Kirela Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 - [2005] NSWCA 108

No judgment structure available for this case.

Reported Decision:
141 LGERA 40

Court of Appeal

CITATION:
KIRELA PTY LTD v MINISTER ADMINISTERING THE ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979 [2005] NSWCA 108

HEARING DATE(S):
15 December 2004, 16 December 2004

JUDGMENT DATE:

13 April 2005

JUDGMENT OF:
Sheller JA at 1; Beazley JA at 136; Brownie AJA at 137

DECISION:
Appeal dismissed with costs.

CATCHWORDS:
Compulsory acquisition - valuation of land - whether amount of compensation determined in accordance with the Land Acquisition (Just Terms Compensation) Act 1991 - whether all relevant evidence taken into account - whether fees paid to town planner and surveyor were loss attributable to disturbance or were incurred relating to the actual use of the land - Procedure - submission made after trial but before judgment - whether trial Judge wrongly took submission into account

LEGISLATION CITED:
Environmental Planning and Assessment Act 1979
Land Acquisition (Just Terms Compensation) Act 1991
Land and Environment Act 1979
Rivers and Foreshores Improvement Act 1948
Supreme Court Act 1970

CASES CITED:
Associated Confectionary (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 21 NSWLR 349
Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259
Corrie & Anor v MacDermott [1914] AC 1056
Griffith City Council v Pelegato & Anor (1990) 20 NSWLR 696
Horn v Sunderland Corporation [1941] 2 KB 26
Housing Commission of New South Wales v Falconer & Ors [1981] 1 NSWLR 547
Housing Commission of New South Wales v San Sebastian Pty Ltd & Ors (1978) 140 CLR 196
Maurici v Chief Commissioner of State Revenue (2002) 212 CLR 111
Overton Investments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2001) 113 LGERA 439
Pointe Gourde Quarrying and Transport Company Ltd v Sub-Intendent of Crown Lands [1947] AC 565
Silverwater Estate Pty Ltd v Auburn Council & Anor [2001] NSWLEC 60
The Crown v Murphy & Anor (1990) 64 ALJR 593
Vaughan-Taylor v David Mitchell-Melcann Pty Ltd (1991) 25NSWLR 580
Yates Property Corporation Pty Ltd (In

PARTIES:
Kirela Pty Ltd - Appellant
Minister Administering the Environmental Planning and Assessment Act 1979 - Respondent

FILE NUMBER(S):
CA 40235/04

COUNSEL:
TS Hale SC/A Galasso - Appellant
J J Webster SC - Respondent

SOLICITORS:
Minter Ellison - Appellant
Blake Dawson Waldron - Respondent

LOWER COURT JURISDICTION:
Land & Environment Court

LOWER COURT FILE NUMBER(S):
30088/01

LOWER COURT JUDICIAL OFFICER:
Cowdroy J

CA 40235/04
L&E 30088/01

SHELLER JA
BEAZLEY JA
BROWNIE AJA

KIRELA PTY LTD v MINISTER ADMINISTERING THE ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979

This is an appeal from the Land and Environment Court concerning a compulsory acquisition effected on 8 June 2001 by the Minister administering the Environmental Planning and Assessment Act 1979 of land belonging to Kirela Pty Ltd.

The appeal is from Judgment No 1 of 12 March 2004, which concerns the amount of compensation to be provided to Kirela Pty Ltd in accordance with the Land Acquisition (Just Terms Compensation) Act 1991 (‘the Act’), and Judgment No 2 of 12 March 2004, relating to consultant’s fees allowable under section 59 of the Act.

In relation to Judgment No 1, the issues for determination by the Court of Appeal included:

(i) Whether the trial Judge wrongly took into account a submission made by the respondent after the conclusion of the hearing and after the appellant’s submissions in reply and without giving the appellant the opportunity to respond to it; and
(ii) Whether the judgment should be set aside on the basis that the trial Judge made incorrect factual findings and failed to consider all the relevant evidence.

Per Sheller JA and Beazley JA and Brownie AJA agreeing:

While it was unsatisfactory that there was correspondence between the trial Judge and senior counsel for the respondent of which, unknown to the Judge, the appellant’s advisers were unaware before the judgment was given, the fact that this was not the fault of the respondent or its advisers and in circumstances where the appellant was given full opportunity to re argue the matter, does not, without more, enliven appellate relief.

Per Sheller JA and Beazley JA and Brownie AJA agreeing:

The trial Judge correctly held that the success of the appellant’s claim for compensation was entirely dependant upon Strathfield Council creating specific development controls for the subject land to exempt it from the existing requirements. If that did not happen the appellant’s development proposal would not have been approved by Strathfield council. His Honour fully took into account the appellant’s proposals.

In relation to Judgment No 2, the issue for determination was whether the fees paid to a town planner and to a surveyor should allowed to the appellant pursuant to section 59 of the Act on the basis that they were either loss attributable to disturbance under section 59(f) or were incurred relating to the actual use of the land under section 59(b).

Per Sheller JA and Beazley JA and Brownie AJA agreeing:

Neither the fees paid to the town planner or to the surveyor can be classified as loss attributable to disturbance. Neither was a valuation fee within the meaning of s59(b) of the Act nor could it be described as a financial cost reasonably incurred or that might reasonably be incurred relating to the actual use of the land as a direct and natural consequence of the acquisition within the meaning of section 59 (f) of the Act.

Per Sheller JA and Beazley JA and Brownie AJA agreeing:

Legislation cited:

Environmental Planning and Assessment Act

1979

Land Acquisition (Just Terms Compensation) Act

1991

Land and Environment Act

1979

Rivers and Foreshores Improvement Act

1948

Supreme Court Act

1970

Cases cited:

(1991) 21 NSWLR 349

[2001] NSWCA 259

[1914] AC 1056

(1990) 20 NSWLR 696

[1941] 2 KB 26

[1981] 1 NSWLR 547

(1978) 140 CLR 196

(2002) 212 CLR 111

(2001) 113 LGERA 439

[1947] AC 565

[2001] NSWLEC 60

(1990) 64 ALJR 593

(1991) 25NSWLR 580

(1991) 24 NSWLR 156

ORDERS

Appeal dismissed with costs.

*********

CA 40235/04
L&E 30088/01

SHELLER JA
BEAZLEY JA
BROWNIE AJA
Wednesday, 13 April 2005

KIRELA PTY LTD v MINISTER ADMINISTERING THE ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979

Judgment

1 SHELLER JA:

Introduction

On 1 June 2001 a proposed acquisition notice was given to Kirela Pty Ltd (the appellant) by the Minister Administering the Environmental Planning and Assessment Act 1979 (the respondent) advising that the appellant’s interest in land described in the attached schedule thereto would be compulsorily acquired. The date of acquisition was 8 June 2001. On 17 September 2001 a compensation notice was given under s42(2) of the Land Acquisition (Just Terms Compensation) Act 1991 (the Act) offering $2,913,150 by way of compensation, an offer which the appellant rejected claiming the land had a current value of $12,000,000 at the date of acquisition. The appellant began proceedings in the Land and Environment Court pursuant to s19(e) (Class 3 proceedings) and s24 of the Land and Environment Court Act 1979 (the LEC Act). The proceedings were heard by Cowdroy J. The land is located at Homebush and known as Lot 2 in Deposited Plan 1002876 (the subject land). Cowdroy J’s principal judgment was given on 29 August 2003. The appellant appeals from his Honour’s decisions. An appeal lies to this Court on a question of law; s56 of the LEC Act and s48 of the Supreme Court Act 1970 .

Just Terms Compensation

2 Section 54 of the Act is headed “Entitlement to just compensation”. Subsection (1) provides that the amount of compensation to which a person is entitled under Pt 3 of the Act “Compensation for acquisition of land”, “is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land.”

3 In the preliminary part of the Act, Pt 1, s3 states the objects of the Act which include:

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

4 Section 55, in Division 4 of Pt 3 of the Act, is headed “Relevant matters to be considered in determining amount of compensation” and provides:

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

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

(b) any special value of the land to the person on the date of its acquisition,

(c) any loss attributable to severance,

(d) any loss attributable to disturbance,

(e) solatium,

(f) any increase or decrease in the value of any other land of the person at the date of the acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.”

5 Section 56 of the Act headed “Market value”, so far as presently material, provides:

“(1) In this Act:

market value

(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.”

6 Later it will be necessary, when considering parts of the appeal related to the matters set out in s55, to refer to other parts of the Act.

Land area and site constraints

7 The total area of the subject land is 1.668 hectares. The shape of the land is irregular. The southern end has a frontage of 71.525 metres to Parramatta Road and the northern end a frontage of 42.23 metres to Allen Street. The subject land is generally level and covered with vegetation except for the remains of a dilapidated bowling clubhouse formerly used by the employees of Arnott’s Biscuits Limited, which owned the subject land together with Lot 1 in the same Deposited plan. Both lots, together with other land occupied by Arnott’s Biscuits Limited (the Arnott’s land), were sold to the appellant in 1998. The subject land is bounded by Powells Creek on the east, a creek now confined in a concrete stormwater channel. A bridge traverses the creek at the northern extremity of the land at Allen Street (the Allen Street bridge). Powells Creek forms the Local Government boundary between the Municipality of Strathfield and the City of Canada Bay (formerly Concord). The subject land is bisected by the M4 motorway which is elevated 12 metres above ground level where it crosses the subject land in an east/west direction. The area under the M4 is approximately 2,280 square metres. The surface of the land on this area is not disturbed. The subject land was analysed in the evidence as the “southern portion”, an area of 5,700 square metres between the M4 and Parramatta Road, and the “northern portion”, which lies between the M4 and Allen Street, an area of approximately 8,700 square metres. The subject land is affected by a transmission line easement and drainage, water and sewerage easements and encumbrances. It is also affected by the M4, “partial inundation from Powells Creek, contamination and rows of fig trees”.

Zoning

8 In his judgment of 29 August 2003 Cowdroy J said that the evidence of the history of environment planning instruments and zoning by Strathfield Council and Canada Bay Council illustrated policies and strategies adopted by the two councils to increase residential use and mixed use of land previously used for industrial activities. The following summary of the history of zoning and of the expert evidence is taken from his Honour’s judgment.

9 Under the County of Cumberland Planning Scheme Ordinance (CCPSO), which became operative on 27 June 1951, part of the subject land was reserved “Open space – Parks and Recreational Areas” and the remainder was reserved “County roads – National and Regional”. To the east of that part of the land zoned “Open space – Parks and Recreational Areas” lay adjacent lands zoned “Industrial class A – General” under the CCPSO. This comprised, inter alia, the Arnott’s land. The adjacent area to the west was zoned “Living Area”.

