Scarfone v Blacktown City Council
[2004] NSWLEC 114
•03/26/2004
Land and Environment Court
of New South Wales
CITATION: Scarfone v Blacktown City Council [2004] NSWLEC 114 PARTIES: APPLICANT:
RESPONDENT:
Scarfone
Blacktown City CouncilFILE NUMBER(S): 30309 of 2003 CORAM: Bignold J KEY ISSUES: Compulsory Acquisition of Land :- land zoned Special Uses (Drainage)-underlying zoning-residential or rural?
LEGISLATION CITED: Land Acquisition (Just Terms) Compensation Act 1991, s 56 CASES CITED: Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Co Ltd (1947) 74 CLR 358;
Crown v Murphy (1990) 71 LGRA 1;
Pointe Gourde Quarrying & Transport Co v Sub-Intendent of Crown Lands (Trinidad) [1947] AC 565DATES OF HEARING: 17-19/11/2003 DATE OF JUDGMENT: 03/26/2004 LEGAL REPRESENTATIVES: RESPONDENT:
APPLICANT:
Mr J Webster SC
SOLICITORS
Philip Goldman & Co
Mr J Robson, Barrister
SOLICITORS
Taylor Kelso
JUDGMENT:
IN THE LAND AND Matter No
. . 30309 of 2003
ENVIRONMENT COURT Coram
: Bignold J
OF NEW SOUTH WALES
26 March 2004
G AND M SCARFONE
Applicants
v
BLACKTOWN CITY COUNCIL
Respondent
JUDGMENT
A. INTRODUCTION
1. This is an objection pursuant to the Land Acquisition (Just Terms Compensation) Act 1991, s 66(1) (the Just Terms Act) against the amount of compensation offered to the Applicants in consequence of the compulsory acquisition of their land fronting the Great Western Highway at Minchinbury effected on 29 November 2002 by Notice published in Government Gazette No 237 of that date “for the purpose of local trunk drainage and a stormwater detention basin”. The subject land is located at the south-western corner of the intersection of the Highway and Wallgrove Road (a major road).
2. The compulsorily acquired land comprises ten (10) small lots (being lots 16 to 25 inclusive in Section A of Deposited Plan 15587) having an aggregated area of 4,380 m2 in a rectangular shape with an aggregated highway frontage and rear boundary of some 94 metres in each case and a depth of some 47 metres (the subject land). Deposited Plan 15587 was a plan of subdivision registered in 1928 creating several hundred lots in a typical residential subdivision layout which also created and dedicated a number of subdivisional roads including Eskdale Street, which runs in an east-west direction for a distance of some 1000 metres parallel to the highway and set back some 90 metres from the highway. At the date of compulsory acquisition the subject land was developed by a small cottage and a roadside stall from which was sold flowers grown on the land.
3. The amount of compensation offered to the Applicants was in the sum of $402,315, (comprising market value of $381,00 and a disturbance allowance of $21,315), being the Valuer-General’s determination of compensation made under the Just Terms Act.
4. At the time of compulsory acquisition, development of the subject land was governed by the Blacktown Local Environmental Plan 1988 (the LEP) which zoned the subject land 5(a) “Special Uses—Drainage” except for a splayed corner comprising some 600m2 situate on the highway frontage which was zoned “5(b) Special Uses—Arterial Road and Arterial Road Widening”. That zoning has remained unchanged since the LEP came into force on 28 October 1988.
5. The “Special Uses—Drainage” Zoning also applied to other adjoining lands in the vicinity of the subject land comprising some 25 lots in Section A of Deposited Plan 15587. Lands (comprising the vast majority of the lots in Deposited Plan 15587) immediately adjoining the “Special Uses—Drainage” Zone and situate to the west were zoned Residential 2(b) by the LEP. In these reasons I shall, at times, refer to the residentially zoned land as the Eskdale Street precinct. An extract of the LEP Zoning Map is annexed hereto and marked “A” showing the relationship of the lands in the Eskdale Street precinct which are respectively zoned Residential 2(b) and Special Uses 5(a)—Drainage.
