Nasser v Roads and Traffic Authority; Millstar Holdings Pty Limited v Roads and Traffic Authority - [2006] NSWLEC 181

Land and Environment Court

of New South Wales

CITATION: Nasser v Roads and Traffic Authority; Millstar Holdings Pty Limited v Roads and Traffic Authority [2006] NSWLEC 181

PARTIES:
APPLICANTS
Fred Nasser
George Nasser
Michael Nasser
Millstar Holdings Pty Ltd
RESPONDENT
Roads and Traffic Authority

FILE NUMBER(S): 30162 of 2003; 30163 of 2003

CORAM: Pain J

KEY ISSUES: Compulsory Acquisition of Land :- definition of public purpose-whether public purpose caused loss-whether highest and best use industrial-development constraints, flooding and ecological constraints-whether betterment should be allowed in comparable sales

LEGISLATION CITED: Development Control Plan 8 - Natural Assets
Development Control Plan 19 – Prestons Industrial Release Area
Environmental Planning and Assessment Act 1979 Pt 4, Pt 5, s5A, s78A, s122(1B)
Land Acquisition (Just Terms Compensation) Act 1991 s4(1), s54(1), s55, s56(1), s66
Liverpool Local Environmental Plan 1997
Liverpool Local Environmental Plan 201
Liverpool Local Environmental Plan 243
Threatened Species Conservation Act 1995 s56(1), s74(1), s127, Pt 3 Sch 1, Pt 6 Div 2

CASES CITED: Bautovich v The Minister administering the Environmental Planning and Assessment Act 1979 [2004] NSWLEC 389 ;
Crompton v Commissioner of Highways (1973) 32 LGRA 8;
Hornsby Shire Council v Vitone Developments Pty Limited [2003] NSWLEC 272 ;
Lalic v Roads and Traffic Authority [2005] NSWLEC 430;
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 ;
Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of New South Wales [2005] NSWLEC 419;
Mosca v Roads and Traffic Authority (2004) 139 LGERA 28 ;
San Sebastian Pty Limited v Housing Commission of NSW (1977) 37 LGRA 191;
Stephen Anthony Horton and Kay Elizabeth Horton v Wyong Shire Council [2004] NSWLEC 571;
Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251 ;
VAW (Kurri Kurri) Pty Limited v Scientific Community (2003) 128 LGERA 419;
Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2004] NSWLEC 315;
Wilson v Liverpool Corporation [1971] 1 WLR 302;
Woollams v The Minister (1957) 2 LGRA 338

DATES OF HEARING: 20/11/2005, 29/11/2005, 30/11/2005, 01/12/2005
Notice of Motion - 17/02/2006, 13/03/2006

DATE OF JUDGMENT:
06/06/2006

LEGAL REPRESENTATIVES: APPLICANTS
Mr P McEwen SC with Mr A Pickles
SOLICITORS
Allens Arthur Robinson
RESPONDENT
Mr J Maston
SOLICITORS
Corrs Chambers Westgarth

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

6 June 2006

30162-3 of 2003 Fred Nasser, Michael Nasser & George Nasser v Roads and Traffic Authority; Millstar Holdings Pty Limited v Roads and Traffic Authority
JUDGMENT

1 Her Honour: These are two sets of Class 3 proceedings brought by the Applicants appealing against the offer of compensation for acquisition made by the Roads and Traffic Authority (“the RTA”) of parts of adjoining land owned by the respective Applicants. The RTA acquired the land on 4 October 2002 (“the date of acquisition”) for the purpose of building the Western Sydney Orbital (“WSO”). The appeal is under s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (“the Just Terms Act”). The parties agreed that all evidence tendered in one proceedings was to be used as evidence in both proceedings. The Court went on a view of the acquired lands and comparable sales.

Background

2 The partly acquired northern property, known as 1 – 3 Bernera Road, Prestons is owned by Millstar Holdings Pty Limited (“the Millstar land”). The Millstar land has an area of approximately 5.56ha. On 4 October 2002 the RTA acquired approximately 3.01ha of the Millstar land, known as Lot 5 DP 1045029, Bernera Road, Prestons (“the acquired Millstar land”). This was 54 per cent of the original land area. The residual land, known as Lot 2 DP 1045029, is approximately 2.55ha (“the residual Millstar land”). The Valuer-General determined the compensation payable was $901,620 for the acquired Millstar land at the date of acquisition. This included market value of $788,828.

3 The partly acquired southern property, known as 5 Bernera Road, Prestons is owned by Fred, Michael and George Nasser (“the Nasser land”). The Nasser land has an area of approximately 4.05ha. On 4 October 2002, the RTA acquired approximately 1.53ha of the Nasser land, known as Lot 4 DP 1045029, Bernera Road, Prestons (“the acquired Nasser land”). This was 37.78 per cent of the original land area. The residual land, known as Lot 1 DP 1045029, has an area of approximately 2.52ha (“the residual Nasser land”). The Valuer-General determined compensation of $1,505,720 was payable to the Applicants for the acquired Nasser land, being $1,500,000 for market value and $5,720 for disturbance.

4 The Applicants’ Further Amended Points of Claim dated 10 November 2005 claim $9,582,500 for the Millstar land being market value of $9,030,000 and disturbance of $552,000 (exclusive of GST). The compensation claimed for the Millstar land in the Applicant’s Supplementary Submissions sets out compensation claims for two possible scenarios. The total for Valuation Scenario 1, the Applicants’ preferred scenario, is $7,350,000 plus disturbance.

5 The Applicants’ Further Amended Points of Claim dated 10 November 2005, claim $7,185,000 for the Nasser land consisting of market value of $6,770,000 and disturbance of $378,000 (exclusive of GST). The compensation claimed for the Nasser land in the Applicants’ Supplementary Submissions for Valuation Scenario 1 (the Applicants’ preferred scenario) is $6,793,000 plus disturbance.

6 The relationship between the Nasser land and the Millstar land is shown in Attachment 1. The properties are located on the Cabramatta Creek flood plain downstream from the junction of Hinchinbrook and Cabramatta creeks. The land is currently zoned Rural 1(e) - Future Urban Zone by the Liverpool Local Environmental Plan 1997 (“the LEP”) and has been since before 1993. The Prestons Industrial area is nearby except for a strip along the Bernera Road frontage identified for a road widening proposal. The Court has had the benefit of a view of the subject lands and comparable sales in the same area.

7 Immediately adjacent is a large electricity substation to the west and a large refrigerated food transporting business, Scotts, to the east.

Relevant provisions

8 The Just Terms Act regulates the basis on which compensation is payable in these circumstances. Section 54(1) of the Just Terms Act states that:

The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land.

9 Section 55 of the Just Terms Act relevantly states that:

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,

…

(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.

10 Section 56(1) of the Just Terms Act defines market value as follows:

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,

11 There are two threshold issues requiring determination concerning s 56(1)(a):

(i) what is the “public purpose” pursuant to s 56(1)(a) of the Just Terms Act, and
(ii) whether the WSO caused the relevant decrease in the value of the land under s 56(1)(a).
Issues related to zoning, flooding, the nature of the vegetation on the land and valuation also arise for determination.

What is the public purpose?

12 Pursuant to s 56(1) of the Just Terms Act, the Court is required to disregard the effect of the public purpose for which the land was acquired when assessing the market value of the land. In order that this may be done, it is first necessary to determine what the “public purpose” is in this instance. The phrase “public purpose” is defined in s 4(1) of the Just Terms Act as follows:

public purpose

means any purpose for which land may by law be acquired by compulsory process under this Act.

13 The Applicants argued that the “public purpose” for the purpose of the Just Terms Act is the WSO project broadly, the concept for which was announced first by the Federal government in 1993 as part of a national highway program to link the two termination points of the national highway north and south of Sydney.

14 In determining the date the public purpose was identified, the Applicants relied on the cases of Woollams v The Minister (1957) 2 LGRA 338, Mosca v Roads and Traffic Authority (2004) 139 LGERA 28 and Lalic v Roads and Traffic Authority [2005] NSWLEC 430. The Applicants argued that while the Minister for Planning did not approve the final route of the WSO until 28 February 2002, it was the announcement of the national highway building program in 1993 and the planning scheme for some eight years before the actual route was announced which caused a blight on the planning of the area which must be considered. The subject lands are shown as impacted upon by the highway proposal in the 1994 Route Investigation study for the RTA.

15 The RTA submitted that the public purpose in the present case was the construction of a 12km public road between Prestons and Cecil Hills as described in the environmental impact statement (“EIS”) for the WSO published in October 2000. The public purpose was defined by the project the subject of approval under Pt 5 of the Environmental Planning and Assessment Act 1979 approved by the Minister for Planning on 28 February 2002 and issued by the Chief Executive of the RTA on 12 March 2002. While the national highway program which came to include the WSO was announced in 1993, the RTA submitted that the “public purpose” did not arise until February 2002 when the route of the WSO was formally authorised and the public purpose then became manifest.

16 The RTA argued that if the public purpose did not crystallise until 2002, then any increase or decrease in market value of the land after that date, caused by the carrying out or proposal to carry out that public purpose, could be disregarded for the purposes of s 56(1)(a) of the Just Terms Act. Any increase or decrease in the market value of the land due to the development of a national highway program prior to 2002 is irrelevant.

Finding on Public Purpose

17 While the cases on which the parties focused consider the impact on market value resulting from a defined public purpose, the definition of the public purpose is significant also in that the relevant circumstances arising from that public purpose which ultimately impact on value will also be defined by the commencement of any public purpose scheme. In this case, the planning history of the area is relevant. My finding on the date of the commencement of the public purpose will determine how much of that history can be considered for the purpose of assessing what the highest and best use of the land would have been at the date of acquisition.

18 Woollams is early authority that the value of property acquired for public works must be determined without regard to any effect on land values of that public work. That is well settled law and reflected in s 56(1)(a) of the Just Terms Act. What is more relevant for current purposes is working out when the public purpose which involves certain works commenced. In Woollams land was acquired over many years for the Warragamba Storage Dam. Hardie J held that purchases of land for a broad range of uses to support the dam construction not just the land on which the dam was to be constructed were within the relevant public purpose.

19 In Wilson v Liverpool Corporation [1971] 1 WLR 302, the Court of Appeal analysed what constitutes a public purpose in the context of a scheme to carry out a particular public purpose. Widgery LJ said at 310:

Whenever land is to be compulsorily acquired this must be in consequence of some scheme or undertaking or project. Unless there is some scheme or undertaking or project, compulsory powers of acquisition will not arise at all, and it would, I think, be a great mistake if we tended to focus our attention on the word ‘scheme’ as though it had some magic of its own. It is merely synonymous with the other words to which I have referred, and the purpose of the so-called

rule is to prevent the acquisition of the land being at a price which is inflated by the very project or scheme which gives rise to the acquisition … It is for the tribunal of fact to consider just what activities - past, present or future - are properly to be regarded as the scheme within the meaning of this proposition.

