Everest Project Developments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 & The Roads and Traffic Authority of New South Wales

LEGISLATION CITED: Land Acquisition (Just Terms Compensation) Act 1991 South Sydney Local Environmental Plan 1998

Abbey Orchard Property Investments Pty Ltd v Sydney City Council (1978) 37 LGRA 230 AMP Capital Investors Ltd v Transport Infrastructure Development Corporation [2007] NSWLEC 397 AMP Capital Investors Ltd v Transport Infrastructure Development Corporation [2008] NSWCA 325; (2008) 163 LGERA 245 ASIC v Rich [2005] NSWSC 149; ASIC v Rich [2005] NSWSC 149; (2005) 190 FLR 242 Ballina Waterways Pty Ltd v Roads and Traffic Authority of New South Wales [2009] NSWLEC 96 Boland v Yates Property Corp Pty Ltd (1999) 167 ALR 575 Brell v Penrith City Council (1965) 11 LGRA 156 Carson v Minister for Environment and Planning (1990) 70 LGRA 215 Chino Pty Ltd v Transport Infrastructure Development Corporation [2006] NSWLEC 768,(2006) 153 LGERA 136 Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Co of South Australia Ltd (1947) 74 CLR 358 Cook, Saad, Raguz & Ors v Roads and Traffic Authority of New South Wales [2007] NSWLEC 136 De Ieso v Commissioner for Highways (1981) 27 SASR 248 Deputy Federal Commissioner of Taxation v Gold Estates of Australia (1903) Ltd (1934) 51 CLR 509 Estate Constructions of Australia Pty Ltd v Council of the City of Sydney [2007] NSWLEC 756 CASES CITED: Gosford Shire Council v Green (1980) 48 LGRA 201 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 Leichhardt Council v Roads & Traffic Authority of NSW [2006] NSWCA 353, (2006) 149 LGERA 439 McDonald v RTA NSW [2009] NSWLEC 105, (2009) 169 LGERA 352 Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority (NSW) [2005] NSWLEC 467, and [2006] NSWCA 314 Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 Roads and Traffic Authority (NSW) v Mosca (2006) 146 LGERA 335 Roads and Traffic Authority (NSW) v Collex Pty Ltd [2009] NSWCA 101; 165 LGERA 419 Spencer v The Commonwealth (1907) 5 CLR 418 Sydney Water Corporation v Caruso [2009] NSWCA 391, (2009) 170 LGERA 298 Trust Company of Australia Ltd v Valuer General [2007] NSWCA 181; (2007) 154 LGERA 437 Turner v Minister of Public Instruction (1956) 95 CLR 245 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 Willoughby City Council v Transport Infrastructure Development Corporation (No.2) [2008] NSWLEC 238 Yates Property Corporation Pty Ltd (in liq) v Darling Harbour Authority (1991) 24 NSWLR 156

DATES OF HEARING: 8, 9, 10, 11 September 2008; 20 October 2008; 6, 24 November 2008; 2, 3, 4, 5, 8 December 2008; 20, 21 April 2009; 14, 27, 28, 29, 30 July 2009; 3, 4 August 2009; further written submissions 12 August, 26 August, and 3 September 2009; 30 September 2009

APPLICANT Mr J Webster SC and Mr A Pickles (Barrister) SOLICITORS Minter Ellison

FIRST RESPONDENT LEGAL REPRESENTATIVES: Submitting appearance SOLICITORS Pike Pike & Fenwick SECOND RESPONDENT Mr P Tomasetti, SC SOLICITORS Corrs Chambers Westgarth

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Sheahan J

31126 of 2007 Everest Project Developments Pty Limited v Minister Administering the Environmental Planning and Assessment Act 1979 & The Roads and Traffic Authority of New South Wales

JUDGMENT A. General Introduction 1 His Honour: This is a judicial determination, under the provisions of the Land Acquisition (Just Terms Compensation) Act 1991 ('JTC Act'), of the appropriate compensation to be paid for land compulsorily acquired by the State from the applicant company. 2 The acquisition by the Minister on behalf of the Roads and Traffic Authority of New South Wales ('the RTA'), took effect on 10 August 2007, and was for the purpose of urban road improvement in the Waterloo area of Sydney (see gazettal at Exhibit A4, tab 38). The parties 3 The Minister was the appropriate acquiring authority, as the relevant road project was not, at the time of acquisition, included in the then current five-year works programme of the RTA, although the road reservation was approved on 1 December 2000. The acquisition took place pursuant to consent orders made in class 4 proceedings (07/40065) on 29 May 2007. 4 The applicant changed its name from Estate Project Developments to Everest Project Developments, and became part of Becton Property Group, all at about the same time (August-September 2007) as the acquisition was gazetted. Being dissatisfied with the compensation determined and offered by the Minister ($3.51M), the applicant appealed to this court on 7 November 2007. In its amended points of claim ('APOC') filed 2 December 2008, compensation of $8,743,720 (excluding GST) was claimed. 5 The proceedings were commenced against only the Minister, but the RTA was joined by consent on 7 December 2007 as the government agency responsible to pay any compensation flowing from the acquisition. Shortly thereafter, the Minister filed a "submitting appearance, save as to costs", leaving the RTA alone to actively defend the proceedings. The Hearing 6 The hearing ran for some 17 actual days of evidence between 8 September 2008 and 30 September 2009, and generated extensive oral and written submissions at its conclusion. The content of those closing submissions varied markedly from that of the opening submissions twelve months earlier because of the way the litigation evolved. 7 In the end, the applicant's claim remained at more than $8.7M, with a fallback position of slightly more than $3M, but the RTA finally submitted that the applicant was entitled to no compensation at all in respect of market value (see par 12 of Amended Points of Defence filed on 21 April 2009 - 'APOD'). 8 The court attended a view of the relevant lands, their environs, and various nominated "comparable" properties, on 9 September 2008 (see agreed report in Exhibit A21). A model of the proposed development on the residue land was also made available to the court on that inspection. The relevant lands 9 The relevant area of Waterloo has historically been a "light industrial" area, but in more recent times it has been moving towards more residential development, especially after the establishment of a Green Square station on the Airport Rail Link was announced in 1995. 10 At the date of acquisition, the address of the parent lot was 830-840 Bourke Street, Waterloo, and it was known as Sydney Gate, because of a cul-de-sac by that name which bisects it from west to east. It was partly developed and partly vacant. The improvements on the "brownfield" site were not seen to add any value to it at the hearing. It had a frontage of approximately 200m to Bourke Street and 130m to Lachlan Street. Sydney Gate is located in the 278ha "Victoria Park"/"Green Square" urban renewal area, about 600m from Green Square Railway Station, and 750m northeast of the 13ha Town Centre (see Exhibit A12). Prior to the acquisition, the parent parcel had an area of some 36,883m2 (some evidence says 36,877m2 - see Exhibit A13). 11 The Green Square area moved from the old South Sydney Council area into the City of Sydney on 6 February 2004. 12 The acquired land comprised approximately 7.5% of the parent parcel. It is a sliver of vacant, vegetated but unimproved, land, "narrow and irregular" in shape, rather like a boomerang, at the northern end of what had been a large rectangular parent holding on the south-east corner of the intersection of Lachlan and Bourke Streets, Waterloo. It is approximately 2,781m2 in size (see the deposited plan ('DP') at Exhibit A4, tab 39, fol 1215, and maps/plans at Exhibit A2, fols 416 and 567). The RTA will use it to create what will be the new left turning lane for traffic heading west and turning out of Lachlan Street into Bourke Street. 13 At the time of acquisition the acquired land was part of Lot 1 DP 611113, one of three lots comprising Everest's holding at that location, and it was zoned "Arterial Road Reservation 9(a)", under Amendment 7 of South Sydney Local Environmental Plan 1998 (amendment gazetted 7 September 2001). On acquisition, the acquired land became Lot 11 DP 1112470 (Exhibit A4, tab 39). 14 The residue land (i.e. Lot 10 of DP 1112470, plus the two southern lots which were part of the parent parcel, namely Lot 3 DP 624897 and Lot 45 DP 624898), is still identified as Sydney Gate, and has an area of approximately 34,102m2 (in some evidence 34,096m2). It is zoned "10(e) Mixed Use" under Amendment 7. Despite some testing of the market for its possible sale in 2008, Becton, as at the date of hearing, remained the owner of the residue land. 15 It is common ground that, but for the acquisition, the acquired land would also have been zoned "10(e)", and would have become part of the applicant's proposed development of the Sydney Gate site. It is clear that the acquired land, standing alone, is "not developable in its own right and needs to be part of a bigger site" (Exhibit A24, p9, Q12). A masterplan for the development of Sydney Gate, i.e. the residue land, as required by the relevant planning regime and prepared in contemplation of the acquisition, received approval on 23 June 2005. 16 The parent parcel, and, under the masterplan approved 23 June 2005, the residue land, would be developed in four "blocks", numbered 'A', 'B', 'C', and 'D', with 'A' closest to and roughly parallel to Lachlan Street (and adjacent to the acquired land) and most directly affected by the acquisition, 'B' immediately south of 'A', and 'C' and 'D' aligned west-to-east further south along Bourke Street towards Sydney Airport (see T27.7.09, p 30, LL 15-35, and Exhibit 2, fols 519 and 563A). 'A' and 'B' are north of the cul-de-sac, and 'C' and 'D' south of it. Some of the land, in the parent/before scenario, or in the residue/after scenario, would be required to be set aside for public use. 17 The four notional "blocks" are not required to be developed either at the same time or in any particular order, but the masterplan and other evidence suggests they were intended or expected to be developed in the order 'B', 'A', 'C', 'D'. The acquired land was part of Block 'A'. 18 The applicant appears to have been resigned to the outcome of its proposals for that masterplan (which will be discussed in Section F of this judgment) - it did not seek to appeal to this court against any aspect of the approval, but neither did it seek (at least prior to the hearing of this matter) any modification of it. There have, however, been some relevant Class 1 proceedings in this court concerning the development of the residue land. Earlier Class 1 proceedings in this court 19 On 25 November 2005, a deferred commencement consent was granted to a 28 April 2004 development application ('DA') for Block 'B', amended on 22 July 2005 to accord with the masterplan approval (DA in Exhibit A3, tab 25). The deferred commencement condition required a planning agreement to be made covering "public domain" items to the value of approximately $4M. Council on 22 January 2007 refused a modification application made on 17 July 2006 (Exhibit A4, tab 28), seeking to reconfigure the residential units to increase the number of bedrooms, at the expense of living space, and the applicant appealed to this court (Matter No. 10074 of 2007).

20 The applicant had also appealed against the deemed refusal of a DA submitted on 22 June 2006 for Block 'A' (Exhibit A4, tab 27 - LEC Matter No.10054 of 2007). The Council's major concern with that DA was overshadowing of residential flats at 11A Lachlan Street (adjacent east of the Sydney Gate site), and of proposed public open space (then part of Sydney Gate) to the south of No.11A.

