Antonino Gaudioso v Transport for New South Wales [2021] NSWLEC 91 | Case summary

Land and Environment Court (NSW)|2021-03-19|Before: Duggan J

Nature of proceedings

On 9 February 2018, Antonino Gaudioso and Carmel Gaudioso (the Applicants) were the registered proprietors of the land identified as Lot 1 in Deposited Plan 510297 and Lot 101 in Deposited Plan 701466, known as 182 (No 182) and 184-186 (No 184-186) Parramatta Road, Camperdown.
By Acquisition Notice published in the Government Gazette on 9 February 2018, (the Date of Acquisition) the Respondent (then Roads and Maritime Services) compulsorily acquired both parcels of land (the Acquired Land).
The Applicants were offered compensation for the acquisition of their interest in the Acquired Land. The Applicants have, pursuant to s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act), objected to the amount of compensation offered.
At the Date of Acquisition, the Acquired Land was occupied by Olde English Tiles Australia Pty Ltd (OET). The Applicants were sole directors and shareholders of OET. OET conducted a business of the manufacture and sale of Victorian and Federation tessellated tiles, mosaics and subway tiles for retail and commercial installation on the Acquired Land (the OET Business).
OET also claims compensation for its interest in the Acquired Land, which claim will be determined in other proceedings. For the purposes of the Applicants' claim in these proceedings it contends that OET should be taken to have had, at the Date of Acquisition, a relatively short term right to occupy the Acquired Land (less than 5 years).

No 182

No 182 had a site area of 752.5m2. A single-storey, older-style period building occupied 100% of the site footprint, with frontages presenting as 2 storeys to Parramatta Road and Bignell Lane.
The front elevation of the building had nil setback from Parramatta Road and had shop-front openings at ground floor level, a driveway crossover and pedestrian entry. The rear elevation abutted Bignell Lane with a single vehicle entry.

No 184-186

No 184-186 had a site area of 978.5m2 with a full-width frontage to Parramatta Road and a partial width frontage to Bignell Lane, which incorporated a single high-level vehicle entry loading dock access to the premises.

Development history

At all relevant time the Acquired Land was situated within the Leichhardt Council local government area which now forms part of the Inner West Council (the Council).
The parties agree that there are no Council records of any development consent or building approval associated with the Acquired Land at the Date of Acquisition that related to the sale and display of tiles and tile products.
There is no dispute in these proceedings that the use of the Acquired Land was for a light industrial purpose was permitted in the zone. It was not contended in the proceedings that the use of the Acquired Land was not a lawful use of that land.

Public Purpose

The Acquired Land was compulsorily acquired for the purposes of the Roads Act 1993 (NSW), specifically for the WestConnex Project (the Public Purpose).

Offer of compensation

The Applicants were offered compensation in the amount determined by the Valuer-General on 4 June 2018, to be $10,392,626 comprising: 1. Market value: $9,6700,000 2. Disturbance: $722,626 comprised of: 1. Legal costs: $83,693 2. Valuation fees: $69,740 3. Relocation costs: $7,700 4. Stamp duty: $517,340 5. Mortgage costs: $44,153
On 21 June 2018, the Applicants commenced these proceedings.

Issues for determination

The Applicants contend that at the Date of Acquisition the IN2 zoning of the Acquired Land was an incident of the proposal to carry out the Public Purpose and as such, in the determination of the market value of the Acquired Land pursuant to s 55(a) of the Just Terms Act, that zoning is to be disregarded as is required by the definition of market value in s 56 of the Just Terms Act, which provides: 56 Market value (1) In this Act - market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid) - (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and…
Therefore, it is necessary to determine: whether, at the Date of Acquisition, was there a decrease in the value of the Acquired Land caused by the proposal to carry out the Public Purpose? To answer this question, it is necessary to determine whether: 1. Having regard to the circumstances of this case, absent the proposal to carry out the Public Purpose, would the Acquired Land have been zoned IN2? 2. If not, what would the zoning of the Acquired Land be absent the proposal to carry out the Public Purpose; and 1. What would have been the highest and best use of the Acquired Land under that zoning? 2. What was the market value of the Acquired Land absent the Public Purpose? 1. Is the market value of the Acquired Land a decrease in value when zoned IN2 compared to its market value if zoned in accordance with the zoning in (2)? That is, would the market value have decreased as at the Date of Acquisition by reason of the proposal to carry out the Public Purpose?
Each issue must be resolved in order for the amount of compensation for the acquisition to be determined.

Was the IN2 zone a consequence of the carrying out of the Public Purpose?

The claim in this case does not relate to a determination of an underlying zoning where the zoning was one that was imposed in order to further the carrying out of a public purpose. Rather, it is contended that the Council was intending to rezone the Acquired Land together with adjoining IN2 zoned land to a more economically beneficial zoning, but ceased taking steps to give effect to that intention upon the coming into being of the proposal to carry out the Public Purpose. It is said that this process of rezoning was stalled or redirected as a consequence of the proposal to carry out the Public Purpose and, therefore, should be disregarded for the purposes of determining the market value of the Acquired Land. It is contended that as a consequence of the land remaining zoned IN2 that the Acquired Land has suffered a decrease in market value as a consequence of the proposal to carry out the Public Purpose.
Whilst the exact zone contended for varied during the course of the hearing by the conclusion of the hearing, the Applicants contended that the proposed zoning would be a B6 Enterprise Corridor Zone pursuant to the terms of the Standard Instrument which provided: Zone B6 Enterprise Corridor 1 Objectives of zone • To promote businesses along main roads and to encourage a mix of compatible uses. • To provide a range of employment uses (including business, office, retail and light industrial uses). • To maintain the economic strength of centres by limiting retailing activity. 2 Permitted without consent 3 Permitted with consent Business premises; Community facilities; Garden centres; Hardware and building supplies; Hotel or motel accommodation; Landscaping material supplies; Light industries; Oyster aquaculture; Passenger transport facilities; Plant nurseries; Tank-based aquaculture; Warehouse or distribution centres 4 Prohibited Pond-based aquaculture
In addition, the Acquired Land would be subject to a provision made pursuant to cl 2.5 of the Standard Instrument to permit the additional land use for residential accommodation for a boarding house style development that would permit affordable housing and/or student accommodation.

