Smith v Roads and Traffic Authority of New South Wales - [2005] NSWLEC 438

Land and Environment Court

of New South Wales

CITATION:
Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438
This decision has been amended. Please see the end of the judgment for a list of the amendments.

PARTIES:
Leslie Alexander Smith (Appl)
Roads and Traffic Authority (Resp)

FILE NUMBER(S):
30669 of 2004

KEY ISSUES:
Valuation of Land :- Compulsory acquisition of land by RTA
Market value claim
Appropriate zoning for assessing compensation
Application of s 56(1)(a) Land Acquisition (Just Terms) Compensation Act 1991

LEGISLATION CITED:
Environmental Planning and Assessment Act 1979
Public Works Act 1912 (NSW)
Land Acquisition (Just Terms Compensation) Act 1991

CASES CITED:
Attorney General (UK) v Heinanman Publishers Australia Pty Ltd & Anor (1987) 10 NSWLR 86 at 189;
Broken Bay Peninsular Pty Ltd v Minister Administering the National Parks and Wildlife Act 1974 [1997] NSWLEC 165;
Brooks v Minister for Planing abd Environment & Anor (1988) 68 LGRA 91;
Carson v Minister for Planning and Environment (1990) 70 LGRA 215;
D & C Dwight v Sydney Water Corporation Limited [1995] NSWLEC 72;
F & J Cauchi v Blacktown City Council [1993] NSWLEC 183;
Fletcher Estates (Harlecott) Ltd v Secretary of State for the Environment [2000] 2 AC 307;
Housing Commission of NSW v San Sebastian Pty Ltd & Ors (1978) 140 CLR 196;
Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378;
Lalic v Roads & Traffic Authority (NSW) NSWLEC 430;
Overton Investments Pty Ltd v The Department of Urban Affairs & Planning [1998] NSWLEC 67;
Pamalco Pty Ltd v Minister Administering the National Parks and Wildlife Act 1974 [No 3] (1991) 71 LGRA 441;
Petar Rukavina v The Council of the City of Wagga Wagga [1993] NSWLEC 29;
Point Gourde Quarrying and Transport Co Ltd v Sub-Intendant of Crown Lands [1947] AC 565;
Raja Vyrichera Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302;
Roads and Traffic Authority (NSW) v Perry & Anor (2001) 116 LGERA 244;
Royal Sydney Golf Club v Federal Commissioner of Taxation (1957) 97 CLR 379.;
Rugby Joint Water Board v Shore-Fox [1973] AC 202;
Scarfone v Blacktown City Council [2004] NSWLEC 114;
Spencer v The Commonwealth (1907) 5 CLR 418;
Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251;
The Crown v Murphy (1990) 64 ALJR 593;
The Minister v Stocks & Parkes Investment Pt Ltd (1972) 129 CLR 385;
Tony Fidler as Trustee For Howship Holdings Pty Ltd v Port Stephens Council [1998] NSWLEC 193;
Wimpey Construction UK Limited v The Minister (1983) 53 LGRA 75

DATES OF HEARING: 14-15 June 2005
4 August 2005
26 August 2005

DATE OF JUDGMENT:

08/30/2005

LEGAL REPRESENTATIVES:
J Webster SC/A Stenmark SC (Appl)
Somerville Laundry Lomax (Sols - Appl)
R Lancaster (Resp)
Clayton Utz (Sols - Resp)

JUDGMENT:

THE LAND AND

ENVIRONMENT COURT
OF NEW SOUTH WALES

McCLELLAN J

TUESDAY, 30 AUGUST 2005

30669/04 SMITH v ROADS AND TRAFFIC AUTHORITY

HIS HONOUR : The applicant was the owner of land which was compulsorily acquired by the Roads and Traffic Authority pursuant to a Gazettal Notice dated 6 February 2004. The relevant land is identified as Lots 16 and 17 in DP104 and 457 being parts of land in Certificate of Title 10/565442 MD2/566453 and Lot 1 in DP1052078. The area of land acquired was 8.782 hectares.

By further Notice dated 17 September 2004 a small parcel of land being Lot 27 in DP1066975 with an area of 213.5 sq metres was acquired, this area having been omitted from the original acquisition.

Before the acquisition the applicant was the owner of all of the land in Lot 2 in DP566453 and Lot 10 in DP565442 and Lot 29 in DP755745 with a total area of 52.38 hectares.

The land abutts the southern boundary of Alstonville which is a village on the plateau area, as it is known, of Ballina Shire. Alstonville is presently planned to have a total population of 5,000 persons and is located a short distance from Wollongbar which historically has been smaller than Alstonville.

The land which was acquired abutts the southern boundary of the town and has a gentle slope from south to north. The land has been acquired to construct a by-pass of the Bruxner Highway so, that it will pass around the town of Alstonville, rather than comprising its main street as is presently the case.

At the date of acquisition the land acquired was zoned 9(a) (Main Roads Proposed). The relevant portion of the balance of the applicant’s land was zoned 7(c) Environment Protection (Water Catchment).

Separate questions

The current proceedings raise for consideration the development potential of the acquired land and the other adjoining lands which it is claimed have been affected by the road proposal. At the original hearing the parties accepted that that potential depends upon whether or not, but for the proposal to construct the by-pass, the land acquired and the adjoining land would have been zoned for urban purposes

In these circumstances it was determined that it would be convenient to investigate the question of the impact of the road proposal on potential of the land as a separate question. The expectation is that, once the answer to this question is known, the further work necessary to establish the market value of the resumed land and the compensation payable in respect of that land and the other lands will be confined and the prospects of the matter being settled between the parties significantly increased.

The matter has been made more complex than the parties contemplated at the original hearing because of the decision of the Court of Appeal in Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 252. That decision which raises possible ways of looking at the relevant questions not previously considered by the parties has required the refining of the separate questions and the receipt of further submissions.

Ultimately, the parties agreed that the following questions should be determined pursuant to orders made for determination of separate questions under Pt 31 of the Supreme Court Rules 1970:

1. “

In determining the market value of the resumed land at the date of acquisition disregarding the increase or decrease in value, if any, caused by the carrying out of, or the proposal to carry out the development of the by-pass:

1. Was the zoning, or the failure to change the zoning, of that part of the land zoned 7(c) Environment Protection (Water Catchment) caused by the proposal to carry out the development of the by-pass?

2. If so, what was the prospect of zoning or rezoning that land to either 2(a) Living Area, 2(b) Village or 1(a1) Rural, had it not been zoned 7(c) Environment Protection (Water Catchment)?

3. Accepting that the zoning of that part of the resumed land zoned 9(a) (Main Roads Proposed) was a step in the proposal to carry out the development of the by-pass what was the prospect of zoning or rezoning that land to either 2(a) Living Area or 2(b) Village or 1(a1) Rural, had it not been zoned 9(a)?

4. As an alternative to question 2, at the date of acquisition, would the land have been zoned 2(a) Living Area, 2(b) Village or 1(a1) Rural had it not been zoned 7(c) Environment Protection (Water Catchment)?

5. As an alternative to question 3, at the date of acquisition, would the land have been zoned 2(a) Living Area or 2(b) Village or 1(a1) Rural had it not been zoned 9(a)?

The parties agreed questions 2 and 3 should be answered out of concern that the decision in Walker Corporation required consideration of questions different from previous approaches to these matters which are reflected in questions 4 and 5.

In order to answer the questions it is necessary to consider the history of the planning and development of Alstonville. One critical question is whether the location for the by-pass road was chosen because a decision had been made that the town would not be allowed to expand in a southerly direction or whether the roadway has had the effect of foreclosing any possibility of expansion in that direction.

Factual matters discussed and determined

Until about 1966 the village of Alstonville was quite modest. However, in the late 1960s some pressure for development was being felt, apparently in response to the movement of people from broadacre farms to live in a village environment. An Interim Development Order was gazetted in June 1970 which provided for the town to be within a village zone. Land outside the village was zoned Non-urban. In 1969 correspondence between the Department of Main Roads and the Housing Commission of NSW confirms that the DMR was considering various proposals to improve the Bruxner Highway in the vicinity of Alstonville and provide a by-pass. The Housing Commission was a significant owner of land in part of Alstonville fronting Wardell Road and one of the proposed routes for the by-pass would have sterilised some of that land.

At that point in time Alstonville was within the area of Tintinbar Shire and the Council had approved the “in principle sub-division At that point in time Alstonville was within the area of Tintinbar Shire and the Council had approved the “in principle sub-division” of land known as Lot 28, which was owned by Mr Strong, and through which the proposed by-pass could be routed. Plans which have been tendered in these proceedings reveal that although the Council had approved a subdivision of part of Lot 28 there was an expectation of further subdivision of the allotment at some future date. I understand the Council had an interest in the acquisition of Lot 28.

A Minute of the DMR dated 24 April 1970 contains a discussion of the problems with the proposed deviation. The Minute records the following:

"On 13 February, 1970, advice from the Divisional Engineer was received that the developer of the proposed subdivision of Lot 28, Mr Brown and the Tintenbar Shire Engineer, discussed the subdivision with him and concern was expressed that the proposed deviation of the Highway at Alstonville would affect the subdivision. The Shire Engineer expressed the view that development south of the deviation could be thought to be 'on the wrong side of the tracks'. The subdividor also stated a preference for the Highway to be along Ellis Road at the south of the subdivision, but if this was not possible, stated that the most northerly line under consideration would have the least effect on the subdivision proposal. The Divisional Engineer then reported on several lines under consideration."

As I understand the comment of the Shire Engineer recorded in this paragraph he recognised that once the line of the roadway had been fixed development to the south of the road would be seen as inferior being "on the wrong side of the tracks." This would obviously be the case and, as later appears, the Department of Planning would not have allowed development beyond the line of the road. To have allowed that development would have defeated the purpose of having a by-pass constructed in the first place.

