Maloney v Minister Administering the Environmental Planning and Assessment Act 1979
[2011] NSWLEC 121
•13 July 2011
Land and Environment Court
New South Wales
Medium Neutral Citation: Maloney v Minister Administering the Environmental Planning and Assessment Act 1979 [2011] NSWLEC 121 Hearing dates: 7-11, 15-16 February 2011, 27-28 April 2011, 2-3 May 2011 Decision date: 13 July 2011 Jurisdiction: Class 3 Before: Biscoe J Decision: Compensation determined in the sum of $3,943,000
Catchwords: COMPULSORY ACQUISITION - determination of market value of land zoned Public Recreation Regional under SEPP (Sydney Region Growth Centres) 2006 - existing zoning disregarded - determination of underlying zoning - whether but for existing zoning land would have received biodiversity certification and been included in precinct planning. Legislation Cited: Blacktown Local Environmental Plan 1988
Environmental Planning and Assessment Act 1979 ss 94EE - 94EM
Environment Protection Biodiversity Conservation Act 1999 (Cth)
Land Acquisition (Just Terms Compensation) Act 1991 ss 21(1)(b), 55, 56(1)(a)
Native Vegetation Act 2003
State Environmental Planning Policy (Sydney Region Growth Centres) 2006
Threatened Species Conservation Act 1995Cases Cited: Cook v Roads and Traffic Authority of NSW [2007] NSWLEC 136
Halley v Minister Administering the Environmental Planning and Assessment Act 1979 [2010] NSWLEC 6, 170 LGERA 449
Halley v Minister Administering the Environmental Planning and Assessment Act 1979 [2010] NSWCA 361, 178 LGERA 327
Pointe Gourde Quarrying and Transport Company, Limited v Sub-Intendant of Crown Lands (Trinidad) [1947] AC 565
Macarbell Pty Ltd v Roads and Traffic Authority [2006] NSWLEC 366
Roads and Traffic Authority of New South Wales v Perry [2001] NSWCA 251, 52 NSWLR 222
Smith v Roads and Traffic Authority (NSW) [2005] NSWLEC 438
Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No 2) [2006] NSWCA 386, 68 NSWLR 487
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5, 233 CLR 259
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWLEC 219, 173 LGERA 155
Wilson v Liverpool Corporation [1971] 1 WLR 302Category: Principal judgment Parties: Barry Gavin John Maloney (First Applicant)
Bradley John Maloney (Second Applicant)
Minister Administering the Environmental Planning & Assessment Act 1979 (Respondent)Representation: Solicitors:
Fraser Clancy (Applicants)
Henry Davis York (Respondent)
Counsel:
Mr I Hemmings with Mr S Nash (Applicants)
Mr P Tomasetti SC (Respondent)
File Number(s): 30036 of 2010
Judgment
Contents
INTRODUCTION
1
EXPERT EVIDENCE
20
THE LAND
23
ZONING
31
NORTH WEST GROWTH CENTRE AND MARSDEN PARK INDUSTRIAL PRECINCT
37
THE s 56(1)(a) JUST TERMS ACT DISREGARD
78
UNDERLYING ZONING, INCLUSION IN THE MPIP AND BIODIVERSITY CERTIFICATION
95
POTENTIAL DEVELOPMENT CONSTRAINTS
125
MARKET VALUE
140
ORDERS
188
INTRODUCTION
This is an objection to the determination of compensation for the compulsory acquisition of land.
The applicants, Barry Gavin John Maloney and Bradley John Maloney, were the registered proprietors of Lot 40 in DP 262886, also known as Lot 40 South Street, Marsden Park ( Land ). The Land has an area of 10.7 hectares.
On 21 August 2009, pursuant to the provisions of the Land Acquisition (Just Terms Compensation) Act 1991 ( Just Terms Act ), the respondent, the Minister Administering the Environmental Planning and Assessment Act 1979, compulsorily acquired the Land by publication of an acquisition notice in the Government Gazette.
The Valuer-General determined the compensation payable to the applicants in the sum of $1,500,000 pursuant to s 55 of the Just Terms Act. That is the determination to which the applicants have objected.
The acquisition was owner-initiated. The applicants gave a notice dated 2 January 2009 to the respondent requiring acquisition of the Land pursuant to s 23(1) of the Just Terms Act, which provides:
23 Owner who suffers hardship may require authority of the State to acquire land designated for acquisition
(1) The owner of land to whom this Division applies may require an authority of the State, by notice in writing given to that authority, to acquire that land under this Act if:
(a) the land is designated for acquisition by that authority for a public purpose, and
(b) the owner considers that he or she will suffer hardship if there is any delay in the acquisition of the land under this Act.
Section 21(1)(b) provides:
21 Definition of "land designated for acquisition for a public purpose"
(1) For the purposes of this Division, land is designated for acquisition by an authority of the State for a public purpose if:
...
(b) the land is reserved by an environmental planning instrument for use exclusively for a purpose referred to in section 26 (1) (c) of the Environmental Planning and Assessment Act 1979 and the instrument (or some other environmental planning instrument) specifies that authority as the authority required to acquire the land.
The Minister accepted that the applicants would suffer hardship were there to be any delay in the acquisition of the Land under the Just Terms Act. This led to the compulsory acquisition.
At the acquisition date the Land was zoned Public Recreation - Regional under State Environmental Planning Policy (Sydney Region Growth Centres) 2006 ( SEPP ). Previously it had been zoned 1(a) General Rural under the Blacktown Local Environmental Plan 1988 ( LEP) .
The applicants' compensation claim comprises the market value of the Land at the acquisition date and disturbance loss. Section 55 of the Just Terms Act provides that in determining the amount of compensation, regard must be had to the market value of the land on the acquisition date and any loss attributable to disturbance. Section 56(1)(a) provides:
56 Market value
(1) In this Act:
market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid):
(a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.
The parties agree that the actual zoning of the Land should be disregarded in favour of its underlying zoning pursuant to s 56(1)(a).
The applicants submit that, ignoring the Land's actual zoning, it should be valued on the basis that at the acquisition date the Land would have:
(a) been zoned Urban Capable under the SEPP;
(b) been included in draft precinct planning and released land for the adjacent Marsden Park Industrial Precinct ( MPIP ) in the North West Growth Centre and identified for light industrial or low density residential development; and
(c) had the benefit of the biodiversity certification conferred upon Growth Centres within the SEPP by a Ministerial order made in 2007 pursuant to the Threatened Species Conservation Act 1995 ( TSC Act ).
The applicants submit that because of its actual zoning the Land was not considered for biodiversity certification nor for MPIP planning. Otherwise it would have been included in both.
The applicants submit that, ignoring the Lands' actual zoning, the market value of the Land at the acquisition date should be assessed according to its highest and best value on one of the following three alternative scenarios:
(1) Light Industrial potential
100% developable area 10.3 hectares
$14,980,000
or developable area 3.35 hectares
$ 4,690,000
(2) Low density residential potential
100% developable area 10.3 hectares
$15,250,000
or developable area 3.35 hectares
$ 4,777,500
(3) Offset potential relating to biodiversity certification of adjoining land
$10,600,000
The respondent submits that because of the Land's ecological constraints, and disregarding its actual zoning, at the acquisition date the Land would not have received biodiversity certification or been included in MPIP planning; would have had no industrial or low density residential development potential; and would have been zoned Environmental Conservation under the SEPP with a value of $526,000, or 1(a) General Rural under the LEP with a value of $1 million.
The market value for which the respondent contends is far less than the Valuer General's statutory determination: see [4] above. It is a remarkable feature of the statutory scheme that if a dispossessed owner does not accept a statutory offer based on the Valuer-General's determination, the acquiring authority may, on an objection to the determination, contend for a lower market value. That has occurred in this case, as in many others.
An understanding of the case is assisted by plans relating to the SEPP, copies of which are annexed to this judgment and marked as follows:
"A" zoning map as at the acquisition date. The Land is within the dark green area to the west of South Street zoned Public Recreation Regional. The extensive white areas are zoned Urban Capable under the SEPP and include the MPIP. The MPIP is mainly on the eastern side of South Street but extends to the western side, both to the north and to the south of the Land.
"B" MPIP indicative layout plan of October 2009 (the date agreed at the hearing notwithstanding the reference to 2010 on the map) showing proposed zonings of the MPIP. The MPIP area north of the Land is largely zoned residential and the MPIP area east and south of the Land is zoned industrial. This plan reflected a land uses map published in June 2009 by the Department of Planning at the final design stage.
"C" zoning map for the MPIP introduced into the SEPP in 2010. The relevant MPIP zonings have not changed.
In my opinion, ignoring the actual zoning:
(a) About one third of the Land fronting South Street would have been zoned Urban Capable under the SEPP, designated industrial in the MPIP and received conservation certification.
(b) The market value of that eastern one third as at the acquisition date was $3,417,000.
(c) The other two thirds would have been zoned Environmental Conservation under the SEPP.
(d) The market value of that other two thirds as at the acquisition date was $500,000.
Loss attributable to disturbance is agreed in the sum of $25,258.38.
Therefore the applicants should be awarded compensation in the total of the three amounts referred to in [17] and [18] above, that is, $3,942,258.38, which I round to $3,943,000.
EXPERT EVIDENCE
To determine the highest and best use of the Land, including its underlying zoning, and its market value at the acquisition date, expert evidence was led by the parties on the following topics:
(a) Town planning: The key issue is the highest and best use and likely underlying zoning of the Land, having regard to the environmental characteristics of the Land and environmental planning in the locality. The planners were Mr Gary Rhodes for the applicants and Mr Garth McKenzie for the respondent.
(b) Ecology: The key issue is the environmental characteristics. The ecologists were Mr Dominic Fanning for the applicants and Dr David Robertson for the respondent.
