Inner West Council v Transport for NSW

[2024] NSWLEC 138

Land and Environment Court

New South Wales

Medium Neutral Citation:

Inner West Council v Transport for NSW [2024] NSWLEC 138

Hearing dates:

4, 5, 8, 9, 10, 11 and 12 April 2024

Date of orders:

19 December 2024

Decision date:

19 December 2024

Jurisdiction:

Class 3

Before:

Duggan J

Decision:

See orders at [218] and [219]

Catchwords:

COMPLUSORY ACQUISTION – assessment of compensation for acquired land under Land Acquisition (Just Terms Compensation) Act 1991 – claim for reinstatement value under s 56(3) – factual preconditions of reinstatement not made out – particular purpose for which acquired land was used a detention basin – Council failed to demonstrate genuine intention to use other land for such a purpose – alternative claim for market value under s 56(1) – valuation methodology based on comparable sales – ‘heavily constrained’ sites deemed most appropriate – adjustments made – parties agreed as to disturbance under ss 55(d) and 59

Legislation Cited:

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

Local Government Act 1993 (NSW)

Roads Act 1993 (NSW)

Callan Park (Special Provisions) Act 2002 (NSW)

Cases Cited:

Chamwell Pty Ltd v Strathfield Council (2007) 151 LGERA 400

Leichhardt Council v Roads and Traffic Authority of New South Wales [2006] NSWCA 353

Leichhardt Council v Roads and Traffic Authority of New South Wales (No 3) [2009] NSWLEC 3

New South Wales Cremation Company Pty Limited v Valuer General [2016] NSWLEC 135

Roads & Traffic Authority of New South Wales v Blacktown City Council [2007] NSWCA 20

Royal Agricultural Society (NSW) v Sydney City Council (1987) 61 LGRA 305

Spencer v The Commonwealth (1907) 5 CLR 418

Sydney Metro v G & J Drivas Pty Limited [2024] NSWCA 5

Sydney Water Corporation v Marrickville Council [2014] NSWCA 438

The Crown v Murphy (1990) 64 ALJR 593

Valuer-General v Fivex Pty Ltd (2015) 206 LGERA 450

Willoughby City Council v Roads and Maritime Services [2014] NSWLEC 6

Texts Cited:

Macquarie Dictionary (online)

Category:

Principal judgment

Parties:

Inner West Council (Applicant)
Transport for NSW (Respondent)

Representation:

Counsel:
R Lancaster SC and T To (Applicant)
J Steele SC and M Astill (Respondent)

Solicitors:
Inner West Council (Applicant)
Norton Rose Fulbright (Respondent)

File Number(s):

2022/000267014

Publication restriction:

Nil

TABLE OF CONTENTS

Nature of proceedings - [1]

Facts - [4]

Background to acquisition - [6]

Planning instruments - [13]

Physical attributes of Acquired Land and Parent Parcel prior to Public Purpose

Acquired Land - [16]

Parent Parcel - [18]

Contamination - [19]

Carrying out of work giving effect to Public Purpose - [25]

Funding Deed - [38]

Issues for determination - [44]

Issue 1 – Is the Council entitled to compensation for market value under s 56(3) of the Just Terms Act, such that the market value is taken to be the reasonable cost to the Council of equivalent reinstatement of the particular purpose for which the Acquired Land was used prior to the Date of Acquisition? - [45]

What was the particular purpose for which the Acquired Land was used? - [50]

Approach to determining purpose - [55]

Determination of the purpose - [61]

Does the Council genuinely propose to continue after the acquisition to use other land for the purpose of a Detention Basin? - [76]

Issue 2 – If the Council is entitled to compensation for market value under s 56(3) of the Just Terms Act what is the reasonable cost to the Council of equivalent reinstatement of the particular purpose for which the Acquired Land was used? - [80]

Issue 3 – If the Council is not entitled to compensation for market value under s 56(3) of the Just Terms Act what is the market value of the Acquired Land under s 56(1), having regard to the following matters:

(a)   The relevant comparable sales for the purpose of determining the market value of the Acquired Land;

(b)   Whether any rate per square metre derived from comparable sales should be adjusted to account for a range of physical, environmental and planning constraints that pertain to the Acquired Land; and

(c)   If adjustments are required, the appropriate adjustments to the comparable sales.

What is to be valued – application of s 56(1)(a) of the Just Terms Act? - [81]

Master Plan/Funding Deed - [83]

Valuation methodology - [94]

Accumulation and adjustment of comparable sales - [96]

Adjustment of comparable sales - [104]

Consideration of comparable sales

Comparable to what? - [109]

Characteristics of the Acquired Land - [123]

Topography (slope) - [126]

Detention Basin/flooding - [128]

Contamination/geotechnical constraints - [133]

Contamination - [137]

Geotechnical - [143]

Other necessary adjustments - [160]

Analysis and adjustment of comparable sales - [162]

Comparability of Mr Dyson’s sales - [165]

Residential Replacement Properties - [167]

Development sites - [179]

Open Space Properties - [185]

Comparability of Mr Lunney’s sales - [188]

Issue 4 – Has there been any increase or decrease in the value of any other land of the Council as at the Date of Acquisition which adjoins or is severed from the Acquired Land by reason of the carrying out of the WestConnex for the purpose of s 55(f) of the Just Terms Act? - [211]

Issue 5 – What is the Council entitled to with respect to losses attributable to disturbance under ss 55(d) and 59 of the Just Terms Act? - [215]

Costs - [217]

Orders - [218]

JUDGMENT

Nature of proceedings

1. These proceedings relate to the quantum of compensation the Applicant, Inner West Council (Council) is entitled to as a consequence of the compulsory acquisition of 1,687m² of land that formed part of Camdenville Park by Transport for NSW (Respondent) for the WestConnex Project (WestConnex).

2. The Council makes alternative claims either for reinstatement value pursuant to s 56(3) of the Land Acquisition (Just Terms Compensation) Act1991 (NSW) (Just Terms Act) or as market value pursuant to s 56(1). The quantum of such claims comprise:

1. Section 56(3) – the amount of $13,550,000; or

2. In the alternative, under s 56(1):

1. the amount of $12,200,000; or

2. in the further alternative the amount of $10,517,000; and

3. disturbance as agreed.

3. The Respondent contended that the Council was not entitled to compensation pursuant to s 56(3) and, by the conclusion of the proceedings, contended that the value to be determined under s 56(1) was $675,613, comprising:

1. $641,060 for the market value of the acquired land under s 56(1); and

2. Disturbance as agreed.

Facts

4. On 7 September 2022, the Council commenced Class 3 proceedings objecting to the amount of compensation offered by the Respondent, as set out in its Compensation Notice dated 27 June 2022, in relation to the compulsory acquisition of Lot 2 in DP 1273810 (Acquired Land).

5. The relevant facts in these proceedings are set out below, drawing upon the Agreed Statement of Facts provided by the parties.

Background to acquisition

6. On 2 June 2021, DP 1273810 was registered, being a plan prepared of land to be acquired for the purpose of the Roads Act 1993 (NSW), inclusive of the Acquired Land. DP 1273810 subdivided Lot 1 in DP 1258288 and DP 1258288 subdivided Lot 9 in DP 879483 (Parent Parcel), known as Camdenville Park, the whole of which was owned by the Council (until 19 November 2021).

7. The area of the Acquired Land (Lot 2) is 1,687m² and the residue portion (Lot 1) is 32,800m² or 3.28ha (Residue Land).

8. On 19 November 2021 (Date of Acquisition), by notice published in the NSW Government Gazette No. 589, the Respondent compulsorily acquired the Acquired Land.

9. The public purpose for which the Acquired Land was acquired was the construction, operation and maintenance of a road identified as the WestConnex. Part of WestConnex was the Stage 2 “New M5”, later known as the “M8 Motorway” (Public Purpose).

10. On 16 June 2022, the Valuer General determined compensation for the compulsory acquisition of the Acquired Land in the amount of $654,078 which comprised of market value under s 55(a) of $616,500, and disturbance under s 55(d) of $37,578

11. On 27 June 2022, the Respondent provided the Council with a Compensation Notice relating to the compulsory acquisition of the Acquired Land and enclosed an offer of compensation in the amount as determined by the Valuer General.

12. Prior to the acquisition of the Acquired Land, the Respondent occupied parts of the Residue Land and the Acquired Land for the Public Purpose pursuant to the following construction leases which were compulsorily acquired, (collectively referred to as the Construction Lease). The areas occupied pursuant to the Construction Lease are identified as Area A (the Acquired Land) and Area B (the Residue Land) in the Sketch SR 1923 below:

1. From 16 September 2016 until 15 March 2020, the Respondent occupied the Acquired Land (Area A on Sketch SR 1923) and a portion of the Residue Land consisting of approximately 10,250m² (Area B on Sketch SR 1923) pursuant to a compulsorily acquired construction lease;

2. From 16 March 2020 to 30 June 2021, the Respondent occupied the Acquired Land (Area A on Sketch SR 1923) pursuant to the Construction Lease entered into by agreement under s 30 of the Just Terms Act;

3. From 16 March 2020 to 31 December 2021, the Respondent similarly occupied, under the Construction Lease entered into by agreement under s 30, a portion of the Residue Land (Area B on Sketch SR 1923); and

4. From 1 January 2021 to 31 December 2021, the Respondent entered into a lease pursuant to s 30 for an area of land comprising 4,320m² at the north-west corner of the Residue Land identified on Sketch SR 1923 as Area B, which was subsequently subleased to Transgrid.

Planning instruments

13. At the Date of Acquisition, the Acquired Land was, under Marrickville Local Environmental Plan 2011:

1. Zoned RE1 Public Recreation;

2. Mapped as part of the Goodsell Estate heritage conservation area for the purpose of cl 5.10;

3. Partially within a flood planning area for the purpose of cl 5.21;

4. Mapped in part containing potential Class 2 and Class 5 acid sulfate soils for the purpose of cl 6.1; and

5. Not subject to a height of buildings or floor space ratio control.

14. The Acquired Land was also identified as being within a land acquisition reservation for Classified Road (SP2) under the Land Acquisition Reservation Map. Whilst initially the consequence of the Classified Road (SP2) reservation was the subject of dispute between the parties, by the conclusion of the hearing the parties had agreed that the road reservation did not affect land value. Accordingly, the road reservation played no further role in the proceedings.

15. Both the Acquired Land and Residue Land were classified as community land (“sportsground” and “general community use”) for the purpose of the Local Government Act 1993 (NSW) (LG Act) under the Camdenville Park Plan of Management dated July 2014 (POM).

Physical attributes of Acquired Land and Parent Parcel prior to Public Purpose

Acquired Land

16. Prior to the carrying out of the works to give effect to the Public Purpose, the Acquired Land formed an irregular “L” shape that occupied part of the south-western portion of Camdenville Park. It comprised of land located between the eastern side of Bedwin Road and the stormwater detention basin (Detention Basin) located in the south-western area of the Residue Land and along its southern length, and comprised of the land located between the northern side of May Street and the Detention Basin. The Acquired Land was grassed with trees and shrubs along the boundary adjacent to Bedwin Road.

17. As of the Date of Acquisition, there was no public access to parts of the Acquired Land, including the Detention Basin. The area of the Acquired Land that was inaccessible was 1,467.54m².

