Sandhurst Trustees Ltd v Roads and Traffic Authority of NSW

[2006] NSWLEC 243

Land and Environment Court

of New South Wales

CITATION:

Sandhurst Trustees Limited v Roads and Traffic Authority of NSW [2006] NSWLEC 243

PARTIES:

APPLICANT:
Sandhurst Trustees Limited

RESPONDENT:
Roads and Traffic Authority of NSW

FILE NUMBER(S):

30132 of 2005

CORAM:

Biscoe J

KEY ISSUES:

Compensation - Compulsory Acquisition of Land :- strip of land resumed for road widening purposes - before and after valuation method applied – land situate in proposed Town Centre – development potential of land

LEGISLATION CITED:

Land Acquisition (Just Terms Compensation) Act 1991 ss 54, 55 and 56

CASES CITED:

Constantino v Roads and Traffic Authority of NSW (2004) 135 LGERA 365;
EJ Cooper and Son Pty Ltd v Baulkham Hills Shire Council (2003) 131 LGERA 226;
Gosford Shire Council v Green (1980) 48 LGRA 201;
Hordern v Sydney Municipal Council (1940) 14 LGR (NSW) 200 ;
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640;
Kenny and Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413;
Liverpool City Council v Commonwealth of Australia (1993) 81 LGERA 405;
Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendant of Crown Lands (Trinidad) [1947] AC 565;
Port Macquarie West Bowling Club Ltd v The Minister [1972] NSWLR 63;
Realty Corporation Ltd v Commissioner for Main Roads (1940) 14 LGR (NSW) 204;
Redeam Pty Ltd v South Australian Land Commission (1977) 17 SASR 508;
Roads and Traffic Authority (NSW) v Muir Properties Pty Ltd (2005) 143 LGERA 192;
Royal Sydney Golf Club v Federal Commissioner of Taxation (1957) 97 CLR 379;
Spencer v The Commonwealth (1907) 5 CLR 418· Sydney Harbour Foreshore Authority v Walker Corporation (2005) 141 LGERA 243;
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2004) 134 LGERA 195;
Woodbury v Wyong Shire Council [2006] NSWLEC 48

DATES OF HEARING:

27-31/03/2006

 
DATE OF JUDGMENT: 

05/10/2006

LEGAL REPRESENTATIVES:

APPLICANT:
Mr S Flanigan, barrister
SOLICITORS
Kemp Strang

RESPONDENT:
Mr P Tomasetti, barrister
SOLICITORS
Corrs Chambers Westgarth

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

BISCOE J

10 May 2006

30132 of 2005

SANDHURST TRUSTEES LIMITED v ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES

JUDGMENT


HIS HONOUR :

A. INTRODUCTION
1 This is a claim under the Land Acquisition (Just Terms Compensation) Act 1991. It arises by way of an objection against the amount of compensation offered to the applicant in respect of the compulsory acquisition by the respondent of part of the applicant’s land. This land is located at 28 Burns Road, Kellyville in the local government area of Baulkham Hills Shire Council. The compulsory acquisition was effected by notice published in Government Gazette No 179 on 12 November 2004.

2 The major issue in the case concerns the effect of the proposed North West Rail Link on the development potential, and hence the market value, of the acquired land as at the acquisition date.

3 Sections 54, 55 and 56 of the Act relevantly provide as follows:
54 Entitlement to just compensation

(1) 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.


……

55 Relevant matters to be considered in determining amount of compensation

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

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


……

(d) any loss attributable to disturbance

…...


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

56 Market value

(1) In this Act:

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

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

(b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and

(c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law.


4 In Further Amended Points of Claim filed on 21 February 2006, the applicant claimed $839,492.00 comprising:

· $535,950.00 in respect of the market value of the land under s 55(a) of the Act.
· $59,492.00 in respect of loss attributable to disturbance under s 55(d).
· $244,050.00 in respect of the decrease in value of the applicant’s residual land under s 55(f).

5 In Points of Defence, the respondent denied that the applicant was entitled to the compensation claimed and contended that the compensation payable was $269,090 (GST exclusive) comprising:

· $260,000 in respect of the market value of the land under s 55(a);
· $9,090 in respect of loss attributable to disturbance under s 55(d);
· Nil in respect of the decrease in value of the applicant’s residual land under s 55(f).

6 The s 55(d) loss attributable to disturbance claim has been agreed between the parties at $15,973.51.

B. THE SUBJECT LAND
7 The whole of the applicant’s land, of which the acquired portion forms part, was formerly known as Lot 3 in Deposited Plan 241547, Folio 3/241547. It was rectangular in shape, with a frontage to Burns Road of 73.15 metres and a slightly wider rear boundary of 83.64 metres. It had a depth of 261.49 metres on the eastern boundary and 260.55 metres on the western boundary and an area 20,230 square metres. At the acquisition date, there was a two storey brick and tile residence with a double garage and a swimming pool on the land.

8 The acquired land is known as Lot 47 in Deposited Plan 1071715, Folio 47/1071715. It is a strip along the Burns Road frontage with a depth of 16.2 metres on the eastern boundary and 18.2 metres on the western boundary. It has an area of 1,191 square metres. The acquisition included all of the brick fence located on the Burns Road frontage and part of the landscaping and driveway.

9 The applicant’s land is located on the southern side of Burns Road, 170 metres to the east of its intersection with Old Windsor Road. From the west at this point, Sunnyholt Road also intersects with Old Windsor Road. This is a major intersection, providing access to Blacktown and Baulkham Hills and is approximately 38 kilometres north-west of the Sydney Central Business District by road.

Balmoral Road Release area

10 The acquired land is within an area known as the Balmoral Road Release Area ( BRRA ) comprising 410 hectares between Old Windsor Road and Windsor Road. It contains a mix of dwellings on small rural holdings (around 0.5 hectares) and other rural uses such as market gardening and grazing. Norwest Business Park is to the south and Castle Hill Town Centre is to the east. It is surrounded by recently developed and developing residential areas in the suburbs of Kellyville, Baulkham Hills, Glenwood, and Stanhope Gardens.

11 The BRRA has received widespread media attention since about 2001 and is referred to anecdotally as the “ hole in the doughnut ”. The metaphor suggests that all of the once rural lands surrounding the BRRA have been developed for residential housing and that the subject precinct is the missing piece in this logical rezoning process.

12 In 1998 the State Government identified the BRRA for future urban development under its Urban Development Program to enable higher density development to occur. An additional 10,000 residences were being planned. As at November 2002 there were approximately 230 landowners in the BRRA.

Zoning

13 At the acquisition date the land was zoned Rural 1(a) pursuant to the Baulkham Hills Local Environmental Plan 1991. Subdivision is permitted in this zone with a minimum allotment size of 40 hectares.

C. PURPOSE OF THE ACQUISITION
14 The gazetted compulsory acquisition notice stated that the acquisition was “ for the purposes of the Roads Act 1993 ”. The evidence established more specifically that the acquisition was for the purpose of the construction of a bus only transitway linking Parramatta and Rouse Hill. This forms part of the North-West Transitway ( Transitway ), a joint initiative of the Department of Planning (formerly Transport NSW) and the respondent. As the construction of the Transitway constituted the public purpose for which the land was acquired, it has to be ignored for the purposes of assessing the market value of the land pursuant to s 56(1) of the Act. This came to be common ground during the course of the hearing.

