The Trustees of the Roman Catholic Church for the Diocese of Wollongong v Roads and Traffic Authority of New South Wales

[2002] NSWLEC 162

Land and Environment Court

of New South Wales

CITATION:

The Trustees of the Roman Catholic Church for the Diocese of Wollongong v Roads and Traffic Authority of New South Wales [2002] NSWLEC 162

PARTIES:

APPLICANT
The Trustees of the Roman Catholic Church for the Diocese of Wollongong

RESPONDENT
Roads and Traffic Authority of New South Wales

FILE NUMBER(S):

30043 of 2001

CORAM:

Talbot J

KEY ISSUES:

Valuation of Land :- Resumption of land for the purpose of a new road - whether the underlying zoning at the date of acquisition would have been open space or rural with urban potential

LEGISLATION CITED:

Environmental Planning and Assessment Act 1979 s 117
Land Acquisition (Just Terms Compensation) Act 1991
Roads Act 1993
State Environmental Planning Policy No. 5 - Housing for Older People and People with a Disability
State Environmental Planning Policy No. 14 - Coastal Wetlands
Shellharbour Local Environmental Plan No. 16
Shellharbour Local Environmental Plan 2000
Illawarra Regional Environmental Plan No. 1
Illawarra Planning Scheme Ordinance 1968

CASES CITED:

DATES OF HEARING:

29/08/2002, 30/08/2002, 02/09/2002, 03/09/2002, 04/09/2002 (Site Inspection), 05/09/2002

DATE OF JUDGMENT:

09/26/2002

LEGAL REPRESENTATIVES:

APPLICANT
Mr J J Webster (Barrister)
SOLICITORS
Levy Peatman

RESPONDENT
Mr J B Maston (Barrister)
SOLICITORS
Crown Solicitors Office

JUDGMENT:

IN THE LAND AND 30043 of 2001
ENVIRONMENT COURT Talbot J
OF NEW SOUTH WALES 26 September 2002

The Trustees of the Roman Catholic Church for the Diocese of Wollongong
Applicant

v
Roads and Traffic Authority of New South Wales

Respondent

REASONS FOR JUDGMENT


1. The applicants are trustees of land situated in Tongarra Road, Albion Park within the City of Shellharbour. By Notice published in the New South Wales Government Gazette No. 5 on 5 January 2001 the Roads and Traffic Authority of New South Wales (“the RTA”) acquired lot 10 in DP 883605 and lot 6 and lot 7 in DP 882595 (“the subject land”) by compulsory process under the provisions of the Land Acquisition (Just Terms Compensation) Act 1991 (“the Just Terms Act”) for the purposes of the Roads Act 1993. The said lot 10 was previously lot 3 and lot 5 in DP 882595 and was excised fROm the original land parcel to facilitate the acquisition by the RTA. The total area acquired by the respondent is 21.4277 hectares.

2. At the date of acquisition the subject land was partly within zone 9(d) – Open Space Reservation and zone 9(b) – Arterial Roads Reservation, pursuant to Shellharbour Local Environmental Plan 2000 (“LEP 2000”) which was gazetted on 2 June 2000. The zoning pursuant to LEP 2000 was generally in accordance with the previous zoning imposed by Shellharbour Local Environmental Plan No. 16 (“LEP 16”), which was made on 30 September 1983, with the exception that LEP 2000 expanded the width of the area within the Arterial Roads Reservation zone.

3. The Illawarra Regional Environmental Plan No. 1 (“the REP”) made in 1986 identified regional planning issues and established parameters and controls relating to development, together with advice for the management of resources in the Illawarra region.

4. Part of the subject land, including that part of the land with a frontage to Tongarra Road, is flood prone.

5. The applicant relies upon the evidence of Mike George, a Consultant Town Planner, who maintains the opinion that, at the date of acquisition, the subject land had an underlying zoning of Rural 1(a) under LEP 2000. He claims this reflects the general zoning pattern around urban areas in Albion Park with the bulk of non-urban private land included in the zone. Even if the urban potential of the land was to be ignored, Mr George is still of the opinion that the underlying zoning would be Rural 1(a) with a strong potential for the subject land to be developed as an aged unit complex on the flood-free part of the land with the balance or residue of the subject land to be utilised as associated landscape space.

6. On the other hand, based on a consideration of all the relevant documentation, Ian (Jock) MoreAu Palmer, the Town Planning Consultant retained on behalf of the respondent, holds the opinion that a residential re-zoning of the subject land would not have been supported by Shellharbour City Council (“the council”) or the Department of Urban Affairs and Planning (“DUAP”) at any time leading up to the date of acquisition. In his opinion, the subject land would have been zoned Rural 1(b) under LEP 16 with the zoning likely to have been changed to either 6(a) – Public Open Space or 6(b) – Private Open Space with the gazettal of LEP 2000.

