Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW - [2010] NSWLEC 234

Reported Decision: 179 LGERA 47

Land and Environment Court

of New South Wales

CITATION: Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW (No 3) [2010] NSWLEC 234
This decision has been amended. Please see the end of the judgment for a list of the amendments.

PARTIES: APPLICANT
Vilro Pty Ltd (In Voluntary Liquidation)
RESPONDENT
Roads and Traffic Authority NSW

FILE NUMBER(S): 30369 of 2009

CORAM: Pain J

KEY ISSUES: COMPULSORY ACQUISITION OF LAND :- claim for market value and loss of value of residue land as a result of public purpose - before and after method of valuation encapsulates both - whether residue land landlocked as a result of acquisition - what expert advice would prudent hypothetical parties be likely to obtain on ecological matters at date of acquisition - whether residue land constrained for residential development due to ecological characteristics - whether events after date of acquisition can be considered - whether residue land would have been rezoned residential but for the public purpose

LEGISLATION CITED: Environment Protection and Biodiversity Conservation Act 1999 (Cth)
Environmental Planning and Assessment Act 1979 Part 5, s5A, s54, s70, s96, s112C
Hastings Local Environmental Plan 1987
Hastings Local Environmental Plan 2001
Land Acquisition (Just Terms Compensation) Act 1991 s3, s54, s55, s56, s59, s66
Native Vegetation Act 2003
Port Macquarie-Hastings (Area 13 Thrumster) Local Environmental Plan 2008
Roads Act 1993 s6, s10, s49, s68, s145
State Environmental Planning Policy No 44 - Koala Habitat Protection (SEPP 44)
Threatened Species Conservation Act 1995

CASES CITED: Adelaide Fruit & Produce Exchange Co Ltd v Adelaide City Corp (1961) 106 CLR 85
Bennett v Commissioner for Railways (1952) 12 The Valuer 169
Besmaw Pty Ltd v Sydney Water Corporation [2001] NSWLEC 15; (2001) 113 LGERA 246
Bowden v Housing Commission of NSW (1948) 17 LGR (NSW) 34
Brandi v Mingot (1976) 12 ALR 551
Caruana v Port Macquarie-Hastings Council [2007] NSWLEC 109
Commissioner of Highways v George Eblen Pty Limited (1975) 34 LGRA 207
Cook v Roads and Traffic Authority (NSW) [2007] NSWLEC 136
Davey v Minister for Agriculture (1979) (1) SA 466 (N)
Gilmour v The Crown (1981) 7 QLCR 160
Girlock (Sales) Pty Ltd v Hurrell [1982] HCA 15; (1982) 149 CLR 155
Holloway v McFeeters (1956) 94 CLR 470
Jones v Dunkel (1959) 101 CLR 298
Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547
Illawarra Local Aboriginal Land Council v Minister Administering the Crown Lands Act (No 2) [2010] NSWLEC 124
Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413
March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506
Minister Administering the Crown Lands Act v Illawarra Local Aboriginal Land Council [2009] NSWCA 289; (2009) 168 LGERA 71
Minister for Army v Parbury Henty & Co Pty Ltd (1945) 70 CLR 459
Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of NSW [2005] NSWLEC 467
Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of NSW [2006] NSWCA 314
Roads and Traffic Authority of NSW v Collex Pty Limited [2009] NSWCA 101; (2009) 165 LGERA 419
Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66
Serbian Cultural Club “St Sava” Inc & Serbian Cultural Club Limited v Roads and Traffic Authority of New South Wales [2007] NSWLEC 673
Spencer v the Commonwealth of Australia [1907] HCA 82; (1907) 5 CLR 418
Spicer v Valuer-General (1963) 10 LGRA 319
Toohey’s Limited v Housing Commission of NSW (1952) 20 LGR (NSW) 236
Turner v Minister of Public Instruction (1956) 95 CLR 245
Vickers v Minister for Business and Consumer Affairs & Ors (1982) 43 ALR 389
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259
Willis v Commonwealth (1946) 73 CLR 105

DATES OF HEARING: 26 August 2010
6 - 17 September 2010
25 October 2010

DATE OF JUDGMENT:
15 December 2010

LEGAL REPRESENTATIVES: APPLICANT
Mr T Hale SC with Mr R Beasley
SOLICITOR
Minter Ellison Lawyers
RESPONDENT
Mr P Tomasetti SC with Mr S Nash
SOLICITOR
Blake Dawson

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

15 December 2010

30369 of 2009 Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW
JUDGMENT

1 Her Honour: The Applicant Vilro Pty Ltd has lodged an objection to the amount of compensation offered following the compulsory acquisition of land it owns at Port Macquarie under s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (the JT Act). I thank Acting Commissioner Cowell for his assistance.

2 On 30 January 2009 the Roads and Traffic Authority NSW (the RTA) acquired a section of land owned by the Applicant, now lot 41 in DP 1094314 (the resumed land). Lot 41 was created by the subdivision of a larger lot of land, lot 3 in DP 826241, into lot 41 and lot 40. The resumed land was formally acquired by the RTA for the purposes of the Roads Act 1993. The purpose of the acquisition was the construction of a deviation to the Oxley Highway. The resumed land is situated 6.5 km from the town of Port Macquarie.

3 Lot 40 continues to be owned by the Applicant after the acquisition. Both the acquired land (lot 41) and lot 40 are shown in DP 1094314. The acquired land (lot 41) has an area of 16.08 ha running diagonally across lot 40 and severing the northern section of lot 40. Lot 40 has an area of 201.7 ha. The Applicant also owns land being lot 6 DP 1105610 (formerly lot 32 DP 809231) known as Maher’s Headland adjoining lots 40 and 41 to the east which is also the subject of the Applicant’s claim. It is referred to as lot 32 in this judgment. It is also the area of land the RTA argues has increased in value as a result of the public purpose.

4 The parties’ valuers took a different approach to the area which should be considered as residue land. The Applicant considered this was lot 40 only while the RTA considered this was lot 40 and lot 32. The area of the acquired and residue land, if lot 40 and lot 32, is 316.35 ha. The acquired land and the residue land are located to the south-west of the existing township of Port Macquarie, with rural and rural/residential land use characterising the immediate locality. At the date of acquisition, the acquired land was zoned rural 1(a1) under the Hastings Local Environmental Plan 2001 (the Hastings LEP 2001).

5 All of the land described in these proceedings has been owned by the Charley family since 1906. The Applicant became the registered proprietor of the land in 1967, and is a company controlled by members of the Charley family. For most of the period of ownership, the land has been used for the business of logging.

6 In the course of the hearing the Court conducted a view of the acquired and residue land and surrounds, and some of the comparable sales referred to by the valuers.

Compensation claimed

7 The Applicant claims compensation as follows:

(i) Market value of the acquired land: s 55(a)
$2,785,925

(ii) Injurious affection to claim areas A, B, C and D: s 55(f)

(a) claim A
(b) claims C and D
(c) claim B

$3,102,014
$4,381,651
$7,500

(iii) Injurious affection: noise barriers s 55(f)
$2,093,000

(iv) Disturbance: legal costs s 55(d), 59(a) (agreed)
$8,599

8 The RTA contends that the Applicant is entitled to nil compensation as follows:

Land Acquisition (Just Terms Compensation) Act 1991

9 Section 3 of the JT Act provides:

(1) The objects of this Act are:

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

(b) to ensure compensation on just terms for the owners of land that is acquired by an authority of the State when the land is not available for public sale, and

(c) to establish new procedures for the compulsory acquisition of land by authorities of the State to simplify and expedite the acquisition process, and

(d) to require an authority of the State to acquire land designated for acquisition for a public purpose where hardship is demonstrated, and

(e) to encourage the acquisition of land by agreement instead of compulsory process.

10 Section 54 “Entitlement to just compensation” provides:

(1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land.

…

11 Section 55 “Relevant matters to be considered in determining amount of compensation” 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,

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

(c) any loss attributable to severance,

(d) any loss attributable to disturbance,

(e) solatium,

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

12 Section 56 “Market value” provides:

(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.

13 Section 59 “Loss attributable to disturbance” provides:

In this Act:

loss attributable to disturbance

of land means any of the following:

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

14 The only disturbance claimed is legal costs and the amount of these is agreed.

The public purpose - Oxley Highway Upgrade (OHU)

15 The public purpose of the acquisition was under the Roads Act, in particular the construction of a new alignment of the Oxley Highway between Wrights Road and the Pacific Highway, west of Port Macquarie. The carrying out of the Oxley Highway upgrade (OHU) will result in the declassification of the old Oxley Highway so that it becomes part of the local road network and vested in the Hastings Council,

General valuation principles

16 The task before the Court as reflected in the s 56(1) JT Act definition of market value, is to ascertain the price that a hypothetical (willing but not anxious) buyer would have paid for land, and a hypothetical (willing but not anxious) seller would have accepted, as at the date of acquisition. Both parties to this transaction are “willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration”. Further, both parties are “perfectly acquainted with the land, and cognizant of all circumstances which might affect...[its] value”: Spencer v the Commonwealth of Australia [1907] HCA 82; (1907) 5 CLR 418 at 441 per Isaacs J; Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413 at [49]-[50] per McHugh J specifically adopted by the High Court in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259.

17 Market value of land is also to be valued according to its “highest and best use”: Turner v Minister of Public Instruction (1956) 95 CLR 245; Spicer v Valuer-General (1963) 10 LGRA 319. The Court will therefore approach the task of determining compensation in this matter by determining what was the “most profitable potential use” of the land.

18 The parties agree that the before and after method of compensation in this case captures compensation for market value under s 55(a) and under s 55(f) for the Applicant’s claim based on injurious affection. Under s 55(f) any increase or decrease in value of other land which adjoins or is severed from the acquired land as a result of the public purpose must be considered in determining compensation. The Applicant claims that both “the proposal to carry out the public purpose for which the land was acquired”, and “the carrying out of … the public purpose for which the land was acquired” have caused a decrease in the market value of both the residual and resumed land within the meaning of s 55(f) and s 56(1)(a) (as it informs s 55(a) of the JT Act) for which it must be compensated.

The residue land – claims A, B, C, D in lot 40

19 When the Applicant’s land was resumed lot 40 was created through which the acquired land for the OHU now runs. For the purposes of these compensation proceedings, part of the residue land in lot 40 has been divided by the Applicant into four claim areas designated as claims A, B, C and D. The acquisition has resulted in the severance of the northern residue land (claims A, B and C) from the southern much larger area of the Applicant’s land (lot 40) where claim D is located. Claim D is a relatively small part of the southern area of lot 40.

20 It is important to note that the claim areas A-D were drawn on a plan by an unidentified engineer. The basis for doing so was not explained in the evidence. Submissions were made by the Applicant’s counsel that the boundaries of the claim areas were intended to reflect physical changes in the topography and characteristics of the site, for example claim D was said to reflect where the southern portion of lot 40 started to become low lying and swampy. Without evidence about why the claim areas were chosen it is fair to describe these as artificial given that they lack any legal or physical definition beyond the plan provided by the Applicant.

