Nasser v Roads and Traffic Authority; Millstar Holdings Pty Limited v Roads and Traffic Authority

Nasser v Roads and Traffic Authority; Millstar Holdings Pty Limited v Roads and Traffic Authority - [2006] NSWLEC 181 - NSWLEC 2005 case summary — Zoe

[19]

16 The RTA argued that if the public purpose did not crystallise until 2002, then any increase or decrease in market value of the land after that date, caused by the carrying out or proposal to carry out that public purpose, could be disregarded for the purposes of s 56(1)(a) of the Just Terms Act. Any increase or decrease in the market value of the land due to the development of a national highway program prior to 2002 is irrelevant. Finding on Public Purpose 17 While the cases on which the parties focused consider the impact on market value resulting from a defined public purpose, the definition of the public purpose is significant also in that the relevant circumstances arising from that public purpose which ultimately impact on value will also be defined by the commencement of any public purpose scheme. In this case, the planning history of the area is relevant. My finding on the date of the commencement of the public purpose will determine how much of that history can be considered for the purpose of assessing what the highest and best use of the land would have been at the date of acquisition. 18 Woollams is early authority that the value of property acquired for public works must be determined without regard to any effect on land values of that public work. That is well settled law and reflected in s 56(1)(a) of the Just Terms Act. What is more relevant for current purposes is working out when the public purpose which involves certain works commenced. In Woollams land was acquired over many years for the Warragamba Storage Dam. Hardie J held that purchases of land for a broad range of uses to support the dam construction not just the land on which the dam was to be constructed were within the relevant public purpose. 19 In Wilson v Liverpool Corporation [1971] 1 WLR 302, the Court of Appeal analysed what constitutes a public purpose in the context of a scheme to carry out a particular public purpose. Widgery LJ said at 310: Whenever land is to be compulsorily acquired this must be in consequence of some scheme or undertaking or project. Unless there is some scheme or undertaking or project, compulsory powers of acquisition will not arise at all, and it would, I think, be a great mistake if we tended to focus our attention on the word 'scheme' as though it had some magic of its own. It is merely synonymous with the other words to which I have referred, and the purpose of the so-called Pointe Gourde rule is to prevent the acquisition of the land being at a price which is inflated by the very project or scheme which gives rise to the acquisition … It is for the tribunal of fact to consider just what activities - past, present or future - are properly to be regarded as the scheme within the meaning of this proposition. 20 The RTA relied on Crompton v Commissioner of Highways (1973) 32 LGRA 8, Supreme Court of South Australia, where Wells J followed the decision in Woollams and held at 13-14 that: The question whether, at the date of valuation, there was an existing scheme, and the extent of that scheme, are both matters for the court to decide, and usually a decision can be arrived at on the evidence with reasonable precision. There are, however, schemes and schemes. Some are limited and are capable of being carried out, as it were, uno ictu. The calculation of what part of the open market value of the subject land is fairly to be attributed to a limited scheme is the responsibility of the expert valuer and no doubt it is a reasonably straightforward task; the relevant facts will generally be found to lie within a narrow compass in time, space and commercial activity. But not infrequently properties - especially when highways are to be built - are acquired between the date on which a long-term scheme is authorized and the date on which the authorized works are complete; sometimes - as in the instant case - those two dates are, or will be, years apart. In such cases, the difficulty of correctly attributing part of the market value to the implementation or the proposed implementation of the scheme will be very much greater than in the case of the limited scheme. All else apart, it will be well nigh impossible to trace precisely the network of cause and effect from the scheme or proposed scheme, as an original and continuing cause, through countless intermediate transactions, each one of which makes or may make its own contribution, to the pattern of values in the relevant area, down to the subject land. Moreover, it is obvious that the works constructed or to be constructed under the scheme are far from being the sole cause of any increments observable in the level of land prices in the area capable of being influenced by those works. Until the last sentence quoted above, that finding could equally apply here in the Applicants' favour to the period from 1993 to 2002. The finding on the next issue at [48] is that but for the WSO the subject lands would have been zoned for industrial development on the basis that this is what the planning history of the area around the subject land demonstrates. In this case that history shows there is uncertainty about the impact of the WSO in this area over an extended period of years, unlike the position in Crompton . 21 In Mosca Bignold J summarised the relevant parts of the EIS for the WSO at [53] - [56]. At [54] his Honour states: 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). 22 Applying these cases here, whilst the WSO was not specifically identified in 1993, the national highway scheme giving rise to it was then conceived. No precise location was determined until several years later. The final determination of the WSO route was made in 2001. Thus, there was an eight year period from the announcement in 1993 that a national highway scheme was to be constructed in the general area of the subject lands to the final determination of the WSO route made in 2001. Nevertheless the genesis of the scheme giving rise to the WSO occurred in 1993 and that is the relevant period from which the impact of the scheme is to be considered. Numerous investigative studies for the route of the national highway were undertaken after 1993 which caused uncertainty in the planning process. As relied on by the Applicants the 1994 "Route Investigation Study" showed the subject sites as being impacted by the routes under consideration. Further, studies on the appropriate route for the WSO took place in the mid to late 1990s. In 1998 the preparation of an EIS was announced but this did not finally appear until October 2000, and showed a number of alternative routes for the Prestons to Cecil Hills 12km roadway which affected the subject sites. 23 It was argued by the RTA that the case of Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251 is authority for the suggestion that preparatory investigations do not constitute a public purpose or proposal. At [38] Basten JA distinguishes between conduct which constitutes the carrying out of a public purpose and the existence of a "proposal" for carrying out a public purpose from steps taken in the development of a proposal or steps which are merely preparatory to the carrying out of the public purpose. I do not consider this distinction applies to the facts in this case.

