Sutherland Shire Council v Sydney Water Corporation

[2008] NSWLEC 303

Land and Environment Court

of New South Wales

CITATION:

Sutherland Shire Council v Sydney Water Corporation [2008] NSWLEC 303

PARTIES:

APPLICANT
Sutherland Shire Council
RESPONDENT
Sydney Water Corporation

FILE NUMBER(S):

30769 of 2007

CORAM:

Sheahan J

KEY ISSUES:

Compulsory Acquisition of Land :- market value of open space land where no comparable sales exist; compensation payable for loss of freehold and easements taken over land; injurious affection

LEGISLATION CITED:

Conveyancing Act 1919
Land Acquisition (Just Terms Compensation) Act 1991
Local Government Act 1919

CASES CITED:

Ashfield Municipal Council v RTA of NSW [2000] NSWLEC 117
Ashfield Municipal Council v Roads and Traffic Authority of New South Wales (2001) 117 LGERA 203
Blacktown City Council v Roads and Traffic Authority of New South Wales [2004] NSWLEC 772
Blacktown City Council v Roads and Traffic Authority (NSW) (2006) 144 LGERA 265
Canterbury City Council v Roads and Traffic Authority of New South Wales [2002] NSWLEC 161
City of Brighton v Road Construction Authority [1986] VR 255; 59 LGRA 262
Corrie and Another v MacDermott [1914] AC 1056
Hornsby Shire Council v Roads and Traffic Authority of New South Wales [1996] NSWLEC 152
Hornsby Shire Council v Roads and Traffic Authority of New South Wales (1998) 100 LGERA 105
Leichhardt Council v Roads and Traffic Authority of New South Wales [2005] NSWLEC 86
Leichhardt Council v Roads and Traffic Authority (NSW) (2006) 149 LGERA 439
Roads and Traffic Authority of New South Wales v Hurstville City Council (2001) 112 LGERA 223
Roads and Traffic Authority of New South Wales v Blacktown City Council [2007] NSWCA 20
Spencer v The Commonwealth (1907) 5 CLR 418

DATES OF HEARING:

16-18 July 2008; 21 July 2008

 
DATE OF JUDGMENT: 

5 November 2008

LEGAL REPRESENTATIVES:

APPLICANT
Mr T Robertson SC with Mr J Lazarus
SOLICITORS
Pike Pike & Fenwick

RESPONDENT
Mr J Webster SC
SOLICITORS
Bartier Perry

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Sheahan J

5 November 2008

30769 of 2007 Sutherland Shire Council v Sydney Water Corporation

JUDGMENT

A. Introduction

1 His Honour: This case concerns the compensation payable by Sydney Water Corporation under the Land Acquisition (Just Terms Compensation) Act 1991 (“JTC Act”) in respect of its acquisition of an area of freehold land and three easements, at Burraneer, a suburb approximately 30km by road south-east of Sydney’s CBD and about 3km from the heart of Cronulla.

2 The acquired interests were in/over parts of Rutherford Reserve at the corner of Rutherford Avenue and Woolooware Road South on the end of Burraneer peninsula, which is described as “a well established exclusive … residential suburb” (Exhibit R5, p8) consisting predominantly of single residential dwellings.

3 The Reserve is owned by the Applicant Council and appears to have been held by it on trust since mid 1961 (Exhibit R6). The Reserve pre-acquisition had a total area of 9017m2, of which approximately 1100m2 was “gently sloping cleared, passive and readily usable open space”, a further 600m2 “gently sloping bushland”, and the balance “bushland falling steeply from the open area to the high water mark” (Exhibit R5, p12).

4 The relevant acquisition was notified in Government Gazette No.51 dated 13 April 2007 (p.2182 – see Exhibit A1, vol 2, fol 536) which details it as follows:

1. the freehold of Lot 10 in DP 1088312, having an area of 178.5m2 (“Lot 10”).
2. easement “A” for sewerage purposes over Part Lot 5 DP 10703 and Lots 12 and 13 DP 1088312, having an area of 164.7m2.
3. easement “B” for access and other stated purposes over Parts Lots 11 and 12 DP 1088312, having an area of 334.6m2.
4. easement “C” for water supply and sewerage purposes over Lot 12 DP 1088312, having an area of 14.8m2.

5 The acquired land, including the easement areas, represents about 65% of the total cleared or buildable area in the Reserve. It (or at least most of it) is zoned 13 - Public Open Space, under the Sutherland Shire Local Environmental Plan 2006 (“LEP”) (gazetted 15 November 2006). Development is permitted in Zone 13 under the LEP, if authorised by a plan of management, for the purpose of arts and crafts centres, community facilities, food shops, passenger transport facilities, places of assembly, restaurants, tourist facilities, and tourist information centres. The majority of Rutherford Reserve not affected by the acquisition is zoned 14 - Public Open Space (Bushland) under the LEP. It is common ground that Burraneer has limited areas of public reserve, especially waterfront public reserve.

6 Rutherford Reserve has a “community land” classification pursuant to the relevant provisions of the Local Government Act 1993 (“LG Act”), notably s.45 which provides:

What dealings can a council have in community land?
(1) A council has no power to sell, exchange or otherwise dispose of community land.
(2) A council may grant a lease or licence of community land, but only in accordance with this Division.
(3) A council may grant any other estate in community land to the extent permitted by this Division or under the provisions of another Act.
Note: The word "estate" has a wide meaning. See the Interpretation Act 1987, section 21 (1).
(4) This section does not prevent a council from selling, exchanging or otherwise disposing of community land for the purpose of enabling that land to become, or be added to, a Crown reserve or to become, or be added to, land that is reserved or dedicated under the National Parks and Wildlife Act 1974”.

7 Section 55 of the JTC Act relevantly provides:

“In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division): (a) the market value of the land on the date of its acquisition,
…
(d) any loss attributable to disturbance,
…
(f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.”

8 A compensation notice dated 14 May 2007, issued pursuant to s.42(2) of the JTC Act offered the Applicant the amount of compensation as determined by the Valuer General (Exhibit R5), that being $118,200 (made up of market value $116,000 and disturbance $2,200).

9 The disturbance amount is agreed, but the market value is contested, and a claim has also been made under s.55(f) of the JTC Act.

10 The Applicant originally based its claim on a residential market value of $1690/m2, “discounted by 33% for its open space zoning”, but then amended its Points of Claim on 4 July 2008 to reduce the open space discount to 20%.

11 In those Amended Points of Claim the Applicant’s claim now comprises market value $650,000, disturbance $2,200, and a s.55(f) claim of $101,400. In its Amended Points of Defence the Respondent sets the compensation payable at $87,700, comprising market value $52,000, the agreed amount of $2,200 for disturbance, and $33,500 for the s.55(f) claim.

