Kalambaka Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979

RESPONDENT: Minister Administering the Environmental Planning and Assessment Act 1979

30114 of 2008 APPLICANT: Tiako Pty Ltd

RESPONDENT: Minister Administering the Environmental Planning and Assessment Act 1979

FILE NUMBER(S) : 30068; 30069; 30114 of 2008

KEY ISSUES: COMPULSORY ACQUISITION OF LAND :- part of land fronting river acquired for cycleway public purpose - claim for market value of acquired land, decrease in value of residue land and disturbance - whether acquired land had development potential - whether development of acquired land with resort type facilities would have added value to unit development on residue land - whether acquired land should be valued on before and after method or piecemeal method - whether valuation assessment on before and after method should be discounted

Environmental Planning and Assessment Act 1979, ss 68(4), 70 Land Acquisition (Just Terms Compensation) Act 1991, ss 42, 54, 55, 56, 65, 66, Pt 3 Div 4 LEGISLATION CITED: Parramatta City Centre Local Environmental Plan 2006 Parramatta City Centre Local Environmental Plan 2007 Parramatta Local Environmental Plan 2001, cl 32 Sydney Regional Environmental Plan No. 28 - Parramatta

AMP Capital Investors Ltd v Transport Infrastructure Development Corporation [2008] NSWCA 325, (2008) 163 LGERA 245 Gosford Council v Green (1980) 48 LGRA 201 CASES CITED: Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority of New South Wales [2006] NSWCA 314 Morison v Commonwealth of Australia (1971) 34 LGRA 273 Penrith City Council v Sydney Water Corporation [2009] NSWLEC 2 Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438

APPLICANTS: Mr J Robson SC SOLICITORS Deacons LEGAL REPRESENTATIVES: RESPONDENT: Mr A Galasso SC SOLICITORS DLA Philips Fox

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

30068 of 2008 KALAMBAKA PTY LTD v MINISTER ADMINISTERING THE ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979

30069 of 2008 SALT KETTLE PTY LIMITED v MINISTER ADMINISTERING THE ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979

30114 of 2008 TIAKO PTY LIMITED & ANOR v MINISTER ADMINISTERING THE ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979

JUDGMENT 1 HIS HONOUR: These are claims for determination of compensation for compulsory acquisition of lands. 2 On 28 September 2007, the respondent, the Minister Administering the Environmental Planning and Assessment Act 1979, compulsorily acquired from the applicants part of three adjoining undeveloped lots on the Parramatta River known as 184, 186 and 188 George Street, Parramatta, under the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act). The lands were identified as, respectively, the rear of Lot 1, DP 1003950, folio identifier 1/1003950; the rear of Lot B, DP 337507, folio identifier B/337507; and the rear of Lot 2, DP 1033950, folio identifier 2/1003950. They were acquired for the purposes of the Environmental Planning and Assessment Act 1979, in particular as part of the Parramatta Valley Cycleway. The cycleway, upon completion, will run through the Parramatta River Valley from Northmead to Ermington, on one side or the other of the river.

3 In accordance with s 42 of the Just Terms Act the respondent offered the applicants compensation in an amount determined by the Valuer-General. The applicants objected to this amount under s 66. Section 66(2) requires the Court to hear and dispose of the applicant's claim for compensation. Compensation is to be determined in accordance with Division 4 of Part 3 (ss 54-65).

4 The applicants, on the basis of the evidence of their expert valuer, claim $1,080,000 for the market value of the acquired lands and decrease in the value of the residue lands under s 55(a) and (f) of the Just Terms Act. The respondent's competing contention, based on the evidence of the respondent's expert valuer, is in the amount of $82,800. There is also a claim for disturbance under s 55(d).

