4 The Respondent argues that a piecemeal approach is incorrect. A before and after approach is the legally correct approach and is the approach the valuers took. The facts in Constantino are different from this matter and it does not apply.
Finding
5 In Constantino Bignold J did not apply the before and after method, contrary to the approach of the valuers in that matter. He noted that the before and after method provides a single figure reflecting the market value of the compulsorily acquired land unaffected by the public purpose and the decrease in value of the applicant's residue lands by reason of that public purpose. However he considered the approach reflected the considerable decrease in value of the residue lands resulting not from the public purpose but because of their proposed open space zoning under a draft LEP. Bignold J considered this produced a distorted approach to market value. On the evidence there was no connection between the proposed public purpose (the western orbital road) and the proposed open space zoning under the Council's draft LEP. He applied a piecemeal approach whereby he valued the small area of compulsorily acquired land based on the zoning assumption reached by the experts and added an amount for injurious affection caused to the residue lands.
6 Having reviewed the parties' respective figures for market value arrived at by using the different methodologies, there is not a great deal of difference between them, except in relation to the Mesiti land (about $200,000 difference) and one of the N Caruso blocks to a lesser extent (about $79,000). I will consider the issue because it is necessary for the market value in relation to the Mesiti land to be determined in particular.
7 Either the piecemeal or the before and after approach is theoretically open on the evidence provided by the valuers in exhibit JJ. Values for the different categories of land have been provided in the table at page 2 of exhibit JJ and can be applied in a piecemeal approach. The valuers Mr Large and Mr Phippen have applied these values in before and after calculations to arrive at their respective values. As Mr Dempsey did not provide a table of his workings I am not sure what he did.
8 As submitted by the Applicants' counsel, the zoning of the residue land as residential results in a substantial increase in value of the land in the after scenario if the before and after approach is used. I consider that zoning is not linked to any decrease or increase in value of the lands resulting from the public purpose of the Respondent in undertaking trunk drainage works on the acquired land, referring to the definition of market value in s 56(1) of the JT Act. Rather it reflects the overall planning aims and objectives of the Council and the Department of Planning in relation to the urban development of the Strangers Creek area generally. This issue was discussed in detail in Caruso No 1 in the context of determining the underlying zoning of the acquired land at [35] - [49]. That it has relevance to the residue land was unfortunately not raised in the substantive hearing given the issue has now been raised in the course of determining final orders.
9 My conclusion that the zoning of the residue land is not linked to the public purpose of the Respondent is sustained by my earlier findings in Caruso No 1 in relation to the underlying zoning of the acquired lands. In Caruso No 1 I held that the public purpose of the acquisition was that of the Respondent acquiring the Applicants' lands for trunk drainage. That purpose was more limited in scope than the purpose contended for by the Applicants. As part of that finding I held that the Council and the Department of Planning had planning purposes and responsibilities in relation to the provision of trunk drainage and other services separate from the Respondent. The residential zoning of the residue land relates to those separate purposes and responsibilities of those entities and is separate from the public purpose of the acquisition.
10 It therefore follows that the issue raised in Constantino whereby the zoning of the residue land in the after scenario did not reflect any increase or decrease in the public purpose but was related to another unrelated purpose also applies here. I therefore agree with the Applicants' counsel that a piecemeal approach is the appropriate methodology to apply in this case, as the Applicants' calculations do. I therefore intend to award market value in accordance with the orders filed with the Court yesterday by the Applicants subject only to further clarification of one issue in relation to the Mesiti land.
Endangered ecological community (EEC) on Mesiti
11 In Caruso No 1 I made certain findings about the area of EEC on the Mesiti land between the solid and the dashed yellow line at [141] - [142]. I held that some allowance for the additional cost of providing an offset for the EEC potentially lost in this area by development is likely to be made by a hypothetical purchaser of the land. The Applicants deducted 10 per cent over the whole of the land to take into account the risk a prudent hypothetical purchaser would consider likely to apply in relation to development of the land affected by the EEC. The Respondent took the view that a hypothetical purchaser would assume that the land could not be developed at all in light of the onerous requirement of a 6:1 offset that I held should apply. Its counsel argued that there was no evidence to support the reduction of 10 per cent for the whole of the land which the Applicants had applied and it would not be appropriate to allow that amount.
