Keller and Keller v Blacktown City Council

The Acquired Land as at the date of acquisition

1. As at the date of acquisition, the Acquired Land was a rectangular-shaped area of approximately 970m², with a frontage of approximatively 17.68m to Bligh Street on its north-eastern boundary.
2. The Acquired Land is located on the western side of Bligh Street, approximatively 85m north of the intersection with Cranbourne Street, and is surrounded by other vacant lots. It is in the Blacktown Local Government Area and in the Riverstone Precinct as delineated in the State Environmental Planning Policy (Sydney Region Growth Centres) 2006 ('Growth Centres SEPP').
3. The Acquired Land was and remains vacant, grass-covered, and generally cleared. It slopes gently downwards from the front towards the rear boundary and drains towards a second order watercourse located approximatively 10 to 15m to the southwest of its rear boundary. For this reason, and as will be discussed later, the Acquired Land has been identified as "Flood Prone and Major Creeks Land" on the Development Control Map which forms part of the Growth Centres SEPP.
4. Below is an extract of the Growth Centres SEPP zoning map at the date of acquisition showing the Acquired Land and its surrounds. For clarity, and to provide perspective to the zoning map, an aerial photograph of the area dated 5 June 2021 is shown on annexure "A" to this judgment.

Key planning controls

1. The key planning controls applicable to the Acquired Land as at the date of acquisition and relied upon by the parties are briefly described below.
2. Prior to April 2010, the Acquired Land had been zoned "Rural 1(a)" under the then applicable Blacktown Local Environmental Plan 1988 ('Blacktown LEP 1988'). The precinct was subsequently rezoned by the State Environmental Planning Policy (Sydney Region Growth Centres) Amendment (Alex Avenue and Riverstone Precincts) 2010. The Acquired Land has since been zoned "SP2 Infrastructure" and marked "Local Drainage" ('SP2') pursuant to Appendix 4 Alex Avenue and Riverstone Precinct Plan 2010 of the Growth Centres SEPP, with the lots immediately to the south of the Acquired Land also zoned SP2. Beyond these parcels of land, much of the surrounding land is zoned "R2 Low Density Residential" ('R2').
3. The Acquired Land was (and continues to be) subject to the provisions of the Blacktown City Council Growth Centre Precincts Development Control Plan 2010 ('Blacktown DCP'), and to the Growth Centres SEPP.
4. Save for a narrow corridor along its Bligh Street frontage, much of the Acquired Land had been identified in flood mapping undertaken in 2008 as "Flood Prone and Major Creeks Land" on the Development Control Map under the Growth Centres SEPP. However, in a subsequent 2014 flood study it was found to be less flood-affected than originally indicated on the Development Control Map.
5. The Acquired Land was partly identified as a "Vegetation retention area" on the Native Vegetation Protection Map referred to in the Growth Centres SEPP and marked as "non-certified" on the map issued by the Minister assisting the Minister for Climate Change, Environment and Water pursuant to s 126G of the then Threatened Species Conservation Act 1995 (NSW) ('TSC Act') which otherwise conferred biodiversity certification on the Growth Centres SEPP for the purposes of the TSC Act.
6. The Acquired Land was partly identified as having an "Environmental Protection Overlay" on the Indicative Layout Plan for the Riverstone Precinct ('ILP') contained in the Blacktown City Council Growth Centre Precincts Development Control Plan 2010 ('Growth Centre DCP').

Evidence

1. In a hearing extending over four days, the Court received extensive documentary and oral evidence, including expert evidence in the areas of hydrological, town planning, and valuation. The applicants relied upon the hydrological evidence of Scott Button; the town planning evidence of Nick Juradowitch; and the valuation evidence of David Bird. Council relied upon the hydrological evidence of Grant Harlow; the town planning evidence of Robert Chambers; and the valuation evidence of Grahame Hollinshead.
2. The applicants also read the affidavit of Kristofer Daniel Keller sworn 9 May 2022 who deposed to the fact that the applicants were the registered proprietors of the Acquired Land from June 1999 up until the date of acquisition.
3. The Court undertook a site view of the Acquired Land, the surrounding area, and a number of comparable sales relied upon in the valuation evidence. I was assisted in hearing the proceedings by Acting Commissioner Targett in accordance with s 37 of the Land and Environment Court Act 1979 (NSW).

Statutory valuation task

1. The relevant statutory provisions and the legal principles governing the assessment of compensation for compulsory acquisition of land are well-known and can be briefly summarised.
2. Section 54 of the Just Terms Act sets out the amount of compensation to which a person whose land has been compulsorily acquired is entitled, as follows: (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. …
3. Section 55 of the Just Terms Act sets out the matters to be considered when determining the amount of compensation, including: 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, …
4. Insofar as the parties agree that the loss attributable to disturbance amounts to $550, the essential matter for determination in these proceedings is the market value of the Acquired Land as at the date of acquisition.
5. Relevantly, s 56 of the Just Terms Act defines "market value" 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 …
6. As will become clear, the disregard of the "public purpose" raises an issue in relation to the determination of what zoning would have applied to the Acquired Land but for the public purpose, with the applicants contending for an underlying residential zoning (being 'R2') and Council contending for an environmental zoning (being 'part E2 Environmental Conservation and part E4 Environmental Living'). The determination of the underlying zoning in turn affects my assessment of market value.
7. The statutory definition of market value reflects the hypothetical transaction described by the High Court in Spencer v The Commonwealth of Australia (1907) 5 CLR 418 at 432 ('Spencer'); [1907] HCA 82, where Griffith CJ described the question for the Court as "[w]hat would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?", and further indicated that the process required the Court to consider: "…the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it…"
8. This illustrates that the statutory task the Court is to undertake, acting as the "judicial valuer", is not to objectively determine the market value of the Acquired Land, but rather to determine the terms of a hypothetical transaction that would occur between a hypothetical purchaser and a hypothetical vendor of the Acquired Land at the date of acquisition: Apokis v Transport for NSW (2020) 101 NSWLR 844; [2020] NSWCA 39 ('Apokis') at [44].

State of knowledge

1. The extent of knowledge that can be attributed to the hypothetical parties when determining the terms of that transaction was adverted to by the High Court in Spencer, where Isaacs J at 441 indicated that the Court: "…must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property."
2. Although doubts have been raised as to the appropriateness of the phrase "perfectly acquainted" following cases such as Apokis at [36]-[48] and ISPT Pty Ltd v Valuer General [2009] NSWCA 31; (2009) 165 LGERA 25 at [4], and noting the need to focus on the statutory language of the Just Terms Act (Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 at [47]), I accept the above description.

Highest and best use

1. When assessing market value under s 56 of the Just Terms Act, the Court must consider the "highest and best use" of the land at the date of acquisition. While not appearing in the text of s 56, the phrase "highest and best use" has been incorporated by reference to the terms on which the hypothetical transaction would occur, being, "…the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted": Spencer at 440-441 (Isaacs J).

Onus

1. The onus lies on a claim to establish their case for compensation: Roads and Traffic Authority of New South Wales v Perry (2001) 52 NSWLR 222; [2001] NSWCA 251 at [67].
2. I remain cognisant of the above matters in my consideration of the issues in these proceedings.

