Boiling Pty Limited v Roads and Maritime Services (No 6) [2019] NSWLEC 98
Bezzina Developers Pty Ltd v Leichhardt Municipal Council (2006) 146 LGERA 249
Gertos Holdings Pty Ltd
Source
Original judgment source is linked above.
Catchwords
Boiling Pty Limited v Roads and Maritime Services (No 6) [2019] NSWLEC 98
Bezzina Developers Pty Ltd v Leichhardt Municipal Council (2006) 146 LGERA 249Gertos Holdings Pty Ltd
Judgment (34 paragraphs)
[1]
Introduction
These proceedings involve the claims made by Noubia Pty Limited ("Applicant" or "Noubia") as
1. the applicant in Land and Environment Court proceedings number 2017/83167, commenced by Summons dated 17 March 2017, amended on 8 September 2017; and
2. as plaintiff in Supreme Court proceedings number 2017/272416, by Summons filed on 7 September 2017;
in respect of Noubia's development at Coffs Harbour, known as "Lakes Estate".
The Supreme Court proceedings were transferred to this Court, on 6 October 2017, for hearing and determination with the Land and Environment Court proceedings.
The Applicant filed Points of Claim ("POC") on 1 December 2017, contending:
1. that Coffs Harbour City Council ("Council") has not complied with its obligations to pay compensation to the Applicant for the transfer to the Council of three lots of land (in 2007, 2008 and 2012); and
2. that the Court should determine the dispute about the amount of compensation to be paid, and order the Council to pay that amount, together with interest, to the Applicant.
The total claim made exceeds $4million, plus interest and costs (Applicant's opening subs pars 71-72).
The Council filed Points of Defence ("POD") on 22 December 2017, admitting many early paragraphs of the POC, but, in substance, denying the whole of Noubia's claim.
At the centre of the parties' dispute are the conditions imposed by Council on its approval, on 11 April 2003, of Noubia's development application ("DA") No. 575/03, especially Condition 1, dealing with "Acquisition of Land for Public Purpose", which was subsequently modified, on 25 September 2006.
Early in the hearing, the Court inspected the estate, and other lands considered by the parties' respective valuation witnesses, John Maher (for Noubia) and Terry Davis (for Council), who subsequently gave concurrent oral evidence. Those inspections included a visit to the development on neighbouring land immediately to the east of the estate, referred to during the hearing as the "Gill" property (see Exhibit A8).
Apart from the valuers, the parties also relied upon expert witnesses in town planning - Keiley Hunter (Noubia) and Clare Brown (Council) - and in hydrology - Peter Jamieson (Noubia) and Daniel Martens (Council) - all of whom gave both written and oral evidence.
[2]
The Applicant's Claims
The POC of 1 December 2017 ([3] above) claimed the following relief:
1. A declaration that the Respondent is estopped from denying an obligation to pay compensation to the Applicant in respect of the following land that has been transferred or dedicated to the defendant by the Applicant:
(a) Lot 94 in Deposited Plan 1111430;
(b) Lot 96 in Deposited Plan 1129227; and
(c) Lot 163 in Deposited Plan 1170833,
in an amount calculated in accordance with section 54(1) of the Land Acquisition (Just Terms) Act 1991 (NSW) [("JTC Act")] and all applicable heads of compensation referred to in section 55 of the [JTC Act]
2. A declaration that on the proper construction of Development Consent 575/03 granted by [Council on 11 April 2003, as modified on and after 25 September 2006 (Consent), and in the events which have happened:
(a) The Council must pay compensation to the Applicant in respect of the following land that has been transferred or dedicated to the Council by the Applicant:
(i) Lot 94 in Deposited Plan 1111430;
(ii) Lot 96 in Deposited Plan 1129227; and
(iii) Lot 163 in Deposited Plan 1170833.
(b) The Council must pay such compensation in an amount calculated in accordance with section 54(1) of the [JTC Act] and all applicable heads of compensation referred to in section 55 of the [JTC Act].
3. An order that the Council make an offer to pay compensation to the Applicant, in the particular amount that it considers is the amount due to the Applicant, within 14 days of this order.
4. An order that, in the event that the Applicant refuses the offer referred to in Order 3, the determination of the amount of compensation referred to in Order 2 be determined as a separate question by this Court, in Class 3 of its jurisdiction or otherwise.
5. An order that the Council pay to the Applicant, within 14 days of the date of determination of compensation referred to in Order 4:
(a) the amount of compensation so determined;
(b) interest on the amount of compensation so determined, running from the date of transfer of the relevant land to the Council, up to the date of payment.
6. Further or in the alternative to the orders in paragraphs 3 - 5, specific performance of the Transfer Agreement (as defined in this Statement of Claim) or, in the alternative, damages for breach of the Transfer Agreement.
7. Further or in the alternative to the declarations and orders in paragraphs 1 - 6:
(a) A declaration that condition 1 of the Consent is invalid, void and of no effect.
(b) An order that the Respondent pay restitution to the Applicant for money had and received in the sum of $4,150,000, or such other amount as constitutes the value of the land transferred to the Respondent pursuant to the obligation imposed by Condition 1 of Development Consent 575/03 granted by the Respondent on 11 April 2003, as modified on and after 25 September 2006.
(c) Further or in the alternative, an order that the Council pay restitution to the Applicant for all of its loss, damage and expense suffered or incurred by or in consequence of the imposition of Condition 1 of the Consent and the subsequent conduct of the parties.
(d) Further or in the alternative, an order that the Respondent pay restitution to the Applicant for the Respondent's enrichment by or in consequence of the imposition of Condition 1 of Development Consent 575/03 granted by the Respondent on 11 April 2003, as modified on and after 25 September 2006, and the conduct of the Applicant in respect of that condition, including:
(i) the value and/or the increase in the value of any property of the Council that has thereby been obtained or derived by the Council; and
(ii) the amounts paid by the Applicant that would otherwise have been paid by the Council (or that otherwise enriched the Council) in respect of the land or in relation to Condition 1.
8. Interest.
9. Costs.
Extensive particulars were provided in the POC (and the layout of the subject lots can be found amongst Kevin Shanahan's materials - [61] below).
Lot 94 was transferred on 18 May 2007, Lot 96 on 31 July 2008, and Lot 163 on 1 February 2012 (Applicant closing subs at 4 and 30).
Soon after the joint substantive hearing of the two matters commenced on 4 March, senior counsel for the Applicant, Mr Richard Lancaster SC, tendered, with the agreement of senior counsel for the Respondent, Mr Ian Hemmings SC, Exhibit A1, described as a "joint note on amended declaratory relief and Council's undertaking" ("NOTE"), signed by the parties' respective solicitors.
That "NOTE" recorded the following:
(1) Following discussions between the parties, the parties propose to resolve the real issues in dispute between them by the course outlined below.
(2) The Applicant seeks leave to claim the two additional declarations and that the Court note an undertaking of the Council, as follows. Council does not oppose the grant of leave.
1. A declaration that on the proper construction of Condition 1 the lands referred to in the first bullet point of Condition 1 include:
(i) Lot 94 in Deposited Plan 1111430 (Lot 94)
(ii) Lot 96 in Deposited Plan 1129227 (Lot 96); and
(iii) Lot 163 in Deposited Plan 1170833 (Lot 163)
2. A declaration that on the proper construction of Condition 1 the value of those lands, as at the date of transfer or dedication in accordance with section 54(1) of the [JTC Act] with the relevant matters to be considered as set down by section 55 of the Act, is as follows:
(i) Lot 94 - $3,256,000;
(ii) Lot 96 - $265,000; and
(iii) Lot 163 - $560,000.
3. That the Court note the undertaking of the Council to the Court and the Applicant that it will pay to the Applicant, within 28 days of the date of determination by the Court of the value of Lots 94 and 163 and (if applicable) Lot 96 (or, if there is an appeal by either party, within 28 days of the final determination of the proceedings):
(i) the amount of that value as so determined; and
(ii) interest on the amount so determined, running from the date of transfer of the relevant land to the Council up to the date of payment.
(3) The Council consents to the declarations sought in Orders 1(i) and 1(iii), but opposes the declaration sought in Order 1(ii). Accordingly, the only issue about the lands to which Condition 1 applies is whether Lot 96 is within the description of the first bullet point of Condition 1.
(4) The Council agrees that the Court ought make a declaration about the value of Lots 94 and Lot 163 on the basis described in Order 2, but contends that the values of those lots is, respectively, $110,000 and $110,600. The Council also agrees that, if the lands described in the first bullet point in Condition 1 include Lot 96, the value of Lot 96 on the basis described is $265,000. Accordingly, there is an issue about the value of Lot 94 and Lot 163 when calculated on the basis described in Condition 1.
(5) The Council gives the undertaking in paragraph 3 of the orders set out above.
(6) The parties submit that if the course outlined above is followed, it is not necessary to determine any of the Applicant's other claims for relief in the LEC or NSWSC proceedings.
(7) It will remain for the Court to make an appropriate order in respect of the costs of the proceedings.
Although the NOTE was presented as an agreed document, the Respondent disagreed with what the Applicant "did" with it (see Tpp262-272, and 284-286).
In any event, the Court granted, at the time of its tender, leave to the Applicant to amend its claim(s) in accordance with its terms (T04.03.19 p7, L6).
Following the conclusion of the evidence, and adjournment of the hearing to 28 March 2019, for the hearing of submissions, the Applicant filed, on 11 March 2019, a (further) amended summons in each matter, and amended POC ("APOC"), covering both matters.
In those 11 March 2019 APOC, the Applicant claims, inter alia, the relief set out in pars (2)1 and 2 of the Note, as pars "1A" and "1B" (of the APOC), but the APOC then continued:
2. A declaration that the Respondent is estopped from denying an obligation to pay compensation to the Applicant in respect of the following land that has been transferred or dedicated to the defendant by the Applicant:
(a) Lot 94 in Deposited Plan 1111430;
(b) Lot 96 in Deposited Plan 1129227; and
(c) Lot 163 in Deposited Plan 1170833,
in an amount calculated in accordance with section 54(1) of [JTC Act] and all applicable heads of compensation referred to in section 55 of the [JTC Act].
2. (sic) A declaration that on the proper construction of Development Consent 575/03 granted by [Council] on 11 April 2003, as modified on and after 25 September 2006 (Consent), and in the events which have happened:
(a) The Council must pay compensation to the Applicant in respect of the following land that has been transferred or dedicated to the Council by the Applicant:
(i) Lot 94 in Deposited Plan 1111430;
(ii) Lot 96 in Deposited Plan 1129227; and
(iii) Lot 163 in Deposited Plan 1170833.
(b) The Council must pay such compensation in an amount calculated in accordance with section 54(1) of the [JTC Act] and all applicable heads of compensation referred to in section 55 of the [JTC Act].
3. An order that the Council make an offer to pay compensation to the Applicant, in the particular amount that it considers is the amount due to the Applicant, within 14 days of this order.
4. An order that, in the event that the Applicant refuses the offer referred to in Order 3, the determination of the amount of compensation referred to in Order 2 be determined as a separate question by this Court, in Class 3 of its jurisdiction or otherwise.
5. An order that the Council pay to the Applicant, within 14 days of the date of determination of compensation referred to in Order 4:
(a) the amount of compensation so determined;
(b) interest on the amount of compensation so determined, running from the date of transfer of the relevant land to the Council, up to the date of payment.
6. Further or in the alternative to the orders in paragraphs 3 - 5, specific performance of the Transfer Agreement (as defined in this Statement of Claim) or, in the alternative, damages for breach of the Transfer Agreement.
7. Further or in the alternative to the declarations and orders in paragraphs 1 - 6:
(a) A declaration that condition 1 of the Consent is invalid, void and of no effect.
(b) An order that the Respondent pay restitution to the Applicant for money had and received in the sum of $4,150,000, or such other amount as constitutes the value of the land transferred to the Respondent pursuant to the obligation imposed by Condition 1 of Development Consent 575/03 granted by the Respondent on 11 April 2003, as modified on and after 25 September 2006.
(c) Further or in the alternative, an order that the Council pay restitution to the Applicant for all of its loss, damage and expense suffered or incurred by or in consequence of the imposition of Condition 1 of the Consent and the subsequent conduct of the parties.
(d) Further or in the alternative, an order that the Respondent pay restitution to the Applicant for the Respondent's enrichment by or in consequence of the imposition of Condition 1 of Development Consent 575/03 granted by the Respondent on 11 April 2003, as modified on and after 25 September 2006, and the conduct of the Applicant in respect of that condition, including:
(i) the value and/or the increase in the value of any property of the Council that has thereby been obtained or derived by the Council; and
(ii) the amounts paid by the Applicant that would otherwise have been paid by the Council (or that otherwise enriched the Council) in respect of the land or in relation to Condition 1.
8. Interest.
9. Costs.
The Respondent Council complained (Tpp262-264) that some of the relief carried forward into the APOC from the original POC should not have been pursued in light of the agreements noted in Exhibit A1.
In its written closing submissions, the Applicant said (at 9-11):
9. Since the basis on which the value of the transferred lots is to be calculated "in accordance with … the relevant matters to be considered as set down by section 55 of the Act", and since sections 55(d), 59(1)(d) and 59(1)(f) extend to compensate a developer such as the Applicant for the stamp duty expenses involved in purchasing other land of equivalent value, additional amounts to reflect stamp duty on land of those values should be added.
