SNS Pty Ltd v Roads and Maritime Services

[2018] NSWLEC 7

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:	SNS Pty Ltd v Roads and Maritime Services [2018] NSWLEC 7
Hearing dates:	6, 7, 8, 9, 10, 13, 14, 15, 17 November 2017
Decision date:	15 February 2018
Jurisdiction:	Class 3
Before:	Pain J
Decision:	See pars 355-357
Catchwords:	COMPULSORY ACQUISITION – partial acquisition of land – application of before and after method of valuation where mixed use development highest and best use – gateway site in Mascot Station Town Centre Precinct – assumption by hypothetical parties of developable gross floor area in before and after scenario – s 59(1)(f) disturbance claim – costs of development application for parent parcel not claimable – costs of development application for residue land not claimable – professional fees of experts advising on valuation for compulsory acquisition additional to legal and valuation fees claimable – stamp duty for replacement land claimable
Legislation Cited:	Botany Bay Development Control Plan 2013 Pt 4C, Pt 9A Botany Bay Local Environmental Plan 2013 cll 4.6, 6.16 Botany Local Environmental Plan 1995 cl 23A City of Botany Bay Section 94 Contributions Plan 2016 County of Cumberland Planning Scheme Ordinance 1951 Environmental Planning and Assessment Act 1979 ss 74C, 79C, 123 Environmental Planning and Assessment Regulation 2000 cll 49, 55 Interim Development Order No 19 Land Acquisition (Just Terms Compensation) Act 1991 ss 5, 47, 55, 56, 59, 61, 66 Land and Environment Court Act 1979 s 34 Mascot Station Precinct Development Control Plan 2004 Mascot Station Precinct Section 94 Contributions Plan 2004 Mascot Station Town Centre Precinct Masterplan 2012 Roads Act 1993 State Environmental Planning Policy (Infrastructure) 2007 cll 85, 86, 100 State Environmental Planning Policy No 65 – Design Quality of Residential Apartment Development
Cases Cited:	Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 254 Allandale Blue Metal Pty Ltd v Roads and Maritime Services (No 6) [2015] NSWLEC 18 Blacktown Council v Fitzpatrick Investments Pty Ltd [2001] NSWCA 259 Bligh Consulting Pty Ltd v Ausgrid (2016) 217 LGERA 258; [2016] NSWLEC 75 Botany Development Pty Ltd v Council of the City of Botany Bay (No. 3) [2015] NSWLEC 1282 Cannavo v Roads and Traffic Authority of New South Wales [2004] NSWLEC 570 Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Ltd (1947) 74 CLR 358; [1947] HCA 10 Constantine v Blacktown City Council (No 2) [2016] NSWLEC 81 Everest Project Developments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2010) 177 LGERA 43; [2010] NSWLEC 88 Health Administration Corporation v George D Angus Pty Ltd (2014) 88 NSWLR 752; [2014] NSWCA 352 Housing Commission (NSW) v Falconer [1981] 1 NSWLR 547; (1981) 50 LGRA 334 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413; [1999] HCA 25 Kirela Pty Ltd v The Minister Administering the Environmental Planning and Assessment Act 1979 (No. 2) (2004) 132 LGERA 90; [2004] NSWLEC 68 Macarbell Pty Ltd v Roads and Traffic Authority of New South Wales (2006) 149 LGERA 217; [2006] NSWLEC 651 Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales [2006] NSWCA 314 Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66 Roads and Maritime Services v Allandale Blue Metal Pty Ltd (2016) 212 LGERA 307; [2016] NSWCA 7 Roads and Traffic Authority of New South Wales v McDonald (2010) 79 NSWLR 155; [2010] NSWCA 236 Spencer v The Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82 Speter v Roads and Maritime Services [2016] NSWLEC 128 Spicer v Valuer-General (1963) 10 LGRA 319 Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391 Tenstat Pty Ltd v Valuer General [2012] NSWLEC 1361 Turner v Minister of Public Instruction (1956) 95 CLR 245; [1956] HCA 7 Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW (No 3) (2010) 179 LGERA 47; [2010] NSWLEC 234 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 Yates Property Corporation Pty Ltd (in liq) v Darling Harbour Authority (1991) 24 NSWLR 156; 73 LGERA 47
Category:	Principal judgment
Parties:	SNS Pty Ltd (Applicant) Roads and Maritime Services (Respondent)
Representation:	COUNSEL: A Galasso SC and L Waterson (Applicant) R Beasley SC and M Astill (Respondent)   SOLICITORS: King & Wood Mallesons (Applicant) Minter Ellison (Respondent)
File Number(s):	17/10904

TABLE OF CONTENTS

Compensation following compulsory acquisition of land   1-4

Land Acquisition (Just Terms Compensation) Act 1991   5-7

Planning controls   8-30

Chronology   31

Assessment of Original DA and JRPP DA   34-39

Market value and injurious affection   40-44

Issues   45-55

Lay evidence   56-71

Evidence on market value   72

Town planning   73-104

Architectural evidence   105-117

Geotechnical engineering evidence   118-120

Valuation evidence   121-165

Assumed GFA in before scenario   166-183

Consideration of before scenario

Is evidence which came into existence after date of acquisition admissible in before and after scenarios?   184-191

Finding on assumed GFA in before scenario   192-208

Finding on GFA rate in before scenario   209-226

Consideration of after scenario

Assumed GFA in after scenario   227-235

Finding on GFA in after scenario   236-238

Whether delay in construction assumed to affect value/if deferment what is appropriate period?   239-288

Finding on assumed GFA in after scenario/access to Acquired Land/deferred construction in after scenario   289-312

Finding on GFA rate/impact of construction costs in after scenario   313-317

Conclusion on market value   318

Disturbance   319

Evidence on disturbance   320-340

Finding on disturbance claim under s 59(1)(f)   341-354

Conclusion   355-357

Judgment

Compensation following compulsory acquisition of land

1. The Applicant SNS Pty Ltd (SNS) owns land at 653 Gardeners Road Mascot. It objects to the amount of compensation offered by the Respondent Roads and Maritime Services (RMS) for the partial acquisition of that land for the purposes of the Roads Act 1993 in particular the WestConnex New M5 project (WestConnex Project) on 5 August 2016. These proceedings are an appeal in relation to the amount of compensation payable brought pursuant to s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act). I thank Acting Commissioner Parker for his valuable assistance in this matter.

2. Prior to the acquisition, SNS owned land identified as Lot 100 DP 1191017 comprising an area of 4,962 m² bounded by Bourke Street on the eastern boundary and Gardeners Road on the northern boundary (Parent Parcel). It had approximate dimensions of 46.45 m x 108.82 m. The WestConnex Project involves inter alia the widening of Bourke Street at the intersection with Gardeners Road. The RMS acquired part of the Parent Parcel identified as Lot 11 DP 1219678 and comprising an area of 1,678 m² (Acquired Land). The Acquired Land is generally 15.24 m wide (widening to 24.385 m at the Gardeners Road frontage) and runs along Bourke Street. The residue portion owned by SNS is Lot 10 DP 1219678 and is 3,284 m² (Residue Land). The site was vacant meaning unoccupied at the acquisition date with various warehouse structures on it. It was leased to a business renting out campervans until shortly before the acquisition.

3. SNS’ land is part of the Mascot Station Town Centre Precinct (MSTCP), an area of urban renewal characterised by multi-storey residential flat buildings and mixed-use buildings centred around Mascot train station. The land is approximately 150 m to the north of the station.

4. The Court went on a view of the subject site and surrounds and viewed the comparable sales relied on by the valuers.

Land Acquisition (Just Terms Compensation) Act 1991

5. Relevant sections of the Just Terms Act provide:

Division 4 Determination of amount of compensation

…

55   Relevant matters to be considered in determining amount of compensation

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

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

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

(c)   any loss attributable to severance,

(d)   any loss attributable to disturbance,

(e)   the disadvantage resulting from relocation,

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

56 Market value

(1)   In this Act:

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

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

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

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

(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.

(3)   If:

(a)   the land is used for a particular purpose and there is no general market for land used for that purpose, and

(b)   the owner genuinely proposes to continue after the acquisition to use other land for that purpose, the market value of the land is taken, for the purpose of paying compensation, to be the reasonable cost to the owner of equivalent reinstatement in some other location. That cost is to be reduced by any costs for which compensation is payable for loss attributable to disturbance and by any likely improvement in the owner’s financial position because of the relocation.

…

59 Loss attributable to disturbance

(1)   In this Act:

loss attributable to disturbance of land means any of the following:

(a)   legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land,

(b)   valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land),

…

(f)   any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.

(2)   Subject to the regulations, a reference in this section to a qualified valuer is a reference to a person who:

(a)   has membership of the Australian Valuers Institute (other than associate or student membership), or

(b)   has membership of the Australian Property Institute (other than student or provisional membership), acquired in connection with his or her occupation as a valuer, or

(c)   has membership of the Royal Institution of Chartered Surveyors as a chartered valuer, or

(d)   is of a class prescribed by the regulations.

…

61   Special provision relating to market value assessed on potential of land

If the market value of land is assessed on the basis that the land had potential to be used for a purpose other than that for which it is currently used, compensation is not payable in respect of:

(a)   any financial advantage that would necessarily have been forgone in realising that potential, and

(b)   any financial loss that would necessarily have been incurred in realising that potential.

SNS' claim

6. As set out in the Points of Claim dated 1 November 2017, SNS claims compensation in the amount of $40,681,906 plus stamp duty as set out in the following table:

Sections 55(a), 56 and 55(f)- Market value and injurious affection

                          $38,768,993

                                                                           Disturbance Losses

Sections 55(d) and 59(1)(a) and (b)- Legal and valuation costs

                       $325,900 (GST

                                exclusive)

Sections 55(d) and 59(1)(f)- Other financial costs being:

•   stamp duty to be incurred in respect of the acquisition to replace the Acquired Land;

•   costs incurred in relation to the preparation of the Original DA and Amended DA ($774,134);

•   costs incurred in relation to the Residue Land Consent ($478,877); and

•   fees of consultants whose expertise informed he valuation of the Acquired Land ($314,000).

                              stamp duty

                             $1,587,013

   Total

$40,681,906 plus stamp duty

RMS’ position

7. The RMS' contention as to compensation is set out in the following table:

Sections 55(a), 56 and 55(f) – Market value and injurious affection	$13,472,000
Disturbance Losses
Sections 55(d) and 59(1)(a) and (b) – Legal and valuation costs	$325,900 (GST   exclusive)   -AGREED
Sections 55(d) and 59(1)(f) – Other claimed financial costs	NIL
Total	13,797,900

Planning controls

8. At the date of acquisition the Parent Parcel was zoned “B4 Mixed Use” under the Botany Bay Local Environmental Plan 2013 (BBLEP). The floor space ratio (FSR) development standard for the Parent Parcel under the BBLEP was 3.2:1. The “site area” of the Parent Parcel as defined in the BBLEP for the purposes of determining FSR was its total area (which included the land which became the Acquired Land).

