Nevitoro Investments Pty Ltd v Hawkesbury City Council

[1998] NSWLEC 141

Land and Environment Court

of New South Wales

CITATION:	Nevitoro Investments Pty Ltd v Hawkesbury City Council [1998] NSWLEC 141
PARTIES:	APPLICANT Nevitoro Investments Pty Ltd RESPONDENT Hawkesbury City Council
FILE NUMBER(S):	30020 of 1997
CORAM:	Talbot J
KEY ISSUES:	:-
LEGISLATION CITED:	Statutes Land Acquisition (Just Terms Compensation) Act 1991s 55(f)
CASES CITED:
DATES OF HEARING:	06/02/98, 09/02/98, 10/02/98, 12/03/98, 13/03/98, 16/03/98
DATE OF JUDGMENT:	04/07/1998
LEGAL REPRESENTATIVES:	APPLICANT Mr G T Miller QC Mr A A Hyam (Barrister) Coode & Corry Solicitors RESPONDENT Mr P D McClellan QC Mr G B Newport (Barrister) Abbott Tout Solicitors

JUDGMENT:

The subject land, Lot 3 in DP 864088, was acquired by Hawkesbury City Council by compulsory acquisition notified in Government Gazette No 115 on 11 October 1996. The land was acquired from the applicant pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 for the purposes of car parking.

The land is located on the eastern side of Baker Street, Windsor, approximately twenty metres north of its intersection with George Street and is situated at the rear of Fitzgerald House, which stands on the corner of George and Baker Streets.

The property was zoned Special Uses Parking 5(a) under City of Hawkesbury LEP 1989 at date of acquisition. The land has since been rezoned to Business 3(a) under Amendment No 12, gazetted 21 February 1997.

Prior to acquisition, the subject land served as a car park for Fitzgerald House and the adjoining Macquarie Arms Hotel.

The acquired land has an area of 1,072m2. At the date of resumption, the title was encumbered by a right of carriageway 3.65 metres and an easement for electricity purposes. The right of carriageway facilitated access across the subject land from Baker Street to the rear of Macquarie Arms Hotel. Subsequent to resumption, upon registration of DP 864088, further rights of carriageway have been created extending the existing right of carriageway to the eastern boundary of the subject land so that access is maintained to Macquarie Arms Hotel and providing a new right of carriageway from the existing right of carriageway to the rear of Lot 2 for the purpose of access to the rear of Fitzgerald House.

The Market Value

At the commencement of the hearing, the applicant relied on valuation evidence furnished by Charles Verheyden. In 1991, while negotiations were continuing between the applicant and respondent, he produced a valuation of the land based on comparable sales which indicated a value of $500 - $550 per square metre. As the site was already surfaced for car parking, he adopted the higher rate of $550. This valuation compares to a base value of $500 per square metre adopted by the council's consultant valuer, Kent Wood. Both valuers agree there have been no significant variations in land values for commercial land in Windsor between 1991 and October 1996.

In 1991, Mr Verheyden calculated the fair market value for an area of 1,017 m2 as follows:-

$550 x 1,017

$559,350

Refund of contribution made to council for seven car spaces at $8,900 per space

$ 62,300

$621,650

The above calculation is based on an area of 1,017m2 as being the projected area for resumption in 1991.

Following resumption of 1,072m2 in 1996, Mr Verheyden merely adopted his 1991 figure of $621,650 to which he added $26,700 for the loss of an additional three parking spaces at $8,900 per space to arrive at a market value for the land of $648,350.

Mr Verheyden relied on sales of two small improved parcels of land opposite the subject land in Baker Street which reflected a price per square metre of $478 and $914 respectively.

At the commencement of the hearing Mr McClellan QC, appearing for the council, gave notice that Mr Wood had subsequently become aware of a further sale in Windsor and that he proposed to rely upon that sale for the purpose of determining the market value of the land at the date of resumption.

