Kirela Pty Limited v Minister administering the Environmental Planning and Assessment Act 1979

APPLICANT Mr T. Hale SC Mr A Galasso (Barrister)

SOLICITORS Minter Ellison LEGAL REPRESENTATIVES: RESPONDENT Mr J. Webster SC

SOLICITORS Blake Dawson Waldron

JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 30088 of 2001

29 August 2003 Kirela Pty Limited (ACN 079 721 127) Applicant v Minister administering the Environmental Planning and Assessment Act 1979 Respondent Judgment

1 By application dated 21 September 2001 the applicant claims compensation pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 ("the Act") arising out of the acquisition of land known as lot 2 in deposited plan 1002876 ("the subject land"). The subject land was compulsorily acquired by notice published in the New South Wales Government Gazette No. 95 on 8 June 2001. A compensation notice dated 17 September 2001 and made pursuant to s 42(2) of the Act was issued to the applicant offering the sum of $2,913,150 by way of compensation. The applicant has rejected such offer and claims that the subject land had a current value of approximately $12,000,000 at the date of acquisition. Description of the subject land 2 The subject land had been zoned for a public purpose since 1951. The subject land is located at Homebush and comprises part of the land formerly occupied by Arnott's Biscuit Limited. Arnott's Biscuits Limited owned lot 1 in deposited plan 1002876, lot 1 in deposited plan 829703 and lot 2 in deposited plan 829703 ("the Arnott's land") and the subject land all of which was sold to the applicant in 1998. Lot 1 in deposited plan 1002876 is currently subject to development for commercial purposes. The subject land is situated in the municipality of Strathfield ("Strathfield Council") but the adjacent Arnott's land is located within the municipality of the City of Canada Bay, formerly known as the municipality of Concord ("Concord Council"). 3 The subject land has an irregular shape and a total area of 1.668ha. The southern end of the subject land has a frontage of 71.525m to Parramatta Road and a frontage of 42.23m to Allen Street at its northern extremity. The subject land is generally level and is covered with vegetation except for the remains of a dilapidated bowling clubhouse which was formerly used by the employees of Arnott's Biscuits Limited. The subject land is bounded by Powells Creek on the east which is now confined in a concrete stormwater channel. A bridge traverses Powells Creek at the northern extremity of the subject land at Allen Street ("the Allen Street bridge"). Powells Creek forms the local government boundary between the municipality of Strathfield and municipality of the City of Canada Bay. Homebush railway station is approximately 250m from the subject land's southern boundary and North Strathfield railway station is approximately 500m to the north of the subject land. 4 The subject land is bisected by the M4 Motorway ("the M4") which is elevated 12m above ground level where it crosses the subject land in an east west direction. The area under the M4 is approximately 2,280m². The surface of the subject land beneath the elevated M4 is not disturbed. The subject land has been analysed in the evidence as the "southern portion", namely an area of about 5,700m² between the M4 and Parramatta Road, and the "northern portion" which lies between the M4 and Allen Street to the north encompassing an area of approximately 8,700m².

5 The subject land is affected by a transmission line easement, and by numerous drainage, water and sewerage easements and encumbrances which are as follows:- 435981 - Easement for stormwater drain or sewer

Y578715 - Easement to drain water Z944756 - Transfer of easement to Sydney Electricity as regards the easement in G109007 DP269189 - Easement to drain water 2,2.18 & 2.34 wide and variable width affecting the part(s) shown so burdened in DP269189

DP269189 - Easement to drain water 2 wide limited in height affecting the part(s) shown so burdened in DP269189

6 The applicant contends that such easements can either be relocated or removed where no longer in use. However the respondent maintains that the easements represent major obstacles for potential development of the subject land. The subject land is also affected by the M4, partial inundation from Powells Creek, contamination and rows of fig trees. Town planning history 7 The parties have provided a detailed history of environmental planning instruments and zoning adopted by Strathfield Council and the City of Canada Bay Council. Such evidence illustrates the policies and strategies adopted by the two councils to increase residential use and mixed use of land which was previously used for industrial activities.

Zoning prior to the Strathfield Planning Scheme Ordinance

8 By proclamation in the New South Wales Government Gazette No. 87 on 1 July 1927 the subject land was included in "Proclaimed Residential District No. 2 - Homebush". Such proclamation prohibited industrial buildings and industrial uses on the subject land.

9 The County of Cumberland Planning Scheme Ordinance ("the CCPSO") became operative on 27 June 1951. As a result of the CCPSO part of the subject land was reserved "Open Space - Parks and Recreation Areas" and the remaining portion was reserved "County Roads - National and Regional". The "Open Space - Parks and Recreation Areas" zone applying to the subject land adjoining Powells Creek was probably created in recognition of Powells Creek's drainage and floodway system, to effect a separation between the living areas and industrial areas, and to provide open space to serve the adjoining residential areas. Such open space provides a public corridor leading ultimately to Homebush Bay. 10 To the east of the portion of the subject land zoned "Open Space - Parks and Recreation Areas" lay adjacent lands which were zoned "Industrial Class A - General" under the CCPSO which comprises, inter alia, the Arnott's land. The adjacent land to the west was zoned "Living Area". Zoning pursuant to the Strathfield Planning Scheme Ordinance 11 The Strathfield Planning Scheme Ordinance ("the Strathfield PSO") was gazetted on 21 February 1969 and generally incorporated consistent provisions of the CCPSO relating to the land within the municipality of Strathfield (see cl 2 of the Strathfield PSO). Accordingly the subject land was zoned "County Open Space" and "County Road" and was placed under the provisions of "Part II - Reservation and Restriction on Use of Lands" as described in the Strathfield PSO. At the date of acquisition the Strathfield PSO was the relevant planning instrument applying to the subject land.

12 Pursuant to the Strathfield PSO the area adjacent to the subject land on the north and northwest was zoned "2(b) Residential". In such zone attached and detached dual occupancies were permissible with consent subject to the provisions in cl 41 and cl 41B of the Strathfield PSO. To the south of the subject land, land was zoned "3(b) Business (Special)" and "2(a) Residential" under the provisions of the Strathfield PSO.

13 In 1997 Strathfield Council prepared a future housing policy known as the Strathfield Housing Strategy to avoid the imposition of State planning controls for urban consolidation. The aims of the Strathfield Housing Strategy included the relaxation of the controls for the development of multi-unit housing; the rezoning of business zones along the Parramatta Road corridor to a mixed use zone; the rezoning of residential zones to "2(b) Residential" under the Strathfield PSO and the authorisation of buildings to be four to nine storeys in height along the Parramatta Road corridor. The Parramatta Road corridor comprises that portion of land between the Western Railway in the south, the M4 in the north, the Northern Railway in the east and the Homebush Bay Goods Line in the west. The subject land has a boundary to Parramatta Road and is within the precinct of the Parramatta Road corridor.

14 The Strathfield Housing Strategy referred to the "Parramatta Road Corridor Study" and noted that such study was a separate investigation of the Parramatta Road corridor. The "Parramatta Road Corridor Study" was prepared by Mike George Planning Pty Ltd, completed in 1997 and included recommendations for zoning land to allow for residential and business uses and for appropriate building heights. As a result certain town planning controls were formulated by Strathfield Council. They were rejected by the Minister for Local Government for the reason that greater provision for housing was required.

15 During this period Strathfield Council agreed to consider individual sites prior to the completion of the Strathfield Housing Strategy due to the protracted delay in finalising such strategy. The majority of the sites were industrial land and surplus to present day requirements. The sites required an alteration in the planning controls to allow residential flat development but such practice was undertaken at the initiative of the owner of the land. Strathfield Council considered sites including the former Department of Defence site at 14-16 Station Street Homebush ("the Department of Defence site"), 5-7 Beresford Road Homebush and 1-3 Beresford Road Homebush. Such sites are known as "selected sites". 16 There was another group of sites, separate from the "selected sites", which received individual consideration following requests that they be rezoned to permit higher residential densities. After the exhibition of the Strathfield Housing Strategy in February 1997 to March 1997 Mike George Planning Pty Ltd prepared a selected sites report for Strathfield Council entitled "Proposed Rezoning of Various Residential Sites - Strathfield" in November 1997. This report was adopted by Strathfield Council with some revisions. One significant recommendation was the identification of all land north of the M4 which was already zoned for residential purposes being adapted for villa house and townhouse development.

17 In February 1998 Strathfield Council prepared a supplementary report to the Strathfield Housing Strategy in February 1998 which provided for more intense residential development. On 3 September 1998 the Minister accepted the Strathfield Housing Strategy and from 9 October 1998 exempted the municipality of Strathfield from State Environmental Planning Policy No. 53. The Strathfield Housing Strategy was implemented by the provisions of the Strathfield Local Environmental Plan No. 79 ("LEP 79"), the Strathfield Development Control Plan No. 3 ("DCP 3"), the Strathfield Development Control Plan No. 8 ("DCP 8") and the Strathfield Development Control Plan No. 20 ("DCP 20"). 18 LEP 79 was gazetted on 4 February 2000. It amended the Strathfield PSO to include provisions relating to development within residential zones and mixed use zones. LEP 79 rezoned the land adjoining the western boundary of the subject land to the north of the M4 as "2(b) Residential" and zoned the land adjoining the western boundary of the subject land to the south of the M4 as "10 Mixed Use".

Zoning in the Concord Municipality 19 The land adjacent to the subject land on the eastern side of Powells Creek is within the Concord Local Government area and is affected by the provisions of the Concord Planning Scheme Ordinance ("the Concord PSO"). Such land is zoned "10(b) Enterprise Area" pursuant to the Concord PSO. Concord Local Environmental Plan No.100 ("Concord LEP 100") gazetted on 24 December 1999 generally amended controls relating to "10(b) Enterprise Area" in the Concord PSO and consequently facilitated redevelopment of the Arnott's land in that municipality.