9. At the date of acquisition the Parent Parcel had registered on its certificate of title easements for electricity, water and railway transit. All easements were on the portion of the Parent Parcel that became the Acquired Land and remain entirely contained within the Acquired Land post acquisition. The easements run generally in a north-south direction parallel to Bourke Street. The easement for railway transit is approximately 15 m wide, the majority of which (13 m) is within the Acquired Land. The top of the railway easement is at RL 2.475 m AHD, a depth of approximately 8.5 m. A rail tunnel for the airport line passes under the Acquired Land.

10. The Parent Parcel has been historically affected by a number of road reservations under various planning instruments which are relevantly summarised below.

County of Cumberland Planning Scheme Ordinance 1951

11. The County of Cumberland Planning Scheme Ordinance 1951 contained a map dated 27 June 1951 which identified a proposed road widening reservation along the land known as Bourke Street.

Interim Development Order No 19

12. Part of the Parent Parcel was identified for road widening in the Council’s Interim Development Order No 19 gazetted on 16 September 1977.

Botany Local Environmental Plan 1995

13. An area of 1,690 m² of the Parent Parcel was affected by a reservation for local road widening purposes (Zone 5(a) Special Uses – Road Widening) in the Botany Local Environmental Plan 1995 (BLEP 1995) which largely corresponds with the land acquired by RMS (1,678 m²⁾. The BLEP 1995 was superseded by the BBLEP in 2013 some three years prior to the acquisition date. Under cl 23A of the BLEP 1995 the Council was designated the responsible acquiring authority for land reserved for road widening in the “Mascot Station Precinct”.

Botany Bay Local Environmental Plan 2013

14. Under the BBLEP the Parent Parcel was zoned B4 Mixed Use, had a maximum permissible building height of 44 m and maximum FSR limit of 3.2:1. The Land Reservation Acquisition (LRA) Map included in the BBLEP identified 1,678 m² of the eastern portion of the Parent Parcel as Classified Road (SP2). The area identified was generally consistent with that which was shown in earlier instruments save for a small additional splay corner in the top left hand corner. The RMS was the relevant acquisition authority pursuant to cl 5.1(2) of the BBLEP.

15. The maximum FSR for the Parent Parcel was 3.2:1 according to the Floor Space Ratio map in the BBLEP. As the Parent Parcel was located within the MSTCP, cl 6.16 design excellence applied to any development application (DA) for a new building on that land, requiring the consent authority to have regard to various design-related matters.

Mascot Station Precinct Development Control Plan 2004

16. The Mascot Station Precinct Development Control Plan 2004 (Mascot DCP) specified design guidelines for new streets earmarked for improvement including Bourke Street. Additional road widening works were contemplated on Bourke Street between Gardeners Road and Church Avenue to the effect that the eastern boundary of the Parent Parcel would align with properties to the south. The relevant sketch map was not dimensioned. It indicated that the land to be acquired would be in line with the road reserve alignment to the south.

Botany Bay Development Control Plan 2013

17. The Botany Bay Development Control Plan 2013 (BBDCP) applied to the Parent Parcel at the acquisition date. Part 9A of the BBDCP related to the MSTCP in which the Parent Parcel was located. The MSTCP “vision statement” articulated in Pt 9A.2 of the BBDCP envisages “a vibrant and diverse town centre, where a spacious, high quality public domain is the setting for thriving activities and cohesive built form”. Bourke Street “is to be a vibrant retail main street, with excellent pedestrian amenity, wide footpaths, a dedicated bicycle lane and excellent public transport access”.

18. The Parent Parcel was located in “Urban Block 1” identified in the BBDCP. The desired future character of “Urban Block 1” was for a mixed use area with retail ground floor premises. Bourke Street was envisaged as “the major, thriving main street” and “active spine” of the MSTCP. The Parent Parcel was described as a “gateway site” being at the intersection of the northern entry point to the MSTCP. Redevelopment of the Parent Parcel “will respond to the sites [sic] prominence and visual importance in order to define the entry to the [MSTCP]”.

19. Diagrams in the BBDCP illustrate the layout and built form controls for development within the MSTCP. The desired built form for development on the Parent Parcel is a four storey podium beneath two towers reaching a height of 13 storeys. The podium was envisaged to have zero setback and retail frontage along the new (widened) Bourke Street alignment. The towers were to be set back 3 m from Bourke Street.

20. The BBDCP also stated in relation to alternative development schemes proposed by developers:

Council will consider alternative development schemes subject to the Vision in Part 9A.2 – Vision Statement and the Desired Future Character principles in Part 9A.3 – Urban Block Character Statements being met. [Pt 9A.1.2 – Preliminary; Land to Which this Part Applies]

Council will consider alternative development proposals relating to the future layout and built form controls (Part 9A.4.3) if the alternative development proposal meets the future vision in Part 9A.2 for the Mascot Station Town Centre Precinct and the Desired Future Character principles in Part 9A.3. Alternative development proposals are to meet the provisions of the Botany Bay LEP 2013 and SEPP No. 65 and the Apartment Design Guide. [Pt 9A.4.1 – General Controls; Introduction]

Development must comply with the future layout and built form controls for Urban Blocks 1 and 4 in Figures 11, 12, 14 and 15. This requirement may result in the FSR not being achieved. [Pt 9A.4.3.2 – Floor Space Ratio (FSR)]

21. The abovementioned diagrams identified that part of the southern portion of the Parent Parcel was required for a proposed “new street” to be created to the south of the Parent Parcel perpendicular to Bourke Street. The Court was informed that this street is to be named Galloway Street and I will refer to it as such throughout this judgment.

22. Part 4C of the BBDCP contained controls for residential flat buildings including site and building design, building configuration and social requirements. Notably, for development with 10 or more apartments, a maximum of 25% of apartments were to be studio and one-bedroom.

Mascot Station Precinct Section 94 Contributions Plan 2004

23. The eastern portion of the Parent Parcel was identified as “[l]and to be purchased by Council” in Figure 8 of the Mascot Station Precinct Section 94 Contributions Plan 2004 (s 94 Plan 2004). Figure 8 was a sketch map similar to that which appeared in the Mascot DCP. The purpose of the acquisition was described in cl 3.3.3 as “to improve the functioning of Bourke Street to cater for the needs of new development in the locality”.

City of Botany Bay s 94 Development Contributions Plan 2016

24. The City of Botany Bay s 94 Development Contributions Plan 2016 (s 94 Plan 2016) proposed that a portion of the Parent Parcel, as identified in the BBDCP, be dedicated for the widening of Bourke Street and used to accommodate forecast growth in local traffic. The s 94 Plan 2016 was the relevant s 94 plan as at the date of acquisition.

Mascot Station Town Centre Precinct Masterplan 2012

25. The MSTCP Masterplan prepared in April 2012 provided the urban design framework for future development of the MSTCP. The illustrations used in the Masterplan appear similar if not identical to those which are included in the BBDCP. They show the proposed widening of Bourke Street incorporating the eastern portion of the Parent Parcel at a width of 16.4 m, the same two towers on top of a four-level podium concept design, zero setback for the podium levels with retail frontage along the new Bourke Street alignment, and 3 m setback for the towers. The widened Bourke Street is shown in all illustrations as being linear to the existing road reserve to the south.

26. The Masterplan explained that separating towers above a podium is intended “to provide daylight and views through the Town Centre and a sense of openness”.

State Environmental Planning Policy (Infrastructure) 2007

27. Clauses 85 and 86 of the State Environmental Planning Policy (Infrastructure) 2007 (ISEPP) apply which respectively relate to development immediately adjacent to rail corridors and to excavation in, above, or adjacent to rail corridors. They required concurrence from Sydney Trains because of the location of the Airport Tunnel beneath the Parent Parcel.

28. The tunnel imposed constraints on the redevelopment of the Parent Parcel as described in the “Airport Line Tunnel Projection Guidelines: Guidelines for Development within the Vicinity of the Airport Line” (Airport Line Guidelines).

29. Clause 100 relates to development on a proposed classified road and relevantly required concurrence from RMS for such development. Concurrence from RMS was required for proposed development on the Parent Parcel as the eastern portion of the site was identified on the LRA Map in BBLEP as Classified Road (SP2).

State Environmental Planning Policy No 65 – Design Quality of Residential Apartment Development

30. State Environmental Planning Policy No 65 – Design Quality of Residential Apartment Development (SEPP 65) contains design guidelines which need to be addressed and considered in the submission and determination of a DA for a residential flat building. The relevant design quality guidelines as at the acquisition date (5 August 2016) were those in the Apartment Design Guide (ADG) which applies to DAs lodged from 19 June 2015. When the DA for development on the Parent Parcel (DA 15/22) was first lodged on 17 February 2015 the relevant design quality guidelines were those in the Residential Flat Design Code (RFDC).

Chronology

31. The following chronology was agreed by the parties:

Event

Date

DA No 15/22 lodged by Icek Holdings Pty Ltd (a related entity to SNS) for the construction of a 14 storey mixed-used development including 190 residential apartments (Original DA).

17 February 2015

Amendment to Original DA under cl 55 of the Environmental Planning and Assessment Regulation 2000 (EPA Regulation) reducing the number of residential units from 190 to 184 and increasing retail floor space (JRPP DA). The proposed building height, FSR (3.67:1), gross floor area (GFA) (18,184 m²) and provision of car parking (268 spaces) remained the same.

July 2015

Botany Bay Council Assessment Report of JRPP DA issued under s 79C of the EPA Act to the Sydney East Joint Regional Planning Panel (JRPP) for consideration.

2 December 2015

Further amended plans lodged with the Council (Further Amended DA). These plans reduced the number of residential units from 184 to 144, changed the unit mix to reduce the proportion of studio and one-bedroom apartments, removed the above ground development proposed on the Acquired Land and retained basement car parking under the Acquired Land. The FSR remained 3.67:1.

The Further Amended DA was not sent to the JRPP.

4 December 2015

JRPP DA refused by the JRPP.

17 December 2015

Class 1 proceedings commenced in the Court appealing JRPP’s refusal of the JRPP DA.

19 April 2016

Proposed acquisition notice issued to SNS.

29 April 2016

Land acquired by RMS.

5 August 2016

Leave granted in the Class 1 proceedings by the Registrar of the Court to rely on amended plans (Residue Land DA) that proposed development wholly within the Residue Land. The Residue Land DA reduced the number of residential units to 117, underground car spaces to 158 and FSR to 3.39:1.

23 August 2016

Statutory offer of compensation to SNS in accordance with the Valuer-General's determination.

24 October 2016

Development consent for the Residue Land DA granted by the Court pursuant to an agreement under s 34(3) of the Court Act.

21 December 2016

Proceedings commenced appealing the Valuer-General’s determination of compensation.

12 January 2017

32. The development proposed on the Parent Parcel in the Original DA and the JRPP DA comprised a slab building construction with nil setback. Development proposed on the Acquired Land included about two metres of slab building on the western boundary and a basement carpark which was close to the rail tunnel for the airport line. The surface area potentially required by the Council’s road widening requirements in Bourke Street was provided for on the eastern boundary with the basement carpark proposed to be built underneath.