D. THE PROPOSED NORTH WEST RAIL LINK AND BRRA PLANNING
15 The acquired land is very close to the location of a proposed train station on the yet to be constructed North West Rail Link ( NWRL ) which is unrelated to the Transitway. As at the acquisition date, no commitment had been given by the State Government to the funding of construction of the NWRL. However, by 20 July 2004 the Minister of Infrastructure, Planning and Natural Resources had indicated a commitment to acquire the land within the rail corridor.

16 In 1998 the State Government released its blueprint “ Action for Transport 2010: An Integrated Transport Plan for Sydney ” which identified the extension of a planned rail link, known as the North West Rail Link, to Castle Hill by 2010 and Rouse Hill by 2020.

17 In 2000 the Department of Urban Affairs and Planning published a document which indicated a growth potential of approximately 4000 lots within the next five years in the area described as the Balmoral Release.

18 In 2001 the Minister for Planning put out a media release “ New Land to House Sydney Families ” accompanied by a map entitled “ Major Growth Areas in Western Sydney ” which identified the BRRA with a potential for 4000 lots.

19 In March 2002, the NSW Government published the North West Rail Link Overview Report “ Connecting Communities ”, to provide information about the proposed NWRL and encourage community debate and input into the early planning process. It noted that for financial reasons the 2010 timeframe for the NWRL had been deferred and that the focus of the project was currently on the protection of a rail corridor for the NWRL. It stated that “the protection of the corridor represents a major commitment to the Rail Link by the NSW Government”. Maps therein provided an indication of the proposed alignment of the North West Rail Link and indicated the proposed location of railway stations at Burns Road, adjacent to its intersection with Old Windsor Road; and at Mungerie Park to the north. The report stated at p 17:

The Burns Road and Sunnyholt Road intersection with Old Windsor Road is the crossing point of two of the proposed rapid bus transitways being provided in the North West. The proposed site for the Burns Road station coincides with this location and hence maximises the opportunity for interchange between modes and future transit supportive land use Ddevelopment. Details on the exact location and station facilities are being discussed with Baulkham Hills Shire Council as part of its planning studies for the Balmoral Road release area. There are opportunities for this station to realise land use integration benefits.

Mungerie Park Town Centre would be the terminus station for the North West Rail Link. The proposed Mungerie Park station would be in the heart of the new town centre.

20 The Overview Report also stated:
The overall process for including the proposed Rail Link into local planning involves:
· proposing a preferred alignment for the Rail Link for discussion (the subject of this Overview Report );
· direct consultation with major stakeholders and the three Councils regarding opportunities for better land use outcomes and urban design as a result of the proposed Rail Link;
· consulting with the general public to understand opinions on the details of the preferred alignment;
· refining the alignment based on further technical investigations and the outcomes of initial community consultation; and
· further consultation with the key Councils and inclusion of necessary amendments of the local planning instruments to include a corridor where necessary.
CORRIDOR RESERVATION.

The next critical step in the planning process is the reservation of the corridor in local planning instruments. This is essential to ensure that development around the Rail Link and particularly the stations progresses in an orderly fashion while the Rail Link is still a proposal. This would allow an easier and cheaper construction process and less long term impacts on nearby properties.

The process of corridor reservation will be based on detailed and on-going liaison with the Councils. The Rail Link corridor would then be reserved where necessary on relevant Local Environmental Plans and other planning instruments of Hornsby, Baulkham Hills and Blacktown Councils.


21 The Overview Report also identified the following key benefits of its preferred station location at Burns Road:
· outstanding opportunity for a comprehensively designed residential area focused on public transport;
· direct interchange with the Mungerie Park – Parramatta and Castle Hill – Blacktown rapid bus transitways;
· excellent pedestrian access opportunities to the station; and
· likely strong residential patronage catchment.

22 In October 2002, in response to submissions on the Overview Report, the Transport Minister announced further studies to progress the development of the NWRL, focussing on the resolution of the alignment through the BRRA.

23 In November 2002, the North West Transitway Environmental Impact Statement was prepared. It stated:

Baulkham Hills Shire Council is in the process of developing a Local Environmental Plan (LEP) for the Release Area [ie the BRRA] and planning for the proposed North-West Rail Link is also being integrated with the planning for the Balmoral town centre.

…..

Subdivision and urban development within the Balmoral Road Release Area is likely to commence within the next two years. The intersection of the two T-way links within this Precinct, along with the potential location of a rail station as part of the North West Rail Link, provides an excellent opportunity for development of an activity centre when the Balmoral Road release area is developed. Given the high accessibility of this location with these proposed transport infrastructure improvements, the density of development within this Precinct is likely to be relatively high, with an associated mix of uses providing a focus for activity for the population of surrounding areas.

….

….The North-West Rail Link is under investigation and is intended to include a station near the intersection of Burns Road and Old Windsor Road.


24 In July 2003 the Department of Infrastructure, Planning and Natural Resources ( DIPNR ) announced its preferred alignment for the North West Rail corridor. On 23 July 2003, the Minister for Infrastructure Planning and Natural Resources met with Baulkham Hills Shire Council and explained the decision to pursue the preferred alignment.

25 This appears to have provided the impetus for the Baulkham Hills Shire Council to produce a “ Draft Structure Plan ” for the BRRA by 28 October 2003. It was in the form of a brochure with a coloured map. A major feature was the inclusion of a corridor for the NWRL, following the said preferred alignment. It showed a “ Transit Centre ”, which appears to have been designed to service a future rail station on the NWRL to be located close to the intersection of Burns Road and near the applicant’s land, and a range of anticipated residential zonings ranging through to high density and transit centre density. The applicant’s land was in the Transit Centre zone. It is common ground that this zoning allowed 90 dwellings per hectare in apartment buildings of 6-8 storeys in height. The Draft Structure Plan, while a significant document, had no status under the Environmental Planning and Assessment Act 1979.

26 On 28 October 2003, the Baulkham Hills Shire Council Forward Plan Co-ordinator presented a report to a meeting of Council on the BRRA Draft Structure Plan. The report stated on the first page that in July 2003, DIPNR “ announced its preferred alignment for the North West Rail Corridor and the urban release of the BRRA can now proceed ”. In relation to the Transit Centre, the report stated (in section 5) that it had an area of 15.43 hectares; the likely number of dwellings per hectare would be 90; the likely total dwellings would be 1388, with an occupancy rate of 1.5; and that the likely total population would be 2082. The report explained why the BRRA was not included in earlier rezoning within the Rouse Hill Development Area and stated that the BRRA’s release “ was further delayed during the last two to three years by the State Government’s continuing assessment of the alignment of the North West Rail Link ”. The report stated that the vision for the BRRA is: “To create a high quality, integrated and ecologically sustainable urban environment with good public transport accessibility, open space, community facilities and employment opportunity ” . The report stated (in section 5):

The land uses and their arrangement proposed in the plan are based on the underlying assumption that the State Government will commit funds to acquisition, construction and operation of the North West Rail Link as the BRRA is developed.