20 The RTA relied on Crompton v Commissioner of Highways (1973) 32 LGRA 8, Supreme Court of South Australia, where Wells J followed the decision in Woollams and held at 13-14 that:

The question whether, at the date of valuation, there was an existing scheme, and the extent of that scheme, are both matters for the court to decide, and usually a decision can be arrived at on the evidence with reasonable precision. There are, however, schemes and schemes. Some are limited and are capable of being carried out, as it were, uno ictu. The calculation of what part of the open market value of the subject land is fairly to be attributed to a limited scheme is the responsibility of the expert valuer and no doubt it is a reasonably straightforward task; the relevant facts will generally be found to lie within a narrow compass in time, space and commercial activity. But not infrequently properties - especially when highways are to be built - are acquired between the date on which a long-term scheme is authorized and the date on which the authorized works are complete; sometimes - as in the instant case - those two dates are, or will be, years apart. In such cases, the difficulty of correctly attributing part of the market value to the implementation or the proposed implementation of the scheme will be very much greater than in the case of the limited scheme. All else apart, it will be well nigh impossible to trace precisely the network of cause and effect from the scheme or proposed scheme, as an original and continuing cause, through countless intermediate transactions, each one of which makes or may make its own contribution, to the pattern of values in the relevant area, down to the subject land. Moreover, it is obvious that the works constructed or to be constructed under the scheme are far from being the sole cause of any increments observable in the level of land prices in the area capable of being influenced by those works.

Crompton

21 In Mosca Bignold J summarised the relevant parts of the EIS for the WSO at [53] – [56]. At [54] his Honour states:

Chapter 10

of the EIS describes the processes involved in the selection of the preferred corridor for the WSO, noting that investigations commenced in 1994 with the “Route Investigation Study”, progressed through 1995 with the commencement of design investigations for the EIS and through 1998 with the Initial Design Proposal and were completed in 2000 when the EIS assessed the preferred route (which was the ultimately approved route).

22 Applying these cases here, whilst the WSO was not specifically identified in 1993, the national highway scheme giving rise to it was then conceived. No precise location was determined until several years later. The final determination of the WSO route was made in 2001. Thus, there was an eight year period from the announcement in 1993 that a national highway scheme was to be constructed in the general area of the subject lands to the final determination of the WSO route made in 2001. Nevertheless the genesis of the scheme giving rise to the WSO occurred in 1993 and that is the relevant period from which the impact of the scheme is to be considered. Numerous investigative studies for the route of the national highway were undertaken after 1993 which caused uncertainty in the planning process. As relied on by the Applicants the 1994 “Route Investigation Study” showed the subject sites as being impacted by the routes under consideration. Further, studies on the appropriate route for the WSO took place in the mid to late 1990s. In 1998 the preparation of an EIS was announced but this did not finally appear until October 2000, and showed a number of alternative routes for the Prestons to Cecil Hills 12km roadway which affected the subject sites.

23 It was argued by the RTA that the case of Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251 is authority for the suggestion that preparatory investigations do not constitute a public purpose or proposal. At [38] Basten JA distinguishes between conduct which constitutes the carrying out of a public purpose and the existence of a “proposal” for carrying out a public purpose from steps taken in the development of a proposal or steps which are merely preparatory to the carrying out of the public purpose. I do not consider this distinction applies to the facts in this case.

24 The concept of the “public purpose” under the Just Terms Act and the delay between the announcement of the national highway program in 1993, and the compulsory acquisition of land in the general area has been considered in this Court. In Mosca Bignold J came to the conclusion after examining the evidence that the public purpose dated from the time of commencement of the national highway program.

25 In Lalic, where land was acquired for the WSO in the immediate area and on the same date of acquisition as the land in this case, McClellan J also considered the effect of the delay between the time the WSO was announced and when the applicant’s land was compulsorily acquired. He held at [15] that the prospect of the relevant land being released by the Council and developed was inhibited from at least 1993 onwards, when the announcement of the proposed WSO was made. While the circumstances in Lalic are not identical to this case the cases have great similarity.

26 The RTA argued that Mosca should be distinguished on its facts or not followed because it was incorrectly decided and did not correctly apply Woollams v The Minister (1957) 2 LGRA 338. That submission appeared to relate to Bignold J’s reasoning as to how the extent of the “blight” caused by the WSO should be applied in the valuation process and is not a matter about which I need make a finding here.

27 I consider that in this particular case the announcement of the national highway program in 1993, which ultimately became known as the WSO (and the M7 more recently), should be considered to be a part of the wider public purpose for the purposes of s 56 of the Just Terms Act. Accordingly, in determining the compensation and the application of s 56(1)(a) of the Just Terms Act, it is necessary to consider the effect of the delay between the announcement of the WSO in 1993 and the date of acquisition in relation to the planning history in this area and, if relevant, to the valuation of comparable sales.

Did the WSO cause the decrease in value of the land under s 56(1)(a) of the Just Terms Act?

Planning history

28 It is necessary to outline the nature of the planning documents before the Court before considering the next issue.

Before 1993

29 The subject land is located within the Hoxton Park Stage 2 Release Area, as identified in the “Sydney Region Outline Plan – 1968” (“the SROP”). Under the SROP, the subject site was identified as “Urban Proposed”.

30 In 1970, the Council issued Interim Development Order (“IDO”) 16, resulting in Part 1 of the Prestons Industrial Area, an area of 63ha, being rezoned Industrial. On 7 April 1978, the subject site was zoned 1(c) Non-urban – Limited Uses by IDO 74.

31 In February 1983, a report titled “Regional Environmental Investigation Hoxton Park Casula”, prepared by Wellings, Smith & Byrnes identified the subject lands as future industrial. The Wellings, Smith & Byrnes Report also stated that “the area should accommodate as much industrial land as it can environmentally support, on the basis of a wider regional context”.

32 The “Prestons Environmental Planning Study 1987”, prepared by Planning Workshop (“the Planning Workshop Study”), assessed the suitability of the Prestons area for industrial development and the consequent planning implications. The Planning Workshop Study confirmed the demand for the provision of more industrial land at Prestons, consistent with the SROP. The subject land was included in Precinct 4 in the Planning Workshop Study within an area identified “subsequently, if necessary” industrial use, subject to further investigation.

33 In 1989, Liverpool Council adopted a “Structure Plan for the Hoxton Park Stage 2 Release Area 1989” (“the 1989 Structure Plan”) which divided the area into six residential precincts and two industrial precincts. Explanatory notes accompanying the 1989 Structure Plan state that it was “intended to provide guidance for future decisions and for the preparation of local environmental plans”. The subject site is located within an area identified by the 1989 Structure Plan as “Future Industrial to be rezoned in the longer term”. The 1989 Release Areas Structure Plan resulted in the rezoning of six residential and two industrial areas. The six residential areas are as follows:

Precinct 1 Hoxton Park

Precinct 2 Cecil Park North

Precinct 3 Cecil Park (which was subsequently divided into Precinct 3 and Precinct 3A)

Precinct 4 West Hoxton

Precinct 5 Prestons

Precinct 6 Edmonson Park

34 The two industrial areas, Prestons Stage I (first release) and Prestons Stage I (second release) were rezoned for industrial use on 12 October 1990 and 28 February 1992 respectively. On October 12 1990, Local Environmental Plan 201 for the Prestons Stage I area was gazetted rezoning sections of the Prestons area as industrial land. This made development on flood liable land possible with the consent of the Council. On 3 September 1991, the Council published Development Control Plan 19 – Prestons Industrial Release Area (“DCP 19”).

35 Gazetted on 20 March 1992, Local Environmental Plan 243 rezoned further areas of Prestons as Industrial as part of the ongoing release of land for industrial purposes. On 7 May 1992, IDO 236 rezoned areas of land at Hoxton Park and Hinchinbrook for residential use. Pursuant to IDO 236, development on flood liable land was permissible subject to certain conditions.

After 1993

36 In 1993 the Federal Government announced a national link road between Sydney’s north and south. It was apparent then that the route would run north-westerly from the M5 to the M2 motorways passing through the Hoxton Park Stage 2 Release Area, although the exact route was undetermined.

37 On 21 July 1993, the Council published the “Prestons Industrial Release Landfill Strategy Plan”. In early 1994 the RTA advised Liverpool City Council of its plans to undertake a study to determine the location of the WSO through Prestons. In 1994 the “Route Investigation Study” for the national highway scheme in this area was released. By May 1995 Liverpool City Council was advised by the RTA that the proposed location of the WSO in the vicinity of Precinct 3 had not been determined and that an EIS was being prepared to be exhibited in the second half of 1995 and would detail the precise route of the WSO.

38 In June 1995, the Council’s s 94 Contribution Plan No 7 identifies the subject lands within the “Future Industrial Release Area”. In consideration of the WSO, the Council made the following resolutions at its meeting of 11 December 1995:

…

(9) Council resolve as a statement of policy, the following with respect to that land at Prestons proposed to be zoned Rural 1(e) Future Urban:

(a) That land immediately west of the proposed National Highway link (Prestons to Cecil Park) be rezoned Residential 2(a) immediately upon determination of the precise location of the National Highway corridor. Further, that no environmental studies be required at that time.

(b) That land within the future Prestons Industrial Area, shown on Council’s adopted structure plan immediately east of the National Highway link be rezoned Industrial 4(a) immediately upon the determination of the precise location of the National Highway corridor. Further, that no environmental studies be required at that time.

39 On 23 June 1997, the Council resolved to undertake an environmental study and Draft LEP for land in the vicinity of the WSO.

40 On 30 July 1997, the Minister for Roads wrote to the Mayor stating that the “RTA [is] reluctant to … release [the] EIS”. On 14 December 1998, the Council resolved to defer amendments to the LEP in face of uncertainty regarding the WSO. The Council memorandum stated that:

… Council has never been in a position to proceed beyond the basic investigation phase due to the ongoing uncertainty regarding the alignment of the proposed West Sydney Orbital as well as the uncertainty regarding the Sydney West Airport and associated rail.

…

[D]uring the course of this work it became apparent that much of the urban release that has occurred to date, has occurred in the absence of key infrastructure. As such the further release of urban land should not be considered until such time as current and future infrastructure needs – in particular public and road transport, have been satisfied.

41 In 2000, the subject lands were included as part of the Yarrunga release area in the strategy titled “Smart Growth in Sydney’s South-West – Creating Communities 2000” (“the Smart Growth Strategy”). The Smart Growth Strategy was adopted by Council in August 2000 and provided the strategic framework for the development of more detailed land release proposals in the release areas.

42 In October 2000 the environmental impact statement for the WSO was released to the public showing several alternative routes.

