Halley v Minister Administering the Environmental Planning and Assessment Act 1979

[2010] NSWCA 361

Reported Decision: 178 LGERA 327

New South Wales

Court of Appeal

CITATION:	Halley v Minister Administering the Environmental Planning and Assessment Act 1979 [2010] NSWCA 361
HEARING DATE(S):	15 November 2011
JUDGMENT DATE:	17 December 2010
JUDGMENT OF:	Giles JA at 1; Hodgson JA at 2; Tobias JA at 3
DECISION:	Appeal dismissed with costs. [The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
CATCHWORDS:	ENVIRONMENT AND PLANNING – acquisition of land – compensation – valuation – market value – whether highly unlikely that Council would approve subdivision of acquired land into two allotments – whether primary judge failed to disregard any decrease in value of land compulsorily acquired caused by proposal to carry out relevant public purpose – whether primary judge erred in law with respect to analysis of relevant zoning – whether primary judge’s error vitiated decision
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 Land Acquisition (Just Terms Compensation) Act 1991 Land and Environment Court Act 1979 Lane Cove Development Control Plan No.1 – Control of Development Adjacent to Bushland Lane Cove Local Environmental Plan 1987 Miscellaneous Acts (Planning) Repeal and Amendment Act 1979 NSW Planning and Environment Commission Act 1974 State Planning Authority Act 1963 Sydney Regional Environmental Plan (Sydney Harbour Catchment) 2005
CASES CITED:	Halley v Minister Administering the Environmental Planning and Assessment Act 1979 [2010] NSWLEC 6; (2010) 170 LGERA 449 Roads and Traffic Authority (NSW) v Mosca [2006] NSWCA 159; (2006) 146 LGERA 335 Sydney Water Corporation v Caruso [2009] NSWCA 391; (2009) 170 LGERA 298 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 Woollams v The Minister (1957) 75 WN (NSW) 103; (1957) 2 LGRA 338
PARTIES:	Diane Kay Halley Minister Administering the Environmental Planning and Assessment Act 1979
FILE NUMBER(S):	CA 2010/38030
COUNSEL:	A: T Hale SC / J Kildea R: R P Lancaster / L T Livingston
SOLICITORS:	A: Bradfield & Scott, Solicitors, Sydney R: Pikes Lawyers, Sydney
LOWER COURT JURISDICTION:	Land & Environment Court
LOWER COURT FILE NUMBER(S):	LEC31077/08
LOWER COURT JUDICIAL OFFICER:	Lloyd J
LOWER COURT DATE OF DECISION:	15 January 2010
LOWER COURT MEDIUM NEUTRAL CITATION:	Halley v Minister Administering the Environmental Planning and Assessment Act 1979 [2010] NSWLEC 6

CA 2010/38030
L&E 2008/31077

GILES JA
HODGSON JA
TOBIAS JA

Friday 17 December 2010

DIANE KAY HALLEY v MINISTER ADMINISTERING THE ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979

Judgment

1 GILES JA: I agree with Tobias JA.

2 HODGSON JA: I agree with Tobias JA.

3 TOBIAS JA: On 18 July 2008 by notice published in the New South Wales Government Gazette, the respondent, the Minister Administering the Environmental Planning and Assessment Act 1979 (the Minister), compulsorily acquired one of the last remaining privately owned pieces of bushland along the foreshore of Woodford Bay which is part of the Lane Cove River (the acquired land).

4 The acquired land was known as Lot 2 DP 1126043 and had an area of 466m². It was rectangular in shape, approximately 15.28 metres wide and approximately 30.4 metres long. It formed the foreshore part of Lot 212 DP 866891 (Lot 212).

5 By Compensation Notice dated 15 August 2008 and served pursuant to s 42(2) of the Land Acquisition (Just Terms Compensation)Act 1991 (the Just Terms Act), the Minister offered to the appellant as owner of the acquired land an amount of compensation determined by the Valuer-General in the sum of $2,016,500. As the appellant claimed compensation in the amount of $3,500,000 together with disturbance, the Minister’s offer was rejected with the consequence that the matter proceeded to a contested hearing before the Land and Environment Court.

6 On 15 January 2010 Lloyd J determined the amount of compensation to which the appellant was entitled for the compulsory acquisition of the acquired land in the sum of $1,315,000. This amount consisted of its market value of $1,300,000 and loss attributable to disturbance of $15,000: Halley v Minister Administering the Environmental Planning and Assessment Act 1979 [2010] NSWLEC 6; (2010) 170 LGERA 449.

7 The appellant appeals to this Court against his Honour’s assessment of the market value of the acquired land. Such an appeal is confined to a decision of the Land and Environment Court on a question of law: Land and Environment Court Act 1979, s 57(1).

Some background facts

8 As I have indicated, the acquired land formed part of Lot 212 in DP 866891 which had an area of 1,437m². In turn Lot 212 was created by the subdivision of Lot 21 DP 3957 (Lot 21) into two allotments being Lot 211 that had an area of 591.3m² (Lot 211) and Lot 212. Lot 21 extended from Arabella Street, Longueville to the foreshore of Woodford Bay. It was an elongated parcel being 15.24 metres wide and 131 metres long with an east-west alignment. Lot 211 was 37.55 metres on its northern boundary and 40.05 metres on its southern boundary. Both Lots 211 and 212 were bounded on their northern boundaries by Nott Lane, which provided access from Arabella Street to the substantial house ultimately constructed on Lot 212.

9 At [25] of his reasons the primary judge noted that the general area was characterised by a series of long narrow allotments with frontages to Arabella Street and running down to the shoreline. The houses on these allotments were in each case built close to the Arabella Street frontage where the elevation allowed panoramic views over Woodford Bay, the Lane Cover River, the city skyline and the Sydney Harbour Bridge. In a few places these lots had been subdivided into two (of which the subdivision of Lot 21 was an example) so that there were two houses erected between Arabella Street and the foreshore.

