McDonald v Roads & Traffic Authority of NSW [2009] NSWLEC 105

Land and Environment Court (NSW)|2009-07-08

The application seeks to extend the adjoining 1(r1) Rural Residential zone in Glen Haven Drive, to include Lot 1 DP733145, the purpose being to enable future subdivision of Lot 1 into possibly 4 lots, exclusive of land currently being acquired by the RTA for highway deviation.

You will be aware that Council is currently preparing a Council wide Standard Local Environmental Plan and in so doing, Council has the ability to correct any existing LEP anomalies. It is proposed to include Lot 1 in the adjoining zone as requested by the proponent on the basis that development approval for the Glen Haven Drive subdivision issued in 1992 is deemed not to have lapsed, therefore the landowner has the ability to complete the subdivision. This creates an existing zone anomaly that may be corrected by including Lot 1 in the Standard Local Environmental Plan and Council proposes to deal with the proponent's request through implementing the new Standard LEP.

Please be advised that the landowner and their consultant have been advised accordingly."

(a) the 1992 consent was a valid subdivision approval that applied to this site at the date of acquisition; and

(b) a prudent purchaser, upon enquiry of council at the acquisition date, would have been given the advice contained in the 4 September 2007 letter in relation to rezoning potential.

27 The RTA submits that the applicant, knowing her land was about to be acquired by the RTA, made the modification application in order to enhance the development potential of the parent land, and therefore increase its market value; and that it is therefore a step to be ignored in the assessment of compensation: Just Terms Act s 56(1)(a). It is unclear on the evidence whether that was the purpose. Even if it were, I do not accept that it engages the terms of s 56(1)(a).

28 The RTA submits that a prudent hypothetical purchaser at the acquisition date would not assume that the rezoning of the subject land would happen before March 2011 because that is the State-wide deadline, fixed in 2006 by the NSW government, for the implementation of an LEP in the standard format prescribed by the government. The RTA draws attention to the evidence of its town planner, Mr Rowan, that the Department of Planning, in designating the council as a "five year" council, considered the complexity of the task and resource limitations within both the council and the Department.

29 The RTA submits that the fact that the subject land had still not been rezoned by the time of the trial, 18 months post-acquisition, confirms the hypothetical purchaser's foresight that there would be a significant delay in the rezoning of the land, a foreseeable delay of some four years according to the RTA's contention: Housing Commission of New South Wales v Falconer (1981) 1 NSWLR 547. Hindsight is impermissible. However, in Falconer it was held that "evidence of future events is admissible not to prove a hindsight, but to confirm a foresight": at 558B per Hope JA, approved in Minister Administering the Crown Lands Act v Deerubbin Local Aboriginal Land Council (No 2) [2001] NSWCA 28, 50 NSWLR 665 at [69] - [74] per Spigelman CJ. This principle is quite often invoked in resumption compensation cases in this Court. To my mind, a danger with the principle is the bootstraps argument that it was foreseeable at an acquisition date that something would (or would not) happen because that thing did (or did not) happen after the acquisition date. Two other dangers with the principle were noted in Minister Administering the Crown Lands Act v New South Wales Aboriginal land Council [2009] NSWCA 151 at [68] per Basten JA (Beazley and Tobias JJA agreeing):

"Falconer was a valuation case, and the comments made were specific to the circumstances with respect to the valuation of land. The basic principle does not involve exclusion of reference to later events as evidence to establish a situation at an earlier point in time. Numerous examples may be identified in different situations where that can legitimately occur. Two points of practical importance are to borne in mind. The first is that reliance on later evidence may distract attention from the point in time at which the relevant assessment must be made. Secondly, there are dangers in drawing inferences from later evidence, without close attention to the circumstances in which it arose."

30 The evidence of the applicant's valuer, Mr Owen Allsopp, which I accept, is that the council's strategic planning manager, Mr Peter Cameron, told him that as at August 2007 he would have advised a buyer that the new LEP would have been completed in two years, as council was "well advanced" at that time.

31 Having regard to the rezoning of the adjacent Bunyah land and Glenhaven Estate, the council's September 2007 letters evidencing that the subject land was omitted from the rezoning by a mistake that would be rectified, and the evidence that the council would have advised a buyer at the acquisition date that a new LEP would be completed in two years, I am prepared to conclude that, at the acquisition date, the hypothetical buyer and seller would have been confident that there would be a rezoning in two years so as to permit a seven lot subdivision. That would be my conclusion even if I were to take account of the fact that no rezoning has yet occurred. However, in my view, they would not have thought it was certain, that is, as good as if the land had already been rezoned by the acquisition date. I am also prepared to conclude, as propounded by Mr Allsopp, that the hypothetical buyer, at the acquisition date, would have intended to prepare a subdivision development application so that it could be decided promptly by the council as soon as the rezoning occurred and that have been similarly confident that it would be granted.

32 Market valuation evidence was given by two valuers, Mr Owen Allsopp for the applicant and Mr David Lunney for the RTA. As is common in resumption cases in this jurisdiction, the valuers are poles apart in their valuations. Lloyd J has described this phenomenon as notorious and has attributed it to inevitable, even if subconscious, bias: Penrith City Council v Sydney Water Corporation [2009] NSWLEC 2 at [5].

33 The Court, accompanied by the parties' legal representatives, undertook a view of the subject land and the comparable sales lands utilised by the valuers in support of their valuation assessments.

34 The valuers had to determine the market value of the acquired land as defined in s 56(1) of the Just Terms Act (set out at [10] above). The definition reflects the classic test in Spencer v The Commonwealth [1907] HCA 82; (1907) 5 CLR 418, as the High Court confirmed in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5, 233 CLR 259 at [51]:

"The opening words of the definition in s 56(1) (means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer) reflect what for a century has been taken from Spencer v The Commonwealth [1907] HCA 82; (1907) 5 CLR 418. That case arose under the tersely expressed provisions of the first federal legislation in the field, the Property for Public Purposes Acquisition Act 1901 (Cth). Section 19(1) thereof spoke merely of 'the value of the land taken'. The result of the judicial exegesis in Spencer was summed up by McHugh J in Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413 at 436 [49]- [50] as follows:

'Value is determined by forming an opinion as to what a willing purchaser will pay and a not unwilling vendor will receive for the property [Spencer v The Commonwealth [1907] HCA 82; (1907) 5 CLR 418]. In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value. Those matters will include the predicted impact of future events as well as the experience of the past and the rates of return on other investments. As Isaacs J pointed out in Spencer v The Commonwealth [(1907) [1907] HCA 82; 5 CLR 418 at 441]:

'We must further suppose both to be perfectly acquainted with the land, and cognisant 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.(emphasis added.)'"

35 Thus, the hypothetical parties must be supposed to have "a knowledge of all matters that affect its [the land's] value" and, further, to be "perfectly" acquainted with the land itself. As to the former, the High Court in Walker did not say that the attributed knowledge of all matters is perfect. The question of whether it is apt to say that it is perfect was reserved in ISPT Pty Ltd v Valuer General [2009] NSWCA 31 at [4] by Allsop P.

36 The definition of market value in s 56(1) continues to be illuminated by the judgment of Dixon CJ in Turner v Minister of Public Instruction [1956] HCA 7; (1955-1956) 95 CLR 245 at 268 (notwithstanding that the case was decided under the sparser terms of a different resumption statute):

"That value was necessarily affected by all the advantages which the land possessed and these might be a matter of future or even contingent enjoyment. Future advantages or potentialities must not be excluded. At the same time the value of these things must be assessed according to the condition of the land as it stood at the time of resumption: 'it is the present value alone of such advantages that falls to be determined'..."

37 The parties' valuers adopted the before and after valuation method whereby the market value of the acquired land is calculated by determining the market value of the parent land immediately before acquisition and subtracting the market value of the residue land immediately after acquisition. The before and after method is often adopted when only part of land is resumed. The NSW Court of Appeal approved the before and after method, without suggesting that it had to be adopted in all cases, in MIR Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales [2006] NSWCA 314; Roads and Traffic Authority (NSW) v Muir Properties Pty Ltd [2005] NSWCA 460, 143 LGERA 192; Roads and Traffic Authority (NSW) v Damjanovic [2006] NSWCA 166, 146 LGERA 403; and Roads and Traffic Authority (NSW) v Collex Pty Ltd [2009] NSWCA 101, 165 LGERA 419 at [101] - [103], [173].

38 The before and after valuations were as follows:

(a) the primary method of valuing the parent land before acquisition should be on the basis of direct comparable sales evidence;

(b) a hypothetical subdivision development should be adopted as a check valuation;

(c) under both methods, allowance had to be made for delays to obtain development consent and to obtain rezoning to permit minimum residential lots of 8,000 m2 in a seven lot subdivision, as agreed by the planning experts;

(d) it was virtually certain that the residue land would have the benefit of an entitlement to erect a replacement dwelling;

(e) the value of the improvements on the acquired land was $160,000. Mr Lunney attributed $30,000 of this to services.

40 Thus, the unimproved value of the acquired land of 1.614 ha at the acquisition date was $527,000 according to Mr Allsopp ($687,000 less improvements $160,000) but only $40,000 according to Mr Lunney ($200,000 less improvements $160,000).

