Expandamesh Pty Ltd v Sydney Metro - [2022] NSWLEC 137 - NSWLEC 2022 case summary — Zoe

NSWNSWLEC

Expandamesh Pty Ltd v Sydney Metro

[2022] NSWLEC 137

Land and Environment Court (NSW)|2022-09-27|Before: Moore J

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At a glance

Source facts

Court

Land and Environment Court (NSW)

Decision date

2022-09-27

Before

Moore J

Catchwords

[2012] NSWCA 404 Dillon v Gosford City Council (2011) 184 LGERA 179
(2000) 106 LGERA 440
[2000] NSWCA 44 Hunter's Hill Council v Minister for Local Government
Lane Cove Council v Minister for Local Government

Source

Original judgment source is linked above.

Catchwords

[2012] NSWCA 404 Dillon v Gosford City Council (2011) 184 LGERA 179(2000) 106 LGERA 440[2000] NSWCA 44 Hunter's Hill Council v Minister for Local GovernmentLane Cove Council v Minister for Local GovernmentMosman Municipal Council v Minister for Local GovernmentNorth Sydney Council v Minister for Local GovernmentStrathfield Municipal Council v Minister for Local Government [2017] NSWCA 188 Landan Development Pty Ltd v Sydney MetroOpera Australia v Sydney Metro

Judgment (64 paragraphs)

[1]

Introduction

Expandamesh Pty Ltd (the Company) owns a property at 175‑177 Botany Road, Waterloo (the site). On 11 October 2019, a substratum of the site was compulsorily acquired by Sydney Metro for the purpose of constructing tunnels to serve the Sydney Metro City and Southwest Project. The Valuer General has determined that the amount of compensation to be paid to the Company by Sydney Metro for the compulsory acquisition of the substratum through which the tunnel will run is nil.
The Company has commenced proceedings pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 (the Just Terms Act) disputing the Valuer General's determination. The Company seeks to be awarded compensation on two bases. The first is for the value of the substratum which has been acquired from it and the second is what the Company says is the reduction in value, for future development, of the site because of the additional restrictions that will apply on future development as a consequence of the existence of the railway tunnels.

[6]

The Just Terms Act

A number of provisions of the Just Terms Act potentially require consideration. As can be seen from that which has been set out above concerning the Transport Administration Act, the various provisions now set out from the Just Terms Act will not arise for consideration unless one or other of the preliminary gateways to accessing the Just Terms Act is found to be open for the Company in the circumstances of the acquisition of the substratum under the site.
Although not requiring specific later consideration, it is appropriate to set out the objects of the Just Terms Act. They are reproduced below: 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, and (c) to establish new procedures for the compulsory acquisition of land by authorities of the State to simplify and expedite the acquisition process, and (d) to require an authority of the State to acquire land designated for acquisition for a public purpose where hardship is demonstrated, and (e) to encourage the acquisition of land by agreement instead of compulsory process. (2) Nothing in this section gives rise to, or can be taken into account in, any civil cause of action.
It is next appropriate to set out the terms of s 54 of the Just Terms Act, this being the provision that makes it clear that the only matters which could potentially provide a foundation for compensation are those which are set out in Div 4 of Pt 3 of the Just Terms Act. 54 Entitlement to just compensation (1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land. (2) …
Following the broad restrictive proposition set out in s 54(1) reproduced above, it is also appropriate to note that s 55 sets out, in express terms, the only six bases upon which compensation could be sought for any acquisition for which a compensation claim under the Just Terms Act is permitted. The provision is in the following terms: 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division) - (a) the market value of the land on the date of its acquisition, (b) any special value of the land to the person on the date of its acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) the disadvantage resulting from relocation, (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.
It is next appropriate to set out the terms of s 56 of the Just Terms Act, the provision that is engaged for the purpose of assessing the value of the substratum acquisition element of the Company's claim for compensation if it does arise for consideration: 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
The next relevant provision (s 59) is that which find its foundation in s 55(d) of the Just Terms Act as earlier set out. This provision sets out a number of headings pursuant to which losses attributable to disturbance may be claimed by a dispossessed owner. For present purposes, the Company only makes a claim pursuant to s 59(1)(a) reproduced below: 59 Loss attributable to disturbance (1) In this Act - loss attributable to disturbance of land means any of the following - legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land,
I was recently advised that agreement has been reached between the Company and Sydney Metro as to the amount to which the Company would be entitled pursuant to s 59(1)(a) if the Company is entitled to compensation for the acquisition of the substratum (the necessity for the establishment of such an entitlement is expressly clear from the wording of the provision). The parties have agreed that, if the Company does have an entitlement to compensation, it is also entitled to its legal costs reasonably incurred in the agreed sum of $40,829.25.
It is also appropriate to note the terms of s 62 of the Just Terms Act. It is the provision in this legislation which, in s 62(2), sets out the three tests arising before any claim for compensation of a non‑rail tunnel might potentially be available. It is to be noted that the terms of s 62(2)(b) differ from the terms of cl 2(1)(b) of Sch 6B of the Transport Administration Act. That difference is a matter later discussed as arising from submissions made on behalf of the Company in these proceedings. 62 Special provision relating to acquisition of easements or rights, tunnels etc (1) If the land compulsorily acquired under this Act consists only of an easement, or right to use land, under the surface for the construction and maintenance of works (such as a tunnel, pipe or conduit for the conveyance of water, sewage or electrical cables), compensation is not payable except for actual damage done in the construction of the work or caused by the work. (2) If land under the surface is compulsorily acquired under this Act for the purpose of constructing a tunnel, compensation is not payable (subject to subsection (1)) unless - (a) the surface of the overlying soil is disturbed, or (b) the support of that surface is destroyed or injuriously affected by the construction of the tunnel, or (c) any mines or underground working in or adjacent to the land are thereby rendered unworkable or are injuriously affected. (3) If the land compulsorily acquired under this Act consists of or includes an easement or right to use the surface of any land for the construction and maintenance of works (such as canals, drainage, stormwater channels, electrical cables, openings or ventilators), the easement or right is (unless the acquisition notice otherwise provides) taken to include a power, from time to time, to enter the land for the purpose of inspection and for carrying out of any additions, renewals or repairs. Compensation under this Part is payable accordingly.

[8]

The Company's Further Amended Points of Claim

The Company's Further Amended Points of Claim filed on 12 September 2022 sets out the nature of the Company's claim as addressed during the hearing. It is in the following terms: 1 The applicant (Expandamesh) at all material times, has been the registered proprietor of land at 175‑177 Botany Road, Waterloo (Land), 1/DP841108. 2 The respondent (Transport): (1) Is a corporation constituted pursuant to Transport Administration Act 1988 (TAA) Part 1A; (2) Is responsible for, inter alia, the provision of facilities and the operation of public transport activities in NSW; (3) Exercises the above responsibility in conjunction with Sydney Metro, a corporation constituted per TAA Part 3D, with respect to certain underground railway facilities and operations. 3 On 11 October 2017 (Date of Acquisition), pursuant to the provisions and powers in the TAA Sch 1, cl 11 and the Land Acquisition (Just Terms Compensation) Act 1991 (JTA), Transport acquired a horizontal stratum, below the surface, of the Land (Acquired Land) for the purposes, inter alia, of constructing underground railway facilities associated with the Sydney Metro City & Southwest project. Particulars The Acquired Land was defined in the NSW Government Gazette No 115 of 11 October 2017 as being that part of the Land 'affected by Plan of Acquisition Lot 201 in PPN DP 1231704. The acquisition published in the Gazette of 11 October 2017 was later 'corrected' in Gazette No 123 of 10 November 2017. 4 On and from the Date of Acquisition, that part of the Land remaining after the acquisition of the Acquired Land (Remaining Land) and Expandamesh as its registered proprietor and its occupier became burdened by, and subject to, the provisions set out in TAA Sch 6B cll 3 to 8.By JTA ss 37 & 54, 5 Expandamesh is entitled, pursuant to and subject to the provisions, inter alia of the JTA and the TAA, to be compensated in such amount as will justly compensation it for acquisition of the Acquired Land. 6 The Notice of Acquisition of 15 March 2018 issued for the Acquired Land included a Determination of Compensation of 23 January 2018 (Determination) for the purposes of JTA and the Valuation of Land Act 1916, which determined the compensation due to Expandamesh to be $nil. 7 The Determination broke down the calculation of compensation as providing $nil for those factors set out in JTA s 55(a) and (d), and asserting that the factors set out in JTA s 55(b), (c), (e), (f), and (g) were 'not applicable' to the calculation. 8 Expandamesh says that the compensation in the Determination does not provide just compensation to it for the acquisition, and brings these proceedings, per Class 3, Land & Environment Court Act 1979 for orders for the proper amount of compensation. 9 Expandamesh anticipates that Transport may seek to raise an argument in support of the Determination some argument based upon TAA Sch 6B cl 2(1), and if, which is not admitted, the acquisition of the Acquired Land is subject of that cl 2(1), Expandamesh says: (1) That, in advancing such assertion, Transport bears the onus of establishing that no compensation is payable to Expandamesh by reason of that cl 2(1). (2) That, in any event, for the purposes of that clause 2(1)(a), the surface of the overlaying soil of the Remaining Land is relevantly disturbed; (3) Further that by Antoni Kuras' report of 1 August 2017 attached to the Determination & served upon Expandamesh with the Notice of Acquisition, Transport admits that the surface of the overlying soil of the Land will be disturbed by the acquisition & construction of the relevant facilities. (4) And further that, in any event, the support of the surface of the Remaining Land was injuriously affected by the construction of the relevant underground rail facilities within the meaning pursuant to the acquisition of the Acquired Land destroyed or injuriously affected the support of the surface of the overlying soil, lying at & immediately below the surface of the Remaining Land for the purposes of cl 2(1)(b). (5) By Antoni Kuras' report of 1 August 2017 attached to the Determination & served upon Expandamesh with the Notice of Acquisition, Transport admits that the support for the surface of the overlying soil, lying at & immediately below the surface of the Remaining Land will be destroyed or injuriously affected for the purposes of cl 2(1)(b). 10 For the avoidance of doubt, Expandamesh says that by the provisions of TAA Sch 6B cll 3‑8 contribute to the injurious affectation of the Remaining Land for the purposes of cl 2(1)(b) of that Schedule, as well as involving matters that call for consideration in the calculation of compensation pursuant to the various subjects included within the terms of JTA s 55. Particulars in relation to paragraphs 8, 9, & 10 Expandamesh will rely upon: (1) The engineering reports dated 26 February 2020, 17 August 2021, and 27 July 2022 from Douglas Partners as a basis for the determination of the compensation to which the applicant was entitled. The applicant also relies on the engineering report dated 1 August 2017 from Parson Brinkerhoff to the respondent in respect of the land, which the respondent provided to the Valuer General as a basis for the determination of the compensation to which the applicant was entitled and authorised the Valuer General to provide that report to the applicant for the purpose of the applicant relying on it; (2) The findings and conclusions in those reports, including that it was predicted that in the carrying out of the construction proposed by the respondent there would be movement of the ground at the surface of the land, surface displacement in the form of settlement, such movement of the ground, surface displacement and settlement constituting the disturbance of the surface of the overlying soil of the land within the meaning of clause 2(1)(a); (3) The findings and conclusions in that report, including that it was predicted that in the carrying out of the construction proposed by the respondent there would be significantly reduced maximum loads that could be placed on the ground surface, indicating that the support of the surface of the overlaying soil of the land will be injuriously affected within the meaning of clause 2(1)(b); (4) The fact that at all relevant times prior to 11 October 2017 the respondent had conducted itself on the basis that the applicant was entitled to such compensation that might be assessed even though it was ultimately assessed as $nil. (5) The town‑planning reports of David Haskew dated 12 August 2021 and 19 July 2022. (6) The valuation report of Michael Dyson dated 1 September 2022. 11 Applicant's Claim for Compensation ‑ Requirements set out in Land & Environment Court Practice Note Class 3: Compensation Claims cl 13(a)‑(g) (1) JTA s 55(a) ‑ (f) (a). Compensation pursuant to s 55(a) for the value of the Acquired Land, and compensation pursuant to s 55(f) for the decrease in value of the Remaining Land above the substratum are to be assessed in combination. (b). The Applicant claims that it is entitled to compensation of $20,000 pursuant to s 55(a) for the market value for the Acquired Land (d). The Applicant claims that it is entitled to compensation of $405,000 pursuant to s 55(f) for the decrease in the value of the Remaining Land by reason of the additional delays, uncertainty cost in redeveloping the Remaining Land due to the requirement of the concurrence of the rail authority to any development application on the Remaining Land pursuant to clause 86 of State Environmental Planning Policy (Infrastructure) 2007. (e). The Applicant will provide particulars of the quantum of the claim after service of its expert valuation report. Particulars (i) The Applicant relies on the report of Michael Dyson dated 1 September 2022, paragraphs 119 to 121. (2) Schedule of Losses ‑ JTA s 55(d), 59(1)(a)‑(f) (a). Pursuant to JTA s 59(1)(a): Legal Costs ‑ $50,000 (b). Pursuant to JTA s 59(1)(b): Valuation Fees ‑ $7,001.25 (c). Pursuant to JTA s 59(1)(f) ‑ The Applicant contends that in a redevelopment of the Remaining Land the Applicant will incur additional development costs. The Applicant contends that the incurring of such costs is a matter which is relevant to the claim for compensation pursuant to s 55(f) referred to above. To the extent that those costs are not compensated pursuant to that head of claim, the Applicant makes a claim for them as financial costs pursuant to s 59(1)(f), namely: Item Estimated Cost (A) Estimated Cost (B) Drilling of at least one fully cored borehole to 37m $8,000.00 ‑ If piezometer and/or extensometer is required $10,000.00 2D numerical modelling and preparation of a report covering the required stages and information $20,000.00 ‑ If 3D modelling required $30,000.00 Independent verification $10,000.00 $10,000.00 Application for track possession, hire of protection officer, hire of Hi‑Rail, installation of crack tell tales, vibration monitor and tilt meter, together with preparation of a vibration monitoring plan $80,000.00 $80,000.00 Three tunnel dilapidation surveys, together with a protection officer and application for track possession $20,000.00 $20,000.00 Ongoing tunnel instrument monitoring over two years $320,000.00 $320,000.00 Removal of instruments which also requires a protection officer and an application for a track possession $9,000.00 $9,000.00 TOTAL ESTIMATED COSTS $467,000.00 $479,000.00

[9]

The issues

The issues requiring determination in these proceedings can be explained comparatively simply. There are only two of them.
The first is whether the construction of the tunnels under the north‑western corner of the site has impacted the site in a fashion which satisfies cl 2(1)(a) or (b) of Sch 6B the of the Transport Administration Act. This provision has earlier been set out. It is clear from its terms that each of the elements noted sets a gateway test. One or other of them must be open to provide a basis via which the Company can be permitted to make a claim for compensation pursuant to the Just Terms Act.
The case advanced on behalf of the Company is that both of these gateways are open, whilst, unsurprisingly, the position advanced on behalf of Sydney Metro is that neither is open.
The second issue (if the first is resolved in favour of the Company) is what compensation (if any) is to be paid to the Company for the substratum acquired by Sydney Metro for the construction of the twin tunnels for the project.
In this regard, the position advanced by the Company is that: 1. the acquisition of the substratum constitutes a "blot on title" of the surface land remaining in the Company's ownership and that the Company is entitled to modest compensation ($20,000) for this. This element is said to reflect the market value of the acquisition of the substratum (s 55(a) of the Just Terms Act); and 2. the presence of the tunnels imposes additional mandatory approval requirements from Sydney Metro for any future redevelopment of the site. These additional approval requirements arose, as at the date of acquisition of the substratum, by virtue of the operation of the earlier set out cl 86 of the SEPP. The Company says that the value of this impact is $405,000. This compensation is said to arise as a consequence of the presence of the tunnels having decreased the value of the surface land remaining in the ownership of the Company (s 55(f) of the Just Terms Act).
Thus, on the Company's case, it is entitled to total compensation of $425,000.
Sydney Metro's position on each of these claim elements (elements which, on Sydney Metro's case, do not arise for consideration in any event) is that:

the substratum acquired had no market value; and
the carrying out of the public purpose (construction of the Sydney Metro project incorporating the new public access option of Waterloo Station in fact operated to increase the future development potential (and, hence, value) of the site and that this increase in value of the site was significantly greater than any additional cost which would need to be incurred as a consequence of the presence of the tunnels for the realisation of that increased development potential.

