Liverpool City Council v Roads and Traffic Authority of New South Wales

Land and Environment Court (NSW)|2004-09-24|Before: Talbot J

CITATION : Liverpool City Council v Roads and Traffic Authority of New South Wales [2004] NSWLEC 543 APPLICANT Liverpool City Council PARTIES : RESPONDENT Roads and Traffic Authority of New South Wales FILE NUMBER(S) : 30489 of 2003 CORAM: Talbot J KEY ISSUES: Compulsory Acquisition of Land :- compensation - allowance for rezoning and reclassification of community land - taking account of relocation of drainage works riparian zone and vegetation. Environmental Planning and Assessment Act 1979 Land Acquisition (Just Terms Compensation) Act 1991 s 55(a), s 55(f), s 56(1), s 66 Local Government Act 1993 s 35, s 36, s 45 LEGISLATION CITED: Threatened Species Conservation Act 1995 Liverpool City Council Development Control Plan No.4 Environmentally Responsive Residential Development Liverpool City Council Development Control Plan No. 31, Subdivision of Land in Hoxton Park, Carnes Hill and Prestons Residential Release Areas Liverpool Local Environmental Plan 1997 cl 24 Bunney v State of South Australia (2001) 112 LGERA 213; Canterbury City Council v Roads and Traffic Authority of New South Wales [2002] NSWLEC 161, unreported; Collins and Another v Council of the Shire of Livingstone (1972) 127 CLR 477; CASES CITED: Corrie v MacDermott [1914] AC 1056; Hornsby Shire Council v Roads and Traffic Authority of New South Wales (1998) 100 LGERA 105; Paine v Cork Co (1900) 69 LJ Ch 156; Turner and Another v Minister of Public Instruction (1956) 95 CLR 245 DATES OF HEARING: 01/09/04, 02/09/04, 03/09/04, 06/09/04, 13/09/04 DATE OF JUDGMENT: 09/24/2004

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

30489 of 2003 Liverpool City Council v Roads and Traffic Authority of New South Wales

JUDGMENT Introduction 1 By notice of Acquisition published in the NSW Government Gazette 4 October 2002 pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 ("the Just Terms Act") the Roads and Traffic Authority of NSW ("the RTA") acquired three parcels of land from the applicant, Liverpool City Council ("the Council") by compulsory acquisition.

2 The parties have not been able to agree on the amount of compensation. The Council has applied for determination by the Court of the amount of compensation payable by way of an objection pursuant to s 66 of the Just Terms Act in accordance with s 55.

3 Three separate parcels of land have been acquired, they are as follows:

· Parcel A originally comprised .553 hectares being Lot 26 in DP 876139. An area of 1,445m2 comprised in Lot 9 DP 1045043 has been excised from Lot 26 as a consequence of the compulsory acquisition. The residue of Parcel A comprises 4,094m2 in Lot 4 DP 1045043. · Parcel B originally comprised an area of: 4 acres, 3 roods, 37 ½ perches delineated as Lot 1 in DP 21220. The Respondent has acquired 3,907m2 being (Lot 11 in DP 1045043), 5,635m2 (being Lot 7 in DP 1045043) and 1,960m2 (being Lot 10 in DP 1045043) out of the original Lot 1. The residue of Parcel B comprises Lot 3, which is in two parts, severed by Lot 7.

Parcels A and B both have a frontage to Kurrajong Road and are separated by Skipton Lane.

· The third parcel of land acquired from the Council is Lot 111 in DP 1045185. The parties have agreed on the compensation payable in respect of this parcel of land. Consent orders will be made. 4 The purpose of the acquisition is for that part of the Western Sydney Orbital (WSO) Road, which will be constructed through the suburb of Prestons. Lot 7 DP 1045043 and Lot 111 DP 1045185 will form part of the area occupied by the Western Sydney Orbital Road, whereas Lots 9, 10 and 11 have been acquired to facilitate the construction of a deviation, pending the construction of an overpass for Kurrajong Road.

5 At the date of acquisition Parcel A was zoned Special Uses 5(a) Drainage by Liverpool Local Environmental Plan 1997 ("the LLEP"). Parcel B was zoned partly Residential 2(a), Special Uses 5(a) Drainage and the open space 6(a) Public Recreation.

6 The land acquired by the RTA falls predominantly within the Special Uses 5(a) Drainage zone. Some 12% of the RTA acquired land is zoned Residential 2(a) and a further 3% is zoned Open Space 6(a) Public Recreation.

7 Clause 24 of the LLEP provides for the development of land which is located along the boundary of two zones, in this case the Special Uses 5(a) Drainage and Residential 2(a) zones, as follows:- ( 1) Where land adjoins the boundary between two zones, development may be carried out on that land, with consent, if the development is permissible within the adjoining zone.