The valuation issue

10 The only relevant valuation issue before the primary judge related to the determination of the market value of the acquired land. It was the appellant’s primary submission that Lot 212 at the date of acquisition was capable of subdivision into two allotments and that the construction of Nott Lane could have been extended to serve the additional lot that would have fronted Woodford Bay. The two allotments so created from Lot 212 would have conformed to the minimum allotment area under the Lane Cove Local Environmental Plan 1987 (the LEP). Under the LEP the acquired land was zoned 9(c) (Regional Open Space Reservation Zone) (9(c)) whereas the residue of Lot 212 was zoned Residential 2(a2) (2(a2)). The existing house on Lot 212 had been erected within the 2(a2) zone.

The relevant statutory provisions

11 Pursuant to s 55 of the Just Terms Act when determining the amount of compensation to which a person is entitled, regard must be had to amongst other matters, the market value of the land on the date of its acquisition. Section 56(1) relevantly defines that concept in the following terms:

“(1) In this Act:
market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid):
(a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and
(b) …
(c) …”

12 As the primary judge acknowledged at [15] of his reasons, s 56(1)(a) of the Just Terms Act required the Court to ignore the fact that the acquired land was within the 9(c) zone under the LEP. The parties agreed, consistently with their town planning advice, that the acquired land if it was not so zoned would have had the same zoning as the adjoining land, namely, 2(a2).

13 However, his Honour observed that it was not only the zoning of the acquired land that was required to be ignored. At [16] of his reasons he said (omitting citations):

“Moreover, it is not just the zoning of the acquired land that must be set aside. In disregarding the blight caused by the process of compulsory acquisition, the Court must also disregard its effect on other land and must take account of development that would otherwise have occurred in the area but for the blight caused by the public proposal.”

14 There was a dispute at trial as to the application of this principle to the evidence. It was the Minister’s case that consistent with the High Court’s decision in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 at [53]-[54], the Court could only disregard so much of the waterfront land in the vicinity of the acquired land as was zoned 9(c).

15 On the other hand the appellant submitted that the zoning of all the waterfront land under the LEP should be ignored and that it should be assumed that at the date of acquisition that that land was zoned 2(a2). It was contended that if this was so then the development of waterfront land both in the vicinity of the acquired land and further afield would be different to what it was at the date of acquisition, which was generally bushland.

The relevant town planning evidence

16 In order to understand the significance of these competing submissions, it is first necessary to refer to the evidence of the town planner called on behalf of the appellant.

17 Mr Neil Ingham, a well-known consultant town planner, provided the appellant’s town planning evidence. His evidence was relevantly confined to the report that became Exhibit A. Under the heading “THE UNDERLYING ZONING” Mr Ingham set out a potted history of the zoning controls applicable to the foreshore of Woodford Bay apparently gleaned from his research of documents held by the Department of Planning. The relevant sections of Mr Ingham’s report are as follows:

(a) In paragraph 3.3 Mr Ingham observed that:

“[t]he foreshore land was first reserved in the County of Cumberland Planning Scheme 1951. The width of this foreshore land was not identified in the plans available to me but a foreshore reservation was included in the County plan which is shown as a narrow strip of Parks and Recreation Areas, Foreshore Reservations and Places of Natural Beauty or Advantage. The situation is, then, that the land has been reserved for at least 58 years. That reservation has undoubtedly influenced to a very significant extent the attitude of authorities and owners as to what may or may not occur on the land or on adjacent land over that period of time.”
The last sentence of this paragraph asserts an opinion, not a fact.

(b) There then follows a number of paragraphs in which Mr Ingham quotes from letters of the State Planning Authority of NSW (the SPA) to Hunters Hill Council (the Council) between 1970 and 1973. It would appear that an issue arose as to the retention of the open space reservations in Woodford Bay, the Council agreeing to their retention upon a number of conditions including:

“[t]he showing of these reservations as County Open Space so that the total responsibility for the acquisition would be with the State Planning Authority of New South Wales and not Council.”

(c) At paragraph 3.9 Mr Ingham refers to a letter from the SPA to the Council dated 15 September 1972 which states:

“The purpose of the County Open Space and Access Reservation of the land at Woodford Bay West is twofold. Firstly it will enable the foreshore land to be brought into public ownership for open space purposes and, in fact, some land has already been acquired by the Authority and negotiations are proceeding towards acquisition of other land. Secondly a road can be constructed through these lands to provide access to the open space and to any new allotments created by subdivision of the remaining vacant portions of residentially zoned land.”
(d) After referring to what appeared to be a conflict between the SPA and the Council relating to the issue of the visual objectives of each authority and to proposed roads, the effect of which would appear to be to delineate the extent of the foreshore reservation from the area capable of subdivision by the owners of land fronting Arabella Street, Mr Ingham opined in paragraph 3.12 that

“[f]rom all of the discussion and negotiation between the Council and the State Planning Authority of New South Wales, and the owners of land in Arabella Street when the Lane Cove Planning Scheme was being prepared, it is apparent that the Council and the State Planning Authority of New South Wales viewed the land as being land which would be subdivided if the reservation were not put in place. Indeed they both agreed that any land outside of the reservation would be subdivided.”


(e) I note that, again, the above paragraph expresses an opinion by Mr Ingham rather than the assertion of a fact. Further, Mr Ingham does not express a view as to the extent of the subdivision of the foreshore land if the reservation were not put in place.

(f) At paragraphs 3.13 and 3.14 Mr Ingham relevantly states:

“3.13 The land north-west of the reservation is presently zoned Residential 2(a2) and, in my opinion, the whole of the land to the foreshore would have been placed within that zone had it not been for the reservation. …
3.14 In commenting upon this matter it is my opinion that the whole of the foreshore of Woodford Bay would have been placed within the Residential 2(a2) zone, not simply the subject land. Accordingly, subdivision of other land along the foreshore would, in my opinion, have taken place in accordance with the Council’s minimum subdivision controls, having also allowed for a foreshore building line of about 50 ft. as specified above.”
It is to be noted from the last sentence in paragraph 3.14 that Mr Ingham’s opinion was that the Council would insist on a foreshore building line of about 50 feet (just over 15 metres).