Previously the analysis undertaken by Mr Wood showed sales ranging from $247 per square metre to $614 per square metre. The variation, he said, could be related directly to area. He adopted the two sales of smaller sites opposite the subject land as the most comparable sales. He then stated that, having regard to all factors, he considered an unaffected rate per square metre for the subject land is $500 per square metre, equivalent to $536,000. He discounted this amount by seventy five per cent to take into account the existence of the rights of way and heritage implications associated with any proposed development consent. Mr Wood also undertook an alternative calculation based upon the council's car parking contribution code to arrive at a market value of $313,000, which he then adopted as a reflection of the highest and best use of the land for car parking.

Using the new evidence of the sale of adjacent land, 25 Lot 3 Macquarie Street, pursuant to a contract dated June 1997, Mr Wood concluded that the market value of the resumed land in October 1996 was at the rate of $300/m2, being $321,600. He noted that the value of $321,600 is not significantly different from that arrived at in his earlier valuation at $313,00, albeit on a different basis. He was therefore prepared to amend his valuation to an amount in the sum of $321,600 plus items of disturbance.

Following the indication of change of approach by Mr Wood, the applicant was granted an adjournment to enable it to fully investigate the further sale upon which Mr Wood now relied and also to have regard to further sales in Richmond, of which it had only recently become aware.

During the adjournment, the applicant instructed Sidney Glen Harrison to report on the latest sale in Windsor disclosed by Mr Wood and the sales in Richmond. Mr Harrison gave evidence when the hearing resumed. Mr Harrison told the Court that, after consideration of both townships, it is his opinion that sales evidence in Richmond and Windsor would assist in arriving at a fair valuation assessment of the subject property. This proposition is not accepted by the respondent.

Mr Harrison also drew attention to a number of matters which he says made the latest sale relied upon by Mr Wood unreliable. In contrast to Mr Wood, he preferred to base his assessment of market value on the sale of properties in Francis Street Richmond, which are said to be indicative of the prices which the council itself was prepared to pay for land required for car parking purposes. Apart from the fact that these sales relate to land in another town, the respondent sets these sales apart on the ground that they were all made for the purpose of expanding an existing car park to allow the expansion of the Coles supermarket into an existing area used for car parking. In addition the respondent distinguishes the prime commercial location of the land in Richmond by contrast to the fringe location of the subject land in Windsor.

The extent of the effect of heritage considerations upon the development potential of the subject land is a matter of marked dispute. The applicant relied upon the conclusiveness of a certificate issued pursuant to s 167 of the Heritage Act to show there is no justification for any allowance by reason of the possibility that the Heritage Council might, at some future date, give some direction or order. On the other hand the respondent claims that, as a matter of general policy, all land in Windsor is considered to have some heritage value and that no development can occur without a thorough investigation. The evidence in this regard ultimately points to a neutral result on the heritage impact, which appears to apply equally to all land in Richmond or Windsor.

Graham Edds, a conservation architect, concluded in favour of the applicant's argument that, as the property is not subject to a conservation order and is not located in a deemed conservation area, and further that any future development may not affect the already disturbed resource below ground, on heritage grounds there is no reason to prevent building development on the subject property.

On the other hand, Robert Staas does not consider the approach by Mr Edds would result in an adequate assessment of a development of the site. Given the sensitivity of the site and close proximity of significant heritage items affected by orders under the Heritage Act, Mr Staas believes that it would be prudent for council to seek the concurrence of the Heritage Office before approving any development on the subject site that may have the capacity to affect the setting of items. He further recommended that, before any work is undertaken on the car parking site, a full and thorough archaeological excavation be undertaken of the entire area under the direction of a competent historical archaeologist and that the history of the development of the site be fully recorded to provide a framework for the assessment of the archaeological remains. Any substantial archaeological remains of building structures should be kept and conserved in situ with appropriate interpretation and public access.

Irrespective of whether the Court accepts one view or the other, it is satisfied that any relevant development site in Windsor or Richmond may be subject to heritage and archaeological assessment before development can proceed and that any reasonable purchaser would take that into account. The Court sees no reason to differentiate between this site and any other site in Richmond or Windsor on that account alone.