Summary of issues

1. As a result of joint conferencing between the various experts engaged in these proceedings, some narrowing of the issues was achieved. Although the parties agree that compensation for the acquisition of the Acquired Land is to be determined in accordance with the Just Terms Act, and that the comparable sales methodology is to be adopted to determine market value, the parties disagree about a number of issues which impact the resulting amount of compensation they claim is appropriate. In these circumstances the following (somewhat overlapping) matters require consideration of: 1. the characterisation and scope of the "public purpose" which must be disregarded pursuant to s 56(1)(a) of the Just Terms Act; 2. the zoning of the Acquired Land at the date of acquisition absent the determined scope of the public purpose; 3. the highest and best use of the Acquired Land at the date of acquisition having regard to the underlying zoning; and 4. the determination and analysis of sales to be relied on using the comparable sales methodology to derive the market value.

Statutory context

1. Although the parties agree that the SP2 zoning was occasioned by the public purpose and therefore must be disregarded in accordance with s 56(1)(a) of the Just Terms Act (noted at [23] above), there is disagreement as to the actual scope (and characterisation) of the public purpose which determines what must be disregarded in determining the underlying zoning of the Acquired Land.

Applicants' position

1. The applicants' primary position is that the public purpose is confined to the provision of trunk drainage by Council at the very location of the Acquired Land or in its vicinity and that only this (localised) element is required to be disregarded pursuant to s 56(1)(a) of the Just Terms Act. On this basis, the surrounding urban rezoning (to R2) of much of the Riverstone Precinct in 2010 should not be taken into account in ascertaining the underlying zoning (and thereafter the highest and best use) of the Acquired Land.
2. Alternatively, the applicants contended in final oral submissions that the precise characterisation of the public purpose is not determinative of their case because, even if the zoning of the Acquired Land is held to be "environmental", the land could in any event be rezoned R2 and/or the "[d]evelopment near zone boundaries" provisions under cl 5.3 of Appendix 4 to the Growth Centres SEPP could be relied upon to permit residential development on the Acquired Land.
3. Simply stated, the applicants maintain that in the absence of a publicly provided trunk drainage system in the location of the Acquired Land or its vicinity, drainage to support residential development of the Riverstone Precinct could and would have been provided either in a different location (that is, upstream or downstream of the Acquired Land) or by different means (for example, by way of a private developer) which could otherwise facilitate an R2 rezoning of the Acquired Land.
4. The applicants rely in this regard on the evidence provided by Mr Juradowitch in his town planning report (annexure "B" to his affidavit sworn 30 May 2023) that: "The surrounding land around the SP2 Zone is zoned R2 Low Density Residential and has many characteristics similar to the subject land. In my opinion, absent the public purpose, the most likely underlying zoning of the subject land at the date of acquisition is R2 - Low Density Residential."
5. As I understand the applicants' position, the Riverstone Precinct (or area surrounding the Acquired Land in general) would have been released for urban development at some stage prior to the date of acquisition regardless of the public purpose (however characterised) and, as such, it is irrelevant whether the public purpose is characterised as including the residential rezoning of the surrounding lands or not.

Council's position

1. Council maintains that the public purpose for which the land was acquired is uncontroversially related to the provision of a trunk stormwater drainage system to accommodate increased stormwater discharge from new urban development occurring upstream of the detention basin system.
2. Council submits that the fact that the "surrounding land" had been zoned R2 is, at least in part, a consequence of the public purpose (in providing drainage infrastructure to facilitate such zoning). It emphasises that the applicants must therefore prove that, absent the public purpose, the Minister would nevertheless have gone ahead with the rezoning, and when doing so, would have included the Acquired Land in the R2 zone, or alternatively that the Acquired Land would have been rezoned R2 by some other means.
3. Addressing these hypotheses, Council submits that there is no prospect that the Minister would have undertaken the rezoning allowing large areas of land, including the Acquired Land, to be used for urban purposes absent a precinct-wide scheme dealing with the consequential increase in runoff and existing flood issues (that is, the public purpose). Further, Council emphasises that the town planners agree that while the demand for land might have resulted in a drainage initiative of some sort, it would have required a larger amount of land than just the Acquired Land.
4. Council also submits that the Court could not conclude that any alternate zoning would not also have identified the Acquired Land as being required for a similar trunk drainage purpose and, as such, that this would not result in any material change to the correct approach to valuation.

Findings

1. There is an overlap between the first two issues identified at [32]. It is clear that the correct approach to the statutory disregard required by s 56(1)(a) of the Just Terms Act is, having identified the zoning of the Acquired Land at the date of acquisition, to determine whether the imposition of that zoning was part of the carrying out of the public purpose (or the proposal thereto) for which the Acquired Land was acquired, and, if so, notionally setting aside that zoning and the potential of the Acquired Land.
2. Ultimately, the market value of the Acquired Land is to be determined in accordance with what and how the land would have been zoned as at the date of acquisition. As such, it is first necessary to determine the scope and character of the public purpose in order to appropriately disregard that public purpose (once characterised) to assess the market value of the Acquired Land as required by s 56(1)(a) of the Just Terms Act.
3. The applicants submit that a narrow characterisation of the public purpose should be preferred limiting it to the provision of trunk drainage by Council in the location of the Acquired Land or in its vicinity. Council conversely submits that a broader characterisation of the public purpose should be preferred whereby the public purpose includes a trunk stormwater drainage system to accommodate increased stormwater discharge from new urban development occurring upstream of the detention basin, such that the urban (residential) rezoning of the surrounding land in 2010 also forms part of the public purpose to be disregarded.
4. I am conscious that it is not just the zoning of the Acquired Land that must be set aside and that, in disregarding the blight(s) caused by the process of acquisition, the Court must also disregard its effect on other land. Although not without some caution, I accept the applicants' narrower characterisation of the public purpose (and, as considered later in this judgment, find that but for the public purpose, there was a prospect that the Acquired Land would have been zoned R2) for the following reasons: 1. The applicants' characterisation of the public purpose is consistent with the evidence of both town planners that the Acquired Land and the general surrounding area would have been rezoned from rural zonings to more urban zonings and would have likely been rezoned residential absent the provision of a trunk drainage system at this location. Although Mr Chambers maintains his view as to a likely environmental zoning absent the public purpose, he accepts that trunk drainage could be provided privately and that despite his concern that there might be a requirement for retention of riparian corridors he anticipates "a shift from rural to more urban zonings" with a significant residential component (Tcpt, 1 August 2023, p 119(31-36)). 2. The town planners agree (albeit again with some reservation from Mr Chambers) that the trunk drainage system could be located in a different location and/or via a different means. 3. Mr Chambers does not appear to disregard the residential zoning of the surrounding land and, in fact, states that the Acquired Land would have been zoned residential were it not for its flooding affectation as indicated on the Development Control Map under the Growth Centres SEPP. This is clear from Mr Chambers' statement in the Joint Town Planning Report dated 6 July 2023 that: "If the Acquired Land had a greater area outside of the identified flood-affected land shown on the map in Annexure B then the part identified as being flood-free would be zoned R2 Low Density Residential. …" 1. In accepting the applicants' narrower characterisation, I have closely considered the further town planning and hydrological evidence noted later in this judgment, more particularly in relation to factors that have been considered relevant to the actual determination of the zoning (including planning and other likely constraints). In addition, and although not determinative of this discrete issue, it is clear that the second order watercourse is not itself on the Acquired Land (although, as considered later in this judgment, it is clear that part of the Acquired Land is flood-affected). In this regard, I give weight to Mr Juradowitch's evidence that the second order watercourse would not require a substantial riparian area, a conclusion that is supported by the hydrological experts. 2. I accept Mr Juradowitch's evidence that if the public purpose trunk drainage system is set aside, an alternative means of dealing with the need for increased stormwater infrastructure in the catchment would be necessary. I also accept that this would require, for example, provision of onsite stormwater detention on any land that is to be residentially developed and that the Acquired Land, absent the public purpose, has ample capacity to provide for such works. Mr Juradowitch also maintains 3. Even if the specific R2 zoning of the immediately surrounding land was disregarded, I find that the evidence is compelling that there would be movement towards residential zoning and that the "constraints" otherwise raised are not such as to militate against residential development (and consequential zoning) of the Acquired Land.
5. The public purpose can therefore be characterised as a publicly provided trunk drainage system at this location or in its vicinity. The effect of this finding is that, to the extent necessary, the residential rezoning of the surrounding land in the Riverstone Precinct in 2010 is not required to be disregarded under s 56(1)(a) of the Just Terms Act in determining the zoning and the highest and best use of the Acquired Land absent the public purpose.