21 Both matters came on for hearing before Bly C on 22-24 October 2007, and, in his judgment on 24 October 2007 (Estate Constructions of Australia Pty Ltd v Council of the City of Sydney [2007] NSWLEC 756), the learned Commissioner recorded that the parties had reached agreement on concerns, amended plans and conditions of consent (including deferred commencement). He decided that it was "unreasonable" for Council to require that the s 94 contributions (and other community "levies", e.g. for affordable housing), a total of about $7.4M, be paid before a construction certificate issued, and that payment would be required by the time the occupation certificate was to issue. This Judgment 22 With that introductory summary as background, I turn now to deal with the matter in the following order: B: An introduction to the valuation contest. C: The witnesses and documentary evidence. D: The JTC Act and its application. E: An outline of the planning instruments and other relevant documents and policies. F: A more detailed account of the evidence before the court. G: The question of site contamination. H: The town planning dispute. I: The valuation evidence. J: Consideration B. Introduction to the valuation contest before the court 23 As already noted, the acquisition by the Minister was notified in the Government Gazette on 10 August 2007. 24 On 10 September 2007 the Valuer General issued its notice determining compensation to be $3.51M (Exhibit A4, tab 37), comprising $3.5M market value, plus $10,000 for disturbance costs, and those amounts were offered to the applicant. 25 Having rejected that determination, the applicant's case before this court rests on a claim that the loss of this relatively small area of land from the parent Sydney Gate site has seriously reduced the "yield" from the residue of that site. The applicant argues that, although the area acquired can, by reason of Council policy, be notionally "added back" in order to calculate floor space ratio ('FSR') for development of the residue, the unavailability of the acquired land prevents the masterplan development approved for the Sydney Gate residue land from qualifying for a bonus FSR of 1:1, to achieve on the residue the maximum allowable total FSR of 2.5:1, with a gross floor area ('GFA') of 78,179m2. 26 Disturbance costs have now been agreed at $65,000, and the valuers also agree that the highest and best use of the relevant land was mixed development, with an emphasis on "residential" over "non-residential". There remains, however, a serious dispute about the applicant's claim of unrealised potential, and the market value compensation engendered by it, flowing from the acquisition. 27 On the one hand, the applicant claims it had to accept 2.12:1 FSR, pursuant to the relevant planning documents, policies and design criteria (see Section E of this judgment), including "public domain" and residential/non-residential "split" or "mix" considerations, strictly because it no longer had the acquired land upon which to site its development. The applicant says the acquired land has become the "critical missing element" in the development of Sydney Gate. The acquisition took from the parent land a prominent and well-defined corner, the best location on Sydney Gate for commercial or retail development, achievable in buildings of considerable height. Had the acquired land been available for development, it would have enabled the development of an additional 11,728m2 of floor space. 28 On the other hand, the RTA claims that the applicant's 2.12:1 FSR outcome on the residue flows from the applicant's attitude to design, and its inability or failure to satisfy the Council on Public Domain issues, the latter more so than the former, rather than from town planning and site constraints on the development of the residue land. 29 It was and remains agreed (Exhibit A13, par 33, and Exhibit A36) that if the court accepts the applicant's town planning case, the compensation for market value under s 55(a) of the JTC Act, or for diminution in value of the residue land under s 55(f), would be $8,678,720, calculated on a "direct comparison and a before and after valuation" basis by multiplying an agreed valuation of $740 per m2 of potential GFA by the "lost floor space" area of 11,728m2 (Exhibit A13, pars 33-4). The applicant supports its claim with a "check" valuation of a "hypothetical development" (APOC 7, 9, & 11). 30 If the court does not accept the applicant's town planning case, the applicant claims market value compensation of $3,086,910 (APOC 10, and Exhibit A25, par 23), calculated by multiplying (a) the acquired land area of 2,781m2, by (b) the base maximum FSR 1.5:1, by (c) the agreed $740 per m2 GFA. 31 On the other hand, the RTA argues (and pleads in its APOD filed 21 April 2009): (1) that as the area of the acquired land was included, in accordance with an established and well-known Council policy, with the residue land, in Council's calculations for the purpose of the applicant's achieving as high as possible bonus FSR on the residue land, its " value ", in terms of its development potential, was absorbed into the residue land, and to now provide compensation for that acquired land would effectively result in the applicant " double dipping " ( Exhibit R1 , pars 6-7), by receiving a " value " for the acquired land twice ; and/or (2) that the valuation of the acquired land should be determined, in the alternative, as if it were a separate parcel of land, and so perceived by hypothetical parties to a hypothetical sale of it on the relevant date. 32 By the end of the case, the RTA was submitting that the market value is really NIL (actually calculating a negative sum), but certainly no more than a maximum of $445,000 (calculated as a loss in gross realisation - Exhibit R2, par 100), and preferably only $200,000 (being "nominal" compensation, appropriate and "reasonable having regard to the use potential of the land before and after including the highest and best use being for road purposes" - Exhibit R2 par 92, and Exhibit R10, par 35), with either positive amount to be reduced by an allowance of $263,584 for the removal of asbestos contamination (Exhibit A36). 33 The RTA does not accept that the applicant can make a claim for "injurious affection". While the RTA did not plead "betterment", it advanced several "enhancements" or savings accruing to the residue land as a consequence of the acquisition, and submits they should be taken into account in the interests of justice. It submits that having less land available for development has saved the applicant not only some costs of asbestos removal, but also a substantial sum by way of its contribution to "public domain improvements" ('PDI'). The RTA does not accept the applicant's $3M fallback position, because it says that all the development potential of the acquired land (not just its entitlement to bonus FSR) was "transferred" to the residue parcel. 34 I will return (in Section I of this judgment) to the primary valuation evidence presented and relied upon by the parties, but there are among the evidence several other possible indicators of the market value of the acquired land:

(a) At about the time of the acquisition (see T27.7.09, p27, LL 1-12 - the valuation is dated 28 August 2007), the applicant company and its landholdings (about 20 properties) were sold to Becton Property Group Ltd for a total consideration of $580M (T27.7.09, p64, L21), of which $70M is considered by Becton and its valuers ( DTZ ) to have concerned the parent parcel (see T27.7.09, p38, LL 44-49; p58, L 48-p59, L7; p64, LL 29-35; p82, LL 17-30, and Exhibit R7 pars 47-48), which became Becton's only site in the Green Square area (T27.7.09, p32, LL42-46). 7.5% of $70M would be $5.25M, and the RTA submits (par 11) that the $70M translates to $2,052 per metre 2 paid for the residue land. Approximately 12 months after both the compulsory acquisition and the sale of Everest to Becton, in about the third quarter of 2008, Becton tested the market unsuccessfully on a sale of the residue land for $100M (T27.7.09, p24, L46-p25, L4; p26, LL38-44; p27, L14-p28, L19). (Offers are not " comparable sales " - see Alan Hyam " Valuation of Land in Australia ", 3 rd Edn, pp92-93).

(b) There are also in the evidence two valuations which were obtained by the first respondent, but not now relied upon by the RTA - (i) one by Geoff Healy & Associates, commissioned by the Minister, dated 23 August 2006, i.e. about 12 months before the acquisition, showing a market value of $2.6M , stated to be calculated on a " land " (apparently not floor space!) value of $900 per m 2 ( Exhibit A4 , tab 35), and (ii) the determination valuation, prepared for the Valuer General by FPV Consultants, and relied upon by the Minister when acquiring the land, showing a market value of $3.5M at the date of acquisition, calculated on a floor space value of $600 per m 2 , i.e. $25M in the " before ", less $21.5M in the " after " situation ( Exhibit A4 , tab 36).

(c) That FPV document (at fol 1209 of Exhibit A4 ) also records the sale of the parent parcel to the applicant on 24 December 2002 for $48,250,000 (sale apparently completed in May 2003).

(d) Various assumptions about land value were made in Becton's preparation of a range of feasibility studies. None of those studies dealt with the residue site as a whole, but it could be inferred from them that the residue land had a value in 2009 of $53M-$63M (see T29.7.09, pp47-55). 35 The Healy valuation noted (Exhibit A4, tab 5, fol 1182) that the improvements on the parent/residue parcel may generate a good return, and so add value to the land. It also assumed that the land was not contaminated, and recommended an investigation of that possibility, with the valuation to be possibly revised if contamination were found. The $900 per m2 of "land" was based on the "high level of market evidence available", but his "direct comparison" sales were all of development sites in the area (see fol 1185 and the table of sales) and he thought the subject land could be "residential" rather than "mixed". (Healy wrongly took the area of the acquired land to be 2,876m2). C. The Witnesses and other evidence 36 The court had the assistance of oral and written evidence from 14 witnesses, including a senior Becton representative, Sebastiano Catalfamo, Head of Development (since January 2007), who gave evidence late in the proceedings (Exhibit A31 and Exhibit A32. See also Exhibit A16 and Exhibit A37). 37 Three witnesses associated with the local government sector gave affidavit and oral evidence regarding the role of, and the applicant's dealings with, the relevant local council - originally South Sydney and later City of Sydney. Stuart McDonald and Jason Perica, who had been Council planners involved in Green Square, at various levels and at relevant times, were called by the RTA, over the objections of the applicant (see T10.09.08, pp1-4), and Jeremy Swan, still with Council as an Area Planning Manager, was relied upon by the applicant in reply. 38 Mr Swan was/is the Council officer to whom any inquiries from parties to any hypothetical sale would be addressed (his affidavit 2 September 2008, par 27). Messrs McDonald and Perica occupied more supervisory positions, less involved with detailed design. All three provided individual affidavits, conferred (Exhibit A24), and gave concurrent oral evidence. (A lot of Council documentation is to be found in Exhibits A1-A8, A18, and R4). 39 Architectural evidence was provided by Guy Lake (Exhibit A14 and Exhibit A15) for the applicant, and Nigel Dickson (Exhibit R3 and Exhibit A29) for the RTA. Town planning evidence was provided by James Harrison (Exhibits A1 and A22) for the applicant, and Harvey Sanders (Exhibit R1) for the RTA. Mr Sanders carried out what Mr Tomasetti called (T4.8.09, p16, LL43-44) a "forensic town planning perusal" of the documents in evidence. Each pair of experts "conferenced" and gave concurrent oral evidence (Lake/Dickson Exhibit A27 and Exhibit A28, and Harrison/Sanders Exhibit A9, Exhibit A10, Exhibit A23). Mr Sanders also accepted in court Mr Harrison's calculations regarding FSR and PDI (in Exhibit A30), which had not been the subject of any of their three joint conferences. 40 The independence of Messrs Lake and Harrison as expert witnesses was questioned by the RTA during the proceedings, because they had been retained by the applicant throughout its masterplan dealings with the Council. 41 The RTA says that both Mr Lake's and Mr Harrison's evidence should have little or no bearing on the outcome of this compensation matter, given that they advised the applicant, time and again, despite consistent rejections by Council, that it could achieve 2.5:1 on the site, prior to the submission of the approved masterplan, which achieved only 2.12:1. The RTA says they are advocates for one party (c.f. UCPR Schedule 7, "Code of Conduct"), and that no weight should be accorded to their claims in their evidence in this matter that their failure to achieve 2.5:1, something which they spent years advocating, was due to the acquisition of the subject land. The RTA says that their evidence is speculative, and not objective. 42 The applicant filed written submissions on 4 August 2009 in response to this questioning of witness independence. In those submissions it was said that, although Mr Lake and Mr Harrison had worked with the applicant on the masterplan design and the further amendments prior to its final approval, these circumstances did not "show how the relationship [between the involvement in the preparation of the Masterplan and the provision of evidence in this case] is capable of corrupting the expert itself". In this respect the applicant relies on comments made by Austin J in ASIC v Rich [2005] NSWSC 149; (2005) 190 FLR 242, at par [346], and seeks to distinguish this court's decision in Willoughby City Council v Transport Infrastructure Development Corporation (No 2) [2008] NSWLEC 238 by limiting it to its own facts. 43 I had allowed the evidence of both witnesses (see T08.09.08, p51, L49-p52, L42, in respect of Mr Harrison's statement, Exhibit A8, and T09.09.08, p6, L13-p7, L9 in respect of Mr Lake's evidence, Exhibits A14 and A15). So it does indeed become a question of the weight to be attributed to their evidence when the court comes to determine whether or not it was the design, and/or the "public domain", issues which mainly contributed to the failure of the applicant to achieve the full bonus FSR available to the site. It should be noted that both witnesses gave relevant factual evidence helpful to the court's task, and I thought they acted professionally, and not in "advocacy mode", when giving their evidence. 44 Three valuers have been involved throughout - Wayne Wotton (Exhibits A11, A35, A38) and John Booth (Exhibit A12) for the applicant, and Peter Dempsey (Exhibit R2 and Exhibit R10; and see also Exhibit R6) for the RTA. They conferred five times (see Exhibits A13, A25, A26, R7, and A36; and see also Exhibit A17), and gave concurrent oral evidence over several hearing days. 45 The often repeated "conferencing" of experts within their various disciplines succeeded in resolving some issues and narrowing others, but it also brought to prominence other matters, as a result of which the RTA's case shifted over time. 46 During the valuers' joint conferences, issues and evidence emerged regarding: (1) studies made of the feasibility of development of the residue site, and (2) the extent and implications of the water table beneath, and the contamination of, all the relevant lands. 47 Three experts were engaged late in the case to address the contamination/remediation issue: The applicant retained Matthew Kritzler (Exhibit A33), a construction economist from W T Partnership, which had been involved on-site for the applicant, and the RTA engaged John Meredith (Exhibit R9), a quantity surveyor from Rider Levett Bucknall (NSW) Pty Ltd, and Peter Graham (Exhibit R8; and see also Exhibit R11), a soil scientist from SGA Environmental. Those three experts also "conferenced" (see Exhibit A34), and gave concurrent oral evidence. 48 Each side also filed several volumes of other allegedly relevant documents (Exhibits A18-A20, and Exhibits R4 and R5). Overall the court has been burdened with an amount of documentary material befitting the name of the applicant company.