(g) The relevant parts of paragraphs 3.15, 3.16 and 3.17 are as follows:

“3.15 It is noticeable that the Longueville peninsula has many areas where there is no foreshore reservation and a number of areas where the reservation is not as deep as on the subject site. Furthermore, the difference between the Zone 9(c) (Regional Open Space Reservation Zone) and the adjacent Zone 6(b) ((Open Space (Bushland) Zone) is simply that one has already been acquired and the other has not. …
3.16 When the Lane Cove Planning Scheme was prepared it was quite clear that the Council sought to avoid any responsibility for acquiring land reserved in the original County of Cumberland Planning Scheme. …
3.17 The result of this is that while the foreshore land is now in two different zones, it is my opinion that I am required to go back behind all of the matters leading up to the reservation and the zoning of the whole of this foreshore for open space purposes. This means that I must consider all of the foreshore land in this immediate vicinity as Residential 2(a2), and determine what the likely result of this zoning would have made upon the use and development of land adjacent to the foreshore of Woodford Bay.”

18 A number of versions of the zoning map forming part of the LEP were exhibits before the primary judge. Exhibit 7 tendered by the Minister without objection from the appellant, was the whole of the original zoning map dated 29 July 1987 and revealed all of the various zonings around the waterfront of Woodford Bay. Exhibit J was tendered by the appellant and was an extract from Exhibit 7.

19 There were three relevant zones. The first was the 9(c) zone. Based on Exhibit 7 (and Exhibit J) it covered three lots both to the north and to the south of the acquired land. To the north of the land so zoned was a large area of land zoned 6(a) Open Space Recreation “A” (6(a)). Immediately to the south of the 9(c) zoned land is a relatively narrow strip extending over the foreshore of approximately seven lots which was zoned 6(b) Open Space Bushland “B” (6(b)). There then appears a larger area of 6(a) land together with two or three smaller sections of the foreshore similarly zoned. However, they do not extend along the whole of the southern foreshore of the Bay.

20 The northern shore of Woodford Bay also contained foreshore land which was zoned 2(a2) as well as sections zoned 9(c) and 6(a). It would be fair to say that along the north, south and western foreshores of the Bay there were only two relatively small lengths of foreshore which were zoned 2(a2) down to the waterfront itself.

21 The following would appear from so much of Mr Ingham’s evidence to which I have referred above:

(a) Although in paragraph 3.17 Mr Ingham opined that the foreshore land was at the date of acquisition in two different zones, in fact it was in three different zones namely 6(a), 6(b) and 9(c);

(b) The foreshore land zoned 6(b) had, as at the date the LEP came into force, already been acquired by, it would seem, the SPA or perhaps its successor, the NSW Planning and Environment Commission (the PEC), and it was then zoned in the LEP as 6(b). It is not apparent from Mr Ingham’s report whether the 6(a) land was ever acquired either by the SPA, the PEC or the Council. In fact this was acknowledged by the primary judge and not challenged on appeal when at [23] he said:

“There is no evidence to show when or by what means the land zoned 6(a) (Open Space Recreation)) was acquired, or by whom it was acquired.”
I would add that there was no evidence as to whether it had been acquired at all. Further, there was no provision in the LEP such as clause 10 (which applied only to the 9(c) land) which enabled an owner of land zoned 6(a) (or for that matter 6(b)) to require the Minister or any other public authority to acquire that land on the giving of appropriate notice;


(c) Only the 6(b) land had been acquired by the date of acquisition whereas the 9(c) land was to be acquired.

The findings of the primary judge on the issue of zoning

22 It appears that after the LEP came into force parts of the land zoned 9(c) as shown on Exhibit 7 were in fact acquired as a consequence whereof the LEP was amended by rezoning those parts of the 9(c) land which had been acquired as 6(b). So much appears from Exhibit H and figure 6 in the planning report of Mr Rohan Dickson (Exhibit 2), the town planner retained by the Minister, which are undated extracts from a later version of the zoning map of the LEP and which were confined to foreshore in the general vicinity of the acquired land.

23 According to Exhibit H, which was an undated extract from a later version of the zoning map, three lots (which included the acquired land) remained zoned 9(c) as at the date of acquisition. The other three were referred to by the primary judge (at [24]) as being zoned 9(c) and had apparently been acquired and rezoned to 6(b). However, there was no direct evidence as to the entity that acquired that land and no finding by his Honour with respect to it. This was because he was under the mistaken impression that the present zoning map under the LEP showed that there were only two kinds of open space zoning around the foreshore. He said (at [18]):

“…Some foreshore land is shown as being within zone 9(c) (Regional Open Space Reservation) – the same zoning as the acquired land. Other foreshore land is shown as being within zone 6(a) (Open Space (Recreation)).”

24 It is apparent from the foregoing that his Honour misinterpreted the zoning maps exhibited before him in two respects. First, at the date of acquisition the number of lots still zoned 9(c) had reduced from six to two (excluding the acquired land). His Honour at [24] considered that apart from the acquired land there were at most six other lots within the 9(c) zone along the north-western foreshore of Woodford Bay which, but for that zoning, would otherwise have been notionally developable in accordance with the underlying zoning of 2(a2). In fact there were at most only two such lots the other four having been rezoned 6(b).

25 Second, his Honour failed to appreciate that there were three kinds of open space zoning around the foreshore being 6(a), 6(b) and 9(c). Zone 6(b) was not referred to at all by his Honour in his reasons. It was submitted on behalf of the appellant that his failure to recognise that zoning involved the misinterpretation of the map that formed part of the LEP and thus constituted an error of law.

26 The Minister submitted that his Honour had not made an error at [18] of his reasons upon the basis that there were in fact only two kinds of open space zoning being those to which his Honour had referred. It was submitted that the 6(b) zoning was not a true open space zoning but, as the index to the map (Exhibit 7) demonstrated, was in truth a “BUSHLAND” zoning.

27 When taken in context I have little doubt that his Honour made the error that the appellant attributes to him. This is not entirely surprising given the manner in which the case was conducted before him. Consideration of the relevant parts of the Black Book containing counsels’ addresses demonstrates that the appellant was pressing upon the primary judge the submission that upon the basis of Mr Ingham’s evidence, he should find that s 56(1)(a) of the Just Terms Act required him to ignore all of the land along the foreshore which had been reserved since 1951 and that he should assume that at the date of acquisition it was all zoned 2(a2).