10. By paragraphs 5 and 2(3) of the Joint Note, the Council gave an undertaking to the Court and the Applicant. The effect of the undertaking is, broadly, that Council accepts an obligation to pay to the Applicant the value of the transferred lots referred to in Condition 1, plus interest.
11. The giving of the undertaking makes it unnecessary for the Court to determine the various alternative bases in the pleadings on which the Applicant sought to fix the Council with liability to pay compensation for the transfer of the three lots. The Applicant submits that the appropriate formal order in respect of the balance of the relief set out in the pleadings is for the Court to grant leave to the Applicant to discontinue those claims.
[3]
Council's Position
Council maintains (closing subs, par 2) that it does not deny, and has never denied, an obligation to pay compensation to the Applicant in respect of Lots 94 and 163; the amounts are in dispute.
However, Council continues to deny that any compensation at all is payable in respect of Lot 96 (par 3), and it filed comprehensive amended POD ("APOD"), on 15 March 2019, addressing the APOC.
Towards the end of the fourth hearing day, Mr Hemmings informed the Court that part-payments had been made by the Council, in or around August 2017, in respect of Lots 94 and 163 ($110,000 and $80,000 respectively - see Tp261, LL1-22). Those payments would necessarily be offset against any compensation awarded for those lots. Mr Lancaster observed (at Tp271 LL7-9), in respect of those payments:
… I don't think council controverts our proposition, which was that those payments were accepted as an advance payment, and without prejudice to Noubia's claim in these proceedings. …
[4]
Noubia and the Lakes Estate
Noubia was described in the affidavit of Kevin Francis Shanahan, dated 12 February 2019 (par 3) in these terms:
Noubia was incorporated as a specific entity to purchase and develop land in the North Boambee Valley. Noubia is part of a group of companies which includes a property development company known as Astoria Developments Pty Limited (Astoria). The shareholders and officers of the companies which form the Astoria Group are myself and my brothers, Peter Shanahan, Terry Shanahan, Mark Shanahan and David Shanahan. ...
Kevin (par 4) was authorised by Noubia, and/or Astoria, to deal with Council in respect of developing the subject land. He was assisted by officers and employees of Astoria, and they "all reported to ... Peter Shanahan who was at all times a director of Noubia". Any involvement of Astoria in those dealings (par 5) "was in its capacity as a managing entity for Noubia".
A second affidavit from Kevin Shanahan, dated 1 March 2019, which is relevant to Noubia's claims for stamp duty, further recorded (pars 2-3):
2. Noubia is the Trustee of the Noubia No.1 Trust which is one of the many Family Trusts involving my four brothers and I (sic) …
3. Noubia is part of a group of companies which are established under the umbrella of a property development company known as Astoria Developments Pty Limited (Astoria). Each time my brothers and I undertake a new project, we incorporate a new company which becomes the trustee of a newly established trust to undertake the works and hold the property.
The relevant Trust Deed is annexed to that second affidavit.
Lakes Estate is situated in the North Boambee Valley, near Coffs Harbour, and was acquired by Noubia on 28 May 2003 (Kevin 1 March 2019, par 6).
Council granted approval for Development Application 575/03, on 11 April 2013 (Kevin 1 March 2019, par 7) for:
… the staged subdivision of the Subject Land to create 160 residential lots, a community centre lot, land for public reserves and one future development lot.
The Applicant notes (closing subs, par 17) that, in 2002, the uses of the Land were rural in character, and it had not been developed for any urban or residential purposes.
The Lakes Estate subdivision, as it currently exists, was described in evidence as a "prestigious subdivision" (Tp215, LL6-31).
It is characterised by a system of five interconnected lakes surrounded by residential housing, has an internal road network, and includes also a children's playground and other amenities.
There was some argument among witnesses as to any negative effect on the "prestige" of the estate if some of the lakes were not present, and witnesses also disagreed on how important they all were, for other (hydrological) purposes, for an area of 154ha (533 lots), of which (only) 240 lots are in the Lakes Estate (Tp63, LL22-24).
The Applicant noted (closing subs, par 18) that:
... the lake system at the heart of these proceedings did not naturally exist - the lakes are entirely artificial and were created as a result of extensive excavation of the natural landform …
The "five lakes system" exists to fulfil the public purpose, namely, water quality management and stormwater and flooding control (Applicant's closing subs, par 34).
The background to the construction of the five lakes system, and its functions, are described in the report of the Applicant's retained hydrology expert, Peter Jamieson, of Anditi Pty Ltd (Exhibit A2).
The lakes system was designed by Umwelt Australia Pty Ltd ("Umwelt"), of which Jamieson was then a director, and "comprised five lake (sic) and one wetland that had no large embankment and balanced cut to fill earthworks requirements" (Exhibit A2, par 6).
Jamieson explained (par 7) that this water management system had three functions, namely:
• conveyance of flows within the catchment from upstream to downstream;
• detention of flows to offset the additional runoff from increased permeable (i.e. houses, roads and footpaths) areas in the catchment; and
• water quality controls to reduce impacts of increased nutrient loading from urban areas and sediment generation.
In his primary expert report for the Council (Exhibit R1), Martens made the following observations (par 13) regarding the trunk drainage scheme:
a. The approved trunk drainage scheme has been constructed on a pre-existing 2nd order watercourse. This means that the lakes are known as 'on-line' stormwater structures.
b. A number of minor or 1st order, watercourses drain to the approved trunk drainage scheme.
[5]
Other Facts
Additional relevant background facts, set out in the Applicant's opening submissions (pars 5 to 15), were not really contested by the Respondent, and I set them out in full, for completeness (noting that there is additional detail provided in Kevin's uncontested affidavit evidence):
5. On or about 20 September 2002, the Applicant lodged development application DA 575/03 with the Respondent (Development Application) under the provisions of the Environmental Planning and Assessment Act 1979 (EP&A Act).
6. The Development Application sought development consent for the staged subdivision of land to create 160 residential lots, community centre lot, land for public reserves and one future development lot.
7. The Development Application related to the following parcels of land of which the Applicant was the Registered Proprietor at the time the Development Application was lodged (Land):
(a) Lots 1 and 2 in DP 773626;
(b) Lot 1 in DP 402432;
(c) Lot 4 in DP 852521;
(d) Part Lot 9 DP 401212.
8. The Land is situated in the North Boambee Valley, near Coffs Harbour.
9. The Development Application was approved by the Respondent on 11 April 2003, subject to conditions. Condition 1 of DA 575/03 (Original Condition 1) was in the following terms:
Acquisition of Land for Public Purpose:
The developer entering into a deed of agreement with the Council prior to the release of the linen plan of subdivision to the effect that land nominated under the North Boambee Valley Stage 1 Release Area Developer Contributions Plan for koala management, traffic management, water quality and community facilities that affects this site be transferred to the Council following registration of the linen plan of subdivision upon terms agreed between the parties.
Acquisition of public land by Council is to occur on a staged basis. The staging is to coincide with the release of adjoining land by the developer unless other arrangements have been made to the satisfaction of Council.
Additional Lands proposed by the developer for public ownership not detailed in the North Boambee Valley Stage 1 Release Area Developer Contributions Plan are to be dedicated at no cost to Council at the time of linen plan registration.
Lands being dedicated to or acquired by Council for a public purpose being improved by the removal of dead and dangerous trees, weeds, rubbish and all plants on Council's list of undesirable species and left in a useable and mowable (sic) condition to the satisfaction of Council.
[Kevin deposed (12 February par 9) that he did not agree with how Condition 1 dealt with "valuation of the land to be transferred or dedicated", but that Noubia was given no opportunity to negotiate the terms of the condition.]
10. On or about 19 March 2004, the Applicant provided to the Respondent a proposed deed of agreement that made provision for the transfer of the land identified in Original Condition 1. Pursuant to the proposed deed, the Respondent was to compensate the Applicant for the market value of the land as determined in accordance with Part 3 of [JTC Act].
11. On or about 23 March 2004 the Respondent declined to enter into a deed of agreement on terms suggested by the Applicant on 19 March 2004, but agreed that the compensation to be paid to the Applicant for the land identified in Original Condition 1 ought to have regard to the provisions of the [JTC Act].
12. On 6 July 2006 the Applicant lodged with the Respondent a Modification Application (the modification application) seeking to modify the terms of Original Condition 1.
13. On 24 August 2006 the Respondent advised the Applicant that it did not support the alternative wording of Original Condition 1 proposed by the Applicant in the modification application and notified the Applicant that it proposed to amend Original Condition 1 in other terms.
14. On or about 25 September 2006 the Respondent granted consent to the modification application and modified the terms of Original Condition 1.
15. At all material times since 25 September 2006, condition 1 of the Consent as modified has provided ([Modified] Condition 1):
• The applicant must transfer or dedicate the lands set aside for acquisition within the approved plan of subdivision the subject of the development application, being those lands identified in the North Boambee Valley Stage 1 Release Area Developer Contributions Plan for Koala Management, Traffic Management, Water quality and community facilities.
The lands must be transferred or dedicated to the Council in fee simple free of encumbrances, other than those acceptable to Council at or prior to the registration of the plan of subdivision.
The Council must compensate the applicant for the lands. The value is to be determined at the date of transfer or dedication in accordance with section 54(1) of the [JTC Act] with the relevant matters to be considered as set down by Section 55 of the Act.
• Acquisition of public land by Council is to occur on a staged basis. The staging is to coincide with the release of adjoining land by the developer unless other arrangements have been made to the satisfaction of Council.
• Additional lands proposed by the developer for public ownership not detailed in the North Boambee Valley Stage 1 Release Area Developer Contributions Plan are to be dedicated at no cost to Council at the time of Linen Plan registration.
• Land being dedicated to or acquired by Council for a public purpose being improved by the removal of dead and dangerous trees, weeds, rubbish and all plants on Council.
Kevin deposed (12 February 2019, par 21):
21. Condition 1 of the Modified Consent, was significantly different from condition 1 of the development consent in respect of the following matters:
o Noublia (sic) was required to transfer or dedicate the lands set aside for acquisition within the approved plan of subdivision the subject of the development application.
o The value of the land was to be determined at the date of transfer or dedication in accordance with section 54(1) of the [JTC Act] with the relevant matters to be considered as set down by section 55 of the Act.
The suggested differences between the Original and Modified Conditions 1 should be noted at this point:
1. The Original Condition 1 described the requirement to transfer in the following terms:
"The developer entering into a deed of agreement with the Council prior to the release of the linen plan of subdivision to the effect that land nominated under the North Boambee Valley Stage 1 Release Area Developer Contributions Plan … be transferred to the Council following registration of the linen plan of subdivision …"
but
Modified Condition 1 expressly requires (emphasis added) that:
• The applicant must transfer or dedicate the lands set aside for acquisition within the approved plan of subdivision the subject of the development application. ...
1. The Original Condition 1 stated (emphasis added) that "… land … be transferred … upon terms agreed between the parties"
but
Modified Condition 1 expressly mandates that "The Council must compensate the applicant for the lands".
Furthermore, Modified Condition 1 states that the compensation for the transfer of these lands is to be "determined at the date of transfer or dedication in accordance with section 54(1) of the [JTC Act] with the relevant matters to be considered as set down by Section 55 of the Act".
1. Whereas Original Condition 1 was expressed in one large paragraph, Modified Condition 1 is divided into multiple "bullet points". Both the Original Condition 1 and Modified Condition 1 contain the following statement:
"Additional lands proposed by the developer for public ownership not detailed in the North Boambee Valley Stage 1 Release Area Developer Contributions Plan are to be dedicated at no cost to Council at the time of Linen Plan registration".
However, in Modified Condition 1, this statement is contained in the Condition's separate (third) bullet point.
Kevin deposed (12 February 2019, pars 26-28):
26. The dedications of each of Lots 94, 96 and 163 by Noubia to the Council were accepted by the Council and resulted in subsequent registration of each of those lots in the name of the Council as registered proprietor. Those dedications completed Noubia's obligations under the agreement which I believed existed with the Council.
27. Noubia has been in dispute with the Council since the completion of the dedication of Lot 163 on 1 February 2012 in respect of the amount of the compensation payable by the Council to Noubia in respect of each lot.
28. At no time have I or anyone (sic) Noubia's behalf indicated to the Council that Noubia did not require payment of compensation for the dedication of lots 94, 96 and 163.
The Applicant contends that the parties, by their conduct after 6 July 2006, made a binding and enforceable agreement for the transfer of land ("transfer agreement"), from the Applicant to the Respondent, relevant terms of which agreement were that:
1. The Applicant would transfer or dedicate Lot 94 in Deposited Plan 1111430, Lot 96 in Deposited Plan 1129227 and Lot 163 in Deposited Plan 1170833 to the Respondent in consideration of the payment by the Respondent of compensation as determined in accordance with s 54(1) and all applicable heads of compensation referred to in s 55 of the JTC Act; and
2. The Respondent would:
1. pay compensation to the Applicant in respect of the transfer or dedication to the Respondent of the Public Purpose Land; and
2. pay such compensation in an amount calculated in accordance with s 54(1) of the JTC Act and all applicable heads of compensation referred to in s 55 of the JTC Act.
The Applicant complains that the Respondent has neglected or refused to perform the transfer agreement, and sought its specific performance.
Alternatively, the Applicant sought damages for breach of that transfer agreement, quantified in the amount of compensation calculated as provided in it ([43(ii)(b)] above). Also in the alternative, the Applicant further alleged that Council was "estopped from denying an obligation to pay compensation to the Applicant in respect of the transfer of the land in an amount to be determined under the [JTC Act]" (opening subs at 23 to 31), and pleaded also "mistake of law" and/or "unjust enrichment", as a basis for an order in restitution.