Summary of zoning 20 At the date of acquisition of the subject land, the zonings of the surrounding land were "2(b) Residential" and "10 Mixed Use" pursuant to the Strathfield PSO, and "10(b) Enterprise Area" under the Concord PSO. 21 In 1997 Arnott's Biscuits Limited submitted an application to Strathfield Council and to Concord Council to rezone all its land including the subject land. The application included the subject land and sought to rezone the land "to a flexible 10(b) Enterprise Area zone" under the Concord PSO and part "3(b) Business Special" and part "6(b) Private Recreation" under the Strathfield PSO to recognise "the unique characteristics of the site". The proposal did not proceed due to the sale of the Arnott's land and of the subject land to the applicant. However the Arnott's land in the City of Canada Bay municipality was rezoned "10(b) Enterprise Area" under the Concord PSO. Arnott's Biscuits Limited had proposed a floor space ratio ("FSR") of 1.5.1 for such land. However when Concord LEP 100 was implemented, the FSR was limited to 0.75:1. Development control plans 22 The principal development control plans to be considered are DCP 3 and DCP 20. Such plans were adopted by Strathfield Council on 20 September 1999 and commenced on 9 February 2000. DCP 3 is entitled "Multiple-Unit Housing" and was "prepared to control and guide the nature, form and scale of multiple-unit housing development" within Strathfield municipality (see cl 1 of DCP 3). Clause 2.2 of DCP 3 provides that the bulk, scale and height of any development shall be determined according to the relevant building envelope. The building envelopes are illustrated in maps included in appendix 1 to DCP 3 which show the locations where villa houses, townhouses, two to three storey townhouses, three to four storey units and five to seven storey units may be erected. 23 DCP 20 is entitled "Guidelines for the Siting, Design and Erection of Developments within the Parramatta Road Corridor Area". It provides guidelines for residential and mixed use development within the Parramatta Road corridor. The aim of DCP 20 is to ensure development is "sympathetic and appropriate for the natural and built environment" which "optimises opportunities for utilising public transport" and is "acceptable to the community and economically feasible" (see cl 1.3 of DCP 20). Clause 2.4 of DCP 20 provides that buildings within the Parramatta Road corridor area are to comply with the height limits that are shown on figures eight to ten of DCP 20 named the "Parramatta Road Corridor Built Form Masterplan" ("the DCP 20 Masterplan"). Applicant's town planning evidence

Mr Sydney J. Cooke 24 Mr Sydney J. Cooke of Sydney J. Cooke Consulting Pty Ltd provided evidence for the applicant relating to the zoning history of the subject land. Mr Cooke opined that if the subject land had not been reserved for "County Open Space" and "County Road" under the Strathfield PSO subsequent to similar zoning under the CCPSO, it would have been zoned for industrial purposes under the CCPSO. This opinion was based upon the industrial zoning of the land to the east of the subject land, which generally comprised the Arnott's land. Mr Cooke maintained his opinion despite the "Proclaimed Residential District No. 2 - Homebush" having applied to the subject land since 1927. Mr Cooke further believed that the subject land would also have been zoned for industrial pursuant to the Strathfield PSO. Mr Cooke stated that if the land was zoned for industrial use under the CCPSO it would have been unnecessary for the Strathfield PSO to rezone the subject land for public purposes since there was sufficient open space in the locality.

Mr John Wynne 25 The applicant relies upon Mr John Wynne, a director of town planning of Urbis Pty Ltd, who provided evidence concerning the future development potential of the subject land. Mr Wynne considered that if the subject land had not been reserved for "County Open Space" it would have been included partly in the "2(b) Residential" zone under the Strathfield PSO and partly in the "10 Mixed Use" zone.

(i) Northern portion of the subject land 26 Mr Wynne opined that the northern portion of the subject land would be zoned "2(b) Residential" because such zoning would correspond to the zoning and the use of the land north of the M4. However, he also concluded that a substantial part of the northern portion of the subject land could have been included in the "10 Mixed Use" zone. Mr Wynne's belief relies upon the fact that the subject land adjoins land which is predominantly used for non-residential purposes, namely, the large scale development of the Arnott's land. Development has been approved up to twenty-four metres in height on such site. Additionally Mr Wynne observed that the land north of the subject land is undeveloped public open space and the subject land abuts only one residential property. 27 Mr Wynne acknowledged that if the northern portion of the subject land had been included in the "2(b) Residential" zone, DCP 3 would control the development. However he believed that DCP 3 would represent an under-utilisation of such portion. DCP 3 provides that land zoned "2(b) Residential" is suitable for villa house or townhouse development, which is low density. Mr Wynne testified that low density development would be inconsistent with the objectives of the Environmental Planning and Assessment Act 1979 and the subject land's potential, given its proximity to public transport. Mr Wynne agreed that villa house and townhouse development as prescribed by DCP 3 had resulted in low density residential areas in the Strathfield municipality. However Mr Wynne stated there had been exemptions for larger landholdings such as the Department of Defence site and McDonald College in Beresford Road.

(ii) Southern portion of the subject land 28 Mr Wynne considered that the inclusion of the southern portion of the subject land in the "10 Mixed Use" zone would be consistent with the zoning of adjacent land having a frontage to Parramatta Road. 29 Mr Wynne said that DCP 20 controls the majority of the southern portion of the subject land because it is largely within the Parramatta Road corridor. DCP 20 would set the development parameters for the southern portion of the subject land. He observed that DCP 20 "establishes a clear framework for future development in the area". Such framework is based upon the identification of building layouts, footprints and height limits; the identification of a desired amalgamation of smaller sites to create feasible development sites; the establishment of a desired model of built form; and development guidelines to support these factors. (iii) Comparable sites

30 Mr Wynne considered comparable sites and areas in his assessment of the likely development parameters applicable to the subject land. Mr Wynne believed that the development parameters applicable to the "Strathfield Triangle", being a triangular area of land bounded by Parramatta Road, the Western Railway line, Leicester Avenue, the Parramatta Road corridor, and the land in Beresford Road and The Crescent, represent a strong precedent for the likely planning controls that would be applied to the subject land. The accessibility, location and nature of built form of the comparable sites were similar. 31 Mr Wynne compared other sites including the former "Defiance Mills" site which is in close proximity to the Arnott's land. The former "Defiance Mills" site was an industrial site which was rezoned as "10(b) Enterprise Area" under the Concord PSO to allow for more intensive development. The development parameters in the "10(b) Enterprise Area" zone include a maximum FSR of 0.75:1 and a maximum building height of twenty-four metres. Mr Wynne considered such FSR to be restrictive and uncharacteristic compared to development on nearby land. However, Mr Wynne conceded that a FSR of 0.75:1 had been specifically imposed by the Minister in such zone.

(iv) Likely built form and potential development yield 32 Based upon above considerations Mr Wynne produced two diagrams of the hypothetical built form illustrating the likely key development controls ("the likely built form envelopes") which he believed would have applied to the subject land. Mr Wynne stated that the southern portion of the subject land was suited to intensive and large scale development. The development that could be undertaken included buildings with heights of approximately six storeys in the vicinity of the Parramatta Road frontage, being reduced to three storeys closer to the M4 if the subject land were used for residential purposes. If the use of the subject land was for non-residential purposes, six storeys would have been permitted throughout the southern portion. Such approach would reflect the building envelope referred to in DCP 20 ("the first built form"). Alternatively, two separate buildings exceeding six storeys in height could be developed on the southern portion with a height of up to eight to ten storeys ("the two towers built form"). This is a similar approach adopted by Strathfield Council approved for the Department of Defence site. 33 With regard to the intensity of the development of the first built form, Mr Wynne calculated that the southern part of the subject land had an indicative development yield of 17,550m². He acknowledged that there would need to be a setback from trees, easements and Powells Creek. Adopting his two towers built form Mr Wynne stated that the southern portion would have an indicative development yield of 18,240m². He said:- It is my opinion that the indicative development potential of the southern part of the 'acquired land' based on my two alternative likely built form 'envelope' controls, falls between around 17,000m² and 21,000m². This represents an indicative floor space ratio of between 3.0:1 and 3.6:1 for this part of the site. In my opinion, having regard to all the preceding factors, I consider that the most likely development yield for the southern part of the 'acquired land' would be closer to 17,000m² of gross building area (an FSR of 3.0:1) than 21,000m² (an FSR of 3.6:1)

As a consequence he considered that the southern portion of the subject land could obtain a yield of 190 dwellings having an average gross floor of 90m²; or 170 dwellings having an average gross floor area of 100m²; or alternatively 154 dwellings having an average gross floor area of 110m².

34 On the northern part of the subject land he believed that residential development would have been likely. Such development would allow for high density to the south and east extending to a lower density in the north and west. He believed that a maximum of six storeys would be permitted in the vicinity of Powells Creek and the M4, decreasing to three storeys near the existing residential properties.

35 Mr Wynne considered that the northern portion of the land with an area of 8,700m² would produce an indicative development yield of 15,600m². Allowing for setbacks a theoretical development of 20,000m²could be achieved. He concluded:- It is my opinion that the indicative development potential of the northern part of the 'acquired land' based on the likely built form 'envelope' controls, falls between around 13,000m² and 20,000m². This represents an indicative floor space ratio of between 1.5:1 and 2.3:1 for this part of the site. Overall, it is my opinion that the northern part of the land would most likely be approved to accommodate development achieving a floor space ratio in the order of 1.5:1 (around 13,000m² built form area).

Accordingly the development he proposed for the northern portion was 144 dwellings having an average gross floor area of 90m²; or 130 dwellings having a gross floor area of 100m²; or 118 dwellings having an average gross floor area of 110m². 36 Mr Wynne considered the land beneath the M4 would also be capable of development as a car park. Mr Wynne calculated that the land beneath the car park would produce an available area of 2,280m²which would allow for 76 at grade car parking spaces.

(v) Severance claim 37 As an alternative basis for valuation Mr Wynne assessed the potential development of the subject land as part of the overall redevelopment of the Arnott's land. That is, Mr Wynne assessed the loss attributable to severance of the subject land from the Arnott's land. Mr Wynne acknowledged that the subject land and the Arnott's land are controlled by different local government planning instruments but stated that a landowner would be able to request a masterplan be created for a combined development. Mr Wynne provided two options of possible combined development. Firstly Mr Wynne suggested that the whole of the subject land could have been used as at grade car parking serving the commercial and retail activities occurring on the Arnott's land. Such use would avoid the cost of constructing basement car parking on the Arnott's land and reduce the need for remediation of contamination on the subject land. 38 The second option proposed by Mr Wynne was to recognise the development potential of the subject land but to transfer the potential floor space to the Arnott's land and keep the subject land as open space. Such proposal would ensure that there is public open space in an increasing developed urban area. Mr Wynne believed that both options would have been considered by Strathfield Council and the City of Canada Bay Council and that they would not have opposed development even if such development exceeded the limited FSR of 0.75:1 imposed on the Arnott's land. Mr Don J. Smith 39 Mr Don J. Smith was the Chief Town Planner and later Director of Planning, Building and Environmental Services at Strathfield Council between 1981 to 2000. Mr Smith opined that but for the "County Open Space" and "County Road" zoning under the Strathfield PSO the southern portion of the land would have been zoned "3(b) Business (Special)" under the Strathfield PSO with a FSR of 3:1. He considered that a commercial zoning was appropriate for such position since it was compatible with existing development along Parramatta Road. 40 As to the northern portion of the subject land Mr Smith believed that such portion would have been zoned "2(a) Residential" under the Strathfield PSO similar to adjacent land in the Strathfield municipality. 41 Mr Smith referred to the "selected sites" which Strathfield Council had considered prior to the completion of the Strathfield Housing Strategy. Mr Smith stated that the Department of Defence site and other intensive residential development sites such as 5-7 Beresford Road Homebush and 1-3 Beresford Road Homebush were of particular relevance. These were sites approved for residential flat development and have a close affinity to the Arnott's land because they, like the Arnott's land, had previously been used for industrial or non-residential purposes. Mr Smith noted that Strathfield Council permitted residential development with a maximum height of twelve storeys obtaining a FSR of 2.5:1 on the Department of Defence site. Strathfield Council permitted a substantial building for residential flat development at 5-7 Beresford Road Homebush which was of the same height as a fifteen storey silo previously located on the property. Such development achieved a FSR of 2.5:1. At 1-3 Beresford Road Homebush a six to twelve storey building was built partly on former railway land on the basis that it adjoined development of a similar height. Such development achieved a FSR of 3:1. 42 In respect of the Arnott's land Mr Smith said:- It is my opinion that had the Arnott's land site not been reserved for County Open Space that Council would have been receptive to an approach to consider it as a selected site. It is likely that had it "been available" when the Parramatta Road Study was commenced it would have received "special consideration". This would have been a site specific LEP/DCP applying to the Strathfield part of the site (the acquired land) or it may have been a joint LEP/DCP with Concord Council. 43 Mr Smith observed that it was difficult to find a site of such a large area in one ownership, situated in a locality where the Minister had directed Strathfield Council to increase housing opportunities. Mr Smith concluded:- Based on the above it is my opinion that had the acquired site been included as a selected site that Council would have prepared a site specific LEP & DCP based on the following;- (a) The land between Parramatta Road and the motorway would have had a 6 storey height limit, probably with a solid building running parallel to Parramatta Road with 6 storey fingers projecting to the motorway. (b) The land between the motorway and Allen Street would have had a mixed built form, probably 2-3 storeys on the Allen street frontage and the western edge of the site. The buildings on the eastern side and towards the motorway would have been taller, up to 6 storeys, given the height of the buildings proposed on the remainder of the Arnott's land site or the eastern side of Powells Creek.

