Collex Pty Limited v Roads and Traffic Authority of New South Wales

Adelaide City Corp v City of Port Adelaide Enfield (2001) 115 LGERA 136; Albany & Ors v Commonwealth of Australia (1976) 12 ALR 201; Bezzina Developers Pty Ltd v Leichhardt Municpal Council [2006] NSWLEC 175; Blacktown City Council v Fitzpatrick Investments [2001] NSWCA 259; Boland v Yates (1999) 167 ALR 575; Collex v RTA [2005] NSWLEC 601; Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333; CASES CITED: Downie v Sorell Council (2005) 141 LGERA 304; EPA v Alkem Drums Pty Ltd (1996) 93 LGERA 83; EPA v Taylor Woodrow (No. 2) (1997) 97 LGERA 368; Ironhill Pty Ltd v Transgrid (2004) 139 LGERA 398; Macarbell Pty Ltd v RTA [2006] NSWLEC 366; Mir Brothers Unit Construction Ltd v RTA [2004] NSWLEC 612; Spencer v The Commonwealth (1907) 5 CLR 418; Yates Property Corp Pty Ltd (In Liquidation) v Darling Harbour Authority (1991) 24 NSWLR 156

DATES OF HEARING: 31/10/2005, 01/11/2005, 02/11/2005, 03/11/2005, 17/07/2006, 19/07/2006, 20/07/2006, 21/07/2006, 24/07/2006 25/07/2006, 26/07/2006, 01/09/2006 (written submissions), 12/09/2006 (written submissions)

APPLICANT Mr J J Webster SC with Mr I J Hemmings (barrister) SOLICITORS Collex Pty Ltd LEGAL REPRESENTATIVES: RESPONDENT Dr J E Griffiths SC with Mr R P L Lancaster (barrister) SOLICTORS Corrs Chambers Westgarth

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

31175 of 2004 Collex Pty Limited v Roads & Traffic Authority of New South Wales

JUDGMENT 1 Talbot J: On 28 May 2004 the applicant, Collex Pty Limited ("Collex"), was the owner of the site known as Horsley Park Waste Management Facility at Wallgrove Road, Horsley Park situated on the eastern side of Wallgrove Road south of the Western Motorway. 2 An industrial operation owned by Austral Brick Company Pty Ltd ("Austral") is situated along the northern boundary. The land is zoned Regional Parkland under Sydney Regional Environmental Plan No. 31 ("SREP 31"). The site comprises an area of 35.22 ha being Lot 1 DP 1042225. 3 On the abovementioned date an area of 4.512 ha was acquired by the respondent authority pursuant to a Compulsory Acquisition Notice published in the NSW Government Gazette for the purposes of the Roads Act 1993. 4 The residue land retained by Collex has an area of 30.71 ha comprised in Lot 8 in DP 1059698. The 4.512 ha acquired is now Lot 9 in DP 1059698. 5 The existing access to the land is via a Right of Carriageway over the land owned by Austral. 6 Collex has lodged an objection to the amount of compensation offered by the respondent pursuant to s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 ("Just Terms Act").

7 On 23 June 1961 Blacktown Council granted development consent to Brickworks Limited (a company related to Austral) for the use of its entire site (including the land subsequently acquired by Collex) for brick manufacturing including the extraction of clay and shale for use in the plant. The conditions of consent included a provision that no buildings shall be erected or excavations made within "100 ft" of the frontage of the subject land to what was known at the date of acquisition as Wallgrove Road. There was a further requirement that tree planting occur on the 100 ft strip adjoining Wallgrove Road. 8 The land was subsequently included within the area of Fairfield City Council and by then had come into the ownership of Austral. 9 On 8 December 1998, Austral was granted development consent by Fairfield City Council to use a portion of its site for a solid waste landfill for remediation of the approved extractive industry. The land the subject of the 1998 development consent included the area of 35.22 ha subsequently purchased by Collex in May 2002. The following conditions of consent were imposed by Fairfield City Council: 9. Access to and egress from the landfill shall be via the existing access/egress point to Wallgrove Road. Separate access will require separate consent of Council and the Roads and Traffic Authority.

32. A Final Landfill Environmental Management Plan (LEMP) must be prepared and submitted to Council for concurrence prior to commencement of operation. The LEMP must identify all safeguards in relation to pollution control measures and hazard reduction and must also detail monitoring programmes of such measures and hazard reduction. The LEMP shall be prepared in conjunction with Western Sydney Waste Board and shall meet with the satisfaction of the Board. Evidence of the Board's concurrence to the LEMP shall accompany the LEMP's submission to Council.

33. The landfill shall operate as a Solid Waste Landfill -Class 2. 10 The approved LEMP adopted a final landform designed to accommodate a landscaped open space. 11 On 2 July 2001, Collex and Austral executed a Deed of Licence and Operation, the relevant terms of which are explained in an earlier judgement delivered on 21 October 2005 (Collex Pty Ltd v RTA [2005] NSWLEC 601). The Deed controls an operation whereby the clay/shale source in Lot 1 is extracted and the resulting airspace is filled with solid waste. Collex has agreed to pay a fee or royalty to Austral for providing the airspace. 12 The compulsory acquisition notice expressly excluded from the compulsory acquisition of Lot 9 the profit a prendre of Brickworks Limited and the existing easements. 13 On 18 December 2004 Fairfield City Council approved an application for modification of the 1998 development consent pursuant to s 96 of the Environmental Planning and Assessment Act 1979 ("EP&A Act") thereby allowing an increase in the annual acceptance rate for landfill from 300,000 tonnes to 430,000 tonnes per anum. Issues 14 The applicant identifies the following issues: Issue A: Would the hypothetical purchaser take into account the potential use of the extraction and landfill land after filling for open storage? Issue B: Would the hypothetical purchaser take into account the potential use of the extraction and landfill land after completion of land filling for tourist and/or commercial recreational facilities or for open storage? Issue C: Would the hypothetical purchaser take into account the potential use of the Northern Developable Land for a waste recycling and transfer facility and/or brick making (with ancillary storage)? Issue D: Would the hypothetical purchaser take into account the potential for the land acquired to be valued as SEPP 59 or as Employment Land? Issue E: Would the hypothetical purchaser take into account the potential for the land to be acquired valued as Non Urban 1(b) at the date of acquisition but as SEPP 59 or Employment Land at the time when filling had been completed? Issue F: Would Council consent be required for the modified development [as a consequence of the compulsory acquisition of part of the applicant's land] ? Issue G: Is the ability to amend the final landform relevant to the assessment of compensation? 15 The issues raised by the respondent although corresponding to the applicant's issues to a significant degree, are particularised in more detail as follows: Planning issues

1. The potential interim uses of Area A (the area of 37,120 m² that is potentially available for quarrying and filling) and Area B (the area of approximately 8,000 m² that is not available for quarrying and landfill), pending the completion of excavation and landfill on Lot 9. 2. The highest and best ultimate uses of Area A and Area B, once excavation and landfill is complete on Lot 9. 3. The prospect of Lot 9 being the subject of a voluntary acquisition of land by the Corporation referred to in clause 19 of SREP 31, for the regional park. 4. In the event of Lot 9 being the subject of a voluntary acquisition of land by the Corporation referred to in clause 19 of SREP 31, for the regional park, the 'underlying zoning' of the land (that is, the planning assumption on which the Corporation might be expected to compensate the landowner). 5. The appropriate setback of excavation and land filling activities from the western boundary of Lot 8 (the retained land) after acquisition.

6. The permissibility of changes to the shape and volume of the land fill.

7. The prospect of Council granting consent to an application to change the shape and volume of the land fill, both before and after the date of acquisition.

Engineering and surveying issues 8. The volume of airspace lost as a consequence of the compulsory acquisition, having regard to: (a) the shape of the final landform; and/or (b) the setback of excavation and landfill from the western boundary.

Valuation issues 9. Whether the value attributed to all or part of Lot 9 should be deferred until the time of completion of excavation and landfill. 10. The application of the agreed value of airspace. That is, should the rate of $4.75 per m³ be applied directly to the total volume of lost airspace, or applied as a deferred value according to the time at which the airspace is likely to be created?

11. Whether an amount should be added to the value of the retained land after acquisition on account of enhancement or 'betterment' due to proximity to the M7 and, if so: (a) whether 7.5% is the appropriate increase; and (b) whether any betterment is offset by the loss of direct access to Wallgrove Road. 12. Whether the application of a discounted cash flow methodology (as either a primary method or a check method) is of utility in the circumstances of this case. 13. If a discounted cash flow methodology (as either a primary method or a check method) is of utility in the circumstances of this case, the reliability and appropriateness of the various inputs used in the calculations by Lonergan Edwards and Don Reed & Associates. 14. The relevance of the fact that at the date of acquisition the land in Lot 9 was in its natural state, with no existing void for landfill, and the time and expense that would have been involved in creating a void and, if relevant, the way in which the valuers relied upon by Collex have taken account of that fact. 15. Whether on the proper construction and application of the Deed, Collex has suffered any compensable loss of airspace. 18. The basis for, and relevance of, the application of Collex in opening submissions that the Court determine the residual value of the acquired land so as to permit the calculation by Collex of the amount due to Austral Bricks (in accordance with the terms of the Deed of Licence and Operation). 19. Whether the Court should in determining market value on the basis of comparable sales deduct from what would otherwise be the amount of compensation an amount of $1,060,000 already paid by the RTA to Austral Bricks on account of lost royalty payments from Collex. Valuation Evidence 16 If the Court rules that the underlying zoning is to be considered Non-Urban 1(a) and given the total area of the land of 4.512 ha the valuers have agreed that the value of the surface land in the present day would be $2,030,400.00 (4.512 ha at $45.00 per m2), ignoring the landfill and deferment. However, there is disagreement whether the area of 8,000m2 unaffected by the landfill would be valued at figure of $155 per m2 determined by Mr Large. 17 If the Court rules that the underlying zoning is to be considered as Employment Land and given the total area of the land of 4.512 ha the valuers have agreed that the value of the surface land in the present day would be $6,993,600.00 (4.512 ha at $155.00 per m2), ignoring the landfill and deferment. 18 The valuers then agreed on the appropriate basis for the assessment of the present value of the remainderman's interest after the landfill based on those underlying zoning scenarios. The agreements assume that the Court rules that a valid claim for compensation exists for the landfill. In these circumstances, if 18 years is to be adopted for the life of the landfill operation, the valuers have agreed to the following:- Non-Urban (1a)

