Apokis v Roads and Maritime Services

Introduction

1. Until 19 December 2014, Mr Sam Apokis (the Applicant) owned an undivided parcel of land at Dirty Creek, some 17 kilometres north of Woolgoolga. The Applicant's property was, prior to that date, an irregularly shaped allotment running, generally, north-south but of variable width. The northern frontage of the allotment was to the Pacific Highway.
2. On 19 December 2014, Roads and Maritime Services (the RMS) acquired a strip through the centre of the Applicant's land from the central north-west of the land and running in a generally south-easterly direction to the opposite boundary. This strip was acquired by the RMS for the purposes of constructing a new route for the Pacific Highway Upgrade Project (the project), to construct a two-lane carriageway highway in each direction.
3. Construction of the project along the acquired strip is substantially advanced. A significant cutting has been excavated through part of the strip (giving rise to one aspect of the Applicant's claim). The excavated material has been used by the RMS for the project - whether on the acquired strip or elsewhere being irrelevant.
4. Although that which remained in the Applicant's ownership was now in two severed elements separated by the new highway corridor, the two elements, nonetheless, remain parts of what is now a divided, single allotment known as Lot 550 in Deposited Plan 1181369 (Lot 550).
5. Before the acquisition, the Applicant's property had an area of 76.38 hectares. The acquisition of the central strip (having an area of 19.02 hectares) reduced the area of the Applicant's retained property to 57.36 hectares.
6. The northern portion of Lot 550 has an area of 40.21 hectares, whilst its southern portion has an area of 17.15 hectares.
7. The minimum allotment sizes in the Coffs Harbour Local Environmental Plan 2013 (the CHLEP), applicable to Lot 550, are such that it is not possible to create two separate allotments and, thus, a single allotment with the two severed portions is the way that Lot 550 must remain.
8. An air photo from the Sixmaps web site shows the boundaries of Lot 550, together with the central strip acquired by the RMS. The site of the past quarrying activities can also be seen on it in the north-eastern corner.
9. A copy of the same location from the Sixmaps cadastral map is also reproduced below as this provides an understanding of the topography of the two elements of Lot 550, internal road/track layout on the Applicant's original landholding, road/track access to the southern portion of Lot 550 and the location of the project.
10. Little arises of legal complexity for determination in these proceedings in light of the various factual conclusions which I have reached on the basis of the technical and other evidence (whether documentary or oral).

Past quarrying activities

1. Prior to the acquisition by the RMS of the central strip, there had been a history of quarrying activities on the Applicant's property since the mid-1930s. Although the predominant quarrying activities appear to have been toward the north-eastern corner of the property, some more limited quarrying activities had also taken place, over the years, toward the southern end.
2. In recent years, the quarrying has been confined to the area toward the north-eastern corner.
3. For that recent quarrying, at least, the Applicant himself has not actively undertaken such quarrying as had occurred on Lot 24. The extraction of quarrying product which has been undertaken has occurred by others whose activities have been authorised by the Applicant pursuant to profit a prendre arrangements between him and a quarrying operator. Two companies, Rix Pty Limited and Wyanga Holdings Pty Limited have undertaken quarrying activities in recent years in the quarry pit area at the northern, existing Pacific Highway, end of Lot 24. These two companies are not mutually independent but have the same principals behind them. The question of what was the correct operative profit a prendre, and to what area did it apply, as at the date of acquisition of the central strip by the RMS is a matter of factual and legal dispute.
4. It will be necessary to consider both contemporary quarrying activities on the property and the varying legal structures potentially applying to them and also to give consideration to a development consent given by Ulmarra Shire Council (a local government body subsequently absorbed into the local government area of Coffs Harbour City Council (the Council)).
5. In 1991, the Applicant applied to Ulmarra Shire Council seeking development consent concerning, amongst other things, his quarrying activities. The Council granted development consent in late 1991. This development consent was subject to a limited range of conditions. It will be necessary, later, to consider the scope and effect of that development consent, in some detail. It is sufficient, for this historical narrative, to note that that consent was sought and obtained.
6. The question of precisely which of the profits a prendre was operative, and over which area they applied at relevant times was in dispute, in these proceedings. There is also commercial litigation in the Supreme Court, initiated by the Applicant arising out of the recent quarrying operations on the site.
7. Given the conclusion which I have reached concerning the extent of the scope of what quarrying operations on Lot 24 were lawful at the time of the RMS' acquisition and remain so on the northern portion of Lot 550, it is unnecessary to explore in detail, or make any determinations concerning, the various profits a prendre in the areas of actual or potential quarry operation. It is also unnecessary to explore Environment Protection Licence issues which were also the subject of debate in the proceedings.

Assistance from Parker AC

1. In these proceedings, I have had the advantage of being advised by Acting Commissioner Parker. The Acting Commissioner has sat with me, as provided for by s 37(1) of the Land and Environment Court Act 1979. I am grateful for his advice and for the opportunity to have discussed with him, over the length of the trial and afterwards, all aspects of the evidence and submissions. However, this decision (and any faults which lie within it) is mine alone.

Compensation for the acquisition of the central strip

The statutory framework

1. The compulsory acquisition of the strip through the centre of the Applicant's property, for the public purpose of the project, gave rise to his entitlement to claim compensation pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act). Compensation can become payable under a number of provisions of the Land Acquisition Act. Those sections relevant in this litigation are set out below: 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division): (a) the market value of the land on the date of its acquisition, (b) … (c) … (d) any loss attributable to disturbance, (e) … (f) ... 56 Market value (1) In this Act: market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid): (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and (b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and (c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law. (2) ... (3) … 59 Loss attributable to disturbance (1) In this Act: loss attributable to disturbance of land means any of the following: (a) … (b) … (c) … (d) … (e) … (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition. (2) …
2. It is to be observed that, in the context of s 59(1)(f) set out above, "financial costs" also encompasses losses (George D Angus Pty Limited v Health Administration Corporation (2013) 205 LGERA 357; [2013] NSWLEC 212 at [82] to [102] (George D Angus)).

Introduction

1. As is mandated by s 47 of the Lan d Acquisition Act, the Valuer General determined the amount of compensation appropriate for the strip of land that was acquired. The Applicant claims that this compensation for the acquisition of portion of his land did not adequately reflect the proper value of the acquired land after disregarding the public purpose (the project) for which the land had been acquired and any effect it had on the value of his property.
2. The RMS, on the other hand, does not accept the Valuer General's valuation, as the RMS considers that this valuation is too high.
3. The result is that the Applicant and the RMS are in dispute on two substantive issues. The first is the appropriate compensation to be paid to the Applicant for the value of the strip of land acquired through the centre of the pre-acquisition property of the Applicant for the purpose of construction of the relevant section of the project. This value, as will later be seen, is to be calculated by having regard to two separate factors - first, the impact on the "bush block" residential potential of the land on a before-and-"after" acquisition approach and, second, such impact as might be caused to the value of any continuing quarrying potential of the site.
4. The second substantive issue arises from the claim by the Applicant that he is entitled to be paid a royalty for the 2,524,000 tonnes of material removed by the RMS from the acquired strip and used by the RMS for the purposes of carrying out the project on the acquired strip and elsewhere.

Introduction

1. As is required by the Land Acquisition Act, the Valuer General made a determination as to what would be the appropriate compensation to be paid to the Applicant to reflect market value of the acquired strip of the Applicant's land as a consequence of its acquisition by the RMS for the carrying out of the public purpose. The Valuer General's determination was $230,000 (excluding the s 59(1)(f) royalty claim - for this, zero was allowed).
2. Both the Applicant and the RMS have rejected the Valuer General's determination. The Applicant contends for a significantly higher value. The Applicant's claim is that the compensation due to him should be $862,000 with an additional $2,262,000 for his s 59(1)(f) royalty claim.
3. On the other hand, the RMS proposes that the Valuer General's determination is too high and should be reduced. The compensation proposed by the RMS is $75,000 with zero for the Applicant's s 59(1)(f) royalty claim.
4. Although there were initially differences between the parties on the disturbance elements arising under s 59(1)(a)-(e), I was advised on the second-last day of the hearing that there was no longer any dispute concerning them.

Division of the market value claim

1. At this time, I should observe that not only am I not required to choose between the two values contended for by the Applicant or the RMS but, in addition, those values do not set a range within which I am obliged to make a determination. Nor am I obliged to accept the proposition inherent in the approaches taken - namely, that, in the before-acquisition situation, "bush block" residential use and quarrying operations were mutually exclusive. Provided I am satisfied that there is appropriate and sufficient evidence to support some alternative result, and I articulate my reasons for concluding that that result is the appropriate outcome, I can adopt an approach outside that proposed by the parties provided, in doing so, I do not deny either party procedural fairness.
2. On the facts disclosed by the field inspection (particularly the southern access position not being as complex or difficult in either the before- or after‑ acquisition position as had been assumed by the town planners and, at least initially, by the land valuers, I am satisfied that there is a "bush block" residential capacity on the southern element in both the before-and-"after" acquisition position. Whilst the Council might have imposed conditions in the hypothetical "before" scenario to effect separation from the quarrying activities (assuming the hypothetical dwelling was not one for a quarry manager), conditions such as fencing would have been of minor consequence.

The forgone royalties' claim

1. As we were able to observe several times during the course of the field inspection, construction of the project along the strip of land acquired through the centre of the Applicant's property is now well advanced. To enable construction of the dual carriageway in each direction for the Pacific Highway, which is to be the outcome of the project, a cutting has been excavated through the north-south-running ridgeline which had formed the spine of the pre-acquisition configuration of the Applicant's property.
2. At its top, at the existing natural ground on either side of the cutting, it is, perhaps, some 100 metres wide. It benches down so that, at the road construction level, it is, perhaps, some 60 metres or so wide. The location of the ridgeline through which the cutting has been excavated can be seen from the contours shown on the earlier reproduced topographic map extract.
3. During the course of the excavation of this cutting, the RMS removed some 2,524,000 tonnes of material (approximately 1,051,500 cubic metres) to create the cutting. This material was used by the RMS (whether within the acquired strip or not being immaterial for the purposes of the Applicant's claim) as construction materials, of varying grades, for the purposes of the project.
4. The Applicant makes a claim on the RMS to compensate him for the utilisation of this excavated material for the purposes of the project. The claim is advanced on the basis that, had the central strip through the Applicant's land not been acquired for the purposes of the project, the excavated material would have remained in place, undisturbed, as part of his future quarry resource.
5. The Applicant says that, because this quarry resource had been won by the RMS and used for the purposes of constructing the project, he was entitled to be paid the royalty which would have been appropriate for this resource if quarried by a quarry operator appointed by him. This compensation, he asserts, should be struck on a rate preferable to royalty rates said to be appropriate having regard to existing quarrying arrangements on the northern portion of his land.
6. Applying what is said for the Applicant to be the appropriate rate to the excavated material (having regard to the expected composition of the material) results, the Applicant says, in an obligation falling on the RMS to pay him $2,262,000 as a result of the RMS' utilisation of the material it has excavated and used for the project.

The field inspection

1. On the third day of the hearing, a field inspection was undertaken. Its first aspect comprised an inspection of the site - that is, of the northern and southern portions of Lot 550.
2. The second aspect comprised visiting locations to observe relevant attributes (including potential or actual access) of other bush blocks relied on by either, or both, of the valuers - Mr Dempsey (for the RMS) and Mr Dale (for the Applicant) - for their comparable sales analyses. Each undertook such an analysis to derive the value he concluded was appropriate on a "bush block" residential basis in both a before-and-"after" acquisition scenario.

Introduction

1. The inspection of the site itself, essentially, comprised two separate elements. The first element was an inspection of the quarrying area in the northern portion of Lot 550. The second element was what might be regarded as the "bush block" inspection of the (now separated) southern portion of Lot 550.

Introduction

1. This element of the inspection itself fell in three distinct parts. First, as we entered the northern portion of Lot 550 from the existing Pacific Highway, we were able to observe the short portion of a tar-sealed access road across the adjacent Crown land to the east, Lot 76 in Deposited Plan 752820 (Lot 76), before entering the site. The distance traversed across Lot 76 is of the order of 90 metres.
2. The second aspect of the inspection of the quarry was an explanation given of the current state of the faces of the existing major quarry bench on Lot 550.

Commentary during the quarry inspection

1. During the course of the inspection of the existing quarry on the northern portion of Lot 550, various facets of what was observed were the subject of commentary by Mr Gray (an expert giving evidence for the Applicant in several mining-related disciplines - see [82] below) and Mr Herdman, the quarry valuation expert on behalf of the RMS.

Mr Gray's evidence

1. It is appropriate here to note that, in the relevant Joint Report, Mr Gray set out a number of caveats concerning the evidence he was giving. They appear in the Joint Report of Valuation and Quarry Management Experts (Messrs Gray and Dale - for the Applicant - and Messrs Herdman and Dempsey - for the RMS). During cross-examination of Mr Gray by Mr Tomasetti SC, for the RMS, concerning these caveats, Mr Gray confirmed, relevantly, that:

• Mr Gray was not provided with any financial statements (audited or unaudited) for any period of time for either the Applicant or any entity which had acted as the operator of the quarry. This was entirely contrary to what Mr Gray would ordinarily expect to be the position and this was the first occasion, in his experience, when this had occurred;
• he had not been provided with any quarry management records of any type that would enable him to have an understanding of what types of quarry products had actually been produced through the quarrying process by past operators;
• similarly, he had not been provided with any quarry management records of any type that would enable him to have an understanding of quantities actually produced through the quarrying process by past operators;
• the solicitors, who had briefed him to give evidence on behalf of the Applicant, had instructed him that he was not to make contact with either the Applicant or the quarry operator for any purpose. This was entirely contrary to what would be normal practice and had not ever previously happen in his experience; and
• his attendance at the quarry for the purposes of the site inspection, on the day prior to his giving oral evidence, was the only occasion upon which he had visited the quarry. On this point, his evidence was that he had been instructed by the solicitors who had retained him to give evidence that he was not to visit the quarry. This, he conceded, was entirely contrary to what would be ordinary practice in such circumstances and that he had never previously in his professional experience been subjected to such a restricting instruction.