41 Where there are comparable en globo sales, it is preferable to use the comparable sales method rather than the hypothetical development method because many factors in the latter involve a speculative element, such as the expected realisable prices and the time to realise subdivision. As Roper J said in Closer Settlement Ltd v The Minister (1942) 17 LGR (NSW) 62 at 65:

"In arriving at the value of land which is suitable for subdivision a familiar and appropriate method ... is to estimate from whatever comparable sales of land in subdivision are available the price which would be realized by the land when sold; then to estimate the costs involved in the subdivision and the length of time that the realization would take, making provision for the payment of rates and taxes and for interest on money outstanding; and an estimated net return on the subdivision is obtained. It is of course clear that a person purchasing land in globo for the purpose of subdividing it would not pay the sum of money which is the present equivalent of that estimated return. Many factors in the calculation are speculative: the land in subdivision may not realize the prices which are at present expected, and the subdivision may take longer to realize than is at present anticipated. To compensate for the risk involved in the venture the purchaser would certainly discount the estimated returns."

42 Similarly, in Para Vale Estates Pty Ltd v Minister of Works (1964) 12 LGRA 19 Napier CJ said, at 23:

"...but I think that it introduces an additional element of speculation and uncertainty, namely, what profit would the subdivider look for and expect. This must necessarily vary, according to the circumstances and the risks inherent in the particular case. In the result the method is, at best, no more than an indirect way of reaching a conclusion, which can, in the ordinary course of things, be reached more directly and satisfactorily by a consideration of comparable sales."

43 The limitations of a hypothetical subdivision analysis were noted in Carson v Minister for Environment and Planning (1990) 70 LGRA 215 at 231:

"The numerous hypothetical subdivision exercises were helpful as check valuations, but the inevitably wide range of net land value derived by variation of assumptions emphasised the hazards of relying too much on the hypothetical approach. In any event, values should not necessarily be applied directly to the subject land from detailed analyses of comparable sales or valuation exercises with mathematical precision. Hypothetical valuation exercises are not as helpful as comparable sales evidence, and are best used as tools to assist the Court to determine the price at which the parties would also come together in the 'selling approach' explained in Spencer v Commonwealth of Australia [1907] HCA 82; (1907) 5 CLR 418."

44 The larger the delay in realising the expected subdivision, the greater the element of speculation in the hypothetical development method. In Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 32 LGRA 170 Wells J said, at 181:

"Plainly, a calculation based on a hypothetical subdivision will not be vitiated simply because some very slight delay might be experienced before realization could begin, but an inordinate delay of, say, several years could, equally plainly, render the whole undertaking so speculative that a conclusion as to value would be wholly unreliable. In between those two extremes, the skilled valuer will have to decide at what stage the speculative element looms so large that the method becomes unsafe. His decision will depend on all the circumstances of each particular case."

45 In Coastal Estates Pty Ltd v Bass Shire Council [1993] VicRp 92; (1993) 79 LGERA 188 at 196 Gobbo J thought that a realisation delay of three years raised a very real doubt as to the hypothetical development method, which his Honour called the "analysis" method:

"In my view the passage of time is not always decisive and the analysis method may be inappropriate even in cases where the time delay is less than three years.

It is a question of fact in each case as to what is the appropriate method and it is unwise to seek to lay down prescriptive rules in this matter. At the same time, it is reasonable to regard a period of three years before any significant development and sale as raising a very real doubt as to this method because of the uncertainties involved in use of current estimates of sale prices and costs.

In my view the starting point is that the valuation should, if possible, be founded on sales of comparable land. This is subject to the following qualifications and the particular circumstances of the case:

(a) Where there are no comparable sales then the use of the analysis method is necessary;

(b) Where there is little evidence by way of comparable sales, then use of the analysis method as a check is appropriate;

(c) Where the subject land that has been acquired is part of a larger parcel and issues of severance and injurious affection and enhancement arise, it will be necessary that an analysis exercise be carried out if there are grounds for believing that a before and after valuation will not meet these issues.

Thus, if there are significant differences in lot yield or in development costs between the before and after parcels then usually a full analysis should be carried out as a check. I say 'usually' because sometimes the matter can be satisfactorily dealt with by an allowance that reflects differences of cost."

46 The views of the experts as to the highest and best use of the parent land before acquisition differed:

(a) the applicant's valuer, Mr Allsopp, and planner, Mr Chapman, considered that the highest and best use was as a seven lot rural residential subdivision with a minimum lot size of 8,000 m2 (and an average size of approximately 9,000 m2). That minimum lot size was permissible in the 1(r1) Rural Residential zone, which, at the acquisition date, was the zoning of the adjoining Bunyah land and Glenhaven Estate and the council's intended rezoning of the subject land. One lot would contain the existing dwelling, a second lot would contain the landscape supply business, while the remaining five lots would be vacant rural residential homesites. The value would be deferred for two years to allow for rezoning to 1(r1) Rural Residential to permit that subdivision and development consent. Mr Allsopp envisaged it would be well presented and similar to the nearby attractive Glenhaven Estate, that is, cleared except for specimen trees; not poorly presented like parts of the Lake Ridge Estate, which is a rural residential subdivision north-east of Kew. The electrical transmission easement and power line significantly affects four of the seven potential lots and slightly affects a fifth lot;

(b) the RTA's planner Mr Rowan considered that the highest and best use of the parent land was as a three, four or five lot subdivision;

(c) the RTA's valuer Mr Lunney considered that the highest and best use of the parent land was its existing use as a single rural residential homesite, although he would allow a small premium of 15 per cent for uncertain future subdivision potential Mr Lunney considered that a seven lot subdivision did not adequately reflect the fact that the land was zoned rural 1(a1) and that the potential for rezoning carried a high level of risk regarding its likelihood, the resulting lot sizes that could be achieved and the timing of the process. He thought that the rural residential housing market in the Kew area was very soft at, and for a considerable period prior to, the acquisition date and that, having regard to development costs, a rural residential subdivision was not then viable. Mr Lunney examined hypothetical three, four, five and seven lot subdivisions of the parent land, adopting cost estimates provided by the RTA's engineering expert, Mr Parker, and agreed development costs in the joint report of the engineering experts, Mr Mowle and Mr Parker. He thought that the market was weak. He took into account what he regarded as an oversupply of slow selling rural residential lots at the Lake Ridge Estate. His highest calculation, for a seven lot subdivision, produced an en globo value for the parent land of $350,000. He concluded that the value of the parent land as a subdivision proposition was less than as a single dwelling rural residential site for which he calculated a value of $500,000.

47 Having regard to the hypothetical subdivision analysis at [70] ff below, I accept that the highest and best use of the parent land was as a seven lot rural residential subdivision subject to rezoning and development consent before acquisition.

48 The views of the experts as to the highest and best use of the residue land after acquisition were as follows:

(a) Mr Allsopp and Mr Chapman considered that it was as a four lot residential subdivision with a minimum lot size of 8,000 m2 subject to rezoning and development consent. One of the lots would be used for the applicant's future dwelling and another for the landscape supply business. Mr Allsopp acknowledged that it was almost not economically viable;

(b) Mr Rowan considered that it was as a three lot subdivision.

(c) Mr Lunney considered that subdivision of the residue land into three or four lots was not economically viable and that its highest and best use was as a rural residential homesite.

49 Notwithstanding their different views as to the highest and best use of the residue land, during the hearing the valuers reached an agreement, which I accept, that the value of the residue land after acquisition was $300,000. However, Mr Allsopp substantially qualified his agreement by saying that this after value must be discounted if the Court rejected disturbance items, in the nature of onsite infrastructure costs to the residue land amounting to some $363,000 (connection of services, access tracks, vegetation removal and wastewater facilities on the residue land). The weight of expert evidence favours, and I accept, that the highest and best use of the residue land was as a four lot subdivision subject to rezoning and development consent.

50 "Comparability and concomitant adjustment involve matters of degree and judgment": ISPT Pty Ltd v Valuer General [2009] NSWCA 31 at [23] per Giles JA (Allsop P and Campbell JA agreeing).

51 Mr Allsopp's direct en globo sales comparison looked to the sale of adjacent land at lot 327 Bethesda Road, Kew, by the Bunyah Local Aboriginal Land Council to the RTA (Bunyah land) and the sale of land at 1107 Hannam Vale Road, Hannam Vale. Both had subdivision potential. After adjusting for the differences, Mr Allsopp concluded that the Bunyah sale showed that the subject land with seven lot subdivision potential had a value of $990,000 and the Hannam Vale sale showed that the subject land with seven lot subdivision potential had a value of $954,000.

52 The adjacent Bunyah land comprised 3.234 hectares of vacant rural residential land formerly forming part of the Glenhaven Estate. It was sold for $425,000 to the RTA by the Bunyah Local Aboriginal Land Council for the same upgrade to the Pacific Highway. The sale agreement was entered into in 2007 prior to the acquisition date of the subject land. It was zoned Rural residential 1(r1) under the LEP and was therefore capable of subdivision into four rural residential lots. The sale price represented $106,250 per lot en globo.

53 The RTA submits, based on the evidence of its valuer Mr Lunney, that the Bunyah sale is not comparable because it was not an advertised sale to the open market and does not satisfy the s 56(1) Just Terms Act requirement of a not anxious buyer; alternatively, that it is of so little assistance, that it should be ignored or given little weight. In closing oral addresses, the RTA appeared to limit its submission to the alternative. I do not accept the submission in either form.