44 Mr Smith considered the likely built form envelopes proposed by Mr Wynne. Mr Smith stated that in respect of the southern portion of the subject land it was not necessary to confine the development to three storeys adjacent to the M4. Mr Smith would have recommended six storey development throughout the southern portion regardless of whether the development was residential, commercial or both. Mr Smith said that he would have suggested approval of either development of the southern portion, but would have preferred the proposal for the two towers.

45 In relation to Mr Wynne's development proposals relating to the northern portion of the subject land Mr Smith stated that he did not consider that a limitation of three storeys adjoining the M4 was necessary. Mr Smith suggested that such building height could have been increased to six storeys. Mr Smith concluded:- In respect of Mr Wynn's [sic] proposal I would have recommended approval subject to: · The 3 storey element adjoining the motorway be increased to 6 storeys, subject to sufficient setback from the motorway to reduce impacts such as noise, overshadowing and the like. · The 3 storey building along the western boundary be set back to reduce impacts such as privacy, overshadowing, overlooking onto adjoining residents.

46 Mr Mike George, town planner, testified that he had acted as consultant for Strathfield Council on several occasions during the 1980s and 1990s in relation, inter alia, to State environmental planning policy No. 28 and the "Parramatta Road Corridor Study". As far as he was aware, he undertook the majority of Strathfield Council's town planning work during this period. 47 The Court observes that Mr George's statement of evidence is predicated upon the assumption that the subject land would have been zoned for industrial purposes rather than "County Open Space" and "County Road", had the subject land not been designated for a public purpose. 48 Mr George's statement of evidence addressed and explained Strathfield Council's approach to "selected sites" as discussed by Mr Smith. Mr George said that unless the owner of the land initiated such action Strathfield Council would not rezone industrial land to a residential zoning. He said:-

The Council's position had been to respond to applications by owners to rezone such land. In preparing its residential strategy the Council had sought responses from owners of land who wanted to put their land forward for rezoning for higher residential densities. The Council subsequently took action to rezone a number of sites identified in this manner. While the emphasis was on land already zoned for residential purposes, given the broad coincidence of timing, it is possible that the acquired land could have been advanced as a potential candidate for rezoning in response to that request, had it not been reserved for County Open Space. 49 Mr George also said that if a request to rezone the subject land was not made, it would have been included in the "Parramatta Road Corridor Study" and treated similarly to adjoining land. He concluded:- In these circumstances, it is my opinion that the whole of the acquired land would have been included in the study because - · there would have been no particular reason to treat the different parts of the same site differently, simply because of the M4 · the Council had already taken action to increase residential densities north of the M4, and consideration of the northern part of the acquired land would have been consistent with this action. 50 Mr George then added:- On balance the more likely scenario is that had an application been made by the owner of the acquired land, if it was zoned industrial, for a residential rezoning, the application would have been supported by the Council in principle.

Mr Garth McKenzie 51 Mr Garth McKenzie, town planner disagreed with the applicant's contention that the subject land would have been zoned for such intense uses. Mr McKenzie opined that the northern portion of the subject land would be zoned "2(b) Residential" under the Strathfield PSO, to render it compatible with the existing zoning of land to the west of the subject land. The southern portion of the subject land would be zoned "10 Mixed Use" under the Strathfield PSO similar to the area adjoining the southern part of the subject land to the west and south west.

52 Mr McKenzie emphasised that Strathfield Council would provide for a public pedestrian access or cycle link through the subject land between Parramatta Road and Allen Street to ensure the connection between Sydney Olympic Park and Strathfield is retained. To achieve such a plan Mr McKenzie concluded that Strathfield Council would zone part of the subject land as public open space or require dedication of an open space corridor as a condition of development consent. 53 Mr McKenzie believed that the development potential of the subject land would be subject to the same or similar provisions of LEP 79, DCP 3 and DCP 20. Mr McKenzie considered two hypothetical scenarios to determine the development potential of the subject land. Both options assume the relinquishment of the Sydney Water easements. One option is based upon permitting the transmission line easement to remain in its current location. The second option considers the transmission line as an underground easement. Mr McKenzie calculated the development potential for the first option as permitting eight townhouses and two detached dwellings in the "2(b) Residential" zone, and thirty-nine apartments of varying sizes in the "10 Mixed Use" zone located in two buildings of three storeys and four buildings of six storeys in height. 54 The second option is predicated upon the transmission lines being relocated underground. Pursuant to this option, eighteen townhouses and two detached dwellings would be derived in the "2(b) Residential" zone. In the "10 Mixed Use" zone Mr McKenzie stated fifty-three apartments could be located in five buildings of three storeys, two buildings of four storeys and five buildings of six storeys. In both options Mr McKenzie assigned 9,350m² of the total area of the subject land to the "2(b) Residential" zone and 7,330m² to the "10 Mixed Use" zone.

Mr Harvey Sanders 55 Mr Harvey Sanders, consultant town planner testified that if the subject land had not been zoned "Open Space - Parks and Recreation Areas " and "County Roads - National and Regional" under the CCPSO, the subject land would have been zoned partly "2(a) Residential" and partly "3(b) Business Special (Redevelopment)" under the Strathfield PSO when it was first gazetted in 1969. Such zoning is consistent with land adjacent to the western side of Powells Creek. 56 Following the adoption of the Strathfield Housing Strategy and LEP 79 Mr Sanders said that he would have advised the hypothetical prudent purchaser that the southern portion of the subject land would be rezoned "10 Mixed Use" under the Strathfield PSO and "2(b) Residential" pursuant to the Strathfield PSO in the north. 57 Mr Sanders said that DCP 20 would apply to the southern portion of the subject land as this area is included in the Parramatta Road corridor, and believed that the DCP 20 Masterplan "would have illustrated building footprints on the land having a height of 6 storeys along the Parramatta Road frontage with 3 storeys to the north." Had the southern portion of the subject land been included in the DCP 20 Masterplan, setbacks would have been required for the M4 and for retention of the fig trees. Mr Sanders observed that the DCP 20 Masterplan did not make provision for the electricity transmission lines and other easements.

58 As to the northern portion, Mr Sanders said that he would have informed a hypothetical prudent purchaser that such portion was subject to development controls in the "2(b) Residential" zone contained in the Strathfield PSO and in DCP 3.

59 Mr Sanders' conclusions differ from Mr Wynne regarding the applicability of DCP 3 to the northern portion of the subject land. Mr Sanders did not consider that the northern portion of the subject land would have been treated differently to adjacent land by Strathfield Council if it had been included in the Strathfield Housing Strategy. Land in the Strathfield municipality was rezoned by LEP 79 from"2(a) Residential" to"2(b) Residential" under the Strathfield PSO "to permit medium density residential development in order to increase residential densities" proximate to the Olympic site. In this respect "redevelopment for the purpose of townhouses and villas was recommended and adopted by" Strathfield Council. Mr Sanders also referred to the fact that Strathfield Council decided to maintain the townhouse and villa houses designation in the area north of the M4 despite the recommendations in Mike George's "Proposed Rezoning of Various Residential Sites - Strathfield" study. Furthermore Mr Sanders considered low density development to be represented by "2(a) Residential" zone and not the "2(b) Residential" zone.

60 Mr Sanders made other criticisms of Mr Wynne's conclusions. Mr Sanders did not accept that the fact that the subject land was a part of the Arnott's land was relevant in determining the zoning and development potential of the subject land. Mr Sanders considered that the subject land was distinguishable from the Arnott's land because it was a separate land holding and contained in a separate land title at the date of acquisition. Furthermore it was separated by Powells Creek and it was located in a different local government area. 61 Mr Sanders disagreed with Mr Wynne's alternative hypothesis that the whole of the subject land would have been zoned "10 Mixed Use" under the Strathfield PSO at the date of acquisition. Mr Sanders believed that the rezoning of the Arnott's land as "10(b) Enterprise Area" under the Concord PSO would not have influenced Strathfield Council to zone the entire subject land as "10 Mixed Use".

62 Mr Sanders also disputed Mr Wynne's town planning proposal based upon severance. Mr Sanders considered it speculative and improbable that the subject land would have been included in the development proposals for the Arnott's land, especially as any such development proposal would exceed the applicable FSR standard under Concord LEP 100. Mr Sanders also noted that the use of the subject land for a car park would have been prohibited under the "2(b) Residential" zone. If the subject land was used for a car park any potential for residential development would be forfeited. Accordingly Mr Sanders did not regard Mr Wynne's proposal as a practical or viable means of establishing the maximum value of the subject land.

Mr Mark Pepping 63 Mr Mark Pepping is the current manager of strategic planning at Strathfield Council and has the responsibility of considering all rezoning matters, providing advice relating to major development sites and offering expert advice to Strathfield Council's executive and councillors. Mr Pepping supported the conclusions of Mr Sanders and of Mr McKenzie. He believed that the southern portion of the subject land would have been zoned "10 Mixed Use" under the Strathfield PSO. Mr Pepping also said that the DCP 20 Masterplan would be applied to the use and development of such portion of the subject land. Accordingly Mr Pepping considered that the southern portion of the subject land would be suitable for six storey buildings fronting Parramatta Road and three storey buildings abutting the M4. In respect of Mr Wynne's proposal for eight to twelve storey development, Mr Pepping said:- The option for 8-12 storeys would not be supported due to the overall impact on the character of Parramatta Road and the potential for excessive overshadowing. 64 In relation to the northern portion of the subject land Mr Pepping concluded that it would have been zoned "2(b) Residential" under the Strathfield PSO. Mr Pepping considered that such zoning conforms with the residential development in surrounding areas to the northern portion of the subject land which is limited to townhouses and villa houses by virtue of the controls under DCP 3. Mr Pepping believed that Strathfield Council would maintain consistent development in this locality and ensure that excessive traffic did not generate from more intense development. For these reasons Mr Pepping did not support Mr Wynne's development proposals for the northern portion of the subject land, and said:- I would not be prepared to support the option for 3-6 storey buildings on the northern portion of the site on the grounds of its incompatibility with the future character of the adjoining residential within the Strathfield Municipality of townhouses and villas, the potential impacts of excessive traffic generation which would impose on Ismay Avenue and in turn impact on the operation of the intersection of Ismay Avenue with Pomeroy Street and the significant overshadowing which would occur.