21 The Applicant’s land in claims A, B, C and D is in the northern portion of its landholdings, closest to residential development, and the old Oxley Highway. The claim areas constitute 90.25 ha (including the resumed land) of a larger parent parcel (previously lot 3) of 217.8 ha, excluding Maher’s Headland: see exhibit F.

Claim A and resumed land

22 That part of lot 40 described in the points of claim as claim A is, after acquisition, an area of 9.20 ha. An area of 6.07 ha was (notionally) resumed by the RTA. Immediately to the south of this land is lot 32, which is zoned residential 2(a1), and is the site of the approved Maher’s Headland development consent.

23 The Applicant’s case is that but for the proposal (to upgrade the Oxley Highway by way of deviation through the Applicant’s land), the claim A land and adjoining resumed land would (like lot 32) also have been zoned residential 2(a1) at the date of acquisition, rather than being zoned rural. That change of zoning would have occurred, but for the public purpose, at the time of Amendment No 8 to the Hastings Local Environmental Plan 1987 (the Hastings LEP 1987) made on 8 September 1989 when the zoning of lot 32 was changed to residential. Alternatively, but for the proposal, the land would have been zoned for residential purposes sometime since the date of Amendment No 8, and prior to the date of acquisition. Instead, because of the proposal, the claim A land and adjoining resumed land are still zoned for rural purposes, which has caused a decrease in the value of that land.

24 In relation to both s 55(f) and s 56(1)(a) of the JT Act, the focus must be on decreases (or increases) in value caused by a particular proposal for acquisition: Walker Corporation at [52]-[56]. The relevant words of s 55(f) and s 56(1)(a) applicable to the Applicant’s case in relation to the decrease in value caused by the proposal (as they relate to claim A including the resumed land) are “by reason of the… proposal to carry out the public purpose for which the land was acquired”. Although the final route for the upgrade of the Oxley Highway was not chosen until 2003, the proposal to have part of the Highway upgrade running through the Applicant’s lands in the position finally chosen by the RTA has existed at least since the 1980s, and was identified on the map for Amendment No 8 to the Hastings LEP 1987. The proposal extends at least as far back as the time when it was first proposed to place a deviation of the Oxley Highway over the Applicant’s land, and the proposal has been maintained until the time that the final route was confirmed and the acquisition made.

25 The parties have called expert planners to give evidence as to what effect the proposal has had on the residential development potential of the Applicant’s land. Their evidence is discussed below.

Claim B

26 After acquisition claim B is 5.47 ha from which 1.45 ha was (notionally) resumed for the OHU. It is common ground that the land in claim B is low lying and constrained from development. Nominal compensation is sought in relation to claim B.

Claim C and resumed land

27 After acquisition claim C is 43.2 ha from which (notionally) 8.56 ha was resumed for the OHU.

Claim D

28 Claim D is in the southern section of Lot 40. The southern boundary of claim D is below the line of the boundary of the floodplain which extends in a west-east direction: exhibit H. Claim D is 16.3 ha. The parties agree that for the purposes of these proceedings the floodplain map of the Council in evidence shows that 70-80 per cent of claim D is subject to 1:100 flooding. None of the acquired land was taken from claim D. It is common ground that the land south of claim D in the remainder of lot 40 is not affected by the acquisition and is not the subject of this claim.

29 Claim areas C and D are accepted by the Applicant as being zoned rural at the date of acquisition in the before and after scenario. It submits that compensation should be assessed in the after scenario on the basis these areas have potential for rezoning for residential development in the near future.

Whether events after the date of acquisition can be taken into account?

30 The issue of whether matters after the date of acquisition can be taken into account in relation to what a hypothetical vendor and purchaser would consider as at the date of acquisition arose in relation to several matters raised, the most substantial of which is whether the claim areas A, B and C became landlocked as a result of the acquisition.

Applicant’s submissions

31 The Applicant argued that events after the date of acquisition should be ignored except in very limited circumstances where these confirm a foresight, as held in Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547 at 557-558. In the present case the hypothetical purchaser would only know what was contained in the OHU Review of Environmental Factors (REF) at the date of acquisition. Subsequent events might be relied upon to confirm the foresight that at some future time some arrangement of some description might be forthcoming. Subsequent events can do no more than confirm this and cannot be relied upon to establish the nature of any arrangement.

Respondent’s submissions

32 The RTA argued that authorities suggested matters after the date of acquisition could be taken into account and also relied on s 54 of the JT Act as supportive of this submission. The Applicant’s approach is wrong in law and valuation principle. In Willis v Commonwealth (1946) 73 CLR 105 at [116] (per Dixon J), Bowden v Housing Commission of NSW (1948) 17 LGR (NSW) 34, Bennett v Commissioner for Railways (1952) 12 The Valuer 169 at 172 (per Sugerman J), Toohey’s Limited v Housing Commission of NSW (1952) 20 LGR (NSW) 236 at [240] (per Sugerman J), Adelaide Fruit & Produce Exchange Co Ltd v Adelaide City Corp (1961) 106 CLR 85 at [90], Gilmour v The Crown (1981) 7 QLCR 160 at [165], Commissioner of Highways v George Eblen Pty Limited (1975) 34 LGRA 207 at [216] (per Wells J) and Falconer at 558 (per Hope JA), it has been variously said that the Court may take into account events subsequent to the date of acquisition in determining compensation.

33 More recently, in Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66, Beazley and Tobias JJA held, in respect of the admissibility of expert noise evidence which was formulated upon material that was not available at the date of acquisition of the acquired land, at [14] and [15]:

14 … The underlying objection to this evidence was that it related to events which post-dated the date of acquisition.

15 As Basten JA points out at [128] of his reasons, the procedure at trial in Class 3 proceedings is governed by s.38 of the Land and Environment Court Act. In particular, the Court is not bound by the rules of evidence and may inform itself on any matter in such manner as it thinks appropriate. The availability of a challenge on the basis of error of law in such issues will inevitably be limited and is most likely to be on the basis that an irrelevant consideration was taken into account, or that there was some denial of procedural fairness. The latter has not been suggested in this case.

34 In light of the “just terms” override in s 54 of the JT Act, and the case authorities referred to above, the Court may and will have regard to events occurring after 30 January 2009 (the date of acquisition) insofar as they concern questions of access to the Applicant’s land, inter alia.

Finding

35 The JT Act 1991 is the statutory framework under which compensation is awarded in compulsory acquisition of land for public purposes. The terms of the statute define how compensation is calculated. Section 55(a) refers to the calculation of market value of land at the date of its acquisition as do other parts of s 55. Section 56 sets out how market value is to be calculated at the time of acquisition. The focus of evidence in compulsory acquisition cases is what would be reasonably known to a prudent hypothetical purchaser and vendor at the date of acquisition. The requirement in s 54 to award just compensation does not override the clear wording in s 55. The issue of whether events after the date of acquisition can be considered has arisen in numerous cases in this Court.

36 Falconer is often referred to on this issue where Hope JA held that events after the date of acquisition which confirm a foresight can be considered, at 558 (noting that case also predates the JT Act but continues to be a useful authority).

37 The RTA referred to numerous authorities as identified in par 32 above. All predate the JT Act 1991, and not all concern compulsory acquisition in any event. They are not relevant authorities in this statutory context and do not support the RTA’s broad submission that events after the date of acquisition should be considered.

38 The RTA’s reliance on [14]-[15] in Peak on this issue is misplaced as there the Court of Appeal was considering what kind of expert advice the hypothetical purchaser would be likely to have access to, which involves the Court considering material prepared by experts after the event. That is a different circumstance to whether certain events after the date of acquisition ought be considered as able to be taken into account by a hypothetical purchaser. The authorities otherwise relied on by the RTA do not support the liberal approach it urges to considering events after the date of acquisition. The consideration of events after the date of acquisition is limited in the statutory framework of the JT Act.

39 The decision of Hope JA in Falconer was recently considered by the Court of Appeal in Minister Administering the Crown Lands Act v Illawarra Local Aboriginal Land Council [2009] NSWCA 289; (2009) 168 LGERA 71, an appeal against the refusal of a claim for Crown land under the Aboriginal Land Rights Act 1983. Basten JA discussed Falconer in relation to the consideration of post claim material after the Minister’s decision refusing a land claim. He found at [80] that Hope JA was distinguishing in Falconer between evidence relating to a foresight and that constituting merely a hindsight. He further observed that the question to be addressed at the date of claim is inherently speculative and that the use of future events must be subject to reasonable time constraints ([77]-[78]).

40 While Basten JA was in the minority in the appeal, as observed on the remitter hearing by Sheahan J in Illawarra Local Aboriginal Land Council v Minister Administering the Crown Lands Act (No 2) [2010] NSWLEC 124 at [19] he usefully traces the evolution of the principle in Falconer, particularly in light of the circumstances of that case. Sheahan J set out the judgment of Hope JA from 558-559 and emphasised the finding that events after the date of acquisition can be looked at as confirmation of what a hypothetical purchaser properly advised at the time of resumption would have foreseen. Sheahan J also referred to Glass JA in Falconer at 563F stating that in relation to market value inter alia, events after the date of acquisition are irrelevant except to the extent that they provide some evidence of what was foreseeable by the owner in calculating what he would have accepted or offered at the time of resumption; Minister for Army v Parbury Henty & Co Pty Ltd (1945) 70 CLR 459. This authority confirms the limitations placed on considering events after the date of acquisition.

41 My finding will need to be applied in relation to whether a prudent hypothetical purchaser should be presumed to have knowledge of the statements of Mr Nash which referred to negotiations for access with one of the directors of the Applicant after the date of acquisition (considered in relation to access at par 191-194 below); the grant of development consent for residential subdivision in Maher’s Headland in December 2009 after the date of acquisition which had as a condition of consent that a roundabout was required at the intersection of Philip Charley Drive; and a subsequent application by the Applicant under s 96 of the Environmental Planning and Assessment Act 1979 (the EP&A Act) for an extension of the time for the completion of the Maher’s Headland subdivision development from 10 to 15 years (considered at par 61 below).

Knowledge attributed to hypothetical vendor/purchaser

42 Whether expert evidence would be obtained by parties seeking to test market value is a question of fact; Cook v Roads and Traffic Authority (NSW) [2007] NSWLEC 136 at [12]-[13]. Given the large area of the potential redevelopment on the residue land the Court considers it is likely that the parties would obtain expert evidence. The issue remains what kind of expert evidence would the hypothetical purchasers obtain and the level of detail that is likely to contain.

