Coundrelis v Roads and Traffic Authority of New South Wales

Boland v Yates Property Corporation Pty Ltd (1999) 167 ALR 575 Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd (1947) 74 CLR 358 CASES CITED: Cook, Saad, Raguz v Roads and Traffic Authority of New South Wales [2007] NSWLEC 136 Maidment v Roads and Traffic Authority (NSW) (2006) 153 LGERA 249 Roads and Traffic Authority (NSW) v Mosca (2006) 146 LGERA 335 Spencer v Commonwealth (1907) 5 CLR 418

DATES OF HEARING: 14-16/8/07, 3-4/12/07, 17/12/07

APPLICANTS: Mr I J Hemmings and Mr A Hyam, barristers SOLICITORS Peter Bouzanis & Associates LEGAL REPRESENTATIVES: RESPONDENT: Mr R Lancaster, barrister SOLICITORS Henry Davis York

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

PERRY COUNDRELIS AND ANOR v ROADS AND TRAFFIC AUTHORITY OF NSW

JUDGMENT 1 HIS HONOUR: This is a claim by way of objection against the amount of compensation offered by the Roads and Traffic Authority of New South Wales (RTA) to the applicants for the RTA's compulsory acquisition of part of the applicants' land under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act).

2 The applicants were the owners of the whole of Lot III DP 135743 known as 2 Nelson Road, Box Hill, situated on the corner of Windsor Road and Nelson Road. On 9 December 2005 the RTA compulsorily acquired a boomerang shaped part of the applicants' land on that corner for the public purpose of upgrading Windsor Road. Details are as follows:

Acquired Lot 15 DP 1076228 339.3 m2 Retained Lot 5 DP 1076228 16,740.7 m2 Parent Lot 111 DP 135 743 17,080 m2

3 There is an enormous difference between the applicants' claim and the RTA's position as pleaded and supported by their respective valuation experts, as follows: Applicants RTA Market value of acquired land: s 55(a) $68,000 $30,000 Loss attributable to disturbance: s 55(d) $9,000 $ 9,000 Decrease in value of retained land: s 55(f) $2,176,000 NIL__ TOTAL $2,253,000 $39,000

4 The lion's share of the compensation claimed is under s 55(f) of the Just Terms Act for alleged injurious affection caused by RTA road works, including associated drainage works, for the Windsor Road upgrade upon the value of the retained land. The road works are said to have caused or increased flooding to the retained land and eliminated vehicular access off Windsor Road and affected access off Nelson Road. The main issue is flooding. The applicants purchased their land at auction on 3 April 2004, with settlement on 17 May 2004, for $1,720,000. Thus, their claim is that the retained land has decreased in value by about $450,000 more than they paid for their whole land 20 months before the compulsory acquisition date.

5 The parties are polarised as to both the value of the applicants' land at the acquisition date and the effect of the works on the value of the retained land. As at the acquisition date, the applicants and their expert valuer contend that the value of their land was $200/m2, whereas the RTA and its expert valuer contend that it was $85/m2. After the road works, the applicants and their valuer contend that the value of the retained land fell on average to $75/m2 because of flood affection and fell by a further $5/m2 because of loss of access. The RTA and its valuer dispute that the road works caused flood affection and dispute that it caused a fall in value.

6 The applicants' land is low lying land below road level. Employing the co-ordinate system adopted at the hearing, the land is bound on the west by Windsor Road, on the south by Nelson Road and on the north by Lot 112 DP 10157. Part of Lot 112 is located between the applicants' land and the Killarney Chain of Ponds Creek which crosses under Windsor Road. There are, and were at the acquisition date, no structural improvements on or in the immediate vicinity of the acquired land; there was a single level brick veneer dwelling and some detached sheds at the eastern end of the retained land; and there was a dam in about the middle of the retained land.

7 The applicants' land is, and was at the acquisition date, zoned Rural 1(a) under the Baulkham Hills Local Environmental Plan 2005. This zone has a minimum allotment size for subdivision of 40 hectares, although one of the zone objectives is to "ensure that development of land within the zone does not hinder the proper and orderly development of any future urban land". This is in recognition that the land has future urban potential.

8 The Just Terms Act relevantly provides: 55 Relevant matters to be considered in determining amount of compensation

In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division):

(a) the market value of the land on the date of its acquisition, … (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

56 Market value (1) In this Act: market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid): (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and (b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and (c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law. …

9 Section 56(1) is still illuminated by the classic test in Spencer v Commonwealth (1907) 5 CLR 418 at 441 - 442 where Isaacs J said, among other things, that the claimant is to receive money equivalent to the loss he has sustained by deprivation of his land, which (apart from special damage) cannot exceed what a "hypothetical prudent purchaser" would give him. "The basic principle of compensation law is that the land must be valued at the relevant date in its existing condition with all its potentialities as potentialities": Roads and Traffic Authority (NSW) v Mosca (2006) 146 LGERA 335 at [15] per Handley JA (with whom Mason P and Bryson JA agreed). In compulsory acquisition cases, valuation doubts are resolved in favour of a more liberal estimate: Boland v Yates Property Corporation Pty Ltd (1999) 167 ALR 575 at [356] per Callinan J, agreeing with Dixon J in Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd (1947) 74 CLR 358 at 373 - 374. Leading cases and principles relating to compensation law were reviewed in this Court in Cook, Saad, Raguz v Roads and Traffic Authority of New South Wales [2007] NSWLEC 136 (Jagot J) and Maidment v Roads and Traffic Authority (NSW) (2006) 153 LGERA 249 (Biscoe J).

The Flood Issue 10 The applicants' submitted that there has been a decrease in the value of the retained land by reason of the carrying out of the road works because of a change in the retained land's actual flooding characteristics and a change in the knowledge of the hypothetical prudent buyer and seller before and after the road works. In particular:

(a) before commencement of the road works, the retained land was not affected by flooding; or alternatively any flooding did not include overtopping of Windsor Road. After commencement of the road works, the retained land has been affected by flooding, or alternatively by an increase in flooding particularly via culvert MD2 under Nelson Road; (b) before commencement of the road works and at the acquisition date, the knowledge of the hypothetical prudent buyer and seller was that the retained land was flood free; or alternatively that any flood affection did not include flooding by overtopping of Windsor Road. After commencement of the road works, the knowledge of the hypothetical prudent buyer and seller was that the retained land was subject to flooding, or alternatively that it was subject to increased flooding particularly via MD2. 11 The RTA submitted that there has been no decrease in the value of the retained land by reason of the acquisition and carrying out of the road works under s 55(f) because: (a) the flood experts agree that as a result of the road works, the retained land is less affected by the average recurrence interval (ARI) 100 year flood event and that it is now cheaper to carry out works to permit future development; (b) the Court should accept the opinion of the RTA's flood expert that there is a net decrease in water flowing onto the site for all recurrence intervals after the road works; (c) the Court should not accept the applicants' claim that there has been a significant increase in nuisance flooding in minor rainfall events; (d) the Court should accept the evidence of the RTA's planning expert that acquisition and road works have not adversely affected the development potential of the retained land and has had no adverse effect on overall accessibility; (e) the retained land is in a improved position to be developed. 12 A major issue is whether (as the RTA contends and the applicants' dispute) prior to the road works a substantial volume of water would flow across Windsor Road onto the applicants' land in the 100 year ARI storm event, which has a 1 percent probability of being equalled or exceeded in a given year. It is common ground that after the road works any flooding from this source is eliminated. There is also a contest as to flooding before and after the road works from any other source, particularly via culvert MD2. Drainage Systems at Acquisition 13 When the applicants purchased their land in April 2004, and at the compulsory acquisition date, there were three drainage systems onto it:

(a) culvert MD2 under Nelson Road at its intersection with Windsor Road. It comprised two pipes with diameters of 375 mm and 525 mm. The discharge was directed into an open table drain between Windsor Road and the applicants' land from which flows were directed via an open table drain on the eastern side of Windsor Road through culvert MH9 to the Killarney Chain of Ponds Creek, slightly to the north of the applicants' land. If the capacity of the table drain were exceeded, water would flow onto the applicants' land. The RTA's flood expert, Mr Ian Rowbottom, thought MD2 catered for the 1:5 year ARI event. The applicants' flood expert, Mr Drew Bewsher, thought MD2 catered for between 1:5 and 1:20 year ARI; (b) culvert MB1 fed the applicants' dam in about the middle of their land by draining water under Nelson Road at a point about half way along the land's southern boundary; (c) two 450 mm diameter pipes about half way along the northern boundary (from Windsor Road) drained flows from the dam into the creek. It appears that it had potential to backflow in the event of flood in a fairly infrequent ARI event. The Road Works 14 The RTA road works, including associated drainage works, mostly commenced in 2006 and were largely completed by around December 2006. They included: (a) changing culvert MD2 under Nelson Road from two pipes to a bigger box culvert 1800 mm wide x 600 mm high. The new, prominent outlet directly faces the applicants' land and is 5 or 10 metres closer than the old pipes whose outlets were in the road reserve and not prominent; (b) replacement of the Windsor Road open table drain adjacent to the applicants' land with a 675 mm diameter low flow pipe from culvert MD2 to culvert MH9 (opening into the Killarney Chain of Ponds Creek), which has a surcharge pit adjacent to a gate on the retained land; (c) construction of culvert MD3 across Windsor Road roughly 500 metres south of the applicants' land. Its construction commenced in late 2005; (d) widening the eastern side of Windsor Road, raising the level of Windsor Road so as to act as a levy bank in all flood events up to and including the 500 year ARI flood event, and raising the level of Nelson Road.

Effect of Road Works on Flooding 15 Evidence relevant to the question whether the road works caused or increased flooding works was given by one of the applicants, Mr Perry Coundrelis; Mr Warwick Jones who led the team of RTA engineers responsible for the Windsor Road upgrade; flood experts Mr Bewsher for the applicants and Mr Rowbottom for the RTA; and Ms Ingrid Bigger, a civil engineer with Hyder Consulting which was an RTA consultant, who was involved with the production in 2004 of three hydraulic assessment reports of Windsor Road around its boundary with Nelson Road.

Observations as to Flooding before Road Works 16 Before purchasing the land in April 2004 Mr Coundrelis, despite making enquiries, was unaware that it was flood prone. Mr Coundrelis understood that the land was subject to drainage from culvert MB1 into the dam. He thought that there were no flood problems preventing the filling of the entire Windsor Road frontage to a depth of about one metre in order to create a development to service traffic on Windsor Road e.g. a service station and convenience store. As at the date of acquisition in December 2005, a service station and convenience store were prohibited uses in the Rural 1(a) zone under the Baulkham Hills Local Environmental Plan 2005.

17 During the period from 2004 to September 2006 prior to completion of the road works, Mr Coundrelis observed that neither the applicants' land nor the adjoining Lot 112 flooded. He observed that only a small quantity of water reached Nelson Road from the south into culvert MD2. This, to his observation, was due to the following: (a) over a distance of some 500 metres between Nelson Road and culvert MD3 to the south, the vast majority of runoff flowed across Windsor Road from east to west; (b) between culvert MD3 and Nelson Road, a table drain on the eastern side of Windsor Road was virtually non-existent and had no practical capacity, and there were driveway crossings with small pipes which acted to direct runoff across Windsor Road; (b) the small quantity of runoff that did reach Nelson Road at MD2 travelled along the Nelson Road table drain towards culvert MB1 or drained through culvert MD2 and along the Windsor Road table drain to the creek. He never observed water flow from the latter table drain, or the creek, entering the applicants' land. There was an intense one hour storm on 27 February 2006 prior to the road works but the applicants' land did not flood. Observations of Flooding after Road Works 18 On five occasions after commencement of the road works, Mr Coundrelis witnessed the retained land being flooded extensively: on 7 September 2006, 12 February 2007, 9 June 2007, 16 June 2007 and 20 August 2007. Photographs he took of the flooding on 9 June 2007 and 20 August 2007 are in evidence. The flooding on 20 August 2007 was of similar magnitude to the flood on 7 September 2006. On 20 August 2007 the majority of the water discharged from the surcharge pit located adjacent to culvert MH9 and in front of the gate on the north-western corner of the applicants' land. The magnitude of the five rainfall events were of a very minor nature. Storm events of an equal or greater magnitude that he witnessed prior to commencement of the road works did not cause flooding. Rain falling during these five flood events was similar to the rain that fell on 27 February 2006 when there was no flooding. Water broke the banks of the creek during these five flood events but did not do so on 27 February 2006. The flooding was of a transient nature.

19 The evidence of Warwick Jones, the leader of the team of RTA engineers responsible for the upgrade, establishes that on the first of these occasions, on 7 September 2006, culverts MD2 and MD3 were still under construction; the low flow pipe was not in place; the table drain between Windsor Road and the applicants' land had been filled in; longitudinal Windsor Road drainage was not operational; vegetation and landscaping on the southbound carriageway was not in place; a diversion bank north of culvert MD3 which directs water to MD3 was not complete; and culvert MD3 was not fully functional. While those matters may provide an explanation for the flooding or some of it on 7 September 2006, they do not explain the flooding on the later occasions when construction was largely complete. On 7 September 2006 Mr Jones observed water running onto the retained land from where culvert MD2 is located. The depth of the water varied from about 300 mm in the vicinity of the dam to about 50 to 100 mm closer to the corner of Windsor and Nelson Roads.

20 Mr Coundrelis conceded at one point in his cross-examination that from time to time between his purchase and the compulsory acquisition there was pooling of water on his land and photographs of areas proximate to the dam taken in June 2005 (before the road works) show significant pooling. The pooling on that occasion occurred after five continual days of rain. However, Mr Coundrelis maintained, and I accept, that flooding since the road works has been worse. His photographs of post road work flooding provide support.

Hyder Consulting 21 Hyder Consulting was commissioned by the RTA to prepare engineering designs for the widening and upgrading of Windsor Road and associated drainage works. In the first half of 2004 they undertook three hydrologic and hydraulic analyses. Their drainage design was reviewed for the RTA and criticised in some respects by Lyall & Associates Consulting Water Engineers. One of the people involved with production of the Hyder Consulting reports was Ms Ingrid Bigger who gave evidence. She appeared to indicate that in the Hyder modelling Windsor Road, was not overtopped in the 100 year ARI event along the frontage of the applicants' land.

The Flood Experts 22 Evidence was given by flood experts Mr Drew Bewsher for the applicants and Mr Ian Rowbottom for the RTA. 23 Mr Rowbottom employed modelling systems to assess the impacts of the road works on local flooding patterns in the vicinity of the retained land based on the 100 year ARI event, which has a 1 percent probability of being equalled or exceeded in any given year. The 100 year ARI flood event is commonly used in NSW for land use planning in flood prone areas and is consistent with the general requirements in the NSW Government's Floodplain Development Manual (NSW Government, 2005). For the 100 year ARI flood event he concluded that pre-road works, the flow across Windsor Road to the applicants' land was 7.7 m3 per second, and that post road works this was eliminated. Mr Rowbottom also investigated drainage flows and potential inundation of the retained land during minor flood events ranging from 1 to 20 year ARI.