Ancillary claims for stamp duty and interest are still pressed, on the basis that the subject lands, prior to their transfer to Council, were held by the Applicant as part of its "land bank", being an "actual use" of land recognised by the Court of Appeal in Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259 ("Fitzpatrick"), at [1]-[6] and [31]-[35], and G Capital Corporation Pty Ltd; Gertos Holdings Pty Ltd; Marsden Developments Ltd v Roads and Maritime Services [2019] NSWLEC 12 ("G Capital"), at [45] (see opening subs par 70, and closing subs par 111). While the stamp duty claim is disputed, the question of interest has been agreed in the NOTE.
[6]
Introduction to the Central Issues
The Applicant's case was based on the argument that, absent the public purpose, Lots 94 and 163 could have been developed for residential purposes. Mr Lancaster explained, in closing (Tp272, LL34-44):
… to disregard the effect of the carrying out of the public purpose we must hypothesise about what would have occurred if that purpose had not been carried out and was necessary, therefore, to ask what would have happened either in 2003 when a different development consent would have been applied for an achieved, or alternatively at the time of the transfer of lot 94 in 2007. In each case the answer is the same on the evidence. The time of the consent which would in our submission have authorised and required a development that did not incorporate that public purpose but that allowed for residential development of the land …
A hypothetical subdivision layout, prepared by Newnham Karl Weir & Partners Pty Ltd, became Exhibit A6. As Mr Lancaster explained (Tp272, LL48-50, and p273, L1):
… Noubia contends that the likelihood is that it would have sought and obtained approval for residential subdivision of lot 94 as shown on exhibit A6 and, likewise, for lot 163 or something substantially to that effect …
The "main elements" of this hypothetical subdivision arrangement were identified in the Applicant's expert town planning report (Exhibit A13) at par 1.4:
1. Thirty five (35) low density residential lots ranging in area from 646.5 m2 to 1,635 m2.
2. No new roads - all hypothetical lots have frontage to the existing public road network.
3. Stormwater drainage infrastructure comprising open grassed channel dispersal to Lakes 1 and 2.
4. Reticulated water and sewer infrastructure.
In order to address the hydrology requirements within the hypothetical subdivision, an alternative trunk drainage scheme was designed to manage the subdivision's stormwater and drainage.
This alternative trunk drainage scheme features an alternative stormwater channel, which, as the Applicant explained, would involve (subs par 37):
… shifting Lakes Drive approximately 20 metres to the west, and the construction of the said channel to the east of the Lakes Drive. The channel is adjacent to the nursing home, and slightly encroaching into an at-grade car park, but which feeds into the lake system.
The feasibility of this alternative hypothetical subdivision, and particularly, the alternative trunk drainage scheme, was the central contest in these proceedings, in respect of Lots 94 and 163, and was the subject of a great deal of expert evidence.
The Respondent maintained that the subject land was constrained, and, therefore, was not developable.
The Respondent also emphasised (subs par 10) that, notwithstanding the "statutory disregard", a trunk drainage corridor would have been required for Lots 94 and 163, which Council submits would have been "materially very similar" to that which was approved and constructed on site.
In respect of Lot 96, the key issue to be determined was a question of construction, specifically, whether the transfer of Lot 96 fell within the meaning of the first or third bullet point of Modified Condition 1 ([39]15 above).
While the parties disputed the construction point, they came to an agreement that Lot 96 had a value of $265,000 (Tp2, L34).
[7]
Relevant Legislative Provisions
Compensation, in accordance with Condition 1, falls to be determined by reference to s 55 of the JTC Act, which provides:
55 Relevant matters to be considered in determining amount of compensation
In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division):
(a) the market value of the land on the date of its acquisition,
(b) any special value of the land to the person on the date of its acquisition,
(c) any loss attributable to severance,
(d) any loss attributable to disturbance,
(e) the disadvantage resulting from relocation,
(f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.
Section 56 provides:
56 Market value
(1) In this Act:
market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid):
(a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and
(b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and
(c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law.
(2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition.
(3) If:
(a) the land is used for a particular purpose and there is no general market for land used for that purpose, and
(b) the owner genuinely proposes to continue after the acquisition to use other land for that purpose,
the market value of the land is taken, for the purpose of paying compensation, to be the reasonable cost to the owner of equivalent reinstatement in some other location. That cost is to be reduced by any costs for which compensation is payable for loss attributable to disturbance and by any likely improvement in the owner's financial position because of the relocation.
Section 59 provides:
Loss attributable to disturbance
(1) In this Act:
loss attributable to disturbance of land means any of the following:
(a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land,
(b) valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land),
(c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs),
(d) stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired),
(e) financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation (but not exceeding the amount that would be incurred if the new mortgage secured the repayment of the balance owing in respect of the discharged mortgage),
(f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.
(2) Subject to the regulations, a reference in this section to a qualified valuer is a reference to a person who:
(a) has membership of the Australian Valuers Institute (other than associate or student membership), or
(b) has membership of the Australian Property Institute (other than student or provisional membership), acquired in connection with his or her occupation as a valuer, or
(c) has membership of the Royal Institution of Chartered Surveyors as a chartered valuer, or
(d) is of a class prescribed by the regulations.
The Applicant submits (closing subs par 34) that, because of s 56(1)(a), the public purpose is to be disregarded in calculating the market value of each lot. The public purpose for the acquisition of Lots 94 and 163 is agreed to be for water quality management and stormwater/flooding control, and Lot 96 was noted on the subdivision plan as "public reserve" (query "neighbourhood park" or playground).
[8]
Evidence
Much relevant background information was contained in the 12 February 2019 affidavit of Kevin Shanahan, and many relevant documents were included in its accompanying exhibit "KFS-1".
I have already noted (above at [25]) that Kevin provided a second affidavit, dated 1 March 2019, and his brother Mark also provided an affidavit, dated 1 March 2019. Kevin was not required for cross-examination, but Mark gave some supplementary oral evidence, upon all of which the Applicant relied.
Council relied on affidavits from current and former Council officers, Timothy Cotsell (30 January 2019) and Anthony Mutkins (5 February 2019). Neither was required for cross-examination.
[9]
Lot 96
The approved subdivision plan is found behind tab 15 of Exhibit KFS-1 (fol 118), and Mr Lancaster drew attention (at T04.03.19 p9, LL17-19) to "a series of areas marked for public reserve", which he submitted were "very important as to the proper construction of condition 1".
They included Lot 96, which he noted (at T04.03.19 p9, LL40-42) was "within the meaning of condition 1, because it's in the area marked as public reserved (sic) on the approved subdivision plan".
The "Deposited Plan Administration Sheet" for DP1129227 (at fol 68 of KFS-1) included the following words:
IT IS INTENDED:-
TO CREATE LOT 96 AS PUBLIC RESERVE.
The North Boambee Valley Stage 1 Release Area Developer Contributions Plan 2000 ("the Contributions Plan" - Tab 13, starting at fol 76) says, in its executive summary (at fol 78):
As a consequence of this anticipated development and having regard to the level of facilities currently available and the expected profile of the new population, it will be necessary to provide:
• open space and recreation facilities
• transport and traffic facilities
• community facilities and services
• fire services
• koala management facilities
• stormwater management.
The Contributions Plan continued (at fol 90):
Local
Local open space comprises neighbourhood parks, children's playground areas, passive reserves and drainage reserves.
Local open space is used primarily by children, these facilities should be provided within walking distance of residential development. A reasonable walking distance to a neighbourhood park is considered to be 500 metres which represents, on average, a seven minute walk.
Map 3 shows a 500m radius around potential neighbourhood park sites. (These radii do not take into account topography and other physical constraints.) On this basis a minimum of six playgrounds would be required to meet the needs of the community within the release area, with two of these provided in Stage 1.
Map 3, titled "Community Facilities, open space and recreation" (fol 91 of KFS-1) identified two playgrounds.
Mr Lancaster submitted (T04.03.19 p11, LL42-48):
… from the terms of condition 1, the identification of the lands in its primary operation was by reference to the subdivision plan, in our submission. That really answers the question sufficiently for our purposes. But the condition goes on to say, "Being the lands identified for the various four public purposes in the contributions plan". We say that your Honour will be comfortable (sic) satisfied that lot 96, in particular, is also described in the contributions plan.
He then referred to Map 3, and made the following submissions (T04.03.19 p12, LL38-50):
Map 3 shows a 500 metre radius around potential neighbourhood park sites, on this basis a minimum six playgrounds will be required to meet the needs of the community within the release areas, with two of these provided in stage 1. This is dealing with stage 1. Over the page at map 3, there are two playgrounds, indicative locations marked on that map. The one to the right was otherwise provided by Noubia.
The relevant one is the one to the left of this map. In our submission, it is in the general vicinity of lot 96, and at a conceptual level it is clearly the case that lot 96, being identified for public reserve on the approved subdivision plan, was intended to and did in fact provide for a public reserve to be transferred to council by Noubia for playground purposes, neighbourhood park purposes as indicated in the contributions plan.
In relation to Lot 96, Mr Hemmings, for the Respondent, contended (T04.03.19 p14, LL37-39) that "the question of construction is not one that can start and stop by looking at the subdivision plan …".
The Respondent made submissions in relation to correspondence between the Council and "Astoria", especially a letter dated 29 August 2002 (Exhibit R6), which contained the following (emphasis added):
Subdivision Concept
North Boambee Valley
I refer to the receipt of concept subdivision plans for Lot 1, DP773626, Lot 1, DP402432, Lot 2, DP773626, Lot 4, DP852521 and Part Lot 9, DP401212 North Boambee Road, North Boambee Valley on 8 August 2002.
The submission has been reviewed by Council's Planning, Engineering, Property & Valuation and Parks & Recreation sections. The following comments are provided for your assistance:
…
• Open Space
1. The lake system does not meet the recreational profile for the residential release area.
2. Proposed Lots 100 to 104 are positioned within the Environmental Protection Zone.
3. The three (3) small reserves indicated on the concept plan are not required for public open spaces purposes.
4. Residential lots should not directly border the public lake system.
Mr Hemmings also noted that Lot 96 was mapped as both bushfire zone and potential koala habitat, and that "it had some concerns attached to it. By dedicating that land, the developer of course avoids the necessity of dealing with those concerns" (T04.03.19 p15, LL25-30).
I will return later to the detailed submissions in respect of Lot 96 (at [162] and [182]).
[10]
Alternative Trunk Drainage Scheme
In his expert report (Exhibit A2), Jamieson noted that Umwelt had been instructed by the Applicant's solicitors to "address water management aspects of a hypothetical subdivision for the site".
In addressing the stormwater management options for the alternative subdivision, Jamieson opined (par 12):
A hypothetical alternative to Noubia constructing the five lakes system would be for Noubia to construct sufficient conveyance, detention and water quality controls for the Lakes Estate alone leaving the provision of conveyance, detention and water quality controls for upstream areas the responsibility of the upstream developers.
His report explained that detention requirements could be met (Exhibit A2, par 15)
… through the provision of the wetland, Lakes 1 and 2 and the pool and riffle channel that is upstream of where Lake 5 has been constructed which have a combined surcharge storage capacity of 12,388m3 …
and that, in order to meet the conveyance requirement (Exhibit A2, par 16)
… the channel system through Lakes Estate would need to have sufficient capacity to convey flows from the upstream catchment through the development area. …
The report continued (par 19):
… to convey upstream flows through the Lakes Estate, a grassed channel approximately 16.5 m wide with a flow depth of approximately 1.3 m would be required to carry flows from upstream to Lake 2. …
The experts referred to this modified drainage scheme in their joint report as the "alternative trunk drainage scheme".
[11]
Hydrology Expert Evidence
The expert hydrology evidence focused mostly on the feasibility of the alternative hypothetical subdivision and the alternative drainage corridor.
Dr Martens (of Martens & Associates Pty Ltd - for the Council) produced an individual report (Exhibit R1), and a supplementary report (Exhibit R2). He and Jamieson also authored a joint report (Exhibit A3), which canvassed four general topics relevant to the assessment of the market value for Lot 94:
1. Site flood affectation;
2. Stormwater detention;
3. Stormwater quality and treatment requirements;
4. Riparian corridor requirements.
It was agreed that a fifth topic addressed in the joint report, being the visual amenity of the riparian corridor, was better addressed by the expert town planners (Applicant's closing subs par 42).
[12]
Site flood affectation
Both experts agreed that, at the time of the development consent, the site was affected by flows from upstream of the site. They also agreed (Exhibit A3, p2) that any development of the subject site, including the hypothetical subdivision layout, "would need to accommodate flood water passing through the site such that the development was safe and buildings could be situated at the flood planning level …".
Jamieson was of the view that sections of the predevelopment site would be subject to a flooding impact which was not significant. He opined (Exhibit A3, p2) that a drainage corridor, provided in the hypothetical subdivision layout, ranging in width from 20m to 23m, would provide adequate space for the conveyance of flows from the upstream and adjoining catchment.
However, Martens was of the view (Exhibit A3 p2) that the site was "significantly" affected by flood water prior to its redevelopment, and that the minimum requirement likely for a flood conveyance corridor or channel would be around 25m, rather than the 16.5m proposed by Jamieson.
