Land and Environment Court (NSW)|1991-02-11|Before: Hemmings J

The applicant claims that the highest and best use of the subject land at date of resumption was for tourist facilities, including hotels, motels, caravan parks, golf courses, condominiums. Experts said that the land had the following features which facilitate that use:|CF2.|PSI

* Proximity to local communication, i.e. the degree of isolation

* The type of coastal landscape or beachfront available

* Land classification by Department of Agriculture."|CF1.|PSO

The applicant is a family company of MrPhilipA.Malouf, asolicitor and experienced property developer. The Malouf family has had an interest in the village of Crowdy Head for more than twenty-five years, and has a substantial holiday house therein.

Lot23 was acquired in 1980, without agent, for the price of $110,000. At all times it was zoned Non-Urban 1(a) but was subject to Private Lands Mining Lease No.3510. Lot23 has not been mined, and in 1982 RZM agreed to a cancellation of the mining lease, and filled it with tailings from the operations on Lot21.

On 1stSeptember, 1982 the applicant acquired Lot21 from HaroldNixon for $200,000, without agent. As it had with Lot23, on 28thSeptember, 1982 the National Parks & Wildlife Service ("NP&WS") advised:|CF2.|PSI

"The Service has no intention to compulsorily acquire Lot21, and there are no objections to the transfer. Negotiations for the purchase of land by the Crown will only proceed at the request of a land owner."|CF1.|PSO

In 1982 the applicant lodged an application with the Council of the City of Greater Taree for the rezoning of Lot21 to permit a residential subdivision in conjunction with a caravan park on Lot23. That application was rejected because of the perceived isolated and fragmented nature of a residential development, and concern about sand stabilisation in the area.

On 2ndFebruary 1984, Gutteridge Haskins & Davey ("GHD") on behalf of the applicant lodged a feasibility study with the NP&WS and an objection to the 8(b) zoning on Lot21. The NP&WS was requested to support such rezoning, and on 5thJune, 1984 advised that a resort development may be acceptable to the Minister on land that has already been subject to major disturbance. The NP&WS further advised that a tourist oriented development which aims at providing coastal recreation opportunities to the widest possible section of the community with multiple occupancy in the form of caravan parks, cabins and similar types of accommodation may be suitable.

Following discussions with senior officers of the NP&WS, GHD prepared a resort proposal which provided for the rezoning of Lots21 and 23 to permit a golf course and a resort tourist complex with urban development. During this time, the applicant caused further land clearing to be done on Lot21, but suspended such works after complaint from representatives of the NP&WS.

On 23rdNovember 1984, GHD lodged a final submission with the Council for rezoning and by letter of 16thJanuary, 1985 Council advised that it had resolved to support the concept plan.

The applicant authorised the continuation of clearing work on Lot21 for agricultural purposes, and by letter of 26thNovember, 1985 the Minister for Planning & Environment advised of objection to the said work for the reason that:|CF2.|PSI

"...it is not within the spirit of the intentions of the 8(b) zone, which were to preserve the status quo pending acquisition of the land under the provisions of the National Parks & Wildlife Act 1974".|CF1.|PSO

1. As a consequence of the provisions of s.116, the effect on value as a result of the provisions of LEP1 and IDO1, as amended, must not be taken into account in the assessment of compensation for the subject land.

2. Pursuant to s.122 and 124 of the Mining Act 1973, the applicant had a potential claim for compensation for interference with the use of the subject land by mining operations which must be taken into account in the assessment of the value of the subject land.

1. S.116 of the Environmental Planning and Assessment Act, 1979 ("the E.P.&A.Act") is irrelevant to the assessment of compensation for the compulsory acquisition of the subject land because:

a) The subject land was not "reserved" by an environmental planning instrument pursuant to s.26(c) of the E.P.&A.Act.

b) S.116 of the E.P.&A.Act has a prospective operation and has no application to the restrictive zoning on the subject land. In such circumstances such zoning can only be ignored if part of the resumption process. There is no nexus between the resumption and the subject zoning.

c) S.116 applies only to the assessment of compensation for a resumption pursuant to the E.P.&A.Act. S.10 of the E.P.&A.Act also adopts a version of s.124 and is identical to that in the National Parks & Wildlife Act. There is no similar provision in s.116.