WestConnex publicly available project documents

33. Several publicly available documents identify the likely completion dates of the work on Bourke Street including the Acquired Land. A WestConnex “Project Overview” dated November 2014 indicated that the Project would be open to traffic in late 2019. A “Community update” dated August 2015 maintained the same intended date for completion. A “Project Overview” dated November 2015 identified that Bourke Street would be widened and upgraded to cater for future traffic growth. The “New M5 – St Peters” fact sheet dated November 2015 included basic construction timetables which indicated that the Bourke Street road works were forecast for completion in late 2019.

Assessment of Original DA and JRPP DA

Design Review Panel report

34. As part of the Council’s assessment process the Original DA was referred to the Design Review Panel (DRP) which prepared a report dated 4 April 2015. Relevant extracts of the report are as follows:

1.   PREAMBLE

The subject DA is for a mixed-use development on the south-western corner of the intersection of Gardeners Road and Bourke Street, within the Mascot Station Precinct.

...

The site is dimensionally constrained by future road widening to Bourke Street, the rail tunnel and a planned new street to the south.

The DA submission is of a new scheme but it continues to demonstrate a well­considered design approach to which the Panel responds positively.

The Panel continues to be concerned about the excess in FSR and would recommend a possible way that this issue may be addressed. This and other issues are discussed in this report.

2.   DESIGN REVIEW

2.1   Context

The design overview submitted by the applicant documents effectively the reasoning behind the current scheme of a single slab tower over a four storeyed podium.

...

Despite the changes, the current proposal would be an acceptable response in terms of its relationship to the adjoining redevelopment, within the courtyard and when viewed from Gardeners Road and the new street.

2.2   Scale

The bulk and height of the 4 storey podium and the 10 storey slab building are generally appropriate for the scale of the streets and the adjoining and surrounding redevelopments.

...

2.3   Built Form

The proposed slab building is approximately 90m long but is well modulated by deep recesses in the main eastern façade, in particular the central recess above level 3 which provides a significant visual break in the length of the building.

The proposal as outlined on the drawings and presented at the meeting would be generally acceptable in terms of its relationship to the existing and approved redevelopment, definition of the public domain and activation of the streets at ground level.

…

2.4   Density

... The DA has reduced the FSR to 3.67:1 which is an excess of 15%.

The established preference of the Panel regarding FSR is for numerical compliance with the maximum allowed especially considering that the LEP is a recent instrument having been made in 2013. The Panel does not support excesses in FSR unless it is a minor excess and then with adequate justification otherwise it may tend to undermine the objectives of the control.

It is understood that the applicant is willing to transfer a substantial part of the site area without charge to the public for the purpose of road widening and part of a new street adjoining the southern boundary of the site. In these circumstances there is potential justification for acceptance of an excess in density on the basis of "public benefit". The applicant advised however that if a further part of the site is also required in the future for widening of Bourke Street, this would need to be on an agreed commercial basis.

In the subject case, the proposed excess density would be partly mitigated by the reduction of a part storey as suggested above and the skilful design as demonstrated by the design architect.

…

3.   CONCLUSION/ RECOMMENDATION

The subject proposal has the potential for an excellent design outcome, and some excess density could be justified if the land required for the new street is dedicated without charge to the Council.

The Panel generally supports the DA subject to the suggested modifications in this report being incorporated in an amended design to the satisfaction of the Council.

35. Following the DRP report the Council accepted an amendment to the Original DA (the JRPP DA) which addressed some of the issues raised by the Council’s initial assessment of the proposal.

Council Assessment Report

36. The Council prepared an undated assessment report which recommended that the JRPP DA be refused by the JRPP. The Council Assessment Report was sent to the JRPP on 2 December 2015. Its recommendation in full and reasons for refusal are extracted as follows:

RECOMMENDATION

That the Sydney East Joint Regional Planning Panel (JRPP), as the Determining Authority resolve to refuse consent for the construction of a thirteen storey mixed use development including 272msq of retail floor space at ground level; including 184 residential apartments DA-15/22, for the following reasons:

Reasons for Refusal

1. The Roads and Maritime Services have refused to provide the concurrence required by Clause 100 of State Environmental Planning Policy (Infrastructure) 2007, relating to development on a proposed classified road Concurrence is unable to be granted as the development is proposed within the proposed classified road, and would interfere with future road widening (Environmental Planning and Assessment Act 1979 s79C(1)(a)(i)).

2. Sydney Trains have been unable to provide the concurrence required by Clause 86 of State Environmental Planning Policy (Infrastructure) 2007, relating to excavation in, above or adjacent to rail corridors. Concurrence is unable to be granted as the package of information required to assess the impacts of the proposal on the Airport Railway Tunnel is not adequate, and Sydney Trains are not able to properly consider the matters outlined within Clause 86(4) of State Environmental Planning Policy (Infrastructure) 2007 (Environmental Planning and Assessment Act 1979 s79C(1)(a)(i)).

3.   The proposal is not consistent with the Design Principles outlined within State Environmental Planning Policy No.65 Quality of Residential Flat Development, Specifically, the proposal does not comply with the following principles:

a)   The proposal is unable to be contained within the developable area of the site, and the density is therefore inappropriate for the site and context as required by Principle 3: Density.

b)   Inadequate acoustic amenity is provided to the ground floor dwellings, as required by Principle 7: Amenity.

c)   The design does not provide a dwelling mix that responds to the desired future community as required by Principle 9: Social dimensions and housing affordability.

(Environmental Planning and Assessment Act 1979 s79C(1)(a)(i)).

4.   The proposed development is not consistent with the objectives of the B4 Mixed Use zone under Botany Bay Local Environmental Plan 2013 as the proposal does not integrate suitable business, office, residential, retail and other development, as the ground floor residential units are not suitable in the location.

5.   The proposed does not comply with the maximum floor space ratio required by the Botany Bay Local Environmental Plan 2013, and the submitted 4.6 variation request is not supported, as the proposed floor space is unable to be contained within the developable area of the site (Environmental Planning and Assessment Act 1979 s79C(1)(a)(i)).

6. The proposed development does not comply with Part 9A Mascot Station Town Centre Precinct of the Botany Bay Development Control Plan 2013 (Environmental Planning and Assessment Act 1979 s79C(1)(a)(iii)). Specifically, the proposal does not comply with the following:

a) The proposal does not comply with the unit mix requirements outlined within Part 9A.4.4.7, and the proportion of studio and one bedroom apartments is excessive.

b)   Further to reason 1. above, the proposal does not comply with the setback requirements to Bourke Street outlined within Part 9A.4.3.4, as inadequate provision has been made for the portion of the proposed classified road to be acquired.

c)   The ground floor units are provided with poor amenity, and the private open space areas are not designed away from noise sources as required by Part 9A.4.5.1, and the primary outdoor private open space areas are located on the street frontages, contrary to Part 9A.4.4.3.

d)   The proposal does not provide a complete commercial frontage to Bourke Street, as required by Part 9A.4.4.4.

e)   Insufficient information has been provided to demonstrate that vehicles are able to manoeuvre into the service parking bays as required by Part 3A.3.4.

7.   The proposal will result in adverse social impacts on the locality given the provision of an unsatisfactory dwelling mix, will result in adverse impacts on the built environment in relation to the impacts to the proposed road widening, and has not demonstrated that the proposal will not generate adverse impacts on the Airport Rail Tunnel (Environmental Planning and Assessment Act 1979 s79C(1)(b)).

8.   The proposed development is not suitable in the context of the site and locality given the issues in relation to road widening, road noise, and acoustic amenity impacts to ground floor apartments (Environmental Planning and Assessment Act 1979 s79C(1)(c)).

9.   Granting approval to the development is contrary to the public interest (Environmental Planning and Assessment Act 1979 s79C(1)(e)).

Correspondence from Sydney Trains

37. The concurrence of Sydney Trains was necessary before development could proceed on SNS’ land due to the location of the Airport Line tunnel and railway easement described in par 29 above. At the time the JRPP determined the JRPP DA, Sydney Trains had not provided concurrence having sought information that was either not provided or was inadequate for the purposes of cl 86 of the ISEPP, as set out in the correspondence summarised in the next paragraph.

38. A letter from Sydney Trains to the Council dated 30 June 2015 requested further information to allow Sydney Trains to make a decision on the granting of concurrence. SNS was encouraged to consult with Sydney Trains before submitting new or revised documentation to the Council. An email from Sydney Trains to the Council dated 19 November 2015 advised that Sydney Trains was still not in a position to issue its concurrence. Despite consultation between Sydney Trains and a consultant for SNS, Sydney Trains was of the opinion that the information provided remained inadequate. Several technical issues were identified as outstanding and requiring further documentation to resolve before an assessment on concurrence could be made.

JRPP determination

39. The JRPP notified its refusal of the JRPP DA in a letter dated 17 December 2015. Its reasons for refusal were:

1.   The Roads and Maritime Services have refused to give concurrence to the development, which is located on a classified road .

2. Sydney Trains has not provided its concurrence required under Clause 86 of SEPP (Infrastructure) 2007.

Market value and injurious affection

40. The RMS correctly identified the applicable valuation principles that are relevant to the hypothetical transaction in the before and after method applied by the valuers. The market value of land under s 5(a) of the Just Terms Act must be assessed according to its “highest and best use”, Turner v Minister of Public Instruction (1956) 95 CLR 245; [1956] HCA 7 and Spicer v Valuer-General (1963) 10 LGRA 319. The Court will therefore approach the task of determining compensation by determining what was the “most profitable potential use” of the subject land, Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW (No 3) (2010) 179 LGERA 47; [2010] NSWLEC 234 at [17].

41. The parties to the hypothetical sale are assumed to be “fully informed” and to make “all proper inquiries”, Everest Project Developments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2010) 177 LGERA 43; [2010] NSWLEC 88 at [58]. The extent to which this includes expert evidence will be discussed below.

42. The land must be valued at the relevant date in its existing condition with all its potentialities, Yates Property Corporation Pty Ltd (in liq) v Darling Harbour Authority (1991) 24 NSWLR 156; 73 LGERA 47 at 175-176; citing Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 at 313 and Turner v Minister for Public Instruction at 268-289.

43. The valuation exercise must assume that both parties to the hypothetical transaction are “perfectly acquainted with the land, and cognizant of all circumstances which might affect… [its] value”, Spencer v The Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82 at 441 per Isaacs J and Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413; [1999] HCA 25 at [49]-[50], specifically adopted by the High Court in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 at [51]. Following Spencer v Commonwealth the hypothetical purchaser in both the before and after scenario is assumed to be willing, knowledgeable and prudent.

40. As a general principle in determining compensation doubts should be resolved in favour of a more liberal estimate, see Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Ltd (1947) 74 CLR 358; [1947] HCA 10 at 374 and Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391 at [3].

