Transport for NSW v Registrar-General of NSW

Lot 33 in DP270147

1. Lot 33 in DP270147 comprises a community development lot in the Community Scheme (Acquired Land). Prior to the Resumption, the Acquired Land was owned by DJ & KG Lodge Investments Pty Ltd (DJ & KG Lodge).
2. On 12 November 2021, the Plaintiff issued a proposed acquisition notice (PAN) to DJ & KG Lodge in respect of the proposed acquisition.
3. On 4 March 2022, an acquisition notice was published in NSW Government Gazette No. 81, compulsorily acquiring the Acquired Land from DJ & KG Lodge.
4. Prior to the Resumption, the Community Scheme comprised 37 lots: 1. One community property lot, being Lot 1 in DP270291, owned by Community Association DP270291; and 2. 36 community development lots, being: 1. Lots 2 to 35 in DP270147; and 2. Former Lot 36 in DP270147, which now contains a subsidiary neighbourhood scheme created by neighbourhood plan DP285565 (Neighbourhood Scheme), comprising: 1. one neighbourhood property lot, being Lot 1 DP DP285565; and 2. eight neighbourhood development lots, being Lots 2 to 9 DP285565.
5. The Community Scheme is subject to a Community Management Statement. There is also a Community Management Statement for the subsidiary Neighbourhood Scheme.

Legislative Framework

1. The Community Land Development Act 1989 (NSW) was repealed and replaced by the CLD Act on 1 December 2021.
2. The CLD Act has been restructured and now Part 10 of the CLD Act regulates the compulsory resumption of land which forms part of a neighbourhood, precinct, or community scheme.
3. As the lot the subject of the Resumption is in a community scheme, Part 10 of the CLD Act applies: s 72(4)(a) CLD Act. The Acquired Land is a 'community development lot', which is defined in s 3 of the CLD Act to mean: community development lot means a lot in a community plan that is not community property, a public reserve or a drainage reserve and is not land that has become subject to a subsidiary scheme or a lot that has been severed from the community scheme.
4. Division 2 of Part 10 of the CLD Act relates to the making of applications by the resuming authority to the Supreme Court.
5. Section 73 makes provision with respect to the making of an application to the Supreme Court and the following provisions are relevant to the application: 1. Section 73(2) provides that the resuming authority proposing to resume the part of the land in a scheme parcel must apply to the Supreme Court for an order restructuring the scheme. 2. Section 73(4) makes provision for the making of orders by the Supreme Court and provides: The Supreme Court may, when making an order restructuring the scheme, also make any order it considers necessary, including - (a) to adjust unit entitlements, or (b) to amend any applicable - (i) development contract, or (ii) management statement, or (iii) by-laws under a strata scheme, or (c) if part of a lot is to be resumed - (i) to make the residue of the lot a lot in the scheme, or (ii) with the consent of the owner of the residue of the lot, to vest the residue of the lot in the relevant association or strata corporation as association property or common property.
6. Section 73(6) provides that an application under s 73 must be made before the publication of the relevant notice of resumption.
7. Section 74 of the CLD Act deals with notice of the application including: 1. Section 74(1) provides that the resuming authority must serve notice of the application to the Supreme Court on various entities, including the relevant community association, each registered owner, and each registered mortgagee, chargee and covenant chargee of a lot within a scheme, as well as the Registrar-General, except to the extent that the Court otherwise directs. 2. The manner of service for the purposes of s 74(1) is not prescribed by the CLD Act or the Community Land Development Regulation 2021 (Regulation). Accordingly, usual rules of service apply in Rule 10.5 of the Uniform Civil Procedure Rules 2005 (NSW) for service on a person, and section 109X of the Corporations Act 2001 (Cth) for a corporation.
8. Section 74(2) provides that an 'interested person' is entitled to be heard on the application. The term 'interested person' is defined in the CLD Act by reference to the list of persons in section 74(1).
9. Section 76 of the CLD Act sets out the Court's powers in hearing an application under Division 2: (1) The Supreme Court, when deciding an application under this Division, must - (a) disregard any failure by the resuming authority to comply strictly with the requirements of this Part and of any regulations made for the purposes of this Part, and (b) consider whether any amendment is required to a schedule of unit entitlement, development contract or management statement, and (c) consider whether any contribution should be made by the resuming authority for the period following publication of the notice of resumption, and (d) make any orders the Court considers to be appropriate, just and equitable in the circumstances. (2) The Supreme Court may order a whole parcel to be resumed or a scheme to be terminated if it appears to the Supreme Court that the effect of a resumption of land would cause the continuation of the scheme to be impracticable. (3) Nothing in this Division authorises the Supreme Court to modify or nullify the effect of a notice of resumption in relation to the land resumed.
10. Schedule 3 of the CLD Act make provision for requirements for schedules of unit entitlement and provides in section 2: 2 General requirements for all schedules of unit entitlement A schedule of unit entitlement must - (a) be in the approved form, and (b) clearly state - (i) for a schedule for a completed scheme - that the schedule has been revised, or (ii) in any other case - that the schedule is liable to be altered before, or on, completion of the scheme to which it relates, and (c) show all unit entitlement as whole numbers.
11. As the Resumption is by compulsory process under the Just Terms Act, sections 3 and 7 of Schedule 3 of the CLD Act do not apply.