5 This case is typical of valuation disputes in this jurisdiction where experienced valuers often come up with figures that are far apart. In Penrith City Council v Sydney Water Corporation [2009] NSWLEC 2 at [5] Lloyd J commented:

"Each party relies upon the evidence of an experienced and highly regarded valuer... It is a constant source of surprise that two such highly experienced valuers can come up with figures that are poles apart…This is not the only case where this kind of thing occurs. It is, of course a notorious fact that expert witnesses are inevitably biased, even if only subconsciously so, in favour of the party by whom they are engaged. This means that the court must approach the expert evidence with a considerable degree of scepticism."

6 The subject lands are located on the north-east corner of the Parramatta Central Business District on the southern banks of the Parramatta River, near the ferry wharf. They have depths of approximately 80 to 85 metres from the George Street frontages to their rear boundaries at the mean high water mark of the Parramatta River. The acquired lands extend approximately 30 metres from the mean high watermark of the Parramatta River. They are unique in that they are the last privately owned lots adjoining the river in the general area.

7 The following table sets out the areas of the parent, acquired and residue lands:

Parent Lands Acquired Lands Residue Lands Lot 1 Lot 12 Lot 11 184 George Street DP 1003950 DP 1115358 DP 1115358 1,416.2 m2 400.2 m2 1,016 m2 Lot B Lot 31 Lot 30 186 George St DP 337507 DP 1115365 DP 1115365 587.1 m2 48.6 m2 538.5 m2 Lot 2 Lot 21 Lot 20 188 George St DP 1003950 DP 1115360 DP 1115360 1,007.5 m2 379.2 m2 628.3 m2 Consolidated Consolidated Consolidated 3,010.8 m2 828.0 m2 2,182.8 m2

8 The applicants claim compensation under s 55(a), (d) and (f) of the Just Terms Act, which provide:

" 55 Relevant matters to be considered in determining amount of compensation

In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division):

(a) the market value of the land on the date of its acquisition, …

(d) any loss attributable to disturbance, …

(f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired." 9 Section 56(1) defines 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."

10 Section 55(f) requires the court to ascertain the effect on the value of the residue lands at the acquisition date of the carrying out of (or the proposal to carry out) the public purpose, including in relation to lands resumed from others; that is, not limited to the effect flowing from the acquisition of the applicants' lands: Morison v Commonwealth of Australia (1971) 34 LGRA 273 at 299 (in relation to comparable Commonwealth legislation). SUBMISSIONS

11 The applicants claim, in accordance with expert valuation evidence by Mr David Viarella on a before and after basis, that the market value of the acquired lands as at the acquisition date is $1,080,000.00. The before and after method involves subtracting the market value of the residue lands immediately after acquisition from the market value of the parent lands immediately before acquisition. It captures both the market value of the acquired lands under s 55(a) and any decrease or increase in the residue lands under s 55(f) of the Just Terms Act. As Spigelman CJ said in Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority of New South Wales [2006] NSWCA 314 at [11] (quoting Gosford Council v Green (1980) 48 LGRA 201 at 208):

"If the whole parcel is valued at the time of resumption and then the residue is valued, the difference is the ascertained amount of compensation, and severance damage and enhancement of the residue are comprehended without any necessity for specification". And at [46]:

"As I have noted above it is a feature of the before and after approach of valuation that it does not separately address each of the matters in s55. It does, by its nature, make allowance for more than one of those matters. The before and after method, albeit in this rolled up way, can be understood to achieve 'just compensation' because its application, insofar as money can do so, places a person in the same position as that person would have been in if the acquisition had not occurred. This approach to compensation is, of course, equivalent to the measure of damages in tort. I do not wish to suggest that this is the criterion, because it bears a close analogy with a reinstatement basis for valuation to which ss 54 and 55 are not directed. Nevertheless, in an appropriate case, the before and after method can be used to determine 'just compensation'." 12 The applicant submits that in the before and after scenarios the residue lands had the same potential to be developed as multi-storey mainly residential units; and that in the before scenario the acquired lands had potential to be developed with resort style facilities including a swimming pool, barbeque and recreation areas and a jetty, which would have added substantially to the value of the units.