D. The JTC Act and its application 49 The JTC Act is a code, and relevantly provides: " 3 Objects of Act (1) The objects of this Act are: (a) to guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition, and (b) to ensure compensation on just terms for the owners of land that is acquired by an authority of the State when the land is not available for public sale… …

10 Statement of guaranteed acquisition at market value (1) When, on request by or on behalf of an owner or prospective purchaser of land, an authority of the State gives a person written notice to the effect that the land is affected by a proposal for acquisition by the authority, the notice must contain the following: (a) a statement that the Land Acquisition (Just Terms Compensation Act 1991 guarantees that, if and when the land is acquired by (insert name of authority) under that Act, the amount of compensation will not be less than market value (assessed under that Act) unaffected by the proposal, … 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. … 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, … (d) any loss attributable to disturbance, … (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. "

50 The codification of the law by the JTC Act means that (1) some previously well-established concepts, such as "value to the owner", were not continued, and (2) one has to approach with some care some of the leading pre-1991 authorities, such as Abbey Orchard Property Investments Pty Ltd v Sydney City Council ("Abbey Orchard") (1978) 37 LGRA 230. (The applicant relies on Abbey Orchard because of its factual similarities to the present case, and Rath J's decision that compensation should include actual losses). 51 As s 54 mandates, compensation under the Act must be "just". Section 54 has been described as the "just compensation override". See Leichhardt Council v Roads & Traffic Authority of NSW ("Leichhardt") [2006] NSWCA 353, (2006) 149 LGERA 439, at [28]. Later in Leichhardt (at [37]), Spigelman CJ, speaking for a five-member Court of Appeal bench, said: "The context in which, relevantly, s 56(1) falls to be interpreted, is as one of the matters identified in s 55, which constitutes an exhaustive list to which regard must be had when determining the amount of compensation under s 54. These matters do not, however, constitute a mathematical formula. They are matters which the valuer must take into account. The dominant test is contained in s 54, that is, the task is to determine the amount that will "justly compensate the person for the acquisition of the land". This carries into effect the object of the Act set out in s 3(1)(b) "to ensure compensation on just terms for the owner of land that is acquired ...". (emphasis added) 52 Where a genuine doubt remains about value, it should be "resolved in favour of a more liberal estimate". Boland v Yates Property Corp Pty Ltd (1999) 167 ALR 575, at [356], citing Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Co of South Australia Ltd (1947) 74 CLR 358, at 373-4. 53 As noted by Biscoe J at first instance in McDonald v RTA NSW ("McDonald") [2009] NSWLEC 105, (2009) 169 LGERA 352, at [14], ss 3(1)(a) and 10(1)(a) guarantee that an "acquiring authority must pay at least the market value of the acquired land unaffected by the [public] proposal" (AMP Capital Investors Ltd v Transport Infrastructure Development Corporation [2008] NSWCA 325; (2008) 163 LGERA 245, at [63], [72]). This ordinarily requires an examination of the expert evidence to determine the "highest and best use" of the land (Trust Company of Australia Ltd v Valuer General [2007] NSWCA 181; (2007) 154 LGERA 437, Sydney Water Corporation v Caruso [2009] NSWCA 391, (2009) 170 LGERA 298). 54 The issue of "highest and best use" is agreed in this matter - the highest and best use of the residue is (and of the parent was) as a mixed development, with an emphasis on residential, but the proportions as between residential and non-residential have not been agreed. 55 The definition of "market value" in s 56(1) was at the centre of the High Court's decision in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority ("Walker") [2008] HCA 5; (2008) 233 CLR 259. The court pointed out that the opening words of the definition reflect the test laid down by the court in Spencer v The Commonwealth ("Spencer") (1907) 5 CLR 418. That test has been applied down the years, and was summed up by McHugh J in Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 436 ([49]-[50]) in these terms (quoted in Walker at [51]): "Value is determined by forming an opinion as to what a willing purchaser will pay and a not unwilling vendor will receive for the property. In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value. Those matters will include the predicted impact of future events as well as the experience of the past and the rates of return on other investments. As Isaacs J pointed out in Spencer v The Commonwealth [at 441]: "We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property." 56 As Jagot J noted in Cook, Saad, Raguz & Ors v Roads and Traffic Authority of New South Wales [2007] NSWLEC 136, at [35]-[36]: " Comparable sales are the conventional technique to ascertain the market value of land. Adjustments are likely to be required, as 'no two parcels of land are identical in all respects … Before using any allegedly comparable sale, therefore, the valuer must consider whether, having regard to the circumstances (using that word in its broadest sense) appertaining to the parcel of land in question, and to the transaction of sale, there are sufficient similarities to the circumstances appertaining to the subject land and to the notional sale presupposed by the test formulated in Spencer v Commonwealth … In Roads and Traffic Authority (NSW) v Mosca (2006) 146 LGERA 335 at [15], Handley JA (with whom Mason P and Bryson JA agreed) emphasised that: 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 : Yates Property Corporation Pty Ltd (in liq) v Darling Harbour Authority (1991) 24 NSWLR 156 at 175-176; 73 LGRA 47 at 65-66 citing Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 at 313 and Turner v Minister for Public Instruction (1956) 95 CLR 245 at 268-289." (emphasis mine). 57 In valuing on the basis of "potentiality" one must make appropriate allowance for any risk that the claimed potential is not realised. See Yates Property and Turner (cited in [56]). Floor space lost by the subject site by reason of the acquisition is a "potentiality" in the RTA's submission, and put as an "actuality" in the applicant's case. 58 While the Spencer test found its way into the JTC Act (s 55(a)), its "perfectly acquainted" requirement did not. Parties to the hypothetical sale are assumed to be "fully informed" and to make "all proper inquiries". Whether they will obtain expert advice is a question of fact, but, if they do so, those expert opinions are relevant "through the judgment of the hypothetical" parties. See De Ieso v Commissioner for Highways (1981) 27 SASR 248 at 252. The purchaser is not to be taken to have "any uncommon gift of foresight" - Deputy Federal Commissioner of Taxation v Gold Estates of Australia (1903) Ltd (1934) 51 CLR 509, at 515. 59 The requisite conclusion reached would be a "reasonable likelihood" or a "probability", rather than a "certainty", of proving correct an assumption (such as that having the acquired land available for development in this case would generate an additional 11,728m2 of GFA). See Chino Pty Ltd v Transport Infrastructure Development Corporation [2006] NSWLEC 768, (2006) 153 LGERA 136. 60 The authorities establish that in cases where only part of a holding is acquired, the "before and after" valuation methodology is to be preferred as, when correctly applied, it captures within "market value" other compensable elements such as "severance" and "special value", and some "disturbance" items, and avoids "double counting". See Gosford Shire Council v Green (1980) 48 LGRA 201, Carson v Minister for Environment and Planning (1990) 70 LGRA 215 ("Carson"), Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority (NSW) [2005] NSWLEC 467, and [2006] NSWCA 314. However, a "reality check" method is usually adopted. In this case the applicant's valuer, Mr Wotton, used a hypothetical development as a check method. 61 In McDonald, Biscoe J was somewhat critical (at [41]ff) of the hypothetical development method, in comparison with the comparable sales method, because of its many speculative aspects. (His Honour's decision has gone on appeal). 62 In his opening submissions in this case, Mr Tomasetti SC, for the RTA, said (T08.09.08, p39, LL 42-43): "all land had (sic) some value and so therefore you have to offer some compensation", and in its APOD (par 13) the RTA admitted that "compensation is payable for the acquired land under s 55(a)" of the JTC Act. Later in the hearing, Mr Tomasetti said (T20.4.09, p3, LL40-42): "…land never has no value at all unless perhaps it's contaminated or … there's a liability really attaching to it…". 63 When tested by the court at the very end of his closing submissions on how NIL compensation can be "just" (see s 54 of the JTC Act, and par [51] above), if all land has value, and "betterment" is not pleaded, Mr Tomasetti repeated his overriding submission that the code in the JTC Act must be applied, and that the acquired land's "real value" had been transferred to the residue land as a result of the Council's well known policy on the calculation of FSR in circumstances such as occur in this case (see T04.08.09, p52, L43-p55, L10). (On "betterment", see Brell v Penrith City Council (1965) 11 LGRA 156; Pain J's first instance judgment in AMP Capital Investors Ltd v Transport Infrastructure Development Corporation [2007] NSWLEC 397, upheld on appeal, as cited at [53] above; and Ballina Waterways Pty Ltd v Roads and Traffic Authority of New South Wales [2009] NSWLEC 96). 64 In Roads and Traffic Authority (NSW) v Collex Pty Ltd ("Collex") [2009] NSWCA 101; 165 LGERA 419, Hodgson JA (in his dissenting judgment) saw a result in which a claimant was awarded $7M for the compulsory acquisition of only 13% of an area of land acquired by it only two years earlier for $7.2M as "utterly contrary to common sense", but conceded that such a reality test did not necessarily make the decision legally wrong: At [221] His Honour expressed a preference for a " valuation soundly based on a bargain recently made in respect of " the actual property " by two companies experienced in the relevant area of business " as a " sounder indicator of market value within s 56(1)", rather than cash flow calculations depending on doubtful assumptions and projections. At [231] His Honour cautioned judicial valuers not to " defer uncritically to the opinions of experts, particularly where those opinions are about matters affected by somewhat complex factual and legal issues. It is generally desirable, where possible, to engage in commonsense reality checks on what the experts are saying, if only to ensure that their views are not distorted by mutual misunderstandings in a complex legal and factual situation ", such as confronts this court in the present case. 65 Any element of "double dipping" could not be seen as "just", nor as passing Hodgson JA's "common sense" reality test. On the other hand, the court would not lightly conclude that a NIL result was "just".

E. The Relevant Planning and Development Approval Regime LEP & DCP 66 The South Sydney Local Environmental Plan 1998 ('the LEP' - Exhibit A1, tabs 1 and 2) and the South Sydney Development Control Plan(s) ('the DCP' - Exhibit A1, tabs 5 and 6, and Exhibit R4, tabs 1 and 2) contain specific provisions relevant to developments in the Green Square area (designated "Special Precinct No.9"). 67 The parent and residue land were zoned "10(e) Mixed Use", and the various "mixed use" zones were reviewed in 2005 (Exhibit R4, tab 6). The review report was adopted with some amendments by the City of Sydney Planning Committee ('CSPC') on 7 April 2004 (Exhibit R4, tab 7). The objectives for the "10(e) Mixed Use" zone under the LEP are (Exhibit A1, tab 1, fols 19-20, cl 21E): "(a) to establish a predominantly employment-based zone while allowing residential use on appropriate development sites, and (b) to allow for appropriate business activities which contribute to the economic growth and employment opportunities within the Green Square area, provided they are environmentally compatible in terms of design and operational requirements with residential development, and (c) to allow residential development within the zone, provided it is designed so as to be compatible with other non-residential uses and will not adversely affect the operations of existing lawfully operating industrial uses, and (d) to minimise any adverse impact, including social impact, on residential amenity by devising appropriate design assessment criteria and applying specific impact mitigation requirements by the use of development control plans, and (e) to ensure that development within the zone contributes to a highly sustainable, vibrant community, and reflects equal and integrated consideration of social, economic and environmental design issues." (emphasis added) 68 The relevant design requirements deal with height and form of buildings. They recognise that corner sites, such as the subject site, have an important streetscape function which can be enhanced by additional height (DCP at Exhibit A1, tab 5, fol 234). 69 The DCP provides for a "maximum" FSR of 1.5:1, but applicants can seek approval for "bonus" floor space, increasing the FSR by no more than 1:1, giving a real "maximum" permissible FSR of 2.5:1 (see Exhibit A1, tab 3, fols 192-3, and map at fol 312). Bonus Floor Space 70 The bonus floor space system is designed to foster negotiations between Council and developer as to the package of PDI to be required, and to result in a deed (planning agreement). It was intended to encourage developers to deliver material public and community benefits, beyond those facilitated by "standard development consent requirements", such as s 94 contributions. 71 The objectives of the Council's bonus floor space policy (along with its rationale, methodology, etc) were set out in the report of a review of it in November 2004 (Exhibit R4, tab 3) in the following terms (fol 408): "(a) Improve the liveability of the area and provide a high quality street environment (attractive and 'people friendly') as a consequence of rapid transformation from predominantly warehouse/industrial uses to predominantly medium to high-density mixed uses. (b) Capitalise on the strong link between visible improvements to the public domain and acceptance/satisfaction of new development - there is a desire, if not expectation, for improvements to the public domain amongst existing and new residents. (c) Provide more appropriate footpath widths, crossing points, landscaping and lighting along pedestrian streets, embellish the street environment generally at the expense of road space for fast moving vehicles, through traffic and non-essential parking; provide a variety of community focal points and spaces for social inter-action and recreation, and embellish heritage features and contribute to community facilities and services. (d) Design the public domain for a diverse range of activities (walking, recreation, entertainment, environmental performance) and make more efficient use of it. (e) Provide for infrastructure works which are difficult to achieve through other means (eg. cross site drainage works). (f) Establish social development works, as a means of contributing to developing communities, and strengthening links between the Green Square community and existing surrounding communities." 72 As that review document notes (in par 60(d) on fol 423): " Floorspace bonuses are conditional upon achieving acceptable environmental amenity and an appropriate package of works to deliver public benefits ". 73 Questions of urban design and any PDI package will be more closely linked to some extent on larger sites, such as Sydney Gate, because parks, other public spaces, and roads are integral components of the development. 74 At a post-amalgamation meeting of the expanded Sydney City Council on 19 April 2004, the Council approved and adopted a minute and recommendation from the Lord Mayor dated 15 April 2004 (Exhibit R4, tab 8, and Annexure 'A' to Mr Perica's affidavit 30 October 2008), concerning the use of discretion in the application of planning controls across the whole city area, including the processes by which developers secure "bonus floorspace". The Lord Mayor said in her minute (Exhibit R4, tab 8, fol 458): "… There have been past instances in the implementation of South Sydney Development Control Plan 1997 where large variations to floorspace ratio controls were granted in return for monetary or in kind contributions for public works. At times these variations were well in excess of the 0.25:1 contained in the Plan. Where there has been a lack of transparency or public understanding of the process, the community does not accept the claimed public benefits for which the 'bonus' was given, undermining community confidence in the very plan from which the bonus provisions came. Where the planning controls allow extra floorspace, then the public should see and understand the 'public benefit' being provided, so its overall merits can be weighed and considered. … In the former South Sydney City Council local government area, the controls and provisions relating to height and floorspace ratios are contained in a Development Control Plan (DCP 1997). I have made firm public commitments during the election campaign that a stricter approach to such controls should be applied, as occurs in the former City of Sydney's planning controls, wherein these controls are in a Local Environmental Plan. Embodying the core planning controls in a LEP provides them with greater statutory weight. … The process of varying controls and creating new Local Environmental Plans will take some time, and involve extensive community involvement and public consultation, and I will ask Council to commence this process. In the interim however, the existing planning controls continue to apply. It is important that the city be clear in articulating its philosophy and approach for applicants and the community". 75 The recommendation which was carried by the Council, included the following (fol 459): "… that Council: … (D) discourage the option of receiving monetary contributions for public domain improvements arising from the 'bonus floorspace incentive' provisions in the South Sydney Development Control Plan (DCP) 1997 and encourage developers to provide public domain benefits as envisaged in the DCP, such as: additional useable public open space; public transport enhancements; public pedestrian links; cycle paths; and the like;" (emphasis added) 76 This issue of bonus floor space/community projects/cash contributions was further considered, in the specific context of the special nature of the Green Square project, on 15 November 2004, when Council dealt with a comprehensive report on the floor space/PDI scheme (Exhibit R4, tab 3, Exhibit A18, tab 2, fols 148-165, and annexure 'A' to Stuart McDonald's affidavit of 29 October 2008) and resolved (Exhibit R4, tab 4, fols 424-5, Exhibit R4, tab 5, fols 431-3, and Exhibit A18, tab 2, fols 146-7) to:

"(A) recognise and allow continuation of the Bonus Floorspace Policy as a significant means of achieving public domain infrastructure and other community benefit projects in the Green Square Redevelopment Area, until such time as a review of funding mechanisms for public infrastructure is undertaken by the City, within the context of its staged City-wide review and integration of the various planning controls and strategies that currently apply to the area; (B) allow continuation of the application of monetary contributions to fund and deliver area-wide projects within the Green Square Redevelopment Area (including towards the Green Square Town Centre infrastructure from outside the area), and that these contributions be collected into financial accounts set up by the City for the purpose for which the monetary contributions were received and be used for the purpose; and (C) further examine indexation of the February 2003 monetary rates applied to benchmark the minimum value of bonus floorspace works in the Green Square Redevelopment Area, on the basis of movements in the Sydney median house price index, and that a report on this matter be presented for consideration by the Council and the Central Sydney Planning Committee prior to the end of 2004." (emphasis added). 77 The award of bonus floor space to an applicant requires the added area of the project (1) to have acceptable environmental and amenity impacts, and an acceptable urban design outcome, and (2) to involve the funding or provision of a package of appropriate PDI, to a "specified value sufficient to warrant" the Council's granting of the bonus. 78 It was common ground between the parties that the Council's established practice in assessing masterplans, and determining what, if any, bonus floor space would be approved, was to base the relevant calculations on the entire parent parcel, where a public authority acquires some of it, even though the actual development will eventually occur on the residue land only (Sanders par 6.7 in Exhibit R1. See also Exhibit A24, p9, Q13, and Exhibit A26, pars 4 and 5).

Special provisions for Green Square 79 The "Urban Strategy" for Green Square (Exhibit A1, tab 6, fol 271) is "to establish a transit oriented ecologically sustainable community, based on a mixed use urban environment with a balance of residential and employment generating activities…". 80 Division 2 of Part 4 of the LEP (cls 27A-27K) makes "Special Provisions" for "Development at Green Square". Clause 27A sets out a "Vision for Green Square", and the concepts which "sustain" it. Clause 27B takes the reader to Schedule 4 for the relevant planning principles to apply to Green Square. 81 Clause 27C requires masterplans to be adopted by Council to regulate development not considered minor, and cl 27D regulates the preparation and content of such masterplans. Many of the considerations in cl 27D relate to public amenity and design principles (see Exhibit A1, tab 1, fols 28-29). Clause 27G specifically provides that masterplans may be amended by following the same process by which they are made. Clause 28 is headed "Built environment design principles and masterplans" and requires development governed by the LEP to satisfy a list of design principles. 82 While Schedule 1 has a dictionary of definitions, and the major relevant distinction is between "residential" and "non-residential" use, "commercial", "residential", and "retail" development are all defined in cl 27KC (at fol 31), which falls within the division of the LEP (Division 2A of Part 4) making "Special provisions" for "Green Square Town Centre". 83 The Green Square planning principles in Schedule 4 (Exhibit A1, tab 1, fols 183-186), include a section on PDI (see fol 184, but also the DCP at Exhibit A1, tab 6, fols 283ff). Contamination 84 Contaminated land and the requirement for remediation plans are dealt with in cl 39 (Exhibit A1, tab 1, fols 42-3). PDI programmes - works or cash? 85 Council apparently appointed consultants in August 2002 to prepare a strategy for PDI in Green Square (see Exhibit A2, tab 19, fol 691). The applicant opened its negotiations with Council for development of the Sydney Gate site in about May 2003, and submitted its first masterplan DA in October 2003. The Lord Mayor's minute was approved in April 2004 (see [74]-[75] above). Council released a report on PDI policy on 4 November 2004, further considered the monetary contributions issue for Green Square on 15 November 2004 ([76] above), and proceeded to finalise its PDI policy in 2005. 86 The November 2004 PDI policy report stated that development "must be acceptable in terms of environmental capacity, compliance with development controls and impact on adjoining properties and the surrounding area. The development must be acceptable based on a merit assessment, before the possibility of accepting public domain improvements is considered" (Annexure A to McDonald affidavit 29 October 2008). 87 Among the materials in evidence is a Council-published guide to its Bonus Floor Space System in terms of developing PDI, called "Developing Public Domain Improvements: A Guide to Council's Bonus Floor Space System" (Exhibit A1, tab 3, fols 192-4; see also Exhibit A8, tab 9). 88 That guide states that the aim of the policy is to provide public and community benefits above and beyond what the development itself would bring; and that an applicant's "expression of interest … does not guarantee approval of any additional floor space by Council. Council must firstly be satisfied that the proposed FSR is acceptable in terms of social and environmental impacts, also having regard to Council's vision and applicable controls for the subject area."

89 The monetary rates used for benchmarking the value of such improvements were fixed by Council on 26 February 2003 (Exhibit A18, tab 2, at fols 135-6), and are set out for the various precincts - in Green Square Redevelopment Area they are $475/m2 for residential, $275/m2 for retail, and $200/m2 for "other" non-residential, all including a minimum cash contribution of $100/m2 from sites outside Green Square Town Centre to support infrastructure development at that centre. 90 Elements that may be included in a PDI package include dedication of land, and the provision of, or contribution to, through-site links; private land (such as courtyards, plazas and the like) being accessible to the community; road works (civil infrastructure); other civil infrastructure works (including stormwater amplification, integrated water treatment facilities, aerial bundling or undergrounding of cables and improved street lighting or monetary contributions, amongst other things); community buildings and facilities; parks projects; public transport projects; public art; and any other works or improvements at the discretion of the Council (see Exhibit A1, tab 3, fols 192-4). F. History, Background, and Evidence in more detail 91 On purchasing Sydney Gate the applicant hired Mr Lake (of Batessmart Pty Ltd) as architect, and Mr Harrison (of JBA Consulting) as planner, to assist in the design and preparation of the masterplan, and to brief the Design Review Panel of the South Sydney Development Corporation ('SSDC'). 92 Broadly, the original Masterplan design comprised three development options, 'A', 'B', and 'C', (not to be confused with the alphabetical labelling of the development blocks in the subsequent approval), with proposed FSRs of 1.5:1, 2.5:1, and 2.5:1, respectively, and each with a residential/non-residential mix of 95%:5%. Option 'C' emerged as the applicant's preferred option (and it continued to be modified in the hope of achieving the maximum FSR on offer - see Exhibit A8). 93 Option C (as framed and submitted to Council in October 2003) sought a FSR of 2.5:1, a 95% residential/5% non-residential mix, and approval for four buildings of 4 to 9 storeys, plus one of 15, and another of 18. The PDI package in the preferred option included a north-south link park, a public plaza, and an east-west road link, inter alia. 94 As noted above (at [16]-[17]), the Sydney Gate project was to be developed in four "blocks" - 'A' along the Lachlan Street frontage adjacent to the acquired land, 'B' to the south of 'A', and 'C' and 'D' south of 'B', with 'C' on the Bourke Street side and 'D' west of 'C' - not necessarily simultaneously, as one project, nor in any particular order. 95 There was a long negotiation between the applicant and Council (and the SSDC, and later the CSPC), regarding how Option C could achieve approval as the applicant's masterplan for Sydney Gate. 96 Pre-DA discussions took place with various Council officers and with the SSDC's Design Review Panel during 2003 (Exhibit A1, tabs 6 and 7), and constraints were imposed on the applicant as the process unfolded - the requirement of a linear park, the dedication of a southern access road, restrictions on tower buildings and on the height of perimeter buildings generally, the requirement for setbacks, and the proportions in which uses could be mixed. 97 The applicant's draft masterplan was lodged with Council as a DA on 2 October 2003 (Exhibit A2, tab 9). It was notified, and JBA responded on 22 December 2003 to various objections received and various issues raised by Council officers (Exhibit A1, tab 8). The Design Review Panel also commented during December 2003 (Exhibit A1, tab 8A).

98 Council appears to have seen many problems with the October 2003 plan, and required a series of revisions and changes to be made over time - a summary of some appears in Exhibit A2, tab 21; (see also tab 19) - before its final assessment and determination by Council (D/2003/828) on 23 June 2005 (Exhibit A2, tab 20). As at February 2004 the RTA had not finalised its design for the reconfiguration of the intersection(s) of Lachlan/Bourke/McEvoy Streets (Exhibit A2, fol 10), and, as noted above ([71]-[76]), Council policies were evolving over that time.

99 The applicant's preferred option ('C') maximised PDI (see Exhibit A2 at fols 397ff). It proposed a programme it said was worth approximately $17M, including cash of $3.7M for the Town Centre. It detailed substantial land dedications (see fol 563A). 100 Negotiations continued into 2004. South Sydney Council merged with the City of Sydney Council in February 2004, and an election was held. During 2004 Council gave close attention to the role of cash contributions in PDI programmes (see again [74]-[76] above). 101 On 29 March 2004, the City Council wrote to the applicant's project designers with a six page list of concerns, including, amongst various design matters, a specific item on PDI cash contributions (Exhibit A2, tab 11). At this point, the land use ratio sought by the applicant was still 95/5 in favour of residential. JBA and Batessmart responded at great length on 30 April 2004 (Exhibit A2, tab 12), including an attachment describing the $17M PDI package proposed (fols 586-90). 102 Heritage and other issues were canvassed in late June 2004 (see Exhibit A18, tab 3). 103 On 13 July 2004, the Council sent a significant and lengthy letter to JBA (Exhibit A2, tab 13) headed "Bonus Floor Space Works". Mr Webster described it during his submissions (T3.8.09, p45, L31) as "a fascinating document in itself"! It has been central to the contest between the parties ("the 13 July letter"). Each party has relied on it at different times for different purposes, but the court needs to have regard to it as a whole, as well as to some specific remarks. In it Council noted that it had "some serious concerns about the merits of the application", with which it would deal in separate correspondence, and indicated only partial agreement on key matters. The letter raised many pertinent issues with respect to its consideration of the masterplan, especially PDI works, land dedications, and cash contributions. 104 Between some introductory/general remarks (on fols 632-3) and a summary on the last of the letter's ten pages (fol 641), a detailed critique of the applicant's then current proposals regarding PDI appeared under ten headings - land dedication, publicly accessible land, road/public plaza works, footpath/verge works, monetary contributions for Green Square Town Centre infrastructure, public art, section 94 contributions plan, Green Square Public Domain plans, child care, stormwater management, public transport, and "other" proposals. Council concluded that the value of those PDI elements which it found acceptable was just under $9M, little more than half the applicant's nominated $17M. Exhibit A30 establishes that the Council's evaluation of the package results in bonus FSR 0.38:1 on a 75/25 mix residential/non-residential (or 0.42:1 if 80/20). 105 I must refrain from reproducing the 13 July letter in full, but some of its contents of particular relevance are extracted below:

(i) (from fol 632): " As you are aware, the determination of bonus floor space available for each development is contingent on the development being acceptable on planning grounds in the first instance. You have previously been advised that the Council has some serious concerns about the merits of the application. This will be confirmed under separate letter. Secondly the proposal must be acceptability (sic) in environmental capacity terms, and to the appropriateness of the proposed public benefits package in achieving Council's infrastructure and planning objectives. Council officers select and evaluate the merits of works in relation to the planning objectives documented in the South Sydney Plan, as well as other Council-derived public works initiatives in various stages of formulation. It should be noted that the determination of bonus works is at Council's discretion, and is a requirement in addition to the standard requirements for site development ." (ii) (from fol 632): "In relation to this site, and on the basis of information provided in your letter dated 30 April 2004, the total indicative value of bonus related benefits required to support the additional floor space is approximately $17,009,516. The scope of works outlined in this letter are what Council's officers consider are the minimum necessary to support any bonus floor space. Council reserves the right to adjust the extent of the works and/or reallocate funds in order to utilise the final quantum of agreed funds." (iii) (from fol 633): "In the event that a scope and standard of works other than that described in the attached plan and outlined below be proposed by you, Council reserves the right to undertake further detailed assessment of your proposal and provide advice in relation to the acceptability of these works as well as their costs."