2. If LEP1 is an environmental planning instrument pursuant to s.26(c) and it has to be ignored pursuant to s.116, then it is replaced by IDO1, as amended, which preserves the same restrictive zoning. IDO1 was made before the E.P.&A.Act and therefore the land was not reserved by any environmental planning instrument pursuant to s.26(c).

3. The principle in San Sebastian (Housing Commission of N.S.W. v. San Sebastian Pty Ltd (1978) 37LGRA214) has no application where the dispossessed owner purchased the land already subject to the restrictive zoning.

4. As a matter of law, compensation for the compulsory acquisition of land cannot be assessed on the basis of the hypothetical development of the land.

The right to payment of compensation for the compulsory acquisition of land does not arise from the common law and is vested only by Statute. Such legislation attempts to assess in economic terms the sum which, if possible, would put the dispossessed owner in the same position after resumption as before. A resumption for the purpose of the National Parks & Wildlife Act is required, pursuant to s.147, to be effected under the Public Works Act 1912. Such resumption shall be deemed to be for an authorised work, and the Minister shall be deemed to be the constructing authority. Schedule14 makes a number of modifications of the Public Works Act for the purposes of s.147, and substitutes an amended version of s.124, i.e.:|CF2.|PSI

"(1) For the purpose of ascertaining the compensation to be paid, regard shall in every case be had by the Land and Environment Court not only to the value of the land taken but also to the damage (if any) caused by the severing of the land taken from other lands or by the exercise of any statutory powers of the Constructing Authority otherwise injuriously affecting such other lands and that Court shall assess the compensation according to what it finds to have been the value of such lands, estate or interest at the time the notification was published in the Gazette and without being bound in any way by the amount of the valuation notified to such claimant and without reference to any alteration in such value arising from the construction of any works upon the land taken."|CF1.|PSO

Upon the publication of notice of such acquisition of land, the fee simple thereof is thereby converted into a claim for compensation which is described simply as |CF2.|PSI"for the value of the land taken"|CF1.|PSO. The legislation is otherwise silent as to the criteria to determine such value and, in the absence of a specified catalogue of relevant considerations, the matters which should be taken into account and the valuation principles which should be applied remain elaborated in Judge-made law. Long experience has demonstrated that the most acceptable and reliable approach to the ascertainment of the value of land is the "selling approach", which was explained in Spencer v. The Commonwealth of Australia (1907) 5CLR418. In my opinion, the selling test described therein is as appropriate today as when initially formulated. The loss to the dispossessed owner is the sum which a prudent purchaser would be prepared to pay to the vendor for the land at the date of resumption after a hypothetical process of voluntary bargaining. For that purpose each party must be assumed to be cognisant of all relevant circumstances which might affect the value of the land.

There are many acceptable valuation approaches, and hypothetical development exercises are also a valid and useful tool in the hands of an expert valuer. However, the inevitable multiplicity of assumptions and adjustments make such mathematical hypothetical assessment less reliable than the "selling" approach based on market sales of comparable land with the minimum of adjustment.

However, some factors which affect the market value of the land must be excluded. This case concerns the relevance to the assessment of compensation of the provisions of the environmental planning instruments which are said to restrict its development and thereby facilitate the purpose for which the subject land was compulsorily acquired.

Whilst s.124, and in any of its amended forms such as in Schedule14, requires that compensation for the compulsory acquisition of land must not include any alteration in value which is due to the construction of any works underlying the acquisition, for many years the Courts displayed a reluctance to apply that principle when such value was depreciated by an instrument made under a public law, and which imposed a rezoning or reservation for a public purpose. Housing Commission of N.S.W. v. San Sebastian Pty Limited was a landmark decision which put beyond doubt that in assessing compensation where there is a nexus between such planning controls and the intended resumption, such steps in the planning process which had an effect upon the value of the land must be ignored. Such principles may apply not only to alterations in the provisions of an environmental planning instrument, but to any other step which has an effect upon the value of the land, either up or down; The Council of the City of Griffith v. Polegato & Anor, Court of Appeal, 16thOctober, 1990 (unreported). However, San Sebastian also acknowledged that a change in zoning might be taken into account if it arose merely in the ordinary discharge of the duty of the consent authority to implement planning controls.