a) in accordance with expert valuation evidence by Mr Watt, the constraints affecting the acquired lands excluded any development on the acquired lands; or, alternatively, excluded development on the acquired lands of the proposed jetty, steps leading to the jetty and a level recreation area adjacent to the steps supported by a retaining wall;

b) in any event, in accordance with Mr Watt's opinion, resort facilities on the acquired lands would not have added value to the units on the residue lands;

c) consequently, s 55(f) is not engaged because there was no decrease in the value of the residue lands by reason of the carrying out of the cycleway public purpose;

d) all that remains to be determined is the market value of the acquired lands under s 55(a), which should be determined by the piecemeal method proposed by Mr Watts at $82,800 comprised as follows:

184 George Street - $40,020 186 George Street - $ 4,860 188 George Street - $37,920

e) if, however, the Court accepts that the acquired lands developed with resort facilities would have added value to the units on the residue lands, then the before and after valuation method is appropriate, as Mr Watt accepted. In that event, Mr Viarella's valuation assessment (assuming the Court considers that his hypothetical development on the residue lands is viable) should be discounted for the following reasons:

(i) some of the resort facilities in Mr Viarella's hypothetical development of the acquired lands could not be built because they intruded into the mangroves and a 10 metre buffer zone next to the mangroves. To that extent, the premium which Mr Viarella attributed to the units because of the resort facilities should be discounted;

(ii) the value Mr Viarella attributed to the units on the residue lands in the before scenario included an element for a scarcity factor of privately owned lands with absolute water frontage, which was contributed to by the carrying out of the cycleway public purpose. By reason of s 55(f), this increase in value should be reflected in a discount;

(iii) the value of the residue lands was increased because the acquisition freed the northern portion (then zoned Open Space) of the residue lands for development through rezoning, as later occurred in the LEP 2007 . This should be viewed as an increase in the value of the residue lands by the carrying out of the cycleway public purpose. Therefore there should be a discount for that increase under s 55(f);

(iv) Mr Viarella's assessment of the amount of the premium which units on the residue lands would have commanded (by reason of resort facilities on, and the private waterfront feature of the acquired lands) is disproportionately high compared with his assessment of value for units with and without water views;

(v) real doubt arises as to the quantum of Mr Viarella's market value of a little over $1 million for the acquired lands when it is compared with his valuation of a little over $1.5 million for the parent lands on a residual land value analysis in the before situation. ZONING

14 As at the acquisition date, 28 September 2007, Sydney Regional Environmental Plan No. 28 - Parramatta (SREP 28) zoned the acquired lands and a rear section of the residue lands as Open Space and the front portion of the residue lands as City Edge. Annexed to this judgment is a copy of a plan showing the SREP 28 zoning of the subject lands. The Open Space zoning continued along the whole length of the Parramatta River foreshore through the City Centre precinct. Elsewhere, many kilometres of the Parramatta River foreshore had been zoned "Environmental Protection" where permitted development was more limited than in the Open Space zone.

15 The draft Parramatta City Centre Local Environmental Plan 2006 (draft LEP) had been exhibited before the acquisition date (from 20 December 2006 to 28 February 2007). The draft LEP zoned the subject lands to substantially the same effect as SREP 28, except that it preferred the description "B4 Mixed Use" for "City Edge" and the description "W2 Recreational Waterways" for "Open Space".

16 The draft LEP was gazetted, with two relevant changes, as Parramatta City Centre Local Environmental Plan 2007 (LEP 2007) shortly after the acquisition date, on 21 December 2007. The first change was that the rear section of the residue lands was now also zoned B4 Mixed Use. The second change was that the zone description "RE1 Public Recreation" was preferred to "W2 Recreational Waterways". The making of a new LEP was certain and imminent at the acquisition date.