1. The overarching conclusion I drew from his oral evidence was that the instructions that were given to him for the purposes of him fulfilling his brief were not only unprecedented in his prior experience but were entirely at variance with what he considered to be appropriate professional practice.
2. I should make it clear that, despite the deficiencies in information provided to Mr Gray, I am not being critical of the assistance which Mr Gray gave during the field inspection. Although it is not necessary to undertake a detailed analysis of his formal technical evidence because of the conclusions I have drawn concerning quarry production constraints (past and future), I wish to record that he candidly and properly acknowledged, from the combination of his written evidence and his oral evidence, the extremely circumscribed basis upon which he could approach his brief.
3. Despite the significantly unsatisfactory position in which Mr Gray found himself, I accept that Mr Gray approached the task as best he was able to do within the scope of those limitations - limitations which, however, had the effect of rendering his evidence on future potential quarry demand virtually entirely speculative.

The quarry inspection

1. Whilst we stood on the floor of the existing quarry, we observed what appeared to be two white survey pegs (one on the highest point of the quarry face immediately visible from the quarry floor and the other on a lower, intermediate bench). I questioned, on-site, whether these might mark the boundary between Lot 550 and Lot 76, the adjacent Crown land, as the historic sketch diagrams of past quarrying activities showed that the quarrying had extended across this boundary and into the Crown land. Indeed, this quarrying over the boundary can be seen on the earlier reproduced air photo.
2. That which was able to be seen on the quarry site was benching beyond the line of the white pegs, with that benching obviously relating to significantly past historic quarrying activities. The lack of any obvious signs of fresh extraction, from that area, meant we were also able to observe the presence of a number of trees growing on the top of intermediate benches. An examination of relevant contemporary air photos subsequently made it clear that those pegs were likely, in fact, to delineate the boundary between Lot 550 and Lot 76.
3. The main face of the quarry runs, in very broad terms, in a generally north-east to south-west direction. As was able to be observed, during a later element of the site inspection when travelling in a southerly direction immediately adjacent to the line of the project, the present quarry face could be seen to be at an angle to, rather than being parallel to, the boundary of the acquired central strip in the area through which the project's major road cutting had been constructed.
4. A significant number of very large and/or larger rocks, which had fallen down from the quarry face, could be seen. There was also, in the centre of the major face, a fall from the upper-level overburden which was described as having rilled (meaning spilt) from that upper level.
5. The bedding planes of the general geological structure of the quarry face could also readily be observed from the quarry floor. The appropriate description commences at the uppermost white peg and then extends across a slope in the overall topography toward the south-west from that point.
6. First, there was a layer of overburden that would need to be cleared and disposed of before substantive quarrying could be recommenced (with this quarry recommencement using drilling and blasting processes that were described to us). This removal of overburden was described as needing to be cleared (with such activity being undertaken by a bulldozer or similar piece of equipment) until there was "blade refusal" to push further material, as "blade refusal" demonstrated sufficient hardness of the material below that point for the purposes of drilling and blasting.
7. The layer that was described as that which would be reached when "blade refusal" occurred was described as being a sandstone layer. The bedding plane boundaries of this layer were readily observable and it appeared to be some five metres or so in thickness.
8. The observable bedding planes of this sandstone material in the quarry face sloped from the high point at the left (addressing the quarry face from the quarry floor) downward to the right. The depth of overburden and sandstone layers, before conglomerate was reached, appeared to be consistent across this sloping of the face.
9. Below this layer sat the substantial volume of quarryable conglomerate material that extended to the present quarry floor. It was confirmed at that time that the present quarry floor was at 63 metres AHD.
10. The primary face was observed to be vertical, for all intents and purposes, with a height of some 35 metres or so. If quarrying activities were to recommence in a properly safe and regulated fashion, this single vertical face was inappropriate. The first steps that would need to be undertaken in the recommencement of proper quarrying operations would be to establish (at least) a three-stepped bench presentation of the quarry face as the initial quarrying activity antecedent to, but forming part of, what I understood would be implementation of a proper long-term quarry management plan.
11. We also inspected two piles of material that had previously been won from the quarry face and crushed but left on the quarry floor. One pile was of material appearing to be of 50-millimetre-or-so crusher production throughput (material that also was shown to contain significant elements of finer, more granular, particulate material when scratching below the present weathered surface of the pile was undertaken). The second pile was of material that was described as being likely to be of 20-millimetre crusher output. This material also contained a significant element of fines or more particulate material.
12. The third element of the quarry inspection comprised a walk around the area to the west of the quarry floor. The walk around commenced with a climb to an intermediate point up the slope from the quarry floor and looking down into the pit; then walking in a generally westerly direction before turning back down the slope to return to the area in front of a substantial shed (one that had been constructed, it is to be inferred, in reliance on the 1991 development consent - discussed later - and the subsequent building application that followed).
13. During the course of the walk back to the shed, we observed a very large assortment of what appeared to be redundant or rejected metal objects, including vehicles, and a wide range of smaller items of both a metallic and non-metallic nature.
14. We went inside the shed where we were able to observe that it had a substantial concrete floor and generally seemed to be well-constructed. A little over half the shed was being used for the storage of a wide range of materials - from several significantly sized pieces of industrial plant through to industrial bric-a-brac.
15. After our inspection of the interior of the shed, we walked around its curtilage, a curtilage which also had an accumulation of what appeared to be redundant or rejected items of plant or equipment (including a number of motor vehicles). A final, slightly incongruous touch was the presence of a small vegetable garden that was being tended in the area adjacent to the shed on the Pacific Highway side!

Introduction

1. Finally, we travelled to the vicinity of the southern portion of Lot 550. We did so to two different locations immediately adjacent to its boundaries but did not enter the southern portion at the first of these. We did, from the second location, walk to a point adjacent to the cutting for the project after leaving our bus at the more northerly access point to Lot 550.

The road access on the Corindi side

1. During the course of the inspection, we travelled along the project's construction corridor immediately to the south of the cutting to access the last section of the Corindi access road being constructed by the RMS. This Corindi access road is located immediately adjacent to the highway alignment and on its southern side. This access road terminates near the boundary of the southern portion of Lot 550 and will provide, in the "after" scenario, all-weather access to the lower, more southern portion of the southern residual element of Lot 550.
2. Mr Mitchell, the town planner for the Applicant, observed in his expert report (at [38.3]): RMS is proposing to connect the southern portion to the Pacific Highway (future service road) via the new Corindi Access Road (final name yet to be determined). The new Corindi Access Road will intersect with the existing Pacific Highway approximately 2.3 km south‐east of the quarry's access road intersection passing underneath the realigned section of the Pacific Highway and accessing the southern portion of Lot 550 via a 'paper road' easement.
3. Two further short observations should be made about this location. First, we were able to see (but not with any specificity of detail) where there had been past quarrying activity on the Applicant's land a little beyond the boundary at the end of the road. Second, from this point, the land on the southern residual element of Lot 550 sloped, comparatively steeply, up towards the ridgeline we visited at the brow of the project's road cutting.
4. Although the valuers had originally assumed that this new Corindi Access Road was the preferred access to the southern portion of Lot 550, it is clear that the access described below would be the more preferable and practical access to use the southern portion of Lot 550 for "bush block" residential purposes.

The northern, direct access

1. First, we travelled along Kathleen Drive, continuing in an easterly direction, and then along Bonita Drive (after Kathleen Drive turned to the south), both tar-sealed public roads, before turning to travel, in a generally northerly direction, along Woodward Close, a nominal public road but one which was no more than a two-wheel drive trafficable track along the alignment of its road reserve. The distance from Bonita Drive, the tar-sealed public road, to the end of the track was approximately 200 metres. The track appeared to be all weather trafficable.
2. An examination of the air photo and topographic map extracts earlier reproduced shows that the weather trafficable track extends some 220 metres further north than the nominal end of Woodward Close (along an axe-handle access to Lot 74 in Deposited Plan 731384 - an allotment which appeared to be included in the RMS project boundaries but about which I have no definite ownership information). The end of Woodward Close and the axe-handle can be seen on the topographic map extract earlier reproduced.
3. At the end of the Lot 74 axe-handle, we walked approximately 100 metres through the bush to a point on the uppermost shoulder of the road cutting that had been created through the central strip of the site acquired by the RMS for the project. We walked in a further 30 metres or so to the east, parallel to the road cutting, to the brow of the ridge. This ridge had run, in a generally north-south direction, from the Applicant's quarry along what was, effectively, the spine of the Applicant's original allotment prior to the acquisition of the central strip by the RMS.
4. The point where we stood at the brow of the cutting for the project was somewhat lower than the top of the ridge behind the quarry on the northern residual portion of Lot 550. The ridge sloped gently away to the south from this observation point. It was not possible to identify, with precision, the boundary between the RMS-acquired central strip and the residual southern element of Lot 550 but it appeared to be at a maximum of some 30 metres or so to the south of where we stood looking into the road cutting.
5. It is to be observed that, as well as the north-south-running spinal ridge, the land fell away, comparatively steeply, to the east of the ridgeline, as well as falling away gently to the south. It is also to be observed that the western boundary of the southern residual portion of Lot 550 is separated from the road reserve of the track up which we had driven by a narrow strip of private land of variable width, but being of no more than approximately 100 metres at the northern end of Woodward Close. This strip, as can be seen on the topographic map extract, contains a number of smaller allotments. The result of this landholding pattern is that there are a number of dwellings to the west of what is now the southern portion of Lot 550. These are relevant in my consideration of what might have been the quarrying potential of this portion of the Applicant's original landholding.
6. An electricity supply line ran along the corridor of Woodward Close to a point a little to the north of the end of the formed track beyond the end of this road reserve. At the end of the formed track, there was a take-off from the power line, with that take-off going a short distance to the east to a domestic scale metal supply pole from which there was obviously an underground supply cable running some 20 metres or so to a domestic supply fuse box. It was not clear during the inspection whether this was located on the southern portion of Lot 550, but an examination of the cadastre, when overlaid on the air photo earlier reproduced, shows it is on Lot 73 in Deposited Plan 731384. However, this nonetheless clearly demonstrates the ready availability of domestic electricity supply to the southern portion of Lot 550.

The view to the north-east

1. I now turn to describe the view to the north-east from the brow of the cutting in the vicinity of the northern edge of the southern portion of the residual allotment. This view can only be described as spectacular and expansive. The land to the east of the ridgeline falls away (and fell away prior to the excavation of the road cutting) quite sharply to the east.
2. The direct view in that direction, across at least a 90-degree arc, was to the coastline and the ocean beyond (including a small offshore island). The intervening coastal plain was heavily vegetated, providing, in itself, an attractive foreground to the vista from the viewing point.

Inspection of comparable "bush block" sales

1. We also travelled to the location of five bush blocks that were relied upon by Mr Dempsey and/or Mr Dale for comparable sales' evidence in the before and/or after circumstance. It was not possible to enter any of these five properties as no permission for access had been sought. The addresses of these five properties in the inspection programme are set out in the list below: 1. 405 Sherwood Creek Road, Upper Corindi (both valuers for before-and-"after" acquisition valuation purposes); 2. 20 Post Office Lane, Corindi Beach (Mr Dempsey for before-and-"after" acquisition valuation purposes); 3. 95 Barcoongere Way, Barcoongere (Dirty Creek) (Mr Dale for "before" acquisition valuation purposes and Mr Dempsey for before-and-"after" acquisition valuation purposes); 4. 4925 Pacific Highway, Halfway Creek (Mr Dale for "after" acquisition valuation purposes and Mr Dempsey for before-and-"after" acquisition valuation purposes); 5. 4648 Pacific Highway, Halfway Creek (Mr Dale for before-and-"after" acquisition valuation purposes).
2. It will be necessary, in my later consideration of the valuation evidence and the conclusions to be drawn from it with respect to the utility of a "bush block" comparison, to explain why I am not satisfied that all of these sales should be regarded as appropriate to be used as a basis to derive an analysed value for deriving either a "before" acquisition value for the site or an "after" acquisition "bush block" value for all or part of Lot 550.

Introduction

1. During the course of the site inspection, various matters were pointed out by relevant experts who accompanied us and the representatives of the parties. Although given informally, these are evidence in the proceedings.
2. As can be understood from my above description of the field inspection, the observations made, and expert commentary proffered, were not only concerning Lot 550 and of the project being constructed through the centre strip separating the northern and southern portions of this allotment, but also concerned the five properties relied upon by one or both of the land valuers for the purposes of their comparable sales analysis.

