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

APPLICANT: Mr P C Tomasetti (barrister) SOLICITORS: Maddocks

LEGAL REPRESENTATIVES: RESPONDENT: Mr J B Mason (barrister) SOLICITORS: Corrs Chambers Westgarth

JUDGMENT:

• 5 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES (3)0150 of 2002 Lloyd J 26 February 2004 CANTERBURY CITY COUNCIL Applicant v ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES Respondent EX TEMPORE JUDGMENT 1 HIS HONOUR: This is an objection by the applicant, Canterbury City Council, to an amount of compensation pursuant to s 55 of the Land Acquisition (Just Terms Compensation) Act 1991 ("the Just Terms Act") offered by the respondent, the Roads and Traffic Authority of New South Wales ("the RTA"), for the compulsory acquisition of land for the construction of the M5 East motorway. The notice of acquisition was published in the New South Wales Government Gazette No. 67 on 28 March 2002 by which the RTA acquired a number of parcels of land set out in six schedules described in the notice. The present claim relates only to the land described in Sch 1 and Sch 3 to the notice of acquisition. 2 Under Sch 1 of the acquisition notice, the RTA acquired the freehold interest in the following land: All those pieces or parcels of land shown on RTA Plan 6005 078 SS 0396 and being: Lots 901, 1345 and 1469 Deposited Plan 13705 being the whole of the land in the correspondingly numbered Certificates of Title, Lots 67 and 68 Deposited Plan 14705 being the whole of the land in Certificate of Title Auto Consol 6599-147, Lots 198, 199, 200, 201, 202 and 264 Deposited Plan 14705 being the whole of the land in the correspondingly numbered Certificates of Title, Lot 270 Deposited Plan 16265 being the whole of the land in Certificate of Title 270/16265 Lot 2 Deposited Plan 547732 being the whole of the land in Certificate of Title 2/547732, Lot 28 Deposited Plan 15293 being the whole of the land in Certificate of Title 28/15293, Lot C Deposited Plan 396304 being the whole of the land in Certificate of Title c/396304, and Lot 13 Deposited Plan 1038625 (shown as Lot 13 RTA Plan 6005 204 SS 0395) being part of the land in Certificate of Title 1462/13705 The land is said to be in the possession of Canterbury City Council (registered proprietor) and the Roads and Traffic Authority of New South Wales (lessee). 3 Under Sch 3 of the acquisition notice, the RTA acquired a leasehold interest for two years, commencing 28 March 2002, in the following land: A lease as described in Memorandum 7796130 recorded at Land and Property Information NSW over all those pieces or parcels of land shown on RTA Plan 6005 078 SS 0396 and being: Lot 1348 Deposited Plan 13705 being part of the land in Certificate of Title Auto Consol 8363-175, Lot 81 Deposited Plan 14705 being the whole of the land in Certificate of Title 81/14705, Lot 29 Deposited Plan 15293 being the whole of the land in Certificate of Title 29/15293, and Lot 39 deposited Plan 20617 being the whole of the land in Certificate of Title 39/20617. Also a lease as described in Memorandum 7796130 recorded at Land and Property Information NSW over all that piece or parcel of land shown as Lot 12 RTA Plan 6005 386 SS 0359 (also shown on RTA Plan 6005 078 SS 0396) being part of the land in Certificate of Title 2/547347. Also a lease as described in Memorandum 7796130 recorded at Land and Property Information NSW over all those pieces or parcels of land shown on RTA Plan 6005 078 SS 0396 as: Lot 2 being part of the land in Certificate of Title 10/231025, Lot 3 being part of the land in Certificate of Title 305/16265 and Lot 4 being part of the land in Certificate of Title 30/15293. 4 The applicant also claims compensation for the decrease in the value of Lot 58 in deposited plan 14705 under s 55(f) of the Just Terms Act. 5 The parties' respective valuers, Mr T Dundas for the council and Mr K D Wood for the RTA, have agreed on a number of questions. They have agreed that the area of land acquired by the RTA in Sch 1 is 15,229 square metres; that the zoning of the land at the relevant date was part proposed County Road and part Open Space (Existing Recreation) 6(a), except for Lot 270 in Sch 1 which they accept is zoned Residential 2(a). The valuers have agreed that the market value of Lot 270 is $346,000. They have agreed that, insofar as the land described in Sch 3 is concerned, compensation should be based on a rental factor of six per cent of the market value of the land; as I understand it, to be applied as a rental factor to the market value. 6 As to the leasehold interest that was acquired, Mr Wood relies upon sales of other land which was zoned for either open space or similar purposes in what were described by him as "arm's-length transactions" to arrive at a rate of $50 per square metre. To quote from his report: [T] hese sales reflect the value which the community has placed upon them and obviates the need for analysing sales of land based on a higher usage, e.g. "Residential" and then making an arbitrary reduction to take into account the restrictions placed on the sale and use of land designated as "community land"… (Mr Wood then refers to Hornsby Shire Council v Roads and Traffic Authority of New South Wales [1996] NSWLEC 152 per Bannon J.) 7 If this method of valuation is not accepted then Mr Wood has set out an alternative basis relying upon the sales of residential land acquired for open space purposes to arrive at a rate of $350 per square metre which he then discounts by fifty per cent to take into account the restriction placed on the land because of its classification as community land under the Local Government Act 1993 ("the LG Act"). On this alternative basis the figure is thus $175 per square metre. 8 The applicant's valuer, Mr Dundas, accepts Mr Wood's alternative approach, but does not accept Mr Wood's first method of valuation because, as I understand it, he says that the sales relied upon are not truly comparable to the acquired land. The approach of Mr Dundas also relies upon some sales of open space land, but mainly relies upon sales of land used or zoned for purposes other than open space but which had been purchased for open space purposes. On this basis the valuers have agreed that the value should be discounted by fifty per cent for community land classification; that is, they agree that if the Court adopts Mr Wood's alternative method of valuation, which is the same as Mr Dundas's method of valuation, then there should be applied a discount factor of fifty per cent. 9 The question for determination is whether the sales relied upon by Mr Wood in his first method of valuation are comparable to the acquired land. If so, then Mr Wood's first method of valuation should be adopted. I was informed at the commencement of the hearing that this was the only issue. 