Zoning of the Acquired Land absent the public purpose

Applicants' position

1. The applicants maintain that, disregarding the public purpose, the Acquired Land would have been zoned R2 as at the date of acquisition. The applicants' town planner, Mr Juradowitch approached the question of determining the underlying zoning in a tripartite manner requiring consideration of, first, the zoning and context of adjoining and nearby land; second, the characteristics of the Acquired Land, including development constraints and opportunities; and third, the circumstances of the case.
2. By reference to Mr Juradowitch's evidence, the applicants submit that much of the land surrounding the SP2 zone is zoned R2 and share many characteristics with the Acquired Land.
3. The applicants submit that the environmental designations attaching to the Acquired Land, including, first, its lack of biodiversity certification; second, its partial mapping as vegetation retention area; and third, its identification as environmental protection overlay, are a result of, or tied to, the public purpose and should therefore be disregarded under s 56(1)(a) of the Just Terms Act. In the alternative, the applicants submit that these designations would not preclude an R2 zoning and subsequent residential development on the Acquired Land, given the lack of existing native vegetation on, or ecological significance of, the Acquired Land.
4. In relation to the lack of biodiversity certification under the TSC Act, the applicants submit that: 1. The Acquired Land was previously "bio certified", and Mr Juradowitch's evidence was that "nothing in respect of the Land changed between certification and non-certification, other than the fact that public purpose zoning (SP2) was applied to it." 2. The town planning experts appear to agree that zoning dictates the biodiversity certification status of land and not the other way around. In this regard, the applicants rely on the following statement of Mr Juradowitch and Mr Chambers in the Joint Town Planning Report: "We agree that, within the North West Growth Centre, biodiversity non-certified land is land generally excluded, via zoning, from development for residential, commercial and industrial purposes. For example, where land has been zoned residential that land is also biodiversity certified." 1. The lack of biodiversity certification is not a bar to residential development, but simply requires an ecological study to be conducted prior to any development being approved. 2. To this effect, the Court should prefer Mr Juradowitch's evidence that: "Even in the unlikely event that the Acquired Land remained excluded from biodiversity certification absent the public purpose, the existing grassland vegetation on the Acquired Land is not of biodiversity significance and would not preclude an underlying R2 Zone…"
5. In relation to the partial native vegetation retention mapping, the applicants submit that: 1. It is agreed between the parties that the Acquired Land was not mapped as containing any existing native vegetation under the Growth Centres SEPP. 2. Mr Juradowitch opines that the vegetation retention mapping under the Growth Centres SEPP and the Environmental Protection Overlay identified on the ILP were generally located on land zoned for drainage, public open space or land containing a substantial cover of native trees. As the Acquired Land did not contain any trees, the applicants submit that the vegetation retention area mapping (and environmental protection overlay) followed the zoning, rather than the other way around, and should be disregarded in determining the underlying zoning of the Acquired Land. 3. In any event, cl 6.4 of Appendix 4 of the Growth Centres SEPP (which seeks to prevent clearing of certain native vegetation) nevertheless provided a pathway for clearing native vegetation on land identified within a vegetation retention area identified by the Native Vegetation Retention Map having regard to the objectives of development in the relevant zone. As such, it would be inappropriate to assign an underlying environmental zoning to the Acquired Land, being E2 Environmental Conservation ('E2'), as there was no existing native vegetation on the Acquired Land to "conserve", "protect" or "manage" (being relevant objectives of the E2 zone). 4. Mr Juradowitch further asserts that there were a number of examples of areas identified as existing native vegetation that were zoned R2 and stated that native vegetation retention areas are not located on land zoned R2. 5. Mr Juradowitch also asserts that there are examples of land in close proximity (on the same street) as the Acquired Land with the same watercourse actually traversing the land and are nevertheless zoned R2 in their entirety (Tcpt, 31 July 2023, p 70 (31-39)).
6. The applicants accept that the identification of approximately 90% of the Acquired Land as "Flood Prone and Major Creeks Land" on the Development Control Map under the Growth Centres SEPP, which the town planning experts agree was informed by the flood study undertaken by GHD in 2008, should not be disregarded in determining the zoning in the absence of the public purpose. However, they submit that it would not have, in any event, prohibited a residential zoning of the Acquired Land for three reasons. First, the land identified as flood prone on the Development Control Map is subject to cl 19 of the Growth Centres SEPP which does not prevent development on land so identified; second, other surrounding land in the Riverstone Precinct also mapped as being flood liable had nevertheless been zoned residential under the Growth Centres SEPP (as is evidenced by the overlay of the flood mapping in the Development Control Map and zoning map under the Growth Centres SEPP (prepared by Mr Juradowitch and annexed as annexure "G" to the Joint Town Planning Report); and third, the Riverstone Precinct Plan (Appendix 4 of the Growth Centres SEPP) does not make any provision for, or include an E4 Environmental Living zone.

Council's position

1. Council submits that, absent the public purpose, the Acquired Land would have been zoned part E2 Environmental Conservation and part E4 Environmental Living.
2. Council submits that an E2 zone would apply to that part of the Acquired Land which was, first, mapped as having an environmental protection overlay (that is, comprising a riparian corridor) on the ILP; second, mapped as being a vegetation retention area under the Growth Centres SEPP; and third, not biodiversity certified under the then TSC Act. The remainder (being the front Bligh Street section) of the Acquired Land would be zoned E4 on the basis of its flood liability.
3. In relation to the (part) E2 zoning, Council points to the evidence of Mr Chambers that the native vegetation retention area identified under the Growth Centres SEPP was imposed as a result of the environmental protection overlay in the ILP which was in turn informed by the riparian corridor associated with the second order watercourse adjacent to the Acquired Land. Mr Chambers indicated that the E2 zoning would be suitable to land in a "riparian corridor" and calculated that area to be 375m².
4. Council submits that the applicants' argument that the native vegetation protection mapping results from the SP2 zoning (and therefore should be disregarded) is flawed on the basis that, if all SP2 land was no longer set aside for the additional purpose of vegetation retention, then that would trigger a need for a revision of the whole rezoning to make provision in relation to other land for native vegetation retention so as to achieve biodiversity certification.
5. Council submits that the lack of certification is in fact a development constraint because it triggers a requirement for a developer to obtain an ecological assessment upon filing a development application.
6. Council points to the evidence of Mr Juradowitch during cross-examination that he was "not violently opposed to the concept that [an] E2 zone might have extended further up to the back of the subject land" (Tcpt, 1 August 2023, p 127(6-8)). In addition, Council asserted that Mr Juradowitch's reasoning for not adopting that E2 zoning, namely that nearby (developed) land had in fact piped the watercourse which indicated that the watercourse had very little environmental significance, was incidental to the public purpose, and should be disregarded.
7. On the basis of Mr Chambers' evidence that his suggested (part) E4 zone was based upon the flood mapping set out in the Development Control Map under the Growth Centres SEPP, Council further submits that the front Bligh Street section of the Acquired Land would have been zoned E4 on the basis of its flood liability as it was understood in 2010 (informed by the flood mapping study undertaken in 2008). Further, the applicants' proposition that flood liability does not prevent development is both an overgeneralisation and irrelevant to the enquiry into the most appropriate zoning (to be contrasted with consideration of what development might be granted consent).
8. In summary, and simply stated, the applicants' position is that there is a correlation between land mapped as vegetation retention area and land zoned SP2 such that the native vegetation protection mapping is tied to the public purpose and should be disregarded. Council's position is that there is a correlation between land mapped as existing native vegetation and native vegetation retention, and land zoned E2 (such that the native vegetation protection mapping is not tied to the public purpose and should be considered).