Documentary evidence

The evidence adduced addressing the process of zoning of the Acquired Land was largely documentary. The documents related to relevant planning policies in force at the relevant period together with the actions taken by the Council relating to the Acquired Land and the local government area generally.
Prior to the adoption of LEP 2013 the Acquired Land was zoned for industrial purposes pursuant to the Leichhardt Local Environmental Plan 2000.
In July 2008, the NSW Government released the Draft Subregional Strategy (Inner West Subregion) (Draft Subregional Strategy) to implement the 2005 Metropolitan Strategy, City of Cities: A Plan for Sydney's Future.
In the Draft Subregional Strategy, the vision for the Inner West was explained as involving seven key outcomes. Relevantly, Key Direction 2 is to "Protect Employment Land and the Working Harbour" and stated at p 8: Across the subregion, small scale industrial plots which support a range of local urban services, such as auto repair services, are coming under increasing pressure for conversion to other uses. A subregional understanding of existing supply and future demand for industrial land should be completed before significant rezoning of industrial land, to ensure the subregion can support both its metropolitan (working harbour, freight and logistics) and local (urban services) economic roles.
The Draft Subregional Strategy further stated at p 27 that "employment lands" were defined in the Metropolitan Strategy as including: .. the traditional industrial areas and business and technology parks for higher skilled employment. They incorporate light industries, heavy industry manufacturing, urban services such as concrete batching plants and waste management, warehousing and logistics and higher skilled technologies based activities.
The Draft Subregional Strategy describes identified lands by category and "category 1" land was "land to be retained for industrial purposes" and stated in part: Due to anticipated continued strong demand for Employment Lands across the metropolitan region, the majority of sites are currently considered to be most appropriately placed in category one (ie to retain for industrial purposes) … Classification of Category 1 lands does not mean that the sites cannot be intensified or redeveloped to meet modern industrial requirements and create additional employment and economic benefits, but that they continue to primarily accommodate industrial and related uses, within the range generally allowed under current zonings.
Page 30 of the Draft Subregional Strategy identified the land between Parramatta Road, Mallet Street and Pyrmont Bridge Road, which area included the Acquired Land as "Category 1 Land to be retained for industrial purposes" and stated at p 31: Due to the extent of rezoning and continued demand for Employment Lands in the Inner West, all Employment Land precincts are currently considered to be of strategic importance and should be retained for employment uses…
In 2010 the Council exhibited a draft local environmental plan which was prepared for the primary purpose of bringing the environmental planning instruments of the Council into conformity with the adopted Standard Instrument. The draft local environmental plan was placed on exhibition and submissions received and considered.
That draft environmental plan was made on 23 December 2013 and became LEP 2013. The Acquired Land and surrounding lands were zoned IN2-Light Industrial under LEP 2013, which zone provided: Zone IN2 Light Industrial 1 Objectives of zone • To provide a wide range of light industrial, warehouse and related land uses. • To encourage employment opportunities and to support the viability of centres. • To minimise any adverse effect of industry on other land uses. • To enable other land uses that provide facilities or services to meet the day to day needs of workers in the area. • To support and protect industrial land for industrial uses. • To retain existing employment uses and foster a range of new industrial uses to meet the needs of the community. • To ensure the provision of appropriate infrastructure that supports Leichhardt's employment opportunities. • To retain and encourage waterfront industrial and maritime activities. • To provide for certain business and office premises and light industries in the arts, technology, production and design sectors. 2 Permitted without consent Nil 3 Permitted with consent Agricultural produce industries; Depots; Educational establishments; Garden centres; General industries; Hardware and building supplies; Industrial training facilities; Light industries; Neighbourhood shops; Oyster aquaculture; Places of public worship; Roads; Storage premises; Tank-based aquaculture; Warehouse or distribution centres; Any other development not specified in item 2 or 4 4 Prohibited Air transport facilities; Airstrips; Biosolids treatment facilities; Boat sheds; Camping grounds; Caravan parks; Cellar door premises; Cemeteries; Centre-based child care facilities; Correctional centres; Crematoria; Eco-tourist facilities; Entertainment facilities; Environmental facilities; Exhibition homes; Exhibition villages; Extensive agriculture; Farm buildings; Forestry; Heavy industries; Home businesses; Intensive livestock agriculture; Hazardous storage establishments; Health services facilities; Helipads; Highway service centres; Home occupations (sex services); Information and education facilities; Livestock processing industries; Marinas; Markets; Mooring pens; Moorings; Offensive storage establishments; Open cut mining; Pond-based aquaculture Public administration buildings; Pubs; Registered clubs; Residential accommodation; Respite day care centres; Restaurants or cafes; Roadside stalls; Rural supplies; Shops; Stock and sale yards; Tourist and visitor accommodation; Waste disposal facilities
During the course of exhibition of LEP 2013 in draft form a number of submissions were received relating to the possibility of rezoning industrial zoned land. The evidence disclosed that the Council had determined to take a two-step approach to the strategic planning of its local government area. Stage one of the approach was to adopt LEP 2013 which was, in effect, to provide an environmental planning instrument that conformed with the Standard Instrument, and the second stage would deal with a number of rezoning requests relating to industrial land made in its public exhibition period.
In December 2010, the NSW Government released the Metropolitan Plan for Sydney 2036 (2010 Sydney Metro Plan).
The 2010 Sydney Metro Plan identified as one of its objectives "Objective E3: To Provide Employment Lands to Support the Economy's Freight and Industry Needs" which stated, inter alia, at p 141: Employment lands accommodate traditional industrial activities such as heavy and light industry, repair and service businesses and utilities as well as freight terminals and support industries. However, many employment lands now include substantial office-based activity and involve knowledge workers…
At p141 is "Action E3.2: Identify and retain strategically important employment lands" which states, in part: The future role of employment lands must be clearly defined to keep land affordable for industry and maintain Sydney's competitiveness. Retaining existing zoned employment lands of strategic importance is a key objective of this plan, as it was in the 2005 Metropolitan Strategy. This was bolstered in the Employment Lands for Sydney Action Plan (Department of Planning 2007) and the draft Subregional Strategies, where industrially zoned land was categorised to ensure valuable lands were identified and protected … The NSW Government continues to support the retention of existing strategically important employment lands across the Sydney region. Only areas that are not strategically important will be considered for rezoning.
The first step that the Council undertook in respect of stage two of the plan making process was to commission an employment lands study. In January 2011, the Council adopted the Leichhardt Employment Lands Study 2011 (2011 ELS). The 2011 ELS stated the strategies for the Camperdown Industrial Precinct at Folio 783, which principles were reiterated at Table 29 at Folio 816 as: Camperdown Industrial Precinct Vision and Strategies Based on the opportunities and constraints, the future role of the Camperdown Industrial Precinct is as a light industrial area with enterprise corridor activities on Parramatta Road. To assess the likely demand for floorspace with this vision in mind, the BLC profile of the corridor was adjusted to reflect the type of uses that would most likely occur in these precincts. These are principally local light industry, light manufacturing and some supporting retail uses (ie. food retail). Strategies to achieve the vision for Camperdown industrial precinct are to: • Limit subdivision to preserve the large lots in the precinct • Improve local traffic management and investigate parking demand issues for precinct activities A light industrial designation under the standard template is considered appropriate for the northern part of the precinct with an economic corridor zone for Parramatta Road frontage lots.
In March 2013, the NSW Government released the Draft Metropolitan Strategy for Sydney to 2031 (2013 Draft Metro Strategy).
The 2013 Draft Metro Strategy sets out objectives, policies and actions as part of the framework for Sydney's growth and prosperity to 2031. Relevantly, "Objective 13: Provide a well-located supply of industrial Lands" stated, inter alia, at p 48: Existing industrial lands, especially in established areas, are under pressure to be rezoned to other uses, despite the clear need to for them in the future …To provide a framework to assess proposals to rezone industrial land, an assessment checklist has been developed (Criteria Table 1, page 49) in consultation with key stakeholders on the NSW Government's Employment Lands Task Force.
Further it identified as Policy "e" for that objective: e. Proposals to rezone existing industrial lands must be consistent with the Industrial Lands Strategic Assessment Checklist (Criteria Table 1, page 49).
The "Criteria Tab 1: Industrial Lands Strategic Assessment Checklist for Rezoning of existing industrial land to other uses" was stated at p 49 as: • Is the proposed rezoning consistent with State and/or council strategies on the future role of industrial lands? • Is the site: - near or within direct access to key economic infrastructure? - contributing to a significant industry cluster? • How would the proposed rezoning impact the industrial land stocks in the subregion or region and the ability to meet future demand for industrial land activity? • How would the proposed rezoning impact on the achievement of the subregion/region and LGA employment capacity targets and employment objectives? • Is there a compelling argument that the industrial land cannot be used for an industrial purpose now or in the foreseeable future and what opportunities may exist to redevelop the land to support new forms of industrial land uses such as high-tech or creative industries? • Is the site critical to meeting the need for land for an alternative purpose identified in other NSW Government or endorsed council planning strategies?
The 2013 Draft Metro Strategy contained detailed strategic advice for six subregions. Relevantly, figure 17 at p 81 identified Leichhardt as being in the "Central" subregion. The "Metropolitan priorities" for the Central subregion were set out at pp 83-84 and relevantly included: retain smaller pockets of industrial land to enable economic diversity
On 12 July 2013, the Council adopted: 1. The draft Employment and Economic Development Plan, 2013-2023 (the 10 Year Plan); and 2. The Leichhardt Employment and Economic Development Plan, June 2013 (the 4 Year Plan).
The 10 Year Plan: 1. Was broad policy relating to the whole local government area; 2. There was no specific analysis of the Camperdown Industrial Precinct but for identifying it (Folio 1593) as one of the main industrial precincts in the local government area; 3. The broad policy indicates the Council's view that there was an under-utilisation of existing industrial lands and that it is important to retain as much industrial land as is necessary to meet the current and future demands of the local area; 4. This Plan used the 2011 ELS as "a key evidence-base" (Folio 1612); and 5. In referring to the 2011 ELS it observed: The Study did not however assess in detail the capacity or suitability of individual fragmented employment sites for ongoing use or the ability of the sites to adapt to changing economic trends and market demands. This Plan recognises that these recommendations could be taken forward by a more focused analysis of fragmented industrial lands in the LGA with respect to their suitability for a range of employment generating uses and in the context of the LGA's broader economic trends and needs. In practical terms, this recommendation has three key components: 1. A co-ordinated approach to reviewing sites (and where possible concurrent approach) to ensure an LGA wide perspective is maintained particularly in relation to the need for, and suitability of, the sites for various uses both today and in the future; 2. A consistent approach is achieved by reviewing the sites against the standard criteria outlined below; and 3. Where sites are found to be surplus to requirements and proposed to be rezoned, their suitability against a range of alternative uses discussed in this Plan is considered. For example their potential rezoning and use for creative industries, commercial office space or affordable housing. Step 2 above refers to standard criteria for assessing the suitability of an employment site for rezoning. In greater detail this Plan advocates the use of standardised criteria which has been designed to qualify the suitability of sites from a quantitative perspective (i.e. is there enough industrial land to meet current and forecast demand), a qualitative perspective (i.e. does the industrial land have the attributes required by potential tenants) and from the perspective of economic viability (i.e. are industrial uses viable on the land). In light of these factors, criteria against which proposed rezonings of industrial land should be assessed include: • Would the rezoning result in insufficient land being available for current and future demand for industrial land in the LGA, at a minimum? • Would the rezoning of the site result in the fragmentation of a larger industrial precinct or erode the viability of a locally or regionally significant industrial precinct? • Would the rezoning be consistent with adopted Council and/or State Government Policy regarding the future role and demand for industrial land? What impact would it have to Council's employment targets? • Does the site(s) have characteristics required by light or high tech industrial uses and other uses permitted in the zone/seeking floorspace in the LGA or subregion (e.g. floorspace, access, proximity to economic infrastructure, parking, infrastructure, storage, building configuration and land value)? • Would it be economically viable to improve the site to attract new tenants or to adapt to changing industry requirements and to ensure that the land uses on the site address compatibility with surrounding uses? • Would the retention of industrial uses on the site result in a positive net benefit to the community as a whole? Those rezoning proposals that can best respond to the criteria may be considered to have merit. Based on these criteria the industrial sites most likely to be suitable for rezoning are the LGA's fragmented industrial sites and smaller industrial precincts - although all rezoning proposals should be based on a thorough market analysis and economic impact assessment by an independent party. The criteria should also be considered in light of the supply and demand analysis provided by Leichhardt Employment Lands Study 2011 (or as updated by Council), the NSW Employment Lands Development Programme and any other relevant policy, publication or research.
