Pastrello v Roads and Traffic Authority of New South Wales - [2000] NSWLEC 164

No judgment structure available for this case.

Land and Environment Court

of New South Wales

CITATION: Pastrello v Roads and Traffic Authority of New South Wales [2000] NSWLEC 164

PARTIES:
APPLICANTS:
Lorenzo Antonio Pastrello and Carla Liliana Pastrello
RESPONDENT:
The Roads and Traffic Authority of New South Wales

FILE NUMBER(S): 30005 of 1999

CORAM: Talbot J

KEY ISSUES: Compensation :- potential for highway service centre - assessment of affect on service station business

LEGISLATION CITED: Land Acquisition (Just Terms Compensation) Act 1991

CASES CITED:

DATES OF HEARING: 03/07/2000, 04/07/2000, 05/07/2000, 06/07/2000, 07/07/2000, 10/07/2000, 11/07/2000, 26/07/2000 written submissions

DATE OF JUDGMENT:
08/03/2000

LEGAL REPRESENTATIVES:

APPLICANTS:
Mr J J Webster (Barrister)
SOLICITORS:
Levy Peatman
RESPONDENT:
Mr J B Maston (Barrister)
SOLICITORS:
Crown Solicitor's Office

JUDGMENT:

IN THE LAND AND Matter No. 30005 of 1999
ENVIRONMENT COURT Coram: Talbot J
OF NEW SOUTH WALES Decision Date: 3 August, 2000

Lorenzo Antonio Pastrello and Carla Liliana Pastrello

v

The Roads and Traffic Authority of New South Wales

Respondent

REASONS FOR JUDGMENT

1. In about 1980 the applicants purchased approximately 184.3 hectares at Eagle Hawk Hill near Sutton on the Federal Highway situated just north of the NSW/ACT border, about 12 kilometres from the centre of Canberra. They proceeded to develop the site as a hotel/bistro and caravan park. Later, a service station was added to the development. The land is occupied by a tourist park known as the Canberra Holiday Retreat comprising 100 cabins and caravans, a hotel with some car parking, a Caltex service station, vacant land comprising mainly remnant bushland and an old open cut quarry site.

2. On 4 September 1998 the Roads and Traffic Authority of New South Wales (RTA) compulsorily acquired Lots 129 and 131 in DP 878557 having a total area of 2.67 hectares.

3. The caravan park was provided with road services and landscaping, an inground swimming pool and a tennis court.

4. Car parking for 25 cars was provided immediately in front of the hotel and a gravel car parking area for a further 75 cars was provided in the north east.

5. Northbound traffic on the Federal Highway had the benefit of a dedicated right hand turn lane and southbound traffic was provided with deceleration and acceleration lanes to facilitate ingress to and egress from the site.

6. Access was by way of sealed road directly from the Federal Highway with carriageways leading off to the service station in one direction and the hotel/bistro and caravan park in the other.

7. On 8 January 1999 the applicants commenced these class 3 proceedings pursuant to s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (“the Just Terms Act”) by way of an appeal against the RTA offer of compensation under s 42(2) of the Just Terms Act in the sum of $23,000, including an amount of $6,000 for legal and valuation fees as disturbance items separate from those agreed to be paid by the RTA in the sum of $179,000 to replace the office/administration centre, tennis court, metal screen fence, aviary and a water bore.

9. In response the RTA asserts that the area of land acquired had no market value and that there was no decrease in the value of the remaining land. Accordingly, it says no compensation should be paid pursuant to s 55(a) or s 55(f).

10. The claims for legal costs, valuation fees, setback of hotel extensions, reinstatement of road sign and the relocation of barbecue and fence are accepted. Cost has been incurred by the RTA in carrying out some car park works and light installation.

12. The applicants dispute that work allegedly carried out to reinstate the car park is satisfactory, and that a sum of $101,355.50 must be expended to reinstate the car park area. In addition, the respondent should pay $48,263 owing to contractors Kenoss Contractors Pty Ltd for part of the work already completed.

13. The applicants do not accept that the lighting work carried out by the respondent can be regarded as the equivalent of replacing the car park lights which they claim have been destroyed.

14. The dispute in relation to the decrease in market value of the remaining land primarily arises out of the conflicting projections for the volume of fuel sales before and after the road works are completed.