Findings

1. Dealing first with issues raised in relation to biodiversity certification, I am satisfied, based on the evidence of the town planners, that biodiversity certification followed zoning, rather than informed zoning, and that the Acquired Land's lack of biodiversity certification was occasioned by the public purpose and should be disregarded. This is evident from the following passage from the Joint Town Planning Report: "We agree that, within the North West Growth Centre, biodiversity non-certified land is generally excluded, via zoning, from development for residential, commercial and industrial purposes. …where land has been zoned residential that land is also biodiversity certified."
2. Further, noting that the Acquired Land had previously been biodiversity certified (a fact with which both Mr Juradowitch and Mr Chambers agree), I accept the applicants' submission that there was no obvious reason for the change in certification other than the zoning of the Acquired Land to SP2 in 2010.
3. Having regard to the submissions and evidence, it is clear that an E2 zoning would have been appropriate in relation to land mapped as containing, or being in proximity to, land identified as containing existing native vegetation. It is less clear whether land identified as being for native vegetation retention that was not in proximity to any existing native vegetation would have been similarly zoned E2 in the absence of the public purpose. To this end, I note the Acquired Land was not in proximity to land identified as containing existing native vegetation on the Protected Vegetation Map under the Growth Centres SEPP. As considered later in this judgment, I also consider that flood affectation is not a matter that appears to be relevant to the objectives of either the E2 or E4 zones (noting that there is no provision for an E4 zone in the Riverstone Precinct Plan).
4. Although Mr Chambers states in the Joint Town Planning Report that the "E2 Environmental Conservation zone is a suitable zone to apply to land in a riparian corridor", and Mr Juradowitch opines that he was "not violently opposed" to the E2 zoning extending "further up to the back of the subject land", the question is not what could be suitable, but rather what zoning would have been applied to the Acquired Land absent the public purpose.
5. On balance, I find that the zoning of that part of the land mapped as native vegetation retention under the Growth Centres SEPP would have been zoned R2 absent the public purpose. My reasons, which generally accept the applicants' position as noted at [49]-[53] above, may be shortly stated.
6. First, as noted above, the Acquired Land was not mapped as containing any existing native vegetation and was not in close proximity to other land mapped as containing existing native vegetation, noting that much of the land zoned E2 in the North West Growth Centre appears to be mapped as containing (or proximate to) existing native vegetation.
7. Secondly, the Acquired Land would have been biodiversity certified absent the public purpose.
8. Thirdly, the objectives of the E2 zone are, relevantly, "to protect, manage and restore areas of high ecological, scientific, cultural or aesthetic values", and I find that, on the evidence before the Court, the Acquired Land did not contain any area that could be so characterised.
9. Fourthly, the examples of land in close proximity (indeed on the same street) and traversed by the same watercourse being zoned R2 is persuasive in the Court not favouring Mr Chambers' assertion that the riparian corridor arising from the adjacent second order watercourse would have dictated the E2 zoning of the Acquired Land.
10. Further, apart from the above findings, and accepting Mr Juradowitch's evidence in the Joint Town Planning Report that native vegetation retention mapping was "not located on land zoned for residential development" (which was not relevantly disputed by Mr Chambers), I am satisfied that the native vegetation retention mapping relating to the Acquired Land followed, and was as a result of, the public purpose, and should be disregarded under s 56(1)(a) of the Just Terms Act.
11. For completeness, I will now consider that part of the Acquired Land which Council asserts would have been zoned E4 in the absence of the public purpose.
12. Whilst repetitive, for clarity, it was the applicants' position that having regard to the residential context of the Acquired Land and comparing its characteristics to that of other residentially zoned land, the Acquired Land would have been zoned R2 in its entirety. Conversely, it was Council's position that insofar as much of the Acquired Land was mapped as flood prone on the Development Control Map in the Growth Centres SEPP in 2010, that portion of the Acquired Land (being the front Bligh Street section) would have been zoned E4 absent the public purpose. I am however of the view that the balance of the Acquired Land would also have been zoned R2 absent the public purpose. Again, my reasons can be shortly stated.
13. Apart from my findings above, I consider the "overlay" plan prepared by Mr Juradowitch (annexure "G" to the Joint Town Planning Report), which shows that other land in the Riverstone Precinct also mapped as being flood prone had nevertheless been zoned R2, to be persuasive. In addition, the fact that the Riverstone Precinct Plan itself (in Appendix 4 to the Growth Centres SEPP), does not make provision for an "E4 Environmental Living" zone despite the presence of flood prone land in the precinct is similarly compelling to displace Mr Chambers' assertion that land mapped as flood prone must necessarily be zoned E4.
14. Finally, land identified as flood prone on the Development Control Map is subject to cl 19 of the Growth Centres SEPP which, although providing additional matters for consideration when granting development consent for development to be carried out on flood prone land, does not prevent development on land so identified. This provision further indicates that residential development is contemplated on flood prone land in the Riverstone Precinct such that an R2 zoning appears to be appropriate.
15. In addition, and although not determinative in my reasoning, I have also considered the fact that the objectives of the E4 zone (referenced from the Schofields Precinct by Mr Chambers as they are not included in the Riverstone Precinct) are, relevantly, "to provide for low-impact residential development in areas with special ecological, scientific or aesthetic values". Again, in circumstances where the Acquired Land does not, on the evidence, have any special ecological, scientific or aesthetic value, and in conjunction with the above reasons, I consider an R2 zoning to be much more likely absent the public purpose.
16. I remain conscious that the question in this case is what zoning would have applied to the Acquired Land absent the public purpose having regard to its specific characteristics and context, and that this issue is not concerned with determining the underlying zoning of all land zoned SP2 in the Riverstone Precinct. With this focus in mind, for the reasons above, I am satisfied that the applicants have established that the zoning of the Acquired Land absent the public purpose would have been R2.
17. On the basis of this finding, it is not necessary to consider the applicants' alternative submissions that, if the zoning of the Acquired Land was held to be part E2 Environmental Conservation and part E4 Environmental Living as per Council's case, the Acquired Land could have, first, been rezoned R2 in any event; or, second, utilised the "development near zone boundaries" provisions under cl 5.3 of Appendix 4 to the Growth Centres SEPP to permit residential development on the Acquired Land.

Highest and best use of the Acquired Land absent the public purpose.