Ultimately, the real issue between the parties is whether the sale of Lot 3 Macquarie Street Windsor, lately discovered by Mr Wood, is to be accepted as relevantly comparable or, alternatively, whether three subsequent sales of land at Richmond, transferred to the council for the purpose of car parking, support the applicant's ultimate claim pitched at $525 per square metre.

Comparison of the rates per square metre paid for commercial land in Richmond and Windsor show a higher rate, generally, in Richmond. The Court accepts that, having regard to the different category of commercial development in Richmond, sales in that town do not provide a reliable guide for the market value of commercial land in Windsor. Furthermore, the principal sales in Richmond relied upon by the applicant are each in their own way special sales, either to an adjoining owner or there was special value to the purchaser which caused it to pay above market price.

I have already pointed out that in his original analysis, Mr Wood relied on five sales to show rates ranging from $247 per square metre to $614 per square metre for sites comprising from 231m2 ($614 per square metre) to 2,864m2 ($247 per square metre). Obviously the rate decreases conversely to the increase in area. After making an allowance for the costs of an archaeological assessment before development, Mr Wood analysed the sale of 25 Macquarie Street to reveal a market value rate of $286.93 per square metre. Two other sales in George Street Windsor analysed at $247 per square metre and $249 per square metre to support his allowance of $300 per square metre as the market value of the subject land. This approach appears to be reasonable given that 25 Macquarie Street comprises an area of 3,182m2 and the above sale at $247 relates to land comprising 2,864m2. Although certain aspects of the sale at 25 Macquarie Street gave reason for doubt as to its reliability at first, Mr Wood has been able to satisfy the C

ourt after making further inquiries that the transaction was at arm's length. The sale is close to the subject land and in many respects is a superior site. The sales relied upon by Mr Verheyden are smaller and constrained by the presence of the existing heritage buildings. The criticism of the sale at 25 Macquarie Street by Mr Harrison has not been sustained and the Court is not prepared to take cognisance of the sales in Richmond upon which he relies.

The Court therefore determines that the underlying market value rate for the subject land at the date of resumption is $300 per square metre. Although this analysis involves accepting evidence of a sale subsequent to the date of resumption, this can be justified in the present case because there has been no relevant change in the circumstances of the market for commercial land in Windsor in the ensuing period. It now transpires that the sale of 25 Macquarie Street provides the only reliable evidence of the value of land in the immediate vicinity of the subject site to a purchaser wishing to develop the land for its highest and best use of commercial premises. In the absence of directly comparable sales at the date of acquisition, the Court is entitled to have regard to subsequent sales, provided it is possible to accept that the relevant vendor and purchaser would have reached the same conclusion at the date of resumption. The contract for the sale of 25 Macquarie Street bears a date of 11 June 1997 which is

the same date as the transfer. This unusual circumstance is explained by the fact that the purchaser exercised an option to purchase which puts the date when the price was agreed back further towards the acquisition date.

The effect of the right of carriageway is equivocal given that the land acquired extends beyond the extremity of the land it served, thereby leaving it partly dominated by the subject land itself. The election by the resuming authority to create new rights of carriageway does not, in my opinion, operate to bring a discount to bear on the market value of the land at the date of acquisition as Mr Wood claims. Mr Verheyden made no allowance in his original valuation. Although Mr Harrison did apply a discount of seventy five per cent upon the approximate area of 96m2 he understood to be affected by easements and rights of carriageway, he was not prepared to rely on the sale of 25 Macquarie Street, which the Court accepts. There were some buildings which required demolition upon the site at 25 Macquarie Street and it was also affected by easements to drain water and provision of services for car parking and a right of carriageway. It is reasonable to adopt $300 per square metre without a discount, thereby giving t

he dispossessed owner the benefit of resolving any doubt in its favour.

Parking

Loss of car parking utility for the occupiers of Fitzgerald House is claimed pursuant to s 55(f).