Future Value (FV): $2,030,400 Term (n) Years: 18 (Subject to confirmation of this as being the remaining life of the landfill). Interest Rate: 5.5% Present Value (PV) Therefore: $774,528 Employment Land

a) Land Unaffected by the land fill: 8,000 square meters subject to confirmation by survey. 8,000m2 @ $155 pm2= $1,240,000

b) Land Affected by landfill: (45,120 m2 - 8,000m2) = 37,120 Future Value (FV): (37,120m2 x 155 pm2)= $5,753,600 Term (n) Years: 18 (Subject to confirmation of this as being the remaining life of the landfill). Interest Rate: 5.5% Present Value (PV) Therefore: $ 2,194,802

Total Employment Land this basis: $ 3,434,802 19 The abovementioned agreement by the valuers relates only to the value of the surface lands acquired. 20 They agree further that the present value of the lost airspace at the acquisition date was $4.75 per m3. Mr Preston, the respondent's valuer, believes however that the rate should be deferred given the fact that the voids do not yet exist. 21 The following points of disagreement remain between the valuers, Mr Preston and Mr Large, after further conferencing and production of a final joint statement: (1) Should the values attributable to fill volumes be deferred until the cells become available. (2) Should the value of airspace derived from sales be deferred. (3) Is the value of the 8,000 m2 $155 per m2 even if zoned Non Urban. (4) Is "betterment" or "enhancement" applicable to the subject land due to the M7. (5) The overall value of the acquired land with DA approval as an extractive industry site and DA approved and licensed landfill site. (6) Is the "piecemeal" approach or "before and after" approach to valuation preferred. (7) Whether or not the whole of the land value including the 8,000 m2 should be deferred to the end of filling. (8) Whether or not a risk factor for rezoning should be applied in considering the land as employment land. 22 The following is a summary table prepared by Mr Preston reflecting the respective adjustments made by him and Mr Large including alternatives based on possible fill volumes. The possible fill volumes depend upon the Court's ultimate finding in respect of a dispute regarding the final landform in the "after" situation and whether further development consent is required. Surveyors have carried out a series of alternative agreed calculations reflected in the table. Under the existing development consent, the space available for landfill is agreed at 6,946,712 m3. Mr Large agrees with the summary. SCENARIO GREG PRESTON TERRY LARGE ASSESSMENT OF MARKET VALUE ASSESSMENT OF MARKET VALUE 1. Value of land only $1,240,000 (Non Urban 1A Zoning) $921,117 $ 757,798 $1,997,798 2. Value of land only $1,240,000 Employment Zoning $1,114,701 $ 842,000 $2,082,000 $1,997,798 3. Value of land (Non Urban 1A Zoning) and lost airspace Based on 1,048,186m3 of lost airspace $3,977,720 $4,978,884 $6,976,682 $1,997,798 Based on 715,800m3 of lost airspace $3,008,453 $3,400,050 $5,397,848 $1,997,798 Based on 689,966m3 of lost airspace $2933,119 $3,227,339 $5,275,137 $1,997,798 Based on 483,682m3 of lost airspace $2,331,577 $2,297,490 $4,295,288 $2,082,000 4. Value of land (Employment Zoning and lost airspace) Based on 1,048,186m3 of lost airspace $4,171,303 $4,978,884 $7,060,884 $2,082,000 Based on 715,800m3 of lost airspace $3,202,036 $3,400,050 $5,482,050 $2,082,000 Based on 689,966m3 of lost airspace $3,126,702 $4,277,339 $5,359,339 $2,082,000 Based on 483,682m3 of lost airspace $2,525,160 $2,297,490 $4,379,490

23 Notwithstanding that the applicant originally presented its case by relying primarily upon the comparable sales evidence to determine the market value of the land, ultimately it principally relied upon a discounted cash flow methodology ("DCF") to establish its loss. Distinct issues arise in this respect and will be dealt with separately. It can be noted at this point that the applicant engaged experts, other than Mr Large, to deal with this issue whereas the respondent relied upon a critique by Mr Preston. The latter's evidence was essentially directed at identifying alleged errors in the evidence of the applicant's experts and the calculations and assumptions relied upon by them. Coincidentally the results arrived at by the applicant's advisors are not materially diverse but the applicant effectively now says the DCF is more reliable. The respondent disagrees. Planning Evidence 24 Mr Harvey Sanders has been retained to give expert evidence on behalf of the respondent as a town planning consultant and Mr Nick Juradowitch is retained as a consulting town planner for Collex Pty Ltd. After a lengthy process involving the preparation and exchange of reports and respective replies the expert town planners conferred in accordance with directions made by the Court and filed the following joint statement indicating the matters upon which they agree and upon which they disagree and the reasons that they hold the respective opinions:- 2.3 The planning experts agree or disagree in part (see comments) in relation to the following matters; (a) The land acquired by the RTA was at the date of acquisition zoned Regional Parklands pursuant to Sydney Regional Environmental Plan No 31 - Regional Parklands (SREP 31). (b) Prior to the gazettal of SREP 31 on 8th June 2001, the subject land was Recreation 6(c) Corridor under Fairfield LEP 1994 and prior to gazettal of the Fairfield LEP 1994, on 12th August 1994, the subject land was zoned Non Urban 1(a) under the Blacktown Planning Scheme Ordinance and Blacktown Interim Development Order 112. (c) The acquired land formed part of a land parcel owned by Collex Pty Ltd which was and continues to be used for clay and shale extraction and as a waste disposal facility. (d) The EIS accompanying the DA permitting solid waste land fill and remediation of the extractive industry (consent dated 8/12/98) advised that "upon the completion of landfilling activities, the site would be rehabilitated and used for purposes consistent with State planning requirements for the Western Sydney Open Space Corridor (currently under consideration by DUAP). These uses include recreation activities of a limited scale. Rehabilitation of the site and design of the landform so that it is compatible with the surrounding Cumberland Plain terrain and would contribute to the habitat value and amenity of the wider area." (e) Under SREP 31 the Collex site and nearby lands are identified in DlPNR's "The Western Parklands Management Vision" Summary Report (dated November 2004) as falling within Precinct 3.5 and deemed suitable for the development of community facilities, environment education, active recreation and tourist facilities. This report was based on the "Western Sydney Regional Parklands Management Vision and Concept Plan Options" report prepared in March 2004 by URS Australia Pty Ltd. The information preferred land uses in Precinct 3.5 would have been available to interested persons prior to the date of acquisition by the RTA.

(f) As at the date of acquisition, the subject land could have been used pursuant to [SREP 31] as an extractive industry and waste facility, or with appropriate approval from DIPNR, for community facilities, environment education, active recreation and tourist facilities. Tourist facilities identified included small scale accommodation (up to 2 storeys) and health centres.

(g) Both planning experts agreed that approvals [for] community facilities, environment education, active recreation and tourist facilities would be unlikely to be forthcoming until such time as the extractive industry and waste disposal activities had ceased and the site had been rehabilitated and stabilized in accordance with the terms of EIS. It was also agreed that those areas of the site subject to extraction and landfill would not be physically suitable for buildings associated with such uses.

(h) Under SREP 31 and until the land is acquired by DIPNR, the landfill area of the Collex site (as staged landfilling is completed) could be used with consent for open storage of for example bricks, pavers or raw material stockpiles associated with brick making and/or a waste facility. The Respondent's planner considers that an approval for these purposes would be unlikely to given [be] having regard to the terms and context of the 1997 EIS and present government policy in respect of the parklands. (i) The Applicant's planner considers that such uses would not be inconsistent with land filling and rehabilitation of the site or with eventual use of the site for SREP 31 purposes, as the landowner, prior to purchase of the land by DIPNR, would be responsible for removing all improvements and items being stored, at no cost to DIPNR. A similar situation exists for nearby land in the parklands, where DIPNR has approved expansion of the Eastern Creek Waste Management Facility site, which will eventually be developed as parklands.

(j) With respect to the northern portion of the Collex site not available for extraction or filling, under SREP 31 and until the land is acquired by DIPNR, this portion of the site could be used with consent for buildings associated with brick making/display or a waste facility, for example of a type similar to the nearby Eastern Creek Waste Management Facility. The Respondent's planner considers that an approval for these purposes would be unlikely to be given having regard to the terms and context of the 1997 EIS and present government policy in respect of the parklands. (k) The Applicant's planner considers that such uses and associated buildings would not be inconsistent with previous approvals or with the eventual use of the site for SREP 31 purposes, as the landowner, prior to purchase of the land by DIPNR, would be responsible for removing all improvements and items being stored, at no cost to DIPNR. A similar situation exists for nearby land in the parklands where DIPNR has approved expansion of the Eastern Creek Waste Management Facility site, which will eventually be developed as parklands. (I) The subject land is located within an area which has a mixed character in terms of land uses. Rural-residential development is located nearby to the south-west. A farm holding is located to the west, and a quarry further to the west. To the north-west is land being developed for industrial purposes under SEPP 59, to the north is the Austral Bricks display centre, an intensive poultry establishment and the Eastern Creek Waste Management Facility. To the north-east is the Austral brick/paver plant and to the east, raw material stockpiles associated with the brick/paver plant. To the south are small farms used primarily as market gardens.