17 Under these instruments, the City Edge and B4 Mixed Use zones permitted with consent multi-storey buildings (for which the applicants contend on the residue lands); and the Open Space, W2 Recreational Waterways and RE1 Public Recreation zones permitted with consent one-level resort facilities (of the kind for which the applicants contend on the acquired lands).

18 The background to the first change to which I have referred began in 2003 when the residue lands had been the subject of a development application to Parramatta City Council for the construction of a mixed use commercial and residential building over basement car parking. The application was refused in 2006 on merit grounds. In 2006 Mr Waight, the applicant's expert planner (who had been a party to the development application), on behalf of the owners, made submissions to the Department of Planning that they should acquire the acquired lands; that is, less than the whole of the lands then zoned Open Space. That is what eventuated.

19 As at the acquisition date, the Parramatta Local Environmental Plan 2001 cl 32 created a foreshore building line 30 metres from the mean high water mark. That generally coincided with the southern boundary of the acquired lands. Buildings were generally prohibited between the foreshore building line and the mean high water mark. However, relevantly, swimming pools, jetties, waterway access stairs and picnic facilities were permitted there with consent. The council's Local Floodplain Risk Management Policy stated that the foreshore building line was applied primarily to preserve the scenic qualities of the river. No such foreshore building line provision appeared in the draft LEP or the LEP 2007. However, its substance was dealt with to similar effect in the draft LEP by zoning the acquired lands as W2 Recreational Waterways, on which the type of facilities permitted with consent were generally the same. That zoning did not expressly refer to swimming pools, but it is common ground that a hypothetical prudent purchaser at the acquisition date would have proceeded on the basis that a swimming pool would have been permitted on the acquired lands with consent.

20 There was some debate among the experts as whether the "underlying" zoning of the acquired lands differed from the zoning as at the acquisition date. As to what this really means, see Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438 at [70] per McClellan CJ. However, in closing submissions it was said to be common ground that it did not differ and it was apparent that the real issue was the effect of constraints on development potential. DEVELOPMENT POTENTIAL

21 It is necessary to take into account the development potential of the subject lands at the acquisition date: Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority of New South Wales [2006] NSWCA 314 at [28]. Mr Viarella, after considering the expert heritage, ecology and planning reports, concluded that, as at the acquisition date, the subject lands had potential for a higher use than their then current use. Mr Viarella considered design schemes developed by architects and adopted a hypothetical development approach to value in each of the before and after scenarios. He considered - as did Mr Watt - that in the before scenario a hypothetical purchaser would have been prudently advised that the residue lands had multi-story residential unit development potential. However, in the after scenario, the development would be deprived of absolute waterfront recreation and entertainment facilities on the acquired lands. These facilities were referred to in evidence and submissions as "resort" facilities. They comprised, in a landscaped setting, a swimming pool, barbeque and recreation areas, a jetty through the mangroves to give canoe access, steps leading to the jetty, and a level grassed recreation area adjacent to the steps supported by a retaining wall. He described the contemplated jetty as environmentally friendly.

22 Mr Viarella considered that these resort facilities and the waterfront location of the acquired lands would substantially impact on the realisable sale price of units on the residue lands. As a result of the loss of the acquired lands, such a unit development would be substantially less profitable. In support of his position, Mr Viarella noted that prior to acquisition, the parent lands had potential to provide one of the only absolute water frontage strata living developments on the upper reaches of the Parramatta River, and, indeed, within 300 metres of the Parramatta CBD.

23 Mr Viarella determined the market value of the acquired lands by a residual land value valuation of a hypothetical development in each of the before and after scenarios. The first step was to determine the gross realisation value of the units on the residue lands. The unit values ranged from $40,000 to $55,000 higher in the before situation than in the after situation, which he attributed to the premium which they would have commanded due to resort facilities on the acquired lands. From the gross realisation value, he deducted an allowance for profit and risk, interest costs, GST and construction costs. The resultant residual land value in the before situation was $1,515,000, and in the after $437,000. The difference between these two amounts was the value of $1,080,000 that he attributed to the market value of the acquired lands.