(c) Hydrological: The key issue is the hydrological state of the Land. The hydrologists were Dr Daniel Martens for the applicants and Dr Ian Joliffe for the respondent.
(d) Quantity surveyors: The key issue is the cost to remedy any hydrological issues associated with the hypothetical development of the Land. The surveyors were Mr John Meredith for the applicants and Mr Paul Parker for the respondent.
(e) Valuation: The key issue is the market value of the Land, disregarding any decrease in value caused by the carrying out of, or the proposal to carry out, the public purpose for which the Land was acquired. The valuers were Mr Walter Dobrow for the applicants and Mr Greg Jones.
Whether the hypothetical parties to a sale at the acquisition date would have obtained expert advice is a question of fact. If they would have obtained expert advice, then the expert opinions are relevant, through the judgment of the hypothetical buyer and seller: Cook, Saad, Raguz v Roads and Traffic Authority of NSW [2007] NSWLEC 136 at [12]. For example, in Macarbell Pty Ltd v Roads and Traffic Authority [2006] NSWLEC 366 at [15] Jagot J held:
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.
In the present case, in my view, the same may be said of the hypothetical buyer at the acquisition date.
THE LAND
The Land is located in the Blacktown Local Government area. It has an area of 10.7 hectares and is rectangular in shape. It has a frontage of 225 metres to the western side of South Street, Marsden Park; side boundaries of about 745 metres each; and a rear boundary also of 225 metres. The Land slopes gently from its south-eastern corner to the northern boundary. The Land is covered in woodland except for about 1.25 hectares in its north-eastern corner and several other cleared areas. It has no significant improvements apart from boundary fencing.
There is a small intermittent stream that flows across its north-eastern corner. The Land is prone to flooding in part. Of itself, this is not a constraint to development and could be managed by flood mitigation works. Being forested, the Land is exposed to bushfire hazard.
The suburb of Shanes Park adjoins the Land to the west. Immediately to the west of the Land is the former Commonwealth owned Airservices Australia international radio transmitter site of about 560 hectares.
The Land is in the North West Growth Centre, which is governed by the SEPP.
Ecological features of the Land include:
(a) a cleared paddock in the north-eastern corner representing about one-tenth of the area of the Land;
(b) a moderately disturbed and weedy area with dilapidated structures in the south-eastern part;
(c) a small, artificial and modified drainage line through the north-eastern corner characterised by introduced grasses and sedges through the paddock, and paperbarks with a mixed native and weedy understorey along the western side of the paddock;
(d) regrowth woodland over the majority of the Land, predominantly in moderate to good condition;
(e) several vehicle tracks;
(f) areas of dumped building material and other rubble; and
(g) the Land has been substantially or totally cleared in the past for agricultural purposes.
The vegetation communities on the Land include mixed regrowth woodland including Endangered Ecological Communities ( EECs ):
(a) shale gravel transition forest: a critically endangered ecological community;
(b) Cumberland plain woodland: an endangered ecological community; and
(c) swamp sclerophyll forest on coastal floodplains: an endangered ecological community.
Such communities also occur within the adjacent MPIP to the east of the Land and the Commonwealth owned Airservices site to the west.
The Land lies on the eastern edge of the Commonwealth owned Airservices site, an area of about 560 hectares of contiguous vegetation which contains a valuable remnant of Cumberland Plain Woodland. The vegetation in this area is of high conservation value and is protected under State and Commonwealth legislation. It includes a number of EECs. Shortly before the acquisition of the Land there was a public consultation period for the proposed listing of two of those species as critically endangered (after the acquisition they were so listed).
ZONING
At the acquisition date:
(a) the Land, which is located on the western side of South Street, was zoned Public Recreation - Regional under the SEPP. It acquired that zoning in 2006. Previously, the Land was zoned 1(a) General Rural under the LEP;
(b) the adjoining land to the west owned by Airservices Australia, with an area of about 560 hectares, was zoned Environmental Conservation under the SEPP;
(c) the Land is one of five similar lots with the same zoning and a total area of about 45 hectares, fronting the western side of South Street; and
(d) the adjacent MPIP to the east, north and south of the Land, was zoned Urban Capable under the SEPP and had the benefit of a 2007 biodiversity certification order under the TSC Act.
The aims of the SEPP are as stated in cl 2 :
2 Aims of Policy
The aims of this Policy are (in conjunction with amendments to the regulations under the Act relating to precinct planning) as follows:
(a) to co-ordinate the release of land for residential, employment and other urban development in the North West and South West growth centres of the Sydney Region,
(b) to enable the Minister from time to time to designate land in those growth centres as ready for release for development,
(c) to provide for comprehensive planning for those growth centres,
(d) to enable the establishment of vibrant, sustainable and liveable neighbourhoods that provide for community well-being and high quality local amenity,
(e) to provide controls for the sustainability of land in those growth centres that has conservation value,
(f) to provide for the orderly and economic provision of infrastructure in and to those growth centres,
(g) to provide development controls in order to protect the health of the waterways in those growth centres,
(h) to protect and enhance land with natural and cultural heritage value,
(i) to provide land use and development controls that will contribute to the conservation of biodiversity.
Note. This Policy provides the initial environmental planning instrument component of the Metropolitan Strategy released on 4 December 2005 for the release of land for urban and employment development in areas suitable for growth in the Sydney Region (with more detailed land use and other development control components to be progressively included on completion of the planning process in precincts released for urban development from time to time under clause 276 of the Environmental Planning and Assessment Regulation 2000 ).
The SEPP in cl 10 states the objectives of the Environment Conservation Zone and the Public Recreation - Regional Zone as follows:
Environment Conservation Zone
(a) to protect and restore areas of special ecological, scientific or aesthetic values,
(b) to conserve biological diversity, native vegetation corridors, aboriginal heritage or cultural values of the land, and its scenic qualities.
Public Recreation-Regional Zone
(a) to enhance, restore and protect the natural and cultural heritage values of the land,
(b) to enable the land to be used for regional open space or recreational purposes that are consistent with the protection of its natural and cultural heritage values.
One difference between the Environment Conservation Zone and Public Recreation - Regional Zone is that the Environment Conservation Zone has an objective to protect and restore areas of special ecological value. The Public Regional zone does not, and it allows for land to be used for specified purposes.
The land use table in the SEPP prohibits many uses in those two zones as follows:
Environment Conservation Zone
(1) Permitted without consent
Development permitted by or under the National Parks and Wildlife Act 1974 (but only if the land is reserved under that Act); development for the purpose of eradicating noxious weeds in accordance with the Noxious Weeds Act 1993 .
(2) Permitted with consent
Development for advertisements, advertising structures, drainage, earthworks, entertainment facilities, environmental protection works, flood mitigation works, kiosks associated with environmental facilities or recreation areas, recreation areas or restaurants associated with environmental facilities or recreation areas that seat not more than 50 people, telecommunication facilities, telecommunication networks or temporary structures.
(3) Prohibited
Any other development.
Public Recreation-Regional Zone
(1) Permitted without consent
Development permitted by or under the National Parks and Wildlife Act 1974 (but only if the land is reserved under that Act); development for the purpose of eradicating noxious weeds in accordance with the Noxious Weeds Act 1993 .
(2) Permitted with consent
Development for advertisements, advertising structures, drainage, earthworks, entertainment facilities, environmental protection works, flood mitigation works, kiosks associated with environmental facilities, public entertainment, recreation areas, recreation facilities, telecommunication facilities, telecommunication networks or temporary structures.
(3) Prohibited
Any other development.
As stated earlier, previously the Land was zoned 1(a) General Rural under the LEP. Clause 11(1) of the LEP provides that council shall only consent to an application to subdivide land in that zone if each separate allotment created by the subdivision is not less than 40 hectares. Clause 12(2) provides that a dwelling shall not be erected on a parcel of land within that zone unless the parcel has an area not less than 4,000 square metre. The LEP land use table relating to that zone states its objectives and prohibits a range of uses:
Zone No 1 (a) (General Rural Zone)
1 Objectives of zone
The objectives are:
(a) to ensure that actual or potential agriculturally productive land is not withdrawn unnecessarily from production,
(b) to ensure that development in rural areas is carried out in a manner that minimises risks from natural hazards and does not unreasonably increase demand for public services,
(c) to provide for urban support functions, and
(d) to ensure that development within the rural zones does not hinder the proper and orderly development of any future urban lands.
2 Development that does not require consent
Nil.
3 Development which requires consent
Any purpose other than a purpose included in Item 2 or 4 of the matter relating to this zone.
4 Prohibited
Amusement centres; animal boarding establishments where dogs are kept; auction rooms; brothels; boarding houses; bulk stores; bulky goods retail establishments; caravan parks; child care centres; commercial premises; detached dual occupancies; exhibition homes; exhibition villages; hardware stores; hazardous industries; hazardous storage establishments; highway service centres; industries (other than rural industries or extractive industries); integrated housing; junk yards; manufactured home estates; medium density housing; methadone dispensaries; mineral sand mines; mines; mixed businesses; mortuaries; motels; motor showrooms; offensive industries; offensive storage establishments; plant and equipment hire establishments; professional offices; refreshment rooms, residential flat buildings; service centres; service stations; shops; storage yards; transport terminals; warehouses.
NORTH WEST GROWTH CENTRE AND MARSDEN PARK INDUSTRIAL PRECINCT
The context in which the case is to be decided includes the planning history of the North West Growth Centre and the MPIP.
July 2003 - First ecological investigation
In July 2003 a report was prepared for the Department of Planning by Eco Logical Australia titled "Ecological Assessment North West Sector Study Area". It had a significant influence in terms of future planning decisions such as the SEPP. The objectives of this Eco Logical assessment were to:
(a) identify the relative conservation significance of the remnant native vegetation, aquatic habitats and riparian area within the study area, so as to form a regional structural planning process; and
(b) identify two options for achieving regional habitat connectivity within and across the study area, so as to form a regional structural planning process.
