Mosca v Roads and Traffic Authority of NSW [2006] NSWCA 159 | Case summary

JUDGMENT HIS HONOUR: A. INTRODUCTION 1 This is an objection pursuant to the Land Acquisition (Just Terms Compensation) Act 1991, s 66(1) against the amount of compensation in the sum of $911,170 offered by the Respondent in respect of its compulsory acquisition of a portion of the Applicant's land situate at Skipton Lane, Prestons which occurred on 4 October 2002. That was the date of the publication in Government Gazette No 163 of a Notice of Compulsory Acquisition in respect of that land, (together with several other parcels of land variously situate at Prestons, Hoxton Park and Hinchinbrook), which lands were collectively acquired for the "purposes of the Roads Act 1993". 2 As so often occurs in cases of disputed compensation claims under the Just Terms Act, the Applicant's claim for an amount considerably greater than the amount offered by the Respondent was countered at the hearing by the Respondent contending for an amount of compensation far less than the amount originally offered in the statutory Compensation Notice. 3 It is common ground that the particular purpose under the Roads Act for which the described lands were acquired was for the purposes of the Western Sydney Orbital (WSO) being a major road forming a connecting adjunct to the National Highway by linking it between the M5 Motorway situate at Prestons in the south and the M2 Motorway situate at Baulkham Hills in the north. (More recently, this section of road has been nominated as the M7 Westlink.) 4 The land compulsorily acquired from the Applicant is shown as lot 5 in Deposited Plan 1045043 (prepared on behalf of the Respondent and registered on 19 September 2002) comprising an area of 4,954 m2 which bisected the Applicant's land (formerly known as lot 3 in Deposited Plan 21220 comprising an area of 2.0234 hectares), producing an area of some 1.02 hectares to the west of the compulsorily acquired land and an area of 5,081 m2 to the east of it. A copy of Deposited Plan 1045043 is annexed hereto and marked "A". 5 Both the severed portions of the Applicant's land have a frontage of 50 m width to a public road - Skipton Lane on the east and Ash Road on the west in each of which are located water, sewerage, electricity and telephone services which would be available by extension to the residential development of the Applicant's land. Before this severance occurred, the Applicant's land comprised a single rectangular shaped lot with dimensions of 50 m x 400 m. 6 The Applicant purchased the subject land in 1968 and has since continuously lived on the property in his family home erected near to the Skipton Lane frontage and worked the property as a small dairy farm. When the Respondent compulsorily acquired part of his property, he ceased to operate his dairy farm and sold most of his livestock. He proposes to purchase a replacement property at Kemps Creek. 7 At the date of compulsory acquisition, the subject land, in common with the neighbouring properties situate between Kurrajong Road in the north and Camden Valley Way in the south was zoned for urban development under the Liverpool Local Environmental Plan 1997 (the LEP) being part of the Prestons Residential Release Precinct. However, although so zoned since 1992 as part of the Hoxton Park Stage 2 Urban Release Area, the relevant land (including the Applicant's land) had not undergone any residential urban development, unlike the position of similarly zoned lands that were included in the Prestons Residential Release Precinct flanking Skipton Lane to the east of the subject land and Ash Road to the west of the subject land, which lands were at the date of compulsory acquisition substantially developed by residential subdivision and housing development (which process is continuing). 8 I think that it was common ground that at least one of the reasons for this state of affairs was the public awareness since 1993 of the WSO proposal which was first publicly announced in 1993 more as a concept than a precise road route. Following extensive investigations involving detailed consideration of various options for the route of the WSO, the preferred route which became the subject of the Environmental Impact Statement (the EIS) prepared and published in 2000 for what was described as the southern section of that road involving a distance of 12 km between Prestons and Cecil Hills, and was eventually approved by the Minister for Planning on 28 February 2002 pursuant to the provisions of Part 5 of the Environmental Planning and Assessment Act 1979. 9 As will appear later in these reasons, I am of the firm opinion that the key to determining fair and just compensation in the present case is the proper appreciation of the effect on the value of the compulsorily acquired land (as one of several affected properties) of the history of the WSO, including its implementation which was commenced soon after the date of compulsory acquisition (and is continuing). In my opinion, this key matter, though explored in the evidence adduced in the present case, was not nearly adequately recognised in much of the expert evidence relevant to the determination of the just compensation (both in terms of the market value of the land taken and the injurious affectation of the retained lands of the Applicant). 10 Nowhere, in my opinion, is this inadequate appreciation of the effect of the WSO on land value more graphically demonstrated than in the valuation evidence of Mr Lunney who determined on behalf of the Valuer-General under the Just Terms Act the compensation in the sum of $911,170 (Exhibit 43) which was offered to the Applicant but rejected by him. He gave valuation evidence on behalf of the Respondent, initially estimating market value and injurious affection in the total amount of $395,000 based upon his before and after valuation exercise (Exhibit F) but finally (as part of the joint report of the valuer witnesses, Mr Lunney and Mr Paris) estimating compensation at the lowest end of his valuation spectrum in the sum of $232,284 based on a partial piecemeal or summation valuation basis which for the sake of simplicity was confined to the Applicant's retained land fronting Skipton Lane (Exhibit 40) on the agreed basis that residential development in the western sector of the Applicant's land was virtually the same in terms of residential intensity in the before and after valuation exercise. 11 The lowest estimate of compensation assigned a market value to the compulsorily acquired land of $188,340 on the basis of the net loss of four residential lots yielded by a before and after valuation exercise. Yet when that valuation result is checked by the simple analysis of deducing a rate per square metre, the result shows $38 per square metre for the area acquired ie 4,954 m2 in circumstances where Mr Lunney's evaluation of the various relevant comparable sales of en globo lands (either relevantly zoned residential or future residential) led him to apply a rate of $140 per square metre in his before valuation exercise. This anomalous outcome immediately strongly suggests some valuation deviation or error. 12 To a significant degree, Mr Lunney's obviously low estimated value of residentially zoned land derives from his opinion that the land "had inherent development constraints" (which he enumerates at p 22 of his valuation report Exhibit F) before opining at p 23: Given these constraints and significantly increased development costs a residential development may not be commercially viable. 