65 Mr Pepping agreed with Mr McKenzie that Strathfield Council would be strongly committed to maintain part of the subject land for a public access pedestrian or cycle link. Mr Pepping assumed such access would be along Powells Creek and overlay the flood prone land and riparian vegetation corridor. 66 Mr Pepping referred to Mr Wynne's and Mr Smith's consideration of "selected sites" and particularly of buildings greater than six storeys in height. Mr Pepping observed that such sites were approved by Strathfield Council prior to the implementation of any comprehensive residential housing strategy. Mr Pepping explained that such sites should not be used as examples of typical development in the Strathfield municipality. He said that the Department of Defence site was developed as a consequence of a report prepared by Mike George in 1997 "where it was demonstrated that sites adjoining Homebush Station could be considered for 10-12 storey developments". At 5-7 Beresford Road the existing concrete silos had provided a building envelope for residential development of a similar height. The development at 1-3 Beresford Road was approved on land which was partly zoned "Special Uses Railway", a zone which had no planning development restrictions. The section of the site formerly occupied by the McDonald Performing Arts School was a non-conforming use. With respect to the development within the Strathfield Town Centre, Strathfield Council had adopted planning provisions contained in its Local Environmental Plan No. 70 and Development Control Plan No. 13 which permitted development based upon FSR and building height planes. Accordingly, each of the "selected sites" had a special feature which, in the absence of a housing strategy, justified special consideration by Strathfield Council.

67 Mr Pepping disagreed with the opinions of Mr Wynne and Mr Smith that the subject land would be given special consideration for development potential similar to the "selected sites" referred to above because of its size. Mr Pepping stated:- In response to the suggestions made by both Mr Wynne and Mr Smith that the subject site because of its size would be given special consideration for development potential similar to previous sites is not supported. In 2000, Council successfully introduced a comprehensive Residential Housing Strategy which took into account a broad analysis for development and the cumulative impact across the whole of the Strathfield Municipality. This has provided a long term development strategy recognising various opportunities and constraints throughout the Municipality.

68 Mr Richard Sydney Marshman, town planner, was employed with the Concord Council as manager of its approvals unit from October 1997 to October 1998 and subsequently as Concord Council's assistant general manager of Environmental Planning and Development. 69 Mr Marshman was the Assistant General Manager Environmental Planning and Development at Concord Council when a masterplan development application for redevelopment of the Arnott's land was submitted by the applicant in approximately September 2000 ("the redevelopment masterplan"). Mr Marshman possessed a detailed knowledge of the strategic planning controls of Concord Council and provided his assessment of the likely response from Concord Council if the subject land was included in the redevelopment masterplan. Mr Marshman said that Concord Council had concluded that the redevelopment masterplan conformed to the Concord LEP 100 except for the proposed FSR of 1.7:1. While Concord Council viewed a FSR of 1.7:1 as excessive, it also decided that a FSR of 0.75:1 was unduly restrictive. In an undated assessment report of the redevelopment masterplan Concord Council concluded:- It is recommended that the proposed Masterplan application be approved subject to the total FSR for the site being reduced to 0.75:1 with application being made by Council to the Director General seeking concurrence to increase the FSR to 0.97:1 using SEPP 1.

Following such decision Concord Council sought a more flexible FSR for the redevelopment of the Arnott's land from the Director General of the Department of Urban Affairs and Planning. It received a response by letter on 11 May 2001 from the Director General rejecting its application to increase the FSR. Such letter explained that it was inappropriate to vary controls relating to the Arnott's land which was described as of "considerable regional significance". 70 Mr Marshman believed that Concord Council would not have approved a floor space transfer from the subject land to the Arnott's land as suggested by Mr Wynne. Concord Council would have been concerned about the additional traffic impact, building bulk and effects on the amenity of the neighbouring areas. Additionally he believed it unlikely that Concord Council would have agreed to a joint environmental planning instrument with Strathfield Council to implement site specific controls for the Arnott's land. Mr Marshman's concluded that a joint environmental planning instrument may not accommodate Concord Council's housing strategy and that such council would not consent to the transfer of floor space from the Strathfield municipality. Additionally, any such agreement between Strathfield Council and Concord Council for the hypothetical development proposal would have resulted in development inconsistent with the requirements of Concord LEP 100. Evidence relating to site constraints

(i) Mr Eddie Lucas 71 For the applicant Mr Eddie Lucas, manager of Civil Environmental Unit at Cardno Willing (NSW) Pty Ltd assessed the utility services of the subject land. Mr Lucas confirmed the status of Sydney Water services passing through the subject land. By facsimile dated 23 July 2002 Sydney Water stated that the disused 500mm rising sewer main created by Dealing A995 "is no longer needed and can be removed" at no cost to Sydney Water. Mr Lucas concluded that only the "live" sewer mains would constrain development which includes a 750mm diameter rising sewer main covered by an easement in deposited plan 531560, a 450mm diameter sewer main and a 150mm diameter reticulation sewer collecting the wastewater from properties located on Powell Street.

72 Sydney Water has specific requirements for structures erected near sewers as set out in the document entitled "Building Over and Adjacent to Sewers". Sydney Water permits construction over a sewer or within 600mm of a sewer if the sewer is concrete encased. The cost of concrete encasing depends upon ground conditions and can be up to $800/m. In comparison the cost of relocating a 150mm diameter sewer or a 225mm sewer is in the order of $200 to $300/m. Mr Lucas estimated that the cost to encase the reticulation sewer of 130m in length would be approximately $104,000 compared to a relocation cost of $33,000. 73 Mr Lucas opined that in relation to the 450mm sewer main crossing the northern part of the subject land, Sydney Water would prefer to investigate alternatives to relocation, such as concrete encasing, which would present less difficulties. The cost to relocate such sewer would be approximately $600 to $800/m. If encased, the cost would be approximately $44,000 and if relocated the cost would amount to approximately $38,500. 74 Buildings must be kept clear of the easement covering the 750mm rising sewer main. Any structures immediately adjacent to this easement would require its footings to be specially designed to accommodate the pipe. 75 Mr Lucas also considered the transmission line passing through the subject land from north to south which are the subject of a 30m wide easement. Mr Lucas noted the letter of Energy Australia dated 2 July 2002 which advised Mr Wynne that the easement could be relocated under the ground with cables being laid within a 4m wide easement. The cost of such work is assessed to be approximately $3,000,000.

The subject land is liable to flooding. Strathfield Council commissioned Webb McKeown & Associates Pty Ltd to prepare the "Powells Creek and Saleyards Flood Study" which was completed in 1998. This study reveals that the area upstream of the Allen Street bridge traversing Powells Creek is extensively affected by the 100 year average recurrence interval flood event ("the 100 year ARI flood event") which could cause inundation of part of the subject land at the northern extremity and near the M4.

(i) Mr Eddie Lucas 76 Mr Lucas made observations concerning flooding of the subject land by the Powells Creek stormwater channel for the applicant. He referred to the "Powells Creek and Saleyards Flood Study" and noted that if the Allen Street bridge were removed the 100 year ARI flood event would be reduced by 1.17m. This would remove all the flooding from the subject land and would confine the 100 year ARI flood event within the easement boundary. That is, the subject land would be deemed flood free if the Allen Street bridge was removed.

(ii) Mr Stephen Neville Webb 77 Mr Stephen Neville Webb, a director of Webb McKeown and Associates Pty Ltd, consulting engineers, provided evidence for the respondent. Mr Webb said that Strathfield Council had commissioned Perrens Consultants to prepare the "Powells Creek Catchment Floodplain Management Study and Plan" ("the FPM study") subsequent to the "Powells Creek and Saleyards Flood Study" of October 1998. The FPM study was completed in July 2002 and investigated the appropriate measures to manage the flood risks within the Powells Creek catchment. It discussed the feasibility of removing the Allen Street bridge and enlarging the width of the stormwater channel from the junction of the Powells Creek stormwater channel with Strathfield Creek to a point upstream just beyond the Allen Street bridge. The FPM study did not recommend the removal of the Allen Street bridge or the widening of the stormwater channel as such activities would be expensive and restrict access for neighbouring streets. 78 Mr Webb noted that Mr Lucas contemplated removal of the Allen Street bridge but not the widening of Powells Creek. Mr Webb believed that such removal would be insufficient to render the subject land flood free. Mr Webb calculated that the removal of the Allen Street bridge would only reduce the flood level by 0.72m not 1.17m. To ensure that the subject land is not affected by flooding the stormwater channel would need to be enlarged in addition to removing the Allen Street bridge. An area of 25m² of land is required to widen the stormwater channel within the subject land adjacent to the stormwater channel. Contamination 79 The subject land is additionally affected by industrial contamination. The remediation costs vary between the parties ranging from an estimate of $200,000 to approximately $750,000.

(i) Mr Paul Gorman 80 Mr Paul Gorman, director of Geotechnique Pty Ltd prepared a statement of evidence for the respondent concerning the cost of remediation of the subject land. He discovered that the subject land had been extensively filled and that there were areas with high concentrations of polycyclic aromatic hydrocarbons, lead and total petroleum hydrocarbons. 81 Mr Gorman prepared a facsimile to Mr McKenzie dated 26 June 2001 stating that the remediation costs would range from $350,000 to $750,000 if contaminated material was removed from the subject land. If the contaminated soils could be relocated onsite below high-rise or commercial buildings the remediation cost would be approximately $200,000. This figure was adjusted to an estimate between $300,000 and $350,000 following additional laboratory results on soil samples. Such adjustment was the subject of a second facsimile dated 4 July 2001 to Mr McKenzie. Mr Gorman noted that Mr Wynne's report did not adopt the revised figure but stated that the remediation cost for onsite relocation of contaminated soils was $200,000. 82 Mr Gorman stated that although the onsite retention and relocation of the contaminated soils was possible it would be necessary to obtain approval from the New South Wales Environment Protection Authority and Strathfield Council to effect such work. Other factors for consideration were the continual monitoring of groundwater quality, ongoing management of buried contaminated soil and future liability issues. Accordingly Mr Gorman concluded that removal of the contamination soils at a cost of approximately $750,000 was the most viable option. Traffic Constraints 83 The parties' traffic experts provided a statement outlining areas of agreement. Such statement noted that traffic associated with development of the subject land would be minor relative to the traffic generation of land within DCP 20 and the Arnott's land. Both experts agreed if DCP 20 applied to the subject land, the planning controls in DCP 20 would limit the density of housing, thereby ensuring that the development would not adversely impact upon the volume of traffic. However the respondent's expert did not agree that Mr Wynne's proposal would have received development consent.