The executive summary in the report says:
The outcomes of this assessment process are to be used to inform the development of scenarios with potential urban release on the fringe of Sydney, through a multi-agency regional structural planning process.
The study area was identified as some 21,682.9 hectares. The area of the Land, which is 10.7 hectares, together with the areas of the adjoining lots now also zoned Public Recreation - Regional, is about 45 hectares.
Eco Logical undertook a rapid assessment process of the total study area. The study adopted a two stage process to provide an initial landscape assessment of the relative values of native vegetation in the study areas (Stage 1) and the identification of areas to focus subsequent more detailed investigation (Stage 2) before final recommendations were made to the government. The Stage 2 studies were never carried out.
The Land was included in areas identified as containing "Regional Significant (Core)" vegetation. This identification is explained as follows:
These "Core" areas are the remnant of highest conservation values. They represent areas where species or communities are at imminent risk of extinction, or large areas within the region that constitute the backbone of a viable conversation network across the landscape.
The Land was also included in areas identified as part of a further investigation zone which contained a number of rare and threatened flora.
The study's broad nature, in terms of the area assessed relative to the area of the Land, suggests that its assessment did not extend to any site specific detailed assessment, such as was carried out by the parties' ecologists in these proceedings.
2005 - Metropolitan Strategy
In 2005 the NSW Government published its Metropolitan Strategy which identified two major areas of land for future urban growth in the Sydney basin: the North West Growth Centre and the South West Growth Centre. The North West Growth Centre includes the MPIP and the Land. It will see the development of a huge amount of infrastructure linked to the staged release of land for new homes over the next 30 years.
Forming part of the Metropolitan Strategy was a publication titled "Managing Sydney's Capital Growth Centres Information". It states that there would be a new SEPP which would designate all land into the North West Growth Centre and South West Growth Centre in one of four areas: Future Urban, Future Industrial, Landscape and Rural Lifestyle, and Urban. It states that the Landscape and Rural Lifestyle zone will protect the rich biodiversity, the Aboriginal heritage and other landscape qualities; and that it would allow current uses such as rural residential living, agriculture and tourism to continue. It says that this zone would also provide an opportunity to protect and link significant vegetation patches across the Western Sydney region.
The Land was within the "Landscape and Rural Lifestyle" area. There was much community objection to this zone. On 3 November 2005 the Minister for Planning announced that it would be scrapped and that land would now be classified into one of four zones: Flood Prone, Urban Capable, Urban Edge and Conservation.
2006 - The SEPP
The draft SEPP was exhibited between January and March 2006. An accompanying guide said:
One important change is that the proposed "Landscape and Rural Lifestyle zone" has been removed. Instead, new measures have been introduced to protect high quality bushlands and waterways while creating leafy and liveable communities. The removal of the Landscape and Rural Lifestyle zone will allow more dwellings to be built.
The exhibited SEPP material included four draft maps:
(a) A zoning map indicating that the Land and the adjoining lots fronting South Street were to be Public Recreation - Regional. The Commonwealth Airservices land to the west, whilst now included in the Growth Centre, was not zoned.
(b) A development control map indicating Flood Prone and Major Creek land. It did not apply to the Land. It designated the Commonwealth land to the west as "Transitional Land".
(c) A precinct boundaries map indicating the various precincts by boundary and name. The area to the east of the Land on the other side of South Street - but also crossing South Street to the north and south of and proximate to the Land - was shown as "Marsden Park Industrial Precinct". The Land and the Commonwealth Airservices land to the west were shown as the "Marsden Park Precinct".
(d) A northwest structure plan map indicating the Land as "Environmental Conservation", the land to the east as "Industrial/Employment Lands" and the Commonwealth Airservices Land as "Transitional Lands".
I agree with Mr Rhodes, the applicants' planner, that the MPIP boundaries were influenced by the Public Recreation zoning of the Land and adjoining lots.
With respect to land use designation, the exhibited guide said:
" Green areas - Zoned for public recreation (regional and local)
Areas marked in green on the maps are areas of high quality of vegetation and natural habitat that would be conserved for future generations. The Government proposes to bring this land into public ownership so that it can be conserved as a Regional Infrastructure Contribution. This would be voluntary.
Pink hatched areas - "Transitional Land"
In addition to the above conservation areas, a "Transitional Land" category has been created to protect sensitive areas adjacent to creeks and lands that have high quality vegetation or steep gradients. Transitional land has specific rules to protect bushland, similar to existing controls that limit land clearing. Existing vegetation will need to be conserved, and vegetation levels maintained or improved.
White areas - Urban Capable
Areas shown in white on the maps are regarded as fully "Urban Capable". These are the areas in which urban development for the new communities will occur. The broad land use targets are set out in the structure plan and include open space (eg parks and sporting fields), residential, social infrastructure, town centres and employment areas. The Growth Centres Commission will work with local councils to ensure precinct planning incorporates existing trees and vegetation into the design of new communities".
The only former Landscape and Rural Lifestyle areas to be zoned Public Recreation - Regional under the SEPP are the Land, the immediately adjoining lots and the Rouse Hill Regional Park on the eastern side of the North West Growth Centre.
Accordingly, nearly all the areas that had formerly been designated as Landscape and Rural Lifestyle Areas ("i.e. areas of important scenic landscape, areas with Aboriginal heritage, areas containing remnants of Cumberland Plain Woodland and/other endangered ecological communities and areas with regional values and strategic significance") were now available for potential urban development (fully Urban Capable), whilst the Land and the adjacent lots were not.
There is force in Mr Rhodes' opinion that, to justify this differing zoning approach, it would have been necessary to demonstrate that the Land was significantly ecologically different to the lands now designated "White Areas - Urban Capable". However, the Land has never benefited from any further detailed assessment following its zoning under the SEPP until these proceedings.
A number of fact sheets accompanied the exhibition of the Growth Centres SEPP. The fact sheets for the Environment Conservation Zone and the Public Recreation - Regional Zone identify in identical words in the first few paragraphs that protection of the highest quality existing vegetation is a key objective. Each zone then has a different description. The description for the Environment Conservation Zone is:
These lands have been identified as having significant ecological value worthy of protection that will contribute to the overall conservation outcomes in the Growth Centres. In recognition of this contribution, the landowners in these areas who to develop their land will be offered a "voluntary land swap"... unlike land in the Public Recreation zones, the development potential of these properties is already very limited due to existing planning laws, high value vegetation and their fragmented nature. These lands are generally considered unsuitable for urban development.
No such description is in the fact sheet in relation to the Public Recreation - Regional Zone. That fact sheet says that the Marsden Park site has been included in that zone "due to its size, the extent of covering of high quality Cumberland Plain Woodland, and its location next to the Airservices site".
Following the exhibition period, the SEPP came into effect on 28 July 2006. Its relevant provisions have been set out earlier. It shows that nearly all the areas formerly to be zoned Landscape and Rural Lifestyle are now zoned Urban Capable but not the Land and adjacent similar lots.
February 2007 - Growth Centres Conservation Plan
The Growth Centres Conservation Plan exhibition draft was placed on public exhibition in February 2007. It identified the existing biodiversity ratings within the Growth Centres and proposed mechanisms to achieve positive conservation outcomes. Its objectives were to outline planning and offsetting proposals for the Growth Centres; assess whether they would improve or maintain regional biodiversity values; and confirm the outcome of the assessments under the TSC Act so that biodiversity certification may be granted to the Growth Centres SEPP by the Minister for the Environment.
Figures 6 and 7 show the breakdown of endangered ecological communities ( EECs ) within the Growth Centres which are identified to be either:
(a) higher long term management viability areas - being areas to be retained and protected; and
(b) lower long term management viability areas - being areas where impacts may be accepted if offset.
In figure 6 the areas marked red are the higher long term management viability areas. They include the Airservices site and areas to the east including, it appears, the majority of Land.
The Conclusion and Final Justification in this document identified the key actions as follows:
(a) Protection of 976 hectares of land containing 643 hectares of high quality native vegetation through Environment Conservation and Recreation Zones identified by the SEPP
(b) Protection of a further 881 hectares through development controls identified by the SEPP and the associated Development Code.
(c) Implementation of conservation offsets program to secure the protection of at least 2300 hectares of priority, high quality vegetation in Western Sydney and the Sydney Basin.
It stated that certification was not being sought for land identified in the SEPP as Environment Conservation or Public Recreation zonings. It said that protection of vegetation in those areas was an essential part of the conservation package for the Growth Centres and any proposed impacts would therefore be subject to detailed scrutiny in accordance with the provisions of the SEPP and the requirements of Part 5 of the EPA Act.
December 2007 - The biodiversity certification order
Under s 126G (since amended) of the TSC Act, as it was at the relevant time, the Minister may by order confer biodiversity certification on an environmental planning instrument ( EPI ) if satisfied that the EPI, in addition to any other measures to be taken, will lead to the overall improvement or maintenance of biodiversity values. Biodiversity values include threatened species, populations and ecological communities, and their habitats. Biodiversity certification aims at big picture conservation, moving away from site by site decision making and providing greater certainty in land-use planning.
The effects of biodiversity certification were stated at the relevant time in s 126I (since amended):
(a) The environmental assessment requirements for the approval of a project, or a concept plan for a project, under Part 3A of the EPA Act do not require an assessment of the impact of the project on biodiversity values.
(b) Development on biodiversity certified land is taken, for the purposes of Part 4, to be development that is not likely to significantly affect any threatened species, population or ecological community under this Act, or its habitat.
(c) A consent authority, when determining a development application in relation to development on biodiversity certified land under Part 4 of the EPA Act, is not required to take into consideration the likely impact of the development on biodiversity values.
