Halley v Minister Administering the Environmental Planning and Assessment Act 1979

Cant v Lane Cove Council [2007] NSWLEC 801. Friskovec v Lane Cove Council [2006] NSWLEC 262 Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565 CASES CITED: Roads and Traffic Authority of New South Wales v Mosca [2006] NSWCA 159; (2006) 146 LGERA 335 Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 Woollams v The Minister (1957) 75 WN (NSW) 103; (1957) 2 LGRA 338

DATES OF HEARING: 7 December 2009, 8 December 2009 and 9 December 2009

APPLICANT: T S Hale SC and J F Kildea (barrister) SOLICITORS: Bradfield & Scott LEGAL REPRESENTATIVES: RESPONDENT: R P L Lancaster SC and L T Livingston (barrister) SOLICITORS: Pikes Lawyers

JUDGMENT:

• 15 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

HALLEY v MINISTER ADMINISTERING THE ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979 [2010] NSWLEC 6

JUDGMENT 1 HIS HONOUR: One of the better views in Sydney is from Northwood Wharf - an area heavily used by ferry commuters and others - where one is presented with the wide expanse of the Lane Cove River and a view directly into Woodford Bay and a swathe of bushland along the foreshore at the head of the Bay. 2 Much of this foreshore bushland is in public ownership. By a notice published in the New South Wales Government Gazette on 18 July 2008, the respondent Minister compulsorily acquired one of the last remaining privately owned pieces of bushland along the foreshore, known as lot 2 in deposited plan 1126043, having an area of 466 square metres. The question for determination is the amount of compensation to which the dispossessed owner, the applicant, is now entitled. 3 By a compensation notice dated 15 August 2008 and served under s 42(2) of the Land Acquisition (Just Terms Compensation) Act 1991, the Minister offered an amount of compensation determined by the Valuer-General in the sum of $2,016,500. The applicant, however, claimed compensation of $3,500,000 together with disturbance to be determined and the costs of the proceedings. In these proceedings, however, the Minister contends that the appropriate amount of compensation for the acquisition is $1,315,000. The applicant contends for the sum $2,385,000. 4 The acquired land was part of a larger parcel containing an existing house fronting Nott Lane, Longueville. The total area of the that parcel before the acquisition was 1437 square metres. The residue lot after the acquisition, on which the existing house stands, is 971 square metres. The whole of the land slopes steeply down to Woodford Bay, on the Lane Cove River, to which the acquired land has a frontage. Nott Lane itself slopes steeply down from its intersection with Arabella Street and has been constructed as far as the existing house on the residue lot. The original parcel of land was itself a subdivision of an allotment defined as lot 212 in deposited plan 866891 which extended from Arabella Street to the waterfront, with a house standing on the lot fronting Arabella Street. All the properties in the vicinity enjoy panoramic views over Woodford Bay and the Lane Cove River to the city skyline and the Sydney Harbour Bridge. 5 The applicant's primary submission is that the original parcel was at the date of acquisition able to be subdivided into two allotments and that the construction of Nott Lane could have been extended to serve the additional lot which would have fronted Woodford Bay. 6 The Minister contends, however, that the land had no development potential and should be valued as part of the original holding. 7 The foreshore land, including the acquired land, has been reserved for public purposes since the commencement of the County of Cumberland Planning Scheme Ordinance in 1951. At the date of acquisition it was (and is) zoned Regional Open Space Reservation 9(c) under the Lane Cove Local Environmental Plan 1987 ("the LEP"). The residue land on which the existing house is situated is zoned Residential 2(a2) under that instrument. 8 The parties' town planning experts, Mr N Ingham for the applicant and Mr N R Dickson for the Minister, agree that if the acquired land had not been reserved or zoned for the public purpose, the underlying zoning would have been Residential 2(a2) under the LEP. 9 Mr Ingham, the applicant's town planning consultant, contends that there were three options for development of the original parcel, assuming a Residential 2(a2) zoning. Option 1 is for an attached dual occupancy. This would require either alterations and additions to the existing house, or demolition and rebuilding of the existing house to provide two attached dwellings. I note, however, that the existing house is a substantial structure built to a high standard and unlikely to be developed in this way. Option 2 is for a detached dual occupancy. Option 3, which seems to be Mr Ingham's preferred option, is a subdivision to create an allotment of 550 square metres with the existing house and a second allotment of about 887 square metres on the waterfront. Although Mr Ingham has propounded the three options, the applicant's valuer, Mr W Wotton, has valued the acquired land only on the basis of option 3 - that is, that the original parcel had the potential to be further subdivided to create a third residential allotment in the block between Arabella Street and the waterfront. 10 Mr Dickson, the Minister's town planning consultant, disagrees with Mr Ingham and says that consent for a subdivision is and was at all times unlikely. Similarly, the Minister's valuer, Mr R J Briggs, has valued the acquired land only on the basis that the approval of a subdivision was unlikely and that the land should be valued on a "before" and "after" approach in which there has been a loss of part of a single allotment.

