Taylor v Port Macquarie-Hastings Council

Blefari v The Minister (1962) 8 LGRA 1 Bow v Blacktown City Council [2008] NSWLEC 211 Caruso v Sydney Water Corporation [2008] NSWLEC 320 Cassidy v Sydney Water Corporation [2008] NSWLEC 223 Chaudry v Liverpool City Council [2008] NSWLEC 251 Cook Saad Raguz v Roads and Traffic Authority of NSW [2007] NSWLEC 136 Coundrelis v Roads and Traffic Authority of NSW [2008] NSWLEC 72 Fenton Nominees Pty Ltd v Valuer-General (1981) 47 LGRA 71 Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547, 50 LGRA 334 Liverpool City Council v Commonwealth (1993) 46 FCR 67, 81 LGERA 405 Maurici v Chief Commissioner of State Revenue [2003] HCA 8, 212 CLR 111 CASES CITED: McDonald v Roads and Traffic Authority of NSW [2009] NSWLEC 105, 169 LGERA 352 Minister Administering the Crown Lands Act v Deerubbin Local Aboriginal Land Council (No 2) [2001] NSWCA 28, 50 NSWLR 665 Minister Administering the Crown Lands Act v New South Wales Aboriginal Land Council [2009] NSWCA 151 Penrith City Council v Sydney Water Corporation [2009] NSWLEC 2 River Bank Pty Ltd v The Commonwealth (1974) 4 ALJR 483 Roads and Traffic Authority of New South Wales v Hurstville City Council [2001] NSWCA 11, 112 LGERA 223 Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373 Spencer v The Commonwealth (1907) 5 CLR 418 The Valuer General v Fenton Nominees Pty Ltd (1982) 150 CLR 160 Transport for London (London Underground Ltd) v Spirerose Ltd [2009] UKHL 44, 1 WLR 1797, 4 All ER 810 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWLEC 219, 173 LGERA 155 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5, 233 CLR 259

DATES OF HEARING: 19, 22-26 Feb 2010, 2-4, 24 March 2010, 15-17 June 2010

APPLICANTS: Mr T Hale SC with Mr J Dupree SOLICITORS: Russo & Partners LEGAL REPRESENTATIVES:

RESPONDENT: Mr T Robertson SC with Mr J Lazarus SOLICITORS: Donovan Oates Hannaford

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

TAYLOR v PORT MACQUARIE-HASTINGS COUNCIL TABLE OF CONTENTS A. INTRODUCTION 1-6 B. THE STATUTORY SCHEME 7-11 C. THE APPLICANTS' CASE 12 D. THE RESPONDENT'S CASE 13-23 E. ECOLOGY 24-54 F. PHYSICAL CONSTRAINTS 55-59 G. PLANNING 60-103 H. THE QUARRY RESOURCE 104-112 I. HIGHEST AND BEST USE 113 J. MARKET VALUE 114-146 K. DISTURBANCE 147 L. CONCLUSION 148

JUDGMENT A. INTRODUCTION 1 HIS HONOUR: This is a claim for compensation for resumption of land under the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act). 2 On 1 April 2005 the respondent, Port Macquarie-Hastings Council, compulsorily acquired from the applicants, John Taylor and Mildred Taylor, rural land on Ocean Drive, Kew, for the purpose of waste management. The acquired land was Lot 1 DP 729726 with an area of 2,944m2 and Lot 7 DP 775532 with an area of 36.9 hectares (Land). The total area acquired was therefore 37.1944 hectares. 3 The Land is located immediately to the east of the small village of Kew on the northern side of Ocean Drive, which is the main road running east from Kew through Lakewood (about 4 kilometres) to Laurieton near the sea (about 8 kilometres). At the acquisition date the Pacific Highway passed through Kew. Since the acquisition date, as part of the Pacific Highway upgrade, the Kew Bypass has been constructed about 250 metres east of Kew over part of the Land acquired by the Roads and Traffic Authority of NSW (RTA) from the council for that purpose. At the acquisition date the Land was: (a) a single rural residential home site covered in bush except for 4 to 6 hectares of a disused quarry in its eastern half and a small area with a house in the south western corner; (b) zoned Rural 1(a1) in the Hastings Local Environmental Plan 2001 (LEP), which did not permit subdivision of the Land because the minimum allotment size was 40 hectares. Land so zoned has limited uses. 4 The applicants contend that compensation should be assessed at $4,540,000 comprising market value of $4,510,000 and $30,000 for loss attributable to disturbance. The council contends that compensation should be assessed at $900,000 or alternatively (if the land had industrial potential, which is denied) at a maximum of $1,270,000 for market value. 5 The key issue concerns the Land's potential for a higher and better use than that permitted by its zoning. In addressing that issue, it is necessary to consider ecological issues, physical constraints and the council's planning strategies as at the acquisition date.

6 In my opinion, compensation should be assessed at $1,525,000 comprising $1,495,000 for market value and $30,000 for loss attributable to disturbance.

B. THE STATUTORY SCHEME 7 The following provisions of the Just Terms Act are relevant: " 3 Objects of Act

(1) The objects of this Act are: (a) to guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition, and (b) to ensure compensation on just terms for the owners of land that is acquired by an authority of the State when the land is not available for public sale, and … 10 Statement of guaranteed acquisition at market value

(1) When, on request by or on behalf of an owner or prospective purchaser of land, an authority of the State gives a person written notice to the effect that the land is affected by a proposal for acquisition by the authority, the notice must contain the following: (a) a statement that the Land Acquisition (Just Terms Compensation) Act 1991 guarantees that, if and when the land is acquired by (insert name of authority) under that Act, the amount of compensation will not be less than market value (assessed under that Act) unaffected by the proposal, … 54 Entitlement to just compensation

(1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land. … 55 Relevant matters to be considered in determining amount of compensation

In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division): (a) the market value of the land on the date of its acquisition, … (d) any loss attributable to disturbance,

market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid):

(a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and … (c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law. … 59 Loss attributable to disturbance

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 reasonably incurred by those persons in connection with the compulsory acquisition of the land, … 61 Special provision relating to market value assessed on potential of land If the market value of land is assessed on the basis that the land had potential to be used for a purpose other than that for which it is currently used, compensation is not payable in respect of: (a) any financial advantage that would necessarily have been forgone in realising that potential, and (b) any financial loss that would necessarily have been incurred in realising that potential." 8 The Just Terms Act includes the following relevant principles. First, it is a code in relation to the matters to which regard must be had in determining the amount of compensation: s 55 (with its reference to "only"). Secondly, the amount of compensation has to be just: ss 3(1)(b), 54(1). Thirdly, there is a guarantee that the amount of compensation will be not less than the market value of the land at the acquisition date: ss 3(1)(a), 10(1)(a). Fourthly, market value has the classic meaning of a price agreed between a hypothetical willing but not anxious seller and buyer. Fifthly, market value has to disregard any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired: s 56(1)(a). Sixthly, market value has to take into account not only the land's actual use but its potential use at the acquisition date: ss 56(1), 61(a). The value of the potential depends upon how good was the chance, at the acquisition date, of the potential being realised. The chance may be virtually certain at one end of the spectrum or a mere speculative hope at the other. In Liverpool City Council v Commonwealth (1993) 46 FCR 67 at 83, 81 LGERA 405: "In a case where the task of assessing compensation comes down to the evaluation of a chance, it will rarely be possible to demonstrate that any particular figure is correct. I certainly cannot do so in this case. I can only consider all the relevant factors and make a judgment about them; a 'best guess' perhaps." 9 The statutory provisions are illuminated by the authorities I reviewed in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWLEC 219, 173 LGERA 155 and McDonald v Roads and Traffic Authority of NSW [2009] NSWLEC 105, 169 LGERA 352. In Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5, 233 CLR 259 at [51] the High Court said: "The opening words of the definition in s 56(1) ('means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer') reflect what for a century has been taken from Spencer v The Commonwealth . That case arose under the tersely expressed provisions of the first federal legislation in the field, the Property for Public Purposes Acquisition Act 1901 (Cth). Section 19(1) thereof spoke merely of 'the value of the land taken'. The result of the judicial exegesis in Spencer was summed up by McHugh J in Kenny & Good Pty Ltd v MGICA (1992) Ltd as follows: 'Value is determined by forming an opinion as to what a willing purchaser will pay and a not unwilling vendor will receive for the property. In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value. Those matters will include the predicted impact of future events as well as the experience of the past and the rates of return on other investments. As Isaacs J pointed out in Spencer v The Commonwealth : 'We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property. (Emphasis added.)' The market for the property is, therefore, assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property" 10 English authorities were reviewed by the House of Lords in Transport for London (London Underground Ltd) v Spirerose Ltd [2009] UKHL 44, 1 WLR 1797, 4 All ER 810 but in New South Wales they must be approached with caution for it is the provisions of the Just Terms Act that are determinative: Walker HCA at [47]. 11 "In the field of judicial valuations, the task is ultimately evaluative. Within limits, courts do not require every step to be separately justified": Roads and Traffic Authority of New South Wales v Hurstville City Council [2001] NSWCA 11, 112 LGERA 223 at [50]. As Isaacs J said in Spencer v The Commonwealth (1907) 5 CLR 418 at 442 quoting the Privy Council in Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373 at 391: "It is quite true that in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others. Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had his own set of conjectures, of more or less weight according to his experience and personal sagacity. In such an inquiry as the present, relating to subjects abounding with uncertainties and on which there is little experience, there is more than ordinary room for such guesswork; and it would be very unfair to require an exact exposition of reasons for the conclusions arrived at."