43 In the “Liverpool City Council, Developing Sustainable Communities – Stage One, Urban Form and Development Scenarios – Background Report” prepared in September 2000, the Yarrunga release area was identified as being subject to flooding, as containing endangered ecological communities and as having significant overhead transmission lines. The Yarrunga release area was also identified as in need of upgraded infrastructure. Similarly, the “Liverpool City Council, Developing Sustainable Communities – Stage One, Environmental Baseline System – Background Report” prepared in September 2000 estimated the Yarrunga release area to have only 63 per cent urban capable land and identified the subject lands as being affected by various environmental constraints. More recently, since the date of acquisition the Council has moved to have the land in the Yarrunga area including the subject land removed from the urban development program with a view to rezoning it for industrial use.

Parties’ arguments

44 Having previously identified the relevant public purpose and the date of its inception (1993), it is then necessary to consider whether the carrying out of that public purpose, or the proposal to carry out that public purpose, caused an increase, or more relevantly here, a decrease in the value of the land acquired pursuant to s 56(1)(a) of the Just Terms Act when determining market value. The parties agreed that the relevant question for the Court to consider was whether the Millstar and Nasser land would have been rezoned for urban development “but for” the announcement of the WSO. They disagreed on whether, in the circumstances here, the “but for” test was satisfied.

45 The RTA argued that from the evidence it was clear that the announcement of the WSO alone did not cause a blight in the process of rezoning in the area surrounding the Millstar and Nasser lands. There was evidence before the Court that planning uncertainty was created not only by the announcement of the WSO. On 14 December 1998, the Council resolved to defer amendments to the LEP in the face of uncertainty regarding the WSO, acknowledging that reasons for the failure to rezone the area included the WSO and the uncertainty regarding the proposed Sydney West Airport and associated rail link. In addition, the RTA referred to the need to provide for adequate infrastructure prior to the release and rezoning of future development areas and the relatively high supply of industrial land at the time. Any planning blight was not caused by the WSO alone and it was necessary in order to satisfy s 56(1)(a) that this be the case, therefore the “but for” test was not satisfied.

46 The Applicants argued that the planning history of the area surrounding the subject lands evidenced that “but for” the announcement of the WSO, the Millstar and Nasser lands would have been rezoned for industrial development. Accordingly, in the circumstances of this case it was clear that the public purpose relevantly caused a blight on the subject lands.

Finding

47 When the Council’s planning documents in relation to the WSO are viewed as a whole, as set out at par 36 - 43, the memorandum of 14 December 1998 (par 40) is an isolated reference to other planning concerns such as the proposed Sydney West Airport and associated rail link. While other circumstances such as the proposed Sydney West Airport and associated rail link are referred to in the Council memorandum of 14 December 1998, the evidence when viewed as a whole strongly suggests that planning in the area of the subject lands was put on hold from 1993 because of the WSO proposal.

48 In my view, the announcement of the WSO relevantly caused a blight in the rezoning of Precinct 3A and the Millstar and Nasser lands. As the planning history of the area before 1993 (par 29 – 35) shows the Council has, over a number of years, provided for the release and rezoning of industrial land in the Hoxton Park area. This is evident in the release of Precincts 1, 2, 4 and 5. It is clear that prior to 1993 the Council intended to release and rezone Precincts 3 and 3A, but the Council’s intention to do so was frustrated by the announcement of the national highway program in 1993. This caused the Council to put on hold its plans to release Precincts 3 and 3A. This is evident in the Council’s advice from the RTA during 1994 (par 37), the Council’s resolution of 11 December 1995 (par 38) and through correspondence received from the Minister for Urban Affairs concerning the delay of the WSO EIS (par 40) and its effect on planning. Accordingly, I consider that “but for” the announcement of the WSO the Millstar and Nasser lands would have been subject to rezoning prior to the date of acquisition.

Highest and best use – likely zoning

49 There are two issues to resolve in relation to zoning. Firstly, what was the likelihood of the land being zoned industrial at the date of acquisition or later? Secondly, are the flooding constraints on the Millstar land so great that it would be unlikely to be rezoned for industrial purposes at all? The second question will need to be determined once the evidence in relation to flooding has been considered.

Expert planning evidence

50 The Applicants relied on the expert planning evidence of Mr Gary Rhodes. The RTA relied on the expert planning evidence of Mr Harvey Sanders.

51 The planning experts agreed that at the date of acquisition, the subject lands were zoned partly Rural 1(e) – Future Urban under the 1997 LEP and partly Non Urban 1(c) under the Interim Development Order No 74 – holding zone pending urbanisation (“IDO 74”). A small area of Non Urban 1(c) land was zoned for potential road widening works along Bernera Road.

52 The planning experts identified two broad issues in relation to the likely zoning as follows: What would the zoning of the subject lands have been at the date of acquisition but for the WSO, and further if the lands were still zoned Rural 1(a) at the date of acquisition what was the likelihood of rezoning thereafter?

53 Mr Rhodes considered that the zoning of the lands at the date of acquisition in 2002 would have been Industrial 4(a) but for the WSO and that this was the highest and best use of the lands. The release of the lands for industrial purposes would have occurred in an orderly and timely manner consistent with the other residential and industrial releases within the Hoxton Park Release Area (Stage 2). In Mr Rhodes’ view the pre-planning, rezoning and development of the area was delayed from at least early 1993 to 2001, being the period it took to determine the route of the WSO. Mr Rhodes considered that the subject land would have been rezoned for industrial use in about 1995 to 1996, and certainly would have been zoned Industrial 4(a) by the time amendments were made to the LEP in 1997.

54 Mr Sanders disagreed that the subject lands would have been rezoned industrial in the time frame stated by Mr Rhodes. Mr Sanders accepted that part of the Nasser land would certainly be zoned residential, but considered that the remaining portion of the Nasser land and the whole of the Millstar land would not be zoned for urban development because of the development constraints over the land. Mr Sanders’ final position was that, subject to his views on potential development constraints, the land would be rezoned industrial within five years of the date of acquisition, despite Council’s 1995 resolution to rezone the area residential, given recent moves by the Council to change the future zoning to industrial.

55 Based on this evidence, the RTA argued that the inclusion of the subject land within the Yarrunga release area evidenced competing demands for industrial and residential land in the area that preceded the date of acquisition. This competing demand, in addition to the reasons outlined by Mr Sanders, reinforced the proposition that “but for” the WSO, the subject lands would not have been rezoned for industrial purposes by the date of acquisition.

Finding

56 I have already held that the relevant public purpose commenced in 1993 so that all the planning history leading up to the date of acquisition from that year is relevant. It is necessary to consider what a prudent hypothetical purchaser would have considered the zoning of the subject lands to have been at the date of acquisition in light of that planning history, and given the town planning advice they would have received.

(i) Would the area have been zoned 4(a) Industrial at the date of acquisition?

57 I consider a prudent hypothetical purchaser would be likely to obtain town planning advice. Given the evidence before me, there is a possibility that conflicting town planning advice would be obtained by a prudent hypothetical purchaser. In Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2004] NSWLEC 315, Talbot J considered the role of the Court in reconciling conflicting expert evidence in valuation cases (his finding was not the subject of the appeal) Talbot J stated at [119] that:

Having regard to the whole of the evidence, particularly the expert evidence of architects and town planners, it is highly probable that the hypothetical purchaser would have received conflicting advice about the potential yield, in terms of residential units, that could be achieved from the site. It is unlikely, however, that the same purchaser would have had the benefit of the far-ranging and wide scope of advice and competing argument of the type that has been made available to the Court through the presentation of evidence by a plethora of experts and voluminous submissions by counsel. Nevertheless, the purchaser would, in my view, have had the benefit of over-arching assessments of the potential for the site that would have identified the range of possibilities and the associated degree of risk. It is necessary, therefore, that the Court balance the evidence made available to it by having regard to the practical context of the willing but not anxious purchaser dealing with a vendor of the same mind.

58 In Bautovich v The Minister administering the Environmental Planning and Assessment Act 1979 [2004] NSWLEC 389 Talbot J states in his conclusion at [63] – [64]:

… the Court’s role is not to determine what would have been

approved, but rather to decide how the hypothetical purchaser acting prudently after obtaining the advice of relevant experts familiar with and experienced in developments of residential subdivisions, would have assessed the potential for the development of the subject land.

59 A prudent hypothetical purchaser would be able to view all of the planning documents referred to in the planning history above at par 28-43, and would therefore be familiar with the pattern of land development in the area. This pattern shows up to 1992 a relatively rapid land release and development in the Hoxton Park area. The subject lands were in an area identified as “Future industrial use to be rezoned for longer term” in the Council’s “Structure Plan for the Hoxton Park Stage 2 Release Area” 1989 as set out at par 33. The nearby areas of Prestons Stage 1, first and second releases, were rezoned for industrial use in 1990 and 1992 (par 34). Future land releases for industrial zones in Prestons occurred in 1992. While Mr Sanders argued there was a lack of demand for industrial land, Mr Rhodes disputed this. In my view, the pattern of land release in the Hoxton Park area, in particular the release of the nearby Prestons industrial area in the 1990’s, suggests it was likely there would have been demand for industrial land by the date of acquisition if not already rezoned for that use in the 1997 LEP, as Mr Rhodes argued.

60 As is clear from the planning history set out for the period after 1993 at par 36 – 43, the planning for the WSO affected the area which included the subject site.

61 The RTA criticised Mr Rhodes for drawing conclusions from planning documents produced by the Council and from the patterns of release of land under the urban development State government program. None of these documents refer to the subject lands, and Mr Rhodes was not the author of them. Therefore the RTA suggested that no weight should be given to his opinion. His approach is appropriate and necessary when I have held that the planning processes in relation to the subject lands was affected from 1993 because of the broader planning objectives for these areas. It is not surprising that the planning undertaken by the Council was not advanced to the level of considering particular sites, given the uncertainty over the impact of the WSO on land in the general vicinity from 1993.

62 A link road from Sydney’s north to south as part of the national highway program was announced in 1993 and this affected the planning for the surrounding area from that period. The 1995 Council resolution to rezone land to the west of the WSO (par 38), including the subject lands, for residential use should be disregarded, as clearly a decision influenced by the WSO and not therefore a matter which can be considered under s 56 of the Just Terms Act. The decision to include this land in the Yarrunga residential release area is a consequence of the WSO in my view, and should be disregarded for that reason. The decision by the Council in 2000 to include the subject lands in a future residential zone must be excluded from consideration for the same reason.

63 The long-standing industrial development on adjoining property, the electricity substation site and the adjacent Scotts site, also suggests the likelihood of an industrial zoning on the subject lands.

64 All these matters suggest that a prudent hypothetical purchaser would consider that the evidence of Mr Rhodes was supported by the planning history and documents available at the date of acquisition. A prudent hypothetical purchaser would consider that at the date of acquisition the Millstar and Nasser land would have been zoned 4(a) Industrial, given the pattern of land development in the surrounding precincts of the Hoxton Park Release Area.

65 A related issue is whether, having zoned the land industrial, the Council would also have had in place by the date of acquisition a landfill strategy in order to deal with any development on the site in relation to flooding. Such a strategy was developed for the nearby Prestons industrial area. The evidence on flooding is also relevant to this issue and I will consider it in that context.