The correct valuation approach 11 The amount of compensation must be determined with regard to the following matters in accordance with s 55 of the Just Terms Act: "(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." 12 In the present case the applicant claims only the market value and an amount attributable to disturbance. The applicant did not dispute that the amount attributable to disturbance is $15,000, being the amount supported by the respondent's evidence. 13 Market value is in turn relevantly defined in s 56(1) of the Just Terms Act as follows: " 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." 14 The definition of market value is a statutory formulation of the Pointe Gourde principle - that compensation for the compulsory acquisition of land cannot include any increase or decrease in the value of the acquired land which is due to the scheme underlying the acquisition: Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565. 15 This principle requires the Court to ignore the fact that the acquired land is within zone 9(c) (Regional Open Space Reservation) under the LEP. The parties agree that consistently with their town planning advice, if the acquired land was not zoned 9(c), it would have otherwise had the same zoning as the adjoining land, namely zone 2(a2) (Residential "A2"). In another way, the present zoning and the market value of it must be assessed by how the land would have been zoned but for the proposal to carry out the public purpose, which in this case is an acquisition by the Minister for regional open space: Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438 at [63] per McClellan J. 16 Moreover, it is not just the zoning of the acquired land that must be set aside. In disregarding the blight caused by the process of compulsory acquisition, the Court must also disregard its effect on other land and must take account of development that would otherwise have occurred in the area but for the blight caused by the public proposal: Woollams v The Minister (1957) 75 WN (NSW) 103; (1957) 2 LGRA 338, Roads and Traffic Authority of New South Wales v Mosca [2006] NSWCA 159; (2006) 146 LGERA 335 at [50]. 17 According to the evidence of Mr Ingham - which is undisputed - the foreshore land at Woodford Bay was first reserved in the County of Cumberland Planning Scheme in 1951. In 1971 and 1972 there was a proposal which was discussed by the Council and the State Planning Authority for a road to be constructed through the foreshore land to provide access to the open space and to any new allotments created by subdivision of the remaining vacant portions of residentially zoned land: letter dated 15 September 1972 from the State Planning Authority to the Council. In Mr Ingham's opinion, which I have no reason to doubt, the whole of the foreshore of Woodford Bay would have been otherwise placed within the Residential 2(a2) zone and subdivided, with an allowance for an appropriate foreshore building line. 18 The present zoning map under the LEP shows that there are two kinds of open space zoning around the foreshore. Some foreshore land is shown as being within zone 9(c) (Regional Open Space Reservation) - the same zoning as the acquired land. Other foreshore land is shown as being within zone 6(a) (Open Space (Recreation)). 19 Mr R P L Lancaster SC and Mr L T Livingston, appearing for the Minister, submit that in disregarding the blight caused by the compulsory acquisition process, the Court is limited to disregarding the effect of the proposal of the relevant acquiring authority - here, the Minister - on planning controls in the area; and restrictions and limitations imposed by other authorities for which the Minister is not responsible, such as the local council are not to be disregarded: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 at [53] - [54]. That is, according to the submission, the Court can only disregard the 9(c) zoning but must assume that the 6(a) zoning was and is in place, so that only part of the foreshore land would otherwise have been notionally developed as residential land. The 6(a) land is, I understand, land which is already owned by the Council and used for open space recreation. 20 I accept, as I must, the principle explained in Walker Corporation - that it is the public purpose ("the proposal") for which the acquiring authority is responsible which must be disregarded and not that of the local council or some aggregation over time of the policies of the local council or of the government. 21 In another way, Walker Corporation, which is binding upon me, requires the Court to disregard only the increase or decrease in value for which the acquiring authority is responsible: see in particular the joint judgment in the High Court at [54]. That is, par (a) of the definition of "market value" in s 56 of the Just Terms Act limits "the proposal" to that of the acquiring authority. 22 The question is, what is "the proposal" of the acquiring authority - the Minister in the present case. According to the notice of compulsory acquisition published in the Gazette, the land was acquired "for the purposes of the Environmental Planning and Assessment Act 1979". The only possible purpose for acquisition under that Act is to fulfil the stated objective of the 9(c) zone as described in the LEP: "to identify, preserve and plan future development of privately owned land of Regional Open Space significance which should eventually be acquired by the State". 23 The 9(c) zone is the only zone, together with the 9(b) (Arterial Road Reservation), in the LEP, which appears to involve the acquisition of land by the State. There is no evidence to show when or by what means the land zoned 6(a) (Open Space (Recreation)) was acquired, or by whom it was acquired. I have noted in par [21] above that I am bound by the joint judgment of the High Court in Walker Corporation. That is, I can only disregard any increase or decrease in value for that for which the acquiring authority is responsible, namely the proposal to give effect to the acquisition of the land within the 9(c) zone in accordance with its zoning. The same case requires that I do not disregard the fact of the zoning of other land in the vicinity zoned 6(a). 24 Most of the foreshore in the vicinity is zoned 6(a) and I must thus assume that it is not and was not developable for residential purposes. The few allotments within the 9(c) zone, being part of the purpose for the acquisition, must be assumed to have an underlying zoning of Residential 2(a2), and are notionally developable land. Apart from the subject land there are at most six other lots within the 9(c) zone along the north-western shore of Woodford Bay which, but for that zoning, would otherwise have been notionally developable in accordance with the underlying zoning.

