Capocchiano v Shellharbour City Council

Land and Environment Court (NSW)|2014-12-12|Before: Craig J

Solicitors: In person (Applicants) RMB Lawyers (Respondent) File Number(s): 30818 of 2013

Judgment

1 By notice published in the New South Wales Government Gazette on 16 August 2013, land known as Lot 2 Croome Road Croom was compulsorily acquired by Shellharbour City Council (the Council) under the provisions of the Land Acquisition (Just Terms Compensation) Act 1991 (the Compensation Act). At the time of acquisition, the land was jointly owned by Francesco Capocchiano and Italia Capocchiano (jointly the Applicants).
The Applicants object to the compensation offered to them by the Council for the acquisition of the land. Accordingly, they have commenced proceedings in this Court pursuant to s 66(1) of the Compensation Act. This Court is then enjoined by s 66(2) to "hear and dispose of the … claim for compensation."
For reasons that will become apparent, the compensation sought by the Applicants is not identified with any precision. The claim lodged with the Council pursuant to s 39 of the Compensation Act identified a figure of $600,000 for market value of the land together with disturbance costs of $40,000. However, the Amended Class 3 Application filed in the proceedings by the Applicants sought compensation in the sum of $700,000. No expert valuation evidence was filed in the proceedings by or on behalf of the Applicants in support of either figure.

The land

The land acquired by the Council on 16 August 2013 is more fully described as Lot 2 in Deposited Plan 1055678 (the Land). It is irregular in shape with frontages to Croome Road, Grevillea Street, an unnamed and unformed road on the north and on the south the East-West Link Road. The Land has an area of 1.569ha.
On the date of acquisition, a number of dilapidated sheds were located towards the eastern boundary of the Land. Remnants of other buildings could be observed closer to the central part of the Land, although, as my inspection revealed, that section of the Land appeared to be low lying.
Evidence tendered by the Council showed that the central or western part of the Land was liable to flood inundation in the 1:100 year flood event, the mapping of which is used to identify what is referred to as the General Flood Planning Level (GFPL) for the area. However, the flood evidence indicates that there was an area across the width of the Land extending for about 25m west from the eastern boundary that was above the GFPL and capable of accommodating a dwelling house, should the erection of such structure be otherwise permitted.
The north eastern corner of the Land adjoins dwelling allotments in an extensive residential subdivision known as the Green Meadows Estate. That estate is substantially developed with several blocks having frontage to Grevillea Street as does the north eastern section of the Land that is above the GFPL.

