Penfold and Bracey v Health Administration Corporation

Penfold and Bracey v Health Administration Corporation - [2009] NSWLEC 157 - NSWLEC 2009 case summary — Zoe

[68]

(a) there are many local medical and related practitioners in the area surrounding the Bantry Bay Road Site and the Frenchs Forest area is characterised by such uses; (b) Pittwater Council and NSW Health had identified the Bantry Bay Road Site as suitable for a hospital or medical centre; (c) that Site is at the centre of a major health care catchment area; (d) as regards the potential market for hospital and medical services within the catchment, Frenchs Forest is surrounded by eight local suburbs; the Frenchs Forest postcode region which surrounds the Bantry Bay Road Site has an area of 9.1 square kilometres and a population of over 12,000 which is the size of a medium size NSW country town. On 2003 figures the total number of patients admitted to hospitals in the catchment area was somewhere in the vicinity of 170,000. There is an identified need for medical specialists in the catchment area; (e) there is an accommodation shortage for specialist medical tenants; there are general practitioners within the catchment who could be both tenants as well as a source of referrals to specialists; and there is a shortage of medical accommodation; (f) the regional demographics are that in the catchment there will be an increased population and an aging population which will require an increase in private hospital beds. Shorter hospital stays mean that more off site pre and post admission patient consultations are needed; (g) the site is well served by major roads and public transport; (h) there are potential developers and investors in the market who would be available to assist in the development of the sites as a hospital or medical centre. 65 In late 2006, the council granted development consent for a proposed private hospital and medical centre for sleep disorders at 49 Frenchs Forest Road East, approximately 800 metres east of the Lands. It comprised a three storey building with two levels of basement car parking, with a total site area of over 1,600 square metres compared with a total site area for the Lands of about 2,000 square metres. It is located within a business park development characterised by buildings of a substantial scale within the G4 Locality, in which a hospital and medical centre are Category 3 land uses. It was approved notwithstanding that a Category 3 use is presumed to be inconsistent with the desired future character in the G4 Locality Statement. However, the desired future character of Locality G4 is whether "future development will maintain the predominant scale of existing development in the locality", in contrast to the locality G3 test of "complementary or compatible land use". A council report relating to that development stated that use of the building as a medical centre was appropriate given that the site was in close proximity to residential uses and public transport and, as such, was accessible and in a convenient location; and that its operation was unlikely to result in any significant impacts such as acoustics or traffic on the residential development opposite the site. Mr Player considered that a similar conclusion could be drawn with respect to a proposed private hospital on the Lands where the nearest residential neighbourhood (other than the properties acquired by the Corporation) are on the other side of Frenchs Forest Road. Ms Laidlaw thought 49 Frenchs Forest Road was not comparable because it was in a different physical environment characterised by multi-level commercial style buildings. While statements in the council report concerning accessibility and convenient location apply equally to the Lands, I think that this development consent is of little assistance given the different physical environment. 66 In my view, at the acquisition date the location and characteristics of the Lands, described at [14] - [17] above, made them well suited for development for a small private hospital, and somewhat better suited than Frenchs Forest residential sites outside the Eastern Site. This is supported by the recognition of the suitability of the Western Site for a hospital use through its former special use or hospital zoning, the factors which brought about the short listing of this location as suitable for a public hospital, and the existence of some health care facilities on the Western Site. Private hospitals are regularly in residential localities around Sydney, as illustrated in photographs and descriptions in evidence. The report by Mr Smiles evidences that there was demand for private hospitals/medical uses in the Frenchs Forest area and beyond and that there were potential developers and investors in the market for such a use. Western Site 67 The applicants submit that the development potential of the Lands for a private hospital use was also enhanced by public knowledge that the Western Site directly opposite had been short listed as the site for the new Northern Beaches Hospital. I accept that the development potential of the Lands for a private hospital would benefit from the synergy of being opposite a public hospital. Mr Player said it was a relevant consideration that a hypothetical purchaser would be aware from available public information prior to 30 March 2006 that the government was considering various potential sites for a new public hospital including the Western Site directly opposite the Lands, with the possibility of consequential enhancement of the Lands; and that the Western Site had formerly been zoned for hospital use. That proposition is correct as far as it goes but, for reasons discussed later, I conclude that the uncertainty as to whether the new public hospital would be built on the Western Site alone was such that the hypothetical purchaser would not, on that account alone, have paid more than a modest premium over the single house market value of the respective Lands: see [109] - [110] below. Development Consent 68 I turn to consider the likelihood, as at the acquisition date, of obtaining consent to develop the Lands as a private hospital.

