Filip Yakas v Roads and Traffic Authority of New South Wales

[2004] NSWLEC 525

Land and Environment Court

of New South Wales

CITATION:	Filip Yakas v Roads and Traffic Authority of New South Wales [2004] NSWLEC 525
PARTIES:	APPLICANT: Filip Yakas RESPONDENT: Roads and Traffic Authority of New South Wales
FILE NUMBER(S):	31579 of 2003
CORAM:	Pain J
KEY ISSUES:	Compulsory Acquisition of Land :- Market value - Determination of underlying zoning - Whether special market for single large lot in rural zoning - Whether alternative acquisition value available
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979, s 117 Land Acquisition (Just Terms Compensation) Act 1991, s 54, 55, 56 Land and Environment Court Rules, pt 13 r 8 Roads Act 1993
CASES CITED:	Boland v Yates Property Corporation Pty Ltd; Webster v Yates Property Corporation Pty Ltd (1999) 167 ALR 575; Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited and Ors (1947) 74 CLR 358; Housing Commission of New South Wales v San Sebastian Pty Ltd (1978) 140 CLR 196; Minister Administering the Heritage Act 1997 v Haddad (1998) 67 LGERA 438; Richardson v Roads & Traffic Authority (1996) 90 LGERA 294; Spencer v Commonwealth (1907) 5 CLR 418; Turner v Minister of Public Instruction (1956) 95 CLR 245; Vella v Roads and Traffic Authority of New South Wales; Paoloni v Roads and Traffic Authority of New South Wales; Martignago v Roads and Traffic Authority of New South Wales [2003] NSWLEC 375
DATES OF HEARING:	07/09/2004 08/09/2004 09/09/2004 10/09/2004 14/09/2004 15/09/2004
DATE OF JUDGMENT:	09/24/2004
LEGAL REPRESENTATIVES:	APPLICANT: Mr J Webster SC (barrister) with Mr I. Hemmings (barrister) instructed by Thorntons Lawyers RESPONDENT: Mr R. Lancaster (barrister) instructed by Henry Davis York

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

24 September 2004

31579 of 2003 FILIP YAKAS v ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES

JUDGMENT

1 Her Honour: The Applicant, Mr Yakas, owned Lots 10 and 28 in DP1021940 known as 86-94 Wallgrove Road, Cecil Park (“the land”). By notice published in the New South Wales Government Gazette on 10 October 2003 the Respondent, the Roads and Traffic Authority of New South Wales (“the RTA”), compulsorily acquired the land pursuant to the Roads Act 1993 for the purpose of constructing the M7 Westlink, formerly known as the Western Sydney Orbital. A compensation notice dated 7 November 2003 issued by the RTA under s 42 of the Land Acquisition (Just Terms Compensation) Act 1991 (“the Just Terms Act”) offered the Applicant the sum of $1,220,426.20 in compensation for the compulsory acquisition of the land. The Points of Assessment of Compensation filed by the RTA pursuant to Pt 13 r 8 of the Land and Environment Court Rules indicates that this figure included $1,140,000 for market value, $62,590 for disturbance and $19,665 in solatium.

2 The Applicant has appealed to this Court under s 66 of the Just Terms Act against the amount of compensation offered in the compensation notice. The Points of Claim filed by the Applicant claimed $8,230,990 in total compensation for the compulsory acquisition of the land, representing a market value of $7,797,000 and a solatium of $19,665 with the other components to be advised. However, the Applicant made it clear to the Court on the first day of the hearing that the amount of compensation which he was claiming in respect of the market value of the land was in fact $5,085,000.

The Land

3 The land is located on the eastern side of Wallgrove Road, north of the intersection between that road and Elizabeth Drive. A location plan of the land is contained at Figure A. The land surrounding the subject land undulates and the subject land is located on the western side of a ridge which runs in a roughly north south direction. The eastern boundary of the land adjoins a property known as the Lenkathboron land, which continues up over the ridge and down its eastern side.

4 The land is irregular in shape with both of its constituent lots, lot 10 and lot 28, being battleaxe in shape and narrowing towards the point where they join. The land has a total area of 33,899m2.

5 The land has a varying gradient ranging between the fairly steep and the gently undulating. A dam is currently located on the land and, while the land is substantially cleared, some remnant Cumberland Plain Woodland remains.

6 I had the benefit of viewing the land and some of the comparable sales relied on by the parties on the first day of the hearing.

7 The Just Terms Act regulates the basis on which compensation is payable in these circumstances. Section 54(1) of the Just Terms Act states that:

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.

8 Section 55 of the Just Terms Act states that:

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) solatium,
(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.

9 Section 56(1) of the Just Terms Act states that, for the purpose of the Just Terms Act the:

"market value" of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid):
(a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and
(b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and
(c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law.

10 In Spencer v Commonwealth (1907) 5 CLR 418 the High Court set out the manner in which the market value of land is to be determined:

... the test of value of land is determined, ... by inquiring: "What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell ? [Per Griffith CJ at p 432]
…
To arrive at the value of the land at that date, we have, as I conceive, to suppose it is sold then, not be means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property. [Per Isaacs J at p 441]

11 It is settled law that the market value of the land must be determined on the basis of the highest and best use of the land as at the date of acquisition: Turner v Minister of Public Instruction (1956) 95 CLR 245; Boland v Yates Property Corporation Pty Ltd; Webster v Yates Property Corporation Pty Ltd (1999) 167 ALR 575. In this case the date of acquisition is 10 October 2003.