6. The Applicants’ case for a greater amount of compensation than that offered by the Council was supported by the valuation evidence of Mr Higgins who estimated the market value of the subject land at $1 million based upon the planning assumption that if the subject land had not been required for the public purpose of drainage it would have been zoned under the LEP to permit medium density residential development.
7. The competing valuation evidence of Mr Corbin relied upon by the Council estimated the market value of the subject land at $330,000 which was based upon the planning assumption that if the subject land had not been required for the public purpose of drainage, it would have been zoned under the LEP Rural 1(b).
8. In the case of each of the competing valuations (contained in Exhibit 6 and Exhibit D respectively) the valuer has relied upon the advice of a consultant town planner concerning the probable zoning under the LEP of the subject land but for the fact that it had been zoned for the public purpose of drainage.
9. The town planning assumption adopted by the Applicant’s valuer is contained in the evidence of Mr Rhodes (Exhibit 3) and the town planning assumption adopted by the Council’s valuer is contained in the evidence of Mr Mullane (Exhibit B). In the course of the hearing, these experts conferred and three joint reports were tendered (Exhibits E, 8 and 9).
10. In the course of the hearing, the valuers also conferred and reached substantial agreement upon a number of matters (their conferencing reflecting the benefits they had received from the outcomes of the conferencing by the town planners). Their agreements were as follows:—
(a) the market value of the subject land based upon the planning assumption of an underlying “Rural 1(b)” zoning would be $375,000 (Exhibit 1);
(b) the market value of the subject land based upon the planning assumption of an underlying “Residential 2(b)” zoning would be either—
(i) $ 85,000 per dwelling unit multiplied by the appropriate yield of dwelling units less $200,000 costs and less a 5 per cent allowance for risk if the land were assumed to be available for residential development with temporary vehicular access from the Great Western Highway; or
(ii) the same as in (i) except that the allowance for risk would be 10 per cent if the land were assumed to be available for residential development with access via an internal service road in accordance with the Council’s Development Control Plan (such as has occurred in the development of the residentially zoned lands fronting the highway and situate immediately to the west of the lands zoned 5(a) “Special Uses—Drainage”), (Exhibit 10); and
(c) the aforesaid allowances for risk of 5 per cent or 10 per cent respectively covered “all risks associated with the possible residential development of the site” and their figures were exclusive of GST (Exhibit 12).
11. It is apparent from what I have said that the key issue requiring adjudication in the present case concerns the question of how the subject land would probably have been zoned or otherwise affected by the LEP but for its zoning as “Special Uses—Drainage” in circumstances where the parties and all of the expert witnesses have either conceded or presupposed that that actual zoning must be disregarded in determining compensation under the Just Terms Act.
12. It is important to note at the outset that the correctness and soundness of that concession or presupposition has not been questioned in these proceedings, presumably on account of the obvious and direct link or connection between the “Special Uses—Drainage” zoning of the subject land and the public purpose for which the subject land was compulsorily acquired, where it can be concluded that that zoning was a step in the resumption process.
13. This common understanding accords with the established principle of land compensation law, as stated in the following passage of the judgment of the High Court of Australia in the Crown v Murphy (1990) 71 LGRA 1 at 4:
- One purpose of this principle is to ensure that a resuming authority does not employ planning restrictions to destroy the development potential of the land and then assess compensation for its resumption on the basis that the destroyed potential had never existed: Melwood Units Ltd v Commissioner of Main Roads [1979] AC 426 at 434. The principle applies in cases where there is a direct relationship between the planning restriction and the scheme of which resumption is a feature and extends to cases where there is merely an indirect relationship, provided that the planning restriction can properly be regarded as a step in the process of resumption: Housing Commission of New South Wales v San Sebastian Pty Ltd, (at 206-207).
