Mac's Pty Ltd v Minister Administering Local Government Act 1993 and Parramatta City Council

56 On 30 April 2003 council resolved to acquire certain land within Civic Place known as Connection Arcade. The council Report dated 30 April 2003 looked at the proposal to acquire Connection Arcade as representing a positive investment and it would increase council's frontage to Church Street Mall and surrounding streets. The report considered the funding principles proposed to be used for the acquisition of the remainder of the Darcy Street properties. At par 15 and onwards in the Report, council made the following statements: 15. Firstly, the intended and most desirable outcome will be the transfer of the properties to Civic Place development partner as part of the Project. This would involve the buying out of any remaining tenancies or reaching agreement with the tenants for their inclusion in the final development. These arrangements would be put into place through the council's Development Partner. 16. If, for some reason this does not eventuate the properties can be refinanced (possible writing down the debt through the disposal of other properties) and held as a long term investment. 17. Lastly the properties could be sold (perhaps amalgamated with other council properties) to an investor or developer. 57 On 14 May 2003 the CPPC resolved to adopt the Master Plan to come into effect on 1 June 2003 subject to certain minor amendments. The CPPC further resolved that: (b) …the Committee seek a joint meeting between Parramatta City council, the Central Parramatta Planning Committee and Parramatta Rail Link to collaborate on design co-ordination issues. 58 In a council report of 26 May 2003, council referred to the approval it sought on 30 April 2003 for Special Loan Funds for the acquisition of properties in Darcy Street. Council noted that negotiation with the owners of the Hungry Jacks Building (Mac's Pty Ltd) and of 20-26 Darcy Street (R & R Fazzolari) had indicated that they were unwilling to sell. This was also described in the council report of 10 June 2003. 59 In June 2003 the Master Plan was released in final form to the public.

60 The Master Plan states at page 4: 14. Ownership and Use The Civic Place site has an area of approximately 31,950 m2. The Parramatta City council owns 17,598 m2, which is just over 50% of this land, and is the largest landholder... 15. Master Plan Vision The redevelopment of Civic Place will reposition Parramatta as the capital of the western Sydney and a centre of business, tourism, entertainment, culture and heritage. It will build on the $100M investment that the NSW Government is making in the development of Public Transport Interchange by creating a gateway to the city. The Master Plan is pivotal in achieving the ambitious REP targets for employment and for public transport use both through its direct contribution and through the flow on effect for the rest of the city centre. … 17. Land The Master Plan encourages land amalgamation and it is critical that the open space, the pedestrian circulation, parking and access and the retail planning are integrated across the whole site. 18. Urban Structure The master plan utilises the historic axis between St Johns Church and Lancer Barracks as a major circulation route and to define the site layout. To the south of that line, backing onto Darcy Street and the rail station are the taller building, trapping the sun and creating a high quality northern face to the sequence of public places. To the north the buildings are reduced in height establishing an appropriate setting for the heritage buildings and ensuring sun access to the public spaces. 61 On page 9 the Master Plan states: …

The Sydney Regional Environmental Plan No. 28, 1999 (SREP 28 or REP) positions Parramatta by 2021 as Sydney's second CBD catering for a workforce of 90,000 within the Parramatta primary centre, and a city centre workforce growing to 60,000 workers with new residential communities of up to 12,000 residents.

Improved access and public transport to and from Parramatta City Centre will be needed to support employment growth. As a consequence, Parramatta is the focus of significant State Government investment into public transport with the new Parramatta Transport Interchange planned to open by the end of 2006. This project will involve upgrading the existing Parramatta Railway Station as part of the Parramatta and Chatswood Rail Link project and consolidating all bus operations into an integrated public transport interchange.

The State Government has also recently commenced construction of the NSW Police Headquarters as part of the strategy to create jobs in the area.

The new Public Transport Interchange will link City Rail services with the Western Sydney Rapid Bus Transitway network, local bus and other transport services. Together they will create a new transport gateway to Western Sydney that will support the future sustainable economic growth of Parramatta City Centre.

The redevelopment of the Parramatta Civic Place area and the new Public Transport Interchange will be a major catalyst in the economic prosperity and growth of the Parramatta City Centre. 62 On page 11 the Master Plan states: The REP makes statutory provisions for the master planning of a special area named Civic Place. Following the adoption of that plan the REP partners agreed to expand the area covered by the Master Plan to include the new location of the Parramatta Transport Interchange and the site of the NSW Police Headquarters.

This Master Plan therefore applies to the land bounded by Church Street Mall, Macquarie Street, Charles Street, Hassall Street, Station Street, Parkes Street, Valentine Street and Fitzwilliam Street as shown in Figure 1.3

However this Master Plan includes greater detail and has direct statutory effect, over the area bounded by Macquarie, Church, Darcy and Smith Streets. (Civic Place)

The Civic Place site and the Master Plan area are located at the core of the Parramatta Central Business District, next to the Parramatta Railway Station and Transport Interchange. The site has a mixture of retail and commercial uses and is traversed by major pedestrian routes linking the railway station to the Centre's commercial and retail precincts to the north and south and to the local schools to the east. The site is a centre of community activities and facilities and the nucleus of Local Government for the Parramatta area. It contains the Parramatta City council administrative offices, council Chambers, the historic Town Hall, Library and community meeting rooms.

… 63 On page 12 the Master Plan states: The purpose of the Master Plan is to provide a development framework for the civic centre of Parramatta that will guide the development and redevelopment of private and public land including public domain areas and public facilities. Specifically, the Master Plan provides detail on the resolution of the key issues which affect the precinct including: · Implementing established regional and local planning objectives for the City Centre · Creation of a gateway identity befitting Parramatta's role as a regional centre · Providing convenient public transport, vehicle and pedestrian access · Facilitating an economically-feasible mix of land uses which responds to the site's location at the centre of Parramatta · Accommodating and strengthening the civic focus of the site · Conservation and celebration of environmental, social and cultural heritage · Implementing new development, that is sustainable The Master Plan balances social, economic and environmental considerations to achieve a sustainable development proposal that will contribute to the city's overall economic robustness, fulfil a ceremonial and civic role, provide community facilities and services and establish best practice urban design, environmental management and government leadership. 64 On page 15 the Master Plan states: The most recent metropolitan strategy, Shaping Our Cities (DUAP 1998), identifies Parramatta as one of four primary centres in the Greater Metropolitan Region, alongside Sydney, Newcastle and Wollongong.

An underlying tenet of the strategy is the creation of a more compact city, creating opportunities for reduced reliance on motor vehicle travel, and employment creation in targeted locations. One of the key planning principles documented in Shaping Our Cities is to identify and create opportunities for employment and business growth in locations that support access by public transport and minimise conflict with other uses.

A regional strategy, Shaping Western Sydney, has also been prepared to provide further guidance on growth and development in the region. This strategy acknowledges the status of the western Sydney region as one of the fastest growing in the country, in terms of both population and economic (and consequent employment) development.

The strategy's overriding policy in relation to Parramatta is to develop it as the City at the Centre of Sydney. The Parramatta Primary Centre will, in the future, accommodate 90,000 employees, while the City Centre, focused around Parramatta Railway Station, will accommodate 60,000 employees. Specific actions identified in the strategy, with particular relevance to the Master Plan area, include: · Develop the important Civic Centre site · Implement rapid transit corridors · Market Parramatta regionally, nationally and internationally · Improve management of the City's heritage as a cultural tourism magnet · Developing a targeted growth program based on existing opportunities

Shaping Our Cities and Shaping Western Sydney both provide a broad framework to position Parramatta as the primary centre serving the western Sydney region. The development of the Master Plan area which forms the arrival point for the Parramatta City Centre is critical to achieving the objectives of these strategies. 65 On page 17 the Master Plan states: …

This Plan satisfies the Parramatta REP requirement that a Master Plan be prepared for the area bounded by Smith, Macquarie, Church and Darcy Streets prior to development consent being granted for development within the area.

The REP required a document consisting of written information, maps and diagrams which: · Outline detailed provisions relating to development of land to which the Master Plan applies, and · Explains how the planning aims, and the precinct, zone and special area objectives in the REP are applied.

Under the provisions of the REP, the Master Plan is required to address the following issues: · Phasing of development · Urban design considerations, including principles drawn from site analysis of the site and its context, density, height controls, building envelopes, identified views, privacy and security · Distribution of major land uses, including public access and open space · Environmental considerations, including noise attenuation, flood mitigation, water and soil management, remediation of contaminated land, solar access, energy efficiency, and management of significant flora and fauna habitat · Access considerations, including public transport, pedestrian, cycle and road access and circulation networks, including local traffic and parking · Patterns of subdivision or site amalgamation · Infrastructure provision and funding · Site landscaping · Heritage considerations, including conservation and protection of heritage items, heritage conservation areas, identified historic views and archaeological relics (including the preparation of conservation plans) · Provision of public facilities · Any other matter required by the appropriate authority 66 On page 53 the Master Plan states: Parramatta City council's vision is that Civic Place will be a landmark development with vibrant public places, distinctive buildings and active street life. council's vision and the strategic outcomes that provide the framework for this Master Plan are outlined in the 2002-2006 Management Plan. The vision will contribute to the achievement of several of council's strategic outcome areas which integrate economic, social and environmental issues to meet the needs of the community and secure its long term well being. The outcome areas relevant to the Civic Place site are: · SUSTAINABLE CITY Parramatta City will have an improving way of life now and for future generations · DISTINCTIVE CITY Parramatta is the leading City at the heart of Sydney - a distinctive, vibrant, cosmopolitan and sustainable city · ATTRACTIVE CITY Parramatta will be a place where people choose to live, work, visit and invest · ACCESSIBLE CITY People will move easily to and around Parramatta City using a more sustainable form of transport · ENTERPRISING CITY Parramatta will seize opportunities for smart growth and promote sustainable economic development · NATURAL CITY Parramatta will protect and enhance its environment. Think globally and act locally. 67 On page 54 the Master Plan states: Based on this framework, the Master Plan area must create a place which: · Considers, interprets and celebrates its indigenous and non-indigenous heritage, and integrates such features into the design of new or redeveloped buildings and public spaces · Provides for land uses and activities which recognise Parramatta's role as a primary centre serving the western Sydney and Sydney's wider regions · Provides sufficient opportunity for the location of civic land uses and functions, befitting Parramatta's role as the metropolitan area's second CBD · Provides for employment opportunities commensurate existing and proposed regional public transport services and which contribute to the jobs targets identified in strategic planning documents · Incorporates Ecologically Sustainable Development principles · Comprises high quality urban design, building forms and public spaces which enhance Parramatta's image and identify · Has an urban structure and public domain that allows the safe and convenient movement of pedestrians between the transport interchange and other activities in the Parramatta City Centre · Provides opportunities for residential uses and the development of a 24 hour centre 68 On page 55 the Master Plan states: Based also on the planning framework established in the Parramatta REP, this Master Plan has the following objectives: · Promote the significance of Civic Place in the context of Parramatta and Western Sydney and as the focus of the revitalisation of the Parramatta City Centre · Provide guidance for the future redevelopment and management of the Civic Place site including the scale, form and types of development within a publicly accountable process · Enable development to proceed efficiently by clarifying issues and identifying requirements for coordination and future consideration · Set the implementation strategy and future management structure for the site · Assist the consent authority in considering development applications by setting the planning framework 69 On page 63 the Master Plan states: The Master Plan proposes to re-instate and celebrate the historic links between the St Johns Church and the Lancer Barracks. This east-west link sets the framework for the introduction of a new sequence of public spaces and the way in which the future development is organised on the site. See figure 6.1 Historic Axes.

Beginning from the existing Centennial Plaza (Church Street) a series of linked plazas and squares will celebrate and interpret Parramatta's: · Urban structure and street grid pattern · Architectural heritage · Historic markets · Indigenous and culture heritage · Relationship with the river, farming and colonial settlement.

This Master Plan will also establish Civic Place, its plazas and squares, as the gateway for Parramatta with reinforced pedestrian links to the Parramatta Railway Station and the Transport Interchange. See Figure 6.3 Urban Structure

A series of three axes run north south through the site. They reinforce Parramatta's street grid and existing pedestrian connections and are extensions of walkways, streets and lanes between Parramatta Railway Station and Parramatta River and the southern sections of the Centre. The western most axis extends and enhances Horwood Place as a local connection into the Civic Place site with the potential for both two way pedestrian and vehicular traffic.

The middle axis reveals the Leigh Memorial Uniting Church, linking the site with Batman Walk; a mid-block pedestrian connection running through a mid block spine of the Parramatta City Centre between Church and Smith Streets.

The eastern most axis enhances pedestrian movement to and from the Railway Station and the transport interchange across Darcy Street, and through Civic Place. 70 On page 66 the Master Plan states: Revitalising Centre of Parramatta Civic Place should be the hub of diverse activities: · Civic and Community · Cultural · Commercial · Retail · Residential

Civic Place is to be enlivened by a variety of well balanced active uses, such as: · Community facilities · Cultural facilities · Retaining, restaurants, cafes, bars · Entertainment venues such as a cinema complex · council's meeting rooms and City Hall offices including a conference facility · Residential and commercial communities to support new and established functions. 71 On page 70 the Master Plan states: Public spaces within the development will provide its identity . They will be places that are accessible to all and attract people both night and day. They will be the focus of an urban art program and activities that will add a cultural and social dimension to Civic Place. The design of the public domain and adjoining buildings will utilise opportunities to incorporate public art to create vistas and to capture and focus attention at terminating view points… 72 Part 6.7 of the Master Plan then discusses design principles for public domain character including for streets, arcades, colonnades and squares. 73 On page 93 the Master Plan states: The Civic Place Master Plan establishes a model inner city mixed-use precinct in the capital of Sydney's Western Region. Acting as a catalyst for future growth, it transforms under-utilised private and Government land into an integrated and vibrant recreation and living area.

This concept plan illustrates the ways in which the principles and objectives of the Civic Place Master Plan, SREP 28 and the Parramatta City Centre Plan may be applied to the site. The Master Plan concept develops the axis between St Johns Church and the Lancer Barracks. This east-west axis sets the framework for the introduction of a new sequence of public spaces. The public spaces provide a series of outdoor venues for recreation, markets and civic events.

Taller buildings are positioned to the south adjacent to the railway line… 74 This southern area includes the applicants' land. Figures 7.12 to 7.15 designate the space occupied by their land as suitable for retail or (at higher levels) residential uses. 75 On page 99 the Master Plan states: The major public spaces are aligned on an east-west axis that connects St John's church across the site to the Lancer Barracks. The church is celebrated through the definition of Church Place. This flows into Garden Place, which reinterprets the important role of gardens and farming in the founding of Parramatta. Market Place is located on the very site of Parramatta's original markets. Civic Place celebrates the location of Parramatta's City council headquarters and the site on the east while Water Place represents the importance of fresh water in the founding of the city. The sequence of public spaces is drawn together by an ecology spine, an integral part of the water management for Civic Place. The ecology spine reaffirms the historic east-west axis of Parramatta, tracing a line of water through the sequence of public spaces beginning at the high point with a series of source pools and gradually filtering down to terminate in a water garden adjacent to the church.

The ecology spine, part garden and part ephemeral stream, collects and treats roof water and runoff from the square and adjacent road network. A series of separately defined spaces are clustered along the spine. The spine also provides an opportunity for heritage and archaeological interpretation. Strong directional paving draws pedestrians across the spine, through public spaces and gardens, into arcades, enriched streets and to the greater Parramatta beyond.

The Master Plan emphasises environmental issues through water management and recycling systems and appropriate approaches to energy management. 76 The report of the Civic Place Project Manager received by council on 25 August 2003 states: 5. The Project is currently undergoing a process of value creation through the property acquisition, property amalgamation, design development, and financial modelling. The value of the council component of the project will be dependent upon how far that process is advanced prior to taking the project to the market. …

7. The council's financial position under the current analysis shows a requirement for additional funding in the order of $20M. It is too early to determine how such a requirement would be made up but council may consider, taking on some leasing commitments, debt servicing or other property disposal in support of this project. A final determination of this will depend to some extent on the market response to the financial structure of the project and funding alternatives.

10. The analysis work to date has brought the value creation close to optimization, at this stage of the project….The next significant addition to the value will be through financial structuring of the project and the nature and timing of council's land ownership and transfer… 77 At that time, it was also proposed that PRL would acquire part of Darcy Street. 78 On 22 September 2003 council considered among other things the financial structure of the Civic Place project. In the Executive Summary, council, stated "Current work on Civic Place is being funded by a special allocation supported by positive cash flow from the Connection Arcade and Hotel Parramatta. That funding remains positive, provided that a development partner can be appointed during 2004. Further legal advice is being sought in respect of property acquisitions."

79 At paragraph 14 at page 3 of council's report, council foreshadowed that the next significant addition to the value will be through the financial structuring of the project and the nature and timing of the council's land ownership and transfer. 80 On 24 November 2003 council resolved as follows: (a) That council seek approval of the Minister for Local Government and the Governor of NSW to compulsory acquire all of the following properties: (i) 160 Church Street; (ii) 12 Darcy Street (iii) 14 Darcy Street (iv) 18 Darcy Street (v) 20-26 Darcy Street (vi) 28 Darcy Street. (b) Further that, the General Manager be authorised to make application to the Minister for Local Government to compulsory acquire the properties. 81 The report of the Manager, Property Services, received by council on 24 November 2003, states: … 2. As council would be aware, the Connection Arcade (including the Hotel Parramatta) was acquired by council on 11 July 2003 in accordance with Resolution (c) of council meeting on 28th April 2003. 3. The remaining properties to be acquired in accordance with Resolution (d) of council meeting of 28th April 2003 are listed as follows: (i) 160 Church Street (ii) 12 Darcy Street (iii) 14 Darcy Street (iv) 18 Darcy Street (v) 20-26 Darcy Street (vi) 28 Darcy Street 4. A site plan indicating the respective properties is attached as Attachment 1. 5. Council's Valuer F C Carrapetta & Associates together with council's consultant Valuer and Land and Economist Mike Collins & Associates were requested to undertake current market valuation of each property as well as values for the purpose of compulsory acquisition. 6. In addition, values of leasehold interests (lessee's interest) were also assessed by Mr F J Kelly who also acted on behalf of the PRL in acquisition of properties in Argyle Street for the purpose of 'buying out' any tenancies within a 5 year period. Several leases will naturally expire within this period, thus no buy out costs will apply. 7. Mike Collins and Associates were requested in June 2003 to formally submit offers on behalf of council to all owners to purchase their respective properties, subject to council's formal approval. 8. To date little response has been received. Various owners are not interested in selling their properties, some owners are refusing to acknowledge council's offer and some owners have requested to make no further contact with them. 9. A copy summarising the status of council's previous offers by Mike Collins and Associated is attached as Attachment 2. Current Status 10. council proposes to redevelop Civic Place in accordance with the provisions of the Civic Place Master Plan and SREP 28. 11. The development will be for the following purposes: · to assist the Parramatta City Centre to reach its target of employment growth of 60,000 jobs by 2021, through the creation of 4,770 jobs at Civic Place; · to increase the utilisation of public transport; · to provide open space, · to provide revamped council facilities including an administration building, library, senior citizen's centre and toilets; · to provide additional facilities to the public including a new child care centre; and · to provide commercial, retail and residential development and facilities. 12. In order to achieve the employment targets, the Civic Place Master Plan envisages the development of up to 168,000m2 of gross floor area, comprised as follows: Commercial Office 65,000m2 Residential 60,000m2 Entertainment and Leisure 3,000m2 Commercial facilities 5,000m2 Retail 35,000m2 Total Area 168,000m2 13. council is now in the process of preparing appropriate documentation in order to deliver the Civic Place property to the open market for Expressions of Interest for a development partner in March 2004. 14. council was previously advised through reports submitted to council at its meeting of 28 April 2003 and a subsequent workshop held with councillors on 2 September 2003 that use of the compulsory acquisition powers of council may be required if acquisition through mutual negotiations with property owners cannot be achieved. 15. It is vital to the overall Civic Place development that all properties in Darcy Street be acquired to ensure control of all properties which provide vital frontage to Darcy Street and form part of the development site for both commercial, retail and residential development. Proposal to Compulsory Acquire 16. If it is not supported by other property acquisitions council's property at 30 Darcy Street will not provide the appropriate land area and configuration of an acceptable footprint for a commercial office building. This is the only council property to carry the maximum development potential under the REP and the Master Plan and failure to redevelop it would also preclude the extension of the main rail concourse into Civic Place. 17. council will be unable to accommodate the 30,000m2 pre-commit for the Department of Commerce. Without the additional properties neither 30 Darcy Street, 16 Darcy Street nor the Connection Arcade/Hotel can take the required footprint of 12,000 - 15,000m2 for a commercially viable office. This would not only remove that area of development but the potential to construct an equal area of residential development (under the REP controls linking the two). 18. Further, it will deny the possibility of closing Darcy Street with the increase in site area and GFA and the Urban Design improvements that would flow from the inclusion of Darcy Street in the development. 19. It will erode the potential to link and integrate the retail component of the development from the rail concourse through to Church over three levels. This would very significantly reduce the financial and non-financial benefits of the development. 20. Taken together these implications put in question the financial viability of the Civic Place project. 21. council has been frustrated in all of its attempts over the last six months in particular to enter into full and meaningful discussions and negotiations with all the owners of the relevant properties in Darcy Street in order to acquire the relevant properties by mutual negotiations. … 27. In order to proceed to acquire ownership of the relevant properties necessary to deliver the masterplan it is now considered paramount that council formally consider acquisition of the properties through the compulsory acquisition process as detailed in this report. … 31. council's efforts to date in this regard are considered more than reasonable and any further delay in attempting to acquire the relevant properties will have a major impact of the delivery of the Civic Place project and as a consequence achievement of the objectives of SREP 28 and the Masterplan. … 82 On 4 December 2003, council wrote to the Director-General of the Department of Commerce. That letter states, in part: As you are aware, this project is the result of considerable joint effort by the NSW Government and Parramatta City council. The project, with its genesis in the Sydney Regional Environmental Plan 28 Parramatta, was the first REP to cover a complete city centre. Since its gazettal in 2001, the REP partners have monitored the achievement of its objectives.

In particular, Civic Place has an important role in achieving the REP objectives by forming a gateway from the new Transport Interchange to the CBD. I believe the project will provide a critical mass of high quality development which is required to change the private sector perception of Parramatta as an investment opportunity.

In recognition of the importance of the Government's transport investment in Parramatta and its commitment to the REP targets, council has made significant progress in delivering the Civic Place project. In the past 18 months, we have: · Prepared, exhibited and approved the Master Plan in partnership with the Government Architect. · Gazetted a supporting amendment to the REP. · Borrowed $35 million to support the acquisition program. · Purchased the Connection Arcade and the Hotel Parramatta. · Resolved to acquire the remainder of the Darcy Street properties by compulsory acquisition. · Established the Central Parramatta Planning Committee to establish Civic Place planning matters.