At this point in time three prospective routes for the by-pass were under consideration. The route which was further from the developed area of the town would be the most expensive for the DMR for it would require a greater length of road. However, the shortest route came closest to the already developed area and had the potential to sterilise a greater area of potentially developable land.

In a report to the Engineer-in-Chief of the Department of Main Roads dated 8 May 1970 Mr Brown, the Shire President, is recorded as having said:

"1. Council was more concerned with the overall affect of the highway being located so close to the existing route and felt that it was desirable to locate it further south, but he also stressed that Council was concerned with the overall affect and not only in regard to the affect on subdivision of Lot 28.

2. He considered that the brown line shown on the plan was a reasonable location for a new highway. He contended that Council was concerned with the affect of the blue or green lines and that the other lines near Ellis Road would probably represent the southern limit of development of Alstonville and that any closer location would present problems to Council.

3. From an engineering and local government point of view the area south to about Ellis Road was most suitable for sewerage development which Council had under consideration, but the imposition of a motorway and the intervening area of the green or blue line would make development south of the motorway undesirable or uneconomical

It was stated that in the area north of Ellis Road, sewerage can be gravitated in accordance with Council's present plans but that the extraction of a 3 chain road reserve would present problems.”

The evidence includes a document of the Shire discussing submissions to be made to the Department of Main Roads about the Alstonville deviation. The document was prepared for a meeting which occurred between the Council and the DMR on 4 June 1970.

The note records the fact that the Council supports the proposal to provide a replacement for the Bruxner Highway between Ballina and Lismore. The minute records the fact that Alstonville has recently experienced an upsurge in residential development with annual population increases that "put it in the forefront of developing community of its size in the northern part of the State". The Council is apparently encouraging the development and it is contemplated that the population of Alstonville will have increased from 630 in 1970 to 2000 by the year 1980. Prospects beyond that date are said to be "conjectural". Having recognised this potential development the Minute continues with the following:

"With the planning and construction of a motorway on the southern edge of the Village, Council would have to decide as to the advisability of allowing further development on the southern side of the motorway. Residents living in this area in the future would have to cross the motorway to carry out their normal daily activities of shopping and going to school. Whereas these circumstances are by no means unique it is considered that in the present situation they are completely unnecessary.

To avoid the above problems there are two alternatives. Council could limit development south of the proposed motorway. This action would alienate approximately 130 acres of land well suited for residential development and already served with the basic framework of services for water, sewerage and electricity. The loss of the development potential on the existing services and land in this area could be expressed as a financial loss to the community of Alstonville and the State. The other alternative available would be to select a route south of the area under consideration and so keep the urban development on one side only of the motorway and yet allow the Village to extend in the logical way. The selection of what is shown on the Department's plan of the proposals considered as a combination of the red and brown lines would achieve such an end. The apparent disadvantages of this proposal would be an additional length of approximately 500 feet of motorway and a need for an underpass to service the Ellis Road.

Council submits that it may be possible to equate the additional costs to the public in road construction and travel, to the losses incurred to the public in the inability to extend their Village along previously planned lines. However, it feels that this evades the main issue which is, that for purely minor economic gains the social wellbeing of the community of Alstonville is threatened with unnecessary damage."

The evidence includes notes of an interview with the Assistant Commissioner of the DMR and representatives of the Council. The President of Tintenbar Shire was Councillor Brown who was recorded as saying to the meeting:

"The position is, as you know, that with the already proposed alignment of the Bruxner Highway deviation around Alstonville, the Department has proposed two lines, the 'green' and 'blue' lines on the map (plans displayed during the interview) which are virtually through the middle of the village of Alstonville. There are two other alignments, one is 'red' and the other is 'brown' on the map. The 'brown' line is the one furtherest south which does much more for us. In fact, the 'green' and 'blue' lines deprive us of 130 acres of first-class development land which is a major consideration as far as we are concerned. Over the years this could mean quite a loss of revenue to our Council and we would feel it would spoil that particular area for development."

The reference to the 130 acres is, as I understand it, a reference to, at least in part, Lot 28 which was proposed for subdivision.

In the Minutes Councillor Brown is also recorded as urging the roadway to be kept further south and away from the town. The Shire Engineer, Mr Thorpe, is recorded as saying that "the development (of the town) is not on the north but on the southern side of the town."

The Minutes also record the following exchange:

"COUNCILLOR BROWN: Most of the areas on the northern side are developed to a point. It is elevated to the south and this is natural for development and it has water and so forth available.

ASSISTANT COMMISSIONER: Your proposition is to go south of Lot 28. From our point of view we are not in a hurry to do this but from your point of view you want an answer.

COUNCILLOR BROWN: We have young people who have bought blocks of land and who are waiting for this decision before they build their homes. We have sub-dividers in the same position."

Further in the Minute Mr Thorpe is recorded as saying the following:

"This is the most attractive one from the point of view of Alstonville, its growth and the people who live in the area. From the point of view of the Highway itself, this seems to be the most attractive one. As far as development in the future is concerned, you are not going to impede this area which has the greatest potential. This area is going ahead pretty rapidly and I think this is one area that should be looked at fairly sympathetically in respect of the proposed road. It is an area which is going to have some prominence in the future as far as development is concerned because it is between Ballina and Lismore and people are living here and working at either end. If the road is suitably located, you are going to encourage development rather than impede development in the future."

The matter was not immediately the subject of decision and there are other minutes from government files which have been tendered disclosing the further process of consideration.

In a Minute signed by J Giddy, Senior Draftsman, and endorsed by the Assistant Rural Investigations Engineer the discussions with the Council are considered. It is recorded in that document that a meeting had been held with Mr O'Neil and Mr Brooks of the State Planning Authority. They made plain that wherever the deviation came to be located it would define the southern boundary of the Alstonville Urban Centre.

In a report which was signed by Mr O'Grady on 19 August 1970 a recommendation is made that the DMR accept the orange line of the proposed roadway. The matters said to be in favour of the adoption of the orange line was as follows:

"(i) Permits more compact development of the town.

(ii) Council's asset in water supply and sewerage facilities for Lot 28 is not partly wasted.

(iii) The motorway will have less cross traffic at Wardell Road.

(iv) Council, and probably the State Planning Authority is better satisfied. The ORANGE line does not avoid the proposed subdivision in its future south-westerly extension, but no doubt it would better suit Council. This became apparent in discussion with the Shire President and Shire Engineer at the site."

The consideration of the matter concludes with the following:

"It is submitted that, as the ORANGE line would be primarily to satisfy Council. It should be for Council to ensure its acceptance by property owners affected - in particular, the owner of the cottage to the south of Ellis Road."

The recommendation made in that report was accepted by the DMR and was communicated to the Council by a letter which asks the Council to approve the proposed future route and take the necessary action to ensure the acceptance of the route by the effected landowners.

It must, of course, be remembered that the consideration of the route of the proposed deviation at this stage was against the background of a town of very modest proportions with an expectation that it might grow to have a population of 2000 by the year 1980. This position had altered significantly by the time the land was acquired in 2004.

Once the line of the bypass had been fixed, although it was included in relevant plans, it was not until 1987 that it came to be included in a planning instrument made under the Environmental Planning and Assessment Act 1979. However, by defining the proposed route the limits of development of the town to the south were fixed. Accordingly, any opportunity for the applicant to have sought to develop either the land to be taken for the roadway or land to the south of it was lost.

Although opportunities to develop land to the south of the roadway did not occur the township continued to develop. In 1975 the Council Engineer prepared a comprehensive report in relation to the prospects for development throughout the whole Shire which included detailed consideration of agricultural uses and the availability of agricultural land. It also included a detailed consideration of various settlements including Alstonville. In that report the Shire Engineer notes that the growth of the Village commenced in 1966 with the making available of a small number of residential lots. These were rapidly built on and the rate of settlement, particularly of persons in advancing years, increased. It also came to be recognised as a suitable address for workers in Lismore or Ballina offering a reduced capital cost of acquiring property and lower rates. The Village was noted as supporting a small commercial centre providing basic requirements, although the area was rundown and in need of revitalisation.

The Engineer raised the question in the Report whether, having regard to the growth rate which had been experienced in 1966, it was necessary to consider the ultimate size of the Village. He indicated that with a present population of 1,530 persons and the future availability of 553 serviced vacant allotments there was provision for a population of 3,200 persons. It was anticipated this population may be present by 1990. Having noted that one of the basic and immediate needs of the area was for land for light industry the report concluded:

"The growth of Alstonville will be clearly limited in the south by the Lismore-Ballina motorway planned for construction in the next five years. However, there is no other clear limitation to area of growth for topographical reasons, apart from the constraint imposed by a Council operated basalt quarry, and the position of Alstonville sewerage treatment works."

From this Report it is apparent that future development of Alstonville was contemplated. Although at the time the motorway alignment was being considered the Council saw future development of the town as likely to occur in a southerly direction, that opportunity was no longer possible beyond the line adopted for the motorway. Accordingly, it was necessary to provide for further development of the town in areas which were not affected by the motorway alignment.

A map was prepared and tendered in evidence which records the history of zoning in the Alstonville village. It indicates that the original Interim Development Order was made in June 1970 which provided for the zoning for urban purposes of a modest area of land along the main street together with a more significant area to the north-west. The second area zoned for this purpose was the area to the south and west of the route of the Highway, as it then existed (and still exists today) which is the area of land immediately to the north of the proposed motorway. The zoning of that area of land was followed by the release of land to the west in 1974 and to the north-west in 1977. Further lands to the north were released in 1979.

An area of land to the east of the town identified as Area 8 in the zoning history map was initially released as a large lot rural/residential holding. It was intended that the lots were to each have direct access to significant areas of open space. That area was released by Ballina LEP No 6 which was made on 2 October 1981.