15. In addition, the applicants insist that the resumed land provided a feasible opportunity to develop a fast food restaurant or other commercial uses permissible in the zone. The respondent’s valuers paid no regard to this prospect.

16. It is convenient to deal with each of the factual issues separately so that the determination of those issues can be applied to the assessment of compensation.

Value of the land taken

17. The applicants’ valuer, Graham Jeffress, considers that the prime highway frontage location of the land taken represents the most valuable component of the whole property due to its commercial potential. After allowing 4,000 square metres within the area already leased to Caltex Oil and 1,000 square metres required to provide access to the residue of the site, he valued the remaining area of 21,702 square metres at $25 per square metre as potential commercial development land based on sales evidence. Recognising that development potential would not be realised until some time in the future he deferred the value of this land for a period of six years.

18. Although Mr Jeffress referred to evidence of negotiations between international fast food operator, McDonalds and the applicants in February 1995 to show $27.78 per square metre based on a capitalisation of the offered land rental by McDonalds for an area of 4,500 square metres, he primarily relied on sales evidence from the Goulburn area to support the level of $25 per square metre.

19. Mr Pastrello told the Court that he had discussions with officers from McDonalds dating back to 1994.

20. At the date of acquisition the land in question was the subject of a lease to Canberra Holiday Retreat Pty Ltd for a period of five years commencing on 9 October 1997. The conditions of lease gave the lessee a right of first refusal to buy the premises during the term of the lease or any extension thereof. The lessee also had the option to renew the lease for a further term of five years at the expiration of the initial term with further option to renew, thereby aggregating the possible term to 15 years. There is no right for the applicants as lessors to excise any part of the demised land from the lease during any of the terms. Mr Pastrello told the Court the lease was granted when the prospect of acquisition was known.

21. Correspondence between the applicants and McDonalds shows that following preliminary discussions which took place in late 1994, a formal offer was made by letter dated 17 February 1995 to lease approximately 4,500 square metres for the purpose of a dine-in and take-away food outlet. The offer was not accepted by the applicants. A second written offer generally in the same terms was made on 28 June 1995. Again this offer was not accepted.

22. A letter written to McDonalds by the RTA on 8 November 1996 makes it clear that the proposal for the upgrading of the Federal Highway in the vicinity of the tourist park was not settled at that time.

23. McDonalds also wrote to the applicants on 13 November 1996 when issues were raised with regard to future access arrangements from the highway and the date of commencement of the roadworks.

24. The first meeting between Mr Pastrello and Mr Lucchinelli, a representative of McDonalds, took place in the first half of 1994, probably April. A discussion took place on the site. After the meeting Mr Lucchinelli and Mr Pastrello consulted David Rouse, the Director of Environment and Planning at Yarrowlumla Shire Council. Mr Pastrello told the Court that Mr Rouse said there was no objection and there would be no problem with the development of a McDonalds restaurant on the land in front of the hotel.

25. According to Mr Pastrello, a further meeting took place with Mr Lucchinelli and Mr Doolan, an RTA engineer, late in 1994. Mr Doolan told the Court that his recollection was the meeting took place in early 1995 at a time when a preferred route for the relocated highway was in front of the applicants’ property with a suggestion that there could be an interchange at that point. Mr Lucchinelli denies that such a meeting took place in late 1994 or early 1995 and insists that he never met Mr Doolan until late 1995.

26. Although no witness could be categorical about the actual date of the meeting involving Mr Doolan, it is most probable that it did take place in early 1995 when changes to bring the highway closer to the subject property with an interchange where it is now were being discussed. The minutes of a public meeting on 15 February 1995 confirm that the general consensus at that meeting was that route option S, which is the one discussed above, was the most favoured at that time.

27. Unfortunately, a plan referred to in the letter from McDonalds dated 17 February 1995 cannot be located and no witness was able to recall seeing it.

28. The offers made by McDonalds in February and June 1995 were on the basis that the provision of access to the site for a McDonalds restaurant and compliance with any other conditions of development consent would be the responsibility of the owner of the land.

29. The offer to establish the McDonalds restaurant specified a lease for a term of 10 years and the creation of a separate lot containing sufficient area to accommodate the proposed restaurant.

30. Mr Lucchinelli says that the offer made by McDonalds was on the basis of the existing access. He did not concern himself with what it might cost McDonalds to fulfil conditions of development consent for access because that would be the responsibility of the owner of the land. He could not recall seeing any plans of the highway upgrade although Mr Pastrello says they were produced.