14. The principle stated in the Pointe Gourde case (Pointe Gourde Quarrying & Transport Co v Sub-Intendent of Crown Lands (Trinidad) [1947] AC 565). and the obverse principle stated in Melwood Units is now recognised in the following portion of the definition of “market value” contained in the Just Terms Act, s 56(1):
- 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
…………………
…………………
15. In the circumstances, it is appropriate that I immediately consider the question of what planning assumption should be made in respect of the subject land in consequence of the legal necessity to disregard the 5(a) “Special Uses—Drainage” zoning under the LEP as a step in the resumption process.
B. WHAT PLANNING ASSUMPTION SHOULD BE MADE IN CONSEQUENCE OF DISREGARDING THE “SPECIAL USES-DRAINAGE” ZONING UNDER THE LEP OF THE SUBJECT LAND
16. As earlier noted, evidence concerning the probable zoning of the subject land but for the “Special Uses—Drainage” zoning of it by the LEP was given by consultant town planners retained by the parties. (There is no need for any further consideration to be given to the road widening affectation of the subject land since it remains a constant.)
17. Mr Rhodes was of the opinion that the subject land would have been zoned Residential 2(b) based upon his research of relevant Council files concerning various options for the provision of trunk drainage in the immediate locality of the lands (including the subject land) which were zoned 5(a) “Special Uses—Drainage” by the LEP in 1988. His opinion also relied upon the contents of correspondence passing between the Applicant’s Valuer, Mr Higgins and the Council, earlier in 2002 just prior to the Council’s decision to compulsorily acquire the subject land. Mr Higgins had evidently obtained certain advices from various Council employees concerning the subject land which appeared to him to be at odds with what he understood the Council’s valuer to have been advised. He sought clarification from the Council on a number of matters including the opinion recorded in Mr Higgins’ letter that “the most likely underlying zoning would be Residential 2(b)”. The Council’s General Manager by letter dated 7 March 2002 provided advice from its “Development and Regulatory Services Section” in response to each of the matters specifically raised by Mr Higgins. That advice included the following statements—
Possible development for the site could include standard Residential Subdivision with lot size complying with Council’s Development Control Plan Part C or Integrated or Medium density housing development.
………….
…..The alternative zoning would be residential 2(b).
18. Mr Rhodes also relied upon the fact that the residentially zoned lands situate to the immediate west of the lands zoned 5(a) “Special Uses—Drainage” either had been recently developed or were in the course of being developed for residential purposes by overcoming any flooding problem by (i) piping the watercourse which had traversed these lands; and (ii) filling the lands to be developed. In his opinion these same flood mitigation measures and development opportunities were equally available to achieve the residential development of the subject land, which was only distinguishable from the lands situate to the west by virtue of the different zonings created for these respective lands in 1988 by the LEP, where those different zonings were not founded on any differences in the physical attributes of the respective lands (including those posing development constraints).
19. Mr Mullane was initially of the opinion that the subject land would have been zoned Rural 1(b) by the LEP had it not been zoned 5(a) “Special Uses—Drainage”. I say “initially” because his opinion fluctuated in the course of the hearing. In particular in his report in reply (Exhibit F) he expressed the following opinion:
- Mr Rhodes makes reference to a summary of documents contained in Council’s files. I am generally familiar with the directions of those memos and notes and I concur with Mr Rhodes conclusion that there were several alternative drainage designs considered (or options related thereto) and that had not the land been zoned Special Uses 5(a) it could have been zoned Residential 2(b), with Medium Density Housing as a permissible use.
20. Mr Mullane, in his report in reply qualified his concurrence with Mr Rhodes’ opinion by stating that a medium density development of the subject site might possibly achieve 6 units (Mr Rhodes had estimated a yield of 12 or 13 units) but that there were significant risks in realising that potential by virtue of (i) the extent of filling required; (ii) difficulties of achieving vehicular access to the development because of the unlikelihood of the Roads and Traffic Authority or the Council allowing direct highway access; and (iii) uncertainties with the impact of any requirement of the Department of Infrastructure Planning and Natural Resources for the creation of a riparian zone adjacent to the watercourse that passes alongside the southern boundary of the subject land as a condition of any necessary Permit under Part 3A of the Rivers and Foreshores Improvement Act 1948.