These decisions have been made in a spirit of co-operation between council and various State Government Agencies. 83 On 24 December 2003 council wrote to the Director-General of the Department of Local Government. The letter is headed "Compulsory Acquisition of various properties in Church and Darcy Streets, Parramatta, for Civic Place Redevelopment Project". By this letter, council sought the approval of the Minister for the compulsory acquisition of the properties owned by Mac's Pty Ltd and R & R Fazzolari Pty Limited together with other properties. The letter states, in part: council proposes to redevelop the Civic Place site in accordance with the provisions of the Civic Place Master Plan and SREP 28. The development will be for the following purposes: · to assist the Parramatta City Centre to reach its target of employment growth of 60,000 jobs by 2021, through the creation of 4,770 jobs at Civic Place; · to increase the utilisation of public transport; · to provide public open space; · to provide revamped council facilities including an administration building, library, senior citizen's centre and toilets; · to provide additional facilities to the public including a child care centre, and · to provide commercial, retail and residential development and facilities. · In order to achieve the council's employment targets, the Civic Place Master Plan envisages the development of up to 168,000m2 of gross floor area, comprised as follows:

Commercial Office 65,000m2 Residential 60,000m2 (650 apartments) Entertainment and Leisure 3,000m2 Commercial Facilities 5,000m2 Retail 35,000m2 Total 168,000m2

council is now in the process of preparing appropriate commercial documentation to invite Expressions of Interest in March 2004 from the open market for a development partner to join with council in undertaking the Civic Place redevelopment project.

Whilst council already owns some 60% of the total Civic Place redevelopment site, council considers that it is vital to the overall Civic Place redevelopment project that eight properties in Church and Darcy Streets be acquired by council to ensure control of all properties which provide vital frontage to Darcy Street. The acquisition of these eight properties is necessary for: · the delivery of a number of the above elements of the project. · the closure of Darcy Street as core element of the Civic Place Master Plan, and · the integration of Civic Place with the NSW Government's major upgrade of Parramatta station and the new ($100M) of the Parramatta Bus Rail Interchange.

A site plan for reference is attached as Attachment 1.

council considers that the inclusion of these properties within the Expression of Interest offering to be conducted in March 2004 is vital for the proper and orderly redevelopment of the Civic Place site and that their exclusion from the offering will totally frustrate the council's objectives in developing the Civic Place precinct under the Civic Place Master Plan and SREP 28.

council has attempted to negotiate the acquisition of the additional properties as set out in this submission over the past 12 - 18 months by private treaty but has been frustrated in all of its attempts to date.

In it now more than evident that owners seek to obtain excessive price for the sale of their properties at levels which cannot be justified nor acceptable to council as a public authority.

A summary of negotiations with the respective owners is attached in duplicate at Attachment 2.

council has also received legal advice from its legal advisors, Deacons, that it would be both appropriate and legally possible for council to exercise compulsory acquisition powers to acquire the subject properties should private treaty negotiations fail. A copy of this legal advice is attached at Attachment 3. 84 On 15 March 2004, council received a letter from the Department of Local Government seeking clarification in respect of various matters concerning the proposed compulsory acquisition of the properties referred to above. In the letter, the Department requested that council provide a statement "in relation to how the public interest in compulsorily acquiring those properties outweighs the owner's private property interest in retaining those properties, particularly in light of the fact that the issue does not appear to be quantities of compensation." 85 The Department also asked council whether it [council] proposed to divest any interest in the land to the partner during or after development. 86 On 16 March 2004 council resolved to adopt and thereafter publish a document called "Expressions of Interest" (EOI). seeking interest in the proposed development of Civic Place such as contemplated by the Master Plan. The council's role was described as facilitated land owner, tenant and consent authority: s 2.4 87 Section 2.5 of the EOI states: council aims to achieve, amongst other things, the following objectives in relation to the Project:

(a) position Parramatta as the centre for investment, recreation, education and employment in Western Sydney; (b) create a gateway identity development in accordance with the Civic Place Master Plan; (c) create high quality civic spaces and innovative living and work environments through exceptional design solutions, providing convenient public transport/vehicle/pedestrian access; (d) comply with (or exceed) the aims of the regional and local planning provisions for the City centre; (e) create an economically feasible mix of land uses which responds to the site's location and consumer and investor expectations; (f) provide a catalyst for better urban design in the Parramatta area; (g) maintain an on-going role in the Project; (h) maximise council's return at the lowest possible risk; (i) deliver new council and community facilities, strengthening the civic focus of the site; (j) conserve and celebrate environmental, social and cultural heritage; and (k) implement and encourage development which is environmentally sustainable and in accordance with council's Sustainable Development Guidelines. 88 At part 3.1, the Civic Place site is described in greater detail. Land is identified that is owned by council and land is also identified that is not owned by council. 89 At part 3.6, the EOI states: council intends to acquire each of the Darcy Street Properties by negotiation with the individual land owners or by compulsory acquisition. The compulsory acquisition process has already commenced through the Department of Local Government. The matters set out in section 3.9 apply to the Darcy Street properties.

The Darcy Street Properties referred to in part 3.6 include the applicants' properties. 90 At part 3.8, the EOI states: council intends to: (a) Acquire, by compulsory acquisition, any part of Darcy Street which is not already owned by council; and (b) close Darcy Street and incorporate the land comprising Darcy Street into the Civic Place Site. Temporary access for buses will be required in Darcy Street during the construction of the Parramatta Transport Interchange. These matters set our (sic) in section 3.9 apply to Darcy Street. 91 At part 3.9, the EOI states: (a) council discloses to the Applicant and the Applicant acknowledges that, despite any provision in this invitation: (i) the properties referred to in sections 3.2 to 3.8 (inclusive) of this Invitation may:

(A) not be included in the Project; (B) not be procured by council or any other party for the purposes of the Project or otherwise; (C) be independently developed by the respective owners of those properties in accordance with the Civic Place Master Plan or otherwise; or (D) never be developed by the respective owners of those properties;

(ii) the possible tenancy arrangements referred to in section 4 of this Invitation may:

(A) never be agreed and/or entered into; or (B) comprise an alternative tenancy arrangement with a different tenant or tenants. (b) council makes no representation or warranty in respect of the properties referred to in section 3.2 to 3.8 (inclusive) and possible tenancy arrangements referred to in sections 4 of this Invitation, including but not limited to the matters referred to in this section 3.9 and any other matter in connection to or arising out of those properties. (c) council may, but is not required to, provide further information in respect of the properties referred to in sections 3.2 to 3.8 (inclusive) and possible tenancy arrangements referred to in section 4 and any other possible tenancy arrangements (if any) to the Applicant at any time. 92 The EOI also provided (at 4.1): council currently occupies approximately 8,500m2 across three buildings it owns within the Civic Place Site. These include the council Chambers Building, the east wing of the library and the council Site.

As part of its commitment to the Project, council has reviewed its accommodation requirements. Council has agreed, in principle, to relocate its occupancy from the council Site Library and council Chambers Building to new purpose builded accommodation elsewhere on the Civic Place Site… 93 On 23 March 2004, council wrote to the applicant, R&R Fazzolari Pty Ltd. That letter states: As you are aware council has resolved to develop the Civic Place site in accordance with the Civic Place Master Plan and SREP 28. that development will be for a number of purposes: (a) to assist the Parramatta City Centre to reach its target of employment growth of 60,000 jobs by 2021, through the creation of 4,770 jobs at Civic Place; (b) to increase the utilisation of public transport; (c) to provide civic uses and open space; (d) to provide revamped council facilities including an administration building, library, senior citizen's centre and toilets; (e) to provide additional facilities to the community including a child care centre; and (f) to provide commercial, retail and residential development and facilities. As you are also aware, council has appointed Mike Collins of Michael Collins & Associates as its representative to negotiate with you for the proposed acquisition of your property, so far without success. I am advised that council's efforts to date have been more than reasonable.

Because the acquisition of your property is an essential step in the delivery of the Civic Place project, I am writing to advise that the council resolved to compulsory acquire your property and has formally commenced the process of compulsory acquisition under the Local Government Act 1919 and the Land Acquisition (Just Terms Compensation) Act 1991 . This process of compulsory acquisition is available to council where the council us unable to acquire your property through mutual negotiations.

council remains open to continue the negotiation process in parallel with the compulsory acquisition process and, if you wish to avail yourself of this opportunity to negotiate the terms of the acquisition of the Property or for any other purpose connected with your property, then I invite you to contact Mike Collins (telephone: 9247 2955 or 0417 658 355). 94 On 22 April 2004, council wrote to the Director-General of the Department of Local Government responding to the Department's letter referred to above (dated 15 March 2004). That letter stated: Thank you for your letter in relation to the clarification of matters associated with the application by Parramatta City council to acquire, by compulsory acquisition, the land as referred to in your recent letter. Council has further considered this matter and each of the issues raised in your letter are respectively addressed as follows.

1.1 Functions of council As noted in your letter, council is required to demonstrate a public need to compulsorily acquire the Land as part of its functions. Section 186 of the Local Government Act 1993 (NSW) (Local Government Act) provides that: (1) A council may acquire land (including an interest in land) for the purpose of exercising any of its functions.

Section 24 of the Local Government Act provides as follows: A council may provide goods, services and facilities, and carry out activities, appropriate to the current and future needs within its local community and of the wider public, subject to this Act, the regulations and any other law. Chapters 5 and 6 of the Local Government Act state that a service function of council includes:

(a) providing community, recreation and information services and facilities; and (b) managing public transport services and facilities. Set out below are matters which council believes demonstrate a public need to compulsorily acquire the Land. 1.2 Public need On 26 October 2002, the Premier of New South Wales, Mr Bob Carr launched the master plan for Parramatta Civic Place ( Master Plan ). At that time, Mr Carr announced that the development would re-vitalise the heart of Parramatta and create a vibrant, living, working, retail and entertainment precinct which will create more jobs and a better lifestyle for Parramatta. The President of the Parramatta Chamber of Commerce, Mr David Osbourne, also said I believe re-development of Civic Place is absolutely essential for the future growth of our city and our ongoing social and economic well being.

The project also has support from the New South Wales government through significant proposed tenancy arrangements which will have considerable employment generating effects. If the Project does not proceed, there is a real prospect that such tenancies will move elsewhere.

1.3 The existing use of facilities at Civic Place The Master Plan highlights the community facilities currently in use at the Civic Place, which further highlights the public benefit which will be derived from the Project … 1.4 Provision of council's Facilities and Community Facilities council will be granting development rights in relation to the Project through a public market process. The preferred proponent selected under that process to carry out the Project ( Proponent ) will be required under its development agreement to construct (to council's satisfaction) the following: (a) facilities which are intended to replace council's existing facilities at the Civic Place site, currently proposed as: (i) new council chambers; (ii) new office accommodation for council officers and staff; (iii) a customer service centre which provides an interface between council officers and the public and incorporates a planning enquiries centre and call centre; (iv) community meeting rooms; and (v) a new senior's leisure and learning centre, including a club room, classroom, meeting spaces, kitchen and related spaces and a facility to enable after hours community meetings, ( Council Facilities );

(b) new proposed facilities within the Civic Place site to be owned and controlled by council which are intended to enhance the quality of life in Parramatta through venues and spaces for services and activities that foster social, cultural, health, leisure and economic wellbeing, currently proposed to include the following: (i) large open spaces allowing pedestrian access across and through Civic Place, which will facilitate easy access to the council Facilities and the community facilities forming part of the Civic Place site; (ii) a central library which is easily accessible by the public and located near the community meeting and assembly rooms forming part of the council Facilities; (iii) an art gallery and exhibition space; (iv) a youth contact place; (v) a visitor information centre; (vi) a childcare centre (minimum 60 places); and (vii) hall of fame (to be co-located with the library, office or art centre foyer),

In addition, as part of the Project, several key pedestrian links between Civic Place and the Parramatta Link (PRL) transport interchange will be constructed. The nature of this pedestrian link is to be negotiated with the preferred proponent, other land owners of the Civic Place site and PRL.

It is intended that each of the council Facilities and the Community Facilities will be constructed within the Civic Place site by the Proponent, at minimal cost to council. That is, the entire proceeds of sale will be applied to the council and Community Facilities.

1.5 Location of council Facilities and Community Facilities

While preliminary design work in relation to the Project has not yet commenced, the building configurations contained in the Master Plan mean that it is possible that the council Facilities and the Community Facilities may not be constructed on, or contiguously with, the Land being acquired. Nevertheless, the Civic Place development is a cohesive plan that needs to be developed under a single master plan strategy in order to create the key pedestrian links and amenity, and to ensure the commercial feasibility of the Project.

council does not otherwise have funding to design and construct the council Facilities or the Community Facilities. 1.6 New South Wales Government arrangements

As noted in council's application and the public announcement by the Premier referred to above, the Project will involve the construction of several large major mixed use buildings that will significantly increase the numbers of people working and residing in and around the CBD of Parramatta. The New South Wales government has expressed interest in relocating major government tenancies to Civic Place. In particular, council is currently negotiating commercial tenancy arrangements in Civic Place with:

(a) Sydney Water Corporation, which requires approximately 24,000m2 for a head office premises that could, subject to negotiation, form part of the Project; and (b) the NSW Government, which is considering consolidating approximately 26,000m2 of commercial space into new A grade premises within the Civic Place site. 1.7 C ouncil's submission The Department has requested that council provide evidence that the public interest in compulsorily acquiring the Land outweighs the interest of each private owner of the various parcels comprising the Land.

(a) the nature of the Project and the public benefits to be derived from the Project, as outlined above; and (b) the improved urban design outcomes and wider positive economic impacts derived from an integrated and consolidated city block; and (c) the considerable support of the New South Wales Government to the Project, outweigh any private interest in the Land.

Further, as the various parts of the land are all used for commercial and not residential purposes, the various owners and lessees can be fully compensated in money for the loss of their properties. 2. Operational or community land The Land, once acquired by council, will be classified operational land .

No part of the Land is intended to be classified community land . 3. Divesting any interest in the land

council is in the process of seeking expressions of interest (EOI) from private sector parties to participate in a more detailed request for proposal process (RFP) and ultimately to be selected as council's Proponent for the Project.

It is expected that the EOI process will result in the short listing of up to five proponents by mid May 2004. Following the EOI process, council intends to invite shortlisted applicants to participate in the RFP process that will lead to the selection of the preferred Proponent in October 2004.

No decision has been made by council as to whether any part of the Land or the Civic Place site generally will be divested to the preferred proponent before or after the Project is completed. It is likely that the selected proponent will require that title to certain parts or the whole of council's land holding in the site be transferred or leased for the purposes of the Project. This outcome will not be determined until the RFP process has commenced and council enters into negotiations with proponents as to the nature and scope of the Project.

As noted above, the preferred proponent will be required, as part of the Project, to construct the council Facilities and the Community Facilities and access ways to the PRL transport interchange. It is council's present intention, subject to final negotiations with the preferred proponent, that title to the council Facilities and Community Facilities and access ways to the PRL transport interchange will either remain with or be vested in council. 4. How the acquisition will assist council

The comments above describe in more detail the council Facilities, the Community Facilities and the construction of pedestrian links to the PRL as part of the Project and how these will assist council to achieve the outcomes of the Project. To summarise:

(a) the relocation of substantial Government offices into Civic Place will generate employment within the Parramatta CBD area. The additional 4,770 jobs referred to in council's submission would be based on estimates of the proposed tenancy requirements (b) the creation of the pedestrian link to PRL, and the development of appropriate civic areas within Civic Place will facilitate transport usage; (c) the creation of 6,000m2 of open space in a central plaza as required by the approved master plan for the site, as public benefit, will improve the urban amenity of the Civic Place locality; (d) the council Facilities and the Community Facilities noted above will be delivered, a least in part, through the amalgamated lands contributed by council; and (e) the development of commercial, retail and residential facilities is noted in the Master Plan for the Site. 95 On 11 May 2004, the Director General of the Department of Local Government wrote to the council referring to the council's letter dated 22 April 2004 and highlighted council's statement made in that letter that "It is likely that the selected proponent will require that title to certain parts or the whole of the council's land holding in the site be transferred or leased for the purposes of the Project". The Director General referred to section 188 of the LG Act and asked the council to advise "whether the land council seeks to compulsorily acquire will be the subject of sale, transfer or lease." 96 On 17 May 2004, council resolved to approve the appointment of the Civic Place Management Committee under s 355 of the LG Act. The report to "City Leadership & Management" from the Civic Place Project - Development Director, dated 7 May 2004 and received at council's meeting of 17 May 2004, stated various reasons in support of the appointment of the Civic Place Management Committee and set out the roles and functions of the Committee at par 12. 97 Council received a number of responses to the EOI and short listed a number of proponents. 98 On 7 June 2004, in response to the Department of Local Government's letter of 11 May 2004, council wrote to the Director General of the Department of Local Government in respect of the compulsory acquisition of the Darcy Street properties, identifying among other things that negotiations with land owners had continued but that little progress had been made. The letter states: Council has continued negotiations with the owners of properties in Darcy Street the subject of the application for compulsory acquisition, however little progress has been made in this regard. The various owners are generally only prepared to consider prices substantially in excess of council's independent valuations.

Nevertheless, council will continue to pursue negotiations with each property owner in an attempt to acquire the properties. Again I would reiterate such negotiations have been ongoing for a period in excess of 12 to 18 months with no satisfactory result to date. Further delays in this regard has the strong potential to inhibit and restrict the effective and coordinated development of the Civic Place project.

At this stage council currently owns in fee simple 18,937 m2 of land including the recent acquisition of 16 Darcy Street, 160 Church Street & Macquarie House as set out in the plan attached.

All land owned by the council is operational land which allows council to deal with the land for the purpose of delivery of the Civic Place development in response to the Master Plan and achieve the objectives of the Regional Environment Plan No. 28.

The acquisition of the properties in Darcy Street provide only an additional 1,382m2 which represents 5.5% of the projected total land holdings (inclusive of Australia Post and Uniting Church land) of 24,927m2.

The acquisition of the subject properties provides a vital link between the redevelopment of the Bus/Rail Interchange and the southern frontages to the Civic Place site.

Council does not intend to sell the land once it is compulsorily acquired. Rather, the land parcels are a small part of a broader amalgamation by council of a site for the establishment of a new civic centre, community facilities and council functions, as part of an integrated commercial and civic development.

The future land tenure and leasehold issues will not be resolved until such time as council appoints a development partner and the future development configuration, spatial allocation of community/ council facilities and possible ownership structure are resolved. Council intends to retain ownership of those facilities and the public space, wherever they are located on the amalgamated site. As a result, some part of the lands the subject of this application may be reconfigured and included in titles held by others at the conclusion of the development.

Any future title transfer of parts of council's lands to its development partner is unlikely to occur until such development is completed and delivered. It is anticipated this process will be protected by appropriate legal documentation through a binding development agreement between council and the development partner. It is intended that council's facilities including council's functions, civic centre, community centre, public domain and roads, etc will be retained by council in fee simple.

The compulsory acquisition of the subject properties is integral with the success of the overall development and delivery of the Civic Place project and forms only a minor part of council's land holding when acquired.

On this basis council considers that such acquisition would satisfy the requirements of sub paragraph (2)(a) section 188 of the Local Government Act. 99 On 21 June 2004, council resolved to seek the approval of the Minister for Local Government and the Governor of NSW to compulsorily acquire Darcy Street. A plan of proposed acquisition was prepared.

100 The report to City Development from the Manager Property Services received at the council meeting of 21 June 2004, recommended the compulsory acquisition of Darcy Street. It states: The approved Master Plan for the Civic Place Precinct requires that the land area of Darcy Street be incorporated into the Civic Place Area, in order to realise the full development potential of Civic Place.

It sets out the following options for Darcy Street, Parramatta: 5. Darcy Street is currently owned by council, in the status of a public road. To convert the road to operational land for council to effectively own and control that part of Darcy Street for delivery of the Civic Place Project; involves the Compulsory Acquisition of Darcy Street by council. 6. A summary of this process is outlined as follows: 7. A resolution of council is compulsorily acquire (Powers under S 186-190 of the LGA) and make application to the Minister and Governor is required - 1 month 8. Lodge Plan for acquisition purposes with LPI - 1 month 9. Application to Minister to seek consent of the Governor to publication of the acquisition notice in gazette (Section 19 LAJTC Act) 1-3 months 10. Upon Gazettal the land is vested in council free from all estates interests etc. 14. The former public road ceases to become a public road as a consequence of its acquisition, (s 43(2) of the Roads Act) and the former public road is classified as operational land and council can freely deal with the land unless council resolves otherwise (Section 44 of the Roads Act).

101 On 5 July 2004, council resolved to approve the issue of the Request for Proposals (RFP).

102 In a report to the Confidential Committee of council received at the council meeting on 5 July 2004, the RFP Co-ordinator Civic Place Development refers to the short listing of four development proponents and the subsequent step of issuing the RFP to them. The report also goes on to state: Financial Feasibility

10. Detailed modelling of the financial feasibility of Civic Place has been undertaken over a period of some months, specialist external consultants being used. Preliminary modelling was carried out by Macroplan Pty Ltd, with an audit of their modelling by PricewaterhouseCoopers Pty Ltd. Subsequent financial modelling, using more developed project planning and updated estimates, was then carried out by both Macroplan Pty Ltd and Hill PDA Pty Ltd. This modelling work has been interrogated internally by the Civic Place team, to ensure appropriate rigour has been applied to the analysis and to consider the sensitivity of the projections. 11. Due to the confidential nature of the financial analysis, a financial summary has been prepared as a separate attachment to this report and will be issued at the meeting. This information will need to be returned at the conclusion of the meeting. 12. The conclusions of the analysis, is an estimated small net debt position to council, once all council and Community facilities to be delivered to council have been deducted from the value of councils land holdings. 13. The new assets gained by council as a result of this project however, result in an uplift in councils asset position of an estimated $48 million. These include: - New council Administration Building of 7,609 spm GBA New Library and Technology Centre of 4,290 spm GBA - New council Community Space of 2,503 sqm GBA - New Child Care Centre (60 spaces) 1,200 sqm GBA s14. council also gains other indirect financial benefits not incorporated into the financial modelling, including increased rate revenue derived from the new development on Civic Place, reduced capital expenditure and maintenance demands by replacing current ageing assets with new building stock, as well as the other triple bottom line benefits of positive social and environmental outcomes.