(d) An activity to which Part 5 applies is taken, for the purposes of Part 5, to be an activity that is not likely to significantly affect any threatened species, population or ecological community under the TSC Act.
(e) A determining authority under Part 5 is not required to consider the effect on biodiversity values of an activity carried out on biodiversity certified land.
(f) The Native Vegetation Act 2003 does not apply to biodiversity certified land.
During 2005 the Department of Planning in consultation with the Department of Environment and Conservation developed a package of conservation measure to protect some areas of land while enabling the development of other areas within the Growth Centres. The aim was to obtain biodiversity certification of the land that should be developed in the Growth Centres.
In order to grant biodiversity certification a conservation plan must be prepared and publicly exhibited. There is in evidence an incomplete draft compendium of a conservation plan said to be dated December 2005. It refers to an area of around 48 hectares, including the Land, located on the eastern edge of the Airservices site that had high quality vegetation. Given that this document is an incomplete draft, I am disinclined to give it much weight.
A letter of 9 December 2005 from the Director General of the Department of Environment to the Director General of the Department of Planning indicated that there was now general agreement on the scope of the conservation package that would accompany the final Growth Centres plan as set out in an attachment to the letter. The attachment indicated that one of the actions to be undertaken to achieve, maintain or improve outcomes was "Shanes Park East - acquire" 19.88 hectares. It is unclear but this area may have included the Land.
On 11 December 2007, the Minister assisting the Minister for Climate Change, Environment and Water made an order under s 126G(1) of the TSC Act conferring biodiversity conservation on the Growth Centres SEPP ( Order ). The Order extends to the MPIP but does not extend to the Land, the adjacent lots and the large Airservices land to the west.
In the order the Minister states that she is satisfied that the SEPP and other relevant matters would lead to the overall improvement or maintenance of biodiversity values. Pursuant to s 126H, the biodiversity certification of the SEPP is subject to the conditions listed in the Schedules. The order states that the conditions are "necessary to ensure that the SEPP and other relevant measures would lead to overall improvement or maintenance of biodiversity values, including the limiting of certification to specified lands, procedures for the allocation of conservation of funding for offsets, and mechanisms for the on-going review of progress in delivering offsets". The explanatory notes to schedule 1 include the statement that nothing in the order removes, alters or over-rides any requirement to obtain any necessary approvals under the Commonwealth Environment Protection Biodiversity Conservation Act 1999 ( EPBC Act ).
The order included the following conditions:
(a) The conferring of biodiversity certification relied upon the acquisition of "offset land" by the Growth Centres Commission. Condition 6 provides:
A minimum 2,000 hectares of existing native vegetation must be retained and protected within the Growth Centres, either within the certified areas and/or the non-certified areas, subject to conditions 7 to 13 below.
(b) The purchase of offset Land was to be funded by "special infrastructure contributions". Condition 21 provides:
Over the life of the development of the Growth Centres funding shall be provided to establish a Conservation Fund of at least $530 million to be used for biodiversity conservation and regional open space purposes. $197.5 million of the Conservation Fund is planned to be used to acquire lands and/or enter into conservation agreements over lands that are outside of the Growth Centres for the primary purpose of biodiversity conservation.
(c) According to Condition 20, the references to the dollar values in Condition 21 were taken to be 2005/2006 values, and all values were to be indexed in accordance with the "land index" to be published by the Growth Centres Commission, as detailed in the "Special Infrastructure Contribution Practice Note".
(d) A special infrastructure contribution was to be paid by developers pursuant to conditions of consent for development of land within the biodiversity certified land under the SEPP, so as fund to purchase of the offset land.
The following outcomes are specified in the conditions:
(a) Protection of 2000 hectares of native vegetation within the North West and South West Growth Centres.
(b) Offsetting of the 1867 hectares of native vegetation to be lost within the Growth Centres through the provision of $530 million of funding for the protection of high value areas both within and outside of the Growth Centres.
(c) 75% of this funding to be spent on the Growth Centres, targeting the largest and best vegetation remnants with the remaining funds spent on acquiring land within the Growth Centres identified in the SEPP.
Condition 21 of Schedule A provides that:
Over the life of the development of the Growth Centres funding shall be provided to a establish a Conservation Fund of at least $530 million to be use for biodiversity conservation and regional open space purposes. $397.5 million of the Conservation Fund is planned to be used to acquire land and/or enter into conservation agreements over lands that are outside the Growth Centres for the primary purpose of biodiversity conservation.
The parties' ecologists agreed in their joint report that the Land was not included in the biodiversity certification process for the MPIP because it had already been zoned in 2006 for the Public Recreation - Regional purposes by the SEPP. At the hearing, however, the respondent's ecologist departed from the agreed position. In my view, the agreed position is correct.
June 2008, March 2009 - Release
In June 2008, 551 hectares in the MPIP were released. In March 2009, following a precinct boundary review, further lands in the North West Growth Centre were released. The Land was not included within the released land. The applicants contend that if the Land had not been zoned Public Recreation - Regional pursuant to the SEPP, it would have been included within the released land. This the respondent disputes. By the acquisition date, draft precinct planning for the released land appears to have been well advanced.
May 2009 - Eco Logical Investigation of Marsden Park Industrial Precinct
In May 2009 the Department of Planning engaged Eco Logical to conduct an ecological investigation into the land within the MPIP. Eco Logical's report recommend that land identified "subject to further investigation" in the Order be rezoned for environmental protection as they met most of the criteria set out in Schedule 3 of the Order. They are two parcels located near the Land and are part of the larger contiguous patch of vegetation which includes part of the Airservices site and the Land.
June 2009 - Finalising designs of MPIP
In June 2009 the Department of Planning published a MPIP "Land Owners Land Session" document. It stated that the Department was finalising the designs of the MPIP, consulting with agencies, meeting with landowners, and preparing for public exhibition, for the MPIP. It included maps which show the MPIP zoning that later that year was relevantly reflected in the map which is annexure B to this judgment. In particular, it showed MPIP lands zoned industrial to the east of the Land on the eastern side of South Street, zoned industrial to the south of the Land on the western side of South Street, zoned residential to the north of the Land on the western side of South Street.
In 2010 the MPIP was introduced into the SEPP.
THE s 56(1)(a) JUST TERMS ACT DISREGARD
Section 55 of the Just Terms Act provides that in determining the amount of compensation, regard must be had to the market value of the land on the acquisition date and any loss attributable to disturbance.
Section 56(1)(a) provides:
56 Market value
(1) In this Act:
market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid):
(a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.
The s 56(1)(a) disregard requires identification of the actual proposal to carry out or the carrying out of the public purpose for which the Land was acquired, as well as identification of any increase or decrease in market value thereby caused.
In the present case the applicants contend that the s 56(1)(a) decrease in the value was many millions of dollars. The respondent says that the decrease was, if anything, small.
Identification of the public purpose of which s 56(1)(a) speaks was considered in Roads and Traffic Authority of New South Wales v Perry [2001] NSWCA 251, 52 NSWLR 222 at [65] where Handley JA said:
[The primary Judge] found that the land taken was acquired for the principal purposes of building the highway deviation through the claimant's land and obtaining a supply of fill. However this finding did not determine whether the scheme which underlay the acquisition was a single scheme for the enlarged Raleigh Deviation or a separate Perry's Hill scheme. The particular purposes, in the sense of the uses to which particular land will be put, do not exclude the wider public purpose to be served by the acquisition. If so it is this wider public purpose, scheme or project which underlay the acquisition, which governs the operation of s 56(1)(a).
Hodgson JA at [100] said:
I do not think there are any clear rules determining how the relevant purpose or the appropriate level of generality is to be determined. Factors to be taken into account would, in my opinion, include the degree of continuity and consistency of various elements of what is proposed and done, and fairness to both the claimant and the acquiring authority...
The references in Perry to "the scheme" does not reflect the statutory language. It appears to have been adopted from English cases decided in the context of different resumption compensation legislation: particularly Pointe Gourde Quarrying and Transport Company, Limited v Sub-Intendent of Crown Lands (Trinidad) [1947] AC 565 and Wilson v Liverpool Corporation [1971] 1 WLR 302 at 309, quoted in Perry at [42] - [43]. The decision of the High Court in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5, 233 CLR 259 drives home that that it is necessary to be faithful to the statutory language. Accordingly, references to "the scheme" in Perry should now be understood as references to "the proposal".
In Halley v Minister Administering the Environmental Planning and Assessment Act 1979 [2010] NSWLEC 6, 170 LGERA 449, the Land was zoned 9(c) Regional Open Space under a local environmental plan. Lloyd J said at [22]:
The question is, what is "the proposal" of the acquiring authority - the Minister in the present case. According to the notice of compulsory acquisition published in the Gazette, the land was acquired "for the purposes of the Environmental Planning and Assessment Act 1979". The only possible purpose for acquisition under that Act is to fulfil the stated objective of the 9(c) zone as described in the LEP: "to identify, preserve and plan future development of privately owned land of Regional Open Space significance which should eventually be acquired by the State".
That finding was not challenged on appeal: Halley v Minister Administering the Environmental Planning and Assessment Act 1979 [2010] NSWCA 361, 178 LGERA 327: see [43], [44].
Similarly, in the present case the gazettal notice stated unhelpfully that the Land was acquired for the purposes of the Environmental Planning and Assessment Act 1979 ( EPA Act ) .
However, before the hearing the respondent identified the public purpose as being to fulfil the object of the Public Recreation - Regional zone as set out in the SEPP: see [33] above. Expert reports were prepared on that basis.
At the hearing the respondent submitted that alternatively there was a broader public purpose, namely, "to develop the North West and South West Growth Centres, so as to accommodate the continuing population of Sydney by releasing land for employment and residential use, together with concomitant conservation and recreation purposes". The respondent submitted that:
(a) Adopting this broader view of public purpose, the s 56(1)(a) disregard requires the Court to ignore the entire SEPP and its consequential impacts and to ask how the Land would then have been zoned. The only answer available is that it would have continued to be zoned Rural 1(a) under the LEP.
