Marrickville Council v Sydney Water Corporation

[2013] NSWLEC 222

Land and Environment Court

New South Wales

Medium Neutral Citation:

Marrickville Council v Sydney Water Corporation [2013] NSWLEC 222

Hearing dates:

9,10,11,12,13,16 December 2013

Decision date:

24 December 2013

Jurisdiction:

Class 3

Before:

Biscoe J

Decision:

(1) Determination that the compensation payable to the applicant by the respondent for the compulsory acquisition on 11 November 2011 of easements over lands owned by the applicant is $1,634,000.

(2) The respondent is to pay the applicant's costs.

(3) The exhibits may be returned.

Catchwords:

COMPULSORY ACQUISITION - compensation for compulsory acquisition of easements over land for purposes of the Sydney Water Act 1994 - easements utilised for pipelines to carry water from desalination plant at Kurnell - adjustments to comparable sales.

Legislation Cited:

Airports Act 1996 (Cth) s 179
Crown Lands Act 1989 s 106A
Land Acquisition (Just Terms Compensation) Act 1991 s 55, s 56(1)(a), s 66
Sydney Water Act 1994
Marrickville Local Environment Plan 2001

Cases Cited:

City of Brighton v Road Construction Authority [1986] VR 255, (1985) 59 LGRA 262
Leichhardt Council v Roads and Traffic Authority of New South Wales [2005] NSWLEC 86
Leichhardt Council v Roads and Traffic Authority of New South Wales (No 3) [2009] NSWLEC 3
Penrith City Council v Sydney Water Corporation [2009] NSWLEC 2
Tempe Recreational (D.500215 & D.1000502) Reserve Trust v Sydney Water Corporation [2013] NSWLEC 221

Category:

Principal judgment

Parties:

Marrickville Council (Applicant)
Sydney Water Corporation (Respondent)

Representation:

COUNSEL:
A Galasso SC and M Seymour (Applicant)
R P L Lancaster SC and N Zerial (Respondent)
SOLICITORS:
Marrickville Council (Applicant)
King & Wood Mallesons (Respondent)

File Number(s):

30916/12

Judgment

TABLE OF CONTENTS	Paragraphs
INTRODUCTION	1-3
BACKGROUND	4-6
VALUATION	7-61
Land to be valued	9
Comparable Sales	10-28
Adjustments required to comparable sales	29-56
Application of adjustments to areas	57-59
Injurious affection	60
Determination of compensation	61
ORDERS	62
ANNEXURES
A Aerial photograph
B Table of adjustments
C Table detailing determination of compensation, including application of adjustments to areas

INTRODUCTION

1. These proceedings under the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act) are for determination of compensation for the compulsory acquisition of easements. On 11 November 2011 the respondent, Sydney Water Corporation (SW), compulsorily acquired three easements over open space land Lot 306 DP 1136061 owned by the applicant, Marrickville Council, for the purpose of the Sydney Water Act 1994. The quantum of compensation for that acquisition is disputed, except for agreed compensation for disturbance under s 55(d) of $11,700. Additionally, SW compulsorily acquired below ground stratum easements over nearby land Lot 202 DP 1097238 and parts of Swamp Road, Bellevue Street and Canal Road in St Peters: the parties agree compensation for that acquisition at $5,000. Although not specified in the gazetted acquisition notice, SW has utilised the easements to construct a 1.8 metre diameter water supply pipeline from the desalination plant at Kurnell to the Sydney water distribution facility at Erskineville.

1. The Council claims compensation in the total amount of $2,589,460. SW contends that the compensation payable is $471,700.

1. For the reasons set out below, I determine compensation in the sum of $1,634,000.

BACKGROUND

1. Annexed hereto and marked "A" is an aerial photograph showing Lot 306 with the three acquired easements marked thereon, designated D, A and E. Lot 306 has an irregular "U" shape (around land on which containers can be seen in the photograph) and an area of 8.268 hectares. It comprises three distinct areas: a generally level area beside the Alexandra Canal, being the area affected by the easements; a steeply rising vegetated area leading to an elevated near level area on which is a section used as a golf driving range and a dog off-leash area; and a western wetlands area. A narrow section of the embankment was excavated to permit the pipe to be constructed on level land. Lot 306 is just north of Tempe Reserve, which can be seen in the photograph with four further easements marked thereon designated A, B, C and D. SW also compulsorily acquired those easements and the pipeline traverses them. Separate compensation proceedings in respect of the easements over Tempe Reserve brought by the reserve trust under s 106A of the Crown Lands Act 1989 were heard with these proceedings and are the subject of a separate judgment: Tempe Recreation (D.500215 & D.1000502) Reserve Trust v Sydney Water Corporation [2013] NSWLEC 221.