13 In fairness to Mr Lunney, it is clear that in so opining he relied substantially upon other experts retained by the Respondent for his understanding of the true nature of the development constraints that he had identified (namely flood liability, need for fill, need for a riparian corridor and floodway corridor). In my judgment, both they and he in this respect, failed to have full and proper and real regard to the effect of the WSO on the value of the affected lands. Indeed, their opinions were essentially based upon the actual facts pertaining to the Applicant's land existing at the date of compulsory acquisition without any real or effective attempt to appreciate how those facts, insofar as they bore upon the question of the value of the compulsorily acquired land, had been affected by the WSO proposal that had been first publicly announced some nine years before the date of compulsory acquisition and throughout that continuous period had been progressed including the public exhibition in 2000 of the EIS and the Minister's approval of the proposal in February 2002. 14 Moreover, the impact of the WSO continued post the date of compulsory acquisition in the implementation phase including the physical construction of the roadway which is still in progress and is scheduled to be completed in 2007. 15 When it is appreciated, as I shall presently demonstrate, that the WSO has since the emergence in 1994 of possible routes, directly and profoundly affected much of the land at Prestons generally situate between Kurrajong Road and Camden Valley Way and Skipton Lane and Ash Road, to the extent that it alone, of the Prestons Residential Release Precinct (which according to the Council's s 94 Contributions Plan made in 1992 (Exhibit 19) had the capacity to yield 4,500 residential lots) has throughout the period of the history of WSO (which has virtually coincided with the history of the development and implementation of the Prestons Urban Release Area except for that discrete portion affected by the WSO), it will become abundantly clear that the parties' concentration on the single issue of the effect of the WSO on the provision of trunk drainage for Maxwell's Creek has been unintentionally myopic and has failed to appreciate the far wider and profounder adverse or negative ramifications and impacts of the WSO on the values of the affected lands (including the Applicant's compulsorily acquired land and retained land). 16 Those wider ramifications are that the affected section of the Prestons Residential Release Precinct has had its development prospects and potential seriously blighted by the WSO throughout its history which has coincided with the history of the residential development that has occurred in the unaffected Prestons Release Precinct. 17 The consequences of that blight is that the residential prospects and potential of the affected section of the Prestons Release Precinct have in effect been frozen throughout the history of the WSO in stark contrast with the dynamic and rapid development of the unaffected Prestons Release Precinct throughout the same period. 18 The most obvious and serious consequence of that sustained blight is that the affected section of the Prestons Release Precinct has suffered throughout that period the lost opportunities and advantages which it would otherwise have shared with the unaffected lands in the Prestons Residential Release Precinct, which opportunities and advantages have been substantially exploited by the conventional processes of implementing the urban release of former greenfield lands which have been operative and manifested themselves in Metropolitan Sydney throughout the past 30 years, in the emergence of new planned residential suburbs and communities. 19 It is because of the breadth of the nature and extent of those adverse ramifications that I have concluded that the parties' sustained focus at the hearing on the single issue of trunk drainage works in Maxwell's Creek was essentially myopic. This is not to ignore the commonly accepted fact that much of the Applicant's land was flood liable to varying degrees. 20 But it is to be noted that that characteristic of the Applicant's land was by no means unusual in respect of the lands situate in the City of Liverpool which have been included in the Government's Urban Release Programme. 21 But even more importantly, the manner in which the parties' respective experts have dealt with the issue of the flood liability of the Applicant's land from the point of view of the position at the date of compulsory acquisition, including the nature and extent of the physical works required to provide flood proofing or protected lands for residential development has failed to have regard to the real impacts of the WSO which were experienced well before Mr Bewsher was commissioned in 1999 to undertake on behalf of the Council engineering design works for improving the trunk drainage functioning of Maxwells Creek. In any event, that commission involved consideration of the then current WSO alternative proposals and it appears that the commission was terminated before completion, soon after the preferred route for WSO was selected. 22 Ultimately, I have found most of the expert evidence adduced at the hearing to be unhelpful because perhaps unwittingly it has failed to give real effect to the blight created by the WSO on the realisation of the development prospects and potential of the affected section of the Prestons Residential Release Precinct, with the consequent decrease in values of those lands. 23 The imperative that there be a real appreciation of the blight caused by the WSO is founded on the fundamental feature of the measure of compensation prescribed by the Just Terms Act, in that the market value of the land compulsorily acquired must be determined by disregarding all increases or decreases caused by the carrying out, or proposal to carry out, the public purpose for which the land was acquired (s56(1)(a)) and that the owner of retained lands be compensated for any decrease in the value of those lands "by reason of the carrying out, or the proposal to carry out, the public purpose for which the land was acquired" (s 55(f)). 24 In a case such as the present where the blight has predated for a significant period of time, the compulsory acquisition and the effect of the blight was to freeze throughout the period of the blight the realisation of the development potential of the lands that has been recognised and created by the zoning delineated by the LEP effectuating the planned Residential Release, as part of the Government's planned Urban Release Programme, it is obvious that as a matter of principle any attempt to value the compulsorily acquired land including any attempt to evaluate its capability to generate residential development, which simply takes the land in its existing condition at the date of compulsory acquisition (without any attempt to appreciate the blight created by the WSO throughout its preceding nine year history) entirely fails to satisfy the statutory measure of compensation that is provided by the concept of "market value" as prescribed by the Just Terms Act. 25 Yet I am in no doubt that this essentially is the approach adopted (probably unwitting by the Respondent's experts in the present case, notwithstanding verbal formulations and affirmations that superficially suggest compliance with the statutory imperative to determine the market value of the acquired land unaffected by the relevant public purpose for which the land was acquired. 26 To illustrate what I have just said, it is instructive to consider the contents of Mr Lunney's Valuation Report (Exhibit F). 