(i) Mr Craig McLaren 84 Mr Craig McLaren of McLaren Traffic Engineering provided evidence for the respondent. Mr McLaren had undertaken a traffic and parking strategy study for the Parramatta Road corridor area on behalf of the Strathfield Council in August 1999 entitled the "Revised Parramatta Road Corridor Traffic Study". Such study reviewed parking and traffic generation following a modification of the building footprints proposed in DCP 20 when it was in draft form. It was recommended that 71 dwelling units was appropriate for the adjoining lot at the western side of the southern portion of the subject land. 85 Mr McLaren considered the likely impact on traffic if the southern portion of the subject land was included in DCP 20. His observations concluded:- · Up to 53 dwelling units, as identified by McKenzie, thereby raising the residential intensity (net equivalent housing type) of Blocks 2 to 5 inclusive from 690 dwelling units to 743 dwellings, prior to a reduction by the revised housing assessment, as outlined in the September 1999 traffic study underpinning DCP#20. · Applying the final determination of Council to reduce residential intensity across each of the identified blocks on the basis of equity considerations, results in a loss of 10 dwellings on that part of the subject site south of the M4 motorway, thereby equating to a supply of 43 dwellings. Calculation based upon a pro-rata assessment of findings contained in Section 5.4 of the 1999 revised housing traffic study, adjusted to reflect addition southern portion of 'acquired land'. … · Hence, the incorporation of the subject site as a developable site under DCP#20, would have resulted in up to 63 dwelling units, comprising 43 dwellings on that part of the site south of the M4 motorway and 20 dwellings on that part of the site north of the M4 motorway. In addition, reductions to dwelling supply in other blocks occurs as a direct result of inclusion of the subject 'acquired' land in order to maintain equity. 86 Mr McLaren stated that "either of the development proposals in the Wynne report would be contrary to the available traffic studies…". Mr McLaren said that Mr Wynne's development proposals would comprise an intense form of development and impose unacceptable traffic impacts. (ii) Mr Tim Rogers

87 Mr Tim Rogers, consultant traffic engineer for the applicant, concluded that the applicant's appraisal of the potential development yield would "generate a modest amount of additional traffic" but should not be regarded as a constraint. Mr Rogers said that access to the subject land could be provided by neighbouring streets, namely Allen Street or George Street without adversely impacting upon Ismay Ave. Further, he said that additional traffic would not impact significantly on the future operation of the intersection at Parramatta Road and George Street. Mr Rogers also opined that development of the subject land would not adversely impact upon The Crescent as it is unlikely that traffic travelling from the subject land would utilise The Crescent unless a specific trip to Homebush shopping centre was made. In summary, he concluded that there were no traffic issues which would restrict future the development of the subject land in the manner proposed by Mr Wynne.

Acoustic constraints 88 The acoustic experts for both parties submitted a joint report outlining the areas of agreement and disagreement. The experts agreed that both Mr Wynne's and Mr McKenzie's assessment of the potential development yield for the subject land would have been likely to receive development consent from Strathfield Council subject to the provision of appropriate mechanical ventilation and acoustic design criteria in accordance with the Australian Standard 2107:2000 entitled "Acoustics - Recommended design sound levels and reverberation times for building interiors" ("the Australian Standard 2107:2000"). 89 The experts disagreed upon the suitability of the subject land for residential development and the feasibility of the various residential options proposed by the parties.

90 Mr Richard Heggie, acoustic engineer for the applicant reviewed the acoustic standards guidelines and criteria applicable to the subject land. Mr Heggie concluded that the residential development of the subject land is "not unique" as evidenced by significant residential developments that have been constructed in the neighbouring vicinity. He stated that such "residential developments have similar external noise levels" and are subject to council requirements which "include noise control measures to control traffic noise." Mr Heggie continued and remarked that Mr Wynne's proposals were "similar to the residential developments under construction or those that have been recently completed in the immediate surrounding area". (ii) Mr Steven Cooper 91 Mr Steven Cooper, acoustic engineer provided a report for the respondent. He said that the traffic on Parramatta Road "dominates the acoustic environment" on the southern portion of the subject land. Traffic noise from the M4 also affects the southern portion as well as the northern portion of the subject land. Mr Cooper's report was predicated upon his instructions that a potential use of the subject land was for residential purposes. Mr Cooper noted that traffic impacts upon residential development have been a concern which is recognised by the Australian Standard 2107:2000, a publication entitled "Environmental Criteria for Road Traffic Noise" issued by the New South Wales Environment Protection Authority and also by the provisions for visual and acoustic privacy under DCP 20. Applying such guidelines and standards, traffic noise affecting the subject land would be regarded as significant. Accordingly development of the subject land would require the incorporation of significant noise controls. Mr Cooper concluded:- The acoustic upgrading of the building elements would add a significant cost to such a development and affect the viability of any residential development. In addition to the upgrading of the facades of the developments (including the ceiling/roofs) there is a necessity for significant costs in terms of mechanical ventilation equipment required by the subject Australian Standard.

92 Mr Cooper opined that residential development of the subject land is inappropriate because of the costs associated with acoustic constraints. Mr Cooper acknowledged that Mr McKenzie's proposal could be developed to provide acceptable noise attenuation but a significant number of acoustic controls would be necessary. Mr Cooper added that residential development of greater height and density would not be considered by developers as the provision of the acoustic constraints would not be cost effective. Vegetation 93 The respondent alleged that the rows of fig trees on the Parramatta Road frontage of the subject land, beside Powells Creek and near the vicinity of the old bowling green constrain development on the subject land. There are no indigenous trees in issue.

94 Mr David Ford, aborist provided a report for the applicant. The report identified fig trees requiring retention and which would impose constraints on development of the subject land. Such fig trees included the row growing along the centre of the subject land in an east-west direction which would require a setback of fifteen metres from excavation to make provision for the major root system and the canopies. The row of fig trees alongside Parramatta Road would necessitate a setback of eight metres from excavation if preservation was required. Mr Ford opined that retaining the remaining fig trees along the western boundary of the southern portion of the subject land described as the "west row" would not be warranted in view of their condition and location. 95 Mr Ford stated that a row of Eucalyptus grandis along the M4 embankment are repeatedly lopped for power line clearance and although in good condition they could quickly and easily be replaced. Other trees scattered throughout the subject land were not regarded as valuable by Mr Ford. Riparian zone 96 Powells Creek is defined as a "river" under s 2 of the Rivers and Foreshores Improvement Act 1948 ("the Rivers and Foreshores Act") and would be included in the definition of "protected waters" under s 22A of such Act. Part 3A of the Rivers and Foreshores Act makes provision for the protection of rivers and lakes and requires permits for development within forty metres of a protected waterway. The Department of Land and Water Conservation administers the Rivers and Foreshores Act and through the provisions under Part 3A can establish riparian zones to improve biological connectivity. 97 The Department of Land and Water Conservation has imposed general conditions and terms on the applicant's development consent to redevelop the Arnott's land pursuant to Part 3A of the Rivers and Foreshores Act. Such conditions include the creation of a riparian zone along Powells Creek. The riparian zone is to be a minimum of twenty metres wide on the eastern side of Powells Creek and fifteen metres wide on the western side. The condition imposed on the western side of Powells Creek constrains development potential of the subject land. Summary regarding the extent of impact of the site constraints

98 Mr Wynne believed that the range of easements including electricity transmission lines, sewerage and drainage easements which affected the land could be relocated to accommodate his proposed developments. Mr Wynne acknowledged that access to the subject land from Parramatta Road could be restricted, but noted that Allen Street could be utilised. Mr Wynne considered the contamination of the subject land, and regarded it as minor and easily remedied. He did not regard the rows of fig trees on the subject land as a serious impediment to development of the subject land. 99 Mr McKenzie for the applicant contended that development of the subject land would be limited to areas unaffected by the existing easements, potential for flood inundation, access, adjoining residential development, tree preservation, land contamination and the M4. With respect to the easements, Mr McKenzie made enquiries of Sydney Water and Energy Australia to ascertain the feasibility of relocating or removing the easements. Sydney Water advised that two of the easements within its control could be relinquished but all other easements are required to carry out their activities. Energy Australia advised that the costs of relocating the transmission line which traverses the subject land underground was $3,000,000 and would take approximately eight to twelve months to complete. 100 Mr Sanders said that he would have advised a hypothetical purchaser that the subject land was constrained by electricity easements, flood liability, road access, acoustic impacts, vegetation, contamination, the M4 and the requirement for a riparian zone.

Mr Brian Dudakov 101 Brian Dudakov, valuer for the applicant, provided his assessment of the market value of the subject land. For the purpose of his valuation Mr Dudakov adopted the development proposals suggested by Mr Wynne. Mr Dudakov allowed for the cost of relocating three easements posing an impediment to future development of the subject land identified by Mr Lucas. No allowance was made for inundation as Mr Dudakov did not consider it to be a constraint. The cost of remedying contaminated land was taken into consideration in his valuations. 102 Mr Dudakov undertook two valuations. The first valuation of the subject land was based upon the subject land as a separate title to the Arnott's land. Mr Dudakov relied upon Mr Wynne's calculations and said:- The total achievable development area assessed by Wynne is 30,000m², which reflects a floor space ratio (FSR) of 1.80 on the total site area. I have estimated a total development yield of 316 residential units for the site based on Wynne's estimate, which is calculated on an average gross area of 95m² per unit (ie including common areas but excluding services areas, balconies and car parking areas). This area has been adopted based on my analysis of average gross unit sizes in other nearby projects. 103 Mr Dudakov stated that he adopted the "direct comparison approach" with the "principal unit of comparison being the rate per potential residential unit." He assessed the sale price per m² of land and sale price per m² of floor space at fourteen allegedly comparable sites. From such comparable sites Mr Dudakov adopted a general amount of $50,000 per residential unit, which equated to an unencumbered residential value of $15,800,000 for 316 units. Such amount reflects a figure of $526/m² of potential development area and $947/m² of land area, which accords with the parameters reflected by the comparable sales. 104 Deducting the approximate costs of $3,000,000 to relocate the transmission line, $75,000 to relocate easements and $200,000 for remediation expenses, Mr Dudakov reached an amount of $12,525,000 as the estimated value of the subject land as at the date of acquisition.

105 The second approach of valuation was to adopt Mr Wynne's alternative proposal to consider the subject land and the Arnott's land as one parcel of land. Mr Dudakov was advised that 236 at grade car parking spaces would be developed on the northern portion of the subject land. Mr Dudakov also included Mr Ferrarin's estimate of a saving of $17,373 per car space if at grade car parking was provided on the subject land rather than basement car parking on the applicant's land. Such saving equates to a total of $4,100,000 for 236 car spaces. The clean up cost allowed for the contaminated land amounted to $70,000. Such allowance only applied to the southern portion of the subject land, since there would be no need to allow for the relocation of the easements as a car park could be built over them. Mr Dudakov undertook calculations valuing the subject land before and after it was acquired to ascertain the loss arising from the acquisition. Mr Dudakov concluded that the value of the subject land on his hypothesis was $16,840,000.

Respondent's valuation evidence Mr Kent Wood 106 Mr Kent Wood, valuer for the respondent, considered the site constraints in detail for the purposes of his valuation. Mr Wood used Mr Kenzie's assessment of the highest and best use of the subject land which was townhouse and villa development on the northern portion of the subject land and development compliant with the "10 Mixed Use" zone on the southern portion. 107 Mr Wood made his valuation by two separate approaches in accordance with Mr McKenzie's report. Firstly, he assessed the value of the land upon the basis that the overhead transmission line remained in situ ("option one") and then he formulated a valuation assuming that the transmission lines had been located underground ("option two").