Conduct of the proceedings and procedural history

Before turning to matters relevant to the issues in the case, it is necessary to make observations as to the manner in which the proceedings were conducted.
Following my inspection of the Land and its environs on 9 December 2014, the hearing of evidence and final submissions on behalf of the Council occurred on 10, 11 and 12 December 2014 in the absence of the Applicants. The circumstances in which that occurred need to be recorded. Those circumstances necessitate a recounting of the history of the proceedings before the Court.
The Class 3 Application commencing the proceedings was filed on 22 October 2013. That Application was prepared and filed by a solicitor then retained by the Applicants.
The proceedings were first listed for directions on 22 November 2013. At that time the parties consented to the proceedings being referred immediately for conciliation before a Commissioner of the Court pursuant to s 34(1) of the Court Act. Directions made by the Court at that time required that each party prepare a position paper for the purpose of the conciliation conference, with the respective conciliation papers to be exchanged by 6 December 2013. It is apparent that the parties complied with that direction.
An Acting Commissioner of the Court with valuation expertise was appointed to conduct the conciliation conference. That conference took place on 17 December 2013 when it was adjourned until 13 March 2014 and then further adjourned until 3 April 2014. The conference was terminated on 3 April as the parties were unable to reach agreement (cf s 34(4) of the Court Act). On each of the three dates upon which that conference was held, the Applicants were represented by counsel. The report prepared by the Acting Commissioner following termination of the conference stated that the determination of compensation "principally depends on the assumed underlying zoning, which is in dispute".
The proceedings were listed for further directions on 4 April 2014. Orders were then made, by consent, conformably with draft short minutes of order that had been prepared by the solicitor acting for the Applicants. Those orders took the form of directions to the parties for the preparation of evidence, including the preparation and service of expert town planning evidence and expert valuation evidence. Town planning evidence was required to be served by 23 May, with a town planners' joint expert report to be served both on the parties and the expert valuers by 6 June 2014. Thereafter, valuation reports were to be exchanged and a further directions hearing fixed for 20 June 2014.
On 13 June 2014, the Applicants' solicitor filed a notice indicating that he had ceased to act in the matter. As a consequence, when the matter was next listed on 20 June the Applicants were self-represented. They have not since obtained legal representation.
When the matter was before me as List Judge on 20 June, I was requested to stand the proceedings over until 12 September 2014 to enable the Applicants to consider their position, as they were no longer represented by a solicitor. The prospect that further advice, particularly expert advice, would be obtained was encouraged by counsel who then appeared for the Council, who stated that the Council supported the three month adjournment that the Applicants then sought.
The matter next came before me as List Judge on 12 September 2014 when the Applicants appeared in person and the Council was represented by counsel. As no evidence had then been filed on behalf of the Applicants, further directions were made requiring that the Applicants serve all their evidence, including expert reports, by 3 October 2014. They were reminded by me of the difficulty that the Court might face in determining their Application if the only evidence before the Court was that adduced by the Council.
In the event that they did obtain expert reports, further directions were then made for the joint conferencing of experts and the preparation of joint reports. On that same day the Applicants, together with the Council's legal representative, were referred by me to the Registrar for the purpose of obtaining dates for a hearing, estimated to take 4 days. In the result, the hearing was then fixed to commence on 8 December 2014. The Applicants are recorded as being present before the Registrar when the hearing dates were fixed.
On 24 September 2014, the Applicants wrote to the Registrar stating: "Due to the state of our very poor physical, mental and financial health we ask this honourable court if they would use the documents and information we submitted to Commissioner Cowell; as stated above to come to a final judgment." (Acting Commissioner Cowell was the Commissioner who had presided at the s 34 conference.) Attached to the letter of 24 September were documents that included a letter to the Council's solicitor of 19 September 2014 in which statements are made recording or reflecting upon matters that were discussed at the s 34 conference.
Upon receipt of that letter, the Registrar wrote to the solicitors acting for the Council enquiring whether the Council raised objection to the material identified by the Applicants being relied upon for the purpose of determining the proceedings. This enquiry was no doubt made having regard to the provisions of s 34(11) of the Court Act, effectively preventing the use in any proceedings of any document produced for, or evidence given in the course of, a conciliation conference unless that evidence or document is used with the consent of both parties. At that same time the Registrar also notified both parties that a case management hearing would be held in Sydney on 4 November 2014.
The case management hearing held on 4 November 2014 was conducted before another Commissioner of the Court. That hearing is recorded as having been attended both by the Applicants and by the legal representatives of the Council. I am informed by counsel that the Council did not then agree to the use of documents produced for the conciliation conference, a position said to have been made clear at the case management hearing. As a consequence, further directions were given for the hearing to take place in December.
By agreement, commencement of the hearing was appointed to commence at 11.00am on Tuesday 9 December on the Land. The direction then given by the Commissioner was that the hearing would continue in Sydney on 10 and 11 December 2014. Further, the Applicants were directed to provide to the Council details of the disturbance costs that they claimed. Otherwise, the Commissioner confirmed directions that I had earlier made for preparation of the matter for hearing, including the need to file and serve expert evidence, if any, upon which the Applicants proposed to rely.
As will later become apparent, a number of documents were provided by the Applicants to the Council shortly before the commencement of the hearing. However, no expert town planning or valuation evidence has been served by them in accordance with the directions that the Court has made and they have not sought to tender any such evidence.
The hearing commenced on the Land on 9 December 2014 at 11.00am. Both Mr and Mrs Capocchiano were present. What took place thereafter is detailed in a judgment that I delivered on Wednesday 10 December 2014. I do not repeat the detail of that judgment other than to state that after being present on the Land for a relatively short time, Mr & Mrs Capocchiano left and did not return. Mrs Capocchiano did announce her intention to leave. Before leaving, the Applicants were urged by me to remain. I informed them of my intention to continue my inspection of the Land, its environs and other properties identified in the Council's evidence that was acknowledged to have been served upon them. I also advised the Applicants that the hearing would resume at the Land and Environment Court in Sydney at 10.00am the following day.
Apart from an indication by the Council's representative of the purpose of observations that I was being asked to make on that day, I did not receive oral evidence. The purpose of the visit to Croom that day was to view the Land as well as the properties that were to be the subject of comparable sales evidence relied upon by the Council's expert valuer in support of the market value of the Land which he had determined.
Shortly before the hearing was due to resume in Sydney at 10.00am on 10 December, a medical certificate was received by facsimile from Mr Capocchiano in the Court's Registry. That certificate had been issued by a medical officer at Wollongong Hospital on 9 December and stated that Mr Capocchiano had attended the emergency department that day, as a result of which he was certified to be "unfit for … usual activities" from 9 December until 10 December 2014.
When the Court convened that morning, there was no appearance by or on behalf of the Applicants. It was then that I delivered the judgment to which I have earlier referred, reciting the events of the previous day.
Over the opposition of the Council, I adjourned the hearing until the following day, 11 December, at 10.00am. In so doing, I directed that the Registrar inform the Applicants of the adjournment that I had granted and also required that if any further adjournment was sought, it would need to be supported by a report signed by a qualified medical practitioner indicating the nature of the illness that prevented the attendance of both Applicants together with the likely period for which each would be unable to attend the Court to conduct their proceedings.
The letter from the Registry forwarding those orders was sent by facsimile transmission to the Applicants at the address for facsimile transmission provided by them. In addition to the copy orders that were attached, the letter also stated that the hearing would proceed on Thursday 11 December 2014 and included the following statement: "If you fail to appear orders may be made in your absence."
The facsimile transmission sent from the Registry on 10 December also included a copy of my orders translated into the Italian language by the accredited interpreter who had attended Court on 10 December. The presence of that interpreter had been arranged through the Registry as it was apparent that while Mrs Capocchiano spoke and appeared to understand English, the Italian language was the language in which both Applicants readily communicated.
During the afternoon of 10 December, two further medical reports were received in the Registry concerning Mr Capocchiano. Both were signed by Dr Chinwendu Fortune-Uchendu of the Albion Park Rail Family Practice. The first certificate stated that Mr Capocchiano was "unwell", suffering the following condition: "He has a tracheostomy tube in situ which has been recurrently blocked with secretions causing respiratory distress and panic attacks with associated hypertensive episodes."
The certificate stated that he was "unable to attend court or any occupation" from 10 December until 31 December 2014 inclusive. The second certificate repeated the condition of Mr Capocchiano and stated that Mrs Capocchiano, as his only carer, was unable to attend Court or any function that would require leaving Mr Capocchiano unattended. That position was also said to pertain from 10 December until 31 December.
When the matter resumed on Thursday morning, 11 December, there was no appearance by or on behalf of the Applicants. A further adjournment of the proceedings was opposed by the Council, essentially by reason of the significant costs burden that it was bearing, it having prepared for the hearing and, in particular, having brought its expert witnesses to Sydney in expectation that their evidence would be given during the course of that day.
In anticipation that the further adjournment of the proceedings would be opposed by the Council, a telephone conference call had been arranged through the Registry with Mr and Mrs Capocchiano at their home in Croom. That telephone conference, conducted in a Court room equipped for such a purpose, proceeded with Mrs Capocchiano as well as her adult daughter speaking on behalf of the Applicants. I was told by Mrs Capocchiano that Mr Capocchiano was also listening to the telephone discussion. Mrs Capocchiano's daughter appeared to have an excellent command of the English language.
In the presence of the Council's representatives, I advised Mrs Capocchiano that further adjournment of the proceedings was opposed by the Council. I enquired as to whether, if the commencement of the hearing that day was delayed for a sufficient time, it was possible for either her or her husband, to attend Court later in the day. She stated that she was not prepared to do so.
I then indicated that the medical certificates that had been received confirmed my own observation that Mr Capocchiano's condition appeared to be permanent and that his inability to attend Court for the purpose of having the proceedings determined was likely to continue indefinitely. Mrs Capocchiano confirmed that Mr Capocchiano would never be in a position to give oral evidence, question witnesses or address the Court on his own account. When I enquired from her as to whether she intended to question the Council's witnesses if she was to attend on a later date, her response was to refer to letters or documents that had either been forwarded to the Court or to the Council by way of submissions.
Mrs Capocchiano also made reference to the fact that earlier in the proceedings, they had utilised the services of a valuer who had attended the s 34 conference to which I have earlier referred. With that indication, counsel for the Council indicated that the Council would be prepared to tender part of the position paper prepared on behalf of the Applicants for the purpose of that conference, being that part which reflected the valuation approach taken by the valuer together with the comparable sales upon which he had relied for the purpose of contending for a particular value, the quantum of which was unstated. As a result of further discussion in the course of that telephone conference, reference was made to numerous documents recently forwarded to the Council by the Applicants upon which the Applicants wished to rely. The Council identified those documents and agreed to tender them for the purpose of my consideration of the matter.
In the course of that telephone conference, I stated to Mrs Capocchiano that having had both her and her husband appear before me at directions hearings earlier in the year, as well as seeing them on the Land on 9 December, the present proceedings appeared to be occasioning them considerable distress that was unlikely to be relieved by adjourning the proceedings to a later date. Both Mrs Capocchiano and her daughter accepted my observation to be correct. Once they had done so I observed that it may be in their interests to have the proceedings resolved rather than adjourned for a lengthy period with the likelihood that an application for a further adjournment would be sought by reason of Mr Capocchiano's state of health.
The telephone conference that I have been describing in some detail extended for a period of about 45 minutes. Shortly prior to the conference call concluding, I stated my intention to proceed with the hearing, on the basis that under the provisions of the Compensation Act, only the Court could determine the compensation to which they were entitled (s 66(2) of the Compensation Act) as a consequence of which a hearing was necessary in order to resolve the compensation claim. I further stated that in making the determination I would do so not only on the evidence led by the Council but that I would take into account submissions that had been made either by way of letter to the Court or in documents submitted to the Council, all of which the Council had agreed to tender. Again, I offered to delay the commencement of the hearing that day to enable either or both of the Applicants to travel to Sydney but Mrs Capocchiano repeated that they would not avail themselves of that opportunity.
The various letters, documents and submissions to which I have referred in the preceding paragraph, including part of the Applicants' s 34 conference position paper, were subsequently tendered by the Council in the course of the hearing (Exhibits 9, 10, 19, 21 and 25). They have been considered by me in determining the compensation reflected in this judgment.