1. The acquired easements are each 8 metres wide and have a total area of 4,379 square metres. They are expressed to be for water supply purposes and permit above ground infrastructure. Easement A has an area of 3,611 square metres. Easement E is between the two lots of Easement A and has an area of 640 square metres. It comprises a below ground stratum in addition to the surface and permits above ground infrastructure supported on deep pile foundations. Easement D has an area of 128.3 square metres. Although the 1.8 metre diameter pipe was constructed above ground on Easement D, by the provision of a retaining wall and backfilling it is not visible.

1. The terms of the easements secures to the Council a right to permanent vehicular and pedestrian access alongside the works carried out under the terms of the easements. However, the terms of the easements do not limit future works to what is currently on the land.

VALUATION

1. Sections 55 and 56(1)(a) of the Just Terms Act provide:

55 Relevant matters to be considered in determining amount of compensation

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

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

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

(c) any loss attributable to severance,

(d) any loss attributable to disturbance,

(e) solatium,

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

56 Market value

(1) In this Act:

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

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

...

1. The parties' valuers agree, and I accept, the following:

(a)   For the purpose of determining any diminution in value of land which is affected by an easement, it is appropriate to assume that the dominant tenement will or may use the easement to the extent permitted by the terms of the easement. In other words, it is appropriate to consider, at least as a wost case scenario, that the owner of the easement will use the easement to the maximum extent permitted by the terms of the easement.

(b)   Compensation for the acquisition of an easement is usually quantified by determining the diminution in the market value of the land owner's interest. This approach is usually adopted because it is difficult to establish a market of sellers and buyers of easements.

(c)   The highest and best use of the easement area is as public open space. The easement area and the land between the easement area and Alexandra Canal would have no development potential other than for uses permitted under the existing zoning of the easement area, even if an alternate or underlying zoning may be assumed to apply to the land. This is because of the physical constraints which apply to the land, which include topographic constraints (landfill batter-slope), proximity to the heritage listed Alexandra Canal, flood liability, former contamination and aircraft noise constraints.

(d)   It would be difficult, if not impossible, to accurately identify any diminution in the market value of the land if the whole of Lot 306 were to be assessed on a before and after valuation basis. This is because of the large size of Lot 306 (8.268 hectares) and the relatively small size of the acquired easements (4,379.3 square metres) and the nature of the easement area.

(e)   The most appropriate method of valuation is the piecemeal method.

Land to be valued

1. The first point that arises concerns Mr Dundas' assessment of market value, on the piecemeal approach, by reference to the area of the land affected by the easements, not to the larger Lot 306 of which it was part. The latter would be likely to be valued at a lower rate per square metre than the former on account of its larger size, which could be expressed as a discount on the rate applicable to the former. SW submits that Mr Dundas should have applied that discount. In my opinion, on the piecemeal approach, Mr Dundas was correct not to make the discount. This is supported by the decision, to which he had regard, in Penrith City Council v Sydney Water Corporation [2009] NSWLEC 2 where Lloyd J said, at [10] - [13]:

10 Mr Large also made an adjustment for size of plus 25 per cent. This, he says, was because the St Marys' land is 10,720 square metres whereas the subject land is 793 square metres. Mr Dempsey, however, made an adjustment for size of minus 25 per cent, because the subject land comprised part of the Woodriff Gardens comprising more than four hectares. That is, as I understand his reason, the subject land must be valued as part of a much larger area being the whole of the park in which it is situated.

11 I am unable to agree with Mr Dempsey on this point. ...

12 ...s 55 [of the Just Terms Act] draws a clear distinction between "the land" - being the acquired land - in paragraphs (a) and (b), and "other land" of the person at the date of acquisition which adjoins or is severed from the acquired land, in paragraph (f). It follows that in determining the market value of the acquired land, it is only that land which is to be considered in the hypothetical sale described in s 56(1), namely, "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" (emphasis added).

13 Different considerations may apply if the valuers had adopted the "before" and "after" method of valuation, commonly applied where there has been an acquisition of part of a larger holding. In the present case, however, the valuers did not do so. They adopted the direct comparison method. It seems to me that the court must thus assume that there was a sale of the acquired land, and only the acquired land, on the date of acquisition. In rejecting as I do, Mr Dempsey's downward adjustment of 25 per cent for size, I am left with Mr Large's upward adjustment of 25 per cent, which is also consistent with the approach adopted by Sheahan J in the Sutherland case, at [45].