The locality 25 The acquired land is on the north-western shore of Woodford Bay. This area is characterised by a series of long narrow allotments having frontage to Arabella Street and running down to the shoreline. The houses on these allotments are in every case built close to the Arabella Street frontage, where the elevation allows panoramic views over the bay, the Lane Cove River, the city skyline and the Sydney Harbour Bridge. In a few places these lots have been subdivided into two, so that there are two houses between Arabella Street and the foreshore. The subject land was part of an original allotment that was subdivided into two, with a house fronting Arabella Street on one of the subdivided lots and the present property behind it and fronting Nott Lane. 26 The applicant, supported by the opinion of Mr Ingham, submits that absent the 9(c) zoning, the lower lot, being the acquired land and the residue land, could have been further subdivided to create a third lot on the strip of land between Arabella Street and the foreshore. The applicant submits that such a development would not have been out of character with the surrounding area, since one must assume a residential zoning of all the 9(c) land, and if the surrounding land had not been so reserved then it too would have been subdivided into upper and lower lots and developed with houses on the lower lots. 27 The town planning consultant called by the Minister, Mr Dickson, states that establishing a dwelling on the foreshore allotment would be inconsistent with the local character of the area. Such a dwelling would be the third in a series of buildings along the linear stretch of land running from Arabella Street to the foreshore. Whilst some of the land nearby has two lot subdivisions, this would be the only linear stretch of land that would contain three dwelling houses. A dwelling in the notional foreshore allotment would also be significantly closer to the foreshore than any nearby dwellings. A third dwelling would significantly extend the built form toward the shoreline, providing a wedge between two massive clumps of trees on either side. 28 Moreover, according to Mr Dickson, any such development would be inconsistent with the Sydney Regional Plan (Sydney Harbour Catchment) 2005 and the relevant W8 Scenic Waters: Passive Use zone, inconsistent with the objectives of the LEP, inconsistent with the desired character of the area and inconsistent with the Lane Cove Development Control Plan No. 1 - Control of Development Adjacent to Bushland ("the DCP"). The parties accept that, as at the date of acquisition, 18 July 2008, all of these controls applied to the land and would have to be taken into account in any application for a hypothetical subdivision. For all these reasons Mr Dickson does not believe that consent would have been obtained for the hypothetical subdivision of the land.