(m) Clause 19 of SREP 31 provides for the owner of the subject land (and other land identified on Sheet 2 of the map to SREP 31) to require that the Corporation (DIPNR) purchase their land. However, Clause 19(3) provides that the Corporation is only required to purchase the land "when the land is included in a priority program for acquisition as determined by the Corporation or the Corporation is of the opinion that the owner of the land will suffer hardship if the land is not acquired".

(n) At the date of acquisition by the RTA, the subject land was not on a priority program for acquisition by DIPNR nor was the owner suffering hardship as a result of the land not being acquired. At the date of acquisition there was no obligation on DIPNR to acquire the subject land.

(o) As at the date of acquisition, the great majority of land within the SREP 31 area had come under public ownership, however, a lesser area had actually been developed for parkland purposes. Both publicly and privately owned lands within the SREP 31 area were and continue to be used for purposes which are not intended to remain in the longer term when the area is developed for parklands. A number of these uses, such as the Eastern Creek Waste Management Facility, the Austral Brick Works and the Collex landfill are likely to continue to operate for many years, perhaps more than 20 years in some cases, before reverting to parklands purposes.

(p) SREP 31 imposes an open space style zoning over the land and facilitates its future compulsory acquisition for parklands. If the subject land is acquired under SREP 31 it would be necessary, in order to determine its value, to identify its underlying zoning and compare the site to comparative sales with a similar underlying zoning. The Respondent's planner considered the underlying zoning as at the date of acquisition could either be Non-Urban 1(a) or Non-Urban 1(b) under the Fairfield LEP 1994. The Applicant's planner considered that a Non-Urban 1(b) zoning would be much more likely for the reasons outlined in his Planning Report. The experts agreed that the subject land would not have had an underlying zoning of industrial at the date of acquisition.

(q) SREP 9 applies to the subject land and allows extractive industries on the site, irrespective of the Fairfield 1994 zonings or planning controls that would have applied under that LEP, if the land had not been zoned under SREP 31 . (r) Metropolitan Plans and Strategies prior to 1998 did not identify land west of the main north-south ridgeline and extending west to Ropes Creek, i.e. the area within which the subject land is located, for future urban development.

(s) In 1998 the "Shaping Western Sydney" planning strategy identified the area between Ropes Creek and the main north-south ridgeline, north of the Warragamba to Prospect Sydney Water supply pipeline as an employment area primarily for industrial and related activities. This represented the first incursion of urban development into what had previously been an open space and rural corridor. The experts agree that as at the date of acquisition by the RTA, the subject land and other nearby land south of Sydney Water supply pipeline had not been identified for urban development in any planning strategy for Sydney or Western Sydney.

(t) A new metropolitan plan is currently being prepared and this plan may be expected to review preferred future zonings in the locality, but would retain a parklands designation over the existing area identified within Western Sydney Regional Park, as zoned under SREP 31. 2.4 The planning experts disagree in relation to the following matters; (a) The Respondent's planner is of the view that as at the date of acquisition by the RTA, the highest and best use of the acquired land would have been for its current approved use for clay and shale extraction and for land fill of the void created by extraction activities. The Applicant's planner agreed with this view, but only in relation to the area approved for extraction and land fill.

(b) The Applicant's planner considered that acquisition of the land by DIPNR would be some way off, and certainly not before extraction and landfill activity was completed on the site, not expected before 2017. He considered that in the interim Collex could develop buildings to house a waste facility similar to the nearby Eastern Creek Waste Management facility on the northern portion of the land where excavation and landfilling is not permitted. The facility could include a waste transfer station, with "raw material" stockpiles located on areas of the site where filling has been completed. He further considered that this part of the site would be quite valuable because of its building potential and the difficulty in Sydney of finding suitable sites for waste facilities.

(c) The Respondent's planner considered that it would be unlikely that an approval for a waste facility of the type proposed by the Applicant's planner would be issued by the Council/DIPNR because of the parklands zoning over the land and the proposed future inclusion of the land into the Western Sydney Regional Park. The Respondent's planner considered that such a use would not be consistent with the end uses envisaged by SREP 31 or with the end use of the site, or its physical state, envisaged in the EIS that accompanied the development application to use the site for landfill. (d) The Applicant's planner considered that approval for "interim land uses" such as a waste facility would be quite likely, provided that the landowner was responsible for removal of all improvements at no cost to the acquiring authority when the land is acquired for parklands. The Applicant's planner considered the site to be very suitable for a waste facility of the type suggested because of its relative isolation from residential development, easy access to Wallgrove Road and its compatibility with adjoining land uses including a large waste facility and a brick works. A substantial area unaffected by extraction and landfilling is available for buildings associated with a waste facility. In addition the facility could operate for at least 12 to 15 years before DIPNR is likely to be interested in purchasing the land. (e) The Respondent's planner is of the view that filled areas must be progressively landscaped and the land stabilized and would not be available for open storage or other forms of development. The Applicant's planner agreed that the existing landfill consent had this requirement, however, he considered that an amendment of the consent to allow for landscaped open storage associated with a waste facility or the adjoining brickworks, as an interim use, would be likely to be approved provided that stored items were removed and the site landscaped when landfilling activities are completed. He considered this would be a more efficient use of the land, noting that it would not be acquired for many years and that the filled areas would be physically capable of accommodating open storage.

(f) The Respondent's planner considers that if the Regional Parklands zoning is ignored, the underlying non-urban zoning at the date of acquisition would remain as non-urban into the foreseeable future. He was of the view that past and present planning strategies do not envisage urban development in the area west of the north-south ridgeline and south of the Warragamba to Prospect Sydney Water supply pipeline. He considers that the end use of the site (if the regional parklands zoning is ignored) is 4 rural-residential allotments of approximately 1 hectare each and that industrial zoning under SEPP 59 would not be extended south of the pipeline.

(g) The Applicant's planner considers that if the Regional Parklands zoning is ignored, the underlying Non-Urban 1(b) zoning would only apply until extraction and land filling activities are concluded. He is of the opinion that the area north of the pipeline designated for industrial development would be substantially developed by 2015 and that prior to this, the area south of the pipeline would come under consideration for inclusion into SEPP 59. (h) The Applicant's planner considers that the land along the southern boundary of the pipeline would be too valuable to leave as non-urban into the foreseeable future. Whilst its rezoning now would be premature because of distance to services and the ready availability of industrial land to the north, these circumstances would change within 10 years at most. The land on the southern side of the pipeline comprises larger holdings physically suitable for industrial development. Necessary services will be available close by within 5 years and a landscaped buffer could be provided to rural residential land to the south. (i) The Applicant's planner notes that SEPP 59 area has been extended on several occasions since it was gazetted in February 1999. He further notes that prior the acquisition date, investigations commenced in relation to extending SEPP 59 into the last remaining area north of the water supply pipeline. He considers that a prospective prudent developer would be realistic in assuming that land to the south of the water supply pipeline would be next in line for inclusion into SEPP 59, with timing depending on the take up rate of land north of the water supply pipeline.

(j) The Applicant's planner is of the view that having regard to the circumstances and the strong demand for additional employment land in western Sydney, previous planning strategies which resisted urban development south of the water supply pipeline would not longer be relevant. He considers that future planning in Western Sydney will accommodate urban development south of the water supply pipeline, particularly industrial development along the sector adjoining the southern side of the pipeline. He therefore concludes that rezoning to industrial within 10 to 12 years in this locality is a very likely outcome and that therefore the highest and best future use of the subject land within this timeframe (in the absence of a regional parklands zone) would be industrial.

(k) The Respondent's planner is of the view that the only basis on which the Applicant planner's proposition as to the future release of the area south of the Pipeline for urban development would be correct is if the fundamental principles that have informed the strategic metropolitan planning process for decades are ignored. These strategies have been predicated on urban development being undertaken along defined growth corridors in order to avoid unconstrained urban sprawl with growth taking place in a contained, not dispersed, manner. Such principles informed the 1968 SROP and the 1988 Metropolitan Strategy and continue to inform the strategic planning process. These corridors are defined by geographical and topographical features, with the Warragamba to Prospect Pipeline being one such significant feature. The strategy of growth along corridors has been complemented for many years by policies of urban consolidation within existing urban areas. If urban development was to spread south of the Pipeline, as contemplated by the Applicant's planner, it would therefore be contrary to well established planning practice and long-standing planning principles. Accordingly, the Respondent's planner, namely, [sic] that the area to the south of the pipeline would come under consideration for inclusion in SEPP 59, prior to 2015, is most improbable.