1. Conscious that the valuers have jointly approached their task on the basis that if the underlying zoning was R2, the Acquired Land had the potential for two dwellings to be constructed, I now only briefly consider the highest and best use of the Acquired Land on the basis of an underlying R2 zoning.
2. The concept of "highest and best use" is set out above at [29]. As recorded earlier, the Court received detailed expert evidence in the areas of hydrological, town planning, and valuation in relation to this issue. Although the parties ultimately agreed on the highest and best use, and noting the valuers undertook their task without discrete reliance upon the hydrological evidence, some further understanding of the background evidence is helpful.
3. In relation to the extent of flooding impact on the Acquired Land and addressing any requirement for a riparian corridor that could constrain development potential, the hydrological experts in their Joint Hydrological Report dated 5 July 2023 relevantly agreed that: 1. The publicly available flood mapping for the Acquired Land, being the GHD 2008 mapping (which is also the Growth Centres SEPP mapping) and the CSS 2014 mapping, "both had accuracy issues in defining the actual flood liability on the site at the time of acquisition"; 2. Subject to matters noted below, there was a need to provide a riparian corridor offset in the form of a vegetation riparian zone when considering the development potential of the Acquired Land covering an area assessed to measure between 202m² and 228m²; 3. Absent the area for native vegetation retention, there is potential for development of the Acquired Land external to the vegetation riparian zone, provided flood related impacts are managed; and 4. While part of the Acquired Land to be developed for residential purposes would need to be filled to an elevation to meet Blacktown City Council's building requirements (which is a minimum of 500mm above the peak 1% AEP flood level), and that some volume of floodplain storage would need to be recaptured, this would involve only "modest reshaping of natural surface levels".
4. For completeness, I note that Mr Button revised his views in a subsequent hydrological report dated 21 July 2023, following review of certain material produced under a notice to produce (which included an "Existing Native Vegetation" map within the Riverstone Precinct showing that there was no existing native vegetation burdening the Acquired Land) such that it would be reasonable to conclude that there would be no need for a vegetation riparian zone.
5. Turning now to town planning considerations. The town planners had different views about whether development would be approved in the riparian corridor related to the adjoining second order watercourse and whether this would impact upon the development potential of the Acquired Land. It was Mr Chambers' view that no development would be approved within the native vegetation retention area (as well as the vegetarian riparian zone area (earlier) opined by the hydrological experts in the Joint Hydrological Report). Mr Juradowitch's view on the other hand was primarily informed by development approved on nearby properties with comparable proximity to the same second order watercourse which were not subject to a requirement for a vegetation riparian zone.
6. However, and although there was hydrological evidence on this issue, the parties ultimately agreed on the highest and best use of the Acquired Land such that a more detailed consideration of the town planning and hydrological evidence is not required.

Parties' agreed position

1. In the event that the Court determined that the zoning of the Acquired Land absent the public purpose is R2, the valuation experts accept that the market value of the Acquired Land should be assessed on the basis that there is potential for two dwellings to be constructed on the Acquired Land. Interestingly, the potential development constraints alleged to affect the Acquired Land by Council, including its non-biodiversity certification, native vegetation retention, and the environmental overlay considered above, were not ultimately relied upon by either valuer in determining the highest and best use of the Acquired Land, and subsequently, market value. As Council's counsel stated in submissions (Tcpt, 31 July 2023, p 12(12-20)): "Our valuer does not make any adjustment for any of the three things [he] identified: the native vegetation and environmental overlay or biodiversity. I think both valuers effectively treat the subject land as identical to the two blocks which are further north, one which is only one property away and the other one next to that. And that really - the only issue, as I read it, between them on that is how to adjust for time."
2. On the basis of the evidence provided in this matter, and accepting the agreed approach by the valuers in this regard, I therefore find that the highest and best use of the Acquired Land, as at the date of acquisition, is for the development of two dwellings.

