Maidment v Roads and Traffic Authority of NSW

Maidment v Roads and Traffic Authority of NSW - [2006] NSWLEC 606 - NSWLEC 2006 case summary — Zoe

[61]

34 Mr Lindsell said that his Department would have given the following advice to an enquiring member of the public as at the acquisition date: (a) The NWRL Overview Report 'Connecting Communities', released in March 2002, provides an outline of the project including needs, objectives, next steps and an indicative alignment. (b) The delivery timeframe for the NWRL (as contained within Action for Transport 2010) had been deferred to enable the NSW Government to refocus on state-wide rail safety and reliability, including the Rail Clearways program. (c) Since the release of the Overview Report, the Department, in conjunction with RailCorp and the Ministry for Transport, had been undertaking further project development and this work would inform the Government's decisions on infrastructure investment. (d) No funding had been set aside and no commitment made to funding for construction of the NWRL. However, a small amount of funding (approximately $1-2 million annually) over a number of years had been provided for investigations into the preservation of rail corridors (the Government's Transport Corridor Preservation Fund), including for the NWRL. (e) However, the State Government had made a strong commitment, since 2002, to ensure protection of the rail corridor as a priority. Corridor protection ensures the viability of being able to construct the project in the future and maximise the opportunity for appropriate land-use and transport outcomes around the corridor, whilst providing the Government with flexibility to make decisions about the future of the proposed NWRL based on trends in population and employment and travel patterns. (f) The North West Rail Link, like other major infrastructure projects was being considered within the context of the Metropolitan Strategy. As the Strategy had not been finalised at the date of acquisition, it is possible that during this process a decision could have been made by the State Government not to pursue the project, to bring forward the timing of the project or to delay the project.

[69]

Town Planners' Evidence 39 Town planners, Mr Kettle on behalf of the applicant and Mr Sanders on behalf of the respondent, agreed, and I accept, that had a purchaser sought their advice in relation to the development potential of the acquired land as at the acquisition date they would have advised that: (i) the land was within an area that had been identified for future urban development for many years and which was by the date of acquisition known as the Balmoral Road Release Area (BRRA); (ii) a Draft Structure Plan for the BRRA had been exhibited in December 2003/January 2004; (iii) the land was designated in the Draft Structure Plan in part as Transit Centre and in part as Railway Corridor; (iv) the Draft Structure Plan did not nominate any existing zonings upon which the Transit Centre would be modelled; (v) the draft Structure Plan refers to the Transit Centre as having residential buildings together with ' a local retail/service element, a formal civic space and a combined major community and indoor recreation facility '. The Transit Centre is akin to a high density residential precinct located at a transport hub with some complementary uses; (vi) the Transit Centre would require a precinct plan to be prepared prior to redevelopment; (vii) the land would be access denied from Old Windsor Road and Burns Road, however, a precinct plan or DCP could nominate future roads for access; (viii) a draft local environmental plan for the BRRA was in preparation but had not been exhibited at the date of acquisition; (ix) the timing of the public exhibition of the draft local environmental plan was contingent on a commitment by the State Government to the North-West Railway and no such commitment had been made - in any event, it would be some 10-15 years, at the earliest before the railway would be constructed, even if such a commitment was to have been made. (x) whilst the Draft Structure Plan for the BRRA only depicted the proposed railway as a ' corridor ' and not as a special uses zone it would have been most likely that the land affected by the corridor would have been subject to an acquisition clause in the draft local environmental plan that was in the course of preparation, as at the date of acquisition; and (xi) the local environmental plan was unlikely to be gazetted before mid-to-late-2005 if not delayed and not before mid 2006 if it was delayed.

[74]

44 Market value is defined in s 56(1) of the Land Acquisition (Just Terms) Compensation Act 1991 (NSW), which is set out in paragraph 2 above. The statutory definition continues to be illuminated by the classic test of market value in relation to compensation for the resumption of land in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, Isaacs J said at 441-442: In the first place the ultimate question is, what was the value of the land on 1st January 1905? All circumstances subsequently arising are to be ignored. Whether the land becomes more valuable or less valuable afterwards is immaterial. Its value is fixed by Statute as on that day. Prosperity unexpected, or depression which no man would ever have anticipated, if happening after the date named, must be alike disregarded. The facts existing on 1st January 1905 are the only relevant facts, and the all important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted. The plaintiff is to be compensated; therefore he is to receive the money equivalent to the loss he has sustained by deprivation of his land, and that loss, apart from special damage not here claimed, cannot exceed what such a prudent purchaser would be prepared to give him. To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property. 45 Griffiths CJ, at 432, described the mental process as follows: … to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce…a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.