C. THE APPLICANTS' CASE 12 The applicants claim compensation for market value of the Land in the sum of $4,510,000 as broad-acre rural land with potential for rezoning to permit urban use as detailed in the Camden Haven Urban Growth Strategy 2002 - 2022 (CHUGS) or with potential for seniors living pursuant to State Environmental Planning Policy (Seniors Living) 2004 (as it was called at the acquisition date) (SEPP SL 2004). The applicants assess market value at $110,000 per hectare based on comparison with three nearby sales of properties to the east on the same side of Ocean Drive and in the same zone for, respectively, $102,354, $161,555 and $167,121 per hectare (the applicants' comparable sales). In addition, the applicants claim disturbance costs in the sum of $30,000 for legal and valuation fees.

D. THE RESPONDENT'S CASE 13 The council's case is that (a) market value compensation should be assessed at $819,000 on the basis of its existing use as a kind of Shangri-La in the bush, together with a 10 per cent premium for potential quarry use; (b) alternatively, if it be held that the Land had potential for industrial use, its market value would be higher but could not be higher than $1,270,000; (c) none of the applicants' comparable sales are comparable and it is therefore not reasonable to adjust them to arrive at the value of the Land; and (d) nothing should be awarded for disturbance because there is no supporting evidence. 14 The council's submissions can be encapsulated in five propositions. 15 First, the council submits that the highest and best use of the land was its current use as a single rural homesite. 16 Secondly, the council submits that there were only four potential uses of the Land: (a) waste management, as proposed by the council in 2001, which was the type of use that might naturally be located in a disused quarry and which was permissible without rezoning; (b) quarrying, which was a past use of the Land that had been abandoned but was permissible without rezoning; (c) industrial, but only on the four to six hectares on the eastern part of the Land that had been previously disturbed by quarrying; and (d) environmental protection, because the Land was known to have high habitat value for fauna due to its old growth forest elements. 17 However, a purchaser would not offer more for this potential than for a single home site, except for a premium of 10 per cent for quarrying potential (as the council's valuer, Mr Wood, said). 18 Thirdly, the council submits that the limited potential of the Land for industrial use only on the four to six hectares previously disturbed by quarrying is confirmed by: (a) the council's 2001 offer to purchase the Land for a waste transfer station in the former quarry area; (b) CHUGS, which identified 15 hectares on the eastern part of the Land as suitable for "industrial investigation". That excluded residential use. 19 The Land's industrial potential was limited, the council says, by a number of factors that would have deterred anyone from purchasing the Land for industrial use at all or at least outside the cleared, disused quarry area of four to six hectares:

(a) at the acquisition date there was available ample, better situated, industrially zoned land, with little uptake; (b) the Land was only capable of development for an industrial purpose if it were to be rezoned; (c) investigation would have shown that less than the 15 hectares referred to in CHUGS was potentially sound industrial land due to topographical and ecological restraints. The view of the valuer, Mr Wood, was that a potential purchaser for an industrial purpose would have little or no expectation of developing it beyond the area already cleared for the quarry. Due to the Land's steep terrain, extensive and costly levelling would be required to enable it to be used for industrial purposes outside the disused quarry area. The estimate of the council's quarry expert, Mr Stitt, was between one and six million tonnes of material would have to be moved. Even for residential development, levelling for building platforms would be required to achieve CHUGS' required density, as the applicants' valuer Mr Dobrow agreed. Ecological constraints on clearing of forest on the Land for development include the fact that the Land has old growth and riparian elements. 20 The council contends that the limited industrial potential of the Land is also evidenced, by way of confirmation of foresight, by the Port Macquarie-Hastings Industrial Land Strategy 2007 (2007 Strategy) which increased the investigation area of the Land to 30 hectares but concluded that the developable area was seven hectares including the planned waste transfer station. I will address that contention immediately. The proposition that foresight at the acquisition date may be confirmed by looking at post acquisition date eventualities has authority in Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547 at 558-559, 50 LGRA 334 at 343-344 (approved in Minister Administering the Crown Lands Act v Deerubbin Local Aboriginal Land Council (No 2) [2001] NSWCA 28, 50 NSWLR 665 at [69]-[74]), which is often cited in resumption compensation cases in this Court. In my view, the proposition should be treated with caution for it enables any party to claim, if it suits them, that which eventuated is that which was foreseen: McDonald v Roads and Traffic Authority (NSW) [2009] NSWLEC 105, 169 LGERA 352 at [29]. For example, in the present case if council's post-acquisition date investigation of the Land had concluded that its developable area was 30 hectares, the applicants might equally submit that that was confirmation of foresight at the acquisition date. There are also two points of practical importance. First, later evidence must not distract attention from the acquisition date when the assessment must be made; secondly, there are dangers in drawing inferences from later evidence without close attention to the circumstances in which it arose: Minister Administering the Crown Lands Act v New South Wales Aboriginal Land Council [2009] NSWCA 151 at [68] per Basten JA (Beazley and Tobias JJA agreeing). There is force in the applicants' submission that as the 2007 Strategy was two years after the acquisition date and much had happened in the interim, it should be given no weight. In any case, the essential task is to assess the matter by reference to the facts that would have been known to the hypothetical buyer and seller at the acquisition date.

21 Fourthly and alternatively, the council submits that if an industrial purchaser were prepared to pay more than for a single rural home site, they would not pay a value that represented Land immediately available for industrial use. The future expected value of the land would have to be discounted for the risk of realisation, the risk of getting approvals and the cost of levelling and roads. Any such industrial purchaser was likely to be a specialised developer like a large industrial company that wanted to put a factory there or subdivide it into industrial units or an institution like a university or a council. 22 Fifthly, the council submits that the Land had no potential for urban residential use. That is said to be clear from: (a) CHUGS which described the Land as suitable only for industrial investigation; and (b) council's resolution made two days before the acquisition date which effectively adopted CHUGS and Map 3 in CHUGS relating to 15 hectares for urban investigation. 23 Consequently, the council contends the applicants' three comparables are irrelevant because: (a) they are sales into a different market, the urban residential market. CHUGS makes clear that they are to be considered for residential use whereas the Land is suitable only for industrial investigation. CHUGS identified that 191 hectares of land was needed to meet urban residential demand over a 20 year period, there were 94 hectares available to satisfy demand over 10 years, another 97 hectares was needed to satisfy demand for the succeeding 10 years, and the only available land from which the latter could be taken included the applicants' comparable sales but not the Land; (b) the topography is radically different. The Land is very much steeper. The cost of levelling compared with the relatively flat applicants' comparable sales would exclude the kind of concentrated urban residential development envisaged by CHUGS or would require a massive cost adjustment; (c) there were different constraints in that the Land was fully vegetated, with the exception of the disturbed quarry area, whereas the applicants' comparable sales 1 and 2 had little vegetation and sale 3 was much less vegetated than the Land.

E. ECOLOGY 24 The council submits that matters of ecology were a significant constraint on the development of the Land. In the council's submission, the importance of the ecological issues is that the properties the subject of the applicants' three sales are not comparable with the Land because the ecological issues constrain the development potential of the Land to such an extent that the Land had a different highest and best use than those three sales. 25 The applicants submit that matters of ecology did not pose a constraint to development; rather, where they arose, they were matters for management. 26 As stated earlier, the Land is forested except for four to six hectares on the eastern half representing the site of a former quarry and a small area in the south western corner where a house is located. The Land has old growth forest elements: trees that live long enough to develop hollows used as habitats by arboreal mammals and birds.

27 At the acquisition date there were three ecological reports directly or indirectly in the public domain relating to proposed development on the Land. 1995 SEE 28 The first was a Statement of Environmental Effects in 1995 (1995 SEE) prepared for Hurd Haulage Pty Ltd relating to a development application for the continued use and expansion of a gravel quarry on the eastern part of the Land, which had been in operation for about 75 years. The products of the quarry could be used for select fill or road pavement material. Extractable reserves were calculated at 6.1 million tonnes. 29 Hurd Haulage operated the quarry under licence from the applicants from about 1992 to 1998 when quarry operations ceased in the circumstances described at [105]-[106] below. 30 The area of the quarry development to which the 1995 SEE related was about six hectares. As the 1995 SEE concerned a previously disturbed area, about two or three hectares of vegetation was to be disturbed by the proposal. The 1995 SEE expressed the view that the site had high conservation value, as follows: "The open forest habitat has been moderately disturbed through past activities, although the area still provides rich habitat for a variety of arboreal mammals, bats, ground mammals and reptiles. While only two Schedule 12 [a reference to now repealed legislation] species were recorded in this habitat, a further five species are considered to have a high likelihood of occurring, nine are considered to have a moderate chance of occurring, and five have a low likelihood of being found on site. While this habitat is widespread within the region, it is inadequately held in reserves and this habitat on site is considered to have a high conservation value." 31 The 1995 SEE proposed an environmental management plan incorporating mitigation measures and management recommendations to protect rare and endangered species. 2003 SEE 32 Secondly, there was a Statement of Environmental Effects in 2003 (2003 SEE) prepared for the council in relation to its proposed waste transfer station in the area of the disused quarry on the Land. 33 The proposed waste transfer station involved the removal of approximately 0.4 hectares of dry open forest habitat and 0.9 hectares of modified open shrubland habitat in the general area of the disused quarry on the eastern part of the Land. It stated that the forest habitat represented potential koala habitat but no koala activity was recorded on the "site" (apparently a reference to the large Lot 7 component of the Land). It noted that National Parks and Wildlife records indicated that 29 fauna species and three flora species listed as threatened under legislation had previously been recorded within 10 kilometres of the study area. It took the 1995 SEE into account. It concluded that the proposed development was unlikely to have a significant impact on threatened species and proposed a number of mitigation measures. Biosis Report 2004 34 Thirdly, Working Paper No 7 prepared in 2004 for the RTA by Biosis Research Pty Ltd (Biosis Report) investigated the terrestrial flora and fauna aspects of the proposed 22 kilometre Pacific Highway upgrade between Moorland and Herons Creek including the Kew Bypass over the western part of the Land. The Biosis Report was for the purpose of the RTA's Environmental Impact Statement (RTA EIS) which was not released until shortly after the acquisition date. The Biosis Report per se was not available to the public by the acquisition date but was indirectly in the public domain because, according to the evidence, which I accept, of Ms Weston, the applicants' environmental expert who was involved in the RTA EIS, the information in it would be provided by the RTA to the public upon inquiry and there was an extensive community consultation for years before release of the RTA EIS which enabled persons to make detailed inquiries. The council at one point submitted that the Biosis Report information was confidential but that is not established on the evidence. 35 The Biosis Report stated that the study area consisted of the area of the earthworks for the proposed Pacific Highway upgrade, the proposed road reserve and a zone of likely impact of approximately 50 metres on either side of the road. The stated objectives of the Biosis Report included assessing the conservation significance of the study area in terms of threatened species and important habitat, and evaluating the potential impact of the proposed development by undertaking statutory tests for threatened terrestrial flora and fauna species that may occur in the study area. The Biosis Report identified the section of the proposed upgrade known as the Kew Bypass. Vegetation in this area was said to be in good condition.