Market value of the Acquired Land

1. I now turn to my consideration of the valuation evidence. In doing so, I rely on my above finding in relation to the town planning matters, and therefore disregard any valuation evidence predicated on an environmental underlying zoning.
2. Assuming a residential underlying zoning, the valuers agree that the direct comparison method of valuation is the most appropriate to be adopted and that the market value of the Acquired Land falls to be assessed on the basis that two dwellings could be constructed thereon. While each valuer has considered a number of other sales (as considered later in this judgment), they agree that the most relevant sales for present purposes relate to two properties in close proximity to to the Acquired Land, namely: 1. Lot 27 Bligh Street, Riverstone ('Lot 27 Bligh') being one property removed from the Acquired Land which sold on 4 September 2020, 10 months before the date of acquisition, for $449,000, and again on 5 August 2022, 13 months after the date of acquisition, for $925,000; and 2. 2 Bligh Street, Riverstone ('2 Bligh') being a property adjoining Lot 27 Bligh which sold on 20 January 2023, 18.6 months after the date of acquisition, for $1,050,000. The location of these two properties and certain other sales considered by the valuers is shown on annexure "B" to this judgment.
3. The valuers also agree that these two properties have the same topography, flood affectation, street frontage level, access to services, site work cost and risk profile (including for example, filling and re-shaping), and similar density and development constraints as that of the Acquired Land.
4. In these circumstances, the primary difference between the valuers relates to the determination of the appropriate adjustment for time (and therefore market movement). This issue arises in circumstances where two of the three sales of these properties are 13 and 18.6 months after the date of acquisition. Each valuer took a different approach to adjust these sales for market movement.
5. Mr Bird adopts a "point-in-time" analysis of the growth and/or decline of the local property market between the dates of the sales of the comparable properties and the date of acquisition of the Acquired Land, from which he derives a market value of the Acquired Land of $950,000. Significantly, although Mr Bird relies upon the second sale of Lot 27 Bligh and the sale of 2 Bligh, he does not place weight on the first sale of Lot 27 Bligh (for $449,000) on 4 September 2020 on the basis that this sale appears to be considerably below market value and should therefore not be relied upon as market value evidence. This approach is not adopted by Mr Hollinshead.
6. Mr Bird's analysis of the growth and/or decline in the local property market is predicated upon his view that there has not been any substantial escalation of the property prices in the 13 months between July 2021 (the date of acquisition) and August 2022 (the date of the second sale of Lot 27 Bligh for $925,000) such that the sales of Lot 27 Bligh (13 months after the date of acquisition) and 2 Bligh (18.6 months after the date of acquisition) are appropriate comparators.
7. To support his (time adjustment) analysis, Mr Bird relies, albeit with some caution, on the CoreLogic Hedonic Home Value Index ('HVI statistics'), a market indicator of value trends which utilises a "hedonic" regression methodology using recent sales information, including data in relation to individual properties (such as number of bedrooms and bathrooms) and the geographical context of those properties, and provides broad analysis regarding housing value changes for the whole of the Sydney residential market. As will be seen, he also relies on a number of sales of smaller properties. In his valuation report (annexure "A" to his affidavit sworn 15 June 2023), Mr Bird states: "Statistically values had been declining since February 2022, and negative annual growth was reached in August 2022. The retrospective date of July 2021 was under strongly rising market conditions, well beyond the mid-way between the low point in October 2020 and peak at say end 2021. On this overall consideration, and also taking account of the improving and establishing nature of the new estate precinct surrounding and developing in this sector of Riverstone/Schofields, I would opine the contract price negotiated in August 2022 as also indicative of the value as at July 2021 as for analysis of this property as a directly comparable sale. That considers the overall market statistics rose from July 2021 to January 2022, then declined till past August 2022. My own view on the Riverstone vacant land market is that no real decline was evident post the peak, and values were in fact increasing August 2022 to Q1 2023, as evidenced by the following sale at Lot 2 Bligh Street."
8. Overall, Mr Bird's market value of $950,000 is determined by first, an overall analysis of the second sale of Lot 27 Bligh and the January 2023 sale of 2 Bligh; second, a deduced per square metre rate of $975 based upon a discount to those sale rates (rounded to $950,000); and third, a discount factor applied to a gross realisation as a two-lot subdivision.
9. Mr Hollinshead disagrees with Mr Bird's views, first, that no weight is to be placed on the September 2020 sale of Lot 27 Bligh; and second, that the August 2022 sale of Lot 27 Bligh (at $925,000), 13 months after the date of acquisition, does not require any downward adjustment to reflect market movements. He also disagrees with Mr Bird's opinion that the residential property market in Riverstone continued to grow from July 2021 to January 2022 and then declined from February 2022 to August 2022 with the effect that there has only been negligible growth between July 2021 and August 2022. He further indicates that, although statistical data services can be helpful, they must be used with caution in circumstances where that data (such as the HVI statistics relied upon by Mr Bird) includes a different segment of the market.
10. Mr Hollinshead opines that analysing a sale and resale of a directly comparable property (being Lot 27 Bligh) over a given period is the most direct and reliable approach to determine the rate at which the property market in a given location is strengthening or weakening.
11. As such, Mr Hollinshead maintains that the sale and resale of Lot 27 Bligh reflects a growth rate of 4.5% per month during the period from 4 September 2020 to 5 August 2022. Mr Hollinshead applies this growth rate to the September 2020 sale of Lot 27 Bligh (for $449,000) up to the date of acquisition of the Acquired Land and derives a time-adjusted sale price of $650,000.
12. Mr Hollinshead's approach included using statistical data as well as three "paired sales" (accounting for the sale and resale of discrete properties, being Lot 27 Bligh; 35 Brighton Street, Riverstone; and 19 Titania Street, Riverstone) to determine the rate at which the market was strengthening or weakening. As considered below, he also utilised sales of smaller lots and sales of land similar in size to the Acquired Land that also had potential for a two-dwelling development.
13. In relation to his per dwelling potential approach, and having considered three sales (2 Cirella Street, Riverstone; 2 Bligh; and Lot 27 Bligh) on the basis of their potential for two dwellings, Mr Hollinshead initially derived an adjusted range of $341,000 to $517,000 per dwelling. However, having given further consideration (adjusting for the close proximity of 2 Bligh and Lot 27 Bligh to the Acquired Land), he assigns a "headline" value of $350,000 per potential dwelling site within the Acquired Land. Using this approach, he ultimately derives a market value for the Acquired Land of $700,000.
14. Mr Hollinshead notes that, although he does not rely upon adjusting the second sale of Lot 27 Bligh, if he was to rely primarily upon that sale, it would be necessary to adjust that sale downwards for market movement, and that his time-adjusted sale price of $650,000 as at the date of acquisition (at [97] above) is equivalent to a downward adjustment of the 5 August 2022 sale price (at $925,000) by $275,000 which is the equivalent of a "backward adjustment" from August 2022 to July 2021 of −2% per month which he considers is comfortably supported by the available market data.
15. Using the CoreLogic statistics report (a service which depicts changes in the median sale price of houses on a month-to-month basis in Riverstone), Mr Hollinshead considers the changes in the median sale price in Riverstone - being $808,000 in July 2021 and $1,050,000 in August 2022 - and opines that applying a thereby deduced 23% downward adjustment to the 5 August 2022 sale of Lot 27 Bligh for $925,000 derives a value for the Acquired Land at the date of acquisition of $712,000, although he maintains in cross-examination (Tcpt, 1 August 2023, p 183(35-46)) that he reached his valuation opinion primarily upon "increasing the first sale" which he considers the "most appropriate method" and that he actually did not rely on "adjusting backwards" the August 2022 sale of Lot 27 Bligh.
16. Mr Hollinshead also relies upon the PriceFinder service (which provides statistical analysis of sales of vacant land in Riverstone) which he maintains depicts a steady increase in land prices of vacant residential land in Riverstone during 2020 and throughout 2023.
17. Addressing Mr Bird's reliance upon the HVI statistics, Mr Hollinshead clarifies that it is an indicator of value trends for residential property for the whole of Sydney and includes sales of both houses and strata units. However, because different parts of Sydney have different growth rates, he opines that it is unhelpful to rely on the HVI statistics to adjust a vacant parcel of land at Riverstone for market movement.
18. Apart from the agreed "most relevant" comparable sales noted above, each valuer considered a number of other sales. Mr Bird relies on nine sales of small vacant lots as secondary market evidence to establish a per dwelling site approach and to provide support for the August 2022 sale of Lot 27 Bligh and the January 2023 sale of 2 Bligh (and to cast doubt upon the reliability of the 4 September 2020 sale of Lot 27 Bligh). Those sales include: 6 Bligh Street, Riverstone (being 311m²); 35 Brighton Street, Riverstone (being 364m²); and 4, 6, 8, 12, 14, 19 and 26 Pettit Street, Riverstone (ranging in size from 250m² to 302m²) (collectively, the 'Bird Small Lot Sales'). These sales were transacted between March and October 2021. The location of these sales is shown on annexure "B" to this judgment. These sales were transacted between March and October 2021.
19. In relation to these sales, Mr Bird, noting the Acquired Land's potential as a two-lot side-by-side subdivision development, states in his valuation report: "I have provided relevant date comparable sales evidence which shows vacant land values for small residential lots in the immediate vicinity of $490,000-$665,000, all of lesser overall size (250 - 364 square metres) than one of these achievable subdivided lots, though with broader frontages. The expert planning report further states there would be no earthworks required to provide flood-free building platforms to the front half of the two sites. Thus with a combined gross realization land value of a two lot subdivision at a potential $1,200,000, and very few costs in achieving this, a value as arrived at in the above paragraph scenario is fully supported. … based upon a discount factor applied to a gross realization of land value as a two lot subdivision (say 20% on $1,200,000 = $960,000 - Adopt $950,000)."
20. In response to the evidence, Mr Hollinshead notes that the average price of the Bird Small Lot Sales is $530,000 and he similarly identifies a number of smaller land parcels sold during 2021 and 2022 including one sale at 14 Lincoln Street, Riverstone which sold for $580,000 in September 2022 and, three further sales at 4, 6 and 8 Lincoln Street, Riverstone, each of which sold for $490,000 in August 2021, which he considers indicates market growth circa 18.5% during the period August 2021 to September 2022.
21. Mr Hollinshead also identifies four sales of properties of similar size to the Acquired Land as being of relevance (albeit being sales of improved properties) being: 36 Hunter Street, Riverstone (being 948.5m²); 165 Garfield Road, East Riverstone (being 942m²); 51 Sydney Street, Riverstone (being 929.03m²); and 57 Sydney Street, Riverstone (being 929.03m²) ('Hollinshead Secondary Market Sales'). These sales were transacted between January and June 2021. Having analysed these sales, and deriving equivalent values between $656,812 to $702,954, Mr Hollinshead concludes that Mr Bird has significantly overstated the market value of the Acquired Land.
22. Mr Hollinshead states that this body of market evidence, after adjustment, indicates a market value range in the order of $660,000 to $700,000.

