Gattuso v Liverpool City Council - [2011] NSWLEC 110 - NSWLEC 2010 case summary — Zoe

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Gattuso v Liverpool City Council

[2011] NSWLEC 110

Land and Environment Court (NSW)|2010-07-07|Before: Pepper J, Mr J

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Source facts

Court

Land and Environment Court (NSW)

Decision date

2010-07-07

Before

Pepper J, Mr J

Source

Original judgment source is linked above.

Judgment (39 paragraphs)

[1]

Introduction 1The applicant, Mr Rodolfo Gattuso, objects to the Valuer General's determination of compensation in respect of a parcel of land located at 95 McIver Avenue, Middleton Grange, New South Wales (Lot 120 DP 2475) ("the land"). 2Liverpool City Council ("the council") acquired the whole of the land on 1 May 2009 pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 ("the Act"), for the purposes of an environmental drainage corridor and open space. The land was vacant and was being held for redevelopment purposes by Mr Gattuso. 3The Valuer General determined compensation payable to Mr Gattuso in the amount of $1,484,650, with $1,477,500 being the component for market value. It is against this determination of compensation that the applicant commenced proceedings in Class 3 of the Court's jurisdiction on 30 September 2009. 4Mr Gattuso claims an amount of between $2,275,000 and $2,665,500 by way of compensation, based on a multi dwelling housing development on the acquired land. In so doing, he values the land using the direct comparison method of valuation for englobo residential subdivision/development of land. 5The council's assessment of the compensation is lower ranging from, depending on which town planning evidence is accepted, $1,427,500 to $1,620,000. 6The principal reason for the difference in the amount of the compensation is due to conflicting town planning evidence as to the yield and density of the developable area on the land. 7During the proceedings a view was held of both the subject land and the comparable sales relied upon by both parties.

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[4]

Statutory Planning Instruments 14Clauses 4.1 (minimum subdivision lot size), 4.1A (minimum subdivision lot size community title schemes), 4.4 (floor space ratio) and 4.6 (exceptions to development standards) of Part 4 of the LEP were the principal development standards to be applied. 15These clauses relevantly state as follows: 4.1 Minimum subdivision lot size (1) The objectives of this clause are as follows: (a) to ensure that lot sizes are consistent with the desired residential density for different locations, (b) to ensure that lot sizes are able to accommodate development that is suitable for its purpose and consistent with relevant development controls, (c) to prevent fragmentation of land which would prevent the achievement of the extent of development and nature of uses envisioned for particular locations, (d) to minimise traffic impacts resulting from any increase in the number of lots on classified roads, (e) to minimise any likely impact of subdivision and development on the amenity of neighbouring properties, (f) to ensure that subdivision reflects and reinforces the predominant subdivision pattern of the area, (g) to ensure that lot sizes allow buildings to be sited to protect natural or cultural features including heritage items and retain special features such as trees and views. (2) This clause applies to a subdivision of any land shown on the Lot Size Map that requires development consent and that is carried out after the commencement of this Plan. (3) The size of any lot resulting from a subdivision of land to which this clause applies is not to be less than the minimum size shown on the Lot Size Map in relation to that land. (4) This clause does not apply in relation to the subdivision of individual lots in a strata plan or community title scheme. (4A) Despite subclause (3), the size of any lot resulting from the subdivision of land shown on the Lot Size Map to be within Area 1, Area 2 or Area 3 for the purposes of: (a) a dual occupancy that was approved before the making of this Plan and that satisfies any conditions of that approval, or (b) multi dwelling housing, or (c) attached dwellings, or (d) semi-detached dwellings, must not be less than the area shown in Column 2 of the Table to this subclause opposite the relevant Area, or if the lot adjoins a rear or side lane that provides vehicular access to the lot, not less than the area shown in Column 3 of the Table opposite the relevant Area.

[6]

4.1A Minimum subdivision lot size community title schemes (1) The objectives of this clause are as follows: (a) to ensure that lot sizes in community title schemes are consistent with the desired residential density for different locations, (b) to ensure that lot sizes in community title schemes are able to accommodate development that is suitable for its purpose and consistent with relevant development controls, (c) to prevent fragmentation of land which would prevent the achievement of the extent of development and nature of uses envisioned for particular locations, (d) to prevent an increased traffic and safety impact as a result of increased lots on classified roads, (e) to minimise any likely impact of subdivision and development on the amenity of neighbouring properties, (f) to ensure that subdivision reflects and reinforces the predominant subdivision pattern of the area, (g) to ensure that lot sizes in community title schemes allow buildings to be sited to protect natural or cultural features including heritage items and retain special features such as trees and views. (2) This clause applies to a subdivision under a community title scheme of any land shown on the Lot Size Map that requires development consent and that is carried out after the commencement of this Plan. (3) The size of any lot resulting from a subdivision of land to which this clause applies is not to be less than the minimum size shown on the Lot Size Map in relation to that land. (4) Despite subclause (3), the size of any lot resulting from the subdivision of land shown on the Lot Size Map to be within Area 1, Area 2 or Area 3 for the purposes of: (a) a dual occupancy that was approved before the making of this Plan and that satisfies any conditions of that approval, or (a1) 2 or more dwellings where each dwelling is attached to another dwelling by a common wall, or (b) 3 or more dwellings, or (c) attached dwellings, or (d) semi-detached dwellings, must not be less than the area shown in Column 2 of the Table to this subclause opposite the relevant Area, or if the lot adjoins a rear or side lane that provides vehicular access to the lot, not less than the area shown in Column 3 of the Table opposite the relevant Area.

[8]