A "paperless" trial

1. The hearing of this compensation claim was conducted as the first "paperless" trial undertaken by the Court as part of an experimental programme being conducted by the Court with the Australian Legal Sector Alliance, a grouping of top and mid-tier private and government legal practices across Australia. It is unnecessary, in this decision, to describe the paperless hearing process in great detail. It is sufficient to note that, in substitution for the 11 folders of photocopied material that would otherwise have been necessary to form the evidence before me and the Acting Commissioner, the material was tendered on a USB thumb drive, as a collection of PDF documents. The Court Book and the Agreed Tender Bundle were all provided in this electronic format.
2. As necessary, during the course of the hearing, documents (whether text or plans), maps and air photos were all projected onto the wall of the courtroom as required. This included split screen presentations that enabled documents to be compared when the expert witnesses, in varying disciplines, gave concurrent evidence in the courtroom.
3. It is to be observed that, in the conducting of these proceedings as a paperless trial, this process ran entirely smoothly and did not take any additional time. I express my gratitude to my 2017 Tipstaff, Mr Ben Niles, as his computer operation skills to find and project material (not only from that which had been tendered electronically but also from external websites such as the New South Wales Legislation website), made a very significant contribution to the smoothness of running of this electronic experiment.

The witnesses

1. Extensive written evidence in individual and joint expert reports was provided as part of the electronically tendered material. The witnesses who provided this expert evidence, by area of expertise, were as shown in the following table: Area of Expertise Witness for Applicant Witness for RMS Business Valuation - Dr Rod Ferrier Geological Guy Grocott Robin Rankin Market and Land Valuation Paul Dale Peter Dempsey Mining Engineering Dugald Gray Gordon Atkinson Quarry Valuation Dugald Gray Darren Herdman Town Planning Paul Mitchell Steve O'Connor

1. In addition to conventional joint expert reporting, two cross disciplinary joint conferences were held resulting in additional joint reports: Area of Expertise Witness for Applicant Witness for RMS Joint Quarry Royalties Valuation Report Dugald Gray Rod Ferrier Joint Land and Quarry Valuation Report Dugald Gray, Paul Dale Peter Dempsey, Darren Herdman

1. Extensive oral evidence was given across these areas of expertise during the course of the hearing, a hearing which ran, in total, for eleven days (including the full-day field inspection).

The town-planning evidence

1. The town planners, Mr Mitchell and Mr O'Connor, were required to give oral evidence. They were not, however, required to attend the site inspection. Their oral evidence commenced on the afternoon of the second day, after the conclusion of opening addresses on behalf of the parties. As Mr O'Connor had a prior commitment to a Planning Assessment Commission hearing on the Wednesday and Thursday (Days 4 and 5), continuation of the town-planning evidence was deferred until the afternoon of the sixth day.

A dwelling house in the before-and-"after" acquisition situations

Introduction

1. To understand the town-planning evidence on this point, it is necessary to understand the zoning of the Applicant's land in the before-and-after situation. An "after" acquisition zoning map is reproduced below from Mr Mitchell's expert report:
2. The land within the acquired strip was zoned RU2 - Rural Landscape under the CHLEP - zoning consistent with the land on either side of it. Construction of a single dwelling house on the Applicant's land was permissible under the CHLEP in the "before" (and remains so in the "after") situation. Although there was some comment by Mr Mitchell on the possibility of subdivision in the "before" scenario, I am unable to take this seriously as there was no proper and sufficient explanation of how departure from the CHLEP minimum allotment requirement might be justified. In any event, I did not take this possibility to be advanced with any vigour on behalf of the Applicant.
3. However, Mr Mitchell and Mr O'Connor both took the view, in their Joint Report, that a dwelling was unlikely to be approved in the pre-acquisition configuration of the Applicant's property.
4. Mr Mitchell's comments on this topic appeared earlier in their Joint Report than those of Mr O'Connor but referred to those comments. I therefore reproduce them in the reverse order as they make more sense when so read. This issue was dealt with in the Joint Report in the following terms: Mr O'Connor's comments 47. As previously discussed I believe it unlikely that Council would approve a dwelling house on Lot 24 DP 705683 in the "before" scenario while quarrying was able to be undertaken upon the land. The reason I hold this view is because of the potential conflict between the two land uses. While a dwelling house is permissible with development consent under the RU2 Rural Landscape zoning and the E2 Environmental Conservation zoning under CHLEP 2013, a suitable location to erect a dwelling within Lot 24 DP 705683 may not be available within either of these zones on this land notwithstanding that the total area of Lot 24 DP 705683 is 76.38 ha. This allotment has an area well in excess of the 40 ha minimum site area established by Clause 4.2B of CHLEP 2013. 48. Figure 6 is an extract of the Lot Size Map from CHLEP 2013. It shows that the majority of Lot 24 DP 705683 and all of Lot 550 DP 1181369 (both the northern and southern portions) are within the designated area where a minimum 40 ha lot size applies. Therefore, an application to erect a dwelling house could have been lodged in the "before" scenario. However, as previously stated I believe it is unlikely that development consent would be granted given the potential conflict between quarrying and concrete block manufacturing on Lot 24 DP 705683 and the residential environment desirable when a dwelling is created. 49. The negative impacts of quarrying can include dust, noise, vibration, erosion and sedimentation, safety concerns and aesthetics which may not be seen by Council as acceptable impacts. However, in the "after" scenario there would be an improved likelihood of securing a development consent for a dwelling house on Lot 550 DP 1181369 because the physical link between the northern and southern portion of this allotment would have been severed by the construction of the upgrade of the Pacific Highway on Lot 554 DP 1181369. It would depend very much on the location and design of the proposed dwelling house and the mitigating measures which may be able to be put in place to deal with issues such as bushfire hazard and servicing, however once the access road was constructed I believe that it would have been likely that Council would have approved a dwelling house on the southern portion of Lot 550 DP 1181369. 50. Finally, I would have advised a hypothetical purchaser that the likelihood of securing development consent for a dwelling house on Lot 24 DP 705683 in the "before" scenario would have been significantly improved if the quarrying operation was abandoned and could not be recommenced. In this circumstance, I think it likely that Council would have been prepared to grant development consent for a dwelling house if it were located in the disturbed area of the quarry footprint as this would have negligible ecological impacts. It would also have direct access to the Pacific Highway and any services which might be available from the Pacific Highway such as power and telecommunications. 51. The same is true in the "after" scenario for Lot 550 DP 1181369 if quarrying were abandoned and could not recommence. However, only one dwelling house could be erected on Lot 550 DP 1181369 so a decision would need to be made about whether the preferred site was the southern portion of this allotment or the northern portion. Mr Mitchell's comments on Mr O'Connor's position 36. Paragraphs 47‐48. O'Connor says it is unlikely that an application for a dwelling would have been approved in the "before" scenario. Mitchell generally agrees but notes that Lot 24 is large - over 76ha - and believes it is likely that a suitable location could have been found for a manager's residence on the Lot. 37. Paragraph 51. O'Connor says only one dwelling would be approvable on Lot 550 in the "after" scenario. Mitchell believes the situation is not that definite noting that the Lot has an area of 57.36Ha that is close to the minimum required for two residential lots (ie 80Ha). Consequently, he believes there is a reasonable prospect of consent being granted for two residential lots.

A reassessment of the "before" acquisition position after the field inspection

1. The town-planning evidence set out above, concerning the possibility of utilisation of the pre-acquisition allotment for "bush block" residential purposes, was clearly significantly influenced not only by the potentiality of ongoing quarrying operations at the northern end, but also by the assumption that there was no ready access to the southern end of the allotment. This assumption, one which initially influenced the land valuers before the true position was revealed during the field inspection, mistakenly influenced the town-planning evidence as to the dwelling potentiality away from the quarrying area in the pre-acquisition circumstances.
2. It seems to me that any hypothetical development application for a dwelling with access from Woodward Close (albeit faced with the necessity to negotiate an easement for access) would not face the same approval hurdles that would have existed for a proposed dwelling anywhere in the vicinity of the northern quarrying operations.
3. Although, in the pre-acquisition position, seeking to site a dwelling toward the southern end of the pre-acquisition allotment in a fashion independent of such quarrying activities as might continue at the northern end would face the probability of more onerous conditions of development consent being imposed by the Council to ensure isolation of such a dwelling from any quarrying activities, those conditions would, overall, not make the pre-acquisition dwelling potentiality significantly different from that which applies to the southern portion of Lot 550 in the post acquisition position which now exists. In light of the access information available, I consider that it would have been significantly more probable than not that the Council would have approved such a southern-located dwelling in the pre-acquisition circumstances.
4. This planning conclusion means that, for valuation purposes, there can be regarded as "bush block" residential development potentiality in both a before-and-"after" acquisition circumstance. This has implications for the land valuation approach, as later dealt with under that topic.

The position in the "after" acquisition position

1. The dwelling potentiality after the RMS acquisition of the central strip is, in my view, quite clear. Although, because of the minimum allotment size provisions in the CHLEP, there is no prospect of the southern portion of Lot 550 being able to be subdivided from the northern portion, the functional separation of the two portions caused by the project means that, for planning purposes, they can be treated separately.
2. It was obvious from the field inspection that the southern portion of Lot 550 provides a significant potential "bush block" residential opportunity. Although the question of access from the Woodward Close access option still needs to be resolved (whether over RMS-owned land or otherwise), this is a significantly lower barrier to utilisation of the southern portion than would be the position if access from the inspected Corindi Road extension was the only functional option. This Corindi Road access assumption is clearly incorrect and the potential availability of alternative access of a more functional and more easily implemented nature cannot be ignored.
3. It seems to me that, in the "after" acquisition circumstance, utilisation of the southern portion of Lot 550 for "bush block" residential purposes, independent of whether or not quarrying could continue on the northern portion of the allotment (the terms upon which such quarrying might continue being immaterial for assessment of residential capability of the southern portion), means the physical separation caused by the project would ensure Council approval for a "bush block" dwelling taking advantage of all the outlook potential available from a dwelling site location on the southern portion.

Reflection on "bush block" use for the land valuation evidence

1. The land valuers have approached the consideration of the pre-acquisition value of the Applicant's land on the assumption that its highest and best use was as a residential "bush block". They had, as explained above, reached this conclusion on the assumption of cessation of quarrying activities.
2. I have explained above why I am satisfied that the pre- and post acquisition position concerning "bush block" residential development potential, on the southern portion of the site would have been broadly similar (albeit with likely separation effecting conditions imposed by the Council in the pre-acquisition scenario).
3. However, given the common pre-acquisition approach taken by the land valuers, this does not impact on the general valuation approach to be taken. It merely provides a basis upon which to found a duality of valuation analysis. This duality of valuation analysis means that, in addition to the before-and-after valuation approach for "bush block" residential purposes, a similar approach needs to be taken to determine what would be the post acquisition impact on the quarrying potential of the northern portion when compared to the potential of future quarrying activities at the northern end of the pre-acquisition allotment disregarding the public purpose of the project.

The land valuation evidence in the "before" acquisition circumstance

Introduction

1. As previously noted, Mr Dale - for the Applicant - and Mr Dempsey - for the RMS - were the land valuers engaged for these proceedings. Prior to the commencement of the hearing, Mr Dale and Mr Dempsey prepared written statements of evidence and conferred to produce a joint expert report.
2. In his original report, Mr Dale adopted a value of $1,155,400 in the "before" scenario, assuming the highest and best use of the subject property to be "rural/residential property with existing quarry income and good potential for expansion of income", where the value of the latter exceeds the value of the former (Exhibit A, E001, paragraphs 88, 90).
3. Both land valuers attended the field inspection. During the course of the inspection, when it became obvious that access to the southern portion of the Applicant's land (in both the before-and-after circumstances) was available to what would be the desirable house site via Bonita Drive and Woodward Close, they were requested to confer further. This they did and produced two further supplementary joint reports.
4. In the "before" scenario, Mr Dale and Mr Dempsey agreed that the value of the subject property for rural residential use was $450,000. This was on the basis, as I understood it, that quarry potentiality value issues were now to be separate from the "bush block" valuation.
5. Having agreed upon that value, they then proposed that there be two adjustments necessary to derive the finalised "bush block" valuation as at the date of acquisition. The first allowance that they make (and where they differ) concerns the value to be attributed to the substantial shed erected to the north-west of the quarry workings as a consequence of the granting of the 1991 development consent approving concrete block-making.
6. They also both made an allowance for rehabilitation of that portion of the northern end of the Applicant's land. They both adopted the same amount for this purpose, an amount derived from the evidence of Mr Gray and Mr Herdman.
7. Mr Dale added $100,000 for the shed and deducted $234,500 for remediation giving a "before" scenario value of $315,500. On the other hand, Mr Dempsey added $50,000 for the shed and deducted $234,500 for remediation giving a "before" scenario value of $265,500.
8. However, as set out in the following major portion of this judgment, I have found the quarry and its potential to be the same in the "after" scenario as in the "before" scenario, so that it is appropriate to focus in this portion of the judgment on the value of the acquired land and the value of the southern rural residential element of land in both a before-and-"after" acquisition circumstance. It is also not necessary to make allowances for the shed (as it will continue to be used in conjunction with ongoing quarrying activities in both the before and after models). Similarly, no allowance is required to be made for quarry rehabilitation as this would be factored into ongoing quarrying operational plans.
9. As a consequence of the conclusion I have reached concerning the potential for further quarrying activity on the northern portion of the site and the potential extent of such quarrying (being limited, in the before and after, by what I have concluded would be the future demand for quarry materials, setting aside the public purpose), the outcome is that Mr Dale and Mr Dempsey are in agreement as to what is the raw, starting value of the land (without incorporation of any quarry value) as a "bush block", with that value being $450,000 overall, as at the date of acquisition.
10. Apportioning that value over the various post acquisition components of the overall site achieves the following valuation outcome (on a $5,892 per hectare rate - rounded to the nearest $1,000) as follows: Northern portion 40.21 hectares $237,000 Acquired portion 19.01 hectares $112,000 Southern portion 17.16 hectares $101,000 Total 76.38 hectares $450,000

The land valuation evidence in the "before" acquisition circumstance

Introduction

1. As I have found, as later discussed, that the quarry and its potential are the same in the "before" as in the "after", and with the acquired land not existing in the "after" scenario, it is appropriate to focus on the value of the southern portion of the subject property in the "after" scenario. To do so, it is now necessary to turn to how comparable sales analysis can be used to derive a "bush block" rate for the southern portion of the site and apply that to the acquired land.