10 On 21 February 1969 the Strathfield Planning Scheme Ordinance (the Strathfield PSO) was gazetted. Generally it incorporated provisions consistent with those of the CCPSO relating to land in the Strathfield Municipality. Accordingly, the subject land was zoned “County Open Space” and “County Road” and was placed under the provisions of “Part II Reservation and Restriction on Use of Lands” as described in the Strathfield PSO. Cowdroy J said that at the date of acquisition the Strathfield PSO was the relevant planning instrument applying to the subject land. Under the Strathfield PSO the area adjacent to the subject land on the north and north-west was zoned “2(b) Residential”. In such zone attached and detached dual occupancies were permissible with consent subject to the provisions in cl 41 and cl 41B of the Strathfield PSO. To the south of the subject land, the area was zoned “3(b) Business (Special)” and “2(a) Residential” under the provisions of the Strathfield PSO.

11 In 1997 Strathfield Council prepared a future housing policy known as the Strathfield Housing Strategy to avoid the imposition of State planning controls for urban consolidation. The aims of this strategy included the relaxation of the controls for the development of multi-unit housing: the re-zoning of business zones along the Parramatta Road corridor to a mixed use zone; the re-zoning of residential zones to “2(b) Residential” under the Strathfield PSO and the authorisation of buildings to be four to nine storeys in height along the Parramatta Road corridor. This corridor comprised that portion of land between the western railway in the south, the M4 in the north, the northern railway in the east and the Homebush Bay goods line in the west. As already mentioned, the subject land has a boundary to Parramatta Road. It is within the precinct of the Parramatta Road corridor.

12 The Strathfield Housing Strategy referred to the “Parramatta Road Corridor Study” and noted that such study was a separate investigation of the Parramatta Road corridor. The study was prepared by Mike George Planning Pty Ltd and completed in 1997. It included recommendations for zoning land to allow for residential and business uses and for appropriate building heights. As a result, certain town planning controls were formulated by Strathfield Council which were rejected by the Minister for Local Government because greater provision for housing was required. During this period before the completion of the Strathfield Housing Strategy the Strathfield Council agreed to consider individual sites due to the protracted delay in finalising the strategy. The majority of the sites were industrial land and surplus to current requirements. The sites required an alteration in the planning controls to allow residential flat development. This practice was undertaken at the initiative of the owner of the land. Strathfield Council considered sites which included the former Department of Defence site at 14-16 Station Street, Homebush (the Department of Defence site), 5-7 Beresford Road, Homebush and 1-3 Beresford Road, Homebush. These sites were known as “selected sites”.

13 Another group of sites, separate from the “selected sites”, received individual consideration following requests that they be re-zoned to permit higher residential densities. In November 1997, after the exhibition of the Strathfield Housing Strategy from February 1997 to March 1997, Mike George Planning Pty Ltd produced a selected sites report for Strathfield Council entitled “Proposed Rezoning of Various Residential Sites – Strathfield”. Strathfield Council adopted this report with some revisions. Cowdroy J said:

“One significant recommendation was the identification of all land north of the M4 which was already zoned for residential purposes being adapted for villa house and town house development.”

14 In February 1998 Strathfield Council prepared a supplementary report to the Strathfield Housing Strategy. This provided for more intense residential development. On 3 September 1998 the Minister accepted the Strathfield Housing Strategy and from 9 October 1998 exempted the municipality from State Environmental Planning Policy No 53. The Strathfield Housing Strategy was implemented by the provisions of the Strathfield Local Environmental Plan No 79 (LEP 79) the Strathfield Development Control Plan No 3 (DCP 3), the Strathfield Development Control Plan No 8 (DCP 8) and the Strathfield Development Control Plan No 20 (DCP 20).

15 LEP 79 was gazetted on 4 February 2000. It amended the Strathfield PSO to include provisions relating to development within residential zones and mixed use zones. LEP 79 re-zoned the land adjoining the western boundary of the subject land to the north of the M4 as “2(b) Residential” and zoned the land adjoining the western boundary of the subject land to the south of the M4 as “10 Mixed Use”.

16 The land adjacent to the subject land on the eastern side of Powells Creek is within the Concord Local Government area and was affected by the provisions of the Concord Planning Scheme Ordinance (the Concord PSO). Such land is zoned “10(b) Enterprise area” pursuant to the Concord PSO. Concord Local Environment Plan No 100 (Concord LEP 100) gazetted on 24 December 1999 generally amended controls relating to “10(b) Enterprise area” in the Concord PSO and consequently facilitated re-development of the Arnott’s land in that municipality.

17 In his judgment of 29 August 2003, Cowdroy J summarised the zoning as follows:

“20 At the date of acquisition of the subject land, the zonings of the surrounding land were ‘2(b) Residential’ and ‘10 Mixed Use’ pursuant to the Strathfield PSO, and ‘10(b) Enterprise Area’ under the Concord PSO.

21 In 1997 Arnott’s Biscuits Limited submitted an application to Strathfield Council and the Concord Council to rezone all its land including the subject land. The application included the subject land and sought to rezone the land ‘to a flexible 10(b) Enterprise Area zone’ under the Concord PSO and part ‘3(b) Business Special’ and part ‘6(b) Private Recreation’ under the Strathfield PSO to recognise ‘the unique characteristics of the site’. The proposal did not proceed due to the sale of the Arnott’s land and of the subject land to the applicant. However the Arnott’s land in the City of Canada Bay municipality was rezoned ‘10(b) Enterprise Area’ under the Concord PSO. Arnott’s Biscuits Limited had proposed a floor space ratio (‘FSR’) of 1.5:1 for such land. However when Concord LEP 100 was implemented, the FSR was limited to 0.75:1.”

18 DCP 3 and DCP 20 were adopted by Strathfield Council on 20 September 1999 and commenced on 9 February 2000. DCP 3 was entitled “Multiple unit housing” and was “prepared to control and guide the nature, form and scale of multiple unit housing development within the municipality”. Clause 2.2 of DCP 3 provided that the bulk, scale and height of any development should be determined according to the relevant building envelope. These envelopes were illustrated in maps included in appendix 1 to DCP 3 which showed the locations where villa houses, town houses, two to three storey town houses, three to four storey units and five to seven storey units might be erected.

19 DCP 20 was entitled “Guidelines for the Siting, Design and Erection of Developments Within the Parramatta Road Corridor Area”. It provided guidelines for residential and mixed use development within the Parramatta Road corridor. The aim of DCP 20 was to ensure development was “sympathetic and appropriate for the natural and built environment” which “optimises opportunities for utilising public transport” and is “acceptable to the community and economically feasible”. Clause 2.4 of DCP 20 provided that buildings within the Parramatta Road corridor were to comply with the height limits that were shown on figures eight to ten of DCP 20 named the “Parramatta Road Corridor Built Form Masterplan” (the DCP 20 Masterplan).

Evidence

20 The appellant relied upon a report and evidence of a town planner, Mr John Wynne, of Urbis Pty Ltd. He gave evidence about the future development potential of the subject land. He considered that if the subject land had not been reserved for “County open space” it would have been included partly in the “2(b) Residential” zone under the Strathfield PSO and partly in the “10 Mixed Use” zone. Dealing first with the northern portion of the subject land, Mr Wynne said this would be zoned “2(b) Residential” because this zoning corresponded with the zoning and the use of the land north of the M4. Mr Wynne also concluded that a substantial part of the northern portion of the subject land would have been included in the “10 Mixed Use” zone. He relied upon the fact that the subject land adjoined land which is predominantly used for non-residential purposes, namely, the large scale development of the Arnott’s land. Development had been approved up to 24 metres in height on such site. He further observed that the land north of the subject land was undeveloped public open space and the subject land abutted only one residential property.

21 Mr Wynne acknowledged that if the northern portion of the land had been included in the “2(b) Residential” zone, DCP 3 would control the development. However, he believed that DCP 3 would represent an under-utilisation of such portion. DCP 3 provides that land zoned “2(b) Residential” is suitable for villa house or town house development, which is low density. Mr Wynne gave evidence that low density development would be inconsistent with the objectives of the Environmental Planning and Assessment Act 1979 and the subject land’s potential, given its proximity to public transport. He agreed that villa house and town house development as prescribed in DCP 3 had resulted in low density residential areas in the Strathfield municipality. He said, however, that there had been exemptions for larger land holdings such as the Department of Defence site and McDonald College in Beresford Road.

22 As to the southern portion of the land, Mr Wynne considered that the inclusion in the “10 Mixed Use” would be inconsistent with a zoning of adjacent land having a frontage to Parramatta Road. He said that DCP 20 controlled the majority of the southern portion of the subject land because it was largely within the Parramatta Road corridor. DCP 20 would set the development parameters for the southern portion of the subject land. He observed that DCP 20 “establishes a clear framework for future development in the area”. Such framework is based upon the identification of building layouts, footprints and height limits; the identification of a desired amalgamation of smaller sites to create feasible development sites; the establishment of a desired model of built form; and development guidelines to support these factors.

23 Turning to comparable sites Mr Wynne believed that the development parameters applicable to the “Strathfield Triangle”, being a triangular area of land bounded by Parramatta Road, the western railway line, Leicester Avenue, the Parramatta Road corridor, and the land in Beresford Road and The Crescent, represented a strong precedent for the likely planning controls that would be applied to the subject land. The accessibility, location and nature of built form of the comparable sites were similar.

24 Mr Wynne compared other sites including the former “Defiance Mill’s” site which was in close proximity to the Arnott’s land. The site was an industrial site re-zoned as “10(b) Enterprise area” under the Concord PSO to allow for more intensive development. The development parameters in this zone included a maximum FSR of 0.75:1 and a maximum building height of twenty-four metres. Mr Wynne considered such FSR to be restrictive and uncharacteristic compared to development on nearby land. However, he conceded that a FSR of 0.75:1 had been specifically imposed by the Minister in such zone.

25 In the result, Mr Wynne stated that the southern portion of the subject land was suited to intensive and large scale development. The development that could be undertaken included buildings with heights of approximately six storeys in the vicinity of the Parramatta Road frontage, being reduced to three storeys closer to the M4 if the subject land were used for residential purposes. If the use of the subject land was for non-residential purposes, six storeys would have been permitted throughout the southern portion. Such an approach would reflect the building envelope referred to in DCP 20. Alternatively, two separate buildings exceeding six storeys in height could be developed on the southern portion with a height of up to eight to ten storeys (“the two towers built form”). This was a similar approach to that adopted by Strathfield Council’s approval for the Department of Defence site.

26 With regard to the intensity of the development of the first built form, Mr Wynne calculated that the southern part of the subject land had an indicative development yield of 17,550m2 . He acknowledged that there would need to be a setback from trees, easements and Powells Creek. Adopting his two towers built form Mr Wynne stated that the southern portion would have an indicative development yield of 18,240m2. He said:

“It is my opinion that the indicative development potential of the southern part of the ‘acquired land’ based on my two alternative likely built form ‘envelope’ controls, falls between around 17,000m2 and 21,000m2. This represents an indicative floor space ratio of between 3.0:1 and 3.6:1 for this part of the site.

In my opinion, having regard to all the preceding factors, I consider that the most likely development yield for the southern part of the ‘acquired land’ would be closer to 17,000m2 of gross building area (an FSR of 3.0:1) than 21,000m2 (an FSR of 3.6:1).”