31. At the end of last year Mr Pastrello had a further informal discussion with a representative of McDonalds who indicated that the company would still be interested in developing the site under certain conditions. Mr Pastrello said the conditions involve major alterations to the service station which he believes will involve uneconomic capital expenditure.

32. A confidential document produced from the McDonalds file discloses that McDonalds had a positive attitude to the site during 1995. Two options for the location of the upgraded Federal Highway were being considered, namely, either at its then current location or 300-400 metres to the west. On the face of it, the document suggests it was prepared between February and April 1995.

33. Dr Graham Brisbane, Road Safety and Traffic Manager Southern Region for the RTA, has told the Court that had the proposal to realign the Federal Highway as a new dual carriageway not occurred and a development application had been put forward to establish a drive-in take away food outlet on the Pastrello land in September 1998, he would have considered the proposal as the introduction of a highway service centre on the land. The estimate provided to him of the likely cost of the work to ensure that road safety and network efficiency were not compromised is $1,395,625. The estimate is limited to works within the highway reserve and not on any private land.

34. In any event, he would not have recommended the site as a suitable location for such a development. He could not be persuaded to accept an alternative assessment of costs in the sum of $600,000 made by Allan Hasani, a qualified civil engineer retained by the applicants, because Mr Hasani contemplated construction of a pavement below the standard current for such works at the time of acquisition.

35. Given that a proposed developer would, in all probability, consult the RTA before proceeding with any proposed development of a McDonalds restaurant, they would have been aware of the views held by Dr Brisbane and that his views were likely to be upheld for the purposes of SEPP 11 by the regional development committee which he chaired in September 1998.

36. Following the gazettal of Yarrowlumla Local Environmental Plan in 1993 (“the LEP”), caravan parks, hotels and taverns were prohibited in zone No. 1(a) (General Rural). Clause 26 of the LEP made special provision for land which has frontage to a main road and required the council to ensure that access to development is provided by a road other than the main road, wherever practicable, and that the affect on the safety and efficiency of the main road and visual amenity is considered.

37. When the LEP was amended on 13 March 1998 service stations were added to the category of prohibited uses.

38. At the date of resumption further amendments to the LEP were under consideration. These amendments were made on 18 December 1998. The effect was that council could not consent to carrying out development on the subject land for the purpose of refreshment rooms where the land had direct access to a main road or a road connecting to a main road if access to the land was within 90 metres of the alignment of the main road.

39. In a written response to an inquiry directed to him by town planners acting in the interests of the parties for the purpose of these proceedings, David Rouse confirmed that in discussions with Mr Pastrello and a representative of McDonalds between 1994 and 1996 he indicated that he saw the development of a McDonalds type drive-in take away food outlet to be compatible with the then existing development.

40. Mr Rouse also advised the respondent’s consultant town planner, Mr Ian (Jock) Palmer that pursuant to the provisions of Yarrowlumla LEP 1993 (as amended) council would consider a McDonalds restaurant as having a definition separate and distinct to that applicable to a refreshment room. However, he noted that the development of a restaurant within a rural residential 1(d1) zone, whilst permitted development, would need to address, particularly, the issues of traffic generation and compatibility with the objectives of the zone having regard to amenity. The redevelopment of the subject land to include a McDonalds restaurant would be considered on its merits taking into account the existing adjoining service type land use.

41. Mr Rouse separately advised the applicants’ town planner, Mr Gary Shiels, that subject to the issue of traffic generation being addressed and a study proving the impact of a McDonalds on the immediate area would be minimal, he would support consideration of a modification to the zoning in the event that a McDonalds type of food outlet was shown to be inconsistent with the zone objectives.

42. Notwithstanding the opinion of Mr Palmer that, due to the constraints imposed by way of restrictions on tree clearing along the frontage of the subject land, development setbacks, access setbacks along the service access road from the Federal Highway and the general prohibitions contained in the LEP on a broad range of tourist, recreational, commercial and service related land uses, he considers it highly unlikely that approval for such a development would have been gained, the Court is satisfied, nevertheless, that if a purchaser had made the necessary prudent inquiries it would have been informed that there was a reasonable prospect that a McDonalds type development may have been approved. That would be irrespective of whether the proposed use was permissible under the provisions of the LEP or relied on existing use rights.