27 Under the heading "3.7 Location" Mr Lunney states that the Applicant's land is "within Sydney's developing south western suburb of Prestons" and that "(t)he property is currently in an en globo and unimproved state and that it is understood that development has been delayed for this precinct as a result of the finalising of the Western Sydney Orbital route" 28 Under the heading "3.9 Topography" the following passage is included: A development control plan and indicative road layout has been prepared for the locality and the residential re-zoning for the area was made on the basis that the land was capable of landfill and residential development. The detention basin strategy was put on hold when plans for the WSO project emerged. Liverpool Council advise that these original strategies will require revision following acquisition of the WSO land and construction of the road. 29 Under the heading "6.0 Valuation Rationale" in detailing his employment of the "before and after" valuation method it is said that the "before" valuation (was) "of the entire property as it was immediately prior to the compulsory acquisition disregarding any increase of decrease in its value due to the execution of proposed execution of the WSO". 30 These passages indicate a proper understanding of the required task to determine the market value of the acquired land by disregarding any decrease in the value caused by the WSO. 31 However, those indications are nullified by contradictory indications. 32 For example, almost immediately following the recited passage under the heading "Topography" the following passage appears: Council's original detention based strategy required the formalising and dredging of Maxwell's Creek. Provisions of the Rivers and Foreshores Improvement Act 1948 may prohibit this work and consequently limit flood mitigation measures available. We have been provided with a hydraulic engineering report prepared by Lyall & Associates, Consulting Water Engineers, who have been engaged by the RTA in respect of the existing flood affectation and inherent constraint to development. (This report has been filed as evidence in this matter.) This report indicates that if Council were to allow filling of land below the 5% AEP contour (ie within the 1% floodway) compensatory flood mitigation measures would be required would include: 33 What emerges from a consideration of the two recited passages is that although initially there is the acknowledgment that the WSO caused the Council to put on hold its detention basin strategy, not only is there no attempt to appreciate the impact on the value of the Applicant's land of this state of affairs but the ultimate position adopted is that there is now doubt that the Council's original detention basin strategy would be an available option in view of the now current operation of the Rivers and Foreshores Improvement Act 1948 and that the approach to be adopted to the issue of the treatment of the flood liability of the Applicant's land is that detailed in the engineering advice obtained by the Respondent from Mr Lyall. 34 This analysis of this aspect of Mr Lunney's valuation Report demonstrates that despite formulaic orthodoxy, there has been a failure (probably unwittingly) to appreciate the real effect on the value of the Applicant's land of the blight caused by the WSO. At most, it indicates a recognition that the realisation of the development potential of the Applicant's land has been delayed without any analysis of the consequences of that significant delay in terms of lost opportunities etc to legitimately exploit that potential in the manner that the unaffected lands in the Prestons Residential Release Precinct were exploited (by being residentially subdivided and developed) coinciding with the course of the history of the WSO. 35 The same type of criticism may legitimately be made in respect of the other expert opinions concerning issues of planning, drainage and flood liable land, that were adduced in the Respondent's case and upon which Mr Lunney's valuation relied, since these opinions likewise failed to have regard to the effects on the issues which were the subject of their opinions, of the sustained blight created by the WSO. Again, I infer that this lack of time appreciation of the true effects of the blight created by the WSO was unwitting. Incidentally, no criticism of the credit of the Respondent's experts is intended by my conclusion that they have failed to appreciate the true effects of the blight created by the WSO. I suspect that the failure to consider the effects on value of the lost opportunities for the earlier realisation of the residential development potential of the Applicant's land was profoundly influenced by the constant fact that, at all material times the Applicant's land was flood liable land, which condition required obvious remediation or amelioration so that the residential potential could be realised. But what was apparently not appreciated by the Respondent's experts was that this fact itself was the subject of a lost opportunity for an earlier solution to be provided in the earlier realisation of the residential potential. B. THE COMPULSORILY ACQUIRED LAND - ITS PHYSICAL CONTEXT AND ITS PLANNING AND DEVELOPMENT HISTORY 36 At the date of compulsory acquisition, the Applicant's land was subject to three different zonings under the LEP, namely (i) the majority, comprising 17,266 m2 of the total area was zoned Residential 2(a) and this was the zoning of the compulsorily acquired land; (ii) a small area comprising 2,372 m2 mid-section the lot was zoned Special Uses 5(a) (Drainage); and (iii) a smaller area comprising 596 m2 adjoining the 5(a) zoning on its western side was zoned Recreation 6(a) (Public) - also being identified as "Environmentally Significant Land" (vide cl 16 of the LEP). A copy of an extract of the Zoning Map is annexed hereto and marked "B" 37 By comparing the two annexed plans (Annexures A and B), it can be appreciated that the compulsorily acquired land immediately adjoins the eastern boundary of the section of the Applicant's land zoned Special Uses 5(a) (Drainage) in the configuration of a band having a variable width between 95and 101 metres bisecting the Applicant's land. 38 A graphic representation of the section of the proposed WSO situate between Kurrajong Road and Camden Valley Way (connecting with the South-Western Freeway) is shown by the superimposition of its outline on an aerial photograph dated to October 2003, which is included as an attachment to the Valuation Report of Mr Paris (Exhibit 8) and a copy of it is annexed hereto and marked "C". 39 It is to be noted that the section of the Prestons Residential Release Precinct bounded by Kurrajong Road, Skipton Lane, Camden Valley and Ash Road comprises an area of approximately 56 hectares of which some 15 hectares is zoned under the LEP 6(a) "Open Space" and some 4.5 hectares is zoned under the LEP 5(a) Special Uses-Drainage with the majority (some 35 hectares) of that total area being zoned under the LEP 2(a) "Residential" This is the only section (together with a smaller section on either side of the existing M5 Motorway) of the Prestons Residential Release Precinct that has been affected by the WSO throughout its history as is shown in Figure 10.1 of the EIS which shows the initial alternative routes that were developed by the 1994 Route Investigation Study. 40 The direct physical impact of the WSO on the relevant section of the Prestons Residential Release Precinct is demonstrated by `Figure 9.4a of the EIS which depicts the Land Acquisition Corridor for the WSO south of Kurrajong Road to the intersection of the WSO with the existing M5 Motorway. (A copy of that figure is annexed and marked "D".) 