As a consequence, Sydney Metro's position is that the Company has no entitlement to compensation on either basis advanced.

[20]

The monitoring points

As earlier noted, Mr Braybrooke and Mr Kotze gave expert geotechnical evidence (both written and oral). That evidence was founded on monitoring data harvested from a series of nine monitors located on Botany Road (on the side of that road opposite the site). The location of the monitors, and their relationship with the alignment of Sydney Metro's twin tunnels as they approach and pass under the site, can be seen on the plan reproduced below (Exhibit 2, folio 1082):
As can be seen, the second‑most southerly of these monitors, SYW_02812_SP039, is located above the centre of the eastern of the two tunnels. Whilst the line of the monitors (following the alignment of Botany Road) diverges from that of the tunnels, as the alignment of the tunnels moves north in a direction heading a little to the east of the alignment of Botany Road, it was Mr Braybrooke's opinion (expressed during the course of the concurrent oral evidence he gave with Mr Kotze) that the data from the second‑most southerly of these monitoring points provided the most reliable information concerning the extent of the impact of the construction of the twin tunnels on the surface of the site. This was because it was the only monitor directly above the centre of the eastern tunnel that runs directly underneath the north‑west corner of the site.
Mr Kotze disagreed with this position, expressing the opinion that data from all nine of the monitors needed to be considered to obtain a broad and sufficiently accurate understanding of the impact of the tunnels' construction on the site.
It is to be noted that, given the conclusion I have reached on how cl 2(1)(a) of Sch 6B of the Transport Administration Act is to be construed, it is unnecessary to resolve this difference of opinion. It is sufficient to note that the data from the single monitoring point preferred by Mr Braybrooke as a basis for analysis had the potential to demonstrate a somewhat greater degree of disturbance of the surface of the site than it is to be derived from Mr Kotze's approach to interpreting the data from all the monitoring points.

[21]

The monitoring data

Monitoring data from all of these monitoring points, during the period between July 2018 and the end of December 2019, formed part of Exhibit 1.
Mr Kotze produced a composite graph showing the data for surface movement recorded by each of the nine monitors during this period. The data for each monitor was assigned a different colour for the purposes of preparation of the graph. A copy of this graph (taken from Mr Kotze's individual expert report ‑ Exhibit 2, folio 1083) is reproduced below:
Because of the limited scale available by reproducing this graph in portrait alignment for present purposes, a copy of it at A4 scale in landscape alignment is also reproduced as Annexure A to this decision. It is also appropriate, for present purposes, to extract and additionally reproduce a copy of the key to this graph to enable a better understanding of what is shown above. That key is reproduced below:
As can be seen from the general shape of the graph of the monitoring data, there are three distinct phases depicted in it.
The first phase depicts data prior to the advent of the tunnel‑boring machines in proximity to the site.
The tunnel‑boring activity is depicted by the more intense and complex movement of the lines of the graph in the central portion of it. In this regard, it is to be noted that the two tunnels were bored through the Hawkesbury Sandstone in the substratum in two passes, with the more westerly tunnel being bored between 20 March 2019 and 29 March 2019 and the more easterly tunnel subsequently being bored under the site between 18 April 2019 and 2 May 2019. It is to be noted that, during the course of his oral evidence, Mr Braybrooke explained that this intensity of surface movement (both up and down) extended beyond the construction period (doing so until the end of July 2019) because there was a residual tapering‑off of surface movement (tapering‑off being my expression) until the end of July 2019. Mr Kotze did not disagree with this observation by Mr Braybrooke.
The third phase of the data on the graph shows what can be regarded as the "post construction impact" data.

[22]

Mr Kotze's trend line

Mr Kotze's expert report also contained a second version of the above graph, a version upon which he had depicted what he considered to be the relevant trend line derived from a proper consideration of the entirety of the data shown analysed to provide a composite understanding of what Mr Kotze proposed should be seen to be the impact of the tunnel construction (and the tapering‑off of the construction impacts) on the surface of the site. A copy of the graph including Mr Kotze's trend line is reproduced below (Exhibit 2, folio 1084):
As with the base graph, this trend line‑containing version of the graph is reproduced in portrait to enable an understanding of the commentary on it (an A4 version, in landscape presentation, is also reproduced as Annexure B to this decision).
During the course of Mr Braybrooke's and Mr Kotze's oral evidence, I asked Mr Kotze how he proposed I should understand and have regard to the trend line he had derived as depicted above. That exchange was in the following terms (Transcript 20 September 2022, page 66, lines 3 to 47): WITNESS BRAYBROOKE: Sorry, I, I disagree with Greg Kotze's trendline as shown. HIS HONOUR: All right. Mr Kotze, what is your response to that question? WITNESS KOTZE: My response is that the data that we have here within ‑ marginally within, it could be argued within or without the level of accuracy that it's possible to read it, is suggestive of a possible settlement of one and a half millimetres or between 1 and 2 millimetres, which is why I've drawn that trendline. HIS HONOUR: Do you say to me that I would be making a factual error if I relied on your trendline as a basis for drawing a conclusion as to what happened in the vicinity of the site at the relevant periods? WITNESS KOTZE: I think it would be a fair assumption, but I have to say I'd stressed the word "interpretive", because with such small magnitudes‑‑ HIS HONOUR: I understand that. But you're the person who drew the trendline. WITNESS KOTZE: Yes. HIS HONOUR: It seems to me that the first element of the trendline shows, at its right‑hand end, a slight deviation upwards from the zero line. WITNESS KOTZE: Yes. HIS HONOUR: It then trends down, and at least doing as best I can after what I described yesterday as the "trampolining" that is shown in the middle portion of the graph, the trendline then appears to be horizontal at about 1.5 millimetres, is that correct? WITNESS KOTZE: Yes, correct. HIS HONOUR: If I was to say I accept your evidence based on the trendline that you have drawn to conclude that there has, as a result of the multiple readings through the relevant period when the drilling machines were under the site and in what Mr Braybrooke I think describes, if I'm correctly summarising him, the limited post departure continuing settlement period, the result of that is the horizontal line at the right‑hand end. If I rely on all of that to say I adopt your trendline as a conclusion, do you accept that that is an accurate reflection of your evidence? WITNESS KOTZE: Yes.
It is to be observed that Mr Braybrooke did not accept the validity of the trend line as a basis for my drawing any conclusion from the monitoring data. This was because, as I have earlier explained, Mr Braybrooke considered that the data harvested from the only monitoring point located directly above the centre line of the tunnels provided a better representation of the conclusion to be drawn concerning the impact of the tunnel construction on the surface of the site.
As the tunnel‑boring machine reached the monitors, shown in the diagram at [43], and, at the end of March 2019, just before it commenced tunnelling in the vicinity of, and then under and beyond, the site, Mr Kotze's trend line discloses an almost imperceptible upward deviation from his horizontal zero axis.
During the period of intense tunnelling activity and its subsequent tapering‑off until the end of July 2019, his trend line shows a steady level of subsidence until it stabilises, at the end of July 2019, when it steadies and continues horizontally at a level, recording a constant subsidence of approximately 1.5 millimetres.
It is thus the position, on Sydney Metro's own expert's evidence, there has been this degree of subsidence on the site as a consequence of tunnel construction having taken place.
Although Mr Braybrooke proposes that reliance on the monitoring data recorded from his preferred monitoring point (being that which he believed provided more accurate data from which to draw any inference as to the extent of settlement on the site and which would show a greater degree of disturbance), it remains the position that, on Mr Kotze's evidence, I should accept that there has been a minimum disturbance of 1.5 millimetres across the site.
To the extent that it would be open to me to adopt the position proposed by Mr Braybrooke as being preferable, I am satisfied that it is not necessary to seek to resolve this disagreement. I have reached this conclusion because it seems to me that, for the next stage of my consideration of the disturbance of the site (namely, whether the extent of the disturbance satisfies the requirement of cl 2(1)(a) of Sch 6B of the Transport Administration Act, the question of whether the subsidence is 1.5 millimetres or modestly greater is a matter of irrelevance.
I am satisfied that I should conclude that, at a minimum of 1.5 millimetres (and accepting the possibility that there might be some minor increment on that number), the subsidence would be imperceptible but, nonetheless, has taken place.
The question which now arises for consideration is whether some such subsidence, as a matter of law on a proper construction of the relevant statutory provision, opens the gate to permit the Company to be able to make a valid application for compensation pursuant to the Just Terms Act. I here note that I deliberately use the word "application", as whether or not any entitlement to compensation actually arises could only be addressed after proper consideration of relevant matters engaged for consideration of applications made out of the Just Terms Act.

[24]

The Joint Expert Report

Mr Kotze and Mr Braybrooke had conferred and had produced a Joint Expert Report (Exhibit E). Paragraph 6 of this report was in the following terms: 6 It was agreed by the experts that very minor ground surface settlement may have occurred at the subject site as a result of underlying tunnel construction. Mr Braybrooke in Reference 3 refers to individual peak vertical displacement monitoring data of 4.7mm downwards and 3.5mm upwards. Mr Kotze in Reference 4 (Section 3 and Appendix E) describes an overall monitoring data trend during tunnel construction that is suggestive of level settlement (downwards) in the order of between ‑1 and ‑2mm. It was agreed that all the level monitoring data was consistent with the documented impact assessment prediction of less than ‑5mm (lowest risk category 1) and that level movements would have had no adverse impact on the existing or possible future usage of the site.
It was agreed by the experts that very minor ground surface settlement may have occurred at the subject site as a result of underlying tunnel construction. Mr Braybrooke, in Reference 3, refers to individual peak vertical displacement monitoring data of 4.7 millimetres downwards and 3.5 millimetres upwards. Mr Kotze, in Reference 4 (Section 3 and Appendix E), describes an overall monitoring data trend during tunnel construction that is suggestive of level settlement (downwards) in the order of between ‑1 and ‑2 millimetres. It was agreed that all the level monitoring data was consistent with the documented impact assessment prediction of less than ‑5 millimetres (lowest risk category 1) and that level movements would have had no adverse impact on the existing or possible future usage of the site.
It is to be noted that, during the course of his being questioned by Mr Beasley, Mr Braybrooke made the following observation concerning his agreeing to the inclusion of the word "may" (a word of contingent meaning) in the first line of the above‑reproduced paragraph (Transcript 20 September 2022, page 59, lines 11 to 50): BEASLEY: Can I ask ‑ and if we need to, I'll come back to you, Mr Braybrooke, but I asked Mr Braybrooke about the use of the word "may" in paragraph 6 of this joint report. It's a matter of obviousness. It's not my joint report. You two have agreed to phrase it this way: that very minor ground surface settlement may have occurred at the site. Now, for you, Mr Kotze, did the use of the word "may" have any particular significance? WITNESS KOTZE: I used that word deliberately because whilst the trendline, that's my trendline, suggested it might have, it may have gone down by 1 or 2 millimetres. Because the accuracy of this type of equipment is plus or minus 2 to 3 millimetres, most of those readings are within that plus or minus 2 to 3 millimetres and therefore are not crystal clear and can't be guaranteed, hence the use of the word "may". BEASLEY: Do I take that answer to mean that whilst in your opinion it's possible that the changes in vertical displacement represented on this graph might indicate settlement of the subject site as a result of the tunnel‑boring machine, you're not prepared to say it's probable? WITNESS KOTZE: No, I'm prepared to say it might have. Can I just add that if, if the displacement was 23 and a half or, or 13 and a half, most definitely, but within that band, within that limited scope, I've used the word "may". BEASLEY: For the reasons you've expressed, Mr Braybrooke, you think it's more likely than not that‑‑ WITNESS BRAYBROOKE: Yes, again for a number of reasons. Firstly, if we look at this, this particular blue line up here which is 046, that point is well away from the tunnel and therefore, I would expect not to have as much ‑ not be influenced as much as by the tunnel itself. When we start putting a trendline like that, we are taking these points into account which should not be taken into account in my view because it is not relevant to what's happening over and immediately adjacent to the tunnel. That is well away from the tunnel. Now, that then starts bringing this trendline down. Secondly ‑ and I must admit that when I signed this, I hadn't read the word "may". If I had and understood what was there, I would not have signed it as such. BEASLEY: I see. WITNESS BRAYBROOKE: Anyway, that's my problem. I signed it.
It is to be observed that, given my conclusion concerning the geotechnical evidence and cl 2(1)(a) of Sch 6B of the Transport Administration Act, it is unnecessary for me to derive any detailed conclusion concerning Mr Braybrooke's reservation now expressed concerning the phrasing of this passage in the joint geotechnical report.

[26]

Introduction

I now turn to consider how the extent of the maximum disturbance established, arising out of the geotechnical evidence, is to be regarded in the context of cl 2(1)(a) of Sch 6B of the Transport Administration Act.
First, it is appropriate to note that the ordinary principles of statutory construction for considering the text and context of the words of cl 2(1)(a) of Sch 6B of the Transport Administration Act are engaged for my assessment of whether the case advanced for the Company establishes that the test there posed is satisfied. Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28, at [70] and [71], made it clear that the meaning of the provisions of a statute is to be ascertained by examining the context in which the language of those provisions is used and seeking to give effect to the purpose and language of the provisions.
It is to be noted that, in Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707; [2004] NSWCA 422 (Pallas Newco), at [60], examples were set out by Spigelman CJ where questions of a jurisdictional fact were engaged.
Although not precisely analogous, I am satisfied that I do not need to set out those examples in Pallas Newco for present purposes, given the assumption that I have made that I should proceed on the basis that cl 2(1)(a) of Sch 6B of the Transport Administration Act does give rise to consideration of whether or not a jurisdictional prerequisite exists.
It is the overall statutory context that provides the framework within which I need to determine whether or not Parliament intended the existence of the fact to both objectively exist and be essential, notwithstanding the element of fact and degree, or even of judgement, that was required in the process of determining whether or not the relevant fact existed.
Although the High Court has said that it is permissible to read additional words into a statutory provision such as cl 2(1)(a) of Sch 6B (see Taylor v The Owners of Strata Plan 11564 and Others (2014) 253 CLR 531; [2014] HCA 9), if it is necessary to do so to enable giving full effect to the operation of the provision there is no obvious lacuna in cl 2(1)(a) of Sch 6B that would require such an importation of the requirement to have regard to such externalities.
For present purposes (on the assumption that the drafters of cl 2(1)(a) of Sch 6B of the Transport Administration Act intended that consideration of a jurisdictional test was involved), I now undertake an objective determination, on the facts which are here available, as to whether or not "the surface of the overlying soil" has been "disturbed" by the construction of the Sydney Metro tunnels.
It is, therefore, necessary that I confine myself to the evidence concerning this and how that is to be understood in its statutory context.

[27]

Definitions and the use of dictionaries

The written opening submissions, on behalf of Sydney Metro, set out, at paragraph 41, the definition of "disturbed" taken from the current online edition of the Macquarie Dictionary. That definition is in the following terms: "2. to interfere with; interrupt; hinder. 3. to throw into commotion or disorder; agitate; disorder; disarrange; unsettle"
The Court of Appeal has cautioned overreliance on dictionaries, as explained by Basten JA in Hunter's Hill Council v Minister for Local Government; Lane Cove Council v Minister for Local Government; Mosman Municipal Council v Minister for Local Government; North Sydney Council v Minister for Local Government; Strathfield Municipal Council v Minister for Local Government [2017] NSWCA 188, at [77]‑[78]: 77. … Resort to dictionaries to determine the meaning of a word used in a legal context is rarely favoured. Such judicial disfavour is not a result of some dismissive or precious attitude towards the compilers of dictionaries. The point is rather that dictionaries reflect common usage and common usage may not be reflected in a particular statutory context. Thus, it used to be said that the ordinary meaning of a word, other than a technical term, is a question of fact, whereas the construction of the statutory provision in which the word is found is a question of law. Since Collector of Customs v Agfa‑Gevaert Ltd that distinction is no longer applied. As explained by Lord Hoffmann in R v Brown, referred to in Agfa‑Gevaert: "The unit of communication by means of language is the sentence and not the parts of which it is composed. The significance of individual words is affected by other words and the syntax of the whole." 78. That is not to say that dictionaries may not be helpful, or are not used, although they are rarely referred to in judgments. Their function is, however, limited.
I set aside any detailed consideration of dictionary definitions, as I do not consider that they are of significant assistance and are to be approached with caution in having regard to the meaning of the potentially jurisdiction‑triggering expression in cl 2(1)(a) of Sch 6B of the Transport Administration Act (House of Peace Pty Ltd & Anor v Bankstown City Council (2000) 48 NSWLR 498; (2000) 106 LGERA 440; [2000] NSWCA 44, at [25] ff).