12 In Housing Commission of New South Wales v San Sebastian Pty Ltd (1978) 140 CLR 196 the High Court accepted that in determining the market value of land under the Public Works Act (1900), the predecessor of the Just Terms Act, it was necessary to disregard acts, done in the period leading up to the acquisition, which are “part of a series of actions leading up to, and done in contemplation of, the making of the decision” to acquire the land for the purpose for which it was ultimately acquired and which result in “any alteration to the value of the land”: per Hope JA at p 203.

13 Further, in determining the market value of the land it is accepted that the Court must give the benefit of any doubt to the dispossessed landowner: Richardson v Roads & Traffic Authority (1996) 90 LGERA 294.

14 It is accepted that the legal principles established by these cases continue to have relevance to the Just Terms Act which, like its predecessor the Public Works Act (1900) incorporates “in statutory form a principle which had been developed in the cases independently of express statutory provision”: Housing Commission of New South Wales v San Sebastian Pty Ltd per Jacobs J at p 205. However, as Kirby J stated in Minister Administering the Heritage Act 1997 v Haddad (1998) 67 LGERA 438 at 440:

Ultimately, the duty of a court is to be faithful to the language used by Parliament. But where, as here, the language used is expressed in words of great generality, where no provision of the statute negatives the case law and where adherence to the principles earlier stated achieves predictability and consistency, the Court does well to follow the earlier decisions. It should do so, even if, starting again, a different approach might seem attractive.

15 The parties have now agreed on all components of the compensation payable under the Just Terms Act for the compulsory acquisition of the land other than the market value of the land. In determining market value the parties agreed that:

(a) the land was acquired by the RTA for the purpose of constructing the M7 Westlink under the Roads Act 1993 ; and
(b) the current zoning of the land as “Regional Parkland” under the Sydney Regional Environmental Plan No 31 – Regional Parklands (“SREP 31”) can be disregarded under s 56 of the Just Terms Act, although the parties disagreed on the basis why this zoning could be disregarded.

16 Accordingly, I must determine the zoning which the land would have had under the Fairfield Local Environmental Plan 1994 (“the LEP”) at 10 October 2003 if the land had not been reserved for the purpose for which it was ultimately acquired. The Applicant argues that the underlying zoning of the land under the LEP is “Zone 2 (a) Residential A” (hereafter referred to as “Residential”) while the RTA argues that the underlying zoning is “Zone 1 (a) Non Urban-Residential” (hereafter referred to as “Rural-Residential”).

17 If I determine that the appropriate underlying zoning is Residential the parties have agreed that the market value of the land, on the basis of a hypothetical 16 lot residential subdivision, is $4,127,462. The issues initially raised by the RTA as to whether the land presents engineering constraints on residential subdivision have been resolved, with the parties ultimately agreeing that the land is capable of being subdivided into 16 lots for residential purposes.

18 If I determine that the appropriate underlying zoning is Rural-Residential the parties have agreed that if the highest and best use of the land is a three lot Rural-Residential subdivision then the market value of the land is $1,500,000. However, the Applicant does not agree with the Respondent’s submission that a three lot Rural-Residential subdivision represents the highest and best use of the land if the land is zoned Rural-Residential. The Applicant argued that if the underlying zoning is Rural-Residential the highest and best use of the land is as a single lot used for rural pursuits and that the market value of the land for this use is approximately $2 million.

19 The Applicant argued that there is an alternative method whereby the market value of the land may be assessed as cl 19 of SREP 31 contains an acquisition clause under which the owner of land zoned “Regional Parkland” can require the Department of Infrastructure Planning and Natural Resources (“DIPNR”) to acquire the land. The Applicant argued that the effect of this clause is that the land has an “acquisition value” and should be valued on this basis if this “acquisition value” represents the highest and best use of the land.

The Evidence

20 The Applicant relied on the affidavit and oral evidence of himself, Mr Peter Laybutt, a town planner, and Mr Walter Dobrow, a valuer.

21 The RTA relied on the affidavit and oral evidence of Mr Harvey Sanders, a town planner and Mr David Lunney, a valuer. The RTA also relied on the affidavit evidence of Mr Andrew Shirley, a geotechnical engineer, Mr Barry Eadie, a fire consultant and Mr Robert Pascoe, a surveyor.

The Underlying Zoning

22 I must determine the market value of the land as at 10 October 2003. Section 56 of the Just Terms Act and the authorities cited above make it clear that in determining this I must disregard any change to the market value of the land resulting from the public purpose for which the land is being acquired, in this case the construction of the M7 Westlink. The parties have agreed that the current zoning of the land as “Regional Parklands” pursuant to SREP 31 should also be ignored. Accordingly, it is necessary for me to determine the zoning which the land would have had as at 10 October 2003 were the land not resumed for a public purpose.