43. However, the inquiries would also have revealed that the conditions of development consent reflecting the requirements of the RTA would result in a requirement for works to be carried out at the cost of the developer, or the owner. These costs were likely to be significantly in excess of $1,300,000.

44. Although the evidence concentrated on the prospect of the development of a McDonalds fast food outlet, the same considerations would have arisen in relation to any traffic generating commercial development inconsistent with the objective of the zone to prevent the establishment of traffic generating land uses in the vicinity of main roads.

45. Mr Jeffress used the rental of $10,000 escalating to an annual rental of $20,000 in year five offered by McDonalds to establish a value of around $125,000 or $27.78 per square metre for an area of 4,500 square metres.

46. The primary sales relied upon by Mr Jeffress were two sales of vacant land at Goulburn comprising 481 square metres and 1.122 hectares which, when analysed, respectively yield $24.50 per square metre and $19.60 per square metre. Mr Jeffress used these sales to derive a rate of $25 per square metre for land close to the highway. The potential uses he had in mind included those permitted under the LEP, such as a rural garden centre.

47. He applied the rate of $25 per square metre to 21,702 square metres to derive $542,550 for the whole of the residual land area available for commercial uses after setting aside 1,000 square metres for access to the remainder of the site and allowing for the 4,000 square metres within the service station area.

48. By deferring the amount of $542,550 for six years at 10 per cent it gave Mr Jeffress a present value of $300,000 for the land taken. The deferral is to take account of all the risks associated with buying the land and dealing with access and planning problems.

49. The respondent’s valuer, Mr Dorrian, does not consider that it is appropriate to analyse sales such as those at Goulburn per square metre because they are generally purchased on the basis of a total price.

50. He further notes that the applicants’ property has not been put to a lesser use as a result of the acquisition. Additionally, any buildings and other improvements that have been affected have been reinstated by the RTA.

51. He did not value the improvements because the only thing lost is a piece of land, the RTA having reinstated the uses.

52. Mr Dorrian values the commercially used 15 hectare section of the applicants’ land as one parcel and then compares it to the commercially used 12.33 hectares left after the compulsory acquisition. This exercise was conducted on the basis that the reduction in the area of the applicants’ land by 2.67 hectares is totally offset by the benefits accruing to the remaining 12.33 hectares of the commercially used land from improved site visibility, improved access, improved signage and improved potential as a result of the roadworks completed by the RTA.

53. The main sale relied upon by Mr Dorrian was the purchase of an area of 8 hectares at Yass which is now developed as an Ampol service station, a McDonalds outlet and a KFC facility, for $1,300,000.

54. He says that sale and others listed by him suggest that a highway service centre site such as that at Eagle Hawk Hill, being of sufficient size to accommodate roadside uses including a service station, a roadhouse, holiday accommodation and a hotel would have a value within the range of $1,300,000.

55. Mr Dorrian recognised in cross-examination that the relocation of the reception area for the caravan park, car parking, tennis courts, and other fixtures uses an area that otherwise could have been available for development. However, in his opinion, the remaining land after acquisition was worth more, or at least the same, as the total holding before acquisition.

56. Mr Webster cross-examined Mr Dorrian and attempted to persuade him that because the land taken was at the front of the property it was more valuable than the land remaining. While acknowledging that generally the front portion of a property is more valuable than the land at the rear, Mr Dorrian stated that in the present case it is necessary to look at the total parcel, rather than attempting to break the property up and value it in sections according to proximity to the highway.

57. Mr Dorrian took no account of any impact on the service station business as he did not consider that the owner of the land suffered a loss of rental for the service station as a result of the compulsory acquisition. However, for the purpose of comparing the rental return from the land at Yass, Mr Dorrian took account of $1,100,000 expended on the Yass site in addition to the purchase price of $1,300,000. By adjusting the rental returns from the Yass property he derived a capital value of $1,300,000 for the subject property.

58. Put in plain and simple terms, Mr Dorrian’s proposition is that the value of the improvements on the subject land did not change following acquisition because the RTA reinstated any improvement situated in the resumed area elsewhere on the land. He therefore concentrated on land value.

59. Ultimately, he says that the land was a more attractive investment after the acquisition than before, mainly because of the improved visibility and access. In addition, in his opinion the property will be more attractive when the roadworks are complete.

60. He relied on the opinion of Robert Aubin, furnished in support of the respondent’s case, to the effect that there would be no loss of income for the service station operator directly as a result of the works or the new traffic arrangements.