(b) Alternatively, if the Court follows Halley and adopts the narrower public purpose of fulfilling the objects of the Public Recreation - Regional zone, then the zoning of the Land would have been, but for the carrying out of the public purpose, Environment Conservation. Land in that zone is subject to the conditional right of the owner to require the land to be acquired by the Minister for Planning. That zoning of itself would attract the operation of s 21(1)(b) of the Just Terms Act which provides for owner-initiated acquisitions in cases of hardship. Assuming that the land was acquired, the market value would be determined by reference to an underlying zoning which would have been 1(a) General Rural under the LEP. Such a zoning would have seen the Land heavily constrained by the vegetation upon it, unable to be developed for anything other than a rural homesite (with development consent which would unlikely to be granted) and likely to be rezoned E2 - Environment Protection in the near future.
(c) On either of the "broader" or "narrower" approaches, the primary factor that would have influenced the likely underlying zoning is the fact that the vegetation covering most of the Land had high conservation value (the ecology issue).
I uphold the applicants' objection to the late raising of the respondent's alternative. In my view, the respondent should be bound by its identification of the public purpose for which it acquired the Land given that expert evidence was led and the case proceeded to hearing on that basis. In any case, I propose to follow Halley .
I uphold the respondent's submission that s 56(1)(a) of the Just Terms Act does not require disregard of the biodiversity certification order under the TSC Act.
The parties agree that by reason of s 56(1)(a) of the Just Terms Act the Court should disregard the actual zoning of the Land and determine market value at the acquisition date by reference to the "underlying zoning": that is, the zoning the Land would have had if its actual zoning is disregarded.
This is the traditional approach to s56(1)(a) described by McClelland CJ in Smith v Roads and Traffic Authority (NSW) [2005] NSWLEC 438 at [63] as follows:
1. Identify the zoning of the land at the date of acquisition.
2. Determine whether that zoning was imposed or retained in order to facilitate the implementation of the public purpose for which the land was acquired.
3. If the answer to question 2 is yes, that zoning is notionally set aside, and the potential of the land and ultimately its market value is assessed by determining how the land would have been zoned, at the date of acquisition, but for the proposal to carry out the public purpose.
In Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No 2) [2006] NSWCA 386, 68 NSWLR 487 at [60] the Court of Appeal proposed that step 2 would be closer to the statutory language if it were formulated as follows:
2. Determine whether the imposition or retention of that zoning was part of the carrying out of the public purpose or part of the proposal to carry out the public purpose for which the land was acquired.
Whichever way the steps are expressed, the approach of ignoring actual zoning in favour of the underlying zoning captures any decrease or increase in market value caused by the zoning: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWLEC 219, 173 LGERA 155 at [180]. However, this approach does not of itself answer the question whether there has been any such increase or decrease. This leads to a subtlety in the present case because:
(a) although it is common ground that if the applicants are correct as to the underlying zoning, then the actual zoning of Public Recreation - Regional substantially decreased market value;
(b) if the respondent is correct as to the underlying zoning, then the respondent contends that the actual zoning had little, if any, effect on market value.
The carrying out of, or the proposal to carry out, the public purpose for which the Land was acquired began, in my view, with its zoning as Public Recreation - Regional under the SEPP in 2006.
UNDERLYING ZONING, INCLUSION IN THE MPIP AND BIODIVERSITY CERTIFICATION
The applicants submit, and I accept, that the zoning of the Land as Public Recreation - Regional under the SEPP in 2006 had two important effects:
(a) the Land was not considered as part of the later MPIP precinct planning process. This is supported by the planners' joint report; and
(b) the Land was not considered for the conferral of later biodiversity certification under the TSC Act. This is supported by the ecologists' joint report.
The applicants submit that if the Land had been so considered, then by the acquisition date it would have received biodiversity certification, been zoned Urban Capable under the SEPP, been within the draft MPIP and designated as Industrial - the same as MPIP areas on the eastern side of South Street. Alternatively, it would have been designated Residential.
The respondent submits to the contrary because of the ecological attributes of the Land.
Thus, there are three questions. As at the acquisition date:
(a) what was the Land's underlying zoning?
(b) would the Land have been within the draft MPIP and designated industrial?
(c) would biodiversity certification have been conferred upon the Land?
As the answers to all three questions hinge on ecological features of the Land, it is convenient to consider them together.
The applicants, supported by the opinion of their planner Mr Rhodes, submit that the underlying zoning was Urban Capable under the SEPP, with the final zoning industrial or residential under the MPIP precinct planning process. In forming that opinion, Mr Rhodes took into account the approach taken to other areas within the Growth Centres, including the MPIP, also containing significant vegetation. Like the Land, they were to be zoned Landscape and Rural Lifestyle and then, when that zoning was abandoned, were zoned Urban Capable. In that regard, he considered that there would have been potential for the Land to be zoned industrial or residential with vegetation removed under an offset arrangement as has occurred with other land containing significant vegetation within the Growth Centres, including in the MPIP. In cross-examination, Mr Rhodes said he did not think it could be zoned without biodiversity certification, but in re-examination he clarified that he was there speaking only about the back two thirds.
The respondent, supported by the opinion of its planner, Mr McKenzie, submits that the underlying zoning was Environmental Conservation under the SEPP. Mr McKenzie's main reasons were that the vegetation on the Land included threatened or endangered ecological communities; those communities were connected to the very large area to the west also containing endangered ecological communities; the potential for the Land to contribute to the conservation of the biodiversity in the North West Growth Centre; and the desire of the Minister for Planning to obtain biodiversity conservation of as much land as possible in the North West Growth Centre.
The applicants submit there is nothing in any materials that provide justification for the Public Recreation - Regional Zone because of the ecological significance of the Land. To the contrary, the applicants submit, if it had such significance it should have been zoned Environmental Conservation. It was not. The applicants submit that the Environmental Conservation having been an option at the time the Land was zoned, it is a nonsense to suggest that if the Public Recreation - Regional Zone is ignored it is replaced with an Environmental Conservation zone: a decision to give it that zone had already been made. I do not agree. In my view, the decision not to give the Land an Environmental Conservation zoning is not conclusive.
Mr Fanning and Dr Robertson agreed that the Land was not included in the biodiversity certification process for the MPIP because it had already been zoned in 2006 Public Recreation - Regional by the SEPP. Dr Robertson disagreed with Mr Fanning that had the Land been included within the biodiversity certification process for the MPIP, the whole of it could have been cleared for industrial or residential purposes.
In the opinion of the applicants' ecologist, Mr Fanning, without biodiversity certification it was most likely that consent could be obtained for development of only the eastern part, comprising approximately 35%, of the Land. He concluded that that part could reasonably be considered developable because of levels of degradation and modification of the plant communities thereon the Land. He considered that to develop that part would (without biodiversity conservation) require dedication of the balance of the Land for biodiversity conservation purposes. He held the same view in relation to the similar adjacent lots.
In Mr Fanning's opinion:
(a) conservation of the Land is not necessary for the viability of the Airservices land (to the immediate west) as a significant conservation reserve, and therefore that connectivity would not have been a significant constraint to biodiversity certification of the Land;
(b) had the Land been included within the biodiversity certification process for the MPIP, the whole of the Land could have been cleared for industrial or perhaps residential purposes and offset, just as other patches of endangered ecological communities of a similar size within the MPIP had been so treated; and
(c) the Land could have been part of the biodiversity certified lands in the MPIP.
The view of the respondent's ecologist, Dr Robertson, expressed in reports, was that a maximum of 1.2 to 2 hectares fronting South Street is potentially developable and that the residue would need to be retained and restored for permanent conservation to balance the losses associated with development. In oral evidence he appeared to indicated that only the cleared area in the eastern part (about one hectare) was developable. In relation to EECs, he attached importance to the connectivity of the Land to the Airservices land to the west.
There are EECs on the Land. However within the MPIP there are large areas that are similarly constrained yet are not zoned Environmental Conservation (nor Public Recreation - Regional) and have the benefit of biodiversity certification.
Under condition 14 of the biodiversity certification order a further detailed assessment had to be undertaken of three relatively small areas adjoining or proximate to the Airservices site marked in blue hatching on the biodiversity certification maps. Condition 15 says that this assessment must examine whether the areas meet the criteria specified in Schedule 3 to determine whether they should be protected.
Assessment of two of those areas, called the North West Remnant and the South West Remnant, was carried out by Eco Logical in its May 2009 report. They did not meet the specified criteria but were nevertheless protected by including them in an Environmental Conservation Zone.
Mr Fanning was unable to follow the logic of the zoning of the North West and South West Remnants when the same authority had facilitated the destruction of tens upon tens of hectares of EECs in larger patches and better condition than those two areas. There is force in that observation.
It was put to the parties' ecologists that applying the Schedule 3 criteria to the Land it too would have been zoned Environmental Conservation. Mr Fanning considered that the western two thirds of the Land, which met all of the criteria, would have been zoned that way but that the eastern one third, which did not, would likely have been zoned for development purposes. Dr Robertson considered that the Land except for its cleared area would have been zoned in that way.
Reference was made in evidence to a triangular patch to the south of the Land on the western side of South Street which, although substantially cleared, was zoned Public Recreation - Regional. I think that is explicable in terms of boundary smoothing. It sits between the Airservices land and an area for emergency overflow of water from the large storage detention basin to be constructed to its south-east. Mr Fanning did not consider that it bore upon the validity of zoning of the eastern part of the Land. I tend to agree.