In time Tintenbar Shire became incorporated in Ballina Shire and by 1985 the pressure for development throughout the Shire was such that it was determined there should be a Commission of Inquiry to consider the future course of development and make recommendations in relation to suitable zones to be incorporated within future planning instruments. The Inquiry, which was conducted as a public hearing, was chaired by Mr Simpson. He reported in September 1985. With respect to Alstonville the Commissioner recorded the fact that the central issue at the Inquiry was the appropriate future size of Alstonville and the neighbouring village of Wollongbar. An important issue was the size and location of any urban buffer to be provided between the two villages. Furthermore it was believed that if there was to be an increase in population, it should not be at the expense of maintaining the village atmosphere of either town and should not take the form of linear expansion so as to create one large residential, commercial and industrial centre.

A local environmental study had been undertaken in 1983. It included a further review of the Alstonville Wollongbar area and proposed a population limit of 4,500 for Alstonville. The intended strategy was included in a draft Local Environmental Plan which contemplated an ultimate population for Alstonville of 5,900 by the year 2001.

It was this proposal which generated public concern and the need for the Public Inquiry. Submissions were received that suggested the Study contemplated excessive population for Alstonville and, because an even more significant population increase was contemplated for Wollongbar, it was feared by some that the possibility of maintaining a village atmosphere for both centres may be lost.

Commissioner Simpson drew attention to the 1975 Tintenbar Shire Council strategy for the Alstonville Wollongbar locality and referred to the summary which said as follows:

"In the case of Alstonville and Wollongbar the aim is to develop Alstonville to a population of approximately 4,500 persons and Wollongbar to approximately 2,500 persons. Each centre will have its own village infrastructure, with that of Alstonville being the more highly developed. Access between the villages will by means of an open space corridor with pedestrian and cycleway along the creek. The population of approximately 7,000 persons, with the immediate surrounding rural area, is sufficient to support a High School proposed for Alstonville. A small industrial park is proposed on the level area between the two villages. The surrounding area is proposed as non-urban, but the major consideration in this area is the open space content, and rural residential developments that provide a satisfactory open space content will receive consideration. In the event of a population pressure beyond these levels the development of separate further village structure in an area without physical constraints is suggested."

Commissioner Simpson came to the view that significant expansion of Wollongbar would be appropriate. He did not believe that the expansion provided within Alstonville should be as intense and was of the opinion that Alstonville should be contained so as to continue to provide a village character and lifestyle. However, he did recommend an increase in the population of Alstonville which would limit its size to about 5,000 people. Consistent with this recommendation was the release of an area of land to the north of the town identified as Area 10 on the zoning map history document. Commissioner Simpson rejected the possibility of the release of a further area of land known as the "Campbell land" which had been included in the draft Local Environmental Plan as potentially suitable for urban development.

Commissioner Simpson's recommendations were ultimately incorporated into Ballina Local Environmental Plan 1987 which was made in February of that year. It provided for the release of the area of land known as Area 9. Area 10 was ultimately released by an amendment to the 1987 Local Environmental Plan which was made in March 1989.

From this history it is apparent that although in the early 1970s Alstonville was a modest village it was recognised from that time that it was likely to grow. Accordingly, efforts were made to provide for orderly planning to accommodate that growth recognising the need to provide appropriate infrastructure, including shopping centres, schools, water and sewerage and other community facilities. An examination of the zoning history demonstrates that the land which has been released to accommodate the population growth has generally been provided at a similar distance from the central facilities including shopping and school facilities in the town and in a manner which allows for its effective incorporation into the water and sewerage system designed in the 1970s. The only part of the town where this development pattern is not apparent is in the area to the south of Area 2 which, of course, includes the subject land. In that area an examination of the zoning history map confirms that the line of the proposed motorway has precluded the release of land for urban purposes. That impediment, in my opinion, has been artificially provided. But for the proposed roadway, given that the major facilities of the town are located in Area 2 or adjacent to it and that the land to the ridge on the subject land could all have been provided with sewerage, which would naturally drain to the sewerage treatment works which have been located to the north of the town, it would have been logical that the acquired land, together with the additional land owned by the applicant to the ridge line would have been incorporated into the village zone. The benefit which this land had of proximity to the town centre and the opportunity to be incorporated into the sewerage system without the necessity for a pumping station made it more desirable for development than the land in Areas 8 and 9, both of which were released for village development after the 1985 Commission of Inquiry. By the date of acquisition village zonings had been replaced by more particular zone descriptions. Consistent with those descriptions by the time of acquisition, I am satisfied that the relevant land would have been zoned Residential 2(a).

The acquired land and the additional lands of the applicant are classified 2 under the Ballina Shire Agricultural Land Classification Map. Some are also class 3 land. The class 2 land is the highest level of classification in this area and it is submitted by the RTA that, accordingly, the land would not have been given over to village purposes but would have been kept for agriculture.

To my mind, there is no force in this submission. Both Area 9 and Area 10 were class 2 lands and they were given over to urban development. I see no reason why that would not have been the case in relation to the subject land.

Evidence was given on behalf of the respondent by Mr Palmer who is an experienced town planner and landscape architect. He has examined the history of development in Alstonville and the related documentation and has formed the view, expressed in a report, that if the acquired land had not been required for the roadway it would have been zoned 7(c) - Environmental Protection (Water Catchment) Zone pursuant to Ballina Local Environmental Plan 1987.

It will be apparent from my analysis that I do not accept his view.

Mr Palmer reached his conclusion after considering the fact that beyond the ridge line to which I have referred, the applicant owned significant further lands which form part of the catchment of the Duck Creek which is an important supplementary water supply for the town of Ballina. In Mr Palmer's opinion, the relevant authorities would not have allowed any part of the applicant's land beyond the motorway to have been given an urban zoning because it may have compromised the integrity of the catchment land. He formed this opinion even though part of the land is on a north facing slope draining to the north and not into the catchment. He was concerned that it was possible that if development was allowed on that north facing slope, the groundwater may be contaminated with adverse consequences for the catchment.

I cannot accept Mr Palmer's view. If the area was zoned urban I have no doubt that adequate provision could be made in any development consent to ensure that facilities were kept sufficiently removed from the ridge to ensure that surface flows would not enter the catchment. Provision would also have been made to ensure that only appropriate development which would not contaminate any groundwater flows would have been provided. I am also satisfied and it is obvious from the topography that there was no justification derived from the integrity of catchment lands for imposing a water catchment zoning on land below the ridgeline. It must be the case that rather than provide a modest area of non-urban zoned land it was thought more convenient to extend the catchment zone to the road boundary. However, but for the road, I am completely satisfied the land would have been zoned for development - village or residential.

Mr Palmer was also of the opinion that the land was valuable agricultural land and, accordingly, would not have been given over to urban development. As I have indicated the land is valuable agricultural land, being basalt country, but this factor has not precluded development of similar land elsewhere in the Alstonville township and I do not believe it would have been an impediment on the subject land.

Mr Palmer has also expressed the opinion that not only because of the need to preserve the catchment and the value of the land for agriculture but because of the intention to limit the ultimate population of Alstonville to a threshold of approximately 5,900 persons this "would have created a specific deterrent to any urban rezoning of the subject land." He says that:

"Bearing in mind that the subject land has an area of 8.803 ha, at a residential density of 14 lots/ha, a maximum yield of 123 lots and resultant population of approximately 320 persons may have been hypothetically feasible should the land have been suitable for urban purposes. In light of the well documented Council restrictions to the wholesale expansion of the population of Alstonville, especially after 1983, together with other planning and agricultural constraints, in my opinion it would inconceivable that Council or the State Planning authority would have supported an urban rezoning so as to permit the release of an additional 123 lots within Alstonville.

However, I am of the opinion that the subject land and northern section of the original land parcel would never had been rezoned or developed for urban uses due to the imperative planning objective of preserving the high agricultural qualities of this land and avoiding potential land use conflicts which would compromise such qualities."

In my view, Mr Palmer's opinion overlooks the fact that to accommodate the accepted additional population of Alstonville after 1983 significant areas of land being areas 9 and 10 in the Alstonville Zoning history map were released. Although the release of Area 10 could be justified by reason of its relative proximity to the town centre and ready inclusion in the sewerage system, this is not the case with Area 9. As I have already indicated Area 9 required pumping stations to drain its sewerage and was significantly further removed from the town facilities than the area of the applicant's land suggested as appropriate for development but for motorway. To my mind, but for the delineation of the by-pass where it was provided in the early 1970s, the applicant's land to the ridge south of the proposed roadway would have been given an urban zoning and released for urban purposes possibly before 1985 but certainly by 1989. The formulation of the proposal for the roadway denied the land urban potential.

In this case, and unlike many others, the Court has had the benefit of evidence from persons who were actually involved in making the relevant planning decisions. Mr Thorpe, an experienced engineer and planner, carried out those tasks for the relevant council, (Tintenbar was amalgamated with Ballina) from 1970 to 1982. He gave the following evidence which I accept:

1. “

In this period, perhaps best described as an hiatus in the planning process, I continued to use the 1975 Study as a basis for my recommendations to Council on changes to land use. These changes where they required approval from the State Planning Authority were also underpinned by this Study.

As indicated earlier herein, if the proposed by-pass had not been identified by the Department of Main Roads, I would have recommended to Council that we purchase all of the land of the Smiths which was not affected by the Water Catchment Constraints and incorporated that land into the expansion of Alstonville and IDO Amendment No 1.

Had the proposed by-pass not been positioned where it was in 1975 and the land of the Smith’s not already zoned, I would have included that land and the adjoining land not affecting the Water Catchment, as blue in the Tintenbar Land Use Strategy. That is, as potential expansion of the village of Alstonville. This would have been a more favourable option than the westerly slope subsequently used for the expansion of the Village around what became the High School.”

Mr Connelly, another experienced planner, was the planner for Ballina Shire from 1981 to 1986. He gave the following evidence:

1. “

At the time of the preparation of the Ballina Draft Local Environmental Plan, I was employed by Ballina Council as a town planner. I was intimately involved in the preparation of work associated with the Local Environmental Study which preceded the Draft Local Environmental Plan and the Draft Local Environmental Plan itself.