[33]

45 The RTA argued that from the evidence it was clear that the announcement of the WSO alone did not cause a blight in the process of rezoning in the area surrounding the Millstar and Nasser lands. There was evidence before the Court that planning uncertainty was created not only by the announcement of the WSO. On 14 December 1998, the Council resolved to defer amendments to the LEP in the face of uncertainty regarding the WSO, acknowledging that reasons for the failure to rezone the area included the WSO and the uncertainty regarding the proposed Sydney West Airport and associated rail link. In addition, the RTA referred to the need to provide for adequate infrastructure prior to the release and rezoning of future development areas and the relatively high supply of industrial land at the time. Any planning blight was not caused by the WSO alone and it was necessary in order to satisfy s 56(1)(a) that this be the case, therefore the "but for" test was not satisfied. 46 The Applicants argued that the planning history of the area surrounding the subject lands evidenced that "but for" the announcement of the WSO, the Millstar and Nasser lands would have been rezoned for industrial development. Accordingly, in the circumstances of this case it was clear that the public purpose relevantly caused a blight on the subject lands. Finding 47 When the Council's planning documents in relation to the WSO are viewed as a whole, as set out at par 36 - 43, the memorandum of 14 December 1998 (par 40) is an isolated reference to other planning concerns such as the proposed Sydney West Airport and associated rail link. While other circumstances such as the proposed Sydney West Airport and associated rail link are referred to in the Council memorandum of 14 December 1998, the evidence when viewed as a whole strongly suggests that planning in the area of the subject lands was put on hold from 1993 because of the WSO proposal. 48 In my view, the announcement of the WSO relevantly caused a blight in the rezoning of Precinct 3A and the Millstar and Nasser lands. As the planning history of the area before 1993 (par 29 - 35) shows the Council has, over a number of years, provided for the release and rezoning of industrial land in the Hoxton Park area. This is evident in the release of Precincts 1, 2, 4 and 5. It is clear that prior to 1993 the Council intended to release and rezone Precincts 3 and 3A, but the Council's intention to do so was frustrated by the announcement of the national highway program in 1993. This caused the Council to put on hold its plans to release Precincts 3 and 3A. This is evident in the Council's advice from the RTA during 1994 (par 37), the Council's resolution of 11 December 1995 (par 38) and through correspondence received from the Minister for Urban Affairs concerning the delay of the WSO EIS (par 40) and its effect on planning. Accordingly, I consider that "but for" the announcement of the WSO the Millstar and Nasser lands would have been subject to rezoning prior to the date of acquisition. Highest and best use - likely zoning 49 There are two issues to resolve in relation to zoning. Firstly, what was the likelihood of the land being zoned industrial at the date of acquisition or later? Secondly, are the flooding constraints on the Millstar land so great that it would be unlikely to be rezoned for industrial purposes at all? The second question will need to be determined once the evidence in relation to flooding has been considered. Expert planning evidence 50 The Applicants relied on the expert planning evidence of Mr Gary Rhodes. The RTA relied on the expert planning evidence of Mr Harvey Sanders. 51 The planning experts agreed that at the date of acquisition, the subject lands were zoned partly Rural 1(e) - Future Urban under the 1997 LEP and partly Non Urban 1(c) under the Interim Development Order No 74 - holding zone pending urbanisation ("IDO 74"). A small area of Non Urban 1(c) land was zoned for potential road widening works along Bernera Road.

[38]

(i) Would the area have been zoned 4(a) Industrial at the date of acquisition? 57 I consider a prudent hypothetical purchaser would be likely to obtain town planning advice. Given the evidence before me, there is a possibility that conflicting town planning advice would be obtained by a prudent hypothetical purchaser. In Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2004] NSWLEC 315, Talbot J considered the role of the Court in reconciling conflicting expert evidence in valuation cases (his finding was not the subject of the appeal) Talbot J stated at [119] that: Having regard to the whole of the evidence, particularly the expert evidence of architects and town planners, it is highly probable that the hypothetical purchaser would have received conflicting advice about the potential yield, in terms of residential units, that could be achieved from the site. It is unlikely, however, that the same purchaser would have had the benefit of the far-ranging and wide scope of advice and competing argument of the type that has been made available to the Court through the presentation of evidence by a plethora of experts and voluminous submissions by counsel. Nevertheless, the purchaser would, in my view, have had the benefit of over-arching assessments of the potential for the site that would have identified the range of possibilities and the associated degree of risk. It is necessary, therefore, that the Court balance the evidence made available to it by having regard to the practical context of the willing but not anxious purchaser dealing with a vendor of the same mind. 58 In Bautovich v The Minister administering the Environmental Planning and Assessment Act 1979 [2004] NSWLEC 389 Talbot J states in his conclusion at [63] - [64]: … the Court's role is not to determine what would have been approved, but rather to decide how the hypothetical purchaser acting prudently after obtaining the advice of relevant experts familiar with and experienced in developments of residential subdivisions, would have assessed the potential for the development of the subject land.

[39]

59 A prudent hypothetical purchaser would be able to view all of the planning documents referred to in the planning history above at par 28-43, and would therefore be familiar with the pattern of land development in the area. This pattern shows up to 1992 a relatively rapid land release and development in the Hoxton Park area. The subject lands were in an area identified as "Future industrial use to be rezoned for longer term" in the Council's "Structure Plan for the Hoxton Park Stage 2 Release Area" 1989 as set out at par 33. The nearby areas of Prestons Stage 1, first and second releases, were rezoned for industrial use in 1990 and 1992 (par 34). Future land releases for industrial zones in Prestons occurred in 1992. While Mr Sanders argued there was a lack of demand for industrial land, Mr Rhodes disputed this. In my view, the pattern of land release in the Hoxton Park area, in particular the release of the nearby Prestons industrial area in the 1990's, suggests it was likely there would have been demand for industrial land by the date of acquisition if not already rezoned for that use in the 1997 LEP, as Mr Rhodes argued. 60 As is clear from the planning history set out for the period after 1993 at par 36 - 43, the planning for the WSO affected the area which included the subject site. 61 The RTA criticised Mr Rhodes for drawing conclusions from planning documents produced by the Council and from the patterns of release of land under the urban development State government program. None of these documents refer to the subject lands, and Mr Rhodes was not the author of them. Therefore the RTA suggested that no weight should be given to his opinion. His approach is appropriate and necessary when I have held that the planning processes in relation to the subject lands was affected from 1993 because of the broader planning objectives for these areas. It is not surprising that the planning undertaken by the Council was not advanced to the level of considering particular sites, given the uncertainty over the impact of the WSO on land in the general vicinity from 1993.