The valuers' "bush block" comparable sales

1. Mr Dale and Mr Dempsey between them relied upon a total of five sales of bush blocks for the purposes of determining an analysed value to be applied to the Applicant's land for the purposes of deriving a "bush block" valuation for it. Although there was some commonality between the valuers, there were also differences between them in the selection of the sales adopted for analysis. The sales that were adopted for this process are set out at [75] above.
2. As earlier described, we visited each of these proposed comparable sales during the course of the site inspection. For each of these sites, we had the advantage of an air photo which showed the shape of each and from which an understanding of its topography, vegetation pattern and, if without an existing dwelling, potential dwelling locations.
3. I have carefully considered each of these sales and have concluded that, on a factual basis, only two of them, those being the sales at 95 Barcoongere Way, Dirty Creek (a little over one kilometre to the north-east of the Applicant's land) and 4648 Pacific Highway, Halfway Creek (some six kilometres to the north-west of the Applicant's land) are, in reality, sufficiently factually similar to the Applicant's land to be capable of being regarded as appropriately comparable for the purposes of analysis to derive a rate to be applied for the purposes of these proceedings.
4. Although the 95 Barcoongere Way site was relied upon by Mr Dale only for "before" acquisition valuation purposes but by Mr Dempsey for before-and-after valuation purposes, I am satisfied that it is an acceptable sale for comparative purposes and its use for both before and after calculation of an analysed value to the Applicant's "bush block" hypothetical use is appropriate. Similarly, although the 4648 Pacific Highway site was only relied upon by Mr Dale, and not at all by Mr Dempsey, I am satisfied that it is an acceptable sale for comparative purposes and its use for both before and after calculation of an analysed value to the Applicant's "bush block" hypothetical use is also appropriate.
5. A short explanation of the reasons for rejection of each of the other sales is set out below: 1. 405 Sherwood Creek Road, Upper Corindi This site, although of similar size to the Applicant's land, lacks (as could be seen from the air photo provided in the field inspection itinerary) ready access from a public road to what would be any appropriate "bush block" residential site. In addition, the air photo also shows a complete absence of any internal track network - unlike the position of the Applicant's land in the "before" circumstance. For those reasons, I am satisfied that this is not an appropriate sale to be used to derive an analysed value for the Applicant's land in the "before" RMS acquisition context. Although that position is somewhat ameliorated in the "after" acquisition context of the Applicant's land (because the RMS acquisition renders any internal track connection necessarily irrelevant), nonetheless, on balance, I am satisfied that there is sufficient difference between this sale and the Applicant's land, post acquisition (when I am satisfied that there are two sales validly available for appropriate analysis in both a before-and-after circumstance), that it is not necessary to consider this site in a single‑phase, comparative analysis for the purposes of deriving a relevant value for the Applicant's land in both the before-and-after circumstances; 1. 20 Post Office Lane, Corindi Beach The air photo of this allotment has (as could be seen from the air photo provided in the field inspection itinerary), adjacent to its northern boundary, a comparatively extensive cleared area. From the location visited during the site inspection at the end of Post Office Lane, this open, grassed area was observable. The air photo also shows the vegetation as being more scattered, with further open, grazing potential amongst the treed patches. Such areas, potentially suitable for low‑scale grazing activities in conjunction with any "bush block" residential use to which this parcel might be put, make it, I consider, unlikely that a purchaser considering acquiring this proposed allotment for "bush block" residential purposes would have also considered the Applicant's land for that purpose in either the "before" or "after" situation. It is also significantly smaller in area than the Applicant's land (even in the "after" circumstances); 1. 4925 Pacific Highway, Halfway Creek This site has a very lengthy frontage to the current Pacific Highway (as could be seen from the air photo provided in the field inspection itinerary), a frontage which will be retained when the project has been completed. It is, in its predominant portion which is to the west of the highway, largely flat. During the course of the site inspection, it was observed that, because of its gently undulating nature, there were areas which were somewhat boggy (although not to be characterised as proper wetlands, as I understood the observation). There was also no ready access into the site observable from its Pacific Highway frontage or from the location along Gilmores Lane (beyond the right‑angle bend in Kungala Road) to which we drove to a point where access into the site might be able to be constructed as it came to a point at the road edge. Although it was accepted by the valuers that this sale was likely to be used as a single residence "bush block", its very significantly larger area and distinguishing characteristics mean that I am unable to accept (despite the general temporal similarity of the sale with the acquisition by the RMS of the strip through the Applicant's land) that this sale is one which is sufficiently relevant to use for analysis to derive a value for the Applicant's land as a "bush block" in either a "before" or "after" consideration. Indeed, unlike the Applicant's land, this parcel had some subdivision potential - a major difference with the Applicant's land and a factor which would distinguish it in the mind of the hypothetical purchaser.

Deriving a "bush block" value from the two accepted comparable sales

1. For the properties at 95 Barcoongere Way and 4648 Pacific Highway, Halfway Creek, it is necessary to make a number of adjustments to reflect those of its characteristics which differ from the land to which the analysed valuation rate is to be applied. The characteristics requiring adjustment are set out below:

• area;
• topography;
• access; and
• access to services.

1. Having regard to the location and size of the southern portion of the subject property, and the acquisition date of 19 December 2014, I derive the following from the inspected comparable sales: Location Date of Sale Area Analysed Sale Price Analysed Rate Per Hectare 95 Barcoongere Way, Barcoongere 4/15 42.92 ha $240,000 $5,592 4648 Pacific Highway, Halfway Creek 6/14 24.28 ha $130,000 $5,354

1. Adjusting these two relevant comparables, as best I can, for location, size, view, provision of power and road access relative to the southern portion of Lot 550, I derive a rate of $6,500 per hectare for "bush block" residential purposes for the southern portion in the "after" scenario (giving a land value of $112,000 - rounded to the nearest $1,000 for the southern portion of Lot 550 - independent of any value for the northern portion as its use will remain unchanged).
2. Application of this rate of $6,500 per hectare to the acquired land results in a value of $124,000 (rounded to the nearest $1,000) for it.
3. However, this does not determine the amount of compensation due to the Applicant as the acquisition of the strip has also increased the value of the southern portion of Lot 550 compared to its value in the before position. The before and after value scenarios to the Applicant (confined solely to the southern portion and disregarding the northern portion as its value and use, although now separated, remain unchanged) may be summarised as follows: Land Before After Southern portion $101,000 $112,000

1. As can be seen, the Applicant has achieved a betterment of $11,000 in the value for the southern portion as a consequence of carrying out the public purpose. This betterment is to be deducted from the derived value of the acquired land (Tolson v Roads and Maritime Services (2014) 201 LGERA 367; [2014] NSWCA 161 at [24] to [50]).
2. Accordingly, I determine the compensation due to the Applicant, as a consequence of the acquisition of the central strip by the RMS, to be $113,000.

The extent of the existing quarrying use rights

1. As has been earlier observed, quarrying has been undertaken on the northern portion of what is now Lot 550 since the 1930s. There is no dispute in these proceedings that, as a general proposition, such quarrying could continue after the date of the acquisition of the central strip by the RMS, in reliance of existing use rights for that purpose. However, those existing use rights are constrained (absent any development consent approving lateral expansion of those quarrying activities (Vaughan-Taylor v David Mitchell-Melcann Pty Ltd (1991) 25 NSWLR 580 (Vaughan-Taylor)).
2. Although expansion of the quarry, within its present footprint, by extending extraction deeper into the floor of the present quarry would be permitted, this is not a matter relevant to the extent to which quarry expansion for the purposes of winning materials outside what would reasonably be regarded as the footprint of those existing quarrying activities.
3. In a letter from Ulmarra Shire Council, dated 18 December 1992, that Council acknowledged, inter-alia, those existing use rights. However, the letter also said: However the issues raised by the Vaugham-Taylor case have altered the circumstances relating to extractive industries and it is not possible to expand a quarry laterally by more than 10% of the area in use as at February 1986, without obtaining further consents. To answer your specific questions I advise, in light of present legislation and knowledge:- 1. The quarry operation is protected by continuing use provisions, but cannot be expanded laterally.
4. As a consequence, it is necessary to explore the extent to which there might be some other present or future basis upon which the quarrying potential of the site can be expanded, for the purposes of determining the Applicant's claim for compensation for what might be curtailment of future quarrying activities as a consequence of the RMS acquisition.

Introduction

1. In 1991, the Applicant applied to Ulmarra Shire Council for a development consent concerning, amongst other things, his quarrying activities on Lot 24. On 25 November 1991, Ulmarra Shire Council granted consent (the 1991 consent) for the development for which application had been made, subject to conditions.
2. It is now necessary to turn to consider the extent to which the 1991 consent may have granted approval, in a geographic sense, to the lateral expansion of the quarry footprint. This requires consideration of what is to be taken from the 1991 consent.

The scope of the 1991 development consent

1. It is appropriate to start by reproducing an image of the Council's notice of determination, from its beginning to the commencement of the conditions which the Council imposed, to provide the framework within which the development consent was permitted to be implemented. This element of the Council's notice of determination is shown below:
2. As can be seen, there is no express mention of any general use for any purpose or any specific use in this development consent document. It is therefore necessary to consider what (if any) extrinsic documents are permitted to be utilised for the purposes of making sense of the scope of the 1991 consent (Ryde Municipal Council v Royal Ryde Homes [1970] 1 NSWR 277; (1970) 91 WN (NSW) 440; (1970) 19 LGRA 321).
3. Initially, in this context, it is clearly appropriate to turn to the terms of the Development Application as it is expressly referred to in the 1991 consent document. Consistent with the generally more laconic style of development consent formulation used in the era when this consent was granted, the abbreviated reference to DA 91/46 provides a sufficient basis, in my view, to enable me to turn to the terms of the development application document itself to see the extent to which it informs me about the development consent and whether, after considering that document, there is both a reason to turn to some further document, coupled with a proper foundation based on authority to do so. I therefore, first, turn to the terms of the development application form. A copy of the relevant portion is reproduced below:
4. As can be seen, immediately underneath the heading requesting a description of the development, there is the handwritten annotation "continuation of existing quarrying and crushing operation + establishment of concrete block industry".
5. As discussed in the above section of this judgment, there was, as at the date of the application in 1991, an existing use right for quarrying on Lot 24 (as quarrying had been undertaken since at least 1939, well prior to the introduction of any relevant planning controls).
6. It is the agreed position of the parties that I should accept that there has been no break in the operation of the quarry (over the period between the commencement of quarrying activities in the 1930s and the 1991 Council determination processes) in any fashion that would question the continuing nature of the lawful existing use rights for the quarry.
7. Although, as earlier discussed, that continuing use right is not to be regarded as uncircumscribed, and certainly was not "at large" across the whole of Lot 24, nonetheless, "continuation of existing quarrying and crushing operation" did not need, and was not required to have, development consent. Nonetheless, application was made, in terms, for approval of this.
8. On the other hand, that existing use right did not include any right to carry out the activity of concrete block-making. It is, however, accepted that, in 1991, concrete block-making was an activity permissible with development consent on Lot 24.
9. Therefore, at least as a first step, it is appropriate to conclude that the 1991 consent granted approval to use Lot 24 for the purposes of concrete block-making.
10. As this development consent was granted at a time when a separate Building Application was required for the erection of a structure to accommodate the activities for which consent had been granted, a subsequent Building Application was submitted, seeking approval to construct the shed and slab observed during the course of the site inspection. Whether any of the equipment presently stored in the shed was ever actually used for the purposes of concrete block-making (or, indeed, other equipment no longer on site was used for that purpose) is irrelevant, as it is sufficient for the purposes of commencement of the consent (and thus it continuing to run with the land) that the slab and shed have been constructed.
11. Having come that far in my analysis of the 1991 consent, it is now necessary to consider whether there is a need to turn to any other document to obtain a sufficient understanding of that to which the 1991 consent relates, and, if so, whether there is such a document or documents to which it is permitted to turn.
12. Although Mr Tomasetti proposed that I should turn, next, to the Statement of Environmental Effects (the SEE), which accompanied the 1991 Development Application (this being said by Mr Tomasetti to be available, as a consequence of the ticking of a box on the Development Application form, thus indicating that a SEE accompanied the application), I do not consider that it is necessary to do so and, as a consequence, I do not need to consider the submissions made by Mr Hemmings that it would be impermissible to do so.
13. I have reached this conclusion because I am satisfied that the use of the expression "continuation of existing quarrying and crushing operation + establishment of concrete block industry" provides a sufficiently adequate description of the use for which development consent had been sought. I am fortified in the view that this description is adequate for the purposes of understanding the development consent because there is nothing in any of the nine conditions that the Council attached to the 1991 consent that requires any recourse to any further document in order to understand what might be meant by any one of those conditions.
14. However, for the purposes of the broader scope of the analysis necessary for me to undertake, I am obliged to consider, in the context of these proceedings, what is meant by the terms of two of the conditions attached to the 1991 consent. These conditions are Condition 5 and Condition 9.