23 The Applicant and Respondent agreed that the following policy documents are of relevance to this task:

1948: County of Cumberland Planning Scheme : The parties agree that this Scheme proposed a “green belt” which was envisaged as covering the land.
1968: Sydney Region Outline Plan (“the SROP”): The parties agree that the SROP contained an “Outline Map Plan” which identified a proposed Open Space Corridor (“the Corridor”) along the ridge between the South Creek catchment and the Georges River Catchment. Appendix 4 of the SROP stated that this Corridor was to form the following functions:

1974: Fairfield Planning Scheme Ordinance : The parties agree that land in the Corridor was zoned “Non-Urban 1(d)” under this ordinance, while land to the east and west of the Corridor was zoned “Non-Urban 1(a)”. The minimum allotment size for land zoned “Non-Urban 1(d)” was 20 hectares while for land zoned “Non-Urban 1(a)” it was 2 hectares.
1977: Fairfield Interim Development Order No 32 : The parties agree that land in the Corridor was zoned “Rural 1(e)” under this order and that a minimum allotment size of 20 hectares applied in this zone.
1979: Fairfield Interim Development Order No 39 : The parties agree that land in the Corridor was zoned “Rural 1(a3)” under this order and that a minimum allotment size of 20 hectares applied in this zone.
1988: Metropolitan Strategy for the Sydney Region (“the Metropolitan Strategy”): The parties agree that the Metropolitan Strategy was the first metropolitan strategic plan to be produced since the SROP. One of the functions served by the Metropolitan Strategy was to assess all undeveloped areas in the Sydney region and assess them in terms of the “physical, social and economic constraints on their development” so that additional areas could be identified for urban development. The Metropolitan Strategy did not consider whether land in the Corridor, including the Applicant’s land, should be developed for urban development as it was already subject to a “primary constraint”, however:
(a) land to the west of the Corridor, being Cecil Park and Horsley Park, land to the east in Cecil Hills and Abbotsbury and land to the south of the Corridor, being Bringelly, were identified as “areas under consideration for potential urban use” in Map 4; and
(b) land to the south of the Corridor, being Bringelly, and land to the east in Cecil Hills and Abbotsbury was positively identified in Map 5 Strategy Plan as an “area for future urban development”.
1989: Update to the Metropolitan Strategy for the Sydney Region (“the Metropolitan Strategy Update”): The parties agree that the Metropolitan Strategy Update indicated that further investigations of the urban development potential of land to the west of the subject land were to be carried out prior to the release of the land to the south of the Corridor, being Bringelly, for urban development.
1990: Horsley Park Corridor Eastern Boundary Review (“the Eastern Boundary Review”): The parties agree that the Eastern Boundary Review was undertaken for the purpose of identifying land in the Corridor which was “not required for the achievement of the Corridor objectives and can be considered for alternative land use.” While the Eastern Boundary Review found that the land was required for the achievement of the Corridor objectives, it identified that the land between Horsley Drive and Elizabeth Drive would be suitable for urban development and this land was subsequently included in the Urban Development Program in 1992 and zoned for urban purposes in the LEP (see below).
1994: Fairfield Local Environmental Plan 1994 (“the LEP”): The Parties agree that the land was zoned “Recreation 6(c) Corridor” under the LEP and that cl 28 of the LEP contains a mechanism whereby the owner of land so zoned may require the Minister administering the EP&A Act to acquire the land. The LEP also re-zoned the land identified as suitable for urban development in the Eastern Boundary Review.
2001: Sydney Regional Environmental Plan No 31 – Regional Parklands (“SREP 31”): The parties agree that the land is currently zoned “Regional Parklands” under SREP 31.

24 The parties agree that in determining the underlying zoning I must ignore the fact that the land was included, in 1974, in the Open Space Corridor initially identified in the 1968 SROP. Accordingly, the parties agree that in determining the underlying zoning of the land the relevant question is what would have happened to the land if it was not included in the Corridor.

25 The Applicant argued that the underlying zoning of the land is Residential. The Applicant argued that the strategic planning documents set out above show that:

(a) the western edge of the urban zone in the vicinity of the land has been moving further west over time; and
(b) the southern edge of the urban zone in the vicinity of the land has been moving further north over time.
The Applicant argued that, but for the fact that the land was zoned “Regional Parklands” and was intended to be acquired for a public purpose, the expansion of the urban zone would have resulted in the land being zoned Residential by 10 October 2003, the date of acquisition.

26 According to the Applicant, land located to the immediate south and south-east of the subject site, for example Bringelly, has already been released for urban development, or is marked as being available for release for urban development under the Metropolitan Strategy.

27 The Applicant argued that land west of the subject site, that is land west of Wallgrove Road, would have been identified as being appropriate for urban release in the Metropolitan Strategy, but for the Commonwealth government’s proposal for the development of an airport at Badgery’s Creek and the resulting Australian Noise Exposure Forecast (“ANEF”) affectation of this land. The ANEF represents a forecast, calculated in ANEF units, of the level of aircraft noise which a particular piece of land will be affected by. The Minister has made a direction under s 117 of the Environmental Planning and Assessment Act 1979 (“the EP&A Act”) to the effect that land may not be rezoned for urban development for residential purposes where the ANEF exceeds 25 unless a Council can satisfy the Director that the zoning should be varied having regard to s 5 of the EP&A Act. The evidence of the Applicant, which the Respondent did not dispute, was that part of the land to the west of Wallgrove Road is affected by an ANEF of greater than 25. The subject land is not affected by ANEF predictions.