[76]

medical centre means a building or place used for the purpose of providing professional health services (such as preventative care, diagnosis, medical or surgical treatment, or counselling) to out-patients only, but does not include a health consulting room." 74 There is a question whether a building can be a "hospital", as defined in the WLEP, if it provides professional health services to outpatients only. The answer is unclear because there is a tension between the words of the definition "whether or not they are admitted as in-patients" and the exclusion from that definition of a "medical centre", which is defined as a place used for the purpose of providing professional health services to out-patients only. In my view, the question should be answered in the affirmative given the strength of the words "whether or not they are admitted as in-patients". 75 Under cl 12(3)(b) of the WLEP, before granting consent for development classified as Category Two or Category Three, the consent authority must be satisfied that it is consistent with the desired future character described in the relevant Locality Statement. A note to cl 12 states that, "To assist with understanding: Category One development is development that is generally consistent with the desired future character of the locality, Category Two development is development that may be consistent with the desired future character of the locality, and Category Three development is development that is generally inconsistent with the desired future character of the locality." The word "consistent" in a context such as this has been held to have its ordinary and natural dictionary meaning, including agreeing or accordant, compatible, not self-opposed or self-contradictory, consistently adhering to the same principles or course: Gillespies v Warringah Council [2002] NSWLEC 224, 124 LGERA 147 at [70] - [77]; Residential Lifestyles Pty Ltd v Warringah Council [2005] NSWLEC 250 at [30]. 76 The desired future character of Locality G3 is set out in appendix G to the WLEP: "The Manly Lagoon Suburbs locality will remain characterised by detached style housing with a pocket of apartment style housing in landscaped settings interspersed by a range of complementary and compatible uses . The development of further apartment style housing will be confined to the 'medium density areas' shown on the map. Substantial regional parklands and bushland will remain significant elements of the locality.

[81]

79 There is an issue as to whether the scale of Mr Player's contemplated private hospital (or medical centre) activity on the Lands is such that it predominantly serves only the needs of residents of the local area, so as to meet the definition of complementary and compatible use. "Local area" is not defined. It must be different from "Locality", which is defined in the Dictionary to the WLEP as "a discrete area of land (or water) listed as a locality in an Appendix to this plan and identified on the map". Thus, a "Locality" includes Locality G3, in which the Lands are located. 80 The absence of a definition of "local area" is an unsatisfactory aspect of the WLEP since much may turn on it in a particular case. Mr Player interpreted "local area" to mean an imprecise area much larger than Locality G3, in effect a "district". Ms Laidlaw interpreted "local area" to mean a "neighbourhood" which, relevantly, she thought was bound on the east by Wakehurst Parkway, on the south by Warringah Road or an imprecise point to the south of Warringah Road, on the north by an imprecise point north of Frenchs Forest Road, and on the west by an imprecise point including the residential area east of Forest Way. Thus, Ms Laidlaw's perception of a "local area" was a small fraction of Mr Player's perception. The relevant "local area" assumed by each planner was ill-defined and somewhat arbitrary. Some Category Two uses (such as child care centres) would seem to be incapable of satisfying the limited interpretation favoured by Ms Laidlaw. On the other hand, perhaps all such uses would satisfy the wide interpretation adopted by Mr Player. On Mr Player's interpretation, the proposed hospital would predominantly serve only the needs of residents of the local area. On Ms Laidlaw's interpretation, that may not be so (at least in the case of a medical centre) although it may be arguable that it still "predominantly" serves only the needs of the residents of the local area if by reason of their proximity they would predominantly use it. 81 In my view, "local area" in this context should be construed as an area approximating the area of the Locality, as defined, in which the proposed development site is located, rather than as that Locality. For example, if (as in the present case) the activity is proposed on a site in Locality G3 bordering another Locality, the "local area" would straddle Location G3 and that other Location and would approximate the area of Locality G3. On this basis, in my opinion, the scale and intensity of the proposed private hospital is such that it predominantly serves only the needs of the residents of the local area. Private hospitals probably do not come any smaller than this. 82 I turn to the issue between the planners as to whether, at the acquisition date, a hypothetical purchaser would have perceived a risk arising from the Draft WLEP adopted by council some two weeks before the acquisition date.