(2) The Council may permit development of land referred to in subclause (1) only if, in its opinion: (a) the development is desirable, due to planning, design, ownership, servicing or similar requirements relating to the optimum development of the land, and (b) the development would not have an adverse impact on:

(i) a wetland, or (ii) a water body, or (iii) bushland, and

(c) an area of land, sufficient and suitable for development which is permissible on the land, is provided in the adjoining zone or, where the land is in the 5(a) zone, will be acquired by the Council and is, in the opinion of the Council, no longer required for the purpose specified on the map."

8 Family day care centres, Home-based childcare centres, Home occupations and Maintenance dredging may be carried out within the Residential 2(a) zone without development consent. The following uses are permissible in the zone:- Agriculture; Aquaculture; Assisted accommodation; Bed & breakfast premises; Child care centres; Communications facilities; Community facilities; Dams; Dual occupancy housing; Dwelling houses; Educational establishments; Exhibition homes; Exhibition villages; Forestry; Health consulting rooms; Home businesses; Hospitals; Housing for aged or disabled persons; Integrated housing; Intensive plant agriculture; Land fill; Local shops; Motels; Multiple dwellings; Permanent group homes; Places of public worship; Public buildings; Recreation areas; Roads; Sanctuaries; Transitional group homes; Utility installations; Utility undertakings.

9 It is convenient to deal with the claim in respect of Parcels A and B together.

10 Parcel A comprised relatively flat cleared and grassed land sloping gently to the west with an open drainage channel extending centrally east/west through the site. Lot 4 is retained by the Council and is irregular in shape.

11 Parcel B was a rectangular allotment located immediately to the west of Parcel A. There is frontage to Kurrajong Road of 399m and frontages to Skipton Lane and Ash Road of approximately 50m. It is bisected by Maxwells Creek. The remaining Lot 3, held by the Council, is severed by the proposed orbital road. The two parts of Lot 3 are irregular in shape with a total area of 8681m2.

12 Over the past decade the Council has progressively acquired land for drainage purposes in the Prestons area in order to accommodate future drainage requirements for the Maxwells Creek corridor.

13 Parcel A was acquired in 1998 and Parcel B was acquired in 2000. Notwithstanding that the land was zoned generally for drainage purposes at the date of acquisition, it is asserted that the prices paid by the Council for the two parcels of land reflected potential for future residential development. These sales are not relied upon by either party. Accordingly the statement has no relevance to the determination of the value of the land at the date of acquisition except to show support for the applicant's ultimate submission that it would be unlikely in the circumstances that the Council as vendor would dispose of the land for a nominal consideration.

14 Parcel B is classified as Community Land pursuant to Part 2 of Division 1 of Chapter 6 of the Local Government Act 1993 ("the LG Act"). Section 35 requires it to be used and managed in accordance with the following: · The plan of management applying to the land; · Any law permitting the use of the land for a specified purpose; and · Division 2.

15 There is no evidence of the adoption of a plan of management for the subject land as community land. Section.36 contemplates that not all community land will be owned by a council. Section 45 severely constrains a council in dealing with community land as follows: - (1) A council has no power to sell, exchange or otherwise dispose of community land.

(2) A council may grant a lease or licence of community land, but only in accordance with this Division.

(3) A council may grant any other estate in community land to the extent permitted by this Division or under the provisions of another Act.

(4) This section does not prevent a council from selling, exchanging or otherwise disposing of community land for the purpose of enabling the land to become, or be added to, a Crown reserve or to become, or be added to , land that is reserved or dedicated under the National Parks and Wildlife Act 1974.

16 Accordingly, prima facie the Council has "… no power to sell [community land] for money" Paine v Cork Co (1900) 69 LJ Ch 156 at 158 per Sterling J. However, the respective planning consultants gave evidence in a report following a joint conference pursuant to the Expert Witness Practice Direction ("the EWPD") as follows: (1) The Respondent's planner considered that reclassification from Operational to Community would be a lengthy process with no guarantee of success. Accordingly a prospective developer would have to factor in a significant degree of risk and allow for the time taken to obtain a reclassification of the land, before a purchase could be effected and development commenced.

(2) The Applicant's planner considered that the reclassification of surplus drainage and open space lands from community to operational is a relatively routine matter in the context of new residential release areas. He indicated that there were several examples of such reclassifications in the Liverpool Local Government Area."