41 When that figure is read in conjunction with Table 9.3 to the EIS it shows that of a combined area of some 58 hectares (comprising some 39 separate properties) some 33 hectares would need to be acquired by the Respondent for the purposes of the WSO. 42 To complete the necessary understanding of the physical contextualisation of this affected section of the Prestons Residential Release Precinct, it is to be noted that the total area of that Precinct is some 500 hectares (being the area bounded by Kurrajong Road, Box Road, Camden Valley Way and Cabramatta Creek) and that at the date of compulsory acquisition, the majority of the Preston's Residential Release Precinct situate both to the east and west of the affected section had been residentially subdivided and/or developed. 43 This stark contrast between the undeveloped condition of the affected section, and the developed condition of the unaffected sections, of the Prestons Residential Release Precinct is demonstrated by Exhibit 36 being an aerial photograph showing the majority of the Prestons Residential Release Area upon which has been superimposed by an overlay reflecting the relevant zonings created by the LEP. (A similar result demonstrating the contrasting undeveloped and developed conditions of the relevant sections of the Prestons Residential Release Precinct is depicted in the 39th edition (2003) of the UBD Street Directory for Sydney on Maps 267, 268, 287 to 288). 44 The relevant planning history of the Prestons Residential Release Precinct is summarised in the following extract from the Liverpool Council's s 94 Contributions Plan No 6 (Exhibit 19) which came into force in December 1992 applying to the Release Areas of Cabramatta Creek, Carnes Hill and Prestons (being respectively known as Precincts 1, 4 and 5 of the Hoxton Park Stage 2 Release Area): In April, 1989 Council adopted a Structure Plan for the Hoxton Park Stage 2 Release Area. The area is included in the Department of Planning Urban Development Program for the Sydney Region. This Plan divided the release area into six (6) precincts. These precincts were primarily delineated on the basis of staged availability of utility services. Major roads, creeks and the Noise Exposure Forecast around Hoxton Park Aerodrome also formed boundaries to the Precincts. By early 1991 Council had resolved to release Precincts 1, 4 and 5. Plans for the three areas were prepared concurrently. Liverpool Local Environmental Plan Nos. 236 (Precinct 1) and 238 (Precinct 5) were gazetted on 15 May 1992. Liverpool Local Environmental Plan NO. 237 (Precinct 4) was gazetted on 10 July 1992. A draft development control plan for Precinct 1 was approved by Council in November 1992. A draft local environmental plan for this precinct has also been approved by Council which proposes minor amendments to the previous plan based on more detailed investigations in the preparation of the development control plans. Draft development control plans are being prepared for Precincts 4 and 5. Draft local environmental plans are also being prepared for Precincts 4 and 5 which will propose minor amendments to the current plans. It is anticipated that the development control plans will be in force in early 1993. The total residential potential is 10,700 lots, excluding flood liable land which, subject to filling and/or appropriate drainage works, might also be developed for residential. The rezoning of all these precincts has to some extent preceded the availability of water and sewerage facilities. Water and sewerage facilities are currently being made available in parts of Precinct 1, around Hoxton Park Village. It is expected that water and sewerage facilities will be extended to part of Precinct 4 in conjunction with development by the Department of Housing (funded by Department of Housing). This will include construction of a sewer carrier along Cowpasture Creek. Land development will probably commence around Hoxton Park Village and around Whitford and Hinchinbrook. Development will probably also take place on land owned by the Department of Housing in Precinct 4 and on land in the vicinity of the sewer carrier along Cowpasture Creek. The commencement of development elsewhere in Precincts 1, 4 and 5, will depend on the timing of the provision of water and sewerage by the Water Board or on the ability of potential developers to fund temporary infrastructure. The residential zone is quite flexible and permits a range of residential forms and non residential land uses. This release area will ultimately comprise a comprehensively planned residential community, providing recreational, commercial and community facilities which are appropriate to the anticipated population. Therefore public amenities and public services (facilities) have been planned according to the needs of the anticipated population. 45 On 10 December 1995, the Liverpool Council adopted Development Control Plan No 31 - Subdivision of land in Hoxton Park, Carnes Hill and Prestons Residential Release Areas which came into force on 11 March 1996 (DCP 31). It included Map 3 (Exhibit 7) which provided detailed planning of the layout of all proposed subdivisional roads throughout the Release Area and the locations of open space and the locations of drainage infrastructure. 46 Map 3 of DCP 31 contains the following endorsement: Note: The area east of Bernera Road may be subject to replanning due to the proposed Western Sydney Orbital Road 47 This note is an important recognition that although all lands within the Prestons Residential Release Precinct had been included in the detailed planning provided by DCP31, the area situate to the east of Bernera Road (which includes the section between Ash Road and Skipton Lane) may require revised detailed planning in view of the WSO proposal. 48 This is the first, and surprisingly, the last time that any of the relevant planning instruments recognise the existence of WSO and demonstrates the sustained period of uncertainty up to the Minister's approval of the WSO in February 2002 for the identified section of the Prestons Release Precinct affected or potentially affected by WSO. 49 The Council's s 94 Contributions Plan No 6 contains provision in Section 7 for contributions towards major trunk drainage and local trunk drainage. The need for, and the nature of, the required drainage contributions are stated in the following passages at p 53: The development of new release areas generally leads to a significant change in the stormwater runoff characteristics of drainage catchments. This change partially results from an increase in the ratio of runoff volumes to rainfall volumes due to a reduction in previous areas to absorb rainfall into the ground. It also influenced by the reduction in catchment response times, where the impact of piping and channelising more efficiently conveys concentrated runoff to the catchment outlets. It may also be influenced by a reduction in flood plain storage of runoff volumes due to developments that incorporate landfill. All these factors mean that the development of new areas may cause or exacerbate flooding problems in areas remote from the development areas themselves. Council has identified a strategic trunk drainage scheme to offset the impacts of the development. This scheme, known as Option A3 in the Trunk Drainage Study carried out on Council's behalf by Kinhill Engineers, involves a system of wet and dry detention basins. The scheme relies on the principle of controlling differential catchment response rates to optimise the required basin storage capacities. This