[50]

76 In January 2002, WBM Oceanics and Bewsher Consulting were commissioned by the RTA to prepare the "Western Sydney Orbital, Cabramatta Creek 2D Flood Model - Sizing of Bridges, Culverts and Basins" ("the WBM Report"). The WBM Report provided that increased run-off in the area required the provision of additional detention basins. While there was reference to this report by Dr Webb it cannot be assumed to have been available at the date of acquisition, given that it is a result of the WSO planning process. It is not therefore relevant to the "before" scenario for valuation purposes and is not a report a prudent hypothetical purchaser can be assumed to have access to. 77 In July 2002, the Council published the Liverpool Contributions Plan 2001 ("the Contributions Plan"). The Contributions Plan includes provision for s 94 contributions for drainage facilities to implement part of the Option A-3 trunk drainage strategy concerning the construction of detention basins for floodwaters recommended by the Kinhill Report. It was agreed this was the relevant contributions plan that a prudent hypothetical purchaser would consider. 78 The flooding experts identified four issues as follows in relation to the Millstar land:

What is the categorisation of flooding on the Millstar land?
What is the extent of filling likely to be undertaken on the Millstar land?
What setback from Cabramatta Creek is required for the conveyance and storage of the 1% AEP flood event?
What is the likelihood of the Council's storage basin strategy accommodating development on the Millstar land? Issue 1 - Categorisation of flooding on the subject land 79 Dr Webb considered that but for the WSO, flooding constraints would have been alleviated to a large extent on the Millstar land by the adoption of the trunk drain strategy and provision of a levee on the Millstar land outlined in the 1992 Kinhill Report (part of option A-3). With the levee in place the part of the Millstar land adjacent to Cabramatta Creek would be considered a floodway, while the remainder of the Millstar land would not be a floodway and could be filled. If a levee had not been put in place, Dr Webb considered that the Millstar land would be a flood storage area, not a floodway, and would be a "high hazard" area up to 50m from Cabramatta Creek. 80 Dr Webb considered the land to be flood storage rather than a floodway because in his view the landfill strategy for the Prestons industrial area located downstream from the Millstar land, would result in flood waters not flowing across most of the Millstar land. Dr Webb considered that other than the land 50m along Cabramatta Creek, there was no impediment to rezoning the Millstar land for industrial use.

[51]

81 Mr Rowbottom did not consider the landfill strategy for the Prestons industrial area was dealing with flood management as it did not result in filling of the land above the 1% AEP flood level. Rather it was a strategy dealing with drainage from within the industrial area. Accordingly, flood water would continue to flow across the Millstar land. Mr Rowbottom considered that according to the Council's 1999 flood contour maps the Millstar land was completely flooded in both the 1% AEP flood event and the 5% AEP flood event. In the 1% AEP flood event, Mr Rowbottom believed that 80 per cent of the Millstar land would be inundated over a depth of one metre. Because of the location of the land in relation to the creek it was a floodway and therefore it fell within the definition of "high hazard" in the NSW Floodplain Management Manual 2001. Accordingly, the Millstar land was so flood liable that it would not have been rezoned for industrial purposes. This was consistent with the Council Floodplain Management Plan 1987 which states at 6.9 that: 6.9 Rezoning of Land Council will not favourably consider any application for the rezoning of land identified as being flood-liable on the basis of information in Council's possession. Issue 2 - Extent of filling on the Millstar land 82 Dr Webb considered that, by reference to the Kinhill Report, there were no flood restrictions that prevented the filling and development of the Millstar land. When the subject lands were zoned industrial, the Council would have introduced a landfill strategy, accompanied by a detention basin strategy to provide compensatory storage where filling occurred, to raise land above the 1% AEP level. Dr Webb's view was that filling the subject lands could have occurred in accordance with his plan contained in Exhibit K. This showed that approximately one third of the Millstar land could be filled behind a levee built approximately 50m from Cabramatta Creek, with the top of the fill at 27mAHD. The balance of the Millstar land and all the Nasser land was therefore available for development. The fill required by the scheme in Exhibit K, approximately 55,000m3, could be accommodated by any conditions of development consent and by the basin storage strategy expected to be implemented by the Council without any adverse impact on the flood plain. An alternative proposal was that a levee proposed by the Kinhill report across the Millstar land would be built which would have allowed a lesser area of the Millstar land to be developed.