The 10 Year Plan identified as one of the policy options available: Policy options available to Council include allowing a greater amount of office space in industrial areas and nominating appropriate industrial land to be transformed into affordable housing for key workers and students.
The 4 Year Plan was a shorter-term broad policy document. The Camperdown Industrial Precinct was not analysed specifically. The Plan noted the strategy to protect and enhance key employment lands as requiring the following actions (Folio 1658):
In May 2013, the Council resolved to implement a consideration of what was described as The Strategic Sites, Centres and Corridors Program (SSCC). It was intended to consider the issues relating to the potential to rezone existing zoned industrial lands in the whole local government area. At its meeting on 23 July 2013, the Council resolved to bring forward and commence a study of an area of land in Camperdown, ultimately bounded by Johnson Street, Parramatta Road, Mallet Street and Johnstons Creek (the Camperdown Industrial Precinct) as the first, and at the relevant dates the only of the strategic sites to be considered pursuant to the SSCC. The Camperdown Industrial Precinct included, at all times, the Acquired Land. Funds were allocated to the Camperdown Industrial Precinct consideration and work was undertaken by the Council staff to progress the consideration.
The resolution of the Council adopting this initiative identified that the study be commenced as soon as possible and that the scope of the study includes specifically (Item 3 at Folio 1685): • Future employment and economic possibilities, including business incubators to facilitate small 'start up' enterprises; • Housing opportunities, in particular aged housing, student housing and key worker housing; • Transport considerations, including public transport, cycleways and pedestrian linkages; • Public domain improvements; • Place-making and activation of the public domain And with reference to: • Council's flagged intention to develop Parramatta Road as a live music and entertainment precinct; • The regeneration of transport corridors and high street precincts; • The need to develop a more detailed response to opportunities implied by the proposed West Connex Corridor; The study to be funded from carryovers from the financial period 2012-13 or those identified in the first quarterly review of 2013-14.
On 18 March 2014, a presentation was made by Council staff to the Councillors relating to the status of the SSCC.
On 8 April 2014, the Council's Executive Strategic Planner produced an email that stated, in part: Below is my understanding of the work that Peter has proposed SGS Economics & Planning (SGS) could undertake and the next steps: Meet with Patrick Fensham of SGS with the view to engaging them to undertake further economic analysis of employment land for Stage 1 of the Strategic Sites, Centres and Corridors Study - Parramatta Road. The purpose of the work is to gain an understanding of where the industrial land within the study area, bounded by Parramatta Road, Mallett Street/Booth Street and Johnstons Creek, is positioned in the sub‐regional context…
By a report to the Council dated 10 April 2014, Council's Executive Strategy Planner reported to the Council as to the progress of stage two of the LEP review and identified that the SSCC study for the Camperdown Industrial Precinct would involve the following phases:
It further advised with respect to the Camperdown Industrial Precinct that:
This report did not refer in terms to the need to commission further studies relating to the industrial lands in the local government area generally or Camperdown specifically.
In May 2014, the Council prepared a project brief for the preparation of an industrial lands study. The project brief identified in its introduction, inter alia: Council is currently undertaking a Strategic Sites, Centres and Corridors Project which aims to develop a masterplan for the area bounded by Parramatta Road, Mallett St/Booth St, Johnstons Creek and Catherine Street to inform the future direction of the development of the area. The Study is to inform this project. Specifically, Council's intent in this regard is to understand where the Camperdown Industrial Precinct (which is located within the Strategic Sites, Centres and Corridors Project area) is positioned in the subregional context, and form a coherent view on the merits of protecting the industrial land. However, this cannot be established without consideration of the role, function and strategic position of the other industrial precincts, both within in the Leichhardt LGA and the other "inner Sydney" LGAs of Sydney, Botany Bay and Marrickville. During exhibition of Council's draft comprehensive LEP (Leichhardt Local Environmental Plan 2013), a number of submissions were received on behalf of owners of property within the Camperdown Industrial Precinct. These recommended that a greater mix of uses should be permitted in the area, including residential accommodation, and rezoning to a Business zone.
The brief identified in section 2.0 the "Need for the Study". The identified needs were stated in a section dealing with the "Background to the Leichhardt Economy"; a section dealing with "WestConnex" and a section identifying associated studies, policies and documents.
The purpose of the Study was identified in the following terms: The purpose of the Study is to: • Provide Council with baseline information against which to consider proposals for the rezoning of industrial land. • Identify the trends and long-term demand and supply for industrial zoned land in the context of the LGA and the subregion. • Establish the relative strategic positioning of the industrial precincts within the LGA. • Consider the Study Area against criteria for the rezoning of industrial land. • Assess the capacity of the industrial zoned land within the LGA to accommodate future demand for industrial land. • Establish if there is a basis for change in the Study Area. • Consider what uses may need to be accommodated in Leichhardt's industrial zoned land in the future. • Guide future decision making in relation to industrial land within the LGA. • Understand the implications of WestConnex on industrial zoned land within the LGA, in particular the Camperdown Industrial Precinct. • Make recommendations for the Camperdown Industrial Precinct to inform the direction of the Strategic Sites, Centres and Corridors Project and future amendments to the LLEP 2013 and DCP 2013. • Make recommendations for the industrial precincts of Moore Street, Lords Road, Balmain Road and Victoria Road South.
SGS Economics and Planning (SGS) were engaged to prepare the Study and the final report was dated December 2014 (2014 ILS). SGS were also the authors of the 2011 ELS. The 2014 ILS recommended that the IN2 zoning should be retained for the Camperdown Industrial Precinct and that no further retail uses in that Precinct should be permitted. In recognising that the recommendations in the 2014 ILS were different in some material respects from the 2011 ELS recommendations SGS noted that the differences were accounted for by differences in reporting outputs one of which was identified as: Development within the broader inner Sydney environment. Neither the 2012 nor the 2014 BTS employment and population forecasts indicate that they have factored in development of the Bays Precinct or the Westconnex project. The Bays Precinct will have a particularly significant effect on Leichhardt LGA. A conservative approach to the retention of existing industrial precincts is therefore recommended in the 2014 report given the likely increase in demand once these projects' impacts are considered.
In the report's section "Summary and Implications" it noted: Although fragmented, much of Leichhardt's industrial zoned land is located towards the LGA's southwestern boundary, between Parramatta Road and the City West Link. The construction of the Westconnex Motorway will provide connection opportunities for these industrial lands to the Sydney motorway network and, by extension, the Greater Metropolitan Area. Better accessibility resulting from these infrastructure improvements will improve business supply-chain links and access to customers for population-serving industries. This will increase the competitive position of these areas and will likely result in increased demand.
Subsequent to the adoption of the 2014 ILS the Council prepared the Leichhardt Industrial Lands Study (LIPP) prepared at least in part to assist with its consideration of the Parramatta Road Urban Renewal Strategy (PRUTS). In order to undertake the LIPP the Council also engaged urban designers Architectus to prepare an urban design report to compliment the LIPP (Architectus Report). This report tested various industrial use standing alone or in conjunction with commercial or residential development.
Concurrently with the commissioning and receipt of the 2014 ILS the Council determined three planning proposals: 1. In November 2013, the Council received an application for a planning proposal requesting the rezoning of industrial land at Allen Street, Leichhardt (Allen Street PP) to a residential only zone. In October 2014, the Council resolved to support the Allen Street PP without commissioning any further studies relating to the need to retain industrial lands in the local government area and relied instead upon the findings of the 2011 ELS to justify the rezoning from industrial to residential; 2. In May 2014, the Council received an application for a planning proposal in Lords Street, Leichhardt (Lords Street PP). In August 2014, the Council resolved not to support the Lords Street PP for reasons that included the necessity to defer consideration until after the 2014 ILS had been received; and 3. In August 2014, the Council received an application for a planning proposal in Marion Street, Leichhardt (Marion Street PP). In November 2014, the Council resolved not to support the Marion Street PP for reasons that included the necessity to defer consideration until after the 2014 ILS had been received.
In addition, during this period, the Council held a number of meetings to consider the WestConnex project. The Council was not supportive of the project and rejected support for the PRUTS. In essence, the Council was attempting to encourage the State Government to reconsider proceeding with the WestConnex project, particularly as it related to its local government area. It is fair to say that the Council was vehemently opposed to the WestConnex project.
In force at the relevant time was a direction made pursuant to s 117 of the Environmental Planning and Assessment Act 1979 (NSW) (the s 117 Direction) which related to Business and Industrial Zones. The s 117 Direction had as its objectives: Objectives (1) the objectives of this direction are to: (a) encourage employment growth in suitable locations, (b) protect employment land in business and industrial zones, and (c) support the viability of identified strategic centres.
The relevant operative provisions of that Direction were that: What a relevant planning authority must do if this direction applies (4) A planning proposal must: (a) give effect to the objectives of this direction, (b) retain the areas and locations of existing business and industrial zones, (c) not reduce the total potential floor space area for employment uses and related public services in business zones, (d) not reduce the total potential floor space area for industrial uses in industrial zones, and (e) ensure that the proposed new employment areas are in accordance with a strategy that is approved by the Director-General of the Department of Planning. Consistency (5) A planning proposal may be inconsistent with the terms of this direction only if the relevant planning authority can satisfy the Director-General of the Department of Planning (or an officer of the Department nominated by the Director-General) that the provisions of the planning proposal that are inconsistent are: (a) justified by a strategy which: (i) gives consideration to the objective of this direction, and (ii) identifies the land which is the subject of the planning proposal (if the planning proposal relates to a particular site or sites), and (iii) is approved by the Director-General of the Department of Planning, or (b) justified by a study (prepared in support of the planning proposal) which gives consideration to the objective of this direction, or (c) in accordance with the relevant Regional Strategy or Sub-Regional Strategy prepared by the Department of Planning which gives consideration to the objective of this direction, or (d) of minor significance.