Land use zoning events leading to compulsory acquisition

At the time of its compulsory acquisition by the Council, the land use controls applying to the Land were those found in Shellharbour Local Environmental Plan 2013 (SLEP). That instrument commenced on 5 April 2013. Under SLEP, the land was zoned RE 1 Public Recreation.
However, the process leading to ultimate acquisition of the Land by the Council was a product of the former planning instrument governing use of the Land, being Shellharbour Local Environmental Plan 2000 (LEP 2000). Under that instrument the land was zoned 9(d) Open Space Reservation. The sole objective of that zone was "to allow the continued use of reserved land until it is required". LEP 2000 was the operative planning instrument until the commencement of SLEP in April 2013.
Given the public purpose intended by the 9(d) zoning under LEP 2000, that LEP provided a mechanism for owner-initiated acquisition of land so zoned. Clause 71 of the instrument provided: "71 Acquisition of land within Zone 9(d) (1) The owner of land within Zone 9(d) may, by notice in writing, require the Council to acquire the land. On receipt of such a notice, the Council must acquire the land. (2) Despite any other provisions of this plan, until it is acquired, land within Zone 9(d) may be developed, with the consent of the Council, for any purpose for which development or compatible development may be carried out on land in an adjoining zone. In granting such a consent, the Council may apply conditions requiring: (a) the removal of any building or work for which it has granted consent, and (b) the reinstatement of the land or removal of any waste materials or refuse."
On 27 July 2012 a notice pursuant to cl 71(1) of LEP 2000 was served on the Council by the solicitors then acting for the Applicants, requiring that the Council acquire the Land. The notice included information directed to the hardship being suffered by the Applicants in continuing to hold the land, that hardship including their medical and financial circumstances. That information was included in the notice, having regard to the provisions of subsections (3) and (4) of s 27 of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act). Those provisions were inserted into the EPA Act by the Environmental Planning and Assessment Amendment (Reserved Land Acquisition) Act 2006 (NSW). They provide: "27 Owner-initiated acquisition of land reserved for public purposes … (3) An environmental planning instrument (whenever made) is not to be construed as requiring an authority of the State to acquire land, except as required by Division 3 of Part 2 of the Land Acquisition (Just Terms Compensation) Act 1991. (4) Subsection (3) applies despite: (a) any provision of an environmental planning instrument (whenever made) to the contrary, or (b) the service of a notice to acquire the land on an authority of the State on or after the day on which notice was given in Parliament for leave to introduce the Bill for the Environmental Planning and Assessment Amendment (Reserved Land Acquisitions) Act 2006." Division 3 of Pt 2 of the Compensation Act makes provision for owner-initiated acquisitions where hardship is claimed.
As a result of the service of the Applicants' cl 71 notice and the apparent satisfaction by the Council that the hardship had been made out (s 24(1) of the Compensation Act), a substantive right to have the land acquired by the Council came into existence (Byron Shire Council v Greenfields Mountain Pty Limited [1999] NSWCA 461; 105 LGERA 445 at at [21]). The acquisition notice considered in Greenfields Mountain was given when s 34(4) of the EPA Act relevantly provided that the amendment or repeal of an environmental planning instrument did not affect: "(a) the previous operation of the instrument or anything duly suffered, done or commenced under the instrument; (b) any right, privilege, obligation or liability acquired, accrued or incurred under the instrument, …".
Section 34(4) was repealed by the Environmental Planning and Assessment Amendment (Infrastructure and other Planning Reform) Act 2005. At the same time the Interpretation Act 1987 (NSW) was also amended so that an environmental planning instrument became an instrument within the meaning of s 3(1) of that Act. Section 5 of the Interpretation Act was also amended by identifying a number of its provisions, then expressed to apply to a "statutory rule", as being provisions that also applied to an environmental planning instrument: s 5(6). As a consequence of these statutory amendments, both at the time at which the Applicants' cl 71 notice was served and at the time at which LEP 2000 was replaced by SLEP as the planning instrument that controlled development upon the Land, s 30 of the Interpretation Act applied, it being one of the provisions of that Act made applicable to an environmental planning instrument by s 5(6). Section 30 relevantly provides: "30 Effect of amendment or repeal of Acts and statutory rules (1) The amendment or repeal of an Act or statutory rule does not: (a)…. (b) affect the previous operation of the Act or statutory rule or anything duly suffered, done or commenced under the Act or statutory rule, or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under the Act or statutory rule, …".
These legislative changes render the decision of the Court of Appeal in Greenfields Mountain applicable to the present circumstances. Expressed succinctly, the cl 71 notice served on 27 July 2012 had the effect of creating a substantive right on the part of the Applicants to have the land acquired by the Council, with a concomitant obligation on the part of the Council to take such steps as were required of it to effect acquisition.
The present circumstance that acquisition was not effected until 16 August 2013, when SLEP was the operative planning instrument, is of no present moment. It is accepted that the determination of compensation is to be made as at the latter date. Further, the Council does not advance any submission directed to any diminution in compensation by reason of the circumstance that the process of acquisition was owner-initiated.

