandstone formation layer, strict compliance with the monitoring requirements in T1 and T2 would not be required by the then rail consent authority. This was because, whatever redevelopment might be proposed (even at the six‑to‑eight‑storey redevelopment possibility canvassed by the town planners), the increased pressure at the crown of the tunnel would be only equivalent to two adult persons standing on it (Mr Kotze’s Statement of Evidence dated 23 May 2022 (Exhibit 2) at paragraphs 4.17 and 5.23).

107. In oral evidence, Mr Kotze observed in more general terms that (Transcript 20 September 2022, page 74, lines 22 to 29):

The proposed development, what I call the Grech development, would have negligible impact on the tunnel and would be feasible to construct. The additional modelling that's allowed for is far more detailed, far more thorough, and, in my opinion, would prove beyond a doubt that the proposed development would have no adverse impact on the tunnel and could be feasibly constructed.

108. As a consequence, Mr Kotze was satisfied that the relevant rail consent authority, as at the time of application for concurrence for any future redevelopment proposal, would not require strict compliance with the maximum monitoring to satisfy the technical guidelines. In such circumstances, it was his estimate that the additional geotechnical monitoring costs would be a maximum of $140,000.

Mr Braybrooke’s position

109. Mr Braybrooke accepted that, if strict compliance with the technical guidelines was not required, Mr Kotze's estimate of $140,000 for additional geotechnical monitoring to support a development application was appropriate.

110. However, it was his evidence that, if strict compliance was required, the additional geotechnical monitoring costs would be $479,000.

111. Mr Braybrooke considered that the advice that would be appropriate to give the hypothetical purchaser, as at the date of acquisition, would be to allow for geotechnical monitoring expenditure at the higher amount he had nominated. In questioning from Mr Beasley, Mr Braybrooke explained why he adopted this position (Transcript 20 September 2022, page 72, line 26 to page 73, line 12):

BEASLEY: You heard his Honour. You're saying that if you went back to the date of acquisition, 11 October 2017, you'd be saying, even for a four to nine storey development, the extra geotechnical costs could be $479,000?

WITNESS BRAYBROOKE: That's correct.

BEASLEY: Which was the costing you did for a 33 storey development plus four levels of basement?

WITNESS BRAYBROOKE: It's also the costing that you would do for any building based on paragraphs 10(a) and 10(b), because those paragraphs ‑ and this is in the Transport NSW‑‑

BEASLEY: Yes.

WITNESS BRAYBROOKE: ‑‑which states that, "The minimum monitoring requirement for development activities" ‑ in black and white it says what the minimum is. On the next page, it says, it's noted, "It may, may not be feasible to grant access to the tunnels for the purposes of installing monitoring equipment." Currently, it is not feasible to do that and, in fact, we've got a number of properties we've been monitoring, we have not been allowed to go into the tunnel because the tunnels are still under construction.

I do not know what's going to happen once the tunnels are up and running, whether Transport NSW is going to then re‑insist that the monitoring internally within the tunnel is adhered to for any sized development. If they are reasonable, I agree, it then should be only probably in the order of 140,000, but if they're not reasonable ‑ and I can't predict whether or not they will be ‑ it could be up to 479,.000.

116.   This materially exceeds the potential future cost penalty of $140,000 (which would be suffered 6 years after the Date of Acquisition, at the earliest).

117.   I appreciate that quantifying Betterment is a difficult and subject exercise and there is rarely directly relevant market evidence available to assist in quantifying Betterment. In my experience it is common for a valuer to rely on general experience and professional judgment in quantifying Betterment.

197. During the course of his oral evidence, he explained why he adhered to this position, saying (Transcript 21 September 2022, page 144, from line 9):

BEASLEY: Did you express the opinion in the after scenario that the betterment would be, in your view, in the after scenario, 10%, but you said conservatively 5% if we are only talking about physical betterment, not including town planning betterment?

WITNESS LUNNEY: That's correct.

