JUDGMENT
1 Talbot J: This is a supplementary judgment in respect of the one remaining issue as explained at [69] in my judgment delivered on 17 August 2006 (JL & MM Muir Properties Pty Limited v Roads and Traffic Authority of New South Wales [2006] NSWLEC 508). It is not in the circumstances necessary or expedient to reiterate the substance of the factual matrix and reasoning already outlined in the first judgment. The following reasons and findings are to be read as an addendum to the primary judgment following the further submissions and evidence filed in response to the invitation extended to both parties at [71].
2 The primary submission by the applicant is an inappropriate attempt to re-litigate a decided issue namely that a rate of discount should not be applied in the "before" situation when assessing the amount of injurious affection to the Open Space land on either basis namely that its inherent value lies in the prospect of its acquisition by notice and the subsequent payment of compensation assessed against its underlying highest and best use as Special Business 3(b) land, or alternatively that the land was in the process of being rezoned to 3(b). Those arguments have been rejected and I expressly reaffirm my earlier decision.
3 The purported further evidence from Mr Drummond and Mr Large relied upon by the applicant to support its position is repetitive. Moreover it is not conducive to an alternative view. The same elements of contingency and delay in process outlined in my judgment of 17 August 2006 are reiterated by the applicant's witnesses. They merely reinforce my original conclusion. The issue of a profit allowance also remains to be determined.
4 The applicant contends in the alternative that a figure of 10% has support from "similar cases in Liverpool" and that accordingly the compensation for the injurious affection of the 6(a) land should be $90.00 per m2 less 10% for risk. That is $81.00 per m2. Apart from applying the discount to the wrong figure there is no evidence to support the rate of 10%.
5 Mr Wood on the other hand has been requested by the respondent to make certain assumptions prior to assessing the question of what discount a hypothetical willing but not anxious purchaser would apply to the "before" value of Parcel D. The assumptions put to him were:-
· There is no reason in principle why the value of Parcel D should not have been diminished by the acquisition;
· The value of Parcel D, being the Open Space land, should be determined (in the "before" situation) on the basis that the Applicant had an inchoate claim for compensation against the Council and for the purposes of that claim, that land would have had an underlying zoning of 3(b);
· The 3(b) value of land cannot be applied directly to Parcel D, rather "there should be a discount or risk factor for the contingencies of obtaining that compensation from Council in due course";
· The value of $350 m2 for land zoned 3(b) is a value which has regard to any risk (in the "before" situation) of not obtaining direct access to Windsor Road;
· The relevant local environmental plan contained an acquisition clause allowing owners to require the acquisition of land zoned Open Space. However, it provided that the Council was not required to acquire any land that was not part of its acquisition program;
· Parcel D was not part of the Council's acquisition program at the date of acquisition; and
· The relevant evidence as to the status of the acquisition program is as set out in paragraphs 64-67 of the judgment.
6 Mr Wood confirms his previously expressed view that the preferred approach to the assessment of Parcel D in the "before" situation is on the basis that it represents an inchoate claim for compensation from the council. Relying on his previous opinion, which I described at [66] as "pure speculation" Mr Large maintains that rezoning was imminent and therefore the injurious affection value of $90.00 per m2 should not be discounted. Moreover, Mr Large appears to confuse the potential or inchoate claim for compensation as the consequence of a notice requiring acquisition with an inchoate rezoning. He insists that compensation be assessed as if the land had already been rezoned Special Business 3(b).
7 The respondent makes a rather hollow submission by seizing on my observation at [69] that the applicant had failed to prove its claim for injurious affection on the land in Parcel D. That observation in [69] needs to be taken in the context of the general finding that the claim for injurious affection in respect of the land actually zoned Special Business 3(b) has been substantiated. As I made clear at [67] and [71] the claim in respect of Parcel D could not be finalised without ascertaining an appropriate discount rate for the reasons explained. I confirm my decision to allow compensation for injurious affection to Parcel D subject to the application of an appropriate discount.