Issues

45. The parties have a common general approach to market value but have used different values for the inputs to that approach. The common approach as set out by RMS with some amendment by the Court has the following elements:

1. the highest and best use of both the Parent Parcel and the Residue Land is redevelopment for a mixed use development incorporating a podium containing commercial uses and high rise residential buildings (towers being the preferred built form according to the BBDCP);

2. the values of the Parent Parcel and Residue Land are determined (largely) by the amount of GFA in a redevelopment to which a purchaser (developer) would reasonably expect to obtain development consent;

3. the value of expected GFA for the land per square metre may be derived from comparable sales;

4. the expected GFA for the Parent Parcel less the expected GFA for the Residue Land, multiplied by a rate per square metre derives an amount (subject to possible further adjustment under (e) below) that reflects the value of the Acquired Land and the diminution in the value of the Residue Land; and

5. further adjustments if the carrying out of the public purpose affects the value of the Residue Land in the following respects:

1. potential delay in commencement of redevelopment (if any); and/or

2. potential extra cost of redevelopment (if any).

46. SNS contends that the market value of the Residue Land is substantially less than the market value of the Parent Parcel principally because of the following factors:

1. a substantial reduction in the development potential of the Residue Land compared to the Parent Parcel to the extent of approximately 7,000 m² of GFA;

2. a substantial increase in risk and cost attending the physical development of the Residue Land in the after scenario as a consequence of RMS’ denial of access over the Acquired Land for construction purposes until completion of the road widening works on Bourke Street.

47. SNS in closing submissions submitted the following key issues for determination. In the before scenario, disregarding the public purpose, would the Further Amended DA (144 units, FSR 3.67:1) have been approved in relation to the Parent Parcel at the acquisition date? If yes, the developable area of the Parent Parcel is 18,184 m² GFA according to one town planner. If no, what would the hypothetical parties have regarded as the developable GFA for the Parent Parcel? Mr Chambers town planner for SNS applied 18,184 m² while Mr Mitchell town planner for RMS deduced 16,085 m². Alternatively, if both planners’ views are reasonably open, the valuers adopted different rates for certain and less certain GFA. The rate per square metre GFA determined by the valuers for certain GFA is Mr Davis for SNS at $3,400/m² and Mr Lunney for RMS at $3,200/m².

48. In the after scenario, what would the hypothetical parties regard as the developable GFA for the Residue Land? Mr Chambers applied 10,508 m² GFA (FSR 3.2:1) and Mr Mitchell applied 16,085 m² GFA (FSR 4.9:1). SNS’ primary case is that the Residue Land DA approved with a GFA of 11,164 m² (3.39:1 FSR) showed that this developable area was reasonably available to a hypothetical purchaser in the after scenario. Determining the appropriate rate per square metre of GFA as between the valuers produces an after value. According to SNS this must be adjusted to reflect the lack of access to the Acquired Land on the Bourke Street boundary until early 2020, the appropriate period of deferment being 30 months. If construction commences before 2020 greater construction costs result from the inability to rely on the Acquired Land for access.

SNS not synonymous with hypothetical parties

49. I observe that one of the features of this case was the well advanced planning by SNS for the site including the preparation of a DA rejected by the JRPP not long before acquisition. Since acquisition development consent has been granted over the Residue Land by the Court. There are consequently potentially two well advanced DAs in the before and after scenarios. As observed by the Acting Commissioner during the hearing had SNS wished to claim loss of development potential the hypothetical development model may well have been a more appropriate valuation approach. As the valuers considered there was insufficient evidence from the other disciplines to enable them to undertake that approach it was not pursued.

50. In accordance with the principles of valuation identified above in pars 40-43, the extent to which the prudent hypothetical parties would be informed in the before and after scenarios must not be assumed to be identical to the actual circumstances of SNS. Separating reality from the required hypothetical considerations which I must undertake was not straightforward in this case. This leads to the next topic as I consider part of the driver for the extensive expert evidence was the tendency to support the detailed actual development proposals which existed in the before and after scenarios.

Extent of expert evidence likely to be obtained by hypothetical parties

51. Whether and what expert evidence would be obtained by the hypothetical parties is a necessary finding the Court must make. The principle encunciated in Everest Projects that the hypothetical parties must make all proper inquiries does not mean that every piece of information or expert opinion sought by a party should be considered by the Court. The volume of expert evidence from seven disciplines before the Court is substantial. The RMS submitted it was far more substantial than the prudent hypothetical parties would be assumed to obtain and that is a question of fact per Everest Project Developments at [58].

52. As has been observed in other cases, parties before the Court in some compensation appeals are often better informed as is the Court than the prudent hypothetical parties would be assumed to be, Allandale Blue Metal Pty Ltd v Roads and Maritime Services (No 6) [2015] NSWLEC 18 at [257]. One example in this case is that Mr Menzies quantity surveyor for SNS undertook an assessment of building costs for six comparable properties which Mr Davis valuer for SNS included in his analysis of these sales. I consider that is more information than the prudent hypothetical parties should be assumed to obtain.

53. As RMS identified, it having lost the argument at the interlocutory stage as to whether detailed expert evidence should be prepared and filed, it has addressed the expert evidence which SNS wished to rely on. It nevertheless argued that the hypothetical parties would have obtained advice from an architect, town planner and valuer at most. In this case there was a volume of material prepared to support various versions of SNS’ DA for development on the Parent Parcel available at the date of acquisition negating the need for structural engineering, geotechnical engineering, construction scheduling or quantity surveying advice.

54. SNS submitted the assumed sale is of a high value, complex development. The degree of investigation is not disproportionate.

55. I flag this issue at this stage and will not rule finally at this point on the admissibility of all the expert evidence but will return to this matter as I discuss the expert evidence in more detail.

Lay evidence

Affidavits of Mr Royal

56. Mr Royal director of SNS affirmed an affidavit on 15 September 2017. SNS is part of a group of companies (Sans Group) directed and managed by Mr Royal each of which carries on the business of acquiring and developing property. Mr Royal listed six additional companies within the Sans Group which had purchased and been involved in the development of seven properties since 1986. Mr Royal also stated that some of the Sans Group companies have acquired partial interests in various development properties.

57. SNS acquired the subject property in 1992 and leased it to various tenants until 30 June 2016. The most recent tenant used the premises for its campervan and car rental business. On 21 July 2016 a complying development certificate was obtained authorising demolition of the existing structures on the property. Mr Royal attested to inspecting the property on 24 July 2016 where he observed that the demolition works had been partially completed.

58. Mr Royal attested that on 23 February 2015, after preparation of the Original DA had commenced, he met with representatives of WestConnex and RMS who explained that RMS intended to acquire part of the subject property which would be added to the Bourke Street road reserve.

59. Mr Royal attested to receiving a proposed acquisition notice on 29 April 2016. On 11 May 2016 he attended a meeting with representatives from the Sydney Motorway Corporation (SMC), the entity responsible for the construction of WestConnex, and the contractors (CPB) engaged to perform the Bourke Street road works. Mr Royal recorded in his affidavit his recollection of the meeting having refreshed his memory using notes made at the time. He was told by CPB that the Bourke Street road widening would likely be completed in 2018 and that access across the Acquired Land would not be possible before this time as it would interfere with those road works. CPB also said that the Acquired Land would not be available for scaffolding, even if it were cantilevered over the road reserve, as it would interfere with WestConnex’s construction program and pose safety issues. CPB said that crane swings above the Acquired Land would be a safety risk and would not be permitted unless required by law. It would not allow anchors to be placed on the Acquired Land to support the basement during construction.

60. On 25 May 2016 Mr Royal attended a meeting with the same representatives of SMC and CPB. He recalled that CPB reiterated that there could be no access to the Residue Land from Bourke Street until the road widening was complete. Anchoring would only be permitted by CPB if legally obliged to and subject to the final design of the road. Scaffolding on and crane swings over the Acquired Land would only be permitted if forced to by law. CPB expected that the widening of Bourke Street would be completed by mid-2019 and declared a public road in 2020.

61. The acquisition occurred on 5 August 2016. Mr Royal attested that SNS paid fees for consultants and advisers engaged in connection with the preparation of development plans prior to the acquisition. Mr Royal attested that he intends to purchase land to replace the Acquired Land and has made offers on nine other properties without success.

62. Mr Royal affirmed a second affidavit on 1 November 2017 related to disturbance costs. Mr Royal stated that some expenses incurred for services provided by consultants in the preparation of the DAs for development on the Parent Parcel were wasted as a consequence of the acquisition as they were unable to be used in relation to the DA. Nine consultants were engaged relating to the following disciplines: acoustic, architectural three-dimensional modelling, photomontage, fire engineering, population analysis, accessibility, legal, landscape design and wind. For each consultant Mr Royal described the nature of the services and identified the quantum of and extent to which the services initially provided for the DAs prepared before the date of acquisition were able to be re-used for the Residue Land DA. Invoices in respect of these amounts were attached to Mr Royal’s second affidavit.

Oral evidence of Mr Royal

63. In examination-in-chief Mr Royal stated he spoke with a council officer in November 2015 who maintained the view that RMS was the concurrence authority and that it would continue to recommend that the JRPP refuse the JRPP DA on the basis that RMS had not given its concurrence. Following this Mr Royal instructed his geotechnical engineers to stay their investigations until the JRPP made its determination.

64. Mr Royal was asked questions about his discussions with the Council. He was shown a letter from the Council dated 27 May 2015 which stated that a preliminary assessment of the Original DA had been carried out and that several issues had been identified including the absence of RMS concurrence. Mr Royal was also shown a file note of a council officer dated 16 June 2015 produced after a meeting with SNS staff including Mr Royal which stated that “Applicant needs this [the Original DA] to be determined such that they can pursue litigation with RMS. Thus, SNS understands that Council/JRPP will have to refuse the application, but nonetheless wishes to proceed”. It was put to Mr Royal that the letter and file note recorded an understanding between the Council and SNS that the Original DA would be refused. Mr Royal refuted this and stated that SNS acted on legal advice that suggested RMS’ concurrence was not required. Mr Royal was asked why he only asked the geotechnical work to be put on hold in November 2015 if he understood from June 2015 that the Original DA would be refused. Mr Royal said that the Council continued to work with SNS to resolve the issues raised in their preliminary assessment of the Original DA suggesting that neither parties’ actions were consistent with an assumption that the DA would inevitably be refused.

65. It was pointed out in re-examination that the file note of 16 June 2015 recorded requests from the Council to SNS to provide additional information concerning a number of issues with the Original DA. Mr Royal stated that these issues were examples of the parties continuing to work together before the JRPP determination in December 2015. Many of the issues were resolved in the Residue Land DA.

66. Mr Royal was cross-examined about his records of meetings with SMC and CPB, which were included in his first affidavit and summarised in pars 59-60 above. In his affidavit Mr Royal recalled that he had been told that access to the Residue Land from Bourke Street would not be possible. Mr Royal agreed in oral evidence that he was in fact told that “unrestricted” access would not be possible as this more accurately reflected the notes he made after the meetings with SMC and CPB. Mr Royal confirmed that he was told a crane would not be permitted to swing over the Acquired Land unless required to by law. He was also confident that he had been told that no anchors or scaffolding would be permitted on the Acquired Land unless required by law. Mr Royal had the impression at the first meeting on 11 May 2016 that SMC and CPB were very unhappy about the prospect of SNS using the Acquired Land in any manner. At the second meeting on 25 May 2016 they qualified their responses slightly but continued to convey reluctance towards permitting SNS using the Acquired Land unless required to by law or under the terms of the WestConnex Project approval.