[58]

92 In light of these matters the RTA submitted that it was highly unlikely that the Council would have permitted the subject lands to have been rezoned for urban purposes including industrial use. The RTA argued that it was unlikely that the Council would permit landfill to the extent necessary to accommodate industrial development and that there was no likelihood that Dr Webb's proposed levee would be built. Contrary to the evidence of Dr Webb, the Council would be likely to insist upon storage compensation onsite rather than relying on external compensation such as augmenting detention basins in the general catchment for Cabramatta Creek. Finding 93 The flooding experts have given substantially conflicting opinions on the extent of flooding and its consequences for development on the Millstar land in particular. It is therefore necessary to determine what enquiries a prudent hypothetical purchaser would undertake and what he or she might do in light of conflicting expert advice (see Walker, Bautovich at par 57, 58). 94 The parties agreed that the advice of flooding experts would be likely to be sought by a prudent hypothetical purchaser. It is clear there could be a substantial difference in the advice obtained if more than one opinion was sought. 95 The Millstar land, according to the 1999 Flood Management Study is wholly affected by a 5% AEP flood level and 80 per cent affected by 1% AEP flood levels up to 1m. Considering the practical context that a willing but not anxious prudent hypothetical purchaser would have before them, the Council instruments relating to flooding available at the date of acquisition are the most relevant to indicate the Council's likely approach to flooding at the date of acquisition. These are the Council's 2001 flood contour maps based on the Floodplain Management Study 1999 adopted by the Council in 2001, the LEP and the s 149 certificate issued for the land. The s 149 certificate for the land would have stated that it is affected by the Council's Floodplain Management Plan which restricts the development of land below the level of a 1% AEP flood event. For the Millstar land, 80 per cent is inundated in the 1% AEP flood event. The depth of flooding at the peak of such a flood would range from 0.4 m in the south-eastern corner to more than 2m along the northern boundary according to Mr Rowbottom's comparison of the Council's 2001 flood contour maps and the natural surface contours of the land. While the accuracy of these maps was challenged by Dr Webb they are significant in that they were the primary material available to a prudent hypothetical purchaser. The 2002 WMB/Bewsher report relied on by Dr Webb in calculating the flood maps were inaccurate and overstated the flood levels and cannot be assumed to have been available at the date of acquisition because it was prepared for the WSO proposal. 96 The relevant LEP 1997 also had provisions concerning flood liable land in cl 21 which states that: (1) Before determining an application for consent to carry out development on flood liable land, the Council must consider:

[65]

Issue 1 - flood categorisation on Millstar 99 While the experts agree that the majority of the Millstar land is flood liable in the 1% AEP flood event Dr Webb considered the land was not a floodway, and therefore high hazard, but rather flood storage due to the impact of the filling in the Prestons industrial area. Mr Rowbottom appears to have a credible reason for why this is not correct and the land is high hazard. I consider it is likely a prudent hypothetical purchaser would be inclined to value the land on the basis that most is "high hazard". The area is located right on Cabramatta Creek and is clearly much more flood liable than the Prestons industrial area which is further from Cabramatta Creek. 100 The next issue that arises from the parties' general submissions is appropriately dealt with now. Is it is likely the Millstar land would be zoned industrial at all, given how much of it is flood affected? It is likely that part of the property would be zoned Special Uses 5(a) - Drainage along Cabramatta Creek at least to the extent of the riparian zone. Since industrial development on immediately adjoining land which is flood liable has been approved by the Council to some extent in relation to the Scotts site and the electrical substation site in the area of Cabramatta Creek, I do not accept the RTA's argument that most of the Millstar land would not have been considered able to be rezoned for industrial purposes. As relied on by the Applicants, the Prestons industrial area had been rezoned for industrial use despite being flood liable, albeit to a lesser extent than the Millstar land. The extent to which the Millstar land could be developed due to constraints on the land is a separate issue. What I must determine is how a prudent hypothetical purchaser would choose to value the land zoned for industrial use in light of the flooding constraints and possible measures needed to deal with these. Issue 2 - what is the extent of filling able to be undertaken on the Millstar land? 101 The Council's 2001 Contributions Plan in place at the time of acquisition in 2002 does provide for contributions to be collected to implement Option A-3 in the 1992 Kinhill study. The contributions plan refers to that option as a detention basin strategy aimed at offsetting the impacts of development on stormwater runoff both on the major creek tributaries within, and downstream of, the release areas. It is not at all clear that the levee on the Millstar land recommended in the 1992 Kinhill study is intended to be covered by the 2001 contributions plan. There was no indication in subsequent Council documents prepared since 1992, suggesting that it would be implemented. It is not included in the 1999 Bewsher study. While the Applicants argued this was because of the WSO, I consider that a prudent hypothetical purchaser would take a cautious approach on this issue given the uncertainty about construction of such a levee and proceed on the basis that the levee identified in the Kinhill report would not be built. Further, there is simply no firm basis given the Council's LEP and the extent of flooding on the Millstar land, to suggest it is likely Dr Webb's levee would be able to be built. 102 The Applicants have relied on the filling on neighbouring sites as suggestive that a similar approach such as the levee proposed by Dr Webb could be built on the Millstar land. The filling of land on the neighbouring Scotts site to the east does not provide any comfort as the evidence suggests this was done without development consent and would appear to be in the area of the riparian zone along Cabramatta Creek, which is usually protected. The electricity substation site to the west is on land filled between 1982 and 1986. Apart from an aerial photograph showing this I do not have any other details about the basis on which filling was allowed. There have been several instruments related to flooding prepared since this period which are more likely to be considered relevant by a prudent hypothetical purchaser.

[69]