36 Figure 13 in the Biosis Report showed key habitat and corridors proposed by the Department of Environment and Conservation. The Kew corridor was considered a major linkage for koalas and glossy black cockatoos and was described as running in a north-west/south-east direction and linking key habitat in the Laurieton/Camden-Haven regions with Kew State Forest. The Kew corridor does not necessarily comprise continuous vegetation. It is discussed further at [46]-[47] below. The overall impact assessment was that implementation of suitable mitigation measures would reduce impacts on threatened species such that the action was unlikely to have a significant impact as assessed under relevant legislation, and that a species impact statement was not recommended. Expert evidence 37 Evidence was given for the applicants by an environmental expert, Ms Helen Weston, and for the council by an ecologist, Mr David Milledge. They held quite different views of the Land's conservation significance.

38 The council submits that the 1995 SEE's identification of the Land as of high conservation significance together with the fact that the applicants' case is that the Land had a value of over $4 million, made it likely that the hypothetical buyer and seller would have engaged an ecologist to undertake a flora and fauna survey who would have provided a report such as Mr Milledge provided in this case, as well as engaging an environmental expert. 39 The applicants submit that the prospective buyer and seller at the acquisition date would have been likely to have consulted an environmental expert such as Ms Weston but would have been unlikely to have consulted an expert ecologist such as Mr Milledge given the absence of ecology "red flags" in the publicly available information at the acquisition date. The applicants submit that it is even more unlikely that the hypothetical parties would engage such a controversial ecologist as Mr Milledge given, they say, the evidence that he is an environmental activist with strong views on matters of ecology. However, the council's contention is not that the hypothetical purchaser would have retained Mr Milledge but, rather, would have retained an ecologist who would have provided a report similar to Mr Milledge's report. 40 Ms Weston is not an ecologist. She has a Bachelor of Regional and Town Planning and a Master of Environmental Studies. She conducts a practice both as a town planner and in environmental assessment. She advises government and private enterprise about potential projects and potential purchases of land from her town planning and environmental background. The concept development and RTA EIS were undertaken for the RTA by its consultants, Arup, and involved consideration of the Kew Bypass and the Land. Ms Weston was Arup's Environmental and Consultation Workstream Manager for the project from 2000 to 2006 and consequently was familiar with the Land and its environs for some time prior to the acquisition date. Investigations included the Biosis Report. She reviewed such working papers prior to their finalisation. She was familiar with the studies and working papers then available on all issues related to the Pacific Highway upgrade, which included the working papers concerning the flora and fauna significance of the proposed sites through which the highway upgrade was to go, including the western part of the Land. The preferred route for the Kew Bypass section of the Pacific Highway upgrade was through the western half of the Land.

41 Mr Milledge is a wildlife ecologist with extensive field experience in eastern Australia, specialising in forest and woodland ecosystems and concentrating on endangered vertebrate species. He has published fairly extensively and has been consulted by government and private organisations. Under cross-examination, he accepted that in the majority of cases in which he had appeared as an expert witness in this Court, it was against the developer and that from time to time he had appeared against developers without fee.

42 Ms Weston concluded that the Land was not of flora or fauna conservation significance and that the vegetation and flora and fauna values of the Land would not have precluded the grant of development consent for a range of permissible land uses on part or all of the Land at the acquisition date. Her central point was that the 2003 SEE and the Biosis Report demonstrated that there were no endangered ecological communities on the Land and that the vegetation and flora and fauna values of the Land had not been established to be of conservation significance. The 1995 SEE, having been raised in Mr Milledge's evidence during the hearing, was considered by Ms Weston who concluded that it did not affect her opinions concerning environmental issues. The reason was its conclusion that the quarry development would not have such adverse environmental effects that it could not proceed and its conclusion that there were appropriate mitigation measures that could offset impacts.

43 Ms Weston said that if the whole of the Land were to be cleared, mitigation measures could comprise offset (compensatory) planting regimes on other land. She acknowledged that the governmental rule of thumb accepted by the RTA was between 5 and 20 times the area taken by the works, depending on the rarity of the particular vegetation. She accepted that that would not mitigate the impact on the wildlife corridor but proposed that that could be mitigated by strengthening other areas of the corridor, by buying and planting out other areas of the corridor or through arrangements with the property owners. I observe that such mitigation measures, which are obviously substantial, were not taken into account in the applicants' valuation case.

44 In contrast, Mr Milledge was of the opinion that the Land provided high to very high conservation value habitat for forest-dependent fauna; that development consent would have resulted in the loss or degradation of habitat such that a development application would either have been refused or approved on highly restricted conditions; and, consequently, that a prospective purchaser would have been deterred from acquiring the Land for urban use. During the hearing a supplementary report by Mr Milledge was produced in which he said that he had now become aware of the 1995 SEE; that it strengthened his opinion on the significance of the biodiversity conservation values of the Land and, consequently, that the advice of a consultant ecologist at the acquisition date would have indicated a higher level of constraint than in his original report.

45 The ultimate conclusion as to the likelihood of obtaining development consent is a matter for the Court after weighing all relevant considerations. Generally, in my view, that task is not assisted by experts in particular disciplines expressing their opinion on that issue.

46 Figure 13 in the Biosis Report showed mapped key habitats and corridors: see [36] above. However, it was not ground-truthed (ie by observations on the ground). Figure 13 represents the Kew corridor with a uniform width of approximately one kilometre and with some extensive cleared areas including the Kew-Kendall golf course and private land. As Ms Weston conceded, the Kew corridor had conservation value. It was common ground between Ms Weston and Mr Milledge that part of the Land, it seems in its northern half, falls within the Kew corridor but because of the scale of Figure 13 it is not possible to know exactly where the corridor is on the Land. This led to there being introduced during the hearing a more specific version of Figure 13 prepared by Mr Milledge. Ms Weston considered that it was liable to be distorted and proved her point by referring to the fact that it showed a small area of key habitat straddling Ocean Drive. Mr Milledge indicated that the corridors and habitats could be north or south of the locations indicated on this document by somewhat less than several hundred metres. In the end, Ms Weston and Mr Milledge agreed, and I accept, that the corridor falls somewhere across the Land, but that its boundaries are matters of conjecture. 47 In view of this uncertainty, I am unable to say that the Kew corridor affects the Land to any greater extent than the applicants' three nearby comparable sales. It is therefore a fairly neutral consideration in the context of comparing the Land with those three sales for valuation purposes. 48 The applicants' planner, Mr Dowling, commented by reference to the 2003 SEE that it appeared that at the acquisition date the Land had only moderate ecological value in that it was not a core koala habitat, had a sub-optimal habitat quality (for some threatened species found to use it) and there was a high mobility of threatened species likely to occur on it. He also commented that the flora and fauna study undertaken with the council's proposal for a waste transfer station would appear to have not given cause for council to not include the Land for further "urban" investigation in CHUGS. His reference to "urban" investigation of the Land was too loose because CHUGS was more precise in specifying 15 hectares on the eastern part of the Land as suitable for "industrial investigation only". Discussion 49 The council suggests by reference to two cases that the hypothetical willing but not anxious seller and buyer at the acquisition date would have sought and obtained advice from an ecologist: Caruso v Sydney Water Corporation [2008] NSWLEC 320 at [137]; Bow v Blacktown City Council [2008] NSWLEC 211 at [17]. These cases were decided upon different facts and are distinguishable. In both cases there was on the site an endangered ecological community. Whether the hypothetical parties to a transaction would have obtained expert advice is a question of fact, as I said in Coundrelis v Roads and Traffic Authority of NSW [2008] NSWLEC 72 at [51] quoting Jagot J in Cook Saad Raguz v Roads and Traffic Authority of NSW [2007] NSWLEC 136 at [12].