(l) The Applicant's planner considers that previous planning strategies have been well intentioned and soundly prepared on the basis of the information and circumstances as existing at the time they were prepared. He also considers that many initiatives in those previous strategies have stood the test of time, whilst a number of others, such as the greenbelt concept, originally considered to be fundamental for the planning of Sydney, have been substantially changed or abandoned. The Applicant's planner considers that the current strategy in place, "Shaping Western Sydney" is a case in point, as this introduces urban development (i.e. industrial) into an area which was previously restricted to open space and non-urban uses. He further contends that the NSW Government has recognized that a new metropolitan planning strategy is required for Sydney and is now well advanced in the preparation of this new strategy. He considers that there is every possibility that industrial development will be permitted south of the water supply pipeline and that this issue has recently been flagged for consideration as a result of the need to identify a suitable location for a link road between the Erskine Park Industrial Area and Wallgrove Road. 25 The above extract from the joint statement of the planners remained a proper reflection of their evidence after they were sworn and gave evidence in a concurrent session and following cross-examination. Whether the land should be valued on the basis of a deferred use as Non Urban or Employment Land 26 At the date of acquisition the whole of the Collex land was zoned Regional Parklands under SREP 31 with a history of Recreation 6(c) zoning under Fairfield LEP since August 1994. Prior to that date it was in the Non Urban 1(a) zone under Blacktown City Planning Ordinance. 27 There is disagreement between the planners about the prospect of an approval for open storage use as the staged landfill is completed. There is also disagreement whether that part of the site not available for extraction or filling could be used, with approval, for buildings associated with brick making or a waste facility pending acquisition by DIPNR for the purpose of Regional Parkland. 28 The land is surrounded by a number of mixed uses for industry and agricultural pursuits. Some of these uses are long term. The trigger for acquisition by DIPNR, namely the inclusion of the land in a priority program, has not occurred. Where interim uses are approved pending acquisition under SREP 31 the land owner is responsible for removal of all improvements at no cost to DIPNR, as the acquiring authority. 29 At the date of acquisition the subject land and other nearby land south of the Sydney Water Supply Pipeline had not been identified for further urban development in any planning strategy. 30 No change to that position is foreshadowed at present. 31 Nevertheless having heard and read the evidence of both planning experts I tend to the view that a hypothetical purchaser of the 8,000 m2 comprising the northern sector of the acquired land would recognise some potential for the land to be used for a use not inconsistent with the immediately surrounding uses of brick making and landfilling activities. The land is remote from any residential development. The prospect of DIPNR acquiring the land is dependant upon the completion of the extraction and landfill activities on the balance of the Collex land. They are expected to continue for 15-20 years. 32 Approval for a use such as open storage or buildings associated with a waste facility would only be granted subject to a condition requiring removal of all improvements, at no cost to the acquiring authority. In my view the Parklands zoning would not be seen as an absolute caveat against the type of development identified by the applicant's planner in the northern sector. The land has proximate access to Wallgrove Road and the proposed uses would be compatible with adjoining land uses. Moreover the conditional use would not be an impediment to the ultimate use for parklands. 33 The assessment of the prospect of the future release of the balance of the Collex acquired land as employment land is a distinct question attracting different considerations although to a significant extent it is based upon the same underlying planning circumstances. 34 The opinion of Mr Juradowitch is that the area identified in SEPP 59 for substantial employment related development was initially restricted by the capacity of Wallgrove Road and the provision of services to the area south of the pipeline. By 2003 as a result of the decision to construct the orbital road his advice to a hypothetical purchaser would have been that SEPP 59 would only cater for the short and medium term employment needs and that at the end of the initial 10 years there would be a shortage of industrial land. However, following the not previously anticipated announcement of the huge release of land for future urban expansion in south-western Sydney and the north-west sector, he would have revised his estimate to the effect that rezoning would occur within 5 years and that planning would have commenced to investigate industrial development south of the pipeline. Within 10 years it would be necessary. 35 Looking at the planning history for Sydney and the planning history for the site and the unsuitability of it and adjoining land for residential development, the presence of quarries and industrial development to the north, Mr Juradowitch concludes that any reasonable person in 2004 would have appreciated that "down the track" industrial development would occur. Otherwise it would be ludicrous to leave ideally developable land sitting there unused. When he balances up all the factors he believes that the prudent purchaser, talking to an experienced planner, would form a view that within 10 years there would be a strong likelihood of industrial development occurring. He excludes the prospect of development west of Wallgrove Rd in the absence of the parklands on the eastern side of Wallgrove Rd and that with the shortage of industrial land the whole strip right up to the M4 freeway would become industrial. The areas south to Horsley Park would have been deferred until the Badgery's Creek Airport issue is resolved. 36 Mr Juradowitch does not think that the planning process would have been completed until about 2010 following the release of the Metro Strategy. He would then envisage a 3-5 year timeframe to bring the land on stream. The services have virtually been extended to the SEPP 59 area accordingly there would not be the same restraint by the lack of provision of services that existed in 1998. 37 On the other hand in his oral evidence Mr Sanders reiterated that any foreseeable demand for development of employment land south of the pipeline relates directly to the advent of the M7. Moreover the employment land study referred to and relied upon by Mr Juradowitch was not in existence at the date of compulsory acquisition of the land. In any event it is even now only a draft confidential document not readily available to the public and hence the relevant hypothetical purchaser. Finally he says the document only considers options and does not engender any specific recommendation or resolution to carry out any amendment to SEPP 59. 38 When asked what advice he would give a purchaser who had received Mr Sanders' advice Mr Juradowitch replied that, based on the information on the employment and strategic corridor, it would be only a matter of time before industrial development would occur in the fairly narrow band south of the pipeline. He would have said that Mr Sanders is unduly pessimistic about the medium to long term future of the land but in the short term he would agree with him 100%.

39 Conversely, when asked what he would have said to a prospective purchaser who had received Mr Juradowitch's advice Mr Sanders replied that he would have said that what Mr Juradowitch was postulating would run counter to 40 years of planning experience and that a purchaser who took his advice would be "very much braver" than the prudent purchaser. It would be speculative not prudent in the context of the situation that prevailed at the time. 40 I am driven to the conclusion that the prudent purchaser would have paid close attention to the more conservative advice offered by Mr Sanders in this instance. The purchaser would have perceived that the projection by Mr Juradowitch is based on conjecture and speculation about a change in an established strategy and needed to be treated with extreme caution. Moreover Mr Juradowitch corroborates Mr Sander's prediction in the short term. Having taken into account both points of view, I am not satisfied that the hypothetical purchaser would have paid any more than the market value of the 37,120 m2 assessed against the potential compensation payable for acquisition based on a Non Urban 1(a) zoning as the alternative zoning to the parkland designation after filling is completed. 41 However, the 8,000 m2 in the northern sector of the land acquired would be recognised by the purchaser as having a real potential for industrial type use at least during the period while ever brick making and landfill operations continued on the adjoining land. 42 Notwithstanding the reservations held by Mr Preston in relation to the figure of $ 155 per m2 for the 8,000 m2, I am prepared to adopt that figure. I am satisfied his doubts in that respect have been sufficiently dispelled by the contrary evidence of Mr Large. In my view, there is no current risk that an industrial use can be realised in respect of the 8,000 m2 and that it can continue indefinitely until the adjoining uses are exhausted. At the expiration of the landfill it will not be subject to the physical constraints on the use of the land that has been excavated and filled. That fact alone would reduce the risk of the use continuing. Furthermore Mr Preston has not justified the level of discount he arbitrarily claims at 50%. 43 I find that the present value of the land acquired, assuming completion of the landfill on 37,120 m2 in 18 years and the immediate availability of 8,000 m2 for an industrial use for an indeterminate period is:-

Land unaffected by landfill: 8,000 m2 at $155 per m2 $1,240,000.00 Land affected by landfill: 37,120 m2 $ 757,798.00 Total $1,997,798.00

Loss of airspace 44 The applicant submits that the value of the lost airspace should be properly reflected in the market value of the acquired land and the compensation for injurious affection to the retained land. The analysed value of rate per m3 for the purchase of landfill airspace is agreed at $4.75 per m3. The alternative calculations and methodology shown in the summary table at [21] are adopted. 45 The issue between the valuers is whether the rate of $4.75 per m3 should be applied directly to the total volume of lost airspace or applied as a deferred value according to the time at which airspace is likely to be created. At the date of acquisition the acquired land was in its natural state with no existing void available to receive landfill. The respondent seeks to recognise the time, cost and expense involved in creating a void. 46 Two further issues arise in respect of the effect of the Deed made between Austral and Collex:- a) Whether Austral is obliged to provide alternative airspace in a way that means Collex has not suffered any compensable loss of space. b) Whether the Court should in determining market value on the basis of comparable sales deduct from what would otherwise be the amount of compensation an amount of $1,060,000.00 already paid by the RTA to Austral Bricks on account of lost royalty payments from Collex. 47 Furthermore, there is the issue whether an amount should be added to the value of the retained land after acquisition on account of enhancement or betterment due to the convenience of the proximity of the M7. 48 However, the applicant now contends that the preferred approach to the assessment of the value of lost airspace is a discounted cash flow (DCF) methodology. Even if the Court accepts the suitability of the DCF methodology the respondent claims that the various inputs used in the calculations undertaken by the applicant's experts are unreliable or inappropriate in the circumstances.

49 The evidence of the planners is equivocal as to whether they would have advised the owner to make an application to the Council for an approval to a modification of the existing development consent following the compulsory acquisition but they both acknowledge that some problems could arise in regard to the shape of the ultimate landform, setbacks and landscape areas so that legal advice on those aspects would have been recommended. Nevertheless, they both accept that either an application under s 96 of the EP&A Act or a new application for approval more or less consistent with the overall existing approved scheme would be likely to succeed.

50 The respondent asserts that, as it is open to create a finished landform to a maximum height of RL 85 AHD under the recommendations contained in the EIS adopted by the existing development consent, Collex could offset and accommodate the effects of any loss of airspace as a consequence of the acquisition. The applicant rejects the respondent's argument on the basis that the requirement for setback landscaping is a fundamental requirement of the consent, which cannot be implemented or replicated without modification of the existing scheme.