is a cost effective solution and in practice means that some tributary creeks are retarded with extra basin storage compared to other tributary creeks. This is reflected in the placement of more basins on Hinchinbrook Creek. The scheme is an effective, integrated strategy to offset the impacts of development on stormwater runoff both on the major creek tributaries within the release areas and downstream of the release areas. Consequently, the entire release area contributes as a collective whole to the implementation of the Option A3. The drainage systems identified for Section 94 purposes in Council's Stage Two Release Areas falls into two basic categories: * The Major Trunk Drainage System of detention basins and water quality ponds system as identified in the selected Option A3 in the Kinhill's Report. * Various local catchment pipe and channel systems as identified in the local catchment schedules by Council. Contributions are levied on all development for both of these categories. The contribution for major drainage basins is constant throughout the whole stormwater catchment, while that for local trunk drainage varies according to the appropriate local catchment. Within the various local drainage catchments, individual developers are required to directly bear the cost of all pipelines up to 825mm diameter within or past their own land. The cost difference between any larger pipe size or drainage swale/channel is funded by Section 94 contributions. 50 The required contribution rate for major drainage basins was stipulated at $799 per lot. 51 Additionally, some 12 separate catchments are identified for the purposes of local trunk drainage (including that described as "Precinct 5 Central" covering some 75 per cent of the Prestons Release Precinct (including the discrete section in which the Applicants' land is included) in respect of which the required contributions rate was stipulated at $1,535 per lot (This rate was marginally higher than the rates stipulated for the other catchment areas). 52 The significance of these matters that are revealed in the planning history and planning documentation is that there is simply nothing that singles out or otherwise differentiates the identified section of the Prestons Release Precinct in which the Applicant's land is included, in respect of the planned implementation of the Urban Release Program for the Prestons Precinct other than the Note to DCP 31 foreshadowing the need for a revision of the detailed planning on account of the proposed WSO. C. THE HISTORY OF THE WSO PROPOSAL 53 Chapter 8 of the EIS prepared and publicly exhibited in 2000 for the WSO includes the following background statement: 8.2 Background The National Highway system comprises major inter-capital links and other designated roads around Australia, of which the Western Sydney Orbital is to be a part. The National Highway, however, stops at the outskirts of the major cities that it connects. In Sydney, it terminates at the start of the M5 Motorway at Prestons in the south and at the southern end of the F3 Freeway at Wahroonga in the north. The Cumberland Highway is currently the interim National Highway route and is being maintained by the Commonwealth until a superior route is available for traffic. In 1993 the Commonwealth Government announced that it intended to extend the National Highway to link the two termination points in Sydney. The National Highway link through Sydney would comprise the Western Sydney Orbital, the M2 Motorway and the section of Pennant Hills Road between the M2 Motorway and the F3 Freeway. The proposed link that would pass through western Sydney has come to be known as the Western Sydney Orbital. In July 1998, the NSW Minister for Roads and Minister for Transport announced that the environmental assessment of the Western Sydney Orbital had commenced. The RTA would be the Commonwealth Government's agent in respect of the design, building and maintenance of the proposed Western Sydney Orbital. The proposed Western Sydney Orbital is part of larger program of transport improvements for the Sydney region and has two main functions. Firstly, it would link the northern and southern sections of the National Highway system through Sydney. Secondly, it would provide an important component of Sydney's road network as it would form part of a high standard orbital road linking major employment and residential areas of Sydney (Roads and Traffic Authority 1994a). It would connect all of Sydney's existing motorways (the M5, the M4 and the M2) allowing high standard access to parts of Sydney (Roads and Traffic Authority 1998a and b). 54 Chapter 10 of the EIS describes the processes involved in the selection of the preferred corridor for the WSO, noting that investigations commenced in 1994 with the "Route Investigation Study", progressed through 1995 with the commencement of design investigations for the EIS and through 1998 with the Initial Design Proposal and were completed in 2000 when the EIS assessed the preferred route (which was the ultimately approved route). 55 Chapter 16 of the EIS notes that the proposed WSO corridor "passes through the urban release area of Prestons, Cabramatta Creek and Aerodrome (Hoxton Park) and Cecil Park". It notes that planning for the Prestons Release Area is well advanced "although there are large areas yet to be zoned for residential development". (This statement is erroneous because the whole of the Prestons Precinct was released for urban (residential) development in 1992 as I have earlier noted in outlining the planning history). It notes that "construction in this release area has already commenced….". 56 In the following passage at p 16.10, the focus is on the planning implications of the proposal's major intersection with the existing M5 Motorway: - Where the proposed road corridor meets the M5 Motorway, the associated interchange ramps and approach roads would affect the proposed subdivision design form approximately west of Beech Road to Ash Road. The proposal's alignment has been located, as far as possible, on flood-prone land. However, should the proposed road corridor proceed, planning for this part of the release area would need to be revised. The following impacts would need to be taken into consideration in any planning revision: · the area available for the residential lots would be reduced with a consequent reduction in the likely contributions for community facilities, open space, roads and traffic facilities and drainage to be made under Liverpool City Council's Section 94 Contributions Plan No 6; · the portion of the urban release area east of the proposal would be severed from the remainder of the urban release area to the west, although the south-east portion of the release area is already severed by the M5 Motorway; and · the provision of community facilities and open space would need to be reconsidered in light of the changed local access arrangements and reduced number of lots. D. THE EFFECT OF THE WSO ON THE VALUES OF THE AFFECTED LANDS 57 Consideration of the foregoing reasons outlining and discussing (i) the planning history of the Prestons Residential Release Precinct; (ii) the history of the WSO; and (iii) the radical contrasting conditions of the substantial residential development that has occurred on lands within the Prestons Release Precinct that were not affected by the WSO and of the non-development of the lands within that Precinct that were affected by the WSO leads to the inevitable conclusion, which I make as a matter of inference, that the WSO has profoundly blighted the realisation of the development potentiality of the affected lands (including the Applicant's lands). 