(ii) If the land was not 4(a) Industrial at the date of acquisition, what is the likelihood of rezoning?

66 Given my finding above I do not need to answer this question.

67 The Millstar land has potentially substantial flooding constraints. Accordingly, the RTA argued that this land would not be rezoned for any urban development. That issue will be considered after the flooding constraints are considered. It is agreed that part of the land along Cabramatta Creek would be likely to be rezoned for Special Uses 5(a) – drainage purposes.

Development constraints

68 The determination of the proper market value of the Millstar and Nasser lands also requires account to be taken of the development potential at the date of acquisition, having regard to relevant constraints. The relevant constraints affecting the subject lands here include:

(a) flooding – the parties disagree on the extent of development constraint due to flooding

(b) vegetation – the extent of the constraint is agreed as between the parties

(a) flooding to a lesser extent – the extent of the flooding is generally agreed by the experts

(b) vegetation – there is disagreement between the parties’ ecologists on whether there is environmentally significant vegetation which is a constraint on development

(a) Flooding

69 The extent of flooding on the Millstar land and whether fill can be used on it to enable development was in issue. The Applicants relied on the expert flooding evidence of Dr Stephen Webb. The RTA relied on the expert flooding evidence of Mr Ian Rowbottom.

Background

70 A number of reports and studies are referred to by the experts. The most relevant are identified here. In 1988, the Department of Water Resources published the “Cabramatta Creek Flood Study Report” (“the Cabramatta Creek Report 1988”). This report referred to the delineation of “floodways” and the definitions of “high hazard” flood areas. Floodways are those areas of the floodplain which must be kept clear to permit the unimpeded flow of flood waters.

71 The Council’s guidelines for development of flood liable land are outlined in the Council’s “Floodplain Management Plan 1987” (“the Floodplain Management Plan 1987”). This provides the Council’s guidelines for the provision of flood levels in new development and urban release areas, the subdivision and filling of land, and the rezoning of flood liable land.

72 In 1992, Kinhill Engineers were commissioned by the Council to prepare the “Hoxton Park Stage II Release Area – Total Catchment Management Study” (“the Kinhill Report”) in relation to drainage in the Hoxton Park release area. The Kinhill Report recommended Option A-3 as the preferred trunk drainage strategy in the area for maintaining the 1% Annual Exceedance Probability (“AEP”) flood post-development flows to pre-development levels. This included a recommendation for a small levee to be built in the vicinity of the Bernera Road breakout to prevent the flooding of a large area of proposed industrial land during large flood events. It was otherwise concerned with the implementation of a series of detention basins to catch flood waters across the catchment. The Kinhill Report estimated that approximately 40ha of flood-affected land could be released for development with the proposed levee in place. The Kinhill Report was adopted by the Council in 1992.

73 In March 1999, Bewsher Consulting published the “Cabramatta Creek Floodplain Management Study: “Working Paper No. 31 – Review of Basin Strategy” (“the Basin Strategy Review 1999”), reviewing the Council’s existing detention basin strategy for the Cabramatta Creek catchment and proposed different strategies to improve the strategy. It recommended that a substantial detention basin, Basin 22, be built towards the middle of the catchment. It would relate to the area which includes the subject lands. It is described as follows:

Basin 22 is considerably larger than any of the other basins already constructed or proposed to be constructed in Cabramatta Creek. The basin also has a number of components, benefiting new release area development, other ultimate catchment development, compensatory flood mitigation works for the proposed Western Sydney Orbital highway, as well as a flood mitigation benefit for existing development. Construction of the basin will need to be staged, in accordance with available funding and the particular objectives of the basin at any particular time.

74 In May 1999, Bewsher Consulting provided to the Council a “Floodplain Management Study and Plan for Cabramatta Creek Advance Draft” (“the 1999 Floodplain Management Study”). It states at s 5.3 that Cabramatta Creek is important for the natural temporary storage of floodwaters during flood events. This study outlined the Council’s basin strategy which incorporated 16 detention basins to ensure that downstream peak flooding rates were not increased as a result of the new release area development. The basin strategy aims to compensate for potential increases in catchment runoff due to an increase in the paved or impervious area of the catchment. The strategy does not provide compensatory storage for development located within floodplain areas that would result in a loss of floodplain storage volume.

75 On 21 June 2001, the Council adopted the 1999 Floodplain Management Study. Since that time until at least 2003, the technical data from that study has been used by the Council as the most up to date information to map flood extent, identify flood levels and prepare information noted on any s 149 certificates. The 1999 Floodplain Management Study is currently being revised to include the WSO.

76 In January 2002, WBM Oceanics and Bewsher Consulting were commissioned by the RTA to prepare the “Western Sydney Orbital, Cabramatta Creek 2D Flood Model – Sizing of Bridges, Culverts and Basins” (“the WBM Report”). The WBM Report provided that increased run-off in the area required the provision of additional detention basins. While there was reference to this report by Dr Webb it cannot be assumed to have been available at the date of acquisition, given that it is a result of the WSO planning process. It is not therefore relevant to the “before” scenario for valuation purposes and is not a report a prudent hypothetical purchaser can be assumed to have access to.

77 In July 2002, the Council published the Liverpool Contributions Plan 2001 (“the Contributions Plan”). The Contributions Plan includes provision for s 94 contributions for drainage facilities to implement part of the Option A-3 trunk drainage strategy concerning the construction of detention basins for floodwaters recommended by the Kinhill Report. It was agreed this was the relevant contributions plan that a prudent hypothetical purchaser would consider.

78 The flooding experts identified four issues as follows in relation to the Millstar land:

1. What is the categorisation of flooding on the Millstar land?

2. What is the extent of filling likely to be undertaken on the Millstar land?

3. What setback from Cabramatta Creek is required for the conveyance and storage of the 1% AEP flood event?

4. What is the likelihood of the Council’s storage basin strategy accommodating development on the Millstar land?

Issue 1 – Categorisation of flooding on the subject land

79 Dr Webb considered that but for the WSO, flooding constraints would have been alleviated to a large extent on the Millstar land by the adoption of the trunk drain strategy and provision of a levee on the Millstar land outlined in the 1992 Kinhill Report (part of option A-3). With the levee in place the part of the Millstar land adjacent to Cabramatta Creek would be considered a floodway, while the remainder of the Millstar land would not be a floodway and could be filled. If a levee had not been put in place, Dr Webb considered that the Millstar land would be a flood storage area, not a floodway, and would be a “high hazard” area up to 50m from Cabramatta Creek.

80 Dr Webb considered the land to be flood storage rather than a floodway because in his view the landfill strategy for the Prestons industrial area located downstream from the Millstar land, would result in flood waters not flowing across most of the Millstar land. Dr Webb considered that other than the land 50m along Cabramatta Creek, there was no impediment to rezoning the Millstar land for industrial use.

81 Mr Rowbottom did not consider the landfill strategy for the Prestons industrial area was dealing with flood management as it did not result in filling of the land above the 1% AEP flood level. Rather it was a strategy dealing with drainage from within the industrial area. Accordingly, flood water would continue to flow across the Millstar land. Mr Rowbottom considered that according to the Council’s 1999 flood contour maps the Millstar land was completely flooded in both the 1% AEP flood event and the 5% AEP flood event. In the 1% AEP flood event, Mr Rowbottom believed that 80 per cent of the Millstar land would be inundated over a depth of one metre. Because of the location of the land in relation to the creek it was a floodway and therefore it fell within the definition of “high hazard” in the NSW Floodplain Management Manual 2001. Accordingly, the Millstar land was so flood liable that it would not have been rezoned for industrial purposes. This was consistent with the Council Floodplain Management Plan 1987 which states at 6.9 that:

6.9 Rezoning of Land

Council will not favourably consider any application for the rezoning of land identified as being flood-liable on the basis of information in Council’s possession.

Issue 2 – Extent of filling on the Millstar land

82 Dr Webb considered that, by reference to the Kinhill Report, there were no flood restrictions that prevented the filling and development of the Millstar land. When the subject lands were zoned industrial, the Council would have introduced a landfill strategy, accompanied by a detention basin strategy to provide compensatory storage where filling occurred, to raise land above the 1% AEP level. Dr Webb’s view was that filling the subject lands could have occurred in accordance with his plan contained in Exhibit K. This showed that approximately one third of the Millstar land could be filled behind a levee built approximately 50m from Cabramatta Creek, with the top of the fill at 27mAHD. The balance of the Millstar land and all the Nasser land was therefore available for development. The fill required by the scheme in Exhibit K, approximately 55,000m3, could be accommodated by any conditions of development consent and by the basin storage strategy expected to be implemented by the Council without any adverse impact on the flood plain. An alternative proposal was that a levee proposed by the Kinhill report across the Millstar land would be built which would have allowed a lesser area of the Millstar land to be developed.

83 Mr Rowbottom considered that the Council’s detention basin strategy did not aim to replace displaced floodplain storage caused by development of flood liable land and accordingly, any potential development would need to have compensatory excavation onsite. In Mr Rowbottom’s view, it would be impossible to compensate for 55,000m3 of fill on the Millstar land as proposed by Dr Webb’s plan, considering the riparian vegetation requirements and the limited space on the land. Accordingly, Mr Rowbottom believed that it was unlikely that the Council would approve development as any fill required for development could not be compensated for onsite. This was consistent with cl 6.9 of the Council’s Floodplain Management Plan 1987 which provided that the Council would not permit rezoning of flood liable land.

Issue 3 – Setback required from Cabramatta Creek for the conveyance and storage of the 1% AEP flood event

84 Dr Webb believed that a 50m buffer zone adjoining Cabramatta Creek was sufficient for the purposes of floodway conveyance. Mr Rowbottom considered that a 50m buffer zone would not be sufficient to ensure that the adjoining properties were not impacted by the 1% AEP flood event. In oral evidence Mr Rowbottom stated that it was likely that a buffer zone double the size contemplated by Dr Webb would be necessary, that is at least 100m.

Issue 4 – Ability of the basin storage strategy to accommodate displaced floodplain storage

85 Outlined in cl 5.2 of the 1999 Floodplain Management Study is the basin strategy, which provides for 16 detention basins in the Cabramatta Creek catchment area to ensure that downstream peak flow rates during flooding were not increased as a result of the new release area development planned within the catchment in the Prestons industrial area. Clause 5.3 of the 1999 Floodplain Management Study states that:

The detention basin strategy (outlined above) aims to compensate for potential increases in catchment runoff due to an increase in the paved or impervious area of the catchment. It has not allowed for development that may be located within floodplain areas which would result in a loss of floodplain storage volume.