The aims of the 1985 draft LEP with respect to residential and were:

1. ‘

i) Consolidate existing urban areas to ensure optimum utilisation of land, services and support facilities.

ii) Promote the orderly and efficient development of land which is suitable for urban uses and promises a high level of residential amenity.’

Relevant objectives were:

1. ‘

i) Allocate sufficient land within the Alstonville Wollongbar locality to cater for anticipated population growth, whilst minimising adverse affects on the agricultural enterprise and scenic quality of surrounding land.

ii) Maintain a village scale and amenity presently enjoyed by allowing minor rounding off of the Alstonville Village area to achieve a population of approximately 5,900 persons by the year 2001.’

As is clear from the above objectives and as I am aware from my involvement with the Draft LEP, Council had moved away from the Tintenbar Shire 5000 village population ‘development cap’ policy in its Draft LEP strategic approach. Council was prepared to provide all the necessary ‘headworks’ civil infrastructure to accommodate the ‘rounding off’ of the village area and to facilitate development as anticipated by the Draft LEP. For example, the Draft LEP included land to the west of the village for future urban expansion (Campbell’s Farm). In defining this land, Council undertook to provide all the necessary ‘headworks’ and civil infrastructure to accommodate such growth. In point of fact, the Campbell Farm was far less suitable for development than the Smith land and less consistent with the abovementioned objectives. However, the inclusion of the Campbell Farm in the Draft LEP showed the strong strategic commitment Council had to ‘round off’, in so far as practical, the village of Alstonville.

Pursuant to the above observations, the rezoning of the Smith land up to the water catchment boundary would have, had it not been for the ‘motorway’, been consistent with the aims and objectives of the Draft Ballina Local Environmental Plan.

In my opinion, had it not been for the highway by-pass proposal, that part of the site not physically constrained by the Duck Creek water supply catchment would have been zoned 1(d) rural investigation zone under the Draft LEP. I believe the land would have then been released for residential purposes in March 1989 with the making of Ballina LEP Amendment 2. Rezoning of the Smith land being the land currently zoned 9(a) and land south of that up to the catchment boundary would have occurred early in the life of the Ballina Local Environmental Plan because of the continued demand for residential land in the locality. The Smith land is much better located by reference to civic facilities than the land which formed the Ballina LEP Amendment No 2. This being the case, I believe it would have had a preferential release for residential purposes.

I know from my involvement in the Draft LEP planning process at the time, that land defined for urban release was catered for in associated civil works and infrastructure planning. This was a mandatory requirement of the North Coast Regional Environmental Plan (NCREP) at the time. Had it not been for the highway bypass proposal, the Smith land would have been designated in the Draft LEP for future residential development and, as required by the NCREP, Council would have certified the future availability of infrastructure provision.”

I accept Mr Connelly.

The relevant law

After the primary argument was concluded the Court of Appeal handed down its decision in Walker Corporation . It was submitted by the respondent that this decision significantly alters the traditional approach to the application of s 56(1)(a) of the Land Acquisition (Just Terms Compensation) Act 1991 and, accordingly, the outcome in the present matter. It is necessary to consider whether this is so.

The submission which the respondent makes is that the reasons for judgment in Walker Corporation of Basten JA, with whom Beazley JA and Stein AJA agreed, have the effect that, rather than the Court being required to determine the zoning which the land would have had at the date of acquisition, but for its zoning to facilitate the roadway, it is necessary to first identify the chance of the land being zoned for urban purposes in the early 1970s, when the alignment of the proposed roadway was fixed and then ask the question - what, if any, has been the impact upon that chance of the later actions in pursuance of the road proposal? This approach was accepted by counsel to be an approach never previously adopted. The applicant submitted that as the approach would be contrary to the decisions of the High Court in Housing Commission of NSW v San Sebastian Pty Ltd & Ors (1978) 140 CLR 196 and the Court of Appeal in Roads and Traffic Authority (NSW) v Perry& Anor (2001) 116 LGERA 244 it should not be accepted.

The respondent submitted that I was bound to follow the ratio stated in Walker Corporation unless I came to the conclusion that it was inconsistent with other authority from the Court of Appeal. In that event it was accepted that I should attempt to reconcile my reasons with any relevant decisions of the High Court.

The land which was acquired in Walker Corporation was a significant parcel of waterfront land on Sydney Harbour. It had previously been used as an oil terminal which had left behind significant contamination. Although this was an impediment to its use for residential purposes the owners of the property had been attempting for a number of years to have the land rezoned to permit medium density housing. Since at least 1989, the local council had resisted those attempts, although they had been supported by the State Government. The council had taken proceedings challenging the validity of rezonings which had been effected by the State Government. Ultimately, the State changed its position and decided to acquire the land for open space in 2002.

The reasons of Basten JA contain an analysis of the relevant provisions of the Land Acquisition (Just Terms Compensation) Act 1991 and some of the previous decisions of the High Court and Court of Appeal relevant to the application of the statute. It will be necessary to consider part of that analysis. However, the respondent emphasises four paragraphs in his Honour's reasons which it says support the submission which it makes in the present case.

The paragraphs from Basten JA's reasons which the respondent says are of particular relevance to the present case are as follows:

"[85] The lesson of San Sebastian is that no narrow view should be taken of steps which may affect the value of land. Nevertheless, it is necessary to distinguish between conduct which constitutes a proper exercise of planning powers irrespective of the ultimate resumption and a use of planning powers in pursuit of a proposed resumption. The facts in the present case suggest that, although it had powers of compulsory acquisition, the Council, perhaps for financial reasons, was never likely to exercise those powers. In any event, that is a factual question which may need to be addressed. The reason why it is significant is that, in a case where planning powers and powers of compulsory acquisition are vested in separate bodies, the absence of any intention on the part of the State authority with power to acquire in order to carry out such a public purpose will, except perhaps in unusual cases, suggest that the exercise of planning power in the hope that the State authority may change its mind will be unlikely to constitute the carrying out of the public purpose. The present case is unusual in this respect. As the material before the primary judge demonstrates unequivocally, the State Government was for many years opposed to the overall public purpose and committed to the use of the land for residential purposes. The significance of the two attempts by Ministers in 1992 and 1995 to take over planning control of the site so as to approve residential development, demonstrates this difference in circumstances. The fact that the attempts were legally flawed is beside the point: the State not only did not seek to pursue the relevant public purpose – it actively opposed it.

[86] Nevertheless, it does not follow that a rezoning for residential use, at that date, should be treated as an assumed fact. Although the exercise may seem artificial, it is necessary to ask what the prospects of rezoning were at the date at which, for whatever reason, the terms of s 56(1) were engaged. If the chance of the Council rezoning for residential use was, at that time, assessed at 25%, why is it appropriate for the Court to disregard entirely the substantial likelihood that no rezoning would have occurred immediately prior to that time?

[87][87] Furthermore, it is far from clear that s 56(1) operates so as to require that a failure to act be disregarded. The trial judge avoided this question by referring to the “underlying residential zoning”. With respect, if all that is meant is the zoning which he believed would have been imposed absent the Council’s desire to see no redevelopment, it is a misleading expression which tends to conceal the nature of the legal issue at stake.

[88] Once a proposal to acquire the land had been adopted, the refusal of an application to rezone the land could well be seen as the carrying out of the public purpose for which the land was (later) acquired. Nevertheless, there is no statutory warrant to assume that the opposite decision was taken. Rather, s 56(1)(a) requires that any increase or decrease in the value of the land caused by that refusal to rezone must be disregarded. On the assumed fact noted above, namely that, at the time the proposal was adopted, the market rated the chance of a rezoning at 25%, the adoption of the proposal would have reduced that figure to an insignificant level. The rejection of a development application which constituted a step in carrying out the public purpose, would, in all likelihood, come after the adoption of the proposal. In that case, it would have no effect on the value of the land. On the other hand, it is possible that such an act might precede the public knowledge that the proposal had been adopted and might reduce the expectation of rezoning from 25% to 10%. Public knowledge of the proposal would then reduce the chance to zero. Either way, the decrease in value which should be disregarded pursuant to s 56(1)(a) is the loss of the 25% chance of rezoning for residential use. Because this calculation was not undertaken by the trial judge, the judgment must be set aside and the matter remitted to the Land and Environment Court to be determined according to the principles outlined above."

The traditional approach

63
In my understanding, the traditional approach to the application of s 56(1)(a) is embodied in the last two of the separate questions raised in these proceedings. In simple terms (it is possible to express the problem in more complex and possibly less helpful ways) the approach which has been traditionally adopted involves the following steps:
1. Identify the zoning of the land at the date of acquisition.
2. Determine whether that zoning was imposed or retained in order to facilitate the implementation of the public purpose for which the land was acquired.
3. If the answer to question 2 is yes, that zoning is notionally set aside, and the potential of the land and ultimately its market value is assessed by determining how the land would have been zoned, at the date of acquisition, but for the proposal to carry out the public purpose.
Although the cases demonstrate that the answers to those questions may involve complex factual matters, they have been understood as the appropriate steps to give effect to s 56(1)(a) of the Land Acquisition (Just Terms Compensation) Act 1991. See Petar Rukavina v The Council of the City of Wagga Wagga [1993] NSWLEC 29; F & J Cauchi v Blacktown City Council [1993] NSWLEC 183; D & C Dwight v Sydney Water Corporation Limited [1995] NSWLEC 72; Broken Bay Peninsular Pty Ltd v Minister Administering the National Parks and Wildlife Act 1974 [1997] NSWLEC 165; Overton Investments Pty Ltd v The Department of Urban Affairs & Planning [1998] NSWLEC 67; Tony Fidler as Trustee For Howship Holdings Pty Ltd v Port Stephens Council [1998] NSWLEC 193; Scarfone v Blacktown City Council [2004] NSWLEC 114

The Land Acquisition Act

The Land Acquisition (Just Terms Compensation) Act, as is now common, includes a statement of the objects intended by the legislature to be effected by its provisions. The first object is in the following terms:

"S 3(1)(a) to guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition."