27 As a consequence Mr Wynne considered that the southern portion of the subject land could obtain a yield of 190 dwellings having an average gross floor of 90m2; or 170 dwellings having an average gross floor area of 100m2; or, 154 dwellings having an average gross floor area of 110m2.

28 On the northern part of the subject land Mr Wynne believed that residential development would have been likely. Such development would allow for high density to the south and east extending to a lower density in the north and west. He believed that a maximum of six storeys would be permitted in the vicinity of Powells Creek and the M4, decreasing to three storeys closer to the M4 if the subject land were used for residential purposes. Mr Wynne considered that the northern portion of the land with an area of 8,700m2 would produce an indicative development yield of 15,600m2. Allowing for setbacks a theoretical development of 20,000m2 could be achieved. He concluded:

“It is my opinion that the indicative development potential of the northern part of the ‘acquired land’ based on the likely built form ‘envelope’ controls, falls between around 13,000m2 and 20,000m2. This represents an indicative floor space ratio of between 1.5:1 and 2.3:1 for this part of the site.

Overall, it is my opinion that the northern part of the land would most likely be approved to accommodate development achieving a floor space ratio in the order of 1.5:1 (around 13,000m2 built form area).”

29 Accordingly the development Mr Wynne proposed for the northern development was 144 dwellings having an average gross floor area of 90m2; or 130 dwellings having a gross floor area of 100m2; or 118 dwellings having an average gross floor area of 110m2.

30 Mr Wynne considered that the land beneath the M4 would also be capable of development as a car park. He calculated that that land would produce an available area of 2,280m2 which would allow for 76 at grade car parking spaces.

31 Mr Don J Smith, the Chief Town Planner and later Director of Planning, Building and Environmental Services at Strathfield Council between 1981 and 2000, was of opinion that but for the “County Open Space” and “County Road” zoning under the Strathfield PSO the southern portion of the land would have been zoned “3(b) Business (Special)” under the Strathfield PSO with a FSR of 3:1. He considered that a commercial zoning was appropriate for such position since it was compatible with existing development along Parramatta Road. He believed that the northern portion of the subject land would have been zoned “2(a) Residential” under the Strathfield PSO similar to adjacent land in the Strathfield Municipality. Mr Smith said that the Department of Defence site and other intensive residential development sites such as 5-7 Beresford Road, Homebush and 1-3 Beresford Road, Homebush were of particular relevance. These were sites approved for residential flat development and had a close affinity to the Arnott’s land because they, like the Arnott’s land, had previously been used for industrial or non-residential purposes. He noted that Strathfield Council permitted residential development with a maximum height of twelve storeys obtaining an FSR of 2.5:1 on the Department of Defence site. Strathfield Council permitted a substantial building for residential flat developments at 5-7 Beresford Road, Homebush which was of the same height as a fifteen storey silo previously located on the property. Such development achieved a FSR of 2.5:1. At 1-3 Beresford Road, Homebush a six to twelve storey building was built partly on former railway land on the basis that it adjoined development of a similar height.

32 Having considered the likely built form envelopes proposed by Mr Wynne, Mr Smith said that in respect of the southern portion of the subject land it was not necessary to confine the development to three storeys adjacent to the M4. He would have recommended a six storey development throughout the southern portion regardless of whether the development was residential, commercial or both. He would have suggested approval of either development of the southern portion, but would have preferred the proposal for the two towers.

33 In relation to Mr Wynne’s development proposal for the northern portion of the subject land Mr Smith said that he did not consider that a limitation of three storeys adjoining the M4 was necessary. He suggested that such building height could have been increased to six storeys. He concluded by saying that he would have recommended Mr Wynne’s proposal for approval subject to:

· The 3 storey element adjoining the motorway be increased to 6 storeys, subject to sufficient setback from the motorway to reduce impacts such as noise, overshadowing and the like.

· The 3 storey building along the western boundary be set back to reduce impacts such as privacy, overshadowing, overlooking onto adjoining residents.

34 Mr Mike George said that unless the owner of land initiated such action Strathfield Council would not rezone industrial land to a residential zoning. If a request to rezone the subject land was not made, it would have been included in the “Parramatta Road Corridor Study” and treated similarly to adjoining land. He concluded:

“In these circumstances, it is my opinion that the whole of the acquired land would have been included in the study because –

· There would have been no particular reason to treat the different parts of the same site differently, simply because of the M4

· The Council had already taken action to increase residential densities north of the M4, and consideration of the northern part of the acquired land would have been consistent with this action.”

35 Mr George added:

“On balance the more likely scenario is that had an application been made by the owner of the acquired land, if it was zoned industrial, for a residential rezoning, the application would have been supported by the Council in principle.”

36 The respondent relied upon the evidence of Mr Garth McKenzie, a town planner, who disagreed with the appellant’s contention that the subject land would have been zoned for such intense uses. In his opinion, the northern portion of the subject land would be zoned “2(b) Residential” under the Strathfield PSO to render it compatible with the existing zoning of land to the west of the subject land. The southern portion of the subject land would be zoned “10 Mixed Use” under the Strathfield PSO similar to the area adjoining the southern portion of the subject land to the west and south west. Further, to provide for public pedestrian access or cycle link through the subject land between Parramatta Road and Allen Street Strathfield Council would have zoned part of the subject land as public open space or required dedication of an open space corridor as a condition of development consent.

37 Mr McKenzie believed that the development potential of the subject land would be subject to the same or similar provisions of LEP 79, DCP 3 and DCP 20. He considered two hypothetical scenarios to determine the development potential of the subject land. Both assumed the relinquishment of the Sydney Water easements. One option was based upon permitting the transmission line easement to remain in its current location. The second considered the transmission line as an underground easement. He calculated the development potential for the first option as permitting 8 townhouses and 2 detached dwellings in the “2(b) Residential” zone and 39 apartments of varying sizes in the “10 Mixed Use” zone located in two buildings of three storeys and four buildings of six storeys in height. The second option was predicated upon the transmission lines being relocated underground. Pursuant to this option, 18 townhouses and 2 detached dwellings would be derived in the “2(b) Residential” zone. In the “10 Mixed Use” zone Mr McKenzie stated 53 apartments could be located in five buildings of three storeys, two buildings of four storeys and five buildings of six storeys. In both options he assigned 9,350m2 of the total area of the subject land to the “2(b) Residential” zone and 7,330m2 to the “10 Mixed Use” zone.

38 Mr Harvey Sanders, who was a consultant town planner, testified that if the subject land had not been zoned “Open Space – Parks and Recreation Areas” and “County Roads – National and Regional” under the CCPSO, it would have been zoned partly “2(a) Residential” and partly “3(b) Business Special (Redevelopment)” under the Strathfield PSO when it was first gazetted in 1969. Such zoning was consistent with land adjacent to the western side of Powells Creek.

39 Following the adoption of the Strathfield Housing Strategy and LEP 79, Mr Sanders said that he would have advised the hypothetical prudent purchaser that the southern portion of the subject land would be rezoned “10 Mixed Use” under the Strathfield PSO and “2(b) Residential” pursuant to the Strathfield PSO in the north.

40 According to Mr Sanders, DCP 20 would apply to the southern portion of the subject land as this area was included in the Parramatta Road corridor. He believed that the DCP 20 Masterplan “would have illustrated building footprints on the land having a height six storeys along the Parramatta Road frontage with three storeys to the north”. Had the southern portion of the subject land been included in the DCP 20 Masterplan, setbacks would have been required for the M4 and for retention of the fig trees. He observed that the DCP20 Masterplan did not make provision for the electricity transmission lines and other easements. As to the northern portion, he said that he would have informed a hypothetical prudent purchaser that subject person was subject to development controls in the “2(b) Residential” zone contained in the Strathfield PSO and in the DCP 3.

41 Cowdroy J said:

“59 Mr Sanders’ conclusions differ from Mr Wynne regarding the applicability of DCP 3 to the northern portion of the subject land. Mr Sanders did not consider that the northern portion of the subject land would have been treated differently to adjacent land by Strathfield Council if it had been included in the Strathfield Housing Strategy. Land in the Strathfield municipality was rezoned by LEP 79 from ‘2(a) Residential’ to ‘2(b) Residential’ under the Strathfield PSO ‘to permit medium density residential development in order to increase residential densities’ proximate to the Olympic site. In this respect ‘redevelopment for the purpose of townhouses and villas was recommended and adopted by’ Strathfield Council. Mr Sanders also referred to the fact that Strathfield Council decided to maintain the townhouse and villa houses designation in the area north of the M4 despite the recommendations in Mike George’s ‘Proposed Rezoning of Various Residential Sites – Strathfield’ study. Furthermore Mr Sanders considered low density development to be represented by ‘2(a) Residential’ zone and not the ‘2(b) Residential’ zone.

60 Mr Sanders made other criticism of Mr Wynne’s conclusions. Mr Sanders did not accept that the fact that the subject land was a part of the Arnott’s land was relevant in determining the zoning and development potential of the subject land. Mr Sanders considered that the subject land was distinguishable from the Arnott’s land because it was a separate land holding and contained in a separate land title at the date of acquisition. Furthermore it was separated by Powells Creek and it was located in a different local government area.

61 Mr Sanders disagreed with Mr Wynne’s alternative hypothesis that the whole of the subject land would have been zoned ‘10 Mixed Use’ under the Strathfield PSO at the date of acquisition. Mr Sanders believed that the rezoning of the Arnott’s land as ‘10(b) Enterprise Area’ under the Concord PSO would not have influenced Strathfield Council to zone the entire subject land a ‘10 Mixed Use’.

62 Mr Sanders also disputed Mr Wynne’s town planning proposal based upon severance. Mr Sanders considered it speculative and improbable that the subject land would have been included in the development proposal for the Arnott’s land, especially as any such development proposal would exceed the applicable FSR standard under Concord LEP100. Mr Sanders also noted that the use of the subject land for a car park would have been prohibited under the ‘2(b) Residential’ zone. If the subject land was used for a car park any potential for residential development would be forfeited. Accordingly Mr Sanders did not regard Mr Wynne’s proposal as a practical or viable means of establishing the maximum value of the subject land.”

42 Mr Mark Pepping, also relied upon by the respondent, was the current manager of strategic planning at Strathfield Council and had the responsibility of considering all rezoning matters, providing advice relating to major development sites and offering expert advice to Strathfield Council’s executive and councillors. He supported the conclusions of Mr Sanders and Mr McKenzie. He believed that the southern portion of the subject land would have been zoned “10 Mixed Use” under the Strathfield PSO. He also said that the DCP 20 Masterplan would be applied to the use and development of such portion of the subject land. Accordingly Mr Pepping considered the southern portion of the subject land would be suitable for six storey buildings fronting Parramatta Road and three storey buildings abutting the M4. He said this of Mr Wynne’s proposal for eight to twelve storey development:

“The option for 8-12 storeys would not be supported due to the overall impact on the character of Parramatta Road and the potential for excessive overshadowing.”