24 Mr Rowbottom's conclusions in his initial report dated 9 March 2007 included the following: 6.2 Flooding of the Subject Land under pre-road upgrade conditions occurs due to:

a) Flows surcharging the embankment of Windsor Road in the section of road between Killarney Chain of Ponds Creek and Nelson Road. b) Flows through culvert MD2 beneath Nelson Road and flow over Nelson Road originating from sub-catchments to the south (i.e. sub-catchments N1 to N5 and NA1). c) Backwater flooding from Killarney Chain of Ponds Creek via the 675 RCP and twin 450 RCP's located beneath Lot 112. d) Shallow sheet flow over Lot 112.

6.3 Under post-road upgrade conditions the following conditions would apply over the Subject Land, in the 100 year ARI design flood event:

a) Flows surcharging the embankment of Windsor Road between Killarney Chain of Ponds Creek and Nelson Road will be eliminated. b) Flow entering the Subject Land from Nelson Road will be reduced due to the diversion of flows from catchments N1 to N5, through culvert MD3, to the western side of Windsor Road. c) Increased backwater flooding over/below Lot 112, as a result of increased flood levels in the main channel of Killarney Chain of Ponds Creek. d) The magnitude and depth of flow over the Subject Land would be reduced.

6.4 For the above reasons, it is considered that the Subject Land will be less flood affected during major flood events (i.e. 100 year ARI flood) under post-road upgrade conditions compared to the pre-road upgrade conditions.

6.5 The model results also show that for the 1, 2, 5 and 20 year ARI design flood events, the peak flow rate entering the Subject Land at Culvert MD2 is reduced following completion of the proposed road and associated drainage works.

6.6 Whilst the Subject Land is likely to be less flood affected during major flood events, under post-road upgrade conditions, the original design may have resulted in the Subject Land being inundated more frequently, albeit at relatively shallow depths, by stormwater discharging from culvert MD2. More frequent flooding may have occurred on the Subject Land, during minor flood events, because the capacity of the proposed 375 RCP was less than the capacity of the existing table drain, which was filled in to enable the widening of Windsor Road. 6.7 A number of alternatives that could be implemented to mitigate the potential impacts on the Subject Land were assessed. The extent of works, for the preferred option, are as follows:

a) The 375 mm diameter low flow pipe, as originally proposed by Hyder Consulting, would need to be replaced with a larger 675 mm diameter pipe. b) The proposed floodgate in Pit D should remain, but would need to be enlarged to suit the 675 mm diameter pipe. c) Pit C should be shifted to a location adjacent to the common boundary between the Subject Land and Lot 112. d) To maintain the existing pattern of low flows along the eastern boundary of the Subject Land, a short length of 675 mm diameter pipe would need to run from Pit C to the edge of the road reserve boundary, where a grated surcharge structure would need to be constructed. The grate level of this pit would need to be set at an elevation of RL 33.7 m AHD. This level matches the right top of bank level of the existing open drain adjacent to the inlet to the existing 675 RCP. The grate of the surcharge structure would need to allow for the free discharge of stormwater and have a minimum perimeter of 5 m at an elevation of RL33.7 m AHD. (It needs to be noted that this minimum length of grate has been calculated based on the height of the concrete endsill described below). e) A concrete endsill would need to be incorporated into the design of the outlet headwall of culvert MD2. The top of the endsill would need to be set at an elevation of RL 33.95 m AHD. Provision of the endsill will increase the available head in the low flow system and reduce the frequency of stormwater discharging onto the Subject Land at the outlet of culvert MD2. The invert of the outlet headwall would need to be graded towards the inlet to the 675 RCP to drain the base of the structure. f) Rock riprap protection should extend a minimum of 4 m around the outlet headwall to reduce the risk of scour. g) A standard RTA SA2 type pit should be constructed in Nelson Road at the end of the proposed kerb and gutter system. A 375 RCP would drain the pit and join culvert MD2 at the inlet to the proposed 675 RCP.

6.8 A set of revised design drawings prepared by Hyder Consulting, which incorporate the above mentioned mitigation measures, are contained in Appendix D. 6.9 It is my opinion that if the RTA implement the design as revised by Hyder Consulting, then the proposed road works will not adversely impact on both local drainage or flooding conditions across the Subject Land, and in fact there is a net benefit in terms of reduced flood impact on the Subject Land as a result of the proposed road works, as described herein. 25 Mr Bewsher in his initial report (Ex Q) described the potential for water to enter the applicants' land in major flood events as follows: 14 In major flood events, there is potential for water to enter the subject site at the following locations:

(a) overtopping of Windsor Road with flood flows travelling in a north-easterly direction; (b) overtopping of Nelson Road at Culvert MD2; (c) spilling of flows from the Killarney Chain of Ponds Creek downstream of Culvert MH9 into the subject property in a generally easterly direction. There may also be potential for flood flows to surcharge Culvert MB1 and flow into the subject site in a generally north westerly direction. 26 Mr Bewsher did not carry out detailed modelling but reviewed Mr Rowbottom's modelling. In his initial report, he agreed with Mr Rowbottom's modelling in relation to the 100 year ARI flood but disagreed in relation to minor flood events, as follows: 17. Subject to the qualifications presented in Paragraphs 18-20 below, I believe the RTA's modelling provides a reasonable approximation of flow behaviour over the site during major events such as the 100 year flood. Given the complex behaviour and the models used, I would anticipate that the flow predictions made by the RTA's consultants were accurate to + 30% and the flood level predictions are within + 0.3 to + 0.5m. Subject to these inaccuracies, the model would still provide, in my opinion, a reasonable basis from which to assess development potential. 18. In smaller events (say those less than a 20 year flood, say the 1 year, 2 year and 5 year ARI events) overtopping of Windsor Road would not occur and the RTAs modelling indicates that the flows coming into the southern part of the site would occur from three sources under "pre" and "post" works scenarios: (a) from culvert MD2; (b) from the Windsor Road table drain adjacent to the site (or the 675mm diameter pipe which is proposed as a replacement for the table drain); (c) overtopping of the fill in Lot 112. 19. In my opinion, it is unlikely that the RTA's modelling correctly predicts the flooding mechanisms (a) or (b) referred to in paragraph 18 above, for the "pre" works scenario. I say this because the old MD2 culvert delivered flows to the Windsor Road table drain and thence to the Creek, and had not been observed to overtop onto the property. 27 Mr Bewsher in this report assessed the capacity of the Windsor Road table drain approaching culvert MD2 as follows: 20. I have also carried out a preliminary hydraulic assessment of the hydraulic capacity of the Windsor Road table drain upstream of culvert MD2 which suggests that " pre" works, a maximum of only about 1m3/sec would reach the upstream side of culvert MD2. Flows in excess of this amount would cross Windsor Road in a westerly direction. In addition, flows arriving at the entrance to MD2 could also flow towards MB1. 21. In Figure 1, I have summarised my assessment of the changes inflows which will occur on the site as a result of the RTA's works. As shown on the figure: (a) flows from MD2 would be increased in minor and major floods. (I use the term "major flood" to indicate floods generally in excess of about a 20 year flood when significant overtopping of Windsor Road occurs); (b) flows overtopping Windsor Road in major floods would be eliminated; and (c) flows from Lot 112 would be increased in major floods and there would be little change in minor floods, or possibly a small increase. 22. In my opinion, in major floods the net flow coming on to the site from all sources will decrease, but will be increased in minor floods. 28 Mr Bewsher's conclusions included the following: 39. In minor floods (such as the 5 year event) when waters would not have overtopped Windsor Road in the "before" situation, the RTA's works will divert more water onto the subject site. In major floods (such as the 100 year event) when significant flows would have been overtopping Windsor Road in the "before" situation, the RTA's works will eliminate such overtopping. Whilst in this situation some additional flows will still be coming onto the subject site from culvert MD2, the net effect of all flow changes will be a reduction in total flows coming onto the site. 40. As the flood behaviour which occurs in the 100 year event is usually one of the primary considerations for the Council when assessing development options on a site, the net reduction in flows coming onto the subject site in this event will likely lead to some reduction in the cost of developing the site to overcome its flood problems (assuming the full extent of the flood problem was known to the Council and the developer). 41. In summary, having regard only to flooding issues, there appears to be a net detriment to the site in minor floods and a net benefit to the site in major floods. 29 In a joint report, the flood experts agreed the accuracy of Mr Rowbottom's models as follows: Accuracy of RTA's Hydrologic Model 24. The experts agree that the hydrological model is likely to be accurate to within + 30%. The experts also agree that the order of accuracy is consistent with best practice.