Notice of application to the Supreme Court

1. Pursuant to s 74(1)(f) of the CLD Act, the Summons was served on the Registrar-General on 22 February 2022 and the Registrar General filed a Notice of Appearance on 25 February 2022.
2. In accordance with s 74(1) of the CLD Act, on 8 March 2022, the Summons was sent by registered priority post to the following entities: 1. Community Association DP270147 (as the community association and the registered proprietor of the association property); 2. Neighbourhood Association DP285565 (as the neighbourhood association and the registered proprietor of the neighbourhood property); and 3. Each registered proprietor and registered mortgagee of a lot within the Community Scheme and Neighbourhood Scheme (except where the Plaintiff is the registered proprietor).
3. For the purposes of s 74(1)(a), there are no registered chargees or covenant chargees registered on the title of any lots within the Community Scheme.
4. There are two entitles that needed to be notified, where service was not as obvious.
5. First, Lot 9 in Deposited Plan 270147 is owned by a corporation, Byron Gold Investments Pty Ltd. The notification letter was sent by registered post to the company's registered office. The letter was not collected for some time, however, the sole director has more recently provided written confirmation to the Plaintiff that the company does not have any objection and does not wish to be heard. However, I note that the settlement of the Plaintiff's purchase of Lot 9 has been delayed to 9 December 2022.
6. Secondly, Lot 32 in Deposited Plan 270147 is owned by a deregistered company, Fourofam Pty Ltd. On 25 November 2022, the Plaintiff's solicitor sent an email to the Property Law team at the Australian Securities and Investment Commission attaching the notification letter and valuation report to satisfy s 109X Corporations Act 2001 (Cth).
7. On 28 November 2022, ASIC notified the Plaintiff that Lot 32 is not vested in ASIC but instead was disclaimed when Fourofam Pty Ltd was placed in liquidation. ASIC's understanding is that Lot 32 vested with the Crown in right of New South Wales. The Plaintiff subsequently contacted Crown Lands NSW and provided a copy of the notification letter and other relevant materials including the Amended Summons. The Department of Planning and Environment accepts that it has been notified, and notification is the requirement for the Plaintiff to proceed.
8. I am therefore satisfied that all relevant parties have been notified with the requisite material.
9. Other than the Registrar General who appears, none of the persons on whom notice of the proceedings have been served have indicated that they wish to be heard on the hearing of the application.