Public purpose and the underlying zoning

The acquisition notice published in the Gazette on 16 August 2013 identified the purpose of acquisition as being "for community land". That purpose is consistent with the zoning of the Land under both LEP 2000 and SLEP. The Council accepts that the zoning under both instruments was intended to give effect to that purpose by securing ownership of the Land so that it could be held as an open space buffer adjoining the East-West Link Road.
If, as the Council accepts, the RE 1 Zone under SLEP was imposed to give effect to the public purpose for which the Land was acquired, that zoning is to be disregarded for the purpose of determining the market value of the Land. So much is required by the provisions of s 56(1) of the Compensation Act which relevantly provides: "56 Market value (1) In this act: market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid): (a) any increase or decrease in the value of the land caused by the carrying out of or the proposal to carry out, the public purpose for which the land was acquired, …".
The "traditional application" of s 56(1)(a) of the Compensation Act was held by McClellan J (as his Honour was when Chief Judge of this Court) in Smith v Roads and Traffic Authority of NSW [2005] NSWLEC 438 at [63] to involve the following steps: 1. identify the zoning of the land at the date of acquisition; 2. determine whether that zoning was imposed or retained in order to facilitate the implementation of the public purpose for which the land was acquired; 3. if the answer to (ii) is in the affirmative, that zoning is notionally set aside and the potential of the land and ultimately its market value is assessed by determining how the land would have been zoned at the date of acquisition, but for the proposal to carry out the public purpose.
In Sydney Harbour Foreshore Authority v Walker Corporation Pty Limited (No 2) [2006] NSWCA 386; 68 NSWLR 487 at [60] the Court of Appeal proposed that step (ii) in the formulation of McClellan J would be closer to the statutory language if it was reformulated as follows: "Determine whether the imposition or retention of that zoning was part of the carrying out of the public purpose or part of the proposal to carry out the public purpose for which the land was acquired."
Applying the reformulation of step (ii) to the present case, the Council accepts that the imposition of the RE 1 Zone was part of the proposal to carry out the public purpose requiring the Land for open space. It is the third step of those formulated by McClellan J that is controversial in the present case. Relevantly, that step requires the determination as to whether, but for the intention to have the Land acquired as community land for open space, a land use control would nonetheless have operated such that the erection of a dwelling or dwellings on the Land would have been prohibited. The determination of that question informs the conventional valuation exercise of determining the highest and best use of the land at the date of acquisition.

Town Planning Evidence

The only town planning evidence tendered in the present case is that given by Ms E. Treglown who was retained by the Council. Ms Treglown prepared an expert report dated 23 May 2014 which became Exhibit 2. She was also called to give evidence at the hearing.
Ms Treglown is a qualified urban and regional planner who, in the 1980's, was employed by the Council. The instructions given to her for the purpose of preparing her evidence are identified in her report. Those instructions include a request to respond to matters specifically identified in the retainer letter provided by the Council's solicitors. By that letter, Ms Treglown was asked to indicate the advice she would have given to a hypothetical purchaser or vendor of the Land as to its highest and best use at the date of acquisition. In addressing that issue, she was also asked to consider a number of subsidiary questions including what the likely zoning of the Land would permit if the public purpose was disregarded, with a further question framed to ask "if the public purpose for the acquisition… was to be disregarded, and based on an assessment of the site characteristics of the subject land compared to adjoining land, would the subject land have been included in the Urban Fringe Local Environmental Study?" As will be seen, the formulation of the last question had the capacity to distract from consideration of the essential question arising under s 56(1)(a).
Ms Treglown examined historical documents and identified site specific planning issues directed to the potential flooding of the site as well as the zoning history of the Land since 1968. At that time, the Land was zoned Non-Urban 1 (b) under the Illawarra Planning Scheme Ordinance.
In 1983, the Land was rezoned 9(d) Open Space Reservation under Shellharbour Local Environmental Plan No. 16 (LEP 16) which commenced in September of that year. LEP 16 also contained reservations for future road corridors in proximity to the Land, including a reservation for what became the East-West Link Road, together with an arterial road reservation for a proposed road corridor to the West of the Land. Thus, LEP 16 appears to be the origin of the public purpose planning impact upon the Land. However, there is a paucity of evidence demonstrating why the zoning reservation was for open space.
In her report, Ms Treglown accepts that the RE 1 Public Recreation zoning of the Land under SLEP is a zoning imposed as "a consequence of the proposal to provide the road corridor buffer and open space corridor" (section 4.1). Based on the analysis that she gives in her report, I accept that evidence.
In section 4.2 of her report, Ms Treglown identifies three factors that would have influenced the likely zoning of the land "if the public purpose of the land was disregarded", those factors being: 1. proximity of the land to mineral resource extraction areas located to the southeast of the Land, with the consequent need for a buffer/transition area; 2. the intention to provide a buffer (of undetermined width) adjacent to the East-West Link Road corridor; and 3. the extent of flood affectation in the event of the 1% annual exceedence probability flood.