The main features of the structure plan are:

(i) The corridor for the North West Rail Link is identified and includes the construction of two rail stations – one under Norwest Boulevard and the Balmoral Road station that is planned to be located between Balmoral Road and Burns road.

(ii) Two rapid bus transitways – the Parramatta to Rouse Hill Regional Centre T-way that will operate on Old Windsor Road and the Blacktown to Castle Hill T-way that will operate on Burns Road and Memorial Avenue but may eventually operate on Burns Road, Balmoral Road, and Memorial Avenue. A bus interchange station is planned for the south–eastern corner of the intersection of Old Windsor Road and Burns Road…

(iii) …

(iv) Apart from the rail station and bus interchange station the transit centre will have residential buildings of 6 to 8 storeys, a local retail/service element, a formal civic space and a combined major community and indoor recreation facility…


27 This October 2003 report also stated (in section 6):

(i) North-West Rail Link

The structure plan has been developed on the assumption that the rail link will be constructed. The State Government, however, has made no financial commitment to the rail link’s construction and unless it does, the structure plan will lead to a density of urban development dependant upon this public transport infrastructure without any certainty that the infrastructure will be provided.

Council will continue negotiations with DIPNR during the public exhibition of the structure plan but unless the commitment is made during the next few months a significantly revised structure plan may need to be prepared.


28 I construe the word “ commitment ” in the last quoted paragraph as meaning the “ financial commitment” referred to in the penultimate paragraph.

29 However, no revised Structure Plan was prepared by the acquisition date of the acquired land in November 2004.

30 The Draft Structure Plan was exhibited during the period 2 November 2003 to 23 March 2004. Submissions made during this period raised two main areas of concern in relation to the NWRL, namely, that there had been no financial commitment to the NWRL’s construction, and there was no statement by the State Government as to when the NWRL would be constructed.

31 Thereafter and prior to 20 July 2004, Council produced a draft BRRA Local Environmental Plan ( LEP ), which appears to have been prepared on the basis of the draft BRRA Structure Plan, and a draft BRRA Development Control Plan ( DCP ). The acquired land was identified in the draft BRRA LEP for future road purposes. The residue of the applicant’s land was zoned Residential 2(a4) Town Centre which was identified as a “Transit Centre Precinct” . There is evidence, which I accept, that if the acquired land were not identified for future road purposes, it would have been proposed to be zoned Residential 2(a4) Town Centre. Clause 61 of the draft BRRA LEP provided that Council could not consent to development in the Transit Centre Precinct unless Council had first approved a master plan that included all land in the Transit Centre Precinct.

32 In the meantime, on 26 March 2004, Council approved the Rouse Hill Regional Centre Master Plan Development Application, which provided for a NWRL corridor. Unchallenged evidence on this point was given in a statement by Mr Rodney Lindsell, chair of the NWRL Project Control Group at the acquisition date:
The Department [of Planning] also ensured that the NWRL corridor through the Rouse Hill Regional Centre would be preserved as part of the major mixed-use project being undertaken by Landcom and Lend Lease (comprising approximately 150,000 m 2 of retail/commercial floor space and 1,800 dwellings). Baulkham Hills Shire Council approved the Rouse Hill Regional Centre Master Plan Development Application, which provided for a NWRL corridor, on 26 March 2004.


33 The Rouse Hill town centre is about three and a half kilometres north of the BRRA and adjacent to a planned railway station on the proposed NWRL. It appears that this railway station is Mungerie Park, which is the proposed destination for the NWRL and would lie to the north of the proposed Burns Road station. Hence, at Rouse Hill, town centre development had proceeded notwithstanding the absence of a financial commitment by the State government to the NWRL.

34 On 20 July 2004, Council considered its Corporate Development and Planning Services Review Committee’s report on the BRRA Draft Structure Plan, Draft LEP and Draft DCP, which were attached. The report stated that since the report of 28 October 2003:
Discussions [had] continued with various sections within DIPNR and the Director General of DIPNR has written to Council confirming that several major studies on various considerations related to NWRL are being completed. These studies are expected to be completed this month. In addition, the Minister of Infrastructure, Planning and Natural Resources has indicated a commitment to acquire the land within the rail corridor.
This commitment to acquisition was one of the underlying assumptions to which reference had been made in the earlier 28 October 2003 report.

35 The 20 July 2004 report also stated (at p 17) that: “ At this time the State Government has made no financial commitment to the rail line’s construction and it has not given any indication as to when the rail line would be constructed ”. The report recommended (at p 19) that:
1. Council resolve to prepare a draft local environmental plan and draft development control plan for the Balmoral Road Release Area.
2. Council seek a Section 65 Certificate from DIPNR to enable the draft LEP to be publicly exhibited.
3. Upon receipt of a Section 65 Certificate the draft and draft DCP be exhibited for a period of 40 days and a community briefing session be held for land owners during the exhibition.
4. A further report be prepared for Council’s consideration on the outcome of studies into the NWRL and submissions on the draft LEP and draft DCP.

36 However, Council resolved—
1. In respect of the Draft Local Environmental Plan, as the Minister for Planning and Infrastructure and Minister for Natural Resources is to visit the shire on 13 August 2004 and meet with Council, it be deferred for further consideration at the meeting of the Corporate Development and Planning Services Review Committee on 17 August 2004 following his visit.
2. Consideration of the Draft Development Control Plan be deferred for a further report to ensure consistency with existing development standards.
3. The further report be prepared for Council’s consideration on the outcome of studies into the North West Rail Link.


37 A meeting was to be held by Council with the Minister on 13 August 2004. However, the Minister was not able to attend on that day and re-scheduled the meeting for 7 September 2004.

38 Meanwhile, on 17 August 2004, Council considered the said Committee’s further report which stated:

In relation to the progress of the work being undertaken on the North West Rail Link by the Department of Infrastructure Planning and Natural Resources (DIPNR), more recent advice indicates that this work is continuing and is now expected to be completed within approximately eight weeks for referral to the Minister later in the year.

Draft Local Environmental Plan
The Report to Council on 20 July 2004 dealt with submissions on the draft Balmoral Road Release Area Structure Plan and proposed a draft LEP to be referred to DIPNR and then placed on public exhibition. This plan is resubmitted to Council in this report….

….

Recommendation
1. Council resolve to prepare a draft Local Environmental Plan and draft Development Control Plan for the Balmoral Road Release Area.
2. Council seek a Section 65 Certificate from DIPNR to enable the draft LEP to be publicly exhibited.
3. Upon receipt of a Section 65 Certificate the draft LEP and draft DCP be exhibited for a period of 40 days and a community briefing session be held for landowners during the exhibition.

39 However, Council resolved that:
The matter be deferred to Corporate Development and Planning Services Review Committee no later than November 2004 to allow for a visit by the Hon Craig Knowles, MP Minister for Infrastructure and Planning.


40 Council also resolved that prior to the Minister’s visit, certain information and a report be prepared for Councillors.

41 On 24 August 2004, Council urgently considered the BRRA and resolved:
In addition to the matters resolved last week that a report be brought forward to the next meeting of the Corporate Development and Planning Services Review Committee immediately following the visit of the Hon Craig Knowles, MP identifying the opportunities and constraints to the preparation of an amended Local Environmental Plan and Development Control Plan that removes the employment zone from the Balmoral Road Release Area and zones the land residential, reduce the 700 mtr lot sizes to 550 mtrs, to provide a build form that removes 8 to 10 storey apartment buildings and incorporates a residential mix of villas, townhouses and stand alone dwellings.


