El Boustani v Minister Administering the Environmental Planning and Assessment Act 1979

The Planning Framework 9It was not a matter of controversy that as at the resumption date the acquired land was zoned Rural 1(b) with a minimum lot size of 2ha under the Camden Local Environmental Plan No 48 ("the LEP"). Intensive agriculture was prohibited in the zone. Clause 9 of the LEP defined "intensive horticulture establishment" as "a structure used for growing mushrooms or other produce including large sheds, igloos, greenhouses and the like". Although the existing intensive horticultural activity that the El Boustanis were engaged in was prohibited in the zone, the activity was nevertheless carried out pursuant to existing use rights under s 107(1) of the Environmental Planning and Assessment Act 1979 ("the EPAA"). 10Camden Council ("the council") had issued three development consents and modified one of those consents for the use of the land as follows: (a)DA 949/2001 approved on 23 August 2001, for the construction of four igloos ("the 2001 consent"). This consent was limited to five years and expired on 23 August 2006; (b)a modification to the 2001 consent on 14 April 2004, to reconfigure the approved igloos; (c)DA 559/2006 issued on 29 June 2006, for the construction of a new shed on the land; and (d)DA 288/2007 approved on 16 June 2007, for "New Agriculture - Igloos/Greenhouses" ("the 2007 consent"). Condition 1(2) of this consent provided that: The use shall cease after a period of 5 years from the date of consent. A further application must be lodged no less than six (6) months before the expiration of the consent for Council's consideration and determination. 11In 2005 the New South Wales Government released its Metropolitan Strategy that identified the south western area of Sydney as an area available for new urban development within the Sydney basin. This area is known as the South West Growth Centre. The acquired land is located in the South West Growth Centre. The Centre is divided into 18 planning precincts and the land is located in the Leppington North Precinct. 12The 2007 consent lapsed on 16 June 2012. 13On 28 July 2008 the State Environmental Planning Policy (Sydney Region Growth Centres) 2006 ("the Growth Centres SEPP") was gazetted for the North West and South West Growth Centres. The Sydney Growth Centres Guide to Precinct Planning states that from release to rezoning, each precinct planning process is expected to take two to three years. 14On 23 October 2009 the Minister declared that the South West Growth Centre - Leppington North Precinct was to be released for urban development. 15On 1 December 2010 Sydney Growth Centres issued a precinct update for Leppington North, stating that it was expected to accommodate around 12,000 new dwellings and 30,000 new residents with a major centre and a number of neighbourhood centres along major roads. 16As at the resumption date, the draft Camden Local Environmental Plan 2010 ("the 2010 draft LEP") had been exhibited and was both certain and imminent. On 3 September 2010 it was gazetted. Under the 2010 draft LEP the land was to be zoned RU4 Rural Small Holdings. This zone permitted various types of development without consent, including extensive agricultural occupation on two hectare lots. Development permitted with consent included horticultural and intensive plant agriculture. The existing greenhouse horticultural operations of the El Boustanis would therefore be permissible with consent. 17One of the principal issues for determination, and about which there was considerable disagreement between the parties' town planning experts, Mr Paul Grech, on behalf of the El Boustanis, and Mr Gary Shiels, on behalf of the Minister, is whether the council would have continuously granted extensions to the existing 2007 consent. 18It is the Minister's contention that the council would not have done so, and therefore, the El Boustanis are not entitled to the cost of the relocation of their horticultural business. By contrast, the El Boustanis submit that because the RU4 zone preferenced intensive horticulture over rural residential or other uses, it was likely that the 2007 consent would have been extended, and therefore, compensation is payable in respect of these costs.

Legislative Framework and Applicable Legal Principles 19In addition to the objects of the Act contained in s 3, the following provisions of the Just Terms Act are particularly relevant: 54 Entitlement to just compensation (1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land. (2) If the compensation that is payable under this Part to a person from whom native title rights and interests in relation to land have been acquired does not amount to compensation on just terms within the meaning of the Commonwealth Native Title Act, the person concerned is entitled to such additional compensation as is necessary to ensure that the compensation is paid on that basis. 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, (b) any special value of the land to the person on the date of its acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) solatium, (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. (2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition. 59 Loss attributable to disturbance In this Act: loss attributable to disturbance of land means any of the following: (a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land, (b) valuation fees reasonably incurred by those persons in connection with the compulsory acquisition of the land, (c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs), (d) stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired), (e) financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation (but not exceeding the amount that would be incurred if the new mortgage secured the repayment of the balance owing in respect of the discharged mortgage), (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. 20The overriding principle in compensation cases is one of fairness to the dispossessed owner. In seeking to do justice, a liberal estimate should, where doubts arise, be adopted in favour of the claimant (McBaron v Roads and Traffic Authority of New South Wales (1995) 87 LGERA 238 at 244-245 and Sydney Water Corporation v Caruso [2009] NSWCA 391; (2009) 170 LGERA 298 at [99]-[102]).

The Market Value of the Acquired Land 21The task before the Court in ascertaining the market value of the acquired land is to estimate the price that would have been agreed upon in a voluntary bargain between a willing but not anxious seller and a willing but not anxious buyer (s 56(1) of the Act and Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418 at 441 and Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 at [51]). 22The market value of the land equates to the highest and best use of the land (Turner v Minister of Public Instruction (1956) 95 CLR 245 at 274). 23It is well established that if comparable sales or transactions are available, the direct comparison of these sales is the conventional, if not preferred, method of valuation (The Trust Company Limited v Minister Administering the Crown Lands Act 1989 [2012] NSWLEC 73 at [110] and Marroun v Roads and Maritime Services [2012] NSWLEC 199 at [196]). 24In Marroun Sheahan J made the following observation concerning the methodology to be employed in any direct comparison process (at [197]): 197 Such a direct comparison process requires the accumulation, analysis, adjustment, and application, to the subject site, of genuinely comparable sales. A court depends upon the established expertise of valuer witnesses called on both sides of the case. As Sugerman J said in Bingham v Cumberland County Council (1954) 20 LGR (NSW) 1, at 18-19: "The valuer, in arriving at his opinion in these difficult matters may have to draw upon his general knowledge and experience, including perhaps experience in other situations which, although lacking in complete comparability, may yet provide an experienced valuer with guidance and suggestions as to the general approach which may be made and as to considerations which may become relevant." 25The accumulation of potentially genuinely comparable sales seeks to identify and establish a pool of relevant sales from which information may be deduced concerning the value of the subject property (Trust Company Limited at [110] and [111] and Marroun at [198]). 26The analysis of potentially genuinely comparable sales provides a common basis of measurement by seeking to convert all potential sales to a common unitary rate, usually expressed as a dollar value per square metre, that is either improved or unimproved. 27The adjustment of potentially genuinely comparable sales acknowledges the fact that no two properties are identical and seeks to convert these sales to a hypothetical expression of value (as a unitary rate) in the context of the acquired property, through the reflection of differences between the comparable sales and the resumed land (Trust Company Limited at [112] and Marroun at [202]). Excessive adjustment, however, renders the comparable sales unsafe. This is a matter of degree to be considered in each case (Marroun at [201]). 28The application of these potentially genuinely comparable sales to the acquired property then determines the value of that property through a comparison of the unitary rate derived from those adjusted comparable sales relative to the acquired land (Trust Company Limited at [114] and Marroun at [208]). 29A considerable number of comparable sales were relied upon by the parties' respective valuation experts, Mr Kent Wood on behalf of the El Boustanis and Mr Michael Dyson on behalf of the Minister. But as the joint expert valuers' report demonstrated, the gap between the valuers was ultimately relatively narrow: the El Boustanis contend for a market value of the acquired land of $1,320,000, whereas; the Minister contends for a market value of $1,100,000. 30Both Mr Wood and Mr Dyson adopted the 'before and after' method of valuation. They also agreed that the highest and best use of the land was its existing use of intensive horticulture. 31Their competing valuations, initially contained in their joint report dated 11 October 2011 and subsequently modified during the course of the hearing (and allowing for errors in the calculations), can be summarised as follows: Before Valuation Dyson Wood - joint report Wood - hearing land (19,510m2) ($70 per m2) = $1,365,700 ($90 per m2) = $1,755,900 ($85 per m2) = $1,658,350 Improvements cottage $70,000 $107,100 $107,100 carport - $11,248 $11,248 packing shed $35,000 $48,600 $48,600 tractor implement shed - $10,000 $10,000 multi-span igloo $80,000 $150,000 $150,000 4 x igloos $60,000 $34,560 $34,560 dam and irrigation piping $20,000 $25,000 $25,000 (1) say: $1,630,000 say: $2,150,000 say: $2,044,858 After Valuation (6,050m2 x $70 per m2) = $423,500 (6,076m2 x $100 per m2) = approx $600,000 (6,076m2 x $100 per m2) = approx $600,000 Improvements cottage $70,000 $107,100 $107,100 carport - $11,248 $11,248 machinery shed $35,000 $48,600 $48,600 2 x igloos $15,000 - - $543,500 $766,948 $766,948 As say: $540,000 say: $770,000 say: $770,000 Injurious affectation Nil 25% 33.3% (2) $540,000 $577,500 $513,333 therefore diminution in value (1) - (2) say: $1,100,000 say: $1,572,500 say: $1,540,000