12 The Court has determined the compensation payable for the following matters in the sums indicated:

Market Value (s.55(a))
Lot 10 $201,170
Easement A $37,123
Easement B $301,675
Easement C $1,668

Disturbance (s.55(d))
Agreed at $2,200

Injurious Affection (s.55(f)) $67,620

TOTAL $611,456

13 My reasons follow. I deal first with the methodology of the expert valuers (Section B pars [14]-[48]), then the law governing the discount rate to be applied to reach the market value (Section C pars [49]-[71]), including a hypothetical sale of the freehold area acquired (Section D pars [72]-[97]). I then consider the compensation payable in respect of the acquisition of the three easements (Section E pars [98]-[111]), and, lastly, the claim for injurious affection (Section F pars [112]-[122]).

B. The Valuation Methodology

14 The Court has been assisted by the evidence of two experienced valuers, Mr Peter Dempsey for the acquiring authority and Mr Kent Wood for the dispossessed owner. They produced separate reports (Exhibit R2, and, Exhibits A4 and A5, respectively), and a joint report (Exhibit A3), and both of them gave oral evidence during the hearing, and assisted the Court during extensive site visits. Their markedly differing views offered the Court a stark contrast in approach to almost every aspect of the case.

15 “Market value” is defined by s.56 of the JTC Act in the following terms:

“(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 .”

16 There is agreement between the parties that (a) the highest and best use of the subject lands is for “open space”, and (b) there are no comparable sales of “open space” land in the locality. The valuers start with a residential parcel and apply a “discount” to its “market value” as residential land to arrive at its “open space value”.

17 The appropriate residential parcel to the value of which the discount would be applied is agreed by the valuers to be No.50 Rutherford Avenue, Burraneer. This property is in the immediate vicinity of the Reserve and has the same outlook over Port Hacking out to Maianbar, Bundeena and the Royal National Park.

18 No.50 Rutherford Avenue was sold by contract dated 29 October 2005 for $2,160,000 (reflecting the value of $1690/m2 referred to above), and then sold again on 28 June 2007 for $2,350,000 (reflecting a value of $1839/m2). Mr Wood believes the first sale is the appropriate sale to use, and Mr Dempsey the second, and he has rounded up the $1839 figure to $1850/m2. Mr Wood concedes that it would be better for his client to rely on the higher value, but he believes it is “incorrect in principle” to do so, given that the acquisition date, 13 April 2007, predates the second sale. I am happy to adopt his view in this regard, and use $1690/m2 as the base residential value.

19 The valuers take vastly different approaches to arrive at the discount percentage to apply to the value of No.50 Rutherford Avenue in order to determine the open space value of the subject land.

Mr Dempsey’s approach

20 Mr Dempsey analyses the sale of eight open space parcels of land, and sales of residential lands near each of them, to derive a discount percentage in respect of each sale property, his valuation rationale being to “demonstrate how markets deal with use potential.” He stated (Exhibit R2, fol17):

“Purchasers accept risk in relation to future outcomes e.g. achieving use potential through a development approval and expect to be rewarded for such risk.
The nature of open space land serves a different purpose to land from which an economic benefit can be derived and upon which buildings may be developed.
Whether land is undulating, flood free or otherwise is not a relevant consideration in relation to a use potential that does not contemplate the land being built upon.
...
My analysis to derive a discount reflects a consistent methodology where open space sales of varying areas are compared to average size residential allotments in the same area expressed on a rate per square metre of land value ”.

21 Having calculated discounts for the 8 sales at between 85% and 99%, Mr Dempsey settled on 90% as the appropriate discount. If the Court were to accept his discount figure, but apply it to the lower sale figure ($1690/m2), as Mr Wood opines it should, I would arrive at a market value of $30,166.50 for the freehold land acquired (Lot 10), c.f. $33,022 in the Amended Points of Defence.

Mr Wood’s approach

22 Mr Wood would also apply the discount to a value derived from sales of vacant residential land, in the absence of any “truly comparable sales of land zoned ‘open space’ … to bring to account the restrictive zoning”.

23 However, he is opposed to Mr Dempsey’s methodology. He observed during his oral evidence (T18.07.08, p23, L32-37) that all Mr Dempsey’s sales concerned “inferior parcels”, which were “physically deficient”, and were often “residue areas of subdivisions”. Mr Wood, confronted by an absence of true comparables, relied on his professional judgment and experience to arrive at “market value”.

24 In his first report (Exhibit A4) he arrived at a discount figure of 50%, but in his second report (Exhibit A5) he reduced that percentage to 20%, “having revisited” the following decisions:

· Hornsby Shire Council v Roads and Traffic Authority of New South Wales (1998) 100 LGERA 105 (“Hornsby CoA”),

· Canterbury City Council v Roads and Traffic Authority of New South Wales [2002] NSWLEC 161 (“Canterbury”),

· Blacktown City Council v Roads and Traffic Authority of New South Wales [2004] NSWLEC 772 (“Blacktown No1”)

· Blacktown City Council v Roads and Traffic Authority (NSW) (2006) 144 LGERA 265 (“Blacktown No2”).

· Leichhardt Council v Roads and Traffic Authority (NSW) (2006) 149 LGERA 439 (“Leichhardt CoA”).

25 Those cases dealt with not only the discount to be applied for an open space zoning, but the question of whether a discount should also be made for the restrictions imposed on land by its Local Government Act classification as “community land”, especially as to its sale or leasing.

26 Applying his discount rate of 20% to the 1690/m2, Mr Wood arrived at an open space value of $1352/m2, which produces a figure of $241,332 (178.5m2 x 1352/m2) as the value of the freehold land acquired (Lot 10), as per the Amended Points of Claim.

Mr Dempsey’s 8 sales

27 The first sale Mr Dempsey uses to derive his discount figure is the quite extraordinary block of land partly leased by Mosman Rowing Club (for 150 years) at Lot 1 Killarney Drive, Killarney Heights. This property was purchased (from the Club but subject to lease) for $1,500,000, representing a price per m2 of $98.04. The value of residential land opposite is $900/m2, giving Mr Dempsey a discount figure of 89.11%.

28 Mr Wood criticises Mr Dempsey’s analysis of this sale as not being based on “like with like” comparisons in the vicinity (T18.07.08, p4, L43ff). The harbour-fronting property “has extremely difficult foot access, only pedestrian access. And the main difference is one of size, I mean they’re just normal type residential allotments whereas the subject property is some 15,300 square metres.” (T18.07.08, p5, LL28-32). The following example is given by Mr Wood to support his thesis that “size is imperative”:

“If you looked at the area of cleared land around the house which there’s freehold title to, if it approximates 2,000 square metres for example and you compare - and you divide the purchase price of 1.5 million by 2,000 square metres it gives a rate per square metres of $750 per square metre as compared to the $900 per square metre that Mr Dempsey has deduced from sales of residential lands in Killarney Heights. That discount is equivalent to 16%. If you said it was 4,000 square metres around the house I mean be generous, give the gentleman 4,000 square metres - because you see that the balance of the land is steep, rugged land and I mean - and carries fairly little value. So if you said it was 4,000 square metres that gives a rate per square metre of $375 and the discount would be 32%. So you know, it’s totally reliant on the area of the land, and that’s why you must compare like area with like area” (T18.07.08, p6, Ls35-47)