15. The approved masterplan for Civic Place and the financial feasibility, both assume certain additional land is secured by Parramatta City council (PCC) in addition to its current holdings. 16. Macquarie House land was purchased by council on the 1st July, 2004 and will be incorporated into the site. 17. Australia Post have responded positively to PCC interest in securing an option over their property, however written agreement is yet to be obtained. 18. Negotiations are also continuing to purchase those Darcy Street Properties not yet owned by council. We have concurrently made application to the Minister for Local Government to compulsorily acquire these properties, should commercial negotiations be unsuccessful. … 23. The Darcy Street road is intended to be compulsorily acquired from PCC itself in order to close the road and incorporate the site as operational land, and a council resolution has been passed to this end. … 103 At paragraphs 32 and 33 of the Report, council reported on the following: 32. Council will hold the freehold title to the Civic Place land until completion and will lease Connection Arcade and Macquarie House to the Developer so that the Developer can manage and collect income from the relevant tenancies. At completion, the developer will create separate title to council of the council facilities, Community facilities and the public open space. The Developer or its nominee will take title over the remainder of the works. 33. The developer will have responsibility for creating the necessary legal instruments to effect the required ownership structure. 104 In a minute of the Lord Mayor to council dated 29 July 2004 and received at a council meeting on 2 August 2004, the Lord Mayor recommended that council delay issuing the RFP pending the Minister for Local Government giving the necessary approvals to the compulsory acquisition of the Darcy Street properties. 105 A meeting minute of 20 September 2004 contains a recommendation that council issue the RFP. 106 The report to the Confidential Committee of council from the Development Director Civic Place Project, received at a meeting of the Confidential Committee of council on 20 September 2004, recommended that council note the report from the Development Director, Civic Place Project, and authorise the issue of documents to the 4 short listed tenderers. The report provides the following background information: 1. Council resolved at its meeting on 2 August 2004 that it will delay issuing the Request for Proposal documents to the four (4) shortlisted tenderers until the Minister for Local Government gives the necessary approvals to the compulsory acquisition of the Darcy Street properties. 2. The Minister indicated that consideration of council's application for compulsory acquisition for the Darcy Street properties would be delayed due to the legislation that would be introduced in the next session of Parliament. The legislation covers Local Government's involvement in Public / Private Partnerships requiring councils involved in major development to seek approval from State Government. This proposed legislation follows the report by Emeritus Professor Maurice Daly into the Liverpool council Public Inquiry and the recommendations for Public / Private Partnerships in Local Government. 3. Once the legislation is finalised, the Director General of the Department of Local Government will establish a Local Government Project Review Committee. The legislation will be retrospective to 28 June 2004, and as such, Parramatta City council will need to seek approval from this Committee before the acquisition of Darcy Street properties and the appointment of a Development Partner can proceed. Given that this is such a significant project and well advanced, the Minister gave an assurance that our project would be the first reviewed by this group. In addition, the Director General of the Department of Local Government gave an undertaking to provide a preliminary assessment of the proposal once council makes its submission, along the lines set out in the Daly report. 4. The submission was completed and lodged with the Director General of the Department of Local Government on 2 September 2004. It addresses each of the significant matters raised in the Daly report. Council endorsed the lodgement of the submission at its 16 August 2004 meeting. It is anticipated that the Committee will, upon initial review of the submission, ask council representatives to present its report and address any queries that they have. 5. Review and acceptance of the Civic Place submission by the Project Review Committee is likely to be sufficient grounds for the Minister for Local Government to then consider the recommendations of the Department of Local Government in relation to compulsory acquisition of the Darcy Street properties. This is foreshadowed to occur in approximately eight (8) weeks. 6. Included within the submission to the Project Review Committee was the outline of the Financial Model for Civic Place, together with various scenarios which cover the precommitment risks and residual risks to council. The Financial Model is to be treated as Confidential, and was presented to the council Meeting. 7. The Civic Place Management Team has considered in detail the various financial model outcomes, and considers that the return profiles to council would likely be sustainable and should, in any event, be tested by market tendering in the RFP phase of the project. 8. Council representatives have briefed each of the four (4) selected parties from the Expression of Interest process on the reasons for the delay in calling for Request for Proposal (RFP) submissions. Given the lack of tenancy commitment by the NSW Department of Commerce, it is possible that one of the parties (being Lend Lease Development) will withdraw at the commencement of the RFP process. That party has verbally indicated it would prefer to focus on the upcoming Parramatta Legal Precinct tender. 9. The Management Committee has considered various options for progressing the RFP process. Its view is that the outcomes of the market bids for the Development Partner role will be the litmus test for the financial model and the Project Review Committee endorsement. 10. The Management Committee considers that continuing delay in achieving the RFP process, brought about by the review to be held under the Project Review Committee of the Department of Local Government, could further destabilise interest in the project by the shortlisted RFP bidders. Furthermore: (a) there is a positive view that the Project Review Committee will endorse the project under the proposed legislation, and subsequently the compulsory acquisition of the Darcy Street Properties would proceed (for which funds have already been approved); (b) negotiations are continuing positively on the Australia Post site, for securing an option for the Development Partner to purchase that site; (c) going to the marketplace for RFP bids will maintain the momentum of the project, does not constitute a financial commitment by council or a commitment to proceed, and will enable financial offers to be confidentially ratified via the Project Review Committee of the Department of Local Government. 11. As such, the Management Committee considers it would be appropriate to issue the RFP documentation, and to issue a later addendum when the remaining property issues are resolved. This is reflected in the attached outline by council's solicitors of the proposed amended RFP process (See Attachment 1). 107 A document titled "Civic Place Request for Proposals and Request for Tenders" (RFP Document) was issued to the four development proponents in September 2004. The RFP Document sets out the process to be followed by proponents, including the following: 4.1 Invitation to lodge Proposal (a) To assist council in selecting Proponents to participate in the Proposal Negotiation Process, the Proponent is invited to lodge a Proposal in accordance with this RFP. (b) The Proponent must comply with the provisions of this Part 1 at all times during the RFP process and, in lodging a Proposal, makes the acknowledgment set out in the Proposal Form. … 6.2 Evaluation of Proposals

Following receipt of the Proposals in accordance with this RFP, council will evaluate each Proposal against the Evaluation Criteria during the Proposal Evaluation Period. … 108 The Evaluation Criteria are set out in Schedule 1 of the RFP Document as follows: EVALUATION CRITERIA 1 - DESIGN

THE DESIGN OF THE PROJECT, INCLUDING: · a master plan, generally conforming to the Civic Place Master Plan (and which is consistent with the relevant planning controls and instruments), with a high quality, vibrant and sustainable urban centre and civic spaces that integrate built form and public domain; · design excellence - contemporary urban residential, commercial, retail and community facilities architecture and public domain which is inclusive and creative; · innovative design and development concepts in relation to the Project; · partnerships on the Project to assist in creating and delivering a quality living and working environment; and · connectivity between elements of the Project.

The response to sustainability and the environment as these relate to the Project, including: · excellence in sustainable design; · innovation across a range of areas to incorporate ESD principles in all stages of the development, from design through to long term management; · integration of social, community and environmental requirements and facilities in ways that will create a vital and sustainable place; and · social and environmental benefits to council and the community (note that economic benefits are to be evaluated under Evaluation Criteria 3). EVALUATION CRITERIA 3 - FINANCIAL

The financial offer, based on the following: · the financial return to council as reflected in the payment regime proposed; · confirmation of the sources of debt, equity and of finance (including any mezzanine debt) in relation to delivery of the Project; · the form, structure and timing of payments proposed; · economic benefits to council and the community, including benefits to end users of the Project during its operations phase (note that social and environmental benefits are to be evaluated under Evaluation Criteria 2); · a viable business plan; · implementation, development and divestment strategies; and · quality of any parent company's corporate financial and completion guarantees which will be offered - if applicable.

Ability to successfully structure, manage, construct, market and deliver the type of development found in the Project, including: · viable risk profile for council as disclosed in the risk allocation matrix forming part of the Development Agreement Summary; and · the capacity to understand and deal with: o issues associated with major construction in a CBD environment in close proximity to an operational railway; and o the Project concept and design capacity required for the Project; o the delivery of the council Related Works.

EVALUATION CRITERIA 5 - APPROACH, TERM, STAGING AND OPERATION

Ability to successfully manage, construct, market and deliver the type of development found in the Project, including: · capability in respect of major projects (of a size and complexity similar to that of the Project), including: o processes to manage and operate; o delivery of high quality public facilities; o demonstrated ability and experience to prepare an innovative approach to Project delivery; o commitment and processes to work with Government and comply with relevant NSW Government procedures, codes and practices; and · · selected suitably qualified human resources required for the Project. 109 The RFP states that the evaluation criteria will be applied to each Proposal in accordance with the weightings, set out in item 2 of the Reference Schedule, which states: Evaluation Criteria 1 - Project Design 25% Evaluation Criteria 2 - Sustainability 15% Evaluation Criteria 3 - Financial Offer 35% Evaluation Criteria 4 - Risk/Certainty 12.5% Evaluation Criteria 5 - Approach, Team, Staging, Operation 12.5% 110 On 24 November 2004, council wrote to the Director General of the Department of Local Government seeking approval to compulsorily acquire Darcy Street: see s 34 Roads Act 1993. The letter identified that the purpose of acquiring the subject land was: …to enable Parramatta City council to close Darcy Street and own the land free of interests for Civic Place development (sic). 111 The letter then set out the reasons for seeking to acquire the land by compulsory process: The approved Master Plan for Civic Place requires the land at Darcy Street to be included as part of the development site, in order to realise the full potential of the Civic Place development.

The Civic Place development is now at the Request for Proposals stage with various development proponents making proposals to council. To ensure that council will effectively close and own the land at Darcy Street free of interests for timely delivery for the Civic Place development project, it is recommended that council should now proceed with acquiring Darcy Street by compulsory process.

A report was submitted to council on 21 June 2004 recommending compulsory acquisition of the subject land. A further report was submitted on 16 August 2004 seeking council's resolution to classify the land at Darcy Street to operational upon compulsory acquisition. Both the reports and its recommendation were adopted by council. For reference, copies of the council reports and resolution are at Appendix 3.

The council is now seeking the approval of the Minister under Section 187(2) of the Local Government Act 1993 to compulsory acquire the subject land and to commence acquisition action under Section 12 of the Land Acquisition (Just Terms Compensation) Act 1991. The council is also seeking the Minister's recommendation to the Governor of New South Wales for approval to the gazettal of an acquisition notice under Section 19 of the Land Acquisition (Just Terms Compensation) Act 1991. 112 On 21 December 2004 the Local Government Amendment (Public Private Partnerships) Act 2004 received assent. 113 In a report to the Confidential Committee of council dated 14 March 2005, the Civic Place Project Manager recommended that the Committee proceed with two proponents (one of which was Grocon Pty Ltd) into the Proposal Negotiation period and issuing the Request for Tender documents. 114 Council issued a request for tenders on 9 June 2005. The issuing of a request for tenders included the issuing of an information memorandum which sets out the background to the Master Plan as follows: 2.3 Civic Place Master Plan

The Civic Place Master Plan has been prepared by the NSW Government Architect on behalf of council. It applies to the land bounded by Church Street Mall, Macquarie Street, Charles Street, Hassall Street, Station Street, Parkes Street, Valentine Street and Fitzwilliam Street. The Civic Place Master Plan was approved and adopted in May and came into effect in June 2003.

The purpose of the Civic Place Master Plan is to provide a framework for the Civic Place Site that will guide the development of private and public land, including public domain areas and public facilities and services.

The Civic Place Master Plan aims to balance social, economic and environmental considerations in order to achieve a sustainable development proposal that will contribute to the city's overall economic robustness, fulfil a ceremonial and civic role, provide community facilities and services and establish best practice urban design, environmental management and government leadership. 115 It then sets out council's role at 2.4: 2.4 Council Role council recognises that it has several roles and responsibilities in relation to the Project and for the purposes of clarity, brief descriptions of those roles are set out below:

Council is the initiator of the Project and, as such, has issued this Information Memorandum, the Request for Proposals (RFP) and will issue the Request for Tenders (RFT). Council will utilise an evaluation panel for each stage of the evaluation process but reserves the right to make the final decision in relation to any matter.

Council intends to enter into an agreement with the successful Proponent which will contain the position agreed between council and the Proponent during the RFP and RFT processes.

As can be seen from section 3 below, council is the owner of a substantial portion of the Civic Place Site.

Council intends to transfer title of the relevant council owned properties in the Civic Place Site to the successful Proponent or its nominee, at agreed stages or otherwise on terms agreed with the successful Proponent.

As can be seen from section 4 below, council is proposed to be the owner, occupier or tenant of the council Facilities and Community Facilities. The briefs for the required council Facilities and Community Facilities have been included in the RFP.

Although council would normally be the consent authority, and to ensure the separation of council's role as land owner and consent authority, council has appointed the Central Parramatta Planning Committee (CPPC). The CPPC comprises representatives from the NSW Government, council and the private sector and its determinations are not capable of being overturned by council.

Council has deleted to the CPPC, pursuant to section 377 of the Local Government Act 1993, the function of determining development applications made in respect of land within the Civic Place Site.

In addition, all development applications lodged for development within the Civic Place Project will be assessed by independent planners retained by council (and not council officers) before submission to the CPPC.

All aspects of the Project will be subject to the successful Proponent obtaining all relevant consents, approvals, permits or other required authority from the CPPC and any Commonwealth, State or other body or agency.

... 116 It then sets out council's Project objectives at 2.6: 2.6 Council's Project Objectives Council aims to achieve, amongst other things, the following objectives in relation to the Project:

(a) position Parramatta as the centre for investment, recreation, education and employment in Western Sydney; (b) create a gateway identity development in accordance with the Civic Place Master Plan; (c) create high quality civic spaces and innovative living and work environments through exceptional design solutions, providing convenient public transport/ vehicle/pedestrian access; (d) comply with (or exceed) the aims of the regional and local planning provisions for the City Centre; (e) create an economically feasible mix of land uses which responds to the site's location and consumer and investor expectations; (f) provide a catalyst for better urban design in the Parramatta area; (g) maintain an on-going role in the Project; (h) maximise council's return at the lowest possible risk; (i) deliver new council and Community Facilities, strengthening the civic focus of the site; (j) conserve and celebrate environmental, social and cultural heritage; and (k) implement and encourage development which is environmentally sustainable and in accordance with council's Sustainable Development Guidelines.

… 117 It then refers to the Darcy Street Properties, which includes the applicants' land in section 3.7: 3.7 Darcy Street Properties Council intends to acquire each of the Darcy Street Properties by negotiation with the individual land owners or by compulsory acquisition. The compulsory acquisition process has already commenced through the Department of Local Government.

Respondents are to assume for the purposes of their Proposals that the Darcy Street Properties will be acquired by the council (at no cost to the Proponent) prior to the signing of the Development Agreement.

Further information will be supplied as an addendum to this Information Memorandum.

The matters set out in section 3.10 apply to the Darcy Street Properties.

… 118 It then refers to Darcy Street, as section 3.9: 3.9 Darcy Street (road) Council has commenced the process to:

(a) acquire, by compulsory acquisition, any part of Darcy Street which is not already owned by council. The compulsory acquisition process has already commenced through the Department of Local Government; and (b) close Darcy Street and incorporate the land comprising Darcy Street into the site.

The Church Street Mall, although closed to traffic, remains a public road. Some properties, in particular Queensland Mall, may have a right of vehicular access to their properties across Church Street Mall from Darcy Street. Closure of Darcy Street may require alternative access ways to be provided.

The Parramatta Transport Interchange, currently under construction, includes an adjoining site boundary with the land comprising Darcy Street. The Proponent should be aware that various interface issues will arise as a result of both its construction phase and the permanent redevelopment of the Interchange.

(a) TIDC has an interest in acquiring a small part of Darcy Street for the station entrance and has incorporated this acquisition into the design of its facilities. The nature of this acquisition is set out in the material which has been included in the Project electronic data room; (b) underground services situated beneath Darcy Street supply and service the Parramatta railway station and may require maintenance or relocation if excavation in and around Darcy Street is necessary; and (c) Darcy Street cannot be closed to bus access until completion of certain alternative provisions for buses which are being developed as part of the Interchange, anticipated to occur at the end of March 2006.

Further information will be supplied as an addendum to this Information Memorandum.

The matters set out in section 3.10 apply to Darcy Street.

(a) Council discloses to the Proponent and the Proponent acknowledges that, despite any provision in the Information Memorandum: (i) the properties referred to in sections 3.3 to 3.9 (inclusive) and section 3.11 may: (A) not be included in the project; (B) not be procured by the council or any other party for the purposes of the Project or otherwise; (C) be independently developed by the respective owners of those properties in accordance with the Civic Place Master Plan; or (D) never be developed by the respective owners of those properties….

119 Grocon's tender application dated 22 July 2005 included allocation of the Mac's land as part of the "Park Apartments", involving construction of a 31 storey building with up to six apartments per floor. It was said that the Darcy Street retail arcade will "penetrate…the ground level continuing the connectivity of this grand lobby and arcade through to Church Street". Retail use was also proposed for the ground level. The tender application allocated the Fazzolari land to "The Atria", involving construction of a 40 storey commercial office tower.

120 On 29 July 2005 council had prepared a revised plan for the compulsory acquisition of Darcy Street. That plan was registered as DP1086906 on 13 September 2005 and identifies that the title system of the subject land is both Torrens title and old system. The table of road titles on DP1086906 shows the area of Darcy Street to contain a number of old system parcels of land which are annotated as "OS1" to "OS7". The table states:

OS DENOTES:-RESIDUE OF LAND IN OS TITLES Table of Road Titles OS11DP519723RESIDUE OF OS LAND- ROAD Bk 1161 No193 OS2 - OS6ROAD WIDENINGNOT SEARCHEDOS TITLE OS7ROADA 44260No:363 Conv. Bk.1400

121 DP1086906 also shows a number of areas within Darcy Street to be held under a title derived from previous road widening notices and the residues of various parcels of land. 122 In Minutes of the Confidential Committee of council dated 29 August 2005, council declines to accept any of the tenders received for the Civic Place Project and to negotiate with Grocon. It states: …

(e) That the council notes that the reasons for council determining to enter into direct negotiations with Grocon and to decline to invite fresh tenders or applications include: 1. The Grocon tender substantially met a number of council's criteria in the RFP process including: 1.1 Design 1.2 Sustainability 1.3 Risk/Certainty, and 1.4 Team/Staging and council was of the view that these aspects of the Grocon tender may be further improved by direct negotiations with Grocon for a limited period;

2. That council is deeply concerned about the financial offers from both Grocon and Multiplex and as guardians of community property, council will need to see a final offer which has much better value for the community and that council was of the view that the financial aspects of the Grocon tender may be improved by direct negotiations with Grocon for a limited period; 3. The council was of the view that the financial aspects of the Multiplex tender are unlikely to be improved by direct negotiations with Multiplex to a level which nears the Grocon financial offer or meets council's financial hurdles. 4. Having regard to the Expression of Interest (EOI), Request for Proposals (RFP) and RFT processes undertaken by council for a period of over 12 months to date, the cost and time involved in calling fresh tenders for this Project would be prohibitive for council and would not result in a better outcome to council… … 6. That council has very deep concerns about the quality of the public space and the sustainability aspects, particularly the ESD from both tenders. 123 Council and Grocon negotiated in respect of the contractual arrangements for the delivery of the Civic Place Project. 124 In the report to the Confidential Committee of council received at the council meeting of 30 November 2005, the General Manager recommended that council enter into a Development Agreement (subject to the Department of Local Government private public partnership review committee approval) with Grocon Developments Pty Limited for the redevelopment of Civic Place. The report recommends at page 1: …

(a) That council enter into a Development Agreement with Grocon Pty Ltd (Grocon) or an appropriate special purpose company created by Grocon for the Civic Place Development in relation to the Civic Place Development and delegate to the Lord Mayor and the General Manager the authority to:

1. resolve any issues outstanding between the council and Grocon as at the date of this resolution on such terms as: 1.1 provide adequate and appropriate protection to council or 1.2 are otherwise determined from time to time by council 2. resolve the final terms of the Development Agreement to the satisfaction of council's lawyers. 3. affix the council seal to the final development Agreement following receipt of appropriate certifications from council's lawyers and 4. undertake all things necessary, within the ambit of the Local Government Act 1993, to implement the provisions of the Development Agreement.

(b) That, subject to satisfaction of the conditions precedent contained in the Development Agreement, council enter into a lease or licence of the public domain area to be constructed as part of the Civic Place Development (Public Domain Area). The lease/licence will be granted upon completion of construction of the Public Domain Area and will be with either Grocon or an appropriate special purpose company created by Grocon for the Civic Place Development. The term of the lease/licence will be for an initial term of 30 years, with a series of options taking the total possible term to 99 years.

(c) That, council note that the Development Agreement contains an obligation offer for construction of facilities and public domain to the value of $95m, including: 1. council Chambers and councillor Offices 2. council Offices 3. Library, Technology Centre, Art Gallery 4. Community Rooms 5. Childcare Centre 6. Community Facilities 7. Public Domain 8. Car parking. …

(f) That upon financial close (and in accordance with the Development Agreement) council retire $55m from council's debt portfolio. 125 In the same report, the General Manager states at par 9 on page 3: There is no doubt that Civic Place will help to redefine Parramatta's role as Sydney's second CBD. A recently commissioned report from SGS identified that Civic Place will contribute up to 8,800 jobs to our local economy. Civic Place is a major gateway project and will create a new market in the commercial, cultural and retail offering of Parramatta. 126 In the same report, the General Manager sets out set out council's financial options at pars 11 to 13, which state: 11. Council has two financial options:

11.1 Option 1 - Exit Strategy 11.1.1 The Exit Strategy option provides council with two different ways of not proceeding with the Civic Place site. As previously reported, should council exit from the Civic Place project it will be exposed to substantial costs and risks. These costs will vary according to the option taken. The net present values of cash flows, without considering financial implications of annual deficits under each of these options are as follows: 11.1.1.1 Hold Purchased Properties - Repay Current Debt over 20 Years - negative ($[redacted figure]) 11.1.1.2 Sell Purchased Properties - negative ($[redacted figure]) 11.2 Option 2 - Proceed with Civic Place 11.2.1 As council is aware the development market place has been thoroughly canvassed and the best offering (against predetermined selection criteria) has been made by Grocon. 11.2.2 Financial negotiations with Grocon have continued over the six week period which has resulted in a final financial offering on 24 November 2005. 11.2.3 Each version of Grocon's financial offering has been analysed against council's base financial model as previously presented to council. A summary of the changes against this base case will be provided to councillors at the workshop. In essence, following the negotiations, council's net cash flow over the duration of the project has improved by $78.1m, and net assets (assets less debt) by $112.3m). 12. In summary, this gap has been closed through a series of changes primarily by Grocon. These include: 12.1 Provision for [redacted figure] revenue share. 12.2 A reduction and capping of relocation costs and participation payments 12.3 The removal of the purchase of [redacted site] and [redacted site] sites from council's liability. Negotiations on these sites will now be undertaken directly by Grocon creating an additional injection of participation payments of $[redacted figure]. 12.4 Changes in the staging to reduce risks. 12.5 Changes in risk sharing such as archaeological and environmental risks. 12.6 A Sydney Water contribution of $4.25m to the public domain in accordance with conditions contained in the REP. 12.7 An arrangement to provide council with 93 car parking spaces (previously offered at 25). 13. The financial evaluation has been considered from the point of view of: 13.1 Value Change in net assets 13.2 Debt Service Ratio impacts on council's budget 13.3 Net cash flow implications 13.4 Balance Sheet implications 127 In the same report, the General Manager addresses the value change of council's assets at pars 14, 15 and 19, which state: 14. The council's Civic Place assets (including public domain but excluding those assets purchased through loan funds) are valued in best possible use terms at $77m. Once Civic Place is completed the council's assets are valued at $95m. This gives an $18m or 23% increase in asset value. 15. Council should note that to own these assets it will incur a net debt on Civic Place of $10.1m. This will reduce the net increase of council's assets to $84.9m or a 10.3% increase. However, the council will have less exposure to the need of replacement and maintenance costs of its existing degraded assets (currently costing $1.5m pa to maintain). … 19. The following figures are indicative of the major items of council's financial offering from Grocon: Receipts 19.1 Upfront participation payments $[redacted figure] 19.2 Revenue share $[redacted figure] 19.3 council facilities and public domain $[redacted figure] 19.4 Housing cash contribution $[redacted figure] Total $[redacted figure] … 128 In the same report, the General Manager addresses council's long term debt position at pars 21, 22 and 23, which state: 21. On completion of council's facilities in 2012, council was originally required to make a payment of $[redacted figure]m to Grocon. This would have had a significant impact on council's debt position. As part of the negotiations, Grocon has offered to provide an interest only financing arrangement to council whereby Grocon will finance this amount until the council's revenue share payments fully offset the $[redacted figure]m. This will be done by way of a form of lease, with Grocon continuing to own the council facilities and council paying the related interest-only finance costs until the $[redacted figure]m payment is finalised by way of revenue share payments. 22. It should be noted that the council's revenue share is not guaranteed, either by the total amount or the timing of receipt of payments. The modelling carried out by council shows that the council can have a reasonable expectation that the total revenue share will be some $[redacted figure]m, and that this will be delivered in 2012 and 2013. This has formed the basis of council's financial modelling as attached to this report. 23. The actual amount and timing of the revenue share payments to council will be dependent upon the market response to Grocon's development proposals. In order to be financially viable (and as the council's facilities sit above the retail and car parking levels of the project), Grocon is very likely to deliver a substantial portion of its development proposals at the same time as the delivery of council's facilities. If this occurs, it will minimise the financial exposure of the council and accord with council's preferred financial model. This will leave the council with an annual lease payment of some $[redacted figure]m until the balance of the $[redacted figure]m is paid. 129 In the same report, the General Manager refers to the Development Agreement conditions under the heading "Legal and Risk" at pars 37, 38 and 39, which state: 37. As can be seen in Blake Dawson Waldron's (BDW's) Outline of Key Development Agreement Provisions the legal and risk issues are quite complex. 38. Council should note that the Development Agreement will be subject to the following conditions prior to financial closure taking place. 38.1 The compulsory acquisition of the Darcy Street properties must be undertaken by council prior to 31 December 2006. 38.2 Grocon must acquire the [redacted site] site prior to 31 December 2006. 38.3 Grocon's DA consent will be granted on terms which are reasonable to the developer and council by 31 December 2006. 38.4 Grocon have confidence by 31 December 2006 (with a further extension to 30 June 2007) to secure adequate levels of pre-commitments to the project that render the development feasible and capable of being financed which fit within the parameters of the submitted Grocon financial model. 39. Once these conditions have either been waived or satisfied, Grocon's obligation to construct the council Related Facilities in accordance with the requirements of the Development Agreement will be unconditional and no extensions of time will be permitted because of market conditions (including an absence of any Pre-Commitments for the Project). 130 In the same report, the General Manager addresses the timing of contractual arrangements at par 46, which states: It must be remembered that council is unable to enter into any contractual arrangements with Grocon until such time as the Department of Local Government Private Public Partnership Review Panel has considered the proposal and the Minister for Local Government has granted consent to proceed. Should council proceed, it is hoped that details can be submitted to the Department over the next weeks and that Ministerial consent will be granted by the end of February 2006. 131 Attachment C to the council report dated 30 November 2005 is a report prepared by Booz Allen Hamilton. The report is a third party review of the Civic Place Project and concludes, at par 5.2: In the event that council does not proceed with the Civic Place Development, it will incur costs (associated with the base case) of approximately $[redacted figure] and DSR of around approximately 8%.