86 Dr Webb gave evidence that irrespective of cl 5.3 of the Cabramatta Creek Floodplain Management Study 1999 the Council’s basin storage strategy was used, in part, to deal with additional filling in the Prestons industrial area pursuant to the landfill strategy. He relied on the 2002 WMB/Bewsher study as evidence that the Council had allowed filling in the flood plain in conjunction with its basin strategy. In particular Basin 22 could have been designed to accommodate flood storage for any development in the area around the subject lands. I have already noted that the 2002 report cannot be regarded as relevant to a prudent hypothetical purchaser in the “before” scenario.

87 Mr Rowbottom was of the view that the Council would insist on storage compensation onsite rather than relying on external compensation through the Council’s basin storage strategy. Mr Rowbottom considered that it was not the objective of the Council’s detention basin strategy to replace displaced floodplain storage lost due to the development of flood liable land.

Parties’ submissions on flooding issues generally

88 The Applicants submitted that, in accordance with the evidence of Dr Webb and given the history of policies and strategies adopted by the Council to address the issue of flood liable land in the Prestons area and on adjoining land, a prudent hypothetical purchaser would have considered that the issue of flooding was not an impediment to the rezoning and development of most of the Millstar land. They based this argument on the industrial development of the properties immediately adjacent to the subject lands (the Scotts site to the east and the electrical substation site to the west) and the rezoning of the nearby Prestons industrial area despite being flood liable land. Dr Webb proposed that a levee could be constructed allowing for a 50m buffer along Cabramatta Creek. Alternatively, the levee referred to in the Kinhill report could be built. Either approach would result in the majority of land on the Millstar site being available for development.

89 The Applicants also relied on various flood studies undertaken in relation to the Prestons area and the actual conduct of the Council in the period prior to the date of acquisition. The Applicants argued the Council was co-ordinating drainage arrangements at the time that it was rezoning land, and permitting the filling of land in flood prone areas adjacent to Prestons. Any prudent hypothetical purchaser would have taken into account that the industrial area to the east of the subject lands had been both filled and rezoned in the period leading up to the date of acquisition.

90 If rezoned for industrial use, a landfill strategy would be in place to address the flooding potential of the land, and a detention basin strategy would be in place to accommodate displaced flood storage as a result of development on the land. Consequently, the flooding potential of the land was not an impediment to development on the Millstar land. It was also likely that the Council would have in place a fill strategy, as it had for part of the Prestons industrial area. If there had been no filling strategy, it would have been necessary to undertake a detailed flood study of the land to identify areas which could be filled to create land above the 1:100 flood level.

91 The RTA submitted that the flooding constraints on the Millstar land would have been an impediment to the rezoning and development of that land and, to a lesser extent, the redevelopment of the Nasser land. While it may be accepted that there has been some landfill in the Prestons industrial area, the flood liability of the Millstar land would have prevented the rezoning of that land because it was far more flood liable than the Prestons industrial area, and the land upon which fill was placed in the Prestons industrial area was already zoned industrial land from the mid to late 1980s when the landfill strategy was developed. Further, the landfill strategy was not a flood mitigation strategy, as explained by Mr Rowbotton. Significantly, both flooding experts agreed that landfill downstream of the subject land would increase flooding on the land. Clause 6.9 of the Floodplain Management Plan 1987 strongly indicates that rezoning to an industrial use was highly improbable, a conclusion which is also supported by the discussion Mr Rowbottom had with relevant Council flood engineers.

92 In light of these matters the RTA submitted that it was highly unlikely that the Council would have permitted the subject lands to have been rezoned for urban purposes including industrial use. The RTA argued that it was unlikely that the Council would permit landfill to the extent necessary to accommodate industrial development and that there was no likelihood that Dr Webb’s proposed levee would be built. Contrary to the evidence of Dr Webb, the Council would be likely to insist upon storage compensation onsite rather than relying on external compensation such as augmenting detention basins in the general catchment for Cabramatta Creek.

Finding

93 The flooding experts have given substantially conflicting opinions on the extent of flooding and its consequences for development on the Millstar land in particular. It is therefore necessary to determine what enquiries a prudent hypothetical purchaser would undertake and what he or she might do in light of conflicting expert advice (see Walker, Bautovich at par 57, 58).

94 The parties agreed that the advice of flooding experts would be likely to be sought by a prudent hypothetical purchaser. It is clear there could be a substantial difference in the advice obtained if more than one opinion was sought.

95 The Millstar land, according to the 1999 Flood Management Study is wholly affected by a 5% AEP flood level and 80 per cent affected by 1% AEP flood levels up to 1m. Considering the practical context that a willing but not anxious prudent hypothetical purchaser would have before them, the Council instruments relating to flooding available at the date of acquisition are the most relevant to indicate the Council’s likely approach to flooding at the date of acquisition. These are the Council’s 2001 flood contour maps based on the Floodplain Management Study 1999 adopted by the Council in 2001, the LEP and the s 149 certificate issued for the land. The s 149 certificate for the land would have stated that it is affected by the Council’s Floodplain Management Plan which restricts the development of land below the level of a 1% AEP flood event. For the Millstar land, 80 per cent is inundated in the 1% AEP flood event. The depth of flooding at the peak of such a flood would range from 0.4 m in the south-eastern corner to more than 2m along the northern boundary according to Mr Rowbottom’s comparison of the Council’s 2001 flood contour maps and the natural surface contours of the land. While the accuracy of these maps was challenged by Dr Webb they are significant in that they were the primary material available to a prudent hypothetical purchaser. The 2002 WMB/Bewsher report relied on by Dr Webb in calculating the flood maps were inaccurate and overstated the flood levels and cannot be assumed to have been available at the date of acquisition because it was prepared for the WSO proposal.

96 The relevant LEP 1997 also had provisions concerning flood liable land in cl 21 which states that:

(1) Before determining an application for consent to carry out development on flood liable land, the Council must consider:

(a) the impact of that development on:

(i) flood behaviour, including the flood peak at any point upstream or downstream of the site of the development, and

(ii) the flow of floodwater on adjoining lands, and

(iii) the flood hazard or risk of flood damage to property and personnel, and

(iv) erosion, siltation or destruction of riparian vegetation in the area, and

(v) the water table on any adjoining land, and

(vi) riverbank stability, and

(vii) the safety in time of flood of the site of the development and of any buildings or works intended to be erected or carried out, and

(viii) the hydraulic capacity of flood liable land in the locality, and

(ix) the provision of emergency equipment, personnel, welfare facilities or other resources that might be needed for an evacuation resulting from flooding, and

(x) the risk to life and personal safety of any emergency service and rescue personnel who might be involved in any such evacuation, and

(xi) the cumulative impact of further development on flooding, and

(xii) the potential for pollution during flooding, and

(b) the impact that flooding will have on the proposed development, including the flood liability of access to the site of the proposed development, and

(c) the provisions of any floodplain management plan adopted by the Council which applies to the land.

(2) The Council may, as a condition of its consent, require:

(a) the floor of a building or work to be erected at a height sufficient, or

(b) the construction of a structure or carrying out of a work,
to prevent or reduce the incidence of flooding of that building or work or other land.

97 Clause 26 concerns land fill and states:

Consent for the placing of landfill may be granted only if the Council is satisfied that:

(a) the landfill is required for the reasonable economic use of the land on which it takes place or for the provision of utility services, and

(b) there would be no adverse impact on:

(i) a water body, or

(ii) private or public property, or

(iii) ground water quality and resources, or

(iv) stormwater drainage, or

(v) flooding.

98 These provisions would also be taken into account by a prudent hypothetical purchaser in considering the extent to which the Millstar land was developable for industrial purposes. The provisions of the LEP suggest that there may be difficulties in developing land identified as highly flood liable where this also involves extensive land filling. In light of this material the issues raised by the parties’ experts can be assessed in terms of what a prudent hypothetical purchaser would consider is a constraint on development.

Issue 1 – flood categorisation on Millstar

99 While the experts agree that the majority of the Millstar land is flood liable in the 1% AEP flood event Dr Webb considered the land was not a floodway, and therefore high hazard, but rather flood storage due to the impact of the filling in the Prestons industrial area. Mr Rowbottom appears to have a credible reason for why this is not correct and the land is high hazard. I consider it is likely a prudent hypothetical purchaser would be inclined to value the land on the basis that most is “high hazard”. The area is located right on Cabramatta Creek and is clearly much more flood liable than the Prestons industrial area which is further from Cabramatta Creek.

100 The next issue that arises from the parties’ general submissions is appropriately dealt with now. Is it is likely the Millstar land would be zoned industrial at all, given how much of it is flood affected? It is likely that part of the property would be zoned Special Uses 5(a) - Drainage along Cabramatta Creek at least to the extent of the riparian zone. Since industrial development on immediately adjoining land which is flood liable has been approved by the Council to some extent in relation to the Scotts site and the electrical substation site in the area of Cabramatta Creek, I do not accept the RTA’s argument that most of the Millstar land would not have been considered able to be rezoned for industrial purposes. As relied on by the Applicants, the Prestons industrial area had been rezoned for industrial use despite being flood liable, albeit to a lesser extent than the Millstar land. The extent to which the Millstar land could be developed due to constraints on the land is a separate issue. What I must determine is how a prudent hypothetical purchaser would choose to value the land zoned for industrial use in light of the flooding constraints and possible measures needed to deal with these.

Issue 2 – what is the extent of filling able to be undertaken on the Millstar land?

101 The Council’s 2001 Contributions Plan in place at the time of acquisition in 2002 does provide for contributions to be collected to implement Option A-3 in the 1992 Kinhill study. The contributions plan refers to that option as a detention basin strategy aimed at offsetting the impacts of development on stormwater runoff both on the major creek tributaries within, and downstream of, the release areas. It is not at all clear that the levee on the Millstar land recommended in the 1992 Kinhill study is intended to be covered by the 2001 contributions plan. There was no indication in subsequent Council documents prepared since 1992, suggesting that it would be implemented. It is not included in the 1999 Bewsher study. While the Applicants argued this was because of the WSO, I consider that a prudent hypothetical purchaser would take a cautious approach on this issue given the uncertainty about construction of such a levee and proceed on the basis that the levee identified in the Kinhill report would not be built. Further, there is simply no firm basis given the Council’s LEP and the extent of flooding on the Millstar land, to suggest it is likely Dr Webb’s levee would be able to be built.

102 The Applicants have relied on the filling on neighbouring sites as suggestive that a similar approach such as the levee proposed by Dr Webb could be built on the Millstar land. The filling of land on the neighbouring Scotts site to the east does not provide any comfort as the evidence suggests this was done without development consent and would appear to be in the area of the riparian zone along Cabramatta Creek, which is usually protected. The electricity substation site to the west is on land filled between 1982 and 1986. Apart from an aerial photograph showing this I do not have any other details about the basis on which filling was allowed. There have been several instruments related to flooding prepared since this period which are more likely to be considered relevant by a prudent hypothetical purchaser.