28 The Applicant argued that, while there is a valid town planning reason why the land to the west of Wallgrove Road has not been released for urban development, being the ANEF affectation and the s 117 direction, the subject land is not constrained by the s 117 direction and there is no evidence that there is any other planning reason preventing the land to the west of Wallgrove Road from being released for urban development.

29 The Applicant sought to rely on Mr Laybutt’s evidence concerning the 1998 resumption of the neighbouring land, known as the Lenkathboron land, which is located to the east of the subject land. The Lenkathboron land was acquired by DIPNR on the basis that it had an underlying zoning of Residential. The acquisition of the Lenkathboron land was not the subject of legal proceedings but rather was settled on the basis of an agreement reached between the respective parties.

30 The Applicant also criticised the reliance of Mr Sanders on the five functions (set out in par 23) which the SROP states that the Corridor located on the ridge was to perform as a basis for his view that the underlying zoning of the land is Rural Residential. The Applicant argued and Mr Sanders conceded, that functions 1, 4 and 5 should be ignored as steps in the resumption process, leaving only the physical barrier (2) and western backdrop functions (3) remaining. The Applicant further argued that the five principles identified by the then Minister for Local Government in a 1970 letter to a local member regarding the role performed by the ridge (“the 1970 letter”), being the principles also contained in the SROP regarding the functions to be performed by the ridge, had been outdated by the 1988 Metropolitan Strategy so that the ridge had become merely a natural boundary providing a western backdrop to urban development. The five principles made by the then Minister for Local Government in the 1970 letter are as follows:

1. It represents the physical division between eastern and western catchment of the Cumberland Plain and any extension of urban development beyond this point would involve the construction of a new sewerage and drainage system.
2. It is part of a land feature to be used as an effective western backdrop to urban development and as a significant feature in the landscaping of the urban environment.
3. It represents a natural boundary for the containment of Sydney’s urban sprawl.
4. It represents a vital regional open space scheme for future metropolitan needs and is proposed as a reservoir of land which will meet some of the future recreational requirements.
5. It represents, particularly on the western side of the ridge, a vital link in the corridor system proposed as a reserve for the installation of major public utilities and communication systems of the future and as a vital link for this purpose between the south western and western urban corridors of the Sydney Metropolitan area.

31 Further, the Applicant argued that, because the land was only included within the corridor after a public enquiry process carried out in 1974, and was not within the corridor at the time the SROP was made in 1968 or at the time the 1970 letter was written, the “timeless principles” identified in these documents could not be said to apply to the land so as to preclude the release of the land for urban purposes. Further, the Applicant argued that:

(a) the Metropolitan Strategy, which identified land to the west of the ridge and the corridor as being “under consideration for potential urban use”; and
(b) the Eastern Boundary Review, which used the location of the canal, rather than the ridge, in considering whether land should be excluded from the corridor;
demonstrates that these principles had been abandoned by 1988.

32 The Respondent relied on the evidence of Mr Sanders to the effect that there were sound planning principles as to why the underlying zoning of the land was Rural-Residential. The evidence of Mr Sanders was that:

(a) for many years the planning documents produced by the New South Wales government have confined urban development to specific growth corridors, so that there has been planned development within a defined area;
(b) the principle of urban consolidation has been consistently applied in these planning documents; and
(c) the ridge located to the east of the land was first identified in 1968 in the SROP as providing a natural planning boundary containing the urban development to the east and this planning boundary had been adhered to since.

33 The Respondent argued that the following documents supported Mr Sanders’ analysis of the underlying zoning of the land:

(a) the comments made by the then Minister for Local Government in the 1970 Letter which confirm that the ridge was regarded as “a natural boundary for the containment of Sydney’s urban sprawl”;
(b) the reasons for judgment of this Court in Vella v Roads and Traffic Authority of New South Wales ; Paoloni v Roads and Traffic Authority of New South Wales ; Martignago v Roads and Traffic Authority of New South Wales [2003] NSWLEC 375, where Talbot J accepted at [25] that comments 1 to 4 made by the Minister in the 1970 letter established timeless principles for the zoning of this area of Western Sydney; and
(c) the departmental minute paper dated 6 July 1984, a copy of which is located at Tab D2 of exhibit 11, which refers to the ridge at p 1-6 in a context that confirms its continued significance as a planning boundary.

34 While Mr Sanders accepted the argument made by the Applicant that the ridge no longer poses a physical barrier to urban development and that services would be able to be physically provided to the land, Mr Saunders was of the view that the ridge still operates as a planning boundary marking the western limits of urban development in accordance with the timeless principles identified in the 1970 letter and confirmed in the departmental minute paper. Mr Sanders is of the view that the Applicant’s suggestion that the underlying zoning of the land would have permitted urban residential development is inconsistent with these timeless principles.