42 The Minister met with Council on 9 September 2004.

43 On 21 September 2004, Council considered a further report of its said Committee which attached the same BRRA draft Structure Plan, draft LEP and draft DCP as those considered at its July and August meetings. The report stated:

The draft LEP and draft DCP as reported to Council, does [sic] not make provision for 8 – 10 storey residential buildings. The draft planning instruments provide for 16.75 hectares of land within the transit centre area. This land may be developed in future with buildings up to 6 to 8 storeys dependant upon the preparation of a specific `transit centre ’ DCP….

The higher density development within the transit centre is intended to provide a focus for, and to ensure the viability of, the public transport services needed for the entire release area.

…

The current draft BRRA plan is based upon the transit-way and railway infrastructure proceeding in the future. The draft plans are considered to be consistent with developing a more compact urban form, featuring a mix of land uses in close proximity to essential employment, transport and other facilities.

44 Council resolved:
1. Council resolve to prepare a draft local environmental plan and draft development control plan as shown in Attachments 3, 4, 5 and 6.
2. Council seek a Section 65 Certificate from DIPNR to enable the draft LEP to be publicly exhibited.
3. Upon receipt of a section 65 Certificate the draft LEP and the draft DCP be exhibited for a period of 40 days and a community briefing session be held for land owners during the exhibition.

45 This reference to a “ section 65 certificate ” was to Environmental Planning and Assessment Act 1979, s 65, which provides in subsection (1) that:
Where the Director-General receives a copy of a draft local environmental plan from a council under section 64, the Director-General may cause to be issued to the council a certificate certifying that the draft plan may be publicly exhibited in accordance with section 66.


46 On 19 October 2005, Council received another report concerning the BRRA and resolved that a further report addressing traffic issues be submitted to Council upon completion of the exhibition of the draft LEP and DCP.

47 A letter dated 9 December 2005 from Baulkham Hills Shire Council to Mr Sanders (the respondent’s town planner witness) indicated that as at the acquisition date, Council’s response to inquiries would have included the following:


(a) the proposed planning controls outlined in the BRRA Draft Structure Plan and its accompanying report (in particular the high residential density), draft LEP and draft DCP were contingent upon the State government’s commitment to the provision of the NWRL; and

(b) it was unlikely that a provision would be inserted in the BRRA draft LEP that prevented development up to the high residential density proposed in the Draft Structure Plan until the proposed NWRL was constructed and in operation. However, absent the said commitment, it was possible that Council would not have adopted any LEP for the BRRA or might have resolved to delete the higher density component from the draft LEP.


48 There was evidence, which I accept, that the cost of the NWRL infrastructure, so far as the public knew as at the acquisition date, was in the order of $1.4 billion.

E. MR LINDSELL’S EVIDENCE
49 In relation to the timing of the construction of the NWRL, I accept the unchallenged evidence of Mr Rodney Lindsell, chair of the NWRL Project Control Group at the acquisition date, that he would have advised (or authorised his staff to advise) a member of the public at the acquisition date that:

A minimum or maximum timeframe for planning and construction cannot be confirmed. Preliminary engineering investigations suggest that planning and construction of the proposed North West Rail Link between Cheltenham and Rouse Hill could take between seven and ten years. This duration would ultimately be dependent on a number of factors such as the availability of funding, the final location of the corridor, the final nature of the construction activities and the outcomes of environmental approvals.

50 I also accept that Mr Lindsell would have provided, and authorised his staff to provide, the following additional advice to a member of the public at the acquisition date:

(a) No funding had been set aside and no commitment made to funding the construction of the NWRL. However a small amount of funding (approximately $1-2 million annually) over a number of years had been provided for investigations into the preservation of rail corridors … including for the NWRL.

(b) The delivery timeframe for the NWRL (as contained within Action for Transport 2010 ) had been deferred to enable the NSW Government to refocus on state-wide rail safety and reliability, including the Rail Clearways program.

(c) The State Government has made a strong commitment to ensure protection of the rail corridor as a priority. Corridor protection ensures the viability of being able to construct the project in the future and maximise the opportunity for appropriate land-use and transport outcomes around the corridor, whilst providing the Government with flexibility to make decisions about the future of the proposed NWRL based on trends in population and employment and travel patterns.

(d) The North West Rail Link, like other major infrastructure projects was also being considered within the context of the Metropolitan Strategy. As the Strategy had not been finalised at the date of acquisition, it is possible that during this process a decision could have been made by the State Government not to pursue the project, to bring forward the timing of the project or to the delay the project.

F. TOWN PLANNERS’ EVIDENCE
51 In a town planners’ expert witness joint report by Mr R J Chambers on behalf of the applicant and Mr H M Sanders on behalf of the respondent, they agreed, and I accept, that had a purchaser sought their advice in relation to the development potential of the subject land as at the acquisition date, 12 November 2004, they would have advised (inter alia) that:

(a) the Draft Structure Plan envisaged that the Transit Centre would have a dwelling density in the order of 90 dwellings per hectare, with a local retail service element, a formal civic space and a major community and indoor recreation facility;
(b) Council had resolved to prepare a draft LEP and draft DCP for the BRRA and, on 21 September 2004, had further resolved to seek a section 65 certificate in respect of that draft LEP to enable it to be publicly exhibited. The draft LEP had been forwarded to government departments for consultations under the Environmental Planning and Assessment Act 1979, s 62;
(c) were the subject land not identified for future road purposes, it would have been proposed to be zoned Residential 2(a4) Town Centre. This zone was to permit a range of development types including apartments and commercial/retail development in association with shop-top housing. The whole of the Residential 2(a4) Town Centre zone was identified in the draft BRRA LEP as a “ Transit Centre Precinct ”;
(d) the BRRA draft LEP provided that no development could occur in the area identified as a Transit Centre Precinct unless Council had first approved a master plan. The purpose of this provision was to achieve a coordinated development outcome within the Transit Centre Precinct;
(e) the BRRA draft LEP provided no limit on the height or the density of development permitted in the Residential 2(a4) Town Centre zone,
(f) the Transit Centre DCP, once prepared, was likely to make provision for buildings up to 6-8 storeys.
52 The joint report recorded divergent views or disagreements between the town planning experts. Mr Chambers’ views included the following:

(a) the identification of the BRRA in the urban development programme in 2000 as having short-term potential for the release of 4,000 lots, combined with
(i) the identification of the BRRA by the Minister in December 2001 as a release area to be brought forward and rezoned;
(ii) the preparation by Council in 2002-2003 of a Draft Structure Plan for BRRA;
(iii) the designation of the parent parcel as part of a Transit Centre with a residential density of 90 dwellings per hectare; and
(iv) the preparation by Council of a draft LEP and draft DCP for the release area, although yet to be exhibited at the acquisition date,
were factors that a prudent, hypothetical, willing but not anxious purchaser would have had particular regard to as at the acquisition date.