29 Mr Dempsey responded that size is not important to the approach he has undertaken and to reduce the Killarney Heights sale to 600m2 to compare with normal residential allotment size:

“avoids the integrity of the approach that I’ve taken which is to compare...residential lots, which are inevitably...smaller than open-space land and so the open-space sales are larger parcels of land. So I’m comparing consistently larger parcels of land with residential allotments. If area was a very significant issue or even a significant issue, you would expect to see some significant variation in the results that come out of the analysis. And what the sales reveal is that the outcome is consistent but primarily consistent relative to use potential. And use potential is reflected in the variation in the discounts that apply.” (T18.07.08, p10, Ls16-25)

30 The second sale Mr Dempsey uses for his analysis is Samantha Riley Drive, Beaumont Hills. This property comprises an area of 36,850m2 of which 4,650m2 was identified as above the 1:100 year flood level with the balance being trunk drainage land. The parties to this contract recognised that two different values applied to the land relative to land use potential. It was agreed that the land above the 1:100 flood level had a full residential englobo value of $283.83 per square metre while the trunk drainage land had a value of $70/m2. The land is subject to easements for the drainage of water, underground cables, batter and a pad mount for a substation.

31 This sale represents $70/m2 for land at Beaumont Hills with restricted use potential, but without restriction on sale as applies to “Community Land” classification. Eight sales of residential land in nearby Fraser Ave establish the value of residential land as $600/m2, which would indicate a discount of 88.3%.

32 Mr Wood criticises the use of this sale, and questions (T18.07.08, p12, L43 - p13, L7):

“ how one can compare flood liable land with land in the Beaumont Hills Estate, which is conventional size allotments, 760 square metre - 600 square metre allotments, fully serviced with land which has basically been bought on the basis of drainage land, what’s been paid for drainage land. If one was to compare the land above the one-in-100 which I contend to be more reasonable, to the land - to the residential allotments it would indicate about a 50% discount, that is $300 per square metre compared to Mr Dempsey’s deduced rate of $600 per square metre. And the area of land above the one-in-100 I think was around about 4,650 square metres. It would be more appropriate to compare that size to the size of 6 or 700 square metre conventional allotment. To look at the overall bases to my mind is just entirely inappropriate, incorrect .”

33 The third sale analysed by Mr Dempsey is 23A Victoria Street, Watsons Bay comprising beach and land below high water mark (2655 out of 3165m2), freely used by the public. The owner did not enjoy exclusive use rights, nor could anyone achieve any higher use of the land (such as a marina or jetty). The land was sold to the Waterways Authority for $30,000, and Council agreed not to collect accrued rates. As Mr Dempsey points out, the land (T18.07.08, p16, Ls18-24):

“ for all intents and purposes was a liability given that it was commonly used by the public, it had no use potentials in the hands of private ownership and to that extent the potential liability for people being injured on the land it was not something that the owners wanted to carry and so the land was sold based on its use potential. It was essentially land, notwithstanding its location, that had no economic use potential and in fact represented a liability”.

34 Comparing the sales of three residential parcels in Victoria Street, Watsons Bay, leads to a discount figure of 99.76%.

35 Mr Wood submits that this sale would not meet the criteria of market value set out in Spencer v The Commonwealth (1907) 5 CLR 418 (“Spencer”) and taken up by s.56(1), namely “willing but not anxious” parties to a hypothetical sale, because the vendor here was (T18.07.08, p.17, L46 - p.18, L1):

“ anxious to sell...because it had been in her ownership since 1998 and one of the conditions of sale was that council doesn’t levy rates for that period of time. So it was obviously a liability both from a rating point of view and as Mr Dempsey’s pointed out also from an insurance point of view ”.

36 The fourth sale relied on by Mr Dempsey is 24-26 Robert Street, Telopea which is part of Vineyard Creek Reserve and close to Oatlands Golf Club. It was sold by the State Rail Authority, to the Council, on the condition it be used only for open space. The sale price was $300,000 ($75,000 per year over four years). The land is subject to an easement for “noise and vibration”, another for “electrolysis”, and a restriction on drainage (Exhibit A1, tab 8). A discount figure of 92.8% is derived from comparing sales of 4 residential parcels in the locality.

37 Mr Wood opines that “it’s a sale between two government authorities… [and] unless the basis of the purchase price was established, it would be difficult to accept this as being an arm’s length transaction …” (T18.07.08, p.19, L45 - p.20, L3).

38 The fifth sale analysed by Mr Dempsey is Weeroona Road, Strathfield which is a narrow strip of unformed road (known as Pole Depot Road) occupied by Strathfield Golf Club as part of the 13th hole for 64 years before formal ownership was settled by the sale. The land is subject to an easement to Sydney Electricity and Shell Company of Australia. Mr Dempsey states that the easements don’t affect use as open space, and that you would not contemplate building upon the land, leaving its highest and best use as open space. Comparing it with the sale of 5 residential parcels in the locality a discount of 96.99% is derived.

39 Mr Wood opines that the residential comparables and the golf club land are like “chalk and cheese” and believes that the Golf Club would have received consideration, in the price it paid for the land, for the fact that the sale formalised ownership following such a long period of use. He concludes that no “worthwhile comparison can be made between the sale of this property and other properties that Mr Dempsey identified in Strathfield” (T18.07.08, p.23, L15-37).

40 The sixth sale analysed by Mr Dempsey is at Blenheim Road, Schofields. According to Mr Dempsey the land cannot be built upon unless aggregated to form a 10 hectare parcel, suitable as a single rural homesite. There is potential for this land to be released for urban purposes possibly within the next 5 years (according to inquiries with the Council). Comparing it with 3 residential parcels in the locality, a 80.88% discount is derived.

41 Mr Wood draws attention to the land’s very restricted usage; its situation below the one in 100 year flood level; and the impact of a transmission line easement. He notes its likely release for urban purposes within 25 years (rather than 5), and that its sale was for unpaid rates, making it questionable whether it meets the Spencer test of market value (T18.07.08, p.25, L38ff).

42 The seventh sale analysed by Mr Dempsey is Henry Lawson Drive, East Hills. This property adjoins East Hills Golf Course, is zoned for rural purposes, and is flood liable. Comparison with three sales of residential parcels in the locality leads to a 87.62% discount. Mr Wood points out that the land is subject to easements to drain water, for transmission lines, and also is subject to a right of way.

43 The eighth and final sale analysed by Mr Dempsey is Cabbage Tree Road, Bayview, which is a small triangular parcel of land which adjoins Bayview Golf Club. Comparison with three sales of residential parcels in the locality leads to a discount of 84.39%. Mr Wood opines that the sale was not an arm’s length transaction because it was a s.66G sale (Conveyancing Act 1919).

44 I agree with Mr Wood that each of these 8 sites is inferior to the land comprising the part of Rutherford Reserve which is the subject of the four acquisitions. The Reserve is a beautiful and well-positioned area of land, flood-free, fully serviced (including by sealed roads and easy pedestrian access) and (apart from the acquisition) not subject to any very restrictive easements.