The decision in AMP Capital Investors Limited v Transport Infrastructure Development Corporation

The Company’s position

198. In the joint expert valuers’ report, Mr Dyson had relied upon what was said in the decision of Hodgson JA in AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2008] NSWCA 325 (the AMP decision) for the proposition that, when there was a requirement for separate precursor decisions or approvals from a consent authority that was not the body carrying out the public purpose, the consequences sought to be attributed to the public purpose should be disregarded. This element of his contribution to the Joint Expert Report of Valuers was contained in paragraph 30 of the document, a paragraph in the following terms:

30.   Mr Dyson considers that the possibility of any future rezoning of the Residue Land would not be part of the SM Public Purpose (or even controlled by SM) but rather, a matter which would be controlled by the Council and or the Department of Planning and Environment. He considers that relevant case law confirms that consideration of such matters in any assessment of Betterment pursuant to Section 55(f) of the Just Terms Act is not appropriate. Mr Dyson considers that the extent of the SM Public Purpose does not extend to changes in zoning by a separate authority. Mr Dyson relies on the decision of AMP Capital Investors Ltd and anor. v Transport Infrastructure Development Corporation [2008] NSW CA 325 in this regard.

199. In this context, it is to be noted that Mr Dyson's reliance on the AMP decision was not something which arose from his own original knowledge or research but which had been suggested to him by the Company's legal representatives (see Transcript 21 September 2022, page 139, line 44 to page 140, line 17).

200. Given that Mr Hale also relied on the AMP decision ‑ making submissions to the effect of the proposition advanced by Mr Dyson ‑ the fact that these comments were the expression of a legal opinion and did not arise from Mr Dyson's own knowledge (and thus, prima facie, should be ignored for each of these reasons), it is necessary to turn to what was said by Hodgson JA, at [96] to [99], of that decision. The passage relied upon by Mr Dyson and also by Mr Hale was in the following terms:

96   In my opinion, in determining what increase or decrease in value occurs “by reason of” or is “caused by” the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, it is first necessary to identify the public purpose and its relevant scope or generality. This may be a matter of some difficulty, as illustrated by Roads and Traffic Authority of New South Wales v Perry [2001] NSWCA 251; (2001) 52 NSWLR 222.

97   That case concerned the acquisition of land on which a road was to be constructed, and the result was greatly affected by the determination of whether the relevant public purpose was the construction of that particular stretch of road or a larger stretch of road of which this was to be part, or even the overall scheme of upgrading the Pacific Highway from Sydney to the Queensland border. I expressed the following view at [100]:

[100]   I do not think there are any clear rules determining how the relevant purpose or the appropriate level of generality is to be determined. Factors to be taken into account would, in my opinion, include the degree of continuity and consistency of various elements of what is proposed and done, and fairness to both the claimant and the acquiring authority. In the present case, I think it unlikely that the relevant public purpose could be as wide as the upgrading of the Pacific Highway between Sydney and the Queensland boarder; while on the other hand, assuming there have been a number of versions of the Perry's Hill extension, I think it unlikely that the public purpose could be as narrow as just the last of those versions. The public purpose could be as wide as the Raleigh Deviation generally, encompassing all the variations of that project including all versions of the Perry's Hill extension, or it could be somewhat narrower.

98   Once the public purpose is thus identified, it may then be necessary to identify what is comprehended by “the proposal” to carry it out and/or “the carrying out of” the purpose. Then it may be necessary to identify the scope of what occurs “by reason of” or is “caused by” these things. In these steps also, I do not think there are clear rules, but there may need to be judgments of degree which take into account considerations of reasonableness and fairness.

99   The mere circumstance that the public purpose is a contributing factor to changes which in turn affect value is not necessarily sufficient, particularly if the changes depend also on discretionary decisions made by other authorities.

201. Mr Hale's submission was that, in effect, the position advanced by Mr Dyson in paragraph 30 of the Joint Expert Report of Valuers was a correct understanding of what was to be drawn from the AMP decision. When that reasoning was applied to the present circumstances, the fact that the likely beneficial planning consequences for the site of the redevelopment of the Waterloo Estate was contingent on discretionary decisions made by other planning consent authorities and not by Sydney Metro meant that, on a proper understanding of the AMP decision, the beneficial future planning control impact on the site of the proposed redevelopment of the Waterloo Estate did not permit the conclusion to be drawn that that beneficial impact was to be attributed to the public purpose.