7. The expert valuers have relied upon the advice of the town planners and carried out their respective valuation exercises based on the various alternative underlying zonings and development potential identified by Mr George and Mr Palmer.

8. The issues, therefore, may be summarised as follows:-


(1) Determination of the underlying zoning of the subject land at the date of acquisition (if the zoning applied by LEP 2000 is to be ignored as a step in the resumption process); and

(2) Having determined the underlying zoning and development potential, the assessment of compensation, pursuant to the Just Terms Act, as the market value of the land.



Town Planning Issues

9. Albion Park Airport is located to the north east of the subject land. There is no issue about there being no adverse impact upon the development potential of the land as a consequence of the operation of the airport. The subject land has a frontage to the southern side of Tongarra Road and is separated from the Albion Park urban area by land traversed by Frazers Creek. A recreational sporting complex has been developed immediately to the south east of the subject land. A small unnamed tributary of Frazers Creek traverses an area of public open space to the west and south of the subject land. Development immediately to the west of the public open space comprises residential subdivision which is accessed from Tongarra Road. A sewerage pumping station is situated on an allotment adjoining the north western corner of the subject land.

10. The subject land is currently cleared of vegetation and used for agricultural purposes in conjunction with other land owned by the applicant immediately to the east.

11. Clause 26 of the REP provides as follows:-

26 Rezoning of rural land for urban purposes
A draft local environmental plan shall not rezone rural land for urban purposes unless:


(a) such action is justified by an environmental study,

(b) the draft local environmental plan is for land identified on the map as potentially suitable for urban use, or
(c) the rezoning is of relatively minor significance.

12. The REP contains a number of prescriptions for the control of development on rural land with a history of flooding, the assessment of land availability for new living areas, the impact of airport noise, the protection of estuaries and wetlands and the development of land within a service corridor. Mr Palmer asserts the provisions of the REP would have created an impediment to the rezoning of the subject land for residential proposes, whereas Mr George regards the REP as doing no more than setting up a framework for the making of any local environmental plan and identifying the documentation required to support a rezoning. In his opinion, nevertheless, a local environmental study (“LES”) would have been necessary before even considering whether the subject land could have been rezoned to permit urban uses. Moreover, directions made pursuant to s 117 of the Environmental Planning and Assessment Act 1979 would apply to a consideration of any rezoning of the subject land.

13. Although the majority of the subject land was included in the 1(b) - Non-Urban zone under the Illawarra Planning Scheme Ordinance 1968, parts of the land on the western side of the tributary creek were included in the 2(a) - Residential and 2(e) - Residential (Living Area) zones.

14. In 1981 Dr R.J. Cardew carried out a land market study of the Illawarra region on behalf of the Land Commission of New South Wales (“the Cardew study”). The aims of the Cardew study can be summarised as an assessment of the demand and supply of residential lots in the Illawarra area and the identification of the pattern and timing of urban extension to minimise public and private development costs.

15. The Illawarra Urban Development Program (“the IDUP”) has generally followed the recommendations made in the Cardew study for the release of land for urban development. The subject land was not included in an urban release area identified in the Cardew study.

16. Mr George and Mr Palmer conferred at the Court’s direction in accordance with par 5 in Sch 1 to the Expert Witness Practice Direction 1999.

17. The following agreement was filed and tendered as part of the evidence:-


_ The underlying zoning of the land would have been Rural 1(b) under LEP 16, up to the Gazettal of Shellharbour LEP 2000

_ a SEPP No 5 development would have been permissible under this zoning
_ the land would have been excluded from any consideration of urban development prior to 1993 because of its previous classification as flood liable
_ Shellharbour City Council Officers advocate the creation of an “open” corridor between Albion Park and Albion Park Rail.
_ The “open” corridor could be achieved via a number of different landuses including open space; rural; and environmental protection.
_ the preparation of any required LES to identify the most appropriate zoning of the subject land could take 12 months to complete.
_ the preparation and gazettal of any required LEP for the subject land could take 6 months.

18. Both town planners recognise that the LES is an essential prerequisite to a consideration of the rezoning of the subject land.