45 The 8 parcels are of widely varying area. Rutherford Reserve has a total area of 9017m2, of which approximately 1100m2 is clear and flat, while the East Hills site, for example, is 113,817m2, most of which would be physically comparable with the cleared area, other than locational features, such as aspect. The flood-liable but flat Schofields site is only 531m2, and Strathfield, Watsons Bay, and Bayview are much smaller, indeed very small. Mr Dempsey opines that relative size is not a consideration, but Mr Wood disagrees (see pars [28]-[29] above) and I accept Mr Wood on this point as well.

46 The Court is also concerned about how reflective the sale prices of the 8 sites are of their “true market value”. One need only look at the bare facts (above) of the relevant transactions at Watsons Bay, Strathfield, Bayview, Telopea, and Schofields to see this concern.

47 Each market functions in its own context, which makes it difficult to apply to the Burraneer acquisition any discount derived from an analysis of the 8 properties considered.

48 The Court is left then to rely on (1) the residential market value of No.50 Rutherford Avenue as the base for the judicial assessment of the market value of the land acquired, and (2) the method of valuation employed by Mr Wood – an expert valuer’s professional experience and judgment applied to all the facts and circumstances of the case, including the elements of the hypothetical sale.

C. Arriving at the discount rate

49 I must, therefore, now turn to consider the appropriate discount rate to apply to “residential market value”, given that the subject land has three “restrictions” applying to it:

(i) its “ open space ” zoning.

(ii) its status as “community land”.

(iii) the requirements imposed on Council by the trust.

50 Mr Dempsey opined for a 90% discount and Mr Wood for 20%.

The key authorities on discount rate

51 Hornsby CoA was an appeal to the Court of Appeal against the decision of Bannon J at first instance ([1996] NSWLEC 152 – “Hornsby”). The land acquired was zoned “Public Recreation - Local” and “Transport Corridor” under the relevant LEP, and at the date of acquisition was used by the Council for open space purposes. The land was subject to a community land classification under the LG Act. Bannon J, following Corrie and Another v MacDermott [1914] AC 1056 (“Corrie v MacDermott”), discounted the open space value proven before him by (a further) 66.66% to take into account the “restrictions applicable”, namely from the Local Government Act. The Court of Appeal found no error of law in His Honour’s approach (see Stein JA at 107-109).

52 In Ashfield Municipal Council v RTA of NSW [2000] NSWLEC 117 I followed Bannon J’s discount decision in Hornsby. The RTA resumed lands, held by the Council under a trust, to construct the “City West Link Road”. The Court of Appeal held in Ashfield Municipal Council v Roads and Traffic Authority of New South Wales (2001) 117 LGERA 203 (“Ashfield CoA”) that I had “erred in law” by applying the 66 2/3% discount, stating (at [109]):

“ There is no practice or principle of law which makes a two-thirds discount appropriate in itself to a case involving restrictions of the type with which we are concerned. Every case turns upon its own facts ”. (emphasis added)

53 In Canterbury the resumed land had as its highest and best use active and/or passive open space , and most of it was classified community land. Pearlman J applied a 50% discount to the value of residential sales to take into account both the open space zoning and community land classification (see pars [25], [28] and [38] of Her Honour’s decision).

54 Blacktown No1 involved the resumption of land approximately 170m long and 6m wide for the purposes of road widening. The zoning of the land was Open Space 6A Public Recreation under the applicable LEP and the land was subject to a community land classification. The valuers agreed that the highest and best use of the land was for community open space purposes, and there were no comparable sales. Lloyd J discounted the value of two residential parcels within the locality by 50% (adjusted to take into account any movement in price since the sale) “to reflect both the fact that it was community land and its zoning for open space purposes” (at [19]).

55 In Blacktown No2 the RTA again acquired Council land for road purposes. The acquired land was zoned 6(a) Open Space under the applicable LEP, with part of the land being classified as community land. Bignold J discounted the value of residential parcels in the locality by 50%, “reflecting in an undifferentiated manner both the open space zoning of the subject land and its classification as ‘community land’ under the LG Act” (par [46]). (Bignold J’s decision was upheld on appeal and I will return to this case later in this judgment).

56 In Leichhardt CoA the acquired land was unzoned at the date of acquisition, but adjoined a park which was used for active recreation and was zoned open space under the applicable LEP. The whole parcel, comprising the acquired and residue land was subject to a community land classification.

57 At first instance - [2005] NSWLEC 86 (“Leichhardt”) – the parties agreed that the unzoned acquired land had an underlying open space zoning, and that that was its highest and best use. Lloyd J referred to Corrie v MacDermott, and to the Court of Appeal’s decisions in Hornsby CoA, Roads and Traffic Authority of New South Wales v Hurstville City Council (2001) 112 LGERA 223, and Ashfield CoA. His Honour rejected a submission by the Council’s Senior Counsel, Mr Roberston, to the effect that “Corrie v MacDermott and the cases which follow and apply it may no longer be good law”. His Honour said (at [38]):

“ The difficulty I have with the submission is that decisions of the Court of Appeal (and, of course, the High Court) are binding upon me. It is not open to me, a trial judge, to hold that decisions of the Court of Appeal are wrongly decided. I am bound by the decisions of the Court of Appeal in Hornsby, Hurstville and Ashfield. Apart from the High Court, only the Court of Appeal itself can overrule its own decisions, just as only the High Court that can overrule its own decisions. The Court of Appeal decisions, to which I have referred, adopt Corrie v MacDermott as correctly stating the relevant principles. I have no option but to follow and apply those principles ”.

58 Lloyd J allowed an 80% discount to take into account the restrictions imposed on the acquired land, and the case went on appeal. Speaking for a bench of 5, Spigelman CJ was not entirely clear whether Lloyd J was referring to restrictions flowing from classification alone or from the open space zoning as well (see [72]-[73]).

59 Spigelman CJ said at [26]):

“ Corrie v MacDermott should be understood as an application of the concept of "value to the owner". This unifying concept was most commonly applied to increase the amount of compensation over market value when the land had a positive special value to the owner. In Corrie v MacDermott the concept was applied to reduce the compensation when the land had what could be described as a negative special value to the owner. ”

60 His Honour opined (at [14]) that the principle in Corrie v MacDermott applied to various restrictions such as those flowing from zoning, but held (in [17]) that:

“ for the purposes of s 56(1) of the Land Acquisition Act, the statutory prohibition on sale of community land cannot be taken into account under the principle of Corrie v McDermott, when determining the market value of the acquired land ”.

61 The Chief Justice stated (at [32]):

“ In my opinion, once the idea of "value to the owner" is taken away as a unifying concept, as it has been, the foundation of the reasoning in Corrie v MacDermott has also been removed. There are, of course, restrictions on use, eg zoning, which affect all vendors and purchasers in the hypothetical sale. Where, however, a restriction affects only the person whose land has been acquired, in my opinion, the restriction is not a matter that must be applied when determining the market value. ”

And then (at [42]-[43]):

“Section 56(1) is an objective test to which considerations entirely personal to the owner are not material.
In my opinion, the statutory prohibition on sale of community land is a consideration which affects the land by reason only of the identity of the person who happens to own it. The process of classification and the concomitant restraint on alienation are not characteristics of the land that are capable of constituting an element of the hypothetical sale for which s 56(1) provides.”