In their oral evidence, their written views regarding the width of the channel in the alternative hypothetical subdivision remained unchanged (see Tp060319 p7, LL34-37 and LL40-45).
Martens gave the following evidence (Tp060319 p10, LL5-19):
LANCASTER: Dr Martens, you appreciate, do you, the width of that channel attributed in the alternatives then the storm water and drainage is some 23 metres wide?
WITNESS MARTENS: I think it is. Yes.
LANCASTER: And that needs some substance, doesn't it, your desire to have a corridor or channel of around 25 metres wide.
WITNESS MARTENS: It's very close to the 25 metres that I have said would be a minimum for flood conveyance. Yes.
LANCASTER: But in substance, it would meet your requirements, wouldn't it?
WITNESS MARTENS: In substance, in relation to flood conveyance. Yes.
[13]
Stormwater detention
The hydrology experts agreed that, at the time of development consent, the site would have needed to provide on-site stormwater detention to ensure that stormwater flows leaving the site did not exceed pre-development levels for flows up to the 1 in 100 year ARI event (the "detention objective"). Both experts also agreed that the approved trunk drainage scheme provided adequate on-site detention capacity, and met the detention objective (Exhibit A3 p2).
Jamieson opined (Exhibit A3, p3) that the hypothetical sub-division layout was capable of achieving adequate stormwater detention. He referred to modelling undertaken by Umwelt (2004) for the Lakes Estate development. He was of the view that detailed design of the alternative trunk drainage scheme, within the area currently provided by the hypothetical sub-division layout, could further reduce peak discharge if required.
On the other hand, Martens took the view (Exhibit A3, p2) that the alternative drainage scheme would result in an increase in peak flow rates from the development site, thereby failing to satisfy the detention objective.
[14]
Stormwater quality and treatment requirements
Both experts agreed that the site, at the time of the development consent, would have needed to provide suitable stormwater treatment facilities in order to meet the "water quality objective", which they defined (Exhibit A3, p3) as:
a. That the exported nutrient concentrations from the development do not exceed 0.50 mg/L total nitrogen (TN) and 0.05 mg/L total phosphorus (TP) for more than 6 months of a median rainfall year.
Jamieson opined (Exhibit A3, p4) that the development with the alternative trunk drainage scheme would meet the water quality objective, and he also noted that Martens had adopted a different water quality objective, in his 4 February Report, than that used by Council, set out in Appendix E of the GHD EIS (Exhibit A9).
Jamieson also noted that different models are likely to produce different results, and that "significant work" would be required in order to calibrate the different models used by the experts.
Martens, amongst other comments, noted three key findings based on preliminary and supplementary stormwater modelling (Exhibit A3, p4), namely:
i. The approved trunk drainage scheme did not likely meet the water quality objectives.
ii. That the alternative trunk drainage scheme would not be capable of meet (sic) the water quality objectives.
iii. That the alternative trunk drainage scheme would result in an increase in pollutants being discharged from the site compared to the level presently released from the site.
[15]
Riparian Corridor Requirements
The hydrology experts also disagreed on the question of riparian corridor requirements.
Mr Jamieson opined (Exhibit A3, p5):
... that the Alternative Trunk Drainage Scheme is consistent with other sections of the approved drainage system on-site and that a riparian area approximately 20 to 23 metres wide could have been approved for as part of the hypothetical subdivision layout, [and noted] that the approved 5 Lake Trunk Drainage Scheme included two channel based riparian elements that are consistent with that proposed for the alternative trunk drainage scheme...
Martens's view was (Exhibit A3, p4):
... that the alternative trunk drainage scheme does not provide for an adequate riparian corridor along the second order watercourse that flowed through the site prior to development, [and] considers that an allowance of 40-50 m should have been provided in accordance with likely riparian corridor requirements at the time of consent …
[16]
Conclusion on Hydrology Evidence
I record here the conclusion I have reached on the hydrology evidence, following consideration of the parties' competing submissions, which I will deal with in detail later.
While Martens, as usual, gave thorough and thoughtful evidence - indeed, Mr Lancaster referred to him, and his evidence, several times (e.g. reply subs par 12), as "a counsel of modern-day perfection" - I found Jamieson's evidence more compelling, given his close involvement over many years with the specifics of the subject land, the development of the Lakes Estate, and the hypotheses of the Applicant.
[17]
Town Planning Expert Evidence
Each of the town planning experts, Keiley Hunter (of Keiley Hunter Town Planning - for the Applicant) and Clare Brown (of URBIS - for the Council) produced an individual expert report (Hunter Exhibit A13, and Brown Exhibit R5), and they also produced a Joint Report (dated 21 February 2019 Exhibit A14).
Both planning experts also gave oral evidence.
The planners agreed that the primary town planning issues to be addressed were (Exhibit A14, part 4.1):
(a) Whether the alternative subdivision proposal was permissible with consent.
(b) Whether [Council] would have approved the alternate subdivision proposal and alternate stormwater management system.
(c) Whether other land would be required for stormwater and water quality management to achieve the water quality and stormwater objectives in lieu of Lakes 3, 4 and 5.
(d) Whether Lot 96 was identified for open space purposes by [Council].
They identified and agreed upon the relevant environmental planning instruments which applied to the land, and agreed that, in March 2003, the subject land was zoned Residential 2A Low Density under the Coffs Harbour City Local Environmental Plan 2000 ("CLEP 2000").
They did not agree on whether Council would have approved the alternative hypothetical subdivision. As Brown explained orally (at Tp94, LL30-34):
… I would agree with Ms Hunter that the layout as shown in appendix A of the joint report being the re-subdivision of lot 163 and lot 94 would have been permissible with consent in 2003. So I do not think that that issue is in dispute. I think that the area where we diverge is whether or not that layout would have been approved in 2003 …
In respect of Lots 94 and 163, Hunter relied on the hydrology evidence of Jamieson to support her view that "the hypothetical layout for the Lakes Estate… could be designed and constructed to comply with conveyance, detention and water quality requirements for the 246 lots that make up Lakes Estate" (Exhibit A14, part 6.1).
Brown relied on the assessment of the alternative hypothetical subdivision proposal, and Martens's stormwater and water quality proposal, and expressed the view that the Council would not have approved the alternate subdivision (Exhibit A14, part 6.1).
In cross-examination, Brown was asked by Mr Lancaster whether, if the stormwater detention and other water quality issues addressed by Martens were to be put aside, there might be any other planning issue that might lead to a rejection of an application for the alternative hypothetical subdivision of lots 94 and lots 196 (Tp132, L48-p133, L3). The following exchanges occurred (Tp133, LL33-45):
LANCASTER: I'm inviting you to accept that, to put it in a nut shell, you've relied on Dr Martens' deficiencies about trunk drainage as a reason for thinking consent wouldn't have been granted to the alternative development of lots 94 and 163, haven't you?
WITNESS BROWN: Yes.
LANCASTER: There's no other planning factor that you've referred to in your evidence that you suggest additional to the trunk drainage issues as a factor that would have led council to refuse an application for residential subdivision of lots 94 and lot 163. That's correct, isn't it?
WITNESS BROWN: In isolation that's correct.
Hunter explained (Exhibit A14, part 7.2) that the Applicant's proposed public reserve "6", as shown on the approved plan of subdivision, corresponds with the position of Lot 96.
She also opined that it was "possible, albeit likely" that Lot 96 was necessary to provide play areas within 500m of residential areas. She explained her evidence in relation to Lot 96 (Tp93, L45 to p94, L11) in these terms:
… map three of the contribution plan nominates two playgrounds in the stage one release area. One is located near by the southern lake and the other is located to the west of the subject land.
Given the conceptual nature of the concept plans shown in the information sheet and the contributions plan, I consider that public reserve two shown on the - the approved subdivision plan prepared by Newnham Karl Weir and Partners best represents the location of the east playground and public reserve six, the west playground.
Public reserve two, the tennis courts, has not been dedicated to council and remains in the same ownership as the retirement village. Reserve six, which is what we call lot 96, it's within the 500 metre catchment of the approved lots. There is playground equipment established in lot 92, a council reserve. Lot 96 is similar identified as a council reserve and is owned and maintained by council. Lot 96, similarly to lot 92, was dedicated to council on the Lennon Plan as a public reserve.
Brown was of the opinion that, by reference to Map 3 of the Contributions Plan, Lot 96 was not nominated as being land required for Community Facilities, Open Space or Recreation Areas (Exhibit A14, part 7.1). She commented (Exhibit R5, par 6.2.3):
Lot 96 is an irregular shaped lot and it is unclear on the material available to me as to why the Applicant elected to dedicate that land as open space when it had not been identified as being required to meet the needs of the incoming population.
and continued (par 6.2.8):
Map 3 shows a 500 metre radius around potential park sites and on the basis of incoming population and the demographic profile two local parks were required for Stage 1. This did not include Lot 96.
Brown further opined that, under the terms of condition 1, Lot 96 was (Exhibit A14, part 7.3):
…additional lands proposed by the developer for public ownership not detailed in the North Boambee Valley Stage 1 Release Area Contributions Plan and as such if dedicated was to be dedicated at no cost to Council at the time of linen plan registration.
In her oral evidence, she also expressed her view (Tp98, LL6-10) that Lot 96 had some affectation from fire risk or bushland fire risk.
[18]
Conclusion on Town Planning
After considering all the submissions made by the parties, I find Hunter's evidence more persuasive, given Brown's reliance on the opinions of Martens, whose evidence I have found inferior to Jamieson's.
[19]
Valuation Expert Evidence
John Maher (of Property Strategies Australia Pty Ltd - for the Applicant) and Terry Davis (of TJ Davis & Associates Pty Ltd - for Council) each produced separate valuation reports for each of Lots 94, 96 and 163.
Together they produced three joint expert reports, one in respect of each of Lots 94, 96 and 163, which became Exhibit A18, A19 and A20, respectively.
Significantly, they agreed that Lot 96 ought to be valued at $265,000, but the main areas on which they disagreed were (1) methodology, (2) the relevance of "constrained" sales, and (3) whether a premium would be paid (or allowed) for lots close to, or in view of, the contentious "water features" of the estate.
In respect of (3), Davis found a premium, on the sales figures, of 20% (see Tpp184, 227, 233, and 255), but Maher said that the sales evidence did not take adequate account of other influential features like steepness or narrow frontage (Tpp230-231), which were not evident in respect of the hypothetical additional lots (Tp234).
In respect of the use of so-called "constrained" sales, Maher objected (Tp186) that they were all really "remnant" lots with no alternative development potential.
In considering the highest and best use of Lot 94, both valuation experts based their respective views on the opinions of their hydrology and planning experts.
Accordingly, Maher was of the opinion (Exhibit A18, par 12) that the highest and best use of Lot 94 is the hypothetical subdivision. He used market evidence and identified residential lot values for properties located within Lakes Estate, "within close proximity to the acquired land", in order to determine a sale price (market value) for the hypothetical lots in the hypothetical subdivision (Exhibit A15, p20, and see Tp193).
Relying on this market evidence, Maher calculated the market value of lot 94 at $3,256,000 including GST, as at 18 May 2007 (Exhibit A18, par 69).
Davis's view was that the highest and best use of Lot 94 is the existing lake and channel stormwater drainage and detention system, and he approached market value on this basis: Exhibit A18, par 14. He noted (Exhibit A18, par 114) that his approach to his primary valuation is "based upon the premise that the Property is best compared to constrained land", and he compiled market evidence using sales "of similar constrained properties in the vicinity" (Exhibit R10, par 50).
Davis concluded (Exhibit R10, par 62) that:
The Property has, as articulated in the Urbis and Martens Reports, no residential development potential and is consequently considered to be wholly constrained. This being the case, I am of the opinion that an appropriate market valuer (sic) per hectare at the date of valuation is in the order of $40,000 per hectare, inclusive of GST.
Based on that evidence, Davis arrived at a market value for Lot 94 of $110,000 (Exhibit R10, par 63).
Both experts also prepared alternative valuation scenarios.
Maher's alternative involved valuation involved a "before and after" approach (Exhibit A18, par 19)
… where the hypothetical development of the Parent Land, disregarding the public purpose and the need to construct lakes 3, 4 and 5 represents the 'Before Case'. The existing lot layout, including Lot 94 and the presence of Lakes 3, 4 and 5 and the open channel, which were constructed to meet the requirements of the public purpose represents the 'After Case'.
According to Maher's alternative valuation, the "before" case would involve a scenario where Lot 94, and Lakes 3, 4 and 5, would not exist, and the land would be en globo residential land prior to development (Exhibit A18, par 22).
The "after" case would be Lot 94, and Lakes 3 and 4, as they exist, "with the public purpose and other residential lots" (Exhibit A18, par 24).
Davis's alternative valuation involved a feasibility analysis of the property, assuming that it could be developed in the form of the alternative hypothetical development (and also assuming that the alternative development would be modified as per the advice of Martens).
Davis had regard to "the sales of similar properties in the vicinity", and analysed a number of en globo residential subdivision sites, transacted at and around the date of the valuation of the subject property (Exhibit A18, pars 139-141).
Davis's alternative valuation also encompassed a notion of "betterment". He explained (Exhibit A18, par 158) that:
… the Lakes Estate has commanded premium values due to the presence and aesthetic superiority of allotments with lake frontage or views. Were the Alternative Development to be developed, the lakes would no longer exist, and those lots fronting (or with good views over) the lakes would have had to be sold at lower prices.