For present purposes the object has a number of important components. Firstly, it provides a guarantee that land affected by a proposal will be acquired at market value. Secondly, the market value will be determined at the date of acquisition. Thirdly, the value paid will be not less than the market value which the land would have, at that date, if it had not been affected by the proposal.

Part 3 Division 4 of the Act provides for the determination of compensation when land is acquired. An essential obligation of the acquiring authority is to pay compensation in the amount which, having regard to matters in Part 3, "will justly compensate the person for the acquisition of the land" (see s 54(1)). The inclusion of the statement that compensation must be "just" in s 54 informs the approach which must be taken to the application of Division 4. In the event of any ambiguity in the legislation, or difficulty in its practical application, the ultimate result must provide a "just" outcome for the dispossessed owner.

Section 55 and 56 of the Act are in the following terms:

1. “

55 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,

(b) any special value of the land to the person on the date of its acquisition,

(d) any loss attributable to disturbance,

(e) solatium,

(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 (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

(2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition.”

Section 55 provides a statement as to the matters which are relevant to the determination of the amount of compensation. The starting point is "the market value of the land on the date of its acquisition." This statement is faithful to the object in s 3(1)(a).

Market value is defined in s 56(1). It embodies the classic statement of a hypothetical sale - "a willing but not anxious seller to a willing but not anxious buyer" and requires the hypothetical sale price to be determined disregarding three matters.

The first matter to be disregarded is "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" (section 56(1)(a)). This is not a complex statement although the facts relevant to any case may be complex and create difficulties in its application. To my mind, (and I do not believe Walker Corporation requires me to determine otherwise, although Basten JA raises some doubts see [39]), in relation to matters of zoning, s 56(1)(a) requires that (a) a zoning imposed to facilitate the public purpose, and, (b) a zoning which has been maintained to facilitate such a purpose is to be set aside, when, in either case, the facts make plain that but for the proposal to carry out the public purpose some other zoning would have been imposed. A decision must then be made as to the zoning which the land would have had at the date of acquisition so that the development potential of the land, if any, can be identified and the market value, unaffected by the proposal to acquire the land, determined. Only then will the compensation be just. The question raised by the respondent is whether this approach to the problem is correct.

Section 56(1)(b) requires any increase in the value of the land caused by the carrying out of improvements for the public purpose for which the land is to be acquired to be disregarded. Section 56(1)(c) requires that any value attributable to an illegal use of the land must also be disregarded.

As I have indicated s 56(1) has been considered and applied by this Court in many cases. It has also been considered by the Court of Appeal. The decision in Perry being of particular relevance.

The position before the Environmental Planning and Assessment Act

It is convenient to commence the analysis of the relevant decisions with consideration of the decision of the High Court in San Sebastian, a case decided pursuant to s124 of the Public Works Act 1912 (NSW). Section 124 provided that compensation for land which has been compulsorily acquired should be assessed without regard to any alteration to the value of the land arising from the establishment of any public works upon, or, for which the land was resumed. Jacobs J who wrote the judgment, with which the other members of the High Court agreed, identified that the provision stated in statutory form a principle which has been developed in the cases independently of any statute - the Pointe Gourde principle: see Point Gourde Quarrying and Transport Co Ltd v Sub-Intendant of Crown Lands [1947] AC 565.

Jacobs J recognised that because the valuation of land in the ordinary case is based upon market value, if the proposed public purpose has become public knowledge before resumption "the market value at the time of resumption will probably reflect by way of increase or decrease the possibility or likelihood of resumption for that public purpose. Therefore that value cannot be accepted." p 205-206

Section 124 was enacted long before statutory planning. In San Sebastian the High Court was confronted by the problem of the impact of a prospective change in the zoning to facilitate the development of public housing which operated to deny the land any potential for commercial development. Prior to its acquisition the owner had been pursuing a proposal to develop the land for a private hospital.

Jacobs J solution to the problem was expressed in the following terms:

"With the actual market value at the time of resumption as the starting point it is then necessary to determine whether that value has been depressed or elevated by the market's foreknowledge of the possible or likely purpose and consequent resumption. It is therefore inevitable in such circumstances that the public purpose has to be taken into account in the process of valuation but it can be taken into account only for that purpose. "p 206 (emphasis added)

Jacobs J recognised that there may be difficulties in applying these principles when planning legislation imposed restrictions on the use of land. However, his Honour said:

"Where there is a direct relationship between the restriction on land use and the proposed establishment of the public works the effect on value of the zoning or restriction ought to be ignored." p 206

Whether compensation should be paid on the basis that the land was "zoned" for the public purpose, his Honour said depended upon "knowing whether there was any connection between the zoning (for the public purpose) and the subsequent resumption." p 207

Jacobs J also addressed the problems which had been considered in TheMinister v Stocks & Parkes Investment Pt Ltd (1972) 129 CLR 385, a case decided after statutory planning had been adopted in New South Wales. The difficulty in that case was that there was a planning scheme which would ultimately control the use of the land which was still in the course of preparation at the date of acquisition. In these circumstances, Jacobs J said "the question may arise whether, irrespective of any public purpose existing or anticipated, the planning scheme would be likely to zone the lands in a way which in a general sense was related to the kind of purpose for which the land might be resumed. At the stage of preparation of a planning scheme zoning for such purposes is a possibility which cannot be ignored. At the same time a particular designation in a proposed planning scheme which reflects an intended use for a public purpose cannot be ignored." p 207

In Stocks & Parks the relevant land was resumed for a State school within a large area which was undergoing detailed planning so that it could be released for urban purposes. The High Court held that although the proposal to establish a State school had to be ignored, because the planning process had not been finalised the market value of the land had to reflect the possibility that the land being suitable for the purpose may, nevertheless, be zoned to facilitate open space or a school. In other words when valuing the land it was necessary to identify the judgment which the market place would have made about the potential of the land, but always leaving aside any potential for its use for a purpose of the State. For this reason in San Sebastian Jacobs J said when speaking of Stocks & Parkes "in the circumstances it was proper to take the proposed zoning of the land into account not because the site was intended for a public purpose but because the zoning was part of the overall planning of the area which did not envisage that the land would be used for residential subdivision." p 209 Of course, if the only impediment to the land used for residential subdivision was a desire to see it used for a public purpose, being a purpose of the State or Local Governmen t, the position would have been different and the land would have been valued in a manner which reflected its residential potential.

In his reasons for judgment Jacobs J refers to the hypothetical circumstance of land which was zoned open space, which may have depreciated its value, without the intent or anticipation that it be required for a public purpose. In these circumstances his Honour suggests that s 124 would not have protected the land owner who would have to accept compensation at the lesser value, even if, as would often be the case in a "greenfields" location, there was little to distinguish it from surrounding land which had been zoned residential, except, perhaps that it was in a central location or was otherwise readily accessible from the land to be released. I consider this problem further below in light of the legislative changes which followed San Sebastian.

In San Sebastian it was apparent that, although previously zoned commercial, the land was likely to be zoned residential under the new planning scheme when made. Jacobs J said that when identifying the elements relevant to the value of the acquired land the important factor was "what would have led up to such a variation of the Planning Scheme. If independently of the proposed resumption for the purpose of public housing the land was found likely in the varied scheme to have been zoned residential … that would have been a most important finding" and "the fact that the land would probably have been zoned in a manner similar to its proposed zoning under the draft interim development order would only be of significance if, contrary to the facts, that zoning would have been regarded as likely to occur independently of the proposed purpose of public housing and consequent resumption." p 211

The impact of the Environmental Planning and Assessment Act

The Environmental Planning and Assessment Act was enacted in 1979, some four years after San Sebastian was finally resolved. It is not difficult to identify that the legislative drafter recognised that with a new system of planning, attention should be given to the formula of words controlling the compensation to be paid to an owner whose land was taken for a public purpose where the land was controlled by a planning instrument. This was done in s116 of the Act, although the formula of words chosen did not deal with all of the significant issues.

Section 116 of the Environmental Planning and Assessment Act was in the following terms:

1. “

(1) Where land reserved by an environmental planning instrument pursuant to section 26(c) or proposed to be reserved by a draft environmental planning instrument is resumed or appropriated, the value of that land shall be determined as if it had not been so reserved or proposed to be reserved.

(2) Where -

(a) land reserved by an environmental planning instrument pursuant to section 26 (c) is resumed or appropriated for the purpose for which it is reserved; and

(b) that land was at the date of resumption or appropriation used by the claimant as his place of residence,

then, in ascertaining compensation payable in consequence of the resumption or appropriation, the Court may award additional compensation in respect of -

(c) the amount (if any) by which the cost to the claimant of relocating his residence in other accommodation would exceed the value of the land referred to in sub-section (1), on the assumption that the other accommodation is equivalent to or comparable with the accommodation on the land so referred to; and

(d) solatium for the necessity to relocate his residence.”

Although when determining compensation s 116 provided that a reservation for any of the many public purposes in s 26(c) was to be ignored it did not in terms indicate what assumption if any had to be made as to the potential of the land, including any zoning, when determining its value. This was a significant omission which Hemmings J considered in Pamalco Pty Ltd v Minister Administering the National Parks and Wildlife Act 1974 [No 3] (1991) 71 LGRA 441. His Honour pointed out neither s 116 nor the reasons in San Sebastian explain the nature and extent of the planning controls which are deemed to replace those which must be disregarded. After considering other alternatives his Honour decided that it was appropriate to find that the land "is deemed to be subject to (the) planning controls which would have applied had there never been any intention to resume." p 448 Many cases have been decided on that basis see eg Wimpey Construction UK Limited v The Minister (1983) 53 LGRA 75; Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378; Brooks v Minister for Planning and Environment & Anor (1988) 68 LGRA 91; Carson v Minister for Planning and Environment (1990) 70 LGRA 215); Griffiths City Council v Polegato & Anor (1990) 20 NSWLR 696; Blacktown City Council v Lasseter (unreported, Court of Criminal Appeal, 5 December 1996). The expression which came into common use was to identify the "underlying zoning."