The provisions of s.116 of the E.P.&A.Act concern steps taken under that Act and eliminate the need to discharge the often difficult onus to prove the relevant nexus. S.116 provides:|CF2.|PSI

"1) Where land reserved by an environmental planning instrument pursuant to section 26(c) or proposed to be reserved by a draft environmental planning instrument is resumed or appropriated, the value of that land shall be determined as if it had not been so reserved or proposed to be reserved."|CF1.|PSO

It is now well established that in the application of s.116 there is no distinction between land "zoned" or "reserved" for a public purpose, nor does the restrictive zoning have to be exclusively for a public purpose; Brooks v. Minister for Planning & Environment and Anor (1988) 68LGRA91; Carson v. Minister administering the Environmental Planning and Assessment Act (1990) 70LGRA215.

S.116 is also clearly intended to apply to the determination of the value of any land reserved by an environmental planning instrument pursuant to s.26 and which is resumed or appropriated under any legislation. In my opinion, it is not confined to those acquired pursuant to the provisions of the E.P.&A.Act. The provisions of s.116 are mandatory and apply to land and not the owner thereof. In my opinion, it is irrelevant that when a dispossessed owner acquired the land it was subject to the restrictive zoning. Nor is there any reason why the San Sebastian principles would have any different application; cf. Nuland Developments Pty Ltd v. Parramatta City Council (1978) 37LGRA258.

Almost all of the subject land at the date of resumption was "reserved" by an environmental planning instrument pursuant to s.26(c) of the E.P.&A.Act. IDO1, if it still applied to the land, would be deemed to be made under that Act by virtue of the transitional provisions of the Miscellaneous Acts (Planning) Repeal and Amendment Act 1979. In such circumstances s.116 requires that the value of the subject land shall be determined as if it had not been so reserved or zoned.

Neither s.116 nor the reasons in San Sebastian explain the nature and extent of planning controls, if any, which are deemed to replace those which must be disregarded. In a number of cases it has been contended that in such circumstances the land is either:

a) uncontrolled by an environmental planning instrument, or

b) is unzoned under such instrument and all uses are permissible thereon, or

c) the planning controls existing prior to the zoning for the public purpose are restored; or

d) is deemed to be subject to planning controls which would have applied had there never been any intention to resume.

In my opinion, (a), (b) and (c) should be rejected, and (d) is appropriate to determine the highest and best use of resumed land to which s.116 or the San Sebastian principle apply; cf. Wimpey Constructions UK Limited v. The Minister (1983) 53LGRA75. The nature and extent of the assumed appropriate planning control is a question of fact which must be determined in the circumstances of each particular case. This may be a simple exercise and resumed land is often deemed to have the same zoning as that of adjoining land which was unaffected by the resumption process.

In fact, prior to resumption, attempts to rezone the subject land reached a stalemate. Even with Council support, rezoning proposals appeared to be affected by wetland policies and National Park proposals. It is not uncommon for a resuming authority to intervene in the planning process prior to acquisition of the land in order to affect its value without actually seeking a zoning for a public purpose. If the land is not zoned or proposed to be zoned for a public purpose at date of resumption, s.116 has no application in such circumstances. However, the principles of San Sebastian could apply to such steps if they affect the value of the land. If the necessary nexus can be established, the Court will still ignore the planning controls over the land and assume those which would have applied had there been no intervention by the resuming authority; Housing Commission of N.S.W. v. Tatmar Pastoral Company Pty Ltd (1983) 53LGRA325; E.M.Power v. Department of Education, Land & Environment Court, 29thAugust, 1989 (unreported).

In this matter Iam persuaded that if the restrictive zoning had not been imposed, the subject land would have been zoned Non-Urban similar to adjoining land, but with a strong potential for some tourist oriented development, and rezoning to include associated residential accommodation. Whilst Council's attitude was favourable, the timing, nature and extent of such urban development could not be clearly defined at resumption date.

The applicant also claims what was called "severance", and valuers have attempted a traditional "before and after" exercise involving Lot23 to establish loss caused by the compulsory acquisition of Lot21; cf. Bergman v. Holroyd City Council (1988) 66LGRA68.