Applicants' position

1. Based on the opinion of Mr Bird, the applicants submit that minimal weight should be placed on the first sale of Lot 27 Bligh (on 4 September 2020 for $449,000) because first, it defines the bottom of the "Covid impacted market"; and second, it appears to be a below-market sale which is difficult to support on market value evidence.
2. The applicants submit that the point-in-time analysis approach adopted by Mr Bird reflects the dynamic nature of market movements whereas the linear approach adopted by Mr Hollinshead ignores or obscures the rise or fall in the market at any given point in time.
3. In final oral submissions, the applicants submit various "sanity checks" to support Mr Bird's approach to the determination of market value and his dismissal of the first sale of Lot 27 Bligh by directing the Court to various figures and evidence including the "Change in Median Price (Land)" (CoreLogic) table (in Mr Hollinshead's valuation report) and contend that the growth indicated by this table for the sale of vacant land between August 2022 (the date of the second sale of Lot 27 Bligh) and January 2023 (the date of the sale of 2 Bligh) amounts to a 2.19% increase in circumstances where Mr Bird applies a 5% deduction. Over the relevant period (from the first sale of Lot 27 Bligh in September 2020 to the second sale of Lot 27 Bligh in August 2022), the applicants submit that their "mathematical" analysis of the statistical data in the evidence shows that the growth rate was 38.53%. The applicants maintain that this contradicts Mr Hollinshead's adoption of a pro-rata growth rate of 106% for the same period relying on the paired sale analysis of the two sales of Lot 27 Bligh.
4. The applicants submit that this analysis of the "Change in Median Price (Land)" (CoreLogic) table indicates that a growth rate of 106% is clearly out of line with the market and would indicate that the first sale of Lot 27 Bligh should therefore be given little weight as it is not reflective of the market. The applicants accept that this mathematical analysis was not put to the witnesses but submit that it shows that the first sale of Lot 27 Bligh radically departs from the other statistics.
5. The applicants note two further "sanity checks" in Mr Bird's evidence to support his valuation. First, he applies a discount to his rate per square metre approach (to reflect his understanding of a need for a riparian zone on the Acquired Land) as derived from his analysis of the comparable sales upon which he relies (in the range of $1,100 - $1,200 per square metre) when he applies a reduced rate of 975m² to the Acquired Land. Second, Mr Bird undertakes a comparison of other sales on a per dwelling (potential) basis, noting that the single dwelling sites which he analysed (the Bird Small Lot Sales) are relevant to the two-dwelling potential that the experts agree is the highest and best use of the Acquired Land. The applicants emphasise the seven sales that Mr Bird relies upon in Pettit Street (part of the Bird Small Sales) which are temporally relevant, being close in time to the date of acquisition, as indicative of the reasonableness of Mr Bird's conclusion as to the market value. In particular, Mr Bird's calculations which derive a per dwelling range from $490,000 to $650,000, give a potential of $1.2 million to the Acquired Land, to which he applies a 20% discount to yield $960,000, and then adopts $950,000.
6. The applicants submit the above three matters indicate the reasonableness of Mr Bird in disregarding the first sale of Lot 27 Bligh and criticise Mr Hollinshead's reliance upon the median sales price (CoreLogic) statistics, his reliance upon, and use of, three paired sales (one of which is Lot 27 Bligh) and submit that he has not justified why he adopts an average strengthening of the market.
7. The applicants also submit that the Court would be cautious in relation to the first sale of Lot 27 Bligh because some issues arose in respect of the date of the sale, although the applicants also accept that the appropriate date of the sale was resolved by the experts during the hearing.
8. Finally, the applicants submit that even if the Court, in weighing up the evidence, came to the conclusion that neither of the respective approaches of Mr Bird and Mr Hollingshead discloses any matter which requires rejection, the Court would apply the principle of a liberal estimate in favour of the applicants as dispossessed owners, and would adopt Mr Bird's determination of market value.

Council's position

1. Council maintains that the valuation exercise must be undertaken at the date of acquisition with the state of knowledge in existence at that time (subject only to consideration of subsequent events that confirm a foresight) and therefore, that sales that occurred more than a year (13 months and 18.6 months) post the acquisition date should be disregarded. Moreover, at the date of acquisition, the September 2020 sale of Lot 27 Bligh for $449,000 would have been known and there is no evidence that the sale had not been conducted at arms' length.
2. As such, Council submits that there is no evidence to support Mr Bird's assessed market value which is more than double (from $449,000 in September 2020 adjusted to $950,000 in July 2021) for time, over a period of only 9 to 10 months.
3. Council submits that the Bird Small Lot Sales are, first, not paired sales that would support the doubling of the market value of the Acquired Land over the period for the first sale of Lot 27 Bligh up to the date of acquisition; and second, are very different properties (being approximately one quarter of the size of the Acquired Land) and, as opined by Mr Hollinshead, are in a different (much bigger) market whereas the Acquired Land would appeal more to the small-time developer/speculator, being a much smaller market.
4. Council relies on Mr Hollinshead's paired sale analysis of the two sales of Lot 27 Bligh (and other paired sales) to inform an indicative growth rate in the market, and submits that his adjustment of the 4 September 2020 sale of Lot 27 Bligh (upward by 44.7% for the 10-month period) is liberal in favour of the landowners, should be accepted, and is objectively correct having regard to the published data referred to by the valuers, being, first, Mr Bird's reference to the HVI statistics showing an annual growth in Sydney prices up to October 2021 of 25.2%; and second, Mr Hollinshead's more narrowly sampled (and thus arguably more relevant) PriceFinder statistics showing annual growth in Riverstone vacant land sales of 23.8% for the 2021 year.