If council proceeds with the project: · DSR will be just under 5%, the cost of servicing the non-Civic Place debt during the Project; · At completion, council will have a debt that could be substantially serviced by increased rates from Civic Place. Council's overall DSR will be approximately 5.8%, well below the 8% constraint. 132 Attachment E to the council report dated 30 November 2005 is a report described as "Development Agreement and Commercial Risk Report" dated 24 November 2005. At par 8 of the Report, the Key features of the Project are identified as follows:

The key features of the proposed transaction are as follows : (a) upon satisfaction of the conditions precedent referred to in Section 7.0 above, the Development Agreement will become unconditional and will bind both council and Grocon; (b) at that point, Grocon will pay an initial payment to council, and council will constitute a trust over all of the project land with the exception of the land required to construct the future council facilities. This arrangement effectively transfers the land to Grocon at the start of the project; (c) Grocon will assume an obligation to design and construct the new council facilities by 30 June 2012, subject to certain agreed extensions of time; (d) ... (e) ... (f) ... (g) it is proposed that Council provide a long term lease/licence over the Public Domain Areas of the project. The arrangement will include the requirement for Grocon to maintain the Public Domain Areas and will also include the rights of Grocon over those areas. The areas will remain available for use by the public throughout the term. The term would be for an initial period of up to 30 years, with options for an overall period of 99 years... 133 Attachment A to attachment E above is a document called "Outline of Key Development Agreement Provisions" prepared by Blake Dawson Waldron. On page 3 of the document, an outline of the Trust Structure is provided. Under cl 3.2, the effect of the Trust structure is described as follows: (a) council will, upon receipt of the initial payment referred to above, transfer the equitable title in the Development Component to the Developer (that is an effective transfer of title to the Developer); (b) council will however, remain registered as the owner of the Development Component on the land titles register maintained by the NSW land and Property Information; (c) when the Development Component is completed and subdivided into each of the individual parcels containing the different staged office, retail, residential and car park elements of the Development Component, council will execute a transfer of the legal title in those parcels progressively to the Developer or its nominee; (d) the Developer will indemnify council for all costs arising from the Land Trust, including any stamp duty, land tax, council or other rates, insurance costs or other costs; (e) in order for the Developer to obtain bank finance for the Project, the Developer will need to mortgage the Development Component. This will require council to execute a mortgage in favour of the financier. The mortgage will be non-recourse to council and will include the Developer as a party. 134 On 2 January 2006, Parramatta City council wrote to the Department of Local Government, to provide an update on the Civic Place Project status, among other things. The letter states: Council has now completed an exhaustive Request for Proposals (RFP), Request for Tenders (RFT) and negotiation process leading to a council decision to resolve to enter into a Project Development Agreement (Development Agreement) (and associated documents) with Grocon Pty Limited (Grocon) for the development of the Civic Place site.

However, because the proposed project is a public -private partnership as defined by the Local Government Amendment Act 2005, council is in the process of making an application to the Local Government Project Review Committee (LGPRC).

In the circumstances, we therefore request the DLG to progress the Applications for compulsory acquisition of both the Darcy Street Properties and Darcy Street itself immediately and, as discussed with Mr Woodward of your department, to consider both applications simultaneously. 135 In February 2006, Parramatta City council made a submission to the Local Government Project Review Committee. The following comprises the executive summary of the submission: This is an application by Parramatta City council (council) under the Local Government Amendment (Public-Private Partnerships) Act 2004 (as amended by the Local Government Amendment Act 2005 (PPP Amendment) to the Local Government Project Review Committee (LGPRC) in respect of the public-private partnership (as defined b the PPP Amendment) for the proposed mixed use development known as the Civic Place Development ( Project ).

The Project arises out of council's wish to revitalise the Parramatta CBD through the utilisation of council's current land asset holdings, to provide a modern council administrative, community and cultural hub that will serve the rate-payers of Parramatta and provide the impetus for further investment in Parramatta. The project will create an enhanced new property market for Parramatta and further position it as Sydney's second CBD. The Project is consistent with the State Government's Metro Strategy for Sydney.

The application proposed that council will enter into a Project Development Agreement (and associated documents) with (PDA) Grocon Pty Ltd (Grocon) for the development of the Civic Place site. In exchange, the council will receive an increase in asset value and quality and Title of Ownership of new public spaces, civic administration building, council chambers, community facilities and a library. The development Agreement also affords an opportunity for uplift from future income to council.

The Project as negotiated has been tested by council's financial advisers against assessed industry benchmarks, pursuant to an exhaustive tender process. Council concludes that the anticipated commercial and non-commercial benefits to Parramatta are of major significance. 136 Under the heading "Introduction" of the submission, the following background information was provided by council: Council has for many years owned a substantial land holding at the core of the CBD where it operates its civic administration, council chambers, town hall, library, car parking and other community services. These facilities are outdated by modern standards, and are becoming physically and technically obsolete. Council's objective is to utilise this strategic site to revitalise the core of the CBD and deliver modern council administrative and community facilities that will serve the ratepayers of Parramatta for generations to come. The Project will create a Gateway to the city and also create a new property market befitting Parramatta.

Accordingly, in 2002 the council commissioned a Master Plan for the Civic Place site which was prepared by the Government Architect on behalf of council. The Master Plan, subject to community consultation and feedback, was endorsed by the NSW Government and adopted by council in June 2003.

The Civic Place Master Plan envisions a major development of the prominent Civic Place Site in the heart of Parramatta Town Centre. The area covered by the Civic Place Master Plan currently incorporates the nucleus of local government for the Parramatta area, a mixture of retail and commercial uses and is traversed by major pedestrian routes linking the Parramatta Transport Interchange to commercial and retail precincts in the North and South to local schools in the East. 137 The submission then refers to the Master Plan at page 6 and states its objectives: The objectives of the Civic Place Master Plan are outlined below. In each case the original objectives have been either been [sic] met or exceeded by the proposed Civic Place development. 138 The objectives are set out over the following two pages of the submission, together with the council and community facilities to be provided by the Civic Place development: 1.1 Objectives of the Civic Place Development The objectives of the Civic Place Master Plan are outlined below. In each case the original objectives have been either been met or exceeded by the proposed Civic Place development.

Original Master Plan Objectives Current Proposal Position Parramatta as the centre for investment, recreation, education and employment in Western Sydney Meets Master Plan objectives by providing the appropriate mix of residential, commercial, retail and community uses in order to activate the space. Create a Gateway identity development in accordance with the Civic Place Master Plan Meets Master Plan objectives by creating appropriate links through the site to create connectivity to major public transport links including the transport interchange and Parramatta river, and provides a Gateway built form. Create high quality civic spaces and innovative living and work environments through exceptional design solutions, providing convenient public transport/pedestrian access Exceeds the objectives with a total of 15,595m2 of public space provided (a minimum of 6,500 was required). Much consideration has been given to the urban design of public spaces to ensure spaces that are comfortable and inviting on a human scale. There are strong linkages for pedestrian and vehicular transport access. All buildings, with the exception of the Atria will be subject to a design competition process. Comply with (or exceed) the aims of the regional and local planning provisions for the City Centre. Meets the objectives of local and regional planning instruments in principle Create an economically feasible mix of land uses which responds to the site's location and consumer and investor expectations Meets objectives of the Master Plan. The use mix has been established to position Civic Place as a commercial CBD while ensuring activation of spaces through appropriate positioning of retail and residential spaces. Provide a catalyst for better urban design in the Parramatta area Meets objectives with a well resolved urban design solution, high quality finishes, and sustainable design elements. The central position of this site should have a catalyst effect on the development of adjacent properties in the future. Maintain an ongoing role in the Project Meets Master Plan Objective. Council will retain an ongoing role not only in the design process of their own facilities but also in the overall design of Civic Place having two representatives on the design competition review panel. An element of involvement has also been established through the financial 'blue sky' elements such as revenue share, profit share and tenant sourcing incentives. Council retains ownership of its new facilities. Maximise council's return at the lowest possible risk Meets objectives. Refer to Appendix 4. Deliver new council and community facilities, strengthening the civic focus of the site Meets objectives with delivery of a total of 12,200 sqm of council and Community space in addition to 15,595 sqm of open public space. The positioning of the council building serves to clearly demonstrate the civic focus of the site. Conserve and celebrate Parramatta's environmental, social and cultural heritage Meets objectives. The urban design is sensitive to the existing heritage elements on the site not only in the conservation of these sites but also in the design of surrounding elements. Social and cultural heritage will be conserved and celebrated within a $5m arts and cultural package delivered as part of the Project. Creation of approximately 6,000 jobs Exceeds objective. An Employment Generation Analysis report prepared by SGS Economics & Planning estimated that jobs associated with the Civic Place redevelopment peak at 8,800 in 2023. Refer to Appendix 12. The objectives of the Master Plan have been met using sustainable design elements appropriate to the site, including:

· Grey water recycling · 60% reduction in potable water to site Implement and encourage development which is environmentally sustainable. · Zero storm water runoff · 60% reduction in sewer discharge · 4.5 Star ABGR to commercial NLA · 4 Star Green Star to all commercial NLA · Solar powered lighting to Public Domain

… 139 At page 10 of the submission, council sets out the alternatives available in respect of the Civic Place site. It states in s 4: Council considered a number of alternatives for progressing the opportunity presented by the Civic Place site. The alternatives are generally described as follows:

(a) The Status Quo case; (b) Council as developer of the Civic Place site; (c) Council entering into an agreement with a Developer to undertake the works pursuant to the Civic Place Master Plan; or (d) Council to dispose of the site. 140 At page 10 of the submission, council then discusses these alternatives in the submission as follows: (a) Status Quo

Council set a series of Exit Gateways (Gateways) during the pre-development stages of the project (Gateways are explained further in Section D3 of this Submission). At these Gateways, councillors were presented with updated project and/or estimated financial information to resolve to consider prior to resolving whether to proceed to the next stage or take the Exit Gateway. Assuming that council did not wish to proceed and decided to take a Gateway, it would remain the owner of a significant amount of land and buildings, including assets resulting from its property acquisitions in preparation for the project…

At each Gateway, council resolved not to exercise its option of exiting the project. This was based upon the net projected financial benefits and indirect benefits of proceeding the with the development; · The loss of opportunity to rejuvenate the Parramatta CBD and provide modern facilities to the people of Parramatta and immediate areas; · The costs expended in acquiring property in preparation for the project; · The costs expended in undertaking the design development and tendering process; · The negative impact this decision would have on council's reputation in the marketplace and likely decrease in investor confidence regarding Parramatta as a centre of prospective investment; and · The risks associated with disposing of the assets purchased in preparation for the Project at the most opportune time and subsequent reduced returns from seeling purchased properties in a flatter commercial market. (b) Council as Developer

Council could develop the Civic Place Land as a Developer. Although some councils act in a capacity as land developer, the council has not pursued this option for the development of the Civic Place Project. This is based upon: · The high levels of risk liability associated with council being a developer for the Civic Place Land: · council's limited financial capacity and lack of financial backing that would allow it to effectively play a lead role in the development of the Project; and · council's lack of in-house expertise, where property development is not part of its core business and it has only a limited pool of development management skills available for a redevelopment project of this magnitude. (c) Private Sector Developer Under this option, council enters into a PDA with a private sector partner in order to fund, design and construct the Public Space, council and Community Facilities. The private sector partner in turn receives the rights to develop the remaining council-owned site areas in accordance with the Master Plan. This was the option chosen by council and it resolved on 11 May, 2005 that financial hurdles for the project are be [sic] defined as follows:

1. That the Debt Service Ratio (DSR) (net operative cash/debt repayment obligations) does not exceed 8%; 2) That $55m of existing council debt is to be extinguished over the life of Civic Place; and 3) That council would be prepared to consider a maximum debt threshold of up to $20m for Civic Place if required.

Preferably, council wishes to complete the Project with zero debt and new facilities and an opportunity for increased future income streams. As demonstrated elsewhere in this Submission, Grocon's negotiated bid meets council's financial hurdles.

This alternative was dismissed as it put at risk the likelihood of the site being developed as a CBD consistent with the Master Plan.,[sic] threatened the longevity of the community and council uses on the site and would leave council without an ongoing interest in the centre of the CBD. It was also considered that this option would not optimise the site's value or the wider benefits achievable from redevelopment in accordance with the Master Plan and could cost council $17M to exit. 141 The approach council elects to pursue is the Private Sector Developer option. 142 At page 17 of the submission council sets out "Part D" entitled "Second Stage - Pre-Contract Signing Report". At page 23, s 4 sets out council's Business Plan, which states: 4. COUNCIL BUSINESS PLAN

The vision of council's Business Plan for the Civic Place Development is outlined within the Civic Place Master Plan. The approved Master Plan is provided as an attachment to Volume 3 of this submission.

The redevelopment of Civic Place will reposition Parramatta as the Capital of Western Sydney and as a centre of business, tourism, entertainment, culture and heritage.

Civic Place will build on the significant investment made by the NSW Government in the development of the new Public Transport Interchange and NSW Police Headquarters and the commitments to the Parramatta Justice precinct and the Sydney Water Corporation headquarters relocation.

To establish the economic benefits of the redevelopment, Grocon as preferred developer commissioned Macro Plan to conduct a study of the Triple Bottom Line effects of the development. Building on the Macro Plan report, the council separately commissioned its own analysis using SGS Economics, that focused on the employment and multiplier effects that would be generated by the development. This report is provided at Appendix 12

The total quantitative economic impact of Civic Place as a multiplier effect to the Parramatta CBD us estimated to be equivalent to $1.9 billion over a 20 year period. This comprises $420 million in construction and maintenance and $1.5 billion in resident and visitor-generated expenditure.

This economic impact will have a considerable positive influence on employment in the Parramatta Local Government Area (LGA) and CBD in particular. Jobs associated with the redevelopment peak in the LG Act at over 8,800 in 2023 - of these around 2,000 will be outside the CBD but within the LGA. By the 2020's, 65% of the jobs will be direct employment in retailing and offices with construction providing a relatively minor proportion. However the employment that construction provides will be important in the early years before permanent jobs develop on-site.

The Civic Place development will make a pivotal contribution toward attaining the REP target of 60,000 jobs in the Parramatta CBD by 2021. From a 2005 estimate of around 40,000 jobs, the Civic Place development would contribute more than 40 percent of additional jobs required to achieve the target. It will also make a significant contribution to achieving the SREP target for public transport use. There will be a broader economic benefit to the whole of the greater region of Western Sydney.

143 At page 23 of the submission council sets out the project objectives for the Civic Place Development land in s 4.1 of the Submission, which states: Council aims to achieve, amongst other things, the following objectives in relation to the Civic Place Development:

(a) Create a high quality commercial development which will become a market leader in urban design, planning and design outcomes; (b) Create high quality civic space and innovative living environments through exceptional design solutions; (c) Comply with, or exceed, the aims of the regional and local planning provisions for the Local Government area; (d) Create an economically feasible mix of land uses which responds to the site's location and consumer and investor expectations; (e) Provide a catalyst for better urban design in the Parramatta area; (f) Maintain an ongoing role in the Project to ensure council's objectives and return are met; (g) Maximise council's return whilst achieving an appropriate balance between the risk and return for the council in the context of its role as a local government authority; (h) Deliver new council and community facilities; (i) Conserve and celebrate Parramatta's environmental, social and cultural heritage; (j) Implement and encourage development which is environmentally sustainable; and (k) Create a new commercial market in Parramatta by providing Grade A, minimum 4 star Green House-rated large floor plate commercial buildings. 144 At page 26 of the submission, council's Business Plan Objectives are set out at s 4.3, which states: For the purposes of this Business Plan, the council's objectives can be summarised as follows:

(a) To provide a strategically positioned new civic and mixed use environment for the Parramatta CBD by realising the Civic Place Master Plan; (b) To optimise the financial return to council at the lowest possible risk; (c) To utilise council's Civic Place land assets to achieve new accommodation and community spaces for the residents of the Parramatta area; and (d) To encourage a substantial mixed use residential, commercial and retail development that is environmental sustainable. 145 At page 29 of the submission, the new facilities to be received by council as a result of the development of the Civic Place site are set out in s 4.6, which states: As a result of the development of the Civic Place site by Grocon, Parramatta City council receives the following new facilities (all areas are Nett Lettable Area): Ø Fitted out council's offices* (of 5,250sqm) Ø council chambers & councillor facilities* (950sqm) Ø Customer service centre* (180sqm) Ø Community meeting & activity rooms* (570sqm) Ø Seniors' leisure centre* (160sqm) Ø Basement storage space* (290sqm) Ø Library and new media art gallery (3,400sqm) Ø Childcare centre (910sqm) Ø Community help & referral centre* (60sqm) Ø Youth drop-in centre (190sqm) Ø New public open space of 15,595sqm) Ø $5 million arts and cultural package to be implemented in Civic Place Ø 92 council carparking spaces

These facilities have an estimated value on completion of $94.95 million. An allowance within this figure has been made for council's facilities construction costs of $3,000 per square metre and fit-out costs of $1,000 per square metre.

… 146 On page 32, under the heading "Business Plan - Risks", at par 4.8(d), the following statements are made: Grocon proposes that ownership transfer be initially affected by a declaration of trust, which will occur shortly after the date on which the Conditions Precedents are satisfied. The declaration of trust will transfer beneficial ownership of the Civic Place Development Land (with the exception of the land needed to accommodate the future council Related Works) to Grocon. The land needed to accommodate the future council Related Works will remain in council ownership. A default by Grocon would permit council to have recourse to the unconditional undertakings, but would not permit the re-conveyance of the land which is the subject of the trust declaration. It would permit council to use the proceeds of the undertakings to complete its development on the council Related Works land ; 147 At page 33 of the submission council sets out the Business Plan risks including the conditions precedent under the Development Agreement, which states: The obligations of the parties under the Development Agreement are subject to the following Conditions Precedent:

a. the compulsory acquisition by council of the remaining properties on Darcy Street which council does not presently own and compulsory acquisition of Darcy Street itself, which have been the subject of an application by council to the Minister for Local Government for compulsory acquisition; b. the acquisition by the Developer of the land currently owned by [owner of redacted site] ([redacted site]); c. the grant of development consent for the first stage of the Project (which must be restricted to the defined and agreed Master Plan proposed by the Developer (Development's DA Consent) on terms reasonably acceptable to the Developer and on terms reasonable acceptable to council, in so far as the consent relates to the works associated with the new council facilities and the public domain (council Related Works); and d. the execution of certain pre-commitment arrangements acceptable to Grocon (acting reasonably) for the commercial and retail elements of the Project. A detailed summary of the proposed PDA structure and risk profit is attached at Appendix 4. 148 At page 35 of the submissions, council identifies Darcy Street and states: Council intends to acquire, by compulsory acquisition, any part of Darcy Street which is not already owned by council; and close Darcy Street and incorporate the land comprising Darcy Street into the Site ... 149 At page 39 of the submission council sets out the public interest evaluation in s 7, which states: 7. PUBLIC INTEREST EVALUATION Council has been very open with the public in relation to the development of the Civic Place site.

The Civic Place Development public announcements are attached as Volume 3.

Council is of the view that proceeding with the Civic Place Development is in the public interest because:

(a) The Project delivers economic returns to the public through the creation of short and long-term jobs; (b) The Project results in promoting Parramatta as a viable urban investment alternative to the City of Sydney; (c) There is a significant and positive urban planning outcome for the people of Parramatta; (d) The Project enhances community facilities; (e) The Project enhances public spaces; and (f) The Project renews and enhances council's assets and reduces costs of maintenance of these assets. An early public survey on Civic Place indicated a very high level of support for the Civic Place Proposal. 150 At pages 42 to 44 of the Submission, council describes the "Profit Share and Tenant Introduction Fee's". 151 Following the submission to the Local Government Project Review Committee, there was correspondence between the council and the Department of Local Government (9 March 2006 and 22 March 2006) confirming details of the Darcy Street properties for which compulsory acquisition applications had been made and details of representations from affected landowners along Darcy Street. 152 On 9 March 2006, the Department of Local Government wrote to the council in reply to the council's letter dated 2 January 2006 in relation to council's 2003 and 2004 applications to acquire lands by compulsory process. In this letter, the Department requested council to confirm the properties intended to be acquired, provide details of negotiations with the Transport Infrastructure Development Corporation, the lessee of part of Darcy Street and provide a copy of a plan of Darcy Street that has been deposited with the New South Wales Land and Property Information. 153 On 22 March 2006, the council wrote to the Director-General of the Department of Local Government in response to the Departments' letter dated 9 March 2006. In this letter, the council confirmed that it intended to acquire the Fazzolari properties and the Mac's Property among others. The letter enclosed council's letter dated 22 April 2004 in which council had indicated that: No decision has been made by council as to whether any part of the Land or the Civic Place site generally will be divested to the preferred proponent before or after the Project is completed… 154 On 24 March 2006, the council wrote to the Department of Local Government responding to items raised by the Local Government Project Review Committee. The letter states in paragraph (e) on page 2: ...