Land must be valued by reference to the potential it may have to whoever may be the owner of it, and that is its market value. However, it has long been accepted that in the assessment of compensation for the compulsory acquisition of the land the value of the property must be the value to the owner, and that value may exceed such market value. The latter concept is common to all compensation legislation. Landmark decisions such as Pastoral Finance Association Limited v. The Minister ([1914] AC1083), and Commonwealth v. Millege (1953 90CLR157), distinguish its meaning from market value and incorporate elements such as special value and disturbance.

If for any reason the land is particularly suited for the use to which the owner is or intends to put it, it may be more valuable to him than to others in the market. The land in such circumstances must be valued not only on the market value, but also its value having regard to such special value; see Housing Commission of N.S.W. v. Falconer & Ors (1981) 1NSWLR547, at 572-573. The Court will recognise that the owner in that situation would be unlikely to sell the land for merely its market value.

In my opinion, the subject claim is misconceived as there was no "severance" in the compulsory acquisition of one of the two parcels owned by the applicant. Any such claim for compensation would more properly be described as special value. However, in many circumstances value of the land and value to the owner are the same, and they both mean market value. In that situation the owner of the land should be regarded merely as one of the persons interested in purchasing the land and, in the hypothetical sale, likely only to pay such amount as would enable the use of the land for its highest and best use.

Iam unpersuaded that the common ownership of Lots21 and 23, or the provision of services for their development or any other reason, makes either or both any more valuable to the owner of the land than to others in the market place. Itherefore reject any claim for severance or special value.

The mining leases and the continuing processing activities of RZM at date of resumption were undoubtedly a significant blight on the use and development of the subject land. The processing plant is unsightly and noisy at times and occupies prime land near Crowdy Beach. Substantial bunds, landscaping and setbacks would be required from adjoining development. Radioactive material is stored on the leased area and some has been deposited in the waterhole. Even if RZM was likely to vacate the site before the expiration of the leases, the timing was uncertain. In my opinion, aprudent purchaser would consider such matters and make appropriate enquires in the determination of the highest and best use of the land at date of resumption, and the appropriate purchase price.

MrR.J.Kelly, who became General Manager RZM after 1982, asserts that at all relevant times RZM was anxious to win valuable metals from the tailings on the subject land and continue in occupation for the term of the leases. However, that evidence conflicts with the advice and opinions actually expressed prior to resumption, and confirmed in evidence by MrD.J.Kelley, Property Officer, RZM, and who at all relevant times was the appropriate person with whom interested parties would confer.

It is unnecessary to set out all of the correspondence or the conflicting evidence. What is apparent, however, is that for some reason mining activities on the subject land recommenced or accelerated after acquisition by the applicant, and after MrR.Kelly assumed control of RZM. Inote that such renewed activities coincided with doubts raised as to the lawfulness of the continuation of the use of the subject land by RZM, and the prospect of a claim for compensation by it if the subject land was resumed for public purposes. In my opinion, the actions of RZM after 1982, including representations to Council, are consistent with those of a prudent holder of a mining lease to ensure that all appropriate steps were taken to protect and enhance its interest in the subject land.

However, Iam satisfied that by late 1985 extraction on the land had virtually ceased, and RZM thereafter was really carrying out only industrial activities to process imported sand. In such circumstances RZM would have been likely to have found it difficult to justify continued occupation of the land if sold and rezoned for tourist or residential purposes. Iam also persuaded that from his observations and a number of discussions with management and staff of RZM, MrMalouf prior to acquisition in 1982 reasonably assumed that RZM was in the process of winding up operations on the subject land and would vacate the site within a few years. Iam therefore of the opinion that, after proper enquiries, a prudent purchaser would have made similar assumptions. In such circumstances, the possibility of a claim, if any, for compensation pursuant to the Mining Act 1973 would have had negligible effect, if any, upon the purchase price.

The Court has a duty to assess the amount of compensation for the compulsory acquisition of land, but it is not bound to accept the opinions, or apply the methodology of any expert. It is not an error of law for the Court to prefer or reject the opinion of one valuer; see Leichhardt Municipal Council v. Seatainer Terminals Pty Ltd (1981) 48LGRA409. The Court is entitled to take such opinions into account and assess compensation by a process of adjustment and modification of any submitted figures; cf. Doherty & Doherty v. Commissioner of Highways (1974) 32LGRA328, at 339.