103 While the Prestons industrial area, although flood liable land, was rezoned industrial in the early 1980s, and filling in the flood plain did occur in that area, it is further from Cabramatta Creek and is less flood liable than the Millstar land. I do not consider that a prudent hypothetical purchaser would consider the likely treatment of development on the Millstar land would be identical to the approach taken by the Council to the Prestons industrial area. This view is underlined by the large amount of fill required for the Millstar land (and Nasser land to a lesser extent) (total of 9ha) of 55,000m3 based on Dr Webb’s evidence in Exhibit K, compared to the 80,000m3 required for the whole Prestons industrial area of 100ha. I agree with Mr Rowbottom that it cannot be assumed the Council would be willing to accommodate this much fill for a single combined site under any landfill strategy even if the Millstar and Nasser lands were included in a detention basin strategy in relation to the management of floodwater. A prudent hypothetical purchaser would have reservations about the likelihood of the relevant council approving the large amount of fill (55,000m3) necessary to develop the Millstar land, as identified by Dr Webb. These observations are also relevant to issue 4, storage basin capacity.

104 Given the extent of fill needed to render the Millstar land developable, it is unlikely that a Council landfill strategy, if implemented similarly to the Prestons industrial area, would accommodate such a large amount of fill, particularly as Mr Rowbottom’s evidence suggests the Prestons landfill strategy was not aimed at flood mitigation, but rather designed to deal with drainage.

Issue 3 – extent of buffer for 1% AEP flood

105 In light of my findings in par 99 above, and while Dr Webb disputes Mr Rowbottom’s evidence, I do not accept that a prudent hypothetical purchaser would assume that a 50m buffer zone would be sufficient to contain the conveyance and storage of water in the 1% AEP flood event. A prudent hypothetical purchaser would consider that a larger area than that identified by Dr Webb would not be able to be developed.

Issue 4 – storage basin capacity

106 The experts have also differed on the likelihood of accommodating development on the Millstar land in the floodplain within the Council’s detention basin strategy. The Applicants’ expert relied on the example of what had occurred in relation to the nearby Prestons industrial area. I have already held I do not consider the subject lands would be likely to be treated identically to the Prestons industrial area because of the different location and topography which render the lands more flood liable. I do not consider a prudent hypothetical purchaser would assume that the Council’s storage detention basin strategy would accommodate the development of much of the Millstar land. Basin 22, described at par 73, is designed to generally accommodate a large area of developable land. I have already referred to the substantial amount of fill required by Dr Webb’s scheme in issue 2. I do not think a prudent hypothetical purchaser would assume that the Council’s detention basin strategy could accommodate floodplain storage capacity reduced by that much fill from one site.

107 It is difficult due to the substantial differences between the experts and my findings above, to identify how much of the Millstar land should be valued on the basis that it can be developed. I have not accepted Dr Webb’s view that a substantial portion can be developed, and I have held in relation to the buffer needed for the 1% AEP flood event that it is greater than the 50m estimated as adequate by Dr Webb. Mr Rowbottom’s view is that none of the land can be developed. Mr Rowbottom’s evidence was that approximately 80 per cent of the Millstar land was highly flood liable and that as the land was located on the southern bank of Cabramatta Creek it was heavily affected by the conveyance of water from upstream.

108 This suggests that a prudent hypothetical purchaser may consider that 20 per cent of the Millstar land on the southern boundary could be developable. Twenty per cent of 55,620 is 11,124m3. The parties agreed that the volume of fill needed to ensure the land was above the 1% AEP flood event level was 11,124m3. The fill cost of $8/m3 was agreed so that the fill cost under this scenario is approximately $90,000. The other assumption I make in the Applicants’ favour is that it will be possible to accommodate this level of fill as “lost” floodplain storage in any floodplain strategy the Council has adopted to enable development on land zoned for industrial use, whether accommodated onsite, as Mr Rowbottom considered would be necessary on the Nasser land, or offsite. Another assumption I will make in the Applicant’s favour is that this developable area of 20 per cent is in addition to the 50m vegetation protection zone the parties agreed ought be set aside on the western boundary.

Nasser land

109 There was agreement that the Nasser land was far less flood liable and could be developed. Dr Webb considered that the Nasser land was low hazard and that there were no impediments to rezoning or development following filling of the northeast area of it. Mr Rowbottom considered that the Nasser land was more likely to be classified as flood storage than a floodway. Accordingly, Mr Rowbottom agreed that the Nasser land was low hazard flood liable land and could be rezoned, filled and developed, provided sufficient compensatory excavation could be carried out to replace displaced floodplain storage. The experts differed on how filling on the Nasser land would take place because of their different views on whether and how the Millstar land could be developed.

110 I have rejected a finding that a prudent hypothetical purchaser would assume Dr Webb’s levee scheme under which no fill on the Nasser land was necessary because that land benefited from the levee and filling on the Millstar land, would be implemented. I consider that a prudent hypothetical purchaser would consider that the Nasser land could have been filled in part to enable development across the whole site. The issue then arises of whether a prudent hypothetical purchaser would factor in that any fill required for the Nasser land would have to be accommodated onsite or could be accommodated elsewhere by a Council landfill strategy. According to Mr Rowbottom any fill would have to be accommodated onsite. His report included a plan (Fig 5.1 Ex 6) whereby part of the Nasser land could be developed with a 6,000m2 fill platform as part of a cut and fill operation. I adopt Mr Rowbottom’s scheme as the basis on which a prudent hypothetical purchaser would consider the land could be developed and will value the Nasser land accordingly.

(b) Vegetation

111 The Applicants relied on the expert ecological evidence of Mr Dominic Fanning. The RTA relied on the expert ecological evidence of Dr Anne Clements.

112 In relation to the Millstar land the ecological experts agreed that it was appropriate to provide a 50m riparian zone along Cabramatta Creek and a 10m – 20m buffer zone along the drainage swale on the western portion of the Millstar land. This area of land measures 19,710 m2.

113 On the Millstar land the areas identified as a necessary buffer for vegetation generally are overlapped by the areas I consider a prudent hypothetical purchaser would regard as subject to flooding constraints. That purchaser would not therefore assume that most of that buffer land could be developed in any event.

Nasser land

114 In relation to the Nasser land, the ecological experts identified two areas of disagreement in relation to what vegetation would have been on the land at the date of acquisition:

(1) Was the vegetation located in the northwest corner of the Nasser land environmentally significant, and if so, would it have been required to be protected?

(2) Was the vegetation on the Nasser land Cumberland Plains Woodland (“CPW”), an ecologically endangered community, and if so, would it have been a constraint on development?

115 Both experts agreed that the vegetation at the date of acquisition would have been similar to the vegetation they inspected in the preparation of their reports. The land was generally cleared approximately seven or eight years before the date of acquisition.

116 The Scientific Committee, established by s 127 of the Threatened Species Conservation Act 1995 (“the TSC Act”), made a Final Determination on 27 June 1997 to list CPW as an endangered ecological community pursuant to Part 3 of Sch 1 of the TSC Act. The Final Determination states:

…

3. The Cumberland Plain Woodland sites are characteristically of woodland structure, but may include both more open and more dense areas, and the canopy is dominated by species including one or more of the following: Eucalyptus moluccana, Eucalyptus tereticornis, Eucalyptus crebra, Eucalyptus eugenioides and Eucalyptus maculata.

4. The understorey is generally grassy to herbaceous with patches of shrubs, or if disturbed, contains components of indigenous native species sufficient to re-establish the characteristic native understorey.

5. The Cumberland Plain Woodland includes regrowth which is likely to achieve a near natural structure or is a seral stage towards that structure.

…

117 If a community is listed as an endangered ecological community under the TSC Act, the consequence is that under s 56(1) and s 74(1) of that Act respectively, the Director-General of the Department of Environment and Conservation may prepare a recovery or threat-abatement plan for it, the object of which is to promote the recovery of, or abate threats to, the endangered ecological community. These plans must then be taken into account by consent and planning authorities under s 5A of the Environmental Planning and Assessment Act 1979 (EP&A Act) when considering development applications under Pt 4 of the EP&A Act, or applications for approval for the carrying out of activities under Pt 5 of the EP&A. Further, under s 78A of the EP&A Act, a species impact statement (SIS), must be prepared in accordance with Pt 6 Div 2 of the TSC Act for a development application, in relation to land which is part of a critical habitat, or where the proposed development is likely to significantly affect threatened species, populations or ecological communities. Under s 122(1B) of the EP&A Act, a determining authority cannot grant development approval or consent without having regard to this SIS.

Issue 1 – Vegetation in the northwest corner of the Nasser land

118 An area of vegetation in the northwest corner of the Nasser land is identified by the National Parks and Wildlife Service 2002 Conservation Significance Maps as Sydney Coastal River-flat Forest (“SCRFF”), an endangered ecological community. It is also identified as environmentally significant land in the 1997 LEP. Both maps would have been available to a prudent hypothetical purchaser.

151 On the evidence presented it is not clear how much area of vegetation is said by Dr Clements to have been covered by CPW at the date of acquisition. If, on the basis of existing evidence, an area is able to be identified I can take this into account. Further advice from the parties is needed before I finalise this aspect of the matter.

(c) Transmission line easement

152 The parties agreed and it was obvious from the view conducted during the course of the hearing that there is a transmission line easement (“TLE”) across the Millstar land. This affects 7,080m2 of the acquired Millstar land. It is subsumed into the flood affected area as identified by Mr Rowbottom and I have held there would be constraint on development in this area in any event.

Expert Valuation Evidence

153 The Applicants relied on the expert valuation evidence of Mr Lopco Neskovski. The RTA relied on the expert valuation evidence of Mr David Lunney. Both valuers agreed the “before and after” method of valuation was appropriate in these circumstances to determine compensation. Such an approach incorporates the market value, loss due to severance and any injurious affection; Just Terms Act s 55(a), (c) and (f). The value of the original land before acquisition, as if the event causing enhancement or depreciation had not occurred, is calculated, and the value of the remaining land after acquisition is determined as if the event causing the depreciation had been carried out. The latter value is subtracted from the former. The summation approach whereby an amount is attributed to developable land and a different amount to constrained land was also applied by the valuers within the “before and after” context.

154 The valuation depends in part on which planning approach is taken. I have accepted the Applicants’ argument that the highest and best use of the subject lands was as industrial land with an underlying Industrial 4(a) zoning except for part of the Millstar land in the riparian zone which would be likely to be zoned for Special Uses 5(a) - Drainage purposes. Accordingly the land should be valued in the “before” scenario as though it was industrial land but for the WSO proposal.

(a) Industrial land value

155 Both valuation experts agreed that the most comparable sale for industrial use was 10 – 12 Bernera Road, Prestons (“the Boral site”). The Boral site has a land area of 29.35ha and was sold for $4,350,000. The contract date was 13 December 2002. The settlement date was 19 December 2002. The rear of the site, approximately 5,000m2, included vegetation which had to be retained and did not therefore have development potential. A further area of land at the front was to be made available for road widening also leaving a net developable area of approximately 18,800m2. The valuation experts agreed that the purchase price for 4(a) - Industrial sales should have a market adjustment rate of 2.5 per cent per month.