17 The above approaches have been embraced by the parties.

18 The Court of Appeal in Hornsby Shire Council v Roads and Traffic Authority of New South Wales (1998) 100 LGERA 105 at 108 expressed the view that notwithstanding land is classified as Community land at the date of resumption, the task of this Court is "to seek to value the chance of the land being released from the category of community land and have the restriction removed." Corrie v MacDermott [1914] AC 1056 (particularly at 1062 and 1064) was cited by Stein JA as authority for the proposition that it is necessary to determine to what extent the restrictions affect the value of the land and to consider the chance of those restrictions being discharged. I am, of course, bound to follow the decision of the Court of Appeal in Hornsby but I note in passing that Corrie v MacDermott was, as I presently understand it, a case dealing with legislation that provided for compensation to be made to the person from whom property was taken for "the value of the land" untrammelled by the constraints contained in s 55 of the Just Terms Act that direct the Court to have regard only to the matters identified in paragraphs (a) to (f), including market value of the land (as defined in s 56(1)). I propose to assume that the Council at the date of acquisition would have sold the land as a willing but not anxious seller to a willing but not anxious buyer with an assumption that there was a real expectation that the restriction would be lifted within a period of at least one year.

19 The real substance of the dispute between the parties lies with ascertaining the real potential the land had for residential development prior to compulsory acquisition, if any. The applicant's claim is that the highest and best use of Parcels A and B immediately preceding the acquisition was residential use, whereas the respondent argues that the land immediately preceding acquisition was not suitable for development due to the significant constraints that applied.

20 In respect of the part of Lot 26 (Parcel A), the applicant's claim is $1,250,000.

21 The applicant's claim in respect of Lot 1 (Parcel B) is $2,100,000.

22 The respondent is prepared to pay only $285,000 by way of compensation in respect of both parcels.

Evidence of ecological experts in respect of the subject land 23 Dr AnneMarie Clements and Mr Dominic Fanning have been respectively retained by the respondent and the applicant to advise in regard to the conservation value of the existing vegetation on the western part of Parcel B. They agree that the patch of vegetation consists of a native canopy with a predominantly exotic under storey that appears to be an intergrade between Sydney Coastal River-Flat Forest (SCRFF) and Cumberland Plain Woodland (CPW) both of which are endangered ecological communities within the meaning of the Threatened Species Conservation Act 1995 ("the TSC Act"). They both recognise that the vegetation is a potential environmental constraint to development which would need to be considered pursuant to the Environmental Planning and Assessment Act 1979 ("the EP&A Act").

24 Dr Clements is firmly of the opinion, based on survey data, that this stand of vegetation would be conserved and enhanced by careful bush regeneration to form part of the open space riparian corridor required on both sides of Maxwells Creek. On the other hand Mr Fanning is equally adamant that the vegetation is not of sufficient value to warrant retention and did not constitute an impediment to development.

25 Dr Clements asserts that the intergrade between the two communities is such a rare occurrence that it heightens the ecological value and makes it imperative that in conservation terms the vegetation be retained. Dr Clements would advise a prospective purchaser that the area in the western section was "totally no-go" and would not be developable land.

26 Mr Fanning makes the semantic point that under the TSC Act specific species are listed as entities whereas there is no separate listing of an intergrade forest, which, therefore, arguably is not technically protected by the terms of the Act. Moreover, he regards the area of vegetation on the land as being so small, isolated and in a highly degraded and depauperate condition that there would have been little purpose to be achieved by its retention.

27 A report prepared by Mr Fanning's firm, in November 1996, for the purpose of assessing the environmental impacts of the WSO concluded that although the stands occurring along or adjacent to Maxwells Creek are fragmented and generally without a complete tree canopy cover, efforts would be made to retain as much of these stands as possible adjacent to areas disturbed for flood mitigation works. Aerial photographs suggest that there has been substantial clearing since that earlier investigation was undertaken by Mr Fanning's firm. Although the vegetation may constitute an endangered ecological community Mr Fanning maintains his current opinion that it is regrowth not worthy of retention.

28 There is evidence that the vegetation in the western section of Parcel B has been identified by Abigroup Leighton Joint Venture as an endangered ecological community and has been fenced for protection from road works. Mr Fanning explained that he was opposed to the fencing of the vegetation. His firm had been directed to carry out the fencing in order to satisfy approval conditions for the construction of the WSO.

29 There is no doubt in my mind that both Dr Clements and Mr Fanning would have been equally emphatic in their advice to a prospective purchaser, notwithstanding the extreme divergence in their views. During the course of their concurrent evidence it was obvious that beyond the limited areas of agreement, whereby the vegetation was identified as an intergrade between SCRFF and CPW, neither would be prepared to make a concession in favour of the prospect that the assessment of the value of the vegetation by the other could be correct in any other respect. The hypothetical prospective purchaser therefore might have been faced with making an assessment of market value based upon those divergent views.