(iv) (from fol 635): " Council has resolved to allocate a component of bonus floor space related funding as monetary contributions for infrastructure provision within the Green Square Town Centre. In relation to this site, the applicable quantum of bonus floor space funding for Town Centre infrastructure is $3,687,700."

(v) (from fol 636): "The Green Square Public Domain Plans have integrated the typologies of public art identified in the strategy with the planning for other elements of the public domain in Green Square. The plans indicate three public art works in the area of the Sydney Gate masterplan site. The proposal includes a number of opportunities for public aft and water features, these opportunities include: 1. New Section 94 open space areas (accommodating two typologies) 2. North-South pedestrian link 3. Termination of McEvoy Street vista at Bourke Street forecourt (under suspended building) 4. Urban public plaza (a new element that has not been identified in public domain plans) Consistent with Council's approach of implementing the GSPAWF Strategy, Council officers may recommend support for the allocation of bonus funds toward the provision of public art. However, the proposed allocation of $2,300,000 of bonus funds for public art (which constitutes 23% of the total value of the Green Square public art and water features program), is not supported. Council's adopted Green Square Public Art and Water Features Strategy (2001), allocates a contribution of $100,000 for each work. Notwithstanding Clause 27 D (4) of LEP 1998, you have not provided any documentation (for example, the delineation of commission types, concepts) that provides a basis for the allocation of amounts greater than $100,000 per work. The allocation of bonus funds for public art will be subject to the provisions of the GSPAWF Strategy."

(vi) (from fol 637): " As you are aware both Sydney Gate Park, located on the Sydney Gate masterplan site, and Sydney Gate Link Park, located to the south of your site are elements of the Section 94 Contributions Plan 2003, Green Square New Open Space Works Programme. As such these elements of the public domain will not be included in the bonus floor space package. Therefore, with respect to your submission dated 30 April 2004, element nos. 3a and 3b are not supported".

(vii) (from fol 637-8): " To date, various inconsistencies between Council's public domain plan and your masterplan documentation have remained. Council officers have outlined the scope and standard of works required for the site as documented in the Green Square Public Domain Plans. You are advised that our position with respect to these plans remains unchanged. The masterplan documentation requires the following amendments: 1. Provision of a three metre wide boundary setback along the (sic) Bourke Street in accordance with the supplied drawing (Sydney Gate Park, dwg no. 01); 2. Provision of a three metre wide ground floor setback along Bourke Street in accordance with the supplied drawing (Sydney Gate Park, dwg no. 01); 3. The adoption of road and footpath typologies in accordance with the supplied drawing (Sydney Gate Park, dwg no. 01); 4. An increase in the width of the Section 94 open space area (north and south) in accordance with the supplied drawing (Sydney Gate Park, dwg no. 01) to accommodate the incorporation of the right of carriageway along the eastern boundary; 5. Detailed analysis and redesign of the regional stormwater management proposal. 6. A 2.65 metre wide increase in the width of the eastern boundary road adjacent to Block A to provide a 5.0 metre wide footpath parallel to the right of carriageway".

(viii) (from fol 639): "… Council is attempting to implement a regional stormwater management strategy to address major overland flow and flooding issues downstream of the masterplan site, essentially through the integration of Section 94 Open Space areas with stormwater infrastructure works. … …Council officers do not support an allocation of $250,000 towards 'Stormwater amplification' from the bonus floor space funds and, until the matter of design feasibility is resolved, do not support the allocation of any bonus funds towards this component of public domain works".

(ix) (from fol 640): "…Whilst the Green Square Public Domain Plans propose bus laybacks and bus shelters along Bourke Street, such works would need to be coordinated with the overall package of works proposed within these plans for Bourke Street. It would therefore be premature to implement the public transport component of the Bourke Street proposal with the development of this site. There is therefore no opportunity to link the layover and bus shelter works proposed within the Green Square Public Domain Plans to the floor space bonus package for this site. Due to the absence of works associated with public transport improvements that can be readily implemented, there is little opportunity to make any contribution towards public transport improvements as part of the floor space bonus package for this site".

(x) (from fol 641, concluding the letter): " SUMMARY Table 6 below provides a summary costing for bonus floor space items that may be acceptable, but are dependent on the Council accepting a reasonable form of development on the site. The costs are based on a detailed review of areas and rates for the scope of works documented on the attached public domain plan by Council's quantity surveyors. Bonus Floor Space Summary [Table 6] Package Item Value ($) Land Dedication $949,000 Publicly Accessible Land $584,200 Roads and Public Plaza Works $2,378,800 Footpath Works $758,427 Public Art and GSTC Monetary Contributions $4,187,700 Total Value of Bonus Floor Space Works $8,858,127 As the masterplan seeks the in principle endorsement of floor space and built form, to qualify for the above-mentioned elements of the bonus floor space package the masterplan documentation must be amended to reflect the scope and standard of public domain works documented in the attached plan". 106 Mr Lake met with Council representatives to discuss the 13 July letter on 5 August 2004 (Exhibit A2, tab 13A). 107 Further issues, largely of a design nature, were raised by way of a letter dated 3 September 2004 (Exhibit A2, tab 14), and the Council first proposed a reduced residential component. Design issues were then discussed at a meeting on 30 September 2004 (Exhibit A2, tab 15). 108 On 25 October 2004, JBA wrote formally to Council advising Estate's intention to submit a revised masterplan (Exhibit A2, tab 16). 109 When Council released its PDI consultant's report on 4 November 2004, it applied to land within the Green Square area, including the Sydney Gate site. On 15 November 2004 Council adopted its policy on cash contributions (see par [76] above), and on 24 November 2004 (Exhibit A7) the applicant submitted its amended and then preferred masterplan, with a FSR of 2.12:1 and a land use mix of 80/20. (Exhibit A7 does not include all the documents submitted - a notable omission from the exhibit is the site contamination report included in the application; see also See Exhibit A8, par 17, where Mr Harrison lists some issues canvassed during the negotiations in late 2004). 110 The amended masterplan set out the following staging proposed (Item 3.13 of Exhibit A7, p22): " Development will generally proceed in 4 stages, comprising: Stage 1 Redevelopment of Block B; Extension of Sydneygate Road; Construction of northern portion of the proposed link park/detention basin; and Construction of east-west street between Blocks A and B (refer to Figure 31). Stage 2 Redevelopment of Block A.

Stage 3 Redevelopment of Block C; Construction of southern boundary access road; and Construction of new north-south pedestrian link. Stage 4 Construction of southern portion of the proposed link park/detention basin; and Construction of urban plaza".

111 Among the attachments to the masterplan (and included in Exhibit A7 as appendix I) is a comprehensive PDI package, complete with costings. 112 Some unsourced "assessment notes" dated January 2005 were produced by the City Council on subpoena (Exhibit A2, tab 17), and the evidence includes a Council briefing note dated 10 February 2005, focussing on three major issues - height, parking, and PDI (Exhibit A2, tab 18). 113 The applicant then clearly adopted the view that it had pressed Council as far as it could on FSR and mix of use. 114 The reduction in the heights of the proposed towers resulted in a loss of 3,500m2 of GFA, some of which Council was happy to see transferred to buildings proposed for Block 'A'. 115 As one would expect when zone objectives require the zone to have a "predominant" employment focus (see [67] above), the Council had repeatedly refused to entertain the 95/5 mix or even the 80/20 mix, and the final masterplan approval was for 75% residential, 19% commercial and 6% retail. The applicant's case is that "the highest and best use of the land was to get as much residential as you possibly could …" (T08.09.08, p41, LL16-17). Commercial space is said to be less economic to develop and to drag down a project's value (T8.12.08, pp4-6, and p74, L32ff): For example, a height limit of 18m would accommodate six residential floors, c.f. five commercial floors. 116 When Council signified to the Central Sydney Planning Committee its approval of the further amended masterplan on 21 June 2005 (Exhibit A2, tab 19), the committee granted its consent on 23 June 2005 (notice of determination at Exhibit A2, tabs 20 and 21A, with stamped plans at Exhibit A3, tab 22). 117 The final approval (D/2003/828) involved further reductions in tower heights, a land use ratio of 75/25, a GFA of 78,179m2 at 2.12:1 (c.f. 92,193m2 if FSR were 2.5:1), a proposed east-west road, some "packing" of the development towards the north of the site, and the setting back of the development along the western and southern edges of the site, due to a heritage building constraining the site to its south (the Millers Storage Building). 118 The environmental and amenity impacts were seen as "acceptable", and the relevant controls as having been complied with. The floor space lost from the towers was, pursuant to condition 3, to be redistributed towards the Lachlan Street end, in a particular order, (see Exhibit A2, tab 20, fol 724), a contamination remediation plan was required (condition 43), and PDI issues were to be included in an agreement. Council accepted most of the PDI package offered, including some items it had not favoured in the 13 July letter. The package was "priced" at $9.3M, including a cash contribution for Green Square, sufficient to support a bonus taking the FSR up by 0.68:1. 119 The applicant did not seek the full bonus (1:1) when making its amended application in final form (Exhibit A2, fol 689, item 111). Of the total FSR submitted and achieved in the masterplanning process (2.12:1), 0.62:1 (c.f. 0.68:1) was "bonus" floor space. (That FSR on the whole of the parent land translates to 2.29:1 on the residue land alone).