202. Mr Hale also proposed that the necessity for upgrades of services, such as water, sewer or electricity support for the Waterloo Estate redevelopment, were also contingent on activities by other authorities in the fashion envisaged by the AMP decision, thus providing a barrier to the attribution of future beneficial planning changes for the site to the effect of the Sydney Metro project.

Sydney Metro’s position

203. In response, Mr Beasley took me to an additional paragraph in the AMP decision, one in the decision of Hodgson JA, at [92], a paragraph where his Honour set out the relevant reasoning of the primary judge:

92   The primary judge said this at par [71]:

[71] Section 55(f) refers to “… by reason of the carrying out of … the public purpose for which the land was acquired ”. The land was acquired by the State Rail Authority (now TIDC) under the Transport Administration Act. I consider that given those specific words in the section there is a short answer to TIDC’s submission that the public purpose for which the land was acquired includes the planning changes mooted for Macquarie Park in the EIS for the PRL. TIDC, the acquiring authority, is not responsible for, and indeed has no power to effect, rezoning of land. The proposed planning changes referred to in the EIS relied on by TIDC simply cannot therefore be within the public purpose contemplated by TIDC in undertaking this compulsory acquisition. I agree with and adopt all of AMP’s written submissions at para 6 on that issue.

204. It was Mr Beasley's submission that, properly understood and read in context, the elements of the AMP decision were not as black‑and‑white as had been submitted by Mr Hale.

205. Mr Beasley also took me to two further decisions in compensation cases where the AMP decision had been considered and the approach now advanced by Mr Hale had not been adopted.

206. The first of those decisions (in time) was a decision of Craig J (MMTR Pty Ltd v Roads and Maritime Services [2015] NSWLEC 177) where his Honour had addressed matters relevant to my present consideration in [132], [135] and [142]. It is not necessary to set out the terms of each of these paragraphs. It is sufficient to note, as Mr Beasley drew my attention to, that his Honour did not adopt the rigid approach that Mr Hale had submitted was required by the AMP decision. His Honour noted that the public purpose with which he was then dealing (the Oxley Highway upgrade project) was the catalyst for the beneficial impact on the residue land involved in those proceedings, although the rezoning of the residue land had been undertaken through planning processes initiated by the local council. Having regard to the particular facts and circumstances there engaged, Craig J concluded that, because the highway upgrade project had been the catalyst for the beneficial rezoning of the residue land from rural to residential, that project was properly engaged for consideration for the purposes of s 55(f) of the Just Terms Act.

207. Mr Beasley next took me to the decision of the Court of Appeal in Barkat v Roads and Maritime Services [2019] NSWCA 240 (Barkat), referencing [27], [78], [79] and [84]. In particular, he took me to the second and third sentences of [27] where Emmet AJA said:

27   … His Honour considered that the inextricable nexus was so close that the WestConnex Project effectively charged each authority to co‑operate and co‑ordinate within the overall scheme to carry out their respective roles to implement the scheme, orchestrated to occur in a connected matter. His Honour considered it to be irrelevant that RMS was not the responsible public entity who would be charged with putting a proposed local environmental plan amendment into the public arena, thereby leading to an awareness in the market of the rezoning to R4 of the Underwood Land.

208. Mr Beasley also took me to the last two sentences in [84] where Emmet AJA said (approving the approach of the primary judge):

84   … Accordingly, his Honour concluded, it is not necessary for RMS to be the rezoning authority but it was sufficient for its WestConnex Project to be the intended catalyst for predicting urban renewal and associated rezoning that would most likely follow. They were all interrelated components of the same public purpose.

209. This decision, Mr Beasley submitted, also made it clear that it was appropriate to have regard to the facts and circumstances of the particular instance in order to assess how any causal chain of potentially related development should be viewed to obtain a proper understanding of how matters of causation for s 55(f) purposes should be understood.