The relevant planning controls 29 The suitability of the land before the compulsory acquisition for subdivision must be assessed against the relevant planning controls which applied at 18 July 2008. 30 The Sydney Regional Environmental Plan (Sydney Harbour Catchment) 2005 specifies the following objectives for the W8 Scenic Waters: Passive Use zone, which are relevant here (cl 17): "(a) to give preference to unimpeded public access along the intertidal zone, to the visual continuity and significance of the landform and to the ecological value of waters and foreshores,

(e) to ensure that the scale and size of development are appropriate to the locality and protect and improve the natural assets and natural and cultural scenic quality of the surrounding area, particularly when viewed from waters in this zone or areas of public access." 31 Clause 25 required that a consent authority must take into consideration the maintenance, protection and enhancement of the scenic quality of foreshores. Clause 26(b) required that development should minimise any adverse impacts on views and vistas to and from public places. 32 Landscape Character Type 9 applies to Woodford Bay under the Sydney Harbour Foreshores and Waterways Area Development Control Plan ("the Sydney Harbour DCP"). The statement of character and intent for this area is:

"These areas are significant because they contain natural foreshores interspersed with more developed areas and provide a key feature and visual variety to the total landscape. The natural shoreline has significant visual features. However, it is also developed with swimming pools, retained edges and boat sheds. Sections of vegetated skyline have been preserved. The intent is to retain these natural features and only encourage development that is consistent with the scale, design and siting of that which exists." 33 The Sydney Harbour DCP specifies the following performance criteria for the applicable landscape character type: "Any development within this landscape is to satisfy the following criteria:

• it is sited to ensure that the continuous line of any natural feature is preserved and remains the dominant feature in the landscape; ..." 34 I have noted the parties' agreement that if the land had not been zoned Regional Open Space 9(c) under the LEP, its underlying zoning would have been Residential 2(a2) under that instrument. The zone objective for the 2(a2) zone in the LEP is: "The objective is to retain the existing residential amenity of detached single family dwelling areas. New dwelling-houses or extensions of existing dwelling-houses will be permitted only where they would not be highly visible when viewed from the Lane Cove River or Parramatta River." 35 Clause 18G of the LEP states: "The council, when considering any application for consent to the erection of a structure or the carrying out of a work which will be visible from the site of an item described in Schedule 6, being a site shown on the heritage map (Items of Landscape Significance) must take into account the impact which that development will have on the heritage significance of the Lane Cove River or that landscape feature." 36 Woodford Bay foreshore is listed as an item of landscape significance as contained in Sch 6 - Items of Landscape Significance. 37 Lane Cove Development Control Plan No. 1 - Control of Development Adjacent to Bushland provides detailed guidance with respect to the aims and objectives applicable to the Woodford Bay precinct. These include: "To protect both public and private bushland from adjacent development which could result in altered moisture conditions, increased nutrient levels, soil movement and invasive or inappropriate plant species. To retain and protect natural topographic features, remnant bushland areas, plant species and communities and native fauna habitat which once prevailed in this locality. To maintain and regenerate areas of natural bushland which define the essential character of Lane Cove. To acknowledge the importance of bushland to the character and value of the locality and its importance to the region. To provide a set of development standards that encourage innovation and attractive design which acknowledges the importance of bushland areas through the control of building form, position, colours and materials, hard surface areas, stormwater disposal, soil erosion control, and landscape material adjacent to bushland."