Valuation Evidence of the El Boustanis 32On behalf of the El Boustanis, Mr Wood considered sales of "rural lands" to be relevant comparable sales. He identified seven potentially comparable sales, which he analysed to derive a common basis of expression as a unitary rate, as follows: Sale # Address Deduction for Improvements Analysed Land Value (per m2) 1 362 Bringelly Road, Austral $0 (cottage) $84.25 2 1435 Camden Valley Way, Leppington N/A $84.24 3 415 Fifteenth Avenue, Austral $200,000 (cottage) $68.25 4 50 Tenth Avenue, Austral $150,000 (cottage) $82.37 5 310 Edmonson Avenue, Austral $250,000 (cottage and shed) $107.43 6 250 Sixth Avenue, Austral $50,000 (cottage) $81.87 7 187 Rickard Road, Leppington $50,000 (cottage) $107.50

33Sale 6 was the subject of an agreed fact to the effect that there was a s 149 certificate annexed to the contract of sale dated 31 March 2010. This certificate stated that the property was affected by flood inundation, that it was the subject of a tree preservation provision and that it "may have impediments to development under the Threatened Species Act 1995". The certificate did not, however, state that the land was subject to biodiversity certification. 34The Minister identified several difficulties with the comparable sales relied upon by Mr Wood. First, sales 1, 2 and 5 were all earlier in time and prior to the global financial crisis. There was no evidence that the market, namely, intensive horticulture, was immune from this crisis. They therefore had to be viewed with caution. Sale 3, by contrast, showed an analysed rate of $68.25 per m2 at 31 May 2010, that is to say, after the global financial crisis. Second, sale 2 was located between an existing service station and a hotel, with other commercial uses both across and along the road. This difference in market would, as Mr Wood agreed in cross-examination, have the effect of increasing the price per square metre, for which no adjustment had been made. Third, sale 5 suffered from significant flooding and benefited from substantial improvements, for which inadequate adjustment had been made. Fourth, sale 4 was sold initially in February 2009 and again eight months later in November 2009, but at a lower price, and therefore, had to be viewed with suspicion. Fifth, sale 7 also had to be treated cautiously to the extent that it was the outcome of a negotiated conciliation under s 34 of the Land and Environment Court Act 1979. Sixth, sale 6 showed a rate of $66.31 per m2 before adjustments for flooding. But, according to the Minister, the assumption that Mr Wood made that 30% (not 3% as erroneously stated in his report dated 2 June 2011) of the land was subject to inundation in a 1:100 year flood was exaggerated. Rather, the better view appeared to be that only a very small portion of the land would be affected by a flood of such severity. 35While Mr Dyson considered that sale 3 supported his rate of $70 per m2, the El Boustanis submitted that it was necessary to add back to its value the value of the 14 greenhouses stripped from the site before sale and include consideration of the fact that the removed greenhouses were inferior to those erected on the acquired land. When upward adjustments were made for the better location of the acquired land, the value of the greenhouses and the large dam size, a value of $70 per m2 could not be supported and a higher value ought to be allocated to that sale. 36For the 'before' valuation, Mr Wood initially attributed $1,755,900 (being a rate of $90 per m2) to the land and $386,508 to the residence, sheds, igloos and dam. This comprised $166,948 for the cottage, carport and packing shed and $219,560 (rounded to $220,000) for the tractor implement shed, multi-span igloo, smaller igloos, dam and irrigation piping. As was properly conceded by the El Boustanis, this latter amount should be deducted from the 'before' valuation to prevent double counting in the event that this sum was awarded as compensation for disturbance under s 55(d) of the Just Terms Act. 37However, during the hearing, in relation to the 'before' valuation, Mr Wood adopted a rate of $85 per m2 and consequently amended the claim to $1,658,350 for the market value of the land, with the amount calculated for the residence, sheds, igloos and dam unchanged at $386,508, thereby totalling $2,044,858. 38For the 'after' valuation, Mr Wood attributed $600,000 (being $98.75 per m2, rounded up to $100 per m2) to the land and $166,948 to the residence and shed, totalling $766,948 rounded to $770,000, which Mr Wood then reduced by 25% for injurious affectation created by the presence of the railway and depreciation in the value of the buildings because of their loss of utility, to $577,500. 39During the hearing, Mr Wood again changed his opinion in respect of the reduction for injurious affectation and depreciation, increasing it to 33.33%, thus claiming an 'after' valuation of $513,333. 40Finally, Mr Wood calculated the added value of the improvements having regard to the intensive use of the land for horticultural purposes and the current value of its present use. The value ascribed to the multi-span igloo was inclusive of site preparation and electrical installation. 41Mr Wood therefore determined the compensation payable to the El Boustanis calculated as the difference between the 'before' ($2,044,858) and 'after' ($513,333) valuations, to be $1,531,525, rounded up to $1,540,000. In summary, therefore, the El Boustanis contended for a market value of $1,320,000, which is $1,540,000, less the potentially double counted amount of $220,000.

Valuation Evidence of the Minister 42Mr Dyson analysed eight comparable sales, the first six of which he considered to be of comparable size and use, and were proximate to the acquired land and the resumption date, to derive the following rates: Sale # Address Deduction for Improvements Analysed Land Value (per m2) 1 250 Sixth Avenue, Austral $10,000 (cottage) $69.60 2 144 Gurner Avenue, Austral N/A $48.40 3 230 Fifth Avenue, Austral $30,000 (cottage) $66.31 4 230 Seventh Avenue, Austral N/A $62.19 5 Lot C Cowpasture Road, Leppington $10,000 (cottage) $52.20 6 173 Byron Road, Leppington N/A $43.53 7 240 Seventh Avenue, Austral (sold 6 months after resumption date) N/A $75.78 8 30 Jardine Drive, Edmonson Park (land in an already rezoned area) N/A $77

43Taking these sales into account, Mr Dyson adopted a range of $60 to $70 per m2 and, resolving all doubts in favour of the El Boustanis, settled on an upper most limit of that range of $70 per m2. 44The El Boustanis criticised the comparable sales relied upon by Mr Dyson on a number of grounds. Complaint was made, first, on the basis that Mr Dyson had selected land for which intensive horticulture would have been prohibited or discouraged because the land was less than 2ha, or was not the subject of an existing use for intensive horticulture (in particular, sales 1, 3, 4 and 7). Second, sales 2, 3, 4 and 5 were criticised because they were treed. Third, in relation to sale 2, although approximately the same size as the acquired land, as Mr Dyson had admitted, the sale was inferior because it appeared to have been purchased for rural/residential use. Fourth, in respect of sale 5, this sale was said to be inferior with a narrow frontage, limited access and adjoining a major Sydney water supply canal creating the potential for constraints on any future development. In addition, the property was not used for horticulture, was irregularly shaped and a significant proportion of it (the El Boustanis estimated 50%) was unimproved because of the existence of native vegetation on the site. Fifth, sale 6, although located in an appropriate area, was sold by a vendor who was anxious insofar as he was sick, unemployed and could not afford repayments at the date of sale, which was the same day the deferral of the South West Rail Link was announced (1 November 2008). 45For the 'before' valuation, Mr Dyson attributed $1,365,700 to the land and $265,000 to the value of the improvements, namely, the residence, sheds, igloos and dam, totalling $1,630,700, which he rounded down to $1,630,000. 46For the 'after' valuation, Mr Dyson attributed $423,500 to the land (based on a rate of $70 per m2 and a residue land area of 6,050m2) and $120,000 to the residence, sheds and igloos, totalling $543,500, which he rounded down to $540,000. 47In Mr Dyson's opinion, the diminution in value in the 'after' case for impacts from noise, pollution and nuisance occasioned by the railway line was set off by the increase per square metre because of the smaller lot size of the residue land, retaining, as it did, the building entitlement and road frontage. Furthermore, allowance had to be made for the potential increase in value of the property as a result of its proximity to the proposed Leppington Railway Station and for any possible release, rezoning and development of the land that meant that the residue land would be utilised for commercial purposes, which would not be impacted by noise. 48Mr Dyson had regard to the use of the land for horticultural purposes and assessed the added value of the improvements, including the multi-span igloo, on the basis of the depreciated replacement cost over the effective life of the assets. This basis was adopted because, although there was potential for future redevelopment, redevelopment would not occur before the end of the effective life of the improvements (after 2012). Further, in the acquisition scenario, the value of the remaining horticultural igloos was discounted by 50% to take into account the economic obsolescence resulting from the acquisition.