43 He concluded that the northern portion of the subject land would have been zoned “2(b) Residential” under the Strathfield PSO. He considered that such zoning conformed with the residential development in surrounding areas to the northern portion of the subject land which was limited to townhouses and villa houses by virtue of the controls under DCP 3. He believed that Strathfield Council would maintain consistent development in this locality and ensure that excessive traffic did not generate from more intense development. For these reasons Mr Pepping did not support Mr Wynne’s development proposals for the northern portion of the subject land. He said:

“I would not be prepared to support the option for 3-6 storey buildings on the northern portion of the site on the grounds of its incompatibility with the future character of the adjoining residential [sic] within the Strathfield Municipality of townhouses and villas, the potential impacts of excessive traffic generation which would impose on Ismay Avenue and in turn impact on the operation of the intersection of Ismay Avenue with Pomeroy Street and the significant overshadowing which would occur.”

44 Mr Pepping agreed with Mr McKenzie that Strathfield Council would be strongly committed to maintain part of the subject land for a public access pedestrian or cycle link. He assumed such access would be along Powells Creek and overlie the flood prone land and riparian vegetation corridor. Mr Pepping made the point that the selected sites considered by Mr Wynne and Mr Smith with buildings greater than six storeys in height should not be used as examples for typical development in the Strathfield Municipality. They were approved by Strathfield Council before the implementation of any comprehensive residential housing strategy. He demonstrated that each of the “selected sites” had a special feature which in the absence of a housing strategy justified special consideration by Strathfield Council.

45 Cowdroy J said:

“Mr Pepping disagreed with the opinions of Mr Wynne and Mr Smith that the subject land would be given special consideration for development potential similar to the ‘selected sites’ referred to above because of its size. Mr Pepping stated:

In response to the suggestions made by both Mr Wynne and Mr Smith that the subject site because of its size would be given special consideration for development potential similar to previous sites is not supported. In 2000, Council successfully introduced a comprehensive Residential Housing Strategy which took into account a broad analysis for development and the cumulative impact across the whole of the Strathfield Municipality. This has provided a long term development strategy recognising various opportunities and constraints throughout the Municipality.”

46 Mr Richard Sydney Marshman, a town planner, was employed with the Concord Council as manager of its approvals unit from October 1997 to October 1998 and subsequently as the Council’s assistant general manager of Environment Planning and Development. He possessed a detailed knowledge of the strategic planning controls of Concord Council and provided an assessment of the likely response from Concord Council if the subject land was included in the redevelopment masterplan. Mr Marshman believed that Concord Council would not have approved a floor space transfer from the subject land to the Arnott’s land as suggested by Mr Wynne. The council would have been concerned about the additional traffic impact, building bulk and effects on the amenity of the neighbouring areas. He believed it unlikely that Concord Council would have agreed to a joint environmental planning instrument with Strathfield Council to implement site specific controls for the Arnott’s land.

47 Evidence was called before Cowdroy J about site constraints. Mr Eddie Lucas, the manager of the Civil Environmental Unit of Cardno Willing (NSW) Pty Ltd, gave evidence about the cost of removing or encasing Sydney Water sewer mains and the relocation of Energy Australia transmission lines. Evidence was also given about dealing with the possibility of flooding and the remediation costs for industrial contamination. Consideration was given to traffic constraints. Mr Craig McLaren of McLaren Traffic Engineering observed that “either of the development proposals in the Wynne report would be contrary to the available traffic studies”. He said that Mr Wynne’s development proposals would comprise an intense form of development and impose unacceptable traffic impacts. Mr Tim Rogers, the consultant traffic engineer for the appellant, concluded that the appellant’s appraisal of the potential development yield would “generate a modest amount of additional traffic” but should not be regarded as constraint.

48 The acoustic experts for both parties submitted a joint report outlining the areas of agreement and disagreement. The experts disagreed upon the suitability of the subject land for residential development and the feasibility of the various residential options proposed by the parties. Cowdroy J summarised this evidence.

49 Evidence was also given about the retention of vegetation and general conditions and terms imposed by the Department of Land and Water Conservation having regard to the Rivers and Foreshores Improvement Act 1948. The condition imposed on the western side of Powells Creek constrained development potential of the subject land.

50 Cowdroy J summarised the extent of the impact of the site constraints as follows:

“98 Mr Wynne believed that the range of easements including electricity transmission lines, sewerage and drainage easements which affected the land could be relocated to accommodate his proposed developments. Mr Wynne acknowledged that access to the subject land from Parramatta Road could be restricted, but noted that Allen Street could be utilised. Mr Wynne considered the contamination of the subject land, and regarded it as minor and easily remedied. He did not regard the rows of fig trees on the subject land as a serious impediment to development of the subject land.

99 Mr McKenzie for the applicant contended that development of the subject land would be limited to areas unaffected by the existing easements, potential for flood inundation, access, adjoining residential development, tree preservation, land contamination and the M4. With respect to the easements, Mr McKenzie made enquiries of Sydney Water and Energy Australia to ascertain the feasibility of relocating or removing the easements. Sydney Water advised that two of the easements within its control could be relinquished but all other easements are required to carry out their activities. Energy Australia advised that the costs of relocating the transmission line which traverses the subject land underground was $3,000,000 and would take approximately eight to twelve months to complete.

100 Mr Sanders said that he would have advised a hypothetical purchaser that the subject land was constrained by electricity easements, flood liability, road access, acoustic impacts, vegetation, contamination, the M4 and the requirement for a riparian zone.”

51 Both the appellant and the respondent tendered valuation evidence. The appellant relied upon the evidence of Mr Brian Dudakov. Mr Dudakov, for the purpose of his valuation, adopted the development proposals suggested by Mr Wynne and allowed for the cost of relocating three easements posing an impediment to future development of the subject land identified by Mr Lucas. No allowance was made for inundation as Mr Dudakov did not consider it to be a constraint. He took account of remedying contaminated land. Mr Dudakov undertook two valuations. The first treated the subject land as a separately saleable parcel. He relied upon Mr Wynn’s calculations and said:

“The total achievable development area assessed by Wynne is 30,000m2, which reflects a floor space ratio (FSR) of 1.80 on the total site area. I have estimated a total development yield of 316 residential units for the site based on Wynne’s estimate, which is calculated on an average gross area of 95m2 per unit (ie including common areas but excluding services areas, balconies and car parking areas). This area has been adopted based on my analysis of average gross unit sizes in other nearby projects.”

52 His Honour said:

“103 Mr Dudakov stated that he adopted the ‘direct comparison approach’ with the ‘principal unit of comparison being the rate per potential residential unit’. He assessed the sale price per m2 of land and sale price per m2 of floor space at fourteen allegedly comparable sites. From such comparable sites Mr Dudakov adopted a general amount of $50,000 per residential unit, which equated to an unencumbered residential value of $15,800,000 for 316 units. Such amounts reflects a figure of $526/m2 of potential development area and $947/m2 of land area, which accords with the parameters reflected by the comparable sales.

104 Deducting the approximate costs of $3,000,000 to relocate the transmission line, $75,000 to relocate easements and $200,000 for remediation expenses, Mr Dudakov reached an amount of $12,525,000 as the estimated value of the subject land as at the date of acquisition.”

53 The second valuation approach was to adopt Mr Wynne’s alternative proposal to consider the subject land and the Arnott’s land as one parcel of land. Mr Dudakov was advised that 236 “at grade car parking spaces” would be developed on the northern portion of the subject land. Allowing savings from this Mr Dudakov concluded that the value of the subject land on his hypothesis was $16,840,000.

54 Mr Kent Wood was the valuer for the respondent. He considered the site constraints in detail for the purpose of valuation. He used Mr McKenzie’s assessment of the highest and best use of the subject land which was townhouse and villa development on the northern portion of the subject land and development compliant with the “10 Mixed Use” zone on the southern portion.

55 He made his valuation by two separate approaches in accordance with Mr McKenzie’s report, firstly, on the basis that the overhead transmission line remained in situ and then assuming that the transmission lines had been located underground. Cowdroy J said:

“108 Mr Wood considered sales evidence of sites in the immediate locality to decide the sale prices which could be expected for residential units, villa houses and townhouses. In respect of option one he calculated that the subject land would yield eight townhouses at $100,000; two detached houses at $150,000; and thirty-nine apartments at $70,000 making a total of approximately of $3,830,000. To this amount $711,360 must be added to represent the value of 11,856m2 of open space at $60/m2. In total the valuation of the subject land was assessed by Mr Wood to amount to $4,540,000.

109 For the second option Mr Wood assessed the yield of the subject land at eighteen townhouses at $115,000; two detached houses at $170,000 and fifty-three apartments at $80,000 totalling $6,650,000. To this he added an area for open space of 6,931m2 at $60/m2 which amounted to $415,860. Therefore the total value of the development yield for option two was $7,065,860. Mr Wood however made a deduction of $3,000,000 for the cost of relocating the electricity transmission line easement reducing the development yield to $4,065,860.

110 Adopting the total development yield of option one, being the greater sum, Mr Wood subtracted $119,713 for the cost of the acquisition of Sydney Water easements, and $750,000 for remediation costs. The final valuation reached by Mr Wood for the whole of the subject land on this basis is $3,700,000.

111 Mr Wood stated that a severance claim as provided for by s55(c) of the Act is not warranted to these proceedings. Mr Wood alleged that the applicant could not maintain any loss due to severance since the subject land and the Arnott’s land are located in two different local government areas and are therefore subject to distinct planning controls.”

56 Ms Kerry-Anne Hogan, a valuer employed by the State Valuation Office, provided a valuation of the subject land taking into consideration the development as proposed by Mr McKenzie, the site constraints and town planning considerations. She developed a valuation on the basis of option one as proposed by Mr McKenzie and option two as proposed by Mr McKenzie. Cowdroy J said:

“113 Ms Hogan concluded that option one is preferable as it did not incorporate any costs of achieving the development proposed in option two. Accordingly on Ms Hogan’s assessment the highest value of the subject land at the date of acquisition was $4,400,000.

114 As to the applicant’s severance claims Ms Hogan agreed with Mr Wood and did not support it. Ms Hogan stated that the subject land was noted as being reserved for recreational purposes in the proposed masterplan submitted by the applicant to the City of Canada Bay Council for the redevelopment of the Arnott’s land. Subsequent to the lodgement of such masterplan there was no indication from either Strathfield Council or from the City of Canada Bay Council that car parking would be permitted on the subject land. Therefore Ms Hogan maintained that there is no evidence to suggest that the acquisition of the subject land directly reduces the value of the applicant’s land.”

Submissions at trial

57 I summarise the appellant’s submissions at trial as Cowdroy J recorded them. The appellant claimed that if the subject land had not been zoned under the Strathfield PSO as “County Open Space” and “County Road” it would have been zoned industrial under the CCPSO and subsequently the Strathfield PSO. Industrial use of the subject land would have intensified from the commencement of the Strathfield PSO in 1969 to the cessation of Arnott’s Biscuits Limited on its land in 1996. Arnotts would then have sought to rezone and redevelop all of its land. An application would have been made to Strathfield Council to rezone that part of the subject land lying within Strathfield Local Government area from industrial to residential to permit multi-unit housing. Arnotts would have applied to Concord Council to rezone its land within the Concord Local Government area to develop it in a manner that was complementary to the redevelopment of the subject land. The appellant claimed that in 1996 Strathfield Council would have recommended that the subject land be treated as a “selected site” because

· it was ideal for high density residential zoning based upon its size of 1.6 ha;

· it was being converted from an industrial use;

· its close proximity to Parramatta Road, three railway stations and bus services; and

· the New South Wales Government’s encouragement for urban consolidation.