4.4 Floor space ratio (1) The objectives of this clause are as follows : (a) to establish standards for the maximum development density and intensity of land use, taking into account the availability of infrastructure and the generation of vehicle and pedestrian traffic, (b) to control building density and bulk in relation to the site area in order to achieve the desired future character for different locations, (c) to minimise adverse environmental effects on the use or enjoyment of adjoining properties and the public domain, (d) to maintain an appropriate visual relationship between new development and the existing character of areas or locations that are not undergoing, and are not likely to undergo, a substantial transformation, (e) to provide an appropriate correlation between the size of a site and the extent of any development on that site, (f) to facilitate design excellence in the Liverpool city centre by ensuring the extent of floor space in building envelopes leaves generous space for the articulation and modulation of design. (2) The maximum floor space ratio for a building on any land is not to exceed the floor space ratio shown for the land on the Floor Space Ratio Map. 4.6 Exceptions to development standards (1) The objectives of this clause are: (a) to provide an appropriate degree of flexibility in applying certain development standards to particular development, and (b) to achieve better outcomes for and from development by allowing flexibility in particular circumstances. (2) Consent may, subject to this clause, be granted for development even though the development would contravene a development standard imposed by this or any other environmental planning instrument. However, this clause does not apply to a development standard that is expressly excluded from the operation of this clause. (3) Consent must not be granted for development that contravenes a development standard unless the consent authority has considered a written request from the applicant that seeks to justify the contravention of the development standard by demonstrating: (a) that compliance with the development standard is unreasonable or unnecessary in the circumstances of the case, and (b) that there are sufficient environmental planning grounds to justify contravening the development standard. (4) Consent must not be granted for development that contravenes a development standard unless: (a) the consent authority is satisfied that: (i) the applicant's written request has adequately addressed the matters required to be demonstrated by subclause (3), and (ii) the proposed development will be in the public interest because it is consistent with the objectives of the particular standard and the objectives for development within the zone in which the development is proposed to be carried out, and (b) the concurrence of the Director-General has been obtained. 16In addition, the development control provisions contained in Part 7 of the LEP, namely, cl 7.8 (development on flood prone land), cl 7.11 (minimum dwelling density and related dwelling density map) and cl 7.13 (minimum lot width in Zones R1, R2, R3 and R4) are also relevant, and provide as follows: 7.8 Flood planning (1) The objectives of this clause are: (a) to maintain the existing flood regime and flow conveyance capacity, and (b) to avoid significant adverse impacts on flood behaviour, and (c) to limit uses to those compatible with flow conveyance function and flood hazard, and (d) to minimise the risk to human life and damage to property from flooding. ... (2A) Development consent must not be granted to development in a flood planning area for the purposes of residential accommodation unless the consent authority is satisfied that the development: (a) will not adversely affect flood behaviour and increase the potential for flooding to detrimentally affect other development or properties, and (b) will not significantly alter flow distributions and velocities to the detriment of other properties or the environment, and (c) will enable the safe occupation and evacuation of the land, and (d) will not have a significant detrimental affect on the environment or cause avoidable erosion, siltation, destruction of riparian vegetation or a reduction in the stability of any riverbank or watercourse, and (e) will not be likely to result in unsustainable social and economic costs to the flood affected community or general community as a consequence of flooding, and (f) if located in the floodway, will be compatible with the flow of flood waters and with any flood hazard on that floodway. (3) Development consent must not be granted to development on flood prone land (other than development for the purposes of residential accommodation) unless the consent authority is satisfied that the development: (a) will not adversely affect flood behaviour and increase the potential for flooding to detrimentally affect other development or properties, and (b) will not significantly alter flow distributions and velocities to the detriment of other properties or the environment, and (c) will enable the safe occupation and evacuation of the land, and (d) will not have a significant detrimental affect on the environment or cause avoidable erosion, siltation, destruction of riparian vegetation or a reduction in the stability of any riverbank or watercourse, and (e) will not be likely to result in unsustainable social and economic costs to the flood affected community or general community as a consequence of flooding, and (f) if located in the floodway, will be compatible with the flow of flood waters and with any flood hazard on that floodway. 7.11 Minimum dwelling density (1) The objectives of this Plan for the control of dwelling densities are as follows: (a) to contribute toward the efficient use of land resources, (b) to ensure the viability of public transport and other services planned for the area, (c) to ensure adequate funds for the recreation and community facilities planned for the area. (2) Development consent must not be granted for the subdivision of land shown on the Dwelling Density Map unless the consent authority is satisfied that the dwelling density likely to be achieved by the subdivision is not less than the dwelling density shown for the land on that Map. (3) In this clause: dwelling density means the ratio of the number of dwellings to the area of the land to be occupied by the development, including internal streets and half the width of any roads adjoining the development that provide vehicular access to the development but excluding land used for public open space and non-residential purposes. 7.13 Minimum lot width in Zones R1, R2, R3 and R4 (1) The objective of this clause is to ensure that lot dimensions are able to accommodate residential development that is suitable for its purpose and is consistent with relevant development controls. (2) This clause applies to the subdivision of land in Zone R1 General Residential, R2 Low Density Residential, R3 Medium Density Residential or R4 High Density Residential. (3) The width of any lot, resulting from a subdivision of land to which this clause applies, that is capable of accommodating residential development but is not the subject of a development application for that purpose, must not be less than 10 metres except as provided by subclause (4)... 17With respect to the DCP, Part 2.5 entitled "Land Subdivision and Development in Middleton Grange" applied to the subject land. 18Specifically, cl 3.4 of the DCP describes "multi dwelling housing" as (emphasis added): Opportunities are provided for row housing in small groups, duplexes, triplexes, or Terraces . They are located in areas of higher amenity and many contain home businesses. These need rear lanes for parking and servicing. 19Clause 3.5 of the DCP under the sub-heading "Private Open Space" and "Controls" states that, "1. Each dwelling must provide a minimum of 50m2 of Private Open Space." The term "private open space" is defined in the same clause to mean: Private open space is an area within the site (usually at the rear) that is set aside for outdoor activities. Clotheslines, BBQ areas, pergola (unroofed structure), patio, garden, sheds and pools can be included in the private open space.

[9]

Legislative Framework and Applicable Legal Principles 20The following provisions of the Act are relevant: 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. 54 Entitlement to just compensation (1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land. (2) If the compensation that is payable under this Part to a person from whom native title rights and interests in relation to land have been acquired does not amount to compensation on just terms within the meaning of the Commonwealth Native Title Act, the person concerned is entitled to such additional compensation as is necessary to ensure that the compensation is paid on that basis. 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division): (a) the market value of the land on the date of its acquisition, (b) any special value of the land to the person on the date of its acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) solatium, (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. 56 Market value (1) In this Act: market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid): (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and (b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and (c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law. (2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition. 59 Loss attributable to disturbance In this Act: loss attributable to disturbance of land means any of the following: (a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land, (b) valuation fees reasonably incurred by those persons in connection with the compulsory acquisition of the land, (c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs), (d) stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired), (e) financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation (but not exceeding the amount that would be incurred if the new mortgage secured the repayment of the balance owing in respect of the discharged mortgage), (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition. 21The task before the Court in ascertaining the market value of the acquired land is to estimate the price that would have been agreed upon in a voluntary bargain between a willing but not anxious seller and a willing but not anxious buyer (s 56(1) of the Act and Spencer v Commonwealth (1907) 5 CLR 418 at 441 and Walker Corp Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 at [51]). 22The market value of the land equates to the highest and best use of the land ( Turner v Minister of Public Instruction (1956) 95 CLR 245 at 274). 23The terms of the legislation are determinative. Thus it cannot be assumed that the provisions reproduce principles derived by way of judicial interpretation of the terms of earlier resumption legislation and earlier case law should be approached with caution ( Walker at [31], [35] and [47]). Thus s 55 of the Act adopts different and exhaustive elements of market value from its legislative predecessors ( Leichhardt Council v Roads and Traffic Authority (NSW) [2006] NSWCA 353; (2006) 149 LGERA 439 at [27]-[30] and [91]). 24The list of matters to which regard must be had in assessing the amount of compensation is subject to the "just compensation override" in s 54 of the Act ( Leichhardt Council at [28]). 25Because of the guarantee in ss 3(1)(a) and 10(1)(a) of the Act, the acquiring authority must pay at least the market value of the acquired land unaffected by the public purpose ( AMP Capital Investors Ltd v Transport Infrastructure Development Corporation [2008] NSWCA 325; (2008) 163 LGERA 245 at [63] and [72]). 26The overriding principle in compensation cases is one of fairness to the dispossessed owner. In seeking to do justice, a liberal estimate should, where doubts arise, be adopted in favour of the claimant ( McBaron v Road and Traffic Authority of New South Wales (1995) 87 LGERA 238 at 244-245 and Sydney Water Corporation v Caruso [2009] NSWCA 391; (2009) 170 LGERA 298 at [99]-[102]). 27Mr Gattuso is thus entitled to just compensation having regard to the relevant matters set out in s 55 of the Act. The relevant matters for the purpose of these proceedings are the market value of the land as at the date of acquisition (s 55(a)) and any loss attributable to disturbance (s 55(d)).