107 It is difficult due to the substantial differences between the experts and my findings above, to identify how much of the Millstar land should be valued on the basis that it can be developed. I have not accepted Dr Webb's view that a substantial portion can be developed, and I have held in relation to the buffer needed for the 1% AEP flood event that it is greater than the 50m estimated as adequate by Dr Webb. Mr Rowbottom's view is that none of the land can be developed. Mr Rowbottom's evidence was that approximately 80 per cent of the Millstar land was highly flood liable and that as the land was located on the southern bank of Cabramatta Creek it was heavily affected by the conveyance of water from upstream. 108 This suggests that a prudent hypothetical purchaser may consider that 20 per cent of the Millstar land on the southern boundary could be developable. Twenty per cent of 55,620 is 11,124m3. The parties agreed that the volume of fill needed to ensure the land was above the 1% AEP flood event level was 11,124m3. The fill cost of $8/m3 was agreed so that the fill cost under this scenario is approximately $90,000. The other assumption I make in the Applicants' favour is that it will be possible to accommodate this level of fill as "lost" floodplain storage in any floodplain strategy the Council has adopted to enable development on land zoned for industrial use, whether accommodated onsite, as Mr Rowbottom considered would be necessary on the Nasser land, or offsite. Another assumption I will make in the Applicant's favour is that this developable area of 20 per cent is in addition to the 50m vegetation protection zone the parties agreed ought be set aside on the western boundary. Nasser land 109 There was agreement that the Nasser land was far less flood liable and could be developed. Dr Webb considered that the Nasser land was low hazard and that there were no impediments to rezoning or development following filling of the northeast area of it. Mr Rowbottom considered that the Nasser land was more likely to be classified as flood storage than a floodway. Accordingly, Mr Rowbottom agreed that the Nasser land was low hazard flood liable land and could be rezoned, filled and developed, provided sufficient compensatory excavation could be carried out to replace displaced floodplain storage. The experts differed on how filling on the Nasser land would take place because of their different views on whether and how the Millstar land could be developed. 110 I have rejected a finding that a prudent hypothetical purchaser would assume Dr Webb's levee scheme under which no fill on the Nasser land was necessary because that land benefited from the levee and filling on the Millstar land, would be implemented. I consider that a prudent hypothetical purchaser would consider that the Nasser land could have been filled in part to enable development across the whole site. The issue then arises of whether a prudent hypothetical purchaser would factor in that any fill required for the Nasser land would have to be accommodated onsite or could be accommodated elsewhere by a Council landfill strategy. According to Mr Rowbottom any fill would have to be accommodated onsite. His report included a plan (Fig 5.1 Ex 6) whereby part of the Nasser land could be developed with a 6,000m2 fill platform as part of a cut and fill operation. I adopt Mr Rowbottom's scheme as the basis on which a prudent hypothetical purchaser would consider the land could be developed and will value the Nasser land accordingly.

[76]

117 If a community is listed as an endangered ecological community under the TSC Act, the consequence is that under s 56(1) and s 74(1) of that Act respectively, the Director-General of the Department of Environment and Conservation may prepare a recovery or threat-abatement plan for it, the object of which is to promote the recovery of, or abate threats to, the endangered ecological community. These plans must then be taken into account by consent and planning authorities under s 5A of the Environmental Planning and Assessment Act 1979 (EP&A Act) when considering development applications under Pt 4 of the EP&A Act, or applications for approval for the carrying out of activities under Pt 5 of the EP&A. Further, under s 78A of the EP&A Act, a species impact statement (SIS), must be prepared in accordance with Pt 6 Div 2 of the TSC Act for a development application, in relation to land which is part of a critical habitat, or where the proposed development is likely to significantly affect threatened species, populations or ecological communities. Under s 122(1B) of the EP&A Act, a determining authority cannot grant development approval or consent without having regard to this SIS. Issue 1 - Vegetation in the northwest corner of the Nasser land 118 An area of vegetation in the northwest corner of the Nasser land is identified by the National Parks and Wildlife Service 2002 Conservation Significance Maps as Sydney Coastal River-flat Forest ("SCRFF"), an endangered ecological community. It is also identified as environmentally significant land in the 1997 LEP. Both maps would have been available to a prudent hypothetical purchaser. 119 Mr Fanning stated that the vegetation in the north-west corner was dominated by acacia decurrens ("Black Wattle"), which was not a species characteristic of either SCRFF or CPW. Mr Fanning stated that the mapping of environmentally significant land by the Council does not identify land with any real ecological value or significance. The designation of environmentally significant land under cl 16 of the LEP requires only that certain matters be addressed in any proposed development of the land and is not a prohibition on development of the site. Similarly, DCP 8 - Natural Assets, is not a prohibition on development of land with vegetation.

[77]

120 Dr Clements considered the northwest area of the Nasser land was a continuation of the mapped SCRFF to the north on the Millstar land. In oral evidence, Dr Clements accepted that the vegetation might not be SCRFF, but stated that it would otherwise be CPW. Dr Clements stated that the mapping of environmentally significant land in the LEP indicated areas of native vegetation cover as well as wetlands in the Liverpool local government area. The designation of the north-west corner of the Nasser land as environmentally significant land was to ensure that significant bushland is substantially retained and protected and that development adjacent to bushland did not detrimentally affect the continued survival of the bushland. DCP 8 - Natural Assets was directed at the retention of significant bushland in the development context. Issue 2 - Vegetation occurring on the remainder of the Nasser land 121 The experts disagreed on whether vegetation on the remainder of the Nasser land was CPW present at the date of acquisition. 122 Dr Clements' report identified the vegetation as early regrowth CPW. She identified only one mature eucalypt on the land in her report. An investigation conducted during the course of the hearing identified three additional eucalypt saplings on the southern portion of the Nasser land. Dr Clements argued that this further supported her claim that the vegetation on the remainder of the Nasser land was CPW. Mr Fanning disagreed that all four saplings would have been in place at the date of acquisition in 2002. 123 Mr Fanning stated that both at the date of acquisition and now the Nasser land is dominated by acacia decurrens and the vegetation is not CPW. The vegetation on the land is shrubland, not woodland as the definition of CPW in the Final Determination requires. As the Nasser land was found to contain only one mature eucalypt and possibly two eucalypt saplings at the date of acquisition, it could not be said that the canopy was dominated by specified eucalypts, as the definition of CPW requires. In addition, there were few eucalypt saplings present on the Nasser land which could regenerate. As the last clearing of the site was seven or eight years ago, the Nasser land could not be classified as regrowth which was likely to achieve a near natural structure or was a seral stage towards that structure.