Parent Parcel

18. Prior to the carrying out of works to give effect to the Public Purpose, the Parent Parcel comprised:

1. In its western portion, the Detention Basin in the south-western corner that included trees and a stormwater pumping facility and, a portion of dense vegetation including shrubs and trees along a section of the western boundary adjacent to Bedwin Road;

2. In the north-western portion, a former council storage compound that was subsequently leased and used for construction purposes for WestConnex since September 2016; and

3. In the eastern portion, a recreational area comprised of the following: a sports field (“Camdenville Oval”), sports lighting, light poles and children's playground; raised grass embankments between the sports field and the eastern and southern boundaries and western boundary of the recreational area; and an amenities building, fencing, pathways and trees.

Contamination

19. The primary potential source of contamination of the Acquired Land stemmed from the historical uses of the Parent Parcel as a brickworks between the late 1800s to the early 1920s, followed by the operation of a waste incinerator and facility from the early 1920s to the early 1950s. During this period, materials resulting from incineration and other non-combustible waste materials were placed to infill the former brickworks’ brick and clay pits on the Parent Parcel. Those brick and clay pits had been completely infilled by the early 1960s.

20. Below is an image depicting the relationship of the Acquired Land (bounded by the red line) with the former brick pit and waste disposal site:

21. The Acquired Land is reported to be underlain by fill materials including silt, sandy clays and clays containing fragments of glass, brick, rubber, metal, tiles, plastics and concrete as well as, in certain locations, asphaltic/bituminous gravels or ash from the current surface to depths that vary between 0.6m below ground surface (bgs) to 3.7m bgs. Directly underlying the fill materials at each location are reported to be natural clays that grade with depth to weathered clays and into siltstones, weathered shale, shale and laminites.

22. Results of intrusive soil, landfill gas and groundwater investigations completed on the Acquired Land have identified the presence of concentrations of carcinogenic polycyclic aromatic hydrocarbons, metals (lead, copper, zinc) and asbestos in fill materials at a number of locations that were greater than the applicable human health- based criteria for open space and recreational land uses.

23. On 4 April 2013, the NSW Environment Protection Authority (EPA) wrote to Marrickville Council (as it then was prior to its amalgamation), in regard to the Parent Parcel, stating “there is no reason to believe that contamination at the site is significant enough to warrant regulation under the Contaminated Land Management Act 1997”, and further indicated that given the park was covered with grasses and is maintained that exposure to any underlying contaminants was unlikely under the existing open space and recreational land use.

24. During the period 2006 to 2013, Marrickville Council investigated the contamination on the Parent Parcel, which resulted in the completion of a remediation and construction environmental management plan in 2013.

Carrying out of work giving effect to Public Purpose

25. In carrying out the Public Purpose in accordance with the conditions of development consent for SSI 6788, as modified, works were carried out by the Respondent to the Residue Land, including the reinstatement of a maintenance path on the western edge of the Detention Basin and the fencing between Bedwin Road and the path; the creation of bike-safe steps from Bedwin Road to the Residue Land north of the Detention Basin; and the removal of the existing driveway from May Street in the south-west corner of the Residue Land.

26. As part of the local roads upgrade associated with the Public Purpose, Bedwin Road was realigned, and the publicly accessible landscaped area within the road reserve on the western side of Bedwin Road was increased from 323.20m², prior to the carrying out of the Public Purpose, to 1,128.92m², following those works.

27. The Council (and its predecessor Marrickville Council) has identified land that it would acquire for open space purpose by reference to development contributions pursuant to Marrickville Section 94/94A Development Contributions Plan 2014 (including by amendment in 2019).

28. A POM and Master Plan dated July 2014 (Master Plan 2014) were adopted by Marrickville Council at the council meeting on 15 July 2014.

29. The Master Plan 2014 proposed upgrade works on the Acquired Land including circuit paths to establish new pathways to link park activities and encourage recreation use by walkers and joggers; the removal of the fencing along the Bedwin Road edge; and the creation of three new park entries to improve access and views into the park as well as the embellishment of the Detention Basin as a wetlands.

30. Works proposed to the Residue Land included a BMX track in the north-western corner above the Detention Basin; bulk earthworks; clean soil cover; reconstructing the sports field; upgrading of the children's playground; landscaping; new tree; and garden plantings. Below is an image of the Master Plan 2014:

31. By May 2015, the Council had progressed the Master Plan 2014 and engaged landscape architects to design the capital upgrade works, construction plans had been developed for the BMX track, and site investigations and soil sampling for the detailed design had been completed.

32. In May 2015, the upgrade of the Detention Basin area and the establishment of a wetland, identified in the POM and Master Plan 2014, was put on hold.

33. Amendments were made to the Master Plan 2014 to include a central play space in the middle of the park and a reduction of pathways on Bedwin Road, May Street and the Detention Basin (2015 Design Upgrade), which is reproduced below:

34. In July 2015, the local community were informed in a newsletter of the Council’s decision to put on hold the Detention Basin upgrade and wetland.

35. At a council meeting in September 2015, the Council resolved to not proceed with the BMX track works due to WestConnex.

36. At a council meeting on 19 April 2016, the Council resolved to accept the tender for the capital upgrade works to the sports field.

37. Between April 2016 and May 2016, a decision was made not to proceed with the capital upgrade works to the Residue Land, and the community was advised accordingly in the May 2016 newsletter.

Funding Deed

38. On or around 2 October 2020, the Council and the Respondent entered into a “Funding Deed”, the terms of which acknowledged that the Respondent would undertake “Stage 1 Works” and required the Council to undertake “Stage 2 Works” and “Stage 3 Works” on behalf of the Respondent in compliance with the Respondent’s obligations under the SSI Approval B51 and B62(c).

39. Under the Funding Deed, Stage 1 Works included the completion of the new Bedwin Road, Unwins Bridge Road, May Street, Campbell Street intersection on a new alignment as part of the WestConnex “New M5”, St Peters local road upgrades, the reinstatement of temporary works area immediately north of Camdenville Park Basin, the reinstatement of maintenance path and batter slope along the south side of Camdenville Park Basin to allow future maintenance of the basin and fencing Camdenville Park Basin.

40. The Stage 2 Works included upgrading the Camdenville Park Basin area generally consistent with the POM and Master Plan 2014 and 2015 Design Upgrade, including detailed design and procurement of BMX facilities and landscaping.

41. The Stage 3 Works included the provision of pedestrian and cycle paths within Camdenville Park, generally consistent with the POM, Master Plan 2014 and 2015 Design Upgrade, including detailed design and procurement for paths and associated works, specifically a pedestrian path connection to the new stairs near Bedwin Road Bridge and a shared path connection from May Street south of the terraces to Council Street near Goodsell Street.

42. The preliminary cost estimate of the works to carry out the Master Plan 2014 was estimated at $3,701,925 (ex GST) as of 7 March 2014. The cost estimate of the works to carry out the Master Plan 2014 as at 2024 are $6,619,173 (ex GST).

38. The Stage 2 and Stage 3 Works had an estimated delivery date of September 2024.

Issues for determination

44. The parties agreed that the following issues arise for determination:

1. Issue 1: Is the Council entitled to compensation for market value under s 56(3), such that the market value is taken to be the reasonable cost to the Council of equivalent reinstatement of the particular purpose for which the Acquired Land was used prior to the Date of Acquisition?

2. Issue 2: If the Council is entitled to compensation for market value under s 56(3) what is the reasonable cost to the Council of equivalent reinstatement of the particular purpose for which the Acquired Land was used?

3. Issue 3: If the Council is not entitled to compensation for market value under s 56(3) what is the market value of the Acquired Land under s 56(1), having regard to the following matters:

1. the relevant comparable sales for the purpose of determining the market value of the Acquired Land;

2. whether any rate per square metre derived from comparable sales should be adjusted to account for a range of physical, environmental and planning constraints that pertain to the Acquired Land; and

3. if adjustments are required, the appropriate adjustments to the comparable sales.

4. Issue 4: Has there been any increase or decrease in the value of any other land of the Council as at the Date of Acquisition which adjoins or is severed from the Acquired Land by reason of the carrying out of the WestConnex for the purpose of s 55(f)?

5. Issue 5: What is the Council entitled to with respect to losses attributable to disturbance under ss 55(d) and 59?

Issue 1 – Is the Council entitled to compensation for market value under s 56(3) of the Just Terms Act, such that the market value is taken to be the reasonable cost to the Council of equivalent reinstatement of the particular purpose for which the Acquired Land was used prior to the Date of Acquisition?

45. The Council’s primary claim in the proceedings was that it was entitled to the market value of the Acquired Land as provided for in s 55(a) determined on a reinstatement value pursuant to the provisions of s 56(3). Section 56(3) provides:

(3)   If—

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

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

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

46. Section 56(3) was inserted into the Just Terms Act by amendment made in 2016 in response to the Review of the NSW Land Acquisition (Just Terms Compensation) Act undertaken by David Russell SC. The NSW Government Response to that report proposed an amendment and the response described the proposed amendment in the following terms:

In circumstances where:

Land used for specific purposes for which there would be no general market (such as a church, community building or sports centre); and

But for the acquisition, the land would have continued to be used for that purpose, the Government considers that an amendment to the Act to include a provision to allow for reinstatement compensation is likely to deliver a fairer outcome for the affected land owners.

The Government will therefore amend the Act to allow for reinstatement in those limited circumstances, to operate in a similar manner to s 42 of the Victorian Land Acquisition and Compensation Act 1986.

47. The proposed amendment in the terms as now contained in s 56(3) was introduced by the Hon Duncan Gay in the second reading speech to the Legislative Council on 20 October 2016. With respect to the amendment to s 56(3) the Minister stated:

…The Government will legislate to include reinstatement provisions in respect of land used for limited specific purposes. A number of jurisdictions have reinstatement provisions to account for the acquisition of properties that have a specific function and purpose.

For example, if a church were to be acquired by a government authority, it may not be possible to determine a market value because of its unique use. In these circumstances there is no general market under which to determine market value, which is the fundamental basis of the Act. It is important that such circumstances are accounted for in the Act, and there is a new provision to clarify that such community or sporting facilities will be able to be compensated for the reasonable costs to the owner of equivalent reinstatement. I note that Victorian land acquisition legislation, for example, has similar provisions and New South Wales will mirror this approach in the Land Acquisition (Just Terms Compensation) Act.

48. The Council accepted that in order for s 56(3) to apply it was required to demonstrate the relevant factual preconditions to the application of the section as set out in s 56(3)(a) and (b). It contended that it satisfied the factual preconditions in that:

1. The particular purpose that the land was used for was as active and passive public recreation;

2. That there is no general market for land used for that purpose; and

3. That it genuinely proposed to use other land for the purpose of active and passive recreation.

49. The Respondent contended that the determination of reinstatement value was inappropriate on the basis that the particular purpose that the Acquired Land was used for was as a Detention Basin and that there was no evidence that the Council genuinely proposed to continue to use other land for that purpose. In the alternative, if the Council’s characterisation of the particular purpose was accepted, there was a general market for land used for such purpose. On either basis, the Council could not satisfy the requirements of s 56(3) to permit a determination of market value on a reinstatement basis.

What was the particular purpose for which the Acquired Land was used?