62 Leichhardt CoA must be regarded and followed as the current legal prescription of the approach to be taken to discounting for “restrictions”. To the best of my knowledge this present case is the first to come before this Court since the Court of Appeal expounded the correct principles to apply.

63 In accordance with that decision, the community land classification of the subject land in this case should and will be ignored for the purposes of establishing market value.

64 The next question for the Court to consider is whether any discount should be made on account of the third “restriction” on the subject land, namely the trust arrangement (Exhibit R6), as well as on account of the “open space” zoning.

65 The declaration of trust dated 14 June 1961 requires the Council to “hold the said land for the purpose of a public park public reserve or public recreation area and the Council will not use or permit to be used the said land for any [other] purpose...” without the consent of the Cumberland County Council. The “said land” includes Lots 1 to 7 inclusive of DP 10703, which is the entirety of Rutherford Reserve (see Exhibit A1, vol 2, tab 22). Mr Webster for the Respondent submits (Respondent’s closing submissions, 21.07.08, par 9.1) that:

“ This restriction of the trust must be considered, not in the context of Corrie v McDermott (sic), but as a restriction which would ensure that the land remained as was used and even disregarding the principles that would be applicable to the question of “underlying zoning”, why would Council, knowing whoever brought this land use must use it as Open Space in accordance with the adjoining use owed by the Council, why would that Council pay any more for that land than anyone else? ”

66 Mr Webster says the trust is “a restriction like a zoning restriction that’s placed on the land outside the context of the council itself, in other words it didn’t place it on it and it’s not a restriction on alienation” (T21.07.08, p32, L9-11) and therefore would deflate the value of that land.

67 In respect of this alienation issue I accept Mr Robertson’s submissions to the effect that the declaration of trust is indeed a restraint on alienation (T21.07.08, p51, L35ff). This is clear on the face of the trust: “Council of the Shire of Sutherland...hereby acknowledges and declares that it will hold and stand seised of the [trust] land” for the purpose of the trust (emphasis added).

68 The trust is “personal” to the Council and would not apply to the land if Council were not the owner. It is the very restriction that the Chief Justice says in Leichhardt CoA (at [32]) is not to be taken into account when determining market value:

“Where, however, a restriction affects only the person whose land has been acquired, in my opinion, the restriction is not a matter that must be applied when determining the market value.”

69 In so far as Mr Webster submits that the trust would have the effect of depressing the price paid for the resumed Lot 10, supposing a sale, because the surrounding Council land is subject to the trust (T21.07.08, p45, L35ff), I do not accept his submission, because the surrounding land would be held by Council, subject to the trust, according to its current zoning (public open space), which both valuers agree is the highest and best use of the land.

70 I conclude, therefore, that the discount should be applied only for the “open space zoning”.

71 The Court of Appeal does not specify any particular discount to apply on all occasions. As Davies AJA said in Ashfield CoA, “every case turns on its own facts”. I must now consider the appropriate percentage to apply in all the facts and circumstances of this case.

D. The hypothetical sale and the discount rate

72 In determining market value under the JTC Act one hypothesises a sale from a willing but not anxious seller to a willing but not anxious buyer. The Chief Justice has said that this is the process even where, e.g. s.45 of the LG Act forbids a sale.

73 Isaacs J said of the hypothetical sale – see Spencer at 441 – that the Court supposes voluntary bargaining between parties who are not so anxious that they would:

“…overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property”.

74 There may be numerous buyers interested in buying the land and it is not necessary to assume that the Council is the seller. Indeed, Council might be a purchaser. Mr Wood lists some potential purchasers in his supplementary report (Exhibit A5, par 7), including “local and state government authorities, developers seeking Open Space to maximise floor space ratios and to off-set Section 94 Contributions, sporting and recreation clubs, schools and universities”.

75 In establishing the market value one needs to consider what is happening in the market at the time of acquisition. Indeed, the valuation rationale of Mr Dempsey seeks to “demonstrate how markets deal with use potential” (see par [20] above). The activities of the Council, as dispossessed owner and a potential purchaser in the hypothetical sale, are valid matters to have regard to as part of the “facts and circumstances of the case”.

76 Mr Robertson summarised the evidence of Mr Wood in the following way (Applicant’s outline of submissions, 15.07.08, par 24):

“ In his supplementary report, Mr Wood adopted a discount of 20% to account for the open space zoning of the land. Echoing the approach adopted by Gobbo J in the City of Brighton case, according to Mr Wood, the market value of open space land such as the subject land is related to what a community would be prepared to pay for the land rather than to lose it. In his opinion, the subject land is an asset the community would not part with at a figure substantially less than its alternate residential zoning. His reasons for that conclusion may be summarised as follows:
(a) in the hypothetical sale mandated by s.56(1) of the Just Terms Act, the Council would be a potential purchaser in the market, bearing in mind that it has been an active purchaser of land to comply with its s.94 and other plans;
(b) all these acquisitions (50 since October 2000) have been on the basis of residential land values;

(c) in the hypothetical sale, there could be several purchasers in the market, including the Council itself, State Government authorities, developers seeking open space to maximise FSRs and to offset s.94 contributions, sporting and recreation clubs and schools and universities;
(d) the value of parkland to the community could well exceed the value of the land as residential land, especially in highly urbanised areas or where the cost of land in prime locations is prohibitive such as foreshore areas;
(e) the subject land would be highly sought after in view of its prime residential location, its elevated building platform, its deep water frontage to Port Hacking and the scarcity of parkland in the immediate vicinity. Burraneer has only 4 (sic) relatively small areas of public open space land, Rutherford reserve being the largest and the only one with a foreshore location; and
(f) the subject land has significant development potential, having regard to the range of permissible development provided for in the LEP... Indeed, the Council had identified the site as being suitable for a restaurant development. ”

77 In his oral submissions Mr Robertson said (T21.07.08, p9, L49 - p10, L9):

“ Insofar as we know anything about the market place we know that council is a buyer, it accumulates open space and we know there’s a shortage of it in the locality and we know that council pays residential values for it. Those three facts are fundamental to appreciating the exercise of judgment which our valuer makes, Mr Wood, about the extent of the discount. He says 20% is an appropriate discount in this case, bearing in mind that a seller of the land would probably expect to receive something near residential[,] bearing in mind that the buyer would try to seek a discount from residential values. He thinks they would come together at approximately 20% less [than] (sic) what’s determined to be the market value of the land. ”

78 Council has indeed made 50 purchases of land at near residential prices for the purpose of open space since 2000 (see Exhibit A1, vol 2, tab 26 and various Council documents at tabs 27-29). There are only four to six relatively small parcels of open space in Burraneer (see Exhibit A1, vol 3, tab A), with Rutherford Reserve being the largest.