120 Between July 2005 and the acquisition in August 2007, the applicant made its DAs, and (where relevant) modification applications, in accordance with the approved masterplan, in regard to Blocks 'A' and 'B'. The disputes regarding those DAs, amendments and s96 modifications were, as noted earlier, resolved between the parties during a hearing before Bly C in October 2007 (see [19]-[21] above). Under the court's approvals, Block 'A' was to have a GFA of 16,608m2 (2,103m2 retail + 14,505m2 commercial), and Block 'B' 29,303m2 (28,865m2 residential + 438m2 retail), leaving 32,268m2 to be placed on Blocks 'C'/'D', to give the total 78,179m2 (Exhibit A13, Annexure 1). 121 As at August 2009, there had been no commencement of development works on the site, for either of Blocks 'A' and 'B', and Becton was still negotiating with Council (see Mr Catalfamo's oral evidence in T27.07.09, commencing at p28, L32). Becton staff carried out a large number of feasibility studies for the development of various Blocks (see Exhibits A31, A32, A37 and A38), but all of them were post-acquisition. 122 The various feasibility studies do not assume any particular staging of the Sydney Gate project, but it was always logical to do Block 'B' before 'A', and Mr Catalfamo said the development of 'A' is "absolutely … independent" of 'B', 'C' and 'D' (T27.07.09, p73, LL13-15). There will also be some internal staging - for example, the eastern building on Block 'B' (building 'B') will be the first developed (T27.7.09, p76). 123 It is also clearly logical and appropriate to concentrate in Block 'A' the non-residential components of the development. Various blocks of residential units can be commenced when pre-sales reach the usual threshold (66%), but long-term pre-commitment to major commercial/retail space is necessary before Becton commences work on Block 'A'. In the absence of such a pre-commitment, it is almost certain that Block 'A' will remain deferred while development work is undertaken on Blocks 'B', 'C' and 'D', probably in that order. The possible need for two basements, if a large retailer commits to Block 'A', will also complicate the viability of developing that block (T27.7.09, pp79-81). 124 Mr Catalfamo was keen to make the point, during his evidence, that Becton builds residential accommodation for sale not lease, and has a different approach from other developers, including the interests formerly in control of the applicant company. This Sydney Gate development is likely to cost $400M (Exhibit A38), and take up to 8 years (T8.12.08, p77, and T29.7.09, p38), and Becton's policy is to use all available space well, do its own construction, and market its product as a development with a "point of distinction" or "difference" (T27.07.09, p41). 125 Mr Lake's firm, the principal design consultant at the time of the masterplan process, is no longer retained, having been replaced by Turner & Associates, and Becton is negotiating with Council to amend the Sydney Gate project (firstly the DC for 'B', but possibly then the masterplan - see T27.7.09, pp66-74), to increase the yield of the residue land, at a PDI cost of $15M. (There is clear evidence that an agreed PDI costing of about $15M will attract a full 1:1 floor space bonus across the whole residue site with a 75/25 mix in favour of residential - see Exhibit A22, par 15). G. The Question of Site Contamination 126 The production on subpoena of the various Becton feasibility studies, to which I referred in the previous section, brought on to the court's agenda, and excited party and valuer interest in, the issue of site contamination. 127 A contamination report by Sinclair Knight Merz ('SKM'), dated 21 December 2002, was submitted to Council by the applicant with the October 2003 masterplan DA (see Appendix 'D' at Exhibit A2, tab 9, fols 455-502), and recommended further investigation. A report by Earth Air Water Consulting and Monitoring Pty Ltd ('EAW'), apparently prepared in May 2004, was then submitted with the amended November 2004 masterplan DA, but it is not included in the copy of the DA as placed before the court (Exhibit A7). It appears that EAW also sent a relevant fax on 17 November 2004 (see Exhibit R8, p3, par 3.1, item 3), but that also is not in evidence. However, the text of the applicant's amended November 2004 submission dealt with the EAW report in the following terms (s 4.10 on p34 of Exhibit A7): " The scope of work included the coordination of excavation, removal and validation works with respect to the underground storage tanks located on the site. The conclusions of this report are as follows: Sampling of solids, during the excavation and removal of underground fuel storage tanks identified some petroleum hydrocarbon and some BTEX contamination beneath and adjacent to one of the four tanks removed. This soil was excavated and disposed of to a licensed waste facility. Validation testing of the area has confirmed no residual contamination. The analysis of soil samples collected show contaminant levels in 17 of the 18 samples (representing 14 locations) to be above the phytotoxity guideline limits for substances including mercury. However, only two of these locations exceed the 'Column 2 (NEHF D)' guidelines for lead and petroleum hydrocarbon. The level of some elements at locations which exceed the prescribed phytotoxity levels will result in restrictions on the locations of gardens in the final development. Remediation of the remaining site will need to be undertaken once existing buildings are removed. The 'preferred Masterplan' has been prepared with regard to the conclusions of the contamination investigation." 128 In its assessment report on the November 2004 DA (see Exhibit A2, tab 19, fol 674, pars 46-8), Council noted the requirement for remediation, and included in its approval (Exhibit A2, tab 20, fol 729) an appropriate condition (43), which required remediation action plans "prior to submitting any DA for this site" (see [118] above). Some such plans appear to have been done by EAW - for Block 'A' in June 2006 and Block 'B' in March 2007 (see Exhibit A33, p5, par (ii)). 129 Mr Webster referred also to a "report" in 2005, which he said showed "insignificant contamination of this land" (T21.4.09, p6, LL40-41), and to a 2008 study which identified "isolated pockets" of asbestos, along with "other types of normal contamination one finds, such as petroleum products" (LL48-50). The 2005 "report" may have been a further remediation action plan prepared by EAW, and the 2008 study may have resulted in one of five documents prepared by JBS between 21 July 2008 and 20 April 2009 (see Exhibit R8, p4, par 3.1, items 4 and 9-13). However, none of these documents is in evidence. 130 The applicant's valuer, Mr Wotton, at the time of his original report, was not aware of any contamination of/on the site, but all the valuers agreed on their $740 per m2GFA on the assumption that most land in the relevant former industrial area, including Sydney Gate and the agreed list of six comparables examined, had "mild" contamination of some sort. 131 Mr Dempsey first expressed his particular concerns, on 21 April 2009 (in Exhibit R7), regarding the level and nature of contamination, namely the "significant" presence of asbestos as identified by JBS, and then urged (in Exhibit R10) a reduction in the $740 agreed position to cover the cost of asbestos remediation (since agreed as $263,884 nett, in respect of only the acquired land). 132 The evidence noted (1) the 2008 change in regulations regarding disposal, especially of asbestos, (2) the cost of disposal, and (3) acceptable locations for disposal. Most of the contaminated soil would be removed during the basement excavation (for either one or two). The evidence also confirms that asbestos-contaminated soil could be acceptable fill on the site, especially under roads (T21.4.09, p7, LL18-20; and T28.7.09, p54, LL12-36). 133 The applicant's position is that:

(1) the marketplace would have recognised (from the DC condition if nothing else) that there would be some contamination of the acquired land, and that (2) the cost of some remediation works is already built into the agreed $740 per m 2 GFA ( Exhibit A36 , par 57), and, in the hypothetical development, any extra cost (occasioned by the presence of asbestos) would be adequately covered by the contingency allowance. 134 The RTA's position is that any hypothetical purchaser would see the EAW report and commission some further investigation to confirm or negate the presence of asbestos. If asbestos were found, the price offered would be reduced to cover the cost of remediation. Mr Dempsey did concede, however, that the hypothetical purchaser would not be absolutely certain as to the nature or extent of contamination, or "the cost of remediation … prior to acquisition" (Exhibit A36, par 21). 135 The industrial history of the area is well known. However, the Healy valuation (Exhibit A4, tab 35) had assumed that the land was not contaminated. The FPV valuation (Exhibit A4, tab 36) noted (at fol 1202) that some remediation would be required. The conditions imposed by the court in matters 10054 and 10074 of 2007 (Exhibit A4, tab 33) dealt with site audit and/or remediation, and the need to provide for study and possible remediation is frequently mentioned in the documents before the court. 136 Contamination and quantity survey experts were engaged late in the proceedings (see [47] above) and gave evidence. Mr Graham reviewed in his report (Exhibit R8, pp6-20) many of the documents to which I referred above (in [129]), but that part of his report was not pressed. He was, however, critical of EAW in his oral evidence, and took the view that further assessment work should have been done, just in case there might be asbestos. He would so advise a hypothetical purchaser, as those who assessed the site should have seen it (T28.7.09, p47). Mr Kritzler's view was that a hypothetical purchaser would rely on the excellent credentials of those who had already done assessments, which did not detect asbestos on site (see Exhibit A34).

H. The Dispute on Town Planning Issues 137 The applicant's case is, essentially, that in reducing the land area available for development, the acquisition has restricted the development's capacity to win the maximum bonus floor space on the residue land. 138 The acquired land is agreed to be the least "constrained" area of the parent parcel. Logically any commercial development of the site would be concentrated at the northern end. Boundaries of the parent were more "square" and straight, so block edge development was easier than on the residue, with its now rounded northern boundary. The developer has lost the opportunity to put substantial height on a corner building on Block A (at the corner of Lachlan and Bourke Streets), into which substantial floor space could be compressed. Placing any bulky development to the south of the parent or the residue also brings it closer to, and into conflict with, the heritage building, "Miller's", making exceedence of height by proposed towers around the residue land less acceptable to the Council or CSPC - adding more pressure on GFA. 139 All of this was complicated for the applicant by Council's restrictions on the residential component of the favoured mixed-use 10(e) development. Waterloo was a new area for mixed or commercial developments, with no established commercial precinct or market - c.f. Mascot, which is more established, with its close links to the airport and the sea port. Zone 10(e) is an employment focussed mixed use zone, with residential development allowed on suitable sites. Residential development is the most profitable (commercial elements drag values down, and apparently cost more to build), so the applicant began with a mix of 95/5, retreated to 80/20, and finally "accepted" Council's position of 75/25, which produces some 700 residential units. 140 GFA and FSR are calculated by notionally adding back the acquired land into the site area, so the development potential of the acquired land is said by the RTA to have been transferred to the residue. The estimate is that actual availability of the 2,781m2 of acquired land would add a further 11,728m2 to the GFA. (Hence the applicant's claim based on that GFA x $740 = $8.7M). 141 While a masterplan is "conceptual" only, and individual DAs for a staged development might achieve increases in the yield on the site as a whole (cl 27C, and Exhibit A28, p5, Q5), the masterplan approved by Council in this case was very specific about several important issues which would restrict the actual development which might win approval - FSR, building envelopes, height limits, setbacks, and placement of buildings on site, generally. 142 In the end, the applicant says that its "final" proposal to Council, embodying a FSR of 2.12:1, was simply "the best [it] could do". 143 Mr Harrison (the applicant's planning expert) opines that the applicant could not achieve the maximum possible FSR (2.5:1) because of Council's attitude to design issues, especially constraints which affected Blocks 'C' and 'D', given the loss of the acquired land. He says (in his Statement of Evidence, Exhibit A8, pp 27-28, pars 86-90): "86. From my experience in dealing with development sites within the Green Square redevelopment are the ability for development on a particular site to achieve the maximum floor space potential (as defined under Part G of the DCP) has been driven first and foremost by whether the environmental impacts of the development are considered acceptable. In some instances such as the Sydney Gate development site the maximum floor space has not been achieved because of these constraints. In most instances the full bonus floor space has been achieved (e.g. 11a Lachlan Street and the 'Email' site). 87. I am not aware of any development proposal in Green Square where the consent authority has assessed the environmental impacts as being acceptable but where the package of public domain improvements proposed has not been agreed to and, as a consequence, the floor space/bonus has been reduced to equate to a reduced, but agreed, public domain package. 88. The current package of public domain benefits proposed as a consequence of the approved Sydneygate Master Plan has been further refined having regard to design development and input from Council officers. 89. In my opinion, the public domain package could be further enhanced to provide such things as: Streetscape enhancement works to Bourke Street, between the development site and Green Square Railway Station, particularly adjacent to the Millers Self Storage Building (which is a heritage item and where any redevelopment of the site is unlikely to be able to achieve a floor space bonus) or in front of the Bourke Street residential properties, between the Green Square Railway and O'Dea Avenue; Large scale under-grounding of electrical cables (or bundling) in and around the site and within existing residential areas in green Square; Drainage and traffic management works external to the site and its immediate environs; Enhancement to existing parks; Subsidisation of embryonic bus services; or Other works negotiated with Council. 90. A further cash contribution to the Green Square Town Centre works. In my opinion, an appropriate public domain package could have been put together to utilise the full quantum of bonus floor space funds generated by the development at 2.5:1 ." (emphasis in original) 144 On the other hand, the RTA and its experts say the applicant at that time (c.f. Becton now) gave up too early/easily on the objective of maximising bonus floor space. Even the Council witnesses agree that the approved masterplan is only one scheme available for the development of the residue land. The RTA's experts (Messrs Sanders and Dickson) did not test Council on their suggested scenario(s) for achieving 2.5:1, but Mr Lake (the applicant's designer), like Mr Harrison, acknowledges that the applicant could have achieved 2.5:1. 145 The 13 July letter, concerned primarily with the PDI package in the applicant's proposal, was only one stage in the negotiations. Mr McDonald testified that Council actually sought to be challenged on it, and Council went on to raise still further issues, mainly design, about the draft masterplan in September 2004. 146 The RTA says that the FSR of 2.12:1 was a "deal" to which the applicant committed in its revised DA - it was not a planning decision of the Council. Council never said 2.5:1 was not possible, but insisted on particular design issues - the applicant drove the negotiations, but says it could not design the project to achieve more than 0.62 bonus. Council needed to have regard to the two policy minutes in 2004, especially regarding cash components of the PDI package, but there was scope for more discussion. The compromise exhibited in the applicant's November 2004 masterplan DA could have been improved upon, before its 23 June 2005 approval, and the RTA experts would so advise a hypothetical purchaser, even if the acquisition is seen to restrict the site's potential for edge development. 147 Mr Sanders placed great importance on the 13 July letter, and concluded (Exhibit R1, pars 6.12, 6.13, and 7) that none of the problems outlined by the Council before the final approval of the masterplan would have been "…able to have been overcome simply by the Applicant having been able to actually build on the acquired land…", and that "… the fact is that it is not possible for an appropriate package of public domain improvements to be identified that would be acceptable to the Council and which would justify the quantum of bonus floor space that would be required…to achieve a floor space ratio of 2.5:1." He opined (in par 7) that any value arising due to development potential on the acquired land had transferred to the applicant's other land due to the Council practice at the time. 148 The RTA also relies on the evidence of Mr Dickson, who is both an architect and a planner, and has 30 years experience of doing masterplans (T3.12.08, p111, L49; Exhibits R3, A27 & A28). Mr Dickson says that the advice he would give a prudent, not overly anxious, hypothetical purchaser is that it could arrive at a design with a suitable urban outcome, meet the relevant planning controls, and still achieve the maximum FSR of 2.5:1. He did not find the "planning constraints overly cumbersome" (T3.12.08, p112, L14-15), but he acknowledged (at p115, L32) that Lake and Harrison were doing the masterplan at the same time as Council was still "writing codes and rules" for the area, and (at p108, LL35-41) that having the acquired land available would add some flexibility to the process of planning and design. 149 Mr Dickson prepared several schemes for adding the necessary floor space to the residue land's development, as depicted in the masterplan, and the applicant attacked the revised scheme vehemently. Mr Lake took to it with a "fine tooth comb" approach, alleging that, as it was inconsistent with the masterplan, it did not address Council's concerns, the DCP and the Residential Flat Building design code (Exhibit A18, tab 2, doc 1). Mr Pickles (T3.8.09, p35, LL11-31) said that all Mr Dickson did was take 14,000m2 of floor space and deposit it around the site, in an order dictated by condition 3 of the consent, without regard to important amenity considerations. As it would presumably take longer and cost more to build Mr Dickson's scheme, changes in the risk profile of the development had also to be considered. 150 The applicant's Council witness, Mr Swan, prepared Council's favourable June 2005 assessment report, and confirmed in evidence that it was always possible to vary, modify or completely overhaul the masterplan with a view to negotiating to achieve the maximum FSR (see T02.12.08, pp65-66), provided that urban design issues were adequately addressed and the PDI package was acceptable. However, he opined that it was design and amenity considerations, rather than PDI issues, which limited the bonus FSR outcome (Exhibit A24, p2, Q2). 151 Mr Lake and Mr Harrison also acknowledged that changes to the design and the PDI package could have yielded the maximum bonus FSR. Mr Harrison also conceded, in his briefing letter of 18 July 2008 (annexed to Exhibit A13), that 2.5:1 would be possible if more commercial development were proposed - the masterplan merely limits residential development to 75%, and it is said to be applicant reluctance which precluded more commercial. As there were also reservations about its viability, no hypothetical purchaser would want to develop more than 25% commercial. Mr Harrison, in his oral evidence (T4-5.12.08), canvassed how to achieve the full 1:1 bonus without a significant additional cash contribution (see especially T4.12.08, p66, and Exhibit A30). 152 Messrs Perica and McDonald, both former officers of Council, gave evidence on behalf of the RTA to the effect that a cash contribution to cover any shortfall in the PDI package, so as to lift the FSR from 2.12:1 to 2.5:1, would have been difficult for the Council to accept, due to the need to have regard to the Lord Mayoral Minute of 15 April 2004 ([74]-[75] above). 153 I accept that, prior to the acquisition, the Council policy had changed, such that after April 2004 it sought to discourage, rather than forbid, cash contributions as a method by which developers could maximise any bonus floor space on offer. The evidence regarding various projects in the area shows that Council, even after that Mayoral minute, approached each case on its own facts. No instances were identified where totally unacceptable PDI packages caused refusal of applications for maximum FSR, whereas there were two cases where the maximum was not achieved on design grounds (see Exhibit A24, p4, Q6, and T4.12.08, p90, LL30-36), and, in the case of the Gazcorp site, none of which was developed for residential, the whole package was monetary. 154 Mr Sanders correctly observed (T5.12.08, p38) that it was always the amount, rather than the percentage, of cash in the PDI package which was the prime consideration in dealing with the Council's concern about alleged "purchase" of additional floor space. 155 Both Perica and McDonald also opined that allowance by Council of any additional items under the PDI package, to achieve more than the 2.12:1 total FSR, would be unlikely. However, the applicant clearly had opportunities to consider and propose other public benefits, for example, a contribution to "regional stormwater management opportunities". Yet the applicant said that it considered at the time, in all amended plans and in the plans finally approved, that that "was something we didn't want to make a contribution to" (T8.09.08, p13 LL34-37; see also p8 of the 13 July letter). 156 The three local government witnesses conferred on the question: " 2. What factors affected or limited the achievement of the maximum bonus floor space ratio of 2.5:1 as part of the Applicant's Master Plan Application?" and agreed "… that the following factors affected or limited achievement of the maximum bonus FSR: (a) Height of towers; (b) urban design and heritage considerations, including the adjoining heritage item to the south (i.e. the Millers Storage Buildings); (c) orientation, and solar access within the site and to buildings; (d) access to and within the site (this is always a constraint for larger sites, such as the subject site, as less land is available to be developed); (e) rights of carriageway along the eastern boundary; (f) stormwater drainage; (g) amenity considerations for residential dwellings and provision of open space, particularly given the majority of the floor space was to be utilised for residential use; It is agreed that the public domain package, in as much as the requirement for a park and provision of through site links/roads, influenced the placement of buildings on the site and so also affected the potential floor space ratio that could be achieved. It is agreed that it was open to the applicant to propose a different public domain package for an FSR of 2.5:1 using elements that may be included in the package as identified in Clause 6 of the document 'Developing Public Domain Improvements - A Guide to Council's Bonus Floor Space system' with such a proposal needing to be consistent with DCP and guideline requirements and approved by the CSPC". I. The Valuation Evidence 157 I introduced the valuation contest in this matter in Section B of this judgment, commencing at [23]. 158 The valuers remain agreed on a number of matters (see Exhibit A13 and applicant submissions par 106):