54 Mr Lunney accepted that prima facie the Bunyah sale appeared to represent the best evidence of value. Nevertheless, he considered it needed to be treated with caution because of his enquiries of the RTA as to the background of the sale. The Aboriginal Land Rights Act 1983, s 42 precluded the RTA from acquiring the Bunyah land by compulsory process. According to Mr Lunney's enquiries, a valuation of $380,000 was provided to the RTA by the RTA's consultant valuer, the RTA did not accept a higher valuation of $427,500 provided by Mr Allsopp to the Bunyah Local Aboriginal Land Council, but because the RTA needed the land they paid $425,000 for it. In these circumstances Mr Lunney thought that a significant part of the RTA's rationale in paying an amount in excess of the value determined by its consultant valuer was due to anxiety. He concluded that the RTA could not be seen as a not anxious purchaser and that the sale therefore failed the test prescribed in s 56(1) of the Just Terms Act. Nevertheless he considered it, although he placed little weight upon it and discounted it by 57 per cent: see [57] below. .

55 In the context of the Bunyah sale negotiations, the RTA obtained a valuation report which assessed the market value in the before situation of the Bunyah land at $380,000, ie $95,000 per lot for its potential four rural residential lots. In the same context, Mr Allsopp provided the Bunyah Local Aboriginal Land Council with his report which assessed the market value at $427,500, ie $106,875 per lot for its potential four rural residential lots.

56 Thus, the RTA had two valuations before it and bought the land for less than one valuation and 12 per cent above the other. The difference between the two valuations was relatively modest, particularly when compared with competing valuations with which this Court is regularly confronted in resumption compensation cases, including in the present case. The RTA's possession of two valuations, the modest difference between them and the fact that a price was negotiated which lay between them, tend to support the conclusion that the RTA was not an anxious buyer. No RTA witness was called by the RTA to establish that it was an anxious buyer. Overall, I am not satisfied that the RTA was an anxious buyer such as to negate or diminish the usefulness of the comparison with the Bunyah sale.

57 The RTA submits, and it was the opinion of Mr Lunney, that a discount of 57 per cent is required when applying the Bunyah sale, broken down as follows: purchaser anxiety 12 per cent, being the percentage difference between the Bunyah sale price of $425,000 and the RTA consultant's valuation of $380,000; time (interest costs) 25 per cent (for a three year rezoning period at 8.5 per cent per annum); risk of rezoning (time and development standards) 10 per cent; electricity transmission lines easement 10 per cent (actually, Mr Lunney's adjustment for the last item included for lot shapes but in cross-examination he did not adhere to the proposition that the lot shapes were inferior. In addition, the RTA submits that, based on Mr Lunney's evidence, there should be a discount of $10,000 per lot because the Bunyah land will only accommodate four lots compared with the subject land's seven lots (Mr Allsopp agreed with that $10,000 discount); and an addition of $15,000 per lot for the difference in development costs($95,000 versus $80,142 per lot). These adjustments would result in a valuation of $50,687 per lot for the subject land, which generally supports Mr Lunney's valuation of $500,000 (7 lots x $50,687 = $354,809 + improvements $160,000 = $514,809).

58 In 2006 the applicant and the Bunyah Local Aboriginal Land Council agreed to share the cost of developing their respective properties, thus reducing the cost for the owner of each property. They retained surveyors who prepared a report on the cost of subdivision of each. On a shared costs basis, I accept (a) that the development cost of a seven lot subdivision of the subject land would be $560,996 ie $80,142 per lot as agreed by the parties' valuers, based on the agreement of the parties' engineers, Mr Michael Mowle for the applicant and Mr Paul Parker for the RTA; and (b) that the development cost of a four lot subdivision on the Bunyah land was $115,000 per lot based on evidence obtained in 2006 from the surveyors retained by the applicant and the Bunyah Local Aboriginal Land Council.

59 The applicant submits, based on the evidence of its valuer Mr Allsopp, that the direct comparison with the Bunyah land should proceed as follows:

(i) the sale price of the Bunyah land was $425,000 or $106,250 per lot for its four lot subdivision potential;

(ii) development costs per lot for the subject land were assessed by Mr Allsopp at $34,477 per lot lower than for the Bunyah lots on a shared costs basis (the evidence supports the conclusion that costs would have been shared). That amount is the difference between development costs of $114,619 per lot for the Bunyah land compared with $80,142 per lot for the subject. The latter was agreed between the engineering experts and was adopted by the valuers. The former was an estimate provided by a surveyor to the Bunyah Aboriginal Land Council and the applicant in 2006 . In oral evidence Mr Lunney indicated rather briefly, that applying the composite rates agreed by the parties' engineering experts the four lot subdivision development costs of the Bunyah land was $95,000 per lot. I accept the evidence from Mr Allsopp that the development costs of the Bunyah land was achieved on the basis of the surveyor's estimate. I am prepared to accept the surveyor's estimate having regard to its provenance and the basis on which the Bunyah sale proceeded. I am fortified in that conclusion by the fact that the parties' engineering experts arrived at a figure of $121,100 per lot for a four lot development on the subject parent land on a shared costs basis ($513,644 - GST $29,243 = $484,401 4 = $121,100 per lot). If a hypothetical purchaser would pay $106,250 per lot for the Bunyah land, they would pay an extra $34,477 per lot for the subject land. Therefore, the two sums should be added to arrive at a figure of $140,727 per lot for the subject land;

(iii) there should then be a deduction because the four lot Bunyah sale profit and risk was assessed at 15 per cent per lot. The subject proposal is for seven lots for which the profit and risk is assessed at 20 per cent. That results in a reduction of $10,000 per lot (with which Mr Lunney agreed) to arrive at $130,727 per lot for the subject land;

(iv) there should then be a deduction to reflect the fact that the Bunyah land was already zoned to permit an immediate subdivision application, whereas rezoning and development approval for the subject land would take two years from the acquisition date on Mr Allsopp's assessment. I accept his time assessment having regard to the council correspondence in September 2007 and the evidence as to timing that the council would have given a prospective buyer at the acquisition date, in preference to Mr Lunney's view that it would take longer. The commercial interest rate during that period would be 8.5 per cent per annum, a rate which Mr Lunney considered would be applicable. Mr Allsopp adopted a 5 per cent interest rate on the reasoning that, in his experience, developers would adopt a lower rate than the commercial rate in anticipation of offsetting capital gains during the holding period. Discounted at 5 per cent for two years, the result is $118,573 per lot. I am persuaded, based on Mr Allsopp's evidence as to his experience, that the assumption of a capital gain should be attributed to a hypothetical developer at the relevant time. I therefore think it is appropriate to adopt the 5.0 per cent interest rate;

(v) seven lots at $118,573 per lot equals $830,000.

(vi) to that sum must be added $160,000 for the agreed value of the improvements on the acquired land. The resultant value of the subject parent land is $990,000.

60 In the RTA's submission, a reality check suggests that the value per lot of the subject should only be about half of the value per lot of the Bunyah land due to the rezoning requirements, size, transmission line and sale circumstances, and that Mr Allsopp's value of $118,573 per lot for the subject land is therefore grossly overstated at more than 10 per cent in excess of the Bunyah sale.

61 In my view, (a) there should be no adjustment for sale circumstances (ie the alleged buyer anxiety) for the reasons discussed at [56] above; (b) there should be adjustments for time (interest) for the rezoning period, for the risk of rezoning and for the electricity transmission lines, but these adjustments should be much more modest than those submitted by the RTA; and (c) the substantial reason for the value of the subject lots comparing favourably with the value of the Bunyah lots is that shared development costs are about 30 per cent less per lot for a seven lot subdivision on the subject land than for the Bunyah four lot subdivision.

62 I accept the applicant's analysis as generally sound. However, in my opinion, there should be a further discount of 20 percent for (a) the hypothetical purchaser's perception that, at the acquisition date, there was a risk (albeit low) that rezoning and subdivision consent would not eventuate or that rezoning would eventuate on materially different terms, and (b) for the transmission line easement. The resultant value of the subject land on the Bunyah land comparison is $791,988, which may be rounded to $792,000.

63 1107 Hannam Vale Road, Hannam Vale is a 16.48 hectare rural residential development site sold in August 2006 for $770,000. Hannam Vale is a small village west of the Johns River. This land had an existing development consent for a nine lot subdivision, reflecting a value of $85,555 per lot en globo. All the potential lots were affected by a power line easement and lacked town water. The RTA concedes that the Hannam Vale sale is of some assistance. However, on the basis of Mr Lunney's evidence, the RTA submits that the Hannam Vale sale price per lot of $85,555 should be significantly discounted when applying this property to the subject property because it was appropriately zoned, enjoyed an existing subdivision development consent and had lower development costs whereas the subject land did not enjoy these advantages. Mr Lunney adjusted this sale to reflect a value of $35,000 per lot for the subject land. However, as the applicant submits, (a) Mr Lunney adjusted for three years interest at 8.5 per cent per annum pending rezoning whereas, in my view, the adjustment should be for two years interest at 5 per cent per annum for the reasons explained at [59(v)] above; and (b) Mr Lunney said that it would cost $30,000 per lot more than to develop the subject land whereas the true differential appears to be $24,587 per lot because the development costs for the subject are agreed at $80,142 per lot and he accepted that the development costs of Hannam Vale were $55,555 per lot ($500,000 9).