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Hydrology 34Mr Drew Bewsher was requested to provide an opinion on "the extent of land which would be available for development, having regard to flood risks and creek corridor issues, in late 2004, ignoring the existing zoning and assuming the land would otherwise be available for residential development." Relevantly, it was his opinion that, first, 34% of the northern portion of the land or 4,200m2 would be inundated in a 100 year flood event. Second, that there would be a need to provide riparian corridors along the watercourse as part of any development proposal for the land. It was Mr Bewsher's initial opinion (as at 17 May 2005, the date of his first report) that a total riparian corridor of 35m would be required along the watercourse. 35In reaching these conclusions, Mr Bewsher ignored a flood study prepared by J Wyndham Prince ("JWP") in January 2004 that was based on one-dimensional hydraulic modelling, which in turn was based on a new field survey undertaken specifically for the precinct. It was ignored because it was prepared as a consequence of the council's intention to develop the precinct, and therefore, its results would not have been available to a prudent hypothetical purchaser. As it transpired, the JWP modelling was broadly consistent with the modelling upon which Mr Bewsher relied. 36An updated report (18 January 2010) dealing with the changes to the information and policies affecting the development of flood prone land from May 2005 until the date of the acquisition of the property on 1 May 2009, was provided by Mr Bewsher. In this report Mr Bewsher: noted the effect of the commencement on 4 February 2008, of the controlled activity approval provisions of the Water Management Act 2000; ignored the additional modelling carried out by JWP on the basis that it appeared to be closely related to the public purpose (although he stated that it would, in any event, have been unlikely to alter his position) and additional modelling carried out by his firm; considered the additional available field survey and aerial photography and found that it did not change his initial 2005 advice; and noted changes in the DCP that had come into force in August 2008 that required wider riparian corridors, although he ignored Part 2.5 of the DCP relating specifically to land subdivision and development in Middle Grange (including the subject land) on the basis that this part of the DCP appeared to be directly related to the public purpose. 37It was Mr Bewsher's conclusion that there were no significant changes that altered the earlier advice that he would have given a prudent hypothetical purchaser as at the date of acquisition and that the flood information available to a prudent hypothetical purchaser as at that date would have been that as presented in his 2005 advice. 38This advice, based as it was on a one in 100 year inundation, was that although the land was flood prone, the depth of the inundation was nevertheless shallow, typically less than 0.5m. Thus "given the wide, shallow inundation...it is likely that the development potential of each property could be increased by filling the flood-affected portions". The filling was, however, subject to constraints. These constraints were: (a) flood conveyance - any development would need to demonstrate that the upstream and downstream flood levels would not be exacerbated as a result of the obstruction of flood flows by filling. But, in the absence of a detailed flood study, the impact of any filling could not be predicted; (b) flood storage - any development that involved filling would need to ensure that the existing volume of flood storage on the site was not reduced thereby exacerbating downstream flooding. This was usually achieved by a 'cut and fill' development proposal, but in certain circumstances it may be impractical for excavated material to be used for fill, for example, for geotechnical reasons or because of contamination; and (c) riparian corridor - it may not have been possible to fill areas in close proximity to creeks and watercourses because of the impact of doing so on the riparian corridor. 39In his 2005 report, Mr Bewsher concluded that a 35m riparian corridor would be required and that given this width, and the shallow depth of inundation, in his opinion, "it would be possible for filling to occur right up to the boundary of each riparian corridor without impacting on the conveyance of flood waters across each property." Mr Bewsher also concluded that the extent of excavation and filling required within each property was unlikely to be extensive, however, a 'cut and fill' operation would be required to be carried out to ensure that flood conveyance and flood storage constraints were satisfied. 40In his 2010 report, Mr Bewsher further stated that had he been asked by a prudent hypothetical purchaser in May 2009 to estimate the likely riparian corridor width in the absence of the public purpose, he would have advised that the total riparian corridor width would be likely to be reduced from 65m, through negotiation, to 45m. With respect to the 35m estimate given in his 2005 advice, it was Mr Bewsher's opinion that "there would be a significant risk that he [a hypothetical purchaser] may be unable" to achieve such a width reduction. 41Mr Bewsher's evidence was accepted by Mr Gattuso (this was so even though Mr Rhodes, on behalf of Mr Gattuso, preferred the original 35m estimate given by Mr Bewsher in his 2005 report). 42Mr McKenzie, however, sought to cavil with the likely width of the riparian corridor and the developability of the flood prone land. This was so notwithstanding that the unchallenged joint bushfire evidence (discussed in further detail below) had assumed the existence of a 45m wide riparian corridor and the admission by Mr McKenzie that he had no relevant qualifications in hydrology. The council submitted that Mr Bewsher should have considered the JWP survey information, concerning, as it did, the inherent qualities of the land and its surrounding environment. Thus the location of the stream as ascertained from the survey should have been taken into account and not the less reliable information from topographic maps and investigation. Had this been done, this would have revealed the true location of the stream pre-acquisition, which was ignored by Mr Rhodes. By contrast, by considering this information Mr McKenzie opined that he was able to determine the correct position of Middle Creek within the land for the purpose of determining specific zones within the land for planning purposes. 43Other than the attack through Mr McKenzie, no direct challenge was made to any part of Mr Bewsher's evidence by the council. In my opinion this was unfortunate. In my view, in order for the council to seriously contend that Mr Bewsher's evidence was wrong and should not be accepted, it was incumbent upon the council to put this to Mr Bewsher for comment. This included putting to Mr Bewsher his rejection of the initial and subsequent JWP one-dimensional hydraulic modelling based on the earlier field survey undertaken specifically for the Southern Hoxton Park precinct and his evidence as to the location of the creek. 44While the Court was not bound to accept Mr Bewsher's evidence, it was loathe to reject it. The Court was influenced, in this regard, first, by the absence of any cogent evidence contradicting it. Second, by Mr Bewsher's considerable hydrological expertise and experience, notably in floodplain risk management. Third, by the fact that other uncontested evidence, namely, the bush fire expert evidence, was contingent upon it. And fourth, by the fact that for the purposes of his 2010 opinion, Mr Bewsher had access to both the council's acquired airborne laser scanning survey of much of the Liverpool local government area, including the acquired land, for both 2005 and 2008, and to high resolution aerial photography of the land in 2007. On this basis, Mr Bewsher found that there were no significant changes that altered the opinion he gave in 2005 and that "in particular, there were no significant changes in...the location of the watercourse through the subject lot, that would alter the flooding and drainage constraints that were documented in my May 2005 advice". 45I therefore find that subject to a width of 45m required to accommodate a riparian corridor (which I accept), and assuming the land could be filled by means of a 'cut and fill' operation, a prudent hypothetical purchaser would consider that the development of the land, although flood prone, was possible because any inundation would be shallow and typically less than 0.5m.