[28]

The Company's submissions

Mr Hale submitted that the use of the word "may" in paragraph 6 of the joint expert geotechnical report was to be considered in light of the terms of a Parsons Brinckerhoff letter appended to Mr Kotze's individual expert report, a letter which ascribed certainty to the expectation of settlement as a consequence of tunnel‑boring and construction activities. The relevant portion of this letter was in the following terms: Methods of construction The excavation under the Property will be carried out using tunnel‑boring machine (TBM) tunnelling techniques. The running tunnels will be supported using a passive structural lining. A precast concrete segmental lining will be installed immediately behind the TBMs as the excavated face is advanced. For this reason, only limited surface displacement (in the form of settlement above the excavation) is predicted. Analysis technique A Gaussian model recommended in a published paper entitled "Prediction of ground movements and assessment of risk of building damage due to bored tunnelling" (Mair, RJ. et al., 1996) has been used to predict an idealised settlement trough at surface level from tunnelling activities. This approach assumes that the settlement profile will not be affected by the presence of buildings and structures at or below surface level (i.e. commonly referred to as 'greenfield' conditions). The excavation required to construct the Underground Rail Facilities will cause some level of deformation of the surrounding ground. The movement of the ground at surface during excavation can be attributed to the contraction of the recently formed opening. Following this approach, the settlement at surface as induced by tunnelling is idealised to occur in the shape of a trough. The area contained within the trough is set by the volume loss parameter, expressed as a percentage of the tunnel area. A trough width parameter determines the steepness and the width of the settlement trough. The effect of multiple tunnels on settlement at the surface is assessed by applying superposition principles. The assessment of settlement takes account of the layout and size of the tunnels, as well as the thickness and quality of the material that lies above the tunnels. This approach has been calibrated on previous projects using numerical modelling to prove its applicability to rock conditions in Sydney. These projects include the Epping to Chatswood Rail Link and the Sydney Airport Link. Based on the application of this analysis technique, it is predicted that the maximum surface settlement within the boundaries of the Property will be less than 5 mm.
This set the scene, Mr Hale submitted, for understanding how I should approach the question of acceptance that there had, in fact, been settlement across the site in a fashion that would satisfy the first of the gateway tests I was required to consider.
He also submitted that Mr Kotze's oral evidence should be regarded as supporting this approach, where Mr Hale submitted (Transcript 27 September 2022, page 246, line 44 to page 247, line 1): HALE: Yes. His explanation of what he means by "may", at p 59 of the transcript, and I took you to it this morning, 59.24. He says there "Most of the…not crystal clear". He's looking for certainty and can't be guaranteed. Hence the use of the word "may". So in our submission it has been established beyond any doubt that there was settlement. It was predicted, the science expected it and the results confirmed it. While there was some criticism of Mr Braybrooke that he didn't pick up the word "may", nonetheless he accepted it.
The oral evidence Mr Hale referred to is in the following terms (Transcript 20 September 2022, page 59, lines 18 to 23): WITNESS KOTZE: I used that word deliberately because whilst the trendline, that's my trendline, suggested it might have, it may have gone down by 1 or 2 millimetres. Because the accuracy of this type of equipment is plus or minus 2 to 3 millimetres, most of those readings are within that plus or minus 2 to 3 millimetres and therefore are not crystal clear and can't be guaranteed, hence the use of the word "may".

[33]

The Company's position

The primary position advanced on behalf of the Company on this point can be understood from Mr Hale's written closing submissions at paragraphs 35 to 38. These were in the following terms: 35. Clause 2(1)(b) applies where the "support" of the surface of the land "is destroyed or injuriously affected by" the construction of the underground rail facilities. 36. The term "injurious affection" has been described as a "neat expressive way of describing the adverse effect of the activities of a resuming authority upon a dispossessed owner's land". 37. The geotechnical experts agreed that any newly constructed building on the Site requires the surface of the land to support the building. Such support is provided by excavating the land and constructing foundations for the building. However, by reason of the excavation and construction of the tunnels below the surface of the Site, any excavation of the surface of the Site to construct any new building, including its foundations, below a depth of 2 metres, will require the concurrence of the rail authority. 38. Therefore, the injurious affection to the applicant's Site by reason of the construction of the underground rail infrastructure beneath the Site is caused by the limitations which are imposed upon the ability of the landowner to excavate the Site for future development, namely the requirement for the concurrence of the rail authority for any development application for future development, due to the presence of the underground rail facilities beneath the Site. That is sufficient to engage clause 2(1)(b) of Schedule 6B to the TA Act.
Although Mr Hale addressed this provision in his oral closing submissions, it is not necessary to extract any material from the transcript of his closing submissions, as that which is set out above adequately comprehensively encompasses the position advanced on behalf of the Company.
It is appropriate, however, to note one specific matter raised by Mr Hale in his oral submissions on this point. It is that the requirements of cl 86 of the SEPP mandated the compliance with the technical requirements which had been set out at paragraph 26 of Mr Braybrooke's Statement of Evidence dated 17 August 2021. Although there was some possibility that these requirements might be relaxed by a future rail consent authority, the terms in which they were expressed made compliance with both the requirements in Tables 10.1 and 10.2 of the Sydney Metro Underground Corridor Protection Technical Guidelines ‑ April 2021 mandatory. These requirements, as I understood him, were necessary responses to what was set out in cl 2(1)(b) of Sch 6B of the Transport Administration Act for any future redevelopment of the site.

[34]

Sydney Metro's position

The position advanced by Mr Beasley in response can be addressed in comparatively short compass. There are two aspects to his submissions.
The first and, as I understood it, primary position advanced on behalf of Sydney Metro by Mr Beasley was that the agreed position of Mr Kotze and Mr Braybrooke was that, even on the basis of construction of a 33‑storey building plus sufficient basement car‑parking to cater for a development of that size (a development possibility which had drifted into the potential future development mix in a fashion disavowed by the planning experts), construction of such a structure would be possible without the twin tunnels through the sandstone substratum having any impact on such development potential. That geotechnical evidence with respect to that (fanciful) development scenario demonstrated, Mr Beasley submitted, that those matters arising from cl 2(1)(b) were not engaged in any fashion for consideration in the context of such a hypothetical development. Given that position, it was clear, Mr Beasley proposed, that there was no possible way that this provision could be said to be engaged, in the fashion advanced for the Company, by the agreed future hypothetical development accepted as being the future potential for the site as defined by the likely more beneficial planning controls that would arise for the site (the timing of that being irrelevant for present purposes) of a six‑to‑eight‑storey redevelopment above basement car‑parking. Given that agreed future development scenario, there was no basis upon which the Company could satisfy me that this necessary jurisdictional gateway was open.
The second basis upon which Mr Beasley submitted that the Company's position lacked validity was the fact that, as was demonstrated by the Ministerial approval of the designation of the rail corridor on 9 January 2017, by the (then) Minister for Planning, the triggering of the necessity for consent from the rail authority required by cl 86 of the SEPP and the technical requirements arose from that date, with respect to any future excavation of greater than two metres below the surface. As the requirement operated from that time, rather than from any time associated with the actual construction of the tunnels through the acquired substratum, this requirement arose prior the date of the acquisition of the substratum and independently of the construction of the tunnels.
Mr Beasley submitted that, in the final analysis, there was absolutely no evidence which could support a conclusion that the gateway in cl 2(1)(b) was open. There was, he submitted, no possible geotechnical basis for such a conclusion, given the agreement between Mr Kotze and Mr Braybrooke that the presence of the tunnels would have no impact on the ability of the surface of the site to provide support for its redevelopment for a 33‑storey building with basement car‑parking, let alone the six‑to‑eight‑storey (with basement car‑parking and an FSR of 6:1) redevelopment as agreed by the town planners. That agreed evidence demonstrated that neither element of this provision was satisfied and that, therefore, this potential gateway to the Just Terms Act remained shut.

[38]