(b) the version of the draft LEP attached to the reports to Council in July, August and September 2004 did not contain any provision which prevented development within the Transit Centre Precinct up to the maximum density until the railway was completed.
(c) although no financial commitment had been made by the government for the construction of the NWRL as at the acquisition date, the Council had resolved to pursue the draft LEP for the BRRA and to place it on public exhibition.

53 Mr Sanders’ views in the joint report included the following:

(a) the timing of the BRRA Draft LEP was contingent on a commitment by the State Government to the funding of the NWRL and no such commitment had been made;
(b) even if such a commitment were made and a BRRA LEP gazetted by late 2005 at the earliest based on the zonings proposed in the draft BRRA LEP, and a master plan prepared by late 2006 at the earliest, the timing of any development on the subject land was uncertain;
(c) if such a commitment were not made, not only was the timing of development uncertain, but also the nature of any future planning provisions applying to the land and, therefore, the nature of that development was uncertain;
(d) without a commitment to the funding of the NWRL, it would have been unlikely that the BRRA LEP, when finalised, would have made provision for any higher density residential development.


54 Mr Sanders also stated in the joint report that the preparation of a master plan could commence prior to gazettal of the BRRA LEP and final adoption of the BRRA Draft DCP. However, he said, this would be unlikely given the need for the master plan to be consistent with these plans and therefore the need for certainty as to their final forms. I consider the master plan question later in this judgment.

55 In an earlier report Mr Sanders said that, at the acquisition date, he would have advised the hypothetical purchaser that development in the Transit Centre could not reasonably have been expected to be undertaken until after 2012/2015.

56 In oral evidence Mr Sanders stated that, as at the acquisition date, he might have expected the BRRA draft LEP to have been gazetted by the end of 2005, although that was not to say that zoning of the Town Centre would necessarily be resolved by then.

57 Both planners gave oral evidence, with which I agree, to the effect that achievement of the high density of 90 dwellings per hectare in the Town Centre was contingent on the NWRL. Mr Sanders gave oral evidence, which I accept, that if the NWRL was abandoned, densities in the Town Centre would probably be close to 25 dwellings per hectare.

58 Mr Sanders gave oral evidence that the Minister’s commitment in 2004 to acquire the land for the NWRL would not have significantly reduced the uncertainty as at the acquisition date. Mr Chambers disagreed. I consider this point later in this judgment.

G. VALUERS’ EVIDENCE
59 In a valuers’ expert witness joint report by Mr Ian Blackall for the applicant and Mr Peter Dempsey for the respondent, they agreed (inter alia), and I accept, the following:

(a) the alternate zoning of the acquired land would have been 2(a4) Town Centre which would allow 90 dwellings per hectare;
(b) the before and after valuation method should be adopted, which results in the s 55(a) and s 55(f) claims being assessed together. They agreed that there was a decrease of 5 percent in the value of the residual land.
(d) the BRRA had received widespread local media attention for a number of years leading up to the acquisition date and subsequently. However, it was only with the public exhibition of the draft BRRA Structure Plan in November 2003 that a degree of certainty in the rezoning process was established;
(e) there were no directly comparable sales at or around the acquisition date having the same future use designation as the subject property.

60 I agree with the valuers that the “ before and after ” valuation method is the most appropriate method to determine compensation in the present case where a strip of land has been resumed for road widening purposes. In Constantino v Roads and Traffic Authority of NSW (2004) 135 LGERA 365 at 369 [13], Bignold J quoted the following passage from Brown, Land Acquisition (4th ed):

The expression before and after is sometimes used to refer to a valuation where the valuer values the land before a certain event and then values it after that event. It is used where a strip of land is resumed for road-widening purposes. The land is valued before the strip is resumed and the remaining portion is valued immediately after the strip has been severed. The difference between the two values represents the value of the strip resumed.

The expression before and after is used in respect of enhancement and depreciation. The land is valued at the relevant date as if the subject causing enhancement or depreciation had not occurred and then the land is valued as if the subject causing the enhancement had been carried out. The difference may signify loss or gain as the case may be to the dispossessed owner.

61 In Gosford Shire Council v Green (1980) 48 LGRA 201 at 208 Reynolds JA, in giving the judgment of the Court of Appeal, cited with approval the judgment of Roper J in Realty Corporation Ltd v Commissioner for Main Roads (1940) 14 LGR (NSW) 204 at 205 where it was said that “ It appears to me that the easiest and the proper way to determine the value of the land resumed and the damage to the residues by severance is to ascertain the difference between the value of the lots before resumption and the value of the residues after resumption ” . See also Hordern v Sydney Municipal Council (1940) 14 LGR (NSW) 200 at 203-204 (Roper J). In Roads and Traffic Authority of NSW v J M Muir Properties Pty Ltd [2005] 143 LGRA 193 (CA/NSW) at 212 [103] – [104] Tobias JA, with whom McColl and Hunt JJA agreed, said:

It is often the case that when only part of a dispossessed owner's land is compulsorily acquired, a ‘before’ and ‘after’ valuation exercise of the whole of that owner's land is conducted. In other words, the market value of the land before acquisition is determined (including the acquired land) as is its value after acquisition (excluding the acquired land). In this way the difference between the two values determines not only the market value of the acquired land but also captures any injurious affection to the retained land by reason of the acquisition for the public purpose. This approach will also, in an appropriate case, capture any loss due to the severance of the dispossessed owner's land by that acquisition.

In proceeding according to that approach, there has never been any doubt that the Pointe Gourde principle is applied in the ‘before’ valuation exercise. In other words, the ‘before’ value is determined on the basis of disregarding any decrease in the value of the land arising out of the purpose of the compulsory acquisition and any steps in the scheme leading to that acquisition. It is only in the ‘after’ value that any decrease by reason of the proposed implementation of the public purpose for which the resumed land was compulsorily acquired is taken into account.
The “Pointe Gourde principle” to which Tobias JA referred is eponymously named after the seminal case of Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands (Trinidad) [1947] AC 565 and is now expressed in the Land Acquisition (Just Terms Compensation) Act 1991 s 56(1).


62 In their joint report, the valuers disagreed as to the time when the subject land could be potentially redeveloped for apartments based upon 90 dwellings per hectare. Mr Blackall concluded that such redevelopment could have reasonably occurred within three to four years after the acquisition date. Mr Dempsey concluded that such redevelopment was dependant upon the delivery of the NWRL, which he estimated was twelve to fifteen years after the acquisition date. The selection of appropriate sales evidence was based upon their respective assumptions.