19. Studies undertaken by Kinhill Engineers Pty Ltd (“Kinhill”) for the council in June 1993 show that, contrary to previous analysis and study, a substantial part of the subject land is flood free. Mr George is of the view that the categorisation of the subject land as flood liable explains why it would not have been considered as having urban development potential in the Cardew study. However, Mr Palmer considers that as both the existing supply of residentially zoned land and potential urban land within the Shellharbour area was, at all relevant times, more than adequate to meet the anticipated short to medium term population growth, the subject land would not have been included in any of the urban release areas identified either by the Cardew study or the IUDP. Furthermore, Mr Palmer says that in view of the provisions of the REP he believes that the council and DUAP would not have been supportive of rezoning of the subject land for residential purposes.

20. Mr Palmer claims that if the Arterial Roads Reservation and Open Spaces Reservation zoning imposed by LEP 16 had not occurred then the subject land would have retained a non-urban zoning. Relying upon the Albion Park Recreational Facilities Study – Precinct 7, prepared in 1996 and updated in 1997 and 2000, and an Open Space Plan, prepared in June 1993 for the council, Mr Palmer argues that it is clear that the provision of open space to satisfy a structural landscape function, in addition to the provision of passive and active recreational functions, was an important component of the council’s open space planning. Accordingly, regardless of the imposition of the Open Space Reservation and Arterial Roads Reservation zoning, in his view, the land would have been considered “highly desirable as passive open space providing a linear continuation of the open space along Frazers Creek imposed pursuant to the Illawarra planning and design principles of the Planning Scheme of 1968 and later reinforced by the planning and design principles of the 1993 Open Space Plan” . Even if the council had been provided with documentation indicating that the subject land was predominantly flood free at the time of making LEP 16, Mr Palmer considers that, faced with the results of the Cardew study and the IUDP, there would have been no town planning justification to release the subject land for residential purposes. He finds it noteworthy that land adjoining the subject land to the east, also owned by the present applicant, and land to the north of Tongarra Road were included in the Rural 1(b) zone in LEP 16. In Mr Palmer’s opinion, between 1983 and 2000 the subject land would have been identified as being desirable as open space and, either with the gazettal of LEP 2000 or even before that date, the subject land would have been rezoned from a Rural 1(b) zone to either a 6(a) - Public Open Space zone or a 6(b) - Private Open Space zone, with 6(b) being the most likely zone. Furthermore, he says the effect of potential flooding of a substantial part of the land highlights difficulties with respect to the provision of flood free access. Moreover, the failure by the Cardew study and the IUDP to recognise the area of the subject land as suitable for future residential development and the support for the establishment of a linear open space link in areas such as the subject land, would have guided the council and DUAP in determining an appropriate zoning and future use for the subject land. In his view, these issues adversely impact on the suitability of the site for a residential zoning and hence the justification for an open space zoning to be imposed on the subject land. Mr Palmer identified a range of relevant developments and land uses likely to have been considered by the council within the 6(a) or 6(b) zones, including recreation establishments and facilities and tourist facilities. In either zone, dwelling houses are only permissible as ancillary to other permissible development.

21. Mr George categorically rejects the prospect of a private open space zoning in the absence of any suggestions of an existing or proposed use in accordance with that zoning and against the wishes of the owner.

22. The pessimistic outlook for urban development purveyed by Mr Palmer is in sharp contrast to the optimistic view taken by Mr George to the effect that on the basis that a substantial part of the site is flood free, the urban potential of the subject land at the date of acquisition is demonstrated by the following:-


_ the cleared state of the land

_ its contiguity with the Albion Park urban area
_ the availability of services including utilities (power and sewerage lines are in Tongarra Road); and the urban infrastructure of Albion Park
_ the absence of other development constraints (aircraft noise, wetlands, rare and endangered species, etc)
_ the single ownership of a substantial development parcel.

23. Mr George says that, in his opinion, it is not reasonable to say that the land is only useful for open space or that the underlying zoning, as far as the road reservation is concerned, is open space. In his view, such a conclusion ignores the fact that the land is privately owned and, accordingly, in order for it to achieve any status as open space it would first have to be acquired by the council on the basis of its true underlying zoning. Furthermore, the council’s S 94 Contribution Plan makes no provision for the acquisition of the subject land as public open space. Not only have council studies concluded there is no demand or need for additional open space at Albion Park, Mr George considers that the subject land has no particular utility as open space given that its flood free areas are separated from the urban area and that the flood prone land in any development would, in any case, remain as some form of buffer. Mr George does not agree that the development constraints identified by Mr Palmer preclude potential development. In his view, the issues raised by Mr Palmer have standard solutions and any submission seeking rezoning would be capable of comprehensively addressing those issues.