58 Mr Smith said that if Arnotts sought to initiate a rezoning to develop its land such application would have received “special consideration” and “there would have been a site specific LEP/DCP” applying to the subject land. The appellant submitted that the evidence of Mr Smith and Mr George provided the most accurate indication of the controls which would have applied to the subject land. Cowdroy J said:

119 The applicant submits that the application of DCP 3 and of DCP 20 is significant. The applicant claims that it is unlikely that DCP 3 would have applied to the subject land. However if DCP 3 had applied, the applicant submits that the subject land would not be included in the building envelope so prescribed for villa houses or townhouses. Such limitation would be unduly restrictive, and would be categorised as development of the lowest density. The applicant contends it would be illogical for villa houses and townhouses only to be permitted adjacent to the redevelopment on the Arnott’s land.

120 Instead, the applicant submits that the subject land would have been considered separately and that a development control plan would have been created to conform with Mr Wynne’s built form plans. In the alternative the applicant submits that if a development control plan was not formulated for the subject land, it would nevertheless have been made the subject of individual consideration under DCP 20. Accordingly the applicant submits that at the date of acquisition the subject land would have been subjected to development controls as proposed by Mr Wynne had it not been reserved for a public purpose.”

59 The appellant submitted that the constraints affecting the subject land were minor. The electrical easement could be relocated at a cost of $3,000,000 and the disused easements extinguished. The remaining “live” water and sewerage easements could be concrete encased or relocated. Excavation within forty metres of the drainage easement would require approval from the Deprtment of Land and Water Conservation pursuant to s22B of the Rivers and Foreshores Act. Although the development approval for the Arnott’s land contained a condition requiring a riparian zone on the subject land, the appellant submitted a hypothetical purchaser would know at June 2001 that such condition could not be enforced in consequence of the decision in Silverwater Estate Pty Ltd v Auburn Council & Anor [2001] NSWLEC 60.

60 The appellant submitted that the “Interim Floor Prone Lands Policy” required a habitable floor to be 500mm above the 100 ARI floor event which could easily be achieved. The ground floor levels of any development could be raised to satisfy such requirements. As to the acoustic impact the appellant submitted that a variety of construction methods, including double glazing and mechanical ventilation, would be adequate to resolve any constraints. The appellant submitted that the rows of fig trees were not a constraint because they were permitted to grow as a consequence of the public purpose namely the reservation. Since the public purpose was to be disregarded the appellant claimed that the trees were not an issue. Reference was made to the Housing Commission of New South Wales v San Sebastian Pty Ltd & Ors (1978) 140 CLR 196 at 206.

61 The appellant maintained that the valuation of the subject land at the date of acquisition at $12,000,000 bore a relationship to the consideration received for the sale of McDonald College at 1-3 Beresford Road, Strathfield in May 2000 which had development consent for an area of 6,806m2, 202 residential units and a land value of $11,716,000. Other comparable sales included the Department of Defence site, 52-59 Parramatta Road and the former “Defiance Mills” site at 2A Hamilton Street, North Strathfield. Separate analysis of the southern portion and the northern portion of the subject land was said to establish a minimum value of $9,000,000 for the southern portion and $4,100,000 for the northern portion. Alternatively, a minimum value of $6,200,000 was suggested.

62 The respondent submitted at trial that the appellant’s claim of $12,000,000 depended solely on the hypothesis that the subject land was deemed a “selected site”. This contention was said to conflict with the decision of this Court in Griffith City Council v Polegato & Anor (1990) 20 NSWLR 696 at 701 which established that the Court must assess the value of the subject land at the date of acquisition without regard to remote hypothetical considerations. Reference was also made to the judgment of Handley JA in Yates Property Corporation Pty Ltd(In Liquidation) v Darling Harbour Authority (1991) 24 NSWLR 156 at 179.

63 The respondent acknowledged that, consistently with The Crown v Murphy & Anor (1990) 64 ALJR 593 at 595, the zoning of the subject land as “County Open Space” and “County Road” was to be ignored as being a step in the resumption process.

64 However, other factors contraining the subject land could not be ignored, including the desire of the Strathfield Council to use the subject land for public access. Additionally the transmission line, fig trees, contamination, flooding, easements and the requirement for riparian zone constituted constraints which affected the subject land at the date of acquisition and had to be taken into consideration.

65 Under the heading “Zoning and development planning controls” Cowdroy J summarised part of the respondent’s argument. The respondent disputed the appellant’s assertion that the subject land together with the Arnott’s land would have been zoned for industrial purposes submitting that there was no evidence to indicate that Strathfield Council would have zoned the subject land for industrial purposes under the Strathfield PSO or to support the submission that Arnotts would have sought a rezoning of all its land for multi-unit housing in 1996. In 1996 Arnotts made a rezoning application to rezone the land, part “6(b) Private Recreation” and part “3(b) Business Special”, under the Strathfield PSO. That application did not indicate that Arnotts would have submitted an application to rezone its land in accordance with Mr Wynne’s development proposals. The respondent disputed the appellant’s submission that the Arnott’s land would have been deemed a “selected site” or alternatively have received “special consideration” under DCP 20.

66 Mr Smith did not say in evidence that at the date of acquisition he would have advised a hypothetical prudent purchaser that Strathfield Council would have recommended the type of development as proposed by Mr Wynne. Mr Smith merely stated that if the subject land was available in 1996 when the “Parramatta Road Corridor Study” commenced “it would have received ‘special consideration’ ”.

67 Before the Court could conclude that Arnott’s land would have been approved as a “selected site”, several issues had to be resolved in favour of the appellant. The Court would have to find that Arnotts would have approached Strathfield Council to redevelop its land as envisaged by Mr Wynne’s proposal, that Mr Smith would have recommended such approach and that Strathfield Council would have granted approval. Such approval would have to be granted before the Strathfield Housing Strategy was implemented. Therefore the respondent claimed that before the Court could give weight to Mr Smith’s suggestion, it must make each finding in favour of the appellant and further that the Arnott’s land would become the subject of a site specific development control plan rendering DCP 20 and DCP 3 inapplicable.

68 The respondent submitted that such hypothesis was contrary to Mr Pepping’s evidence. Mr Pepping did not agree that the area of Arnott’s land together with the subject land would have warranted special consideration for development. He said that once Strathfield Council adopted the Strathfield Housing Strategy in 1998 the Arnott’s land and the subject land would not have received any special treatment. The development control plans adopted to implement the Strathfield Housing Strategy would have applied. Both Mr Pepping and Mr McKenzie added that “selected sites” were only included in the Strathfield Housing Strategy following a request by the owner of the land. The Court could not conclude that Arnott’s land together with the subject land would have been treated by the Strathfield Council as a “selected site” merely because other sites in the neighbourhood were so treated prior to 1997. The respondent acknowledged that the Department of Defence site was an exception. It was allowed only because of specific considerations, namely the fact that the Department of Defence had agreed to defer its application pending the making of a new draft local environmental plan. Accordingly, the respondent submitted that the Court could not speculate without a factual or legal basis that Strathfield Council would have classified the Arnott’s land as a “selected site” and subsequently implemented different development controls for adjoining land.

69 The respondent submitted that Mr Wynne’s evidence should be disregarded since it was predicated upon the subject land being classified as a “selected site”. This was evident from Mr Smith’s statement. He said that it was clear from s4.3 of the planning report, prepared by Urbis and designed to represent Mr Wynne’s recommendation for development on the subject land, that Strathfield Council did from time to time approve development that significantly departed from the planning controls that applied at the time. “Part of Council’s strategy to accommodate the government’s urban consolidation initiative was to give special consideration to selected sites where circumstances allowed a greater built form and higher density.”

70 The respondent submitted that the appellant’s approach was contrary to the principles in Griffith City Council v Polegato. The appellant’s submission that the Arnott’s land would have received “special consideration” under DCP 20, if not deemed a “selected site”, was entirely speculative.

71 Under the heading “Development yield”, Cowdroy J referred to the respondent’s submission that Mr Wynne’s development controls and built form envelopes were unrealistic. It was submitted they directly conflicted with the provisions of DCP 20 which were the result of considerable analysis, various studies and strategies considered by Strathfield Council between 1996 and 1999. In relation to the hypothetical application of DCP 20 to the subject land Mr Sanders stated:

“It is considered that, if development of the subject land had been contemplated in the Development Control Plan Master Plan, it would have illustrated building footprints on the land having a height of 6 storeys along the Parramatta Road frontage with 3 storeys to the north. It is also considered that the footprint would have been setback from Parramatta Road sufficiently to ensure the retention of the Fig trees across the frontage. Setbacks would also have been provided from the carriageway of the M4 Motorway.”

72 The respondent relied upon Mr McKenzie’s evidence that Mr Wynne’s proposal was unrealistic because it disregarded site constraints and the building footprints did not conform to the characteristics of the subject land.

73 In relation to the northern portion of the subject land the respondent relied upon Mr George’s evidence. Mr George concluded in the “Parramatta Road Corridor Study” that the area north of the M4 should be categorised as suitable for villa house and townhouse development with some potential for two storey dwellings with attics. Accordingly, the respondent submitted that there were no grounds to suggest a departure from the DCP 3 controls with respect to the northern portion of the subject land. In support of the respondent’s submission, Mr Pepping, in a passage already quoted, stated that he would not support “the option for 3-6 storey buildings on the northern portion” of the subject land because “of its incompatibility with the future character of the adjoining residential [sic] within the Strathfield Municipality of townhouses and villas.”

74 As to the southern portion, the respondent submitted that the controls imposed by the “Parramatta Road Corridor Study” and the “Revised Parramatta Road Corridor Traffic Study” were determinative of the development potential of the subject land. The “Revised Parramatta Road Corridor Traffic Study” included a built form masterplan which reduced the density of units on the land adjacent to the southern portion of the subject land to 71 units. The respondent submitted that Strathfield Council would have allocated a similar density on the southern portion thereby rendering Mr Wynne’s proposal unrealistic and Mr Pepping’s proposal more likely. The respondent further submitted that a hypothetical prudent purchaser of the subject land would not expect to obtain the density of development proposed by Mr Wynne. The respondent relied on Mr Pepping’s evidence:

“If I had been approached by a purchaser in respect of this land at the date of acquisition I would have advised that the concepts of development set out in either the development concepts (pages 39-40 and 41-45) or those concepts as set out at pages 48-51 of Wynne report of August 2002 would not have received any recommendation to the Council nor, in my opinion, would the Council have varied the policies adopted prior to the date for this site.”

