Rocco Fraietta v Roads and Maritime Services

Background

1. The applicant purchased the property in 1991. The property is 2,883 square metres ('sqm') in area, with a frontage of approximately 23.69 metres to Lochville Road to the north. The property is bounded by residential land to the south and east, and the M1 Pacific Motorway to the west ('Motorway'). At the date of acquisition, there were no improvements constructed on the property.
2. The property is unusual insofar as an urban watercourse known as Cockle Creek runs from the southwest corner, through the centre to a point slightly to the west of the centre of the northern end of the property ('Creek'). The Creek effectively divides the property into three regions: 1. the east of the Creek, which is a relatively flat portion of land which grows wider to the south of the property, and is able to be developed ('Area A'); 2. the bed of the Creek, which is lower than the areas on each side, and cannot be developed as this would interfere with the Creek's flow ('Area B'); and 3. the west of the Creek, which comprises an artificial hill (or mound) of unknown composition which rises steeply to the Motorway to the west that is generally inaccessible and inappropriate for development ('Area C').
3. The precise size of Areas A, B and C have varied considerably between the experts, with the following values being provided to the Court: Expert Area A Area B Area C Peter Phippen 1,491 sqm 425 sqm 967 sqm Garth McKenzie 1,323 sqm 520 sqm 1,040 sqm Daniel Martens 1,519 sqm 321 sqm 1,042 sqm

1. I find that the sizes provided by Dr Martens are the most accurate for two reasons. First, his figures are the most transparent figures. Mr Phippen does not provide the basis for his calculations, whilst Mr McKenzie includes in the size of Area B the embankment on the east (thus reducing the size of the developable Area A), but not the embankment on the west (thus increasing the size of the undevelopable Area C). Conversely, Dr Martens specifies that the embankment sits above the creek bank, and that it should not be included in the calculations of either Area A or C. Second, Dr Martens is a geotechnical engineer, and is more qualified than both Mr Phippen (a valuer) and Mr McKenzie (a town planner) to give such evidence. As such, I will adopt Dr Marten's figures when looking at the sizes of Areas A, B and C.
2. The property, whilst surrounded by land zoned "R2 - Low Density Residential", was (and remains) zoned "E4 - Environmental Living".

Evidence

1. The applicant's primary position was that a prudent purchaser would value the property on the basis that the Creek could be relocated to the west, which would in turn increase the developable area of Area A, and that irrespective of such relocation two dwellings could be constructed on the property.
2. As a result, the Court received expert evidence in relation to architecture, town planning, geotechnical engineering, hydrology, quantity surveying and valuation. Lay evidence was also given by way of two affidavits of the applicant and an affidavit of Anthony Elwaw.

Lay evidence

1. The applicant, who was not cross examined, deposed that he had purchased the property in 1991 from the NSW Department of Main Roads. He deposed that he: 1. intended to build a stone house in the south of the property; 2. collected stone blocks, bricks and other building material over the past 25 years that he has stored on the property; 3. spent many hours over the past 10 to 15 years dealing with weed infestation; 4. purchased an excavator in 2011 which he intended to use to develop the property, which he stored on the property; 5. had ceased "plans" to build the stone house when his mother fell ill approximately three years prior to September 2016 (when he swore his second affidavit), and that he had "planned to recommence" these plans in May/June 2014 after this mother passed away in December 2013.
2. The applicant deposed that the RMS first contacted him regarding the proposed acquisition of the property in April 2014.
3. The applicant also deposed that in March 2014, prior to the acquisition, Mr Elwaw, a developer, approached him and offered to purchase the property for $2,500,000, which the applicant ultimately declined. This is corroborated by the affidavit of Mr Elwaw.
4. Subsequent to the acquisition, the applicant deposed that he had attended at least nine "auctions or open houses" in the surrounding area. He deposed that he has not purchased a replacement property as the part payment from the RMS was not received until May 2016, and that the amount was in any event insufficient to purchase an appropriate property in the surrounding area.
5. The applicant also deposed that he incurred a number of costs in removing objects from the property, including: 1. $1,318 per day for 10 days to remove the building materials, including $500 for two labourers, an average of $18 for petrol and $800 for his own lost income; and 2. $300 to have the excavator moved.
6. The applicant finally deposed that, when he purchases a replacement property, he anticipates that he will incur costs of $1,500 for a surveyor, $2,500 for a conveyancer and $1,100 in bank fees when entering into a new mortgage.

Architectural evidence

1. The applicant relied upon expert evidence from Peter Israel, an architect, who prepared plans depicting development options for the property dated 10 June 2016 and a further set of plans dated 19 September 2016. The RMS did not rely on any expert architectural evidence.
2. With regard to the two sets of plans Mr Israel provided to the Court, one was drafted on the basis that the Creek was relocated, and the other envisaged that the Creek would remain in the same location. Each provided for two dwellings to be developed on the site; a primary, two storey dwelling in the south of the property, and a secondary single story dwelling in the north of the property, both of which are located in Area A. Each plan also shows access to both dwellings through a driveway along the eastern edge of the property from the accessible frontage in the northeast corner of the property and past the secondary dwelling. Both sets of plans allow for a deck and pool as part of the primary dwelling.
3. The difference between each set of plans is the size of the dwellings. In the first set of plans (which assumes that the Creek has been relocated to the west), Mr Israel has designed a primary dwelling with a gross floor area ('GFA') of 481 sqm, and a secondary dwelling with a GFA of 120 sqm. Mr Israel calculated that if the property were to be developed in accordance with these plans, it would have a floor space ratio ('FSR') of 0.21:1. As will become relevant below, these plans also have a side setback from the eastern boundary of 4.2 metres, and have a "hard surface area" of 902 sqm. Whilst these plans showed two possible realignments of the Creek, one approximately 10 metres to the west ('10 Metre Option'), and a second approximately 13 metres to the west ('13 Metre Option'), the plans allowed the dwellings to be constructed in the same locations regardless of which option was adopted. These plans shall be referred to as "Plan A".
4. Mr Israel's second set of plans (where the Creek remains in its present location) allowed for a GFA of 192 sqm for the primary dwelling, and 91 sqm for the secondary dwelling. Mr Israel calculates that these plans would have a FSR of 0.16:1. As will become relevant below, these plans also have a rear setback to the southern boundary of 10 metres, a side setback from the eastern boundary of 2.5 metres, and a "hard surface area" of 447 sqm (although it is noted that this excludes 261 sqm of "permeable paving" that forms a driveway). These plans, which became Ex D, shall be referred to as "Plan B".
5. Whilst a third set of plans was attached to the joint report of the planning experts, these were similar to Plan B, and were not referred to in Mr Israel's expert report. As such, they are of limited relevance.

Planning evidence

1. The town planning experts, Dan Brindle for the applicant and Garth McKenzie for the RMS, each prepared individual reports and a joint expert report dated 31 August 2016. Mr McKenzie also prepared a statement of evidence in reply.
2. The planning evidence was uncontroversial in relation to a number of points. It was common ground that: 1. the applicable controls included the Ku-ring-gai Local Environmental Plan 2015 (NSW) ('KRG LEP') and the Ku-ring-gai Development Control Plan 2015 (NSW) ('KRG DCP'); 2. the highest and best use of the land would be to develop a primary and secondary dwelling; 3. the maximum allowable FSR was 0.2:1 pursuant to cl 4.4(2) of the KRG LEP, although (if it were to apply) cl 4.4(2D) of the KRG LEP would allow a maximum FSR of 0.237:1, noting that these are development standards that are amenable to relaxation pursuant to cl 4.6 of the KRG LEP; 4. the vegetation in Area C, which may be removed if the Creek is realigned, has not been identified and it is unclear whether this would be in breach of cl 6.3 of the KRG LEP (which seeks to protect biodiversity, amongst other things); 5. any realignment of the Creek would require that any consequent reduction to the riparian zone be offset to avoid a breach of cl 6.4 of the KRG LEP; 6. for the primary dwelling, the rear setback should be a minimum of 12 metres, and the side setback at least 9% (for a single storey) or 12% (for two storeys) of the width of the property, pursuant to cl 4A.2 of the KRG DCP, although it was again noted that this control was flexible (in particular, Mr McKenzie suggested that a side setback of 2 metres and a rear setback of 6 metres would likely be approved); and 7. the maximum built upon area ('BUA') for the site is 540 sqm (or 19%) pursuant to cl 4A.3 of the KRG DCP, although there is some level of flexibility on this control.
3. Mr Brindle accepted that Plan A does not satisfy the BUA controls, as it has a footprint of approximately 31%. He noted however that plans similar to Plan B would be able meet these controls, and that there may be a number of other available designs that would allow a primary and secondary dwelling to be constructed.
4. Mr McKenzie stated that neither Plan A nor plans similar to Plan B would likely be approved by Ku-ring-gai Council ('Council'), as they both exceed the 540 sqm of BUA, and are inconsistent with the "E4 - Environmental Living" zone objectives, as well as cll 6.3 and 6.4 of the KRG LEP.
5. Mr McKenzie also stated that it was "highly improbable" that Council would allow the land to be subdivided in any event, as at least one of the blocks would be smaller than the required 1,500 sqm. Whilst he acknowledged in cross examination that the whole site was only 117 sqm short, and that such a requirement was a development standard that could be overcome, he maintained that given the objects of the "E4 - Environmental Living" zoning and the constraints on Areas B and C, the subdivision would likely still not be approved. Conversely, Mr Brindle stated during cross examination that whilst there would be a high risk involved in purchasing the property expecting that a subdivision would be approved, this risk would be significantly reduced if subdivision was sought after the dwellings were constructed.
6. The final point of contention was the riparian zone. Mr McKenzie opined that, for the purposes of the "Guidelines for riparian corridors on waterfront land" prepared by the Office of Water (which became Ex 1) ('Guidelines'), the Creek was a "first order" watercourse. As a result, the Guidelines required a vegetated riparian zone ('VRZ') of 10 metres from the watercourse, and that the "riparian corridor" stretches 20 metres from either side of the channel. Both planning experts agreed that such a VRZ would cover the majority of the property, and cut substantially into both dwellings in both Plan A and Plan B. Even applying the "averaging rule", which allows works to be undertaken in 50% the "outer VRZ" if this area is offset in the remainder of the riparian corridor, both experts agreed that Mr Israel's plans did not meet these controls. However, Mr Brindle did not accept that the Guidelines applied (or would be applied) to the proposed development, particularly given that two properties which ran alongside the Creek to the north of the property had been developed substantially closer to the Creek than the Guidelines recommend, although no evidence as to when and how such development took place was tendered.