Comparable Sales

1. The second point to be determined is the rate per square metre to be applied. This rate is determined from analysis and adjustment of comparable sales. Ultimately, the valuers agreed that the only sales that have a significant bearing are:

(a)   Sales of 1-2 Wentworth St and 2A Fanning St, Tempe to the Council relied upon by Mr Dundas. Those lands had an underlying residential zoning and were for an open space purpose, namely consolidation into the adjacent parkland.

(b)   A sale by Sydney Airport Corporation Limited (SACL) to SW of an easement for water supply purposes, which was utilised for the continuation of the pipeline just north of the subject easements. This sale is relied upon by Mr Lunney.

1. The valuers agree that, generally, sales to public authorities are not accepted as good evidence of market value.

1. Mr Dundas considers that regard should only be given to the residential sales and that the SACL transaction should not be relied upon as it requires too much adjustment. Mr Lunney takes the opposite view, preferring to rely entirely on the SACL transaction.

1. The principal points in dispute are:

(a)   Should the residential sales be considered and, if so, should a discount be applied for their underlying residential zoning?

(b)   What adjustments, if any, should be applied to the compatible sales to reflect the features of the acquired land?

1. If a council is prepared to buy residential land at residential values for open space purposes, such as where there is a shortage of needed open space land in a locality (as is often the case in inner city localities), then in assessing market value compensation for compulsory acquisition of the council's open space land, there should be no discount from comparable residential sales prices merely because the acquired land is zoned for open space: Leichhardt Council v Roads and Traffic Authority of New South Wales (No 3) [2009] NSWLEC 3. In that case Lloyd J at [22] adopted the following comments of Gobbo J in the compulsory acquisition compensation case of City of Brighton v Road Construction Authority [1986] VR 255, (1985) 59 LGRA 262 at 272:

Where a parcel of land is set aside for parkland use, its value will be related to the price that a purchaser of parkland will be prepared to pay, given that such purchaser will be using the land for that which constitutes for it the highest and best use of the land. It will also be related to what that purchaser would have to pay - assuming reasonable opportunity and not compulsion to effect a purchase - if it were to purchase other land that might equally meet its purpose. Such purpose of other land may lead it to have to pay the equivalent of residential values.

The fact that emerges very clearly is that municipalities, especially those like that claimant in developed areas, cannot purchase land appropriately zoned for parkland purposes. They are obliged to buy residential land, at or near residential values, when they wish to secure parkland.

The authority's valuers argued that where a municipality bought residential land for parkland purposes and then had imposed on the land a reservation for public open space, its value was immediately reduced. It is difficult to understand why this is so, for the municipality is the main factor in the market for parkland. It will clearly be prepared to pay the original price it paid for the very good reason that, if it did not buy this land at that price, it would be compelled to pay that price for residential land, there being no parkland so zoned available for sale.

1. In Leichhardt (No 3) Lloyd J also said:

25 In Roads and Traffic Authority of New South Wales v Blacktown City Council at [40] to [42], the Court of Appeal accepted the practice of using comparable sales of properties acquired by councils for open space purposes, but which had residential zoning or residential uses. Spigelman CJ also accepted the long established practice that a person who wishes to acquire land for the purpose of open space is, in fact, prepared to pay residential values to make such an acquisition (at [44]). His Honour said (at [44]):

This is an example of the "willing but not anxious purchaser" element of the market valuation test, the traditional test now found in s 56(1) of the Just Terms Act.

...

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

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

1. Marrickville local government area is deficient in public open space. The Plan of Management Tempe Recreation Reserve 1997 records it as having the second lowest level of open space per capita in the Sydney region. The Department of Planning's 2003 open space inventory of the Sydney region records Marrickville local government area as having 1.88 hectares of open space per 1,000 persons compared with 7.78 hectares per 1,000 persons for the Sydney region. In 2005 and 2006 Council paid residential rates to purchase two properties with an underlying residential zoning for public open space purposes, namely to extend the adjoining parkland (1-2 Wentworth Street and 2A Fanning Street). The Marrickville Local Environmental Plan 2001 zones as open space other residential properties in the same locality as those two properties (enabling owner-initiated compulsory acquisitions at residential rates for their underlying residential zoning). In these circumstances, in my opinion, no discount should be applied to the comparable residential sales merely because the acquired land is zoned for open space.