[83]

54 The valuers agreed the following, which I accept: (a) although the zoning of the land was Rural 1(a), the underlying land use designation would have been Transit Centre, in accordance with the Draft Structure Plan, which had a proposed density of 90 dwellings per hectare; (b) the valuation methodology was direct comparison to relevant sales evidence; (d) the BRRA had received widespread local media attention for a number of years leading up to the acquisition date and subsequently. However, it was only with the public exhibition of the Draft Structure Plan in November 2003 that a degree of certainty in the rezoning process was established; (e) there were no directly comparable sales at or around the acquisition date having the same future use designation as the subject property; (f) the public purpose of the acquisition is to be ignored for the purpose of assessing compensation in accordance with the Act; (g) under s 55(a) of the Act, the hypothetical prudent purchaser would have regard to the highest and best use potential of the acquired land. This potential is determined on the basis of the most probable use based on planning guidelines, and whether the development is physically possible, legally permissible, financially feasible and results in the highest value; (h) a prudent purchaser would retain the advice of appropriately qualified experts in reconciling risks and uncertainties associated with the acquisition. However, Mr Phippen said that not all potential purchasers do this; (i) a prudent purchaser would pay a prudent vendor an amount based on the use potentials of the acquired land; (j) the prudent purchaser would expect to receive the benefit of any future change to the use potential of the land, being a reward for the risks incurred in acquiring the subject land based on the uncertainties at the date of acquisition; (k) based on town planning advice, the scope of the uncertainties relating to the development of the acquired land are significant. Mr Phippen added that, whilst significant, the uncertainties are not unique and can be allowed for in a valuation.

[84]

55 Mr Dempsey reasoned that a hypothetical prudent purchaser would anticipate uncertainty in relation to the following matters: (a) When funds would be available to construct the NWRL. (b) The precise boundaries of the NWRL were not established. Mr Phippen thought this was irrelevant. (c) There was no engineering detail in relation to the NWRL. Mr Phippen thought this was irrelevant. (d) This was not an established town centre but a greenfields location. There was no demonstrated market demand for higher density residential uses in this location. Mr Phippen observed that the absence of demand was because three of the seven lots in the Transit Centre zone were owned by the respondent (who had just compulsorily acquired them and was thus unable to sell them) and the other four were owned by Norwest, the largest developer in the area. (e) The only reason the designated land use applying to the subject property existed in this location related to the proposed development of the NWRL. Mr Phippen said this may be true but the bus transitways require an interchange facility in the Transit Centre zone. (f) The likelihood is that part of the NWRL will be in a tunnel. There was no preferred construction method for the tunnel. Adjoining land may be significantly affected by this tunnel. The potential to construct over the tunnel could not be properly assessed at the date of acquisition or subsequently. Mr Phippen considered that adjoining land is not realistically expected to be greatly affected by such a tunnel. (g) Development of the acquired land depended on agreement to a precinct plan (master plan) with other surrounding landowners within the proposed Town Centre. Mr Phippen considered this to be hardly relevant, given that all the land within the Transit Centre is owned by Norwest and the RTA. (h) There was difficulty in concluding a precinct plan in circumstances where there was uncertainty in relation to the location of the NWRL and where engineering considerations would delay resolving the location of roads and buildings including the building type and use. (i) Until funds were allocated for the construction of the NWRL it was unlikely that the uncertainties relating to the required detail would be resolved to the degree necessary to finalise a precinct plan. Mr Phippen considered this irrelevant. (j) Council would not be able to issue a development approval without fully understanding the design of the NWRL, including issues relating to engineering and geotechnical considerations. There were no prospects at the date of acquisition or subsequently of this information being available in the foreseeable future. Mr Phippen considered this irrelevant. (l) There was no sound basis at the acquisition date to assume funds would be allocated for the construction of the NWRL in the foreseeable future. Mr Phippen considered this irrelevant. (m) The location of the higher density residential and mixed use land uses in this location is a direct consequence of the proposed location of NWRL. Mr Phippen considered this irrelevant.

[85]

56 Prior to the hearing, the applicant's valuer, Mr Phippen, produced reports which took a top down approach and which included brief reference to a sale at 497 Old Windsor Road. Prior to the hearing, the respondent's valuer, Mr Dempsey, in a report of October 2005, listed 12 comparable sales including those identified as Sales 5 to 10 of land in the BRRA. On the basis of Sales 5 to 10 he assessed the acquired land's market value at $225 per square metre which (after applying a discount) converted to $3.12 million. In Mr Dempsey's 2 June 2006 report, produced shortly before the hearing, he abandoned the valuation methodology adopted in his first report, instead adopting the "bottom up" methodology which he had considered but not adopted in that earlier report. Based on that methodology, Mr Dempsey assessed market value at $2.5 million by adopting a rate of $125 per square metre and adding a 15 percent premium for development potential. On the eve of the hearing, following the recent decision in Sandhurst, Mr Phippen switched to a bottom up approach and produced a spreadsheet of the 12 comparable sales in Mr Dempsey's earlier report, which Mr Phippen adjusted for time and drainage affectation to produce a dollar rate per square metre (Exhibit O). Mr Phippen placed reliance on Sales 5 to 10 which he considered to have a similar level of uncertainty, but much lower future development potential than the acquired land. During the hearing, Mr Dempsey produced a competing spreadsheet of the same sales, in which he calculated the time adjustments and drainage affectation areas differently, with resultant lower adjusted rates per square metre (Exhibit 13). Towards the end of the hearing, Mr Dempsey produced a revised spreadsheet of the same 12 sales (Exhibit 20), which replaced his earlier spreadsheet. Mr Dempsey's spreadsheets describe Sales 5 to 10 as having potential for more immediate prospects of rezoning and development than the BRRA Transit Centre land. I accept this. In the meantime and during the hearing, Mr Dempsey placed reliance on the sale at 497 Old Windsor Road, Kellyville, briefly referred to as part of a table set out in Mr Phippen's June 2004 report, as the most comparable sale.