Although Davis's alternative valuation valued Lot 94 at $1,400,000, this value was effectively reduced to Nil once betterment, and the costs of the alternative channel, were taken into account (Exhibit A18, pars 185-186).
The competing expert valuers also produced a joint report detailing the valuation approaches to Lot 163 (Exhibit A19).
Maher, in his individual valuation report for Lot 163 (Exhibit A17, p31), calculated its market value as $560,000.
Davis, on the other hand, calculated the market value for Lot 163 as $110,600.00 (Exhibit R12, page 18).
Davis also produced an alternative valuation for Lot 163, arriving at a value of $395,000.00 (Exhibit A20).
When the valuers appeared for cross-examination, the issues were (Tp182): (1) whether or not there is a premium for lot values with lake frontage or lake views demonstrated from comparable sales, (2) the relevance, if any, of Mr Davis' constrained sales, and (3) methodology.
Maher challenged Davis's opinion that there was a premium for properties with lake frontage. He said (Tp184, LL41-50):
I don't agree with that analysis at all. That - that table is purely selective on one physical attribute of those particular parcels, being its location. The - in the direct comparability of land you should look at all the physical attributes including topography, position, aspect, frontage, shape - that hasn't been done. If you go to the paragraph - sorry, yeah, paragraph 143 in his table of sales, the result is significantly skewed by the use of sales so they're just simply not comparable, and they're easily identified in the price column by the price, and their physical location is Mawson Close, Colac Terrace, Wallace Circuit. All of those parcels are steep, most of them have narrow frontages, and they have significant cross fall.
In cross-examination, Davis was asked about the effect of Martens's evidence in informing his conclusion that Lot 94 was so constrained that it was undevelopable. The following exchange took place (at Tp247, LL46-50):
LANCASTER: One thing Dr Martens doesn't say is that lot 94 is so constrained by trunk drainage issues that it can't be developed. Do you agree with that?
WITNESS DAVIS: I didn't hear him say that, no.
Later, the following exchange took place (Tp248, LL37-48):
LANCASTER: What I'm inviting you to accept is, that the way that you summarised things this morning, you approached lot 94 on the basis that it's so constrained that it can't be developed, that's right, isn't it?
WITNESS DAVIS: Yes, if it has to be underwater, it can't be developed.
LANCASTER: And I'm suggesting to you that Dr Martens has never said in any written or oral evidence that lot 94 is so constrained by storm water, that it can't be developed and you agree, don't you, that he never said that or wrote that?
WITNESS DAVIS: I can't recall him saying that, no.
[20]
Conclusion on Valuation
I will, in the next section, deal in detail with the parties' submissions, but, even after considering them, I find great difficulty with Davis's evidence, which again was very reliant on that of Martens, and I prefer the cogent arguments advanced and defended by Maher.
[21]
Lots 94 and 163
The Applicant submits (par 35):
Mr Maher's evidence is that, having regard, in particular, to the zoning of Lot 94 at the date of transfer on 18 May 2007, being Residential 2A Low Density under the [CLEP], and the advices of Mr Jamieson and Ms Hunter which attest to the ready availability of the land for residential subdivision purposes, the highest and best use of Lot 94, disregarding the public purpose, was for residential subdivision in accordance with the said zoning. The Respondent's experts do not, generally speaking, appear to cavil with this, although it is asserted that the land is constrained because of its stormwater and flooding control use. ...
The hypothetical subdivision of Lot 94 and the hypothetical alternative stormwater channel are depicted in Exhibit A6.
The Applicant contends (closing subs par 44) that the effect of Jamieson's evidence is that the level of significance of flooding of the site was "not dissimilar" to other development in the Lakes Estate subdivision.
The Applicant pointed (pars 44(a) and (j)) to a number of observations from the evidence to support this; for example, the nursing home on Lot 92 which was built over an existing watercourse and was flood affected, but was filled to 3m in order to be developed. In addition, the neighbouring Gill property development, to the east of the subject site was substantially filled to enable its subdivision.
The Applicant referred to the Gill property as an example of "what council actually approved in 2003" (Tp274, L27), and submitted that the Gill development supports the proposition that (Tp276, LL17-24):
... council would have taken no more demanding an approach to the exhibit A6 hypothetical subdivision if it had have been presented to it at any time during the 2000s.
For example, the retirement or nursing home was on land that was flood affected but was filled in the order of three metres to enable construction and development, that the Gill property next door likewise was subjected to very substantial earthworks and movement of soil and fill to enable its development. ...
In relation to the site flood affectation, the Applicant submitted (par 45) that the Court would find that:
(a) The subject's site susceptibility to flooding would not have presented any difficulty at all for a hypothetical residential subdivision, in a manner similar to the residential subdivision which in fact occurred on land immediately adjacent and in the vicinity of Lot 94 which shared identical landform characteristics and zoning;
(b) to the extent that there were existing watercourses on the land before its residential development, there is no sufficient evidence before the Court to suggest that the Council would have denied an application for residential subdivision of Lot 94 because of the nature or location of those watercourses;
(c) The alternative channel arrangements were readily capable of being implemented if the alternative hypothetical residential subdivision were to have been pursued at the relevant time.
The Applicant added (pars 52, 55, 58-60):
52. Accordingly, the Applicant submits that the Court will find that on the hypothetical subdivision, there would be no real concerns about stormwater detention objectives, as the modelling used on the grant of the original consent showed that if that same data was applied to the hypothetical subdivision, the detention objective would be met.
...
55. As Dr Martens conceded in cross examination, the alternative stormwater channel only marginally increases pollutants - the increase being an increase of 0.01mg/L (T 6/3/19, p 49, lines 9 - 13). Dr Martens concern was that this 'pushes it further into non-compliance', on the basis that the existing 5 lake system according to him already exceeds the above mentioned criteria. The fact remains, however, that this is the system which the Council approved, and there is no material increase in pollutant discharge. Dr Martens approach to the lakes system is generally not consistent with the Council's adopted approach (see e.g. T 6/3/19, p 62, lines 28 - 35). Dr Martens' evidence is a counsel of perfection, which the actual course of Council decision-making in respect of Noubia's land shows to be unrealistic and an approach that would not have been adopted.
...
58. In summary, Mr Jamieson says that from a nutrient point of view, there is no relevant difference between the current lake system and the proposed hypothetical replacement system (see e.g. T 6/3/19, p 64, lines 1 - 12).
59. Accordingly, the Applicant submits that the Court will find that the stormwater quality and treatment requirements of Council would have been met by the alternative subdivision of Lot 94 relied on by the Applicant.
Riparian corridor requirements
60. As with the analysis above, the focus of this topic should be on what the Council's likely requirements were at the time of the grant of the original consent. In the words, the Council (sic) actual behaviour and response to riparian corridor issues is most instructive. This issue is addressed in the joint report, Exhibit A3, pp 4 - 6. Mr Jamieson gives evidence on this topic at T 6/3/19, p 70, lines 38 - 50, p 71, lines 1 - 50, p 72, lines 1 - 50, p 73, lines 1 - 50 and p 74, lines 1 - 13, and notes that in the Lakes development, the existing approved development only has a 5m riparian corridor between the top of bank (the footpath) and the road. No other requirements have been imposed, and he points to the analysis in Annexure C of joint report (see T 6/3/19, p 71, line 16). This approach is also consistent with the riparian corridors in the vicinity of the subdivision (see the photos in Exhibit A5, which show that the riparian corridors of the type Martens identifies do not exist). As Mr Jamieson noted in his oral evidence, the purpose of the riparian zones in this instance establish connectivity, and as he said, he was not suggesting one can ignore riparian corridors, but rather was saying nowhere on the Lakes development can one find riparian corridor of 20m or overall corridor of 50m is in existence (T 6/3/19, p 75, line 7).
The Applicant's submissions then dealt with the town planning evidence, concluding, inter alia (in par 65(a)):
Putting aside the hydrological/trunk drainage issues the subject of the hydrological evidence, there are no planning issues giving rise to possible rejection of a hypothetical development application for the hypothetical subdivision of Lot 94 (or Lot 163) …
The Applicant also submitted (par 65(b)) that there would be no planning reason to refuse the hypothetical DA (in relation to filling), and referred to Hunter's evidence that the amount of fill required for the hypothetical subdivision would be no barrier when regard was had to other developments in the same area.
The Applicant concluded (par 66) that "there are no planning issues arising from the hypothetical subdivision which would have led to the refusal of the hypothetical application for that subdivision".
In respect of the valuation evidence, the Applicant pressed its submission (par 67) that Davis's conclusion that the land was "constrained" was not based on any expert evidence adduced in the proceedings, including that of the Council.
The Applicant referred (par 69) to Davis's acknowledgment in cross-examination that it was not even the evidence of Martens that Lot 94 is so constrained by trunk drainage issues that it could not be developed (see above at [141]).
Instead, the Applicant submitted (par 70), the Court would accept Maher's hypothetical development analysis, given that "it is not seriously contradicted".
The submissions then reminded the Court (par 71) that these issues were not to be dealt with as if this were a Class 1 appeal.
The submission noted that any:
... possibility that a hypothetical development application may not be approved is captured in the 25% risk factor, and it is submitted that in circumstances where the hydrological evidence and planning evidence overwhelmingly favours a finding that the hypothetical subdivision has high prospects of success, a 25% risk factor is appropriate and probably conservative.
The Applicant also pointed out (par 72) a number of difficulties with Davis's reliance on his "constrained land" sales:
(a) They are not sufficiently proximate to Lot 94:
(b) They were not market sales and therefore must be treated with significant caution …
(c) They are residue parcels from residential subdivisions …
(d) They were, in the main, zoned 7A, thus reflecting their inherent lack of development potential …
The Applicant also disputed (pars 74-75) Davis's alternative valuation, from which he derives a value of $1,440,000, but gives allowances for betterment and development costs. The Applicant argued that the allowances made for "betterment" and "development costs" were not based on sound reasoning, and the submissions identified a number of flaws with his approach.
The Applicant also contended (par 75) that, "… any contention that nil compensation would be paid for Lot 94 is contrary to both authority and common sense".
The Applicant's submissions regarding Lot 163 were largely based on those for Lot 94:
104. Mr Maher's evidence is that, having regard, in particular, to the zoning of Lot 163 at the date of transfer on 1 February 2012, being part 2A Residential Low Density and Part 7A Environmental Protection Habitat and Catchment under the [CLEP], and the advices of Mr Jamieson and Ms Hunter, the highest and best use of Lot 163, disregarding the public purpose, was for residential subdivision in accordance with the said zoning. The Council's experts do not, generally speaking, appear to cavil with this, although it is asserted that the land is constrained because of its stormwater and flooding control use.
…
107. For the same reasons as those outlined in relation to Lot 94, namely, that Mr Davis' primary approach in using constrained sales is flawed, the Court would accept Mr Maher's evidence as to the value of Lot 163 disregarding the impact of the public purpose.
108. Accordingly, the value of Lot 163 at time of transfer would be determined in the sum of $560,000 for the transfer of Lot 163 from the Applicant to the Council.
[22]
Applicant's submissions on Lot 96
On the basis that the approved subdivision plan depicted Lot 96 as "public reserve 6", the Applicant submitted (par 79):
That is, at the time of the grant of consent, it was clear, to use the precise words of Condition 1, that it was 'lands set aside for acquisition within the approved plan of subdivision the subject of the development application'. That the lands (in this instance, Lot 96) were 'set aside for acquisition' is clear from the use of the words 'public reserve' in the approved plan, particularly when combined with the legal effect of s 49 of the Local Government Act 1993 which relevantly provided:
49 Public reserves and drainage reserves dedicated on subdivision, transfer or conveyance
(1) On the registration by the Registrar-General of a plan on which land is marked with the words "public reserve", or of a transfer or conveyance to a council of land identified in the transfer or conveyance as being for use as a public reserve, the land is dedicated as a public reserve and vests in the council for an estate in fee simple.
…
The Applicant also noted that the relevant linen plan (Exhibit KFS-1, p 67) "carried forward this text", and also contained the following words "It is intended:- to create lot 96 as a public reserve" (subs pars 81 and 82; see also above at [66]).
The Applicant submitted (pars 87-89, 94, and 96):
87. A non-legalistic and common sense interpretation of Condition 1 leads to the conclusion that if the approved plan of subdivision shows land 'set aside' for acquisition, prima facie compensation for the acquisition of that land must be paid by Council. In the present case, Lot 96 was noted on the approved subdivision plan as a 'public reserve' and, although the draftsperson of the consent does not expressly recognise, in precisely stated terms, Lot 96 as having been 'set aside' for 'acquisition', plainly the use of the words 'public reserve' must be interpreted as meaning such land would be transferred to the 'public' (i.e. to the Council), given that s 49 of the Local Government Act 1993 mandated this outcome.
88. Condition 1 goes on to say that such land should be 'identified in the 'North Boambee Valley Stage 1 Release Area Developer Contributions Plan for Koala Management, Traffic Management, Water quality and community facilities'. As the Contributions Plan makes clear, it is a concept document with, relatively, broadly indicative locations for neighbourhood parks. Lot 96 is either one of the 2 identified neighbourhood parks, or is land falling within the descriptive text of the document.