Mr Braybrooke's position

Mr Braybrooke accepted that, if strict compliance with the technical guidelines was not required, Mr Kotze's estimate of $140,000 for additional geotechnical monitoring to support a development application was appropriate.
However, it was his evidence that, if strict compliance was required, the additional geotechnical monitoring costs would be $479,000.
Mr Braybrooke considered that the advice that would be appropriate to give the hypothetical purchaser, as at the date of acquisition, would be to allow for geotechnical monitoring expenditure at the higher amount he had nominated. In questioning from Mr Beasley, Mr Braybrooke explained why he adopted this position (Transcript 20 September 2022, page 72, line 26 to page 73, line 12): BEASLEY: You heard his Honour. You're saying that if you went back to the date of acquisition, 11 October 2017, you'd be saying, even for a four to nine storey development, the extra geotechnical costs could be $479,000? WITNESS BRAYBROOKE: That's correct. BEASLEY: Which was the costing you did for a 33 storey development plus four levels of basement? WITNESS BRAYBROOKE: It's also the costing that you would do for any building based on paragraphs 10(a) and 10(b), because those paragraphs ‑ and this is in the Transport NSW‑‑ BEASLEY: Yes. WITNESS BRAYBROOKE: ‑‑which states that, "The minimum monitoring requirement for development activities" ‑ in black and white it says what the minimum is. On the next page, it says, it's noted, "It may, may not be feasible to grant access to the tunnels for the purposes of installing monitoring equipment." Currently, it is not feasible to do that and, in fact, we've got a number of properties we've been monitoring, we have not been allowed to go into the tunnel because the tunnels are still under construction. I do not know what's going to happen once the tunnels are up and running, whether Transport NSW is going to then re‑insist that the monitoring internally within the tunnel is adhered to for any sized development. If they are reasonable, I agree, it then should be only probably in the order of 140,000, but if they're not reasonable ‑ and I can't predict whether or not they will be ‑ it could be up to 479,.000. BEASLEY: Do I understand your evidence now to more accurately, I would submit, be reflected by this: that if Transport for NSW act in a reasonable way, you would tell a hypothetical developer that the extra costs might only be the 140,000. If they insist on everything that they possibly could in the technical guidelines, it could be up to the 479,000? WITNESS BRAYBROOKE: That's correct.
During the course of his oral evidence, Mr Braybrooke explained why he relied upon the sum of $479,000 as the appropriate amount to advise the hypothetical purchaser would be the likely cost necessary to be incurred to satisfy the requirements of cl 86 of the SEPP in order to obtain the concurrence consent of the relevant rail authority to a future redevelopment proposal for the site.
Mr Braybrooke explained his reasoning as to why the amount of $479,000 was the appropriate cost of the additional geotechnical monitoring which would need to be undertaken in order to satisfy the consent rail authority that approval should be given for a development of the scope proposed by the town planners as reflecting the future redevelopment potential of the site. He explained this at paragraphs 35 to 45 of his individual expert report in the following terms: 35. As part of the additional site investigation requirements at least one fully cored borehole will need to be drilled to 3 m below tunnel invert, a depth of 37 m. 36. Obtaining permission from TfNSW to drill this hole, scanning for services, drilling and rock mechanics testing, and geotechnical logging is likely to cost in the order of $8,000. If a piezometer and/or extensometer is required, the total cost is likely to be in the order of $10,000. 37. It may be possible to convince TfNSW that modelling will not be necessary or if not, that only 2D numerical modelling will be required. From our experience, if this is the case the cost of two‑dimensional numerical modelling and the preparation of a report covering the required stages and information will likely be in the order of $15,000‑$20,000. 38. Alternatively, should 3D modelling be required, which from the preceding section is considered likely, the modelling and reporting is likely to cost in the order of $25,000 ‑ $30,000. 39. The independent verification will be by others and may cost in the order of $10,000. 40. Application for track possession, hire of Protection Officer, hire of Hi‑Rail, installation of crack tell tales, vibration monitor and tilt meter, together with preparation of a vibration monitoring plan will cost, based on one of our recent jobs, approximately $80,000. 41. Three tunnel Dilapidation Surveys will need to be carried out which, together with a Protection Officer and application for a track possession is likely to cost in the order of $20,000. 42. Ongoing Tunnel Instrument Monitoring over say two years is likely to cost in the order of $320,000, or $13,300/month. 43. Removal of the instruments which also requires a Protection Officer and an application for a track possession is likely to cost $9,000. 44. Should this instrumentation, monitoring and 3D modelling be required the all‑up cost is likely to be in the order of $479,000. 45. Apart from these costs there will be additional costs for: • A stray current assessment report and any additional costs to address this issue; • A noise and vibration assessment report and any additional costs to address any issues; • A risk assessment report; • A drainage report; • An engineering impact assessment report; • A summary report; and • Verified survey plans by a NSW registered surveyor showing the tunnels and the building.
He based his conclusion that this was the appropriate advice because of what he considered to be the risk that the consent‑giving rail authority would require the full implementation of the geotechnical monitoring requirements set out in the technical guidelines. Although he acknowledged that it was possible that that consent authority, acting reasonably, might not require the full suite of the monitoring requirements set out in the technical guidelines, there was, nonetheless, a risk that this would occur if the consent authority acted unreasonably (Transcript 20 September 2022, page 72, line 49 to page 73, line 12).
When questioned by Mr Beasley concerning what practical experience, if any, he had had concerning such a possibility, his evidence was in two parts (Transcript 20 September 2022, page 73, line 44 to page 74, line 10): BEASLEY: "This small pressure is roughly equivalent to that which would be applied by two fully‑grown adults standing together on the tunnel crown. This small loading is sufficiently low as to have negligible impact on the tunnel" et cetera. A proposition to you, Mr Braybrooke, is this: that the modelling that Mr Kotze has allowed for would show this; that this level of development, four to nine storeys, is likely to have a negligible impact on the tunnel and, perhaps, that pressure from two fully‑grown adults only, and that would be an indication to Transport for NSW, or whoever the decision‑maker was, that you don't need to do all this extra monitoring? WITNESS BRAYBROOKE: Should be. That has not been our experience. With, and our experience hasn't been other than recently with Sydney Metro, but it has been with Sydney Rail and Sydney Rail have insisted that, despite something like that, that all the monitoring that they require, which is very similar to this, goes in. So, I cannot, basically, accept that they're going to have somebody suddenly change, well, and maybe not change, a more reasonable client appear to what we have been used to in the past. and (Transcript 20 September 2022, page 79, line 37 to page 80, line 24): BEASLEY: You mentioned that you've had, was it personal experience with people being unreasonable? WITNESS BRAYBROOKE: Most certainly have. BEASLEY: And that was with who? WITNESS BRAYBROOKE: That was with Sydney Rail. BEASLEY: Sydney Rail? WITNESS BRAYBROOKE: Or their predecessors, but they're all the same. BEASLEY: When was that? WITNESS BRAYBROOKE: The most recent time would've been three, four years ago. BEASLEY: Is that before the date of acquisition or after the date of acquisition? WITNESS BRAYBROOKE: Would be after, yeah. BEASLEY: What sort of development was involved? It may not be relevant now, but what sort of development was that involving? WITNESS BRAYBROOKE: It's ‑ it was probably a, a medium rise in the city itself. BEASLEY: And medium rise means how big? WITNESS BRAYBROOKE: 20 storeys, something of that order. BEASLEY: I see, okay, but no personal experience with Sydney Metro, for example? WITNESS BRAYBROOKE: Not directly with Sydney Metro, but I've been involved on the periphery of negotiations with them, yes.
In his closing written submissions, Mr Hale proposed (at paragraphs 12 to 17): 12. The parties' geotechnical experts agree that possible future re‑development scenarios for the Site ‑ for a new building comprising between 4 to 9 levels above ground and between 1 to 4 basement levels below ground ‑ would be "feasible at the subject site from a geotechnical perspective". That is, "such new building scenarios could be readily supported by the subsurface geological profile at the site and, could be constructed without any adverse impacts on the underlying Metro tunnels". 13. However, the parties' geotechnical experts also agree that, because of the presence of the underground rail facilities constructed beneath the Site, any re‑development of the Site which involved any excavation greater than 2 metres below the surface would require the concurrence of the rail authority, in accordance with the requirements of clause 86 of State Environmental Planning Policy (Infrastructure) 2007 (NSW). 14. The parties' geotechnical experts agree that concurrence for the re‑development of the Site should be "readily obtained from the rail authority on geotechnical grounds, albeit that some additional expenditures in both time and cost would be required to achieve concurrence, than would otherwise be the case if the tunnels were not constructed", including construction monitoring. 15. The applicant's geotechnical expert, Mr Braybrooke, gave evidence that the additional costs of any re‑development of the applicant's Site due to the presence of the underground rail facilities beneath the Site will likely be up to $479,000, in the event that the rail authority required the full suite of monitoring requirements for development activities near rail tunnels which are set out in Tables 10.1 and 10.2 of the Sydney Metro Underground Corridor Protection ‑ Technical Guidelines (Technical Guidelines). This is the advice which Mr Braybrooke would have given to a prospective purchaser of the Site as at the date of acquisition in October 2017. 16. On the other hand, the respondent's geotechnical expert, Mr Kotze, gave evidence that the additional costs of any re‑development of the applicant's Site due to the presence of the underground rail facilities beneath the Site will likely be $140,000, due to additional requirements for site investigation and reporting, additional geotechnical modelling, and construction monitoring. Mr Kotze expressed this opinion on the basis that the Site has "favourable geotechnical conditions", and therefore in his opinion "a relatively simple project‑specific construction monitoring programme would be acceptable to the rail authority and additional geotechnical costs in the order of $140,000 would be applicable". However, Mr Kotze conceded that he did not have any experience in negotiating with Sydney Metro in respect of its requirements for construction monitoring. Mr Kotze also accepted that, as at October 2017, he would advise a prospective purchaser of the Site that Tables 10.1 and 10.2 of the Technical Requirements set out the requirements for construction monitoring, and that those standards may be relaxed by Sydney Metro, but that would depend upon the particular circumstances at the time of the application. 17. Mr Kotze also agreed that, as at October 2017, he would have had to warn his client of the possibility of having to expend up to $479,000 in additional monitoring costs etc. However, he said that such a warning would be subject to him also saying that the rail authority may waive compliance with some of the monitoring requirements set in Table 10.2, but that would depend on the particular development proposed at the time.
In his oral closing submissions, Mr Hale said (Transcript 27 September 2022, page 212, line 16 to page 213, line 40) ‑ to complete the sense of the passage, the below extract of his oral submissions is expanded by inserting full extracts of the relevant quotes in square brackets: HALE: … Your Honour will have seen in Mr Braybrooke's first report, which is exhibit A, he sets out the technical guidelines at para 25. I'll just give your Honour the reference. Even though they are in evidence, nonetheless they're set out more clearly, and then at exhibit B, he sets out the various extracts in more detail and your Honour will see those at para 26, the tables, and you've been taken to them on a number of occasions. ... HALE: Yes. Your Honour sees 10.1 "Minimum monitoring requirements for development activities near rail tunnels in ground." That is near the tunnels, not in the tunnels. Then table 10.2, "Minimum monitoring requirements for development activities near rail tunnels within existing rail tunnels". They are expressed to be in mandatory terms. In exhibit D, which is the supplementary report of Mr Braybrooke, he says at para 5 "However, as at [11 October 2017 it was not clear that access to the tunnels would not be granted, particularly once they are in operation. Therefore, I would have advised a potential purchaser of the property that due to the presence of the tunnels beneath the property the additional cost of development could] would have been 479,000" as outlined in s B of his 2021 report. Then in exhibit F, which is the supplementary joint expert report, at para 5 he says "Mr Braybrooke believes that [, in light of the black and white requirements of Table 10.2, it is impossible to second guess the attitude of Sydney Metro once the tunnels are in operation, as to what monitoring would be insisted on. Hence it is still his opinion that the geotechnical costs could] be up to $479,000". And it was in exhibit B ‑ sorry to jump back again ‑ he set out those costs at para 35 through to 44 totalling $479,000, in which a significant amount was due to the ongoing tunnel instrument monitoring which, as we'll come to, Mr Kotze agrees is the more expensive. The explanation between the two costs of Mr Kotze and Mr Braybrooke of the $140,000 difference may be summarised ‑ and this is what Mr Kotze says ‑ the $140,00 is if you don't have ‑ the difference is if you don't have to go into the tunnels. If you don't have to do what's required of 10.2 you only have to do what is in relation to 10.1, but if you have to go into the tunnels, which is 10.2, then the figure would be the 479,000. Your Honour will see that in the evidence of Mr Kotze at pp 75 through to 78 of the transcript. It begins at 75 line 25: "Q. Having taken you to the tables, you would advise the potential client" ‑ this is focussed in October 2017 ‑ "you would advise [them that the requirements of the relevant authorities are set out in tables 10.1] and 10.2? A. Yes." And I asked some further questions. That it would require the minimum monitoring. That's pressed. Then at line 50 he says: "A. I would elaborate [. Q. Yes, but before we come to the elaboration, what you would say, "These are the standards they set out that have to be complied with." A. Yes. Q. Your elaboration, might we take it, is they may, however, in particular circumstances, relax those standards? A. Yes. Q. But it would depend on the circumstances at the time of the development? A. Probably at the time] of the application." Then your Honour follows that through. Then your Honour will see from about line 33 referring to the technical guidelines ‑ sorry I go back it, begins at line 21 picking up 10.2 and your Honour will see at line 44: "Q. It's more expensive? [and it's more expensive because you have to be able to get into the tunnels to put the monitors there. Correct? A. Yes. Q. That costs time and] effort? A. Correct, yes." Then if we go to 77 line 40: "Q. Would it be [fair to say that the major difference between your $140,000 and Mr Braybrooke's $479,000 is the cost of complying with 10.2 if it is required‑‑ A. Yes Q. ‑‑to be complied with? A. Yes. Q. So, what you would be advising somebody in October 2017 about what might happen in the future would be that you might have to expend the order of 479,000 because of the costs of monitoring within the tunnels? A. That's possible. Q. Yes, so you've got to warn them of that. You've got to warn your client of that if your advice is being sought? A. Can I add something though? Q. Sorry, can you answer my question? You have to warn your client if that advice is being sought of the possibility of them having to expend up to $479,000. Correct? A. Conditionally, yes. Q. Yes, and the condition is that it may be the case that the Rail Authority may waive compliance with 10.2? A. With some of it dependent upon the proposed development] at the time." What your Honour sees is that that would be the position at the time, the 479,000, but they might waive. I think Mr Kotze also said that he himself had never actually had to negotiate. I'll come back to that. Your Honour may remember that. HIS HONOUR: I do. HALE: Yes. That would be picked up with Mr Lunney's evidence. I'm told that that reference is footnote 11, transcript 74 to the top of p 75, it's picked up in footnote 11. Then we go to Mr Lunney at 167 and following to 170. At that point, I first take him to what you would advise the hypothetical purchaser who has in mind the possibility of developing under existing controls, and your Honour will see at about line 25 "I think a [purchaser of that profile would, would carefully listen to all of the geotech advice, and they] couldn't ignore the 479,000". He then goes on‑‑ ... HALE: From line 25 after the reference to "479". "I accept that [, that they would be given that advice as, as something that could happen if, if, if the authority acted unreasonably. My view is, if, if they were given all of the geotechnical advice that, that we in this room have the benefit of, that ‑ a, a purchaser of that profile would take the view that the most probable cost would be 140,000.] most probable was 140,000". But the 140,000, as I say, is the figure if only 10.1 applies, not 10.2. His advice would be advise of the risk. Then your Honour will see Mr Dyson at 171 at line 25, he refers to the risk. At p 172 from about line 15 Mr Lunney is cross‑examined on the basis that the hypothetical purchaser is purchasing the land with the idea that at some stage in the future there will be redevelopment when there are zoning changes. Then from about line 40 "I want you to…into account? A. Yes." They would take into account all of the geotechnical advise whether that number be 140 or 479. [KH Note: this has been incorrectly transcribed, in addition to the fact that Mr Hale may have deviated slightly when reading the transcript. The actual quotation is as follows: "Q. And I want you to assume that this hypothetical purchaser also received the advice of the geotechnical nature which we discussed earlier‑‑ A. Yes. Q. ‑‑that if table 10.1 and 10.2 were required to be complied with, in 2017 dollars, the costs would be of the order of $479,000? A. Yes. Q. Might we take it that the hypothetical purchaser, intending to do what I've just described, plainly enough, would take into account that potential cost of $479,000? A. Look it ‑ yes, they would take into account all of the geotechnical advice, whether that number be 140,000 or 479,000.] As I say, the 140 assumes the works in 10.2 are not required. That also continues over at the top of 174.
In his closing written submissions, Mr Beasley submitted on this point (at paragraphs 101 to 104): 101. The geotechnical experts agree that, as at the Acquisition Date, any additional geotechnical costs associated with a 6 to 8 level redevelopment of the residue land should be in the order of about $140,000. Mr Braybrooke agreed with this in the joint report: Ex E [11] 1139 referring to Ex 2 [6.15] 1058‑9. They were also of the view that additional geotechnical costs associated with a 33‑level redevelopment would be about $479,000: Ex E [14] 1139. 102. However, on the Friday before the hearing began, Expandamesh served a further statement of evidence from Mr Braybrooke in which he asserted that extra geotechnical costs for a 6 to 8 level redevelopment could also be "up to $479,000": Ex D [5]. 103. Mr Braybrooke clarified in cross‑examination that, while his view was that extra geotechnical costs as at the Date of Acquisition as a result of the Tunnels for a 6 to 8 level redevelopment should be about $140,000, they could be up to $479,000 if the relevant authority for the purposes of concurrence under clause 86 of the SEPP acted "unreasonably": see T D2 72:41‑73:12; T D2 73:44‑74:10. He cited an example of what he considered to be unreasonable behaviour by Sydney Rail (an entity not represented in these proceedings, and in relation to a medium density 20‑level tower development), but not by Metro: T D2 79:40‑80:23. 104. In light of this evidence, the Court has no basis upon which it could make a finding that on the Acquisition Date the hypothetical parties would have considered that Metro would act in an "unreasonable" or irrational way if concurrence was sought for a future redevelopment of the residue land. The only available finding is that the hypothetical parties would be advised that additional geotechnical costs for any feasible redevelopment of the residue land would be in the order of $140,000. They could not rationally then contemplate some "unreasonable" behaviour by the concurrence authority. Rather, they would be advised that concurrence would be "readily obtained": Ex E [10] 1138.
In closing oral submissions, Mr Beasley submitted (Transcript 27 September 2022, page 234, line 30 to page 235, line 50): Just leaving that for a moment, and before turning to the valuation evidence, if I can just deal with the geotechnical evidence and the after scenario? In my submission the position ultimately taken by the geotechnical experts is relatively clear. There is agreement between them. There is agreement that for a feasible redevelopment of six to eight storeys the geotechnical cost should be in the order of about $140,000 as at the date of acquisition. … BEASLEY: ... There is absolutely no doubt ‑ and we've given your Honour all the transcript references ‑ there is no doubt that the geotech experts have expressed agreement that as at the date of acquisition the costs ‑ any further geotechnical costs required or that might be required as a result of the presence of the tunnels should be $140,000. Mr Braybrooke went on to say yes they could be up to $479,000 if I assume the concurrence authority does not act reasonably. That's the position of the evidence. Mr Braybrooke, and the same applies to Mr Dyson, offered no evidence at all that Sydney Metro would act in an unreasonable way. The transcript reference to this is 160 at line 42, Mr Dyson wants to say it's an unknown then. It's not an unknown. Both of them say 140,000 it should be. Mr Dyson agreed, like Mr Braybrooke, that there was no basis for assuming Sydney Metro would act unreasonably. He said to me in an answer "Where's your evidence that it acts reasonably?" That's not the point, with all due respect. Professional people, as at the date of acquisition, would be obliged to give proper advice to the hypothetical parties. These geotechnical experts giving proper advice would say no more than this: "We both think it's 140,000 extra because of the presence of the tunnels at the date of acquisition". Mr Braybrooke would say it'll be up to 479 if they behave unreasonably. Hypothetical parties, whether it's developer or vendor, would say what's your evidence they'll act unreasonably? Mr Braybrooke and Mr Dyson would both say we don't have any for Sydney Metro. Where does that leave the hypothetical parties in terms of risk that it might be more than 140,000? It's barely speculation that it would be above $140,000. It's like, "You tell us where Sydney Metro acts reasonably in circumstances where they can't point to Sydney Metro ever acting unreasonably". In those circumstances, I accept that a hypothetical purchaser might say: "Well look, there's this off far fetched chance if Sydney Metro acts unreasonably, for which no one can give me any advice that they would, that the price goes up from 140 to something else. But otherwise, I'm being told by my geotechnical experts that for the development that's feasible for me, six to eight storeys, the cost should be no more than an additional $140,000 on the basis of the presence of the tunnels". In those circumstances, a hypothetical developer that actually wants to win the sale is not going to be deducting anything like $479,000 off an offer that he, she or it might make. I would make the submission that they're unlikely to even take off the $140,000 because that would be noise in a hypothetical sale, based on an after scenario for a land which you considered or had advised had a short to medium term development potential for a six to eight storey development, but leaving that aside, a rational hypothetical party, based on the geotechnical evidence and the valuation evidence, would go "It'll cost me 140 grand for the extra geotechnical costs". It's ludicrous to make the submission that it would be 479,000, and further, what we know about Mr Braybrooke and Mr Dyson is that they started at 479,000, not on a six to eight level development, but on a 33 level tower. Clearly when Mr Haskew, at some stage before the proceedings started, said "No, that's not feasible. I only mean six to eight storeys", there's been a backtracking to thrash around to try and find another means of getting back to $479,000 and the means of backtracking to get to that has been this theory of Mr Braybrooke's, adopted by Mr Dyson, that Sydney Metro will act unreasonably. Your Honour would just reject all that evidence.

[39]

Consideration

In considering the appropriate starting point for determining what would be the relevant advice given on geotechnical matters to a hypothetical purchaser considering the likely future redevelopment opportunities for the site, and what geotechnical costs might need to be incurred to realise them, there is no doubt that such a hypothetical purchaser would readily accept the agreed position of Mr Kotze and Mr Braybrooke that geotechnical monitoring costs of $140,000 would need to be incurred.
The question, therefore, is whether (and, if so, to what extent) the prudent hypothetical purchaser would make an allowance for the risk that the relevant rail authority, acting as a concurrence consent body, would act in an unreasonable fashion, the purchaser being advised by Mr Braybrooke of what he considered to be this possibility founded on the limited factual knowledge outlined above of Mr Braybrooke's oral evidence.
Put simply, given that advice in the terms set out, would the prudent hypothetical purchaser deduct not only $140,000 from what might otherwise be offered for the site but also deduct a further $339,000 to accommodate a risk based on the very limited extent of the knowledge held by Mr Braybrooke, knowledge based on a development in the Sydney CBD of 20 storeys in height and where the concurrence consent authority was not Sydney Metro but was Sydney Trains, the heavy rail operator at the time that the uncooperative conduct took place.
Put in those terms, whilst I accept that there is a risk and some modest allowance might possibly need to be contemplated to guard against that risk, the scale of the maximum beneficial planning changes agreed by the town planners (a six‑to‑eight‑storey new development with appropriate basement car‑parking ‑ a development which, on the agreed evidence of Mr Kotze and Mr Braybrooke would have no impact on the tunnels below the site) does not provide any rational basis as to why the prudent hypothetical purchaser would make a total reduction of $479,000 in the amount offered for the site as a consequence of the geotechnical monitoring risk.
I am satisfied that, framed in the analytic fashion which I have set out, any hypothetical purchaser who made an allowance in that amount and deducted it from the hypothetical offer would end up being the under‑bidder in any contested sale of the property.
Although the hypothetical prudent purchaser might contemplate making some allowance if given the advice advanced by Mr Braybrooke and his reasoning for that advice, I have concluded that, on proper consideration of the basis of that advice, the hypothetical prudent purchaser would conclude that the risk was small under the circumstances (indeed, so small as to be negligible) and would only make allowance for the incurring of the agreed quantum of $140,000, as that which would necessarily be incurred to obtain the monitoring data that would be required by the concurrence consent authority before that rail authority would give its approval as mandated by cl 86 of the SEPP.
As a consequence, the appropriate outcome is that the hypothetical prudent purchaser would reduce what might otherwise have been the maximum amount offered to acquire the site by $140,000 to allow for the required future geotechnical monitoring.