12 As noted in Caruso No 1 at [142] there was no specific evidence on this precise matter and I asked for further assistance from the parties on how best to make allowance for this area of land in Mesiti. As there have been quite different approaches by the respective parties that assistance has been regrettably limited. Doing the best I can as the judicial valuer I consider there should be some allowance made for the risk of obtaining development consent a hypothetical purchaser would consider might arise in relation to the EEC in the limited area under discussion. I did not consider the land could not be developed at all, contrary to the Respondent's assumption, but consider the amount of 10 per cent reduction in value over the whole of the land for risk is too high. I will adopt a figure of 5 per cent and the Mesiti figures will have to be adjusted accordingly.
Disturbance - Stamp duty
13 All items of disturbance are agreed except for stamp duty. I note that the Respondent has agreed to provide an easement over the sewerage management facility to N Caruso in proceedings no 07/30694.
14 As referred to at [176] of Caruso No 1, all but one of the Applicants has claimed stamp duty under s 59(f) of the JT Act for the purchase of other land. Affidavits have been filed in support of the claim (see [176] of Caruso No 1). I did not determine that issue in Caruso No 1 (see [177]).
15 Section 61 of the JT Act states:
If the market value of land is assessed on the basis that the land had potential to be used for a purpose other than that for which it is currently used, compensation is not payable in respect of:
(a) any financial advantage that would necessarily have been forgone in realising that potential, and
(b) any financial loss that would necessarily have been incurred in realising that potential
16 The Applicants submitted that in light of the High Court decision in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; 242 ALR 383 holding that the words of the sections in the JT Act should be applied in the context of the legislation, meaning its aims and objects in s 3, leads to a finding that s 61 should not be interpreted to mean that compensation for disturbance is not payable as that section really focuses on market value. Further support for this approach is found, in obiter, in the judgment of Hodgson JA in AMP Capital Investors Limited and Anor v Transport Infrastructure Development Corporation [2008] NSWCA 325 at [51] - [75] where he refers to the guarantee of just compensation found in s 54 of the JT Act.
17 The Respondent argues that stamp duty is not payable because of s 61 of the JT Act as interpreted in Peter Croke v Roads and Traffic Authority of New South Wales (1998) 101 LGERA 30 and followed in numerous other cases. In Peter Croke Bignold J considered that s 61 of the JT Act prohibited a claim for disturbance under s 55(d) because the market value had been determined on the basis of a higher and more valuable use. The Respondent argued that s 61 applies so that the stamp duty is not payable because the determination of market value for a rural zone included consideration of the potential, more valuable, use of the land as a seniors' living facility which is not the current use of the land.
Finding
18 In the substantive proceedings the Applicants' primary case was that the underlying zoning for the assessment of market value was residential. I have now determined in Caruso No 1 that the underlying zoning for the determination of market value is rural. Its current use is as a rural home site. Market value was determined by me taking into account the potential for development under the rural zone in the LEP. That incudes use for seniors' living facilities and specified commercial types of development. The Applicants' lands are not currently being used for such purposes.
19 Section 61 operates where the assessment of market value of land is on the basis of a purpose other than that for which it is being used occurs, as it has in this case. While the underlying zoning of the land is rural and the current use is for a rural home site the market value was calculated on the basis of comparable sales which included sales based on a more valuable potential use as a seniors' living facility. Market value was determined at a higher value than the current use of the land as a rural home site. Section 61 does not refer to zoning but to use for a purpose. In Peter Croke and numerous other cases which have applied the findings in this Court similar circumstances have resulted in a claim for stamp duty not being upheld because of s 61. I do not consider there is a clear legal basis put forward by the Applicants relying on general statements in Walker and obiter statements in AMP to overcome the specific language used in s 61 and its consistent application since Peter Croke.
20 I agree with the Respondent's submission that as the market value has been assessed on the basis that the land has the potential to be used for a purpose other than its current use, compensation (which includes disturbance under s 55(d)) cannot include the Applicants' claims for stamp duty under s 59(f).
21 I will now make final orders for compensation in this matter.