50. The factual inquiry that arises for consideration under s 56(3) in order to determine the market value requires a determination of the particular purpose for which the Acquired Land was used. Section 55(a) requires the determination of market value to be undertaken “on the date of its acquisition”. In the circumstances of this case, as at the Date of Acquisition, the Acquired Land was used and occupied in large part by the Respondent pursuant to the Construction Lease for the purposes of undertaking the Public Purpose works.

51. The Council contended that the inquiry required by s 56(3) was directed towards the purpose of the use of the land made by the “owner” referred to in the subsection. Where there are circumstances, as in this case, in which the acquiring authority has made some other use of the land before and as at the Date of Acquisition, such use is not relevant to the application of s 56(3). Section 56(3) calls for the identification of the particular purpose of the use of the land made by the owner when the land was under the control and management of the owner.

52. The Respondent did not contend that the occupation by it under the Construction Lease were factual matters that disentitled the Council under s 56(3). The Respondent accepted that it was appropriate to determine the relevant factual inquiry required by s 56(3) as at the date when the Council was last in occupation of the Acquired Land.

53. Whilst the text of s 56(3)(a) does not expressly limit the factual determination of the manner in which the land was “used for a particular purpose” to a use by the “owner” I must also consider the context and object of the legislative provision. Having regard to the totality of the text of s 56(3) it is apparent that the relevant use is reflected in that undertaken by the owner as, for example, the requirement is that the “owner genuinely proposes to continue” to use other land for the purpose to which s 56(3)(a) refers. Further, the provisions of s 56(1), whilst not directly referrable to the determination of market value pursuant to s 56(3), make it apparent that the determination of market value is not to be affected adversely by the consequence of the carrying out of the public purpose. To construe the legislative provisions of s 56(3) in a manner that would disentitle an owner to the benefit of the reinstatement provision by virtue of the actions of an acquiring authority in entering and using land prior to its acquisition, would be inconsistent with this context. Accordingly, I accept the Council’s construction that the use to which s 56(3) refers is that of the owner and not, as in this case, the use by the acquiring authority.

54. In order to be consistent with the legislative intent I find that the use to be considered is the use to which the land was used for, as at the date upon which the acquiring authority took possession of the Acquired Land pursuant to the Construction Lease.

Approach to determining purpose

55. The parties were in dispute as to the relevant approach to the determination of the purpose to which s 56(3) was directed.

56. The Council contended that s 56(3) reflected the distinction in a planning context between use (the specific activities upon, and character and functions of, the land) and the purpose of the use (the end served by the use). The Council considered that authorities about the characterisation of land use in a planning context to determine purpose may provide assistance and are not irrelevant to the inquiry: see Chamwell Pty Ltd v Strathfield Council (2007) 151 LGERA 400; and Royal Agricultural Society (NSW) v Sydney City Council (1987) 61 LGRA 305.

57. The Respondent contended that the focus must be on the words of the statute and to import concepts developed under planning law to construe the Just Terms Act would be erroneous: see Valuer-General v Fivex Pty Ltd (2015) 206 LGERA 450 at [44] (per Leeming JA). A consideration of the text of s 56(3) makes it apparent that the nature of the use to which the section refers is of a narrow scope, as can be ascertained from the words “particular purpose” and the references thereafter to “that purpose”. The ordinary meaning of the word “particular” indicates a definite determination of the actual use rather than a broad characterisation without reference to the specific features of the use.

58. I accept the construction proposed by the Respondent. Having regard to the text, context and objects of s 56(3) specifically and of the Just Terms Act as a whole, the reference to a “particular purpose” should not be determined by reference to the task of characterisation undertaken in matters relating to the carrying out of a use in a planning sense. The text of s 56(3) does not refer to a use in a general sense (as is the case in planning law characterisation) but rather is qualified by choice of the words “particular purpose” as it relates to “use”. In addition, s 56(3) is a provision of specific application to particular circumstances in which compensation is to be determined on the basis of the costs of reinstatement. The concept of reinstatement is confined by the use to be reinstated, not any other broader or other use to which the land acquired may be able to be put but is not at the date of acquisition.

59. Further, to the extent that the parties have relied upon extrinsic material to assist in the construction of the provisions of s 56(3), in particular the second reading speech (as identified at [47] above), the purpose of the legislative provisions was to provide for reinstatement relating to “limited specific purposes” and “properties that have a specific function and purpose”. This indicates the intention to identify the purpose to which s 56(3) relates with a degree of specificity that would not be achieved by applying the principles relating to characterisation of uses in a planning context.

60. Accordingly, I find that the identification of the purpose to which s 56(3) refers is limited to the actual nature of the particular purpose being carried out on the land at the relevant time.

Determination of the purpose

61. In its closing submissions the Council contended that, upon a consideration of the evidence, it would be determined that the purpose for which the Acquired Land was used was for open space. The particular purpose identified by the Council in its Further Amended Points of Claim was, at par 19 identified as:

19   Prior to the Acquisition, Camdenville Park, including Lot 2, was land used for the purpose of active and passive public recreation.

Particulars

a)   Camdenville Park and Lot 2 is classified community land and categorised general community use and sportsground under Marrickville Council’s Plan of Management for Camdenville Park dated July 2014.

b)   Camdenville Park and Lot 2 are zoned RE1 Public Recreation on the land zoning map under IWLEP 2022 and the Repealed MLEP 2011.

c)   The land in Lot 2 included a line of substantial trees generally following the boundary with Bedwin Road with grassed areas around, adjacent to and integrated with other grassed and planted areas within Camdenville Park.

d)   The land on the south – western portion of Camdenville Park, including Lot 2 was identified on the 2014 Masterplan for Camdenville Park for new park entries, planting, improved access and views into the park and circuit paths for pedestrians and cyclists.

62. The Respondent contended that the Acquired Land was used for the particular purpose of a Detention Basin.

63. I accept the use as defined by the Respondent.

64. Of the factual circumstances that arise in this case the most significant consideration that informs the identification of the particular purpose is that a large proportion of the Acquired Land was fenced in a manner that prevented public access. The location of the fences and the determination of the areas that were fenced and not fenced is illustrated below:

65. The fencing (as indicated at [64] above) was a high chain wire fence. Within the area that the fence enclosed was the Detention Basin and associated pumping infrastructure. That part of the Acquired Land that was not enclosed by the fencing comprised an area of 219.46m². The unfenced portion of the Acquired Land:

1. Comprised of a triangular strip of land adjacent to the intersection between May Street and Bedwin Road and continuing along Bedwin Road from that intersection towards the railway bridge;

2. Was planted with some trees and adjacent to other plantings outside the Acquired Land within the Bedwin Road reserve; and

3. Was physically accessible from Bedwin Road. However, it provided no convenient access to the unfenced parts of Camdenville Park.

66. In order for the Acquired Land to be used for recreation purposes it is necessary that there be some capacity for members of the public to access that land and that it be suitable for such recreation.

67. The ordinary meaning of the word “recreation” as identified in the online Macquarie Dictionary relevantly defines it as:

Recreation

Noun. 1. Refreshment by means of some pastime, agreeable exercise or the like.

2. A pastime, diversion, exercise or other resource affording relaxation and enjoyment.

68. The concept of active recreation incorporates concepts of being able to enjoy the use of the land for active physical pursuits such as playing games or exercising. The concept of passive recreation incorporates concepts of enjoying the space in non-active pursuits such as sitting, reading and picnicking. Absent the ability for the land to be accessed a person cannot use that land for either active or passive recreation.

69. The Council contended that fencing and inaccessibility itself does not mean land cannot serve an open space function. In this case, it was said that having regard to the easy visibility of the grass, trees and other vegetation through the chain wire fencing and above the top of solid fencing, to the extent it existed along part of Bedwin Road, the area of the Acquired Land performed the function of, and was used for, open space and acted as a landscape buffer. The Council’s position inherently accepts that there can be no physical access. The reference to “open space” appears to be a term adopted to nominate land as being inaccessible but perceivable by users of the adjoining recreation spaces or adjoining lands. The fact that the Acquired Land is visible and provides a pleasant outlook from other land does not itself comprise a use of the Acquired Land, rather reflect the attributes of the land from which it is viewed. In order for such features to be identified as the particular use of the Acquired Land there would need to be some evidence that such was the purpose for which the Acquired Land was being utilised.

70. The Council submitted that the Master Plan 2014 in so far as it provided descriptions of the current and future use of the area in that plan was an important primary source of evidence about the particular purpose of the use of the Acquired Land that having regard to that plan, the historical purpose of the use of the Acquired Land was identified in the Master Plan 2014 variously as:

At their meeting 29 July, 1949 the City of Sydney carried a motion declaring the land be used as a recreation area. In the 1950's a playing field was installed on the site, which interfered with the storm water run-off in the area. In 1957 the City of Sydney Council installed a holding basin and pump facility to hold storm water run off. The area was formally named Camdenville Park in 1960. Flooding continued to be an issue in the area; the holding basin overfilled in May 1975, with water entering houses in Hutchison Street. This flooding occurred during the worst downpour the area had received in 43 years, and coincided with a shaft breaking on the single detention basin pump.

Parts of the existing park, such as the detention basin, has large protective fencing …

5.1   CATCHMENT AND DRAINAGE

The detention basin receives stormwater via formal drainage from the adjacent field and housing lots as well as road runoff from the north lane of May Street (between Bedwin road and Council Street).

The 23Ha urban catchment to the south and south-east of the park bypasses the basin, via formal drainage, in small storm events. In large storm events stormwater from this large catchment spills into the basin via a spillway on May Street. The detention basin doesn't alleviate nuisance flooding experienced at the intersection of May and Campbell Streets during small frequent storms.

The main land use within the southern sub-catchment is residential. Development in the residential area is characterised by highly impervious terrace housing lots which drain to the street. The south-eastern sub-catchment includes a mix of residential and commercial land uses. The southern and south-eastern sub-catchments have a high runoff potential, with approximately 70-75% of the surfaces comprising the catchment characterised as impervious.

5.2   DETENTION BASIN

There is no permanent water stored in the basin. The basin relies on pumping to drain stored water to the 1200mm diameter stormwater main under the railway line. This pipe connects to a Sydney Water channel north side of railway line (Lucas Cons Eng 1998). The basin takes approx 1 day to empty when completely filled.

In this case of pump failure, there is a pit located on the north side of the basin which gravity feeds to formal drainage downstream. There is a spillway on the north side of the basin which directs flood water to a (sic) an overland flow path north across the railway line towards Murray St and Sydney Water drainage channel.

71. From the Master Plan 2014 it is apparent that historically the whole of the area of Camdenville Park was to be used as recreation space. The Acquired Land did form part of land used for recreational pursuits until the construction of the sports field. However, after the construction of the sports field, the area was given over to stormwater functions. That function continued up until the relevant date for the determination of the use pursuant to s 56(3) as identified above at [54].

71. The Master Plan 2014 did acknowledge the presence of the vegetation within the area, for example, where it states:

Trees in the Detention Basin are a mixture of juvenile and mature Casuarina. These trees provide a valuable small urban forest and contribute to a sense of green to the park and passersby.

Such is merely a description of the trees and the capacity for them to be viewed from locations within the park and adjacent to it. There are no references in the Master Plan 2014 that indicate that the vegetation on the Acquired Land formed any part of the recreational activities which the park facilitated.