(e) Grocon PL initially proposed that the land comprising the site be transferred to GPH on the date of payment of the initial payment of $[tens of millions of dollars]. This transfer would have occurred shortly after the date on which the last of the conditions precedent referred to in the PDA is satisfied or waived. Grocon has requested that the transfer occur by way of constitution of a bare trust arrangement (Trust) as follows: I. on the date which is 10 business days after satisfaction or waiver of the conditions precedent, a deed of trust will be executed by council and GPH; II. council will be the trustee of the Trust; III. the beneficiary of the Trust will be GPH, however it should be noted that GPH may itself be the trustee of various sub-trusts which will conform to the future development components to be constructed as part of the Project; IV. the property of the Trust will comprise the site, excluding the parcel of land which will accommodate the future council facilities to be constructed as part of the Project (council Stratum). The council Stratum will remain in council ownership at all times; (f) as each stage of the Project is completed, GPH will subdivide the relevant stage and call for the transfer of legal title. Council will obtain appropriate advice from its lawyers to ensure that council's involvement in the above structure is within the powers of council under the Local Government Act 1993. 155 On 8 June 2006, the Department of Local Government wrote to Parramatta City council advising that the Local Government Project Review Committee was satisfied that the requirements of the PPP guidelines had been complied with in relation to the Civic Place project. The letter states: As you are aware, the committee has met on three occasions to review this submission, most recently on Thursday, May 18 2006. At this meeting the committee reviewed the original submission and all additional information that was supplied by council in order to clarify aspects of the original submission.

The committee's role is to assess the process used by the council against the Guidelines on the Procedures and Processes to be followed by Local Government in Public-Private Partnerships (September 2005). The committee is not responsible for assessing the merits of the projects this responsibility rests with the proponent council. However, the committee's primary concern is to ensure that council has followed the appropriate processes.

The committee is satisfied that, based on all information supplied by the council, processes used in the development the civic Place Redevelopment Project comply with the Guidelines on the Procedures and Processes to be followed by Local Government in Public-Private Partnerships (September 2005).

During its review, the committee noted council's statement in the Risk Table - Pre-Development Issues that securing the Compulsory Acquisition is linked to the satisfaction of the requirements of the DLG RC . The committee asserts that this statement is not correct as the compulsory acquisition application is not a matter for the committee and further, the committee's determinations do not have any bearing on or relevance to the outcome of the compulsory acquisition process.

The committee noted that the council's intention to invest revenue from CBD land sales, to enable it to service the portion of residual debt not serviced by the projected rates uplift, is a prudent measure. 156 On 29 June 2006, council received and considered a report from the council's General Manager - Mr John Neish. Annexed to that report was an attachment titled "Civic Place - Development Agreement, Management Committee Report" dated June 2006. 157 The General Manager's report of 29 June 2006 identifies its purpose as being to "update council on negotiations concerning Civic Place with the view to enter into a Development Agreement with Grocon Pty Ltd (Grocon), Grocon Constructors Pty Limited and Grocon Pty Limited in relation to the Civic Place Development". The report sets out numerous recommendations including in par (d), a recommendation to enter into that development agreement which may include the provision for: 1. The acquisition, purchase, sale, exchange or surrender of any land or other property forming part of the Civic Place Site or located within or adjacent to the Civic Place Site in accordance with the Development Agreement; 2. The construction, completion and delivery of the Civic Place Development; 3. council granting a lease, licence or other entitlement in respect of the public domain areas within the Civic Place Development; 4. The establishment of a trust over the Civic Place site of which council will be the trustee and the beneficial ownership of the land comprising the Civic Place site will be vested in Grocon; 5. The grant of a mortgage to Grocon's financiers over the Civic Place site including over the council's interest. 158 The report then considers a number of matters under the heading "Issues/Options/Consequences". Those matters include :

(a) " Community and council Facilities " (paragraphs 6-8 on page 6): 6. council's facilities and community facilities will equate to $63m and publicly accessible open space will equate to $23.5m (including public art works). It should be noted that both of these values are subject to final due diligence and agreement by both council's and Grocon's Quantity Surveyors and will be confirmed by both parties prior to final completion of the Development Agreement. 7. The facilities are as outlined in the attached report and currently equate to: 7.1 7510sqm net area of council Facilities; 7.2 5560sqm net area of Community Facilities 8. The Development Agreement also currently requires the provision of open space of approximately: 8.1 15,000sqm which is accessible 24 hours a day; 8.2 8,000sqm limited access to open space (e.g. open space within the atria).

(b) Discussion of council's financial position in the following terms: 11 Council should refer to the detailed financial comparisons as outlined in the attached report. In keeping with councils previous approach, Civic Place is self funding through a debt capitalisation approach. This minimise any impact on council's operating budget. 12. In November 2005, council had projected a net debt position of $10.08m at project completion to be serviced by the increases from the estimate rates uplift as generated by the Civic Place development. At this time, council had not allowed any CPI growth on revenue share. It was considered prudent at the time not to include this amount until negotiations had been finalised with Grocon. Now that all major risk issues have been negotiated it is an appropriate time to factor in projected growth in revenue share. 13. As a result of this, the most likely scenario now leaves council with a net debt at project completion of $6.26m. This likely debt position is arrived at after all known risk adjustments have been made to the financial model, and all revenue enhancement opportunities are achieved. 14 council should also be aware of the changes to the value of its current net asset values compared to its future net asset values. The most likely balance sheet outcome for council at project completion is that its net asset position will increase from the current value of $71.49m to $88.69m (an increase of 24%). 15 To ensure that council is given the best guidance possible the Civic Place Management Committee has undertaken a sensitivity analysis and is of the opinion that council's best case scenario could generate a debt as low as $0.37m. Conversely the worst case scenario could generate a net debt of $7.67m which includes sacrificing council contingency of $7m. 16 However the Civic Place Management Committee has fully analysed all risks and considers that the most likely net debt position of the Civic Place Project is $6.26m. This is considered to be a prudent estimation considering all of the facts currently known to the Committee at this time. The committee has tried to cap council's risk position in several areas to remove uncertainty; however a project with the complexity of Civic Place cannot be managed without council taking a risk position in some areas. The Civic Place Management Committee has capped exposure to Environmental restoration to a maximum of $4m and has capped its exposure on the cost of vacant possession of Darcy Street properties to $2m. 17. Whilst best endeavours have been undertaken to ensure that councils likely financial position is delivered this estimated net debt position has been achieved by investing $7m that council has acquired from property sales from both Valentine Square and the Hunter Street Car-park forecourt. By investing this $7m council generals interest which offsets councils debt position and provides a contingency fund for unforseen e3xpenses which equates to approximately 10% of councils facility costs. It should be noted that the Department of Local Government supports this approach. Should these funds not be drawn down for contingencies then (on completion of councils facilities), council will have a further $7m to invest in other projects at that time. 18 As before, the servicing of council's net debt position of $6.26m will be financed through the life of the project from the additional uplift that Civic Place generates in rates income. This position will maintain councils commitment [sic] to the community that Civic Place will remain a self funded project. 19 Council is also aware that Grocon has the ability to withdraw from proceeding with Civic Place between June 2007 (financial close) and June 2008 in the unlikely event that they cannot secure finance to proceed with Civic Place. This is considered to be a most unlikely scenario given that by this stage Grocon will have outlaid up to [redacted figure]m in completing their designs, gaining development consent and marketing Civic Place. In this unlikely event however, the Civic Place Management Committee estimate that the cost to council would be [redacted figure]m. However the council has the right to be reimbursed for reasonable costs and would have a consolidated site and an approved DA with which to go back to the market place. 20 At this time should council wish to unravel the civic Place deal altogether then the estimated costs to council would be approximately [redacted figure]m. This is more clearly explained in the attached Civic Place Management Committee Report. 159 The General Manager's report of 29 June 2006 concludes at par 21: The Negotiating Committee has now concluded its major commercial negotiations with Grocon. Over the next weeks the Lawyers representing both parties will finalise legal drafting of the details of the Development Agreement and Annexure to ensure that the facility risk and financial outcomes as outlined in this report , are delivered. 160 Further at par 25: As requested by the Department of Local Government, once council has resolved its position on Civic Place, councils Solicitors will advise the council of its final risk allocation and commercial position. It should be noted that the Department is satisfied that given all the information given to it, that our project complies with their guidelines and as such council may enter into the Development Agreement. As a matter of course however the Department will be notified of the final position as reported to council. 161 The Management Committee report of June 2006 includes an executive summary in which the management committee sets out its recommendations to the council as follows: (a) That the most likely financial outcome arising from the development of Civic Place is a net debt position to council at project completion of $6.26 mill. (b) That the most likely balance sheet outcome for council at Project completion is a nett (sic) asset position of $88.69 mill (being an increase from the current net asset position of $71.45 mill) (c) That council enters into a Development Agreement with Grocon consistent with the Development Agreement summary and Risk Matrix appended at Attachment B; (d) Prior to execution of the Development Agreement that council obtain from its legal advisors a letter form recommended by the Department of Local Government Review Committee; and (e) council expeditiously proceed with all necessary application to the Department of Local Government and, if those applications are approved, proceed with Compulsory Acquisitions of the relevant part of Church Street and any necessary leasehold interests in the Darcy Street properties. 162 The Management Committee report of June 2006 includes a discussion of council's financial position in Part 3. 163 The Management Committee report of June 2006 also discusses design outcomes and includes two tables describing the council Facilities and Community Facilities to be delivered under the Development Agreement. These are as follows: Council Facilities Net Lettable Area(sqm) Entry zone 220 council Workspace 6500 Civic Facilities 650 Basement Storage, IT, Arts 100 Loading Dock 40 Sub-Total 7,510

Community Facilities Net Lettable Area (sqm) Library & Technology Centre (shares foyer outlined in accommodation brief above) 3,030 Childcare Centre 960 Childcare Focus and Support Facilities (SDN) 150 Community Meeting and Activity Rooms 350 Senior Leisure Centre 120 Gallery & Technology Centre 950 Facilities Total 5,560

164 Part 5.3 of the Management Committee report of June 2006 also contains a discussion of the use of Church Street within the Civic Place development as follows: Under the PDA, Grocon will develop the substratum under Church Street Mall as additional car parking and retail below street level.

Grocon, in return, will upgrade the street level of the mall above (between Macquarie and Darcy Streets) to a level consistent with the rest of the Open Space Works… 165 The Management Committee report of June 2006 includes at Annexure A a financial model prepared by Mike Collins and Associates. That report sets out a number of financial models for the Civic Place development. Under the heading "Current Models" there are three further columns headed "Worst Case", "Likely Case" and "Best Case". The model then includes numerous line items describing payments made and payments received by council. These are described as "In", "Out" "Below the Line" and "Other potential below the line revenue enhancements". The model includes the following line items in respect of each of the current model's "Worst case", "Likely Case" and "Best Case": Current Models Worst case Likely Case Best case Total-in [redacted figure] [redacted figure] [redacted figure] Total-out [redacted figure] [redacted figure] [redacted figure] council's above the line net cash position [redacted figure] [redacted figure] [redacted figure] Debt at project completion -$25.04 -$21.99 -$20.25 Net debt at project completion after deducting other potential below the line revenue adjustments -$7.67 -$6.26 -$0.37

166 The financial model also includes a table headed "Balance Sheet" as follows in respect of each of the current model's "Worst Case", "Likely Case" and "Best Case" scenarios: Current Models Worst case Likely Case Best case Existing Civic Place buildings - - - council facilities including fitout $71.45 $71.45 $71.45 Public art [redacted figure] [redacted figure] [redacted figure] Public domain (cost of works and land component) [redacted figure] [redacted figure] [redacted figure] Cash in bank/property investment - - - Net debt at project completion -$7.67 -$6.26 -$0.37 Total $87.28 $88.69 $94.58

167 Also attached to the council attachment (or report) is Annexure B "Development Agreement Summary and Commercial Risk Report". At par 9 of the annexure, the key features of the project and outstanding issues are addressed. These include: 9.0(e) the trust noted above will cover all of the project land (excluding Town Hall and its surrounds), including the land required to construct the future council facilities. This arrangement effectively transfers the land to Grocon at the start of the project. 168 A "Development Agreement Summary" is annexed as "A" to the above Annexure B and is dated 27 June 2006. It is in the same terms as the document referred to above prepared by Blake Dawson Waldron and confirms, at par 3.2 what the effect of the Land Trust is. 169 On 29 June 2006, council resolved to enter into the Development Agreement with Grocon. The resolution included in par (d): (d) That council enter into a Development Agreement with Grocon (Civic Place) Pty Ltd (Grocon) Grocon Constructors Pty Limited and Grocon Pty Limited in relation to the Civic Place Development (and each document necessary to give effect to it including the document referred to in paragraph (e) below) which Development Agreement is substantially in accordance with the Development Agreement and Commercial Risk Report dated June 2006 (see Annexure B to the attached Civic Place Management Committee Report) and may include provision for: 1 The acquisition, purchase, sale, exchange or surrender of any land or other property forming part of the Civic Place Site or located within or adjacent to the Civic Place Site in accordance with the Development Agreement; 2 The construction, completion and delivery of the Civic Place Development; 3 council granting a lease, licence or other entitlement in respect of the public domain areas within the Civic Place Development; 4 The establishment of a trust over the Civic Place Site of which council will be trustee and the beneficial ownership of the land comprising the Civic Place site will be vested in Grocon; 5 The grant of a mortgage to Grocon's financiers over the Civic Place site including over the council's interest.

(par (e) referred to above dealt with the acquisition of certain land from Integral Energy which is not relevant for present purposes.) 170 On 21 July 2006 council entered into the Development Agreement with Grocon. 171 On 16 August 2006, the Department of Local Government wrote to Blake Dawson Waldron in response to its letter dated 6 July 2006 regarding the council's proposal to acquire private land and a public road for the implementation of the Civic Place redevelopment project. The letter states: Before recommending to the Minister that he exercise his discretion to either approve or decline this application, I will require evidence of council having attempted to reach a negotiated agreement in relation to these registered interests. I also consider it appropriate that the lessees are given an opportunity to make written submissions about the proposal to acquire their interests. A copy of any submissions received from the lessees should be forwarded to the Department. 172 Council wrote to the Department of Local Government on 19 October 2006. That letter states: The Department has requested that the council provide it with an assurance that the council will not gazette the Notice of Compulsory Acquisition for Darcy Street prior to gazetting the Notice of Compulsory Acquisition for the Darcy Street Private Properties.

In response to that request, the council undertakes that it will gazette the Notice of Compulsory Acquisition for Darcy Street at the same time as it gazettes the Notice of Compulsory Acquisition for the Darcy Street Private Properties. That is, the council will not gazette the Notice of Compulsory Acquisition for Darcy Street prior to gazetting the Notice of Compulsory Acquisition for the Darcy Street Private Properties. 173 On 13 December 2006, council sought approval for the Compulsory Acquisition of Church Street (Church Street Application). In Part 4 of that application, under the heading "Purpose of Acquisition", is the following statement: Section 186 of the Local Government Act 1993 (NSW) states that a council may acquire land for the purpose of exercising its functions. Sections 7, 8, 23 and 24 of the Local Government Act 1993 (NSW) set out the functions and charter of a council which include the provision of appropriate services and facilities, the improvement and development of its resources, and the proper management, development, restoration and enhancement of the environment of the area for which it is responsible.

Section 186 of the Local Government Act 1993 (NSW) also provides that a council may acquire land that is to be made available for any public purpose for which it is reserved or zoned under an environmental planning instrument.

Parramatta Civic Place is located within the City Centre Precinct defined in the Sydney Regional Environmental Plan No. 28 (SREP 28), which sets out specific aims for the City Centre Precinct. In accordance with the aims in SREP 28, in order to improve and enhance the public facilities and amenities in the City Centre Precinct, council proposes that the development of a large part of the Civic Place site as part of the overall Civic Place Development will include a mix of public facilities including public open space, council buildings, a library and community facilities.

A Project Development Agreement for the Civic Place Development was finalised between Parramatta City council, Grocon (Civic Place) Pty Ltd and related Grocon parties on 21 July 2006. Under the Project Development Agreement approximately 12,000 square metres of public open space will be delivered to the Parramatta CBD, together with various other community facilities for the public purpose identified in SREP 28. The inclusion of part of Church Street will result in the delivery of an additional 2,925 square metres of revitalised public open space. The provision of these public facilities will not be feasible without including Church Street and Darcy Street.

The purpose of acquiring the relevant part of Church Street is to enable Parramatta City council to: · own the land free of encumbrances and interests; · to close this part of Church Street; and · include part of Church Street in the overall Civic Place Development,

so that the Civic Place Development including the expected public facilities can proceed.

Once the relevant part of Church Street is acquired by council it will be classified as Operational Land .

Subject to the comments below in relation to a proposed vehicular access ramp, the surface of Church Street will be retained by Parramatta City council and utilised as public open space. Council will ensure that, following completion of the works on Church Street associated with the Civic Place Development, public access to Church Street is available on a basis similar to that which exists prior to compulsory acquisition.

A substratum beneath Church Street which is contiguous to the Civic Place site and which is subject to a final design and agreement between the parties will be transferred to the developer Grocon (Civic Place) Pty Ltd at a later date for the purpose of construction of public car parking and one level of retail development. Subject to design considerations and the grant of all required approvals from relevant statutory authorities (including planning approval), a vehicular access ramp may be constructed on part of Church Street emerging from the vicinity of the substratum.

With the exception of any rights required to accommodate the access ramp, the surface of Church Street will not be transferred to the developer or into a trust for the benefit of the developer. 174 At Section 5.3 of the Church Street Application it states: Is the land to be acquired a public road? Yes (If No, go to 5.5)

(If Yes, reason for not proceeding under the road closure provisions of the Roads Act 1993)

The compulsory acquisition of Church Street will free it of encumbrances and close the road. Section 41 of the Roads Act 1993 (NSW) provides that a public road that is compulsorily acquired under any Act ceases to be a public road as a consequence of its compulsory acquisition.

There are also two compulsory acquisition applications before the Department, namely: · Darcy Street (refer to Parramatta City council's compulsory acquisition application dated 24 November 2004); and · Darcy Street private Properties (refer to Parramatta City council's compulsory acquisition application dated 24 December 2003). These applications will be gazetted concurrently with Church Street if approved. 175 Sections 5.4 and 5.5 of the Church Street Application state: 5.4 Is the land to be acquired a Crown road or an unformed council road? No (If No, go to 5.7) (If Yes, go to 5.6)

5.5 Is the land to be acquired Crown Land? No 176 Section 5.7 of the Church Street Application states: 5.7 Any easements/leases/other interests affecting the land? No 177 Section 5.10 of the Church Street Application states: 5.10 Is the acquisition ancillary to another acquisition? Yes (attach statement)

See Attachment F for statement. 178 Attachment F to the Church Street Application states: ATTACHMENT F

5.10 Is the acquisition ancillary to another acquisition?

The compulsory acquisition of part of Church Street forms part of a series of compulsory acquisitions that Parramatta City council is undertaking, namely: · Darcy Street (refer to Parramatta City council's compulsory acquisition application dated 24 November 2004); and · Darcy Street private Properties (refer to Parramatta City council's compulsory acquisition application dated 24 December 2003).

It is Parramatta City council's intention that the publication of Notices of Compulsory Acquisition in the New South Wales Government Gazette for the compulsory acquisition of: · part of Church Street; · Darcy Street; and · the relevant private properties adjacent to Darcy Street (Darcy Street Private Properties),will occur on the same day. 179 Section 6.3 of the Church Street Application states: 6.3 Who owns what (land or interest in the land)?

Parramatta City council wholly owns: · the land at Church Street; and · the interest in the land at Church Street,

that is the subject of this application for compulsory acquisition.

Attachment D contains a discussion which confirms that council is the owner of Church Street. 180 Section 6.9 of the Church Street Application states: 6.9 Does the land or land interest owner(s) consent to acquisition? Yes ( attach copy ) Parramatta City council is the owner of Church Street including the part of Church Street the subject of acquisition, and consents to the acquisition. Refer to Attachment A for resolution of Parramatta City council.

As Parramatta City council is acquiring part of Church Street from itself, it is not required in provide a copy of the Department of Commerce's Section 30 Agreement in accordance with clause 1.15 of the Guidelines for the Compulsory Acquisition of Land by councils, June 2006. 181 Section 9.1 of the Church Street Application states: 9.1 Does council intend to sell the land once the land is acquired? In Part (If No, go to 8) The purpose of the compulsory acquisition of part of Church Street is for the public purpose of providing open space land as part of the Civic Place Development (refer to section 4 above for a more detailed explanation of the purpose of the acquisition).

Subject to the comments below in relation to a proposed vehicular access ramp, the surface of Church Street will be retained by Parramatta City council and utilised as public open space. Council will ensure that, following completion of the works on Church Street associated with the Civic Place Development, public access to Church Street is available on a basis similar to that which exists prior to compulsory acquisition.

A substratum beneath Church Street which is contiguous to the Civic Place site and which is subject to a final design and agreement between the parties will be transferred to the developer Grocon (Civic Place) Pty Ltd at a later date for the purpose of construction of public car parking and one level of retail development. Subject to design considerations and the grant of all required approvals from relevant statutory authorities (including planning approval), a vehicular access ramp may be constructed on part of Church Street emerging from the vicinity of the substratum.

With the exception of any rights required to accommodate the access ramp, the surface of Church Street will not be transferred to the developer or into a trust for the benefit of the developer

Ownership of the acquired land above and below this substratum will remain vested in Parramatta City council and will be classified as Operational Land . 182 Sections 11.1 and 11.2 of the Church Street Application state: 11.1 Is council applying for urgent processing? Yes (If No, go to 12)

11.2 Reasons: It is Parramatta City council's intention that the publication of the Notices of Compulsory Acquisition in the New South Wales Government Gazette in respect of: · part of Church Street; · Darcy Street (refer to Parramatta City council's compulsory acquisition application dated 24 November 2004); and · the Darcy Street Private Properties (refer to Parramatta City council's compulsory acquisition application dated 24 December 2003),

A Project Development Agreement for the Civic Place Development was finalised between Parramatta City council, Grocon (Civic Place) Pty Ltd and related Grocon parties on 21 July 2006. The acquisition of the lands listed above forms a condition precedent in the Project Development Agreement which must be satisfied in order for the Civic Place Development to proceed.

Accordingly, Parramatta City council requests urgent processing of this application so that the conditions precedent can be satisfied to allow the Civic Place Development to proceed in a timely manner. 183 On 9 November 2006, DP11004477 was registered being a "Plan of Proposed Compulsory Acquisition of Church Street". The Notes at the top right hand corner of that plan say: "Title System: CROWN LAND" 184 On 15 December 2006, the Minister's approval, pursuant to s 187(2) of the LG Act, for the issue by the council of proposed acquisition notices under the Just Terms Act in respect of certain lands within Civic Place, including the applicants' lands, was notified to the council. This was in a letter from the Department of Local Government to council headed "Approval to compulsorily acquire various Lots for the purposes of the implementation of the Civic Place Project". The letter says: I am pleased to inform you that the council's application to compulsorily acquire Lot 1 DP514282, Lot A and Lot B DP417015, Lot 2 DP549978, Lot 3 DP221128, Lot 3 and Lot 4 DP211992, Lot 1 DP128539 and Lot 1 DP 1086906 for the implementation of the Civic Place Project has been approved.