51 I accept that notwithstanding the compulsory acquisition the consent can still be implemented, albeit after modification to ensure that the environmental and amenity impacts on the M7, in lieu of Wallgrove Road, are reasonable. I agree that in order to satisfy the Council any amended scheme would need to provide at least 30 m setback from the adjusted western boundary of the land. That in my view would involve sufficient change to demand an application for modification of the existing development consent. Otherwise, it might reasonably be expected the Council would take steps to ensure that changes satisfactory to it were made in order to meet the altered circumstances following acquisition. 52 Notwithstanding that it may be feasible for the applicant to reconfigure the landfill to ensure that the same amount of space for landfill is provided in the remaining area, I am satisfied, nonetheless, that there is a loss of airspace as a direct consequence of the acquisition. If the replacement of airspace can be achieved by re-design after acquisition then it must be accepted that the same could have been achieved beforehand. 53 I find that the deprivation of the opportunity to use the part of the land acquired that could have been made available for landfill is a compensable loss under the Just Terms Act. The use of airspace for the proposed waste disposal is a factor that parties to a hypothetical transaction between a vendor and purchaser would take into account when determining the price to be paid for the land at the date of acquisition. I further find that the applicant is entitled to compensation pursuant to s 55(f) of the Just Terms Act for the decrease in the value of its other land, which adjoins the acquired land by reason of a loss of airspace in that land. 54 On the basis of a setback of 30 m and adopting the revised contours developed by Collex rather than the RTA the value of lost airspace has been determined by an agreement between surveyors at 1,048,186 m3. Mr Preston, after deferring what he says is the present value of lost airspace comprising 1,048,186 m3, derives a value for the lost airspace of $3,056,603.00 whereas Mr Large adopts the actual figure of $4.75 per m3 to derive a value of $4,978,884.00. The difference is the discount allowed by Mr Preston for deferring the value to allow for the time before the airspace becomes available. 55 The question for the Court to decide is whether or not the agreed rate of $4.75 per m3 should be deferred to the date cells in the land affected would be physically created. Mr Preston believes that a hypothetical prudent purchaser would pay a different price for the subject land as they would for a void that exists today. The rate of $4.75 per m3 is primarily based on the analysis of the sale of a property at Riverstone and the sale of the subject property by Austral to Collex. 56 Mr Preston draws a distinction between two parcels of land one being level without a void and the other with the void already created. On the other hand Mr Large says that the value of the airspace does not need to be deferred, as the element of deferment is inherent in the price paid for the land purchased. He explains it as follows:- A hole to be filled has the space available for filling for the next 10 to 20 years, but the price paid today reflects that deferred nature of the opportunity to fill. For example, a landfill hole is purchased to day for $5 million, which will allow 1 million cubic metres to be filled over the next five years at an average value of $5 per cubic metre. The first 200,000 cubic metres of capacity could be worth $20 per cubic metre and the last cubic metre could be worth only $2 today. The deferment is inherent in the price paid today. 57 He says further that vacant land for the next 10 years could be very useful on the landfill site whereas a void will be very difficult to use. If the land is vacant, soil or overburden can be stored on it. That he regards as an advantage over having a void to be filled. In his oral evidence Mr Large explained further that a void with a 10 year fill life has an airspace available at the top level which cannot be used for 9 years, until fill material reaches that level. The top airspace cannot be used until the bottom airspace is filled. Therefore he says in the same manner cells 9, 10 and 11 will not be available until they are created. I agree with Mr Large as it is consistent with the analysis of the comparable sales relied upon by both valuers, that there is no account of the time before the actual space becomes available or utilized. The amount of $4.75 per m3 is the result of dividing the price paid by the estimated amount of space. 58 Although under the arrangement made with Austral the airspace is to be made available to Collex progressively, the price paid by Collex including an initial payment and subsequent progressive payments reflects the availability of airspace for the purposes of landfill by Collex as and when required over the years. In those circumstances the consideration paid by Collex is for the provision of airspace for the purpose of its business progressively over time. Collex will be in no different position to a purchaser of land, which already contains a void suitable for progressive landfill over a similar period of years. There is no evidence to support a deferral of the value of the airspace based upon present market value. The adopted comparable sales take account of the fact that the whole of the void will not be utilised immediately. I therefore propose to adopt the value of $4,978,884.00 based on comparable sales evidence as the value of the lost airspace calculated at the rate $4.75 per m3 in respect of 1,048,186 m3. 59 The Deed between Collex and Austral deals with the prospect that Austral may not be able to deliver the maximum of 6,800,000 m3 of airspace as required by cl 8.4 or the annual minimum of 250,000 m3 as provided in cl 8.1. as follows:- 8.2 If Austral cannot provide the airspace referred to in clause 8.1, it may provide an equivalent amount of reasonably adjacent Airspace for Landfilling at its other quarries located in proximity to the Land at Plant 2, Vineyard or Plan 3 (as shown on Annexure C) or at another similar location. 8.5 If it becomes apparent to the parties acting reasonably that it will not be possible for Austral to reasonably provide the airspace required under clause 8.4, and the amount of airspace able to be provided is materially less than the required airspace, then …Austral must reimburse to Collex from the Purchase Price paid under the Land Sale Agreement, the amount being $7.2/6.8 multiplied by the number of metres of Airspace not able to be provided. The Purchase Price will be reduced by the amount so reimbursed. 60 Pursuant to clauses 2.9 and 7.1 of the Deed Austral is entitled to payments calculated by reference to the amount of airspace provided (Airspace Creation Payment). 61 The respondent contends that as a consequence of the operation of the agreement with Austral, Collex has not and will not suffer any loss in respect of the reduction in available airspace consequent upon the compulsory acquisition. Effectively therefore the respondent says that if Collex receives compensation in respect of the reduction in airspace it will be compensated for a loss not suffered. The argument of the respondent is summed up in a written submissions as follows:- The implementation of the public purpose (that is, the construction of the M7 Westlink) has the consequence that the land in Lot 9 is not available for excavation and landfilling. However that does not have the necessary consequence of loss to Collex. Clauses 8.2 and 8.5 of the Agreement are matters not connected to or caused by the public purpose for which the land was acquired. It is an aspect of an agreement by which the value of the land is to be privately adjusted in certain circumstances, activated in the present case. 62 The applicant claims that the above submission demonstrates the flaw in the respondent's argument. This is because what has to be determined for the purpose of assessing compensation is the decrease in market value of that part of Lot 9 and the adjoining land that would otherwise be used for the purpose of landfill. At the date of acquisition it was available for future excavation and filling. Any agreement with a third party is not a relevant consideration for the purpose of ascertaining the market value of the land acquired and for which the applicant is entitled to be compensated. 63 The same line of reasoning can be applied as a matter of logic to the argument put on behalf of the respondent that the final landform after filling the residue of the land can be adjusted to accommodate the loss of airspace in Lot 9 and the adjoining land. 64 I agree with the applicant that it is entitled to be compensated for the loss of potential airspace. The compensation can be properly assessed against the value of the airspace as it is reflected in the loss in the market value of the land, including the residue land. 65 I find that the Airspace Creation Payment is not relevant to the assessment of compensation for the purposes of the Just Terms Act. The additional fact that the RTA paid an amount to Austral in respect of the loss of the Airspace Creation Payment is equally irrelevant to the assessment of compensation payable to Collex. Austral is a mere licensee under the Deed and as between it and Collex it has no relevant interest in the land for current purposes. Whatever the consequence may be, as between Collex and Austral, under the terms of the Deed Collex is not precluded from a claim to compensation following the acquisition of part of the land it purchased from Austral. The question of any adjustment of payments made by Collex to Austral is a matter of private agreement and does not fall for determination in these proceedings. The payment of compensation may have consequences inter parties under the Deed but any potential payments trigged by the operation of the Deed do not affect the amount of compensation gauged against the value of the land acquired and the detrimental effect on the value of the residue land. 66 Either way a cost of providing airspace is irrelevant in the assessment of market value. It is a fee for service. If the DCF method is adopted the so-called royalty payment will be incorporated in the calculations. Irrespective of the context it is an irrelevant consideration. Any alleged payment by the RTA to Austral as compensation based on the loss of income for the payment, however it is characterised, is a matter between the authority and Austral and has no bearing on the determination of compensation to which Collex is entitled. No evidentiary basis for finding that Austral had a relevant interest in the land has been established in these proceedings. Betterment 67 The respondent submits that common sense strongly suggests that proximity of land to such a significant new motorway providing convenient integration with the M2, M4 and M5 involves appreciable betterment of at least 7.5%. 68 In support of the claim of betterment, Mr Preston makes a comparison between sales and resales of industrial land at Penrith and similar sales at Prestons and provides an analysis from the Valuer General's Blue Book. The former, he says, suggests a betterment figure in excess of 15% on an annual basis whereas the latter suggest in excess of 11% following the advent of the M7 freeway as an orbital road. He adopts a betterment factor of 10% for the subject land. 69 The respondent refers to precedents in Mir Brothers Unit Construction Ltd v RTA [2004] NSWLEC 612 at [43] and Macarbell Pty Ltd v RTA [2006] NSWLEC 366 at [169] - [172] where a 7% increase was accepted for a betterment factor in like circumstances. Mr Preston has explained that in his opinion there would be a saving in fuel costs by the use of the M7 that facilitates access for the transport of waste from a large part of Western Sydney. 70 I am not persuaded by the applicant's argument that the consequence of the acquisition is the loss of access to Wallgrove Road. It remains the same. I also disagree that the Collex land suffers a relevant detriment as a consequence of the increased exposure to observation following the construction of the freeway. There can be no realistic adverse impact on the approved use for landfill and waste disposal in that context. The after value depends on the maintenance of the parklands zoning and an underlying use consistent with the Rural 1(a) zone, except in relation to the area of 8,000 m3 to the extent already explained. On balance, taking the increased efficiency and convenience of the freeway feeding traffic into the area, I agree with the respondent, that there is a betterment factor that needs to be taken into account. However as the direct access to the land is restricted to Wallgrove Road and accepting Mr Large's criticism that some of the sales relied upon by Mr Preston to demonstrate a difference attributable to the M7 are unreliable, using my own judgement, I would only adopt a minimal betterment factor. However, in the "after" situation following completion of the landfill there can be no measurable betterment arising where, as the Court has found, the zoning remains Rural. Interest 71 The applicant claims a loss of $140,295.00 for interest lost on advance payments made to Austral. I do not fully understand the basis for the claim under the Just Terms Act although the means of calculating the interest is described as being interest on purchase money paid over the previous two years. I agree with the respondent that any cost arising from ownership between the date of purchase and the date of compulsory acquisition is reflected by or absorbed in the market value of the land. 72 However, the best I can understand is that the claim relates to loss of interest on an alleged overpayment to Austral by Collex as part of the consideration for the provision of airspace based on the original estimate made at the time the Deed was executed. The payment is to be regarded either as part of the consideration for the purchase of the land or is an amount payable directly as a consequence of the exercise of rights that Collex might have under the agreement with Austral, if any. There is no conclusive evidence that Collex is entitled to the money or that Austral will not provide the space in an alternative way if it is obliged to do so. I cannot therefore find that there is any justification or evidentiary basis for the claim for interest in the sum of $140,295.00. 73 The claim for interest is disallowed.