[89]

91 It is therefore unnecessary to consider the applicant's alternative submissions as to development potential. However, I would briefly comment on the alternative medical centre use submission. As a medical centre is a Category Three development under the WLEP, Mr Player accepted that it would have a lesser prospect of obtaining development consent than a private hospital. Ms Laidlaw thought it oxymoronic that a Category 3 development such as a medical centre that is generally inconsistent with the desired future character of the locality should be described as a "complementary and compatible land use" in the absence of any other mitigating circumstance. She pointed out that the nearby medical centres cited by Mr Player (including one at 48 Bantry Bay Road) were around a quarter or a fifth of the size of the medical centre proposed by Mr Player. There is force in her views. Viewed at the acquisition date, the hypothetical purchaser would have been pessimistic, I think, about the prospect of obtaining development consent for a medical centre on the Lands. Market value 92 I turn to consider the Corporation's submission that any development potential of the Lands for a private hospital carried no market value above their respective values as single house properties. 93 Expert valuation evidence was given by Mr Terry Large for the applicant and Mr David Lunney for the Corporation. Their competing valuations are set out at [4] above. Western Site proposal and the s 56(1)(a) disregard 94 As stated earlier, the applicants submit that development potential for a private hospital use was enhanced by the fact that it was public knowledge that the Western Site had been short listed for selection as the site for the new Northern Beaches hospital. The result, the applicants submit, was that the development potential of the Lands would benefit from the synergy of being in close proximity to the public hospital. I have earlier identified the evidence relating to the major premise of this submission: see particularly [44] - [50]. It is true that during the early to mid 2000s there was a public awareness that the Western Site was one of several sites under consideration for a new public hospital. However, in March 2005 the applicants received a letter indicating that the whole Bantry Bay Road Site was under consideration for that purpose and there was an article in the Manly Daily to that effect. A Manly Daily article in early 2006 identified six potential sites for the new public hospital and set out the health service's assessment of each. One was identified as Housing's land on the Western Site. This article may have been inaccurate given that in November 2005 the Health Department appears to have been considering the option of the Western and Eastern Sites together as the location for a new hospital: see [48] above. Nevertheless, against the background of earlier public awareness that the Western Site was an option, I am prepared to accept that the market would have perceived that article as an indicator that the Western Site, was still a possible site for the new public hospital.

[94]