73. As to that part of the Acquired Land that was not fenced, whilst there was no physical barrier to access it was physically divorced from the accessible area by the intervening fenced area. It was a small area of land immediately adjacent to the road reserve. Whilst use was not prevented, there was no evidence that the unfenced portion of the Acquired Land was used or managed consistently with it being used for the particular purpose of recreation. The Council seems to rely merely upon the fact that the unfenced land was physically accessible to suggest that the area was used for recreational purposes. However, having regard to the requirements of s 56(3) that are identified above at [45] accessibility of itself is insufficient to establish on the evidence that the land was being used at the relevant date for that purpose.

74. Whilst it is apparent that the Acquired Land was immediately adjacent to land that was used for the purposes of active and passive public recreation the evidence discloses that the Acquired Land was largely unavailable for that particular purpose as access to it was intentionally precluded by the intervention of the fenced area between it and the useable part of the Residue Land. The area that was not fenced was disconnected from the land that was utilised for active and passive public recreation by the imposition of the fencing, thereby rendering it of little utility for that purpose. There was no evidence adduced that indicated that at any time that part of the Acquired Land that was not fenced was used for any physical manifestation of recreation (active or passive).

75. For the reasons outlined above, I find that the particular use of the Acquired Land for the purposes of s 56(3) is as a Detention Basin.

Does the Council genuinely propose to continue after the acquisition to use other land for the purpose of a Detention Basin?

76. The evidence of the Council’s intention was adduced by reference to the Council’s resolution of 5 December 2023 wherein Council resolved:

That all amounts of compensation received from TfNSW’s compulsory acquisition of part of Camdenville Park under s 56(3) of the Land Acquisition (Just Terms Compensation) Act 1991 be placed in a restricted reserve for open space and expended solely on the acquisition of land for public open space to be used for active and passive recreation.

77. The terms of this resolution make it plain that the Council does not genuinely propose to use other land for the purpose of a Detention Basin.

78. For those reasons, I find that the Council is not entitled to market value on a reinstatement basis pursuant to s 56(3).

79. My findings as to the Council’s intention is determinative of this issue. Therefore, the question of whether a general market exists for the use as a Detention Basin does not require determination.

Issue 2 – If the Council is entitled to compensation for market value under s 56(3) of the Just Terms Act what is the reasonable cost to the Council of equivalent reinstatement of the particular purpose for which the Acquired Land was used?

80. In light of the findings made with respect to Issue 1, Issue 2 does not arise for determination.

Issue 3 – If the Council is not entitled to compensation for market value under s 56(3) of the Just Terms Act what is the market value of the Acquired Land under s 56(1), having regard to the following matters:

(a)   The relevant comparable sales for the purpose of determining the market value of the Acquired Land;

(b)   Whether any rate per square metre derived from comparable sales should be adjusted to account for a range of physical, environmental and planning constraints that pertain to the Acquired Land; and

(c)   If adjustments are required, the appropriate adjustments to the comparable sales.

What is to be valued – application of s 56(1)(a) of the Just Terms Act?

81. In this case, the Respondent does not contend that the occupation of the Acquired Land pursuant to the Construction Lease was not a matter to be disregarded by application of s 56(1)(a). Both parties accepted that the occupation pursuant to the Construction Lease diminished the value of the Acquired Land.

82. Accordingly, it is appropriate to determine the value of the Acquired Land disregarding the occupation of that land by the Respondent pursuant to the Construction Lease.

Master Plan/Funding Deed

83. The Council contended that the value of the Acquired Land should be determined on the basis disregarding the fact that the Master Plan 2014 works had not been undertaken. The foundation for this contention was that the Council had ceased progressing the Master Plan 2014 works because of:

1. The carrying out of the Public Purpose by virtue of the occupation of land pursuant to the Construction Lease; or

2. The proposal to carry out the Public Purpose rendering uncertain the impacts of the Public Purpose upon Camdenville Park.

84. The evidence demonstrates that as of 2 July 2015 the Council’s intention was to carry out the upgrade works commencing in May/June 2015 with completion in 2017. By 3 May 2016, the Council’s position had changed. The Council advised its ratepayers that:

Uncertainty around WestConnex delays park upgrade

The NSW Roads and Maritime Service (RMS) has announced that it will compulsorily lease approximately one third of Camdenville Park for the construction of the WestConnex. RMS will take over the area planned for a BMX pump track to use as a construction compound, enlarge the detention basin, and permanently take a small section of the park to straighten Bedwin Road.

Council is negotiating with RMS and the company established by the State Government to build WestConnex – the Sydney Motorway Corporation (SMC) – around:

•   Access to the remainder of the park so that Council’s contractors can commence the planned upgrade of the sports field and new playground

•   Restoring the area used by SMC and building the BMX track, paths and landscaping once WestConnex is completed in 2019.

As more information comes available about the impact of WestConnex on the park upgrade it will be posted on and included it in a future newsletter.

Community Newsletter 3 May 2016

85. The uncontested evidence adduced in this matter discloses that the Council was embarking upon the upgrade of Camdenville Park as set out above at [28]-[37] above. The contemporaneous documentary evidence discloses that the halting of the progress of the upgrade works was as a consequence of the potential impacts of the WestConnex upon Camdenville Park together with the physical occupation of parts of Camdenville Park.

86. The Respondent contended that the suspension of the upgrade works was a decision made by the Council which did not cause an increase or decrease in the value of the Acquired Land and therefore should not be taken into account in the determination of compensation.

87. In Sydney Metro v G & J Drivas Pty Limited [2024] NSWCA 5 (Drivas) the Court of Appeal, per Kirk JA (with whom Payne JA and Griffiths AJA agreed) relevantly held at [88]:

88   Weighing these factors together, the respondents’ construction is not the better understanding of the intended operation of s 56(1)(a) of the Act. An increase or decrease in value caused only by choices made by an owner prior to the date of acquisition in relation to the land, being choices made because of the possibility or certainty of the land being acquired, are not the types of effects on value which can be regarded as having been caused by the actual or proposed carrying out of the public purpose for which the relevant authority is acquiring the land. Section 56(1)(a) does not require that the land be valued on a hypothetical basis as if such choices had not been made. ...

88. The Council submitted that its decision to suspend the works was made around May 2016 (see [37] above), however, it was not a decision of the type intended to be captured in Drivas. In this case, the Respondent acquired the Construction Lease of what ultimately was acquired: see [12] above. The occupation of the Acquired Land pursuant to the Construction Lease was caused by the carrying out of the Public Purpose. The occupation of the Acquired Land under the Construction Lease prevented the furthering of the upgrading of the Acquired Land. Therefore, the decision to suspend the upgrading project was a direct and necessary result of the Respondent’s carrying out of the Public Purpose.

89. It is apparent from this evidence that, at least with respect to the part of Camdenville Park occupied pursuant to the Construction Lease (of which the Acquired Land was part), the Council’s decision not to proceed the upgrade works in that location was caused by the Public Purpose for which the land was acquired. The Construction Lease prevented the Council from obtaining access to that land to carry out the work. The decision to suspend the works proposed on the Acquired Land were a direct consequence of the carrying out of the Public Purpose and not a decision of the type referred to in Drivas.

90. To the extent that the Council may have carried out the works on land outside the occupied areas and made a decision to defer the whole upgrading project, such a factor is not relevant to my determination, as those lands were not part of the Acquired Land to which the provisions of s 56(1)(a) apply in these proceedings.

91. For those reasons, I find that the decision to defer the upgrade works on the Acquired Land was caused by the Respondent’s carrying out of the Public Purpose for which the land was acquired.

92. The evidence discloses that the Master Plan 2014 works on the Acquired Land would have impacted on the slope of the land and the potential inundation of the land by stormwater together with the provisions of embellishment works. Whilst the land valuation experts considered features such as stormwater and slope in the context of whether adjustments should be made to comparable sales to reflect such features, neither expert quantified whether there would be a difference in value (an increase or a decrease) from the carrying out of the Master Plan upgrade 2014 works on the Acquired Land as compared to the value attributed to it in the state it was prior to occupation by the Respondent. Therefore, notwithstanding that I have found that the Master Plan 2014 works were suspended due to the carrying out of the Public Purpose for which the land was acquired, I am unable to be satisfied that the failure to carry out those works caused an effect on the value of the Acquired Land so as to enliven the operation of s 56(1)(a) in connection with those works.

93. Accordingly, I find that for the purpose of determining the value of the Acquired Land it is appropriate to consider its physical features as being those that were in existence prior to the occupation by the Respondent pursuant to the Construction Lease, that is, it was land capable of being occupied by the Council for recreational uses in the form and with the features that existed as at the date prior to the acquisition of the Construction Lease, with potential for further embellishment for recreational uses.

Valuation methodology

94. With respect to the determination of value pursuant to s 56(1) it was agreed that the highest and best use of the Acquired Land was for uses permitted in the RE1 – Local Open Space Zone. It was also agreed that the appropriate valuation methodology was by way of consideration of comparable sales.

95. The usual, but not only, manner of utilising the comparable sales methodology was summarised by Robson J in New South Wales Cremation Company Pty Limited v Valuer General [2016] NSWLEC 135 at [99]-[100] and [102]-[104], as follows:

99   It has been accepted that a generally valid method of conducting a comparable sales approach is to undertake it in the four steps of accumulation, analysis, adjustment and application.

100   First, the valuer, judicial or otherwise, should accumulate comparable properties. In undertaking this process, the “sales to be treated as comparable sales need to be truly comparable”, although the Court should not be “unreasonably selective” of its comparable properties in any event.

…

102   Second, the valuer should analyse those comparable sales. This often involves converting the value of those sales into another measurement that can be easily compared. Examples of this process include converting those sales into unitary rates, such as a [rate per square metre].

103   Third, the valuer should adjust those properties it considers comparable to create equivalence with the unimproved subject land. As stated by Biscoe J in Holcim (Aust) Pty Ltd v Valuer-General [2009] NSWLEC 225 at [31]:

The basis for the valuers’ valuation assessments is the sales comparison method. Accepted valuation practice permits adjustments for differences, such as in location, area and time to enable valuers to have comparable values which, following adjustment, account for the various differences with the subject property. Such adjustments are generally based on a reasoning process drawing on the skill and experience of the valuer and are undertaken to derive an opinion of value through a deductive process. Because properties are rarely identical, adjustments for differences are obviously necessary but caution is required through making as few adjustments as possible, in a consistent manner, to ensure the reliability of the comparable sale when related to the subject property. Too many adjustments potentially render the comparable sale unsafe to rely upon. Caution is therefore required where large adjustments are to be made. Reflecting the significant roles of skill, experience and personal assessment in the adjustment process, the scope for differences in the quantum and direction of adjustment between valuers can be considerable. Third, the Court should then apply these adjusted values to the subject property. The purpose of this is to determine, based on comparable sales and as best it can, what value the subject property would obtain if it were to be sold on the market.

104   Fourth, the valuer should apply the comparable sales to determine a value of the subject land based on the adjusted values of the comparable properties. (some citations omitted)

Accumulation and adjustment of comparable sales

96. Whilst the valuation methodology and the highest and best use of the Acquired Land was agreed there was great divergence between the expert valuers as to what sales were comparable and how such sales should be adjusted (if at all) to render them comparable to the Acquired Land.