The spaces lost were part of a requirement of eighteen spaces set by council when it granted development consent for the use of Fitzgerald House. Eleven spaces were provided on site and a s 94 contribution was paid for the additional seven spaces. The Court accepts that four car spaces have been physically lost. The respondent contends that, because rights of carriageway have been created over the acquired land in favour of Fitzgerald House, there will be, in reality, no loss of parking facility. The weakness of this argument is that no formal agreement or guarantee for the use of the acquired land by the occupiers of Fitzgerald House for car parking purposes has been provided. The land now has the broader zoning of Business 3(a), although council still proposes to use it for parking. If a development application was lodged in respect of Fitzgerald House, it is reasonable to expect that the demand for parking could be assessed at eighteen spaces. This is so notwithstanding that informal inquiries made to coun

cil indicate the agreement may be as low as fourteen, based on one car space for every 40m2 of building area. The difference has not been clarified sufficiently for the Court to decide.

So far as Mr Verheyden is concerned, the development consent requirement for a contribution of $8,900 for each space is a measure of the value of the spaces lost. Mr Harrison attempted, unsuccessfully, to determine value by capitalisation of lost rent return. The spaces physically taken have been lost, irrespective of whether the requirement under council parking is fourteen or eighteen. However, the owner is to receive compensation for the very land previously occupied by those spaces. To allow the market value of the land assessed on its highest and best use, other than parking, as part of the compensation for acquisition is therefore arguably full compensation.

Based on that argument as advanced for the council by Mr McClellan QC, the physical spaces acquired can only have a separate value to the owner of the residue of the land if, in some way, the interest of that owner is not synonymous with the interest of the owner of the acquired land. Otherwise there is no distinct aspect of the loss which can be attributed to the loss of the benefit of the use of the land for parking associated with Fitzgerald House. Where the owner is the same person, to pay additional compensation to recognise the loss of car parking spaces would be to allow double compensation.

The Court agrees with the respondent that the claim for car parking loss as a decrease in the value of other land is captured in the declared highest and best use accepted for the site as business and not car parking. In those circumstances, the Court is satisfied that the claim for loss of car parking is double counting and will not be allowed on that account. The claim under s 55(f) of the Land Acquisition (Just Terms Compensation) Act 1991 has been wholly subsumed by the assessment of compensation under s 55(a).

Even if I am wrong to conclude that to allow the claim amounts to double counting, the calculation of the loss by the applicant is flawed if the council requirement is only to provide fourteen spaces. These can be accounted for by taking the credit for seven spaces paid for by the s 94 contribution and the seven spaces remaining on site. Furthermore, a full complement of fourteen or eighteen spaces can be accessed using the rights of carriageway created at the time of resumption.

Finally a closer reading of s 55(f) discloses that regard must be had to "any ... decrease ... in the value of any other land ... which adjoins ... by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired". It has not been demonstrated that the carrying out of the public purpose of parking on the acquired land has decreased the value of the adjoining land. The applicant, by basing its claim under s 55(f), shows that it has failed to appreciate its true effect. The provision of a public car park where the land is already being put to the purpose of parking has, in terms of the applicant's interest, at best, a neutral effect on value.

A claim for betterment represented by the value of the existing sealed surface of the land acquired fails for the same reason as the claim for the loss of parking utility, namely that compensation will be paid at the rate for the highest and best use, which is not parking.

Disturbance

This is a claim for legal and associated expenses incurred by the applicant.

After some necessary adjustments by agreement, the only dispute in respect of this claim relates to an allowance of twenty five per cent for care, skill and responsibility for the applicant's solicitor, Mr Coode. Mr Coode was criticised for not being able to show the allowance in the itemised accounts rendered. The claim for skill, care and responsibility while discretionary is, without doubt, a proper one. The only evidence before the Court is that of Mr Coode himself. He said the claim should be regarded as reasonable. In the circumstances, the Court will allow the full amount of this part of the claim pursuant to s 55(d) in the sum of $26,525.75.

Determination

The claim for compensation is determined as follows:-

Market value of land pursuant to s 55(a) 1,072m2 at $300/m2

$321,600.00

Disturbance pursuant to s 55(d)

$ 26,525.75

$348,125.75

Having regard to the way in which the proceedings were conducted, by both parties, and the way the evidence evolved, the question of costs is reserved.