63 Mr Dempsey’s reasoning including the following:
(a) A hypothetical prudent purchaser would anticipate uncertainties in relation to the following matters:
· When funds would be available to construct the NWRL.
· The precise boundaries of the NWRL were not established.
· There was no engineering detail in relation to the NWRL.
· This was not an established town centre but a greenfields location. There was no demonstrated market demand for higher density residential uses in this location.
· The only reason the designated land use applying to the subject property existed in this location related to the proposed development of the NWRL.
· The likelihood is that part of the NWRL will be in a tunnel. There was no preferred construction method for the tunnel. The potential to construct over the tunnel could not be properly assessed at the date of acquisition or subsequently.
· Development of the acquired property depended on agreement to a precinct plan (ie master plan) with other surrounding landowners within the proposed Town Centre corridor. There was difficulty in concluding a precinct plan in such circumstances where there was uncertainty in relation to the location of the NWRL and where engineering considerations would delay resolving the location of roads and buildings including the building type and use.
· Until funds were allocated for the construction of the NWRL it was unlikely that the uncertainties relating to the required detail would be resolved to the degree necessary to finalise a precinct plan.
· Council would not be able to issue a development approval without fully understanding the design of the NWRL including issues relating to engineering and geotechnical considerations.
· There were no prospects at the date of acquisition or subsequently of this information being available in the foreseeable future.
· There was no sound basis at the date of acquisition to assume funds would be allocated for the construction of the NWRL in the foreseeable future.
· The location of the higher density residential and mixed use land uses in this location is a direct consequence of the proposed location of NWRL.
(b) A hypothetical prudent purchaser was not likely to conclude that a development approval would be achievable within 3-4 years. Given the absence of a commitment to the NWRL, the opportunity to realise the use potential of the subject land was speculative.
(c) If the Court considered Mr Blackall’s assessment of $675-$700 per m2 (before adjustment) for the land to be correct, this value could not be realised for at least 12 years and possibly longer. When the adjusted value adopted by Mr Blackall is applied, the present value is below that of a rural homesite.
(d) Arising from the uncertainties relating to the timing of realising the future use potentials of the acquired land, a hypothetical prudent purchaser would pay no more than the value of the property as a rural homesite. This is an amount greater than the discounted value of the subject property based on its designated use potential. This outcome represents the highest achievable value at the date of acquisition.
64 Mr Blackall’s reasoning included the following:
(a) Based upon his own enquiries with the Strategic Town Planner at Baulkham Hills Council, he was never at any stage led to believe that development of the proposed 2(a4) land within the BRRA was to be dependant upon the construction of the NWRL. This was confirmed by expert Town Planner, Mr Robert Chambers, of BBC Consulting Planners.
(b) At the acquisition date the owners and any hypothetical potential purchaser of this land would have been well aware of the advanced stage of the rezoning of the whole of the lands within the BRRA, including the subject land, and known this land was intended to be rezoned 2(a4) Transit Centre, allowing residential development of up to 90 dwellings per hectare.
(c) The highest and best use of the land was for redevelopment of residential development based upon 90 dwellings per hectare. He therefore researched sales evidence for similar intended uses. He did not find any sales evidence of land within the BRRA which had similar development potential as the subject land. He did find such sales evidence for a similar use in the locations of Castle Hill and Blacktown. The analysis of these sales showed a rate per square metre of site area in the range of $801 to $1,390. The most comparable sale was a site at 25-31 Old Northern Road at Castle Hill, which comprised 4 properties which were purchased by the developer between 2002 and 2003 for rates per square metre of between $553 and $1,154, with the latter 3 sites all showing around $1,100 per square metre.
(d) From this sales evidence he made logical adjustments for differences in location, size of land and development potential to compare it to the subject land.
(e) Based upon his experience in valuing similar medium to high density residential development sites throughout the Sydney metropolitan area over many years, he was of the firm opinion that there would be sound market demand for apartments in this location. He was aware of a number of apartment developments which have been built in the north-west sector of Sydney in recent years, which are not located close to railway stations.
(f) Based upon the relevant sales analysed, he concluded that if the rezoning of the land and the appropriate Precinct Plan was in place at the relevant date, that the value of the land would have been between $675 to $700 per square metre of site area. He then adjusted this value rate range to allow for the timing of the rezoning and the preparation of the Precinct Plan, which he estimated could conservatively occur within a 3-4 year time frame.
(g) He then further adjusted the value rate range to allow for the special infrastructure levy, plus an adjustment to account for the difference in infrastructure contributions payable to Sydney Water for water, sewer and drainage services, as compared to those payable in nearby Castle Hill.
(h) The value rate he derived of $450 per square metre of site area was the fair and reasonable rate that a prudent and fully informed vendor and prudent and fully informed purchaser would have agreed at the relevant date.
(i) He believed there was a measurable amount of loss in value to the remaining land, ie injurious affection, which is accounted for in the rate per square metre of site area adopted in his “ after ” scenario, whereby a rate of $437.50 per square metre was adopted.
(j) It was neither fair nor reasonable to value the subject site as a “ rural home site ”.

65 In a supplementary report, Mr Dempsey stated:

9. I conclude that there are so many uncertainties in relation to realising the development potential of the subject land, that a prudent purchaser and vendor are unlikely to value the subject land, as more than a rural homesite value with some expectation that at [sic] unforeseen future date, dependent on the construction of the NWRL, some higher density development may be permitted.

10. In my opinion, Council would be unlikely to approve the development application for high density until a commitment was made by government and the railway was being constructed.

…

17. In my opinion a further uncertainty is the possibility that the Town Centre land would be deferred from rezoning altogether until the State government had made a final decision on the rail link.

18. Accordingly, I have assumed that a hypothetical prudent purchaser is not likely to conclude that a development approval would be achievable in the foreseeable future.

19. Given the absence of a commitment to the NWRL, the opportunity to realise the use potential of the subject land was speculative.


66 Mr Blackall based his valuation assessment on a comparison with seven sales of land with high densities outside the BRRA. Mr Dempsey based his valuation on a comparison with about 16 sales of land currently zoned Rural 1(a), including land which had some higher and better use potential of low to medium density at some time in the future. Some of his comparables were at or towards the fringes of the BRRA but most were located elsewhere. I viewed with the parties and the valuers the comparable sales sites relied on by the valuers.

67 The valuers’ respective assessments utilising the before and after method (before GST) were as follows:


Mr Blackall :

Before $450 per m2 $9,100,000
After at $437.50 per m2 $8,320,000
Compensation Value $780,000

Mr Dempsey :

Before $130 per m2 $2,630,000
After $123 per m2 $2,342,000
Compensation Value $288,000


H. VALUATION PRINCIPLES AND METHODOLOGY
68 Market value is defined in the Land Acquisition (Just Terms Compensation) Act 1991, s 56(1) to mean “ 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 certain prescribed matters).

69 The statutory definition continues to be illuminated by the classic test of market value in relation to compensation for the resumption of land in Spencer v The Commonwealth (1907) 5 CLR 418. Isaacs J said at 441-442:
In the first place the ultimate question is, what was the value of the land on 1st January 1905?

All circumstances subsequently arising are to be ignored. Whether the land becomes more valuable or less valuable afterwards is immaterial. Its value is fixed by Statute as on that day. Prosperity unexpected, or depression which no man would ever have anticipated, if happening after the date named, must be alike disregarded. The facts existing on 1st January 1905 are the only relevant facts, and the all important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted. The plaintiff is to be compensated; therefore he is to receive the money equivalent to the loss he has sustained by deprivation of his land, and that loss, apart from special damage not here claimed, cannot exceed what such a prudent purchaser would be prepared to give him. To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.

70 Griffiths CJ at 432 described the mental process as follows:
…to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce…a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.