35 The Respondent argued that the 1988 Metropolitan Strategy continues the same planning approach commenced in the 1968 SROP, which approach limits urban development to identified growth corridors and referred to the ridge as an appropriate natural limit to urban development. The Respondent argued that there was no need to refer to the ridge in the 1988 Metropolitan Strategy because Map 5, which formed the strategy plan itself, continued the approach begun in the SROP of limiting urban growth to identified growth corridors to the east of the ridge.

36 Further, the Respondent argued that the fact that Map 4 of the Metropolitan Strategy identified land to the west of the ridge as under consideration for potential urban use does not support the Applicant’s argument that, but for the inclusion of the land in the corridor, the land would have been zoned Residential as Map 4 represents the “dispersed option” ultimately rejected by the Metropolitan Strategy which adopts Map 5 as the strategy plan.

Finding on Underlying Zoning

37 The 1988 Metropolitan Strategy states that it applies the principles from the 1968 SROP and considers two alternative approaches to future urban development in the Sydney region being the “concentrated” or “dispersed” approach. The concentrated approach, meaning urban development will be along specific growth corridors, is selected as the appropriate approach by the Metropolitan Strategy. This approach was reflected in the land identified in Map 5, the Strategy Plan.

38 Map 4 of the Metropolitan Strategy identified extensive areas as “areas under consideration for potential urban use, including land directly to the west and south of the Applicant’s land. Because the Applicant’s land was in the corridor it was not directly considered in the 1988 Metropolitan Strategy. Mr Sanders conceded in cross examination that had the land not been in the corridor it was likely that it would have been included on Map 4 but not on Map 5 which is the Strategy Plan. Map 5 identifies that land which the Metropolitan Strategy identifies as “an area for future urban development” and land to the west of the north-south ridge was not identified on that map.

39 The expansion of urban development to the south and east of the site in the suburbs of Cecil Hills and Abbotsbury, which the Applicant argued indicates that the land would also have been zoned residential but for the corridor zoning, was identified in Map 5 of the 1988 Metropolitan Strategy as land available for urban expansion. That land appeared on Map 4 and Map 5, while the land west of the Applicant’s land appeared only on Map 4. As Cecil Hills and Abbotsbury are located east of the water supply channel and the catchment boundary for the Georges River catchment, I accept the Respondent’s argument that the urban release of these areas does not indicate that the ridge has been abandoned as a planning boundary.

40 There was some dispute by the Applicant as to whether the ridge identified in the SROP is the same topographical feature as the ridge which the land is located to the west of. A map showing the location of the ridge was tendered in evidence as exhibit 7. Having had the benefit of a view of the land on the first day of the hearing, I am of the view that the ridge to the east of the land is the ridge referred to in the SROP and later documents.

41 While the Applicant argued that the Badgery’s Creek airport proposal was the only reason why land to the west of the Applicant’s was not included on Map 5, I accept the evidence of Mr Sanders, the Respondent’s planner, that there were important planning reasons, including the containment of urban sprawl as identified in the 1968 SROP and the 1988 Metropolitan Strategy, which meant that this land was not considered suitable for urban development. I do not accept the argument made by Mr Laybutt, the Applicant’s planner, that the non-inclusion of these areas on Map 5 is simply the result of the level of ANEF affectation to the west of the ridge and the impact of the Ministers s 117 Direction. Accordingly, I agree with the Respondent’s submissions that the non-inclusion of the Horsley Park area from Map 5 was based on the rejection of the “dispersed option” so that the ridge continued to operate as a planning barrier limiting the western extent of urban development.

42 The Eastern Boundary Review, which identified land close to the subject land as land which was “not required for the achievement of the Corridor objectives” and which was suitable for urban development, was relied on by the Applicant as showing that the demand for further residential land is such that the ridge no longer operates as a limit on the western extent of residential development. I accept the evidence of Mr Sanders that the land identified for release in the Eastern Boundary Review was located to the east of the ridge and is therefore consistent with the ridge having a continued operation as a planning boundary. Accordingly, I do not consider that the Eastern Boundary Review demonstrates that the ridge no longer operates as a planning boundary.

43 Nor do I find the Applicant’s argument that the fact that the neighbouring Lenkathboron land was acquired by DIPNR on the basis of an underlying residential zoning indicates that the underlying zoning of the subject land is also residential persuasive. The circumstances of that negotiated sale are quite different to what I must resolve. Further, I note the vast majority of the Lenkathboron land lies on the east of the ridge, which land Mr Sanders identified as likely to have been identified for urban development, but for the corridor, consistently with his overall argument.

44 For the reasons set out above I do not accept the Applicant’s argument that the underlying zoning of the land is Residential. I accept the Respondents argument, for the reasons set out in section 4 of Mr Sanders Report which formed exhibit 2, that, absent the inclusion of the land in the corridor, the land would have been zoned Rural-Residential under the LEP as at the date of acquisition.

45 I understand that in my role as judicial valuer in cases of this nature “doubts are resolved in favour of a more liberal estimate”:Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited and Ors (1947) 74 CLR 358 at per Dixon J at p 373. However I do not consider this is a situation where doubt requiring resolution exists as I consider that the approach taken by the Respondent in relation to the underlying zoning of the land is correct so that on the balance of probabilities the underlying zoning is Rural-Residential.