58 The effect of that blight is far greater than the effect of the mere delay caused to the possibility of the earlier realisation of the residential development of the affected lands in accordance with the Urban Release Programme such as has occurred in respect of the lands within the Prestons Precinct that were unaffected by the WSO. It includes that loss but additionally the loss of the opportunities for that earlier development to have occurred conformably to (i) the relevant planning controls (including DCP31 and the s 94 Contributions Plan) that were in place from the mid 1990's to facilitate the implementation of the Urban Release Programme for the Prestons Precinct; and (ii) the prevailing market conditions during this period. 59 Such market conditions would have included the familiar pattern of larger developers accumulating, by purchase, land reserves or banks to facilitate the planned processes of the urbanisation of the former greenfields lands. 60 Those lost opportunities included the opportunity for the Applicant to sell his land to a developer especially one who was agglomerating sites in the conventional fashion that urban release lands are developed, for the land to be developed at a time when the Council's drainage strategy emphasised channelisation of existing creeks etc and the installation of detention basins and at a time when the requirements for a Part 3A Permit under the Rivers and Foreshores Improvement Act were less rigorous and demanding than they apparently were at the date of compulsory acquisition. 61 These are particular aspects of lost opportunities for the earlier realisation of the residential development potential of the Applicant's land in a similar manner in which the lands in the Prestons Residential Release Precinct that were unaffected by WSO were developed coinciding with the course of the history of WSO. 62 But for the existence of the blight created by the WSO for the affected section of the Prestons Residential Release Precinct the probability is that the affected section of that Precinct (including the Applicant's land) would have had its residential potential realised (or at least been in the process of realisation) by the date of compulsory acquisition in common with the majority of the lands in the Prestons Residential Release Precinct, which had not been affected by WSO. 63 This ultimate conclusion derives from the fact that except for the affectation by the WSO there is nothing in the evidence that would distinguish, in terms of implementing the Urban Release Programme, the section of the Prestons Residential Release Precinct that was affected by WSO from the other (unaffected) lands within the Precinct which at the date of compulsory acquisition had been substantially residentially developed or were in the course of being so developed. 64 The question that remains is whether the identified blight created by the WSO had relevantly caused the value of the Applicant's land to be decreased as at the date of compulsory acquisition, in which event the determination of the market value of the compulsorily acquired land must disregard that decrease in value conformably to the Just Terms Act, s 56(1)(a). 65 In my judgment, there are a number of effects of the blight which relevantly caused the value of the Applicant's land to be decreased at the date of compulsory acquisition, namely - (i) the value of the lost opportunity to realise the development potential by implementing the detailed planning provisions of DCP31 and the s 94 Contributions Plan as they affected the Applicant's land and neighbouring lands; (ii) the value of the lost opportunity to realise that development potential by either selling the Applicant's land to a developer who was intent on agglomerating development sites or by some joint enterprise between the Applicant and neighbouring land owners; (iii) the value of the lost opportunity to realise that development potential by adopting a trunk and local drainage solution conformably to the Council's s 94 Contributions Plan adopted in 1992 which propounded engineering drainage solutions/treatments different from the more recently conceived and/or imposed demanding environmental solutions/treatments, including the requirement for the creation and preservation of riparian zones along creek corridors. 66 The value of these lost opportunities caused by the blight created by the WSO have the effect of decreasing the value of the Applicant's land as at the date of compulsory acquisition by virtue of those losses which though incurred before the date of compulsory acquisition, by virtue of the residential potential of the Applicant's land being effectively frozen throughout the history of the WSO, were sustained as at that date and beyond it. The quantum of the value of those lost opportunities is found in the additional costs apt to be incurred in realising the potential of the Applicant's land on and from that date, compared with the lesser costs that would have been incurred in the earlier realisation of that potential which would have occurred, but for the blight created by WSO. 67 It is the fact that the value of these lost opportunities was sustainable as at the date of compulsory acquisition (and beyond that date) in the manner that I have delineated (ie quantifiable as either the additional costs incurred in realising the residential potential of the Applicant's land from that date or alternatively quantified as the reduced realisable potential compared with the earlier realisation of that potential that probably would have occurred had there been no blight created by the WSO) that the consequent decrease in value of the compulsorily acquired land is to be disregarded conformably to the Just Terms Act, s 56(1)(a). 68 It is that same fact that distinguishes the present case from Griffith City Council v Polegato (1990) 71 LGRA 208 where the Court of Appeal held that the Public Works Act 1912, s 124 (the legislative predecessor to the Just Terms Act, s 56(1)(a)) as expounded and applied by the High Court in Housing Commission of NSW v San Sebastian Pty Ltd (1978) 140 CLR 196) did not justify the trial court's award of compensation for the lost opportunity to carry out an approved development which the resumption process had interrupted in circumstances where the value of the development potential had disappeared at the date of resumption due to the effect of economic and market forces (rather than the resumption process). 69 The judgment of the Court of Appeal in Polegato expounded the relevant principle and its application in the following passage at 213 which in my respectful judgment equally applies to the principle established by the Just Terms Act, s 56(1)(a). Although it may appear at first glance that the decision in Housing Commission of New South Wales v San Sebastian authorises the assessment of compensation at a date prior to the date of acquisition this in fact is not the case. Compensation is still assessed at the date of the compulsory acquisition. However in order to determine the value of the land at that date, unaffected by the resumption process it will generally be necessary to take as a starting point the value of the land immediately before the resumption process began when the value could not and would not have been affected by the resumption. This value can then be brought down to the date of acquisition by making appropriate adjustments to reflect subsequent events but leaving out of account either the favourable or unfavourable effect of the resumption process on the value of the land. It is clear that such an approach cannot assist the owners in the present case because the development potential which existed at what they claim was the start of the resumption process had disappeared for reasons other than the proposed resumption by the date of the acquisition. The principles applied in Housing Commission of New South Wales v San Sebastian require the land to be valued at the relevant date on the artificial, but just, assumption that such value has not been affected by the resumption process. It does not require or authorise the court to disregard facts themselves independent of the resumption process such as costs of building and general market values at the date of resumption. 