89. The town planning experts gave some evidence on this topic. Although there was much oral evidence and cross examination on this topic, ultimately the question in relation to Lot 96 is a legal one involving the proper construction of Condition 1, principally having regard to the analysis above. For what it may be worth, the town planners' respective evidence was as follows:
(a) Ms Hunter, whose summary oral evidence is at T 7/3/19, p 93, lines 44 - 50, and p 94, lines 1 - 18) said that Map 3 of contributions plan nominates 2 playgrounds; one near the southern lake and the other to the west of subject land and she considered that public reserve 2 shown on the approved subdivision plan best represents the location of the east playground and public reserve 6 the west playground. Public reserve 2 - the tennis courts - has not been dedicated. Lot 96 is within a 500m radius of residential lots; identified as council reserve and since 2003, adjoining land in the same ownership has been approved and directly adjoining lot 96 is a bushland reserve and this makes sense in having a playground linked with bushland reserve;
(b) Ms Brown said Lot 96 - shown on the approved subdivision plan as public reserve (Appendix E of JR) is not identified in the contributions plan as required for this purpose. However, in cross examination, Ms Brown said as follows:
(i) There are many aspects of contributions plan mapping which do not accord with approved subdivision layouts (see e.g. T 7/3/19, p 103, lines 1 - 15);
(ii) Contributions plan mapping should be regarded as conceptual (T 7/3/19, p 103, lines 17 - 50, and p 104, lines 1 - 20). Although Ms Brown's evidence was that it depends on the type of facility, and the nature of the facility in the instant case (a playground) is one that is in the category of having a 'flexible' location within a contributions plan, to which Ms Brown said that will often depend on final subdivision layout, and is a common experience.
...
94. The public purpose of the acquisition of Lot 96 was for a neighbourhood park (see Shanahan affidavit, 12/2/19, par [22]). Although this is denied by the Council, the Applicant submits that the land is identified in the Contributions Plan for this purpose, and the land was thus transferred by the Applicant to the Council for this purpose. Accordingly, by dint of s 56(1)(a) of the [JTC Act], that purpose is to be disregarded in assessing and determining the compensation payable for the transfer of Lot 96.
…
96. Accordingly, the value of Lot 96 at time of transfer would be determined in the sum of $265,000 for the transfer of Lot 96 from the Applicant to the Council, noting that the Court observed that it accepts the agreement of the valuation experts…
[23]
Miscellaneous
The Applicant also submitted (pars 111-115):
111. The land was, prior to its transfer to the Council, held by the Applicant as part of its 'land bank'. This is an 'actual use' of land: [Fitzpatrick] at [1]-[6], [31]-[35]; [G Capital] at [45]. Accordingly, the Applicant is also entitled to amounts for stamp duty, which can be calculated and (it is expected) agreed between the parties and notified to the Court following the Court's determination in respect of the value of the transferred lots.
CONCLUSION
112. The Court should make the declarations claimed in orders 1A and 1B of the amended pleadings. The final dollar amounts in those declarations should comprise both the market value of the lots at the date of transfer and an amount for stamp duty on land at those prices.
113. The Council has undertaken to pay interest (see paragraph 2(3)(ii) of the Joint Note). The Applicant proposes that the appropriate amount to be paid as interest can be calculated and (it is expected) agreed between the parties and notified to the Court following the Court's determination in respect of the value of the transferred lots.
114. Accordingly, in the event the Applicant is successful on the three central issues, the Council will be required by its undertaking to pay $4,081,000 plus stamp duty plus interest.
115. The Council should pay the Applicant's costs of the proceedings, as agreed or assessed.
[24]
Respondent's Submissions
The Respondent did not provide written opening submissions, but its very comprehensive written closing submissions included the following (footnote omitted):
2. The Council does not deny, and has never denied, an obligation to pay compensation to the Applicant in respect of Lot 94 and Lot 163. Contrary to the Applicant's submission that the Council has not complied with its obligations to pay compensation to the Applicant for the transfer of three lots of land, on or about 10 August 2017 the Respondent paid $190,000 to the Applicant, being $110,000 in payment of Lot 94 and $80,000 in payment of Lot 163.
...
5. The alternative relief sought in both the Land and Environment Court and in the Supreme Court proceedings has at all times been misconceived and a distraction from determining the just compensation payable in respect of Lots 94, 96 and 163.
...
7. The competing values contended for the three lots are:
LOT APPLICANT RESPONDENT
Lot 94 $3,256,000 $110,000
Lot 96 $265,000 nil
Lot 163 $560,000 $110,600
TOTAL $4,081,000 $220,600
[25]
The considerable difference between the parties on the competing values for Lots 94 and 163 is the result of the Applicant's opinion that the lands are hypothetically 'shovel ready' for residential development and the Respondent's contrary position that that (sic) lands are highly constrained and not developable.
...
17. Relevant to the factual background is that while Condition 1 of the consent was modified in 2006 the Condition was only modified at bullet point 1. Bullet point 3 - which the Respondent relies upon in respect of the dedication of Lot 96 - was unamended.
18. Also relevant to note is that as early as 29 August 2002, by letter to the Applicant, the Council expressly advised that it did not require Lot 96 (one of three reserves offered for dedication) for public open space purposes.
In his oral closing submissions Mr Hemmings complained (Tpp284-286) about the Respondent's approach to the effects of the NOTE - there are several pleadings and some of the Applicant's Opening written submissions not now reflected in the final form of relief sought, but, because of the NOTE, the Respondent had held back substantial written opening submissions, and had not amended his POD earlier.
However, Mr Hemmings did not oppose the granting of leave to the Applicant to discontinue the relevant parts of its claim as pleaded, and suggested that the question of costs should await my final decision.
[26]
Lots 94 and 163
The Respondent noted that, while its valuation was based on the lands being highly constrained, the Applicant maintained that they were "shovel ready".
The Respondent contends that even in the Applicant's hypothetical, the land is not developable because (subs par 24 - footnote omitted):
(a) Lakes 3 and 4 (and 5) would still be so located because of the natural characteristics of the land;
(b) The developer would still make choices related to cost and convenience and strive to provide a balanced cut to fill; and
(c) Policies of Council favoured lakes, not channelization.
The Respondent addressed concerns surrounding the Site Flood Affectation, and submitted (par 26) that the upstream flows are significant, and that, based on Martens's evidence, the site was significantly affected by floodwater prior to redevelopment.
Further, the Respondent noted that it had been generally agreed between the parties that the approved trunk drainage scheme performed a number of functions, and that the 5 lake scheme had been generally located in areas that follow the original watercourse.
In its closing submissions (par 30), the Council noted:
Specifically, Mr Jamieson agreed with the statement (T6/3/19, p11, line 45 - p12 line 15) that "the lakes have generally been located in areas which follow the original watercourse rather than filling these areas."
With regard to stormwater detention, the Respondent (subs pars 38-40) relied upon Martens's modelling to argue that the alternative trunk drainage scheme is not capable of providing stormwater detention requirements for the developed site. Council submitted that the currently existing 5 lakes system "just" satisfies the detention requirements.
In respect of the town planning evidence, the Respondent submitted that, in contrast to the Applicant's submission that there would be no planning reason to reject the hypothetical subdivision, there were at least 5 reasons to reject the proposal, which Council identified (subs par 70) as:
1. whether Council would have permitted the watercourses to be filled;
2. the amount of fill required for the hypothetical subdivision;
3. securing an Office of Water approval;
4. amenity; and
5. the proposed channel shown on Exhibit A6.
On item (b), Mr Hemmings stressed, in his oral submissions (at Tp300, L30-p301, L2), paragraphs 82 and 83 of the Respondent's written submissions:
82. Ms Hunter confirmed in cross examination that the 5 lake scheme and in particular Lakes 3, 4 and 5 were actively sought by the Applicant as a change to the previously approved 2 lake system; that the 5 lake system permitted the more economic approach to the carrying out of the development because it allowed a cut to fill exercise; the lakes in the 5 lake system have generally been located in areas which follow the original watercourse rather than fill in those areas (T7/3/19, p 154, line 45 - p 156, line 0).
83. Ms Hunter conceded that where there is a balanced cut to fill which has generally followed the natural watercourses and where the Applicant provided retention basins as landscape features, that the cut to fill was an element of design of the subdivision, and the cut to fill following the natural watercourse was also part of the concept design considerations. Ms Hunter was of the opinion that those concept design considerations sat outside of the public purpose (T7/3/19, p 161, lines 5-15).
In respect of the valuation evidence, the Respondent contends (par 101) that Council's expert hydrology and town planning evidence "fully supports" Davis's basis for his analysis of constrained sales.
Council submitted (par 104 - footnote omitted) that:
While all of the Respondent's sales of constrained land are to the Council, and the Respondent accepts that ordinarily sales to acquiring authorities, need to be treated with caution and great care, the market for constrained land is different, as the council is generally the only purchaser.
The Respondent submitted (par 107) that, in respect of Davis's opinion that there is a premium for lake frontages, "it is both intuitive and common sense that a premium is ordinarily paid for views".
The Respondent (par 113) challenged Maher's approach to valuation, and pointed to his concession in cross examination (Tp210, L35-p211, L22):
HEMMINGS: Now, if I want to work out if there is a change in value which is caused by the proposal to carry out the public purpose, I need to compare the difference in value of the subdivision that was approved actually in 2003.
WITNESS MAHER: Yes.
HEMMINGS: Compared to the one that hypothetically would allow lot 94 to be sold.
WITNESS MAHER: Yes.
HEMMINGS: Right. In order to do that, I need to carry out - I need to understand the value of the subdivision as a whole.
WITNESS MAHER: Yes. So you're asking me the proper methodology would have been a before and after?
HEMMINGS: Yes, I am. And that the before and after exercise needed to be in the before, so assuming the public purpose is not being carried out, what was the value of the subdivided land approved in the 2003 hypothetical consent on the one hand? And on the other, in the after, what was actually approved.
WITNESS MAHER: I understand. That's exactly how I approached it when I was first instructed to do this job, and I went down that path, and the barrister that was acting for the land owner at that time thought it was too complicated, and told me that it was no good, and to do it exactly the way I've done it.
HEMMINGS: So if you were trying to do it in accordance with your own opinion, to work out the difference in value, you would have done a before of the whole development, and an after of the whole development with the public purpose?
WITNESS MAHER: The answer is yes, but I'd like to qualify it in the sense that I would look at it in terms of what had already been developed up to a point, because there were stages, and then I made an assessment of how many - what parcels I needed to consider in the before. So that we're trying to narrow it down to just doing exactly what you're suggesting.
The Respondent then made the following submissions (pars 118-121) in regard to Maher's valuation approach:
118. As conceded above, the turning or tipping point, for what should have been the methodology applied in the before and after by Mr Maher, is 2003.
119. Mr Maher says that for the purpose of determining compensation for market value it is possible and reasonable for a hypothetical plan of subdivision to be prepared for the parent land totally ignoring the public purpose of the acquired land with a view to maximising the development potential…
120. In setting aside the public purpose and in considering how the parent land would have been developed Mr Maher assumes that the lot would be treated as a Greenfields site.
121. This is fundamentally inconsistent with Mr Maher's written evidence that in effect has Lot 94 as a stage of the already existing Lakes Estate, "shovel ready" for residential development…
[27]
Lot 96
The Council denies that compensation is payable in respect of Lot 96.
Mr Hemmings noted, in opening (T04.03.19 p14, LL46-47), that:
… [Lot 96] was and did form part of the consent. There's no doubt about it. It's whether it formed part of the first or third bullet point.
In his written closing submissions he said (at 144):
The Contributions Plan identifies that the nominated areas for local open space on Map 3 would consist of neighbourhood parks, children's playground areas, passive reserves and drainage reserves.
In his oral opening he said (T04.03.19 p15, LL13-30):
It is lot 96, in the council's submission, which doesn't form part of the contributions plan. We'll go back to map 3 in just a moment. It doesn't form part of the contributions plan, and therefore was a lot which was additional lands proposed by the developer for public ownership. Obviously there are benefits and burdens that run with that. The developer gave up the possible benefit of a lot of land, which subsequently has been valued at $265,000, that's an agreed position between the valuers. Of course, at the time - as your Honour will probably no doubt need to be taken to eventually - but it was a lot in this area, there's bushfire issues, and there's koala habitat issues.
Your Honour will see aerial photographs, because we're dealing with history rather than present day when we go and have a look. It was a lot which had a tree canopy in the rear section of the lot. It was mapped as bushfire prone, and it was mapped as potential koala habitat. It had some concerns attached to it.
By dedicating that land, the developer of course avoids the necessity of dealing with those concerns …
He later argued (T04.03.19 p16, LL38-40):
… It was a matter volunteered by the applicant, and as a consequence of that volunteering, falls within the third bullet point and not the first.
In his oral closing submissions, Mr Hemmings elaborated on those supposed concerns (Tp292, LL13-18):
… lot 96 was mapped koala habitat, was mapped high-hazard bushfire, was about half covered in vegetation at the time, but there's been vegetation removed since, clearly. So it was a constrained lot, which either the developer had the risk of having to maintain this environmental reserve, or could give it to the council. It made the decision, apparently, to give it to the council …
The Respondent submitted (subs pars 126-127) that, while the evidence demonstrates that Lot 96 was offered to the Council on a Concept Plan in 2002, the Council did not agree to compensation being payable for it (or in respect of two other lots proffered at the time). Council contends that Mr Smith of Astoria was advised, by way of letter dated 29 August 2002 (Exhibit R6, p2), that "the three (3) small reserves indicated on the concept plan are not required for open space purposes".