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Bushfire 46The bushfire experts filed a joint report prepared by Mr David Peterson (on behalf of Mr Gattuso) and Mr Wayne Tucker (on behalf of the council). Their evidence was uncontroversial. First, the whole of the subject land was bush fire prone land and thus a bush fire safety authority needed to be obtained and complied with prior to any subdivision for residential purposes (s 100B(3) of the Rural Fires Act 1997). 47Second, assuming a 45m wide riparian corridor, and having regard to the legislated requirements of Planning for Bushfire Protection 2006 with respect to bushfire mitigation matters, the bushfire experts' advice to any prudent hypothetical purchaser at the time of acquisition would have been that asset protection zones ("APZs") of 20m width along the western side of the land and 10m located next to the riparian corridor, together with access including a perimeter road of at least 8m curb to curb, were necessary. It would have also been necessary to extend the hydrant network within the subdivision. I find that a prudent hypothetical purchaser would have accepted this advice. 48An issue arose as to what use, if any, could be made of the APZs in calculating the yield and density of the developable land. 49The council contended that the reference to the exclusion of land used for "public open space and non-residential purposes" in the definition of "dwelling density" in cl 7.11 of the LEP included the land required for the APZs. The council relied upon the objects of the Rural Fires Act 1997 contained in s 3(a)-(c) and s 100B(2) of that Act in support of its contention. 50Those provisions provide as follows: 3 Objects of Act The objects of this Act are to provide: (a) for the prevention, mitigation and suppression of bush and other fires in local government areas (or parts of areas) and other parts of the State constituted as rural fire districts, and (b) for the co-ordination of bush fire fighting and bush fire prevention throughout the State, and (c) for the protection of persons from injury or death, and property from damage, arising from fires, ... 100B Bush fire safety authorities (2) A bush fire safety authority authorises development for a purpose referred to in subsection (1) to the extent that it complies with standards regarding setbacks, provision of water supply and other matters considered by the Commissioner to be necessary to protect persons, property or the environment from danger that may arise from a bush fire. 51Thus, the council argued, while the 8m perimeter road around the allotments could be used for access to the parts of the subject land intended to be used for residences, because it was devoted to the public purpose of bush fire setback in which dwellings could not be erected, it therefore followed that no incursions into the APZs were permitted and that the "area of land to be occupied by the development" in cl 7.11 of the LEP excluded any portion of the APZs. 52By contrast, Mr Rhodes on behalf of Mr Gattuso advanced the argument that the APZs could be used for access, parking and open space, thereby resulting in a higher dwelling yield. According to him, the bushfire experts did not require the 8m access road to be used for fire safety to the exclusion of the use of that road as part of the internal road. In other words, the access road was not a road that needed to be wholly sterilised from the development. 53I do not accept, and nor would, in my view, a prudent hypothetical purchaser, that no part of the 8m access road is able to be used in any calculation of the developable yield and density of the land. If the road is additionally utilised for the purpose of an access road then the land is being used for residential purposes and falls within the definition of "dwelling density" within cl 7.11. There is nothing in the objects of the Rural Fires Act or s 100B(2) of that Act that militates against this construction. Clearly a different outcome would result if any portion of the APZs was intended to be used for the construction of individual dwellings, but this is not what is proposed. I was comforted in my conclusion by Mr McKenzie's concession in oral evidence to the effect that the APZs could be used to provide access for fire fighting purposes, visitor parking and the residue land in the APZs utilised as common open space maintainable by the body corporate. 54It follows that I do not consider all of the APZs to be completely sterilised from development. Provided the APZs are utilised in a manner that permits their use for fire fighting purposes, I see no reason why they cannot simultaneously be used for residence purposes. I therefore find that a prudent hypothetical purchaser, as at the acquisition date, would have considered that the development of the land was subject to APZ constraints but would have nevertheless considered that some of the land required for APZ dedication was developable.

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Town Planning Evidence 55It is now convenient to turn to the town planning evidence. As stated above both experts agreed that the zoning of the acquired land, absent the public purpose, was R1-General Residential under the LEP, except for the northern section. 56It was Mr Rhodes' contention that the northern section (2,414m2 ) would be zoned RE1-Public Recreation or open space, as this was the zone that applied to other portions of Middle Creek. This approach, Mr Rhodes maintained, was consistent with the zoning generally in Middle Grange. That is to say, where the width of the land along the creek exceeds the width of the drainage channel it is zoned open space. Assuming a width of 45m for the riparian corridor, outside this corridor the land would have been available for development and zoned residential, as was common throughout the land released in Hoxton Park. 57By contrast, Mr McKenzie noted that the balance of the land (4,003m2 ) was flood prone and opined that it would have a zone reflective of the purpose and use of the land for drainage and flood mitigation, which was inconsistent with the use of the land for public open space and recreational purposes, or RE1. Mr McKenzie considered the objectives of zone SP2-Infrastructure or drainage were more appropriate. Mr McKenzie noted that this was not inconsistent with the way flood and drainage land was zoned elsewhere in Middleton Grange. 58However, in my view, the opinion expressed by Mr Rhodes on the zoning of the undevelopable land is preferable, premised as it was on a number of lots equivalently zoned in land released in Hoxton Park. 59Ultimately, little turned on the zoning issue because the valuers agreed that the undevelopable land should be valued at $70m2. 60The real issue was how much of the land was undevelopable. The contest was between Mr Rhodes' calculated area of 2,414m2 and Mr McKenzie's calculated area of 4,003m2. The former was premised on an adoption of Mr Bewsher's 45m riparian corridor (which equates to 30m to the south and 15m to the north of Middle Creek); the latter on Mr McKenzie's view that an additional 20m of the land was required to be sterilised from development as part of a 49.75m2 drainage area. 61Given the acceptance of Mr Bewsher's evidence, it follows that I do not agree with the area of the developable land as calculated by Mr McKenzie. It also follows that I find that the area of undevelopable land was 2,414m2 . I consider that a prudent hypothetical purchaser would have reached a similar conclusion. 62What remains to be determined, therefore, is the likely zoning of this parcel of land. 63It was Mr McKenzie's view that a prudent purchaser would take a cautious approach in assuming that the council would approve residential development in a 1:100 year flood area. In this regard Mr McKenzie relied upon cl 7.8(3) of the LEP. It was his view that if this clause did not preclude the council from approving development of residential accommodation on flood prone land, then the council would need to be satisfied of the matters set out in (a)-(f) of that clause prior to approval being granted. Mr McKenzie believed that the council would not permit development that would require the destruction of existing native riparian vegetation or destroy the existing creek channel on the land. 64As stated above, Mr Rhodes accepted Mr Bewsher's evidence that development could occur on the land albeit with some filling. It was Mr Rhodes' opinion that this view was consistent with practice of the council in rezoning flood liable land in the locality since the Hoxton Park Stage 2 Release (the land is within Precinct 3A of this release) in 1992 up to the most recent release area, Edmondson Park, in 2006. 65The LEP land zoning map and flood planning area map appear to be consistent with the views expressed by Mr Rhodes. Those maps demonstrated that land that was shown as flood liable had been rezoned and developed for residential and industrial development. Mr Rhodes' opinions were also consistent with the practice of the council in similarly constrained land in the Stage 2 Release. Therefore, in light of the conclusion I have reached above concerning the hydrological evidence, I find that a prudent hypothetical purchaser would have considered that had the land not been zoned for the public purpose of an environmental corridor, it would have been zoned RE1-Public Recreation and R1-General Residential.