64 Mr Allsopp carried out a similar subdivision analysis for this sale as he had done for the Bunyah sale. He made adjustments for projected higher development costs on the subject land ($80,142 per lot compared with $55,555 per lot for Hannam Vale); projected higher sale lot prices on the subject land ($300,000 compared with $215,000 per lot for Hannam Vale based on information obtained from the selling agent); and an adjustment for time for two years at five per cent per annum. After adjustments, he assessed the value per lot at $113,378 x 7 lots equals $793,646 plus improvements of $160,000 to arrive at a value of $954,000 for the parent land. I accept this analysis subject to discounting this value by 15 per cent for Hannam Vale's existing zoning and subdivision development approval and gentler contours, to arrive at a rounded figure of $811,000.

65 Mr Lunney valued the parent land before acquisition at $500,000 as a single rural residential site, relying upon the following sales as direct comparisons. He considered that sale 1 was the best evidence of value and relied on sales 1 and 2 more heavily than the others:

(1) 22 Weeroona Place, Kew: 17.11 hectares of land with improvements, sold in March 2007 for $430,000. Mr Lunney considered this to be the best evidence of value of a comparable single rural residential home site. It is very close to Lake Ridge Estate. Mr Lunney allowed $130,000 for the existing improvements to deduce a land value of $300,000. This sale land also had a power line easement across it. It emerged in Mr Lunney's cross-examination that it backed onto a railway line, had a watercourse running through it and its only access was shared by another property. Those matters, I think, diminish its comparability to some extent;

(2) Lot 19 Possum Way, Kew: 3.265 hectares of vacant land, sold in July 2007 for $290,000. It is a single rural residential lot located within Lake Ridge Estate at Kew. The rear boundary adjoins the Pacific Highway. It is generally uncleared bushland. It is quite close to sale 1 above and reflected a nearly identical land value despite sale 1 being over five times larger.

(3) 163 Stewarts Road, Johns River: 4.812 hectares with improvements, sold in January 2008 for $330,000. Mr Lunney attributed a value of $100,000 to the existing improvements to deduce a land value of $230,000. He considered that significant adjustment would be required to reflect the inferior Johns River location compared with Kew. Johns River is approximately 15 kilometres south of Kew, located within the Greater Taree local government area and further removed from Port Macquarie and shopping facilities.

(4) 159 Stewarts River Road, Johns River: 9.129 hectares with improvements, sold in September 2008 for $385,000. Mr Lunney attributed a value of $135,000 to the improvements to derive a land value of $250,000. Approximately 55 per cent of the land had been cleared and divided into paddocks. The sale was by a mortgagee in possession. Mr Lunney thought that the seller may not have been a not anxious seller and accordingly placed little weight on the sale. Again, he considered that significant adjustment was required to reflect the fact that Johns River is an inferior locality. This property had been on the market since 2006 for $525,000. Mr Allsopp considered that it should be looked at with great caution because (inter alia) it was sold by a mortgagee in possession. Mr Lunney said in cross-examination his enquiries indicated that the mortgagee had obtained a valuation and he acknowledged that a valuation for a mortgagee sale may be lower than for a non-mortgagee sale depending upon the strength of the market;

(5) the Bunyah sale, which has been analysed above at [52] - [62];

(6) the Hannam Vale sale, which has been analysed above at [63] - [64].

66 I attach little weight to the sales of the two Johns River properties given their inferior location, the fact that one was a mortgagee sale, and the fact that they occurred in 2008. During oral evidence Mr Allsopp indicated that the market was rising whereas Mr Lunney indicated it was declining between the acquisition date in August 2007 and about September 2008. Counsel for both parties indicated that this issue did not affect their respective cases and pragmatically agreed to move on without canvassing the issue further.

67 Having regard to the above sales evidence, Mr Lunney formed the opinion that the unimproved value of the parent land before acquisition, on the basis of a single rural residential home site and disregarding any potentiality, was $300,000. He attributed a value to the improvements on the acquired land of $130,000, comprising $100,000 for the house, $15,000 for the shed and $15,000 for the roads and landscape pit. To the total of $430,000 he applied a premium of 15 per cent for the possibility of subdivision potential in the future to arrive at a total market value (after rounding up) of $500,000 for the parent land before acquisition. Since he later agreed with Mr Allsopp that the value of the improvements was $160,000, it would appear that his valuation should increase to $530,000.

68 "It is generally desirable, where possible, to engage in commonsense reality checks on what experts are saying": Roads and Traffic Authority (NSW) v Collex [2009] NSWCA 101, 165 LGERA 419 at [231] per Hodgson JA. A reality check produces a difficulty with Mr Lunney's conclusion that the before value of the parent land is $500,000. The unimproved Bunyah land of 3.234 hectares with a four lot subdivision potential sold shortly before the acquisition date for $425,000. On Mr Lunney's figures, the unimproved value of the subject parent land of 6.068 hectares at the acquisition date was $345,000 (ie his $300,000 plus his 15 per cent or $45,000 for development potential). It is difficult to accept that the subject parent land should have had a value so much less than the next door Bunyah sale price when the parent land was more than double its size and, as I have found, had subdivision development potential for seven lots compared with four on the Bunyah land. This is so, I think, even allowing for the advantages of the Bunyah land in terms of its zoning to permit an immediate subdivision development application and absence of an electricity transmission easement and power line. In addition, Mr Lunney's before and after valuation produces an unimproved value of only $40,000 for the acquired land of 1.614 hectares: see [40] above. That is difficult to reconcile with the unimproved value of $425,000 for the Bunyah land of about double the size of the acquired land.

69 In my opinion, the Bunyah sale is the most comparable sale. The Bunyah land is adjacent to and very similar to the subject land; a price was agreed shortly before the acquisition date for a little less than one of the two market value valuations provided to the RTA and only 12 per cent above the other valuation; and it had the potential to be developed with the same minimum sized lots as those proposed for the subject land. The next most comparable sale, in my opinion, is the Hannam Vale sale. As discussed, after adjustments, the Bunyah sale indicates a value for the subject parent land of $792,000 and the Hannam Vale sale indicates a value for the subject parent land of $811,000. Giving greater weight to the Bunyah sale, I propose to adopt a valuation of $790,000 for the subject parent land based on the direct comparison method.

70 As a check, the valuers employed the hypothetical development valuation method to a seven lot subdivision on the subject parent land before acquisition. The hypothetical development method and its speculative nature were described in the cases discussed at [41] - [45] above.

71 The valuers deducted from the aggregate of gross estimated realisations of the potential seven lots and the value of existing improvements, items consisting of estimated GST (agreed), agents fees and legal costs on the sale of each lot, developer's profit and risk margin, development costs (agreed) and interest on development costs (agreed). From the balance remaining they then deducted acquisition and holding costs, which comprised interest and agreed percentages for legal costs on acquisition, stamp duty, land tax and council rates. There was a dispute as to the period for council rates. The balance represented the value of the parent land, which Mr Allsopp assessed at $933,050 and Mr Lunney at $357,165. Mr Allsopp made an alternative valuation of $583,690 assuming Mr Lunney's gross realisation value per lot of $210,000.

72 The valuers agreed that there should be added to their valuations the present value of rental income from the house and shed for three years amounting to $46,486. That increased Mr Allsopp's primary valuation to $979,536 and his alternative valuation to $630,176; and increased Mr Lunney's valuation to $403,651.

73 I accept the quantum of the constituent items on which the valuers agreed.

74 The valuers differed on the quantum of seven of the constituent items:

(a) the gross realisation value of each of the seven hypothetical lots, which Mr Allsopp assessed at $300,000 and Mr Lunney assessed at $210,000. This depended on an analysis of comparable sales;

(b) agents fees and legal costs on the sale of each lot, which Mr Allsopp assessed at 2.5 per cent and Mr Lunney at 3 per cent;

(d) the holding costs period before realisation which Mr Allsopp took as three years from the acquisition date and Mr Lunney as more than four years and up to six years;

(e) the interest rate during the holding costs period which Mr Allsopp took at 5 per cent per annum and Mr Lunney at 8.5 per cent per annum;

(f) the holding period in which land tax would be payable, which Mr Allsopp took at one year and Mr Lunney took at five years;

(g) the holding period in which council rates would be payable, which Mr Allsopp took at three years and Mr Allsopp took at five years.

75 A threshold difficulty, particularly in the case of Mr Lunney's assessment, is that the time for realisation is so long as to magnify the speculative element of the exercise and to diminish the reliability of its conclusion as to value: see [44] - [45] above.

76 In arriving at his gross realisation value of $300,000 per lot based on comparable sales, Mr Allsopp said that he made an allowance for the electricity transmission easement and power line with the result that he applied a different value for each of the lots in the seven lot subdivision to reflect the effect of the easement and power line. Some were above and some were below $300,000 but they averaged $300,000 per lot.

77 The applicant submits that Mr Allsopp's gross realisation value of $300,000 per lot for the potential seven lots on the parent land is principally supported by the sale of land with few improvements at 23 Lake Ridge Drive, Kew for $310,000, supported by two sales of improved land at 8 Lake Ridge Drive and 3 Bellbird Close, Kew (mainly because they were around the acquisition date), and three sales of unimproved land at Hannam Vale for an average price of $253,333 also around the acquisition date. Details are as follows:

(a) 23 Lake Ridge Drive: an area of 1.257 hectares, sold in April 2006 for $310,000. The property was unimproved except for a shed, carport, a small dam and fencing, which Mr Allsopp valued at $10,000. Mr Lunney said he made adjustments to make it comparable with the subject land including for the sale land's larger size, superior topography and nature and absence of the transmission line easement. Mr Allsopp said he took all those factors into account when he individually valued each block on the subject land but did not attribute a percentage adjustment to them. He then balanced this against the better location of the subject land. Mr Lunney valued the improvements at $20,000, that apparently being based on inquiries of the purchaser. Mr Lunney considered that a minimum discount of 25 per cent was required from his unimproved value of $290,000, to bring it down to $217,500. Mr Lunney said that his enquiries of the purchaser indicated he was prepared to pay a premium price due to the gentle topography, the fact that it was predominantly cleared of vegetation and had a dam. I do not think that this reference to a "premium" price should be regarded as anything other than the market price. I accept that the value of improvements should be assessed at $20,000 to derive an unimproved value of $290,000 before adjustments. I accept the adjusting factors that Mr Allsopp identified, but I consider that they should result in a reduction of $10,000 to $280,000.