It is important to remember that the Environmental Planning and Assessment Act was an endeavour by the legislature to provide a comprehensive planning system. An attempt was made to recognise and deal with all of the problems which had been experienced in the planning mechanisms formally provided by Part XIIA of the Local GovernmentAct 1919. One identified problem was the impact on a landowner, which could be financially devastating, of having their land "zoned", under the nomenclature of the Act “reserved” for a public purpose, without there being an obligation in the public authority to acquire it. This dilemma was resolved by s 27(1) and s 26(c). The relevant provisions are as follows:

1. “

27(1) Where an environmental planning instrument reserves land for use exclusively for a purpose referred to in section 26 (1) (c), that environmental planning instrument shall make provision for or with respect to the acquisition of that land by a public authority unless the land is owned by a public authority and is held by that public authority for that purpose.

26(c) reserving land for use for the purposes of open space, a public place or public reserve within the meaning of the Local Government Act 1993 , a national park or other land reserved or dedicated under the National Parks and Wildlife Act 1974 , a public cemetery, a public hospital, a public railway, a public school or any other purpose that is prescribed as a public purpose for the purposes of this section,

The inclusions of these provisions in the Environmental Planning and Assessment Act not only provided a fair outcome for affected owners but reflected the practical reality of the modernised planning system. Whereas it may have been theoretically possible in San Sebastian to hypothesise that land might be "zoned" for a park or open space without it being, at least ultimately, brought into public ownership, after the new leiglsation this was inconceivable. Even in a "greenfields" site, if land was identified by the planners as suitable for open space or some other public purpose the inevitable expectation was that it would be owned by the "public", either State or Local Government and s 27(1) would apply. This reflected a fundamental objective of the Act, being “the orderly and economic use of land.” If a facility such as a private school or, perhaps, a private hospital was contemplated provision was usually made which permitted that facility on land zoned residential or commercial, where a variety of uses would be permissible and the land would have a value in the market place which effected its potential for development for that range of uses. The position may have been different if a planning instrument was made for an already developed area where it would be likely that a "special use" zone would be given to an existing private school, private hospital or similar facility. However, such a "zoning" would be less likely to affect the value of the land where it was already being used for the purpose identified in the planning instrument.

The Land Acquisition (Just Terms Compensation) Act 1991

Section 116 was itself repealed when the Land Acquisition Act was enacted in 1991. The impact of any "reservation" or zoning for a public purpose is now addressed through s 56(1)(a) which seems to me to be wider than s 116. The market value must now be determined at “the date of acquisition” (s 55(a)) disregarding "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." (s 56(1)(a)) The reference to the date of acquisition is not surprising but is important.

With respect to zoning the steps seem to me to be the same as those required by s 116. If the land has been reserved or zoned for a public purpose that reservation or zoning must be set aside. In order to establish the market value of the land at the date of acquisition, disregarding the influence of any reservation or zoning imposed for the public purpose, it is necessary to identify the planning controls which would have been imposed, at the date of acquisition, absent the proposal to carry out the public purpose. In San Sebastian it was necessary to ignore the prohibition which had been imposed on the use of the land for a private hospital and assume that the zoning permitted consent for that use to be granted. The same approach was adopted by Hemmings J in Pamalco.

Perry’s case

The relevant provisions of the Land Acquisition Act were comprehensively considered by the Court of Appeal in Perry , a decision primarily concerned with the steps necessary to identify the "scheme" underlying the acquisition of the relevant property and the relevance of the decisions in Raja Vyrichera Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 and Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565. However, the analysis of the legislation by Handley JA with whom Powell JA agreed and Hodgson JA generally agreed is of general application.

Handley JA identified that s 56(1)(a) embodied both the principle stated in Spencer v The Commonwealth (1907) 5 CLR 418 (found in the first part of the definition) and the principles in the Raja case which are embodied in paragraph (a) of the definition.

For the purpose of the present matter it is only necessary to examine his Honour's reasoning in relation to para (a). With obvious approval his Honour identifies the fact that Pointe Gourde was applied in Rugby Joint Water Board v Shore-Fox [1973] AC 202 and again in Fletcher Estates (Harlecott) Ltd v Secretary of State for the Environment [2000] 2 AC 307 where Lord Hope said:

"The whole question must be approached upon a consideration of a state of affairs which would have existed if there had been no scheme." p 315

Because the land must be valued at the date of acquisition it is at that date that the hypothetical state of affairs must be identified. The effect both direct and indirect of that scheme must be disregarded and the land valued having regard to the hypothetical "state of affairs."

It seems to me that this was the task which the High Court required to be undertaken in San Sebastian. Once it had been identified that the proposed zoning of the land as residential "was a step in the resumption process" it had to be set aside and the land valued having regard to the uses which would have been permitted, but for the proposed public purpose. Because, having regard to the facts of that case, it was only necessary to consider whether a private hospital would have been permissible, statements of general application were unnecessary. As Jacobs J acknowledges the appropriate conclusion may have been that, irrespective of the proposal for public housing, the land would have been zoned residential, in which event the land would be required to be valued as residential land. However, as it happened, the trial judge's findings precluded that option and the land was required to be valued on the basis that development at least for a private hospital, could be approved (see the discussion at p 212).

In San Sebastian, Jacobs J identified that different parcels of land in a given area may have natural features which dictate their ultimate development potential. However, where land is acquired for a public purpose, it will be in only limited cases where that purpose reflects a purpose for which it would have been zoned but for an ultimate intention to bring it into public ownership. However, even then, experience indicates that when "greenfields" areas are being developed in Sydney an active private market will often exist for land which is flood prone or otherwise of high conservation value which is traded by developers so that they can use it to meet obligations under s 94 of the Environmental Planning and Assessment Act . Furthermore, as s 27(1) makes plain, if land is reserved for the relevant purpose provision must be made for its acquisition. These provisions are part of the integrated process of orderly planning which ensures just compensation for the person whose land is taken to provide for a general community need.

Accordingly, if land which would otherwise have had residential potential and would have been zoned for this purpose is identified and acquired for a public park, compensation would be payable reflecting the fact that it would have been zoned residential and ignoring its zoning for a park even though suitable for that purpose. If, however, the land is low lying and without economic development potential its market value would reflect that diminished potential.

This analysis seems to me to be faithful to the reasons of Jacobs J in Sans Sebastian and Handley JA in Perry.

The decision in Walker Corporation

In Walker Corporation this Court was required to determine a claim for compensation for a large waterfront site. The trial judge found that, if remediated (it was known to be contaminated with hydrocarbons) having regard to s 56(1)(a) the site had a market value at the date of acquisition of $60 million. The land had been acquired for use as open space, an objective which the Leichhardt Council had been pursuing over a number of years. Although this proposal was initially opposed by the State Government, the State's position changed, and it was the State which acquired the land.

The land had been used for many years as an oil terminal and, consistent with this use was zoned industrial. However, the commercial viability of that use had changed and the owners had sought to change the zoning to facilitate residential development. Being waterfront land on Sydney Harbour and in relatively close proximity to the city, it was highly suitable for this use.

100

The Council had resisted the change to a residential zone and sought to maintain a form of industrial zoning, which Basten JA records was the position adopted "with the apparent intention that any change of use should commit the bulk of the land to open space."

101

As I understand the judgment of Basten JA the primary argument for the Authority in the Court of Appeal was that as the Council was not the authority which either acquired the land or carried out the project its actions, even if they were intended to maintain an industrial zoning to facilitate the open space proposal, were not actions which had decreased the value of the land in the relevant sense. They were not actions taken in the carrying out or proposal to carry out the relevant public purpose, which was the purpose of the State.

102

The land owner took a different position and, again as I understand it, argued that the appropriate finding of fact was that the actions of the Council were part of the carrying out of the public purpose for which the land was acquired. The ultimate submission of the owner was that as the trial judge had found, as a matter of fact, that but for the proposal to create public open space the land would have been rezoned to residential before the date of the acquisition, that ended the debate.

103

It does not appear that these questions were resolved by the Court. Other issues assumed greater importance.

104

Basten JA begins his analysis by identifying that, whatever the common law may have required s 55 and s 56 provide the statutory statement of the approach to be taken to ascertaining the market value of land. His Honour points out that the first step in the process of introducing the qualification provided by s 56(1)(a) is to identify the "scheme for which the property is compulsorily acquired" [34].

105

However, his Honour points out that there is no reference to a "scheme" in s 56 where the expression used is "the public purpose for which the land was acquired." Basten JA suggests that the statutory expression is more complex, although as the cases to which his Honour refers would seem to demonstrate, it may be that asking the question, "what was the scheme", gives rise to the same factual questions as the statutory formulation. It was the question asked by Handley JA in Perry.