97. My Dyson, the Council’s valuer, undertook the s 56(1) valuation on the basis that the Council was entitled to purchase land to reinstate the Acquired Land. He relied upon the decision of the Court of Appeal in Leichhardt Council v Roads and Traffic Authority of New South Wales [2006] NSWCA 353, Leichhardt Council v Roads and Traffic Authority of New South Wales (No 3) [2009] NSWLEC 3 (Leichhardt Council (No 3)) and Willoughby City Council v Roads and Maritime Services [2014] NSWLEC 6 (Willoughby), which he considered permitted him to value the Acquired Land on the basis of the acquisition of land zoned for purposes other than open space as such would be the type of land this Council would acquire to replace the Acquired Land.

98. Adopting this approach Mr Dyson accumulated a number of sales of what he described as “Residential Replacement Properties” and “Development Sites” comprising sales of commercial and industrial zoned land and, in addition, relied upon the residential sales he had identified for his consideration of the valuation under s 56(3) as “Residential Replacement Properties”.

99. As to the use of the residential sales he was of the opinion that, consistent with the authorities he relied upon, a market transaction of residential sales in close proximity to the Acquired Land were the most relevant comparator for the determination of market value.

100. Mr Dyson’s comparable sales adjusted to a rate per square metre were identified as:

Sales Evidence – Residential Replacement Properties
Property	Sale Date	Sale Price ($)	Site Area (m2)	$/m2 of Site Area
111 May Street, St Peters	Jun-21	$1,702,000	142m2	$11,986/m2
119 May Street, St Peters	Jun-21	$1,695,000	289m2	$5,863/m2
105 May Street, St Peters	Mar-21	$1,310,000	170m2	$7,729/m2
80 May Street, St Peters	Feb-22	$1,740,000	159m2	$10,964/m2
Sales Evidence – Development Sites
Property	Sale Date	Sale Price ($)	Site Area (m2)	$/m2 of Site Area
41 May Street, St Peters	Aug-21	$1,700,000	269m2	$6,329/m2
42 May Street, St Peters	Jul-22	$2,100,000	143m2	$14,696/m2
11-17 Hutchinson Street, St Peters	Jun-21	$4,600,000	820m2	$5,607/m2
7 Gerald Street, Marrickville	Nov-21	$2,900,000	491m2	$5,908/m2
14 Gerald Street, Marrickville	Sep-21	$2,680,000	519m2	$5,169/m2

101. From these sales he deduced the appropriate rate/m² as:

1. For Residential Replacement Properties at $1,500/m² and $1,700/m²; and

2. For Development Sites at $6,250/m².

102. Mr Lunney, the Respondent’s valuer, accumulated sales of land which had been sold on the basis that the highest and best use of the land was for public recreation purposes. Mr Lunney’s comparable sales adjusted to a rate per square metre were identified as:

Address	Sale Date	Sale Price ($)	Site Area (m2)	Analysis ($/m2 unadjusted)
Part of the former Tempe Tip site, Swamp Road, Tempe	March 2020	$78M	111,894m2	$560/m2
20A Parramatta Road, Homebush	August 2022	$730,000	1,845m2	$396/m2
Lot 1 Glover Street, Lilyfield	January 2022	$220,000	518.5m2	$424/m2

103. After adjustment, Mr Lunney applied a rate of $300/m² being towards the upper end of the range of those sales, as adjusted.

Adjustment of comparable sales

104. The valuers also diverged on whether any adjustments should be made and, if so, the appropriate adjustments to be made to the comparable sales.

105. Mr Dyson made no adjustments to his comparable sales as he indicated in the Supplementary Joint Expert Report of Property Valuation Experts (Exhibit N) that in the s 56(1) valuation exercise, in his opinion, “the application of the valuation principles established in the Leichhardt precedent necessitated an approach where the applicant would be compensated as a result of the acquisition to acquire replacement properties under s 56(1)”.

106. Mr Lunney considered it appropriate to make adjustments to his comparable sales as he considered that the task under s 56(1) was a valuation of the Acquired Land and not of replacement land. He made the adjustments he considered relevant to his sales for differences for constraints including: slope; flood liability; contamination and geotechnical constraints; size; market movement; and location.

107. To assist the Court both experts considered what adjustments would be made to their sales if the Court did not accept their primary positions. Each expert considered both their own sales and the sales of each other and the summary of their positions.

108. It is therefore necessary to determine what sales are relevantly comparable if adjustments are required to be made, and if so, on what basis.

Consideration of comparable sales

Comparable to what?

109. The subject matter of the present inquiry is the determination of market value of the Acquired Land. This task is identified in the statutory language of the relevant sections of the Just Terms Act which provide:

55   Relevant matters to be considered in determining amount of compensation

In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division)—

(a)   the market value of the land on the date of its acquisition,

…

56   Market value

(1) In this Act—

market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid)—

(a)   any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and

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

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

110. The focus of the inquiry is the value of the land that has been acquired and for which a person has an entitlement to be compensated: s 54. The object of the Just Terms Act is to provide just compensation, in the sense of recompense, for the loss occasioned by the acquisition: Drivas at [50]. Thus, in applying the valuation methodology of comparable sales in the context of a determination of market value applying the provisions of s 56(1), the issue is whether such sales are comparable (or able to be rendered comparable by adjustment) to the Acquired Land.

111. The primary valuation approach of Mr Dyson, and the Council, is that the sales should be selected based upon identifying sales of land that are comparable to land that the Council would be purchased to replace the Acquired Land.

112. The Council submitted that the authorities supported such an approach and formulated the argument in its closing submissions at pars 55-56 and 62-66 in the following manner:

55   The Applicant’s approach is one that has been long recognised as unexceptional in cases involving the compulsory acquisition of open space land, where the owner (usually a council) is in a context of a shortfall of open space, and would reasonably act to replace it: see Sydney Water Corporation v. Marrickville Council [2014] NSWCA 438 at [7] (Basten JA). So, too, in such context, that there should be no discount from residential land sales by reason of it being acquired for open space. That is, there is no occasion to make adjustments to residential rates to determine the value of the acquired land.

56   In cases like the present, the value of the land acquired can be assessed by reference to the price that a council would have to pay to acquire such land. This includes, paying residential land (or industrial/commercial) values even though the land will be put to open space use. It is common ground that the Acquired Land suffered no constraints that prevented its ongoing and future use as passive and active open space.

…

62   Another significant difference is the approach to adjustments. Mr Lunney’s central thesis is that adjustments have to be made to any comparable sale on account of the different conditions that may be relevant, to render them comparable to the Acquired Land. This statement in the ordinary case is also unexceptional.

63   However, in particular case such as the present, there is no need to adjust on all of these accounts: Leichardt Council v. Roads and Traffic Authority (No. 3) [2009] NSWLEC 3 at [25]-[34] (Lloyd J).

64   The rationale for this approach is not because differences might not exist in fact that in an ordinary case may justify adjustment, but rather because in such a hypothetical sale (as recognised in Roads and Traffic Authority v. Blacktown City Council, cited at paragraph [25]) the hypothetical seller is unwilling to accept less than the value represented by the zoning and other characteristics of the land. This reflects the nature of the sale, in which the hypothetical buyer must compete with all other buyers who would otherwise would pay for that such land on the basis all of its potentialities. Hence, residential or industrial/commercial rates.

65   Mr Lunney maintained in oral evidence that in some cases this may result in a “stand off” between buyer and seller. This may be the case in some instances in the real world. However, for the purposes of a s56(1) valuation, the hypothetical sale is necessarily assumed to occur. And, in view of Mr Lunney’s acceptance that the Applicant has in fact historically and recently paid residential land value for land to be used for open space, there is no reason to assume the same would not occur in the hypothetical sale.

66   Thus, no adjustment for physical constraints is warranted in view of the nature of the hypothetical sale, because the market value of the hypothetical sale will not be arrived at on the basis of such constraints in the circumstance where, as Mr Lunney, accepts none of the constraints would prevent the use of the Acquired Land as open space – as has been the case for decades.

113. In support of this proposition the Council relied upon a number of authorities. The first, was the decision in Sydney Water Corporation v Marrickville Council [2014] NSWCA 438 per Basten JA (Sydney Water). I do not accept that [7] of that decision is authority for the proposition set out in the submissions. The full text of [7] makes it apparent his Honour’s comments were obiter and that the apparent support of the proposition cited by his Honour in [6] was in fact qualified. The full text of the relevant passage from Sydney Water states at [6]-[9] (my emphasis added):

6   Those authorities were held by the trial judge to support the proposition stated at [14] (and repeated in greater detail at [16]):

“If a council is prepared to buy residential land and residential values for open space purposes, such as where there is a shortage of needed open space land in a locality (as is often the case in inner city localities), then in assessing market value compensation for compulsory acquisition of the council's open space land, there should be no discount from comparable residential sale prices merely because the acquired land is zoned for open space ...”

7   So far as that proposition went, it was unexceptionable, with the possible qualification that it was unclear whether the intended reference was to land which was being acquired as open space, or land which was being used as open space but was required for a different public purpose. But the statement was not complete and could be misleading.

8   In Roads & Traffic Authority of New South Wales v Blacktown City Council [2007] NSWCA 20, Spigelman CJ (with the concurrence of Beazley and Hodgson JJA) noted that there had been a challenge to the practice of valuing replacement land, but not a challenge which dealt with the expert evidence in the case: [40]-[48]. The challenge was said not to raise any demonstrable error of law. No doubt that will frequently be so: however, there might be an error of law if the valuation undertaken for the purposes of s 55(a) were not directed to the value of the land acquired, but the ability of the owner to obtain land to replace that acquired.

9   Focus on the land being acquired in the present case would probably have demonstrated that it had no value as residential land, although it may have had value for industrial purposes. Whether the valuation evidence demonstrated that it was not reasonably open to a judicial valuer to take account of residential value is unclear: that case was not mounted on appeal. Rather, the case for Sydney Water (in this Court) proceeded on the basis that the residential values could be taken into account, with an appropriate discount factor. Accordingly, the issue raised above need not be addressed further.

114. The Council also relied upon the decision in Roads & Traffic Authority of New South Wales v Blacktown City Council [2007] NSWCA 20. In that case, the particular issue relevant to the present case with which the Court of Appeal was concerned was a matter raised at hearing and described at [30] as follows:

30   I turn now to the additional submissions made orally today. Mr M Craig QC, who appeared in this Court for the RTA, submitted that it was an error of principle to use land capable of being used for residential purposes, as being in any way comparable, for the purpose of valuation of open space land. …

115. The Court then dealt with that submission substantively at [40]-[48] in the following manner (my emphasis added):

40   As the expert evidence of both parties in this case affirms, and numerous other decisions of the Land and Environment Court also indicate, valuation of open space land under the Just Terms Act has often involved comparable sales of properties acquired by councils for open space purposes, which properties had residential zonings or residential uses.

41   These authorities, and the expert evidence in this case, indicate that such evidence has often been given, and that expert valuers, including the expert valuers in this case, have frequently accepted it as appropriate. I am not prepared to overturn such a practice on the basis of submissions from the bar table which are made without any reference to expert evidence.

42    This is a matter with a considerable amount of background in expert valuations decisions in the Land and Environment Court. To seek to thus undermine the whole of this expert evidence, including expert evidence of the valuer called for the RTA in the present case, is, to say the least, a bold course.

43   The submission that sales of residential land cannot logically be regarded as comparable does not in my opinion, actually arise on any of the grounds of appeal, which are quite specifically pleaded. At the outset of the oral hearing in this case, the Appellant was given an opportunity to amend its grounds of appeal, and did not do so. That is sufficient to dispose of this matter. However I think it is, in any event, a submission that should be rejected.