28 It was further pressed upon his Honour that he should take the view that had the foreshore land not been so reserved, development along it would have had a very different look to that which existed at the date of acquisition. In particular it was submitted that the foreshore land would have been subdivided, there would have been more development and possibly a reduced band of bushland along the waterfront.

29 However, although there was the odd reference to the 6(b) zone, it did not of itself receive any particular emphasis in counsels’ addresses. Furthermore, his Honour was not taken to Exhibit H and figure 6 in Exhibit 2 which, as I have noted at [22] above, were extracts from a more up-to-date zoning map of the area in the general vicinity of the acquired land.

30 In these circumstances one can understand why his Honour appears to have relied upon Exhibit 7 which showed more land zoned 9(c) than was in fact the case. Nevertheless, as I have already observed, there was a strip of land immediately to the south of the 9(c) land as shown on Exhibit 7 that was zoned 6(b) and which his Honour apparently overlooked.

Some further evidence of the planners

31 In his report (Exhibit A) Mr Ingham under the heading “POTENTIAL FOR FORESHORE BUILDING LINE” stated the following:

“4.1 It is known that at the time of the preparation of the Lane Cove Planning Scheme owners of land along the western foreshore of Woodford Bay were considering subdivision of their land. The results of this type of action along the Woodford Bay area, if the reservation had not been in place, could have resulted in a number of properties being subdivided and developed along the foreshore prior to 1986 as evidenced by other parts of the Longueville foreshore area. However, it must be remembered that a reservation had existed along the foreshore since 1951.
4.2 It is therefore very likely that while a foreshore building line would have been applied to the subject land and other lands along the Woodford Bay foreshore that the protection of land would have resulted in a foreshore building line of about 20-30 metres (50 ft. was Council’s view in 1971). The 30 metres is the absolute maximum the foreshore building line would have been because the reservation is at 30 metres whereas the more likely result would have been somewhat below that. This would have protected a belt of vegetation along the whole of the foreshore which would have resulted in a green space as seen from the Bay.
4.3 It is to be noted that under the Lane Cove LEP 1987 – Amendment No. 17 dealing with heritage matters the area of Woodford Bay foreshore is identified as an item of landscape significance. Clause 18G of this amendment provides the following requirement:
‘The council, when considering any application for consent to the erection of a structure or the carrying out of a work which will be visible from the site of an item described in Schedule 7, being a site shown on map H/S 3 (heritage items of landscape significance) shall take into account the impact which that development will have on the heritage significance of the Lane Cove River or that landscape feature’. ”

32 Three observations can be made with respect to the foregoing. The first is that in paragraph 4.1 Mr Ingham, when opining as to what type of action would have taken place along the Woodford Bay area if “the reservation had not been in place”, put it no higher than that it “could” have resulted in a number of properties being subdivided and developed along the foreshore prior to 1986. Critically, as will appear, Mr Ingham did not opine that the lots running from Arabella Street to the foreshore would have been subdivided into three lots as was advocated by the appellant as being the form of the development of Lots 211 and 212 which would have occurred but for the reservation.

33 The second is that Mr Ingham seemed to accept that even if the reservation had not taken place, there still would have been a 30 metre (maximum) foreshore building line in order to provide a protected belt of vegetation along the whole of the foreshore.

34 The third is that at paragraph 4.3 Mr Ingham appeared to have accepted that clause 18G of the LEP would be applicable to any consideration by the Council of any further subdivision of Lot 212 into two lots as proposed by the appellant. In this respect there were a number of planning controls applicable to the area within which the acquired land was located and referred to by the primary judge at [28] of his reasons. His Honour said the parties accepted that those controls applied to Lot 212 and would have been taken into account as at the date of acquisition in any application for a hypothetical subdivision of that allotment. Those controls included the Sydney Regional Environmental Plan (Sydney Harbour Catchment) 2005, the LEP itself and the Lane Cove Development Control Plan No.1 – Control of Development Adjacent to Bushland (the DCP). It was not suggested on the appeal that any of those controls could or should be ignored for the purpose of the hypothetical subdivision exercise.

35 The two planners prepared a joint report dated 9 July 2009 that became Exhibit D. They agreed that given that Lot 212 had an area of 1,437m², it had the numerical capacity for two attached dwellings on a land area totalling 750m² or greater, or two separate dwelling houses on a land area totalling 900m² or greater consistent with clause 9(c) – Minimum site area and subdivision of the allotment of the LEP. They further agreed that a reservation had existed over the foreshore area of this land area since the County of Cumberland Planning Scheme (the County Scheme) was made in 1951.

36 The reason why, theoretically, Lot 212 could be divided into two lots was because the minimum area of those lots was 550m² whereas the total area of Lot 212 was 1,437m². When dealing with the matters of disagreement, the report under the heading “ISSUE 2: Local Character” sets out, relevantly, Mr Ingham’s view as to that issue in the following terms:

“39 The foreshore land has been reserved since 1951. Even at 1951, Longueville was a well established and developed suburb. Only small pockets of the locality were undeveloped. Generally, where land was not constrained by a reservation it has been developed, … While it is not possible to state with certainty that the foreshore area, within which the subject land is found, would have been developed with dwelling houses prior to now, it is my opinion that the foreshore of Woodford Bay would have been very different if there had been no reservation on the foreshore land.
40 Perhaps the major visual impact on Woodford Bay between 1951 and today is the extent to which the Bay is littered with moored boats. The argument of Mr Dickson concerning a de facto building line ignores the consideration of going back behind the reservation and determining what would have occurred if there had never been a reservation. …”

37 With respect to the same issue, Mr Dickson referred to the DCP expressing the view that a dwelling house on a foreshore allotment (being the hypothetical development contended for by the appellant) would be inconsistent with a number of objectives aimed at protecting the character of the area contained in the DCP for, relevantly, the following reasons:

“(c) To acknowledge the importance of bushland to the character and value of the locality and its importance to the region.
● Despite what may have occurred on the site had there not been a reservation, the existing character of this portion of Woodford Bay is currently defined by a dense buffer area between the foreshore area and land along Arabella Street, Longueville.
● Assessing the suitability of the proposal has been undertaken relative to the existing site context, rather than what may have occurred on the land had the site not been a reservation. This assessment shows:
○ Development within the buffer area will remove significant amounts of vegetation and established trees and introduce a dwelling structure. Essentially, the buffer area will be eliminated.
○ Reducing the width of the buffer area will be inconsistent with the generous width of buffer and bushland area of northerly adjoining developments. A row of seven dwellings adjoining the site to the north comprise single dwellings, enabling generous vegetation buffer widths.
○ The character of the eastern side of Woodford Bay is defined by dwellings and boat mooring structures situated on the foreshore, with minimal bushland or vegetation buffer areas. In contrast, the character of the western side of Woodford Bay comprises an apparent and significant band of dense vegetation. Development on the foreshore allotment will establish an undesirable precedent for similar development, and reduce the importance of the bushland character for this portion of Woodford Bay.”

38 Of course, the appellant’s contention was that the suitability of a three lot subdivision between Arabella Street and the foreshore needed to be assessed upon the basis of no foreshore reservation with the consequence that his Honour should have accepted that the existing character of this portion of Woodford Bay which Mr Dickson opined was currently defined by a dense buffer area of vegetation between the foreshore and the land along Arabella Street, would have been significantly different in that, at the very least, the extent of that vegetation buffer would have been reduced.

The effect of the High Court’s decision in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority

39 At [19] of his reasons the primary judge referred to the Minister’s submission that in disregarding the blight caused by the compulsory acquisition process as required by s 56(1)(a) of the Just Terms Act, the Court was limited to disregarding the effect of the proposal of the relevant acquiring authority – here, the Minister – on planning controls in the area and that restrictions and limitations imposed by other authorities for which the Minister was not responsible, such as those of the Council, were not to be disregarded.

40 In the joint judgment of the Court comprising Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ in Walker Corporation at [53], their Honours set out the respondent’s submissions the relevant part of which was as follows:

“(v) this is because the market value disregard in para (a) [of s 56(1)] looks to the public purpose for which the Land might by law be acquired by the Foreshore Authority by compulsory process under the [Just Terms Act] and to ‘ the proposal’ to carry it out; (vi) ‘ the proposal’ here was not that of the Council as the proposed resuming authority, or some aggregation over time of the policies of the Council and later of the Carr Government; (vii) to give the statutory expression that operation, as had the primary judge in fixing upon ‘unity of purpose displayed by the two arms of government’, was an error of law.”

41 At [54] the Court accepted that reasoning. They continued:

“This reasoning should be accepted. The construction of the market value disregard in para (a) for which the Foreshore Authority correctly contends, links ‘the proposal’ to that of the resuming authority. It puts aside anterior discussions or agitations by the Council and others in favour of classifying the Land as public space. In this way there is reflected in the terms of para. (a) of s 56(1) a policy to require a disregard only of that increase or decrease (as in this case) in value for which the resuming authority is responsible.”

Did the primary judge err in law with respect to his analysis of the relevant zoning?

42 At [19] of his reasons, the primary judge, after referring to the foregoing passages, said:

“That is, according to the submission [of the Minister], the Court can only disregard the 9(c) zoning but must assume that the 6(a) zoning was and is in place, so that only part of the foreshore land would otherwise have been notionally developed as residential land. The 6(a) land is, I understand, land which is already owned by the Council and used for open space recreation.”

It is apparent from the foregoing that his Honour overlooked the 6(b) land that was also apparently owned by the Council as at the date of acquisition.

43 Accepting the principle that the public purpose for which the acquiring authority is responsible must be disregarded, at [22] his Honour posed the question as to what was the public purpose of the acquiring authority – in the present case the Minister. He continued in these terms:

“… According to the notice of compulsory acquisition published in the Gazette, the land was acquired ‘ for the purposes of the Environmental Planning and Assessment Act 1979 ’. The only possible purpose for acquisition under that Act is to fulfil the stated objective of the 9(c) zone as described in the LEP: ‘ to identify, preserve and plan future development of privately owned land of Regional Open Space significance which should eventually be acquired by the State ’. ” (Italics in the original)

44 There was no challenge by the appellant to his Honour’s description of the relevant public purpose. She nevertheless submitted that that purpose was essentially the same as that for which the land now zoned 6(b) had been reserved under the County Scheme since 1951 and which had been acquired by the State (meaning thereby the SPA and/or the PEC). This submission ran contrary to the primary judge’s finding at [23]:

“The 9(c) zone is the only zone, together with the 9(b) (Arterial Road Reservation), in the LEP which appears to involve the acquisition of land by the State. There is no evidence to show when or by what means the land zoned 6(a) (Open Space (Recreation)) was acquired, or by whom it was acquired. I have noted in par [21] above that I am bound by the joint judgment of the High Court in Walker Corporation . That is, I can only disregard any increase or decrease in value for that for which the acquiring authority is responsible, namely the proposal to give effect to the acquisition of the land within the 9(c) zone in accordance with its zoning. The same case requires that I do not disregard the fact of the zoning of other land in the vicinity zoned 6(a).”

45 For present purposes I am prepared to assume that the acquisition of what became the 6(b) land was for the same public purpose as was the Minister’s proposal to acquire the 9(c) land. Furthermore, I do not consider that it matters whether what became the 6(b) land was acquired by the SPA or the PEC. The SPA was created by the State Planning Authority Act 1963 and by s 4(1)(b) was, for the purposes of any Act, deemed to be a statutory body representing the Crown. The State Planning Authority Act was repealed by the NSW Planning and Environment Commission Act 1974 which came into force on 23 April 1974 and which replaced the SPA with the PEC which, by s 5(2)(a), was, like the SPA, also deemed for the purposes of any Act to be a statutory body representing the Crown.

46 The NSW Planning and Environment Commission Act 1974 was repealed by the Miscellaneous Acts (Planning) Repeal and Amendment Act 1979 which commenced operation on 1 September 1980. At the same time the Environmental Planning and Assessment Act 1979 was enacted which, by s 8, incorporated the Minister as a corporation sole with the corporate name “Minister administering the Environmental Planning and Assessment Act 1979” which by s 8(2)(e) was also, for the purposes of any Act, a statutory body representing the Crown.