61. Whether the Court accepts Mr Dorrian’s opinion is therefore dependent to a large extent upon the Court’s determination of whether the rental value of the Caltex service station site has depreciated.

62. I am not convinced there was a realistic prospect of the applicants meeting the expectations of McDonalds and the RTA.

63. Irrespective of whether McDonalds went ahead, Mr Jeffress has assumed the whole of the land taken, apart from the access area and the part included in the service station lease, would attract a price of $25 per square metre. Mr Jeffress took no account of the capital cost associated with providing access to the site as required by the RTA and expected by McDonalds. This brings the feasibility of any commercial development into serious question. Furthermore, the Court agrees with Mr Dorrian that a purchaser would approach the purchase of the site on a total price basis.

64. After taking into account the whole of the evidence, the Court agrees with Mr Palmer that the highest and best use of the acquired land, including that part contemplated for use as a McDonalds restaurant, would have been for uses ancillary to, or supportive of, the existing hotel, caravan park and service station and would typically comprise overflow car parking, recreational facilities, signage and landscaping.

The affect on rental value of the Caltex service station site

65. Mr Pastrello believes that approximately 55 per cent of trade in fuel comes from Canberra and 45 per cent comes from cars travelling south except in winter when more trade would come as a result of people travelling south to the snow fields. This split has been confirmed by a survey taken at the site in April/May 2000 and at the Caltex Service Station Sutton in June 2000.

66. At the date of resumption Caltex Oil occupied the service station under a lease for a five year term expiring 5 December 1998 with an annual rental of approximately $400,000 per annum. The land the subject of the lease was Lot 1 DP805794.

67. The consensus is that the rental paid by Caltex at the date of acquisition was above the market rental value of the property and could not be sustained on renewal of the lease.

68. The parties rely on conflicting opinion evidence to establish the market rental for the service station before and after the compulsory acquisition.

69. Mr Jeffress adopted a market rental of $250,000 per annum before acquisition. By contrast, Mr Aubin calculated the market rental before resumption at $220,800 based on sales of 5,520,000 litres per annum at 4 cents per litre derived from the evidence of comparative head lease rentals at other sites. The market rental adopted by Mr Jeffress reflected 4.5 cents per litre per annum.

70. Caltex Oil agreed to pay a rental of $200,000 per annum for the one year to December 1999. At the expiration of that term the company offered $165,000 per annum for five years. This offer was rejected and the service station business is currently conducted by Mr Pastrello’s son. The $200,000 per annum for one year was a rental agreed to cover the construction period.

71. Mr Henk Mossel considers that the $200,000 per annum rental paid by Caltex is between $25,000 and $50,000 lower than the market rent for a new 5-10 year lease of the subject site before making any allowance for loss of sales volume due to the road changes.

72. Although Mr Mossel has no formal valuation qualifications he has been associated with the petroleum retail marketing business for 28 years. Between 1983 and 1997 he was employed by Mobil Oil Australia in the development of its network including acquisition, development, upgrading and divestment of retail sites. He retired from the company’s employ in 1997 and since then has acted as a private consultant to the industry generally.

73. Mr Mossel considers there will be a 30-35 per cent downturn in the overall performance of the site as a consequence of the changed access arrangements. Mr Jeffress used the rental offer of $165,000 per annum made by Caltex as the market rental after acquisition. This represented a return of 4.5 cents per litre per annum based upon estimated annual fuel sales of 3,800,000 litres. Mr Mossel believes that the $165,000 per annum offer by Caltex is indicative of the expected negative impact of the road changes. He estimates a 10 per cent loss of southbound trade and a 50 per cent loss of northbound trade after completion of the roadworks, thereby reducing the total volume of sales to 4,160,000 litres per annum which at 4 cents per litre produces an annual rental of $166,400.

74. In contrast to the applicants’ witness, Mr Aubin split the trading performance before resumption at 75 per cent draw from southbound traffic and 25 per cent draw from northbound traffic. As I have said, he calculated an annual rent before resumption at $220,800 based on sales of 5,520,000 litres per annum at 4 cents per litre.

75. Mr Aubin reviewed the critical elements of the service station operation as they applied to the subject site before and after the roadworks.