210. As was demonstrated by Barkat, Mr Beasley submitted, the overall public purpose was the catalyst for the beneficial planning outcome for that dispossessed owner’s residue land, despite the fact that the specific alteration to the planning regime which effected those beneficial changes resulted from activities of a different consent authority. In those circumstances, the Court of Appeal decision expressly addressed the question of the catalytic effect of the public purpose being the cause of the beneficial changes and holding that the intermediate step could not act to exclude consideration of the public purpose when considering whether or not the public purpose had caused the relevant increase in value of the residue land for the purposes of s 55(f) of the Just Terms Act.

211. Having regard to the present facts and circumstances, Mr Beasley submitted that I could not conclude that the proposition advanced by Mr Dyson in paragraph 30 of the Joint Expert Report of Valuers and the submissions in support of that position made by Mr Hale had the effect that, in the present circumstances, the fact that the planning changes necessary as the foundation for the redevelopment of the Waterloo Estate required to be carried out by consent authorities other than Sydney Metro acted in the barrier fashion advanced by Mr Hale.

Consideration

212. I have, earlier, separately, dealt with the competing positions of Mr Haskew and Mr Grech as to whether the redevelopment of the Waterloo Estate was a necessary intermediate prerequisite for the anticipated future beneficial alterations to the planning controls that would apply to the site. Although I have concluded that the position advanced by Mr Grech (namely, that the proximity of the Waterloo Station element of the Sydney Metro project would, in itself, provide a sufficient contextual basis for the beneficial changes expected for the site, I should set that aside for the purposes of considering the competing submissions concerning the proposition advanced by Mr Dyson in paragraph 30 of the Joint Expert Report of Valuers concerning the AMP decision.

213. I am satisfied that the AMP decision does not impose an absolute barrier test in the sense adopted by Mr Dyson and supported by the submissions advanced by Mr Hale on behalf of the Company.

214. I accept that, as reflected in the (then) Minister’s press release of 19 May 2017, the identification of the location of Waterloo Station as an element of the Sydney Metro project acted as the catalyst for pursuit of the redevelopment of the Waterloo Estate. As Mr Beasley submitted, this catalytic effect arising from that element of the Sydney Metro project was to be understood as having a similar catalytic effect (whether direct or indirect being irrelevant, in my assessment) for the anticipated future beneficial changes to the planning controls for the site. Having regard to the facts and circumstances here engaged, I am satisfied that, despite what has been advanced as appropriate to be derived from the AMP decision, the beneficial future alterations to planning controls for the site are to be regarded as being as a consequence of the Sydney Metro project and, thus, the Sydney Metro project (the public purpose) is to be regarded as triggering those beneficial impacts for the purposes of my consideration of the extent of engagement of s 55(f) of the Just Terms Act.

The Company’s concluding position on compensation

215. The written closing submissions for the Company explained the basis upon which Mr Dyson had approached the $479,000 additional geotechnical modelling costs proposed by Mr Braybrooke to reach the conclusion that, as at the date of acquisition, the hypothetical purchaser would adopt an allowance of $405,000 for this purpose. The Company’s written closing submissions, at paragraph 52(a) to (e) explained this in the following terms:

52. The applicant’s valuer, Mr Dyson, assessed compensation under s 55(f) of the JTC Act in the amount of $405,000. His reasoning was as follows:

(a)   The market value of the Parent Land “before acquisition” can be assessed using a capitalisation of net income approach or a direct comparison approach. The capitalisation of net income approach derives a value of $10,135,000, and the direct comparison approach derives a value of $10,145,000 (paras [103]‑[109]);

(b)   In assessing the market value of the Residue Land “after acquisition”, Mr Dyson assumes that there will be additional development costs for any future re‑development of the Site in the amount of $497,000, which he adjusts to an amount of $407,095 to take into account the time cost of money and the likely future increase in construction costs (paras [110]‑[112]);

(c)   In assessing the market value of the Residue Land “after acquisition”, Mr Dyson also takes into account the reduction in market value due to the “blot on title”, which he assesses in the sum of $20,000 (para [113]);

(d)   Mr Dyson then adjusts the “before acquisition” value of the Parent Parcel to take into account these matters, for which he assesses the value of the Residue Land “after acquisition” using the capitalisation of net income approach in the amount of $9,705,000, and using the direct comparison approach in the amount of $9,715,000 (paras [114]‑[118]).