30 In my opinion it is probable that the hypothetical purchaser, after viewing the vegetation for themself would have been more persuaded by the evidence of Mr Fanning that it would be more likely than not, that the Council ultimately would not regard the trees as an impediment to development. Further encouragement for this view would have been garnered from the fact that the Council had concentrated on a more extensive and intact stand of CPW to the south, to the extent that it is identified in the LLEP as significant and warranting special consideration and protection. Moreover the draftsperson of the LLEP specifically limited the constraint on the subject land to a narrow tongue of vegetation immediately adjoining the 5(a) zoned land approximately adjacent to the western bank of Maxwells Creek. Subsequent depauperisation since the date of earlier surveys and the report prepared by Mr Fanning for the purpose of the WSO reduces the importance of the remaining trees.

31 Finally, the heavy traffic along Kurrajong Road and the highly developed residential areas on the opposite side of Ash Street directly adjacent, would have been perceived as having significant adverse impact on the long term viability of the trees, thereby further reducing their prospect for retention.

Flooding and drainage 32 The Court has the benefit of a joint report and concurrent evidence from two hydrologic engineers. Mr Drew Bewsher has been retained by the Council not only in relation to this case, but generally for advice in regard to strategic planning of drainage and flooding matters in Cabramatta Creek. Maxwells Creek is a tributary of Cabramatta Creek. On occasions he has also given advice to individual developers as a private consultant.

33 The RTA relies upon the advice and evidence of Associate Professor James E Ball a professional engineer who is also a teaching academic at the University of New South Wales. Professor Ball is located at the Water Research Laboratory, which is also retained as a consultant for developers from time to time.

34 Mr Bewsher and Professor Ball agree that having regard to the requirements of the Department of Infrastructure Planning and Natural Resources (DIPNR) and good engineering practice a developer purchaser would be advised that a 70m riparian zone would be required in respect of Maxwells Creek.

35 Mr Bewsher's concept proposal for providing a naturally functioning creek system involves restoring and recreating a creek system with a riparian zone and fulfilling all the hydraulic and riparian functions of a creek system within a 70m corridor.

36 The basic concept proposed by Professor Ball is very much as Mr Bewsher proposes except that he proposes placing compensatory flood storage outside the riparian zone to replace the area taken up by the fill platform constructed in the buffer. Professor Ball identifies two constraints to the prospect of providing the compensatory storage within the riparian zone. One is the need to ensure that there is adequate conveyance through the channel so that flood levels upstream are not amplified or increased. Secondly, if the works are undertaken outside the riparian zone his opinion is that such a scheme would be more likely to obtain approval from DIPNR. He agrees however, that provided conveyance can be maintained and depending upon DIPNR approval being forthcoming, Mr Bewsher's proposal would not be an alien engineering concept.

37 Mr Bewsher says that if the works were carried out solely on the subject site for the purpose of rendering it predominantly flood free there would be an almost imperceptible change in upstream flood levels. Any filling on the site would basically do what Kurrajong Road presently does. Given that the subject site is the last property downstream above the culvert under Kurrajong Road, Mr Bewsher believes that if the work was confined only to the subject site at the time of development it could be regarded as the initial step in a staged approach. He recognises, of course, that it would be preferable to have a co-ordinated approach so that all of the riparian works required for Maxwells Creek, including the subject site, were carried out at the same time. Nevertheless, starting with the subject property would be a normal process in his opinion. Furthermore, he believes that if the WSO had never been contemplated the most likely situation would have been that the whole area would have been developed up to the 45m corridor boundary of the 5(a) zone. That assumption is based upon his knowledge of the rate of development in Liverpool and the likelihood of the whole area between Ash Road and Skipton Lane being developed up to the boundary of the 5(a) land. At the date of resumption Mr Bewsher says that the strategy for drainage was for a 45m wide corridor.

38 On the other hand Professor Ball sees technical difficulties with fitting the riparian zone into a single allotment without a transition zone between the existing creek and the modified and enhanced creek system within the allotment. He estimates that for every one metre change in lateral width of channel, 10 to 12 metres longitudinal length is required to undertake the transition from a channel roughly 10 metres wide so that there would need to be about 100 to 120 metres of transition zone. Such a transition arrangement would obviate the requirement for co-ordination all the way upstream south of the boundary of the subject land. Conversely Mr Bewsher would inform the prospective purchaser that if there was no co-ordinated scheme upstream of the subject land at the time of purchase, there could be temporary works within the site itself to cover the interim period between the date of development of the subject site and the introduction of a regional scheme. Professor Ball would prefer to advise the purchaser that initially his scheme would be necessary on the subject land but that in the future when the regional scheme came through the purchaser may be able to make more land available for development.