50 There is evidence in a letter from the buyer of the applicants' comparable sale 3 indicating that it was purchased without obtaining ecology advice but, instead, that the evident ecology risk was reflected in the price. This tends to support the conclusion, which I favour, that a hypothetical buyer of the Land would also be unlikely to obtain advice from an ecologist. 51 Although I am not satisfied that the hypothetical buyer would have gone so far as to retain an ecologist to advise, I am satisfied that they probably would have obtained advice from an environmental expert and would have understood that there were ecological constraints on the development of the Land which would have to be managed and which would impact on the developable area. 52 The 2003 SEE and the Biosis Report indicate that the Land had only moderate ecological value. The 1995 SEE assessed it as having high conservation value. The council emphasises the 1995 SEE. The applicants, on the other hand, say that by the acquisition date, which the 1995 SEE preceded by almost 10 years, it was stale and overtaken by the 2003 SEE and the Biosis Report. All three ecological reports considered that matters of ecology did not restrain the development that they respectively contemplated but were matters for management.

53 The 1995 SEE was not identified as of significance in the ecology context by Mr Milledge or Ms Weston or by the planning or valuation experts until, on the fifth day of the hearing, Mr Milledge produced a supplementary report dated the previous day in which he said that since preparing his initial report in the proceedings he had become aware of the 1995 SEE concerning the proposed expansion of the quarry on the Land. Mr Milledge's initial report in August 2009 was detailed and recited that as long ago as February 2009 the council requested a flora and fauna survey and biodiversity conservation value assessment of the Land. Since neither he nor Ms Weston nor the planning and valuation experts seem to have attributed much ecology assessment significance to the 1995 SEE until Mr Milledge raised it during the hearing, I am not satisfied that an environmental adviser to a hypothetical buyer at the acquisition date would have done so. 54 Nevertheless, I am satisfied that the hypothetical parties would have been aware that there was an ecology risk and made significant allowance for it in the price. I do not think they would regard it as a severe constraint on development given that (a) the Land had been selected by the RTA as its preferred route for the four lane divided road of the Pacific Highway upgrade; (b) the Land had been identified by the council itself as the site of a proposed waste transfer station; (c) CHUGS had considered that the Land was unsuitable for consideration for residential purposes both because of the proposed highway through it and because of the "degraded nature of the quarry part of the site"; and (d) CHUGS had identified 15 of the 19 hectares on the eastern side of the Land as suitable for industrial investigation to meet the burgeoning population of the Camden Haven: see [64] below.

F. PHYSICAL CONSTRAINTS 55 The main physical constraint on development of the Land is its hilly topography: steep slopes and high ridges ranging from about RL 18 to RL 60. Other physical constraints are its heavy forest cover, other than in the disused quarry and the house site in the south-west corner; a Category 1 bushfire hazard over the land (shown in the council's Bushfire Prone Land Map for the locality); and, in the event of industrial development, potential noise, dust and odour impacts on adjoining rural residential development. In contrast, the applicants' three comparable sales are relatively flat, and sales 1 and 2 are largely cleared while sale 3 is fairly heavily vegetated although to a much lesser extent than the Land. The north-east corner of sale 1 has also been designated as a low risk flood area. 56 The council's planner, Mr Pratt, considered that the Land's steep slopes lessened the likelihood of residential development although he thought residential development would be cheaper than industrial development because stepping would be required. Mr Dobrow agreed that the Land would be unlikely to be used for a residential purpose until the quarry resources were won or sterilised. It appears from Mr Dobrow's evidence that the steep topography of the Land was similar to areas of Camden Haven, Port Macquarie, Kendall and Kew which had been developed for residential properties. The council's valuer, Mr Wood, said he thought that, save for degenerated areas, the Land was unsuitable for industrial development because of its steep slopes. If so, it is difficult to see why CHUGS decided that most of the Land within CHUGS (the eastern half) was suitable for industrial investigation. Moreover, in a report produced during the hearing, Mr Wood attributed potential industrial value to the Land after taking into account (inter alia) its physical constraints and flora and fauna issues, assuming that there was demand for the area designated by CHUGS: see [141] below 57 It is reasonably apparent that (a) the Land's physical constraints, particularly the steep topography, would result in commensurately higher development costs for the Land than for the applicants' comparables, and (b) industrial development would require level footplates and earthworks on a large scale depending on the extent of development. The applicants say that all this is simply a matter for adjustment from their three comparable sales. Earthworks for levelling were not costed in the evidence.

58 The quarry resource is relevant to the question of overcoming the physical constraints of the Land's steep slopes because the applicants submit that a hypothetical developer buyer at the acquisition date would envisage carrying out quarrying during the years awaiting industrial rezoning and development consent and to that extent quarrying would result in levelling and the income from quarrying would offset or defray the cost of levelling. As discussed below at [112], I accept that submission. 59 I consider that CHUGS would encourage the hypothetical parties at the acquisition date to think that 15 hectares of the eastern half of the Land had potential for industrial development notwithstanding the physical constraints, but not for urban residential development. G. PLANNING KKUS 1998 60 The Kew Kendall Urban Strategy (KKUS) was adopted by the council in 1998 to provide for population increases in the Kew/Kendal area. The applicants submit that it does not include the Land. Although it is probably unnecessary to resolve the point, the map within KKUS includes, and seems to me to indicate, that it includes the Land. KKUS identifies areas for urban investigation adjacent to the west and south-west of Kew and proximate to the village of Kendall, 1.5 kilometres west of Kew. KKUS says that it excludes heavily vegetated land from its investigation areas. It records that the population of the area was 850 of which 700 lived in Kendall and 150 in Kew. Growth rates had varied between nil and 1.5 per cent per annum during the preceding ten years. It is apparent that there had been hardly any development in Kew for many years prior to the acquisition date. At the time KKUS was adopted, the village of Kew straddled the Pacific Highway. Since the acquisition date the Kew Bypass has been constructed over the western part of the Land about 250 metres east of Kew. KKUS characterised Kew as essentially a highway service centre for travellers on the Pacific Highway. At the acquisition date, I think that the anticipated Kew Bypass as part of the Pacific Highway upgrade could be seen to be unhelpful to its highway service centre role and that Kew (notwithstanding its existing infrastructure) was unlikely to stimulate any eastward march of residential development across the Land. HUGS 2001 61 The Hastings Urban Growth Strategy 2001 (HUGS) was adopted by council in 2000. It was a strategy to accommodate the bulk of projected population growth. HUGS gave some emphasis to the retention of a viable network of natural vegetation corridors to support ongoing wildlife survival. Otherwise, relevantly, it has been virtually superseded by CHUGS. CHUGS 2003 62 The most important relevant planning strategy at the acquisition date was the Camden Haven Urban Growth Strategy 2002-2022 (CHUGS) which was adopted by the council in 2003. CHUGS' stated purpose was to provide a strategy for the release of residential land in the Camden Haven to accommodate its population growth for 20 years from 2002 to 2022. 63 There is debate between the parties as to whether the westernmost part of CHUGS' scope is the whole of the Land or only the eastern half of the Land. I think the latter is correct and, to that extent, CHUGS ate into the land covered by KKUS. However, I do not think it matters for present purposes.

64 Importantly, CHUGS designated 15 hectares of the eastern half of the Land, comprising 19 hectares, as "suitable for industrial investigation only", but designated the applicants' three nearby sales more brightly as suitable for "urban development", which included urban residential development: see [76] below. That 15 hectares included the disused quarry site. CHUGS did not designate the western half of the Land for any investigation. 65 On its first page CHUGS defined "the Camden Haven" and identified its strong growth, shortage of urban land to meet that growth and the area covered by CHUGS, as follows: "The Camden Haven, for the purpose of this Strategy, includes Lakewood, Laurieton, Dunbogan, West Haven and North Haven. Rural residential subdivisions in this vicinity are not included. The land outside this area, to the north, is covered by the Hastings Urban Growth Strategy 2003 and to the west by the Kew/Kendall Strategy 1998.

The Camden Haven has enjoyed strong growth in the past twenty years. The capacity for growth in the Camden Haven is limited by physical constraints such as slope and estuaries, hazards such as coastal erosion and flooding, and environmental constraints such as wetlands and vegetation. There are also very important scenic attributes to be maintained. The main limit to growth is the shortage of suitable land for urban development and this suggests that a limit to population growth should be considered.

The land considered in this strategy represents the total of the remaining land in the Camden Haven suitable for urban use. Once the land identified in this strategy is released and developed, additional release land is not available. Additional Greenfield sites are not available based on the constraint mapping.

This strategy covers the Camden Haven area east of, but not including, Kew and includes Lakewood, Laurieton, Dunbogan, West Haven and North Haven. Three rural residential estates contained within this area are not included in this strategy." 66 CHUGS' stated objectives included identification of likely growth rates, constraints to urban development, land suitable for residential development and land suitable for industrial development. 67 CHUGS said that a relatively narrow strip of land following Ocean Drive to the west was the only land available, without major constraints, for urban development.

68 CHUGS addressed constraints and physical issues as follows: (a) Map 1 showed the Land almost entirely covered by vegetation, roughly 60 per cent of the applicants' comparable sale 3 covered by vegetation, and only a small part of the applicants' comparable sales 1 and 2 covered by vegetation; (b) Map 1 showed the north-east corner of the applicants' comparable sale 1 as low flood risk land; (c) the vegetated areas had potential fire areas which rezoning must take into account including by ensuring that a sufficient buffer was provided; (d) in relation to drainage and slope, areas adjacent to watercourses must be provided with suitable buffers for future development, the minimum buffer to be 40 metres. This is relevant because a creek line runs through the north-eastern part of the Land. The parties' planners noted this was a constraint; (e) height limits restricting development due to water supply pressure problems were identified in a few specified areas but they did not include the Land nor the applicants' three comparable sales. 69 CHUGS stated that the land identified therein represented the total remaining greenfield land suitable for urban release investigation in the Camden Haven. 70 CHUGS said that the concentration in the past on development of land for residential use had resulted in a shortage of land suitable for industrial use in the Camden Haven.