Findings

1. For the reasons that follow, I prefer the evidence and approach of Mr Hollinshead.
2. The valuation exercise before the Court is undertaken at the date of acquisition. This involves the state of knowledge in existence at that time. I consider that Mr Bird's significant reliance upon sales that are 13 and 18.6 months after the date of acquisition needs to be approached with caution. While the parties accept that there is no prohibition upon consideration of events that are post-acquisition, it is unquestionably difficult to determine what might subsequently occur in a market.
3. In these circumstances, as at the date of acquisition in July 2021, the hypothetical parties would be aware of the September 2000 sale of the very similar, almost adjacent, vacant land at 27 Bligh for $449,000. On the basis that it is agreed that there is real equivalence between the Acquired Land and Lot 27 Bligh, which I find there is, Mr Bird's determination of market value (which I accept was not reliant on this sale) amounts to more than a doubling of this purchase price over a period of 10 months, being $449,000 in September 2020, adjusted to $950,000 in July 2021. As will be seen, I have difficulty accepting Mr Bird's rejection of the September 2020 sale and his consequential reliance upon sales, some 13 and 18.6 months after the date of acquisition, and his reluctance to allow for any material escalation between July 2021 and August 2022 (and January 2023).
4. Mr Bird sought to justify his determined market value and to undermine the circumstances of the first sale of Lot 27 Bligh by reference to other sales (including the Bird Small Lot Sales), however, as submitted by Council, these are not "paired sales" that would support a significant increase in the purchase price over the period and they are sales of properties with different characteristics (being approximately one quarter of the size of the Acquired Land), and which individually relate to a bigger market. Although Mr Bird sought to use these sales to justify a two-lot residential potential approach to the determination of market value of the Acquired Land, and to make the point that these subdivided sales undermine Mr Hollinshead's reliance on the first sale of Lot 27 Bligh, I do not accept this position.
5. Contrary to this position, Mr Hollinshead primarily adjusts the September 2020 sale of 27 Bligh by 44.7% for the 10-month period which Council submits, and I find, is a liberal adjustment in favour of the dispossessed owners.
6. I consider that Mr Bird has not justified the weight to be applied to, and use of, sales that postdate the date of acquisition even though he acknowledges that the industry literature suggests sales evidence after the event should be treated with "extreme care". While his view is that they are equally relevant to sales prior to the date of acquisition, I find, as submitted by Council, that the better position is that sales that postdate the date of acquisition can be given weight in circumstances where they confirm a foresight. As such, I am reluctant give weight to either the sale of 2 Bligh in January 2023 or the sale of Lot 27 Bligh in August 2022 although both valuers appear to rely on this sale, albeit for different reasons.
7. Moreover, Mr Bird accepts in cross-examination that neither the HVI statistics (in particular for September 2020 through to June 2021) nor the PriceFinder statistics (utilised by Mr Hollinshead) support a "doubling" in market value of the Acquired Land (from the first sale of Lot 27 Bligh to Mr Bird's market value of the Acquired Land). Part of these data sets (or similar statistics) may have been otherwise known at the date of acquisition and, as such, would be available to the hypothetical purchaser and vendor.
8. In relation to the first sale of Lot 27 Bligh in September 2020, I agree with Council's submission and, find, that to the extent that the applicants suggest doubt as to the veracity of this sale, there is no evidence that this transaction was not conducted at arms' length. Both valuers have considered this sale and the circumstances relating to the date thereof and have given their evidence on this agreed basis. As such, I do not accept the applicants' submission that the Court should be cautious in relation to this sale. That concern aside, the weight to be given to this sale depends to some extent upon the relevance of the Bird Small Lot Sales which Mr Bird contends suggest that the first sale in September 2020 of Lot 27 Bligh was out of line with the market, a fact I do not accept. It also depends upon the weight to be given to the applicants' "sanity check" analysis (raised in final submissions) of the "Change in Median Price (Land)" (CoreLogic) table referred to above.
9. While I consider the applicants' "mathematics" to be correct, which, on one view, would indicate that the first sale in September 2020 of Lot 27 Bligh may have been out of line with the market, as submitted by Council, this particular "mathematical" analysis of the statistics otherwise in the table within expert evidence was not put discretely to, nor considered by, either valuer, and as such, I do not give it significant weight.
10. I also consider that statistical data (including CoreLogic and PriceFinder), while accepted by the valuers to be a helpful tool, must be used with caution. Further, as considered later in this judgment, there is force in Mr Hollinshead's criticism of Mr Bird's reliance on the HVI statistics in that it relates to the residential property market in the whole of Sydney which is unlikely to be representative of newly released residential lots in Riverstone. Even so, the HVI statistics show an annual growth in Sydney prices to October 2021 of 25.2%, and, further, the PriceFinder statistics for annual growth in Riverstone for vacant land sales indicates a 23.8% increase for the 2021 year.
11. I also take into account Mr Hollinshead's evidence regarding the sales he considered in Lincoln Street, Riverstone, from which he derives a growth of 18.5% during the period August 2021 to September 2022.
12. Although the Bird Small Lot Sales are located in close proximity to the Acquired Land and were transacted between March and October 2021, shortly around the date of acquisition, at most they provide some indication of what the market would pay for a single lot (once the Acquired Land is subdivided into two lots) albeit noting that the Acquired Land is approximately 970m² and the Bird Small Lot Sales range in size from 250m² to 364m² and are therefore smaller than even the Acquired Land's hypothetically subdivided lots.
13. I also accept the evidence of Mr Hollinshead that the Bird Small Lot Sales may have some greater relevance if the valuers (or the Court) had adopted a hypothetical development valuation methodology where the sales may provide guidance for the gross realisation in such an approach to valuing the Acquired Land. In the circumstances, I find that they do not provide material assistance in a direct comparison methodology.
14. As such, the rationale that only time adjustments need to be made to Lot 27 Bligh and 2 Bligh does not apply to the Bird Small Lot Sales as they are not located on the same street as Lot 27 Bligh and 2 Bligh, and I consider they are not nearly as comparable. In addition, they are not (and cannot be) relied upon as paired sales.
15. I also consider that the 20% "discount factor" utilised in Mr Bird's valuation report (referenced above at [113]) appears to be arbitrary and that his understanding of the town planning evidence as not requiring any earthworks to provide flood-free building platforms is overly simplistic and a mischaracterisation of the hydrological evidence that earthworks would in fact be required on the Acquired Land (even if not the building platforms) to support a riparian corridor and related flooding issues.
16. I accept Mr Hollinshead's opinion and find that although Mr Bird considers that the Bird Small Lot Sales support the potential of the Acquired Land as a two-lot subdivision, I find these sales to be of limited assistance in determining the market value of the Acquired Land because first, they have a different highest and best use; second, they appeal to a different market of prospective purchasers; and third, I accept Mr Hollinshead's evidence that the number of participants in the "small lot market" is significantly greater than the number of participants that would be in the market for a property similar to the Acquired Land. For the above reasons, I do not consider that the Bird Small Lot Sales (and in particular the seven sales in Pettit Street), "undermine" Mr Hollinshead's reliance on the first sale in September 2020 of Lot 27 Bligh as submitted by the applicants.
17. I find that the Hollinshead Secondary Market Sales (at [107] above) are some distance from the Acquired Land compared to Mr Bird's Small Lot Sales, and that there is force in Mr Bird's argument that they are located within "Old Riverstone" which was developed through the 1960s and 1970s and therefore represents a different market to the Acquired Land which is directed towards newly established lots and ready-built homes.
18. Overall, I consider that the Hollinshead Secondary Market Sales and the Bird Small Lot Sales are, to some extent, at cross-purposes, with Mr Hollinshead looking at established residential properties of a comparable size to the Acquired Land, and Mr Bird looking at lots of a size comparable to the Acquired Land once subdivided into two lots.
19. Finally, as alluded to at [122] above, I remain concerned that the evidence relied upon by the applicants does not address how knowledge available at the date of acquisition anticipated what happened thereafter. The principles upon which market price is to be determined prevent (or at least restrict) reference to subsequent events. My view in this regard further draws me to the conclusion that the earlier sale of Lot 27 Bligh (and the market movement up to the date of acquisition) provides a sound basis upon which to determine the market value.
20. For the above reasons, I determine that the market value of the Acquired Land is, as at the date of acquisition, $700,000.

Conclusion

1. Having found that the underlying zoning is residential and that the first sale in September 2020 of Lot 27 Bligh is both compelling and known at the date of acquisition, and accepting Mr Hollinshead's view that the CoreLogic statistics represents a good basis for the determination of market value, and that the Bird Small Lot Sales do not, on balance, detract from the first sale of Lot 27 Bligh, I find that Mr Hollinshead's adjustment for time to be more compelling than that of Mr Bird. As such, I determine that the applicants are entitled to an order that they receive $700,000 for the market value of the Acquired Land and $550 (as agreed) for disturbance. On the matters presently before the Court, I also consider that the applicants are entitled to their costs.

Orders

1. The orders of the Court are: 1. Compensation for the acquisition of Lot 197 in DP 1007 and known as 197 Bligh Street, Riverstone, is determined in the amount of $700,550 comprising $700,000 for market value pursuant to s 55(a) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) and $550 for disturbance pursuant to s 55(d) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW). 2. Blacktown City Council is to pay the costs of David Rolland Keller and Kristofer Daniel Keller as agreed or assessed.

Annexure A (1254116, pdf) Annexure B (1875329, pdf) 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. Decision last updated: 30 November 2023