Comparable Sales 49I agree with the El Boustanis, for the reasons they gave, that sale 6 relied upon by Mr Dyson should be ignored and that sales 2 and 5 are inferior. I do not accept, as the Minister submitted, that sale 5 had the benefit of biodiversity certification, the evidence before the Court being equivocal in this regard. That said, there was no cogent evidence to suggest that the general presence of trees on sales 2, 3, 4 or 5 of the comparable sales relied upon by Mr Dyson materially impacted the market value. 50I have also eschewed sale 8 insofar as it was located in an area subject to zoning different to that applicable to the acquired land as at the resumption date. 51In relation to the criticisms levelled at sales 1, 3, 4 and 7 of Mr Dyson's comparable sales, sales 2, 4, 5 and 6 of Mr Wood's sales suffer from the same asserted vices of being less than 2ha and only being used as at the date of their sale (and thereafter) for rural/residential purposes and not intensive horticulture. 52Limited reliance should also be placed on sales 2, 4, 5 and 7 of Mr Wood's comparable sales for the reasons given by the Minister. 53Mr Wood's evidence was problematic in several other critical respects. These may be summarised as a failure to clearly articulate a logical and transparent reasoning process justifying the assumptions he made in deriving his hypothetical expression of value as a unitary rate in the context of the acquired land. While Mr Wood identified seven potentially comparable sales that he analysed to derive a rate per square metre, the explicit adjustment and application of these potentially comparable sales was, in my view, manifestly inadequate. 54With respect to making appropriate adjustments for differences, in Marroun Sheahan J recently stated the following, which is worth repeating in the context of the present proceedings (at [203]-[207]): 203 Making appropriate explicit or implicit adjustments for differences, such as in location, area, and time, is accepted valuation practice, and enables valuers to produce, in their evidence, comparable values for the court to assess. Such adjustment is a deductive process generally based on reasoning which draws on the expertise, skill and experience of the valuer (Trilby 2009 at 35, see also Holcim (Australia) Pty Ltd v Valuer-General [2009] NSWLEC 225). 204 Bly C said in Jessica Investments Pty Ltd v Valuer General [2008] NSWLEC 1375 (at [6]): "Also, in my opinion, if a valuer does not have a final land value in mind, the detailed percentage adjustment approach could be utilised and revealed in an attempt to provide transparency. Otherwise the valuer's less transparent approach would be to identify a range of factors that distinguish in one way or another, the comparable sale from the subject property and, based on the valuers own judgment simply assert the land value." 205 Explicit adjustment was preferred by Pepper J in Tomago Aluminium Company Pty Limited v Valuer General [2010] NSWLEC 4, at [45]: "... it is necessary to make explicit adjustments for differences so that the adjustment process is sufficiently logical. An implicit process comprising a single adjustment, rather than separately itemised and reasoned adjustments, risks rejection for want of transparency." 206 A transparent process of explicit adjustment, leading to an explicable assessment of value, is to be preferred to an opaque process of implicit adjustment, leading to an assertion of value. 207 Furthermore, the adjustment process should work forwards from the comparable sales to derive an opinion of value, rather than working backwards to justify an opinion of value previously formed (per Jagot J in Graham Trilby Pty Limited v Valuer-General [2008] NSWLEC 217, at [25]). 55A similar sentiment was expressed by Pain J in Trust Company Limited, where her Honour, after identifying and discussing the obligations imposed on expert witnesses giving opinion evidence (at [116]-[117], which I reiterate absent repetition), identified the failure to set out a clear and reasoned process enabling scrutiny of the facts and assumptions relied upon by the valuer in arriving at his conclusions as the reason why certain aspects of his valuation report could not be attributed any weight and were rejected. Her Honour concluded (at [119]): 119 I consider the absence of an explicit process of analysis by Mr Dupont exposing the reasoning and logic adopted significantly limits the usefulness of his expressed opinion of value of the hotel. The Appellant's counsel's cross-examination highlighted the large number of necessary adjustments and the failure to identify these in Mr Dupont's report. Applying the obligations of expert witnesses referred to in par 116 - 117 above, as the facts and assumptions made by Mr Dupont in his report are not explicit nor were they sufficiently elucidated in oral evidence, I consider this part of his report and conclusions therein should not be given any weight. 56Although the lack of satisfactory reasoning process demonstrated by Mr Wood was nowhere near as egregious as that afflicting the valuer the subject of criticism in Trust Company Limited, Mr Wood's evidence was nevertheless deficient in key aspects. The gulf between Mr Wood's analysis to derive a unitary rate from the seven potentially comparable sales ranging from $68.25 - $107.50 per m2 and his adoption of $90 per m2 in his calculation, subsequently revised downward to $85 per m2 during the hearing, lacked foundation, and provided, in my opinion, limited assistance to the Court in ascertaining the market value of the acquired land. 57By contrast, Mr Dyson's valuation report demonstrated a more lucid and properly articulated reasoning process that afforded transparency and contained an appropriate level of support for the key assumptions made by him. Mr Dyson identified eight potentially comparable sales which he analysed to derive a unitary rate, adjusted to reflect nominated factors (namely, location, area, slope, road frontage and date of sale). He applied these factors explicitly to determine the market value of the acquired land through a consideration of the relevance of the unitary rate derived from those adjusted comparable sales relative to the resumed land. The process by which Mr Dyson progressed from the identification of potentially comparable sales to an assessment of the value of the acquired land was, in most aspects, preferable. 58Again, while it would have been preferable for Mr Dyson to have adopted an explicit process of adjustment regarding each of the nominated factors, the direct relevance of the comparable sales at: (a)250 Sixth Ave, Austral (Mr Dyson's sale 1), analysed at a land value of $69.60 per m2; (b)230 Fifth Ave, Austral (Mr Dyson's sale 3), analysed at a land value of $66.31 per m2; (c)415 Fifteenth Ave, Austral (Mr Wood's sale 3), analysed at a land value of $68.25 per m2; and (d)230 Seventh Ave, Austral (Mr Dyson's sale 4), analysed a land value of $62.19 per m2, nevertheless supported Mr Dyson's generous (but allowing the El Boustanis the benefit of the doubt) adoption of $70 per m2 for market value purposes. 59In short, as analysed, the comparable sales relied upon by Mr Wood do not, in my opinion, support a rate of either $90 per m2 or even $85 per m2 and I adopt the rate of $70 per m2 derived by Mr Dyson.

Injurious Affectation 60Under s 55(f) of the Just Terms Act the El Boustanis claimed an amount of compensation for injurious affectation with respect to the residue land situated adjacent to the railway line and in close proximity to a proposed railway station servicing the line. 61From the outset two observations should be made. First, it was generally agreed that the smaller lot, the greater the increase in the rate per square metre. Second, it was also accepted that there was the potential for impacts from noise, pollution and disturbance to reduce value in any 'after' scenario. 62The only assessment attempting to quantify the loss occasioned by the proximity of the residue land to the railway line was undertaken by the Valuer-General and consisted, unsatisfactorily, of an examination of two residential properties in Bundanoon. On the basis of this evidence the Valuer-General allowed a discount of 30% "to land in close proximity to the railway line". 63No sound basis was provided by Mr Wood in his valuation report dated 2 June 2011 to substantiate a deduction of 25% for injurious affectation in the 'after' case and even less was provided for the increase to 33.3% during the hearing. Rather, Mr Wood justified his increase on the basis of extracts the Court was taken to from the South West Rail Link, Glenfield to Leppington Rail Line Project Approval Environmental Assessment by Parsons Brinckerhoff ("the Environmental Assessment") concerning noise mitigation (including a diagram showing the proposed noise mounds adjacent to the acquired and residue lands), the South West Rail Link Noise and Vibration Assessment, Stage 2 Glenfield to Leppington Train Stabling Facility prepared by Heggies on 11 May 2010 ("the Heggies Noise Assessment") and the State Environmental Planning Policy (Infrastructure) 2007 ("the Infrastructure SEPP"). 64The extracts from the Environmental Assessment and the Heggies Noise Assessment plainly demonstrated that the residue land would be substantially affected by noise (approximately 50% of the land would be sterilised from use by reason of the affectation). This evidence is somewhat unremarkable for a parcel of land adjacent to a railway line and in close proximity to a train station, where trains must decelerate upon approach in turn having the effect of amplifying their noise emissions. 65The Infrastructure SEPP was relied upon by the El Boustanis to submit that because the residue land in the 'after' case would be within a 55dB(A) noise shadow, it would be highly unlikely that approval would be granted for residential development on the land, consequently sterilising a significant part of it for that use. 66I accept that the residue land, by reason of its location, will be significantly affected by noise emanating from the railway line. I also accept that the approval of residential development on it would be remote given the affectation. But this use becomes less significant if regard is had to a likely future potential commercial use of the land by reason of its location in the Leppington Town Centre. As Mr Wood agreed during his oral evidence, any commercial use of the land would not be impacted upon by noise. 67An additional difficulty exists with Mr Wood's injurious affectation calculation, namely, a double counting of the diminution insofar as he reduced both the value of the residue land and the value of the improvements, the latter of which should not change. 68However, it must be acknowledged that any future predicted use of the residue land is just that, namely, a prediction. 69In my opinion, a discount for injurious affectation should be made in the 'after' case, but not the inflated diminution for which Mr Wood contends. In my view, a deduction of 20% is justifiable.