Discounted Cash Flow 74 This method of valuation looks to the net proceeds expected to be received from a development in the future in order to determine the amount of compensation payable as a consequence of the loss to the owner of that income: Albany & Ors v The Commonwealth of Australia (1976) 12 ALR 201 at [231] and Boland v Yates (1999) 167 ALR 575 at [284]. 75 In Albany, Jacobs J rejected a discounted cash flow valuation for unoccupied land as not being a suitable method of valuation in those circumstances. However, in respect of land forming part of a quarry where there is an assured right to receive income over an identifiable period Jacobs J concluded that it is a correct approach to use a discounted cash flow analysis. 76 In a comprehensive article ("Investment Decisions: Discounted Cash Flow and Other Valuation Methods in Litigation" published in the Journal of Banking and Finance Law and Practice in March 1991) Steven J Brown recognised discounted cash flow as an appropriate valuation method in litigation on investment decisions. Mr Brown reflected upon the decision of Jacobs J in Albany and made the following observation at page 16:- The difference between the rejection of discounted cash flow analysis for the unoccupied land and its acceptance for the quarry land demonstrates the following matters: · It is important for expert witnesses to rely on verifiable evidence in projecting future cash flows. Discounted cash flow analysis makes explicit items which conventional capitalisation methods subsume as being taken account of in the discount rate. While having the advantage of ensuring that all relevant considerations are analysed, discounted cash flow analysis requires that such considerations which are extrapolated and projected are based upon evidence available to the expert witness as at the date the valuation is to be made. · It is important for expert witnesses to be educated so as to be able logically to put their cases before the courts. · It is important for lawyers to understand the foundations of discounted cash flow analysis to provide courts with sufficient material upon which courts can express a concluded opinion, bearing in mind that judicial decisions on issues of fact, such as methods of valuation, are in the main reflections and sanctioning by courts of established methods of valuation used in practice by accountants, bankers and valuers. 77 The Full Court of the Supreme Court of South Australia quoted the article by Brown in Adelaide City Corporation v City of Port Adelaide Enfield (2001) 115 LGERA 136 at [147] and found the method useful when valuing land to be used either as a quarry or as land to be used for waste disposal, in particular. The Court noted that the discounted cash flow method values the land by valuing the business conducted on the land and that it is, in truth, the value of the land and the profits derived from conducting the business on the land. 78 After noting that land used for waste disposal usually has little intrinsic value the Full Court observed that the value of the land lays in the ability to earn income from the land. There were a number of factors identified that pointed to the utility of the DCF method in the circumstances of that case. They showed there were few risks attached to the operation of the business. It was acknowledged that DCF is a valuation of the business. There were major unexplained discrepancies between the results obtained using the different methods of valuation. This was partly explained by the different identity of the hypothetical purchaser used by the valuers, namely, passive investors and owner operators. The Court found that the latter was more likely to pay a price higher than the former. Ultimately the Court adopted the result of comparing sales and increased the allowance for the costs and risks that an owner operator would apply to the amount assessed by the DCF method and determined the value of the land by having regard to both valuations. 79 The Full Court of the Supreme Court of Tasmania considered using the discounted cash flow (DCF) method to assess the market value of land as at a particular date in Downie v Sorell Council (2005) 141 LGERA 304. The Judge at first instance was not prepared to give effect to the calculations advanced on that basis. The Full Court agreed that the primary judge was entitled to reject the DCF method because a number of assumptions and assessments of probability were not correctly made. 80 Similarly in Ironhill Pty Limited v Transgrid (2004) 139 LGERA 398 McClellan CJ, as he then was, accepted criticism of the utility of an analysis undertaken using a DCF. He was satisfied that the assumptions made by the accountant who gave the evidence about likely selling prices and the appropriate discount rate were inappropriate. His Honour did not reject the use of the method to assist in the determination of compensation payable based upon market value. His rejection of the evidence reiterates the problems associated with a discounted cash flow analysis. 81 Noting that when Spencer v The Commonwealth (1907) 5 CLR 418 was decided it is unlikely that courts would have encountered a DCF method Callinan J nevertheless recognised its possibilities in Boland v Yates at [653] as a method "which looks to", among other things, net proceeds receivable in the future from a development not as yet undertaken. His Honour expressly acknowledged the decision by Jacobs J in Albany. 82 Although Courts have clearly experienced difficulty from time to time in accepting the DCF method due to the unreliability of the assumptions made for the purpose of the analysis, it is nonetheless a method which can be accepted where the special facts and circumstances pertaining to the subject land make it appropriate to do so. 83 The respondent contends that there are two main reasons why the Court should refuse to entertain the DCF valuation methodology in the circumstances of this case: (a) the first is that there is agreement between Mr Preston and Mr Large (about the value of lost airspace, among other things) based on good comparable sales transactions and that agreement makes it unnecessary to move beyond the comparable sales methodology on which it is based;

(b) the second is that there is so much uncertainty associated with the attempted application of the DCF methodology in the circumstances of this case that the methodology could not confidently be relied upon as either a primary valuation method or as a check method. 84 The applicant contends that the Court should accept the DCF method of assessing compensation for the following main reasons: i) The compensation that must be assessed must include the losses that the Company will incur by reason of the acquisition - that is, the compensation is not just for the 'market value' of the land but must also consider the actual losses to be incurred to the business of Collex by the loss of the land. (see Adelaide City & Jacobs J).

ii) The only proper method of calculating that loss is, by such methods as the DCF methodology, on valuing the 'before and after' situation for the Company. This means the likely cash flows and expenses over the life of the air space before the acquisition and then after the acquisition to assess the losses in the future and by discounting those losses to bring them to the present day value. (The DCF approach).