Accuracy of RTA's Hydraulic Model 25. In relation to the accuracy of the hydraulic model, the experts hold slightly different views. Mr Rowbottom believes flood levels are accurate to + 0.3m whilst Mr Bewsher believes the accuracy is + 0.3m to + 0.5m. However, the difference between these accuracy estimates may not be significant for the purposes of the current proceedings.

30 Importantly, in the same joint report the flood experts agreed that it would now be cheaper to develop the retained land because the road works have reduced the 100 year ARI flow coming onto it: 26. The experts agree that the cost of works necessary to allow development of the Subject Property would be reduced in the "after" scenario compared to the "before" as the total 100 year ARI flow coming onto the Subject Property would be reduced. 27. The experts disagree on the magnitude of flows at culvert MD2 in both the "before" and "after" scenarios. However, they agree that the differences do not change the agreement expressed in Paragraph 26. 28. Further the experts agree that, from a flooding perspective, the development potential of the Subject Property is largely governed by the flood constraints imposed by the 100 year ARI event. 31 The applicants conceded that this evidence, if accepted, does considerable damage to their case. 32 However, they submitted that I should not accept it because it assumed, rather than established, overtopping of Windsor Road pre-road works in the 100 year ARI event and that I should not be satisfied on the evidence that was so. I do not accept the submission. The experts were not merely expressing an assumption. They were expressing their opinions or conclusions. Indeed, earlier Mr Bewsher in his initial report said that flood waters would overtop Windsor Road onto the applicants' land in major flood events, which he defined as being in excess of about a 20 year ARI flood: see [25] and [27] above. In cross-examination he said that the most likely situation was that in a 100 year ARI flood, water would have overtopped Windsor Road before the road works and he agreed with Mr Rowbottom's estimate that the magnitude of such water would have been between 300 and 500 millimetres crossing the whole of the Windsor Road frontage. Moreover, Mr Bewsher in his initial report also said that the net effect after the road works will be a reduction in total flows coming onto the site: see [28] above. There was no contrary evidence called by the applicants (which may have required leave of the Court given that the experts had reached agreement in a joint report).

33 I accept Mr Rowbottom's estimate that the pre-road works overtopping of Windsor Road was in the order of 7.7 m3 per second, the opinion of both flood experts that overtopping of Windsor Road has been eliminated by the road works, and their joint opinions.

34 A point of debate between the flood experts concerned what happened at culvert MD2. Pre-road works, Mr Rowbottom estimated in his initial report that the maximum flow approaching MD2 was 3.0 m3 per second in each of the 20 and 100 year ARI events. In oral evidence, Mr Rowbottom explained that when it became greater than this it flowed across Windsor Road to the west and so had no effect on the applicants' land. Post road works, Mr Rowbottom's estimate was that those flows to culvert MD2 decreased to 1.7 m3 per second for the 20 year ARI event and 2.3 m3 per second for the 100 year ARI event. Although Mr Bewsher in most other respects accepted Mr Rowbottom's modelling, in relation to these flows to MD2 he controverted the pre roadwork modelling and said that instead of flows reducing after road works in the 20 and 100 year ARI events they would increase. His reason, essentially, was that he made a visual observation of the Windsor Road road works table drain approaching MD2 from the south and concluded that it could not have carried more than 1.5 m3 per second. So, he concluded, Mr Rowbottom's estimate of 3.0 m3 per second must be wrong. However, he accepted Mr Rowbottom's post road upgrade estimates. He thereby reached the conclusion that there was a slight increase in the 20 year ARI event and a more significant increase in the 100 year ARI event. Although Mr Bewsher's analysis would allow a significant increase in volume in the 100 year ARI event at MD2 post road works, nevertheless his overall opinion remains that there is a reduction in 100 year ARI flooding because the road works eliminated the very much larger volume of water that would cross the length of Windsor Road fronting the applicants' land.

35 As for flooding in minor events at MD2, Mr Rowbottom's modelling for the 1, 2 and 5 year ARI events showed reduction of peak flows pre and post road works from, respectively, 1.1 to 0.4, 1.7 to 0.7, and 2.8 to 1.1 m3 per second.

36 The applicants sought to cast doubt on Mr Rowbottom's modelling by arguments that included the following. The engineer's science is an inaccurate one and is subject to uncertainties; Mr Bewsher did not carry out modelling but relied on Mr Rowbottom's modelling; Mr Rowbottom's modelling estimated overtopping of Windsor Road by 7.7 m3 per second but estimates in earlier reports by him and others were lower and one report by another estimated nil; it is unclear why the modelling results changed; the results were affected by different survey data and models; a modeller might have "tweaked" the input to produce a result more in line with that expected; modelling is not a precise tool; the hydraulic model result is agreed to be accurate only within a certain range; Ms Bigger thought there was no overtopping.

37 Generally, the seeds of doubt sought to be sown by the applicants' submissions in respect of Mr Rowbottom's modelling have not germinated in my mind except in relation to flooding via MD2. That is because I accept Mr Bewsher's analysis of the capacity for the table drain south of MD2 pre-road works based on his visual observations and Mr Coundrelis' observations that nuisance flooding has occurred after the road works and his observations pre-road works. I am prepared to accept that the post-road works flooding he observed was due to the road works. I prefer these observations over Mr Rowbottom's modelling in relation to MD2 to the extent that they are inconsistent.

38 In a further joint report (Ex R) the flood experts answered the question whether there has been increased nuisance flooding (in up to about the five year ARI event) as follows: (a) Mr Rowbottom first visited the site on 8 September 2006 and Mr Bewsher first visited it on 24 August 2006. (b) Photographic information has been provided by Mr Coundrelis that indicates nuisance flooding on parts of the property. (c) Mr Rowbottom cannot say that this is worse or more frequent than would have occurred prior to road works. (d) Mr Bewsher believes it is quite likely that there has been an increase in nuisance flooding. He bases this on: (i) Mr Bewsher's analysis of the drainage system discussed in his March 2007 report. (ii) The rainfall information and the evidence of Mr Coundrelis. (e) Mr Rowbottom believes that his modelling indicates there is no increase in nuisance flooding except for backwater flow up the two 450mm diameter pipes under Lot 112. However the modelling shows there is a net decrease in flow coming onto the site for all recurrence intervals, post road works.