46 I also note that my conclusion as to the underlying zoning of the land is consistent with the approach followed by Talbot J in Vella. I should note, however, that I do not consider that Vella can be applied directly here as the issues in Vella were different to those being considered here as:

(a) Talbot J was required to determine whether the underlying zoning was rural or industrial; and
(b) the Vella land is located approximately four kilometres to the north of the Applicant’s land, near a portion of the ridge which Talbot J recognised as becoming more pronounced as it proceeds north towards Prospect Reservoir;
so that the evidence presented by the parties in Vella necessarily varied from that before me. However, despite these differences I consider that it is appropriate for me to adopt a similar approach to the planning instruments before me as that adopted by Talbot J in Vella in arriving at my decision as to the underlying zoning of the land.

47 As set out at par 18 to 19 above, the Applicant argued that if I determine, as I have done, that the underlying zoning of the land is Rural-Residential then the following three alternative options can be used to determine the market value of the land:

(a) valuing the land on the basis of its value as a site for subdivision into three rural lots of at least one hectare;
(b) valuing the land on the basis of its value as a single large rural lot, in which case the Applicant argues, on the evidence of its valuer, Mr Dobrow, that the land has a value of $2,000,000; and
(c) valuing the land on the basis of its acquisition value by DIPNR pursuant to cl 19 of SREP 31.
The Respondent disputed that the land can be valued under either options (b) and (c) and argued that, on the basis of my finding that the underlying zoning of the land was Rural-Residential, that the highest and best use of the land is as a three lot rural subdivision.

(a) Three Lot Subdivision

48 The parties have agreed that the market value of the land on the basis of a three lot Rural-Residential subdivision is $1,500,000. Accordingly, if I determine that a three lot Rural-Residential subdivision represents the highest and best use of the land the market value of the land will be $1,500,000.

(b) Single Large Lot

49 The Applicant argued that if the underlying zoning of the land was Rural-Residential the highest and best use of the land, based on the evidence of his valuer, Mr Dobrow, was as a single large rural lot with a market value of $2 million.

50 Mr Dobrow argued that there is a special market, existing on the western fringe of Sydney, for properties such as the land which offer a rural retreat lifestyle. Mr Dobrow argued that this market is generated by families of European extraction who buy property in excess of the minimum Rural-Residential lot sizes to use for rural pursuits with a view to a possible future subdivision or the provision of additional housing on the land for their children. Mr Dobrow argued that buyers in this market will pay more for the land than its subdivision value. In relation to calculating the extra value of the land for that portion of the land over two hectares, one hectare being the minium lot size under the LEP for land zoned Rural-Residential, Mr Dobrow applied what he described as “rule of thumb” equation whereby the additional land is valued at 50 per cent of the value, expressed in $ per m2, of the two hectares. The figure this methodology produced was $500,000. Mr Dobrow then added this to the value of $1.5 million agreed for the three lot subdivision.

51 Mr Dobrow argued that the sales of large rural lots relied on in his first valuation report tendered as exhibit C supported this view. The sales he relied on were as follows:

Sale 8: 1598 Horsley Drive
Mr Dobrow argued that this sale was a:
Good example of market value for a 2ha rural home site, $1,510,000 for about a 2ha rural parcel or $650,000/ha anxious vendor, zoned open space, similar physical features to the subject, considered comparable.

Sale 9: 1667 Horsley Drive
Mr Dobrow argued that this sale was a:
Good example of market value for a 2ha rural home site, $1,475,000 for about a 2ha rural parcel or $735,000/ha, affected by watercourse and TLE, well located parcel on a busy road, used for rural purposes.

Sale 13: 1634 Horsley Drive, Horsley Park
Mr Dobrow argued that this sale:
Shows a rate of $757,000/ha, includes disturbance for acquisition, $4,000,000 for a large 5ha rural parcel or $757,000/ha, brought by the DIPNR, considered better located than the subject, 40 per cent affected by “unstable land” hatching, the subject property has better views.

52 Mr Dobrow also argued that:

(a) Sale 10: 262 Ceil Road, Horsley Park
(b) Sale 11: 63 Arundel Road, Horsley Park;
(c) Sale 12: 278 Mount Vernon Road, Mount Vernon; and
(d) a sale relied on by Mr Lunney, being 158 Duff Road;
also supported his view.

53 The Respondent’s valuer, Mr Lunney, argued that there is no market evidence to support the view of Mr Dobrow that there are people who will pay a premium of $500,000 above the $1.5 million representing the market value of the land as a three-lot rural subdivision site to have a large rural home site.