156 The valuers gave evidence that before the Boral site could be developed the owner was required to fund the provision of a sewerage system. Estimates of the cost of the sewerage varied widely between the experts with Mr Neskovski allowing a figure of $250,000 and Mr Lunney considering the system was inexpensive and did not need to be factored into his calculations. In oral evidence on 8 December 2005, Mr Lunney indicated that the sewerage installed on the Boral site was simple in nature, and therefore not worth very much. The valuers also disagreed on what the date of the contract should be. The date of sale on the contract documents was 13 December 2002, and this was the date applied by Mr Lunney. Mr Neskovski considered the relevant date of sale was August 2002 because he was aware from his enquiries that the parties agreed on a sale price then. Mr Neskovski adjusted the sale price by six per cent in his analysis to reflect this.

157 Mr Lunney considered the Boral site was superior to the subject site because it had an approved fill strategy, was flood free and had no TLE. He analysed the sale as reflecting an amount of $161.50/m2, or $165/m2 when applied to the developable area. This was a different figure to that applied by Mr Lunney in Lalic ($200/m2) because according to him the area of constrained land had now been found to be greater than that taken into account in that case. Mr Lunney allowed for market movement between the date of sale (13 December 2002) and the date of acquisition of two months at 2.5 per cent. In his view, the Boral site also required adjustment for the betterment influence of the WSO of seven per cent. Mr Lunney considered that having regard to the poorer egress to the WSO from the Boral site that the subject lands had values of approximately $180/m2 for flood free englobo industrial land.

158 Mr Neskovski analysed the Boral sale as $230/m2, taking into account the land to be used for road widening and 5,000m2 of environmentally significant land not available for development. He considered the sale should be adjusted upwards as the subject lands were superior to the Boral site. He did not allow an amount for “betterment” as a result of the WSO being constructed at the date of sale. Having regard to the constraints on the Boral site, the better access to the WSO and high visibility of the subject lands, he calculated these had a value of approximately $250/m2.

Other sales

159 Mr Neskovski also relied on a sale at 16 Lyn Parade, Prestons as an example of a reliable sale, because it did not require much adjustment in his view. The Lyn Parade site had a land area of 1.898ha and was sold on 25 February 2004 for $6,500,000, representing a rate of $342.47/m2. The settlement date for the Lyn Parade sale was 13 April 2004. After making adjustments to allow for the timing of the Lyn Parade sale and the existing infrastructure, Mr Neskovski estimated the value of the subject lands to be approximately $240 - $250/m2.

160 Mr Lunney criticised the Lyn Parade sale on the basis that it was not comparable because of the extent of adjustment required, it being a sale 16 months after the date of acquisition when the market for industrial land was rising rapidly. The land had a much smaller area than the subject lands. Further, unlike the subject lands, the Lyn Parade land was unconstrained.

Finding on industrial land rate

“Before” value

161 There is a marked difference of over 28 per cent, between the two valuers’ conclusions on the value demonstrated by the Boral sale with Mr Lunney attributing $165/m2 and Mr Neskovski attributing $230/m2. Given that the valuers are expert witnesses whose primary duty is to assist the Court, this level of discrepancy is both surprising and unhelpful.

162 There were three adjustments where there was substantial difference between the two valuers in relation to their analysis of the Boral sale, apart from whether there should be an allowance for betterment from the WSO. I consider that issue separately below. I note that the Applicants no longer press one of these adjustments, an allowance made for interest of 8.5 per cent lost on the purchase price for a 12 month period. The other differences relate to the cost of the sewerage system and the contract date.

163 As referred to in par 156 Mr Neskovski took into account $250,000 to provide for a temporary sewerage system. He gave oral evidence of a conversation with a valuer connected with the earlier sale of the site. Mr Lunney did not consider this to be an accurate reflection of the cost of the sewerage system at all. He considered the cost of the system would be much less. In the absence of concrete evidence to support the figure applied by Mr Neskovski I do not accept the amount applied by him should be considered as relevant in this analysis.

164 The valuers took a different approach to the relevant contract date. Mr Lunney applied the date the contract exchanged in December 2002. Mr Neskovski applied a date of August 2002 which he considered to be the date the parties entered an agreement to proceed with the sale and adjusted the rate by six per cent reflecting the increase in the market. The RTA argued Mr Neskovski’s approach represented a potential loss of the increase in value between August and December 2002 of $450,000 to $500,000, given the rapidly rising market at that time, which they argued a vendor would be unlikely to forgo. I agree for that reason. I consider the relevant date of the contract is December 2002 when the contracts were exchanged.

Betterment from the WSO

165 Mr Lunney adjusted the Boral sale down by seven per cent as it occurred (on 13 December 2002) during the period the WSO was being constructed. The WSO opened in 2006. This represented the betterment he said resulted from the WSO on the basis that it had contributed to an increase in land values. He considered that based on his experience in this area of Sydney increases in industrial land values reflected betterment of 15 per cent as a result of the WSO but he was prepared to allow an adjustment of seven per cent. No specific sales evidence for this was relied on by Mr Lunney.

166 The amount of seven per cent was disputed by Mr Neskovski on the basis of a lack of any concrete sales evidence to support it. He was prepared to agree to two per cent at most, but also considered that to be a guess. He considered the M5 motorway opening four years before the date of acquisition had a betterment impact, but given that the WSO was not due to be completed until 2006 it could only have a negligible impact at the date of acquisition in 2002.

Finding on betterment

167 In Lalic the figure of seven per cent for the betterment effect of the WSO was agreed between the two valuers in that case, Mr Lunney and Mr Neskovski. In a statement filed after the close of hearing in this matter Mr Neskovski sought to explain why he had changed his mind since Lalic. This statement essentially canvassed matters he had put in oral evidence during the hearing. He stated that much of the increase in the value of individual land in south-western Sydney can be attributed to the rising market between 1989 and 2004 coupled with the completion and opening of the M5 motorway, eastern distributor and M5 east motorway rather than the announcement of the construction of the WSO. As at the date of acquisition, the completion date of the WSO was estimated to be four to five years away. Therefore betterment cannot accurately be determined.

168 In oral evidence during the substantive hearing Mr Lunney stated that the M5 east motorway also had a positive effect on land values at Prestons. However, the M5 east motorway only provides access from Prestons (and the subject lands) to Port Botany and the south. Access to the M4 motorway and the northern freeway from the subject lands was still very difficult. As the WSO provides an important link between the existing freeway systems linking the M5, M4 and M2 motorways, it would clearly have had a betterment impact because it was under construction at the date of acquisition.

169 During argument after the substantive hearing had finished on whether Mr Neskovski’s further statement on betterment ought be admitted the Court was taken to Lalic (same date of acquisition) and Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of New South Wales [2005] NSWLEC 419. The land in Mir Bros is in the general vicinity of the subject sites and was compulsorily acquired for the WSO on 10 October 2003. In both matters an amount for betterment of seven per cent was applied by the Court in relation to the impact of the WSO on comparable sales. In Mir Bros another valuer, Mr Sorenson, gave evidence on behalf of the RTA before McClellan J that the betterment effect on the WSO was nine per cent based on his experience in this area of Sydney. McClellan J considered on the evidence that seven per cent was the appropriate figure to allow.

170 This issue has now been considered directly on at least two other occasions by this Court, in Lalic and Mir Bros. In Lalic the same comparative sale was applied by the same valuers as in this case. While each case must be considered on its own facts it seems to me that a relevant consideration must also be consistency in decision-making by this Court in the absence of cogent reasons as to why previous decisions ought be departed from. Essentially the Court has the expert opinion of two valuers disagreeing on betterment on the basis of their experience. I do not consider the evidence of Mr Neskovski in relation to the potential betterment impact of the M5 motorway rather than the WSO, which opinion is also based largely on his experience in this area of Sydney, is so demonstratively correct that I should apply his view that the betterment impact of the WSO on the Boral sale was negligible or at most two per cent. Given the significant improvement to the road system resulting from the completion of the WSO in 2006, this appears unlikely, particularly if the M5 motorway is considered to have had some beneficial impact as both valuers agreed. I therefore consider Mr Lunney’s approach to the Boral sale on this issue is correct.

171 In relation to the analysis of the Boral site, I consider the value attributed to the sale of $230/m2 by Mr Neskovski is too high and the approach of Mr Lunney is generally to be preferred except that his reduction of the figure he applied in Lalic of $200 to $165 because of the change in the constrained area in the Boral sale appears too much. $180/m2 is an appropriate amount to apply in my view.

Application of Boral sale to subject sites

172 In terms of the derivation of the value of the subject lands in applying the Boral sale, I do not consider the Boral site to be substantially inferior to the subject lands. Indeed the subject lands and the Boral site appear largely comparable apart from there being marginally better egress to the WSO from the subject lands. To counter that, the Boral site is less flood free than the subject lands.

173 Mr Neskovski considered the subject lands were superior and adjusted the rate of $230/m2 for the Boral sale upwards by three per cent to allow for time to arrive at $240/m2, and then by a further five per cent on the basis they had excellent access and visibility, also taking into account that the subject lands were twice as large. The experts later agreed that an appropriate rate was 2.5 per cent, suggesting the first adjustment should be lower in any event. I have held that I consider the date of the contract should be that adopted by Mr Lunney, so that I would not make the adjustment made by Mr Neskovski to arrive at $240/m2. Nor would I increase the value overall by five per cent as I do not consider the subject lands are as superior in relation to the Boral sale as Mr Neskovski considers.

174 I agree with Mr Lunney that the Lyn Parade Prestons sale relied on by Mr Neskovski is not comparable for the reasons given by Mr Lunney; see par 160. Subsequent sales have most utility as comparable sales if economic circumstances remain unchanged between the base date and the date of the subsequent sale. The evidence is that the market was changing rapidly.

175 Given my finding that the Boral sale should be valued at $180/m2 which should be increased marginally for the subject sites, I adopt $190/m2 as the appropriate rate for englobo unconstrained industrial land that a prudent hypothetical purchaser would apply to the subject lands.

Should allowance be made for development risk on Millstar and Nasser lands?

176 Mr Lunney and the RTA argued that a prudent hypothetical purchaser would deduct an amount of 25 per cent for development risk from the amount he or she was prepared to pay for the Millstar site. This reflected the flood prone nature of the lands as well as the environmentally significant vegetation and the TLE. The Court should take this approach even if it considered the land would have been zoned industrial with a landfill strategy in place. This approach should also be taken to that part of the Nasser land which is flood liable.

177 Mr Neskovski considered there should be no such allowance made because development risk was already built into comparable sales, particularly the Boral site which has substantial constraints. The RTA submitted that a prudent hypothetical purchaser would view adjoining development which relied on filling at the Scotts site, the Boral site and along Jedda Road. Such purchaser would conclude there was no risk the Council would not permit some filling of the Nasser land and would have regarded the Millstar land was only constrained in the area north of the TLE.