Geotechnical Engineering Evidence

1. The geotechnical engineering experts, Dr Martens for the applicant, and Tony Colenbrander for the RMS, each prepared individual reports and a joint expert report primarily in relation to the potential realignment of the Creek.
2. Both experts agreed that realignment was at least technically possible. However, such realignment would require that the steep slope heading to the Motorway be cut in a manner that would allow the Creek to be moved to the west. It was also agreed that the process of constructing the slope, and the nature of the fill of the artificial hill (or mound), was unknown (although Dr Martens stated that it was unlikely that it was contaminated).
3. The primary point of disagreement was in relation to the best method of achieving that realignment. Dr Martens contended that a "gravity retaining structure", which would involve the construction of a sandstone brick wall to retain the mound to the west of the realigned Creek, was the preferred solution ('GRS Solution') as it was the most appropriate option for residential realignments. Mr Colenbrander considered that the GRS Solution was, whilst technically suitable, inappropriate because it would require significant excavation works and was potentially unsafe for the contractors given the gradient of the slope (Dr Martens disputed this). Rather, Mr Colenbrander opined that a soil nail and shotcrete option should be preferred ('Shotcrete Solution'). Dr Martens considered that whilst this was technically suitable, it was inappropriate in a riparian corridor and would not meet the surrounding aesthetics (Mr Colenbrander acknowledged this, and suggested that some further design works could be undertaken).
4. The experts also disagreed about the amount of works that would need to be undertaken for each solution. For example, with regard to the Shotcrete Solution, Mr Colenbrander contended that 125 soil nails would be required, whilst Dr Martens considered that between 10 and 29 soil nails would suffice. As noted below, this disagreement was manifested in the quantity surveyors' evidence.
5. Importantly, both experts acknowledged that there was a degree of uncertainty regarding the relocation of the Creek. In particular, Dr Martens conceded in cross examination that whilst he was of the opinion that the artificial hill (or mound) had probably been filled in a proper manner, he could not be sure, and that until a geotechnical assessment was undertaken (which had not been undertaken, nor he opined would have been undertaken by a reasonable purchaser prior to purchase in any event), there remained a risk that the Creek could not be realigned in the manner contended for by the applicant.

Hydrology Evidence

1. The hydrology experts, Dr Martens for the applicant, and Ian Joliffe for the RMS, each prepared individual reports and a joint expert report. They agreed that the existing riparian corridor provided only limited functionality, and that at least technically it could be relocated to provide an increase to this functionality.
2. The experts agreed on little else. Dr Martens stated that realigning the Creek would not have any detrimental impact on the existing riparian corridor. He stated that, whilst the proposed development contravenes the Guidelines, these are only recommendations and in his experience a large amount of flexibility is given where a riparian corridor is of negligible value. He opined that, as such, it was likely that the realignment would be approved.
3. Dr Joliffe was of the opinion that the proposed realignment required further assessment to determine whether it would be appropriate. He stated that, given that realigning the Creek to the west would reduce the riparian corridor in Area C, this should be compensated for in Area A. He opined that this was not reflected in Plan A, which had the dwellings within one or two metres from the waterway. He stated that a riparian corridor of 10 metres would be appropriate on the eastern side of the Creek, and that the proposed realignment and development of the secondary dwelling was unlikely to be approved.
4. With regard to Plan B, Dr Martens stated that the Office of Water would be likely to approve the proposed development, as it appeared that at least 50% of the entire site could be dedicated to a riparian corridor. Dr Joliffe conversely stated that it was unlikely that Plan B would be approved as the proposed dwellings remained too close to the embankment.

Quantity surveyor evidence

1. The quantity surveying experts, Ian Menzies for the applicant, and David Lawson for the RMS, prepared five individual expert reports, as well as two joint expert reports.
2. Both quantity surveyors provided a range of estimates based on the various differing proposals that may have been utilised if the land were to be developed. Based on a "typical" 1,000 square metre lot, the experts made the following estimates: 1. with regard to a "base scenario", where the Creek is not realigned, the "abnormal site costs" were estimated by Mr Menzies to be $190,301 and Mr Lawson between $302,779 (where the opinions of Dr Martens and Mr Brindle were taken into account) and $491,634 (where they were not); 2. with regard to circumstances where the Creek was to be realigned using the GRS Solution, Mr Menzies estimated it would cost between $363,886 (for the 10 Metre Option) and $411,993 (for the 13 Metre Option), whilst Mr Lawson estimated it would cost between $597,880 (for the 10 Metre Option) and $628,857 (for the 13 Metre Option); and 3. with regard to circumstances where the Creek was to be realigned using the Shotcrete Solution, Mr Menzies estimated it would cost between $345,065 (for the 10 Metre Option) and $360,061 (for the 13 Metre Option), whilst Mr Lawson estimated it would cost between $443,023 (for the 10 Metre Option) and $505,272 (for the 13 Metre Option).
3. The primary difference between the experts was that whilst Mr Lawson made various assumptions and estimated the costs based on those assumptions, Mr Menzies considered that this was inappropriate, and so did not cost what he described as "unknowns". Given that he did not include these unknowns, Mr Menzies stated that he was "extremely comfortable" that, insofar as the scope of works does not change, the cost would not change from that which he has provided. Mr Menzies therefore adopted a contingency of 10% for error.
4. As can be surmised from the above, Mr Lawson took the position that Dr Martens' works were cheaper than those postulated by Mr Colenbrander. Despite this, Mr Lawson stated that there were a large number of unknowns in relation to the property, and that this impacted the accuracy of any estimates that were made in relation to the property. As such, Mr Lawson allowed a margin of error of -30% to +20% in his estimates.

Valuation evidence

1. The valuation experts, Peter Phippen for the applicant, and David Lunney for the RMS, each prepared individual reports and a joint expert report.

Applicant's valuation evidence

1. Mr Phippen originally valued the property at $2.28 million. He was of the opinion that the property was ideally located within the "Wahroonga Village Precinct" ('Precinct'), and was close to "virtually every essential service, facility and amenity". He stated that this was not an "average" property given its size and the potential to develop two dwellings on the property, and that whilst a likely purchaser would not engage most of the experts that have been engaged in this matter, any additional development cost would not reduce the market value of the property.
2. Importantly, Mr Phippen stated, in considering comparable sales, a potential depressive impact on the market values of properties near the NorthConnex development as a result of related works (in particular an exhaust stack) should not be disregarded. He was of the opinion that the market had increased significantly since 2008, and that these depressive factors should be taken into account. Mr Phippen also considered that it was appropriate to only give consideration to the applicant's expert evidence (and in particular the evidence given by Mr Israel, Mr Brindle, Dr Martens and Mr Menzies), as a prospective purchaser would only obtain expert advice from one expert in each discipline.
3. Mr Phippen considered that the best way to derive the market value of the property was to adopt a comparable sales approach utilising adjusted values of comparable sales on a per square metre ('psm') basis. Whilst he accepted that often lots are transferred on a "block value" basis, he stated that this was inappropriate for the subject property as it was large enough to hold a secondary dwelling.
4. Mr Phippen utilised 22 comparable sales, all of which were located within Wahroonga and were contracted after the NorthConnex development was announced in March 2014. Mr Phippen then, in effect, undertook two steps. As each sale involved land on which improvements had been constructed, the first step was to determine the "base land value" ('BV') without improvements. This involved: 1. calculating the value of the improvements subject to each of the comparable sales by multiplying the GFA of each property by either $1,000 if it contained improvements in "good" condition or $500 if it contained improvements in "inferior" condition; 2. subtracting this amount from the sale price of the property; and 3. dividing this deduced value by the area of the property to give a psm BV.
5. It is important to note that Mr Phippen accepted during cross examination that he had not necessarily applied these numbers in the way represented within his report. Further, he accepted that applying "blanket" values such as those set out in par 48(1) does not allow the range of improvement values to be disclosed in the adjustment process. Further, there is one example where he increased the value of the land by $100,000 for demolition costs as the 'improvements' were dilapidated. As set out below, I have treated his approach with some caution.
6. Once Mr Phippen ascertained the BV of the land, he then made a number of adjustments, including: 1. time, at a fixed rate of 1% per month from the date that the comparable property was sold to the date of the acquisition; 2. location, at a rate between 2.5% to 15% depending on the superiority or inferiority of the comparable property when compared to the property; 3. whether the comparable property was located outside the Precinct, at a fixed rate of 10% downwards if this was the case; 4. noise, at a rate between 0% to 15% depending on how much further the comparable property is from the Motorway; 5. size, at a variable rate based on the assumption that smaller parcels of land sell for a higher rate psm than larger parcels of land (which he noted during cross examination was an adjustment of -10% if they were smaller than 1,000 sqm, -5% if they were between 1,000 and 2,000 sqm, -2.5% if they were around 2,000 sqm and no adjustment if they were the same size); and 6. topography, at a flat rate of 2.5% where the comparable property has "minor" sloping greater than that on the property.
7. Whilst Mr Phippen applied the above adjustments to all 22 comparable properties, he considered that the four most comparable properties were those which were directly adjacent to the Motorway, and had the Creek running through the land. Importantly, Mr Phippen accepted during cross examination that each of these sales were voluntary acquisitions by the RMS which involved unwilling vendors and anxious purchasers. He also stated that each would have sold for "much higher prices" had they been private sales. These comparable sales (and the base calculations adopted by Mr Phippen) were: Address Sale price Less Improvement BV Area (sqm) BV (psm) 39 Bareena Ave, Wahroonga $1,200,000 $240,000 $960,000 734 $1,308 37B Bareena Ave, Wahroonga $1,400,000 $300,000 $1,100,000 571 $1,926 28 Bareena Ave, Wahroonga $3,100,000 $1,000,000 $2,100,000 1,478 $1,421 35 Bareena Ave, Wahroonga $2,200,000 $350,000 $1,850,000 1,799 $1,028