Added Value of Improvements 70I agree with Mr Dyson that Mr Wood has over assessed the value of most of the improvements. Two examples suffice. The first is Mr Wood's added value in respect of the old metal tractor shed at $10,000 and the second is the carport valued at $11,248, neither of which, as Mr Dyson opined, had any added value on the open market. Accordingly, I prefer and adopt the evidence of Mr Dyson in relation to the added value of the improvements on the land.

Summary of Market Value 71Based on the discussion above, the market value of the property is $1,194,556, calculated as follows: Before Valuation land (19,510m2) ($70/m2) = $1,365,700 improvements cottage $70,000 carport nil packing shed $35,000 tractor shed nil multi-span igloo $80,000 4 x igloos $60,000 dam and irrigation piping $20,000 (1) $1,630,700 After Valuation land (6,074m2) ($70/m2) = $425,180 improvements cottage $70,000 carport - machinery shed $35,000 2 x igloos $15,000 $545,180 Injurious Affectation 20% $109,036 (2) $436,144 Market Value = (1) - (2) $1,194,556

72Because I have disallowed compensation for any relocation costs incurred by the El Boustanis, no deduction has been made in the 'before' scenario to accommodate any potential double counting with respect to the value of the improvements on the acquired land.

Are the El Boustanis Entitled to Claim Relocation Costs? 73The market value of the acquired land referred to in s 55(a) of the Just Terms Act and any loss attributable to disturbance pursuant to s 55(d) are wholly separate components of the compensation to which the El Boustanis are entitled under the Act. 74The former is assessed in accordance with the hypothetical exercise required by the definition of "market value" in s 56(1)(a). The latter is assessed by reference to the actual costs and fees specified in s 59, which is qualified by the concept of reasonableness and is, as is discussed further below, circumscribed by the limitations on the recovery of loss contained in s 61 (Roads and Traffic Authority of New South Wales v McDonald [2010] NSWCA 236; (2010) 79 NSWLR 155 at [38]). 75As stated above, the El Boustanis claim relocation costs pursuant to either s 59(c) or (f) of the Just Terms Act in order to re-establish their horticulture business. The parties' respective disturbance quantum experts agreed that, if compensable, the costs required to re-establish the existing facilities on a new site amounted to $852,000. To this the El Boustanis add an allowance for fit out, stamp duty and legal fees associated with the relocation, less $7,000-8,000 in fees payable to the council to extend the consent necessary to continue to use the acquired land for the purpose of intensive horticultural business. The total amount of compensation claimed by way of disturbance in this regard is $920,000, excluding, as was agreed by the parties, GST. 76The Minister submits that no relocation costs are payable for two reasons: first, because neither s 59(c) nor (f) are engaged, and second, because the rate of $70 per m2 reflects the acquired land's potential to be used for a purpose other than that for which it is currently used and therefore s 61 of the Just Terms Act applies to preclude the claim. Were it otherwise, the Court should apply the rural value attributable to the acquired land, which, according to Mr Dyson, achieved a rate of only $40 per m2.

