Macarbell Pty Ltd v RTA

No judgment structure available for this case.

Land and Environment Court

of New South Wales

CITATION: Macarbell Pty Limited v RTA, Michael Nasser v RTA [2006] NSWLEC 366

PARTIES:
Proceedings 30801 of 2004
APPLICANT
Macarbell Pty Limited
RESPONDENT
Roads & Traffic Authority of New South Wales
Proceedings 30802 of 2004
APPLICANT
Michael Nasser
RESPONDENT
Roads & Traffic Authority of New South Wales

FILE NUMBER(S): 30801 of 2004; 30802 of 2004

CORAM: Jagot J

KEY ISSUES: Compulsory Acquisition of Land :- compensation - "before" and "after" valuations, decrease in value of land caused by proposal, comparable sales

LEGISLATION CITED: Conveyancing Act 1919
Environmental Planning and Assessment Act 1979
Land Acquisition (Just Terms Compensation) Act 1991
Liverpool Local Environmental Plan 1997
National Parks and Wildlife Act 1974
Rivers and Foreshores Improvements Act 1948
Roads Act 1993
Threatened Species Conservation Act 1995

CASES CITED: Blacktown City Council v Lasseter (unreported, Court of Criminal Appeal, 5 December 1996);
Boland v Yates Property Corporation Pty Ltd and Another (1999) 167 ALR 575;
Brewarrana Pty Ltd v Commissioner of Highways [No 2] (1973) 6 SASR 541;
Collins and Another v Council of the Shire of Livingstone (1972) 127 CLR 477;
Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited and Others (1947) 74 CLR 358;
Crompton v Commissioner of Highways (1973) 5 SASR 301;
De Ieso v Commissioner of Highways (1981) 27 SASR 248;
Downie v Sorell Council (2005) 141 LGERA 304;
E J Cooper & Son Pty Limited v Baulkham Hills Shire Council (2003) 131 LGERA 226;
Emerald Quarry Industries Proprietary Limited v Commissioner of Highways (South Australia) (1979) 142 CLR 351;
Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment [2000] 2 AC 307;
Fraser and Others v City of Fraserville [1917] AC 187;
Griffith City Council v Polegato and Another (1990) 20 NSWLR 696;
Hornsby Shire Council v Roads and Traffic Authority of New South Wales (1998) 100 LGERA 105;
Housing Commission of New South Wales v San Sebastian Proprietary Limited and Others (1978) 140 CLR 196;
Lalic v Roads & Traffic Authority of New South Wales [2005] NSWLEC 430;
Mario Piraino Pty Ltd v Roads Corporation (1990) 76 LGRA 263;
Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426;
Minister Administering the Environmental Planning and Assessment Act 1979 v Bautovich (2005) 142 LGERA 331;
Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of New South Wales [2004] NSWLEC 612;
Pamalco Pty Ltd v Minister Administering the National Parks and Wildlife Act 1974 [No 3] (1991) 71 LGRA 441;
R K Morgan Holdings Pty Ltd v Melbourne & Metropolitan Board of Works (1992) 77 LGRA 102;
Roads and Traffic Authority of New South Wales v Mosca [2006] NSWCA 159 ;
Roads and Traffic Authority (NSW) v Muir Properties Pty Ltd (2005) 143 LGERA 192;
RTA v Muir Properties Pty Ltd [2005] NSWCA 460;
Roads and Traffic Authority of New South Wales v Perry and Another (2001) 52 NSWLR 222;
Sebastian Cannavo and Alfia Jennifer Busa v Roads and Traffic Authority of New South Wales [2004] NSWLEC 570;
Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438;
Spencer v The Commonwealth of Australia (1907) 5 CLR 418;
Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (2005) 63 NSWLR 407;
The Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co and T D Charlesworth & Co [1901] AC 373

DATES OF HEARING: 1/5/2006, 2/5/2006, 3/5/2006, 4/5/2006, 5/5/2006, 8/5/2006, 9/5/2006, 10/5/2006

DATE OF JUDGMENT:
07/11/2006

LEGAL REPRESENTATIVES:
APPLICANTS
Mr N Hemmings QC (solicitor)
SOLICITORS
Allens Arthur Robinson
RESPONDENT
Dr J Griffiths SC with Mr J Maston
SOLICITORS
Corrs Chambers Westgarth

JUDGMENT:

TABLE OF CONTENTS

Paragraphs

Introduction 1 - 3

The land and its surrounds generally 4 - 7

General observations 8 - 16

Zoning east of Ash Road

17 - 26

27 - 41

42 - 49

Vegetation and snails

50 - 73

74 - 77

78 - 79

80 - 87

Flooding and landfill

88 - 96

97 - 115

Access and accessibility

116 - 123

124 - 125

126 - 133

134 - 147

Sewer and water 148 - 150

General planning 151 - 154

Development costs 155 - 161

The offers 162 - 163

Comparable sales and adjustments

164 - 168

169 - 172

173 - 174

175 - 183

184 - 193

194 - 204

205 - 209

Conclusions on comparable sales 210 - 215
Before value 216 - 222
After value 223 - 236
Conclusion 237

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Jagot J

11 July 2006

30801 of 2004

MACARBELL PTY LTD
Applicant

ROADS & TRAFFIC AUTHORITY OF NEW SOUTH WALES
Respondent

30802 of 2004

MICHAEL NASSER
Applicant

ROADS & TRAFFIC AUTHORITY OF NEW SOUTH WALES
Respondent

JUDGMENT

Jagot J:
Introduction

1 These are objections under s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (the “Just Terms Act”) to the amounts of compensation offered by the respondent to the applicants on the compulsory acquisition of part of the applicants’ land at Prestons on 10 October 2003. The respondent offered amounts of compensation (excluding disturbance) of $2,222,000 to the applicant Macarbell Pty Limited, and $5,890,000 to the applicant Michael Nasser ($8,112,000 in total). The applicants did not accept the offers and proceeded by way of objection to this Court.

2 The applicants contend that they are entitled to compensation (excluding disturbance) of $31,496,176. The respondent contends that the applicants are entitled to compensation (excluding disturbance) of $8,700,000 (reduced from $10,550,000 as set out in the primary report of Mr Lunney, valuer).

3 The parties proceeded on the common basis that this phase of the hearing would resolve the compensation payable to the applicants, other than in respect of disturbance (that is, all heads of compensation in s 55 of the Just Terms Act, other than s 55(d)). The evidence in one proceeding was agreed to be evidence in the other. I have determined compensation (excluding disturbance, interest and costs) in the sum of $13,578,522. My reasons are set out below.

The land and its surrounds generally

4 Macarbell Pty Ltd owned lot 25 in DP 752060. Michael Nasser owned lots 286 and 287 in DP 752060. Michael Nasser controlled Macarbell Pty Ltd.

5 The land is in the southern part of the Prestons Industrial Release Area. The lots were similar in area. Lot 25 had an area of 6.5756 hectares, lot 286 an area of 6.778 hectares, and lot 287 an area of 6.475 hectares. The total area of the three lots was thus 19.8286 hectares. 17.544 hectares of the land was located west of an unformed Crown road known as Ash Road. 2.284 hectares of the land was located east of Ash Road. The southern, western and northern boundaries of all the lots were regular, forming a large rectangular parcel. The eastern boundary of the lots was somewhat irregular, following the path of Maxwells Creek.

6 On 10 October 2003, the respondent compulsorily acquired part of lots 25, 287 and 286 for the purposes of the Roads Act 1993. The respondent acquired three lots from lot 25 (lots 46, 47 and 48 in DP 105760), two lots from lot 287 (lots 45 and 49) and one lot from lot 286 (lot 44). The residue of lot 25 (left in the ownership of Macarbell Pty Ltd) was designated as lot 41. The residue of lots 287 and 286 (left in the ownership of Michael Nasser) were designated as lots 42 and 43 respectively.

7 From lot 286 (6.778 hectares), the respondent acquired 3.144 hectares and left a residue of 3.634 hectares. From lot 287 (6.475 hectares), the respondent acquired 1.81 hectares and left a residue of 4.665 hectares. From lot 25 (6.5756 hectares), the respondent acquired 9946 sqm and left a residue of 5.581 hectares. From the 19.8286 hectares of land owned by the applicants, the respondent acquired 5.9486 hectares (5.749 hectares west of Ash Road and 2000 sqm east of Ash Road), and left a residue of 13.88 hectares (11.795 hectares west of Ash Road and 2.084 hectares east of Ash Road). In percentage terms, the respondent acquired just over 30% of the applicants’ land.

General observations

8 The primary task is to ascertain the price which a buyer would give and a seller take for the land in all the relevant circumstances at 10 October 2003, where both are assumed to be willing but not anxious parties proceeding “not by means of a forced sale, but by voluntary bargaining … willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration”, and both being “perfectly acquainted with the land, and cognizant of all circumstances which might affect … [its] value” ( Spencer v The Commonwealth of Australia (1907) 5 CLR 418 at 441 per Isaacs J). Although the applicants referred in submissions to the relevant value being the value to the owner over and above market value, nothing in the applicants’ claim or the evidence supported any suggestion of special value or provided a basis for concluding that the market value as provided for in s 56 of the Just Terms Act (embodying the Spencer principle) did not reflect the value to the owner (see, for example, Boland v Yates Property Corporation Pty Ltd and Another (1999) 167 ALR 575 at [79] to [83], [292] and [354]).

9 In applying the Spencer test, it is conventional to refer to the views of the “hypothetical prudent purchaser”. I understand this to encompass the ultimate point at which the notional buyer and seller posited by the statute would meet (s 56(1) of the Just Terms Act). For convenience, I generally adopt the terminology of the “hypothetical buyer” on the basis that the reference includes the notional buyer and seller, cognizant of all circumstances which might affect the value of the land and acting on ordinary business considerations (as identified by Isaacs J in Spencer ).

10 Various circumstances potentially affecting the development potential of land (and thus its value) may arise. The relevant issue is the view of the hypothetical buyer and seller about those circumstances and their effect on the value of the land, not the circumstances per se ( E J Cooper & Son Pty Limited v Baulkham Hills Shire Coun cil (2003) 131 LGERA 226 at [9], referred to as “the correct approach” in Minister Administering the Environmental Planning and Assessment Act 1979 v Bautovich (2005) 142 LGERA 331 at [20] per Handley JA, Tobias JA and Brownie AJA agreeing. See also De Ieso v Commissioner of Highways (1981) 27 SASR 248 at 252).

11 In resolving the competing opinions of the experts “through the judgment of the hypothetical buyer and seller premised by Isaacs J for the purpose of making the test work” ( De Ieso at 252), I may determine that qualifications or modifications of those opinions are required, and am not bound to accept or reject the whole of one or other opinion ( Hornsby Shire Council v Roads and Traffic Authority of New South Wales (1998) 100 LGERA 105 at 108, Roads and Traffic Authority (NSW) v Muir Properties Pty Ltd (2005) 143 LGERA 192 at [89], Brewarrana Pty Ltd v Commissioner of Highways [No 2] (1973) 6 SASR 541 at 544-545 and 578, and Downie v Sorell Council (2005) 141 LGERA 304 at [31]).

12 Where a genuine doubt relevant to value remains, that doubt should be “resolved in favour of a more liberal estimate” ( Boland v Yates Property Corporation Pty Ltd (1999) 167 ALR 575 at [356], citing Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited and Others (1947) 74 CLR 358 at 373 – 374).