24. Recognising that there is currently substantial urban development capacity in the council land located east of the subject land, Mr George is nevertheless of the opinion that potential shortages and limited longer term supply of urban land in the Illawarra and Sydney region, together with urban infrastructure cost pressures and the lack of need for additional open space, support a case for the urban zoning of the land, subject to resolution of the access problem, the making of arrangements for service connections and determination of the manner of treating the flood prone part of the land.

25. The subject land adjoins urban land. Development of the subject land for the purpose of a dwelling would have been permissible under the Rural 1(a) zoning. The respondent concedes the land falls within the criteria specified by State Environmental Planning Policy No. 5 – Housing for Older People and People with a Disability (“SEPP 5”). Mr George would have advised a hypothetical purchaser at the date of acquisition that an aged persons development under SEPP 5 was the highest and best use of the land on the basis that the underlying zoning was Rural 1(a). This is because a rezoning to urban was not, in the circumstances of the location of the site, necessary.

26. Although the realisation of the urban potential of the land might have been influenced by progress in other areas, the real issue, according to Mr George, is only one of timing. Accordingly, any deferral would be unlikely to be more than the 12 to 18 months necessary to achieve a rezoning.

27. Mr George and Mr Palmer reach conflicting conclusions in regard to the extent to which land outside the areas identified in the Cardew study have been rezoned for urban use. Although they both recognise that land outside the boundaries of the specific areas identified by Dr Cardew have since been rezoned and developed for urban purposes, Mr Palmer says that, with isolated exceptions that are either not relevant to the present circumstances or are of minor significance, rezoning has taken place generally in accordance with the Cardew study either on areas directly identified by Dr Cardew or upon land which can be reasonably regarded as an extension of those areas. In any event, Mr George is of the opinion that the urban zoning of the subject land would be of minor significance in the overall context of the Albion Park urban areas.

28. At the time the Cardew study and report was prepared the subject land had been classified as flood liable. Subsequent findings by Kinhill in 1993 confirm that only about 45 per cent of the site is flood affected. This, of course, does not mean that the land may now be regarded as flood free. The Cardew study attempts to show the extent of flooding that would have been known in 1981. Other than the opinion of Mr George, there is no conclusive evidence that the subject land would have been included as land recommended for urban land release. This, therefore, remains a matter of opinion and conjecture. It is true that the Cardew projections have proved to be generally accurate in the context of a report of that nature and that development in the Shellharbour area has, in a general sense, followed the pattern identified by Dr Cardew. It is also true, nevertheless, that rezoning of land to allow urban development have not been strictly confined to areas specified by Dr Cardew and the IUDP. The Court finds, however, that departures from the Cardew projections are generally as Mr Palmer describes them, namely irrelevant to the present circumstances or of minor significance.

29. Although ultimately they are diametrically opposed in their respective final conclusions, Mr George and Mr Palmer have attempted to substantiate their respective arguments in respect of the future urban potential of the land with compelling force.

30. The Court is not persuaded that the council would have moved, by the date of acquisition, to formally rezone the subject land for either public or private open space in lieu of the actual zoning which reflects the prospect of the proposed road. Given the agreed position that the underlying zoning of the land would have been Rural 1(b) under LEP 16 up to the date of gazettal of LEP 2000 it is not unreasonable to assume, on the balance of probabilities, that the same type of zoning would have been maintained when LEP 2000 was made. The question that the evidence of Mr George raises is whether LEP 2000 would have included the subject land in a Rural 1(a) zone. There is no Rural 1(b) zone under LEP 2000. Neither party has contended that the land would have been placed within the Rural 1(c) zone pursuant to LEP 2000.

31. The objective of the Rural 1(a) zone under LEP 2000 is threefold as follows:-


(a) To protect the agricultural potential of rural land and to prevent the fragmentation of rural holdings.

(b) To prevent premature and sporadic subdivisions and to ensure consolidation of urban areas, thus enhancing the prospect of the economic provision of public services.

(c) To prevent, on the fringe of urban areas, the subdivision of land into small lots which would prejudice the proper layout of additional urban areas as a result of natural growth.


32. The Court is satisfied that the evidence shows that there was already a significant provision of open space land within the Albion Park locality and, further, that the council would have been unlikely to pursue a private open space or recreation zone unless it was at the request or instigation, or at least with the connivance or acquiesce, of the owner of the subject land. In the absence of any identified use for the land falling within the permissible uses, either under a public open space or private open space or recreation zone, it is reasonable to assume that the subject land would have been included in the Rural 1(a) zone under LEP 2000 when it was gazetted on 2 June 2000.