(b) 8 Lake Ridge Drive, Kew: 1.348 hectares with a four bedroom house with a pool in a landscaped garden setting, sold for $630,000 in July 2007. The lot is elevated, has attractive views, and has few trees. However, it is larger, was sold 16 months before the acquisition date and is not in as attractive a location as the subject land. Mr Allsopp determined the value of the improvements at $310,000 to derive a land value of $320,000. He had to value the improvements on the basis of a colour photo and an external inspection because the occupier would not agree to him entering the property.

In cross-examination it was put to Mr Allsopp that he should have "paired" 8 Lake Ridge Drive with Lot 48 Possum Way, Kew, a similarly sized unimproved property of 1.46 hectares about 400 metres away which sold for $225,000 in March 2006, almost 15 months before the 8 Lake Ridge Drive sale. In a paired sales analysis the value of improved land is compared with the value of vacant comparable land in order to determine the value of improvements. It was put to Mr Allsopp that pairing would suggest that the value of the improvements on 8 Lake Ridge Way is $405,000. Mr Allsopp distinguished the sale of Lot 48 Possum Way on the basis that Possum Way and Glider Spur were very different areas compared with most sections of Lake Ridge Drive because they were heavily timbered and had very poorly presented blocks denuded of topsoil whereas Lake Ridge Drive has good grassland and good topsoil. He thought there were two different markets notwithstanding their proximity. As they sold at similar dates but for very different prices, he considered that that demonstrated the better Lake Ridge Drive properties. Mr Lunney thought the two properties could be paired, contending that Lot 48 Possum Way was largely cleared of existing vegetation and therefore differed from other heavily vegetated lots in that area. Having viewed the locations of these properties, which seemed to me to be quite different, I am not persuaded that it was appropriate to pair them.

The RTA criticises Mr Allsopp's evidence in relation to the house on this land. Mr Allsopp's said in his initial written report that the house on the land was built in 1994, yet apparently relied in support of his analysis on a 1999 sale of this land as vacant land. When this arose in oral evidence he said that the house was built in 2004. Evidence tendered later by the RTA indicates reliably that the house was built in 1995 and that after it was sold in 1999 it was renovated, a double garage erected and significant landscaping occurred by the time of its resale in 2007. The RTA's criticism of Mr Allsopp over these errors in his evidence is justified.

(c) A sale of 1.007 hectares of improved land at 3 Bellbird Close, Kew, in the nearby Glenhaven Estate in May 2007 for $575,000. Mr Allsopp applied sales based on his experience to the built areas to determine the value of the improvements as $260,000 and the unimproved value of the land as $315,000. Mr Allsopp said this sale was very comparable because the sale date was close to the acquisition date of the subject land, the subject land can be viewed as an extension of the nearby Glenhaven Estate, its highest and best use is as a single homesite (like six of the seven proposed lots on the subject land), and it has very similar attributes, location, services and facilities.

The RTA submits that no reliance can be placed on Mr Allsopp's analysis of this sale because his valuation of the improvements was inadequate in two respects. First, he did not inspect the inside of the house. Mr Allsopp explained that that was because no one was there when he knocked on the door, so he had to content himself with walking around the house and looking in the windows. While this limitation on his inspection was unavoidable, I think it should be reflected in an adjustment. The RTA's second criticism focuses on Mr Allsopp's valuation of the verandah of the house at 3 Bellbird Close, which is on all four sides of the house and is five times the area of the verandah of the house on the subject acquired land. He valued the latter at $10,000 and the former at $20,000. The criticism is that he should have valued the 3 Bellbird Close verandah at much more than $20,000 because it is five times the area of the verandah on the subject land. When this was put to him in cross- examination, Mr Allsopp said he considered it was right to value it at only twice the value of the verandah on the subject land because although purchasers want utilisable outside area, verandahs all the way around a house do not usually attract a significant amount more. While I am prepared to accept that there is some substance in this evidence, it seems to me that there should be some adjustment for the very much larger area of the verandah on the sale land.

In my opinion, 3 Bellbird Close is a good comparative sale for the reasons identified by Mr Allsopp and because the potential seven lot subdivision on the subject land is proposed to be developed in the same attractive way as Glenhaven Estate, through which potential purchasers would pass to inspect the subject land. However, I think that Mr Allsopp's valuation of the improvements should be increased by $30,000 to $290,000 because of the matters raised by the RTA discussed above. That results in an unimproved value of $285,000.

(d) Mr Allsopp said he derived great comfort from the sale prices of lots at the Hannam Vale sale site (discussed at [63] above). The Hannam Vale site went on the market in March 2007 and in the two years thereafter there were three sales of lots at $230,000, $250,000 and $295,000. These lots are in a new small estate (similar to the subject land) but are located 20 kilometres from Kew, the closest town. They are impacted by power line easements and lack town water. Mr Allsopp considered that they needed an adjustment for the significant relative advantages of the subject lots and that $300,000 per lot for the subject land was conservative by comparison. Mr Lunney took an entirely different view of the Hannam Vale sales. He thought that they were far less comparable than the Lake Ridge Estate sales on which he relied; that the Hannam Vale subdivision was very different from both the subject land and the Lake Ridge Estate; and that Hannam Vale and the subject land would appeal to different markets.

78 In determining his gross realisation value of $210,000 per lot for the potential seven lot subdivision on the subject land, Mr Lunney relied on sales at the Lake Ridge Estate. Prior to the acquisition date, sales at the Lake Ridge Estate had been slow and 14 lots were available for sale. Mr Lunney thought this number represented an adequate supply of rural residential land in the locality for a number of years. The lots in Lake Ridge Estate are substantially larger than the potential lots in the seven lot subdivision on the subject land. Mr Lunney gave them adjusted values ranging from $176,000 to $217,500 per lot and the figure that he adopted and applied to the subject land lots was $210,000 per lot. The Lake Ridge Estate sales on which he ultimately relied were as follows:

(a) 93 Possum Way: 3.265 hectares sold for $290,000 in July 2007 as a vacant single rural-residential lot. The rear boundary adjoins the Pacific Highway but the preferred building envelope is a similar distance as the building envelope on some potential lots on the subject land. He thought a discount of 25 per cent to $217,500 was required to make it comparable with the subject land because this sale land was substantially larger than all of the lots on the seven lot subdivision on the subject land and the fact that it was not burdened by an electrical transmission line easement;

(b) Lot 53 Glider Spur: 2.8 hectares sold for $265,000 in October 2007 as a vacant single rural-residential lot. Mr Lunney considered it should be discounted by 20 per cent to $212,000 for the fact that it was substantially larger than all of the lots on the seven lot subdivision on the subject land and the fact that it was not burdened by an electricity transmission easement;

(c) 8 Glider Spur: 2.146 hectares sold for $245,400 in August 2008 as a vacant single rural residential lot. The rear boundary adjoins the Pacific Highway, however the preferred building envelope is a similar distance as the building envelope on some of the potential lots on the subject land. He thought a discount of 20 per cent to $197,000 was required for the facts that it was substantially larger than all the lots on the seven lot subdivision on the subject land and that it was not burdened by an electricity transmission easement;

(d) Lot 48 Possum Way: 1.46 hectares sold for $225,000 in March 2006 as a vacant single rural-residential lot. He thought a discount of 15 per cent to $191,000 was required for the fact that it was substantially larger than the seven lot subdivision on the subject land and the fact that it was not burdened by an electrical transmission line easement. Mr Allsopp regarded this sale with some caution because it was a sale by the selling agent's daughter to a family friend and information he received from the agent indicated that, in consequence, there had been a discount of $10,000;

(e) 76 Possum Way: 2.1 hectares sold for $260,000 in June 2006 as vacant battleaxe shaped rural-residential lot. It includes a substantial amount of cleared and arable land which is considered to be an advantage. He thought discount of 25 per cent to $195,000 was required to reflect its battleaxe shape, size, the superior nature of the sale property (cleared land of gentle contour) and the fact that it was not affected by an electricity transmission line easement;

(f) 23 Lake Ridge Drive, to which Mr Allsopp also had regard as discussed at [77(a)] above.

(g) 78 Possum Way: 1.5 hectares of vacant battleaxe shaped rural-residential land which sold in November 2006 for $220,000. It is substantially larger than all of the potential lots in a seven lot subdivision of the subject land. It includes a substantially amount of cleared and arable land, which he considered an advantage. Mr Lunney considered that a discount of 20 per cent to $176,000 was required in applying this sale to the subject property to reflect its battleaxe shape, size, the superior nature of the sale property (cleared land of gentle contour), and the fact that it is not burdened by an electrical transmission line easement.