iii) The particular facts of this case makes such an approach one which the Court can accept, being: · A limited life of the business (17 years and 13 years). · Almost guaranteed cash flows. As 60% from this Company and 40% from known external suppliers (on Contract). · Expenses are fairly minimal and predictable. · The provision of the air space is guaranteed as per the agreement with Austral and their need for the extraction of clay to continue their own brickworks business. · Discount rate has been fully explained and deemed to be appropriate by Mr Lonergan. 85 Moreover the applicant emphasises that the respondent has not produced its own assessment based on the DCF method but has confined its case to a criticism of the DCF rate applied by the applicant's expert. Furthermore there is an advantage arising from the absence of either a complicating factor of betterment or discount be applied to the value of the airspace. 86 The principal witnesses relied upon by the applicant are Mr Don Reed and Mr Wayne Lonergan. Mr Lonergan co-opted assistance from an associate, Mr Martin Holt. The respondent relies solely upon the evidence of Mr Preston for its attack on the applicant's DCF analysis. 87 Mr Reed is a qualified geologist and has 31 years experience in the quarry industry and 16 years experience in the landfill industry in Australia and overseas. The methodology adopted by Mr Reed is to calculate the difference between:- (i) the net present value (NPV) of the projected operational cash flow of the landfill operation at Horsley Park assuming that no land had been resumed and that the total airspace originally available could have been landfilled; and (ii) the NPV of the projected operational cash flow of the landfill operation at Horsley Park after resumption (and consequent sterilisation) of part of the Horsley Park airspace, by the RTA, on 28th May 2004. 88 Mr Reed made assumptions in relation to:- · development approval for quarrying and landfill operations; · extraction and landfill scheduling; · handover of quarried airspace by Austral to Collex; · landfill compaction and landfill densities; · types of fill able to be placed in the Horsley Park landfill; · landfill forecasts (tonnes per anum); · tip fees for landfill, before and after EPA levy; · landfill revenue; · operational costs - labour, operating, maintenance and fuel; · administration costs -royalties, provisions, other, premises and general overheads; · fixed costs - depreciation, insurance, rates and taxes etc; · capital expenditure - pre-payment, establishment etc; · discounted cash flows - discount rates; · risk and sensitivity analyses. 89 He adopted a "before tax" discount factor of 12% on the basis of experience with similar valuations over the last five years. However he relies on the opinion of Mr Lonergan in relation to the appropriate discount rate to apply to the "after tax" cash flows. Mr Lonergan adopted a weighted average cost of capital in the range of 8.41% to 8.74% after tax reflecting his opinion of the appropriate discount rate to apply to the landfill operation at Horsley Park. If required to apply a single discount rate Mr Lonergan would choose the mid point of the range after tax namely 8.58%. Mr Reed rounded the discount figures determined by Mr Lonergan to a mid point of 8.6%. 90 In a written joint statement Mr Lonergan and Mr Holt express the opinion that the methodology adopted by Mr Reed is a widely used and accepted valuation methodology and is the appropriate methodology to use in assessing the loss caused by the resumption. Furthermore the DCF approach is the most theoretically sound valuation methodology where reliable financial information about future events is available. The concept of discounting is based upon the principle that the value of the sum of money received in the future is less than the value of the same sum of money if it were to be received today. The difference in value between money receivable today and receivable in the future arises for a number of reasons which include inflation, interest, and risk. 91 According to Messrs Lonergan and Holt the DCF approach comprises the following four steps:- (a) Estimate future cash flows for the forecast period of operations. (b) Discount these cash flows to a present value at a rate of return that considers the relative risk of achieving the cash flows and the time value of money. (c) Estimate the residual value of any assets subsequent to the period of operations. (d) Combine the present value of the residual assets with the projected cash flows operations to indicate the fair market value. 92 They explain that the relative risk of a specific business compared to the investment risk in businesses generally is reflected in the capital asset pricing model (CAPM), as the beta. For example, risk-free assets such as government bonds have a beta of 0, whereas a diversified portfolio of companies has the same risk as the market generally, that is, a beta of 1. More risky companies have higher betas and conversely less risky companies have lower betas. A beta of 1.0 to 1.1 has been adopted by Messrs Lonergan and Holt as appropriate in the circumstances, after considering the betas of companies carrying on comparable or related activities to the Horsley Park operations of Collex, and broadly Austral. Assuming a beta of 1 they have assessed the cost of equity as 11.85% whereas with a beta of 1.1 the cost is 12.45%. These numbers are consistent with the figure of 12% adopted by Mr Reed. 93 Acknowledging that the DCF methodology becomes more challenging if the period over which projections are made is extended beyond five or ten years Mr Holt nevertheless told Dr Griffiths in cross-examination that he was confident of its relevance in the present case where there is a significant degree of consistency about the operations of the business. 94 In his oral evidence Mr Lonergan explained the difference between a discount rate and an internal rate of return. The former is used to calculate the value of an asset as Mr Reed has done whereas the latter is an internal calculation that is specific to an individual company and takes into account not just the inherent cash flows of the business but other internal matters that are company specific. The discount rate is market driven and results in a market value whereas an internal rate of return is an internal calculation which takes account of other factors that the market cannot recognise. 95 Mr Lonergan confirmed that, in his view, Mr Reed appropriately applied the DCF methodology subject to the assumption by Mr Reed that operational cash flows arise at the end of each accounting period. Mr Lonergan's opinion is that the appropriate treatment is to make an assumption that the cash flows arise (on average) at the mid point of each accounting period reflecting the fact that the cash flows occur over the accounting period rather than at the end of each financial year. Mr Lonergan recalculated the net present value of the operational cash flows adopting a pre-tax discount rate of 12% per annum to disclose a loss of $4,887,000.00, which contrasts with the result achieved by Mr Reed of $4,545,000.00. 96 As a matter of both logic and market behaviour Mr Lonergan prefers to use a post tax discount figure for the purposes of a CAPM. He explained to Dr Griffiths in cross-examination that all the market participants, regulators investors and companies work on an after tax basis both as a model and because all the reference data across a spectrum of investment opportunities to calculate a scientific observable number are expressed in after tax terms. If the after tax discount rate is grossed up at the standard rate of tax in order to ascertain the pre tax factor, it will not work in all circumstances and in some circumstances will give a higher value whereas in others it will give a lower value. As indicated earlier operational cash flows have been prepared by Mr Reed on the before tax basis but the preferred approach by Mr Lonergan in the current situation is to determine the net present value of future cash flows on an after tax basis and to "gross-up" the assessed value for tax. He says that the adoption of pre-tax flows and a pre-tax discount rate is likely to produce a lower value. 97 Mr Lonergan and Mr Holt expressed a disclaimer in their joint statement of evidence as follows:- 6. We in no way guarantee the achievability of the budgets or forecasts of future cash flows. Budgets and forecasts are inherently uncertain. They are predictions by management of future events which cannot be assured and are necessarily based on assumptions of future events, many of which are beyond the control of management. Actual results may vary significantly from forecasts and budgets. 7. We have assumed that these budgets and forecasts have been prepared fairly and honestly based on the information available to management at the time and within the practical constraints and limitations of such budgets and forecasts. We have assumed that the budgets and forecasts do not reflect any material bias, either positive or negative. We have no reason to believe that these assumptions are inappropriate. 98 However, Mr Lonergan explained in cross-examination that Mr Reed had adopted the best estimate and that this was an acceptable thing to do in the present case where there is a fairly low risk. In other words what is a prima facie reasonable forecast should be relatively symmetric in the present "fairly low risk" case. Mr Lonergan describes the business of Collex as a low risk business with a bit of moderate risk for pricing. It is basically low risk. Therefore, the type of business implies a beta of less than 1. Accordingly having regard to the landfill operations in particular and to the betas for other companies identified by Mr Lonergan in general he considers a beta of 1.0 to 1.1 is appropriate. He acknowledges that there is a degree of judgement in forming a view as to an appropriate beta. He was not persuaded to alter that judgement notwithstanding an extensive cross-examination. A beta of between 1 and 1.1 in respect of the Collex business at the subject site reflects the relative risk in the investment to the market as a whole and has regard to the risk calculation carried out by Mr Reed, as well as Mr Lonergan's own review of it given his knowledge of market risk in general and the statistical backup from the contemporaneous market. 99 Generally speaking the evidence of Mr Holt corroborates and provides a basis for the evidence of Mr Lonergan. However, in his oral evidence Mr Holt makes some specific observations in respect of a transaction used by Mr Preston. The transaction is the purchase (through a shares acquisition by Collex) of a property at Riverstone for the purpose of a waste facility. Mr Preston developed a rate of return of 21.7% based on an analysis of that transaction. Mr Holt does not agree that such a discount rate, established by reference to an internal rate of return, should be adopted. However if some reliance is to be placed on that sale it is his opinion that it should properly reflect the rate of return implicit in the transaction namely the cash flows that the vendors sold and that Collex as the purchaser acquired. According to Mr Holt the cash flows show a return of 15.7%. Therefore, if any reliance is to be placed on the transaction the market rate of return of 15.7% should be adopted. Further as the transaction took place in 1999, (5 years prior to the resumption) an allowance should be made for movements in the market value of business and equity values in that intervening period. 100 Mr Lonergan estimates that the internal rate of return calculated by Mr Preston in respect of the Riverstone property would be reflected in a beta of 3.2. In colloquial terms he says, "that's off the planet. It is so high as to be clearly and manifestly extremely wrong". 101 When asked in cross-examination, why (given the confined market of potential purchasers for the Riverstone site) the valuer determining a discount rate or internal rate of return for the Riverstone site would not refer to the projection of Collex as the purchaser, thereby reflecting its expected ability to grow the business, Mr Holt said:- I think what you continue to confuse is the transaction that was in the market between the buyer and a seller, were the cash flows that the vendor offered for sale and the cash flows that the purchaser bought. The cash flows that the purchaser subsequently generated are an entirely different matter, those were not the cash flows that were offered to the market in a transaction. So there is no market reference point on those transactions, the only market reference point is what the vendor sold and what the purchaser bought, and that's a long established tradition. (transcript p 41 20/07/06). 102 Mr Reed established the projected loss in earnings as a consequence of a 15% reduction in landfill capacity at the subject site by calculating the variation in the net present value of discounted cash flows prepared for "the before and after case". Using a before tax discount factor of 12% on the basis of industry experience, and after extensive consultation with Mr Lonergan and Mr Holt, he calculated the present value of the variation in earnings as a direct result of the land resumption at $4,544,889.00. After noting adjustment made by Mr Lonergan, Mr Reed expressed the opinion that the derived value of $4,887,000.00 represents the price that an informed and willing but not anxious buyer would have paid at the time of resumption for the loss of 1.02 million m3 of airspace approved for solid waste landfill. He states that the methodology used to determined the net present value of landfill airspace is essentially the same as that applied by his firm in valuing quarry and landfill businesses for a range of clients including state and local government authorities, accounting companies, major banks and some merchant banks. 103 Although Mr Reed relies on five and ten year forecasts for projections to a period beyond ten years, he explains that by the time ten years is reached the impact on the bottom line is much less, so that by the time twenty years is forecast the discount factor basically takes the cash flow out altogether. Unexpected volatility in recurrent costs such as fuel costs do not affect the valuation to any significant extent because the margin for the operation remains constant in the before and after situation. 104 Following an adjustment to the final estimate of the loss of airspace upon receipt of further evidence from the surveyors, Mr Reed adjusted his value of the lost airspace to $4,918,000.00. However, the applicant's DCF claim is based on Mr Lonergan's figure of $4,887,000.00. This amount is confirmed in the final points of claim and final submissions on behalf of the applicant. Notwithstanding the further evidence of Mr Reed that his final calculation is $4,918,000 based on the whole of the evidence made available to him it is appropriate for compensation payable to be assessed against the amount for which the applicant contends relying on the evidence of Mr Lonergan. The further evidence of Mr Reed merely confirms that the amount claimed is justified. I propose to adopt the figure derived from the DCF calculation as $4,887,000.00 105 Primarily Mr Preston believes that the subject land can be valued readily by the comparable sales evidence. In his opinion the DCF methodology is, at best, a possible check method. In his original report Mr Preston criticises a number of specific matters and assumptions that were adopted by Mr Reed for the purpose of his analysis. He does not disagree with the approach taken by Mr Lonergan for the purpose of calculating a discount rate. However, he disagrees with the practical application of that discount rate relevant to comparable sales and in particular the sale of the Riverstone property to Collex. Moreover, he would prefer to look at discount rates applicable to transactions involving private companies owned principally by individuals rather than by developing a rate referable to the activities of public companies. He doubts that the former would adopt the same sophisticated approach as the latter. It is his expectation that the former would offer a price per cubic metre of airspace based on the perception of the market place. 106 Mr Holt recalculated the Riverstone figures by excluding depreciation as a component of the cash flow. The recalculation showed a rate of 21.9%. He makes the distinction between the 15.7% figure representing the market rate of return from the transaction and the figure of 21.9%, which he says is a market rate of return from the business at the site. The greater rate of return used by Mr Preston reflects the fact that Collex already owned the business for which it was going to use the site, and therefore it would not expect to pay a second time for cash flows that it already owned. 107 Mr Holt also pointed out that since the tax rate was set at 30% he had not observed a pre-tax discount figure higher than 15%. Mr Reed commented that 12% has been a figure, (plus or minus a percentage point), used in projects of comparable size in comparable industries for quite some years. Both Mr Reed and Mr Lonergan point to the difficulty in identifying two directly comparable sites in the quarrying and landfill industries as a consequence of the number of variables that apply. Mr Reed says, recognising that difficulty, the industry relies on the DCF analysis. 108 Mr Preston agrees that the DCF method is one of the best methods to value a business. The major issue he raises is in regard to the discount rate. For his analysis he relies primarily on the Riverstone sale. He agrees that the best method of assessing the loss by Collex is to use a before and after method on a discounted cash flow approach combined with a comparable sales approach. He accepts that where a particular owner can achieve a greater return from particular premises the additional return could increase the value to the owner. In the case of the Riverstone sale Mr Preston accepts that if the internal rate of return calculated at 21.9% is an indication of the return expected by Collex by reason of its own advantages and techniques in the waste disposal and landfill business, then, the true internal rate of return would be 15.7%. Special Value 109 On the assumption that the value of the lost airspace is greater than the market value of the acquired land the applicant submits that the difference is "special value" for the purposes of the Just Terms Act. Special value is defined in s 57 as:- The financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person's use of the land. 110 The applicant's argument is difficult to follow in the context of the observation by Mahoney JA in Yates Property Corporation Pty Ltd (In Liquidation) v Darling Harbour Authority (1991) 24 NSWLR 156 at 162 D as follows:- Special value can only arise where, at the time of compulsory acquisition, the owner is actually putting the property to some use for which it is especially well suited. It is a term of art used to describe a characteristic of the expropriated interest which is of economic value to the owner but which would not enhance the market value of the interest and hence would not be included in the "market value" component as the compensation to which the statute entitles the owner following resumption: see discussion in Todd (at 105ff); see, also, Gagetown Lumber Co Ltd v The Queen [1957] SCR 44 at 62; 6 DLR (2d) 657 at 671. 111 The evidence establishes a value for the lost airspace as part of the value of the land for the very purpose for which it would be offered for sale to any purchaser seeking to use if for that highest and best use albeit not active at the date of resumption. The other component is a remainderman's interest, which together with the value of the airspace reflects both elements of the actual value of the land. It is not necessary in my view to introduce a distinct figure to accommodate the concept of special value in this case. Market Value and Injurious Affection 112 Mr Reed asserts that the value derived using DCF represents the price that a willing but not anxious buyer would have paid at the time of the land resumption for the affected airspace approved for the solid waste landfill and accessible for that purpose after end June 2017. Representing, as it does the NPV of the projected operational cash flow in the before and after situation no account is taken of the residual value of the land after landfill is completed. This fact is relevant in respect of the valuation of the acquired land. It has been separately valued as a remainderman's interest and must therefore be added to the value of the lost airspace to determine the just entitlement to compensation. Not only is the airspace of economic value to the dispossessed owner, Collex, it would be included in the general market value component of the acquired land. 113 After giving due consideration to the various criticisms raised by Mr Preston and appreciating the reluctance demonstrated by courts to accept the DCF methodology I nonetheless propose to adopt the overall joint opinions and advice given by the applicant's witnesses in the circumstances of this case where there is a significant degree of consistency about the operation of what is essentially a low risk business. I adopt the DCF method as the primary method of valuation. That approach carries with it the advantage of eliminating the relevance of a number of possible variables and adjustments such as a betterment factor or possible deferral of the price of the airspace as these matters are taken into account by the DCF calculation. The comparable sales analysis provides considerable assistance as a check method to show a result relevantly consistent with the DCF outcome. 114 Taking into account all of the evidence I determine the amount of compensation to which Collex is entitled pursuant to s 54 and s 55 (a) and (f) of the Just Terms Act as follows:- Present value of the land acquired assuming completion of the landfill: $1,997,798.00 Value of lost airspace in Lots 8 and 9: $4,887,000.00 Total: $6,884,798.00