1. Mr Phippen then adjusted these properties as follows: Address BV (psm) Time Location Size Topo-graphy Adjusted value (psm) 39 Bareena Ave, Wahroonga $1,308 9% -2.5% -10% 2.5% $1,295 37B Bareena Ave, Wahroonga $1,926 8% -2.5% -10% 0% $1,840 28 Bareena Ave, Wahroonga $1,421 0% -2.5% -5% 0% $1,252 35 Bareena Ave, Wahroonga $1,028 -4% -2.5% -2.5% 2.5% $962

1. Using these adjusted values, Mr Phippen proceeded to value Area A (the developable land on the east of the Creek) at $1,250 psm.
2. Mr Phippen valued Area B (the Creek itself) at $100 psm. His stated basis of this valuation was that a value of $80 psm had been allocated to land zoned "E2 - Environmental Conservation" by Moore J in Constantine v Blacktown City Council (No 2) [2016] NSWLEC 81, as well as land within a riparian corridor by Pain J in Caruso v Sydney Water Corporation [2008] NSWLEC 320.
3. Mr Phippen valued Area C (the undevelopable land to the west of the Creek) at $200 psm. The basis of this valuation was that whilst the land could not be developed, it "would be worth at least double the value of Area B land".
4. Mr Phippen then applied these values to Areas A, B and C as provided for in both the 10 and 13 Metre Options to derive the following values: Option Area A Area B Area C Total 10 Metre Option $2,318,750 (1,855 sqm) $42,500 (425 sqm) $120,600 (603 sqm) $2,481,850 13 Metre Option $2,485,000 (1,988 sqm) $41,100 (411 sqm) $96,800 (484 sqm) $2,622,900

1. Mr Phippen then subtracted the cost of undertaking the construction works for the 10 and 13 Metre Options (which he estimated based on the quantity surveyors' evidence) as follows: Option Total Works Cost Land Value 10 Metre Option $2,481,850 $200,000 $2,281,850 13 Metre Option $2,622,900 $250,000 $2,372,900

1. Mr Phippen was of the opinion that a hypothetical purchaser would seek to undertake the least amount of works necessary when relocating the Creek, and would therefore opt for the cheaper option, being the 10 Metre Option. As such, Mr Phippen valued the property at the lower end of the range, and adopted a value of $2,280,000.
2. However, Mr Phippen also stated during the hearing that if the allocation of space to Areas A, B and C were to remain the same (i.e. a prospective purchaser were not to seek to realign the Creek), he would still assign the same values. Utilising the numbers contained in Plan B, he valued Area A (1,491 sqm) at $1,863,750, Area B (425 sqm) at $42,500 and Area C (967 sqm) at $193,400, giving a total value of $2,099,650 for the property. Based on this, he accepted during cross examination that his final valuation of the property was therefore $2.1 million.
3. Mr Phippen however continued at the hearing to state that despite raising the depressive impact of the NorthConnex project (in particular an exhaust stack) in his report, he had not taken this into account until the evening of the third day of the hearing, after he had commenced his evidence. He stated that if it were to be taken into account, the value of Area A should be increased to $1,500 psm, leading to an overall value of $2,472,400 for the property if the allocations of land in Plan B were adopted. He stated that this 20% increase was based on his discussions with other estate agents and various articles in newspapers, and was particularly the result of a large exhaust stack being built on the other side of the Motorway.
4. Whilst it did not explicitly impact his final analysis, Mr Phippen also considered the sales of 116 and 118B Coonanbarra Road, Wahroonga (respectively, '116 Coonanbarra' and '118B Coonanbarra'), both of which were relied upon by Mr Lunney (as outlined below). Using the same adjustments, Mr Phippen analysed the BV of these properties as follows: Address Sale price Area (sqm) Less Improvement BV BV (psm) 116 Coonanbarra $1,575,000 1,112 $125,000 $1,450,000 $1,304 118B Coonanbarra $1,788,000 1,032 $250,000 $1,538,000 $1,490

1. He then adjusted these properties as follows: Address Base value (psm) Time Location Size Topo-graphy Adjusted value (psm) 116 Coonanbarra $1,304 -1% 0% -5% 0% $1,226 118B Coonanbarra $1,490 -4% 0% -5% 0% $1,356

1. Finally, Mr Phippen also acknowledged that one of Mr Lunney's comparable sales, 56 Junction Road, Wahroonga ('56 Junction') could be of assistance. He said that his analysis would "likely" give a base land value of $2 million, although he did not attempt to justify or adjust this value. He was of the opinion that Mr Lunney's other primary comparable sale, 142 Coonanbarra Road, Wahroonga ('142 Coonanbarra'), was too old and too distant to be of any relevance.

RMS' valuation evidence

1. Mr Lunney has valued the property at $1,400,000.
2. The primary basis of his valuation is that a rate psm is an inappropriate measure of value of single residential lots, and that such lots are rather transacted on a "block value" basis. Further, Mr Lunney stated that it was unlikely that a prospective purchaser would seek to realign the Creek (or take it into account when determining the perceived market value) because realignment would be of limited utility and carries with it substantial cost, time and risk that outweigh any benefits. He stated that the differences in opinion of the quantity surveyors would also "weigh heavily" on the prospective purchaser, and discourage them from seeking to realign the Creek.
3. Mr Lunney began his valuation analysis by stating that two properties, 56 Junction and 142 Coonanbarra, were the most physically comparable properties to the subject property.
4. With regard to 56 Junction, which comprised 2,879 sqm and was sold for $2.9 million in March 2015, Mr Lunney noted that it was of almost identical size to the subject property, contained a large dwelling, was impacted by a riparian corridor, was located on a busy road and was of an irregular shape. Mr Lunney made an allowance of $1.11 million for improvements (leaving an unadjusted land value of $1.79 million), which includes $200,000 for landscaping. He then adjusted the value of the property by -15% for topography, -5% for location and -5% for additional development costs, giving 56 Junction an adjusted value of $1,342,500.
5. With regard to 142 Coonanbarra, which comprised 1,955 sqm and sold for $1.01 million in August 2013, Mr Lunney stated that it was comparable as it was zoned "E4 - Environmental Living", is traversed by the Creek, abuts the Motorway, and is significantly larger than most surrounding residential lots (although smaller than the subject property). Mr Lunney made an allowance of $110,000 for improvements, leaving an unadjusted land value of $900,000.
6. Despite this, he also determined that such a sale should be 'paired' with other sales at a similar time to determine whether the market paid a premium for larger blocks of land. As such, he looked at the sales of 107 and 123 Coonanbarra Road, Wahroonga, which were both substantially smaller and sold for $1.05 million in May 2013 and $1.18 million in October 2013 respectively. After making allowances for improvements, Mr Lunney determined that they had unadjusted land values of $900,000 and $880,000 respectively. This, he stated, showed that 142 Coonanbarra did not command a premium over two substantially smaller lots of land that were sold at a similar time, and demonstrated that a psm rate was inappropriate.
7. Mr Lunney continued to draw comparisons between the subject property and the sales of 116 Coonanbarra and 118B Coonanbarra. Both of these sales occurred in the months subsequent to the date of acquisition, and both properties are adjacent to the subject property.
8. In relation to 116 Coonanbarra, which sold for $1.575 million in July 2015, Mr Lunney allocated a value of $175,000 for improvements, giving it an unadjusted land value of $1.4 million. In relation to 118B Coonanbarra, which sold for $1.788 million in October 2015, Mr Lunney allocated a value of $386,000 for improvements, giving it an unadjusted land value of $1.402 million. Given his opinion that the size of the land is not important, and that land is transacted on a block basis, he considered that the subject property would have a similar value at around $1.4 million. He stated that any adjustments to 116, 118 and 142 Coonanbarra would simply cancel each other out, and no net adjustment was necessary.
9. The final property Mr Lunney took into account was 35-41 Billyard Avenue, Wahroonga ('35 Billyard'), which was a vacant lot zoned "R2 - Low Density Residential" and approximately three times the size of the subject property. This property sold for $3.25 million in 23 August 2015. Given its size, topography and location, Mr Lunney stated that any adjustments would be too great, and as such it cannot be utilised as a comparable property. However, he continued to state that it shows that land in the surrounding area did not transact on a psm basis.
10. Mr Lunney also made a number of criticisms of Mr Phippen's analysis, and in particular regarding his valuation of the improvements and adjustments to 28 and 35 Bareena Avenue, Wahroonga (respectively '28 Bareena' and '35 Bareena').
11. Whilst Mr Lunney does not rely on either of these sales as comparable sales, he nonetheless undertook an analysis of them where he assigned psm values to discrete aspects including dwelling, veranda, garage, loft, landscaping, fencing, paving and pool. This led him to attribute values of $1,284,000 and $500,200 to the improvements of 28 Bareena and 35 Bareena respectively, and unadjusted land values of $1,766,000 and $1,700,000. Mr Lunney then adjusted each property by 10% for size (whilst the subject property is much larger, much of it is not developable), -10% for inferior development potential, -20% for increased development costs (which equates to approximately $350,000, which is the midpoint between the quantity surveyors' costings) and -5% for inferior shape and frontage. This gave adjusted values of $1,324,500 and $1,275,000, which were lower than his $1,400,000 valuation of the subject property in any event.
12. Mr Lunney also criticised Mr Phippen's change during the hearing to the psm value of Area A as a result of the exhaust stack's depressive impact on sale prices. In particular, he stated that 116 Coonanbarra increased in value by 57% since an earlier sale in October 2010, which was consistent with (and even slightly higher than) market trends. Further, whilst Mr Lunney accepted during cross examination that there was an increase in the number of sales around the exhaust stack to the west of the Motorway, he also stated that this did not appear to extend to the east of the Motorway, where each of the comparable properties (and the subject property) were located.