71 CHUGS estimated a population growth of 14 per cent per annum in the period 2001 to 2021.

72 For the purpose of estimating zoning requirements, CHUGS adopted a yield of 10 lots per hectare of land after allowing for "land that is not suitable for housing" (apparently because of constraints).

73 On this basis CHUGS estimated that total land requirement for 20 years was 191 hectares ie 47.7 hectares every five years.

74 CHUGS indicated that 94 hectares of residentially zoned land was already available. Therefore, a further 97 hectares was needed to meet the 191 hectare requirement over 20 years.

75 To meet that 97 hectare requirement, CHUGS identified a further 131 hectares of potential urban land in Camden Haven "for investigation", being the limits of land available for urban investigation in the Camden Haven. This 131 hectares was divided into 97 hectares of greenfeld land for urban investigation, 19 hectares for infill release, and 15 hectares for investigation for industrial use.

76 Importantly for present purposes, Table 2 of CHUGS identified the 15 hectares for "industrial investigation" as on the eastern part (comprising 19 hectares) of the Land, and identified the applicants' three comparable sales as part of the 97 hectares for "urban investigation". Table 2 contained a column for constraints which stated in relation to the 15 hectares of the Land: "Quarry rehabilitation, vegetation suitable for industrial investigation only "

(emphasis in CHUGS) 77 CHUGS then made the following statements concerning the Land: "The property on the western extremity of the release area (Lot 7 DP 775532, Ocean Drive) is currently occupied by a disused quarry. Part of this property is also identified, by the Roads and Traffic Authority, as the preferred route for the Pacific Highway by-pass of Kew. The degraded nature of the quarry part of the site (approximately 15 ha) and the location adjacent to the proposed Pacific Highway makes the site unsuitable for consideration for residential but suitable for investigation for industrial development. Infrastructure servicing of this area would be possible from the existing development within Kew." 78 The applicants echo their planner, Mr Dowling, in challenging the sufficiency of those two stated reasons for designating that 15 hectares of the Land unsuitable for consideration as residential, and point out that topography and vegetation were not expressed to be reasons. Mr Dowling found the CHUGS' reasons unconvincing because the eastern half of the Land was not affected by noise and quarries are used for residential land although they are first rehabilitated. His evidence was that the cost of quarry rehabilitation would be $2,310 per hectare. 79 Nevertheless, CHUGS' contemplation that the Land would not have an urban residential use was emphasised in its statement that investigations were required to determine an appropriate buffer between proposed residential development and the potential use of the disused quarry on the Land as an industrial area. This was further emphasised by another statement in CHUGS that one of the key implementation tasks was that there be an assessment of buffer issues between potential industrial and residential land.

80 CHUGS' designation of the applicants' three nearby comparative sales for "urban investigation" did not necessarily mean that if they were rezoned they would be rezoned residential but, in my view, it did indicate that that was likely. 81 In relation to ecological issues, CHUGS stated: "A Flora and Fauna issue on much of the investigation land is likely to present the most significant constraints to urban use. The draft Hastings Vegetation Management Plan, 1999, has indicated that some of the identified land (classified as Rural Priority 2 or 3) could be considered important for conservation. The constraints map has taken vegetation issues into account and the majority of the land included in this strategy for urban release is relatively cleared. However, any rezoning of land for urban purposes will be required to undertake suitable flora and fauna assessments as part of the rezoning process. … More detailed investigation will be required for all of the identified lands adjacent to watercourses and drainage lines. However, the majority of the identified land is not unsuitable for urban development as a result of drainage or slope."

82 In relation to regional development, CHUGS concluded that "once the identified land is developed, future growth will need to be accommodated by the Kew Kendall Strategy land to the west or the HUGS land to the north". Thus, CHUGS seems to have contemplated that the Kew Kendall strategy land to the west would not be potentially required to meet population growth until after the next 20 years.

83 Finally, CHUGS contemplated that it would be reviewed in, ideally, five years when its assumptions would be reassessed. One of the assumptions was that the Kew Bypass "will enable the development of industrial land east of Kew" and CHUGS said that that assumption depended on the ultimate location of the bypass. Although it is unclear, I think this reference to "industrial land east of Kew" probably would be construed by the hypothetical parties at the acquisition date as including the western half of the Land and encourage them to think that the council might consider designating the western half of the Land for industrial investigation once the location of the Kew Bypass was determined. Hastings Rural Residential Strategy 2004 84 The council's submissions draw attention to the Hastings Rural Residential Strategy 2004. This Strategy was concerned with rural residential land which it defined as the subdivision of rural land to meet the lifestyle needs of those wishing to live in a rural area without the need to operate a farm. It stated that allotments are generally one to five hectares and located nearby existing towns and villages. It identified land which met to varying degrees the selection criteria prerequisite to any consideration of future rezoning of rural land. The council submits that this Strategy is relevant because it confirms the significance of vegetation constraints by stating that areas shown to be (inter alia) heavily vegetated will be excluded from consideration in the Strategy. As this Strategy does not relate to CHUGS' investigation areas, and as the applicants do not press a rural residential development potential case, I think that it is of little significance. Council's Rezoning Resolution 29 March 2005 85 On 29 March 2005, two days before the acquisition date, the council resolved to prepare a draft local environmental plan pursuant to s 54(1) of the Environmental Planning and Assessment Act 1979 to rezone land in the vicinity of the Camden Haven High School, as shown in Map 3 of CHUGS, for urban purposes; and to notify the Department of Infrastructure, Planning and Natural Resources of council's decision in accordance with s 54(4). The Camden Haven High School is opposite the applicants' comparable sale 2 which is only a few lots east of the Land.

86 The resolutions accorded with a council officer's recommendations in a report to council which included the following statement: "It was always anticipated that the timing for the implementation of CHUGS would be dependent upon relevant demographic and market conditions. Under present conditions (2.3% pa growth rate), it is apparent that there is a high level of demand for serviced residential land which will need to be met within the short term. It is therefore suggested that detailed investigations in relation to the main release area in the vicinity of the Camden Haven High School commence at the earliest opportunity. In this regard, a resolution to prepare a draft LEP represents the first step in the process. … A significant amount of work will need to be carried out in preparing the Environmental Study, Structure Plan, LEP, et cetera, necessary to implement CHUGS. In this regard, a timeline to consider the staging and completion of these various requirements, similar to that prepared for Council's Area 13 and 14 Growth Areas, will be required.

A final decision on the extent of land to be rezoned will not occur until Council has had an opportunity to evaluate the content and conclusions of the Environmental Study." RTA EIS June 2005 87 In June 2005 an Environmental Impact Statement was prepared by Arup for the RTA's proposed Pacific Highway upgrade between Moorland and Herons Creek (RTA EIS). It was signed by Ms Helen Weston of Arup, who gave evidence for the applicants in these proceedings. Although it was produced after the acquisition date and is therefore of limited relevance, it evidences that the former quarry on the Land was a potential site for ancillary construction activities in relation to the Pacific Highway upgrade. This reinforces my conclusion that the Land had value for potential quarry use. Expert evidence 88 Expert planning evidence was given for the applicants by Mr Greg Dowling and for the council by Mr Chris Pratt.

89 In his initial report, Mr Pratt made the error of saying that CHUGS did not apply to the Land and said that the Land had not been identified in any of the council's land use planning strategies as suitable for rezoning. He concluded that the Land's highest and best use involved utilising the existing cleared excavated areas of the quarry for a permitted use in the zone. In a supplementary report, Mr Pratt, addressing issues raised by the council's valuer (Mr Wood), acknowledged that CHUGS applied to the eastern 19 hectare half of the Land. Under cross-examination, he conceded that when he prepared his initial report he gave insufficient attention to the terms of CHUGS. However, he did not change his opinion as to the highest and best use.

90 Mr Dowling's approach was to consider whether the information available at the acquisition date raised any "red flags" which might concern a hypothetical purchaser. He thought that any red flags were capable of being addressed. He said it was plain that residential development could travel with the slopes of the Land better than industrial.

91 Mr Dowling considered that the Land had development potential for quarrying and industrial use. He also considered that it had potential for residential use through the planning process because of what he considered to be the weakness of the two reasons expressed in CHUGS for categorisation of the eastern part of the Land as suitable for industrial investigation only (ie the degraded nature of the quarry area and the location of the Land adjacent to the proposed Pacific Highway): see [77]-[78] above. He thought those reasons were weak because the eastern part of the Land was not affected by noise, and other quarries have been used for residential development after rehabilitation. He estimated the cost of rehabilitating the quarry on the Land at $2,310 per hectare. He thought that the Land's proximity to Kew justified it being given further consideration for residential development; that is, although CHUGS was directed to the progress of urban development from east to west, it could also come from Kew in the west to east. However, he conceded that CHUGS considered only part of the Land for industrial uses and not any other use and that he would have clearly explained that to a potential purchaser. 92 The council's valuer, Mr Kent Wood, did not think that the Land had any potential use other than quarrying. He did not think it had potential for industrial use notwithstanding that CHUGS designated 15 hectares of the Land for industrial investigation and even though he considered that the other lots identified in CHUGS' urban investigation zone - including the applicants' three nearby sales - would have their market value influenced by CHUGS. Discussion 93 It is difficult to say that the applicants' three nearby sales are meaningfully comparable with the Land unless the Land had residential use potential.

94 CHUGS is a significant document and its emphatic conclusion was that the Land was not suitable for residential use and that only 15 hectares of its eastern part was to be investigated for industrial potential. Investigation might result in contraction or expansion of that 15 hectares. Conceivably, investigation might result in abandonment of any industrial use of the Land or categorise it (or part of it) as suitable for urban residential use.