[43]

Timing of redevelopment under altered planning controls

There was a difference of opinion on this topic between Mr Haskew and Mr Grech.
Mr Haskew adopted the position that he would have advised, at the acquisition date, that it was likely that the alterations to the planning controls creating the potential for a six‑to‑eight‑storey redevelopment of the site being possible would have occurred within the range of three‑to‑five years after the date of acquisition of the substratum. His advice would also have been that it would have taken two years after such uplift in the planning controls made a beneficial redevelopment possible for obtaining the necessary approvals for such a redevelopment. Thus, his anticipated timeline for future redevelopment was one of five‑to‑seven years post acquisition (Exhibit H) at [31], [54], [55]: 31. Having regard to that strategic planning context, any planning proposal to amend FSR and HOB controls for the subject site would be contingent on strategic planning certainty regarding those same development standards from the Waterloo Estate. Consequently, it follows that the timing for rezoning and redevelopment of the subject site must follow the rezoning process of the Waterloo Estate. At the date of acquisition, given the foregoing strategic planning context, it would have been my expectation that the Waterloo Estate state significant precinct would have reached a level of strategic planning certainty by 2022. At that time, it would have been appropriate for the Council or the landowner to commence a planning proposal to rezone land on the eastern side of Botany Road north of McEvoy Street. Given the comparatively small land area and demonstrable consistency with recent strategic planning actions, I would predict the time frame for that rezoning application to be two years from 2022. … 54. As opined above, the highest and best use of the subject site at the date of acquisition was contingent on LEP amendment to increase the FSR and Height of Buildings standards. That amendment was in turn contingent on strategic planning certainty of FSR and Height controls for the Waterloo Estate. In May 2017, the Minister for Planning announced plans to include the Waterloo Estate as a Priority Precinct expedited due to the Sydney Metro Central to Southwest. Given that ministerial announcement I would have predicted in 2017 that strategic planning certainty concerning FSR and Height of buildings development standards within the Waterloo Estate by around 2022. At that point, upon strategic planning certainty becoming known, the strategic merit for LEP amendment for the subject site would become non‑controversially evident. The ability of either the landowner or the Council to commence a planning proposal relevant to land on the eastern side of Botany Road, would be enlivened. 55. At the date of acquisition, I would have advised that the likely time frame for such a planning proposal would be two years from 2022. I would expect the time to assess a DA for mixed use development, consistent with the amended FSR and height of buildings controls to be in the order of 9‑12 months.
In the Joint Expert Report of the Town Planners (Exhibit J), Mr Haskew wrote, at [15], [104]: 15) … The public purpose has a catalytic effect on the long‑planned redevelopment of Waterloo Estate. It was also foreseeable that Over Station Development above Waterloo Station would be proposed. Over Station Development combined with redevelopment of the Waterloo Estate would deliver significant change to the strategic planning context surrounding the Parent Parcel. At the date of acquisition it was foreseeable that within the short to medium term, there would be strong strategic merit to support a planning proposal for land between Botany Street and Cope Street from McEvoy Street to Buckland Street which sought to increase height and floor space ratio development standards. In my opinion it was foreseeable that strategic planning decisions would have been taken to amend those development standards for the Parent Parcel within approximately 5‑7 years. … 104) As to timing, I would advise that decisions concerning the Parent Parcel and its precinct could not be made until there was a high degree of certainty about FSR and building heights which would be adopted for the Waterloo Estate. At the date of acquisition I would have advised hypothetical parties to expect the planning process for Waterloo Estate to take approximately 3‑5 years. The rezoning process for the subject site would be expected to take an additional 2 years from that point.
The relevant portion of Mr Haskew's oral evidence on this point was (Transcript 20 September 2022, page 88, lines 11 to 43): BEASLEY: I want to ask you some questions about the possible alternative rail proposal you discuss later on in the joint report, but in order to orientate ourselves, I just want to get a couple of markers as to what the evidence you're giving is, leading up to that. If we could start at page 893 at paragraph 15? Tell me when you have that? Joint report, page 839, paragraph 15? ... BEASLEY: You and Mr Grech there set out what it is you agree upon, if there's no disregard of the Sydney Metro public purpose, that is, could have created the potential for a change in zoning, et cetera. Then, there's a disagreement between you about certainty and timing, do you see that? WITNESS HASKEW: Yes. BEASLEY: The agreement's set out, then the disagreement, certainly of timing, and then you explain, in the right‑hand box, what your view is concerning certainty of timing, when you start off with, "The public purpose as catalytic effect", et cetera? WITNESS HASKEW: Yes. BEASLEY: Which then goes on to explain your view that a redevelopment of the kind we were talking about, the six to eight storeys, FSR might be slightly less than 6:1, in your view, would have been foreseeable in the five to seven year period which, I think, form the date of acquisition would be in the 2022 to 2024 timeframe? WITNESS HASKEW: That's correct.
Mr Haskew also said (Transcript 20 September 2022, page 90, lines 17 to 32): BEASLEY: Then, 102, "In my opinion, the public purpose is that a significant impact on the strategic planning decisions" et cetera. Do you see that in 102? WITNESS HASKEW: Yes. BEASLEY: Concluding, 103, "Having regards to my opinion, the public purpose has influenced strategic planning decisions" et cetera. See that? WITNESS HASKEW: Yes. BEASLEY: All of which is really a longer explanation for what you'd said back in paragraph 15 that, "In my view, there's likely to either be an uptick in the planning controls or a planning proposal will get up in the five to seven year range"? WITNESS HASKEW: Yes.
On the other hand, Mr Grech's position was more cautious than that advanced by Mr Haskew. Mr Grech expressed no definite opinion on the time horizon as the basis for the advice he would have given about future redevelopment as the date of acquisition of the substratum. His position was expressed in the following terms in his Statement of Evidence (Exhibit 3) at [12.42], [13.18]‑[13.19]: Strategic Planning Considerations General 12.42 As set out above, the LEP and DCP controls on the Acquisition Date were introduced well before the announcement of the Project and had not been amended as at the Acquisition Date. The LEP and DCP controls therefore provide the principal statutory planning framework that would have governed the development potential of the Parent Parcel on the acquisition date. However, in providing advice to a hypothetical seller or purchaser I would have also reviewed the future potential for a Planning Proposal to rezone the Parent Parcel or change the development standards applying to it. From a planning perspective, the implications of any prospects for a change of zoning or planning controls to a hypothetical seller or purchaser would vary depending on the certainty and timing for such a change. … Development Potential Subject to a Change in Planning Controls 13.18 As set out above, on the acquisition date, there was no Planning Proposal seeking to change the zoning or other planning controls applying to the Residue Land. However, taking into account the Project, my advice to a hypothetical purchaser or seller would have been that the Sydney Metro Project could have created the potential for a change in zoning and/or planning controls in the future to increase the scale of development on the Residue Land. 13.19 In my experience, and consistent with the strategic planning documents I discussed above, the construction of a new Metro train station within walking distance of the Residue Land, would be seen as a catalyst for a potential change in zoning and/or planning controls to increase development potential.
In the Joint Expert Report of the Town Planners, Mr Grech wrote (Exhibit J) at [15], [77]‑[80]: 15) … This did not change the development potential of the residue land at the acquisition date. There was no certainty in regard to the change and it would not have been possible to advise on what increase in development potential could have been expected. … Having Regarding to the Public Purpose 77) At the acquisition date, there was no Planning Proposal on foot. However as outlined in my SOE [PG SOE 13.18‑13.19] and agreed with DH, I would have advised a prospective seller or purchaser that the Sydney Metro Project could have created the potential for a change in zoning and/or planning controls in the future to increase the scale of development on the Residue Land. 78) This did not change the development potential of the residue land at the acquisition date. 79) In my opinion it would not have been possible to advise on what increase in development potential could have been expected because of the public purpose or the timing for this, at that time. 80) A rezoning might proceed either as a Council or owner initiated Planning Proposal. Council would more likely seek to plan the whole of the Regent Street/Botany Road Precinct. If pursued as an owner initiated Planning Proposal justification and Council support would be improved with inclusion as much of the Regent Street/Botany Road Precinct as possible in the Proposal.
Mr Grech did not give oral evidence on this point.

[44]

The cause of the increase in development potential

Mr Haskew and Mr Grech, however, differed significantly on what would be the cause of the uplift in the planning controls giving rise to the increased future redevelopment potential as at the date of acquisition of the substratum.
The position advanced by Mr Grech was a simple one. This redevelopment potential would arise as a consequence of the construction of the Waterloo Station element of the Sydney Metro project. To the extent that it was also known that the State Government was proposing to redevelop the Waterloo Estate, this too was being triggered by the Sydney Metro project and the proposed construction of Waterloo Station (the location for Waterloo Station having been identified in 2016, well prior to the date of acquisition of the substratum).
This has resulted in an area, known as the Waterloo Precinct, being identified for zoning alterations to permit greater housing density as a consequence of the redevelopment.
That the proposed redevelopment of the Waterloo Estate was triggered by the Sydney Metro project was confirmed, in his opinion, by the statement of the (then) Minister for planning in May 2017.
The Minister's press release of 19 May 2017 had, relevantly, described Waterloo Station as the "catalyst" triggering the redevelopment of the Waterloo Estate. It is appropriate to reproduce the first two paragraphs of the Minister's press release (Exhibit 3, folio 846): Waterloo nominated as next state significant precinct Waterloo has been nominated by the NSW government as a new State Significant Precinct and residents are being urged have their say on the transformation of the inner city suburb through a series of master planning workshops. Planning Minister Anthony Roberts said the new Waterloo station would be the catalyst for the progressive renewal of the Estate. State Significant Precincts are areas where the NSW government takes the lead role in the approval of planning proposals, which are of state or regional significance due to their social, economic and environmental characteristics.
Mr Haskew's evidence on this point significantly departed from the above position advanced by Mr Grech. The position advanced by Mr Haskew was that: 1. Since 2010, the potential for redevelopment of the Waterloo Estate had been identified by the State Government as desirable; 2. The Waterloo Estate was already appropriately serviced by public transport options within reasonable walking distance (particularly the Green Square Station on the T8 Airport Line heavy rail facility), with Redfern Station also within reasonable walking distance. As a result, the Sydney Metro project and its proposed Waterloo Station were not to be regarded as the catalyst for the redevelopment of the Waterloo Estate, the Minister's statement to this effect being a purely political one. The October 2017 town planning advice to the hypothetical purchaser would be that the redevelopment of the Waterloo Estate was independent of the Sydney Metro project and that the Waterloo Estate redevelopment at higher density would trigger the increased redevelopment potential for the site because of its location on the south‑western boundary of the larger (approximately 16 hectares), identified Waterloo Estate redevelopment area; and 3. There was also an identified underground rail corridor retained under the SEPP as an element of the Chatswood‑to‑CBD Metro project. This project, although subsequently abandoned by the State Government in favour of the Sydney Metro project, at the time of giving advice in 2017 to the hypothetical purchaser, would have been known as a potential, different future transport operation which would be beneficial to redevelopment of the site.
It was Mr Haskew's opinion that these three aspects all demonstrated that the appropriate advice to the hypothetical purchaser would not be that the increase in development potential for the site was caused by the Sydney Metro project.
As noted above, Mr Haskew proposed that there was an alternative public transport metro scheme, at relevant times, about which he would have advised the hypothetical purchaser that it also potentially afforded support for beneficial changes to the planning controls for the site.
In the Joint Expert Report of the Town Planners (Exhibit J) at folio 920, Mr Haskew reproduced a map which showed the alignment of potential twin tunnels leading to a turnback facility at the southern end of what was said to be the Chatswood‑to‑CBD Metro corridor. During the course of his oral evidence, he was asked for the source of this map because, in his expert report, he had identified the source with his own initials rather than its primary origin.
He was asked to provide, before the commencement of the hearing on the following day, the relevant URLs that provided the foundation for this information. It was his evidence that, although the SEPP had been repealed, the Chatswood‑to‑CBD rail corridor (including the identified tunnel portion in the vicinity of the site) had been preserved.
Prior to the commencement of the third day of the hearing, Mr Haskew provided URLs to a series of maps, one of which was the composite map upon which he had relied in his expert report. The others were the component maps at more detailed scale that were the foundation for the composite map upon which he had relied. All of these maps were taken from the Department of Planning's website.
They were not taken from the New South Wales Legislation website, the authoritative portal providing access to legislation and relevant mapping. This website permits point‑in‑time accessing of current and repealed Acts, Regulations and Environmental Planning Instruments.
The relevant point‑in‑time version of the (now repealed) SEPP in effect as at the date of acquisition in October 2017 ‑ through its maps link ‑ does not provide a link to the plan upon which Mr Haskew relied for the purposes of the proposition that there was an alternative potential public transport option available that could have supported advice to the hypothetical purchaser that beneficial improvements in planning controls might arise from that public transport option.
In such circumstances, the proposition that, in his opinion, there was an alternative to the Sydney Metro project as a basis for such beneficial future planning expectation and that, as a consequence, any betterment which might arise from such future beneficial planning controls was not to be attributed to the public purpose (being the Sydney Metro project) and could not be adopted by me.
During the course of his cross‑examination by Mr Beasley, Mr Haskew was shown extracts from the 2007 and 2008 Annual Reports of the Transport Infrastructure Development Corporation (the TIDC). The extracts described the Chatswood‑to‑CBD rail link as terminating at Redfern. These extracts from the TIDC Annual Reports were tendered becoming Exhibits 4 and 5.

[45]

Consideration

I have earlier set out the basis upon which Mr Haskew proposed that there was a public transport metro system, as an alternative to the Sydney Metro project which is the current public purpose that would have provided a basis for advising the hypothetical purchaser of the possibility of future beneficial amendments to the planning controls as a result of greater proximity to public transport. I am unable to accept that there is any proper evidentiary basis providing support for this proposition. There are two reasons for me reaching this conclusion.
The first is that the evidence relied upon by Mr Haskew that the corridor for the Chatswood‑to‑CBD Metro project had been preserved, notwithstanding the overtaking of that possible project by the Sydney Metro project (including the 2016 identification of there being a Waterloo Station for that project rather than a station at Sydney University), is founded on mapping information taken from the Department of Planning's website said to demonstrate that the rail corridor for that project had been preserved after the repeal of the SEPP.
For reasons earlier explained, the validity of that information, as at the date of acquisition, was not supported by the authoritative information to be taken from the New South Wales Legislation website. I am unable, therefore, to conclude that the rail tunnel corridor shown by Mr Haskew on the map reproduced in his individual expert report had, in fact, been preserved as at the date in October 2017 when town planning advice would have been given to the hypothetical purchaser.
However, against the possibility that I might be in error in reaching this conclusion, I have also considered how the plan relied upon by Mr Haskew might be reconciled with the TIDC Annual Report extracts which were in evidence. For this purpose, it is appropriate to reproduce the map relied upon by Mr Haskew. It appears below:
As can be seen, what is marked as projecting to the southern end of the green corridor is two tunnels merging into one and terminating. That, it is reasonable to infer, is reflective of the incorporation of a turnback facility, one enabling trains which had travelled beyond Redfern (as the terminating station nominated in the TIDC Annual Report extracts) then being able, through the turnback facility, to emerge from it to travel in a northerly direction.
It is to be observed that there is nothing on this plan, or in any of the more detailed composite elements whose URLs were provided by Mr Haskew as the underlying maps to the composite map which he had reproduced, which showed any station on this green corridor anywhere in the vicinity of the site.
In these circumstances, when the Sydney Metro project had been expressly identified as the preferred Metro option which was to be implemented and the identification, in 2016, of the Waterloo Station as being a specific element of the Sydney Metro project, the only conclusion available is that there was not, at the date of acquisition, any potential alternative public transport option available. There was, therefore, no basis upon which reliance could have been placed to provide advice to the hypothetical purchaser that such alternative public transport provision would provide an opportunity for assuming that there would be beneficial improvements to the planning controls for the site in the future.