75 Under the heading “Site constraints” Cowdroy J dealt with the respondent’s submissions. The costs associated with the repositioning of the transmission line were substantial. The transmission line would constrain the likely building form on the subject land as would setbacks required from trees and from Powells Creek. A hypothetical prudent purchaser would be aware that development consent for the Arnott’s land was subject to a condition that a 15m setback be established along the western side of Powells Creed for a vegetated riparian zone. Mr Pepping stated that a riparian corridor was warranted “given the open space corridor which exists north of the subject site from Allen street and largely undeveloped nature of the subject site”. Such corridor would restrict development of the subject land.

76 Mr Lucas recommended that the area affected by the flooding be retained for car parking or for open space rather than removing Allen Street bridge. Further, he recommended that the area above the 450mm sewer should not be built upon. The respondent submitted that these matters demonstrated the fallacy of Mr Wynne’s design which envisaged three storey buildings built over this area. The respondent submitted that construction could not take place above the 450mm sewer across the north eastern corner of the subject land. Other water or sewerage easements could be removed at cost, but those remaining would nevertheless constrain development of the subject land as each easement would require relocation in and around the building form of the subject land. The respondent relied on evidence that remediation of the contamination on the subject land was estimated to cost $750,000.

77 Mr Cooper gave evidence that a hypothetical prudent purchaser could not be guaranteed that the entire area of the subject land could be utilised due to acoustic constraints from traffic using the M4. The respondent submitted that a constraint was imposed on the whole of the Parramatta Road corridor because of traffic generation. As a result of the concerns of the Roads and Traffic Authority the number of potential units in the Parramatta Road corridor had been reduced by Strathfield Council from 4,400 to 3,600. The respondent submitted the subject land would be similarly constrained.

78 Under the heading “Valuation evidence”, the trial Judge recorded the respondent’s submission that if the Court rejected the appellant’s conceptual basis premised on the subject land being a “selected site”, there was no alternative presented by the appellant for the Court to consider. In those circumstances, Mr Wood’s valuation had to be adopted. During the final submissions, the respondent presented alternative calculations for Mr Wood’s second option based on the transmission lines being relocated underground. The calculations were similar to Mr Wood’s option 2 except the number of apartments on the southern portion of the subject land was adjusted to 71 in “Option 2A” to conform with the number of apartments permitted on the adjacent land stipulated in the built form masterplan in the “Revised Parramatta Road Corridor Traffic Study”. In comparison “Option 2B” provided for 63 apartments. This calculation made a 10 per cent reduction in the number of units to accommodate site constraints.

79 His Honour set out the calculation and said “Accordingly the maximum valuation attributed to the subject land by the respondent is $4,750,000.”

80 The respondent submitted that the appellant’s claim for severance was incapable of being awarded compensation under s58 of the Act. Additionally, the respondent submitted that the appellant’s proposal to transfer the subject land’s floor space to the Arnott’s land for incorporation in a car park was impossible since a car park was a prohibited use in the “2(b) Residential” zone under the Strathfield PSO. Furthermore, the development of the Arnott’s land was already at the maximum FSR of 0.75:1 and it was likely that City of Canada Bay Council would not have countenanced such a proposal.

Cowdroy J’s findings

81 The trial Judge acknowledged the parameters of the task of valuation that he was required to undertake by reference to Horn v Sunderland Corporation [1941] 2 KB 26 at 42, Housing Commission of New South Wales v Falconer & Ors [1981] 1 NSWLR 547 at 569and ss55 and 56 of the Act. His Honour observed that s56(1)(a) of the Act reflected the principle established by the High Court in Housing Commission of New South Wales v San Sebastian Pty Ltd at 205 and by the English Court of Appeal in Pointe Gourde Quarrying and Transport Company Ltd v Sub-Intendent of Crown Lands [1947] AC 565 at 572 which required the Court to disregard 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 when assessing compensation.

82 His Honour did not accept the appellant’s submission that, but for the public purpose, the subject land would have been zoned for industrial purposes. He regarded this claim as speculative and predicated upon a hypothesis that the subject land, but for the public purpose, would have been zoned industrial and then residential. This submission relied upon Mr Cooke’s evidence which disregarded the prohibition of industrial activity on the northern portion of the subject land and on a substantial area adjacent to the subject land by the “Proclaimed Residential District No 2 – Homebush”. Furthermore, the town planning evidence revealed that Powells Creek was considered as a natural boundary between land used for industrial uses and residential land. His Honour said:

“158 Having considered the town planning evidence the Court finds on the balance of probabilities that the northern portion of the subject land would have been zoned ‘2(b) Residential’ under the Strathfield PSO and that the ’10 Mixed Use’ zone under the Strathfield PSO would have applied the southern portion of the subject land. Such a finding is in accordance with Mr Wynne’s evidence for the applicant, and Mr Pepping’s, Mr McKenzie’s and Mr Sanders’ evidence for the respondent.”

83 Turning to consider development controls, his Honour was satisfied that DCP 3 and DCP 20 would have applied to the subject land. The southern portion of the subject land was located within the Parramatta Road corridor and would have been subject to the height and building controls specified in the DCP 20 Masterplan. His Honour was not persuaded that Strathfield Council would have treated the northern portion of the subject land differently to adjoining land which was subject to DCP 3.

84 His Honour said:

Zhang v Canterbury City Council

Ervin Mahrer & Partners v Strathfield Municipal Council

‘The significance of the departures from the requirements of DCP 20 in the present case is heightened by two additional factors -

(i) the very large scale nature of the redevelopment proposal; and

(ii) its crucial timing in the early stages of implementation of DCP 20 (and the Masterplan it incorporates).

These factors, in combination would, if the proposal were to be approved, so seriously undermine the integrity and planning intent of DCP 20 (including the Masterplan) as to effectively emasculate it and thereby to set at nought the fruit of the sustained planning processes which undergird DCP 20.

To approve the proposed development would not only create a planning precedent very adverse to the integrity of DCP 20, but would virtually ignore the content of DCP 20, in circumstances where no justification for departing from the requirements of DCP 20 has been substantiated by the Applicant.’

Accordingly DCP 3 and DCP 20 must be treated as providing the fundamental controls for the development of the subject land.

161 To reach the development potential of the subject land as submitted by the applicant, the hypothetical purchaser would need to be assured that it would have obtained an exemption from the general planning controls and approval for site specific development controls. It would require exemption from the Strathfield Housing Strategy after its adoption in 1998, and from the controls imposed by DCP 3 and by DCP 20. There is no evidence which establishes that on the balance of probabilities the subject land would have been approved as a ‘selected site’ prior to the adoption of the Strathfield Housing Strategy. Nor does the evidence establish that exemption is likely to have been granted after its adoption.”

85 Cowdroy J referred to Mr Pepping’s evidence that there were particular reasons for Strathfield Council granting approval for “selected sites” before the adoption of the Strathfield Housing Strategy. There was, in the trial Judge’s view, insufficient evidence to support the appellant’s claim that Strathfield Council would have altered planning controls to permit residential development on the subject land and the Arnott’s land in excess of the applicable planning controls.

86 Although Mr Smith as chief town planner at Strathfield Council might have exercised persuasive power and influence in that role, his evidence did not establish that the subject land would have been accepted by Strathfield Council as a “selected site”. Mr Smith merely expressed the opinion that it was likely that had the subject land “been available” when the “Parramatta Road Corridor Study” commenced it would have received “special consideration”. This evidence, in his Honour’s opinion, fell well short of establishing the requisite inference of which the Court had to be satisfied, namely, that the subject land would have been treated as a “selected site”, granted a more intensive floor space ratio, and exemption from the relevant development control plans. There was no evidence to show that Strathfield Council had ever altered such controls after it had adopted its residential housing strategies, nor that the applicant would have received favourable treatment. Reference was made to the judgment of Stein JA in Overton Investments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2001) 113 LGERA 439 at 445.

87 Arnotts had submitted a rezoning application to Strathfield Council and to Concord Council. However, such application did not reflect the residential zoning which was pivotal to Mr Wynne’s development proposals. His Honour accepted the respondent’s submission that there was no evidence to support the proposition that in 1996 Arnotts sought a rezoning from something different than part “6(b) Private Recreation” and part “3(b) Business Special” under the Strathfield PSO. His Honour said:

The Crown v Murphy

108 The remaining grounds of appeal under the heading “Decision of 29 August 2003” were as follows:

Land Acquisition (Just Terms Compensation) Act

(a) First making a finding as to the planning controls that would have applied to the land, including controls in development control plans, were it not for the reservation of the land for county open space; and

(b) then determining the market value of the land at the date of resumption on the basis of the planning controls referred to in (a).

2. Having found that Development Control Plan No 20 (‘DCP No 20’) would have applied to part of the land were it not for the county open space reservation, in circumstances in which DCP No 20 diagrammatically identified a building envelope and number of storeys for each parcel of land the subject of DCP No 20, his Honour erred in making no finding as to the building envelope and number of storeys which DCP No 20 would have identified for the land had it been included in DCP No 20.

3. His Honour erred in:

(a) Failing to consider the evidence led by the appellant and the submissions made on its behalf as to the appellant’s claim for compensation based upon the assumption that DCP No 20 and/or Development Control Plan No 3 applied to the land; and

(b) giving judgment upon the erroneous assumption that the appellant did not lead such evidence or make any such submissions.

…

6. His Honour erred in that compensation was determined contrary to and not in accordance with:

(a) Sections 54-59 of the Act; and

(b) principles of valuation and/or assessment of compensation for compulsory acquisition.”

109 In his oral submissions, Mr Hale SC, who appeared for the appellant, summarised the questions of law claimed to be in issue; first that the trial Judge had adopted a principle of valuation which was wrong; secondly, the trial Judge had failed to consider all the evidence and submissions of the appellant and thirdly, there was an absence of reasons.

110 In the course of oral submissions, the appellant emphasised what was said to be error in Cowdroy J’s reasoning process in that his Honour conflated what were said to be the two stages in valuation. The first stage was to make findings about zoning, controls and the content of controls and the second, given those findings, to look at what the hypothetical purchaser would pay for the land in question. In this context, reference was made to Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111 at 116. As I have already indicated under the heading “Potential development yield”, Cowdroy J said that the Court adopted the respondent’s proposals as they were formulated in accordance with DCP 3 and DCP 20 and took into account site constraints. Debate about this paragraph suggested that the heart of the appellant’s submission was that the trial Judge ignored Mr Wynne’s opinion about how the controls would apply to the subject land once his Honour concluded at para 160 that the success of the applicant’s claim for compensation was entirely dependent upon Strathfield Council creating specific development controls for the subject land to exempt it from the requirements under DCP 3 and DCP 20. Otherwise Mr Wynne’s development proposal would not have been approved by Strathfield Council. Further, the appellant submitted that the trial Judge did not adequately enunciate his reasons.