(e)   Based on this analysis, Mr Dyson assesses the decrease in value of the Residue Land in the sum of $425,000, of which $405,000 is by reason of “injurious affectation”.

216. Mr Dyson’s adoption of this approach explained how the Company reached its total compensation claim of $425,000.

217. Mr Hale submitted that I should accept Mr Dyson's evidence that there would be no increase in value to the hypothetical purchaser as at the date of acquisition as a consequence of the anticipated proximity of Waterloo Station to the site because its potential for a mixed use development with retail on the ground floor would not attract any sufficiently significant passing potential customer foot traffic so as to warrant any value for this being accorded by the hypothetical purchaser. This, Mr Hale submitted, was a factor to be taken into account in support of Mr Dyson's broad proposition that the hypothetical purchaser would not pay “a single dollar more” in the “after” scenario for consideration in the s 55(f) assessment I am required to undertake.

Sydney Metro’s concluding position on compensation

218. Mr Beasley submitted that I should adopt Mr Lunney’s approach. Mr Lunney had conducted his valuation assessment on the basis that there were two distinct classes of betterment requiring consideration. He had categorised these two classes of betterment as being town planning betterment and physical betterment. He had set out two scenarios, one where both physical and town planning betterment are considered, and another where only physical betterment is considered at paragraphs 31 to 38 in the Joint Expert Report of Valuers in the following terms:

31.   Mr Lunney has interpreted the evidence of the town planning experts to be that there is a strong nexus or causal connection between the proposal to carry out the SM Public Purpose and the increased likelihood of a future rezoning of the Residue Land occurring.

32.   Mr Lunney acknowledges that the matter raised by Mr Dyson is a legal matter, to be determined by the Court. To assist the Court, he has addressed two alternative scenarios.

33.   In the first scenario, he has considered, in his assessment of Betterment, both “Physical Betterment” and “Town Planning Betterment”. In this scenario, he maintains the opinion that the Residue Land has enjoyed significant Betterment, by reason of the carrying out of, or the proposal to carry out the SM Public Purpose.

34.   In the second scenario, he has assumed that it would be legally impermissible to consider “Town Planning Betterment”.

35. Even in this alternative scenario, for the reasons which Mr Lunney set out in his Report in Chief at [110] to [121], he considers that the Residue Land would enjoy Physical Betterment, by reason of its close proximity to the proposed Waterloo Metro Station (300m). Mr Lunney notes that Mr Dyson has made reference to the existing Green Square Railway Station, in forming the opinion that the Residue Land would enjoy no Physical Betterment, however Mr Lunney notes that the Residue Land is 600m away from the Green Square Railway Station (walking) which is materially further than the proposed Waterloo Metro Station.

36.   Considering only Physical Betterment, Mr Lunney would conclude that the amount of “Betterment” would offset or exceed any reduction in the value of the Residue Land which may otherwise have been suffered by reason of a geotechnical cost penalty.

37.   In this regard Mr Lunney notes that this cost penalty of $140,000 is equivalent to 1.2% of Mr Lunney’s assessment of the existing use value of the Residue Land.

38. For the reasons set out in Mr Lunney’s Report in Chief at [110], [111] and [114], Mr Lunney considers that Physical Betterment would be a material advantage. He considers that this advantage would, at the very least, exceed 1.2% (or 1.4%) and may be conservatively estimated at 5%.

219. In his Statement of Evidence (Exhibit 6), Mr Lunney had set out in much clearer terms the definitions and distinction between the two classes of “betterment” he advanced. The following extract is from paragraphs 109 to 110, with additional detail on town planning betterment in paragraph 112. These are set out below:

109.   More importantly however, I consider that the benefits accruing to the Residue Land, by reason of the construction and operation of the SM Public Purpose, would be more likely to represent an advantage and value benefit (i.e. Betterment).