Valuation methodology

1. Before undertaking a valuation of the property, there are two preliminary questions to be considered: 1. basis of the valuation: should the value of the property be determined on a piecemeal psm basis, or a block value basis (also known as a 'per lot basis'); and 2. relocation of the Creek: given that the applicant's primary submission was that the value of the land should be assessed based on the size of Area A if the Creek was to be relocated, whether it is correct to assess the value of Area A based on this development potential, or whether the value of Area A should be assessed based on its size as it existed at the date of acquisition.

Basis of the valuation

1. For the reasons set out below, I consider that it is appropriate to value the property on a piecemeal psm basis ('psm value').
2. As stated by Sackville AJA in Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391: [146] …In the normal course, in a case such as the present (and indeed in the present case), the valuers called by the respective parties would take and analyse comparable sales to determine a rate per square metre to apply to the acquired land. Each would express an opinion as to whether the rate derived from the comparable sales should be adjusted up or down to take account of, for instance, the potential highest and best use of that land and its other characteristics to the extent to which they differed from the sales evidence. In determining a rate to be adopted, the judicial valuer was required to resolve the doubts or conflicts raised in the expert evidence as to the rate to be derived from the analysis of the sales and the adjustments, if any, to be applied to that rate, in favour of the dispossessed owner. [emphasis added]
3. Whilst Allsop P and Tobias JA gave their own reasons in this matter, this passage has been recently been cited as authority by Pain J in Taylor v Roads and Maritime Services [2016] NSWLEC 138, and is consistent with the position taken by Sheahan J in Marroun v Roads and Maritime Services [2012] NSWLEC 199 (which was upheld on appeal) ('Marroun'), where his Honour stated at [201]: [201] The sales chosen as potentially comparable are analysed to provide a common basis of measurement and comparison, for example a unitary rate (rate per square metre, rate per hectare, etc), or notation whether improved or unimproved (through allowance for the absence or existence of improvements, etc), and so on.
4. Justice Pepper expressed similar sentiments in El Boustani v Minister Administering the Environmental Planning and Assessment Act 1979 [2012] NSWLEC 266 (which, whilst reversed on appeal, was not challenged on this point), when her Honour stated at [26]: The analysis of potentially genuinely comparable sales provides a common basis of measurement by seeking to convert all potential sales to a common unitary rate, usually expressed as a dollar value per square metre, that is either improved or unimproved.
5. Whilst this Court has accepted valuations on a per lot basis ('per lot value') on at least one previous occasion in Goluzd v Minister Administering the Environmental Planning and Assessment Act 1979 [2012] NSWLEC 25 at [80] (Biscoe J) ('Goluzd'), and I acknowledge that this can be an appropriate valuation methodology in certain circumstances, on the present facts I find that a psm value remains more appropriate for three reasons.
6. First, it is conceded by the respondent that the highest and best use of the property is for residential development comprising a primary and a secondary dwelling, rather than just a single dwelling. In Goluzd, Biscoe J was asked to consider the market value of land that had been subdivided for the purposes of the acquisition using the "before and after" method which is commonly used in such matters. Further, all of the comparable sales were similar oceanfront lots which had been transacted within approximately a year prior to the relevant acquisition date in that case. This is qualitatively different to the present case. Whilst his Honour accepts criticism of a psm value at [80] on the basis that it was highly irregular to value a residential block of land with a "single dwelling allotment" using a psm basis, it is also accepted that it was appropriate to value residential land sold "en globo" using a psm basis. Whilst the subject property does not neatly fit into either of these categories, I consider that given its development potential, the psm value would likely give a better indication of the subject property's value.
7. Second, applying psm values in a piecemeal fashion is advantageous in the present circumstances, as different aspects of the land have clearly different values. It is agreed that no development can occur on the western side of the Creek or the Creek itself, meaning that the highest and best use of that land is substantively different to that of the eastern side of the Creek, which can be developed. Applying a value to the land as a whole (either on a per lot basis or a uniform psm basis) does not account for the peculiarities of the property. Applying different psm values to the different parts of the property in a piecemeal fashion would avoid this issue.
8. Third, the process of obtaining and applying psm values allows for a more flexible approach, which in turn renders a piecemeal psm value more reliable. The subject property is not an ordinary parcel of land, insofar as it is an irregular shape with a creek effectively rendering the western half of the property undevelopable, zoned "E4 - Environmental Living" and substantially larger than most of the surrounding lots. Because of these irregularities, there are a limited number of truly comparable properties (let alone comparable sales) against which its value can be compared when assessing its per lot value, as those comparable lots must be similarly irregular. This is evident in the fact that Mr Lunney only found two properties that he deemed comparable, both of which were some distance from the subject property, and one of which was sold nearly two years prior to the acquisition date. Whilst he considered other properties, including 56 Junction and 142 Coonanbarra, these were considered in substantially less detail.
9. This represents a lack of flexibility when assigning a per lot value to an irregular piece of land, such as the subject property. Such a lack of flexibility in turn reduces the reliability of such a method, as there are insufficient comparable properties that can be used to determine whether the assigned value is reflected generally in the market. However, such a criticism cannot be made when assigning a psm value, because it allows a piecemeal approach (such as that adopted by Mr Phippen) to be utilised. Such a method facilitates a larger number of potential comparable properties to be considered, thus increasing the reliability of the valuation.
10. As such, because utilising a psm basis is more appropriate in the circumstances, and because a psm value is likely to be more reliable than a per lot value, I find that the approach utilised by Mr Phippen (with amendments as outlined below) to be the most appropriate valuation method in the circumstances.

Relocation of the Creek

1. It is important to take into account the property's development potential and the cost of achieving that potential. However, to the extent that a piecemeal approach is undertaken, I find that the correct approach is to value Area A (and as such Areas B and C) as they existed as at the date of acquisition.
2. It is clear from the evidence that the realignment of the Creek would not have been considered by a prudent purchaser to be a fait accompli. First, the geotechnical experts expressed doubts as to whether such realignment would be approved. Whilst Dr Martens was generally of the opinion that it was likely to be approved, he did retreat from this position at least partially during cross examination. Second, the content (and potential contamination) of the mound to the west of the Creek remains unknown, which could pose further issues in relation to relocating the Creek. Dr Joliffe in particular was forceful in stating that further assessment would need to be undertaken before any works could be undertaken. Finally, there remains a question as to whether a prudent purchaser would even seek to realign the Creek. Mr Lunney consistently stated that because of the cost, time and risk involved in realigning the Creek, it was not something that a prudent purchaser would take into account when determining the value of the property. Further, Mr Phippen conceded that his valuation would remain unchanged (to the extent that he would assign the same psm values) should the Creek remain in the same position or be realigned.
3. As such, I find that the psm value of the property should be assessed using the allocations for Areas A, B and C as the property existed at the date of acquisition, rather than that found on any plans seeking to realign the Creek.

Legal context

1. There are generally four steps that need to be undertaken in a market value valuation.
2. First, the valuer should compile a list of comparable properties, and determine which should be utilised. In undertaking this process, the "sales to be treated as comparable sales need to be truly comparable", although the valuer should not be "unreasonably selective" of its comparable properties in any event: Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8 at [18] (McHugh, Gummow, Kirby, Hayne and Callinan JJ).
3. As stated by Pain J in The Trust Company Limited v Minister Administering the Crown Lands Act 1989 (2012) 211 LGERA 158; [2012] NSWLEC 73 at [110]: While all comparable sales evidence may be considered relevant and so cannot be disregarded, the level of relevance of different comparable sales to the property may vary leading to the valuer attributing differing weight to different comparable sales. In Brewarrana Pty Ltd v Commissioner of Highways (1973) 6 SASR 541 at 551, Wells J observed: … there is no hard and fast rule by the application of which a valuer may, whatever the circumstances, draw the line that clearly separates the sales that are comparable from those that are not.
4. Second, the valuer should obtain an unadjusted value by which to allow those sales to be reliably compared with the subject property. This often involves converting the value of those sales into another measurement that can be easily compared, such as a psm rate: Marroun at [201] (Sheahan J). Further, in circumstances where the valuer is comparing sales of improved properties with an unimproved block of land, it is also important at this point to first determine the value of those improvements and then remove this value from the relevant sale prices.
5. Third, the valuer should adjust those properties considered to be comparable to create equivalence with the unimproved subject land. As stated by Biscoe J in Holcim (Australia) Pty Ltd v Valuer-General [2009] NSWLEC 225 at [31]: The basis for the valuers' valuation assessments is the sales comparison method. Accepted valuation practice permits adjustments for differences, such as in location, area and time to enable valuers to have comparable values which, following adjustment, account for the various differences with the subject property. Such adjustments are generally based on a reasoning process drawing on the skill and experience of the valuer and are undertaken to derive an opinion of value through a deductive process. Because properties are rarely identical, adjustments for differences are obviously necessary but caution is required through making as few adjustments as possible, in a consistent manner, to ensure the reliability of the comparable sale when related to the subject property. Too many adjustments potentially render the comparable sale unsafe to rely upon. Caution is therefore required where large adjustments are to be made. Reflecting the significant roles of skill, experience and personal assessment in the adjustment process, the scope for differences in the quantum and direction of adjustment between valuers can be considerable. Third, the Court should then apply these adjusted values to the subject property. The purpose of this is to determine, based on comparable sales and as best it can, what value the subject property would obtain if it were to be sold on the market.
6. Fourth, the valuer should apply the unitary value of the comparable sales to the subject property to determine an accurate and reliable value.