The applicant called two experienced valuers, MrC.A.Woodley and MrJ.G.Robertson, and each assumed that the depreciating effect of the zoning for public purposes on value must be ignored. They assumed that the subject land was zoned Non-Urban1(a), but with good prospects of rezoning to permit tourist oriented development.

Each assumed the highest and best use of both Lot21 and Lot23 to be for tourist and associated residential development, as recommended by GHD, and that for that purpose the subject land would have been rezoned soon after purchase. They also assumed that by that time RZM would have vacated the subject land.

Ido not propose to set out all of the particulars of valuations by MrWoodley because, although he is an experienced valuer whose expertise Irespect, Ido not accept that a prudent purchaser would assess a purchase price based upon any of his hypothetical valuations. He assumed that a single purchaser of 98ha would notionally divide it into a 23ha resort site, a 30ha golf course, and a 14.5ha low density residential potential subdivision of 105lots. The 23ha site was further notionally divided into a 5ha hotel area, a 12ha holiday resort complex and 6ha of caravan park site. To arrive at the value of such unsubdivided areas he assigned values deduced from sales of mainly small lots of subdivided land, and made massive upward adjustments to actual purchase prices to accommodate what were said to be service costs paid by the purchaser after acquisition. Such adjustments, even if appropriate, were based upon data and information of the most unreliable kind.

The hypothetical exercises contained numerous assumptions, charges, costs and discounts of an arbitrary or speculative nature, and MrWoodley sought to confirm the result with a valuation based upon comparable sales. That exercise relied upon an analysis of the purchase price of land at Bonny Hills. However, Ifound his check valuation with arbitrarily adjusted comparable sales similarly unreliable and unacceptable.

MrRobertson, a valuer with specialist knowledge of the tourist industry, relied solely upon the more reliable comparable sales or "selling" approach. If the highest and best use of the subject land at date of resumption was for tourist development, in his opinion it had a value of $2.3 million. To arrive at that figure, he excluded wetlands, and to 60.34ha of "usable" land he assigned a value of $40,000 per hectare. He deducted an "allowance" of $60,000 for the impact of the mining leases. Alternatively, if the subject land was considered to be zoned Non-Urban 1(a), he said it had a value of $1.5million. To arrive at this value he assigned $25,000 per hectare to the "usable" land and made a similar deduction for the impact of the mining lease. To each assessment of compensation he added the sum of $430,000 or $180,000 respectively, said to be the loss in value to Lot23 as a consequence of "severance" from Lot21. For reasons already given, the claim for severance is rejected.

On behalf of the respondent, MrJ.G.May, asenior valuer formerly in the employ of the Valuer General, assessed compensation on three bases. On instructions, he firstly assumed that the subject land continued to be zoned for a public purpose, and assessed compensation at $126,000. For reasons already given, such basis of valuation contravenes the provisions of s.116 of the E.P.&A.Act and is rejected. His preferred valuation of $310,000 was on the basis that the depreciating effect of Open Space zoning was ignored, but the subject land was zoned Non-Urban 1(a) with potential to be subdivided into concessional allotments for agricultural purposes, or low key tourist development. This basis does not reflect the highest and best use of the land and is rejected.

If, as Ihave already found, the effect on value of the 8(b) Open Space zoning should be ignored and the subject land assumed to be zoned Non-Urban but with potential for tourist oriented development, MrMay said the value was $308,110.

It was common ground that the most useful sale to determine the value of the subject land at the date of resumption was W.C.Welsh to Jaspers Pty Ltd on 31stOctober, 1984 for $725,000. That land had an area of 59.04ha and is located on the northern edge of the coastal village of Bonny Hills and situated about 23km south of Port Macquarie. The premises adjoined land acquired for tourist purposes and had good access to a sealed public road and water and sewerage were on site or nearby and available. It was in close proximity to a safe beach and an intervening creek system and coastal strip was controlled by a 7(f1) Environmental Protection Zone. Between 10ha and 14ha of the land was wetlands which was subsequently the subject of a SEPP14 proclamation, and the development of about 6ha was affected by the proximity of a nearby sewage treatment works. The land was purchased subject to obtaining a development approval to carry out a staged residential subdivision on mostly elevated land zoned for that purpose. The land was zoned to permit tourist development and there was a long history of favourable rezoning and development negotiations with Council.