24 The valuers and the parties accepted, as do I, that the highest and best use of the residue lands before and after the acquisition was the same: a multi storey mainly residential development. Although there is no change in the unit yield before and after, there is an issue as to whether there was, and if so the extent of, any reduction in the value of the units as a result of the acquisition.

25 The essential issue between the valuers was that the respondent's valuer, Mr Watt, considered the constraints of the site are such that the acquired lands had no development potential; and that even if they did, resort facilities would not have added to the value of the units on the residue lands. Contrary to Mr Watt's opinion, other experts, including Mr Logan (the parties' single heritage expert), Mr Waight (the applicant's planner) and Mr Drummond (the respondent's planner) accept that the acquired lands had development potential. 26 The subject lands are subject to a number of constraints which affected their development potential as at the acquisition date. 27 First, located immediately to the west of the subject lands, at 182 George Street, is a building called "Harrisford", an item on the State Heritage Register. It operated to impact upon the height and therefore the density of any unit development on the immediately adjoining residue land at 184 George Street, as well as on the setback. The purpose of the height constraints and setback is to preserve the visual importance of "Harrisford". The effect of this heritage item on development of an adjoining property may be measured by the Meriton development on the other side of "Harrisford" from the subject lands. There, Meriton has erected a five or six storey building with 206 units that scales down to one and two storeys at 180 George Street.

28 Mr Logan, a heritage expert, recommended certain building heights and setbacks on the parent lands. Mr Drummond, the respondent's planning expert, produced a plan which added areas to Mr Logan's proposal and proposed for part of the site three storeys maximum and for other parts up to the height of planning controls.

29 At one stage during these proceedings and prior to the hearing, the applicants proposed an ambitious eleven storey development on the residue lands - much larger than the proposal refused in 2006 - based on architectural concept plans. That was abandoned in favour of a more modest proposal formulated by Mr Viarella and pressed at the hearing, described at [21] above. Mr Viarella's proposed plan for the built development on the residue lands provides for two storeys adjoining "Harrisford" on the 184 George Street frontage, three levels elsewhere on the 186 and 188 George Street frontages, and six levels further to the rear. This is comparable with the Meriton building on the other side of "Harrisford". 30 Mr Watt, the respondent's valuer, also produced a plan showing his assessment of the likely building envelope potential of the residue lands available before and after acquisition. It shows part of the building envelope with a six storey limit. Mr Viarella's proposed building envelope envisages a denser development but is comparable in substantial respects.

31 In my opinion, Mr Viarella's hypothetical development plan for the built development on the residue lands is a reasonable response to the "Harrisford" constraint.

32 Secondly, the acquired lands on the northern side adjacent to the river have a mangrove ecological community, which was listed as a heritage item. The expert evidence indicates, and I accept, that if plans were made to develop the acquired lands with resort facilities, the Department of Water and Energy would have been likely to require the mangroves to be protected by a ten metre buffer on the southern edge.

33 Thirdly, all the acquired lands were subject to 1 in 100 year flood inundation, and the majority were subject to 1 in 20 year flood inundation. However, the expert evidence indicates that this constraint could be addressed to permit the resort development proposed by Mr Viarella (as it may have been addressed more recently in council's re-contouring for the cycleway). 34 Fourthly, the acquired lands slope moderately and fairly steeply in parts to the river. Although Mr Watt mentioned this, the parties' submissions did not suggest that it was a significant constraint. 35 The evidence of the applicant's planner, Mr Drummond, was that he would have advised a prospective buyer (at the acquisition date) that development consent for resort facilities on the acquired land would likely be obtained, compatible with ecological requirements relating to the mangroves. He qualified this by saying that development related to the acquired lands would be approximately confined to the southern ten metres of the acquired lands (subject to heritage, hydraulic and engineering assessment); and that the remainder of the acquired land could contain unobtrusive landscaping and recreational elements compatible with the ecological requirements of the mangrove buffer. He said he would have advised a prospective buyer, at the acquisition date, that it was unlikely that consent would be granted for a jetty because (a) it would be within the heritage listed mangrove strand and (b) it would extend into the river owned by NSW Maritime, which restricts recreational vessels on this part of the river. I accept that evidence. Mr Viarella's inquiries, however, indicated that the use of canoes in the river at this location would not conflict with NSW Maritime requirements. I accept that evidence also.