The Respondent's submissions concluded with the following (after its submissions on Stamp Duty, to which I will come shortly):
171. The Applicant does not make submissions about any "other expenses" claimed.
172. Being Class 4 proceedings, and payment having already been made by the Respondent to the Applicant in 20I7, and largely in satisfaction of the amount the Respondent contends for, costs should be reserved.
In his oral submissions (at Tp306, LL3-7), Mr Hemmings reiterated the Respondent's acceptance of a liability to pay interest in the circumstances of this case.
[28]
Applicant's Reply Subs
The Applicant's written submissions in reply began with the following "overview":
1. In the present matter, the agreed basis on which the Court is asked to determine the market value of Lots 94, 96 (if applicable) and 163 is set out in Condition 1, which requires the disregard of any decrease in value caused by the carrying out of the public purpose of the Council's acquisition of the land. The value of Lot 96 on that basis is not in dispute. As to Lots 94 and 163, any fair understanding and assessment of the characteristics of that land at the relevant times demonstrates that the values for which the Council contends are unreasonably low. In particular:
(a) Both lots were zoned to permit residential subdivision, in a manner identical to the land immediately adjacent to those lots (which has since been developed for residential subdivision and dwelling construction);
(b) Both lots shared the same general stormwater and drainage characteristics as that adjacent land;
(c) The evidence of both town planners was that, subject to the resolution of the stormwater and drainage issues, there were no town planning reasons to refuse development consent to the hypothetical residential subdivision shown in Exhibit A6;
(d) Mr Jamieson, the Applicant's expert hydrological engineer who designed the public purpose drainage scheme, said that the drainage solution reflected in Exhibit A6 would have satisfactorily addressed Council's requirements at the relevant time and gained approval; and
(e) Although the Council repeatedly submits that Lots 94 and 163 were "highly constrained and not developable" (for example, Council submissions at [8]), not even the evidence called by Council supports that proposition. In particular, Dr Martens did not give evidence that either of the lots were "not developable" by reason of their hydrological characteristics.
2. Yet in spite of this evidence about the characteristics of the land at the relevant times, the Council contends that the market value of each of Lots 94 and 163 is (i) less than half the value of the agreed value of Lot 96; and (ii) less than half the average value of a single developed residential lot in The Lakes Estate.
3. The Council's contention is wrong on the evidence, but it also fails any common sense reality check. In RTA v Collex Pty Limited [2009] NSWCA 101, (2009) 165 LGERA 419, Hodgson JA said at [231] (and see also at [156], [157], [176], [185], [186], [187] and [188]):
I would comment finally that this case shows that it is sometimes wrong for lawyers and the court to defer uncritically to the opinions of experts, particularly where those opinions are about matters affected by somewhat complex factual and legal issues. It is generally desirable, where possible, to engage in common sense reality checks on what the experts are saying, if only to ensure that their views are not distorted by mutual misunderstandings in a complex legal and factual situation.
4. The following additional critical points should also be noted:
(a) First, that Mr Davis' assumption that Lots 94 and 163 should be valued on the basis the lots are 'constrained land' is unjustifiable. His constrained land sales are obviously very different in character, topography and value when contrasted with the land in Lots 94, 96 and 163; and
(b) Secondly, Mr Davis wrongly, and contrary to the mandate in Condition 1 referring to ss 54 and 55 of the [JTC Act], continues to assume the existence of the as-constructed public purpose lakes system in undertaking his valuation. The Council's reliance on [Croghan v Blacktown City Council [2019] NSWLEC 2] (see pars [22] - [24] of its submissions) is misplaced and, in any event, it is clear enough that decision did not intend to subvert the statutory disregard. To pay lip service to the need to value the land by disregarding the depressing effect on value of the public purpose (as mandated by section 56(1)(a)), but to then have regard to an identical public purpose as part of the assessment and determination of market value of the acquired land, is an error of valuation principle and contrary to the [JTC Act] basis on which value is to be determined.
Points of claim and alternative relief
5. In pars [4] - [6] of the Council's submissions, the Council refers to the Applicant's alternative bases for its claims. The Council says it has never denied an obligation to pay compensation for Lots 94 and 163, but that submission does not sit well with the Council's Points of Defence, in which the Council denied each and every alternative basis on which the Applicant pleaded that an obligation exists. Further, nowhere in the Points of Defence did Council positively accept any obligation to pay compensation in respect of Lots 94 and 163. The legal, procedural and practical effect of the Council's position was that the Applicant had to continue to maintain the bases on which it contended that Council was obliged to compensate the Applicant. The Applicant's Statement of Claim and the Summons in each proceeding properly identifies the various causes of action and alternative claims for relief on which it relied to claim such compensation and it was reasonable for it to continue to pursue those claims in light of the Council's position.
6. It was only, literally, on the eve of the hearing that the Council conceded an obligation to pay compensation, as reflected in the undertaking given to the Court on the first day of the hearing (Ex A1).
7. Accordingly, the Applicant's conduct in pleading and pursuing the alternative claims was reasonable. The parties agree (Ex A1) that it is not now necessary to determine those claims. That is so because, the Applicant submits, there is now no utility in determining the character of the legal obligation of the Council to pay in circumstances in which Council has belatedly given an undertaking to the Court that it will pay such value as the Court declares the land to have (when assessed on the basis set out in Condition 1). The appropriate step for the Court to take in those circumstances is not to dismiss those other claims (and Council does not suggest that order) but rather either (i) simply note that it is not necessary to consider and determine those claims in light of the undertaking or (ii) grant leave to the Applicant to discontinue those claims. In neither case would it be appropriate to require the Applicant to pay any costs in that respect. Pt 42.19(2) of the [Uniform Civil Procedure Rules 2005] (as quoted in [6] of the Council's submissions) does not apply because the Applicant does not propose to file any 'notice of discontinuance' of the proceedings.
Hydrology
8. Much is made in pars [26] - [28] and [34] - [36] of the Council's written submissions about the existence of a watercourse on Lot 94 before residential development of that land. This issue cannot be accepted in the way Council puts it forward, as an alleged answer to the whole of the Applicant's claim for compensation for lots 94 and 163. In particular:
(a) The location of the watercourse was never identified (except in the most general terms as somewhere on the land in Lot 94), let alone any identification of the location of first order water courses or second order water courses. That is a consequence of there being no evidence that there was ever any substantial creek or stream running through Lot 94 in an identifiable and permanent location;
(b) The precise impact of the unidentified watercourse on any hypothetical residential subdivision was never adequately identified or explained by Dr Martens or any other expert witness. For example, there was no evidence of what percentage of the land is constrained by water courses or where that land was located;
(c) It was never explained by the Council or its expert evidence how the watercourse somewhere on Lot 94 could make Lot 163 undevelopable;
(d) The 2002 letter to which the Council refers in its submissions at [29] refers to the existing watercourse only in the most general of terms;
(e) In any event, both town planners agreed that filling of watercourses is a readily acceptable means of preparing land for subdivision;
(f) Council did in fact permit fill to be applied on parts of the existing watercourse (such as the land in and around the land that was subsequently developed as a playground and community facility; and also the land required for the nursing home development). The actual course of events shows that Council did not (and in the hypothetical world would not have) deny development that involved the filling in of such watercourses as existed on the land;
(g) The zoning of the whole of Lot 94 and Lot 163 as residential land demonstrates that any existing water courses were not so substantial or significant that they warranted environmental protection or equivalent other zoning.
By way of its general submissions, the following paragraphs (18 and 27) should be noted in the context of such an overview:
18. In summary, the Court has the evidence of two experienced hydrologists, and in the case of Mr Jamieson, a hydrologist who is on any view equipped with superior knowledge of the likely approach the Council would have taken at the relevant time to the alternative drainage solution.
The Applicant submits that it is unrealistic and wrong to suggest in the present case that the hypothetical parties would be advised that the land in Lots 94 and 163 was "highly constrained and undevelopable", or that the alternative drainage scheme would not have been approved. To the contrary, the Court would be comfortably satisfied that, although there were risks (which Mr Maher has accounted for, as discussed below), the likelihood that an alternative drainage scheme such as that depicted in Exhibit A6 would have been approved was strong.
...
27. The values attributed by Mr Davis to Lots 94 and 163 are also totally undermined by the value he agrees applies to Lot 96. It simply cannot be the case that if (as the experts and parties agree) Lot 96 had a value of $265,000, that the much larger area of land in Lot 94 has a total value less than half the value of that single lot.
The Applicant submitted (reply subs par 12) that Martens's evidence on hydrology "was a counsel of modern-day perfection, rather than a reasonable assessment of the approach that the Council would have taken at the time of the transfer of the relevant lots".
The Applicant continued (at par 16):
… No part of the Applicant's case involves (nor can it involve) any enquiry into whether the Council would have 'approved' the removal of the lakes. …
In reply to the Respondent's town planning evidence, the Applicant contended that (par 19)
None of the matters in par [70] of the Council's submissions can be accepted as reasons why a hypothetical alternative drainage solution for Lot 94 would not have gained Council's support at the relevant time. As the Applicant observed in its submissions in chief, Ms Brown's evidence was that there were no town planning issues (apart from the drainage issues) which would have prevented the Council from granting consent to the hypothetical subdivision.
In respect of valuation, the Applicant (par 25) maintained its position that there was no evidence to support Davis's assumption that Lot 94 was so constrained that it would have been impossible to obtain Council's approval for any hypothetical residential subdivision.
In response to the criticism which Council directed at Maher's methodology, the Applicant submitted (par 28):
… ultimately the criticism goes nowhere because it is clear that Mr Maher's hypothetical subdivision method of valuation is not only a well recognised method, but it is particularly pertinent in the present case because the very town planning circumstance which is envisaged as being the highest and best use of Lot 94 is a residential subdivision. …
The Applicant further submitted that Maher's evidence should be preferred to that of Davis because (par 31):
… [Maher] recognises that gaining Council approval for the hypothetical subdivision of Lot 94 is not guaranteed, and accordingly uses a 25% 'profit and risk' factor to account for such risks. …
The Applicant continued (pars 32 and 33):
32. This serves to demonstrate that the approach taken by the Council to the assessment and determination of value is flawed. The enquiry into the alternative drainage solution is not being conducted in a Class 1 planning merit appeal context where it is an 'all or nothing, proposition. There may be multiple ways to achieve an appropriate drainage solution for Lot 94, absent the public purpose, and the hypothesised solution as described and put forward in Mr Jamieson's evidence may require amendments and changes to satisfy the consent authority. For the valuation exercise, it is unnecessary to delve into deep layers of enquiry to determine precisely what physical works must be allowed for and constructed in order to guarantee Council's consent to the drainage solution. Rather, it is demonstrated that drainage solutions such as that contended by Mr Jamieson are available, and from a valuation perspective, allowances must be made to account for the risk that consent may not be granted. Mr Maher was not tested in cross examination on his selection of 25% as being the appropriate profit and risk factor to apply.
33. As to Mr Davis' suggested 'premium for lot values with lake frontage' (see pars [107] - [112] of the Council's submissions), it is noted that the Council does not identify any reliable market evidence justifying this so-called 'premium', and does not at all respond to Mr Maher's evidence as discussed in the Applicant's submissions in chief which plainly demonstrate, through market transactions, that in this lakes estate, premiums are not being paid for direct lake frontage. Mr Davis could not and did not put forward in oraI evidence any reason to doubt Mr Maher's table showing that there is no premium as alleged. And in the event, the Council still has not explained, in the face of Mr Davis, evidence that he did not know what to do with this evidence, how these so-called 'premiums' are relevant to the calculation of the market value of Lot 94. The Applicant therefore continues to rely on what it said in its submissions in chief on this topic.
The Applicant also replied to the Respondent's submissions in regard to Lot 96 (pars 38-39):
38. … The Council wrongly attributes significance to the August 2002 letter … which does not explain or controvert the central facts that (i) Lot 96 was required by the approved plan to be an area of public reserve; and (ii) an area of land in the close vicinity of Lot 96 was required by the 2002 Concept Plan to be applied to public purposes.
39. The Council relies heavily on the evidence of the town planners and certain items of correspondence to argue that Lot 96 was not identified in bullet point 1 of Condition 1. Although the Applicant has referred to the evidence of the planners, this was only to bolster its contended interpretation of Condition 1, because ultimately, the evidence of the planners and any items of correspondence exchanged on this topic is not strictly relevant to what is otherwise a purely legal questions (sic) of interpretation of Condition 1 as to whether the Council was obliged to pay compensation for the acquisition of Lot 96.
The Applicant also dismissed (par 40) the Respondents' submission (at par 159) that bullet point 3 of Condition 1 has "no … work to do". The Applicant identified instances where bullet point 3 might apply, for example, in the dedication of footpaths, and, pointing to Hunter's evidence, said that Condition 1 is a "standard condition".
Finally, in respect of the Respondent's submissions surrounding the constrained nature of Lot 96, Mr Lancaster said (Tp312, LL25-35):
... my learned friend said that lot 96 was, after all, a constrained lot and that my client, Noubia, simply decided to give it to council so they didn't have to pay for the upkeep of what was put forward as a problematic environmentally hazardous lot of land. Your Honour, nothing of that sort was put to Mr Mark Shanahan or to Mr Kevin Shanahan in cross examination. And it's a serious proposition that should have been put if it was going to be relied on; namely, that this would simply willingly be given up by Noubia because it was all too much trouble. The proposition that Noubia just decided to hand it over to council and that's the end of it, therefore, flies in the face of the facts and of common sense and wasn't put to relevant witnesses.