39 In my opinion, there has been an increase in nuisance flooding by reason of the road works. I agree with Mr Bewsher for the reasons that he gave. The observations of Mr Coundrelis that there has been such an increase are telling. It is unnecessary to go further but I note that anecdotal evidence he obtained from neighbours of absence of flooding before the road works provides further support even after making due allowance (as submitted by the RTA) that they may not always have been present during storms or may not have had particular reason to recall flooding. 40 Mr Bewsher, like Mr Coundrelis, said and I accept, that in more frequent, less serious rainfall events there is, post road works, increased ponding on the retained land. Mr Bewsher attributed this to the road works. Mr Rowbottom expressed the opinion that the likely cause was not the road works but a development that took place on the other side of Nelson Road, on Lot 30, involving a large impervious asphalted area and a large shed. He considered that water from Lot 30 previously would have been largely dissipated but now largely goes towards culvert MB1 which drains to the dam. Although the flood experts agreed that the development of Lot 30 has resulted in increased runoff to the retained land to culvert MB1, I do not accept Mr Rowbottom's opinion. The development on the other side of Nelson Road was carried out in 2003. It does not explain Mr Coundrelis' observations, which I accept, that nuisance flooding increased after the road works and that in the period 2004 to 2006, prior to the road works, there was no flooding from culvert MB1. Mr Rowbottom considered that photographs taken by Mr Coundrelis on 20 August 2007 show water backing up from the dam onto the low lying portion of the retained land. Mr Bewsher disagreed and considered that it came from the MH9 surcharge pit. I believe Mr Coundrelis who testified that, to his observation, it came from the surcharge pit. 41 Since August 2007 extensive work had been undertaken in the vicinity of culvert MH9 and as a result it is less likely to surcharge. That was the evidence of Mr Warwick Jones, the leader of the team of engineers responsible on behalf of the RTA for the Windsor Road upgrade, which I accept. Therefore, to the extent surcharging from MH9 may be the source of flooding of the applicants' land post road works, that affection should be less, but to what extent is unclear.

Planning History 42 The planning history is relevant to the industrial development potential of the applicants' land. The applicants' land was in the "North-West Sector" identified in the NSW government's Sydney Region Outline Plan 1968 as "Future Urban (in principle)". That sector was divided into two development areas - Castle Hill and Rouse Hill-Maralya. The Sydney Regional Environmental Plan No. 19 - Rouse Hill Development Area included the applicants' land in the Rouse Hill Development Area which had been selected as an area to accommodate part of the long-term growth of the Sydney Region. The Structure Plan, which formed part of SREP No. 19, designated the applicants' land Living Area. Land Releases in the Rouse Hill Development Area commenced in 1989 but, so far, have not included the applicants' land. In 2004 the NSW government commenced preparation of a new Metropolitan Strategy for the Greater Metropolitan Region.

43 Significantly, on 9 December 2004 the government announced its plan for the release of land in the North-West and South-West sectors to accommodate a significant portion of Sydney's population growth over the next 30 years. The applicants' land was within the boundary of the Growth Centre and was within the Box Hill Industrial Precinct. The majority of the land within that precinct, including the applicants' land, was designated as Employment Lands.

44 In June 2005 the NSW Government released detailed plans for the North-West and South-West Growth Centres, which were placed on exhibition for several months. The applicants' land was included in the Box Hill Industrial Precinct shown on the North-West Precinct Plan. The Draft Structure Plan exhibited for the Box Hill Industrial Precinct indicated that the land within that precinct was designated as "industrial land" and stated that "the Structure Plan expands the existing Annangrove Industrial Estate. Two small centres will provide a public transport stop and other amenities for workers. This industrial area is sited to take advantage of its access to Windsor Road" (p 34).

45 A new Land Release State Environmental Planning Policy (SEPP) was described in the exhibited overview report "Managing Sydney's Growth Centres" as one of the key planning instruments. The applicants' land was identified on the Draft SEPP map as "future urban". The report stated that the SEPP would, among other things, designate all land in the growth centres into one of four areas - Future Urban, Future Industrial, Landscape and Rural Lifestyle, and Urban. The Box Hill Industrial Precinct, in which the applicants' land is located, was not identified for immediate release. Nevertheless, the understanding of the applicants' town planning expert Mr McKenzie, which I accept, was that the council's strategic planning role was aimed at ensuring there would be sufficient employment lands available for development. The overview report stated that: The growth centres cannot be released for development all at once and will be developed over a 25 - 30 year period. Accordingly, each Growth Centre has been divided into a number of precincts so that their release can be appropriately staged.

By 2007/08 the Growth Centres Commission will identify the next release areas to maintain steady land supply. It is expected that the next release areas could be rezoned and ready for development by 2009/10.

The Planning Experts 46 In the initial joint report of the parties' town planning experts, Mr G McKenzie for the applicant and Mr H M Sanders for the RTA, they summarised their conclusions as follows: Had a purchaser sought our advice in relation to the development potential of Lot 15 as at the date of acquisition, we would have advised that:

(i) Lot 15 was zoned Rural 1(a) under Baulkham Hills Local Environmental Plan 2005 with recognition that the land had future urban potential; (ii) Lot 15 was within the Box Hill Industrial Precinct in the NW Growth Centre first announced in December 2004 and exhibited in June 2005, however, it was not within a Precinct identified for immediate release; (iii) Lot 15 was designated for industrial purposes in the Draft Structure Plan exhibited in June 2005 for the NW Growth Centre; (iv) according to the June 2005 exhibition material, the next Precincts for release were expected to be identified in 2007/08. Those areas could be ready for development in 2009/10 (following precinct planning). These timeframes could be extended by up to 1-2 years; in Mr McKenzie's view if development pressure emerged the process could be expedited; (v) on this basis, if the Box Hill Industrial Precinct were to be identified for release in the next round, it could be released in 2008/09 and it could be ready for development in 2010/11. Otherwise its release may be timed to meet the supply of industrial land for employment purposes commensurate with the release of land for residential development and be subject to the availability of services; in Mr Sanders' view in such circumstances it would be uncertain when the land would be released over the overall timeframe of the program. (vi) in accordance with the June 2005 exhibition, once land is released a precinct plan is required to be prepared before development can occur. (vii) No development contribution charges were provided for development of industrial land. (viii) Lot 15 was not affected by the Landscape and Rural Lifestyle Zone proposed as part of the draft Structure Plans for the NW (and SW) Growth Centre in the June 2005 Exhibition which was abandoned in November 2005 following an announcement by the Minister for Planning. (ix) new land release constraint maps released in November 2005 indicated that Lot 15 was unaffected by constraints. Part of Lot 5 (the residual lot) was identified as being subject to flooding. Mr McKenzie has sought further information on this matter as it may not impact on development potential as is inferred. In Mr Sanders' view, the acquisition of Lot 15 would not change the extent to which the residue land was affected by such a constraint. (x) the release of detailed maps referred to in the November 2005 announcement had not occurred by the date of acquisition of Lot 15 on 9 December 2005. 47 The planners also said in this joint report that had a hypothetical prudent purchaser made enquiries of them to identify the development potential of the acquired land as at the acquisition date, they would have advised that part of the retained land was identified as being subject to flooding.

48 The planners agreed that, as at the acquisition date, industrial use of the applicants' land was not possible and it had potential for industrial use as part of the future Box Hill Industrial Precinct, but that potential would not be able to be realised for some time.

49 I accept the evidence of the planners to which I have referred.

Knowledge of Prudent Buyer and Seller 50 There was a contest as to the flood knowledge of the hypothetical prudent buyer and seller before the road works and as at the acquisition date. The applicants submitted that at that time the prudent buyer and seller would be unaware that the land was flood affected or, alternatively, would believe that it was less flood affected than it was after the road works.