110.   I hold this opinion as:

i.   The SM Public Purpose works include the construction and operation of a new metro station, at Waterloo, approximately 300m from the Residue Land. In the event that the Residue Land was to be redeveloped in an intensive manner, the provision of this significant piece of public infrastructure, with a railway station within 300m of the Residue Land would undoubtedly be considered to be some advantage by a developer which intended such a development. This would be regarded as an advantage to any future redevelopment which would be expected to enhance realisation values for any future development and improve the marketability, and

ii.   The town planning experts have agreed that the proposal to carry out the SM Public Purpose works has likely acted as a catalyst for any future rezoning which would apply to the Residue Land. In other words, the carrying out of the SM Public Purpose has increased the likelihood and reduced the timeframe over which the Reside Land may be rezoned, in a favourable manner in the future.

…

112.   If, as Mr Haskew has opined, the Residue Land was a likely candidate for a rezoning within 5‑7 years from the Date of Acquisition in the “after scenario”, this is a matter for which a material premium may be paid by a speculative purchaser. I am aware of other properties for which there was speculation about a future rezoning, which have sold at a premium price, above the underlying “current use value” of those properties. This is often reflected in the market by a higher $/m² rate or in a lower or firmer capitalisation rate.

220. Mr Lunney had explained that he had based his valuation approach on the combination of the town planning evidence given by Mr Haskew and Mr Grech. Mr Lunney said (Transcript 21 September 2022, page 182, line 38 to page 184, line 45):

HALE: I want you, firstly, to assume what Mr Grech would have advised as at the acquisition date, which we will find in the joint experts' report at paragraphs 77, 78 and 79. This is the joint expert report, where you see, in paragraph 77, Mr Grech would have advised the prospective seller or purchaser that the metro project could have the potential for a change in zoning. If he advised that, that, of itself, is unlikely to give any potential purchaser a great deal of confidence as to what might happen in the future, would you agree?

WITNESS LUNNEY: Yeah, I think that's right. If you had Grech and only Grech.

HALE: Yes. Also, 78, if it was advised that this did not change the development potential of the residue land at the acquisition date, that advice is highly unlikely to give the potential purchaser a great deal of confidence as to what might happen in the future so far as an uplift in zoning?

WITNESS LUNNEY: I, I don't see 78 changing that. 78 is, is simply factual, the zoning did not change on that date.

HALE: The advice in 79, "In my opinion, it would not have been possible to advise on what increase in development potential could have been expected because of the public purpose or the timing of this at that time". In relation to the advice in accordance with 77, 78 and 79, I think you would agree, this would hardly give the potential purchaser any great confidence as to what might happen and when, to lead to an uplift in zoning for the subject premises. You would agree with that?

WITNESS LUNNEY: Yeah, I, I think that that's correct. As I said before, if, if the inquirer has only the Paul Grech evidence, his position about the catalyst probably would be regarded as a good thing and a positive thing, but how much further somebody could take that and factor that into the, the market value of the land, I, I accept, would be very limited.

HALE: It would be perhaps a‑‑

WITNESS LUNNEY: Yes.

HALE: Based on that advice, that is unlikely to lead to the hypothetical purchaser offering more for the retained land, the subject site, in 2017 than it otherwise would?

WITNESS LUNNEY: It, it, would ‑ even if you had only the Paul Grech evidence, my view is it would be regarded as a, as a benefit, and, and probably a value benefit, but to quantify that by reference to only the Paul Grech evidence, I accept, would be difficult.

HALE: If we go to Mr Haskew, and if I could ask you to go to 103 of the joint expert report? I think you've already discussed his suggestion of five years for some certainty for the Waterloo estate and another two years. If you go to 102, his advice would be:

"In my opinion the public purpose has had a significant impact on strategic planning decisions which have been made. In this regard, the decision to locate the new Metro Station at Waterloo was heavily influenced by the opportunity which Waterloo would present to redevelop the Waterloo estate".

Pausing there, that might give some element of hope, but it certainly would not lead, of itself, to any increase in which the hypothetical purchaser would pay for the subject land, would it?

WITNESS LUNNEY: Look, I, I don't agree with that last part. Even if you stop there, it's a good thing. The‑‑

HALE: I'm pausing. I’m not suggesting it's not a good thing, we're seeing what the‑‑

HIS HONOUR: Let him finish what he's saying.

HALE: Yes.