44   The long accepted practice reflected in the expert evidence in this case, identifies, appropriately, that a person who wishes to acquire land for the purpose of open space, is in fact prepared to pay residential values to make such an acquisition. This is an example of the “willing but not anxious purchaser” element of the market valuation test, the traditional test now found in s56(1) of the Just Terms Act.

45   It is the case that the “willing but not anxious seller”, element of the hypothetical transaction, requires compensation for the additional value of residential use. However in my opinion, it is at least relevant to look at transactions in which residential land has been acquired for open space purposes, and it is logical to focus on land of that character, for purposes of the relevant analysis, rather than on the full range of residential land transactions, where both the purchaser and vendor have a residential use in mind.

46   I find this to be a relevant source of information but, of course, by reason of the ability of the vendor in the hypothetical sale, to get compensation for the use as a residence, it is not determinative. I see nothing wrong with an approach which accepts the relevance of such transactions, and then proceeds to apply a discount.

47   As the expert evidence in this case manifests, valuers accept the validity of this general approach. In my opinion no basis has been set forth which could establish the proposition that the approach is either illogical or irrational. In valuations, as in computation of damages, a court, relevantly a judicial valuer, must often do the best he or she can with the materials before the Court. That may involve a broad brush.

48   A significant element involved in this process is the element of judgment. Where, as is the case with the valuation of open space land, actual comparable sales are few, an indirect approach is, in my opinion, appropriate. The formulation of a judgment, whether by a valuer giving expert evidence or by the judicial valuer, often calls for a broad judgment to be made, just as the determination of damages requires a broad judgment to be made. This is not a process that can be parsed and analysed with precision.

116. In Willoughby Biscoe J, in considering the dispute as to the relevance of comparable sales stated at [56]:

56 The best evidence of the market value of compulsorily acquired open space land is comparable sales, with no compulsion to purchase, of other open space lands in the locality requiring very few adjustments: see, for example, Penrith at [7]. However, valuation of open space land under the Just Terms Act has often involved comparing sales of residentially zoned or used land, including where such residential land has been acquired by councils for open space purposes: Roads & Traffic Authority of New South Wales v Blacktown City Council [2007] NSWCA 20 at [40] - [44] per Spigelman CJ. Residential sales may be relevant where there are no reliable comparable sales of open space land, subject to a discount for the fact that the acquired land was zoned open space: ibid at [48]. For example, in Sutherland Shire Council v Sydney Water Corporation [2008] NSWLEC 303 Sheahan J determined the value of compulsorily acquired open space land by reference to a residential sale discounted by one third for the acquired land's open space zoning where there were no comparable sales of open space land in the locality. His Honour rejected the respondent's valuer's proposed discount of 90 percent and the applicant's valuer's proposed discount of 20 percent: at [96]. Where a dispossessed council has been active in buying residential land at residential values for open space purposes due to a shortage of needed open space land in the locality (as may be the case in inner city localities), then in assessing market value compensation there should be no discount from comparable residential sales for the fact that the acquired land was open space: Leichhardt Council v Roads and Traffic Authority of New South Wales (No 3) [2009] NSWLEC 3 at [22], [25], [33], [34] per Lloyd J; Marrickville Council v Sydney Water Corporation [2013] NSWLEC 222 at [14] - [16] per Biscoe J. In Leichhardt (No 3) Lloyd J said at [33]:

The facts and circumstances of the present case are different from those in the Sutherland case. Unlike Sutherland, there is a severe shortage of open space in Leichhardt. Leichhardt Council is active in the market of acquiring land for the purpose of open space. That is, the council is a buyer of land in the market for open space, it accumulates open space, there is a shortage of open space in the municipality and the council pays residential values to obtain it. The hypothetical willing but not anxious seller, with the knowledge of the market, would be aware of the prices paid by the willing but not anxious buyer and would thus be unwilling to settle for less than a full residential value in the hypothetical sale.

117. Ultimately, his Honour determined the comparability at [89] preferring an open space sale to the residential sales relied upon.

118. In Leichhardt No 3 Lloyd J, in hearing the matter when remitted from the Court of Appeal held at [19]-[20]:

19   The parties accept, and I agree, that the subject land should not be valued as if it could be used as residential: Ashfield Municipal Council v Roads and Traffic Authority of New South Wales (2001) 117 LGERA 203 at 226 [86], per Davies AJA (Mason P concurring). This is because it is necessary to take into account any relevant restrictions upon the use of the land: Ashfield Municipal Council v Roads and Traffic Authority of New South Wales at 230 [100], Mayor Councillors and Citizens of the City of Brighton v Road Construction Authority [1986] VR 255 at 263. The fact that there are restrictions upon use does not, however, necessarily mean a lower value: Ashfield Municipal Council v Roads and Traffic Authority of New South Wales at 231 [107], City of Brighton at 263.

20    In the Ashfield case the facts were not dissimilar to those in the present case. Open space land owned by the council had been compulsorily acquired by the RTA for the City West Link Road. Ashfield Council, like Leichhardt Council in the present case, is an inner city council with a shortage of open space land. I respectfully adopt the comments of Davies AJA (Mason P concurring) (at 231):

106    It was, therefore, significant that the comparable properties upon which the trial Judge relied were properties which had been purchased by municipal councils for public recreation or public open space. Those sales demonstrated the value which communities in Sydney were prepared to pay to obtain such land. Although none of the land in the comparable sales was subject to any specific restriction, public open space was its highest and best use and, in each case, the land was purchased for that purpose. In no case was the land purchased for profit making, for development or for resale. It was purchased with the intention that it would be held and used as public open space or for public recreation.

107    In this context, the restrictions imposed upon the subject Lots had little significance. The comparable sales were of lands which had been acquired for a comparable use. The comparable sales reflected the value which the community placed upon such land.

108    The task is always to assess the value of that which has been acquired. The subject lands were held by a municipal council and were devoted to public recreation. The comparable sales, which reflected acquisitions made by councils of land to be devoted to such a purpose, were good evidence of the value to the Council of the lands from which it has been dispossessed.

And at [32]-[34]:

32    In the Sutherland case, Sheahan J accepted the fact that the appropriate discount to apply in a particular case will depend upon its own facts and circumstances (at [95]). In that case Sheahan J applied a one-third discount to residential values, in a case where the acquired land was zoned public open space. The evidence in that case showed that the provision of open space in Sutherland had recently stabilised, the amount of open space was generous compared to general standards of open space provision, and the council had apparently resolved to acquire less open space (at [79] and [92]).

33    The facts and circumstances of the present case are different from those in the Sutherland case. Unlike Sutherland, there is a severe shortage of open space in Leichhardt. Leichhardt Council is active in the market of acquiring land for the purpose of open space. That is, the council is a buyer of land in the market for open space, it accumulates open space, there is a shortage of open space in the municipality and the council pays residential values to obtain it. The hypothetical willing but not anxious seller, with the knowledge of the market, would be aware of the prices paid by the willing but not anxious buyer and would thus be unwilling to settle for less than a full residential value in the hypothetical sale.

34    As in the City of Brighton case, the market value disclosed in the present case reflects the history of purchases by the council for open space in Leichhardt. Moreover, as noted by Gobbo J in the passage set out at par [22] above, this may lead and, in fact, has led, to the council having to pay the equivalent of residential values. Accordingly, in my opinion, the discount due to the fact that the subject land is zoned for open space, on the facts and circumstances of the present case, should be nil. It represents the price that a willing but not anxious purchaser is prepared to pay and a willing but not anxious seller is prepared to accept, for land intended to be used for open space in Leichhardt. The result is a market value for the acquired land of $1,175 per square metre, that is, the sum of $1,053,740.

146. The Council submitted that the Respondent’s position was founded upon a misunderstanding of the evidence. It submitted that Mr Clay was a contamination expert but not a geotechnical expert. He had been instructed to give an opinion about the contamination matters relevant to an assumed development of the Acquired Land for residential purposes and therefore his evidence should be viewed in that context.

147. In the evidence given at par 6.2 of his report, Mr Clay referred to the fact (by reference to his Figure 273) that the Acquired Land “includes a small part of the western end of the former landfill”. This reference to the small part of landfill is established if Figure 2 were to be overlaid a 1943 aerial image with the cadastral boundary of the Acquired Land. The “small part” to which Mr Clay refers is observable in the vicinity of the borehole marked "LDS-BH- 5001". A small section of the pit extends slightly beyond the eastern boundary of the Acquired Land in two locations.

148. In this context, Mr Clay continued in par 6.2 of his report: “This could make development of the site challenging from a geotechnical and contamination stand point”.

149. The Council contended that it was apparent that Mr Clay in using “could” was referring to a theoretical potential only, so far as geotechnical matters were concerned because he did not have or profess to have any geotechnical expertise. Such was confirmed at the end of par 6.2 because Mr Clay would have advised a hypothetical purchaser to “seek advice from a geotechnician”.

150. By way of summary, the Council submitted that a fair reading of par 6.2 of Mr Clay’s report was that he was saying that:

1. There might conceivably be a geotechnical challenge, but that should be the subject of specialist advice from others;

2. To the extent that Mr Clay expressed any reservations they could only relate to the small part of the Acquired Land and not the whole; and

3. There is no geotechnical evidence that demonstrates any geotechnical challenge to redevelopment, as hypothesised by Mr Clay.

152. There is a real difficulty in resolving this issue as neither witness was cross-examined on the relevant material, or at all. To resolve the issues raised by the parties the only material to which relevant recourse can be had is the written reports. To that extent I am required to consider what a hypothetical purchaser would determine having regard to such material if provided to them for the purposes of the hypothetical sale.

153. Having regard to the reports of Mr Clay and the evidence of Ms Organo in response as comprised in the expert joint report, I do not accept that a hypothetical purchaser would limit the evidence of Mr Clay (or by extension of Ms Organo) in the manner contended for by the Council. Mr Clay’s evidence and Ms Organo’s response are both unconstrained as regards to the potential geotechnical impacts. Whilst there may only be two areas of fill within the Acquired Land the opinions expressed and the proposed advice given would be in the unconstrained manner.

154. I also take into account the evidence given by Mr Clay and Ms Organo in their summary advice extracted at [144] above, wherein the reservations relating to the capacity to develop for residential uses, that geotechnical issues had the potential to be prohibitive in cost and technical in nature such that it had the potential to affect the commercial viability of the project as a whole. I also take into account Mr Clay’s statement at par 9.1 of his report that:

Based upon my experience advising landowners on property acquisitions, low-density residential use does not seem feasible in these circumstances. For further explanation, see my comments above.

155. I note that Ms Organo did not traverse that statement in her evidence.

156. On that basis, I find that a hypothetical purchaser of the Acquired Land would for residential or commercial/industrial purposes consider that there was a real risk that the location of the Acquired Land adjacent to, and in some parts forming part of, a filled site may pose geotechnical risks and the incurring of costs. The extent of such risk and the quantum of such costs would depend upon an investigation into the geotechnical condition of the Acquired Land. However, such costs would not be incurred, and such risk would not be present, on other land not so constrained.

157. I further find that a hypothetical purchaser would not consider such geotechnical constraints would affect the capacity of the Acquired Land to be used for open space purposes.