Relocation Costs and s 59(c) and (f) of the Just Terms Act 77In Roads and Traffic Authority of New South Wales v Peak [2007] NSWCA 66 the Court of Appeal distinguished between costs claimable under s 59(c) of the Just Terms Act that may be described as relocation costs, and those claimable under s 59(f) of that Act that refer to costs relating to the actual use of the acquired land. As the Court of Appeal opined in Peak, relocation costs cannot necessarily be claimed interchangeably between ss 59(c) and (f), otherwise one of the provisions would be superfluous in function (at [100]). 78Turning first to s 59(c) of the Just Terms Act, as was noted by Biscoe J in McDonald v Roads and Traffic Authority (NSW) [2009] NSWLEC 105; (2009) 169 LGERA 352, the word "relocation" in s 59(c) of the Just Terms Act is one of wide compass (at [107]-[109], this reasoning was not disturbed on appeal: McDonald (NSWCA)): 107 The word "relocation" in s 59(c) has a wide meaning. This is indicated by Minister for Army v Parbury Henty & Co [1945] HCA 52; (1945) 70 CLR 459 at 507 (notwithstanding that the case was decided under different resumption legislation) per Dixon J who held that disturbance costs include costs that a claimant: "reasonably incurs in removing his furniture and goods including tenants' fixtures and the expenses in setting up in new premises for the purposes of carrying on his business. Nor is it denied that the expenses may include the net cost of installing fixtures, both those removed and, where reasonably necessary, newly acquired fittings. The residual value which would remain to him must of course be taken into account". Williams J said (at 514) that the claimants were entitled to compensation: "not only for the value of the proprietary interests so acquired, but also for what can be compendiously called expenses of removal into premises at least as commodious and congenial taking a broad view of the matter, as those of which they were dispossessed". 108 The width of the meaning of "relocation" in s 59(c) is also indicated by the decision in Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of NSW (1998) 101 LGERA 30. Bignold J allowed as s 59(c) relocation costs, the costs of a dispossessed tenant in relocating and re-establishing a business on another site. They included the cost of obtaining development consent, the cost of site preparation including drainage, kerb and guttering, and removal of pergolas; the cost of additional advertising to promote the new location; the cost of reprinting business stationery; the cost of management time involved with re-establishing contacts; and the cost of electricity connection. 109 Similarly, in Home Care Services (NSW) v Albury City Council [2003] NSWLEC 214, 136 LGERA 117 at [18] Bignold J held that "the amount of compensation recoverable pursuant to s 59(c) in the present case includes all of the relocation costs incurred by the Claimant in re-establishing its business premises in the Swift Street premises". The relocation costs that his Honour allowed included fit-out costs. 79In McDonald the applicant vacated the acquired land upon which her residence was located and moved to rented premises pending the construction of the replacement residence on the residue land. The cost of connecting services (water, power and telephone), the provision of road access and rental costs formed the bulk of the applicant's disturbance claim. At first instance, Biscoe J held that post-acquisition rental costs were not compensable. This was reversed on appeal, the Court of Appeal determining that such costs were reasonably incurred pursuant to, in that case, either s 59(c) or (f) of the Just Terms Act. 80Justice Biscoe's remarks in McDonald were adopted by Pain J in Hua v Hurstville City Council [2010] NSWLEC 61 (at [58]). In that case, after reviewing the authorities, her Honour awarded compensation under s 59(c) of the Act for the relocation of a bakery business operating upon the acquired land, stating that "the preferable view" was that the costs of re-establishing the business elsewhere, whether described as relocation or reinstatement costs, were claimable under s 59(c). 81For present purposes, what emerges from the cases above (and those they analyse) is that, first, it is the reasonableness of the incursion of the costs that constrains any claim under s 59(c) of the Act, rather than the costs themselves (McDonald (NSWCA) at [38]). And second, that the costs "incurred" refer to costs whenever incurred, as determined on the balance of probabilities, and not costs that have already been incurred (McDonald (NSWCA) at [46]). That is to say, future costs fall within the ambit of the provision. 82The Minister argued the El Boustanis' claim for relocation costs should fail because the acquisition was only a partial acquisition because their home was not acquired and, as a consequence, the relocation and reinstatement of their business did not engage s 59(c). 83In my opinion, and contrary to the Minister's assertion, to the extent that these foreshadowed costs would be reasonably incurred (and subject to the limitation contained in s 61), the disputed disturbance items flow from the necessity of the El Boustanis to relocate, albeit from the residue land, in order to re-establish their business. That their residence was not acquired does not preclude compensation for such costs. 84In the present case, the evidence demonstrates that the relocation costs are referable to the cost of re-establishing the horticultural business elsewhere. As the El Boustanis deposed in their affidavits (Mr Elias Boustani swore three affidavits on 17 June, 10 August, and 22 November 2011, respectively and Mrs Guita El Boustani swore four affidavits on 17 January, 10 August, 16 and 22 November 2011, respectively), confirmed in their oral evidence, and as was evident during the site visit, these relocation costs are necessary to re-establish their intensive plant agricultural business. The business cannot be re-established on the residue land given the size of the remaining area and the lack of access to water (the town water being inadequate in this regard). 85These relocation costs would, moreover, include the cost of replacing essential equipment (Hua at [59]) such as, for example, clean soil and grow bags in which the tomatoes are propagated, and fit out costs (McDonald per Biscoe J at [107]-[108] and the authorities cited thereat). 86That the claimed relocation costs could include the purchase of land upon which a residential dwelling was located, also ought not, in light of the intensive nature of the horticultural enterprise in which the El Boustanis were engaged prior to the resumption, matter. As Mrs El Boustani said in cross-examination (T73.38-74.07): A. Yes. I prefer it with a home. If it's close I would've stayed in my home, but I prefer it with a home because like the ideal situation why we like this business is because my kids stay at home, we can work as late as we want, we can pick up the kids, they stay at home, I can work in my backyard. Q. Absolutely, so there's actually, if we were to work out what the four things are that you want and what has been working in your mind when you've been looking for a replacement property, there are four things. You want it to be permissible, so you can carry out your farm-- A. Uh-huh. Q. --you want to be able to put on the same amount of igloos? A. Yes. Q. You've got to be able to afford it, it's got to be in your price range-- A. Yes. Q. --and you want it to have a family home on it? A. If it was empty but close by, that's all right, maybe later on we put a home on it, like when we have enough money, but if it's far, I'd like it to be, to have a home, if it's going to be far. 87Compensation under the Just Terms Act should strive to be, at the risk of being trite, 'just'. So much so is provided by the override contained in s 54 of the Act. If a corollary of the acquisition is to force the El Boustanis to fundamentally alter the manner in which they conduct their business, by, for example, curtailing the hours of cultivation in order to attend to their family (and thus, it may be inferred, curtail their productivity), or to incur extra costs travelling between their home and the land upon which their horticultural business has been re-established, this would not, in my view, amount to 'just' compensation. While the object of compensation payable under the Just Terms Act is not to accommodate the convenience of the dispossessed party, provided the relocation costs, including the costs of relocating to a property with an established home in order to re-establish the family business, are reasonably incurred by the El Boustanis, then s 59(c) permits compensation in respect of these costs. 88Even if I am wrong, and s 59(c) is not applicable, or is insufficiently comprehensive to capture all of the costs of re-establishing the El Boustanis' family business elsewhere, s 59(f) nevertheless, in my view, applies and would do so. 89Section 59(f) has been compendiously described as "a catch-all provision" (McDonald per Biscoe J at [110]) of wide import (Fitzpatrick Investments Pty Limited v Blacktown City Council (No 2) [2000] NSWLEC 139; (2000) 108 LGERA 417 at [20]). Of course, the costs must be reasonably incurred and must also relate to the actual use of the land as a direct and natural consequence of the acquisition (Fitzpatrick (No 2) at [20] and McDonald per Biscoe J at [110]). 90In McDonald Biscoe J summarised the three requirements for financial costs to fall within s 59(f) as follows, which I gratefully adopt (at [110], undisturbed on appeal): 110 ...There are three requirements for financial costs to fall within s 59(f). First, they must be reasonably incurred or might reasonably be incurred. Secondly, they must relate to the actual use, as distinct from the potential use, of the "land", which means the acquired land and not residue land: MIR Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales [2006] NSWCA 314 at [88]; Roads and Traffic Authority of New South Wales v Peak [2007] NSWCA 66 at [56], [59], [66], [67]. However, if the actual use of the residue land is so intimately connected with the actual use of the acquired land so that use of the one is dependant on use of the other, that is sufficient to bring the actual use of residue land within s 59(f): Peak at [71]; McBaron v Roads and Traffic Authority of New South Wales (1995) 87 LGERA 238 (Talbot J), approved in Peak at [71]. Thirdly, they must arise as a "direct and natural consequence of the acquisition". Those words direct attention to the nature or degree of the required causal relationship: Almona Pty Ltd v Roads and Traffic Authority (NSW) [2008] NSWLEC 112, 160 LGERA 375 at [60] (Jagot J). It is not necessarily the same as the applicant's wishes in relation to the building of a new residence: Peak at [74]. 91In Peak the Court of Appeal held that the costs associated with the relocation of a residence from one location on the residue land to another, in circumstances where the remainder of the land had been acquired for the purpose of the construction of a highway, were compensable. The relocation costs included the cost of the connection of services (telephone, water and electricity), a bridge over the gully and the relocation of an access road, fences and furniture. The respondents operated a cattle stud farm over the whole of the land. The Court held that because the use of the residence was an "intimate part" of the use of the acquired land and the residue land for the purpose of the respondents' cattle breeding business, the costs were recoverable (at [90]). 92In my opinion, the evidence demonstrates the requisite "intimate" nexus between the residue land and the acquired land. As Mrs El Boustani described, the presence of the residence on the property was an integral part of the manner by which they conducted their horticultural business. 93Furthermore, and subject to the resolution of whether the El Boustanis could have continued to use the land for the purpose of intensive horticulture past 16 June 2012, the evidence demonstrates that the remaining costs relate to the actual use of the acquired land as an intensive horticultural business and are costs that would be reasonably incurred, particularly given the fact that it is a small scale family business that is sought to be relocated. 94In Hua Pain J adopted, for the purposes of s 59(f), the test derived from Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111 at 128-131 (at [32] and [64]) and asked the following five questions in determining whether relocation costs were compensable: (a)can the business be relocated; (b)does the claimant intend to move; (c)would a reasonable person in the position of the claimant in the prevailing circumstances relocate; (d)is it feasible and practicable to relocate within a reasonable time of vacating the resumed land; and (e)will the cost of relocating be less than the cost of extinguishment? 95The first four questions are readily answerable when regard is had to the evidence of the El Boustanis, both written and oral. The El Boustanis have made an effort to purchase a new property in order to relocate their business. There is no reason why this cannot be achieved. The only possible impediment preventing the El Boustanis from relocating is the inability to obtain finance because the acquisition has meant that they do not have an income stream. 96As to the fifth question, even if the extinguishment value of the business was less than the cost of relocation, this is, of itself, no bar to recovery (Hua at [69]). Courts have recognised the necessity for latitude in the case of a family business where relocation costs significantly exceed extinguishment costs (Hua at [70]). I agree with the El Boustanis that any argument that their claim for relocation costs should be limited to the extinguishment value of the business finds scant support in the language of s 59(f) given that the reasonableness touchstone in that provision relates to the incurring of costs and not the costs themselves.