WITNESS LUNNEY: You know, if, if, if the question is if that's the only part of the David Haskew evidence an inquirer had, would they form the view that there was no value benefit, I, I, I don't think I could go as far as agreeing with that. I, I accept that there would be difficulties in, in, in quantifying the value benefit of that, you know, of itself.

HALE: Then, if we go further, his advice at 103, having regard to what he just said‑‑

WITNESS LUNNEY: Yep.

HALE:

"The public purpose has influenced strategic planning decisions but because of those decisions there are strong indicators at the date of acquisition the parent parcel would likely to be subject of a planning proposal in the short to medium term".

That of itself is highly unlikely to give the hypothetical purchaser a great deal of confidence as to what actually will happen and when in the future?

WITNESS LUNNEY: It would give, in my opinion, it would definitely give an enquirer confidence. I accept that there's uncertainty as to precisely what and as to precisely when. But it might assist in, if I can explain how I've sought to capture that value benefit in my valuation. I've not assumed that the land was rezoned and applied a linear increase in value or anything like that.

I've simply expressed the opinion in my report, and maintain the opinion, that provided with this evidence, an inquirer would assign something that might be termed a bottom up premium to the value that would otherwise have applied to the land, because all of this town planning evidence, in its totality, would indicate that there is a real potential for something positive to happen within the foreseeable future. I accept uncertainty as to when and to precisely what, but that's, that's as far as I go with it. I don't say 6:1 is more than three times the current potential, therefore there's a 600% value benefit, or anything along those lines.

221. Mr Lunney adopted what he described as a conservative and “bottom‑up” approach to determining what value uplift he would attribute to the future beneficial changes to the planning controls in advice which he would give to the hypothetical purchaser of the site as at the date of acquisition of the substratum.

222. Relying, as he observed during the course of his oral evidence, on a combination of the town planning opinions expressed by both Mr Haskew and Mr Grech, Mr Lunney proposed that a premium of 10% (as the aggregate of both town planning betterment and physical betterment) would be applied to the value of the site as at the date of acquisition by a hypothetical purchaser for the purpose of making an offer to the owner of the site. In reaching this conclusion, Mr Lunney observed that he relied upon the Sydney Metro project as being the catalyst for the future beneficial changes to the planning controls which applied to the site as at the date of acquisition of the substratum (Transcript 21 September 2022, page 189, lines 25 to 40):

BEASLEY: …. Mr Lunney, you've ascribed value in the after valuation to what you understand from the planning evidence to be the further potential created by the Sydney Metro project, correct?

WITNESS LUNNEY: Correct.

BEASLEY: As you've said, you've used a bottom up approach to attach a premium, correct?

WITNESS LUNNEY: That's right.

BEASLEY: Taking into account what you ascribe to both town planning and physical betterment, that is a 10% premium you've said you've used conservatively, is that right?

WITNESS LUNNEY: That's right.

The correct concluding position on compensation

223. I have earlier set out the competing positions of Mr Dyson and Mr Lunney as to the advice which they would give to the hypothetical purchaser of the value of the site (including its improvements) as at the date of the compulsory acquisition of the substratum.

224. As was obvious from what I have set out, there is a stark conflict between the positions each of them adopted.

225. In these circumstances, it is not a question of consideration of how each valuer undertook calculations (Mr Dyson as to either the capitalisation rate he adopted or the adjustments he made to the comparable sales he had relied upon or, for Mr Lunney, the adjustments he had made to the sales upon which he had relied). Such differences are those which conventionally arise for consideration in endeavouring to reconcile the positions of competing valuation evidence. For present purposes, there is no option of considering whether some midpoint or alternative position might be appropriate to be adopted.

226. I have carefully considered the individual expert valuation reports; the Joint Expert Report of Valuers and the oral evidence given by each of the valuers. Having done so, I have concluded that it is appropriate to adopt Mr Lunney's position as reflecting the appropriate advice to be offered to the hypothetical purchaser. I am satisfied that the combination of:

1. A stable tenancy basis and hence a predictable rate of return whilst awaiting changes to the planning controls to reflect the anticipated beneficial improvements to them shows that, even adopting Mr Dyson's capitalisation rate and its derived value, there would be no risk to hypothetical purchaser of offering an amount with a development potential premium as a minimum purchase price for the site;

2. The combination of the planning advice that there was significant future certainty that beneficial changes to the controls which would apply to the site (effectively tripling the development permissible on the site, at a minimum) would provide a reason to the hypothetical purchaser to pay a premium on the value of the site as at the date of the compulsory acquisition of the substratum.