(a) The highest and best use of both the parent and residue parcels was a mixed use development. (b) One method of valuing the acquired land is to apply the " before and after " method to identify and assess the loss (if any) of development potential on the residue land. (c) In using that method, comparable sales should be analysed on the basis of development potential measured in terms of achievable floor space. (d) Six comparable sales, and their adjustment to reflect their individual characteristics relative to the subject land. Messrs Dempsey and Wotton both selected 222 and 219-231 Botany Road, Waterloo; Mr Dempsey selected 222-228 Coward Street, Mascot, and 283 Young Street, Waterloo; and Mr Wotton selected 114 Joynton Avenue, Zetland, and 13-15 Lachlan Street, Waterloo. All six had " mixed use 10 " zonings, but only Lachlan Street was " 10(e)" : (e) The application of an agreed rate of $740 per m 2 to the GFA of the parent and residue parcels respectively for the " before and after " calculation. It was originally thought that that figure reflected project viability, market conditions, and potential to pre-sell or pre-lease. The agreement on the figure withstood some attempt by Mr Tomasetti to get Mr Wotton to reduce it (see T29.7.09, p56, LL44-p57, L13). 159 In the "before", the parent land had an area of 36,883m2. If developed to the maximum possible FSR of 2.5:1, the GFA would be 92,207m2. To achieve 2.5:1 on the parent land it was expected that two mixed residential/non-residential buildings, with majority residential, would be built on Block 'A', including the acquired land (Exhibit A13, pars 28-30). 160 In the "after", the residue land has an area of 34,102m2. Viewed correctly, the approved FSR for that area is 2.29:1, giving a GFA of 78,179m2. 161 Subtracting the "after" GFA from the "before" GFA gives a difference of 14,028m2. 162 Mr Lake calculated that 2,277m2 of that difference would be accommodated within the masterplan approval, mainly in Block 'A', so the nett "loss" of GFA on the residue, as a result of the acquisition, is reduced from 14,028m2 to 11,728m2 (sic?). 163 If the applicant's town planning case is accepted, the valuers agree that the market value compensation payable for loss of the acquired land is the product of multiplying 11,728m2 by $740 per m2, namely $8,678,720. 164 When the valuers considered Mr Dickson's evidence as to how 2.5:1 might be achieved on the residue, they factored in the probable cost of an additional basement carpark at between $10,769,600 and $11,607,800 - apart from any other problems in the case, this area has a well-established water-table problem. Mr Wotton opined that this extra cost made the Dickson scheme uneconomic. Certainly if a pre-commitment were given by a major retailer, a second basement would probably be required. Despite its potentially prohibitive cost, and "challenging" market conditions, Mr Booth opined that pre-commitment was achievable. 165 The valuation exercise was then further complicated by the feasibility studies produced by Becton, and the consideration of possible asbestos contamination. 166 Mr Booth observed (Exhibit A12) that a prudent purchaser of any major site with development potential for any purpose would do a feasibility analysis, and not simply rely on a rate/m2 derived from comparable sales. Mr Wotton relied on the Becton feasibility studies, all done in 2009, and so not available to a hypothetical purchaser, to support his hypothetical development "check" valuation, of which the RTA was especially critical, but the studies cannot inform a market valuation as at August 2007. 167 Agreement was reached on the amount of $263,884 as the additional nett cost of remediation to remove asbestos (as distinct from the earlier accepted "mild" or "minor" contamination) from the acquired land. The RTA submits that this cost should be deducted from any market value determined in accordance with the JTC Act, but the applicant's valuers do not agree. 168 Mr Dempsey adopted Mr Sanders' position that the PDI package was the principal limiting factor resulting in the applicant being unable to achieve the maximum bonus FSR, and that, as a consequence, the applicant could not achieve the maximum FSR across the residue site. 169 Messrs Wotton and Booth opined that the acquired land retained development potential after the masterplan approval, but Mr Dempsey disagrees - he says development potential of acquired land in the "after" is zero. 170 Minds differed on the state of the market for both residential and non-residential land in the relevant area as at the date of acquisition (August 2007). The DTZ valuation had described the market at that time (at least for new residential) as "flooded". Mr Catalfamo did not accept that description (see T27.7.09, pp31-33). None of the expert valuers accepted it either, but the RTA submitted (par 93): " At the time of acquisition, the Sydneygate site was made up of a number of lots in a developing area of Sydney. It was a partly developed and partly vacant site, however, the improvements did not add value to the property. The site was (and remains) zoned to allow mixed use development and to establish a predominantly employment based zone. The site was ripe for development, however, market conditions were deteriorating. Residential flat sales were themselves 'flat' and had been for a number of years and commercial development in this area was oversupplied. The residential apartment market in this particular location was 'flooded'. Many were in the pipeline. Pre-leasing of large areas of commercial space with quality long term tenants would have been 'challenging' according to Mr Booth." 171 Doing the best I can to summarise a vast amount of opinion and other evidence given to the court on market conditions, I do not accept the description "flooded", but I find as follows: The residential market was very strong until late 2003, went into downturn through 2004-05, levelled off at the end of 2005/early 2006, and picked up in 2007 (see T8.12.08, p75).

The Green Square area was undergoing a huge transition from old industrial to new residential development, but the Sydney Gate development represented the first really substantial commercial development in that area, which placed it in competition with an established commercial area like Mascot, relevantly linked to Port Botany and the nation's primary airport. 25% of 78,179m 2 on Sydney Gate (noting that not all GFA is " lettable "), with components of, say, 4,000m 2 , are considered significant areas, and the valuers agreed that obtaining pre-commitments for them was " challenging but not impossible " (T29.7.09, p8, L19).

" Successful " development is measured by residential pre-sales off-plan (of, say, 66%), and long term pre-lease commitment(s) of substantial commercial space. Mr Booth opined that " higher than average " incentives might be needed, and would add to the cost of development (his affidavit 11 July 2008, par 15). Mr Dempsey thought these measures of success " most unlikely " to be achieved in the present case (T29.7.09, p30), but the market conditions for commercial deteriorated in late 2007 and 2008 (T27.7.09, p51).