51 Expert evidence was called as to the level of flood advice that the hypothetical prudent purchaser would have obtained as at the acquisition date. In this case, the views of the hypothetical buyer and seller may be better ascertained through the comparable sales. The valuation experts have agreed on the four best comparable sales to determine values at the acquisition date - and, indeed, on the single most useful comparable sale, which (unusually) is the sale of the applicants' own land. As Jagot J said in Cook, Saad, Raguz v Roads and Traffic Authority of New South Wales [2007] NSWLEC 136 at [12] - [13]: The views of the hypothetical buyer and seller about the development potential of the land are relevant ( E J Cooper & Son Pty Limited v Baulkham Hills Shire Council (2003) 131 LGERA 226 at [9], referred to as "the correct approach " in Minister Administering the Environmental Planning and Assessment Act 1979 v Bautovich (2005) 142 LGERA 331 at [20] per Handley JA, Tobias JA and Brownie AJA agreeing. See also De Ieso v Commissioner of Highways (1981) 27 SASR 248 at 252. Whether the hypothetical parties to the transaction would have obtained expert advice is a question of fact. If they would have obtained such advice, then the expert opinions are relevant "through the judgment of the hypothetical buyer and seller" ( De Ieso at 252).

In this case, I consider that the views of the hypothetical buyer and seller about the development potential of the properties are best ascertained through the comparable sales. Accordingly, I deal with the relevant aspects of the planning evidence in the context of the comparable sales. 52 Be that as it may, I will address the evidence concerning the flood knowledge of the hypothetical prudent buyer and seller.

53 When the applicants purchased their land in April 2004 they did not know, I accept, that it was flood affected. The contract of sale included a certificate under s 149(2) and (5) of the Environmental Planning and Assessment Act 1979, which was silent as to flood affection. A 1988 report by the Department of Water Resources entitled "Vineyard and Rouse Hill Flood Study Report" had as its purpose to delineate floodways and included the applicants' land within its area of investigation. The floodway limits shown in the plans at the rear of the report do not show the applicants' land as being within a floodway.

54 The relevant date, however, is the date of compulsory acquisition in December 2005 and prior to the road works. By then the following flood information was available to the prudent buyer and seller: (a) a draft Department of Planning map, entitled " Draft Sydney Region Growth Centres Development Control Map - North West Growth Centre " which showed the applicants' retained land to be partially nominated as " Flood prone and major creeks land " from the direction of Lot 112 and the creek. A note on the map indicated that it was based on information provided by local councils and State authorities and was an estimate. A copy of this map was obtained by Mr Coundrelis in October 2005. This map was on public exhibition after the acquisition date, from January to March 2006; (b) from 3 November 2005 a second version of that map was available on the Department of Planning's website which nominated part of the applicants' retained land as " Preserve flood prone land and important creeks ". 55 The planning experts stated in a joint report, and I accept, that they would have advised a hypothetical prudent purchaser who inquired of them to identify the development potential of the land, that new land release constraint maps released in November 2005 indicated that part of the retained land was subject to flooding. 56 The flood experts agreed that advice to a prospective purchaser at the acquisition date might be given in stages, with each consecutive stage providing more detailed advice if the circumstances required it: (a) Stage A advice comprised initial advice without a site visit or calculations. No specific advice would have been given as to whether the land was flood prone or not. Rather, the purchaser would have been advised to refer to information that might have been available from the council or other authorities. The flood experts disagreed as to what would have happened after Stage A. Mr Bewsher considered no further advice would have been sought from a flood expert, and said that was his experience. Mr Rowbottom believed further advice would have been sought. (b) Stage B advice extended to a site visit and, possibly, preliminary calculations. Both experts agreed that if advice proceeded to Stage B, following site inspection, the prospective purchaser would have been advised that the site may have been flood prone. Mr Rowbottom believed prospective purchasers would have requested additional information as to the likely severity of flooding. Therefore, in addition to the Stage B site visit, Mr Rowbottom would have advised, based on preliminary hydrologic and hydraulic calculations (i.e. the probabilistic rational method outlined in the publication " Australian Rainfall and Runoff" ) that this section of Windsor Road was likely to overtop during events greater than the 20 year ARI flood. That information could be provided at a reasonable cost without the need for detailed survey or computer modelling. (c) Stage C advice required computer modelling. Mr Bewsher considered that a prospective purchaser would only be seeking advice after Stage B if the property market and the local council were aware of the flood prone nature of the site and the difficulties that might be faced in developing it. Mr Rowbottom considered that given the low lying nature of the property and its location downstream from a sag point in Windsor Road, preliminary calculations would have been required at the date of acquisition and these would have been sufficient to advise a prospective purchaser as to likely flood affection. Following acquisition, a computer model would be required to more accurately define flood behaviour to support any future development application. However, neither flood expert suggested that a buyer would go to the expensive stage C advice before buying the property.

57 In cross-examination, Mr Rowbottom indicated that the cost of stage B advice would be about $5,000 and that if the purchaser, without proceeding to stage C, wanted an estimate of the "depth of water flowing across the property", some computer modelling would be required and the cost would be of the order of an additional $10,000. I do not understand that additional cost to relate merely to his additional advice identified in his written report as supplemental to stage B advice which he said could be provided without the expense of computer modelling.

58 The applicants submitted that the prudent purchaser would only have obtained stage A advice and, consequently, would have attempted to consider relevant publicly available documents, speak with persons with local knowledge and council officers and observe the absence of flood warning signs and depth markers. The applicants submitted that that purchaser would conclude that the land was not subject to inundation by the 100 year ARI storm event or, at least was not flooded by water overtopping Windsor Road. The submission at a later point was that the applicants' land was not subject to any flooding. The applicants submitted that the prudent buyer armed with stage B advice that there was a risk but with no information as to the risk, would not buy the land; and would only buy if they obtained Mr Rowbottom's further advice (prior to stage C advice) which they would not do because it was too expensive as it would cost of the order of another $10,000 after the initial $5,000 for the stage A advice. I observe that this fails to distinguish between the additional non-computer advice supplemental to stage B advice, which Mr Rowbottom said in his written report could be provided at a reasonable cost, and the further computer modelling advice on which he was cross-examined, which he indicated would cost of the order of $10,000.

59 Matters relevant to the level of inquiry appropriate to be attributed to the prudent buyer in this market include the following. First, the hypothetical buyer who would have been in the market for the applicants' land was unlikely to be an institutional market investor. Secondly, the cost of the inquiry relative to the expected purchase price range. Thirdly, apparent objective features of the land suggesting that flood inquiry may be prudent: it was low-lying; there were a number of significant drains or pipes around the boundary; and there was a dam which must have been fed from somewhere. If inquiry revealed a flood problem, that was likely to drive the price down.

60 In my opinion, having regard to all the circumstances, the prudent buyer in this market probably would have proceeded to obtain stage B advice that the land may be flood prone and the additional advice based on preliminary calculations (without computer modelling) identified by Mr Rowbottom: see [56] above.

Access 61 The planning experts addressed the access issue in a joint report. Before the road works, physical and statutory potential existed for vehicular access off Windsor Road to the applicants' land under uses permitted within the Rural 1(a) zone. Due to the road works, physical and statutory potential access off Windsor Road has been eliminated and the frontage to Windsor Road has been reduced to approximately 66 metres. A gate is located on the north-western corner of the Windsor Road boundary although there is no evidence that it was used for vehicular access. The current access is off Nelson Road reflecting the current use which is primarily for a residence at the far end of the land from Windsor Road. Except for that circumstance, I do not think that before the road works access would have necessarily been more convenient off Nelson Road than Windsor Road.