Legal principles

1. There is no provision in the CLD Act for the method of readjustment of a community scheme for the purposes of a resumption. The Plaintiff was not able to identify any authorities relating to an application under s 73 of the CLD Act.
2. However, in proceedings brought under the 1989 Act in relation to the consequences of the resumption of land under a neighbourhood scheme, Transport for NSW v Registrar-General of New South Wales [2013] NSWSC 1272 at [10], Ball J set out the task for the Court in determining whether the resumption has altered the relative value of the lots under the 1989 Act: Although the CLD Act does not set out the criteria the court should have regard to in making orders under ss 53 and 57 of the CLD Act, there can be little doubt that the question for the court is whether the resumption has altered the relative value of the affected lots compared to other lots in the scheme. The original unit entitlement of each lot owner was determined by reference to relative value of the lots that comprised each scheme. The question in those circumstances must be whether those unit entitlements need to be adjusted having regard to any change in value of the affected lots. Other rights may have been conferred on lot owners by other documents regulating the relevant scheme including the management statement of the relevant scheme and the by-laws of a strata scheme. However, it is not suggested in these proceedings that any relevant rights of that sort are affected by the resumption.
3. Although the provisions of the CLD Act with respect to resumptions have been modified since the 1989 Act, the provisions are substantively the same and both Acts seek to deal with the consequences of a resumption on the rights and liabilities of unit holders under a community scheme. The provisions with respect to the powers of the Court on an application in consequence of a resumption are identical. Both Acts expressly require orders to be made in the Supreme Court with respect to the adjustment of any unit entitlements under the applicable schemes as a consequence of the resumption.
4. I accept that the question for the Court as framed by Ball J is no different with respect to assessing the consequences of the resumption pursuant to section 76(1) of the CLD Act. The main concern for the Court is that the schedule of unit entitlements after the proposed resumption continues to reflect the relative values of the remaining lots.
5. Each application turns on its own particular facts and circumstances. Valuation evidence may be required for the adjustment of unit entitlements.

Expert evidence

1. There will be no amendments to the services within the Community Scheme and Neighbourhood Scheme and there are no amendments to the Community Management Statement for the Community Scheme nor to the Community Management Statement for the Neighbourhood Scheme as a result of the compulsory acquisition of the Acquired Land.
2. The Plaintiff relied upon an expert valuation of Mr Leigh Bridges, Certified Practising Valuer. He assessed the impact of the Resumption on the value of each applicable lot and formed the opinions including those set out below: 1. An analysis of the original unit entitlements indicates that the allocation to each lot was based on land size as well as land use and zoning considerations. This original apportionment is in his opinion correlated with the relative value of each allotment as residential dwelling sites within the overall Deposited Plan development. Although the proportion of overall land size and impact to continued existing use as residential dwellings which will result from the proposed resumption is minimal, he considered that the impact to the proportionate value of the non-directly affected parcels should be considered. 2. The relative values and allocated unit entitlements of Lots 1-32 & 34-36 in Deposited Plan 270147 and Lots 1-9 in Deposited Plan 285565 in the subsidiary Neighbourhood Scheme do not require adjustment as a result of Transport for NSW's resumption, because of the following: 1. The original allocation of Unit Entitlement to Lots 1-36 in Deposited Plan 270147 reflects the relative value of each lot according to the existing uses. Given the Highest and Best Use of the parent site and individual parcels within the existing Deposited Plan 270147 are unchanged, the prevailing unit entitlements remains accurate. 2. The Plaintiff's resumption of the Acquired Land (Lot 33 in DP270147) will reduce the size of the overall parent holding and therefore is to be excluded from the Community Scheme. However, the site areas and current values of residue lots in Deposited 270147 and subsidiary Neighbourhood Scheme Deposited Plan 285565 will remain unchanged. Lots 1-32 & 34-36 in Deposited Plan 270147 and Lots 1-9 in Deposited Plan 285565 in the subsidiary Neighbourhood Scheme are not directly impacted upon as a result of the resumption, nor the deletion of the Acquired Land (Lot 33) from the schedule of unit entitlements. 1. Therefore, the only consequential change to the Community Scheme is to delete the Acquired Land (Lot 33 in DP270147) from the schedule of unit entitlements.
3. The Valuation Report was sent to all interested parties. No issue has been raised with the report by any person. I accept those opinions.

Orders

1. In the circumstances, the appropriate orders are: 1. Pursuant to s 73 of the Community Land Development Act 2021 (NSW) (CLD Act), order that as a consequence of the resumption of Lot 33 in Deposited Plan 270147: 1. The schedule of unit entitlement for community scheme DP270147 is adjusted as specified in the replacement sheets for DP270147 in annexure A to this Judgment and as set out in Annexure A to the Amended Summons filed in Court on 6 December 2022; 2. There is no amendment to the schedule of unit entitlements for the subsidiary neighbourhood scheme DP285565; 3. There is no amendment to the management statement for community scheme DP270147 nor to the management statement for the subsidiary neighbourhood scheme DP285565. 1. Plaintiff pay the costs of the Registrar-General pursuant to s 77 of the CLD Act.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 December 2022