Would the El Boustanis Have Been Permitted to Continue the Use of the Land After 16 June 2012? 97The Minister submitted that because the 2007 consent would have expired on 16 June 2012, the El Boustanis are unable to claim relocation costs. 98During the hearing it was properly conceded by the Minister that if the 2007 consent was likely to have been extended for another five years after the 16 June 2012 expiry date, then they would be entitled to their relocation costs. At issue, therefore, is whether, absent resumption, the El Boustanis would have been granted the requisite extension to use the land for the purposes of propagating tomatoes (and cucumbers) in igloos. 99It was agreed by the town planning experts, Mr Paul Grech for the El Boustanis and Mr Gary Shiels for the Minister, that the use by the El Boustanis of the land for intensive horticulture was permissible with consent under the 2010 draft LEP, and moreover, that it was likely that consent would be granted. The only question was, for how long. 100The issue may be summarised as whether, in determining whether or not to grant development consent, the council would have regard to the future development of the land, and in particular, the time within which the land will be released, rezoned and available for town centre or urban development. 101It was Mr Grech's opinion that the council would have been unlikely to impose a condition relating to a further time limit because, as he stated in the further joint experts' planning report dated 22 November 2011: a) The igloos are in existence together with associated infrastructure such as irrigation systems and machinery/packing shed and access paths and would not require any works that could have an impact. b) It encourages orderly and economic development consistent with the Objects of the Act by allowing for the continuation of an existing agricultural use which contributes to the food supply of Sydney until such time as the land is required for urban development. PG [Grech] notes the publication "Sydney's agricultural Lands: An Analysis" (Prepared for NSW DoP pg.25) identifies research highlighting that current threat to vegetable farms from planned urban development and that the majority of vegetable production in the Sydney basin is undertaken on sites under 2 ha with 42% being located in the South West Growth Centre. Department of Primary Industries. a) Use of the land for intensive plant agriculture could continue in any case based on continuance of use rights pursuant to s109(1) of the Act established prior to the coming into force of LEP48. However, vegetable production in igloos would be more efficient and provide for consistency in supply and quality and accordingly would be more desirable. b) the use is permitted with consent by LEP 2010 and consistent with the pertinent objectives of the RU4 zone. c) No evidence of any complaints or issues with the operation on Council's file. Discussions with Council did not reveal any complaints or other issues with the subject operations. d) Should consent for the use of the igloos not have been extended, then there was no consent requirement to have the igloos removed. Consequently with no incentive for maintenance the igloos would most likely have become derelict. This would have been inconsistent with objective of the condition to provide a mechanism to enforce maintenance. e) No referral to the DPI would be required under SEPP (Sydney Region Growth Centres) 2006 but in any case the GCC did not object to the current consent. f) A policy [no] longer exists which requires the imposition of a time limitation. g) The objective for previously imposing the time limitation was effectively to have a mechanism to enforce non-compliance issues such as poor maintenance on the igloos. There is no evidence that this was an issue during the preceding 5 years. h) PG met with Council's Manager of Development Assessment, Mr Jeremy Swan, on 15 November 2011 and corresponded by email to seek his view in regard to this matter. Based on Mr Swan's advice it would be likely that such a DA would have been granted without a further time limitation.... 102Moreover: a) Even if a further time limitation was imposed on the further consent (and this was not removed on appeal), it would have been likely that Council would have continued to extend the consent until such a time as the land was ripe for urban development. It is unlikely that Council would prematurely close down a local business. b) That while a DA to extend the use of the igloo would likely be determined by Council prior to the gazettal of the SEPP amendments proposed by the draft Precinct Plans, then the use of the site would have the benefit of existing use rights and any provision of an environmental planning instrument would have no force of effect if to derogate from these rights (per s108 (3) of the Act). 103In short, it was Mr Grech's view that there was no proper planning purpose served by the imposition of a condition providing for a time limited consent. This was so notwithstanding, first, pronouncements by him in his statement of evidence (dated March 2011) to the effect that in his opinion the urban development potential was "imminent" and would be "likely to be able to be realised after early 2012". And second, his concession during cross-examination that any conflict between, on the one hand, the proposed major growth centre proposed for the south west, and on the other, development approval for intensive agriculture, would require management, and that one potential management tool was the granting of time limited development consents. 104In the further joint report, Mr Shiels expressed the opinion that the council would impose a time limit on any consent for these reasons: a) Council previously granted two (2) time limited consents for the construction and use of Igloos on the northern part of the site; b) A merit assessment would need to take into account Clause 16 (Sydney Region Growth Centres) 2006. This Clause becomes one of the "Matters For Consideration" for Council until finalisation of Precinct Planning for the land; c) The Draft Precinct Plan will zone the subject site Business Park B7, which may prohibit agriculture. On 16 June 2012, this Precinct Plan may be imminent and certain and a relevant matter for consideration; d) I have had discussions with Mr Jeremy Swan, the Acting Director of Planning at Camden Council and he is of the opinion that an application to extend the use of the Igloos on the northern part of the site on 16 June 2012 would be a merit consideration and there would be a better than average change [sic] (6/7 out of a probability of 1 to 10) of Council imposing a time limit on any consent.... 105Mr Grech's view was supported by the evidence of Mr Jeremy Swan, a council officer, who expressed the firm opinion that once the council was apprised of all of the relevant merit considerations in a detailed development application - which included the fact that there was no policy basis for the imposition of a time limited consent, there had been no complaints relating to the use of the land, there was support from surrounding neighbours for the use of the land, the igloos had been properly maintained and that, by contrast, a requirement to cease use could result in the igloos falling into disrepair - it was unlikely that the council would have imposed any further time limitation, and furthermore, that he would have recommended the approval of the development application to extend the 2007 consent absent any time bar. If a less detailed development application was lodged, then the consent would have been granted subject to a five year time limit. 106Despite the Minister's valiant attempts to persuade him to adopt a contrary position during cross-examination, Mr Swan did not resile from the views he had expressed. Thus (T289.50-290.37): Q. DA's been lodged and town centre use is the land's been released. Re-zoning is imminent and the ability to develop if for the town centre is also imminent? A. Yeah. Q. In those circumstances, is that a combination of events where because of the potential strategic planning outcomes you would recommend the imposition of a time limit of consent? A. No. Q. Is that because you still don't see there's any potential for conflict? A. I think that - from my experience in situations where town centres are based around fragmented ownership - significant fragmented ownership which is the case in this town centre as is the case in the Green Square Town Centre, my experience is even though all of those things are the case that that doesn't necessarily mean that development will take place soon after. Q. But, sir, isn't that the purpose of the imposition of a time limit upon a brand new consent to stop that conflict. A. I don't think that assists. Q. It is certainly not going to assist to grant an unlimited consent for a use which is clearly inconsistent, is it? A. Well, I don't think it - given the fragmented ownership, that it assists. Q. Thank you, probably be my last question so on that assumption where we have the DA being made at the imminent point that we were just speaking of, is it fair to say there really is no circumstance in which because of potential conflicts of our strategic outcome you would impose a time limited consent? A. No, I've given my examples of when you would impose time limited consents and they're around the more temporary natured things not things that have been there and have ongoing uses. Q. So where there's a potential for conflict between a current use and a strategic use if the proposed use is going to be a temporary one, you'll impose a time limit but if the current use is actually a permanent use you wouldn't? A. I think there's a difference between someone that's there already and someone that's attempted to come in at a time when there may be conflict. 107While Mr Swan is not the ultimate decision-maker, I nevertheless found his evidence compelling. 108The El Boustanis advanced four additional and, in my opinion, persuasive reasons why the council would have granted them, at the very least, a five year extension of the 2007 consent. First, the coming into effect of the 2010 draft LEP on 3 September 2010 and the Camden Development Control Plan 2011 on 8 February 2011 heralded a change in the council's policy concerning the use of the land from one of prohibition, to one of acceptance, of intensive plant agriculture. 109Second, as Mr Grech noted in his oral evidence (T132.10-132.17), the extension of the consent would not hinder the orderly economic development of the land after being released for urban development (see cl 16 of the Growth Centres SEPP) because a five year time limit would not dissuade an interested developer from purchasing the land. 110Third, although the land had been released for urban development and was likely to be rezoned in early to mid 2012, it was unlikely that development of the acquired land for urban purposes would commence at or about this time given: (a)the significant fragmentation of ownership, with, according to the evidence, most of the allotments being too small for large developers; (b)as at the hearing, no work had commenced, there was no timetable for work to commence, the land was not sewered, town water was insufficient for urban purposes and there were still significant road works to be carried out; (c)part of the surrounding land was flood prone and would require filling; (d)the evidence of Mr Dyson was that buyers were not buying land for future urban development, rather they were purchasing land for rural/residential purposes or to build large mansions; and (e)it was more likely that a potential purchaser would have regard to the slow uptake experienced in Edmondson Park since it was released for urban development in 2006 and developers were, according to Mr Dyson, more likely to purchase land in that area rather than in Austral or Leppington. The prices currently being paid did not reflect pressure from developers. 111Fourth, it would be less likely in the circumstances outlined above and in circumstances where the El Boustanis had spent considerable sums of money on igloos and related infrastructure, that the council would effectively destroy their business by refusing to extend the consent for five years or more. 112While I do not accept that, in light of the release and rezoning of the land for urban development, the 2007 consent would have been extended indefinitely, I nonetheless find that an extension of five years would, for the reasons discussed above, have been granted by the council to the El Boustanis. 113This finding renders it unnecessary to determine whether or not the El Boustanis could rely on their existing use rights. The Minister submitted that because the use of the land is now permissible with consent under the 2010 LEP, reliance on such rights is misconceived because there is no planning instrument currently in force with the effect of prohibiting the use (see the definition of "existing use" in s 106 of the EPAA). The effect of s 109 of the EPAA is that although the use by the El Boustanis of the land for intensive plant agriculture is now permissible with consent, it is unnecessary to obtain approval. Furthermore, as a consequence of s 109(2)(d), the use, now permissible with consent, continues, but only in accordance with the conditions of any consent issued in respect of it. Thus when the 2007 consent expired on 16 June 2012, so too, contended the Minister, did the lawful use of the igloos. 114The El Boustanis, by contrast, submitted that s 109(2)(d) had no application because there was no issue of any breach of any condition of consent. The consent, having expired on 16 June 2012, simply had no further work to do. 115Were I required to decide this question, I would be inclined to do so in favour of the Minister, the "existing use" of the land no longer being the subject of prohibition.