108 Mr Wood considered sales evidence of sites in the immediate locality to decide the sale prices which could be expected for residential units, villa houses and townhouses. In respect of option one he calculated that the subject land would yield eight townhouses at $100,000; two detached houses at $150,000; and thirty-nine apartments at $70,000 making a total of approximately of $3,830,000. To this amount $711,360 must be added to represent the value of 11,856m² of open space at $60/m². In total the valuation of the subject land was assessed by Mr Wood to amount to $4,540,000. 109 For the second option Mr Wood assessed the yield of the subject land at eighteen townhouses at $115,000; two detached houses at $170,000 and fifty-three apartments at $80,000 totalling $6,650,000. To this he added an area for open space of 6,931m² at $60/m² which amounted to $415,860. Therefore the total value of the development yield for option two was $7,065,860. Mr Wood however made a deduction of $3,000,000 for the cost of relocating the electricity transmission line easement reducing the development yield to $4,065,860. 110 Adopting the total development yield of option one, being the greater sum, Mr Wood subtracted $119,713 for the cost of the acquisition of Sydney Water easements, and $750,000 for remediation costs. The final valuation reached by Mr Wood for the whole of the subject land on this basis is $3,700,000. 111 Mr Wood stated that a severance claim as provided for by s 55(c) of the Act is not warranted in these proceedings. Mr Wood alleged that the applicant could not maintain any loss due to severance since the subject land and the Arnott's land are located in two different local government areas and are therefore subject to distinct planning controls.

Ms Kerry-Anne Hogan 112 Ms Kerry-Anne Hogan, a valuer who was employed by the State Valuation Office, provided a valuation of the subject land taking into consideration the development of the subject land as proposed by Mr McKenzie, the site constraints and town planning considerations. Ms Hogan initially valued the subject land at $2,913,150 but adjusted her valuation after reviewing Mr McKenzie's development proposals. Accordingly Ms Hogan's valuation is as follows:- Option One: (transmission line in situ) A development of 49 dwellings, comprising the following: Townhouses 8 @ $115,000 per site = $ 920,000 Detached Dwellings 2 @ $160,000 per site = $ 320,000 Units 39@ $70,000 per site = $2,730,000 Undevelopable land 11.856m² @ $100/m² = $1,185,600 Total = $5,155,600 less $750,000 Remediation Land Value = $4,405,600

Option Two: (transmission line relocated underground) A development of 73 dwellings, comprising the following: Townhouses 18 @ $115,000 per site = $2,070,000 Detached Dwellings 2 @ $160,000 per site = $ 320,000 Units 53@ $70,000 per site = $3,710,000 Undevelopable land 6,931m² @ $100/m ² = $ 693,100 Total = $6,793,100 less $3,000,000 Relocate Power Lines Underground $750,000 Remediation Land Value = $3,043,100

113 Ms Hogan concluded that option one is preferable as it did not incorporate any costs of achieving the development proposed in option two. Accordingly on Ms Hogan's assessment the highest value of the subject land at the date of acquisition was $4,400,000.

114 As to the applicant's severance claim Ms Hogan agreed with Mr Wood and did not support it. Ms Hogan stated that the subject land was noted as being reserved for recreational purposes in the proposed masterplan submitted by the applicant to the City of Canada Bay Council for the redevelopment of the Arnott's land. Subsequent to the lodgement of such masterplan there was no indication from either Strathfield Council or from the City of Canada Bay Council that car parking would be permitted on the subject land. Therefore Ms Hogan maintained that there is no evidence to suggest that the acquisition of the subject land directly reduces the value of the applicant's land.

Zoning and development planning controls 115 The applicant claims that if the subject land was not zoned under the Strathfield PSO as "County Open Space" and "County Road" the subject land would have been zoned industrial under the CCPSO and subsequently the Strathfield PSO. The applicant relies upon the fact that the subject land and the Arnott's land were originally comprised in one certificate of title and the entirety of such site would have been classified as an industrial zone. The applicant submits that industrial use of the subject land would have intensified from the commencement of the Strathfield PSO in 1969 to the cessation of Arnott's Biscuits Limited on its land in 1996. 116 The applicant further submits that when Arnott's Biscuits Limited ceased its manufacturing activities in 1996, Arnott's Biscuits Limited would have sought to rezone and redevelop all of its land. An application would have been made to Strathfield Council to rezone that part of the subject land lying within Strathfield local government area from industrial to residential to permit multi-unit housing. Arnott's Biscuits Limited would have applied to Concord Council to rezone the subject land within Concord local government area to develop such land in a manner that was complementary to the redevelopment of the subject land.

117 The applicant claims that in 1996, Strathfield Council would have recommended that the subject land be treated as a "selected site" because it was ideal for high density residential zoning based upon its size of 1.6 ha; the fact that it was being converted from an industrial use; its close proximity to Parramatta Road, three railway stations and bus services; and the encouragement by the New South Wales Government for urban consolidation. 118 The applicant relied upon the evidence of Mr Smith. Mr Smith said that if Arnott's Biscuits Limited sought to initiate a rezoning to develop its land such application would have received "special consideration" and "there would have been a site specific LEP/DCP" applying to the subject land. In the applicant's submissions it was emphasised that Mr Smith had been the chief town planner of Strathfield Council for sixteen years and was very influential. Strathfield Council had required all major development proposals and suggestions to alter planning controls to be submitted to Mr Smith for consideration. The applicant says that if Mr Smith did not agree with any recommendation he would convey his opinion to Strathfield Council, which would carefully consider his opinion. Accordingly the applicant submits that Mr Smith's and Mr George's evidence provide the most accurate indication of the controls which would have applied to the subject land. Mr Smith would have supported the implementation of the development controls relied upon by Mr Wynne to achieve his proposed development yield. 119 The applicant submits that the application of DCP 3 and of DCP 20 is significant. The applicant claims that it is unlikely that DCP 3 would have applied to the subject land. However if DCP 3 had applied, the applicant submits that the subject land would not be included in the building envelope so prescribed for villa houses or townhouses. Such limitation would be unduly restrictive, and would be categorised as development of the lowest density. The applicant contends it would be illogical for villa houses and townhouses only to be permitted adjacent to the redevelopment on the Arnott's land. 120 Instead, the applicant submits that the subject land would have been considered separately and that a development control plan would have been created to conform with Mr Wynne's built form plans. In the alternative the applicant submits that if a development control plan was not formulated for the subject land, it would nevertheless have been made the subject of individual consideration under DCP 20. Accordingly the applicant submits that at the date of acquisition the subject land would have been subjected to development controls as proposed by Mr Wynne had it not been reserved for a public purpose.

Site constraints 121 The applicant submits that the constraints affecting the subject land are minor. The electrical easement can be relocated at a cost of $3,000,000 and the disused easements can be extinguished. The remaining "live" water and sewerage easements can be concrete encased or relocated. Excavation within forty metres of the drainage easement would require approval from the Department of Land and Water Conservation pursuant to s 22B of the Rivers & Foreshores Act. Although the development approval for the Arnott's land contained a condition requiring a riparian zone on the subject land, the applicant submits a hypothetical purchaser would know at June 2001 that such condition could not be enforced in consequence of the decision in Silverwater Estate Pty Limited v Auburn Council and Another [2001] NSWLEC 60.

122 In relation to inundation, the applicant submits that the "Interim Flood Prone Lands Policy" requires a habitable floor to be 500mm above the 100 year ARI flood event which could readily be achieved. The ground floor levels of any development could be raised to satisfy such requirements. 123 As to the acoustic impact the applicant submits that a variety of construction methods including double glazing and mechanical ventilation would be adequate to resolve any constraints. 124 The applicant submits that the rows of fig trees are not a constraint because they were permitted to grow as a consequence of the public purpose namely the reservation. Since the public purpose is to be disregarded the applicant claimed that the trees are not an issue. The applicant submits that the decision in Housing Commission of New South Wales v San Sebastian Pty Ltd and Others (1978) 140 CLR 196 at p 206 supports its contention citing the following extract:- a direct relationship between the restriction on land use and the proposed establishment of the public works, the effect on value of the rezoning or restriction ought to be ignored.

Development potential and valuation 125 The applicant maintains that the value of the subject land at the date of acquisition is $12,000,000. Such amount bears a relationship to the consideration received for the sale of McDonald College at 1-3 Beresford Road, Strathfield in May 2000 which had development consent, an area of 6,806m², 202 residential units and a land value of $11,716,000. The applicant submits that other comparable sales included a sale of the Department of Defence site, 52-58 Parramatta Road and the former "Defiance Mills" site at 2A Hamilton Street, North Strathfield. 126 The applicant also separately analyses the value of the southern portion and the northern portion of the subject land to illustrate that Mr Wood's valuation is unrealistic. In relation to the southern portion the applicant calculated the floor area to be 17,100m² adopting the FSR of 3:1 generally applicable to land having a frontage to Parramatta Road. Such floor area accords with Mr Wynne's calculation of 190 units having a floor area of 90m². Applying Mr Dudakov's rate per unit of $50,000 the value of the southern portion of the subject land is $9.5 million. The applicant made similar calculations by adjusting the statistics of comparable sales to accommodate for any differences such as the site area and FSR. Such comparable sales include 52-58 Parramatta Road, McDonald College and the former "Defiance Mills" site. The applicant claims that such comparisons establish a minimum value of $9,000,000 for the southern portion of the subject land.

127 The applicant made similar calculations for the northern portion of the subject land by comparing a variety of recent sales in the neighbouring area. The applicant calculated amounts ranging from $2,070,000 to $8,970,000 as an indicative value of the northern portion of the subject land. With respect to the alternative submission made by the applicant that the northern portion could have been used as a car park, the value of such land is claimed by the applicant to be $4,100,000 derived from the joint surveying report prepared by Mr John Ferrarin and Mr John Lawrence. 128 Alternatively the applicant submits that although it maintains that the value of the subject land is $12,000,000, the minimum value of the subject land is $6,000,000. The applicant states that the respondent's minimum valuation for the southern portion of the subject land is $2,700,000. The minimum value of the northern portion of the subject land is $3,500,000 if the land is used as a car park. Therefore the total value of the subject land is $6,200,000. The applicant deducts $200,000 for costs but does not include the expenses associated with removing the transmission lines, the easements and contamination on the northern portion. Respondent's submissions

Potential of the subject land at the date of acquisition 129 The respondent submits that the applicant's claim of $12,000,000 depends solely on the hypothesis that the subject land is deemed a "selected site". The applicant submits that such contention conflicts with the decision of the New South Wales Court of Appeal in Griffith City Council v Polegato and Another (1990) 20 NSWLR 696 at p 701. That is, the Court must assess the value of the subject land at the date of acquisition without regard to remote hypothetical considerations (see also Handley JA in Yates Property Corporation Pty Ltd (In Liquidation) v Darling Harbour Authority (1991) 24 NSWLR 156 at p 179).