62 The view of Mr Hilton Deane, the applicants' valuer, which I accept, is that a service station is now far less appealing on the retained land as a result of lesser frontage, lesser exposure and difficult access off Windsor Road; however there is still the opportunity for light industrial use albeit with those same limitations. Mr Deane and Mr McKenzie considered, and I accept, that the new large box culvert MD2 facing directly across the retained land may also dissuade some prospective purchasers because of potential drainage issues.

63 Clause 52 of the Baulkham Hills Local Environmental Plan 2005 deals with development and vehicular access where land adjoins a classified road in Rural 1(a), (b) or (c) zones. Clause 52(2) provides that consent must not be granted to the carrying out of development for a range of purposes (including service stations) unless the consent authority has given consideration to a number of specified matters including the availability of access from a road that is not a classified road. The retained land has access from Nelson Road which is not a classified road. Mr Sanders expressed the view that it would be imprudent to suggest to a purchaser of the applicants' land that it could assume to get consent to vehicular access off Windsor Road after an industrial rezoning. Nevertheless, potential existed.

64 If, as anticipated, there will be release of the applicants' land at some time in the future for industrial purposes, the road works will prevent physical access off Windsor Road. However, assuming that that the local environmental plan in its current incarnation still then applies, access off Windsor Road for such uses would be restricted. Clause 51 applies to land within a range of zones including 4(b) (light industry) and 10(a) (employment) and relevantly provides: (2) A person must not carry out development on land to which this clause applies, being land that adjoins a classified road, unless vehicular access to and from the land is made by way of another road (not being a classified road). (3) However, if subclause (2) is the only requirement that prevents the development from being able to be carried out, consent may be granted to allow that development even though it will require permanent vehicular access to and from a classified road, but only if, in the opinion of the consent authority, alternative access to the site of the proposed development is neither practical nor able to be provided by another road (or by a proposed road identified in a development control plan). 65 Clause 51(3) suggests that the consent authority may well require vehicular access for such a development to be from Nelson Road. On the other hand, cl 53 provides an exception for vehicular access for businesses that, in effect, rely upon classified road frontages. For example, it permits a convenience store, service station and shops in the 3(a) zone.

66 The uncertainty generated by the local environmental plan concerning permitted access off Windsor Road should be factored into any valuation for the loss of access. However, in my opinion, it does not set the loss at nought under the Just Terms Act.

67 Road works on Nelson Road included a median strip from the intersection with Windsor Road, some double lines for a relatively short distance thereafter and some elevation in the road level near that intersection. However, the median strip only extends for 44 metres out of a total Nelson Road frontage of 230 metres and the median strip and other road works do not affect the two existing vehicular access points off Nelson Road much further to the east. The installation of traffic lights at the intersection of Windsor and Nelson Roads has improved vehicular access to the retained land in the sense that it has facilitated a right hand turn at the intersection. The impediment to access off Nelson Road due to the road works is relatively minor given that most of the Nelson Road frontage is unaffected, including the existing access points.

VALUATION 68 The valuation experts, Mr Hilton Deane for the applicants and Mr Peter Dempsey for the RTA, produced three joint reports. Their areas of agreement and disagreement were expressed in their final joint report as follows: AREAS OF AGREEMENT 1. In the "before" and "after" scenarios based on the Rural 1(a) Zone and prior to any works associated with the public purpose relating to the acquisition, there existed physical and statutory potential for access to be obtained off Windsor Road. 2. The short term industrial use of the lands was not possible. The only certain use was that permitted under the Rural 1(a) zoning. There existed future potential for industrial use but that potential would not be able to be realised for some time. 3. The subject property was included in the future Box Hill Industrial Precinct and as such it should be valued accordingly.

AREAS OF DISAGREEMENT 4. The significance of the potential for access from Windsor Road and the extent to which such potential adds value. 5. To formalise such access a development application to provide access for a use permitted under the Rural 1(a) zoning would be required. 6. In the "before" and "after" scenarios assuming the land was ultimately rezoned for urban purposes including industrial purposes, access would be denied off Windsor Road. 69 Their valuation methodology was direct comparison to relevant sales evidence. I share their opinion that the following are the four best comparable sales and that the most useful (and unusual) is the sale of the applicants' own land to the applicants in April 2004:

Address Sale Date Land m2 Unadjusted $/m2 Deane Land Value $/m2 Dempsey Land Value $/m2 Deane Dec-05 $/m2 Dempsey Dec-05 $/m2 2 Nelson Rd Apr-04 17,080 101 94 88 200 85 6 Nelson Rd Feb-05 15,500 123 110 105 125 101 8 Nelson Rd Jan-05 19,830 118.5 103 98 120 95 27 Box Rd Nov-05 12,730 92 97 92 100 92

70 The table summarises the valuers' opinions of values as at their respective sale dates and as at the compulsory acquisition date in December 2005. These properties are all zoned Rural 1(a) and are in the future Box Hill Industrial Precinct. Numbers 6 and 8 Nelson Road are the applicants' near neighbours. 71 Six other comparable sales were referred to by Mr Deane but I have found them relatively unhelpful. Four concerned land in Annangrove Road, not far away, released as industrial land and therefore obviously realising higher values than land which only had that potential. Mr Deane assessed their value variously at between $270 and $320/m2 as at the acquisition date. Mr Deane argued that the Annangrove Road sales were relevant because they showed that there was demand and what the market was for industrial land. I accept that they have that limited relevance. One of the Annangrove Road comparable sites is separated from Windsor Road by a narrow strip. The RTA submitted that it is therefore comparable to a corner site, yet Mr Deane did not attribute to it a higher value than the other Annangrove Road comparables further away from Windsor Road. Therefore, the RTA submitted, this disproves Mr Deane's theory that the corner Windsor Road location of the applicants' land accounted for its much greater value compared with 6 and 8 Nelson Road. Mr Deane countered this proposition by referring to the steepness of the access of that Annangrove Road property resulting in the loss of part of the site. Having regard to the site specific considerations, I do not accept the RTA's submission. The remaining two comparables are in a different future release area on Windsor Road but in an unusual location close to a big development, the Rouse Hill Regional Centre. Mr Deane assessed their value at $220/m2 as at the acquisition date. I think their location is too different for them to be of significant assistance relative to the comparable sales in the above table.

72 The sale prices of the applicants' land and of 6 and 8 Nelson Road should be taken as reflecting their future industrial potential at the time of sale. The sale price for 27 Box Road is less reliable because there were unusual issues that were likely to have depressed its sale price: the owner had died in the house; he had been divorced for some years but his will had left nothing to his subsequent partner; and the trustees, his children, lived in London. A lower figure than the reserve price was accepted at auction due to the extenuating circumstances. It is also further away from the applicants' land and the other comparables, in a side street in a location that may be described as significantly inferior for land with future industrial potential.

73 Mr Dempsey's adjustments from the sale dates of comparable sales to the acquisition date in December 2005 were for time and were based on Residex data. His time adjustment for the applicants' land was actually to $80 but he adjusted this further to $85 in order, he said, to resolve any doubts in favour of the dispossessed owners. According to Mr Dempsey, having regard to this data, there was a decline in the market subsequent to the applicants' purchase up to and beyond the acquisition date, which is reflected in the comparable sales. Mr Deane disagreed that the relevant market had fallen and disagreed with Mr Dempsey's reliance on the Residex data because it is based upon residential markets and does not reflect potential industrial use of land. In Mr Deane's opinion, the market was increasing for the latter type of land based upon a variety of published statistics relating to industrial land. In reply, Mr Dempsey said that he thought those statistics were inappropriate because they applied to industrial land whereas the applicants' land only had future employment potential and that potential was reflected in the sales. None of the statistical data relied on by either expert is applicable to rural land with industrial potential. Therefore none of it should be automatically applied. Nevertheless, the industrial property data relied on by Mr Deane is, in my view, more useful than purely residential data as some indication of the relevant trend.