21. The existence of these risks led him to conclude that his original opinion of an assumed Rural 1(b) zoning of the subject land “may have more appeal” (presumably to the hypothetical parties to the assumed sale).
22. However, in the course of his oral testimony, Mr Mullane conceded that the three elements of risk that he had identified in his report in reply were capable of being substantially resolved and overcome conformably with the outcomes of the expert conferencing that occurred in the course of the hearing. However, these concessions did not ultimately cause him to depart from his original opinion (as expressed in his report in chief Exhibit B) that the subject land probably would have been zoned Rural 1(b) by the LEP had it not been zoned 5(a) “Special Uses—Drainage”.
23. The stated reasons for Mr Mullane’s opinion were (i) the history of the zoning of the subject land from 1951 when the County of Cumberland Planning Scheme came into force to 1988 when the LEP came into force; and (ii) the physical condition of the subject land and the constraints on its development.
24. The zoning history was that from 1951 until 1987 the subject land (in common with the Eskdale Street precinct) had been zoned for rural or non-urban purposes and that in 1987 the subject land (in common with some adjoining lands) had been zoned for “Special Uses—Drainage” purposes. The relevant constraints were identified as (i) flood liability; and (ii) access difficulties.
25. In the course of his oral testimony, Mr Mullane was asked in chief whether the recent development of the residentially zoned lands situate immediately to the west of the lands zoned 5(a) “Special Uses—Drainage” had any relevance to the question of determining the underlying zoning of the subject land. His answer was that it was of no relevance because the Council’s planning for this precinct had recognised that a drainage system was needed for the lands situate to the west of the subject land (and the other lands zoned 5(a) “Special Uses—Drainage”) and that the subject land was required as a necessary component of that drainage scheme.
26. However, this testimony was significantly undermined when in the course of cross-examination, Mr Mullane made the following concessions—
(i) his reports (Exhibits B and F) had not stated that the subject land was required for drainage purposes to serve the residentially zoned lands situate immediately to the west of the lands (including the subject land) zoned 5(a) “Special Uses—Drainage”;
(ii) he did not know what the 1987 proposed trunk drainage system designed for the Council by Rose Consulting Group had said about the need for the subject land to be included in that system;
(iii) he did not know why the Council had acquired the subject land; and
(iv) his Reports had not addressed the question of the underlying zoning of the subject land by considering what would have been the alternative zoning in 1987 when the subject land was first zoned 5(a) “Special Uses—Drainage”. (that zoning being perpetuated by the LEP in 1988)
27. The question of the relevant history of the Council’s flooding and drainage proposals concerning lands in the Eskdale Street Precinct was addressed by Mr Bewsher in his Report (Exhibit 5). The following extract is taken from his Report under the heading “History of Relevant Flood Plain Proposals”:—
13. Based on our review of the available documentation, we have prepared a brief history of flooding and drainage proposals and reports that may be of relevance to the floodplain issues before the Court.
14. During the 1980s, Council prepared drainage proposals for many parts of the Blacktown local government area. Specific proposals were prepared for Eskdale Street and the subject site by the Rose Consulting Group (refer Paragraph 6(a) above and Appendix A). The general philosophy of floodplain management at that time involved the construction of relatively straight grassed channels along existing watercourses and creek systems. Areas adjacent to these channels which were previously floodplains were usually filled to maximise development potential of the adjacent land These man-made channel systems were more efficient hydraulically than the natural creek systems and usually carried flows at greater velocities and with reduced waterway areas than the natural systems. Flood levels were often lower as a result
15. The scheme proposed for Eskdale Street seems typical of the philosophy described in the previous paragraph. It comprised the construction of trapezoidal channel with a base width of 10 metres to 14 metres running in a generally easterly direction from the eastern end of Eskdale Street to the Wal1grove Road box culverts. This base width was considerably larger than the existing creek channel.
16. As part of the Rose Consulting Group's proposals, a detention basin was to be located just upstream of Wallgrove Road on the southern portion of the subject site. This basin was to be formed by slight adjustments to the footpath and kerb on the south-eastern side of Wallgrove Grove. No excavation of the basin area was proposed.