158. In the circumstances of this case, I find that the hypothetical purchaser would have the information provided by the contamination experts and therefore would be cognisant of the risk posed by the geotechnical features of the Acquired Land and would consider that there was a range of risks, including the potential risk of unfeasible development, and would deduce a value for the Acquired Land without the scope and nature of that risk being resolved prior to sale.

159. On the basis of my findings above, I find that a hypothetical sale would include an adjustment being made for the potential for the Acquired Land being unsuitable for residential or commercial/industrial use due to the geotechnical risk. Such an adjustment would be significant.

Other necessary adjustments

160. The valuers agreed that, if it was necessary to make adjustments to the comparable sales, it would also be necessary to make adjustments (where appropriate) for:

1. Market movement;

2. Location;

3. Size;

4. Existence of a development consent; and

5. Improvements.

161. The quantum of such adjustments depended upon the characteristics of the comparable sale. The experts disagreed on the quantum of such adjustments.

Analysis and adjustment of comparable sales

162. In considering the comparability of the sales accumulated by the expert valuers in this case, it is necessary to determine whether such sales are comparable or capable of being rendered comparable with appropriate adjustments.

163. In this case, each of the valuers adopted very different approaches to comparability. Mr Dyson, for the Council (as observed above) adopted a concept of replacement value even when undertaking a s 56(1) valuation. Mr Lunney sought to identify sales of heavily constrained land that was purchased for the purposes of open space. Neither valuer considered, that even with adjustment, that the sales of the other could be rendered comparable.

164. Notwithstanding the very divergent views of the task of determining comparability and the staunch opposition to the approach taken by each counterpart, I directed that the valuers provide an analysis of the sales adopted by each other in the event that the approach determined by each was found to be the appropriate approach. The outcome of this exercise was reflected in Exhibit N.

Comparability of Mr Dyson’s sales

165. Mr Dyson had three groups of comparable sales:

1. The residential terraces that adjoined Camdenville Park known as: 111, 119, 105 and 80 May Street, St Peters together with another proximate residential sale at 28 Unwins Bridge Road, St Peters (Residential Replacement Properties);

2. Development Sites which were identified as commercial/industrial zoned land (Development Sites);

3. Two residentially zoned parcels of land that had been acquired by the Council for open space purposes (Open Space Properties).

166. I will consider each of the sales in the grouping identified, as that was the approach taken in the evidence of each valuer.

Residential Replacement Properties

167. With respect to the each of these properties all were improved with a residential dwelling which would attract purchasers in the market for a residence. In addition, each of the residential terraces in May Street were heritage listed. Mr Dyson considered that these sales were the most relevant as comparable sales on the basis that the Council would look to replace the Acquired Land with land proximate to Camdenville Park and such properties were especially suited to this requirement. On that basis, he considered that it was appropriate to utilise these sales unadjusted for anything other than market movement (where appropriate).

168. Considering these sales in the context of determining their comparability to the Acquired Land I consider that on a pure face value assessment they are not comparable. There are differences between these sales that must be accounted for in determining whether they are comparable. Such differences include:

1. The fact that the Acquired Land is vacant and the residential sales are improved;

2. Land area size; and

3. Contamination and geotechnical constraints.

169. In considering whether this group of sales is comparable, or capable of being rendered comparable, I find that they are not. The primary distinction between these sales and the Acquired Land is the size, improvements and lack of impact of contamination and geotechnical constraints. These differences render this group of sales so distinct from the Acquired Land that the mere proximity of the sales cannot render them comparable in any compelling way.

170. In cross-examination Mr Dyson accepted that in normal valuation considerations adjustments would be made for size and land improvements, however, due to the approach he was taking he did not make such adjustments to these sales. In Exhibit N, Mr Dyson did make an adjustment for contamination (at 15%) and flood/slope at (1%) in order to render the properties comparable. As I have found above, there is no requirement for an adjustment for slope/flood in light of the evidence of the town planning experts. As to contamination, Mr Dyson allowed an amount of 5% for the cost of contamination remediation (as provided in the consideration of the contamination experts) together with an addition 10% for the stigma associated with the presence of contaminants. He made no adjustment for the geotechnical risk.

171. Mr Dyson maintained his primary position that no adjustments at all should be made to his sales to reflect any of the constraints including the potential geotechnical constraints. However, he was pressed on this point in cross-examination, and I take from this evidence that Mr Dyson would not have valued the land absent geotechnical advice on the assumption he was asked to make, as absent such advice valuing the land and determining its potentialities for either residential or commercial/industrial uses would be extremely difficult, if not impossible. Mr Dyson’s further evidence indicates that whilst he was reluctant to put a figure on a relevant adjustment of such sales, he accepted that an adjustment of some significance would need to be made.

172. As to the adjustments proposed by Mr Dyson, I reject the approach that underlay his assessment of comparability with respect to this group of sales. When what is being sought is the identification of properties that are comparable to the Acquired Land it is necessary to make appropriate adjustments to make the sales relied upon reflect the attributes of the Acquired Land. By taking an approach of asking what the Council would pay to replace the Acquired Land rather than what a purchaser would pay to acquire the Acquired Land, Mr Dyson is not performing the necessary valuation approach required and dictated by s 56(1).

173. I note that Mr Lunney, in Exhibit N, undertook (reluctantly) the process of adjustment. His reluctance was due to his underlying contention, that I have accepted, that the sales are not comparable. However, in applying adjustments Mr Lunney adjusted for size, improvements and contamination and geotechnical constraints. His adjustments (in total) represented a downward adjustment in the range of 110-115%.

174. As Mr Dyson did not undertake similar adjustments, I have only Mr Lunney’s assessment of these factors. Having regard to his evidence, I have no foundation to reject or qualify the adjustments made by him.

175. Mr Lunney identified the constraints that he considered required the comparable sales to be adjusted. He did not provide an adjustment for each constraint, rather he made a single adjustment to reflect the totality of the constraints on the basis that once a parcel of land has multiple constraints of the type identified by him, the land value would be reduced by a single amount. He identified the quantum of the single adjustment as being in the order of 80% when applied to sales of residential or commercial/retail sales. The matters that he considered constraints included each of: slope; flooding; contamination and geotechnical risk. He accepted that if he was not required to make an adjustment for slope or flooding, he would reduce this total adjustment.

176. Mr Dyson and the Council contended that if an adjustment was required to be made for contamination an adjustment in the order of 15% should be made to all residential and commercial/industrial sales. With respect to the RE1 sales significant adjustments (from 40%-230%) were required to be made.

177. With respect to contamination, if it were to be treated separately from the geotechnical risk I consider an adjustment sufficient to reflect the potential costs as identified above at [142] would be necessary. However, I accept Mr Lunney's opinion that, in light of the geotechnical risk, this sum would not be separately accounted for in the determination of value. The range of risk associated with the potential geotechnical impacts would consume the contamination risk and would operate as a single depression on value.

178. Even if the pool of residential sales of the type identified by Mr Dyson were a relevant comparison, I accept that adjustments of such magnitude are indicative of the lack of comparability to the Acquired Land such that to utilise such sales as the primary determination of the value of the Acquired Land would be unsound.

Development sites

179. Again, the primary approach of Mr Dyson was that no adjustments should be made to these sales apart from market movement (where appropriate). For the same reasons I rejected this approach with respect to the residential sales, I reject the approach for this group of sales.

180. In Exhibit N, Mr Dyson considered what adjustments would be made if he valued this group of sales on the assumption that the land should be rendered comparable to the Acquired Land. He made adjustments for improvements on 42 May Street (60%), but not on any other of the group of sales. He adjusted for contamination (10%) and flood/slope (1%). For the same reason as outlined above, I do not consider an adjustment needs to be made for flood/slope. To the extent that Mr Dyson has identified the 10% adjustment for contamination, being 5% for the cost of remediation and 5% for the stigma, he has not made any adjustment for geotechnical risk.

181. I consider that each of the sales in this group are distinguished from the Acquired Land by reason of (where relevant):

1. Size;

2. Frontage/configuration;

3. Improvements;

4. Existence of an approved development consent; and

5. Contamination and geotechnical constraints.

182. Mr Dyson has not adequately adjusted for each of these factors. As noted above, Mr Dyson accepted that where a comparison for valuation is done on a basis other than replacement value, adjustments for size and improvements should be made. In cross-examination, he also accepted that adjustments for the existence of a development consent and frontage and configuration would also be made. I find that, in order to consider the comparability of these sales, such considerations should be factored into that assessment.

183. Mr Lunney had provided an assessment of adjustments for these factors in Exhibit N. His adjustments in total were in the range of 105-120%.

184. In considering whether this group of sales is comparable, or capable of being rendered comparable, I find that they are not. The primary distinction between these sales and the Acquired Land is the size, and lack of impact of contamination and geotechnical constraints and where relevant the presence of a development consent. Whilst it may be attractive to a council seeking to purchase land for open space, it is not reflective of the market for the Acquired Land, being severely contaminated vacant land. These differences render this group of sales so distinct from the Acquired Land that the necessary adjustment of sales cannot render them comparable in any compelling way. The quantum of such adjustment renders the use of them as unsound.

Open Space Properties

185. The two sales Mr Dyson relied upon as evidence of sales where the Council had purchased land zoned as either residential or industrial for open space were located at 43 and 4E Hercules Street, Dulwich Hill. I consider each of these sales, in order to be rendered comparable, would require adjustment for:

1. Market movement;

2. Improvements;

3. Size;

4. Frontage;

5. Location; and

6. Constraints for contaminations and geotechnical issues

186. My Dyson has not made such adjustments. Mr Lunney reflected such adjustments to the extent that they must be made for 43 Hercules Street, Dulwich Hill as producing a derived adjusted rate of $471/m².

187. I accept these adjustments. I consider that the vast differences between these properties and the Acquired Land are such that to utilise them as comparable to the Acquired Land would be unsound.

Comparability of Mr Lunney’s sales

188. Mr Lunney relied upon 3 sales of what he described as “heavily constrained” sites. The constraints upon those sales comprised:

1. Tempe Tip – zoned RE1; contamination and geotechnical constraints as comprised a filled former waste disposal site; height restrictions due to location under flight path of Sydney Airport; part of the site was steeply sloping;

2. Homebush – zoned RE1; site was constrained by an easement for electrical transmission lines; it had no road frontage but was accessible via a right of way over a Council reserve; and

3. Lilyfield – subject to the provisions of the Callan Park (Special Provisions) Act 2002 (NSW).

189. Whilst Mr Lunney acknowledged that each of the sales were located in different localities to the Acquired Land, he considered the sales were capable of being adjusted to reflect comparability with the Acquired Land due to the fact of the significant constraint suffered by each sale, which he contended indicated the approach of the market to sites with such constraints that the highest and best use of these land was for open space purposes.

190. Mr Dyson was of the opinion that these sales were incapable of being considered comparable to the Acquired Land. In the valuers’ joint report, Mr Dyson expressed his opinion at pars 105-106 as follows:

105   My Dyson considers that the Sales Evidence used by Mr Lunney in his Report are not comparable to the Acquired Land as they have heavy restrictions which the owner of the land has no ability to remove. Mr Dyson considers that the restrictions on Mr Lunney’s sales evidence limits any development of the properties, irrespective of the zoning of the land.