70 In the later unreported decision of the Court of Appeal in Blacktown City Council v Lasseter (CA 40147/94 5 December 1996) also involving the Public Works Act, s 124 and where the San Sebastian and Polegato cases were applied, the Court had to decide whether "the principle that resumed land is to be valued at the resumption date in its then present condition" (see Yates-Property Corp Pty Ltd v Darling Harbour Authority (1991) 73LGRA 47) was "subject to the principle in San Sebastian": at p 1. 71 In that case, the Court of Appeal rejected the appellant's argument that the San Sebastian principle "had no application in the present case, where the condition of the land immediately prior to the resumption (ie its landlocked condition) which depreciated its value, was not due to any establishment of a public work, but was caused by the act of the respondent in subdividing the land in the manner he did…." by holding that "that approach however takes too narrow a view of the principles which govern the valuation of resumed land". After citing the passage I have earlier recited from Polegato as "conveniently summarising the relevant principles" the Court of Appeal applied those principles in the following passage at p 8: The question therefore in the present case is whether the subdivision which created the landlock was part of the resumption process. In my opinion, it was, it being irrelevant that the resumption occurred after the land was subdivided. This land was always liable and likely to be resumed. The subdivision which was effected was predicated upon the basis that the land zoned 6(c) would be resumed. The limited access to the land zoned 6(c) created by the subdivision was a direct response to the zoning of that land and as such had sufficient connection with the resumption process to require that the landlock created by the subdivision be ignored for the purposes of the valuation. 72 An apt illustration of the breath of the principle embodied in s 124 of the Public Works Act (as now embodied in s 56(1)(a) of the Just Terms Act) and in particular of the legitimacy of disregarding actual conditions affecting the value of the resumed land at the date of resumption and instead making assumptions contrary to the actual conditions is provided by the decision of Hardie J in Woollams v The Minister (1957) 2 LGRA 338 decided nearly 50 years ago. That case involved resumptions of lands for the purpose of establishing the Warragamba Dam where the public announcement of the proposed public work had preceded by many years the resumption of land and where "the amenities available in the area and other social and economic conditions affecting the value of the subject property retrogressed and worsened over a period of years immediately prior to the resumption by reason by the decision of the Water Board to proceed with the….project, and the acquisition by the Board of a number of other properties required for the project and other events and circumstances associated with or consequential upon such acquisitions" (p 343). 73 The competing arguments on the meaning and application of s 124 of the Public Works Act are recited in the following passage of the judgment at 343: Counsel for the plaintiffs has contended that, having regard to the language of s 124, market value should be determined on the footing that no deterioration in amenities and other social and economic conditions had taken place, and on the footing that the amenities available and conditions existing at the date of resumption were those which would have been available and present, had there been no other acquisitions of properties by the Board, and no abandonment of farms, businesses and the like; in other words, no Warragamba Dam project. Counsel for the defendant conceded that, in determining market value, the Court should ignore the lessened demand for property in the area, by reason of the Board's decision to proceed with the project and to flood the Valley, and also that proposed future acquisitions should be disregarded. However, he contended that in all other respects value should be determined on the basis of the amenities and other social and economic conditions in fact existing in the valley at the date of resumption; in particular, he submitted that any deterioration in those conditions referable to acquisitions of other properties by the Board and other steps taken by it to implement the project prior to the relevant date should not be ignored. 74 Hardie J's decision on the disputed issue is recorded in the following passage at 346: Construing the material portion of s 124 along the lines indicated, I am of opinion that the value is to be determined on the assumption that the amenities and other economic and social conditions in the subject area did not deteriorate following upon and by reason of the decision of the Board to proceed with the Warragamba Dam project, and the acquisition by the Board of a number of properties in the Valley before the relevant date, and other events and circumstances associated with or consequential upon such acquisitions, and on the assumption that those amenities and conditions would have improved during the period under consideration, as they did in other primary producing and tourist areas during the post-war years, by reason of the increase in population, the improved prices being paid for primary products and the general economic development that occurred throughout the State. 75 The decision in Woollams was approved by the Court of Appeal in Stocks and Parkes Investments v The Minister (1971) 25 LGRA 243 where the Court said at 252: It is appropriate to forbid the taking into account of any blight which may have affected the land as a result of long public foreknowledge of the establishment of the public works: Woollams v The Minister 76 Having concluded that the blight created by WSO has relevantly caused a decrease in the value of the Applicant's land it is now necessary to decide how that decrease should be disregarded conformably to the statutory imperative in determining the market value of the compulsorily acquired land. 77 This is obviously a difficult question in the present circumstances where there has been no attempt in the case to quantity in terms of dollars the decrease in value and where there is no evidentiary foundation for applying the approach theoretically proffered in Polegato of commencing with the value of the land immediately prior to the first public announcement of WSO in 1993 and then bringing that value up to date over the ensuing 9 years up to the date of compulsory acquisition. 