The respondent's ecologist, Dr Robertson, was asked to assess land at Shanes Park contiguous with the south-west corner of the Airservices land against the same Schedule 3 criteria in the biodiversity certification order. That land met the criteria. Nevertheless it was zoned Urban and has the benefit of biodiversity certification.
Mr Fanning considered that, but for its zoning, the boundary of the Public Recreation - Regional Zone for the Land would have been moved westward, together with the adjacent lots, to achieve a straight line boundary. Dr Robertson appeared to consider that only the cleared portion of the Land could be dealt with in that way.
The ecologists' evidence was that the Land met most of the criteria in Schedule 3.
Mr Fanning was asked what he believed, having regard to the known facts, would have been the zoning of the Land had it not been for the Public Recreation - Regional Zone. His answer was that there was a high probability of being able to persuade the authority that an appropriate zoning for the front (eastern) part of the Land would be for development purposes in exchange for the quid pro quo being the balance of the land being rehabilitated and dedicated to conservation purposes. He thought that an industrial purpose made sense but it could also have been residential. Logically, he thought, it was not inappropriate to remove highly degraded to degraded vegetation on the eastern part of the Land in exchange for the rehabilitation, maintenance and dedication of the balance. Dr Robertson thought that one logical outcome would be to have development to the east of South Street and conservation to the west of it. I consider that one difficulty with his view is that there is already MPIP land zoned industrial and residential on the western side of South Street to the south and to the north of the Land. In later oral evidence, Dr Robertson said he thought it likely that the Land would have gone into a conservation zone. I am inclined to think that should be read subject to his earlier evidence which appeared to indicate that at least the existing cleared area could be zoned for development.
Mr Robert Black, a senior officer at the Department of Planning, gave evidence for the respondent. He has held senior roles within both the Department of Planning and the Growth Centres Commission. He was not, however, directly responsible for the determination of the boundaries of the Growth Centres nor the actual zonings of land as set out in the Growth Centres SEPP when it was first made in 2006. His role at the Growth Centres Commission required him to consider development proposals for industrial precincts, including reviewing the proposed boundaries of the MPIP, and recommending changes.
Mr Black deposed that, with few exceptions, the Department fixed precinct boundaries by reference to man-made or natural features, such as proposed road reservations, existing roads and creeks. He said that it does not often use cadastral boundaries when fixing precinct boundaries. He said that he would be very unlikely to recommend fixing the western boundary of the MPIP at the western boundary of the Land (and, by extension, to the lots to the north and south of the Land). Instead, he would have recommended the Department fix the boundary at South Street, being a typical kind of boundary marker adopted by the Department. Assuming the existing zoning is to be disregarded, he would have formed the view that the appropriate zone to which to rezone the Land would have been the E2 Environmental Conservation zone. He considered that the Department would have recommended that zoning.
Mr Black's evidence does not in my view sit comfortably with the fact that:
(a) the western boundary of the MPIP extends west of South Street in areas proximate to, and both south and north of, the Land and was zoned Urban Capable under the SEPP; and
(b) those areas were later zoned Industrial or Residential.
The respondent contends that all patches of EECs that have connectivity to a larger patch of higher ecological value in the North West Growth Centre have been zoned E2 - Environmental Conservation under the Growth Centres SEPP, post acquisition. I think, as the applicants submit, that is not entirely correct. At the eastern edge of the MPIP there are areas of high ecological constraint that appear to adjoin land ultimately conserved (referred to at the hearing as "the teeth of the comb") which have been designated Urban Capable and have the benefit of biodiversity certification.
Plans in evidence that were put to the ecologists show that within the MPIP, areas received biodiversity certification and were designated Urban Capable even though in the Eco Logical 2009 report they were identified as Priority 1 vegetation for retention, mapped as having a high ecological constraint category, and identified as high constraint. Thus, identification of the Land as having those characteristics would not necessarily have prevented the Land from being within the MPIP and having biodiversity certification.
I accept the evidence of Mr Fanning that conservation of the Land is not necessary for the viability of the Airservices land.
After weighing the evidence, which points in different directions, and the submissions, my conclusions are as follows:
(a) because of its existing zoning, the Land was not considered for biodiversity certification and MPIP precinct planning;
(b) except for its existing zoning, about one third of the Land fronting South Street probably would have received biodiversity certification, been zoned Urban Capable under the SEPP and later Industrial. The same probably would apply to adjoining lots. The remaining two thirds probably would have received an Environmental Conservation zoning. Matters influencing these conclusions include the following:
(i) that one third of the Land includes a large cleared area and vegetation which is degraded compared with most of the remainder;
(ii) at the acquisition date the Urban Capable zoned areas in the MPIP with biodiversity certification extended west of South Street - both north and south of, and proximate to, the Land. The part to the north came to be zoned Residential and the part to the south Industrial;
(iii) other land adjacent to the south west corner of the Airservices land met the conservation order schedule 3 criteria yet was zoned Urban and received biodiversity certification; and
(iv) my conclusion as to the one third is consistent with the view of the applicants' ecologist, and is not that far away from the view expressed in reports by the respondent's ecologist that up to two hectares on the eastern side of the Land was developable (although in oral evidence he appeared to restrict it to the cleared area). They both agreed in oral evidence that the remainder would have a conservation zoning.
There is little in the evidence to choose between an industrial zoning or a residential zoning for the eastern one third of the Land. On balance, I consider that it probably would have been designated industrial. My reasoning may be understood by reference to the SEPP zoning map copied in annexure "B" to this judgment. The Land (and the adjoining lots) face the industrial zoned areas in the MPIP on the opposite side of South Street. So too does the industrial zoned lot in the MPIP on the western side of South Street, just south of the Land. The western boundary of the eastern one third of the Land and adjoining lots roughly corresponds with a notional northern extension of the western boundary of that industrial zoned lot. The residential zoned lots in the MPIP on the western side of South Street and to the north of the Land almost entirely do not face the industrial zoned areas. They face areas zoned as Business Park which constitute a buffer between the industrial zoned areas and other residential zoned areas to the north. Overall, it seems to me that an industrial zoning for the eastern one third of the Land would be more harmonious than a residential zoning with the overall zonings in the MPIP.
POTENTIAL DEVELOPMENT CONSTRAINTS
There are some potential constraints on the development of the eastern one third of the Land:
(a) bushfire;
(b) riparian zones;
(c) water inundation; and
(d) Commonwealth approval.
My conclusion that the eastern one third of the Land would have had biodiversity certification makes it unnecessary, I think, to consider whether development of that area would require offsets. However, even if it would not have had biodiversity certification, there would not be an offsets issue because about one hectare of it is already cleared; there is therefore only a requirement to clear an additional two hectares; the offset ratio is 2:1 or at worst 3:1; and the conservation of the remainder of the Land therefore accommodates development of the eastern one third.
Bushfire
In May 2009 Eco Logical carried out an detailed bushfire constraints assessment for the MPIP. The required asset protection zones are identified as 15 metres to surrounding bushland vegetation and 10 metres to riparian vegetation. Asset protection zones can be wholly contained within perimeter roads (9 metres) and standard setbacks (6 metres). In my view that could be dealt with in any normal subdivision layout.
Riparian
By July 2009, GHD had prepared a detailed draft report for the MPIP. It shows in plan form the preferred riparian network that had been defined by Eco Logical.
The following facts are uncontroversial:
(a) The Land was not, at the date of acquisition, designated as "Flood Prone Land" under Blacktown City Council's flooding maps.
(b) There are four pathways by which water may pass over the Land, designated WC1, WC2, WC2A and WC3 as depicted in an aerial photograph in the hydrologists' joint report. They run across the Land from or near the southern boundary except for WC3, which enters the Land about halfway along the eastern boundary near a pipe culvert under South Street and exits near the north-western corner of the Land.
WC3 is identified on land immediately adjacent (and upstream) in annexure B to the GHD draft report as an "earthed water stream VB10N". It is a first order (Category 3) lowest order stream and only requires a 10 metre riparian zone from the top of the bank on either side of the creek. A 10 metre riparian zoned for that creek seem to be agreed between the parties' hydrologists.
The parties' hydrologists, Dr Daniel Martens for the applicants and Dr Ian Joliffe for the respondent, disagreed in relation to the other drainage lines: WC1, WC2 and WC2A.
In relation to WC1 and WC2, Dr Martens was of the opinion that they are not properly considered streams, they are merely drainage depressions. With the benefit of the view that I had of the Land, I agree. I note Dr Joliffe had not been to the site before preparing his statement of evidence or the joint report.
A Department of Energy and Water document notes that riparian zones for water courses are based on current 1:25000 topographical maps. WC3 is shown on that topographical map, the others are not.
In my view, a prudent buyer and seller properly advised, would assume the riparian constraint to be 10 metre riparian zone on either side of WC3.
I do not accept Mr McKenzie's proposal for a swathe being grated at 100 metres wide through the Land.
Water inundation
The Land has a creek and some drainage depressions. The experts agreed that all the water that needs to pass through the Land is able to be contained within the pipes and swales that they discussed. In addition, the Land is not mapped as flood liable; the Land is only used as a pathway for stormwater; and there is no question of the creek system failing with water backing up and inundating the Land. The only flood constraint, in my view, is the need to spend an agreed sum of $115,000 to construct a necessary drainage system.
Commonwealth Approval
The respondent submits that, even if the Land is granted biodiversity certification, clearing of threatened species required by the Commonwealth Environment Protection Biodiversity Conservation Act 1999 provides an impediment to development. The applicant, submits as I understand it, that matters which would satisfy concerns at the state level would also satisfy concerns at the Commonwealth level.
Dr Robertson noted that the Commonwealth typically requires offsetting where a proposal would clear critically endangered communities, thus adding some uncertainty about the maximum developable area. Mr Fanning noted that his "development concept" provides offsets and is of the opinion that the Commonwealth often does not require further offsets, but notes there is a risk the Commonwealth would require further offsets or reduction in the development footprint below 35%.