43 Before considering the substantial further expert evidence placed before the Court it is useful to reflect on the Spencer test concerning the knowledge of matters that might affect the value of land which must be attributed to the hypothetical parties, also as reflected in the opening words of s 56(1). Spencer refers to both being “perfectly acquainted with the land, and cognizant of all circumstances which might affect its value” per Isaacs J at 441. The Applicant referred to the need for there to be a realistic and practical interpretation of the fully informed hypothetical parties, per Davey v Minister for Agriculture (1979) (1) SA 466 (N) to support a submission that the evidence of the RTA in the proceedings was more detailed than prudent hypothetical parties would obtain. The RTA submitted that the parties to the hypothetical sale must be “perfectly informed” suggesting its reliance on four experts on flora, fauna, koalas and soil was justifiable in the context of these proceedings.

Planning issues/advice to hypothetical purchaser/vendor

44 The Applicant submits that the planning and development history of the acquired and residue land and other land owned by it is relevant to its claim. The Applicant owns and (owned) land in an area known as Mill Hill which adjoins Maher’s Headland to the east.

45 The chronology below identifies the planning history and instruments of the general locality, Mill Hill, Maher’s Headland and the resumed land and residue land the subject of this claim. Area 13 Thrumster surrounds the Applicant’s land on the northern and western boundaries.

Date	Description
1906	Charley family acquire the “Original Holdings” lands described in the applicant’s points of claim
1946 to 1963	Logging of the lands conducted by NG Charley Pty Ltd
1969	Ten year logging licence sold to Roy McMillan and Son (later acquired by Herons Creek Pty Ltd)
1980’s to date	Logging carried out by K Cooper and Sons, and various other mills
1967	The Applicant (Vilro) becomes the owner of all relevant land (the subject land)
26 May 1967	Gazettal of Interim Development Order No. 1 – Shire of Hastings. Subject land zoned non-urban A and partly non-urban B
September 1983	Hastings Coastal Development Strategy and Residential Release Program
1986	Upgrade for Oxley Highway with new alignment through Vilro’s lands first proposed
2 October 1987	Gazettal of Hastings LEP 1987. Subject land zoned as rural 1(a1). This is still the zoning for lot 40 DP 1094314 (previously part of lot 3 DP 8262421) and lot 41 DP 1094314 (the acquired land for the purposes of the Oxley Highway upgrade) Subdivision limited to 40ha – cl 14
15 January 1988	Gazettal of North Coast Regional Environmental Plan
15 June 1988	Development application (DA) No 248/88 lodged by Charley Brothers (for Vilro) for 231 residential allotments plus golf course (part of the “Mill Hill” residential development and golf course).
28 September 1988	Vilro’s DA No 248/88 for “231 residential allotments, golf course and residue allotments” approved by Hastings Council for “lot 5 and subdivision of lot 3, DP 630179; lot 1 DP 589082; lot 11, DP 255991; lot 1, DP 256447, Oxley Highway, Port Macquarie” (Mill Hill residential development and golf course).
8 September 1989	Lot 32 in DP 809231 (now lot 6 DP 1105610) rezoned from rural to residential 2(a1) under Amendment No 8 to the Hastings LEP 1987. Map for Amendment No 8 shows “Proposed Arterial Road”.
4 April 1989	Department of Planning letter re rezoning of lot 32.
8 May 1990	Lot 3 DP 630179 subdivided (in accordance with DA No 89/368) in conjunction with lot 1 DP 589082 and lot 1 DP 256447 to create: o lot 1 DP 801087 o lot 2 DP 801087 (contains recent Maher’s Headland residential subdivision (see below)) o lot 3 DP 801087 (north-western corner of Vilro land holdings, now part lot 41 DP 1094314)
8 February 1991	Hastings Council amends DA 248/88 (Mill Hill residential development and golf course).
16 April 1991	Lot 2 and 3 DP 801087 subdivided (in accordance with DA No 89/561) to create: o Lot 31 DP 809231 o Lot 32 DP 809231 (contains Maher’s Headland residential subdivision) Lot 33 DP 809231 (north-western corner of Vilro land holdings) The purpose of the subdivisions was to create lot 31 DP 809231 which the National Parks and Wildlife Service had shown interest in acquiring for addition to the Lake Innes Nature Reserve.
18 March 1992	Hastings Council amends DA 248/88 (Mill Hill residential development plus golf course).
30 April 1992	Hastings Council amends DA 248/88 to approve, inter alia, 247 residential allotments in lieu of 231 (Mill Hill residential development plus golf course).
13 November 1992	Lot 3 DP 813808 subdivided into: o Lot 1 DP 826241 o Lot 2 DP 826241 Lot 3 DP 826241 (north-western corner of Vilro land holdings)
1995	North Coast Urban Planning Strategy: Into the 21^st Century
15 December 1995	Hastings Council amends DA No 248/88 to approve 233 residential allotments (Mill Hill residential development plus golf course).
8 April 1998	Hastings Council amends DA No 248/88 to approve 250 residential allotments in lieu of 233 (Mill Hill residential development plus golf course).
11 March 1999	Hastings Council amends DA 248/88 to approve, inter alia, 251 residential allotments (Mill Hill residential development plus golf course).
17 July 2000	DA 1999/0775 part lot 238 DP 1009629, 94 lot residential subdivision
30 August 2001	Hastings Urban Growth Strategy 2001 (“HUGS”) adopted by the Director-General of Department of Urban Affairs and Planning (Draft endorsed by Hastings Council on 25 October 1999, and HUGS adopted by Council on 30 October 2000). Subject land identified as an “Urban Investigation Area” – Map 4 – Area 13, page 16
8 June 2001	Gazettal of Hastings LEP 2001.
15 May 2002	Hastings Council amends DA No.248/88 to approve, inter alia, 254 residential allotments (Mill Hill residential development plus golf course).
23 August 2002	Commitment for upgrade of Oxley Highway announced by Minister for Roads
7 October 2003	Final route of Oxley Highway upgrade announced (nearly identical to original route proposed in 1986 with adjustments at western area)
September 2004	Review of Environmental Factors (REF) for Oxley Highway upgrade
2005	Area 13 – Structure Plan and Local Environmental Study 2005
March 2005	Revised decision report for Oxley Highway
1 August 2005	Development application 2005/547 lodged by Vilro for “a 291 lot residential subdivision (plus residue lot) and associated infrastructure” on lot 6 DP 1105610 (then lot 32 DP 809231), lot 31 DP 809231 and lot 40 DP 1094314 (the “Maher’s Headland residential subdivision”)
September 2005	Area 13 Thrumster Water Cycle Management report for Council
March 2006	Biolink study for Local Environmental Study Area 13 Urban Investigation Area
Draft Area 13 KPoM
May 2006	Revised draft Area 13 Thrumster Local Environmental Study
December 2006	Draft North Coast Regional Strategy
May 2007	Area 13 and Sancrox Traffic Study Final Report
February 2008	Koala Plan of Management (KPoM) for Maher’s Headland residential subdivision submitted to Department of Planning.
6 March 2008	Department of Planning grants conditional approval under Clause 13 of State Environmental Planning Policy (SEPP) 44 to the KPoM for the Maher’s Headland residential subdivision – see letter from Department of Planning to Port Macquarie Hastings Council dated 6 March 2008.
12 June 2008	Area 13 Thrumster DCP approved by the Council pt 1-4
22 October 2008	DCP Area 13 Thrumster North Oxley Neighbourhood adopted
10 November 2008	Lot 6 in DP 1105610 created. The majority of lot 6 was lot 32 in DP 809231 except for a strip of land containing a powerline easement which has been acquired by Council.
24 December 2008	Gazettal of Port-Macquarie-Hastings (Area 13 Thrumster) LEP 2008
30 January 2009	Gazettal of date of Acquisition. Lot 41 in DP 1094313 (zoned rural 1(a1)) created for the proposed Oxley Highway upgrade.
March 2009	Mid North Coast Regional Strategy published. Subject land identified for future urban release – see Growth Map 7, page 56
9 March 2009	RTA s 42 Compensation notice to Vilro offering compensation in the sum of $3,888,500.00
9 June 2009	Class 3 Application filed
19 October 2009	Final draft KPoM conditionally approved by the Department of Planning for the Maher’s Headland residential subdivision – see letter Department of Planning to Port Macquarie-Hastings Council dated 19 October 2009.
16 December 2009	Development consent granted by the Port Macquarie Hastings Council to DA No 547/2005 for the Maher’s Headland residential subdivision for a “291 Lot Residential Subdivision (plus Residue Lot) and Associated Infrastructure”, to be carried out in accordance with, inter alia, a KPoM dated July 2009 and an Ecological Assessment dated April 2006 (and amended as at 2 September 2009)
3 June 2010	Hastings Council approves s 96(1A) amendment to DA 547/2005 (Maher’s Headland residential subdivision)
29 July 2010	Draft Port Macquarie-Hastings Urban Growth Management Strategy

46 The chronology refers to four processes referred to in the evidence and submissions, namely:

(i) Planning instruments

(a) Hastings Urban Growth Strategy 2001 (HUGS) (exhibit A vol 2 tab 15)

47 On 30 October 2000, Hastings Council resolved to adopt the Hastings Urban Growth Strategy (HUGS) and referred the document to the Department of Urban Affairs and Planning for endorsement. The primary purpose of HUGS is to outline expected future urban development in the Hastings Area, and how this development will occur and be serviced. At par B2 of the foreword to HUGS (exhibit A p 551) it states that at a meeting on 28 May 2001 the Council resolved:

That a statement and map be incorporated in the document to the effect that the land which has been excluded from the modified HUGS 2001 (ie Vilro Pty Ltd land south of the Oxley Highway realignment and a small section of land owned by Lewis/Wilson at Bonny Hills) can be reconsidered for inclusion within the HUGS Strategy at a later point in time, subject to the owners undertaking appropriate environmental studies which demonstrates, to the satisfaction of the Department of Urban Affairs and Planning, that the land is not constrained for urban development.

48 The Director-General of the Department of Urban Affairs and Planning endorsed HUGS 2001 on 30 August 2001.

49 HUGS identifies that the Hastings area has experienced rapid population growth since the late 1960’s particularly focussed in Port Macquarie (exhibit A p 555) with an expectation of continued population growth with a need to explore opportunities for increased housing densities. Usable residential land reserves excludes land which, from preliminary analysis, appears to have constraints which may prevent urban development, such as indications of core koala habitat, threatened species, or flood risk (exhibit A p 555, 558). The Thrumster locality (Area 13) is one of three areas which will accommodate the bulk of population growth due to proximity and access to Port Macquarie, largely clear of major physical constraints (noting the northern boundary is in the 1:100 year flood line), and allows space for compact urban areas and other non-residential land uses (exhibit A p 558). HUGS identifies the medium projection for the future growth for Area 13 to 2021 at a constant 12 dwellings/ha (exhibit A p 571). Some infrastructure limitations, particularly regarding water supply and waste water/sewage capacities, are identified for Area 13 (exhibit A p 559-560)

(b) Hastings LEP 2001

50 The Hastings Local Environmental Plan 2001 (the LEP) applies to all land in the Hastings local government area, except land identified on the zoning map as deferred. It provides the zoning objectives for rural zone 1(a1) and various residential zone 2 classifications. Clause 25(2)(a) states that flood liable land is land likely to be inundated in the 1:100 year flood, as identified on mapping held in the office of the Council. The Applicant’s land is zoned rural 1(a1) under the LEP. Lot 32 adjoining the subject land was rezoned residential 2(a1) by Amendment No 8 of the earlier LEP 1987.