39 They both agree that the existing drainage channel within Parcel A (Lot 26) could be re-engineered and located in the Kurrajong Road alignment. They also agree that it is a concept that would be acceptable to a council on the basis that the developer purchaser was responsible for the cost. The only difference between them is whether the design of the alternative piped system within Kurrajong Road would be designed to accommodate the one in 100 year flood entirely or whether the excess over a one in 20 year flood would be allowed to run along the road itself.

40 I do not accept the proposition put by Mr Bewsher that a hypothetical developer purchaser at the date of acquisition, assuming that the WSO had not been a prospect at that date, would have considered that only the 45m within the 5(a) zone in Parcel B would be required as a riparian buffer. The purchaser would have accepted the professional engineering advice that at least a 70m buffer or zone was required and would have understood that the additional flood storage proposed by Professor Ball on the site could in engineering terms be included within the riparian zone, although there may have been some doubt that DIPNR could be persuaded to approve such a concept. It would also have taken account of the evidence of Mr Juradowitch, the applicant's planning expert, who would have allowed for an 80m riparian zone in the circumstances. Nevertheless, some confidence would have been gained by the precedents relied upon by Mr Bewsher, namely that the use of wetlands and billabongs within a riparian zone had been accepted in design for other areas, such as South Hoxton Park and that in the particular circumstance of the subject property, being the ultimate down stream site, it could be developed in a way consistent with his advice and confirmed in practical terms by the advice of Professor Ball. There is no direct evidence from DIPNR, nor of its opinion, except as it was given in another case under different circumstances at an unrelated upstream site along Maxwells Creek. 41 There would have been some concern that the Council may have required the piped system to replace the existing scheme through Parcel A and the north eastern corner of Parcel B to be designed to keep Kurrajong Road free of flood water in a one in 100 year event but nevertheless there would have been a reasonable expectation by the hypothetical purchaser that Council could have been persuaded to allow a system which catered only for the event up to one in 20 years in accordance with what Mr Bewsher described as reasonably standard practice.

42 Harvey Sanders has given evidence on behalf of the respondent that he would have alerted the prudent purchaser to delays that could have been caused by the necessity to reclassify Lot 1 as operational land and for the 5(a) drainage zoning to be changed to permit residential development. There would also be concerns that a redevelopment of the land in the form suggested by the applicant's consultant Nick Juradowitch did not strictly comply with the controls in Liverpool City Council Development Control Plan No. 31, Subdivision of Land in Hoxton Park., Carnes Hill and Prestons Residential Release Areas ("DCP 31") The concern entertained by Mr Sanders, particularly in relation to reclassification of the community land extended to the risk involved as a consequence of a need for transparency and probity on the part of Council as the owner of the land. Accordingly the foreshadowed risk in his view turns on certainty as well as timing. 43 Mr Sanders would have also alerted the hypothetical purchaser to the risk that a regional flood mitigation and creek management scheme might be impeded by the recognised importance of the CPW vegetation to the south of the subject site and that in any event a developer would have regard to the prospect that the development of the whole of Lot 1 (Parcel B) might have to be addressed in stages until the works in the riparian zone proposed by Mr Bewsher could be undertaken and that in the meantime it might be necessary to recognise that the detention works suggested by Professor Ball may be necessary. Even if the purchaser could be satisfied that the full development potential could be realised in due course there would be significant delay before that could be achieved according to the advice Mr Sanders would have given. 44 In addition to the above concerns Mr Sanders doubts that the 6m setback from Kurrajong Road required by the DCP 31 would be sufficient in the case of Lot 26. Moreover he would have advised the purchaser to take account of the more expensive options for relocating the drainage within the Kurrajong Road alignment to avoid the prospect of road flooding in the one in 100 year event. Even if he was asked to assume Lot 26 could be made flood free and the existing drainage works removed, Mr Sanders would have told the purchaser that townhouse development would have been out of the question because it would be inconsistent with a number of the provisions of the Liverpool City Council Development Control Plan No.4 Environmentally Responsive Residential Development ("DCP 4") which relates to residential development. At the very least the constraints applied by DCP 4 would reduce the expected yield from a townhouse development. Indeed Mr Sanders would not accept that townhouses were acceptable on the site at all given its configuration and relationship to the road and to properties adjoining on the south. Mr Sanders would have foreshadowed problems in relation to the achievement of a viable form of residential subdivision on either lot, having regard to the constraints identified by him and the other consultant.