33. The land has agricultural potential as recognised by its ongoing use for that purpose. It also adjoins urban areas and may, therefore, be regarded as being within the purview of objective (b) and objective (c) of the Rural 1(a) zone. The Court is, therefore, satisfied that after setting aside the actual zoning that prevailed at the date of acquisition, which reflected the statutory purpose of the acquisition, the underlying zoning of the land at that date would have been Rural 1(a) under LEP 2000.

34. Although the Court prefers the conclusions reached by Mr George in respect of the underlying zoning of the subject land, there nevertheless remains an outstanding issue as to the potential for development for urban purposes, in particular, residential development. Although one objective of a Rural 1(a) zoning is to preserve land for future urban use by constraining incompatible fragmentation through subdivision, that does not necessarily mean that rezoning will always follow solely as a consequence of an owner presenting a proposal to that effect.

35. Mr Palmer and Mr George agree that the period of 12 months should be allowed for the preparation of a required LES to support an application for rezoning and that if the proposal was adopted by the council, DUAP and the Minister it would have taken a further six months before the rezoning was effected by the making of an amending LEP. The consensus between the parties in this respect is limited to the period of time it could take to achieve a rezoning as a matter of procedure only. The applicant’s case proceeds on the assumption that any such proposal in respect of the land would have been embraced and a rezoning would have been achieved within two years from the date of acquisition. Mr Palmer does not agree that rezoning to permit residential development would have occurred at that time even if the underlying zoning is accepted as being Rural 1(a).

36. The respondent contends that the flood prone nature of the subject land, the need to acquire or construct flood free access to the land and the proximity of the land to a wetland, pursuant to State Environmental Planning Policy No. 14 – Coastal Wetlands, would all be matters that the council would also regard as constraints upon the grant of a development consent for a retirement village development pursuant to SEPP 5. Mr Maston accepts that, as a matter of law, the zoning of the land and its adjacency to areas for urban purposes, a SEPP 5 development would be permissible with consent of the council. As I said earlier, Mr George claims that the highest and best use for the land, at the date of acquisition, would have been a SEPP 5 development given that rezoning was not required before a development application could be made. Mr Maston’s concession and the claim by Mr George are both based upon an assumption that the underlying zoning, pursuant to LEP 2000, would be Rural 1(a).

37. It is a matter of contention between the parties whether the hypothetical prospective purchaser would have purchased the subject land with any degree of expectation that either the land would be rezoned in the foreseeable future or that a development application for a retirement village development could be successful. Furthermore, the respondent raises a doubt, particularly in the case of a retirement village, that there was such a demand for residential land or retirement village units that could have justified a purchase at that time.

38. Mr Palmer points out that an assessment of the urban capability of the subject land would have raised issues of the potential for an erosion hazard, land stability, soil types, landscape limitations as well as flooding and water logging. In his opinion, the council and DUAP would have been guided by the findings of various urban/land capability assessments carried out on the subject land and surrounding areas in determining future zoning and land use. He states that these findings did not support the residential zoning of the subject land. In response, Mr George asserts that the partial and generalised soil assessments referred to by Mr Palmer would not have precluded urban development of the land and that a detailed assessment of soils on the developable part of the site would have been part of the detailed submission to support a rezoning. The Court is not able to conclude whether the soil landscape class would have prevented a “high to severe limitation for urban development” as Mr Palmer suggests. Nor is it able to conclude that any detailed assessment anticipated by Mr George would have supported the case for urban development of the subject land. All that is clear, from the evidence before the Court, is that a potential purchaser would have been aware that a SEPP 5 development was legally permissible with the consent of the council or that it was open for that purchaser to make an application for rezoning of the land but without any certainty of success in either case.

39. Mr George, in his evidence in chief, states his opinion that an application to have the land rezoned to permit urban development would have been successful and that it would have taken 12 to 18 months for that to be achieved. In answer to that proposition, Mr Palmer responds that up until 1993 the classification of flood liability would have prevented urban development and that nothing occurred between 1993 and the date of acquisition to justify a change to an urban zoning which, in any event, would be contrary to the range of land use planning principles identified by him.