36 Mr Viarella said that if a jetty were not allowed, foot access would be available to the river through the mangroves. He said that there are numerous properties in the Sydney area that front mangroves on waterways where the water is accessible on foot through the mangroves, for example, for the purpose of canoeing or fishing. He identified in that regard Port Hacking, Georges River, Oyster Bay and Bonnet Bay. He said that in such locations there was no fencing denying foot access through the mangroves, nor signs prohibiting foot access. I accept that evidence. Notwithstanding the view of Dr Robertson, an ecologist, that significant detrimental impacts to the mangroves should be avoided, I conclude that it is unlikely that there would be any legal restriction on foot access to the river through the mangroves and that this would have been understood by the hypothetical buyer and seller at the acquisition date. On the other hand, in my view, foot access through the mangroves is by no means as appealing as jetty access. 37 In my opinion, Mr Viarella's plan for the resort facilities on the acquired lands is a reasonable response to the restraints affecting that land so far as concerns the swimming pool, barbeque area and recreation area which are all located outside the likely requirement for a ten metre mangrove buffer. However, given the buffer requirement, it was unlikely, as at the acquisition date, that development consent could have been obtained for the proposed resort facilities within that ten metre buffer - that is, the proposed jetty through the mangroves, steps leading to the jetty and retaining wall adjacent to those steps creating a level recreation area.

38 In my opinion, as at the acquisition date, a hypothetical buyer and seller would have understood that, first, a ten metre buffer from the mangroves would be required for any resort development of the acquired lands; secondly, development consent could be obtained for a proposed swimming pool, barbeque and recreation areas outside the ten metre buffer area; thirdly, it was unlikely that development consent could be obtained for a jetty through the mangroves, approach steps to the jetty and a retaining wall adjacent to the steps to support a level recreation area, all within the ten metre buffer or within the mangroves; and, fourthly, there would be unlikely to be any legal impediment to foot access to the river through the mangroves.

WHETHER THE ACQUIRED LANDS WITH RESORT FACILITIES WOULD ADD VALUE TO UNITS ON THE RESIDUE LANDS

39 The opinion of Mr Viarella was that the units on the residue lands would have commanded a substantial premium by reason of the associated acquired lands and resort facilities thereon. 40 The respondent, on the basis of Mr Watt's evidence, submits that resort facilities on the acquired lands would have added nothing to the value of units on the residue lands. This in part involves the proposition that the constraints mean that the acquired lands are not in substance "waterfront" lands and are no more valuable than open space land in any other area. I disagree. The acquired lands have water frontage. There is access to the river through gaps in the mangroves. There are pleasing water views through those gaps and elsewhere, through the foliage. There are also good view corridors to the water on either side of the mangroves. 41 Mr Watt's view that, in any event, resort facilities on the acquired lands would have added no value to units on the residue lands, relied on a comparison between two multi-level developments with commercial/retail units on the ground floor and residential units above, some blocks away in the Parramatta Central Business District. One was at Charles Street and had no such facilities. The other was at Hassell Street and had a swimming pool and barbeque area - reached by crossing an unattractive, large, open, concrete stormwater drain - and a putting green on artificial grass at ground level below the building. Units in the latter commanded no premium over units in the former. I do not accept that this comparison between developments in a very different environment dictates a conclusion that units on the residue lands would not command a premium by reason of the proposed resort facilities thereon. It is important to take into consideration not just the proposed resort facilities but also their location on rare waterfront lands. The acquired lands have expansive northern views looking towards the river. The mangroves themselves are attractive. I have earlier noted the pleasing water views through the mangroves and along view corridors to the river on both sides of the mangroves. I agree with Mr Viarella that the waterfront location of the acquired lands, and resort facilities thereon, would have been appealing to buyers of units on the residue lands.