(c) Area 13 Thrumster Structure Plan and Local Environmental Study 2005

51 Following HUGS, the Area 13 Thrumster Structure Plan and Local Environmental Study 2005 was drafted using the urban investigation area identified in HUGS (that is, Area 13). This document was amended to become the Revised draft Area 13 Thrumster Local Environmental Study.

(d) Revised draft Area 13 Thrumster Local Environmental Study March 2006 (Thrumster LES)

52 The purpose of the revised Thrumster LES is to provide a comprehensive understanding of the site and its environmental capacity to accommodate future urban growth (exhibit A p 671). It is the culmination of background reports and studies variously commissioned for the Area 13 urban investigation area and is intended as a comprehensive analysis of the constraints and opportunities presented by the investigation area to establish a sustainable urban community (exhibit A p 671). The requirements of a KPoM developed by Dr Stephen Phillips of Biolink Pty Ltd were taken into account in the development of the Thrumster LES and Structure Plan (exhibit A p 675). The Thrumster LES concludes with a table identifying constraints and opportunities for the entirety of Area 13. The environmental constraints include koala habitat protection, waterway and drainage corridors, wildlife corridor linkages, noise (proposed motorway and airport), endangered ecological communities, and old growth trees (exhibit A p 728).

(e) Area 13 and Sancrox Traffic Study Final Report May 2007

53 The Area 13 and Sancrox Traffic Study Final Report (May 2007) was commissioned by the Council and included Area 13 and land to the west known as Sancrox. The project was undertaken to enable Council and the RTA to make informed decisions in relation to the development of the road network for the study area. Figure 1.1 is the proposed traffic network plan and shows the Sancrox future rural residential area with existing and planned new roads. The Applicant’s land is also shown. Future road networks have been developed for the next 30 years. The existing road network and the new road network planned for 2026 is shown. A road running along the northern boundary of the Applicant’s land is shown. A connector road running down the western boundary of the Applicant’s land is also shown.

(f) Area 13 Thrumster Development Control Plan 2008 Parts 1-4 General Provisions

54 The Area 13 Thrumster Development Control Plan (the Thrumster DCP) was adopted by Port Macquarie-Hastings Council on 12 June 2008 and came into effect upon gazettal on 24 December 2008 (exhibit 8 p 294). The Thrumster DCP applies to the land identified in map 1.1 (at exhibit 8 p 291) and excludes the subject land. It identifies that Area 13 will play a major role in accommodating projected urban growth in the Port Macquarie-Hastings local government area over the next two decades creating a new inland coastal township (exhibit 8 p 296). Part 3 of the Thrumster DCP identifies five residential and one business neighbourhood that comprise the Thrumster area. Paragraph 3.1 – 3.2 provide for the preparation and content of neighbourhood DCPs to establish a clear implementation strategy of the delivery of all major infrastructure that requires coordination to provide for development in that neighbourhood. Paragraph 4.4.2 identifies objectives and development criteria to be adopted in the individual neighbourhood DCPs (exhibit 8 p 324). The relevant development criteria provides standards for arterial roads, collector roads (neighbourhood avenues) and perimeter roads. Paragraph 4.5.1 of the Thrumster DCP provides the target dwelling and population yield for the area, identifying the target yields/ha in medium density residential subdivisions.

(g) Area 13 Thrumster DCP Part 5 North Oxley Neighbourhood

55 As foreshadowed in par 4.4.2 of the Thrumster DCP, the Area 13 Thrumster DCP Part 5 North Oxley Neighbourhood DCP was adopted by the Council on 22 October 2008. This area is immediately to the north of the Applicant’s land. Although drafted as a separate document, it is part of the structural framework of the Thrumster DCP and came into effect at the same time that instrument was gazetted (24 December 2008). The Oxley Neighbourhood DCP relates to the whole of the land identified as North Oxley Neighbourhood in the Thrumster DCP. It identifies environmental management principles specific to core koala habitat (exhibit 8 tab 8 p 9) and potential koala habitat (exhibit 8 tab 8 p 10) as required by the Thrumster DCP (at exhibit 8 p 308-309 indicating koala habitat and habitat corridors). It also includes a section on connectivity and street networks relevant to the neighbourhood, and provides an indicative street hierarchy relative to the planned Oxley Highway deviation (exhibit 8 tab 8 p 27-28) following the development requirements in the Thrumster DCP. Map 5.4.1 shows a collector road on the northern boundary of the Applicant’s land as well as other neighbourhood avenues across the neighbourhood.

(h) Port Macquarie-Hastings (Area 13 Thrumster) Local Environmental Plan 2008

56 The Port Macquarie-Hastings (Area 13 Thrumster) Local Environment Plan 2008 was published in the government gazette on 24 December 2008. The land zoning map (exhibit U) for the Area 13 Thrumster LEP includes land immediately adjacent to the north and west of the Applicant’s land. Predominantly, the Area 13 land at the boundary of the Applicant’s land is zoned general residential with some pockets zoned environmental conservation.

(i) Mid North Coast Regional Strategy (Draft)

57 A draft Mid North Coast Regional Strategy was released in December 2006 for public display (prior to the date of acquisition). Notice of the proposed Oxley Highway upgrade was provided in this draft document. The Applicant’s town planning expert contends that the release of this draft document provides confirmation of the future rezoning potential and proposed future urban release areas.

(j) Mid North Coast Regional Strategy 2009

58 The Mid North Coast Regional Strategy 2006-2031 was published by the NSW Department of Planning in March 2009. It identifies the environmental challenges for the entire region as the protection and enhancement of environmental assets, including biodiversity, wetlands, littoral rainforest, threatened species habitat, estuaries and landscape values (exhibit K p 142). It also identifies the mid north coast as one of the faster population growth regions of NSW (exhibit K p 142). The legend to the Regional Strategy Map (exhibit K p 148) states that new urban release areas will be developed at Thrumster and Bonny Hills.

(ii) The Mill Hill residential development and golf course

59 Mill Hill is an area approximately 1.5 km east of the land subject of these proceedings. DA No 248/88 for subdivision to provide for 231 residential allotments, golf course and residue allotments was approved by Hastings Council on 28 September 1988. Successive amendments to the approval of DA No 248/88 on 8 February 1991, 18 March 1992, 30 April 1992, 15 December 1995, 8 April 1998, 11 March 1999 and 15 May 2002 allow for subdivision of 254 residential allotments.

(iii) The Maher’s Headland rezoning and development

60 Maher’s Headland is approximately 320 ha described as lot 32 DP 809231 (now lot 6 DP 1105610 created 10 November 2008) located immediately to the south and abutting the residue land and the acquired land. It is accessed via Philip Charley Drive and has a northern boundary aligned with the proposed highway upgrade and a southern boundary adjacent to the Lake Innes Nature Reserve. It was rezoned on 8 September 1989 from rural to residential 2(a1) under Amendment No 8 to the Hastings LEP 1987 (see LEP map at exhibit A vol 2 p 547).

61 Development application 2005/547 was lodged on behalf of the Applicant on 1 August 2005 for part of lot 32, approximately 42 ha, for a 291 residential lot subdivision (plus residue lot) and associated infrastructure. The Department of Planning granted conditional approval under cl 13 of State Environmental Planning Policy No 44 - Koala Habitat Protection (SEPP 44) to the draft Maher’s Headland KPoM (the Maher’s KPoM) (see exhibit K p 1-39) on 6 March 2008. The Council granted development consent on 16 December 2009 (after the date of acquisition) with the completion period of ten years specified in the conditions of consent. The site is predominantly comprised of underscrubbed dry schlerophyll forest, and has historically been used for agriculture and forestry (see Council development assessment panel background notes 16 December 2009: exhibit K p 251-252). On 3 June 2010 (also after the date of acquisition) the Council granted a modification to DA 2005/547 following an application under s 96(1A) of the EP&A Act providing, inter alia, that the development be completed within fifteen years from commencement of works (see exhibit K p 297). In light of my finding above in relation to the limited circumstances in which events after the date of acquisition can be considered the grant of development consent subject to various conditions and the modification of the consent to allow completion within 15 years rather than 10 years are not matters about which a prudent hypothetical purchaser could be presumed to have knowledge or advice.

(iv) Oxley Highway upgrade (the OHU)

62 The upgrade of the Oxley Highway between Wrights Road and the Pacific Highway was announced by the Minister for Roads in August 2002. The REF was published in September 2004 and examined the environmental impact of the highway proposal incorporating the preferred corridor and a detailed concept plan. The approval for the public purpose is dated April 2006 (REF Approval). The REF Approval decision report was approved by the General Manager of RTA Network Development on 18 April 2006, with concurrence from the Director-General of the Department of Environment and Conservation on 3 March 2006 pursuant to s 112C of the EP&A Act.

63 The proposal as defined in the REF and the REF Approval generally represents the final detail of the public works which comprise the public purpose. There have been some minor modifications to the public purpose since the REF Approval. The RTA’s valuation report (exhibit 6) refers to advice from Mr Nash, Project Engineer with the RTA, that the OHU now incorporates two twin bridges a short distance west of the Applicant’s land. The date of that change is not given.

Planners’ evidence

64 The Applicants relied on the expert planning evidence of Ms Michelle Hollis. The RTA relied on the expert planning evidence of Mr Harvey Sanders. Ms Hollis prepared an expert planning report dated 4 March 2010 and tendered as exhibit B. In her report she relies predominantly on the relevant LEPs, the HUGS document, and the Mid North Coast Regional Strategy (2009). Mr Sanders prepared an expert planning report dated March 2010 and tendered as exhibit 1. In his report he predominantly relies on the planning instruments and documents detailed above at par 47-53 and par 56-58. There is no direct reference by either planning expert to the two Thrumster/North Oxley Neighbourhood DCPs. A joint expert planners report dated 15 April 2010 was prepared by Ms Hollis and Mr Sanders and tendered as exhibit C. The planners also gave oral evidence during the hearing.

65 Ms Hollis’ report includes the plans lodged for the Mill Hill development in DA 248/88 (fig 9 and 10 at p 29-30 of exhibit B). The plans show Maher’s Headland as residential and future residential tourist accommodation and recreation. A golf course is shown as connecting the Mill Hill and Maher’s Headland proposed development areas.

66 The planning experts agreed that at the date of acquisition, the subject lands were zoned rural 1(a1) under the Hastings LEP 2001. It was also agreed that major urban expansion of the regional centre of Port Macquarie could only occur to the west which includes the Thrumster area adjoining the acquired land. The draft Mid North Coast Regional Strategy was released in January 2006, and the final document was published in March 2009. The western urban release area was identified by the Council as Area 13 (Thrumster).