8 I generally agree with Mr Wood that the value ascertained in the "before" situation recognising the Special Business 3(b) zoning cannot be applied directly to Parcel D because of the identified risks associated with the contemplated acquisition of Parcel D. The risks identified by Mr Wood are:-
· The risks involved in obtaining adequate compensation from the Council, including the risk that the Council would not agree as to the value of "Special Business 3(b)" land, or that an objection to the Land and Environment Court may be necessary;
· The time and cost associated with both requiring acquisition and obtaining compensation (including the time and costs associated with the compulsory acquisition and compensation process);
· An element of profit on the compulsory acquisition; and
· The risk that the Council would not compulsorily acquire Parcel D in any event, because the acquisition clause in the local environmental plan did not require the Council to acquire land that was not part of its acquisition program and Parcel D was not part of the Council's acquisition program.
9 In Sebastian Cannavo and Alfia Jennifer Busa v The Roads and Traffic Authority NSW [2004] NSWLEC 570 I recognised that land in 5(a) and 6(a) zones under Liverpool LEP would have been purchased by the hypothetical purchaser on the sole basis that the purchase money paid for that part of the site would be recovered in a short time pursuant to a notice requiring the council to acquire the land. Based upon the experience of the valuers in other cases recognising that there would be time and cost incurred before obtaining payment from the council and the identified level of uncertainty regarding the potential amount of compensation I concluded that it would have been most likely that the hypothetical purchaser would have discounted the purchase price of the land by an amount in the order of 20%. The element of contingency in the present case is higher where the council has not adopted a programme of acquisition for the Open Space land. The adoption of a programme is a pre-requisite for a landowner to require acquisition pursuant to cl 26A of Baulkham Hills LEP.
10 Other peripheral issues relating to the possible effect of a requirement to fill the land or the prospect that it might fall into different ownership have been set aside by me as being irrelevant either because they are a common factor or they are irrational. At best they are insignificant.
11 Taking account of the abovementioned contingencies identified by him I agree with Mr Wood that a hypothetical prudent purchaser would discount the "unaffected" value of $350.00 per m2 by 30% in the "before" scenario to give a resultant value of $245.00 per m2. The risk factor of 30% is conservative, as the prudent purchaser would also expect some profit from the outlay of the purchase money to acquire the land in the first place.
12 Mr Wood would reduce the risk to 25% in the "after" situation because the council would be more inclined to acquire land that cost less. I have some difficulty with the application of that logic. I am not satisfied that the purchaser would perceive there to be an increased willingness on the part of council simply because the rate per m2 is less. Other considerations would come into play in that context including, for example, the total amount of land within the Open Space zone exposed to the prospect of a notice from the subject owner and whether other owners required the council to acquire land in part or whole of the zone at the same time. It is more likely than not that a consistent discount would be applied and I therefore conclude that the prudent hypothetical purchaser would also have applied a 30% discount for profit and risk in respect of the inchoate claim in the "after" situation.
13 The compulsory acquisition by the RTA of other parts of the applicant's land is not a relevant factor to the ascertainment of the discount the theoretical purchaser would adopt when acquiring the Open Space land in the "after" situation. The direct effect of the acquisition by the RTA and the creation of the transitway is to reduce the value of land with a Special Business 3(b) zoning to $260.00 per m2 for the reasons explained at [55] -[57].
14 In the "before" situation the determined value for 3(b) land at $350.00 per m2 would be reduced by 30% to $245.00 per m2. In the "after" situation the determined value of $260.00 per m2 would be reduced by 30% to $182.00 per m2. The reduction in value is $63.00 per m2 so that the diminution in value over the total area of 2.177ha is $1,371,510.00. I therefore determine compensation for the injurious affection to the land zoned 6(a) as consequence of the acquisition by the RTA at $1,371,510.00.
15 Final orders can now be made based on my findings and the determination of market value by Bignold J. The parties are directed to submit final orders within 7 days.