Town planning evidence

Evidence was given by town planners for each party dealing with the planning history of the Acquired Land and the status of the zoning at the Date of Acquisition together with future zoning by Mr Cirilo for the Applicants and Mr Rohan for the Respondent. In the Joint Report of the Town Planners those experts prepared an agreed chronology of events that they considered may have some bearing on the determination of the issues relating to the zoning of the Acquired Land which is annexed at Annexure A.
The town planning experts agreed that all actions taken by the Council in connection with the Acquired Land up until April 2014 were not actions influenced by the proposal to undertake the Public Purpose. The experts further agreed that the following were not influenced by the proposal to undertake the Public Purpose: 1. The Council's decision to take a two-stage approach to the plan making was not influenced by the Public Purpose; 2. The 2011 ELS; 3. The 10 Year Plan; 4. The 4 Year Plan; 5. The SSCC; 6. The presentation to Councillors; and 7. The decision to commission a report that studies the industrial lands but they disagreed as to whether the particular study that was commissioned was influenced by the Public Purpose.
The town planning experts diverge as to whether the steps taken to commission and adopt the 2014 ILS were influenced either in whole or in part because of the proposal to carry out the Public Purpose.
Mr Cirilo gave evidence that in his opinion, in April 2014 the Council undertook a shift in focus in relation to the rezoning of the land in the Camperdown Industrial Precinct the subject of the SSCC. At [86]-[87] of the Joint Report of the Town Planners he stated his position in the following manner: 86. GC says the Project Brief for the Leichhardt Industrial Lands Study issued in May 2014 marked a distinct shift in focus from the earlier Strategic Sites, Centres and Corridors Project. The ILS is clearly a product of the "public purpose", being the proposal of the State Government to carry out the WestConnex project and its associated Parramatta Road Urban Transformation Strategy. The Leichhardt Industrial Lands Study (ILS) released in December 2014, specified the consideration of WestConnex within its scope of works and recommended the retention of IN2 zoned industrial land within the Leichhardt LGA. 87. GC says the public purpose changed the evidentiary basis for the investigation of future land use options and the conclusions of the ILS.
As a consequence, it was Mr Cirilo's opinion that the whole of the 2014 ILS should be disregarded. If it was disregarded it was his opinion that the Council would have proceeded to determine the zoning of the Camperdown Industrial Precinct in accordance with the existing evidence base that included the 2011 ELS, as it had done with the Allen Street PP. Such evidence base indicated that a B6 zoning was being considered for that part of the Camperdown Industrial Precinct that included the Acquired Land. The precise controls and land uses would have been informed by the preparation of further studies including an urban design study.
Having considered the urban design evidence adduced in these proceedings Mr Cirilo was of the opinion that the likely built form on the Acquired Land would have been that as proposed by Mr Dickson with a 12-storey building comprising enterprise uses at ground floor and residential above. The residential uses would have been of a type relating to affordable housing such as boarding house uses for key worker and student accommodation provided by a private developer. The total FSR would have been 5:1.
Mr Rohan disagreed that the 2014 ILS should be disregarded in its entirety. He expressed the foundation for his opinion at [88] of the Joint Report of the Town Planners in the following terms: 88. AR says the ILS 2014 should not be disregarded in its totality. The ILS brief, absent the public purpose, would not be substantially different from that which was prepared, if those sections referring to WestConnex were omitted. Absent those sections, the scope of the brief would have essentially have remained the same for the following reasons: a. section 2.2 only refers to the public purpose in the form of background information extracted from the relevant strategic planning documents. It does not provide any evident basis to conclude that its content warranted preparation of the ILS 2014. Section 2, Needs for the Study, also includes two other sub-heading sections. Absent section 2.2, sections 2.1 and 2.3 would still provide adequate justification for preparation of the ILS 2014; b. Section 3.0, Purpose, includes only one purpose of the identified 11 purposes of the brief that refers to WestConnex. Likewise in Section 5.0, Scope of Work, that only one task of the identified 13 tasks refers to WestConnex. Omitting those specific references would not have altered the overall purpose and scope of the brief regarding industrially-zoned land.
Mr Rohan was of the opinion that absent the Public Purpose a study seeking to understand the local government area wide industrial lands would likely have been commissioned in order to progress the SSCC. He was of the opinion that such a study would, absent the Public Purpose, still have arrived at a recommendation to retain the industrially zoned land in that part of the Camperdown Industrial Precinct that included the Acquired Land and that the Acquired Land would have remained zoned IN2, or if an alternative existed it would have been a B6 zone with no residential accommodation.
If, contrary to his opinion, residential accommodation was to be provided it would be limited to a smaller percentage proportion of the total FSR, in the order of 20-30% and would have been limited to affordable housing for key workers and students.
Having regard to the urban design evidence adduced in the proceedings Mr Rohan considers the urban design study prepared in the proceedings to be insufficient to justify the urban design response if the land was rezoned and he sets out his reasoning at [20] pf the Supplementary Joint Expert Report of Town Planners. If the site was rezoned as contended for by the Applicants Mr Rohan agreed with Mr Cadogan that it was extremely unlikely that the Council would approve a 12-storey building in this locality and that the more likely building envelope would be a 6-storey building including a 2-storey podium in which enterprise uses would be undertaken and a 4-storey setback component for affordable housing above.

Urban design evidence

The Applicants retained urban designer and architect, Mr Dickson, who undertook an assessment of the Acquired Land and determined that the land could accommodate residential uses and that its proximity to university and hospital uses indicated a capacity to meet key worker and student demand for affordable housing. He gave evidence that, in his opinion, a development that provided some retail/food uses at ground floor with a total height of 12 storeys with the storeys above ground floor being residential and with the development having a FSR of 5:1 would be appropriate for the site.
Mr Cadogan, architect and urban designer gave evidence for the Respondents. From a purely urban design position he accepted that the proximity of the Acquired Land to the educational and medical uses could support housing that would accommodate workers and students. Also, from a purely urban design position he agreed that the form of building indicated by Mr Dickson could be accommodated on the Acquired Land in the manner proposed. However, Mr Cadogan emphasised that the relevant considerations were not limited purely to urban design and that in his opinion, the Council, in light of current development in the area and Council's past attitude to development, it would be unlikely that a 12-storey building would be approved on the Acquired Land. He indicated that it was more likely that the total height would be in the order of a maximum of 6-8 storeys.
Both experts ultimately agreed that from an urban design analysis only that if the land was rezoned to permit enterprise uses with a residential component an 8-storey building could accommodate a 5:1 FSR if designed as: 1. A 4-storey podium accommodating active street front uses permissible in a B6-Enterprise Zone; and 2. A 4-storey boarding house style use of affordable housing for students and/or key workers above the podium.