Quarry Development

In reviewing the first of the three factors considered to influence the likely zoning of the Land, disregarding a zoning intended to secure the public purpose for which the Land was acquired by the Council, Ms Treglown referred to a report to the planning committee of the Council in November 1978. The report is said to relate to residential rezoning of land within the Green Meadows Estate and was directed to potential conflicts between residents residing in the southern section of that estate and "quarry operations to the south". That was a reference to one or more quarries then operating beyond a significant hill, the crest of which appeared to be about 850m south of the common boundary between the East West Link Road and the Land. The report prepared by Council officers recommended that "residential development should not be permitted to extend south of the existing estate and should be contained outside a buffer approximately 120m north of the proposed East/West Connector Route". The evidence does not reveal the result of the Council's consideration of that report.
Reference is also made by Ms Treglown to a mineral resource audit carried out in November 2012 by NSW Trade and Investment within the Shellharbour City area. That audit identified mineral resources within the area, including those located to the south of the Land. The plan prepared for the purpose of that audit, identifying the location of resources, shows the Land to be on the periphery of a "Transition Area", being an area "adjacent to identified resource areas".
As was acknowledged by Ms Treglown, all quarrying operations that had taken place up to the time at which the Land was acquired by the Council in August 2013 had been or were being undertaken in locations south of the significant or steep hill south of the Land. None of the past or present quarrying activities were visible from the Land. No quarrying had ever taken place on the northern side of that hill. No doubt the hill provided both a visual and acoustic screen, although the level of acoustic attenuation was not the subject of evidence.
As a consequence of the 2012 minerals resources audit, a local planning direction pursuant to s 117 of the EPA Act was issued to the Council. In substance, that planning direction required consultation with the Director-General of the Department of Primary Industries when any planning proposal was being considered, being a proposal that may impact upon the operation of existing extractive industries or the capacity to win available extractive material identified by the audit. The direction also required the identification and consideration of issues "likely to lead to land use conflict between other land uses" and the development of existing or identified resources. The audit had identified the potential for conflict between or among land uses where land was identified as being within a "Transition Area".
The terms of the direction do not prevent the amendment of planning instruments or the grant of development consent in appropriate cases; the purpose of the direction was to add a layer of consideration and reference in the process of considering a planning or development proposal. Clearly, the Council was satisfied that the residential zoning of the Green Meadows Estate was appropriate and its existence as a developed residential area would no doubt have been taken into account when granting any consent for an extractive industry. A dwelling located at the north-eastern end of the Land would not have had a materially different separation from possible future quarries than the adjacent residential lots in the Green Meadows Estate, currently (and in August 2013) zoned R 2 Low Density Residential under SLEP.

Road buffer

The East-West Link Road appears to be a controlled access road with the consequence that direct access from the Land to that road would be denied. However, as I have earlier recorded, direct access to the Land is available from Grevillea Street.
Accepting that a dwelling could be sited on an area within the north-eastern section of the Land that is flood free, any acoustic issue said to arise from traffic on the East-West Link Road could realistically be addressed both by selective siting of such a dwelling and by requiring dwelling design that incorporated measures to address any identified elevated noise level from anticipated traffic volumes on the East-West Link Road.
Having regard to the area of the Land, together with the measures that I have indicated, I do not consider the fact that the Land adjoins the East-West Road Link, of itself, leads inevitably to a conclusion that, disregarding the public purpose of acquisition, land use controls would have been such as to prohibit the erection of any dwelling on the Land

Flood affectation

The evidence as to the flood affectation of the Land is clear. Although the central section of the Land is below the 1:100 year flood level, an area in the north-eastern section measuring approximately 85m by 25m is accepted as being above that level. In her oral evidence, Ms Treglown acknowledged that such an area "might be available within the land for flood free residential use".
Having regard to that evidence and the fact that a dwelling can be constructed within the area identified that is well above the GFPL, I am satisfied that the extent to which the site is flood affected is not, of itself, a factor that would rationally exclude the possibility of land use controls that allowed residential use.