42 Although Mr Viarella's assessment was based on his general experience over many years rather than on specific comparisons, I accept his view that the units would have commanded a substantial premium by reason of the associated acquired lands and resort facilities thereon.

43 It follows that it is appropriate to adopt Mr Viarella's before and after method of valuation.

44 In November 2006 Mr Watt provided a valuation of the acquired lands to the respondent in an amount in excess of $220,000, assessed on a before and after basis. Earlier in 2006, he also provided a valuation on a before and after basis to the respondent in relation to a larger area including the acquired land. As it was in relation to a larger area, I am disinclined to give it further consideration. The later 2006 valuation, according to his evidence, was based on different information and on the basis that the acquired lands would be developable in the same way as the residue lands. In these circumstances, the fact that he had earlier adopted a before and after method, after making appropriate enquiries, provides only weak support for my conclusion that the before and after method is appropriate. I have reached that conclusion without reliance on any such support.

45 The respondent submits that Mr Viarella's assessment of market value in the sum of $1,080,000 should be discounted for the following reasons.

46 First, the respondent submits that there should be a discount because Mr Viarella assumed that all the proposed resort facilities contributed to the value of the units on the residue lands. I have held that the hypothetical buyer and seller would have understood it was unlikely that development consent could be obtained for some of those facilities: namely, the jetty through the mangroves, approach steps to the jetty and the retaining wall adjacent to the steps to support a level recreation area: see [38] above. I agree that there should be a discount on account of this reduction in the proposed resort facilities. There is no valuation evidence to assist in the determination of such a discount. Doing the best I can, I propose to discount Mr Viarella's valuation assessment by 10 percent on account of the reduced resort facilities compared with those he contemplated.

47 Secondly, the respondent submits that there should be a discount because the value that Mr Viarella attributed to the units on the residue lands in the before scenario included an element for a scarcity factor of privately owned lands with absolute water frontage, which was contributed to by reason of the carrying out of the cycleway public purpose. The cycleway proceeds on one side or the other of the Parramatta River. The respondent submits that under s 55(f) of the Just Terms Act, this increase in the value of the residue lands should be deducted from Mr Viarella's assessment. The applicant submits that, while this may be technically correct, such exclusivity would have had an almost inestimable effect. I accept the respondent's submission: see [10] above. Again there is no valuation evidence to assist in determining the quantum of the discount. Doing the best I can in the absence of expert evidence, I propose to discount Mr Viarella's assessment by 10 percent on account of this consideration. 48 Thirdly, the respondent submits that (a) an indirect effect of the cycleway public purpose was to facilitate a change in zoning to B4 Mixed Use of the non-acquired lands formerly zoned Open Space; (b) that meant that the value of the residue lands was increased by the carrying out the cycleway public purpose; (c) therefore there should be a discount for that increase under s 55(f) of the Just Terms Act. I have difficulty in seeing a sufficient causal connection in terms of s 55(f), which directs attention to the acquisition date. The change in zoning did not appear in the draft LEP that had been exhibited prior to the acquisition date. Not all of the lands then zoned Open Space were acquired for the cycleway public purpose. That strengthened the case for rezoning the non-acquired Open Space lands, as occurred soon after acquisition, in the 2007 LEP. It may be accepted that the public purpose was a contributing factor to the rezoning change which in turn increased the value of the rezoned lands. However, in my opinion, this does not mean that the increase in value was "by reason of" the carrying out of the cycleway public purpose within the meaning of s 55(f). The causal chain was insufficient, in my view, because it was still a discretionary matter, in light of the acquisition, for the council to decide whether or not to submit to the Director-General, who then had to report to the Minister, that the non-acquired Open Space lands should be rezoned in the LEP, and for the Minister to decide whether or not to effect such rezoning in the LEP 2007: ss 68(4) and 70 Environmental Planning and Assessment Act 1979. As Hodgson JA said in AMP Capital Investors Ltd v Transport Infrastructure Development Corporation [2008] NSWCA 325, (2008) 163 LGERA 245 at [99]:

"The mere circumstance that the public purpose is a contributing factor to changes which in turn affect value is not necessarily sufficient, particularly if the changes depend also on discretionary decisions made by other authorities."