17. The basin proposed on the subject site would have had minimal storage capacity and virtually no impact in attenuating flood flows. As such, it would not have functioned as a normal detention basin functions, by today's standards. This fact was recognised in subsequent studies carried out for Council.
18. Whilst we have not carried out specific hydraulic computer modelling of the system proposed by the Rose Consulting Group, based on the modelling of the current proposal and the existing system which has been carried out by our firm, it is our opinion that if the Rose Consulting Group's proposals had been implemented, 100 year flood flows could have been confined to the proposed grass channel system and minor site earthworks carried out so that the vast majority of the site would have been free from inundation in a 100 year flood event. As only a very small portion of the subject site would have been affected by the proposed trapezoda1 channel, there would have been no need to acquire the majority of the subject site and supposedly it could have been developed for residential purposes.
28. The significance of the foregoing evidence to the question of determining what is the relevant planning assumption lies in the fact that it is apparent that the 1987 trunk drainage proposal could have been implemented without requiring anything like all of the lands which had been zoned “Special Uses—Drainage” initially in 1987 (and perpetuated in 1988 by the LEP) and in particular, without requiring virtually any part of the subject land which, although flood liable, was not traversed by the existing Creek line of Minchinbury Creek as it flowed downstream immediately to the south of the subject land under the culverts in Wallgrove Road where soon thereafter it joined with the more major Eastern Creek.
29. Moreover, in rebuttal of the Council’s submission that the application of the Pointe Gourde principle to the facts of the present case required the Court to disregard the residential zoning of the majority of the land in Deposited Plan 15587, it is important to appreciate that the 1987 trunk drainage proposal was not a proposal that was required by the future residential development of the residentially zoned lands in the Eskdale Street precinct. That precinct comprised an area of approximately 14 hectares (compared with the approximate area of 2 hectares comprising the 5(a) “Special Uses—Drainage” zone which included the subject land), whereas the relevant local catchment for Minchinbury Creek was 170 hectares (according to Mr Bewsher’s evidence: Exhibit 5) or 145 hectares according to Dr Perrren’s evidence: Exhibit C) chiefly comprising the areas of “Australia’s Wonderland” and the Pinegrove Cemetery (both situate due south of the Eskdale Street precinct) in addition to some areas of residential development.
30. In respect of the residentially zoned lands in the Eskdale Street precinct, it is to be noted that their recent and continuing development for residential purposes has occurred by substantial land filling to raise the lands above the 100 year flood level combined with the installation of major reinforced concrete box culverts under the easterly extension of Eskdale Street (where it terminates at the intersection of he Residential 2(b) zone with the “Special Uses—Drainage” zone) which discharge flood waters into a man-made natural channel which directs flood waters to the culverts under Wallgrove Road.
31. Although the Council’s cryptic submission that this was a Pointe Gourde case was not elaborated, I take it that it was suggestive of the fact that but for the Council’s unspecified drainage proposal as reflected in the creation of the “Special Uses—Drainage” zoning of some 2 hectares of land (being the easterly sector of the Eskdale Street precinct) the majority of the lands in that subdivision would not have been zoned Residential 2(b) by the LEP in 1988. The ultimate relevance of this “suggestion” is that the Court in determining what planning assumption should be made in the present case in respect of the subject land would not adopt a residential zoning (as contended for by the Applicants) but would adopt the Rural 1(b) zoning (as contended for by the Council).
32. In my judgment, the evidence adduced in the present case does not support the Council’s submission. In fact, as I have already noted, the evidence in fact substantially rebuts the submission. Mr Bewsher’s evidence (and the documentary materials from the Council’s official sites) demonstrates how the drainage proposals were in a state of flux for much of the past 15 years since the Special Uses—Drainage zone was applied to the subject land (and adjoining lands) in 1987/8. As late as 1999 the Council was pursuing a proposal which would have eliminated the need for the retention of the Special Uses—Drainage zoning in the Eskdale Street, precinct.