Attached to that letter is the form of the " Notice of Compulsory Acquisition of Land ". 185 On 14 March 2007, the Department of Local Government wrote to council. That letter was headed: "Approval to compulsorily acquire land for the purposes of the Civic Place Project". The letter said: I am pleased to inform you that the council's application to compulsorily acquire Lot 1 DP1104477 for the implementation of the Civic Place Project has been approved.

The letter also enclosed the form of " Notice of Compulsory Acquisition of Land ". 186 On 26 March 2007 council wrote to Mr Fazzolari. That letter stated: We refer to our previous meetings, correspondence and discussions regarding the Civic Place Development and the purchase of your Property and particularly to council's recent letter dated 8 January, 2007 in which we sought a further meeting between the parties. To date no response has been received in relation to this request and as such council regrets that unlike the majority of Darcy Street property owners, there has not been an opportunity to further discuss the potential acquisition of your Property prior to completion of the compulsory acquisition process.

Council advises that it is proposed that Proposed Acquisition Notices (PAN's) be issued within the next few weeks to those remaining owners of Darcy Street properties with which council has not been able to reach mutually agreeable acquisition terms. 187 On 26 March 2007 council wrote to Mr Winston-Smith, Mac's Pty Limited. That letter stated: We refer to our previous meetings, correspondence and discussions regarding the Civic Place Development and the purchase of your Property and particularly to council's recent letter dated 19 December, 2006 and 16 January, 2007 in which we sought a further meeting between the parties.

A letter, issued by your solicitor, dated 12 January 2007 was received by council and subsequently responded to by council on 16 January 2007. This letter advised that you were seeking further advice and would endeavour to respond to council's request for a meeting between the parties. To date no such response has been received in relation to this request and as such council regrets that unlike the majority of Darcy Street property owners, there has not been an opportunity to further discuss the potential acquisition of your Property prior to completion of the compulsory acquisition process.

Council advises that it is proposed that Proposed Acquisition Notices (PAN's) be issued within the next few weeks to those remaining owners of Darcy Street properties with which council has not been able to reach mutually agreeable acquisition terms.

188 On 5 April 2007 Hunt and Hunt, on behalf of the Applicant Mac's Pty Ltd, wrote to council. That letter stated: ...Please forward all future correspondence to our firm.

We note council intends to issue a Proposed Acquisition Notice. We are instructed to accept service of same. 189 On 23 April 2007 Hunt and Hunt again wrote to council and said: We refer to our letter 5 April 2007 and note that we have not had a response thereto. We do not believe that Parramatta City council has power to compulsorily acquire our client's property at 160 Church Street, Parramatta. We request that council put into place appropriate procedures so that our client has every opportunity to challenge any decision of council's to proceed with its compulsory acquisition of 160 Church Street, Parramatta. 190 On 25 May 2007 Blake Dawson Waldron on behalf of council wrote to Hunt and Hunt and stated: We refer to your letters of 5 April and 23 April 2007.

We act for Parramatta City council in relation to the Civic Place Development.

The Civic Place Development is a public private partnership (PPP) being carried out by council in accordance with the Department of Local Government's Guidelines on the Procedures and Processes to be followed by Local Government in Public-Private Partnerships (1 September 2005) and the relevant provisions of the Local Government Act 1993 (NSW).

The Civic Place Development involves the restructuring and embellishment of public and private lands in the Civic Place site to create a more vibrant civic centre for Parramatta as envisaged in Sydney Regional Environmental Plan No 28 - Parramatta and the Civic Place Masterplan. The development of Civic Place will include a mix of public facilities including public open space, council buildings, a library and community facilities to be delivered by a private sector contractor.

In order to achieve these public benefits envisaged under the Master Plan, Darcy Street and the adjoining lands are incorporated into the Civic Place Development Site.

Accordingly, the council is proposing to compulsorily acquire Lot 1 in DP 514282 as part of the Civic Place Development pursuant to its powers under the Local Government Act.

In accordance with Part 1 of Chapter 8 of the Local Government Act, the council obtained the approval of the Minister for Local Government on 15 December 2006 to compulsorily acquire Lot 1 in DP 514282.

We confirm that the council will be giving your client a proposed acquisition notice in accordance with the Land Acquisition (Just Terms Compensation) Act 1991 (NSW). We will advise you of the date of service. 191 On 31 May 2007, council issued two proposed compulsory acquisition notices for the acquisition of Darcy Street and Church Street. 192 On 1 June 2007, council served a Proposed Acquisition Notice on each Applicant in respect of their respective properties the subject of these proceedings. Each of the letters accompanying the notice said: The Parramatta City council of New South Wales requires the whole of your interest in the land located at [address] for a public purpose, namely the Civic Place Development. A full description and title details of the land are in the attached schedule. 193 On 16 August 2007 Clayton Utz, on behalf of R&R Fazzolari Pty Limited, wrote to council seeking certain documents. 194 On 20 August 2007 Clayton Utz on behalf of R&R Fazzolari Pty Limited wrote to council. That letter said: "…our client does not believe that the council has the power to compulsorily acquire the Properties." The letter further stated: In light of the circumstances surrounding the proposed acquisition of the Properties, we are instructed to seek an undertaking from council that it will not take any steps to procure the gazettal of the compulsory acquisition of the Properties without first providing us with 14 days notice of the intention to gazette the Notices.

We request that this undertaking be given no later than 2pm on Wednesday 22 August 2007. If we do not receive the undertaking, we put you on notice that our client will be seeking urgent orders from the Court, including an injunction to prevent the acquisition from taking place prior to the Court having the opportunity to consider all of the issues and determine whether the proposed acquisition is unlawful. 195 On 22 August Blake Dawson Waldron on behalf of council wrote to Clayton Utz and stated: We act for Parramatta City council (council) in relation to the Civic Place Development.

We refer to your letters to council dated 16 August 2007 and 20 August 2007.

1. The Proposed Acquisition The redevelopment of Civic Place is an important urban renewal project that has been promoted by the NSW Government and council for a number of years. The project utilises private sector skills and capability to deliver public facilities and amenities as well as revitalising the Civic Place Precinct. A master plan was prepared by the NSW Government Architect and Environmental Planning Instruments (including SREP 28) have been made to facilitate the project.

Contrary to your comments in the above letters, the proposed acquisition is authorised by section 188 of the Local Government Act 1993 (LGA) for the following reasons:

(a) the proposed acquisition is not for the purpose of re-sale - the purpose of the acquisition is so that the Civic Place Development including the required public facilities and amenities can proceed; and

(b) section 188(2)(a) provides that in any event the owner's approval is not required if: the land forms part of, or adjoins or lies in the vicinity of, other land acquired at the same time under this Part for a purpose other than the purpose of re-sale council is acquiring other land within the vicinity at the same time for a purpose other than the purpose of resale. 2. Request for Documents in your letter of 16 August 2007 As you are aware, a statutory process exists by which documents can be obtained. That process includes a number of formal and procedural safeguards in respect of issues such as commercially confidential information, privacy rights and other issues. Your client should seek to exercise their entitlements under those processes and not seek informal production.

In your letter you foreshadow instituting legal proceedings and request an undertaking from council. council declines to provide that undertaking. council reserves its rights including its right to seek an undertaking as to damages for any interlocutory relief sought and its rights as to security for costs.

Your client has been aware of the proposed acquisition of your client's properties and other properties in the vicinity for some time and has delayed until this late stage to take any action as to the validity of the proposed acquisitions. Currently, we advise that council intends to proceed with the Gazettal of the acquisition notices on 31 August 2007 and will not provide your client with the requested undertaking. If your client commences proceedings our client will seek expedition of the matter and security for costs. If your client seeks an interlocutory order restraining any action by our client, our client will require an undertaking as to damages.

Our client considers that it has power to acquire the properties. It considers your client's actions in making threats of legal proceedings at this late stage to be motivated by no more than a desire to gain a commercial advantage. Our client will strongly defend any proceedings and will not negotiate the compensation to be paid in the context of the compromise of those proceedings.

However, if your client is prepared to sell for fair market value our client is prepared to buy and to obtain an independent valuation to determine the fair market value. … 196 On 21 August 2007 the Applicant Mac's Pty Ltd commenced proceedings No. 40810.

197 On 22 August 2007 the Applicant R&R Fazzolari Pty Limited commenced proceedings No 40818.

198 On 24 August 2007 DP116940 was registered being a "plan of proposed acquisition of Darcy St and land acquired by Government Gazette 05/04/07 fols 2150-2151".

Summary of civic place development agreement 199 The Development Agreement is complex, if not labyrinthine. Initially, it is helpful to consider it by reference to a council document dated 27 June 2006 called "Outline of Key Development Agreement Provisions" prepared to summarise and simplify the terms of the Development Agreement for submission to the Project Review Committee. This document relevantly included the following: Conditions precedent

2.1 Transaction is dependent on satisfaction of agreed preconditions … (a) The compulsory acquisition by Council of the remaining properties on Darcy Street, Darcy Street itself and a defined section of Church Street. … …

Within 10 business days of the date on which the last of the conditions precedent have been satisfied or waived: (a) GCP [Grocon] will be required to make an initial payment to Council… (b) Council and GCP must execute a document which constitutes a trust over all parts of the site owned by Council at that time…

The effect of the Land Trust is as follows: (a) Council will transfer the equitable title of the site to GCP (that is an effective transfer of title to GCP) 4. The Works

4.1 What are the Works? The works to be carried out by GCP and, as applicable, the Developer (Works) will include two main components: (a) the Council Project Works…comprise: (i) the Council Related Works…; and (ii) several phases of Open Space Works (including public domain areas and public art); and (b) the Developer Works to be carried out by GCP comprise the balance of the Project comprising residential, retail, commercial offices, car parking and other components described in the Developer's design proposal. 5. Payment

5.1 Summary of Payments … (a) GCP will be required to make an initial cash payment to Council on the date which is 10 business days after the date on which the last of the conditions of precedent is either satisfied or waived, equal to [tens of millions of dollars] (plus GST) subject to a proportionate reduction if the Developer's DA Consent does not achieve the minimum FSA. (b) GCP will be required to pay [redacted figure]% of project revenues to Council (Revenue Share); … (d) GCP will be required to pay an additional payment to Council where total revenue from the Project exceeds the total cost of the Project by a percentage which is to be agreed between Council and the Developer (super profit share). 200 The Development Agreement may be summarised in more detail as follows.

201 The Development Agreement concerns the Project which is defined in cl 1.2 to mean the development of the Site. Elements of the Project are further defined to include the design, construction and commissioning of the Works. Works are broadly made up of facilities and other structures to be supplied ultimately to the council as identified in Exhibit V to the contract. In Exhibit V the facilities to be supplied under the contract include council workspace, civic facility, community meeting and activity rooms, seniors leisure and learning centre, library and heritage centre, gallery and technology centre, childcare centre, storage facilities, loading dock and 92 car spaces. Works also include those building structures and other improvements to be developed on the site under the contract other than the Council Project Works. Those Works are generally described in the Developers Design Proposal which is Exhibit X to the Contract. 202 The Site is defined to include the land identified at p 23 of the Development Agreement. The bulk of the land is that identified in Exhibit F to the Development Agreement which is the land bordered by Darcy Street, Smith Street and Macquarie Street together with the westerly border of the substratum of Church Street. 203 Two other properties currently form part of the site. One is referred to as the Integral Energy Substation site which is the site of an existing substation which under the terms of the contract is proposed to be transferred to the council for $1 upon Grocon, in the course of the project design, constructing and commissioning an alternative substation to replace it. The second further piece of property is referred to as the Grocon Land at [redacted site] then owned by [owner of redacted site] which under cl 5.1 Grocon is to use reasonable endeavours to acquire. Acquisition of that property is a condition precedent under cl 2.1(b) of the Development Agreement. "Site" is defined to include such other land as agreed between the parties to form part of the applicable portion of the site for the purpose of the contract. 204 Recital F sets out the substance of the Development Agreement in these terms: The council, GCP and GCPL [Grocon] have agreed upon the development of the project upon the terms and conditions set out in this Contract. (p 9) 205 The Site includes the properties owned by the applicants. These properties form part of the group of properties defined as Darcy and Church Street Properties. For the purposes of this summary the applicants' properties will be referred to as the Darcy Street Properties. 206 Clause 2 of the Development Agreement identifies Conditions Precedent and Conditions Subsequent. The former are identified in cl 2.1 and include: (a) the acquisition by council of the freehold of the Darcy Street and Church Street Properties; (b) acquisition in the name of Grocon of the freehold of the [redacted site] site; (c) planning approval for Stage 1 of the agreement and execution of a Planning Agreement; and (d) execution of the "Pre-Commitment" by Grocon concerned with what is likely to be necessary for Grocon to obtain finance approval. The Conditions Subsequent consists of finance approval and a voluntary agreement as referred to in s 93F of the Environmental Planning and Assessment Act 1979.

207 Clause 2 sets out detailed provisions concerning the consequences of failure to satisfy, or waiver of, the Conditions Precedent and Conditions Subsequent.

208 Clause 3 sets out the steps to be undertaken to obtain Stage 1 planning approval, being one of the Conditions Precedent referred to in cl 2.1. That approval is to be obtained by Grocon after acceptance by the council of a planning application which has to be of a design which is consistent with the developers' design proposal as reflected in the tender document which is Exhibit X to the contract. Stage 1 planning approval is the approval to carry out the whole of the council Related Works as described in the Stage 1 planning application without the need for further planning approval.

209 Clause 4 is concerned with the financing of the project. Under cl 4.6, provision is made for the top up of certain entitlements to rent by Grocon to the council in the event that the agreement is terminated.

210 Clause 5 is concerned with the steps taken to acquire sites which consist of the [redacted site] site, the Integral Energy Substation site and the Darcy and Church Street Properties. Under cl 5.3 the council must use its best endeavours to satisfy the conditions precedent in cl 2.1(a) being the acquisition of the Darcy and Church Street properties, which include the applicants' land. Under cl 5.3(b) upon acquisition by the council of the Darcy and Church Street Properties, the council must take steps to ensure they become part of the Trust Land.

211 "Trust Land" is defined as that part of the sale identified in Exhibit F and an "allowance agreed in accordance with clause 1.9". The applicants' land is included in the definition, as well as in Exhibit E attachment 5, as Trust Land.

212 Clause 6 is concerned with the activation of the trust and the council's continuing occupation of the existing facility. Under cl 6.1(a), ten days after the satisfaction (or waiver) of the conditions precedent, council must execute and deliver a Trust Declaration in the terms of Exhibit Z to the Development Agreement. In that event cl 6.1(a) read with cl 8.1(a) and Item 5 of the reference schedule, provides for payments by Grocon or the council, including payment by Grocon to the council of [tens of millions of dollars]. Council must pay Grocon the amounts identified in Item 4 to the reference schedule and a sum of [a few] million.

213 Provision is made for the addition of further land to the trust as required by Grocon: cl 6.1(e). Under cl 6.2, provision is made for council to remain in occupation of existing facilities upon payment of the Existing Facilities Rental. Provision is made under cl 6.3 for relocation of the council to the new facilities.

214 Annexure Z to the Development Agreement designates the council as Trustee and Grocon as beneficiary of a Trust Deed. The recitals to the Trust Deed declare (at [B] - [C]) that: The Beneficiary has agreed to procure the development of the Trust Land on the terms and conditions set out in the Development Agreement.

Pursuant to the terms of the Development Agreement, including payment of the Transfer Consideration by the Beneficiary, the Trustee has agreed to hold the Trust Land and all Receipt and Rights on trust for the Beneficiary (in its capacity as trustee of the Grocon Parramatta Trusts) as provided in this deed.

215 Clause 2.1 of the Trust Deed provides that the council will hold the Trust Land on trust for Grocon. Removal of the Trustee may occur, under cl 8.1(b) of the Trust Deed, in accordance with cl 19.1 of the Development Agreement. Clause 19.1 of the Development Agreement provides for the transfer of council related works to the council. The council cannot resign or retire as trustee and Grocon cannot cause or permit the council to cease to be a trustee, before this transfer (cl 19.4(a) of the Development Agreement). Once Grocon provides the council with necessary instruments to vest the Council Related Works in the council, Grocon must deliver to the council a change of trustee document and any necessary transfer document, which the council must promptly execute (cl 19.1A of the Development Agreement).

216 Under cl 7.1(a) of the Development Agreement, Grocon is granted the right to undertake the "Project" (defined as the "development of the site", including the design, construction and commissioning of the "Works" (a term itself defined as including "Council Project Works" and "Developer Works")). The "Site" is described as including Council Provided Land, the Trust Land (which includes the Applicants' land), the Grocon Land and any other land agreed to form part of the Site.

217 Grocon's design documents must be "prepared to a level of detail at least equivalent" to the Master Plan: cl 10.1(c) of the Agreement. These documents must show, inter alia, buildings to be constructed and gross floor space ration, number of storeys and heights of such buildings.

218 Clause 7.1(b) obliges Grocon as developer to finance, design, construct and commission the Works in accordance with the contract and hand over to the council the council related works at practical completion and certain open space balance works in accordance with the contract. The latter are identified in Exhibit W to the contract. Their identification is subject to agreement in accordance with cl 1.11 of the Development Agreement. Sub-clauses 7.2 and 7.3 impose upon Grocon the obligation to build the various Works in accordance with law and broadly at its own risk. Clause 7.4 deals with the development of the design. The specific risks taken by Grocon are identified in cl 7.5.

219 Clause 8 sets out what are described as the deliverables and are more particularly payments to be made by Grocon, payments to be made by the council (cl 8.2), two performance bonds to be delivered by Grocon to the council each in the sum of [redacted figure] (cl 8.3 and Item 7 Schedule 1), and the payment by Grocon of a project revenue share calculated in accordance with the agreement (cl 8.1(b), 8.4). Clause 8.5 provides for the obligations of the parties to the contract. Clause 8.9 and following deal with other provisions as to payment of consideration and entitlements to rents.

220 Clause 9 deals with various matters associated with the site, particularly access and control. In cl 9.12 Grocon acknowledges that the construction of any pedestrian link to the Parramatta railway station forms part of the Developer Works.

221 Clause 10 deals with planning. Grocon must lodge its preliminary planning documents with the council for review and comment. This procedure and the involvement of council in relation to planning documents is replicated throughout the course of the project: cl 10.1(a) and (b). The council is entitled to withhold approval under the foregoing clauses on a number of bases specified in cl 10.3, including that it is materially inconsistent with the developers design proposal as it relates to council project works.

222 Clause 11 deals with the design and design documentation. Council has an active role in relation to approval of the design both of council related Works (cl 11.1), Open Space Balance Works (cl 11.2) and the preparation of Design Documentation into such Works (cl 11.4, 11.5). Council has a more limited participation but still significant in relation to the Developer Works (cl 11.6). Clause 11.9 provides for the parties to negotiate to seek to achieve a reduction in the costs of council related works by [redacted figure] and, in default of such agreement, allows for the possibility that the council might be required to make a further contribution (cl 11.9).

223 Clause 12 deals with the construction and commissioning of the works and provides for council involvement by way of inspection and the like (cll 12.2, 12.3, 12.5). Clause 13 deals with variation of the Works. Under cl 14 an administration process is put in place including allowing for the participation of a council's representative in such meeting. A project co-ordination group is established pursuant to cl 14.6 involving representatives of the interested parties which is charged with various functions identified in cl 14.6(b). Clause 15 deals with timing in relation to completion of the council Works. Clause 18 deals with plans of sub-division consequent upon the development.

224 Clause 19 provides for the transfer of the council project works. This deals with the steps to be taken upon completion of the project in relation to the council works and provides for the execution of transfers of relevant property to the council including portions of open space which are referred to as "open space balance works" which are defined as including the works identified in Exhibit W to the Development Agreement. These spaces are yet to be agreed. Under cl 19.3, provision is made for the grant of leases in respect of certain property identified as the "open space stage 1 works" which are defined to be works identified as such in Exhibit V and W to the Development Agreement.

The Questions that arise 225 From the statement of issues at [27] above, the following questions arise: (a) Is the decision of council to compulsorily acquire the applicants' land for the purpose of exercising any of its functions under s 186(1) (The s 186(1) Question)? (b) Is the decision of the council to compulsorily acquire the applicants' land a decision to compulsorily acquire land which adjoins or lies in the vicinity of other land proposed to be compulsorily acquired under Part 1 of Chapter 8 of the LG Act within the meaning of s 186(2)(b) (The s 186(2)(b) Question)? (c) Is the council seeking to compulsorily acquire the applicants' land for the purpose of re-sale within the meaning of s 188(1) (The Section 188(1) Question)? (d) If so, does the applicants' land adjoin or lie in the vicinity of other land to be acquired at the same time under the LG Act for a purpose other than a purpose of re-sale, within the meaning of s 188(2)(a) The Section 188(2)(a) Question)? 226 Another question proposed by the council was this: Is the decision of council to acquire the applicants' land a decision liable to be set aside as one made for an improper purpose (The Improper Purpose Question)? An issue arose as to whether it would be necessary to join Grocon as a party if this question were to be pursued. The applicants clarified that it was the alienation of their lands away from the council which they submitted was the improper purpose and they submitted that such a joinder was not required. The section 186(1) Question 227 Is the decision of the council to compulsorily acquire the applicants' land for the purpose of exercising any of its functions under s 186(1)? Section 186(1) provides : 186 For what purposes may a council acquire land?

(1) A council may acquire land (including an interest in land) for the purpose of exercising any of its functions.

228 The applicants submitted that the compulsory acquisition of their land is not for the purpose of exercising a function of the council, but rather for the purpose of providing their land (or the benefit of their land) to a third party, Grocon. The council submitted that the purpose of the acquisition of the applicants' land is to give effect to the Development Agreement and thereby achieve the objects of the Master Plan.

229 In a sense, the choice posed is between the immediate object and the middle distance object of implementing the vision of the Master Plan. Choosing the middle distance object involves classifying it as the end and classifying the immediate object as the means to the end, the end being the real purpose. Choosing the immediate object as the purpose involves classifying the middle distance object as the motive or reason for the purpose.

230 If the Civic Place development had been so designed that council buildings, say council chambers and library, were to be constructed on the applicants' land after resumption, rather than their land being transferred to Grocon, there would be great difficulty in the applicants maintaining their claim. However, that is not the case. The council intends to resume their land in order to transfer it to Grocon under the Development Agreement.

231 The service functions under s 24 of the LG Act, which is widely framed, are apposite to the present matter: 24 Provision of goods, services and facilities and carrying out of activities

A council may provide goods, services and facilities, and carry out activities, appropriate to the current and future needs within its local community and of the wider public, subject to this Act, the regulations and any other law. 232 Section 23 confers on a council a function to "do all such things as are supplemental or incidental to, or consequential on, the exercise of its functions". The functions should be construed in light of the purposes of the LG Act in s 7 including to give councils "the ability to provide goods, services and facilities, and to carry out activities, appropriate to the current and future needs of local communities and of the wider public". This is very similar to the s 24 function. Section 8 identifies the "charter" of a council which involves a set of principles which are to guide a council in carrying out its functions. They include "to bear in mind that it is the custodian and trustee of public assets and to effectively account for and manage the assets for which it is responsible" and "to raise funds for local purposes by the fair imposition of rates, charges and fees, by income earned from investments". Public - Private Partnerships are regulated by Part 6 (ss 400B - 400N) of Chapter 12, which does not confer a function but prescribes a process.