67. Mr Royal was asked about access for construction vehicles to the Residue Land via the new Galloway Street. He stated that at the date of acquisition the portion of Galloway Street to the south of the Residue Land was privately owned. Mr Royal did not think that he would be able to obtain permission from the landowner to traverse that land.

Correspondence between SNS and RMS

68. Nine letters between SNS and RMS after the date of acquisition were tendered as evidence of discussions concerning access over the Acquired Land. In the first letter dated 23 December 2016, Mr Royal wrote to RMS informing it of the Court’s approval of the Residue Land DA and requesting confirmation of RMS’ position concerning access. The RMS responded on 18 January 2017 seeking additional information. On 30 January 2017 Mr Royal provided extra information about the matters of construction for which access to the Acquired Land is required. Mr Royal stated that SNS anticipated commencing construction on the Residue Land in September 2017. The RMS response on 5 April 2017 stated that it was committed to maintaining access to adjoining properties where “feasible and reasonable” in accordance with the WestConnex Project approval. However, it considered Mr Royal’s requests for access went “beyond merely ‘maintaining access’ to your property” and that insufficient detail had been provided. It continued:

There is a potential for conflict between the two construction activities giving rise to a need for the SNS Development to take account of the Project at an operational level. However your letters seek to obtain quite broad and general undertakings that do not recognise this need. Specifically Roads and Maritime cannot and will not allow SNS use of the RMS Land in any manner that may affect the construction of the Project.

69. Mr Royal provided further details as requested on 8 May 2017. On 5 July 2017 RMS responded to the information provided. It was of the view that erecting scaffolding on the Acquired Land would constitute “development” under the EPA Act for which no development consent had been granted. The RMS expressed a similar view concerning anchors and any crane jib swing over the Acquired Land. On 20 July 2017 Mr Royal stated that the Court approval of the Residue Land DA was broadly framed so as to permit activities on adjacent land to facilitate the construction of the proposed development without the need for an additional development consent. Mr Royal directed attention to Condition 10(a) of the Court approval which prohibits development on the Acquired Land “except with consent of RMS or Court Orders that allow access”.

70. The RMS responded on 9 August 2017 that it did not agree that the Court approval permitted development on the Acquired Land. The RMS stated that it would not give owners’ consent under cl 49 of the EPA Regulation to lodge any DA for construction activities on the Acquired Land as such works may interfere with the road widening project. It would reconsider this position once the road widening works were completed.

71. On 20 October 2017 RMS wrote an unsolicited letter to Mr Royal stating that it would grant consent to a crane jib swing over the Acquired Land on certain terms.

Evidence on market value

72. Extensive expert evidence was obtained from town planners, architects, a geotechnical engineer, structural engineers, quantity surveyors, and construction schedulers some of which informed the valuation exercise undertaken by the valuers.

Town planning

73. Mr Chambers town planner for RMS prepared a report dated May 2017. The RMS’ town planner Mr Mitchell prepared a report dated 4 May 2017. The planning experts prepared a joint report dated 8 June 2017.

74. The planners agreed that some design flexibility was provided for in the BBDCP. They also noted that according to the EPA Act the controls in a DCP are to be applied flexibly (s 79C(3A)) and have no effect to the extent that they are inconsistent with the provisions of an environmental planning instrument (s 74C(5)).

Likely approval prospects of Further Amended DA before acquisition date (before scenario)

75. Mr Chambers thought that absent the public purpose there was a strong likelihood that the JRPP would have approved the JRPP DA with an FSR of 3.67:1 (18,184 m² GFA) subject to the resolution of engineering matters raised by Sydney Trains. This approval would likely have been granted before the date of acquisition.

76. Disregarding the public purpose some form of widening of Bourke Street would have been required to enable it to function as a local road in the manner anticipated by the Council. The JRPP DA accommodated the Council’s road widening requirements. Although the Council Assessment Report did not expressly acknowledge that the JRPP DA met these requirements it was accompanied by a traffic concept plan which was stated to have been prepared in consultation with the Council and to have accommodated the Council’s plans for Bourke Street. The traffic concept plan had also been provided to the WestConnex Delivery Authority who indicated by email dated 7 August 2014 that it did not conflict with the requirements of the WestConnex Project. In Mr Chambers’ opinion the Council would not have desired a more extensive road widening scheme than WestConnex.

75. The JRPP identified only two reasons for refusal of the JRPP DA, neither of which were related to the merit of the proposed development. Mr Chambers’ opinion was that it is reasonable to infer that the JRPP did not have any merit issues with the JRPP DA as it would have otherwise acted reasonably and informed the proponent. Even if the JRPP had been concerned about design issues, it is unlikely that these would have been determinative of the JRPP DA. The DRP considered the Original DA to be “generally appropriate” and had the potential “for an excellent design outcome”. The Council Assessment Report to the JRPP stated that the proposed development complied with the design excellence provisions in cl 6.16 of the BBLEP. Any outstanding design issues were or at least could have been resolved in subsequent amendments to the DA. The Council’s recommended rejection of the cl 4.6 variation request for an FSR above the 3.2:1 control (reason 5) was predominantly influenced by the public purpose and should be ignored. Development was proposed on the portion of the Parent Parcel marked on the LRA Map in BBLEP for the purposes of road widening which was therefore impermissible under RMS’ plans for the site. The Council made no mention of its own road widening proposal for Bourke Street when discussing this reason for recommending refusal in its report to the JRPP. Mr Chambers considered the Further Amended DA satisfied both the Council and WestConnex road widening requirements in the before scenario. Absent the public purpose, the cl 4.6 variation request for greater FSR was well-founded and likely to have been supported by the JRPP.

76. Mr Mitchell disagreed that absent the public purpose the Further Amended DA would have been approved by the JRPP. The engineering issues raised by Sydney Trains were not easily resolvable. Further, that the JRPP relied only on the absence of concurrence from RMS and Sydney Trains in its reasons for refusal does not mean that merit issues would not have acted as an impediment to its approval. Most of the merit based reasons for refusal recommended by the Council were not resolved by subsequent amendments to the DA. There is no evidence supporting a successful cl 4.6 variation request to permit the FSR proposed in the DA. The nomination of the site as a gateway to the MSTCP does not justify greater building bulk but requires higher design standards.

77. Absent the WestConnex public purpose the Council’s plans for widening Bourke Street and consequential increases in local traffic would have been relevant considerations. Mr Mitchell considered the hypothetical parties would not assume that the Council was satisfied its local road widening requirements had been met by the Further Amended DA as it had not turned its mind to that at the time of assessing the Original DA and JRPP DA. The adverse traffic related impacts identified in the Council’s refusal reasons would therefore still largely apply.

78. The DRP report had no regard to the provisions of the BBDCP and its conclusion that the Original DA had the potential “for an excellent design outcome” was largely based on an irrelevant consideration that “the land required for the new street is dedicated without charge to the Council”. In Mr Mitchell’s opinion a “slab building type” of the kind proposed would not be appropriate and unlikely to be approved in either the before or after scenarios. A slab building is inconsistent with the Council’s desired future character of buildings expressed in Pt 9A of the BBDCP and maximum building length of 24 m in Pt 4C.2.2. Mr Mitchell disagreed with the DRP’s conclusion that “[t]he bulk and height of the 4 storey podium and the 10 storey slab building are generally appropriate for the scale of the streets and the adjoining and surrounding redevelopments”. A slab building scheme would lack distinctive elements such as a slender tower and be generally inconsistent with the emerging future character of the locality which would be particularly inappropriate for a gateway site. Mr Chambers disagreed with Mr Mitchell’s criticism of the slab building design, noting that developments elsewhere within the MSTCP have been approved with a similar building form notwithstanding the desired built form expressed in the BBDCP.

79. Mr Mitchell requested that Mr Bonus architect for RMS provide possible building designs consistent with the planning controls in the BBLEP, the maximum building height of 51 m, the airport tunnel easement, SEPP 65 and the ADG, the desired future character map in the BBDCP and designation of the subject site as a gateway site. Mr Bonus’ concept plans were adopted by Mr Mitchell as evidence of the GFA and FSR that could be achieved by a hypothetical purchaser of the Parent Parcel in the before scenario and are summarised at pars 109-110 below.

Likely floor space ratio approved in before scenario

82. Mr Chambers’ opinion was that the JRPP would have likely approved a development of a similar type, density and presentation to that which was proposed in the DAs prepared before the date of acquisition. Absent the public purpose some widening of Bourke Street would have been required by the Council to enable it to function in the manner anticipated as an integral part of the MSTCP. There was a strong likelihood that absent the proposed acquisition and subject to the resolution of issues associated with Sydney Trains’ concurrence the Further Amended DA would have been approved by the JRPP with an FSR of 3.67:1 and GFA of 18,184 m².

83. The Further Amended DA was for a design which addressed what council officers understood to be the relevant requirements for the widening of Bourke Street. It did not preclude the street being developed in accordance with the Council’s vision for the MSTCP as set out in the BBDCP. Mr Chambers found support for this view in the Statement of Environmental Effects (SEE) prepared in support of the Original DA.

84. In Mr Chambers’ opinion there was “some possible basis” for additional FSR approved in a DA for the Parent Parcel above that of the adjacent Avantra site (3.34:1) due to the Parent Parcel’s location at the northern gateway of the MSTCP. Absent the public purpose there was a strong likelihood that the JRPP would have approved the Further Amended DA which proposed an FSR of 3.67:1, although possibly with some design modifications that may have had a minor impact on FSR.

85. Mr Mitchell stated that development on the Parent Parcel absent the acquisition would have been confined to the area of the site not affected by the proposed Council road widening. Given the constrained developable area a breach of the FSR control would not be appropriate nor practical as it would result in a building with excessive bulk and substantial basement excavation on the Residue Land. A development with an FSR of 3.16:1 (15,660 m² GFA) or 3.24:1 (16,085 m² GFA) would likely have been approved based on designs prepared by Mr Bonus architect for RMS. Mr Mitchell considered the designs of Mr Bonus that were compliant with the built form controls on the BBDCP were more likely to be approved than those that were not compliant. The differences in FSR depended on whether the ADG or RFDC applied to the DA, see par 116 below.

86. Mr Chambers thought that Mr Mitchell failed to adequately consider the approved FSR of 3.34:1 at the adjacent Avantra site and that SNS’ DAs had considerable design merit which was recognised by the Council. Mr Mitchell’s opinion was that the Avantra site was not a useful comparison due to the restricted developable area on the Parent Parcel.

Likely floor space ratio approved in after scenario

87. In Mr Chambers’ opinion the Council would have been unlikely to support a cl 4.6 variation request other than for a very minor increase in the permissible maximum FSR (no more than 5%) given the changes to the development potential of the Residue Land in the after scenario. His advice to a hypothetical purchaser was that it was highly likely that the maximum achievable FSR would be the 3.2:1 control pursuant to the BBLEP. This would result in 10,508.8 m² of GFA.