47 It follows that each of the SPA, the PEC and the Minister were organs of the State and each succeeded the other as the relevant responsible authority for the compulsory acquisition of land on behalf of the Crown. In these circumstances, in my opinion the SPA, the PEC and the Minister can be taken as one for the purposes of the application of s 56(1)(a) of the Just Terms Act provided otherwise that those authorities or any one of them are responsible for the decrease in value of land compulsorily acquired caused by the carrying out of, or the proposal to carry out, the relevant public purpose.

48 The appellant relied on the appeal upon its submissions at trial to support the proposition that the primary judge had erred in law in three respects. First, he had failed to ignore all of the historical planning restrictions upon the foreshore land prior to the coming into force of the LEP in 1987. Second, he had failed to recognise that land zoned 9(c) in the original LEP had been rezoned 6(b) when that land had been acquired after 1987 by or on behalf of the State. Third, he had failed to appreciate that the environment in the vicinity of the acquired land would have been different to what it was at the date of acquisition had those failures not occurred. However, as conceded at trial, how different the appellant was unable to say.

49 The legal significance of these errors and, in particular the first two, was that by overlooking the fact that land in the immediate vicinity of the acquired land was zoned 6(b) which had been reserved for a public purpose and acquired by the SPA, the PEC or the Minister, his Honour had failed, as required by s 56(1)(a) of the Just Terms Act, to disregard not only the land zoned 9(c) but also other land along the western foreshore of Woodford Bay which was zoned 6(b).

50 Given the differences between Exhibits 7 and J on the one hand and Exhibit H and figure 6 of Exhibit 2 on the other with respect to the land zoned 9(c) and 6(b) as at the date of acquisition, in my view the primary judge did err in the manner alleged in the preceding paragraph. This was because he misinterpreted the map that formed an integral part of the LEP as at the date of acquisition. His error was in substance and in principle no different than if he had misconstrued the text of a provision of the LEP and, as such, was an error of law.

The alleged consequences of the primary judge’s error

51 In the appellant’s submissions on the appeal it was not suggested that the primary judge erred in failing to disregard any decrease in value caused by the restrictions on developing the 6(a) land. But it was submitted that as a consequence of his error in misreading the map which formed part of the LEP, his Honour only disregarded any decrease in value caused by the restrictions on developing the 9(c) land and failed, albeit by oversight, to disregard any decrease in the value caused by the restrictions on developing the 6(b) land. He therefore analysed the appellant’s three lot hypothetical subdivision upon the assumption that only the 9(c) land in the vicinity of the acquired land was zoned 2(a2).

52 At [32] of the appellant’s written submissions, the following was asserted:

“Had the primary judge assumed that all the foreshore land (that is the 9(a) [sic 9(c)] and 6(b) land in the vicinity of the subject land) had been developed as 2(a2) land, his conclusion as to the development potential of the subject site is likely to have been very different.”

However, how different was never explored as it was recognised that to do so would involve mere speculation or conjecture.

53 The legal foundation for this submission was the proposition expounded by Hardie J in Woollams v The Minister (1957) 75 WN (NSW) 103; (1957) 2 LGRA 338 that in disregarding the blight caused by the resumption process, the Court disregards its effect on other land, and takes into account development that would otherwise have occurred in the area (such as the provision of roads and other infrastructure): see also, Roads and Traffic Authority (NSW) v Mosca [2006] NSWCA 159; (2006) 146 LGERA 335 at [50]-[54] per Handley JA, with whom Mason P and Bryson JA agreed. Of course, the significance of this proposition to the assessment of compensation is dependent upon the extent to which the evidence establishes as a matter of probability the particular development in the area of the acquired land that would have occurred but for the public purpose for which the appellant’s land was acquired. In the present case, the evidence was non-specific and, as I have observed, descended into the realm of speculation and conjecture.

54 Thus it is significant to note that in his submissions at trial senior counsel for the appellant contended, based on Mr Ingham’s evidence to which I have referred, that although it was clear that the land adjoining Woodford Bay and between the foreshore and Arabella Street would have been very different if it had been zoned residential 2(a2), one could not know with any certainty how that land would have been developed and/or subdivided as at 2008 had the foreshore strip not been the subject of the reservation which, it was submitted, was required to be ignored.

55 In particular and significantly, neither senior counsel nor Mr Ingham contended for any specific form of development or any specific subdivision pattern, but couched his opinion (in the case of Mr Ingham) and his submissions (in the case of counsel) in very general terms simply asserting that it would have been very different given the restraints on development resulting from the reservation.

56 Although it was accepted that the land between Arabella Street and the foreshore was reasonably steep, it was contended that there was nothing to suggest that the lack of development in the vicinity of Lot 21 was other than the result of the various reservations over the approximately 30 metre wide strip of bushland along the foreshore.

57 When his Honour asked counsel (at Black 20Y) whether, absent the reservation, the facts would be different in that the bushland would not be there, senior counsel for the appellant’s response was “Yes or it would be in a very much reduced state and therefore one still applies” the DCP and other planning instruments to which I have referred at [34] above.

58 In response senior counsel for the Minister submitted (at Black 21I-K) that although the appellant had contended that there might have been some bushland remaining, but much reduced, nevertheless Mr Ingham did not say in specific terms that there would have been multiple three lot subdivisions of the kind now proposed by the appellant as the basis for determining the market value of the acquired land. In my view, reading Mr Ingham’s evidence bears out that observation.

59 It was further submitted by senior counsel for the Minister that, consistent with Mr Ingham’s evidence with respect to the necessity for a foreshore building line, even absent the reservation, there would still have been a band of bushland along the foreshore which the Council would have sought to protect when dealing with any subdivision application that abutted it.

60 It was therefore submitted that one would have been left in July 2008 with a situation in which protection of the bushland character of the foreshore would have been a serious consideration for the Council in determining any application for subdivision of the adjoining land and that this was so even if the various planning controls along the foreshore were to be ignored.