13 The applicant called evidence from Mr Fanning (ecologist), Dr Webb (hydrologist), Mr Varga (traffic engineer), Mr Rhodes (planner), Mr Meredith (quantity surveyor) and Mr Neskovski (valuer). The respondent called evidence from Dr Clements (botanist), Dr Ambrose (zoologist), Mr Rowbottom (hydrologist), Mr Brogan (transport planner), Mr Sanders (planner), Mr Saunders (quantity surveyor) and Mr Lunney (valuer). The respondent also called evidence from Mr Shatford, one of its officers responsible for dealings with land.

14 Both valuers used the before and after method (relying on comparable sales) to found their opinions with respect to the total compensation payable to the applicants by reason of the acquisition (excluding disturbance). This method was described as according with conventional valuation principles in RTA v Muir Properties Pty Ltd [2005] NSWCA 460 at [103] – [104]. Both assumed that the hypothetical buyer (before and after acquisition) would have obtained expert advice about the development potential of the land.

15 Given the size of the land, the nature of the vegetation upon it, the presence of Maxwells Creek on its eastern boundary and clear potential for flooding from that creek, I accept that the hypothetical buyer would have obtained expert advice about various potential constraints on development and likely development costs. I also consider that the hypothetical buyer of land of this size and character would be reasonably sophisticated. While the hypothetical buyer would obtain expert advice on various issues, the buyer would ultimately deal with the advice as a whole. The buyer would bring to bear upon that advice their own sense of the relevant circumstances and probable outcomes in terms of likely development potential and constraints.

16 With these matters in mind, I deal with the issues in the following order: - (i) the issue of the zoning east of Ash Road at the acquisition date, (ii) the views of the hypothetical buyer about the expert advice they would have obtained relating to various circumstances affecting the land, (iii) the comparable sales relied on by the valuers, and (iv) the value of the land (before and after acquisition) at the relevant date. In so doing, I have been assisted by a view of the land and its surrounds, including each of the comparable sales relied on by the valuers.

Zoning east of Ash Road

Background

17 At the acquisition date, the whole of the land west of Ash Road (and Ash Road) was zoned 4(a) Industrial. The whole of the land to the east of Ash Road was zoned 5(a) Special Uses - Drainage. In the 5(a) zone, limited uses are permissible with consent. Clause 55 of the Liverpool Local Environmental Plan 1997 (“the 1997 LEP”) provided that the owner of land so zoned may request the Council to acquire the land. The Council was obliged to acquire the land in the circumstances identified in the clause. Clause 10(11) made development of such land for any purpose permissible with consent, but only if it would not render the land unfit for the land use for which it may be required to be acquired. Clause 24 provided for development permissible in an adjoining zone to be carried out on land zoned 5(a), but only in the circumstances specified. At this stage, I will assume that land zoned 4(a) would be decreased in value by the imposition of a 5(a) zoning, despite cll 10(11), 24 and 55 of the 1997 LEP. The question is whether any such decrease in value was caused by the proposal to carry out the public purpose for which the land was acquired (s 56(1)(a)).

18 The public purpose for which the land was acquired was said in the Gazette notices to be “for the purposes of the Roads Act 1993”. It is not in issue that the particular purpose of the acquisition was the provision of the M7. The scope and genesis of that proposal, however, is in issue.

19 The Prestons Industrial Release Area was released for industrial development from about 1982 onwards. The land was included within a second stage of the release pursuant to draft LEP 201 (which rezoned land in the release area from non-urban to Industrial 4(a)). Draft LEP 201 was made on 12 October 1990, but the area to the south of Jedda Road (including the land) was deferred from that instrument. On 28 February 1992, the deferred area (including the land) was rezoned to 4(a) Industrial by the making of LEP 243. LEP 243 zoned the whole of the land both west and east of Ash Road 4(a) Industrial, other than a strip of land with an average width of 20 metres on the eastern boundary of the land (formed by Maxwells Creek), which was zoned 5(a) Special Uses – Drainage.

20 Liverpool Local Environmental Plan 1997 was made on 29 August 1997. The 1997 LEP zoned all of the applicants’ land to the west of the unformed Ash Road 4(a) Industrial (as did LEP 243). The 1997 LEP zoned all of the applicants’ land to the east of the unformed Ash Road as 5(a) Special Uses – Drainage (unlike LEP 243). The applicants submitted that the 5(a) zoning east of Ash Road must be disregarded in the before situation under s 56 of the Just Terms Act, as that zoning was caused by the proposal to carry out the public purpose for which the land was acquired (that is, provision of the M7).

21 In Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (2005) 63 NSWLR 407 Basten JA (with whom Beazley JA and Stein AJA agreed), insofar as relevant, said that s 56 is not engaged by steps preparatory to a proposal, but concrete steps to achieve an identified aim (at [39] and [82]). Further, that in most cases involving a failure to change a zoning, it will be inappropriate to treat the land as having been rezoned (at [83]). In all cases, “it is necessary to distinguish between conduct which constitutes a proper exercise of planning powers irrespective of the ultimate resumption and a use of planning powers in pursuit of a proposed resumption” (at [85]).

22 In this case, unlike Walker Corporation , the issue is not the failure to change a zoning. Apart from the 20 metre strip, the land to the east of Ash Road was zoned 4(a) Industrial in 1992, before any proposal to provide the M7.

23 In Roads & Traffic Authority of New South Wales v Perry and Another (2001) 52 NSWLR 222 Handley JA (with whom Powell and Hodgson JJA agreed) adopted that part of Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment [2000] 2 AC 307 at 315 where Lord Hope of Craighead said: “[T]he whole question must be approached upon a consideration of the state of affairs which would have existed if there had been no scheme” (at [14]). Hence, “[t]he Pointe Gourde principle requires the court to identify “the scheme for which the property is compulsorily acquired”: Fraser and Others v City of Fraserville [1917] AC 187 (at 194) cited (at 227 [16] supra).

24 In Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438 at [120], McClellan J identified that the decision in Walker Corporation confirmed that “once it has been determined that the zoning which actually exists at the date of acquisition should be disregarded, proper enquiry must be made as to the circumstances which would otherwise have existed at that date. Along with other matters that factual enquiry will be informed by an examination of the circumstances which existed at the time when the relevant public purpose was first initiated”.

25 In Emerald Quarry Industries Proprietary Limited v Commissioner of Highways (South Australia) (1979) 142 CLR 351 at 357 Gibbs J cited Lord Russell of Killowen in Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 at 434 that “[u]nder the principle in Pointe Gourde …the landowner cannot claim compensation to the extent to which the value of his land is enhanced by the very scheme of which the resumption forms an integral part: that principle, in their Lordships’ opinion operates also in reverse.” Gibbs J (also at 357) observed that it “will sometimes be difficult to determine whether a change in value or in circumstances is due only to the scheme underlying the resumption, or to other causes as well”, and referred to another decision of the trial judge ( Crompton v Commissioner of Highways (1973) 5 SASR 301 at 310) where the trial judge had referred to the potential for multiple causes to effect value.

26 In contrast to the observation in Crompton at 310, the effect on value of the imposition of a zoning is indivisible. In Blacktown City Council v Lasseter (unreported, Court of Criminal Appeal, 5 December 1996), Beazley JA (Cole and Priestley JJA agreeing) characterised the causal requirement as one of “sufficient connection” between the relevant condition of the land and the resumption. The decisions referred to in Smith support a “but for” approach to the question of causation.

Evidence about zoning east of Ash Road

27 The Council’s planning for the Prestons Industrial Release Area, insofar as relevant, shows that in March 1992 the Council received the Hoxton Park Stage II Release Area Total Catchment Management Study (Kinhill engineers). A plan, 17/94, is described as the adopted Trunk Drainage Strategy. It included an area designated as Basin 18. The whole of Basin 18 was south of the land. Basin 18 was part of a scheme of such basins, intended to manage the flow of waters in the catchment assuming its release for urban development (basically, that post-development flows should remain the same as pre-development flows). This approach obviated the need for individual on-site detention basins or compensatory excavation to ameliorate the impacts of urban development. The catchment wide basins were to be funded through the Council’s s 94 contributions plan.

28 In February 1993, Kinhill prepared the Cabramatta Creek Catchment Management Study for the Water Board. This report included a plan that included an area designated as long-term floodway extension east of Ash Road, between Basin 18 and Jedda Road. On or about 21 July 1993, the Council adopted a landfill strategy plan for the Prestons Industrial Release Area. That plan included Basin 18 south of the land in the same area as shown on the earlier plans, and a drainage channel north of Basin 18, generally consistent with the 5(a) zoned land on the 1992 zoning map, linking Jedda Road with Basin 18. That plan did not adopt the “floodway” proposal in the 1993 Kinhill study.

29 Council documents from 1994 to 1995 referred to the respondent having notified the Council of a proposal to link the M5 at Prestons with Cecil Park. This was later absorbed into the M7 proposal (which links the M5 at Prestons with West Baulkham Hills). Correspondence from the respondent to the applicant dated 8 January 1996 shows that, by that time, the M7 (Western Sydney Orbital) proposal was well advanced. On that date, the respondent wrote to the applicant Michael Nasser, enclosing two sketches of five options for the route of the M7. Two of the options passed through the applicants’ land and three through Basin 18. The covering letter to Mr Nasser stated that Option 5 (or a variation) could be the preferred line. Option 5 passed through the middle of Basin 18 and through the applicants’ land. I infer that the same information must have been available to the Council.

Council’s Drainage Assets section requested this basin to make up for volume expected to be lost by the proposed Western Sydney Orbital Highway and the landfill strategy for the Prestons Industrial

31 Correspondence between the Mayor of the Council and the Minister for Roads continued throughout this period. One of those letters stated “[u]p until now, Council has co-operated with the Commonwealth by not rezoning lands affected by the proposed WSO”. In the context of the correspondence as a whole, I construe this as a reference to land zoned non-urban but intended for release for residential purposes and known as Precinct 3A (a different area from the applicants’ land). A letter dated 30 July 1997 disclosed a change in the anticipated provision of the M7 in this period due to a change in the Federal Government funding for the project. The terms of that letter contrast those of the letter received by the Council on 15 October 1996. The 15 October 1996 letter had been to the effect that construction of the M7 would commence on approval, which was anticipated by mid 1997. The 15 October 1996 letter was two months prior to the Council’s adoption of the instrument that became the 1997 LEP. The 30 July 1997 letter was six months after the Council had adopted the draft LEP and one month before the Minister made the LEP.

32 The 1997 LEP was made on 29 August 1997. The zoning map shows a 5(a) zone of about 250 metres wide above Kurrajong Road, narrowing to about 175 metres wide at the land (extending from the eastern boundary of Ash Road into the Showground site). Above Jedda Road, the 5(a) zone narrows to about 30 or so metres. Below Kurrajong Road the 5(a) zone also narrows to about 40 metres.

33 On 26 September 1997 (after the 1997 LEP was made and, I note, the 30 July 1997 letter suggesting that the M7 construction was in abeyance due to Federal Government funding changes), the respondent forwarded a facsimile to the Council which stated that “[t]he site for Basin 18 is affected by the proposed WSO. The location is as per your plan – copy follows. If the basin can be relocated or modified the RTA may be prepared to compensate Council. Please advise of options.” The attached plan depicted the M7 passing through Basin 18. That plan was described as “your” (that is, the Council’s) plan. In other words, the Council must have sent the plan to the respondent before 26 September 1997.