79 On the other hand, the “Sutherland Shire Council Contribution Plan - Shire-Wide Open Space and Recreation Facilities 2005” (3rd edition, May 2006 – Exhibit A1, vol 2, tab 32) notes (at fol 726) that:

“Open space provision has stabilised over the last couple of years … The amount of open space provided is also generous if compared to the 28m2/person general standards of open space provision.
The existing provision of open space and the relatively high land values supports a decision to acquire less open space. Council will focus on strategic acquisitions that contribute to open space that serves the whole shire and acquisitions that create links between important areas”.

80 As noted above, Mr Robertson places some reliance on City of Brighton v Road Construction Authority [1986] VR 255; 59 LGRA 262 (“Brighton”), which concerned the compensation payable for the resumption of Council owned parkland for road purposes. There was a shortage of parkland in the locality and “[u]nlike outer municipalities, which have been able to secure undeveloped lands more readily, the claimant has had to find its parkland in a more settled and developed area. As a general rule it has paid market prices for land zoned and used for residential purposes” (per Gobbo J at 266).

81 In Leichhardt a submission was put to Lloyd J at first instance in the following terms (at [42]):

“ where, as here, there is a shortage of available land for purchase for open space, a demand for open space and a program for the purchase of open space by buying residential land, then the price for land already capable of use for open space purposes might be higher than residential values ”.

82 That submission relied on the following comments of Gobbo J in Brighton (at 272 – quoted in Lloyd J’s judgment at [42]):

“ Where a parcel of land is set aside for parkland use, its value will be related to the price that a purchaser of parkland will be prepared to pay, given that such purchaser will be using the land for that which constitutes for it the highest and best use of the land. It will also be related to what that purchaser would have to pay – assuming reasonable opportunity and not compulsion to effect a purchase – if it were to purchase other land that might equally meet its purpose. Such purpose of other land may lead it to have to pay the equivalent of residential values.

The fact that emerges very clearly is that municipalities, especially those like that claimant in developed areas, cannot purchase land appropriately zoned for parkland purposes. They are obliged to buy residential land, at or near residential values, when they wish to secure parkland.
The authority’s valuers argued that where a municipality bought residential land for parkland purposes and then had imposed on the land a reservation for public open space, its value was immediately reduced. It is difficult to understand why this is so, for the municipality is the main factor in the market for parkland. It will clearly be prepared to pay the original price it paid for the very good reason that, if it did not buy this land at that price, it would be compelled to pay that price for residential land, there being no parkland so zoned available for sale. ”

83 Lloyd J summarised the submission (at [43]) thus:

“where, as here, the highest and best use of the acquired land is open space, it should be valued according to comparable sales of land acquired for open space purpose, adjusting value to take account of position, quality, state of readiness and the like, with no discount to what otherwise would be the open market value for such land.”

before commenting (at [44]):

“ The difficulty I have with the Council’s submission and with the passage from the judgment of Gobbo J is that they are contrary to the principles explained in Corrie v MacDermott and the cases which follow and apply it, and contrary to the decisions of the Court of Appeal in the Hornsby, Hurstville and Ashfield cases which are binding upon me. With the greatest respect to Gobbo J, it seems that His Honour‘s approach is to adopt a value which represents the cost of reinstatement. But that is not the valuation required by the [JTC, which] … requires an assessment to be made of the market value of the acquired land …”

84 A number of observations can be made about these submissions.

85 Firstly, Corrie v MacDermott, and the Court of Appeal decisions in Hornsby, Hurstville and Ashfield to the extent that they rely on and apply that case, are no longer binding on this Court, and so do not dictate the approach to be adopted when assessing market value under the JTC Act (Leichhardt CoA).

86 Secondly, Bignold J in Blacktown No2 cited with approval the Gobbo J quote relied on by Mr Robertson in Leichhardt (see par [82] above), and had this to say (at [79]-[81]) about Lloyd J’s comments:

“ [79] In referring to that decision of Gobbo J (a distinguished judge and most experienced particularly in this area of the law) I am acutely conscious of the fact that Lloyd J in the Leichhardt Council case held at [44] that the judgment of Gobbo J was "contrary to the principles explained in Corrie v MacDermott and the cases which follow and apply it, and contrary to the decisions of the Court of Appeal in the Hornsby, Hurstville and Ashfield cases ...
[80] With the greatest respect to that observation I do not myself see anything in Gobbo J's judgment that is contrary to the binding authorities that are cited by Lloyd J.
[81] Indeed, on the same page of his judgment which contains the passages I have recited, Gobbo J cites the Privy Council decision in Corrie v MacDermott …”.

87 Bignold J in Blacktown No2 cited with approval, as entirely consistent with the above passage quoted from Brighton, the following comments of Davies AJA (at [104]-[108]) in Ashfield CoA:

“ [104] The position, therefore, is that the lots were lands which the RTA wished to acquire and did acquire and they were lands which the council had power to sell with consent. In this circumstance, the assessment to be made was an assessment of the fair market value of that which was taken. The first and most important factor to be considered was the land itself, its position and qualities. The subject lands were accessible, level land adjacent to the Parramatta River. They were in an area of Sydney in which the land available for public recreation was limited. The trial judge referred to a report which "highlighted the deficiency of the Council in open space".

[105] The community would have regarded the lands as valuable public open spaces. Increasingly, public open space is regarded as a necessary and valuable community asset. Increasingly, councils are building up their reserves, not destroying them. In the area in which the subject lands were situated, there was not such an abundance of open space land that the subject lands would have been regarded as having only minimal value.

[106] It was, therefore, significant that the comparable properties upon which the trial judge relied were properties which had been purchased by municipal councils for public recreation or public open space. Those sales demonstrated the value which communities in Sydney were prepared to pay to obtain such land. Although none of the land in the comparable sales was subject to any specific restriction, public open space was its highest and best use and, in each case, the land was purchased for that purpose. In no case was the land purchased for profit making, for development or for resale. It was purchased with the intention that it would be held and used as public open space or for public recreation.

[107] In this context, the restrictions imposed upon the subject lots had little significance. The comparable sales were of lands which had been acquired for a comparable use. The comparable sales reflected the value which the community placed upon such land.