(a) it is not the proposal to carry out or the carrying out of the public purpose that must be disregarded under s 56(1)(a). It is any change in the market value of the land thereby caused. Until the market knows of the proposal or the carrying out of the proposal, it cannot change the market value; (b) s 56(1)(a) uses the definite article ("the" proposal), indicating that there is only one proposal within its contemplation. The High Court has emphasised the use of the definite article: Walker HCA at [53]. However, the proposal might be multi-faceted: Walker CA1 at [39]; (c) the s 56(1)(a) proposal to carry out the public purpose must be that of the resuming authority as an emanation of the State: Walker CA3 at [55]; (d) s 56(1)(a) only refers to the carrying out of the public purpose and the proposal to carry out the public purpose (it seems logical that the proposal would precede the carrying out). The provision does not expressly refer to steps taken in the development of a proposal. This was noted in Walker CA1 at [39]. Basten JA reviewed the case law to see if it would support some broader construction but did not conclude that it did. His Honour did conclude that the lesson from Housing Commission of NSW v San Sebastian Pty Ltd (1978) 140 CLR 196 is that no narrow view should be taken as to the steps that may affect the value of land: at [85]. The applicability of the lesson to s 56(1)(a) may be questioned given the subsequent High Court acceptance of submission (iv) in the passage in Walker HCA quoted at [97] above; (e) I doubt that the High Court intended to mandate that propositions (i) and (ii) in the passage quoted at [97] above were steps that necessarily had to be taken in that order; that is, a valuation that ignored s 56(1)(a) followed by a subtraction for the effect of its disregard. It seems equally consistent with the terms of s 56(1)(a) to take its disregard out of the equation before making any market value assessment, if that seems a preferable course. Either way, the result should be the same. (f) any effect on market value of the attributes of land which make it suitable for the public purpose for which it is resumed falls outside the s 56(1)(a) disregard. That effect is to be distinguished from the effect on market value of the proposal or the carrying out of the proposal referred to in s 56(1)(a), which must be disregarded. This distinction, I think, is consistent with the distinction expressed (although not in the language of s 56(1)(a)) in English authorities concerning the judge-made Pointe Gourde principle (named after Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565), the predecessor to s 56(1)(a), where: "The distinction was drawn…between allowing for the possibility of enhancement by the carrying out of an undertaking (permissible) and the value of that realised possibility (impermissible). It was… the possibility and not the realised possibility of the site being required for the purpose for which it is specially adaptable which ought to be considered": Walker HCA at [44].

[98]

102 In his initial valuation report, Mr Large said that his value had been assessed on the basis that a hospital/medical centre was the Lands' highest and best use from "a town planning and valuation point of view. Prior to the properties being compulsorily acquired by the [Corporation], a number of the owners had discussed their property's redevelopment potential including the dispossessed owners, as medical oriented redevelopment sites due to the long term knowledge of the proposal for the new hospital opposite the subject Lands. The site to be occupied by the hospital is opposite the subject properties and was not part of the acquired Land. The influence of the hospital should not be ignored". Thus, he placed strong reliance on a proposal for the new public hospital to be on the Western Site only. 103 Mr Large's later valuation approach, as expressed in the valuers' joint report, went too far in assuming that that proposal had been approved: "10. Mr Large agrees that his valuation is predicated on the assumption that the Northern Beaches public hospital has been proposed and approved on land to the western side of Bantry Bay Road opposite the subject property... … 12. It is agreed that if the assumption is to be made that a major public hospital is not proposed and approved on land to the western side of Bantry Bay Road opposite the subject property, it is necessary for Mr Large to reconsider his opinion as to the highest and best use of both the Penfold and Bracey site and the value of the two properties. On the basis of this assumption, Mr Large considers that it is debatable whether the highest and best use of the Penfold and Bracey sites is for a single residential use or alternatively for a senior's living housing development. … 20 Mr Large considers that any influence in value due to the Northern Beaches Hospital should not be ignored." 104 However, in oral evidence Mr Large said that he had not taken into account the fact that there was "definitely" going to be a public hospital directly opposite the Lands, and that he valued it on the basis of Mr Player's town planning advice. At one point, he appeared to blame Mr Lunney for drafting the joint report erroneously in this respect, which I do not think is an acceptable excuse. If one valuer misunderstands and misstates the position of the other when drafting a joint report, it is the responsibility of the latter to ensure that his position is stated accurately before signing the report. This contradiction in Mr Large's evidence is unfortunate not only of itself but because it led Mr Lunney to value the Lands on Mr Large's stated assumption in the joint report, even though he thought the assumption was erroneous. On that assumption, Mr Lunney valued the Penfold Land at $1,000,000 and the Bracey Land at $1,600,000.