Applicants' submissions

The Applicants accept that the IN2 zoning of the Acquired Land by LEP 2013 was not in any manner influenced by the proposal to carry out the Public Purpose.
The Applicants' fundamental position is that the Council had, independent of the making of LEP 2013, commenced the taking of steps to rezone the land and that absent the Public Purpose the Acquired Land, sometime prior to the Date of Acquisition, would have been rezoned. The rezoning would have been a B6 zone with a permitted residential use as affordable housing for key workers and/or students.
The Applicants contend that prior to April 2014 there were clear indications in the Council documents that the Acquired Land was being actively considered for rezoning as evidenced by: 1. The 2011 ELS; 2. The 10 Year Plan; 3. The 4 Year Plan; 4. The SSCC; 5. The funding of the SSCC for the Camperdown Industrial Precinct; and 6. The pursuit of the programme identified in the SSCC as indicated in the reporting to the Council by its officers of the progress of the SSCC.
The Applicants rely upon the steps leading up to and including the commencement of the SSCC for the Camperdown Industrial Precinct as evidence of the intention to rezone and the list of land uses to be considered in that precinct as evidence of the type of zone to which the Acquired Land was likely to be rezoned.
Whilst the Applicants accept that prior to April 2014 there was no express reference in any of the written materials that the Acquired Land would be zoned to permit some residential uses in addition to some industrial uses they say that is because the process of rezoning was stopped or relevantly changed. Once it is found that the rezoning process was stopped or changed course the Court must then decide as a question of fact what the rezoning would have been if the process had continued without the influence of the Public Purpose. In their case they say the Acquired Land would have been rezoned and that any such rezoning would have been undertaken by the Council as a "precinct wide" rezoning of the Camperdown Industrial Precinct. Further, that such a process of rezoning would have been completed prior to the Date of Acquisition in 2018.
In April 2014, it is contended that the process of rezoning the Acquired Land was stalled or redirected. This relevant change is said to have been caused by the proposal to carry out the Public Purpose. The change is to be derived from a consideration of the Council's actions as to the rezoning process from this date in that: 1. The Council determined that it had an insufficient evidence base to determine the rezoning of the Camperdown Industrial Precinct and that new studies relating to the local government and regional demand for industrial land uses were required before any rezoning could be completed; and 2. In commissioning such further studies the Council altered its approach to the consideration of the industrial lands by requiring a consideration of the impact that the Public Purpose may have on demand of industrial lands in the local government area and the region generally.
The consequence of this change in position is that the Council determined that industrially zoned lands, including the Camperdown Industrial Precinct and the Acquired Lands should not be rezoned but should remain zoned IN2. This retention of the zoning of the Acquired Land was, therefore, as a direct consequence of the proposal to carry out the Public Purpose and should be disregarded pursuant to s 56(a) of the Just Terms Act.
The evidence supports this conclusion having regard to the way in which the Council determined the Allen Street PP where it determined to rezone industrial land to zone for residential uses based solely on the evidence base available to it at the time which included the 2011 ELS. There was no requirement for further studies to be undertaken, as the 2011 ELS was a sufficient evidence base. Further, as the 2011 ELS had determined that there was a surplus of industrial lands rezoning was considered appropriate. The Applicants contend that absent the Public Purpose this is the way in which the Camperdown Industrial Precinct would have been investigated, considered and rezoned.
For that reason, the recommendations in the 2014 ILS and all documents that arose from or were informed by the 2014 ILS and the change in position in relation to the need for local government based demand assessment for industrial land (such as the LIPP and the Architectus Report) are to be set aside. It must then be ascertained what the rezoning of the Camperdown Industrial Precinct would have been absent these considerations.
Absent the material that was influenced by the proposal to carry out the Public Purpose an urban design report would have been considered in conjunction with town planning considerations to develop a built form and land use package for the Camperdown Industrial Precinct. The evidence from the urban design experts make it plain that a building that conformed with the B6 zone and a residential use above could be justified for the Acquired Land in a manner that there was retaining the amount of industrial (or enterprise) land uses whilst adding the residential above.
The Applicants contend that from the actions of the Council prior to April 2014 a finding should be made that the 2014 ILS was commissioned, adopted, and the IN2 zoning maintained, as a direct consequence of the change in circumstances that related solely to the carrying out of the Public Purpose. Steps taken subsequent to the 2014 ILS, such as the LIPP and the Architectus Report must also be disregarded as those steps were informed by the content and recommendations of the 2014 ILS. Absent the 2014 ILS those steps would not have been taken in the manner in which they were.
Therefore, as s 56 requires, the 2014 ILS and subsequent planning steps are to be ignored. The Court must then determine as a "question of fact" what the Acquired Land would have been zoned absent the Public Purpose. Based upon the evidence projected from the pre-April 2014 steps that zoning would not have retained the IN2 zoning of the Acquired Land. All recommendations prior to April 2014 recommended a change to the IN2 zoning, which at the very least would have resulted in a B6 zoning.
The Council's approach was to identify "appropriate industrial land" to be transformed into affordable housing for key workers and students. The Acquired Land was suitable, adopting the evidence of the urban designers, as it was proximate to hospitals and education facilities. As such, the Acquired Land would have been considered suitable for that additional residential purpose.
The adoption of a zone other than the IN2 zone that permitted residential development improved the market value of the land and, therefore, the IN2 zone retention should be disregarded and the Acquired Land valued on the basis of the zone that would have been if the proposal to carry out the Public Purpose had not intervened.
The evidence also supports a finding that such a process of rezoning could have been completed prior to the Date of Acquisition.

Respondent's submissions

The Respondent contends that the Applicants' case turns on the assumption that the Acquired Land would have in fact been rezoned through the process embarked upon by the Council and in fact there is no evidence that would support such a finding. The evidence makes it plain that whilst the Council had embarked on a process of investigation any resolution of that investigation would have retained the IN2 zoning of the Acquired Land. There had been, and was at the relevant period, a consistent approach of both the State Government and the Council to protect industrially zoned land and the process of investigation was not a step towards rezoning but a very tentative first step to see if there were circumstances in the precinct as a whole that may permit some more uses in the Camperdown Industrial Precinct. Therefore, there was, on the evidence, no decision to rezone and, therefore, no decision that could be stalled or redirected as contended for by the Applicants.
Even if the Applicants' position was accepted and the Council had made a decision to rezone the Acquired Land the steps necessary to develop that decision to a point where a rezoning could be effected it was unlikely that such a process could have commenced and been completed by the Date of Acquisition.
The evidence does not support the finding that the Council's position or action towards rezoning changed, altered, stalled or diverted due to the proposal to carry out the Public Purpose. The commissioning of the 2011 ILS was a sensible step to provide an evidence base to a determination such as the rezoning of the Camperdown Industrial Precinct. The Council documents, including those relied upon by the Applicants, anticipated that further studies and reports would have been required. The 2011 ILS and the subsequent reports such as the LIPP and the Architectus Report are not exceptional nor does the findings of those reports reflect an influence of the Public Purpose that would require them to be ignored by operation of s 56(a).
To the extent that the 2014 ILS did make references to the Public Purpose the recommendations of that report were arrived and absent a consideration of the impact of the Public Purpose the recommendations would have been the same absent the Public Purpose and as such it should not be disregarded in its entirety but rather considered as part of the broader policy considerations that would have been developed to inform the investigation process identified in the SSCC.
The Allen Street PP is not evidence of any consistent policy of the Council. A consideration of that planning proposal indicated that there were very site-specific considerations relating to that industrial land that was not present in Camperdown. For example, the Allen Street PP was industrially zoned land that was not being used for industrial purposes and had not been used for that purpose for some time; the buildings were not able to be used for industrial purposes at the rezoning without being substantially rebuilt; and it was an area of land totally surrounded by residential development.
Even if, contrary to the Respondent's submissions, it was accepted that the Acquired Land would have been rezoned that rezoning would not have included any residential uses. The reference to considering uses for affordable housing for key workers and/or students was never identified as a real prospect in the Camperdown Industrial Precinct or particularly the Acquired Land. The absence of reference to residential uses is consistent with the historic policy of the Council and the State Government to protect industrial lands. The introduction of residential uses into an industrial area is a dilution of the capacity for that area to operate for industrial uses and the mere numeric retention of industrial floor space is not the only consideration in determining whether residential uses should be introduced into an industrial area. The primacy of the industrial uses being retained is inconsistent with the introduction of residential uses.
The Respondent contends that the Council did not alter its consideration of the rezoning of the Acquired Land as a consequence of the proposal to carry out the Public Purpose. The actions taken by Council after April 2014 were a continuation of the consideration process embarked upon by it and the findings of the 2014 ILS and the IN2 zoning at the Date of Acquisition was not influenced by the proposal to carry out the Public Purpose and such zone would have been maintained for planning reasons notwithstanding the Public Purpose.