[108] The task is always to assess the value of that which has been acquired. The subject lands were held by a municipal council and were devoted to public recreation. The comparable sales, which reflected acquisitions made by councils of land to be devoted to such a purpose, were good evidence of the value to the council of the lands from which it has been dispossessed. ”

88 An appeal to the Court of Appeal against the decision of Bignold J in Blacktown No2 was dismissed – Roads and Traffic Authority of New South Wales v Blacktown City Council [2007] NSWCA 20 – and the Court of Appeal (again per Spigelman CJ, extempore, 2 months after Leichhardt CoA) made the following comments regarding assessment of market value under the JTC Act (at [40]-[42], [44]):

“ 40 As the expert evidence of both parties in this case affirms, and numerous other decisions of the Land and Environment Court also indicate, valuation of open space land under the Just Terms Act has often involved comparable sales of properties acquired by councils for open space purposes, which properties had residential zonings or residential uses.
41 These authorities, and the expert evidence in this case, indicate that such evidence has often been given, and that expert valuers, including the expert valuers in this case, have frequently accepted it as appropriate. I am not prepared to overturn such a practice on the basis of submissions from the bar table which are made without any reference to expert evidence.
42 This is a matter with a considerable amount of background in expert valuations (sic) decisions in the Land and Environment Court. To seek to thus undermine the whole of this expert evidence, including expert evidence of the valuer called for the RTA in the present case, is, to say the least, a bold course.
…
44 The long accepted practice reflected in the expert evidence in this case, identifies, appropriately, that a person who wishes to acquire land for the purpose of open space, is in fact prepared to pay residential values to make such an acquisition. This is an example of the “willing but not anxious purchaser” element of the market valuation test, the traditional test now found in s56(1) of the Just Terms Act. ”

89 As Stein JA observed in Hornsby CoA (at 108-109), regarding the task of the judge in cases like this:

“… acting as a judicial valuer … involves making inferences and applying experience and judgment in order to determine what are really hypothetical questions … which may (permissibly) involve subjective judgments”.

90 In the present case I conclude that there may indeed be many purchasers for the subject land, including the Council itself, State Government authorities, developers seeking open space to maximise FSRs and to offset s.94 contributions, sporting and recreation clubs, and schools and universities, as submitted.

91 I also agree with the submission that the community would value this piece of land highly, considering that there are limited open space parcels in Burraneer, and Rutherford Reserve appears on the evidence to be the most significant.

92 At the same time I accept the evidence that purchases of land by the Council at near residential prices for open space may have “stabilised” and may well slow in the future, with Council focussing on “strategic acquisitions” (see par [79] above).

93 I have reviewed in this judgment more cases than Mr Wood did for his report, but he arrived at a discount rate of 20%, having originally applied 50%, the rate often applied by the Courts before Leichhardt CoA. He did not include any discount for the community land classification, so his 20% applied only in respect of the open space zoning.

94 As Mr Robertson succinctly put it (Applicants Submissions, 15.07.08, par 12):

“ Logically it must be the case that, consistent with the long line of authority cited above [which includes those to which Mr Wood refers], if a 50% discount is appropriate to take into account both the LG Act restriction and the open space zoning, a discount of somewhat less than 50% would be appropriate if the only matter to be taken [into] account is the zoning issue. ”

95 The appropriate percentage/fraction to apply in a particular case, post-Leichhardt CoA, will depend on its own facts and circumstances. (See also Davies AJA in Ashfield CoA).

96 Taking all the above considerations into account, none being necessarily more important than the others, and “doing the best I can” (per Canterbury at [30] and Bannon J in Hornsby at 13) as the judicial valuer, I believe that the hypothetical willing but not anxious buyer and hypothetical willing but not anxious seller, armed with knowledge of public facts and the market (see Spencer at 441) would meet in the hypothetical sale of the subject land at two-thirds of residential values, meaning that the open space value of the acquired land would be the value of No.50 Rutherford Avenue discounted by one-third (33 1/3%). I consider Mr Wood’s 20% figure is inadequate, and Mr Dempsey’s 90% figure far too extreme, in all the circumstances of the case. By coincidence I have arrived at the same discount as was relied upon originally, without explanation/rationale, by the Applicant (see par [10]).

97 I, therefore, derive the price per m2 as $1127 ($1690 x 2/3), meaning that the value of, and therefore the compensation payable for the acquisition of, Lot 10 as $201,169.50 (178.5m2 x $1127), rounded up to $201,170.

E. The three easements

98 I now set out in full the easements acquired over areas of the Reserve, as published in the Gazette No.51 (as Schedules 2, 3 and 4):

“SCHEDULE 2
An Easement for Sewerage Purposes more fully described
in Memorandum 7158328D lodged at the Department of
Lands (Division of Land and Property Information NSW),
Sydney over all that piece or parcel of land having an area
of 164.7 m² in the Local Government Area of Sutherland,
Parish of Sutherland, County of Cumberland, and State
of New South Wales, being the land shown on Deposited
Plan 1088312 as “(A) PROPOSED EASEMENT FOR
SEWERAGE PURPOSES VARIABLE WIDTH”.

SCHEDULE 3
An Easement for Access, Electricity Purposes, Sewerage
Purposes, Telecommunications Purposes and Water Supply
Purposes more fully described in Memorandum 7158335G
lodged at the Department of Lands (Division of Land and
Property Information NSW), Sydney over all that piece
or parcel of land having an area of 334.6 m² in the Local
Government Area of Sutherland, Parish of Sutherland, County
of Cumberland, and State of New South Wales, being the land
shown on Deposited Plan 1088312 as “(B) PROPOSED
EASEMENT FOR ACCESS, ELECTRICITY PURPOSES,
SEWERAGE PURPOSES, TELECOMMUNICATIONS
PURPOSES AND WATER SUPPLY PURPOSES 17.54
WIDE”.

SCHEDULE 4
An Easement for Water Supply Purposes more fully
described in Memorandum 7158329B lodged at the
Department of Lands (Division of Land and Property
Information NSW), Sydney and an Easement for Sewerage
Purposes more fully described in Memorandum 7158328D
lodged at the Department of Lands (Division of Land and
Property Information NSW), Sydney over all that piece
or parcel of land having an area of 14.8 m² in the Local
Government Area of Sutherland, Parish of Sutherland, County
of Cumberland, and State of New South Wales, being the land
shown on Deposited Plan 1088312 as “(C) PROPOSED
EASEMENT FOR WATER SUPPLY PURPOSES AND
SEWERAGE PURPOSES VARIABLE WIDTH”.
[Sydney Water reference: 438636F5]”

99 The relevant memoranda of rights and restrictions, burdens and benefits, lodged at the Department of Lands, are in evidence (Exhibit A1, vol 2, tabs 23-25), and need not be set out here in detail. Mr Dempsey accepts the following descriptions of the easements, as contained in Mr Wood’s original report (Exhibit A4, fol 8):

Easement “A” (schedule 2) - having a “ 3.5m width to Rutherford Avenue and is of variable width having an area of 164.7m2 ”.
Easement “B” (schedule 3) - “ having an irregular frontage to Woolooware Road of 17.83m, a northern boundary of 18.23m, a rear or eastern boundary of 17.54m and a southern boundary of 20.79m, having an area of 334.6m2 ”.
Easement “C” (schedule 4) - “ being of triangular shape, having a frontage to Woolooware Road South of 5.275m and containing an area of 14.8m[2] ”.

100 Mr Dempsey assesses compensation for the acquisition of the easements as 2% of his residential value ($1,850/m2) or 20% of his open space value ($185/m2, being 10% of that residential value). This means that the compensation payable for the acquisition of easement A would be $6,093.90; easement B $12,380.20; and easement C $547.60.

101 Mr Wood assesses compensation for the acquisition of easements A, B and C as 20%, 80% and 10% respectively of his open space value ($1352/m2, being 80% of his residential value). This means the compensation payable for the acquisition of easement A would be $44,535; easement B $361,903; and easement C $2,000.