[108]

(1) 1 Bantry Bay Road, a corner site at the northern end of the Eastern Site of 556m2 with a five bedroom house. It sold in June 2006 to the Corporation for $805,000 (after deducting the premium over market value: Mr Large did not deduct that premium). He adjusted the rate for size and time to the acquisition date to $1,736/m2; (2) 24 Stanhope Road, Killara, 890m2 sold in August 2007 for $1,850,000 for the expansion of the Dalcross Private Hospital. He adjusted the rate for location and time to $1,746/m2; (3) 26 Stanhope Road, Killara, 841m2 four bedroom dwelling sold for $1,800,000 in May 2007 for the expansion of the Dalcross Private Hospital. He adjusted the rate for location and time to $1,870/m2; (4) 34 Stanhope Road, Killara, 886m2 four bedroom dwelling sold for $1,600,000 in December 2006 for expansion of the Dalcross Private Hospital. He adjusted the rate to $1,755 m2. Although the improvements were more substantial than in the other Stanhope Road sales, concluded that the sale per square metre indicated that the value was in the land; (5) 16-18 Mons Road, Westmead 1283 square metre property sold in November 2007 for $1,775,000. The land is currently being used for car parking and development consent was subsequently approved for a two and a half storey medical centre. Mr Large adjusted for location to a rate of $1,591 per square metre; (6) 20-22 Mons Road, Westmead, 1,980m2 sold for $3,936,395 in March 2007. At the sale date, two single storey buildings used as medical consulting rooms were on the site. He adjusted the rate for location and time to $2,505/m2; (7) 9 Patey Road, Dee Why, 911m2 sold for $1,310,000 in August 2006 to the adjoining Delmar Private Hospital. There is a Seniors Living proposal for the site. He adjusted the rate for time to $1,682/m2. Mr Large said this land has similar development potential as the Lands. Mr Lunney said this property is in a far superior location as it is only 800m from Dee Why beach and is not comparable. 114 As I have said, I have decided that Mr Large's approach is inappropriate. In addition, even on Mr Large's approach, there is force in Mr Lunney's view that the majority of Mr Large's sales are not comparable because they were sales of properties to adjacent or very close existing hospitals; and 1 Bantry Bay Road does not seem a fair comparison given that it was a sale of a single block for a residential use and sales for such a use are not valued on the basis of a rate per square metre.

[116]

(a) 8 Cobb Street, Frenchs Forest: sold in July 2007 for $690,000. An area of 696.85m2, with a three bedroom dwelling generally in original condition and in need of maintenance and renovation. It has a smaller land size and a smaller dwelling in an inferior condition. Mr Large thought this property was 15 per cent inferior whilst Mr Lunney thought it was 10 per cent. The Corporation uses this sale, in conjunction with 9 Bantry Bay Road, to perform a reality check on the valuation of the Penfold property. After adjustments for time and location between these properties the valuation for the Penfold Land yields a market value of $805,000, which is less that Mr Lunney's valuation of that property at $820,000; (b) 24 Cobb Street, Frenchs Forest: sold in December 2007 for $725,000. An area of 682.9m2 with a four bedroom dwelling in a slightly irregular shaped allotment located at the end of a cul-de-sec. This has a larger dwelling on a smaller allotment and is in an inferior location; (c) 10 Cobb Street, Frenchs Forest: sold in September 2007 for $761,500. An area of 696.85m2 with a four bedroom dwelling. This has a similar sized dwelling on a smaller allotment; (d) 9 Bantry Bay Road, Frenchs Forest: sold in November 2005 for $656,000 and May 2006 for $675,000 (negotiated sale to the Corporation excluding 10% premium). An area of 752.5m2 with a three bedroom dwelling. This sale property is located in the same street as the Lands. Mr Lunney acknowledged that this sale needs adjustment for market movement to November 2007; (e) 14 Penrose Place, Frenchs Forest: sold in October 2007 for $845,000. An area of 746.1m2 with a three bedroom, largely original dwelling. Mr Lunney did not place strong weight on this sale as he said it was out of line with a number of similar properties in the area including the adjacent sale of 15 Penrose Place and was marketed for sale in the "high $700,000s". However, this sale does have a comparable land size with a slightly smaller dwelling in similar condition; (f) 15 Penrose Place, Frenchs Forest: sold in November 2007 for $735,000. An area of 714.5m2 with a three bedroom dwelling. This property has a slightly smaller allotment in inferior shape and a similar sized dwelling to the subject site. It was first thought this property was affected by an easement which would limit the potential envelope for any future extensions or redevelopment but during the hearing, this was found to be incorrect; (g) 56 Bantry Bay Road, Frenchs Forest: sold in December 2006 for $787,000 and June 2008 for $887,444. An area of 668.88 with a four bedroom renovated dwelling. This rectangular shaped allotment is located on the corner of Bantry Bay Road and Primrose Avenue. This is a larger, superior dwelling on a smaller allotment. Mr Lunney acknowledged these sales need adjustment for market movement to November 2007. 123 In relation to the larger Bracey Land only, Mr Lunney also had regard to the three following single residential sales of larger lots:

[118]

125 The Corporation submits that a comparison of 8 Cobb St and 9 Bantry Bay Road demonstrates that the former supports the sale price of the latter to the Corporation in 2006 (minus the 10 per cent premium referred to in the contract), and provides good evidence to support Mr Lunney's valuation of the Penfold Land. The reasoning, which is persuasive, is along the following lines: (1) 9 Bantry Bay Road sold in May 2006 for $675,000 (excluding the 10 per cent premium over agreed market value); (2) adjusting this sale to the date of the 8 Cobb Street sale (July 2007) requires an adjustment of time at 11% per annum. For the 14 months between the sales, this is 12.8%, which shows $761,000; (3) Mr Large stated that 9 Bantry Bay Road is 10 per cent better than 8 Cobb Street. By the hearing this was increased to 15 per cent. I accept 10 per cent; (4) as 8 Cobb Street sold for $690,0900, 10 per cent ($69,000) would adjust the value of 8 Cobb Street to $759,000. This is virtually identical to the figure of $761,000 for 9 Bantry Bay Road referred to in (2) above. The comparison of these two figures indicates that the sale price in (1) above represented market value of 9 Bantry Bay Road; (5) as to the comparison between 9 Bantry Bay Road and the Penfold Land, Mr Large said that the Penfold Land was more valuable by $18,000 because its land size is 13m2 larger than 9 Bantry Bay Road and the Penfold Land has 15m2 larger floor area in the house; (6) as 8 Cobb Street sold for $690,000 in July 2007, this sale price needs adjustment the market movement between July 2007 and 30 November 2007. This is four months at 11% pa or +3.67%, which equals $715,000; (7) to this must be added the adjustment of 10% for superior features of 9 Bantry Bay Road. This yields $787,000; (8) accepting Mr Large's $18,000 difference between 9 Bantry Bay Road and the Penfold Land, this yields $805,000 as the market value of the Penfold Land, which is less than Mr Lunney's valuation of that Land at $820,000. 126 On the other hand, further analysis of the comparable sales listed earlier, along lines suggested by the applicants, suggests that Mr Lunney's assessment of the residential market value of the Lands may be too low: (a) 9 Bantry Bay Road. Its market value at the sale date of 31 May 2006 was $675,000 which, if adjusted at 13.5 per cent per annum, leads to a value on 30 November 2007 of $810,000. I am prepared to accept Mr Large's evidence that No 9 was inferior to the Penfold Land, therefore a further adjustment needs to be made for that fact; (b) 14 Penrose Place, Frenchs Forest was sold for $845,000 on 14 October 2007. I accept Mr Large's evidence that it is not as good as the Penfold Land. A small increase for time to 30 November 2007 is required on account of the good market conditions. Mr Lunney suggested that the sale was out of line, but I am not persuaded that that is so; (c) 56 Bantry Bay Road. Mr Lunney agreed that the June 2008 sale price of $880,444 would have been achieved by December 2007; (d) 1 Bantry Bay Road referred to at [113] above which sold for a market value of $805,000 in June 2006 (after deducting the premium over market value). The applicant submitted that it was in poor condition compared with the Penfold Land but I am not satisfied that that was so. The proposition seems inconsistent with the valuation report in evidence and I am not satisfied that the photographs on which the applicant relied represented its condition at its sale date. 127 Balancing these competing considerations, I conclude that Mr Lunney's residential valuations should be increased by 5 per cent to $860,000 for the Penfold Land and to $1,155,000, for the Bracey Land. To this should be added the premium of 25 per cent for their private hospital development potential, discussed earlier, to arrive at market value (rounded) for the Penfold Land of $1,075,000 and for the Bracey Land of $1,444,000. Disturbance loss 128 The following table summarises the parties' competing contentions and my decisions concerning the quantum of s 59 disturbance loss:

[120]

129 Two comments may be made concerning the extent of agreement between the parties. First, the s 59(d) claims for ad valorem stamp duty are agreed in principle but final quantification depends upon the Court's determination of the market value of the Lands. The parties are to calculate the stamp duty following delivery of these reasons for judgment. Secondly, the Corporation's agreement that s 59(c) and (d) relocation costs and stamp duty, as well as solatium, are payable on the basis that the Lands are valued on a single dwelling basis; otherwise, it says, the higher use would require cessation of the use of the dwellings. That agreement is engaged by my valuation of each of the Lands on a single dwelling basis (while allowing a limited premium for some higher development potential). 130 The applicants' disturbance loss claims are for costs incurred after 30 March 2006, the date of the Minister's announcement of the acquisition, and before 24 April 2008 when the applicants commenced proceedings, except that relocation costs have not yet been incurred because the applicants still reside on the Lands and apparently have not yet been required by the Corporation to vacate. To the extent that the disturbance claims are in dispute, I address them below. 131 The "reasonably" incurred requirement of each sub-section of s 59 should be construed in the context of the Just Terms Act's encouragement of the acquisition of land by agreement: ss 3(1)(e), 14(1)(a). Legal costs - s 59(a) 132 Section 59(a) disturbance loss comprises "legal costs reasonably incurred by the person entitled to compensation in connection with the compulsory acquisition of the land". In addition to costs paid to lawyers, the applicants' claims under s 59(a) relate to costs of town planners, negotiators, surveyors, researchers, quantity surveyors, architects and a developer. The Corporation submits that, apart from costs paid to lawyers, they are not "legal costs" and therefore are not allowable under s 59(a). I accept the submission. However, it may be that some of the disallowed costs are recoverable by the applicants as costs of these proceedings.

[127]

138 The Corporation disputes these claims on the ground that, as the applicants still reside at their former properties, they have not yet incurred costs in connection with relocation and, therefore, they are not allowable under s 59(c). Nevertheless, the Corporation allows $5,000 on account of relocation costs, which it says is reasonable having regard to the nature of the premises. 139 The relocation costs paid by the Corporation to four other owners along Bantry Bay Road who negotiated sales after 30 March 2006 were $34,415, $36,890, $40,715 and $42,742. These amounts were respectively specified in the contracts of sale between each of those owners and the Corporation. Earlier, I have upheld the Corporation's submission that full weight should be given to another clause of those contracts which specified that the purchase price included a 10 per cent premium on the market value: see [119] - [120] above. Consistency irresistibly suggests that equal weight be given to the clause quantifying relocation costs as evidence of their reasonableness and, therefore, the reasonableness of the lesser quantum of the applicants' claims for relocation costs. 140 I am satisfied that the relocation costs claimed will be incurred and that they are reasonable. In my opinion, they are allowable notwithstanding that they have not yet been incurred, on the construction of s 59(c) adopted in McDonald v Roads and Traffic Authority of NSW [2009] NSWLEC 105 at [117]. Other financial costs - s 59(f) 141 Section 59(f) disturbance loss comprises "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". There are three requirements for financial costs to fall within s 59(f). First, they must be reasonably incurred or might reasonably be incurred. Secondly, they must relate to the actual, as distinct from the potential, use of the acquired land. Thirdly, they must arise as a "direct and natural consequence of the acquisition", which directs attention to the nature or degree of the required causal relationship: see McDonald v Roads and Traffic Authority of NSW at [110] where the authorities are reviewed. I consider that these requirements are satisfied in the present case.

At a glance

Court

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Before

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Judgment (132 paragraphs)

Parties

Cases Cited (17)

Cited By (3)