[109]

79 The respondent submitted that other uncertainties affecting the proposed future use potential included the following: (a) the fact that the Draft Structure Plan has no status under the EPA Act and therefore could not be relied upon with certainty as an indication of an intended future zoning. That is true. Nevertheless, a draft structure plan is a commonly used planning tool of councils and, in my opinion, the Draft Structure Plan was a significant document; (b) the Draft Structure Plan does not itself specify the densities applicable to the various land use designations, but one has to go to the October 2003 council report to see that the density for the Transit Centre zone, for example, is 90 dwellings per hectare. I do not think that this is a significant point; (c) according to the October 2003 council report, the residential densities proposed in the Transit Centre were based on an assumption that the State Government would commit funds for the acquisition, construction and operation of the NWRL. Further, the report stated that unless a financial commitment was made within a few months, a significantly revised structure plan may need to be prepared. That is true. On the other hand, by the acquisition date almost eight months had passed, there had been no such revision, and a local environmental plan based on the Draft Structure Plan was in the process of being drafted; (d) if a local environmental plan based on the Draft Structure Plan were to be gazetted before the Government's financial commitment was made, it could reasonably be anticipated, in Mr Sanders' view, that the local environmental plan would include a provision preventing development to the maximum density until the railway was completed. Accordingly, in Mr Sanders' view, the timing of the development and the nature of future zoning were uncertain. On the other hand, as Mr Kettle said, the earlier Rouse Hill Regional Centre Local Environmental Plan rezoned land proposed to be serviced by the NWRL as commercial and high density residential zones without taking the deferred matters approach; (e) in relation to remnant vegetation communities, stands of Cumberland Plains Woodland existed on the southern part of the acquired land before their removal after compulsory acquisition. Mr Kettle said in his initial report that any development application relating to the property would require the preparation of a Species Impact Statement because the Cumberland Plains Woodland is listed as an " endangered ecological communit[y] " under Schedule 1 of the Threatened Species Conservation Act 1995 (NSW). On the other hand, prior to the making of the Draft Structure Plan, the council had commissioned an ecological assessment of Cumberland Plains Woodland in the BRRA as part of its 2001 Local Environmental Study. It said that whilst the trees had some regeneration potential, their " structure and floristic composition [had been] significantly reduced due to grazing, slashing and mowing ". The Draft Structure Plan and October 2003 council report took such matters into account and located significant stands in open space zonings and areas appropriate for regeneration in scenic corridors. Although this remnant vegetation was referred to in Mr Kettle's initial report, which the respondent tendered, it was otherwise not really identified or assessed as an issue in the case. When put to Mr Phippen in cross-examination, he said that he did not consider that any of the trees represented an impediment to development. Further, although he was aware that depending on the outcome of the Species Impact Statement, there may be a possible constraint arising out of the existence of that vegetation, he said that he did not give that consideration much weight. I accept Mr Phippen's evidence. I think this issue is of little significance. (f) There were access restrictions because Old Windsor Road and Burns Road were each defined as a " classified road " under the Baulkham Hills LEP 1991. Therefore any access to the acquired land would be from a classified road unless new roads were constructed. Mr Kettle said in his initial report that the current access restrictions posed a constraint on the site in terms of the range of land uses permissible, this constraint relating primarily to traffic and access issues of the arterial roads. I accept that this was so. (g) Mr Kettle also said in his initial report that the property is identified under the council's Bushfire Prone Land Map as being subject to bushfire hazard. The majority of the property is located within the 100 metre vegetation buffer to Vegetation Category No 1 land located on neighbouring properties. He said that the bushfire hazards affecting the property were a constraint affecting the site and that the manner in which the constraint would affect development would vary according to the nature of the proposed development in this location on the property. I think that this is correct, but is a minor point. 80 My conclusions concerning the probable assessment of the development potential of the subject land by the hypothetical buyer and seller as at the acquisition date are as follows.

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