95 It is not just a matter of considering the stated reasons in CHUGS for confining part rather than all of the Land to industrial investigation. There is also CHUGS' assessment that sufficient, more suitable land for urban residential investigation existed elsewhere as well as some of the Land's constraints.

96 In my view, the hypothetical parties at the acquisition date would be unlikely to regard the Land as attracting a premium for potential urban residential use.

97 Nor, in my view, would they regard the Land as attracting a premium for potential seniors living under SEPP SL 2004. I have considered the suggestion of the applicants' valuer, Mr Dobrow, taken up in the applicants' submissions, that the Land is capable of being developed for seniors living because it adjoins Kew village, zoned 2(b) urban, and, consequently, seniors living is permissible on the Land with consent. That ignores that the Land was not considered by CHUGS to be capable of development other than through industrial investigation. SEPP SL 2004 did not apply to land zoned for industrial purposes (cl 4(2)(b)), which is the potential rezoning emphasised in CHUGS. The applicants have conducted no analysis of whether the specific requirements of SEPP SL 2004 were otherwise capable of being satisfied or likely to result in development consent, including the severe gradient constraints (cl 25(2)(a)) and constraints on development on bushfire prone land (cl 26). Nor is there any evidence of the value of the Land with the alleged development potential. 98 In my opinion, having regard to CHUGS, at the acquisition date the Land had significant potential for industrial use and that was its highest and best potential use.

99 What area of the Land had potential for industrial use? CHUGS identified 15 hectares on the eastern half of the Land as suitable for industrial investigation. Ecological and physical constraints and the likely need for buffers around watercourses and between industrial and adjoining residential areas meant that not all of the Land could be used for industrial purposes. The council's valuer, Mr Wood, considered that a potential purchaser for an industrial purpose would have little or no expectation of developing it beyond the area already cleared (4-6 hectares). CHUGS encouraged a greater expectation, in my view, because it discounted the 19 hectares eastern half of the Land by only four hectares to 15 hectares for industrial investigation. CHUGS does not specify what the four hectares represents; it might have been viewed as an estimate of the area that would have to be excluded in any event to allow for constraints and buffers. Of course, upon investigation the 15 hectare investigation area might expand or contract in terms of designation for rezoning.

100 In light of CHUGS, I am prepared to accept that at the acquisition date the hypothetical parties would consider that 15 hectares of the eastern part of the Land had potential for industrial use. However, they would also be aware that the Land's steep slopes would make industrial use development outside the relatively flat, cleared quarry area of (say) six hectares costly because of the large amount of levelling that would be required. There is no detailed evidence as to the quantum of such costs. As discussed at [112] below, I am also prepared to accept the applicants' submission that an industrial purchaser at the acquisition date would realistically contemplate obtaining development consent fairly quickly to quarry the Land for the several years required for industrial investigation, rezoning and development consent for industrial use; and that this would have the effect of offsetting or defraying levelling costs for the later use: see [112] below. 101 I turn to the western half of the Land which was excluded from the CHUGS investigation areas and which was not the subject of rezoning under the Kew/Kendall Urban Strategy. One of CHUGS' assumptions, which it contemplated would be reviewed, was that, depending on its ultimate location, the Kew Bypass would enable the development of industrial land east of Kew. I agree with Mr Dowling that the hypothetical parties would have perceived at the acquisition date that the western half of the Land also had potential for industrial use once it was clear what portion would be acquired for the Kew Bypass. They would regard that potential as substantially less than the industrial potential of the eastern half because the western half had not yet been designated for industrial investigation either in CHUGS or in the council's 2005 resolution. Nevertheless, I think that the western half's industrial use potential would attract value at the acquisition date. The RTA's proposed resumption of the part of the Land required for the Kew Bypass would not detract from the value of the western part of the Land because the RTA would have to pay compensation in accordance with the Just Terms Act.

102 As Kew was small and had not developed for many years, I do not think that urban development on the Land would be perceived to obtain impetus from its proximity to Kew. In the long term, perhaps after the expiry of the 20 year CHUGS period, there might be some residential use potential for the Land given its proximity to Kew and assuming a continuing population expansion in the Camden Haven, but insufficient to attract a premium on that account at the acquisition date.

103 The council refers to the Port Macquarie-Hastings Industrial Land Strategy 2007 (2007 Strategy) which stated that due to water restrictions only seven hectares of the Land may be developable and that any development of the site would need to consider an adequate buffer between the Land and proposed residential development to the east. The council submits that this confirms foresight at the acquisition date. As discussed earlier, the proposition that foresight may be confirmed by looking at post acquisition date events should be treated with caution: see [20] above. There is some tension between the submission and the council's primary position that the Land had no industrial potential because, if the submission is accepted, the 2007 Strategy tends to support the conclusion that it did have industrial potential at least to the extent of seven hectares. Further, since there is no suggestion in CHUGS that water restrictions affected the Land, it is difficult to see why water restrictions would have been foreseen as a restraint at the acquisition date. As I have indicated, I think that at the acquisition date the hypothetical parties would accept at face value that CHUGS regarded 15 hectares of the eastern half of the Land as suitable for industrial investigation. I am not significantly assisted by the 2007 Strategy.

H. THE QUARRY RESOURCE 104 A gravel quarry was operated on the eastern half of the land for about 75 years until 1998. In or about 1992 the applicants licensed Hurd Haulage Pty Ltd to operate the quarry. 105 In 1995 a development application was lodged on Hurd's behalf with the council for the continued operation and expansion of the quarry. The 1995 SEE accompanying the application identified total reserves of 6.1 million tonnes.

106 A 1997 council report recommended that, following receipt of the concurrence of the Director-General of the National Parks and Wildlife Service, consent be granted to continuing the use of the existing gravel extraction operations subject to conditions. It appears that the conditions were not acceptable to Hurd which, consequently, withdrew its application. In a letter written in 1998, Hurd explained that it did so because of the legal costs involved in an appeal to the court and the present economic climate which they felt made it not financially viable to contest the council determination.

107 The applicants' valuer, Mr Dobrow, assumed that prior to development being carried out for industrial, residential or other uses, the Land would be levelled as a result of quarrying activities. The applicants' planner, Mr Dowling, indicated that the Land could be shaped for residential use in the process of extraction of some of the resource. To the extent that levelling was to be achieved through quarrying it would be necessary for consent for quarry use to be obtained and for quarrying to be commercially viable. The council submits that it would have been obvious at the acquisition date that no extractive industry could have operated on the Land in a commercially viable manner and that consent for quarrying at least would be unlikely. 108 At the hearing both sides called quarry resource and waste management experts who disagreed as to the quantity of the resource available, the type of material that could be extracted, the potential markets, and the probability of obtaining development consent for quarrying at the acquisition date. Because of the way that the quarry case developed and the position ultimately taken by the parties, it is unnecessary to dwell on that evidence.

109 During the hearing, both parties shifted their position in relation to the quarry resource.

110 The applicants' resource experts, Mr Stitt and Mr Herdman, considered that the quarry resource was valuable and the applicants' valuer, Mr Dobrow, valued it at $875,000 (a figure that he later indicated could be higher). The council's valuer, Mr Wood, adopted a 10 per cent premium over market value as the value of the quarry resource. The council's Points of Defence accepted that premium. The council made a written submission that the quarry resource had no value. However, in subsequent oral submissions, the council accepted the 10 per cent premium as the value of the quarry resource.

111 Rezoning for industrial (or any other urban use) is inconsistent with long term quarrying. Although the applicants initially appeared to be advancing a case for valuing the quarry resource, in closing submissions they made it plain that they did not ask the Court to determine the extent of the value of the quarry resource. Rather, they submitted the Court should find that (a) the quarry resource had value when compared with the applicants' comparable sales, and (b) an urban use developer purchasing the Land at the acquisition date would have considered it added value of about 10 per cent (Mr Wood's figure) on the reasoning that it would provide temporary income and achieve levelling thereby saving on the cost of levelling required for such eventual use.

112 The council's written submissions sought to cast doubt on whether quarrying was economically viable or would be approved. As it eventually became common ground that the quarry resource had value and as there is evidence that quarrying was economically feasible, I am prepared to accept that the resource had value, that quarrying was economically feasible, and that a hypothetical purchaser for an industrial use would be attracted to temporary quarrying pending rezoning and industrial development consent and would anticipate that development consent for temporary quarrying could be obtained reasonably quickly on acceptable conditions.

I. HIGHEST AND BEST USE 113 In my opinion, on the objective evidence considered above:

(a) the highest and best potential use of the Land was industrial development; and (b) the potential residential character of the applicants' three comparable sales properties were likely to attract a different class of buyer, residential developers, and therefore are unlikely to provide a reliable indicator of the value of the Land. J. MARKET VALUE 114 The applicants claim that market value was $4,510,000; the council contends that it was $900,000 or alternatively (and at best) $1,270,000: see [4] above. 115 The council submits that a reality check is provided by the applicants' offer in November 2001 to sell the Land to the council for $475,000. That offer was two years before the publication of CHUGS and prior to the announcement of the RTA's preferred route for the Kew Bypass. I do not think it has any real weight when considering market value at the acquisition date. The council also suggests that a reality check is provided by the applicants' claim for compensation in April 2004 in relation to the proposed acquisition, which identified the market value of the Land at $605,000. I agree that, by comparison, the applicants' claim in the proceedings that the market value exceeds $4 million is startling, however it is necessary to confront the evidence and submissions marshalled in support of that claim. 116 Expert market valuation evidence was given for the applicant by Mr Walter Dobrow and for the council by Mr Kent Wood.