Proposals for change of zoning of the Land

For some time prior to 2002, the Land was part of a much larger area known as 149 Croome Road, Albion Park. In 2000, Deposited Plan 1012391 was prepared for the purpose of the compulsory acquisition of a strip of land 9,233m2 in area, and shown as Lot 107 in that Deposited Plan. Lot 107 was shown as being "required for controlled access road" under s 49 of the Roads Act 1993 (NSW). The acquisition of Lot 107, then effected, was to provide for the East-West Link Road. The residue lot created upon registration of Deposited Plan 1012391 was identified as Lot 100. Lot 100 was bisected by the acquired Lot, Lot 107, leaving an area of 30.37ha to the south of Lot 107 and an area of 1.569ha to the south of Lot 107. That Deposited Plan was registered on 14 April 2000.
On 30 January 2002, the Council granted development consent for subdivision of Lot 100 to create the present Lot 1 in DP 1055678 south of the East-West Link Road and Lot 2, being the Land, north of that road. The conditions attached to that development consent for subdivision included the following: "14. A Restriction As To User must be created under section 88B of the Conveyancing Act prohibiting vehicle and pedestrian access to and from Lot 107 DP 1012391 and the land identified as future arterial road reservation Shellharbour LEP 2000, from proposed Lots 1 and 2. 15. A future dwelling that maybe [sic] constructed on proposed Lots 1 and 2 with the consent of Shellharbour City Council must be designed and constructed in accordance with the requirements of Australian Standard AS3671-1989, Acoustics - Road Traffic Noise Intrusion - Building, Siting and Construction. 16. A Restriction As To User must be created under section 88B of the Conveyancing Act requiring any dwelling constructed on proposed Lots 1 and 2 must be designed and constructed in accordance with the requirements of Australian Standard AS3671-1989, Acoustics - Road Traffic Noise Intrusion - Building, Siting and Construction." While not sanctioning the erection of a dwelling on the Land (Lot 2), conditions 15 and 16 do not exclude the possibility of a dwelling being constructed on the Land.
In September 2002, the Council resolved to prepare a draft Urban Fringe Local Environmental Study (the LES) to review the zoning of Land "on the urban frontage [sic] to ensure that the zone of the land reflects the current land uses" and also review the potential "of certain properties for a range of residential development including rural residential, large prestige lots, small farm properties, conventional residential". The Land was not included in the land that was the subject of the LES.
Immediately north of the Land and separated from it by the unnamed and unformed road adjoining the northern boundary of the Land is Lot 1 in Deposited Plan 549511 (Lot 1). That Lot is roughly triangular in shape, having frontage to both Grevillea Street and Croome Road. It is a Lot that was included within the LES area.
Lot 1 was first considered for rezoning to permit residential use in 1989. In that year the Council resolved to prepare a draft local environmental plan to the intent that Lot 1 would be zoned 2(a) Residential. Ms Treglown records that the then proposed draft local environmental plan did not include the Land for inclusion in the proposed residential zoning "most likely because the Council maintained its position that it was not suitable for rezoning". That expression of opinion is obviously speculative. It seems to me that it does not take account of the fact that at that time the Land was already zoned for open space purposes under LEP 16 which also identified the then proposed East-West Link Road adjoining the Land to the south. The fact that Lot 1 was then identified as having potential for residential zoning while the Land was not so identified does not, to my mind, justify an inference that the Council determined the Land to be unsuitable for residential use if the public purpose for which the Land was then zoned and ultimately acquired is disregarded.
In 1998 Council staff again recommended that Lot 1 be rezoned to allow residential development. The Land was not included in that recommendation. As it happens, the recommendation for rezoning of Lot 1 was not then accepted by the Council.
Having identified the earlier occasions upon which the residential zoning of Lot 1 has been considered by the Council, together with its inclusion within the study area identified in the LES, Ms Treglown again speculates as to why the Land was not included in the LES so as to consider its use for a residential purpose. She does so acknowledging that none of the material that was reviewed by her identified a reason for excluding the Land from that consideration. In section 5.2 of her report she states: "It is also assumed that Lot 2 [the Land] was not included in the Rural Fringe LES or draft LEP as Council had not previously moved forward with the preparation of a draft LEP to rezone Lot 2, whilst Lot 1 had been the subject of extensive investigations into alternate zones, with Council resolving to prepare draft LEP and publicly exhibiting this plan."
For reasons earlier expressed, the expression of this opinion, so it seems to me, is speculative and appears to ignore the existence of the public purpose or the proposal for it that informed the ultimate acquisition of the Land by the Council.
Ms Treglown did consider a hypothetical position, providing a list of issues that arose with the rezoning proposal for Lot 1, in order to consider the constraints that might apply to any residential development on the Land. It appears that the density of development on Lot 1 was an issue of concern to the Council. Ms Treglown considered that density should be no higher than nearby development in the Green Meadows Estate. However, in transposing the constraints considered appropriate to Lot 1 to the Land, nowhere does her evidence reflect consideration of a single dwelling located upon the north-eastern section of the Land.
Lot 1 is presently shown as a "deferred matter" on the land zoning map incorporated in SLEP. Its land use is currently controlled by the provisions of LEP 2000 under which it is zoned 6(b) Private Open Space. However, the evidence before me indicates that there is, and was in August 2013, a real possibility that it could soon be zoned for residential purposes, once a number of specific issues, including flooding and the like, are addressed.
Reference is also made in the evidence of Ms Treglown to applications that were made from time to time by or on behalf of the Applicants to have the Land rezoned so as to permit either residential subdivision or commercial accommodation. In the form in which those applications were made, they were refused by the Council. However, the determination of those applications did not involve matters for consideration that arise in the present context. Such applications necessarily accepted that the Land was subject to the open space reservations that have applied since the making of LEP 16, but sought a dispensation or indulgence to change that public purpose zoning to permit the residential use that was sought. When considering such applications, the Council would necessarily address the question as to whether the public purpose for which the Land was reserved would be abandoned by allowing the rezoning sought.
The disinclination of the Council to abandon the open space zoning, so as to allow residential development, says nothing of the enquiry necessary for the purpose of s 56(1)(a) of the Compensation Act. The provisions of that section mandate address to an entirely hypothetical situation, namely the assumption that there was not and never had been a public purpose of the Council to require the Land, as community land, to be used as public open space.
Accordingly, evidence as to prior applications and their refusal can have little bearing upon my decision as to how the Land would have been zoned at the date of acquisition, but for the proposal to carry out the public purpose, a determination required in order to give effect to s 56(1)(a). Similarly, consideration of strategic planning in the area in 1992, 1997 and 2011, together with demographic projections in 2008 are of little relevance when it is remembered that the public purpose reservation of the Land had applied to the Land throughout that time.
As I have already indicated, the Land was first reserved for open space in 1983 under LEP 16, being the same planning instrument that also identified the East-West Link road corridor. In that circumstance, absence of any action by the Council to rezone the Land for residential or other private purposes provides no sound basis, contrary to the contention of the Council, to conclude that at the date of acquisition the Land would not have enjoyed a zoning or other land use control that allowed some form of residential use.