67 The planning experts disagreed on whether the western urban expansion of Port Macquarie would have occurred without the public purpose. Mr Sanders contends that absent the proposed highway deviation there would have been no residential rezoning of lot 32 (Maher’s Headland) and the entire parcel of the Applicant’s land, including the land subject of this claim, would have remained rural 1(a1). Mr Sanders opines that the Applicant’s land has enjoyed betterment as a result of the highway upgrade, and that the amount of betterment exceeds all other heads of compensation claimed by the Applicant.

68 Ms Hollis contends that progressive release of urban land west from the Port Macquarie urban centre has been planned by the Council for some decades. Regardless of the public purpose the strategic planning for the locality would have provided for the Area 13 Thrumster urban release area. She opines that absent the highway upgrade the entire parcel of the Applicant’s land would be capable of residential rezoning, with concomitant increased development potential.

69 During concurrent oral evidence the expert planners were provided with a list of agreed questions to enable consideration of the areas of disagreement in the joint report.

(i) Whether the area of land identified as claim A in the Applicant’s points of claim would have been re-zoned residential 2(a1) on or about 8 September 1989 under Amendment No 8 to the Hastings LEP 1987, or at some other time prior to the date of acquisition, but for the proposed Oxley Highway deviation

70 Ms Hollis considered that but for the highway deviation, the land in claim A would have been rezoned residential 2(a1) and would have been included in Amendment No 8 of the Hastings LEP. Such a rezoning would be consistent with the planning intentions for residential expansion of Port Macquarie in a westerly direction, and any existing rezoning activities near the Applicant’s land holdings were the result of the same westerly urban expansion and not the result of RTA road infrastructure decisions (TS 26.08.10 p 32-33).

71 In cross-examination (TS 26.08.10 p 52 L 41 to p 53 L 16) Ms Hollis stated she did not make enquiries of the Applicant regarding the location of the north-western boundary at the time of the rezoning in 1989.

72 Mr Sanders stated that claim A would have still been zoned for rural 1(a1) purposes as at the date of acquisition absent the proposed Oxley Highway deviation, and that he has seen no evidence that it would have been otherwise. Mr Sanders opined that the entire area was sufficiently remote from the then built up areas of Port Macquarie. As there would have been no residential rezoning without the road in relation to the land to the south of the alignment, therefore it follows that there would have been no residential rezoning on claim A (TS 26.08.10 p 33, 35). He agreed in cross-examination that there was no geographic or environmental feature of the claim A area which would warrant the boundary being identified in the zoning plan.

(ii) Whether lot 32 in DP809331 (now lot 6 in DP1105610) would have remained zoned as rural 1(a1) under the Hastings LEP 1987, instead of being rezoned residential 2(a1) under Amendment No 8 on 8 September 1989, but for the proposed Oxley Highway deviation

73 In Mr Sanders’ opinion lot 32 was only able to be rezoned from rural 1(a1) to residential 2(a1) by reason of the proposal to carry out the public purpose as the realignment meant the authorities would be satisfied that existing road congestion in the locality would be relieved in due course. This opinion was supported by the Hastings Coastal Development Strategy (September 1983) which refers to the substandard roads in Port Macquarie requiring improvement and realignment to support continuing urban development (see exhibit A vol 1 p 421, particularly par 5.2(iii)). He also considered the site was isolated in 1989 from other developed areas of Port Macquarie.

74 Ms Hollis did not agree with Mr Sanders and considered that the rezoning of Maher’s Headland was justified on town planning grounds, regardless of the proposal to carry out the public purpose, because of the westward expansion of Port Macquarie. The need to expand residential development westward is emphasised in the Council’s planning instruments.

(iii) What the zoning/development potential of the lands identified as claims B to D in the Applicant’s points of claim would have been at the date of acquisition but for the proposed Oxley Highway deviation

75 Ms Hollis stated that at the date of acquisition the land had been identified in HUGS as part of a future residential area. HUGS identifies high growth in Port Macquarie, that Port Macquarie is a major centre and that the Hastings area will be accommodating additional urban release areas. All these things point to the fact that the Council is open to additional urban release areas, and on this basis Ms Hollis stated that there was significant potential for rezoning and development of the land in claims B, C and D (TS 26.08.10 p 78, 96). In oral evidence she was cross-examined about whether any application for rezoning of the claim areas supported by environmental investigations had been made to the Council by the Applicant. She was unaware of any such application being made.

76 She considered claims A to D were landlocked as a result of the acquisition which was a significant impediment to their development for residential purposes as the land would not be rezoned without access to a public road.

77 Mr Sanders stated that the zoning of the entire land holding would be no different from what it was, and that is rural 1(a1). He maintained that rezoning of that land was not pursued because it needed further ecological investigations. No such further ecological investigations were undertaken by the land owners (TS 26.08.10 p 63). Further, even if the land were to be rezoned it would have very low potential for development due to environmental constraints (TS 26.08.10 p 64). Areas C and D would not be landlocked given the development process in the adjoining Thrumster Area 13 if the land is zoned residential in the future. A prudent hypothetical purchaser would assume that council planning would provide for future access to the land via an integrated road network, an approach commonly undertaken in new release areas.

(iv) What is the potential lot yield for the claim A to D lands were they to be developed for residential purposes

78 Ms Hollis stated in her report (exhibit B) par 98 (TS 26.08.10 p 113-114) that claim A has the potential for 10 lots/ha in Maher’s Headland (excluding the golf course land). She applied the same lot layout as approved on Maher’s Headland on claim A (p 40 exhibit B). This yield includes provision for roads, drainage reserves and setbacks for such issues as bushfire asset protection zones and also habitat corridors but not the golf course land. At par 99 to 102 of her report Ms Hollis identifies that low density residential development could be considered to yield 7 lots/ha in claims C and D.

79 Mr Sanders stated that in the event that the claim A area had potential for urban development it would have the potential development density of 7 lots/ha reflecting its environmental constraints. Insofar as claims C and D are concerned it would be a much lower density, maybe in the order of 4 or 5 lots/ha (TS 26.08.10 p 91).

Applicant’s submissions
(i) Claim A- likelihood of residential rezoning in 1989?

80 The Applicant argues in relation to claim A, including the resumed land, that the proposal has caused a large decrease in the market value of that land because rather than being zoned rural at the date of acquisition, it would have been zoned residential. At the date of acquisition, it would have been seen by prudent parties to a hypothetical sale as having potential for a further 152 lot residential development (discussed below) as a continuation of the approved Maher’s Headland subdivision.

81 The Applicant submitted that there did not appear to be any other reason, but for the Oxley Highway deviation, which would have prevented rezoning of the claim A land as residential with lot 32 in Amendment No 8 to the Hastings LEP in September 1989. There does not appear to be any ecological, topographical or geomorphic differences between the claim A land and the other land which was rezoned (par 32 written submissions). Mr Sanders agreed that there is no “geographic feature” or “environmental feature” which warranted the boundary for the September 1989 residential re-zoning being where it was (TS 26.08.10 p 40 L 24-35).

82 The Oxley Highway deviation proposal was used as the physical boundary for the lot 32 residential rezoning and this prevented the claim A land from being rezoned (par 45 written submissions). Further, DA 248/88 was granted consent in September 1988 for the Mill Hill subdivision. The letter from the Council dated 4 April 1989 referred to in the report of Ms Hollis refers to the Council advising of its resolution to prepare a draft LEP to facilitate the development of the Applicant’s land. There is no evidence that the Applicant made any application to anyone for rezoning. This was not required by the EP&A Act as it applied in 1988-89.

83 The proper inference to draw is that the Council made the application for rezoning. The only inference available from the proven facts is that the proposed highway upgrade was chosen as the physical boundary of the residential rezoning of lot 32, there being no proper planning reason why the residential zoning would not have extended to the northern boundary of the Applicant’s land, namely claim A.

84 Applying a “common sense” or “but for” causation test (March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 applied in Caruana v Port Macquarie-Hastings Council [2007] NSWLEC 109 at [52]), there is no reasonable inference that can be drawn on the evidence other than that the proposed highway upgrade has caused the residential zoning boundary of lot 32 to stop where it did. This is not only Ms Hollis’ view, but (putting aside his betterment argument), Mr Sanders agreed (TS 26.08.10 p 42 L 49 – p 43 L 6).

(1959) 101 CLR 298, a case on which the RTA seeks to rely, only has proper application in circumstances where a competing inference “is open from facts proved by direct evidence”: Menzies J p 312. The RTA has not proven any fact to suggest that the boundary for the residential zoning of lot 32 had anything to do with some (unproven) rezoning application it says was made by the Applicant. What is proven instead is that the Applicant lodged a development application, which was consented to by the Council in September 1988, following which the Council resolved to prepare a draft LEP to facilitate this development.

(ii) Lot 32 rezoned because of OHU

86 Contrary to Mr Sanders’ opinion, lot 32 was not rezoned because of the proposed OHU. Mr Sanders based his view on a 1983 report, the Hastings Coastal Development Strategy, which refers to substandard roads in the Port Macquarie area and his view that the Applicant’s lands were then isolated from Port Macquarie. As referred to by Ms Hollis, ongoing western expansion of urban development from Port Macquarie had been planned by the Council for some time. Her evidence is that Port Macquarie had experienced strong growth for years and the upgrading of the road network is but one of the requirements for the opening up of land to urban release. Major urban release areas in Port Macquarie have been developed without reliance on the RTA (joint planners’ report exhibit C par 4.21). Ms Hollis strongly disagreed in oral evidence that lot 32 was rezoned because of the proposed OHU due to the high growth rates in Port Macquarie and that road infrastructure was planned for that purpose. The OHU does not facilitate development as it is not a local access road and it will not therefore service the development of lot 32, which relies on access through Philip Charley Drive.

87 Further Mr Sanders does not refer to any traffic evidence to support his view that rezoning could not take place without an upgrade of the OHU. Nor is lot 32 isolated, being located in the western area of Port Macquarie where urban expansion is expected. Thrumster has been identified as such an area for more than 20 years.

88 The language of causation used in s 55(a) (“as a result of”) and s 56(1)(a) (“caused by”) of the JT Act cannot be satisfied by a finding that the residential boundary on lot 32 when rezoned from a rural zoning was caused by anything other than the presence of the OHU at that place. This requires no more than a “common sense” consideration: see generally the comments of Biscoe J in Caruana [52] regarding similar language of causation in s 59(f) of the JT Act, and the “common sense standards in determining what is a proximate cause” as outlined in the High Court in March v Stramare at 509-510 per Mason CJ. Clearly, but for the identification of the proposed Highway upgrade across the Applicant’s land, the boundary for the residential zoning would not have been that proposed road, but the northern boundary of the Applicant’s land.

(iii) likelihood of claims B to D being rezoned residential

89 As Ms Hollis stated in her evidence there is a high likelihood that the Applicant’s lands would have been rezoned for residential use since LEP Amendment No 8 in relation to claim A given the planning instruments which provide for the westward expansion of Port Macquarie. Claim areas C and D may also be suitable for some form of residential development (see Hollis report exhibit B par 105).