71 Spencer v The Commonwealth was affirmed by the High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 at 650 [17]. “ In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value. Those matters will include the predicted impact of future events as well as the experience of the past…. ”: Kenny and Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 436 [49] per McHugh J. The only events to be taken into account are those occurring up to the acquisition date: “ All circumstances subsequently arising are to be ignored ”: Spencer v The Commonwealth at 440. It has been said by the NSW Court of Appeal that the statutory test in s 56(1) “ depends upon states of knowledge about that which has happened and that which might be anticipated ” : Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (2005) 141 LGERA 243 at 254 [32].

72 In Multari v Roads and Traffic Authority of NSW [2004] NSWLEC 649 at [30] Talbot J cited with approval the following passage from the judgment of the Full Court of the NSW Supreme Court in Longworth v Commissioner of Stamp Duties [1953] SR (NSW) 342:
A tribunal which is called upon to make such an assessment of value must in each case decide what facts affecting values would have been in the contemplation of the notional buyer and seller at the relevant date, and what, if any, effect on values the existence of those facts would have had on the sum which the one was prepared to give, the other to take. One such relevant fact may be the probability or possibility that an event will later occur, and the existence or non-existence of that contingency may have its effect on values. If so, it is relevant. But the value must surely be ascertained in the light of the facts, including the probabilities then existing, and without taking notice of subsequent happenings.


73 In considering the highest and best use potential of the acquired land, it would be preferable to have regard to sales of other lands that were similarly affected by the proposals relating to the Transit Centre designation. Their development potential under that designation would be embedded in their sale price. However, there are no such comparable sales.

74 In those circumstances, there are two competing valuation methodologies. The first I will call the “ bottom up ” method, whereby the subject land should be valued on the basis of a restrictive Rural 1(a) zoning in force at the acquisition date and, if appropriate, an addition made for the chance of Transit Centre zoning, which permitted 90 dwellings per hectare. This is the method for which the respondent and its valuer contend, although they say that there was no such chance in the foreseeable future and realisation of this use potential was speculative.

75 The second method I will call the “ top down ” methodology, whereby the acquired land should be valued as though it had Transit Centre zoning which permitted 90 dwellings per hectare, and a deduction should be made for the chance that that rezoning and such development may not eventuate, and for the time required before it may eventuate. This is the method for which the applicant and its valuer contend.

76 Which method should be applied depends on the circumstances, as the authorities referred to below demonstrate.

77 In Royal Sydney Golf Club v Federal Commissioner of Taxation (1957) 97 CLR 379, the court was required to consider the value of land held by the golf club at Rose Bay which was reserved for the purposes of parks and recreation areas under a planning ordinance. Consequently, residential development was prohibited. The owner of land restricted in this way could require the council to acquire the land. As the Council had no funds to do so, the prohibition was suspended, allowing interim development to be carried out with the permission of the council. It was contrary to council’s policy to grant such permission, except in respect of very small areas of land. In the circumstances Kitto J adopted the following approach:
In the result my opinion is that a notional intending vendor and purchaser, treating about the appellant's land on 30th June 1951, and fully informed as to all relevant considerations, would have proceeded, in discussing price, on the footing that there was only a slender chance that it would ever become permissible to use any part of the land for other than recreational purposes. For that reason, I do not think that a method of valuation can be supported which aims first to ascertain what value the land would have had on the relevant date if it had been free from the restrictions of the Ordinance, and then to fix upon a deduction to be made from that value in order to reflect the depressive effect of the restrictions. That may be an acceptable method of allowing for restrictions which operate merely for a limited period; but it is not with restrictions of that kind that this case is concerned. I think the proper course is to inquire first what was the value of the land on the footing that there was no possibility of its ever being turned to other than recreational purposes, and then how much extra should be allowed for such chance as there was of securing permission for residential use at some future time (at 391).

78 This dictum was cited with apparent approval by the NSW Court of Appeal in Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (2005) 141 LGERA 243 at 258 [45].

79 Thus, Kitto J in Royal Sydney Golf Club applied the bottom up methodology of assessing value by reference to the land’s then current zoning, but making an allowance for increased value referable to the prospect that approval might be obtained for residential use. His Honour allowed an increase of five percent above the value at the current zoning to reflect the slender chance of realising the potential higher use. In that regard, he said at 395:
How much should be allowed under that head is necessarily a matter of guesswork, for the hypothetical vendor and purchaser would have to engage in sheer speculation… I think they would more probably agree on the addition to the amount otherwise arrived at of a percentage of that amount. From what I have said it will be apparent that I regard the chance to be allowed for as one which negotiating parties would acknowledge but would not treat as more than a very speculative item in their deliberations. I think an increase of five percent is as near to the mark as one can get.

80 In Redeam Pty Ltd v South Australian Land Commission (1977) 17 SASR 508, there was held to be uncertainty in realising the development potential of compulsorily acquired land even though a proposed plan of subdivision had been approved by Council and conditionally approved by the public authorities responsible for the provision of services. All that stood in the way of development of the land for residential purposes was rezoning (at 516). Jacobs J held at 512:
I have dealt at length and in detail with a description of the subject land and its potential for future subdivision, but the parties and their expert valuers now agree that, for the purposes of valuation, the land should not be regarded as ripe and ready for subdivision at the date of acquisition, or within a short predictable time thereafter, and that it would not be correct to attempt to ascertain the value of the land upon the basis of its value in hypothetical subdivision. The rejection of that method of valuation in the circumstances of this case, is plainly correct. The fact of the matter is that the land is still zoned as Rural A, and it would defeat the whole scheme and tenor of the Metropolitan Development Plan and the Zoning Regulations if such land were to be regarded as capable of being brought into residential subdivision while it remained so zoned … The hypothetical subdivision of the land lies in the future with all the uncertainty that the future holds.


81 In Port Macquarie West Bowling Club Ltd v The Minister [1972] 2 NSWLR 63, the holder of a special lease of land had applied under the Crown Lands Consolidation Act 1913 to convert the land to freehold. The restriction on the land resulting from its open space zoning was unlikely to remain in force for long. It was held appropriate to value the land on the basis of a virtually unrestricted zoning and then make deductions for the current zoning restriction and the possibility of a relaxation of that restriction. That is, the “ top down ” methodology was adopted.

82 There is a spectrum or notional scale along which land subject to development restrictions may be placed in order to decide whether the bottom up method or top down valuation method is appropriate. The notional scale was described in Wattle Park Pty Ltd v Commissioner of Highways (1973) 6 SASR 69 at 94 by Wells J:

It seems to me that the cases in which the land to be valued is subject to restrictions may be ranged along a notional scale within which they differ from one another in degree.

At the lower end of the scale, there would appear the sort of restrictions exemplified by those in the Royal Sydney Golf Club case, which are so far reaching and so securely entrenched in the structure of the relevant parts of our law, that the possibility of relaxation, although it exists, is remote. At the upper end of the scale, one would find the sort of restrictions that Else-Mitchell J was concerned with [in] the Port Macquarie West Bowling Club Case which, either because they are obviously intended to be temporary, or because, in the circumstances, they are unlikely to remain in force for long, may soon be relaxed, in whole or in part. Where land that is to be valued is subject to restrictions of the kind appearing towards the lower end, a reliable starting point for the valuer will probably be found in the value of the subject land in its unrestricted [sic] state and adjustment can then be made, with some reasonable assurance, to allow for the chances of relaxation. In such a case, the possibilities of error or of disagreement would be much greater if the land were first valued in its unrestricted state, and allowances were made in respect of the figure so arrived at.