130 The respondent acknowledges that the zoning of the subject land as "County Open Space" and "County Road" is to be ignored as being a step in the resumption process consistent with the principle in The Crown v Murphy and Another (1990) 64 ALJR 593 at p 595 where the High Court of Australia said:- …a resuming authority does not employ planning restrictions to destroy the development potential of the land and then assess compensation for its resumption on the basis that the destroyed potential had never existed.

However the respondent submits that the other factors constraining the subject land must not be ignored, including the desire of Strathfield Council to use the subject land for public access. Additionally the transmission line, fig trees, contamination, flooding, easements and the requirement for a riparian zone constitute constraints which affect the subject land at the date of acquisition and must be taken into consideration. Zoning and development planning controls 131 The respondent disputes the applicant's assertion that the subject land together with the Arnott's land would have been zoned for industrial purposes. The respondent submits that there is no evidence to indicate that Strathfield Council would have zoned the subject land for industrial purposes under the Strathfield PSO. 132 The respondent submits that there is no evidence to support the submission that Arnott's Biscuits Limited would have sought a rezoning of all its land for multi-unit housing in 1996. Arnott's Biscuits Limited made a rezoning application in 1996 to rezone the land part "6(b) Private Recreation" and part "3(b) Business Special" under the Strathfield PSO. The respondent submits that such application does not indicate that Arnott's Biscuits Limited would have submitted an application to rezone its land in accordance with Mr Wynne's development proposals.

133 The respondent rejects the applicant's submission that the Arnott's land would have been deemed a "selected site" or alternatively have received "special consideration" under DCP 20. The respondent says that it was not Mr Smith's evidence that at the date of acquisition he would have advised a hypothetical prudent purchaser that Strathfield Council would have recommended the type of development as proposed by Mr Wynne. Rather Mr Smith merely stated that if the subject land was available in 1996 when the "Parramatta Road Corridor Study" commenced "it would have received 'special consideration'". 134 The respondent submits that before the Court can conclude that the Arnott's land would have been approved as a "selected site", several issues would have to be resolved in favour of the applicant. The Court would have to find that Arnott's Biscuits Limited would have approached Strathfield Council to redevelop its land as envisaged by Mr Wynne's proposal, that Mr Smith would have recommended such approach and that Strathfield Council would have granted approval. Such approval would have to be granted before the Strathfield Housing Strategy was implemented. Therefore the respondent claims that before the Court can give any weight to Mr Smith's suggestion, it must make each finding in favour of the applicant and further that the Arnott's land would become the subject of a site specific development control plan rendering DCP 20 and DCP 3 inapplicable.

135 The respondent submits that such hypothesis is contrary to Mr Pepping's evidence. Mr Pepping did not agree that the area of the Arnott's land together with the subject land would have warranted special consideration for development. Mr Pepping said that once Strathfield Council adopted the Strathfield Housing Strategy in 1998 the Arnott's land and the subject land would not have received any special treatment. The development control plans adopted to implement the Strathfield Housing Strategy would have applied. Additionally Mr Pepping and Mr McKenzie stated that "selected sites" were only included in the Strathfield Housing Strategy following a request by the owner of the land. 136 The respondent submits that the Court could not conclude that the Arnott's land together with the subject land would have been treated by Strathfield Council as a "selected site" merely because other sites in the neighbourhood were so treated prior to 1997. The respondent acknowledges that the Department of Defence site was an exception. It was allowed only because of specific considerations, namely the fact that the Department of Defence had agreed to defer its application pending the making of a new draft local environmental plan.

137 Accordingly the respondent submits that the Court cannot speculate without a factual or legal basis that Strathfield Council would have classified the Arnott's land as a "selected site" and subsequently implemented different development controls from adjoining land.

138 The respondent further submits that the evidence of Mr Wynne should be disregarded since it is predicated upon the subject land being classified as a "selected site", as is evident from Mr Smith's statement. Mr Smith said:- It is clear from section 4.3 of this report that Strathfield Council did from time to time approve developments that significantly departed from the planning controls that applied at the time. Part of Council's strategy to accommodate the government's urban consolidation initiative was to give special consideration to selected sites where circumstances allowed a greater built form and higher density.

139 The respondent submits that the applicant's approach is contrary to the principles in Polegato. Furthermore the respondent claims that the applicant's submission that the Arnott's land would have received "special consideration" under DCP 20, if not deemed a "selected site", is entirely speculative.

Development yield 140 The respondent submits Mr Wynne's development controls and built form envelopes are unrealistic. They directly conflict with the provisions of DCP 20 which were the result of considerable analysis, various studies and strategies considered by Strathfield Council between 1996 and 1999. In relation to the hypothetical application of DCP 20 to the subject land Mr Sanders stated:- It is considered that, if development of the subject land had been contemplated in the Development Control Plan Master Plan, it would have illustrated building footprints on the land having a height of 6 storeys along the Parramatta Road frontage with 3 storeys to the north. It is also considered that the footprint would have been setback from Parramatta Road sufficiently to ensure the retention of the Fig trees across the frontage. Setbacks would also have been provided from the carriageway of the M4 Motorway.

The respondent relies upon Mr McKenzie's evidence that Mr Wynne's proposal was unrealistic because it disregarded site constraints and the building footprints did not conform to the characteristics of the subject land.

141 In relation to the northern portion of the subject land the respondent relies upon the evidence of Mr George who concluded in the "Parramatta Road Corridor Study" that the area north of the M4 should be categorised as suitable for villa house and townhouse development with some potential for two storey dwellings with attics. Accordingly the respondent submits that there are no grounds to suggest a departure from the DCP 3 controls with respect to the northern portion of the subject land. In support of the respondent's submission Mr Pepping stated that he would not recommend "the option for 3-6 storey buildings on the northern portion" of the subject land because "of its incompatibility with the future character of the adjoining residential [sic] within the Strathfield Municipality of townhouses and villas". 142 As to the southern portion, the respondent submits that the controls imposed by the "Parramatta Road Corridor Study" and the "Revised Parramatta Road Corridor Traffic Study" are determinative of the development potential of the subject land. The "Revised Parramatta Road Corridor Traffic Study" included a built form masterplan which reduced the density of units on the land adjacent to the southern portion of the subject land to 71 units. The respondent submits that Strathfield Council would have allocated a similar density on the southern portion thereby rendering Mr Wynne's proposal as unrealistic and Mr Pepping's proposal more likely. 143 The respondent further submits that a hypothetical prudent purchaser of the subject land would not expect to obtain the density of development as proposed by Mr Wynne. The respondent relies upon Mr Pepping's evidence as follows:- If I had been approached by a purchaser in respect of this land at the date of acquisition I would have advised that the concepts of development set out in either the development concepts (pages 39-40 and 41-45) or those concept as set out at pages 48-51 of Wynne report of August 2002 would not have received any recommendation to the Council nor, in my opinion, would the Council have varied the polices adopted prior to the date for this site.

Site constraints 144 The respondent submits that the costs associated with the repositioning of the transmission line are substantial. The transmission line would constrain the likely building form on the subject land, as would setbacks required from trees and from Powells Creek. The respondent submits that a hypothetical prudent purchaser would be aware that development consent for the Arnott's land is subject to a condition that a 15m setback be established along the western side of Powells Creek for a vegetated riparian zone. Mr Pepping stated that a riparian corridor is warranted "given the open space corridor which exists north of the subject site from Allen Street and the largely undeveloped nature of the subject site" and that such corridor would restrict development of the subject land.

145 Mr Lucas recommended that the area affected by the flooding be retained for car parking or for open space rather than removing Allen Street bridge. Further, he recommended that the area above the 450mm sewer should not be built upon. The respondent submits that that the these matters demonstrate the fallacy of Mr Wynne's design which envisages three storey buildings built over this area. 146 The respondent submits that construction could not take place above the 450mm sewer across the north eastern corner of the subject land. Other water or sewerage easements could be removed at cost, but those remaining would nevertheless constrain development of the subject land as each easement would require relocation in and around the building form of the subject land. 147 The respondent relies upon Mr Gorman's evidence that remediation of the contamination on the subject land is estimated to be $750,000. 148 The respondent relies upon Mr Cooper's evidence that a hypothetical prudent purchaser could not be guaranteed that the entire area of the subject land could be utilised due to acoustic constraints from traffic using the M4. 149 With respect to traffic the respondent submits that a constraint is imposed on the whole of the Parramatta Road corridor because of traffic generation. As a result of the concerns of the Roads and Traffic Authority the number of potential units in the Parramatta Road corridor had been reduced by Strathfield Council from 4,400 to 3,600. Accordingly the respondent submits that the subject land would be similarly constrained.

Valuation evidence 150 The respondent submits that the value of the subject land at the date of acquisition is dependent upon the Court's determination of the development potential of the subject land. The respondent disputes the applicant's claim that 316 residential units is the potential yield. The respondent submits that the applicant made no submissions concerning the development potential of the subject land on the basis of the application of DCP 3 or DCP 20. Accordingly the respondent submits that if the Court rejects the applicant's conceptual basis premised on the subject land being a "selected site", there is no alternative presented by the applicant for the Court to consider. In such circumstances it submits that Mr Wood's valuation must be adopted. 151 During final submissions the respondent presented alternative calculations for Mr Wood's option two with the transmission lines relocated underground. The calculations are similar to Mr Wood's option two except the number of apartments on the southern portion of the subject land is adjusted to 71 in "Option 2A" to conform with the number of apartments permitted on the adjacent land stipulated in the built form masterplan in the "Revised Parramatta Road Corridor Traffic Study". In comparison "Option 2B" provides for 63 apartments. This calculation makes a 10% reduction in the number of units to accommodate site constraints. Accordingly the calculations are as follows:- Option 2A 18 townhouses @ 115,000 $2,070,000 2 detached houses @ 170,000 $ 340,000 71 apartments @ 80,000 $5,680,000 open space $ 415,8000 $8,505,800 less costs $3,750,000

$4,750,000 Option 2B 18 townhouses @ 115,000 $2,070,000 2 detached houses @ 170,000 $ 340,000 (71 less 10%) 63 apartments @ 80,000 $5,040,000 open space $ 415,8000 $7,865,800 less costs $3,750,000

152 Accordingly the maximum valuation attributed to the subject land by the respondent is $4,750,000.

153 The respondent submits that the applicant's claim for severance is incapable of being awarded compensation under s 58 of the Act. Additionally, the respondent submits that the applicant's proposal to transfer the subject land's floor space to the Arnott's land for incorporation in a car park is impossible since a car park is a prohibited use in the "2(b) Residential" zone under the Strathfield PSO. Furthermore the development of the Arnott's land is already at the maximum FSR of 0.75:1 and it is likely that City of Canada Bay Council would not have countenanced such a proposal. Findings 154 The Court is required, so far as money can do so, to place the applicant in the same position as if its land had not been compulsorily acquired (see Horn v Sunderland Corporation [1941] 2 KB 26 per Scott LJ at p 42; Housing Commission of New South Wales v Falconer and Others [1981] 1 NSWLR 547 at 569). For this purpose it is essential to examine the contentions of the applicant concerning the potential use, and accordingly the value, of the subject land.