106   My Comments on each of Mr Lunney’s sales are as follows:

1   Part of the former Tempe Tip Site, Swamp Rd, Tempe – This property was highly contaminated and was severely restricted in its use due to its proximity to the Sydney Airport and being under the north-south runway. It was height restricted in any development and was within the ANEF 30-35 noise contour and mostly within the Runway Approach Surface which restricts development on the land.

An indication of the restrictions on this property is shown in Mr Lunney’s report where he provides that the Industrial component of the land transferred was agreed at a price 15% of an unrestricted sale property. This reflects the inherent constraints suffered by the sale property irrespective of its zoning.

2   20A Parramatta Road, Homebush – This property was flood prone and restricted in its development by having the majority of the land affected by Transmission Line Easements (TLE) whereby no buildings could be erected and also had only a 5-metre-wide Right-of-Way access off Parramatta Road. I do not consider this property to be well suited to a Public Recreation use and would have limited potential uses regardless of its zoning.

3   Lot 1 Glover Street, Lilyfield – The majority of this property is restricted in its development by a Transmission Line Easement, its proximity to Sydney Harbour foreshore at the front and an Easement for Public Access to the rear. The transaction was not a “Market” Transaction as the vendor, the Commonwealth agreed to sell the property for its “book value” and the agreement was subject to a 10 year licence to the vendor at a rental of $1 per annum for a part of the purchasers building for the relocation of the sound monitoring infrastructure which was previously located on the site.

191. As to Mr Dyson’s criticisms of these sales, he rejects comparability on the basis that the land is very constrained. However, I do not consider that such a factor is a reason for discounting them as comparable sales. The sales were of land that were significantly constrained (for differing affectations), as is the Acquired Land. They were parcels of land that, notwithstanding those constraints, were capable of being used for open space of differing types, as is the Acquired Land. I consider, with some adjustment, such sales are the best evidence of the market approach to determining value of inherently constrained land that remains capable of open space use.

192. As to the degree of comparability, I accept that the constraints on the Homebush and Lilyfield sales are different from the Acquired Land, however the consequence of such constraints is a limitation on the capacity to build on that land, such is also a feature of the Acquired Land, having regard to the potential geotechnical risk. The limitation on the capacity to build on the Tempe Tip site is also the contamination and geotechnical constraints, which is comparable to limitations on the Acquired Land. To the extent that the geotechnical and contamination constraints limit construction on that land I do not consider that an additional adjustment needs to be made as a consequence of the height restriction imposed by the Sydney Airport runway proximity.

193. The real and important difference between the sales and the Acquired Land is that there is a certainty of limitation of building on each of the sales, whereas the Acquired Land has a risk, as yet quantified that may limit any construction.

194. Therefore, I consider the Acquired Land to be less affected by that limitation than the comparable sales.

195. I consider that the sales of Lilyfield and Homebush are evidence of the market paying less for constrained land irrespective of its zoning where such constraints limit the capacity to exploit development potential. In this case such sales indicate a degree of comparability that provides sufficient confidence in utilising such sales to determine the value of the Acquired Land.

196. Whilst all of the sales are relevant, I consider the sale of Tempe Tip to be of the greatest assistance due to the comparability of the type of constraint and the fact that the sale was to facilitate an open space recreational use. I further consider that an analysis of this sale provides a higher unitary rate, perhaps indicating that the nature of the constraints of the other sales had a greater depressing effect on the sale. For caution therefore, I give the greatest weight to the analysis of the Tempe Tip sale as being the most comparable.

197. I consider that Mr Lunney’s adoption of the base rate/m², being the unitary rate for the benched and level land, to be the appropriate starting point. As for the reasons identified above, there is no need to adjust for slope.

198. I accept the evidence of both valuers that there should be an adjustment for size, location and market movements. There was not an agreement as to those adjustments.

199. As to market movement, Mr Dyson considered the percentage based upon the published median house price trend for the relevant two year period and determined an adjustment of 30%. Mr Lunney determined an adjustment of 10%. I accept Mr Dyson’s adjustment rate as it appears based upon published data. Mr Lunney’s 10% adjustment appears low even on his evidence where, for example, he applied a market adjustment in the order of 18% for the sale of 3 Cahill Street that was also transacted in the same year as the Tempe Tip sale. Accordingly, I find that a market adjustment of 30% is appropriate.

200. As to size, Mr Dyson adjusted by 50%, whereas Mr Lunney adjusted by 20%. Whilst the unitary rate of smaller lots is generally higher than larger lots, this is not a linear mathematical difference. Taking into account the large size of the Tempe Tip sale being some 11,894m² as compared to the Acquired Land having a site area of 1,687m², I consider that the adjustment of 50% as proposed by Mr Dyson is appropriate. I note that Mr Lunney had in his evidence made an adjustment for 20% where the land size was 50% smaller than the Acquired Land, which would seem to indicate the much larger differential between the Acquired Land and the Tempe Tip sale warrants a larger adjustment.

201. As to location, Mr Dyson proposed an adjustment of 50% and Mr Lunney an adjustment of 10%. Mr Dyson identified this sum as representing the fact that the land was below the runway restricting the height and the use of the land. As I consider that such features are already taken into account in adjusting for the constraints, to additionally account for them in an adjustment for location would be inappropriate. Accordingly, I will adopt Mr Lunney’s adjustment of 10% for the location.

202. As to contamination, Mr Lunney adjusted for his “constraints” at -50%. Mr Lunney’s adjustment for constraints included consideration that the Tempe Tip sale was flat and not affected by flooding. As I have indicated above, I do not consider that the differences require such an adjustment. This is particularly so when the comparison land is used for open space (as is the Acquired Land) and the features of slope and flooding do not diminish the utility or desirability of the Acquired Land for such purpose. Accordingly, I consider Mr Lunney’s adjustment of -50% (indicating that the Tempe Tip site is more desirable) is not appropriate.

203. Mr Dyson adjusted for contamination, on the basis that Tempe Tip site was highly contaminated such that if required leachate treatment plants and methane exhaust at a rate of 100%.

204. I accept that the contamination of Tempe Tip is a matter that requires continuing management into the future, including the potential for the expenditure of funds. I accept that the contamination on the Acquired Land can be managed, if proposed for a higher order use, by the expenditure of a single sum in the order of either $500,000 or $919,000. However, for the purposes of rendering the Tempe Tip sale comparable to the Acquired Land, it is to be noted that the presence of the contamination does not affect the use of either site for open space purposes, and if the Acquired Land was used for its highest and best use as open space the expenditure of the identified funds would not be required. On that basis, I find that an adjustment should be made to take account of the risk that the Tempe Tip contamination management may require continual monitoring and potentially the expenditure of funds, which risk would have a depressing effect on its value when compared to the Acquired Land. Whilst the level of contamination and the management of such contamination differs as between the Acquired Land and the Tempe Tip sale, both sites are contaminated. Notwithstanding that contamination, both sites are capable of being used for recreational purposes. To the extent of the comparability of contamination impacts and recreational use, I do not consider that Mr Dyson’s proposed 100% adjustment is warranted.

205. Doing the best I can with the evidence before me, I consider that the future management of Tempe Tip would be considered less desirable in the market than the Acquired Land. To the extent that I am able to put a figure on such adjustment I find that the contamination risk requires an adjustment of 30% to the Tempe Tip sale to represent the future cost of managing contamination on that land. The fact of contamination is present on both properties from similar past uses and therefore requires no further adjustments for the presence of contamination, or, as Mr Dyson referred to, the stigma of the contamination.

206. As to the geotechnical risk, as I have noted above, the Acquired Land has the potential to be adversely affected by geotechnical issues such that it may prevent the construction, or at least a commercially feasible construction, on the Acquired Land if used for a higher order use than recreational uses. In considering the comparability of the Tempe Tip sale to the Acquired Land such constraints operate to the same extent on both sites, as the use of recreation does not contemplate construction of the type that would be limited by the geotechnical features identified. Therefore, I make no adjustment for geotechnical constraints.

207. The total adjustment to the Tempe Tip sale for contamination constraints will be made at 30%.

208. On the basis of my findings as to the appropriate adjustment of the most comparable sale, being the Tempe Tip sale, I would determine the adjusted rate/m² in the following manner:

Sale rate/m2	Size	Location	Market	Constraints	Total	Adjusted rate/m2
$560/m2	50%	10%	30%	30%	120%	$672/m2

209. For the reasons outlined above, I consider the Tempe Tip sale the most comparable sale. Whilst there is a degree of adjustments, the quantum of which are numerically large, I consider the characteristics of the Tempe Tip sale is the most representative of the market for heavily constrained land by reason of contamination and geotechnical risk with a highest and best use as open space. Therefore, I will apply the adjusted rate to the Acquired Land.

210. Based upon an application of that rate to the area of the Acquired Land the value of the Acquired Land would be $1,133,664.

Issue 4 – Has there been any increase or decrease in the value of any other land of the Council as at the Date of Acquisition which adjoins or is severed from the Acquired Land by reason of the carrying out of the WestConnex for the purpose of s 55(f) of the Just Terms Act?

211. Notwithstanding that this issue was raised by the Respondent and it made closing submissions that suggested that there may be some betterment to the remainder of Camdenville Park as a consequence of funding arrangements that would enable Council to undertake embellishment works, the issue was not ultimately pressed.

212. It was accepted by the Respondent in its closing submissions at par 127 that the Respondent had not sought to quantify such betterment. In such circumstances, I accept the submissions of the Council that absent evidence to substantiate such a claim (which was not adduced in this case), the issue does not arise for determination.

213. To the extent that the Respondent relied upon the unidentified and unquantified betterment it should be taken to be an indication that any determination of compensation would be taken as “clearly erring in favour of the Council”, I do not accept that such an approach is open. The issue having not been pressed for determination cannot then be relied upon to influence the determination of compensation on some other basis that has clearly been identified, tested in evidence and quantified.

214. For the above reasons, Issue 4 does not arise for determination and I do not take it into account in the determination of compensation.

Issue 5 – What is the Council entitled to with respect to losses attributable to disturbance under ss 55(d) and 59 of the Just Terms Act?

215. The parties have reached agreement as to the amount of compensation for disturbance totalling the amount of $34,553 for the Council’s as follows:

1. Legal fees under s 59(1)(a) in the sum of $22,728; and

2. Valuation fees under s 59(1)(b) in the sum of $11,825.

216. The sums as agreed are appropriate and will be ordered to be paid as compensation.

Costs

217. The parties should be given an opportunity to consider my reasons prior to a determination of the appropriate costs order. I will reserve costs.

Orders

218. For the reasons outlined above, the Court orders:

1. Compensation under Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (the Act), for the compulsory acquisition of the Applicant's interest in land in Certificate of Title Lot 2 DP 1273810 known as part of Camdenville Park located on the corner of Bedwin Road and May Street, St Peters NSW, is determined in the sum of $1,168,217 plus statutory interest being payable under ss 49 and 50 of the Act. This sum comprises:

1. $1,133,664 for market value of the land acquired under s 55(a) of the Act; and

2. $34,553 for disturbance under s 55(d) of the Act.

2. Costs are reserved.

219. The matter is listed for mention before Duggan J on the question of costs on 6 February 2025 at 9am.  Should the parties, by agreement, determine an appropriate order for costs, the parties are given leave to forward Short Minutes of Order, which orders may be made in chambers without the necessity of an appearance.

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Decision last updated: 19 December 2024