40. Mr George further explains his position in oral evidence as follows:-

From my perspective, first of all I don’t believe that the Local Environmental Study required in this case need be complex. There’s a substantial amount of work already been done. The study would fundamentally need to deal with the issues we more or less went through yesterday. It would need to look at the specifics of the land. It would need to look at things like downstream drainage in terms of the wetland and so on. It would need to look at flood free access. That’s all fairly routine engineering matters. It would need to address the demand argument, it would need to address any sort of inconsistencies with the regional plan, the 117 directions and so on. But the essence of it, I don’t believe is difficult simply because we know the land is flood free, we know services are available, we know it’s capable of being built on. So the LES process is not necessarily difficult and the trick would be to avoid making it more complicated than it needs to be. It’s a sort of circumstance where an applicant for re-zoning may in fact do a planning report to - a comprehensive planning report to simplify the study process so that the formal environmental study fundamentally consists of council’s independent review of the documentation that’s submitted which is a process which is addressed in the courts before. So my view was that there was plenty of time to do everything that needed to be done within that 12 months. It may be that the council, for example, would refer [sic] to see the case made in some detail before it would resolve but also within the 12 months plus six months, there’s a lot of opportunity for overlaps so the LEP preparation process overlaps the study process. It would be improbable that the council or the department would agree to rezoning without at least some idea how the land was intended to be developed, given its relatively small size and given the containment of issues. So that you would actually be working on your development application as part of the study in the LEP process. So I’m not saying for a moment that in practice it couldn’t take more than 12 months but there’s no reason for it, would be my view.


What I was trying to say was that I believe 12 months is ample time to conduct the technical investigations reporting necessary and to do the preliminaries. What I was suggesting was it may well be to prompt the council to make a decision to prepare a Local Environmental Plan, a person seeking rezoning may well have to effectively do the environmental study themselves, even though the formal local environmental study would have to be the council’s independent review of that document.

41. The following passages are taken from the cross-examination of Mr George by Mr Maston:-


Q. Before a council would consider resolving to entertain an application for rezoning, it would have to be persuaded that it was generally appropriate to enter into that investigation?
A. The council would have to pass - be persuaded to pass a resolution for a local environmental plan, yes.

Q. How is that done in practice? Do town planners consult with the council town planners and try to convince them it’s a good idea?
A. In this particular case, you’ve had advice from the then Department of Planning that raised all sorts of difficulties and you would have a position from council officers that seem to suggest that zoning of this land wasn’t - if you were dealing with that in practice, what I’m suggesting is one of the possibilities and a fairly common approach is for - to justify the council taking that action is to, in effect, deal with all the issues that an environmental study would deal with.
Q. But you wouldn’t do the local environmental study unless you’d had some indication that the council would be prepared to even look at it?
A. Yes, but these things don’t necessarily happen in a sequence. Again, in practice, if you were pursuing the rezoning of this land you’d be taking a number of steps simultaneously.

Q. Time could be occupied and, on one scenario, infinite time might be needed to no avail if you couldn’t convince the council to even consider the rezoning of the land?
A. Yes.
42. In further cross-examination of Mr George in respect of certainty the following appears:-


Q. What I want to ask you is this, would you have indicated or if you were asked to indicate the level of the chance that you believed existed to rezone this land to 2A, would you have said it was an absolute certainty in January 2001?
A. No what I would have said is that a good case can be made, if you’re looking for levels of certainty that something that occurs in a series of steps, so the further you go down the track you have both a series of get out points as well as increasing confidence levels.

Q. So if he told you that he was contemplating purchasing the land unconditionally, that is not conditional upon a rezoning or development consent and that he was relying on you to give him the assurance of the chance, would you give him a better than fifty fifty chance or would you say that there were significant question marks which could go the wrong way for him?
A. What I would say is that a strong case is able to be made for the urban zoning of the land. There are technical issues all of which have a ready explanation. His primary risks would be political ones. Persuading the council to take action. Dealing with government agencies. For example, you could envisage a situation where you do a study of this land to demonstrate a development which was justifiable against any regional plan, SEPP 1 directions or anything else and you still wouldn’t guarantee someone that it would be rezoned.


43. Again in cross-examination, Mr Maston put to Mr George that on the basis of information available in January 2001, from the relevant authorities, together with the published 1995 report of the IUDC, he would have advised the hypothetical purchaser of the subject land that the supply of trouble free land suitable for urban development in the Illawarra area was sufficient for a number of years ahead. Mr George replied as follows:-

If I was relying on that 1995 document, I would have certainly told a potential purchaser that but I would also have said there’s a lot happened since 1995 and there would be a need to make further enquiries. If I made further enquiries at the date of resumption of the department, there would have been updated information, perhaps not published but certainly the nub of it would be there. The department would have known what was happening. I question whether a statement made in 1995 is necessarily - would necessarily remain relevant. In any event, it’s not necessarily a question whether there is insufficient land earmarked in the Illawarra but there are a series of questions about whether and when it will be developed. There are substantial problems in West Dapto. There are question marks about Calderwood, et cetera. So the picture portrayed by the Urban Development Programme is not necessarily something that - is not the totality of the urban lands - process.