45 Mr Juradowitch emphasises that the critical shortage of land available for residential development at the time of acquisition would have reduced the element of risk for achieving a rezoning and reclassification of Lot 26. 46 He also noted a move away from the channelisation of watercourses in recent times with attempts to reintroduce a natural riverine environment. However Maxwells Creek is in his view not a major watercourse. It is, he says an intermittent stream. He would have advised the developer that it would need more land in a drainage corridor than shown on the zoning map for the 5(a) zone. He regards the 70m zone put forward by Mr Bewsher and subsequently adopted by Professor Ball as a minimum. He would have allowed 80m to permit some recreational use of the land such as a cycleway. Nevertheless he recognises that it would have been quite possible for a developer to negotiate with the Council to do works at this most downstream site in Maxwells Creek adjacent to the culvert under Kurrajong Road, notwithstanding that the regional scheme was not proceeding at that time. In his view the principal contribution to flood level upstream is the existing "dam effect" caused by the culvert at Kurrajong Road. 47 In Mr Juradowitch's opinion the Council would not have retained part of the land in the drainage zone once the drainage works had been achieved. After that it would have released the land for residential development. Alternatively the provision of clause 24 of the LLEP could have been utilised. It is also his belief that the land was classified as community land because the prospect of rezoning and release of the land for development was overlooked at the time of classification. He says it is his experience that the reclassification and rezoning process would have been a routine matter. Objections to the reclassification and rezoning would have been unlikely in the circumstance of this case according to Mr Juradowitch. 48 Having regard to the size of pipe that would be required to carry the water flows from Skipton Lane to Maxwells Creek Mr Juradowitch regards the costs of piping as relatively minor and minimal in the context of residential development. If the drainage pipe was installed to cater only for a one in 20 year event nevertheless the depth of water at Kurrajong Road in the one in 100 year event would only be gutter height and accordingly access for cars would not be impeded. In his opinion there would be water on the road for a short period and only during the extreme event. Accordingly Mr Juradowitch sees no constraints to the development of the strip of land fronting Kurrajong Road which is zoned 5(a) and says that a developer would be keen to negotiate with the Council in the context of potential returns for high land prices at the relevant date. In his opinion clause 24 of the LLEP is designed to provide flexibility when engineering circumstances changed to allow for solutions that do not require the drainage zoning to be maintained. 49 Mr Juradowitch places different weight upon the significance of the CPW on Parcel B and the land to the south to reach the conclusion that if the value of the vegetation on the subject site was weighed against the demand to provide developable land for residential purposes, the balance would have been found in favour of development, notwithstanding that the advice of Dr Clements was diametrically opposed to the advice given by Mr Fanning. 50 In contrast to Mr Sanders view regarding compliance with DCP 31 and DCP 4 he is of the opinion that the requirements of the DCPs can be satisfied by good design. He would have told the purchaser that so long as between 270m2 and 300m2 for each townhouse could be achieved that would be consistent with marketplace expectations and the requirements of the DCP. Similarly the demand for blocks of residential land and the consequential increase in price means that purchasers can only afford to buy lots with an area of about 350m2 and a developer would realise that. Moreover his advice would be that the requirements of the DCPs in relation to the numerical standards can be met by adopting the design concepts provided by Mr Juradowitch. He says the only real argument raised by Mr Sanders lies in relation to the interpretation and application of the objectives stated in the planning instrument. 51 Mr Juradowitch sees no problem with the interface between a townhouse development and adjoining residential estate to the south of Lot 26. Provision of a retaining wall, a one metre landscaping strip at the rear, a driveway along the back of the townhouses and the difference in levels would provide a sufficient degree of physical separation in his opinion. The position of the prospective purchaser 52 Mr Sanders' evidence suggests that a prospective purchaser could be advised that the likelihood of achieving an economic yield from Lot 26 at the date of acquisition was remote given the constraints provided by the provisions of the DCPs. I agree with the applicant's submission that in every case on issues ranging from classification, engineering, planning, drainage, vegetation and valuation Mr Sanders has expressed a worst case view which invariably favours the resuming authority not the disposed owner. I find that the approach of Mr Juradowitch is far more balanced and realistic reflecting the more likely advice that would be provided to and acted upon by the prospective hypothetical developer purchaser. Moreover, as a matter of principle the disposed owner is entitled to the resolution of a genuine dispute in its favour.