[46]

Conclusion on the town planning evidence

I am satisfied that the increased development potential for the site, as agreed is appropriate by Mr Haskew and Mr Grech, is to be accepted. I am also satisfied that the sole reason for the future availability of this improvement in development potential arises as a consequence of the carrying out of the public purpose, being the public purpose which includes both the construction of the twin tunnels underneath the site and the construction of the new Waterloo Metro Station. I have reached this conclusion for the reasons advanced by Mr Grech.
In this regard, a combination of the earlier identification of the general alignment of the Sydney Metro project; the subsequent preacquisition determination of the location of a new Metro station on the site where the Waterloo Metro Station is presently under construction; and the ministerial press release of May 2019 provide appropriate evidence that the public purpose was, in fact, the triggering cause of the future redevelopment proposals for the Waterloo Precinct and, as a slipstreaming consequence for the site, the increased development potential for the site in the agreed terms identified by Mr Haskew and Mr Grech.
For the reasons earlier explained, I am unable to accept that there is any reliable basis for the proposition discussed in Mr Haskew's expert evidence that there was some alternative, remaining extant, possible public transport project which would have provided support for the future increase in development potential for the general locale as well as for the site.
I am also unable to accept, giving appropriate regard to the Sydney Metro project, that the redevelopment of the Waterloo Precinct would have gone ahead in the fashion announced by the Minister in May 2019 based on any alternative public transport availability at either Green Square Station on the T8 Airport Line or Redfern Station (this station being on a multitude of heavy rail lines).
As a consequence, the increase in development potential for the site is to be regarded as arising solely as a consequence of the public purpose and that this, therefore, requires consideration for the purposes of s 55(f) of the Just Terms Act. Engagement of this provision requires a determination, here relevantly, of what increase in value, as a result of the increase in development potential, arises for consideration in an overall valuation context ‑ having regard to the earlier discussed position concerning the extent to which the hypothetical purchaser of the site would need to have regard to future geotechnical monitoring requirements as a consequence of the presence of the two rail tunnels.

[47]

Introduction

In this context, it is to be observed that s 55 of the Just Terms Act, in setting out the exhaustive list of heads of compensation available to be pursued by a dispossessed owner, the right to claim compensation for the market value of the acquired land is separate from the right to claim compensation for any decrease in value of any residual land remaining in the possession of the owner of the land which had been compulsorily acquired. These provisions, s 55(a) and (f) have earlier been set out.
As earlier noted, expert valuation evidence was given by Mr Dyson for the Company, and Mr Lunney for Sydney Metro. They each had produced expert reports and had provided a Joint Expert Report. They gave concurrent oral evidence on 21 September 2022, the third day of the hearing.
Their expert evidence addressed two valuation issues that are in contention. The first of these is whether or not the Company is entitled to any compensation for the market value of the substratum which was compulsorily acquired for the purpose of constructing Sydney Metro's tunnels. The second matter in dispute is whether the Company is entitled to be compensated for the additional geotechnical monitoring costs which would arise should there be a redevelopment proposal, based on the potential for more beneficial planning controls applying in the future ‑ the compensation said to be necessary to reflect the increased cost of implementing that additional development potential..
For the purposes of this second issue, the question of quantum of compensation which would arise is determined by whether the cost of the additional geotechnical monitoring for any future redevelopment was to be offset against the increased value (if any) of the residue land as a consequence of carrying out the public purpose of constructing the Sydney Metro.
The additional geotechnical monitoring costs have earlier been determined as being a maximum of $140,000, as explained in my conclusion arising from the expert geotechnical evidence. The valuation contest, therefore, is whether or not there has been an increase in the value of the residue land as a consequence of the compulsory acquisition of the substratum and, if so, by what amount.

[49]

The Company's position

It was Mr Dyson's evidence that the value of the acquired substratum was $20,000, this being as a consequence of the creation of a "blot on title" by the acquisition. He summarised this position in his individual expert report in the following terms (Exhibit K, paragraph 113): 113. As noted above, there is an additional encumbrance on the title which includes the condition of seeking approval from Sydney Metro for any redevelopment of the land. Where this was negotiated between willing buyer and willing seller, some consideration would have been paid by the buyer to compensate for the additional encumbrance, similarly to that where an easement is put on a title. Based on my experience in the valuation of easements and the market values agreed thereof, it is considered that a market value of $20,000 would be appropriate for the consideration between willing parties to such a transaction.
He repeated this proposition in the element of the Joint Expert Report with Mr Lunney dealing with this topic. It is unnecessary to reproduce the relevant section of this Joint Expert Report.
During the course of his oral evidence, he was questioned by Mr Beasley on this point ‑ with Mr Dyson explaining why, by analogy, such an entitlement to compensation arose. The exchange was in the following terms (Transcript 21 September 2022, page 163, line 35 to page 165, line 18): BEASLEY: Still on this topic, your Honour. I now want to take you please to paragraph 51. Sorry, I think we should first of all go to 113 of your statement of evidence which is at folio page 1217. This is about the $20,000‑‑ WITNESS DYSON: Yes. BEASLEY: ‑‑for the encumbrance. Do you see there that you say, "There is an additional encumbrance on the title which includes the condition of seeking approvals from Sydney Metro for any redevelopment of the land"? WITNESS DYSON: Yes. BEASLEY: You assess that at a cost of $20,000 or a price of $20,000. Agree? WITNESS DYSON: Yes. BEASLEY: Then if we go to the joint report where this is taken up at paragraphs 51 and 52, 1251, first of all you'll see Mr Lunney's opinion there where he suggests there's no sound basis‑‑ WITNESS DYSON: Mm‑hmm. BEASLEY: ‑‑for this assessment. Then you say, "Mr Dyson considers that a market with only one purchaser does not mean there would not be a market value nor consideration paid where easements are sought over a property", et cetera. WITNESS DYSON: Yes. BEASLEY: Do you see that? WITNESS DYSON: Yes. BEASLEY: You agree with this, don't you, that to the extent that you call this encumbrance on the title an easement, it's nothing like for example a drainage or access easement? WITNESS DYSON: It depends on where the drainage or access easement is. BEASLEY: Well, in the ordinary course of the use of this land, the encumbrance in relation to the tunnels doesn't in any way impact or affect the enjoyment or use of the land as it currently is? WITNESS DYSON: An easement below ground that is outside an allowable building envelope does not change the enjoyment of the land either. BEASLEY: Mr Dyson, the people that are currently using this building can walk in and out of it unaffected by the encumbrance in the title in relation to the tunnels, correct? WITNESS DYSON: Correct. BEASLEY: It doesn't impinge on the current use of the land, correct? WITNESS DYSON: Correct. BEASLEY: You wouldn't know it was there. You wouldn't know the tunnels were there, you wouldn't know the encumbrance was there? WITNESS DYSON: Which you could say the same about an easement that is outside a building envelope for something that is below the ground. BEASLEY: Yes, and you're adding this $20,000 on, you're taking into account this $20,000 which relate to the Sydney Metro tunnels, correct? WITNESS DYSON: Yes. BEASLEY: You're also taking into account extra geotechnical costs, correct? WITNESS DYSON: Correct. BEASLEY: Which relate to the same encumbrance, correct? WITNESS DYSON: Yes. BEASLEY: Have you heard of the expression, "Double‑dipping"? You know what I mean by, "Double‑dipping"? WITNESS DYSON: Yes, I know what‑‑ BEASLEY: You're double‑dipping, aren't you? WITNESS DYSON: No I'm not, I don't think so.

[50]

Sydney Metro's position

It was Mr Lunney's opinion that no compensation was payable for the acquisition of the substratum. He explained his reasoning for this opinion, in his individual expert report, in the following terms (Exhibit 6, paragraphs 94 to 102): 94. The acquisition of the Sub Stratum Interest represents a partial acquisition of the Parent Parcel. 95. In my experience, in the case of a partial acquisition, the most commonly applied methods of valuation are either: i. The "piecemeal" method of valuation or, ii. The "before and after" method of valuation. 96. In the circumstances of the present matter, it is my opinion that it would be difficult to identify a market of prospective purchasers to which the Sub Stratum Interest would appeal, if offered for sale. 97. As such, it is my opinion that the "piecemeal" method of valuation cannot be reliably applied. 98. I have resolved to undertake my valuation by applying the "before and after" method of valuation. … 100. In my opinion, the utility of the Residue Land and the ability of the existing building to be occupied or used to generate rental income is identical with or without the acquisition of the Sub Stratum Interest or the carrying out of the SM Public Purpose. 101. The town planning experts have agreed that the Sub Stratum Interest is approximately 19.2m below the current ground level. Its acquisition and the carrying out of the SM Public Purpose works does not have any impact on the existing building.
Mr Lunney also dealt with Mr Dyson's proposal that there should be a $20,000 compensation award for the "blot on title" occasioned by the acquisition of the substratum at paragraph 51 of the Joint Expert Report of Valuers in the following terms: 51. Mr Lunney notes that Mr Dyson has assessed the Market Value of the Acquired Land in a nominal amount in the amount of $20,000 which is said to be in line with the Market Value of a "blot on title" for an easement. In Mr Lunney's opinion there is no sound basis for this assessment or market evidence which would support it.
During the course of his oral evidence, Mr Lunney was questioned on this point. His evidence in this regard was (Transcript 21 September 2022, page 186, line 14 to page 188, line 41): HALE: Yes, the final topic is to move on to the market value of the acquired portion which is the substratum. You would agree, wouldn't you, that in determining market value, you would wish to do so or need to do so applying the test in section 56 of the Just Terms Act? WITNESS LUNNEY: Yes. HALE: What you therefore need to do, applying that, is what would've been paid for the land when it was sold by the time by a willing but not anxious seller to a willing but not anxious buyer. The fact of the matter is, isn't it, that the owner of the land ‑ this is the substratum, Expandamesh or whoever it might be ‑ as at the acquisition date would clearly not give the land away? WITNESS LUNNEY: Yes. HALE: Putting aside figures at the moment, what would need to be offered was a sum of money which would induce the vendor to sell that substratum? WITNESS LUNNEY: Look, in, in a ‑ that's the normal objective market value test. HALE: Yes, it is. WITNESS LUNNEY: As I've said in my primary report, I don't think it works in, in a case like this. Because my view is ‑ in fact Mr Dyson and I expressly agree that we simply can't find a market of purchasers that, that, that substratum interest would appeal to, which is why piecemeal‑‑ HIS HONOUR: Absent the public purpose, I assume? WITNESS LUNNEY: Of course, yes. Which is why I do, and I think we both do before and after. HALE: Yes. But nonetheless, even though I fully accept there's not a market, certainly so far as I'm aware of the sale of substrata of land. But nonetheless you would recognise the obligation under section 56 as trying to determine what that amount might be? WITNESS LUNNEY: True. My understanding is that we're required to assume a sale, we're required to assume the interest was capable of being sold. HALE: Yes. WITNESS LUNNEY: But I don't, I don't know that it goes as far as requiring us to assume a market that doesn't otherwise exist. HALE: That's the point. It's not unusual ‑ I suppose it is unusual but it does happen ‑ that one is called upon, or the Courts are called upon to determine the value of land in respect of which there is not a clear comparable. WITNESS LUNNEY: That's true. HALE: You would also accept, wouldn't you ‑ although I suppose this is a legal proposition ‑ the Court as the judicial valuer has to ascribe a figure to the value of the market value of the land? You would accept that, wouldn't you? WITNESS LUNNEY: Well, you know, ultimately the Court has to determine the quantum of compensation payable. If that's determined through another means, like before and after, that sweeps up all of the heads of compensation, the relevant heads under section 55. HALE: Yes. In this particular case, based upon, I suppose, experience in an area in which you probably know such similar cases, one has to work out a value to determine what it would be that would induce the vendor to sell this particular piece of land, even though you haven't got a comparable. That's something you need to do, isn't that right? WITNESS LUNNEY: I'm, I'm not sure that that is right. That to me suggests that there's an unwilling vendor, which is not really what section 56 is directed to. In saying that, I appreciate the difficulty in trying to get section 56 to, to fit a matter like this, which is why I've said in my report and maintain the opinion that this is a matter where before and after is the better method than, than piecemeal. HALE: But you see, you talk about an unwilling vendor. A vendor, for the purposes of section 56, would be entitled of course to be unwilling if the amount offered was insufficient. WITNESS LUNNEY: The ‑ yeah, yeah. Well, I don't know what to say. HALE: Also you would accept that although the acquired land stratum is, on the face of it, some distance below ground level at 19.2 metres, that's still really the width of a road reserve, isn't it? It's not a long distance. BEASLEY: It's 19 metres something. HALE: Yes, that's what I said. WITNESS LUNNEY: It's 19 metres below the ground. HALE: Yes. One can foresee the possibility, in the mind of a vendor at some stage, this land for example might be rezoned to high density dwelling and this might have an impact on its value. You can see that going through the mind of an informed vendor? WITNESS LUNNEY: Yes, they would take advice on that. They would talk to people like Grech and Haskew, and they'd be told what Grech and Haskew told them. HALE: Yes. We're looking at the future. It's not unusual ‑ and I think this point has been made by Mr Dyson ‑ that sometimes ‑ and I do know you've been involved in cases where one has to actually determine an amount which is referred to as a blot on the title? WITNESS LUNNEY: Yes. HALE: That blot on the title is something which is not based upon comparable sales, you would agree? WITNESS LUNNEY: It's normally a nominal sum. HALE: Yes, and even though you may not agree with the assessment that Mr Dyson has come up with as $20,000, you probably can't disagree and say it's wrong, can you? WITNESS LUNNEY: Look I ‑ as I, as I said in the joint report, that I just can't see a sound basis for that. But, but, my, my reservation about that goes beyond the quantum of the nominal sum. It's to the selection of the appropriate method of valuation. That's why I maintain the view that before and after is more appropriate for a matter like this. HALE: But what you're dealing with here, the task under the Act is to determine the market value of the ‑ we've been through this ‑ to determine the market value of the substrata of land pursuant to section 56. WITNESS LUNNEY: Well, ultimately the task is to assess compensation payable.
Mr Beasley submitted that, for the $20,000 value ascribed by Mr Dyson to the acquisition of the substratum to have any potential validity, the valuers would have needed to have undertaken their valuation task on a piecemeal valuation methodology, rather than the "before and after" methodology which they in fact adopted. He submitted that only a piecemeal methodology could provide a proper foundation upon which, in this instance, s 56(1)(a) of the Just Terms Act could be engaged for the purposes of determining whether the hypothetical purchaser/seller transaction would have (disregarding the public purpose) struck a value for the acquisition of the substratum.
Because the valuers had not engaged in the necessary and appropriate valuation exercise to permit such an amount to be determined, Mr Beasley submitted the proper understanding of the "before and after" methodology adopted by Mr Dyson and Mr Lunney as being appropriate meant that seeking a compensation payment of $20,000 for the substratum amounted to "double dipping", as any impact of that acquisition was already accounted for in that "before and after" methodology.