44. It is the tenor of Mr George’s evidence that there was an underlying ongoing demand for the release of land for urban development and that there was an overflow from the demand in the Sydney Metropolitan area which affected the situation in the Illawarra area. It is, nevertheless, not clear to the Court from the evidence how the prospective purchaser would have been in a position to conclude that the demand for residential development was not generally being satisfied by the release of land in areas generally consistent with findings in the Cardew study.

45. On 19 March 1999, in the context of the proposed resumption, DUAP advised the RTA that in its opinion the highest and best use of this land would be “different for a variety of residential, commercial or industrial developments, and could hinge on further detailed site investigations and site constraints”. Furthermore, DUAP referred to the council’s belief “that there is sufficient zoned land for commercial purposes to cater for the optimum population of the municipality, while current zoned land for residential purposes is sufficient to cater for the next 12 years based on current population projections.” The Court agrees that the advice by DUAP to the RTA must be weighed in the context of the proposal to resume the subject land. No DUAP representative was called to give direct evidence. Nevertheless, the advice cannot be disregarded as Mr Webster suggests it should be.

46. Although there is no direct evidence from any council officer, the Valuer General, Mr Palmer and Mr George were all informed by Linda Madden, a Senior Strategic Planner, that the council may be interested in pursuing an open space zoning for the land. The Court has had no opportunity to test whether Ms Madden was expressing any properly formulated and authoritative view of the council itself.

47. In the circumstances, the Court is not prepared to conclude that, on the balance of probabilities, the hypothetical purchaser would have bought the land with any enhanced degree of confidence that a rezoning to allow urban development could take place within 18 months or two years or, indeed, at all for probably at least 10 years.

Sales evidence

48. The applicant’s Valuer, John Warwick Austin, first valued the land on the basis that the subject land had urban potential in the foreseeable future. It is his view that, at the relevant date, an application to have the flood-free part of the site rezoned to permit urban development would have been successful although it could have taken 12 to 18 months to achieve approval. Mr Austin made adjustments to the sale prices of land in Terry Street, Albion Park, Shellharbour Road, Shellcove and Mount Brown Road, Dapto. In the unlikely event of an application to rezone the land being unsuccessful, his fallback position is that a potential use would have been for aged housing under the provisions of SEPP 5.

49. Bruce Martin, a Valuer retained by the respondent, relies upon Mr Palmer for the opinion that the most likely underlying zoning of the subject land at the date of acquisition would have been 6(b) - Private Recreation. In response to the contention that the underlying zoning could be regarded as Rural 1(a) and that the land had urban potential, Mr Martin carried out a valuation exercise on that basis, although he did not agree that the land should be regarded in that light.

50. In reply, Mr Martin indicates that sales of Bridgewater Farm in Cleveland Road, Dapto and 43.03 hectares purchased by Wollongong City Council in West Dapto Road, West Dapto in 1998 were a better reflection of urban potential. Mr Austin was not aware of the sale of the land in West Dapto Road at the time he made his original valuation. After he became aware of the sale and had the opportunity to analyse it, Mr Austin contended that this sale supported his valuation per hectare for the subject land if one takes into account the difference in site area of each property and the fact that the West Dapto site was a holding that had little or no chance of being developed for urban purposes for at least five and maybe 10 years. Relying on his own sales, and after making appropriate adjustments, Mr Austin valued the subject land at $58, 337 per hectare. The price paid for the West Dapto land at $47, 641 per hectare, he says, supports the $58,337 figure on the basis that the subject land had a potential to be developed for urban purposes in the two-year period after the date of acquisition.

51. Notwithstanding differences of opinion between Mr Austin and Mr Martin in regard to the nature of the adjustments required in order to take account of the timing question, the per hectare analysis and land comparison, the analysis of all the above sales serves to demonstrate the range of prices that a hypothetical purchaser would be prepared to pay where the subject land is identified as having some urban potential. The sales relied upon initially by Mr Austin show what purchasers were paying for land that had already been rezoned and that effectively had the benefit of development consent.

52. The West Dapto sale first identified by Mr Martin assists with an understanding of the value attributed to land where the potential for development is deferred for 10 years or more. It is helpful notwithstanding that the land was purchased by the council as the local authority responsible for planning and thus with some degree of control over the realisation of the future residential potential of the land.

53. The sale of Bridgewater shows a value of $38,920 per hectare for land that the applicant agrees reflects the value of non-urban land with potential for residential subdivision deferred for at least 12 years. The sale took place in 1993 and, accordingly, suffers from being substantially removed in time from the date of acquisition.