Condition 5 of the 1991 consent

1. Condition 5 of the 1991 consent was in the following terms: 5. Quarrying of raw material is to be limited to 17,000 cubic metres per annum, unless approval for an increase is gained by means of a further application.

Condition 9 of the 1991 consent

1. It is also to be observed that Condition 9 of the 1991 consent was in the following terms: 9. Production of concrete products is not to exceed 15,000 tonnes per year, unless approved by means of a further application.

Reading Conditions 5 and 9 together

1. The joint geological evidence establishes that 17,000 cubic metres of raw material would be approximately equivalent to 40,800 tonnes of quarry production.
2. Given that the production of concrete blocks necessarily requires the addition of cementitious material and water to such quarried raw material as part of the production process, it is clear that the raw material quarrying limit of 40,800 tonnes in Condition 5 is quite unrelated to the limit on concrete block production in Condition 9 as the raw material limit is nearly three times the concrete block production limit of 15,000 tonnes.
3. Indeed, Mr O'Connor acknowledged, in reply to a question from Mr Hemmings, that the limitations of 17,000 cubic metres per annum for quarrying activities and the 15,000 tonnes per annum production rate for a concrete block-making plant were ones which ensured, in each instance, that the proposed activity was not triggered to be designated development. It is clear that there is, in fact, no functional interrelationship between the two but that the limits are merely reflective of the desire to avoid, in each instance, the development falling within the designated development category for its particular type of operation. In this context, it seems to me that the words in the development application proposing approval of "continuation of existing quarrying and crushing operation" were not redundant surplusage but did seek approval for this (perhaps serendipitously prescient in light of the Court of Appeal's decision in Vaughan-Taylor - a decision given two weeks prior to the granting of the 1991 consent).

Conclusion on the scope of quarrying permitted by the 1991 consent

1. As a consequence, it seems to me that the appropriate view to be undertaken of Condition 5 is that it applies a maximum extraction rate of quarried raw material, per annum, across the whole of Lot 24 and, to the extent that such quarrying would be outside the footprint of the historic quarrying area with existing use rights, there would be no limitation imposed on this quarrying except to the extent of the nine conditions of consent attached by Ulmarra Shire Council to the development consent given on 25 November 1991.
2. Specifically, there would be no requirement imposed by the conditions of development consent for any buffering setback from any of the boundaries of Lot 24 as they were at the date of acquisition or of the post acquisition boundaries on either portion of Lot 550. There is no evidence in these proceedings that would suggest that were is any other statutory constraint on quarrying up to the boundary (subject to prudent mining practice to have a benched finish to any final quarry configuration). On the evidence before me, this could be undertaken, in a proper quarry management fashion, in accordance with the 1991 consent.

Future quarrying potential on the northern portion of Lot 550

Introduction

1. There are three matters which need to be analysed before reaching any conclusion about the future quarrying potential of the land. These three matters are: 1. What is the reasonable future expectation for demand for product from the quarry? 2. What is the quarry resource available post acquisition and over what period of time would it meet future quarry product demand? 3. Would development consent for an expanded quarry have been sought and obtained?

Future market demand for product from the Corindi Quarry

Introduction

1. To understand what might be the life of the quarry and the net present value (NPV) of its future production, it is necessary to examine such material as is available to see if any realistic conclusion can be drawn about the future demand for product from the Corindi Quarry. There are a number of actual or potential sources of that information. They are examined below.

The evidence before Sheahan J

1. On 15 May 2015, Sheahan J gave his sentencing decision in a prosecution by the Environment Protection Authority of the (then) operators of the Corindi Quarry (Environment Protection Authority v Wyanga Holdings Pty Ltd; Environment Protection Authority v Cauchi [2015] NSWLEC 78). In this decision, his Honour dealt with several elements of the evidence before him that dealt with the past and possible future output of the Corindi Quarry. His Honour recorded (source citations omitted): 19. The provable volumes extracted between September 2010 and May 2013 are (cf charge periods in [17] above): • 1 February 2011 to 31 January 2012 - 96,597 tonnes; • 1 February 2012 to 31 January 2013 - 368,363 tonnes; and • 2 February 2013 to 31 May 2013 - 81,512.07 tonnes, which includes, in the month of May 2013 alone, 41,273.11 tonnes. 20. Letters from the defendants' solicitor to the EPA in March and June 2013 attached schedules of monthly tonnages between September/October 2010 and 31 May 2013. 21. The first such letter, dated 28 March 2013, noted that the Pacific Highway upgrade needed "between 300,000 to 400,000 tonnes of material to the year ending 2013". Louise deposed (par 81) that all the material won and hauled from the quarry in the charge period, except for 18,000 tonnes, was supplied to the Leighton/Fulton Joint Venture, as the major contractor for the RMS.
2. "Louise" is Mrs Louise Cauchi, one of the two principals of both Wyanga Holdings Pty Ltd and Rixa Pty Limited.
3. His Honour also recorded, relevant to the question of past demand for, and utilisation of, product from the Corindi Quarry: 35. The defendants' arrangement with Apokis coincided with an agreement (Tp10) made by Leighton Contractors Pty Ltd and Fulton Hogan Pty Ltd with the then RTA (now RMS) to design and construct an upgrade of the Pacific Highway from Sapphire to Woolgoolga. 36. The quarry began operating in September 2010, and nearly all of the extracted material was supplied to the Leighton/Fulton joint venture on an ongoing basis (only 18000 tonnes was supplied to Coffs Harbour City Council - see [21] above).
4. Later in his Honour's decision, at [87], he recorded a paragraph of Mrs Cauchi's affidavit. The sentence relevant to consideration of future demand for product was in the following terms: There is presently little or no work for the quarry. The upgrade works from Sapphire to Woolgoolga for which the materials were supplied from the quarry have now been completed.

The extent of the present "public purpose"

1. The Minister's project approval dated 24 June 2014 (Exhibit A, I002, Sch 1) deals with the present project in the following terms: State Significant lnfrastructure: The construction and operation of a four-lane motorway standard highway (two lanes in each direction) approximately 155 kilometres in length between Woolgoolga and Ballina, known as the Pacific Highway Upgrade - Woolgoolga to Ballina project. The land within the public purpose as defined: The Pacific Highway between Woolgoolga and Ballina, from about six kilometres north of Woolgoolga at Arrawarra Beach Road to Pimlico Road about six kilometres to the south of Ballina, excluding the Glenugie and Devils Pulpit upgrades but including the tie-ins to those projects.

The Applicant's town planning position

1. Mr Mitchell's Statement of Evidence concerning post acquisition demand for material which might be quarried from Lot 550, post acquisition, was in the following terms: 44. Given the historic and current applications (DA 0271/14 and DA 0328/16) to increase the rate of extraction at the quarry, it is likely that an increase to approximately 500,000 tpa (approximately 208,000 m3) would be sought. An extraction rate of less than 30,000 tpa would likely not meet the requirements of major road projects in the region (such as the Pacific Highway upgrade). An extraction rate of more than 500,000 tpa is unlikely to be sought given that demand for road base material will drop once major road projects are completed. Such a substantial increase in the extraction rate is unlikely to meet the test of being 'substantially the same development' and would not be able to be approved by way of a section 96 modification. Therefore, the second approval pathway (a new application for designated development with an extraction rate of up to 500,000 tpa) is the most likely application that I would recommend to a hypothetical purchaser of Lot 24.
2. I asked Mr Mitchell a number of questions concerning what he had written on this point. The transcript records the exchange in the following terms (Transcript, 8 May 2017, page 129, lines 7 to 33): HIS HONOUR: Mr Mitchell, have you got paragraph 44 in front of you please? WITNESS MITCHELL: I have your Honour, yes. HIS HONOUR: The second sentence says, amongst other things, the requirements of major road projects, in plural, in the region such as the Pacific Highway upgrade? WITNESS MITCHELL: Yes. HIS HONOUR: I want to know please what are the other major road projects in the region to which this quarry might provide material other than the Pacific Highway upgrade, and where do I find some strategic or other planning indication of it? WITNESS MITCHELL: They'd only be council the only major RMS project that I'm aware of is this Pacific Highway upgrade. HIS HONOUR: So that should be in the singular, is that right? WITNESS MITCHELL: That would be. HIS HONOUR: And in the next sentence the words "once major road projects are completed" should be read as "once this major road project is completed", is that right? WITNESS MITCHELL: That would be more correct, your Honour, yes.
3. Mr Tomasetti then questioned Mr Mitchell. It is not necessary to reproduce this element of the transcript.
4. Mr Hemmings further questioned Mr Mitchell on matters arising out of paragraph 44 of his statement. The transcript records (8 May 2017, page 141, line 7 to page 142, line 6): HEMMINGS: Just on paragraph 44. Mr Mitchell, can you go to paragraph 44 and in the fourth line, his Honour's question, you were asked about in the region such as the Pacific Highway upgrade. WITNESS MITCHELL: Yes. HEMMINGS: I don't know if you were here for the purposes of the opening but there's been an agreement between the parties by reference to the document I002 that the public purpose is it's on the first page construction and operation of a four lane motorway standard highway, Woolgoolga to Ballina do you see that? WITNESS MITCHELL: I do. HEMMINGS: Can I then please ask you to open the document I001.02. If you go in that document, please, to page 6 projects section so, the Woolgoolga to Ballina upgrade is the section we're talking about 155 kilometres it starts from the southern end, tying in with something called Sapphire to Woolgoolga upgrade? WITNESS MITCHELL: Yes. HEMMINGS: And at the other end it's coming Ballina elsewhere. WITNESS MITCHELL: Yes. HEMMINGS: Then lastly if the officer could open W2, and go to paragraph 5 firstly, please. There have been proceedings that were taken against the Cauchis that related to the sale of materials in breach of the licence for the upgrade of the Pacific Highway from Sapphire to Woolgoolga? WITNESS MITCHELL: Mm hm. HEMMINGS: Just go down to 145, please, where there was in the order of 450 plus 3.7 million dollars' worth of materials sold into that project? WITNESS MITCHELL: Mm hm. HEMMINGS: What I want to understand in the statement that you've made at paragraph 44, when you have spoken about the Pacific Highway upgrade, are you talking about any potential project that forms part of the Pacific Highway upgrade itself or just the project the subject of this application? WITNESS MITCHELL: No, I'm talking about other I'm talking about upgrades that would be possible for this quoted service, and do so in a financially viable way, and these are high volume, low cost materials, and so transport costs are a significant part of their competitiveness, so it would be much more sensible for this quarry to look at the Sapphire area just to the north of Coffs Harbour than the other end of the project at Ballina in other words, the public purpose for this exercise.
5. It is clear that the public purpose, as earlier set out, must be disregarded in contemplating what might be any future demand from this quarry. To the extent that that may have coloured Mr Mitchell's analysis of future demand (and possibilities for, or provision of, a basis for an approval for an expanded quarry), it is to be set aside as mandated by s 56(1)(a) of the Land Acquisition Act.
6. Although there was further extensive testing of Mr Mitchell by Mr Tomasetti about future potential demand for product from a continuing Corindi Quarry, it was clear that Mr Mitchell's assumptions were founded on his understanding of what was to be drawn from evidence of future demand calculations based on expected future population growth. Evidence on this point came from other experts - namely, Mr Gray and Mr Herdman. It is, therefore, appropriate to turn to consideration of what can be drawn from that evidence.

The Gray/Herdman evidence on future demand

1. Mr Gray and Mr Herdman provided evidence to address future quarry demand. Mr Gray attempted to estimate the future quarry demand in his expert report, whilst Mr Herdman believed that such a task was unable to be undertaken with any accuracy due to a lack of information.
2. In Mr Gray's report (Exhibit A, C001, Geological Market Value Expert Report, dated 8 February 2016, at Pt 7 commencing at [79]), he attempted to estimate (in both the "before" and "after") such things as demand for quarry materials in the market area, market penetration of the quarry, product penetration of the quarry, a hypothetical products list, a hypothetical pricing list, and sales projections amongst others.
3. I turn, first to the commencing portion of Mr Gray's statement where he wrote: 7.1.1 Market Area for Corindi quarry 79. I have defined the market area as the Coffs Harbour and Clarence Valley local government areas (LGA's). I have assumed all sales would be conducted within this market area. 7.1.2 Demand for quarry materials in market area 80. Demand for quarry products is derived from the demand for the goods and services that aggregates and roadbase materials provide. 81. As the majority of quarry products are used as inputs in construction materials for building and construction, a number of factors contribute to their demand. These primarily include interrelated elements of population growth, road construction and maintenance, housing, land and commercial developments, and other engineered infrastructure for the built environment. 82. Past and present trends in demand per capita for quarry materials provide a reasonably robust means of forecasting of future needs for these materials. In NSW results vary from around 6 to 9 tonnes per person annually, of all quarry materials, depending on the intensity of development in each region at any given time. Large cities typically consume less quarry products per capita, because of higher population densities. In regional areas, with lower population densities per capita consumption is typically higher. 83. For the market area in the mid Coast NSW region, I have adopted an average per capita consumption (demand) figure of 6.5 tonnes per annum for quarry materials won from hard rock sources (ie hard rock quarry products) and lower quality sand and gravel sources. 84. In December 2014 the Coffs Harbour and Clarence Valley Local Government Areas (LGA's) had an estimated resident population of 118,13017. The market demand pertinent to Corindi quarry is therefore estimated at 768,000 tonnes per annum being the product of the estimated resident population and the estimated per capita consumption in the market area.
4. Following from this, his statement provided, over the following more than six pages, his estimates under the following headings:

• Corindi Quarry - likely customer segments (in Table 7.1);
• 7.1.3 Market Penetration of Corindi quarry - Geography;
• 7.1.4 Product Penetration of Corindi quarry;
• 7.1.5 List of Quarry Products Sold from Corindi quarry and Sales Mix;
• 7.1.6 Sales Forecasts - Corindi quarry;
• 7.1.7 Pricing of quarry products in sales forecast and royalties value expressed as a % of selling price;
• 7 .1.8 Competitor Quarries into Market Area.