88. Mr Mitchell was of the opinion that an FSR of 4.9:1 would likely be approved in the after scenario in accordance with designs provided by Mr Bonus. The site has essentially the same constraints in the before and after scenarios. If a 3.24:1 FSR (16,085 m² GFA) development was appropriate in the before scenario that same development would be equally appropriate in the after scenario (yielding a higher FSR due to the reduced developable area). There were “virtually unique circumstances” which applied to the site that would have justified a substantial variation to the FSR control. A development that is compliant with the control would be of a bulk and scale which is not appropriate for the prominence and visual importance of the site as a gateway to the MSTCP. The site area would be underutilised and conflict with the Council’s vision for the site in the BBDCP.

89. An alternative approach for a hypothetical purchaser would be to lodge a planning proposal seeking a zoning amendment to achieve a large variation to the FSR control.

90. Mr Chambers disagreed with Mr Mitchell’s approach to FSR in the after scenario. It is highly unlikely that a consent authority would refuse a DA on the basis that its FSR is too low. Similarly, an FSR of 4.9:1, a 53% increase above the BBLEP control, is unrealistic and would not be approved. The prospect of a planning proposal successfully changing the FSR limit on the Residue Land to 4.9:1 would be very remote.

Development potential in after scenario

91. Mr Chambers assumed that a new DA would be required for development on the Residue Land in the after scenario. The site area 3,284 m² is substantially reduced by 1,675 m² from the Parent Parcel. The development potential of the subject site was different following the acquisition. Firstly, an assessment of a new DA must take into account the changes to SEPP 65 and the fact that the ADG, not the superseded RFDC, applies to DAs lodged from 19 June 2015. This will likely result in smaller units being approved by the Council provided they satisfy ADG requirements notwithstanding the Council’s relatively large minimum apartment sizes in the BBDCP. The Court’s decision in Botany Development Pty Ltd v Council of the City of Botany Bay (No. 3) [2015] NSWLEC 1282 supports the likelihood of this outcome. Mr Chambers stated that given the smaller apartment sizes council planning officers were less likely to accept exceedances of the FSR control. Previously there was “a trade-off between units that complied with Council’s unit size requirements and the achievement of more FSR than was permitted by the [BB]LEP”. Mr Chambers did not provide any evidence of such a “trade-off” between council officers and developers.

92. Secondly, development in the before scenario was not confined to the Residue Land as identified in the LRA map in BBLEP. The Acquired Land had “real development potential” absent the public purpose, which would have been able to coexist with the Council’s road widening intentions. Geotechnical work carried out in preparing the Original DA supported the building extending onto the Acquired Land. The DRP report and Council Assessment Report did not identify any conflict between the proposed development and any local road widening intentions for Bourke Street. Documentation in support of the Original DA suggested that the Council’s road widening requirements were more flexible and negotiable than the requirements of RMS. Further, the reduced site area in the after scenario is a constraint on development as it generates less achievable GFA based on the FSR control.

93. In Mr Mitchell’s opinion the development potential of the Residue Land is essentially the same as that which was available on the Parent Parcel. In the before scenario, absent the public purpose the Council’s road widening plans would have applied. Both road widening plans are virtually identical and have the same effect on the site’s development potential. Both plans would also result in substantial increases in traffic on Bourke Street creating important merit considerations affecting the use of the lower levels and overall form, siting and design of a development on the subject land. Development in both the before and after scenarios must also satisfy the provisions of the Airport Line Guidelines.

Cross-examination of town planners

Before scenario

94. Mr Chambers’ opinion was that the DRP report which referred to the proposal as achieving “design excellence” suggested the Council did not have any issue with a slab-style building on the subject site, despite this being the desired built form for development on the land in the BBDCP. He did not consider that the plans were inconsistent with the BBDCP which allows for flexibility in built form.

95. Mr Chambers agreed with Mr Mitchell that absent the public purpose there would have been a Council road widening requirement. However, the developer of the site would have been able to negotiate the land dedication with the Council which is common practice. Mr Mitchell said that he has only ever come across such negotiations when a new street is to be created.

96. Mr Chambers agreed that there was no need for council officers to engage with the Council’s road widening purpose when it assessed the Original DA and JRPP DA because at the time RMS was the acquiring authority. Mr Chambers agreed that the Council Assessment Report expressed concerns about the merit of the proposed development in addition to the absence of RMS’ or Sydney Trains’ concurrence as reasons for recommending refusal to the JRPP. However, his opinion was that it is unlikely that these merit issues would have been determinative and were curable. He agreed that there was no direct engagement in the Council Assessment Report with cl 4.6 variation request seeking an uplift in FSR to 3.67:1 from 3.2:1.

97. Mr Mitchell agreed that advice to a hypothetical developer of the Parent Parcel would consider the approved FSR of nearby developments including Avantra and Meriton (see par 130 below) at 3.34:1 but that this would only be one factor to consider. Another important factor is the developable area of the Parent Parcel. He agreed that the ability of the subject site to accommodate the Council’s vision for the widened Bourke Street was an advantage over the Avantra and Meriton sites. He disagreed however that this was a reason to support the FSR uplift sought despite the DRP’s view.

98. Mr Mitchell did not agree that the designation of the subject land as a gateway site in the BBDCP suggests that a higher FSR would be approved for development in the before scenario. The gateway designation shows a need for a higher standard of design and finish but makes no reference to bulk and scale.

99. Mr Mitchell said that he would advise a hypothetical purchaser who wished to construct a basement carpark over the rail tunnel that to do so could be problematic due to the Airport Line Guidelines and geotechnical advice would need to be sought before proceeding. He did not agree that the absence of Sydney Trains’ concurrence indicated that they were in principle content with the prospect of development over the rail tunnel.

100. It was put to Mr Mitchell that the Council Assessment Report had no indication that the plans submitted to it by the proponent were unacceptable insofar as it impeded plans for the widening of Bourke Street. Mr Mitchell stated that as the Council’s road widening plans had been replaced by the public purpose it would have been illogical to discuss the Council’s plans in this report.

101. Mr Mitchell agreed that of the nine reasons for refusal recommended by the Council Assessment Report reasons 1, 3(a), 6(b) and parts of 7 and 8 were to be disregarded to give effect to s 56(1)(a) of the Just Terms Act. He also agreed that apart from the absence of concurrence of Sydney Trains the remaining reasons were based on location of residential units on the ground floor or non-compliance with the unit mix control for one-bedroom and studio apartments. Mr Mitchell did not agree that there was a high likelihood at the date of acquisition, but for the public purpose, that the Further Amended DA was likely to have been approved.

After scenario

102. Mr Chambers said that a “minor” FSR uplift would be possible in the after scenario. A point of difference with the adjacent Avantra and Meriton sites which received an approved FSR of 3.34:1 is that those DAs were approved under the former provisions relating to apartment sizes (relevantly, larger apartments required by the BBDCP). Mr Chambers said that the prospect of approval for an FSR of 4.9:1 as suggested by Mr Mitchell was “unrealistic” and would carry a 95% chance of refusal.

103. Mr Mitchell agreed that an FSR of 4.77:1 or 4.9:1 would require a significant cl 4.6 variation but emphasised that “these circumstances are virtually unique”. He thought that a development which was satisfactory for the Parent Parcel should by default be satisfactory for the Residue Land. Mr Mitchell disagreed that his approach to the before scenario infected his analysis of the after scenario. He said that he looked at each case on its own circumstances and the constraints which applied to the site in both scenarios were essentially the same.

104. Mr Mitchell disagreed that submitting a planning proposal to permit a significant FSR uplift of 4.9:1 would be an “absolute nonsense”. He said that there would be “strong planning merit” for such a proposal and “[saw] no reason why it wouldn’t be granted”. Mr Mitchell disagreed that the BBDCP controls for built form and character were the “driving factor” in his advice for a cl 4.6 variation to the FSR control but maintained that the BBDCP was an important document that should be “given significant weight”.

Architectural evidence

Mr Ireland

105. Mr Ireland architect for SNS prepared an expert report dated 8 May 2017. He had regard to the planning evidence of Mr Chambers and the architectural plans which accompanied the various DAs for development on SNS’ land in the preparation of his report. In Mr Ireland’s opinion both the JRPP DA and Further Amended DA complied with relevant planning controls, site constraints and characteristics. Further, the Council Assessment Report raised no issues which would warrant refusal of the application in the before scenario save for the ground floor residential uses proposed in the JRPP DA which were amended to commercial in the Further Amended DA.

106. Mr Ireland prepared a concept plan for development on the Residue Land in the after scenario. He considered that the developable site in the after scenario was much narrower than in the before scenario based on the advice of Mr Chambers. The development he proposed complied with the FSR control of 3.2:1.

Mr Bonus

107. Mr Bonus architect for RMS prepared an expert report dated 4 May 2017. Prior to the preparation of his report Mr Bonus had received advice from Mr Mitchell about the planning controls which apply to the subject site. Mr Mitchell advised him that absent the public purpose the Acquired Land would have been reserved for acquisition by the Council.

108. Mr Bonus prepared several concept plans and design reports for the development of the subject site in the before and after scenarios. The plans differed based on various assumptions about whether a hypothetical purchaser of the Parent Parcel would lodge a new DA, whether the ADG or RFDC would apply affecting the number and type of units that could be included in a potential development and whether strict compliance with the BBDCP is required.

Mr Bonus’ architectural schemes in before scenario

109. Mr Bonus explained that if a purchaser of the Parent Parcel decided to lodge a new DA then the ADG which came into effect on 19 June 2015 and the principles of SEPP 65 should be applied to the design of new apartments. He prepared a plan for development of the Parent Parcel which was consistent with the four-level podium and two-tower built form set out in the BBDCP within the area unaffected by the Council’s road widening requirements. Assessed against the design criteria of the ADG the plan had a GFA of 16,085 m² and FSR of 3.24:1. An alternative plan for a slab style building not compliant with the built form requirements of the BBDCP but otherwise based on the same assumptions produced a GFA of 16,106 m² and an FSR of 3.25:1.

299. In addition I agree with RMS that such detailed evidence as I have summarised above concerning construction scheduling, insetting of walls to a specific degree resulting in the possible need for a third level of basement car parking would not be obtained by the prudent hypothetical parties in any event. I will not consider the third level of basement further for construction programming or valuation purposes and accordingly it need not be taken into account in considering construction on the Residue Land before early 2020.

300. Commenting more generally on the nature of expert advice that the prudent parties would be likely to obtain, I consider Mr King’s evidence based on the structural engineers’ advice as summarised above in pars 264-265 is more likely to be the type of evidence received by prudent hypothetical parties, if sought at all. That is to the effect that there are construction methods, albeit more costly, which enable construction to commence and progress without relying on access to the Acquired Land which would permit construction to commence at any time. Mr Abbott prepared a detailed construction schedule based on various assumptions such as whether internal buttressing and/or a third level of car parking would be required. Evidence of this type reflects a particular construction program and is not what the hypothetical parties would be assumed to obtain. I intend no criticism of Mr Abbott in making these observations as he was addressing the brief provided to him.

301. As a result of my findings accepting a 12 month period for preparation for construction after the grant of a development application and Mr King’s evidence of the potential for construction to commence from July 2018 in the after scenario the 10 month and 17 month deferral periods do not arise.