54 Mr Lunney argued that the sales relied on by Mr Dobrow did not support his argument that the value of the land as a single large lot is greater than its value as a three lot subdivision site as:

(a) Sale 8: 1598 Horsley Drive was not purchased as a rural home site but by a person living overseas (apparently as an investment) and its price was not consistent with the existence of a premium for large single sites because its value was commensurate with its subdivision potential;
(b) Sale 9: 1667 Horsley Drive is not a comparable transaction, primarily because it was zoned for tourism uses under the LEP, which provides very substantial potential for development beyond that available upon a single large Rural-Residential zoned site and these is no direct evidence that it was purchased as a rural home site;
(c) Sales 10, 11 and 12 have all been the subject of development applications, lodged after completion, for subdivision. This indicates that these properties were not acquired as large single rural home sites;
(d) Sale 13: The Horsley Drive was not firmly relied upon by Mr Dobrow, for good reason. It was a negotiated settlement to litigation, not a market transaction, and the amount referred to by Mr Dobrow as the sale price included an amount of about $500,000 attributed to legal costs. That land area was in the order of 5.3 hectares. It is not comparable and is unreliable evidence; and
(e) 158 Duff Road is a sale of Mr Lunney’s which Mr Lunney argued showed a comparable land value of $1 million and which Mr Dobrow argued had a comparable value of $1.05 million. 158 Duff Road had an area of 1.943ha, just under the 2ha minimum needed for a subdivision into two one-hectare lots and its shape, topography and location are all superior to the acquired land. This sale of a large single home site with superior features cannot reasonably be said to justify a valuation at double the amount (namely $2 million) of the subject land as a single home site which, although larger, is of notably inferior shape, topography and location.

55 Further the Respondent argued that the 50 per cent “rule of thumb” applied by Mr Dobrow as his diminishing return on land above a certain size was not an accepted valuation methodology and was not an approach supported by Mr Lunney. In Mr Lunney’s view the land must be valued by reference to comparable sales and not by any rule of thumb inflexibly applied.

56 In addition, the Respondent argued that as Mr Dobrow agreed with Mr Lunney that the market value of a two lot rural subdivision is $1.285 million, Mr Dobrow’s methodology for valuing the surplus land over two hectares by reference to the agreed value for a three lot rural subdivision, being $1.5 million, is flawed.

Finding as to the Single Lot Basis for Compensation

57 Mr Dobrow did not provide me with any direct evidence as to the existence of the special market for which he contends. Accordingly, I only have Mr Dobrow’s oral evidence that he is aware of such a market as a result of inquiries he has made of real estate agents located in the western areas of Sydney. When I asked Mr Dobrow whether such markets were found elsewhere in Sydney he nominated large waterfront home sites around Sydney Harbour as an example of other market where the value of a single large lot is more than the value of two or more smaller lots covering the same total area. This suggests to me that this is a very specialist market. Mr Dobrow admitted in cross examination that he did not make any investigation as to the regional background of purchasers of the comparable sale properties relied by him. In the absence of such sales which clearly show the existence of such a market I am not prepared to accept that it exists.

58 I generally agree with the analysis undertaken by Mr Lunney of the sales relied on by Mr Dobrow to support his argument. I agree with Mr Lunney that these sales do not support Mr Dobrow’s argument that a special market exists in relation to large lots to be used for rural pursuits.

59 Further, even if such a specialist market did exist, I simply do not find it credible that a purchaser in such a market would pay $500,000 more than the agreed value of $1.5 million for a three lot rural subdivision or the agreed value of $1.285 million for a two lot subdivision. I therefore do not accept, on the evidence before me, the application of Mr Dobrow’s 50 per cent rule of thumb approach to the valuation of additional land on blocks greater than two hectares.

60 For the reasons set out above I do not accept the Applicant’s argument that the land has a market value, in accordance with the Rural-Residential underlying zoning, of $2 million being its value as a single large lot used for rural pursuits. Accordingly, this cannot represent the market value of the land and, unless the Applicant is successful in its argument that the land can be valued on the basis of its acquisition value, the highest and best use of the land will be its value as a site for a three lot rural subdivision with an agreed value of $1,500,000.

(c) Acquisition Value

61 The Applicant argued that a prudent speculative purchaser would buy the land for its acquisition value, knowing that:

(a) it was subject to an acquisition clause, namely cl 19 in SREP 31; and
(b) the neighbouring Lenkathboron land had been acquired by DIPNIR on the basis of an underlying Residential zoning;
and would purchase the land for a price representing something less that the market value of the land if the zoning was Residential and something more that the market value of the land if the zoning were Rural-Residential to allow for the risk that DIPNR would not purchase on the basis of a Residential underlying zoning. The Applicant argued that a prudent speculative purchaser would discount the value of the land based on an underlying zoning of Residential, which the parties have agreed is $4,127,462, by 35 per cent so as to allow for this risk.

62 The Applicant relied on the principles set out by Isaccs J in Spencer, which are set out at par 10 above, to the effect that the hypothetical purchaser is to be assumed to be “perfectly acquainted with the land, and cognizant of all circumstances which might affect its value” to support his argument that a hypothetical purchaser acquiring the land for its acquisition value must be assumed to be aware of the basis on which the Lenkathboron land was acquired by DIPNR. The evidence of the Applicant was that he personally knew about the basis on which the Lenkathboron land was acquired as his neighbour, the owner of the Lenkathboron land, had informed him of it. The Applicant argued that as he would have imparted information about the acquisition of the Lenkathboron land to any potential purchaser seeking to acquire the land for its acquisition value, this information would have been known in the market place.

