Blacktown City Council v Roads and Traffic Authority of New South Wales

BLACKTOWN CITY COUNCIL v ROADS AND TRAFFIC AUHTORITY OF NEW SOUTH WALES [2004] NSWLEC 772

EX TEMPORE JUDGMENT 1 HIS HONOUR: On 24 October 2003 the Roads and Traffic Authority of New South Wales (the "RTA"), acquired by compulsory process a strip of land from Blacktown City Council for the purpose of road widening. The question for determination is the amount of compensation that is to be paid for the acquisition. 2 By a Compensation Notice dated 25 November 2003 the RTA offered $116,000 as representing the market value of the acquired land together with $4,000 for disturbance. In these proceedings, however, the RTA has contended through its valuer for a sum of $80,000 as representing the market value together with a sum to be assessed for disturbance. The council claims $800,000 for market value together with $4,000 for disturbance. I am informed that the parties have now agreed on $4,000 for disturbance. 3 The acquired land is a strip approximately 170 metres long and approximately 6 metres in depth fronting Patrick Street, Blacktown. At the date of the acquisition the land formed part of a park known as Alpha Park adjacent to Blacktown Central Business District. It is agreed that the zoning of the land as Open Space 6A Public Recreation under Blacktown Local Environmental Plan 1988 was not a step in the resumption process. 4 Alpha Park is classified as Community Land under the Local Government Act 1993. This means that it could only be used in accordance with a plan of management: s 35 of the Local Government Act 1993. It also means that the council had no power to sell, exchange or otherwise dispose of it: s 45. If the council proposed to grant a lease, licence or other estate in respect of community land, it had to notify the public and obtain the consent of the Minister for Local Government. Community land cannot be reclassified as operational land without a public hearing, the Minister's consent and the making of a local environmental plan: see ss 27, 33, 34 and 46. 5 The parties' respective valuers, Mr K D Wood for the council and Mr P Dempsey for the RTA, agree, as I have noted, that the 6A zoning is not a step in the resumption process. They further agree that the highest and best use of the acquired land immediately before the acquisition was for community open space purposes. They also agree that there was no likelihood of the land being rezoned for some higher use. 6 The parties' respective valuers have each adopted a different approach to assessing the market value of the land resulting in the wide gap between their valuations. A common difficulty facing both of them is in finding comparable sales of land either appropriately zoned for open space or public recreation purposes within the area and/or purchased for such purposes within the area. There is a paucity of comparable sales. 7 Mr Wood has relied on the sales of two properties opposite Alpha Park and within the general business 3A zone. These sales show a rate per square metre of $1600. In applying these sales to the subject land he has applied a discount of 50 per cent for the community land classification which results in the figure of $786,969, say $800,000, for the 983 square metres that has been acquired by the RTA. 8 Mr Dempsey has attempted to apply sales of land zoned for open space and public recreation purposes. He has then made adjustments to those sales having regard to their location, the nature of the open space, the characteristics of the surrounding development and the like. There are, however, no sales of such land that can be directly compared to the subject land. Some of the sales replied upon by Mr Dempsey are several kilometres from the subject land and the adjustments that Mr Dempsey has made are so great as in my opinion likely to lead to distortion and error. The adjustments made by Mr Dempsey to the sales upon which he relies are in the order of a factor of two times sale No. 1; 192 per cent upwards followed by 33 per cent downwards, sale No. 2; a factor of two times upwards followed by 33 per cent downwards, sale No. 3; 100 per cent upwards followed by 66 per cent downwards, sale No. 4; 2.5 times upwards, sale No. 5; and 100 per cent upwards, sale No. 6. Adjustments of this magnitude demonstrate that these sales could not be considered comparable with the subject land. 9 Mr Dempsey does, however, refer to two sales in Balmoral Street, Blacktown and which adjoin Alpha Park. These two properties were rezoned Open Space 6A Public Recreation and were purchased to form part of the community lands in Alpha Park. They were sold on the basis of their existing uses as single residential sites. The sales were No. 22 Balmoral Street which sold on 7 June 2001 for $300,000, being $298 per square metre; and No. 38 Balmoral Street which sold on 8 March 2002 for $305,000, being $264 per square metre. 