Findings on zoning of Acquired Land

The Applicants' case relies upon a finding that the Council was taking steps to rezone the Acquired Land and that such steps would have been completed by a date prior to the Date of Acquisition. This foundational proposition of the Council being likely to rezone is said to be found in the documentary evidence leading up to a date in April 2014. From the evidence adduced, I accept the Respondent's submissions that there is no evidence that would support a finding that the Council had in fact made a positive decision to rezone the land in the Camperdown Industrial Precinct and in particular the Acquired Land.
The evidence discloses that a number of submissions had been received by the Council during the consultation leading up to the making of LEP 2013 seeking to rezone industrially zoned land. The Council determined that independent of the making of LEP 2013 it would investigate whether rezoning of industrial lands was warranted. This was no more than the Council agreeing to investigate the claims of various submitters that the land should be rezoned. The Council, at no time, made a decision to pursue a rezoning and was only investigating the appropriate zone to be adopted in a rezone. The investigation was more fundamental and went to whether the industrial lands broadly, and the Camperdown Industrial Precinct specifically (as the first identified area for investigation), should be rezoned at all. The evidence, whilst identifying Camperdown Industrial Precinct as the first of the areas to be investigated, does not identify any particular attitude of Council in favouring rezoning at all or identifying Camperdown as being an area more suitable to rezoning.
The steps then undertaken by the Council, including the allocation of funding for the SSCC project for the Camperdown Industrial Precinct and the works carried out by the staff, identify this process of fundamental investigation, rather than determination that a rezoning of some type was appropriate. As can be observed from, for example, the SSCC, the 10 Year Plan and the 4 Year Plan identifies a process of creating an appropriate evidentiary context in which various proposals to rezone industrial lands can be understood and creating appropriate criteria against which any rezoning proposal should be considered. This approach is not supportive of a suggestion that the Council had made any real or substantive decision to rezone the Camperdown Industrial Precinct or had even at April 2014 completed what was considered to be the identification and commissioning of the essential evidence base to permit such a consideration to begin, let alone be completed.
In this context, the consideration by the Council of the Allen Street PP is to be viewed as a site-specific response to a proposal rather than representative of any settled policy by the Council. As is made apparent in the Allen Street PP the industrially zoned land was not being used for industrial purposes and the capacity for that land to be used for such purposes was significantly affected. I accept the Respondent's submissions as to distinguishing the Allen Street PP. The Council's identification that the Allen Street PP related to industrial land that was low quality and of a very low significance as it related to the demands for employment lands in the local government area indicates a site-specific merit assessment. The approval of that planning proposal was consistent with both evidence-based merit assessment and the State Government's and Council's historic policies relating to industrial lands and was not an indication of a broader policy approach to industrial lands more generally.
The Camperdown Industrial Precinct, in contrast, had been consistently identified as an important (if not one of the most important) industrial areas in the local government area as indicated by: 1. Designation as category 1 industrial land in the Draft Subregional Strategy (see [28]-[32] above); 2. The reiteration in the 2010 Sydney Metro Plan of the need to retain existing strategically important industrial land in the earlier Subregional Strategy including category 1 land as identified (see [36]-[38] above); 3. The identification in the 2011 ELS of the future of the Camperdown Industrial Precinct as retaining the light industrial zoning with enterprise corridor activities along Parramatta Road (see [39] above); and 4. Retention of industrial lands as identified in the 2013 Draft Metro Strategy (see [44] above).
The actions that the Council then took in investigating industrial lands does not evidence a shift from the designation of the Camperdown Industrial Precinct as being an important area of industrial land to be protected: 1. In the 10 Year Plan the Council identified the policy of retaining as much industrial land as was necessary to meet demand and that notwithstanding the 2011 ELS a more detailed and focussed analysis of demand would be required before consideration of any rezoning proposals (see [46]-[47] above); 2. The 4 Year Plan also reflected the desire to protect industrial lands. The outcome identified in the 4 Year Plan (see [48] above) emphasised that protection of industrial lands was a key policy driver; and 3. The SSCC which was a framework for the investigation rather than a statement of intention.
From a fair reading of the totality of this material the only reasonable conclusion is that the Council was embarking on an investigation of rezoning whilst reiterating the broader overarching policy that it had implemented for many years that industrial lands, particularly existing industrial land is to be retained.
In that context, the Applicants' submission that the decision to commission a report relating to the local government area and broader regional demand cannot be accepted.
The question then arises as to whether the report the Council did in fact commission, the 2014 ILS and the subsequent considerations in the LIPP and Architectus Report, is one that should be ignored as it was impermissibly influenced by the proposal to carry out the Public Purpose.
It is apparent on its face from the brief prepared in the commissioning of the 2014 ILS that the Council was considering how the Public Purpose would affect the industrial areas (positively or negatively) and that such considerations were a key part of the 2014 ILS brief (see [56] above). Further, the purpose of the 2014 ILS was to specifically consider the impacts of the Public Purpose on industrial lands (see [58] above). Further, whatever the recommendations in the 2014 ILS it is apparent that there was a clear instruction that the Public Purpose be considered in the reporting (not as a separate and distinct consideration) and to that end it must follow that the 2014 ILS was commissioned in response to the Public Purpose. As the LIPP and the Architectus Report in part relied upon the 2014 ILS and also was considering the PRUTS (which was created for the Public Purpose) those reports should also be disregarded.
Absent the Public Purpose the 2014 ILS would not have been commissioned in the manner and for the purpose it was commissioned. Accordingly, the 2014 ILS should be disregarded for the purposes of determining what the zoning of the land would have been absent the Public Purpose.
It is then necessary to attempt to derive from the evidence the approach that the Council would have taken to the consideration of the zoning of the Camperdown Industrial Precinct. For the reasons outlined above, the Council would have continued to obtain necessary analysis of the demand for industrial lands in the local government area and region generally, but that analysis would have excluded any consideration of the effect that the Public Purpose may have had upon that demand.
Drawing from the agreement in the evidence between the town planners the study of the prevailing and future demand for industrial land absent any consideration of the Public Purpose would have been a study that largely accorded with a consideration of the evidence base in the 2014 ILS and would likely have arrived at a similar conclusion that the industrial lands, and in particular the Camperdown Industrial Precinct, be retained and protected with an IN2 zone. As stated by those experts in their joint report: 100. We agree, absent the public purpose, the emerging issues current in their effect upon industrial land and the supply of industrial land would still have existed and still would have been identified in response to the review process required by the 10 Year plan for a thorough market analysis and economic impact analysis as part of the investigation of rezoning of any industrially-zoned land. 101. Section 7.2 of ILS 2014 reviews each of the industrial areas, including Camperdown, against the criteria expressed in the 10 year plan when considering the rezoning of existing industrial land. It concludes, in section 7.3, that Camperdown is to retain its IN2 zoning. There is no reference to the public purpose in either the Section 7.2 review; or the strategies and actions for Camperdown (or any other area) in Section 7.3. 102. We agree that the summary of findings of the ILS 2014 (pg 3) is that all of Leichhardt's industrial land be retained and protected from rezoning; and additional industrial floor space be provided; and Council's planning controls be revised to facilitate the protection and growth of industrial precincts. 103. We agree that in Part 7 "Findings and Recommendations", Section 7.3 Strategies and Actions within the ILS 2014, we agree the supporting justification for Actions 3.1 and 3.2 of Recommendation 3 (Table 40) pertinent to the Camperdown Industrial Area did not include any reference to the public purpose. 104. We agree, absent the public purpose, strategies and actions the same as contained in sections 7.3 of ILS 2014 would have resulted in a study that responded to the review process similar to that contained in section 7.2 required by the 10 Year plan for a thorough market analysis and economic impact analysis as part of the rezoning investigation of any industrially zoned land. 105. We agree that the findings of the ILS 2014, regarding the protection of existing industrially zoned land, comprised the established planning approach of the Council as at the date of acquisition for the consideration of future planning proposals seeking the rezoning of such land.
Having regard to the prevailing historic policies for the retention and protection of industrially zoned land and the probable findings of a study of demand prepared for the purposes of the investigation of the Camperdown Industrial Precinct, on the balance of probabilities, I find that it would be unlikely that the Council would have rezoned the Camperdown Industrial Precinct, and in particular the Acquired Land for a zone other than IN2.
Accordingly, the Acquired Land is to be valued on the basis of the IN2 zoning.
However, even if I be wrong and the Council was to have been found to have been likely to have rezoned the land to a B6 zoning the evidence discloses that there would only be a material change in the market value of the land if a residential land use was permitted on the Acquired Land. It is a necessary element of the disregard required by s 56(a) that there must be an impact on the value of the land caused by the proposal to carry out the Public Purpose. In this case, as is set out below, it was an agreed position between the valuers that a B6 zoning with no residential would produce the same value as land zoned IN2. If I was required to consider this aspect of the Applicants' case I would find, for the reasons that follow, that on the balance of probabilities, a residential use would not be permitted on the Acquired Land.
The Applicants rely upon statements in the pre-April 2014 Council documentation that residential uses in the form of affordable housing or boarding houses would have been permitted on the Acquired Land. It contends that the statements relating to the identification of appropriate industrial land for key worker and student accommodation would permit such a finding and that the evidence of the urban designers would support such a finding.
From these references, the Applicants contend that the Council would have rezoned the land to include some residential uses, particularly boarding house type affordable accommodation for key workers and students. The only requirement for the Council to favourably consider such additional uses would be to provide an evidence-based assessment that confirmed the suitability of the Acquired Land for that purpose.
Mr Cadogan, architect and urban designer gave evidence for the Respondent. From a purely urban design position he accepted that the proximity of the Acquired Land to the educational and medical uses could support housing that would accommodate workers and students. Also, from a purely urban design position he agreed that the form of building indicated by Mr Dickson could be accommodated on the Acquired Land in the manner proposed. However, Mr Cadogan emphasised that the relevant considerations were not limited purely to urban design and that in his opinion, the Council, in light of current development in the area and Council's past attitude to development, it would be unlikely that a 12-storey building would be approved on the Acquired Land. He indicated that it was more likely that the total height would be in the order of a maximum of 8 storeys.
Both experts ultimately agreed that from an urban design analysis an 8-storey building could accommodate a 5:1 FSR if designed as: 1. A 4-storey podium accommodating active street front uses permissible in a B6-Enterprise Zone; and 2. A 4-storey boarding house style use of affordable housing for students and/or key workers above the podium.
It is true that the Acquired Land is located in proximity to both educational and health uses such that it is capable of meeting any demand for key worker and/or student housing. However, the same can be said for all of the land located within the Camperdown Industrial Precinct. The question is whether the Acquired Land would have been zoned to permit such residential uses. Having regard to the totality of the evidence, and particularly as identified below, I find that the Acquired Land would not, on the balance of probabilities, have been zoned to permit residential uses of any kind.
The first reason is that in the 2011 ELS the Council identified the Camperdown Industrial Precinct as being a key industrial area. To permit residential uses in the whole of the northern part of the precinct would be inconsistent with the principle goal identified as the protection of key industrial areas. To then examine the northern portion and identify if any particular sites were, on an evidence-based approach, suitable for residential uses the Acquired Land would be unlikely to be so identified as it was being used for industrial purposes. There is land in the northern precinct that was being used for residential and other non-industrial uses that could accommodate a residential form without the loss of existing industrial land given over to an industrial use.
Secondly, the Camperdown Industrial Precinct was of a sufficient area that there was land available more proximate to existing residential uses (both within and adjoining the Precinct) where such uses could have been accommodated without the loss to residential of industrial lands with the desirable features of accessibility and visibility to the arterial Parramatta Road. Further, the proximity to Parramatta Road posed some amenity issues for any residential use that rendered it less desirable than in the parts of the Precinct more removed from the main road. Therefore, there is no presumption in favour of residential uses being permitted in the zone, and particularly not on the Parramatta Road frontage, upon which the Acquired Land was located.
As was noted in the 4 Year Plan (see [48] above) the primacy of the policy was to discourage residential uses along Parramatta Road unless an evidence-based assessment confirmed suitability for key worker or aged care accommodation. It noted that some "resilient" residential uses could be located around the "buffer zone" of industrial uses to minimise impacts to sensitive uses. The location of proximity to the university and medical facilities relied upon by the Applicants to demonstrate a suitability for such uses is equally identified in the 4 Year Plan at [48] above as being a good quality location for industrial land uses.
Thirdly, the Council, in its consideration of the Camperdown Industrial Precinct had specifically identified Parramatta Road frontages as being appropriate for enterprise uses. The SSCC study was sufficiently fine grained that if there were a suggestion that affordable housing or any residential use was appropriate for land such as the Acquired Land it would have been specifically identified. The references to affordable housing in the context in which it is found is not an indication that any or all of the industrial land should be given over to residential uses. It was intended to be the exception dictated not by whether the land could accommodate a residential use but rather whether the other goals identified in the SSCC, the 10 Year Plan and the 4 Year Plan could be met with the land taken out of industrial use and given over to residential uses. The analysis undertaken by the urban designers does not consider these additional considerations sufficiently such that it could be found that the Acquired Land, upon undertaking the analysis required by the Council, would support a residential use.
Finally, the retention of land zoned for industrial uses was consistent with the state government policies of the time. To provide for the provision of any residential development in an industrial or enterprise zone would be prima facie inconsistent with such policies and would have to be justified. In light of the specific identification in the Council's own policies to retain an industrial/enterprise use on land fronting Parramatta Road (which includes the Acquired Land) would not have been achieved if residential uses were a permitted land use. The fact that a B6-Enterprise zoning would permit and encourage industrial uses would not be sufficient to protect such land uses if residential was also permitted. As is made plain by the valuers' evidence in this case, if any form of residential use is permitted on the Acquired Land the economic return for that land is improved such that it would be unlikely be used for an industrial use.