79 Mr Allsopp considered that the Lake Ridge Estate sales on which Mr Lunney relied were a poor comparison for the following reasons:

(a) the Lake Ridge Estate was poorly presented land with lots of old timber growth and in a wildlife corridor which would require flora/fauna studies, bushfire and koala reports;

(b) many of the Lake Ridge Estate lots are risk purchases. His enquiries of the marketing agent indicated that the cost to clear and bench sites would exceed $25,000 and that the agent would like his client to clear the site to enable the sale of more lots;

(c) Lake Ridge Estate in the period from February 2007 to May 2008 was blighted by a proposed diesel fired power plant to be located to its north. A real estate agent who owned a block on the estate told him he had halted his plans to build when he heard of the power plant proposal and he had also lost a sale there due to that issue. In oral evidence he indicated that it had the effect of deterring sales in the above mentioned period or at least until early 2008;

(d) Lake Ridge Estate was impacted by a proposed waste transfer station and industrial estate located about mid-way between Lake Ridge Estate and the subject land. In cross-examination Mr Allsopp agreed that the waste transfer station and industrial estate could not be seen from any of the vacant land parcels in the Lake Ridge Estate. Nevertheless, he thought that the proximity was a relevant consideration. He conceded in cross-examination that any adverse effect on the value of the Lake Ridge Estate lots would apply more or less to the subject land. Given that concession and the evidence overall, I do not think that the impact of the proposed waste transfer station and industrial estate is a significant point;

(e) the subject land is superior to Lake Ridge Estate because it is more proximate to the Kew shops and hotel. Mr Allsopp calculated that the distance is one kilometre and a pedestrian trial is available, whereas 23 Lake Ridge Drive is 2.4 kilometres. Mr Lunney disagreed. He said that proximity to the Kew shops and hotel was not a "primary" consideration of purchasers contemplating a rural residential use. Further, he said that the distance from the subject land to the Kew hotel along the pedestrian trail was over one kilometre and that the vehicular distance was virtually identical. They each quoted local managing agents (presumably different ones) of whom they had made enquiries in support of their competing positions as to whether or not proximity to the Kew shops and hotel would add value. In this remarkably contradictory state of the evidence on an aspect, which one would have thought would defy controversy between experts, I have to do the best I can. From my view of the location and as far as I can deduce from a map in evidence, the walking distance from the subject land to the Kew hotel and shop is roughly one kilometre. I am prepared to accept that this makes the subject land significantly more proximate than the Lake Ridge Estate to the Kew hotel and shops, and that this was likely to be appealing to purchasers for whom it would be likely to add value.

80 I generally accept Mr Allsopp's evidence concerning the Lake Ridge Estate subject to my comments in the preceding paragraph. With the exception of the mater of the waste transfer station and industrial estate, I think that they support the conclusion that Mr Allsopp's comparables are of more assistance.

81 Mr Allsopp's comparables except for Hannam Vale were sales of improved land, for which an adjustment for the value of improvements has to be made to make them comparable. Mr Lunney's comparable sales were all sales of unimproved land. All other things being equal, comparable sales of unimproved land have the advantage of avoiding an adjustment for improvement. However, Mr Allsopp considered that there were no better sales of unimproved land than his preferred comparables. It is the daily fare of valuers to value land by subtracting the added value of improvements to derive unimproved values: Maurici v Chief Commissioner of State Revenue [2003] HCA 8, 212 CLR 111 at [19]. The Possum Way and Glider Spur sales lands are generally poorly presented. With the benefit of a view, I think that 23 Lake Ridge Drive and 3 Bellbird Close are the two most comparable sales. As discussed, after adjustments they show an unimproved gross realisable value of, respectively, $280,000 and $285,000 per lot for a seven lot subdivision on the subject land. I propose to adopt $280,000.

82 Mr Allsopp assessed agents fees and legal costs on the sale of each lot at 2.5 per cent and Mr Lunney at 3 per cent. Mr Lunney indicated that the difference was largely referable to the difference in realisation values. As I have largely favoured Mr Allsopp's realisation values, I will adopt 2.5 per cent.

83 Mr Allsopp adopted a profit and risk margin of 20 per cent and Mr Lunney adopted 30 per cent. Mr Lunney considered that Mr Allsopp's margin was inadequate particularly because of the risk that rezoning might not occur and, if it did occur, might not permit a seven lot subdivision. I have earlier concluded that the parties to a hypothetical sale at the acquisition date would have been confident that rezoning and seven lot subdivision approval would be obtained within two years. Nevertheless, they would not have thought it was certain, that is, as good as if the land had already been rezoned by the acquisition date. Taking this into account, I consider that Mr Allsopp's profit and risk margin is too low. I propose to adopt a profit and risk margin of 25 per cent for the subject land.

84 Mr Lunney originally adopted a holding interest costs period of 51 months in a report served before the hearing. However, he produced a further analysis during the hearing which adopted a holding interest costs period of six years ie 72 months: three years for rezoning, one year for development approval and development, and two years for the sales and settlement. No explanation was given for this large expansion of time. Mr Allsopp adopted a three year holding interest costs period: two years for rezoning and development approval and one year for development, sale and settlement. I have earlier indicated that I accept Mr Allsopp's two year period for rezoning; but I think that his one year for development, sale and settlement of all seven lots is too optimistic and that it is more realistic to adopt Mr Lunney's two years. As agreed by the valuers, interest should be charged in relation to only half the latter two year period on the assumption that the lots would be sold progressively over the two year period.

85 Mr Allsopp adopted an interest rate during the holding period of 5 per cent per annum; Mr Lunney adopted 8.5 per cent per annum. The latter was the relevant prevailing interest rate as at the acquisition date. Mr Allsopp's rationale for adopting a lower rate was that, in his experience, a developer would assume some capital gain during the holding period that would partially offset the interest. Mr Lunney pointed to the slow rate of sales at the Lake Ridge Estate, but that goes not so much to the issue of anticipated capital gain but to the realistic holding costs period. Markets fall as well as rise. Nevertheless, as discussed at [59(iv)] above, I am prepared to accept Mr Allsopp's evidence, based on his experience, that at the acquisition date, a hypothetical developer would have anticipated some offsetting capital gain over the four year holding period. I therefore adopt the 5 per cent interest rate.

86 The valuers agreed that land tax during the holding period was one per cent per annum, but Mr Allsopp applied it for only one year whereas Mr Lunney applied it for five years. Mr Allsopp said that the land would be exempt from land tax for the period before subdivision development consent was obtained because it would be used for primary production. Section 10AA of the Land Tax Management Act 1956 exempts land from tax if it is for primary production, meaning, relevantly, that its dominant use is the maintenance of animals for the purpose of selling them or their natural increase or bodily produce. In Mr Allsopp's experience, developers put goats or beef cattle on rural property until they are ready to develop it and thereby obtain the exemption, and he had seen that happen on zoned residential land. Mr Lunney contended that the land was not big enough to attract the exemption. Two factors tend to weigh against bringing this land within the exemption. First, its relatively small size and my visual observation raises doubt whether it would support grazing for long. Secondly, both valuers agree that in the hypothetical subdivision analysis there should be added back the present value of the rental income for the house and shed during the holding period. That use tends to weigh against the suggestion that the dominant use of the land would be for the maintenance of animals. On balance, having regard to these considerations, I consider that land tax should be factored in at one per cent per annum for three years.

87 The valuers agreed that council rates were 0.5 per cent per annum but Mr Allsopp applied them for three years to arrive at a total of 1.5 per cent whereas Mr Lunney applied them for five years. Given my decision as to the holding period, I propose to apply them for three years.

88 My conclusion is that the hypothetical development method yields a value of $705,000 for the parent land before acquisition, calculated as follows:

Gross realisation @ $280,000 per lot for 7 lots (average size 8,997 m2)

Less development costs as per joint report of engineering experts

Less interest on development costs 8.5% x 1 year x 50% x $560,996

$832,534 = 126.5% of the residual land value. Therefore 100% =

Plus present value of rental income from house and shed ($18,200 pa for 3 years 8.5%)

89 The last-mentioned figure of $705,000 compares with the value of $790,000 by the direct sales comparison method. Given the greater element of uncertainty with the hypothetical development method, I propose to adopt $790,000 as the market value of the parent land before acquisition.

90 The market value of the acquired land at acquisition, in my opinion, was therefore $490,000 calculated as follows:

91 The applicant claims loss attributable to disturbance of land under s 55(d) of the Just Terms Act. On the acquired land were the applicant's residence and a large shed used by her partner for a landscaping supply business. The disturbance claim largely comprises the costs of connection of services (water, electricity, telephone and road access) to a new residence to be constructed on the south-eastern part of the residue land away from the Pacific Highway, and to a new shed to be constructed on the north-western part of the residue land close to the Pacific Highway.

92 The applicant submits that the disturbance claim falls within the definition of "loss attributable to disturbance" in s 59(c) or (f), which provide:

loss attributable to disturbance of land means any of the following:

(c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs),

(f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition."

93 The applicant quantifies her total disturbance claim at $426,295, of which the RTA accepts $22,058. In addition to some quantum disputes, the RTA submits that the disputed disturbance claims are not claimable at law because:

(a) they do not come within the definition of "loss attributable to disturbance" in s 59(c) or (f);

(b) if Mr Allsopp's valuation approach is adopted, s 61(b) of the Just Terms Act precludes their recovery;

(c) in any event, they are double-dipping because they are included in the valuers' before and after method of assessing the market value of the land.