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What Was the Appropriate Yield and Density of any Development? 66Given the findings on zoning and the developable area, it falls to determine what was the appropriate yield and density of the developable land. 67The planning experts were in agreement on a number of matters when it came to determining the appropriate yield and density. Specifically, there was consensus that: (a) first, that the principal development standards for any Torrens title subdivision as defined in the LEP relating to the site were those contained in Part 4, in particular, the minimum subdivision lot size as depicted on the Lot Size Map (sheet LSZ-008) (cl 4.1); (b) second, the experts were in agreement that the minimum subdivision lot size applying to R1 land was that indicated on the Lot Size Map in the LEP, divided into two portions, namely, area 'D' and area 'F' on the Lot Size Map; (c) third, they agreed that the minimum dwelling density applying to the R1 zoned land as indicated by the Dwelling Density Map (sheet DWD-008) in the LEP was 23 dwellings per hectare coinciding with the area designated as "D" and 15 dwellings per hectare coinciding with the area marked "F" respectively on the Lot Size Map; (d) fourth, the experts agreed on a minimum lot width or frontage of 10m. While Mr McKenzie initially contended for a wider frontage to accommodate a double garage to satisfy a dual parking space requirement in the DCP, both experts subsequently agreed that this could be satisfied by a single garage and an open car space, including stack parking; (e) fifth, the experts agreed that the following minimum lot size and minimum dwelling density provisions applied to different parts of the R1 land: (1) the minimum subdivision lot size would be 300m 2 for area D on the Lot Size Map, or 240m2 if adjoined by a laneway; (2) the minimum subdivision lot size would be 400m2 for area F on the Lot Size Map; and (3) the minimum dwelling density would be 15 and 23 dwellings on the Dwelling Density Map (depending on the location of the dwellings on the land); (f) sixth, the experts agreed that the land fronting the vegetation to the west and the land fronting the riparian corridor would have a minimum subdivision lot size of 300m 2 , or 240m2 if adjoined by a laneway; (g) seventh, the experts agreed that within the 20m setback for the APZ to the west of the available land there was sufficient room to accommodate the necessary perimeter fire road; and (h) eighth, the area of land excluding the riparian zone was 8,250m2 (Mr McKenzie) or 9,860m2 (Mr Rhodes) and excluding both the riparian zone and the APZs was 5,595m2 (Mr McKenzie) or 6,805m2 (Mr Rhodes). 68However, the experts disagreed on how the balance of the land zoned R1 should be treated with respect to yield and density. 69The planning experts disagreed as to the effect of the definition of "dwelling density" contained in cl 7.11 of the LEP and as shown on the Dwelling Density Map referred to in that clause. 70It was the council's submission that, excluding use of any of the APZs and based on a total developable area of 5,595m2 for areas 'D' and 'F', overall there were only 12 allotments occupying the whole of the available residential area. That is to say, nine lots in area 'D' and three lots in area 'F' that complied with the minimum lot size requirements set out in the Lot Size Map in cl 4.1 of the LEP. It was this figure that, the council submitted, should be adopted as the basis of the assessment of the unconstrained developable area on the land. However, this density would not, the council conceded, achieve the mandated dwelling density in the LEP of 19 lots. 71Even if part of the area of the APZs was used for residential purposes and a total area of 6,223m2 was available for development in area 'D' yielding between 14 to 15 lots, it was again accepted that the area 'F' lots nevertheless failed to meet the minimum requirement of 400m2 and thus the subdivision failed to meet the minimum lot size and dwelling density mandated by the LEP. 72Mr Rhodes premised his opinion on the existing treatment of land extending from McIver Ave to Seventeenth Ave immediately to the west of the drainage land and on open space land over which development consent had been granted by the council. In relation to Landcom land to the north of Middle Creek, Mr Rhodes noted that the land had a minimum lot size of 300m2 and the registered plan of subdivision included small lots not fronting open space. Mr Rhodes considered the minimum lot size for the land zoned R1 to be 300m2 (or 240m2 where the lot would adjoined a rear or side lane). This land had a minimum density of 15 dwellings per ha. Accordingly, applying the 'D' and 'F' minimum densities of 23 and 15 dwellings per ha, and consistent with the treatment of other land within Middleton Grange, it was Mr Rhodes' contention that the land could achieve a maximum density of approximately 17 lots. 73However, Mr Rhodes' density similarly suffered from a deficit in the required minimum lot size and he was equally unable to comply with the mandated dwelling density of 24 Torrens title lots under the LEP for this developable area. 74The minimum dwelling density provided in cl 7.11(2) of the LEP means, as the ordinary language of that sub-clause clearly states, that the consent authority "must" be satisfied that the dwelling density likely to be achieved by the proposed subdivision is not less than the dwelling density shown for the land on the Dwelling Density Map referred to in that clause. Applying the 'D' and 'F' minimum densities of 23 and 15 dwellings per ha contained in the Dwelling Density Map, it is clear that neither planner was therefore able to achieve the necessary compliance with the clause. 75Clause 4.6(2) of the LEP was relied upon by the council to argue that an exemption from compliance with cl 7.11 could be sought from the consent authority. This submission was put notwithstanding the agreement by the parties' valuers that cl 7.11 applied and that if the required number of dwellings could not be constructed pursuant to that clause by the land subdivision layout proposed, then a prudent hypothetical purchaser would consider that he or she would have to seek consent from the council to develop the land in a multiple dwelling development format - rather than a Torrens title subdivision - in order to achieve development consent. 76Militating against the attractiveness of pursuing an exemption under cl 4.6 was the fact that a written request was required demonstrating that compliance with the development standard contained in cl 7.11 was unreasonable or unnecessary in the circumstances and that there were sufficient environmental planning grounds to justify contravening the development standard. In addition, the consent authority would need to be satisfied that the proposed development was in the public interest because it was consistent with the objectives of the standard and the objectives of the zone in which the development was proposed to be carried out. Furthermore, consent could not be granted until the concurrence of the Director-General had been obtained. 77Mr Rhodes further submitted that in light of the mandatory minimum density provisions and lot sizes for Torrens title subdivisions mandated in the LEP, the variations from the standards proposed by both planners were considerable and were not in conformity with the density planning requirements imposed on Middleton Grange. 78Accordingly, for these reasons I do not consider that a prudent hypothetical purchaser would come to the conclusion that the proposed Torrens title subdivision of the developable land would be likely to receive consent from the council. 79As a consequence, it was necessary to determine the likely yield for a multi dwelling housing development on the developable land. Because neither town planner had addressed the issue of the potential multi dwelling housing yield, further joint conferencing between the town planning experts was necessitated during the course of the hearing which culminated in a supplementary joint report. 80According to Mr Gattuso, the benefit for the prudent hypothetical purchaser of multi unit housing on the developable land, was that the lot size and density controls applicable to a Torrens title subdivision were no longer applicable and instead density was controlled by the floor space ratio provisions ("FSR") contained in cl 4.4(2) and 4.4(2A) of the LEP. 81The experts agreed that "multi dwelling housing" was a permitted use in the R1 zone (see cl 4.1) and that this term relevantly meant three or more dwellings on one lot of land, which included townhouses, villas and row housing generally, when regard was had to the dwelling typology in cl 3.4 of the DCP. Having said this, it was Mr McKenzie's view that cl 3.4 spoke of small clusters of multi dwelling houses, rather than large unbroken rows of residences with concomitant low amenity, the latter of which was contrary to the manifest intent of planning for the area under the LEP and DCP (especially Part 2.5 of the DCP, Land Subdivision and Development in Middleton Grange). 82However, Mr McKenzie accepted that there were no minimum lot size provisions applicable to a multi dwelling housing strata title subdivision. It was Mr McKenzie's calculation that, excluding the riparian zone and the APZs, a yeild of 20 dwellings could be achieved for the site by recourse to a multi dwelling housing format. This figure was premised on the occupation of every permissible part of the developable land, without internal roads or separation between the dwellings. If Mr Rhodes' developable area was assumed (that is to say, including 1.2 m of the APZs), then Mr McKenzie's estimate increased to 24-26 dwellings. 83Applying an FSR control of 0.7:1 (the experts agreed that the FSR was 0.7:1, or 0.75:1 if adjoined by a laneway) (see cl 4.4 of the LEP), Mr Rhodes' estimate of yield based on Mr McKenzie's site area, excluding the riparian zone and APZs, was 26 multi dwelling residences. Based on his own site area, that is to say, adopting Mr Bewsher's assessment of site developability, he achieved a 34 dwelling yield. 84In respect of the APZ constraints, it was Mr Rhodes' evidence that the APZs could be utilised to provide an internal subdivision road that could serve a dual purpose of access for fire safety. Further, the APZs could form part of the calculated area for dwelling yield having the capability of serving the purpose of visitor car parking and open space, in addition to the necessary setback. Thus if a portion of the APZs were included in the calculation, then an increased dwelling yield of 31-32 dwellings on Mr McKenzie's site area and up to 37-38 dwellings on Mr Rhodes' site area, resulted. 85Mr Rhodes contended that Mr McKenzie's analysis ought not be accepted, first, because the estimate of 20 dwellings was premised on controls concerned with minimum lot sizes, densities and widths contained in the LEP, none of which were applicable to a multi dwelling housing development format. In particular, the only relevant control for density was that contained in the FSR map. Second, contrary to Mr McKenzie's opinion that there was no market for this type of row housing in the area, comparable sales in the immediate vicinity of Kanzo Ave demonstrated otherwise. Third, it was Mr Rhodes' opinion that with appropriate design, particularly given the size, regular shape, extended public road frontage to McIver Ave, and driveways on the western and northern sides that could be created within the APZs, construction of dwellings with high amenity fronting open space were possible. Fourth, Mr Rhodes expressed the view that because the DCP applied to the development post the public purpose, it ought to be disregarded. 86Mr McKenzie stated that his yield, based on a building layout drafted by him, conformed to "the strata subdivision concept that applied to the land", but more importantly, conformed to a lot that could be sold and that met the goals and objective criteria within the DCP and the council's planning objectives insofar as small lot development was to be oriented to areas of amenity. 87Even allowing for the objectives and controls contained in the DCP and LEP and having regard to the landscaping and private open space provisions contained therein, it remains the fact, in my view, that in determining the yield of any multi dwelling housing strata subdivision on the land the FSR development control contained in cl 4.4 of the LEP would be applicable to assess potential development yield. This is not to say, however, that a prudent hypothetical purchaser would ignore the consent authority's desire to ensure controls concerning amenity and setbacks were observed. As Mr Rhodes' evidence demonstrates, these standards can be accommodated within a multi dwelling housing development by appropriate building design and appearance, once yield is determined. 88Accordingly, I find that a prudent hypothetical purchaser, having concluded that it was unlikely that the consent authority would approve a Torrens title subdivision that was non-compliant with the minimum dwelling density requirements of cl 4.1, would consider that consent would be granted on the potential development yield of a residential subdivision on the land on a multi dwelling housing development format having regard to the FSR development standard contained in cl 4.4, in conjunction with appropriate design to maximise amenity and preserve development controls.