76. In particular, the composite sign for the service station will in future be seen from a point 1.6 kilometres travelling in a southerly direction by comparison to the 500 metres from the site on the old highway. He says visibility has been improved for northbound traffic from approximately 500 metres to 750 metres. This enhanced visibility improves the decision time for motorists to purchase fuel.

77. Mr Aubin also considers that accessibility to the facility will be improved by the roadworks. Although it will now be necessary for northbound traffic to use the overbridge, that is a far safer and more attractive arrangement for motorists than the previous road design where a right hand turn storage lane was provided in the centre of the road.

78. Following a further site inspection on 22 June 2000 and subsequent further research and analysis after making his initial report, Mr Aubin reconfirmed his opinion that the proposed roadworks will enhance the subject facility by between 15 and 20 per cent.

79. Mr Mossel says that similar situations at comparable service station locations clearly suggest that performance suffers as a result of the loss of direct access to and from the main carriageway. He refers to sites at Port Macquarie in NSW and Oxley in Queensland as instances where volumes were affected by road changes.

80. In his oral evidence Mr Aubin accepted that the 75/25 split used by him for his original calculations as the situation before acquisition was incorrect and that the 50/50 split adopted by the applicants’ witnesses was correct. He adopted the daily traffic count of 13,300 vehicles past the site published in the RTA’s EIS. The figure of 13,300 was subsequently identified as the June 1994 count.

81. His calculation of the market rental in the “before” situation reflected actual sales at the site. In the “after” situation he made a projection that the draw from northbound traffic would be affected by improved access to a service station at Watson on the outskirts of Canberra. He was not prepared to concede that using a base of 13,300 vehicles per day four years before the acquisition had an ultimate impact on the accuracy of his calculations of future sales. In any event, Mr Mossel made his projections on the same basis. When Mr Aubin adjusted his calculation in the after situation by taking the split of the draw as 50/50 the projected rental was reduced from $257,804 to $253,748, based on a rate of 4 cents per litre.

82. Using Mr Mossel’s predictions and accepting the actual rent paid by Caltex, Mr Jeffress derived $1,118,881 as the capitalised value of the site at 13 per cent in perpetuity deferred for one year. He then allowed the first year’s rent of $200,000 less an allowance of $5,000 for future replacement and management to determine the after valuation of $1,313,881. Mr Aubin capitalised the future rental of $253,748 at 12 per cent to value the site at $2,115,000.

83. The difference in the before value determined by the two valuers is not so dramatic. It is within an acceptable range to be treated as relatively the same for present purposes. Capitalising the annual net rental of $245,000 at 12 per cent, Mr Jeffress determined a value of $2,040,000, whereas Mr Aubin capitalised the annual rental of $220,800 at the same rate for a value of $1,840,000.

84. Mr Mossel draws what is prima facie a valid distinction between the operation of highway service centres which are integrated developments with major high profile fast food operations sharing the facility, located on a franchise section of the highway they address, and the older type of service station such as the subject site offering limited facilities close to the city limits.

85. In cross-examination Mr Mossel agreed that the southbound visibility had been significantly enhanced by the roadworks, but he would not accept that the provision of the interchange is an advantage for northbound traffic.

86. The Court has not been able to devise any useful assistance from Mr Mossel’s comparison to the Port Macquarie site because it was a new site and therefore no relevant comparison can be made between before and after the completion of the roadworks.

87. The changes at Oxley occurred about 15 years ago when the highway was duplicated and the surface of the road was lowered leaving the existing service station on top of a cutting in a residential area, thereby transforming the site from a highway outlet to a site predominantly drawing its custom from the local area. Any comparison to the subject site is not readily apparent to the Court.

88. The applicants’ case is that landscaping proposed alongside the highway leading up to the interchange will obscure the visibility of the site for approaching motorists. The applicants’ case in this respect is not convincing. Although obviously there will be some landscaping, some of which will be in the form of open woodland, it is unlikely to totally obscure the site over the entire approach distance. Furthermore, the composite road sign and other signage will alert motorists to the presence of the service station. Although Mr Aubin could accept that the landscaping may have an impact on part of the visibility of the service station, there would be no impact on the composite sign. In any event, there is no definitive description of the proposed landscaping available at this time apart from the conceptual presentation in the RTA’s EIS.