10 Mr Dempsey would make an adjustment in applying these sales to the subject land based upon an assumption that the in globo value is generally around 40 per cent of the land value. I do not agree that such an adjustment should be made in this case because the land is fully serviced; that is, the land has a frontage to a sealed, kerbed and guttered road and has all services available. It is not in globo land. 11 In Canterbury City Council v Roads and Traffic Authority of New South Wales [2002] NSWLEC 161 and in Canterbury City Council v Roads and Traffic Authority of New South Wales [2004] NSWLEC 172, the Court was faced with a similar problem where there were no comparable sales of open space land. In each case the Court had recourse to sales of residential land acquired for open space purposes and then applied a discount of 50 per cent to take into account the restrictions placed on the land by reason of its classification as community land including its zoning for open space purposes. 12 Similarly in this case where there are no comparable sales, in my opinion a discount of 50 per cent may be applied to the two sales in Balmoral Street which were residential properties acquired for open space and public recreation. Those sales, however, must be adjusted to take account of the movement in land values between the dates of each sale and the date of compulsory acquisition. 13 According to Mr Dempsey, the movement in land values within the Blacktown postcode would require an upward adjustment of 60 per cent to the sale of No. 22 Balmoral Street and an upward adjustment of 31 per cent to the sale of No. 38 Balmoral Street, so that when adjusted to the date of 24 October 2003, those sales would represent values of $477 per square metre and $346 per square metre respectively, an average of $412.50 per square metre. When discounted by 50 per cent and applied to the area of the acquired land, one arrives at a figure of $202,500. 14 Mr Wood, however, relies upon direct sales evidence of the movement in residential property prices within the proximate area which he says are greater than those in the Blacktown postcode generally and which support an adjusted value for the Balmoral Street sales of $550 per square metre. When discounted by 50 per cent and applied to the area of the acquired land, one arrives at a figure of $270,325, say $275,000. 15 I turn now to Mr Wood's use of the sales of two commercial properties within the general business 3A zone. Mr Wood initially applied a discount of 50 per cent to those sales consistently with the Canterbury cases. He sensibly conceded in cross-examination, however, that it is appropriate to apply a greater discount to sales of commercially zoned land when comparing such land to the restrictions applying to the subject land. He thought that a discount factor of 75 per cent should be applied to reflect the greater ability to make use of the 3A land. 16 Mr Dempsey on the other hand would apply a discount factor of 90 per cent to reflect both the restrictions applying to the acquired land and the greater ability to use the 3A land. Mr Dempsey conceded that adjustments are always difficult and the greater the adjustment then the greater is the margin for error. 17 In my opinion the sales of the two Balmoral Street properties are the most reliable indicators of value, particularly since they adjoin Alpha Park and were purchased for the purpose of addition to the park. 18 In considering the Balmoral Street sales, I am prepared to apply the principle that in compensation cases doubts are resolved in favour of a more liberal estimate of value: see Commissioner for Succession Duties South Australia v Executor Trustee & Agency Co of South Australia Limited (1947) 74 CLR 358 at 373 and 374. 19 I therefore adopt Mr Wood's estimate of the movement in property prices since those sales occurred. That is, I adopt an adjusted value of $550 per square metre for the acquired land to which should be applied a discount of 50 per cent to reflect both the fact that it was community land and its zoning for open space purposes, resulting in a market value of $275,000 for the acquired land.

ROBSON: Does your Honour intend to round it up by 5,000? HIS HONOUR: That's what I have just done; I have rounded it up to-- ROBSON: It comes to 270,426.

HIS HONOUR: Yes, so I have rounded it up to 275,000. 20 HIS HONOUR: I therefore determine the market value of the land at $275,000. I note that the parties have agreed upon the loss attributable to disturbance in the sum of $4,000. The exhibits may be returned. ROBSON: Would your Honour entertain an application for costs?

PRESTON: I don't have instructions, it's a matter for the Court. The basis upon which they came to court has not been successful so the way in which it's been determined is two sales that the respondent has put forward, albeit with some adjustments that your Honour has put forward.

They have been more successful than was the amount from the Valuer General and that seems to have been successful. It's a matter whether your Honour considers that sufficient success to warrant an order for costs or that there be no order. 21 HIS HONOUR: On the question of costs the applicant has been successful in that it is entitled to receive a sum greater than that offered by the RTA. There will therefore be an order that the RTA pay the applicant's costs. I hereby certify that the preceding 21 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

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