The valuers did not appear to regard this as a consideration which should be reflected in a deduction in their valuations. Given my conclusion that only one third of the Land is developable on the basis of an underlying industrial zoning, I do not consider it appropriate to make any deduction for this factor in assessing market value.
MARKET VALUE
The parties' valuation experts were Mr Dobrow for the applicants and Mr Jones for the respondent. Their valuations were informed by comparable sales, adjusted to take account of the difference between those sales and the Land so as to derive per square metre figures. The adjustments had regards to matters such as the timing of the sales, land area, location, zoning, environmental characteristics and topography.
The valuers, in their industrial valuations in written reports, both relied on what were called Sales 1, 2, 3 and 4. All are located in the MPIP and in close proximity to the Land. However, when oral evidence in chief was led from Mr Jones half way through the hearing, he abandoned Sales 3 and 4. As I understand it, the essential reasons for his abandonment of Sales 3 and 4 were that he now considered that they were too old and the impacts of the global financial crisis.
Mr Dobrow, after adjustments, attributed a rate of $103 per square metre to Sale 1, $60 to Sale 2, and $138 to each of Sales 3 and 4. He then adopted and applied a rate of $140 per square metre to the Land. Applied to the Land's whole area of 103,000 square metres area of the Land, that produced a market value of $14,980,000. Applied to 335,000 square metres, the market value was $4,690,000.
In his written report prior to the hearing Mr Jones' numbers were very much lower. After adjustments he attributed a rate of $69 per square metre to Sale 1, $41 to Sale 2 and $80 to each of Sales 3 and 4. He then adopted and applied a rate of $80 per square metre to the Land. Applied to the Land's whole area of 103,000 square metres, that produced a figure of $8,219,400. From this he deducted a "cost allowance" of $2 million to find an industrial market value of $6,220,000. Applied to 33,500 square metres without biodiversity certification, the market value was $2,673,500. From this he deducted a cost allowance of $1 million, and added his assessment of the value of the remainder of the Land (730,500 square metres), which he called "constrained land", in the sum of $500,000, to arrive a value of $2,170,000.
However, in oral evidence Mr Jones' numbers were very much lower still. In addition to abandoning Sales 3 and 4, he now reduced the adjusted rate for Sale 1 by 10% to $62 per square metre to allow for adjoining purchaser influence; and applied that rate to the developable area of the Land. On the assumption of 100% developable area of 103,000 square metres, he arrived at a figure of $6,386,000. He deducted a cost allowance of $2 million to arrive at an industrial valuation of $4,390,000.
Given that there had been a valuation experts' conference and joint report followed by Mr Jones' report in reply before the hearing, it is disconcerting that when Mr Jones came to give oral evidence at the hearing he reduced his industrial valuation in this way by almost $2 million. His explanation was that he continued to make inquiries and investigations including by talking to Mr McKenzie about development lead times. That does not, I think, explain his abandonment of Sales 3 and 4, and a new deduction he made in one analysis of $538.000 for what he called "risk of obtaining biodiversity certification". He also introduced a "sensitivity analysis" adjustment of -40% - which he did not adopt but appeared to identify as an alternative to his adopted time adjustment of -20%.
In the end, however, I have to make up my own mind about the evidence.
Sales 3 and 4: Lots 23 and 24 Hollingsworth Road, Marsden Park
Sale 3 was of 10.69 hectares for about $12.8 million. Sale 4 was of about 10.79 hectares for about $12.9 million. Both sales were in November 2006 but were the subject of options entered into in November 2005. The options were not conditional upon rezoning. It is apparent however that the parties anticipated potential for rezoning to Employment because the settlement date varied depending upon whether or not those lands were in fact rezoned.
This land was cleared, undeveloped, gently sloping, and unconstrained except for a proposal to acquire 3.78 hectares for a reservoir. It was zoned 1(a) General Rural and was sold before gazettal of the SEPP and the date of the biodiversity conservation order and before the global financial crisis. It was sold to a property development fund that proposed a major industrial park.
The respondent accepts that it had future development potential to the purchaser but submits that it is unreliable for the following reasons:
(a) it contains no threatened species, was not affected by flooding or bushfire risk and was subject to an imminent rezoning;
(b) the sale price was determined nearly four years before the date of acquisition. This was before the global financial crisis which had the effect of dramatically reducing industrial property values;
(c) following the global financial crisis it was marketed nationally but there were no expressions of interest lodged.
(d) in 2009 the market value was nothing like the analysed value of the sale in November 2005.
In my view:
(a) Sales 3 and 4 are reasonably comparable. Their respective areas are very similar to the area of the Land.
(b) I do not think that Mr Jones' recent criticism of those sales should result in them being ignored. None of the factors identified by him in oral evidence were different at the time of preparation of his earlier report and joint report.
(c) The valuers were capable of adjusting them to account for relevant differences. Mr Jones chose an adjusted rate of $80 per square metre. Mr Dobrow chose an adjusted rate of $138 per square metre.
The difference between the valuers is explained by Mr Dobrow's adjustment to take into account increasing certainty, and increase in value, associated with the precinct planning processes for the MPIP. As explained by him, his adjustment for time "+ 20% (including certainty of Marsden Park Industrial Precinct)", took into account both the impacts of time including the global financial crisis, and the increase due to MPIP certainty. No similar adjustment for certainty was made by Mr Jones.
My adjustments compared with those of Mr Dobrow and Mr Jones before he abandoned Sales 3 and 4 are as follows:
Raw Rate/m2
Time
Location
Applied Rate/m2
Dobrow
$120
+20%
- 5%
$138
Jones
$120
-30%
- 5%
$80
Court
$120
-10%
-5%
$102
Mr Jones' -30% for time may well be acceptable if the increased certainty of the MPIP is ignored. However, where land is being acquired for its future urban/industrial potential, changes in certainty in the planning regime should lead to an increase in value.
I have chosen -10% for the time adjustment because I consider that the general depreciatory effect of the global financial crisis should be offset against the increased certainty of the MPIP. In my assessment, that is reflected in an adjustment of -10%.
Sale 1: 235 South Street Marsden Park
This was a sale of 22,140 square metres of land in December 2007 for $2.4 million. That translates to $108 per square metre unadjusted. The land was cleared, serviced with town water, developed with a dwelling house and shed, level and unconstrained. It did not contain any threatened ecological communities, nor was it affected by flooding or bushfire risk. It was zoned 1(a) General Rural and was sold following gazettal of the SEPP. It was situated in the then Draft MPIP. Significantly, it was biodiversity certified land. The sale followed the date of the biodiversity conservation order published in December 2007.
It was sold to the adjoining owner. As stated earlier, Mr Jones made an adjustment of -10% for adjoining owner influence. The valuers agreed that as a general principle a deduction should be made for adjoining owner influence. However, Mr Dobrow said that in this case the principle did not apply because he had made inquiries which revealed that the purchaser had engaged a valuer and had simply paid the price the valuer came up with this. I accept this as a complete answer to the proposition that there should be a deduction for adjoining owner influence in the case of this sale.
The valuers agreed that this sale requires significant adjustment. They agreed that it was in a better location than the Land, although the rates of adjustment varied. They agreed that it was appropriate to make an adjustment of -10% to allow for the difference in size between the Land and Sale 1. For location, Mr Dobrow made an adjustment of -5% and Mr Jones -10%. I prefer -5%.
The principal point of departure between the valuers in respect of Sale 1 was the adjustment necessary to allow for time elapsed between the date of the sale (December 2007) and the acquisition date (21 August 2009).
Mr Dobrow contended that an adjustment of +10% ought to be made to reflect that lapse of time, because of the greater certainty in the market place as to the rezoning of the land to industrial. Mr Jones expressed the view that a deduction of -20% was warranted because of the large decrease in market values of industrial land during the global financial crisis from 2008 to the end of 2009.
The respondent submits on the basis of the above that Mr Jones' adjustment of -20% is legitimate and should be preferred to that of Mr Dobrow, having regard to the following:
(a) In cross examination, a press release containing an expression of an opinion of a real estate agent (who did not give evidence) was put to Mr Dobrow in support of the proposition that average capital values of industrial land in Sydney reached a nadir in the September 2009. Mr Dobrow disagreed but admitted that he had no sales evidence in support of his disagreement.
(b) Mr Dobrow was asked to comment on a bulletin published by valuers (who did not give evidence) in May 2010 stating that overall development actively decreased over 2009 and this was expected due to restrictions on development finance, tightening lending conditions and increased funding costs. Mr Dobrow did not disagree with that statement.
(c) Mr Dobrow observed that after June 2009 that there were some "tail end effects" from the global financial crisis.
(d) Mr Jones' statement in reply contained similar material in respect of the global financial crisis' depreciatory effect on land values.
(e) A further adjustment is needed to reflect the fact that the purchaser in Sale 1 was the adjoining owner. Mr Jones opined that this was necessary Mr Dobrow agreed that it is conventional to make an adjustment reflecting an assumption that such purchasers typically pay a premium for adjoining parcels because of the unique ability to make use of the land. Mr Dobrow did not, however, make any allowance for it.
(f) Applying the adjustments necessary in the opinion of Mr Jones to the unadjusted valued of $108 per square metre for that sale, results in an adjusted value of $62-69 per square metre, depending on the adjustment made to allow for the depreciatory effects of the global financial crisis on unconstrained developable land, smaller in area to the Land and with potential in the near future for rezoning and redevelopment
My conclusions are as follows:
(a) As discussed above at [156], I do not accept Mr Jones' adjustment of -10% for adjoining owner influence.
(b) Mr Jones referred to two figures for adjustment for time. The first was -20%. The second, in his handwriting was -40%. However, he made clear that he did not suggest that the Court adopt the -40%, rather he relied on the -20%.