Relocation Costs and s 61 of the Just Terms Act 116Section 61 provides as follows: 61 Special provision relating to market value assessed on potential of land If the market value of land is assessed on the basis that the land had potential to be used for a purpose other than that for which it is currently used, compensation is not payable in respect of: (a) any financial advantage that would necessarily have been forgone in realising that potential, and (b) any financial loss that would necessarily have been incurred in realising that potential. 117At issue is the proper construction of s 61, which in turn gives rise to factual questions with respect to whether the acquired land has been valued according to its potential to be used for another purpose and whether relocation costs would necessarily be incurred in order to realise this potential. 118The Minister argued that properly construed, the language of the chapeau to s 61 poses a question of fact, that is, whether the market value of the acquired land is assessed on the basis that the land had the potential to be used for a purpose other than that for which it is currently being used. In the present case, because the current and best use of the land is intensive horticulture, the question of fact is simply whether the market value of the land has been assessed on the basis that the land has the potential to be used for a different purpose, namely, town centre or urban development. 119There is no doubt that this was the methodology employed by Mr Dyson, who, but for the acquired land's potential for urban development, would have ascribed to it a rate of approximately $40 per m2 when regard was had, in particular, to land immediately to the west of the acquired land in Rossmore. 120Although the El Boustanis eschewed any reliance upon an uplift in value by dint of the development potential of the acquired land, overall the evidence was to the contrary. 121Statements by the El Boustanis' valuer, Mr Wood, in the joint expert report dated 11 October 2011, and during cross examination, to the effect that his valuation did not take into account any such uplift due to the potential for a higher use because none of the sales he considered reflected it, were demonstrably not correct and were inconsistent with other statements made by him during the course of his evidence. For example, during cross-examination he said (T217.05-217.24): HEMMINGS: Sorry, you misunderstand my question I think. In - when I asked where it is we find the adjustment that you made you tell us they're not there. Mr Robertson assists by taking us to paragraph 26 to see if they are some of the adjustments you have made. Do we properly understand that working in your mind for the implicit adjustments that you are making, you are making adjustment for example like paragraph 26, second bullet point, roman numeral II, for future urban potential? WITNESS WOOD: I'm saying in this instance that those properties in Austral have less potential for urban development than larger properties that have an area of 2 hectares or more. HEMMINGS: So the answer to my question is yes. WITNESS WOOD: Yes. HEMMINGS: That is evidence that you are making adjustments to the sale for future urban potential? WITNESS WOOD: I'm - yes. 122Mr Wood's approach to assessing the market value of the acquired land on the basis of its potential for another purpose was also evident in his report dated 2 June 2011, where he repeatedly emphasised the realisation of the release potential of the acquired land for urban usage. In that report he said: Its present use for intensive horticultural purposes would have provided an income stream until its release potential had been realised. ... In my opinion there can be no doubt that were it not for the excision of the resumed area the parent site (Lot 5A) could have continued to be used for intensive horticulture until such time that it could be developed for urban usage. 123Further, during the site visit it was made tolerably clear by both Mr Wood and Mr Dyson that a relevant consideration for each of the comparable sales inspected was to identify whether the sale was within, or in reasonably close proximity to, the released precincts of Leppington North and/or Austral, or the proposed Leppington Town Centre. 124It is no doubt for this reason that consideration of this factor was made explicit in the "Comment" column to Mr Wood's tabular description of his comparable sales. Sale 1 is described by him as "Within Leppington Town Centre". Sale 2 is described as "Within South Leppington Release Area" and sale 3 as "Further removed from Town Centre. Inferior location." The approach is also consistent with Mr Wood's criticisms of Mr Dyson's evidence regarding comparable sales as, for example, "too difficult for a potential developer to amalgamate" or "requires amalgamation". I agree with the submission of the Minister that this commentary is irrelevant unless Mr Wood's approach to valuation is one that includes value for the land's potential to be used for a purpose other than intensive horticulture, viz, urban development. 125Although Mr Wood was more acquainted with the rural/residential land in Rossmore and gave oral evidence that the prices of unreleased rural land in Catherine Fields showed rates of $65-70 per m2, I nevertheless prefer the evidence of Mr Dyson, which, overall, I found to be more credible. 126I therefore find that the market value of the land was assessed on the basis that the land had the potential to be used for a purpose other than that which it was being used for at the time of acquisition, namely, urban development. 127In light of this finding, the next question the application of s 61 gives rise to is whether the claimed relocation costs are to be characterised as a "financial loss that would be necessarily incurred in realising that potential". If they are, then the section precludes compensation for these costs. 128In McDonald Biscoe J described the operation of s 61(b) as follows (at [123]): 123 Section 61(b) precludes a claim for disturbance costs to the extent that it is inconsistent with a claim for market value based on the potential use of the land. Otherwise the applicant would be unjustly compensated. Thus, s 61(b) precludes compensation for financial loss based on the existing use if that use would necessarily be terminated in realising that potential: Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of NSW (1998) 101 LGERA 30 at 44 (Bignold J); Serbian Cultural Club v Roads & Traffic Authority of New South Wales [2007] NSWLEC 673 at [120], [123] (Jagot J). In Peter Croke at 44 Bignold J said that, although s 61(b) must be interpreted according to its own terms, its apparent effect: "[is] to deny recovery of compensation for disturbance loss where a claim to such compensation is inconsistent with another claim to compensation based upon the market value of the land, where that value is assessed on the basis of a potential higher use of the land than the existing use and where the realisation of that potential necessarily terminates (or postulates the termination of) that existing use." 129On appeal, his Honour's description was endorsed (McDonald (NSWCA) at [90]-[103]). 130The issue, therefore, is whether, as a matter of fact, any of the claimed "financial loss", that is to say, any of the claimed relocation costs (including stamp duty), would necessarily have been incurred in realising the urban development potential of the acquired land upon which the El Boustanis market value was, as I have found, assessed. 131What is meant by "financial loss" in the context of s 61(b) of the Act was explained by way of illustration by Biscoe J in McDonald (at [126], quoted by the Court of Appeal in Caruso at [180]): 126 Some examples (adapted from examples given in Horn at 36) illustrate the meaning of "financial loss" in s 61(b). Assume that the applicant is voluntarily selling her land for its existing rural use for $500,000, that it will cost her $100,000 to move to replacement property, and that the replacement property costs $500,000. She will have suffered a financial loss of $100,000. If the case were one of compulsory purchase, it would be obvious that unless she receives $100,000 for disturbance, she would, to that extent, have suffered financial loss. To take an example within s 61(b), now assume that she sells the land for its potential as residential subdivision land for $900,000, that it will cost her $100,000 to move, and that she purchases the replacement property for $500,000. She is $300,000 better off than she would have been if she had continued to farm on the land. She has suffered no financial loss. If the purchase were a compulsory one, and she was awarded $100,000 for disturbance in addition to the $900,000, she would be $400,000 better off. In such a case, the $100,000 is not an element of financial "loss" within s 61(b), but merely a diminution of the profit which she obtains by giving up an inferior economic use of the land and realising its higher economic value. The extra value which she could realise could only be realised by ceasing the existing rural use and would more than compensate her for the cost of relocating to another property. 132The term "necessarily" requires a finding that, in order for the subsection to be engaged, the relocation costs claimed by the El Boustanis would have been "inevitably incurred" (McDonald (NSWCA) at [94]) if the potential to develop the land for urban usage was realised or implemented. 133The Minister contended that intensive horticulture and the development of the town centre are inconsistent (cl 16 of the Growth Centres SEPP) and hence to realise the potential of the acquired land, relocation, with its attendant costs, was inevitable. 134The El Boustanis argued that because the urban development of the acquired land was so distant and uncertain, it could not be said that the relocation was inevitable in order to realise its potential. This contention echoed the opinion of Mr Shiels, who considered that a prudent purchaser would have appreciated that there was nothing certain or imminent about the release and rezoning of the land and that any number of factors, for example, the absence of public transport, could delay the ultimate realisation of the acquired land's potential. 135Mr Grech disagreed, noting that since the gazettal of the Growth Centres SEPP the acquired land had been located in the Leppington North precinct within the South West Growth Centre. This suggested that the urban development of the land was likely to occur in the near future and that the current rural use of the acquired land was inconsistent with any town centre development. The current lack of public transport was not, according to Mr Grech, necessarily an impediment to the release and rezoning of the land for urban purposes, although Mr Grech acknowledged that the staging and timing of any development would be subject to a number of variables such as the availability of service infrastructure (water and sewerage) and the amalgamation of allotments. 136While, as I discussed above with respect to s 59(f), I am sceptical that the potential of the acquired land is realisable "after early 2012", I nevertheless do not accept that it was so remote and uncertain that the relocation costs would not have been inevitably incurred by the El Boustanis. On the contrary, having regard to the evidence of the town planners, I find that in order to realise the urban development of the land, these costs would have been incurred. I accept as correct on the planning evidence the submission of the Minister that "igloos and the town centre are inconsistent and cannot co-exist". 137For these reasons I find that recovery by the El Boustanis of relocation costs is precluded by the operation of s 61 of the Just Terms Act. In arriving at this conclusion I am mindful that these costs form a significant proportion of the compensation claimed by the El Boustanis. But were I to hold otherwise, the El Boustanis would be unjustly compensated contrary to the words of s 54 of the Act. This is because the market value of the acquired land has been assessed on the basis of a potentially higher and more valuable use than the usage as at the time of acquisition (Peter Croke Holdings Pty Ltd v Roads and Traffic Authority (NSW) (1998) 101 LGERA 30 at 43 per Bignold J).