The determination of the claim under s 55(a) and s 55(f)

89. Mr Dorrian’s valuation brings about the confusing result that whereas he values the whole of the commercial land including the service station, hotel and caravan park sites without regard to improvements consistently at $1,300,000, the respondent’s other valuer, Mr Aubin, places an improved value of $1,840,000 on the service station alone in the before situation and $2,115,000 after the resumption. Mr Jeffress values the whole site including improvements at $6,850,000 before acquisition and $5,900,000 afterwards, including $2,040,000 and $1,118,881 respectively as the improved value of the service station site.

90. Although both Mr Mossel and Mr Aubin have a long term association with the fuel retail business the Court prefers the evidence of Mr Aubin, if for no other reason than that he is a qualified valuer with the necessary expertise to apply his professional experience to the analysis required to make a formal valuation. Furthermore, the two particular sites at Port Macquarie and Oxley, relied upon by Mr Mossel, do not provide the basis for a conclusion that the roadworks will necessarily bring about a reduction in the turnover of the applicants’ service station business after the road construction is finalised.

91. Even though Mr Aubin made some erroneous assumptions in relation to the traffic count and the split of the draw to the subject site, he was nevertheless able to accommodate these changes and reach a comparable conclusion.

92. Although he has gained a broad cross-section of expertise in the valuation of all forms of real estate, Mr Jeffress does not claim any specific experience in the valuation of service station properties whereas Mr Aubin, during his career has valued in excess of 500 sites and is presently the principal consultant valuer to the Shell Company of Australia.

93. The decision by Mr Jeffress to reduce the rent to $165,000 in the after situation was based upon the rental offered by Caltex, confirmed by the opinion of Mr Mossel. Mr Aubin has carried out a critical analysis to support his conclusion.

94. No direct explanation has been given for the Caltex decision to offer a reduced rental after December 1999.

95. Mr Aubin explained that the retail fuel market in Canberra has experienced significant upheaval over the past five years with the introduction of a number of independent retailers including Woolworths, Gull, Burmah and Liberty.

96. Mr Aubin also told the Court natural fuel margins fell substantially in this period and although the market has settled, the margins remain low. Furthermore, he suggested that the proximity of the Ampol service station at Watson could have influenced Caltex, as the owner of Ampol, in its decision to offer a lower rental for the subject site.

97. Mr Aubin says that in his opinion Caltex would have favoured the newer facility of the Watson site over Eagle Hawk Hill. In the absence of any competing bid, Mr Aubin states the Caltex negotiations must be regarded as not being reflective of the open market.

98. Finally, the fact that the subject site needed upgrading leads Mr Aubin to the conclusion that this would have been an issue in determining the rental offer from Caltex.

99. Mr Mossel agreed that market rental for service station sites has dropped since the applicants entered the lease with Caltex, which expired on 5 December 1998. This has occurred mainly because of the entry of new players in the market such as Liberty, Burmah and Woolworths.

100. For the reasons outlined above, the Court prefers the evidence of Mr Aubin and therefore determines, on the basis of that evidence, the market rental value of the service station site was not reduced as a consequence of the compulsory acquisition or the relocation of the Federal Highway.

101. There is considerable force in the respondent’s argument that the loss of the land taken has not materially affected the commercial value of the overall site comprising the service station, hotel and caravan park. However, it must be recognised that it has been necessary to utilise, more or less, equivalent areas elsewhere on the land to allow for reinstatement of facilities. That land is no longer available to the applicants for other purposes.

102. The original offer of compensation made by the RTA was supported by a valuation of the resumed area of 2.67 hectares by McCann and Associates at $20,000 per hectare, which amounted to $53,400. This opinion took account of the use of the land as a buffer, thereby giving it a higher value than the surrounding comparable zone 1(d)(1) land. I agree with Mr Webster that the valuation can be accepted as the only evidence of the value of the land taken on the basis that it had a rural type of value.

103. Mr Aubin reached the conclusion that the service station site increased in value. No witness suggested the balance of the land suffered a loss in value. Nevertheless, it is not appropriate to offset any perceived increase in value of the service station against the market value determined by McCann and Associates in circumstances where the opinions are so widely diverse and conflicting.

104. The applicants have physically lost 2.67 hectares and the Court accepts that it is just they be compensated for that loss on the basis that consistent with Mr Palmer’s view, the land provided utility to the owners by providing a passive buffer zone between the highway and the commercial activities on the land. It is not appropriate to attribute a commercial site value based on comparable sales as Mr Jeffress attempted to do.