Market value of highest and best use

The expert valuers, Mr Dyson for the Applicants and Mr Lunney for the Respondent, agreed that if the Acquired Land were zoned B6 with no residential use permissible at the relevant date the market value of the land would be $10.6 million. This sum would be the same if the Acquired Land remained zoned IN2 Light Industrial. Accordingly, absent a finding of a residential use being permitted on the Acquired Land, the proposal to carry out the Public Purpose did not result in either an increase or a decrease in the value of the Acquired Land.
Accordingly, the market value of the Acquired Land is determined in the sum of $10.6 million.

Disturbance

The dispute between the parties turns on two factors: first, whether the fees for an architect are relevantly legal costs within the meaning of s 59(1)(a) of the Just Terms Act, and secondly, whether the Applicants have relocated such that they are entitled to a sum for stamp duty and the discharge of the mortgage in accordance with the provisions of s 59 and, if so, in what sum?

Claims for disturbance - s 59 of the Just Terms Act

Section 59(1) of the Just Terms Act provides: 59 Loss attributable to disturbance (1) In this Act - loss attributable to disturbance of land means any of the following - (a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land, (b) valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land), (c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs), (d) stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired), (e) financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation (but not exceeding the amount that would be incurred if the new mortgage secured the repayment of the balance owing in respect of the discharged mortgage), (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.
In addition to the market value of the Acquired Land the Applicants seek disturbance pursuant to s 55(d) in the sum of $508,368.18 comprising: 1. Legal costs: $183,926.17 2. Valuation fees: $30,800 3. Stamp duty: $254,990 4. Financial costs incurred with discharging mortgages: $38,652.01
The Respondent disputes that the Applicants are entitled to disturbance in such amounts (apart from an agreement of the quantum of the valuation fees) and contends that the Applicants are entitled to disturbance in the amount of $121,741.58 comprising the following sums: 1. Legal costs: $90,941.58 2. Valuation fees: $30,800 3. Stamp Duty: $nil 4. Mortgage costs: $nil

Legal costs

The disputed amount of legal costs relates to two classes of costs claimed as legal costs: 1. Legal costs (urban design) being the cost of the urban designer of the preparation of an urban design study ($53,313.02) and the costs of the legal advisor considering this urban design study ($6,653); and 2. Legal costs (real estate) ($20,434.57 as claimed) incurred by the Applicants in connection with the purchase of land at 71 John Street, Leichhardt which are now occupied by OET.
The Applicants claim such costs as legal costs within the meaning of s 59(1)(a), or in the alternative as a financial cost incurred pursuant to s 59(1)(f).
The Applicants contend that such legal costs were properly incurred in connection with the compulsory acquisition of the Acquired Land. There is no statutory requirement that such costs be a direct and natural consequence of the acquisition and the appropriate consideration is whether the Applicants would have incurred those costs but for the acquisition.
With respect to the legal costs (urban design) the Applicants contend that such advice was required to enable the Applicants to obtain legal advice as to appropriateness of the offer of compensation. This case was one that required a consideration as to whether the land would have been likely to have been rezoned to another zone absent the intervention of the acquisition and, therefore, a consideration of the likely development potential of that land rezoned in order to determine the highest and best use of that land for the purposes of the valuation exercise. Necessary to obtaining that advice the expert advice of an urban designer was required to undertake an urban design review and that such advice be considered by the legal advisors before providing the necessary advice on the offer of compensation.
With respect to the legal costs (real estate) the Applicants would not have needed to purchase the John Street property but for the acquisition of the Acquired Land and, are therefore, compensable as legal costs pursuant to s 59(1)(a) of the Just Terms Act.
The Respondent contends that the legal advice (urban design) in so far as it relates to the costs of the urban designer are not compensable as they are not "legal costs" in that they are not costs incurred by a legal practitioner, but a third party without legal qualifications. There is a clear statutory intent in s 59(1)(a) to limit fees payable to lawyers to advise the disposed owner on the acquisition: SNS Pty Ltd v Roads and Maritime Services [2018] NSWLEC 7 at [338].
Additionally, the legal advice (urban design) were not reasonably incurred in connection with the compulsory acquisition as a hypothetical prudent purchaser would not have engaged an urban designer to obtain this advice and, it is therefore, not a cost reasonably incurred.
As to the legal advice (real estate) the Respondent contends that such advice is not reasonably incurred in connection with the compulsory acquisition as it relates to the purchase of other land, not the Acquired Land and it cannot be said to relate to any reasonable claim for disturbance within s 59(1) as the Applicants have not relocated such that the costs (including legal costs) relating to the purchase of alternative land would be a reasonable incurring of a cost relating to the acquisition.