Comparable properties

1. Mr Phippen relies, in effect, on four properties which were voluntarily acquired by the RMS. The respondent submitted that these sales are inappropriate, as they do not represent a sale by a willing, but not anxious, vendor to a willing, but not anxious buyer, and should be treated with caution as outlined in Koutsouras v State Rail Authority of New South Wales (unreported, New South Wales Court of Appeal, 29 November 1991). Mr Phippen indeed accepted during cross examination that the vendors were unwilling, and that the purchaser was anxious.
2. As outlined by Pain J in Chaudry v Liverpool City Council [2008] NSWLEC 251: [22] …Caution [in relation to sales to public authorities] is necessary because public authorities have an unnatural advantage in the bargaining process so that they can obtain a discounted price due to the threat of acquisition… … [25] …"there is no principle of law which requires the court to reject completely the evidence of sales to the acquiring authority"…
3. As a general rule, the primary concern with placing reliance on voluntary acquisitions by public authorities is that such sales are voluntary only in a nominal sense. Both the vendor and the public authority know that, if sale negotiations were to fail, the public authority usually would be able to compulsorily acquire the property in any event. This places the public authority in a stronger negotiating position than a private purchaser, as the vendor knows that if they walk away, their best alternative to a negotiated agreement is that the valuer-general (another public authority) will determine the value of their property. Whilst they will usually have some input into this process, their opinion may potentially be disregarded by the Valuer-General, meaning that their only substantive option to challenge the valuation is commencing proceedings against the public authority in this Court. This means that such negotiations will, at least theoretically, often result in sale prices that are lower than those which would have been obtained on the market.
4. Given this, to the extent that the purchase price was depressed because it was being acquired by a public authority, I do not consider that this is in any way prejudicial to the RMS, as it would have the effect of lowering the purchase price in their favour.
5. Further, the RMS alternatively submitted that because it was anxious when those properties were purchased, this meant that they in fact had an inflated price over what the market would have otherwise paid. The only evidence that the RMS was anxious to acquire these properties was an unsubstantiated statement from Mr Phippen. The RMS did not lead any evidence to suggest that this was the case, and relied solely on this statement of Mr Phippen to submit that it had been anxious to acquire these properties. I do not consider that this is sufficient to make a finding that the RMS was an anxious purchaser in the circumstances, and as such I do not consider that these sales should be excluded for this reason.
6. As such, I find that the four properties relied upon by Mr Phippen, being 28, 35, 37B and 39 Bareena, should be considered when valuing the subject property, particularly given their sale dates and proximity to the subject property.
7. With regard to Mr Lunney's comparable sales, an issue arises to the extent that Mr Lunney did not seek to obtain a psm value for those parcels of land, but rather only derived a per lot value for each of his comparable sales. However, given that Mr Lunney provided sufficient information to analyse and adjust the comparable sales to obtain a psm rate, they can at least prima facie be utilised.
8. Whilst Mr Lunney had not included 56 Junction in his list of comparable properties, he did accept that it could be of assistance in the valuation process. Further, whilst he did not ultimately rely upon them, he did consider both 116 and 118B Coonanbarra to be comparable properties, and undertook the relevant adjustments. As such, I find that it is appropriate to take these sales into consideration.
9. However, I find that the sale of 142 Coonanbarra, which was sold in August 2013, is too old to be of assistance, and should not be taken into account when undertaking the valuation process.

Unimproved land value

1. The second step is to analyse each of the sales and convert them to a unitary value that can be adjusted and compared with the subject property. As outlined above, I consider that obtaining a psm value of the unimproved land is appropriate in the circumstances.
2. The only change that has been applied by either of the valuers to obtain the unadjusted value of the unimproved land is to subtract the value of the improvements. Despite this, the method utilised by each valuer to determine the value of improvements varies greatly.
3. I consider that the approach undertaken by Mr Phippen was in a number of ways inadequate. Mr Phippen himself admitted that applying one of two blanket rates to determine the value of the improvements did not necessarily capture the nuanced value of those improvements. Further, he conceded that he had made a range of judgment calls which meant that he had not strictly applied his method in any event. Finally, in light of Mr Lunney's approach to valuing the improvements outlined below, it is clear that the figures that Mr Phippen adopted were inadequate.
4. I find that Mr Lunney's approach to valuing the improvements is more reliable than that used by Mr Phippen. The process of assigning a value to different aspects of the improvements allows substantially more nuance, and is likely to provide a more accurate valuation of the land.
5. Mr Lunney has valued the improvements using this method for 28 Bareena, 35 Bareena, 116 Coonanbarra, 118B Coonanbarra and 56 Junction. However, he did not undertake this process in relation to 37B and 39 Bareena and there is insufficient information before the Court to replicate this exercise. As such, I have adopted an approximation of these values.
6. The differences between the valuations of improvements may be summarised as follows: Address Phippen's value Lunney's value Difference 116 Coonanbarra $125,000 $175,000 $50,000 118B Coonanbarra $250,000 $386,000 $136,000 56 Junction $900,000 $1,110,000 $210,000 28 Bareena $1,000,000 $1,284,000 $284,000 35 Bareena $350,000 $500,200 $150,200 37B Bareena $300,000 N/A N/A 39 Bareena $240,000 N/A N/A

1. I consider it appropriate to adopt Mr Lunney's values for the improvements at 116 and 118B Coonanbarra, 56 Junction and 28 and 35 Bareena. His approach showed a greater level of nuance, and is the more reliable of the two approaches before me.
2. Given this finding, and with reference to the comparative table above, it is clear and I find that Mr Phippen has underestimated the value of improvements by between $50,000 and $284,000 for each of the comparative properties, and that the inconsistencies increase as the overall value of the improvements increase. As such, and doing the best I can, I consider it appropriate to adopt figures of $400,000 and $340,000 for the improvements situated on 37B and 39 Bareena respectively.
3. As such, the unimproved psm value of each of the comparable sales is as follows: Address Price Less Improvement Land value Area (sqm) Land value (psm) 116 Coonanbarra $1,575,000 $175,000 $1,400,000 1,110 $1,261.26 118B Coonanbarra $1,788,000 $386,000 $1,402,000 1,032 $1,358.53 56 Junction $2,900,000 $1,110,000 $1,790,000 2,879 $621.74 28 Bareena $3,100,000 $1,284,000 $1,816,000 1,478 $1,228.69 35 Bareena $2,200,000 $500,200 $1,699,800 1,799 $944.86 37B Bareena $1,400,000 $400,000 $1,000,000 571 $1,751.31 39 Bareena $1,200,000 $340,000 $860,000 734 $1,171.66

1. As can be seen from the above, there are two clear outliers. The first is 56 Junction, which has an unimproved land value of $621.74 psm. This can be simply explained, as larger lots generally have a lower value psm (as was agreed by the valuation experts), and 56 Junction is substantially larger than the other blocks of land (over 1,000 sqm larger than the second largest, 35 Bareena). Further, it is partially undevelopable due to a creek which runs through the front portion of the property, which would also depress its psm value. Finally, if Mr Phippen's value for the improvements were to be adopted, this would have a negligible impact on its value, bringing it up to $694.69 psm, which still $250 psm less than the next lowest value, further confirming that 56 Junction is an outlier.
2. The second is 37B Bareena, which has an unimproved land value of $1,751.31 psm. In contrast to 56 Junction, it is the smallest parcel of land (it is more than a fifth smaller than the next smallest parcel of land, 39 Bareena), and therefore can be expected to have a higher psm value than other parcels of land. Further, even if I was to adopt the value of improvements provided by Mr Phippen, this number would be even greater at $1926.44 psm, further confirming that this sale is likely to be an outlier.
3. However, noting that each represents an outlier above or below the average comparable psm value of unimproved land, I consider they represent outliers that will not be able to be accurately adjusted, and so should be excluded from the remainder of the valuation process. As such, I find that it is appropriate to use 116 and 118 Coonanbarra, and 28, 35 and 39 Bareena as comparable sales.

Adjustments

1. Mr Phippen has undertaken adjustments to all the sales within the reduced pool of comparable properties. Conversely, Mr Lunney stated in his report that whilst he relied upon 116 and 118B Coonanbarra in valuing the property, any adjustments he would have otherwise undertaken would have cancelled one another out.
2. Given this, I consider it appropriate to look at each of the proposed adjustments in turn, before applying them to each of the properties.

Time

1. Mr Phippen has applied a rate of 1% per month for 'time', meaning that any property that was sold before the acquisition date should be adjusted upwards by 1% per month, whilst any property that was sold after the acquisition should be adjusted downwards by 1% per month. Mr Lunney did not apply any adjustments for time to any of his comparable properties.
2. Before the Court were two documents which showed increases of prices in Wahroonga at the relevant times. The first document, entitled "Suburb Flyover Report - Wahroonga (House)", which became Ex N, stated that prices increased by 18% in the 2015 Financial Year, and 10.8% in the 2016 Financial Year. The second document, entitled "Residex - Suburb Report", which became Ex 11, stated that the median price of a property increased by 23% in the year to July 2015, and 8% in the year to July 2016.
3. I consider that it is appropriate to adjust properties for time, and that given each of the comparable properties are located within Wahroonga, that this rate should be uniform as proposed by Mr Phippen. In light of the statistical evidence before the Court, it appears that Mr Phippen's estimated values were reasonable. As such, I find that an adjustment for time of 1% for each month is appropriate in the circumstances.

Location

1. Mr Phippen applied adjustments for each of the comparable properties of either 0% (116 and 118 Coonanbarra) or ‑2.5% (28, 35 and 39 Bareena). This is not dissimilar to Mr Lunney, who applied an adjustment for location of -5% to 56 Junction, as it was removed from the Motorway and on a busy thoroughfare.
2. None of the comparable properties are located particularly far from the subject property. In fact, three of the comparable properties (116 and 118B Coonanbarra and 35 Bareena) adjoin the subject property, whilst 39 Bareena is approximately 10 metres from the property, and 28 Bareena is approximately 120 metres from the property. As such, any adjustment for location should be minimal.
3. It is not clear why Mr Phippen determined that 28, 35 and 39 Bareena required an adjustment of -2.5%, whilst 116 and 118B Coonanbarra required no adjustment. The only reasons before the Court that an adjustment should be undertaken is that of Mr Lunney in relation to the property being removed from the Motorway. None of the properties were more than 30 metres from the Motorway, and as such this justification simply does not apply.
4. As such, I find that whilst an adjustment for location would ordinarily be required, it is not necessary to do so in the present circumstances given the similar location of the comparable properties and the subject property.