90 If the Applicant’s contention is that the residue land has potential for residential use there can be no compensation for injurious affection under s 55(f) as a result of the public purpose. Ms Hollis’ evidence is that in her opinion the Council will rezone the land given its capacity for residential development. This highlights a fundamental contradiction in the Applicant’s case.

(i ) Claim A – likelihood of residential rezoning in 1989

91 The public purpose was not the cause of claim A retaining its rural zoning. The assertions of Ms Hollis in the absence of any evidence as to why the rezoning application for lot 32 in Amendment No 8 to the Hastings LEP was limited to the land south of the Oxley Highway deviation never rises above speculation, which is not permissible (see Serbian Cultural Club “St Sava” Inc & Serbian Cultural Club Limited v Roads and Traffic Authority of New South Wales [2007] NSWLEC 673 at [112]; Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of NSW [2005] NSWLEC 467 per McClellan CJ at [28], and on appeal in Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of NSW [2006] NSWCA 314 at [73] and [77]). There is no documentary evidence to support the argument that claim A was not rezoned because of the road proposal. Nor did the Applicant call anyone with direct knowledge of the rezoning application. Ms Hollis has no knowledge of it. Her career as a planner did not commence until 1991. Claim A has been used for selective forestry and it is possible that the Applicant required this land to be maintained as an existing and future forestry resource.

92 There has been detailed consideration in various studies of the future planning direction for Port Macquarie. There has been and continues to be pressure for urban land release around Port Macquarie to accommodate its growing population. Studies dating back to 1983 have been prepared for stakeholders and the Council and the NSW Department of Planning. Area 13 – Thrumster, west of Port Macquarie, has been identified for future development (and an “inland coastal town”) (exhibit A, page 674). The Applicant’s land has been included in these studies/urban investigations. It has been consistently identified as constrained land with respect to development for urban purposes.

93 There has never been a decision to include the acquired land or the residue land (with the exception of Maher’s Headland) in a residential land release area. To the contrary, the most recent study, the Area 13 Structure Plan and Local Environmental Study 2005 adopted in May 2006 by the Council, describes the parent parcel as land requiring “further investigation – development/habitat constraint” (exhibit A page 740).

94 The current planning controls for the parent parcel at the date of acquisition zone the land as rural land. All publicly available environmental studies in respect of the land consistently identify the presence of flora and fauna on the land including koalas. The LES referred to above refers to the need for future investigation of the Applicant’s land and to identify ecological constraints present over the land (exhibit A pages 740, 782 and 784). Further, the Council’s 12 June 2008 report recommending adoption of the Area 13 Thrumster LEP (exhibit 17 page 31) states:

The adopted Area 13 Structure Plan shows forested land in the south and south-west of the investigation area as “Further Investigation (Development/Habitat Constraint). These areas have environmental significance that has to be assessed in more detail prior to any proposal for development.

95 The forested land refers to the entire parcel of the Applicant’s land. Therefore, even as late as 12 June 2008, about six months before the date of acquisition, the Applicant’s land remained designated as land requiring further investigation because of its ecological constraints.

96 Accordingly, a prudent party to a hypothetical sale of the land could only have assumed the parent parcel would remain zoned as rural land. He or she may foresee some prospect of rezoning of part of the property one day but it was certainly not imminent. The most recent planning study which was undertaken for the Area 13 Thrumster LEP 2008 gave an enquirer no indication if and when any part of the land might be rezoned.

97 The following observations concerning Ms Hollis’ evidence are made:

(ii) Lot 32 rezoned because of OHU

98 The evidence of Mr Sanders is that lot 32 was rezoned residential only because of the OHU proposal which opinion he has formed based on statements in the Hastings Coastal Development Strategy (par 73 above) concerning the inadequate roads at that time limiting further residential development but for the proposed realignment of the Oxley Highway which would relieve traffic from the old road. The existing road network in 1989 would not have been able to cope with the additional traffic that would be generated by a residential subdivision of the adjoining land. The Council had undertaken a study to identify land suitable for urban release in 1983. That study did not identify the Applicant’s land as suitable for urban release because roads in the locality were at or near capacity. This resulted in a substantial increase in value of lot 32 as a result of the public purpose of the acquisition.

(iii) likelihood of claims B to D being rezoned for residential use

99 The Applicant’s land has been consistently identified as constrained land with respect to development for urban purposes (see HUGS 2001 B2 resolution of the Council), and there has never been a decision to include the acquired land or the residue land (with the exception of Maher’s Headland) in a residential land release area (par 29(j)-(k) written submissions). Various planning strategies carried out over time show that the parent parcel has never been included in any residential land release strategy due to ongoing, unresolved ecological constraint issues and the need for further investigations (par 33(a) written submissions).

100 Further Mr Sanders’ evidence is that claim areas C and D would not ultimately be landlocked because access would be provided as part of the residential development processes on the neighbouring land in Thrumster. This is confirmed by the DCP (traffic) which shows the location of roads immediately adjacent to or nearby claim areas B to D in the Thrumster area that have been rezoned for residential development.

101 The Court has no evidence from the Applicant as to why the Applicant did not include claim A in the 1989 rezoning application and when the Applicant would apply to rezone the land to the north of the highway. A party can be reasonably expected to call a person as a witness who is likely to be able to speak on some relevant fact or issue. Failure to do so suggests that an adverse inference may be drawn by that failure per Jones v Dunkel at [308] – [312], Brandi v Mingot (1976) 12 ALR 551 at 559-560.

Finding on planning issues

102 The planning issues are relevant to the Applicant’s claim of injurious affection under s 55(f) of the JT Act as it argues that other land (the residue land) owned by it has decreased in value by reason of the proposal to carry out the OHU. The loss in value arises because it argues claim A would have been rezoned before the date of acquisition for more valuable residential use but for the OHU.

“by reason of”

103 The RTA submitted that s 55(f) operates differently from s 56(1)(a) and s 55(a) of the JT Act which are concerned with market value. The focus of s.55(f) is the words “by reason of”. “By reason of” has been considered in Vickers v Minister for Business and Consumer Affairs & Ors (1982) 43 ALR 389 where Morling J at 407 referred to the words as requiring a relationship of cause and effect. The RTA submits that the term means that while there must be cause and effect, it need not be direct cause. The Court will apply that approach in this matter.

(i) Claim A – likelihood of residential rezoning in 1989

104 Under Amendment No 8 to the Hastings LEP in September 1989 part of lot 32 was rezoned residential 2(a1) with the northern boundary identified as the proposed new highway. Evidence about Amendment No 8 is minimal. Apart from the actual amendment plan of the rezoning there is no other evidence about the Council’s or Minister’s consideration of it. The process for the making of such amendments in 1989 specified that the Council may resolve to make such an amendment under s 54 of the EP&A Act as then in force. The Minister may make the plan under s 70 of the EP&A Act. The Department of Planning letter dated 4 April 1989 which refers to the Council resolution to make the amendment reflects the relevant statutory process (see annexure 4 to exhibit B). It provides no assistance as to what the Council’s reasons were for the resolution. Essentially the Applicant submits that because the claim A land has similar characteristics to the area of lot 32 that was rezoned, there was no planning reason why the claim A land was not rezoned. In written submissions the RTA submitted that the Applicant must have made an application to the Council for the rezoning but accepted in oral submissions that there was no such evidence.

105 The limited evidence raises the question of whether the Court is able to draw any conclusion by inference on this issue. The planners have provided their respective opinions on the very limited material available but the issue arises of whether this is the drawing of proper inferences or simply speculation. The Applicant relies on Girlock (Sales) Pty Ltd v Hurrell [1982] HCA 15; (1982) 149 CLR 155 where the High Court was considering whether conclusions of a board were a reasonable inference open on the evidence or conjecture alone. Stephen J cites Holloway v McFeeters (1956) 94 CLR 470 and Jones v Dunkel Dixon CJ at p 305, at 161-162:

This is not a case of mere competing possibilities, no instance of "a choice among rival conjectures", such as Dixon C.J. spoke of in Jones v. Dunkel [1959] HCA 8; (1959) 101 CLR 298, at p 304 . Here there exists what Dixon C.J. there referred to as "evidence supporting some positive inference . . . an inference which arises as an affirmative conclusion from the circumstances proved in evidence". His Honour went on to cite a passage from the unreported decision of five members of this Court in Bradshaw v. McEwans Pty. Ltd. Unreported; 27 April 1951. which is rather more fully reproduced in the report of Holloway v. McFeeters [1956] HCA 25; (1956) 94 CLR 470, at pp 480-481 ; speaking of civil cases, the passage reads:

"'you need only circumstances raising a more probable inference in favour of what is alleged . . . where direct proof is not available it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference; they must do more than give rise to conflicting inferences of equal degree of probability so that the choice between them is mere matter of conjecture: see per Lord Robson Richard Evans & Co. Ltd. v. Astley (1911) AC 674, at p 687 . All that is necessary is that according to the course of common experience the more probable inference from the circumstances that sufficiently appear by evidence or admission, left unexplained, should be that the injury arose from the defendant's negligence. By more probable is meant no more than that upon a balance of probabilities such an inference might reasonably be considered to have some greater degree of likelihood'."

At p. 305 of Jones v. Dunkel Dixon C.J. added these observations:

"But the law which this passage attempts to explain does not authorise a court to choose between guesses, where the possibilities are not unlimited, on the ground that one guess seems more likely than another or the others. The facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied".

106 The authorities relied on by the RTA are examples in this Court of where a judge has held that expert opinion was speculative. In Mir Bros on appeal from this Court the Court of Appeal accepted that the evidence in question did not rise above the level of possibility and upheld the finding that the evidence did not rise above speculation, per Spigelman CJ at [77] (Handley, Tobias JJA concurring).

Claims C and D - Mr Lunney

249 Mr Lunney applied a rate of $30,000/ha to all the Applicant’s land in both the before and after scenarios. Mr Lunney calculated the before value of claim C (51.76ha) at a rate of $30,000/ha resulting in a figure of $1,552,800. Claim D (16.3ha) at a rate of $30,000/ha results in a figure of $489,000.

After valuation – Scenario 1
Claims A, B, C - Mr Wotton

250 In his written report, Mr Wotton’s calculation for the after scenario was undertaken on the basis that the retained land and the acquired land were zoned rural 1(a1) and included claims A, B and C. He considered that the retained land to the north of the acquired land is landlocked and has no road frontage to which access is available. The Court notes his oral evidence that he valued claims C and D jointly but that is not reflected in his written report.