63 The Respondent argued this valuation basis was simply not open legally to the Applicant because of the way in which the Applicant had run his case. The Respondent argued that:

(a) as the Applicant had argued that the reservation of the land as “Regional Parkland” under SREP 31 was a step in the resumption process for the road resumption before me and should be ignored in determining the underlying zoning of the land it was not open to the Applicant to seek to rely on the reservation of the land under SREP 31 for the purposes of this alternative argument; and
(b) in any event, the way the Applicant sought to rely on the acquisition clause in SREP 31 was not open to it. Clause 19 of SREP 31 permits the owner of land zoned “Regional Parkland” under SREP 31 to require DIPNR to acquire that land. Once cl 19 has been activated so that the land is to be acquired, the market value of the land must be determined, and before this can be done the underlying zoning of the land must be determined. Given this, the Respondent argued that it was not open to the Applicant to ignore my findings as to the underlying zoning in relation to the acquisition value of the land. This is the point made by Mr Sanders in his first report, contained at exhibit 2, where he flags that underlying zoning remains relevant, regardless of whether the Applicant’s land is resumed under the Roads Act 1993 or under SREP 31.

64 In the alternative, if I find that this valuation method is available, the Respondent argued that had inquiries been made of the DIPNR by a hypothetical purchaser as to the possible basis on which the land would be acquired, no information about the Lenkathboron land would have been divulged by DIPNR as the agreement whereby the land was acquired was subject to a confidentiality clause which prevented the parties divulging its contents without the consent of the other. The Respondent argued that it could not therefore be assumed that the basis on which the Lenkathboron land was acquired would be known in the market place to the hypothetical vendor and purchaser.

65 Further the Respondent argued that DIPNR had made it very clear to the Yakas family in the correspondence which occurred between DIPNIR and the Yakas family in 1997 and 1998 that it would purchase the land on the basis of a three lot rural subdivision, this being the highest and best use of the land which DIPNR asserted, as I have found to be the case, had an underlying zoning of Rural-Residential. In addition, Mr Lunney gave evidence that in no case has DIPNR acquired land located on the western side of the ridge on the basis of an underlying Residential zoning. In Mr Lunney’s view, inquirers to the Department would have been informed that it had an inflexible policy to the effect that the acquisition of land located to the west of the ridge line and water supply channel was to be compensated on a Rural-Residential basis.

66 In addition, the Respondent’s valuer Mr Lunney also disputed Mr Dobrow’s evidence that a prudent person seeking to acquire the land on the basis of its acquisition value would only discount the Residential value of the land by 30-35 per cent. Mr Lunney considered that the risk that DIPNR would not acquire the land on the basis of a Residential underlying zoning to be extreme, given the likely market knowledge of a hypothetical purchaser. Accordingly, he did not consider that any prudent purchaser seeking to acquire the land for its speculative acquisition value would purchase the land for more than its Rural-Residential value.

Finding as to Acquisition Value

67 I do not need to determine whether or not the resumption of this land is actually for the purpose of a road or parkland or both. The Applicant has chosen to argue his case on a certain basis and I agree with the Respondent’s arguments as to why this alternative basis of valuation is simply not open to the Applicant as a consequence of the way he conducted his case. Regardless of whether the resumption is based on the Roads Act 1993 or SREP 31 I am of the view that the underlying zoning is a relevant issue and one which I have now determined. Having made a determination that the underlying zoning of the land is Rural-Residential I do not think that this alternative basis argued for by the Applicant is available to him or, if it is, it must be argued on the basis that any person seeking to acquire the land would have done so knowing that the underlying zoning of the land was Rural-Residential. Obviously, in such a case no purchaser would offer more than the market value of the land as Rural-Residential, and accordingly, there is no monetary benefit for the Applicant in arguing that the land should be valued on the basis of its acquisition value.

68 If I am wrong in this conclusion, and there is a legally arguable basis for the Applicant’s submission, the issue becomes what was the information known about the Lenkathboron sale and DIPNR’s acquisition policies in this area in the market place as at 10 October 2003. I am prepared to accept that the Applicant’s knowledge, as vendor, about the Lenkathboron sale may have been imparted and hence known to a hypothetical vendor and purchaser, despite the presence of the confidentiality clause in the agreement between the parties. However, I consider that the other information also likely to be known in the market place, including DIPNR’s acquisition policies in the area and the correspondence between the Applicant and DIPNR in 1997 and 1998, suggests that it would be highly speculative for any purchaser to pay more for the land that its value as a three lot rural subdivision in the hope that DIPNR would acquire the land on the same basis as it acquired the Lenkathboron land. While the Applicant argued this correspondence predates the Lenkathboron land sale in April 1998, the last letter from DIPNR to Mr J Yakas was dated December 1997, only a few months before that sale. I therefore agree with Mr Lunney that a prudent speculative purchaser would be unlikely to purchase the property for more than its Rural-Residential subdivision potential into three lots. Accordingly I reject the Applicant’s claim on this alternative fourth ground.

Conclusion

69 I assess the market value of the land as at the date of acquisition to be $1.5 million, being the agreed value of the land as a site for a three lot rural subdivision. I note that the parties have reached agreement on all other heads of compensation which the Applicant is entitled to under the Just Terms Act. I direct the parties to file short minutes of order giving effect to the findings made by me and with provision for costs within seven days.