In his analysis of that sale, MrRobertson deduced a price paid for usable areas by subtracting land affected by SEPP14, 7(f1) zoning, and a development control plan. He also made an adjustment to the purchase price for what he erroneously regarded as the retention of an interest in the development of the land by the vendor. He also made an arbitrary deduction of $50,000 to reflect what he claimed was the value of a separate parcel of Non-Urban land to the west of the public road. Although at the price of $725,000 the purchaser paid $12,280 per hectare, MrRobertson deduced that the price was $30,820 per hectare for "usable land".

In MrRobertson and MrWoodley's opinion, the Bonny Hills' land is generally inferior to the subject land and could only indicate the absolute minimum value for the filled land thereon. On the other hand, MrMay regards it as being superior to the whole of the subject land.

MrMay and MrRobertson gained assistance from a sale from I.M.Cratchley to Worgelle Pty Ltd on 8thFebruary, 1985 of 109.2ha of coastal land adjoining the village of Red Rock. MrWoodley said it was not comparable, particularly as it was wholly zoned 7(f1) Environmental Protection (Coastal Lands Protection). The land is located approximately 38km north of the major tourist centre of Coffs Harbour, and in many ways is very similar to the subject land, being unserviced coastal heathland substantially affected by wetlands and with a long frontage to a beach and a sealed public road. There is also a high primary sand dune running along a Crown reserve to the beach. The property was sold on terms. Development approval had been granted for subdivision. It is common ground that the properly adjusted purchase price was $718,000. Soon after acquisition the purchaser unsuccessfully applied to Council for rezoning to also permit the erection of a five-star hotel. Under the 7(f) zoning, tourist development was limited to caravan parks and golf courses.

Ihave given careful consideration to all of the evidence and the sales referred to by each of the valuers, but in my opinion the Bonny Hills and Red Rock sales are the most appropriate and sufficient to determine the value of the subject land. Little assistance, if any, can be obtained from the sales in the general locality, including those to the applicant. Sales evidence of comparable coastal beachfront land with real tourist potential is extremely limited owing to the small amount thereof. Iam satisfied that, notwithstanding the mining leases, there would have been a number of potential purchasers for the subject land for tourist oriented purposes at date of resumption.

Iam of the opinion that the Bonny Hills purchase was for land appropriately zoned with a development consent, with available services, and was superior to the subject land in some respects. However it was inferior in others, e.g. beach access.

Iam satisfied that the price of $725,000 was paid only for the residential development potential of part of the land. However, Ido not accept MrRobertson's deduced rate for that part, nor even that the sale is evidence that $12,000 per hectare would be paid for each of the 98.3ha of the subject land. In any event, the Bonny Hills land and the residential portion is much smaller and for that reason alone likely to have been sold at a higher rate than that which could be obtained for the subject land.

On the assumption that the Open Space zoning is to be disregarded and the land deemed to have a future potential for development of the nature recommended by GHD, MrMay assigned a value based mainly on his analysis of the Bonny Hills sale. He first arrived at a purchase price of $1,032,570, i.e. $10,500 per hectare, and from that sum deducted costs of $427,570 to supply services and to fill the land.

However, in my opinion, that adjusted price represents a deduced rate of about $4,450 per hectare, and is out of line with actual sale prices of comparable land. Either the assigned rate of $10,500 per hectare is too low for serviced land, or the deduced rate is a consequence of the unreliability of a valuation exercise which involves adjustment by substantial assumed development costs. In my opinion, none of the valuers gave sufficient weight to the sale at Red Rock which indicates that, even in a depressed market, a purchaser of coastal heathland with many similar characteristics to the subject land and which required similar services, was prepared to pay $718,000 for 109.2ha, i.e. about $6,500 per hectare. Although it had a restrictive zoning, the Red Rock land is closer in size, contains similar areas of wetlands, has good frontage to a beach and good public road access to a major urban area.

Iam satisfied that the price paid for the Red Rock land was not reduced to allow for the full effect of the zoning restrictions, particularly because Iaccept that it was significantly higher and out of line with that paid for otherwise comparable land with either a non-urban or 7(f) zoning. Iam persuaded that the price reflected a perceived potential for rezoning and development of similar coastal heathland for prestige tourist facilities.