53 Irrespective of the view taken about the utility of the application of clause 24 (particularly clause 24(2)(c) which is unhappily phrased) of the LLEP, nevertheless allowance would be made for the delay for either achieving a re-zoning or finalising negotiations and work for relocation of the drainage line into the Kurrajong Road Reserve. The purchaser would have expected an obligation to carry out the drainage works at its expense but with a reasonable prospect that the council would agree to a design that catered for the one in 20 year event. After re-zoning to Residential 2(a) and relocation of the drainage, Parcel A could accommodate 20 villa units or townhouses. 54 So far as Lot 1 is concerned at the date of acquisition the hypothetical purchaser would have allowed for the loss of some developable land within an 80m riparian zone and would have assumed that the prospect of achieving a subdivision with at least 26 single detached dwelling allotments was achievable with a possibility that the density might be increased beyond that depending upon whether Council could be persuaded to approve smaller lots or multiple dwellings. 55 The prudent purchaser would have assumed that re-classification of Lot 1 from Community land to Operational land could take at least 12 months. The necessary re-zoning of the 5(a) land could take place at the same time. 56 In both cases after resumption I am satisfied the yield is reduced by as much as 40 - 45%. The valuation evidence 57 The only written evidence from the valuers is comprised in the following documents:-

(1) Valuation Report by David L. Lunney dated 20 December 2002 (2) Joint Valuers Statement in respect of Parcel A dated 1 September 2004 (3) Joint Valuers Statement in respect of Parcel B dated 1 September 2004

58 The applicant's valuer Mr Lopco Neskovski did not provide a separate statement of evidence. The abovementioned report by Mr Lunney was prepared under instruction from the Valuer General for the purpose of determining the amount of compensation to be offered for the compulsory acquisition of the land. In that report Mr Lunney adopted the "before and after" approach to determine compensation for the compulsory acquisition of Lots 7, 9, 10 and 11 as an amount in the sum of $1,090,170. He proceeded on the basis that both parcels could be developed.

59 Following directions made by the Court, pursuant to the EWPD, the two valuers conferred and provided joint statements of evidence in respect of Parcels A and B.

60 In respect of Parcel A, Mr Neskovski determined the value with a potential of development of 20 townhouse units at an englobo rate of $100,000 per unit adjusted by deducting $355,000 for the cost of filling and draining to give a market value of $1,645,000. No allowance is made for rezoning in that figure, but if necessary he would allow for 9 - 12 month period for this to occur. Based on a yield of only nine units, at a reduced englobo rate of $85,000 to take account of adverse impact from the WSO, Mr Neskovski determined a valuation of $400,000 for Parcel A in the after situation thereby assessing the market value of that land at $1,250,000. He confirmed those figures by carrying out a brief hypothetical development check valuation.

61 Based upon comparable sales including land in the Rural 1(e) Future Urban zone Mr Neskovski obtained a before englobo rate for Parcel B (Lot 1) of $150 m2 giving a valuation of $3,000,000. No adjustment for rezoning was made as the comparable Rural 1(e) sales took account of a deferment in the order of 12 months for the same reason.

62 Taking account of the reduced yield and affection by the proposed road works, Mr Neskovski determined the after valuation at $800,000 using the englobo rate of $100 m2 to calculate the compensation payable at $2,100,000. Again he used a check valuation by using the summation method to achieve the same result.

63 Mr Lunney changed his valuation considerably following the expert advice from the respondent's town planning engineers and flora experts. He formed the view that even if Parcel A (Lot 26) could be rezoned for residential purposes and surface drainage could be relocated, the cost of the works would be prohibitive. He proceeds on the basis that the vegetation on Parcel B (Lot 1) would preclude any residential development of the western part of the Lot.

64 By adopting an approach taken in an unrelated matter by this Court (Canterbury City Council v Roads and Traffic Authority of New South Wales [2002] NSWLEC 161, unreported) he applies a 50% discount to the developable areas of Parcel B to reflect the statutory restrictions imposed on the land as a result of the Community land classification. This allowance is arbitrary and takes no account of the actual circumstances. Given the "enormous development constraints" of both parcels Mr Lunney takes the view that a developer would not see any of the land as capable of supporting development and would pay only "nominal values" at the rate of $20m2 before acquisition and at the rate of $18m2 after resumption to derive a market value of the whole of the land fronting Kurrajong Road of $285,000 as drainage utility land. Even allowing for the prospect of some land being utilised for development he can only derive values ranging form $280,000 to $613,676 over four scenarios depending upon the advice accepted from other experts.