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What is the Value of the Land? 89The valuers, Mr Lopco Neskovski of Gerton Pty Ltd for Mr Gattuso and Mr Lance Kenny of Kenny & Good Pty Ltd, agreed on the physical description of the land and that the land was ripe for subdivision. 90The valuers also generally agreed that: (a) a developer would have to reconstruct half of McIver Ave to a full residential grade road and that in the event of the land having two road frontages, a developer would also be required to construct half of that additional road frontage to a full residential grade road; (b) the opinions expressed by Mr Bewsher that the amount of fill required upon the land was not great and that the inundation was shallow were to be adopted; (c) the land was affected by traffic noise from the nearby M7 motorway and that but for the public purpose, noise attenuation barriers would have been constructed along the M7 motorway boundary in the vicinity of the land; (d) the public purpose zoning of the land was within zone RE1 - Public Recreation under the LEP and that the majority of the land would have an underlying zoning of R1 - General Residential; (e) the highest and best use of the land was for urban residential; (f) the minimum subdivision lot size and width provisions of cls 4.1 and 7.13 respectively of the LEP were relevant considerations for any Torrens title subdivision; (g) if the dwelling density required to be achieved in cl 7.11 of the LEP could not be achieved by a Torrens title subdivision layout it was unlikely that development approval would be granted. Therefore, a prudent hypothetical purchaser or developer would seek development consent to develop the land in a multi dwelling format (although the experts disagreed on which format of multi dwelling housing would be granted development consent by the council); (h) the highest and best use of the land meant that the land would be purchased for subdivision, albeit with Mr Neskovski rejecting the small lot subdivision favoured by Mr Kenny; (i) the bushfire evidence was to the effect that the provision of 20m and 10m APZs to the west and north respectively on the land were required; (j) the 8m perimeter road could be constructed on the APZs; (k) the best and most appropriate method of valuation was the direct comparison method; and (l) that a rate of $70/m2 could be applied to the undevelopable land, whether it was zoned open space or drainage (although the experts disagreed on whether it was more appropriate to assess the developable land on a per lot or a rate per m2 basis). 91Each of the valuers adopted their respective town planning counterpart's division of the land, developable area and minimum dwelling density. 92Accordingly, Mr Neskovski was of the opinion that planning controls applicable to Middleton Grange contained in the LEP mandated minimum density requirements to increase the supply and variety of housing stock in that suburb. Furthermore, in the absence of the planners having given consideration to the potential number of dwellings if the land was to be developed with multi dwelling housing, Mr Neskovski estimated the number of multi unit houses achievable on the land to be between 30-35 dwellings (although Mr Gattuso relied on Mr Rhodes' yield of between 34-38 dwellings in a multi unit development as contained in the supplementary joint planning report). 93Mr Neskovski's was similarly of the opinion that Mr McKenzie's analysis sterilised too great a proportion of the land when it came to providing for the APZs and the construction of the perimeter road . 94By contrast, Mr Kenny did not believe that the land would be viewed as more valuable as a multi dwelling housing site on the basis that since 2008 the Middleton Grange area had experienced only one example of a private development of this type that had been completed and offered on the open market. The only other multi dwelling development that was under construction (the Kanzo Ave property) comprised a total of 8 or 9 dwellings for public housing and was not for resale. According to Mr McKenzie, therefore, a small lot subdivision was preferable. 95Mr Kenny's small lot subdivision required some filling of land and the construction of the perimeter access roads on the west and north for fire fighting purposes. It also involved the registration of the plan of subdivision and the sale of the vacant allotments on the market. 96By way of comparison, Mr Neskovski preferred multi dwelling home and land packages to land subdivision sales. This preference involved the same preparatory work as Mr Kenny, but also involved undertaking the construction of the dwellings, together with the subdivision of the land and the progressive sale of the dwellings on the market. It was Mr Neskovski's view that a land subdivider was a different species of developer from that of a developer of multi dwelling housing, the latter of which having to factor into the purchase price: the land costs, the dwelling construction costs, the interest holding charges, a margin for profit and risk, and the reselling costs of completed dwellings. Thus Mr Neskovski's primary comparative sales were medium density sales, such sales having similar characteristics to multi dwelling sales. Mr Neskovski's secondary comparative sales were englobo sales that had similar affectations or characteristics as the land.

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Comparable Sales 97Turning to the sales evidence, there were four comparable sale properties in Middleton Grange in reasonably close proximity to the land, which were of assistance in determining the market value of the acquired land either separately or on an overall englobo land basis. These were located at: (1) 95 Fifteenth Ave; (2) 110 Sixteenth Ave; (3) 100 Sixteenth Ave; and (4) 55 Fifteenth Ave. 98Initially Mr Kenny relied on two additional Hoxton Park Road sales, one of which was flood affected but which the council nevertheless permitted an urban rezoning. However, at the hearing reliance on these two sales was abandoned. 99The valuers disagreed on the analysis of these sales, particularly in relation to the adjustments required to the sales for the impact of service connections, construction costs, road construction costs and adjustments for differing dwelling densities. 100In particular, the valuers disagreed on the applicability of the 2008 riparian Guidelines. While the valuers agreed, based on Mr Bewsher's evidence, that the council's riparian corridor requirements under the DCP would place constraints on any proposed development on the land, the valuers did not agree that it was a relevant factor in analysing the comparable sales contracted after February 2008 where there was a natural watercourse. In particular, the valuers disagreed on the extent to which, if any, a prudent hypothetical purchaser would factor the Guidelines in to the purchase price or would consider, in any material sense, what order stream any watercourse potentially constraining the land was classified as pursuant to the Guidelines. In brief, Mr Neskovski relied on Mr Bewsher's and Mr McKenzie's evidence to conclude that the Guidelines did apply to the comparable sales, whereas Mr Kenny concluded that they did not. 101On balance, I favour, and I consider that a prudent hypothetical purchaser properly advised would do so also, the views expressed by Mr Neskovski given the conclusions I have reached above concerning Mr Bewsher's evidence and in light of the fact that all of the comparable sales had contract dates that post-dated February 2008. However, the precise impact of the Guidelines absent suitably qualified expert assistance to advise on the classification of the water courses constraining each sale is difficult to determine, especially given that the development consent granted to 95 Fifteenth Ave post-dated February 2008. Having said this, I accept that, depending on the classification of the watercourse on the 95 Fifteenth Ave and 100 and 110 Sixteenth Ave sales, a significant portion of these sales would be subject to material development constraints rendering them largely undevelopable. 102Following cross-examination, Mr Kenny's revised his analysis of the required adjustments for the comparable sale sites for the purpose of comparison with the acquired land. The analysis was usefully summarised in the following table in the joint planning report: Sale Property 95 Fifteen Ave Middleton Grange 110 Sixteenth Ave Middleton Grange 100 Sixteenth Ave Middleton Grange 55 Fifteen Ave Middleton Grange Price $3,500,000 $1,450,000 $1,450,000 $1,800,000 Contract date 8 May 2009 1 October 2008 23 October 2009 early 2010 Title details Lots 316 & 336 DP2475 Lot 317 DP2475 Lot 318 DP2475 Lot 332 DP2475 Vendor Quigg Danielli (MIP) Stateland (MIP) Jakic Purchaser Hi-Tech Homes Lagana Middleton Grange ZSZ Group P/L Land Area 2.428 ha 1.214 ha 1.214 ha 1.216 ha Dwelling density 25% x 23/ha 64% x 23 & 30/ha 69% x 23 & 30/ha 100% x 15/ha Overall rate/m² $144.15 $119.44 $119.44 $148.03 Adjusted rate/m² for delayed settlement $141.68 - - - Adjusted rate /m² after allowance for SP2 land area $145.24 $124.61 $147.55 - Required Adjustment for Comparison with Acquired Land Sale by MIP - + 5% + 5% Dwelling density + 7.5% - - + 12.5% Traffic noise from M7 - - - - Traffic noise from street + 5% - - + 5% Availability of sewer + 6% + 13% + 5% + 5% Access delay/development timing + 2.5% - Required filling - 2.5% - 2.5% - 2.5% - 2.5% Size and topography + 2.5% - - - Market movement - + 2.5% - - 2.5% Section 94 Contributions - - - 10% - 10% Total Adjustment + 18.5% + 20.5% - 2.5% + 7.5% Adjusted Land rate/m² $172.11 $150.16 $143.86 $159.13