The situation, to my mind, would be far otherwise if the restrictions were more like those ranged at the upper end. There the restrictions would have a far less secure lodgement in the relevant law, and the possibilities of error or of disagreement would be greatly reduced by initially arriving at a value for the land in its unrestricted state, and making a deduction in recognition of the restrictions, as qualified by the likelihood of relaxation.
I think that the first reference to “ unrestricted ” in this passage was a slip and was intended to be “ restricted ”.

83 In Woodbury v Wyong Shire Council [2006] NSWLEC 48, the applicant’s valuer adopted the “ top down ” method. He valued the land on the assumption that a rezoning had taken place and then applied a discount to allow for an anticipated delay in achieving the rezoning. Bignold J held that the “ bottom up” method was more appropriate at [49] – [50]:
…an additional very significant discount for risk would need to be applied to [the applicant’s] valuation. But the magnitude of the required discount to cover the risk of the subject land not being rezoned according to Mr Kettle’s opinion, is so high — something like 50 percent would, in my judgment, be appropriate — as to undermine the reliability of employing [the applicant’s] valuation methodology. However, [the respondent’s] valuation methodology of direct comparison with sales of lands situate either within the Town Centre site or within a short distance of the Town Centre site… offers a more reliable basis for valuing the subject land subject to some significant upwards adjustment in favour of the subject land reflecting its higher development potentialities compared with the sales lands by virtue of the subject land’s superior location in relation to the new railway station and the proposed bus/train interchange as I have earlier described those additional potentialities of the subject land.

84 Bignold J said at [46] that:
…the hypothetical prudent parties in striking their agreed price for the hypothetical sale would not give effect to either of the competing town planning opinions concerning the development potentialities of the subject land but, cognisant of those differing opinions, would agree upon a price that recognised that the subject land within the context of the Town Centre site had greater advantages and potentialities by dint of proximity to the hub of the Town Centre.

85 In Liverpool City Council v Commonwealth of Australia (1993) 81 LGERA 405 at 421 Wilcox J said:
In a case where the task of assessing compensation comes down to the evaluation of a chance, it will rarely be possible to demonstrate that any particular figure is correct. I certainly cannot do so in this case. I can only consider all the relevant factors and make a judgment about them; a ‘best guess’ perhaps.


I. CONCLUSIONS
86 My conclusions concerning the probable assessment of the development potential of the subject land by the hypothetical buyer and seller as at the acquisition date are as follows.

87 They would have understood that the high density of 90 dwellings per hectare in the Transit Centre under the BRRA Draft Structure Plan, was on the assumption that the State Government will commit funds to the acquisition, construction and operation of the NWRL. That is what the report to Council at its October 2003 meeting appears to me to indicate and is confirmed by Council’s letter of 9 December 2005. It is also logical because of the enhanced accessibility that the NWRL would provide. They would have understood that there was a risk that the NWRL might not eventuate; that the State government might change its mind; and that there were uncertainties as to the timing of planning approvals, the timing of approval of the master plan for the Transit Centre and the timing of an approved development.

88 However, they would be encouraged by the commitments and announcements that the NSW government had made to the NWRL, albeit the commitments were not legally enforceable. In the March 2002 Overview Report the NSW government had made a commitment to protect the NWRL corridor which it described as “ a major commitment ” to the NWRL and which Mr Lindsell’s advice as at the acquisition date would have described as a “ strong commitment ”. The Minister had made a further commitment in July 2004 to acquire the land within the rail corridor. They would also have been encouraged by the fact that the planning processes had made substantial progress, although those processes still had a good way to go. Council had resolved in September 2004 to seek a s 65 certificate to enable the draft LEP to be publicly exhibited. The draft LEP had been forwarded to government departments for consultations under s 62 of the Act. These circumstances would have significantly reduced, in their minds, the uncertainties attending the NWRL and valuation of the Transit Centre land.

89 They would have understood that the required master plan for the Transit Centre could be approved even before a financial commitment to the NWRL by the State government, because that had occurred in March 2004 in relation to the Rouse Hill Regional Centre Master Plan, albeit owners’ agreement to that master plan was facilitated by the fact that there were only two owners of Rouse Hill Town Centre land. By contrast, there were seven to eleven owners in the proposed Transit Centre area as at the acquisition date.

90 They would have thought that it was likely to take between seven and ten years before the NWRL was constructed depending on various factors including availability of funding (see Mr Lindsell’s evidence), although it could be longer or sooner. They would have thought that there was a significant prospect that the State government’s commitment to constructing the NWRL, gazettal of the draft LEP and development approval for high density development on the subject land would well occur within a couple of years.

91 The hypothetical buyer and seller would have been cognisant of the competing town planning views concerning realisation and timing of the development potentiality of the acquired land. They would have considered that the town planning and valuation views, as expressed in the respondent’s case, gave too much weight to the uncertainties; and, conversely, that the town planning and valuation views, as expressed in the applicant’s case, gave too little weight to those uncertainties.

92 In my opinion, having regard to all relevant circumstances, the hypothetical buyer and seller would have been prepared to agree on a price which reflected a significant sum above the value of the subject land as a rural homestead in order to reflect the prospect of development which permitted 90 dwellings per hectare.

93 In my view, the present case lies not at, but more towards, the lower end of the notional scale referred to in Wattle Park (above). Therefore the bottom up valuation methodology should be applied.

94 The applicant’s valuer, Mr Blackall, adopted the top down methodology . He proceeded on the basis that relaxation of the Rural 1(a) zoning restriction was imminent and valued the land on the basis of the potential rezoning which would permit 90 dwellings per hectare. In my view, this is not the correct approach because there are significant uncertainties surrounding the realisation and timing of the potential development use. The magnitude of the discount required to reflect those uncertainties is so high as to undermine the reliability of that methodology. Mr Blackall’s valuation assessment, I think, would have been reasonably indicative of value if, before the acquisition date, the State government had made a financial commitment to the construction of the NWRL and indicated a time frame for completion construction within say ten years. That was not the situation as at the acquisition date.

95 The respondent’s valuer, Mr Dempsey, adopted the bottom up methodology although he expressed the view that the prudent hypothetical purchaser would pay no more for the subject property than he would for a rural home site. However, he did base his valuation on comparable sales of land which had low to medium development potential. I accept Mr Dempsey’s valuation assessment as the starting point, to which an addition should be made for the significant development potential of 90 dwellings per hectare

96 Taking into account all relevant considerations, I have concluded that a hypothetical buyer and seller probably would have been prepared to agree to increase Mr Dempsey’s assessment of $288,000 (excluding GST) by about 25 percent, ie by $72,000, to $360,000 (before GST). This is the compensation to which the applicant is entitled under s 55(a) and (f) of the Act. To this must be added the agreed s 55(d) loss of $15,973.51. The total is $375,973.51. There is also a claim for statutory interest.

97 I direct the parties to bring in short minutes of order to reflect my reasons for judgment and to re-list the matter before me within four working days, by arrangement with my Associate, when final orders will be made. I will deal with costs on that occasion unless the parties agree on costs in the meantime.