[82]

131 The RTA submitted that it would be erroneous to treat the Scientific Committee's Final Determination as a precise definition of CPW; rather the existence of CPW can be the subject of expert evidence. The correct approach is to treat the Final Determination as descriptive. As described by Dr Clements, the vegetation species present on the land indicated that CPW affected at least two thirds of the Nasser land. This is confirmed by the application of the approach applied by Tozer. Acting on the basis that the land would properly have been regarded by a prudent hypothetical purchaser as having CPW present on parts of it, the Court should accept the evidence of Dr Clements that it would be reasonable for the prudent hypothetical purchaser to expect that there would be an obligation on a developer to retain at least 50 per cent of the vegetation. Finding 132 It is necessary to determine what a prudent hypothetical purchaser would have taken into account given conflicting ecological advice in relation to the Nasser land. The maps of the site available to a prudent hypothetical purchaser include the 1997 LEP. This maps an area of environmentally significant vegetation in the north-west corner of the Nasser land. 133 Mapping of the ecological communities by Cumberland Flora and Fauna and Lesryk Environmental Consultants (2000) identified the environmentally significant vegetation in the north-west corner and found disturbed remnant two to three year old regrowth CPW on much of the site. It is unclear whether this mapping would have been available to a prudent hypothetical purchaser, as it was done as part of the WSO planning process. Material of that nature is generally to be disregarded. That mapping was referred to by both ecological experts. 134 The 2002 NPWS conservation significance mapping identified the vegetation in the north-west corner, which is approximately the same area of vegetation which the LEP identifies as environmentally significant. The NPWS mapping does not identify CPW on the balance of the Nasser land. Mr Fanning sets out in his report the limitations of the NPWS mapping, stating that it is based on aerial surveys and requires ground truthing in relation to its accuracy for individual sites (par 7.2). He also considered that even with its limitations an area as large as the Nasser site would have been identified if it had contained large areas of CPW.

[85]

140 The expert evidence is difficult to resolve given the opposing opinions of the two experts on a fundamental ecological matter concerning the application of the Final Determination. 141 I do not need to resolve finally here the correct approach to the application of the Final Determination of the Scientific Committee in relation to CPW but I do need to consider how a prudent hypothetical purchaser is likely to view conflicting ecological evidence. To that end I need to determine the extent to which the experts' opinions would have been likely to have been applied. There is obviously considerable scope for different opinions as to the application of the Final Determination given the broad description of CPW based on a long list of indicative species adopted in the Final Determination. The challenge of applying the general wording used in the Final Determination to particular areas was discussed by McClellan J in Hornsby Shire Council v Vitone Developments Pty Limited [2003] NSWLEC 272. The relevant threatened ecological community in that case was Blue Gum High Forest, and that wording of the Final Determination necessarily different. 142 I note that the Tozer report at par 126 identifies the difficulties of compiling precise descriptions of endangered ecological communities listed under the TSC Act for legal purposes because "communities are abstract by nature and inconsistently delineated" (exhibit J p1). 143 Where there is a fundamental difference between experts it is necessary that a court consider the respective methodologies and reasoning processes of the experts in order to understand the differences between them, and in order to arrive at its own view of what the correct approach ought to be. In Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Heydon JA sets out the basis on which expert opinion can be admissible. His Honour states at [85]: In short, if evidence tendered as expert opinion evidence is to be admissible, it must be agreed or demonstrated that there is a field of "specialised knowledge"; there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; the opinion proffered must be "wholly or substantially based on the witness's expert knowledge"; so far as the opinion is based on facts "observed" by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on "assumed" or "accepted" facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached : … (emphasis added) 144 His Honour asked of the particular expert report under consideration whether it furnished the trial judge with the necessary scientific criteria for testing the accuracy of its conclusions (at [87]). These observations can be applied here to assess the basis on which the respective experts have presented their opinions. 145 In comparing the reasoning process and scientific criteria applied by the two experts in reaching their conclusions as set out in their respective reports, it is unclear to me what scientific criteria and reasoning process Mr Fanning applied in his report apart from observation of the site in the course of undertaking surveys in light of extensive information available to him. He also applied one literal application of the words in the Final Determination.

[86]

146 Dr Clements caused field survey work to be undertaken in accordance with the Tozer model. Mr Fanning was critical of the Tozer model because it was not referred to in the Final Determination of the Scientific Committee and has not been determined to be applicable by them. Therefore, in his view its application is not determinative of CPW, and has inherent accuracy limitations as a diagnostic tool. However I am unable to discern any alternative diagnostic methodology from Mr Fanning's approach which could or should be otherwise applied. I would need more evidence, preferably from the National Parks and Wildlife Service/Department of Environment and Conservation, on the application of the Tozer model and its general scientific standing as a diagnostic tool, including its limitations, before I accept Mr Fanning's opinion on this issue. It would also have been useful for the Court to be provided with more information on the scientific standing of the Tozer model to enable it to better assess Dr Clements' application of it. 147 In the absence of such material, my preliminary view is that Mr Fanning's approach is somewhat simplistic and the approach of Dr Clements, based on the Tozer model, is potentially more rigorous on this occasion. As already stated I do not need to finally resolve this issue here as I am concerned with what a prudent hypothetical purchaser would do in light of information and advice available to him or her. The principal finding that I need to come to here is that Mr Fanning's opinion that there is no CPW on the Nasser land is not so self-evidently correct that his evidence is to be preferred to that of Dr Clements. There are, given Dr Clements' evidence, possible areas of CPW on parts of the Nasser land which a prudent hypothetical purchaser would take into account as a potential constraint on development. The issue which then arises is how much area a prudent hypothetical purchaser would consider to be a constraint on development. 148 Unfortunately Dr Clements makes general statements that up to 50 per cent of an endangered ecological community would be required to be preserved but this is not backed up by any evidence of precisely what parts of the vegetation on the Nasser land were likely to have CPW. Nor is it clear from the LEP or DCP 8 - Natural Assets that this would be a requirement of the Council. Rather this is a figure Dr Clements applies based on her experience with no evidence to support it. 149 I have referred to cl 16 of the LEP at par 136. Its provisions suggest there would be some constraint on development, but how much is difficult to determine in the abstract. DCP 8 - Natural Assets has no specific targets set for vegetation retention. It states at 3.2 that one of its objectives is: To ensure that significant bushland is substantially retained and protected, and that development enhances and compliments bushland. Given these broad objectives, it is debatable whether the Council would require 50 per cent retention of vegetation across the Nasser land as Dr Clements argued. As Mr Fanning noted the range of vegetated areas required for retention can range from 20 per cent to 80 per cent, depending on the circumstances.