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As affected by 2008 NSW Department of Water and Energy Guidelines for Controlled Activities Relating to Riparian Corridors sale labelled as Sale A Sale B Sale C Address / Title details 95 Fifteen Ave 110 Sixteen Ave 100 Sixteenth Ave Site area 24,300 m² 12,140 m² 12,140 m² Contract date 4/5/2009 1/10/2008 23/10/2009 Sale price $3,500,000 $1,450,000 $1,450,000 Vendor Quigg NAB as (mortgagee in possession) for Danielli Westpac (mortgagee in possession) Stateland Devel Purchaser Hi-Tech Homes Constructions Australia P/L Lagana (purchasers solicitor advised MIP status) Middleton Grange P/L Total Riparian Corridor (TRC) Width (assuming 1st order stream) note 1 TRC Width 43.50 m wide 43.50 m wide 43.50 m wide TRC Area 3,500 m² 3,600 m² 3,000 m² APZ Roads + TRC Width (assuming 1st order stream) note 1 APZ + TRC Width 73.5 m wide 73.5 m wide 73.5 m wide APZ + TRC Area 5,900 m² 6,000 m² 5,000 m² note 1- the nature of the stream (as to whether it is a 1st or 2nd order stream) is subject to confirmation by Mr Bewsher Unadjusted Englobo Rate / m² $144 / m² $119 / m² $119 / m² Adjustments Required for the Following Factors

Sale by Mortgagee in Possession + 0.00 % + 10.00 % + 10.00 %
Fact that Developable Land shown as Min. Dwelling Density of 15 and / or Impacts of Too Much Road Construction +15.00 % + 15.00 % +15.00 %
Road traffic noise from 15th Ave + 5.00 % + 0.00 % + 0.00 %
Delays with Availability of Sewer and / or inability to Develop Rear Half due to Riparian Corridor (Ie.. No Roads Permitted in CRZ and VB Areas) 12 months 24 months 9 months

10.00 % + 20.00 % + 7.50 %

Market increase + 0.00 % + 5.00 % + 0.00 %
Size of Sale Land; Vegetation; Steepness + 2.50 % + 0.00 % + 0.00 %
Area of Land, non-developable due to Riparian Corridor requirements (combined with the fact that Creek cannot be relocated) per Respondents expert, town planner and hydraulics engineer + 0.00 % + 0.00 % + 10.00 % Total Adjustment in Percentage Terms + 32.50 % + 50.00 % + 42.50 % Adjusted Englobo Rate / m² $190.84 / m² $179.16 / m² $170.20 / m²

[21]

Methodology of Valuers 108In analysing and adjusting the Middleton Grange subdivision sales the appropriate valuation comparator between the comparable sales and the land, according to the council, was that proposed by Mr Kenny, namely, a dollar rate per square metre of developable land (6,452m2 at $150m2 ) and a dollar rate per square metre for the non-developable parts (1,795m2 comprising the APZs and including the perimeter road at $100m2 ), together with the agreed rate of $70/m 2 for the riparian area. 109In terms of the estimated costs to provide a fully serviced development site, in further supplementary evidence exclusively addressing this issue, based on Mr Rhodes' layout (26 lots, excluding the APZs and the perimeter road), Mr Kenny's total cost estimate, allowing for a discount, pending verification by an appropriately qualified quantity surveyor, was $575,000. Mr Kenny's total cost estimate based on Mr McKenzie's layout (19 lots, excluding the APZs and the perimeter road) was $500,000. 110By contrast, Mr Neskovski utilised a per lot or per dwelling methodology based on medium density capability being a like for like approach. Because of his view that the site sales at Middleton Grange within a 15 dwelling density minimum were not comparable to the land, Mr Neskovski considered the rate per square metre methodology as being of limited utility because it did not take into account the variation in the number of dwellings that could be achieved per lot. It was, therefore, his opinion that a rate per dwelling/lot basis was more appropriate. 111Initially, Mr Neskovski was of the opinion that medium density sales demonstrated a rate of between $70,000 to $75,000 per lot/dwelling (including an allowance of $10,000 for road construction per lot), but later he adopted the rate of $60,000 to $65,000 per lot/dwelling and ultimately he settled on a rate of $65,000 per lot/dwelling. 112In terms of likely servicing costs, Mr Neskovski provided four possible estimates demonstrated in the table below:

[38]