74 Mr Deane's valuation assessments doubled the value of the applicants' land between the time of its purchase in April 2004 and the acquisition date in December 2005. He attributed this increase to the government announcement in December 2004, its Windsor Road location, time and removal of uncertainty about other issues such as the opening of the M7 motorway in 2005. He considered that the December 2004 announcement was the chief reason why the sale prices for 6 and 8 Nelson Road were higher in early 2005 than the sale price of the applicants' land in April 2004. There is, however, no evidence one way or the other as to their value before the announcement.

75 Mr Dempsey appears to have attributed very little, if any, weight to the land's industrial potential, for in cross-examination he said that he considered that the market did not reflect any such higher use potential and that all four comparable sales in the above table reflected acquisitions primarily for residential purposes within a rural setting. However, he conducted no analysis of the values of the other three comparable properties, the sales of which were all after the December 2004 government announcement, to demonstrate that this was so by reference to their values before that announcement.

76 I accept Mr Deane's view that the market was paying a premium for land with such potential after the December 2004 announcement, which I regard as a significant announcement for the market. However, I am unable to accept his assessment that the applicants' land more than doubled in value between the purchase date in April 2004 and the relatively short time until the compulsory acquisition date in December 2005.

77 Mr Deane attributed a value to the applicants' land at the acquisition date of about two thirds more than the neighbouring properties at 6 and 8 Nelson Road, and double the value of 27 Box Road property in a more distant side street. In oral evidence, he rationalised this on the basis of its superior Windsor Road corner location for future industrial use based on his experience that main road frontage industrial property is developed first. At one point he said he believed that the applicants' land would be developed in the "near term", a description that I think is over optimistic. If the market was taking into account future industrial potential of the comparable properties, those closer to Windsor Road on Nelson Road should have achieved a higher price than those further away, all other things being equal. Mr Dempsey agreed with that proposition. Of course, all other things were not equal in that at the acquisition date the applicants' land appears to have been more flood prone than 6 and 8 Nelson Road. The adjustments for time by each valuer for 6 and 8 Nelson Road from their sale dates in early 2005 to December 2005 appear to be based on the statistical data each adopted referred to at [73] above. As I have said, neither set of data is applicable to rural land with industrial potential and therefore should not be automatically applied, although the industrial data is somewhat more useful. Therefore, the value of these properties at December 2005 I would assess to be somewhere between the competing estimates preferred by the valuers. As this was not specifically addressed in evidence, it is difficult to be more precise.

78 For comparable purposes the RTA submitted that there should be an adjustment to the sale price of the applicants' land on the basis that the applicants paid above the odds for it because Mr Coundrelis had in mind when they purchased it that it could be developed for a service station, which was mistaken and speculative as that was a prohibited use under the Baulkham Hills Local Environmental Plan 2005. Assuming that there was such a prohibition, given that the applicants purchased their land at auction and there is no suggestion that any such mistake or speculation should be attributed to the next highest bidder, I am not satisfied that they paid significantly more for it than if the service station was not present to Mr Coundrelis' mind.

79 Mr Deane's assessment of market value at the acquisition date is based on a rate of $200 per square metre. For the acquired land of 339.3 m2, that equals $67,860 which he rounded up to $68,000. Mr Dempsey's assessment of market value at the acquisition date is based on a rate of $85 per square metre. For the acquired land of 339.3 m2, that equates to $28, 841 which he rounded up to $30,000.

80 As regards the retained land, Mr Deane assessed its value as a result of flood affection caused by the road works at, on average, $75/m2. He did this by hypothetically splitting it into two portions such that the rear half could be raised and developed and the more heavily flood affected front half could be used for, say, parking associated with industrial development. His after road works valuation for flood affection for the total land area of 16,740.7m2 was: Front half: $50 x 8,370.35 m2 $ 418,517.50 Back half: $100 x 8,370.35 m2 $ 837,035.00 Total $1,255,552.50 Say $1,256,000.00

81 In addition, for the loss of access off Windsor Road due to the road works and the median strip in Nelson Road, Mr Deane allowed for a reduction in value of the retained land of $5/m2. He had regard to the allowance of $5/m2 in Cook, Saad, Raguz v Road and Traffic Authority of New South Wales [2007] NSWLEC 136 for loss of capacity to turn right into Windsor Road in the case of nearby resumed land. Therefore, his after road works valuation for loss of vehicular access was assessed at $5 x 16740.7 m2 = $83,703.50, which he rounded up to $84,000. I accept this valuation for loss of access.

82 Mr Deane's total after road works affection assessment was therefore: Flood affection $1,256,000.00 Less denied access $ 84,000.00 $1,172,000.00 83 Mr Deane then assessed s 55(f) compensation as follows:

Before road works: 16,740 m2 @ $200/m2 $3,348,000.00 Less after road works 16,740/m2 $1,172,000.00 Difference $2,176,000.00 84 Mr Deane considered that his $200/m2 rate was the value of the applicants' land as rural zoned land with industrial potential in a prominent corner location and unaffected by flooding. On my finding, his no flooding assumption was erroneous. His valuation is therefore too high for that reason, at least. 85 There should be adjustments to the purchase price of the applicants' land between the date of purchase in April 2004 and the acquisition date in December 2005 for time and for information that became available to the hypothetical buyer and seller between those dates: in particular, the government announcements enhancing the future industrial potential of the land, which would have added to value, and the flooding information available before the acquisition date, which would have subtracted from value. The extent of the effect on value of those factors is a matter for judgment. After taking into consideration the comparable sales but allowing for the fact that they did not have the degree of flood affection of the applicants' land, I assess the value of the applicants' land as at the acquisition date at $140/m2. Therefore the value of the acquired land should be assessed as 339.3 m2 x $140/m2 = $47,502 which I will round to $48,000. This is the amount that will be awarded for the claim under s 55(a) of the Act.

86 I turn to the s 55(f) claim for compensation for devaluation of the retained land due to flooding caused by the road works. As a result of the road works, there has been a net decrease in flooding in the 100 year ARI event due to elimination of the flow across the Windsor Road frontage onto the applicants' land. This finding does considerable damage to the applicants' claim. Nevertheless, in my view, the increase in, and extent of, nuisance flooding has decreased the value of the retained land to some extent as has the vision of the large box culvert at MD2 compared with its prior presentation. I propose to assess the diminution in value of the retained land due to road works flooding affection on average at $10/m2 for the retained land area of 16740.7 m2. That equals $167,407, which I round up to $168,000.

87 In addition, for loss of access I have indicated that I will allow a reduction in value of the retained land of $84,000. Therefore, the total diminution in value of the retained land as a result of the road works is: Flood affection $168,000 Denied access $ 84,000 $ 252,000 CONCLUSION 88 In summary, compensation will be assessed as follows: Claim for acquisition of land: s 55(a) $ 48,000 Claim for loss of value of retained land: s 55(f) $252,000 Claim for disturbance: s 55(d) $ 9,000 TOTAL $309,000 89 The matter will be listed before me at 3.30 pm on 29 February 2008 to make final orders. Agreed or competing short minutes of order are to be submitted by 3:00 pm that day. I will hear the parties on costs if they are not agreed. The exhibits may be returned.

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