117 Mr Wood assessed the market value of the Land at $900,000 on the basis that its highest and best use was its existing use as a single rural/residential home site, calculated at a rate of $20,000/ha to which he added the value of the existing cottage (the total to this point was $819,088) and a 10 per cent premium for possible extractive use.

118 Mr Wood arrived at that value by comparing the Land with seven sales of rural/residential properties. He concluded that the market value of the Land lay somewhere between his sale 5 (1.8 ha site immediately to the east of the Land which sold for $327,500 in January 2004) and his sale 6 (a property at Wauchope, $1.55 million for 47.21 ha of gently sloping land cleared for pastoral purposes). The unimproved value he attributed to the Land was $743,888 for 37.19 hectares. The applicants criticise that value as too low on a per hectare basis when compared with the sale price of his adjacent sale 5 and having regard to the fact that the Wauchope property is some distance away. I consider that Mr Wood made it reasonably clear that he had regard to all his seven sales and was not comparing a per hectare rate. I am prepared to accept the unimproved value that he attributed to the Land for its existing rural residential use. 119 Mr Dobrow assessed the market value of the Land at $4,100,000 on the basis of 37.19 hectares at $110,000 per hectare. That rate was based on a comparison with the applicants' three nearby comparable sales in the same zone in the range of $102,354/ha to $167,121/ha.

120 Initially, Mr Dobrow assumed that the sale prices of those three properties represented their rural/residential subdivision potential. Later, he - and the applicants in submissions - abandoned the rural/residential potential thesis and adopted the position that what was driving the sale prices of those three properties was CHUGS and their consequential potential for urban development. The applicants then say that any differences between those three sales and the Land is simply a matter for adjustment.

121 Mr Dobrow also said that a discount in the order of 10 per cent to 20 per cent should apply to the part of the Land to be acquired by the RTA.

122 As a check on his initial approach, Mr Dobrow commenced but did not complete a hypothetical residential subdivision development method; Mr Wood did and it was supportive of his comparable sales analysis of $900,000. Applicants' comparable sales 123 The applicants' three comparable sales relate to nearby properties located on the northern side of Ocean Drive to the east of the Land and between the Land and Lakewood. They were all designated for urban investigation in CHUGS and which had the same zoning as the Land. Further particulars are as follows:

(a) Sale 1: Ocean Drive, Kew (Lot 33 DP 754405) sold for $5.9 million in February 2005. The area is 36.52 hectares. The rate was $161,555 per hectare. It is adjacent to rural residential subdivisions, relatively flat and substantially cleared. Access is via a private road entering off Ocean Drive and running along the western side of sale 3. The north-east corner is subject to a low flood risk. It is superior to the Land.

(b) Sale 2: 131 Ocean Drive, Kew (Lot 2 DP 504042). It sold for $1,225,000 in November 2005. The area is 7.33 hectares. The rate was $167,121 per hectare. It is the closest of the three sales to the Land. It is a long, relatively narrow rectangle with frontage lengthways along Lake Ridge Drive, relatively flat and mostly cleared. It is superior to the Land.

(c) Sale 3: 201 Ocean Drive, Kew (Lot 12 DP 109144) sold for $3 million in July 2005. The area is 29.31 hectares. The rate was $102,354 per hectare. It is to the east of Sale 2 in close proximity to residential subdivisions. It is predominately rectangular in shape, relatively flat and wooded for roughly two thirds of its area. Mr Dobrow considered it to be comparable overall with the Land but, in my opinion, it is superior. 124 In my opinion, the applicants' three sales are all superior to the Land for the following reasons:

(a) CHUGS identified them as suitable for investigation for urban residential use but identified the Land as suitable for industrial investigation only; (b) their relatively flat topography compared with the steep slopes of the Land; (c) sales 1 and 2 have limited areas of forest cover. Sale 3 has a much larger area of forest cover than sales 1 and 2 but has approximately eight cleared hectares with direct frontage to Ocean Drive; (d) they are less constrained in terms of bushfire hazards than the Land; (e) sales 1 and 3 are adjacent to existing residentially zoned land that is part of the established residential area of Lakewood, and all three sales are closer than the Land to amenities such as the Lakewood Village Shopping Centre than the Land. 125 I have taken into account the low flood risk attributed to the north-east corner of sale 1 but do not think it is a telling offsetting factor in assessing comparability. 126 Notwithstanding their proximity, in my view the applicants' comparables are not a good guide to the value of the Land because, having regard to their different designation under CHUGS and their very different physical characteristics, they would be perceived by buyers and sellers not merely as physically superior to the Land but as having good urban residential development potential whereas the hypothetical buyer and seller at the acquisition date would not regard the Land in that way. To attempt to adjust those sales to arrive at value for the Land is difficult and risky. Intention of Buyers 127 The council tendered evidence that the subjective intention of the purchasers of the properties the subject of the applicants' three comparable sales was to develop them for the purpose of urban residential development under CHUGS or (in the case of sale 3) a retirement village under SEPP SL 2004. I admitted the evidence subject to the applicants' objection as to its relevance.

128 The council submits that there should be taken into account that the purchasers of the applicants' comparable sales purchased those properties with a subjective view to developing them for a higher use potential than their rural 1(a1) zoning would suggest and permit, and one which is radically different to any potential of the Land. In other words, in each case, the purchaser's intentions relating to the development potential was factored into the purchase price. Thus, in addition to the objective characteristics of these sales, the subjective intention also removes them from the realm of comparability with the Land.

129 The applicant submits that the only reason that valuers investigate the circumstances of a particular sale is in order to determine whether it is an arms length sale which matches the description in Spencer v The Commonwealth (1907) 5 CLR 418 particularly at 440-441 (quoted at [9] above).

130 Since I have concluded on the objective evidence that the highest and best use potential of the Land was not residential or seniors living but an industrial use, it is strictly unnecessary to rule on the admissibility of or to consider this evidence of subjective intention. If it is admissible, it confirms my conclusion. If it is not, it does not affect my conclusion. However, I think that it is admissible.

131 The many different forces in the market that bring parties to a sale are ordinarily brought to a state of equilibrium when the bargain is finally struck. When assessing comparability the subjective intentions of the parties are generally irrelevant and the valuer looks to fundamental objective particulars of the sale such as the price, date, area, location, zoning, land use (actual and potential), physical constraints, services and amenities. However, there may be special circumstances relating to the buyer or the seller which plainly affect the comparability of a sale by showing that it is in no sense comparable or that it requires adjustment to be a reliable yardstick. Special circumstances include those which establish that the seller or buyer was anxious or unwilling and thus outside the statutory test, or not at arms length. Special circumstances also include those showing that the buyer, to the knowledge of the seller, had a higher potential use in view, perhaps not permitted by the existing zoning, which commanded a price higher than the price commanded by a lower and less rewarding use (actual or potential) whereas the subject land has no such higher potential use. That is the present case: the Land and the applicants' comparable sales all had potential industrial use but, in my view, only the latter had potential residential use, neither use being permitted by the existing zoning. Where land has more than one potential use, the seller will gear his negotiating price to the knowledge (which the seller will almost inevitably acquire) that a buyer has a higher and more valuable use in view and will not confine the price to a range appropriate to a lower and less rewarding use. This analysis is supported, I think, by the authorities and texts cited below.

132 Rost and Collins, Land Valuation and Compensation In Australia (3rd ed 1993) at 86 state: "Valuations must be based on relevant sales evidence. It is most important for the valuer to obtain a detailed knowledge of all relevant sales within the area where the valuation is to be determined. Inspections and analyses of the sales will enable each one to be compared in detail with the others and with the property being valued so that a basis for determining the value can be established. The circumstances under which sales take place should be investigated by interviewing the parties concerned in each transaction. Such circumstances could affect the comparability between the sale properties and the subject property being valued". 133 Douglas Brown, Land Acquisition (6th ed 2009) at 229 states: "The purpose underlying the sale or purchase of a property may be relevant in determining whether a sale is comparable or not. The court may wish to know whether a sale was an ordinary businesslike transaction. If the sale was made by an aunt to her favourite nephew the sale might not be regarded as being made at arm's length. If the seller was bankrupt or in severe financial difficulties it may be asserted that the seller sold at a lower price than might be expected if the seller was not over-anxious to sell. A sale by a mortgagee may be rejected on the ground that there was no evidence to show that the mortgagor's interests were being fully preserved: Re Murray (1934) 13 LVR (NSW) 25. Sales by the sheriff or in bankruptcy do not come within the Spencer principle: March v Frankston (City [1969] VR 350 at 367. A sale of farming land to a large retail establishment may be rejected on the ground that it is not a sale to another farmer and therefore not comparable to sales of farming land: Blefari v Minister (1962) 8 LGRA 1. If the resumed land is expected to attract only a certain class or type of purchaser, the sale of otherwise comparable land to an unexpected and different class or type of purchaser, may result in it being regarded as non-comparable. A sale of land which resulted from compromised litigation needs to be viewed with caution, because many factors extraneous to value may enter into the compromise: Celtic Agencies Pty Ltd v South Australian Land Commission (1978) 20 SASR 176." 134 In Maurici v Chief Commissioner of State Revenue [2003] HCA 8, 212 CLR 111 at [120] the High Court said: "How is the land in its notionally unimproved state to be valued? The traditional, and usually unexceptionable method is to seek out relatively contemporaneous sales of comparable properties between parties at arm's length, unaffected by special circumstances, such as, for example, a strong desire by a purchaser to buy an adjoining property, and to use those sales as a yardstick for the valuation of the relevant land." 135 In The Valuer General v Fenton Nominees Pty Ltd (1982) 150 CLR 160 the court took into account the intention of buyers when acquiring land in determining that the land was comparable with the subject land. The case concerned a valuation under South Australian valuation legislation which required the unimproved value of land to be assessed. The highest and best use of the subject land was as vacant land suitable for commercial development. The parities' competing valuations were based on sales of improved land which the purchasers had acquired for redevelopment with the intention of demolishing the existing buildings as a preliminary to redevelopment. The existing buildings had no value to the purchasers. The High Court held that the prices paid for the improved land should be converted so as to reflect their unimproved value by treating the prices and the cost of demolition and earthworks as together representing the cost to the developer of obtaining unimproved land suitable for redevelopment. This established the price which commercial developers were prepared to pay for suitable vacant land similar in kind to the subject land in its unimproved state. The High Court rejected Fenton's competing contention (which would have resulted in a lower valuation) that the price paid for the improved land should be converted so as to reflect unimproved value by subtracting the value of improvements from the sale price. The latter would have been a conventional method of arriving at unimproved value if the purchasers' subjective intentions had been ignored. The High Court at 166-167 agreed with the primary judge, Wells J, who said: "Speaking generally, where the subject matter of the sales, and the market in which they were concluded, reveal a sufficiently high degree of comparability with the notional sale of the land in question and the market in which it would be the subject of negotiation, the particular circumstances and considerations that induced the respective parties to come together at the several prices agreed upon are regarded as immaterial, unless, in a given case, they are such as plainly to take a sale out of the ordinary run of transactions that together constitute the relevant market. Where the circumstances and considerations have such an effect, valuers are wont to say that the alleged comparable sale must be excluded because it was affected by special circumstances." 136 In that case, the primary Judge, Wells J, said in Fenton Nominees Pty Ltd v Valuer-General (1981) 47 LGRA 71 at 79 before the passage quoted by the High Court: "it is fallacious to suppose that the owner of vacant land will not gear his negotiating price to the knowledge (which he will almost inevitably acquire) that the intending purchaser has a commercial use in view; and will not confine himself to asking prices within the range of those appropriate to some other lower and less rewarding use". Wells J also said at 79 immediately after the passage quoted by the High Court: "Put another way, one may assert that none of the many different forces in the market under consideration that bring the parties to a sale is ordinarily regarded as a special circumstance, because all such forces are brought to a state of equilibrium when the bargain is finally struck. Generally speaking, therefore, and given that the degree of comparability is sufficiently marked, what the valuer primarily looks to are the fundamental particulars of each sale - the price, the date, the location of the land, and its area."