In July/August 2007 the " sub-prime " crisis was emerging, and some developments were being suspended, indicating some likely difficulties in the market, eventually felt in early 2008. The residential market at that time and location was variously described in evidence as " stable ", " improving ", " firming ", etc (see, eg. T29.7.09, p38), and the general market for commercial space as " strong " (T8.12.08, p75). While perhaps not " flooded ", the residential market, certainly rental, was seen to be possibly " oversupplied ", but " still relevantly strong and moving forward " (T8.12.08, p9): 1,407 residential units were under construction in 2007, compared with 2,800 completions in 2005 and little more than 1,000 (including 537 in Green Square) in 2006. The 2007 figure was said to show an " intense level of construction in Green Square ", and to indicate a high level of supply, cf demand (T29.7.09, pp27-28), but no " flooding ". Any " fall off " was in completed stock, not pre-sales (T27.7.09, p36). 172 The valuers generally agreed that the market conditions were adequately reflected in their agreement on $740 per m2 GFA, but it must be borne in mind that this is a figure arrived at in a particular planning scenario, and is not a valuation of an actual unit of land. 173 Should the applicant's town planning case not be accepted by the court, the experts' agreement on valuation issues evaporates. 174 The valuers having agreed that "on a direct comparison basis the value of the acquired land would not be significant" (Exhibit A13, par 23), Mr Wotton arrived at his "fallback" figure of $3,086,910 (Exhibit A25), which he testified met the definition "not significant", when compared with $8,678,720 (T29.7.09, p60). 175 The applicant's $3M figure relies on the acquired land retaining a FSR of 1.5:1 in the "after", and attracting the $740 per m2 GFA, so that the calculation is 2,781 x 1.5 x 740 = 3,086,910. 176 On the other hand, the RTA submits (Exhibit R10, par 35) that the acquired land, on its own, has zero development potential and has to be assessed without factoring in either the 1.5 or the 740, on the basis that it is simply a "separate parcel" (see Carson). 177 Essentially, the RTA's case is that the acquired land, being a highly impractical shape, with zero potential and significant contamination, the highest and best use of which would be for road, is worth at most a "nominal" sum (or a "fairly nominal", "rather nominal" or "relatively nominal" sum - see T2.12.08, p18, LL20-23; p21, L36; and p21, L45). 178 Mr Dempsey suggests that the nominal sum should be $200,000, or, on the basis of an arbitrary rent loss calculation, $445,000 (Exhibit R2, pars 92-100). Mr Dempsey then says that any "positive" value attributed to the acquired land must be reduced by the remediation cost the applicant was saved, namely $263,584 (Exhibit A36; see also [32] above). 179 Mr Dempsey did, however, appear to concede in cross-examination that the acquired land retained an entitlement to a FSR of 1.5:1 (T30.7.09, p21, LL15-32). 180 The RTA also submits that the acquisition saved the applicant likely PDI costs of approximately $1.67M, which should also be taken into account, in the interests of justice, in determining compensation. J. Consideration 181 The applicant's claim for more than $8M is dependent on its town planning case. As the RTA submitted (T4.8.09, p10, LL4-10), the court "… has to be satisfied for the applicant to succeed that the marketplace would be convinced that in the before scenario you could've got 2.5:1 on the parent parcel … and your Honour has to then be satisfied that the actually approved master plan represented the absolute maximum that could ever be achieved by anybody on the balance of probabilities in terms of FSR on the residue site". 182 Sydney Gate site has been described (by Colliers in Exhibit A35, par 3.3) as a "premium address with unique advantages". 183 That description is apt in both the "before" and the "after", but the evidence clearly satisfies the court that orderly development of the residue land to its maximum potential is prejudiced to some degree by the loss of the acquired land, which would have added 2,781m2 of low-constraint land area, and greater design flexibility, to the optimised development of the Sydney Gate site. 184 In both the "before" and the "after", a high concentration of appropriate development is best located on the most northern area of the site, Block 'A', from which the acquired land was excised. That excision results in a "rounding" of the site's prime north-west corner, and loss of highly developable land, upon which relatively higher buildings than elsewhere on the site would be acceptable in planning terms. 185 Clearly, fitting the same amount of floor space on 92.5% of the original parent land area, bringing the most intense development south of the acquired land, and closer to the most constrained parts of the site, would require (1) some innovative and determined approaches, (2) probably some concessions from Council and/or the CSPC, and, (3) most likely, some additional project costs. 186 On the other hand, as the RTA submits, working on a smaller land area may well involve some savings on the applicant's part (e.g. in remediation costs and PDI contributions). 187 It is not the role of these proceedings to assess and award some form of "damages" for the loss of profit or development potential sustained by the dispossessed owner (c.f. Abbey Orchard), but to determine appropriate compensation according to the regime of the JTC Act. As earlier noted (in [51]), the "just compensation override", embodied in s 54 of that Act, may come into play when the code in the Act has been followed to its limit. 188 No masterplan was prepared for the parent land, in the "before", but the evidence clearly shows that its development could easily have been designed so as to attract the full 1:1 floor space bonus, enabling it to be developed to a FSR of 2.5:1, provided the developer and Council also agreed on a "sufficient" PDI package (as valued pursuant to Council's guidelines) and on the mix of uses. 189 The key dispute in this case concerns whether the residue land could achieve the same result in the "after" as the parent could in the "before", and whether a hypothetical purchaser would be so advised. 190 The applicant argues that the highest and best use of the residue land is what was approved in the masterplan (2.12:1), and the RTA appears to put its case on alternative bases - it argues that whether only 2.12:1 is achieved or 2.5:1 is found possible, the development potential of the applicant's land is the same in the "before" and the "after". 191 The applicant's position is that two years of Council negotiations by its advisers gave it a "realistic picture of the achievable" in respect of the residue land, and that it responded accordingly in its November 2004 masterplan DA. It describes the RTA's evidence that something more was achievable in the "after", as abstract speculation. 192 Approval of a masterplan does not guarantee the feasibility of the development, but viability is different from feasibility, and one has to allow for the risk that a project may not receive development approval, a different concept again. Prudent hypothetical parties would be aware of the risk that 2.5:1 might not be achieved in this case, in either the "before" or the "after", but all risks were factored into the agreed valuation of $740 per m2 GFA. 193 At the same time, contrary to the position taken by the applicant, the masterplan is properly to be regarded as just one possible development scheme for the site. The LEP envisages that it can be changed, so long as individual DAs for the site accord with the approved masterplan of the time. A hypothetical purchaser could seek to better that masterplan approval, and/or to increase yield on individual components, just as Mr Catalfamo has done on Becton's behalf. 194 The evidence is clear: Council has never excluded the prospect of (1) a redesign of the masterplan achieving the additional floor space, and/or (2) its ultimately approving a mix with more or less than 25% non-residential, and/or (3) sufficient refinement or reassessment of the applicant's PDI intentions meeting with Council's approval. 195 Council in the 13 July letter simply did not accept some elements of the PDI package offered, or the values the applicant attached to that package. It was not the "last word" on those matters, and the applicant did not strongly pursue its opportunities to do better. 196 I have come to the view that 2.5:1 was achievable in both the "before" and the "after", and that the town planning case run by the applicant must, therefore, fail. 197 In that regard, I generally prefer and accept the evidence of Messrs Sanders and Dickson, over that led from Messrs Lake and Harrison. The credibility of the RTA's experts was greatly enhanced by concessions made by the applicant's witnesses in cross-examination, and by the evidence of Mr Catalfamo and the three independent local government witnesses. 198 I am satisfied that the maximum floor space bonus was not in fact achieved in the "after" as a result of a combination of the chosen mix of uses, the structure and valuation of the PDI package, and some Council design concerns not adequately addressed by the applicant. 199 Mr Sanders was confident that a suitable and feasible urban outcome could be designed for the residue to achieve the maximum bonus, and Mr Dickson's task was to illustrate for the court how that might be accomplished. The court appreciates the speculative element of such arguments, and it is certainly true, as the applicant states, that Council has never been asked to assess or determine Dickson's higher-density scheme(s) for the residue land. 200 However, these cases always concern potentialities, and the evidence of those who failed in the task of maximising the bonus on this site has not convinced the court on this occasion that maximisation was not possible. I am satisfied, on all the evidence, that the applicant gave up its fight with Council too easily and/or too early. 201 I have, accordingly, concluded that the development potential of the Sydney Gate site in both the "before" and "after" are the same. 202 As a result of that finding, the applicant cannot succeed in its $8M market value claim, nor its alternative injurious affection claim. 203 As the "before and after" method yields a NIL market valuation result, the court now has to decide whether or not to adopt that NIL result. Otherwise, in searching for a "more liberal estimate" ([52] above) the court must wrestle with how to value the acquired land as a single lot. 204 Mr Wotton agreed that in the scenario in which the court now finds itself the value of the acquired land would not be "significant". He acknowledged (Exhibit A11, par 53) that the shape of the acquired land "does not readily lend itself to conventional residential or commercial development", yet when he came to ascribe an actual value to it, he attributed to it a development potential (1.5:1), which I have found to be already transferred to the residue land, and he applied the agreed $740 per m2 to arrive at his $3M "fallback" valuation. 205 I have already noted (in [179]) the applicant's submission that Mr Dempsey had agreed, in his evidence, that the acquired land retained a FSR potential of 1.5:1, but, reading that evidence in its context (T30.7.09, circa p21), I do not accept that the submission fairly represents Mr Dempsey's view. 206 The acquired land must be valued on the basis of its having no remaining development potential. In any event, there is ample evidence to suggest that, because of its physical features, the acquired land was not "developable in its own right" (Exhibit A24, p9, Q12, and [15] above). 207 The applicant's fallback position must, therefore, also fail. 208 A NIL result can be a just result, e.g. in a case of proven "betterment" (e.g. AMP v TIDC). Somewhat unusually, the NIL result in this case flows directly from the Council's policy/practice of allowing the development potential of the acquired land to be included with that of the residue land when calculating the FSR for the site overall, notwithstanding that the actual physical development would take place only on the residue land. 209 As so much of this matter concerns and deals with "potentialities" rather than "actualities" (such as "betterment"?), I am not convinced that a NIL result is a just result here. It would mean that a significant public authority could acquire private land to carry out a public work, however worthy, and completely escape payment of compensation, in the absence of proven "betterment", simply because of a policy approach taken by the relevant local government authority. 210 As Hodgson JA said, in the Court of Appeal's decision in AMP v TIDC, at [62]-[63]: 62. In my opinion, s 3(a) of the Just Terms Act is important here. One object of the Just Terms Act is to guarantee that compensation be not less than the market value of the acquired land (unaffected by the proposal), that is, the element of compensation provided by s 55(a). Section 10(1)(a) authorises the giving of a notice, stating that the Just Terms Act does guarantee this. Although this notice is not given in connection with actual negotiations for compensation or proceedings in which compensation is assessed, and although it cannot give rise to a civil cause of action (s 10(3)), it is plainly intended that the notice be truthful and not misleading. In my opinion, these provisions disclose a clear legislative intention that compensation be no less than that provided by s 55(a), even if there is "betterment" under s 55(f) that exceeds the other elements in s 55. 63. I see this as consistent with and supported by s 54(1). Where land is compulsorily acquired, it seems to me just that the acquiring authority pay at least the market value of that land (unaffected by the proposal), even if the person from whom the land is acquired owns adjoining land which is increased in value by the proposal, and even if this increase is greater than the market value of the acquired land. Other persons owning land in the area may benefit equally or more from the proposal; so it seems to me unjust that the acquiring authority should get the acquired land for nothing, and that the person whose land is acquired should get nothing for it, just because of a benefit that may be shared by others. Thus a lower limit of the market value (unaffected by the proposal) seems just; and this is what s 3(a)and s 10 indicate is to be guaranteed." 211 I do not accept that NIL market value is a just result in this case. 212 Accordingly, the court must return to the "just compensation override" in s 54 (see [49], [51], and [187]), as the JTC Act code simply does not assist in the valuation of the acquired land. 213 No evidence has been presented of the outcome of any situation similar to this case, but the RTA submits that a hypothetical purchaser of the acquired land as a single lot would be told that its "development rights have been exhausted", with the result that it "has little value because of the Council's practice" (T4.8.09, p36, LL11-21 - emphasis mine). 214 Having before me no precedent situation, and no information about any property regarded by a party or a witness to be "comparable" with the acquired land for "direct comparison" purposes, I turned my attention to all the properties about which there is some evidence, and to other possible indicators of value among the evidence ([34]-[35]), to endeavour to establish what that "little value" might actually be. 215 The valuers directly engaged in the case agreed on six comparable sales. Four of those six had earlier been assessed by FPV among seven upon which they reported (Exhibit A4, tab 36). The agreed six sales, and the additional three FPV sales, were not among the 13 sales assessed by Mr Healy (Exhibit A4, tab 35). The Wotton, Dempsey and FPV valuations were based on the "before and after" method, but the Healy valuation was simply "direct comparison" and, despite its appearance as a valuation of actual land and not floor space (see 34(i) and [35] above), all of those sales were assessed by Healy on the basis of the land's development potential. 216 As Mr Dempsey says (in Exhibit A26, par 31): "The market will only pay for realisable potential". All the development potential of the acquired land, not just its potential for attracting "bonus floor space", was exhausted when it was notionally "added back" to the residue land. I simply cannot accept the applicant's submission (par 78) that this "transfer" of development potential is irrelevant to the court's task. 217 As a consequence of that "transfer" the acquired land's highest and best use now is for road, its actual zoning at the date of acquisition. If the road widening project were not to proceed, the court would expect the land to lie dormant as an irregular area of passive open space adjacent to two busy roads. 218 On the other hand, failure to develop it to its "highest and best use" as road is a "potentiality", as much as failure to optimise development on the residue land remains a "potentiality". Potentialities are to be valued as such, and not as "actualities". (See [56]-[57]). 219 If the court is to agree with the submission that it settle on a figure to order by way of what Mr Dempsey and Mr Tomasetti call "nominal" compensation ([177]), it is to be noted that there is no science underpinning Mr Dempsey's $200,000, whereas there is a basis given for his $445,000 (see Exhibit R2, and [32] and [178] above), albeit that that basis is unrelated to what I have found to be the realities of the situation before the court. 220 The court must find a "just" rather than a "nominal" figure, bearing in mind that justice cannot be for one side alone, and remembering also Hodgson JA's advice (in Collex - see [64] above) that judicial valuers should apply "commonsense reality checks" to emerging conclusions. 221 Applying the commonsense approach, I do not think it "just" that the agreed nett cost of remediation of the acquired land should be deducted from any value the court arrives at. On the available evidence, (1) the court is not convinced that the late discovery of some asbestos among earlier-identified contamination of other types is of such moment that it deserves special attention in this "secondary" valuation exercise, and (2) the likelihood is that relatively inexpensive action by the roadbuilder will see it safely isolated and stored under the new traffic lane in Lachlan Street. 222 The RTA submits that the applicant's alleged savings resulting from the acquisition (in remediation expenses and PDI contributions) should be considered in determining "just" compensation, despite the fact that this is clearly not a case of "betterment". By the same token, the difficulties and costs exposures that the applicant will encounter in developing the residue to the same extent as the parent land should, in the limited ongoing scope for the court to apply Abbey Orchard, also be considered in the interests of a "just" outcome.

K. Conclusion and Orders 223 I conclude that the "just" result in this case simply cannot be clearly and precisely discerned from any of the enormous amount of material before the court, but only intuitively from the court's long and anxious consideration of all that material. 224 Doing the best I can, I have decided to award the applicant $500,000 for market value compensation, plus the agreed amount of $65,000 for disturbance. 225 Some costs orders have already been made during the running of the case, but I will formally reserve the question of costs, as a whole. 226 All the exhibits may be returned, along with those filed affidavits to which some of them are annexed. 227 The formal orders of the court are: 1. The applicant's claim for market value compensation under s 55(a) of the Land Acquisition (Just Terms Compensation) Act 1991 for the acquisition of Lot 11 in DP 1112470, formerly part of Lot 1 in Deposit Plan 611113, is determined in the amount of $500,000. 2. The applicant's claim for disturbance under s 55(d) of the Land Acquisition (Just Terms Compensation) Act 1991 is determined, as agreed between the parties, in the amount of $65,000. 3. Costs of the proceedings are reserved.

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