Size

1. Mr Phippen applied an adjustment to the comparable properties for size of ‑10% if the property was below 1,000 sqm, -5% if they were between 1,000 to 2,000 sqm, or -2.5% if they were around 2,000 sqm. Mr Lunney applied an adjustment of 10% to both 28 and 35 Bareena, and did not adjust any of the other comparable properties for size.
2. I consider that whilst adjustments will need to be made in relation to size, this adjustment does not need to be large. Given that the value of a comparable property that is larger or smaller than the subject property will be reduced to a unitary value which can then be applied to the relevant part of the subject property, differences in size are already largely accounted for. Because Mr Lunney was valuing the land on a per lot basis, this had not been taken into account, hence leading him to adjust 28 and 35 Bareena upwards, as both are smaller than the subject property. Such an adjustment is not necessary where a psm value is adopted.
3. Rather, what Mr Phippen's downwards adjustments seek to achieve is parity between the psm values themselves. As outlined in his evidence, smaller properties tend to have higher psm values than larger properties. This principle was accepted by the applicant in closing submissions. Whilst there are some outliers, such a principle also generally applies to the comparable properties.
4. As such, an adjustment should be made to account for this trend. However, I consider that Mr Phippen's adjustments are inappropriate. Whilst not explicitly stated, it appears that Mr Phippen has compared the size of each property with the size of the subject property. Given that the amount derived from this process will only be applied to Area A (which is 1,519 sqm), I consider that this is the area against which each of the comparable properties should be compared.
5. I therefore find that it is therefore appropriate to adjust the comparable properties as follows: 1. for 39 Bareena, which is substantially smaller than Area A at 734 sqm, an adjustment of -5% should be applied; 2. for 116 and 118B Coonanbarra, which are somewhat smaller than Area A at 1,110 sqm and 1,032 sqm respectively, an adjustment of ‑2.5% should be applied; 3. for 28 Bareena, which is approximately the same size as Area A at 1,489 sqm, no adjustment should be applied; and 4. for 35 Bareena, which is somewhat larger than Area A at 1,799 sqm, an adjustment of 2.5% should be applied.

Topography

1. Mr Phippen made an adjustment for topography of 2.5% for comparable properties which had "minor sloping land". Whilst Mr Lunney did not adjust any properties for topography, he did adjust both 28 and 35 Bareena by -5% because those properties had a "superior shape/ frontage".
2. I consider that an adjustment for topography of 2.5% is appropriate where a comparable property has a greater slope than that found in Area A. Given that the psm value derived from this process will not be applied to Areas B or C, their slopes are not of present relevance. This impacts upon the development potential of that land, and as such should be taken into account.
3. With regard to whether a negative adjustment should be made for superior shape and frontage, I do not consider that this is an appropriate adjustment. Of the five comparable properties: 1. 39 Bareena is of a similar shape to the subject property, with no better frontage; 2. 28 Bareena is a wide rectangular shape that would allow a wider than usual residential development (and likely a wider residential development than would be permitted on the subject property) to be built, and has a good frontage to Bareena; 3. 35 Bareena is a "T" shape, with the base of the "T" fronting onto the road, and the top bar of the "T" inaccessible from the street; and 4. both 116 and 118B Coonanbarra are standard rectangular blocks suitable for a single dwelling.
4. Given this, whilst I accept that an adjustment should be made for 28 Bareena, as it is clearly of a superior shape and frontage, I do not consider that a similar adjustment should be made to any of the other comparable properties, as their shape and frontage do not appear to increase their development potential above that of the subject property in any practical manner.
5. As such, I find that an adjustment for topography of 2.5% should be applied to 35 and 39 Bareena, and an adjustment for frontage and shape of -5% should be applied to 28 Bareena.

Exhaust stack

1. In his analysis provided on the fourth day of the hearing, Mr Phippen suggested that an adjustment of at least 20% should be made as a result of the depressive impacts the NorthConnex project (and in particular the exhaust stack) has had on the sale prices in Wahroonga, including the comparable sales. Mr Phippen supported this by referring to discussions he had with unspecified persons, and what he had read in the media.
2. Mr Lunney disputed that the NorthConnex project or the exhaust stack had any such impact. He based his opinion on the fact that 116 Coonanbarra, which had previously been sold in October 2010, had increased in price since that time in accordance with market trends, and that if there was any impact on sales as a result of the exhaust stack (which was being built to the west of the Motorway), this did not appear on the evidence available to the Court to have extended to the east of the Motorway where each of the comparable properties were located.
3. I consider that an adjustment for the exhaust stack is unnecessary. There is no empirical evidence to which the Court has been directed which would suggest that such an adjustment is necessary. Further, Mr Lunney has presented empirical evidence to the Court which suggests that the exhaust stack has not depressed the value of the comparable properties. To the extent that there was a cluster of sales soon after the exhaust pipe was announced, these appear to have been restricted to the western side of the Motorway, particularly when RMS acquisitions are taken into account. As such, I find that no adjustment should be made for the exhaust stack (or other NorthConnex works).

Development potential

1. Mr Lunney made an adjustment to 28 and 35 Bareena of -10% for inferior development potential and -20% for increased development costs. No similar adjustments are made by Mr Phippen.
2. Mr Lunney did not provide any reasons for the -10% adjustment for inferior development potential. I do not consider that this adjustment is appropriate, as it has already been factored into a number of other adjustments above. In particular, it represents the basis for the topography and shape adjustments. Further, given that Area A is larger than most of the comparable properties and it is agreed that at least one large dwelling and one secondary dwelling could be built on it without relocating the Creek, it appears counterintuitive to suggest that such a parcel of land has inferior development potential in any event. As such, I find that such an adjustment is inappropriate in the circumstances.
3. With regard to the -20% adjustment for increased development costs, Mr Lunney reasoned that because the midpoint between the quantity surveyors' opinions was approximately $350,000 for "additional costs", an adjustment should be made that takes this amount into account.
4. Whether a prudent purchaser would retain the services of a particular expert, and as such have access to the opinions before the Court, is a question of fact: Cook, Saad, Raguz & Ors v Roads and Traffic Authority of New South Wales [2007] NSWLEC 136 at [12] (Jagot J). I consider that a prudent purchaser would not seek the opinion of a quantity surveyor prior to purchasing the property (as was submitted by both the applicant and the RMS), as this is an unnecessary expense, particularly when it is clear that at least some works will need to be undertaken before the property can be developed. As such, I find that whilst a prudent purchaser would have regard to the fact that, given the presence of the Creek, there will likely be added costs, any such adjustment for value would likely have been derived without specific recourse to a quantity surveyor.
5. Given this, it is clear that some adjustment is required. However, I consider that the -20% allocated by Mr Lunney is too high - if one was to average the quantity surveyors' evidence in relation to the "abnormal site costs" where the Creek is not moved, this comes to either $246,540 or $340,968, depending on which of Mr Lawson's numbers are adopted. These values represent 13.6% and 18.8% of the value of the unimproved land at 28 Bareena, and 14.5% and 20.0% of the value of the unimproved land at 35 Bareena respectively. Further, a number (but certainly not all) of the "abnormal site costs" itemised by the quantity surveyors, such as some reporting requirements, would also apply to 28 and 35 Bareena, which are both impacted by the same biodiversity and riparian overlays as the subject property. However, given that none of the comparable properties are physically traversed by the Creek, there remain a number of "abnormal site costs" which apply solely to the subject property.
6. In light of this, and doing the best that I can, I find it appropriate to adjust for "abnormal site costs" at a rate of -10% for properties which are impacted by the riparian and biodiversity overlays, and -12% for properties that are not impacted by those overlays.

Zoning

1. Neither of the valuers make any adjustment for zoning. However, prior to the date of acquisition (and the commencement of proceedings), when the land was zoned the equivalent of "R2 - Low Density Residential", Mr Phippen undertook a valuation of the property, and estimated that it would be worth approximately 25% more than the valuation that was the subject of these proceedings (and after the property had been rezoned to "E4 - Environmental Living"). He accepted during cross examination that the only reason for the 25% drop in value was the rezoning (and, as such, the reduced permissible uses), and that if there were two identical lots, one zoned "E4" and the other zoned "R2", the land zoned "R2" may be of higher value depending on the property involved. The applicant submitted that, whilst no adjustment was made by either valuer, the Court should nonetheless make an adjustment in the order of 25% to account for the different zones.
2. A review of the KRG LEP, the KRG DCP and the associated maps shows that whilst the property has a maximum FSR of 0.2:1 and a maximum BUA of 19% of the property (being 540 sqm), the comparable properties (all of which are zoned "R2") have a maximum FSR of 0.3:1 and maximum BUA of at least 50% (and between 426 sqm for 39 Bareena and 900 sqm for 35 Bareena). Further, land zoned "R2" is less restricted by its objectives, and allows more types of development than land zoned "E4". As such, whilst I accept that the 25% adopted by Mr Phippen is too high, and there may be some difference in the development potential of one lot over another, it is clear that land zoned "R2" has at least some greater development potential than land zoned "E4", and would therefore be of greater value.
3. In light of this, and doing the best I can, I consider that an adjustment of -5% is appropriate to account for the fact that the property is zoned "E4 - Environmental Living" and the comparable properties, which are zoned "R2 - Low Density Residential".

The Elwaw offer

1. The applicant submitted that the Court should take into account the offer of Mr Elwaw to purchase the property in early 2014 when valuing the property.
2. As outlined by Spigelman CJ in MMAL Rentals Pty Limited v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451 at [88]: …in an exchange bargain test, offers to purchase and sell, particularly the very property under consideration, may be relevant by fixing a range and, accordingly, would be admissible.
3. However, as outlined by Tobias AJA (with whom Basten and Gleeson JJA agreed) in Marroun v Roads and Maritime Services (2013) 211 LGERA 391; [2013] NSWCA 358 at [53]: …Having accepted…that the "offer" of $4.2 million should be considered in determining market value, but that, contrary to the submission of the appellants, it was to be considered subject to the other valuation evidence, [the primary judge] was not required to give the Offer any particular level of weight. The law did not mandate that he give the Offer a level of weight which required him as a judicial valuer to increase (by how much was not stated) the rate per square metre of the site area as determined after analysis of the relevant comparable sales relied on by [the respondent's expert valuer] Mr Lunney.
4. I find that whilst there was an offer made by Mr Elwaw for $2.5 million, no adjustment should be made as a result. I find that the other valuation evidence available to the Court is more reliable, particularly given that Mr Elwaw sought to purchase the property as a developer, and that the land was zoned the equivalent of "R2 - Low Density Residential", rather than "E4 - Environmental Living", at the time the offer was made.