137 In River Bank Pty Ltd v The Commonwealth (1974) 4 ALJR 483 at 487, a resumption compensation case, Stephen J rejected two sales of rural property with subdivision potential, Urila and Burra Downs, because the subject property had none. By inquiring into the intentions of the purchasers (Urila - "it was purchased with a view to later subdivision", Burra Downs - "it was bought as a subdivisional project") Stephen J was able to disregard the sales as comparables. 138 In Blefari v The Minister (1962) 8 LGRA 1 the plaintiff contended that resumed land should be valued on the basis that as of the date of resumption there was a strong possibility of it being released from the "green belt" in the near future. In support of that contention he sought to rely on a sale of nearby land for a drive-in theatre. Else-Mitchell J rejected the sale, not because of the characteristics of the land but because it was purchased for the purpose of a drive-in theatre by an adjoining landowner (at 3): "…it was common ground that the land was acquired for the purpose of a drive-in theatre by a company which already had some adjoining land and was in the course of applying for a licence to conduct such a theatre. It was obvious that available sites in the Sydney metropolis, of a size sufficient to enable such a project to be established, must be limited in number, and for this reason at least, it was probable that a purchase for such a special purpose would not evidence any general market value for land of the character of having the situation of the land resumed from the plaintiff." 139 In a number of compulsory acquisition compensation cases in this Court evidence as to the purpose of the purchase of allegedly comparable sales has been considered: Chaudry v Liverpool City Council [2008] NSWLEC 251 at [29]; Cassidy v Sydney Water Corporation [2008] NSWLEC 223 at [100], [106]; Penrith City Council v Sydney Water Corporation [2009] NSWLEC 2 at [8]. Industrial comparables 140 A better comparative guide to the value of the Land consists of two sales of industrial land identified by the council's valuer, Mr Wood, in his report prepared during the hearing, to which the applicants' valuer, Mr Dobrow, responded. In that report Mr Wood valued the Land on the assumption (which he did not accept) that a demand existed at the acquisition date for 15 hectares of the Land the subject of investigation for industrial purposes under CHUGS. The two sales of industrial land to which he had regard were as follows: (a) a Wauchope property of 21.46 hectares which sold in July 2004 for $3.96 million. The yield was $184,529 per hectare. It is Lot 22 DP 811254. It was zoned Industrial 4(a) and sold with development consent for 32 industrial allotments. Services were available. The property is gently sloping with no apparent physical constraints. Approximately seven hectares were timbered. The yield of $184,529 per hectare may be compared with the yield for the applicants' three comparable sales at prices ranging from $102,354 per hectare to $167,121 per hectare, being rural 1(a) land with good residential potential requiring services and rezoning with at least three years lead time (Mr Wood's estimate which I accept); (b) a Herons Creek property which sold for $1.9 million in February 2006. The location is 316 Herons Creek Road, Herons Creek (Lot 186 DP 754405). It was zoned Industrial as to approximately 30 hectares and Rural 1(a) as to approximately 24 hectares. Adopting $20,000 per hectare for the Rural 1(a) component, Mr Wood deduced that the yield for the 30 hectares Industrial component was $34,000/ha. It is good level land, services were available, timbered, backing onto North Coast Rail (with a rail siding) and adjoining Herons Creek Village. 141 Taking into account those sales, the existence of other zoned and serviced industrial properties, the Land's physical constraints, unavailability of services, disused borrow pits, flora and fauna issues and the provision of compensatory habitat, Mr Woods concluded that the 15 hectares of the eastern half of the Land referred to in CHUGS would have realised a rate of $50,000 per hectare and therefore calculated the value of the Land (on the assumption he had made) as follows:

15 ha industrial investigation at $50,000/ha $750,000

22.194 ha Rural 1(a) with one building entitlement at $20,000/ha $443,880 $1,193,880 plus building $75,200 $1,269,080 say $1,270,000

142 In comparing Mr Wood's comparable industrial sales with the Land, it is necessary to take into account that they are both of properties zoned industrial and available immediately and that the Wauchope property also had the benefit of a development consent for a 32 lot subdivision. In contrast, the Land only had potential for industrial rezoning and for consent to industrial use, a potential that had not been realised and which was likely to take some time to realise. However, I do not accept council's submission that the Wauchope industrial property was not remotely comparable. Indeed in Mr Wood's report he appears to have taken the Wauchope property into account. However, I agree that the industrial sale at Herons Creek is more comparable with the Land because (among other things), unlike the Wauchope Land, it did not have subdivision development consent.

143 If the Land were to be valued for its potential industrial use only, Mr Dobrow considered that the value should be assessed by discounting the rate for Mr Wood's industrial sale 1 (the Wauchope property) by 25 to 30 per cent. If, say, a one third discount were to be applied to that sale's rate of $184,529/ha, the deduced rate for the Land would be about $120,000 per hectare. Applied to the Land's 37.1 hectares, the market value of the Land would be about $4.45 million. In my view, that would be a manifestly inadequate discount given the extent of the physical and planning differences between the Wauchope property and the Land.

144 Notwithstanding evidence of the availability of industrial land elsewhere, given that CHUGS identified a need for industrial land in the Camden Haven and identified 15 hectares of the Land for industrial investigation, I am prepared to conclude that at the acquisition date the hypothetical parties would have thought that there would be a demand for that 15 hectares with an industrial use. 145 In my view, the constraints on development of the Land relative to the comparable industrial sales were much greater than Mr Dobrow gave credit for but not as great as Mr Wood considered them to be. I propose to adopt Mr Wood's general approach of allowing for the constraints in evaluating a rate per hectare for the 15 hectares identified in CHUGS on the eastern half of the Land. However, as my view of the Land's constraints differs from his and as I think temporary use of the quarry should be given some additional value, I conclude that the rate should be somewhat higher than the rate Mr Wood adopted.

146 I conclude that it is reasonable to adopt a rate of $60,000 per hectare for 15 hectares of the Land on the eastern half, resulting in a figure of $900,000. I consider that at the acquisition date an equivalent area of the western half of the land would be regarded as having industrial potential after the precise location of the Kew Bypass was clarified. However, I consider that it would attract a very much lower value for industrial potential than the eastern half on account of the greater uncertainty of industrial development on the western half particularly as CHUGS did not designate it for industrial investigation. I think it is reasonable to value 15 hectares on the western half of the land with industrial potential at $25,000 per hectare, amounting to $375,000. The residue of the Land, 7.194 hectares, I value at Mr Wood's rate of $20,000 per hectare, amounting to $143,880: see [118] and [141] above. For the building on the land I will adopt Mr Wood's figure of $75,200. I therefore assess the market value of the Land at the total of those figures, $1,494,080 which I round to $1,495,000.

K. DISTURBANCE 147 There is meagre evidence of the applicants' claim for loss attributable to disturbance comprising legal and valuation fees totalling $30,000. However, it was included in Mr Dobrow's assessment and was not challenged. I therefore assess loss attributable to disturbance in the sum of $30,000.

L. CONCLUSION 148 I have determined that the total compensation to which the applicants are entitled is $1,525,000 comprising market value of $1,495,000 and $30,000 for loss attributable to disturbance. The respondent should pay the applicants' costs. The parties are to bring in agreed or competing short minutes of order to give effect to my reasons within one day. The exhibits may be returned.

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