1. There should, however, be adjustments for other factors including for location, topography and environmental features: as, for example, in Leichhardt Council v Roads and Traffic Authority of New South Wales [2005] NSWLEC 86.

1. As the residential sales abut and have been incorporated into Lot 306, they provide, if adjusted, some indication of value. Similarly, as the SACL sale was for the northern continuation of the same infrastructure, if adjusted it also provides some indication of value.

1. I consider it appropriate to have regard to both these (far from perfect) comparable transactions, as there is no other evidence available. Factors to be considered include:

• Date of sale
• Area of land
• Topography
• Subdivision potential
• Availability of services
• View
• Flood affectation
• Aircraft noise affectation
• Road access
• Environmental Issues
• Restricted airspace height limitation
• Onerous easement conditions - SACL land

1. No 1-2 Wentworth St, Tempe was acquired by Marrickville Council in June 2005 for a consideration of $690,000, for consolidation into the adjacent parkland. The property was zoned open space/recreation but market value was assessed assuming an underlying zoning of residential. The property comprised an area of 613 square metres. An old cottage was located on the property but was assessed to have no value. Mr Dundas analysed this sale at a rate of $1,126 per square metre.

1. No 2A Fanning St, Tempe was acquired by Marrickville Council in March 2006 for a consideration of $560,000, for consolidation into the adjacent parkland. The property was zoned open space/recreation but market value was assessed assuming an underlying zoning of residential. The property comprised an area of 613 square metres. An old cottage was located on the property but was assessed to have no value. Mr Dundas analysed this sale a rate of $914 per square metre.

1. Mr Dundas adopted a rate of $1,000 per square metre for these residential sales and did not consider an adjustment for the older dates to be necessary.

1. To compare these residential sales to the subject, Mr Dundas allowed a discount of 20 per cent to reflect the difference in size between the residential sites (613 square metres) and the subject site (4,379.3 square metres) to determine a rate of $800 per square metre for the level sections of the subject. He made a further adjustment of 20 per cent to a rate of $600 per square metre for the sloping batter area of the subject.

1. Mr Lunney's opinion is that these two residential sales do not provide reliable evidence as to the market value of the easement area as significant adjustment to these sales would be required to bring to account the differences between them and the Easement Area.

1. Mr Lunney consider that the most relevant market evidence is the SACL sale of an easement, which he thought was on virtually identical terms to the acquired easements, over adjoining land to the north.

1. The effective extension of the subject easements over the adjoining SACL land was negotiated between SACL and SW at an effective rate of $125 per square metre. This rate was applied to the whole of the easement area of the SACL land, where the pipeline was above ground. Additionally, it was reported that the residue of the SACL land, from which the elevated pipeline would be visible, suffered a diminution in value equivalent to 1.25 percent.

1. Mr Lunney relied on the SACL sale because the SACL easement provides for a continuation of the same desalination plant water supply pipeline as is erected within the area of the acquired easements, and he thought that the terms of the SACL easement are virtually identical to the terms of the acquired easements. Mr Lunney considered that the adjoining SACL land suffered a number of the same physical constraints as those which are suffered by the subject easements area.

1. A table in evidence detailing the calculations for the SACL purchase indicates that the rate of $125 per square metre was applied to the whole width of the easements. A lower rate was not applied to the maintenance road area, as applied by both valuers to the subject easements. In my opinion, by adopting this different approach to the treatment of the subject land, Mr Lunney has under estimated its value when considering the SACL transaction. Mr Lunney, without adjustment, applied this rate per square metre to the calculation of the compensation for the subject easements.

Adjustments required to comparable sales

1. Annexed hereto and marked "B" is a table listing my adjustments and those of Mr Dundas and Mr Lunney. The upper part contains Mr Dundas' adjustments and my adjustments for the residential comparables. The left hand column of each lists the adjustments made for level land, with the right hand column being the adjustments for the embankment land. Mr Dundas' adopted rates for the easement land are, level land $800 and embankment land $600. In comparison, my adopted rates are level land $550 and embankment land $375.

1. The lower section of this table shows my adjustments for the SACL land and that Mr Lunney made no adjustments. I again separate the easements into level and embankment land and adopt a rate of $419 for level land and $397 for the embankment land.