Conclusions on adjustments

1. In light of the above, I find that the adjustments should be allocated to the comparable properties as follows: Address Time Size Topo-graphy Development Potential Zoning Total 116 Coonanbarra -1% -2.5% 0% -12% -5% -20.5% 118B Coonanbarra -4% -2.5% 0% -12% -5% -23.5% 28 Bareena 0% 0% -5% -10% -5% -20% 35 Bareena -4% 2.5% 2.5% -10% -5% -14% 39 Bareena 9% -5% 2.5% -10% -5% -8.5%

1. When applied to the psm land values of the comparable properties, these adjustments give the following totals: Address Land value (psm) Adjustment Adjusted Land Value (psm) 116 Coonanbarra $1,261.26 -20.5% $1,002.70 118B Coonanbarra $1,358.53 -23.5% $1,039.28 28 Bareena $1,228.69 -20% $982.95 35 Bareena $944.86 -14% $812.58 39 Bareena $1,171.66 -8.5% $1,072.07

Application

1. In light of the above numbers, and doing the best I can, I find that the appropriate psm value to apply to Area A is $1,000 psm.
2. With regard to the values of Areas B and C, I accept that whilst there are no comparable properties against which the market value can be derived, they are of substantially less value than the land in Area A. Whilst I do not accept the method used by Mr Phippen to derive Area B, doing the best I can I find that the final values Mr Phippen derived from Areas B and C give appropriate value to that land, noting that whilst Areas B and C cannot be developed, they do generally increase the overall size of the lot, which in turn allows for a larger development in Area A than would be allowed if the lot was solely comprised of Area A.
3. As such, and doing the best I can, I find that the property has a market value of $1,759,500 being comprised of: 1. $1,519,000 for the 1,519 sqm that comprises Area A; 2. $32,100 for the 321 sqm that comprises Area B; and 3. $208,400 for the 1,042 sqm that comprises Area C.

Disturbance

1. The applicant makes the following claims for disturbance pursuant to ss 55(d) and 59(1) of the Just Terms Act: 1. legal costs in the sum of $26,476.53, pursuant to s 59(1)(a), which is agreed to by the RMS; 2. valuation costs in the sum of $21,060.71, pursuant to s 59(1)(b), which is agreed to by the RMS; 3. past surveying costs in the sum of $1,600, which is agreed to by the RMS, and future surveying costs of $1,500, which is disputed by the RMS; 4. past costs relating to the relocation of plant and equipment in the sum of $13,180, for which the RMS has agreed to pay $9,600; 5. future costs relating to the relocation of plant and equipment in the sum of $9,600, for which is disputed by the RMS; 6. planning costs of pre-acquisition in the sum of $9,501.17, which is agreed by the RMS; 7. Council rates in the sum of $62.43, which is agreed by the RMS; 8. the cost of obtaining advice from a financial advisor in the sum of $2,000 pursuant to s 59(1)(c), which is agreed by the RMS; 9. conveyancing costs in the amount of $2,500 pursuant to s 59(1)(c), which is disputed by the RMS; 10. mortgage costs in the amount of $1,200 pursuant to s 59(1)(e), which is disputed by the RMS; and 11. stamp duty in the sum of $110,910 (based on a market value for the property of $2.28 million) pursuant to s 59(1)(d) and/or s 59(1)(f), which is disputed by the RMS.
2. Noting that I have found that the market value of the property is $1,759,500, I find that to the extent that the applicant is successful in its claim for stamp duty, the correct amount as at the acquisition date is $82,262.50. As such, I will substitute this amount for that contended for by the applicant.
3. Taken together, the RMS accepts that it should pay $70,300.84 of the $170,943.34 contended for by the applicant (once the correct stamp duty value is substituted). This leaves a difference of $100,642.50. Of this amount: 1. the future survey costs, future conveyancing costs, future costs relating to the relocation of plant and equipment, mortgage costs and stamp duty (totalling $97,062.50) are all related to whether the applicant is entitled to compensation relating to the purchase of a replacement property ('relocation costs'); and 2. the balance of $3,580 is attributable to the dispute regarding the quantum for the past costs relating to the relocation of plant and equipment.
4. The quantum of the relocation costs were not in dispute. However, the RMS took the position that: 1. the future survey costs, future conveyancing costs and future costs relating to the relocation of plant and equipment do not fall within the scope of s 59(1)(c) (or any other relevant term) of the Just Terms Act, and as such should be excluded; 2. because there is insufficient evidence to suggest that the applicant "needs" to purchase a replacement property based on his actual use of the land, stamp duty and mortgage costs can similarly not be claimed under ss 59(1)(d) or 59(1)(e) (or any other relevant term) of the Just Terms Act respectively.

Just Terms Act

1. Section 55(d) of the Just Terms Act, which allows for a claim for disturbance, relevantly states: 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): … (d) any loss attributable to disturbance…
2. The phrase "loss attributable to disturbance" is defined in section 59(1) of the Just Terms Act, which relevantly states: 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.

Disturbance submissions

1. The applicant's primary submission is that the relocation costs can be claimed under ss 59(1)(c), 59(1)(d) and 59(1)(e) of the Just Terms Act. It was submitted that Mr Fraietta's affidavits demonstrate a clear and ongoing intention to purchase a replacement property, given his preparations to construct a house were only interrupted by his mother's passing. It submitted that the only reason why he has not already relocated is because a suitable replacement property has not yet been located. He submitted that costs incurred under s 59(1)(c) of the Just Terms Act were not temporally bound, and future relocation costs could be claimed under this provision. The applicant submitted that the term "relocation" in ss 59(1)(d) and 59(1)(e) of the Just Terms Act did not exclude the relocation of a vacant block of land that is the subject of planned use by its owner. It was submitted that the present circumstances could also be distinguished from recent cases, including Speter v Roads and Maritime Services [2016] NSWLEC 128 ('Speter'), as it related to land being held for residential rather than investment purposes.
2. However, to the extent this was incorrect, the applicant alternatively submitted that the land was the subject of "actual use" pursuant to s 59(1)(f) of the Just Terms Act in any event, as the applicant had begun clearing the land, and was storing construction materials for use on the proposed house. This, it was submitted, was a better claim to stamp duty than that which has been granted where land was compulsorily acquired from a business that was using it for land banking.
3. The applicant finally submitted that the language of s 59(1)(f) of the Just Terms Act does not place a temporal restriction on what costs can be claimed, and that if costs were likely to be incurred in the future, they would fall under this subsection.
4. The RMS submitted that the property was not being used at or prior to the date of acquisition, and that a potential future use is not an actual use and does not attract the same right to compensation for disturbance. It submitted that there was insufficient evidence to suggest that the applicant was "on track" to commence works on the property, that the storage of stones is insufficient, and that there was no evidence that the property was any more than simply an investment. In particular, it asks the Court to draw an inference that because the applicant showed the property to Mr Elwaw in 2014, the construction of the stone house may have been only one of multiple possible futures. As such, it submitted that the relocation costs should not be allowed.

Relocation

1. I find that there has been no relocation pursuant to ss 59(1)(c), 59(1)(d) and 59(1)(e) of the Just Terms Act.
2. Section 59(1)(c) of the Just Terms Act refers to the "relocation of those persons" who are entitled to compensation. There is no evidence before the Court to suggest that there has been any such relocation of persons. The applicant did not reside on the property at any point, nor were there premises in which anyone could have resided in any event. As such, I find that the applicant cannot rely upon s 59(1)(c) of the Just Terms Act.
3. Sections 59(1)(d) and 59(1)(e) of the Just Terms Act refer to "relocation", which has been considered by a small number of authorities. Whilst there is no authoritative decision on what is meant by relocation, the following findings have been made by this Court: 1. in McBaron v Roads and Traffic Authority of New South Wales (1995) 87 LGERA 239 at 248, Talbot J found that the applicant was entitled to stamp duty for the relocation of a dairy farm; 2. in Kirela Pty Limited v The Minister administering the Environmental Planning and Assessment Act 1979 (No. 2) (2004) 132 LGERA 90; [2004] NSWLEC 68 ('Kirela') at [14], Cowdroy J found that because the applicant had not relocated its business, it was not entitled to compensation under s 59(1)(d) of the Just Terms Act; 3. in Bezzina Developers Pty Ltd v Leichhardt Municipal Council (2006) 146 LGERA 249; [2006] NSWLEC 175 at [112], Talbot J found that a claim pursuant to s 59(1)(d) of the Just Terms Act was not maintained because "no physical activities [were] to be relocated" as a result of the acquisition; and 4. in Speter at [87]-[89], it was found that because the applicants did not operate the business that occupied the acquired property, and held the acquired property simply as an investment to be rented by that business, the applicants' investment had not been relocated as a result of the acquisition.
4. Relocation requires, necessarily, that something be relocated. The intention to purchase a replacement property alone is insufficient, unless something is also relocated, whether it be a person, a business or physical objects. As noted above, the applicant has not personally been relocated. Whilst certain physical items on the property have been relocated, this has occurred without the need for the applicant to purchase another property or take out another mortgage, whatever his intentions may be. I therefore find that there has been no relocation that would enliven any requirement to compensate the applicant pursuant to ss 59(1)(d) and 59(1)(e) of the Just Terms Act.

Section 59(1)(f) of the Just Terms Act

1. Section 59(1)(f) of the Just Terms Act has a number of elements, including: 1. the costs claimed must be "financial costs"; 2. these must be financial costs that are "reasonably incurred (or that might reasonably be incurred"; 3. there must be "actual use of the land" by the person claiming compensation; 4. the financial costs must relate to the "actual use of the land"; and 5. the financial costs must be incurred as "a direct and natural consequence of the acquisition".

Financial costs

1. As outlined in McDonald v Roads and Traffic Authority of New South Wales (2009) 169 LGERA 352; [2009] NSWLEC 105 at [110] (which was upheld on appeal), the term "financial costs" should be interpreted broadly. In the present case, each of the relocation costs involve actual costs that would be incurred by the applicant, excepting the potential future costs relating to the relocation of plant and equipment, which the applicant may determine to undertake himself. However, given that the term should be interpreted broadly, and that he may indeed pay others to undertake the work, I therefore find that the relocation costs are "financial costs" for the purposes of s 59(1)(f) of the Just Terms Act.