[94]

Finding on industrial land rate "Before" value 161 There is a marked difference of over 28 per cent, between the two valuers' conclusions on the value demonstrated by the Boral sale with Mr Lunney attributing $165/m2 and Mr Neskovski attributing $230/m2. Given that the valuers are expert witnesses whose primary duty is to assist the Court, this level of discrepancy is both surprising and unhelpful. 162 There were three adjustments where there was substantial difference between the two valuers in relation to their analysis of the Boral sale, apart from whether there should be an allowance for betterment from the WSO. I consider that issue separately below. I note that the Applicants no longer press one of these adjustments, an allowance made for interest of 8.5 per cent lost on the purchase price for a 12 month period. The other differences relate to the cost of the sewerage system and the contract date. 163 As referred to in par 156 Mr Neskovski took into account $250,000 to provide for a temporary sewerage system. He gave oral evidence of a conversation with a valuer connected with the earlier sale of the site. Mr Lunney did not consider this to be an accurate reflection of the cost of the sewerage system at all. He considered the cost of the system would be much less. In the absence of concrete evidence to support the figure applied by Mr Neskovski I do not accept the amount applied by him should be considered as relevant in this analysis. 164 The valuers took a different approach to the relevant contract date. Mr Lunney applied the date the contract exchanged in December 2002. Mr Neskovski applied a date of August 2002 which he considered to be the date the parties entered an agreement to proceed with the sale and adjusted the rate by six per cent reflecting the increase in the market. The RTA argued Mr Neskovski's approach represented a potential loss of the increase in value between August and December 2002 of $450,000 to $500,000, given the rapidly rising market at that time, which they argued a vendor would be unlikely to forgo. I agree for that reason. I consider the relevant date of the contract is December 2002 when the contracts were exchanged. Betterment from the WSO 165 Mr Lunney adjusted the Boral sale down by seven per cent as it occurred (on 13 December 2002) during the period the WSO was being constructed. The WSO opened in 2006. This represented the betterment he said resulted from the WSO on the basis that it had contributed to an increase in land values. He considered that based on his experience in this area of Sydney increases in industrial land values reflected betterment of 15 per cent as a result of the WSO but he was prepared to allow an adjustment of seven per cent. No specific sales evidence for this was relied on by Mr Lunney. 166 The amount of seven per cent was disputed by Mr Neskovski on the basis of a lack of any concrete sales evidence to support it. He was prepared to agree to two per cent at most, but also considered that to be a guess. He considered the M5 motorway opening four years before the date of acquisition had a betterment impact, but given that the WSO was not due to be completed until 2006 it could only have a negligible impact at the date of acquisition in 2002.

[95]

Finding on betterment 167 In Lalic the figure of seven per cent for the betterment effect of the WSO was agreed between the two valuers in that case, Mr Lunney and Mr Neskovski. In a statement filed after the close of hearing in this matter Mr Neskovski sought to explain why he had changed his mind since Lalic. This statement essentially canvassed matters he had put in oral evidence during the hearing. He stated that much of the increase in the value of individual land in south-western Sydney can be attributed to the rising market between 1989 and 2004 coupled with the completion and opening of the M5 motorway, eastern distributor and M5 east motorway rather than the announcement of the construction of the WSO. As at the date of acquisition, the completion date of the WSO was estimated to be four to five years away. Therefore betterment cannot accurately be determined. 168 In oral evidence during the substantive hearing Mr Lunney stated that the M5 east motorway also had a positive effect on land values at Prestons. However, the M5 east motorway only provides access from Prestons (and the subject lands) to Port Botany and the south. Access to the M4 motorway and the northern freeway from the subject lands was still very difficult. As the WSO provides an important link between the existing freeway systems linking the M5, M4 and M2 motorways, it would clearly have had a betterment impact because it was under construction at the date of acquisition. 169 During argument after the substantive hearing had finished on whether Mr Neskovski's further statement on betterment ought be admitted the Court was taken to Lalic (same date of acquisition) and Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of New South Wales [2005] NSWLEC 419. The land in Mir Bros is in the general vicinity of the subject sites and was compulsorily acquired for the WSO on 10 October 2003. In both matters an amount for betterment of seven per cent was applied by the Court in relation to the impact of the WSO on comparable sales. In Mir Bros another valuer, Mr Sorenson, gave evidence on behalf of the RTA before McClellan J that the betterment effect on the WSO was nine per cent based on his experience in this area of Sydney. McClellan J considered on the evidence that seven per cent was the appropriate figure to allow. 170 This issue has now been considered directly on at least two other occasions by this Court, in Lalic and Mir Bros. In Lalic the same comparative sale was applied by the same valuers as in this case. While each case must be considered on its own facts it seems to me that a relevant consideration must also be consistency in decision-making by this Court in the absence of cogent reasons as to why previous decisions ought be departed from. Essentially the Court has the expert opinion of two valuers disagreeing on betterment on the basis of their experience. I do not consider the evidence of Mr Neskovski in relation to the potential betterment impact of the M5 motorway rather than the WSO, which opinion is also based largely on his experience in this area of Sydney, is so demonstratively correct that I should apply his view that the betterment impact of the WSO on the Boral sale was negligible or at most two per cent. Given the significant improvement to the road system resulting from the completion of the WSO in 2006, this appears unlikely, particularly if the M5 motorway is considered to have had some beneficial impact as both valuers agreed. I therefore consider Mr Lunney's approach to the Boral sale on this issue is correct. 171 In relation to the analysis of the Boral site, I consider the value attributed to the sale of $230/m2 by Mr Neskovski is too high and the approach of Mr Lunney is generally to be preferred except that his reduction of the figure he applied in Lalic of $200 to $165 because of the change in the constrained area in the Boral sale appears too much. $180/m2 is an appropriate amount to apply in my view. Application of Boral sale to subject sites 172 In terms of the derivation of the value of the subject lands in applying the Boral sale, I do not consider the Boral site to be substantially inferior to the subject lands. Indeed the subject lands and the Boral site appear largely comparable apart from there being marginally better egress to the WSO from the subject lands. To counter that, the Boral site is less flood free than the subject lands.