In his analysis of the Red Rock sale, MrRobertson again deducted what he assessed to be the area of unusable wetlands and estimated that the purchaser paid about $12,000 per hectare for 59.2ha of "usable" land. If his estimate of wetlands was similarly excluded from the subject land and that rate then applied to the 60.34ha balance, it indicates a value of about $724,000. However, MrRobertson assigned a much higher value because he made substantial adjustments to that rate. In his opinion, the Red Rock land was inferior to the subject land and had, owing to its restrictive zoning, negligible development potential. Ireject MrRobertson's assessment of the comparability of Red Rock and his consequential adjustments.

There is no apparent consistency in the sales of the size of parcels acquired for tourist oriented development, or the rate paid per hectare. For that reason, Iam of the opinion that the purchase price of the subject land should not be determined merely by the direct application of a rate per hectare deduced from other sales with different areas. Inote that both Bonny Hills and Red Rock were sold en globo for a sum in excess of $700,000.

In my opinion, the Red Rock sale is the best evidence of the minimum price that a properly informed purchaser would pay for the subject land at date of resumption, even without necessary services.

Whilst in these proceedings the subject land is deemed to be more favourably zoned for tourist oriented purposes than Red Rock and would therefore be expected to realise ahigher price than for that sale, some rezoning would still be necessary to permit all of the likely recommended tourist oriented development. The time between resumption and date of comparable sales also requires some escalation in value. Further, the price paid for Red Rock or any other sales does not take into account the impact of the mining leases and associated activities on the value of the subject land. Whilst the RZM mining leases and such activities apply to only about 14ha of the subject land, unless and until terminated and the site satisfactorily restored, they affect prime land and restrict development on the balance. An appropriate adjustment must be made for the risk and uncertainty of the timing of the termination of the leases.

There is a paucity of reliable evidence to assist in the assessment of appropriate adjustments. Inote that in most exercises the valuers made somewhat arbitrary adjustments and, to reflect the impact of the mining leases, merely made a relatively small percentage deduction. However, in my opinion, mathematical precision is impossible and inappropriate for such matters of judgment. In such circumstances the Court could and should make one adjustment to comparable sale prices which seeks to take into account all relevant matters; cf. Bergman v. Holroyd Municipal Council (1988) 66LGRA68.

Iam persuaded that, for the above reasons, at the date of resumption after a process of voluntary bargaining, the parties to a hypothetical sale of the subject land would come together at a price of $800,000.

1. Compensation assessed at eight hundred thousand dollars ($800,000).

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|CF2.|PSIKeywords|CF1.|PSO: Compulsory acquisition.

Housing Commission of N.S.W. v. San Sebastian Pty Ltd

|CF2.|PSIHearing Dates|CF1.|PSO: 12th to 28th November, 3rd to 6th December, 1990

|CF2.|PSIJudgment Date|CF1.|PSO: 11th February, 1991

|CF2.|PSIAppearances|CF1.|PSO: Applicant - T.F.M. Naughton QC with M.J. McGrowdie

|CF2.|PSISolicitors|CF1.|PSO: Applicant - Philip Malouf & Co.

Environment Court Act 1979

At the time of such purchase, parts of the subject land and Lot23 were subject to mining leases to Rutile & Zircon Mines (Newcastle) Pty Limited ("RZM"), i.e.: a) Private Land Lease No.3510 Mining Act 1906

tle) Pty Limited ("RZM"), i.e.: a) Private Land Lease No.3510 Mining Act 1906 PML1, covering an area of 63.03ha and due to expire on 31stOctober, 1999; b) Special (Private Lands) Lease No.18 Mining Act 1963

Repeal and Amendment Act 1979

PAMALCO PTY LIMITED v. MINISTER ADMINISTERING NATIONAL PARKS & WILDLIFE ACT 1974 [1991] NSWLEC 18 (11 February 1991)

PAMALCO PTY LIMITED v. MINISTER ADMINISTERING NATIONAL PARKS & WILDLIFE ACT 1974 [1991] NSWLEC 18 (11 February 1991)

At a glance

Court

Decision date

Before

Source

Judgment (88 paragraphs)

Legislation Cited (7)

Cases Cited (1)

PAMALCO PTY LIMITED v. MINISTER ADMINISTERING NATIONAL PARKS & WILDLIFE ACT 1974 [1991] NSWLEC 18 (11 February 1991)