34 All other facts post-date the 1997 LEP by a significant period. In March 1999, Bewsher Consulting prepared a working paper for the Council relating to the Council’s basin strategy. The review stated that the Council’s strategy was not “achieving the objectives originally intended” as development that had occurred to date in the release areas had already caused an increase in peak flows at creeks including Maxwells Creek (p 3). The review referred (p 16) to the Council’s recent proposal to divide Basin 18 into two or possibly three stages, extending from Jedda Road to Kurrajong Road. It identified a required main basin volume, excluding the M7 and other items, of 240,000 cubic metres. The Kinhill recommended volume in 1992 was 170,000 cubic metres.

35 The total storage in the main basin recommended by Bewsher in March 1999 was 330,000 cubic metres (including storage required for the M7 and the basin site itself, but not lost storage from the fill strategy of 80,000 cubic metres). The M7 was identified as generating an additional storage requirement of 50,000 cubic metres. The review continued “[i]t may be feasible to compensate for the landfill [i.e., the 80,000 cubic metres] by additional channel works between Basin 18 and Jedda Road, however the compensatory flood storage for the Western Sydney Orbital and the basin site itself will most likely have to be provided within Basin 18”.

36 Appendix D to the review dealt specifically with Maxwells Creek. It stated (p 2) that in 1997 the Council undertook a review of potential detention basin sites within Maxwells Creek and recommended a strategy which involved making Basin 18 two basins – 18C adjacent to the Showground site of 120,000 cubic metres and 18A located immediately downstream of Basin 18A of 61,000 cubic metres. Immediately downstream of the Showground is the applicants’ land. The 1997 Council review is not in evidence.

37 In May 1999 (after the rezoning to 5(a) but before the acquisition), Bewsher Consulting finalised the Cabramatta Creek Floodplain Management Study and Plan on behalf of the Council and Fairfield Council. That report referred to the 1993 Kinhill study. The report stated that deficiencies in the Council’s basin strategy had been identified arising from the same matters referred to in the March 1999 review. With respect to the M7, the report said that a large proportion of the route was within the floodplain and likely to have a significant impact on flood behaviour arising from loss of floodplain storage, reduction in creek capacity, increase in impervious area, local increases in flood levels and the route which passed through several basins.

38 The environmental impact statement for the final M7 proposal was exhibited in 2000. The respondent’s formal determination under Pt 5 of the Environmental Planning and Assessment Act 1979 (to proceed with the proposal) was made on 12 March 2002. In January 2002, Bewsher Consulting and WBM Oceanics prepared a report on the M7 for the respondent. The report reiterated the floodplain impacts of the M7 contained in the May 1999 report. The report stated that the M7 would be located in the wide floodplain of Maxwells Creek, essentially all the way between the M5 and Jedda Road.

39 Mr Rhodes, planner, said that he understood that the rezoning east of Ash Road in 1997 was caused by the need to alter the drainage strategy in that area due to the M7. The land had been zoned 4(a) in 1992 and the M7 was the only new factor after that date. Mr Rhodes agreed that he was relying in this regard on the sequence of events rather than any specific document. Mr Sanders, planner, said he did not know why that land had been rezoned from 4(a) to 5(a).

40 Dr Webb, hydrologist, said that his review of the documents led him to conclude that at the same time the Council recognised that the volume requirements for Basin 18 had to be increased, the M7 was proposed through the location for the basin. The M7 had a large impervious footprint, would generate its own requirements for additional flood storage volumes, and was proposed to be located on the land best suited for such additional flood storage. Dr Webb described this as a “squeeze coming on through this whole area between Kurrajong Road and Jedda Road”, leading to a series of attempts to redesign and increase storage in the area. I understood Dr Webb to mean that the “squeeze” was apparent by 1996 – 1997, prior to the 1997 LEP being adopted by the Council and made by the Minister.

41 Mr Rowbottom, hydrologist, stated in his report that Basin 18 had been enlarged to allow for loss of floodplain storage associated with the filling of land west of Ash Road and the M7 (p 7). In his oral evidence, Mr Rowbottom concluded that the applicants’ land east of Ash Road had been rezoned 5(a) due to the flooding characteristics of that land rather than the M7. Mr Rowbottom said that the 1993 Cabramatta Creek study was known to the Council and had recommended that area for a long-term floodway. Although Mr Rowbottom accepted that this proposal had not been adopted by the Council, he considered the use of the rezoned land for basin storage was consistent with the Council’s intention to do major drainage works on the rezoned land, being an intention having its genesis in 1993 (prior to the M7). Hence, Mr Rowbottom’s opinion was that the 5(a) zoning was imposed so as to accommodate a floodway or the Council’s own trunk drainage requirements. While he thought it essentially a planning issue, Mr Rowbottom said that it would be “very unusual” for the Council to rezone land in 1997 because of the M7, at a time when the environmental impact statement for the proposal (and thus its precise route) had not been finalised. He also observed that the M7 additional storage requirement was 50,000 cubic metres out of a total of 410,000 cubic metres (that is, 330,000 cubic metres plus the 80,000 cubic metres for filling west of Ash Road) or 12%.

Conclusions on zoning east of Ash Road

42 I do not accept the respondent’s submission that the earliest date on which the “proposal” existed was in 2000 when the environmental impact statement was exhibited. The proposal to carry out the public purpose (being the provision of the M7) existed by 1995 (if not earlier). The respondent had taken steps at that time in pursuit of its proposal. It had put the Council and the applicants on notice of its intention to construct the M7 and identified the likely and preferred route options. It was obvious from early 1996 that this public purpose involved a large impervious area very likely to be located in the floodplain between Kurrajong Road and Jedda Road, and likely to traverse the land which the Council had set aside for Basin 18.

43 Before the 1997 LEP was made the Council said to an objector that its reasons for the rezoning of the land east of Ash Road from 4(a) to 5(a) were twofold – its own drainage strategy and the M7. I accept Dr Webb’s opinion that the convergence of events involved a “squeeze”, which the Council recognised before the 1997 LEP was finalised.

44 I do not accept Mr Rowbottom’s opinion that the genesis of the change to the 5(a) zoning can be sourced to the 1993 study. Although I accept that the Council would have had access to that information, the floodway proposal was identified as “long-term” and there is no evidence that the Council adopted it. To the contrary, later in 1993 the Council adopted, and thereafter acted in accordance with, a landfill strategy that did not provide such a floodway. I also do not accept Mr Rowbottom’s opinions that the M7 was unrelated to the rezoning because of the date of the rezoning (29 August 1997) compared to the finalisation of the M7 preferred route (2000) or the proportion of flood storage directly attributable to the M7 (12%). The opinion is inconsistent with the Council’s disclosure of its reasons before the 1997 LEP was made and the circumstances, as communicated by the respondent to the Council, before the Council adopted the instrument which became the 1997 LEP in December 1996.

45 The respondent submitted that: - (i) it did not request the rezoning, (ii) there was no evidence that the Council imposed the rezoning because of a perceived desire of the respondent or because of the M7 proposal, and (iii) Dr Webb’s opinion was pure speculation. It emphasised the 30 July 1997 letter as disclosing a high level of uncertainty about the construction of the M7 given the Federal Government’s changed position on funding, and that this pre-dated the rezoning on 29 August 1997. That letter must be considered in the context of the processes of Part 3 of the Environmental Planning and Assessment Act 1979 for preparing, exhibiting and making local environmental plans. The Council had exhibited and adopted the draft LEP by December 1996. The Council did so in circumstances where the respondent had said that the M7 proposal would be determined by mid 1997, with construction to commence immediately thereafter. Moreover, the 26 September 1997 letter suggests that it would be wrong for me to infer that the M7 proposal was understood by the Council to be in abeyance as at July 1997.

46 The statutory reference is a decrease in value caused by the proposal. If the rezoning resulted from a direction or request by the respondent, the required causal connection is likely to be found. Equally, if the rezoning resulted from the Council’s own planning objectives, the required causal connection would not be found (see, by analogy, Griffith City Council v Polegato and Another (1990) 20 NSWLR 696 at 701 and Roads and Traffic Authority of New South Wales v Mosca [2006] NSWCA 159 at [19]). The absence of a direction or request is not necessarily determinative of the factual issue. See Housing Commission of New South Wales v San Sebastian Proprietary Limited and Others (1978) 140 CLR 196 at 207.

47 In this case, the rezoning did not result from a unilateral act by the Council, disconnected from the steps which the respondent had taken in pursuit of the M7 proposal. The respondent had formulated the proposal, identified the likely and preferred route options, worked out the time for delivery, and informed the Council and the public to that effect. Most of the route options went through Basin 18, the planned flood storage for part of the industrial release. The rezoning of the 4(a) land east of Ash Road to 5(a) enabled Basin 18 to be relocated and reconfigured, outside the preferred route of the M7, and enlarged to accommodate the storage requirements of the industrial release and the M7. These facts disclose a direct and substantial causal connection between the M7 proposal and the rezoning of the 4(a) land east of Ash Road to 5(a) to accommodate the flood storage to be displaced by the M7, and the increased flood storage needed for both the overall drainage strategy and the M7.

48 I am satisfied that there were two reasons for the rezoning of the land east of Ash Road – the inadequacies of the basin strategy and the future need to accommodate the M7 within the floodway, both of which were apparent to the Council before the 1997 LEP was adopted and made. The rezoning of the applicants’ land east of Ash Road from 4(a) to 5(a) was the result of the convergence of these reasons. Would the rezoning from 4(a) to 5(a) have occurred absent the M7 proposal and by reason of the perceived inadequacies of the basin strategy alone (in which event the required causal connection should not be found)? I am satisfied, for the reasons given above, that the convergence of these events (the “squeeze”, to use Dr Webb’s word) was the necessary cause of the rezoning. I do not accept that the deficiencies in the Council’s basin strategy alone would have caused the Council to rezone land from 4(a) to 5(a) in 1997, when such land had been released from a non-urban zoning only five years earlier (in 1992).

49 Hence, any decrease in the value of the applicants’ land east of Ash Road (excluding the 20 metre strip which was zoned 5(a) in 1992) must be disregarded in the before situation, because that decrease in value was caused by the proposal to carry out the public purpose for which the land was acquired. Prior to the 5(a) zoning, the land east of Ash Road (but for a 20 metre strip) was zoned 4(a). In the before situation, it must be assumed that the zoning position would not have changed. Nothing in s 56(1), however, requires me to disregard the fact that the Council’s basin strategy was known to be deficient well prior to the acquisition date of 10 October 2003. I deal with that issue below, in the context of the evidence about flooding.

Vegetation and snails

Vegetation - overview

50 Dr Clements and Mr Fanning gave evidence about vegetation.

51 Mr Fanning inspected the land in 1995, 1996, January 2004 and subsequently. His January 2004 inspection was for the purpose of preparing a report to the Valuer-General on potential ecological and conservation constraints to development of the land. The January 2004 report is in evidence. This report was used by planning consultants (Hassall and Associates) to prepare a further report to the Valuer-General dated February 2004 on the development potential of the land. The February 2004 report is also in evidence.