94 The market value of land in s 55(a) and any loss attributable to disturbance in s 55(d) are separate components of compensation. The former is assessed in accordance with the hypothetical exercise required by the definition of market value in s 56(1)(a). The latter is assessed by reference to the actual costs and fees specified in s 59, which are qualified by a reasonableness requirement and subject to the limitations on the recovery of loss in s 61. Statements in the context of different legislation that disturbance is not a separate subject of compensation from market value (eg in Commonwealth v Milledge (1952-1953) 90 CLR 156 at 164) are inapplicable to the Just Terms Act: Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of NSW (1998) 101 LGERA 30 at 40 (Bignold J).

95 Set out below is a schedule of each item of claimed disturbance costs, the parties' competing quantum contentions, and my determination of quantum. This schedule is only concerned with quantum and does not address the RTA's contentions that the disputed items are not claimable at law:

Rent of alternative accommodation for 36 months while waiting to rebuild on residue land

Slashing and creation of access to enable consultants advice on relocation of business and placement of storage containers

Installation costs for connection of water, power and telephone (materials plus pole construction)

Contingencies for hard -rock and tree stump removal

Installation costs for water/power including trenching, laying cable and connection

Replacement costs of waste water management system and on-going costs of operation

Development application cost for lodgement of application for relocation of dwelling and business

Development application cost for lodgement of application for building envelope

Consultant advice on relocation of dwelling and business (engineer, waste water management, bushfire hazards)

Extra costs of construction associated with compliance with BASIX and Nathers

96 Where the RTA has agreed or not contested the claimed quantum of an item, after considering the evidence I have concluded that it is reasonable. The quantum disputes require further analysis, as follows.

97 Item 2: Removalists $7,700. The claim is for $3,850 for temporarily relocating to rented premises, and a further amount of $3,850 for relocating from the rented premises to the applicant's proposed new residence on the residue land, when it is built. The RTA agrees to the first item for removalist costs but says that the second should be disallowed. I consider that the quantum of the applicant's claim is reasonable and allow it.

98 Item 4: Telephone connection $118. The applicant claims telephone connection costs of $59 for the temporary premises and a further $59 for the new premises to be built on the residue land. The RTA agrees with the first sum but not the second. I think both are reasonable and should be allowed.

99 Item 9: Installation costs for connection of water, power and telephone, $51,085. This is a claim for materials, except that it also includes the cost of constructing a power pole (material, construction, laying of cables and connections), to bring services from the boundary of the residue land to the house and shed proposed to be constructed thereon. The RTA's competing amount is $37,000 for three phase power or $17,000 for single phase power. The RTA says that its item 9 allowance of $37,000 and item 11 allowance of $15,000 covers everything that the applicant claims in items 9 and 10.

100 This item includes the cost of three phase power to the proposed house and shed. The applicant enjoyed three phase power at her house and shed on the acquired land. The evidence of Mr Paul Parker, a civil engineer called by the RTA, was that for a standard residential allotment, three phase power would not be provided upfront, and that whether it was necessary for the proposed shed depended on what was in the shed. At one point of his oral evidence he appeared to indicate that if only one phase power were allowed this would reduce the claim to $32,800. As the applicant had three phase power on the acquired land, it is reasonable that she should also have three phase power on the retained land. Therefore I do not propose to make any reduction on account of three phase power. If it were necessary to go further, I would add that a letter in evidence from Country Energy indicates that the acquired land and other properties were supplied from a substation fitted with a three phase transformer, and it is unclear whether the residue land could in future be supplied from a substation fitted with a one phase transformer.

101 The RTA also submits that item 9 should be reduced by disallowing the power pole, to support a meter box, proposed to be located near the boundary of the residue land. The basis of the submission is evidence tendered by the RTA indicating that a cheaper alternative is to attach a meter box to the side of either the proposed house or the proposed shed, one meter box being sufficient to read the power for both. The power pole costs, including the laying of cables and connections, total $13,475. Mr Parker accepted cable laying and connection costs should be allowed for a meter box attached to the side of the house or shed, at a cost that he guessed would be around $3,000.00. It is unclear whether there is also a cost for the actual attachment of a meter box to the house or shed. As the RTA raised the alternative method, I think it bore an evidentiary onus of costing it. A guess by the RTA expert is not a satisfactory method of costing. However, it is reasonably clear that the alternative method proposed by the RTA must be cheaper than a power pole. Doing the best I can in this state of the evidence, I propose to disallow the claim for $13,475 for the power pole and to allow instead $7,000 for the alternative. The net effect is to reduce the claimed quantum of item 9 by $6,475 to $44,610.

102 Item 10: Construction costs claimed $94,240.85. Item 10 comprises 7 sub-items as costed in a report by Mr Con Constantine, a construction contractor, on which he was not cross-examined. Competing evidence for the RTA was given by Mr Paul Parker, a civil engineer. The sub-items are as follows:

(a) Trenching $17,330. The RTA allowed $15,000 for this item (see item 11 in the table above). I am unable to see a reason for reducing the applicant's claim, which I allow.

(b) Bushfire trail between the house and shed $24,310. Mr Parker mentioned that he thought this was doubling up but that seems to have been on the mistaken assumption that it was the same as the access road from the boundaries of the residue land to the house and shed (which are claimed in item 12). I allow the claimed amount of this item.

(c) Installation Telstra cable $6,083. The RTA allows approximately half that amount $2,865, which was Mr Parker's estimate. I accept Mr Constantine's estimate.

(d) Spread and level off excess soil $2,200. Mr Parker said he thought this should have been covered by other items in Mr Constantine's quote. There is no indication in Mr Constantine's evidence or quote that he is doubling up. I allow the claimed amount.

(e) Tub grinder and shear hire $30,800. The RTA allows $1,000 based on the evidence of Mr Parker that the tub grinder would only be needed for one day at about $150 per hour given that it related to the creation of a trench approximately one metre wide. Mr Parker conceded that he had made no specific inquiry as to the cost of the machine but was relying on general experience. Mr Constantine's evidence was not disturbed by cross-examination. Nevertheless, Mr Parker's evidence has raised sufficient doubt in my mind that I think a reduction is warranted. I propose to reduce the claimed quantum of this item by about half to $15,000.

(f) Contingencies for land rock and tree stump removal $8,567.35. Mr Parker's criticism was that it is unreasonable for an experienced person to accept a quote from a contractor that has a contingency item rather than being on a schedule of rates basis. The applicant does not appear to be an experienced person. However, it would be reasonable when contracting to introduce a schedule of rates. In closing submissions the applicant accepted that in assessing the reasonableness of a claim for the contingency item, account could be taken of the fact that the contingency may not be realised. On balance, I propose to reduce the quantum of this item by about half to $4,280.

(g) Land clearing $4,950. The RTA and Mr Parker had no issue with the quantum of this item and I allow it.

103 Item 12: Creation of an access road to the house and an access road to the shed on the residue land by Ditchfield Contracting $102,073.40. A quote from Ditchfield Contracting in this amount is in evidence. There is a requirement for safe access from the public road system to the proposed house and shed for the rural fire service providing property protection during a bushfire and for occupants faced with evacuation. The RTA allows $74,855 based on the evidence of Mr Parker. The difference represents the cost of a creek crossing. Although there is a creek in wet weather periods, Mr Parker considered that the amount claimed was unjustified. He allowed for a cheaper form of creek crossing appropriate to the conditions. I accept Mr Parker's evidence and reduce the quantum of this item to $74,855.

104 Item 22: Valuation fees of $33,906.40 are claimed by the applicant under s 59(b) of which the RTA accepts $10,000. These were Mr Allsopp's valuation fees. The RTA submits that they are unreasonably high. It contrasts his valuation fees charged to the Bunyah Local Aboriginal Land Council in July 2007 for valuing their adjoining land in the sum of $4,592.50. In cross-examination Mr Allsopp denied a suggestion that the Aboriginal valuation case was no more or less difficult than this one, which he described as extremely difficult and as one of the most complex matters he has ever had to do having regard to the disturbance issues, the landscape business and the potentiality of two applicants. The potential second applicant was the applicant's partner but, eventually, after consultation with lawyers, it was decided that he would not make a claim. I give weight to Mr Allsopp's assessment of the complexity and difficulty of his valuation of the subject land. However, I think there should be a deduction for the element of his fees referable to a potential claimant who did not make a claim. That element has not been specifically quantified in the evidence but, doing the best I can, I propose to reduce this item to $25,000.

105 The RTA submits that, contrary to the applicant's contention, the disputed disturbance items do not fall within s 59(c) or (f) of the Just Terms Act.

106 The disputed disturbance items all flow from the necessity for the applicant to relocate from the acquired land as a result of the acquisition.

107 The word "relocation" in s 59(c) has a wide meaning. This is indicated by Minister for Army v Parbury Henty & Co [1945] HCA 52; (1945) 70 CLR 459 at 507 (notwithstanding that the case was decided under different resumption legislation) per Dixon J who held that disturbance costs include costs that a claimant:

"reasonably incurs in removing his furniture and goods including tenants' fixtures and the expenses in setting up in new premises for the purposes of carrying on his business. Nor is it denied that the expenses may include the net cost of installing fixtures, both those removed and, where reasonably necessary, newly acquired fittings. The residual value which would remain to him must of course be taken into account".

Williams J said (at 514) that the claimants were entitled to compensation:

"not only for the value of the proprietary interests so acquired, but also for what can be compendiously called expenses of removal into premises at least as commodious and congenial taking a broad view of the matter, as those of which they were dispossessed".