233 Chapter 8 Part 1 (ss 186 - 190) is concerned with acquisition of land. Section 186(1) is concerned with the "purpose" of acquisition. In Telstra Corporation Ltd v Hurstville City Council (2002) 118 FCR 198 at [50], the Full Court accepted that the purposes of a council are best inferred from documents brought into evidence by their officers and the council resolutions in response.

234 Two judgments of Gleeson CJ support the view that in determining the purpose of acquisition of the applicants' land, one should look at what is sought to be done with their land, being transfer to Grocon, and not at the middle distance horizon of the council's reasons or motive, being implementation of the Master Plan through the Development Agreement. In Woollahra Municipal Council v Minister for the Environment (1991) 23 NSWLR 710 at 714 - 715 Gleeson CJ said: In the context of planning law, a statement of the purpose for which land is being used is a description or characterisation of what is being done with, or upon, the land, not an account of the motives of the persons involved in that activity. The question in the present case is whether the use to which the land is being put, which is to be identified by reference to the nature of the activity being conducted upon it, is a use for a purpose authorised by the Act.

235 In similar vein, Gleeson CJ said in News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 at 573 [18]: The distinction between purpose and effect is significant. In a case such as the present, it is the subjective purpose of News and ARL in including the fourteen team term, that is to say, the end they had in view, that is to be determined. Purpose is to be distinguished from motive. The purpose of conduct is the end sought to be accomplished by the conduct. The motive for conduct is the reason for seeking that end. The appropriate description or characterisation of the end sought to be accomplished (purpose), as distinct from the reason for seeking that end (motive), may depend upon the legislative or other context in which the task is undertaken. Thus, for example, in describing, for the application of a law relating to tax avoidance, the purpose of an individual, or of an arrangement, it will be necessary to look at what is sought to be achieved that is of fiscal consequence, not at a more remote, but fiscally irrelevant, object, such as increasing a taxpayer's disposable income. Similarly, in the context of competition law, it is necessary to identify purpose by describing what is sought to be achieved by reference to what is relevant in market terms. The purpose of the fourteen team term was the objective, in relation to the nature of their business arrangements, that News and ARL sought to achieve; not the reason why they sought to achieve that objective. They may have had different, and multiple, reasons for their conduct.

236 The purpose of a compulsory acquisition under the Local Government Act 1919 (LG Act 1919), the predecessor to the LG Act 1993, was considered in Collins v Willoughby Municipal Council (1967) 14 LGRA 256. There the plaintiff owned land in the Chatswood shopping centre which adjoined land owned by the council. On each parcel of land was an old semi-detached cottage. The council made application to the Governor for his approval of the resumption of the plaintiff's land "for the purpose of undertaking the improvement and embellishment of the area". The council intended to invite tenders for a building lease of the whole site, that is, both the plaintiff's and the council's land, for a term of 99 years. The proposed lease would require the lessee to erect a multi-storey commercial building containing certain free public car-parking accommodation. Section 321(1)(a)(iv) of the LG Act 1919 permitted the council to acquire in any mode authorised under the Act, any land for the purpose, among others, of "undertaking the improvement and embellishment of the area". The proposed resumption was approved by the Governor and notification published in the Gazette. The plaintiff sought a declaration that the purported resumption was void. One of the grounds of the plaintiff's attack was that the real purpose was not to improve or embellish the area but to turn the lands owned by the council to profitable account by their sale or leasing. The suit was dismissed. Else-Mitchell J held at 258 - 259: It is not in doubt that a council constituted under the Local Government Act cannot resume land except by statutory authority and that it must exercise the power conferred by the Act in that behalf bona fide for the purpose for which it was conferred. So much is established by a long line of cases including Lynch v Ku-ring-gai Municipal Council [ (1947) 16 LGR (NSW) 144]; Thompson v Randwick Municipal Council [(1950) 81 CLR 87]; Howarth v McMahon [(1951) 82 CLR 442; Minister for Public Works v Duggan [(1951) 83 CLR 424]; Baida v Baulkham Hills Shire Council [(1951) 83 CLR 344]. But the basis on which the resumptions in some of these cases were invalidated has been removed by amendments to the Local Government Act made in 1951 (by Act No 46 of 1951) which inserted new provisions widening the statutory purposes for which land might be resumed so that as Roper CJ in Eq observed in Baiada v Baulkham Hills Shire Council [Unreported, 17th December, 1952; cf 91 CLR at p 655] a council has under these provisions power to acquire land by resumption to some extent independently of purpose. It may for instance acquire some land which it proposes to acquire for the purpose of undertaking the improvement and embellishment of the area, and also it may acquire, independently of any purpose of the Act, any lands of which that land forms part or which are adjoining or in the vicinity of that land. Under the law as it stood before the amending Act came into operation, it is clear from the decisions referred to that land could not be acquired by a council, at all events by resumption, except for a purpose of the Act.

In view of the fact that the amendments made to the Local Government Act in 1951 include the sale or leasing of land as purposes for which land may be resumed I think that a council can properly acquire land for the mixed purpose of improvement or embellishment and sale or leasing at a profit and it would therefore not seem to be material that some part only of the land acquired, and even an undefined part, is to be improved or embellished. 237 Significantly, his Honour indicated that even since the 1951 amendments to which he referred, land could not be resumed simply for some purpose of selling or vesting it in a person who does not propose to apply it for any local government purpose (at 260): …No doubt prior to the 1951 amendments to the Local Government Act , land could not be resumed simply for the purpose of selling it to or vesting it in a third person and even since those amendments a resumption which is effected with the sole object of giving it or selling it to some person who does not propose to apply it for any local government purpose may also be invalid… 238 The purpose of a compulsory acquisition under the LG Act 1919 was also considered in Da Rous v Burwood Municipal Council, (Pearlman J, NSWLEC, 5 March 1996, unreported). There the applicant unsuccessfully sought a declaration that a notification of compulsory resumption of land was invalid. For many years the council had been acquiring parcels of land around a stormwater canal that ran through a block of land. The land was generally vacant and the council intended that it would be subdivided and developed for residential purposes. Pearlman J held: The scheme which the council embarked upon in 1964 was a comprehensive scheme to convert an unsightly and unpleasant wasteland into a pleasant residential subdivision. The site was traversed by an open stormwater channel, adjacent to the council's garbage vehicle depot and was run-down and unattractive. Although over the years the council's precise plans for the development of the site changed several times, it was always intended that the ultimate use of the site would be for medium density residential housing and the site would be sold off by the council for that purpose.

The applicants contended that, in those circumstances, the real purpose for the acquisition of the subject lots was the purpose of resale…That is not the case. The council's purpose in acquiring the subject lots was to replan and resubdivide them as part of a comprehensive scheme for transforming a wasteland into something beneficial to the community. Resale of the site, including the subject lots, was an incidental consequence of the scheme - the ultimate aim was medium density residential development which, for obvious reasons, the council would not itself occupy, but would sell off in whole to a residential developer or in lots to individual occupiers.…

The nature of the site, and its constraints (particularly the absence of road access and the necessity to acquire land) made it financially impossible for private developers to develop it;…

In the light of those facts, the council's power to acquire the subject lots is, in my opinion, to be found in s 321. The facts support a conclusion that the purpose for the acquisition was the replanning or resubdivision of existing parcels of land . 239 Collins and Da Rous are distinguishable from the present case. First, they turned on the precise wording of s 321 of the LG Act 1919, which has no equivalent in the LG Act 1993. Second, they are factually remote. In Collins, the multi-storey building had a public purpose of free carparking. In Da Rous, the nature of the site and its constraints (particularly the absence of road access and the necessity to acquire land) made it financially impossible for developers to develop an unsightly and unpleasant wasteland. Both cases, in my view, lay close to the limits of a council's power of compulsory acquisition.

240 A case which is of some relevance is Samrein Pty Ltd v Metropolitan Water Sewerage and Drainage Board (1982) 41 ALR 467, although allowance must be made for the fact that it was decided under different legislation. There the High Court rejected an attempt to restrain the Board from acquiring the appellant's land while holding that, in principle, an acquisition could only occur for a permissible statutory purpose. Gibbs CJ, Mason, Murphy, Wilson and Brennan JJ jointly stated that principle at 468: "The critical question in the present case is whether the purposes for which the Board proposes to acquire the land are purposes of the Act…". The Board had proposed to acquire the land for the purposes of carrying into effect a joint venture with the Government Insurance Office where each party would share the cost of constructing a large office building and each would benefit from the office space they created. Their Honours held at 468 - 469: Section 115 does not expressly provide that the power to acquire land by resumption is to be used for the purposes of the Act. In this respect, it stands in contrast to s 114(1). However, it may be accepted that the statutory power is to be used only for the purposes of the Act…The critical question in the present case is whether the purposes for which the Board proposes to acquire the land are purposes of the Act…Clearly, if the purpose of the acquisition of the land in the present case was to provide office accommodation for the Board's employees now and in the future, the acquisition will have been for one of the purposes of the Act. The questions of whether the land was acquired for another unauthorized purpose, and if so whether that unauthorized purpose was a substantial purpose of the acquisition, are questions of fact. The land in question is situated in a city block…the Board already occupies 60 percent of that block…The remainder of the block…has been purchased by the Board…The Board now proposes to erect a new building on the whole of the western half of the block as a joint venture with the Government Insurance Office - which we shall call the GIO - and for this purpose seeks to acquire the land which it does not already own. The new building proposed is a tower block of approximately 42 stories[sic]. It is intended that upon completion of the building the Board shall register a strata plan and shall transfer the GIO title to about half of the office space and retain title to the remaining area of the office space. At ground level there will be a retail area which will be owned by the Board and GIO as tenants in common in equal shares… It is not contested that the area of office space which the Board will retain is needed by the Board for its own purposes, whether for present use or for use as a result of future foreseeable expansion. However, the argument is that the Board needed only a building of about 21 stories[sic] for its own purposes…

The learned primary judge found that the true purpose, and the predominant purpose, for which the Board acquired the land was to provide it with office accommodation which it needs now and in the future. The purpose of providing accommodation for GIO in order to secure finance was, he said, entirely subsidiary. The learned Judges of Appeal were of the same opinion. We find it impossible to disagree with this conclusion. The Board obviously needed to provide office accommodation for the future. Its objects in acquiring the land was to provide such accommodation…it would be absurd to suggest that on a city block such as that in question, the Board should have constructed a building no larger than was needed for its own purposes if, as appears, a building of that size would be an under-development of a valuable city site.

The proper conclusion is that the Board's proposed acquisition was for the purpose of acquiring a city block on which it could erect a building in which it would provide accommodation for its own employees. The joint venture with GIO was simply a means to that end. The case is distinguishable from Thompson v Randwick Corporation , in which it was established that no attempt would have been made to resume the particular land in question if it had not been the desire of the council to make a profit from the resale of those lands and to reduce the cost of construction of the new road in that way: see Minister for Public Works v Duggan (83 CLR) at 445 - 6. On the other hand, the present case resembles CC Auto Port Pty Ltd v Minister for Works (1965) 113 CLR 365 where part of a block acquired to provide a bus terminus was to be used to develop a retail shopping centre and the acquisition was held to be valid. To apply the words of the judgment in that case to the present case, the provision of accommodation for the Board was both the initiating and the abiding purpose of the resumption (see at 381). 241 Samrein is distinguishable. In the present case the purpose of the proposed acquisition of the applicants' land is not to use any part of their land for any public purpose, but rather to transfer the whole of it to Grocon, or to allow Grocon to develop it in order to make a profit.

242 The issue may be tested by an example given by the applicants. Suppose a city block of land contains five equal sized lots, each of 300m2 in private ownership. The council resumes them for $1 million each, a total of $5 million. It now owns a 1,500m2 block of land with greater potential than any of the individual lots. The purpose of the resumption is to resell the lots to a developer in order to make a profit to pay for a new council building. The value of the integrated site is $10 million which the developer pays, thus providing the council with a profit of $5 million to acquire the new council building. The immediate purpose is to resell the resumed land at a profit. In a consequential sense, the purpose of the resumption is the public function of acquiring a new council building. However, the latter is really the reason or motive for the former, which is the purpose.

243 Take a simpler example. A council wishes to acquire a new council building. Not having the funds to do so, it resumes land in the vicinity and transfers it to a developer as the consideration for the developer providing the council with a new council building.

244 In my view, neither scenario in these examples could have been intended by the legislature under s 186(1). Land cannot be resumed simply for the purpose of selling or vesting it in a person who does not propose to apply it for any local government purpose: Collins at 260. In principle, the present case is no different. The applicants' land is to be resumed to provide council with new buildings for itself which Grocon is constructing, the council is retiring substantial debt and receiving a substantial payment, and its land will be worth more because it will be in a precinct which is of greater amenity.

245 Accordingly, I would answer the s 186(1) question "no".

246 That conclusion does not impeach the Development Agreement, which imposes no obligation on the council to acquire land compulsorily. If the council can contractually acquire the necessary land to meet the conditions precedent under the Development Agreement, so be it.

The section 186(2)(b) question 247 Is the decision of the council to compulsorily acquire the applicants' land for the purpose of exercising any of its functions under s 186(2)(b)? Section 186(2)(b) provides: (2) Without limiting subsection (1), a council may acquire:

… (b) land which forms part of, or adjoins or lies in the vicinity of, other land proposed to be acquired under this Part.

248 The council submits that the question should be answered "yes" because each of the applicants' land is in the vicinity of Church and Darcy Streets which are proposed to be simultaneously acquired for, in part, a public purpose authorised under s 186(1).

249 The applicants submit that the question should be answered "no" because: (a) s 186(2)(b) is concerned with acquisition of land which a council does not already own whereas the council already owns Church and Darcy Streets; (b) alternatively, the s 186(2)(b) power is incidental to and not independent of s 186(1); (c) alternatively, s 186(2)(b) requires more than mere physical proximity to land acquired pursuant to s 186(1).

250 Section 187 provides that land that a council is allowed to acquire under Part 1 of Chapter 8 may be acquired by agreement or compulsory process. If the legislature intended s 186(2)(b) to apply to a resumption by a council of land that it already owns, then a council could by acquiring, say, a long road that it already owns, also acquire all the land not only adjoining but also in the vicinity for no purpose relating to any of its statutory functions. For example, for development and re-sale at a profit. Such an unbridled consequence seems mischievous and thus unlikely to have been the legislative intention. Nothing in the legislative history, which is surveyed in detail below from the time of Thompson v Randwick Municipal Council (1950) 81 CLR 87, would suggest that that was the legislative intention. Thompson provided the context for legislative changes commencing in 1951 but was concerned with acquisition by a council from a third party. The present scenario of acquisition from the council itself is unprecedented. The purposes of the LG Act in s 7, set out above at [31], include a purpose in s 7(d) which is much the same as the council function expressed in s 24. Having regard to the totality of the considerations, in my opinion s 186(2)(b) should be construed as limited to an acquisition by a council from a third party.

251 This brings me to the applicants' second and third submissions. The applicants submit that the current s 186(1) and (2) are substantially to the same effect as the provisions of the LG Act 1919 as interpreted by the High Court in Thompson v Randwick Municipal Council (1950) 81 CLR 87 and Minister for Public Works & Local Government v Duggan (1951) 83 CLR 424, and that the facts in this case fall within the principle in those cases. The council, on the other hand, submits that the current legislation is substantially to the same effect as amendments introduced in 1951 to the LG Act 1919 ,which negated the decision in Thompson.

252 In considering the competing submissions, it is necessary to have regard to the legislative history of the LG Act.

253 In Thompson a council proposed to acquire land for the purpose of road widening, as well as additional land for the purpose of re-sale at a profit in order to reduce the cost of the road widening. The High Court in a joint judgment restrained the resumption. At the time, ss 532 and 535 of the LG Act 1919 provided as follows: 532 The council may acquire land within or outside the area for any purpose of this Act by lease, purchase, appropriation, or resumption in accordance with this Part.

535 Where the council proposes to acquire land for any purpose it may also acquire other land adjoining or in the vicinity. 254 The joint reasons in Thompson explained that the scheme was bad for two reasons. The first reason was that s 535 was not an independent source of power to acquire land but was merely "incidental" to the s 532 power. The explanation for that decision is that "any purpose" in s 535 was "any purpose" referred to in s 532. The Court held that no land could be acquired unless it was to carry into effect some purpose of the council allowed by the Act. Accordingly, taking the land needed for the construction of the road was permissible, as was taking any additional land adjoining or in the vicinity, but only if it could be shown that this additional land was necessary or incidental to that main purpose. It was proved that the additional land would not be worked upon at all, but rather merely subdivided and re-sold by the council. The court held at 103 - 104: Section 535 authorizes a council, where it proposes to acquire land for any purpose, also to acquire other land adjoining or in the vicinity. The language of s. 535 is in terms very wide. But the section can only operate where the council proposes to acquire land for any purpose. It is therefore not an independent but an incidental power and this indicates that some limits must be placed on its meaning. It does no more, we think, than confer a power to acquire land adjoining or in the vicinity of land authorized to be acquired by s. 532 whenever the acquisition of such adjoining or proximate land is reasonably incidental to the carrying out of the purpose for which the land is authorized to be acquired under that section. In the present case it is clear that the lands proposed to be resumed exceed what is required to construct the new road, and there is no evidence that it is reasonably incidental to any purpose under s. 235 of the Act that this excess should be acquired under s. 535. 255 The second reason for striking down the proposed scheme was that in taking more land than was necessary to construct the road, the council was acting in bad faith. The joint reasons explained at 105 - 106: …in attempting to resume more land than is required to construct the road, is not acting in good faith. By that we do not mean that the Council is acting dishonestly. All that we mean is that the Council is not exercising its powers for the purposes for which they were granted but for what is in law an ulterior purpose. It is not necessary that this ulterior purpose should be the sole purpose. The Council, no doubt, believes that the new road will have advantages…from the point of view of access and upkeep. But the evidence establishes that one purpose at least of the Council in attempting to acquire the land not required to construct the new road is to appropriate the betterments arising from its construction. In Municipal Council of Sydney v. Campbell [(1925) A.C. 338] , this was the sole purpose. But in our opinion it is still an abuse of the Council's powers if such a purpose is a substantial purpose in the sense that no attempt would have been made to resume this land if it had not been desired to reduce the cost of the new road by the profit arising from its re-sale. 256 In Duggan (above), the High Court found no reason to depart from this construction of the same legislation. There the council applied to the Minister for the resumption of some 118 acres of land "for the purpose of the improvement and embellishment of the area" of the land proposed to be resumed. Eighty four acres were to be used for a park, 17 acres for new roads, and the balance of 17 acres was to be acquired simply in order that it might be subdivided and sold for building lots and the proceeds applied towards the costs of the scheme. Dixon, Williams and Kitto JJ in a joint judgment held that the council was not empowered by the Act to acquire the last-mentioned land in excess of the actual requirements for a park and new roads in order that upon re-subdividing that land, the council might re-sell it and apply the proceeds towards the costs of the scheme. Their Honours held at 445 - 446: Before us no serious attempt was made to distinguish the present case on the facts from the recent decision of this Court in Thompson v. Randwick Municipal Council . It was not disputed that it was a substantial purpose of the resumption of the residual lands to make a profit out of their re-sale, and that no attempt would have been made to resume these lands if it had not been the desire of the defendant Council to reduce the cost of the construction of the new road in this way.

And at 449 - 550: The question when the whole of a person's lands may be acquired although part only is required for some undertaking so that the residue may be resold at a profit has frequently arisen in England. English legislation often specifies the lands that may be resumed for the statutory purpose. Even so, if the land is resumed for the benefit of a body trading for private gain, such as a railway company, the body may usually be restrained from resuming more of the land so specified than is actually required for the particular work. Public bodies usually may resume the whole of such lands although parts only are required for the particular purpose with a view to re-selling the residue at a profit. But these are all cases where the public body is on the face of the statute authorized to acquire the whole of the land and then empowered to re-sell the surplus land. 257 In 1951 the provisions of the LG Act 1919 considered in Thompson were amended. The new legislation provided as follows: 532 . (1) The council may acquire land within or outside the area for any purpose of this Act by lease, purchase, appropriation, or resumption in accordance with this Part.

(2) In addition to the powers conferred by subsection one of this section the council may acquire by lease, purchase, appropriation or resumption in accordance with this Part - (a) any lands of which those proposed to be acquired for any purpose of this Act form part; (b) any lands adjoining or in the vicinity of any land proposed to be acquired for any purpose of this Act; (c) any lands which the council considers in the public interest should be made available for the purpose for which such land is reserved or zoned by any prescribed scheme under Part XIIA of this Act or which are otherwise required to give effect to any provision included in any such prescribed scheme. (3) Without limiting the generality of paragraphs (a) and (b) of sub-section two of this section the powers conferred by such paragraphs may be exercised notwithstanding that the lands acquired thereunder - (a) may or may not be required for or in connection with any purpose of this Act ; (b) may be so acquired for sale or re-sale and applying the proceeds thereof in defraying in whole or in part the expenses incurred by the council in carrying out any work upon lands: - (i) acquired for any purpose of this Act; and (ii) of which the lands acquired under paragraph (a) of subsection two of this section form part, or which adjoin or are in the vicinity of land acquired under paragraph (b) of that subsection (emphasis added) 258 The words that I have emphasised above amply severed s 532(2) from s 532(1) so as to make the former an independent source of power from the latter, and specifically negated the Thompson prohibition on sale or re-sale for the purpose of applying proceeds to defray expenses incurred in carrying out specified works.

259 In 1979, s 532 of the LG Act 1919 was amended to introduce a requirement for approval of the Minister in a new subsection (1A) and to omit references to "lease, purchase, appropriation or resumption" in subsections (1) and (2). The amendments appeared in Schedule 1 to the Land Acquisition (Just Terms Compensation Act 1991, which provided as follows:

(3) Section 532 ( Acquisition of land ): (a) Omit section 532(1), insert instead: (1) The council may acquire land within or outside its area for any purpose of this Act by agreement or by compulsory process in accordance with the Land Acquisition (Just Terms Compensation) Act 1991. (1A) The council may not give a proposed acquisition notice under the Land Acquisition (Just Terms Compensation) Act 1991 without the approval of the Minister. (b) From section 532(2), omit may acquire by lease, purchase, appropriation or resumption in accordance with this Part , insert instead may so acquire . 260 In 1992, s 532(1) was further amended by inserting after "land" the words "(including an interest in land)": Statute Law (Miscellaneous Provisions) Act 1992 Schedule 1. The Explanatory Note to the Bill stated: "The proposed amendment for s 532 is consequential on the Land Acquisition (Just Terms Compensation) Act 1991 and merely removed any doubt that the acquisition of land by a council in accordance with that Act includes the acquisition of an interest (eg a leasehold interest) in land". That appears to be a reference to the definition in s 4 of the latter Act that "interest" in land means "(a) a legal or equitable estate or interest in the land; or (b) an easement, right, charge, power or privilege over or in connection with, the land".