302. Starting building before access to the Acquired Land is available does require additional costs to be incurred by a hypothetical developer. The valuers agree that additional construction costs arising from no access to the Acquired Land in 2020 should be taken into account in my consideration of such a hypothetical party. There was no dispute by the structural engineers and construction schedulers that the provision of internal support would be necessary if access to the acquired land is not available. The structural engineers agreed that a “top-down” method of construction, internal propping or temporary buttress walls could be used. Internal buttressing is costed at $1.9 million by the quantity surveyors. The additional building costs for internal buttressing should be considered to be a matter the prudent parties would be mindful of and a deduction for these should be made from the purchase price in the after scenario as a cost the hypothetical parties would accept is reasonable to take into account, subject to a matter identified in par 317.

303. A further building cost arising from the lack of access to the Acquired Land before early 2020 is the necessity at the ground level to vary the building program for the podium along Bourke Street so that grids D-E must be built out of sequence to be completed once access to the Acquired Land is obtained, as identified by Mr King in par 269 above. Mr King accepted in cross-examination that this would require additional costs over and above usual construction costs, as RMS accepted. RMS submitted that these could be separately determined. I consider that the hypothetical parties would consider this to be a reasonable cost to factor into any purchase price. I have no evidence of the additional costs that may be occasioned but am prepared to consider deducting these from the market value in the after scenario if they appear generally reasonable. It is a matter for SNS as to whether it wishes to pursue a claim for these. If so, ideally there would be agreement between experts as to what the appropriate reduction should be.

Finding on GFA rate/impact of construction costs in after scenario

313. The parties largely adopted their respective valuer’s evidence in their submissions on the appropriate GFA rate the Court should apply in the after scenario.

314. My findings concerning accumulation, analysis, adjustment and application in the before scenario also apply in the after scenario. While the Residue Land in the after scenario is smaller in area than the Parent Parcel in the before scenario, in relation to the accumulation of sales by Mr Davis the same concerns apply to the application of sales from Waterloo that being a different market. Relevant sales are located very close to the subject. The size of the Residue Land was not so different that the same local sales in Gardeners Road relied on by Mr Lunney in the before scenario cannot apply in the after. Mr Lunney's accumulation, analysis and adjustment of comparable sales in the after scenario were explicit and transparent and are accepted. In the after scenario, Mr Lunney applied the same accumulation, analysis and adjustment steps as in the before scenario, which I have accepted, with the application step having regard to the smaller site area of the Residue Land determining the rate applicable to the subject property in the after scenario to be $3,000/m² GFA, which I accept.

315. Another factor which affects value is the valuers’ approach to the likelihood of GFA being approved above the control of 3.2:1. Both identify a certain and a less certain GFA rate. Mr Lunney adopts $1,500/m² for 5,576 m², a market rate of $39,000,000, reduced to $38,000,000 to take into account Mr Chamber’s and Mr Mitchell’s differing opinions. Mr Davis adopts a rate of $3,225. I prefer Mr Lunney’s reasoning for the reasons identified in the before scenario and will apply $1,500/m².

316. Without taking into account building costs, the value in the after scenario is $32,214,000 consisting of 10,508 m² at $3,000/m² ($31,524,000) and 460 m² at $1,500/m² ($690,000).

317. As concluded above in par 311 and 312, additional building costs occasioned by the assumption of the prudent parties that internal buttressing will be necessary will need to be deducted from the value of the Residue Land. According to RMS, if internal buttress walls are allowed the cost of $1.9 million must be reduced as this includes such walls along Gardeners Road. That is an issue that will be discussed with the parties. Additional costs arising from the need to build out of sequence at ground level is also a matter which SNS can return to the Court about as noted above.

Conclusion on market value

318. I have found that the market value in the before scenario is $51,549,775. The value of land in the after scenario is $32,214,000 from which specified building costs must be deducted. The difference between these figures once finalised will be the market value owing to SNS.

Disturbance

319. SNS' claim for loss attributable to disturbance (s 55(d)) seeks the following costs:

1. under s 59(1)(a) and (b), valuation and legal fees for services provided prior to the commencement of proceedings. These are agreed; and

2. under s 59(1)(f):

1. fees of consultants (other than legal advisers and valuers) for services provided prior to the commencement of these proceedings in relation to the assessment of SNS’ claim to compensation (including in negotiations with RMS and submissions to the Valuer-General under s 47 of the Just Terms Act);

2. wasted costs of consultants engaged in preparing and prosecuting the Original DA/JRPP DA;

3. costs of consultants engaged in preparing and prosecuting the Residue Land DA; and

4. costs for stamp duty payable on the acquisition of land to replace the Acquired Land.

Evidence on disturbance

320. The evidence of Mr Royal’s first affidavit is summarised above in pars 56-61 including a description of the structure of the Sans Group of six companies, including SNS, each of which carries out property development, the leasing of the property from 1992 to 30 June 2016 and that he is intending to purchase land to replace the Acquired Land. In his second affidavit, summarised above in par 62, Mr Royal attested to incurring wasted consultants’ fees for various services and attached invoices reflecting these costs.

321. The consultants’ affidavits relied on in relation to disturbance are as follows:

• affidavit of Mr Koopman architect affirmed 20 September 2017;

• affidavit of Mr Adam hydraulic designer affirmed 18 September 2017;

• affidavit of Mr Jones engineer specialising in flood risk assessment dated 7 September 2017;

• affidavit of Mr Hollyoak engineer sworn 30 August 2017;

• affidavit of Mr Ienco structural engineer affirmed 11 September 2017;

• affidavit of Mr Ruck energy efficiency consultant sworn 6 September 2017;

• affidavit of Mr Young geotechnical engineer sworn 11 October 2017; and

• affidavit of Ms McCabe town planner sworn 23 October 2017.

322. There is no dispute about the actual amounts claimed for disturbance. At issue is whether these are claimable under the Just Terms Act as a matter of principle.

SNS’ submissions on disputed disturbance

Costs of other consultants engaged in connection with the compensation claim

323. As can be seen from the evidence adduced in these proceedings, given the nature of the acquisition, it was reasonable and prudent for SNS to obtain advice from consultants in disciplines other than law and valuation in order to properly inform its claim for compensation. A similar claim was made successfully in Constantine v Blacktown City Council (No 2) [2016] NSWLEC 81 at [157]-[164].

324. This expenditure plainly meets all the requirements of s 59(1)(f). In particular, it is a cost “relating to the actual use [of the Acquired Land]” because, immediately prior to the acquisition, the actual use of the Acquired Land (as part of the Parent Parcel together with what was to become the Residue Land) was as a development site for a mixed use residential and commercial building and the subject matter of the expenditure plainly concerns the use of the Acquired Land (as part of the Parent Parcel) in this manner.

Wasted costs of the Parent Parcel DA

325. Expenditure for the purpose of a proposed development that is aborted or wasted because the development cannot proceed as a consequence of an acquisition is recoverable under s 59(1)(f), for example Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 254. The expenditure incurred by SNS in preparing for and prosecuting the Original DA/JRPP DA was effectively aborted as a consequence of the acquisition except to the extent that the expenditure can be characterised as being for works or services that were able to be re-used in preparing and prosecuting the Residue Land DA.

326. SNS' claim is largely based on evidence adduced from the consultants involved in providing the relevant services that identifies and estimates the extent to which (if at all) services were able to be re-used in respect of the Residue Land DA.

Costs of the Residue Land DA

327. Had the acquisition not occurred it would not have been necessary for SNS to incur costs in preparing and prosecuting the Residue Land DA. Although from one perspective the expenditure was incurred in relation to the Residue Land (and not the Acquired Land), for the reasons that follow, it also has a sufficient relationship with the actual use of the Acquired Land as required under s 59(1)(f).

328. Immediately prior to the acquisition, the actual use of the Acquired Land was (as part of the Parent Parcel and together with the Residue Land) a development site. The claimed expenditure relates to that same actual use albeit as a result of the acquisition. It is only the Residue Land that can be used by SNS in that manner. Putting the matter another way, the actual use of the Acquired Land and the Residue Land were so intimately connected that the use of each was dependent upon (or was indeed the same as) the other, for example Roads and Traffic Authority of New South Wales v Peak [2007] NSWCA 66 at [71] and Roads and Traffic Authority of New South Wales v McDonald (2010) 79 NSWLR 155; [2010] NSWCA 236 at [44]-[45].

Stamp duty on replacement land

329. Immediately prior to the acquisition, SNS was actually using the Acquired Land (as part of the Parent Parcel) as a development site for the purpose of its development business, see the affidavit of Mr Royal summarised above in pars 56-57. Persons carrying on such a business require development sites as their land bank or stock-in-trade and acquire them for that purpose. The acquisition has removed the Acquired Land from SNS' land bank and stock-in-trade and, to continue its business, it intends to acquire replacement land as recognised in Blacktown Council v Fitzpatrick Investments Pty Ltd [2001] NSWCA 259 and Macarbell Pty Ltd v Roads and Traffic Authority of New South Wales (2006) 149 LGERA 217; [2006] NSWLEC 651 at [12]-[16]. The execution of that transaction will involve SNS incurring various costs including for stamp duty.

330. In SNS’ circumstances, as attested to by Mr Royal, the authorities clearly establish that incurring stamp duty calculated on the market value of the Acquired Land is compensable under s 59(1)(f), see Macarbell. Potential future use of the Acquired Land is not an “actual use” but SNS’ use is not as a mere passive investor. The circumstances are unlike Cannavo v Roads and Traffic Authority of New South Wales [2004] NSWLEC 570. Speter v Roads and Maritime Services [2016] NSWLEC 128 is also distinguishable on its facts.

RMS’ submissions

Stamp duty not claimable

331. SNS is not entitled to compensation for four reasons. Firstly, the claim is not related to the actual use of the Acquired Land but is a future or potential use at the date of acquisition. The intention to develop the land is a potential future use as no consent had been obtained to allow development on the Acquired Land, relying on Speter at [93]. The land is not stock-in-trade. SNS has owned it for 25 years as an investment and leased it out. The holding of land as an investment rather than as trading stock is not an actual use of land per Cannavo at [46]. This case is similar to Kirela Pty Ltd v The Minister Administering the Environmental Planning and Assessment Act 1979 (No. 2) (2004) 132 LGERA 90; [2004] NSWLEC 68 where a similar claim was rejected.

332. Secondly, the stamp duty costs are not a direct and natural consequence of the acquisition. The use of the Parent Parcel was for a mixed use development, the same use as on the Residue Land, albeit at reduced size. There is no evidence of SNS carrying out multiple developments at once or at all.

333. Thirdly, the claim is unreasonable given the constraints to development on the Acquired Land, resulting in minimal development. A true replacement with all its constraints would be problematic.

334. Fourthly, the claim is precluded by s 61 of the Just Terms Act if the Court finds the Acquired Land was ripe for redevelopment.

Original DA/JRPP DA costs not claimable

335. For the same four reasons identified above the Original DA/JRPP DA costs are not claimable, particularly as these costs were not caused by the acquisition (second reason). The costs were incurred for the redevelopment of the site. The formulation of the redevelopment was inconsistent with the acquisition as it proposed development on the Acquired Land. It did not therefore acknowledge it and the loss was not caused by it.