Disturbance 115 The following components of the applicant's claim for loss attributable to disturbance are agreed:- Legal fees (s 59(a)): $ 5,346.50 Valuation fees (s 59(b)): $81,562.10 Financial costs for modification of development consent (s 59(f)): $18,957.00 116 The abovementioned legal fees represent fees paid to independent lawyers. The applicant also claims additional legal costs in the sum of $22,000 being the cost attributed to the services of a solicitor permanently employed by Collex. The respondent disputes this claim. 117 Justice Lloyd examined a wide range of authorities in relation to the question of whether a litigant has incurred actual costs in employing the services of an in-house solicitor in EPA v Taylor Woodrow (No.2) (1997) 97 LGERA 368. In so doing he had the benefit of extensive competing argument regarding the somewhat tentative view I formed in EPA v Alkem Drums Pty Ltd (1996) 93 LGERA 83. It is my present view that the pragmatic conclusions reached by Lloyd J are to be preferred and represent the approach displayed in a sustainable line of authorities. Although Lloyd J was dealing specifically with successful prosecution proceedings brought by the EPA as a public authority, part of whose duties were to bring litigation for the purposes of environment protection, he nevertheless decided to award the EPA its costs as the successful litigant by relying on a wider basis namely that the indemnity principle recognises that a successful party should be reimbursed for actual costs incurred. They include work done by a solicitor who is paid by a salary. I am satisfied therefore that Collex is entitled to recover that part of its legal costs incurred by its employed solicitor. 118 In Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333 the issue was whether the assessment of costs of a salaried employee of the bank necessitated an assessment of what had been the cost to the CBA of the provision of the legal services or whether the bill of costs should be assessed on the basis of a relevant scale. In deciding the latter course was appropriate Davies AJ saw no distinction between the work of independent solicitors and practitioners who carry on their profession as an employee of a corporation. The reasons given by Davies AJ in the course of his reported judgment support the view I have taken. 119 Recognising the consequential complexities that could arise by assessing the actual costs of the litigation to the corporation he nevertheless left that prospect open, although rejecting it in the circumstances of that case. The RTA has not raised that issue. The applicant has produced a schedule supporting the claim for legal costs at an hourly rate of $150 for 170 hours up to 12 November 2004. After allowing for a discount in excess of 20% and GST the claim amounts to $22,000. I propose to accept that as a reasonable sum, given the nature of the case. 120 The applicant also claims stamp duty and costs to be incurred for the acquisition of replacement land to be used for the purposes of landfill. In Blacktown City Council v Fitzpatrick Investments [2001] NSWCA 259 the Court of Appeal affirmed a decision by Lloyd J that "actual use" where that expression is used in s 59(f) of the Just Terms Act included a use of land held by a developer for the purpose of development by way of subdivision and that by reason of the acquisition the developer lost that land and replaced that land by acquiring other developable land to form part of its land bank. However, in Bezzina Developers Pty Ltd v Leichhardt Municipal Council [2006] NSWLEC 175 I was not convinced that the ownership of a single parcel of land for the purpose of carrying out a specific development is analogous to holding tracts of land for the purpose of subdivision and resale. Section 59(f) provides for a loss attributable to disturbance as:- (f) any other financial costs reasonably incurred (or that might reasonably be incurred) relating to the actual use of the land as a direct and natural consequence of the acquisition. 121 The difficulty for the applicant in this case is that only part of its land has been acquired and that it may be some years before an alternative site is acquired, if at all. The applicant is not therefore in a position to provide evidence even in the short term, as to the acquisition of an alternative site. It is submitted that the legal costs and stamp duty associated with the purchase of another site commensurate with the assessed market value should be awarded to the applicant. I reject that submission not only on the basis of a lack of evidence but primarily because I am not satisfied that this is a case where Collex will seek to replace the specific parcel of land earmarked for excavation and fill in the future. Realistically any cost of replacement will be subsumed in whatever cost is involved in a future acquisition for the purpose of continuing the overall business when the landfill operation at Horsley Park is completed many years from now. Any such acquisition in my opinion cannot rationally be said to be as a direct and natural consequence of the acquisition as s 59(d) and s 59(f) require. Costs 122 Collex has been clearly successful in its claim in the sense that it would not have achieved the level of compensation assessed by the Court without resort to the litigation. Notwithstanding that some issues have been resolved in favour of the respondent, the adverse issues have not been a major contributing factor to the overall cost involved in the hearing. Prima facie, I am satisfied that the applicant is entitled to the exercise of the Court's discretion in its favour in relation to a substantial part of its costs incurred in the litigation. However, there have been numerous interlocutory and other hearings where costs have been awarded, reserved or not determined. The parties may wish to develop arguments relating to some aspects of the case about which the Court is not presently fully cognisant. The appropriate order is for costs to be reserved. Orders 123 The parties are directed to bring in appropriate orders within 7 days to reflect the following findings:- 1. Market value of the acquired land and injurious affection to other land: $6,884,798.00 2. Disturbance a. Legal costs (including GST): $27,346.50 b. Valuation Fees: $81,562.10 c. Financial costs: $18,957.00 124 The exhibits may be returned.

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