Easement A

102 Easement A is essentially for subsurface sewerage works, which may extend to the surface of the land but not above it (see Exhibit A1, vol 2, tab 23). It includes the necessary rights to enter, including with vehicles, for as long as necessary or convenient to that work. These rights are able to be exercised at any time of the day or night. The Council is not permitted to do anything that would restrict access, and would obviously not be able to build over the site of that easement, e.g., picnic seating or a barbeque area.

103 Mr Dempsey opines that easement A has no effect on the open space use of the land over which the easement was taken, but is a “blot on title”. Mr Wood opines that it represents a loss of proprietary rights. Both valuers have assessed the compensation at 20% of their open space values of the lot.

104 Considering the rights and restrictions under the easement I am content to accept what the valuers say and determine that the easement has reduced the value of that land burdened by 20%. The compensation figure for the acquisition of easement A is, therefore, $37,123.38 (0.2 x $1127 x 164.7m2), rounded down to $37,123.

Easement B

105 Easement B confers more, and more significant, rights on Sydney Water than Easement A, and burdens much of the usable area of the Reserve, seriously restricting use of that area (see Exhibit A1, vol 2, tab 24). Unlike Easement A not all the contemplated work is limited to the subsurface, e.g. there is a right to erect and maintain, etc (permanent) towers or poles for telecommunication, electricity and other mains, wires, cables or conduits, “without limitation”. The Council again must not obstruct, etc, as in the case of Easement A.

106 Mr Dempsey is of the view that easement B does “not have any material impact on the use of this land for open space purposes” (Exhibit R2, fol 19), whereas Mr Wood opines that the easement “practically sterilize[s] the use of this parcel” (Exhibit A4, fol 18), and “that this easement actually occupies the bulk of the usable area of the reserve” (T18.07.08, p37, L1ff).

107 I cannot agree with Mr Dempsey that the easement does not have a material impact on the use of that land. The easement has the potential to significantly change the character of the land and affect its use as open space, both before and after any works. Mr Wood puts that potential impact at 80% of value, and I am inclined to agree with him.

108 In these circumstances, I determine compensation at 80% of the open space value of the acquired land. The compensation figure for the acquisition constituted by easement B is therefore $301,675.36 (0.8 x $1127 x 334.6m2), rounded down to $301,675.

Easement C

109 Easement C covers a relatively small area of bush covered open space. The works facilitated are essentially confined to the subsurface and associated access (Exhibit A1, vol 2, tab 25).

110 Both valuers agree that easement C represents a “blot on title” and are quite comparable in the compensation payable (Mr Wood opines 10% and Mr Dempsey 20% of their respective open space values).

111 Considering the evidence of the valuers and the rights and burdens under the easement, I determine the compensation for the acquisition of easement C over the land at 10%. The compensation figure for the acquisition constituted by easement C is therefore $1,667.96 (0.1 x $1127 x 14.8m2), rounded up to $1,668.

F. Injurious Affection

112 I turn, finally, to the claim made under s.55(f) of the JTC Act.

113 Mr Wood explains the injurious affection claim in the following terms (Exhibit A5, par 49):

“ The area of cleared usable land prior to the acquisition approximated 1000m2 of which 692.6m2 or 69% has been either acquired or blighted by the compulsory acquisition of the various easements leaving an area of approximately 300m2 unencumbered. It is also of note that the compulsory taking of the land and easements occupies the “prime” buildable area of the land and detracts substantially from the general ambience and amenity of the public reserve .”

and then assesses the diminution in value of the residue land at 25% of its open space value, based on “ my professional opinion as to what the reduction in value would be ” (T18.07.08, p44, Ls26-27) - $101,400.

114 Mr Dempsey, on the other hand, opines that there is approximately 1807m2 of useable and accessible open space on the residue land, and its value is diminished by 10% (see T18.07.08, p56, L27ff, and Exhibit R2, pars 102-107) - $33,500.

115 It must be remembered that injurious affection may affect the residue lands as a result of the public works and the rights granted under any easements acquired. Injurious affection is defined in s.55(f) of the JTC Act in the following terms:

“ 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. ”

116 As noted in the Introduction of this judgment, the Reserve has, in general terms, three defined areas – approximately 1100m2 of cleared usable open space, approx 600m2 of easily accessible bushland, and more than 7000m2 of rugged steep bushland falling to the water.

117 The acquisitions affect areas of the 1100m2 close to the intersection and Mr Wood has had regard to the remaining approximately 300m2 of cleared land on the residue lands, between the acquired lands and the accessible bushland, as the area most injuriously affected by the acquisition and the public works it facilitated on Lot 10 (namely the low-level water pumping station, the access to the sealed sewer main junction provided by that facility, and the electrical kiosk).

118 These facilities constitute a visual blight on the residue land. Even the low level structure has vents and manholes. Also the pumps currently operate for two hours twice a day, generating some noise which detracts from the general ambience and amenity of an otherwise tranquil reserve. In considering these matters the Court had the benefit of a view, during which the pump was operating, but also of the affidavit and oral evidence of Sydney Water’s Mr Deininger.

119 Further visual blight (and quaere also noise) may occur if all the rights created by Easement B are fully exploited.

120 Apart from that noise and the visual impacts, a third source of decrease in the value of the residue land comes from maintenance activities on the works within Lot 10. The frequency of such activities is at Sydney Water’s discretion, and the following exchange between Mr Robertson and Mr Deininger (T17.07.08, p20, LL30-43) is illuminative:

“ Q. To service it, you would from time to time need to drive a truck across?
A. The normal service would be in a light utility to a light upright truck, yes.

Q. Do you have a regular maintenance program?
A. The pumps are serviced approximately four times a year, so every three months.

Q. Is there a telemetric machine that notifies you if there’s a breakdown in the pumps?
A. Yeah, we’ve got telemetry on site yes, so we actually can look at pump operations or, you know, power failures or whatever.

Q. So there are other times other than just routine maintenance when you have to access the site?
A. Yep. ”

121 I do not accept Mr Dempsey’s extension of the injuriously affected area of the residue lands into the bushland area of the reserve. Instead, I adopt the figure of 300m2 proffered by Mr Wood as the area of the residue land injuriously affected. Again “doing the best I can”, I consider that the injurious affection in the form of visual and noise impacts, as well as through the inconvenience and other impacts of the workmen and their vehicles upon the lands, affects the value of the open space portion of the residue lands by 20%.

122 I therefore determine compensation under s.55(f) at $67,620 ($1127 x 300 x 0.2).

G. Conclusion

123 Compensation payable to the dispossessed owner is determined as follows:

Loss of market value (s.55(a))
Lot 10 $201,170
Easement A $ 37,123
Easement B $301,675
Easement C $ 1,668

Disturbance (s.55(d))
As agreed $ 2,200

Injurious Affection (s.55(f)) $ 67,620
TOTAL $611,456

124 All the exhibits may be returned.

125 Costs reserved.