(c) After adjustment, Mr Dobrow shows $103 per square metre and Mr Jones $62 per square metre. Sale 1 occurred in December 2007. That was before the northern boundary of the MPIP was adjusted further to the north to include that land.
(d) At the time of the sale the land was zoned 1(a) General Rural. It was, according to Mr Jones, purchased by an adjoining owner for his industrial cold store business being carried out on the adjoining land. It can reasonably be inferred that the price reflected a rural value, with a hope in the mind of the purchaser that he may be able to put it to his industrial use.
(e) Once the MPIP boundary was adjusted in 2009, that should reflect itself in an increase in value (as stated in Mr Dobrow's adjustment). However, that has to be offset against the depreciatory effect of the global financial crisis. As discussed earlier, I consider that that is appropriately reflected in an adjustment of - 10%.
My assessment compared with that of Mr Dobrow and Mr Jones is as follows (disregarding Mr Jones' -10% for adjoining purchaser influence, which I have rejected):
Raw Rate/m2
Time
Location
Size
Applied Rate/m2
Dobrow
$108
+ 10%
- 5%
- 10%
$103
Jones
$108
- 20%
- 10%
- 10%
$69
Court
$108
- 10%
- 5%
- 10%
$81
Sale 2: 883-895 Richmond Road, Marsden Park
This was a sale of about 9.87 hectares of land in October 2008 for $3 million. That was at the low point (highest impact) of the global financial crisis. The land was partially cleared, serviced with town water, developed with a dwelling house and shedding, regular in shape, but falling away to the rear to Bell's Creek. The land was constrained in part for development. 35,000 square metres was flood affected and this land was also vegetated along the riparian corridor. 9,600 square metres was affected by a transmission line easement 60 metres wide, leaving 54,110 square metres of developable land. It was zoned 1(a) General Rural and was sold following the gazettal of the SEPP and following the date of the biodiversity conservation order in December 2007. It had obvious future development potential over the unconstrained parts. In their joint report Mr Dobrow and Mr Jones analysed Sale 2 as follows:
Raw Rate/m2
Remove value constrained land
Time
Location
Applied rate/m2
Dobrow
$30
Yes
+12%
-10%
$60
Jones
$30
Yes
+5%
-15%
$41
Lot 3, which does not suffer any impacts from the transmission line easement, was sold by two brothers as administrators for the estate of their late sister. An analysis of the developable portion of Lot 3 discloses a rate of $97 per square metre. That seems more in line.
In his report in reply Mr Jones concluded that the developable part of Sale 2 (55% or 54,110 square metres) had a market value of $46 per square metre. He said that the part constrained by a transmission line easement (10% or 9,600 square metres) had a market of $23 per square metre. It cannot be developed for buildings but could be used for car parking, open space access and the like. That leaves the non-biodiversity certified and flood affected part (35% or 35,000 square metres) having a value of $300,000. This equate to $8.67 per square metre.
The respondent submits that this sale is useful because it enables one to distil from a piecemeal analysis a value for constrained, flood affected land. The respondent submits that there is no need for a location adjustment, being very close to the Land. There is no need for a time adjustment because the sale was only nine months before the acquisition date and the market for constrained land is unlikely to change substantially over time. The respondent submits that the restraints are the same as the Land as this area was not subject to biodiversity certification and it was also flood affected.
I consider that Sale 2 is unsatisfactory. It has large internal inconsistencies in the rate per square metre and, according to the evidence, it was a stressed sale involving a deceased estate. It involved contracts for sale of three different lots. The contracts allocated different prices to each of the lots as follows:
(a) Lot 1: $800,00 for 3.69 hectares.
(b) Lot 2: $650, 000 for 3.181 hectares.
(c) Lot 3: $1.5 million for 3.0 hectares.
At the time of the sale in October 2008 this land was within the MPIP although it had not been designated industrial, and the biodiversity certification order had been made (in December 2007). As a result, the parties to the sale would have been aware that a significant proportion (estimated at about 35% by Mr Jones) of the land did not have the benefit of biodiversity certification.
When these problems are coupled with the fact that October 2008 sale (the sale date) was at the peak of the global financial crisis, the sale appears out of line. I give it little weight.
Industrial value of one third of Land
I consider that Sales 3 and 4 are the best comparables and propose to adopt and apply a rate of $102 per square metre to 33,500 square metres of the Land. That produces a market value of that area of $3,417,000.
I do not propose to make any cost deduction. In my view, works required to be done on that part of the Land may fairly be described as minor regrading work, which would also be required with the comparable sales. Therefore no adjustment need be made.
Value of the two thirds remainder
The respondent submits that no value should be attributed to that remaining two thirds of the Land because Mr Fanning said in his report that one third would be cleared with "dedication" of the balance for biodiversity conservation purposes. The respondent submits that "dedication" means free of cost.
I do not accept the submission in this context. The valuation evidence proceeded on the basis that this two thirds remainder would have value. In the valuers' joint report, Mr Dobrow attributed a value to "offset" land of $65 per square metre. Whether or not that value is accepted (and I do not accept it), the point is that the applicants' case proceeded on the basis that there should be a value attributed to it.
The respondent's valuer valued that two thirds of the Land at $500,000. I accept his valuation in that respect.
Total market value
Therefore, in my opinion, the market value of the Land at the acquisition date was $3,917,000 ($3,417,000 plus $500,000).
The offset valuation scenario
Finally, I will explain why I do not accept the applicants' third alternative valuation approach. They call it "offset potential relating to biodiversity certification of adjoining lands" and attribute to it a market value of $10.6 million: see [12] above.
Sections 94EE to 94EM of the EPA Act enable the collection of a special infrastructure contribution ( SIC ) from developers as a contribution towards the funding of regional infrastructure in the North West and South West Growth Centres. Under s94EE the Minister for Planning has declared that a SIC will be applied to development within the Growth Centres.
In 2005 the Growth Centres Commission ( GCC ) was constituted to promote, coordinate, manage and secure the orderly and economic development of the Growth Centres. In December 2008 its functions were taken over by the Department of Planning.
In November 2008 the GCC published a Special Infrastructure Contribution Practice Note. Its purpose was to provide guidance as to the calculation and collection of the SIC in the Growth Centres. It states that the SIC will provide a source of funds towards the provision of regional infrastructure including provision of conservation lands. Section two contains tables including an open space table representing the amount allocated within the SIC "which may differ from the actual final cost of the item: The figures will be updated every four years." The amount allocated in this table for land acquisition within the Growth Centres is $143,588,000.
A letter written in December 2010 by solicitors for the Department of Planning in response to an inquiry by the applicants' solicitors, states in relation to the open space table in the practice note that the land to be acquired in the North West Growth Centre comprises the Land and adjacent lots and that their attributable cost is 32.22% of the said sum of $143,588,000.
That percentage translates to $46,264,000. The Land and those adjacent lots have an area of 46.74 hectares. Therefore the cost attributable to them is $989,816 per hectare ($46,264,000 divided by 46.74 hectares).
The applicants' simple submission is that the GCC (now the Department of Planning) has budgeted to acquire the Land at that rate and has called in money by way of SIC at that rate; therefore compensation under the Just Terms Act should be determined on the basis of $989,816 per hectare.
I do not accept the applicants' submission.
Mr William Preston, a senior infrastructure analyst in the Department of Planning, gave evidence which I accept. He was formerly a business analyst at the GCC. His role included modelling to provide a basis for SIC levies and assisting with preparation of practice notes. The figures in the open space table in the relevant practice note were for budgetary purposes used to calculate the amount of the SIC. If the Minister were to agree to purchase land from a person, the Minister's practice was to instruct an independent valuation to be carried out having regard to the Just Terms Act. Similarly, if a person were to offer to dedicate to the Minister land contemplated for acquisition for open space purposes under the SEPP, the market value of that land would be determined by a registered valuer in accordance with the Just Terms Act. Market value would not be calculated by reference to the open space table in the practice note.
In my view, this is fatal to the applicants' submission.
In addition, there is no sales evidence that developers have paid anywhere near $989,000 per hectare. A letter written to Mr Dobrow in January 2011 from a Mr Fallon, a development manager for an unnamed organisation, said that on the purchase of land that can be offset against levy contributions and after allowing for costs, profit and risk, he considered that a purchase price between 60% and 70% of the value of the land "to be charged" would be appropriate. There is no sales evidence to support this proposition. Mr Fallon has not been called as a witness nor has he made a sworn statement. It seems to me to be inherently unlikely that developers would be prepared to pay the prices he indicated given Mr Preston's evidence, which I accept, that the Department of Planning will only acquire such land at market value. I am not prepared to accept the statement in Mr Fallon's letter.
That is sufficient to dispose of the applicants' third valuation scenario. It is unnecessary to address the respondent's submission that, in any event, if the budgeted amount in the practice note had the effect of increasing market value (which is denied), it would have to be disregarded under s 56(1)(a) of the Just Terms Act.
ORDERS
I have determined market value of the Land at the acquisition date in the sum of $3,917,000. Disturbance loss is agreed in the sum of $25,258.38. The total is $3,942,258.38, which I round to $3,943,000. That is the compensation to which the applicants are entitled.
I propose the following orders:
(1) Determination that the compensation to which the applicants are entitled for the compulsory acquisition by the respondent on 21 August 2009 of the applicants' land at 40 South Street Marsden Park being Lot 40 in DP 262886 is the sum of $3,943,000 plus statutory interest under s 49 of the Land Acquisition (Just Terms Compensation) Act 1999
(2) Order that the respondent is to pay the applicants' costs of the proceedings
(3) The exhibits may be returned
If the parties propose orders in an alternative form to give effect to my judgment, I will hear them forthwith. Otherwise the orders will be as I have proposed.
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Decision last updated: 19 July 2012
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