1. In the section under 7.1.6 "Sales Forecasts - Corindi quarry", Mr Gray provided, at table 7.2 (entitled "Sales Forecasts (Tonnes) Corindi Quarry - Before Case"), detailed product mix and volume projections for a future quarry operation extending out for 100 years.
2. In Mr Herdman's report (Exhibit A, E004, RMS SoE Quarry Valuation of 13 March 2017), he criticised Mr Gray's approach, writing at [84]-[87]: 84. Mr Gray goes onto state in paragraph 94 in his Statement of Evidence dated 8 February 2016 that he had not sighted any product lists or sales records of quarry materials for Corindi quarry. This would assist in determining the quality of the products produced from Corindi Quarry and ultimately, its market. 85. In my opinion there is considerable uncertainty over the quality of the remaining in-situ resource. Faced with this uncertainty, a prospective purchaser would be strongly advised to complete petrographic testing on the resource to ascertain what the resource is capable of producing in terms of saleable products. 86. Without having such data, it is difficult to see how a prospective purchaser can accurately determine the market penetration for the materials produced from the subject quarry, as well as assess how the local or regional market is being supplied by other competing quarries. This is further complicated by the fact that Corindi Quarry was predominantly supplying select fill type materials which is a difficult market to quantify within a region, as demand for select fill is generally on an ad hoc basis and localised, unless there is a major road infrastructure project requiring sizeable quantities of fill type materials in close proximity to the quarry. 87. Unless the purchaser is clear on the products that the quarry can generate and sell, based on the resource's quality, undertaking an analysis of local demographics, major projects and competitor quarries in the region to determine the depth of a market is somewhat a meaningless exercise.
3. Mr Tomasetti questioned Mr Gray and Mr Herdman about Mr Gray's future market demand estimates (Transcript, 11 May 2017, page 250, line 40 to page 251, line 16): TOMASETTI: So you say that you're able to determine the depth of the market for the types of products you think this quarry could sell? WITNESS GRAY: Well, in my statement of 8 February I do an exercise, a sort of market share. I look at the products that the quarry could make. I look at the entire market based on a demographic analysis of the capita consumption of aggregate and materials. I then apply a factor to reduce that. I think I took 40% of it because 60% of that market can't be supplied because it's not concrete aggregate or DGB and DGS so I factored in that allowance in my market share analysis and then I did a market penetration analysis which really is the issue of distance, the cost of transport of aggregate by road. So when I arrived at my estimate of the potential market for the Corindi quarry it's around about 50,000 tonnes per annum. I factored in that it can't produce 60% of the market demand but it can produce the other 40% and I've also, in a qualitative way, through the market penetration analysis factored in the cost of transport with distance. So the further one goes from the quarry, the less likely one is to supply. TOMASETTI: Mr Herdman, is there anything you want to say which led you to change the propositions you put in paragraph 86 and 87 as a result of what Mr Gray has said? WITNESS HERDMAN: Well, the only thing I would say, Mr Tomasetti, is that the competing quarries would not only be producing high grade concrete aggregate and DGB and DGS products but they would also be producing the lower fill type materials. So that would impact on the market share that Corindi would be able to achieve as at the date of resumption.

• Mr Gray was not provided with any financial statements (audited or unaudited) for any period of time for either the Applicant or any entity which had acted as the operator of the quarry. This was entirely contrary to what Mr Gray would ordinarily expect to be the position and this was the first occasion in his experience when this had occurred;
• he had not been provided with any quarry management records of any type that would enable him to have an understanding of what types of quarry products had actually been produced through the quarrying process by past operators;
• similarly, he had not been provided with any quarry management records of any type that would enable him to have an understanding of quantities actually produced through the quarrying process by past operators.

Conclusion on future quarry product demand

1. I am satisfied that the criticism made by Mr Herdman, in [86], quoted above is well-founded. The only precise evidence of demand (excluding the Pacific Highway Upgrade Project) is from Mrs Cauchi of sales of 18,000 tonnes to the Council - a quantity of some 44% of the amount permitted to be extracted by the 1991 consent.
2. Despite Mr Gray's best endeavours (ones which might be regarded as heroic under the circumstances of the wide range of assumptions he necessarily made because of the entire absence of factual information provided by the Applicant and his instructions not to seek to have discussions with the Applicant or those who had operated the quarry in the recent past), I am unable to conclude that there is any valid evidence to assume that there would be any future demand for product from this quarry above that permitted by the 1991 consent - 17,000 cubic metres/40,800 tonnes per annum.

Introduction

1. Expert geological evidence was given by Mr Rankin, for the Applicant, and Mr Grocott, for the RMS. Although the primary focus of their Joint Report (Exhibit A, D003) was to define how much quarry resource was lost to the Applicant as a consequence of the RMS' acquisition, one of the aspects explored by these witnesses was the extent to which potential quarry product remained on the northern portion of Lot 550 after the acquisition by the RMS of the central strip.
2. There was considerable agreement between them about the basis upon which they should approach the tasks required of them. This agreement was set out in the following terms:
3. Their areas of disagreement can be seen in Table 1, reproduced a little later. They are not, in my view, material to the matters requiring consideration as to the likely remaining quarry resource on the northern portion of Lot 550.
4. Although there were some differences in the outcomes of their calculations of remaining resource availability, as discussed below, these have no impact on the conclusion to be drawn from this analysis - even if the more pessimistic approach adopted by Mr Rankin is used for the purposes of the detailed quarry potentiality analysis for the northern portion of Lot 550.

Quarry resource on the northern portion of Lot 550

1. First, it is to be observed that, although the floor of the present quarry pit is at 63 AHD, Mr Grocott and Mr Rankin agree that there is available, extractable quarry resource down to at least 51 AHD. Although Mr Rankin expresses the view that it is not appropriate to consider any quarrying potentiality involving extraction below 51 AHD, for the reasons discussed below, there is no need to consider this possibility.
2. The report set out, at page 19, a table (Table 1) setting out their entire resource calculations. It is reproduced below:
3. The qualifications noted for this table were:
4. Mr Rankin also noted, in the joint geological report, the following under the heading "Over-estimation": Rankin would comment that (notwithstanding the fairly arbitrary floor limit at 51 m RL) the designed pits are optimistic maximum cases and are more likely than not to over-estimate potential quarrying.
5. For the purposes of the analysis I consider is necessary to understand the post acquisition quarry potential of the northern portion of Lot 550, it is appropriate to isolate those elements of the above Table 1 as are relevant. Those elements can be seen below in the elements of Table 1 in the figure revised by me (revised only as to presentation - not as to content):
6. I am satisfied that I should undertake my analysis of the available resource on the basis of Mr Rankin's figures in the above extracted table. Approaching the analysis of the resource availability evidence on this basis is consistent with the broad principle of resolving such matters of dispute, when there is a genuine and otherwise unresolvable issue, by taking the position more favourable to the dispossessed landowner (Sydney Water Corporation v Caruso [2009] NSWCA 391 (Caruso)).
7. The underlying assumptions for Mr Rankin's conclusions were set out in the Joint Report as follows:
8. Mr Rankin's post acquisition hypothetical pit design for the northern portion of Lot 550 is shown on page 16 of the Joint Report and is reproduced below:

The future life of a quarry on the northern portion of Lot 550

1. There is, even on this cautionary basis with which to approach the question of resource availability on the northern portion of Lot 550, sufficient winnable material to sustain quarrying activities well beyond a 50-year time horizon. This is because, at 40,800 tonnes per annum permitted by the 1991 consent and making the assumption that there would be sufficient product demand for the entirety of this output (a proposition for which I have found there is no satisfactory evidentiary basis), Mr Rankin's pit has a future life of approximately 55 years post resumption on the post acquisition boundaries of the northern portion of Lot 550.
2. However, the available resource analysis is to be undertaken on the basis not only of the above conclusion based on Mr Rankin's pit design and quantitative analysis but also having regard to the fact that there is no requirement in the 1991 consent to have any buffer whatsoever from any boundary (and the acquisition of the central strip by the RMS does not alter this position). As a consequence, the 100-metre buffer adopted by Mr Rankin and Mr Grocott (although excluded from their resource calculations (subject to Mr Rankin's minor south-eastern corner intrusion to accommodate the present pit in a safe fashion)) could theoretically be quarried and there is no evidence that it is unreasonable to assume that this strip lacks resource potential. The contrary is the position - Mr Rankin's pit design, on a pre-acquisition Lot 24 basis, shows that this strip, subject to the 20-metre eastern and western boundary buffers is entirely able to be quarried.
3. The conclusion to be drawn, then, is that, post acquisition, there is sufficient winnable quarry product on the northern portion of Lot 550 to permit a resumed quarry to operate for a time period in excess of 50 years at present 1991 consent limits and assuming product to that limit was required by potential customers.

Has the Applicant suffered a loss from post acquisition quarrying potential?

Introduction

1. The future income stream which the Applicant might derive from the resumption of quarrying is to be assumed to derive from future royalties paid by the future operator. This is the basis upon which the various experts have approached the matter. There has been no assumption that the Applicant would take on a role as an active quarry operator - he would be a passive investor (as would any purchaser of Lot 550).
2. I have, above, explained why, with the winnable resource within the northern portion of Lot 550 for quarrying based on the operation of the 1991 consent, the available quarry life from resource within the northern portion of Lot 550 is of the order of at least 55 years.
3. As I am satisfied that, on the facts, there is sufficient quarry resource within the northern portion of Lot 550 to satisfy the maximum rate of permissible extraction of quarry product pursuant to the 1991 consent for more than 50 years, this establishes that there is a viable (in terms of rate of extraction) quarry available on the northern portion of Lot 550 for sufficiently long for the NPV of quarrying beyond that time to be purely nominal. Such a purely nominal NPV defines the extent to which the Applicant is entitled to compensation for the acquisition of the central strip by the RMS of the quarry resources that would otherwise have been required in the period beyond 50 years for longer term quarrying activities beyond the fiftieth year (even on the assumption that quarrying would have reached that central strip by then).