Conclusion 38 I accept the fact that the land before the compulsory acquisition was physically capable of being subdivided, there being more than sufficient area to meet the Council's minimum requirement of 550 square metres for each allotment. 39 In my view, however, the likelihood of any consent being granted for a subdivision was extremely remote. That is, I prefer the evidence of Mr Dickson to that of Mr Ingham. I have come to this view for the following reasons. 40 Any proposed subdivision would be contrary to the planning controls described above and applicable to the land. In particular, it would be contrary to the objectives of zone W8 of the Sydney Regional Environmental Plan (Sydney Harbour Catchment) 2005, noted in par [30] above. 41 The proposed subdivision would, of course, be for the purpose of allowing the erection of a dwelling house on the additional allotment, which would be contrary to cl 25 and cl 26 of the same instrument. The Court had the benefit of a view taken together with representatives of the parties. One of the public places - frequently used by members of the public - is the ferry terminal at Northwood Wharf. From this vantage point one gets a direct view of the subject land. The vegetation between the existing house and the foreshore has been thinned out compared with the vegetation on the adjoining land, so that any additional dwelling house would be visually prominent. It is self-evident that this would in turn present as a continuous line of buildings from Arabella Street towards the waterfront, which exists nowhere else along the north-western side of the bay. Although some parts of the area nearby have been developed with two allotments between Arabella Street and Woodford Bay, this would be the only place where there would be a third dwelling in the linear stretch between Arabella Street and the bay and would stand out as an anomaly relative to the rest of the area. 42 In this respect I accept the opinion of Dr R J Lamb, the applicant's visual impact expert, who conceded in cross-examination that Northwood Wharf is a significant vantage point because of its use by members of the public and from which parts of any new structure on the land would be highly visible; that is, obvious to the eye. 43 It also follows that any such development would be contrary to the provisions of the Sydney Harbour DCP, noted in pars [32] and [33] above. A third dwelling on the linear strip between Arabella Street and the bay would not be consistent with the scale, design and siting of that which exists in the area and would fail to preserve the continuous line of natural vegetation along the north-western side of the bay. In so concluding, I am mindful of the fact that I must assume that the other land zoned Regional Open Space 9(c) in the area had an underlying zoning of Residential 2(a2). As I have noted, this might have afforded an opportunity for two lot subdivisions on such land, but not three lot subdivisions as suggested by the applicant here. 44 Any development as proposed would also be contrary to the zone objective of the 2(a2) zone in the LEP and contrary to cl 18G of that instrument. I have noted at par [41] above that any new dwelling on the proposed new allotment would be visually prominent and thus be highly visible when viewed from the Lane Cove River and from Northwood Wharf. 45 Again, it is self-evident that any such development would be contrary to the objective of the DCP No. 1, noted at par [37] above. 46 The Council has consistently enforced these planning controls whenever any development is proposed in or adjacent to any bushland in its area. Moreover, the Council's position has been endorsed in appeals taken to the Court, some of which were referred to in the evidence; in particular, Friskovec v Lane Cove Council [2006] NSWLEC 262 and Cant v Lane Cove Council [2007] NSWLEC 801. This area of foreshore along Woodford Bay is a valuable stretch of urban bushland which the Council is committed to preserve and protect. 47 It is also self-evident that it would be necessary to extend the construction of Nott lane to provide access to any proposed new allotment, which would necessarily involve the loss of some trees and which would also be visible from the Lane Cove River and from Northwood Wharf. 48 In taking all of these matters into consideration, it is highly unlikely that a consent for further subdivision of the original parcel would have been approved by the Council and also highly unlikely that the Court would overturn any decision to refuse such development. 49 It follows that a hypothetical purchaser, properly advised, would conclude that the subject land had little if any potential for subdivision. I thus reject the valuation of the applicant's valuer, Mr Wotton, whose valuation is based solely on the land being available for subdivision. The only evidence of value on a before and after approach that consent for a subdivision, although possible was unlikely, is the valuation of Mr Briggs, which I accept. 50 In the "before" approach Mr Briggs assumes that the property comprised a waterfront allotment having an area of 1,437 square metres enjoying exclusive access to its waterfront. In the "after" approach, Mr Briggs determined the market value of the residential land having an area of 971 square metres, but retaining its waterfront reserve. After analysis of waterfront and non-waterfront sales in the area, Mr Briggs' assessment of the "before" market value is $7,500,000, based on the limited development opportunity of the land. His assessment of the market value of the residential allotment in the "after" situation is $6,200,000. The difference, representing the compensation for the compulsory acquisition is $1,300,000. To this sum there would be added $15,000 being the loss attributable to disturbance. The parties agree that no other heads of compensation are relevant in this case. Orders 51 I make the following formal orders:

(1) I determine the compensation to which the applicant is entitled for the compulsory acquisition of lot 2 in deposited plan 1126043 in the sum of $1,315,000, made up as follows: Market value $1,300,000 Loss attributable of disturbance $15,000 (2) The question of costs is reserved.

(3) The exhibits may be returned. I hereby certify that the preceding 51 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.