65 Mr Lancaster submitted in his final address on behalf of the respondent that the "nominal or utility value" calculated by Mr Lunney is, in substance, either the monetary equivalent of the value of the land to Council as special uses (drainage) land or the like (see Turner and Another v Minister of Public Instruction (1956) 95 CLR 245 at 264, 268 (Dixon CJ)) or the amount that a hypothetical roads authority would be willing to pay for utility land associated with road works (see Collins and Another v Council of the Shire of Livingstone (1972) 127 CLR 477 at 488 (Barwick CJ), at 489 (Menzies J), at 498-499 (Gibbs J); Bunney v State of South Australia (2001) 112 LGERA 213). This would be consistent with authority that it is not appropriate to apply a nominal value as such (see Hornsby and Corrie v MacDermott).

66 While it may be perfectly legitimate for Mr Lunney to rely on expert advice, serious doubt must be cast upon the credibility of his final primary position which was not communicated to the applicant until a few days immediately preceding the hearing. The dramatic change in his perspective is not supported by any plausible explanation except that he became aware of the evidence of the respondent's experts, whereas when he prepared his original valuation for the Valuer General he made his own enquiries including from the officers of the Council.

67 The respondent recognised a residential value for the land in its pleadings until an amended defence was filed during the hearing in response to the change of valuation by Mr Lunney. That is, nearly two years after the date of acquisition and one year and nine months after Mr Lunney expressed his original opinion in December 2002. In the circumstances however it is not necessary to pursue the matter for any forensic purpose because I do not accept his approach in any respect. He relies heavily on the advice of Mr Sanders which I have largely rejected.

68 In what appears to be a belated attempt to regain some credibility Mr Lunney at the conclusion of the evidence prepared a compilation summary of the positions taken by him in response to a number of different scenarios discussed during the joint conference process pursuant to the EWPD. Taking the applicant's case at its highest in respect of Parcel A he derived a figure for diminution of value on a before and after basis of $803,250 and $806,994 for Parcel B. The latter figure applies a 50% risk factor to a rate of $160m2 for reclassification of the land in Parcel B from Community to Operational land. That accounts for the main disagreement with Mr Neskovski's opinion in relation to Parcel B.

69 The discrepancy between Mr Lunney and Mr Neskovski in respect of Parcel A on the applicant's best case is the amount of time discount for re-zoning and the lower rate adopted for each townhouse site, namely $90,000 before acquisition and $81,000 after the relevant date with the public work in place.

70 The hypothetical purchaser would have concluded, as I have, that the land could be developed as contended by the applicant, albeit with some risk.

71 Apart from the 80m riparian buffer zone, the whole of the land would have been regarded by the hypothetical purchaser as being capable of supporting development as foreshadowed by Mr Juradowitch. It may not be in an ideal location but nevertheless it is not disputed that the market at the relevant date was buoyant and developers were anxious to acquire land to meet the ongoing demand.

72 The risk of a re-zoning and re-classification mainly relates to time. Having regard to the practical solutions available in respect of the drainage along Kurrajong Road and Maxwells Creek, the prospect of development taking place is assessed as being extremely likely. The purchaser would allow 12 months for the process to be completed. I agree with Mr Neskovski that no further adjustment is required for that contingency in relation to the Rural 1(e) sales as the clear evidence is that those respective purchasers would have acquired that land with an expectation the re-zoning would occur in a similar time frame. The prices paid for land in the 2(a) zone can be appropriately adjusted on that account.

73 Developer purchasers appear to have willingly entered into contracts to purchase other lands with an awareness of constraints arising from the presence of vegetation and the uncertainty associated with the treatment of watercourses.

74 Doing the best that I can and using my own judgement based upon an overall assessment of the advice that could have been given to the hypothetical purchaser it is my view the purchaser, as a matter of prudence, would have insisted on a reduction in the value determined by direct application of sales evidence by Mr Neskovski. That would be done in order to take account of the adverse impact from the proximity to the busy Kurrajong Road and the risk that the predicted yield may not be achieved by the time the relevant authorities had been consulted. This adjustment together with a further adjustment for the delay in re-zoning for 12 months would have had the effect of reducing the assessment of market value of Parcel A before acquisition to $1,300,000 thereby resulting in a determination of value of the land taken at $900,000. A similar exercise in respect of Parcel B including an allowance for classification at the same time as a rezoning would determine the value of the acquired land at the sum of $1,500,000.

75 I have decided therefore that in the case of Parcel A compensation as it relates to market value assessed by application of the before and after method is determined in the sum of $900,000 and in the case of Parcel B in the sum of $1,500,000.

76 Final orders will be deferred until the parties have had an appropriate time to consider the reasons and to make further submissions in regard to compensation for disturbance, if any, and costs. Nevertheless the exhibits may be returned.

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.

(2001) 112 LGERA 213

(1998) 100 LGERA 105

At a glance

Court

Decision date

Before

Source

Judgment (77 paragraphs)

Parties

Cases Cited (5)