Conclusions on Market Value and Compensation 121In conclusion, the council reiterated the argument that it had advanced at the outset of the town planning evidence, namely, that the development proposed by Mr Gattuso would not, given the density and concomitant amenity proposed by Mr Rhodes and Mr Neskovski, be acceptable to the council and would be unlikely to obtain approval. The council noted that many of the blocks in Middleton Grange were not bushfire prone and were flood free but, nevertheless, remained undeveloped at the present. This, the council submitted, indicated that there was no demand physically proximate to the acquired land for the development mooted by Mr Gattuso. 122The council also submitted that Mr Kenny's evidence as to comparable sales was preferable because it enabled the Court to directly apply sales that were purchased for the same highest and best use and at a similar intensity of use to that proposed by Mr Kenny for the acquired land. These sales, it was argued, most accurately "captured" the cost of carrying out the subdivisional development and the period the purchasers of the comparable sales were expected to wait in order to complete the development and sell the finished lots at a profit. 123This was to be contrasted with Mr Neskovski's evidence, which the council criticised on the basis that there were no examples of multi dwelling housing developments either on the scale proposed by Mr Gattuso or located on the fringes of Middleton Grange. Both the Kanzo Ave and Onslow Garden sites were not comparable, the council submitted, located, as they were, adjacent to the planned town centre for Middleton Grange and in close proximity to schools. Thus while the valuers had reached agreement on the price that might be paid for a dwelling on a multi housing development based on these two sites, no other information existed to enable the Court to assess whether multi dwelling housing would be more advantageous to a prudent hypothetical purchaser than a small lot subdivision. 124I agree with the submission of the council that it cannot be assumed, as Mr Gattuso has sought to do, that by adopting the highest densities theoretically possible at the maximum FSR as calculated by Mr Rhodes for a multi dwelling housing development on the developable area of the land, a 38 unit development would have received development consent from the council. A not immaterial degree of risk would need to be factored in by a prudent hypothetical purchaser in this regard, particularly when consideration is given to the controls contained in the LEP and the DCP. For example, the DCP emphasises, among other things, the enhancement and preservation of natural open space and environmental areas (Part 2.5 cl 1). As a consequence a range and mix of lot sizes is preferred (Part 2.5 cl 3.1), and the houses, whether they be "in small groups, duplexes, triplexes or Terraces" (cl 3.4), must be sensitive to site attributes and ensure privacy for residents and neighbours (cl 3.2), and provide reasonable space for, amongst other things, landscaping and private open space (cls 3.3 and 3.5). 125I also accept the submission of the council that a degree of risk would need to be factored into any comparison between Mr Kenny's and Mr McKenzie's small lot subdivision and the multi dwelling housing development at the densities and/or yields proposed by Mr Rhodes and Mr Neskovski. However, I do not agree with the council that the highest and best use of the land is the small lot subdivision contended for by it. In my opinion, the evidence before the Court demonstrates that a completed multi dwelling housing development is the highest and best use of land and that properly advised, and after weighing up the risks referred to above, a prudent hypothetical purchaser would agree. 126Furthermore, while I accept the existence of the risks referred to above, I do not accept that the level of these risks is as elevated as that which was suggested by the council. This includes the "increased risk" associated with, as the council contended, a development that requires a much longer period of time to construct and sell. While the Kanzo Ave sales required an adjustment to be made to accommodate for the fact that the development was a Housing Commission development and was much smaller in scope, I nevertheless found these sales, together with the sales at Onslow Garden, to be of assistance in decreasing the level of risk that a prudent hypothetical purchaser would need to consider. 127Overall, it is my view that, based on the evidence presented to the Court, to agree with and adopt the submissions made by council would not achieve a just result for Mr Gattuso ( McBaron at 244-245 and Caruso at [99]-[102] and see ss 3(1)(b), 54 and 55 of the Act). 128But as I have indicated above, I do not believe that the highest and best use of the land is a multi dwelling housing development of 38 dwellings, or that a prudent hypothetical purchaser would consider that this number of dwellings would be likely to be approved by the council. Acknowledging the findings that I have made above in the judgment as to the maximum developable area of the land and as to the maximum permissible density and/or yield of any hypothetical development of the acquired land pursuant to the DCP and LEP, I find that on the most liberal estimate available to me, a multi unit development of 32 dwellings constitutes the highest and best use of the land. 129While much was made by the council of the fact that Mr Rhodes was, in contrast to Mr McKenzie, unwilling to attempt to diagrammatically represent any lay-out of a multi dwelling housing development, I do not consider that this fundamentally derogated from the opinions he expressed and, as a consequence, from Mr Neskovski's valuation evidence. As Mr Neskovski stated in evidence, ultimately the design and layout of any multi unit development is an architectural matter. 130In addition, while a prudent hypothetical purchaser would undoubtedly need to be cognisant of the likely demand for the proposed development, I reject, based on the comparable sales evidence and the opinions expressed by Mr Neskovski that there was no demand, as the council maintained, for the development proposed by Mr Gattuso in respect of the acquired site. Rather, I find that a prudent hypothetical purchaser would consider that the demand was present, albeit not, as stated above, for a 38 multi unit development. In arriving at this conclusion, it follows that I have preferred Mr Neskovski's evidence as to the comparable sales to that of Mr Kenny's. In my opinion, Mr Neskovski's detailed analysis adequately incorporated the costs of carrying out a multi dwelling housing development, including the costs associated with the additional time to complete the development and effect the sale of the completed lots. 131In terms of the estimated costs necessary to provide for a fully serviced site for a multi dwelling housing development, the supplementary evidence of Mr Neskovski, in response to site servicing cost estimates prepared by Mr Kenny during cross examination, provided detailed servicing costs calculations for a developed site on the acquired land. Mr Kenny, by contrast, based his servicing costs, in part, on a development site sale in reasonable proximity to the acquired land but for privacy reasons was unable to produce the actual underlying development costs. I am unable to accept the accuracy of the costs estimate provided by Mr Kenny and I accept, by way of preference, the more detailed analysis and estimate provided to the Court by Mr Neskovski. I am of the view that a prudent hypothetical purchaser would do likewise. 132With respect to the adjustments made to the comparable sales by each valuer as stated above, I prefer the approach taken by Mr Gattuso's valuer, Mr Neskovski to that of the council's valuer, Mr Kenny. I agree with the submission of Mr Gattuso that: (a)notwithstanding that the Guidelines did not affect the development consent granted after February 2008 for 95 Fifteenth Ave, it must nevertheless be the case that if the Guidelines are to apply to the acquired land then they must equally apply, in any adjustment exercise, to the comparable sales. Accordingly, portions of both 95 Fifteenth Ave and 100 and 110 Sixteenth Ave are undevelopable; (b)both 100 and 110 Sixteenth Ave would have limited access by reason of the large drain that would exist in the centre of the land; (c)the 95 Fifteenth Ave and 110 Sixteenth Ave properties were not fully serviced lots and development would be dependent upon a coordinated approach with neighbouring lots for the sewer to be connected resulting in delay. Also, a significantly greater amount of road construction would be required for the former site; (d)in relation to the 55 Fifteen Ave sale, it was Mr Neskovski's opinion that this sale was not in fact comparable because it was a 15 lot subdivision sale only, with no permissibility for multi dwelling housing and thus incapable of achieving the density capable on the land; and (e)Mr Neskovski did not factor in adjustments where the sales had similar development constraints as the land, on the basis that this would amount to double dipping because the constraint had already been factored into the sale price. 133After having evaluated the methodologies of the two valuers, and conformably with the reasoning expressed above, I have adopted the approach taken by Mr Neskovski as the basis for calculating the market value of the acquired land, and hence for determining the compensation payable to Mr Gattuso. Not only is the methodology employed by Mr Neskovski based on a medium density capability, which is more consistent with the hypothetical development, it also affords the benefit of flexibility thereby more readily accommodating any variation in the number and configuration of proposed dwellings on the developable land. 134It therefore follows that, accepting, as I have, that the highest and best use of the land comprises Mr Rhodes' estimate of the developable area and the multi unit housing development proposed by Mr Neskovski, albeit with a 32 dwelling yield, the market value of the acquired land would be $2,080,000. To this must be added the agreed market value of the undevelopable area of the acquired land, namely, $168,000, together with the agreed amount for disturbance of $27,500. 135Thus consistent with the findings and reasons expressed above in my judgment, I find that the total compensation payable to Mr Gattuso for the compulsory acquisition of his land (including disturbance) is $2,275,500. Costs 136Consistent with the reasoning in the decision of Halley v Minister Administering the Environmental Planning and Assessment Act (No 3) [2011] NSWLEC 94, it is appropriate, given that Mr Gattuso has been successful in these proceedings, that the council pay his costs. However, because neither party was afforded the opportunity of addressing the Court on this issue, the parties ought to be permitted to seek some alternative order if they desire. Orders 137The formal orders of the Court are as follows: (1) the applicant's claim for market value compensation under s 55(a) of the Land Acquisition (Just Terms Compensation) Act 1991 for the acquisition of Lot 120 DP 2475 is determined in the amount of $2,248,000. (2) the applicant's claim for disturbance under s 55(d) of the Land Acquisition (Just Terms Compensation) Act 1991 is determined, as agreed between the parties, in the amount of $27,500. (3) the respondent is to pay the costs of the applicant as agreed or assessed, unless within seven days of the date of this judgment a notice of motion is filed by either party seeking an alternate costs order; and (4) the exhibits are to be returned.