111 In his submissions, Mr Webster pointed out that Mr Wynne’s proposal was that on the northern portion of the subject land there would be six storey and three storey development in an area where the DCP 3 allowed development of two storey and one storey townhouses and villas. Apparently he was saying that DCP 20 would apply also to the northern portion of the subject land. For the southern portion he proposed two 8-12 storey building towers contrary to the whole scope of DCP 20 with six storey buildings along Parramatta Road.

112 To understand the respondent’s submission it is helpful to set out para 8.2 of Mr Wynne’s report “The Approach to Determining Development Parameters Applying to the Land”:

“Other than with regard to permissible land uses, the Strathfield Planning Scheme Ordinance does not specify any critical ‘development standards’ for either the 10 Mixed Use or 2(b) Residential Zone. Therefore a final determination of zoning of the northern part of the land is not essential in order to introduce development controls such as FSR, height or density. In a sense it is immaterial which would be the final zoning. The structure of the Strathfield Planning control passes development control to a ‘policy’ level as articulated by Development Control Plans.

The provisions of Strathfield DCP No 20 affect a large part of the ‘acquired land’, and I consider that this policy document represents the dominant approach by which development parameters for the ‘acquired land’ are likely to be identified and applied.

DCP No 20 adopts a ‘master planning’ or site specific approach to development along the Parramatta Road corridor. Building on detailed investigations of the corridor, including the identification of the potential for increased development on larger, well located ‘opportunity’ sites, the DCP establishes a clear framework for future development in the area, which is based on:

· Identification of desirable building ‘footprints’ and height.

· Identification of a desired amalgamation of smaller sites to create feasible development sites.

· Establishing ‘models’ of desirable built form in the area.

· Outlining a series of development guidelines supporting the above.

Development within and adjoining residential zones

It is acknowledged that DCP No 20 does not presently extend to include the northern part of the ‘acquired land’. Of course, if the zoning of this portion was to be 10 Mixed Use, then there is a case to be made for extending DCP No 20.

However, if the northern part of the land were included in a 2(b) Residential zone, Strathfield DCP No 3 would prima facie control development. In the circumstances of this case however, in my opinion with respect to development on the northern portion, the controls contained in DCP No 3 would not be appropriate, for the following reasons:

· DCP No 3 identifies 2(b) Residential zoned land in the vicinity of the site as being suitable for ‘townhouse/villa development’. Such low intensity development on the ‘acquired land’ is unrealistic and inappropriate. The site’s proximity to public transport clearly identifies it as being suitable for higher density development – similar to that being experienced in other areas close to the ‘acquired land’. Given the sites context, it is considered that low density development would be inconsistent with state and local government planning policy to achieve urban consolidation in areas benefiting from high public transport accessibility.

· Low density development on the ‘acquired land’ could also be inconsistent with one of the key objectives of the Environmental Planning and Assessment Act, which is for the promotion, and co-ordination of the orderly and economic use and development of land. Villa and townhouse development would likely represent an inappropriate use of the ‘acquired land’ as it would not achieve sufficient development density to support increased residential populations in such a highly accessible area.

· It is evident that the ‘townhouse/villa’ nomination contained in the DCP has been applied generally to low density residential areas throughout the LGA, with site specific exemptions for larger land holdings. In my opinion the ‘acquired land’ would have been identified as an ‘opportunity site’ consistent with Council practice on other large sites such as the Defence Department land in Station Street and the McDonald College site in Beresford Avenue, which, notwithstanding that DCP No 3 applied to these sites, are nominated for higher density development than generally allowed by DCP No 3.”

113 Mr Webster submitted that Mr Wynne was suggesting that so far as DCP 20 was concerned it would apply to the northern portion of the subject land as well. In particular, reference was made to the last paragraph in the passage I have quoted. The proposal was similar to what had been permitted on the Defence Department site near the railway station on a special application before the Housing Strategy had been adopted. The respondent submitted that far from being in accordance with DCP 20 or the masterplan and far from being in accordance with DCP 3 or DCP 20, Mr Wynne was proposing development far in excess of what was proposed in either of the reports or the studies going back to the nature of the development that was proposed in those two policies. The evidence to which I have already referred from Mr Pepping was that such sites were special sites which had been dealt with before the Housing Strategy was implemented. Once the Housing Strategy was implemented after its acceptance by the Minister in September 1998 there was no variation whatsoever and no evidence before Cowdroy J of anybody who had been given any concession. The appellant’s valuer, Mr Dudakov, prepared only a valuation totally dependent on Mr Wynne’s approach which in respect of the northern residential area was six storey and three storey. That was on the basis of something between 150 and 190 units on the subject land. The trial Judge set out accurately exactly what Mr Wynne was proposing.

114 Mr Webster pointed out that Mr Wynne’s proposal involved a floor space ratio of 3.6 or 3.0:1. On the adjoining Arnott’s site the Minister set the limit at .75:1. As Mr Webster put it the development allowed on the eastern side of the channel was .75:1 but Mr Wynne said that the subject land was a different site where a floor ratio of 3.6:1 was appropriate. This, Cowdroy J rejected.

115 Mr Webster submitted that Mr Wynne was putting a U-shaped development on the southern portion of the subject land with horrendous traffic implications. In that sense it might be conceded that Cowdroy J was wrong when he said the success of the appellant’s claim was “entirely dependent” upon Strathfield Council creating specific development controls for the subject land in regard to the southern portion. The problem was one of the density of the development. However, Mr Webster submitted that the trial Judge was talking about different controls to DCP 20. His Honour was mainly referring to what all the studies and strategies indicated namely a six storey across the front and three storeys at the back not a massive U-shaped six storeys with three storeys almost abutting the M4. There was never any suggestion in any of the planning documents that there would be a U-shaped building of that size. If DCP 20 applied there would have been a six storey building across the front and a three storey building at the back. So far as the northern portion of the subject land was concerned, Mr Wynne was saying in effect “forget DCP 3”. Special controls should be applied to this site which gave it the added development potential. Cowdroy J’s findings were that DCP 3 and DCP 20 would apply and the sites would not become a selected site proposal. The hypothetical purchaser would need to be sure that it would have obtained an exemption enabling it to obtain the density of development suggested by Mr Wynne. In other words, as his Honour said, the claim for compensation as formulated by the appellant depended upon the Strathfield Council creating specific development controls for the subject land and exempting it from the requirements of DCP 3 and DCP 20. As the trial Judge said at para 170:

“… The Court rejects the density of development on the subject land proposed by the applicant. The site constraints, including potential traffic and acoustic issues, and the zoning would not permit such intense development. The Court adopts the respondent’s proposals as they are formulated in accordance with DCP 3 and DCP 20 and take into account site constraints.”

116 On the northern portion villas and townhouses were not six storey or three storey. What was accepted was Mr McKenzie’s proposal of six storeys along the front of Parramatta Road and three storeys at the M4 and villas and townhouses in the northern portion. While Mr Webster did not say that the appellant’s proposal for the southern section did not comply in the sense that the U-shaped building was in part six storey with three storey at the rear, it was inconsistent in terms of the level of intensity comparing the site next door. The appellant was saying that in the northern portion the development had to be six storey and three storey different to the one storey, two storey in DCP 3 applied to the adjoining lands. It was correct to say that in order to get a development of the intensity Mr Wynne proposed there would have to be an exemption from DCP 3; see s79C(1)(a)(iii) of the Environmental Planning and Assessment Act. There had to be strong grounds for varying the requirements of the DCP. The relevant part of DCP 3 was 2.2 “Density, Bulk and Scale” and the building envelope “Building Height and Scale” where “up to two storey, townhouses” permitted a maximum of two storeys and “villa houses” permitted a maximum of one storey as set out on the map. Mr Wynne was saying that the northern part of the subject land should be exempt from those provisions to allow six storey and three storey units.

117 In reply, Mr Hale relied upon Mr Wynne’s evidence to demonstrate that, in the northern portion, units other than one or two storey villas or townhouses would have been permitted if DCP 3 had applied to the land. The point was made that where all were agreed that DCP 3 applied to the northern portion of the subject land and DCP 20 to the southern portion, the disagreement between the parties was as to what that involved in terms of the building envelope in each case since in neither did DCP 3 or DCP 20 actually apply because of the existing zoning of the land. The question was what would the building envelope have been on the hypothesis that DCP 3 and DCP 20 applied. That question, Mr Hale submitted, Cowdroy J failed to resolve.

118 The appellant’s valuation case was based on the opinion of Mr Wynne. As the trial Judge said at [160] the success of the appellant’s claim for compensation was entirely dependent upon Strathfield Council creating specific development controls for the subject land to exempt it from the requirements under DCP 3 and DCP 20. If that did not happen Mr Wynne’s development proposal would not have been approved by Strathfield Council. I am not persuaded that Cowdroy J’s reasoning to this conclusion reveals any error of law. That apart, I find it persuasive. Mr Webster submitted that clearly as my summary of the judgment shows his Honour fully took into account Mr Wynne’s proposals.

Disturbance

119 Section 55 of the Act provides that in determining the amount of compensation to which a person is entitled regard must be had to “(d) any loss attributable to disturbance”. Section 59 provides that in the Act “loss attributable to disturbance” of land means, inter alia,

“(b) valuation fees reasonably incurred by those persons in connection with the compulsory acquisition of the land;

…

(f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.”

120 There was dispute between the parties about whether consultants’ fees including fees paid to a town planner ($25,000), civil engineer ($9,765) and surveyor ($9,460) in addition to an amount of $246,740 for stamp duty most of which might be incurred for the purchase for a substitute parcel of land fell within this head of claim. Cowdroy J dealt with these claims in Kirela Pty Ltd v The Minister (Judgment No 2) of 12 March 2004. In this appeal the Court is concerned only with the fees paid to the town planner and to the surveyor.

121 Mr Webster submitted that in the circumstances of this case there was no basis for the disturbance claims either for town planning consultants’ fees or surveyors’ fees since within the language of s59(f) of the Act, which was relied upon, the costs incurred did not relate to the actual use of the land as a direct and natural consequence of the acquisition. Cowdroy J held that none of the amounts claimed could be held to arise out of actual use of the land as required by s59(f). Under this head of disturbance his Honour allowed only the amount of $18,006, an agreed amount of legal costs, pursuant to s59(a) of the Act.

122 The appellant pressed the following grounds of appeal in relation to the disturbance claim:

“10. His Honour erred in finding that the appellant’s disturbance claim for town planning consultants’ fees of $25,000 did not constitute a financial cost relating to the actual use of the acquired land.

…

13. His Honour erred in finding that the appellant’s disturbance claim for surveyors’ fees of $9,460 did not constitute a financial cost relating to the actual use of the acquired land.”

123 In its written submissions the appellant did not press grounds 11, 12 14 and 15. As to ground 10 the appellant submitted that town planning evidence was necessary to value the resumed land. Mr Glew, a director of the appellant, was an experienced valuer. As a director he had the dominant responsibility for property acquisitions and development strategies but had not engaged valuers to advise him on property acquisitions or dispositions. Mr Wynne, a consultant planner, was engaged to provide town planning advice in relation to the acquired land including assessment of the town planning and development constraints and opportunities of the subject land and their likely impact on the value of it. It was submitted that if Mr Glew, or indeed any other valuer, incurred professional fees from a town planner engaged to assist in the valuation of the resumed land those fees would have come within s59(b) of the Act as disbursements incurred in obtaining the valuation. The fact that Mr Glew, as a director of the appellant, did not claim valuation fees from the appellant, did not have the consequence that the disbursements incurred in the valuation were not claimable. This was because the planning advice was necessary to inform Mr Glew so as to enable him to make a valuation of the resumed land.