33. The plain fact is that the majority of the land in Deposited Plan 15587 was zoned Residential 2(b) by the LEP in 1988. The only possible legal justification for ignoring this fact in determining what relevant planning assumption should be made in respect of the subject land after its “Special Uses—Drainage” zoning is properly disregarded, would be some form of extended application of the Pointe Gourde principle so as to require to be disregarded any increase in value of the subject land by virtue of the increase in values of the residentially zoned lands in the Eskdale Street precinct (by virtue of their being so zoned) that was caused by the Council’s proposal to carry out the drainage works on the “Special Uses—Drainage” lands.
34. If there were any evidence to establish that the LEP zoned the majority of the lots in Deposited Plan 15587 (the Eskdale Street precinct) Residential 2(b), only because, and as a consequence of, the Council’s drainage proposal and the “Special Uses—Drainage” zoning of other lots in that Deposited Plan, then it is reasonable to expect that that evidence would have been available to the Council and would have been adduced by the Council in support of its case. Importantly in this respect, it is to be noted that the Council carried the onus of establishing that the proposed drainage works increased the value of the subject land (indirectly by virtue of the Council’s drainage proposal increasing the value of the residentially zoned lands in the Eskdale Street Precinct).
35. Not only was no such evidence forthcoming from the Council, but as I have earlier noted, the documentary evidence establishes that the Council had advised Mr Higgins, the Applicant’s valuer that the appropriate “alternative” (ie underlying) zoning of the subject land (in consequence of disregarding its actual zoning) would be Residential 2(b) zone.
36. For all of the foregoing reasons, I would reject the Council’s submission that in determining the relevant planning assumption in respect of the subject land it is necessary to disregard the fact that the majority of the land in Deposited Plan 15587 (the Eskdale Street precinct) was zoned Residential 2(b) by the LEP in 1988 at the same time that it zoned the subject land (and some neighbouring lands) “Special Uses—Drainage”.
37. Having disposed of the Council’s submission based upon the Pointe Gourde principle, I am left with the task of making that determination of the relevant planning assumption on the basis of the evidence that I have earlier summarised.
38. In my judgment, the weight of that evidence (especially the evidence of Mr Rhodes and Mr Bewsher) clearly favours the view contended for by the Applicants, namely that but for the “Special Uses—Drainage” zoning of the subject land (and some immediately adjoining lands) by the LEP in 1988, the subject land would probably have been included in the Residential 2(b) zone which was contemporaneously applied to most of the land in Deposited Plan 15587 (the Eskdale Street precinct).
39. In so concluding, I would note that the principal foundation for Mr Mullane’s opinion that the subject land would probably have been zoned Rural 1(b), namely the several constraints on a residential development of the site which he had identified in his report in chief (Exhibit B) were all shown to be overcomable (albeit resulting in some limitations on the scale and density of any residential development) in the course of the experts conferencing during the hearing producing joint expert reports by the town planners, the drainage and flooding engineers and the valuers. Indeed, the very significant shift in Mr Mullane’s opinion can be gauged by comparing his opinion in his Report in Reply (Exhibit F) that possibly six dwelling units might be an achievable development on the subject land, but subject to significant risks of not being realised, with his joint statement with Mr Rhodes (Exhibit 9) that the yield would be 10 or 13 dwellings.
40. The other foundation for his opinion, namely the history of the consistent rural or non-urban zoning of the subject land between 1951 and 1987, is not, in my judgment, a sound or cogent reason for the perpetuation of that zoning, especially in view of the fact that the LEP had zoned Residential 2(b) the majority of the land in Deposited Plan 15587 (the Eskdale Street precinct) which provides an illustration of the conventional processes and outcomes of the planned urban release of former rural or non-urban zoned lands that has been systematically occurring in the Metropolitan Sydney Region for more than the past 30 years.
41. Indeed, I think that I can take judicial notice of the relevant features of the urban release programs that have been undertaken in the Metropolitan Sydney Region these past three decades, including the fact that the provision of essential infrastructure in order to convert “greenfields” lands into residential urbanised lands is invariably included in the relevant planning documents and more particularly in s 94 Contributions Plans which identify lands and works required to provide the necessary urban infrastructure and include arrangements for the acquisition of such lands required for public purposes at values that are commonly referred to as “unaffected values” (ie values not affected by the fact that the lands are required for the purpose of the provision of necessary urban infrastructure eg roads, drainage, open space etc).