52 In the January 2004 report, Mr Fanning said that that none of the vegetation on the land was in excellent or even very good condition (in contrast to the open space reserve land to the south). Areas he mapped as moderate constraint were the best examples of native vegetation on the land. No part of the land was subject to a high conservation constraint. It was likely that the moderate constraint areas of vegetation would be retained in any development of the land. Some incursions into those areas, or potentially some low key development, would be acceptable, but it was likely that an assessment under s 79C of the Environmental Planning and Assessment Act 1979 would lead to the conclusion that those areas of vegetation ought to be substantially retained in any future development. Determining areas of the land appropriate for development depended on a range of factors, including “political” considerations.

53 In his evidence in the proceedings, Mr Fanning confirmed that he considered that the land along its eastern boundary (Maxwells Creek) and in its north-eastern corner supported the Sydney Coastal River-Flat Forest (SCRFF) community. The western part of the land supported regenerating Cumberland Plain Woodland (CPW) community. The former was listed as an endangered ecological community under the Threatened Species Conservation Act 1995 in 1999, and the latter in 1997.

54 In Mr Fanning’s opinion, the SCRFF vegetation on the eastern boundary of the land was substantially cleared and disturbed, other than in the north-eastern corner. The CPW vegetation to the west of Ash Road had been subjected to a regime of tree removal and slashing since about 1994. At the acquisition date, canopy trees were limited to stands. The understorey was disturbed and modified regenerating open woodland typical of much of the remaining vegetation in western Sydney. The height of the regenerating bushland was substantially less in January 2004 when he visited the land (about 1 metre or so), than on the view on 3 May 2006.

55 Mr Fanning said that, consistent with his opinion in 2004, he would have advised the hypothetical buyer at the acquisition date that none of the land was subject to high conservation constraint, some of the land was subject to moderate conservation constraint, and most was subject to low to low-moderate conservation constraint. The areas of moderate constraint value were a constraint to development, which would need to be the subject of more detailed investigation. Development of the whole of the land could not be expected. Having regard to the range of factors he had in mind in his earlier report, Mr Fanning would have advised that development must retain (and rehabilitate): - (i) a 20 metre band of vegetation along Maxwells Creek and the patch of vegetation in the north-eastern corner, and (ii) a band of approximately 50 metres of vegetation on the western boundary (in the mapped moderate constraint area). Otherwise, the hypothetical buyer could reasonably expect the land to be able to be developed, subject to preparation of a species impact statement. Mr Fanning said “there are many, many, many examples of sites in New South Wales for which species impact statements have been required over which development has occurred”.

56 Mr Fanning readily accepted that his mapping of development constraints was broad-brush, and had not been based on the type of systematic quadrat surveys carried out by Dr Clements. He considered his mapping a “rough guide”, which would be refined through the development application process, as part of which further work would need to be done. He agreed that the 50 metre band on the western boundary was a narrow part (perhaps less than one quarter) of the land he had mapped as subject to moderate constraint in 2004. He accepted that he would also have advised a buyer that there was an element of risk involved with respect to the vegetation on the land (albeit not what he considered a high element of risk given the circumstances of the land). In dealing with regulatory authorities, a band of up to 100 metres of vegetation on the western boundary might be required to be retained (which would be about half of his mapped moderate constraint area), as well as some possible compensatory habitat elsewhere. These opinions applied both before and after acquisition.

57 Dr Clements inspected the land in October 2004 when retained by a prospective purchaser of the residue land and an adjoining site fronting Bernera Road. The purchaser had noted that their site inspection showed a cleared site with development potential, but that a Council map suggested “the total site is to remain”. The map attached to the email instructions to Dr Clements apparently had no issue date. The version tendered in evidence had an issue date of 8 May 2006 and a legend “Extract of Map – Biodiversity Strategy Conservation Significance (October 2003)”. This map shows the land designated as mainly conservation significance “core - regional”, with parts as “support for core”. Dr Clements’ draft conclusion at 1 November 2004 was that prior to recent clearing, it was likely the residue land supported an endangered ecological community. She recommended that the prospective purchaser seek a legal opinion on the implications of the recent clearing. This map was not referred to in Dr Clements’ draft advice, nor in her written evidence in these proceedings.

58 For her evidence in the proceedings, Dr Clements reviewed the available literature from 1991 to date and caused to be carried out selective sampling of the land. This involved selecting twenty quadrats and systematically identifying plant species and frequency in the quadrats. Dr Clements noted in her report that a 1997 National Parks and Wildlife study of a 100 hectare area (of which the land formed part) concluded that remaining bushland in the area was of high conservation value, and that the cleared land had conservation value due to the remaining natural soil profile. Dr Clements said that the whole of the land supported the regenerating CPW community, the vegetation may be consistent with another endangered ecological community (Shale Gravel Transition Forest, listed in or about 2002) and that the SCRFF community was limited to one quadrat.

59 Dr Clements concluded that there were major flora constraints on the land that would need to be considered prior to any future development. She disagreed with Mr Fanning’s constraint maps. Dr Clements said in her report that her advice to the hypothetical buyer would have been that if the whole of the land were to be developed, then off-setting would be required (that is, as I understand it, replacement conservation land provided off-site). She noted that the off-setting ratio applied to the M7 had been 1 developable to 2 conservation.

60 In their joint statement, Dr Clements and Mr Fanning agreed that the land had been largely cleared in 1994 and 1995 (before the listing of any of the relevant endangered ecological communities), and that parts of the land had continued to be cleared thereafter. At the acquisition date, the cleared vegetation was regenerating. Dr Clements also said “from experience with other development in Liverpool LGA, I would expect at least half of the entire landholding to be constrained”.

A third would be developable in terms of his bidding and at the best to expect to get a half. So somewhere between a third and a half would be what he could develop on the land and for his bidding process go for a third and then expect, after a lot of negotiation, he might get a half.

…what happens after you have purchased means you go through a full analysis of what is potential that can be developed where when it’s advice to a potential purchaser, one takes a very conservative attitude about what is likely to be constrained or potentially constrained…

63 Mr Fanning considered that the Tesrol site was different from the land for numerous reasons, including: - (i) the Tesrol site had long been identified as of conservation value, (ii) a threatened species (Acacia pubescens) was present in abundance on the Tesrol site, (iii) another threatened species, the Cumberland Plain Land Snail, was also present on that site in abundance, (iv) although partially cleared in the mid 1990’s, that site had vegetation in good to excellent condition on it, and (v) Mr Fanning would have mapped that vegetation as high constraint value.

64 Mr Fanning criticised Dr Clements’ selective sampling method as reflecting a bias towards the edges of the land and better vegetated areas. The applicants, in submissions, also criticised the method as not reflecting the approach likely to be adopted in advising a hypothetical buyer.

65 The hypothetical buyer and seller would have had access to other material to assist them in assessing the ecological advice they would have received.

66 The material reasonably proximate to the acquisition date (excluding material created for the purpose of the M7) included the 1997 zoning map. The map shows a small part only of lot 286 (on part of its northern boundary) hatched as environmentally significant land (and thus subject to cl 16 of the 1997 LEP). Most of the lots to the north of the land are shown as environmentally significant land, the whole of the 6(a) land to the south is so shown, as is much of the land in and around what I understand to be the Tesrol site. The hypothetical buyer would also have been aware that the lots to the north of the land had been cleared after 1994 and before 1998 (from the aerial photographs), well prior to the acquisition date.

67 A National Parks and Wildlife map dated 2002 shows the whole of the area to the south and a band to the west of the land as vegetation units 103 and 11, which are apparently SGTF and alluvial woodland vegetation units respectively. That map shows an area in the western part of the land as unit 103 but with less than 10% canopy cover (broadly similar to Mr Fanning’s moderate constraint area), an area in the middle of the land as the same designation, and a narrow band on the eastern boundary as unit 11 but less than 10% canopy cover. Another National Parks and Wildlife map, also bearing a 2002 date, shows the same mapped areas on the land as “support to core habitat”. The core habitat includes the 6(a) land to the south and the band to the west mapped as units 103 and 11.

68 The species impact statement prepared for the M7 in 2000 is irrelevant in the before situation because the assumed hypothetical state of affairs excludes the direct and indirect effects on value of the scheme underlying the acquisition (s 56(1)(a) and, for example, Housing Commission of New South Wales v San Sebastian Proprietary Limited and Others (1978) 140 CLR 196 at 205 - 206). A map in the species impact statement shows the land east of Ash Road as cleared CPW. It shows the 6(a) land to the south and an area to the west of the land as CPW. It also shows the land as “cleared and regenerating” on a map designated “potential compensatory habitat” for the M7. That is, at one time, the applicants’ residue land was nominated as compensatory habitat for the M7. That fact, and its effects, must be disregarded in the before situation.

69 In her primary report, Dr Clements did not refer to the Council map annexed to the 2004 instructions (showing the land as core or support conservation habitat) as relevant to her advice to the hypothetical buyer. The availability of that map at the acquisition date is unclear. Mr Fanning did not refer to the map. In these circumstances, I do not accept that this map would have been the subject of advice to the hypothetical buyer in October 2003. It is also possible that this map was affected by the M7 compensatory habitat proposal for the land. Another document, described by Mr Fanning as an Urban Development Framework, adopted by the Council in 2005, supports this inference. For these reasons, it would be inappropriate to give weight to this map in ascertaining how the hypothetical buyer would assess the circumstances of the land in the before situation.

70 A letter from the Council (the Team Leader – Drainage and Floodplain Assets) to Mr Sanders, the respondent’s planning consultant, dated 13 January 2004, stated that the land had been removed from the Council’s landfill strategy at that time “as Council possesses information indicating that filling of the subject lots would not be permitted due to environmentally significant vegetation. However, should the issues regarding environmentally significant vegetation on the site be resolved such that landfill is permitted, Council will revise the landfill strategy”. A version of the Council’s landfill strategy also showed the land with a handwritten notation on lot 25 “significant vegetation to be retained”.

71 The information possessed by the Council is not identified in the letter. The letter is dated shortly after the acquisition. In their primary reports neither Dr Clements nor Mr Fanning referred to either of these documents as relevant to any ecological advice that they would have given to a hypothetical buyer. The plan showing the notation on lot 25 was forwarded under cover of a letter from the Council in 2005. The letter said that the attached plan takes into account the impacts of the M7 (which must be disregarded in the before situation). In these circumstances, I do not accept that these documents would have been the subject of advice to the hypothetical buyer in October 2003.

72 The respondent’s valuer (Mr Lunney) referred to the development consent for the Liverpool Showground site, which included a condition for a 40 metre riparian zone (in contrast to Mr Fanning’s opinion that a 20 metre retained vegetation zone from Maxwells Creek on the land would be required). The Showground consent is in evidence. It is dated 29 July 2005. Given that the Showground consent was granted about 19 months after the acquisition of the land, a hypothetical buyer of the land could not have taken the imposition of that condition into account.

73 Prior to the acquisition date, the Rivers and Foreshores Improvements Act 1948 operated to require approval to be obtained from the Department of Land and Water Conservation for development within 40 metres of protected waters. This would have resulted in the referral of any development application including such development to the Department as integrated development. The Department issued guidelines for such development in February 2000. These stated, amongst other things, that a riparian area of local native vegetation should be maintained and enhanced wherever possible adjacent to (relevantly) rivers, and that, generally, a minimum riparian area of 40 metres wide from the top of each bank was recommended for major watercourses and 20 metres for minor watercourses. Although the guidelines contain a note that they would apply until the introduction of the integrated water legislation, none of the material before me suggests any alteration to that basic position of the Department. The hypothetical buyer would have been aware (or made aware) of these guidelines.