61 In reply senior counsel for the appellant submitted (at Black 104) that based on Mr Ingham’s evidence, if one disregarded the impact of the public purpose going back to 1951, then one would be left with a foreshore building line within which there would undoubtedly have been retained some vegetation but otherwise there would have been development in the immediate vicinity. However, it was accepted that

“one cannot know exactly what the position would otherwise have been but clearly one would recognise there would have been a significant degree of development.”

62 A little further on (at Black 105U-V) senior counsel for the appellant conceded that

“nobody can say what would have been the case had the reservation not been there.”

63 The foregoing matters assume some relevance when one comes to consider the manner in which the primary judge determined the market value of the acquired land, a matter to which I now turn.

The primary judge’s determination of market value

64 As I have already noted, the primary judge assumed a 2(a2) zoning of all land zoned 9(c) along the foreshore of Woodford Bay as depicted on Exhibit 7, which was more extensive in the vicinity of the acquired land than was in fact the case, as some of that land had been acquired and rezoned 6(b). At [26] he noted the appellant’s submission, supported by Mr Ingham’s opinion, that absent the 9(c) zoning the acquired land and the residue land (being the balance of Lot 212) could have been further subdivided to create a third lot between Arabella Street and the foreshore. If the surrounding land had not been so zoned, then it too would have been subdivided into upper and lower lots with houses developed on the lower lots.

65 At [27] his Honour summarised Mr Dickson’s evidence to the effect that establishing a dwelling on the foreshore allotment would be inconsistent with the local character of the area as it would be the third in a series of buildings along the linear stretch of land running from Arabella Street to the foreshore. While some of the land nearby had been subdivided into two lots, Lot 21 would be the only linear stretch of land to contain three dwelling houses. A dwelling on the notional foreshore allotment would be significantly closer to the foreshore than any nearby dwellings.

66 His Honour then referred to the planning instruments current at the date of acquisition to which I have already referred at [34] above and which the parties accepted applied to Lot 212 and which would have been taken into account by the Council in any application for a hypothetical subdivision of that lot into two lots.

67 As I understand the submission at trial on behalf of the appellant, it was accepted that those controls applied but that they needed to be applied in the context of what would have been the nature and extent of the development in the vicinity of the acquired land had the 9(c) zoning and its predecessor reservations imposed by the County Scheme in 1951 been ignored.

68 The primary judge then turned to the relevant planning controls in greater detail. Of particular relevance to his reasoning process in rejecting the hypothetical three-lot subdivision proposal was his reference (at [34]) to the objective of the 2(a2) zone in the LEP, the parties accepting that that would have been the underlying zoning of the acquired land as well as the three or four lots on either side. That objective was as follows:

“The objective is to retain the existing residential amenity of detached single family dwelling areas. New dwelling-houses or extensions of existing dwelling-houses will be permitted only where they would not be highly visible when viewed from the Lane Cove River or Parramatta River .” (Emphasis added)

69 His Honour at [35] then set out clause 18G of the LEP which was in the following terms:

“The council, when considering any application for consent to the erection of a structure or the carrying out of a work which will be visible from the site of an item described in Schedule 6, being a site shown on the heritage map (Items of Landscape Significance) must take into account the impact which that development will have on the heritage significance of the Lane Cove River or that landscape feature.”

At [36] he noted that the Woodford Bay foreshore was listed as an item of landscape significance in Schedule 6 to the LEP.

70 As I have noted above it was not contended at trial by the appellant that these provisions were not relevant to a consideration of whether the Council was likely to have approved the proposed hypothetical subdivision. In particular, it was not suggested that had there been no reservation of the foreshore land, the objective of the 2(a2) zone would have been any different to what it in fact was. In other words that objective, which had been in force since 1987 and, so the evidence established, consistently enforced by the Council, would have been influential in determining whether a third lot would be approved by the Council resulting in a dwelling house erected thereon which, so his Honour ultimately held, would have been highly visible when viewed from the Lane Cove River and, therefore, inimical to the zoning objective.

71 While accepting that Lot 212 was physically capable of being subdivided into two allotments in terms of the minimum area requirements in the LEP, his Honour concluded at [39] that the likelihood of any consent being granted for a subdivision of that allotment was extremely remote and that in that respect he preferred Mr Dickson’s evidence to that of Mr Ingham. He then set out his reasons for that conclusion which may be summarised as follows:

(a) The proposed subdivision would be contrary to the planning controls in the Sydney Regional Environmental Plan (Sydney Harbour Catchment) 2005 applicable to Lot 212 including the objectives of the zone within which that land was located and clauses 25 and 26;

(b) A view conducted by the Court, particularly from Northwood Wharf from which one obtained a direct line of sight to Lot 212, revealed that the vegetation between the existing house on that allotment and the foreshore had been thinned out compared with the vegetation on the adjoining land. Accordingly, an additional dwelling house (below the existing dwelling house) would be visually prominent and would, self-evidently, result in a continuous line of buildings from Arabella Street towards the waterfront that existed nowhere else along the north-western side of Woodford Bay;

(c) A third dwelling in the linear stretch of land between Arabella Street and the Bay would stand out as an anomaly relative to the rest of the area;

(d) The proposed hypothetical development would be contrary to the objectives of the 2(a2) zone and to the provisions of clause 18G of the LEP in that any new dwelling on the proposed new allotment would be visually prominent and thus be highly visible when viewed from the Lane Cove River and from Northwood Wharf;

(e) The development would be contrary to the objective of the DCP which, together with the other planning controls, had been consistently enforced by the Council whenever any development had been proposed in or adjacent to any bushland in its area. The foreshore area along Woodford Bay was a valuable stretch of urban bushland that the Council was committed to preserve and protect;

(f) It was self-evident that it would be necessary to extend the construction of Nott Lane to provide access to any proposed new allotment, which would necessarily involve the loss of some trees and would also be visible from the Lane Cove River and from Northwood Wharf.