Stamp duty

The Applicants contend that they are entitled to the stamp duty incurred upon the purchase of the John Street property pursuant to s 59(1)(d) of the Just Terms Act.
The Applicants submit that the John Street property would not have been purchased but for the acquisition of the Acquired Land and that they have only done so in order that the business of OET may continue in a manner largely identical to the business carried out on the Acquired Land. The nature of the OET business is such that ownership of the land is desirable as there are a number of modifications required to any property to enable the manufacturing processes to be undertaken.
The Applicants are not passive investors as referred to in Fitzpatrick Investments Pty Ltd v Blacktown City Council (No 2) (2000) 108 LGERA 417. The Applicants, as the controlling minds of OET have relocated in part to the John Street property to continue the warehousing and manufacturing operations of that business.
The Respondent contends that the Applicants is not entitled to stamp duty for the purchase as the Applicants have not relocated to those premises. The Applicants are a separate legal entity from OET. The entitlement to stamp duty only arises where the person claiming it are the persons being relocated, not their assets or investments: Fitzpatrick Investments Pty Ltd v Blacktown City Council (No 2) (2000) 108 LGERA 417 at [18]-[19].

Mortgage costs

The Applicants claim a sum for the discharge of the mortgages on the Acquired Land. These costs were incurred due to the early discharge of the mortgages, which it is said would not have occurred but for the acquisition of the Acquired Land and the consequent need to discharge the mortgage over land that could no longer be used as security.
The claim is made under s 59(1)(e) as a financial cost reasonably incurred by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation. The Applicants submit that the only reason that the John Street property was purchased was so that OET (of which they are the controlling mind) could relocate to that land and the evidence is that OET has so relocated. A construction of the statutory language of the section would encompass, as is the present case, where it is not a person who has been relocated but an activity. The Applicants suggest that these factors are sufficient to demonstrate relocation within the meaning of s 59(1)(e).
The Applicants submitted that in order for them to be entitled to such an amount it was necessary to find that the Applicants had relocated and if that required a finding that the actual Applicants had been physically relocated to another site the claim could not succeed.
The Respondent contends that the Applicants are not entitled to such amount as the section requires the costs to relate to a relocation of the persons entitled to compensation. In this case, the Applicants have not physically relocated to John Street and, therefore, the claim does not fall into s 59(1)(e) as a compensable loss.

Findings on claims for disturbance

The claim for the legal costs (urban design) both as the urban designer's costs and those of the legal advisor considering such advice should be allowed as legal costs incurred within the meaning of s 59(1)(a).
The purpose of the incurring of the costs is to obtain advice as to whether the offer made upon the acquisition of land is sufficient such that a disposed owner should accept that offer. In considering whether an offer is sufficient the material that a legal advisor may require will depend upon the matters relevant for the determination of the offer of compensation made in accordance with the provisions of the Just Terms Act. In some circumstances this exercise may be as simple as obtaining a valuation report and the legal advisor providing advice. In others more complex factors may play into the provision of the legal advice.
In this case, this was not a question of determining the development potential of the land at its current zoning. The issues arising in this case included a consideration of whether the Acquired Land would have been rezoned, absent the proposal to carry out the Public Purpose, and if so, what that zoning would have been. The consideration of this question required a determination of what the urban form of any use of the land rezoned would have been in order to determine what the likely rezoning would have been and what the development potential for that land would also have been.
This is not a case where the development potential of land currently undeveloped would have been and what enquiries a hypothetical purchaser would have undertaken in fixing a value for the land. This case was more fundamental and I accept that it was a necessary incident of the giving of the relevant legal advice that the legal practitioner obtain advice from a third party expert advisor to enable the relevant advice to be formulated and provided. To that extent, and for the same reasons I outlined in Eureka Operations Pty Ltd v Transport for New South Wales [2021] NSWLEC 41 at [153] I find that the legal costs (urban design) are legal costs within the meaning of s 59(1)(a) and that such costs were legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land.
As to the legal costs (real estate) those costs were not incurred in order for the Applicants to receive advice as to the offer of compensation for the acquisition but related to what they should do with any compensation received by them. That is, the purchase of the John Street property was not in connection with the compulsory acquisition of the Acquired Land but related to the desire to rehouse the business of OET. Whilst this decision would likely not have had to have been made but for the acquisition it is not a matter connected to it within the meaning of s 59(1)(a) and, therefore, is not a compensable loss.
The balance of the claims relating to the claim for stamp duty and mortgage discharge fees turn on whether the costs relate to a relocation.
The references in s 59(1) to the relocation is limited by the qualifying words: by those persons. I accept the submission of the Respondent that this can only mean by those persons who are identified as being entitled to compensation pursuant to ss 37 and 53 of the Just Terms Act.
In this case, whilst the Applicants may not see a great difference between themselves as individuals and as the directors and shareholders of OET they have adopted a structure of holding that at law provides a real legal distinction. In this case, the persons to whom the relocation relates must be the persons legally entitled to the compensation and that is, in this case, Mr and Mrs Gaudioso as individuals. There is no evidence in this case that they, as individuals, have relocated as a consequence of the acquisition. The fact that they, as individuals, are the directors and shareholders of OET does not allow them to claim that they have been relocated because the OET business as a separate legal entity has relocated. In this case, OET has no claim for compensation and, therefore, its relocation is not a relevant matter for the determination of disturbance in relation to this claim.
Accordingly, the claims for stamp duty and mortgage discharge are not claimable as disturbance pursuant to ss 59(1)(d) and 59(1)(e) of the Just Terms Act.

GST

In its opening submissions the Respondent raised the issue of Mr and Mrs Gaudioso's GST status. The Applicants initially asserted that Mr and Mrs Gaudioso were not registered for GST. The ABN Lookup tendered by the Respondent as Exhibit 13 lists Mr and Mrs Gaudioso as a "Family Partnership" as of 29 October 2004. The Respondent asserted that to the extent that expenditure incurred by the Family Partnership is compensable as loss attributable to disturbance, and the expenditure incurred included payment of an amount of GST, a deduction should be made from the compensation otherwise payable to account for the input tax credit available to Mr and Mrs Gaudioso.
Leave was granted for specific submissions to be made after the conclusion of the hearing on this issue. In supplementary submissions, the Applicants sought leave to tender an ABN Summary and Activity Statement dated 30 April 2021 to which the Respondent did not object. The ABN Summary and Activity Statement reveals that while Mr and Mrs Gaudioso had been GST registered as a Family Partnership, the Family Partnership was deregistered on 29 April 2021, with retrospective effect from 29 October 2004. As a result, the parties agree that the Family Partnership was not carrying on an enterprise in which it could claim GST input tax credits. Accordingly, it was agreed that there should be no deduction made to any compensable disturbance costs for GST.
For the reasons outlined above, I find that at the Date of Acquisition the Acquired Land would have been zoned IN2 with no residential use permitted. The compensation is determined in the sum of $10,781,707.60 which comprises: 1. $10.6 million for the market value of the Acquired Land pursuant to s 56 of the Just Terms Act; and 2. Disturbance costs of $181,707.60 which comprises: 1. Legal costs of $150,907.60 2. Valuation fees of $30,800

Costs

The parties have not addressed me on the appropriate costs order in this matter as it is necessary for the reasons for my decision and the determination of compensation to be available to them such that an appropriate position with respect to costs may be determined. I propose to reserve the costs of the proceedings and list the matter before me for mention 14 days after the delivery of this judgment. If the parties reach an agreed position on costs, I invite the parties to forward short minutes of that agreement to my associate and orders will be made in chambers. Should the parties not be able to reach an agreed position on the next mention of the matter a date will be fixed for a hearing on costs and appropriate directions relating to such hearing will be made.

Conclusion and orders

The Court orders that: 1. Compensation pursuant to Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (the Act) for the compulsory acquisition of the Applicants' interest in the land Lot 1 in Deposited Plan 510297 and Lot 101 in Deposited Plan 701466, known as 182 and 184-186 Parramatta Road, Camperdown is determined in the sum of $10,781,707.60 plus statutory interest being paid under ss 49 and 50 of the Act; 2. Exhibits are returned; 3. Costs are reserved; and 4. Matter is listed for mention on the question of costs on Friday, 10 September 2021 at 9am.

Orders - 9 September 2021

By consent the Court orders that: 1. The Respondent is to pay the Applicants' costs of the proceedings as agreed or assessed; and 2. Vacate mention on Friday, 10 September 2021 at 9am. Annexure A (154402, pdf)

Amendments 09 September 2021 - Further orders at [163]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 September 2021

(2000) 108 LGERA 417

Antonino Gaudioso v Transport for New South Wales

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