1. My adopted rates derived from the comparables considerably narrow the difference but illustrate that neither sale provides conclusive evidence. In this circumstance, I consider that it is necessary to apply a weighting to each sale to reflect its reliability. The SACL transaction is the most subjective due to percentage adjustments required to account for the development height restriction, aircraft noise, environmental issues and the onerous easement conditions. I consider that the rate derived from the residential sales should carry a weighting of 60 percent and the rate derived from the SACL transaction 40 percent. Applying these weightings, I have determined a rate of $497.60 for the level land and $383.80 for the embankment area.

1. The specific adjustments listed in Annexure B are explained as follows.

Date of Sale

1. Mr Dundas considers that no adjustment is required to the residential sales due to the sales occurring in 2005 and 2006. Mr Lunney does not dispute this and has not had regard to these sales. I make zero adjustment.

1. The SACL transaction was undertaken at about the relevant date and does not require adjustment for this factor.

Area of Land

1. Mr Dundas has reduced the residential sales by 20 percent to reflect that their area (613 square metres) is considerably smaller than the easement area (4,379 square metres). I agree. Mr Lunney suggests that the adjustment should reflect the difference between 613 square metres and the whole area of Lot 306 (8.268 hectares). I have earlier ruled against this suggestion.

1. As the easement area of the SACL land and the subject land is reasonably similar, no adjustment is necessary.

Topography

1. The residential sales are relatively level. Mr Dundas has allowed a 20 percent deduction for the moderately steep batter area of the subject easements. Mr Lunney has not commented upon this adjustment. I agree with the 20 percent adjustment.

1. The SACL land is undulating to flat where affected by the easement. In my view, the embankment area of the subject easements requires a negative adjustment of 20 percent to equate it with the relatively flat easement area on the SACL land.

Subdivision Potential

1. Mr Dundas mentioned that the residential sales may have had limited potential for subdivision. There is no other evidence regarding this fact. Due to their size (613 square metres), this potential would have been limited to possibly dual occupancy. In this circumstance, this limited potential would have little, if any, effect on the analysis. No adjustment is required.

Availability of Services

1. Normal utility services were connected to the residential sales. The valuers made no adjustment for this factor. I consider that a negative adjustment of 5 percent should be made to the subject easements land to reflect its lack of utility services.

1. No adjustment is required to the SACL comparison.

View

1. The residential properties have no view. The subject easements land has a view over the Alexandra Canal. While this is not a scenic view, it provides a moderate outlook particularly if developed as a walking or cycle path. Neither valuer allowed for this factor. I make a positive allowance of 2.5 percent compared with the residential sales.

1. The SACL transaction does not require adjustment as it has a similar outlook.

Flood Affection

1. The subject easements land is not flood affected but it is in a Council flood planning area. This classification would have a minor depreciating effect compared to the residential sales. I allow 2.5 percent for the level land, and nil for the embankment area as it is not affected.

1. The SACL land is similarly affected to the level area of the subject easements. However, the embankment area requires a positive adjustment of 2.5 percent to reflect the fact that is not flood affected.

Aircraft Noise

1. The residential sales are within the Australian Noise Exposure Forecast (ANEF) aircraft noise contour of 25 to 30. The subject easements land is within ANEF aircraft noise contour of about 27 to 34. The SACL easement is within ANEF Aircraft Noise Contour of about 34 to 40. In this area SACL's occupational health and safety regulations require the wearing of hearing protection. Neither valuer made any allowance or adjustment for aircraft noise. As aircraft noise is extreme in this locality, adjustment for this noise is required. I have made an allowance of minus 5 percent to reflect the increase in noise between the subject easements area and the residential sales, and a positive adjustment from the SACL transfer of 15 percent.

Road Access

1. The residential properties have access to a public road. The SACL land only has access to a dedicated road, which has not been constructed. The subject easements had access to the bitumen sealed road through Tempe Reserve. A gate presently controls this access point. Neither valuer adjusted for this factor. The residential sales do not require adjustment. The SACL sale requires a positive adjustment of 10 percent to compare it with the subject easements land.

Environmental Issues

1. The residential sales are not recorded as contaminated. The subject easements area and the SACL land form part of the old Tempe Tip. Lot 306, including the subject easements area, has been decontaminated and capped with soil and certified to permit use for "Park, recreational open space, playing field" and "Commercial/Industrial". The land is not certified for residential use. However, leachate drains and pits are located on the easements land and require maintenance by Council. In contrast, the SACL land has been decontaminated, and is serviced by the same leachate monitoring system. However, it has not been capped with soil and is not certified.