72 It is desirable to set out [43] of his Honour’s reasons that I have summarised in sub-paragraph (e) of the preceding paragraph. His Honour said:

“It also follows that any such development would be contrary to the provisions of the Sydney Harbour DCP, noted in pars [32] and [33] above. A third dwelling on the linear strip between Arabella Street and the bay would not be consistent with the scale, design and siting of that which exists in the area and would fail to preserve the continuous line of natural vegetation along the north-western side of the bay. In so concluding, I am mindful of the fact that I must assume that the other land zoned Regional Open Space 9(c) in the area had an underlying zoning of Residential 2(a2). As I have noted, this might have afforded an opportunity for two lot subdivisions on such land, but not three lot subdivisions as suggested by the applicant here.”

73 At [48] the primary judge concluded that taking all of the preceding matters into consideration, it was highly unlikely that a consent for further subdivision of Lot 212 would have been approved by the Council and also highly unlikely that the Court would overturn any decision to refuse such a development. Accordingly, a hypothetical purchaser, properly advised, would conclude that Lot 212 had little, if any, potential for further subdivision.

Did the primary judge’s error vitiate his decision?

74 The consequences of an error of law in a case such as the present which is governed by s 56(1) and (2) of the Just Terms Act were recently discussed by this Court in Sydney Water Corporation v Caruso [2009] NSWCA 391; (2009) 170 LGERA 298. On this issue there was a difference of opinion between Allsop P and myself. The third judge, Sackville AJA, did not find it necessary to choose between our different approaches.

75 In that case my view was that the onus lay upon a party asserting invalidity (in the present case the appellant) to satisfy the Court that the finding sought to be set aside was based on the relevant error. In other words, it is for the party asserting error to satisfy this Court that the error had affected the relevant decision in the sense that it was one upon which the decision depended: see Caruso at [108]-[113]; [131]-[138].

76 The President took a different view. After analysing the relevant authorities at [8]-[24], at [26] he considered that those authorities did not require any inflexible approach requiring an appellant to establish positively that the decision would have been different had the error not occurred. He then continued:

“To establish ‘vitiation’ one does not need to establish that the decision would have been different. What must be established is that the error is sufficiently material or operative to warrant the large step of setting aside in whole or in part the decision below. … [T]his requires the establishment of the vitiation (viz impairing, spoiling, corrupting or invalidating) of a decision. Depending on the nature and quality of the error, its relationship to the issues and the extent and quality of the reasoning of the tribunal an assessment must be made of the importance of the error and the degree of affectation of the decision. The burden or degree of persuasion will depend upon the circumstances of each case.”

77 At [27] his Honour accepted that it was often difficult to be positive to the point of clarity that the relevant error had affected the outcome. This, his Honour said,

“can be a product of the almost necessarily inexact and imprecise expression of reasons for views about valuation … If, however, the error goes to the heart of the cognitive and evaluative process and one cannot be satisfied that it did not play a relevant or material part in the decision then the appellant has established that the decision is vitiated.”

78 In my judgment in Caruso I discussed the President’s approach to this issue at [132]-[138]. However, on the facts of that case I considered that even if the President’s approach was correct, nevertheless I was satisfied, as was the President, that the finding of the trial judge was not dependent upon or affected in the relevant sense by the error alleged. I am of a similar view in the present case.

79 In my opinion the primary judge’s conclusion that it was highly unlikely that the Council would consent to the further subdivision of Lot 212 was based upon a series of findings of fact that were divorced from the issue in respect of which error is alleged. In particular, his Honour’s reasoning was essentially dependent upon his application of planning controls which, it was common ground, he was required to apply in circumstances where it was open to him to find that it was highly unlikely that the Council would approve a third lot between Arabella Street and the waterfront in circumstances where any dwelling house erected thereon would be highly visible from the Lane Cove River and Northwood Wharf. Such visibility would be contrary, in particular, to the objective of the very zone that his Honour was required to assume applied not only to the acquired land but also to at least three allotments to the north and south of the acquired land.

80 Furthermore, in my view it is critical that at trial it was accepted, as Mr Ingham’s evidence established, that the Council would insist on a foreshore building line of up to 30 metres along the whole of the foreshore within which bushland would be maintained and that Mr Ingham’s evidence was non-specific as to the nature of any development or subdivision pattern that may have occurred had the 6(b) zoning been disregarded. In this context it must be remembered that the issue of the visibility of buildings between Arabella Street and the waterfront on the north-western side of Woodford Bay had been the subject of controls since 1987 when the LEP came into force.

81 There was no evidence that supported the proposition that the visibility and bushland considerations would not have applied had the reservation of the foreshore land been ignored. Maintenance of the bushland strip along the foreshore was a given, whether it was a result of the reservation or of Mr Ingham’s foreshore building line.

82 Also of critical importance is the fact that in his evidence Mr Ingham did not assert that, absent the reservation, the subdivision pattern of the allotments between Arabella Street and the north-western side of Woodford Bay would have included a pattern of three lot subdivisions in the vicinity of Lots 211 and 212.

83 In these circumstances, I do not accept that his Honour’s error with respect to his failure to recognise the 6(b) land and ignore its zoning (but not the 6(a) zoning) was sufficiently material to or operative upon his Honour’s ultimate decision to warrant what the President referred to in Caruso as “the large step” of setting aside the primary judge’s decision.

84 Again adopting the President’s approach, the error relied upon did not go to the heart of the cognitive and evaluative process that his Honour adopted with the consequence that I am satisfied that it did not play a relevant or material part in his decision.

Conclusion

85 In my opinion, the appellant has established that his Honour committed an error of law in misinterpreting the map that formed part of the LEP by failing to recognise that part of the land that constituted the foreshore was zoned 6(b) and should have been ignored in the same way as his Honour ignored the 9(c) zoning. Nevertheless given the extent and quality of his Honour’s reasoning to his conclusion that it was highly unlikely that the Council would approve the subdivision of Lot 212 into two allotments thereby creating an additional dwelling which would be visually prominent contrary to the planning controls applicable at the time, I do not believe that that error vitiated that conclusion.

86 In these circumstances it follows that notwithstanding the error of law that the appellant has established, the Court would not exercise its power under s 57(2) to set aside his Honour’s decision and remit the matter to the Land and Environment Court for further determination.

87 I would therefore propose that the appeal be dismissed with costs.

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