261 In 1993 the LG Act 1919 was repealed and replaced by the LG Act 1993. In J R & E G Richards (NSW) Pty Ltd v Scone Shire Council and Brambles Australia Ltd (trading as Cleanaway) (Stein J, NSWLEC, 24 November 1995, unreported), Stein J made the following comments in relation to the powers of councils under the LG Act 1993 in comparison with the 1919 Act, stating that the LG Act 1993 approaches council powers and functions in a broader fashion than under the 1919 Act:

The approach to council powers and functions under the 1993 Act is very different from that under the former legislation. In many ways the 1919 Act was more limited and prescriptive in its grants of power to councils to carry out functions. The 1993 Act approaches council powers and functions in a broader fashion: see for example s24 quoted above. Indeed, it has been suggested that the wide grant of power in s21-s24 of the Act was an attempt to overcome deficiencies of power under the 1919 Act and the application of the doctrine of ultra vires. 262 In 2004, Part 6 (ss 400B - 400N) of Chapter 12 was inserted into the LG Act by the Local Government Amendment (Public-Private Partnerships) Act 2004, Schedule 1[5]. The Second Reading Speech (LA, 19 November 2004) explains: The bill will amend the Local Government Act 1993 and provide a regulatory framework within which local government can benefit from public-private partnerships. The Local Government Act 1993 is the core Act for the regulation of local council and county council functions. Public-private partnerships [PPPs] are emerging as a potentially attractive and flexible means for local government to create infrastructure and deliver services. For the purposes of this bill, a PPP is defined as any contracted relationship between a council and the private sector in which a council has an equity interest, shareholding or ongoing obligation or liability. Normal transactions such as sale of community land classified as operational and councils acting as trustees for donations or bequests and tendering will not be affected by these new provisions. A number of councils already have experience in negotiating public private partnerships. Unfortunately, not all those experiences have been positive. As members will be aware, Liverpool City Council, between 1996 and 2003, entered into various commercial arrangements with the private sector to develop infrastructure on land owned by the council. The Liverpool City Council public inquiry found that the cost to council of the failed redevelopment proposals - ultimately to be borne by ratepayers - is at least $22 million. The commissioner of the public inquiry, Professor Maurice Daly, found that councils lacked the in-house expertise required to successfully negotiate PPP arrangements. 263 Clause 408(1)(e) of the Local Government (General) Regulation 2005, which commenced at the same time, excluded from the operation of Part 6 of Chapter 12 "the sale by a council to private person of any property (including operational land"). The 2004 Act brought into effect the recommendations of Professor Daly, referred to in the above extract from the Second Reading Speech. His report of June 2004 relevantly included the following (vol 2 p 21): Private sector initiatives, however, are not the only source of PPP proposals. Councils often have a strong interest in providing new infrastructure in the form of civic centres, youth or old aged facilities, libraries, sporting venues and the like. In concert with the private sector such infrastructure may be put in place in the context of a broader commercial or residential development so that the council may receive both the infrastructure and some revenue, whilst the private sector parties profit from the construction and sale of new buildings, or the longer-term revenue from managing the rentals of the buildings. Councils also often have ambitions to develop land to accommodate population growth, or to cater for segments of the population (such as the aged), but lack either the capital or the know-how to perform the task. Partnerships with the private sector clearly represent a solution. Councils in recent years have ventured into new functions that they traditionally have not had to manage. The provision of local medical services and an extending role in law and order maintenance are examples. Again, there is potential for private sector involvement in such areas. In rural areas councils often run the water and sewerage systems, and councils have begun to play a bigger role in energy production through wind-farms and energy-sharing programmes. Council roles in recycling and, especially in rural areas, with broader waste management issues are further areas where collaboration with the private sector is possible. This summary represents just a sample of the ways in which councils and private sector may form linkages. As successful PPP in Local Government are achieved, the lessons learnt will trigger new initiatives, and new ways of linking Local Government with the private sector. 264 One of the examples of a PPP referred to in this passage bears some comparison with the proposed Civic Place Development. However, the passage is silent about compulsory acquisition. 265 As appears from s 400B(1), as substituted by the Local Government Amendment Act 2005 No.59, "public-private partnership" ("PPP") is a reference to an arrangement between a council and a private person for the purposes of: (a) providing public infrastructure or facilities (being infrastructure or facilities in respect of which the council has an interest, liability or responsibility under the arrangement), or (b) delivering services in accordance with the arrangement, or both, but does not include a reference to any such arrangement if it is of a class that has been excluded from the operation of this Part by the regulations. 266 There is no requirement that the infrastructure or facilities be in the council's ownership. 267 As first enacted, s 400B(1)(a) read: (a) providing public infrastructure or facilities (being infrastructure or facilities in respect of which the council retains a beneficial interest under the arrangement), 268 The Second Reading Speech (LC, 22 June 2005) explains the amendment: To ensure that all public private partnerships involving councils are required to follow the appropriate process, this bill makes a minor amendment to the definition of public private partnerships. The new definition includes all arrangements between a council and private person to provide public infrastructure or facilities where the council retains an interest, liability or other responsibility, or to deliver services in accordance with the arrangement.

269 Part 6 of Chapter 12 is procedural. It is not concerned with the scope of the council's functions, but with the procedures necessary to be followed before a council may enter into and carry out a particular kind of arrangement. Whether or not the arrangement involves a function of a council is an anterior question which Part 6 of Chapter 12 does not itself address. In the present case the Development Agreement involved some elements of public infrastructure and facilities as those terms are used in s 400B.

270 In light of this legislative history, the question is whether s 186(2) is an independent source of power to the same effect as the old s 532, or whether it is incidental to s 186(1). Two indicia support the latter construction. First, the prefatory words in s 532(2) "In addition to the powers conferred by subsection(1)" have been replaced in s 186(2) with the words "Without limiting subsection(1)" which, in my view, have a different meaning. The words "In addition" add to the subsection (1) power; the words "Without limiting" indicate that there is no dilution of the subsection (1) power. Second, the important s 532(3) of the old legislation has no corresponding provision in the current legislation. Subsections 532(2) and (3) of the old legislation constituted the most express liberation of s 532(2) from the constraints of s 532(1). The old s 532(3)(b), or something like it, may have permitted council to do what is proposed in the present case but no such provision appears in the current legislation.

271 In my opinion, these changes from the old s 532 are so significant as to lead to the conclusion that s 186(2) of the LG Act is not an independent source of power but is incidental to s 186(1). For example, suppose a council wishes to resume land for a road under s 186(1) but a small corner of that land is surplus to that requirement and of no use to anyone. Council does not need to acquire that corner for the purpose of s 186(1). Under s 186(2) it is reasonably incidental to effecting the s 186(1) purpose to acquire it. In the present case, the incidental power does not authorise the acquisition of the applicants' land.

272 If I am in error, then a similar result may be reached, in my view, by concluding that the general character of the LG Act 1993 requires that the statutory power in s 186(2) is to be used only for the purposes of the Act. Samrein (above) at 468. One of the purposes of the LG Act in s 7(d) is virtually to the same effect as the wide functions of a council referred to in s 24. This purpose did not appear in the LG Act 1919. Thus, there is a purposive limitation on s 186(2) which, in my view, is not significantly different than if it were incidental to s 186(1) and thus limited by the s 24 function.

273 If I am still in error, such that s 186(2) is a freestanding source of power, nevertheless, in my opinion, more is required to enliven the s 186(2)(b) power than mere physical proximity to the land acquired pursuant to s 186(1). Support for that view may be found in Gaffney v Camden Council (1997) 96 LGERA 157 (CA). There the appellant unsuccessfully challenged the compulsory acquisition of his land (Lot 32 and Lot 33) pursuant to the LG Act 1919 for the purposes of a road extension to service a residential subdivision. The court appeared to accept that Lot 33 was resumed for the purposes of exercising functions of the council, namely road widening. The real attack related to Lot 32 which was small and contiguous to Lot 33. The court found there was no evidence to support an intention by the council to acquire Lot 32 to locate equipment during the road construction such that it could be said that Lot 32 was needed for extending the road: at 159. The court held that the appellant's submission that the council's purpose was to aid the developer by taking from the appellant land which the council did not itself need and selling it to the developer could not be entertained because it had not been pleaded: at 160. Mason P (with whom Smart AJA agreed) noted that, following Thompson, s 532 of the LG Act 1919 was amended in 1951 so as to widen the acquisition powers of councils: at 160. His Honour continued at 160 - 161: These provisions have been replicated (with minor changes) in the Local Government Act 1993 (NSW), ss 186 and 188 and the Roads Act 1993 (NSW), ss 177 and 179.

In my view, the combination of s 532(2)(b) and (3) provide legislative authority for the resumption of Lot 32, given its small size and its contiguity to Lot 33, which was acquired for purposes of the Act. See also CC Auto Port Pty Ltd v Minister for Works (1965) 113 CLR 365; 13 LGRA 39; Collins v Willoughby Municipal Council (1967) 14 LGRA 256; De Rous v Burwood Municipal Council (unreported, Land and Environment Court, NSW, Pearlman J, 5 March 1996). The appellant contends that Lot 32 was not needed for the road or roadworks. However, the fact that Lot 32 was itself excess to requirements for extending [the] public road is the very matter which engaged s 532(2) and (3) in a proper case.

Whether, as Waddell AJ considered, the only safeguard against abuse of the powers given by s 532(3) is scrutiny by the Department of Planning before approving a proposal for submission to the Governor in Council, is a point which I would reserve for a case where the link between what is removed and what is actually required for a council purpose is weaker than the present. Here there is direct contiguity between Lots 32 and 33, and Lot 32 is a small piece of land isolated by the excision of Lot 33. 274 It can be seen that Mason P based his decision, under the old s 532(2)(b) and (3), concerning Lot 32 on a link between Lot 32 and Lot 33 which went beyond the mere fact that they were contiguous. In particular, his Honour took into account that Lot 32 was of small size and isolated by the excision of Lot 33. His Honour reserved the question whether the only safeguard against abuse of the powers was the scrutiny of a government department. His Honour's comment that there are only minor changes between s 532 of the LG Act 1919 and the current ss 186 and 188 of the LG Act 1993 was of a passing nature and obiter. In my respectful view, it is clear that s 188 is new (as was noted in the Explanatory Notes to the LG Bill 2003 referred to below) there is now nothing like the old s 532(3), and there are other substantial changes in s 186.

275 In the present case, I can see no elements, such as attracted Mason P in Gaffney, additional to the mere fact that the applicants' land is in the vicinity of land to be acquired pursuant to a s 186(1) function.

276 The basis of the decision of Mason P in Gaffney is consistent with C.C. Auto Port Pty Ltd v Minister for Works (1965) 113 CLR 365 although that case was decided under different legislation. There the appellant was the owner of land forming part of a city block in Fremantle in Western Australia. The city council published a statutory notice of intention to resume the appellant's land which stated the purpose as "Street Widening…and other purposes". The resumption related to more land than was necessary for the proposed street widening because it was the intention of the council to resell so much of it as was not required for street widening or for its own use in order to meet, as far as possible, the cost of the work of street widening. The relevant legislation authorised the council in resuming land for road widening, to also resume adjoining land. The appellant's challenge to the validity of the resumption failed. Kitto, Taylor and Menzies JJ in a joint judgment said at 377 - 378: "There can be no doubt that the effect of s. 2 is to extend the powers of acquisition of the council when resuming land for the purpose of street widening. It seems clear that apart from that section the authority of the council would be confined to the taking of such land as is actually required for that purpose. But legislation authorizing the compulsory taking of land for particular purposes has frequently authorized the taking of additional land not strictly required for any such purpose". Significantly, their Honours indicated that the resumption of the extra land had to be for, or in association with, the purpose of widening the streets. In other words, it was insufficient merely that the land was adjoining land that was to be resumed for road widening. They said at 381: …But once it had been decided to widen the streets in question and for, or in association with, that purpose to acquire the whole block it was essential to decide upon the most suitable method to be employed in disposing of the land surplus to the work of road widening. …We have given consideration both to the documents in the case and to the oral evidence and we are satisfied that the development of the residue of the land resumed as a modern retail shopping centre was not an end in itself; it was, perhaps it may be said, part of a means to an end. But that end was the widening of the three streets and this was, in our view, both the initiating and the abiding purpose of the resumption.

277 Accordingly, I answer the s 186(2)(b) question "no".

The section 188(1) question 278 Is the council seeking to compulsorily acquire the applicants' land for the purpose of re-sale within the meaning of s 188(1)? Section 188 relevantly provides: 188 Restriction on compulsory acquisition of land for re-sale

(1) A council may not acquire land under this Part by compulsory process without the approval of the owner of the land if it is being acquired for the purpose of re-sale. (2) However, the owner's approval is not required if:

(a) the land forms part of, or adjoins or lies in the vicinity of, other land acquired at the same time under this Part for a purpose other than the purpose of re-sale, or (b) the owner of the land cannot be identified after diligent inquiry has been made and at least 6 months has elapsed since that inquiry was made. 279 Section 188 is a new and major variation from the LG Act 1919. This is confirmed in the Explanatory Notes incorporated in the Second Reading Speech for the LG Bill which led to the LG Act 1993 (LA, Hansard 10411) which compared what is now Chapter 8 of the LG Act 1993 with the former LG Act 1919 provisions: A major variation occurs in the creation of a limitation on compulsory acquisition by council for the purposes of re-sale. A council may not acquire land by compulsory process without the approval of the owner if it is being acquired for the purpose of re-sale, as re-sale is not strictly a legitimate Local Government purpose. 280 The applicants submitted that, having regard to the scope, object and purpose of the Act, "re-sale" in s 188 requires no more than a transfer or disposition of land or an interest in land for valuable consideration,.

281 The council submitted that: (a) as s 188(1) does not say " being acquired for re-sale " but rather " being acquired for the purpose of re-sale ", the mere fact of re-sale, if it occurs, will not necessarily trigger the provision unless that was the purpose of the acquisition. I have earlier held that that the purpose of the proposed acquisition in the present case is to transfer the applicants' land to Grocon for consideration; (b) the re-sale must be the sole or real purpose because s 188(1) does not speak of " a " purpose or even a substantial purpose, but rather of " the " purpose of re-sale. In my view, consistently with my earlier reasoning, " the " purpose of the acquisition of the applicants' land is to transfer it to Grocon for the consideration; (c) the trust of the applicants' land in favour of Grocon is not a "re-sale" ; (d) to be a " re- sale", the consideration for the ultimate transfer of the applicants' land to Grocon must be money and only money, which is not the case.

282 Council proposes to acquire both the legal and beneficial interest in the applicants' land with the intention of passing the beneficial interest immediately to Grocon and later passing the legal interest to Grocon, in both cases in return for money and other benefits.

283 The word "re-sale" assumes a prior sale. Under s 187, the prior acquisition may either be by agreement or by compulsory process in accordance with the Just Terms Act. Thus "re-sale" in s 188 assumes that a compulsory acquisition is a sale. That is not the ordinary notion of a sale. Therefore s 188 proceeds on the basis of an extended notion of "sale" in its use of the word "re-sale". "Re-sale", when read in light of s 186, includes resale of an interest in land.

284 Ordinarily, a transaction by which a beneficial interest in a trust is created and acquired is not a sale: AFA v Garendon Investments Pty Ltd (1995) 37 NSWLR 221 (CA) at 230.

285 The leading case on the meaning of "sale" is Chan v Dainford Ltd (1985) 155 CLR 533. It concerned instalment contracts for the sale of land. In a unanimous judgment the High Court said at 537: "The primary meaning of sale is an exchange of property, the subject of the sale, for money. A sale occurs at the time when the title to the subject of the sale is conveyed or transferred". In J & P Coates Ltd v Commissioners of Inland Revenue Commissioners [1897] 1 QB 778 at 783 Wills J said: "Sale undoubtedly in our law generally imports the exchange of some commodity or some article of property for money… That is obviously the general meaning of the word". In Sun World Inc v Registrar, Plant Variety Rights (1997) 75 FCR 528 at 540 - 542 it was held that: "There is considerable authority for the proposition that the ordinary meaning of the word 'sale' in a variety of statutory and common law settings is an exchange of commodities for money…that meaning may be extended by statute expressly or by necessary implication".

286 The council argued that the consideration for the transfer of the applicants' land is more complex than simply money: see [8] above.

287 In my view, the meaning of "re-sale" in s 188 should be determined in light of the legislative history, scope, purposes of the Act and the mischief which s 188 was intended to cure. In Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273 at 280-281 [11] McHugh, Gummow and Hayne JJ said: In Newcastle City Council v GIO General Ltd [ (1997) 191 CLR 85 at 112. See also the observations of Windeyer J in Attorney-General (NSW) v Stocks and Holdings (Constructors) Pty Ltd (1970) 124 CLR 262 at 283.] , McHugh J observed: [A] court is permitted to have regard to the words used by the legislature in their legal and historical context and, in appropriate cases, to give them a meaning that will give effect to any purpose of the legislation that can be deduced from that context. His Honour went on to refer to what had been said in the joint judgment in CIC Insurance Ltd v Bankstown Football Club Ltd [(1997) 187 CLR 384]. There, Brennan CJ, Dawson, Toohey and Gummow JJ said 10 : It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to reports of law reform bodies to ascertain the mischief which a statute is intended to cure . Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses `context' in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy . Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd [(1986) 6 NSWLR 363 at 388, if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent [ Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320-321] .

288 Chan, Coates and Sun World refer to the ordinary, primary or general meaning of a "sale"; do not address the situation where the consideration comprises both money and other benefits; and allow that the meaning may be extended by statute by necessary implication. There is authority that an agreement to acquire goods for money and other consideration is a sale agreement: Aldridge v Johnson (1857) 119 ER 1476; Cheshire and Fifoot's Law of Contract (8th Aust ed) at [16.79]; Benjamin's Sale of Goods (7th ed 2006) at [1 - 037].

289 In my view, the interpretation of re-sale in s 188 does not turn on nice distinctions between what is or is not technically or generally a sale. It is clear that the notion of "re-sale" in s 188 is wider than any technical meaning for it assumes that land acquired by resumption is a sale. The legislature intended the novel s 188 to meet the mischief of a council compulsorily acquiring land for the purpose of re-sale which the legislature considered to be generally outside the functions of a council. This strongly suggests that the legislature did not intend "re-sale" to be construed in a narrow or technical sense but with full amplitude and without niceties, in order to meet the mischief. In Cabell v Markham 148 F 2d 737 (1945) at 739 Justice Learned Hand said: …As Holmes J said in a much-quoted passage from Johnson v United States 163 F. 30, 32, 18 L.R.A.N.S., 1194: it is not an adequate discharge of duty for courts to say: We see what you are driving at, but you have not said it, and therefore we shall go on as before…Of course it is true that the words used, even in their literal sense, are the primary, and ordinarily the most reliable, source of interpreting the meaning of any writing: be it a statute, a contract, or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.

290 In my opinion, a re-sale within the meaning of s 188 includes a transfer of land for a consideration which includes money. That is sufficient to cover what the council intends to do with the applicants' land in the present case.

291 It is no answer for the council to say, as it does, that once council becomes the trustee for Grocon there is a possibility that the properties will return to the full ownership of the council if the project ceases (cl 5.1 of the current Trust Document in cl 24.3(b)(iii) of the Development Agreement). Relevantly, s 188(1) is only concerned with whether the proposed acquisition of the applicants' land is for "the purpose" of re-sale, not with a possibility that a re-sale contemplated by a contract might not occur in the event that the contract does not go ahead.

292 Accordingly I answer the s 188(1) question "yes"

The section 188(2)(a) question 293 Does the applicants' land adjoin or lie in the vicinity of other land to be acquired at the same time under the LG Act for a purpose other than a purpose of re-sale, within the meaning of s 188(2)(a)? Section 188(2)(a) provides: (2) However, the owner's approval is not required if: (a) the land forms part of, or adjoins or lies in the vicinity of, other land acquired at the same time under this Part for a purpose other than the purpose of re-sale, or

294 The council submitted that (a) the use of the definite article "the" before "purpose" means that the re-sale must be the sole or real purpose; (b) council need only show that "a" purpose in the acquisition of Church Street and Darcy Street is other than for re-sale; (c) that is the present case because a purpose in acquiring Church Street is that the surface will provide open space for giving effect to the development and a purpose in acquiring a part of Darcy Street is that it will form Station Square which will also be open space.

295 In my view, s 188(2)(a) is inapplicable for the following reasons, substantially as submitted by the applicant. First, the reference to "other land" should be construed as a reference to land not already owned by the council. Any other interpretation leads to the somewhat absurd result whereby an acquiring authority could circumvent the protection provided by s 188(1) simply by "acquiring" any interest in land that it already owns (that otherwise satisfies the physical nexus criterion in s 188(2)(a)). The council is already the owner of Church Street and Darcy Street. In my opinion, the contemporaneous "acquisition" of its existing interest in those streets cannot be relied upon by the council.

296 Second, if that be wrong, it is sufficient that the purpose for which Darcy Street and Church Street are each to be acquired includes re-sale as a substantial purpose. The council's sole purpose submission makes too much of the definite article "the". Its use is neutral. Any other usage would be unnatural. The provision would have said "solely for the purpose" if the intention was as the council would characterise it. It is settled by cases in a cognate area of law that a collateral purpose that is "substantial" is sufficient to invalidate a decision: Thompson (above) at 106 - 107; Duggan (above) at 446. Re-sale is a substantial purpose as demonstrated by the analysis above.

297 The applicants also submitted that, even if Darcy and Church Streets are relevant for the purposes of s 188(2)(a), the acquisition of the applicants' land is not reasonably incidental to the carrying out of the public purpose for which the subsisting "public" areas of those streets are to be acquired. The reasoning was that those public areas do not require and are not assisted by the acquisition of the applicants' properties: Thompson (above) at 103 - 104. It is unnecessary to rule on that submission.

298 Accordingly I answer the s 188(2)(a) question "no".

299 It is unnecessary to consider the Improper Purpose Question. Conclusion 300 The applicants have been successful and are entitled to relief as against the council.

301 I accept the Minister's uncontested submission that the declaration with respect to the Minister as sought by par 4 of Mac's Application should not be made. In a proposed Chapter 8 Part 1 acquisition the Minister's function is the s 187(2) approval. Whether, subsequent to the issuing of the approval, the council actually proceeds with the acquisition is, as between the Minister and the council, solely a matter for the council. Having issued the s 187(2) approval in respect to the proposed acquisition notices, the Minister is functus vis a vis that proposed acquisition. It is therefore inappropriate for a declaration to be made directed to the Minister.

302 In the Mac's proceedings (No 40810 of 2007), I propose the following relief: 1. Declaration that the proposed acquisition of the land known as 160 Church Street, Parramatta, being the whole of Lot 1 in Deposited Plan 514282, Parish of St John, County of Cumberland, by the second respondent in Proposed Acquisition Notice dated 1 June 2007 is unlawful. 2. Order restraining the second respondent from publishing the said Proposed Acquisition Notice in the Government Gazette and from taking any further steps to compulsorily acquire the said land as set out in the said Proposed Acquisition Notice. 303 In the Fazzolari proceedings (No 40818 of 2007), I propose the following relief:

1. Declaration that the proposed acquisition of the land known as (a) 20 - 22 Darcy Street, Parramatta, being the whole of Lot 3 in Deposited Plan 221128; (b) 24 Darcy Street, Parramatta, being the whole of Lot 3 in Deposited Plan 211992; (c) 26 Darcy Street, Parramatta, being the whole of Lot 4 in Deposited Plan 211992. by the respondent in Proposed Acquisition Notice dated 1 June 2007 is unlawful 2. Order restraining the respondent from publishing the said Proposed Acquisition Notice in the Government Gazette and from taking any further steps to compulsorily acquire the said land as set out in the said Proposed Acquisition Notice. 304 I will hear the parties as to the form of relief, costs and any confidentiality issues. The exhibits may be returned.

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