42. Having determined that the relevant planning assumption is that the subject land would probably have been zoned Residential 2(b), it remains for me to consider the value of the subject land upon the basis of that planning assumption.
C. THE MARKET VALUE OF THE SUBJECT LAND ON THE ASSUMPTION THAT IT COULD BE DEVELOPED FOR RESIDENTIAL PURPOSES
43. In their joint report (Exhibit 1) Mr Bewsher and Dr Perrens agreed that the subject land was capable of being developed for residential purposes subject to filling and compensatory excavation to offset the impacts of the filling.
44. In his Report (Exhibit 5) Mr Bewsher considered three options to overcome the flood liability of the subject land in order to maximise its potential for residential development. Option (a) contemplated filling of the northern portions of land where the filling would be obtained by compensatory excavation works undertaken on the subject land. This option would result in something a little more than 70 per cent of the site being above the 100 year flood level. Other options (b) and (c) contemplated offsite works including works enlarging the channel of the creek either of which options would result in a greater proportion of the subject land being entirely flood free (ie above the 100 year flood level).
45. In their joint report (Exhibit 9) Mr Rhodes and Mr Mullane employed Mr Bewsher’s option (a) to deduce probable yields for the medium density development of the subject land. Those yields were either 10 dwelling units (if the 70 per cent flood free part of the subject land were available) or 13 dwelling units (if a greater proportion of the subject land were available for development). In his original Report (Exhibit 3), Mr Rhodes had estimated a yield of 12 or 13 dwellings.
46. In my judgment, the bargain likely to be struck by the hypothetical parties to the assumed sale of the subject land would be based upon the more conservative estimated yield of 10 dwellings than upon the higher yield. This is because of the existence of the physical constraints on the development of the subject land, even assuming that it would have been zoned Residential 2(b). Although the valuers, in their joint reports (Exhibits 10 and 12) have made an allowance for “all risks associated with the possible development of the site” I nonetheless think that the hypothetical parties would adopt a cautious approach to the various options proffered by Mr Bewsher in his Report.
47. Having concluded that the relevant medium density yield is 10 dwellings, that result can now be factored into the agreement that was reached by the valuers (Exhibit 10) concerning the market value of the subject land.
48. Again, in relation to the differential risk allowances agreed by the valuers, I think the hypothetical parties would adopt the 10 per cent risk allowance upon the basis that vehicular access to the subject land would be via an internal service road rather than via the highway frontage directly (the latter option being unlikely to be agreed by the Roads and Traffic Authority or the Council even though the latter has available to it the discretion under cl 22 of the LEP to allow direct highway access).
49. This means that the market value of the subject land agreed by the valuers is $595,000 computed as follows:
- 10 dwelling units @ $85,000 each $850,000
Less costs of $200,000 $650,000
Less 10 per cent allowance for risk $595,000
50. In my judgment, $595,000 represents a fair assessment of the market value of the subject land based upon the planning assumption I have made and should be adopted.
51. In adopting it, I have not considered the evidence in the present case concerning constraints on the development of the subject land was left in such a state of reasonable uncertainty or doubt as would justify the adoption of a “more liberal estimate” in accordance with the approach commended by Dixon J in Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Co Ltd (1947) 74 CLR 358 at 374.
52. In addition to market value of $595,000 the parties have agreed on the amount of loss attributable to disturbance in the sum of $36,265 (Exhibits 13 and 14) and that amount will be included in the total compensation payable.
D. CONCLUSIONS AND ORDERS
53. For all of the following reasons, I make the following orders:
1. Objection upheld.
2. Compensation is determined in the sum of $631,265 made up as follows:
- (a) Market value $595,000
(b) Disturbance $ 36,265
Total Compensation $631,265
3. Exhibits be returned.
4. Question of costs be reserved.
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