105. The Court determines compensation for the land taken at market value in accordance with s 55(a) at $53,400. No compensation is allowed in respect of the claim made pursuant to s 55(f).

Disturbance items

Car park lights

106. The undisputed evidence is that there were 13 lights in the existing car park, five of which were of the tall street light type. None of the tall lights are now functioning, three of them are lying on the ground. The remaining lights were smaller perimeter lights, none of which have been replaced.

107. The respondent seeks to take credit for new lighting installed near the caravan park reception office and along the access road. In the after situation the reception office has been relocated away from the car park area. The reception area and hotel are now serviced by different service roads. No perimeter lighting has been provided for the car park in its new location.

108. The applicants claim the cost of 13 car park lights to place them in the same position in the after situation as they were in the before situation. The cost of $19,780 is not in dispute. The respondent merely seeks an allowance for the equivalent of five replacement lights in the sum of $8,000.

109. The Court is satisfied that the applicants will incur a financial cost of $19,780 in replacing the lighting for the car park to the full extent claimed.

Car park

110. The respondent has already accepted responsibility for three items of reinstatement work at a total cost of $46,448. It is prepared to acknowledge a further claim by the contractor, Kenoss Contractors Pty Ltd in the sum of $48,263 for work already completed.

111. The applicants claim a further $101,355.50 as a financial cost that they will incur to bring the car park area up to a standard which makes it capable of being used for cars and buses. The RTA disputes the necessity for any additional work of a substantial nature.

112. The Court agrees that a comparison of the materials and finished surface with the existing car park before the compulsory acquisition is not the appropriate test. What is required is that the applicants can make the same use of the land for car parking at the alternative site as the use they could make of the original car park.

113. Whereas the resumed site was reasonably level, the alternative site by comparison has a significant drop in height from one side to the other. The new car park site demands a more stable surface with adequate drainage and retention works. The quote for these works at $101,355.50 is not challenged.

114. The Court will allow the amount of $101,355.50 as a disturbance cost.

Replacement of a water bore

115. The applicant alleges that there were two operational water bores which provided a source of fresh water prior to acquisition, although one was not functioning at the date of acquisition. Mr Pastrello says the latter bore was in existence and only needed to be recleaned to make it operational. It had been sunk many years ago and had been cleaned three years ago.

116. The respondent admits that it is liable for the replacement of the bore which was actually working at the date of resumption but says it is difficult to appreciate how the loss of an unused and unlicensed bore hole can be regarded as compensable as a direct and natural consequence of acquisition.

117. Mr Pastrello explained that the bore provided an alternative supply in dry times and was therefore kept in reserve. He was not able to furnish proof of its viability when asked by the RTA because by then the site had been destroyed by a bulldozer working on the road construction.

118. Although the bore was unlicensed, it nevertheless can be recognised as having some potential for use and added value to the site as a facility to provide water in dry times.

119. The Court is prepared to make the added allowance for disturbance in respect of this item in the sum of $10,000.

Summary of disturbance items allowed by the Court

$10,000

121.

Summary of disturbance items the subject of agreement after commencement

$10,000

Total compensation

$261,267.50

Costs

124. No argument has been presented on the costs issue and it will be necessary for the parties to consider their respective positions in the light of this judgment and the reasons.

125. The question of costs is reserved.

Citations

Pastrello v Roads and Traffic Authority of New South Wales [2000] NSWLEC 164

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CITATION:	Pastrello v Roads and Traffic Authority of New South Wales [2000] NSWLEC 164
PARTIES:	APPLICANTS: Lorenzo Antonio Pastrello and Carla Liliana Pastrello RESPONDENT: The Roads and Traffic Authority of New South Wales
FILE NUMBER(S):	30005 of 1999
CORAM:	Talbot J
KEY ISSUES:	Compensation :- potential for highway service centre - assessment of affect on service station business
LEGISLATION CITED:	Land Acquisition (Just Terms Compensation) Act 1991
CASES CITED:
DATES OF HEARING:	03/07/2000, 04/07/2000, 05/07/2000, 06/07/2000, 07/07/2000, 10/07/2000, 11/07/2000, 26/07/2000 written submissions
DATE OF JUDGMENT:	08/03/2000
LEGAL REPRESENTATIVES:	APPLICANTS: Mr J J Webster (Barrister) SOLICITORS: Levy Peatman RESPONDENT: Mr J B Maston (Barrister) SOLICITORS: Crown Solicitor's Office