227. For these two reasons, I am unable to accept Mr Dyson's evidence that the hypothetical purchaser would not offer any premium under those circumstances (even having regard to a pessimistic view as to what the geotechnical monitoring costs were which would need to be met in order to realise that improved development potential).

228. On the other hand, I am satisfied that Mr Lunney’s analysis as to why there would be a 10% premium to be paid by the hypothetical purchaser to reflect the value of the future development potential for the site is correct. His consideration of the combined impact of the evidence of the two town planners as leading to this result provides, I am satisfied, an appropriate base potential uplift (10%) which would be contemplated by the hypothetical purchaser.

229. Such a 10% uplift, even based on Mr Dyson's more pessimistic valuations of the site would result in a value uplift of the order of $1 million (before making any allowance for the increased geotechnical monitoring costs which would be necessary as part of that redevelopment). Making allowance for those costs at $140,000, it can be seen that the uplift in value of the site as a consequence of its increased development potential caused by the carrying out of the public purpose is at least of the order of $800,000.

230. As a result of the valuation evidence informed by the geotechnical and town planning evidence, the result must be that the premium which the hypothetical purchaser would have paid for the site as at the date of acquisition in October 2017 would have been more than (and significantly more than) any future costs of additional geotechnical monitoring which would have been required to permit redevelopment of the site on the basis of the reasonably‑to‑be‑expected future beneficial changes to the planning controls (such changes to the planning controls arising as a consequence of the public purpose).

231. This conclusion, on the facts, means that the Company's claim pursuant to s 55(f) of the Just Terms Act must fail.

Costs

232. The decision of Wilcox J in Banno v Commonwealth of Australia (1993) 45 FCR 32 (Banno) confirmed that, in compulsory acquisition compensation cases, the dispossessed owner should ordinarily have their costs met by the acquiring authority unless the case pursued by the dispossessed owner was “a vexatious, dishonest or grossly exaggerated claim”, or the claim was one which was presented in such a way as to impose unnecessary burdens on the acquiring authority or the Court.

233. It follows from Banno that the general position is that a dispossessed owner, if acting reasonably in undertaking proceedings disputing the quantum of compensation to be paid, should have the acquiring authority pay costs of the proceedings provided that the dispossessed owner does not act in any disentitling fashion. Whether the dispossessed owner has undertaken the proceedings in a reasonable fashion requires assessment of the facts and circumstances of each individual case (Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 (Dillon) at [70] to [72]). The approach set out in Dillon has been followed in Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404 (Brock).

234. The above broad propositions were cited with approval in Brock at [82]. In Brock, Tobias AJA accepted the proposition that where there had been a reasonable pursuit of the claim, one which did not give rise to unnecessary delay or expense in its determination, the dispossessed owner should have their costs of the proceedings.

235. Although Sydney Metro contended that the Company was not entitled to any substantive compensation, I am satisfied that, consistent with the above outline of principles, even if I am wrong about the Company’s entitlement to $20,000 compensation for acquisition of the substratum, the Company is entitled to its costs of the proceedings.

Orders

236. The orders of the Court are:

1. The Respondent is to pay the Applicant $20,000 pursuant to s 56(1) of the Land Acquisition (Just Terms Compensation) Act 1991 (the Just Terms Act) for the compulsory acquisition of a substratum at 171‑175 Botany Road, Waterloo;

2. The Applicant's claim for compensation pursuant to s 55(f) of the Just Terms Act is dismissed;

3. The Respondent is to pay the Applicant's costs pursuant to s 59(1)(a) of the Just Terms Act in the agreed sum of $40,829.25;

4. The Respondent is to pay the Applicant's costs of the proceedings as agreed or assessed unless a party notifies my Associate within 14 days of the date of these orders that an alternative costs order is sought;

5. The exhibits are returned.

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Annexure A

Annexure B

Decision last updated: 24 November 2022