[29]
Claim for Stamp Duty
In addition to the amounts claimed in respect of each of the lots, the Applicant claims stamp duty, on the basis that, prior to transfer to the Council, the land was held as part of the Applicant's "land bank", which is (par 111) an "actual use": Fitzpatrick.
The Respondent submitted (pars 168-169) that, in line with the decision in Roads and Maritime Services v United Petroleum Pty Limited [2019] NSWCA 41 ("United CA"), which was handed down during the substantive hearing of the present case, the Applicant can claim stamp duty only under s59(1)(d), and not under 59(1)(f), of the JTC Act.
United CA tightened the interpretation of s 59(1), as I discussed in detail in Alexandria Landfill Pty Ltd v Roads and Maritime Services; Boiling Pty Limited v Roads and Maritime Services (No 6) [2019] NSWLEC 98 ("ALF") (from [716]), and Mr Lancaster conceded that his claim for stamp duty could not succeed under s 59(1)(f). He noted, however, (at Tp317, L5) that s 59(1)(d) was "a different matter".
The Respondent contends (par 170) that Kevin's affidavit of 1 March 2019, directed to stamp duty and land banking, did not demonstrate any intention to relocate. Accordingly, the Respondent says that the Applicant's claim for stamp duty must fail, on the principles stated by Robson J in Speter v Roads and Maritime Services [2016] NSWLEC 128 ("Speter"), especially at [84]-[90]. Robson J said:
84 Before proceeding, I note that s 59(1)(c) of the [JTC Act] refers to the "relocation of those persons". I have seen no evidence, nor heard any submissions from the applicants, which suggested that any person, natural or corporate, has been relocated as a result of this resumption. Given this, I find that the applicants' claim for financial costs pursuant to s 59(1)(c) cannot be maintained, as the applicants have not been personally relocated.
85 Sections 59(1)(d) and (e) of the [JTC Act], however, refer simply to "relocation". Given that this term is not defined in the [JTC Act], it should be read in context and given its ordinary meaning. The word "relocate" is defined in the Macquarie Dictionary as "to move (a firm, a factory, etc.) to a different place". Its context, and in particular the exclusion of the words "of those persons", suggests that the disturbance for the relocation of something other than the applicants personally can be claimed.
86 This is consistent with previous authorities. In McBaron v Roads and Traffic Authority of New South Wales (1995) 87 LGERA 239 (sic - 87 LGERA 238), Talbot J found at 248 that the applicant was entitled to stamp duty for the relocation of a dairy farm. In Kirela Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (No 2) (2004) 132 LGERA 90; [2004] NSWLEC 68 ("Kirela"), Cowdroy J found at [14] that because the applicant had not relocated its business, it was not entitled to compensation under s 59(1)(d) of the [JTC Act]. It was also noted by Talbot J in Bezzina Developers Pty Ltd v Leichhardt Municipal Council (2006) 146 LGERA 249; [2006] NSWLEC 175 at [112] that a claim pursuant to s 59(1)(d) of the [JTC Act] was not maintained because "no physical activities [were] to be relocated" as a result of the acquisition.
87 The applicants' primary submission on this point was that their investment was a business, and so could be relocated. I do not accept this. Whilst some investments may be businesses, this is not necessarily the case. Operating a business requires some level of engagement with a commercial enterprise. Whilst the applicants did derive an income from leasing the subject property, they were not engaged in any enterprise beyond passively receiving that income. Mr Speter deposed in his affidavit dated 28 May 2016 that "the tenant was also paying all outgoings", implying that the applicants had little to do with the property. Mr Speter also deposed that the subject property was the applicants' "main source of income", and that they did not have "any significant savings or superannuation" aside from the subject property, suggesting that the applicants were not generally in the business of investing, but rather simply held this single significant investment. Finally, Mr Speter characterised their ownership of the property as the applicants' "superannuation". Whilst I have concerns characterising it as such in a legal sense, this further reinforces that the applicants were not operating a business. I therefore find that the applicants' investment in the subject property should not be considered a business.
88 However, if I am wrong on this point, I also find that to the extent that the applicants operated a business, it has not been relocated. When a business sells a land asset, compulsorily or otherwise, it is not forced to relocate unless it was physically operating from that land asset. The applicants, who had leased out the entire property to the NSW Health Administration, did not operate any business from the subject property. Rather, if it were considered that the applicants were engaged in business, that business would be operated from another location which had invested in the subject property. As such, the applicants' business would not have been relocated in any event.
89 The applicants' secondary submission on this point was that relocation is not limited to persons or businesses, but can be expanded to the relocation of anything. I also do not accept this submission. When an investment property is resumed, the property is acquired and the money invested in that property returned to the investor. That investor may then invest that money how they wish. Investing this money in another property is not a relocation of the original investment, but rather a reinvestment of the money paid for the original investment. Nothing has been physically moved to another place. Reinvestment is therefore conceptually different to the relocation of a person or a business from a resumed property to another property.
90 Given this, I find that the applicants' investment has not been relocated for the purposes of ss 59(1)(d) and (e) of the [JTC Act].
In its Reply submissions, the Applicant said:
42. The Council does not dispute that the Applicant was 'land-banking' (see pars [168] - [170] of the Council's submissions)
43. It follows from the Applicant's evidence that the transfer of land to the Council led to a situation in which the subject matter of the land development business had to be carried out at a different location - that is, in order to continue with the same business of the Applicant, there was a need to acquire other land to develop and sell in the same manner as would have occurred with the land acquired by the Council.
44. In those circumstances, the claim is not barred by the decision in Roads and Maritime Services v United Petroleum.
Orally, Mr Lancaster sought (Tp317, LL13-22) to distinguish Speter from the present case:
We say this case is different from Speter at paras 86 and following because the evidence supports the - the evidence of Mr Shanahan supports the conclusion that ownership of these lots before they were acquired for the public purpose was ownership of land as stock in trade in a property development business that applied those areas to other land held by Noubia to develop for residential subdivision purposes. And the relocation that we say was involved was the need by reason of the transfer of these lots to the council to relocate those parts of its landholdings to some other land to pursue its land development business so the basis on which I put the stamp duty claim is by reference to 59 1D (sic) and distinguishing Speeder's (sic) case.
[30]
Costs
As I have already noted above, the Applicant pressed for a costs order in its favour in its closing submissions (at par 115), and the Respondent sought that costs be reserved (par 172). The Applicant's Reply submissions concluded:
45. The Applicant seeks payment by the Council of all of its costs of the proceedings, but agrees it is appropriate for the question of costs to be reserved and addressed further after judgment. If the Court awards compensation in the amounts for which the Applicant contends, there could be no doubt that the Applicant is entitled to its costs of the proceedings.
46. The Applicant further submits that even if the Court were to assess compensation for any amount greater than the amounts put forward by the Council, it will be appropriate that the Applicant be awarded it (sic) costs. This is on the basis that it has been necessary to commence and continue this litigation in order to recover appropriate compensation, and the Applicant has succeeded in doing so.
Mr Hemmings suggested, during his oral submissions, that there may need to be an argument about costs in respect of the way the Applicant ran the case, refraining from amending, or arguing, a great proportion of its pleaded case (see [18] and [167] above).
[31]
Consideration
I dealt with "highest and best use", and hypothetical development concepts, in a recent Class 3 compulsory acquisition matter: ALF ([205] above).
In that matter, the Applicant's hypothetical development scheme could be divided into two stages; the first of which (years 1 to 8) I preferred to a scheme to which was added a second phase (years 9 to 29).
I found that the proposal for years 9 to 29 was "speculative", and would not form part of the "highest or best use" for the subject land: at [553].
I recently applied a similar analysis to a Class 3 valuation appeal - Limina Holdings Pty Ltd ITF Galileo Superannuation Fund v Valuer General of New South Wales [2019] NSWLEC 110 ("Limina") - and I think the same principles ought be applied to the present Class 4 proceedings.
It is important to consider, in the present case, as noted in the Applicant's closing submissions (par 71):
… the issues concerning the hypothetical subdivision should not be approached as if there were a development application under active consideration, either before the Council, or the Court on a Class 1 appeal for example. …
In contrast to my findings in ALF and Limina, I find, in the present case, that, on the expert evidence, the Applicant's proposed highest and best use, namely, the alternative hypothetical subdivision, is both feasible and achievable, and the Applicant's submissions are to be clearly preferred.
The town planning evidence exhibited little conflict, the two experts having agreed that the alternative hypothetical subdivision would have been permissible with consent
In respect of the hydrology evidence, I found both expert witnesses impressive but the evidence of Martens failed to raise enough doubt about the feasibility of the Applicant's residential project and its associated alternative stormwater management system.
That evidence was, as the Applicant said (reply subs par 12), "a counsel of modern-day perfection, rather than a reasonable assessment of the approach that the Council would have taken at the time of the transfer of the relevant lots" ([100] above), whereas Jamieson presented as a well-qualified and experienced expert in his field, with the advantage of experience in designing the current five lakes scheme.
In respect of the valuation evidence, I accept the criticisms the Applicant made of the Respondent's evidence, in both the primary and alternative valuation approaches.
I agree with the Applicant's contention that Davis "adopted [a] grossly pessimistic approach to lot 94" (Tp280 LL41-42), at odds with his agreed valuation of Lot 96.
I agree with the Applicant (reply subs par 28) that the approach taken by Maher is "both orthodox and sound as a matter of general valuation principle", and, in the present circumstances, "an entirely appropriate approach".
I am simply not satisfied that the subject land is so "constrained" that it was not capable of the residential development now hypothesised.
The Applicant has demonstrated that, absent the public purpose, the hypothetical subdivision layout, with its alternative trunk drainage scheme, or something very similar, could have been achieved, and would have been approved.
Accordingly, I find that the highest and best use of the Lots 94 and 163 should be assessed in accordance with Maher's evidence.
In respect of Lot 96, I accept that, on the whole, the evidence demonstrates that Lot 96 was required to be transferred, in accordance with the first bullet point of modified condition 1.
In Kendall Street Developments Pty Limited v Byron Shire Council [2004] NSWLEC 227, Lloyd J observed (at [12] - citations omitted):
It must be remembered, however, that a development consent such as the present one, is not a document drafted by lawyers. It was drafted by town planners, to be read by town planners and non-legally trained people. The development consent and the conditions must be read in a common sense way so as to give effect to the obvious intention of the draftsperson. Conditions of a development consent are to be construed, not as if the words were the language of a statute, but from a practical viewpoint: ...
As the Applicant put it (closing subs, par 87), a "non-legalistic and common sense interpretation" is required, and I accept that such an interpretation inevitably leads to the conclusion that Lot 96, noted as "public reserve" on the approved plan of subdivision, would necessarily be required to be transferred into public ownership, i.e., to the Council.
I agree with the Applicant's submission that the Respondent attributes inappropriate significance to the pre-DA correspondence between Astoria and the Council, in 2002, which was not incorporated, even by implication, in the consent granted, with the relevant condition.
In addition, I reject the Respondent's submissions to the effect that the Applicant would have wanted to transfer the Lot to the council to avoid its bushfire risks. As the Applicant correctly noted (Tp312, LL25-35), this proposition was never put to the relevant witnesses in cross-examination.
I reject the Respondent's submissions to the contrary, and accept the submissions of the Applicant in respect of Lot 96.
On the other hand, I also reject the Applicant's claim for stamp duty.
It has not established a "relocation" basis for the claim, merely its intention of further acquisition of land for its "bank", and I find Speter apposite.
[32]
Conclusion
The orders finally sought by the Applicant should be made, other than in respect of stamp duty.
The parties agreed that interest would be payable.
As the Applicant has been successful on the vast bulk of its claims it should also have an order for its costs.
The minor dispute about pleadings which became redundant should be capable of agreement between solicitors, or resolution by a costs assessor.
[33]
Orders
In respect of both proceedings:
1. The Court declares that, on the proper construction of Condition 1, the lands referred to in the first bullet point of Condition 1 include:
1. Lot 94 in Deposited Plan 1111430 (Lot 94);
2. Lot 96 in Deposited Plan 1129227 (Lot 96); and
3. Lot 163 in Deposited Plan 1170833 (Lot 163).
1. The Court declares that, on the proper construction of Condition 1, the value of those lands, as at the date of transfer or dedication in accordance with section 54(1) of the Land Acquisition (Just Terms Compensation) Act 1991, with the relevant matters to be considered as set down by section 55 of the Act, is as follows:
1. Lot 94 - $3,256,000;
2. Lot 96 - $265,000; and
3. Lot 163 - $560,000.
1. The Court notes the undertaking of the Council to the Court and the Applicant that it will pay to the Applicant, within 28 days of the date of determination by the Court of the value of Lots 94, 96 and 163 (or, if there is an appeal by either party, within 28 days of the final determination of the proceedings):
1. the amount of that value as so determined; and
2. interest on the amount so determined, less any amount already paid, running from the date of transfer of the relevant land to the Council up to the date of final payment.
1. The Court grants leave to the Applicant to discontinue the claims pleaded in paragraphs 2, 3, 4, 5 and 6 of the Amended Summons filed in matter No 2017/83167, and paragraphs 2, 3, 4 and 5 of the Amended Summons filed in matter No 2017/272416, on 11 March 2019.
2. The Council is to pay the Applicant's costs of both proceedings, as agreed or assessed.
3. All the Exhibits are returned, including Exhibit KFS-1, and the electronic thumb drives, but not Exhibit A1.
[34]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 13 August 2019