Alleged illegal clearing

74 Dr Clements raised the issue of the clearing (post 1997 in any event) being potentially illegal. Dr Clements said that the legality of the clearing was part of the foundation for her opinion that she would have advised the hypothetical purchaser to expect about a third (or, at best, half) of the land to be developable. The respondent submitted that the hypothetical buyer would be aware that development consent for clearing bushland was required since the coming into force of the 1997 LEP (by cl 10(16)), and that a licence to clear the endangered ecological community (CPW) was required since its listing as such on 27 June 1997. The respondent submitted that the hypothetical buyer would not assume that the clearing (presumably after 1997) was an advantage in obtaining the Director-General’s concurrence to clearing the land (assuming a species impact statement was required - s 79B(3) of the EPA Act). Although the respondent raised s 56(1)(c) of the Just Terms Act, it did not ultimately rely on that section (for reasons I consider apparent when regard is had to the terms of the section).

75 The applicants pointed to a letter from the Council to Mr Nasser to the effect that the Council’s records showed approvals to remove trees on lots 286 and 287, but not lot 25. The applicants noted the absence of any action taken by any regulatory authority in respect of the clearing which had commenced in or about 1994 (nearly ten years before the acquisition). A letter from the Department of Environment and Conservation to a solicitor employed by the respondent’s solicitor dated 8 December 2005 (some two years after the acquisition) records that the Department was conducting a “confidential investigation” into alleged breaches of the National Parks and Wildlife Act 1974 that may have taken place on lots 41, 42 and 43 and that may have damaged endangered ecological communities.

(1) The land cannot be assumed to be in a condition different from its actual condition at the date of acquisition ( Collins and Another v Council of the Shire of Livingstone (1972) 127 CLR 477 at 497, also Fraser and Others v City of Fraserville [1917] AC 187 at 194 cited in Roads and Traffic Authority of New South Wales v Perry and Another (2001) 52 NSWLR 222 at 227).

(2) There was no material from which a hypothetical buyer, as at 10 October 2003, would have inferred that any regulatory authority was contemplating taking any action with respect to the clearing of the land. The absence of any action in the face of clearing since 1994 would have been plain to the hypothetical buyer. An investigation in 2005, two years after the acquisition, cannot be said to confirm some foresight about action for alleged illegal clearing. The 2005 “confidential” investigation is irrelevant.

77 Hence, I do not accept that a hypothetical buyer in October 2003 would have been concerned about the potential consequences of possible illegal clearing of the land, or that such a consideration would have entered into the buyer’s deliberations.

Snails - overview

78 Dr Ambrose and Mr Fanning gave evidence about the presence of the Cumberland Plain Land Snail on the land. This snail is listed as an endangered species under the Threatened Species Conservation Act 1995 (listed in 1997).

79 Dr Ambrose and Mr Fanning agreed that the small number of snails on the land at the acquisition date could easily be translocated to other more suitable habitat in the locality. Mr Fanning and Dr Ambrose also agreed that most of the land was unsuitable or marginal snail habitat at the time of acquisition, although Dr Ambrose observed that he could not comment on its suitability prior to clearing (see above).

Conclusions – vegetation and snails

(1) obtained the advice of an ecological consultant;

(2) recognised that the land had been cleared, and supported patches of mature trees and varying quality of understorey;

(3) been informed by the ecologist that the vegetation across the land was the endangered ecological community CPW, which had been subject to a regime of clearing over a number of years and exhibited varying degrees of intactness and weed infestation, but was regenerating as the endangered ecological community;

(4) been informed that the land to the east of Ash Road along Maxwells Creek also contained an endangered ecological community SCRFF, which was degraded in terms of weed infestation and intactness, but which in part formed a riparian zone or area for Maxwells Creek;

(5) been informed that that development of the land would require preparing a species impact statement, primarily to address the clearing of CPW (but possibly also dealing with the SCRFF and snails);

(6) recognised that the presence of the endangered ecological community CPW, in particular, would present a constraint to development of the land;

(7) recognised that the riparian vegetation would also present a constraint to development; and

81 The hypothetical buyer would have recognised that assessing the expected extent of the constraint to development presented by the vegetation involved making a judgment about the relative weight to accord to various, and potentially inconsistent, objectives. Obtaining ecological advice would not have been seen as removing the uncertainties inherent in this judgment.

82 Although I do not consider the criticisms of Dr Clements’ methodology were justified, I am satisfied that Dr Clements’ opinion about the extent of the development constraint should not be accepted. First, Dr Clements’ “one third” developable opinion was based on the off-setting ratio applied to the M7 itself. The off-setting ratio applied to the M7 (presumably over the whole of its length through four local government areas) does not immediately present a rational connection with the constraint to development presented by the vegetation on the applicants’ land. Secondly, the hypothetical buyer would be likely to accept Mr Fanning’s opinion that the Tesrol site was in a different position from the land at the acquisition date for the reasons he gave. Hence, Dr Clements’ experience with that site would not be taken as a reliable indicator of development potential for the applicants’ land. Thirdly, Dr Clements did not present any information in her primary report or joint statement about the Tesrol site (or the Minto site). Dr Clements gave no other basis for her opinion that one third to half the land would be developable. In the circumstances I have described, that opinion would not readily be accepted as the product of a careful process of reasoning, applying to the facts Dr Clements’ specialised knowledge based on her study, training and experience.

83 For these reasons, the hypothetical buyer would not have accepted Dr Clements’ opinion either at face value or as a reasonable assessment of the development constraints presented by the vegetation on the land at the acquisition date, particularly when weighed against all relevant circumstances pertaining to the land (its location, zoning and the context of surrounding land). I accept, however, Dr Clements’ opinion that a hypothetical buyer would have been informed and would otherwise have known that the requirement to prepare a species impact statement was a serious matter and indicative of the fact that conservation of the vegetation on the land, given its status as an endangered ecological community, would be a material consideration for any development proposal. This supports my finding that that hypothetical buyer would have recognised the uncertainty affecting the required judgment about the constraint to development presented by the CPW vegetation regenerating across the land at the acquisition date.

84 Mr Fanning’s approach to ecological constraint mapping was broad brush and rough, providing indicative constraint levels only, and would be recognised as such by the hypothetical buyer. I am satisfied that Mr Fanning has been far too sanguine about the constraints presented by the vegetation on the land at the acquisition date. Mr Fanning’s opinions do not adequately reflect the status of the vegetation as an endangered ecological community, the significance of the rehabilitation of riparian areas, the weight which ought to be given to the National Parks and Wildlife Service 2002 mapping or the likely requirements for retaining part of the endangered ecological community through the species impact statement assessment process. If the hypothetical buyer had obtained advice consistent with that of Mr Fanning based on his mapping (that is, 50 metres to the west and 20 metres to the east to be retained – or about 1.8585 hectares of the land) the hypothetical buyer, in all of the relevant circumstances at the acquisition date, would have reached a conclusion far less optimistic than Mr Fanning about the level of constraint the vegetation presented.

85 As Mr Lunney observed, neither valuer made a specific allowance for risk associated with the vegetation over and above the areas for retention recommended by the ecologists, even though there may be a basis for so doing. While the valuers made no specific allowance for risk on this account (and, as such, I do not propose to do so), this circumstance applies to my findings below and is relevant to my consideration of the valuers’ evidence about the comparable sales.

86 Resolving all doubts in favour of the applicants, I am satisfied that the hypothetical buyer would have expected a requirement to retain and rehabilitate the whole of the western moderate constraint area (as part of any overall industrial subdivision consent). This is an area similar to the National Parks and Wildlife 2002 mapping. The calculation of this area in the Hassall and Associates’ report (which is very similar to Mr Fanning’s mapping for the western area) is 3.48 hectares. While this area does not include an extension of the retained area to the northern boundary (which might also be required), it reflects the expectation that the hypothetical buyer reasonably could have had with respect to the western part of the land.

87 With respect to the eastern part of the land, given the presence of the endangered ecological community (albeit degraded), the National Parks and Wildlife 2002 mapping, Mr Fanning’s moderate constraint mapping and the guidelines for treatment of riparian zones by the regulatory authorities available at the acquisition date, I am satisfied that the hypothetical buyer would have expected a 40 metre setback requirement to Maxwells Creek. This equates to a retained area to the east of Ash Road of about 11,020, sqm. I consider this position would have been effectively the same both before and after acquisition.

Flooding and landfill

Evidence on flooding and fill

88 Dr Webb and Mr Rowbottom gave evidence on flooding and landfill.

89 Their evidence needs to be assessed in the context set by the 1997 LEP (disregarding the 5(a) zoning on that part of the land to the east of Ash Road previously zoned 4(a)). The 1997 LEP defined “flood liable land”, identified any total catchment strategy as a relevant consideration for development (cl 13), contemplated that development would be carried out on flood liable land, specified relevant considerations for such development (cl 21, also cl 22), and contemplated that filling of land may be carried out and specified relevant considerations for such development (cl 26).

90 The Council adopted DCP 19 for the Prestons Industrial Release Area in 1991. Clause 9 identified that efficient stormwater and sewer systems could not be provided in the area without landfill. The clause stated a requirement that land be filled in accordance with the Council’s general requirements and the landfill strategy plan. The Council adopted Development Control Plan No 6 for industrial development generally in March 1998. Clause 4.9 dealt with development on flood liable land. It contemplated the filling of such land (other than a “floodway” – an area where a significant volume of water flows during floods), provided not more than 10% flood storage was displaced.

91 Dr Webb and Mr Rowbottom agreed that the main source of flood impact was Maxwells Creek, not Cabramatta Creek. They agreed the land was shown on the Council’s flood mapping at the acquisition date as mostly inundated in the 1% AEP event. They agreed that the Council’s basin strategy was intended to avoid on-site compensatory storage requirements. They agreed that a landfill strategy from 1993 applied to the land and provided for filling of most of the land west of Ash Road. They agreed that various fill strategies appeared after 1993, but did not agree on the significance of these strategies. They agreed that, at the acquisition date, the land was not the subject of any landfill strategy, but disagreed on the reasons for its exclusion. Dr Webb thought this was primarily due to the M7, and Mr Rowbottom primarily due to environmental constraints (that is, the vegetation). In this respect, Mr Rowbottom relied on a version of the landfill strategy noted “significant vegetation to be retained” (see the comments in [70] and [71] above).

92 In Dr Webb’s opinion, the various landfill strategies were intended to depict design contours that would make properties flood free in the 1% AEP event. Dr Webb referred to a series of Council documents that disclosed that the Council had treated land filled in accordance with its landfill strategy as developable and acceptable in terms of flooding. Dr Webb said that the Council’s flood liable land mapping failed to take into account the filling that had taken place and thus did not show reliable flood levels for the land. He concluded that the M7 affected all Council action relating to filling of the land after the 1993 strategy and that, disregarding the M7, the 1993 landfill strategy would have remained applicable. Under this strategy, filling of the land was straightforward and simple: the land east of Ash Road was to be excavated and the land to the west filled, and the cut/fill balance resulted in a surplus of 6,500 cubic metres of fill. This represented the “before M7” position.