106

As I have already indicated his Honour passes the observation that the statutory formulation does not "in its terms, --- require the disregarding of a failure to do something, which might have resulted in an enhancement of the value of the claimant's land, prior to the date of acquisition"[39]. However, I do not understand his Honour to find that this is not the correct approach to the application of s 56(1)(a) when the facts require it. His Honour says:

"In order to apply these principles in the context of the Land Acquisition Act, it is necessary to replace references to “the scheme” with reference to “the public purpose for which the land was acquired”. That public purpose, although expressed in the singular, might well be multi-faceted, as the broad functions of the Foreshore Authority in the present case demonstrate. That being said, the cases demonstrate that some care must be given to identifying the relevant purpose, even where lands are resumed sequentially, by the one acquiring authority in pursuit of what may, in broad terms, be described as the component parts of an overall project. Alternatively, the concept of a “scheme” may in some circumstances better equate with a “proposal” for carrying out public purposes. That apparently minor variation in terminology may be significant because s 56(1)(a), as noted above, appears to contemplate on the one hand conduct which constitutes the carrying out of a public purpose and, on the other, the existence of a “proposal” to carry out a public purpose: it does not expressly refer to steps taken in the development of a proposal or steps which are merely preparatory to the carrying out of the public purpose. Nor, in its terms, does it require the disregarding of a failure to do something, which might have resulted in an enhancement of the value of the claimant’s land, prior to the date of acquisition." [39]

107

Basten JA commences his discussion of the authorities by reference to Spencer v The Commonwealth (1907) 5 CLR 418 and consideration of Royal Sydney Golf Club v Federal Commissioner of Taxation (1957) 97 CLR 379. The latter case was, as his Honour observes, a decision with respect to the value of land for taxation purposes where it was necessary to assess how the market place would have assessed the value of the land knowing not only of the existing restrictions on development imposed by the current zoning, but also the steps which could have been taken to change that zoning and the likelihood of those steps bringing about the desired result. The valuation exercise required the assessment of the likelihood of the authorities reacting in particular ways being, of course, the exercise which both vendor and purchaser would traditionally undertake in the market place. There is a question whether this exercise is relevant to s 56(1)(a) given that the task required by that Act has traditionally been understood to require the construction of a hypothesis which disregards relevant events which are known to have happened. Of course, once the zoning which would have existed is identified the assessment of market value may require an analysis of the market's view of the prospect or chance of having that zoning changed to a more favourable zoning. I infer that it was for this purpose that his Honour intended to refer to Royal Sydney.

The problem of Murphy’s case

108

Basten JA draws attention to the discussion in the The Crown v Murphy (1990) 64 ALJR 593 where land was acquired for an environmental park proposed for Mon Repos Beach near Bundaberg. The beach was the site of a world renowned turtle rookery. Prior to the resumption the land was sought to be rezoned to allow subdivision but this was refused because of the detrimental effect it would have on the turtle rookery.

109

The High Court held that one fundamental attribute of the land which affected its value was its relationship with the turtle rookery. In that respect the trial court had found as a matter of fact that the existence of "the turtle rookery adjacent to the land was an attribute of the land which affected its value to the extent that the existence of the rookery itself militated against rezoning." Accordingly, the court held that this fact, which was an attribute of the land, had the consequence that its value had to be assessed on the assumption that the market place would not have attributed any money sum for the prospect of rezoning.

110

To my mind, considerable care is necessary when applying this decision. There will be many parcels of land with inherent characteristics which make them suitable for some public purpose as well as for many private purposes. However, in some cases, of which Murphy is an example, the inherent characteristics of the land have the consequence that in the ordinary course the land would not have been given a zoning which permitted private development. Irrespective of whether the land was to be brought into public ownership required by the public the fact that it adjoined the rookery had the effect that it would not be allowed to develop.

111

However, if the reason which limits the potential of the land is the intention to bring the land into public ownership and use it for a public purpose (the "scheme") the development potential of the site must be assessed without consideration of any influence from that scheme. Accordingly, if the land in Murphy was desired by the resuming authority for no other purpose but to allow public access to view the rookery and the land played no part in the maintenance of the eco-system which included the rookery, and its development would not have adversely affected the rookery, its value would have to be assessed without consideration of the presence of the rookery.

112

The difficulty in applying Murphy is evident in the example related by Basten JA in [63]. The whole paragraph is as follows:

1. “

That principle can, however, operate to the disadvantage to the landowner. Land may have a characteristic which diminishes its value, or constrains an increase in value. The value of the land, with all its inherent characteristics, will depend on its physical location, whether there are surrounding developments and a host of other considerations, including social preferences and environmental factors. One may take, by way of example, an hypothetical block of land on the outskirts of an expanding city. The land in question is low-lying, but is surrounded by higher ground. All the land is available for residential development, but the higher ground is developed first because it is seen as more attractive to potential purchasers. The low-lying ground is then identified as part of a flood plain and is found to be subject to inundation after heavy rain. The local council rezones the land to prohibit residential development. The land is capable of commercial development so long as it is drained and the level is raised. A development application is required to be accompanied by an environmental impact statement. Preparation of that statement identifies that portion of the flood plain as having special conservation significance. Accordingly, the council imposes constraints which prevent any significant development and brings the area to the attention of the State authority responsible for environmental protection. The limitations imposed by the council drastically reduce the potential uses of the land and hence its market value. Because of the conservation significance of the site, it is later resumed by the State authority for the public purpose of environmental protection.”

113

Provided the circumstances are that the land has been zoned to prohibit residential development because it is inherently unsuitable for residential development, which I assume is the circumstance his Honour has in mind, the example reflects the approach in San Sebastian . The lack of suitability may derive from its potential to flood or its high conservation value or a combination of both. However, if the constraints have been imposed, as his Honour suggests they may have been, not because the land is inherently unsuitable for residential development but, because of its conservation value, and the council believes that the land should be denied its urban potential and brought into public ownership different considerations arise. In those circumstances it would be argued that the "scheme" consists of the desire to preserve the land for the purpose of environmental protection. Any zoning or reservation designed to further that purpose would accordingly have to be disregarded and the land valued having regard to its development potential, albeit as flood liable land requiring significant civil works before it could be used for residential purposes.

114

A situation close to that which his Honour hypothesises occurred in Lalic v RTA [2005] NSWLEC 430. In that case the acquired land was flood liable and I found that for that reason its release for urban purposes had been delayed. However, I was satisfied that by the date of acquisition, disregarding the proposal for the M7 roadway, the land would have been zoned so as to allow for its development for industrial purposes. However, to facilitate that development extensive civil works would have been required. I also found that because part of the land was of high conservation value its natural attributes would have meant that it would not have been permitted to be developed and another part would have been required to be developed as a "flood runner" to manage flood waters during times of flood. The industrial land was given a value which reflected its potential as industrial land and the other lands were valued at a rate which reflected the amount which the council was paying to bring similar lands into public ownership pursuant to its overall planning for the area supported by appropriate plans made pursuant to s 94 of the Environmental Planning and Assessment Act.

115

Basten JA identifies that the trial judge in Walker Corporation determined as a fact that the Council had been resolutely opposed to rezoning the site to permit residential development for many years. His Honour identifies the starting point of that opposition as being 1989. Although the land was only acquired in 2002 his Honour concludes that if the land had been compulsorily acquired in 1991 "it would have been appropriate to assess compensation by reference to the value of the site with its then current industrial zoning, but with an allowance for increased value referable to the prospect that approval might be obtained for residential use.” [79] His Honour says that this is consistent with the approach adopted by Kitto J in Royal Sydney Golf Club.

116

It seems to me, with respect, that there may be some difficulties in this analysis. If at 1991 it was determined as a matter of fact that the maintenance of the industrial zoning was because of the desire by the acquiring authority to effect the "scheme" for which the land was acquired, and in the meantime maintain the industrial zone to inhibit redevelopment, it is difficult to see why the industrial zoning should not be notionally set aside and the question asked and answered "what was the inherent potential of the site and how would it have been zoned?" Having answered that question it would then be necessary to identify how the market place would have assessed the value of the land having regard to its identified potential. It may be that without the “scheme” the land may still have retained an industrial zoning and accordingly the valuation exercise may have required the identification of the assumption which the market would have made about the prospect of a rezoning for residential purposes. However, only in this limited respect is the task the same as that undertaken in Royal Sydney Golf Club. In that case the development potential was being considered having regard to existing controls which could not be ignored for the purpose of the valuation exercise. The position seems to me to be quite different when applying s 57(1)(a) where, depending on the circumstances, the existing controls must be set aside and the position “which would have existed if there had been no scheme” established.

Applying Walker Corporation in the present case?

117

I turn now to para [86], [87] and [88] of the judgment.

118

The respondent submits that in [86] Basten JA should be understood as finding that the relevant question in the circumstances of that case, when determining the value of the land, was to ask what were the prospects of a zoning for residential purposes in 1989 in order to determine how those prospects have been further diminished by the date of the ultimate acquisition. It is submitted that only that impact is required to be set aside.

119

It seems to me there are difficulties in accepting this submission.

120

In my opinion, his Honour is concerned to ensure that once it has been determined that the zoning which actually exists at the date of acquisition should be disregarded, proper enquiry must be made as to the circumstances which would otherwise have existed at that date. Along with other matters that factual enquiry will be informed by an examination of the circumstances which existed at the time when the relevant public purpose was first initiated. In the circumstances of Walker Corporation his Honour says that it was not apparent from the trial judge’s findings that all of the relevant questions including the circumstances which existed in 1989 had been addressed. However, each case will depend on its own facts. As his Honour points out because of the difficulties created by the conflicting views of the relevant authorities about the future of the land, Walker Corporation is an unusual case. And because the land was not given a residential zoning it was obviously relevant to consider the prospects of that zoning from the time the scheme was first initiated.

121

If, as was submitted by the respondent, Basten JA's observations in the identified paragraphs require an approach confined to a determination of the development potential of the land at the date when the public purpose is first known followed by an assessment of the impact of the public purpose on that potential at the date of acquisition, there may be some difficulties. Taking the facts of the present case where the public purpose became public knowledge in the early 1970s the prospect of urban development of the land at that time may have existed but realisation of that potential, if at all, was dependent on later decisions being made which allowed for Alstonville to further develop. The prospects of that happening in the early 1970s were at their highest uncertain and to assess the chance of it occurring extremely difficult. However, by the time the acquisition occurred, I have concluded that the urban potential of the land would have been recognised and, but for the public purpose of the roadway, the land would have been zoned to facilitate urban development. Because s 55 requires the value of the land to be determined at the date of acquisition it seems to me that it is accordingly necessary to identify the development potential including the zoning which would have applied to the land at that date, irrespective of the position which may have existed in 1973.