Compensation for Lost Profits 138It was not a matter of controversy that compensation for the loss of profits for the 2010-2011 and 2011-2012 years was payable. 139For the 2010-2011 year this sum was agreed in the amount of $104,579, which I accept. To this should be added $11,221, which the parties agreed the El Boustanis had incurred as costs thrown away occasioned by the abandonment of the 2010-2011 crop. This brings the total to $115,800 for the 2010-2011 year. 140The expert forensic accountants, Mr Peter White, on behalf of the El Boustanis, and Mr Paul Russell, on behalf of the Minister, disagreed on whether averages should be used to determine the lost profit for any subsequent years, or whether the adoption of a static figure from the 2010-2011 year should be used. 141The experts' first joint report dated 22 August 2011 used averages over a five year period for gross profit, depreciation, interest and other costs. In order to calculate the 2010-2011 lost profits these average costs were used, together with an estimated crop of 102,600kg of production at a price per kilogram of $2.31. The price per kilogram was derived by taking the average price per kilogram of tomatoes over the agreed selling period of 3 December 2010 to 25 February 2011, for medium to large Gourmet Style tomatoes. 142During this limited period the price of tomatoes per kilogram fluctuated from a minimum of $1.16 per kg to a maximum of $3.10. Indeed, between 2006 and 2011, the sale price of tomatoes per kilogram varied between: financial year $ sale price of tomatoes per kg 2006 $0.79 2007 $1.47 2008 $1.17 2009 $0.96 2010 $1.61 2011 $2.31

143Because of this volatility, arising largely from, according to Mr Russell, the inherent difficulty of predicting tomato prices in the future, and because of the very real likelihood of annual production levels changing, the Minister submitted that the most appropriate methodology was to examine past profits. Reinforcing this logic was the fact that the tomatoes came from the same igloos, using the same propagation techniques, drawing upon the same water supply and were produced by the same people. Hence, assuming the same production levels of 102,600kg and taking an average of the price per kilogram from 2006-2011, an average price of $1.50 per kilogram was derived, which would generate (applying the agreed average costs) a profit for the 2011-2012 year of $58,680. 144Mr White's view, however, was that the best predictor of future tomato prices was the most recent prices and that averaging prices over an extended period of time was of limited utility. It was his opinion, for example, that the 2008-2009 price was an aberration, caused by the effect on the El Boustanis of the proposed acquisition, and moreover, that the 2007 price was too distant in time to be of utility. Thus the same amount as that awarded in 2010-2011 for lost profits should be awarded for 2011-2012. 145The evidence of Mr El Boustani contained in his affidavit of 22 November 2011 revealed that a likely explanation for the increase in prices in the 2010-2011 year was a shortage of tomatoes caused by the Queensland floods. On any view the average price for that year is an aberration and should be ignored. 146Ultimately the El Boustanis adopted a sale price of $1.61 per kilogram for tomatoes for the 2011-2012 year, based on the price per kilogram for the 2009-2010 year, thereby deriving an expected profit of $60,755 for that year. In doing so they criticised the approach taken by Mr Russell insofar as he, first, assumed a constant production of 102,600kg, which given the data for 2008 and 2009 was, in their submission, unlikely, and second, he made deductions for depreciation and interest in future years that were not appropriate given that it was not anticipated that there would be any new borrowings and the current interest payments and deductions for depreciation were declining. 147I accept that the 2006 and 2007 prices are too remote and that the 2008 and 2009 prices must be treated with caution in light of the resumption. Because, for the reasons given above, the 2011 price must be ignored, this leaves the 2010 price, which I adopt. While the sale price of tomatoes varies markedly over time, an upward trend is nevertheless apparent at or around the date of acquisition. Resolving any doubt in favour of the El Boustanis, I therefore award compensation of $60,755 for the loss of profits in 2011-2012. 148The El Boustanis also sought compensation for loss of profits for a further two years, namely 2012-2013 and 2013-2014. This represented the amount of time they estimated it would take to re-establish their business to the point of production after construction of the igloos (and related facilities) on any newly acquired property. Accordingly, the El Boustanis seek an amount of compensation in the sum of $121,511 for these additional two years. 149The Minister's submission was that the El Boustanis were only entitled to an initial two years of lost profits, and that anything further could not properly be characterised as a direct and natural consequence of the acquisition because it was occasioned by the preference of the El Boustanis, as Mrs El Boustani expressed in her oral and written evidence, to wait until proceedings were finalised prior to purchasing a property with an existing dwelling located on it. Put another way, the lengthy delay in re-establishing their business arose as a consequence of the desire by the El Boustanis to "replace something different to that which has been acquired", viz, a farm with no home. 150I do not agree. The evidence that it would take two years before a crop would be produced after the construction of igloos and related infrastructure on any new property was unchallenged and was not dependant upon whether or not the newly purchased property was vacant. Allowing for a year to find a new property and to construct the facilities necessary to grow tomatoes, in addition to the two years necessary to permit full production, in my opinion the El Boustanis should be compensated for a total period of three years of lost profits. That is to say, $115,800 + (2 x $60,755) = $237,310. I note that this approach is also consistent with the evidence of Mr White.

Compensation for Disturbance 151Additional disturbance costs, comprising legal and valuation fees, were agreed by the parties in the sum of $4,193 ($1,624.19 in legal fees and $2,568.47 in valuation fees). This amount is awarded, there being no evidence to suggest that these costs were unreasonably incurred or did not relate to the acquisition.

Conclusion on Payable Compensation 152Conformably with the discussion above, I assess the compensation payable as follows: (a)market value in the amount of $1,194,556 (s 55(a)); (b)disturbance for lost profits in the amount of $237,310; and (c)disturbance in the amount of $4,193 (s 55(d)). 153This brings the total amount of compensation payable to the El Boustanis to $1,436,059.

Costs 154The power of the Court to award costs in claims for compensation for the compulsory acquisition of land under the Just Terms Act is located in s 98(1) of the Civil Procedure Act 2005. This provision states that, subject to the rules of the Court, the power is at the discretion of the Court. 155There are no applicable rules relevant to the determination of costs in proceedings for compensation for the compulsory acquisition of land, other than rules relating to offers of compromise under the Uniform Civil Procedure Rules 2005 ("the UCPR"). Neither r 3.7(2) of the Land and Environment Court Rules 2007 nor r 42.1 of the UCPR (see UCPR r 1.5 and Sch 1) apply to such proceedings. 156Accordingly, there is no presumption that costs should follow the event (Dillon v Gosford City Council [2011] NSWCA 328; (2011) 184 LGERA 179 at [60] and Al Amanah College Inc v Minister for Education and Training (No 4) [2012] NSWLEC 26 at [11(b)]). The contrary view expressed by me in Halley v Minister Administering the Environmental Planning and Assessment Act 1979 (No 3) [2011] NSWLEC 94 (at [37] and [47]) is incorrect. It was premised on the entirely erroneous assumption, albeit encouraged by senior counsel appearing for both parties in that case and in the subsequent related case of Halley v Minister Administering the Environmental Planning and Assessment Act 1979 (No 4) [2011] NSWLEC 113, that r 42.1 applied. 157The legal principles developed by courts to address the issue of whether costs are payable in compulsory acquisition proceedings were recently summarised in Dillon as follows (at [70]-[71]): 70 In other respects, however, the appellants' propositions may be accepted. They support the proposition that a claimant for compensation in respect of a compulsory acquisition should usually be entitled to recover the costs of the proceedings, having acted reasonably in pursuing the proceedings and not having conducted them in a manner which gives rise to unnecessary delay or expense. 71 That approach is also consistent with the absence of any general presumption that costs should follow the event: the owner who has been compulsorily dispossessed is entitled to take reasonable steps to seek the judgment of the Court in respect of the adequacy of any compensation offered. 158The El Boustanis have notionally succeeded insofar as they have obtained an amount of compensation in respect of the acquisition that is greater than the amount determined by the Valuer-General and is in excess of that contended for by the Minister in the amended points of defence ($1,211,852, excluding any agreed disturbance costs under s 55(d)). Ordinarily this would entitle them to an award of costs in their favour. 159However, the El Boustanis have failed in respect of a number of issues raised during the proceedings, including establishing an entitlement to relocation costs, which, as I have noted above, comprised a significant portion of their compensation claim and occupied a sizeable amount of the hearing time. In these circumstances it is possible that the Minister may seek an alternative costs order. Likewise, as the issue of costs was not the subject of argument before the Court, the El Boustanis may seek a different costs order. 160To avoid further litigation I propose to order that the Minister pay the El Boustanis' costs of the proceedings, unless, within 14 days, either party applies for an alternative costs order. Orders 161The orders of the Court are as follows: (1) that the determination of the Valuer-General dated 19 August 2010 in respect of the compensation payable by the respondent to the applicants for the acquisition of Lot 4 in plan of acquisition DP 1127208 being part of Lot 5A DP 8979 ("the determination") is set aside; (2) that the applicants' objection to the determination is upheld; (3) that the respondent pay the applicants $1,436,059 in compensation in respect of the acquisition assessed as follows: (a) market value of $1,194,556 (s 55(a) of the Just Terms Act); (b) lost profits of $237,310; and (c) disturbance of $4,193 (s 55(d) of the Just Terms Act); (4) that the respondent pay the applicants' costs of the proceedings, unless within 14 days either party applies for an alternative costs order; and (5) that the exhibits be returned.

Amendments 25 October 2013 - Admin error Amended paragraphs: Index added before Judgment DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 October 2013