93 The “after M7 position”, according to Dr Webb, was far more complicated than the “before”. In short: - (i) the land east of Ash Road had all been zoned 5(a) (see above), (ii) the M7 had caused damming effects on the land and caused a major afflux in the 1% AEP event. This was disclosed in the Bewsher Consulting and WBM Oceanics report on the M7 from January 2002 which identified that the M7 would result in some localised “unacceptable impacts” that would need to be addressed either through land acquisition or refinement of structures without major changes to the design concept. Further, a design change to the M7 culverts had exacerbated this damming effect, (iii) there was no applicable landfill strategy, and thus uncertainty about the capacity to fill the land and the required levels, (iv) nevertheless, it was apparent that a further 1.5 to 2 metres of fill above the 1993 fill level would be required to fill the land west of Ash Road (180,000 to 240,000 cubic metres).

94 In Mr Rowbottom’s opinion, disregarding the M7, the relevant flood levels were those based on the Council’s 2001 flood study, which would have been available at the acquisition date through notations on the s 149 certificates for the land. Further, the Council’s flood liable land map disclosed that about 65% of the land would be inundated in the 1% AEP event. As such, the Council’s Floodplain Management Plan would apply. That plan provided that the minimum development level was the 1% AEP event level, and filling above that level would require compensatory storage. A 1997 version of the fill strategy existed which appeared to be free from M7 influences. The landfill strategy did not provide levels above the 1% AEP event level (as it was primarily intended to provide for positive drainage), although the Council was likely to permit development below that level provided it complied with the landfill strategy levels (for example, with raised floor levels of buildings). Even after filling in accordance with the strategy an area of 4.7 hectares west of Ash Road was still flood liable (with depths varying from 600mm adjacent to Ash Road to zero at a distance of 180 metres from Ash Road). The land between Ash Road and Maxwells Creek was a “high hazard floodway” which would not have been able to be filled. Most of the land to the west of Ash Road would be considered “low hazard floodway/flood storage”. A drainage channel 10 metres wide on the north of the land was also required. Further, Ash Road would need to be raised as it would flood to 600mm in the 1% AEP flood event.

95 The “after M7 position”, according to Mr Rowbottom, would be similar to the “before” situation, although he accepted that about 0.8 to 1 metres of additional fill would be required above the 1997 fill levels (that is, an average of 1 metre). Mr Rowbottom thought it more likely that the industrial development (and filling for it) was the cause of the adverse afflux on the land, and that the Bewsher Consulting and WBM Oceanics report of January 2002 was incorrect to state otherwise. He also referred to the conditions imposed on the M7 determination relating to flooding as onerous and, in effect, sufficient to ensure the absence of adverse impact from the M7.

96 Dr Webb disagreed that there was a high hazard floodway to the east of Ash Road in the “before” situation. There was a grass lined channel which Dr Webb said would safely convey the 1% AEP event. He also disagreed with Mr Rowbottom’s opinion that any part of the land comprised a “floodway”. He observed that the 1997 landfill strategy depicted the enlarged Basin 18 and thus had itself been affected by the M7 proposal (despite the legend on the plan stating to the contrary). Dr Webb also considered that Ash Road would not need to be raised in the before situation. In the after situation, access to the south along Ash Road would also not require the raising of that land.

Conclusions on flooding and fill

97 I am satisfied that the hypothetical buyer would have obtained the advice of a hydrological expert (or experts) to assist in determining the likely constraints to development of the land by reason of flooding and fill requirements.

98 In the before situation, the hypothetical buyer would have had access to the Council’s flood mapping, s 149 certificates and landfill strategy, and would have had a general familiarity with the way in which the Council had approached other development in the floodplain over time. The hypothetical buyer would have appreciated that the land was largely flood affected (to varying extents), that filling would be required to provide development platforms and that, accordingly, flooding and the capacity to fill were potential constraints to development.

99 Although Dr Webb and Mr Rowbottom debated whether the hypothetical buyer would have relied upon the flood mapping and s 149 certificate levels or the landfill strategy levels, I am satisfied that the hypothetical buyer would have sought to understand all of the available information and, assisted by expert advice, would have assessed that information by reference to whether it was up to date and reliable. In so doing, the hypothetical buyer would have appreciated, as Dr Webb indicated, that the flood map was out of date (because it did not take account of the filling of other land in the catchment), and that the land was not affected by flows from Cabramatta Creek as the flood map indicated. That is, the land was largely an area of flood storage (as opposed to flood flow). The hypothetical buyer would have been aware that the s 149 certificate levels were based on out of date topographical information.

100 These factors mean that I do not accept Mr Rowbottom’s opinion that the Council would consider a large part of the land to be a low hazard floodway in the 1% AEP event. I prefer Dr Webb’s opinion that the hypothetical buyer would be aware (from expert advice and their own knowledge) that the Council’s flood level information did not reflect the flood conditions of the land by the acquisition date. Hence, I do not accept Mr Rowbottom’s conclusion that filling of some parts only of the land to the west of Ash Road may have been possible. That conclusion is at odds with the Council’s inclusion of the land within its landfill strategy in 1993. It also disregards the condition of the land at the acquisition date having regard to the actual topography of other land filled in accordance with the landfill strategy.

101 Accordingly, I generally prefer the opinion of Dr Webb that the hypothetical buyer before acquisition would not view the majority of the land as sterilised from development by reason of flooding. Nevertheless, I am satisfied there are matters to which Dr Webb has not given sufficient weight, and which mean that his advice would have been understood by the hypothetical buyer to be inappropriately optimistic about the flood affectation of, and the fill situation for, the land.

102 The hypothetical buyer at the acquisition date would have faced uncertainty about the levels of fill likely to be required and permitted on the land irrespective of the M7. The Council, by 1997, was aware that its landfill strategy created greater impacts than it had anticipated in 1992. In the face of that awareness, and on the necessary hypothesis that Basin 18 had not been extended north onto the land east of Ash Road between Jedda and Kurrajong Roads, I do not accept that the 1993 landfill strategy would have remained in place or, if in place, would have been seen as providing a simple means to ensure that the land could be filled. The hypothetical buyer would have been aware that it could not rely on any such strategy as a straightforward answer to the flooding and fill issues.

103 The hypothetical buyer in the before situation, deemed to be cognisant of these matters and informed by ordinary business considerations, would have recognised that the fill levels likely to be permitted and required were uncertain and could affect the overall development potential of the land. As part of the same consideration, I do not accept that the hypothetical buyer would have assumed that the Council would permit excavation of a drainage channel along Maxwells Creek, which is likely to have been perceived as inconsistent with the ecological values of the riparian zone. Hence, I do not accept Dr Webb’s opinion that the channel provided for in the 1993 strategy would have been assumed by the hypothetical buyer at the acquisition date to be adequate to convey the whole of the 1% AEP event. A wider area would have been expected to be necessary for the conveyance of flood waters. The hypothetical buyer would have judged that the whole of the ecological constraint area (the 40 metre strip) would also be necessary to perform the additional function of flood conveyance.

104 For the same reasons, I do not accept that the hypothetical buyer would assume that the whole of the balance of the land east of Ash Road was free from any development constraint by reason of flooding. The hypothetical buyer would not have accepted Mr Rowbottom’s opinion that the whole of the land to the east of Ash Road would have been identified as high hazard floodway at the acquisition date, and necessarily incapable of any development. That opinion would be seen as inconsistent with the zoning of the land in 1992 and its inclusion in the 1993 landfill strategy. Nevertheless, the hypothetical buyer (for the reasons underlying Mr Rowbottom’s opinion) would have recognised that the known inadequacies of the basin strategy presented a significant risk to the development potential of that land and the prospect of it being required to be left free from development to accommodate flood flows.

105 The hypothetical buyer also would have known that development in accordance with the 1993 landfill strategy would contribute to flows in Maxwells Creek greater than the Council had anticipated. The hypothetical buyer thus would expect that future development of the land would need to address this issue insofar as practicable. Most likely, a flood study would be required to accompany any development application. This too would have contributed to uncertainty about filling the land before acquisition.

191 I accept Mr Lunney’s opinion that, if no s 94 contributions were payable on the sale site, it would enjoy an advantage over the applicant’ land. Nevertheless, I am not satisfied that development of the sale site would occur absent some public infrastructure being required (even if by way of direct condition for off site works). As such, I resolve this doubt in the applicant’s favour and do not adopt Mr Lunney’s adjustment on his account.

192 Given the sewer and water issues with respect to the applicants’ land, I consider Mr Neskovki’s allowance on that item unwarranted. I also consider Mr Neskovski’s 10% adjustment on risk unreasonable. Mr Lunney made no adjustment. Insofar as the adjustment reflects contamination issues, the special provision in the 1997 LEP (relied on by Mr Neskovski) does not, of itself, warrant an adjustment. Insofar as it reflects fill requirements, I accept the allowance agreed by the valuers and see no justification for an additional risk component.

193 On the basis set out above, and otherwise resolving doubts in the applicants’ favour (for example, adopting Mr Neskovski’s higher allowance for market movements), the Yulong site shows $158 per sqm for the applicants’ developable land at the acquisition date.

The Showground site

194 The Showground site is 17.03 hectares, zoned 4(a) and 5(a) Special Uses–Drainage (1.4 hectares). It was sold on 9 December 2003 for $21,940,000 ($129.18 per sqm unadjusted for any site constraints). Part of the land on the Kurrajong Road frontage is subject to a restriction on use requiring the vegetation in that area to be conserved, which is also an area shown as environmentally sensitive land under the 1997 LEP zoning map (about 2.38 hectares). Mr Neskovski originally analysed the sale as showing $175 per sqm for the applicants’ developable land, but amended that in the joint statement to $231.64. Mr Lunney analysed this sale as showing $147 per sqm for the applicants’ developable land. Mr Lunney thought this the most comparable sale. Mr Neskovski emphasised in his primary report that he considered the sale only comparable to the residue land. The valuers agreed that an adjustment was required for time given the rising market.

195 Although Mr Lunney relied on advice from an officer of the purchaser, I am not satisfied about the developable area of the sale site anticipated at the time of sale. As such, I adopt in the applicants’ favour the lesser area of developable land used by Mr Neskovski (13.25 hectares not 14 hectares). The notion that the purchaser ascribed nil value to the non-developable areas, however, is untenable. It is contrary to the actual basis of the sale advised to Mr Lunney by an officer of the purchaser, fails to recognise that part of that area is zoned 5(a) (subject to the LEP acquisition clause) and that the constrained areas would be likely to contribute to the development potential of the balance of the site by way of setbacks and the like. I consider Mr Lunney’s allowance of $31 per sqm for this area to be conservative in the applicants’ favour and will adopt it. That leads to a developable value of $157 per sqm (unadjusted to the applicants’ land).

196 Although Mr Neskovski emphasised the restriction on use and the need to maintain the vegetation within that area, Mr Neskovski failed to recognise that the vegetation issues on the Showground site were far better defined and markedly less significant than those on the applicants’ land.