122

It is true that in [88] his Honour analyses the position by reference to a fact, assumed to be the position identified at the time the proposal was adopted, being that there was only a 25% chance, at that date, of a rezoning for residential purposes. If this chance reflects the fact that the council would have opposed the rezoning because it desired the land for a public purpose it would have to be ignored. If however, the market rated the chance at only 25% because of other inherent characteristics of the land, including its surroundings, the question would have to be asked whether, absent any proposal to acquire it for a public purpose, the prospect of obtaining a rezoning would have remained the same many years later when the land was actually acquired. Traditionally, this task does not require the assessment of a chance but, rather, the identification of the impact of the public purpose and the disregarding of those impacts so as to identify the “state of affairs which would otherwise have existed.” It may be that once that exercise has been conducted the identification of the potential of the land, without any impact from the public purpose, requires an analysis of the assessment which the market place would have made of the possibility of maximising the development potential of the land including the prospect of rezoning. This may require an assessment of the percentage chance of obtaining a rezoning which gave the land a greater development potential than the zoning which it is concluded the land would have had but for the public purpose. However, this is a secondary step which is required after the state of affairs which, but for the public purpose, would have existed at the date of the acquisition has been identified.

123

In my opinion, the approach which I have indicated to be traditional is consistent with that required by San Sebastian and the principles approved by the Court of Appeal in Perry . Furthermore, it seems to me it is the only means whereby just compensation can be provided. If, in Walker Corporation, Basten JA has suggested a different approach to the problem in the circumstances of that case care would be necessary in accepting that his Honour has defined a principle of general application. I recognise that if Walker Corporation contains a ratio of general application, even if contrary to San Sebastian, I would be obliged to follow it ( Attorney General (UK) v Heinanman Publishers Australia Pty Ltd & Anor (1987) 10 NSWLR 86 at 189). However, it seems to me that if there is such a ratio it would conflict with Perry and because Perry is consistent with San Sebastian I would adopt an approach consistent with Perry.

Applying the law to the facts

124

In the present case it is plain that the relevant land was acquired for the purpose of the motorway. I am of the opinion that by defining the line of the motorway any urban potential of the applicant's land, which included the land acquired and land up to the ridge to the south of the land acquired was lost. I am satisfied that but for the road proposal the urban potential of the land acquired and the land up to the ridge would have been realised and the land rezoned for urban purposes by the time the acquisition took place. This would have occurred in the 1989 Local Environmental Plan and the zoning would have been 2(a) Living Area.

125

I am also satisfied that the imposition of the catchment zone on the balance of the land up to the ridgeline was a consequence of the intention to redevelop the highway in its new location. It could not be justified on any other basis for most of the land does not fall to the catchment which is, of course, a reflection of the existence of the ridge. I do not believe that contamination of ground water would have been an issue.

126

If it be relevant to determine the prospect of a zoning for urban purposes when the highway proposal first became public knowledge some uncertainties are apparent. Although at that stage, no doubt, the market would have assumed that Alstonville would be allowed to grow, its ultimate size would not have been known. However, as I have identified the relevant land was attractive, could be efficiently serviced and was close to the town centre. The prospect of it being released for urban purposes in the early 1970s would, in my opinion, have been assessed in the market place to be a possibility although the timing would have been uncertain.

127

As I have indicated Mr Palmer's opinion was that the applicant's land, including the motorway land, would have been zoned catchment under the 1987 Local Environmental Plan. The applicant's position is that to the point of the ridge the land would have been included in an appropriate urban zone and made available for urban purposes. It was suggested by Mr Connelly that this would have been achieved by a line connecting survey features drawn approximately straight along the line of the ridge. This would have meant that some of the land incorporated in the urban zone would have drained to the catchment. Although this may have presented particular issues in the development of part or all of the lots which may have fallen within the catchment area, I believe that Mr Connelly's approach to the matter is correct. It is the approach which was adopted throughout the Shire when the Local Environmental Plan was being prepared and I am satisfied that it would have been adopted in this location. Individual problems would have been accommodated by confining or conditioning the particular form of any individual development.

128

Consideration was also given in the evidence and submissions to the position of the applicant's land in the event that I came to the conclusion that it would not have been zoned for urban purposes. The applicant submits that in this event it would have been zoned Rural 1(a) to the ridge line with the catchment zone beyond. This would have given a relatively confined area of land which, if given a rural zone, would have been available for more intense agricultural use and some other uses than if it had been zoned catchment.

129

This is a difficult question. However, an indication as to the likely outcome can probably be gauged from what in fact happened. Although the roadway land was zoned 9(a) the balance of the land, even though it did not all fall within the catchment, was given a catchment zoning rather than a small parcel given a rural zoning. To my mind, these areas of the additional land comprising the roadway zone was not such as would have led to a different decision being made. Accordingly, in the event that the land would not have been zoned for village purposes I believe it would probably have been zoned for catchment.

130

The argument which the respondent puts on this aspect is, of course, available to the applicant to reinforce the conclusion which I have reached in relation to the prospective zoning of the relevant land. Rather than exclude land which extended up to the ridge before the catchment from any effective use, in my opinion the planners would have concluded that the logical point for the town to stop on the southern extremity was at the ridge line separating the town from the catchment zone. This is further reason why it is appropriate to conclude that the ridge line would have formed the natural extension of the town, but for the proposed motorway.

131

The questions as now framed seek to draw a distinction between a decision as to the “prospect” of zoning 2(a) Living Area expressed as a percentage chance (said to be the approach required by Walker Corporation ) and the zoning which, on the balance of probabilities, would have existed, but for the road proposal, at the date of acquisition. Having regard to my findings in relation to the relevant events, I am satisfied that at the date of acquisition all of the relevant land would have been zoned 2(a) Living Area. That prospect would have been realised when the 1989 Local Environmental Plan was made. If it be relevant, there was a reasonable prospect of a village zoning in the early 1970s, the uncertainty arising from the question of whether the township would be allowed to significantly increase in size. However, I accept Mr Thorpe when he indicates that but for the roadway it is likely that the land would have been released for urban development by the middle of the 1970s. The critical matter is that once the location of the roadway was fixed any possibility of urban development of the relevant land was lost.

132

I answer the separate questions as follows:

1. Yes.

2. At the date of acquisition the prospect of it being rezoned 2(a) Living Area was highly likely and had been since at least 1989. In the early 1970s there was a reasonable prospect of the land being rezoned village.

3. At the date of acquisition the prospect of it being rezoned 2(a) Living Area was highly likely and had been since at least 1989. In the early 1970s there was a reasonable prospect of the land being rezoned village.

4. 2(a) Living Area.

5. 2(a) Living Area.

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05/09/2005 - typographical error in para 102 - Paragraph(s) para 102

CITATION:	Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438 This decision has been amended. Please see the end of the judgment for a list of the amendments.
PARTIES:	Leslie Alexander Smith (Appl) Roads and Traffic Authority (Resp)
FILE NUMBER(S):	30669 of 2004
KEY ISSUES:	Valuation of Land :- Compulsory acquisition of land by RTA Market value claim Appropriate zoning for assessing compensation Application of s 56(1)(a) Land Acquisition (Just Terms) Compensation Act 1991
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 Public Works Act 1912 (NSW) Land Acquisition (Just Terms Compensation) Act 1991
CASES CITED:	Attorney General (UK) v Heinanman Publishers Australia Pty Ltd & Anor (1987) 10 NSWLR 86 at 189; Broken Bay Peninsular Pty Ltd v Minister Administering the National Parks and Wildlife Act 1974 [1997] NSWLEC 165; Brooks v Minister for Planing abd Environment & Anor (1988) 68 LGRA 91; Carson v Minister for Planning and Environment (1990) 70 LGRA 215; D & C Dwight v Sydney Water Corporation Limited [1995] NSWLEC 72; F & J Cauchi v Blacktown City Council [1993] NSWLEC 183; Fletcher Estates (Harlecott) Ltd v Secretary of State for the Environment [2000] 2 AC 307; Housing Commission of NSW v San Sebastian Pty Ltd & Ors (1978) 140 CLR 196; Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378; Lalic v Roads & Traffic Authority (NSW) NSWLEC 430; Overton Investments Pty Ltd v The Department of Urban Affairs & Planning [1998] NSWLEC 67; Pamalco Pty Ltd v Minister Administering the National Parks and Wildlife Act 1974 [No 3] (1991) 71 LGRA 441; Petar Rukavina v The Council of the City of Wagga Wagga [1993] NSWLEC 29; Point Gourde Quarrying and Transport Co Ltd v Sub-Intendant of Crown Lands [1947] AC 565; Raja Vyrichera Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302; Roads and Traffic Authority (NSW) v Perry & Anor (2001) 116 LGERA 244; Royal Sydney Golf Club v Federal Commissioner of Taxation (1957) 97 CLR 379.; Rugby Joint Water Board v Shore-Fox [1973] AC 202; Scarfone v Blacktown City Council [2004] NSWLEC 114; Spencer v The Commonwealth (1907) 5 CLR 418; Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251; The Crown v Murphy (1990) 64 ALJR 593; The Minister v Stocks & Parkes Investment Pt Ltd (1972) 129 CLR 385; Tony Fidler as Trustee For Howship Holdings Pty Ltd v Port Stephens Council [1998] NSWLEC 193; Wimpey Construction UK Limited v The Minister (1983) 53 LGRA 75
DATES OF HEARING:	14-15 June 2005 4 August 2005 26 August 2005
DATE OF JUDGMENT:	08/30/2005
LEGAL REPRESENTATIVES:	J Webster SC/A Stenmark SC (Appl) Somerville Laundry Lomax (Sols - Appl) R Lancaster (Resp) Clayton Utz (Sols - Resp)