1. The valuers made no adjustments. In my opinion, the subject easements area requires a negative adjustment of 10 percent compared to the residential sales, and a positive adjustment of 35 percent compared to the SACL transfer as the SACL land has not been capped or certified.

Controlled Airspace Height Limitation

1. Adjustment is required for different development height limitations imposed by the Airports Act 1996 (Cth) s 179 on the subject easements compared to the SACL land. Both these properties are under "Prescribed Airspace". There is evidence to indicate the bottom of the Prescribed Airspace by Australian Height Datum (AHD) in the location of the SACL and easements land. The AHD limitations for the SACL land range from 7.0 metres AHD to 14.0 metres AHD. Where the pipeline adjoins the Alexandra Canal, ground level is about 2.0 metres AHD. However, in the north eastern area of the SACL land the ground level is RL12.0. In these areas the maximum height of an obstacle is limited to less than one metre, without approval under the Airports Act (Cth). Although the southern section has some potential for uses such as car parking, a large area of the SACL land is virtually useless due to this development restriction.

1. Neither valuer mentioned this major constraint in their report or calculation.

1. The subject easements area is limited to a maximum height of 10.0 metres AHD where it adjoins the SACL land to in excess of 50 metres plus and increasing from the centre of the easements, heading south.

1. The residential sales are not seriously affected by this limitation.

1. My adjustment to compare the subject easements land to the residential sales is minus 5 percent. My adjustment to compare the SACL land to the easements land is plus 150 percent. This level of adjustment is above any normally accepted range and indicates the extreme height limitation affecting part of the SACL land and the difficulty in accepting the SACL transaction as comparable.

Onerous Easement Conditions affecting the SACL land.

1. Mr Lunney was not aware of the onerous easement conditions in evidence and consequently made no allowance for them. Examples of these onerous conditions in the SACL easement compared to the subject include (but are not limited to) the following: (a) SW can only use the easement for a pipeline connecting the Kurnell plant to Erskineville; (b) SW must pay all additional payments (as defined) that relate to the land; (c) SW must have public liability insurance for a minimum of $100,000,000; (d) SW acknowledges that the owner may require it to relocate the utility (pipeline) or carry out works in order to effect the SACL Proposal (at SW's cost); and (e) SW must remove refuse from the licensed area regularly and comply with SACL's orders in connection with cleaning and refuse disposal.

1. Although it is subjective, I have made a positive allowance of 25 percent to reflect the diminution these conditions have on the SACL transaction compared to the subject easements.

Application of adjustments to areas

1. The valuers agree, and I accept, that the area under and to the west of the easements has been totally sterilised by the pipe and therefore has suffered a 100 percent diminution in value, and that the area of the access road within the easements has suffered a diminution in value of 40 percent. Mr Dundas has applied different rates to the level area and the embankment. Mr Lunney has not so divided the easement area. I consider Mr Dundas' approach to be correct as the areas have distinctly different topographical features.

1. The remaining task is to apply my determined rates (above) to the appropriate areas. There is agreement on all the areas except for the size of the embankment area on Easement D. Mr Dundas' calculation of this area is 13 square metres. As this area is insignificant and has not been contested, I adopt this area.

1. The application of my determined rates to the relevant areas is set out in Annexure "C" to this judgment.

Injurious affection

1. Additionally, compensation is required under s 55(f) of the Just Terms Act for injurious affection. Originally, both valuers considered a claim for severance for the 2,631 square metre area between the easements and the Alexandra Canal. During the planners' evidence there was discussion regarding injurious affection to the western embankment area and the difficulty in ongoing maintenance of the embankment together with the pipeline limiting the potential to connect the canal side area to the dog park. Ultimately, however, Council did not press those two matters. The remaining matter under s 55(f) is compensation for the adjoining 843 square metre area between the western edge of Easements A and E and the retaining wall. The valuers agree, and I accept, that this area is totally sterilised and therefore 100 percent diminished in value. I determine compensation under s 55(f) for this area as $323,543.

Determination of compensation

1. In summary, I determine total compensation at $1,634,000 as detailed in Annexure "C" to this judgment.

ORDERS

1. The orders of the Court are as follows:

(1)   Determination that the compensation payable to the applicant by the respondent for the compulsory acquisition on 11 November 2011 of easements over lands owned by the applicant is $1,634,000.

(2)   The respondent is to pay the applicant's costs.

(3)   The exhibits may be returned.

ANNEXURE A

ANNEXURE B

ANNEXURE C

Decision last updated: 16 January 2014