197 The site is subject to a special provision in the 1997 LEP (cl 53A) that imposes a constraint on subdivision (unless the subdivision will not prejudice development of the site for large scale industrial and warehouse uses which will create employment opportunities) and permits temporary access onto Kurrajong Road until the Lyn Parade extension is constructed. The contract conditions required the development to be completed within five years (but that the Minister would not unreasonably withhold consent to extend time). Failing completion of the development, the Minister could repurchase the site for the original sale price absent compensation, or the purchaser could request repurchase at the original sale price within the five year period. The purchaser could not sell the site within the same period (other than to the Minister for the original sale price if the conditions of sale were thought too onerous).

198 I accept Mr Lunney’s approach to the Showground site sale, with some qualifications. I do not accept Mr Neskovski’s opinion that the sale is comparable only to the residue land. A significant debate between the valuers was the cost the purchaser would have expected to pay for the Lyn Parade extension (land acquisition and pavement). Mr Neskovski, in his primary report, allowed $330,000 for the expected cost of the Lyn Parade extension attributable to the Showground site. Mr Lunney allowed $750,000 based on information from an officer of the purchaser about the costs actually incurred by the purchaser. Mr Neskovski, in the joint statement, altered his adjustment to $2,750,000 based on two letters from the Council in connection with the public auction of the Showground site sale, as well as the valuation advice to the vendor of that site (which assumed a $2,750,000 cost in this respect). I infer that this far larger adjustment was the main basis for the difference between Mr Neskovski’s original and amended analysis of this sale.

199 The letters from the Council are qualified and ambiguous. I do not accept that the purchaser of such a site (who may be inferred to be a sophisticated developer given the size and nature of the site) would have accepted the advice from the Council at face value, had the purchaser been aware of such advice. While the actual costs incurred by the purchaser do not necessarily reflect the expectation on sale, nothing in the inquiries made by Mr Lunney suggests that the purchaser was aware of the Council’s advice or received an unexpected windfall. I am satisfied that the purchaser would have reached its own view about the likely costs associated with the Lyn Parade extension adjacent to the site. I am satisfied that it would not have relied uncritically on qualified and potentially ambiguous advice from the Council.

200 Although I would otherwise be inclined to adopt Mr Lunney’s adjustment of $750,000 (particularly having regard to Mr Neskovski’s original allowance of $330,000), I accept that the purchaser may have formed their views having regard to the Council’s s 94 contributions plan as adopted. If that were done, the purchaser could have concluded that it might be exposed to a development cost of $1,871,163. Resolving all doubts in favour of the applicants, I adopt that adjustment. I do not accept that the purchaser would have assumed any greater allowance for this item.

201 Although I accept that the sale conditions and LEP restrictions on this site may have limited the market to larger institutional style developers, I do not accept that these matters would have affected price to the extent suggested by Mr Neskovski. Mr Lunney’s inquiries of the vendor disclosed strong interest in the site by most of the major industrial developers in the market. Mr Lunney adopted a 10% adjustment on account of the sale conditions and LEP provisions applying to the site. This is reasonable.

202 I accept Mr Lunney’s general approach that the site will derive benefit from, and is well exposed to, the M7. I consider his (10)% allowance reasonable.

203 I consider the sewage issue immaterial for the reasons already given and because the sewage for the site had to be extended through other privately owned land. Hence, no adjustment for that item is warranted. I do not accept Mr Neskovski’s 10% adjustment for location, which disregards the fact that the sale site adjoins the industrial land to the north (like the applicants’ land) and has an advantage in frontage to Kurrajong Road (unlike the applicants’ land). I prefer Mr Lunney’s opinion that no location adjustment is reasonable. I do not accept Mr Neskovski’s 5% adjustment for fill, site works and flooding. While the valuation advice received by the vendor assumed the site was flood affected, I accept it is not and do not infer that the vendor remained under that misapprehension or that it was shared by the purchaser. The fill and site works required do not appear out of the ordinary such as to warrant a particular adjustment. I accept Mr Lunney’s opinion that there should be no adjustment for that item. Finally, I do not consider Mr Neskovski’s adjustment for contamination to be warranted. Mr Lunney’s inquiries show that the purchaser obtained its own contamination advice after receiving the vendor’s contamination report and proceeded on an assumption that contamination was a low risk issue. A 5% adjustment on account of this issue is unreasonable. I adopt Mr Lunney’s position of no adjustment on this account.

204 On the basis set out above, and otherwise resolving doubts in the applicants’ favour, the Showground site shows $162 per sqm for the applicants’ developable land at the acquisition date.

Yarrawa Street and Yarrunga Road site

205 This site is 8.51 hectares comprising three lots (2.028 hectares, 2.03 hectares and 4.425 hectares). It was (and is) zoned rural – Future Urban 1(e). It sold on 22 March 2004 for $14,850,000 ($175 per sqm unadjusted). No part of the sale site is constrained or potentially constrained land which is another important difference (apart from the zoning). The valuers agreed that an adjustment for time in a rising market was required. Mr Neskovski analysed the sale as showing $228 per sqm for the applicants’ developable land. Mr Lunney analysed it as showing $157 per sqm for the applicants’ developable land.

206 As noted, the site is difficult to compare with the applicants’ land given the 1(e) zoning and the evidence (including from the planners) from which I infer that at the sale date the Council most likely favoured residential rezoning of this site, although even then the well-informed purchaser would have appreciated a potential for industrial rezoning. Either way, the time frame for the rezoning would have been assumed to be three years out from the sale date, with a risk of a longer period before the land was rezoned for urban uses. Mr Neskovski made an allowance of 40% on this account and Mr Lunney 20%. While Mr Lunney was questioned at some length about his adjustment, I consider Mr Neskovski’s 40% markedly excessive (especially as I characterise the risk as one of time, not the fact of rezoning). I accept Mr Lunney’s adjustment of 20% on this account.

207 I otherwise accept Mr Lunney’s approach to the this sale site with respect to size and configuration (that is, he considered the sale site superior to the subject in terms of smaller size and configuration of the individual lots, so that any disadvantage from the shape of the lots in aggregate would be more than offset by the size difference between the site and the applicants’ land in aggregate). I accept Mr Lunney’s opinion that this site will derive very significant benefit from the M7 given its location close to the Bernera Road interchange and adopt his adjustment of (15)% on this account.

208 Although the site is sloping, I consider this aspect of the site far less of an issue than suggested by Mr Neskovski. At best, I consider that $5 per sqm on this account may be allowed. I adopt Mr Neskovski’s adjustment for the road upgrading, given that urban development of this site would be assumed to involve those upgrades from the presently rural standard roads on which the site is located.

209 On the basis set out above, and otherwise resolving doubts in the applicants’ favour, the Yarrawa/Yarrunga site shows about $166 per sqm for the applicants’ developable land. This needs to be treated with caution given the 1(e) zoning and the doubt at the time of sale as to whether the Council might favour a residential rezoning and the absence of any uncertainty with respect to the vegetation and flooding issues from the sale site. Contrary to the applicants’ submission, I do not accept that this sale sets a minimum $ rate per sqm for the applicants’ developable land. This sale of 1(e) land is not as reliable as the two sales of industrial property.

Conclusions on comparable sales

210 Mr Neskovski was criticised for abandoning one sale that he had originally relied on as a primary comparable sale (Clunies Ross Street, Prospect). I was not asked to inspect this site. Mr Lunney did not rely on this sale. The valuers agreed the comparable sales (other than 16 Lyn Parade). I am not satisfied that this criticism was warranted.

211 Mr Neskovski adopted rates for the applicants’ developable land of $220 per sqm for the western portion and $300 per sqm for the eastern portion based on the sales above (including Lyn Parade). The comparable sales do not support this analysis. Mr Lunney’s approach to the comparable sales was far more realistic than that of Mr Neskovski, as was his ranking of the reliability of the sales. Mr Lunney concluded that the appropriate rate to apply to the applicants’ developable land was $155 in the before (and after) situation.

212 I do not accept that any adjustment is required to reflect the fact that the land was held in three lots at the acquisition date. Both planners assumed that the most likely form of development was as an aggregated parcel. Other than Mr Neskovski’s approach to the land east of Ash Road (which did not reflect the existing title arrangement in any event), both valuers applied a common rate across the developable land for the three lots. In these circumstances, there is no satisfactory basis for me to conclude that the point at which a hypothetical seller and buyer or buyers would agree would be different by reason of the land being in three lots at the acquisition date.

213 Having regard to: (i) the range apparent on the comparable sales for “developable land”, (ii) the relative reliability of those sales, and (iii) my view of the location and attributes of the applicants’ land at the acquisition date compared to the location and attributes of the comparable sales, and otherwise resolving all doubts in favour of the applicants, I am satisfied that Mr Lunney’s rate of $155 per sqm of developable land in the before situation is appropriate.

214 Mr Neskovski allowed 50% of his adopted “developable land” rates for the non-developable land. I do not accept Mr Neskovski’s approach on this issue, which is inconsistent with his approach to the comparable sale sites. Mr Lunney allowed $50 per sqm for all such land (that is, zoned 5(a) and 4(a) but subject to ecological and flooding constraints) in the before situation, and $31 per sqm in the after situation. The $50 per sqm reflected the fact that Mr Lunney had adopted Dr Clements’ opinion that 50% of the land only would be developable. Given the findings I have made about the land (that is, the areas required to be retained and the absence of any adjustment for uncertainty associated with the vegetation and filling issues), I can see no justification for adopting $50 per sqm for this land in the before situation. The $31 per sqm rate (consistent with the rate used for the comparable sales) should be applied in the before and after situations to land which the hypothetical buyer and seller would recognise would need to be retained free from development.

215 The findings set out above lead to the following assessment of the value of the applicants’ land in the before situation which I am satisfied represents the ultimate common ground between the hypothetical buyer and seller.

Before value

216 The hypothetical buyer and seller would conclude that the main development parcel was to the west of Ash Road, being an area of about 140,640 sqm (175,440 less 34,800 sqm). The rate of $155 per sqm would be applied to this land. They would consider that the balance of the land to the west of Ash Road would need to be retained for ecological reasons. The rate of $31 per sqm would be applied to this land.

217 The hypothetical buyer and seller would operate on the assumed basis that the land to the east of Ash Road was not all zoned 5(a) (for the reasons given above). A 20 metre strip of that land (about 5,510 sqm) must be assumed to be zoned 5(a) as per the 1992 rezoning. Again, the rate of $31 per sqm should be applied to the 5,510 sqm of land zoned 5(a) in 1992, being land unsuited to development due to its proximity to Maxwells Creek, flooding from the creek and ecological value.

218 The balance of the land to the east of Ash Road has a notional 4(a) zoning. The hypothetical buyer and seller would recognise that part of the notional 4(a) land to the east of Ash Road (that is, zoned 5(a), but by reason of the M7) was subject to development constraints. An additional 20 metres (about 5,510 sqm) would be seen as incapable of development for ecological and flooding reasons. The rate of $31 per sqm thus would be applied to that land.

219 The part of the land to the east of Ash Road notionally zoned 4(a) (that is, zoned 5(a) but by reason of the M7), but with development potential (22,840 less 11,020 sqm) would not be seen as having the full value of the western land due to flooding issues, but about 60% of that value (that is, $93 per sqm).

220 The hypothetical buyer and seller would also have allowed for the estimated development costs of $1,900,000.

Developable land west of Ash Road - 140,640 sqm x $155 = $21,799,200

Non developable land west of Ash Road – 34,800 sqm x $31 = $1,078,800

5(a) land east of Ash Road (non developable) – 5,510 sqm x $31 = $170,810

Notional 4(a) land east of Ash Road (non developable) - 5,510 sqm x $31 = $170,810

Notional 4(a) land east of Ash Road (developable) – 11,820 sqm x $93 = $1,099,260

Less development costs of $1,900,000

222 Hence, the sum at which hypothetical buyer and seller would meet with respect to the purchase of the applicants’ land would be $22,418,880 in the before situation.