10 The applicant argues that Mr Wood's first method of valuation and the sales which are said to support it are not comparable to the acquired land. The sales are not comparable mainly because they are sales in areas where open space land is more plentiful, whereas in Canterbury local government area such land is scarce. The applicant says that in Canterbury it has been and is necessary for the council to acquire and pay for residential land to meet its open space requirement. 11 The discount factor of fifty per cent is obviously a reflection of what Pearlman J decided in an earlier case involving the same land, Canterbury City Council v Roads and Traffic Authority of New South Wales [2002] NSWLEC 161, in which her Honour determined the value of a leasehold interest that had been acquired. The discount factor of fifty per cent seems to be appropriate in view of the following facts. The fact that the land that has been acquired was classified as community land and could only be used in accordance with a plan of management (s 35 of the LG Act). The fact that the land was classified as community land also means that pursuant to s 45 of the LG Act a council had no power to sell, exchange or otherwise dispose of it. 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 Minister's consent, and community land could not be reclassified to operational land without a public hearing, Minister's consent and gazettal of a local environmental plan (ss 27, 33, 34 and 46 of the LG Act). 12 The evidence shows that there is a clear lack of open space in Canterbury when compared with many other areas. This was accepted by Pearlman J in the judgment to which I have referred, in which her Honour said that the evidence establishes that there is a lack of open space land in the Canterbury local government area. 13 As I have said, the question for determination is whether the sales relied upon by Mr Wood in his first method of evaluation can be said to be comparable to the subject land. Having visited the land the subject of those sales with representatives of the parties and having heard the oral evidence of both Mr Wood and Mr Dundas, it is obvious that none of the sales relied upon by Mr Wood can be said to be comparable to the subject land. 14 On the other hand, it is clear that some of the sales relied upon by Mr Dundas cannot be said to be comparable to the subject land. I refer in particular to two parcels of land in the eastern suburbs of Sydney to which the Court was taken and upon which Mr Dundas relied. It is clear that land in the eastern Sydney is obviously going to be far more expensive than land in Canterbury local government area. Similarly land in the far western suburbs of Sydney relied upon by Mr Wood is not comparable to land in Canterbury since such land in western Sydney is plentiful and relatively cheap. 15 Shortly stated, I find that none of the sales of open space and relied upon can be said to be reliable and of relevance here. This creates a difficulty for the Court and it also means that the only sales evidence of land zoned open space or for similar purposes must be rejected. This in turn means that the only evidence of sales that are left are those of Mr Dundas and his method of valuation is, it seems to me, to be the only available approach in this case. He relies upon sales of land that were purchased for open space purposes although used for other purposes at the time. 16 It follows, therefore, that I accept Mr Dundas' valuation, which is also Mr Wood's alternative basis. I also accept Mr Wood's reduced figure of $175; that is $350 per square metre, reduced by fifty per cent to $175 per square metre. 17 My opinion in this respect is reinforced by a recent transaction involving the acquisition by Transgrid of part of the subject land. I am mindful that there is a Treasury directive that all government property must be transferred at market value. That property was acquired recently; that is, by transfer effected only late last year; and the value agreed upon in that transaction was also $175 per square metre. 18 There is one outstanding matter, namely the claim under s 55(f) of the Just Terms Act in respect of Lot 58. That lot adjoins land that was taken. It is land owned by the council. It has had structures put upon it by the RTA including in particular a large mound of earth which renders a large part of the land unusable. The applicant claims a proportionate part of the freehold value of that land under s 55(f). I do not think it is entitled to the full freehold value. It still owns the land. It has not necessarily lost the entire use of it: it does provide a visual backdrop to the remaining land and I do not think that I can simply apportion a freehold value to the proportion or part that was taken. In my opinion some lesser amount should be allowed under s 55(f) of the Just Terms Act for that affectation. 19 The parties have agreed on a sum for disturbance items, namely $15,000, pursuant to s 55(d) of the Just Terms Act. Accordingly, the Court makes the following orders:

1. The amount of compensation under the Land Acquisition (Just Terms Compensation) Act 1991 is determined as follows: (a) In relation to the land described in Schedule 1 of the Notice of Acquisition dated 28 March 2002, other than Lot 270 in deposited plan 16265, the sum of $2,900,000. (b) In relation to the leasehold interest in the land described in Schedule 3 of the Notice of Acquisition dated 28 March 2002, the sum of $480,000. (c) By consent, in relation to Lot 270 in deposited plan 16265, the sum of $346,000. (d) In relation to Lot 58 in deposited plan 14705, pursuant to s 55(f) of the Land Acquisition (Just Terms Compensation) Act 1991, the sum of $30,000. (e) By consent, disturbance under s 55(d) of the Land Acquisition (Just Terms Compensation) Act 1991 in the sum of $15,000.
2. The question of costs is reserved.
3. The exhibits may be returned. I hereby certify that the preceding 19 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice Lloyd

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