336. SNS is not entitled to compensation for any cost that would necessarily have been incurred in realising the potential for mixed use development as that was not its use at the date of acquisition. Obtaining development consent is necessary in order to realise that potential and SNS is not entitled to any costs incurred in realising that potential.

Residue Land DA costs not claimable

337. The Residue Land DA costs are not claimable as they do not relate to the actual use of the land and are precluded by s 61. Assuming that market value will be assessed on the basis that the land was ripe for mixed use development this is a use other than that for which it was being used as at the date of the acquisition. Obtaining development consent is necessary in order to realise that potential and is therefore not claimable.

Costs of other consultants engaged for compensation claim not claimable

338. SNS is not entitled to claim compensation for costs incurred in relation to consultants’ fees to inform a valuation under s 59(1)(f) for the same four reasons as set out in pars 331-334 above. In addition, there is a clear statutory intent in s 59(1)(a) and (b) to limit fees payable to lawyers and registered valuers to advise a dispossessed owner in relation to an acquisition. This intent was made even clearer by the insertion of s 59(2) in 2016 to limit claimable valuation fees to those payable only to valuers with certain qualifications.

339. Finally, and independently of the above, for the Court to allow these fees it would need to be satisfied that both the engagement of the consultants was required to inform the valuation of the Acquired Land and that, in fact, SNS' valuer relied on the reports or advice of such consultants in preparing the valuation.

340. SNS relied on Constantine. The case is clear authority that such consultant fees are not compensable under s 59(1)(b). In that case the trial judge did not allow the claim under s 59(1)(f) because the fees claimed did not relate to an actual use of land. Similarly here, the costs claimed could not rationally be said to be related to the actual use of land that were incurred as a direct and natural consequence of the acquisition. First, the fees relate not to the actual use of the land but rather to the prospective highest and best use of the land. Second, they have not been incurred as a consequence of the acquisition affecting any use, but for the purpose of pursuing the claim for compensation with the Valuer-General. The statutory intent is to permit only a limited range of fees in that regard.

Finding on disturbance claim under s 59(1)(f)

341. The precise terms of s 59(1)(f) must be applied in the circumstances of this case. “Any other financial costs” is a wide term and includes loss per Health Administration Corporation v George D Angus Pty Ltd (2014) 88 NSWLR 752; [2014] NSWCA 352 at [61]. Any such costs or losses must be or might be reasonably incurred as a direct and natural consequence of the acquisition.

342. Key to the determination of the claims made under s 59(1)(f) in this case is whether the claims relate to the actual use of the Acquired Land at the date of acquisition. As noted in Constantine in [156] citing Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales 149 LGERA 217; [2006] NSWCA 314 at [88] disturbance costs can only be awarded if they relate to the actual use of the Acquired Land at the date of acquisition so that costs relating to a potential future use would fall short of actual use and would not be claimable. In the present case, at the date of acquisition the Acquired Land was vacant, the lease to the business formerly occupying the site having expired some two months prior. SNS had lodged a DA for a mixed use development which had been refused by the JRPP and was the subject of a Class 1 appeal in the Court. No building work related to the development of the site for mixed use development had commenced. However, a complying development certificate for demolition work had been issued and demolition had commenced on the Acquired Land. SNS described the use at the date of acquisition as a development site for a large mixed use development. I agree with that description of the actual use.

343. This case is similar to Macarbell where Jagot J held vacant land ripe for industrial development was being used in the applicant’s business of land development at the relevant date. The potential use of the land for that purpose was consistent with the use of the land at the date of acquisition. That the applicants had open to them various means of pursuing their business including through a leasehold did not preclude a finding of actual use, at [35]. Applying similar reasoning here SNS is entitled to disturbance which relates to that actual use of the Acquired Land. That is the same basis on which market value is assessed. Section 61 has no application in these circumstances.

341. A further matter identified by RMS is my finding that the Further Amended DA would not have been considered likely to be approved by the prudent hypothetical parties. The Council’s road widening requirements would be presumed to apply in the absence of RMS’ public purpose in the before scenario. This was used to support a submission that the development potential of the Acquired Land was more limited than the Residue Land as a result and its replacement as if on the same development basis was not justified. The Acquired Land nevertheless had development potential for which it is reasonable to find replacement land. That finding does not negate this aspect of the disturbance claim.

Stamp duty (points of claim at [26]-[30])

345. Whether SNS should be regarded as in the business of land development with parcels of land as stock-in-trade arises in relation to the stamp duty claim. Actual use of land can include “land banking” for future development, Fitzpatrick at [4], [27].

346. Mr Royal as the sole director of SNS attested to having a number of development companies through which he has pursued developments of various kinds over many years. His business model is to create a company for each development site under an umbrella group of companies. I accept that he is in the business of land development and that SNS is part of his portfolio of companies created to achieve that end. The stamp duty claim for replacement land is reasonable as the area acquired was substantial in the context of the MSTCP.

347. In Speter the Court found the applicants were not in the business of investing, holding only a single investment of land citing Cannavo. Kirela, Speter and Cannavo are distinguishable given their different facts to this matter.

Wasted costs of Original DA/JRPP DA (points of claim at [23]-[25])

348. This claim is maintained by SNS on the basis that costs of the Original DA/JRPP DA concerning the Parent Parcel were wasted. Why this DA in its various forms was pursued by SNS given the imminent acquisition is unclear on the evidence. Mr Royal was cross-examined about his discussions with council staff as summarised in par 64 above. Despite being told that RMS’ concurrence was unlikely to be forthcoming both he and council staff continued to work on the DA on the assumption on his part that refusal of development consent was not a given. As already observed this approach appears curious given the terms of the BBLEP.

349. Knowledge of when the possibility of acquisition was known about by SNS and of the reservation of land for road widening is relevant to assessing this claim. The RMS’ reservation over the Acquired Land was identified in the BBLEP in 2013. The evidence before the Court included a legal advice dated January 2015 provided to SNS to the effect that RMS’ concurrence was not required under cl 100 of the ISEPP. In a letter to SNS’ consultants dated 13 October 2014 SNS was informed by RMS that it did not agree to reduce the area proposed widening Bourke Street to facilitate development of the Parent Parcel and made it clear that all new building or structures were to be erected clear of the land reserved for road widening unlimited in height or depth.

350. According to Mr Royal’s first affidavit, par 57, in a meeting on 23 February 2015 he was told by RMS’ representatives that part of this land would be acquired. It therefore appears that SNS was aware that RMS would be likely to consider that it was a concurring authority before it submitted its Original DA in February 2015 and also that RMS may acquire the land at some stage. That SNS had legal advice to the contrary which explains in part pursuing the DA does not strengthen this disturbance claim. Its DA was unlikely to succeed yet it proceeded. These are not wasted costs in the sense referred to in Al Amanah College where the abandoned DA costs for a private school were awarded as the applicant had no knowledge of the impending acquisition. This claim is not claimable under s 59(1)(f).

Wasted costs of Residue Land DA (points of claim at [21]-[22])

351. Section 59(1)(f) relates to the actual use of the Acquired Land. The wasted DA costs relate to the Residue Land. In a very small number of cases such as Peak and McDonald expenditure on land other than the Acquired Land has been allowed where these are intimately connected with the actual use of the Acquired Land. The Parent Parcel was a development site. The Residue Land is a development site which does not rely on the Acquired Land in any way. They are not interdependent. That they had the same overall use does not give rise to any practical connection between the two. This claim is not claimable under s 59(1)(f).

Costs of other consultants engaged in compensation claim (points of claim at [11]-[12])

352. SNS is claiming the costs of the architect, quantity surveyor, town planner, geotechnical engineer, structural engineer, construction programming consultant and accountant who assisted in the assessment of compensation in addition to legal and valuation costs under s 59(1)(f). They are not claimable under s 59(1)(b), which RMS submitted provides a statutory indication that such costs are not claimable. The terms of s 59(1)(f) are wide and there is no statutory construction basis for construing them narrowly by reference to s 59(1)(b) and s 59(2). The only case referred to by the parties to have considered such a claim is Constantine.

353. The passages in Constantine relied on at [157]-[164] consider the application of s 59(1)(f) from the point of view of whether the claim for an ecologist’s report obtained as part of the negotiation of valuation process arose from the actual use of the acquired land at the date of acquisition. There is no express consideration of the issue which arises here of whether the pursuit of a compensation claim through instructing expert consultants not otherwise referred to in s 59(1)(a) and(b) relates to the actual use of the acquired land. Unlike in Constantine I have held that the actual use of the land is as a development site so that if I award these costs they do arise from the actual use of the land. Given the broad wording of s 59(1)(f) I consider these costs can be claimed under s 59(1)(f) as they relate to the actual use of the land and arise as a direct and natural consequence of the acquisition, subject to one further matter.

354. The further caveat identified in s 59(1)(f) is that the cost incurred must be reasonable. As identified in SNS’ closing submissions in the table in par 182 the use made of the consultants’ reports by the valuer Mr Davis is identified and clear and I am satisfied that these can be claimed under s 59(1)(f) as being reasonably incurred. It is fair to describe the approach of SNS as somewhat “Rolls Royce” and I have expressed reservations earlier in the judgment as to the relevance of all of the expert evidence obtained in the context of the hypothetical parties I had to consider in the before and after approach to land valuation. In the context of a disturbance claim where the expenditure has been incurred and the evidence establishes that the expertise has been applied I will allow all of this claim for $314,000.

Conclusion

355. I have determined market value subject to two matters as identified in par 318 above. As flagged above in par 317 the market value in the after scenario should be reduced by an appropriate amount for internal buttressing costs the precise amount of which needs to be clarified by the parties. Further, if SNS wishes to pursue an amount for additional construction costs occasioned by changes in sequencing of building the podium level along Bourke Street in the after scenario this can also be deducted once agreed.

356. Disturbance in the amount of $314,000 for additional consultants’ fees is payable under s 59(1)(f). I have also held that stamp duty is payable on any replacement land pursuant to s 59(1)(f).

357. The parties need to agree orders to give effect to the judgment including the resolution of outstanding matters. A timetable for doing so will be discussed with the parties.

Addendum made on 9 April 2018

358. In accordance with the terms of paragraph 357 above and the directions in my judgment of 15 February 2018 the parties provided me with their agreed proposed orders. Accordingly I make orders as follows.

Orders

1. Compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (Act) is determined in the sum of $25,734,425 comprising:

1. market value under section 55(a) of the Act and compensation under section 55(f) of the Act: $23,933,753; and

2. disturbance under section 55(d) of the Act: $1,800,672.

2. Within 28 days of the date the respondent receives from the applicant the original duly executed direction as to payment form, the respondent must pay to the applicant the amount of compensation referred to in paragraph 1 and any interest payable under section 49 of the Act, less any advance payment made to the applicant pursuant to section 48 of the Act.

1. The respondent is to pay the applicant's costs, as agreed or assessed on the ordinary basis.

2. The exhibits may be returned.

3. The mention at 4.15 pm on 9 April 2018 is vacated.

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Amendments

09 April 2018 - Addendum for final orders added

Decision last updated: 09 April 2018