After value

223 Mr Neskovski made a 30% deduction to his adopted rates in the after situation based primarily on the indeterminate time for obtaining access over lots 2, 48 and 49, access for B doubles onto Kurrajong Road and whether the residue would be required for compensatory habitat. He accepted that Mr Shatford’s evidence addressed the first issue, but remained of the view that (30)% was about right having regard to all impacts. Mr Lunney made a deduction of 20% in his primary report, but ultimately made no deduction from his adopted rates in the after situation (on the basis of Mr Shatford’s evidence). Both valuers were questioned at some length on this aspect of their evidence. Mr Neskovski was criticised for not breaking up the adjustment and reducing it on the basis of Mr Shatford’s evidence. Mr Lunney was criticised for having made an original deduction of 20% on account of delay in obtaining access over lots 22, 48 and 49 and the irregular shape of the land, which he then reduced to nil on the basis of only Mr Shatford’s evidence (which said nothing about the irregular shape).

224 Consistent with my general views about percentage on percentage adjustments, I consider the criticism of Mr Neskovski for refusing to break down the risk component unjustified. The hypothetical buyer and seller would make a global adjustment for all aspects of risk and detriment in the after situation (which Mr Lunney also did in his primary report). The issue of risk and detriment in the after situation is a matter where I consider Mr Lunney’s final opinion (making no adjustment because the benefits of the M7 outweighed all) was inappropriate. I am satisfied that, despite the benefits presented by the M7, an adjustment must be made in the after situation for the land to the west of Ash Road to take account all of the issues I have identified above (including obtaining access south to Kurrajong Road, the left in and left out access absent intersection treatment, the less regular shape of the residue land and its separation from the balance of the industrially zoned land). These factors do not include the use of the land as compensatory habitat for the M7. The hypothetical buyer of the residue land at the acquisition date would not have seen this proposal as affecting the land and would know that, irrespective of the M7, the issues relating to the vegetation across the land would have to be resolved through the development application process.

225 These factors must be weighed against the benefit offered by the proximity of the land to the M7, a material benefit which I have accepted on the evidence. In this regard, I do not accept the applicants’ submission that allowing for the M7 benefit in the after situation involves a double discount by Mr Lunney. Mr Lunney’s rate based on the comparable sales was a rate absent the M7 benefit, which was appropriate for the before situation. In the after situation, applying the rate, it was logically consistent for Mr Lunney to factor the M7 benefit in for the applicants’ residue land.

226 Having regard to the above matters, I consider that Mr Neskovski’s 30% deduction is excessive. I infer that this deduction fails to make any allowance for the material benefit the western residue land will enjoy from its proximity to the M7. Mr Neskovski also assumed uncertainty of obtaining access over lots 22, 48 and 49 which Mr Shatford’s evidence made clear was not warranted. In these circumstances, I consider that a 15% deduction overall in the after situation best represents the common perception of the hypothetical buyer and seller. However, I can see no reason for this reduction to apply to the non-developable land west of Ash Road. I am satisfied that land would be treated the same in the before and after situations by the hypothetical buyer and seller.

227 I also do not accept that the hypothetical buyer and seller would apply this adjustment to the residue land east of Ash Road, which is all zoned 5(a). The 5(a) zoning is not to be disregarded in the after situation (but its notional value will reflect the before situation given my findings above). That land was either constrained or subject to significant development risk in the before situation.

228 In his primary report, Mr Lunney adopted $31 per sqm for all of the 5(a) land in the after situation (consistent with the Showground site). Mr Neskovski applied a 20% deduction on the assumption that this land would be acquired by the Council at 50% of the rate for developable land. The 20% deduction appears to be based on the decision in Sebastian Cannavo and Alfia Jennifer Busa v Roads and Traffic Authority of New South Wales [2004] NSWLEC 570, and reflects the time and risk of dealing with the Council where land was subject to an acquisition clause in the planning instrument.

229 A necessary consequence of the facts I have found (namely, that the Council rezoned the whole of the land east of Ash Road 5(a) because of the M7 and its overall drainage strategy, the convergence of both being the necessary cause of the rezoning) is that any future acquisition of the land which had development potential but for the 5(a) zoning, or use of it as a credit against s 94 contributions, must be assumed to reflect that value rather than the value of land incapable of development. As such, I do not accept Mr Neskovski’s initial 50% deduction, from which he has deducted a further 20%. I also cannot apply Mr Lunney’s blanket rate of $31 per sqm to this land – because, on Mr Lunney’s approach, this rate necessarily did not take into account any underlying development potential for any part of the 5(a) land. I am satisfied that the hypothetical buyer and seller would allow for the time and risk in dealing with the Council with respect to the acquisition or dedication and credit of the 5(a) zoned land that had development potential but for that zoning. I am satisfied that a 20% deduction on that account, which must allow for the notional cost of realising that potential ($398,000), should be made. This conclusion applies only to the notionally developable land east of Ash Road, not the balance of that land. For the balance, I adopt Mr Lunney’s $31 per sqm for the 5(a) zoned land in the after situation.

230 The findings set out above lead to the following assessment of the value of the applicants’ land in the after situation.

231 The hypothetical buyer and seller would conclude that the main development parcel was to the west of Ash Road of an area of about 83,150 sqm (117,950 less 34,800 sqm). They would apply a 15% discount to the value of that land (say $131 per sqm). They would consider that the balance of the land to the west of Ash Road would need to be retained for ecological reasons, and would make no adjustment to the rate of $31 per sqm for that land.

232 For the land east of Ash Road perceived as incapable of development (11,020 sqm), the hypothetical buyer and seller would adopt $31 per sqm.

233 For the land east of Ash Road which had development potential on the notional before situation 4(a) zoning (reduced in the after situation to 9820 sqm), the hypothetical buyer and seller would deduct the notional cost of realising that underlying development potential ($398,000) and 20% for time and risk in dealing with the Council.

234 The hypothetical buyer and seller would also have allowed for the estimated development costs of $3,885,000.

Developable land west of Ash Road – 83,150 sqm x $131 = $10,892,650

Non developable land west of Ash Road – 34,800 sqm x $31 = $1,078,800

5(a) land east of Ash Road (non developable) – 11020 sqm x $31 = $341,620

5(a) land east of Ash Road (previously developable) – 9,820 sqm x $93 less $398,000 less 20% = $412,208

Less development costs of $3,885,000

236 The difference between the before and after values is $22,418,800 less $8,840,278 - $13,578,522.

Conclusion

****************************

Citations

Macarbell Pty Ltd v RTA [2006] NSWLEC 366

Most Recent Citation

Cases Citing This Decision

58

Blackley Investments Pty Ltd v Burnie City Council (No 3) [2013] TASFC 12

Cases Cited

20

Statutory Material Cited

8

Spencer v The Commonwealth [1907] HCA 82

Rasch Nominees Pty Ltd v Bartholomaeus [2012] SASC 70

Spencer v The Commonwealth [1907] HCA 82

Actions

Download as PDF Download as Word Document

CITATION:	Macarbell Pty Limited v RTA, Michael Nasser v RTA [2006] NSWLEC 366
PARTIES:	Proceedings 30801 of 2004 APPLICANT Macarbell Pty Limited RESPONDENT Roads & Traffic Authority of New South Wales Proceedings 30802 of 2004 APPLICANT Michael Nasser RESPONDENT Roads & Traffic Authority of New South Wales
FILE NUMBER(S):	30801 of 2004; 30802 of 2004
CORAM:	Jagot J
KEY ISSUES:	Compulsory Acquisition of Land :- compensation - "before" and "after" valuations, decrease in value of land caused by proposal, comparable sales
LEGISLATION CITED:	Conveyancing Act 1919 Environmental Planning and Assessment Act 1979 Land Acquisition (Just Terms Compensation) Act 1991 Liverpool Local Environmental Plan 1997 National Parks and Wildlife Act 1974 Rivers and Foreshores Improvements Act 1948 Roads Act 1993 Threatened Species Conservation Act 1995
CASES CITED:	Blacktown City Council v Lasseter (unreported, Court of Criminal Appeal, 5 December 1996); Boland v Yates Property Corporation Pty Ltd and Another (1999) 167 ALR 575; Brewarrana Pty Ltd v Commissioner of Highways [No 2] (1973) 6 SASR 541; Collins and Another v Council of the Shire of Livingstone (1972) 127 CLR 477; Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited and Others (1947) 74 CLR 358; Crompton v Commissioner of Highways (1973) 5 SASR 301; De Ieso v Commissioner of Highways (1981) 27 SASR 248; Downie v Sorell Council (2005) 141 LGERA 304; E J Cooper & Son Pty Limited v Baulkham Hills Shire Council (2003) 131 LGERA 226; Emerald Quarry Industries Proprietary Limited v Commissioner of Highways (South Australia) (1979) 142 CLR 351; Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment [2000] 2 AC 307; Fraser and Others v City of Fraserville [1917] AC 187; Griffith City Council v Polegato and Another (1990) 20 NSWLR 696; Hornsby Shire Council v Roads and Traffic Authority of New South Wales (1998) 100 LGERA 105; Housing Commission of New South Wales v San Sebastian Proprietary Limited and Others (1978) 140 CLR 196; Lalic v Roads & Traffic Authority of New South Wales [2005] NSWLEC 430; Mario Piraino Pty Ltd v Roads Corporation (1990) 76 LGRA 263; Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426; Minister Administering the Environmental Planning and Assessment Act 1979 v Bautovich (2005) 142 LGERA 331; Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of New South Wales [2004] NSWLEC 612; Pamalco Pty Ltd v Minister Administering the National Parks and Wildlife Act 1974 [No 3] (1991) 71 LGRA 441; R K Morgan Holdings Pty Ltd v Melbourne & Metropolitan Board of Works (1992) 77 LGRA 102; Roads and Traffic Authority of New South Wales v Mosca [2006] NSWCA 159 ; Roads and Traffic Authority (NSW) v Muir Properties Pty Ltd (2005) 143 LGERA 192; RTA v Muir Properties Pty Ltd [2005] NSWCA 460; Roads and Traffic Authority of New South Wales v Perry and Another (2001) 52 NSWLR 222; Sebastian Cannavo and Alfia Jennifer Busa v Roads and Traffic Authority of New South Wales [2004] NSWLEC 570; Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438; Spencer v The Commonwealth of Australia (1907) 5 CLR 418; Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (2005) 63 NSWLR 407; The Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co and T D Charlesworth & Co [1901] AC 373
DATES OF HEARING:	1/5/2006, 2/5/2006, 3/5/2006, 4/5/2006, 5/5/2006, 8/5/2006, 9/5/2006, 10/5/2006
DATE OF JUDGMENT:	07/11/2006
LEGAL REPRESENTATIVES:	APPLICANTS Mr N Hemmings QC (solicitor) SOLICITORS Allens Arthur Robinson RESPONDENT Dr J Griffiths SC with Mr J Maston SOLICITORS Corrs Chambers Westgarth

[2006] NSWLEC 366

11/07/2006