Conclusion as to alternate or underlying zoning

Having regard to the zoning history of the Land, as well as the zoning of land in the vicinity, and having considered the evidence of Ms Treglown, I have concluded that had the Land not been reserved for the public purpose for which it was acquired, in all probability it would have been zoned R 2 Low Density Residential under SLEP as at August 2013. That is not to say that the Land, by reason of its area, would have been capable of subdivision for residential purposes. Rather, I would expect that the residential development of the Land would be confined to an entitlement to erect a single dwelling and that such limitation would be controlled either by the insertion of an amended provision in cl 4.6 of the SLEP, providing for exceptions to development standards, or by amendment of the Lot Size Map identified in cl 4.1 by reference to which clause the minimum lot size for subdivision is identified. Those aspects of the evidence and the provisions of s 56(1)(a) that have informed my conclusion include: 1. the fact that the Land was in private ownership; 2. that topographically it was capable of accommodating a single dwelling with direct road access to Grevillea Street; 3. its use as private land would, for all practical purposes, have been sterilised if no dwelling entitlement existed; 4. it must be assumed that there was no proposal for use of the Land for the public purpose of open space or buffer that impacted upon its value; and 5. that a dwelling was capable of being sited on the Land so that it was located above the GFPL and, as the conditions attached to the 2002 Consent for Subdivision required, could be so constructed as to address a level of road noise anticipated to occur from traffic on the East-West Link Road.
I have earlier recorded that in response to the request from the Applicants, the Council tendered various documents, essentially by way of submission, received over a period of time from the Applicants in support of their claim for compensation. Many of the representations made by the Applicants were directed to the open space zoning attached to the Land and the contention that residential development ought to have been permitted.
To the extent to which I have accepted that a dwelling entitlement should be assumed to have attached to the Land at the time of acquisition, I have sustained, at least in part, the contentions advanced by the Applicants. However, their contentions, as I understand them, sought to assert that the Land ought to have been zoned in such a way as to permit residential subdivision. I have not accepted that part of their submission, essentially because of the extent of flood inundation affecting the central section of the Land and the prohibition upon access to the East-West Link Road.

Valuation evidence

Section 55 of the Compensation Act requires that in determining the amount of compensation to which the present Applicants are entitled, regard must be had to the matters identified in that section. The first of those, identified in s 55(a), is the "market value of the land on the date of its acquisition". As I have already indicated, s 56(1) identifies the meaning of "market value" as that expression is used in s 55(a). The evidence that I am about to discuss is that directed to the "market value" of the Land.
The only expert valuation evidence available to the Court is the valuation report of Mr J W Austin (Exhibit 3), an experienced local valuer. His comprehensive report included an assessment of market value of the Land on the assumption that a single dwelling house was permissible at the date of acquisition, as I have determined to be the case. His assessment of market value, on the assumption that the Land had no dwelling entitlement, need not be considered, having regard to my finding as to the assumed or underlying zoning of the Land.
Mr Austin adopted the preferred method of valuation, namely direct comparison of comparable land sales. Some six such sales were utilised by him and the site of each of those sales was visited by me in company with Acting Commissioner Maston. Five of the sales occurred between June 2012 and June 2013 with one sale occurring in May 2010 and the remaining sale in November 2006. The last of such sales was of Lot 1 in DP 549511, being the triangular lot adjoining the Land to its north. The date of that sale, in light of events that have affected the market for land since 2006, rendered it unreliable for the purpose of determining the market value of the Land in 2013.
Mr Austin's report reveals that the land area of properties identified in each of the five sales upon which he relied ranged between an area of just below 1ha to a site having an area of 1.7ha. All sale properties were within reasonable proximity to the Land. The properties were identified as reflecting sales of what were described as rural residential sites. This, so it seemed to me, was a description that was appropriately applied to the Land which, as earlier recorded, had an area of 1.569ha. The analysis and adjustment of the sales selected by Mr Austin was transparent and in accordance with the methodology accepted by this Court (Chircop v Transport for NSW [2014] NSWLEC 63 at [35]).
Having analysed the comparable sales of rural residential sites, Mr Austin concluded that the market value of the Land as at 16 August 2013 was $300,000. I accept his evidence. I therefore find that the market value of the land at the date of acquisition was $300,000.
In so concluding, I have not overlooked the document apparently prepared by the valuer retained by the Applicants as part of the position paper used for the s 34 conference to which I have earlier referred. That document is a document earlier referred to by me at [39], being a document that the Council tendered (Exhibit 19).
As is stated in Exhibit 19, the assumption made by that valuer was that the Land would have been residentially zoned and capable of subdivision "into between 5 and 7 lots". The basis for that assumption is identified as evidence from a town planner whose evidence was not tendered in the proceedings before me.
Based on that assumption, the methodology adopted by the valuer was to determine the market value of the Land by the "residual land value" method, following a hypothetical subdivision exercise. As a check on the result revealed by that method, a comparable sales method was adopted whereby sales of englobo land, capable of subdivision into residential lots, were analysed.
As I have determined that the assumed or underlying zoning of the Land for the purpose of s 56(1)(a) of the Compensation Act would only have allowed a single dwelling on the Land, the valuer's methodology cannot be accepted. The Land offered no potential for subdivision at the date of acquisition.