251 Mr Wotton considered that a rural lot on claims A, B and C would attract a value based on $12,000 to $15,000/ha. He calculated the 57.87ha residue of claims A, B and C to have a value between $723,375 and $868,050 (table p 33 exhibit S). He then reduced this value by 50 per cent to reflect the landlocked nature of the property and adopted a value for this land in the after scenario of $375,000. After further reducing the value for claim B he calculated the following values: the after value claim A, 9.2ha is $61,047, the after value for claim B, 5.47ha is $27,350, and the after value for claim C, 43.20ha, is $286, 603. The total after value of claims A, B and C is $375,000.

Claim D – Mr Wotton

252 In exhibit S, par 159 Mr Wotton calculated the value of the whole of the southern portion of the land, 143.59ha, south of the OHU based on $8,000 to $10,000/ha. On a proportional area basis he determined the value of claim D in the after scenario at $140,000. He considered (in oral evidence for the first time) that this should be further reduced by 50 per cent to reflect the fact that access to claim D is now across the southern portion of claim B which is floodplain.

Claims A, B and C - Mr Lunney

253 Mr Lunney relied on four rural sales some with potential and some with no potential for residential development with no adjustments for date, size or location, to derive $14,022 to $81,323/ha (this reflects the valuers’ agreement set out in par 231-232). Mr Lunney did not provide details of any adjustments for date of sale, land size position or other factors and adopted, without detailed calculations, a rate of $30,000/ha for the acquired land and the residue land with a rural 1(a1) zoning.

254 In both his before and after valuations Mr Lunney included the 291 lot Maher’s Headland subdivision. As this was a constant figure in both the before and after valuations it does not affect the compensation assessment and has been disregarded. Mr Lunney applied this rate to lot 40 (258.27ha) without differentiation between the claim areas and with no discount for restricted access.

255 On this basis his assessment was claim A (6.07ha) at a rate of $30,000/ha resulting in a figure of $182,100; claim B (1.45ha) at a rate of $30,000/ha resulting in a figure of $43,500 and claim C (8.56ha) at a rate of $30,000/ha resulting in a figure of $256,800. The total is $482,400, rounded to $485,000.

Claim D – Mr Lunney

256 Because there was no change in the before and after scenarios for claim D Mr Lunney considered there was no change in value as a result of the acquisition. He assessed compensation as nil.

Conclusion

257 Mr Wotton considered that under scenario 1, compensation of $5,681,651 was payable for market value and injurious affection (plus the noise barrier claim of $2.093 million). The Court could not arrive at that figure based on the evidence because no figure was provided by Mr Wotton for injurious affection for claim A. Mr Lunney’s calculation of the before value ($18,400,000) and after value ($17,950,000) resulted in compensation of $450,000 (plus $125,000 for disturbance). However when calculated piecemeal, above, a rough figure of $485,000 was arrived at.

Finding on rate/hectare in before and after valuation

258 The Court must determine what a hypothetical purchaser and vendor would do as at the date of acquisition when determining compensation, calculated here on the before and after approach .

(i) lot yield/development constraints

259 The majority of the land (claims A, C and D) is timbered compared to the majority of the comparable sales, which are largely cleared. Part of claim C is identified as core koala habitat on Council’s Area 13 - Thrumster LES. Generally the land the subject of the claim is considered to be highly constrained as identified in the RTA’s evidence on fauna, particularly in relation to koalas, and flora to a lesser extent. It is agreed that 70-80 per cent of claim D is within the Council’s 1:100 year flood plain mapping. A large proportion of claim D is low lying and therefore constrained from development.

260 The Applicant submitted that the relevance of the ecological issues was to determine dwelling yield rather than whether or not there can be development consistent with the finding in relation to fauna at par 177. The ecological constraints raise more fundamental questions for a prudent hypothetical purchaser and vendor than simply what yield a prudent hypothetical purchaser might apply. The Court accepts the RTA’s submission that the vendor and purchaser would, after negotiation, consider that the land had some development potential in the future in the medium to long term, not the short term (see next section).

261 Having regard to the uncertainty of when the claim areas may be rezoned given the level of environmental constraint, and the range of opinions expressed on lot yield, the lot yield basis of assessment (a hypothetical development calculation), is considered to be too subjective and unreliable at this stage of the planning process of the Applicant’s land. For example, for claim C Ms Hollis applied a lot yield of 7 lots/ha, Mr Wotton 4 lots/ha because he considered a conservative approach was warranted and Mr Sanders 0 to 2 lots/ha. That approach is rejected in favour of the direct comparable sales method of valuation for rural sales with future development potential which Mr Lunney adopted as his planning approach.

(ii) time frame for development

262 The valuers applied different time frames for the redevelopment of the residue land assuming it is zoned as rural with development potential. Mr Wotton assumed zoning within three years, and Mr Lunney within 10-15 years. An environmental study must be prepared before rezoning of the Applicant’s land will be considered by the Council as identified in HUGS.

263 The Court agrees with the RTA’s submissions that the sale at Ocean Parade relied on by Mr Wotton is not comparable and clearly had far less environmental constraints on development than the Applicant’s land. It provides no useful guide that rezoning is likely to occur in three years on the Applicant’s land. Having regard to the development history of the Applicant’s land on Mill Hill and Maher’s Headland set out above at par 59-61 and the difference in the ecological evidence of the parties’ experts, the Court does not consider the land will be rezoned in two to three years. The time frame is more likely to be considered by the hypothetical purchaser as mid to long term (10-15 years).

264 Further, by virtue of the Council’s planning process in Thrumster Area 13 large areas of land adjoining the Applicant’s land are zoned for residential use. Timing for residential development in stages is provided for in the DCP. Secondly, in order to develop the northern areas of the Applicant’s land, the land to the north and west must be developed first. All these factors suggest that a prudent hypothetical purchaser would consider 10-15 years was a reasonable time frame for development.

(iii) Access in after scenario

265 The Court has considered the issue of access above (par 205-214). The acquisition did result in claims A, B and C losing access to Philip Charley Drive, a public road. The Court also considered access for these northern claim areas was likely to be obtained in the future as part of rezoning for residential use of the land to the north and west of the site in the Thrumster area based on the Council’s planning instruments in force at the acquisition date. These matters suggest that Mr Wotton’s substantial reduction (90 per cent) in value for loss of access is too great. Mr Lunney considered a reduction of ten per cent was appropriate. The Court held above at par 213 that the appropriate amount which a prudent hypothetical purchaser would apply in the after scenario for loss of value due to lack of access to a public road for claims A and C is 60 per cent. Claim D has not lost access to Philip Charley Drive but a new road needs to be constructed to enable this to occur.

Should Applicant’s claim areas be applied?

266 The Court considers that no logical explanation has been provided by Mr Wotton or any other person called by the Applicant as to why the claim areas have been so defined. In particular, there appears to be no logical basis for valuing claims C and D together, Mr Wotton simply adopting the claim as presented to him by the Applicant. The Court does not agree that the approach to the topographical, environmental and ecological features of the varying claim areas is dealt with entirely appropriately by either valuer. As already noted above the claim areas chosen are artificial. The large area of claim D that is flood affected needs to be reflected in a lesser value for that area than either Mr Wotton’s approach (because he aggregates it with claim C) or Mr Lunney’s approach (because he arrives at one value for the whole of the land, not with separate values for constrained areas).

267 Large parts of claim D have the same environmental constraints as claim B and should be valued accordingly. Claim D should be valued similarly to claim B which it adjoins and with which it shares greater physical similarity given that both are largely flood prone.

268 The Court considers that the following rates are applicable to the Applicant’s land having regard to the following considerations.

Claim A

269 Claim A should be valued as rural land with mid to long term potential for residential development. Mr Lunney’s sale 1 was not relied upon by Mr Wotton in his report. This sale indicates that the $80,811/ha adopted by Mr Wotton for land zoned rural with some potential for urban zoning is too high. The most comparable sale to claim A is Mr Lunney’s sale 4 which showed a rate of $45,832/ha. After adjusting this sale to reflect the Applicant’s land’s superior location, closer to Port Macquarie, and inferior development potential due to ecological constraints, the Court adopts a rate of $40,000/ha. The before value of claim A is $610,800 being 15.27 ha at a rate of $40,000/ha.

270 The after value of claim A is assessed at the same rate/ha less an allowance of 60 per cent to reflect the lack of access to the OHU while the land has its present rural use and the increased difficulty in subdividing the land if it is rezoned. The value of $40,000 less an access discount 60 per cent amounts to $16,000, 9.2 ha at a rate of $16,000/ha amounts to $147,200. The before valuation $610,800 less the after valuation $220,800 results in compensation for claim A of $463,600.

Claim B

271 Claim B should be valued as flood affected rural land. Whilst there are no comparable sales of flood affected rural land Mr Wotton’s adopted figure of $5,000/ha appears reasonable being about 40 per cent of the lowest rural sale.

272 The before value of claim B is $34,600 being 6.92 ha at a rate of $5,000/ha.

273 The after value of claim B is assessed at the same rate/ha less an allowance of 60 per cent to reflect the lack of access to the OHU while the land has its present rural use. This land is considered to have no potential for rezoning to residential. The value of $5,000 less an access discount of 60 per cent amounts to $2,000, 5.47 ha at a rate of $2,000/ha amounts to $10,940. The before valuation $34,600 less the after valuation of $10,940 results in compensation for claim B of $23,660.

Claim C

274 Claim C should be valued as rural land with mid to long term potential (10 to 15 years), subject to compliance with environmental constraints for residential development. The most comparable sale is Lunney sale 4, assessed at $45,832/ha. After adjusting this sale to reflect the subject property’s superior location closer to Port Macquarie, and inferior development potential due to ecological constraints, including core koala habitat and being situated under the flight path for the nearby Port Macquarie airport, the Court adopts a rate of $35,000/ha.

275 The before value of claim C is $1,811,600 being 51.76 ha at a rate of $35,000/ha.

276 The after value of claim C is assessed at the same rate/ha less an allowance of 60 per cent to reflect the lack of access to the OHU while the land has its present rural use and the increased difficulty in subdividing the land if it is rezoned. The value of $35,000 less an access discount of 60 per cent amounts to $14,000, 43.2 ha at a rate of $14,000/ha is $604,800. The before valuation of $1,811,600 less the after valuation $604,800 results in compensation for claim C of $1,206,800.

Claim D

277 Claim D comprises approximately 70-80 per cent flood affected land (as agreed, par 28). The flood affected land is assessed at a similar rate to claim B namely $5,000/ha. The land above flood level is assessed at a similar rate to claim C of $35,000/ha. Seventy-five per cent (half way between 70 and 80) of the 16.3 ha is considered to be flood affected. Flood affected land of 16.3ha x 75 per cent yields 12.225 ha at a rate of $5,000/ha amounting to $61,125. Land above the flood plain of 16.3 ha x 0.25 per cent being flood free yields 4.075 ha at a rate of $35,000/ha amounting to $142,625. The total before valuation is $203,750.