The royalty valuation evidence

1. Mr Gray and Dr Ferrier, the relevant RMS expert, prepared a joint expert report. Its introductory section includes a passage setting out the limitations of Mr Gray in participating in this process. Relevantly, the reports says: 4. As Mr Gray is involved in another separate joint conferencing process with Messrs Herdman, Dempsey and Dale, he has declined to respond in this joint report to Dr Ferrier's opinions in relation to matters which he has addressed in the other joint report ("the Joint Report of Valuation and Quarry Management Experts"). 5. Mr Gray considers that the proper scope of this joint report is limited to matters of the market value (Net Present Value, or NPV) of future royalty income determined by applying the discounted cash flow method not dealt with by the valuers Messers Dale, Dempsey and Herdman in the Valuation and Quarry Management Experts joint report, the mathematical accuracy of his DCF calculations and the quantum of disturbance loss. 6. For matters which Mr Gray considers fall within the scope of this joint report, this report identifies our areas of agreement and disagreement. For matters where we differ, we summarise the key differences and the reasons for each position. 7. For matters which Mr Gray considers fall outside the scope of this joint report, this report identifies Dr Ferrier's opinions and the reasons Dr Ferrier holds those opinions.
2. However, they agreed on the purpose for which they were conferring, describing it as follows: 12. We agree that the purpose of the assessment is to assess the net present value of the future net royalties as at the date of acquisition which would reasonably be taken into account by a prospective purchaser of the subject land, on the assumption that the highest and best use of the land is for quarrying purposes. In the context of the current matter, the assessment of the net present value of future royalties may also be relevant to the assessment of compensation.
3. Dr Ferrier, however, recorded his reservations about the course upon which he and Mr Gray were to embark. He expressed these as follows: 18. In Dr Ferrier's opinion the DCF method is not appropriate in this case because: (a) There is insufficient evidence on which to base a reliable prediction of future net royalties; (b) There is insufficient evidence on which to base a reliable assessment of the specific risk associated with a royalty stream from the quarry. 19. In Dr Ferrier's opinion, the future cash flows are so uncertain and the risks so difficult to quantify, that a reasonable prospective purchaser of the land would have regard only to comparable market transactions and not to a DCF analysis.
4. Despite this, Mr Gray and Dr Ferrier prepared an Excel spreadsheet containing a number of workbooks. In essence, relevantly, Mr Gray prepared a workbook for his calculations based on the present (1991) consent and Dr Ferrier contributed a version of the same calculations but with his own adjustments interposed. It is not necessary to examine these in any detail. It is sufficient to note that Dr Ferrier's approach was more pessimistic in its assumptions than was Mr Gray's.
5. However, their relevant disagreements, to which I need to have heed, are comparatively minor as the sole matter that detains me. It is not necessary for me to consider any aspects of this Excel material beyond that concerning the 1991 consent workings, given my earlier conclusion as to the correct position for future quarrying post acquisition.
6. Mr Gray's calculation of the NPV of the year 51 to 100 royalty stream was $1,109. Dr Ferrier's more pessimistic calculation of this value resulted in a value of $1,036.
7. With respect to values beyond the 100-year point, I put a question to these experts. The exchange was as follows (Transcript, 16 May 2017, page 541, line 10 to page 542, line 12): HIS HONOUR: If we go to spreadsheets, I have a very simplistic question that I want to ask, which I think I know the answer to, but I would like to have answered on the record, and that is, as I recollect, in any discounted cash flow between the period of 50 and 100 years, you say the value is minimal in terms of quantum. I think there are some numbers in the one or two thousands at that point in time. Do I assume that, if you go beyond 100 years, one should simply ignore any number because it is so small as to not make a difference? WITNESS FERRIER: That's correct, in principle, your Honour, yes. Eventually, the discount factor would reach zero. HIS HONOUR: Mr Gray? WITNESS GRAY: Yes, I would agree with that position, your Honour. HIS HONOUR: When would it reach zero? If one had to draw a graph starting at some point, and then work out when you got to zero, is it 100, 200, 300, 40,000 years hence? WITNESS FERRIER: It depends on the discount rate, your Honour. The lower the discount rate, the longer it takes to reach zero. HIS HONOUR: If we take the discount rates that are postulated by firstly Mr Gray and then Mr Herdman, at Mr Gray's discount rate when would you reach zero, in punter's terms? I'm not asking you months, days, hours, minutes sort of numbers, but as a broad proposition how far in the future would you reach zero? WITNESS FERRIER: Without actually doing the calculation I'm not sure, but it would probably be 80 years, something like that. HIS HONOUR: All right, and using do you agree with that Mr Gray? WITNESS GRAY: Yes, your Honour, I use the 15% discount rate beyond year 51 and 8% up until year 50. There was still a value coming in albeit very small at year 100, but it is miniscule, so without doing the math I would think it's beyond 100 years it's very low, but I'm not quite sure when it would actually literally come to zero.
8. I have earlier explained why I am satisfied that there is sufficient quarry resource on the northern portion of Lot 550 to sustain quarrying operations for at least 50 years (without quarrying into the 100-metre buffer adopted by Mr Rankin and Mr Grocott from the project corridor). However, I am unable to calculate when, after 50 years, the quarry resource on the northern portion of Lot 550 would be exhausted.
9. In light of this, and after having regard to Mr Gray's and Dr Ferrier's post 50‑year calculations; and taking the position more favourable to the dispossessed landowner when there is a genuine and otherwise unresolvable issue (Caruso), I am satisfied that a nominal amount (of $1,000) should be allowed to the Applicant to compensate for the loss of future royalty income from quarrying to be caused by cessation of quarrying activities on the northern portion of Lot 550 by the acquisition by the RMS of the future quarry resources in central strip.

Introduction

1. If I am wrong in my conclusions about the future of the Corindi Quarry on the basis of the 1991 development consent permitted extraction rate being the limit on future quarry production; that this rate of extraction would satisfy future demand; and that there was sufficient resource available from the northern portion of Lot 550 to satisfy this demand for sufficiently long to render the value until future exhaustion negligible on a NPV basis, I turn to consider the likelihood of seeking (and, if granted, the terms for) a new development consent at any significantly increased rate of annual extraction.
2. For assessing whether or not there would be any future development consent sought and obtained for a significantly expanded quarrying operation, there are three matters requiring consideration. These are entirely divorced from future quarry demand questions; they solely address the rational probability of seeking and, if sought, obtaining, development consent for a quarrying operation at up to 500,00 tonnes (approximately 210,000 cubic metres) per year, this being the largest hypothetical future quarrying operation dealt with in various aspects of the expert evidence. It is to be noted that other quarry operational levels (eg 150,000 tonnes per annum) were also canvassed by the experts. This does not alter the questions that arise for consideration which are: 1. What would be the realistic cost of preparing a development application for such an expanded quarrying? 2. What constraints would be imposed on such an expanded quarry, if approved, through the likely modern development consent conditions that would be attached to such a consent? 3. Would an application for an expanded quarry be made by an owner of the unaffected land (Lot 24), properly informed by the answers to the questions posed above?

Introduction

1. At any hypothetical rate of future extraction of material from a significantly expanded quarry, Sch 3 of the Environmental Planning and Assessment Regulation 2000 operates to require the preparation of an Environmental Impact Statement (EIS) for such a proposal (it being for an extractive industry). The relevant extraction rate triggering provision is contained in Sch 3(19)(1)(a) as it would be a development which would: obtain or process for sale, or reuse, more than 30,000 cubic metres of extractive material per year
2. It is also highly pertinent to note that Sch 3(19)(1)(c)(v) renders as designated development any extractive industry which is located, relevantly: within 500 metres of a dwelling not associated with the development
3. As there are dwellings "not associated with the development" at distances to the west and south-east of less than 500 metres, any application to expand the quarry beyond the scope of the 1991 consent would also be designated development and require an EIS. As a consequence, any proposed expansion application would need to go through the processes discussed below in the evidence of Mr Mitchell. Whilst the road upgrade required by the RMS (discussed below) might be less extensive or not required for a quarry expansion of very modest quantitative scope, nonetheless, the EIS requirements, at a minimum, would need to be satisfied.
4. In making this point, I am not to be taken to be speculating on what further conditions of the nature set out below in the extract from Mr Mitchell's Statement of Evidence at paragraph 50 might be imposed by the Council.
5. With respect to the potential for expanded quarrying activities on Lot 24, Mr Mitchell canvassed this, in some detail, in his Statement of Evidence. He was also questioned on this point during the course of the oral town-planning evidence. Mr Mitchell's evidence was clearly informed by the chequered history of past quarry development proposals. It is not necessary for this discussion to set out detail of past applications which have not resulted in consents for increased quarry production approvals
6. It is appropriate, first, to set out an edited version of the relevant portions of Mr Mitchell's written statement. The editing is solely to delete detail unnecessary to understand his broad position on this point. His Statement of Evidence, relevantly, read: 45. I note that DA 0271/14, the most recent application to increase quarrying at the site to 490,000 tpa, was refused. The reasons for this were as follows: The application proposes development on Lot 76, DP 752828 and the owner of this land has not consented to the application being made (as required by Regulation 49 of the Environmental Planning and Assessment Regulation). The application is not in accordance with Director General's Requirements that have been issued by the Department of Planning with respect to the proposed crushing works. Plans of the proposed development are not in accordance with Part 1 of Schedule 1 of the Environmental Planning and Assessment Regulation 2000. Adequate information with respect to blasting, flora and fauna impacts, rehabilitation and sediment and erosion control for the development has not been provided to enable likely impacts of the proposed development to be assessed. The safety, efficiency and ongoing operation of the Pacific Highway may be adversely affected by the development. The application has been in for a lengthy period of time without the required information being provided and this is not in the public interest. 46. In relation to reason (a), the absence of land owner's consent for Lot 76 has now been addressed through the offering of a licence for the portion of the land used as access to the quarry (see paragraph 18 of this statement). 47. In relation to reason (e), RMS in their letter to Council regarding DA 271/14 raised safety and operational issues related to the Pacific Highway (see Appendix D). However, the advice also indicates that these issues would be able to be resolved through road improvements. It says: I refer to your letter dated 29 November 2013 to the Roads and Maritime for the proposed expansion of the existing quarry. Roads and Maritime recognises the need for quarries and supports them where they are undertaken in a safe, efficient and sustainable manner. Attached is a copy of Roads and Maritime's recent response to Planning NSW, for your information. The Pacific Highway is an important part of the national transport system. Generally Council is the Road Authority and Roads and Maritime is a concurring and maintaining authority in accordance with the Roads Act 1993 for the highway. Limited sight distance at the quarry's access onto the highway to the south, the gradient, vehicle speed and limited gaps in highway flows creates a safety issue for traffic exiting the quarry. Observations of the quarry's operations indicate that the trucks are using both the western and eastern shoulders of the highway. Loaded southbound trucks exiting the quarry turn left and travel north along the highway to Dirty Creek Road where they turn right into the local road and make a U-turn movement at a local junction. They return to the highway and make a left‐turn to head south. There are no existing acceleration and deceleration lanes for left and right‐turning quarry traffic at the existing access and the Dirty Creek Road junction on the highway. At present the trucks are using the sealed shoulders for left‐turns rather than deceleration lanes. Even though the turning traffic is minimal the safety issues should be addressed and managed until this section of the highway is bypassed. Current AUSTROADS warrants indicate that a northbound AUL deceleration lane is required for the quarry's access. The continual use of the highway's sealed shoulders will require a maintenance agreement with Roads and Maritime to be executed until this section is bypassed. The quarry trucks are tracking material onto the highway's pavement at the access and Dirty Creek Road junctions. At least 200m of the access road and the Dirty Creek Road turn around area need to be sealed. The developer will be required to enter into a 'Works Authorisation Deed' (WAD) with Roads and Maritime if any new road works are required on the Pacific Highway. They will need to be designed and constructed in accordance with the relevant AUSTROADS Guidelines and Australian Standards. Prior to the issue of a Civil Construction Certificate for the proposed development, the developer will be required to enter into a Works Authorisation Deed (WAD) with Roads and Maritime for all road works on the Road Name. Prior to the issue of an Occupation Certificate for the development, a Pre‐Qualified Contractor will be required to complete all road works under the WAD to practical completion, as determined by Roads and Maritime. The developer will be responsible for all costs associated with the works and administration of the WAD. 48. In relation to reasons (b), (c), (d) and (f), a suitably prepared application which adequately addresses the relevant environmental assessment requirements would satisfy these. 49. In summary, five of the six reasons for refusal are about procedural and information adequacy concerns and can be overcome. There is only one merit issue - continued safe and efficient traffic movement on the Pacific Highway - and in this regard I note that the RMS provides conditions which would address these concerns. 50. Given the above, I would advise a hypothetical purchaser of Lot 24 that approval for an increase in the extraction rate to approximately 500,000 tpa would likely be granted subject to conditions. These conditions would likely include road improvements to the intersection of the quarry access with the Pacific Highway, and preparation of environmental management plans and monitoring programmes for noise, blasting, air quality, surface water, ground water, biodiversity, Aboriginal heritage and rehabilitation. 51. I would also advise a hypothetical purchaser of Lot 24 that, if an approval to increase the extraction rate above 30,000 tpa was sought, the quarry would be a scheduled activity to which section 48 of the POEO Act applies and an EPL would be required.

Access across Lot 76 - the Crown land to the east

1. As can be seen from the above extract, the first of the issues which Mr Mitchell indicated required to be resolved was the question of access across Lot 76, the adjacent Crown land to the east. It was earlier noted that the absence of consent for access to the property across this Crown land was one of the matters raised by the Council as an obstacle to the approval of the 2014 development application refused by the Northern Joint Regional Planning Panel (and was one of the reasons given by that Panel for refusal of that application).
2. However, during the early portion of this hearing, a licence which had been granted to the Applicant for a range of activities able to be undertaken on this Crown land parcel, relevant to access across the Crown land to the northern portion of the residual allotment, was tendered. The licence was granted, pursuant to s 34A of the Crown Lands Act 1989, on 4 September 2015. It is to be noted that this permit is, self-evidently from its date, solely directly relevant to consideration of the post acquisition position. The licence is some 18 pages long (including schedules). It is not necessary to reproduce it in full. Relevant matters arising from the licence are set out below.
3. Clause 21(a) of the licence is in the following terms: This license confers on the holder a right to occupy the premises for the purpose specified or referred to in Column 2 of Item 4 in Schedule 1.
4. Clause 21(b) makes it clear that this permitted use is the sole purpose for which the licence is operative. The purpose specified in the schedule is: Access, site investigation, storage area.
5. The licence operates for a period of 10 years from its commencement.
6. There are four special conditions imposed by Sch 2 of the licence (cll 57 to 60). These are: No development authorised The holder acknowledges that this licence only authorises existing structures and does not authorise any development on the premises. Obligation on sale The holder shall notify the Minister in writing immediately upon exchange of contracts for the sale of the adjoining/associated freehold land being lot 550 DP 1181369. Expansion of quarry Upon receipt of an operation consent for the expansion of the quarry beyond 50,000 times per annum the rent will increase from $1,513.40 to $2537.41 plus CPI as per Clause 6.031. Authorised area for access and storage Occupation of the licence for access and storage is to be restricted to the area shown by blue outline on the schedule 3 diagram.
7. The Sch 3 diagram in the tendered document (although not in colour) makes it clear that the area covered by the licence is triangular in shape and at the northern, pointed end of Lot 76. The southern boundary of this triangular area appears to be immediately at the southern side of the access road running from the existing Pacific Highway to the northern portion of Lot 550.
8. There are two further clauses in the licence which warrant noting. They are cll 26 and 27. The first of them provides that the licence will terminate if there is a successful claim over the land or any part of it pursuant to the Native Title Act 1993 (Cth). The second of them acknowledges that the license is subject to a possible Aboriginal Land Claim pursuant to s 36 of the Aboriginal Land Rights Act 1983 and that the licence will terminate in the event that the land is determined to be claimable Crown land.
9. Although the licence is specifically granted to the Applicant, by name, and is not granted, in terms, to any entity that has or has had any quarrying profit a prendre for any quarry on the northern portion of the residual allotment, the right to permit access would, by necessary inference, extend to persons authorised by the Applicant for the purposes of operating his quarry.
10. However, in the context of Mr Mitchell's position, it was his position that this licence provided the appropriate foundation for satisfaction of the list of outstanding matters requiring resolution before an expanded and ongoing quarrying activity could be approved on the northern portion of the residual allotment (see Mr Mitchell's (45)(a) at [207] above) or, in the hypothetical, on Lot 24 in its pre-acquisition configuration.
11. It is also reasonable to assume, in my assessment, that such a licence on the same terms would have been able to be obtained in the past had the Applicant sought to obtain one for access to his quarry site on the pre‑acquisition Lot 24 and that one would be available on similar terms if a new consent were to be obtained.