[100]

"After" value 182 The land is valued in the "after" scenario on the basis of existing Rural 1(e) - Future Urban Zoning with future industrial potential. 183 The residue land of both properties was irregular in shape after acquisition. The Nasser land's substantial frontage to Bernera Road was lost completely. The Millstar land lost substantial frontage to Bernera Road. Further, there is an area of Millstar land of 2,049m2 severed from the rest (S) which can only be developed with other adjoining land. Part of the residue Millstar land is under a TLE, (Q) amounting to an area of 5,880m2. 184 There was not much difference between the valuers' opinions on the "after" value for the developable land and ultimately they agreed on a rate of $40/m2. (b) Constrained (non developable) land value "Before" scenario 185 Mr Lunney applied an amount of $20/m2 for the constrained land such as the area under the TLE on the Millstar land, vegetation requiring preservation on the Nasser land and flood prone land in the "before" scenario. This figure was based on an analysis of three sales of totally constrained land, sales 9 and 10 at Wilson Road, Hinchinbrook and the sale of a golf course at Lot 1 Cowpasture Road, Hoxton Park on flood liable land. Sale 9 at Wilson Road, Hinchinbrook, occurred on 27 September 2002, for a sale price of $515,900 (excluding GST). This property was 3.198ha in area. The sale was negotiated between Stockland and the RTA, at a rate of $20/m2 for the areas not covered by the TLE and $10/m2 for the areas covered by this easement. Sale 10 at Wilson Road, Hinchinbrook occurred on 6 August 2004, for a sale price of $700,000, or $20.60/m2. This property was 3.4ha in area. The sale of Lot 1 Cowpasture Road Hoxton Park occurred on 5 May 2001, for a sale price of $1,013,674, or $17/m2 for the primary acquisition and $19.60/m2 for the road-widening compensation. Lot 1 Cowpasture Road had an area of 6.59 ha. 186 This price also reflected the s 94 "offset" value of the land being the price the Council considered such land to be worth in the relevant s 94 contributions plan. 187 It was difficult to identify in the evidence the values Mr Neskovski attributed to constrained land in the "before" scenario. There is no mention of a figure in his first report that I can find. In the table of values for the Nasser land in the joint valuers report he applied $50/m2 to constrained land in the "before" scenario. For the Millstar land Mr Neskovski applied $180/m2 to the constrained land affected by the TLE and $150/m2 to the area subject to flooding (area Z) in the "before" scenario. "After" scenario 188 Mr Lunney applied $10/m2 in the "after" scenario for constrained land.

[101]

189 In his report on the Millstar residue land, Mr Neskovski allowed $5,000 for the severed land (S), which is approximately 2,049m2 in area. He allowed $40/m2 in the "after" scenario for the rest of the land on the assumption that the land could not be developed but could be used for storage and parking. There is no evidence of comparable sales or other methods by which the figure of $40/m2 was arrived at. In submissions the Applicants accepted a figure of $30/m2. Mr Neskovski applied a figure of $20/m2 for the constrained land on the Nasser land. Finding on constrained land rate 190 The Court would have benefited from a clearer presentation from the Applicants of the evidence they relied on regarding constrained land values. There is a lack of any analysis contained in a report, or sales evidence relied on, to explain how Mr Neskovski chose the figures that he did. Mr Lunney obtained his constrained land figures from sales which appear comparable and I intend to adopt his figures. He generally adopted one amount for constrained land rather than different amounts for differently constrained land. The values for constrained land that I intend to adopt are $20/m2 for the "before" scenario and $10/m2 for the "after" scenario. 191 In relation to the Millstar land, the Applicants' submissions for the "after" scenario were made on the basis that Dr Webb's evidence in relation to filling of flood liable land is accepted which means that in the "after" scenario most of the residue land would be developable. The figure presented in the "after" scenario was $594,530 for areas R, Q, P and S. 192 The RTA's submissions assumed that none of the Millstar land is developable in the "after" scenario and applied a value of $394,408. My finding in relation to the Millstar land was that a prudent hypothetical purchaser would be likely to value the land on the basis that 80 per cent is highly flood liable and would not assume it could be developed. In the "after" scenario this means less will be developable than the Applicants' case assumed but because of the different cases presented by the parties it is difficult to identify exactly how much is developable in the "after" scenario. I will allow a nominal amount, as submitted by the Applicants, for area S given that it is severed from the main parcel by the WSO. I will assume area R is developable but will assume that areas P and Q are not developable. The area under the TLE on the Millstar land should not be valued on the basis that it can be developed for storage and parking.

At a glance

Court

Decision date

Before

Source

Judgment (109 paragraphs)

Cases Cited (10)

Cited By (1)