54. There is uncorroborated evidence that organisations such as Warrigal Care and Anglicare (Chesalon) are actively seeking aged care sites in the Albion Park area and that a development application has been lodged by another organisation to construct a retirement village for 65 places next to Mount Terry Primary School, Albion Park. There is also evidence that the Sisters of Perpetual Adoration, the operators of Villa Maria Retirement Village, made an unsuccessful attempt to locate a suitable parcel of land to build a new retirement village in the area of the subject land in 1999.

55. Mr Austin relies upon one sale of a small site in Terry Street, Albion Park on 1 September 1997 to demonstrate there was some demand for this type of development in the area. The land comprising 1.7 hectares in the Residential 2(a) zone was purchased by Illawarra Retirement Trust for “holding” purposes. Otherwise, there is lack of any market sales evidence supporting demand for a SEPP 5 retirement village development at Albion Park.

56. However, for the purposes of establishing market value, Mr Austin refers to a further purchase of 13.74 hectares by Illawarra Retirement Trust in 1998 at Ferry Lane, Nowra. At the time of purchase, the land had the benefit of a development consent for a 55 lot residential subdivision. It is currently being developed for 33 hostel units and 44 self-care units. The sale shows $67,321 per hectare, including approximately nine hectares of flood prone land.

57. Mr George says that the case for a SEPP 5 development comprising in the order of 720 units on the subject land would be reinforced by the following:-


_ the availability of utilities

_ the proximity of urban services
_ the relatively level grades of the land
_ the attractiveness of the outlook
_ the physical separation of developable land from existing residences, minimising the potential for objections to a development application
_ the likely demand for such a facility, locally and more widely.

58. Mr Martin expressed the view that because the Illawarra Retirement Trust paid a price for the Nowra land which reflected a premium over and above the independent market valuation of $80,000 that was provided by Mr Austin it would have been considered as an “over anxious purchaser”. Another view could well be that the purchase price reflects what the hypothetical purchaser would be prepared to pay in order to secure a site suitable for aged unit development.

59. Mr Austin adjusted the $67,321 per hectare paid for the Nowra property to $51,330 per hectare applied to the subject land which he considered to be inferior. The Court is also mindful of the fact that Mr George projects 720 units for the subject land which bears no comparison in size to the actual development at Nowra.

60. The Ferry Lane, Nowra sale is not, in the Court’s opinion, a direct indication of the market position at Albion Park, some 60 kilometres to the north. Furthermore, when Mr Austin gave advice as a Valuation Consultant to the Illawarra Trust and made his recommendation in respect of the purchase he did so on the basis of the approved subdivision. There is no explanation as to why the Illawarra Trust actually paid in excess of the valuation figure provided to it by Mr Austin. A direct comparison with Nowra is difficult. In the absence of any comparable sale at Albion Park, the Court is driven to enquire what competition there might be in the market against the hypothetical purchaser for the purpose of a retirement village. The next highest and best use for the land would have been for urban development deferred for 10 years, maybe even 15 years.

61. Using the adjustment to the West Dapto sale adopted by Mr Wilson, who made the original statutory valuation for the Valuer General, and also Mr Martin, the value of the subject land with urban development potential deferred for 10 to 15 years would be in the range between $700,000 and $900,000. For present purposes it is appropriate to adopt the figure of $800,000 as the price that a hypothetical purchaser would have paid on the basis that the land had a recognised urban potential in the distant future to the extent referred to above.

62. The Court accepts the prospect that there may have been a further purchaser interested in the land as a potential developer of a retirement village. In view of the uncertainty about demand for a development using the full potential of 720 units and the lack of direct sales evidence, as well as the land constraints, the Court determines that a hypothetical purchaser would have paid only a small premium over and above the urban potential value. Although in a different context there is a precedent for this in the Nowra sale.

63. The Court, therefore, concludes that the compensation payable in respect of the market value of the land for the purposes of the Just Terms Act is $850,000.

Disturbance

64. The agreed amount of compensation payable for disturbance representing valuation and legal fees is $25,000.

Costs

65. There has been no formal argument with regard to the issue of costs. The applicant has recovered a greater sum as compensation than it would have recovered if the claim had not been pursued in these proceedings. In those circumstances, the Court would, as a matter of general practice, exercise its discretion in favour of the applicant and order the respondent to pay its costs. Unless either party moves the Court for orders to the contrary, within seven days, the Court will make an order that the respondent pay the applicant’s costs in the proceedings.

Formal orders

66. The Court makes the following formal orders:-


(1) The Court determines the total amount of compensation payable to the applicant by the respondent pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 as the sum of $875,000.

(2) Subject to any notice of motion filed within seven days, the respondent is ordered to pay the applicant’s costs of the proceedings.
(3) The exhibits may be returned.