Studies necessary to found a proper EIS

1. At paragraph 48 in the above extract from Mr Mitchell's statement, he clearly expresses confidence that, for "reasons (b), (c), (d) and (f), a suitably prepared application which adequately addresses the relevant environmental assessment requirements would satisfy these".
2. As can also be seen, Mr Mitchell also concluded that he expected that an approval would impose quite onerous conditions as part of any development consent - setting out at paragraph 50 what those would entail: These conditions would likely include road improvements to the intersection of the quarry access with the Pacific Highway, and preparation of environmental management plans and monitoring programmes for noise, blasting, air quality, surface water, ground water, biodiversity, Aboriginal heritage and rehabilitation.
3. The application preparation costing evidence given by Mr Mitchell concerned Mr Rankin's theoretical quarry design at Figure 5 in his report. He put the likely cost of such an application as "in excess of maybe $100,000". Although this estimate was for a very complex application, there can be no doubt that the cost of preparation of an adequate application (including the mandated EIS) and studies and further work that would be required by any conditions of consent (if such an application was approved) would be considerable.
4. It is clear that the roadworks set out in the RMS requirements letter quoted by Mr Mitchell at paragraph 47 of his Statement of Evidence would be required to be undertaken prior to any Occupation Certificate being given to permit commencement of any significantly expanded quarry. All the condition requirements would also likely be required to be met prior to commencing operation of the quarry at any expanded capacity.

The constraint of boundary buffers for any new development consent

1. The above conclusion is reached without having regard to the fact that, for the reasons discussed elsewhere, the likelihood that any new development consent would not only have imposed conditions mandating the matters set out in Mr Mitchell's Statement of Evidence (at paragraph 50, quoted at [207] above) but would also have mandated buffer distances imposed by condition from all boundaries. Such buffers would be imposed to provide protection from "fly rock" risk from blasting. Such buffers would severely limit the potential quarry resource available in the "before" RMS acquisition position.
2. Although there was some initial exploration of the possibility of a 300-metre buffer being required (at least on some boundaries), there was agreement, as I understood it, that a minimum buffer distance of 100 metres would be required for any new quarry as a condition of consent.
3. Even if the conditionally imposed buffer distances were only of the order of this 100 metres from any boundary, imposition of such buffer distances as a consequence of any hypothetical further development consent (if, contrary to my conclusion above that one would not be sought or taken to Occupation Certificate implementation) would be likely to sterilise, effectively, much of the potentially available quarry resource (including virtually all of the resource in the narrower portion at the south of Lot 24 as well as imposing very significant limitations on resource availability in the more wide proportion area in the northern approximately two-thirds (by length) element of Lot 24).
4. This makes it self-evident that the likely buffering conditions in some new development consent for quarrying would be so constricting of the quarrying potential to make it clear that even contemplating seeking an expanded quarry consent in the "before" acquisition scenario would likely be an uneconomic act.

Conclusion on seeking an expanded quarry approval

1. It is clear that the cost of seeking approval for a hypothetical future quarrying consent which would be permitted to operate at any level above that permitted by the 1991 consent (whether at 500,000 tonnes per annum or some lower production limit) would render contemplation of pursuing such consent fanciful. When this is coupled with the necessary nature and likely cost of modifications to the existing Pacific Highway in the vicinity of the quarry entrance (as outlined in the RMS' letter as being necessary to be constructed pre-Occupation Certificate for an expanded quarry consent of this extraction rate - see above) contemplation of such a course ceases to be merely fanciful and could properly be characterised as delusional.
2. Indeed, the location of dwellings to the west and south-east of the northern element of Lot 24 (as earlier discussed) and those to the east of the southern element of Lot 24, it is clear that any hypothetical development application for even a modest quarry expansion beyond the 17,000 cubic metres permitted by the 1991 consent would render such a hypothetical application mandated to be treated as designated development. Such application would thus be required to go through the full EIS process, with the necessary attendant cost of preparation of such a document and addressing the various matters identified by Mr Mitchell, the Applicant's own town planning expert, as being necessary.
3. As a consequence of those conditions that could be expected to be imposed by the Council (even if the road upgrades for the existing Pacific Highway were not required at such a lower-level quarry expansion), this would render the cost of seeking and making operational a development consent for a more modest quarry expansion of some level above 17,000 cubic metres per annum unviable - no matter what level of expansion above that volume might be contemplated.
4. As a consequence, the only conclusion concerning potential future viability of quarrying operations, on the pre-acquisition Lot 24, is that quarrying would only continue on a basis limited to the maximum rate of extraction available pursuant to the 1991 consent.

Introduction

1. I have earlier noted that the Applicant makes a claim against the RMS for the payment of royalties on material removed by the RMS from the acquired central strip. As part of the upgrade of the Pacific Highway, the RMS has created a substantial cutting, through the ridge that ran north-south along the pre-acquisition property owned by the Applicant.
2. The material removed by the RMS during the creation of this cutting comprised 2,524,000 tonnes of material that the Applicant says formed part of the future potential quarry resource on his property. In summary, he says that the consequence of this is that the RMS should pay him a royalty, based on the relevant operating profit a prendre for the materials so removed and used elsewhere on the Pacific Highway Upgrade Project. The amount claimed is $2,262,000.

The statutory provision relied upon

1. This claim is made pursuant to s 59(1)(f) of the Land Acquisition Act. Although earlier set out, I now repeat it for the purposes of this discussion: (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.
2. In this context, it is to be observed that loss also encompasses profit forgone (George D Angus).

The Applicant's case

1. The Applicant says that the RMS has won valuable quarry resource for use on the project; that it won it from the Applicant's land; and, had the Applicant been able to supply that material, he would have been entitled to a royalty on it.

The RMS' response

1. On the other hand, the RMS says that, when it acquired the strip of land through Lot 24, it acquired it for all purposes and the acquisition extinguished any right which the Applicant had to it pre-acquisition.

Consideration

1. There are two separate reasons why this claim must fail.

RMS' rights following purchase

1. The RMS' position concerning the extinguishment of the Applicant's rights is clearly correct. By its compulsory acquisition, and the requirement to pay compensation for the market value of that which is acquired, the RMS is put, with respect to the property it now owns, in exactly the same position as any ordinary landholder. That is, the RMS could deal with the property as it saw fit, subject to compliance with any applicable statutory or regulatory requirements that regulate the way that the RMS as a landowner can undertake development on property owned by it.
2. In this instance, although the regulatory regime that applies to the RMS differs from that which would have applied had the Applicant proposed to undertake development on the acquired land for any purpose, there is no suggestion that the development undertaken by the RMS was not entirely compliant with the statutory and regulatory regime that applies to it in these circumstances.
3. In a context where, in common law legal theory, historically the RMS would have been regarded as owning the acquired land to the centre of the earth, the RMS was entitled to construct the road along a central strip in any fashion it chose provided it went through the proper processes mandated for it after it had determined its road design.
4. It would not have mattered whether the road was to go through a tunnel or a cutting or, indeed, up and over the ridgeline in the central strip acquired from the Applicant.
5. The RMS' acquisition gave it full and unencumbered ownership of, and control over, the acquired land from the instant the land was acquired from the Applicant. From that time, that which the RMS did as part of its project construction was merely its own dealing with its own property, not any dealing with anything with which the Applicant may have had some residual right.
6. There is, therefore, no possible basis upon which the Applicant can succeed in his claim for compensation to be paid to him in lieu of royalties which might theoretically have applied had he won that material.

The removed material has zero net present value (NPV) as a quarry resource for the Applicant

1. However, on the assumption that this first proposition is incorrect, it is then necessary to consider what might have been the value to the Applicant of the right to quarry the material that has been removed and utilised by the RMS. This consideration must take place within the framework earlier discussed about future quarrying potential.
2. If the Applicant might, contrary to the above discussion and its conclusion, be potentially entitled to a royalty for the material removed by the RMS from Cutting 8, the question then arises of how its present value is to be determined. It seems to me that the appropriate course is to have regard to the value of the material (and, hence, the royalty due to the Applicant) having regard to the expected future quarrying operations for the winning of quarry products from the site. Such an approach requires consideration within the framework of the reasonably anticipated future scope for quarrying of materials from the site, a matter earlier considered and determined.
3. On the basis of the quarry life left in the northern portion of Lot 550, the elapsing of time before any quarrying activity in the northern portion would reach the strip acquired by the RMS would be well beyond 50 years (and, because the whole of the buffer depicted in Mr Rankin's hypothetical would need to be quarried to get there, would likely be well beyond that - toward, if not after, 100 years).
4. Although I understood Mr Gray and Dr Ferrier did opine that there would be a point in time when there was no present value, at the sort of time horizons arising in this theoretical model, it seems reasonable to assume that this tendency to zero would result in a purely nominal royalty value. Whilst the legal practice of awarding a peppercorn in such circumstances no longer has currency, I am satisfied that the purely nominal amount of $1 would be appropriate if my first determination that there was no entitlement whatsoever was not correct.
5. As a final observation, I note that there was no suggestion, from the mining engineering or geological evidence, that there is any practical way (other than the RMS highway upgrade construction) by which quarrying of the materials won by the RMS from Cutting 8 could have occurred. Specifically, there is no evidence that would suggest that ordinary quarrying activities from the present pit and face could, in some fashion, have been bypassed so that conventional quarrying, for non-RMS purposes, could have been undertaken along the Cutting 8 corridor for the purposes of winning and selling quarry products in association with existing quarrying operations.

Conclusion

1. Properly understood, there is virtually no legal analysis required in these proceedings to address:

• the calculation of compensation for the value of the central strip acquired by the RMS on the assumption that the value for this land should be derived from analysis of residential "bush block" sales in both a before-and-after acquisition context; and
• consideration of the necessary factual matters to assess whether (and at what amount) the Applicant should be entitled to compensation for loss of quarrying potential in the post acquisition position.

1. I have reached the following conclusions with respect to the claim made by the Applicant as a consequence of the resumption by RMS of the strip of 19.02 hectares through the centre of his property for the purposes of the Pacific Highway Upgrade Project. The outcomes I have determined to be appropriate are: 1. The value of the acquired land, based on "bush block" residential usage and after taking into account the betterment to the southern portion of Lot 550, is $113,000; 2. As to the potential of future quarrying operations on the northern portion of Lot 550, a proper understanding of the extent to which quarry resource will remain on the portion of the Applicant's land to the north of the acquired strip when considered having regard to: 1. the rate at which the 1991 development consent authorised the winning of material from the quarry; 2. the absence of any reliable evidence on future market potential for material from the quarry; 3. the improbability of the Applicant seeking to obtain a development consent from the Council for any significant expansion of the rate of extraction of the material from the quarry; and 4. the reasonably foreseeable local market for material from the quarry means that, even if the improbable event of an expanded quarry consent eventuated, there was no realistic prospect that demand would support any significant expansion of the presently approved rate of quarrying means that the operation of the quarry, if continued on the basis of the 1991 consent, would not extract the available resource on the northern portion of the Applicant's land until more than 50 years after the date of the acquisition of the central strip by the RMS. The result of this conclusion is that the resultant compensation entitlement for the loss of quarrying potential arising from continuation of the present quarry, based on the evidence of Mr Gray and Dr Ferrier, is determined as being $1,000; 1. The Applicant's claim for compensation for a royalty payment, for the 2,524,000 tonnes of material removed by the RMS when it constructed the cutting along the acquired strip, is rejected because when the RMS acquired the land, it acquired the right to use the land for all purposes, including the winning of materials that might otherwise have been long‑term quarry resources for the Corindi Quarry and that Mr Apokis retained no entitlement with respect to that material; 2. However, if I am wrong in this conclusion, a proper understanding of the extent to which quarry resource will remain on the portion of the Applicant's land to the north of the acquired strip when considered in light of the rate of extraction permitted by the 1991 consent material from the quarry leads to the conclusion that the operation of the quarry, if continued, would not reach the southern boundary of the available resource on the northern portion of the Applicant's land until very much more than 50 years (and possibly more than 100 years) after the date of the acquisition of the central strip by the RMS. This means that the NPV of the winnable material in the acquired central strip (as a resource for the Applicant's quarrying activities) is, effectively, nothing and that the resultant compensation entitlement should be purely nominal and set at $1.

Directions

1. It is therefore appropriate that the parties settle Short Minutes of Order to give effect to this decision. To ensure that this occurs, I give the following directions: 1. The parties are to provide my Associate by the close of business on Wednesday 13 December 2017, electronically as a Word file, with settled Short Minutes of Order reflecting elements (1), (2) and (3) above and reserving the question of costs; 2. The matter is listed for mention in the LVC List on Friday 15 December 2017; and 3. If (1) is complied with, I will make orders in chambers and vacate the mention in (2).

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: 04 December 2017