[51]

The Company's reply submissions

On the other hand, Mr Hale responded to this proposition, in his oral reply submissions, as follows (Transcript 27 September 2022, page 250, line 41 to page 251, line 13): Going to the before, in terms of value, it is clear, from s 55 of the act that the Court must consider each of the heads that are relevant and take them into consideration. Sometimes, it may be possible, rather than breaking matters down in a before and after, to consider more than one of the heads, and that is permissible, but that would only be permissible if it was clear that you are ascribing a market value to the acquired land. Here, what Mr Lunney has done in his before and after, he has looked at the capitalising of the rents based upon dollars per square metres of floor space, and also in the rents themselves, without any consideration in the before and after to the land that has been acquired under 56. He hasn't given any specific consideration of market value. The approach of Mr Dyson, however, in his before and after, is to take into account the value of the acquired stratum, and if your Honour goes to para 107 of Mr Dyson's statement of evidence, which is exhibit K, your Honour will see, at 107, there is the before value, and, when you go to 114, he takes into account the 20,000 for the ‑ when your Honour goes to that para 114 of Mr Dyson's‑‑ HIS HONOUR: We'll get it on the screen very shortly. HALE: Your Honour will see his before is at 107 and when your Honour goes to 114, he picks up that 20,000. …
As can be seen, Mr Hale drew attention to Mr Dyson's individual expert report in this regard, where, at paragraph 107, he had addressed his "before" valuation, doing so in the following terms: 107. On the above basis, the valuation calculations for the Parent Land "Before Acquisition" on the Direct Comparison Approach are as follows:
Mr Hale next drew my attention to Mr Dyson's paragraph 114 in his individual expert report where he had addressed his "after" valuation, having done so in the following terms: 114. On the above basis, the valuation calculations for the Residual Property "After Acquisition" on the Capitalisation of Net Income Approach are as follows:
As can be seen from a comparison of the extracts set out above, as Mr Hale submitted, Mr Dyson includes the amount of $20,000 as compensation for acquisition of the substratum, describing it as being for: … Market Value of Encumbrance on Title ‑ In line with market value for blot on Title for Easement
Mr Hale had earlier submitted that each of the heads of potential compensation listed in s 55 of the Just Terms Act, although being defined as an exhaustive list of potential heads of entitlement, were not interdependent, but each provided a potentially available head of compensation which, if ascribed a monetary value, would be added together with other value elements, to derive the overall compensation amount (Transcript 27 September 2022, page 250, lines 41 to 46).

[54]

Introduction

Mr Dyson valued the site and its improvements, as at the date of acquisition, using two different methods to do so. He valued the site, using the "capitalisation of rents" methodology, and derived a value of $10,135,000. He also valued the site by analysing what he considered to be a range of comparable sales. Applying this methodology, he valued the site at $10,145,000. I here note that Mr Dyson acknowledged, during the course of his oral evidence, the stability of the tenancy profile of the site and, therefore, the future predictability of the rental income from the site, whilst awaiting the potential for redevelopment arising as a consequence of the beneficial changes to the planning controls for the site (Transcript 21 September 2022, page 193, lines 6 to 11): BEASLEY: All seemed to be secure long‑term tenancies? WITNESS DYSON: There's been a few changes with regard to one of the tenants was at the ground floor and they moved into an upper floor and then vacated that, but yes, generally there's been a few changes but yes, fairly secure income from the property.]
Mr Lunney valued the site in a several ways as set out in his Statement of Evidence at folio 1166. $11,280,000 was his market value on a current use basis, derived by taking a mid‑point between his comparable sales valuation of $11,000,000 and his alternative capitalisation of rents valuation of $11,560,000. Mr Lunney also derived a "redevelopment value" of $11,270,000.
Each of them then considered to what extent, if any, the hypothetical purchaser, as at the date of acquisition, would have offered more than their analysed value of the site for the hypothetical purchase.
Mr Dyson was of the view that, having had regard to the geotechnical cost risk and the timeframe within which any beneficial change might be effected to the planning controls, he would advise the hypothetical purchaser that there was no premium to be paid above the valuation as at the date of acquisition.
During the course of his oral evidence, he confirmed that he remained of this view, having heard much (but not all) of the oral evidence given in the other expert disciplines.
Mr Lunney, on the other hand, would advise the hypothetical purchaser that a premium of at least 10% was warranted to be offered for purchase of the site as at the date of acquisition of the substratum. In his individual expert report, he explained his reasoning as follows (at paragraphs 109 to 117): 109. More importantly however, I consider that the benefits accruing to the Residue Land, by reason of the construction and operation of the SM Public Purpose, would be more likely to represent an advantage and value benefit (i.e. Betterment). 110. I hold this opinion as: i. The SM Public Purpose works include the construction and operation of a new metro station, at Waterloo, approximately 300m from the Residue Land. In the event that the Residue Land was to be redeveloped in an intensive manner, the provision of this significant piece of public infrastructure, with a railway station within 300m of the Residue Land would undoubtedly be considered to be some advantage by a developer which intended such a development. This would be regarded as an advantage to any future redevelopment which would be expected to enhance realisation values for any future development and improve the marketability, and ii. The town planning experts have agreed that the proposal to carry out the SM Public Purpose works has likely acted as a catalyst for any future rezoning which would apply to the Residue Land. In other words, the carrying out of the SM Public Purpose has increased the likelihood and reduced the timeframe over which the Reside Land may be rezoned, in a favourable manner in the future. 111. I appreciate that quantifying these two elements of Betterment, either individually or cumulatively, would be a difficult and subjective exercise however, in my opinion, there is little doubt that these two factors are far more tangible and far more material than the two concerns cited by the Applicant's experts. 112. If, as Mr Haskew has opined, the Residue Land was a likely candidate for a rezoning within 5‑7 years from the Date of Acquisition in the "after scenario", this is a matter for which a material premium may be paid by a speculative purchaser. I am aware of other properties for which there was speculation about a future rezoning, which have sold at a premium price, above the underlying "current use value" of those properties. This is often reflected in the market by a higher $/m² rate or in a lower or firmer capitalisation rate. 113. I would anticipate the Residue Land commanding a premium of at least 10% above the current use value, if it was considered to enjoy potential for a rezoning within a 5‑7 year timeframe. 114. I also consider that the perceived physical benefits of the SM Public Purpose works, including the proposed Waterloo Station, would be carefully considered by an intending purchaser. 115. Even if one was to take a conservative view, in favour of the Applicant, and assigned a premium value of 10% to capture the Betterment items at "(i)" and "(ii)" above, the increase in value or Betterment, would be approximately equivalent to $1.128M. 116. This materially exceeds the potential future cost penalty of $140,000 (which would be suffered 6 years after the Date of Acquisition, at the earliest). 117. I appreciate that quantifying Betterment is a difficult and subject exercise and there is rarely directly relevant market evidence available to assist in quantifying Betterment. In my experience it is common for a valuer to rely on general experience and professional judgment in quantifying Betterment.
During the course of his oral evidence, he explained why he adhered to this position, saying (Transcript 21 September 2022, page 144, from line 9): BEASLEY: Did you express the opinion in the after scenario that the betterment would be, in your view, in the after scenario, 10%, but you said conservatively 5% if we are only talking about physical betterment, not including town planning betterment? WITNESS LUNNEY: That's correct.

[56]

The Company's position

In the joint expert valuers' report, Mr Dyson had relied upon what was said in the decision of Hodgson JA in AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2008] NSWCA 325 (the AMP decision) for the proposition that, when there was a requirement for separate precursor decisions or approvals from a consent authority that was not the body carrying out the public purpose, the consequences sought to be attributed to the public purpose should be disregarded. This element of his contribution to the Joint Expert Report of Valuers was contained in paragraph 30 of the document, a paragraph in the following terms: 30. Mr Dyson considers that the possibility of any future rezoning of the Residue Land would not be part of the SM Public Purpose (or even controlled by SM) but rather, a matter which would be controlled by the Council and or the Department of Planning and Environment. He considers that relevant case law confirms that consideration of such matters in any assessment of Betterment pursuant to Section 55(f) of the Just Terms Act is not appropriate. Mr Dyson considers that the extent of the SM Public Purpose does not extend to changes in zoning by a separate authority. Mr Dyson relies on the decision of AMP Capital Investors Ltd and anor. v Transport Infrastructure Development Corporation [2008] NSW CA 325 in this regard.
In this context, it is to be noted that Mr Dyson's reliance on the AMP decision was not something which arose from his own original knowledge or research but which had been suggested to him by the Company's legal representatives (see Transcript 21 September 2022, page 139, line 44 to page 140, line 17).
Given that Mr Hale also relied on the AMP decision ‑ making submissions to the effect of the proposition advanced by Mr Dyson ‑ the fact that these comments were the expression of a legal opinion and did not arise from Mr Dyson's own knowledge (and thus, prima facie, should be ignored for each of these reasons), it is necessary to turn to what was said by Hodgson JA, at [96] to [99], of that decision. The passage relied upon by Mr Dyson and also by Mr Hale was in the following terms: 96 In my opinion, in determining what increase or decrease in value occurs "by reason of" or is "caused by" the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, it is first necessary to identify the public purpose and its relevant scope or generality. This may be a matter of some difficulty, as illustrated by Roads and Traffic Authority of New South Wales v Perry [2001] NSWCA 251; (2001) 52 NSWLR 222. 97 That case concerned the acquisition of land on which a road was to be constructed, and the result was greatly affected by the determination of whether the relevant public purpose was the construction of that particular stretch of road or a larger stretch of road of which this was to be part, or even the overall scheme of upgrading the Pacific Highway from Sydney to the Queensland border. I expressed the following view at [100]: [100] I do not think there are any clear rules determining how the relevant purpose or the appropriate level of generality is to be determined. Factors to be taken into account would, in my opinion, include the degree of continuity and consistency of various elements of what is proposed and done, and fairness to both the claimant and the acquiring authority. In the present case, I think it unlikely that the relevant public purpose could be as wide as the upgrading of the Pacific Highway between Sydney and the Queensland boarder; while on the other hand, assuming there have been a number of versions of the Perry's Hill extension, I think it unlikely that the public purpose could be as narrow as just the last of those versions. The public purpose could be as wide as the Raleigh Deviation generally, encompassing all the variations of that project including all versions of the Perry's Hill extension, or it could be somewhat narrower. 98 Once the public purpose is thus identified, it may then be necessary to identify what is comprehended by "the proposal" to carry it out and/or "the carrying out of" the purpose. Then it may be necessary to identify the scope of what occurs "by reason of" or is "caused by" these things. In these steps also, I do not think there are clear rules, but there may need to be judgments of degree which take into account considerations of reasonableness and fairness. 99 The mere circumstance that the public purpose is a contributing factor to changes which in turn affect value is not necessarily sufficient, particularly if the changes depend also on discretionary decisions made by other authorities.
Mr Hale's submission was that, in effect, the position advanced by Mr Dyson in paragraph 30 of the Joint Expert Report of Valuers was a correct understanding of what was to be drawn from the AMP decision. When that reasoning was applied to the present circumstances, the fact that the likely beneficial planning consequences for the site of the redevelopment of the Waterloo Estate was contingent on discretionary decisions made by other planning consent authorities and not by Sydney Metro meant that, on a proper understanding of the AMP decision, the beneficial future planning control impact on the site of the proposed redevelopment of the Waterloo Estate did not permit the conclusion to be drawn that that beneficial impact was to be attributed to the public purpose.
Mr Hale also proposed that the necessity for upgrades of services, such as water, sewer or electricity support for the Waterloo Estate redevelopment, were also contingent on activities by other authorities in the fashion envisaged by the AMP decision, thus providing a barrier to the attribution of future beneficial planning changes for the site to the effect of the Sydney Metro project.

[57]

Sydney Metro's position

In response, Mr Beasley took me to an additional paragraph in the AMP decision, one in the decision of Hodgson JA, at [92], a paragraph where his Honour set out the relevant reasoning of the primary judge: 92 The primary judge said this at par [71]: [71] Section 55(f) refers to "… by reason of the carrying out of … the public purpose for which the land was acquired ". The land was acquired by the State Rail Authority (now TIDC) under the Transport Administration Act. I consider that given those specific words in the section there is a short answer to TIDC's submission that the public purpose for which the land was acquired includes the planning changes mooted for Macquarie Park in the EIS for the PRL. TIDC, the acquiring authority, is not responsible for, and indeed has no power to effect, rezoning of land. The proposed planning changes referred to in the EIS relied on by TIDC simply cannot therefore be within the public purpose contemplated by TIDC in undertaking this compulsory acquisition. I agree with and adopt all of AMP's written submissions at para 6 on that issue.
It was Mr Beasley's submission that, properly understood and read in context, the elements of the AMP decision were not as black‑and‑white as had been submitted by Mr Hale.
Mr Beasley also took me to two further decisions in compensation cases where the AMP decision had been considered and the approach now advanced by Mr Hale had not been adopted.
The first of those decisions (in time) was a decision of Craig J (MMTR Pty Ltd v Roads and Maritime Services [2015] NSWLEC 177) where his Honour had addressed matters relevant to my present consideration in [132], [135] and [142]. It is not necessary to set out the terms of each of these paragraphs. It is sufficient to note, as Mr Beasley drew my attention to, that his Honour did not adopt the rigid approach that Mr Hale had submitted was required by the AMP decision. His Honour noted that the public purpose with which he was then dealing (the Oxley Highway upgrade project) was the catalyst for the beneficial impact on the residue land involved in those proceedings, although the rezoning of the residue land had been undertaken through planning processes initiated by the local council. Having regard to the particular facts and circumstances there engaged, Craig J concluded that, because the highway upgrade project had been the catalyst for the beneficial rezoning of the residue land from rural to residential, that project was properly engaged for consideration for the purposes of s 55(f) of the Just Terms Act.
Mr Beasley next took me to the decision of the Court of Appeal in Barkat v Roads and Maritime Services [2019] NSWCA 240 (Barkat), referencing [27], [78], [79] and [84]. In particular, he took me to the second and third sentences of [27] where Emmet AJA said: 27 … His Honour considered that the inextricable nexus was so close that the WestConnex Project effectively charged each authority to co‑operate and co‑ordinate within the overall scheme to carry out their respective roles to implement the scheme, orchestrated to occur in a connected matter. His Honour considered it to be irrelevant that RMS was not the responsible public entity who would be charged with putting a proposed local environmental plan amendment into the public arena, thereby leading to an awareness in the market of the rezoning to R4 of the Underwood Land.
Mr Beasley also took me to the last two sentences in [84] where Emmet AJA said (approving the approach of the primary judge): 84 … Accordingly, his Honour concluded, it is not necessary for RMS to be the rezoning authority but it was sufficient for its WestConnex Project to be the intended catalyst for predicting urban renewal and associated rezoning that would most likely follow. They were all interrelated components of the same public purpose.
This decision, Mr Beasley submitted, also made it clear that it was appropriate to have regard to the facts and circumstances of the particular instance in order to assess how any causal chain of potentially related development should be viewed to obtain a proper understanding of how matters of causation for s 55(f) purposes should be understood.
As was demonstrated by Barkat, Mr Beasley submitted, the overall public purpose was the catalyst for the beneficial planning outcome for that dispossessed owner's residue land, despite the fact that the specific alteration to the planning regime which effected those beneficial changes resulted from activities of a different consent authority. In those circumstances, the Court of Appeal decision expressly addressed the question of the catalytic effect of the public purpose being the cause of the beneficial changes and holding that the intermediate step could not act to exclude consideration of the public purpose when considering whether or not the public purpose had caused the relevant increase in value of the residue land for the purposes of s 55(f) of the Just Terms Act.
Having regard to the present facts and circumstances, Mr Beasley submitted that I could not conclude that the proposition advanced by Mr Dyson in paragraph 30 of the Joint Expert Report of Valuers and the submissions in support of that position made by Mr Hale had the effect that, in the present circumstances, the fact that the planning changes necessary as the foundation for the redevelopment of the Waterloo Estate required to be carried out by consent authorities other than Sydney Metro acted in the barrier fashion advanced by Mr Hale.

[58]

Consideration

I have, earlier, separately, dealt with the competing positions of Mr Haskew and Mr Grech as to whether the redevelopment of the Waterloo Estate was a necessary intermediate prerequisite for the anticipated future beneficial alterations to the planning controls that would apply to the site. Although I have concluded that the position advanced by Mr Grech (namely, that the proximity of the Waterloo Station element of the Sydney Metro project would, in itself, provide a sufficient contextual basis for the beneficial changes expected for the site, I should set that aside for the purposes of considering the competing submissions concerning the proposition advanced by Mr Dyson in paragraph 30 of the Joint Expert Report of Valuers concerning the AMP decision.
I am satisfied that the AMP decision does not impose an absolute barrier test in the sense adopted by Mr Dyson and supported by the submissions advanced by Mr Hale on behalf of the Company.
I accept that, as reflected in the (then) Minister's press release of 19 May 2017, the identification of the location of Waterloo Station as an element of the Sydney Metro project acted as the catalyst for pursuit of the redevelopment of the Waterloo Estate. As Mr Beasley submitted, this catalytic effect arising from that element of the Sydney Metro project was to be understood as having a similar catalytic effect (whether direct or indirect being irrelevant, in my assessment) for the anticipated future beneficial changes to the planning controls for the site. Having regard to the facts and circumstances here engaged, I am satisfied that, despite what has been advanced as appropriate to be derived from the AMP decision, the beneficial future alterations to planning controls for the site are to be regarded as being as a consequence of the Sydney Metro project and, thus, the Sydney Metro project (the public purpose) is to be regarded as triggering those beneficial impacts for the purposes of my consideration of the extent of engagement of s 55(f) of the Just Terms Act.