124 The trial Judge said:

“3 The affidavit of John Wynne, town planner establishes that the applicant paid to Urbis Pty Limited an amount of $260,000 for planning advice in respect of the redevelopment of the former Arnott’s site of which the acquired lands formed part. The invoices issued by Urbis Pty Limited do not itemise work which was undertaken solely in connection with the compulsory acquisition of the acquired land and the amount of $25,000 constitutes an estimate only. Mr Wynne states that town planning advice was provided by his company relating to development constraints and opportunities for such land and the likely impact upon the acquired land. He states that such work was performed to enable the applicant to make a determination of the value of such land.

Blacktown Council v Fitzpatrick Investments

12 It is apparent that the land, at the date of acquisition was not being used for any purpose but rather was awaiting development for some future purpose. However the entitlement to the survey, flooding and planning advice is dependent upon each claim being within s59(f) of the Act which is predicated upon actual use of the land. Accordingly none of such claims can be held to arise out of the actual use of the land as required by s59(f).

13 During the course of oral argument the applicant suggested that such claims may be properly recoverable pursuant to s59(b) of the Act since the advice obtained was necessary to enable the applicant to consider its position. Mr Joseph Raymond Glew, a director of the applicant is also a qualified valuer in New Zealand. Although there is no evidence that Mr Glew has practised as a valuer in Australia it is claimed that he relied upon his own opinion when making property acquisitions for the applicant and that he had only engaged valuers for mortgage purposes, rent reviews and to meet statutory requirements. Despite these facts none of the survey, flooding and planning advice constitutes ‘valuation fees’ which could have been recoverable pursuant to s59(b) of the Act.”

125 The respondent submitted that s59 provided no basis for compensating for town planning fees when the person who got town planning advice may well have used it to consider what the value of the land may have been but if there is no valuation work carried out in accordance with par (b), that is to say, valuation fees reasonably incurred, then there was no other head under which such fees could be obtained.

126 In Blacktown Council v Fitzpatrick Investments, Brownie AJA, who gave the principal judgment with which Stein JA and Ipp AJA agreed, traced through the cases dealing with the meaning of the word “use” and the circumstances leading up to the use of such expressions as “actually physically … used” (Vaughan-Taylor v David Mitchell-Melcann Pty Ltd (1991) 25 NSWLR 580 at 587) to explain the meaning of the expressions “actual use” and “relating to actual use” in s59(f). His Honour said:

Just Terms Act

Brewarrana Pty Limited v Commissioner of Highways [No. 2]

Council of the City of Newcastle v Royal Newcastle Hospital

The Council of the City of Parramatta v Brickworks Ltd

Environmental Planning and Assessment Act

Just Terms Act

‘Relating to actual use’

The appellant contended that the costs incurred in buying the replacement land did not relate to the actual use of the acquired land. However the expression ‘relating to’ is of wide import, and the findings of fact of Lloyd J, set out above, lead to the conclusion that the respondent purchased the replacement land, in order to replace one parcel of developable land with another for the purposes of its business. This seems to me to be correct. In the circumstances of this case, both the need and the occasion for the purchase of the replacement land related to the actual use of the acquired land, that is, to conduct its business the respondent needed to acquire and then hold the replacement land for later subdivision and resale.”

127 In my opinion, the appeal against his Honour’s conclusion not to accept the fees paid to the town planner or to the surveyor as loss attributable to disturbance must fail. Clearly neither was a valuation fee within the meaning of s59(b) nor could it be described as a financial cost reasonably incurred or that might reasonably be incurred relating to the actual use of the land as a direct and natural consequence of the acquisition within the meaning of s59(f). Accordingly, this part of the appeal fails.

Cross-appeal

128 The respondent sought leave to cross-appeal from the decision of Cowdroy J on 8 April, 2004 in relation to the question of costs. The grounds were:

“1. In determining the question of costs in the proceedings in the Court below, his Honour erred at law in:

Supreme Court Rules 1970

In the alternative:

(b) in the exercise of his discretion, his Honour failed to consider or properly consider, as one of the circumstances of the case, the issue that the Respondent’s evidence and submissions at the hearings on 19-23 May 2003, 26-30 May 2003, 2 June 2003 and 4 March 2004 were accepted by the Court over the Applicant’s evidence and submissions in its judgments of 29 August 2003 and 12 March 2004;

and/or in the alternative:

Land Acquisition (Just Terms Compensation) Act 1991

(d) his Honour erred at law in the exercise of his discretion in failing to consider or properly consider the issue that the Respondent’s evidence and submissions in relation to Disturbance and Re-opening were accepted by the Court over the Applicant’s evidence and submissions in relation to Disturbance and Re-opening in its judgment delivered on 12 March 2004; and

(e) his Honour erred at law in the exercise of his discretion in failing to award the Respondent its costs as the successful party in the proceedings.”

129 Written submissions were filed by the respondent in support of the cross-appeal but Mr Webster announced from the bar table that he did not press the cross-appeal. Even so, he invited the Court to consider the correctness of Cowdroy J’s decision that an offer of compromise, which, as in this case, made an offer of a total amount itemised under three headings and then provided that the applicant and the respondent should pay their own costs of the proceedings, was not valid to the extent that it failed to comply with the requirements of Pt 22 of the Supreme Court Rules adopted by the Land and Environment Court pursuant to Pt 13 r27 of the LEC Rules 1996; compare Associated Confectionary (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 25 NSWLR 349.

130 In my opinion, since the respondent did not press its cross-appeal it is not appropriate for us hypothetically to deal with this question. Leave to cross-appeal should be refused.

Conclusion

131 The appellant failed before Cowdroy J because the valuation that it relied upon to support its claim was based upon a supposition that if the subject land had been zoned not “County Open Space” and “County Road” but partly “2(b) Residential” and partly in the “10 Mixed Use” zone the former controlled by DCP 3 (the northern portion) and the latter controlled by DCP 20 (the southern portion), there would have been a yield of either 190 dwellings or 154 dwellings with an average gross floor area of either 100m2 or 110m2 and on the northern portion or either 144 dwellings with an average gross floor area of 90m2 or 130 dwellings having a gross floor area of 100m2 or 118 dwellings having an average gross floor area of 110m2. Put shortly, Cowdroy J rejected this intensity of development and preferred evidence led by the respondent, particularly that of Mr Wood, that at best the yield would be 18 townhouses, 2 detached houses and 71 apartments. The point pressed for the appellant was the trial Judge’s insistence that Mr Wynne’s valuation did not comply in the case of the northern part of the subject land with DCP 3 and in the case of the southern part of the subject land with DCP 20. It was said that, certainly in the way the appellant’s case was ultimately put, Mr Wynne accepted the application of these controls but submitted that within them the concentration he suggested would have been allowed. In my opinion, the appeal on the valuation fails at this point.

132 It may be a nice question to which a great deal of argument was directed whether Mr Wynne regarded his proposal as falling within these controls. The fact of the matter is that his Honour was satisfied on the basis of powerful evidence that the envelopes proposed by Mr Wynne of a U-shaped building on the southern portion and six or four storey buildings on the northern portion would not have been permitted. This being so, it seems to me it was entirely appropriate for his Honour to fall back and accept the respondent’s valuation.

133 I am not persuaded that on the separate question of denial of procedural fairness or disturbance the appellant succeeds. In my opinion, the appeal should be dismissed with costs.

Orders

134 I propose the following orders:

1. Appeal dismissed with costs;

2. Leave to cross-appeal refused.

135 BEAZLEY JA: I agree with Sheller JA.

136 BROWNIE AJA: I agree with Sheller JA.

**********

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Citations

Kirela Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 [2005] NSWCA 108

Most Recent Citation

Buhach v Transport for New South Wales [2022] NSWLEC 148

Cases Citing This Decision

2

Metricon Qld Pty Ltd v Chief Commissioner of State Revenue (No 2) [2016] NSWSC 332

Buhach v Transport for New South Wales [2022] NSWLEC 148

Cases Cited

9

Statutory Material Cited

5

Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259

Silverwater Estate Pty Ltd v Auburn Council [2001] NSWLEC 60

Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259

CITATION:	KIRELA PTY LTD v MINISTER ADMINISTERING THE ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979 [2005] NSWCA 108
HEARING DATE(S):	15 December 2004, 16 December 2004
JUDGMENT DATE:	13 April 2005
JUDGMENT OF:	Sheller JA at 1; Beazley JA at 136; Brownie AJA at 137
DECISION:	Appeal dismissed with costs.

CATCHWORDS:	Compulsory acquisition - valuation of land - whether amount of compensation determined in accordance with the Land Acquisition (Just Terms Compensation) Act 1991 - whether all relevant evidence taken into account - whether fees paid to town planner and surveyor were loss attributable to disturbance or were incurred relating to the actual use of the land - Procedure - submission made after trial but before judgment - whether trial Judge wrongly took submission into account
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 Land Acquisition (Just Terms Compensation) Act 1991 Land and Environment Act 1979 Rivers and Foreshores Improvement Act 1948 Supreme Court Act 1970
CASES CITED:	Associated Confectionary (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 21 NSWLR 349 Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259 Corrie & Anor v MacDermott [1914] AC 1056 Griffith City Council v Pelegato & Anor (1990) 20 NSWLR 696 Horn v Sunderland Corporation [1941] 2 KB 26 Housing Commission of New South Wales v Falconer & Ors [1981] 1 NSWLR 547 Housing Commission of New South Wales v San Sebastian Pty Ltd & Ors (1978) 140 CLR 196 Maurici v Chief Commissioner of State Revenue (2002) 212 CLR 111 Overton Investments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2001) 113 LGERA 439 Pointe Gourde Quarrying and Transport Company Ltd v Sub-Intendent of Crown Lands [1947] AC 565 Silverwater Estate Pty Ltd v Auburn Council & Anor [2001] NSWLEC 60 The Crown v Murphy & Anor (1990) 64 ALJR 593 Vaughan-Taylor v David Mitchell-Melcann Pty Ltd (1991) 25NSWLR 580 Yates Property Corporation Pty Ltd (In
PARTIES:	Kirela Pty Ltd - Appellant Minister Administering the Environmental Planning and Assessment Act 1979 - Respondent
FILE NUMBER(S):	CA 40235/04
COUNSEL:	TS Hale SC/A Galasso - Appellant J J Webster SC - Respondent
SOLICITORS:	Minter Ellison - Appellant Blake Dawson Waldron - Respondent

LOWER COURT JURISDICTION:	Land & Environment Court
LOWER COURT FILE NUMBER(S):	30088/01
LOWER COURT JUDICIAL OFFICER:	Cowdroy J