108 The width of the meaning of "relocation" in s 59(c) is also indicated by the decision in Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of NSW (1998) 101 LGERA 30. Bignold J allowed as s 59(c) relocation costs, the costs of a dispossessed tenant in relocating and re-establishing a business on another site. They included the cost of obtaining development consent, the cost of site preparation including drainage, kerb and guttering, and removal of pergolas; the cost of additional advertising to promote the new location; the cost of reprinting business stationery; the cost of management time involved with re-establishing contacts; and the cost of electricity connection.

109 Similarly, in Home Care Services (NSW) v Albury City Council [2003] NSWLEC 214, 136 LGERA 117 at [18] Bignold J held that "the amount of compensation recoverable pursuant to s 59(c) in the present case includes all of the relocation costs incurred by the Claimant in re-establishing its business premises in the Swift Street premises". The relocation costs that his Honour allowed included fit-out costs.

110 Section 59(f) is a catch-all provision and the words "any financial costs" should not be read down: Fitzpatrick Investments Pty Ltd v Blacktown City Council (No 2) [2000] NSWLEC 139, 108 LGERA 417 at [20] per Lloyd J. There are three requirements for financial costs to fall within s 59(f). First, they must be reasonably incurred or might reasonably be incurred. Secondly, they must relate to the actual use, as distinct from the potential use, of the "land", which means the acquired land and not residue land: MIR Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales [2006] NSWCA 314 at [88]; Roads and Traffic Authority of New South Wales v Peak [2007] NSWCA 66 at [56], [59], [66], [67]. However, if the actual use of the residue land is so intimately connected with the actual use of the acquired land so that use of the one is dependant on use of the other, that is sufficient to bring the actual use of residue land within s 59(f): Peak at [71]; McBaron v Roads and Traffic Authority of New South Wales (1995) 87 LGERA 238 (Talbot J), approved in Peak at [71]. Thirdly, they must arise as a "direct and natural consequence of the acquisition". Those words direct attention to the nature or degree of the required causal relationship: Almona Pty Ltd v Roads and Traffic Authority (NSW) [2008] NSWLEC 112, 160 LGERA 375 at [60] (Jagot J). It is not necessarily the same as the applicant's wishes in relation to the building of a new residence: Peak at [74].

111 The width of s 59(f) is indicated by Peak. That case was concerned with costs associated with the relocation of a residence from one position to another on residue land. There was a claim for disturbance under s 59(f) for costs to be incurred on residue land for a bridge over a gully, compliance with a development application, disconnection of electricity to the old house and connection of electricity to the new house, septic at the new site plus connection, removal and relocation of a gazebo, relocation of fences, and furniture removal to the new house: at [51]. Focusing on the terms of s 59(f), on appeal Beazley and Tobias JJA held that these costs were recoverable if the use of the residence was an intimate part of the use of the acquired land, and remitted the matter to the trial judge to determine whether it was: at [80] - [91].

112 _I_n Parbury Henty, Peter Croke and Peak costs of the same or similar character as the bulk of the disturbance costs in the present case were held to be recoverable (subject, in Peak, to the further finding the subject of the remitter).

113 The RTA submits that s 59(c) is limited to relocation costs already incurred before trial, whereas some of the alleged relocation costs claimed in the present case are yet to be incurred. The submission is based on the fact that s 59(c) - like s 59(a) and (b) - refers to financial costs "incurred", in contrast to s 59(d), (e) and (f) which refer to costs "incurred" or that "might" be incurred. The RTA argues that under s 59(d), (e) and (f) future costs of the type described therein are recoverable because of their additional words "or that might reasonably be incurred", and that the absence of those words in s 59(c) means that future relocation costs are not recoverable. In effect, the RTA's submission is that the reference in all subsections of s 59 to costs or fees "reasonably incurred" should be construed as costs or fees that "have been reasonably incurred" (that is, in the past), and that the additional reference to costs "that might reasonably be incurred" in s 59(d), (e) and (f) should be construed as costs "that might or will be reasonably incurred" (that is, in the future).

114 That is a possible construction, in my view, except that it is difficult to construe the word "might" as including future costs where it is certain that they will be incurred. Another possible construction, in my view, is that the reference to costs and fees "reasonably incurred" means whenever incurred (that is, in the past or in the future) as determined on the balance of probabilities, and that the reference to costs "that might reasonably be incurred" means future costs where the chance of them being incurred is less than on the balance of probabilities.

115 It may be of some assistance to consider the construction issue against the background of the approach of civil courts to the determination of past damages, on the one hand, and future damages, on the other. The courts determine that past damages have been incurred on the balance of probabilities, that is, if there is a 51 per cent chance that they have been incurred. If they are proved to a lesser standard, the applicant recovers nothing. It is an all or nothing assessment. In contrast, because the future is often not predictable, where future damages are not certain the courts determine them according to the degree of chance that they will be suffered, ranging from 1 per cent to 99 per cent, and will adjust the quantum of damages to reflect that chance. See Malec v JC Hutton Pty Ltd [1990] HCA 20, 169 CLR 638 at 642 - 643. Similarly, the words "might reasonably be incurred" in s 59(d), (e) and (f) may be construed as acknowledging a degree of chance which is less than certain that the costs to which they are referred will be incurred. That may provide some support for the RTA's submission except that it does not seem to accommodate future costs where the court is certain that they will be incurred.

116 However, everything depends upon the subject matter and the context. There are strong contrary contextual and purposive considerations which, in my opinion, carry the day. First, within 30 days after publication of an acquisition notice the acquiring authority must give the former owner written notice of the compensation offered as determined by the Valuer-General: s 42(1). At that early stage, s 59(a), (b) and (c) costs are unlikely to have been incurred. If the RTA's construction is correct, future s 59(a), (b) and (c) costs could not be included in the Valuer-General's determination or in the statutory offer. The statutory machinery would become unworkable in that respect. Secondly, if the RTA's construction is correct and the matter proceeds to trial, an acquiring authority would obtain a windfall in avoiding liability for costs under s 59(a), (b) and (c) by the chance circumstance that the trial occurs before the costs are incurred. The Court is entitled to pay the legislature the not excessive compliment of assuming that it did not intend that unjust consequence when its stated objective was to ensure compensation on just terms: s 3(1)(b).

117 The preferable and purposive construction, in my opinion, is that costs "incurred" in s 59(a), (b) and (c) means whenever incurred as determined on the balance of probabilities, and that the expanded "might...be incurred" in other subsections means costs where it is less than probable that they will be incurred. That construction is consistent with the decision to allow likely future removalist costs under s 59(c) in Horton v Wyong Shire Council (No 2) [2005] NSWLEC 45 (Talbot J). If that is not the correct construction, then, in order to arrive at just compensation, the final determination of compensation might have to be postponed and the completion of the trial adjourned until s 59(a), (b) or (c) costs were actually incurred. The inconvenience of such a course tends to reinforce the construction that I have proposed. The quantum of compensation where the conclusion is that costs "might" be incurred may reflect the degree of chance.

118 I am satisfied that the disputed costs, to the extent that they have not already been incurred, will be incurred by the applicant.

119 In my opinion, to the extent that they were reasonably incurred, the disputed disturbance costs fall within s 59(c) as financial costs in connection with the relocation of the applicant, or fall within s 59(f) as financial costs reasonably incurred, or that might reasonably be incurred, relating to the actual use of the acquired land, as a direct and natural consequence of the acquisition. The parent land was the applicant's home. It is a direct and natural consequence of the acquisition that she would continue to live in her large backyard, that is, on the residue land, and relocate her house and shed there. Prior to acquisition the use of the residence and shed were an intimate part of the actual use of the acquired land and the residue land, and the actual use of the residue land was so intimately connected with the actual use of the acquired land that the use of each was dependent on use of the other. Consequently, the disputed costs, insofar as they relate to expenditure on the residue land, relate to the actual use of the acquired land within the meaning of s 59(f).

120 The conclusion I have reached as to the application of s 59(c) or (f) is subject to one exception, namely, that the rental claim for $62,571.60 for the period after the applicant vacated the acquired land does not fall within either and is not recoverable. Section s 34(3) of the Just Terms Act authorises a resuming authority to charge a dispossessed person rental while they remain in occupation of the acquired land after occupation. In my opinion, this indicates a legislative intention that post-acquisition rental is not compensable. A s 59(c) claim for rent pending acquisition of an alternative property was disallowed in Horton at [19] on the different basis that it is was unreasonable to allow it for the following reasons, which would equally apply in the present case:

"Whilever Mr and Mrs Horton reside in the rented premises they do not incur the inherent costs and overheads, such as rates and maintenance, associated with ownership of property. Furthermore, interest may be earned on the balance of the advance payment they have available for investment from time to time and statutory interest will be received on the compensation still outstanding, pending final determination of the claim. Arguably they could be saving on a commitment to interest on future borrowings. Interest has been saved on the mortgage debt repaid out of the advance payment. On balance in the circumstances it is not reasonable that they receive a separate payment of compensation to reimburse the rent payments made pending acquisition of an alternative property."

121 Section 61(b) of the Just Terms Act provides:

"61 Special provision relating to market value assessed on potential of land

If the market value of land is assessed on the basis that the land had potential to be used for a purpose other than that for which it is currently used, compensation is not payable in respect of:

(b) any financial loss that would necessarily have been incurred in realising that potential."

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Judgment (272 paragraphs)

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Cases Cited (54)