[59]

The Company's concluding position on compensation

The written closing submissions for the Company explained the basis upon which Mr Dyson had approached the $479,000 additional geotechnical modelling costs proposed by Mr Braybrooke to reach the conclusion that, as at the date of acquisition, the hypothetical purchaser would adopt an allowance of $405,000 for this purpose. The Company's written closing submissions, at paragraph 52(a) to (e) explained this in the following terms: 52. The applicant's valuer, Mr Dyson, assessed compensation under s 55(f) of the JTC Act in the amount of $405,000. His reasoning was as follows: (a) The market value of the Parent Land "before acquisition" can be assessed using a capitalisation of net income approach or a direct comparison approach. The capitalisation of net income approach derives a value of $10,135,000, and the direct comparison approach derives a value of $10,145,000 (paras [103]‑[109]); (b) In assessing the market value of the Residue Land "after acquisition", Mr Dyson assumes that there will be additional development costs for any future re‑development of the Site in the amount of $497,000, which he adjusts to an amount of $407,095 to take into account the time cost of money and the likely future increase in construction costs (paras [110]‑[112]); (c) In assessing the market value of the Residue Land "after acquisition", Mr Dyson also takes into account the reduction in market value due to the "blot on title", which he assesses in the sum of $20,000 (para [113]); (d) Mr Dyson then adjusts the "before acquisition" value of the Parent Parcel to take into account these matters, for which he assesses the value of the Residue Land "after acquisition" using the capitalisation of net income approach in the amount of $9,705,000, and using the direct comparison approach in the amount of $9,715,000 (paras [114]‑[118]). (e) Based on this analysis, Mr Dyson assesses the decrease in value of the Residue Land in the sum of $425,000, of which $405,000 is by reason of "injurious affectation".
Mr Dyson's adoption of this approach explained how the Company reached its total compensation claim of $425,000.
Mr Hale submitted that I should accept Mr Dyson's evidence that there would be no increase in value to the hypothetical purchaser as at the date of acquisition as a consequence of the anticipated proximity of Waterloo Station to the site because its potential for a mixed use development with retail on the ground floor would not attract any sufficiently significant passing potential customer foot traffic so as to warrant any value for this being accorded by the hypothetical purchaser. This, Mr Hale submitted, was a factor to be taken into account in support of Mr Dyson's broad proposition that the hypothetical purchaser would not pay "a single dollar more" in the "after" scenario for consideration in the s 55(f) assessment I am required to undertake.

[60]

Sydney Metro's concluding position on compensation

Mr Beasley submitted that I should adopt Mr Lunney's approach. Mr Lunney had conducted his valuation assessment on the basis that there were two distinct classes of betterment requiring consideration. He had categorised these two classes of betterment as being town planning betterment and physical betterment. He had set out two scenarios, one where both physical and town planning betterment are considered, and another where only physical betterment is considered at paragraphs 31 to 38 in the Joint Expert Report of Valuers in the following terms: 31. Mr Lunney has interpreted the evidence of the town planning experts to be that there is a strong nexus or causal connection between the proposal to carry out the SM Public Purpose and the increased likelihood of a future rezoning of the Residue Land occurring. 32. Mr Lunney acknowledges that the matter raised by Mr Dyson is a legal matter, to be determined by the Court. To assist the Court, he has addressed two alternative scenarios. 33. In the first scenario, he has considered, in his assessment of Betterment, both "Physical Betterment" and "Town Planning Betterment". In this scenario, he maintains the opinion that the Residue Land has enjoyed significant Betterment, by reason of the carrying out of, or the proposal to carry out the SM Public Purpose. 34. In the second scenario, he has assumed that it would be legally impermissible to consider "Town Planning Betterment". 35. Even in this alternative scenario, for the reasons which Mr Lunney set out in his Report in Chief at [110] to [121], he considers that the Residue Land would enjoy Physical Betterment, by reason of its close proximity to the proposed Waterloo Metro Station (300m). Mr Lunney notes that Mr Dyson has made reference to the existing Green Square Railway Station, in forming the opinion that the Residue Land would enjoy no Physical Betterment, however Mr Lunney notes that the Residue Land is 600m away from the Green Square Railway Station (walking) which is materially further than the proposed Waterloo Metro Station. 36. Considering only Physical Betterment, Mr Lunney would conclude that the amount of "Betterment" would offset or exceed any reduction in the value of the Residue Land which may otherwise have been suffered by reason of a geotechnical cost penalty. 37. In this regard Mr Lunney notes that this cost penalty of $140,000 is equivalent to 1.2% of Mr Lunney's assessment of the existing use value of the Residue Land. 38. For the reasons set out in Mr Lunney's Report in Chief at [110], [111] and [114], Mr Lunney considers that Physical Betterment would be a material advantage. He considers that this advantage would, at the very least, exceed 1.2% (or 1.4%) and may be conservatively estimated at 5%.
In his Statement of Evidence (Exhibit 6), Mr Lunney had set out in much clearer terms the definitions and distinction between the two classes of "betterment" he advanced. The following extract is from paragraphs 109 to 110, with additional detail on town planning betterment in paragraph 112. These are set out below: 109. More importantly however, I consider that the benefits accruing to the Residue Land, by reason of the construction and operation of the SM Public Purpose, would be more likely to represent an advantage and value benefit (i.e. Betterment). 110. I hold this opinion as: i. The SM Public Purpose works include the construction and operation of a new metro station, at Waterloo, approximately 300m from the Residue Land. In the event that the Residue Land was to be redeveloped in an intensive manner, the provision of this significant piece of public infrastructure, with a railway station within 300m of the Residue Land would undoubtedly be considered to be some advantage by a developer which intended such a development. This would be regarded as an advantage to any future redevelopment which would be expected to enhance realisation values for any future development and improve the marketability, and ii. The town planning experts have agreed that the proposal to carry out the SM Public Purpose works has likely acted as a catalyst for any future rezoning which would apply to the Residue Land. In other words, the carrying out of the SM Public Purpose has increased the likelihood and reduced the timeframe over which the Reside Land may be rezoned, in a favourable manner in the future. … 112. If, as Mr Haskew has opined, the Residue Land was a likely candidate for a rezoning within 5‑7 years from the Date of Acquisition in the "after scenario", this is a matter for which a material premium may be paid by a speculative purchaser. I am aware of other properties for which there was speculation about a future rezoning, which have sold at a premium price, above the underlying "current use value" of those properties. This is often reflected in the market by a higher $/m² rate or in a lower or firmer capitalisation rate.
Mr Lunney had explained that he had based his valuation approach on the combination of the town planning evidence given by Mr Haskew and Mr Grech. Mr Lunney said (Transcript 21 September 2022, page 182, line 38 to page 184, line 45): HALE: I want you, firstly, to assume what Mr Grech would have advised as at the acquisition date, which we will find in the joint experts' report at paragraphs 77, 78 and 79. This is the joint expert report, where you see, in paragraph 77, Mr Grech would have advised the prospective seller or purchaser that the metro project could have the potential for a change in zoning. If he advised that, that, of itself, is unlikely to give any potential purchaser a great deal of confidence as to what might happen in the future, would you agree? WITNESS LUNNEY: Yeah, I think that's right. If you had Grech and only Grech. HALE: Yes. Also, 78, if it was advised that this did not change the development potential of the residue land at the acquisition date, that advice is highly unlikely to give the potential purchaser a great deal of confidence as to what might happen in the future so far as an uplift in zoning? WITNESS LUNNEY: I, I don't see 78 changing that. 78 is, is simply factual, the zoning did not change on that date. HALE: The advice in 79, "In my opinion, it would not have been possible to advise on what increase in development potential could have been expected because of the public purpose or the timing of this at that time". In relation to the advice in accordance with 77, 78 and 79, I think you would agree, this would hardly give the potential purchaser any great confidence as to what might happen and when, to lead to an uplift in zoning for the subject premises. You would agree with that? WITNESS LUNNEY: Yeah, I, I think that that's correct. As I said before, if, if the inquirer has only the Paul Grech evidence, his position about the catalyst probably would be regarded as a good thing and a positive thing, but how much further somebody could take that and factor that into the, the market value of the land, I, I accept, would be very limited. HALE: It would be perhaps a‑‑ WITNESS LUNNEY: Yes. HALE: Based on that advice, that is unlikely to lead to the hypothetical purchaser offering more for the retained land, the subject site, in 2017 than it otherwise would? WITNESS LUNNEY: It, it, would ‑ even if you had only the Paul Grech evidence, my view is it would be regarded as a, as a benefit, and, and probably a value benefit, but to quantify that by reference to only the Paul Grech evidence, I accept, would be difficult. HALE: If we go to Mr Haskew, and if I could ask you to go to 103 of the joint expert report? I think you've already discussed his suggestion of five years for some certainty for the Waterloo estate and another two years. If you go to 102, his advice would be: "In my opinion the public purpose has had a significant impact on strategic planning decisions which have been made. In this regard, the decision to locate the new Metro Station at Waterloo was heavily influenced by the opportunity which Waterloo would present to redevelop the Waterloo estate". Pausing there, that might give some element of hope, but it certainly would not lead, of itself, to any increase in which the hypothetical purchaser would pay for the subject land, would it? WITNESS LUNNEY: Look, I, I don't agree with that last part. Even if you stop there, it's a good thing. The‑‑ HALE: I'm pausing. I'm not suggesting it's not a good thing, we're seeing what the‑‑ HIS HONOUR: Let him finish what he's saying. HALE: Yes. WITNESS LUNNEY: You know, if, if, if the question is if that's the only part of the David Haskew evidence an inquirer had, would they form the view that there was no value benefit, I, I, I don't think I could go as far as agreeing with that. I, I accept that there would be difficulties in, in, in quantifying the value benefit of that, you know, of itself. HALE: Then, if we go further, his advice at 103, having regard to what he just said‑‑ WITNESS LUNNEY: Yep. HALE: "The public purpose has influenced strategic planning decisions but because of those decisions there are strong indicators at the date of acquisition the parent parcel would likely to be subject of a planning proposal in the short to medium term". That of itself is highly unlikely to give the hypothetical purchaser a great deal of confidence as to what actually will happen and when in the future? WITNESS LUNNEY: It would give, in my opinion, it would definitely give an enquirer confidence. I accept that there's uncertainty as to precisely what and as to precisely when. But it might assist in, if I can explain how I've sought to capture that value benefit in my valuation. I've not assumed that the land was rezoned and applied a linear increase in value or anything like that. I've simply expressed the opinion in my report, and maintain the opinion, that provided with this evidence, an inquirer would assign something that might be termed a bottom up premium to the value that would otherwise have applied to the land, because all of this town planning evidence, in its totality, would indicate that there is a real potential for something positive to happen within the foreseeable future. I accept uncertainty as to when and to precisely what, but that's, that's as far as I go with it. I don't say 6:1 is more than three times the current potential, therefore there's a 600% value benefit, or anything along those lines.
Mr Lunney adopted what he described as a conservative and "bottom‑up" approach to determining what value uplift he would attribute to the future beneficial changes to the planning controls in advice which he would give to the hypothetical purchaser of the site as at the date of acquisition of the substratum.
Relying, as he observed during the course of his oral evidence, on a combination of the town planning opinions expressed by both Mr Haskew and Mr Grech, Mr Lunney proposed that a premium of 10% (as the aggregate of both town planning betterment and physical betterment) would be applied to the value of the site as at the date of acquisition by a hypothetical purchaser for the purpose of making an offer to the owner of the site. In reaching this conclusion, Mr Lunney observed that he relied upon the Sydney Metro project as being the catalyst for the future beneficial changes to the planning controls which applied to the site as at the date of acquisition of the substratum (Transcript 21 September 2022, page 189, lines 25 to 40): BEASLEY: …. Mr Lunney, you've ascribed value in the after valuation to what you understand from the planning evidence to be the further potential created by the Sydney Metro project, correct? WITNESS LUNNEY: Correct. BEASLEY: As you've said, you've used a bottom up approach to attach a premium, correct? WITNESS LUNNEY: That's right. BEASLEY: Taking into account what you ascribe to both town planning and physical betterment, that is a 10% premium you've said you've used conservatively, is that right? WITNESS LUNNEY: That's right.

[61]

The correct concluding position on compensation

I have earlier set out the competing positions of Mr Dyson and Mr Lunney as to the advice which they would give to the hypothetical purchaser of the value of the site (including its improvements) as at the date of the compulsory acquisition of the substratum.
As was obvious from what I have set out, there is a stark conflict between the positions each of them adopted.
In these circumstances, it is not a question of consideration of how each valuer undertook calculations (Mr Dyson as to either the capitalisation rate he adopted or the adjustments he made to the comparable sales he had relied upon or, for Mr Lunney, the adjustments he had made to the sales upon which he had relied). Such differences are those which conventionally arise for consideration in endeavouring to reconcile the positions of competing valuation evidence. For present purposes, there is no option of considering whether some midpoint or alternative position might be appropriate to be adopted.
I have carefully considered the individual expert valuation reports; the Joint Expert Report of Valuers and the oral evidence given by each of the valuers. Having done so, I have concluded that it is appropriate to adopt Mr Lunney's position as reflecting the appropriate advice to be offered to the hypothetical purchaser. I am satisfied that the combination of: 1. A stable tenancy basis and hence a predictable rate of return whilst awaiting changes to the planning controls to reflect the anticipated beneficial improvements to them shows that, even adopting Mr Dyson's capitalisation rate and its derived value, there would be no risk to hypothetical purchaser of offering an amount with a development potential premium as a minimum purchase price for the site; 2. The combination of the planning advice that there was significant future certainty that beneficial changes to the controls which would apply to the site (effectively tripling the development permissible on the site, at a minimum) would provide a reason to the hypothetical purchaser to pay a premium on the value of the site as at the date of the compulsory acquisition of the substratum.
For these two reasons, I am unable to accept Mr Dyson's evidence that the hypothetical purchaser would not offer any premium under those circumstances (even having regard to a pessimistic view as to what the geotechnical monitoring costs were which would need to be met in order to realise that improved development potential).
On the other hand, I am satisfied that Mr Lunney's analysis as to why there would be a 10% premium to be paid by the hypothetical purchaser to reflect the value of the future development potential for the site is correct. His consideration of the combined impact of the evidence of the two town planners as leading to this result provides, I am satisfied, an appropriate base potential uplift (10%) which would be contemplated by the hypothetical purchaser.
Such a 10% uplift, even based on Mr Dyson's more pessimistic valuations of the site would result in a value uplift of the order of $1 million (before making any allowance for the increased geotechnical monitoring costs which would be necessary as part of that redevelopment). Making allowance for those costs at $140,000, it can be seen that the uplift in value of the site as a consequence of its increased development potential caused by the carrying out of the public purpose is at least of the order of $800,000.
As a result of the valuation evidence informed by the geotechnical and town planning evidence, the result must be that the premium which the hypothetical purchaser would have paid for the site as at the date of acquisition in October 2017 would have been more than (and significantly more than) any future costs of additional geotechnical monitoring which would have been required to permit redevelopment of the site on the basis of the reasonably‑to‑be‑expected future beneficial changes to the planning controls (such changes to the planning controls arising as a consequence of the public purpose).
This conclusion, on the facts, means that the Company's claim pursuant to s 55(f) of the Just Terms Act must fail.

Expandamesh Pty Ltd v Sydney Metro

At a glance

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Judgment (64 paragraphs)

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Cases Cited (23)

Cited By (2)