278 The after value of claim D is assessed on the basis that its shape and topography would prohibit any future potential for residential rezoning. The flood affected land is valued in a similar manner to the before valuation. Due to the land above the flood plain now having no residential potential it is assessed at $20,000/ha. Flood affected land of 16.3 ha x 75 per cent being flood affected yields 12.225 ha at a rate of $5,000/ha amounting to $61,125. The land above the flood plain of 16.3 ha x 0.25 being flood free yields 4.075 ha at a rate of $20,000/ha amounting to $81,500. The total after valuation is $142,625. The before valuation of $203,750 less the after valuation $142,625 results in compensation for claim D of $61,125.

279 The cost of providing all weather gravelled access to claim D is also allowed, as identified by GHD Engineering, in the amount of $94,410.

Injurious affection - Noise barriers

280 Mr Wotton assessed compensation for injurious affection as including noise barriers being (i) a 690m wall along the northern boundary of lot 32 ($483,000) and (ii) along the northern OHU boundary of claim A for 200 m, a soil mound and noise barrier ($490,000 plus GST). Noise barriers are also claimed (iii) to protect the land to the south and north of the road corridor in claims A, C and D ($1.12 million plus GST) and likely to be needed in the short to medium term, 10 – 15 years.

281 Mr Wotton was of the opinion that notwithstanding the severance of the land by the OHU, the claim areas A - D will have long term potential for residential potential (the proposal having destroyed the short term potential) of some 10 years or more. Any purchaser in the future who purchases the land with residential development in mind would recognise that noise barriers would have to be constructed as part of any residential development to shield the land from the OHU noise. That would be factored into the price that a hypothetical purchaser would be prepared to pay. Although this may be some time in the future, when those mounds and barriers are to be constructed the cost will be that applicable at the time of the future value. Additionally, such noise barriers might need to be more effective than the standards for such noise barriers required today. For these reasons Mr Wotton has assessed the decrease in value on the residual lands by reference to the costs at 2009 values.

282 Further he considers that as a busy highway is now to be adjacent to residential land that will create additional noise in lot 32 with a consequential loss of value. There is a claim for a noise barrier adjoining lot 32 which will ameliorate these impacts.

283 The RTA argues part of this claim (items (ii) and (iii) in par 280 above) is illogical and shows a serious defect in the Applicant’s valuation. If Mr Wotton’s evidence (and Ms Hollis’ evidence) is accepted, that is to say, that the residue land ought to be valued on a rural basis in the after scenario, it is wrong as a matter of valuation principle for the Applicant to claim the cost of noise barriers which are used to attenuate noise impacts for neighbouring residential development. The claim is inconsistent with the valuation position. Such flawed logic may be considered in the context of an extended version of the “commonsense” check postulated by Hodgson JA in Roads and Traffic Authority of NSW v Collex Pty Limited [2009] NSWCA 101; (2009) 165 LGERA 419 at [186].

284 In Mr Lunney’s view parties to the sale would not allow for noise barriers along the claim A boundary with the OHU given that the Applicant’s main claim is that the residue lands have lost 90 per cent of their value due to being landlocked (TS 15.09.10 p 629). The time frame of 10 - 15 years identified by Mr Wotton also does not support the full amount of the cost of implementing the barriers being paid now.

Finding

285 The Applicant is claiming, based on the valuation of Mr Wotton the cost of noise barriers along the OHU (items (ii) and (iii) par 280 above). There are some difficulties with Mr Wotton’s approach. For example, (TS 15.09.10 p 627) if no rezoning was to occur then there would be no need to build any barriers suggesting the full cost should not be awarded. Further, as identified by Mr Lunney, the time frame of 10 - 15 years for future residential development does not support the full cost of implementing the barriers being paid now. Contrary to the RTA’s submissions relying on Hodgson J in Collex, the Court considers an amount for the construction of noise barriers in the future along the OHU at claims A and C is payable in light of compensation being awarded in the after scenario based on rural land with potential for residential development in 10 - 15 years. The Court does not consider this approach is contrary to commonsense. The RTA accepts that noise barriers are needed next to lot 32. If the claim areas on the residue land are developed for residential use in the future it is reasonable to expect that the hypothetical parties would consider the same need for noise barriers along the OHU would arise in the future.

286 The amount of compensation should be calculated by taking the cost of items (ii) and half of (iii) of $1.05 million plus GST ($1,155,000), adding CPI of 3 per cent for 10 years and discounting that figure by 6 per cent per year, resulting in $867,400. This should be reduced by 50 per cent to allow for the risk factor that these barriers might not be required, to arrive at a total of $433,700.

287 The RTA accepts lot 32 will require noise barriers (item (i) par 280 above). The noise barriers required for lot 32 should be paid ($483,000 plus GST).

Betterment - Roundabout for lot 32

288 Mr Lunney considered there was a benefit under s 55(f) to lot 32 as the RTA is constructing a roundabout at the intersection of Philip Charley Drive and the old Oxley Highway (identified in par 8(c)(ii)). Condition 27 of the Maher’s Headland development consent requires that no more than 50 lots can be released until the proposed roundabout at the corner of the intersection and Philip Charley Drive had been fully constructed.

289 Mr Lunney’s contends that a prudent purchaser as at 30 January 2009 would be aware that the intersection would have to be upgraded before a 291 lot subdivision would be permitted to have access from the existing poor intersection; exhibit 6 p 64 par 2.1(a). He sought the advice of GHD Engineering on the likely cost of an intersection benefiting lot 32 at the corner of Philip Charley Drive and the old highway and the advice was the cost was likely to be $869,000. This represents a saving to the Applicant because it does not have to construct the roundabout required by the development consent.

290 The Applicant submitted that as the grant of development consent for Maher’s Headland was after the date of acquisition this betterment claim could not be considered. The condition of development consent relied on by the RTA could not have been known to a prudent hypothetical purchaser.

291 The Court considered above at par 36-40 the extent to which events after the date of acquisition can be taken into account when assessing compensation as at the date of acquisition. The circumstances are limited to matters which would be foreseeable to a prudent hypothetical purchaser or vendor. Development consent was not granted until several months after the date of acquisition with numerous conditions imposed and it is not appropriate in these circumstances to attribute betterment to lot 32 in terms of the roundabout as a result of the events after the date of acquisition.

292 Before finalizing orders in this matter the Court will confirm with the parties the final figures that should appear in any orders. A draft of possible orders will be provided for consideration. The parties must also advise the Court of the amount of interest payable.

22/06/2011 - Citation amendedAmendments under r 36.16 of the Uniform Civil Procedure Rules 2005 - Paragraph(s) Coversheet 285, 286

CITATION:	Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW (No 3) [2010] NSWLEC 234 This decision has been amended. Please see the end of the judgment for a list of the amendments.
PARTIES:	APPLICANT Vilro Pty Ltd (In Voluntary Liquidation) RESPONDENT Roads and Traffic Authority NSW
FILE NUMBER(S):	30369 of 2009
CORAM:	Pain J
KEY ISSUES:	COMPULSORY ACQUISITION OF LAND :- claim for market value and loss of value of residue land as a result of public purpose - before and after method of valuation encapsulates both - whether residue land landlocked as a result of acquisition - what expert advice would prudent hypothetical parties be likely to obtain on ecological matters at date of acquisition - whether residue land constrained for residential development due to ecological characteristics - whether events after date of acquisition can be considered - whether residue land would have been rezoned residential but for the public purpose
LEGISLATION CITED:	Environment Protection and Biodiversity Conservation Act 1999 (Cth) Environmental Planning and Assessment Act 1979 Part 5, s5A, s54, s70, s96, s112C Hastings Local Environmental Plan 1987 Hastings Local Environmental Plan 2001 Land Acquisition (Just Terms Compensation) Act 1991 s3, s54, s55, s56, s59, s66 Native Vegetation Act 2003 Port Macquarie-Hastings (Area 13 Thrumster) Local Environmental Plan 2008 Roads Act 1993 s6, s10, s49, s68, s145 State Environmental Planning Policy No 44 - Koala Habitat Protection (SEPP 44) Threatened Species Conservation Act 1995
CASES CITED:	Adelaide Fruit & Produce Exchange Co Ltd v Adelaide City Corp (1961) 106 CLR 85 Bennett v Commissioner for Railways (1952) 12 The Valuer 169 Besmaw Pty Ltd v Sydney Water Corporation [2001] NSWLEC 15; (2001) 113 LGERA 246 Bowden v Housing Commission of NSW (1948) 17 LGR (NSW) 34 Brandi v Mingot (1976) 12 ALR 551 Caruana v Port Macquarie-Hastings Council [2007] NSWLEC 109 Commissioner of Highways v George Eblen Pty Limited (1975) 34 LGRA 207 Cook v Roads and Traffic Authority (NSW) [2007] NSWLEC 136 Davey v Minister for Agriculture (1979) (1) SA 466 (N) Gilmour v The Crown (1981) 7 QLCR 160 Girlock (Sales) Pty Ltd v Hurrell [1982] HCA 15; (1982) 149 CLR 155 Holloway v McFeeters (1956) 94 CLR 470 Jones v Dunkel (1959) 101 CLR 298 Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547 Illawarra Local Aboriginal Land Council v Minister Administering the Crown Lands Act (No 2) [2010] NSWLEC 124 Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413 March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 Minister Administering the Crown Lands Act v Illawarra Local Aboriginal Land Council [2009] NSWCA 289; (2009) 168 LGERA 71 Minister for Army v Parbury Henty & Co Pty Ltd (1945) 70 CLR 459 Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of NSW [2005] NSWLEC 467 Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of NSW [2006] NSWCA 314 Roads and Traffic Authority of NSW v Collex Pty Limited [2009] NSWCA 101; (2009) 165 LGERA 419 Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66 Serbian Cultural Club “St Sava” Inc & Serbian Cultural Club Limited v Roads and Traffic Authority of New South Wales [2007] NSWLEC 673 Spencer v the Commonwealth of Australia [1907] HCA 82; (1907) 5 CLR 418 Spicer v Valuer-General (1963) 10 LGRA 319 Toohey’s Limited v Housing Commission of NSW (1952) 20 LGR (NSW) 236 Turner v Minister of Public Instruction (1956) 95 CLR 245 Vickers v Minister for Business and Consumer Affairs & Ors (1982) 43 ALR 389 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 Willis v Commonwealth (1946) 73 CLR 105
DATES OF HEARING:	26 August 2010 6 - 17 September 2010 25 October 2010
DATE OF JUDGMENT:	15 December 2010
LEGAL REPRESENTATIVES:	APPLICANT Mr T Hale SC with Mr R Beasley SOLICITOR Minter Ellison Lawyers RESPONDENT Mr P Tomasetti SC with Mr S Nash SOLICITOR Blake Dawson

(i) Market value of the acquired land: s 55(a)	$2,785,925
(ii) Injurious affection to claim areas A, B, C and D: s 55(f) (a) claim A (b) claims C and D (c) claim B	$3,102,014 $4,381,651 $7,500
(iii) Injurious affection: noise barriers s 55(f)	$2,093,000
(iv) Disturbance: legal costs s 55(d), 59(a) (agreed)	$8,599