Disturbance

Section 55 of the Compensation Act identifies six heads of consideration when determining compensation under the Act. Apart from "market value", the only other head of consideration to which any evidence in this case is directed is that identified in s 55(d), namely loss attributable to disturbance. In the context of the evidence before me, the only matters that I am able to consider are those identified in s 59(a) and (b) of the Compensation Act, namely costs incurred by the Applicants in connection with the compulsory acquisition of their Land, as distinct from legal costs associated with these proceedings, together with the valuation fees that they incurred in connection with the acquisition.
Shortly prior to the commencement of the hearing in December last, the Applicants forwarded to the Council's solicitors a bundle of invoices, said to support their claim for disturbance under s 59 of the Compensation Act. Those invoices were provided to the Council as a consequence of the direction made on 4 November 2014 by the Commissioner conducting the case management hearing.
The collation and analysis of these invoices is the subject of an affidavit sworn by Tanya Emmett, the solicitor for the Council and read at the hearing. The invoices provided by the Applicants are annexed to Ms Emmett's affidavit.
According to the evidence, which I accept, invoices for legal costs and valuation fees that engage the provisions of paragraphs (a) and (b) of s 59 of the Compensation Act total $5,742.91. The Council accepts that these invoices may not reflect the totality of fees for which the Applicants are entitled under s 59, with the consequence that $10,000 is accepted as being the sum appropriate to reflect compensation for disturbance. As would be apparent from earlier discussion of the manner in which the proceedings were conducted, the Applicants were not present when this concession was made to provide any additional evidence to sustain a claim for a greater sum.
Consistent with the concession made by the Council, I accept that the sum to which the Applicants are entitled for disturbance in accordance with s 59 is $10,000.

Compensation

Having regard to the provisions of s 55 of the Compensation Act, my determination of market value in the sum of $300,000 and my acceptance of the Council's concession that compensation by way of disturbance is in the sum of $10,000, the aggregate compensation to which the Applicants are entitled by reason of the acquisition of the Land on 16 August 2013 is $310,000.

Costs

The Council concedes that the Applicants are entitled to an order for legal and consultancy costs incurred by them in these proceedings. That entitlement is conceded by the Council to be the case notwithstanding that no expert report prepared by any consultant was relied upon by the Applicants for the purpose of conducting the proceedings and acknowledging that following the termination of the retainer of their solicitor in June 2014, the Applicants did not thereafter have the benefit of legal representation.
The majority of invoices provided by the Applicants to the Council in seeking to claim disturbance costs are invoices for legal and consultants fees associated with the conduct of the proceedings. As Ms Emmett deposes, invoices for such fees total $62,592.35. Perhaps unusually, the Council seeks an order that it be required to pay this amount to the Applicants, as a fixed sum, by way of costs rather than have a general order as to costs that require assessment.
The power of the Court to make an order for costs in a fixed sum is found in s 98(4) of the Civil Procedure Act 2005 (NSW). While subsection (1) of that section identifies the discretion of the Court to award costs, subsection (4) relevantly provides: "(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom the costs are to be paid is to be entitled to: (a) … (b) … (c) a specified gross sum instead of assessed costs, …". The Council seeks to invoke that power in the present case.
The purpose of s 98(4)(c) is identified as being "to avoid the expense, delay and aggravation involved in protracted litigation arising out of [assessment]" (Idoport Pty Ltd v National Australia Bank Limited [2007] NSWSC 23 at [9]; Hamod v State of New South Wales (No 13) [2009] NSWSC 756 at [3]-[4]; Puruse Pty Ltd v Council of the City of Sydney [2009] NSWLEC 163; 169 LGERA 85 at [83]). It is a power appropriate to be exercised whenever the circumstances justify so doing. However, it should only be exercised if the Court is satisfied that it is fair so to do and, in particular, if the materials available to the Court afford sufficient confidence that the fixed sum identified is appropriate (Young v Hones (No 3) [2014] NSWSC 499 at [25]).
In support of its application that the Court exercise its discretion under s 98(4)(c), the Council points to the history of the proceedings, in particular the considerable delay that occurred once the Applicants no longer had legal representation, coupled with their failure or inability to engage with any professional advisors in relation to the proceedings. In light of that past experience, the Council is concerned that the process of having costs assessed may be protracted, potentially incurring further costs by all parties, without any realistic prospect of improving upon the position reflected in the invoices already provided to the Council.
I am persuaded that there is substance in the Council's submissions. From the time the Applicants appeared before me as self-represented litigants they stated in the course of directions hearings that they did not intend to engage further with any legal practitioner. Moreover, they were afforded several opportunities to obtain expert evidence to support their claim but they chose not to do so. It must be assumed, therefore, that after June they incurred neither legal or consultancy fees referable to the conduct of these proceedings. I note that the invoices attached to the affidavit of Ms Emmett, being those received from the Applicants, extend through to June 2014.
In the circumstances, I am prepared to make a costs order in favour of the Applicants, specifying the gross sum of costs to be paid to them by the Respondent. I am persuaded that the making of such an order will avoid the expense, delay and likely aggravation to be incurred by pursuing an assessment of costs. Moreover, I am confident that the invoices provided by the Applicants are likely to have been comprehensive in identifying the costs that they have incurred in connection with the proceedings and fairly represent costs to which they would be entitled.

Orders

For the reasons that I have expressed, I make the following orders: 1. Pursuant to the provisions of the Land Acquisition (Just Terms Compensation) Act 1991, determine compensation for acquisition by the Respondent of Lot 2 in DP 1055678 on 16 August 2013 in the sum of $310,000. 2. Pursuant to s 98(4)(c) of the Civil Procedure Act 2005 order that the Respondent pay the Applicants costs of the proceedings in the sum of $62,592 as a gross sum instead of assessed costs. 3. The exhibits may be returned.

Amendments 04 March 2015 - para 26 line 7, 10 "the Respondents" should read "the Applicants" para 30 line 6 "the Respondents" should read "the Applicants" para 31 line 2 "the Respondents" should read "the Applicants" para 32 line 6 "the Respondents" should read "the Applicants" para 36 line 6 "told my Mrs Capocchiano" should read "told by Mrs Capocchiano" para 41 line 12 "the Respondents" should read "the Applicants" para 104 line 2 "by the them" should read "by them" 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 March 2015

Environmental Planning and Assessment Amendment (Infrastructure and other Planning Reform) Act 2005(NSW)

Environmental Planning and Assessment Amendment (Reserved Land Acquisition) Act 2006(NSW)

Illawarra Planning Scheme Ordinance Interpretation Act 1987(NSW)

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