Kirela Pty Limited v Minister administering the Environmental Planning and Assessment Act 1979 - [2003] NSWLEC 135 - NSWLEC 2003 case summary — Zoe

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

[2003] NSWLEC 135

Land and Environment Court (NSW)|2003-05-19|Before: Cowdroy J, Mr J

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Land and Environment Court (NSW)

Decision date

2003-05-19

Before

Cowdroy J, Mr J

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Judgment (106 paragraphs)

[1]

CITATION : Kirela Pty Limited v Minister administering the Environmental Planning and Assessment Act 1979 [2003] NSWLEC 135 APPLICANT Kirela Pty Limited (ACN 079 721 127) PARTIES : RESPONDENT Minister administering the Environmental Planning and Assessment Act 1979 FILE NUMBER(S) : 30088 of 2001 CORAM: Cowdroy J KEY ISSUES: Compulsory Acquisition of Land :- compensation - highest and best use of land - land designated for a public purpose - zoning of land but for the public purpose - constraints affecting land - valuation of land - assessment of compensation. Concord Local Environmental Plan No. 100 Concord Planning Scheme Ordinance County of Cumberland Planning Scheme Ordinance Land Acquisition (Just Terms Compensation) Act 1991, 51(1), s 55, s 56, s 58 LEGISLATION CITED: Rivers and Foreshores Improvement Act 1948, Pt 3A, s 2, s 22A Strathfield Development Control Plan No. 3 Strathfield Development Control Plan No. 8 Strathfield Development Control Plan No. 20 Strathfield Local Environmental Plan No. 79 Strathfield Planning Scheme Ordinance, cl 41D, cl 41E, cl 41F Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited and Others (1947) 74 CLR 358; Corrie and Another v MacDermott [1914] AC 1056; Ervin Mahrer & Partners v Strathfield Municipal Council [2002] NSWLEC 47; Griffith City Council v Polegato and Another (1990) 20 NSWLR 696; Horn v Sunderland Corporation [1941] 2 KB 26; Housing Commission of New South Wales v Falconer and Others [1981] 1 NSWLR 547; CASES CITED: Housing Commission of New South Wales v San Sebastian Pty Ltd and Others (1978) 140 CLR 196; Overton Investments Pty Ltd v Minister administering the Environmental Planning and Assessment Act 1979 (2001) 113 LGERA 439; Pointe Gourde Quarrying and Transport Company Limited v Sub-Intendent of Crown Lands [1947] AC 565; The Crown v Murphy and Another (1990) 64 ALJR 593; Silverwater Estate Pty Limited v Auburn Council and Another [2001] NSWLEC 60; Yates Property Corporation Pty Ltd (In Liquidation) v Darling Harbour Authority (1991) 24 NSWLR 156; Zhang v Canterbury City Council (2001) 51 NSWLR 589 DATES OF HEARING: 19/05/2003; 20/05/2003; 21/05/2003; 22/05/2003; 23/05/2003; 26/05/2003; 27/05/2003; 28/05/2003; 29/05/2003; 30/05/2003; 02/06/2003 DATE OF JUDGMENT: 08/29/2003

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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.

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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

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(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)

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(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.

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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.

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(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.

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(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

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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.

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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

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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.

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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.

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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.

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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

[94]

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.

[101]

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.