49 If I am wrong, any such increase in the value of the residue lands for which the respondent contends seems to be captured in the before and after method of valuation. The respondent accepts this would be so ordinarily but submits that, as at the acquisition date, it could not safely have been assumed that the area of the residue lands effectively extended by the LEP 2007 was developable. The difficulty with the submission is that neither valuer said it was unsafe to make that assumption and, on the contrary, gave evidence to the opposite effect. Indeed, in closing submissions the respondent accepted that there was no doubt that at the acquisition date a purchaser would reasonably have expected to be able to develop that land. I therefore do not accept the submission. 50 Fourthly, the respondent submits that there should be a discount because Mr Viarella's ranging premiums between $40,000 and $55,000, for units on the residue lands by reason of development of the acquired lands with resort facilities are disproportionately high compared with the difference in value of $20,000 that he ascribes to the same sized units with and without water views. For example, Mr Viarella considered that a three bedroom apartment with water views would have commanded a premium of $50,000 in the before situation compared with the after situation; whereas three bedroom apartment with water views in both the before and after situations commanded only a premium of $20,000 over a three bedroom apartment without water views in both the before and after situations. Mr Viarella was cross-examined on this point, but stood his ground. A difficulty with the submission is that the respondent's valuer did not dispute Mr Viarella's values or proportions in relation to units with and without views. That is not conclusive, but it is sufficient to incline me against discounting Mr Viarella's assessment on account of this argument alone. However, when I combine it with the respondent's final quantum submission I am persuaded that a further discount is appropriate.

51 The respondent's final submission is that real doubt arises as to the quantum of Mr Viarella's valuation of the acquired lands at a little over $1 million when it is compared with his valuation of a little over $1.5 million for the parent lands before acquisition on his residual land value analysis: see [23] above. The point seems to have substance. If there is an answer, it was not effectively communicated by Mr Viarella when cross-examined on the point, nor by the applicants in submissions. It fortifies my conclusion that there should be discounts totalling 20 per cent for the matters the subject of the applicants' first and second quantum submissions: see [46] and [47] above. Further, it suggests that there should be an additional discount in order to approach an apparently more realistic proportion between the value of the acquired lands and the value of the parent lands. Doing the best I can in the absence of direct expert evidence, I would allow a further 10 per cent discount.

52 The total of the discounts arising from the respondent's quantum submissions is therefore 30 per cent. Accordingly, I discount Mr Viarella's valuation assessment of $1,080,000 by 30 per cent to $756,000.

53 For these reasons, in my opinion, compensation under s 55(a) and (f) of the Just Terms Act should be determined in the amount of $756,000. No evidence was tendered or submissions made in support of the disturbance claim under s 55(d), no disturbance items have been agreed and no order has been sought or made for the disturbance claim to be determined separately. Disturbance claims should normally be dealt with at the same time as other claims in the proceedings.

54 The orders of the Court in each matter are as follows:

1. within three working days the parties are to bring in agreed or competing minutes of orders to reflect the Court's determination that the amount of compensation to which the applicants are collectively entitled in the three proceedings is $756,000. The minutes are to provide for the allocation of this sum among the applicants;

2. unless disturbance costs are also agreed and provided for in the said minutes of orders, or unless a notice of motion for disturbance costs to be determined separately is filed and served with supporting affidavit evidence within three working days and granted, the disturbance claim will be dismissed without further order;

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.