78 In so concluding, I recognise that theoretically the employment of "the before and after" valuation method (which is the method adopted by Mr Lunney and Mr Paris in the present case) should generally adequately address this question: see Constantino v Roads and Traffic Authority (2004) NSWLEC 517 for my discussion of that method and its rationale. However, as I have emphasised earlier in these reasons, the manner in which Mr Lunney, in particular, employed that method has not adequately addressed the question of disregarding the decrease in value of the compulsorily acquired land on account of the blight created by the WSO, because in his "before" valuation, Mr Lunney has in effect simply ignored the WSO only momentarily (ie at the instant of the date of compulsory acquisition) rather than taking into consideration the sustained blight created over the entire previous nine year history of the WSO. In a case such as the present, where the relevant blight has been sustained over an extended period of time prior to the compulsory acquisition, the relevant "event" by reference to which the "before" and "after" valuations are determined is not simply the relevant public purpose proposal as manifested at that instant of time, but the effect of that proposal throughout its known public history. 79 In all of the circumstances of this case, I think that the only reasonable and practical manner to give effect to the statutory imperative of disregarding any relevant decrease in value is to treat the Applicant's land, at the date of compulsory acquisition, as being regarded by the parties to the hypothetical sale, as being in a condition that would enable its residential potential to be realisable in the ordinary course of development. This approach generally accords with the position assumed by the Applicant's valuer, Mr Paris, relying upon Mr Bewsher's expert opinions concerning flood mitigation works in Maxwells Creek involving excavation of that creek and the deployment of the excavated material in filling the flood liable sections of the land: see Mr Paris' Valuation Report (Exhibit 26) at Section 4.5. 80 That approach also approximates one of the few matters agreed between the parties drainage/hydrological engineering experts (Professor Ball for the Respondent and Mr Bewsher and Mr Fiander for the Applicant) in their series of Joint Statements that were admitted into evidence, namely that assuming the adoption of the Council's 15 m wide channelisation scheme for trunk drainage in Maxwells Creek the necessary excavation would produce the fill required to raise the levels of the Applicant's land so that up to at least 67 percent of the Applicant's land would be above the level of the 1 percent flood event, and in the joint opinion of the Applicant's experts that proportion could be increased to 77 percent (Exhibit 33). 81 These proportions of the flood free site include both the compulsorily acquired land and the Applicant's retained land fronting Skipton Lane immediately adjoining the eastern boundary of the compulsorily acquired land (Exhibit 33). These different proportions of flood free land comprise, in each case, the majority of the residentially zoned land by providing some 13,560 m (if the proportion be 67 percent) and some 15,580 m2 (if the proportion be 77 percent) out of a total area of some 16,580 to 17,260 m2 of residentially zoned land. (There are slight variations in the evidence concerning the division of the Applicant's land into three different zones resulting in some doubt as to the precise area of residentially zoned land.) 82 The availability of up to 16,580 m2 of flood free residentially zoned land (more than to 90 percent of the total area so zoned) is considerably higher than the earlier estimates of flood free land that the Respondent's flooding and drainage experts had advised Mr Lunney when he undertook his several valuations of the Applicant's land both before, and in the course of, the hearing. For example in his valuation of $395,000 (Exhibit F) he had assumed a flood free developable area of only 11,392 m2 in his "before" value. 83 In his Valuation Report in reply (Exhibit R), he had assumed (accepting Professor Ball's then advice) differing areas of flood free developable land ranging from 11,475 m2 to 12,250 m2 resulting in increased valuations of between $532,000 and $611,000. 84 He did not proffer a valuation reflecting the considerably larger area of flood free residentially zoned land ultimately (but belatedly) agreed between the drainage/flooding experts, but it would be logical and reasonable to assume a higher valuation would have resulted if such an exercise had been carried out (Time constraints explain why it was not). 85 Having indicated in general terms how the market value of the compulsorily acquired land is to be determined in accordance with the Just Terms Act, s 56(1)(a), it is now necessary to consider the valuation evidence given in the case and to apply it (with whatever modifications may be necessary) to give effect to what I have held to be the proper approach in the present case to determine the market value unaffected by the blight created by the WSO. E. THE VALUATION EVIDENCE 86 As was acknowledged in the first of the Joint Statements of the valuers (Mr Paris and Mr Lunney) (Exhibit 27), the essential differences in their competing valuations were explained by the different expert advices they had received and acted upon from the parties respective other experts in the case who opined on matters of town planning, drainage engineering and hydrology. 87 For the reasons I have earlier given, I did not find much of the expert testimony to be particularly helpful in the present case. Moreover, as I have just noted, there were significant developments in the course of the hearing in the opinions of the expert drainage/flooding engineers which substantially changed the advice that Mr Lunney had acted upon in undertaking his valuations. 88 To the extent that it has been necessary to resolve the relevant disputed expert opinions I have already concluded that the opinions of the Applicant's experts are more compatible with the approach that I have held to be the appropriate manner of disregarding the decrease in value of the Applicant' land on account of the blight created by the WSO which provides the basis upon which the hypothetical sale would be transacted. 89 It follows from the foregoing that my evaluation of the Valuer's competing valuations, and in particular the extent to which reliance for the valuations was made on the advice of the parties' other retained experts, leads to the inevitable conclusion that Mr Paris' valuation is more soundly based upon the expert advice he received from the Applicant's other experts than is Mr Lunney's competing valuation. 90 However, in respect of valuation matters (uninfluenced by other expert opinion), Mr Lunney and Mr Paris, in their first Joint Statement (Exhibit 27) were able to agree upon the following matters pertaining to their respective valuations:- (i) what comprised the most comparable sales of en globo residentially zoned lands reflecting analysed sale prices of between $75 to $179 per square metre or $62,307 to $103,500 per lot ; and (ii) the extent of injurious affection of 17.5 percent to be applied to the " after valuation ". 91 In their second Joint Statement (Exhibit 40), the valuers maintained their respective opinions on the value of the residentially zoned land in their before and after valuations, Mr Lunney adopting an en globo rate per square metre of $140,000 and Mr Paris adopting an en globo rate of $85,000 per lot. To facilitate comparison in their respective opinions, these rates were converted to show the following comparisons: Index Lunney Paris (i) Rate per square metre $140 $190 (ii) Rate per lot $62,780 $85,000

Mosca v Roads and Traffic Authority of NSW

At a glance

Court

Decision date

Before

Source

Judgment (9 paragraphs)

Parties

Cases Cited (2)

Cited By (24)