Finding on development risk

178 In Lalic, on which the RTA relies on this issue, an allowance of 25 per cent was applied for development risk.

179 Considering the Millstar land first, the Applicants argued the Lalic land was more flood liable and had more environmentally significant vegetation than the subject land, that is, it was more risky to develop. It is clear from my finding on the substantial flooding impacts on the Millstar site that a prudent hypothetical purchaser would be unlikely to assume that the scheme proposed by Dr Webb would be implemented. This means that the extent of development able to be undertaken would be uncertain. I consider that as there are significant risks which potentially need to be overcome before development could take place on the Millstar land that a prudent hypothetical purchaser would deduct an amount for development risk. This is clear given the provisions of the LEP and the s 149 certificate likely to be obtained by a prudent hypothetical purchaser, as identified in par 95 – 97. Given the flood prone nature of the land this would be the case even assuming the land is zoned industrial and there is a Council drainage/flood management strategy in place in relation to it. I accept Mr Lunney’s assessment of 25 per cent, the amount also applied in Lalic.

180 In relation to the Nasser land, given the views of the flooding experts that the area can be developed with appropriate filling in place, I do not consider there is a need to factor in a reduction in value because a prudent hypothetical purchaser would perceive there was a risk that development could not take place. The presence of environmentally significant vegetation is not such a major constraint that a prudent hypothetical purchaser would consider a reduction in value for development risk was warranted on that basis either.

Allowance for fill

181 The valuers agreed that there must be a reduction in the “before” value to allow for filling costs. The rate of $8/m2 for fill was agreed as between the parties.

“After” value

182 The land is valued in the “after” scenario on the basis of existing Rural 1(e) - Future Urban Zoning with future industrial potential.

183 The residue land of both properties was irregular in shape after acquisition. The Nasser land’s substantial frontage to Bernera Road was lost completely. The Millstar land lost substantial frontage to Bernera Road. Further, there is an area of Millstar land of 2,049m2 severed from the rest (S) which can only be developed with other adjoining land. Part of the residue Millstar land is under a TLE, (Q) amounting to an area of 5,880m2.

184 There was not much difference between the valuers’ opinions on the “after” value for the developable land and ultimately they agreed on a rate of $40/m2.

(b) Constrained (non developable) land value
“Before” scenario

185 Mr Lunney applied an amount of $20/m2 for the constrained land such as the area under the TLE on the Millstar land, vegetation requiring preservation on the Nasser land and flood prone land in the “before” scenario. This figure was based on an analysis of three sales of totally constrained land, sales 9 and 10 at Wilson Road, Hinchinbrook and the sale of a golf course at Lot 1 Cowpasture Road, Hoxton Park on flood liable land. Sale 9 at Wilson Road, Hinchinbrook, occurred on 27 September 2002, for a sale price of $515,900 (excluding GST). This property was 3.198ha in area. The sale was negotiated between Stockland and the RTA, at a rate of $20/m2 for the areas not covered by the TLE and $10/m2 for the areas covered by this easement. Sale 10 at Wilson Road, Hinchinbrook occurred on 6 August 2004, for a sale price of $700,000, or $20.60/m2. This property was 3.4ha in area. The sale of Lot 1 Cowpasture Road Hoxton Park occurred on 5 May 2001, for a sale price of $1,013,674, or $17/m2 for the primary acquisition and $19.60/m2 for the road-widening compensation. Lot 1 Cowpasture Road had an area of 6.59 ha.

186 This price also reflected the s 94 “offset” value of the land being the price the Council considered such land to be worth in the relevant s 94 contributions plan.

187 It was difficult to identify in the evidence the values Mr Neskovski attributed to constrained land in the “before” scenario. There is no mention of a figure in his first report that I can find. In the table of values for the Nasser land in the joint valuers report he applied $50/m2 to constrained land in the “before” scenario. For the Millstar land Mr Neskovski applied $180/m2 to the constrained land affected by the TLE and $150/m2 to the area subject to flooding (area Z) in the “before” scenario.

“After” scenario

188 Mr Lunney applied $10/m2 in the “after” scenario for constrained land.

189 In his report on the Millstar residue land, Mr Neskovski allowed $5,000 for the severed land (S), which is approximately 2,049m2 in area. He allowed $40/m2 in the “after” scenario for the rest of the land on the assumption that the land could not be developed but could be used for storage and parking. There is no evidence of comparable sales or other methods by which the figure of $40/m2 was arrived at. In submissions the Applicants accepted a figure of $30/m2. Mr Neskovski applied a figure of $20/m2 for the constrained land on the Nasser land.

Finding on constrained land rate

190 The Court would have benefited from a clearer presentation from the Applicants of the evidence they relied on regarding constrained land values. There is a lack of any analysis contained in a report, or sales evidence relied on, to explain how Mr Neskovski chose the figures that he did. Mr Lunney obtained his constrained land figures from sales which appear comparable and I intend to adopt his figures. He generally adopted one amount for constrained land rather than different amounts for differently constrained land. The values for constrained land that I intend to adopt are $20/m2 for the “before” scenario and $10/m2 for the “after” scenario.

191 In relation to the Millstar land, the Applicants’ submissions for the “after” scenario were made on the basis that Dr Webb’s evidence in relation to filling of flood liable land is accepted which means that in the “after” scenario most of the residue land would be developable. The figure presented in the “after” scenario was $594,530 for areas R, Q, P and S.

192 The RTA’s submissions assumed that none of the Millstar land is developable in the “after” scenario and applied a value of $394,408. My finding in relation to the Millstar land was that a prudent hypothetical purchaser would be likely to value the land on the basis that 80 per cent is highly flood liable and would not assume it could be developed. In the “after” scenario this means less will be developable than the Applicants’ case assumed but because of the different cases presented by the parties it is difficult to identify exactly how much is developable in the “after” scenario. I will allow a nominal amount, as submitted by the Applicants, for area S given that it is severed from the main parcel by the WSO. I will assume area R is developable but will assume that areas P and Q are not developable. The area under the TLE on the Millstar land should not be valued on the basis that it can be developed for storage and parking.

193 In relation to the Nasser land, area T remains in the “after” scenario. The Applicants valued area T on the basis it would be fully developable while the RTA argued it would be partially developable. I have held that part of the developable area on the Nasser land is constrained due to environmentally significant vegetation in the north-west corner (par 136). As this is located on area T allowance will need to be made for that. As identified above in relation to the evidence of Dr Clements at par 151, the location of other environmentally significant vegetation is unclear. Depending on whether this issue can be clarified in relation to area T, allowance may be made in the “after” scenario. I will assume that area T is otherwise developable. Because of this one outstanding issue I will not include the final calculation for compensation for the Nasser land in this judgment.

Joint development

194 The Applicants’ valuer, Mr Neskovski, stated in his report that the two properties would be jointly developed and ascribed a “before” valuation of $19,950,000 for both properties based on an industrial zoning. The Applicants submitted that I should approach this matter on that basis, but that was not a well developed submission. The amounts sought as compensation by the Applicants do not adopt that figure. As the RTA submitted, it is more appropriate to consider the sale of the land in the condition it was in at the date of acquisition, namely as two separate parcels, and I have approached the valuations on that basis.

Disturbance

195 The Court was asked to reserve on the amount of compensation for disturbance claimed under s 59(d) of the Just Terms Act.

Conclusion

196 I determine the compensation for the acquired Millstar land as follows. The letters refer to Attachment 1 to the Applicants’ Supplementary Submissions which is Attachment 1 to this judgment.

MILLSTAR LAND

(a) developable land –11,124m2 x $143 1,590,732

($190/m2 less development risk of 25%)

(b) constrained land – 44,496m2 x $20/m2 889,920

“After” value

(a) severed parcel of land to west of M7

(b) developable land for building structures

(R) – 1,150/m2 x $40 46,000

222,910

197 Findings on all matters relevant to the Nasser claim have been made apart from the outstanding issue raised in relation to vegetation. Once this matter is finalised a determination can issue immediately of the compensation payable for Nasser in relation to market value. Final orders giving effect to these findings in relation to the Millstar land, findings made in relation to the Nasser property taking into account any further submissions made in relation to vegetation, if any, and any findings made on compensation for disturbance at a separate hearing will be made in due course. The parties also need to advise the Court of whether they wish to make any submissions in relation to costs.

CITATION:	Nasser v Roads and Traffic Authority; Millstar Holdings Pty Limited v Roads and Traffic Authority [2006] NSWLEC 181
PARTIES:	APPLICANTS Fred Nasser George Nasser Michael Nasser Millstar Holdings Pty Ltd RESPONDENT Roads and Traffic Authority
FILE NUMBER(S):	30162 of 2003; 30163 of 2003
CORAM:	Pain J
KEY ISSUES:	Compulsory Acquisition of Land :- definition of public purpose-whether public purpose caused loss-whether highest and best use industrial-development constraints, flooding and ecological constraints-whether betterment should be allowed in comparable sales
LEGISLATION CITED:	Development Control Plan 8 - Natural Assets Development Control Plan 19 – Prestons Industrial Release Area Environmental Planning and Assessment Act 1979 Pt 4, Pt 5, s5A, s78A, s122(1B) Land Acquisition (Just Terms Compensation) Act 1991 s4(1), s54(1), s55, s56(1), s66 Liverpool Local Environmental Plan 1997 Liverpool Local Environmental Plan 201 Liverpool Local Environmental Plan 243 Threatened Species Conservation Act 1995 s56(1), s74(1), s127, Pt 3 Sch 1, Pt 6 Div 2
CASES CITED:	Bautovich v The Minister administering the Environmental Planning and Assessment Act 1979 [2004] NSWLEC 389 ; Crompton v Commissioner of Highways (1973) 32 LGRA 8; Hornsby Shire Council v Vitone Developments Pty Limited [2003] NSWLEC 272 ; Lalic v Roads and Traffic Authority [2005] NSWLEC 430; Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 ; Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of New South Wales [2005] NSWLEC 419; Mosca v Roads and Traffic Authority (2004) 139 LGERA 28 ; San Sebastian Pty Limited v Housing Commission of NSW (1977) 37 LGRA 191; Stephen Anthony Horton and Kay Elizabeth Horton v Wyong Shire Council [2004] NSWLEC 571; Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251 ; VAW (Kurri Kurri) Pty Limited v Scientific Community (2003) 128 LGERA 419; Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2004] NSWLEC 315; Wilson v Liverpool Corporation [1971] 1 WLR 302; Woollams v The Minister (1957) 2 LGRA 338
DATES OF HEARING:	20/11/2005, 29/11/2005, 30/11/2005, 01/12/2005 Notice of Motion - 17/02/2006, 13/03/2006
DATE OF JUDGMENT:	06/06/2006
LEGAL REPRESENTATIVES:	APPLICANTS Mr P McEwen SC with Mr A Pickles SOLICITORS Allens Arthur Robinson RESPONDENT Mr J Maston SOLICITORS Corrs Chambers Westgarth