Reasonably incurred

1. Given the applicant's intention to purchase another property as a replacement to the acquired property, I consider that the relocation costs might reasonably be incurred by the applicant. Whilst the future surveying costs may not eventuate, it is sufficient that something "might" occur, rather than it being "likely" that it occurs. As such, I find that each of the relocation costs might be incurred, and that if they were incurred, this would be reasonable pursuant to s 59(1)(f) of the Just Terms Act.

Actual use

1. Pursuant to s 59(1)(f) of the Just Terms Act, an applicant is entitled to seek financial costs which are either reasonably incurred or might reasonably be incurred, that both arise from the actual use of the land, and were incurred as a direct and natural consequence of the acquisition.
2. The principles relating to "actual use" were recently summarised in Speter, where this Court stated at [91]: This provision has been the subject of much judicial discourse, from which the following principles may be distilled: … (2) the actual use must exist in fact at the time of the acquisition, and cannot be either "a future use or potential use": Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259 at [26]-[27] (Brownie AJA) ("Fitzpatrick"), Kirela at [12] (Cowdroy J); (3) actual use can include "land banking" for future development of that land (Fitzpatrick at [31] (Brownie AJA)) and construction that is being conducted on the land at the date of acquisition (Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 254 at [44] (Biscoe J)); (4) an applicant must be more than "a passive investor": Fitzpatrick at [34] (Brownie AJA); and (5) holding land as an "investment rather than as trading stock" is not an actual use of the land: Cannavo v Roads and Traffic Authority of New South Wales [2004] NSWLEC 570 at [46] (Talbot J).
3. It has recently been determined, both in Speter at [94] and by Preston CJ of LEC in G. Suonaf Holdings Pty Ltd v Roads and Maritime Services [2016] NSWLEC 116 at [61], that properties held as tenanted investments did not involve the actual use of those properties.
4. Further to the principles above, it is also instructive to consider a number of authorities with similar factual scenarios in more depth. In Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259, where the Court of Appeal considered whether land held by a company for a proposed subdivision was an "actual use", Brownie AJA stated: [23] S59(f) of the Just Terms Act used a different expression: "actual use". [The primary judge] found that the business of the respondent was "the development of land by subdivision"; that it held the acquired land "for the purpose of development by way of residential subdivision"; that the "actual use for which it held the acquired land [was] for the purpose of development by way of subdivision"; that by reason of the acquisition, the respondent "lost its developable land", and replaced that land by "acquiring other developable land"; and that but for the acquisition the respondent could have developed the acquired land. [24] …these findings of fact mean that "the use" to which the respondent put the land for its purposes, prior to the acquisition, was use for the purpose of residential subdivision. The acquired land formed part of what was called the respondent's "land bank", being land acquired and held for the purpose, when the time was ripe, of being subdivided and resold for profit.
5. In Kirela, Cowdroy J considered whether the applicant was engaged in the "actual use" of a block of land which was intended to be used either for overflow parking, or to increase the FSR of a development planned on an adjacent block of land. His Honour found at [12] that the land "was not being used for any purpose but rather was awaiting development for some future purpose" at the date of acquisition, and continued at [19]: The Court finds that the acquired land was not used in the sense referred to in Fitzpatrick Investments Pty Ltd v Blacktown City Council (No 2). There is no evidence of actual use of the land as a land bank. The proposal for its use remained only potential therefore the applicant is not entitled to recover compensation for stamp duty pursuant to s 59(f) of the Act.
6. In Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 254 ('Al Amanah'), Biscoe J considered whether the applicant was "actually using" land on which a school was being constructed at the date the acquisition was announced. His Honour stated at [37]: …There is a distinction between land simply held in reserve for some future activity and land in respect of which work is being done - which does not have to be physical work on the land - preparatory to an intended use. The latter is, but the former may not be, an actual use of the land…The present case falls into the latter category. By the date of announcement of the acquisition on 20 July 2009, the applicant had caused work to be done preparatory to the intended use of the land as a school, for which it had incurred costs. The work included physical work on the land.
7. His Honour continued at [38] and [41] to outline a number of steps that the applicant had taken, including obtaining development consent, employing teachers and enrolling over 100 students. His Honour also noted that work was about to commence on the site. The respondent's contention is in error if it is equating an actual or present use of land with its physical use. Even so, the facts do not support the contention. In addition to the evidence of actual use noted by the referee, the following uncontested evidence, including evidence of physical use, supports the conclusion of actual use: (a) Actual work had commenced at the time of the resumption announcement as trees had been marked and fences removed; (b) Geotechnical work and site measurements by leading hand carpenters were done on the site; (c) At least 132 students had been enrolled in the school; and (d) Teachers had been employed by the school and were being trained in 2009 by existing teachers at Liverpool and Bankstown, but their contracts of employment required them to devote their time to the new school.
8. It is clear on the evidence (and I find) that the applicant is more than simply a passive investor. He deposed that he intended to construct a stone house on the property, that he had taken active steps towards doing so, and that now the property has been acquired, he intends to purchase land (and has taken active steps to look for such a property) on which he can either construct a new house, or improve an existing dwelling. The photographs attached to his affidavit show a pile of large stones that could be used for building that is bigger than the truck pictured beside it. It does not matter that Mr Fraietta was open to selling the land, if the right offer was made at the right time; the same would likely be true of a company holding land for future development, or a person occupying a residential dwelling. Further, Mr Elwaw deposed that he approached Mr Fraietta originally, and that he had made two offers to Mr Fraietta which were both rejected. This is evidence that the RMS made the conscious decision not to challenge in cross examination or otherwise.
9. However, despite my finding that the applicant is more than a passive investor, something more is required to establish that he was engaged in the "actual use" of the property at the date of acquisition. Importantly, whilst such a use does not need to have been physically commenced, it must exist at the date that the acquisition is announced.
10. I find that the applicant was involved in actual use of the land for two alternate reasons. First, as outlined by Biscoe in Al Amanah at [37], work that is preparatory to an intended use means that there is actual use of the land. Mr Fraietta had deposited a large pile of stones on the property which were to be used in the construction of a dwelling, and had not allowed the land to lie idle insofar as he had managed the weeds onsite. Whilst the applicant had not undertaken the same level of preparatory work as the applicant in Al Amanah, this is of little consequence. He had undertaken sufficient preparatory works to establish that his intention to construct the dwelling was more than simply a "potential" or "future" use. As such, I find that the applicant was involved in the actual use of the property for this reason.
11. Second, I also consider that the applicant has used the land in a manner similar to "land banking". The only evidence before the Court suggests that the applicant held the land with a specific development purpose in mind, being the construction of the stone house, when the time was ripe. It is understandable, given the death of his mother, that he had placed such plans on hold at the date the acquisition was announced. However, this does not change the fact that he was engaged in the actual use of the land, and that "but for" the acquisition of the property, he would have constructed the stone house when the time was right.
12. This can be distinguished from Kirela for two reasons. First, Kirela involved a parcel of land which was intended for two alternate and inconsistent potential outcomes, and as such the contended uses were only potential future uses. Conversely, Mr Fraietta was holding the land so that he could develop his stone house. He was holding the land, and therefore had an actual use of the land, so that he could meet an established objective. Second, there is evidence that Mr Fraietta was holding the land so that he could construct the stone house insofar as there were construction materials being stored on the site that were intended for that development. As such, I separately find that the applicant was engaged in the actual use of the land for these reasons as well.

Relating to the actual use

1. I consider that the relocation costs relate to the actual use of the land. The purchase of new land will likely involve a new mortgage, the payment of stamp duty and the use of a conveyancer who will charge a fee. Further, the relocation of the plant and equipment to the new property will be necessary to allow the dwelling to be constructed. Finally, the survey costs would similarly relate to the actual use, as they may be necessary before construction can begin. As such, I find that the relocation costs relate to the actual use of the land pursuant to s 59(1)(f) of the Just Terms Act.

Direct and natural consequence of the acquisition

1. I find that, but for the acquisition, the applicant would not be in the position where he might have had to incur the relocation costs, and as such that they are the direct and natural consequence of the acquisition.

Conclusions on s 59(1)(f) of the Just Terms Act

1. Given my findings above, I find that the applicant is entitled to the relocation costs totalling $97,062.50 pursuant to s 59(1)(f) of the Just Terms Act.

Quantum of relocation of plant and equipment

1. The final issue regarding disturbance is whether the applicant is entitled to compensation in the amount of $13,180 or $9,600 for the past relocation of plant and equipment from the property.
2. The applicant's estimate of $13,180 is derived from $5,000 Mr Fraietta paid to two contractors, $180 for the two tanks of fuel used to transport the materials, and the remainder (being $8,000) being the average amount he would have earned had he worked the 10 days he spent moving the plant and equipment. The RMS's estimate is based on a quote issued by KG & PK Daly Excavations Pty Ltd on 30 May 2015 (which was set to expire within 30 days of it being issued) to take similar works for $9,600. In particular, the quote states that "it is agreed that Rocco [Fraietta] is to assist with these works".
3. Given that the quote would have expired at the date that the plant and equipment was removed, and given that Mr Fraietta would have been required to assist with the removal works in any event, I find that the RMS cannot rely upon the quote, and that he is entitled to the amount claimed for the relocation of plant and equipment.

Conclusions on disturbance

1. As outlined above, I find that the applicant is entitled to compensation in the amount of $170,943.34 for disturbance, being comprised of: 1. $70,300.84 for the costs agreed to by the RMS; 2. $97,062.50 for the relocation costs; and 3. $3,580.00 for the difference in quantum in the cost of relocating plant and equipment.

Costs

1. As I have awarded the applicant compensation in an amount greater than the amount offered in the Notice of Compensation and contended for by RMS, the applicant should be awarded costs of the proceedings.

Orders

1. The Court orders that: 1. The amount of compensation payable to the applicant for the acquisition of the land comprising Lot 6 in Deposited Plan 263707, known as 16 Lochville Street, Wahroonga, is $1,930,443.34. 2. The respondent is to pay the applicant's costs as agreed or assessed.

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: 06 March 2017