155 Section 55 of the Act specifies the matters to be considered in determining the amount of compensation to which the applicant is entitled when a claim is made for compensation pursuant to the Act. One measure of value is the "market value of the land on the date of its acquisition" as provided for by s 55(a) of the Act. Section 56 of the Act relevantly states:- s 56(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 156 Section 56(1)(a) of the Act reflects the principle established by the High Court of Australia in Housing Commission of New South Wales v San Sebastian and by the Court of Appeal United Kingdom in Pointe Gourde Quarrying and Transport Company Ltd v Sub-Intendent of Crown Lands [1947] AC 565 at p 572. Such principle requires the Court to disregard 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 when assessing compensation. Accordingly the "County Open Space" zoning and the "County Roads" zoning of the subject land is to be ignored for the purpose of assessing compensation. Both parties agree that such zonings must be disregarded as a step in the resumption process. Zoning 157 The Court does not accept the applicant's submission that, but for the public purpose, the subject land would have been zoned for industrial purposes. The applicant's claim is speculative and is predicated upon a hypothesis that the subject land, but for the public purpose, would have been zoned industrial and then residential. Such submission is reliant upon Mr Cooke's evidence which disregards the prohibition of industrial activity on the northern portion of the subject land and on a substantial area adjacent to the subject land by the "Proclaimed Residential District No. 2 - Homebush". Furthermore the town planning evidence reveals that Powells Creek was considered as a natural boundary between land used for industrial uses and residential land. 158 Having considered the town planning evidence the Court finds on the balance of probabilities that the northern portion of the subject land would have been zoned "2(b) Residential" under the Strathfield PSO and that the "10 Mixed Use" zone under the Strathfield PSO would have applied the southern portion of the subject land. Such a finding is in accordance with Mr Wynne's evidence for the applicant, and Mr Pepping's, Mr McKenzie's and Mr Sanders' evidence for the respondent. Development controls 159 The Court is satisfied that DCP 3 and DCP 20 would have applied to the subject land. The southern portion of the subject land is located within the Parramatta Road corridor and would have been subject to the height and building controls specified in the DCP 20 Masterplan. Furthermore the Court is not persuaded that Strathfield Council would have treated the northern portion of the subject land differently to adjoining land which is subject to DCP 3. 160 The success of the applicant's claim for compensation is entirely dependent upon Strathfield Council creating specific development controls for the subject land to exempt if it from the requirements under DCP 3 and DCP 20, otherwise Mr Wynne's development proposal would not have been approved by Strathfield Council. Strathfield Council had formulated DCP 3 and DCP 20 following prolonged study and investigation with the New South Wales Government and other authorities such as the Roads and Traffic Authority, to satisfy its visions for urban consolidation for the Strathfield local government area. Development control plans must be considered as a "fundamental element" in or a "focal point of the decision making process" (see Zhang v Canterbury City Council (2001) 51 NSWLR 589 per Spigelman CJ at p 602). Bignold J in Ervin Mahrer & Partners v Strathfield Municipal Council [2002] NSWLEC 47 emphasised at par 162 to 164 the significance of departing from DCP 20 as follows:- The significance of the departures from the requirements of DCP 20 in the present case is heightened by two additional factors- (i) the very large scale nature of the redevelopment proposal; and (ii) its crucial timing in the early stages of implementation of DCP 20 (and the Masterplan it incorporates). These factors, in combination would, if the proposal were to be approved, so seriously undermine the integrity and planning intent of DCP 20 (including the Masterplan) as to effectively emasculate it and thereby to set at nought the fruit of the sustained planning processes which undergird DCP 20. To approve the proposed development would not only create a planning precedent very adverse to the integrity of DCP 20, but would virtually ignore the content of DCP 20, in circumstances where no justification for departing from the requirements of DCP 20 has been substantiated by the Applicant

Accordingly DCP 3 and DCP 20 must be treated as providing the fundamental controls for the development of the subject land. 161 To reach the development potential of the subject land as submitted by the applicant, the hypothetical purchaser would need to be assured that it would have obtained an exemption from the general planning controls and approval for site specific development controls. It would require exemption from the Strathfield Housing Strategy after its adoption in 1998, and from the controls imposed by DCP 3 and by DCP 20. There is no evidence which establishes that on the balance of probabilities the subject land would have been approved as a "selected site" prior to the adoption of the Strathfield Housing Strategy. Nor does the evidence establish that exemption is likely to have been granted after its adoption. 162 Mr Pepping indicated that there were particular reasons for Strathfield Council granting approval for "selected sites" before the adoption of the Strathfield Housing Strategy. There is insufficient evidence to support the applicant's claim that Strathfield Council would have altered planning controls to permit residential development on the subject land and the Arnott's land in excess of the applicable planning controls. 163 Although Mr Smith was the chief town planner at Strathfield Council and may have exercised persuasive power and influence in that role, his evidence does not establish that the subject land would have been accepted by Strathfield Council as a "selected site". Mr Smith merely expressed his opinion that it was likely that had the subject land "been available" when the "Parramatta Road Corridor Study" commenced it would have received "special consideration". Such evidence falls well short of establishing the requisite inference of which the Court must be satisfied, namely, that the subject land would have been treated as a "selected site", granted a more intensive floor space ratio, and exemption from the relevant development control plans.

164 No evidence exists to show that Strathfield Council had ever altered such controls after it had adopted its residential housing strategies, nor that the applicant would have received favourable treatment. In Overton Investments Pty Ltd v Minister administering the Environmental Planning and Assessment Act 1979 (2001) 113 LGERA 439 Stein JA said at p 445 as follows:- His Honour was also entitled to conclude that the Court was unable to assume a higher development potential when no application for additional units had been lodged and where there was no evidence that any such application was likely to be approved.

165 The Court acknowledges that Arnott's Biscuits Limited had submitted a rezoning application to Strathfield Council and to Concord Council. However, such application did not reflect the residential zoning which is pivotal to Mr Wynne's development proposals. The Court accepts the respondent's submission that there is no evidence to support the proposition that in 1996 the Arnott's land sought a rezoning from something different than part "6(b) Private Recreation" and part "3(b) Business Special" under the Strathfield PSO.

166 The Court rejects the applicant's submission that the subject land would receive dispensation from the applicable development control plans. A hypothetical prudent purchaser would not accept the applicant's hypothetical proposals because they are wholly dependent upon the subject land being treated as a "selected site". The Court accordingly finds that compensation should be determined on the basis of the subject land being zoned "2(b) Residential" and "10 Mixed Use" under the Strathfield PSO and subject to DCP 3 and DCP 20. A hypothetical prudent purchaser would not add "anything over and above" the subject land being valued in such a manner "in expectation of a more liberal approach to rezoning" (see The Crown v Murphy at p 595) and redevelopment as contended by Mr Wynne.

167 The site constraints restrict the development potential yield of the subject land. Mason CJ, Brennan, Deane, Gaudron and McHugh JJ in The Crown v Murphy said at p 595:- Of course, a characteristic or attribute of the land which affects its value must be taken into account in the assessment of compensation even if the planning restriction which is a step in the resumption process is dependent upon or directed to that characteristic or attribute.

Furthermore Handley JA in Yates Property v Darling Harbour stated at p 179:- However the land itself must otherwise be valued at the date of resumption and in its then existing condition.

The Court must consider the extent the site constraints affect the value of the subject land as enunciated by Dunedin LJ in Corrie and Another v MacDermott [1914] AC 1056 at p 1062 as follows:- If, therefore, the old owner holds the property subject to restrictions, it is a necessary point of inquiry how far these restrictions affect the value. 168 The prudent hypothetical purchaser would consider the cost of $3,000,000 to relocate the transmission line underground, the costs associated with the acquisition of the Sydney Water easements, the setback for the riparian zone, the possible setbacks for some of the fig trees, the impact of flooding, acoustic requirements and remediation of the contaminated soil. Such considerations are a further reason to reject the applicant's development yield proposals, as they do not realistically accommodate the site constraints. For example, whilst the removal of the Allen Street bridge is proposed as a measure to relieve the extent of inundation of the subject land, no alternative is proposed and no costing has been estimated. The applicant has failed to give due consideration to the site constraints which a hypothetical prudent purchaser would assess. 169 The applicant's submissions that the rows of fig trees should not be included is contrary to the quotation extracted above from The Crown v Murphy. There is also no evidence to support the applicant's assertion that the fig trees were permitted to grow as a consequence of the carrying out of the public purpose. The existence of some of the fig trees do impose a constraint according to Mr Ford, but they do not constitute a major impediment to development of the subject land.

Potential development yield 170 For the respondent Mr McKenzie, Mr Sanders and Mr Pepping agreed that the subject land would be suitable for villa house and townhouse development on the northern portion of the subject land. On the southern portion of the subject land they agreed that buildings would be permitted to be six storeys in height along Parramatta Road and three storeys high adjacent to the M4. The court rejects the density of development on the subject land proposed by the applicant. The site constraints, including potential traffic and acoustic issues, and the zoning would not permit such intense development. The Court adopts the respondent's proposals as they are formulated in accordance with DCP 3 and DCP 20 and take into account site constraints. Valuation 171 Significantly, the comparable sale sites relied upon by the applicant such as the "Defiance Mills" site, McDonald College, the Department of Defence site and the two sites in Beresford Road, were not the subject of any site constraints. In the present circumstances, the subject land was heavily constrained. Accordingly, it is erroneous to rely upon the valuation of such parcels of land as constituting a valid comparison to the subject land. 172 Mr Wood formulated two options contemplating development with the transmission line in its current location or with the transmission line relocated underground. The respondent submitted two alternative valuations based upon Mr Wood's second option with the transmission line being underground. Such alternative calculations alter the development yield of the southern portion of the subject land. The first alternative uses the amount of 71 apartments reflecting the number of apartments recommended for the adjacent lot to the west in the "Revised Parramatta Road Corridor Traffic Study". On this basis the subject land would be valued at $4,750,000. However the respondent also submitted that a 10% reduction to the yield of the southern portion of the subject land should be made in recognition of the site constraints, which would reduce the value of the subject land to $4,115,800. 173 The Court acknowledges that the subject land is constrained but finds the 10% reduction to be arbitrary and unsupported by evidence. Accordingly the Court will adopt the observations of Starke J in Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited and Others (1947) 74 CLR 358 at p 374 and find "in favour of a more liberal estimate" to resolve any compensation doubt.

174 Applying Mr McKenzie's and Mr Wood's calculations the highest valuation of the subject land is $4,750,000. Such value represents the highest and best use of the subject land at the date of acquisition, and excludes the public purpose.

175 As to the severance claim relied upon by the applicant as an alternative, the Court accepts the evidence of Mr Marshman that Concord Council would not have contemplated the type of development proposed by the severance claim. Accordingly the Court rejects the claim for compensation based on severance. 176 The valuations of the subject land provided by the applicant are predicated upon a development potential which has been found not to exist. Accordingly such valuations cannot be sustained.

1. That the claim for compensation pursuant to the provisions of s 55 of the Land Acquisition (Just Terms Compensation) Act 1991 be assessed in the sum of $4,750,000;

4. Reserve liberty to apply in respect of disturbance subject to any application being made within the next fourteen days.

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.